By the end of November, three special masters appointed by State Supreme Court Justice Leland DeGrasse are expected to hand the judge their recipe for fixing New York City’s public schools. Justice De-Grasse appointed these special masters in the wake of the New York State Court of Appeals decision that ruled New York was failing to provide city students with a “sound basic education.”

After months of legal shuffling and expert testimony, the special masters clearly still believe that the fundamental reason New York’s public schools are low-performing is simply because of a lack of adequate resources. The entire behind-the-scenes debate, reflected in a flurry of paperwork, now is focused upon how to calculate the size of the alleged under funding of city schools. The court appears to be leaning against the most excessive calculations offered by the teachers unions and others, but likely still will embrace an eye-popping number nonetheless.

Despite the artificial and already missed July 2004 deadline for action, Governor Pataki and the state Legislature still have time to reach a more balanced agreement than Justice De-Grasse is likely to impose. Ideally, state policymakers should attempt to reach an agreement before the court appointed masters make their recommendations to Justice DeGrasse at month’s end. Failing that, the governor and state Legislature should attempt an agreement at least by year’s end before Justice DeGrasse himself hands down a ruling.

The governor has a right to appeal any ruling by Justice DeGrasse and has constitutionally protected impoundment powers. This provides the governor with substantial leverage to dictate the terms of any final agreement no matter what an activist judge desires.

Even before getting to the substance of how to transform New York City’s public schools, the agreement would have to include some common-sense parameters. First, the state aid formula, which everyone agrees is a disaster and incomprehensible to all but a few experts, should be fixed statewide. A New York City-only solution may be what the fiscal-equity case narrowly requires, but no one believes that the problem of low student performance is limited to New York City schools or that the formula works any better outside of city boundaries.

Second, districts like New York City that have not kicked in enough local financial support for education should be required to do better. We should not encourage local districts to withdraw local support in the eternal hope that a state bailout – court-imposed or otherwise – always will be just around the corner.

Third, any increase in state aid will have to be phased in over time. The state simply does not have the money to provide a multibillion dollar school-aid increase in the next few years. This reality might not be important to a liberal activist judge, but it should be a practical concern for everyone else. Now, for the educational substance.

Putting aside the legitimate debate over whether more money should be spent on education, most reasonable people – expert or not – understand that simply providing more money to an urban school system like New York’s is not enough by itself. The money could easily be squandered.

To what should the increase in money be tied? A few obvious answers: redesign of the school calendar, greater autonomy at the school level, expanded parental choice, and accountability for results.

Redesign of the school calendar: Given the educational deficits of most entering students, urban schools need much more instructional time than is provided under the existing school calendar, a throwback to the agrarian era when students were released from school early to go work on the farms. Highly successful schools such as KIPP and Bronx Prep provide a longer school day and longer school year for their students.

Greater autonomy at the school level: Part of the problem with New York City’s school system is that it’s a “system.” While it makes sense to set performance benchmarks centrally, school leaders must be given the freedom to lead within their own individual schools. That means principals should be able to select their own faculty, remove underperformers, and reward success. Principals also should have the unrestricted autonomy to build their own budgets within a set overall amount. Some of these changes require a fundamental rethinking of the city’s union contracts and city district budgeting procedures.

Expanded parental choice: The array of parental choices needs to be expanded dramatically. Right now, about 400,000 children are trapped in officially designated failing public schools in New York City. Schools Chancellor Joel Klein reportedly has capped at a low level the number of transfers from these failing schools into the city’s better schools. The city clearly is violating the federal No Child Left Behind Act by blocking these legally authorized transfers, and rightfully faces a lawsuit filed by parent activist and lawyer Charles King.

Although such a cap is wrong on the law and the merits, one suspects Mr. Klein is motivated by a very practical concern. There simply isn’t enough room in the city’s good schools to fit all the children now in the much more numerous bad schools.

The obvious answer is to create many more good schools. The chancellor and the New York City Center for Charter School Excellence, chaired by business leader Joseph Reich and led by Paula Gavin, deserve praise for attempting to create 50 new charter schools. But, literally hundreds more are needed. Even the 50 schools will run up against a statutory roadblock very soon. New York’s charter-school law only authorizes 100 charter schools statewide and only around 30 remain to be issued. Any settlement of the fiscal-equity case should include an increase in the state’s overall charter school cap, and, as Mr. Klein has suggested, all district-approved charter schools should be placed outside the cap altogether.

Also, given the sheer number of students trapped in failing schools, the state should grant scholarships to any student for which the city cannot find a quality school. These scholarships could empower these students to attend any public or private school of their choice.

Accountability for Results:

At the end of the day, there must be consequences for failure. Right now, the only ones bearing the burden of a school’s failure are the poorly educated children. The adults get off scot free. Teachers – good or bad – are granted lifetime tenure, and see their paychecks go up every year whether their students can read or not.

Administrators get shifted from school to school, but almost never get fired. So, we have high standards for children and no standards for adults.

If taxpayers are going to fork over billions of dollars more and parents are going to continue to entrust their children to the New York City public schools, then real accountability must be ensured. Principal and teacher compensation must be based on success in raising student achievement. And, yes, if student achievement doesn’t rise, then someone’s head needs to roll. The price of failure is too high to tolerate mediocrity and failure. A “no excuses” school culture is sorely needed.

Justice DeGrasse and his merry band of court-appointed masters, left to their own devices, will likely turn the fiscal-equity lawsuit into little more than a grand bank heist, with taxpayers left poorer and students still left uneducated.

Mr. Pataki and the state Legislature have time to pre-empt the court by shaping a more balanced and accountability-focused reform package. Let’s hope this opportunity does not slip away.

Mr. Carroll is president of the Foundation for Education Reform and Accountability based in Albany, N.Y.