New Jersey and Connecticut join several other districts and states that are investigating allegations of teacher cheating on state tests, including Philadelphia, the District of Columbia and Georgia.
The district's NAEP scores are believed to be due to real improvements and not cheating, education officials say.
The board that oversees the district released a terse statement saying it remains committed to working with Superintendent Arlene Ackerman.
The school board threatened to delay school until the city made an overdue tax revenue payment to the 105,000-student district
This corruption allegation is one of several in the district over the past five years.
The city's teacher's union has vowed to fight the move, which emergency financial manager Roy Roberts says is necessary to close a budget deficit.
City officials are reportedly negotiating a way to remove Arlene Ackerman from office, but her contract may make her eligible for a large severance package.
Gregory Cizek, who assisted Atlanta investigators in their probe into test cheating, gives some lessons states and districts can learn from the episode.
The 105,000-student district says the city of Memphis owes the school system $55 million.
A Minnesota school district is being investigated by two federal agencies for its handling of harassment and bullying of students.