In an address to the National Governors Association's annual meeting in Washington, Obama said a majority of states will spend less on elementary and secondary schools in 2012 than they did last year, and more than 40 states cut higher education spending in 2011.
He said making sure every student graduates from high school prepared for college and a successful career is central to rebuilding the economy.
"Nothing more clearly signals what you value as a state as the decisions you make about where to invest," Obama said. "Budgets are about choices, so today I'm calling on you to choose to invest more in teachers, invest more in education, and invest more in our children and their future."
The president called for more teachers. "Other countries are doubling down on education and their investment in teachers -- and we should, too," he said. "One study found that a good teacher can increase the lifetime income of a classroom by over $250,000. One teacher, one classroom. And a great teacher offers potentially an escape for a child who is dreaming beyond his circumstances."
He said training programs should be established at community colleges that equip workers for skilled positions in high-growth industries so businesses have the workers they need in the United States instead of outsourcing those jobs overseas
Obama also said he wants to make permanent the tax credit that provides up to $10,000 to help families cover the cost of college and urged states to make state colleges more affordable.
"If tuition is going up faster than inflation -- faster, actually, than healthcare costs -- then no matter how much we subsidize it, sooner or later we are going to run out of money," he said. "That means colleges and universities are going to have to help to make their tuition more affordable. And I've put them on notice -- if they are not taking some concrete steps to prevent tuition from going up, then federal funding from taxpayers is going to go down."