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Even before they鈥檝e finished spending their first block of federal stimulus aid, states are getting a head start in a national 鈥渞ace to the top鈥� for better public education, without even knowing rules to the game.

With up to $4.35 billion in competitive grants for education reform at stake, the most aggressive states are putting together strategic grant-bidding teams, revamping their laws, and parsing speeches by U.S. Secretary of Education Arne Duncan for clues to what might give them an edge.

The Race to the Top Fund is a small slice of the nearly $100 billion aimed at education in the $787 billion American Recovery and Reinvestment Act that Congress approved in February. But in tough budget times, states are eyeing money from the fund as the stimulus measure鈥檚 grand prize. Winning one of the grants will give a state bragging rights鈥攁nd a chance to advance key education improvement efforts through stimulus funding, which in many cases is being used mainly to plug budget holes.

Later this month, the federal Department of Education is expected to reveal the metrics by which states will be measured in the Race to the Top competition. Already, Mr. Duncan has spent the past couple of months dropping not-so-subtle hints about what he鈥檚 looking for鈥攁nd what states should avoid if they hope to win a grant.

The secretary has singled out states for championing, or violating, tenets of education reform embraced by the Obama administration: turning around low-performing schools (and expanding charter schools), improving teacher quality, beefing up state data systems, and enacting common academic standards. Those are the four 鈥渁ssurances鈥� spelled out in the stimulus law.

Risk Factors

Already at a competitive disadvantage, Mr. Duncan has said, are the 11 states without charter schools, and the 23 states (plus the District of Columbia) that have charter school laws but place caps on the expansion of that sector. (鈥淥bama Team鈥檚 Advocacy Boosts Charter Momentum,鈥� June 17, 2009.)

Fiscal and data-quality issues may also come into play: States such as Texas that used stimulus funding to pay for K-12 education while not touching their rainy-day funds will likely be behind in the race; Pennsylvania is debating doing the same thing. Also at a disadvantage are states such as California that put barriers in state law that make it harder to use data that link individual teachers to individual students鈥� academic performance.

And the four states鈥擜laska, Missouri, South Carolina, and Texas鈥攖hat haven鈥檛 signed on to a new effort to create common, national academic standards may not fare well either. (鈥�46 States Agree to Common Academic Standards Effort,鈥� June 10, 2009.)

In zeroing in on a few select areas of policy鈥攕uch as lifting caps on the number of charter schools鈥攁nd using the potential of $4.35 billion in grants as leverage, Secretary Duncan is giving state proponents political ammunition to make select, tangible changes, education observers say.

鈥淚t鈥檚 remarkable that before he鈥檚 even spent a nickel, he鈥檚 sparked a national conversation,鈥� said Andrew J. Rotherham, the co-founder of the Washington-based think tank Education Sector.

He said that Mr. Duncan and the Education Department will face pressure from Capitol Hill, states, and interest groups to dispense the money in certain ways, or to spread it out among most states.

鈥淚f they can hold the line,鈥� he said of department leaders, 鈥淸the Race to the Top grants] can actually be catalytic.鈥�

But there are risks, too. Placing all the emphasis on particular policy approaches may mean oversimplifying complex issues, others warn.

For example, lifting the cap on the number of charters is only one indicator of a state鈥檚 willingness to encourage those largely independent public schools.

鈥淭his is distracting from the bigger issues that face charter schools,鈥� said Jeanne Allen, the president of the Center for Education Reform, a Washington-based pro-charter organization. 鈥淵ou can have no cap on a lousy charter school law; there are more important elements.鈥� She cites factors such as how many different entities can authorize charters, and how the schools are funded.

And the lack of educator training is a bigger issue for districts in being able to use data to improve student achievement than legal or technical barriers, said Paige Kowalski, a senior associate at the Austin, Texas-based Data Quality Campaign.

Such points of contention add to the eagerness of education advocates, policymakers, and state officials for formal guidance on the Race to the Top Fund, which includes $350 million Mr. Duncan has set aside for states to develop common assessments. He鈥檚 tapped Joanne S. Weiss, a former NewSchools Venture Fund executive, to run the program. Among the issues still to be resolved:

鈥�Whether the Education Department will reward states that have already made a lot of progress in improving education, or those with the biggest potential;

鈥�Given the focus on turning around low-performing schools, whether the most populous states, with big pockets of poverty and struggling schools, will be favored over smaller states; and

鈥�How widely the grants will be distributed, with just a few states getting sizable chunks of money or with awards being spread around to many states.

鈥淭he department is going to have to get very specific,鈥� said Andy Smarick, a former department official under Secretary Margaret Spellings, Mr. Duncan鈥檚 predecessor, and an adjunct fellow at the American Enterprise Institute in Washington. For example, he said, 鈥渨e know they care about charter school caps, but how much is good enough?鈥�

Naming Names

While answers to such questions remain a work-in-progress at the department, Secretary Duncan has singled out some states for falling short in areas he considers to be crucial.

Indiana and Maine, for example, were identified last month in an official statement as being unfriendly to charter schools. (Maine doesn鈥檛 have them, and Indiana considered, but eventually rejected, a new cap to halt expansion.)

California, New York, and Wisconsin were cited in a June speech by Mr. Duncan for putting a 鈥渇irewall鈥� between student and teacher data鈥攅ven though it鈥檚 unclear whether their state laws go that far.

Pennsylvania lawmakers got a letter from Mr. Duncan last month, when the state was considering cutting K-12 school aid and filling the hole with federal education stimulus money, while leaving a $750 million rainy-day surplus fund intact. The budget was in flux earlier this month.

And Mr. Duncan鈥檚 home state of Illinois earned special scrutiny in April as the first state he called on to do better, by lifting its charter-school cap and raising academic standards.

Education advocates in Illinois note that two months after Mr. Duncan鈥檚 visit, Illinois lawmakers doubled the cap on the number of charter schools, to 120.

鈥淭hat gave those negotiations a kick in the pants,鈥� said Robin Stearns, the executive director of Advance Illinois, a school reform group launched in November 2008 and led by former Illinois Gov. Jim Edgar, a Republican, and former U.S. Secretary of Commerce William Daley, a Democrat.

The group鈥檚 platform includes raising the state鈥檚 academic standards, linking teacher and principal evaluations to student outcomes, and spurring innovation in school districts, all of which are priorities for Mr. Duncan.

鈥淚t鈥檚 fair to say this is game-changing for us,鈥� Ms. Stearns said of the Race to the Top competition. 鈥淚t鈥檚 compressed the time frame and added some urgency, because the advantage goes to the states with momentum.鈥�

Similarly, in late spring, Mr. Duncan called Tennessee Gov. Phil Bredesen, a Democrat, to urge him to retool what was one of the nation鈥檚 most restrictive charter-school caps; in June, the legislature approved expanding the pool of students eligible to attend charter schools.

鈥淲e鈥檝e passed a bill to show our willingness in this area,鈥� said Tennessee Commissioner of Education Tim Webb. 鈥淚 think the interest was there. I don鈥檛 think it would have been done as expeditiously鈥� without Mr. Duncan鈥檚 advocacy.

Mr. Webb said he now plans to focus his state鈥檚 Race to the Top efforts on teacher incentives and maximizing the state鈥檚 existing data system.

In Indiana, lawmakers ended a special session last month by not capping the expansion of charter schools. And the education department there was successful in getting lawmakers to remove a restriction in state law that said student test scores could not be used for teacher evaluations, said department spokesman Cam Savage.

Angling for Grants

With so many states feeling financial pain in a time of recession, it makes sense that they鈥檇 try to retool education laws and policies to qualify for the federal money, said Michael J. Petrilli, the vice president for national programs and policy for the Washington-based Thomas B. Fordham Institute.

鈥淣o politician wants to be accused of leaving free money on the table,鈥� said Mr. Petrilli, who was in the U.S. Department of Education during President George W. Bush鈥檚 administration.

To help states improve their chances of receiving some of the Race to the Top money, the Bill & Melinda Gates Foundation is planning to award grants that can be used for the application process. Florida and Tennessee are among those in line. But details are sketchy: Chris Williams, a spokesman for the Seattle-based foundation, said he couldn鈥檛 comment on potential grants.

Meanwhile, education observers name a few states as early favorites for the federal Race the Top awards. Chief among them: Colorado, Florida, Massachusetts, and Louisiana.

Massachusetts has been known for its tough standards and assessment system, and its enviable student-performance results, while Louisiana has made charter schools a big part of the education improvement push in New Orleans.

Colorado beefed up its academic standards and accountability law in 2008, has strong charter school legislation, an active P-20 Council linking education from preschool through graduate study, and districts with teacher merit-pay systems.

The state also has a particularly sophisticated grant strategy. Lt. Gov. Barbara O鈥橞rien, a Democrat, is in charge of the Race to the Top 鈥渂id team,鈥� which includes committees of business, community, and education volunteers who are focused on the four assurances that have become priorities for Mr. Duncan.

Ms. O鈥橞rien and her crew are also trying to read the federal Education Department鈥檚 tea leaves. 鈥淲e鈥檝e been following every single speech on education. We analyze them like literary critics,鈥� she said.

Gov. Bill Ritter, a Democrat, also has set aside $10 million from Colorado鈥檚 share of the stimulus package鈥檚 State Fiscal Stabilization Fund to put into programs to show federal officials that Colorado is serious about improving education. Such efforts include expanding the state鈥檚 data system, funding more teachers from the national Teach For America program, and letting more districts experiment with alternative-compensation systems for teachers.

鈥淲e鈥檙e forging ahead with our agenda anyway, even if we don鈥檛 get the money,鈥� said Ms. O鈥橞rien.

That鈥檚 a refrain being heard in Florida, where Commissioner of Education Eric J. Smith said the competition has prompted serious conversations about the next step in education reform among educators, the governor, and legislators.

Florida is considered a prime contender for Race to the Top funds because of its sophisticated and multilayered data system, an accountability system that was among the first in the country, and large urban and student populations. (鈥淔lorida Schools Steer by Numbers,鈥� June 11, 2009.)

Mr. Smith said there鈥檚 no secret grant strategy.

鈥淲e鈥檙e not trying to read anyone鈥檚 mind,鈥� he said. 鈥淲e鈥檙e pushing Florida鈥檚 agenda.鈥� And, he added, that just happens to largely coincide with Mr. Duncan鈥檚 agenda.