set amid the row houses and apartment buildings of the poor, mostly Hispanic community of Bushwick, the New York Harbor School seems a long way from the open water. The school dropped anchor on the top floor of the former Bushwick High School about five years ago, when that old institution was shut down for chronically low performance. Three other small schools occupy the lower floors, each with its own theme, like social justice and urban planning, each striving for relevance on this inner-city block.

Harbor School students routinely venture out to the waterways, but most of their learning takes place up four flights of stairs on dry ground. The maritime theme serves as a hook to draw kids in to academics, as well as a lens through which they might view new career or life paths, says the school’s founder, Murray Fisher, an environmentalist who previously worked with Bobby Kennedy Jr.’s Waterkeeper Alliance. “We keep anticipating naysayers —‘You want to teach these kids what? Boat building?’ — but there’s been almost none,” Fisher says.

In one classroom on a recent afternoon, a half-dozen juniors were learning just that as they huddled around a board contemplating the cuts necessary to form a skeg (the finlike protrusion on the keel of a ship). Down the hall, in a marine robotics class, students worked in teams to build computerized models of the underwater robots they’d fashioned from Legos. Their challenge, as explained by student Daniel Jusino, was to design a robot that could surface on its own from a resting state. “You’ve got to have a good eye for where the pieces are,” Jusino said, maneuvering his mouse to rotate a three-dimensional model on the screen.

Several floors below, in the building’s shared swimming pool, Shaun Strobel’s scuba class was finishing up. As kids stacked equipment, Strobel, a fisherman-turned-teacher, recalled how he and Fisher managed to raise enough money from private donors last year to take 12 students on a seven-day diving trip to the Bahamas. “I wanted to show them how nice it could be outside the pool,” Strobel said, adding that the passport fee alone was more than some of his students’ families could manage.

The Harbor School is neither charter nor magnet. Rather, it’s a public high school reimagined as more of a start-up business, one in which the bottom line is measured by academic achievement. Seeded with $500,000 in foundation grants distributed over four years, the school continues to underwrite its hands-on activities by raising private funds (some $500,000 this year out of its $4 million budget). Much of that fund-raising is done through outside partners, like the South Street Seaport Museum, which also supplies the school with its own schooner.

In essence, the Harbor School is built on Fisher’s entrepreneurial fervor, the staff’s pioneering spirit, and the commitment of outside “investors.” It is one of more than 200 such downsized innovations that have sprung up under Mayor Michael Bloomberg’s small schools initiative, part of a reform process inspired and guided by the rules of the marketplace.

Since taking over the nation’s largest school system in 2002, New York’s billionaire businessman has taken a bold, businesslike approach to reform. The legislation establishing mayoral control allowed Bloomberg greater authority than his counterparts in other major cities — including Boston, where Mayor Tom Menino has overseen the schools for 15 years. Bloomberg has made full use of his authority to give New York’s school system what Stanford University education professor Michael Kirst calls a much-needed “jolt.”

In 1995, Menino tapped the expertise of a respected education veteran (Thomas Payzant) to focus Boston’s reform efforts around improved instruction, but Bloomberg has employed more of a scattershot approach. His handpicked chancellor, Joel Klein, is a former antitrust lawyer for the Justice Department. Together, the two men have set about the business of reform with the impatience of corporate bean-counters, enacting new policies by edict, firing principals who aren’t performing, and sloughing off dissenters as self-interested defenders of the status quo.

Just about everyone agrees that Bloomberg freed the school system from what was a stagnant and ineffective bureaucracy. His reforms have been hailed as a model for mayoral control, with The Economist praising Bloomberg for “pointing the way” on school reform much as his predecessor, Rudy Giuliani, did on fighting crime. More notably, last year the city won the Broad Prize for Urban Education (awarded to Boston public schools in 2006), which comes with $500,000 in college scholarships from the Los Angeles–based Broad Foundation.

But strong mayoral control may not survive Bloomberg’s second term in office. (He is prohibited from running for a third term.) Parents, teachers, and community advocates complain that they have been cut out of the governing process (a not-unfamiliar complaint in Boston). Others raise questions about how the Department of Education (DOE), now a branch of city government, compiles data, and whether the public is getting accurate information about the impact of reforms.

Additionally, some see Chancellor Klein’s repeated reorganizations of the bureaucracy — going from intensely centralized control to regional districts to decentralization — as glaring evidence of the administration’s lack of educational experience. “I don’t think anyone who’s been paying attention could possibly believe they know what they’re doing,” says Leonie Haimson, executive director of Class Size Matters, a city advocacy group.

Stanford’s Kirst counters that total control was essential to shake up such a staggeringly large system, with 1.1 million students, 1,456 schools, and some 80,000 teachers. Performance was so uneven before Bloomberg took over that, in some of the poorer areas of the city, barely 30 percent of students read at grade level, and graduation rates weren’t much higher. “They shook up such a mammoth bureaucracy,” Kirst says. “I mean, they closed down 110 Livingston Street,” the old Board of Education headquarters in Brooklyn. “That was the epitome of bloated bureaucracy.”

Post-jolt, however, the context for mayoral control in New York City may have changed. Next year, mayoral control expires, leaving it to the Legislature to decide whether to reauthorize it, and if so, in what form. “The issue before New Yorkers now,” Kirst says, “is, do they want more democratic control, or unfettered executive leadership?”

A WALL STREET MENTALITY

Klein has publicly addressed that question, telling an audience at the Manhattan Institute recently that mayoral control is the only way to keep “special interests” from mucking up the reform process. (Klein declined to be interviewed for this story.) One of his deputy chancellors, Christopher Cerf, suggests that current criticisms reflect the resistance of those interests, whom he vaguely defines as stakeholders afraid of change or better off with the status quo. “There are of course lots and lots of complainants,” says Cerf, who formerly presided over Edison Schools, a commercial manager of public schools, “and they’re very effective at managing the press because the press likes conflict.”

Certainly Bloomberg and Klein have attacked the status quo on all fronts. In addition to the small-schools initiative, which has attracted more than $125 million in grants from the Bill and Melinda Gates Foundation, their record includes the creation of 45 charter schools, an academy that has trained about 200 new principals, a 70 percent increase in city funding for education, and a 40 percent hike in teacher salaries.

Applying a Wall Street mentality to school performance, they have refocused the system around accountability, aided by an $80 million data management system known as ARIS (for Achievement Reporting and Innovation System). Schools are graded on an A-to-F scale on annual progress reports. Those that meet performance goals can earn bonuses for their teachers. Kids who reach testing goals, earn good grades, and attend school regularly can earn cash payments or prepaid minutes on free cell phones, depending on the particular incentives being tried at their schools.

Klein’s management approach has been a bit herky-jerky. While his first years were marked by a tightly controlled, top-down management style, more recently he did an about-face toward decentralization that he prefers to characterize as a natural evolution. The upshot is that principals are now “empowered” to run their schools like independent franchises. They have much more discretion over how to use their resources, thanks in part to a new union contract that eliminated job “bumping” rights for more-senior teachers. In return, their schools must meet performance targets.

Klein’s rapid-fire reforms are a sharp turnaround from the bad old days, when political divisions paralyzed the Board of Education and scandals periodically plagued the 32 elected community school boards. The 2002 legislation establishing mayoral control replaced those governing bodies with a 13-member Panel for Educational Policy as well as Community District Education Councils, neither of which has any real authority. The PEP generally rubber-stamps Klein’s policy proposals — not surprising, since eight of its members are appointed by the mayor, and the other five by borough presidents over whom the mayor has considerable influence.

In March, for example, the panel voted on a proposal to require eighth-graders to achieve basic levels on standardized English and math exams before being promoted to the ninth grade. (Similar retention policies are already in place for third-, fifth-, and seventh-graders.) The panel approved the policy 11-1 in the face of a roomful of noisy protestors, most of them parents, who wanted to know what the Department of Education was going to do to improve the city’s middle schools. “The votes are almost always like that,” says David Bloomfield, a parent member of the advisory Citywide Council on High Schools and an education professor at Brooklyn College. “It would have made huge headlines if they’d voted against the mayor.”

Mayoral control traded away democratic representation for focused school reform. The question being pondered in the face of reauthorization is whether the tradeoff was worth it, and the debate is heated. Klein points to rising test scores and higher graduation rates as evidence that students are better off, but some critics say those claims are inflated. The mayor’s office also controls the information coming out of the DOE — and that is “a big, big deal,” Bloomfield says. “Democracy runs on information. Accountability runs on information. Without accurate data, there can be no accountability.”

A WHIRL OF CONFLICTING DATA

One of the fiercest dissenters is Diane Ravitch, an education historian and research professor of education at New York University. Although Ravitch initially supported mayoral control, she has since become so disenchanted that, in February, she resigned from the editorial board of Education Next, a journal of opinion published by the Hoover Institution, in a huff over a story about Bloomberg’s reforms. She later derided the article as “a thinly veiled puff piece.” One of her many points of contention is Klein’s claim to double-digit gains in math and reading scores on state exams since 2002. The actual gains are more modest, Ravitch has repeatedly argued, because Klein is wrongly laying claim to progress made between 2001 and 2003, well before his reforms were under way.

Deputy Chancellor Cerf dismisses Ravitch’s criticism as “a cheap rhetorical point.” Bloomberg had an impact on the system beginning in his first year, “an earth-shaking moment in the history of the DOE,” Cerf said.

The release last November of federal test scores dealt a more serious blow to the chancellor’s claims. New York City’s results on the National Assessment of Educational Progress showed no significant change in eighth-grade reading and math between 2005 and 2007. Fourth-grade reading progress was similarly flat. The only bright spot was fourth-grade math, with 6 percent fewer students scoring below the basic level.

Further muddying the picture were the administration’s new school progress reports, also released in November. The rating system relies heavily on the measure of individual student progress from one year to the next, with a lesser focus on overall student achievement. The approach is meant to more accurately identify areas of success (or failure). As applied in the DOE’s complex calculation, however, it branded some schools considered high-performing by other measures with a C or worse, while some schools with lower overall performance won the highest letter grade. A New York Times editorial called the rating system a “commendable” aim which, as executed, resulted in “misleading and distorted results.” (The DOE is now considering assigning separate grades in separate categories, among other changes.)

The city’s public advocate, Betsy Gotbaum, an elected ombudsman who watchdogs city agencies, says the perpetual whirl of conflicting data was the motivation for her recent appointment of a commission to look into whether mayoral control needs refining. “We have too many testing systems here, so nobody really knows what’s going on,” says Gotbaum, who is often mentioned as a potential candidate for mayor herself. “I’m not saying that DOE isn’t telling the truth, but that there’s so many different measurements. That’s what has a lot of people concerned.”

SMALL ADVANTAGES

Back at the Harbor School, the pressure to boost test scores demands a daily focus on keeping kids engaged and on track. With about 400 students, the school is small and contained enough that, on her way up the cement staircase with a bag of sandwiches one recent afternoon, the assistant principal, Jennifer Ostrow, immediately recognized the young man on his way down as a senior now in his fifth year at the school. Planning to skip out on the rest of the day’s classes, the teen was instead escorted back upstairs by Ostrow for a serious chat.

These staff-to-student connections help prevent kids from falling through the cracks. Last year, the Harbor School graduated its first class, 59 percent of the kids who started out as freshmen. That may not sound all that impressive until you consider that the old Bushwick high school’s four-year graduation rate was a far more dismal 23 percent. “Those kids who graduated last year?” says Dudley, the principal. “Those are my babies. And they will be for the rest of their lives.”

A study last year of 75 small schools started under the Bloomberg administration found similarly promising results. The study, by Policy Studies Associates, in Washington, DC, concluded that the four-year graduation rates at small schools averaged about 18 percent higher than those of larger city high schools with comparable student populations.

The administration’s trumpeting of small schools’ success has also been challenged, however. Schools that started with one grade and then added a grade each year (like the Harbor School) have a “particularly well nurtured and incubated sample size,” says Bloomfield. “To compare that with a normal school lacks credibility.” Additionally, new small schools are allowed to exclude high-need special-education students and English language learners (ELLs) requiring separate classroom instruction during their first two years in operation. (Brooklyn College’s Bloomfield has filed a complaint with the U.S. Department of Education’s Office of Civil Rights concerning that policy.)

Some are also troubled that higher graduation rates at the small schools don’t necessarily translate into college readiness. The Policy Studies report noted that small schools’ graduates were far more likely to earn a “local diploma” — representing the minimum standard for graduation and a rank below the higher-standard Regents and Advanced Regents diplomas — than were students at larger city schools. Advocates for immigrant families voice concerns that English language learners are at a particular disadvantage at small schools because many don’t seem to be getting the appropriate instructional services. “They’re closing bilingual programs at these large high schools, and they’re not replicating them at these small schools,” says Arlen Benjamin-Gomez, a staff attorney for Advocates for Children, which advocates for equality in education.

Overall, public support for Bloomberg’s reforms seems lukewarm at best. In a Quinnipiac University poll released in March 2007, 58 percent of voters said an independent board of education should run the public schools, not the mayor. Last November, 47 percent of voters in another Quinnipiac poll called the mayor’s takeover a success. Yet for all the complaints, few are those who long for a return to the old Livingston Street era. The demands are mostly for more transparency. Gotsbaum is thinking the city might need an independent entity that will “give real data” on school performance. Others have suggested giving more of an oversight role to the City Council.

A rethinking of authority could be the system’s next natural evolution. “The mayor’s role may evolve as the context changes over time,” says Kirst. “After the jolt’s over, then you might want to strike a different balance.” The trick will be finding a point on the scale that doesn’t act as a drag on what is still very much a work in progress. Small schools like the Harbor School, for example, are still getting up to speed. Murray Fisher has yet to realize his original vision for a place that would prepare kids to understand, manage, and take care of marine resources. But he’s nearly there. By the time the debate over mayoral control is resolved, the school will be planning its move to a brand new facility on Governors Island, smack in the middle of New York Harbor.