This document's purpose is to assist local educational agencies in providing compensatory education services to students in private schools and to provide clarification about compensatory education program responsibilities as mandated by the Education Consolidation and Improvement Act (ECIA) of 1981. The first of the document's two major parts juxtaposes sections of the federal law and its supporting regulations with state guidelines relating to policy, private school participation, fiscal records and constraints, and program planning and approval. The first part concludes with a summary of the responsiblilities of state and local educational agencies and individual private schools. The second part of the document contains five appendixes, including a copy of the "Private School Affidavit," portions of the California Education Code index referring to private schools, a summary of California laws relating to private schools, the full text of Chapter 1 of the ECIA from the Omnibus Budget Reconciliation Act (Public Law 97-35) of 1981, and its supporting federal rules and regulations. (JBM)