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Racial and ethnic disproportionality in special education is pervasive in the American educational system and the contradictions that exist between the quality of special education services delivered across race and class lines is problematic, especially considering how heavily regulated special education is in the United States. The purpose of this paper is to understand the contextual factors that contribute to the educational paradox that exists between persistent racial disparities in educational outcomes, a policy framework that aims to provide equal opportunity and access to high quality intervention services and persistent disproportionate outcomes. In the paper we use an interdisciplinary lens that engages with both critical policy studies and sociological organizational theory. We use a mixed methods approach to understand (1) what school district contextual factors are associated with a federal citation for racial disproportionality; And (2) how and in what ways do sociocultural, historical, and contextual factors affect stakeholders’ responses to receiving and addressing a citation for disproportionality? For question 1, we use event history analysis (EHA) to identify the relative impact of social contextual covariates on the mediation of disproportionality across districts. For question 2, we interviewed school district leaders and staff. The paper challenges taken for granted assumptions about how education policy, in its attempt to address racial disproportionality in special education, can lessen inequities in practice. Our paper also critically questions how historical, social and economic factors within school districts may affect the implementation and ultimate success of policy in reducing racialized outcomes in education.