Using a case study approach, an eighteen-month review assessed the implementation of the Youth Employment and Demonstration Projects Act (YEDPA) in thirty-seven prime sponsorships in twelve states. Most states showed progress in establishing a role for local educational agencies in the prime sponsor employment and training service matrix. But too little time or incentive has limited union and private employer involvement. To meet developmental needs of youth, sponsors have paid more attention to systematic sequencing of services, emphasized program quality, and tied manpower to education through collaboration with local schools. Despite flexible program targeting, cost and reporting disincentives have deterred special needs group identification. A crisis climate has hindered knowledge development by not permitting time for activities without immediately usable pay-offs, while the maintenance-of-effort mandate has proven hard to enforce. "Sticks" (statutes and regulations) and "carrots" (financial incentives) have failed to assure that new programs serve intended federal objectives. Furthermore, uncertainty about funding levels, regulations, and the law itself lessen federal block grant program effectiveness. (Recommendations are made for improving YEDPA program operations and considerations when enacting and implementing new legislation. The ten case study areas are summarized.) (YLB)