Presented is a two-part study which represents a broadly based effort to assess the consequences of federal compensatory funds being targeted toward elementary students showing low achievement rather than only to those who were first low income and then low achieving. Part 1 deals with the technical issues of suitability, feasibility, and cost implications of the use of performance criteria. Part 2 presents the fiscal issue of resource redistribution consequences of the use of performance criteria. Included in the findings are: (1) Variations in curriculum across states and to a lesser extent, among school districts within a state, raise complex questions regarding the practicality and meaning of any national measure of educational disadvantage at a given grade level. (2) Within states, the districts with currently low concentrations of Title I eligible students would gain funds, and those with high concentrations would lose funds. (3) A formula that would allow a school district to choose either the current Title I criterion or a performance criterion to calculate its Title I entitlement would aid educationally disadvantaged children of working and middle income families while not reducing funds to the children of poverty families, calculated at a national average cost increase of 25 percent. (Author/BJG)