Federal law now allows billions of education dollars, for a variety of programs, to go to states under a single, consolidated state plan. The goal is to develop integrated, coordinated plans for meeting the requirements of the various programs in a way that best serves children's educational needs. Achievement of that goal depends a great deal on the terms that the U.S. Department of Education (ED) established for developing and reviewing the plans. This document contains a review, which was conducted by the Center for Law and Education (CLE), of the consolidated plan process to date. CLE studied the legislation and legislative history for consolidated state planning; analyzed the proposed and final criteria for preliminary consolidated state plans, reviewed the plans submitted by the states and ED's responses to those plans; interviewed selected state officials involved in planning; analyzed the proposed and final criteria for final consolidated state plans; and attended ED-sponsored state meetings. The review found that the process set up by ED is not adequate to the task of developing a consolidated plan process. Key findings include the following: (1) Because of ED's lack of guidance, billions of federal dollars for programs that are critical to the education of children are being spent this year (1995-96) without any real plan at all; (2) while there will be plans for 1996-97 and beyond, those plans also are likely to fall short of meeting the goals and requirements of law or the needs of students; (3) the guidelines undermine, and are inconsistent with, key provisions for ensuring equity in education and (4) parents and the public are excluded from meaningful involvement in the plan. CLE is concerned that the rhetoric of "flexibility" and the fear of "mandates" have become so pervasive that key provisions for program quality, equity, and participatory planning go unimplemented and that clear, continued patterns of low achievement, disparities in the education provided to disadvantaged children, and lack of real parent involvement go ignored. Stripping federal programs of adequate structure and oversight--of the provisions designed to promote and ensure program quality, equity, and participatory planning--does not promote reform. Rather, it protects business as usual in education to the detriment of children and the nation. (LMI)