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Delaware and Tennessee Get Round 1 Financial Bonus

The Education Department has made an important change to Round 2 of the Race to the Top competition that has big—and not necessarily positive—implications for the remaining 48 states and D.C. if they plan to seek a share of the $3 billion or so still left.

In Round 2, Race to the Top awards will be capped at levels outlined in what originally were the Education Department's original nonbinding estimates. Those estimates will now be binding.

That means Round 1 winning states Delaware and Tennessee, in addition to bragging rights, got a financial bonus, too: Their grants are larger than they would have been under the new rules for Round 2. And they'll also likely be worth more per student than any state that wins in Round 2. In the first go-round, the department suggested that a state of Delaware's size could win up to $75 million, but it turns out the state is getting an additional $25 million. Tennessee's top-line budget estimate was $250 million, and the state is getting twice that.

Capping the awards at those top-of-the-line estimates could force states to make some tough choices. Florida, for example, submitted an application that asked for $1.1 billion to fund it, but if they apply in the next round, their next application must be built on programs that can be funded with no more than $700 million.

U.S. Secretary of Education Arne Duncan said in a briefing today that he's doing this to ensure there's funding for as many good applications as possible.

But this could mean states, which in almost every case submitted Round 1 applications that asked for far more money than called for in the non-binding estimates, would have to ratchet down their promises or rework their plans.

And that's probably going to give states pause as they consider their Round 2 applications. In South Carolina, state chief Jim Rex said in a call today with reporters that, given the state's tough budget conditions, officials will have to make sure they can build a successful application and have the capacity to deliver on the promises. The state built its original application around $300 million in anticipated federal funding, but will be capped at almost half that in Round 2.

"We may not do quite as much," Rex said of Round 2. He said no decision has been made yet on whether the state will even apply.

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