Can Arne Duncan (And $5 Billion) Fix America's Schools?

The secretary of education is on fire. He's running up and down a makeshift basketball court in a Kentucky parking lot and has just executed one of those rare flashy moves that also manage to be completely functional: a behind-the-back, no-look pass to a teammate, who cuts backdoor for an easy layup. Moments later, he drains a fadeaway jumper with an opponent dead in his face.

On some weekends, when the rest of Washington is on the back nine or a racquetball court, Arne Duncan (whose first name is pronounced Are-knee) can be found playing in three-on-three street-ball tournaments across the nation. On a muggy, overcast Saturday in late July, while 50 Cent's "I Get Money" blares from a set of speakers, the former head of the Chicago Public Schools pounds the blacktop, alternating between playing intensely and walking off to take calls on his BlackBerry. Almost none of the other ballers know who the white dude with the salt-and-pepper hair is, and even fewer expect him to last long in the tournament. And yet his team goes on to win every game (20-10, 20-6, 18-9, 20-11, 20-10, etc.) and eventually the grand prize of $10,000.

That may sound like a lot of money--Duncan plans to give his share to charity--but it's chump change compared with the kind of cash he gets to play with at work. The economic-stimulus bill passed by Congress in February included $100 billion in new education spending. Of that total, Duncan has $5 billion in discretionary funding. That money alone makes him the most powerful Education Secretary ever. "I had very little--in the single-digit millions," says Margaret Spellings, Duncan's predecessor. "That's millions, with an m."

Duncan's choices could have a transformative impact on America's beleaguered public-education system. On July 24, he stood beside President Barack Obama and announced the guidelines for states to compete for most of that cash. The $4.35 billion Race to the Top (RTT) fund lets states apply for grants that focus on a short list of reforms guaranteed to anger one of the Democratic Party's core constituencies, the teachers' unions. (The remaining $650 million will go to innovative local school districts and nonprofits.) With Duncan handling the ball, the Obama Administration is about to square off with the unions over perhaps the most controversial classroom issue of all: the idea that teachers should be held accountable for the success or failure of their students.

The Everest of Reforms

For all the money at his disposal, Duncan is not making it easy to get. To qualify for the cash, states are being encouraged to remove laws limiting the expansion of public charter schools (which are typically exempt from union rules and other regulations), sign on to common standards, develop a strategy to turn around their worst-performing schools and work toward building better data systems.

But the provision that has provoked the greatest outcry is a requirement that states drop any legal barriers to linking student test results and teacher performance. After years of dancing around the issue, Washington wants to know which teachers produce the best and worst students and is finally backing up that desire with real money.