This document presents the policy guidelines to be observed by the New York State Library in the administration of Federal Library Services and Construction Act (LSCA) funds. The first section is a general policy statement which covers priorities; the relationship between federal and state programs; the application review process; eligibility for participation; administration, planning, and evaluation; consultants; publications and productions; expenditure of funds; audits; conference travel; and membership/affiliate costs. Policies for Title I funds for public library services are described in the second section, including eligibility and other criteria for public library systems, major urban resource libraries, institution library services, and libraries for the blind and physically handicapped. The third section refers the reader to another source for guidelines for Title II funds for library construction, while the fourth covers policies for Title III funds for interlibrary cooperation and resource sharing, including the purpose, eligibility, criteria, and specific projects. Appended materials include information on the reimbursement policy and compliance audit costs for LSCA, and guidelines for Title III funded retrospective conversion projects. (MES)