FEDERAL officials gauging the failure of Chicago public housing need only look into Dorothy Jackson's eyes.
They flit constantly, alert to the signs of gunfire in the glass- and litter-strewn compound where her grandchildren play.
Over the years, Mrs. Jackson has watched neglect and mismanagement transform the brick-walled project on Chicago's West Side into a vertical ghetto beset by poverty, drug dealing, and gang violence. The towering tenements are now emblematic of the worst public housing in America.
Jackson put up with mice, cockroaches, and overflowing toilets. But her resolve was shattered nine months ago when her grandson - an eighth-grade valedictorian who called her 'Mom' - was gunned down as he walked home from school. Now, Jackson says, she wants out.
''I just sit, look, and pray,'' says Jackson, sitting in the complex playground. ''I don't care if you've got gold dripping out of the sky onto these buildings. You couldn't pay me enough to stay here.''
Like Jackson, federal authorities found the situation intolerable. The steep decline of Chicago public housing, home to 86,000 of the city's poorest people, prompted a federal takeover of the Chicago Housing Authority (CHA) a month ago.
Top US housing official Henry Cisneros called the CHA a ''miasma of physical decay and fiscal mismangement,'' where 58 percent of the 40,000 units are not fit to live in.
The federal bid to turn around the CHA - the largest takeover of its kind - has become a national test case of whether some of the country's most troubled public housing can be turned around.
It comes at a time when the federal approach to urban housing is undergoing perhaps its most radical overhaul in six decades, with more authority flowing to the local and grassroots level and with public assistance of all kinds being reduced.
''Public housing in America is on trial in Chicago,'' said Mr. Cisneros, Secretary of the Department of Housing and Urban Development (HUD).
While HUD contends that the failure of the CHA demonstrates a need for federal, not local, authority, Republicans seek to shift power and accountability from Washington to local housing agencies while loosening federal regulations.
Republicans including majority leader Bob Dole (R) of Kansas have threatened to eliminate HUD, dismantle the federal housing program, and devolve control over housing funds to local goverments. While GOP legislation to be introduced this month stops short of such radical steps, it envisions sweeping reforms of both the operation and demographics of the public housing system.
Chicago is one of 150 cities with large housing authorities that oversee almost 60 percent of the nation's federally subsidized low-income housing, where a total of 3.1 million people live. While the CHA is less representative of the country's 3,200 smaller housing authorities, its troubles reflect the problems endemic in much of public housing in America.
The nation's huge, domino-like high-rises seem to have featured built-in blueprints for misery almost since Chicago and other cities began erecting them upon the rubble of slums in the 1950s and 1960s. The austere, steel-frame hulks had spartan, flimsilybuilt interiors. They lacked basic amenities such as doors on kitchen cabinets and closets. Dining rooms were too small to allow families to sit down together for meals.
Worse, the towers were isolated from surrounding communities: physically by barren grounds, walls, and highways; politically by city officials who deliberately situated the projects to confine poor blacks within the boundaries of existing ghettos. ''The siting of developments during the 1950s and 1960s was often the result of deliberate decisions to segregate,'' HUD recently acknowledged.
Still, Jackson and other long-time residents say they were pleased with the apartment blocks at first. They describe Chicago's Henry Horner Homes, a stretch of 19 buildings with 1,761 units, as something out of a fairy tale.
''It was like a palace. It had beautiful lawns and everything was fresh and new,'' recalls Mamie Bone, a resident council leader who moved into Horner with her husband and two children in 1956.
The homes were also relatively safe. ''At night, you could sleep outside on the ramps,'' says Jackson, referring to the open-air walkways that ring each floor of the high-rises.
Horner was a more stable community because the majority of its residents were working class, as was typical of public housing at the time. ''The men would handle the boys,'' says Mrs. Bone. ''They had baseball and a lot of young-men activities in those days.''
Beginning in the late 1960s, however, demographic and economic trends combined with public policies of the day to spur a rapid decline of public housing in Chicago and other cities.
As middle-class Americans fled to the suburbs, blue-collar families moved into the vacant homes and quit public housing. In turn, the projects were left mainly to jobless people on welfare. Federal laws sped the exodus of working families from public housing by imposing scaled rents and income caps that effectively reserved it for the very poor. Lax screening and long eviction procedures meant disruptive tenants got in and stayed.
Financially strapped local housing authorities could no longer raise enough rent to operate the projects. Despite federal operating subsidies that began in 1975, buildings decayed, appliances broke, and routine maintenance went neglected. In Chicago, corruption and mismanagement by CHA bureaucrats siphoned away millions of dollars. ''Everything just started going down, down ...'' says Bone.
Today, Horner is home to one of the 15 poorest communities in America. The hallways of its dilapidated brick buildings are a grimy black scribbled with layers of graffiti. Elevators break down so often that most residents opt to walk up dark stairwells that reek of urine. Jackson, who raises four grandchildren on $700 a month, relies on a cat to exterminate the mice.
The breezy ''ramps'' Jackson once slept on are now dark and dangerous. Gangs and drug dealers control entire buildings. With a CHA backlog of evictions, drug addicts and other criminals often aren't forced out for years.
Accusing the government of carrying out the ''de facto demolition'' of their homes through neglect, Horner residents four years ago filed a class-action lawsuit against CHA and HUD. In March, residents won a court settlement that called for tearing down up to half of Horner's units and replacing them with low-rise, mixed-income housing.
The ruling underscores a broad policy shift in Chicago, Washington, and across the nation toward economic integration as the prime strategy for improving public housing.
Some Horner residents welcome the decision to rebuild and rehab their units and bring in more working families. But others, including Jackson, are skeptical about the promised improvements and still want to leave.
''You dream about having your own house and a backyard where you can let you're kids go and know they'll still be there,'' Jackson says. ''My grandson always said 'Mom, I'm going to get you out of here.'''