The State of Washington received a Chapter 2 award of $8,224,052.00 for the school year 1986-87, a decrease of 3.3 percent from 1985-86. Of that award, $1,249,323.00 (20 percent) was used by the Superintendent of Public Instruction to identify and meet critical education needs in the state and provide technical assistance to local school districts. Planned expenditures and student services for basic skills programs declined over the past four years, but the amount of expenditures for special projects rose for the fifth consecutive year. These special projects included the following: (1) a gifted education program; (2) videotapes for the hearing impaired; (3) a computer education program; and (4) a counseling program. Actual Chapter 2 expenditures for 1986-87 totalled $6,682,377.00, or 90 percent of the funds received. The two largest categories of expenditure were for instructional materials, 28 percent, and capital outlay, 25 percent. Most of the capital outlay was in the learning resources and teaching activities areas, and large expenditures related to salaries primarily reflect staff development substitute costs. The activities with the greatest emphasis were learning resources, 39 percent, and teaching, 44 percent. A special survey on gifted education activities shows that 2.7 percent of Chapter 2 funds were used to supplement local and state funding for programs whose participants were comprised of 7 percent minority group students. Budget and statistical data are included in eight tables. (FMW)