This report summarizes and analyzes the actions of the 104th Congress in legislative areas of importance to children with serious emotional disturbances. Emphasis is on the obstacles now facing advocates and policymakers concerned with these children. An executive summary identifies program changes in child mental health services programs, Medicaid, children's Supplementary Security Income (SSI), child welfare, education, and mental health parity. The body of the report begins with a discussion of the future of CASSP (Child & Adolescent Service System Program) and other child mental health programs. It discusses the reauthorization and appropriations for the Substance Abuse and Mental Health Services Administration programs, noting implications, especially for fiscal year 1997, of the block grant approach and the decreasing commitment of the federal government to mental health services. A section on entitlement programs compares alternatives proposed by President Clinton, Congressional Republicans, the National Governors' Association, the House Coalition (conservative democrats) and the Senate Centrist Coalition (bipartisan moderates). The following sections address proposed or implemented changes and their implications in the children's SSI program, child welfare, education, and mental health parity. A concluding section offers examples of the combined impact of the proposed changes, to illustrate how difficult the situation could become for children with emotional disturbances, while noting that the inability of the Congress to enact most of these plans has temporarily preserved essential services. (DB)