As one of 16 finalists, Pennsylvania is still in the running for a share of $4.35 billion in federal Race to the Top money, but fewer than half of the finalists will become winners next month.

"Each one of them has a shot at winning, but most of them will go home as finalists," said U.S. Education Secretary Arne Duncan in a phone news conference Thursday.

Forty states and the District of Columbia applied in the first phase of the Race to the Top, in which less than half of the money is expected to be awarded. The rest will be allotted in a second phase.

The guidelines permitted Pennsylvania to ask for up to $400 million to foster education innovation in the state.

"Pennsylvania's emergence as a Race to the Top finalist is a direct reflection of not only the quality of the reforms outlined in our application but also the effectiveness of reforms that Pennsylvania already has undertaken," said Gov. Ed Rendell.

State Education Secretary Gerald Zahorchak said, "We believe the vision outlined in our Race to the Top application can result in Pennsylvania doubling its rate of improvement of student achievement by 2014."

The state's application included 120 school districts and 59 charter schools, all of which submitted memos of understanding signed by the superintendent, school board president and teachers union president where there is a union.

The signatures signaled agreement to foster certain practices and meet student achievement targets. One controversial point was using data on student growth in teacher and principal evaluations.

The next step will be presentations by the finalists before reviewers in Washington, D.C., the week of March 15. Mr. Duncan said it is important to make the final decision based on "looking people in the eye," not just paperwork.

After the winners are selected, the reviewers' remarks and scores -- as well as videos of the finalists' presentations -- will be made public.

All of the 16 finalists earned scores above 400 on a 500-point scale. Mr. Duncan said there was not one single factor that was make or break.

"No state has a perfect application. Every state has room to improve," he said.

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

Mr. Duncan said that "no more than $2 billion" will be awarded in the first round and possibly "considerably less."

Those who do not win -- or did not apply in the first round -- can apply in the second round by June 1. The second-phase finalists will be announced in August, with winners to be announced in September.

In his budget proposal for the coming year, President Barack Obama is seeking $1.35 billion for a third round of Race to the Top.

Whether a state wins or not, Mr. Duncan said the competition has served as a catalyst for states across the country to "think deeply" about how to improve education.

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