A new school year begins with a few changes in store, such as Chris has graduated and now must move on with his life, Ms. Sherwood has completed her novel and is moving to Maine, and Mr. Shorofsky decides to retire, which saddens new student Ian Ware.

Jesse and Nicole are set to dance at the wedding of Chris' cousin, but Nicole is unsure where their relationship is headed with Jesse and breaks up with him. Meanwhile, Danny and Jillian begin their own romance.

Lydia gets a job at the school for her old friend, Pete Seeger, as an acting teacher. He feels his tough methods have annoyed the kids and thinks about quitting. Meanwhile, Danny is asked to show Hannah Cooper around the school, but the 11-year old prodigy refuses to play for anyone.

Leroy's commencement as a teacher has arrived, but he doesn't feel much like celebrating after being accused of giving lead roles to blacks over all the other students. Mr. Shorofsky and Ian knock heads over musical styles.

Jesse has a 1930's style play in which Mr. Dyrenforth decides the school will fund to win the $20,000 prize from the Kimble Foundation. But when the school board rejects to fund the play, Lou steps in to get the play produced. Meanwhile, the lead in the play, Nicole, comes down with laryngitis.

Chris learns the good and bad of parenting when his siter leaves him with his nephew, Spike. Mr. Dyrenforth finds out just how important Mrs. Berg is when she leaves to attend her brother's anniversary for a day. Nicole, Dusty, Reggie, and Jullian find themselves arguing after forming their own band.

Reggie gets herself in trouble with the law and with Mr. Dyrenforth, after trying to buck conventionalism and help the homeless. Elsewhere, when Dusty's father comes for a visit, Reverend Tyler decides that she should return home to Colorado because New York is too risque for her.

Danny, frustrated from the lack of acting work decides to start his own cable-access show. While searching where to go he enters the doors of the Mr. Wacky's World, and is offered the job of playing Mr. Noodles. Although he loves the work, Danny isn't thrilled of playing a stooge. When Jesse makes a friendly gesture, Dusty misinterprets it as romance.

Tina comes back to visit her uncle Leroy, and he tries to add the Christmas spirit back inside her. But with Leroy's busy schedule, she loses the faith. Meanwhile, Mr. Shorofsky is hospitalized to remove his tonsils, leaving a pair of kids believing he is the real Santa Claus.

Nicole gets the chance of a lifetime when she's offered a job as a back-up singer for her idol, Frannie Fortune. But she quickly learns that the business is a dog-eat-dog world. that he's lonely, Danny, Jesse, and Leroy try to bolster Mr. Dyrenforth's love life by posting pictures of him all over the city.

Following a party, Miss Grant becomes frustrated when she learns Nicole and Danny missed an important rehearsal for an upcoming performance. Unknown to anyone was that Nicole and Danny were in a car accident with drunk driver Mickey Grath, killing Nicole. Everyone feels the loss of their friend, but Jesse becomes enraged and voes to kill Mickey.

Movie director Jeff Stave's new film "Kittens Go to High School," is to be shot on the site of the School of the Arts. Jillian, working as a student assistant to Mr. Stave, falls for him but quickly learns why their love can never be. The lead actress of the film, Maxie Sharp, decides to stay behind and enroll at the school.

Ms. Fleming will be replacing Mr. Dyrenforth while he is away for an appendectomy, and she quickly instills a doctrine prohibiting dancing and singing in the school hallways. Elsewhere, Miltie decides to do a good deed and takes up the persona of the Crimson Blade, performing feats of heroism.

Lydia and her high school sweetheart have rekindled their romance, that is, until she discovers how he makes his money...as a stock swindler. Meanwhile, Ian becomes jealous of his father when he becomes friendly with the kids at the school.

Duke, Lou's shifty brother, has come for a visit. After hearing Chris' singing voice, offers him a chance of recording an album. Mr. Seeger is asked to sit on the newspaper committee which includes listening to Maxie and Reggie's bickering.

The school becomes a magical location after Mr. Shorofsky receives a violin from Bavaria which he hadn't touched since 1947. He tells the students of the magic which is held inside the instrument and the legend which follows. Convinced of the story, the students clamor over who will possess the violin.

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A visit from Ian's ex-girlfriend has him feeling homesick and decides to head back to England, a move which she disapproves of. Meanwhile, Mr. Shorofsky has decided to enter Ian in a competition for classical guitarists, which he refuses to attend. Also, the gang helps Lou get ready for a campaign as the President of the Metropolitan Bowling Operators Association.

Danny is excited to learn that his old friend id coming for a visit and has gotten a job with Lou. But Danny has trouble accepting the news that he is gay. Meanwhile, a local stereo store is issuing a challenge for a dance routine to appear in their TV ad, prompting a competition between Leroy and Ms. Grant with their choreography.

Chris gets caught up into international intrigue after Jillian sends some papers she was typing up for him to his home. Now he is being followed by a pair of men inside of an ice cream vehicle. Meanwhile, Reggie, Ian, and Dusty all participate in a student video contest, but find their subjects to be troublesome.

Reggie helps her close friend Rose, join a summer stock company with her. But having been kicked out of English class, she gives up on both mediums.

The National Cultural Center has chosen the School of the Arts as an organization which will be allowed to enter one item into the time capsule, but no one can decide on what the item will be. Miltie is given an ultimatum to pen an original song or fail, which leads him to plagiarize a 14th century ballad.

Mrs. Berg is caught in a lie when her old lover comes for a visit after having said she was in charge of the whole school, causing the kids to pretend she is the acting principal. Elsewhere, Gordon and Reggie attempt to get Mr. Dyrenforth to accept a computer simulator which allows virtual animal dissections, instead of destroying an actual animal.

With alumni week in session, this would be a great time to make a video yearbook. Meanwhile, Miss Grant believes Leroy should play the lead of the school showcase, in which alumni and big time producer Michael Taftner turns down feeling that Leroy can't handle the part. Also, Chris lies about his success when asked to be the guest speaker, which causes him to butt heads with Mr. Seger.