The purpose of the study was to investigate effects of different school and teacher characteristics, such as municipal and independently-operated schools and teacher certification on grades in compulsory school, and the extent to which parental education confounds the relations between such characteristics and grades. Multilevel, multivariate, techniques were used. The results showed that both school and teacher characteristics accounted for considerable amounts of variance in grades. However, when parental education was taken into account, the relations decreased considerably and, in most cases, became non-significant, thus indicating a confounding effect of parental education on the relations between school and teacher characteristics and grades. (Contains 2 figures and 3 tables.)