How early childhood funds are channeled to communities significantly affects what supports and services are available, how they are provided, how well they are linked to other resources in the community, and who benefits from them. As pressure mounts for states and communities to strengthen their commitment to families with young children and meet the growing demand for services at a reasonable cost, there is also a growing sense of urgency about finding better ways to finance these supports and services. In 1998, California voters responded to this challenge by passing Proposition 10, "The Children and Families First Act," which imposed an excise tax on sale of cigarettes to be used to improve early childhood development. This report presents a framework and suggests guiding principles to help the Proposition 10 commissioners develop strategic financing plans to meet the Proposition's goals. Following an introduction, the report is organized into four sections. The first section, on the challenges of developing short- and long-term early childhood financing under Proposition 10, reviews a number of structural issues and political challenges that face the commissioners as they develop plans for managing and allocating the new funding. The second section, on investment, highlights a set of general principles to guide decisions concerning the allocation and management of the new early childhood funds. The third section, on financing, presents an array of relevant strategies for financing comprehensive community early childhood initiatives that are aimed at enhancing the short- and long-term value and reach of the new Proposition 10 revenues. The report's summary section focuses on keys to developing and implementing successful financial plans, and encourages the commissioners to see their role and responsibility as more than just spending the new dollars. The report's four appendices include a list of federal funding sources for early childhood supports and services, an index to sources by service domain, guidelines for pursuing federal funds, and a list of other related resources. (Contains 35 endnotes.) (HTH)