Implemented in January 1984, the two-part New Jersey local assistance plan calls for state intervention and possible takeover in districts that are unable, after going through the Level I and Level II monitoring and correction processes, to meet state certification standards. The first phase of the intervention plan, a Level III monitoring process, includes a systematic examination procedure during which experts review the district's deficiencies and direct local officials in ways to correct them. The second phase of the plan, reserved for extreme cases in which severe and complex deficiencies still exist, calls for the establishment of a state-operated school district that will do the following: (1) remove from office the local superintendent, board of education, and other key administrators; (2) give a state district superintendent authority over the district for a minimum of five years; (3) establish a local advisory committee; (4) evaluate building principals; and (5) work toward reestablishing local control. This document presents detailed components of and procedural guidelines for both parts of the intervention plan. It also includes definitions of key terms, a glossary, question and answer sections, and proposed legislation for the establishment and governance of state-operated school districts. (IW)