The most recent data available from the National Center for Educational Statistics (2004) estimate that 60% of community college freshmen and 25% of freshmen at 4-year public institutions nationwide complete at least one remedial course. Nationally, fewer than 40% of students who are referred to developmental education actually enroll in college-level courses. State policy plays a significant role in supporting the improvement of outcomes for remedial students. Policy can create an environment that encourages the identification, dissemination, and implementation of procedures that improve outcomes for students who are identified as needing remediation. States can provide additional funding for colleges and universities to test and refine bold new delivery and instructional models. Equally important, states can remove obstacles that limit colleges and universities' ability to take up more flexible and efficient models for strengthening students' basic skills. With this information, it has been determined that there is a lack of research on how policy has affected students who enroll in developmental education in community colleges. The purpose of this qualitative comparative case study is to determine the policies that are in place in California and Texas that address developmental education and how they are implemented at the institutional level. The overarching research question is how does policy formulation in California and Texas address community college students in developmental education? Findings for California unveiled that state funding legislation drove institutional policies and implementations procedures. Findings for Texas uncovered that under the direction and advocacy of the Texas Higher Education Coordinating Board (THECB), Texas has been a forerunner in presenting legislation directly focusing on students in developmental education. Based on the various systems and legislative policies that have been implemented at the institutional level, policy formation plays a key role in addressing the issues community college students in developmental education face. If accountability and evaluative procedures are in place, policy formulation and implementation can help students in developmental education succeed. [The dissertation citations contained here are published with the permission of ProQuest LLC. Further reproduction is prohibited without permission. Copies of dissertations may be obtained by Telephone (800) 1-800-521-0600. Web page: http://bibliotheek.ehb.be:2222/en-US/products/dissertations/individuals.shtml.]