The House of Representatives recently passed the Academic Achievement for All Act (or "Straight A's") introduced by Education Committee Chairman William Goodling (R-PA). This bill, H.R. 2300, offers 10 states (and school districts in the other states) the opportunity to enter into a contractual agreement with the federal government to improve academic achievement. The five-year contract must outline a state's roadmap to boost achievement for all of its students. In exchange, the Secretary of Education would allow the state considerable flexibility and fiscal and legal autonomy to reach its goals. States that succeed would receive a financial bonus from Washington. But flexibility would be withdrawn and administrative funds reduced if states fail to reach their goals.

The House-passed bill marks a turning point in federal education policy. If it becomes law, federal education policy would focus on the "output" of academic achievement of poor students instead of school "inputs" and services. Unfortunately, because of pressure from some opponents of this new approach, the House version is limited to just 10 states. It also contains a restrictive "hold harmless" provision if a state opts to include the Title I program in its options. Title I, which is meant to provide compensatory education for disadvantaged youngsters, accounts for most of the money and regulations in the Elementary and Secondary Education Act (ESEA).

The House bill gets an `A' for its:

1. Focus on academic achievement. This is the first measure passed by the House that focuses clearly on academic results, especially for poor students, rather than on serving poor students (and trying to reform their schools).

2. Rewards for closing achievement gaps. It would reward academic success. States or school districts that meet the terms of their agreements and close achievement gaps in at least two grade levels would receive a monetary reward.

3. Wide flexibility with most federal categorical programs. Because it contains 14 programs, including Title I, states would have unprecedented flexibility to manage federal funds and commingle them with their own funding streams to devise suitable solutions to their most urgent education problems. Without Title I, it would lead to little reform, since most of the mandates and funding in federal education policy are in Title I.

4. Real accountability. It requires states to test students and release the results disaggregated by socioeconomic background. If enacted into law, this would reassure parents that they have access to the best information on schools and would help states zero in on academic problems. States will use their own tests to measure performance against a single bar. Similar to Texas's well-known accountability system, the bill would offer states or localities carrots and sticks for academic performance. A recent report by the Council of Great City Schools found the Fort Worth and Houston school districts to be the most successful of 11 districts nationwide in reducing the achievement gap between white and minority students. Texas eighth graders had the fourth highest scores in the country on the National Assessment of Educational Progress for writing that was released in September, and the state's black and Hispanic students were among the highest scoring in the nation. Similar achievements were reported earlier in math. The results show that Texas's kind of accountability, the essence of Straight A's, does work.

5. School choice. The House-passed bill allows states to invest federal dollars in reforms that best suit their needs, including parental choice of school and education programs. This is the first piece of legislation that is not hostile to such an innovation. But the state must show academic improvements for all students within five years or this flexibility will be withdrawn.

The House bill gets an `F' for its:

1. Limits on the number of states that can participate. The bill amounts to a pilot program for only 10 states. This limitation will delay the pace of change. Indeed, because the companion ESEA reauthorization is so heavy on rules and regulations--especially in Title I--40 states will still have to comply with a dizzying array of federal requirements, some of which have little to do with academic achievement. To force states to continue down a path that was laid out 34 years ago, when ESEA was enacted, is folly.

2. "Hold harmless" provision under Title I. The bill continues to place a significant mandate on states by requiring them to use the existing formula to allocate Title I funds to districts. Because most of the funding and regulations in Straight A's is in Title I, this provision would considerably hinder a state's ability to innovate. States will spend time tracking the distribution of inputs rather than focusing on achievement. The House bill really just empowers a state with one-third of the funding, requiring the rest to be channeled directly to local school systems, which may not be receptive to state-priority reforms. If a state participates in Straight A's, it should have full fiscal autonomy to allocate federal dollars to the most effective strategies (including statewide teacher training or tests) as long as they yield the academic outcomes.

3. Insufficient power for governors to seek Straight A's contracts. The law places the state in charge of education, but in some states the official who is empowered to run the education system may have vastly different views from the governor. It is important for a state's chief executive officer to have power to apply for Straight A's. Most governors have made education the cornerstone of their campaigns. They see academic achievement as the state's ticket to prosperity. Straight A's legislation should not shut them out of the process.

The House-passed Straight A's bill is a victory for serious education reform, but a partial and flawed one. The Senate has a unique opportunity to make an important reform measure far stronger. By passing an improved version of Straight A's, this Congress can be the first to focus federal education policy not on what goes into schools but on what comes out.

Nina Shokraii Rees is a former Senior Education Policy Analyst at The Heritage Foundation.