This publication describes Rhode Island's expenditure of funds under the Library Services and Construction Act (LSCA), compares this expenditure to that of other states, and presents recommendations for change in the funding policies of the Rhode Island Department of State Library Services. A list of major library programs is provided, showing the amount of LSCA money allocated to each program in 1981-82 and 1982-83 and the percentage of total program funding provided by these federal funds. It is indicated that LSCA monies constituted a substantial, but generally declining share, of the overall funding for various Rhode Island library programs, and that Rhode Island is not alone in using federal aid for system maintenance (paying for library operations, personnel, or equipment) rather than specialized library projects. It is finally recommended that the state library agency dedicate more of its LSCA funds to innovative projects designed to serve target populations and less to the support of local library services, library systems, and the statewide network, which should be supported by municipal and state monies; and that the state library agency seek legislative and executive approval to move away from per capita and base grant funding toward formulae which better equalize such aid in response to local fiscal capacity and/or local fiscal effort. (ESR)