The purpose of this study was to evaluate the relative importance of school socioeconomic and racial-ethnic context for Mexican American student achievement and dropout behavior. Data reported in this paper were obtained from the first part of a larger 3-year panel study evaluating the effects of court-ordered busing on majority and minority student achievement. The sample consisted of 860 7th to 12th grade students in public schools in Waco, Texas, and a random sample of 380 dropouts from the Waco public schools during the 1970-71 school year. The specific variables identified were self-concept, racial/ethnic membership, family socioeconomic status, measured I.Q. score, parental authority structure, achievement value orientation, school racial/ethnic climate, school socioeconomic climate, school status-inschool/dropout, and composite achievement score. It was concluded that school racial-ethnic climate exercised the largest effect on variance in Mexican American achievement test scores. With all other factors controlled, Mexican American achievement scores were higher in desegregated school climates while Anglo achievement scores were higher in segregated facilities. The factor which exercised the second largest effect on Mexican American achievement was self-concept, followed closely by measured I.Q. It was further concluded that segregated school climates produced more Mexican American dropouts while desegregated school climates produced more Anglo dropouts. (HBC)