This paper describes the development and validation of an indicator of educational need which would be suitable for guiding decisions concerning resource allocation to educationally disadvantaged schools in Australia. The data employed were drawn from two sources: data describing a wide range of student characteristics (literacy and numeracy test scores, home background information, teacher ratings of classroom behaviour, etc.) which were collected from national samples of 6000 10-year-old and 6000 14-year-old students, and census data describing the characteristics of the census collector's district in which each sample member lived. Stepwise multiple regression was used to combine the census information into an indicator which was highly correlated with school mean achievement scores. An assessment of the performance of the indicator was made in terms of Accuracy and Leakage coefficients. These coefficients provided objective measures of the precision with which resources have been delivered to those students who were in most need of assistance.
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