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How does the state accomplish its governance functions, especially in key areas of public life, such as education? The functioning of the U.S. state has long been debated, especially in light of record low and declining public confidence in institutions. Scholars have understood state governance through two dominant, opposing theoretical models: bureaucracy, which emphasizes hierarchical control and compliance, and markets, which rely on competition and decentralized decision-making. A central problem connecting these ideal-type illustrations is their view of socially-embedded interactions as an encumbrance to governance. While bureaucracy treats relationships as threats to rule-based order and markets view them as distortions to competition, we argue that relationships can instead serve as a governance mechanism. We introduce the concept of the "relational state", where governance functions are carried out through "relational controls.” This approach leverages social interactions to establish shared expectations, trust, and reciprocal accountability. We explore the relational state in the context of school turnaround efforts, where state education agencies (SEAs) face challenges in ensuring compliance and performance improvement. Through a mixed-methods study, we find that SEAs rely on role relational practices, including repeated interactions, trust commitments, and shared expertise, to shape organizational behavior. These practices restrict discretionary compliance while fostering professional motivation to align with state mandates. Our study advances theories of state governance by highlighting how relational mechanisms can complement or even substitute bureaucratic and market-based controls. Recognizing the relational state’s role in governance may provide new insights into rebuilding public confidence in institutions and improving policy implementation in complex domains like education.