Both the city and the Boston Teachers Union claimed victory after their 11th-hour agreement to a new three-year contract.

It's students and parents who lost.

The new contract shrinks class size a bit, pays teachers a lot more and fiddles around with hiring rules, giving principals and school site councils a bit more discretion.

But the truth is, the city blinked. Fearful of a strike, it backed down from its early insistence that teachers be hired on merit.

Sure, it's a relief that schools are back in session. Unfortunately, business as usual is not good enough.

When Mayor Thomas Menino seven years ago asked that he be judged by his success or failure with schools, there were some early hopes that the new mayor would turn out to be a reformer. Instead he is an incrementalist.

There is no question Menino cares about education. He hired a school superintendent, Thomas Payzant, who has made quality education his mantra and has embraced reforms such as mandatory student testing.

The administration is also eager to point out that spending on education has increased, going from $507 million to $592 million in four years. But as a percentage of the city's total budget, spending on education has actually stayed constant.

More important, as evidenced by this year's contract negotiations, reform has been painfully slow. The city settled for a half a loaf when it came to teacher hiring, and that itself was a relatively minor reform. The big reforms - charter schools, pilot schools and radical decentralization of the overly centralized school system - have never been embraced by the city.

Pilot schools provide a case in point. An innovation of the 1994 contract go-around, pilot schools were supposed to be Boston's version of charter schools. They were intended to operate with greater freedom from the school department and union rules.

The dream was that pilots would become the model for all Boston public schools. Instead, they've been an experiment that is going nowhere.

Since 1994, the city has created only 11. Two have subsequently converted to charter schools. It was once thought that regular Boston public schools would convert to pilots but, largely because of institutional resistance from teachers and administrators, that hasn't  happened.

The few pilot schools have become the school system's shining lights. Deborah Meier's Mission Hill School, the Lyndon School in West Roxbury and the Boston Arts Academy are beloved by parents. They allow educators to create unique environments focused on learning.

And there won't be many more. The new contract only allows for three, one of which will be for disruptive students.

Instead of pilots becoming the model for all Boston schools, they eventually will be anomalies within a system of mediocrity.

Why should this matter? As George W. Bush has noted, the failures of urban education are a kind of ``soft bigotry.'' It's poor, minority kids who are stuck in the failing public school systems.

Boston's population is more than 50 percent white. But its school population differs dramatically: Only 15 percent of the children in Boston Public Schools are white. Outside the exam schools, virtually all students are minorities.

What's happening to the white kids? They escape. Most of them are going to private or parochial schools. Why do they escape? Because they can.

Indeed, the dirty secret of public education is that even those who  most ardently support it send their kids to private schools. Al Gore did. Jesse Jackson did. Many state and local officials do. So do I.

As parents, we want our kids to have the best education possible. With the exception of exam schools, pilot schools and charter schools, that kind of education is not to be found in urban public school systems.

Those who can't afford it don't escape, and the cycle of poverty that is ineluctably tied to education is never broken.

It is these truths that make the tepid improvements of the new contract so frustrating. While Boston pursues its incrementalist path, a generation of children will be lost.

Tom Keane writes every Friday for the Herald. He can be reached at tomkeane@tomkeane.com.