It may become the first state in the country to refuse to accept federal education funding.

Behind the pique: the belief by state officials that it could cost more to implement new federal guide-lines on school testing than to accept the money.

The revolt here amid the rumpled Green Mountains symbolizes how states across the country are struggling to carry out new accountability standards that lie at the heart of the federal education reform movement.

As states from New Jersey to Nebraska prepare to implement what historians call the most extensive federal involvement in local education in the nation's history – the landmark "Leave No Child Behind" law – some educators and local lawmakers are worried about what that will mean in the classroom.

Even some once-ardent supporters are wary of how the law will translate in thousands of school districts with vastly different challenges and standards.

Of particular concern: The law requires each state to create its own testing regime – so those that set high standards could show high failure rates.

In states like Vermont that already have their own tests, many educators are stunned at the number of schools that would be deemed "in need of improvement." Vermont ranks sixth in the nation in test scores, but 30 percent of its schools would be considered "failing."

In states like Louisiana and North Carolina, as many as three-fourths of the schools may not make the federal grade. Once a school is ranked as a failure, mandatory remedies are required under the law. The federal government will pay for some, but not all of them.

The approach is fueling concern that this federal overhaul will have unintended consequences similar to the federal special-education law passed in the 1970s. It set large requirements and committed the federal government to paying 40 percent of the cost. Washington now pays 10 percent.

Vermont's governor, Howard Dean (D), who has become one of the law's most vocal critics, sees a direct parallel with the 1970s bill. "It may cost us twice as much as they're giving us, and there's no money to pay for it," he says.

Education officials in Washington say the alarm over the "No Child Left Behind" law is unwarranted. They note that many regulations are still being developed, and they're planning to work with states cooperatively, not in a "regulatory" way, as they bring about the transition over the summer. And the secretary of Education will have leeway on whether states face penalties.

They also insist there is plenty of new money. The federal education budget received record increases this year. It's now up to $49 billion. Just over half of that would pay for the new law, which, for the first time, also allows some flexibility in the use of federal funds.

"A lot of this is the understandable anxiety that comes along with fundamental change," says Undersecretary of Education Eugene Hickock. "There are also consequences for having things not improve – which is also new."

That may be new in Washington, but it's not a novelty at the Currier Elementary School, tucked in a rural valley of southern Vermont.

As a result of a state education revolution overhaul several years ago that was designed to improve overall achievement, Currier was targeted for extra help.

Its principal and staff overhauled their curriculum, brought in extra tutors, and increased the amount of testing. The bright cheerful school, with just 110 students, started to improve its overall test scores.

When it became apparent that students still weren't making good enough grades in math, the school brought in yet another innovative program. Now, third-graders like Zachary Beauregard can easily do subtraction and division in their heads.

But last month, principal Ruth Anne Barker was notified her school would be labeled "failing" under the new federal law. That was a blow to her teachers, but Ms. Barker thinks the fault lies with the law.

It requires schools to test each year in selected grades. While states develop their own exams, the federal government has to approve them.

If a school does not make "adequate yearly progress," then it is considered "failing." Once that label is attached, the schools are required to pay for students to go to other higher-performing schools or a charter school within their district, if a parent requests it. If after three years a school still doesn't make progress, it must pay for individual tutoring and other academic programs.

That could cause serious problems for Currier, which is having trouble getting the town to pay for its current services. This year's budget was $846,000.

Barker trimmed that to $843,000 for next year, knowing things were tight because of the economic downturn. Still, local voters rejected it, so she had to cut another $10,000 from her bottom line. Washington will provide a portion of the funds to help pay for the extra services it will now require, but the town must pick up the rest.

"It's just going to wreak havoc with local school funding," Ms. Barker says.

Then there's the problem of how to judge "adequate yearly progress" in schools like Currier that have very small classes. For instance, last year all but one of the 10 students in the second grade passed the state's test with flying colors. This year, the second grade has 16 students, and seven of them have some kind of learning difficulty, some with severe disabilities. That will affect the overall grade.

"Any class size under 20 the results aren't statistically significant," says Barker. "How can you make a judgment based on that?"

Officials at the US Department of Education say the regulations will be flexible enough to deal with such challenges.

But other states have their own concerns about new testing requirements.

In Nebraska, which has developed a comprehensive classroom based assessment system, Education Commissioner Doug Christensen says the state will try to integrate "No Child Left Behind." But he says, "I don't believe you improve schools by testing kids to death.... We will accept no policy that removes the teacher from the equation."

Commissioner Christensen is aware that by taking this stand, Nebraska may jeopardize the $37 million dollars in Title 1 education funds for low-income students it currently receives. But he also questions the constitutionality of the law. He says it uses those federal funds for low-income students to leverage change in all of the local systems.

Rhode Island Education Commissioner Peter McWalters, who supported the No Child Left Behind act, has some similar concerns, but he is optimistic. He believes that now the federal government has gotten involved to this extent in local education, that it will have to ante up more money.

"The principle of this is the most clear call for the American promise – "all children to standard" – and now we have a clear federal interest in the outcome of the education systems of all 50 states, I don't think they can ever back off this."