Obama's $4 Billion Education Prize: Incentive or Bribe?

President Obama announced a new education initiative today that sets aside a pool of $4 billion to reward states for improving their school systems. The theme of his speech was twofold: We need better teachers, and we need better standards. We need to find better teachers by using data from student achievement to highlight effective teachers. And we need better standards to keep some states (ahem, Mississippi) from setting their education bar so low that they gut the word "standard" of all meaning.

One of the commonly lamented problems with No Child Left Behind is that the law tells states: Set a standard, any standard, and we'll reward you if your students pass it. The law encouraged states to set the a low bar. That's why Secretary of Education Arne Duncan says he stands behind the national standard -- as hard as it might be to get all 50 states on board.

As he explained to our editor Bob Cohn in this interview, Duncan's broad theory of education policy is to set high national standards and let the states decide their own way to meet those high standards. The $4 billion prize Obama announced today fits that theory: The government sets the terms of the competition and encourages states to innovate their way to success, through their own initiative. 

Of course, Duncan's $4 billion bounty isn't just about paying states to innovate. It's also about implicitly bribing states to reform in specific ways. As Dana Goldstein writes in the American Prospect, dangling money in front of fund-starved school districts is a great way to make them enact changes the federal government would like to see, such as ... oh I don't know, assessing teachers by their students' performance.

Duncan said states are "ineligible" for the grants if they have laws on the books prohibiting student performance from affecting teacher assessment. New York and Wisconsin are two such states, and teachers' unions have long lobbied for such laws. In an attempt to encourage states to overturn these prohibitions, the Department of Education will be handing out Race to the Top grants in two phases over the next two years, allowing state legislatures time to revisit issues of teacher compensation.

At a time when states are facing budget tightening -- and education is often one of the first budget cuts -- this could be a powerful incentive -- or bribe, if you prefer -- for states to ease limits on charter schools and move closer to Duncan's education vision of a unleashing state laboratories' innovation, while slyly yoking them to his plans for teacher assessment and national standards.
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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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