This paper provides a concise summary of 10 years of research into defining appropriate statistical models for estimating school and teacher effect on student learning and other important educational outcomes. It discusses criteria for judging models and presents the formulae for the two-stage, two-level student-school hierarchical linear modeling (HLM) model that is the model of choice for estimating school effect and the two-stage, two-level student-teacher HLM model that is the model of choice for estimating teacher effect. Finally, a brief discussion is provided on criterion variables and the methods by which they are weighted, predicted, and aggregated in the school and teacher effectiveness system. (Contains 1 figure and 39 references.) (Author/SLD)