October is the deadline for states to apply for stimulus money for education -- $4.3 billion are up for grabs.
But to receive those federal grants, California like other states, must submit an education package proposing changes in the way we educate kids.
"It could mean hundreds of millions of dollars for our schools and for our students," said Governor Schwarzenegger R-CA.
In his plan the governor calls for adopting a merit pay system, rewarding teachers for their work, adding more charter schools, allowing students at low-performing schools to transfer and using a student's performance to evaluate a teacher.
This is what Secretary of Education Arne Duncan told some of the state's education leaders during his visit to San Francisco last May.
"We want to bring unprecedented resources to this state, but the state has to push a very strong reform agenda in return," said Duncan last May.
On Friday, Secretary Duncan said he was encouraged by the governor's proposal. But most of Schwarzenegger's plan is not welcomed by the California Teachers Association.
"Even though it's one time money, coming in to the state can be very advantageous, but at what cost? Do you sacrifice the due diligence and the thoughtful argument and debate necessary for major policy decisions?" said Dan Vogel from the California Teachers Association.
"The nightmare scenario is that one teacher is going to get a pay raise because their kids bubbled in better than the teacher who was focusing on creative cooperative learning and community projects and it could turn teachers against each other," said teacher Ken Tray.
Lawmakers also expect resistance from the teachers' union.
"They do have good lobbyists but the governor is also a strong advocate for his position. At the end of the day you have to see whatever the ideas will be. What are the consequences of those ideas and will they work," said one California lawmaker.
The unions have been strong supporters of the democrats in Sacramento and in the past, the Democrats have sided with the teachers union when it comes to education reform.
But with this amount of money at stake, it's hard to imagine the governor's education package not passing.