This report documents the failure of the educational and mental health systems to meet the needs of children with severe emotional disturbances and provides a guide for advocates at both the state and local levels. Part 1 identifies priorities obtained through a national survey and reports major thrusts, including a wider array of services, services to maintain the family, and collaborative arrangements between schools and mental health systems. Next, data are provided concerning graduation/drop-out rates, professional staffing, placement, and identification. Current activities in 22 states and results demonstrating program effectiveness are summarized. Needs assessment activities in eight states are also summarized. Advocates are urged to consider policy changes in the following areas: planning, funding, interagency collaboration, the education system, the mental health system, families, and cultural issues. Specific strategies and tactics to bring about these policy changes are listed. Part 2 includes the philosophy statement of the Federation of Families for Children's Mental Health; proposed changes in the definition of "seriously emotionally disturbed" under the Individuals with Disabilities Education Act; a resource list of 19 items; a sample news release; a sample editorial; a draft letter to state officials; a list of issues to raise with state officials; and a list of state contacts. (DB)