The $4.35 billion Race to the Top fund might be about to get a little smaller.

Rep. David Obey, D-Wis., the chairman of the House Appropriations Committee, just introduced the latest version of the edujobs bill, which would appear to skim some $500 million from the administration’s signature education reform initiative in hopes of coming up with $10 billion to help stave off layoffs.

And that’s not all. From my reading of the draft now up on the House Rules Committee website, it seems another $200 million would come out of the Teacher Incentive Fund, which helps districts create pay-for-performance programs. That program received $400 million this year, plus $200 million under the American Recovery and Reinvestment Act.

The draft bill also would cut $100 million appropriated to the U.S. Department of Education in fiscal 2009 for innovation and improvement. It looks like that refers to the part of the law that deals with charter schools.

All this is intended to come up with $800 million in cuts from Education Department discretionary grants, which Democrats said they would seek in order to help fund the education jobs bill.

The proposed cuts to Race to the Top would leave $2.9 billion in the pot to reward states for making progress on certain education redesign assurances, assuming that the Education Department doesn’t elect to take the cut out of the $350 million Race to the Top assessment competition. (It looks to me like the bill doesn’t target the cut to one part of the program or the other.)

Watch this space for more details.

UPDATE:The implications of this move are not lost on the GOP. Rep. John Kline of Minnesota, the top Republican on the House Education and Labor Committee, just put out this statement:

“Democrats have shown their true priorities, jumping at the chance to discard education reform to salvage an unpopular bailout for the education establishment,” he said.

Do you think that some Democrats will have similar misgivings, given that this is a real shot across the bow for the Obama agenda? Is getting rid of parts of TIF and Race to the Top, not to mention charter grants, a worthwhile trade for edujobs?

UPDATE 2: Here’s what John See, a spokesman for the American Federation of Teachers, told me in an email:

We support Chairman Obey’s bill to keep educators working and protect core education services. We preferred the larger emergency bill, which didn’t cut education programs like the Teacher Incentive Fund and Race to the Top. We were not involved in what the offsets would be, or even told about them in advance.

UPDATE 3: I asked Peter Cunningham, a spokesman for the U.S. Department of Education, whether he thought the cuts to key education redesign programs were worth the tradeoff for edujobs.

“No,” he told me, “We think that these reform programs are needed to move [student progress] forward.” He said the programs are “very important and driving a historic amount of change.” And he noted that there is “huge demand” for the funds...We think jobs and reform are both needed.”

He reminded me that the Education Department supported an earlier version of the edujobs bill that would have provided $23 billion to stave off layoffs, without cuts to other programs. “If Congress is determined to find offsets, we will help them do that, but these are not the right ones.”

UPDATE 4: Check out my story on the offsets here.