The purpose of the present paper is to measure the effectiveness of a differential add-on grant program, Title I of the Elementary and Secondary Education Act. The evidence presented shows that this kind of grant program does increase local spending by much more than would be expected of a traditional block grant. The point estimate of the national sample is that 72 cents of each dollar of Title I funds is used to increase school spending. Although the additional specifications that have been estimated suggest that the effectiveness of Title I aid in stimulating local spending may vary among different types of school districts, the estimates support the conclusion that between 50 and 100 percent of the total Title I budget is added to local school spending. These results support the idea that differential add-on grants do operate in a unique way that deserves attention in the general analysis of intergovernmental aid. It would be valuable to examine other federal and state aid programs to assess whether the effectiveness of block grants in other fields is consistent with this distinction between differential and general add-on grants. (Author/IRT)