This paper describes the restructuring of the Virginia Department of Education, a process that began in 1990. Data were obtained from four sources: (1) Virginia Department of Education documents; (2) a prerestructuring study conducted by Price Waterhouse in 1989; (3) an evaluative report undertaken by the Joint Legislative Audit and Review Commission (JLARC); and (4) personal interviews with department staff. The Price Waterhouse study identified seven issues confronting the department: increasing student diversity; a changing workplace; local fiscal disparities; altered state-local relationships; the demands of state policymakers for outcome indicators; the activism of state policymakers nationwide in educational restructuring; and the need for a systemwide view of school improvement. The new structure features four hierarchical levels and three branches for student services; research, policy development, and information systems; and administrative services. A new request-for-proposal process, in which an "idea paper" can be generated by anyone within the department or local school division and is reviewed by top management in collaboration with experts, establishes an internal system of control. Although the change strategies appear to have worked, a midway evaluation report indicated the presence of poor staff morale, stress, and uncertainty. The recommendation is made to conduct a followup evaluation in approximately 2 years. One figure is included. (Contains 12 references.) (LMI)