An era of substantial growth in investment of resources, program development, and research has led to tangible gains in the scope and quality of early childhood education programs. However, the system of early childhood education programs is plagued by unequal access and inconsistent, inadequate levels of quality. Additionally, the focus of federal policy debate has shifted from improving specific programs to more global and ideological concerns of federalism and fiscal policy. This study was designed to provide information about the effects of current government policy and funding efforts on the shape and quality of local early childhood agencies. The study analyzed and documented significant local examples of innovative and successful reforms in early childhood services. The document, the first of three in a series, contains an analysis of past research and recent policy trends and presents seven case studies of local early childhood initiatives (including Head Start grantees, local school districts, and child-care agencies). All projects serve children from birth to 5 years of age from families of low to moderate incomes. The programs involve sponsorship by one or more state or federal programs and include a significant component of outreach, involvement, and service to parents and other family members. The report highlights strategies to promote child development, strategies to serve and involve families, management strategies, and policy effects in local agencies. Nine policy recommendations are offered, some of which include: (1) coordinate expansion of federal and state public investment to equalize access to quality early childhood programs; (2) support funding rates that are consistent with program and work-force quality; (3) encourage local and private-sector investment in early childhood services; (4) set program standards that are also flexible for meeting local needs; (5) support local agencies; (6) build a supportive infrastructure and management-development system to support program quality and innovation; (7) create leadership/management development system; (8) ease administrative burdens in administering multiple public early childhood programs; and (9) build community planning and responsibility for each childhood service. To improve practice, the report recommends that program administrators refine and promote teaching excellence within the paradigm of developmentally appropriate practice; continue to foster staff development; promote continuity with elementary schools and successful transitions; encourage adult family members' participation; help staff members negotiate the boundaries between their work and family issues; and define and implement high-quality front-line practices. Three tables are included. (Contains 153 references.) (LMI)