Balancing State and Local Power over School Districts’ Finances

Abstract During and for many years after the 2008–10 Great Recession, financial crises in districts across the country triggered varying state involvement in those districts’ finances and governance, up to and including complete takeover. While these actions were most prominent in a handful of states, all states have laws that enable them to intervene in school districts’ finances. These laws shape important governance relationships as well as the allocation of educational resources, yet we know very little about them. Accordingly, this policy brief reports our identification of 449 state statutory provisions across the country, which together contain 1049 potential interventions; our analysis of those provisions included identifying patterns, trends, and potential interactions with other areas of education policy. At a national level and disaggregated by state, we present what potential state interventions into school district finances already exist, which is a necessary foundation to understand which interventions a district could be subject to in the near future, and how states can both contextualize their policy approaches and best address districts’ financial conduct and fiscal challenges going forward.