When federally funded categorical programs for educational equity converge at the school level, difficulties such as resource competition tend to arise. This study addresses interference (categorical and core local program conflicts) and cross-subsidy (categorical fund misuse) problems at district, school, and classroom levels in terms of pervasiveness and intensity. Telephone interviews in 48 school districts, and site interviews in 10 of those districts obtained demographic, financial, and operational, as well as interference and cross-subsidy data. Findings reveal that all districts experience both problems, not only in the face of multiple categorical requirements, but also when schools administer programs imposed by another government agency. At fault are federal program structuring and local administrative habit, both of which encourage separation of categorical and core programs, thus adversely affecting services to disadvantaged children. Solution recommendations include not assigning to separate categories students who can be assigned to regular classrooms. An appendix of success stories and references follow. (KS)