The U.S. Department of Education is meting out shares of a $4 billion grant called "Race to the Top," which rewards states that can show that their reforms have improved student performance. California and Florida could each receive up to $700 million this next year, but Maine won't be included in the first phase of the two-year program -- largely because it failed to meet criteria laid out by the Obama administration.

Although it's only a fraction of the $110 billion assigned for education under President Barack Obama's federal stimulus program, the $4 billion Race to the Top grant funding is eagerly sought by cash-strapped school departments across the country. U.S. Education Secretary Arne Duncan told reporters during a teleconference that national educational standards must be raised.

"The biggest thing is that we're competing in an international and a global economy today, and children aren't competing for jobs just in the district or the state, they're competing obviously nationally and internationally," Duncan says.

To bring more schools up to par on educational standards, the Obama administration created the Race to the Top grant to reward states that have expanded curricula offered in charter schools, turned around their lowest performing schools with innovative programs, and that can tie teacher and principal salary increases to student test scores.

Duncan says meeting all of those program goals will allow the United States to dramatically raise the bar and close the international achievement gap in educational excellence.

"We haven't challenged the status quo, we haven't pushed to get dramatically better," he says. "And as a country, we have a drop-out rate that approaches 30 percent -- that's 1.2 million students dropping out each year. That's an education and economic catastrophe. Of those students who do graduate from high school, far too many don't have the skills to compete in the world of higher education, they have to take remedial classes. And so we feel a real sense of urgency."

Cash payments from the grant will be awarded under a competitive, two-phase schedule that, in some instances, may result in some larger states receiving as much as several hundred million dollars. Depending on the level at which the states meet or exceed the established criteria, their plans could receive a top score of 500 points.

Category scores are weighted differently with teacher and principal effectiveness representing the largest share -- nearly 140 points. While some states are already planning on a win, others are stuck at the bottom in the Race to the Top -- and Maine is among them.

"What has originally appeared on the federal register has criteria that Maine will struggle in some cases to be able to demonstrate," state Education Commissioner Susan Gendron told members of the Legislature's Education Committee. Gendron said that Maine will be sitting out the first round of applications for a share of the grant money, largely because its current policies do not meet the criteria set by federal program.

Teacher contracts in Maine are determined by local school districts -- not the state -- and Maine, like 10 other states, doesn't have a charter school program, and that means an automatic deduction of 32 points under the rules of the grant. For now, Gendron says Maine will weigh its options and enter the competition later.

"What we have chosen to do is not apply in the first round -- the first round will be sometime in December -- because we need to look at that criteria," Gendron says. "We also need to have support from school systems as to what that's going to look like. So we have begun to form a committee, our plan is to apply in the second round. Those funds would be available September of 2010."

Maine will be eligible to compete in the second phase against all other states that either didn't enter the first phase, or failed to win a cash prize. Secretary of Education Duncan warns the states that in the end, the competition will produce a lot more losers than winners, at least when it comes to funding.