Obama Unveils Race for School Billions

President Obama today announced the steps states must take to compete for their cut of an unprecedented $4.35 billion in discretionary federal stimulus funding for education.

"This is one of the largest investments in education reform in American history," Obama said at the Department of Education this afternoon. "And rather than divvying it up and handing it out, we are letting states and school districts compete for it. That's how we can incentivise excellence and spur reform and launch a race to the top in America's public schools. That race starts today."

The controversial "Race to the Top" program offers one of the first glimpses into how far the Obama administration is willing to go to create reform.

VIDEO: Race for Education Reform Money

The program centers of four basic "assurances" that states must meet to qualify for a piece of the pie -- turning around low-performing schools, in part by expanding charter schools; enacting rigorous, common academic standards; improving teacher quality and beefing up state data systems.

States will be judged based on their progress in each of the four areas and -- given the way several states have been using education stimulus money to fill budget gaps rather than to innovate -- it is clear that not all states will be awarded funding.

"I'm issuing a challenge to our nation's governors, to school boards and principals and teachers, to businesses and non-for-profits, to parents and students: if you set and enforce rigorous and challenging standards and assessments; if you put outstanding teachers at the front of the classroom; if you turn around failing schools -- your state can win a Race to the Top grant that will not only help students out-compete workers around the world, but let them fulfill their God-given potential," Obama said.

VIDEO: Education Secretary Arne Ducan will foster a program to reward excellence.

In an exclusive interview with ABC News on Thursday, Education Secretary Arne Duncan explained the dire need for reform.

"We have as a country, I think, have lost our way educationally. We have to educate our way to a better economy. To me, education is the civil rights issue of our generation," he said.

"This is a fight for social justice," he added, "and we want to work with those states that are literally going to lead the country where we need to go."

With more discretionary money at his disposal than all education secretaries in the last three decades combined, and a close personal ties to the president, Duncan may be the most powerful education secretary to date.

Through "Race to the Top," Duncan hopes to prop up states that innovate -- and inspire those that have not. Duncan admitted not all states will qualify, but said that a competitive spirit will drive reform. In this race, there will be clear winners and losers.

"I think there'll be tremendous pressure on states, state legislatures where things aren't happening, by parents saying exactly that: 'Our children deserve a slice of the pie, and we want that pressure,'" Duncan said.

Winners And Losers

"This isn't about winners and losers," Duncan said. "This is about challenging the status quo as a country, getting dramatically better and giving every child in this country a chance they desperately need to have a great, great quality education."

Duncan admitted he worries about the students who may suffer because their states will not adopt his requirements, and hopes that the grants will serve as a large incentive for reform.

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