The system for financing education in Illinois fails to deliver sufficient resources to the school districts that need them most. Although no individual or administrative unit acts to deprive particular groups, the system as a whole does. Using Census figures, state and local tax records and information from the Illinois Board of Education, this report documents how the current system that relies on local property wealth protects the interests of well-educated, wealthy communities that can create islands of exceptionally well-financed schools. Residential segregation means that families with low incomes tend to be segregated from those with high incomes. The current state education finance system relies on a combination of local property tax revenues and funds distributed by the state. In fiscal year 1994, 59% of education revenues in Illinois came from local property taxes, while less than 33% came from state sources. The state's General Assembly helps compensate low-income districts, but does not do so sufficiently because it distributes too little money to overcome differences in property value between high and low property wealth districts. The people of Illinois, and lawmakers in particular, must begin to view state and local financial resources as part of a single system, and the state government must take greater responsibility for equalizing educational resources across districts. An appendix contains a table of districts by various categories. (Contains 32 figures.) (SLD)