The federal Department of Education sketched out a new nationwide competition on Tuesday under which some 2,700 school districts and nonprofit groups are expected to compete for pieces of a $650 million innovation fund.

The department already has the 50 states vying for chunks of a $5.4 billion education improvement fund that it calls Race to the Top; the innovation fund is a separate competition.

Federal officials said the Investing in Innovation Fund would be distributed in three categories. Small development grants of up to $5 million will support new, unproven ideas that seem worth exploring, they said. Validation grants of up to $30 million will support existing programs that have shown evidence that they can work. Scale-up grants of up to $50 million will go to programs that have developed a strong track record for improving student achievement, the officials said.

Congress approved financing for the innovation fund almost as an asterisk when it approved $100 billion in federal education aid under the stimulus program in February. But Secretary of Education Arne Duncan says it could be a powerful lever for improving achievement.