As part of the Recovery Act’s State Fiscal Stabilization Fund (SFSF), Congress required Education to make grants to states that reform their education systems. Education subsequently created the RTT grant fund and gave states the opportunity to compete for grants based on reforms specified in the act: 1. recruiting, developing, rewarding, and retaining effective teachers and principals, especially where they are needed most; 2. turning around states’ lowest-achieving schools, which can include interventions such as replacing school staff, converting the school into a charter school, or closing the school; 3. building data systems that measure student growth and success and inform teachers and principals about how they can improve instruction; and 4. adopting standards and assessments that prepare students to succeed in college and the workplace and to compete in the global economy. Based mostly on these reform areas, Education identified 19 primary criteria—such as adopting common content standards or using performance data to improve teacher effectiveness—to guide the selection of states to receive the grants. Education divided the criteria into two groups: (1) “reform conditions criteria,” referring to the state’s history of and current status in implementing reforms and (2) “reform plan criteria,” referring to the state’s plans to implement new reforms. States were required to provide a narrative response for each criterion and provide performance measures and other information for selected criteria. The applications also had to include budgets and timelines for implementing certain proposed reform efforts. In short, states were to provide information not only on the extent of their experiences implementing reforms in these areas, but also on their plans for moving forward. In addition, states could demonstrate that a sufficient number of their school districts were committed to participating in their RTT reform plans by having a memorandum of understanding signed by district superintendents, school board presidents, and local union representatives. The Recovery Act requires that districts in each grantee state must receive at least 50 percent of the state’s total grant, and, according to Education, only participating districts receive these funds. States could also describe how they would work with participating districts to use RTT funds to improve student outcomes, such as increasing the rates at which students who graduate from high school are prepared for college and careers. See appendix III for more information on the criteria used to help select states for grant awards. Education conducted the RTT grant competition in two phases. Education issued proposed requirements for the RTT grant fund in July 2009, and in November 2009, the department issued final requirements and a notice inviting state governors to apply for Phase 1 of the grant. For a state to have been eligible to receive an RTT grant, Education must have previously approved the state’s applications in both rounds of SFSF grant awards. In addition, at the time they submitted their RTT applications, states could not have any legal, statutory, or regulatory barriers to linking data on student achievement or growth to teachers and principals for evaluation purposes. States had the option to apply in either phase of the competition but were only able to reapply in Phase 2 if they did not receive a grant in Phase 1. Forty-one states applied for RTT funds in Phase 1 of the competition, and all applications were reviewed and scored by external reviewers using Education’s grant award criteria. Sixteen states passed the initial review and were deemed “finalists” for the grants. In March 2010, Education announced that Delaware and Tennessee would receive grants of approximately $100 million and $500 million, respectively. Education posted all Phase 1 applications and reviewers’ scores and comments on its Web site. In April 2010, Education issued a notice inviting applications for Phase 2 of the RTT grant competition, and in August, Education announced that 10 states received Phase 2 RTT grants ranging from $75 million to $700 million. (Education was required to award all RTT grant funds by Sept. 30, 2010.) The size of each state’s award was based in part on the size of the state, among other factors. Table 1 lists RTT grantees and their award amounts. As in Phase 1, all applications and reviewers’ scores and comments were posted on Education’s Web site. Following Education’s announcement of grant recipients, states were given access to 12.5 percent of their award. This amount is approximately equal to the state portion of the first year grant amount for state-level activities only. To receive the rest of their grant funds, states had to submit, and the department had to approve, documents known as scopes of work, which were more streamlined implementation plans that updated and aligned timelines and budgets in the states’ approved applications. Education also required states to submit scopes of work from each of their participating school districts 90 days after the grants were awarded. Education reviewed and approved the state scopes of work and also reviewed the extent to which district scopes of work aligned with their respective state’s plans. Education granted states access to grant funds on a rolling basis as they approved their key documents. (See fig. 1 for a timeline of key RTT grant activities to date.) Grantee states must meet additional requirements throughout the 4-year RTT grant period. Grantees must obligate all funds by the end of their 4- year grant period and must liquidate all obligations no later than 90 days after their grant term ends. Education, however, may grant extensions for states beyond the 90 days on a case-by-case basis. Any funds not obligated and liquidated by September 30, 2015, will revert to the U.S. Treasury, according to Education officials. Also, Education required RTT grantee states, school districts, and schools to identify and share promising practices—with the federal government and the public—that result from implementing RTT projects. This requirement includes making RTT data available to stakeholders and researchers and publicizing the results of any voluntary evaluations they conduct of their funded activities. Education’s policy is to monitor grantee states to ensure they meet their goals, timelines, budgets and annual targets, and fulfill other applicable requirements. According to Education officials, the department’s monitoring plan for states emphasizes program outcomes and quality of implementation, while also ensuring compliance with RTT program requirements. They said the monitoring process for RTT grantees builds on the process that the department uses to monitor all discretionary grants. This process includes, among other things, (1) establishing working partnerships with grantees in order to effectively administer and monitor awards, (2) reviewing and approving administrative changes to grants, (3) monitoring projects for performance and financial compliance, (4) providing technical assistance and feedback to grantees on their progress, and (5) reviewing final outcomes and disseminating information about successful results. In addition, Education requires states to monitor how school districts use RTT funds. Education’s Institute of Education Sciences (IES) is conducting a series of national evaluations of RTT state grantees as part of its evaluation of programs funded under the Recovery Act. In September 2010, IES awarded two contracts to evaluate RTT implementation, outcomes, and impacts on student achievement. One evaluation will examine multiple Recovery Act programs, including RTT, and the other evaluation will focus on RTT and the School Improvement Grants program. Several briefs and reports are expected from these studies and, according to Education, the first one may be available in the summer of 2011. Officials in 6 of the states we interviewed—including 2 states that received an RTT grant and 4 states that did not receive one—reported making policy changes to reform their education systems in order to be more competitive for RTT. Those policy changes included new state legislation and formal decisions made by executive branch entities, such as the governor or state board of education (see table 2). For example, New York officials told us that their state enacted several new education reform laws to be competitive for RTT, including a law that allows school districts to partner with state-approved organizations to manage their lowest- achieving schools. California officials also told us that their state passed several laws to be competitive for RTT. California’s Governor called a special session of the legislature, during which it passed a variety of laws—such as adopting the Common Core State Standards and repealing an existing law that prohibited the use of student achievement data in decisions such as setting a teacher’s pay or deciding whether a teacher should be promoted. In contrast, officials in the other 14 states we interviewed said that their states made education policy changes during the RTT application period, but those changes were not made specifically to be competitive for an RTT grant. State officials explained that the changes their state made reflected the culmination of education reform efforts that began prior to the RTT competition. For example, Ohio enacted legislation in 2009 that required the state to set more challenging statewide academic standards, created new ways for teachers to earn their teacher’s license, and required college readiness examinations for high school students. Ohio officials said that the legislation was introduced before RTT was announced and was not an action that Ohio took to be competitive for the grant. However, they also told us that RTT being aligned with existing state policies influenced their decision to apply for the grant. Arizona officials told us that their state enacted legislation in 2010 that required a variety of changes to their K-12 education system. These changes included developing a new teacher evaluation system based on growth in student achievement and establishing a commission to set guidelines for student data collection and reporting. Arizona officials said these legislative changes would have been made regardless of RTT. In addition to making policy changes, officials in all 20 states we interviewed said they conducted outreach to a variety of stakeholders— including school district officials, state legislators, and representatives from the business community—to build support for the state’s RTT application. To demonstrate a state’s ability to implement reforms statewide, the RTT application allowed states to submit signed memoranda from school districts that agreed with the state’s reform plans.