A number of basic questions exist about the nature of the federal system, about the role education plays in that system, and about how that role should be expressed in policy. This paper examines the doctrinal, functional, and strategic meanings of the term "federalism." The author argues, first, that there is no doctrinal support for the notion that education is exclusively a state function, or that the federal government has overreached its authority by becoming involved in education. The federal structure has divided and dispersed power, precisely what it was designed to do. Secondly, functional interdependence is the central fact of federal-state-local relations in education and occurred because interdependence was necessary in order to ensure that federal purposes were carried out and that the purposes of state and local government would be taken into account by the federal government. Thirdly, the past errors of federal education policy have been errors of strategy, not errors of doctrine. Strategy errors include allowing the number of categorical programs to increase, allowing the rules and restrictions accompanying them to multiply, and allowing an adversarial relationship to develop between levels of government. (Author/MLF)