The General Accounting Office reviewed the overseas dependents school system to determine how schools for children overseas compare with schools in the United States in the areas of teacher salaries, student-teacher ratios, and cost of operations; if costs can be reduced; and whether the Department of Defense is complying with the congressional directive to centralize management. Teacher salaries and the student-teacher ratios in the two school systems compare favorably, but overseas schools incur costs that are unique to them and not all of these costs have been identified and reported. In some countries costs can be reduced by employing more United States citizens rather than foreign nationals primarily because of additional tax revenue from the incomes of citizens. It was recommended that the Office of Dependents Schools revise functions assigned to school officer personnel; identify and report all costs of operating the schools; set up a new accounting system; ensure that cost and budget information is reliable; and initiate programs to employ more United States citizens and dependents and find alternative means of providing bus transportation that would reduce overall costs of overseas schools. (Author/IRT)