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In my state the officials are independent contractors. We sign a contract at the start of each season.
However, it is not the individual schools that hire the independent contractors. It is done through an officials association which contracts with the state office. All of the member schools agree to let the state office handle the officials for all of the contests.
This way no individual school, coach, or AD has any say in who the officials are. That is handled by the adminstrators of the state office and the board of the officials association.
To respond more directly to the setup in your question, I believe that there needs to be a layer of separation between the schools and the officials. Allowing the schools to hire whoever they wish would, in my opinion, affect the integrity of the game.
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