In 1990, the Arizona legislature initiated the Arizona School Restructuring Pilot Project. This report identifies local- and state-level barriers encountered in the first 2 years. Outcomes are presented for the 15 pilot schools--11 elementary and 4 high schools--that were selected in a competitive grant process. Data were collected through school self-evaluation surveys, telephone interviews with key participants, and onsite observations. The following local-level barriers are identified: lack of training/inservicing for key stakeholders; lack of knowledge concerning state laws, school board rules, and available resources; district actions to maintain uniformity; limited discretionary monies allocated to the school-level; and the impact of district-negotiated teacher contracts. State-level barriers included: restrictive certification requirements; numerous state-mandated instructional topics without adequate financing and support; excessive and redundant reporting requirements; an inequitable finance formula and budgetary restrictions; and restrictive teacher-dismissal laws with prolonged timelines. Given the resistance to state-mandated restructuring, it is suggested that state-level policymakers focus instead on empowering school-based personnel through information, training, and support. Recommendations are made for developing such an infrastructure of support. Nine figures are included. The appendix contains a list of participating schools and a funding summary for the pilot project. (LMI)