In the nearly three years that have passed since the city's Department of Education gave principals greater control of their schools, several failing schools truly have turned around, according to a new report released Wednesday by The New Schools' Center for New York City Affairs. But the annual A-through-F grades that city schools receive from the department don't always accurately convey such progress, the report says.

"You shouldn't try to sum up complicated schools with one letter grade," said Clara Hemphill, one of the report's co-authors. "The city must recognize the limited value of the progress report [grade] and rely more on qualitative measurement, on human judgment and less on statistics."

During a forum held in conjunction with the report's release, Hemphill illustrated the flaws in the grading system by citing the example of the school that scored highest during the 2008-09 school year, Manhattan's High School of Hospitality Management. The school received an overall grade of "A", but earned a "D" in school environment. Attendance at the school was low and a survey of parents indicated that the school had low expectations and didn't engage students well, Hemphill said.

She said there were other high-scoring schools where kids have their heads on their desks and teachers kick back reading newspapers and low-scoring schools where kids and teachers are highly engaged.

The report says that in some cases, the system "rewards mediocrity and fails to recognize gains made by schools that are striving for excellence."

A DOE official who also spoke at the forum agreed that the grading system isn't perfect, but said it's necessary. Partly because of the grades, "for the first time in New York city, we're actually seeing the kind of improvement we want to see in our schools," said Shael Polakow-Suransky, the city's deputy chancellor for performance and accountability.

The city plans to keep improving the grading system over time, in part by factoring into each score the school's historical performance, Suransky said. "We can’t wait to implement this until all of this is perfect," he said.

The DOE gave principals greater control of their schools, a move referred to as “empowerment,” in 2007. Empowerment transferred power away from school superintendents, placing more of it in the hands of principals, who were given greater latitude to hire teachers, design curriculum and manage budgets. In exchange for these new powers, principals signed contracts agreeing to meet certain student achievement goals. The annual grades are part of the system designed to measure how well each school and principal are meeting those goals.

Empowerment and other reforms that the DOE has instituted since 2002 have increased the city's four-year graduation rate, from 51 percent to 63 percent, Suransky said. Several middle schools where students once roamed the halls most of the day have become more disciplined and focused, Hemphill said.

But the grading system doesn't always convey the actual progress a school is making because it relies too heavily on students' standardized test scores, Hemphill said. Some schools score well on standardized tests by devoting class time to test preparation, but some do so at the expense of a richer learning environment, she said. Students at those schools may be able to answer test questions, but still may not be ready for college, she added.