Federal education policy preferences of the Reagan Administration include both procedural and substantive elements. The overarching procedural policy is devolution--the transfer of the authority and responsibility for education policy and program development from the federal to state and local levels. Federal activities intended to advance devolution are decentralization, deregulation, and diminution. Decentralization advances devolution by formally transferring the authority for implementation of federal programs, but not the programs themselves, from federal agencies to state and local education agencies. Decentralization occurred with the enactment of the Education Consolidation and Improvement Act of 1981 (ECIA) that established the block grant programs. Deregulation was achieved by constrained enforcement and revoking of regulations. Diminution was accomplished through rescissions and reductions in the federal education budget. Evidence to demonstrate the impact of these factors on state and local agencies is focused on effects that are symbolic, organizational, environmental, substantive, or procedural. Documentation sources include official governmental publications, periodical coverage of federal and state educational policy, publications of policy analysts and agencies, and research studies. Appended are 33 references. (MLF)