NASHVILLE (AP) — U.S. Education Secretary Arne Duncan on Wednesday applauded Tennessee for what he called courage in making education changes and said the state can "help lead the country where we need to go."

Duncan took part in a panel discussion — that included Tennessee Gov. Bill Haslam and state Education Commissioner Kevin Huffman — at a Nashville middle school before heading to a roundtable with school administrators and business owners from rural counties.

He said some states talk about education reform, but Tennessee is taking initiative.

"I just love what I see here," Duncan said after the roundtable. "What I see is courageous leadership at the top. You guys are taking on the tough issues in ways that frankly I wish more states were."

Recent changes in state law — including toughening the curriculum and teacher evaluations — allowed Tennessee to win $500 million in the national Race to the Top education grant competition.

Duncan said teachers' concerns need to be heard, "but at the end of the day, you can't maintain status quo."

"Just continuing to do the same thing is not going to get us where we need to go," he said.

Last month, preliminary results from the Tennessee Comprehensive Assessment Program showed math scores in third- through eighth-grade improved by 7 percent this year over last year and reading scores improved by 3.7 percent.

In 18 school systems, student scores improved by 20 percent or more.

Still, the state is only 41 percent proficient in math for those grades, and 48.5 percent in reading. Under guidelines of No Child Left Behind, the state is required to be 60 percent proficient in math next year, 66 percent in reading, and 100 percent in both subjects by 2014.

Duncan acknowledged Tennessee still has a long way to go, but said he's confident the state's education changes will produce results.

"I'm absolutely optimistic that Tennessee can improve significantly going forward, and can frankly help lead the country where we need to go," he said.

One change that may help the state — and others — is actually coming from the federal level. Duncan announced earlier this week the Obama administration is giving states a waiver on the No Child Left Behind law.

To get a waiver, states must agree to education reforms the White House favors — from tougher evaluation systems for teachers and principals to programs helping minority students.

Duncan has warned that 82 percent of U.S. schools could be labeled failures next year if the law is not changed. Education experts have questioned that estimate, but state officials report a growing number of schools facing sanctions.

Haslam asked for a waiver for Tennessee last month. Duncan said he's talked to about 40 governors about the waiver, and reiterated that he will have more details about the plan next month.

Besides the waiver and more attention to early childhood education, the main concern during the roundtable seemed to be a lack of money for districts to meet the higher expectations.

James Jones, director of Polk County schools, acknowledged it's a "little frustrating" coming up with innovative ways to teach on such tight budgets.

"But we all understand we need to have higher standards," Jones said. "And we want to meet those higher standards. We just have to keep getting funding to do that."

Duncan urged the rural school officials to not hesitate in asking state and federal lawmakers for adequate funding, because he said a good education is important in creating a better economy.

"Budgets reflect our values, and not just budgets," he said.