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Schools Facing Big Budget Bust: Opportunity for Overhaul?

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While the media is preoccupied with financial and auto bailouts, a budget crunch is headed to a school near you.

In a very unusual sign of the times, school districts around the country are facing midyear budget cuts and negotiating with states that can't make payroll. Next school year will be worse. The 2010-11 school year could very well include another round of cuts for many districts.

School districts are terrible at cost reduction. With most of their costs tied up in long term employment contracts that include byzantine layoff rules, there's very little flexibility. Seniority rules in most districts -- lower cost new teachers are typically first to go.

District administration is sticky too. A district near home has lost 20% of its enrollment to charter schools and they have made no reductions in the bloated central office.

Here's what will happen: energetic young teachers will get fired, classes will get larger, and small schools will be closed. There will be some central office layoffs, reductions in transportation, and more pay-for-play sports. Special needs kids will fare best because they're individualized programs are legally protected. By and large, it means a crummier version of an already struggling public delivery system.

While far from easy, states with courageous governors could use this crisis to make a radical change: cut the budget by 10% and send the money directly to schools. Every school would get a three year performance contract (i.e., charter) and would be required to join a support network (which could include what used to be a school district, a university, a non-profit like New Tech Foundation, a charter management organization like Green Dot, a for-profit like Edison Learning, or a self-organized coop).

Under more favorable circumstances, Tony Blair implemented a slightly less radical version of this proposal that stripped Local Education Authorities in the UK of most of their control and budget authority. It resulted in more money in the classroom, more school choice, and probably contributed to improved outcomes.

Okay, this won't be easy, but a good deal of this proposal could be implemented in September 2009 if a legislature moved fast in the next 60 days. A saner schedule would be to put districts on notice this spring that they will be going out of business after the 2009-10 school year. A smaller version could target districts eligible for reorganization under No Child Left Behind and, like New Orleans, they could be placed in a state sponsored reorganization.

As Paul Hill and Marc Tucker have suggested, community councils (taking the place of school boards) could oversee charter renewal and ask the all important portfolio question, "What kind of schools do the kids of this community need?"

Budget cuts are inevitable. We will end up with a crummier version of mediocre except for in those rare places where leaders take advantage of the crisis and reinvent the system.

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