Analysis performed for the Office of Intergovernmental Science Programs (OISP) of the National Science Foundation to provide policy guidance for consideration in developing science and technology programs for the states. Technology holds the promise of enabling state government to anticipate problems and to perform existing functions more efficiently, effectively, and adequately. The states must incorporate change as a regular part of government. Such continual innovation, however, requires positive incentives for change, perceptions of what may be possible, venture capital, and innovative skills. These prerequisites must be developed, despite numerous institutional obstacles that reinforce the status quo. Conducive conditions must be created and key obstacles neutralized. Opportunities and incentives must be provided to create a demand for change in the system to be changed. An "invest and divest" strategy is outlined that should allow the OISP to attain current objectives within 10 to 15 years. 36 pp.