Public Libraries are an important service traditionally provided by local government in the United States. The national government has furnished assistance in the form of grants to the states since the passage of the Library Services Act in 1956. In 1996, the Library Services and Technology Act (LSTA) became law, representing major changes to these grant programs. Emphasis of the federal government's grant program for libraries has changed, and administration has moved to a new agency, the Institute for Museum and Library Services (IMLS). This paper describes the transition to LSTA, analyzes the implications of the change, and examines the LSTA process in the larger context of models of intergovernmental relations. Research for this study consisted of both a survey and case studies of selected states. A questionnaire was sent to LSTA coordinators in the 50 states, Puerto Rico, and the District of Columbia, and then individual case studies were conducted in Arizona, New Mexico, Texas, and Massachusetts. Survey results indicated that the states are increasing their emphasis on technology in LSTA programs. State LSTA coordinators generally approved of the IMLS and rated it as doing a better job than the previous administering agency. The case studies illustrate the variation between states in use of LSTA funds. Following an examination of several models of intergovernmental relations, a modified version of Wright's (1988) coordinate-authority model is proposed to describe the LSTA process. This model appears to best describe the federal-state-local relations which presently exist in the context of library funding. The survey and interview questions are appended. (Author/AEF)