This report examines the relationship between outreach projects and the new State Grants Program involved in the Handicapped Children's Early Education Program (HCEEP). Following a brief review of HCEEP'S mission and history, the State Grants Program and its three types of grants are described: planning, development, and implementation grants. Distinctions between the State Grant Program and an earlier program, the State Implementation Grant, are offered. Noted is the emphasis on collaboration between outreach activities and state-level agencies and programs, and collaboration is seen to take three forms: activities that support outreach goals, activities that support state goals, and activities to support early intervention. Suggestions are made for planning future collaboration. (CL)