Kentucky has been named a finalist for the second round of funding from the federal Race to the Top grant competition and will find out if it wins before the year’s end.

Eighteen states and the District of Columbia were announced as finalists Tuesday, giving them a chance to win a share of $3.3 billion from the stimulus package.

The competition rewards ambitious reforms aimed at improving struggling schools and closing the achievement gap.

Finalists are Arizona, California, Colorado, District of Columbia, Florida, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Maryland, Massachusetts, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island and South Carolina.

Two states, Tennessee and Delaware, were awarded a total of $600 million in the first round of funding. Kentucky was a finalist for the money but did not make the cut.

Education Commissioner Terry Holliday says that experience strengthened Kentucky’s second-round application.

“Our application is strong, and the feedback we received from the first round helped us improve our plan,” he said in a press release Tuesday. 

“I’m optimistic about our chances in this round; however, this application represents not only our plans related to Race to the Top, but our strategic priorities in the coming years.”

The lack of charter schools, which are taxpayer funded but independent of local school board control, may have cost Kentucky millions in the first round of competition. 

Kentucky was one of 16 finalists for Race to the Top money, but the only state to earn zero points for charter schools, Holliday said on his blog in April.

Worth a possible 32 points, charter school legislation could have landed Kentucky in the second-place spot, he said.

Kentucky is the only state among the 19 second-round finalists without charter schools. 

According to USCharterSchools.org, all but one of the competing states has allowed charter schools since the mid-1990s. Maryland adopted them in 2003.

Holliday – who previously served as a public school superintendent in North Carolina, a state that allows charter schools – pushed a bill last spring that would have allowed charter schools in Kentucky, but it died at the end of the legislative session.

The next step is to defend the application to a panel of reviewers in Washington, D.C., who will make the final decisions on winners. 

The U.S. Department of Education will announce the second round of Race to the Top awards in the fall of 2010.

“We are thrilled to once again see Kentucky in the list of finalists for Race to the Top funding,” Gov. Steve Beshear said in a press release Tuesday. 

“Kentucky has shown repeatedly that it is a leader in education reform, and our selection reflects the high quality of our application and reinforces the validity of the work we are engaging in for Kentucky’s children.”

The Associated Press contributed to this report.