Guidelines address California's procedures for the operation of programs for handicapped infants and preschool children. Legal requirements of P.L. 94-142, the Education for All Handicapped Children Act, and the California State Plan are reviewed. Program guidelines focus on eligibility, child assessment, placement in the least restrictive environment, individualized education programs, parental involvement, curriculum activities, related services, administration and personnel, due process provisions, and evaluation activities. Three primary sources of funding are described: preschool incentive grants, state discretionary funds, and federal demonstration funds. Four appendixes include a list of screening and diagnostic instruments appropriate for young children and abstracts of 22 programs serving infants and preschoolers. (CL)