Why Obama’s new education stimulus will leave many states behind.

The Department of Education is having the most decadent Employee of the Month contest ever. On Thursday it released applications for its $4 billion “Race to the Top” program, a competition designed to reward the states most in line with the Obama administration’s educational values. The idea is to bait states into Obama’s reform agenda with the promise of millions of dollars, and then highlight the ones who do it best. The contest is typical of the way the Education Department has used its stimulus money. With incentives, they think, reform can happen. It’s a grand experiment in behavioral economics.

And they’re right: With incentives, reform will happen. But the incentives are not limitless. There’s only $4 billion to go around, and not all states will get the rewards. (In fact, it’s likely most will not.) And so, for some, the Race to the Top is also a Slide to the Bottom. This is where the administration’s experiment breaks down. What’s the reason for those left behind to keep reforming once the incentives have expired?

And there will be plenty of states left behind. The New York Times wrote earlier this week that states are lining up to compete for Race to the Top funds. The states wouldn’t be cobbling together proposals unless they wanted—and, in many cases, needed—the money. Education budgets continue to be imperiled by the financial crisis and states’ needs to eliminate their deficit every year. New York’s governor is threatening major school cuts, Hawaii has eliminated 17 days of school to save money, and South Carolina’s school districts face a potential budget cut of more than $100 million. To reform education the way Obama wants it done is costly. Longer school days, more testing, and extra performance assessments all require resources—resources that will be hard to come by without Race to the Top funding.

The states that win the Race to the Top grants will reinvest the money back into the schools to help fortify reform. There are two rounds of awards. Everyone is free to apply both times, and the losers in the first round will get advice on how to do better the next time. It’s unclear how many states will be the cream of the crop—some estimate a dozen—but we know that the winners will get money and a major financial boost. Everybody else, meanwhile, won’t have met the administration’s criteria. They’re left SOL and will have to figure out how to reform their systems without federal help.

And so the winner-loser paradigm segregates states into two classes: those that have reformed according to Obama’s ideals and those that haven’t (or at least haven’t enough). But rather than give catch-up money to the states that have fallen behind the administration is rewarding those that have already done well. The administration would like you to think that this is the equivalent of getting extra credit or a gold star for a job especially well done. (“Rewarding excellence” is their terminology.) But it’s really like a teacher staying after-school to tutor only the teacher’s pets. The students who really need the help are the ones who are being ignored. And once they know the teacher doesn’t have the time to pay attention to them, there’s little incentive to keep trying to please.

On a conference call with reporters Thursday afternoon, someone asked Education Secretary Arne Duncan whether he thought the program would leave some states behind. Duncan responded with a flat “No,” saying that with all the other education stimulus money pumped into the system (more than $100 billion), no state was in this situation.