In California's public school classrooms, students may not be the only ones worrying about their grades in the near future.

Faced with a dire choice of being loyal to the state's powerful teachers union or claiming their share of billions of dollars in new federal funding, Sacramento legislators are re-evaluating a law that prevents the state from tying student test scores to teacher performance.

At stake is California's ability to compete with Florida, Texas and other states for $4.35 billion in education stimulus dollars. The 2006 law is a sticking point in a political feud between the Obama administration and state educators, and Education Secretary Arne Duncan has strongly signaled that California likely will be disqualified from the new "Race to the Top" funds if the law remains on the books.

Advocates have long argued that data linking student achievement directly to teachers is a critical piece of serious education reform. But teachers unions have long fought off attempts to tie together the two, saying it will unfairly lead to teachers being paid and promoted based on test scores.

"States around the country are constructing data warehouses, and they should be," said Terry Moe, a political-science professor at Stanford University. "But the unions are doing everything they can to make it illegal to use student test scores to evaluate teachers. It's a power play."

The competitive federal grants, announced last month, are designed to spur certain education reforms. Key among them is urging states to improve what is often a patchwork system of different student and teacher databases into one integrated, statewide system.

"In California, they have 300,000 teachers. If you took the top 10 percent, they have 30,000 of the best teachers in the world," Duncan said in a June speech. "If you took the bottom 10 percent, they have 30,000 teachers that should probably find another profession, yet no one in California can tell you which teacher is in which category. Something is wrong with that picture."

The proposed "Race to the Top" guidelines stress that states wanting to compete for a piece of the pie must not have any laws or "firewalls" in place that prevent the use of student achievement for evaluating teachers. Unless California changes its current law it will be out of the running.

California has been building separate student and teacher data systems for years. Eventually, the state will be able to follow student progress over time, as well as find out if, say, smaller class sizes really make a difference, or if teachers with master's degrees are more effective.

But language in the bill prohibits the state from linking student data to teacher data "for the purposes of pay, promotion, sanction, or personnel evaluation." Though the state doesn't currently hire or fire teachers, teachers wanted the language included as a safeguard against the state using such information in the future.

"CTA believes that pay and evaluation decisions should be made at the local level," said Becky Zoglman, spokeswoman for the California Teachers Association. "That's where they are made now, and that's where they should remain. In the end, this is a political fight that is going to cost California's students. Is that really what Secretary Duncan and President Obama want?"

Teachers have little control over which students sit in their classrooms; one teacher may have several students who are struggling to learn English or have learning disabilities. Teachers worry that merit pay or other salary issues will ultimately be tied to test scores, punishing those who were assigned challenging classes.

State Superintendent of Public Instruction Jack O'Connell and others have said the federal government simply misunderstands the intent of the state law.

"This is simply a matter of local control that appropriately ensures school districts handle their own personnel decisions," he said.

But the federal government has taken exception to the caveat. And if a compromise can't be reached, California may have no choice but to change the law. With education dollars scarce, there's enormous pressure for the Golden State to be seen as a player on the national stage.

"California will fight to be competitive for each and every possible Recovery Act dollar — and this instance is no different," said Gov. Arnold Schwarzenegger in a statement. "We will seek any reforms or changes to the law deemed necessary."

Last week, state Sen. Gloria Romero, chairwoman of the Senate Education Committee, called for a public hearing.

"The tempest in the teapot is over one paragraph of the bill," said state Sen. Joe Simitian, a former Palo Alto school board member who authored the bill. "But it could be a very expensive teapot. If we're not eligible for Race to the Top funds — the potential cost to California is millions and millions of dollars."

Reach Dana Hull at 408-920-2706.