The Kentucky Board of Education has decided to keep control of the Breathitt County school district for up to three more years.
Media report the unanimous decision came Tuesday after a nine-hour hearing in Frankfort.
Attorneys for state Education Commissioner Terry Holliday argued that continued state management was needed so that students would continue making progress.
Local school board members argued that some of their powers should be restored because they know what's best for students.
State manager Larry Hammond has overseen the district since December 2012. He recommended that it stay under state control.
One board member said it appears that local officials have "only a superficial knowledge" of the skills needed to run the district.