This book proposes a new form of school governance based on contracting and family choice. Under the proposed plan, all public schools would operate under contracts that define each school's mission, its guarantee of public funding, and its grounds for accountability. The contracts would have two parties--the local school board and the individual school. A local school board would be party to many contracts, and contracts with schools that did not do well could be terminated. This form of contracting would redefine the public school by extending the charter concept to the entire school system. Contract schools would be different from one another, offering different instructional methods and extracurricular activities. School boards would no longer have the authority to run schools directly or to create systems that exhaustively constrain what schools can do. The board would define the need for particular types of schools. Schools would be evaluated based on state or local student performance standards. Teachers' unions would act as hiring halls for schools in search of teachers, and unions might even have full management authority for certain schools. Part I presents the case for contract schools, and Part II discusses implementing a contract school system. The following chapters are included: (1) "Preserving Public Education"; (2) "A Critique of the Current Public School System"; (3) "A Contract School Strategy"; (4) "Contracting and Other Reform Proposals"; (5)"How A Contract Strategy Would Work"; (6) "Paying for Contract Schools"; and (7) "Politics, Leadership, and Transition Strategies." Appendixes describe two hypothetical contract schools, present a primer on school finance systems, and answer some questions about contract schools. (Contains 135 references.) (SLD)