This report provides an overview of the State school aid distribution plan passed by the New Mexico legislature in 1974. The previous school finance plan, passed in 1969, and the problems school districts experienced under that plan are briefly described, followed by a discussion of the 1974 legislation. The new plan is a weighted-pupil formula based on the National Education Finance Project model. It provides distributional equity by defining school district "need" on a weighted-pupil basis, and it provides taxpayer equity by allocating State funds in inverse proportion to local revenue. The author suggests that the 1974 New Mexico plan meets the Serrano test of fiscal neutrality for operational funds but lacks a systematic provision for capital outlay and debt service. (Author/JG)