An interesting econometric problem is to decide whether any given state in the budget process is an example of the political or the bureaucratic model of budgeting. The current paper presents a method of deciding this question and then uses it to study local governmental spending on education. The method is based on the important difference between the effect of intergovernmental aid that is implied by the political budget model and by the bureaucratic model. According to the bureaucratic model, the effect of aid on each category of education input depends only on the change in total educational spending induced by the aid. In contrast, the political budget model implies that the overall expenditure increase is the result of separate decisions on each of the expenditure categories and that the changes in these expenditure categories will depend on the form of the aid. Evidence from examination of data from 105 Massachusetts school districts shows quite clearly that the categorical budgets of the school districts are determined by a political process rather than by the bureaucracy of the school systems. The pattern of educational expenditure as well as its total is thus directly responsive to the preferences of the electorate. (Author/IRT)