NEW ORLEANS - Paul Vallas recently passed his first milestone when fourth and eighth graders in the city's woeful public schools posted significantly higher test scores on state tests.

The superintendent of a 33-school district that includes many of New Orleans' worst-performing schools has received mostly positive reviews after his first year on the job, but many challenges remain. Too many students continue to fail or not show up for classes, there is limited funding for dilapidated buildings, and the district needs to retain quality teachers.

Vallas, 54, was known as a hard-driving advocate for change in Philadelphia and Chicago. After a year as the Recovery School District superintendent in New Orleans, he has lengthened class days, decreased class sizes, and increased classroom technology. He also is helping create schools that revolve around themes like the arts and technology.

Perhaps the biggest distraction, though, has been recovering from Hurricane Katrina.

Affordable housing for teachers is tough to find, and families have been returning to the city with children who, in some cases earlier this year, had not been in school since Katrina hit in August 2005. Most students in the district are at least two years behind in reading and math.

Difficult decisions about reopening, rebuilding or demolishing storm-damaged schools also have evoked emotional responses from neighborhood groups.

There are political and organizational hurdles, too.

The public school system here is fractured. A handful of the city's best-performing schools are run by a local board and are not under Vallas' control. Private organizations run a few dozen others as charter schools.

Money is limited. The district's $260 million operating budget has no cash reserve, and decrepit school buildings need an estimated $1 billion for renovations.

And in a year of critical decisions for Vallas, one has nothing to do with the school system. He says he is open to another run for governor of Illinois after his contract expires in July 2009.

That's yet another worry for a city whose public school system has had a revolving door of nine superintendents over the decade before Katrina.

"We've had many leaders who have backed stability and effectiveness, and they have come and gone, and, often, we throw the baby out with the bathwater," said Angela Daliet, executive director of the parent and community organization Save Our Schools.

Vallas has a reputation as a demanding boss. In New Orleans, he is often seen with his shirtsleeves rolled up and working a BlackBerry when not scribbling on a notepad. He works most weekends, but about once a month, Vallas, who dislikes flying, drives more than 900 miles to visit his family in Chicago.

He has the support of his boss, State Education Superintendent Paul Pastorek, and lots of new teachers to mold.

One is Jeffrey Berman.

Berman said he didn't realize what he was getting into when he was assigned this past school year to a "transitional school" that serves eighth graders as old as 17.

"I can obviously handle it at this point," he said, "and, yeah, I don't want to be another person to give up on these children."

That's the attitude Vallas wants.

Vallas dismisses the suggestion that his district is a "last resort," seeing it instead as an incubator for innovation.

Magnet programs and schools with themes like the arts or technology are expected to roll out this fall. And high schoolers have received laptops to encourage working at home.

The local teachers' union believes the district is better off but worries that not enough attention is being placed on behavioral problems and staff retention.

Vallas, who makes $252,000 a year, says he plans to stay "as long as I feel I'm making a difference and having success."

If he leaves when his contract expires, it would be far short of the six years he spent in Chicago and five in Philadelphia.

"People continue to innovate," he said, "and hopefully they'll continue to build on what you left."