This third annual report of the San Francisco State College Teacher Education Project (STEP) contains six sections: (1) a general descriptive summary of the three-semester 1967-68 program to train K-9 teachers of disadvantaged children; (2) description and evaluation of instruction and curriculum including student recruitment, objectives, staffing and coordination of off-campus teaching centers, inservice training of cooperating personnel, curriculum resources development, field laboratory experiences including internships, and formal instruction in sociology and psychology and in techniques and curriculum materials; (3) description of small-group counseling for development of self and professional images, (4) report of the evaluation and research phases; (5) report of the community relations program including a "New Careers" Work-Study program and a community educational services program, (6) discussion of changes and projections for the future, and a list of instructional packages produced and available for use. Included in the appendixes are miscellaneous samples of program materials and seven measurement instruments developed for use in STEP including the STEP Observation Schedule (for classroom behavior) with manual, the Teacher Adaptability Scale and Opinion Survey for Teaching the Disadvantaged, and a cognitive battery and self-esteem measure for grade school pupils. (JS)