The document is "the second in a series of reports which analyze the problems and effects of intergovernmental grants for education." The focus is on problems of "counting and locating" disadvantaged children who are to be served by Alementary and Secondary Education Act (ESEA) programs. Definitions of the poor for policy purposes, the geographic distribution of children eligible under ESEA, and the funding of the program are discussed within an economics frame of reference. Also, the rationale behind the ESEA criteria for eligibility is analyzed. (NH)