Abstract
The median-voter and budget-maximizing bureaucracy models imply different effects from intergovernmental aid. In this article, the author uses data from an ambitious school district equalization program in Connecticut to test these models. Finding no clear winner in terms of explanatory power, he uses the results of both models to examine the impact of the equalization aid. The estimated models yield a mean price elasticity of public school expenditure of -0.39 and income elasticities of 0.49 and 0.57 for the median-voter and bureaucracy models, respectively. Simulations indicate that the Connecticut school finance equalization and Education Enhancement aid resulted in a reduction in the standard deviations of per pupil spending across districts of 29% to 33% and halved the standard deviation of net school mill rates.
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