With $4.35 billion on the line, 40 states and the District of Columbia turned in applications for the first round of the Race to the Top competition on Jan. 19. Some of the other states - the ones that didn't apply - aren't too excited about the strings attached to the federal education grants.

Peer reviewers will now evaluate what each state is doing to improve education, and while they're using a point system, there won't be any specific point cutoffs that winning applicants have to make, U.S. Department of Education Secretary Arne Duncan said. They also haven't locked themselves into a certain number of states to choose, but they will set a high bar for them to hurdle.

"We want to fund as many great proposals as we can," Duncan said, "and we don't want to fund those that we think are good or have potential, but aren't great yet."

We're In: Choose Us!

To become eligible for the race, a dozen states have amended or maintained their charter school laws, and several states eliminated barriers that prevented teacher performance and student assessment data from being linked, including California.

"When Race to the Top was announced last July, California was immediately counted out of the race - but you should never count California out," Gov. Arnold Schwarzenegger said. "President Obama issued a challenge, and we have responded with strong leadership and bold action to ensure California cannot only apply but be highly competitive in the Race to the Top."

These are the states that applied in round one:

• Alabama
• Arizona
• Arkansas
• California
• Colorado
• Connecticut
• Delaware
• District of Columbia
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Massachusetts
• Michigan
• Minnesota
• Missouri
• Nebraska
• New Hampshire
• New Jersey
• New Mexico
• New York
• North Carolina
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• Tennessee
• Utah
• Virginia
• West Virginia
• Wisconsin
• Wyoming

If states do not enter or win in the first round, they are eligible to apply for the second round by June 1. Awards for the first round will be announced in April, and the awards for the second round will be announced in September.

We're Out: Keep Your Money

Just because the Education Department is offering money, that doesn't mean every state wants it. Texas Gov. Rick Perry refused to apply for Race to the Top. In a letter to Duncan, he said that his state did not want to give up local control over curriculum, legislation and budgets to the federal government.

He stressed that Texas was one of the first states to adopt college and career-ready standards and assessments. While the state has already done many things that the competition has emphasized, it accomplished reforms "in the interest of providing Texas students a bright future, not due to mandates from the U.S. Department of Education."

"Texas is well positioned to continue progressing under the watchful eyes of Texas citizens, and we will build upon our successful record of education reform," Perry said. "I firmly believe that states like Texas, working with local educators, employers and citizens, are best suited to determine the