The No Child Left Behind Act (NCLBA) established 2 flexibility demonstration programs--State- and Local-Flex--that allow up to 7 states and 80 school districts to redirect up to 100 percent of certain NCLBA programs funds. The General Accounting Office (GAO) was asked to determine factors that affect states' and districts' decisions about whether to apply for the programs and to determine the extent to which the Department of Education publicized, provided guidance, and established a process to review and award programs. GAO conducted a study, using telephone interviews, with officials in 22 states and 37 school districts, and site visits to 2 of the 4 applicants. The 1 applicant for State-Flex and the 3 for Local-Flex cited 2 main reasons why they applied: (1) the commitment of leadership and (2) the ability to develop goals and strategies to improve student achievement. States did not apply because few perceived benefits and because of conflicts dealing with other NCLBA requirements. School districts did not apply primarily due to lack of awareness of the programs. GAO recommends that the Department of Education better target information to states and districts in the best position to apply for additional flexibility. (Author/WFA)