Why is contracting used more frequently under some circumstances than others? What is its impact on spending for core mission and on service quality? These questions are explored with data from more than 1,000 Texas school districts. The evidence for a recent three-year period shows that contracting is negatively related to spending on school districts' central task and is not positively associated with district performance. Why, then, do districts contract? While several variables are associated with the degree of contracting, the most interesting is the relative size of a district's bureaucratic staff. Furthermore, the relationship between contracting and bureaucracy is reciprocal: Each is associated with subsequent growth in the other. The dynamic suggests an updated version of Parkinson's law. These findings indicate the need for researchers to probe the causes and consequences of contracting more thoroughly to help public managers assess this important option.