Governor Arnold Schwarzenegger has declared his intention to open health centers in 500 elementary schools across the state, which would bring the total number of such school-based clinics to 646. This initiative builds on California's 30-year history of using the school setting to increase access to care for children, improve clinical outcomes, and save money for public and private payers of child health services. This report explores the options and issues associated with the potential launch of a new school health center initiative in light of previous experience in California and other states. It concludes with a discussion of state policy development and possible directions for future state action. Three appendices are included: (1) School-Based Health Centers, by State and School Year; (2) K-12 Students and School-Based Health Centers, 2004-05; and (3) State Definitions of School-Based Health Centers (SBHCs). (Contains 1 figure, 6 tables and 32 endnotes.) [This paper was prepared for California HealthCare Foundation.]