This report concludes that the house plan should be the centerpiece of a systematic restructuring of New York City neighborhood high schools to reduce the dropout rate and improve academic achievement. The house plan is based on the subdivision of one or more grades into smaller schools within schools. Long-term monitoring of New York City dropout prevention programs found that those strategies, based on targeting limited numbers of at-risk students for remediation and support for limited time periods, failed because they returned students to the same overwhelming system that defeated them in the first place. New York's large, impersonal high school organization breeds alienation and isolation, its curriculum is broad rather than deep, and its management is autocratic rather than participatory. Well-conceived house plans offer the following advantages: (1) intimate environments that promote interaction among staff and students; (2) cohesive educational programs reinforced by interdisciplinary teaching; (3) personal, ongoing staff support; (4) student and staff involvement in decision making; and (5) encouragement of wide participation in extracurricular activities. House plans have not been successfully implemented throughout the system over the past 2 years, despite a mandate from the New York City Board of Education, due to resistance at the school level, lack of forceful leadership, and inadequate funding from the central level. Until the Board of Education puts its full weight behind the house plan program, it is in danger of becoming one small effort among many other uncoordinated dropout prevention and restructuring initiatives. A table illustrating the key features of the house system is included, and a table comparing the effects of different types of house plans on students is appended. (FMW)