State and federal governments provided $146 billion for public elementary and secondary schools in the 1994-95 school year. In response to a Congressional directive to: (1) determine the extent to which state and federal funding is targeted to districts on the basis of the number of poor students; and (2) the effect of state and federal funding on the amount of funds available to high-poverty compared with low-poverty districts, the Government Accounting Office researched these issues, the results of which are reported in this document. The data used were collected from U.S. Department of Education district-level research for school year 1991-92. The data was supplemented by interviews of state and federal education officials to determine how changes in states' school finance systems and federal funding programs would affect funding to poor students. It was found that school finance systems in over 90 percent of the states had the effect of targeting more state funds to districts with large numbers of poor students in school year 1991-92 regardless of whether the system explicitly intended to do so. Although targeting funds helped close funding gaps, the percentage of total funding from state and federal sources was more important in reducing any gaps. Profiles on a state-by-state basis are offered. (RJM)