WASHINGTON — Gov. Arnold Schwarzenegger said Thursday that California must be "more aggressive and bolder" in changing its education system after losing out in a highly competitive national contest for federal money.
Federal officials rejected California's application for a share of $4.35 billion in "Race to the Top" funding, part of President Barack Obama's effort to overhaul public schools.
The news came in a letter to governors, where U.S. Education Secretary Arne Duncan said that "only the very best proposals" will get money. Fifteen states and the District of Columbia were announced as finalists.
It's a setback for Schwarzenegger and the Legislature, which met in special session in January to change state education laws in an attempt to win the money.
"While the reforms we passed did move our state forward, they did not go far enough because other states were more competitive," Schwarzenegger said.
Jed Wallace, president of the California Charter Schools Association, called California's loss "a negative blow to public education, and a step backward in the need for reform."
"This is deeply disappointing for the children of California, particularly after Governor Schwarzenegger and the Legislature acted to ensure California would meet the federal government's eligibility requirements," Wallace said. He said he believed that California "had a strong chance of being selected."
It's yet another blow to the state's budget, too. State officials estimated that California could have won as much as $700 million if it had been selected.
"We were talking about hundreds of millions of dollars that would have helped in the toughest budget year that we've had probably since the Great Depression," said Assemblyman Ted Gaines, R-Roseville.
"It's a real shame," added Juan Arambula, the Assembly's only registered independent, from Fresno. "California could use those funds to improve our educational system."
Forty states and the District of Columbia applied for the money, Duncan said in his letter. He said the money is for the first phase of the program, and he encouraged states that did not win this time to apply for the second phase. The deadline is June 1.
"I assure you there will be plenty of money remaining in the program after the first round of funding is complete," Duncan said.
The 15 states that beat California are Colorado, Delaware, Florida, Georgia, Illinois, Kentucky, Louisiana, Massachusetts, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina and Tennessee. The states' applications were judged by five independent reviewers, whose individual scores were averaged to give the state its final score. Duncan said winners in the competition will be announced in early April.
"These states are an example for the country of what is possible when adults come together to do the right thing for children," Duncan said.
But in a nod to California and others who didn't make the cut, he said that each losing state "is already a winner because of the hard work and collaboration required to reach this point."
State officials said they had no idea why California's application was rejected.
"I hope we'll qualify for something in the second round," said Assemblyman Tom Torlakson, D-Antioch, a candidate for state superintendent of public instruction. "It was always in doubt whether we would get funds in the first round."
To compete for the money, states had to promise to improve teacher effectiveness, make changes in failing schools, improve academic standards and student testing and make better use of data to force more accountability to the public. At the governor's urging, state lawmakers approved a plan to allow students in 1,000 of the worst-scoring campuses in the state to enroll elsewhere.
"The status quo is entrenched in our public school system and we made Herculean strides to even be able to compete and I am proud that we did not abdicate on this responsibility," said Sen. Gloria Romera, chair of the Senate Education Committee.
In January, the governor called the state's action "sweeping education reforms" that would "make sure California is highly competitive for hundreds of millions in federal dollars for our schools."
In a statement Thursday, Schwarzenegger said he would continue to fight for more education changes "to make California truly competitive for the billions of dollars our students desperately need — the people of California expect nothing less."
"The decision by the Obama administration demonstrates that we need to be more aggressive and bolder in reforming our education system," the governor said.
Arun Ramanathan, executive director of The Education Trust-West, said California lost out because state officials decided to play it safe and not enact enough changes to satisfy the Obama administration.
"Giving someone an exit strategy from a low-performing school is not the same as improving the learning conditions inside of those schools," Ramanathan said.
In an afternoon conference call with reporters, Jack O'Connell, the state's superintendent of public instruction, expressed disappointment.
"My belief is that we developed a very thoughtful, careful application that clearly outlines how we intend to make the systemic changes in our education system that will continue to improve outcomes for all of the children in California," he said.
(Jim Sanders of the Sacramento Bee Capitol Bureau contributed.)