In the present paper, we argue that neo-liberal governance regimes are deeply contradictory and that these contradictions are increasingly evident within the education sector. Drawing on a case study of the consequences of restructuring in education in New Zealand, arguably a paradigm case of neo-liberal governance, we suggest the state is faced with a dilemma about how best to manage these tensions and contradictions within the framework of the political rationality itself. One strategy is to isolate and localise these problems in order to contain and manage the risks associated with them. We identify five variants we argue can broadly be viewed as local states of emergency.