Integrating funds of knowledge--the resources, processes, and strategies attached to family and community proficiencies--has widely been accepted as a worthwhile pedagogical intervention. In this article, we argue that two of the primary assumptions underlying such interventions have yet to be explored. First, because funds of knowledge are acquired rather than learned, children may not be readily able to locate and talk about such resources. Second, students often come to classrooms and schools with deeply embedded cultural models of what language, literacy, and learning in school are and should be. These cultural models are acquired through participation in the home, community, and school. In this article, we illustrate how some of the beliefs associated with funds of knowledge--narrow definitions of literacy, for example--run counter to the goals of integrating local resources into the academic curriculum. We studied the complexity of integrating funds of knowledge in a fifth-grade classroom of African-American students in a large Midwestern city. Situated within an action research framework, we collaboratively planned, collected, and analyzed data over a 10-week period. We learned that the network of spoken and written discourse practices that comprised the students' cultural knowledge either conflicted or aligned with the Discourse of the school. We share findings from the entire class and then focus on two in-depth case studies that demonstrate the complexity of alignment and conflict. This research sheds light on how elementary students develop problematic literate identities and offers suggestions to redirect such development. (Contains 4 footnotes.)