The governor said in a statement that "there's a possibility to develop a positive path forward that has a realistic chance of success."
He says he'll talk next with state lawmakers and the superintendent of instruction about the state's options.
The federal government has said Washington must require school districts to use student scores on statewide tests as a factor in teacher evaluation. The current law does not mandate it.
Washington could lose its federal waiver and some federal money by not changing the current law. The state Senate defeated a proposed change to the law last week.
If the state doesn't comply, the federal government has said it would take away flexibility in how the state spends about $44 million.