Chapter 2 of the Education Consolidation and Improvement Act (ECIA) of 1981 consolidated 29 federally funded categorical programs into an education block grant available to all state education agencies and, through them, to school districts. Chapter 2's legislative purpose was to transfer authority and responsibility to state and local education agencies. This report summarizes evaluation findings for activities conducted with Chapter 2 state-purposes funds for 1988-89. The introduction is followed by a description of the allocation and use of state-purposes funds and a discussion of the evaluation of six selected state-purposes activities, which include programs for parent involvement and high-risk youth, the Constitutional Rights Foundation, Federal Teacher Centers, the History Project of California, and Superintendents Academy. Strengths of the funded services include the development of course and curriculum models, training programs, a statewide parent involvement initiative, hands-on teacher and student activities, and local in-kind support. The Governor's Advisory Committee recommends that future activities include instruction of nontraditionally taught languages, a nonpublic schools program, and minority education improvement. Two tables are included. Appendices provide detailed information on expenditures and activities. (LMI)