School finance reform is usually done piecemeal, with many changes mad
e to an existing framework over a period of decades. Also, finance ref
orm is generally carried out separately from reform of school programs
or governance. A notable exception is Kentucky which, in response to
a 1989 state supreme court ruling, created an entirely new elementary
and secondary education system with new finance and governance mechani
sms and new academic expectations and accountability mechanisms. This
article summarizes the major elements of the Kentucky Education Reform
Act (KERA) and research on its impact. Revenues increased, funding di
fferences between districts shrank, but basic allocations (percentage
spent on instruction, facilities, and so on) changed little. A new Off
ice of Education Accountability, reporting to the legislature, tracks
incentives and sanctions for schools that progress or regress against
their baseline performance. School site councils (SSCs) are in operati
on, with authority to hire the principal and to make decision about cu
rriculum, instruction, and the school budget. Major instructional chan
ges were implemented in the early elementary grades, and model restruc
tured high schools are being studied. Significant supplemental service
s (both academic and social) have been added. Overall, much progress h
as been made in putting new structures in place, through changes in pr
actice evolve more slowly. The article identifies barriers to change a
nd concludes that KERA's strategy is promising, but more focus should
be placed on school-level uses of education dollars. SSCs have authori
ty, but they should also be offered substantial guidance regarding whi
ch practices will most reliably promote learning.