The first in a series of three reports by the National Advisory Council on Supplementary Centers and Services which analyze various components of ESEA, this document discusses reasons students drop out of school, reviews some of the methods being used in dealing with the problem in various states and local school districts, and offers several recommendations to help strengthen school systems to reduce dropping out. The report focuses specifically on the scope of the dropout problem, the development of a prevention project, the federal approach to dropout prevention, capsule reports of several ESEA Title III projects on general school improvement, youth development programs and various kinds of work study programs. The Council offers recommendations to reduce the number of students who leave school before they acquire those skills necessary to lead productive and satisfying lives. (Author/CJ)