In response to a request by Congressman Henry Waxman, the General Accounting Office (GAO) examined the implementation of legislative requirements that states set aside a percentage of their Alcohol, Drug Abuse and Mental Health Services Block Grant funds for services to targeted populations, including women substance abusers and underserved mentally ill children and adolescents. GAO obtained data from state agencies; a total of 19 providers who delivered services to the targeted populations; and 278 state- and local-level interest groups involved in alcohol, drug abuse, and mental health issues in California, Colorado, Kentucky, Michigan, Mississippi, New York, Texas, and Vermont. The results revealed that the eight states studied used a variety of procedures to collect information about program needs. In most cases, states allocated their funds according to historical trends or to maintain existing service delivery systems, rather than relying on the results of their needs assessments. The federal requirements to set aside funds for targeted populations promoted a minimum level of spending for new or expanded services to target groups. In 40% of cases, the states increased their commitment to provide required services. In remaining cases, states addressed requirements by either using projects they had already planned or by passing the responsibility for the requirements to local service providers. (NB)