To examine the fiscal implications of reorganizing the Los Angeles (California) Unified School District (LAUSD) into smaller, independent districts, researchers compared LAUSD revenues and expenditures with those of the balance of the state and analyzed differences in expenditures per student within LAUSD. This report on their evaluation is organized into four parts. Part 1 analyzes the fiscal rationales in favor of redistricting. It tests whether LAUSD's political power brings it a disproportionate share of state K-12 funding and also examines efficiency issues, involving optimal district size, school underutilization and overcrowding, administration, and management and information systems. Part 2 looks at such reorganization implications as the distribution of assets, liabilities, and categorical and base revenues, and the costs of transition planning and implementation. LAUSD expenditure patterns are investigated in part 3, including geographic differences in expenditure variations, redistricting's effects on interdistrict inequalities, and the racial and ethnic implications of redistricting. Part 4 presents the researchers' conclusions; among them are that LAUSD operates as efficiently as other California districts and does not get a disproportionate share of state revenues and that there are large differences in expenditure per student within LAUSD, mainly attributable to difference in school size. (RW)