The impact of the Chapter 2 block grant on large cities and districts was assessed through a comparison of school district funding and spending in the two years before and the two years after block grant implementation. In terms of fiscal effects and patterns, it was found that: (1) the 28 districts studied experienced smaller cuts in the two years after implementation than in the year before it, (2) substantial funding cuts did occur in some of the districts, and (3) second year block grant funding levels showed considerable stability (with some exceptions). In the area of desegregation, 16 of the 24 districts that had Emergency School Aid Act (ESAA) funds in fiscal year 1981 spent at least part of their Chapter 2 funds on desegregation-related activities in 1983-84. Overall, desegregation-related projects accounted for 19 percent of Chapter 2 funding. The money spent on such projects in 1983-84 was, however, only approximately one-quarter of the amount spent two years earlier with ESAA funding. Finally, approximately 14.3 percent of the total Chapter 2 allocations in 1983-84 provided services for private school students; it appears that this was proportionately more than under under the antecedent programs. (CMG)