The 1981 Education Consolidation and Improvement Act (ECIA) is part of the Reagan Administration's "new federalism." This study, based on personal interviews with officials in nine states, examined decisionmaking as state officials planned for their new responsibilities under the ECIA. State departments of education, state legislatures, and, in some cases, state boards of education will play a larger role in decisions about fund allocations for the ECIA than in the past. In most states, the block grant portion of the law will result in a redistribution of funds away from urban areas and low-income students, although some states have attempted to minimize this effect. Decreased levels of funding for ECIA programs will reduce services offered by most state departments of education. Previous federal financial support for research and development and for desegregation is no longer earmarked. Finally, many state officials find their decisionmaking flexibility constrained by the absence of compliance standards in law or regulation.