In this policy brief the author shows that contracts negotiated by local teachers' unions and district administrations allow for more flexibility than conventional views suggest. CBAs (collective bargaining agreements) are quite varied in their contents, and many school boards and unions have used the flexibility inherent in contract negotiations to create inventive and targeted solutions for specific district problems. Although many districts are making good use of local autonomy, however, the high-need districts that might make the most beneficial use of flexibility are often those with contracts that include the most severe obstacles to departures from conventional policies. This poses a dilemma for state policymakers. Allowing school boards and unions the autonomy to negotiate district-specific solutions through their CBAs might provide the space for innovative and context-driven solutions at the local level. At the same time, however, independence from regulation brings with it the risk that such autonomy will lead to policies that are in the best interests of districts and/or teachers' unions, but not necessarily in the best interests of students. Based on a careful review of data from four main contract areas (compensation, class size, evaluation, and transfer and vacancy provisions) in 464 California school districts, the author argues for the cautious relaxation of state-level regulations. She identifies three policy levers that the state can use to ensure that increased flexibility is used to advance the interests of students: dissemination of information about innovative "best practices" that have been negotiated in current CBAs; incentives to encourage local innovation on matters covered by CBAs; and sanctions for districts that abuse their newly increased autonomy. The author concludes that enhanced local flexibility can help California school districts survive and flourish in this difficult period, as long as careful precautions are taken to ensure that the highest-need students benefit from increased local autonomy. (Contains 2 tables, 4 figures, and 1 endnote.)