Java Swing Components Drawing Over Multiple Panels

I'm having an issue that I've been trying to solve all day. I have two panels inside a frame and in one panel I've added components. The components, however, seem to have an equal hierarchy value as the panel and as such treat the Frame as the parent instead, ignoring where the panels are located. Basically the components are added to one panel but display on top of both across the whole frame. (Unfortunately I can't post a picture at this time, please up vote the question to allow me to if needed). What is causing this and how can I fix it?

The relevant code:

JFrame arranFrame = new JFrame("Edit Arrangement");
arranFrame.setDefaultCloseOperation(JFrame.EXIT_ON_CLOSE);
        JPanel grid = new JPanel();
        JPanel tools = new JPanel();

        grid.setSize(700, 600);
        tools.setSize(200, 600);

        JLabel widthLabel = new JLabel("Width");
        JLabel depthLabel = new JLabel("Depth");
        JLabel columnLabel = new JLabel("Columns");
        final JTextField rowWidthInput = new JTextField(30);
        final JTextField rowsInput = new JTextField(30);
        final JTextField columnInput = new JTextField(30);

        rowWidthInput.setSize(40, 30);
        rowsInput.setSize(40, 30);
        columnInput.setSize(40, 30);

        rowWidthInput.addActionListener(new ActionListener() {
            @Override
            public void actionPerformed(ActionEvent ae) {
                chartWidth = Integer.parseInt(rowWidthInput.getText());
            }
        });

        rowsInput.addActionListener(new ActionListener() {
            @Override
            public void actionPerformed(ActionEvent ae) {
                chartRows = Integer.parseInt(rowsInput.getText());
            }
        });

        columnInput.addActionListener(new ActionListener() {
            @Override
            public void actionPerformed(ActionEvent ae) {
                chartColumns = Integer.parseInt(columnInput.getText());
            }
        });

        //Enter button for grid modifying creation and setup
        JButton enterButton = new JButton("Enter");
        enterButton.setSize(180, 50);

        enterButton.addActionListener(new ActionListener() {
            @Override
            public void actionPerformed(ActionEvent e) {
                chartWidth = Integer.parseInt(rowWidthInput.getText());
                chartRows = Integer.parseInt(rowsInput.getText());
                chartColumns = Integer.parseInt(columnInput.getText());
            }
        });

        //Save Arrangement button creation and setup
        JButton saveButton = new JButton("Save Arrangement");
        saveButton.setSize(180, 50);

        saveButton.addActionListener(new ActionListener() {
            @Override
            public void actionPerformed(ActionEvent e) {
                SaveArrangement(userDocuments + "\\TSA Seating Chart\\Arrangements\\Period" + period + ".txt");
            }
        });

        tools.setBackground(Color.RED); //Temp for visualization where the panes are

        tools.add(widthLabel);
        tools.add(rowWidthInput);
        tools.add(depthLabel);
        tools.add(rowsInput);
        tools.add(columnLabel);
        tools.add(columnInput);
        tools.add(enterButton);
        tools.add(saveButton);
        arranFrame.getContentPane().add(grid);
        arranFrame.getContentPane().add(tools);

        //Finalize the GUI
        arranFrame.pack();                           //Pack all the content together
        arranFrame.setSize(900, 600);                //Set the size of the window

        Dimension dim = Toolkit.getDefaultToolkit().getScreenSize();
        arranFrame.setLocation(dim.width/2-arranFrame.getSize().width/2, dim.height/2-arranFrame.getSize().height/2);

        arranFrame.setVisible(true);                 //Display the seatingFrame