State Education Agencies (SEAs), in their pivotal role of representing the interests of both the public and the education establishment, must make constant reassessment of the directions which may be taken to improve education, and of the policy issues and options to be examined. These policy-level considerations can be brought into focus by reviewing the contexts in which the improvement of teaching must take place. SEA education policies concerning the improvement of teaching need to be at once sensitive to, and isolated from, political considerations. Other contextual factors in education reform are contradicatory trends, e.g., demands to make things tougher for students and simultaneously to have more concern for their individual needs. Established law and entrenched interests in education must be of concern in policy formation as well as the complex problems inherent in reasonable and sufficient state funding. SEA action for improvement of education must be concerned with what is crucial to real educational reform, what is amenable to change, and most clearly with what is in the area of state-level authority. Factors to be considered are: (1) political realities; (2) organizational and institutional power balances and alignments; (3) patterns of school organization; (4) current and projected fiscal resources; and (5) state level priorities. (JD)