Grants have become a crucial part of the Rochester City School District's yearly budget. How important are they? Consider that the RCSD now receives about $100 million in grant money annually from federal, state, and private funding sources. And grants make up 13 percent of the budget just approved by the school board for the 2013 to 2014 school year.

Grant money could soon eclipse even the funding the district receives from the City of Rochester — about $119 million a year.

Jennifer Leonard, president of Rochester Area Community Foundation, says district officials should be commended for landing so many grants. She says she knows how difficult it can be, in the current economic development.

But when such a substantial portion of the district's $728 million budget is contingent upon grants, is there cause for concern? What happens to students, teachers, and programs after the grant funds are gone? Are district officials building a financial model that's unsustainable? Since virtually all of the grants come with strings attached, how does the money impact policy decisions? And how do taxpayers know the funding is being used judiciously?

Grants have become an addendum to what some critics say is a broken funding system for elementary and secondary public education in the United States. Generally speaking, funding for public schools largely comes from federal, state, and local government sources. In many suburban and rural districts, a major portion of the money comes from local property taxes. Superintendents propose a budget, the school board approves it, and then it's put to voters.

According to numerous studies, well-funded schools have better student outcomes because they attract more qualified teachers, feature better working conditions, and have a greater ability to make major operational decisions, such as reducing class size.

But the current system has created huge disparities in school funding between wealthy and poor communities. The problem is especially evident in the Rochester school district, with its largely poor, high-needs student population.

Even though the district relies heavily on city revenue, Rochester's tax base is stressed. The city has a significant number of nontaxable municipal and nonprofit properties. When that's combined with stagnate population growth and a huge swath of housing in poor neighborhoods with depressed tax rates, it's no wonder that city administrators are reluctant to raise taxes. And Rochester is not alone in this paradox; many urban school districts face similar financial dilemmas.

The result has been a decades-long debate on how to mitigate inequalities in school funding. And there have been spirited arguments among lawmakers and educators around the country about what to do when the needs of some students exceed the available resources. And there's no indication that will change any time soon, making grants a lifeline for districts like the RCSD.

Grants fall into some basic categories.

Title I grants are basically to supplement the district's general fund, says Anita Murphy, deputy superintendent of the RCSD. Annually, billions of dollars in Title I funding are managed by the federal government through the US Department of Education. In 2010, for example, it was roughly $15 billion.

The money is meant to help create equity in education for children from poor households. The funds are divided into three tiers, and provided to schools across the country with such regularity that many educators no longer view them as grants. The RCSD is using the money to support ongoing programs like reading proficiency, Murphy says.

"You don't fund hiring all reading teachers," she says. "You fund to complement what we're trying to do in reading."

"I think it's really important for people to understand the difference between the grants," Murphy says. "People often think the money can be used for a lot of different things, but the guidelines can be pretty specific."

The Individuals with Disabilities Education Act created a pot of grant funding to help students with special education needs, Murphy says.

Another major funding source is School Improvement Grants, which originated in 2002 under former President George W. Bush for the sole purpose of fixing failing schools. In 2009, the Obama administration increased funding for the program, but made it much more competitive and focused on only those schools falling into the lowest performing 5 percent in each state. The states distribute the funds, which can only be used for a brief menu of school turnaround strategies.

The RCSD more than qualifies for the funds. Barely a handful of city schools are not identified by the New York State Education Department as either priority or focus schools — those that already need a turnaround strategy and those that will soon become priority schools if remedial action isn't taken.

Another form of highly competitive grants emanates from private sources, such as foundations, nonprofit agencies, and businesses. The Ford and the Bill and Melinda Gates foundations are among the best known, awarding thousands of dollars to urban districts like the RCSD. But there are hundreds of others willing to fund programs in everything from music to math, teacher training, technology, and systems management.

Karen Jacobs is essentially the RCSD's doyenne of grants. As director of finance, she oversees a staff of eight people who spend most of their time rooting out education grant sources, analyzing budgets, and writing grants. There is no pretense about how important grant money is to the district's budget, Jacobs says.

"Money and resources were already scarce and they're becoming scarcer every year," she says. "We have to do our very best to go out and find new sources."

Knowing where to look for the money takes years of experience, Jacobs says. Her department has one foot in the fiscal world and the other in the program and curriculum world.

"We have to fully understand the superintendent's initiatives in every detail," Jacobs says. "We'll continue to look for grants that support reading proficiency, and to help implement the new [Common Core] curriculum, expanded learning through foundations and state and federal money, and universal pre-k. That's our focus."

The grants are not just to supplement the budget, Jacobs says. They're also needed to replace money cut from the budget. More than $1 million was cut from the city school district 2013 to 2014 budget due to sequestration — the across-the-board cuts Congress made to federal spending.

"Everybody said it would never happen because it was the worst-case scenario," Jacobs says. "But it happened and now we have to deal with it."

The RCSD occasionally receives offers of grant money, Jacobs says, but that's extremely rare. Obtaining grants usually requires advance planning, sometimes years before the money is needed, Jacobs says, and it's never easy.

"Nobody just hands you money," she says. "They want lots and lots of reports, and sometimes detailed plans for how it will be used. They're all different. And there's a strong push for collaboration between agencies and different organizations because we all have scarce resources, and they [grantors] often want to see us working together."

Monitoring the money is another of Jacobs' main responsibilities. Federal and state authorities conduct their own audits of the money they provide through grants.

"At any time they can show up in my doorway and I can be audited going back seven years," Jacobs says. "Every dollar has to be accounted for at all times, no excuses."

Despite the district's success obtaining grants, the added funds have frequently been a point of contention. The concerns have more to do with sustainability than monitoring how the money is used.

For example, City Council has to vote on the district's budget and historically, some Council members have questioned whether the district is overly reliant on grants. Some complained that school officials often failed to budget for programs once the grant funds were depleted. The council members viewed the loss of grant money as a weak rationale for steadily increasing the district's budget.

Even some school board members have expressed concerns about certain grant funds. During the most recent school budget review process, some board members said they didn't have enough data to know whether a grant-funded program worked, and whether the program should be continued using the district's funds.

But Murphy and Jacobs say the RCSD's approach to grants has changed, and is much more tightly focused than it has been in the past. The district doesn't pursue grants just for the sake of obtaining more money, they say; the grants must align with the superintendent's priorities.

Many grants are not intended to be ongoing, Murphy says. Some grants are specifically designed to build internal capability, she says, and don't involve hiring more staff.

"The problem was in the past, we never built that capacity," Murphy says. "At School 34, we have an arts grant [for next year] for artists in residence. Because we know that an artist can't be maintained, that person will work with children. But also they will work with teachers so they can learn how to do this work with the students themselves when the artist leaves."

Murphy, who joined Vargas's cabinet last year, says she doesn't know all of the district's history with grants.

"But the district is doing some things differently," she says. "We're tracking data at every school. We are going to measure effectiveness of all these different programs. We'll know whether math scores went up, for example, and we'll be able to better analyze why."

On a broader note, however, there is ongoing debate about how effective some grants are at improving student achievement. Private sector grants, according to some critics, are often an opportunity to advance the goals and ideologies of some business leaders.

And government grants are often inadequate to address the increasing needs of poor urban students. For example, a recent report by the Center for American Progress says that even though SIG funds have been an important source of financial support for the states, the amount of SIG dollars provided is insufficient.

With 13,000 schools identified as needing improvement, the money is spread too thin to support turnaround strategies in every failing school, the report says. And how states distribute these highly competitive dollars is inconsistent, it says.

Rochester school board member Mary Adams says she's concerned about the district's growing reliance on grants — which she says is driven by the decrease of state money relative to need.

When it comes to grants, Adams says, schools are forced to an absurd degree into rigid financial compliance requirements.

"In addition to siphoning an inordinate number of staff resources, grant and restricted funding compliance also significantly shapes what happens and does not happen in schools," she says.

Adams cites the ending of grant funding for Student and Family Support Center coordinators, which were cut from next year's budget despite what she calls "their central function in assisting and supporting students with complex issues."

Jodi Siegle, executive director of the Monroe County School Boards Association, says the problem is that the funding is not constant and stable, and funding priorities change with each new administration at every level of government.

Rochester Superintendent Vargas's priorities can be boiled down to improving reading proficiency, extending school days, implementing the new Common Core curriculum, and expanding universal pre-k. Those priorities are remarkably similar to those of state Education Commissioner John King. And King's priorities, probably not by coincidence, are similar to US Secretary of Education Arne Duncan's.

Siegle's point is that the priorities can be traced to the source of the funding.

"Each new person has differing agendas for education," she says. "A key person changes, and you have a new agenda."

Grants can be used to exercise control, Siegle says. Political leaders and lawmakers sometimes use grants to get schools to sign on to their agenda, she says.

"The big fear is always that they're going to come up with a new agenda that undermines what's really needed," Siegle says.