Although Sri Lanka ‘s educational achievements, in terms of traditional indicators, are praiseworthy the equity and quality aspects of education have lagged behind over the years. The 1997 education reforms, which are now being implemented, attempt to improve upon the inequities in the education system by various policy measures. Anecdotal evidence from preliminary interviews suggests that the educational resource availability can vary across schools, even when equal amount of per student financial resources are disbursed. This is especially so, when schools are given the power to identify resource needs and procure them, mainly due to differences in management capacity of schools and the constraints faced by them due to limited market access. Keeping this in mind, the study also analyzes the factors affecting financial resource utilization under the Education Quality Inputs (EQI) scheme, recently introduced in Sri Lanka.