Past federal educational policy failures can be traced to three sources. The first is unrealistic expectations about schools' capacity for social reform, about the time needed to produce significant change, and about the degree of federal leverage over local school district behavior. The second source is the misconception that improving educational performance requires innovative educational technologies, missing "inputs," and a project focus for federal funds. Third, federal programs have suffered from poor implementation. Premises about the operation of state education agencies (SEAs) and local school districts gleaned from research literature suggest several recommendations to help make federal educational policy more effective in promoting local change. (1) The federal government should establish an Area Cooperative Program that would provide assistance to school districts for the implementation of federal programs. (2) The federal government should establish a district-based professional growth program for the purpose of developing school districts' capacity to provide staff development on a regular basis. (3) The federal government should revise the Elementary and Secondary Education Act Title IV to strengthen the administrative capacity of SEAs to more effectively influence district performance. (4) Federal agencies should develop accounting and programmatic control procedures that permit the integration of federal and state (or local) categorical funds. (Author/JM)