The Fabled Fourth Graders of Aesop Elementary by Candace Fleming (Shwartz and Wade, 2007) was a Washington Post KidsPost Book of the Week way back in October (the winning entries in the KidsPost fable-writing contest were printed in today's paper). While I think everyone should know (if not love) the originals, I really like the idea of recasting Aesop's animal fables with kids, and retelling (or completely rewriting) the fables in an elementary school context. Each of the fourth-graders in Fleming's book gets his or her own short school-themed chapter or "fable", complete with moral; there is also a romantic subplot involving the fourth-grade teacher and the school librarian that runs the course of the school year. Warning: the book itself is very punny!
This article by Judy Freeman in School Library Journal online (Curriculum Connections, 11/8/2007) has lots of good suggestions for teaching with The Fabled Fourth Graders. First among them is reading the classic fable along with the corresponding chapter of the book (compare and contrast!). If you're so inclined, or if you're just interested in reading Aesop's fables, these are my two favorite picture book editions:
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The McElderry Book of Aesop's Fables by Michael Morpurgo; illustrated by Emma Chichester Clark (McElderry, 2005). Also my kids' favorite.
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Unwitting Wisdom: An Anthology of Aesop's Fables retold and illustrated by Helen Ward (Chronicle, 2004). More sophisticated retellings.