The history of intergovernmental relations in educational policy has been dominated by regulations, categorical programs, and technical assistance by higher levels of government to stimulate or require lower levels to make changes in policy and practice. This paper summarizes recent research collected by the Consortium of Policy Research in Education (CPRE) on the impact of higher-level government policies at all phases of educational change. Specifically, it highlights the limited influence of intergovernmental policy on classroom practice. General findings are: (1) Use of power and influence in education intergovernmental relations is not a zero-sum game; (2) deregulation per se (including abolishing state codes) does not result in significant policy change; (3) some states use differential regulatory strategies; (4) several states and localities have attempted to use sanctions and incentives to stimulate desired change or performance; (5) many recent curricular reforms are not clearly specified in terms of expected local and school-level implementation; and (6) state education agencies are not well structured or well prepared to help implement and sustain systemic reform. The following sections analyze the evolution of categorical grants and recent political controversies, and review intergovernmental relations in theory and practice, such as the Clinton Administration's federalism and the Republican block-grant approach. A conclusion is that these higher level policy debates may obscure the need for improving the connection between policy and classroom practice. Contains 40 references. (LMI)