This paper analyzes alternative approaches to allocating Chapter I funds for the education of disadvantaged children. The paper begins with a short discussion of the traditional method of distributing funds to districts on the basis of low-income student representation and then considers how changes in the poverty count from the 1970 to the 1980 Census have had a redistributive effect on allocation patterns. Using a sample of 12 selected poverty States and 20 urban poverty counties, alternative methods of allocating funds are then analyzed and compared with each other and with the current formula. The alternatives use the following: income adjustments (the proportion of school-age poor children times a State's inverse per capita income); an effort index (based on the percent of a State's income constituted by its expenditures for elementary and secondary education); and population, age 5-17 years. These alternatives are all considered with and without the cost factor, i.e. differences in the average per pupil expenditure among States. A final alternative uses numbers of school-age poor children with no cost factor. Statistical appendices list cost factors for each sample State and county, major cities in the sample counties, and allocations to each sample State and county under the various alternative formulae. (CMG)