A tale about textbooks. Here is the story of how California framed Peter Rabbit - in the state's new basal reader selection for Grades K-8

AFTER an often bitter fight over how to select the best reading textbooks for children, the California Board of Education has adopted a new set of readers that may restore myths, folk tales, heroes, values - literature - to textbooks nationwide. It's hello, Peter Rabbit, Aesop, Charles Dickens. Goodbye to an army of unknown and often uninspired modern authors.

Some California officials call it a ``quiet revolution'' in the teaching of reading. Critics say it's a revolution flawed by education ideology and fashion - in the way textbooks are chosen.

The new reading books ``aren't perfect yet,'' says Bill Honig, California superintendent of public instruction. ``But we're starting to see a shift towards literature. That's good for kids.''

Up to 90 percent of class instruction is based on textbooks, studies show, with basal readers being the most critical.

California, which adopts new K-8 reading books every seven years, exercises the greatest influence on publishers. It's 11 percent of a 1.7 billion textbook market, and is the biggest of 22 ``adoption states'' (states that buy books in bulk).

The Oct. 14 adoption was the final step in a process started in 1985 when state officials, led by Superintendent Honig, began designing a new set of criteria, a ``framework,'' for readers.

The framework is a response to criticism that the content of books American children learn to read from had for decades been drained of sparkling stories and rich language. The literary quality that gives wholeness and meaning to reading - and which children respond to - had been stripped, ``dumbed down.'' The readers were dull, employed mechanical writing formulas that wreck the internal logic of stories, and ``probably slow progress in learning,'' said the 1984 document, ``Becoming a Nation of Readers.'' Published by the Center for Reading at the University of Illinois, it was the basis for California's framework.

The new books must integrate often separated teaching elements such as writing, language skills and phonics, and discussion - stories of quality that have meaning, conflict, and virtue: Mark Twain, Jack London, Leo Tolstoy.

``The search for meaning is the whole core,'' says Francie Alexander, who heads the state curriculum division. ``That's why people read - to get something out of it. It's not a parlor trick - not doing 10 worksheets a day.'' Workbooks are now discouraged. In one second-grade book, for example, children read: ``Angela put turkey, peas, potatoes, and a roll on her plate. She was very hungry. She sat down at the table.'' The book asks ``What will Angela do next? 1.Angela will sing softly. 2.Angela will eat dinner. 3.Angela will go to a party.'' Children circle the answer.

``That kind of exercise is absurd,'' one state official says. ``It's a substitute for real exercises like writing.''

In 1985 California had publishers rewrite science books. In 1986 math books were revised. This year a new history and social science framework asks publishers to present history more as a dramatic narrative, tracing key themes like the roots of democracy. Such revisions cost publishers from $5 million to $25 million. Basal readers can run $40 million.

Yet if California is a state out in front, it's also a place to watch reform problems. And there was considerable controversy over how the reading books were selected. Charges of foul play, politics - but especially a longstanding disagreement over the importance of phonics teaching - had state officials, politicians, corporate lawyers, and professors at loggerheads over Mother Goose.

The main issue was phonics versus ``whole language,'' which relies on learning to read by immersion in text and exercises (a child dictates a sentence to a teacher, the teacher writes it, the child then reads it).

Whole language is very ``in'' now, even among phonics supporters. It works well for children of well-educated parents; empirical tests show, however, that phonics is still needed by many students.

Phonics had been included in the California framework. But when the state's ``quality-review standards'' for judging books were issued, they reflected a whole language approach, says Robert Calfee of Stanford University. The book judges - volunteers, often teachers - had to review some 7,000 items in a four-week period, so it's not surprising they rejected books that focused on phonics, he says.

The debate came to a head when K-2 books of a small publisher in Peru, Ill., called Open Court were at first rejected by the state Curriculum Commission. The irony is that for 25 years, Open Court, founded by a chemical company president who took issue with the ``Dick and Jane'' books of the 1960s, has been the only company to publish the traditional literature California now wants.

Open Court uses phonics, but in a carefully nuanced approach that combines technical skills with a search for meaning in literature.

``The idea that there has to be a separation between phonics and meaning is a false one,'' asserts Andre Carus of Open Court. ``But the California review process seems too crude to detect these distinctions.''

A score of the nation's reading heavyweights, including Richard Anderson, head of the Center for Reading and principal author of ``Becoming a Nation of Readers,'' testified in California on Open Court's behalf, saying there was a ``pattern'' among the rejected books: ``phonics.''

Dr. Anderson charged that ``the changing winds of ideological fashion'' were governing the process and urged they reverse the decision. The California Curriculum Commission stuck to its guns.

But documents obtained by Open Court officials indicate major inconsistencies in the review and may point, they say, to a manipulated process. Using the Freedom of Information Act they found, for example, that two of three separate review panels in different localities had exactly the same scores on a sheet with more than 50 categories - a statistical impossibility, says Harriet Tyson-Bernstein, a Washington textbook expert.

One state document recommending Open Court's rejection said that in the story ``The Little Engine That Could,'' the ``phrase `I think I can, I think I can' central to the underlying moral ... has been deleted.'' In fact the phrase appears in the Open Court text 11 times.

``For publishers spending millions revising their books, this is just irresponsible, outrageous,'' says Ms. Tyson-Bernstein.

(In the final decision Oct. 14, the state board overrode the commission's recommendation and adopted Open Court.)

What many textbook experts - Anderson, Dr. Calfee, Tyson-Bernstein among them - are asking is whether state textbook adoption, which is powerful but can be sloppy and arbitrary, is a good idea. Improve the process, or make it a local decision, as does New York, they say.

``The state interposes itself between teacher, publisher, and student,'' says Anderson. ``It discourages innovation, diversity. It is subject to abuses, including fraud and bribery.''

Mr. Honig asks, ``The books need fixing. Who's going to do that? ... We've got the leverage. So we've got to at least try.''