The report, covering 1965-68, deals first with a program entitled Improved Preparation for Culturally-Deprived Rural Children, which was designed to improve reading skills of elementary school students. Background of the Western States Small Schools Project for New Mexico is described, as well as how Carrizozo Public Schools were selected for the program. Roles of public school personnel, State Department of Education staff, and the Ford Foundation are then presented. Criteria for selection of a teacher to participate in the program are given, and the progress of the first 2 years is discussed. Plans for the third year complete the first part of the report and become the outline for the Carrizozo Reading In-Service Program, the goal of which was to make every teacher in the Carrizozo district (from primary through high school) aware of, and practice, skills of diagnostic teaching to improve students' reading comprehension. Consultants were provided by the Reading Research Center at New Mexico State University. Objective program evaluation by pre- and post-program tape recordings revealed, for example, that teachers were able to elicit higher level responses through use of higher level questioning behavior at the end of the program. (Appendices are not included due to marginal legibility.) (BD)