States’ Intervention in School Districts’ Finances

In recent years, state takeovers of local school districts have become both increasingly common and prominent. Districts including Newark, Detroit, and Harrisburg are among those that have met this fate. Each of these takeovers—as well as many state interventions of a more limited nature in districts across the country—occurs pursuant to state law.

In fact, each state has one or more laws that allow the state to intervene in the finances of its school districts. These laws influence the balance of state and local control over education, and they shape important governance relationships and how educational resources are allocated.

Yet we know relatively little about these potent laws. Accordingly, a research brief released today by the National Education Policy Center, States’ Intervention in School Districts’ Finances,investigates state fiscal powers over districts. The brief, authored by Michigan State University’s Dirk F. Zuschlag and Kristine L. Bowman, provides the needed foundation for policymakers and researchers to understand how states might best address districts’ financial conduct and difficulties going forward.

Zuschlag and Bowman first consider ways that the state statutes provide the bases and means for state intervention into local district finances. They then look for patterns among these state statutory provisions, and present a useful typology of system design across states. Based on that typology, they explore correlations between a state’s potential for fiscal intervention and other major areas of education policy. They conclude with the following four recommendations:

1. The authors encourage national organizations such as the Education Commission of the States and the National Conference of State Legislatures should convene state policymakers and researchers to facilitate policy learning and policy transfer about these issues.
2. They also encourage state governors or state legislatures’ education committees to evaluate their systems of potential interventions into districts’ finances and also implementation. In particular, these policymakers should ask how that system interacts with other statutory systems such as those regulating school funding and enabling charter schools, and how implementation could impact school districts with varying racial and ethnic composition.
3. They ask researchers to make use of the brief’s data to explore connections between a state’s articulated power over school districts’ finances and other core aspects of a state’s fiscal power over education. These other aspects include school funding (de)centralization of school funding and adequacy, as well as charter school permissiveness. Exploring the existence of connections with states’ partisan politics also may help illustrate connections between or among these policies. 
4. Researchers, the authors note, should further investigate the connections suggested in the brief between potential fiscal interventions, students’ race, and charter permissiveness. Researchers also should examine correlation and causation between (a) the systems identified in the report and (b) racial, ethnic, and socioeconomic diversity within and among districts. 

Find States’ Intervention in School Districts’ Finances, by Dirk F. Zuschlag and Kristine L. Bowman, at:

http://nepc.colorado.edu/publication/state-intervention