Focusing on the Johnson O'Malley Act (JOM) and its relationship to subsequent laws, this report on the financing of Indian education in public schools examines the allocation and use of JOM funds for basic educational costs and for supplementary programs, as well as the mixes of local, state, and federal tax revenues available to school districts with Indian students. One section covers the legislative history of several laws on federal funding for Indian education: JOM; Public Law 874 and Public Law 815 (together known as Impact Aid); the Elementary and Secondary Education Act, Title I; the Indian Education Act, Title IV; and the Indian Self-Determination and Education Assistance Act (Public Law 93-638). Other sections discuss: property tax as a source of funding for public schools on or near reservations; JOM funds; supplementary federal programs (including suggestions from Indian parents and fiscal data); and plans in 10 states for financing Indian education. Included are 8 conclusions and 14 recommendations. Appendices contain excerpts from the work requirements for this report, a seven-page bibliography, comments from the Affiliated Tribes chairman, and Indian leaders in New Mexico, Alaska, and Minnesota, and excerpts from a fact sheet by the Red Lake Education Task Force. (AN)