Concerned because California now annually administers an estimated $5.9 billion in funding for children's services programs, the Little Hoover Commission initiated a study on the state's provision for children's services. This report, on Phase I of the study, identifies the extent of the problem in 23 findings and provides a plan of action in 15 recommendations for the development of viable solutions. Particular attention is given to neglected and abused children, runaway/homeless youth, and the need for child care services in California. Findings assert that (1) California's system for delivering children's services is in a state of confusion and disarray; (2) the present method of providing children's services results in service level inequities, disproportionate costs of services, wasted resources, and gaps in service delivery; (3) a great number of children desperately needing help are not being served; (4) several types of children's problems are occurring with an ever-greater frequency; and (5) the need for children's services and the demands of providers have dramatically increased due to recent economic and social changes. Appendices provide a list of advisory committee members, a list of state-funded programs providing children's services, and a catalog of state programs serving abused/neglected children, runaway/homeless youth, and children in need of child care services. (RH)