This report summarizes research on the effects of class size reduction, outlines lessons learned from large-scale class size reduction initiatives in California and Wisconsin, and draws out implications of the research and lessons for class size reduction in North Carolina. The evidence that smaller classes promote increased learning is strongest in grades K-3. The longer students are in small classes, the more they benefit. Small classes help minority and low-income students the most. Teachers in smaller classes give students more individual attention and have fewer discipline problems. Though research in California and Wisconsin has found positive results of small class size, the states faced several barriers to reducing class size, including a shortage of high quality teachers; lack of adequate facilities, equipment, and materials; and lack of sufficient funding. Though North Carolina faces similar problems, it has undertaken such steps as scholarships for prospective teachers, alternative teacher certification, funding for additional teachers, an aggressive reduction program for the lowest-performing and highest poverty schools, and an outside evaluation of the effectiveness of class size reduction initiatives. (Contains 25 references.) (SM)