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To distribute aid to disadvantaged students more fairly, federal officials should adjust grant formulas to consider regional cost-of-living differences, the General Accounting Office says in a recent report on the Chapter 1 program.

Altering the way poverty is defined would enable policymakers to "target scarce federal aid where poor people have a greater need of services,'' the report says.

Under Chapter 1, funds are distributed through a formula based primarily on how many children in a county come from families with incomes below the federal poverty line. If a family's income exceeds that level, children are also ineligible for subsidized school meals.

Students in urban areas where the cost of living is higher may not be eligible for such programs as Chapter 1, even though they may be impoverished, the G.A.O. notes, because their family incomes exceed the national poverty line.

The G.A.O. report also urges Congressional leaders to design a formula that takes into account the ability of different states to pay for compensatory-education programs.

The first copy of the report is free, and each additional copy is $2, from the G.A.O., P.O. Box 6015, Gaithersburg, Md. 20877; (202) 275-6241. Ask for report HRD-94-165.

Rules Delayed: In response to complaints from state officials, the Education Department will postpone for a year rules that would tighten deadlines for most federal education grants.

A 1990 law requires federal agencies to pay interest on late grant payments. But education officials noted that many payments are late because a state's application was deficient or tardy. The proposed rule would penalize states that apply less than 45 days before funds are to be released by delaying the date on which they can use their grants.

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