The Star Schools Program has funded projects to explore innovative educational applications of technology in distance education. Funded projects have applied a variety of technologies, including videodisks, compressed data transmission, fiber optic technology, and computer networks. Program evaluation is a mandated aspect of the program. This paper, as part of a national evaluation of Star schools, focuses on issues related to the physical capacity of schools. It reflects information about the barriers and facilitators of technology applications at all 11 projects funded. The major purpose of site observations was to gain insights into the degree to which students have the opportunity to interact with one another and with the distance-learning teacher, as well as student learning and the role of on-site facilitators. Facilities-related issues center on space, telephone lines, and wiring. These issues will face any technology-based program in the future and must be considered along with issues of teacher training and integrating distance education with other educational reforms. (Contains 10 references.) (SLD)