This article examines recent trends in the allocation of education dollars across school districts, investigating in particular the impact of federal dollars on school funding disparities. Using both the coefficient of variation and the range ratio to evaluate spending disparities, this article estimates that over the 1990s, funding disparities within states declined by about 8-15%, whereas disparities across states declined by 22-25%. Among all U.S. school districts, school funding disparities are now at their lowest level since researchers began measuring them. Yet federal dollars have played a very small role in reducing funding disparities, and they played virtually no role in the reductions in disparities that occurred in the 1990s. The article argues that federal education dollars are both too few and too weakly targeted to significantly redistribute education dollars. Given the national emphasis on student performance coupled with the persistence of uneven student outcomes, the article concludes that the time is right to rethink how federal dollars can best promote the goal of school funding equity. (Contains 2 tables, 6 figures and 9 footnotes.)