Sensitivity to context variables marks the third phase of effective schools research (ESR). The first phase was one of explicit concern for equity, challenging the works of Coleman and Jencks which suggested that achievement differences were more associated with family background than school variables. This research focused on low socioeconomic status urban schools. Phase two was characterized by implicit concerns for efficiency. While controlling for financial expenditures, those variables associated with achievement outcomes were investigated. The third developmental phase of ESR may draw on research done outside of the rubric of ESR to understand forces present in individual classrooms, larger organizational settings, and communities. Using a heuristic of political economy permits researchers to examine the effect of multiple variables on both equity and efficiency of resource utilization and learning. (The stories of two elementary schools are presented to illustrate possible differences in school environments.) (MDE)