Drawing on interviews, documents, and eight studies, this policy research study offers information and recommendations in order to fulfill the responsibility of the National Council on Educational Research to establish general policies for, and review the conduct of, the National Institute of Education (NIE). Questions guiding this study are: the subject and costs of research carried out by NIE's labs and centers; the perceived impact of this research and development on improving educational practices; and appropriate priorities for NIE labs and centers and strategies for more effective dissemination of their findings. Following an executive summary and an introduction, a chapter on reforming American education summarizes a content analysis of national studies, a survey, and additional documents. The third chapter considers the role of the federal government in creating knowledge for educational reform, and the fourth chapter offers three historical perspectives on NIE's labs and centers. Barriers to effective dissemination of educational research are analyzed in the fifth chapter, and the sixth chapter presents the study's major conclusions and recommendations for improving policy management of the delivery system of NIE labs and centers. Among the appendixes are descriptions of eight projects that contributed to the overall study, steps in designing the research matrix, and lab and center missions and budgets. (MJL)