Dear Governors: Let me begin by thanking you for your leadership on education. Thanks to you, America has entered a new era of education reform and progress that holds great promise for our schoolchildren and their future. The tremendous work States did in Phase 1 of the Race to the Top competition brought stakeholders together to build comprehensive reform agendas, pass laws and policies consistent with States' goals, and align plans from the statehouse to the classroom. These reform blueprints are a huge benefit to education in our States. Our students and teachers are the big winners, and I salute you for your effort, your commitment, and your courage. Let me also say that I deeply value your counsel and insight, which have helped to shape this Administration's education agenda. Our role in Washington is to support reform at the State and local levels, and I will continue to reach out to you for guidance and direction. I also know that our educational progress is at risk because so many States face tough economic challenges, and education is particularly vulnerable when State revenues decline dramatically. The State Fiscal Stabilization Fund monies have helped considerably, but they will soon be spent and hard decisions will follow. I further recognize that the Department's competitive initiatives like Race to the Top have taxed your limited staff resources, but I encourage you to apply in Phase 2. The June 1 deadline is rapidly approaching, and we have $3.4 billion left to award. This is a tremendous opportunity, and I encourage every State to apply. To help you use the next seven weeks to the fullest advantage, we have sent Phase 1 applicants the detailed comments that peer reviewers made about applications. In addition, we have posted on our Web site every State's Phase 1 application, reviewers' comments, and scores, as well as videos of finalist presentations. On April 21, we are hosting a workshop for Phase 2 applicants where officials from Tennessee and Delaware will share information about the reforms under way in their States and answer your questions. We hope that this information provides your teams with inspiration and ideas, but we should emphasize that the best Phase 1 proposals built on individual States' unique needs, strengths, and assets. So as you take this time to develop your applications, we recommend that you draw on the lessons that you have learned from your highest-performing districts and schools, research from your universities, and the assistance and capacity offered by your nonprofits, community organizations, and foundations. We also believe that the time you spend refining your State's education reform blueprint will be well spent because, just as you are working to align your State's plans, the Department is working to align its grant programs. The work you do for Race to the Top can be used to inform efforts to secure funding from other Department programs. For example, you will know which districts are well positioned to take full advantage of Teacher Incentive Fund grants and which districts have the capacity to engage in school turnaround efforts associated with School Improvement Grants. Your Race to the Top proposal can also provide the vision and context for future Statewide Longitudinal Data Systems grant proposals. Finally, let me turn to the question of budget limits in the Phase 2 application. To fund as many strong applications as possible, we are capping the budget amounts States may request in Phase 2. Funding for Race to the Top is not unlimited, and there is no guarantee that funding will continue despite our request to continue the program in the 2011 budget. Based on the Phase 1 budgets, which exceeded the maximum ranges by an average of 40 percent and in some cases considerably more, we determined that without capped budget ranges in Phase 2, we would likely have to deny funding to too many extraordinary proposals from deserving States. We believe this decision is in the best interests of all States and their students. We believe that the budget ranges provide more than enough funds for States to implement dramatic reforms. Even with the cap, most successful States could be awarded hundreds of millions of dollars. We have also been asked why States cannot submit budgets they feel are needed to implement their most ambitious reform plans and let the Department simply cut back the budget. When an applicant submits a budget to match its proposed work plans, the applicant is legally committed to substantially implementing that plan and achieving the proposed goals and objectives. Reviewers score applications based on the proposed plans and budgets. If the Department significantly changes a budget after an application is scored, it could affect the scope of work, call into question the validity of the scores, and affect the ability of the grantee to fulfill its obligations under the grant. While we have the responsibility to reduce budgets where proposed costs are unnecessary, unreasonable, or not allowable under a grant, we are not in a position to make large-scale changes to a winning application's scope of work after the fact; to do so would undermine the integrity of the competitive grant process. Thank you for your strong leadership, commitment, courage, and hard work. Your efforts have made an extraordinary difference already, and the children in your States are the beneficiaries. I hope you will use this opportunity to compete in Phase 2 and continue to drive your States' education reform efforts. I look forward to continuing to work with you and supporting your efforts on behalf of America's schoolchildren. Arne Duncan