A 3-year study of the operation of Chapter 1 Neglected or Delinquent (Chapter 1 N or D) Program, which provides compensatory education services to youths in state-operated juvenile and adult correctional facilities, was conducted. The study found that Chapter 1 N or D Program participants had the following characteristics: (1) over half of the youth are high school dropouts; (2) the highest grade completed was 3 years below the typical grade completed by other youth of the same age; (3) participants generally stay in the facility an average of more than 13 months; (4) most do not enroll in school on release or they enroll and soon drop out; and (5) the older the student, the less likely he or she is to enroll and to persist in school. Instruction is commonly done on an individualized diagnostic/prescriptive method with students working on packets of materials or worksheets to meet individually diagnosed deficiencies in basic skills. The most effective Chapter 1 N or D Programs included the following parameters: (1) separate educational administrations; (2) strong communication and administrative leadership at the facility and state levels; (3) creative use of funds; (4) a staff committed to correctional education; and (5) coordination between Chapter 1 and regular academic programs. Chapter 1 services also can include postrelease transitional and prerelease services. The document also provides data on program administration and administrator and educator roles. Included are 14 figures, 9 tables, and an appendix listing effective and common practices. (JB)