This paper presents findings of a study that examined the New Mexico school-finance formula. Specifically, the study assessed the adequacy of the enrollment growth factor (EGF) and its differential impact on New Mexico school districts that grow at different rates. An EGF refers to some type of weighting in a state's basic aid formula to reflect higher operating costs associated with increased student enrollment in a school district. The study examined the changes in enrollment patterns between 1986-87 and 1993-94 and identified 5 types of district growth: fast, moderate, down-up, mixed, declining, and others. It also examined changes in district teacher-pupil ratios by growth group and size and changes in districts' actual spending levels. Data indicate that growth funds had little to do with changes in the pupil-teacher ratios. It was also hard to determine what impact, if any, growth funds had and what need, if any, there is for such funds to be provided. A conclusion is that growth funds do not serve any real purpose as they are currently allocated. If continued, they should be targeted more carefully in the future, taking into consideration the individual characteristics of school districts other than yearly changes in enrollment. It is concluded that there is no research to support or refute higher operating costs for school districts with rapidly growing enrollments. Seven tables and two figures are included. A summary table compares the enrollment-growth finance formulas of other states. (LMI)