This study explores factors associated with the allocation of federal expenditures by states and examines the relation of the level of these expenditures to the level of income of each state. The allocation of federal expenditures is functionally oriented toward the objectives for which various government programs are established. The geographical distribution of federal expenditures, therefore, historically was considered to be a problem incidental to government activity. Because of this, relatively little attention has been given to the question of why some states receive more federal funds than others.1In addition, the implications of the pattern of allocation on income distribution among states have not been investigated intensively.