This Race to the Top - Early Learning Challenge (RTT-ELC) annual performance report for the year 2014 describes California's accomplishments, lessons learned, challenges, and strategies California will implement to address those challenges. California's RTT-ELC implements a unique approach that builds upon its local and statewide successes to create sustainable capacity at the local level and addresses the geographic and cultural diversity of California. To achieve its ambitious goal, California is using the majority of the funding to support the development and expansion of successful local quality improvement efforts that are focused on improved outcomes for children with high needs by implementing local Quality Rating and Improvement Systems (QRIS). Approximately 77 percent of the grant funding is being spent at the local level to support a voluntary network of 17 Regional Leadership Consortia (Consortia) in 16 counties. Each consortium is led by an established organization that is already operating or was developing a QRIS or quality improvement system and allocating local resources to the efforts. In 2014, consortia expanded services by bringing on 14 mentee counties to build a QRIS; mentoring activities included funding, training assessors, developing coaches, assisting with data practices, and supporting a continuous quality improvement approach. More than 2 million (95 percent) children under five in California are represented by the 30 consortia and mentee counties. In addition, California is using a portion of the RTT-ELC grant funds to make several one-time investments in state capacity via 11 projects. These investments range from supporting California Departments of Developmental Services and Public Health's work on developmental screening to developing online training modules of core content and resources. During the third year of the grant, California moved forward in multiple areas while also encountering some challenges and several lessons learned across the following five federal RTT-ELC reform areas: (1) Successful State Systems; (2) High-Quality, Accountable Programs (QRIS); (3) Promoting Early Learning and Development Outcomes for Children; (4) A Great Early Childhood Education Workforce; and (5) Measuring Outcomes and Progress. [For "At a Glance: The Race to the Top - Early Learning Challenge Year 2014 Progress Report," see ED583096.]