Current dissatisfaction with operations of the New York City school system calls for policy proposals based on a better understanding of the system, rather than on economic issues. Any policy proposals aimed at reform must describe the goals of suggested programs and indicate how they relate to the goals of other programs. An evaluation of student performance is essential. Also important is a consideration of costs and outcomes of the proposal, the role played by the consumer, and the successful placement of students and personnel in the system. Since the New York City system is too aggregative, properly structured decentralization would be an appropriate route to take. For example, local school boards should be permitted to design their own school systems, paying particular attention to the heterogeneity of the community. The role of the teachers' union, migration to avoid taxation, and contracting out for educational services are other factors to explore when initiating policy reform in the New York system. (Author/LD)