Since the 1960s, schools have relied on federal and state programs to provide the extra resources and services needed to help certain categories of disadvantaged students catch up with their classmates. While many credit these categorical programs with expanding educational opportunities, increasing numbers question the effectiveness of this ad hoc approach to equity. Facing increasing pressure to be more innovative and improve outcomes for all students, many schools blame regulations for their inability to perform. In response, state and national policymakers have begun to loosen regulatory controls and to examine reforms that focus on outcomes-based accountability. This publication discusses the historical context for regulatory flexibility, describes other education reforms that have acted as a vehicle for this movement, and provides some common examples of deregulation. Finally, it examines issues raised by regulatory flexibility and provides an overview of pending federal legislation. Where this experiment in deregulation, greater local autonomy, and higher standards will lead is unknown. It could result in greater creativity and more responsive, equitable schools, or it could leave some students behind with fewer supportive resources. The real test will be how well-deregulated schools benefit those student who have the most to lose, not just the fortunate few. Contains 14 references. (LMI)