This chapter is organized as follows. The first section examines the evolving state and federal role in education and the implications of an expanded federal role on the structure of the educational system. It pays particular attention to how the debate on the causes and solutions to school reform has shifted and the impact this has had on school governance and on how educational policy priorities are defined and established. It then examines the transformation of institutional relationships, focusing on changes in the organization of interests. The second section takes up the role of the courts and the impact of court decisions on how schools are governed and the reform strategies available to schools and districts. It examines rulings on civil rights, No Child Left Behind (NCLB), and school finance. The third section examines the rise of the market and educational privatization, and the fourth, changes in the governance structure at the district level (mayoral control). The chapter concludes by discussing the implications of these reforms on governance and school reform and the opportunities they generate for the future direction of educational reform. (Contains 3 notes.)