This document summarizes State Education Agencies' (SEA) 1985-86 State Performance Reports for Chapter 1. These reports provide data on Local Education Agency (LEA) and State Agency Neglected or Delinquent compensatory education programs, in terms of the size of the population of educationally deprived students served, the characteristics of that population and its achievement rates, staffing utilized, mix of services provided, and funding. Two major changes are reflected in this year's reports. First, as a result of the impact of the Aguilar v. Felton decision, there has been a dramatic drop--31 percent--in the number of nonpublic school students served by the LEA programs, from over 184,000 the previous year to 127,922. This decrease covered every grade span nationwide. Aggregate declines were reported by 46 states and the District of Columbia, and in 16 states dropoffs of 50 percent or more were reported. Second, all public participation and staffing figures for the years 1978-80 through 1985-86 have been revised to account for California's inclusion of data on students enrolled in the state's own compensatory education programs. Despite Aguilar V. Felton, the total number of Chapter 1 participants increased slightly. Information on the following aspects of Chapter 1 are provided: (1) services rendered; (2) staff; (3) participant composition; (4) achievement; (5) funding; and (6) State Agency Neglected or Delinquent program participants. Appendices discuss the methodology and provide additional data. Data are presented on 63 tables and figures. (BJV)