The purpose of this study is to examine the effect of schools on the relationship between special education status and dropout. I combine relevant school characteristics as delineated on both sides of the bureaucratic/communal debate to formulate a theory of salient school characteristics for engaging students in special education, including fiscal and human resources and social climate. Mixed-effects logistic regression models are used to test if these school effects are significant predictors of dropout for all students, and if so how they interact with special education status to affect this outcome. In addition, I explore the relationship between student achievement and special education in predicting dropout, as these variables are highly correlated. Results from the study indicate that the effect of special education status on dropout does not vary significantly between schools. Additionally, student achievement explains the relationship between special education status and dropout. Lastly, many of the school characteristics that have been found in the past to predict dropout are insignificant in this study. Recommendations for future research are discussed.