The elimination of student overcrowding--the objective in writing this report and the objective in seeking reforms of the school facilities construction process--must be the top priority for the city in the next decade. The premise of this report is that much of the planning process for building and repairing schools requires fundamental change, not a hunt for villains or merely a change in who builds the schools. If non educational objectives continue to guide key decision makers, a decade's worth of future investments in school facilities could result in very little improvement in the instructional environment for children by 2010. After three years of interviews, visits to newly constructed schools, and a review of funding for capital projects, the Educational Priorities Panel (EPP) has arrived at the surprising conclusion that, despite the possibility of mismanagement and fraud, neither one is the central problem. There are no villains, rather, a confluence of parochial politics and narrowly focused strategies of facilities and budget staff. The result is fewer new schools and a perpetuation of student overcrowding. This report proposes that the capital budget for the schools be split into three distinct capital budgets so that there is no "drift" between priorities and funds for ending overcrowding are protected. Second, two of these capital budgets should be based on objective formulas of each school district's overcrowding problem and need for capital repairs. And third, it recommends a process for planning that ensures decision making by district and school staff as well as parents. The following appendixes are included: (1) Overcrowding in the New York City Primary Schools in 1989 and 2001; (2) School Construction from 1989 to 2001; (3) Map of Community School Districts; and (4) State Building Aid Claims and Formula-Generated Aid Amounts. (Contains 50 footnotes, 36 charts, 18 tables, and 1 figure.) [Additional funding for this report was provided by The Schott Center for Public and Early Education. Note: Appendix (3) is not included in ERIC version.]