THIS STUDY DEVELOPED AN INTEGRATED FRAMEWORK FOR THE ANALYSIS OF SPATIAL SPILLOVERS, HAND-IN-HAND WITH A SYSTEMATIC APPROACH TO THE CONCEPTS OF COSTS AND BENEFITS ARISING FROM PUBLIC SUPPORT OF PRIMARY AND SECONDARY EDUCATION. EMPHASIS WAS ON WAYS IN WHICH SPILLOVERS MAY AFFECT LOCAL DECISION-MAKING. ABSTRACT CONCEPTS WERE DEVELOPED AND APPLIED TO THE CLAYTON, MISSOURI, SCHOOL DISTRICT. ANALYSIS WAS MADE OF THE COMMUNITY COST SPILLOVERS OF THE SCHOOL DISTRICT WITH A GENERAL FRAMEWORK BEING DEVELOPED FOR COST SPILLOVER ANALYSIS. EACH OF THE SPILLOVERS OF COMMUNITY COST IS DISCUSSED IN DETAIL AND ANALYZED IN RELATION TO (1) LOCAL FINANCING THROUGH PROPERTY TAXATION, (2) FINANCING THROUGH STATE PERSONAL INCOME TAXES, AND (3) FINANCING THROUGH RETAIL SALES AND EXCISE TAXES. METHODS WERE DEVELOPED AND DISCUSSED FOR ANALYSIS OF IMPUTED OPERATING COSTS AND CAPITAL COSTS. CASE STUDY FINDINGS WERE THEN INTEGRATED WITH INTERCOMMUNITY COST SPILLOVER. THE LATTER PART OF THE STUDY DISCUSSED THE BENEFICIAL SIDE TO EDUCATION. SPECIFICALLY IDENTIFIED WERE THE MAJOR BENEFITS AND KEY CONCEPTS IN RELATION TO SPATIAL SPILLOVER MECHANISMS, SUCH AS MIGRATION AND FISCAL INTERDEPENDENCE. ALSO, BENEFIT SPILLOVERS WERE DISCUSSED IN THE FORM OF STUDENTS' INCREMENTAL EARNINGS AND OF THE CHILDCARE VALUE OF PUBLIC EDUCATION. A FRAMEWORK WAS DEVELOPED WITHIN WHICH INTERCOMMUNITY COST AND BENEFIT SPILLOVER ANALYSIS CAN BE CARRIED OUT IN AN INTEGRATED MANNER. FINALLY, THE INVESTIGATORS EXAMINED SOME OF THE POLICY IMPLICATIONS OF THE ANALYSIS FOR LOCAL, STATE, AND FEDERAL GOVERNMENTS. (HB)