This publication is intended primarily to aid state departments of education in formulating a state policy regarding alternative approaches in education. Section 1 defines and describes public and private educational alternatives and addresses the questions of why and for whom educational alternatives are created. In addition, it discusses the types of problems and costs that are typically encountered by alternative programs. Section 2 identifies four different positions that a state education agency might adopt toward educational alternatives and then discusses the policy implications of each position. The four positions that are examined include (1) encouraging the growth of alternatives by actively soliciting legislative, financial, and community support; (2) supporting local alternative programs by offering technical assistance and disseminating useful information; (3) maintaining an attitude of ambivalence; and (4) discouraging the growth of alternatives by creating regulations that impede their development. Included in the appendix are short descriptions of 24 alternative educational programs in New Jersey and a copy of the Connecticut State Department of Education's policy on the development of educational alternatives. (Author/JG)