Discusses the role of the national values of efficiency, choice, and equity in the adoption and implementation of the federal education block grant program and the negative effects on school desegregation. Urges policymakers to consider policy goals, and not just policy instruments, when considering future proposals. (FMW)

Defines the block grant concept and outlines the consequences of the financial freedom offered by block grants from both microeconomic and macroeconomic perspectives. Considers effects on institutional autonomy and economic efficiency. Recommends combining marginal cost pricing with formula-matching block grants to support decentralized education.…

Chapter 2 of the Education Consolidation and Improvement Act (ECIA) reduced and redistributed federal aid to education, moving funds from targeted areas of need to all areas regardless of need. States were unable to make up for significant losses in aid sustained by local districts. (TE)

In 1984 the Education Department (ED) began to monitor state education agencies' (SEA) administration of the education block grant known as "Chapter 2." ED staff visited 21 states, the District of Columbia, and Puerto Rico and found many serious problems among the SEAs and local education agencies (LEAs). The problems are divided into…