| Abstract: | This paper offers some evidence on the extent of substitution by local educational agencies of federal and state revenue for local revenue. Employing data for all school districts in South Carolina for 1978 and 1982, it is shown that each additional dollar of federal aid reduces local avenues (on average) by between 25 and 35 cents, implying that while local revenues are stimulated by federal aid, some of the latter is used in the form of tax relief. State aid appears to be more stimulative, especially for 1978 and 1982, although preliminary data for 1985 indicate some local substitution. The stability of the regression coefficients from 1978 to 1982 is also explored. |
