SACRAMENTO – Secretary of Education Richard Riordan is preparing a major overhaul of state school funding that would bypass local districts and funnel taxpayer dollars directly to school principals.

The proposal, which Riordan said he has discussed with Gov. Arnold Schwarzenegger, would replace California's complex school funding formulas with a flat payment per student. Schools would be held to strict standards but would be given freedom to determine how they met those standards.

Under the proposal, parents would see much control over their children's education shift from school boards and district officials to principals and teachers.

Local and state education experts offered mixed views of the plan Monday, applauding Riordan for tackling a thorny problem but warning that, in its current form, the plan could diminish parents' control over school finances by reducing the role of elected school boards.

Experts also questioned whether principals with no financial training could manage large school budgets or whether students across the state could be assured of receiving a uniform education under the plan.

"I don't think there's much that Secretary Riordan could propose that we couldn't find some reason to work with him on," said Kevin Gordon, executive director of the California Association of School Business Officials. "The bottom line is, his heart's in the right place. He really cares about kids and education."

Marilyn Buchi, school board member for the Fullerton Joint Union High School District, disagreed.

"You talk to most educators and I'm not sure you'll get a lot of support for his radical views based on his L.A. Unified (School District) experience," she said.

"This is the reform the governor promised during his campaign," said Riordan, who, as mayor of Los Angeles, frequently criticized the city's school district for being unwieldy and unresponsive. "(Schwarzenegger) wanted to limit the amount that goes to bureaucrats."

Riordan, who outlined his thinking on the back of a piece of scrap paper in his office overlooking the Capitol, said sending money straight to principals would give schools, especially in low-income neighborhoods, more control over the teachers they hire and the educational methods they use.

"You can't hold anyone accountable unless they have power. By that I mean the principal," he said.

Riordan said he hopes to make a formal announcement of the plan in about a month. He has been meeting with legislative leaders, whose response so far he termed "very positive."

Riordan said the proposal is at a very early stage and could change before the governor is asked to formally endorse it. Much of it echoes recent revisions to the state's Master Plan for education, a series of recommendations drafted by lawmakers that, among other reforms, calls for dramatic simplification of school funding.

Currently, districts are given an annual amount per student based on average daily attendance. Districts get additional money for students with special needs, such as low-income students or children with disabilities. The state gives the money to the districts, which then decide how to spend it.

Funding, which is governed by a complex web of requirements and formulas, varies greatly by district, with some receiving as much as $8,164 per student each year and others as little as $4,223. The average is $4,654 per student.

Under Riordan's plan, the average daily attendance formulas and additional categories of funding would be scrapped in favor of a flat payment per student directly to schools. Slightly more money would be allocated for students with special needs.

Schools would be required to meet academic standards set by state education officials. But unlike with the current system, which mandates that certain amounts of money be spent on certain programs, schools could choose their own strategies for meeting the standards. School districts would evaluate principals to ensure the standards are being met. State officials would evaluate the districts.

Riordan said similar programs have been adopted or are being considered for schools in Houston, Seattle, New York and the Canadian city of Edmonton. Many of Riordan's ideas are found in "Making Schools Work," a book by University of California, Los Angeles, business professor William G. Ouchi, who has been advising Riordan. Ouchi is among a group of education officials and experts who have met with Riordan several times over the past two months to discuss the proposed reforms.

Once formally unveiled, Riordan's plan likely will be taken up by the Quality Education Commission, formed by lawmakers last year to help implement the state's revised educational Master Plan. The commission will be largely controlled by Schwarzenegger, who appoints seven of its 11 members.

Schwarzenegger hasn't announced his appointments to the commission, which begins meeting in March.

But Riordan said he is recommending Ted Mitchell, president of Occidental College, and David Davenport, a fellow at the Hoover Institution.

Both men are advising Riordan on his funding overhaul.

Simplifying school funding could help resolve a 3-year-old lawsuit filed by the American Civil Liberties Union alleging that the state's current funding formula gives short shrift to students in disadvantaged neighborhoods.

The state has spent roughly $18 million defending the case.

"What we want is to put money at the school site and let the principal do it," Riordan said. Lawsuits "take the eye off the ball, which is:

Are the kids getting a fair shake?"