This report presents an interim analysis by an independent commission of current moves to reform Chapter 1 of the Hawkins/Stafford Elementary and Secondary School Improvement Amendments of 1988. Chapter 1 is the largest federal assistance program to elementary school and secondary school education. The report responds to questions on strengthening Chapter 1 and summarizes the commission's position on critical issues affecting disadvantaged children. Following an introduction, a section on need discusses the successes of Chapter 1 in improving basic skill delivery to students as well as the need to reorient Chapter 1 services to support the teaching of higher order skills. A section on philosophy and goals outlines a proposed new direction based on evidence that all children can achieve at advanced as well as basic levels. Another section suggests major objectives and how they might be connected. The objectives include the following: (1) new standards for real world competencies in reading, mathematics, and science; (2) greater targeting of Chapter 1 funds to schools with large concentrations of poverty; (3) increased funding of professional and school development; (4) increased school capacity through increased parent involvement; (5) an outcome-based system of accountability; and (6) equitable resource distribution. An appendix lists the names and affiliations of members of the Commission on Chapter 1. (JB)