This document discusses the Arkansas Plan, a proposal to the state legislature in 1976 by Governor David Pryor that would restructure the state's financial system and redefine the state/local relationship in Arkansas government. Major changes proposed by the plan--which was ultimately defeated--would allow local voters, not the state, to determine the type, level, and cost of the local services they wanted. The introduction discusses the general political situation out of which the plan evolved. Research is reviewed concerning the origins of the plan, its public reception, and its treatment by the legislature. A case history of the plan from its early formulation through its nearly total rejection by the legislature is followed by an analysis of the process using a public policy model developed by Charles O. Jones. Two factors that led to the plan's defeat, the document concludes, were that the strategy to implement it was imperfect and the plan was not open to compromise. Strategy for approval in the policy process, then, should command as much attention and time as the policy itself. (Author/LD)