The accountability system that is being implemented in the Dallas Independent School District (Texas) is a three-tier system. The first tier focuses at the school level. The second involves the District Improvement Plan, setting district accountability objectives. The third tier involves school effectiveness indices, which take into account important student background variables and provide information on how effective schools are with the students they serve. Accountability is operationalized in a criterion-referenced manner through an analysis of absolute outcomes relative to school and district performance on goals specified in the District Improvement Plan and the School Improvement Plan, and in a norm-referenced manner through school effectiveness indices. Schools and staffs are eligible for financial awards based on school performance on the effectiveness indices. The program does not reward individual competition between teachers within schools. To achieve the necessary improvement in student outcomes, teachers must work together. The program focuses on the important outcomes of schooling and affords all schools an opportunity to be distinguished, since the emphasis is not on absolute achievement, but on impact on the most students. The addition of the effectiveness indices makes the accountability system fair and valid. Six figures illustrate the discussion. (Contains 44 references.) (SLD)