This report describes a study of two small-to-middle-sized midwestern school districts, each observed for about one year. The aim was to clarify the nature of the organizational form of school systems and to examine the organizational processes, using qualitative rather than quantitative methods. Two central concerns of the study were to explore the methods for handling problems in the two districts and to determine to what extent the negotiated order model was useful in describing the districts' organizational functioning. The problems in both districts were similar, varying in source, emergence, magnitude, duration, and intensity, as well as in the degree and type of negotiations involved in their resolution. One district was found to be more like a negotiated order than the other. Similarities and differences between the districts are detailed in the report. Limitations to the application of the negotiated order model to school systems are discussed. (Author/PGD)