One of the originators of performance contracting explains how school districts can use that concept to attack difficult educational problems and meet the increasing demand that schools be held accountable for their educational product. The author argues that what he calls "educational engineering" will guarantee a basic level of achievement in math and reading skills for all children. He lists the various agencies involved in a performance contract, describes their roles, and presents the nation's first performance contract in Texarkana as an example of how these agencies function in an actual contract situation. An exhibit section presents summaries of and excerpts from the actual documents involved in the Texarkana performance contract. (JF)