The students, all trainee teachers, went missing in September after joining a protest in Iguala, Guerrero state.
Their disappearance sparked mass protests, with many still unconvinced by the official explanation that the students were murdered by a drugs gang.
Mayor's arrest In a televised speech, President Pena Nieto said that "Mexico must change".
He announced proposals for a series of constitutional reforms that would allow the country's 1,800 municipal forces to be dissolved and taken over by state agencies.
The overhaul would begin in Mexico's four most violent states, he added - Tamaulipas, Jalisco, Michoacan and Guerrero.
Guerrero is where the 43 students vanished on 26 September.
They had been attacked by local police in Iguala after attending a labour rights demonstration.
Under President Pena Nieto's plans, the thousands of local police forces would come under the control of the 31 federal state governments.
The proposals would also seek to simplify the way in which crimes are currently dealt with at a federal, state or local level, the Associated Press news agency reported.
Some local police forces refuse to deal with federal crimes such as drug trafficking.
The reforms are due to be presented to Congress next week.
President Pena Nieto had faced widespread criticism over the students' disappearance, despite vowing to track down those responsible.
Relatives of the missing have led mass protests across the country to express their anger at the government.
The official explanation offered by the Mexican authorities is that the students were murdered by a drugs gang, but family and supporters say they are unconvinced.
Forensic tests are being carried out on bodies found in mass graves in Guerrero.
The mayor of Iguala, Jose Luis Abarca, has been arrested and faces accusations that he ordered police to confront the students on the day of their disappearance.
The case has highlighted the issue of collusion between drug cartels and the Mexican authorities.
In recent years thousands of people have disappeared or been killed after being caught up in drug-related violence.
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