This paper employs data envelopment analysis (DEA) to study intergover
nmental transfers of revenue from central to local government, termed
local aid in the Commonwealth of Massachusetts. The pattern of transfe
rs is evaluated relative to DEA efficiency measures. The viability of
employing DEA for assessing state and city government efforts to meet
the unique needs of each community is illustrated using available data
for 53 of the cities and towns of Massachusetts for the year 1988.