[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2010/images/02/01/art.obama.duncan.0201.gi.jpg caption="President Obama and Arne Duncan visited with sixth grade students last week."]Washington (CNN) - In the president's budget proposal released Monday, the Department of Education would get a 7.5 percent increase in discretionary spending for 2011 under a plan the secretary of education describes as a "cradle to career agenda."
States will have to compete for the vast majority of the new dollars
This is a shift in the way federal education dollars have been allocated in the past.
"We are absolutely philosophically and strategically moving more money – a lot of money – into a competitive basis. And what we want to do is continue to build upon what we've learned through Race to the Top," said Education Secretary Arne Duncan.
Speaking on a conference call with reporters, Duncan said that "when there are real carrots out there, when you're rewarding excellence, we've seen just tremendous progress around the country."
The Race to the Top program is currently in its first phase. Forty states and the District of Columbia have submitted applications to receive the money. The Education Department expects to announce the recipients at the end of April 2010.
The budget proposal includes $1.35 billion to expand the program, on top of the $4 billion that has already been set aside in the American Recovery and Reinvestment Act.
The education portion of the budget proposal also includes a $3 billion increase in kindergarten through 12th grade programs, with an additional $1 billion if Congress overhauls the Elementary and Secondary Education Act, also known as the No Child Left Behind Act.
"We'll be creating a limited federal role in education," Duncan said. "We will focus on raising standards for all students, rewarding success in schools, supporting and rewarding effective teachers and leaders, turning around low performing schools, and helping schools develop a well-rounded education."
For college students, the budget proposal includes an increase in Pell Grants, which are geared toward students with financial need. It also includes money to support shifting the student loan business from banks to other private and non-profit companies, something that Duncan said he believes will save money in the long run.