The required annual report on compensatory programs funded by the Elementary and Secondary Education Act, Title I, describes California's efforts in the first full year of operation. In general, the programs sought to raise reading and verbal performance levels, improve performance as measured by achievement tests, and also improve students' attitudes toward school and about themselves. Because of Congressional mandate, some of the funds were specifically earmarked for migrant children, youth in state and local institutions, and mentally ill and mentally retarded children. Findings, based on various measures, show that pupil achievement rate increased, with gains as high as three years. The achievement gap between advantaged and disadvantaged students seems to be narrowing. The most progress occurred in districts with the most comprehensive program focusing on a few selected goals. The major problems encountered were reduced appropriations and delays in funding, lack of qualified personnel, and misunderstanding about the purposes of Title I. (NH)