In 1993 the New Jersey Department of Education documented a range of criminal and unethical conduct in the Newark public schools, and state investigators found major deficiencies in administration, educational programs, and finance. In 1995, the courts ordered the state takeover of the Newark school district. This report, by the State District Superintendent of the Newark Public Schools, outlines the steps being taken to provide a better education for the city's children. Initial reorganization of the central office redirected $26.3 million dollars into education programs, including full-day kindergarten. An Advisory Board was established, but the state retained control over personnel matters. The legislation specifies that, after 5 years, local control can be restored if the district meets specific benchmarks, but the state can retain control as it has with two other New Jersey districts. To ensure sound governance after local control is re-established, a Strategic Plan has been developed, with 11 objectives. Implicit in each objective is increased accountability of all constituent groups, and each of the 11 addresses creating the best climate and support systems needed for children to succeed in the classroom and in the future. Governance is a key area of the school reform, and efforts are concentrating on shifting the locus of control, and economic and human capital, to School Leadership Teams (SLTs). Each SLT is led by an assistant superintendent responsible for 14 to 16 schools, each of which will have a building-level School Core Team. Principals have been given authority to develop their own budgets and select their own staff. Parental involvement is an important part of the change process, as are community partnerships. (SLD)