You can't balance whole language and phonics because they are opposites. "Balanced literacy" as taught to my 1st grader meant (in part) "if you don't know a word, look at the first letter and guess." Phonics is "if you don't know a word, sound it out." Those two points of view contradict each other and cannot be "balanced."A friend here described her child's experience with balanced literacy.
It was exactly as Sarah says: the kids were supposed to guess what the unknown words were, using context.
But - and here's something I hadn't heard before - every day the kids would read the same authentic book and guess the same words.
I can only guess that that happened because no matter what curriculum they're using, teachers know that kids need repetition in order to learn. So instead of giving the kids repetition via decodable books, like the Bob Books, they gave them repetition via the same authentic children's book.
But I don't know.