Findings of a study that explored how California school reforms are initiated and revised and how differences between the judicial and legislative areas affect policymaking are presented in this document. Two themes--financial reform and retrenchment--are examined at two levels: as a case study about the politics of school finance reform and also as one episode in the complex history of equity as an objective of educational policy. The study began in 1978 as a political analysis of how Assembly Bill 65, a school finance initiative, evolved. AB 65 was invalidated by Proposition 13, a tax limitation measure. The study's focus then shifted to a comparison of the politics of reform and the politics of retrenchment. Methodology involved interviews conducted with key participants and document analysis. Chapters examine both the chronology and content of each major episode in California's school finance history. Chapter 1 provides an overview of the state's school finance system and context, focusing on three themes: (1) technical problems, political solutions; (2) judicial remedy, legislative response; and (3) political capacity and coalition building. Chapter 2 examines the issue of judicial intervention in policymaking in the context of the 1968 "Serrano v. Priest" decision. Chapter 3 examines the process involved in passing Senate Bill 90 and its effects on school finance reform. Chapter 4 examines events in the passage of AB 65 and shows how different perceptions of reform lawyers and legislative actors influence policymaking. Chapter 5 examines the effects of Proposition 13, a tax reform initiative, and AB 8, a retrenchment measure. The final chapter examines the relationships among the courts, legislatures, and reform. Four tables are included. (Contains 112 references.) (LMI)