The National Council on Educational Research (NCER), and its parent organization, the National Institute of Education (NIE), were established by law in 1972. NCER functions as an advisory arm to NIE, by establishing general policies; recommending programs to strengthen educational research and to disseminate and implement research findings; conducting research; and preparing annual reports on the current status of educational research and on the activities of NIE. During 1975, NCER reviewed the 1976 NIE budget proposals, based on the priorities established by NCER for the continued evaluation of NIE programs and products, and appointed consultants to study NIE's funding policies and its role in the development of a national educational research and development system. In this annual report, NCER has reviewed NIE's programs, which include: (1) basic skills; (2) educational equity; (3) education and work; (4) finance and productivity; (5) school capacity for problem solving; and (6) information dissemination and educational resources. A list of organizations performing research and development in education and a review of NIE's 1975 expenditures are appended. (MH)