This report discusses findings from case studies in California, Missouri, New Mexico, and Pennsylvania that examined ways in which state-level general and special education reforms interact, impact local districts, and affect the educational programs for students with disabilities. Chapter 1 reviews two major state-level priorities for education in the four states: raising education standards and containing education costs. It then explores the effects of state cost-containment measures on local school districts. Chapter 2 focuses on how school districts are responding to state-generated standards-based reforms, and discusses why the kinds of policy actions that the states are taking to reform education are not necessarily the kinds of actions that are most likely to influence local educational practices. It reviews the immediate pressures that the districts must address as they improve their educational programs, and how this leads the districts in directions that may not match up with state education priorities. Chapter 3 looks at the innovations and the variability that arise as the districts invent their own approaches to serving students with disabilities in the absence of clear state guidance. The report concludes with issues that states should consider to increase the impact of standards-based reform. (Contains 59 references.) (Author/CR)