Ways of measuring the fiscal capacity of school systems are examined in this paper, which presents a representative tax system model. Fiscal capacity is influenced by factors other than tax base size; the "ideal" model should address adjustments for variations in cost across communities and school systems. The first section examines the definitions of fiscal capacity, and section 2 discusses revenue sources for education that are used in measuring tax capacity. Approaches to measuring fiscal capacity are described next, which are based on a legal tax base, exported-adjusted income, or a representative tax system. A regression-weighted representative tax system (RTS) is then applied to Tennessee counties, examining local variables that influence fiscal capacity: per pupil own-source revenue, equalized property assessment, taxable sales, and capita income; average daily attendance-to-population ratio; and residential and farm property ratio. Problems in estimating fiscal capacity in the Tennessee school systems--shared tax bases and double-counting of tax bases--are discussed next. A correlation analysis of tax variables is presented in the final section. Four tables and an application of the RTS model to other states are included. (9 references) (LMI)