This report, in two volumes, contains recommendations and supporting documentation for restructuring mental health services to Texas' children with an emphasis on the cost effectiveness of developing accountable school and community based services, family centered prevention services, and early intervention services. Major mental health issues for Texas schools, families, and children include: the mental health needs of children are not being met; currently most of the mental health funding is for the most restrictive and most expensive service model (residential placement) which serves only a few children in need; and the least amount of mental health funding is for the most cost-efficient and effective delivery model--a preventative, family-oriented, community-based consortium of services. Among eight major recommendations are: (1) focusing funding to develop effective school and community based services; (2) development of a statewide Comprehensive Community-Based Children's Service Plan; and (3) systematic evaluation of all residential placements of children with emotional problems. Additional sections of Volume I provide background information, the four legislative mandates to the task force, and various funding strategies. An appendix gives several definitions of emotional disturbance and 29 footnotes are listed. Volume II provides supporting documentation in 12 papers and 6 appendixes. Papers cover an inpatient facility study, a residential facility study, a report on student outcomes in residential placements, a continuum of services, a survey of community mental health services, family treatment models, a parent survey, and preventive programs. A bibliography of 37 references in addition to individual paper references are included in Volume II. (DB)