The starting gun has been fired in the federal $4 billion Race to the Top competition, with final guidelines released today by the U.S. Department of Education.

State applications to compete for these federal education dollars will be due by mid-January 2010, with winners announced in April 2010. Losers will be invited to apply for a second round with applications due June 2010 and winners announced in September 2010.

The size of the awards is dictated by the number of children age 5-17, with the Department unofficially indicating that the larger states (New York, Florida, Texas, California) could win from $350 million to $700 million, reports Education Week.

Given New York's fiscal troubles -- Governor David Paterson has warned that the state could run out of money as early as December -- this is not a competition the state can afford to lose.

New York has an uphill battle on multiple fronts, but a law adopted last year at the request of New York's teachers unions has caused much angst. This law stipulates that student progress may not be used to determine a teacher's eligibility for tenure, commonly called a "data firewall."

Earlier in the year, President Barack Obama and U.S. Secretary of Education Arne Duncan drew a line in sand stating that any state that prohibited the use of student data in teacher evaluations simply was not eligible to apply for Race to the Top funds.

Specifically, Obama warned: "Any state that makes it unlawful to link student progress to teacher evaluations will have to change its ways if it wants to compete for a [Race for the Top] grant."

Initially, Duncan specifically highlighted four states with this problem: California, New York, Nevada, and Wisconsin.

California facing an even more extreme financial crisis than New York repealed its data firewall a few weeks ago at the recommendation of Governor Arnold Schwarzenegger. Wisconsin Governor Jim Doyle has proposed repeal. And, New York officials appear willing to let New York's law expire in April 2010, as currently scheduled. Only Nevada is rolling the dice and standing its ground.

Under the new guidelines, according to the Education Department: "At the time the State submits its application, there must not be any legal, statutory, or regulatory barriers at the State level to linking data on student achievement or student growth to teachers and principals for the purpose of teacher and principal evaluation" (emphasis added).

This "eligibility requirement" would appear to disqualify New York from applying in Round 1 since its data firewall does not sunset until April 2010, but New York Regents Chancellor Merryl Tisch and, privately, U.S. Senator Chuck Schumer have been telling state officials that they have been assured that the Department will not rule New York out of consideration, in part because New York's law only applies to tenure decisions.

The distinction between using data for teacher evaluations vs. for tenure decisions is a strained one since tenure decisions ultimately are teacher evaluations. Nonetheless, Joanne Weiss, who is in charge of the Race for the Top competition, confirmed New York's eligibility to me in a public forum earlier this year.

That, of course, does not mean that New York's data firewall will not be considered a negative factor, even if it is not a disqualifying factor. This is an important distinction the teachers unions are hoping no one focuses upon.

One presumes that the Obama administration will seek assurances that New York's law will sunset as scheduled, rather than risk the embarrassment of New York receiving a Race to the Top award in April 2010, and then extending the data-firewall law days or weeks later.

New York should not take great comfort in the simple fact that its application will be eligible. As Secretary Duncan said this week: "This is not about getting in the game, this is about winning. There will be more losers than winners."