This study addresses the amount of federal dollars used by state education agencies (SEAS) to fund their administrative and other operating costs, and how SEAS are using these funds to support their operating activities. To determine the amount and sources of federal funding, SEAS in 49 states (excluding Hawaii and the District of Columbia) were surveyed. In addition, telephone interviews were conducted with financial staff at each SEA. Study results show that in fiscal year 1993, although the federal government only provided about 7 percent of elementary and secondary school funding, states relied on federal support for about 41 percent of the funding and 41 percent of the staff for their state education agencies. Most federal and state funding received by SEAs is passed through to local education agencies. However, some federal and some state funding is kept at the SEA for state-level operations. The level of federal support for SEAS varied widely among states depending on the number and types of federal and state programs the SEA operates, ranging from about 10 to about 80 percent, with the average level of support being 41 percent. For the 10 federal programs found in nearly every state, however, the average level of support drops to 29 percent. Approximately 85 percent of the report consists of tables and figures illustrating the findings in state-by-state rankings. (MLF)