This study examines the performance of governors in the Southwestern states under the final two years of CETA. (FY 1980 and FY 1981). It investigates how these governors used the flexibility allowed them under the law to make program decisions, particularly in regard to spending their discretionary Special Grants money. Anticipating an enhanced role for governors under the successor to CETA legislation, the Job Training Partnership Act of 1982, the study examines whether governors invested in developing and expanding the capacity of the delivery system in their states as CETA legislation intended. It also examines how minorities fared both as clients and as administrative staff under the Special Grant Programs.