This document contains findings of a study conducted in response to a proposal that would merge the current Departments of Education and Labor. The proposal would also merge the Equal Employment Opportunities Commission (EEOC) with the two departments. Fiscal year 1995 budget data were used to analyze the congressmen's draft proposal and to determine the funding and staffing impact of the estimated cost savings. To realize administrative cost savings, the proposal would: (1) eliminate some programs currently administered within and outside of the existing Departments of Education and Labor; (2) eliminate or reduce duplicative departmentwide management functions; (3) reduce operating budgets for selected programs; and (4) consolidate education and job training programs. Administrative cost savings could total about $1.65 billion--$990 million in compensation and benefits, $530 million in other expenses, and $140 million from the administrative costs of eliminated programs. If the reduction in administrative spending occurred in fiscal year 1996, about 3,500 positions would need to be eliminated to achieve the $990 million in 5-year savings from compensation and benefits. However, about 1,100 additional positions may need to be eliminated to cover the costs of a reduction in force of this size. A phased-in approach to downsizing is recommended. Eleven tables and 30 figures are included. Appendices contain office profiles of the proposed Department of Education and Employment; the impacts of proposed cost reductions; a list of programs that may be consolidation candidates; comments from the Departments of Education, Labor, and EEOC; and a list of selected GAO products on education, labor, and EEOC-related issues. (LMI)