In 1997, the Indiana Department of Education began implementing the Early Literacy Intervention Grant Program (ELIGP), designed to assist schools in their efforts to raise the reading proficiency of students most at risk for reading failures. This report summarizes a study of the impact of ELIGP on schools in the second year of funding, 1998-99. This impact study replicates the study completed in the first year of ELIGP funding (1997-98) and includes: an analysis of the impact of ELIGP, focusing on changes in early reading and literacy programs that resulted from the ELIGP funding; a select group of case studies that illustrate the role of ELIGP in the school improvement process; an analysis of the impact of funding on the numbers of students completing Reading Recovery, referred to special education, and retained; and a summary of findings (which were consistent with the first year impact study) and recommendations for enhancement of ongoing efforts to improve early reading and literacy in Indiana. The report notes that approximately $3.3 million was allocated in 1998-99 through competitive grants to districts or elementary schools and that funds supported early literacy programs in 289 schools across the state of Indiana. Appendixes list funded projects for 1998-99, present the survey instrument, and describe features of early literacy intervention. (Contains 19 references, 25 tables, and 5 figures.) (NKA)