This report was submitted to recommend the passage of H.R. 3263, the Gifted and Talented Children and Youth Education Act of 1986, as amended. The concern of the bill was the establishment of a federal program to strengthen and improve the capability of state and local education agencies and private nonprofit schools to identify gifted and talented children and youth and to provide those individuals with appropriate educational opportunities. This "capacity building" effort would be accomplished by stimulating research, training personnel to serve gifted students, demonstrating effective techniques, and providing a national focal point for information and technical assistance. Need was seen for the legislation through an examination of the requirements and problems of gifted students, the inadequacy of existing programs, and the languishing federal role. An explanation of the bill includes its authorization and purpose; a definition of the population to be served; sections on the selection of grantees, authorized activities and private school participation; and requirements for the establishment of a National Center for Research and Development in the Education of Gifted and Talented Children and Youth, the appointment of an advisory committee, and a federal administration unit within the Department of Education. A cost estimate is presented. It includes an explanation of the basis of estimate and states that the inflationary impact is expected to be minimal. A section-by-section analysis of the bill concludes the report. (CB)