The fiscal year 1981 annual report of the Rehabilitation Services Administration's activities under the Rehabilitation Act of 1973, as amended, is presented; program operations, program development activities, functions of the National Institute of Handicapped Research, and other provisions of the Act, are described. Program operations include: the basic vocational rehabilitation program; services for the deaf, the blind, and the visually handicapped; the Helen Keller Center for Deaf-Blind Youths and Adults; and rehabilitation facilities. Program expenditures versus accomplishments are also examined. Program development, which is designed to improve service delivery and the vocational rehabilitation and independence of handicapped persons, includes the following activities: special projects for the severely disabled, projects with industry, special recreation programs, and Centers for Independent Living. In addition to the activities of research and training centers and special research and demonstration projects, the following ancillary activities are outlined: The National Council on the Handicapped, Office of Information and Resources for the Handicapped, The President's Committee on Mental Retardation, and interagency liaison. Finally, miscellaneous provisions of the Act include: employment, the Equal Employment Opportunity Commission, the Architectural and Transportation Barriers Compliance Board, and nondiscrimination under federal grants and programs. (SEW)