For the casual visitor, it's easy to miss that Southeast High School in rural Kansas — once among the lowest academic performers in the state — is in the midst of a profound transformation.

Like so many other Kansas schools, the building in Cherokee (population: 722) shows the telltale signs of a suffering economy. Bus routes have been cut, as have supplies. Custodians, secretaries and cafeteria workers took an eight-day pay cut. During the harsh winters, students bundle up to make it through classes where the temperature hovers at an uncomfortable, but cost-saving 68 degrees.

But look deeper, and another picture emerges.

Every one of those students is assigned a MacBook for the year. Teachers use iPads on classroom walkthroughs designed to improve instruction and boost student engagement. And the entire school improvement process is underscored by consultants from Cross & Joftus, a Washington, D.C.-area consulting firm.

The schizophrenic portrait of school funding is not unique to Southeast. It is one of roughly 1,200 schools in the nation to win a federal School Improvement Grant (SIG), given to those in the bottom 5 percent in the country to spark radical improvements in school culture and student performance. The backdrop of the recession means that many of these schools have funding to do things they've never done at the same time that they're hamstrung to fund many of the basic things educators typically take for granted.

State cuts

Southeast won a $1.4 million grant at a time when Kansas cut its education funding to the lowest levels since 1999. The grant allowed the school to take risks that have paid off: It has leapfrogged from among the worst high schools in the state to achieving "standard of excellence" ratings in reading and math, as well as 100 percent proficiency in science.

"The grant has been a stop-gap lifesaver to us in many ways, enabling us to continue moving forward when everything else is being cut," said Glenn Fortmayer, superintendent of the USD 247 Cherokee school district. "If we didn't have the grant, there are so many things for kids we couldn't even begin to contemplate doing on our own general money."

While there is some cause for optimism nationally — two recent reports found that states and districts thought the funding was helping — there are also fears that the slow pace of economic recovery could undermine whatever gains schools are achieving through SIG.

A report last October from the Center on Budget and Policy Priorities, a nonpartisan policy institute, found that elementary and high schools in at least 37 states received less funding in the 2011-2012 school year than they did the year before, and in at least 30 states school funding now stands below 2008 levels — often far below. The report warned of the impact of sustained decreases in the funding of federal initiatives like SIG, noting that "deep funding cuts hamper [schools'] ability to implement many of these reforms."

U.S. Secretary of Education Arne Duncan said as much in testimony before Congress in 2010: "It is very difficult to improve the quality of education while losing teachers, raising class size, and eliminating after-school and summer-school programs."

Shortfalls in Philadelphia

That quote may seem prophetic to school officials in Philadelphia, where epic budget shortfalls have led district leaders to announce that they are unsure they'll be able to meet their payroll obligations in July.

It's a dizzying descent from just two years ago, when the district received more than $51 million in SIG funding for 27 schools, the largest total for any city in the country. The size of the grant was in many ways a vote of confidence in former Superintendent Arlene Ackerman, whose vision of school turnaround mirrored the federal government's. Among other initiatives, Ackerman ushered in "Promise Academies," poorly performing schools that got larger infusions of cash to support extended learning time, new teachers and coaches and a "parent ombudsman" to respond better to community concerns. When SIG came along, it was a natural fit.

But after the first year of the grant, newly elected Republican Gov. Tom Corbett implemented an austerity agenda that cut $1 billion from education. Philadelphia, which has a nearly $3 billion school budget and educates some 12 percent of Pennsylvania's public-school students, bore roughly one-fourth of that burden. The state cuts were the largest contributor to a budget shortfall that ballooned to more than $700 million — all but $22 million of which had been filled by the district as of March through cost-saving measures. Ackerman was ousted, and many believe her commitment to the Promise Academies, despite their cost, contributed to her exit.

It struck some as absurd that the city was keeping positions like parent ombudsmen and student advisers — both funded by SIG — while it was cutting teachers and not paying for textbooks. Massive teacher layoffs, which by contract were to be conducted according to seniority, led to a lawsuit when the district sought to exempt the mostly young Promise Academy teachers in order to preserve the program in those schools. After a lengthy court battle, the district lost, and the staffs the academies had carefully assembled were decimated.

Adding to the bitter taste left by the episode is a study performed by Research for Action, a Philadelphia-based nonprofit, which found that the academies performed better than a matched control group on every academic indicator measured. The state, however, is skeptical that the district can sustain those gains and is leveling a more serious charge — that Philadelphia is using SIG funds to back-fill the extraordinary cuts to state and local budgets.

'Back-filling' concerns

The first major sign of trouble came when federal monitors visited the city last spring. The U.S. Department of Education challenged the expenditure of $9.2 million — 73 percent of the district's first-year SIG budget — on summer school, according to a report of their findings. The monitors said the district could be running afoul of a federal law that forbids the use of federal funds to supplant state and local funds. In November, the state responded that Philadelphia had been unable to provide documents to support the summer-school expenditures from 2009, adding that it "had little confidence in the ability of [Philadelphia] to provide accurate information."