MONTPELIER, Vt.- Vermont will not seek millions of dollars in a federal grant program aimed at improving failing schools, joining a handful of states in dropping out of the “Race to the Top” program despite strapped budgets.

The competitive grant requires states to link teacher pay to student performance and invest in charter schools, which would require legislative changes in Vermont, commissioner Armando Vilaseca said Monday.

After spending hundreds of hours reviewing the application and program, the state will not apply, Vilaseca said.

“We have still room to improve but this program doesn’t move us in the direction where we feel we should be going in,” he said.

Vermont could have been eligible for $40 million, which would have amounted to about $500,000 per supervisory union over four years, if the state’s grant had been successful, education officials said.

Vilaseca said the program is better suited to urban underperforming schools, but the U.S. Department of Education disagreed.

“Race to the Top gives all states, both urban and rural, a chance to dramatically improve the lives of children. We hope every state applies and puts its best foot forward,” press secretary Justin Hamilton said.

Maine earlier this month passed legislation paving the way for the state to apply for up to $75 million in grants under the program.

Tennessee and Delaware became the first states in March to win grants from the $4.35 billion Obama administration program aimed at improving student performance, with $500 million going to Tennessee and $100 million to Delaware.