When Arne Duncan was the head of the Chicago public schools, one of the calls he dreaded most came from a certain federal bureaucracy — the Department of Education.

“It wasn’t a call about teaching kids to read,” Duncan recalled. “It was a call about a compliance report or something.”

Now Duncan sits atop the Education Department — meaning he’s the one making those calls to school systems across the country, hoping to reshape education and the role of the federal government in what traditionally has been a state and local effort.

With nearly $5 billion in stimulus funds at his disposal, Duncan has the chance to be a sort of educational kingmaker, doling out money to states as he sees fit. He’s also got something intangible but just as important — a close friend in the White House, in President Barack Obama.

And that’s a combination that some are saying could end up making Duncan the most powerful education secretary in the history of the job.

“This is an unprecedented chance for Obama and Duncan to put their stamp on education. It’s pure Obama, pure Duncan. It’s a chance to have an unfiltered education policy,” said Amy Wilkins of the Education Trust, an independent advocacy group. “Never ever have they had $5 billion to decide what to do in the education system.”

That close friendship was on display recently when Obama stood next to Duncan to announce the criteria for the nearly $4.35 billion in “Race to the Top” funds, one of the largest single investments in education reform in American history.

But not everyone has bought into the Obama-style reforms, which are expected to include a greater emphasis on merit pay for teachers and data systems to track progress. Both have been long resisted by the powerful teacher unions — big backers of Democratic candidates.

Obama and Duncan have not gone out of their way to ruffle feathers among these key supporters — but they also haven’t shied away from moving forward with programs that give the unions’ members heartburn.

Duncan is also a full-throated supporter of charter schools, which aren’t always governed by union rules, a stance that has recently raised red flags with some in education circles — it wasn’t lost on union members that the first school Duncan and Obama visited was a charter school.

“They don’t have a balanced education program when they put so much emphasis on charter schools. I think they have latched onto charter schools as a magic solution, and it isn’t,” said Jack Jennings, president and CEO of the Center on Education Policy, an advocacy group for public schools. “I think they should focus on regular public schools. That’s where the majority of students are.”

Yet Duncan seems a perfect antidote for what others regarded as Bush’s test-heavy, ignore-the-unions approach.

Widely seen as a split-the-difference choice — unions and get-tough-on teacher reformers both praised him when Obama tapped him — Duncan maintained good relationships with unions even as he shuttered schools, pushed for charters and supported merit pay for teachers in Chicago.

“He constantly puts out his desire for teacher involvement,” said Sally Klingel, director of Labor Management Relations at Cornell University. “He says that whatever we do needs to be designed with teacher involvement — and for them, not imposed on them.”

Duncan underscored that approach in a recent address to state governors.

“I understand that teachers are concerned about the fairness of performance pay. I share those concerns — but I am confident that if we sit down with the unions — instead of forcing it on them — we can find ways to reward excellence in the classroom,” he said.

In his funding choices and speeches, Duncan has emphasized data gathering, teacher and student performance, improving the quality of standardized tests and making sure good teachers are in both successful and troubled schools. In the stimulus funds, some see the long arm of the feds over-reaching into what they say should be local efforts; and they complain of a money-first, questions-later approach.

“We’ve seen a flood of federal funding go out through the economic stimulus package, but we have yet to see any comprehensive plan for reform,” said Rep. John Kline (R-Minn.), the senior Republican on the House Education and Labor Committee.

“He’s been pressuring states to adopt certain reforms if they want a piece of the $5 billion fund he controls,” Kline said. “We see Congress handing the secretary of education an entire checkbook of blank checks that he is free to dole out as he sees fit.”

Duncan, whose relationship with Obama goes back two decades to a Harvard basketball court, has quickly become highly visible and accessible, traveling the country on “listening tours,” appearing at union conferences and reading to schoolchildren at the department.

The 6-foot-5-inch former semi-pro basketball player rose to prominence in 2001, when Chicago Mayor Richard Daley named him to head the nation’s third-largest school district. His appointment raised concerns among some — Jesse Jackson came out against him initially — and his lack of classroom experience was a sore point, as well. An early Chicago Tribune story called him “an obscure deputy schools official” charged with leading Chicago schools out of a period of high dropout rates, poor test scores and wide black-white achievement gaps.

Duncan was by that time firmly in Obama’s world, cutting his teeth on educational policy as head of Ariel Education Initiative, which was started by John W. Rogers, Duncan’s childhood friend and a big Obama backer.

In his first weeks as head of Chicago public schools, Duncan reversed a policy of firing teachers in the worst schools and announced a $20 million reading initiative — a grab bag approach that put in him no firm camp. Eventually, he came to be seen as something of a turnaround artist for the strides in the troubled district. He shut down 60 schools, reopened a dozen, increased the number of teachers who had national board certification and backed merit pay.

“Arne’s tenure in Chicago was marked by three things — he was driven by data, he embraced innovation, and he was consistently willing to make hard decisions,” Timothy Knowles, director of the University of Chicago’s Urban Education Institute wrote in an e-mail message. There were “consistently higher graduation rates from high schools across all ethnic groups and for both boys and girls, and in the pace of improvement for African-American and Latino children in Chicago, compared with children statewide.”

Yet, some suggest that the success story under Duncan wasn’t all that it appeared to be. A recent report by The Commercial Club of Chicago said the miracle turnaround in test scores was no miracle at all but the result of weakened standards.

“Chicago public schools had a dismal track record over Arne Duncan’s term,” and reform was “a flat line,” said Julie Woestehoff of Parents United for Responsible Education, a Chicago-based group.

But Randi Weingarten, president of the American Federation of Teachers and the United Federation of Teachers, who has been critical of Duncan in the past, praised his “high standards,” calling it a “transformative moment, and there is no time to waste.”

“This is a matter of trying to figure out new ideas,” Weingarten said. “We all understand that we have to work together to make reform work.”