The purpose of this study was (1) to examine the pupil transportation program in North Carolina relative to those used in the fifty states, (2) to examine variations in pupil transportation costs among North Carolina’s school districts, (3) to identify factors related to variations in per pupil transportation costs and (4) to compare North Carolina’s present pupil transportation funding method with an alternative cost effective method using widely recognized principles of pupil transportation finance. The research design for this study was implemented in four phases. First, pupil transportation information was collected from all states in order to review the current state pupil transportation programs. Second, pupil transportation literature was reviewed to identify cost factors, fiscal models and evaluative criteria. Third, pupil transportation data for the 1990-91 school year were collected from all school districts in North Carolina and analyzed. The best predictor(s) of cost was determined by using appropriate statistical analysis (such as correlation, stepwise multiple regression analysis and scattergrams) to examine the relationship between per pupil transportation costs (dependent variable) and various independent variables that contribute to variations in cost. The best predictor of cost was used in an alternate funding formula. Finally, computer simulation was used to analyze the fiscal implications of the alternate formula on the school districts and the state. Based on the results of this study, three recommendations were offered. First, North Carolina should adopt a cost effective pupil transportation funding model using linear density as the primary determinant of funding. Second, North Carolina should conduct a study that would explore the potential savings that could be generated by school districts cooperating in the delivery of pupil transportation. Third, North Carolina should adopt the alternate equation (regression equation utilizing linear density as the cost predictor) for use in distributing pupil transportation funds. / Ph. D.