Title III of the Elementary and Secondary Education Act of 1965 and Title IV, Part C of the Elementary and Secondary Education Act of 1974 provide for federal funding of innovative projects in public school districts. A study of 981 Illinois school districts revealed that between fiscal years 1974 and 1978 approximately 57 districts per year sought funding and 11 districts a year received funding. Comparisons of the characteristics of districts submitting or not submitting proposals, and receiving or not receiving funding, showed several tendencies: first, only a small percent of districts seek funding; second, secondary districts are more likely to submit proposals, while elementary districts are more likely to have proposals funded; third, districts submitting proposals tended to be urban, having larger enrollments and a higher percentage of minority students; and fourth, awarding of grants by the Illinois state education agency was not related to specific characteristics of districts, such as superintendent's salary, community type, tax effort, or average daily attendance. The researchers recommend policy changes to encourage submission of proposals, and warn that the data reported must be interpreted cautiously due to the small number of funded districts. (PGD)