Policy Study

Balancing Accountability and Local Control

State Intervention for Financial and Academic Stability

Executive Summary

States continue to search for ways to hold schools accountable for results. Financial management and academic performance are two areas where state legislatures gauge school district performance. There are several cases across the nation where school districts failed to maintain sound financial and academic strategies. Financial and academic bankruptcies indicate failure on behalf of local school districts.

In response, states, which have final responsibility for the provision of public education, have proceeded with different intervention and accountability strategies. District takeovers, mayoral control, third-party partnerships, and reconstitution of schools are some of the policies pursued to address school district failure. In all, 22 states have passed academic bankruptcy laws that hold school districts accountable for student results. Since the first state takeover in 1989, more than 25 interventions in school and district operations have been made across the nation.

The track record of these accountability mechanisms is mixed. State takeover of a school district in West Virginia is widely considered a success for the turnaround in financial and educational management of the district. On the other hand, takeovers in New Jersey have failed to bring districts up to state standards in student achievement.

State intervention strategies return fiscal soundness to districts typically in three to five years, but student achievement often lags behind. This mixed bag of results should come as no surprise. Financial-management techniques are standardized and can be replicated. For this reason, returning a district to a sound financial position should come with relative ease. However, student learning is more dynamic in nature and, therefore, not easily rectified by a single, standardized approach. Understanding the scope of student and community diversity leads us to believe that traditional intervention strategies have failed, and will continue to fail, student learning because of the lack of strategic innovation.

What are needed are new options available to educators, parents, and students. These strategies must have the goal of improving student performance at their cores. Ultimately, these programs should no longer operate if unsuccessful in this mission. The ambiguous results of the different state takeover strategies should lead policymakers to seek alternative accountability strategies. The efforts of Chicago Mayor Daley and the ambitious public-private partnership between Chelsea (MA) schools and Boston University offer options for other states and schools to learn from. Without genuine accountability, poor student achievement will continue to plague many of our nation’s public schools.


Richard C. Seder is the director of education studies for Reason Public Policy Institute, a national public policy research organization. Mr. Seder has done extensive work in the area of quantitative and qualitative research on the structure of educational systems; school choice programs; accountability issues; and the impact of expenditures on student achievement. Before joining RPPI, Mr. Seder worked as a research assistant to the executive director for the Cato Institute in Washington, D.C., where he assisted in a study analyzing the relationship between public and private post-secondary institutions in three states. Prior to that, he was the recipient of a Charles G. Koch Fellowship through the Center of Market Processes examining the effects of immigration on the U.S. economy. Additionally, Mr. Seder has served as a project director for the Allegheny County School System Project in Pennsylvania, where he conducted extensive research on 43 public school districts. Mr. Seder holds a Masters of Science in Public Policy and Management from the Heinz School at Carnegie Mellon University in Pittsburgh as well as a double bachelors degree in Government and Economics from Beloit College in Wisconsin.