In the wake of January 1988 takeover legislation to improve education in the State of New Jersey, this paper describes and justifies the strict state three-tier monitoring system of school district educational standards. School districts that need improvement after the first level of monitoring must develop an improvement plan to overcome their problems in the second level. If a school district cannot address its deficiencies in the second level, it moves into Level III where staff from the Department of Education's Division of Compliance conduct a preliminary review. Corrective action must follow state directives for improvement. Districts that do not take appropriate outcomes-oriented corrective action risk state takeover, as was the case in Jersey City. Ultimately, the State Board of Education decides for or against a takeover and may return the district to local control after 5 years, a decision based upon progress reports submitted by state-appointed superintendents. Once the state board reestablishes local control, the district's elected school board has the full authority to govern the school system. This process is justified on the grounds that the state has the resources to correct school district deficiencies that the individual districts cannot correct themselves. Indeed, the takeover law is "no more a threat to healthy schools than financial bankruptcy laws are to healthy businesses." (JAM)