CHICAGO — Chicago Public Schools chief Arne Duncan, who over seven years maintained a positive storyline for the troubled district, will join longtime basketball buddy Barack Obama’s Cabinet as secretary of education.

 Obama’s appointment, which was announced Tuesday during a joint appearance at Dodge Renaissance Academy on the West Side, comes as the nation turns a jaundiced eye toward Chicago leaders and the city’s oft-criticized political machine.

 Since Mayor Richard M. Daley plucked Duncan from obscurity to head the country’s third-largest school district in 2001, Duncan has gained a reputation as a reformer who isn’t afraid to rankle the teachers union or punish underperforming schools. His decisions to pay students for good grades, back an unrealized plan for a gay-friendly high school, and consider boarding schools often polarized the community while bolstering his renegade image.

 “He has the brains, courage, creativity and temperament for the job,” said former Chicago schools chief Paul Vallas, who hired Duncan as his deputy chief of staff in 1998. “And he’s very close to the president, which is an important thing, too.”

 Duncan, who grew up in Hyde Park, has been friends with Obama for more than a decade, and was among those who played basketball with Obama on Election Day.

 An adviser on Obama’s education policy, Duncan has called for more flexibility in the No Child Left Behind school accountability law, but does not intend to scrap the initiative entirely.

  Duncan’s selection also suggests the president-elect has no intention of turning away from the city during a time when alleged corruption involving Illinois Gov. Rod Blagojevich has made national news and further cemented the state’s reputation for political sleaze.

 And it almost certainly will renew debates about Obama’s commitment to public schools, as the president-elect has opted not to send his daughters to the district that Duncan oversees. The Obama girls attend the prestigious University of Chicago Lab School, where Duncan also attended and his wife once worked as the athletic director.

 Obama defended his decision to send the girls to private school during the campaign, saying it was the best choice for his family.

 “I taught there, and it was five minutes from our house. So it was the best option for our kids,” Obama said in 2007. “But the fact is that there are some terrific public schools in Chicago that they could be going to. The problem is, is that we don’t have good schools, public schools, for all kids.”

 Duncan’s departure leaves in doubt some groundbreaking approaches he has spearheaded to help raise academic standards in the district. Under his watch, 53 new public schools have opened and the graduation rate has jumped nearly 6 percentage points.

 “Arne has always seen education as a civil rights issue,” said Phyllis Lockett, president and CEO of The Renaissance Schools Fund, which assists the district with its efforts to shutter and revamp low-performing neighborhood schools.

 Duncan’s approach won praise last week during a Chicago visit by current U.S. Education Secretary Margaret Spellings, who said she believed Duncan had the necessary skills to take her place.

 “I don’t want to hurt his chances but I think he’s a terrific school leader ... and I’m saying this because we have a lot of experience together,” she said then. “I consider him a fellow reformer and someone who cares deeply about students. I think he’d be a great choice.”

  Chicago Public Schools have seen increases in some state test scores for the past seven years, though they continue to lag behind the Illinois average. Overall, 65.4 percent of the city’s elementary school students met or exceeded state standards, an increase of 1.3 percent from 2007.

 Many describe Duncan as a conciliatory character, open to new ideas and realistic about disconcerting trends — but he has not always avoided controversy in Chicago’s politically charged educational system. Community organizations have expressed frustrations over disparities in test scores between minority and low-income students and students at predominantly white and affluent schools.

Some school reformers have questioned Renaissance 2010, a program to close and overhaul low-performing neighborhood schools. Under Duncan’s watch, hundreds of teachers have lost their jobs when he “turned around“ struggling schools and forced the staff to reapply for their positions.

 “He’s been pretty willing to fight some political battles about closing dysfunctional schools,” said John Q. Easton, executive director of the Consortium on Chicago School Research at the University of Chicago. “I think he’s got a willingness for a lot of ideas, and checking out how they’re doing and making changes based on that.”

 Proponents of the city’s 20-year-old Local School Council system — which decentralized authority from the district headquarters to neighborhood voices — have protested a steady push under Duncan to bring some controls back to the central office.

 “I think Arne’s time here is a cautionary tale,” said Julie Woestehoff, executive director of Parents United for Responsible Education. “We hope that outside of Chicago, Arne Duncan will do the right thing for kids.”

  Duncan also helped craft a five-year teacher contract, among the longest in the country, that promised significant raises each year in exchange for long-term contract stability.

 John Ostenburg, a Chicago Teachers Union spokesman, said the union would not comment on the appointment until Obama’s announcement.

  The Illinois Education Association, however, lauded Duncan’s selection. Executive Director Jo Anderson Jr. said Duncan has pushed for school improvement in Chicago and across the state, such as championing changes in the way Illinois funds public education. Though he clashed at times with union leaders, Anderson said Duncan’s collaborative style bodes well for his future work as education secretary.  “I think he’s going to be a partner,” Anderson said.

 When Daley tapped Duncan to be schools chief in 2001, he had limited management and financial experience beyond a few years running a small, non-profit education program. He spent three years working under predecessor Paul Vallas, but never had a high enough post to merit his own secretary.

 Like Obama, Duncan attended Harvard, where he took a year off from his sociology studies to become a tutor. A co-captain of Harvard’s basketball team and a first-team Academic All-American, Duncan bombed a tryout with the Boston Celtics before heading to Australia, where he played pro ball for four years.

 He returned to Chicago in 1992 to direct the Ariel Education Initiative, which seeks to create learning opportunities for underprivileged children on the South Side. He joined CPS in 1998, serving as Vallas’ deputy chief of staff and leading an effort to bring marquee academic programs — expanded International Baccalaureate programs, Advanced Placement classes, accelerated and gifted programs — to neighborhood schools long viewed as academic backwaters.

 Vallas encouraged Duncan to take the Cabinet post when they spoke last week, but he says Duncan wondered whether anyone could make a difference as education secretary.

  “I told him to go for it,” said Vallas, who now is a school superintendent in New Orleans. “He’s got an opportunity to really impact millions of lives in a really positive way. Arne has the capacity to bring people together — he’s always demonstrated that skill — but he’s a reformer.”  ———  (Chicago Tribune reporters Stacy St. Clair, John McCormick, Tara Malone, Darnell Little and Hal Dardick contributed to this report.)