The function of this analysis is to explore the degree to which the level of state and local government spending is influenced by the level of per capita federal aid when states are analyzed, not in aggregate, but by region of location. The data were taken from the Census of Governments annual report on governmental finances and was analyzed statistically using a multivariate technique where a set of qualitative regressors was introduced to account for region of location. The results of the work indicate strong regional disturbances in the expenditure-grants function, and do not reveal a strong discernible trend toward interregional equalization of public spending.