Dangling the promise of $5 billion in grants, President Barack Obama on July 24 pressured states to embrace his ideas for overhauling the nation's schools -- ideas that include performance pay for teachers and more charter schools.

To get the money, state officials might have to do things they, or the teachers' unions, dislike. But in a recession that is starving state budgets, the new "Race to the Top" fund is proving impossible for some states to resist.

Already, seven states--Tennessee, Rhode Island, Indiana, Connecticut, Massachusetts, Colorado, and Illinois--have lifted restrictions on charter schools so they can compete for the money.

"Not every...

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