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A typology of organizational arrangements between state and local public health agencies was used as a framework within which the organizational environment of the local health department was studied for its effects on program development and implementation by local public health departments. Data collected in a national sample of local health officers were used in measuring the effect of four different patterns of administrative relationships on the selected characteristics of local health department programs. Important differences were observed among the four organizational types with regard to constraints on programs and program priorities, and health officers' perceptions of the primary functions of local health departments and sources of local health department funding. These findings were then used as a baseline from which to consider the possible impact of recent federal health budgetary proposals (specifically, block grants) both on existing patterns of intergovernmental relations and on the funding and operation of local health department programs. It was determined that the most likely general development arising from these proposed changes in federal budgetary policy is that the administrative control of state health agencies over those at the local level is likely to be enhanced. Other likely developments include changes in the programs and priorities of local health departments related to reductions in overall funding levels for human services and forced competition for fewer dollars by an enlarged constituency.