Many states are trying to balance interests in school between taxpayers' concerns and providing students with a good education. Washington is trying to overcome these problems and renew and enhance its public schools. Three court decisions in the late 1970s and early 1980s set strict constraints within which Washington's school funding system must operate. Concerns have been raised recently over the state's highly centralized school funding system. Educational reform efforts also stress the importance of the individual school in improving education. These reform efforts were being hindered by the state-centered funding system. Many critics claimed that while school funding increased significantly in the 1980s, the quality of education did not increased at a similar rate. These spending increases were due largely to higher costs for employee benefits and increased special-education enrollment. The Governor's Council on Educational Reform and Funding (GCERF) was created in 1991 to develop a long-term K-12 reform plan. The plan sets student goals, decentralizes operations, establishes school achievement rewards, and increases funding for professional development and technology and changes teacher certification practices. Obstacles to reform include insufficiently tested and expensive assessment methods, resistance to decentralization, and inequitable funding. Four tables and footnotes are included. (JPT)