Although State and local governments fill a strategic role in the area of education, the Federal government provides leadership in research and development and financial support. Federal financial support should be broadly allocated in three basic ways: (1) Designated block grants which give each State maximum flexibility, (2) categorical aids for the support of underdeveloped functions or special needs, and (3) research and development funds. States must commit themselves to a thorough overhaul of their own structures and practices in educational finance to meet future educational needs. A perspective which permits the overall appraisal of the needs and the progress of education is a unique feature of Federal participation in the educational system. The overriding mission of the Office of Education is to be a stronger advocate for change and relevance in education. (MLF)