School finance reform--traditionally based exclusively on school districts' access to funding--has been made difficult by fiscal retrenchment on one hand and the educational excellence movement on the other. Stating that school districts must consider the use as well as the availability of funds, this paper proposes a new definition of equity that encompasses both equality and excellence: "equal educational outcomes." After reviewing school finance research and litigation since 1954, the effects of recent retrenchment, and the educational excellence movement, the paper discusses means of linking excellence and equity and presents the New York City Board of Education's strategy for doing so: first, establishing a decision-making process that proceeds from general areas of agreement to specific programs; and second, opening communication between schools and outside organizations. Four actions reflecting this dual strategy are reported: (1) an attendance improvement program designed to reduce student attrition; (2) the city school chancellor's opposition to the intital state Regents' Action Plan; (3) a "mentoring program" in which adult volunteers work individually with high school students; and (4) a work experience program offering placement for both high and low achievers. (MCG)