An effective educational reform plan creates a compelling vision, develops a new policy environment conducive to change, and lays out strategies for involving educators, parents, business people, and community members in implementation. Traditional educational policy is biased toward the status quo, favors yearly, incremental policy-making, reinforces compartmentalized bureaucracies, and tends toward top-down management. Systemic education policy finds new ways and new people to accomplish goals; begins with thorough housecleaning, simplification, and refocusing of the existing policy framework; creates coherent partnerships, synergies, and collaborative activities; and turns problem-solving responsibility over to those closest to the problems. The key to major educational system improvement lies in redefining the policy area that should drive reform in a given state and linking other policy areas to that effort. This report outlines the policy components providing high leverage for K-12 education system reform (standards and curriculum, assessment and accountability, governance, professional development, higher education, finance, cross-agency collaboration, and diversity/choice options) and provides examples of states' progress in these areas. Five key strategies for coordinating and sustaining policy change are summarized. Directory information for organizations representing each policy component is also provided. (MLH)