This report is submitted pursuant to Chapter 941, Statutes of 1986 (AB 3959). Chapter I explores the problems that are associated with teen pregnancy and parenting. Chapter II describes the dimensions of the teen pregnancy problem in California and the factors contributing to teen pregnancy. Chapter III contains descriptions of existing state programs that serve pregnant and parenting teens, including the cost of services provided. Chapter IV reviews various studies that (1) have identified what influences teenagers in making choices regarding sexual activity and coping with unplanned pregnancy and (2) assess the effectiveness of various services and programs in dealing with the teen pregnancy and parenting problem. Finally, Chapter V summarizes our recommendations regarding state services for pregnant and parenting teens.