In this statement, the Senior Social Scientist of the Rand Institute on Education and Training testified that improving the education of students from low-income families is a difficult challenge. Low-income students suffer more from the related influences of lower family income, family education level, and student achievement than more affluent children, yet attend poorer schools. The RAND Institute on Education and Training undertook an analysis of federal policy options in the Chapter 1 programs to improve education in low-income areas. The study found that while Chapter 1 benefits many children, it improves education in low-income areas only marginally. Chapter 1, as currently funded, cannot address the growing needs of low-income schools. Because its funds are so broadly distributed, Chapter 1 cannot meet the needs of the poorest communities and schools. Large inequities in education spending exist among states, localities, and school districts despite Chapter 1. Chapter 1's broad mandate makes it difficult for the program to meet any of its goals for low-income students. The testimony recommended increasing Chapter 1 funding for the nation's lowest-income school districts and schools, and reformulating Chapter 1 to encourage fundamental improvements in the quality of education for low-income children. Also, a separate general-aid program should be used to provide incentives for equalizing overall funding within states. (JPT)