To help local school officials implement the federal Education Consolidation and Improvement Act (ECIA) of 1981, this handbook offers a step-by-step walk through the new law and presents recommendations for local policies concerning the law. ECIA replaces most categorical programs under the Elementary and Secondary Education Act with block grants to states and school districts. The first section of the handbook briefly describes the historical background and existing structure of federal aid to education and presents a lengthy summary of ECIA's three chapters, covering aid to disadvantaged children, consolidation of elementary and secondary programs, and the new federal regulatory role. Section 2 provides local boards and administrators with checklists of policies needed to avoid the imposition of state and federal guidelines on ECIA programs. Sample board policies are offered on budget priorities, staff assignments, relationships with private schools and state agencies, and community involvement. The roles of state and federal officials under ECIA are also outlined. An appendix gives both the complete text of ECIA and excerpts from related laws governing block grants. (Author/RW)