This is the second of two studies of Ohio's Head Start programs conducted by the Legislative Office of Education (LOEO) of Ohio. The first study described the implementation of Head Start in Ohio. This study looked at the impact of Head Start's education component by examining urban kindergarten students on selected measures of school readiness. LOEO's primary evaluation method was a case study of 1,230 kindergarten students who attended Dayton Public Schools in the 1996-97 school year. Former Head Start students were compared with those who had been in a Title I Preschool and those whose preschool experiences were unknown. The students were compared on selected school readiness measures: literacy readiness, social competency, and attendance rates. Results showed that: (1) kindergarten students who had been in Head Start did no better on any of the school readiness measures than students whose preschool experiences were unknown; (2) the Head Start group had significantly lower scores than the Title I Preschool group on four of seven scales measuring literacy readiness; and (3) the Head Start group had significantly lower ratings of social competency than the Title I group. Observation of 17 randomly selected Head Start classrooms and interviews with teachers revealed that: (1) classrooms are well-organized and caring environments, providing a variety of learning experiences; (2) areas of weakness include less emphasis on critical thinking, problem solving, and language and writing skills; (3) most kindergarten teachers hold low expectations about the need for specific early reading and math skills; and (4) in general, there is little consensus among or between Head Start and kindergarten teachers about the academic expectations that should be held for early learning. LOEO concludes that Head Start has the capacity to ensure that children are prepared to be successful in school, but that it needs to place a higher priority on literacy readiness and capitalize on opportunities already available in Head Start classrooms. (EV)