This paper formulates a comprehensive model of resource allocation in a local public school district. The theoretical framework specified could be applied equally well to any number of local public social service agencies. Section 1 develops the theoretical model describing the process of resource allocation. This involves the determination of the demand for school inputs, the salaries of school personnel, and the level of local educational expenditures. Section 2 is a presentation of the empirical results of estimating these sets of equations on a sample of California public school districts. Some of the issues investigated in the empirical analysis include the price and income elasticity of the demand for teachers, the effects of tenure on the demand for certain teacher quality characteristics, the determinants of the equilibrium salaries of teachers and public school administrators, the differences between the effects of changes in community income and federal and state grants-in-aid on local school spending, and the compensatory effects of grants-in-aid on school spending, the demand for school inputs, and salaries of school personnel in high and low income school districts. (Author)