This report based on data collected from 17 school districts in eight states throughout the country, examines how local school districts allocate Chapter 1 and related resources to public school and private school students and describes the distribution of Chapter 1 resources. The report is organized into eight chapters. Chapter 1 presents an overview of the study and summarizes major findings. Chapter 2 presents the conceptual framework and the methodology used to collect information. Chapter 3 examines the composition of chapter 1 budgets and the impact of changes in Chapter 1 allocations on the portion of the budget devoted to instruction and administration. Chapter 4 describes the mechanisms that school districts use to determine the breadth and intensity of Chapter 1 instructional services. Chapter 5 shows how districts distribute resources across Chapter 1 schools and relates the distribution of Chapter 1 resources to the economic and educational characteristics of participating schools. Chapter 6 describes how districts allocate Chapter 1 resources to private schools and the impact of the Felton decision, prohibiting delivery of chapter 1 services on the premises of religiously-affiliated nonpublic schools, on these policies. Chapter 7 examines the interaction of Chapter 1 and other special needs programs. Chapter 8 contains the major conclusions of the study and implications of the study's findings for federal policy. The major finding was that the districts sampled employ a wide range of Chapter 1 services and exhibit considerable variety in the way they allocate Chapter 1 resources, and the factors which account for this variability are enumerated. (KH)