To win a grant in the U.S. Department of Education’s new Race to the Top competition for early-childhood education aid, states will have to develop rating systems for their programs, craft appropriate standards and tests for young children, and set clear expectations for what teachers should know.

That’s according to the proposed rules released today by the Obama administration that will govern the $500 million competition, which was made possible by the fiscal 2011 budget deal Congress passed in April.

U.S. Secretary of Education Arne Duncan was given $700 million in new Race to the Top money, and chose to put most of it into early education, while keeping a $200 million slice to award to runners-up from last year’s competition. (Details of that separate contest have yet to be announced.)

The Race to the Top-Early Learning Challenge awards will range from $50 million to $100 million, depending on a state’s population, and the contest is open to all states, not just the winners in last year’s competition. This could be especially attractive for small states, which were eligible for maximum grants of $75 million in the first edition of Race to the Top. For big states, $100 million won’t go as far; the biggest states in the original Race to the Top won $700 million each. For this early-learning competition, four states—California, Florida, New York, and Texas—are eligible for $100 million.

In crafting this new iteration of Race to the Top, the Obama administration is building upon the success of last year’s $4 billion competition, which pushed states to embrace charter schools, merit pay for teachers, and better data systems. This competition is designed to improve the quality of and access to early-childhood programs, and to eliminate some of the “vast inequities” in care, said Special Assistant to the President for Education in the White House Domestic Policy Council Roberto Rodriguez, speaking in a call with reporters Thursday afternoon.

“We believe this Race to the Top can have the same kind of impact,” Rodriguez said. “How do we really do more to boost the quality of our early-learning programs?”

Under the competition guidelines developed by the Education Department—working with the U.S. Department of Health and Human Services—a winning state must:

"• Come up with and use early-learning and development standards for children, along with assessments;
• Develop and administer kindergarten-readiness tests, and develop rating systems for early-education programs;

• Demonstrate cooperation across the multiple agencies that touch early-childhood issues (from departments of health to education), and establish statewide standards for what early-childhood educators should know;

• Have a good track record on early learning, and an ambitious plan to improve those programs;

• Make sure early learning and prekindergarten data is incorporated into its longitudinal data system.”

(And no, states do not have to develop pay-for-performance plans for early childhood teachers—which was an important component in the first Race to the Top competition.)

In a nod to rural districts and advocates, who often feel overlooked by the department, the Obama administration says it may go out of its way to reward states with large rural populations, potentially bypassing a higher-scoring urban state in favor of lower-scoring rural state.

Just as in the original Race to the Top, this competition will rely on outside judges to pick the winners. But the ultimate decision rests with Duncan.

Because the department has to get these awards out the door by the end of this year, officials have waived the typical rulemaking process. But they are asking for input. The public can comment on the proposed criteria through July 11. Applications will be available in late summer, and awards will be made by the end of the year. States will have until Dec. 31, 2015 to spend their winnings.