In Pennsylvania where 30 percent of the adult population is functionally illiterate and another 24 percent has only marginal competence, no state funds are appropriated for adult basic education and general educational development (ABE/GED) programs. All programs are supported by federal aid. Information shows that economic revitalization and a reduction in welfare rolls is linked to existing ABE/GED programs. An investment in ABE/GED is one part of the solution to Pennsylvania's economic and social problems. A proposed funding model for ABE/GED programs is predicated on the current federal funding base. Allocation of funds is linked to the removal of students from the public welfare rolls. For the first 2 years, state support should equal welfare dollars saved during the previous year as a result of ABE/GED programs. Funding for subsequent years would be based on the number of individuals who were welfare recipients and ABE/GED students simultaneously and who gained employment during the year following program completion. The Department of Education would administer the state allocation. Grants to local projects would be awarded on the basis of potential (1) reduction or prevention of welfare payments, (2) improvement of the labor pool and diversification of the economic base, and (3) integration of other funds and services. (YLB)