In describing how the present Texas school finance system actually works, this report considers the historical development of the finance system, provides a breakdown of how money is allocated among and between school districts, and examines the problem of who pays for the schools. The foundation program, other State aid, enrichment, and the influence of federal aid are considered in detail, as are proposals for equalizing resources among districts and improving equity among taxpayers. Two appendixes present data for 1970-71 staffing rations, income and expenditures of Texas school districts by source and purpose; and on the taxing effort, yield, and ability of Texas school districts. (Author/DN)