WASHINGTON -- States will hurt their chance to compete for millions of federal stimulus dollars if they fail to embrace innovations like charter schools, Education Secretary Arne Duncan said Thursday.

Duncan was responding to a question about Tennessee, where Democratic state lawmakers have blocked an effort to let more kids into charter schools.

"States like that would not be helping their chances, I can say that," Duncan told The Associated Press during a visit to a high school in the Washington suburb of Alexandria, Va.

President Barack Obama wants to expand the number of charter schools, a daunting task in many states with laws that limit their numbers. The president argues that charter schools are creating many innovations in education today.

Charter schools are publicly funded but operate independently of local school boards, often free from the constraints of union contracts in traditional schools. As a result, they are hotly opposed by teachers and other critics who say they drain money and talent from other public schools.

But the federal stimulus law gives Obama a powerful incentive to push the expansion of charter schools. The law set up a $5 billion fund to reward states and school districts that adopt innovations the administration supports. The fund is part of $100 billion for education over the next two years.

"We want to reward those states that are willing to lead the country where we need to go and are willing to push this reform agenda very, very hard," Duncan told the AP.

"There are a number of states that are leading this effort, and we want to invest a huge amount of money into them, a minimum of $100 million, probably north of that," he said.

"And the states that don't have the stomach or the political will, unfortunately, they're going to lose out," Duncan said.

Tennessee is a logical candidate for the stimulus money. The state recently overhauled its graduation requirements, academic standards and state tests, all among Obama's priorities. Tennessee had been criticized for having weak standards because its kids passed state exams, yet did poorly on well-regarded national tests.

State officials have been talking about what they might do with the stimulus money. One idea is to create an early warning system that identifies kids at risk of dropping out. Another is to make its exhaustive warehouse of student tracking data much less cumbersome for teachers to use.

At the same time, Tennessee has perhaps the most restrictive charter school law in the country. The number of charters is capped at 50, and only failing students in failing schools are eligible to attend.

A bill in the state legislature would allow any child getting free or reduced-price meals to attend a charter school, but the cap would remain. About 16 charter schools are open in the state.

However, the Democratic caucus blocked the measure earlier this month in the House Education Committee. Only a couple of weeks remain before lawmakers adjourn for the year.

Republican state Rep. Beth Harwell, who sponsored the bill, said she's worried the state will hurt its chances at the stimulus money.

"I'm very concerned," Harwell said. "It's like we're shooting ourselves in the foot. I just would hate to see us lose this opportunity."

Duncan's comments came during a visit to Thomas Jefferson High School for Science and Technology. Duncan spoke at a research symposium, then held a brief interview with reporters for the school newspaper and yearbook.