Recent developments in school finance litigation are described in this document, which examines the legal bases for school finance challenges and the nature of the inequities that plaintiffs seek to prove. The first section summarizes the legal theories upon which the challenges have been based. Section 2 focuses upon plaintiffs' arguments in the most recent round of litigation that occurred in New Jersey, Texas, Kentucky, and Montana, and the fiscal conditions that facilitated them. The third section summarizes the current status of school finance case law and offers some observations regarding possible legislative responses to recent judicial rulings. The review points to a problematic degree of variation in judicial findings that exist across states in similar fiscal situations; a lack of a basic sense of fairness; and the failure of the political system to achieve consensus on questions of equity, adequacy, and efficiency. These conclusions call into question the fairness of the state school finance system in distributing educational resources. (37 references) (LMI)