Few national level programs in the United States directly support both local development and education/training. Although both are needed to accomplish the desired goals of economic stability and low unemployment, distinctly different sets of policies exist for each, and because of limited federal resources, each program is in competition with the other. This situation restricts the cooperative planning and joint action that might otherwise occur. Conflicting demands of the monetary goals of industry and the social goals of government also produce counterintuitive results. The foregoing are among the conclusions presented in this document on the federal policies and programs for education and local development. The initial section of this document examines a range of federal legislation affecting the relationship between education and local development and reviews legislation, federal programs, and policies in the areas of vocational education, job training and community economic development. The second section examines four models for local development (relocation, expansion, entrepreneurial and public service) which appear to underlie existing federal programs and analyzes how existing policies and programs support or inhibit each model. The final part of the document examines some of the causes and consequences of problems experienced in implementing and coordinating the various federal initiatives in the field of education and in local development. (Author/DS)