The process wasn't pretty and the result wasn't perfect, but Cincinnati Public Schools reached agreement on a new teachers' contract this week. Besides ending contention, the settlement produced another important result: It brought the district closer to realistic thinking on finances.

Budget hearings this week indicated that the district may have to cut at least $25 million in spending next year, an endeavor that may make the contentious contract look, in retrospect, like child's play.

The district is clearly behind on this process, and now has just three months to identify, communicate and implement at least some of the reductions. In contrast, faced with $44 million in cuts, Columbus City Schools has already held two rounds of informational meetings for the community, and attracted 608 staff members to an "employee separation plan" that could save $490 million.

Clearly, personnel costs are Cincinnati Schools' biggest challenge and one of the places the district will have to finally get real. The loss of 5,500 students to charter schools in the past few years has led the district to streamline its $985 million construction plan. It should have led to a similar downsizing of staff and operations. A fact-finder brought in to settle the teacher contract threw out a severance plan, but the idea bears reconsideration. When you've got to ax $25 million and 75 percent of your costs are in personnel, eventually somebody has to lose his or her job. Why not include some of your most expensive employees?

The new contract keeps the door open on another crucial issue, pay-for-performance. Some board members and business leaders have criticized the contract for lacking such an agreement. By showing genuine collaboration and developing smart plans on this issue, administrators and teachers can win some respect - and some votes for a November renewal levy.

Another wise move would be to conduct exit interviews with families pouring out of the district for charter schools. How can any business lose 13 percent of its clients over five years and not ask why? Clearly the philosophy of "If we don't acknowledge them, they won't keep going" hasn't worked. It's time to see why the students are leaving and what could have kept them.

The charter school exodus is not going away. The district expects up to six new schools to open this fall, draining an additional $10 million from the budget. If the charter schools are truly a reform effort - and not, as critics say, simply a means to reroute finances - the state should make them of real use to Cincinnati Public Schools. The state already has a dissemination fund to encourage an exchange of ideas and best practices between the charters and traditional schools. It should do more to make sure schools use it. Massachusetts requires charter schools to share information with public schools in order to renew their license.

Cincinnati Public Schools is used to hurdling one obstacle only to face another. Handled well, the crises can mean real hope for some of the nation's neediest children. That, for urban educators, is the blessing.