This dissertation focuses on two distinct relationships: 1) classroom peer ability and student end-of-course test outcomes and 2) school tracking policy and student end-of-course test outcomes. Utilizing the education production function and hierarchical linear models, this dissertation contributes to the literature in the field of public policy by extending the work of previous scholars and focusing attention on these relationships in three high school subjects (English I, Algebra I, and Biology). In addition, I present a novel method for identifying tracking intensity within schools. The primary research questions addressed in the dissertation include: 1) To what extent does the ability level of classroom peers contribute to student test score performance?; 2) Does the variability of prior achievement within classrooms correlate with student test score outcomes?; and 3) Is there a relationship between school tracking policy and student test scores? Collectively these questions directly relate to policy options at the school, district, and state levels.