One really important thing is repetitive reading. Pick a book at their level (check out reading a-z if you haven't already it has a TON of printable books that you can differentiate based on level). Then, work on that book for a week. Do different activities with it, but let them get really comfortable with it before moving onto another book. It will also greatly boost their confidence and they can go back and read them at home after you finish working on them.

I feel that when students are significantly below grade level, the best solution involves an in-depth program designed to increase their reading level. Normal reading instruction techniques will likely fall short. My district is using Leveled Literacy Intervention to address this issue.

Use assessments to determine specific needs of students and then group students accordingly and work in small groups. You can teach specific reading strategies, phonics patterns, math skills, etc. to certain groups of students that need specific skills. Go back and look at standards for the previous grade- level. What standards are the students missing? You seem to be well aware that students are not going to be able to master second grade standards when they are missing kindergarten and first grade skills. EIP classes need help filling in the gaps that they are missing.