PALISADES, N.Y: Governors and business leaders who gathered for a summit on raising educational standards agreed Tuesday that states, not the federal government, should set the marks for student performance. At the first such summit in 1989, national standards were the goal. Now, amid a bipartisan push in Washington to allow states to experiment in education and welfare programs, the governors have the ear of a private sector that is increasingly worried about mediocre graduates. "The American people have spoken," IBM Chairman Louis Gerstner told the group. "They do not want national standards." Gerstner and Wisconsin Governor Tommy Thompson hosted the two-day meeting, where 41 governors will attempt to agree on higher scholastic standards that states should adopt within two years. Business leaders, in turn, will develop their own strategies, such as requesting high school transcripts from job seekers or establishing partnerships with schools. TIME'S Elizabeth Gleick says critics of the summit, like the National School Boards Association and the National Parent Teacher Association, complain that too few teachers were invited. That's how summit organizers wanted it: "By combining a governor and a CEO from each state, they were hoping to get the biggest bang for the buck," she says. In theory, those attending would return to their home states and consult with teachers, union members and parents. President Clinton, who favors national standards, will address the group Wednesday.