The recent news that Cincinnati-based Procter & Gamble was buying the Gillette Co. set off the predictable round of hand wringing about Boston’s future. Yet the vibrancy of the Massachusetts economy, driven as it is by the Boston region, will depend little on the presence of this or that company headquarters, poignant though their loss might be. Instead, as experience and research both confirm, our economic fate will hinge on the “talent pool”—the supply of skilled and educated workers who live here. And it is in this light that we must consider the next stage of public school reform.

Harvard economist Ed Glaeser has pointed out that Massachusetts has succeeded in a series of astounding economic reinventions, from maritime commerce in the 1700s, to manufacturing in the 1800s, and finally to the “knowledge economy” we now enjoy, resting on higher education, health care, technology, and finance (“Mother of reinvention,” CW, Fall ’03). The most important ingredient of that economy? Human capital, the educated kind.

In 2003, a groundbreaking study released by the national organization CEOs for Cities showed that in the 1990s, for the first time in history, population growth in metro areas did not account for economic growth. Instead, the number of workers holding a bachelor’s degree or higher now drives economic gains. A related finding was that increasing the rate of high school completion mattered very little. Glaeser noted that Boston ranks in the top six metro areas in college completion.

Will we be this competitive in the future? A number of factors will matter—including immigration, housing prices, the health of our local colleges and universities—but none will matter more than the capacity of our public schools to turn out graduates ready for college level work. This lends great urgency to a new campaign for excellence in the public schools. It is not hyperbole to say that our collective future depends on it.

Since the landmark Education Reform Act of 1993, the state has been engaged in a mammoth and expensive effort to overhaul its public schools. In light of our talent-pool imperative, let’s look at the record.

On the plus side, the strategy of massive new investment, joined to new accountability through high stakes testing, has gotten results. Massachusetts is now among the top five states in math and science. Where we once required only one year of US history and four years of gym to get a diploma, now students must demonstrate basic math and English skills on the MCAS. Despite widespread predictions that MCAS requirements would produce a “train wreck” of failure, 96 percent of our high schools students are passing. Notably, those passing English Language Arts on the first attempt rose from 72 percent in 1998 to 86 percent in 2004, and those passing math on the first attempt rose from 48 percent to 75 percent.

On the funding front, Massachusetts has poured $36 billion into public education in the past 12 years. Annual state aid to local education has increased from $1.2 billion before 1993 to $3 billion today. Unconscionable spending disparities between rich and poor districts have narrowed from 40 percent to 3 percent. For decades, the education debate between liberals and conservatives could be cartooned as “it’s all about money” versus “it’s not about money at all.” The Massachusetts experience proves that money, with standards, is a potent combination. This principle seemed to satisfy the Supreme Judicial Court, which in the recent Hancock decision declined to endorse the “all about money” idea.

But if we think again about our talent pool needs, we have to hope that the hard-won gains of the 1993 reform are merely the prelude to more dramatic progress in the future. After all, the current MCAS graduation requirement is merely an eighth-grade standard. And troubling racial and ethnic disparities persist: While only 2 percent of white students failed MCAS in 2004, 12 percent of African-Americans and 15 percent of Hispanics did not make it over the bar.

Given that the war for talent is increasingly global, we also have to be concerned that US students are falling further behind internationally. According to the best comparative standard, the Program for International Student Assessment, the US places 24th out of 29 countries in math skills. Seen in this light, Massachusetts’s high ranking among the 50 states provides limited reassurance. In the 2004 eighth-grade science MCAS, 31 percent of our students failed, with just 34 percent achieving proficiency, and in math, 29 percent of the eighth-graders failed, with just 38 percent achieving proficiency. Clearly, we have a long way to go.

The grimmest news comes from heavily minority urban districts. Recently Mass Insight Education, a reform advocacy group, published a list of the 115 lowest performing schools in the state. Close to 80 percent of the schools are in eight urban districts. In 95 percent of the schools on the list, 70 percent of the students are in the “needs improvement/failing” category in math; only 10 percent of the students in these schools are “proficient” in math. In 90 percent of the schools, more than half are in “needs improvement/failing” in English, and fewer than 28 percent are in “proficient.” More than half of these schools have shown no improvement in four to six years.

he next phase of school reform must aim higher for all our students, and it must especially do something about schools that are unable to improve themselves. It will probably not be possible to achieve the former without addressing the latter. To be sure, we have to consider a set of comprehensive goals for all students, which should include raising, perhaps in stages, the minimum MCAS requirements so that they are migrating toward a “college ready” standard. There needs to be a particular focus on math and science excellence. The state should set progressive goals for “advanced” attainment, and individual districts should engage in community-based “proficiency campaigns” of the kind now under consideration in Boston.

Some of the means to these ends will require focused state investment. Just as the $170 million spent on remediation over the past five years no doubt figured in the overall MCAS success to date, a new set of targeted investments will be necessary to make further advances. These should include intensive teacher training in math and science, longer school days, and/or universal access to after-school programs and early childhood education. A new private sector coalition, the “Great Schools Campaign,” which I co-chair with attorney (and MassINC co-chairman) Gloria Larson, has formed to push this agenda.

But fundamental to future success must be a new attitude of intolerance toward prolonged failure—not just by the students, but by the institutions that purport to teach them. The organized education interests can no longer plead that schools cannot be held accountable for the failure of poor, mostly urban children to learn. There are too many success stories sprouting across the state, in regular district schools and charter and pilot schools alike. Charlestown High School in Boston has a 94 percent pass rate on the MCAS. South Boston Harbor Academy Charter School has seen 100 percent of its 10th-graders pass the MCAS in the past two years. The Kensington Avenue School in Springfield, the Richard Murphy School in Dorchester, University Park Campus School in Worcester, the Sterling School in Quincy, the Codman Academy Charter School in Dorchester—all high-poverty schools—significantly outperform schools in their districts with similar populations. It is time to make these successes the rule every school serving low-income students is held to, rather than the exception to be wondered at.

Former President Bill Clinton was fond of saying, quoting Benjamin Franklin, “the definition of insanity is doing the same thing over and over and expecting a different result.” Massachusetts heeded this lesson in its 1993 reforms, proving itself willing to do something different in order to obtain better results. We must do so again in the matter of our failing schools.

This is where the politics gets difficult. But just as there are now grave consequences for children who fail the MCAS, there must be grave consequences for the schools that fail those children.

Both the federal No Child Left Behind statute and the state Education Reform Act have eventual consequences for institutional failure, but it’s time to hit the “fast forward” button. The 2004 report of the Governor’s Task Force on Underperforming Districts, which I chaired, called for the state to make a determination of the will and capacity of each failing district to conduct a “turnaround.” If the determination is negative, the district would be placed directly into receivership. Even if the determination is positive, the state would pair the district with a strong outside “turnaround partner” to jump-start reform.

We also recommended that superintendents be given the power to reconstitute the lowest performing schools, a power that would require legislation. In the private sector, failing companies go out of business, are reorganized, or are merged into a company that is more successful. But the organized interests in education have succeeded in staving off similarly stern but necessary measures for failing schools. Opponents of charter schools have taken satisfaction in the state moving to revoke a few charters for non-performance. In reality, this is a point in favor of charters—that, at regular intervals, they are evaluated, and failing schools are shut down. When does this ever happen in a traditional school district—that a school with unsatisfactory performance is simply shut down? Why not make this a universal principle for all the state’s public schools, not just charters? In the meantime, at least give district leaders the ability to restructure schools as a remedy for proven failure.

In addition to granting powers to restructure existing schools, we should be sure to make the most of promising efforts to create new schools from the ground up, including charter schools and pilot schools. Although there is plenty of room for expansion under the cap of 120 charters that can be issued statewide, in Boston and some other urban districts the local cap, which limits charters to 9 percent of school spending in any one district, threatens to stop the charter-school experiment in its tracks in the very places it has proved most popular with parents and students. Meanwhile, pilot schools, which are district schools with charter-like characteristics—start-from-scratch schools with considerable management autonomy—have taken hold only in Boston, where they were first developed. Not every effective urban school is a charter or pilot school, nor is every charter or pilot effective. But a great many successful urban schools are charters, pilots, or are similar to them—small start-ups granted freedom from many bureaucratic and contractual constraints—including seven of the nine urban high schools statewide identified as “higher performing” by the Rennie Center for Education Research & Policy at MassINC in 2003. The local cap on charter schools should be lifted, and the pilot school approach—developed in negotiation with the Boston Teachers Union—should be transplanted to every struggling urban school district in the state.

If nothing else, it is time we faced the fact that our education reform efforts are impeded by the way our schools are organized and run—archaic, rigid structures, locked into place by voluminous and overly prescriptive teacher contracts. Elsewhere in the country, some union and school leaders are beginning to rethink the form and substance of the modern urban teachers’ contract. Is it inevitable that teachers, who say they want more than anything else to be treated as true professionals, must forever look to these obsolete documents for the definition of their rights and responsibilities? Or is there some new compact that could protect wages and benefits but free teachers to be the professionals they claim to be, responsible for making change in their schools, instead of resisting it?

Time will tell. But until that day comes, the state’s political leadership must face up to what is required for reform—because prolonged failure is no more tolerable for institutions than it is for students.

Paul S. Grogan is president and CEO of The Boston Foundation.