First: Article 1, Section 8 of the Constitution and then Federalist papers 41-44 are very clear that the federal government has only those powers specifically granted to it in that section. And that the "general welfare" clause (the first clause of the section) does NOT mean that the feds can do anything they want.
Second: The Department of Education wasn't around for the first 200 years of this country. To think that states and local communities are incapable of running their own educational systems is ridiculous considering you only need to look back 30 years to see a United States without a Department of Education.
Third: These aren't "handouts." They are more "hand-backs," if you will. Perhaps if the federal government wasn't (again, blatantly unconstitutionally) so hellbent on stealing nearly half of my income year in and year out, states, communities, and people would have plenty of money to fund their own educational systems and schools.
And in response to those who think local schools shouldn't be allowed to set their own educational agendas because they are "inbred, God-fearing fools" (I paraphrase), why the hell not? What makes you so certain you are right? In a system where states and local communities were responsible for their own education, those states and communities producing the "smartest" people would naturally rise to the top (be the most desirable places to live, have the strongest economies, etc) while those with crappy systems would be forced to either change or fall behind (it would be their choice - if people in that community were happy falling behind, good for them. If they weren't, individuals and families could freely move to another community or state or the community/state could collectively change its policy...). The entire idea of the federal government mandating nationwide curricula is absurd, and only partly due to this lack of competition (as others have already stated, the federal government is SLOW...). It hasn't worked for the last 30 years and 4 presidents - I find it hard to believe it will work for Obama (then again, maybe he'll prove me wrong - I sure as hell hope so...).