Prepared by the Panel on Outcome Measurement in Early Childhood Demonstration Programs, this report attempts (1) to characterize recent developments in programs and policies for children and families that challenge traditional approaches to evaluation, and (2) to trace the implications of these developments for outcome measurement and for the broader conduct of evaluation studies. The report is divided into two parts. Part I begins by tracing the historical evolution of demonstration programs and their evaluations from 1960 to the mid-1970s. Next, the policy issues and programs that have evolved in recent years and that appear to be salient for the 1980s are examined in detail. Some important implications of these programs and policy developments for outcome measurement and evaluation design are then identified. Finally, implications of the evaluation process for the dissemination and utilization of results, for the organization and conduct of applied research, and for the articulation between applied research and basic social science are pointed out. Part II includes six background papers which were prepared by the panel members together with outside consultants to facilitate the panel's discussion of the evaluation of children's programs. Each paper covers a specific type of program: health, day care, family service, preschool compensatory education programs, and programs for the handicapped. In addition, a paper on the communication and dissemination of the results of evaluations is included. (MP)