This paper explores a theoretical dilemma that arose during a study of risk-taking in decision-making for public school principals in Western Australia. Western Australia is one of six Australian States. It is geographically diverse, including extremely remote schools serving Indigenous communities. The governance mechanism for public schools in Western Australia mandates policy and procedures for decision-making by principals. Principals take risks when they make decisions that are not compliant with established policy, as they may be exposed to criticism should negative outcomes arise. This creates a dilemma for principals who need to be able to respond to locally identified school and community needs, and simultaneously comply with all State and Commonwealth departmental requirements. A theoretical model of factors impacting on reasoned risk-taking in decision-making was developed and data collected through survey of a stratified random sample of principals in 253 Western Australian public schools. The analysis used methodology that combined sequential use of psychometric and traditional measurement techniques. This paper focuses on the cause and solution of a reverse coding problem that arose in structural equation modeling. The dilemma posed by this methodological issue had not been previously considered in the literature. It is reflected in the dilemmas posed to principals who are making decisions in their schools based on universal policy that does not necessarily account for the unique circumstances of their communities, schools and locations.