Because the amount of state-equalization aid received by Ohio school districts is inevitably related to district wealth, the measure of district ability is a concern. This paper presents findings of a study that used computer simulation to examine the effect of proposed modifications to district-revenue capacity on the equity of Ohio foundation-aid allocation. The paper first reviews the Ohio public-school funding system and recent policy initiatives in the state. Two modifications to measure district-revenue capacity have been proposed: (1) include income as part of local capacity in the state-aid formula; and (2) remove nonresidential property from local capacity. Data on each of the school districts for fiscal year 1987 were obtained from the Ohio Department of Education. Findings indicate that the substitutions for the present definition of revenue capacity resulted in greater equality of local revenue capacity. When income- or pooled-property simulations were used to replace assessed valuation, equity improved. A conclusion is that assessed valuation of property is the least desirable definition of local revenue capacity. Modifications to the present definition of local revenue capacity lead to small but significant increases in the equity of state-aid distributions. (LMI)