WASHINGTON - The Department of Education said on Thursday that 15 states and the District of Columbia are in the final running for new stimulus grants to be distributed this spring.

The states, which include financially strapped New York and Florida, will send representatives to the nation's capital for one more round of judging in the Race to the Top grant program.

The $787 billion American Recovery and Reinvestment Act allotted $4.35 billion for the program, which will have two phases of funding.

The Education Department said it will award half or less of the money available in April in the first phase to save funds for the second phase.

We are setting a high bar, and we anticipate very few winners in Phase One, Education Secretary Arne Duncan said in a statement.

Applications for the second phase are due June 1.

In the days to come, we will be reviewing the proposals of the finalist states with an eye on improving our application and making another bid for the second round of Race to the Top funding, said Governor Brad Henry of Oklahoma, a state that did not make the cut.

The grants are designed to spur innovation in education and boost support for semi-autonomous charter schools. President Barack Obama has asked Congress to back yet another round of Race to the Top with $1 billion after the two-year stimulus plan ends at the end of 2010.

Altogether, 40 states and the District of Columbia applied in the first phase, and any state that does not receive funds may apply in the second stage.

Rhode Island, which has had one of the highest unemployment rates in the country for more than a year, was selected as a finalist. Illinois, where Duncan once served as chief executive of Chicago schools, and its Midwestern neighbor, Ohio, were also selected.

The South dominated the list, with North Carolina, South Carolina, Tennessee, Georgia, Kentucky and Louisiana all advancing to the final round of applications.

Governor Jim Doyle of Wisconsin said his state's plan to boost early childhood development, address achievement declines between middle school and high school, and increase teacher quality was rejected. The state is not committed to reforming Milwaukee public schools, which have had to increase class sizes and lay off educators, he said.

The train is leaving the station. But because the Milwaukee School Board continues to cling to the status quo -- and because the State Legislature has so far failed to make real reforms -- Wisconsin is not on that train, he said in a statement.

(Reporting by Lisa Lambert, additional reporting by Karen Pierog in Chicago; editing by Jeffrey Benkoe)