Learning processes often occur at a situational level. Changes in learning context have implications on how students are motivated or are able to cognitively process information. To study such situational phenomena, Experience Sampling Method (ESM) can help assess psychological variables in the moment and in context. However, data collected via ESM is voluminous and imbalanced. Special types of statistical modeling are needed to handle this unique data structure in order to maximize its potential for scientific discovery. The purpose of this paper is to illustrate how Latent State-Trait modeling used within a multilevel framework can help model complex data as derived by ESM. A study of situational engagement is presented as an illustrative case. We describe methodological considerations which facilitated the following analyses: (1) "Decomposition of trait-level and state-level engagement"; (2) "Group differences in variance decomposition"; and (3) "Predicting state component of engagement." Discussions include the relative advantages and disadvantages of ESM and multilevel Latent State-Trait modeling in facilitating situational psychological research.