This study presents California's recent history of public revenue funding for elementary and secondary education and projects the state's educational and fiscal needs for the next five years. California has experienced a roller-coaster pattern in funding support since 1978, the year of Proposition 13. School financing declined from a position of national leadership in the 1960s to below the national average--a level inadequate for the increasingly high-technology economy. The state began working toward improved educational quality in 1983 by demanding more of teachers and students and by providing new funding, achieving a constant funding level during 1983-85. The second section analyzes educational issues for the next five years: implementation of reform, changing student demographics, high school dropout rate, decline in quantity and quality of people entering and remaining in teaching, and capital construction. The final section summarizes revenue needs for these issues, including growth projections and strategies for raising revenue. In spite of the beneficial effects of the reform, the present challenge is to maintain a high priority for education, and to continue additional funding. (CJH)