This report combines a theoretical study of state school aid programs with an empirical study of school districts' responses to such programs. The author's theoretical investigation of existing systems of general state aid to school districts suggests two propositions: school districts do not maximize an ordinary utility function in the light of conventional budget constraints, and school districts are not likely to spend more equally under equalizing percentage grant systems. An analysis of data gathered from observations of 923 school districts in five states supports the first proposition and validates a specific model of school district decision-making. In addition, the author suggests that the same data will serve to test the second proposition after certain specification problems encountered in the course of the analysis have been resolved. (Author/JG)