During the first half of the 1989-90 school year, the Chapter 1 Prekindergarten program of the Saginaw, Michigan school district screened 421 children and served 377. Process evaluation activities consisted of an on-site, half-day classroom observation of each of the 13 prekindergarten teachers' classrooms. The observation instrument focused on cognitive and psychomotor activities, parent participation and education activities, and language development and scheduling activities in the classrooms. Observations revealed that: (1) with the exception of the activities of grouping and regrouping, activities to meet daily objectives were taking place in all classrooms; (2) a record of parent participation was being maintained in all classrooms; (3) labels were posted on objects in the classrooms to assist in word recognition; (4) teachers were employing language production and enhancement techniques, but with wide variation in frequency; and (5) methods used to schedule free play varied widely. Overall, the program is operating as planned, though some areas of operation could be improved. Appendices provide a list of participants, an activity observation checklist and key, an associated language observation instrument, and data on teachers' use of language production and enhancement techniques. (RH)