Minnesota is out of the running for up to $250 million in federal money for school reform.

The state was not one of 16 finalists named by U.S. Education Secretary Arne Duncan on Thursday in the "Race to the Top" competition for a share of $4.35 billion in stimulus funds earmarked by the Obama administration to encourage school innovation.

The defeat disappointed educators who saw it as the only chance schools had to receive new money in upcoming years, and Gov. Tim Pawlenty's office was quick to blame Education Minnesota, the state teachers' union, saying it hurt Minnesota's chances by fighting meaningful education change.

"It's hard to race to the top with an anchor tied to your leg," Brian McClung, spokesman for Pawlenty, said after Duncan's announcement.

His swipe at the union came just hours after the Legislature began considering education proposals from Pawlenty that include an item critics said would dismantle teacher job security and which the union called a "gimmick."

The proposal would require K-12 teachers to reapply for tenure every five years and base their continued employment on evaluations and on test scores of their students. It would "enhance" the license renewal teachers already need to do every few years, said Education Commissioner Alice Seagren.

The proposal has little chance to pass the DFL-controlled Legislature, but its introduction added to the sharp rhetoric that flew Thursday between the union's supporters and detractors.

"This bill ends tenure," Rep. Mindy Greiling, DFL-Roseville, told Seagren. "... I don't know why you took that draconian step."

Tom Dooher, Education Minnesota's president, said later: "It's reform for the sake of reform, and it's not going to close the achievement gap or increase teacher quality or effectiveness."

A lost shot at funding

Education advocates had been optimistic that Minnesota would get a "Race to the Top" windfall because experts said the state's history for implementing change in education meant it had a good shot at winning.

The state's application called for expanding the state's teacher merit-pay program and basing teacher evaluations more squarely on student test scores, ideas the Obama administration supports but unions consider troublesome.

Education Minnesota had voiced concerns about the application, which might have hurt the state's chances because teacher support was a factor in awarding the money.

"We're obviously disappointed [the state isn't a finalist], but we're also not surprised," Dooher said. "We knew that there were serious problems from our perspective."

A spokesman for the state Department of Education said the state won't learn why it's out of the running until April, when winners are announced.

Minnesota would have directed 80 percent of the money to school districts, but districts that wanted a share would have had to enter "Q Comp," Pawlenty's controversial merit-pay program. Forty-four districts and 32 charter schools currently participate, representing about a third of the state's students and teachers.

The Burnsville-Eagan-Savage School District stood to receive about $2.5 million over four years, said Superintendent Randy Clegg. "It would have been probably the only increase in funding of any type that we would have seen for next year," Clegg said.

The district didn't count on the money when it built its budget, but it would have brought "huge benefits," he said, such as funding for academic coaches to help teachers analyze student data and use it to improve lessons.

'So hard to predict'

Still, Clegg said he was "neutral" about the news that Minnesota lost out. "When you get grants at this federal level, it's just so hard to predict how they're going to shake out," he said.

Rosemount-Apple Valley-Eagan Superintendent Jane Berenz said, "Any dollars now are much appreciated, but big-picture-wise, it wasn't going to solve our budget problems."

Berenz said she had been excited about parts of the proposal, such as professional development funding for teachers and principals. But she also had questions about how it would have worked.

The state still can apply for a second round of funding offered under the "Race to the Top" program, with applications due in June.

The governor's office said that Pawlenty has "proposed numerous education reforms" in recent years, but that many "have been defeated at the Legislature at the insistence of the teachers' union."

Does Education Minnesota feel partly to blame for the state not being named?

Union defends role

"I'm not worried about that," Dooher said, "because part of the criteria was that you had to have a collaborative relationship with the teachers union. ... The [state Department of Education] had the responsibility to maintain their part of the relationship. You can't just say, 'Here's our idea' and walk away."

Every year, Education Minnesota is one of the highest-spending lobbying groups at the State Capitol.

The union's proposed ideas for the application included transforming the state's lowest-performing schools into "Centers of Teaching Excellence," potential models for how to teach struggling students.

"We had research-based ideas that would have helped close the achievement gap," Dooher said, "and they chose not to listen to us."

The finalists are Colorado, Delaware, the District of Columbia, Florida, Georgia, Illinois, Kentucky, Louisiana, Massachusetts, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina and Tennessee.

Emily Johns • 612-673-7460 • ejohns@startribune.com Sarah Lemagie • 952-882-9016 • slemagie@startribune.com