In 1927 the Government set up a committee of its members to enquire into means of reducing the cost of education. A new Director of Education, T. B. Strong, presented a strong case for the abolition of all local education authorities except school committees. Later, he modified his proposals to provide for the retention of post-primary authorities with reduced powers similar to those of school committees. The education boards, threatened with extinction, attacked the Director's submissions and successfully rallied support for their cause in Parliament and in the press. A change of Government in 1929 brought forward the Hon. Harry Atmore as Minister of Education. On his motion, the Education Committee of the House of Representatives was empowered to sit during the recess and report on “all matters relating to education and public instruction generally.” The report of the recess Committee (commonly referred to as the Atmore report) rejected the Department's proposals for the abolition of the education boards. In doing so, the Committee stated its conviction that “the public of New Zealand would rather bear the burden of the extra cost of the present system than change it for one of bureaucratic control, however much cheaper the latter may be.” It recommended that the control of primary and post-primary education should be unified under reorganised education boards responsible for the administration of education in their districts. Under this reorganisation, school committees would be responsible for the day to day management of the primary schools, and post-primary school boards, reduced in status to school councils, would carry out similar functions for post-primary schools. As part of its proposals for the unified control of education, the Committee recommended that there should be one national teaching service and that the inspectorate should be unified.

Shortly after the publication of the Atmore report in August 1930, a reorganised Coalition Government set up a National Expenditure Commission to make recommendations for reductions in national expenditure. Although the Commission re-examined and supported the Department's case for the abolition of education boards, the Government, by then strongly aware of the support for local control, did not implement the proposal.

With the appointment of N. T. Lambourne as Director of Education in 1933, there began an improvement in relations between the Department and the education boards. The improved relationships were consolidated by his successor, C. E. Beeby, and in the post-war years the process of centralisation which had continued uninterrupted from the beginning of the century, was in some measure, reversed.

In 1935 a Labour Government was elected to office in improved economic conditions. An Education Bill introduced in 1938 indicated the new Government's endorsement of the Atmore report's recommendation for the local unified control of primary and post-primary education under reorganised education boards. Subsequently, these reorganisation proposals were withdrawn from the Bill with a view to their being included in a Bill consolidating all educational legislation to be introduced later. Work on this consolidating Bill was largely completed by 1941, but in the following year the Government decided not to proceed with it, no doubt because of practical difficulties in introducing a major measure of administrative reform when the country was at war.