One area of the federal government that could see more money is education as the president is proposing to spend as much as $4 billion more nationally next year on schools.
With state funding at a standstill and facing possible cuts, the prospect of any new money for schools gives the federal government more power in setting the terms.
Even $4 billion more from the federal government will not change the fact that the nation's schools get a lion's share of their money from their states.
But state budgets are pinched -- Minnesota's deficit tops a billion dollars - and that's just for the remaining five months on this current fiscal year.
The Lakeville district's budget is 80 percent state money, and Superintendent Gary Amoroso predicts that portion will stay flat for at least four years. Even as costs for things like health care and teacher pay keep increasing.
"When 80 percent of your budget is frozen for four years, you begin to look anywhere you can for resources," Amoroso said. "As I've had some conversations with people, it's a matter of 'what are you willing to sell your soul for?'"
Enter the federal government - promising this week to spend $3 billions to $4 billion more on schools next year. Local education leaders realize this could be the only new money they might get for a while.
The federal government knows this, and it will use that fact to get the changes it wants from districts. U.S. Education Secretary Arne Duncan said as much this morning in an interview with MPR.
"Simply investing in the status quo is not going to get us where we need to go," Duncan said. "We need to get dramatic reform, and we have to get better results for children at every single level."
Those reforms include linking student test scores to teacher performance and creating more charter schools.
Most education money from Washington has for years been doled out based on formulas, but a major change is afoot. Without offering specifics, Duncan said next year's budget will focus more on money that's awarded competitively.
Duncan's efforts were bolstered in recent weeks by one of those competitions known as Race to the Top.
The Obama administration identified reforms it wants to see made, and let states vie for the money, based on who will do the best job of making those changes.
But a funny thing happened on the way to the Race - something that even surprised federal officials.
Several states changed their own laws just to make their applications more attractive. Keep in mind - No Race to the Top money has been awarded. Yet some states, for example, went from banning charter schools to allowing them - on the chance it might mean scoring some of that money.
Minnesota, by the way, didn't change any of its laws. But there are indications that many facets of Race to the Top will be used in the revamping of the No Child Left Behind law, a task that Congressional leaders have indicated they want to tackle this year.
Tom Dooher, president of Minnesota's teacher's union Education Minnesota, worries about portions of Race to the Top that he calls 'prescriptive'
"The goals are very laudable and we can agree with a lot of those pieces," Dooher said Thursday. "But I think there's some very prescriptive pieces that are not going to be helpful for Minnesota, specifically."
"So we want to make [sure] that we take the best of Race to the Top, and when they reauthorize The Elementary and Secondary Education Act, that those pieces get in there."
Moving to more competitive federal funding, and having that funding be possibly the only new school money in the near term, further changes the dynamic between federal, state and local control of schools.
Secretary Duncan insists this does not represent a federal takeover of education.
"What the country needs is a common definition of success; not a prescription for how you get there," Duncan said.
In other words, let states and local school boards figure out the details.
Greg Abbott, with the Minnesota School Board Association, said there was a big shift when President Bush's No Child Left Behind law was passed, and the system is now in the middle of another shift.
"It used to be, you elected school board members to run your school but a lot of the policies were run by the state," Abbott said. "I think the realization is that we have to have that same conversation and that same cooperation with the federal government because the federal government, whether we like it or not, is getting more involved in education."
One group, called the National Conference of State Legislatures, plans to release a report on Monday, outlining some of the criticisms with how the federal versus state versus local control question has played out in recent years.
Minneapolis School Board member Pam Costain said that shift isn't all bad, because she said the White House has identified laudable goals.
"One, to close the achievement gap - which is a serious issue for the country - but secondly to make our education system competitive with the rest of the world which, frankly, it's not right now," Costain said.
The federal Education Department will release more details next week on the president's budget.