The United States Supreme Court decided two cases in the area of school finance in 1986. It addressed student financial assistance under a vocational rehabilitation program for tuition at a sectarian postsecondary institution in Washington; it also decided a case challenging a state finance program. Cases were heard by other courts in an attempt to follow recent U.S. Supreme Court cases in areas of public school personnel working in parochial schools and the recovery of improperly spent federal funds. Some cases represent attempts by state legislatures to implement, and by courts to interpret, taxpayer revolt legislation and other efforts to curb the growth of government spending. Several challenges to the use of funds for programs for handicapped children were presented to the Department of Education. And there was continued litigation on the taxing and spending authority of school districts. These cases, discussed in this chapter, fall under three major topics: public funds for private schools, sources and allocations of public funds, and school tax issues. (TE)