This report uses national and case-study data to address the degree to which limited-English-proficient (LEP) students are served by Chapter 1 programs. Although nationally the ethnic distribution of Chapter 1 funds has paralleled trends in the child-poverty population, there is great variation at the state and school-district level in the proportions of LEP children served. In some districts it is mistakenly believed that bilingual or English-as-a-Second-Language instruction is a substitute for Chapter 1 education. In addition, few districts have the capacity to test academic achievement in languages other than English, or, to a lesser extent, Spanish. Native students have not been displaced by immigrant students, but inclusion of both along with other factors may have served to reduce per-pupil allocations of Chapter 1 funds. The following recommendations are made for the reform of Chapter 1: (1) clarify eligibility; (2) expand the federal role in developing assessments in native languages; (3) concentrate funding in disadvantaged areas; (4) update Chapter 1 poverty data more frequently; and (5) monitor services and outcomes for LEP students. Four figures and 24 tables present study findings and other data. An appendix profiles some urban districts. (Contains 35 references.) (SLD)