Urban school desegregation can be achieved through more sensible housing policies. Review of the current situation shows that some States (New York, Illinois, Michigan, Massachusetts, Maryland, and Minnesota, for example) have been able to integrate their schools by fostering the development of low and moderate income housing in particular urban areas. The shift in Federal policy away from urban school desegregation (and from urban problems in general) presents an opportunity for States to take up the slack. The rational use of housing subsidy programs can be of great assistance to desegregation goals. In States experiencing rapid development, regulations controlling growth and development may also be used to assist in these goals. Control over rules for use of State and local public employee pension funds--a new source of capital for home financing--provides another potential tool. (Author/GC)