We examine in depth the functional dependence of computed core-electron binding and excitation energies based on a total-energy difference approach within Kohn-Sham density functional theory. Twenty-seven functional combinations were studied using a database of reliable experimental data on 18 molecules. The computed core-electron binding energies are largely dependent on the choice of exchange functional. The term value of the first resonant excited state and energy differences between the lowest core-excited states are, however, quite insensitive to the choice of functionals since the errors due to the core-region cancel out. Using these results we define a different exchange functional, which mixes two functionals designed by Perdew and Wang (PD86 and PD91), with the best results for both excitation and binding energies obtained for a mixing ratio 60:40 between these. We also reexamine the relativistic corrections for inner-shell excitations. (C) 2004 American Institute of Physics.