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The Finance Ministry and the Prime Minister's Office are drawing up the principles of a reform plan for elementary schools. The main points are still being formulated, and the Education Ministry has still not agreed to the plan.

The central point of the plan is the introduction of limited competition between schools, in order to encourage them to excel.

The reforms are being formulated as part of the negotiations over teachers' salaries. The intent is to reach an agreement with the teachers' unions on significant increases in wages - in return for their agreement to the reforms.

Senior officials in both the treasury and the Prime Minister's Office said the negotiations with the teachers' representatives are a historic window of opportunity to change the face of Israeli education.

One senior official said, "Even in the treasury they understand that it is impossible to continue with the salaries currently being paid to teachers, and that it is necessary to give them increases - therefore, this is an opportunity to tie the salary increases with the teachers' agreement to make reforms. At the same time, the teachers are now willing to talk about reforms, since it is clear to everyone that we have to deal with the system's failings," said the official.

The main point of the reform concerns competition among primary schools, and there are a number of steps proposed for this:

1. Measuring school performance

The basis for competition is the measurement of performance - and publication of the results. In order to achieve this, regular, nation-wide exams to measure the level of all Israeli schools would be introduced. They would be given in at least a few basic areas such as Hebrew language, mathematics, and science.

Also, the quality of the teachers would be evaluated.

Contrary to the present situation, all results would be published, so the public will know the quality rating of schools and teachers, in order to create a demand for superior teachers.

The measurement of the results is likely to create a problem of some schools forcing weaker children to drop out. Therefore, solutions are necessary to keep children in these schools - such as fines for schools with high drop-out rates; or the opposite - a financial incentive for schools to encourage them to keep a certain percentage of weak students.

2. Free choice for parents

The information on the quality ratings for schools will allow parents to choose the school they want to send their children to - or, in other words, the opening of schools to students living outside the local neighborhood.

This change is expected to increase the costs of education significantly, and will require, among other things, transporting students throughout cities - in particular students from weaker neighborhoods.

Also, there is a real possibility of one school filling up completely, while another empties out. In the case of a school with too much demand, acceptance will probably be awarded by lottery, with local students given some form of priority.

3. Flexible management for principals

In order to compete, school principals will need to be given management tools. These will include control of school budgets. The principal will be able to decide how to divide the budget between classes and subjects; and will have better control over the composition of the teachers' body in the school.

It seems that principals will be given greater freedom in promoting successful teachers - and to fire unsuccessful ones - all within the limits of the collective bargaining agreement, which will not be canceled.

Schools will receive financial incentives for their competitive successes: A good school will have more students - and a larger budget. Outstanding schools will receive special grants, both for the school budget and for teachers' salaries.

4. Budgets per student

The school budget will be set according to the number of students, as opposed to the number of classes, as is the case today.

Every student will receive a budget, which will be set according to the child's socio-economic status. Weaker students, from poorer strata, will receive larger instructional budgets. As a result, these children will receive better instruction, and the school will also have a monetary incentive to accept them.

This mechanism is meant to prevent such weaker pupils from being forced out of the best schools.

5. Incentives for teachers

The treasury plans to propose a significant salary increase for teachers, to be spread out over a number of years - probably between 4-7 years.

The idea is to improve teachers' salaries, and to thereby entice higher quality manpower to teaching. Nonetheless, raising teachers' wages will not come without a quid pro quo. The teachers will be required to work more hours in return.

In addition, various incentives will be introduced into teachers' salaries. In important and high demand areas, such as mathematics, where there is a need to recruit particularly high quality teachers, teachers will be paid higher wages.

Also, there may be special incentives for teachers who agree to teach in weaker schools. In addition, teachers will also be partners to the success of their schools, and will benefit from excellence grants paid to the schools - and the teachers.

Finally, a raise in teachers' pay will no longer be dependent only on seniority and time of service.

6. Teacher training

As part of the attempt to improve the level of the people who want to become teachers, changes will be made in the teachers' training seminaries.

The entry requirements will be raised and the level of instruction at these teachers' training institutions will also be improved.

7. The Education Ministry will only supervise

The primary school system, which is today controlled and managed by the Education Ministry, will be taken away from the ministry and transferred to the management of the local authorities.

In this way, a direct connection will be forged between the voters of the local authorities and the quality of the educational system there. This is meant to increase the pressure on the mayors and council heads to improve the quality of instruction and schools in their cities.

At the same time, the Education Ministry will transform itself from an institution operating the schools to a supervisory body only. It will supervise educational plans and quality only, and, as a result, most of the ministry's headquarters and staff will become redundant, which should bring about enormous budgetary savings.

These reforms are all acceptable to both the Finance Ministry and the Prime Minister's Office, but still need the approval of the Ministry of Education. Nevertheless, it seems that the ministry will not object to the changes in principle, since the proposals - as opposed to the Dovrat Committee reforms - are expected to be worked out in negotiations with the teachers and their unions and because the proposals include significant pay increases for teachers.