In the nearly five years since Paul Vallas burst onto the Philadelphia schools scene, he has managed the largest educational experiment in the country, overseen a steady improvement in test scores, and generated new optimism about the city's schools.

But Vallas is leaving after his political and popular support eroded amid an increase in school violence, an unanticipated $73 million deficit, and fear that future budget cuts could undo recent academic gains.

News of the departure of the high-profile Vallas, who used his political acumen to attract support in Harrisburg and Washington, came a mere eight months after the Philadelphia School Reform Commission voted, 3-2, to extend his contract at least through 2008-09.

The commission hired Vallas, a self-described "policy and finance guy" who had run Chicago's public schools for six years and was once that city's budget director, on July 10, 2002.

It was barely six months after the state took over the district with the promise of providing additional funding, and Vallas was the unanimous choice to be the district's first chief executive officer.

Within weeks of his arrival, Vallas nixed a plan to hire Edison Schools Inc. as "lead consultant" for the district. He also sparred with the administration of Gov. Mark Schweiker about a provision slipped into the state budget that required the district to use $55 million of the $82 million in new state funding to pay Edison and six other private managers that the commission had chosen to run 45 low-performing schools.

Although public attention had been focused on the fate of those 45 schools for months, Vallas redirected the spotlight to the district's other 220 schools and selected 28 struggling ones to receive extra resources and support to improve learning.

His academic blueprint for the district included a standardized curriculum for students in kindergarten through eighth grade. Later, he tackled the high school curriculum. He expanded Advanced Placement offerings across the district, reduced class sizes, and spent millions of dollars on new textbooks.

In the fall of 2002, he introduced an after-school program and required elementary and middle school students who were performing below grade level to attend.

Vallas developed a five-year financial plan aimed at increasing aid to the district and using the $300 million it had borrowed to prevent another deficit. That worked until this year, when Vallas said the district faced unanticipated expenses.

He rolled out a $1.7 billion capital campaign to upgrade aging schools and announced plans to build nine high schools. He also divided some large neighborhood high schools, including Kensington, into smaller, specialized schools. He embarked on a campaign to phase out middle schools by making most elementary schools K-8.

And with the aid of federal money, Vallas in 2003 rolled out the most ambitious summer school in recent memory. The district offered not only mandatory summer instruction for struggling students but also enrichment for those who excelled.

Vallas and the reform commission were buoyed by annually rising test scores while acknowledging that the district had a long way to go.

Last spring, 41.4 percent of the district's fifth graders scored at proficient or advanced in math, compared with 18.7 percent in 2002. Reading scores improved to 31.7 percent in 2006 from 20.8 in 2002.

There were similar increases in eighth grade, but the latest academic improvements in the high schools have not been as great. Last year, 26.9 percent of 11th graders scored at proficient or above in math, compared with 23.6 percent in 2002. A total of 33.2 percent reached that level in reading last year, up from 28.7 percent four years earlier.

Although Vallas initially enjoyed a warm relationship with Mayor Street, the tie grew strained. The same thing happened with the teachers' union, which initially embraced Vallas because of his changes but soured on him when budget cuts led to larger classes and fewer nonteaching assistants.

In late 2004, Vallas and Street argued about placing armed city police officers inside or outside high schools. Vallas called for officers to be assigned to schools after a 16-year-old student was slain outside Strawberry Mansion High School. Street was adamantly opposed.

And when news broke last fall that the district faced a $73.3 million deficit, Street sat through 12 hours of school budget hearings and said he was concerned about how the district was spending money.

The emergence of the deficit in the district's $2.04 billion budget shortly after Vallas' contract extension even drew criticism from commission members who supported him.

"I feel really betrayed," member Martin Bednarek said in November.

Commissioner James Gallagher, who had become disenchanted with Vallas' management, and then-Commissioner Daniel Whelan opposed extending Vallas' contract in August. During a private meeting in May, they had called for a national search for a new CEO, but chairman James Nevels shot it down.

Although Vallas' original contract was not due to expire until this July, he had asked for the extension last spring so he could make plans for his family.

When the commission was slow to act, parents, education advocates, elected officials and business leaders publicly urged the commission to extend Vallas' contract. They said they feared that changing the district's leadership could jeopardize the academic gains.

The divided commission voted to increase Vallas' base pay by $25,000 and to extend the contract for two years, with the option of continuing for a third with Vallas as chief executive or as a consultant.

Vallas will be paid $275,000 this year. Under the contract, the commission could also award him an annual performance bonus of up to 20 percent of his base salary.

Contact staff writer Martha Woodall at 215-854-2789 or