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As education policies focus more forcefully on student achievement, policymakers need to overhaul 20th-century school finances in ways that support and encourage learning, a report scheduled for release this week says.

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Such changes would encompass a wide-ranging agenda to revolutionize tax policy, teacher pay, and school districts鈥� budgeting, according to the report, which was set to be issued Feb. 17 by the Committee for Economic Development.

鈥淚f you have financial policies that are sending one message and other aspects of the educational system sending another,鈥� said Janet S. Hansen, a vice president and the director of educational studies for the business- oriented policy group, based in Washington, 鈥渋t鈥檚 going to be hard to get [the latter] message heard.鈥�

To accomplish such an overhaul, the report argues, school principals would need authority to spend in the best ways possible the dollars allocated to them. In addition, policymakers would have to create new data systems that provided examples of effective practices, and teachers would have to be paid according to their ability rather than seniority.

The report also calls on states to conduct thorough analyses of how much it would cost to reach the ambitious achievement goals of their standards-based initiatives and the federal No Child Left Behind Act.

While many cost studies of state policies conclude that paying for all of those measures would require pumping several billion more dollars into state spending, the CED suggests that policymakers should concentrate first on finding ways to spend existing money to best advantage.

鈥淚t will be easier to make the case [for additional funding],鈥� Ms. Hansen said in an interview, 鈥渙nce people are more confident that education is using the resources it has effectively.鈥�

Search for Answers

In its report, 鈥淚nvesting in Learning,鈥� the Committee for Economic Development addresses the types of questions school finance experts are already pondering.

For example, many states are studying the costs of their standards-based initiatives, or how much it will cost to meet the goals of the No Child Left Behind Act.

Meanwhile, top researchers have joined a five-year project underwritten by the Bill & Melinda Gates Foundation to define best ways to spend public money to achieve state learning goals. (鈥淕ates Grant Will Fund Four-Year Study of School Finance,鈥� Oct. 22, 2003.)

Many states also are working to change their tax policies so they can collect enough money to pay for the increasing costs of schools and other services.

The CED weighs in with recommendations that reflect the perspective of the management experts who constitute most of its membership of business executives and high-level government leaders. The group also includes educators.

Regarding taxes, the group suggests changing tax policies to avoid the current 鈥渟tructural and cyclical problems with state revenues,鈥� but doesn鈥檛 take a stand on whether to increase taxes.

The report also suggests scrapping the salary schedule used by most school districts that set teacher salaries based on seniority and education degrees.

鈥淭he traits rewarded by single-salary schedules (experience and additional education) appear to have little to do with improving student outcomes,鈥� the report says. The group says that 鈥渟ome portion鈥� of teacher pay should be tied to student achievement.

A recent study gave a positive evaluation to the pay-for-performance experiment in Denver. (鈥淒enver Performance-Pay Plan Yields Student Progress,鈥� Jan. 14, 2004.)

The group also proposes that districts offer mathematics and science teachers salaries that are higher than those for other teachers, making teaching jobs more competitive with those in higher-paying sectors.

While such methods are common in business, teachers鈥� unions object to them because the traditional teacher salary structure rewards educational level and experience鈥攖he two factors that deliver improved student achievement, said Carolyn York, the manager of collective bargaining and compensation for the 2.7 million-member National Education Association.

Many of the ideas urged by the CED have been successfully implemented or are currently in the experimental stage, the report adds.

In addition to the Denver teacher-pay program, the Milken Family Foundation is expanding a program that sets salary scales based on teachers鈥� classroom achievement. The program is now reaching 75 schools in six states.