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President Barack Obama is challenging the 50 U.S. states to reform their education systems.  The president says the U.S. needs better schools to compete in the 21st century global economy.

President Obama is offering billions of dollars in government grants to states which enact broad reforms in their schools.

"We are putting over $4 billion on the table -$4 billion, with a 'B'-one of the largest investments that the federal government has ever made in education reform," said President Obama.

At a middle school in the North Central state of Wisconsin, the president said some states, but not all, will have a chance to compete for the money.

"We are saying to states, 'If you are committed to real change in the way you educate your children, if you are willing to hold yourselves more accountable, and if you develop a strong plan to improve the quality of education in your state, then we will offer you a big grant to help you make that plan a reality," said Mr. Obama.

One year after he was elected, Mr. Obama said his administration's first priority was to keep the U.S. economy from collapsing.  He said the nation's long-term economic health depends on the quality of its schools.

"In the 21st century, when countries that out-educate us today will out-compete us tomorrow, there is nothing that will determine the quality of our future as a nation and the lives that our children will lead more than the kind of education we provide them," he said.

State and local governments determine most education policies in the U.S., but the grant money is expected to give the White House increased influence.

The president says some states are moving in the wrong direction, endangering the country's economic competitiveness.

"The United States, a nation that has always led the way in innovation, is now being outpaced in math and science education," said President Obama. "A handful of states have even gone in the wrong direction, lowering their standards at the very moment that they should be raising them."

Mr. Obama praised Wisconsin and nine other states which have updated their education laws and made deals with the unions that oppose some of those changes.

The education grants will come from the $787 billion economic stimulus approved early this year.