Regulatory Flexibility in Schools: What Happens When Schools Are Allowed
to Change the Rules?  (Letter Report, 04/29/94, GAO/HEHS-94-102).

To enable school principals and teachers to attempt improvements in
education, the federal government and some state governments have
provided flexibility to schools as part of education reform initiatives
by both reducing or eliminating regulations for schools through
government action, such as legislative change, and waiving specific
regulations upon request on a case-by-case basis.  Under some state
regulations, for example, a teacher might be discouraged from shortening
the time devoted to some subjects--such as driver's education--in order
to provide more in-depth coverage of difficult subjects--such as
calculus.  GAO studies the regulatory flexibility efforts of the
following three states: California, Kentucky, and South Carolina.  GAO
(1) describes state regulatory flexibility efforts, (2) describes how
schools used flexibility to attempt improvement, (3) determines what
accountability systems states have implemented to ensure that children
benefit from these efforts, and (4) determines how these efforts
affected children with special needs.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-94-102
     TITLE:  Regulatory Flexibility in Schools: What Happens When 
             Schools Are Allowed to Change the Rules?
      DATE:  04/29/94
   SUBJECT:  Public schools
             Federal/state relations
             Aid for education
             State programs
             Disadvantaged persons
             State/local relations
             Education program evaluation
             Accountability
             Educational programs
             Standards evaluation
IDENTIFIER:  Dept. of Education Chapter 1 Program for Educationally 
             Disadvantaged Children
             Improving America's Schools Act
             California
             Kentucky
             South Carolina
             Charter Schools Program (CA)
             School-Based Coordination Program (CA)
             Flexibility Through Deregulation Program (SC)
             12 Schools Project (SC)
             
**************************************************************************
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Cover
================================================================ COVER


Report to Congressional Committees

April 1994

REGULATORY FLEXIBILITY IN SCHOOLS
- WHAT HAPPENS WHEN SCHOOLS ARE
ALLOWED TO CHANGE THE RULES? 

GAO/HEHS-94-102

Regulatory Flexibility


Abbreviations
=============================================================== ABBREV

  ESEA - Elementary and Secondary Education Act
  KERA - Kentucky Education Reform Act
  LEP - limited English proficient
  SBCP - School-Based Coordination Program

Letter
=============================================================== LETTER


B-252334

April 29, 1994

The Honorable Edward M.  Kennedy
Chairman, Committee on Labor and
 Human Resources
United States Senate

The Honorable Nancy Landon Kassebaum
Ranking Minority Member
Committee on Labor and Human Resources
United States Senate

The Honorable Mark O.  Hatfield
Ranking Minority Member
Committee on Appropriations
United States Senate

In order to prepare children to succeed in an increasingly complex
and changing world, many of the nation's schools are attempting to
improve.  School principals and teachers face many challenges in
these attempts, such as determining the needs of children from
diverse backgrounds, finding effective approaches to teaching complex
subject matter to these children, and organizing classes to support
these approaches.  Yet, when teachers and principals attempt
improvement, state and federal regulations can get in the way,\1
according to many educators and researchers. 

Schools are bound by state regulations that dictate the length of
each class period, school day, and school year; class size; the
subjects to be taught; and the qualifications of those who teach
them.  Schools also are bound by state and federal regulations that
prescribe which children with special needs\2 must be served and how
funds should be spent.  Therefore, if a principal wants to lengthen
the school day to provide children with more time to learn, or if
teachers want to shorten the time devoted to some subjects--such as
driver's education--in order to provide more in-depth coverage of
difficult subjects--such as calculus--some state regulations can
discourage or prevent teachers and principals from making these
changes.  Similarly, state and federal regulations may discourage
teachers of children with special needs, who want to work with
regular teachers, from combining their classes in order to teach all
children together.  In order to enable school principals and teachers
to attempt improvement, the federal government and some state
governments have provided flexibility to schools as part of education
reform initiatives by both (1) reducing or eliminating regulations
for schools through government action, such as a legislative change,
and (2) waiving specific regulations upon request on a case-by-case
basis. 

Federal reform initiatives include the Goals 2000:  Educate America
Act,\3 which provides greater flexibility to schools by, for example,
giving the Secretary of Education the authority to waive many federal
regulations when requested by states and school districts.  These
initiatives also include the Improving America's Schools Act, under
consideration by the Congress, which would reauthorize programs under
the Elementary and Secondary Education Act (ESEA).\4 This act would
provide flexibility to schools through a number of provisions,
including expanding the school eligibility criteria for Chapter 1
schoolwide projects\5 and allowing the use of funds for activities
related to the integration of education, health, and social services. 

In order to help the Congress in considering proposed legislation,
you asked us to study the experiences of states that had provided
schools regulatory flexibility.  We reported our preliminary results
to you on November 3, 1993.\6 This report provides our final results. 
The objectives of this study were to

  describe state regulatory flexibility efforts,

  describe how schools used flexibility to attempt improvement,

  determine what accountability systems states have implemented to
     ensure that children benefit from these efforts, and

  determine how these efforts affected children with special needs. 

To address these objectives, we studied the regulatory flexibility
efforts of three states:  California, Kentucky, and South Carolina. 
We selected these states because they (1) were engaged in statewide
education reform, (2) had provided flexibility to schools in relation
to their state regulations, and (3) had, to some degree, included
flexibility in their programs for children with special needs. 
Because of the similarities of the states' programs for children with
special needs to many federal programs, you asked us to review the
states' efforts to provide flexibility to schools and provide lessons
for federal programs. 

In each of the three states, we interviewed state, district, and
school officials.  Although our focus was on state efforts, we also
collected information from each of the states, including district and
school officials, about the effects of federal regulations and
monitoring on their efforts.  We also met with federal education
officials, reviewed studies of systemic reform and state regulatory
flexibility efforts,\7 and interviewed researchers working on similar
issues. 


--------------------
\1 The term "regulation" refers to a variety of federal, state, and
local government requirements, including, but not limited to,
statutes, regulations, rules, policies, guidelines, and
interpretations of these items by local educators and policymakers. 

\2 Children with special needs are those who need assistance to
improve their achievement, such as children who are educationally
deprived, have limited English proficiency, or have disabilities. 
The largest federal program for children with special needs, Chapter
1 of the Elementary and Secondary Education Act ($6.9 billion in
fiscal year 1994) serves educationally deprived children--children
whose educational attainment is below the level that is appropriate
for their age--in relatively high-poverty areas.  Hereafter, we refer
to these children as disadvantaged.  The states we studied defined
disadvantaged children as those who are poor, have low achievement on
state-required tests, or both.  The federal government and the states
we studied defined limited English proficient students as
language-minority children who have difficulty understanding,
speaking, reading, or writing English.  The federal government and
the states consider children to have disabilities when they have
physical, mental, or emotional conditions that impede their ability
to learn.  In addition, the states we studied had special programs
for children who are considered "gifted and talented," but few
federal dollars are targeted for these students. 

\3 This recent legislation, P.L.  103-227, provides, among other
things, grants to states and districts for education reform efforts. 

\4 The ESEA, enacted in 1965 and scheduled for reauthorization in
1994, authorizes funding for many federal education programs,
including Chapter 1.  The proposed versions of the reauthorizing
legislation are H.R.6 and S.1513.  Under these proposals, the current
Chapter 1 program would be incorporated in a new Title I of the ESEA. 

\5 The federal Chapter 1 program allows schools with high poverty
rates to become "schoolwide projects," which gives schools the
flexibility to use Chapter 1 funds to serve all students in the
school rather than only students who qualify for the program. 
Currently, schools with poverty rates of 75 percent or more can
become schoolwide projects; the proposed legislation, in order to
give more schools this flexibility, would lower this percentage to 65
percent in the first year of implementation and 50 percent
thereafter. 

\6 Regulatory Flexibility Programs (GAO/HRD-94-51R, Nov.  3, 1993). 

\7 See S.  Fuhrman and R.  Elmore, Takeover and Deregulation: 
Working Models of New State and Local Regulatory Relationships,
Consortium for Policy Research in Education (New Brunswick, N.J.: 
Apr.  1992); E.  Boe, Incentive and Disincentive Phenomena in
Education:  Definitions and Illustrations, Center for Research and
Evaluation in Social Policy, Graduate School of Education, University
of Pennsylvania (Philadelphia:  Dec.  1992); and J.  David,
Redesigning an Education System:  Early Observations from Kentucky,
National Governors' Association and The Prichard Committee for
Academic Excellence (Washington, D.C.:  1993). 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

All three states we studied provided flexibility to schools, but in
different ways:  Kentucky gave all schools greater flexibility to
make many decisions formerly made by school districts and the state;
California gave flexibility to selected schools that chose to
participate in certain education reform programs; and South Carolina
gave flexibility as a reward to schools with high-performing
students. 

The flexibility granted by the three states enabled many schools to
attempt improvement in how classes were organized and how subjects
were taught.  For example, schools in one state used the flexibility
provided by the state to extend the length of the school day for
kindergartners so they could participate in ungraded primary school
programs.  In these programs, children from kindergarten through the
third grade were placed together in classes that offered more
individualized instruction or had the same teacher over an extended
period.  Additional state efforts, such as encouraging planning or
offering technical assistance, appeared to help schools take
advantage of flexibility.  Such planning and assistance gave teachers
and principals opportunities to decide what they wanted to do or
information about promising educational practices. 

For a variety of reasons, other schools did not attempt improvement
and, therefore, did not take advantage of the flexibility provided. 
Some teachers and principals were reluctant to attempt improvement
because (1) they did not see a need to improve because their students
were performing well, (2) they were concerned that government
auditors and monitors would focus on compliance with procedures
rather than on whether the improvement attempts were helping children
raise their performance,\8 or (3) the flexibility provided by the
state was only temporary.  Other barriers--such as the discouragement
of district officials, lack of school leadership, and lack of money
and time for improvements--also hindered schools' attempts to
improve. 

Furthermore, the states we visited could not yet determine whether
children benefitted from school improvement attempts and the
flexibility that made some of these attempts possible.  This is
because many of the states' flexibility efforts were relatively new,
and the states had not yet fully implemented systems of
accountability that could be used to determine the performance of
children in relation to high standards.  In addition, the effect of
allowing greater flexibility in programs for children with special
needs could not be determined because the three states were still
struggling with how to assess and report on the performance of many
of these children, particularly children with limited proficiency in
English and some children with disabilities. 


--------------------
\8 Federal and state auditors review the financial performance,
economy and efficiency, and effectiveness of federal programs carried
out by local districts and schools.  In addition, federal and state
program officials monitor local districts and schools to determine
whether they are complying with program regulations. 


   BACKGROUND
------------------------------------------------------------ Letter :2

Recent nationwide efforts at school reform have focused on a systemic
approach that involves all levels of the education system--national,
state, district, and school--and sets high standards of performance
for all children.\9 A key part of such reform is providing freedom
from regulations that can constrain schools' attempts to improve. 
Under systemic reform, this regulatory flexibility would be given to
schools in exchange for increased accountability for student
performance. 

Federal education programs have, for many years, focused on children
with special needs.  Program regulations for providing services to
these children have specified (1) procedures that schools, districts,
or states must follow and (2) requirements for how funds must be
spent.  The Congress is currently considering several legislative
proposals that would provide greater flexibility in federal programs,
such as Chapter 1, in return for making schools more accountable for
results--demonstrating that students are showing increasingly high
performance in relation to high standards.  This accountability is
important; without it, the performance of children, particularly
those with special needs, may be negatively affected when regulations
designed to ensure that they receive services are removed. 

States have the primary responsibility for education, and their
regulations govern many aspects of how schools operate.  These
regulations are intended, in part, to set minimum standards of
quality.  For example, all states have set minimum qualifications for
teachers, length of the school year, and requirements for earning a
high school diploma.  In addition, many localities have rules about
how schools operate.  For example, many union contracts, negotiated
with school districts, specify the number of hours in a day that
teachers are required to work and the duties that they are expected
to perform. 

Because different levels of government--federal, state, and
local--dictate the regulations that schools must follow, the
flexibility granted by any one level of government may not remove all
of the regulatory obstacles that, according to researchers and some
state and school officials, can prevent schools from improving.  In
addition, despite the intent of the federal government and states to
allow flexibility, state or local officials sometimes add their own
interpretations that are more restrictive than intended by federal
and state officials. 


--------------------
\9 For a discussion of this approach, see M.  Smith and J.  O'Day,
"Systemic School Reform and Educational Opportunity," in Designing
Coherent Education Policy, edited by S.  Fuhrman (San Francisco: 
Jossey Bass, 1993), pp.  250-312.  See also Systemwide Education
Reform:  Federal Leadership Could Facilitate District-Level Efforts
(GAO/HRD-93-97, Apr.  30, 1993). 


   STATES' FLEXIBILITY EFFORTS
   VARIED
------------------------------------------------------------ Letter :3

The regulatory flexibility efforts varied in the three states we
studied.  For more detailed information on each state's flexibility
efforts, see table 1 and appendixes I for California, II for
Kentucky, and III for South Carolina. 

  California had three programs that provided flexibility:  two
     demonstration programs available to a limited number of schools
     and a program available to all schools that receive state funds
     for children with special needs.  In the first demonstration
     program, schools that applied to the state for restructuring
     grants could request waivers of state regulations as part of
     their restructuring plans.  In the second demonstration program,
     the state's charter schools program,\10 schools submitted
     applications that detailed their improvement plans and, upon
     approval, were exempted from most state education regulations. 
     The third program, the School-Based Coordination Program (SBCP),
     allowed schools the flexibility to release students from class
     in order to provide training for teachers and to combine
     different funds for children with special needs, such as funds
     for state programs for disadvantaged, limited English proficient
     (LEP), and "gifted and talented" children.  Schools were allowed
     to combine state funds in order to better coordinate services
     for these children and to provide services to children who were
     referred by school officials, but did not technically meet the
     state's eligibility criteria for the programs. 

  Kentucky completely revised its education system in 1990, after the
     state supreme court, in 1989, declared the entire state's system
     of education unconstitutional and ordered the legislature to
     replace it with a more equitable system.  Many procedural
     requirements were eliminated, such as the prescribed minimum
     number of daily minutes of instruction, and schools were given
     more direct authority to determine how to meet the needs of
     their students, including how some state education funds should
     be spent.  In return, schools were expected to improve student
     performance over time. 

  South Carolina had two programs:  (1) the Flexibility Through
     Deregulation Program, which provided regulatory flexibility as a
     reward to schools whose students had high performance on state
     achievement tests as compared with students at similar
     schools,\11 and (2) the 12 Schools Project, a demonstration
     program for a small number of schools, which gave additional
     flexibility in applying state regulations to help these schools
     develop new instructional techniques and assessment strategies. 

In addition, all three states allowed schools to request waivers of
state regulations on a case-by-case basis, whether or not the schools
participated in the states' other regulatory flexibility efforts,
described above. 

None of the states was allowed to waive or eliminate regulations
pertaining to federal education programs; all of the districts and
schools in the three states were required to follow federal
regulations.  Although the Department of Education has provided
additional flexibility to districts and schools in implementing the
regulations for many of its programs,\12 some district and school
officials were not aware of the flexibility available. 



                                     Table 1
                     
                      Regulatory Flexibility Efforts in the
                             Three States We Studied

                                                What            What
State                           How many        flexibility is  accountability
flexibility                     schools         given to        for results is
efforts         Key features    participate?    schools?        provided?
--------------  --------------  --------------  --------------  ----------------
California
--------------------------------------------------------------------------------
School          Schools apply   In the 1991-    The state can   Schools are
restructuring   to the state    92 school       grant waivers   required to meet
grants          for grants      year, 212       from any state  the conditions
                used for        schools         regulations     specified in
                school          received        specified in    their grant
                improvement     planning        the schools'    applications,
                                grants; in the  grant           but the state
                                1992-93 school  applications    has not yet
                                year, 146                       established
                                schools                         specific
                                received                        consequences for
                                demonstration                   not meeting
                                grants to                       them\a
                                implement
                                their
                                restructuring
                                plans

Charter         Schools submit  As of January   Flexibility     Schools must
schools         charter         1994, 46        from all state  meet the
                applications    charter         regulations     conditions
                that specify    petitions had   governing       specified in
                the purpose of  been approved   school          their charters,
                becoming        by the state    districts is    or the charters
                charter                         granted         may be revoked
                schools to the                  automatically   by the local
                local district                  to charter      governing school
                governing                       schools         board\a
                boards; the
                charters are
                then approved
                by the state;
                up to 100
                charter
                schools can
                operate in the
                state at any
                one time

School-Based    All schools     Approximately   Schools can     None for this
Coordination    are eligible,   70 percent of   combine state   program\a
program         but the         the state's     funds for
                districts must  7,666 public    several state
                approve         schools in the  programs for
                schools'        1992-93 school  children with
                participation   year, although  special needs
                                many do not     and use up to
                                take full       8 staff
                                advantage of    development
                                the             days annually
                                flexibility
                                allowed


Kentucky
--------------------------------------------------------------------------------
Statewide       The state's     All of the      Many decisions  Individual
school reform   entire          state's public  are left up to  schools are held
                education       schools (1,380  the school      accountable for
                system was      in the 1992-    councils; each  their students'
                restructured    93 school       school          performance;
                by the state    year)           identifies the  rewards are
                legislature in                  needs of its    provided for
                1990                            students and    improvement and
                                                designs         sanctions
                                                programs to     imposed for lack
                                                meet these      of improvement
                                                needs

South Carolina

Flexibility     Schools are     As of August    Flexibility     Schools can lose
Through         automatically   1993, 230 (21   from many       their
Deregulation    given           percent) of     state           deregulated
Program         flexibility     the state's     regulations on  status if
                when they       1,071 public    class size,     student
                qualify,        schools were    minutes of      performance on
                through         in the          instruction,    the statewide
                students' high  program;        and state       achievement
                performance on  approximately   monitoring      tests falls
                statewide       half of them    requirements
                achievement     had attempted
                tests\b         improvements,
                                using the
                                flexibility
                                available

12 Schools      Schools apply   There were 12   Same as above   None yet\c
Project         to the state    schools in the  and freedom
                to participate  original        from statewide
                                project in      testing
                                1991; 24        requirements
                                schools were
                                added as
                                partners of
                                the original
                                12 in 1993
--------------------------------------------------------------------------------
\a California publishes all schools' overall scores on its statewide
assessment, given to children in grades 4, 5, 8, and 10. 

\b Schools may, however, choose not to use the flexibility that is
automatically given to them. 

\c Schools in the 12 Schools Project are developing new assessment
strategies. 


--------------------
\10 The charter schools program allows public schools in California
to operate according to procedures spelled out in an agreement
(charter) between the school's sponsors and the local district
governing board.  Charter schools are freed from most state education
regulations for up to 5 years, with the option of renewing the
agreement every 5 years. 

\11 Schools in South Carolina were placed in one of five categories
("comparison groups") in order to compare improvements in their
students' test scores.  Each school was placed in a category
primarily on the basis of the percentage of its students in the
federal free and reduced-price lunch program.  The average level of
education of a school's teachers and the percentage of first-grade
students at each elementary school who passed a state readiness test
were also used, to a lesser degree, to place a school in one of the
five categories.  Each category had approximately the same number of
schools--about 200. 

\12 The Department of Education has taken steps to provide
flexibility in the implementation of many of its program regulations. 
For example, the Department amended the Chapter 1 regulations to
permit (1) the use of equipment purchased with Chapter 1 funds for
non-Chapter 1 purposes, if it does not interfere with the
availability of the equipment for Chapter 1 students, and (2) the
inclusion of non-Chapter 1 students in the Chapter 1 program on an
incidental basis (with some restrictions).  In 1992, the Department
also issued a booklet that provided guidance to districts and schools
on the flexibility available in the Chapter 1 program to all school
districts. 


   SCHOOLS USED FLEXIBILITY TO
   ATTEMPT IMPROVEMENT
------------------------------------------------------------ Letter :4

In all three states, schools used the regulatory flexibility provided
by the states to attempt to improve how classes were organized and
subjects were taught.  These changes included (1) developing
approaches to combining children into multigrade groups so that
teachers could address the needs of children on the basis of their
development rather than age; (2) restructuring the school day to
allow schools to schedule longer blocks of time for class periods so
that some subject areas could be covered in greater depth; (3)
restructuring the school day to allow teachers more time to plan,
work with other teachers, and serve on school decisionmaking
committees; (4) combining two or more subjects into thematic units,
including having some units taught by teams of teachers; and (5)
allowing people with special knowledge to teach classes although they
do not have state-issued teaching certificates. 

In developing approaches to combining children into multigrade
groupings, schools needed flexibility in applying state regulations
on the age requirements for each grade level as well as class size
restrictions.  In Kentucky, for example, many elementary schools were
in the process of developing primary programs for children in
kindergarten through the third grade that grouped children on the
basis of age, ability, learning style, or interest, rather than
grouping them by age alone.\13 The state eliminated the age and class
size restrictions for each grade level for these schools, allowing
each school to determine how best to group the children in these
grades. 

To restructure the school day, many of the schools we visited used
state flexibility in applying regulations on the required number of
minutes of instruction for each subject area or for the total school
year.  Some schools lengthened class periods in order to cover
material in greater depth, such as one elementary school in South
Carolina that decided to spend more time on mathematics instruction. 
Others revised their schedules to give teachers more time for
planning and working with other teachers and school administrators. 
For example, several schools in California lengthened the school day
for 4 days a week and released the students early on the fifth day so
that teachers could spend time working together as teams to plan
lessons and serve on school management councils. 

In order to combine classes into thematic units taught by teams of
teachers, schools needed flexibility in state regulations governing
the maximum class size and teacher credentialing requirements.  For
example, one class we visited in an elementary school in South
Carolina had selected the weather as its theme.  Groups of children
from two different classes were combined into one large class for
part of the day to read books about the weather in different parts of
the world and write descriptions of it.  Two regular classroom
teachers teamed with an art teacher and a math teacher to teach the
class.  The art teacher helped the students construct models of
elements of the weather, such as clouds, and the math teacher added
basic math concepts to the curriculum, using weather examples, such
as converting temperatures from one system of measurement to another,
that is, from degrees Celsius to Fahrenheit.  Flexibility in state
restrictions on class size allowed the school to combine the two
classes, and flexibility in teacher credentialing requirements
allowed the art and math teachers to participate in teaching subjects
for which they were not specifically credentialed. 

To allow schools to bring in people with special knowledge and skills
to teach classes, states loosened their teacher credentialing
requirements, in some instances.  For example, school officials in
California brought in people from the community, such as local
artists, to teach classes on a few occasions. 


--------------------
\13 Although the state required schools to develop new ungraded
primary programs for children formerly in kindergarten through the
third grade, each school was allowed to design its own primary
program, including determining how to combine the children into
groups and how to assess their performance. 


      STATE EFFORTS OTHER THAN
      FLEXIBILITY CONTRIBUTED TO
      SCHOOL IMPROVEMENT ATTEMPTS
---------------------------------------------------------- Letter :4.1

Several state efforts, besides providing regulatory flexibility,
appeared to contribute to whether schools attempted improvement. 
Schools' participation in a planning process, the availability of
technical assistance, and incentives--such as grants and recognition
for high performance--all contributed to schools' willingness to
attempt improvement. 

According to state and district officials, schools that had
participated in a planning process were more likely to have used the
flexibility available to them to attempt improvement.  In this
process, student needs were identified and the best methods of
meeting these needs were explored.  We also found, in our ongoing
study of school-based management programs, that schools that had
developed improvement plans, as part of a planning process, requested
many waivers of district regulations.  Schools that had not developed
plans for improvement may not yet have determined what they wanted to
do, nor would they have identified regulations that were barriers to
what they wanted to do, according to state officials.  Recently, many
schools were required to prepare school improvement plans, and, as a
result, state officials expected to receive more requests for
waivers. 

The availability of technical assistance also seemed to make a
difference in whether schools took advantage of regulatory
flexibility to attempt improvement.  Technical assistance to schools
in the three states included (1) providing examples of innovations,
(2) establishing networks of schools involved in reform, and (3)
providing schools with information on organizations working on
education reform.  This assistance, however, was not available to all
schools.  Although all three states had established centers to assist
schools in making improvements, not all schools that requested
assistance received it, because funds were limited. 

Incentives--such as grants to schools for planning or implementing
improvements, recognition for high performance, and sanctions for low
performance--also affected schools' willingness to attempt
improvement.  For example, California gave restructuring grants to
schools that participated in one of its demonstration programs of $30
per pupil for planning and up to $200 per pupil for implementation. 
(The largest grants to specific schools were a 1-year planning grant
of $116,280 and a 5-year implementation grant of $2,868,000.) This
prompted many schools to apply for grants and to begin restructuring
their schools.  In Kentucky, many schools were making changes to try
to obtain the benefits the state promised for improved student
performance, state and district officials said, and to avoid the
sanctions related to students' low performance. 

Goals 2000 and legislative proposals for ESEA reauthorization have
recognized the need for support of state efforts to (1) assist
schools in planning, (2) provide technical assistance, and (3) give
schools incentives to improve, in addition to providing flexibility. 
Goals 2000 requires states to prepare improvement plans in order to
receive grants under the act; these plans must include a process for
providing assistance and support to districts and schools in meeting
the state's content and performance standards.  The proposed
legislation for reauthorization of the ESEA requires states to
establish a system of school support teams to provide information and
assistance to schoolwide projects, in order to ensure that the
schools provide the opportunity for all children to meet the state's
performance standards.  The ESEA reauthorization proposal also
requires states to provide monetary awards to schools that make
significant progress toward meeting the state's performance
standards, including allowing states to reward individuals or groups
in schools. 


   OTHER SCHOOLS DID NOT USE
   FLEXIBILITY TO ATTEMPT
   IMPROVEMENT
------------------------------------------------------------ Letter :5

Although many schools used flexibility to attempt improvement, other
schools chose not to attempt improvement; therefore, these schools
did not use the regulatory flexibility that was available to them. 
State, district, and school officials cited three main barriers to
schools' willingness to attempt improvement:  (1) schools'
satisfaction with their current performance levels, (2) government
emphasis on compliance monitoring, and (3) the temporary status of
some states' flexibility provisions.  Education researchers cited
other barriers to improvement, including the discouragement of
district officials, lack of school leadership, lack of money and
time, and the cautious, incremental nature of changes in schools. 

Schools did not always see a need to improve.  Many school officials
were satisfied with the high performance of their students, including
officials in many of the schools in South Carolina that received
flexibility as a reward for such performance on statewide
assessments.  As states move toward new assessment methods that
measure student performance against high standards and children's
ability to master complex, problem-solving skills, schools may become
less satisfied with their students' performance, state officials and
researchers have indicated; as a result, schools may become more
willing to attempt improvement and, accordingly, use the flexibility
available to them. 

Compliance monitoring by state and federal officials also had a
negative impact on schools' willingness to attempt improvement. 
Auditors and program officials with the state education agencies and
the federal government have placed more emphasis on compliance with
procedural and fiscal regulations during reviews of schools than on
outcomes, according to district and school officials.\14 Such
attention made district officials more cautious in allowing schools
to take advantage of flexibility in program regulations.  For
example, officials in one district in California were reluctant to
allow schools to use equipment purchased with federal Chapter 1 funds
to serve any students who were not eligible for the Chapter 1
program, although the schools had the flexibility to do so.  This is
because, after a recent audit by state officials, the district was
required to pay back funds because it had not documented that
equipment purchased with Chapter 1 funds was used primarily to serve
students in the Chapter 1 program. 

Officials with the state education agencies and the federal
government have recently moved toward a new emphasis on the outcomes
of programs, such as their impact on student performance.\15 A focus
on outcomes is also one of the standards for government audits: 
auditors are required to determine whether government programs and
services are achieving the purposes for which they were authorized
and funded.\16 Some state and federal officials responsible for
reviewing education programs may not, however, be aware of these
requirements, according to officials with the state education
agencies and the Department of Education. 

Another barrier to schools' attempts to improve was that states
provided flexibility on a temporary basis; thus, some school
officials were reluctant to make changes that might later be
rescinded.  For example, in several districts in South Carolina,
officials were reluctant to use the flexibility available to them,
they said, because the deregulation status was temporary.  They did
not want to make changes, such as those involved in hiring new staff,
that would have to be rescinded if the school lost its eligibility. 

Education researchers have identified additional barriers to schools'
attempts to improve:  discouragement by district officials who are
not comfortable in allowing schools to pursue diverse approaches to
improvement, lack of leadership among school principals, and lack of
money and time to invest in improvement activities.\17 In a report on
the factors that influenced local program design and decisionmaking,
researchers cited the cautious, incremental nature of the change
process as a key factor that inhibits schools' responsiveness to
change.\18


--------------------
\14 Other studies have reported similar results.  See, for example,
B.  Turnbull, M.  Wechsler, and E.  Rosenthal, Chapter 1 Under the
1988 Amendments:  Implementation From the State Vantage Point, Policy
Studies Associates, Inc.  (Washington, D.C.:  1992), pp.  60-66 and
M.  Millsap, B.  Turnbull, M.  Moss, N.  Brigham, B.  Gamse, and E. 
Marks, The Chapter 1 Implementation Study:  Interim Report, Abt
Associates, Inc.  (Cambridge, Mass.:  1992). 

\15 For example, the compliance division of California's state
education agency had recently adopted policies that emphasize whether
students in programs for children with special needs are learning the
curriculum.  And the U.S.  Department of Education's Office of
Inspector General, in its annual audit plan for fiscal year 1993,
adopted the theme of "maximizing the effectiveness of ED programs to
better educate our students" and stressed the importance of
determining whether education programs are working and whether the
intended purposes of programs are being carried out. 

\16 See Government Auditing Standards:  Standards for Audit of
Governmental Organizations, Programs, Activities, and Functions (GAO,
1988 Revision). 

\17 See S.  Fuhrman, P.  Fry, and R.  Elmore, South Carolina's
Flexibility Through Deregulation Program:  A Case Study, Consortium
for Policy Research in Education (New Brunswick, N.J.:  Apr.  1992). 

\18 See M.  Knapp, B.  Turnbull, C.  Blakely, D.  Jay, E.  Marks, and
P.  Shields, Local Program Design and Decisionmaking Under Chapter 1
of the Education Consolidation and Improvement Act, SRI International
(Menlo Park, Calif.:  Dec.  1986). 


   STATES HAD ONLY PARTLY
   IMPLEMENTED RESULTS-ORIENTED
   ACCOUNTABILITY SYSTEMS
------------------------------------------------------------ Letter :6

Shifting the emphasis of accountability--from procedures to
results--in return for regulatory flexibility is a key element of
systemic reform.  None of the three states, however, had fully
implemented accountability systems that focused on results--systems
that would allow the states to both (1) assess the effects of school
improvements on student performance in relation to high standards and
(2) provide consequences to schools--rewards for schools that
improved student performance and assistance and sanctions for schools
that failed to improve. 

All three states were in the process of developing new methods of
assessing students that were linked to high standards of performance. 
These new methods included developing assessments designed to measure
how well children learn to solve problems and understand complex
issues.  None of the states, however, had completed the task of
implementing these new methods, in part because of the difficulty of
designing and implementing them.  For example, although California
had begun implementing a new assessment system, state officials
estimated that developing and implementing the entire assessment
system will take 7 or 8 years.  In February 1992, the Office of
Technology Assessment reported that it had reviewed many states'
assessments and found that developing and implementing new
assessments was a time-consuming and costly task.\19 However, without
new assessments linked to high standards, state officials noted, it
will be difficult to determine the benefits of school improvements. 

States also recognized that no single measure could provide an
accurate indication of student performance.  California and Kentucky
were beginning to use multiple measures, such as achievement tests in
combination with portfolios of students' work, as well as attendance
and graduation rates, to assess performance.  For example, some
schools were using portfolios of student writing to demonstrate
progress in developing students' writing skills. 

Of the three states, only Kentucky had developed an accountability
system with consequences for all schools, although it had not yet
been fully implemented.  Schools that meet Kentucky's criteria for
making significant improvement will be given both monetary rewards
and statewide recognition.  Schools that fall below the criteria by a
large percentage will be given sanctions, for example, mandated
assistance from experienced educators and state officials designed to
improve student performance.  In South Carolina's Flexibility Through
Deregulation Program, schools with relatively high student
performance were rewarded with flexibility.  By design, however,
South Carolina did not include schools with relatively low student
performance in this program.  California had not yet developed
consequences for schools based on their performance on the state's
new assessment system. 


--------------------
\19 Testing in American Schools:  Asking the Right Questions
(OTA-SET-519, Feb.  1992). 


   STATES' FLEXIBILITY EFFORTS FOR
   PROGRAMS FOR CHILDREN WITH
   SPECIAL NEEDS VARIED
------------------------------------------------------------ Letter :7

To varying degrees, all three states provided regulatory flexibility
in their programs for children with special needs.  They all allowed
flexibility in their programs for disadvantaged children, and two of
the three allowed some flexibility in their programs for children
with disabilities.  Less flexibility, however, was allowed in the
states' programs for gifted and talented children.  In addition, the
states could not provide flexibility in applying federal regulations
governing programs for children with special needs. 

Programs for disadvantaged children were given flexibility in all
three states.  California allowed all schools to combine several
categories of state funds for children with special needs, including
funds for disadvantaged children, in order to encourage teachers and
administrators to work together in planning programs for these
children.  In addition, charter schools in the state were not
required to separately track state funds or services for
disadvantaged children from those for other children.  Kentucky
replaced its remedial program for disadvantaged children with a new
program--the Extended School Services program--that allowed schools
and districts greater flexibility in deciding how instruction would
be delivered and how eligibility would be determined.  In addition,
based on the number of disadvantaged children at each school, the
state provided extra funds and allowed school councils to decide how
these funds would be spent.\19 South Carolina's flexibility program
included disadvantaged children:  for example, requirements for
minimum number of minutes of instruction for all children, including
disadvantaged children, were waived in all schools with high student
performance.  South Carolina also allowed schools in its flexibility
program to expand the eligibility requirements for state programs for
disadvantaged children.  Schools were allowed to include children in
programs on the basis of teachers' evaluations rather than solely on
test results:  for example, the state allowed children whose scores
on a reading test were just above the cutoff score to be included in
a reading program for disadvantaged children. 

State, district, and school officials were sometimes reluctant to
include programs for children with disabilities in their state
regulatory flexibility efforts, officials said, because of the
complexity of special education requirements and the concerns of
parents of these children.  California and Kentucky allowed some
flexibility in their state programs for children with disabilities,
but South Carolina did not.  California allowed schools to combine
some services for children with disabilities with those of other
children, such as allowing resource teachers to spend some time with
other children in the classroom.  State disability program funds,
however, still had to be used and tracked separately.  In Kentucky,
state funds for children with disabilities were combined with general
education funds, although schools received additional funds for each
child with disabilities.  According to district officials, this
flexibility facilitated the inclusion of children with disabilities
in the state's new primary program, which combined children from
kindergarten through third grade into multigrade classes.  However,
in Kentucky, advocates for children with disabilities felt that this
flexibility might reduce special services for these children. 

Two states, Kentucky and South Carolina, allowed little flexibility
in their programs for gifted and talented children:  funds for these
programs remained separate from other state programs for children
with special needs.  In Kentucky, although the additional state funds
for other categories of children with special needs were combined
with general education funds, funds for gifted and talented children
remained in a separate program.  In both states, parents were
concerned that combining funds for gifted and talented programs with
other program funds would lessen the attention paid to their
children, according to state officials.  Some flexibility was
allowed, however, in both states' eligibility requirements.  For
example, one school in South Carolina was allowed to include
disadvantaged children in its gifted and talented program on the
basis of their scores on an ability test selected by the school
rather than on scores from statewide assessments to determine
eligibility.  California, on the other hand, allowed funds for
programs for gifted and talented children to be combined with other
categories of state funds for children with special needs. 

Having flexibility allowed schools to better serve children with
special needs, according to school officials in all three states. 
Schools could tailor their programs to the needs of the children
rather than providing services only for the categories of children
for which the states provided extra funds.  Having greater
flexibility in the federal Chapter 1 program enabled school
officials, they said, to take greater advantage of flexibility in
state programs.  It was easier to include disadvantaged children in
attempts at improvement, officials said, when schools had been
designated Chapter 1 schoolwide projects; this is because schools
could use Chapter 1 funds to attempt schoolwide improvements, without
having to document that the funds were only being spent on specific
children. 


--------------------
\19 Through a combination of state and local funds, the state funding
formula provides a guaranteed amount of funds for every public school
child.  In addition, the state provides extra funds for
transportation and for children who are disadvantaged, disabled, or
receive services in a home or hospital setting.  For example, a
district receives an extra 15 percent of the guaranteed amount of
funding for each disadvantaged child. 


   STATES HAD NOT DEVELOPED
   ACCOUNTABILITY SYSTEMS FOR ALL
   CHILDREN WITH SPECIAL NEEDS
------------------------------------------------------------ Letter :8

All three states were struggling with how to determine the progress
of children with special needs.  All of them included disadvantaged
children in their state assessments of student performance, but were
having difficulty determining the progress of LEP children and some
children with disabilities.  How to report on the results of
assessments for special needs children was also a difficulty that all
three states faced. 

California had not developed its new statewide assessment for use in
evaluating the performance of the state's large population of LEP
children.  One reason for this was that there were many different
languages represented in the state, state officials said.  These
officials recognized, however, that by translating the assessment
into Spanish, they could address the needs of over three-quarters of
the state's LEP students.  But officials had not yet completed the
process of translating and validating the assessment. 

Although most children with disabilities were included in statewide
assessments of student performance, all three states faced
difficulties in determining how to include some children with
disabilities in these assessments.  California used its new state
assessment to measure the performance of children with disabilities
who received instruction in regular classrooms--which included most
children with disabilities--and recently allowed some types of
accommodations, such as large-print versions of the assessment for
children with visual impairments.  However, the state had not
determined how to use the new assessment to measure the performance
of children who received instruction in special classrooms for the
majority of the school day--about 28 percent of all children with
disabilities in the grades included in the assessment.  Schools in
South Carolina were allowed to exempt children with disabilities on a
case-by-case basis from taking the state assessments;\19 state
officials could not tell us how many of the state's children with
disabilities were exempted.  Kentucky required most children with
disabilities to participate fully in all three components of its new
state assessment and allowed accommodations, such as reading test
questions to children with visual impairments, if these
accommodations were used in daily instruction.  The state also
included children with moderate to severe disabilities in the
statewide assessment,\20 except those who received instruction in a
home or hospital setting, by requiring them to provide evidence of
their skills in student portfolios.  Some state officials and
researchers noted the difficulties of developing outcome measures for
these children, and questioned the appropriateness of assessing the
performance of children with disabilities using statewide
assessments. 

Kentucky and South Carolina did not separate the assessment scores of
all categories of special needs children from total student scores,
officials said, to determine how well schools met the needs of these
children.  In Kentucky, most children were assessed, including most
children with disabilities.  But because of concerns about
confidentiality, state officials had not yet decided whether to
separate out, for each school, the data for children with special
needs.  In South Carolina, assessment scores for children with
disabilities and gifted and talented children were not reported
separately.  California annually reported on the progress of children
with special needs whose performance was measured with the new state
assessment, but many LEP children and children with disabilities were
exempted from taking the new assessment. 

Goals 2000 and legislative proposals for the reauthorization of the
Chapter 1 program under ESEA recognize the need for states to develop
better accountability for children with special needs.  For example,
Goals 2000 requires states to prepare improvement plans in order to
receive a grant under the act.  These plans must include a process
for developing and implementing an assessment, or system of
assessments, that (1) is aligned with the states' content standards,
(2) uses multiple measures of student performance, (3) provides for
the participation of all students with diverse learning needs, and
(4) provides the adaptations and accommodations necessary to permit
such participation by all students.  The proposed legislation for
reauthorization of the ESEA requires states to include children with
disabilities and LEP children in their statewide assessments of
student performance and to report on the results of these
assessments.  Although some federally funded education research
efforts have included reviews of the methods used to assess children
with disabilities and LEP children, the federal government has made
little assistance available to states in developing these methods of
assessment and reporting on the results. 


--------------------
\19 South Carolina used two standardized tests to assess student
performance:  (1) a state achievement test, the Basic Skills
Assessment Program, and (2) a national test, the Stanford Achievement
Test, 8th edition. 

\20 Children with "moderate to severe disabilities" were defined as
having disabilities that were significant enough to prevent them from
participating in the regular curriculum, even with all the assistance
and adaptive devices that could be made available.  State officials
estimated that these children represented 1 to 2 percent of the
state's total student population. 


   CONCLUSIONS
------------------------------------------------------------ Letter :9

Shifting the focus of schools--from teaching basic skills to having
children learn to solve problems and understand complex issues--is an
ambitious undertaking that will require improvements in what children
learn, how teachers teach, and how schools operate.  Such
improvements are difficult.  States' experiences suggest that
flexibility efforts--removing regulatory barriers--may prompt some
schools to attempt improvement, but more widespread attempts may
require other federal and state government efforts:  for example,
support for good planning, technical assistance, and incentives to
attempt improvement. 

In addition to other government efforts to promote school
improvement, obstacles to improvement may need to be removed.  When
government auditors and monitors focus on compliance with procedural
regulations, schools are sometimes discouraged from attempting
improvements that regulatory flexibility seeks to encourage. 
Similarly, when flexibility is granted for only a short time, schools
are sometimes discouraged from attempting improvements that might
require investments in new approaches or might not show benefits in
the short run; schools need time to try promising approaches without
obstacles that the government inadvertently puts in their way.  When
the government only temporarily removes regulatory barriers to
improvement, it may seem to contradict a key element of systemic
reform--removing regulatory barriers to improvement in exchange for
accountability for student performance. 

Without adequate accountability for student performance, however, it
will be difficult to determine whether school improvement attempts
prompted by regulatory flexibility benefit all children. 
Furthermore, without an accountability system that includes results
of assessments and ways to report them, there is a danger that
children with special needs will not receive the attention they need. 
This is because, in programs for children with special needs,
providing flexibility--such as mixing funds and loosening eligibility
criteria--and removing obstacles--such as relaxing monitoring
requirements--could also remove mechanisms designed to ensure that
these children receive services.  Given its strong commitment to
provide services to children with special needs, the federal
government must balance a climate of flexibility for reform with a
system of accountability for results. 

In developing an accountability system, federal and state governments
face a number of dilemmas.  New methods of assessment that are
compatible with high standards have not yet been fully developed for
all children, including those with special needs.  Some of these
children--for example, LEP children or those with certain
disabilities--will need translations or adaptations of these new
methods of assessment.  Finally, how to use the results of new
assessments in reporting on the progress of special needs children
has not yet been determined.  Until such dilemmas are resolved,
program officials, advocates for children with special needs, and
parents may hesitate to allow greater flexibility from procedural
requirements in programs for these children. 


   MATTERS FOR CONGRESSIONAL
   CONSIDERATION
----------------------------------------------------------- Letter :10

Our work suggests that as the Congress works toward reaching its
final legislative decisions on the education initiatives under
consideration, it needs to maintain features that would encourage
schools to take advantage of the flexibility provided to attempt
improvement.  These features include (1) linking flexibility with
other efforts to improve schools, such as planning, technical
assistance, and incentives; (2) removing obstacles that inhibit
schools' attempts to improve, such as some forms of government
monitoring; (3) granting flexibility for as long a period as possible
to allow schools time to plan and implement attempts to improve; and
(4) helping to strengthen the ways that states and districts assess
the performance of children in relation to high standards, especially
for children with special needs.  In addition, in enacting federal
education legislation, the Congress should consider providing
increased flexibility to states, districts, and schools in return for
increased accountability for student performance. 


   RECOMMENDATIONS
----------------------------------------------------------- Letter :11

We recommend that the Secretary of Education do the following: 

  Continue to assess the manner in which federal education programs
     are reviewed by federal and state program officials and auditors
     and, as needed, promote changes in the way that programs are
     reviewed in order to be more consistent with schools' attempts
     to improve; specifically, determine if (1) the emphasis on
     compliance with procedural regulations needs to be better
     balanced with an emphasis on whether programs are achieving the
     purposes for which they were authorized and funded and (2) the
     federal and state officials who review federal education
     programs need training to familiarize them with this change in
     emphasis. 

  Work with knowledgeable educators and researchers, as well as
     state, district, and school officials, to develop ways to assess
     the progress of children with special needs in relation to high
     standards and to report on this progress; in developing
     assessments that include children with special needs, give
     particular attention to those children who have been excluded
     from statewide assessments of performance:  children with
     limited English proficiency and some children with disabilities. 


   AGENCY COMMENTS
----------------------------------------------------------- Letter :12

We obtained the oral comments of Department of Education officials
who reviewed a draft of this report.  Although they agreed with much
of the information in the report, they raised questions concerning
the comprehensiveness of the information presented on the
Department's efforts to provide more flexibility to schools and,
therefore, the necessity of our recommendations to the Secretary of
Education.  Their comments on the comprehensiveness of the report
generally fell into two areas:  (1) concerns that we did not
adequately recognize the Department's efforts to provide additional
flexibility to schools, including many of the flexibility provisions
in Goals 2000 and the Improving America's Schools Act, and the
administrative changes made to allow more flexibility in existing
programs and (2) concerns that we did not adequately recognize the
Department's efforts to change the focus of its audit and monitoring
functions, from assuring compliance with regulations to reviewing the
effectiveness of education programs in better educating students.  We
incorporated some of the information they provided into the report,
although we did not attempt to provide a comprehensive list of all of
the Department's efforts.  In addition, we rephrased our
recommendations to the Secretary of Education to reflect the work
that has been done to date.  However, we see the need for continued
action on the part of the Department to (1) determine whether an
emphasis on compliance with program regulations needs to be better
balanced with an emphasis on the results of programs and (2) assist
in developing better methods of assessing and reporting on the
performance of students with special needs. 

The Department officials also commented that the report contained a
"mixed message" in regard to the usefulness of flexibility in
schools' improvement efforts.  We agree that our findings contain a
mixed message:  although flexibility helped many schools in their
attempts to improve, other schools did not use the flexibility
available to them. 

The Department officials also pointed out that in the report
recommendations, we did not address the issue that auditors and
monitors of education programs can only allow as much flexibility as
the law provides:  that is, there is a role for the Congress in
providing more flexibility in education legislation.  Accordingly, we
revised our Matters for Consideration by the Congress to reflect the
need for the Congress to consider providing as much flexibility to
states, districts, and schools as possible, in return for increased
accountability for student performance, in enacting education
legislation. 

In addition to receiving comments from the Department of Education,
we asked state officials to review sections of the report that
focused on their state's regulatory flexibility efforts.  Officials
from each of the three states agreed with our descriptions of their
state's efforts, although officials from California and South
Carolina had some suggestions for technical changes that we
incorporated in the report. 


--------------------------------------------------------- Letter :12.1

Our work was done from September 1992 through January 1994 in
accordance with generally accepted government auditing standards.  We
are sending copies of this report to other congressional committees;
the Secretary of Education; the Governors and Chief State School
Officers of California, Kentucky, and South Carolina; and other
interested parties.  Should you wish to discuss its contents, please
call me at (202) 512-7014.  Major contributors are listed in appendix
IV. 

Linda G.  Morra
Director, Education and
 Employment Issues


REGULATORY FLEXIBILITY EFFORTS IN
CALIFORNIA
=========================================================== Appendix I


   STATE PROFILE
--------------------------------------------------------- Appendix I:1

There were 5,195,777 children in California's 7,666 public schools
and 1,006 school districts in the 1992-93 school year.  The state had
one of the most diverse student populations in the nation, in terms
of racial and ethnic background and primary language.  About 43
percent of the state's students were classified as white, 36 percent
as Hispanic, 9 percent as African-American, and the remainder as
American Indian, Asian, Filipino, and Pacific Islander.  The state's
spring 1993 student census showed that about 22 percent of
California's students were designated as limited English proficient
(LEP).  About 77 percent of the LEP students spoke Spanish as their
primary language; the other major languages they spoke were Armenian,
Cambodian, Cantonese, Pilipino, Hmong, Korean, Lao, Mandarin, and
Vietnamese.  About 38 percent of the state's students were eligible
for free or reduced-price lunches in the 1991-92 school year.  The
state spent $4,627 per student during the 1992-93 school year, below
the U.S.  average of $5,614 per student. 


   REGULATORY FLEXIBILITY PROVIDED
   TO SCHOOLS
--------------------------------------------------------- Appendix I:2

California led the nation in the early 1980s with its efforts to
improve student performance.  These efforts, promoted by the
superintendent of public instruction and the state legislature,
included lengthening the school day, increasing high school
graduation requirements, improving the state curriculum frameworks,\1
attracting higher caliber teachers, upgrading professional
development opportunities, revising the textbook adoption criteria,
and improving the state testing program.  Some regulatory flexibility
was provided to schools in the 1980s through waivers approved by the
state on a case-by-case basis and the state's School-Based
Coordination Program (SBCP) described below.  The state's most recent
initiatives have focused on encouraging changes in the organization,
structure, and governance of individual schools.  Major initiatives
include two demonstration programs designed to promote school-level
changes in how instruction is delivered:  a restructuring grant
program and the charter schools program.  Both programs provide
schools with flexibility in applying state education regulations. 


--------------------
\1 The state's curriculum frameworks are state-disseminated documents
designed to identify the content to be covered, to provide an
ordering of the subject matter and sequence of topics, to identify
themes with applicability across a range of issues and ideas, and to
identify teaching strategies.  The frameworks were developed by state
officials, teachers, administrators, and researchers. 


      SCHOOL-BASED COORDINATION
      PROGRAM
------------------------------------------------------- Appendix I:2.1

The SBCP, a program established in 1981, provides flexibility to
schools in applying regulations for state categorical programs.\2

The intent of the state in establishing the SBCP was to address the
problem that schools tended to treat categorical programs as unique
educational programs separate from one another and from the regular
education program.  Therefore, children who participated in
categorical programs tended not to receive an integrated, enriched
instructional program.  Under the SBCP, schools are (1) allowed to
combine resources or services or both from state categorical programs
and (2) required to engage in schoolwide planning with the goal of
providing all children with a high-quality curriculum.  Schools in
the SBCP are allowed to combine funds from several state categorical
programs, including those for disadvantaged, LEP, and "gifted and
talented" students. 

The SBCP also enables participating schools to take advantage of
opportunities for professional development and schoolwide planning by
providing full funding for up to 8 student-free days each year,
during which these activities can take place.  Schools in the SBCP
must have a school site council, consisting of the principal,
teachers, other school staff, parents, and, in secondary schools,
students.  The council develops an annual plan, approved by the local
school board, detailing how categorical funds and services will be
coordinated and how student-free days will be used.  During the
1992-93 school year, 5,389 schools, about 70 percent of the state's
7,666 public schools, participated in the SBCP, according to state
officials. 


--------------------
\2 Categorical programs are state programs that provide funds
designated for specific purposes.  Most programs are for certain
categories of children with special needs, such as those who are
disadvantaged, have disabilities, are "gifted and talented," or are
classified as LEP.  Other categorical funds are not targeted toward
groups of students, but rather toward specific purposes, such as the
School Improvement Program, which provides funds to most of the
schools in the state for broadly defined "improvement."


      RESTRUCTURING GRANT PROGRAM
------------------------------------------------------- Appendix I:2.2

The Demonstration of Restructuring in Public Education program, which
provided grants to schools, was established in 1990 by the state
legislature to increase site-level decisionmaking at schools in order
to prompt creative and innovative local approaches to providing
instruction.  Schools were invited to apply for grants to conduct
comprehensive restructuring projects.  In the first year, school year
1991-92, 212 schools received planning grants of $30 per student. 
Schools then applied for additional 5-year grants to implement their
restructuring plans, with up to $200 per student awarded annually to
146 schools, beginning in the 1992-93 school year. 

Flexibility is a key feature of the state restructuring grant
program.  Schools in the program can request waivers of any state
education regulation if they can demonstrate that the waivers are
needed to implement their restructuring plans. 


      CHARTER SCHOOLS
------------------------------------------------------- Appendix I:2.3

The charter schools program was established in 1992 by the state
legislature to promote school improvement.  The program allows up to
100 public schools in the state to operate according to procedures
spelled out in an agreement (charter) between the school's sponsors
and the local district governing board.  Charter schools are freed
from most state education regulations for up to 5 years, with the
option of renewal every 5 years.  For example, charter schools are
not required to hire certified teachers or teach a specific
curriculum.  Students at charter schools, however, still must
participate in the state assessment, and the schools are held
accountable for student performance on this assessment.  In addition,
charter schools must still follow federal regulations. 

Charter petitions can be developed by teachers, parents,
administrators, or community members, and must be signed by at least
50 percent of the teachers in a school or 10 percent of the teachers
in a school district.  A petition may be submitted to create a new
school or to convert an existing public school into a charter school. 
The charter petitions must address certain prescribed elements,
including the proposed educational program of the school, student
outcomes to be achieved, governance of the school, procedures for
hiring teachers, and procedures for ensuring parental involvement. 
As of January 1994, 46 charter petitions had been approved by the
state board of education. 


      WAIVERS
------------------------------------------------------- Appendix I:2.4

As a result of state legislation passed in 1989, in California
districts that have established some form of school-based management,
all schools may request waivers of any state education regulation. 
In addition, many other sections of the state education code allow
any school in the state to apply for waivers of specific regulations. 
Few schools in the state, however, had applied for waivers of state
regulations, according to state officials. 


   HOW SCHOOLS USED FLEXIBILITY TO
   ATTEMPT IMPROVEMENT
--------------------------------------------------------- Appendix I:3

Districts and schools in the SBCP made use of flexibility to provide
more individualized services for children with special needs and to
enable categorical program coordinators to work together more closely
to provide services to children targeted by state categorical
programs.  In addition, some recordkeeping requirements were reduced
for schools in the SBCP. 

The SBCP allowed schools to provide more individualized services to
children with special needs by allowing the schools to focus on the
needs of children, rather than providing services as defined by the
categories of state programs.  For example, a child who met the
criteria for more than one of the state categorical programs, such as
a child who was considered LEP and also gifted and talented in math,
could be provided with help to become proficient in English as well
as receiving advanced instruction in math.  This was made possible
because state funds from the state LEP and gifted and talented
programs could be combined to hire instructors with specialized
skills in language and math who could teach children with multiple
needs. 

The SBCP also helped schools offer some services to children who did
not technically meet the eligibility criteria for some of the state
programs for children with special needs.  For example, one school
took advantage of the flexibility in SBCP to provide an expanded
program to gifted and talented children.  Under the SBCP, in order to
provide more students with enriched experiences, the school was
allowed to supplement the minimal amount of state funding for the
gifted and talented program with funding from other state programs. 
Thus, the school could use these program funds to provide art
instruction to disadvantaged children who were talented in art, but
did not meet the eligibility criteria for the gifted and talented
program.\3 The school was also allowed to provide transportation with
these program funds so that gifted and talented children could be
taken on field trips. 

Allowing funds for some state categorical programs to be combined
also encouraged schools and districts in the SBCP to consolidate the
administrative functions for the programs.  For example, in one
district, the program coordinators responsible for the combined
programs met regularly to discuss how to best serve the students in
their programs; prior to the SBCP, program coordinators rarely
consulted with each other.  In addition, because coordinators at SBCP
schools and districts who worked on more than one program no longer
had to keep separate records of the time spent on each program,
recordkeeping at these schools and districts was reduced. 

Schools that were designated schoolwide projects under the Chapter 1
program found it easier to take advantage of the flexibility in the
SBCP because they could use Chapter 1 funds for overall school
improvements, according to district and school officials. 

Schools in the restructuring grant program experimented with a
variety of ways of improving instruction in the classroom, state and
school officials said.  Some schools tried new groupings of children,
such as combining them into cross-grade, multi-age groupings.  For
example, one school implemented an ungraded primary program in which
children in kindergarten through the third grade were combined into
cross-grade and multi-age groups and offered a more individualized
form of instruction.  In order to include the youngest children in
the program, the school needed flexibility from the state to extend
the length of the school day for children in kindergarten.\4

Many restructuring schools rearranged the school day in order to
provide more time for teacher planning.  Most schools in California
were already allowed to use up to 8 student-free days per school year
for professional development or planning if the schools received
funding from a variety of state programs (SBCP, for example). 
However, the schools could not break these days up into smaller units
of time for planning on a more regular basis, unless they requested a
waiver from the state.  State officials said that they had received
requests to use the 8 days in a variety of different ways.  For
example, one school spread their 8 days over 34 weeks in 90-minute
segments, thereby allowing teachers to meet more regularly to plan
changes in instructional strategies. 

Some restructuring high schools rearranged the school day by
combining courses, such as social science and English, into a
multidisciplinary humanities course.  In many cases, these schools
were already receiving funds from the state as an incentive to reduce
class size in one subject area--typically English.  This funding was
jeopardized when the schools combined subject areas because the new
average class size was above the target the schools had set for
class-size reduction.  Thus, the schools needed waivers to continue
to receive state funds for class-size reduction while they were
offering these combined courses. 

Still other restructuring schools rearranged the school day to
provide longer blocks of time and fewer, but more in-depth, classes
or other learning experiences.  For example, one school lengthened
some of its class periods so that students could pursue vocational
interests, such as implementing construction projects in community
settings and working in local businesses.  To do this, the school
needed flexibility for the required annual instructional time because
it could no longer count the time between classes toward its
instructional total; without this flexibility, the school would have
been in danger of losing some of its state funds. 

Almost all of the charter petitioners planned to convert existing
schools to charter schools, beginning in the 1993-94 school year. 
The charter proposals varied in terms of planned improvements in
instructional programs and curriculum, types of students targeted,
changes in governance structures, and the nature of parental
involvement.  Four of the schools proposed to carry out home-based
instruction by parents, with local teachers acting as resource
specialists.  Other schools were experimenting with nongraded
classes, team-teaching approaches, and thematic instructional units. 
Some schools concentrated on children who were not succeeding in the
regular school system, offering them flexible evening and weekend
schedules, so that they could hold jobs or apprenticeships with local
businesses and continue to attend school.  Some schools experimented
with new governance structures, such as rotating leadership roles
through several different committees.  Finally, several of the
charter schools required parents to sign contracts detailing how they
would assist with school operations or how they would help their
children with their schoolwork. 

The charter schools intended to use their flexibility--in such areas
as state teacher certification, class scheduling, required subjects,
and teacher credentialing--to carry out their plans.  Because charter
schools are not required to follow state regulations that require
schools to hire certified teachers, these schools will be able to
hire people with special skills from local organizations to serve as
teachers.  Flexibility from regulations for class scheduling, subject
requirements, and teacher credentialing will facilitate offering
nongraded classes, thematic units, and flexible school hours. 


--------------------
\3 California defined disadvantaged students as they are defined in
the federal Chapter 1 program; that is, they must have low
achievement scores in schools that have relatively large numbers or
percentages of poor students or both. 

\4 In September 1992, the governor signed legislation allowing
schools to extend the kindergarten day without applying for a waiver
from the state, provided (1) the kindergarten day does not exceed the
length of the primary program school day and (2) there is ample
opportunity for both active and quiet activities within an
integrated, experiential, and developmentally appropriate educational
program. 


   OTHER STATE EFFORTS CONTRIBUTED
   TO SCHOOL IMPROVEMENT ATTEMPTS
--------------------------------------------------------- Appendix I:4

Other state efforts, such as encouraging school planning, providing
technical assistance, and providing incentives to schools,
contributed to schools' willingness to attempt improvement. 
Participating in a planning process appeared to motivate principals
and teachers to attempt improvement and help them identify the
flexibility needed.  Officials at schools in the restructuring grant
program that had received 1-year planning grants intended to
implement the planned improvements, they said, whether or not the
schools received the additional 5 years of funding.  And officials at
both funded and unfunded schools that had developed restructuring
plans requested waivers from several district regulations in order to
implement their plans. 

Technical assistance provided by the state also helped schools with
their improvement efforts.  The state education agency established a
technical assistance center to assist schools in the restructuring
grant program.  The center provided orientation meetings for
restructuring schools, provided information and materials about
issues related to restructuring, and held several meetings each year
for schools to share what they had learned. 

Incentives provided by the state also prompted schools to attempt
improvement.  The funds provided to schools for the restructuring
grant program prompted many schools to attempt improvement; schools
received $30 per student for the planning grants and up to $200 per
student each year for the demonstration grants.  Many schools applied
for grants--822 schools applied for the 146 demonstration grants
awarded.  In the SBCP, the funded student-free days provided by the
state prompted many schools' participation, according to state
officials.  Although many of these schools did not take full
advantage of the flexibility provisions in the SBCP, by combining
funds for several of their categorical programs, many of them used
the student-free days to engage in planning and professional
development activities. 


   REASONS SCHOOLS DID NOT USE
   FLEXIBILITY TO ATTEMPT
   IMPROVEMENT VARIED
--------------------------------------------------------- Appendix I:5

Although about 70 percent of the schools in California participated
in the SBCP, most schools did not take full advantage of the
flexibility provisions available to them, according to state
officials.  That is, schools tended to coordinate only a few of the
eligible state categorical programs, or coordinated some programs but
did not completely mix funding sources.  Many schools participated in
the SBCP, according to these officials, only to become eligible for
the funded student-free days rather than to provide more flexibility
in the state categorical programs.  In addition, the flexibility
allowed in the SBCP was not that helpful to school officials, some
said, because the largest sources of funding for their
schools--federal Chapter 1 funds and special education funds--could
not be used in the SBCP and had to be tracked separately. 

In the charter schools program, less than half of the 100 available
charter slots were assigned in the first full year of the program. 
State officials speculated that all of the available slots had not
been filled because (1) no financial assistance was given to charter
schools as part of the program, either for planning or implementation
of the charters, and (2) schools suspected that their districts would
not allow them to fully use the flexibility provided by the state. 
Many innovative schools in California may have chosen to participate
in the restructuring grant program rather than the charter schools
program, according to state officials, because the program provided
additional funding to the schools for improvement. 

Federal and state compliance monitoring also contributed to schools'
reluctance to take advantage of the state's flexibility efforts. 
Some district officials were reluctant to allow flexibility, some
school and district officials said, because, in recent reviews by
state and federal monitors, the districts had been found out of
compliance with procedural and fiscal regulations.  For example,
schools in one district recently had to return federal Chapter 1
program funds because the schools did not have the proper
documentation to show state monitors that equipment purchased with
Chapter 1 funds had not been used to serve noneligible students more
than the allowable percentage of time.  As a result, district
officials were reluctant to allow schools the flexibility, provided
in the Chapter 1 program, to use equipment purchased with Chapter 1
funds to serve noneligible students.  State monitors spent a great
deal of time reviewing such documentation, officials at one school
said, and paid little attention to whether students were showing
improvements in performance. 

California had recently developed new policies for monitoring
district and school compliance with state and federal program
regulations.  During the 1993-94 school year, in its reviews of
districts and schools, the state planned to hold schools accountable
for whether children served by state and federal categorical funds
were learning the subject matter in the curriculum.  In addition,
according to officials with the state education agency, the state had
begun to move toward a more streamlined review process for school
districts considered high performing on the basis of the scores on
state assessments of students in categorically funded programs. 
About 197 of the 1,006 districts in the state were eligible for these
streamlined reviews during the review cycle from school years 1990-91
through 1992-93.  However, state officials also said, federal program
officials encouraged state monitors to be quite strict with districts
and schools about compliance with procedural regulations, especially
those relating to the provision of special education services. 


   HOW ACCOUNTABILITY FOR STUDENT
   PERFORMANCE WAS PROVIDED
--------------------------------------------------------- Appendix I:6

California has had a statewide assessment of student performance for
a number of years and was developing a new assessment that will (1)
be linked to high standards, (2) use assessment methods designed to
measure students' ability to solve problems and understand complex
issues, and (3) consist of multiple measures of performance.  The
results of state assessments, as well as performance on other outcome
measures such as attendance and dropout rates, did not trigger
consequences for schools, however. 

The state has had a statewide assessment, the California Assessment
Program, since 1972, with testing required in grades 3, 6, 8, 10, and
12 in reading, writing, math, science, history, higher mathematics,
and literature.  The state used matrix sampling for the assessment,
so that individual students only took portions of the test.  In 1990,
however, the governor vetoed funding for the assessment program.  As
a result, 12th grade students were not tested in 1990, and none of
the state's students were tested under the statewide assessment
program in 1991. 

In 1991, the state passed legislation to fund the development of a
new statewide assessment--the California Learning Assessment System. 
The assessment is to be phased in over a 5-year period, although,
state officials said, this timetable is unrealistically short.  It
will be used to assess students in relation to new performance
standards, which are also under development.  The state is developing
six performance levels, with a description of the quality of
achievement students are expected to reach at each level.  State
officials estimated that developing and implementing the full
assessment system will take about 7 or 8 years. 

The new statewide assessment will consist of two components when
fully implemented.  The first component will be the most similar to
the old statewide assessment and consist of some multiple-choice
questions, questions that require short narrative answers, and
written essays, as well as more difficult tasks, such as experiments
and collaborative group work.  During the 1992-93 school year, all
students in grades 4, 8, and 10 took the first component of the new
assessment in English/language arts (reading and writing) and math. 
When fully implemented, the state plans to assess (1) all 4th graders
in English/language arts and math, (2) all 5th graders in
history/social science and science, and (3) all 8th and 10th graders
in English/language arts, mathematics, history/social science, and
science.  The second component of the new assessment will consist of
portfolios of students' work.  This component, however, had just
begun to be developed in pilot projects throughout the state. 

The state also uses multiple measures of performance because, state
officials said, no single measure provides all of the information
needed to assess how well schools meet the needs of their students. 
Since 1983, schools have been required to report annually to the
state on such things as assessment scores, course enrollments, and
dropout rates.  From this information, the state publishes the
Performance Report Summary, with information on all schools in the
state.  In addition, Proposition 98--a 1988 statewide ballot measure
that guarantees a fixed portion of the state budget for K-12
education and community colleges--requires each school to develop a
school accountability report card.  The report card covers 13
different areas, including per-student expenditures, characteristics
of school staff, class size, quality of instructional materials,
school discipline and safety, student achievement, and dropout rates. 

Although no consequences are triggered by schools' performance on the
statewide assessment, performance indicators, or school
accountability report cards, the assessment results and the state
Performance Report Summary are released to the press each year.\5

In addition, the School Accountability Report Cards must be made
available to any interested party. 


--------------------
\5 Senate Bill 171, signed by the governor in 1992, provided for
consequences, in the form of mandated assistance for the state's
lowest-performing schools.  The state legislature, however, did not
appropriate funding to implement the statute. 


   HOW STATE REGULATORY
   FLEXIBILITY EFFORTS AFFECTED
   PROGRAMS FOR CHILDREN WITH
   SPECIAL NEEDS
--------------------------------------------------------- Appendix I:7

Children in all of the state's programs for children with special
needs were included, to some degree, in school improvement attempts
that used regulatory flexibility.  In the SBCP, schools were required
to address how the needs of all categories of children with special
needs would be met and were given the opportunity to include all of
these categories of children in their improvement attempts.  Although
schools were allowed to include special education services in the
SBCP, local administrators of special education programs were
sometimes opposed to including these services, according to state and
district officials.  One reason was that the administrators and
parents feared that this would dilute services for children with
disabilities.  Another reason was that in order to use resource
specialists and hearing and speech specialists in regular
classrooms--to assist with including children with disabilities in
these classes--schools were often required to obtain state waivers of
caseload requirements.  And, until October 1993, schools in the SBCP
needed waivers to include teachers who taught children with learning
disabilities in "special day classes,"\6 which made it difficult to
include these children in the program.  There was also resistance to
including funding for children considered gifted and talented and
funding for LEP students in the SBCP, state officials said,
especially in those districts where parent or advocacy group pressure
was strong. 

Schools in the restructuring grant program and charter schools were
not specifically required to focus their efforts on children with
special needs.  The state was required, however, to select three
low-performing, two moderate-performing, and one high-performing
school out of every six schools selected for the restructuring grant
program.\7 And in reviewing charter petitions, local school boards
were required to give preference to petitions that demonstrated the
capability of schools to provide comprehensive learning experiences
to students identified as academically low achieving. 


--------------------
\6 When the nature or severity of a disability precludes a child's
participation in the regular school program for the majority of the
school day, the child is enrolled in a "special day class or center."

\7 Performance was based on students' scores on the 1989 statewide
assessment.  If the school did not have state assessment scores, the
percentage of the school's children whose families were on welfare
was used instead. 


      ACCOUNTABILITY WAS NOT
      PROVIDED FOR ALL CHILDREN
      WITH SPECIAL NEEDS
------------------------------------------------------- Appendix I:7.1

All disadvantaged children in grades 4, 8, and 10 were required to
participate in the new statewide assessment in school year 1992-93. 
The state had not yet, however, completed the development of
non-English versions of the first component of the assessment for use
in assessing the performance of LEP students, according to state
officials.  The state had also not yet determined how to use the new
statewide assessment to measure the performance of some children with
disabilities. 

Although the new state assessment was only administered in English in
the 1992-93 school year, the state required LEP students to take the
test if they had been in schools in the United States for over 30
months.  However, districts could exempt LEP students who had been in
schools in the United States over 30 months from the assessment if
the students were still taking core courses in a language other than
English.  Districts were required to assess these exempted LEP
students, using an alternative assessment in the language of
instruction, and report to the state the number of LEP students
exempted and the type of assessment method used; most districts used
standardized assessments that were not comparable with the new state
assessment.  The state was in the process of developing a
Spanish-language version of the new assessment for grade 4, according
to state officials in charge of developing the new assessment system. 

Most children with disabilities were required to take the first
component of the new statewide assessment.  In order to make the
assessment available to some children with disabilities, the state
recently allowed districts to make some accommodations, such as using
large-print versions of the test for children with visual
impairments, offering extended time for children with learning
disabilities, or administering the test in a smaller group setting
for children who are distracted or disruptive in larger groups. 
Children in special day classes or centers, about 28 percent of
children with disabilities in the grades included in the state
assessment, were not required to participate in the new state
assessment.\8 The state is working on strategies to include more of
these children in the state assessment system by providing additional
accommodations or using different methods of assessment. 

The state had the capability to separately report the results of
assessments, including the first component of the new state
assessment, for each category of special needs child.  However,
because the assessment is not given at each grade level and to every
child with special needs, information on the progress of all
categories of children with special needs was not available. 


--------------------
\8 Children with disabilities in the state's special education
programs made up about 10 percent of the state's total student
population, as of April 1993. 


REGULATORY FLEXIBILITY EFFORTS IN
KENTUCKY
========================================================== Appendix II


   STATE PROFILE
-------------------------------------------------------- Appendix II:1

In the 1992-93 school year, Kentucky had 640,477 students enrolled in
its 1,380 public schools in 176 school districts.  About 90 percent
of the state's students were white, slightly less than 10 percent
were African-American, and about 1 percent were classified as
"other." About 52 percent of the state's students were eligible for
free or reduced-price lunches.  Kentucky spent $5,128 per student
during the school year, below the U.S.  average of $5,614 per
student. 


   REGULATORY FLEXIBILITY PROVIDED
   TO SCHOOLS
-------------------------------------------------------- Appendix II:2

In 1985, 66 school districts filed a lawsuit against the state,
claiming that state funding for public schools was inadequate and
inequitable.  In 1989, the Kentucky Supreme Court upheld a lower
court's ruling in favor of the plaintiffs and declared the entire
system of public schools in the state unconstitutional.  The Court
also directed the Kentucky state legislature to design a new school
system that would guarantee all students an equal opportunity to an
adequate education.  As a result, the legislature enacted the
Kentucky Education Reform Act (KERA) in April 1990. 

The KERA was a comprehensive restructuring of the state's education
system.  The comprehensiveness of the reform was prompted by several
factors, including the decade-long efforts of the Prichard Committee
for Academic Excellence, a nonpartisan organization of Kentucky
citizens, composed of many business and education leaders, to focus
attention on improving education in the state.  As part of the KERA's
goal of enabling all students to achieve high standards, the
legislation set out six "learning goals," which were translated into
75 "learner outcomes" for students to achieve.  The KERA also
required the state to develop new curriculum frameworks organized
around these learner outcomes.  In addition, the legislature
authorized several new state programs and created a new school
finance system as a part of the KERA, all of which were to work
together to support schools' efforts to help all students learn. 

All schools in the state were given substantial flexibility under the
KERA.  The roles of the state education agency and local school
boards in governing schools' day-to-day operations were reduced
substantially, and school-based decisionmaking councils--composed of
teachers, parents, and administrators--were given the authority to
determine how the school would help students achieve the state's
performance goals.  School councils could make decisions on
curriculum, with the state curriculum frameworks as guides;
instruction; assignment of students, teachers, and space; daily
schedules; discipline and classroom management; extracurricular
programs and policies; and hiring of principals, teachers, and other
personnel.  The legislation required most schools to have a school
council by July 1996.\1

In exchange for this flexibility, school personnel were to be held
accountable for the performance of all their students in achieving
the state's learner outcomes.  The legislation required the state to
develop a new student assessment system that would measure students'
abilities to solve problems and express complex ideas.  The new
assessment system was to replace all norm-referenced, multiple-choice
tests.  Schools were to be evaluated on the basis of how well their
students performed on these assessments, as well as on other
indicators of student performance. 

Other components of the KERA were designed to assist schools' efforts
to help all students learn.  One of the largest efforts was directed
at the elementary schools.  All Kentucky elementary schools were
required to fully implement a 4-year primary program to replace the
kindergarten through third grades by the 1993-94 school year.  The
school councils were given the flexibility to determine how best to
organize each school's primary program, although all schools were
required to address certain "critical attributes," such as
developmentally appropriate educational practices, multi-age and
multiability classrooms, assessment, professional teamwork, and
parental involvement. 

In addition, the KERA funded three new programs for children with
special needs.  First, school districts were required to offer
preschool programs for children at risk of educational failure.\2

Second, all districts were required to develop an Extended School
Services program and provide extra instructional time to students who
needed more time to meet the state's learning goals.  The district
could decide how extended instruction would be delivered--through
after-school, weekend, or summer programs--and how eligibility would
be determined.  Third, to allow schools to address the nonacademic
needs of these children, the state provided grants for applicants to
establish Family Resource and Youth Services Centers in schools in
which 20 percent or more of the children were eligible for free
school lunches. 

The KERA also included funding for new educational technology.  The
proposed system would allow students and teachers to access
information on instructional practices from elsewhere in the state,
assist with delivering advanced classes to students and professional
development opportunities to teachers, be part of the new assessment
system, and help make administrative and data collection efforts more
cost effective. 

Finally, additional funding for education reform was provided through
revamping the state education finance system.  In order to address
the inequities that were the basis of the Kentucky Supreme Court's
ruling requiring KERA, a new funding formula to provide general
education funds was developed, to ensure a guaranteed amount of money
per student through a combination of state and local funds.  Total
revenue per student increased from $3,444 in 1989-90 to $4,498 in
1991-92, an increase of approximately 31 percent.  In addition, a
program was established to help local school districts raise funds
for constructing new facilities. 


--------------------
\1 The only schools that will not have to implement school-based
decisionmaking by July 1996 are schools in districts that only have
one school and schools that (1) exceed the performance threshold in
the state accountability process and (2) hold a vote in which a
majority of the faculty vote to return to district control. 

\2 Children at risk of educational failure to be served by preschool
programs were defined as 4-year-old children eligible for the federal
free or reduced-price lunch program and 3- and 4-year- old children
with specific disabilities. 


   HOW SCHOOLS USED FLEXIBILITY TO
   ATTEMPT IMPROVEMENT
-------------------------------------------------------- Appendix II:3

Schools in Kentucky used flexibility provided by the state to attempt
improvement by modifying how classrooms were organized, how subjects
were taught, how teachers were trained, and how students were
promoted and assessed.  Many of the specific changes at the school
level were made possible by devolving much of the authority for
governing schools from the state and district level to the
school-based decisionmaking councils. 

Although the state mandated that all schools would establish primary
programs for children formerly in kindergarten through third grade,
schools had flexibility in designing their programs.  For example,
the state required primary programs to address certain critical
elements, including grouping children of differing ability together. 
But schools with school-based decisionmaking councils were given
flexibility regarding how these groups were formed.  One school put
together several groups of first, second, and third graders, with
each group having equal proportions of children at various levels of
ability, children with disabilities, and boys and girls.  Other
schools grouped together children in kindergarten and first grade,
first and second grade, and second and third grade.  Schools in some
districts extended the primary program to include the fourth and
fifth grades.  Grouping children together for more than 1 year
allowed them to receive more individualized attention because they
had the same teacher, for an extended period of time, who was
familiar with the needs of each child. 

How instruction would be delivered in the primary program was also
under the control of the school councils.  Schools reported that
teachers were doing more hands-on instruction than lecturing and that
children were more involved in group projects.  Teachers were also
engaged in more collaboration, including planning classes with other
teachers.  In the area of instructional materials, school councils
had great flexibility to decide how to use the $17 per student
allotted by the state for appropriate materials for the primary
program. 

The school councils also had flexibility in designing professional
development opportunities, and many were using staff release time to
assist teachers with implementation of the primary program.  In one
school, teachers decided to use staff development time to visit other
schools in the state to observe how these schools had set up their
primary programs before beginning to set up their own. 

Finally, although schools were required to institute performance
assessments to gauge children's progress in the primary program,\3

schools had flexibility as to which assessments would be used and how
children would be promoted to the fourth grade.  For example, one
school chose to use group assessments, which fit well with its use of
group projects and collaborative learning techniques in the primary
program.  Many schools reported that having to administer new
performance assessments caused them to rethink their teaching
strategies and design better ways of teaching students. 

Some schools also used the flexibility in the school-based
decisionmaking councils to affect changes beyond the elementary
level.  For example, one high school planned to revise its schedule
from seven classes a day to four longer classes, in order to allow
more time each day for covering a few subject areas in greater depth. 
A high school in another district was experimenting with
"project-based" learning, in which students worked cooperatively on
extended learning projects:  for example, one class redecorated some
staff offices as part of a home economics project. 


--------------------
\3 The state defined "performance assessments" as assessments that
focus on observing students using the skills and knowledge they have
acquired and looking at what students have done, rather than scoring
multiple-choice paper-and-pencil tests.  Examples of performance
assessments include reading students' writing assignments to see if
students can communicate or watching students complete a science
experiment to see if they can use what they have learned and can
think through a particular problem. 


   OTHER STATE EFFORTS CONTRIBUTED
   TO SCHOOL IMPROVEMENT ATTEMPTS
-------------------------------------------------------- Appendix II:4

Although school flexibility was a central element in the KERA, the
state's reform effort was comprehensive, with all components of the
KERA designed to support school efforts to improve student
performance.  The state supported school efforts by providing
increased funding in several different areas.  Most district
officials said that at least initially, the KERA resulted in
increased funding for teacher salaries, instructional materials, and
professional development in their districts.  This funding was
instrumental in helping districts implement changes required by the
new legislation. 

To help teachers and administrators implement the KERA's many
changes, the state legislature authorized additional funding and
staff release days for professional development and funding for eight
technical assistance centers.  Professional development was funded at
$1 per pupil for 1990-91, $5 per pupil for 1991-92, and $16 per pupil
for 1992-93 and 1993-94.  Four professional development days were
built into the school calendar, and districts were given the option
of offering schools up to 5 more days in the 1992-93 and 1993-94
school years.  The eight technical assistance centers were staffed
with professionals trained to respond to inquiries about the
components of the KERA and to help schools and districts assess their
needs and develop strategies to meet them. 

Opportunities for professional development were helpful, many school
officials said, in making the changes required by the KERA, but
schools still were in great need of time and money to meet all the
other demands of the new legislation.  State officials agreed that
money provided by the state legislature for professional development
had been helpful, but was insufficient given the comprehensiveness of
the KERA reforms. 

The state offered technical assistance to schools through its state
education agency, the eight technical assistance centers established
under the KERA, and a statewide network of schools.  All schools
could request assistance from one of the state's technical assistance
centers.  The centers had staff trained in each of the components of
the KERA.  Staff roles were to assist school personnel in assessing
their schools' needs, writing plans, and locating appropriate
professional development opportunities.  The centers were valuable,
some school officials said, because they felt more comfortable asking
for assistance from the centers than from the state education agency. 
This was especially true for special education issues because the
state was perceived as more concerned with monitoring than with
assistance in this area.  However, the technical assistance centers
were understaffed, according to state officials, with a ratio of
staff to teachers of about 1 to 1,000. 

The state also provided technical assistance through its Effective
Schools Network, which included 47 districts and 235 schools in the
state.  The state provided training to district and school teams in
how to conduct needs assessments and develop improvement plans, on
the basis of research on the "effective schools" approach.\4 The
training helped school officials in one district, they said, set up
their schools' primary program.  State officials said, however, that
they did not have enough staff to conduct all the training that they
would like to provide. 

In addition, the KERA established clear incentives for schools to
improve student performance.  Schools that made significant
improvement in the performance of their students were to be rewarded
by the state, although that portion of the KERA had not yet been
implemented. 


--------------------
\4 Effective Schools programs seek to develop or improve on school
characteristics identified by effective schools research as
associated with high student achievement.  These include (1) strong
leadership, (2) a pervasive and broadly understood instructional
focus, (3) a safe and orderly school climate, (4) high teacher
expectations for student achievement, and (5) the use of student
achievement data to evaluate program success.  See Effective Schools
Programs:  Their Extent and Characteristics (GAO/HRD-89-132BR, Sept. 
13, 1989). 


   REASONS SCHOOLS DID NOT USE
   FLEXIBILITY TO ATTEMPT
   IMPROVEMENT VARIED
-------------------------------------------------------- Appendix II:5

Although the KERA provided greater decisionmaking authority to
schools through the school-based decisionmaking councils, many
schools had not yet voted to establish councils.  State officials
reported that about half of the 1,380 schools in Kentucky did not
have councils in place by June 1993.  Some schools had voted against
establishing councils, state, district, and school officials said,
because the schools expected to be exempted from the requirement;
such an exemption would be allowed if the schools' students exceeded
the level of academic performance required by the state. 

Not all schools with school councils used the flexibility available
to them to attempt improvement.  In some parts of the state, state
officials noted, where local superintendents had traditionally
exercised much authority, the new roles for district and school
officials under the KERA were still being worked out.  Some schools
did not know what to do to improve, state and district officials
said; simply having a school council did not necessarily lead schools
to attempt improvement that would lead to higher student performance. 
Rather, the councils tended to deal first with such issues as
extracurricular activities and school discipline, leaving the more
difficult issues of instruction and curriculum until later.  Although
school councils could request waivers of state regulations--such as
regulations as to maximum class size--the state reported that it had
not received any waiver requests from school councils.  State
officials suspected, they said, that few schools were aware of the
waiver provision. 

Some school officials' attempts at improvement were limited, they
said, because they were overwhelmed with the number of changes
required under the KERA, such as the number of different plans they
had to write and the tight deadlines for implementing changes.  This
left officials little time to plan each type of change and to engage
in the professional development activities required to implement
them.  For example, the KERA had originally required schools to fully
implement primary programs by the 1995-96 school year, but the
legislature changed the deadline for implementation to the 1993-94
school year.  Thus, school officials said, they concentrated most of
their efforts on the primary program and would not be able to use
their flexibility to make other kinds of improvements until later
years. 

Finally, state officials said, the KERA was having a greater impact
at the elementary than at the junior high and high school level.  At
the high school level, one of the biggest changes was the requirement
that all 12th graders take the new state assessment.  However, some
schools found it difficult to get students to take the assessment
seriously, because it had little impact on whether or not they
graduated.  The state's High School Restructuring Task Force planned
to consider, among other things, whether to make changes in
graduation requirements. 


   HOW ACCOUNTABILITY FOR STUDENT
   PERFORMANCE WAS PROVIDED
-------------------------------------------------------- Appendix II:6

Kentucky was in the process of implementing a new statewide
assessment that was linked to high standards--the state's six
learning goals.  The state set specific goals, or "thresholds," for
each school.  These goals require continuous improvement in student
performance on the assessment and on other indicators of student
performance.  Schools that exceed their thresholds will be rewarded
with money and recognition; schools that fail to meet their
thresholds will be given assistance and required to prepare
improvement plans.  Sanctions will be imposed on schools that
experience substantial declines in performance, with certified staff
subject to probation, transfer, or removal, and students will be
given the opportunity to transfer to other schools. 

The KERA requires that the state's accountability system be fully
implemented by the 1994-95 school year.  When the KERA is fully
implemented, all students in grades 4, 8, and 12 will be assessed
annually, using a new state assessment system that measures student
performance in relation to high standards.  Four levels of
performance will be reported:  novice, apprentice, proficient, and
distinguished.  During the first several years of implementation of
the KERA, the state used a transitional test, composed mostly of
open-ended questions, modeled after a national test, the National
Assessment of Educational Progress.  The accountability system also
includes multiple measures of student performance, such as portfolios
of students' work, and performance tasks, such as having students
perform science experiments or respond to questions from a panel on a
specific subject.  Schools are evaluated based on the percentage of
students who achieved the top two levels of performance on the
assessment (proficient and distinguished), as well as on four other
indicators of school performance:  attendance; dropout rates;
retention rates; and ease of students' transition to work,
postsecondary education, or military service. 

The state used results from the 1991-1992 assessments and scores on
the other indicators to establish a baseline score for each school.\5
This score will be used to determine how far schools are from
achieving the state's high standards and how much progress they will
be required to make by the end of the 1993-94 school year.  Every
year, all schools will be issued their scores (their "accountability
index") on a scale of 0 to 100, based on their students' performance. 
A score of 100 would mean that all students were achieving at the
proficient and distinguished levels and had perfect scores on the
other four factors (100 percent attendance, for example).  The state
set a threshold for improvement that was specific to each school,
based on school scores on the 1991-92 assessment.  Each school will
be required to reduce the difference between its baseline score and
100 by at least 10 percent every 2 years.\6

Every 2 years, schools will then be rewarded for progress toward
meeting their thresholds or have sanctions imposed for lack of
progress.  Schools that score 1 percent or more above their
thresholds will receive financial rewards that can be used in any way
the certified staff decides (for instructional materials or teacher
salaries, for example) and may also be singled out for recognition. 
Schools that meet their thresholds will be considered successful and
will avoid any sanctions.  Schools that do not reach their
thresholds, but with an accountability index that does not decline by
more than 5 percent, will be required to prepare school improvement
plans and will be eligible for state funds for school improvement. 
The state is also training a cadre of "Distinguished Educators" who
will be assigned to those schools that suffer declines, to assist
them in making improvements.  Schools that decline by more than 5
percent will be declared "schools in crisis." These schools also will
be required to prepare improvement plans and will be eligible for
school improvement funds, but, in addition, they will be assigned a
Distinguished Educator who must decide, within 6 months, whether
certified staff should be placed on probation, transferred to another
site, or dismissed.  Students in these schools will also be allowed
to transfer to more successful schools. 


--------------------
\5 For the state as a whole, in the 1991-92 assessment, approximately
90 percent of the students fell below the proficient level in the
content areas of reading, math, science, and social studies. 

\6 For example, if a school's accountability index was 30 in the
1991-92 assessment, it will be required to reduce the difference
between 30 and 100 (70 points) by 10 percent (7 points) over the next
2 years. 


   HOW STATE REGULATORY
   FLEXIBILITY EFFORTS AFFECTED
   PROGRAMS FOR CHILDREN WITH
   SPECIAL NEEDS
-------------------------------------------------------- Appendix II:7

Under the financing formula in the KERA, state funds for children
with disabilities were combined with other state education funds;
districts received additional funds for children with disabilities
above the guaranteed amount provided for each child.  The schools
were also given flexibility over how these combined funds should be
spent.  The schools no longer have to keep state funds for children
with disabilities separate from general education funds to ensure
that these funds are being spent solely on children identified as
having disabilities.  The school-based decisionmaking councils are
allowed to decide how the funds are to be used.  Combining the funds
helped to facilitate collaborative teaching models, district and
school officials said, which focus on the inclusion of children with
disabilities in regular classes.  For example, in some schools,
general education teachers and special education resource teachers
worked together in primary program classrooms; this enabled the
general education teachers to learn strategies from the special
education teachers for teaching children with disabilities. 

Schools were able to use state funds, provided under the new funding
formula for children with disabilities, to meet the needs of other
children, as long as the needs of children with disabilities were
being met.  For example, districts were able to use the funds to
serve children with attention deficit disorders, even though, under
federal law, districts are not required to provide special education
services to these children. 

Parents and advocates of children with disabilities expressed
concerns about the potentially harmful effects of combining funds for
children with disabilities with the general education funds.  Parents
and advocates were concerned that if the funds were combined, there
would be no assurance that children with disabilities would be
adequately served.  Moreover, parents and advocates were concerned
that some school councils might not include a special education
representative, who could provide information to the council about
the needs of children with disabilities.  Without this input, parents
and advocates feared, the school councils might not have enough
information to make decisions that adequately addressed the needs of
children with disabilities. 

The KERA also provided flexibility in its program for disadvantaged
children.  The Extended School Services program was created under the
KERA to provide additional instruction time to children before or
after school, on weekends, or during the summer.  This program
replaced a remedial program in which children were pulled out of
their regular classes during school hours to receive additional
assistance.  In the Extended Schools Services program, schools are
given flexibility in determining which students qualify for the
program and how the funds are to be spent.  Schools are no longer
required to use standardized test scores to determine which students
need additional assistance and, instead, use other criteria, such as
teacher evaluations and student portfolios.  According to state
officials, since schools are no longer required to spend the funds
solely on personnel, schools will be able to better meet the needs of
children--by using the funds for instructional materials,
transportation, or for child care for younger siblings--so that they
can receive additional instruction at school. 

It was easier to include all disadvantaged students in their school
improvement efforts, officials in Chapter 1 schools reported, when
the school was designated a schoolwide project under Chapter 1. 
Chapter 1 teachers and aides could then be used to provide
instruction to any student, without having to account for time spent
serving non-Chapter 1 students.  Thus, the school could use these
personnel to help reduce the teacher-student ratio in the primary
program or to provide services to students with special needs without
pulling them out of classes. 

The program for "gifted and talented" children was not combined with
the state's funding provided under the new funding formula for
general education and other state categorical programs.  Parents and
advocates of this program persuaded state officials to keep this
program separate because of concerns that if the funds were combined,
the gifted and talented children might receive fewer services. 


      ACCOUNTABILITY WAS NOT
      PROVIDED FOR ALL CHILDREN
      WITH SPECIAL NEEDS
------------------------------------------------------ Appendix II:7.1

Kentucky used its new statewide assessment system to measure the
performance of children with special needs and required most children
with special needs to participate in the assessment.  Kentucky only
allowed schools to exempt children who received instruction at home
or in a hospital, as well as children whose primary language was not
English and who had been in an English-speaking school for less than
2 years,\7 from all components of the state assessment.  Most
children with special needs participated fully in all three
components of the assessment:  the transitional test, portfolios of
student work, and performance events.  To ensure that children with
disabilities were able to participate in the assessment, Kentucky
allowed some children with disabilities to take the assessment with
adaptations or modifications and only required children with moderate
to severe cognitive disabilities, about 1 to 2 percent of the state's
total student population according to state officials, to participate
in developing portfolios of their work.\8 Children with less
significant disabilities participated in all three components of the
assessment, with modifications that were used in their daily
instruction.  For example, assessments were read to some visually
impaired children if this was the regular way in which materials were
presented to them. 

The assessment results for children with special needs were included
as a part of the schools' accountability scores.  Kentucky had not
yet developed a procedure for separating out the results for children
with special needs at each school because reporting these results for
some small schools would make it possible to identify individual
children.  State officials had not yet decided how they would report
results for children with special needs, although they intended to
hold schools accountable for the performance of all of their
students. 


--------------------
\7 The exemption for students whose primary language was not English
was allowed one time only. 

\8 A special education review team at each school determines if a
child's disability is significant enough to prevent the child from
participating in the regular assessment, even with modifications and
adaptations.  Such a decision must be documented in writing in the
child's record and must be based on current and past data collected
in multiple settings. 


REGULATORY FLEXIBILITY EFFORTS IN
SOUTH CAROLINA
========================================================= Appendix III


   STATE PROFILE
------------------------------------------------------- Appendix III:1

In the 1992-93 school year, South Carolina had 644,358 children
enrolled in its 1,071 public elementary, middle, and high schools in
91 school districts.  About 57 percent of the children were
classified as white, about 42 percent were African-American, and
approximately 1 percent were classified by the state as "other."
Children who received free or reduced-price lunches accounted for
about 45 percent of the student population.  South Carolina spent
$4,573 per student during the school year, below the U.S.  average of
$5,614 per student. 


   REGULATORY FLEXIBILITY PROVIDED
   TO SCHOOLS
------------------------------------------------------- Appendix III:2

Since the early 1970s, South Carolina has been involved in education
reforms.  Initially, these reforms focused on achieving basic skills;
more recently, these reforms have emphasized high standards of
student performance and children's ability to master complex
problem-solving skills.  The governor and the state superintendent of
education won public support for these reforms by appointing
committees of prominent South Carolinians to develop the specific
proposals and by holding public forums to involve citizens in the
reform efforts. 

In the 1970s, South Carolina enacted legislation that required
statewide assessment of basic skills.  In response to this
legislation, the state board of education established minimum
requirements for education programs.  These requirements included
facilities, personnel qualifications, class size, subjects to be
taught, the amount of time students were to be taught each subject,
recordkeeping, and monitoring of schools by the state.  In 1984, the
South Carolina legislature passed a comprehensive reform bill, the
Education Improvement Act, which emphasized raising student
performance.  The act included (1) a compensatory and remedial
education program for children who do not meet basic skills
standards; (2) criteria, using statewide assessment results, for
promoting children to the next grade level; and (3) a graduation
examination for all children. 

In 1988, South Carolina enacted legislation, Target 2000, designed to
stimulate school improvement by providing regulatory flexibility to
schools.  Target 2000 created the Flexibility Through Deregulation
Program (hereafter referred to as "the deregulation program"), which
automatically gives exemptions from many state education regulations
to schools considered high-performing on the basis of their students'
scores on state assessments.\1 The legislation also provided all
schools the opportunity to apply for waivers of state regulations
needed to attempt improvement.  Schools must submit proposals to the
state to show that waivers are needed for school improvement, and
proposals are approved on a case-by-case basis.\2

Schools in the deregulation program are exempted from many of the
state regulations developed by the state board of education in the
1970s.  These schools were initially given flexibility for a 30-month
period.  Thereafter, they can continue in the program only if their
students maintain high scores on the state assessments every year.\3
As of August 1993, 230 schools, about 21 percent of the 1,071 schools
in the state, were in the deregulation program.  Although schools
were not given any additional funding as a part of the deregulation
program, they, as well as other schools in the state, received
monetary rewards for their students' high performance on the state
assessments. 

In 1991, South Carolina established the 12 Schools Project, which was
designed to develop new instructional and assessment strategies for
three subjects:  language arts, mathematics, and science.  The state
provided greater regulatory flexibility to schools in this project
than schools in the deregulation program:  as well as being exempted
from the same state regulations, project schools are exempted from
annual statewide assessments.  The project schools are also allowed
to develop their own criteria for determining (1) which children are
eligible for state programs for disadvantaged children and "gifted
and talented" children and (2) which children should be promoted to
the next grade level. 

The state extended invitations to schools to submit proposals for the
12 Schools Project that were either (1) in the state deregulation
program or (2) part of a state program designed to improve education
in rural schools (to ensure participation from schools in rural
areas).  The schools were selected on the basis of their proposals,
with an equal number of elementary, middle, and high schools being
chosen.  Of the 12 schools, 8 were in the deregulation program and 4
were in the rural schools program. 


--------------------
\1 A school qualifies for the deregulation program by meeting the
following criteria:  (1) in the past 2 out of 3 years, the school has
been recognized as one of the highest performing schools on the state
assessments (for descriptions of these assessments, see p.  54),
relative to schools of similar socioeconomic status; (2) the test
scores of the school's students have kept pace with the scores of
students at similar schools throughout the state for the last 3
school years; (3) students in the school's compensatory program for
low achievers have made minimum gains, as defined by the state; and
(4) the school has exhibited no recurring accreditation deficiencies. 

\2 Target 2000 also established two competitive grant programs, the
School Innovation Program and the Dropout Prevention Program. 
Schools that participated in these programs were allowed to request
waivers of state regulations.  These programs were phased out in June
1993. 

\3 A school that does not requalify for deregulation status may apply
to the state board of education for an extension of the status for 1
year, provided extenuating circumstances exist that account for its
inability to maintain that status.  Such extenuating circumstances
include only (1) an officially declared natural disaster occurring
within the fiscal year in which the assessment is administered; (2)
an officially declared statement of war or civil unrest; and (3) an
official decrease in local, state, or federal funding, requiring a
reduction in instructional or educational resources or both. 


   HOW SCHOOLS USED FLEXIBILITY TO
   ATTEMPT IMPROVEMENT
------------------------------------------------------- Appendix III:3

Schools in both the deregulation program and the 12 Schools Project
used regulatory flexibility provided by the state to attempt
improvement by changing the way classes were organized and how
subjects were taught.  In changing the ways that classes were
organized, schools made changes such as (1) increasing the amount of
time that students spent in each class and (2) rearranging teachers'
schedules in order to provide teachers with more planning time.  In
changing how subjects were taught, schools made changes such as (1)
combining more than one subject into a thematic unit and using a team
of teachers to teach the unit and (2) developing new instructional
and assessment strategies. 

Schools changed the ways that classes were organized by, for example,
having three classes a day for 100 minutes on each subject, instead
of six classes for 50 minutes on each subject.  This allowed students
to study each of the six subjects in greater depth.  Other schools
restructured their class schedules to increase the amount of time
students spent on "core" subjects, such as math and language arts,
and reduce the amount of time students spent on "noncore" subjects,
such as art and music.  The additional time on core subjects
reinforced the students' learning, according to school officials. 
Moreover, this change gave teachers additional time to work directly
with individual students and plan their classes. 

In order to rearrange teachers' schedules to allow more time for
planning, schools needed flexibility in applying regulations on class
size.  For instance, one school increased the size of some classes
and rearranged teachers' schedules so that one teacher could become
the "science expert," spending time on planning, assistance, and
training activities for the other teachers. 

For changes in how subjects were taught, classes were combined and
team teaching was implemented.  To do this, schools needed
flexibility in applying regulations on the length of time for each
class and subject-specific certification requirements for teachers
(that is, requirements that teachers spend the majority of their time
teaching only subjects they were certified to teach).  Some schools
combined more than one subject into a thematic unit and used teams of
teachers to teach the unit.  For example, one school used the Civil
War as the theme, and combined history and English classes, with
students studying articles and books written during the Civil War. 

Schools in the 12 Schools Project were able to develop new
instructional and assessment strategies because these schools were
given flexibility in applying the state's assessment regulations. 
The 12 schools were at various stages of developing and implementing
new instructional and assessment strategies.  Because implementing
new practices and assessments required a lot of time, state officials
reported, schools that had begun restructuring their programs before
participating in the project were farther along than other schools. 
According to school officials, the project served as a vehicle for
schools to continue ongoing improvements and as a catalyst for them
to attempt new improvements. 


   OTHER STATE EFFORTS CONTRIBUTED
   TO SCHOOL IMPROVEMENT ATTEMPTS
------------------------------------------------------- Appendix III:4

Other state efforts--such as encouraging planning, providing
technical assistance, and providing incentives--prompted schools to
use flexibility to attempt improvement.  Participating in a planning
process that evaluated the needs of students and involved teachers,
parents, students, and the community, officials from schools in the
12 Schools Project said, encouraged schools to make improvements
designed to help them best meet the needs of their students.  South
Carolina recently enacted legislation that requires all districts and
schools to develop comprehensive 5-year school plans.\4 After
completing these plans, more schools are expected to undertake
improvements, according to state officials. 

Technical assistance provided by the state also influenced schools'
decisions to attempt improvement, school officials said.  Teachers in
the 12 Schools Project benefited, they said, from participating in
conferences in which teachers from different schools shared
information about their instructional and assessment methods.  Some
schools, including both schools in the deregulation program and those
not in the program, received assistance through South Carolina's
Center for the Advancement of Teaching and School Leadership, created
in 1990 to support school innovation.  The center gave support by
providing information and advice to schools, holding workshops for
teachers and administrators, setting up a telephone hotline for
schools seeking information, establishing a telecommunications
network for schools involved in improvement efforts, setting up
on-site visits for teachers and school administrators at innovative
schools in South Carolina and other states, and passing on
information from national and regional organizations involved in
school improvement.  However, the center's assistance was only
available to about 10 percent of the schools in the state because of
limited funds, although many more schools requested it.  According to
state officials, South Carolina will use funds from federal grants
and the state to open technical assistance centers throughout the
state in 1995, in order to assist schools in making improvements in
math and science instruction. 

Incentives provided by the state, such as additional funds to support
improvement, also encouraged schools to take advantage of regulatory
flexibility, according to school officials.  Some schools in the
deregulation program received annual rewards for high student
performance:  they ranged from $1,000 to over $66,000 in the 1992-93
school year.  Schools in the 12 Schools Project received between
$5,000 and $17,500 annually.  Some of the schools used these
additional funds to pay teachers for working on weekends or to hire
substitute teachers in order to give teachers additional time to
develop new instructional and assessment strategies.  The state
provided schools in the 12 Schools Project with funding to support
their efforts.  During the first year of the project, school year
1991-92, each school received $17,500, and each school received
$14,850 for the 1992-93 school year.  In October 1993, the state
expanded the project to include an additional 24 schools that were
partnered with the original 12.  For school year 1993-94, each of the
original 12 schools received $8,500 and the 24 new schools each
received $5,000. 


--------------------
\4 South Carolina enacted the Early Childhood Development and
Academic Assistance Act in 1993.  It requires districts and schools
to develop long-term plans that include (1) a needs assessment of
their students, (2) identification of new teaching techniques and
strategies to meet these needs, and (3) performance goals and time
lines for progress. 


   REASONS SCHOOLS DID NOT USE
   FLEXIBILITY TO ATTEMPT
   IMPROVEMENT VARIED
------------------------------------------------------- Appendix III:5

Although many of the schools in South Carolina used the flexibility
provided by the state to attempt improvement, other schools did not
attempt improvement and, therefore, did not take advantage of the
flexibility available to them.  About half of the schools in the
deregulation program were reluctant to use the flexibility available
to them, according to district officials.  Schools in the
deregulation program did not attempt improvement, district officials
said, primarily because (1) school officials were satisfied that the
performance of their students was sufficiently high and (2) the
flexibility provided was temporary.  In addition, only a few schools
requested waivers available to all schools in the state, according to
state officials. 

Some of the schools were not inspired to attempt improvement because
flexibility was provided by the state as a reward for students' high
performance on state assessments.  Since student performance was high
enough to get these schools recognized by the state, school officials
did not see a need to improve further, according to district
officials. 

In addition, many schools in the deregulation program were reluctant
to attempt improvement that included making changes that would not be
allowed if these schools lost their eligibility for the program.  For
example, some schools considered making personnel changes, such as
using teachers to staff libraries instead of librarians, in order to
reduce personnel costs and make more funds available for technical
assistance and instructional materials.  However, some schools were
reluctant to make these changes because they would have to go back to
the staffing required by the state if they lost their flexibility. 


   HOW ACCOUNTABILITY FOR STUDENT
   PERFORMANCE WAS PROVIDED
------------------------------------------------------- Appendix III:6

South Carolina's accountability system included assessment of student
performance, but this assessment was not made in relation to high
standards.  Consequences for performance were provided to some
schools:  schools with high-performing students were rewarded with
flexibility and monetary rewards; schools that failed to maintain the
high performance of their students lost their flexibility.  The state
also provided assistance to a few schools whose students had low
performance on state assessments, but was unable to help many of
these schools because of limited funding. 

South Carolina used two standardized tests to assess student
performance:  (1) a state achievement test, the Basic Skills
Assessment Program, and (2) a nationally norm-referenced test,\5 the
Stanford Achievement Test, 8th edition.  Neither of these
assessments, however, measured performance in relation to high
standards.  The state was in the process of developing performance
standards that will be linked to the state assessments of student
performance. 

The state used the results of the state assessments to reward the
state's highest performing schools by placing them in the
deregulation program.  In addition, approximately one-fourth of the
highest performing schools were given monetary rewards each year, on
the basis of their students' assessment scores.  Other factors, such
as student attendance, affected the amount of the reward given to
each school. 

To determine which schools were in the greatest need of assistance,
South Carolina used state assessment results, dropout rates, and
student and teacher attendance rates.  The state, however, could only
assist a small number of schools because of limited staff and
funding.  In the 1992-93 school year, 22 schools in five school
districts, 2 percent of the schools in the state, were assisted,
according to state officials. 


--------------------
\5 Norm-referenced tests are tests that have been shown to measure a
student's skills in relation to other students. 


   HOW STATE REGULATORY
   FLEXIBILITY EFFORTS AFFECTED
   PROGRAMS FOR CHILDREN WITH
   SPECIAL NEEDS
------------------------------------------------------- Appendix III:7

South Carolina had three programs for children with special needs:  a
compensatory and remedial program for children who scored poorly on
the state assessments; a gifted and talented program for children who
scored well in math, English, or science on the state assessments;
and a program for children with disabilities.  The state included the
compensatory and remedial education program in all of its flexibility
efforts.  But less flexibility was allowed in the gifted and talented
program, and none was allowed in the program for children with
disabilities. 

Schools in the state deregulation program and the 12 Schools Project
were exempted from following the compensatory and remedial education
program regulations on class size, minimum number of minutes of
instruction, and personnel qualifications.  In addition, any other
school in the state could apply for waivers of these regulations if
the waivers were needed to attempt improvement.  Schools in the 12
Schools Project were allowed to develop their own eligibility
criteria for the gifted and talented program, but were required to
follow all other state regulations for the program.  And no
flexibility was allowed in applying state regulations governing
programs for children with disabilities. 

Some schools used regulatory flexibility to develop their own
eligibility criteria for the compensatory and remedial education
program so as to include additional students in the program.  In some
cases, schools used multiple criteria to determine eligibility,
including state assessment scores, teacher observations, student
portfolios, performance tasks, and students' grades.  This
flexibility allowed teachers to better meet the needs of the
children, teachers said, by providing assistance to those who needed
it, even though they might have scored above the state-mandated
cut-off score on the state assessments. 

Having freedom from regulations on class size and the number of
minutes of instruction for the compensatory and remedial program,
school officials said, made it easier to include disadvantaged
children in regular classes and other school improvements.  Not
having to worry about spending a certain amount of time on a specific
subject, teachers said, helped them feel more comfortable about
involving these children in the work of the rest of their students. 
For example, some schools increased the length of math and English
courses so that all children, including disadvantaged children, could
spend more time learning these subjects. 

State officials were concerned about allowing flexibility in programs
for gifted and talented children and children with disabilities. 
These officials were concerned that these children's needs might not
be met if the programs' procedural regulations were not followed. 
The complexity of the regulations for students with disabilities also
affected the state's decision to exclude this program from its
flexibility efforts. 


      ACCOUNTABILITY WAS NOT
      PROVIDED FOR ALL CHILDREN
      WITH SPECIAL NEEDS
----------------------------------------------------- Appendix III:7.1

South Carolina included most children with special needs in its
statewide assessments of student performance, including all children
in the compensatory and remedial education program, children in the
gifted and talented program, and most students with disabilities. 
The state did not separately report assessment results for children
with disabilities or gifted and talented children, however, so the
benefits of school improvements on their performance could not be
determined.  State officials planned to separately report assessment
results, they said, for gifted and talented children, beginning in
1994. 

The state exempted some children with disabilities from its statewide
assessments of student achievement.  The special education review
team at each school--consisting of school and district
administrators, teachers, specialists, and the child's parents or
guardians--decided whether or not a child had a disability that would
prohibit the child from participating in the state assessments. 
South Carolina did not track the number of children with disabilities
that were exempted from the state assessments.  The state had
recently adopted procedures on providing accommodations for children
with disabilities, such as allowing the use of a spell checker during
the state assessments, according to state officials. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IV

Beatrice F.  Birman, Assistant Director, (202) 512-7008
Revae E.  Steinman, Evaluator-in-Charge
Tia L.  Daniel, Evaluator
Tom Jessor, Evaluator
Laurel H.  Rabin, Reports Analyst

