The care and education of the youngest children in the United States has become a critical public policy issue affecting millions of families. This guide closely examines the issues and tradeoffs in key child care policy decisions that face state legislators. The guide provides a discussion of state efforts to build supply, improve quality, and develop effective subsidy systems for low-income families. By presenting research findings and policy options about supply, quality, and funding for low-income child care, as well as demographic trends, this guide offers a context within which state lawmakers can plan for successful, lasting effects on current and future generations. Following an executive summary and introduction, the guide's chapters are: (1) "Expanding the Supply of Child Care," through facilities development, public/private partnerships, loans and grants, resource and referral services, and expanding out-of-school time activities; (2) "Improving the Quality of Child Care," through regulations, accreditation and additional standards, training, career development and compensation, and quality early childhood education initiatives; (3) "Funding Low-Income Child Care," including eligibility issues, parent fees, and reimbursement rates and policies; (4) "State Experiences," in California, Colorado, Connecticut, Florida, Illinois, Minnesota, North Carolina, Ohio, and Oregon. A brief conclusion notes that recent changes in federal funding offer state lawmakers an opportunity to establish coordinated early childhood systems that help families of all income levels maintain employment and receive family support services. The guide contains a resource list and 56 references. (EV)