A new $550 million pot of money for another Race to the Top contest will have to be split between two education-policy worlds: early education and district-level reform. But just how the Education Department will take a relatively small slice of money to leverage big change in both arenas remains to be seen.

Education Secretary Arne Duncan told Congress in a hearing last week before the House subcommittee that oversees education spending, according to prepared remarks: “I’m happy to report today that thanks to your continued support for comprehensive education reform, we plan to use our [federal fiscal year 2012] Race to the Top funds for both a district level competition and another round of Early Learning Challenge grants.”

This seems to be a shift in the department’s strategy, which was heading in the direction of giving most, if not all, the money to districts. That’s essentially what Secretary Duncan said in an interview I did with him in January. And he and his aides seemed to be trying to figure out how to make early education one element of a district-level competition. However, advocacy groups and members of Congress (including California ally Rep. George Miller, a Democrat) have been pushing to use some of the money for early learning.

What will be interesting to watch is how the department will structure the two competitions, especially with only $550 million available. While the district contest will obviously be an entirely new phenomenon, it seems likely that the department will not create an entirely new early education contest since it just had one. (Nine states split a $500 million pot last year.) Will the department run another bridesmaids’ edition, like it did with an extra $200 million it had last year for the original Race to the Top runners up? That could be good news for New Mexico, Wisconsin, and Colorado (three who just narrowly missed winning, according to a ranking of the scores), and other states?

Will California, which barely won but got short-changed out of nearly $50 million because the department ran out of money, get its entire grant?

One thing is clear: $550 million is not a lot of money (consider that the first Race to the Top was funded with $4 billion), and split between two grant contests, packs even less of a punch. A half-billion could have done a lot at the district level. Doing anything meaningful with the early-ed piece means quite a bit less for districts at a time when Secretary Duncan seems very interested in leveraging change, including through No Child Left Behind waivers, at the district level. So it will be interesting to see how the department figures out how to make a little money go a long way.