SEED MONEY PROGRAMS HAVE GENERATED SELF-SUSTAINING PROJECTS AND SIGNIFICANT AMOUNTS OF NON-FEDERAL FUNDING. AT THE SAME TIME, MANY PROJECTS ARE REDUCED OR DISCONTINUED WHEN FEDERAL FUNDING ENDS. THIS OUTCOME CAN BE EXPECTED WHEN THE SEED MONEY APPROACH IS USED, AND THE FEDERAL GOVERNMENT SHOULD BE PREPARED TO ACCEPT PROJECT REDUCTIONS AND DISCONTINUATIONS. PAST FEDERAL ACTIONS TO CONTINUE FUNDING SEED MONEY PROJECTS PAST PLANNED PERIODS SHOW FEDERAL RELUCTANCE TO ACCEPT STATE AND LOCAL DECISIONS, GOVERNMENT DELAYS IN FUNDING OTHER POTENTIAL GRANTEES, AND AN INAPPROPRIATE USE OF THE SEED MONEY APPROACH. THIS APPROACH WILL PROBABLY ALSO CAUSE INTERGOVERNMENTAL FRICTION, WHICH CAN BE LESSENED BY ITS APPROPRIATE USE AND CAREFUL ADMINISTRATION. CONGRESS, AS PART OF ITS OVERSIGHT PROCESSES, SSHOULD SEE THAT THE SEED MONEY APPROACH IS APPROPRIATE. WHEN IT IS USED IN NEW PROGRAMS, CONGRESS SHOULD CLEARLY EXPRESS FEDERAL FUNDING INTENTIONS AND EMPHASIZE THE NEED FOR COST-ASSUMPTION PLANNING. THE DIRECTOR OF THE OFFICE OF MANAGEMENT AND BUDGET SHOULD STRENGTHEN SEED MONEY PROGRAM IMPLEMENTATION BY REQUIRING FEDERAL AGENCIES AND GRANTEES TO BEGIN WITH CLEAR AGREEMENTS ON THE LENGTH AND AMOUNT OF FEDERAL FUNDING AS WELL AS FUTURE FUNDING SOURCES. APPENDIXES CONTAIN A LIST OF SEED MONEY PROGRAMS, THEIR FUNDING AND METHOD OF OPERATION, AND A LETTER COMMENTING ON THE REPORT. (MJW)