Despite a decade of reform efforts, important policy questions concerning the efficiency and equity of the current financing system remain unanswered. This paper examines New York State fiscal and educational outcome data for 1985/86 through 1989/90. Data are presented for school district expenditures and teacher salaries; local revenue bases and fiscal effort; and teaching conditions and educational outcomes. Data categories are presented for the state as a whole and then by four strata of school districts: urban; upstate suburban and small city; downstate suburban and small city; and rural. During the late 1980s, New York school district operating expenses grew from $12.8 billion to $17.2 billion, or 34.2 percent in nonadjusted dollars or 15 percent in constant 1985/86 dollars. Teacher salaries increased 39.5 percent (or 19.5 percent in constant dollars) and outpaced the cost of living. Per pupil expenditures rose from $5,039 to $6,883. State and local revenue shares rose slightly, but local revenue bases rose dramatically. After significant increases in state resources, secondary students achieved only modest improvements in educational outcomes, with urban students still lagging behind. Local tax effort declined substantially. These are symptoms of an inefficient and inequitable system. Resources must be redistributed in a more administratively efficient manner. Policymakers should abolish small special interest categorical grants and rechannel funds to achieve broader policy goals. (Contains 10 references.) (MLH)