The recent defeat of New York's statewide School Facilities Bond Act did not eliminate the pressing need for additional funds for school capital needs. This report discusses ways in which the state can meet these needs, shows how "backdoor" borrowing is not an acceptable method of financing school facilities needs, and describes methods for allocating additional funds. It explores ways to acquire building aid for critical projects, particularly under the "building aid formula," which calculates reimbursements based on a varying proportion of expenses incurred. It is recommended that, because the aid formula for distributing funds has been recently revised, any additional aid should be provided strictly on a needs basis, such as in remedying fire, health, and safety problems. The report also recommends a special process that could be used for granting 100 percent reimbursement for the most critical projects in school districts with average or below-average resources; a two-step procedure for this process is outlined. Minor maintenance aid will also need to be addressed, but it is pointed out that aid amounts available for most districts are relatively small in comparison with current maintenance spending. Suggestions for other reform actions are presented. (RJM)