The guiding idea behind regional educational arrangements has changed from regulating and controlling the activities of local school districts to providing specialized services that local districts could not undertake on their own. This change has implications for finance that center on the method of finance flow--whether funds come from local school districts' own tax sources, regional taxing, higher levels of government (federal or state), or categorical grants from the state through the local district. Financing models are developed that take into consideration the four sources of funding and relate them to the extent of local district participation, the nature of the services to be provided, incentive features, and the extent of equalization provided. Recommendations are presented based on a consideration of the four models, a review of regional financing practices in other states, and consultation with Connecticut educators. A three-tier financing system is suggested. (Author/IRT)