This paper begins with background information on the federal grant program, and on the scholarship that has informed our research. We then provide brief sketches of the eleven grantee districts and how they have used their federal funds. Our analysis focuses on how the school districts defined diversity, and how local politics were shaped by national factors like the economic recession. These policies fundamentally affect the distribution of educational and social opportunity within communities, and, in fact, may be even more subject to local variation and political dynamics than were earlier federal diversity efforts. We conclude that existing ambiguity about the use of race and growing governmental austerity constrained how districts chose to pursue diversity at the local level. We found that the districts whose plans explicitly connect diversity to educational improvement were likeliest to produce diversity plans that were approved by local boards while those districts who framed diversity as unrelated or in competition with academic quality adopted plans that moved away from equity. In addition, although the growth of race neutrality and lack of involvement by groups making racial equity claims may have resulted in districts’ adoption of largely race-neutral approaches to diversity, there is also a sense that such decisions have tradeoffs in terms of effectiveness.