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Through the Race to the Top (RT3) Program, the federal government incentivized policy changes at the state level in exchange for the possibility of increased funds. This study places RT3 in the context of federalism, and evaluates why state policymakers decided to apply, or not, in round two of the competition. Framing the study in the theory of borrowing strength, the study explores the issues of capacity and policy momentum in four states that varied in the RT3 decisions they made. The study concludes that state policymakers borrowed strength to increase capacity and policy momentum, but questioned the long-term costs of the policy changes. The study also explores how RT3 may influence educational federalism in the future.