Based on the assumption that a strong teacher contract can restrict the latitude of school administrators, this study tested the following hypothesis: School principals who participate fully in board-teacher collective bargaining as negotiators or active consultants will perceive themselves to have greater on-the-job discretion than principals who are not active in the process. Researchers surveyed 165 principals in two New York State counties about their negotiations roles and level of managerial discretion. Statistical analysis indicated that negotiating role and school district size were significantly related to differences in principals' on-the-job discretion. Principals in smaller districts had more discretion than those in larger districts. Through regression analysis it was determined that the roles of negotiator and active consultant provided principals with higher levels of perceived on-the-job discretion than did the roles of passive advisor and nonparticipant. Discretion was examined in such areas as assigning pupils, teacher discipline, calling additional meetings, and other managerial powers. The data did not indicate that sitting at the bargaining table provides principals with any stronger discretionary authority than being an active consultant does, but researchers concluded that principals should be consultants in the bargaining process to protect their own jobs and autonomy. (JM)