Maryland was in the minority of states not scrambling to file an application for federal education money Tuesday, after state school Superintendent Nancy S. Grasmick decided it wouldn't be a strong contender in the highly competitive race.

U.S. Secretary of Education Arne Duncan said Tuesday that 40 states and Washington, D.C., applied for the first round of the $4 billion in Race to the Top funds. Other states will have a second chance in June and perhaps in October, he said in a news conference.

President Barack Obama announced Tuesday that he will ask Congress to approve another $1.35 billion for Race to the Top, but Duncan said he has not decided how that money will be allocated.

"I would have preferred to see us in the first round," Gov. Martin O'Malley said Tuesday, but "perhaps there are things we can learn from other states in their applications." O'Malley at one point had proposed going against Grasmick's wishes and having his office file the application.

But he said Tuesday that he had recently spoken to Grasmick and the state school board and that they had agreed "to a much more open and transparent process with the application."

O'Malley said a working draft would be put online soon to "help demystify" what the state needs to do.

The Race to the Top funds are intended to encourage states to adopt laws and regulations that encourage reform. The U.S. Department of Education has said it will give money to states that allow charter schools to flourish, use student test data as part of teacher evaluations, decide to close the worst-performing schools and encourage changes at struggling schools. In addition, Duncan has said he wants to see policies that encourage better teaching.

Even before a single dime has been handed out, states have rushed to change regulations and laws to be competitive for the funds.

Duncan said very few states would be awarded money in the first round in the spring. "This is not a race to the middle; this is a race to the top," he said, adding that states should not only have the right policies in place, but have people who are committed to carrying out education reform. Some state education leaders have been unable to get all their local school districts to commit to carrying out reforms.

Legislatures in Michigan, Massachusetts and California have all recently passed packages of education reform laws that will make them more competitive, said Andy Smarick, a visiting fellow at the Thomas B. Fordham Institute.

Maryland's legislature has not taken up the issues, and it seems unclear who would introduce legislation that Grasmick said she would like to see passed, such as requiring teachers to put in more time to earn tenure, linking student test scores to teacher evaluations and requiring local unions to bargain over whether teachers can receive incentive pay to work in courses where there are shortages of instructors, such as science, math and foreign languages. A spokesman, Bill Reinhard, said Grasmick has discussed the issues with legislators.

"I think the legislature should take a serious look at Dr. Grasmick's reform proposals to allow Maryland to be competitive in the Race to the Top," said Bebe Verdery, education director of the Maryland American Civil Liberties Union. "It is a substantial amount of money, and children in low-performing schools could really benefit from the assistance that money could bring. ... To leave that on the table would be tragic."

While education officials in other states worked hard to position themselves to get the federal stimulus money, Maryland was slow to get started.

Leading contenders are considered to be Florida, Louisiana and Colorado, said Smarick, who has been closely following the national race. Tennessee also might be in the forefront of states that have policies Duncan is likely to look at favorably.

"Given where those states are, Maryland is miles behind," Smarick said.

Maryland could still catch up, but Grasmick believes the state will need to make some significant changes. Whether O'Malley is willing to push for legislation and ask the teachers union to make concessions is still a question, Smarick said. O'Malley, for instance, has said he is not sure a change is needed in the charter-school law. Last week, the National Alliance for Public Charter Schools said the state had the nation's weakest charter-school law.

Baltimore Sun reporter Julie Bykowicz contributed to this article.