THIS DOCUMENT DISCUSSES THE ELIGIBILITY REQUIREMENTS FOR TITLE III FUNDS OF THE ESEA, P.L. 89-10 NECESSARY TO MAKE THESE FUNDS AVAILABLE TO SMALL EDUCATIONAL AGENCIES. INCLUDED IS AN OUTLINE OF NECESSARY LEGAL DOCUMENTS AND ASSURANCES REQUIRED BY USOE. THE DOCUMENT POINTS OUT THE NECESSITY OF WELL-PLANNED PROJECTS INVOLVING BOTH OTHER EDUCATIONAL AGENCIES AND ON-GOING PROJECTS. THE PROPOSED PROJECTS ARE FUNDAMENTALLY TO BE FOR DEMONSTRATION PURPOSES TO PRESENT INNOVATIVE PRACTICES TO NEIGHBORING SCHOOL DISTRICTS. TWO TYPES OF PROPOSALS ARE CONSIDERED, THE PLANNING GRANT TO STUDY POTENTIALS FOR FURTHER FUNDING AND THE OPERATIONAL GRANT FOR THE ACTUAL ESTABLISHMENT OF DEMONSTRATION CENTERS. SAMPLE COMPLETED PROPOSALS FOR EACH ARE INCLUDED. ADDRESSES ARE GIVEN FOR SOURCES OF FURTHER INFORMATION. THIS GUIDE IS AVAILABLE FOR $2.00 FROM THE NATIONAL EDUCATION ASSOCIATION, 1201 SIXTEENTH STREET, N. W., WASHINGTON, D.C. 20036. (JM)