This paper (1) provides background on types of State aid to education and describes how they work, (2) discusses the existing expenditure structure in Illinois, (3) describes and analyzes the fixed foundation (Strayer-Haig), variable foundation, percentage equalization, and resource equalizer formulae used for equalization aid in the United States, and (4) analyzes alternatives in educational expenditure policy for Illinois. It is suggested that equalization formulae should include weighting for income and human resources because property valuation, the traditional measure of ability to pay, is becoming more equalized among districts. Although alternatives in expenditure policy are presented, no policy is recommended as best. (TT)