Urban school districts face an enormous challenge. They are confronted with high levels of poverty and minority students who at high-risk for educational failure. To compound this, financial resources are lacking in improving these dire conditions. Thus, in a situation where increased budgetary support is no longer accessible, one question remains: What will make a difference? Chapter 1 suggests a first strategy. If district administrators or school principals could shift classroom composition to increase student achievement, then perhaps this managerial approach could improve urban education under extremely strict financial constraints. Using the framework of the education production function and two quasi-experiments, this investigation has identified status quo peer effects in Philadelphia’s elementary school classrooms over six years of observations. Holding fixed students and classrooms, Chapter 2 then asks what contributes to school effectiveness at the level of the institution. It does so by constructing two unique, quantifiable measures of school quality based on the empirical model from Chapter 1. The results indicate that institutional-level resources are significantly related to school quality across three categories (programs, personnel, and school environment) and within both testing subject areas. Based on the covariates analyzed in the first two chapters, Chapter 3 evaluates if and why there is significant variation in standardized testing performance for students in a single urban school district. Incorporating variables into a three-tiered hierarchical linear model of student achievement explains the majority of the between classroom and between school variance, though only half of the within classroom variance.