This paper proposes a measure of institutional capacity for the empirical assessment of institutional change. The aim of the paper is twofold: first, we present an index of local educational capacity that provides an opportunity for measuring institutional change when applied to longitudinal data; second, using the index as an outcome variable, we explore the determinants of the evolution of institutional capacity in order to better understand institutional change of local governments in the education sector. To both build the index and carry out the analyses we use census data from official Catalan sources on all the 947 Catalan local governments for a 10 year period and specifically focused on education policy. The Catalan government holds almost all competences on compulsory and lifelong learning education in the region. In this institutionally narrow scenario local governments demand their space. In order to carry out their educational policies (e.g., building new schools or creating nursery schools), local governments must sign individual agreements with the Catalan government. Most of them include economic transfers from central governments to local institutions. On the one hand, this scenario sets up an adverse and complex institutional setting for local governments, but on the other hand it uncovers the determinants of institutional change. Preliminary findings suggest that Local economical and intergovernmental factors (such as the average revenue tax, the average property tax, unemployment rate, and the number of agreements signed) have a relevant impact on institutional change.