Flexibility is a lever for change that occupies an increasingly prominent place in federal strategies for educational improvement. Flexibility assumes that local actors are in the best position to identify the most serious problems facing schools and students and to determine how to solve them. Consequently, these actors should be given greater decision-making authority to allocate resources, including federal funds, to the programs for which they will do the most good. This study focuses on the additional funding flexibility offered to all school districts via the Transferability provision of the No Child Left Behind Act of 2001. Under Transferability, districts generally may transfer up to 50 percent of their initial formula allocations into and out of the following Elementary and Secondary Education Act (ESEA) programs: Title II, Part A (Improving Teacher Quality State Grants); Title II, Part D (Educational Technology State Grants); Title IV, Part A (Safe and Drug-Free Schools and Communities State Grants); and Title V, Part A (State Grants for Innovative Programs). There were five primary findings from this study: (1) nearly 16 percent of all school districts reported using Transferability, but conflicts between district and state reports suggest there was considerable confusion about this option; (2) districts exercising Transferability and those not utilizing this type of flexibility were similar demographically; (3) under Transferability, Title I, Part A, and Title V, Part A, received the greatest influx of transferred funds while districts also moved more money out of Title II, Part A, than any other program. (4) districts reallocated funds under Transferability in order to make adequate yearly progress (AYP); and (5) reduced funding and spending restrictions led many districts to use the Transferability provision, though not all. Some districts did not participate in Transferability because of perceived adequate existing flexibility, the amount of eligiblefunds, and insufficient information about Transferability. The following are appended: (1) Methodology; (2) Data Tables with Standard Errors; (3) District Survey; and (4) Transferability Authority District Interview Protocols. (Contains 24 exhibits.)