The study, which followed 12 children referred for evaluation at age 3 on entry into kindergarten or in the early elementary grades, reports the first 2 years of a longitudinal study of the implementation of P.L. 94-142, the Education for All Handicapped Children Act. An introductory chapter addresses organization of the report, background of the study, characteristics of the community (a suburb near Boston, Massachusetts), characteristics of the sample, and research method. Chapter II discusses the focus of the study--the role played by the provisions of the law, the modifications imposed on the law by local education agency staff, and the adaptations fashioned by both staff and parents to make the law effective for individual children. Chapter III considers findings on factors affecting initial adaptations in terms of child characteristics and family characteristics (parents' relationship with each other, with the handicapped child, with other family members, and with the service community). Chapter IV examines the ways in which the adaptation process relates to the formulation of individualized education programs (IEPs). Eight federal and state regulated areas of IEP development are identified: scheduling of the IEP document or meeting; parent participation; meeting participants; IEP content; the diagnostic program; notice to parents, parent response, and requests for independent evaluation; IEP implementation; and liaison, monitoring, and IEP review. The effects of the first year of service in the areas of academic progress, social relationships, and affect and self image are discussed in a fifth chapter. A sixth and final chapter reviews findings on four concepts underlying the law (parent-school partnership, individualization, integration of handicapped and nonhandicapped children, and advocacy for children's rights) which influence adaptation. A list of criteria for compliance with federal and Massachusetts IEP regulations is appended. (SB)