In the American federal system, the vast majority of public monies are allocated through formula grants. While formulas are the subject of heated political debates and regularly require evidence of eligibility – as well as careful accounting from recipient localities and states, funds are not typically awarded based on assessments of merit, the likelihood of efficacious implementation, or institutional capacity (though recipients must often build capacity in order to administer funds). Formulas may not eliminate opportunities for rewarding political allies and constituents, but they do constrain avenues of influence.

Competitive grants, on the other hand offer more opportunities for politicization, are likely to reinforce existing disparities in institutional capacity between states and localities, and may subsequently risk exacerbating unequal access to public services. At the same time, they have the potential to spur policy innovation, render capabilities and intentions of local and state actors more transparent, and may therefore enable a more targeted and efficient use of public funds (of the sort that is rarely politically feasible through formula-funded programs). 

The Race to the Top (RTT) program offers an opportunity to assess these competing expectations regarding the influence of partisan alliances and institutional capacity on the allocation of public resources through competitive processes. It also offers an opportunity to assess the impact of the competition on the equitable distribution of financial resources. In 2009, as state governments confronted budget crises, the US Department of Education (USED) announced its four billion dollar competition. USED hoped to galvanize progressive reforms with the goal of better preparing students for post-secondary education, improving teacher quality, reducing achievement gaps, and re-orienting failing schools. The grant’s designers promised to reward states with credible, ambitious plans and prior evidence of successful reform.

Using a combination of state-level data from the NCES and data gathered from the applications, we first model the effect of state-level partisanship, interest group influence, and institutional capacity on the dynamics of the competition: participation in the first or second stages of the competition; points awarded across different categories of the grant proposal; likelihood of winning in the first or second rounds; and finally size of the reward (controlling for population size and other factors). We find, confirming the explicit statements from USED and an early analysis by Manna and Ryan (2011), that both capacity and political climate shaped participation and ultimately success in the competition.

We then take our investigation a step further to assess whether or not these partisan and institutional effects translated into an unequal allocation of resources. Again, we use a combination of NCES data and information from state applications to identify whether minority and economically disadvantaged student populations are represented among the winning states (and participating school districts). We then discuss the degree to which RTT funds were targeted at high needs areas across the states. Though many were concerned RTT would exacerbate inequalities by rewarding the highest capacity states and districts, we find that many of the most disadvantaged students are likely to be affected by the program.