This paper presents a discussion of challenges to the rapid expansion of a federally sponsored day care program. The analysis has centered upon the policy issue of choosing the ideal blend of governmental reliance upon the private day care market, governmental support to the private day care market, and governmental funding and operation of day care facilities. This issue is discussed from the perspective of the federal government, in terms of both legislation and regulation, and from the perspective of a local administering agency. For the latter, the focus is on local planning of a day care system. The intent is to provide a framework with which to properly allocate limited resources in such a way as to avoid the usual problems associated with a rapidly expanded governmental program. (For related documents, see PS 005 969-974, 976-983.) (Author)