This paper employs data envelopment analysis (DEA) to study intergovernmental transfers of revenue from central to local government, termed local aid in the Commonwealth of Massachusetts. The pattern of transfers is evaluated relative to DBA 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. © 1993.