In the 1990s, Tennessee transformed its educational finance landscape through a series of equity litigation known as "Small Schools v. Tennessee I, II, and III," yet there has been no longitudinal evaluation of the efficacy of the changes in the state's education finance mechanism or the concomitant expenditure distributions. Therefore, this article examines the levels of horizontal and vertical equity resulting from Tennessee's Basic Education Program from 1994 to 2003. This study provides strong evidence contradicting studies that claim education finance equity in Tennessee has improved. Specifically, financial resources for teacher salaries, current instructional expenditures, and support services for students, instruction, and administration still exhibit high levels of inequity. Two findings are even more startling: Local expenditures per pupil have the strongest influence on spending categories of all variables examined, and local expenditures per pupil and teacher salary levels decrease as the percentage of children in poverty increases. Therefore, if education finance equity and equality of educational opportunity are to remain a primary policy goal, the Tennessee school funding mechanism--and the fiscal capacity index specifically--must be reconceptualized and restructured. (Contains 14 tables.)