Title I funding based on what?

I haven't posted a great deal about the suggested changes around Title 1 funding as it's all a bit vague so far. However, this post at the Quick and the Ed is worth reading.
In essence, the Obama administration is suggesting (if that's the right verb) that what is currently Title I funding, which is based on sheer numbers of poverty level and population, become competitive and be based on "college and career readiness." You can still get the money for poverty, but you have to prove your "readiness" to do it.
The competitive part should sound familiar--it is, after all, what's driving Race to the Top. I'm not clear on just why they've suddenly decided that this is a logical way to federally fund education. Generally, the federal funding of education has been in theory to balance out inequalities.
Having a competition isn't going to do that.
You can get a roundup of who thinks what here.