This report reacting to three papers presented at the conference on compensatory education with special reference to Chapter 1 of the Education Consolidation and Improvement Act of 1981 focuses on a series of topics pertaining to the relationship between compensatory education and regular education. The report begins by summarizing the conclusions of the three papers. Next it explores possible relationships between compensatory education and regular education, and draws a distinction between the commonalities shared by most American schools on the one hand and "effective regular education" on the other. Then the report considers the following three approaches for relating compensatory education resources to regular education and the promise of each for creating the conditions required for all students to learn certain basic skills: (1) compensatory education as remediation; (2) compensatory education as an alternative program; and (3) compensatory education as an integral part of adaptive education. Finally, the paper comments on the various explanations offered by the conference as a whole as to why Chapter 1 has had only modest success, and considers two alternative implications for Federal leadership: an expansion of current program improvement activities; or a more far-reaching program of research, development, and dissemination, which incorporates current improvement activities, but challenges directly current beliefs and school structures. A list of references is appended. (PS)