President George W. Bush's proposed budget for the coming fiscal year includes a first: school improvement grants to help state education departments turn around schools and districts identified as needing improvement under the No Child Left Behind Act. While calling the $200 million proposal inadequate, some observers say they are encouraged by the recognition that state agencies are struggling as they assume new roles in giving technical assistance at a time when the number of low-performing schools is on the rise. Nationwide, more than 9,000 schools were designated as "in need of improvement," in the 2004-05 school year, meaning they missed their state's academic-performance targets two years in a row, according to the Education Department. That is up from fewer than 6,000 schools the year before. The increase is due largely to the ratcheting-up of achievement goals. (Contains 1 graph.)