Maryland's Challenge Grant Program was designed to bring systemic change to schools with relatively low performance levels. This paper presents findings of an ethnographic study that examined the workings of an educational reform effort across several levels of administration. Specifically, the study explored conditions that facilitated and inhibited implementation of a state-sponsored reform effort in one school district. It looked at how earnest intentions and significant resources were filtered through a set of important but competing administrative mandates. Examination of the seven participating schools' school-improvement plans (SIPs) revealed several shared goals and objectives: (1) improve curriculum and instruction; (2) extend the school day and year; (3) facilitate student transition; (4) support families; and (5) provide staff development. Conditions facilitating reform included dollars, staff and parent morale/cooperation, dissatisfaction with the status quo, and waivers from standard operating procedures. Inhibiting conditions included a cumbersome SIP review process, accounting regulations and procedures, an unsynchronized annual budget cycle and SIP approval process, an overabundance of leadership with different messages, low tolerance for risk-taking, a high staff turnover rate, and the insularity of the schools. A conclusion is that standards-based reform is a first step in the reform process, which should seek ways to achieve educational equity. (LMI)