A study examined the experiences of local governments throughout the United States in implementing the public service employment (PSE) component of the Comprehensive Employment and Training Act (CETA). The study involved four rounds of observations (in July and December 1977, December 1979, and December 1980) of programs in 40 State and local jurisdictions. These observations indicated that in the period from 1976 through 1978 the PSE component of CETA not only worked, but worked well. Displacement, that is, the use of CETA job funds to pay for jobs that would have existed anyway, was found to be relatively low in this period. The researchers analyzing the data collected during the longitudinal study concluded that a public service jobs program narrowly targeted on the most disadvantaged workers, which is what the program was modified to do in 1978, is not an effective strategy. In their estimation, that modification reduced the incentive to make good use of the PSE funds for "real" jobs. It was recommended that policymakers dealing with the current workfare approach to welfare reform examine the strengths and weakness of the PSE component of CETA when developing future policy pertaining to welfare. (MN)