This report details a study that sought to answer whether welfare reform was meeting its goals of reducing mothers' dependency and boosting children's futures, and whether these reforms were having discernable effects on young children. During the second half of 1998, the study randomly selected 948 single mothers with young children from 5 cities: San Francisco or San Jose, California; Manchester or New Haven, Connecticut; and Tampa, Florida. Participating women in California and Florida had been enrolled for 6 months in new welfare programs. In Connecticut, experimental and control groups were compared 18 months after they had entered the new or old program. Findings from the first wave of data collection stem from interviews of the mothers; visits to their child care providers, both centers and individual caregivers; and assessments of children's early language and social development. Findings on how children are faring under welfare reform include the following: (1) young children are moving into low-quality child care settings as their mothers move from welfare to work; (2) child care subsidies reach unequal fractions of poor families and encourage the use of unlicensed care; and (3) young children's early learning and development is limited by uneven parenting practices and high rates of maternal depression. Findings on how mothers are faring under welfare reform include the following: (1) a sizable share of women are moving into jobs; (2) wages are low and household economies remain impoverished; and (3) levels of economic and social support gained by the women are uneven. Following an executive summary, contents of this report are: (1) "Project Aims," answering, "How are children and mothers faring under welfare reform?" (2) "Mothers' Attributes," answering, "Who are the women entering new welfare programs?" (3) "States and Neighborhoods," answering, "How do job markets, welfare rules, and child care contexts differ?" (4) "Homes and Parenting," answering, "How well do families function?" (5) "Family Economy," answering, "How do women get by economically?" (6) "Maternal and Child Health," answering, "What gaps exist in access to insurance and clinical services?" (7) "Welfare to Work," answering "How do women engage new welfare rules and jobs?" (8) "Child Care," answering, "Where do young children now spend their days?" and (9) "Early Learning," answering, "How well are children growing and developing?" Two articles are appended: (1) "Evaluating Connecticut Welfare Reform: MDRC and Yale-Berkeley Studies"; and (2) "Comparing GUP Children, Mothers, and Child Care Quality to National Norms." (EV)