JIM LEHRER: Now: the battle between unions and school districts over new federal money.
The "NewsHour"'s special correspondent for education, John Merrow, has our report.
U.S. PRESIDENT BARACK OBAMA: This is one of the largest investments in education reform in American history.
JOHN MERROW: When President Obama announced the grant competition called Race to the Top, educators across the country were eager to apply for a share of the $4.35 billion.
KERRI LEONARD-ELLISON, Easton Area School Board: Finally, the federal government is really identifying -- they're getting it. They're getting it.
JOHN MERROW: Kerri Leonard-Ellison, a member of the local school board in the small city of Easton, Pennsylvania, felt she was being heard at last.
KERRI LEONARD-ELLISON: We want to be successful. We're determined to be successful. We need to be supported.
JOHN MERROW: With Easton's one high school failing for the past six years, and only 50 percent of students scoring at grade level in math and reading, Ellison felt the Race to the Top money could make the difference.
KERRI LEONARD-ELLISON: This is huge. It's a huge opportunity for each and every child that's here.
JOHN MERROW: In early March, Pennsylvania was one of 16 states chosen to come to Washington as a finalist for Race to the Top. Representatives had 30 minutes to defend their plan.
GERALD ZAHORCHAK, Pennsylvania secretary of education: We're nervous.
GERALD ZAHORCHAK: And it's that pregame jitter. I mean, and if it weren't like that, we wouldn't be ready.
JOHN MERROW: If Pennsylvania wins, the state stands to gain $400 million. But Easton, a district with 10,500 students, won't see a penny. Its application was disqualified.
KERRI LEONARD-ELLISON: Our superintendent signed. Our president of our board also signed. And the union president wouldn't sign.
KEVIN DEELY, president, Easton Area Education Association: In Easton, anyway, we disagree with the grant. We don't believe it's right for us here.
JOHN MERROW: Kevin Deely is president of the Easton teachers union.
KEVIN DEELY: Race to the Top would require that we talk about making changes to our contract, and that my members are opposed to that, vehemently opposed to it. So, they directed me to not sign on.
JOHN MERROW: Union opposition prevented at least a third of Pennsylvania's school districts from applying for Race to the Top. Other finalists experienced similar resistance.
In Florida, just 8 percent of teacher unions signed on. In Rhode Island, only 5 percent agreed to participate. And, in Washington, D.C., where they have just one union, the response was, no thanks.
Union officials say a big problem with Race to the Top is that it seems to favor paying teachers based on their students' success, not simply on years in the classroom and degrees held, as is currently the case.
DENNIS VAN ROEKEL, president, National Education Association: Right now, in 50 states, and over the last 50 years, with over 15,000 school districts, they have moved to the same compensation system. There must be a reason. I believe because it works.
JOHN MERROW: Dennis Van Roekel is president of the largest teachers union.
You defend the current system?
DENNIS VAN ROEKEL: I believe it works, yes.
JOHN MERROW: I get paid based on how many years I have been teaching and how many graduate credits I have. It has nothing to do with how my students perform?
DENNIS VAN ROEKEL: I think, depending on how you do the -- the advancement on the salary schedule, there are a lot of ways to do that.
JOHN MERROW: But some teachers are better than others. They are. I mean, there's plenty of evidence showing that some teachers actually deliver real performance gains, and some don't. Should those teachers who deliver those performance gains make more money than the ones who don't? It's a yes-or-no question.
DENNIS VAN ROEKEL: Not only -- not based just on that factor, no.
JOHN MERROW: While Race to the Top doesn't require that teacher pay be connected to student achievement, it does encourage using student performance as one measure of teacher effectiveness. That's enough to upset Easton's union leader, Kevin Deely.
KEVIN DEELY: To base a teacher's evaluation and their worth as an educator on how -- how much their students grow, it -- it just doesn't work that way.
JOHN MERROW: And it doesn't sit well with the NEA's Van Roekel, who taught high school math for 23 years.
DENNIS VAN ROEKEL: Well, in a class, you know, you never know which part of a geometry lesson a class isn't going to get. If, based on my assessments, a quiz or whatever, they didn't get my unit on slope, then what they should be watching for is, what did I do as a result, once I realized that they didn't know it? Did I adjust my teaching? Did I find a new way of doing it? That's what I should be judged on.
So, it's the practice, not the test score.
JOHN MERROW: But the test scores are the measure of the practice.
DENNIS VAN ROEKEL: I don't believe that.
JOHN MERROW: The union president may not believe it, but another president apparently does.
BARACK OBAMA: If a school continues to fail its students year after year after year, if it doesn't show any sign of improvement, then there has got to be a sense of accountability. And that's what happened in Rhode Island.
JOHN MERROW: In February, the entire staff of a failing high school in Rhode Island was fired when their union refused to agree to state-mandated reform. In Easton, and in districts all across the country, the tension seems to come down to a fundamental issue.
KEVIN DEELY: We don't feel that we have a good working relationship, that we can sit down across the table and say, yes, I trust you. I trust that you are going to look out for our best interests, and that we can work together and collaborate on this in a productive way.
JOHN MERROW: Kerri Leonard-Ellison of the Easton School Board calls it by a different name.
KERRI LEONARD-ELLISON: It's communication. There's obviously a critical deficiency in communication.
JOHN MERROW: Of the 16 finalists competing for Race to the Top funding, six are right-to-work states, which means teachers do not need to be in a union. Observers are watching closely to see whether Race to the Top is sending a message to teacher unions: Collaborate, or else.
A second round of competition will take place in the summer.