Rural Appalachia received relatively low levels of Federal funds in fiscal year 1997 compared with urban Appalachia. Although it had relatively high income support payments, reflecting high rates of poverty and unemployment, rural Appalachia received less per capita in Federal funding for community resources and other programs that create jobs and development. Mining and poverty counties were the chief rural beneficiaries of income support payments, while the more populous and prosperous rural manufacturing and commuting areas benefited more from community resource programs. Some Federal policy trends may further the region’s growth, particularly the recent increase in highway aid and changes in telecommunications, while environmental policy, welfare reform, and proposals to reduce or limit the growth of income support and economic development programs present challenges to the region.