This study utilized early reading assessment data from a randomized trial of 210 urban and rural schools in Texas to examine contextual effects on risk prediction in first and second grade. The primary objective was to examine the roles of (a) individual differences, (b) the grade 1 classroom, and (c) the pairing of first and second grade teachers in determining grade 2 outcomes in word reading and fluency. A second objective was to investigate whether the administration format of the assessment (paper, paper plus desktop, handheld plus desktop) or the level of teacher support (web mentoring, no mentoring) moderated the prediction. These moderator variables proved not to be significant. Subsequent analyses found that a combination of student pretest and mean of pretest classroom was a better predictor than student pretest alone. Additionally, the effect of student scores varied by teacher-pair. On average, intraclass correlations (ICCs) ranged from 6% to 17%. Differences in ICCs at the classroom level were much greater than at the school level, and differences in urban schools were twice that of rural schools.