Millions of students are attending classes in substandard schools, a condition that is becoming a major concern for many public school parents, teachers, students, and administrators. This report is the result of research investigating school facility issues, assessing the scope of the problem, and making recommendations to the membership of the Association of School Business Officials International. Each of the following three areas of need are examined: the construction of new facilities and the renovation or expansion of existing ones; payment for accumulated deferred maintenance in existing facilities and adequate maintenance of facilities in the future; and financing of the future depreciation of existing and new school facilities and equipment. The report recommends changes in policies, statutes, regulations, and laws in order to properly address all three areas, including specific proposed actions for the states. Concluding comments suggest that the school districts with the lowest taxing abilities are the ones with the highest levels of deferred maintenance and that facilities continue to be predominately a local concern. The report acknowledges that while there is not enough money to improve all the schools within a state, school business officials must be more creative in their search for financial mechanisms to help solve the problems, coordinate their efforts, and lobby effectively. (Contains 17 references.) (GR)