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St. Paul has suffered another setback in its experiment to improve educational outcomes for children in a high-poverty area.


For the second year in a row, the St. Paul Promise Neighborhood did not receive a coveted grant from the U.S. Department of Education. The local effort aims to build stronger neighborhoods, and at the same time, chip away at Minnesota's stubborn achievement gap between whites and students of color.


The financial setbacks are forcing the city, schools, and other partners to raise tough questions about the future of the initiative.


Last month, St. Paul learned once again it was not on the list of nearly 20 communities that won a piece of the Obama administration's Promise Neighborhood fund. The news was a letdown to Kristine Martin, vice president of the Wilder Foundation.


"From the mayor to the county, to the Wilder leadership, and of course to the community, we were really disappointed," Martin said.


Her group and other local partners were seeking up to $28 million that would have been spread over five years. The application pledged to build a pipeline of education, health care and other services to help youth ranging in age from birth to 21 years, or as some supporters say, from cradle to career. That ambition may need to be downsized, at least for now, Martin said.


"We will start to think through how do we shrink," Martin said. "How do we scale back the bigger vision into a more manageable vision, and really focus on birth to fifth grade?"


The St. Paul Promise Neighborhood encompasses about 250 blocks in the Frogtown and Summit-University areas (

). It's a place where foreclosures have left streets pockmarked with vacant homes.


And families, especially those of racial minorities, are struggling across several key measurements, ranging from home ownership to kindergarten readiness. The St. Paul Promise Neighborhood won a $500,000 planning grant from Washington in 2010, but applications for implementation grants were snubbed in subsequent years.


The bad news comes just as a similar model 11 miles away in north Minneapolis is aggressively ramping up. The Northside Achievement Zone is working with a $28 million Promise Neighborhood grant that it was awarded in 2011, roughly the same amount St. Paul was seeking.


Having poor communities compete for limited federal dollars may seem like a crude version of "Survivor." It illustrates a debate that big thinkers in education struggle with, said Kent Pekel, president and CEO of the Minneapolis nonprofit research group Search Institute.


"This comes up in education a lot: 'If it's a good thing, is it unethical or wrong not to give it to all kids?' There's two answers to that," Pekel said. "One, you may not have enough money to do it for all kids, or all communities. But number two, until we really know something works, should we give it to all kids?"


Pekel said if the role of the federal government is to support innovation and reform, there probably need to be some winners and losers.


"The theory is, you're funding some good bets," Pekel said. "You're funding communities that you think are going to be most likely to have success and build a model that others can learn from and replicate."


The U.S. Department of Education says the St. Paul Promise Neighborhood ranked in the top 15 percent of communities seeking implementation money last year. More than 200 applicants across the country applied for grants to either plan or implement their Promise Neighborhoods. Scorecards provided to the Wilder Foundation show judges gave high ratings to the St. Paul application, but took off points for what appeared to be technical matters.


"In the end, the number of quality proposals for Promise Neighborhoods simply exceeded the grant funds available," a department official said in an email to MPR News.


One reason the St. Paul Promise Neighborhood thought it had a good shot at the federal money is the area's diversity. Jackson Preparatory Magnet Elementary, where the vast majority of students are Asian American, is considered a low-performing school. The school offers instruction in both Hmong and English as part of a special dual-language program.


The other elementary school in the Promise Neighborhood is Maxfield Magnet, which is predominantly black. Almost every student qualifies for free or reduced lunch. Identified by the state as one of Minnesota's worst-performing schools, Maxfield is in the middle of a so-called turnaround program.


Both schools are testing culturally specific strategies that if successful, could be a model for other schools. Minnesota has one of the largest gaps between white students and students of color in the nation.


Maxfield's principal, Nancy Stachel, said with or without the Promise Neighborhood funding, her school will continue with those reforms.


But Stachel is concerned that the loss might put a crimp in plans to expand services offered by community partners. The Promise Neighborhood requested money to pay for out-of-school activities, such as nurse home visits to first-time moms and literacy programs for middle-school kids.


"It was everything — from creating safe communities, to stability in housing, to employment resources, to quality childcare," Stachel said of the early plans. "It was a wide variety of things that all come together to create a strong stable community that children will grow and excel in."


"All that will happen to some degree," Stachel added, but the extent of which is unknown.


Wilder Foundation officials say pieces of the program will still continue. It still has about $500,000 in the fund, raised in part by local matching funds.


More than 60 families have received scholarships from federal Race to the Top funds to send their kids to early-childhood education programs. Many more spots are available, said Jane Eastwood, education director for the city of St. Paul.

STILL TRYING FOR CRADLE-TO-CAREER STRATEGY


City Council Member Melvin Carter, an early champion of the project, said he still envisions a cradle-to-career strategy. But it might take longer to achieve that now.


"It'd be a lot more fun to have gotten that money," Carter said. "But we've always said this is something that we're committed to, whether we get a windfall of federal dollars or not. Winning the lottery can never be 'Plan A.'"


Despite missing out on a big infusion of federal funding, supporters say the St. Paul Promise Neighborhood might be better positioned to succeed over time.


"You could see it as the glass is half full," said Pekel, of the Search Institute. "The good news is, whatever they build with local resources has a good chance of being sustained by local resources."

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For the second year in a row, the St. Paul Promise Neighborhood did not receive a coveted grant from the U.S. Department of Education.

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