This special report reviews problems in Illinois' education funding system and discusses potential solutions to these problems. The report notes that the fundamental problem with the current education finance system is an over-reliance on local property taxes. Although property taxes are a relatively stable and lucrative revenue source, over-reliance on them has led to inadequate and inequitable school funding with negative consequences for the quality of education. Michigan's solution of using sales taxes for education is not appropriate for Illinois because Illinois already has a high sales tax rate. Recent evidence suggests a strong positive correlation between school spending and academic achievement. Results of a 1996 poll indicate that Illinois voters see education as one of the most important state problems and that 77 percent of voters feel that the state should increase financial support for public schools. Recommendations by the Ikenberry Commission and the House Plan for reform both have shortcomings. The final education plan includes increasing funds above the Governor's budget request, developing a new set of statewide achievement tests, and enabling local school boards to develop dress codes. A long-term solution will involve an increase in the state's responsibility and a decrease in reliance on local property taxes. The Coalition for Education Rights advocates several state actions, including providing the foundation level of funding sufficient to support a high-quality education program for all children and implementing a fair tax system. (KDFB)