Part of a three-volume report on the effects of school finance reform, this volume examines the effects of reform on Michigan school districts' budgets from 1971 to 1976. Econometric models were used. Researchers found a very small "price" effect--an elasticity of -.02. The data provide no evidence that state matching grants stimulate school district expenditures enough to be a useful policy tool. It was also found that state block grants exert a very small influence on school district expenditures. Results imply, however, that expenditures are increased by 32 to 38 percent of the amount of state or federal categorical aid. Researchers found significantly higher expenditures in school districts serving populations that are wealthier, higher income, employed in higher-level positions, more minority, and more urban. Expenditures are significantly lower in school districts serving populations tending to live in owner occupied housing and tending to be in poverty. (Author/JM)