A recent court case, Sheff vs. O'Neill has centered Connecticut's attention on the fact that its public schools are largely segregated by race/ethnicity (80% of the state's minority student population are clustered in 18 of 166 school districts while 140 others are more than 90% white). This paper discusses financing the cost of higher standards for student achievement, with a focus on assessing student progress, implementing accountability models for schools and local education agencies, developing comprehensive preschool programs, reducing central bureaucratic controls, and shifting from categorical funding to block grant funding. A review of school finance history in Connecticut shows how the fragmentation of local governments led to concentrations of wealth and poverty within towns, and to substantial economic differences among them. Future directions for school finance are briefly examined with regard to school desegregation, early childhood education, and social services. (LMI)