After decades of media attention, study, and lawsuits, the solution to inequities in school funding remains elusive. This paper examines several strategies that states have used to try to close the funding disparities in per-pupil spending. It explains the two definitions of equity in the school-finance arena and identifies some important trends in school-finance litigation. Also described are some of the strategies used by states to address problems arising from differences in school spending, such as increasing state spending in low-wealth districts, placing legislative spending caps on wealthy districts, and recapturing or redistributing revenue. The role of state courts in directing remedies to unequal state funding is outlined in the next part. Policymakers also face challenges resulting from a projected growth in elementary-secondary enrollments and the increased need for state support of school-district capital outlay. State policymakers are advised to be sensitive both to taxpayer equity and to concerns for educational equity; maintain the stability of the funding system; include a measure of school-district fiscal capacity in the state-funding approach; examine both the positive and negative circumstances associated with the use of earmarked lottery revenue; be attuned to the principle of program neutrality; consider the funding systems in total; and distribute state resources in such a way that promotes the most efficient use of those resources at the local level. In addition, the federal role in education finance may need to be redefined. One table and one figure are included. Appendices contain states' nontax revenues (lotteries) for education; educational goals for Kentucky; Alabama's essential principles; programs under the Elementary Secondary Education Program; ideas for a broader federal role in education finance; a glossary; and professional organizations' strategies to address equity. (Contains 30 endnotes and 26 references.) (LMI)