Explains problems with complex system of educational finance in California. Addresses issues such as diversity, per pupil expenditure, and equity at district and school level; problems with special education, pupil transportation, supplemental grants, and "mega-item;" and brief history of California's school financing--including Serrano v. Priest ruling, Proposition 13, and Proposition 98--illuminating source of current difficulties. Concludes with general solutions. (2 tables, 11 references.) (BRH)