This quarterly report, covering July 1 through September 30, 1990, summarizes problems with Project Creating a New Approach to Learning (CANAL), part of a court-mandated desegregation plan in Chicago (Illinois). CANAL's goal is to train the constituent representatives of the public schools to engage in shared decision-making and to develop organizational structures that incorporate the community in the organizational and educational processes of the schools. The training activities during this last quarter of the second year of the project provided no indication of improvements in implementing the school-based management (SBM) model that was the goal of the proposed project. The core planning teams continued to have poor representation of parents, community members, and ancillary staff. There was no evidence that project staff took effective measures to address problems of team composition. Training activities were poorly attended, and some seemed to have little relevance to implementing SBM or improving student achievement. It appears that CANAL's original goal has been lost, and no effort has been made to integrate CANAL's SBM teams with parallel Local School Councils. The following materials are included: (1) a list of project activities; (2) executive summaries of two related evaluation reports; (3) an eight-item annotated bibliography; (4) a list of monitoring commission staff; and (5) a budget status report. (FMW)