Given that California public schools have gotten $17 billion less in state funding, less than they were expecting over the last two years, they were really looking forward to getting some of this extra federal money.
California's second round application for the controversial Race to the Top school reform grant received more than 423 points, ranking 16th out of 19 finalists. That's just 17 points below Ohio, the lowest scoring state that got funding.
"I'm deeply disappointed," says State Superintendent of Public Instruction Jack O'Connell.
Education leaders say the $700 million California was eligible for could have helped pay for major school changes that were difficult to get through the Legislature, things like tying teacher evaluations to student test scores, firing staff at low-performing schools, and allowing failing campuses to convert to charter schools.
"The absence of this money means many of the reforms contained in this application will be more difficult and it will be slower to obtain," says O'Connell.
Some partly blame the teachers' unions for California falling short. While more than 300 school districts and county education offices signed the application promising to implement the reforms, federal evaluators in Washington D.C. noted neither of the state's two major teachers unions had done so.
Critics think that might have caused California to fall below the cut off line.
"I think had there been a greater support from and a buy-in from the teachers unions, the leadership of the teachers unions, because the rank-and-file teachers are ready to go, that I think we would have passed the line," says St. Sen. Gloria Romero, D-East Los Angeles.
"I don't disagree," says Jeff Freitas from the California Federation of Teachers.
The teachers unions don't dispute that California could have gotten a higher score if they had thrown in their support, but say they were not consulted in the changes and are not convinced the reforms will work.
"It's not that we didn't buy into the reforms. It's we've never been asked to participate in the creation or direction of where California was going," says Freitas.
Gov. Arnold Schwarzenegger was in the central coast Tuesday and he too blamed the teachers unions.
"It's just that labor has been fighting those reforms because they're more interested in what's good for them than what's good for the kids," says Schwarzenegger.
U.S Education Secretary Arne Duncan hopes to have a third round of funding and has asked for more than $1 billion in next year's federal budget.