• This is a rush transcript from "The Journal Editorial Report," October 16, 2010. This copy may not be in its final form and may be updated.

    PAUL GIGOT, HOST OF "JOURNAL EDITORIAL REPORT": This week on the "Journal Editorial Report," a setback for school reform as the movements most visible and controversial figure resigns. Washington, D.C.'s, School Chancellor Michelle Rhee is here to tell us why she's leaving and what's next.

    Plus, with just over two weeks to go until Election Day, Wall Street Journal writers are hitting the campaign trail. We'll have their reports from the field.

    And Democrats step up their attack on corporate America, declaring war on the Chamber of Commerce and other groups that dare to oppose them. What liberals really mean when they call for campaign disclosure, next.

    Welcome to the "Journal Editorial Report." I'm Paul Gigot.

    Well, the school reform movement suffered a setback this week when it’s most visible and perhaps more controversial champion resigned. Michelle Rhee served as Washington, D.C., school’s chancellor for three and a half years. During her tenure, student test scores improved and drop-out rates declined in the city. She closed failing schools, fired bad instructors, supported school vouchers for low-income families and opened charter schools. She also negotiated a contract with the teachers union that includes, among other things, merit pay. It has become a model for urban school districts across the country.

    And Michelle Rhee joins me now from Washington.

    Welcome.

    MICHELLE RHEE, FORMER WASHINGTON D.C. PUBLIC SCHOOL CHANCELLOR: Thank you.

    GIGOT: So you said, when you resigned this week, for reform to continue, the reformer had to leave. With respect, that seems contradictory. Why did you feel you had to go?

    RHEE: Well, the new presumptive mayor-elect in Washington D.C., Vincent Gray, and I decided that the best thing for me to do for the city would be for me to step aside, because we really want to make sure that the entire city now can embrace the reform efforts. And certainly for some members of the community to have me continue to be associated with the reforms was not going to allow them to do that. I asked my deputy chancellor to step in, in my place. I asked my entire management team to stay in place through the end of the school year. And, to be honest, those folks are the brains and the talent behind the reforms and so I feel like, by doing this, it would allow the reforms to continue on and they could do it in a way where the entire city could get behind it.

    GIGOT: OK, when you came to see us a few months ago, you had said that one of the secrets of your success was the support you had from Mayor Adrian Fenty, that when you got into trouble, he always backed you up. Do you think the new mayor is going to back up your successor?

    RHEE: Well, I think he has to. His commitment is not to roll back the clock and to continue the reforms as aggressively as we've been doing in the last three and a half years. And in order to do that, you’re going have to give your unequivocal support. My deputy has been working with me since day one. She knows what the political support looks like to get this work accomplished, and I don't think she's going to settle for anything else.

    GIGOT: OK, what's the single most important piece of advice you're going to give your successor to keep these reforms moving?

    RHEE: You know, I think it's the same advice that I would give to any other superintendent out there, which is you'll have to make sure that you don't fall into the trap of beginning to think about adults and all of the adults sort of feelings and egos and that sort of thing. It's easy to fall into that. But at the end of the day, you have to make all of your decisions based on what is in the best interest of the children, even if it causes the adults a lot of consternation.

    GIGOT: And that means, I think, from what I've heard you say in the past, the teacher measurement is absolutely crucial. That's what you built into the new teacher’s contract in Washington. But that's the thing that the teachers unions tended to resist most ferociously. Do you think those are now are locked in, those kinds of changes in D.C., and can't really be ruled back, at least for the terms of this current contract?

    RHEE: At least for the terms of the current contract that we negotiated, those things are pretty safe. And you are absolutely right. I think one of the biggest problems in the public education system today is that we hesitate to differentiate. And I think that's the biggest mistakes that we're making because. To be quite frank, there are -- there are thousands and thousands of great teachers here in Washington, D.C., who are doing heroic things for children every day. But we also have some ineffective teachers. And we have to be able to differentiate between our highest performers and we need to recognize and reward those folks. But then, we also need to be able to identify the lowest performing teachers and either professionally develop them or quickly move them out of the system.

    GIGOT: Right. I was looking at the Baltimore teachers in the school system this week. They rejected a contract with some of the same elements that had been in your Washington -- new Washington, D.C., contract. How do you overcome that resistance from rank-and-file teachers and their unions that somehow rating is going to work against them?

    RHEE: Well, I think the key -- and we've learned this lesson here in D.C. -- is that you've got to be communicating with your most effective teachers and you have to be telling them why it's so important to begin to differentiate. And I'll tell you what, you know, there is -- there's no one who wants to see an ineffective teacher leave the system more than an effective teacher, because effective teachers -- and they tell me this all the time -- they are the recipients of the kids from the ineffective teacher next door, not doing their job for an entire year, and it puts them at a disadvantage. You know, it doesn't allow us to recognize and reward them and compensate them accordingly, if everyone's getting paid the same, you know, just -- just according how much seniority you have.

    GIGOT: Right.