Over a four year period, the Continuation Education System Development Project will develop a practical instructional system capable of continuous identification and efficient response to the critical instructional needs of individual continuation high school students, or those who drop out or are pushed out, in La Puente, California. The first part of this report on instructional needs discusses procedures to determine: (1) the "real world" performance requirements that students will meet upon leaving high school, and (2) the present capability of the students to fulfill these requirements. A critique of procedures is given. A total of four categories of instructional needs were found: (1) home and community, (2) communication skills, (3) computation skills, and (4) other skills (personal, social). Specific skills needed are: (1) read, write, and spell at about the eighth grade level, (2) perform arithmetic functions, (3) follow directions, and (4) get along with others. (See CG 004 283 and CG 004 401). The research reported herein was funded under Title III of the Elementary and Secondary Education Act. (Author/KJ)