This field network study is an account of how three essential features of Reagan federalism affected South Dakota government and programs from 1981-1983: (1) tightening eligibility requirements for entitlement programs to reduce costs; (2) combining 57 categorical grants into 9 block grants, which broadened program goals to permit wider state discretion in expenditure of funds and reduced reporting and other requirements; and (3) reducing the extent of federal funding (approximately 13.4% for block grant programs in 1982). Part 1 sets forth the South Dakota social, economic, political, governmental, and fiscal situation in which developments occurred. Part II presents the historical impact of the Reagan program on entitlement, operating, and capital grants and the state's chronological response. Part III analyzes in detail the state's adjustment to specific program changes including litigation, institutional and political changes, efficiency and management, strategy and mix, intergovernment relations and state centralization, and the roles of local governments, planning districts, and volunteerism. Impact on the Education Consolidation Improvement Act is included. Part IV attempts to explain why the state reacted as it did to funding changes and evaluates programs. The research methodology emphasizes fiscal impacts and the strategy employed by the state in responding to these impacts. (NEC)