Federal funds to rural areas and small towns grew more rapidly in 1976-79 (the most recent data available for analysis) than Federal funding to metropolitan areas, but were still 10% less than the 1979 average. Nonmetro Federal funding per capita reached $1,994 (87% of the metro level). The South received $172 billion in Federal funds, more than any other region and nearly a third of the $483 billion national total. The West received the most dollars on a per capita basis. While nonmetro counties improved their overall position between 1976 and 1979, the most dramatic changes occurred in the most rural counties. The biggest gains occurred in totally rural counties not adjacent to a Standard Metropolitan Statistical Area. Differences persisted between nonmetro and metro areas in their reliance on types of programs. Nonmetro counties received a much larger share of their 1979 funds (40%) from income security programs, principally retirement and disability payments, than metro counties. Although nonmetro counties (except the very high counties) received nearly equal per capita funding, lower income nonmetro counties differed greatly in the programs that supported them. Human resources programs--education, health, and employment--accounted for the smallest portion of Federal dollars. Four tables and four figures illustrate the narrative. (BRR)