This report examines recent proposals for allocating to States revenue sharing and block grants that would provide unrestricted aid and which could be used at the discretion of each State. The report first presents the political administrative, and fiscal rationale for such aid and then points out the possible dangers inherent in unrestricted aid. The proposals, according to the author, seem likely to re-open the issues of church-State relations and the Federal Government's role in racial discrimination elimination. The authors also observe that, politically, there is a pervasive pattern of weakness in both national and State governance of education and recommends strengthening both governments under Federal control rather than weakening federal control of education in an effort to strengthen State government. (Author/JF)