It is true--reading is fundamental. Research and statistics underscore the fact that the foundations for literacy are laid in the earliest years of life and have implications for a child's educational arc and post-schooling outcomes. Literacy development is a cause-and-effect chain that starts at birth. Early language and literacy development, beginning in the first three years of life, is influenced by the experiences young children have with books, stories and relationships with adults. Early literacy is essential if a child is to be reading proficiently by the end of 3rd grade. Recent research suggests that students not reading proficiently in 3rd grade are four times more likely than proficient readers to drop out of high school. Stubbornly low graduation rates in certain areas and among specific student subgroups, coupled with the negative impacts correlated with dropping out of high school, make clear that improved reading proficiency levels in America are absolutely critical. This issue of "The Progress of Education Reform" examines: (1) Low Pre-K-12 literacy levels nationally, especially for low-income and diverse student populations; (2) Trends in U.S. students' reading proficiency since the 1970s; (3) The negative impacts correlated with low reading levels; and (4) Policy recommendations for improving literacy instruction and achievement, particularly in the early grades. (Contains 26 endnotes.)