The Observational Study of Early Childhood Programs, which examined 119 preschool programs in 5 states, was designed to describe the classroom experiences of economically or educationally disadvantaged 4-year-olds and to examine linkages between characteristics of early childhood programs and activities of children and teachers in the classroom. This report describes a substudy of approximately 750 children in 55 prekindergarten classrooms funded all or in part with money from Chapter 1 of the Hawkins-Stafford Elementary and Secondary School Improvement Amendments of 1988. The substudy described was designed to examine relationships between Chapter 1-funded prekindergarten classrooms and children's cognitive and social-emotional development, and to describe how the programmatic experiences of children changed from prekindergarten to kindergarten. The substudy found that Chapter 1-funded programs did not contain a larger number of high-risk students than the programs in the larger study, and that they were comparable in quality to the programs in the larger study. Although global ratings of classroom quality demonstrated that most of the sample classrooms were adequate, they did little to predict child outcomes in these classrooms. Three appendixes provide information about the use of Chapter 1 funds in prekindergarten, a rationale for changing the substudy design, and discussion of issues related to the Bronson Social and Task Skills Profile. Includes 139 references. (MDM)