In this report, the author explains the small-schools environment in New York City. Prior to the pandemic, the Big Apple had a small but growing microschool and learning pod community. New York City's frequent school closures throughout 2020 and 2021 caused many families to look more closely at these education options. New York State's stifling regulatory environment shows why more microschools and learning pods did not emerge during the pandemic--and might not emerge in the years ahead. One key lesson from this study--and others in this series--is that a state's policy disposition toward school choice, private schools, and homeschooling can thwart education innovation in many ways. For microschooling and learning pods to expand in NYC and elsewhere, state policymakers must assess and reform a host of statutes and regulations, even if such rules were created with student welfare in mind and have been on the books for generations. [For the main report, "Microschooling and Policy," see ED618730.]