The Educational Voucher Demonstration began in the Alum Rock Union Elementary School District, San Jose, California, in September 1972. Initially sponsored by the Office of Economic Opportunity, it is now under the aegis of the National Institute of Education. This publication describes the socioeconomic and cultural setting of the school district, the relations among elements of the school administrative hierarchy, and their relations with outside groups and agencies; and shows how these interactions affected the progress of the voucher demonstration. The authors trace some of the developments as they occurred, and describe how the process of solving problems and adapting to new challenges changed the roles and status of individuals and groups involved in the demonstration. The report is selective and descriptive and presents only tentative conclusions based on the first year of the multiyear experiment. (Authors)