California's budget crisis has diminished educational resources for the state's current cohort of public school students. Because school districts have less revenue, class sizes are larger and struggling students receive less assistance. Under these circumstances, it seems beside the point to suggest that California should begin planning for the next cohort of students. Yet, history demonstrates that a failure to plan now will leave the state unprepared for what will surely follow. Although the current recession is deep, economic recovery will come, offering increasing tax revenue and an opportunity for the state legislature to be more generous. How will the state take advantage of this opportunity? It may respond as it has in the past by allocating new revenue to schools for specific purposes. By 2005-06, the state had more than 60 programs targeting a variety of purposes such as reducing class sizes, hiring counselors, purchasing textbooks, and involving parents (Weston, Sonstelie, and Rose 2009). Alternatively, the state might use additional revenue to address underlying weaknesses in its school finance system. This paper explores this alternative. The authors begin by discussing five broad principles for assessing California's school finance system. These principles do not lead to a single superior system, but they do suggest several ways in which California could improve its current system. Through numerical simulations, they illustrate the effects of pursuing some of these improvements steadily over time. The simulations demonstrate that corrective long-term policies could significantly strengthen California's school finance system. (Contains 13 figures, 4 tables and 11 footnotes.) [This paper was written with contributions from Hans Johnson. For the technical appendix, see ED515619.]