The Pew Charitable Trusts

States long have endured the federal government's loud laments about the sorry state of the country's public schools, but, with the No Child Left Behind Act, Washington now has a bigger role and a bigger stick than ever.

The sweeping federal law left cash-strapped states battered and confused in 2003. More nationwide provisions will take effect in 2004, along with the threat of losing millions of dollars for states that don't pass muster.

Budget strains also led many states to impose record tuition increases at public colleges and universities. While colleges are beyond the scope of NCLB, there were murmurings in Washington that higher education institutions should be held more accountable for the quality of education they deliver.

Education reforms and money problems are not new for the nation's schools, but they converged with a vengeance in 2003.

The timing could not have been worse, said Michael Cohen, president of Achieve, a Washington, D.C., nonprofit that helps states raise academic standards. The demands "came at a time when the federal budget deficit is skyrocketing and state budgets are in terrible shape," Cohen said.

Thirteen states cut K-12 funding for fiscal 2003-2004, according to the National Conference of State Legislatures (NCSL).

"This is the most important national education law in 25 years," said Jack Jennings, director of the Center on Education Policy, a Washington think tank. "It's just starting to have an effect," as suburban parents discover their schools aren't measuring up, teachers worry about meeting new qualification standards and politicians wonder how to pay for it and what the political fallout may be, Jennings added.

The White House and Republicans in Congress insist Washington is forking over plenty of money. "Every state is pinched for dollars," U.S. Education Secretary Rod Paige told Stateline.org. "If state coffers were flush with dollars, there wouldn't be quite as much whining going on about this."

Two states were penalized in 2003 for test foul-ups. Georgia lost $783,000 in federal aid and Minnesota lost $113,000. Michigan and Ohio were threatened with sanctions, but both averted them. While the penalties were not steep, they sent the message that Washington is keeping a close eye on how well states carry out their end of the bargain.

The bar will be raised higher in 2004. Faltering schools that land on the "needs improvement" list two years in a row must pick up the tab for students who want to transfer to better public schools. States also will be busy trying to ensure all their teachers are "highly qualified" by the end of 2005-2006.

The National Education Association estimated that 23,000 schools in 44 states got failing marks -- one-fourth of U.S. public schools. The National Conference of State Legislatures said half the schools in 25 states were not meeting state benchmarks.

Many schools falter because of low scores from special education students or students from families that don't speak English. NCLB requires schools to show that all students are making academic progress, including minorities, the disabled and the needy.

"It's disheartening for a state to show improvement and still be called a failure," said Charlotte Postlewaite of The Council of State Governments.

But don't look for Congress to overhaul NCLB soon. "We have no intention to reopen the law prior to its reauthorization in 2007," said Josh Holly, a spokesman for the House Committee on Education and the Workforce. Testing requirements for severely disabled children, however, will be eased. The Department of Education was expected to publish new rules on Dec. 9 allowing 1 percent of special education students to take alternative tests.

Former Michigan Gov. John Engler predicted some heads may roll as NCLB exposes schools to more scrutiny and accountability. "I think you're going to see some governors get beat in a few years based on education stories," Engler told a Grantmakers for Education conference.

Confusion may have been the watchword for K-12 schools in 2003, but anxiety reigned at colleges and universities. Twenty states cut higher education funding, according to NCSL. Tuition climbed 14 percent on average at four-year public institutions in 2003, according to the College Board.

Congress is watching tuition hikes carefully as it prepares to revamp the Higher Education Act in 2004. U.S. Rep. Howard P. McKeon (R-Calif.), who chairs the House panel that oversees higher education, wants to cut student aid for colleges that increase tuition too steeply.

College affirmative action programs survived a second look by the U.S. Supreme Court. Many universities are adjusting how they cast their nets for minorities and disadvantaged students in light of the University of Michigan cases.

In Texas, where an appeals court previously had ruled out use of race, the flagship University of Texas at Austin now is developing a plan to use race and ethnicity as factors in undergraduate, graduate and law school admissions, although not before 2005.

On the other hand, activists are trying to put a ban on affirmative action on the Michigan ballot. In Colorado, Republican Gov. Bill Owens called on lawmakers to prohibit state colleges from considering race in admissions.

That "should serve as clear notice to state policymakers that affirmative action will remain a hot-button political issue," said Dale DeCesare, an analyst with the Education Commission of the States.

Editor's Note: A more complete version of this report will appear in our State of the States 2004 publication, which will be available in January.