Inter-district choice typically allows families to send their children to any government school in the resident state, or a region therein, subject to the following restrictions: (a) the receiving district agrees to accept non-resident students; (b) available space exists within the receiving district's schools; and (c) the transfer will not adversely affect racial desegregation mandates. In a very few cases, districts are required by the state to accept non-resident students if they have space available. Some plans are the result of voluntary compacts between districts apart from any state mandate.

Voluntary compacts between districts, however, are the exceptions: Most school districts are reluctant to waive their claim to per-student state aid for resident students who want to enroll in another district. School districts that might enroll students from other districts have little incentive to accept students who bring no state aid to their school system, unless the family can afford to pay tuition out-of-pocket. Therefore, most inter-district open enrollment plans are the result of a state legislative mandate that, in effect, allows a per-pupil share of state aid to follow students from the resident district to a non-resident district of their choice.

In some states, inter-district choice has been used to facilitate voluntary desegregation between two or more districts by offering unique and special-focus schools to attract children from both urban and suburban settings. Inter-district choice also has been used to give parents and children attending government schools greater flexibility in choosing educational programs. Frequently, small towns and rural communities have only one school at the middle and high school levels so inter-district choice enable parents to expand their educational options to neighboring communities.

Inter-district choice is usually complicated by the fact that school districts spend different amounts per student and have different mixes of local and state tax revenue. In most states, local government revenues cannot be appropriated by the state legislature for state purposes or transferred to other governmental districts without local voter approval. As a result, state revenues are the only source of revenue for participating inter-district choice schools. The greater the reliance by a state on local tax revenues to fund government-run schools, the more difficult it is to implement inter-district choice, for taxpayers within a particular district are understandably reluctant to absorb most of the educational costs of non-resident students. Even in states that heavily subsidize local districts with state revenues, the amount of state subsidy often varies greatly between districts. In such states, high-spending districts—which are most often the subject of choice by non-resident students—are reluctant to accept any amount of state aid less than their per-pupil cost without charging additional tuition.