Designed for use by students, policy-makers, educational administrators, social scientists, and lay citizens, this book analyzes three basic educational issues: the economics of education, the politics of educational finance, and the "new political economy" of education, which employs economic methods to study those governmental institutions responsible for educational policy. The book is in four parts. The first part, comprising three chapters, discusses the relationship between public policy, the government, and education. The next five chapters, the second section, describe the current organization and patterns of public educational finance in the U.S., including such factors as school organization, teacher associations, tax structures, and federal and state aid systems. The third section, also made up of five chapters, describes proposals for reforming school governance and finance. Of particular importance are schemes calling for state-supported basic education and school site management. The book's fourth section analyzes three special topics: management of capital, urban schools, and higher education. (PGD)