Text: H.R.1 — 107th Congress (2001-2002)All Information (Except Text)

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Introduced in House (03/22/2001)

 
[Congressional Bills 107th Congress]
[From the U.S. Government Printing Office]
[H.R. 1 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                 H. R. 1

 A bill to close the achievement gap with accountability, flexibility, 
              and choice, so that no child is left behind.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 22, 2001

  Mr. Boehner (for himself, Mr. Castle, Mr. McKeon, Mr. Hastert, Mr. 
Armey, Mr. DeLay, Mr. Watts of Oklahoma, Ms. Pryce of Ohio, Mr. Dreier, 
Mr. Petri, Mr. Schaffer, Mr. Isakson, Mr. Ballenger, Mr. Sam Johnson of 
Texas, Mr. Greenwood, Mr. Graham, Mr. Norwood, Mr. Upton, Mr. Hilleary, 
  Mr. Ehlers, Mr. Fletcher, Mr. DeMint, Mrs. Biggert, Mr. Tiberi, Mr. 
 Keller, Mr. Osborne, Mr. Culberson, Mr. Oxley, Mr. Nussle, Mr. Wolf, 
      Mr. Gekas, Mr. Combest, Mr. Kolbe, Mr. Baker, Mr. Weldon of 
     Pennsylvania, Mr. Shays, Mr. Gillmor, Mr. Goss, Mr. Camp, Mr. 
Cunningham, Mr. Hobson, Mr. Bachus, Mr. Calvert, Mr. Collins, Mr. Deal 
 of Georgia, Mr. Diaz-Balart, Mr. Horn, Mr. Kingston, Mr. Linder, Mr. 
  McInnis, Mr. Miller of Florida, Mr. Royce, Mr. Portman, Mr. Barr of 
 Georgia, Mr. Burr of North Carolina, Mr. Chambliss, Mr. Ehrlich, Mr. 
LaTourette, Mr. Radanovich, Mr. Cooksey, Mrs.  Northup, Mr. Peterson of 
  Pennsylvania, Mr. Pickering, Mr. Shimkus, Mr. Sununu, Mr. Fossella, 
   Mrs.  Bono, Mr. Green of Wisconsin, Mr. Hayes, Mr. Gary Miller of 
 California, Mr. Ose, Mr. Sweeney, Mr. Crenshaw, Ms.  Hart, Mr. Issa, 
 Mr. Putnam, and Mr. Schrock) introduced the following bill; which was 
        referred to the Committee on Education and the Workforce

_______________________________________________________________________

                                 A BILL


 
 A bill to close the achievement gap with accountability, flexibility, 
              and choice, so that no child is left behind.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``No Child Left Behind Act of 2001''.

SEC. 2. TABLE OF CONTENTS.

    TITLE I--IMPROVING THE ACADEMIC PERFORMANCE OF THE DISADVANTAGED

                         Part A--Basic Program

Sec. 101. Disadvantaged children meet high standards.
Sec. 102. Authorization of appropriations.
Sec. 103. Reservation for school improvement.
Sec. 104. Basic programs.
           Part B--Student Reading Skills Improvement Grants

Sec. 111. Reading First; Early Reading First.
Sec. 112. Amendments to Even Start.
                Part C--Education of Migratory Children

Sec. 121. State allocations.
Sec. 122. State applications; services.
Sec. 123. Authorized activities.
Sec. 124. Coordination of migrant education activities.
                 Part D--Neglected or Delinquent Youth

Sec. 131. Neglected or delinquent youth.
Sec. 132. Findings.
Sec. 133. Allocation of funds.
Sec. 134. State plan and State agency applications.
Sec. 135. Use of funds.
Sec. 136. Transition services.
Sec. 137. Purpose.
Sec. 138. Programs operated by local educational agencies.
Sec. 139. Local educational agency applications.
Sec. 140. Uses of funds.
Sec. 141. Program requirements.
Sec. 142. Program evaluations.
             Part E--Federal Evaluations and Demonstrations

Sec. 151. Evaluations.
Sec. 152. Demonstrations of innovative practices.
                  Part F--Comprehensive School Reform

Sec. 161. School reform.
                        Part G--Rural Education

Sec. 171. Rural education.
                 Part H--General Provisions of Title I

Sec. 181. General provisions.
     TITLE II--PREPARING, TRAINING, AND RECRUITING QUALITY TEACHERS

Sec. 201. Teacher quality training and recruiting fund; teacher 
                            liability.
TITLE III--EDUCATION OF LIMITED ENGLISH PROFICIENT CHILDREN; INDIAN AND 
                        ALASKA NATIVE EDUCATION

        Part A--Education of Limited English Proficient Children

Sec. 301. Programs authorized.
Sec. 302. Conforming amendment to Department of Education Organization 
                            Act.
               Part B--Indian and Alaska Native Education

Sec. 311. Elementary and Secondary Education Act of 1965.
Sec. 312. Alaska Native education.
Sec. 313. Amendments to the Education Amendments of 1978.
Sec. 314. Tribally Controlled Schools Act of 1988.
  TITLE IV--PROMOTING INFORMED PARENTAL CHOICE AND INNOVATIVE PROGRAMS

                      Part A--Innovative Programs

Sec. 401. Promoting informed parental choice and innovative programs.
                     Part B--Public Charter Schools

Sec. 411. Public charter schools.
            Part C--School Choice Research and Demonstration

Sec. 421. School choice research and demonstration
                   Part D--Magnet Schools Assistance

Sec. 431. Magnet schools assistance.
Sec. 432. Continuation of awards.
               TITLE V--SAFE SCHOOLS FOR THE 21ST CENTURY

Sec. 501. Safe schools.
                      TITLE VI--IMPACT AID PROGRAM

Sec. 601. Payments under section 8002 with respect to fiscal years in 
                            which insufficient funds are appropriated.
Sec. 602. Calculation of payment under section 8003 for small local 
                            educational agencies.
Sec. 603. Construction.
Sec. 604. State consideration of payments in providing State aid.
Sec. 605. Authorization of appropriations.
Sec. 606. Redesignation of program.
                       TITLE VII--ACCOUNTABILITY

Sec. 701. Flexibility and accountability.
                     TITLE VIII--GENERAL PROVISIONS

Sec. 801. General provisions.
Sec. 802. Comprehensive regional assistance centers.
Sec. 803. National diffusion network.
Sec. 804. Eisenhower Regional Mathematics and Science Education 
                            Consortia.
Sec. 805. Technology-based technical assistance.
                   TITLE IX--MISCELLANEOUS PROVISIONS

              supart 1--national education statistics act
Sec. 901. Amendment tsubpart 2--homeless education
Sec. 911. Short title.
Sec. 912. Findings.
Sec. 913. Purpose.
Sec. 914. Education for homeless children and youth.
Sec. 915. Technical amendment.
                            Part B--Repeals

Sec. 921. Repeals.

SEC. 3. REFERENCES.

    Whenever in this Act an amendment or repeal is expressed in terms 
of an amendment to, or repeal of, a section or other provision, the 
reference shall be considered to be made to a section or other 
provision of the Elementary and Secondary Education Act of 1965 (20 
U.S.C. 6301 et seq.).

SEC. 4. TRANSITION.

    Unless otherwise provided in this Act, any person or agency that 
was awarded a grant under the Elementary and Secondary Education Act of 
1965 (20 U.S.C. 6301 et seq.) prior to the date of the enactment of 
this Act shall continue to receive funds in accordance with the terms 
of such award, except that funds for such award may not continue more 
than one year after the date of the enactment of this Act.

    TITLE I--IMPROVING THE ACADEMIC PERFORMANCE OF THE DISADVANTAGED

                         PART A--BASIC PROGRAM

SEC. 101. DISADVANTAGED CHILDREN MEET HIGH STANDARDS.

    Section 1001 is amended to read as follows:

``SEC. 1001. FINDINGS; STATEMENT OF PURPOSE; AND RECOGNITION OF NEED.

    ``(a) Findings.--Congress finds the following:
            ``(1) The Constitution of the United States reserves to the 
        States and to the people the responsibility for the general 
        supervision of public education in kindergarten through the 
        twelfth grade.
            ``(2) States and local educational agencies need the 
        maximum liberty to build upon existing innovative approaches 
        for education reform and continue their proven record of 
        increasing student success.
            ``(3) The best education decisions are made by those who 
        know the students best and who are responsible for implementing 
        the decisions, and therefore, educators and parents should 
        retain the right and responsibility to educate their pupils and 
        children free of excessive regulation by the Federal 
        Government.
            ``(4) The Supreme Court has regarded the right of parents 
        to direct the upbringing of their children as a fundamental 
        right implicit in the concept of ordered liberty within the 
        14th Amendment to the Constitution, as specified in Meyer v. 
        Nebraska, 262 US 390 (1923) and Pierce v. Society of Sisters, 
        268 US 510 (1925).
            ``(5) Schools that enroll high concentrations of children 
        living in poverty face the greatest challenges, but effective 
        educational strategies based on scientifically based research 
        can succeed in educating children to high standards.
            ``(6) High-poverty schools are much more likely to be 
        identified as failing to meet State standards for satisfactory 
        progress. As a result, these schools are generally the most in 
        need of additional resources and technical assistance to build 
        the capacity of these schools to address the many needs of 
        their students.
            ``(7) The educational progress of children participating in 
        programs under this title is closely associated with their 
        being taught by a highly qualified staff, particularly in 
        schools with the highest concentrations of poverty, where 
        paraprofessionals, uncertified teachers, and teachers teaching 
        out of field frequently provide instructional services.
            ``(8) Congress and the public would benefit from additional 
        data evaluatinig the efficacy of the Elementary and Secondary 
        Education Act of 1965.
            ``(9) States, local educational agencies, and schools 
        should be given as much flexibility as possible in exchange for 
        greater accountability for improving student achievement.
            ``(10) Schools operating programs assisted under this part 
        must be held accountable for the educational achievement of 
        their students, when those students fail to demonstrate 
        progress in achieving high standards, local educational 
        agencies and States must take significant actions to improve 
        the educational opportunities available to them.
    ``(b) Purpose and Intent.--The purpose and intent of this title are 
to ensure that all children have a fair and equal opportunity to obtain 
a high-quality education.
    ``(c) Recognition of Need.--The Congress recognizes the following:
            ``(1) Educational needs are particularly great for low-
        achieving children in our Nation's highest-poverty schools, 
        children with limited English proficiency, children of migrant 
        workers, children with disabilities, Indian children, children 
        who are neglected or delinquent, and young children who are in 
        need of reading assistance.
            ``(2) Despite more than 3 decades of Federal assistance, a 
        sizable achievement gap remains between minority and 
        nonminority students, and between disadvantaged students and 
        their more advantaged peers.
            ``(3) Too many students attend local schools that fail to 
        provide them with a quality education, and are given no 
        alternatives to enable them to receive a quality education.
            ``(4) States, local educational agencies, and schools need 
        to be held accountable for improving the academic achievement 
        of all students, and for identifying and turning around low-
        performing schools.
            ``(5) Federal education assistance is intended not only to 
        increase pupil achievement overall, but also more specifically 
        and importantly, to help ensure that all students, especially 
        the disadvantaged, meet challenging achievement standards. It 
        can only be determined if schools, local educational agencies, 
        and States are reaching this goal if student achievement 
        results are reported specifically by disadvantaged and minority 
        status.''.

SEC. 102. AUTHORIZATION OF APPROPRIATIONS.

    Section 1002 is amended to read as follows:

``SEC. 1002. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) Local Educational Agency Grants.--For the purpose of carrying 
out part A, other than section 1120(e), there are authorized to be 
appropriated $9,061,000,000 for fiscal year 2002 and such sums as may 
be necessary for each of the 4 succeeding fiscal years.
    ``(b) Student Reading Skills Improvement Grants.--
            ``(1) Reading first.--For the purpose of carrying out 
        subpart 1 of part B, there are authorized to be appropriated 
        $900,000,000 for fiscal year 2002 and such sums as may be 
        necessary for each of the 4 succeeding fiscal years.
            ``(2) Early reading first.--For the purpose of carrying out 
        subpart 2 of part B, there are authorized to be appropriated 
        $75,000,000 for fiscal year 2002 and such sums as may be 
        necessary for each of the 4 succeeding fiscal years.
            ``(3) Even start.--For the purpose of carrying out subpart 
        3 of part B, there are authorized to be appropriated 
        $250,000,000 for fiscal year 2002 and such sums as may be 
        necessary for each of the 4 succeeding fiscal years.
    ``(c) Education of Migratory Children.--For the purpose of carrying 
out part C, there are authorized to be appropriated $380,000,000 for 
fiscal year 2002 and such sums as may be necessary for each of the 4 
succeeding fiscal years.
    ``(d) Prevention and Intervention Programs for Youth Who Are 
Neglected, Delinquent, or at Risk of Dropping Out.--For the purpose of 
carrying out part D, there are authorized to be appropriated 
$46,000,000 for fiscal year 2002 and such sums as may be necessary for 
each of the 4 succeeding fiscal years.
    ``(e) Comprehensive School Reform.--For the purpose of carrying out 
part F, there are authorized to be appropriated $260,000,000 for fiscal 
year 2002 and such sums as may be necessary for each of the 4 
succeeding fiscal years.
    ``(f) Rural Education.--For the purpose of carrying out part G, 
there are authorized to be appropriated $125,000,000 for fiscal year 
2002 and such sums as may be necessary for each of 4 succeeding fiscal 
years to be distributed equally between subparts 1 and 2.
    ``(g) Capital Expenses.--For the purpose of carrying out section 
1120(e), there are authorized to be appropriated $5,000,000 for fiscal 
year 2002.
    ``(h) Federal Activities.--
            ``(1) Section 1501 and 1502.--(A) For the purpose of 
        carrying out section 1501, there are authorized to be 
        appropriated $9,000,000 for fiscal year 2002 and such sums as 
        may be necessary for each of the 4 succeeding fiscal years.
            ``(B) For the purpose of carrying out section 1502, there 
        are authorized to be appropriated such sums as may be necessary 
        for fiscal year 2002 and for each of the 4 succeeding fiscal 
        years.
    ``(i) State Administration.--
            ``(1) State reservation.--Each State may reserve, from the 
        sum of the amounts it receives under parts A, C, and D of this 
        title, an amount equal to the greater of 1 percent of the 
        amount it received under such parts for fiscal year 2001, or 
        $400,000 ($50,000 for each outlying area), including any funds 
        it receives under paragraph (2), to carry out administrative 
        duties assigned under parts A, C, and D.
            ``(2) Authorization of appropriations.--There are 
        authorized to be appropriated $10,000,000 for fiscal year 2002 
        and such sums as may be necessary for each of the 4 succeeding 
        fiscal years for additional State administration grants. Any 
        such additional grants shall be allocated among the States in 
        proportion to the sum of the amounts received by each State for 
        that fiscal year under parts A, C, and D of this title.
            ``(3) Special rule.--The amount allocated to each State 
        under this subsection may not exceed the amount of State funds 
        expended by the State educational agency to administer 
        elementary and secondary education programs in such State.

SEC. 103. RESERVATION FOR SCHOOL IMPROVEMENT.

    Section 1003 is amended to read as follows:

                  ``reservation for school improvement

    ``(a) State Reservations.--Each State shall reserve 3.5 percent of 
the amount it receives under subpart 2 of part A for fiscal years 2002 
and 2003, and 5 percent of the amount received under such subpart for 
fiscal years 2004 through 2006, to carry out subsection (b) and to 
carry out the State's responsibilities under sections 1116 and 1117, 
including carrying out the State educational agency's statewide system 
of technical assistance and support for local educational agencies.
    ``(b) Uses.--Of the amount reserved under subsection (a) for any 
fiscal year, the State educational agency shall make available at least 
95 percent of that amount directly to local educational agencies for 
schools identified for school improvement, corrective action, and 
restructuring under section 1116(c).''.
    ``(c) Unused Funds.--If, after consultation with local educational 
agencies in the State, the State educational agency determines that the 
amount of funds reserve to carry out subsection (b) is greater than the 
amount needed to provide the assistance described in that subsection, 
it may allocate the excess amount to local educational agencies in 
accordance with either or both--
            ``(1) the relative allocations it made to those agencies 
        for that fiscal year under subpart 2 of part A; or
            ``(2) section 1126(c).''.

SEC. 104. BASIC PROGRAMS.

    Part A of title I is amended to read as follows:

   ``PART A--IMPROVING BASIC PROGRAMS OPERATED BY LOCAL EDUCATIONAL 
                                AGENCIES

                ``Subpart 1--Basic Program Requirements

``SEC. 1111. STATE PLANS.

    ``(a) Plans Required.--
            ``(1) In general.--Any State desiring to receive a grant 
        under this part shall submit to the Secretary, by March 1, 
        2002, a plan, developed in consultation with local educational 
        agencies, teachers, principals, pupil services personnel, 
        administrators (including administrators of programs described 
        in other parts of this title), other staff, and parents, that 
        satisfies the requirements of this section and that is 
        coordinated with other programs under this Act, the Individuals 
        with Disabilities Education Act, the Carl D. Perkins Vocational 
        and Technical Education Act of 1998, and the Head Start Act.
            ``(2) Consolidated plan.--A State plan submitted under 
        paragraph (1) may be submitted as part of a consolidated plan 
        under section 8302.
    ``(b) Standards, Assessments, and Accountability.--
            ``(1) Challenging standards.--
                    ``(A) Each State plan shall demonstrate that the 
                State has adopted challenging content standards and 
                challenging student achievement standards that will be 
                used by the State, its local educational agencies, and 
                its schools to carry out this part, except that a State 
                shall not be required to submit such standards to the 
                Secretary.
                    ``(B) The standards required by subparagraph (A) 
                shall be the same standards that the State applies to 
                all schools and children in the State.
                    ``(C) The State shall have such standards for all 
                public elementary and secondary school children served 
                under this part in subjects determined by the State, 
                but including at least mathematics, reading or language 
                arts, and science (consistent with the special rule in 
                section 1111(j), which shall include the same 
                knowledge, skills, and levels of achievement expected 
                of all children.
                    ``(D) Standards under this paragraph shall 
                include--
                            ``(i) challenging content standards in 
                        academic subjects that--
                                    ``(I) specify what children are 
                                expected to know and be able to do;
                                    ``(II) contain coherent and 
                                rigorous content; and
                                    ``(III) encourage the teaching of 
                                advanced skills; and
                            ``(ii) challenging student achievement 
                        standards that--
                                    ``(I) are aligned with the State's 
                                content standards;
                                    ``(II) describe 2 levels of high 
                                performance, proficient and advanced, 
                                that determine how well children are 
                                mastering the material in the State 
                                content standards; and
                                    ``(III) describe a third level of 
                                performance, basic, to provide complete 
                                information about the progress of the 
                                lower performing children toward 
                                achieving to the proficient and 
                                advanced levels of performance.
                    ``(E) For the subjects in which students will be 
                served under this part, but for which a State is not 
                required by subparagraphs (A), (B), and (C) to develop, 
                and has not otherwise developed such standards, the 
                State plan shall describe a strategy for ensuring that 
                students are taught the same knowledge and skills in 
                such subjects and held to the same expectations as are 
                all children.
            ``(2) Accountability.--
                    ``(A) In general.--Each State plan shall 
                demonstrate that the State has developed and is 
                implementing a statewide State accountability system 
                that has been or will be effective in ensuring that all 
                local educational agencies, public elementary schools, 
                and public secondary schools make adequate yearly 
                progress as defined under subparagraph (B). Each State 
                accountability system shall--
                            ``(i) be based on the standards and 
                        assessments adopted under paragraphs (1) and 
                        (4) and take into account the performance of 
                        all public school students;
                            ``(ii) be the same as the accountability 
                        system the State uses for all public schools or 
                        all local educational agencies in the State, 
                        except that public schools and local 
                        educational agencies not participating under 
                        this part are not subject to the requirements 
                        of section 1116(c); and
                            ``(iii) include rewards and sanctions the 
                        State will use to hold local educational 
                        agencies and public schools accountable for 
                        student achievement and for ensuring that they 
                        make adequate yearly progress in accordance 
                        with the State's definition under subparagraph 
                        (B).
                    ``(B) Adequate yearly progress.--Each State plan 
                shall demonstrate, based on assessments described under 
                paragraph (4), what constitutes adequate yearly 
                progress of the State, and of public schools and local 
                educational agencies in the State, toward enabling all 
                public school students to meet the State's student 
                achievement standards, while working toward the goal of 
                narrowing the achievement gaps in the State.
                    ``(C) Definition.--`Adequate yearly progress' shall 
                be defined by the State in a manner that--
                            ``(i) applies the same high standards of 
                        academic performance to all public school 
                        students in the State;
                            ``(ii) measures the progress of public 
                        schools and local educational agencies based 
                        primarily on the assessments described in 
                        paragraph (4);
                            ``(iii) includes annual measurable 
                        objectives for continuing and significant 
                        improvement in each of the following (except 
                        that disaggregation of data under subclauses 
                        (II) and (III) shall not be required in a case 
                        in which the number of students in a category 
                        is insufficient to yield statistically reliable 
                        information or the results would reveal 
                        individually identifiable information about an 
                        individual student):
                            ``(I) The achievement of all public school 
                        students.
                            ``(II) The achievement of--
                                            ``(aa) economically 
                                        disadvantaged students;
                                            ``(bb) students from major 
                                        racial and ethnic groups;
                                            ``(cc) students with 
                                        disabilities; and
                                            ``(dd) students with 
                                        limited English proficiency;
                            ``(III) solely for the purpose of 
                        determining adequate yearly progress of the 
                        State, the acquisition of English language 
                        proficiency by children with limited English 
                        proficiency;
                            ``(iv) at the State's discretion, may also 
                        include other academic measures such as 
                        promotion, completion of college preparatory 
                        courses, and high school completion (and for 
                        individual local educational agencies and 
                        schools, the acquisition of English language 
                        proficiency by children with limited English 
                        proficiency), except that inclusion of such 
                        other measures may not change which schools or 
                        local educational agencies would otherwise be 
                        subject to improvement or corrective action 
                        under section 1116 if the discretionary 
                        indicators were not included; and
                            ``(v) includes a timeline for ensuring that 
                        each group of students described in subclauses 
                        (I) and (II) of clause (iii) meets or exceeds 
                        the State's proficient level of performance on 
                        the State assessment used for the purposes of 
                        this section and section 1116 within 10 years 
                        from the date of the enactment of the No Child 
                        Left Behind Act of 2001.
                    ``(D) Annual improvement for schools.--For a school 
                to make adequate yearly progress under subparagraph 
                (A), not less than 95 percent of each group of students 
                described in subparagraph (C)(iii)(II) who are enrolled 
                in the school are required to take the assessments, 
                consistent with section 612(a)(17)(A) of the 
                Individuals with Disabilities Education Act and 
                paragraph (4)(G)(ii), on which adequate yearly progress 
                is based.
                    ``(E) Public notice and comment.--Each State shall 
                ensure that in developing its plan, it diligently seeks 
                public comment from a range of institutions and 
                individuals in the State with an interest in improved 
                student achievement and that the State makes and will 
                continue to make a substantial effort to ensure that 
                information under this part is widely known and 
                understood by the public, parents, teachers, and school 
                administrators throughout the State. Such efforts shall 
                include, at a minimum, publication of such information 
                and explanatory text, broadly to the public through 
                such means as the Internet, the media, and public 
                agencies.
            ``(3) State authority.--If a State educational agency 
        provides evidence, which is satisfactory to the Secretary, that 
        neither the State educational agency nor any other State 
        government official, agency, or entity has sufficient 
        authority, under State law, to adopt curriculum content and 
        student achievement standards, and assessments aligned with 
        such standards, which will be applicable to all students 
        enrolled in the State's public schools, then the State 
        educational agency may meet the requirements of this subsection 
        by--
                    ``(A) adopting standards and assessments that meet 
                the requirements of this subsection, on a statewide 
                basis, limiting their applicability to students served 
                under this part; or
                    ``(B) adopting and implementing policies that 
                ensure that each local educational agency in the State 
                which receives grants under this part will adopt 
                curriculum content and student achievement standards, 
                and assessments aligned with such standards, which meet 
                all of the criteria in this subsection and any 
                regulations regarding such standards and assessments 
                which the Secretary may publish, and which are 
                applicable to all students served by each such local 
                educational agency.
            ``(4) Assessments.--Each State plan shall demonstrate that 
        the State has implemented a set of high-quality, yearly student 
        assessments that include, at a minimum, assessments in 
        mathematics, reading or language arts, and science (consistent 
        with the special rule in section 1111(j), that will be used as 
        the primary means of determining the yearly performance of each 
        local educational agency and school in enabling all children to 
        meet the State's challenging student achievement standards. 
        Such assessments shall--
                    ``(A) be the same assessments used to measure the 
                performance of all children;
                    ``(B) be aligned with the State's challenging 
                content and student achievement standards and provide 
                coherent information about student attainment of such 
                standards;
                    ``(C) be used for purposes for which such 
                assessments are valid and reliable, and be consistent 
                with relevant, recognized professional and technical 
                standards for such assessments;
                    ``(D) measure the proficiency of students in the 
                academic subjects in which a State has adopted 
                challenging content and student achievement standards, 
                and be administered not less than 1 or more times 
                during--
                            ``(i) grades 3 through 5;
                            ``(ii) grades 6 through 9; and
                            ``(iii) grades 10 through 12;
                    ``(E) involve multiple up-to-date measures of 
                student achievement, including measures that assess 
                higher order thinking skills and understanding;
                    ``(F) beginning not later than school year 2004-
                2005, measure the performance of students against the 
                challenging State content and student achievement 
                standards in grades 3 through 8 in at least 
                mathematics, and reading or language arts, except that 
                the Secretary may provide the State 1 additional year 
                if the State demonstrates that exceptional or 
                uncontrollable circumstances, such as a natural 
                disaster or a precipitous and unforeseen decline in the 
                financial resources of the State, prevented full 
                implementation of the assessments by that deadline and 
                that it will complete implementation within the 
                additional 1-year period;
                    ``(G) provide for--
                            ``(i) the participation in such assessments 
                        of all students;
                            ``(ii) the reasonable adaptations and 
                        accommodations for students with disabilities 
                        defined under 602(3) of the Individuals with 
                        Disabilities Education Act necessary to measure 
                        the achievement of such students relative to 
                        State content and State student achievement 
                        standards;
                            ``(iii) the inclusion of limited English 
                        proficient students who shall be assessed, to 
                        the extent practicable, in the language and 
                        form most likely to yield accurate and reliable 
                        information on what such students know and can 
                        do in content areas;
                            ``(iv) notwithstanding clause (iii), the 
                        assessment (using tests written in English) of 
                        reading or language arts of any student who has 
                        attended school in the United States (not 
                        including Puerto Rico) for 3 or more 
                        consecutive school years, except if the local 
                        educational agency determines, on a case-by-
                        case individual basis, that assessments in 
                        another language and form would likely yield 
                        more accurate and reliable information on what 
                        such students know and can do, the local 
                        educational agency may assess such students in 
                        the appropriate language other than English for 
                        1 additional year; and
                    ``(H) include students who have attended schools in 
                a local educational agency for a full academic year but 
                have not attended a single school for a full academic 
                year, except that the performance of students who have 
                attended more than 1 school in the local educational 
                agency in any academic year shall be used only in 
                determining the progress of the local educational 
                agency;
                    ``(I) produce individual student reports to be 
                provided to parents, which include assessment scores, 
                or other information on the attainment of student 
                achievement standards; and
                    ``(J) enable results to be disaggregated within 
                each State, local educational agency, and school by 
                gender, by each major racial and ethnic group, by 
                English proficiency status, by migrant status, by 
                students with disabilities as compared to nondisabled 
                students, and by economically disadvantaged students as 
                compared to students who are not economically 
                disadvantaged.
            ``(5) Special rule.--Assessment measures that do not meet 
        the requirements of paragraph (4)(C) may be included as 1 of 
        the multiple measures, if a State includes in the State plan 
        information regarding the State's efforts to validate such 
        measures.
            ``(6) Language assessments.--Each State plan shall identify 
        the languages other than English that are present in the 
        participating student population and indicate the languages for 
        which yearly student assessments are not available and are 
        needed. The State shall make every effort to develop such 
        assessments and may request assistance from the Secretary if 
        linguistically accessible assessment measures are needed. Upon 
        request, the Secretary shall assist with the identification of 
        appropriate assessment measures in the needed languages, but 
        shall not mandate a specific assessment or mode of instruction.
            ``(7) Assessments of english language proficiency.--Each 
        State plan shall demonstrate that local educational agencies in 
        the State will, beginning no later than school year 2002-2003, 
        annually assess the English proficiency of all students with 
        limited English proficiency in their schools.''.
            ``(8) Requirement.--Each State plan shall describe--
                    ``(A) how the State educational agency will assist 
                each local educational agency and school affected by 
                the State plan to develop the capacity to comply with 
                each of the requirements of sections 1112(c)(1)(D), 
                1114(c), and 1115(c) that is applicable to such agency 
                or school; and
                    ``(B) such other factors as the State considers 
                appropriate to provide students an opportunity to 
                achieve the knowledge and skills described in the 
                challenging content standards adopted by the State.
    ``(c) Other Provisions To Support Teaching and Learning.--Each 
State plan shall contain assurances that--
            ``(1) the State shall produce, beginning with the 2003-2004 
        school year, the annual State report cards described in 
        subsection (h)(1);
            ``(2) the State will participate, beginning in school year 
        2002-2003, participate in annual assessments of 4th and 8th 
        grade reading and mathematics under--
                    ``(A) the State National Assessment of Educational 
                Progress carried out under section 411(b)(2) of the 
                National Education Statistics Act of 1994; or
                    ``(B) another assessment selected by the State 
                which meets the criteria of section 7101(b)(1)(B)(ii) 
                of this Act.
            ``(3) the State educational agency shall work with other 
        agencies, including educational service agencies or other local 
        consortia, and institutions to provide technical assistance to 
        local educational agencies and schools to carry out the State 
        educational agency's responsibilities under this part, 
        including technical assistance in providing professional 
        development under section 1119A and technical assistance under 
        section 1117; and
            ``(4)(A) where educational service agencies exist, the 
        State educational agency shall consider providing professional 
        development and technical assistance through such agencies; and
            ``(B) where educational service agencies do not exist, the 
        State educational agency shall consider providing professional 
        development and technical assistance through other cooperative 
        agreements such as through a consortium of local educational 
        agencies;
            ``(5) the State educational agency shall notify local 
        educational agencies and the public of the content and student 
        achievement standards and assessments developed under this 
        section, and of the authority to operate schoolwide programs, 
        and will fulfill the State educational agency's 
        responsibilities regarding local educational agency improvement 
        and school improvement under section 1116, including such 
        corrective actions as are necessary;
            ``(6) the State educational agency shall provide the least 
        restrictive and burdensome regulations for local educational 
        agencies and individual schools participating in a program 
        assisted under this part;
            ``(7) the State educational agency shall inform the 
        Secretary and the public of how Federal laws, if at all, hinder 
        the ability of States to hold local educational agencies and 
        schools accountable for student academic performance;
            ``(8) the State educational agency will encourage schools 
        to consolidate funds from other Federal, State, and local 
        sources for schoolwide reform in schoolwide programs under 
        section 1114;
            ``(9) the State educational agency shall modify or 
        eliminate State fiscal and accounting barriers so that schools 
        can easily consolidate funds from other Federal, State, and 
        local sources for schoolwide programs under section 1114;
            ``(10) the State educational agency has involved the 
        committee of practitioners established under section 1603(b) in 
        developing the plan and monitoring its implementation; and
            ``(11) the State educational agency shall inform local 
        educational agencies of the local educational agency's 
        authority to transfer funds or enter into performance 
        agreements under title VII, to obtain waivers under title VIII 
        and, if the State is an Ed-Flex Partnership State, to obtain 
        waivers under the Education Flexibility Partnership Act of 1999 
        (20 U.S.C. 5891a et seq.).
    ``(d) Peer Review and Secretarial Approval.--The Secretary shall--
            ``(1) establish a peer review process to assist in the 
        review of State plans;
            ``(2) approve a State plan within 120 days of its 
        submission unless the Secretary determines that the plan does 
        not meet the requirements of this section;
            ``(3) if the Secretary determines that the State plan does 
        not meet the requirements of subsection (a), (b), or (c), 
        immediately notify the State of such determination and the 
        reasons for such determination;
            ``(4) not decline to approve a State's plan before--
                    ``(A) offering the State an opportunity to revise 
                its plan;
                    ``(B) providing technical assistance in order to 
                assist the State to meet the requirements under 
                subsections (a), (b), and (c); and
                    ``(C) providing a hearing; and
            ``(5) have the authority to disapprove a State plan for not 
        meeting the requirements of this part, but shall not have the 
        authority to require a State, as a condition of approval of the 
        State plan, to include in, or delete from, such plan 1 or more 
        specific elements of the State's content standards or to use 
        specific assessment instruments or items.
    ``(e) Duration of the Plan.--
            ``(1) In general.--Each State plan shall--
                    ``(A) be submitted for the first year for which 
                this part is in effect after the date of the enactment 
                of the No Child Left Behind Act of 2001;
                    ``(B) remain in effect for the duration of the 
                State's participation under this part; and
                    ``(C) be periodically reviewed and revised by the 
                State, as necessary, to reflect changes in the State's 
                strategies and programs under this part.
            ``(2) Additional information.--If the State makes 
        significant changes in its plan, such as the adoption of new 
        State content standards and State student achievement 
        standards, new assessments, or a new definition of adequate 
        yearly progress, the State shall submit such information to the 
        Secretary.
    ``(f) Limitation on Conditions.--Nothing in this part shall be 
construed to authorize an officer or employee of the Federal Government 
to mandate, direct, or control a State, local educational agency, or 
school's specific instructional content or student achievement 
standards and assessments, curriculum, or program of instruction, as a 
condition of eligibility to receive funds under this part.
    ``(g) Penalties.--
            ``(1) Failure to meet deadlines enacted in 1994.--
                    ``(A) In general.--If a State fails to meet the 
                deadlines established by the Improving America's 
                Schools Act of 1994 (or under any waiver granted by the 
                Secretary or under any compliance agreement with the 
                Secretary) for demonstrating that it has in place 
                challenging content standards and student achievement 
                standards, and a system for measuring and monitoring 
                adequate yearly progress, the Secretary shall withhold 
                25 percent of the funds that would otherwise be 
                available for State administration and activities in 
                each year until the Secretary determines that the State 
                meets those requirements;
                    ``(B) No extension.--The Secretary shall not grant 
                any additional waivers of, or enter into any additional 
                compliance agreements to extend, the deadlines 
                described in subparagraph (A) for any State.
            ``(2) Failure to meet requirements enacted in 2001.--If a 
        State fails to meet any of the requirements of this section, 
        other than the requirements described in paragraph (1), the 
        Secretary may withhold funds for State administration and for 
        activities until the Secretary determines that the State has 
        fulfilled those requirements.
    ``(h) Reports.--
            ``(1) Annual state report card.--
                    ``(A) In general.--Not later than the beginning of 
                the 2003-2004 school year, a State that receives 
                assistance under this Act shall prepare and disseminate 
                an annual State ``report card''.
                    ``(B) Implementation.--The State report card shall 
                be--
                            ``(i) concise; and
                            ``(ii) presented in a format and manner 
                        that parents can understand, and which, to the 
                        extent practicable, shall be in a language the 
                        parents can understand.
                    ``(C) Public dissemination.--The State shall widely 
                disseminate the information described in subparagraph 
                (D) to all schools and local educational agencies in 
                the State and make the information broadly available 
                through public means, such as posting on the Internet, 
                distribution to the media, and distribution through 
                public agencies.
                    ``(D) Required information.--The State shall 
                include in its annual State report card--
                            ``(i) information, in the aggregate, on 
                        student achievement at each proficiency level 
                        on the State assessments described in 
                        subsection (b)(4)(F) (disaggregated by race, 
                        ethnicity, gender, disability status, migrant 
                        status, English proficiency, and status as 
                        economically disadvantaged, except that such 
                        disaggregation shall not be required in a case 
                        in which the number of students in a category 
                        is insufficient to yield statistically reliable 
                        information or the results would reveal 
                        individually identifiable information about an 
                        individual student);
                            ``(ii) the percentage of students not 
                        tested (disaggregated by the same categories 
                        and subject to the same exception);
                            ``(iii) the percentage of students who 
                        graduate from high school within 4 years of 
                        starting high school;
                            ``(iv) the rate of completion of Advanced 
                        Placement courses and the rate of passing of 
                        Advanced Placement tests;
                            ``(v) the professional qualifications of 
                        teachers in the aggregate, including the 
                        percentage of teachers teaching with emergency 
                        or provisional qualifications, and the 
                        percentage of class sections not taught by 
                        fully qualified teachers; and
                            ``(vi) such other information (such as 
                        dropout and school attendance rates; and 
                        average class size by grade level) as the State 
                        believes will best provide parents, students, 
                        and other members of the public with 
                        information on the progress of each of the 
                        State's public schools.
            ``(2) Content of local educational agency report cards.--
                    ``(A) Minimum requirements.--The State shall ensure 
                that each local educational agency collects appropriate 
                data and includes in its annual report for each of its 
                schools, at a minimum--
                            ``(i) the information described in 
                        paragraph (1)(D) for each local educational 
                        agency and school; and
                            ``(ii)(I) in the case of a local 
                        educational agency--
                                    ``(aa) the number and percentage of 
                                schools identified for school 
                                improvement and how long they have been 
                                so identified, including schools 
                                identified under section 1116(c) of 
                                this Act; and
                                    ``(bb) information that shows how 
                                students in its schools perform on the 
                                statewide assessment compared to 
                                students in the State as a whole; and
                            ``(II) in the case of a school--
                                    ``(aa) whether it has been 
                                identified for school improvement; and
                                    ``(bb) information that shows how 
                                its students performed on the statewide 
                                assessment compared to students in the 
                                local educational agency and the State 
                                as a whole.
                    ``(B) Other information.--A local educational 
                agency may include in its annual reports any other 
                appropriate information whether or not such information 
                is included in the annual State report.
                    ``(C) Public dissemination.--The local educational 
                agency shall, not later than the beginning of the 2003-
                2004 school year, publicly disseminate the information 
                described in this paragraph to all schools in the 
                district and to all parents of students attending those 
                schools (to the extent practicable, in a language they 
                can understand), and make the information broadly 
                available through public means, such as posting on the 
                Internet, distribution to the media, and distribution 
                through public agencies.
            ``(3) Pre-existing report cards.--A State or local 
        educational agency that was providing public report cards on 
        the performance of students, schools, local educational 
        agencies, or the State prior to the enactment of the No Child 
        Left Behind Act of 2001 may use those reports for the purpose 
        of this subsection, so long as any such report is modified, as 
        may be needed, to contain the information required by this 
        subsection.
            ``(4) Annual state report to the secretary.--Each State 
        receiving assistance under this Act shall report annually to 
        the Secretary, and make widely available within the State--
                    ``(A) beginning with school year 2001-2002, 
                information on the State's progress in developing and 
                implementing the assessment system described in 
                subsection (b)(4);
                    ``(B) beginning not later than school year 2004-
                2005, information on the achievement of students on the 
                assessments required by that subsection, including the 
                disaggregated results for the categories of students 
                identified in subsection (b)(2)(C)(iii)(II);
                    ``(C) beginning not later than school year 2002-
                2003, information on the acquisition of English 
                proficiency by children with limited English 
                proficiency; and
                    ``(D) in any year before the State begins to 
                provide the information described in subparagraph (B), 
                information on the results of student assessments 
                (including disaggregated results) required under this 
                section.
            ``(5) Parents right-to-know.--
                    ``(A) Qualifications.--At the beginning of each 
                school year, a local educational agency that receives 
                funds under this part shall notify the parents of each 
                student attending any school receiving funds under this 
                part that they may request, and shall provide the 
                parents upon request (and in a timely manner), 
                information regarding the professional qualifications 
                of the student's classroom teachers, including, at a 
                minimum, the following:
                            ``(i) Whether the teacher has met State 
                        qualification and licensing criteria for the 
                        grade levels and subject areas in which the 
                        teacher provides instruction.
                            ``(ii) Whether the teacher is teaching 
                        under emergency or other provisional status 
                        through which State qualification or licensing 
                        criteria have been waived.
                            ``(iii) The baccalaureate degree major of 
                        the teacher and any other graduate 
                        certification or degree held by the teacher, 
                        and the field of discipline of the 
                        certification or degree.
                            ``(iv) Whether the child is provided 
                        services by paraprofessionals and the 
                        qualifications of such paraprofessional.
                    ``(B) Additional information.--In addition to the 
                information which parents may request under 
                subparagraph (A), and the information provided in 
                subsection (c), a school which receives funds under 
                this part shall provide to each individual parent--
                            ``(i) information on the level of 
                        performance of the individual student for whom 
                        they are the parent in each of the State 
                        assessments as required under this part; and
                            ``(ii) timely notice that the student for 
                        whom they are the parent has been assigned, or 
                        has been taught for 4 or more consecutive weeks 
                        by, a teacher who is not fully qualified.
                    ``(C) Format.--The notice and information provided 
                to parents under this paragraph shall be in an 
                understandable and uniform format and, to the extent 
                practicable, provided in a language that the parents 
                can understand.
            ``(6) Plan content.--A State shall include in its plan 
        under subsection (b) an assurance that it has in effect a 
        policy that meets the requirements of this section.
    ``(i) Privacy.--Information collected under this section shall be 
collected and disseminated in a manner that protects the privacy of 
individuals.
    ``(j) Special Rule on Science Standards and Assessments.--
Notwithstanding subsections (b) and (h), no State shall be required to 
meet the requirements under this title relating to science standards 
until the beginning of the 2005-2006 school year and science 
assessments until the beginning of the 2007-2008 school year.

``SEC. 1112. LOCAL EDUCATIONAL AGENCY PLANS.

    ``(a) Plans Required.--
            ``(1) Subgrants.--A local educational agency may receive a 
        subgrant under this part for any fiscal year only if such 
        agency has on file with the State educational agency a plan, 
        approved by the State educational agency, that is coordinated 
        with other programs under this Act, the Individuals with 
        Disabilities Education Act, the Carl D. Perkins Vocational and 
        Technical Education Act of 1998, the Head Start Act, and other 
        Acts, as appropriate.
            ``(2) Consolidated application.--The plan may be submitted 
        as part of a consolidated application under section 8305.
    ``(b) Plan Provisions.--In order to help low achieving children 
achieve high standards, each local educational agency plan shall 
include--
            ``(1) a description of additional high-quality student 
        assessments, if any, other than the assessments described in 
        the State plan under section 1111, that the local educational 
        agency and schools served under this part will use to--
                    ``(A) determine the success of children served 
                under this part in meeting the State's student 
                achievement standards and provide information to 
                teachers, parents, and students on the progress being 
                made toward meeting the State student achievement 
                standards described in section 1111(b)(1)(D)(ii);
                    ``(B) assist in diagnosis, teaching, and learning 
                in the classroom in ways that best enable low-achieving 
                children served under this title to meet State 
                standards and do well in the local curriculum;
                    ``(C) determine what revisions are needed to 
                projects under this title so that such children meet 
                the State's student achievement standards; and
            ``(2) at the local educational agency's discretion, a 
        description of any other indicators that will be used in 
        addition to the assessments described in paragraph (1) for the 
        uses described in such paragraph;
            ``(3) a description of the strategy the local educational 
        agency will use to provide professional development for 
        teachers, and, if appropriate, pupil services personnel, 
        administrators, parents and other staff, including local 
        educational agency level staff in accordance with section 
        1119A;
            ``(4) a description of how the local educational agency 
        will coordinate and integrate services provided under this part 
        with other educational services at the local educational agency 
        or individual school level, such as--
                    ``(A) Even Start, Head Start, Reading First, Early 
                Reading First, and other preschool programs, including 
                plans for the transition of participants in such 
                programs to local elementary school programs; and
                    ``(B) services for children with limited English 
                proficiency or with disabilities, migratory children 
                served under part C, neglected or delinquent youth, 
                Indian children served under part B of title III, 
                homeless children, and immigrant children in order to 
                increase program effectiveness, eliminate duplication, 
                and reduce fragmentation of the instructional program;
            ``(5) an assurance that the local educational agency will 
        participate, if selected, in the State National Assessment of 
        Educational Progress in 4th and 8th grade reading and 
        mathematics carried out under section 411(b)(2) of the 
        Education Statistics Act of 1994, or in another assessment 
        pursuant to the State decision under section 7101(b)(1)(B)(ii);
            ``(6) a description of the poverty criteria that will be 
        used to select school attendance areas under section 1113;
            ``(7) a description of how teachers, in consultation with 
        parents, administrators, and pupil services personnel, in 
        targeted assistance schools under section 1115, will identify 
        the eligible children most in need of services under this part;
            ``(8) a general description of the nature of the programs 
        to be conducted by such agency's schools under sections 1114 
        and 1115 and, where appropriate, educational services outside 
        such schools for children living in local institutions for 
        neglected or delinquent children, for neglected and delinquent 
        children in community day school programs, and for homeless 
        children;
            ``(9) a description of how the local educational agency 
        will ensure that migratory children and formerly migratory 
        children who are eligible to receive services under this part 
        are selected to receive such services on the same basis as 
        other children who are selected to receive services under this 
        part;
            ``(10) if appropriate, a description of how the local 
        educational agency will use funds under this part to support 
        preschool programs for children, particularly children 
        participating in Early Reading First, or in a Head Start or 
        Even Start program, which services may be provided directly by 
        the local educational agency or through a subcontract with the 
        local Head Start agency designated by the Secretary of Health 
        and Human Services under section 641 of the Head Start Act, 
        agencies operating Even Start programs, Early Reading First, or 
        another comparable public early childhood development program.
            ``(11) a description of the actions the local educational 
        agency will take to assist its low-performing schools, 
        including schools identified under section 1116 as in need of 
        improvement;
            ``(12) a description of the actions the local educational 
        agency will take to implement school choice, consistent with 
        the requirements of section 1116;
            ``(13) a description how the local educational agency will 
        meet the requirements of section 1119(b)(1).
    ``(c) Assurances.--
            ``(1) In general.--Each local educational agency plan shall 
        provide assurances that the local educational agency will--
                    ``(A) inform eligible schools and parents of 
                schoolwide project authority and the ability of such 
                schools to consolidate funds from Federal, State, and 
                local sources;
                    ``(B) provide technical assistance and support to 
                schoolwide programs;
                    ``(C) work in consultation with schools as the 
                schools develop the schools' plans pursuant to section 
                1114 and assist schools as the schools implement such 
                plans or undertake activities pursuant to section 1115 
                so that each school can make adequate yearly progress 
                toward meeting the State student achievement standards;
                    ``(D) fulfill such agency's school improvement 
                responsibilities under section 1116, including taking 
                corrective actions under section 1116(b)(6);
                    ``(E) provide services to eligible children 
                attending private elementary and secondary schools in 
                accordance with section 1120, and timely and meaningful 
                consultation with private school officials regarding 
                such services;
                    ``(F) take into account the experience of model 
                programs for the educationally disadvantaged, and the 
                findings of relevant scientifically based research 
                indicating that services may be most effective if 
                focused on students in the earliest grades at schools 
                that receive funds under this part;
                    ``(G) in the case of a local educational agency 
                that chooses to use funds under this part to provide 
                early childhood development services to low-income 
                children below the age of compulsory school attendance, 
                ensure that such services comply with the performance 
                standards established under section 641A(a) of the Head 
                Start Act;
                    ``(H) comply with the requirements of section 1119 
                regarding the qualifications of teachers and 
                paraprofessionals;
                    ``(I) inform eligible schools of the local 
                educational agency's authority to obtain waivers on the 
                school's behalf under title VIII of this Act, and if 
                the State is an Ed-Flex Partnership State, to obtain 
                waivers under the Education Flexibility Partnership Act 
                of 1999; and
                    ``(J) coordinate and collaborate, to the extent 
                feasible and necessary as determined by the local 
                educational agency, with other agencies providing 
                services to children, youth, and families.
            ``(2) Special rule.--In carrying out subparagraph (G) of 
        paragraph (1) the Secretary--
                    ``(A) shall consult with the Secretary of Health 
                and Human Services on the implementation of such 
                subparagraph and shall establish procedures (taking 
                into consideration existing State and local laws, and 
                local teacher contracts) to assist local educational 
                agencies to comply with such subparagraph; and
                    ``(B) upon publication, shall disseminate to local 
                educational agencies the Head Start performance 
                standards as in effect under section 641A(a) of the 
                Head Start Act, and such agencies affected by such 
                subparagraph shall plan for the implementation of such 
                subparagraph (taking into consideration existing State 
                and local laws, and local teacher contracts), including 
                pursuing the availability of other Federal, State, and 
                local funding sources to assist in compliance with such 
                subparagraph.
            ``(3) Inapplicability.--The provisions of this subsection 
        shall not apply to preschool programs using the Even Start 
        model or to Even Start programs which are expanded through the 
        use of funds under this part.
    ``(d) Plan Development and Duration.--
            ``(1) Consultation.--Each local educational agency plan 
        shall be developed in consultation with teachers, 
        administrators (including administrators of programs described 
        in other parts of this title), and other appropriate school 
        personnel, and with parents of children in schools served under 
        this part.
            ``(2) Duration.--Each such plan shall be submitted for the 
        first year for which this part is in effect following the date 
        of the enactment of the No Child Left Behind Act of 2001 and 
        shall remain in effect for the duration of the agency's 
        participation under this part.
            ``(3) Review.--Each local educational agency shall 
        periodically review, and as necessary, revise its plan.
    ``(e) State Approval.--
            ``(1) In general.--Each local educational agency plan shall 
        be filed according to a schedule established by the State 
        educational agency.
            ``(2) Approval.--The State educational agency shall approve 
        a local educational agency's plan only if the State educational 
        agency determines that the local educational agency's plan--
                    ``(A) enables schools served under this part to 
                substantially help children served under this part meet 
                the standards expected of all children described in 
                section 1111(b)(1); and
                    ``(B) meets the requirements of this section.
    ``(f) Program Responsibility.--The local educational agency plan 
shall reflect the shared responsibility of schools, teachers, and the 
local educational agency in making decisions regarding activities under 
sections 1114 and 1115.
    ``(g) Parental Notification and Consent for English Language 
Instruction.--
            ``(1) Notification.--If a local educational agency uses 
        funds under this part to provide English language instruction 
        to limited English proficient children, the agency shall inform 
        a parent or the parents of a child participating in an English 
        language instruction program for limited English proficient 
        children assisted under this part of--
                    ``(A) the reasons for the identification of the 
                child as being in need of English language instruction;
                    ``(B) the child's level of English proficiency, how 
                such level was assessed, and the status of the child's 
                academic achievement; and
                    ``(C) how the English language instruction program 
                will specifically help the child acquire English and 
                meet age-appropriate standards for grade promotion and 
                graduation;
                    ``(D) what the specific exit requirements are for 
                the program;
                    ``(E) the expected rate of graduation from the 
                program into mainstream classes; and
                    ``(F) the expected rate of graduation from high 
                school for the program if funds under this part are 
                used for children in secondary schools.
            ``(2) Consent.--
                    ``(A) In general.--A parent or the parents of a 
                limited English proficient child who is identified for 
                participation in an English language instruction 
                program for limited English proficient children 
                assisted under this part shall--
                            ``(i) sign a form consenting to the 
                        student's placement in such a program prior to 
                        such time as the student is enrolled in the 
                        program; and
                            ``(ii) select among methods of instruction, 
                        if more than 1 method is offered in the 
                        program.
                    ``(B) Removal from program upon parental request.--
                A parent or the parents of a limited English proficient 
                child who is participating in an English language 
                instruction program for limited English proficient 
                children assisted under this part shall have the right 
                to have their child immediately removed from the 
                program upon their request.
            ``(3) Receipt of information.--A parent or the parents of a 
        limited English proficient child who is identified for 
        participation in an English language instruction program for 
        limited English proficient children assisted under this part 
        shall receive, in a manner and form understandable to the 
        parent or parents, the information required by this subsection. 
        At a minimum, the parent or parents shall receive--
                    ``(A) timely information about English language 
                instruction programs for limited English proficient 
                children assisted under this part;
                    ``(B) if a parent of a participating child so 
                desires, notice of opportunities for regular meetings 
                for the purpose of formulating and responding to 
                recommendations from such parent or parents; and
                    ``(C) procedural information for removing a child 
                from a program for limited English proficient children.
            ``(4) Basis for admission or exclusion.--Students shall not 
        be admitted to, or excluded from, any federally-assisted 
        education program on the basis of a surname or language-
        minority status.

``SEC. 1113. ELIGIBLE SCHOOL ATTENDANCE AREAS.

    ``(a) Determination.--
            ``(1) In general.--A local educational agency shall use 
        funds received under this part only in eligible school 
        attendance areas.
            ``(2) Eligible school attendance areas.--For the purposes 
        of this part--
                    ``(A) the term `school attendance area' means, in 
                relation to a particular school, the geographical area 
                in which the children who are normally served by that 
                school reside; and
                    ``(B) the term `eligible school attendance area' 
                means a school attendance area in which the percentage 
                of children from low-income families is at least as 
                high as the percentage of children from low-income 
                families in the local educational agency as a whole.
            ``(3) Local educational agency discretion.--
                    ``(A) In general.--Notwithstanding paragraph (2), a 
                local educational agency may--
                            ``(i) designate as eligible any school 
                        attendance area or school in which at least 35 
                        percent of the children are from low-income 
                        families;
                            ``(ii) use funds received under this part 
                        in a school that is not in an eligible school 
                        attendance area, if the percentage of children 
                        from low-income families enrolled in the school 
                        is equal to or greater than the percentage of 
                        such children in a participating school 
                        attendance area of such agency;
                            ``(iii) designate and serve a school 
                        attendance area or school that is not eligible 
                        under subsection (b), but that was eligible and 
                        that was served in the preceding fiscal year, 
                        but only for 1 additional fiscal year; and
                            ``(iv) elect not to serve an eligible 
                        school attendance area or eligible school that 
                        has a higher percentage of children from low-
                        income families if--
                                    ``(I) the school meets the 
                                comparability requirements of section 
                                1120A(c);
                                    ``(II) the school is receiving 
                                supplemental funds from other State or 
                                local sources that are spent according 
                                to the requirements of section 1114 or 
                                1115; and
                                    ``(III) the funds expended from 
                                such other sources equal or exceed the 
                                amount that would be provided under 
                                this part.
                    ``(B) Special rule.--Notwithstanding subparagraph 
                (A)(iv), the number of children attending private 
                elementary and secondary schools who are to receive 
                services, and the assistance such children are to 
                receive under this part, shall be determined without 
                regard to whether the public school attendance area in 
                which such children reside is assisted under 
                subparagraph (A).
    ``(b) Ranking Order.--If funds allocated in accordance with 
subsection (f) are insufficient to serve all eligible school attendance 
areas, a local educational agency--
            ``(1) shall annually rank from highest to lowest according 
        to the percentage of children from low-income families in each 
        agency's eligible school attendance areas in the following 
        order--
                    ``(A) eligible school attendance areas in which the 
                concentration of children from low-income families 
                exceeds 75 percent; and
                    ``(B) all remaining eligible school attendance 
                areas in which the concentration of children from low-
                income families is 75 percent or lower either by grade 
                span or for the entire local educational agency;
            ``(2) shall, within each category listed in paragraph (1), 
        serve schools in rank order from highest to lowest according to 
        the ranking assigned under paragraph (1);
            ``(3) notwithstanding paragraph (2), may give priority, 
        within each such category and in rank order from highest to 
        lowest subject to paragraph (4), to eligible school attendance 
        areas that serve children in elementary schools; and
            ``(4) not serve a school described in paragraph (1)(B) 
        before serving a school described in paragraph (1)(A).
    ``(c) Low-Income Measures.--In determining the number of children 
ages 5 through 17 who are from low-income families, the local 
educational agency shall apply the measures described in paragraphs (1) 
and (2) of this subsection:
            ``(1) Allocation to public school attendance areas.--The 
        local educational agency shall use the same measure of poverty, 
        which measure shall be the number of children ages 5 through 17 
        in poverty counted in the most recent census data approved by 
        the Secretary, the number of children eligible for free and 
        reduced priced lunches under the National School Lunch Act, the 
        number of children in families receiving assistance under the 
        State program funded under part A of title IV of the Social 
        Security Act, or the number of children eligible to receive 
        medical assistance under the Medicaid program, or a composite 
        of such indicators, with respect to all school attendance areas 
        in the local educational agency--
                    ``(A) to identify eligible school attendance areas;
                    ``(B) to determine the ranking of each area; and
                    ``(C) to determine allocations under subsection 
                (f).
            ``(2) Allocation for equitable service to private school 
        students.--
                    ``(A) Calculation.--A local educational agency 
                shall have the final authority, consistent with section 
                1120 to calculate the number of private school 
                children, ages 5 through 17, who are low-income by--
                            ``(i) using the same measure of low-income 
                        used to count public school children;
                            ``(ii) using the results of a survey that, 
                        to the extent possible, protects the identity 
                        of families of private school students and 
                        allowing such survey results to be extrapolated 
                        if complete actual data are not available; or
                            ``(iii) applying the low-income percentage 
                        of each participating public school attendance 
                        area, determined pursuant to this section, to 
                        the number of private school children who 
                        reside in that attendance area.
                    ``(B) Complaint process.--Any dispute regarding 
                low-income data on private school students shall be 
                subject to the complaint process authorized in section 
                8505.
    ``(d) Exception.--This section (other than subsections (a)(3) and 
(f)) shall not apply to a local educational agency with a total 
enrollment of less than 1,500 children.
    ``(e) Waiver for Desegregation Plans.--The Secretary may approve a 
local educational agency's written request for a waiver of the 
requirements of subsections (a) and (f), and permit such agency to 
treat as eligible, and serve, any school that children attend under a 
desegregation plan ordered by a State or court or approved by the 
Secretary, or such a plan that the agency continues to implement after 
it has expired, if--
            ``(1) the number of economically disadvantaged children 
        enrolled in the school is not less than 25 percent of the 
        school's total enrollment; and
            ``(2) the Secretary determines on the basis of a written 
        request from such agency and in accordance with such criteria 
        as the Secretary establishes, that approval of that request 
        would further the purposes of this part.
    ``(f) Allocations.--
            ``(1) In general.--A local educational agency shall 
        allocate funds received under this part to eligible school 
        attendance areas or eligible schools, identified under 
        subsection (b) in rank order on the basis of the total number 
        of children from low-income families in each area or school.
            ``(2) Special rule.--(A) Except as provided in subparagraph 
        (B), the per-pupil amount of funds allocated to each school 
        attendance area or school under paragraph (1) shall be at least 
        125 percent of the per-pupil amount of funds a local 
        educational agency received for that year under the poverty 
        criteria described by the local educational agency in the plan 
        submitted under section 1112, except that this paragraph shall 
        not apply to a local educational agency that only serves 
        schools in which the percentage of such children is 35 percent 
        or greater.
            ``(B) A local educational agency may reduce the amount of 
        funds allocated under subparagraph (A) for a school attendance 
        area or school by the amount of any supplemental State and 
        local funds expended in that school attendance area or school 
        for programs that meet the requirements of section 1114 or 
        1115.
            ``(3) Reservation.--A local educational agency shall 
        reserve such funds as are necessary under this part to provide 
        services comparable to those provided to children in schools 
        funded under this part to serve--
                    ``(A) homeless children who do not attend 
                participating schools, including providing 
                educationally related support services to children in 
                shelters;
                    ``(B) children in local institutions for neglected 
                or delinquent children; and
                    ``(C) if appropriate, neglected and delinquent 
                children in community day school programs.
            ``(4) School improvement reservation.--In addition to the 
        funding a local educational agency receives under section 
        1003(b), a local educational agency may reserve such funds as 
        are necessary under this part to meet such agency's school 
        improvement responsibilities under section 1116, including 
        taking corrective actions under section 1116(b)(6).
            ``(5) Financial incentives and rewards reservation.--A 
        local educational agency may reserve such funds as are 
        necessary under this part to provide financial incentives and 
        rewards to teachers who serve in schools eligible under 
        subsection (b)(1)(A) and identified for improvement under 
        section 1116(b)(1) for the purpose of attracting and retaining 
        qualified and effective teachers.

``SEC. 1114. SCHOOLWIDE PROGRAMS.

    ``(a) Purpose.--The purpose of a schoolwide program under this 
section is--
            ``(1) to enable a local educational agency to consolidate 
        funds under this part with other Federal, State, and local 
        funds, to upgrade the entire educational program in a high 
        poverty school; and
            ``(2) to help ensure that all children in such a school 
        meet challenging State standards for student achievement, 
        particularly those children who are most at-risk of not meeting 
        those standards.
    ``(b) Use of Funds for Schoolwide Programs.--
            ``(1) In general.--A local educational agency may 
        consolidate funds under this part, together with other Federal, 
        State, and local funds, in order to upgrade the entire 
        educational program of a school that serves an eligible school 
        attendance area in which not less than 25 percent of the 
        children are from low-income families, or not less than 25 
        percent of the children enrolled in the school are from such 
        families.
            ``(2) Identification of students not required.--
                    ``(A) In general.--No school participating in a 
                schoolwide program shall be required to identify 
                particular children under this part as eligible to 
                participate in a schoolwide program or to provide 
                supplemental services to such children.
                    ``(B) Supplement funds.--A school participating in 
                a schoolwide program shall use funds available to carry 
                out this section only to supplement the amount of funds 
                that would, in the absence of funds under this part, be 
                made available from non-Federal sources for the school, 
                including funds needed to provide services that are 
                required by law for children with disabilities and 
                children with limited English proficiency.
            ``(3) Exemption from statutory and regulatory 
        requirements.--
                    ``(A) Exemption.--Except as provided in subsection 
                (c), the Secretary may, through publication of a notice 
                in the Federal Register, exempt schoolwide programs 
                under this section from statutory or regulatory 
                provisions of any other noncompetitive formula grant 
                program administered by the Secretary (other than 
                formula or discretionary grant programs under the 
                Individuals with Disabilities Education Act, except as 
                provided in section 613(a)(2)(D) of such Act), or any 
                discretionary grant program administered by the 
                Secretary, to support schoolwide programs if the intent 
                and purposes of such other programs are met.
                    ``(B) Requirements.--A school that chooses to use 
                funds from such other programs shall not be relieved of 
                the requirements relating to health, safety, civil 
                rights, student and parental participation and 
                involvement, services to private school children, 
                maintenance of effort, uses of Federal funds to 
                supplement, not supplant non-Federal funds, or the 
                distribution of funds to State or local educational 
                agencies that apply to the receipt of funds from such 
                programs.
                    ``(C) Records.--A school that consolidates funds 
                from different Federal programs under this section 
                shall not be required to maintain separate fiscal 
                accounting records, by program, that identify the 
                specific activities supported by those particular funds 
                as long as it maintains records that demonstrate that 
                the schoolwide program, considered as a whole addresses 
                the intent and purposes of each of the Federal programs 
                that were consolidated to support the schoolwide 
                program.
            ``(4) Professional development.--Each school receiving 
        funds under this part for any fiscal year shall devote 
        sufficient resources to effectively carry out the activities 
        described in subsection (c)(1)(D) in accordance with section 
        1119A for such fiscal year, except that a school may enter into 
        a consortium with another school to carry out such activities.
    ``(c) Components of a Schoolwide Program.--
            ``(1) In general.--A schoolwide program shall include the 
        following components:
                    ``(A) A comprehensive needs assessment of the 
                entire school (including taking into account the needs 
                of migratory children as defined in section 1309(2)) 
                that is based on information which includes the 
                performance of children in relation to the State 
                content standards and the State student achievement 
                standards described in section 1111(b)(1).
                    ``(B) Schoolwide reform strategies that--
                            ``(i) provide opportunities for all 
                        children to meet the State's proficient and 
                        advanced levels of student achievement 
                        described in section 1111(b)(1)(D);
                            ``(ii) use effective methods and 
                        instructional strategies that are based upon 
                        scientifically based research that--
                                    ``(I) strengthen the core academic 
                                program in the school;
                                    ``(II) increase the amount and 
                                quality of learning time, such as 
                                providing an extended school year and 
                                before- and after-school and summer 
                                programs and opportunities, and help 
                                provide an enriched and accelerated 
                                curriculum; and
                                    ``(III) include strategies for 
                                meeting the educational needs of 
                                historically underserved populations;
                            ``(iii)(I) address the needs of all 
                        children in the school, but particularly the 
                        needs of low-achieving children and those at 
                        risk of not meeting the State student 
                        achievement standards who are members of the 
                        target population of any program that is 
                        included in the schoolwide program; and
                            ``(II) address how the school will 
                        determine if such needs have been met; and
                            ``(iv) are consistent with, and are 
                        designed to implement, the State and local 
                        improvement plans, if any.
                    ``(C) Instruction by fully qualified (as defined in 
                section 8101) teachers.
                    ``(D) In accordance with section 1119A and 
                subsection (b)(4), high quality and ongoing 
                professional development for teachers and 
                paraprofessionals, and, where appropriate, pupil 
                services personnel, parents, principals, and other 
                staff to enable all children in the school to meet the 
                State's student achievement standards.
                    ``(E) Strategies to attract quality teachers to 
                high need schools, such as differential pay systems or 
                performance based pay.
                    ``(F) Strategies to increase parental involvement 
                in accordance with section 1118, such as family 
                literary services.
                    ``(G) Plans for assisting preschool children in the 
                transition from early childhood programs, such as Head 
                Start, Even Start, Early Reading First, or a State-run 
                preschool program, to local elementary school programs.
                    ``(H) Measures to include teachers in the decisions 
                regarding the use of assessments described in section 
                1111(b)(4) in order to provide information on, and to 
                improve, the performance of individual students and the 
                overall instructional program.
                    ``(I) Activities to ensure that students who 
                experience difficulty mastering the proficient or 
                advanced levels of performance standards required by 
                section 1111(b) shall be provided with effective, 
                timely additional assistance which shall include 
                measures to ensure that students' difficulties are 
                identified on a timely basis and to provide sufficient 
                information on which to base effective assistance.
            ``(2) Plan.--Any eligible school that desires to operate a 
        schoolwide program shall first develop (or amend a plan for 
        such a program that was in existence on the day before the date 
        of the enactment of the No Child Left Behind Act of 2001, a 
        comprehensive plan for reforming the total instructional 
        program in the school that--
                    ``(A) incorporates the components described in 
                paragraph (1);
                    ``(B) describes how the school will use resources 
                under this part and from other sources to implement 
                those components; and
                    ``(C) includes a list of State and local 
                educational agency programs and other Federal programs 
                under subsection (b)(4) that will be consolidated in 
                the schoolwide program.
            ``(3) Plan development.--The comprehensive plan shall be--
                    ``(A) developed during a 1-year period, unless--
                            ``(i) the local educational agency 
                        determines that less time is needed to develop 
                        and implement the schoolwide program; or
                            ``(ii) the school operated a schoolwide 
                        program on the day preceding the date of the 
                        enactment of the No Child Left Behind Act of 
                        2001, in which case such school may continue to 
                        operate such program, but shall develop 
                        amendments to its existing plan during the 
                        first year of assistance under such Act to 
                        reflect the provisions of this section;
                    ``(B) developed with the involvement of the 
                community to be served and individuals who will carry 
                out such plan, including teachers, principals, 
                administrators (including administrators of programs 
                described in other parts of this title), if appropriate 
                pupil services personnel, school staff and parents, 
                and, if the plan relates to a secondary school, 
                students from such school;
                    ``(C) in effect for the duration of the school's 
                participation under this part and reviewed and revised, 
                as necessary, by the school;
                    ``(D) available to the local educational agency, 
                parents, and the public, and the information contained 
                in such plan shall be provided in a format, and to the 
                extent practicable, in a language that they can 
                understand; and
                    ``(E) if appropriate, developed in coordination 
                with programs under Reading First, Early Reading First, 
                Even Start, Carl D. Perkins Vocational and Technical 
                Education Act of 1998, and the Head Start Act.
    ``(d) Accountability.--A schoolwide program under this section 
shall be subject to the school improvement provisions of section 1116.
    ``(e) Prekindergarten Program.--A school that is eligible for a 
schoolwide program under this section may use funds made available 
under this title to establish or enhance prekindergarten programs for 
3-, 4-, and 5-year-old children, such as Even Start programs or Early 
Reading First programs.

``SEC. 1115. TARGETED ASSISTANCE SCHOOLS.

    ``(a) In General.--In all schools selected to receive funds under 
section 1113(f) that are ineligible for a schoolwide program under 
section 1114, or that choose not to operate such a schoolwide program, 
a local educational agency may use funds received under this part only 
for programs that provide services to eligible children under 
subsection (b) identified as having the greatest need for special 
assistance.
    ``(b) Eligible Children.--
            ``(1) Eligible population.--(A) The eligible population for 
        services under this section is--
                    ``(i) children not older than age 21 who are 
                entitled to a free public education through grade 12; 
                and
                    ``(ii) children who are not yet at a grade level 
                where the local educational agency provides a free 
                public education.
            ``(B) From the population described in subparagraph (A), 
        eligible children are children identified by the school as 
        failing, or most at risk of failing, to meet the State's 
        challenging student achievement standards on the basis of 
        assessments under this part, and, as appropriate, on the basis 
        of multiple, educationally related, objective criteria 
        established by the local educational agency and supplemented by 
        the school, except that children from preschool through grade 2 
        may be selected solely on the basis of such criteria as teacher 
        judgment, interviews with parents, and other appropriate 
        measures.
            ``(2) Children included.--(A)(i) Children with 
        disabilities, migrant children, and children with limited 
        English proficiency are eligible for services under this part 
        on the same basis as other children.
            ``(ii) Funds received under this part may not be used to 
        provide services that are otherwise required by law to be made 
        available to such children but may be used to coordinate or 
        supplement such services.
            ``(B) A child who, at any time in the 2 years preceding the 
        year for which the determination is made, participated in a 
        Head Start, Even Start program, Early Reading First, or in 
        preschool services under this title, is eligible for services 
        under this part.
            ``(C)(i) A child who, at any time in the 2 years preceding 
        the year for which the determination is made, received services 
        under part C is eligible for services under this part.
            ``(ii) A child in a local institution for neglected or 
        delinquent children or attending a community day program for 
        such children is eligible for services under this part.
            ``(D) A child who is homeless and attending any school in 
        the local educational agency is eligible for services under 
        this part.
    ``(c) Components of a Targeted Assistance School Program.--
            ``(1) In general.--To assist targeted assistance schools 
        and local educational agencies to meet their responsibility to 
        provide for all their students served under this title the 
        opportunity to meet the State's challenging student achievement 
        standards in subjects as determined by the State, each targeted 
        assistance program under this section shall--
                    ``(A) use such program's resources under this part 
                to help participating children meet such State's 
                challenging student achievement standards expected for 
                all children;
                    ``(B) ensure that planning for students served 
                under this part is incorporated into existing school 
                planning;
                    ``(C) use effective methods and instructional 
                strategies that are based upon scientifically based 
                research that strengthens the core academic program of 
                the school and that--
                            ``(i) give primary consideration to 
                        providing extended learning time such as an 
                        extended school year, before- and after-school, 
                        and summer programs and opportunities;
                            ``(ii) help provide an accelerated, high-
                        quality curriculum, including applied learning; 
                        and
                            ``(iii) minimize removing children from the 
                        regular classroom during regular school hours 
                        for instruction provided under this part;
                    ``(D) coordinate with and support the regular 
                education program, which may include services to assist 
                preschool children in the transition from early 
                childhood programs or Early Reading First programs to 
                elementary school programs;
                    ``(E) provide instruction by fully qualified 
                teachers as defined in section 8101;
                    ``(F) in accordance with subsection (e)(3) and 
                section 1119A, provide opportunities for professional 
                development with resources provided under this part, 
                and, to the extent practicable, from other sources, for 
                teachers, principals, and administrators and other 
                school staff, including, if appropriate, pupil services 
                personnel, who work with participating children in 
                programs under this section or in the regular education 
                program; and
                    ``(G) provide strategies to increase parental 
                involvement in accordance with section 1118, such as 
                family literacy services.
            ``(2) Requirements.--Each school conducting a program under 
        this section shall assist participating children selected in 
        accordance with subsection (b) to meet the State's proficient 
        and advanced levels of achievement by--
                    ``(A) the coordination of resources provided under 
                this part with other resources; and
                    ``(B) reviewing, on an ongoing basis, the progress 
                of participating children and revising the targeted 
                assistance program, if necessary, to provide additional 
                assistance to enable such children to meet the State's 
                challenging student achievement standards, such as an 
                extended school year, before- and after-school, and 
                summer programs and opportunities, training for 
                teachers regarding how to identify students that 
                require additional assistance, and training for 
                teachers regarding how to implement student achievement 
                standards in the classroom.
    ``(d) Integration of Professional Development.--To promote the 
integration of staff supported with funds under this part, public 
school personnel who are paid with funds received under this part may 
participate in general professional development and school planning 
activities.
    ``(e) Special Rules.--
            ``(1) Simultaneous service.--Nothing in this section shall 
        be construed to prohibit a school from serving students served 
        under this section simultaneously with students with similar 
        educational needs, in the same educational settings where 
        appropriate.
            ``(2) Comprehensive services.--If health, nutrition, and 
        other social services are not otherwise available to eligible 
        children in a targeted assistance school and such school, if 
        appropriate, has engaged in a comprehensive needs assessment 
        and established a collaborative partnership with local service 
        providers, and if funds are not reasonably available from other 
        public or private sources to provide such services, then a 
        portion of the funds provided under this part may be used as a 
        last resort to provide such services, including--
                    ``(A) the provision of basic medical equipment, 
                such as eyeglasses and hearing aids; and
                    ``(B) professional development necessary to assist 
                teachers, pupil services personnel, other staff, and 
                parents in identifying and meeting the comprehensive 
                needs of eligible children.
            ``(3) Professional development.--Each school receiving 
        funds under this part for any fiscal year shall devote 
        sufficient resources to carry out effectively the professional 
        development activities described in subparagraph (F) of 
        subsection (c)(1) in accordance with section 1119A for such 
        fiscal year, except that a school may enter into a consortium 
        with another school to carry out such activities.

``SEC. 1115A. SCHOOL CHOICE.

    ``(a) Choice Programs.--A local educational agency may use funds 
under this part, in combination with State, local, and private funds, 
to develop and implement public school choice programs, for children 
eligible for assistance under this part, which permit parents to select 
the public school that their child will attend.
    ``(b) Choice Plan.--A local educational agency that chooses to 
implement a public school choice program shall first develop a plan 
that includes assurances that--
            ``(1) all eligible students across grade levels served 
        under this part will have equal access to the program;
            ``(2) describe how the school will use resources under this 
        part and from other sources to implement the plan;
            ``(3) the plan will be developed with the involvement of 
        parents and others in the community to be served and 
        individuals who will carry out the plan, including 
        administrators, teachers, principals, and other staff;
            ``(4) parents of eligible students in the local educational 
        agency will be given prompt notice of the existence of the 
        public school choice program and its availability to them, and 
        a clear explanation of how the program will operate;
            ``(5) the program will include charter schools and any 
        other public school and shall not include a school that is or 
        has been identified as a school in school improvement or is or 
        has been in corrective action for the past 2 consecutive years;
            ``(6) transportation services or the costs of 
        transportation may be provided by the local educational agency 
        with funds under this part; and
            ``(7) such local educational agency will comply with the 
        other requirements of this part.

``SEC. 1116. ASSESSMENT AND LOCAL EDUCATIONAL AGENCY AND SCHOOL 
              IMPROVEMENT.

    ``(a) Local Review.--Each local educational agency receiving funds 
under this part shall--
            ``(1) use the State assessments described in the State 
        plan;
            ``(2) use any additional measures or indicators described 
        in the local educational agency's plan to review annually the 
        progress of each school served under this part to determine 
        whether the school is meeting, or making adequate yearly 
        progress as defined in section 1111(b)(2)(B) toward enabling 
        its students to meet the State's student achievement standards 
        described in the State plan;
            ``(3) publicize and disseminate to teachers and other 
        staff, parents, students, and the community, the results of the 
        annual review under paragraph (2);
            ``(4) review the effectiveness of the actions and 
        activities the schools are carrying out under this part with 
        respect to parental involvement assisted under this Act.
    ``(b) School Improvement.--
            ``(1) In general.--
                    ``(A) Identification.--A local educational agency 
                shall identify for school improvement any elementary or 
                secondary school served under this part that--
                            ``(i) fails, for any year, to make adequate 
                        yearly progress as defined in the State's plan 
                        under section 1111(b)(2); or
                            ``(ii) was in school improvement status 
                        under this section immediately before the 
                        effective date of the No Child Left Behind Act 
                        of 2001.
                    ``(B) Application.--Paragraph (1) does not apply to 
                a school if almost every student in the school is 
                meeting the State's advanced level of performance.
                    ``(C) Review.--To determine if an elementary school 
                or a secondary school that is conducting a targeted 
                assistance program under section 1115 should be 
                identified for school improvement under this 
                subsection, a local educational agency may choose to 
                review the progress of only the students in the school 
                who are served, or are eligible for services, under 
                this part.
            ``(2) Opportunity to review and present evidence; time 
        limit.--
                    ``(A) Before identifying an elementary school or a 
                secondary school for school improvement under paragraph 
                (1), for corrective action under section 1116(b)(6), or 
                for restructuring under section 1116(b)(7), the local 
                educational agency shall provide the school with an 
                opportunity to review the school-level data, including 
                assessment data, on which the proposed identification 
                is based.
                    ``(B) Evidence.--If the principal of a school 
                proposed for identification under paragraph (1), (6), 
                or (7) believes that the proposed identification is in 
                error for statistical or other substantive reasons, the 
                principal may provide supporting evidence to the local 
                educational agency, which shall consider that evidence 
                before making a final determination.
                    ``(C) Final determination.--Not later than 30 days 
                after a local educational agency makes an initial 
                determination concerning identifying a school under 
                paragraph (1), (6), or (7), the local educational 
                agency shall make public a final determination on the 
                status of the school.
            ``(3) School plan.--
                    ``(A) Revised plan.--Each school identified under 
                paragraph (1) for school improvement shall, not later 
                than 3 months after being so identified, develop or 
                revise a school plan, in consultation with parents, 
                school staff, the local educational agency serving the 
                school, the local school board, and other outside 
                experts, for approval by such local educational agency. 
                The school plan shall cover a 2-year period and--
                            ``(i) incorporate scientifically based 
                        research strategies that strengthen the core 
                        academic subjects in the school and address the 
                        specific academic issues that caused the school 
                        to be identified for school improvement;
                            ``(ii) adopt policies and practices 
                        concerning the school's core academic subjects 
                        that have the greatest likelihood of ensuring 
                        that all groups of students specified in 
                        section 1111(b)(2)(C)(iii)(I) and (II) and 
                        enrolled in the school will meet the State's 
                        proficient level of achievement on the State 
                        assessment described in section 1111(b)(4) not 
                        later than 10 years after the date of enactment 
                        of the No Child Left Behind Act of 2001;
                            ``(iii) provide an assurance that the 
                        school shall reserve not less than 10 percent 
                        of the funds made available to the school under 
                        this part for each fiscal year that the school 
                        is in school improvement status, for the 
                        purpose of providing to the school's teachers 
                        and principal high-quality professional 
                        development that--
                                    ``(I) directly addresses the 
                                academic performance problem that 
                                caused the school to be identified for 
                                school improvement; and
                                    ``(II) meets the requirements for 
                                professional development activities 
                                under section 1119A;
                            ``(iv) specify how the funds described in 
                        clause (iii) will be used to remove the school 
                        from school improvement status;
                            ``(v) establish specific annual, measurable 
                        goals for continuous and significant progress 
                        by each group of students specified in section 
                        1111(b)(2)(C)(iii)(I) and (II) and enrolled in 
                        the school that will ensure that all such 
                        groups of students shall meet the State's 
                        proficient level of achievement on the State 
                        assessment described in section 1111(b)(4) not 
                        later than 10 years after the date of enactment 
                        of the No Child Left Behind Act of 2001;
                            ``(vi) identify how the school will provide 
                        written notification about the identification 
                        to parents of each student enrolled in such 
                        school, in a format and, to the extent 
                        practicable, in a language the parents can 
                        understand; and
                            ``(vii) specify the responsibilities of the 
                        school, the local educational agency, and the 
                        State educational agency serving the school 
                        under the plan, including the technical 
                        assistance to be provided by the local 
                        educational agency under paragraph (4).
                    ``(B) Conditional approval.--The local educational 
                agency may condition approval of a school plan on 
                inclusion of 1 or more of the corrective actions 
                specified in paragraph (6)(D)(ii).
                    ``(C) Plan implementation.--A school shall 
                implement the school plan (including a revised plan) 
                expeditiously, but not later than the beginning of the 
                school year following the school year in which the 
                school was identified for school improvement.
                    ``(D) Local educational agency approval.--The local 
                educational agency shall--
                            ``(i) establish a peer-review process to 
                        assist with review of a school plan prepared by 
                        a school served by the local educational 
                        agency; and
                            ``(ii) promptly review the school plan, 
                        work with the school as necessary, and approve 
                        the school plan if it meets the requirements of 
                        this paragraph.
            ``(4) Technical assistance.--
                    ``(A) In general.--For each school identified for 
                school improvement under paragraph (1), the local 
                educational agency serving the school shall provide 
                technical assistance with funds allocated under section 
                1003 as the school develops and implements the school 
                plan.
                    ``(B) Specific assistance.--Such technical 
                assistance--
                            ``(i) shall include assistance in analyzing 
                        data from the assessments required under 
                        section 1111(b)(4), and other samples of 
                        student work, to identify and address 
                        instructional problems and solutions;
                            ``(ii) shall include assistance in 
                        identifying and implementing instructional 
                        strategies and methods that are tied to 
                        scientifically based research and that have 
                        proven effective in addressing the specific 
                        instructional issues that caused the school to 
                        be identified for school improvement;
                            ``(iii) shall include assistance in 
                        analyzing and revising the school's budget so 
                        that the school resources are more effectively 
                        allocated for the activities most likely to 
                        increase student performance and to remove the 
                        school from school improvement status; and
                            ``(iv) may be provided--
                                    ``(I) by the local educational 
                                agency, through mechanisms authorized 
                                under section 1117; or
                                    ``(II) by the State educational 
                                agency, an institution of higher 
                                education (in full compliance with all 
                                the reporting provisions of title II of 
                                the Higher Education Act of 1965), a 
                                private not-for-profit organization or 
                                for-profit organization, an educational 
                                service agency, or another entity with 
                                experience in helping schools improve 
                                performance.
                    ``(C) Scientifically based research.--Technical 
                assistance provided under this section by a local 
                educational agency or an entity approved by that agency 
                shall be based on scientifically based research.
            ``(5) Notification to parents.--A local educational agency 
        shall promptly provide parents (in a format and, to the extent 
        practicable, in a language they can understand) of each student 
        in an elementary school or a secondary school identified for 
        school improvement--
                    ``(A) an explanation of what the school improvement 
                identification means, and how the school identified for 
                school improvement compares in terms of academic 
                achievement to other elementary schools or secondary 
                schools served by the local educational agency and the 
                State educational agency involved;
                    ``(B) the reasons for the identification;
                    ``(C) an explanation of what the school identified 
                for school improvement is doing to address the problem 
                of low achievement;
                    ``(D) an explanation of what the local educational 
                agency or State educational agency is doing to help the 
                school address the achievement problem; and
                    ``(E) an explanation of how parents described in 
                this paragraph can become involved in addressing the 
                academic issues that caused the school to be identified 
                for school improvement.
            ``(6) Corrective action.--
                    ``(A) In general.--In this subsection, the term 
                `corrective action' means action, consistent with State 
                law, that--
                            ``(i) substantially and directly responds 
                        to--
                                    ``(I) the consistent academic 
                                failure of a school that caused the 
                                local educational agency to take such 
                                action; and
                                    ``(II) any underlying staffing, 
                                curriculum, or other problem in the 
                                school; and
                            ``(ii) is designed to increase 
                        substantially the likelihood that students 
                        enrolled in the school identified for 
                        corrective action will perform at the State's 
                        proficient and advanced levels of achievement 
                        on the State assessment described in section 
                        1111(b)(4).
                    ``(B) System.--In order to help students served 
                under this part meet challenging State standards, each 
                local educational agency shall implement a system of 
                corrective action in accordance with subparagraphs (C) 
                through (F) and paragraphs (7) through (9).
                    ``(C) Role of local educational agency.--The local 
                educational agency--
                            ``(i) may identify for corrective action 
                        and take corrective action with respect to any 
                        school identified as in need of improvement 
                        under paragraph (1);
                            ``(ii) after providing technical assistance 
                        under paragraph (4), shall identify for 
                        corrective action and take corrective action 
                        with respect to any school served by the local 
                        educational agency under this part that--
                                    ``(I) fails to make adequate yearly 
                                progress, as defined by the State under 
                                section 1111(b)(2), at the end of the 
                                first school year after the school year 
                                in which the school was identified 
                                under paragraph (1); or
                                    ``(II) was in school-improvement 
                                status for 2 years or in corrective-
                                action status under this subsection 
                                immediately before the effective date 
                                of the No Child Left Behind Act of 
                                2001;
                            ``(iii) shall continue to provide technical 
                        assistance while instituting any corrective 
                        action under clause (i) or (ii); and
                            ``(iv) shall, in any case described in 
                        clause (ii), promptly notify parents of the 
                        option to transfer their child to another 
                        public school under subparagraph (D)(i).
                    ``(D) Requirements.--In the case of a school 
                described in subparagraph (C)(ii), the local 
                educational agency shall both--
                            ``(i) provide all students enrolled in the 
                        school with the option to transfer to another 
                        public school within the local educational 
                        agency, including a public charter school, that 
                        has not been identified for school improvement 
                        under paragraph (1), unless such an option is 
                        prohibited by State law; and
                            ``(ii) take at least 1 of the following 
                        corrective actions:
                                    ``(I) Replace the school staff 
                                which are relevant to the failure to 
                                make adequate yearly progress.
                                    ``(II) Institute and fully 
                                implement a new curriculum, including 
                                providing appropriate professional 
                                development for all relevant staff, 
                                that is based on scientifically based 
                                research and offers substantial promise 
                                of improving educational performance 
                                for low-performing students.
                    ``(E) Delay.--A local educational agency may delay, 
                for a period not to exceed 1 year, implementation of 
                corrective action only if the school's failure to make 
                adequate yearly progress was justified due to 
                exceptional or uncontrollable circumstances, such as a 
                natural disaster or a precipitous and unforeseen 
                decline in the financial resources of the local 
                educational agency or school.
                    ``(F) Publication and dissemination.--The local 
                educational agency shall publish and disseminate 
                information regarding any corrective action the local 
                educational agency takes under this paragraph at a 
                school--
                            ``(i) to the public and to the parents of 
                        each student enrolled in the school subject to 
                        corrective action;
                            ``(ii) in a format and, to the extent 
                        practicable, in a language that the parents can 
                        understand; and
                            ``(iii) through such means as the Internet, 
                        the media, and public agencies.
            ``(7) Restructuring.--
                    ``(A) Failure to make adequate yearly progress.--
                If--
                            ``(i) after 1 additional year, a school 
                        subject to corrective action under paragraph 
                        (6) continues to fail to make adequate yearly 
                        progress and students in the school who are 
                        from economically disadvantaged families are 
                        not making measurable progress in the subjects 
                        included in the State's definition of adequate 
                        yearly progress; or
                            ``(ii) for 2 additional years a school 
                        subject to corrective action under paragraph 
                        (6) fails to make adequate yearly progress, the 
                        local educational agency shall--
                                    ``(I) provide all students enrolled 
                                in the school with the option to 
                                transfer to another public school 
                                within the local educational agency, 
                                including a public charter school, that 
                                has not been identified for school 
                                improvement under paragraph (1), unless 
                                prohibited by State law;
                                    ``(II) make funds available to the 
                                economically disadvantaged child's 
                                parents to place the child in a private 
                                school or to obtain supplementary 
                                educational services, in accordance 
                                with subsection (d); and
                                    ``(III) prepare a plan and make 
                                necessary arrangements to carry out 
                                subparagraph (B).
                    ``(B) Alternative governance.--Not later than the 
                beginning of the school year following the year in 
                which the local educational agency implements 
                subparagraph (A), the local educational agency shall 
                implement 1 of the following alternative governance 
                arrangements for the school:
                            ``(i) Reopening the school as a public 
                        charter school.
                            ``(ii) Replacing all or most of the school 
                        staff.
                            ``(iii) With the approval of a majority of 
                        the teachers at the school and a majority of 
                        parents of children enrolled at the school, 
                        operation of the school by another entity, such 
                        as a private management company.
                            ``(iv) Turning the operation of the school 
                        over to the State, if permitted under State law 
                        and agreed to by the State.
                    ``(C) Available results.--The State educational 
                agency shall ensure that, for any school year in which 
                a school is subject to corrective action under 
                paragraph (6)(C)(ii), and for any school and school 
                year described in subparagraph (A) or (B) of this 
                paragraph, the results of State assessments for that 
                school are available to the local educational agency by 
                the end of the school year in which the assessments are 
                administered.
                    ``(D) Prompt notice.--The local educational agency 
                shall provide prompt notice to teachers and parents 
                whenever subparagraph (A) or (B) applies, shall provide 
                them adequate opportunity to comment before taking any 
                action under those paragraphs and to participate in 
                developing any plan under subparagraph (A)(iii), and 
                shall provide parents an explanation of the options 
                under subparagraph (A)(i) and (ii).
            ``(8) Transportation.--In any case described in paragraph 
        (6)(D)(i), (7)(A)(i)(I), and (7)(A)(ii)(I) the local 
        educational agency--
                    ``(A) shall provide, or shall pay for the provision 
                of, transportation for the student to the school the 
                child attends; and
                    ``(B) may use not more than 15 percent of its 
                allocation under this part for that purpose.
            ``(9) Duration.--If any school identified for 
        reconstitution under paragraph (7)--
                    ``(A) makes adequate yearly progress for 2 
                consecutive years, the local educational agency need no 
                longer subject it to corrective action or identify it 
                as in need of improvement; or
                    ``(B) fails to make adequate yearly progress, but 
                children from low-income families in the school make 
                measurable educational progress for 1 year, the local 
                educational agency shall place or continue as 
                appropriate the school in corrective action under 
                paragraph (6).
            ``(10) State responsibilities.--The State shall--
                    ``(A) make technical assistance under section 1117 
                available to all schools identified for school 
                improvement and corrective action under this 
                subsection, to the extent possible with funds reserved 
                under section 1003; and
                    ``(B) if it determines that a local educational 
                agency has failed to carry out its responsibilities 
                under this subsection, take such corrective actions as 
                the State finds appropriate and in compliance with 
                State law.
    ``(c) State Review and Local Educational Agency Improvement.--
            ``(1) In general.--A State shall--
                    ``(A) annually review the progress of each local 
                educational agency receiving funds under this part to 
                determine whether schools receiving assistance under 
                this part are making adequate yearly progress as 
                defined in section 1111(b)(2) toward meeting the 
                State's student achievement standards; and
                    ``(B) publicize and disseminate to local 
                educational agencies, teachers and other staff, 
                parents, students, and the community the results of the 
                State review consistent with section 1111, including 
                statistically sound disaggregated results, as required 
                by section 1111(b)(2).
            ``(2) Identification of local educational agency for 
        improvement.--A State shall identify for improvement any local 
        educational agency that--
                    ``(A) for 2 consecutive years failed to make 
                adequate yearly progress as defined in the State's plan 
                under section 1111(b)(2); or
                    ``(B) was in improvement status under this section 
                as this section was in effect on the day preceding the 
                date of the enactment of the No Child Left Behind Act 
                of 2001.
            ``(3) Transition.--The 2-year period described in paragraph 
        (2)(A) shall include any continuous period of time immediately 
        preceding the date of the enactment of the No Child Left Behind 
        Act of 2001, during which a local educational agency did not 
        make adequate yearly progress as defined in the State's plan, 
        as such plan was in effect on the day preceding the date of 
        such enactment.
            ``(4) Targeted assistance schools.--For purposes of 
        targeted assistance schools in a local educational agency, a 
        State educational agency may choose to review the progress of 
        only the students in such schools who are served under this 
        part.
            ``(5) Opportunity to review and present evidence.--
                    ``(A) Review.--Before identifying a local 
                educational agency for improvement under paragraph (2), 
                a State educational agency shall provide the local 
                educational agency with an opportunity to review the 
                local educational agency data, including assessment 
                data, on which that proposed identification is based.
                    ``(B) Supporting evidence.--If the local 
                educational agency believes that the proposed 
                identification is in error for statistical or other 
                substantive reasons, it may provide supporting evidence 
                to the State educational agency, which such agency 
                shall consider before making a final determination.
            ``(6) Notification to parents.--The State educational 
        agency shall promptly notify parents in a format, and to the 
        extent practicable in a language they can understand, of each 
        student enrolled in a school in a local educational agency 
        identified for improvement, of the reasons for such agency's 
        identification and how parents can participate in upgrading the 
        quality of the local educational agency.
            ``(7) Local educational agency revisions.--
                    ``(A) Plan.--Each local educational agency 
                identified under paragraph (2) shall, not later than 3 
                months after being so identified, develop or revise a 
                local educational agency plan, in consultation with 
                parents, school staff, and others. Such plan shall--
                            ``(i) incorporate scientifically based 
                        research strategies that strengthen the core 
                        academic program in the local educational 
                        agency;
                            ``(ii) identify specific goals and 
                        objectives the local educational agency will 
                        undertake to make adequate yearly progress and 
                        which--
                                    ``(I) have the greatest likelihood 
                                of improving the performance of 
                                participating children in meeting the 
                                State's student achievement standards;
                                    ``(II) address the professional 
                                development needs of staff; and
                                    ``(III) include specific measurable 
                                achievement goals and targets for each 
                                of the groups of students identified in 
                                the disaggregated data pursuant to 
                                section 1111(b)(2)(C)(iii)(I) and (II);
                            ``(iii) identify how the local educational 
                        agency will provide written notification to 
                        parents in a format, and to the extent 
                        practicable in a language, that they can 
                        understand, pursuant to paragraph (6); and
                            ``(iv) specify the responsibilities of the 
                        State educational agency and the local 
                        educational agency under the plan.
                    ``(B) Implementation.--The local educational agency 
                shall implement its plan or revised plan expeditiously, 
                but not later than the beginning of the school year 
                after which the school has been identified for 
                improvement.
            ``(8) State responsibility.--
                    ``(A) In general.--For each local educational 
                agency identified under paragraph (2), the State shall 
                provide technical or other assistance, if requested, as 
                authorized under section 1117, to better enable the 
                local educational agency--
                            ``(i) to develop and implement its revised 
                        plan as approved by the State educational 
                        agency consistent with the requirements of this 
                        section; and
                            ``(ii) to work with schools needing 
                        improvement.
                    ``(B) Technical assistance.--Technical assistance 
                provided under this section by the State educational 
                agency or an entity authorized by such agency shall be 
                based upon scientifically based research.
            ``(9) Corrective action.--In order to help students served 
        under this part meet challenging State standards, each State 
        shall implement a system of corrective action in accordance 
        with the following:
                    ``(A) In general.--After providing technical 
                assistance under paragraph (8) and subject to 
                subparagraph (D), the State--
                            ``(i) may take corrective action at any 
                        time with respect to a local educational agency 
                        that has been identified under paragraph (2);
                            ``(ii) shall take corrective action with 
                        respect to any local educational agency that 
                        fails to make adequate yearly progress, as 
                        defined by the State, after the end of the 
                        second year following its identification under 
                        paragraph (2); and
                            ``(iii) shall continue to provide technical 
                        assistance while instituting any corrective 
                        action under clause (i) or (ii).
                    ``(B) Definition.--As used in this paragraph, the 
                term `corrective action' means action, consistent with 
                State law, that--
                            ``(i) substantially and directly responds 
                        to the consistent academic failure that caused 
                        the State to take such action and to any 
                        underlying staffing, curricular, or other 
                        problems in the school; and
                            ``(ii) is designed to meet the goal of 
                        having all students served under this part 
                        perform at the proficient and advanced 
                        performance levels.
                    ``(C) Certain local educational agencies.--In the 
                case of a local educational agency described in this 
                paragraph, the State educational agency shall take not 
                less than 1 of the following corrective actions:
                            ``(i) Withhold funds from the local 
                        educational agency.
                            ``(ii) Replace the school district 
                        personnel who are relevant to the failure to 
                        make adequate year progress.
                            ``(iii) Remove particular schools from the 
                        jurisdiction of the local educational agency 
                        and establish alternative arrangements for 
                        public governance and supervision of such 
                        schools.
                            ``(iv) Appoint, through the State 
                        educational agency, a receiver or trustee to 
                        administer the affairs of the local educational 
                        agency in place of the superintendent and 
                        school board.
                            ``(v) Abolish or restructure the local 
                        educational agency.
                            ``(vi) Authorize students to transfer from 
                        a school operated by a local educational agency 
                        to a higher performing public school operated 
                        by another local educational agency, or to a 
                        public charter school and provide such students 
                        transportation (or the costs of transportation 
                        to such schools), in conjunction with not less 
                        than 1 additional action described under this 
                        paragraph.
                    ``(D) Hearing.--Prior to implementing any 
                corrective action, the State educational agency shall 
                provide due process and a hearing to the affected local 
                educational agency, if State law provides for such 
                process and hearing.
                    ``(E) Publication.--The State educational agency 
                shall publish, and disseminate to parents and the 
                public any corrective action it takes under this 
                paragraph through such means as the Internet, the 
                media, and public agencies.
                    ``(F) Delay.--A local educational agency may delay, 
                for a period not to exceed 1 year, implementation of 
                corrective action if the failure to make adequate 
                yearly progress was justified due to exceptional or 
                uncontrollable circumstances such as a natural disaster 
                or a precipitous and unforeseen decline in the 
                financial resources of the local educational agency or 
                school.
            ``(10) Special rule.--A local educational agency, that, for 
        at least 2 of the 3 years following identification under 
        paragraph (2), makes adequate yearly progress shall no longer 
        be identified for school improvement.
    ``(d) Parental Choice.--
            ``(1) In general.--In any case described in section 
        1116(b)(7)(A)(ii)(II) the local educational agency shall permit 
        the parents of each eligible child defined in paragraph (7)(A) 
        to--
                    ``(A) receive, from the agency, the child's share 
                of funds allocated to the school under this part, 
                calculated under paragraph (2); and
                    ``(B) use those funds to pay the costs of either or 
                both of the following:
                            ``(i) Notwithstanding any other provision 
                        of this Act, attending a private school that 
                        agrees to--
                                    ``(I) assess the student in 
                                mathematics and reading and language 
                                arts each year during grades 3 through 
                                8 and at least once during grades 10 
                                through 12, using assessments that are 
                                comparable in what they measure to the 
                                assessments used by the State; and
                                    ``(II) provide the results of those 
                                assessments to the student's parents.
                            ``(ii) Obtaining supplemental educational 
                        services from a provider approved for that 
                        purpose by the State educational agency, in 
                        accordance with reasonable criteria it shall 
                        adopt, and paying for the costs of 
                        transportation to obtain those services.
            ``(2) Per-child amount.--The amount of a school's 
        allocation under this part that it shall make available to the 
        parents of an eligible child under paragraph (1)(B) is equal 
        to--
                    ``(A) the amount of the school's allocation under 
                subpart 2 of this part, after subtracting amounts 
                reserved by the school--
                            ``(i) to carry out parental involvement 
                        activities under section 1118; and
                            ``(ii) to provide professional development 
                        required by section 1119A; divided by--
                    ``(B) the number of eligible children enrolled in 
                the school.
            ``(3) Limitation.--The amount of funds provided to the 
        parents of a child under this subsection shall not exceed the 
        actual costs of the parents for either or both of the 
        following:
                    ``(A) Sending the child to a private school.
                    ``(B) Obtaining supplemental educational services 
                for the child and providing transportation to those 
                services.
            ``(4) Duration.--The local educational agency shall 
        continue to provide funds to parents of a child attending a 
        private school under this section until the child completes the 
        grade corresponding to the highest grade offered at the public 
        school the child previously attended.
            ``(5) Nondiscrimination.--
                    ``(A) Except as provided in subparagraph (B), title 
                VI of the Civil Rights Act of 1964, title IX of the 
                Education Amendments of 1972, and section 504 of the 
                Rehabilitation Act of 1973, do not apply to a private 
                schol that enrolls an eligible child who receives funds 
                under paragraph (1) by virtue of that child's use of 
                those funds to enroll at that school.
                    ``(B) The local educational agency shall ensure 
                that a private school that enrolls an eligible child 
                described in subparagraph (A) shall afford the child 
                the same rights against discrimination provided by the 
                statutes identified in that subparagraph, and shall 
                afford those same rights to any eligible child who 
                applies to enroll in that school.
            ``(6) School aid.--Funds used under this subsection for 
        attendance at a private school shall be considered assistance 
        to the student and shall not be considered as assistance to any 
        school that chooses to participate.
            ``(7) Definitions.--As used in this subsection, the term--
                    ``(A) `eligible child' means a child from a low-
                income family, as determined by the local educational 
                agency for purposes of allocating funds to schools 
                under section 1113(c)(1); and
                    ``(B) `supplementary educational services' means 
                tutoring and other supplemental academic enrichment 
                services.

``SEC. 1117. STATE ASSISTANCE FOR SCHOOL SUPPORT AND IMPROVEMENT.

    ``(a) System for Support.--Each State shall establish a statewide 
system of intensive and sustained support and improvement for local 
educational agencies and schools receiving funds under this part, in 
order to increase the opportunity for all students in those agencies 
and schools to meet the State's content standards and student 
achievement standards.
    ``(b) Priorities.--In carrying out this section, a State shall--
            ``(1) first, provide support and assistance to local 
        educational agencies subject to corrective action under section 
        1116 and assist schools, in accordance with section 
        1116(b)(10), for which a local educational agency has failed to 
        carry out its responsibilities under section 1116(b)(8) and 
        (9);
            ``(2) second, provide support and assistance to other local 
        educational agencies identified as in need of improvement under 
        section 1116; and
            ``(3) third, provide support and assistance to other local 
        educational agencies and schools participating under this part 
        that need that support and assistance in order to achieve the 
        purpose of this part.
    ``(c) Approaches.--In order to achieve the purpose described in 
subsection (a), each such system shall provide technical assistance and 
support through such approaches as--
            ``(1) school support teams, composed of individuals who are 
        knowledgeable about scientifically based research and practice 
        on teaching and learning, particularly about strategies for 
        improving educational results for low-achieving children; and
            ``(2) the designation and use of ``Distinguished 
        Educators'', chosen from schools served under this part that 
        have been especially successful in improving academic 
        achievement.
    ``(d) Funds.--Each State--
            ``(1) shall use funds reserved under section 1003(a); and
            ``(2) may use State administrative funds authorized under 
        section 1002(i) for such purpose to establish a Statewide 
        system of support.
    ``(e) Alternatives.--The State may devise additional approaches to 
providing the assistance described in paragraphs (1) and (2) of 
subsection (c), such as providing assistance through institutions of 
higher education and educational service agencies or other local 
consortia, and private providers of scientifically based technical 
assistance and the State may seek approval from the Secretary to use 
funds made available under section 1002(g) for such approaches as part 
of the State plan.

``SEC. 1117A. ACADEMIC ACHIEVEMENT AWARDS PROGRAM.

    ``(a) Establishment of Academic Achievement Awards Program.--
            ``(1) In general.--Each State receiving a grant under this 
        part may establish a program for making academic achievement 
        awards to recognize and financially reward schools served under 
        this part that have--
                    ``(A) significantly closed the achievement gap 
                between the groups of students defined in section 
                1111(b)(2); or
                    ``(B) exceeded their adequate yearly progress 
                goals, consistent with section 1111(b)(2), for 2 or 
                more consecutive years.
            ``(2) Awards to teachers.--A State program under paragraph 
        (1) may also recognize and provide financial awards to teachers 
        teaching in a school described in such paragraph whose students 
        consistently make significant gains in academic achievement in 
        the areas in which the teacher provides instruction.
    ``(b) Funding.--
            ``(1) Reservation of funds by state.--For the purpose of 
        carrying out this section, each State receiving a grant under 
        this part may reserve, from the amount (if any) by which the 
        funds received by the State under this part for a fiscal year 
        exceed the amount received by the State under this part for the 
        preceding fiscal year, not more than 30 percent of such excess 
        amount.
            ``(2) Use within 3 years.--Notwithstanding any other 
        provision of law, the amount reserved under paragraph (1) by a 
        State for each fiscal year shall remain available to the State 
        until expended for a period not exceeding 3 years.
            ``(3) Special allocation rule for schools in high-poverty 
        areas.--
                    ``(A) In general.--Each State receiving a grant 
                under this part shall distribute at least 50 percent of 
                the amount reserved under paragraph (1) for each fiscal 
                year to schools described in subparagraph (B), or to 
                teachers teaching in such schools.
                    ``(B) School described.--A school described in 
                subparagraph (A) is a school whose student population 
                is in the highest quartile of schools statewide in 
                terms of the percentage of children eligible for free 
                and reduced priced lunches under the National School 
                Lunch Act.

``SEC. 1118. PARENTAL INVOLVEMENT.

    ``(a) Local Educational Agency Policy.--
            ``(1) In general.--A local educational agency may receive 
        funds under this part only if such agency implements programs, 
        activities, and procedures for the involvement of parents in 
        programs assisted under this part consistent with the 
        provisions of this section. Such activities shall be planned 
        and implemented with meaningful consultation with parents of 
        participating children.
            ``(2) Written policy.--Each local educational agency that 
        receives funds under this part shall develop jointly with, 
        agree upon with, and distribute to, parents of participating 
        children a written parent involvement policy that is 
        incorporated into the local educational agency's plan developed 
        under section 1112, establishes the expectations for parent 
        involvement, and describes how the local educational agency 
        will--
                    ``(A) involve parents in the joint development of 
                the plan under section 1112, and the process of school 
                review and improvement under section 1116;
                    ``(B) provide the coordination, technical 
                assistance, and other support necessary to assist 
                participating schools in planning and implementing 
                effective parent involvement;
                    ``(C) build the schools' and parents' capacity for 
                strong parent involvement as described in subsection 
                (e);
                    ``(D) coordinate and integrate parental involvement 
                strategies under this part with parental involvement 
                strategies under other programs, such as Head Start, 
                Early Reading First, Reading First, Even Start, the 
                Parents as Teachers Program, the Home Instruction 
                Program for Preschool Youngsters, and State-run 
                preschool programs;
                    ``(E) conduct, with the involvement of parents, an 
                annual evaluation of the content and effectiveness of 
                the parental involvement policy in improving the 
                academic quality of the schools served under this part; 
                and
                    ``(F) involve parents in the activities of the 
                schools served under this part.
            ``(3) Reservation.--
                    ``(A) In general.--Each local educational agency 
                shall reserve not less than 1 percent of such agency's 
                allocation under this part to carry out this section, 
                including family literacy and parenting skills, except 
                that this paragraph shall not apply if 1 percent of 
                such agency's allocation under this part (other than 
                funds allocated under section 1002(g) for the fiscal 
                year for which the determination is made is $5,000 or 
                less.
            ``(B) Parental input.--Parents of children receiving 
        services under this part shall be involved in the decisions 
        regarding how funds reserved under subparagraph (A) are 
        allotted for parental involvement activities.
            ``(C) Distribution of funds.--Not less than 95 percent of 
        the funds reserved under subparagraph (A) shall be distributed 
        to schools served under this part.
    ``(b) School Parental Involvement Policy.--
            ``(1) In general.--Each school served under this part shall 
        jointly develop with, and distribute to, parents of 
        participating children a written parental involvement policy, 
        agreed upon by such parents, that shall describe the means for 
        carrying out the requirements of subsections (c) through (f). 
        Parents shall be notified of the policy in a format, and to the 
        extent practicable in a language they can understand. Such 
        policy shall be updated periodically to meet the changing needs 
        of parents and the school.
            ``(2) Special rule.--If the school has a parental 
        involvement policy that applies to all parents, such school may 
        amend that policy, if necessary, to meet the requirements of 
        this subsection.
            ``(3) Amendment.--If the local educational agency has a 
        school district-level parental involvement policy that applies 
        to all parents, such agency may amend that policy, if 
        necessary, to meet the requirements of this subsection.
            ``(4) Parental comments.--If the plan under section 1112 is 
        not satisfactory to the parents of participating children, the 
        local educational agency shall submit any parent comments with 
        such plan when such local educational agency submits the plan 
        to the State.
    ``(c) Policy Involvement.--Each school served under this part 
shall--
            ``(1) convene an annual meeting, at a convenient time, to 
        which all parents of participating children shall be invited 
        and encouraged to attend, to inform parents of their school's 
        participation under this part and to explain this part, its 
        requirements, and their right to be involved;
            ``(2) offer a flexible number of meetings, such as meetings 
        in the morning or evening, and may provide, with funds provided 
        under this part, transportation, child care, or home visits, as 
        such services relate to parental involvement;
            ``(3) involve parents, in an organized, ongoing, and timely 
        way, in the planning, review, and improvement of programs under 
        this part, including the school parental involvement policy and 
        the joint development of the schoolwide program plan under 
        section 1114(c)(2) and (c)(3), except that if a school has in 
        place a process for involving parents in the joint planning and 
        design of its programs, the school may use that process, if 
        such process includes an adequate representation of parents of 
        participating children;
            ``(4) provide parents of participating children--
                    ``(A) timely information about programs under this 
                part;
                    ``(B) a description and explanation of the 
                curriculum in use at the school, the forms of 
                assessment used to measure student progress, and the 
                proficiency levels students are expected to meet; and
            ``(5) if the schoolwide program plan under section 
        1114(c)(2) and (c)(3) is not satisfactory to the parents of 
        participating children, submit any parent comments on the plan 
        when the school makes the plan available to the local 
        educational agency.
    ``(d) Shared Responsibilities for High Student Performance.--As a 
component of the school-level parental involvement policy developed 
under subsection (b), each school served under this part shall jointly 
develop with parents for all children served under this part a school-
parent compact that outlines how parents, the entire school staff, and 
students will share the responsibility for improved student achievement 
and the means by which the school and parents will build and develop a 
partnership to help children achieve the State's high standards.
    ``(e) Building Capacity for Involvement.--To ensure effective 
involvement of parents and to support a partnership among the school, 
parents, and the community to improve student achievement, each school 
and local educational agency--
            ``(1) shall provide assistance to participating parents in 
        such areas as understanding the State's content standards and 
        State student achievement standards, the provisions of section 
        1111(b)(8), State and local assessments, the requirements of 
        this part, and how to monitor a child's progress and work with 
        educators to improve the performance of their children;
            ``(2) shall provide materials and training to help parents 
        to work with their children to improve their children's 
        achievement;
            ``(3) shall educate teachers, pupil services personnel, 
        principals and other staff, with the assistance of parents, in 
        the value and utility of contributions of parents, and in how 
        to reach out to, communicate with, and work with parents as 
        equal partners, implement and coordinate parent programs, and 
        build ties between parents and the school;
            ``(4) shall coordinate and integrate parent involvement 
        programs and activities with Head Start, Reading First, Early 
        Reading First, Even Start, the Home Instruction Programs for 
        Preschool Youngsters, the Parents as Teachers Program, and 
        public preschool programs and other programs, to the extent 
        feasible and appropriate;
            ``(5) shall ensure, to the extent possible, that 
        information related to school and parent programs, meetings, 
        and other activities is sent to the parents of participating 
        children in the language used by such parents;
            ``(6) may involve parents in the development of training 
        for teachers, principals, and other educators to improve the 
        effectiveness of such training in improving instruction and 
        services to the children of such parents in a format, and to 
        the extent practicable, in a language the parent can 
        understand;
            ``(7) may provide necessary literacy training from funds 
        received under this part if the local educational agency has 
        exhausted all other reasonably available sources of funding for 
        such activities;
            ``(8) may pay reasonable and necessary expenses associated 
        with local parental involvement activities, including 
        transportation and child care costs, to enable parents to 
        participate in school-related meetings and training sessions;
            ``(9) may train parents to enhance the involvement of other 
        parents;
            ``(10) may arrange for teachers or other educators, who 
        work directly with participating children, to conduct in-home 
        conferences with parents who are unable to attend such 
        conferences at school;
            ``(11) may adopt and implement model approaches to 
        improving parental involvement;
            ``(12) may establish a districtwide parent advisory council 
        to provide advice on all matters related to parental 
        involvement in programs supported under this part; and
            ``(13) may develop appropriate roles for community-based 
        organizations and businesses in parent involvement activities.
    ``(f) Accessibility.--In carrying out the parental involvement 
requirements of this part, local educational agencies and schools, to 
the extent practicable, shall provide full opportunities for the 
participation of parents with limited English proficiency or with 
disabilities and parents of migratory children, including providing 
information and school reports required under section 1111 in a format, 
and to the extent practicable, in a language such parents understand.

``SEC. 1119. QUALIFICATIONS FOR TEACHERS AND PARAPROFESSIONALS.

    ``(a) Teachers.--
            ``(1) In general.--Each local educational agency receiving 
        assistance under this part shall ensure that all teachers hired 
        on or after the effective date of the No Child Left Behind Act 
        of 2001 and teaching in a program supported with funds under 
        this part are fully qualified.
            ``(2) Plan.--Each State receiving assistance under this 
        part shall develop and submit to the Secretary a plan to ensure 
        that all teachers teaching within the State are fully qualified 
        not later than December 31, 2005. Such plan shall include an 
        assurance that the State will require each local educational 
        agency and school receiving funds under this part publicly to 
        report their annual progress on the agency's and the school's 
        performance in increasing the percentage of classes in core 
        academic areas taught by fully qualified teachers.
    ``(b) New Paraprofessionals.--
            ``(1) In general.--Each local educational agency receiving 
        assistance under this part shall ensure that all 
        paraprofessionals hired 1 year or more after the effective date 
        of the No Child Left Behind Act of 2001 and working in a 
        program supported with funds under this part shall--
                    ``(A) have completed at least 2 years of study at 
                an institution of higher education;
                    ``(B) have obtained an associate's (or higher) 
                degree; or
                    ``(C) have met a rigorous standard of quality that 
                demonstrates, through a formal assessment--
                            ``(i) knowledge of, and the ability to 
                        assist in instructing reading, writing, and 
                        math; or
                            ``(ii) knowledge of, and the ability to 
                        assist in instructing reading readiness, 
                        writing readiness, and math readiness, as 
                        appropriate.
            ``(2) Clarification.--For purposes of paragraph (1)(C), the 
        receipt of a high school diploma (or its recognized equivalent) 
        shall be necessary but not by itself sufficient to satisfy the 
        requirements of such paragraph.
    ``(c) Existing Paraprofessionals.--Each local educational agency 
receiving assistance under this part shall ensure that all 
paraprofessionals hired before the date that is 1 year after the 
effective date of the No Child Left Behind Act of 2001 and working in a 
program supported with funds under this part shall, not later than 3 
years after such effective date, satisfy the requirements of subsection 
(b).
    ``(d) Exceptions for Translation and Parental Involvement 
Activities.--Subsections (b) and (c) shall not apply to a 
paraprofessional--
            ``(1) who is proficient in English and a language other 
        than English and who provides services primarily to enhance the 
        participation of children in programs under this part by acting 
        as a translator; or
            ``(2) whose duties consist solely of conducting parental 
        involvement activities consistent with section 1118.
    ``(e) General Requirement for All Paraprofessionals.--Each local 
educational agency receiving assistance under this part shall ensure 
that all paraprofessionals working in a program supported with funds 
under this part, regardless of the paraprofessional's hiring date, 
possess a high school diploma or its recognized equivalent.
    ``(f) Duties of Paraprofessionals.--
            ``(1) In general.--Each local educational agency receiving 
        assistance under this part shall ensure that a paraprofessional 
        working in a program supported with funds under this part is 
        not assigned a duty inconsistent with this subsection.
            ``(2) Responsibilities paraprofessionals may be assigned.--
        A paraprofessional described in paragraph (1) may only be 
        assigned--
                    ``(A) to provide one-on-one tutoring for eligible 
                students, if the tutoring is scheduled at a time when a 
                student would not otherwise receive instruction from a 
                teacher;
                    ``(B) to assist with classroom management, such as 
                organizing instructional and other materials;
                    ``(C) to provide assistance in a computer 
                laboratory;
                    ``(D) to conduct parental involvement activities;
                    ``(E) to provide support in a library or media 
                center;
                    ``(F) to act as a translator; or
                    ``(G) to provide instructional services to 
                students.
            ``(3) Additional limitations.--A paraprofessional described 
        in paragraph (1)--
                    ``(A) may not provide any instructional service to 
                a student unless the paraprofessional is working under 
                the direct supervision of a fully qualified teacher; 
                and
                    ``(B) may not provide instructional services to 
                students in the area of reading, writing, or math 
                unless the paraprofessional has demonstrated, through a 
                State or local assessment, the ability to effectively 
                carry out reading, writing, or math instruction.
    ``(g) Use of Funds.--
            ``(1) Professional development.--A local educational agency 
        receiving funds under this part may use such funds to support 
        ongoing training and professional development to assist 
        teachers and paraprofessionals in satisfying the requirements 
        of this section.
            ``(2) Limitation on use of funds for paraprofessionals.--
                    ``(A) In general.--Beginning on and after the 
                effective date of the No Child Left Behind Act of 2001, 
                a local educational agency may not use funds received 
                under this part to fund any paraprofessional hired 
                after such date unless the hiring is to fill a vacancy 
                created by the departure of another paraprofessional 
                funded under this part and such new paraprofessional 
                satisfies the requirements of subsection (b) or (c).
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                for a fiscal year to a local educational agency that 
                can demonstrate to the State that all teachers under 
                the jurisdiction of the agency are fully qualified.
    ``(h) Verification of Compliance.--
            ``(1) In general.--In verifying compliance with this 
        section, each local educational agency at a minimum shall 
        require that the principal of each school operating a program 
        under section 1114 or 1115 annually attest in writing as to 
        whether such school is in compliance with the requirements of 
        this section.
            ``(2) Availability of information.--Copies of attestations 
        under paragraph (1)--
                    ``(A) shall be maintained at each school operating 
                a program under section 1114 or 1115 and at the main 
                office of the local educational agency; and
                    ``(B) shall be available to any member of the 
                general public upon request.

``SEC. 1119A. PROFESSIONAL DEVELOPMENT.

    ``(a) Purpose.--The purpose of this section is to assist each local 
educational agency receiving assistance under this part in increasing 
the academic achievement of eligible children (as defined in section 
1115(b)) through improved teacher quality.
    ``(b) Professional Development Activities.--Professional 
development activities under this section shall--
            ``(1) support professional development activities that give 
        teachers, principals, and administrators the knowledge and 
        skills to provide students with the opportunity to meet 
        challenging State or local content standards and student 
        achievement standards;
            ``(2) support the recruiting, hiring, and training of fully 
        qualified teachers, including teachers fully qualified through 
        State and local alternative routes;
            ``(3) advance teacher understanding of effective 
        instructional strategies based on scientifically based research 
        for improving student achievement, at a minimum, in reading or 
        language arts and mathematics;
            ``(4) be directly related to the curriculum and content 
        areas in which the teacher provides instruction, except this 
        requirement does not apply to activities that instruct in 
        methods of disciplining children;
            ``(5) be designed to enhance the ability of a teacher to 
        understand and use the State's standards for the subject area 
        in which the teacher provides instruction;
            ``(6) be tied to scientifically based research 
        demonstrating the effectiveness of such professional 
        development activities or programs in increasing student 
        achievement or substantially increasing the knowledge and 
        teaching skills of teachers;
            ``(7) be of sufficient intensity and duration (not to 
        include 1-day or short-term workshops and conferences) to have 
        a positive and lasting impact on the teacher's performance in 
        the classroom;
            ``(8) be developed with extensive participation of 
        teachers, principals, parents, and administrators of schools to 
        be served under this part;
            ``(9) to the extent appropriate, provide training for 
        teachers in the use of technology so that technology and its 
        applications are effectively used in the classroom to improve 
        teaching and learning in the curriculum and academic content 
        areas in which the teachers provide instruction; and
            ``(10) as a whole, be regularly evaluated for their impact 
        on increased teacher effectiveness and improved student 
        achievement, with the findings of such evaluations used to 
        improve the quality of professional development.
    ``(c) Additional Professional Development Activities.--Such 
professional development activities may include--
            ``(1) instruction in the use of data and assessments to 
        inform and instruct classroom practice;
            ``(2) instruction in ways that teachers, principals, pupil 
        services personnel, and school administrators may work more 
        effectively with parents;
            ``(3) the forming of partnerships with institutions of 
        higher education to establish school-based teacher training 
        programs that provide prospective teachers and novice teachers 
        with an opportunity to work under the guidance of experienced 
        teachers and college faculty;
            ``(4) the creation of career ladder programs for 
        paraprofessionals (assisting teachers under this part) to 
        obtain the education necessary for such paraprofessionals to 
        become licensed and certified teachers; and
            ``(5) instruction in ways to teach special needs children.
    ``(c) Program Participation.--Each local educational agency 
receiving assistance under this part may design professional 
development programs so that--
            ``(1) all school staff in schools participating in a 
        schoolwide program under section 1114 can participate in 
        professional development activities; and
            ``(2) all school staff in targeted assistance schools may 
        participate in professional development activities if such 
        participation will result in better addressing the needs of 
        students served under this part.
    ``(d) Parental Participation.--Parents may participate in 
professional development activities under this part if the school 
determines that parental participation is appropriate.
    ``(e) Consortia.--In carrying out such professional development 
programs, local educational agencies may provide services through 
consortia arrangements with other local educational agencies, 
educational service agencies or other local consortia, institutions of 
higher education, or other public or private institutions or 
organizations.
    ``(f) Consolidation of Funds.--Funds provided under this part that 
are used for professional development purposes may be consolidated with 
funds provided under title II of this Act and other sources.
    ``(g) Definition.--The term `fully qualified' has the same meaning 
given such term in section 8101.
    ``(h) Special Rule.--No State educational agency shall require a 
school or a local educational agency to expend a specific amount of 
funds for professional development activities under this part, except 
that this paragraph shall not apply with respect to requirements under 
section 1116(c)(9).

``SEC. 1120. PARTICIPATION OF CHILDREN ENROLLED IN PRIVATE SCHOOLS.

    ``(a) General Requirement.--
            ``(1) In general.--To the extent consistent with the number 
        of eligible children identified under section 1115(b) in a 
        local educational agency who are enrolled in private elementary 
        and secondary schools, a local educational agency shall, after 
        timely and meaningful consultation with appropriate private 
        school officials, provide such children, on an equitable basis, 
        special educational services or other benefits under this part 
        (such as dual enrollment, educational radio and television, 
        computer equipment and materials, other technology, and mobile 
        educational services and equipment) that address their needs, 
        and shall ensure that teachers and families of these students 
        participate, on an equitable basis, in services and activities 
        developed pursuant to sections 1118 and 1119A.
            ``(2) Secular, neutral, nonideological.--Such educational 
        services or other benefits, including materials and equipment, 
        shall be secular, neutral, and nonideological.
            ``(3) Equity.--Educational services and other benefits for 
        such private school children shall be equitable in comparison 
        to services and other benefits for public school children 
        participating under this part, and shall be provided in a 
        timely manner.
            ``(4) Expenditures.--Expenditures for educational services 
        and other benefits to eligible private school children shall be 
        equal to the proportion of funds allocated to participating 
        school attendance areas based on the number of children from 
        low-income families who attend private schools, which the local 
        educational agency may determine each year or every 2 years.
            ``(5) Provision of services.--The local educational agency 
        shall provide services under this section directly or through 
        contracts with public and private agencies, organizations, and 
        institutions.
    ``(b) Consultation.--
            ``(1) In general.--To ensure timely and meaningful 
        consultation, a local educational agency shall consult with 
        appropriate private school officials during the design and 
        development of such agency's programs under this part, on 
        issues such as--
                    ``(A) how the children's needs will be identified;
                    ``(B) what services will be offered;
                    ``(C) how, where, and by whom the services will be 
                provided;
                    ``(D) how the services will be assessed and how the 
                results of that assessment will be used to improve 
                those services;
                    ``(E) the size and scope of the equitable services 
                to be provided to the eligible private school children, 
                and the amount of funds generated by low-income private 
                school children in each participating attendance area;
                    ``(F) the method or sources of data that are used 
                under subsection (a)(4) and section 1113(c)(2) to 
                determine the number of children from low-income 
                families in participating school attendance areas who 
                attend private schools; and
                    ``(G) how and when the agency will make decisions 
                about the delivery of services to such children, 
                including a thorough consideration and analysis of the 
                views of the private school officials on the provision 
                of contract services through potential third party 
                providers.
If the local educational agency disagrees with the views of the private 
school officials on the provision of services, through a contract, the 
local educational agency shall provide in writing to such private 
school officials, an analysis of the reasons why the local educational 
agency has chosen not to use a contractor.
            ``(2) Timing.--Such consultation shall include meetings of 
        agency and private school officials and shall occur before the 
        local educational agency makes any decision that affects the 
        opportunities of eligible private school children to 
        participate in programs under this part. Such meetings shall 
        continue throughout implementation and assessment of services 
        provided under this section.
            ``(3) Discussion.--Such consultation shall include a 
        discussion of service delivery mechanisms a local educational 
        agency can use to provide equitable services to eligible 
        private school children.
            ``(4) Documentation.--Each local educational agency shall 
        maintain in its records and provide to the State educational 
        agency a written affirmation signed by officials of each 
        participating private school that the consultation required by 
        this section has occurred.
            ``(5) Compliance.--Private school officials shall have the 
        right to appeal to the State as to whether the consultation 
        provided for in this section was meaningful and timely, and 
        that due consideration was given to the views of private school 
        officials. If the private school wishes to appeal, the basis of 
        the claim of noncompliance with this section by a local 
        educational agency shall be provided to the State, and the 
        local educational agency shall forward the documentation 
        provided in subsection (b)(4) to the State.
    ``(c) Public Control of Funds.--
            ``(1) In general.--The control of funds provided under this 
        part, and title to materials, equipment, and property purchased 
        with such funds, shall be in a public agency, and a public 
        agency shall administer such funds and property.
            ``(2) Provision of services.--(A) The provision of services 
        under this section shall be provided--
                    ``(i) by employees of a public agency; or
                    ``(ii) through contract by such public agency with 
                an individual, association, agency, or organization.
            ``(B) In the provision of such services, such employee, 
        person, association, agency, or organization shall be 
        independent of such private school and of any religious 
        organization, and such employment or contract shall be under 
        the control and supervision of such public agency.
    ``(d) Standards for a Bypass.--If a local educational agency is 
prohibited by law from providing for the participation on an equitable 
basis of eligible children enrolled in private elementary and secondary 
schools or if the Secretary determines that a local educational agency 
has substantially failed or is unwilling to provide for such 
participation, as required by this section, the Secretary shall--
            ``(1) arrange for the provision of services to such 
        children through arrangements that shall be subject to the 
        requirements of this section and sections 8505 and 8506; and
            ``(2) waive the requirements of this section for such local 
        educational agency;
            ``(3) in making the determination, consider 1 or more 
        factors, including the quality, size, scope, and location of 
        the program and the opportunity of eligible children to 
        participate.
    ``(e) Capital Expenses.--
            ``(1) In general.--(A) From the amount appropriated for 
        this subsection under section 1002(e) for any fiscal year, each 
        State is eligible to receive an amount that bears the same 
        ratio to the amount so appropriated as the number of private 
        school children who received services under this part in the 
        State in the most recent year for which data satisfactory to 
        the Secretary are available bears to the number of such 
        children in all States in that same year.
            ``(B) The Secretary shall reallocate any amounts allocated 
        under subparagraph (A) that are not used by a State for the 
        purpose of this subsection to other States on the basis of 
        their respective needs, as determined by the Secretary.
            ``(2) Capital expenses.--(A) A local educational agency may 
        apply to the State educational agency for payments for capital 
        expenses consistent with this subsection.
            ``(B) State educational agencies shall distribute such 
        funds under this subsection to local educational agencies based 
        on the degree of need set forth in their respective 
        applications for assistance under this subsection.
            ``(3) Uses of funds.--Any funds appropriated to carry out 
        this subsection shall be used only for capital expenses 
        incurred to provide equitable services for private school 
        children under this section.

``SEC. 1120A. FISCAL REQUIREMENTS.

    ``(a) Maintenance of Effort.--A local educational agency may 
receive funds under this part for any fiscal year only if the State 
educational agency finds that the local educational agency has 
maintained its fiscal effort in accordance with section 8501 of this 
Act.
    ``(b) Federal Funds To Supplement, Not Supplant, Non-Federal 
Funds.--
            ``(1) In general.--A State or local educational agency 
        shall use funds received under this part only to supplement the 
        amount of funds that would, in the absence of such Federal 
        funds, be made available from non-Federal sources for the 
        education of pupils participating in programs assisted under 
        this part, and not to supplant such funds.
            ``(2) Special rule.--No local educational agency shall be 
        required to provide services under this part through a 
        particular instructional method or in a particular 
        instructional setting in order to demonstrate such agency's 
        compliance with paragraph (1).
    ``(c) Comparability of Services.--
            ``(1) In general.--(A) Except as provided in paragraphs (4) 
        and (5), a local educational agency may receive funds under 
        this part only if State and local funds will be used in schools 
        served under this part to provide services that, taken as a 
        whole, are at least comparable to services in schools that are 
        not receiving funds under this part.
            ``(B) If the local educational agency is serving all of 
        such agency's schools under this part, such agency may receive 
        funds under this part only if such agency will use State and 
        local funds to provide services that, taken as a whole, are 
        substantially comparable in each school.
            ``(C) A local educational agency may meet the requirements 
        of subparagraphs (A) and (B) on a grade-span by grade-span 
        basis or a school-by-school basis.
            ``(2) Written assurance.--(A) A local educational agency 
        shall be considered to have met the requirements of paragraph 
        (1) if such agency has filed with the State educational agency 
        a written assurance that such agency has established and 
        implemented--
                    ``(i) a local educational agency-wide salary 
                schedule;
                    ``(ii) a policy to ensure equivalence among schools 
                in teachers, administrators, and other staff; and
                    ``(iii) a policy to ensure equivalence among 
                schools in the provision of curriculum materials and 
                instructional supplies.
            ``(B) For the purpose of subparagraph (A), in the 
        determination of expenditures per pupil from State and local 
        funds, or instructional salaries per pupil from State and local 
        funds, staff salary differentials for years of employment shall 
        not be included in such determinations.
            ``(C) A local educational agency need not include 
        unpredictable changes in student enrollment or personnel 
        assignments that occur after the beginning of a school year in 
        determining comparability of services under this subsection.
            ``(3) Procedures and records.--Each local educational 
        agency assisted under this part shall--
                    ``(A) develop procedures for compliance with this 
                subsection; and
                    ``(B) maintain records that are updated biennially 
                documenting such agency's compliance with this 
                subsection.
            ``(4) Inapplicability.--This subsection shall not apply to 
        a local educational agency that does not have more than 1 
        building for each grade span.
            ``(5) Compliance.--For the purpose of determining 
        compliance with paragraph (1), a local educational agency may 
        exclude State and local funds expended for--
                    ``(A) English language instruction for children of 
                limited English proficiency; and
                    ``(B) excess costs of providing services to 
                children with disabilities as determined by the local 
                educational agency.
          ``(d) Exclusion of Funds.--For the purpose of complying with 
subsections (b) and (c), a State or local educational agency may 
exclude supplemental State or local funds expended in any school 
attendance area or school for programs that meet the intent and 
purposes of this part.

``SEC. 1120B. COORDINATION REQUIREMENTS.

    ``(a) In General.--Each local educational agency receiving 
assistance under this part shall carry out the activities described in 
subsection (b) with Head Start Agencies, and if feasible, other early 
childhood development programs such as Early Reading First.
    ``(b) Activities.--The activities referred to in subsection (a) are 
activities that increase coordination between the local educational 
agency and a Head Start agency, and, if feasible, other early childhood 
development programs, such as Early Reading First serving children who 
will attend the schools of such agency, including--
            ``(1) developing and implementing a systematic procedure 
        for receiving records regarding such children transferred with 
        parental consent from a Head Start program or, where 
        applicable, other early childhood development programs such as 
        Early Reading First;
            ``(2) establishing channels of communication between school 
        staff and their counterparts in such Head Start agencies 
        (including teachers, social workers, and health staff) or other 
        early childhood development programs such as Early Reading 
        First, as appropriate, to facilitate coordination of programs;
            ``(3) conducting meetings involving parents, kindergarten 
        or elementary school teachers, and Head Start teachers or, if 
        appropriate, teachers from other early childhood development 
        programs such as Early Reading First, to discuss the 
        developmental and other needs of individual children;
            ``(4) organizing and participating in joint transition 
        related training of school staff, Head Start staff, Early 
        Reading First staff and, where appropriate, other early 
        childhood staff; and
            ``(5) linking the educational services provided in such 
        local educational agency with the services provided in local 
        Head Start agencies and Early Reading First programs.
    ``(c) Coordination of Regulations.--The Secretary shall work with 
the Secretary of Health and Human Services to coordinate regulations 
promulgated under this part with regulations promulgated under the Head 
Start Act Amendments of 1994.

                        ``Subpart 2--Allocations

``SEC. 1121. GRANTS FOR THE OUTLYING AREAS AND THE SECRETARY OF THE 
              INTERIOR.

    ``(a) Reservation of Funds.--From the amount appropriated for 
payments to States for any fiscal year under section 1002(a), the 
Secretary shall reserve a total of 1 percent to provide assistance to--
            ``(1) the outlying areas in the amount determined in 
        accordance with subsection (b); and
            ``(2) the Secretary of the Interior in the amount necessary 
        to make payments pursuant to subsection (d).
    ``(b) Assistance to Outlying Areas.--
            ``(1) Funds reserved.--From the amount made available for 
        any fiscal year under subsection (a), the Secretary shall award 
        grants to the outlying areas.
            ``(2) Competitive grants.--For fiscal years 2000 and 2001, 
        the Secretary shall carry out the competition described in 
        paragraph (3), except that the amount reserved to carry out 
        such competition shall not exceed the amount reserved under 
        this section for the freely associated states for fiscal year 
        1999.
            ``(3) Limitation for competitive grants.--
                    ``(A) Competitive grants.--The Secretary shall use 
                funds described in paragraph (2) to award grants, on a 
                competitive basis, to the outlying areas and freely 
                associated States to carry out the purposes of this 
                part.
                    ``(B) Award basis.--The Secretary shall award 
                grants under subparagraph (A) on a competitive basis, 
                pursuant to the recommendations of the Pacific Region 
                Educational Laboratory in Honolulu, Hawaii.
                    ``(C) Administrative costs.--The Secretary may 
                provide not more than 5 percent of the amount reserved 
                for grants under this paragraph to pay the 
                administrative costs of the Pacific Region Educational 
                Laboratory under subparagraph (B).
            ``(4) Special rule.--The provisions of Public Law 95-134, 
        permitting the consolidation of grants by the outlying areas, 
        shall not apply to funds provided to the freely associated 
        States under this section.
    ``(c) Definitions.--For the purposes of subsections (a) and (b)--
            ``(1) the term `freely associated States' means the 
        Republic of the Marshall Islands, the Federated States of 
        Micronesia, and the Republic of Palau; and
            ``(2) the term `outlying area' means the United States 
        Virgin Islands, Guam, American Samoa, and the Commonwealth of 
        the Northern Mariana Islands.
    ``(d) Allotment to the Secretary of the Interior.--
            ``(1) In general.--The amount allotted for payments to the 
        Secretary of the Interior under subsection (a)(2) for any 
        fiscal year shall be, as determined pursuant to criteria 
        established by the Secretary, the amount necessary to meet the 
        special educational needs of--
                    ``(A) Indian children on reservations served by 
                elementary and secondary schools for Indian children 
                operated or supported by the Department of the 
                Interior; and
                    ``(B) out-of-State Indian children in elementary 
                and secondary schools in local educational agencies 
                under special contracts with the Department of the 
                Interior.
            ``(2) Payments.--From the amount allotted for payments to 
        the Secretary of the Interior under subsection (a)(2), the 
        Secretary of the Interior shall make payments to local 
        educational agencies, upon such terms as the Secretary 
        determines will best carry out the purposes of this part, with 
        respect to out-of-State Indian children described in paragraph 
        (1). The amount of such payment may not exceed, for each such 
        child, the greater of--
                    ``(A) 40 percent of the average per-pupil 
                expenditure in the State in which the agency is 
                located; or
                    ``(B) 48 percent of such expenditure in the United 
                States.

``SEC. 1122. AMOUNTS FOR BASIC GRANTS, CONCENTRATION GRANTS, AND 
              TARGETED GRANTS.

    ``(a) Allocation Formula.--Of the amount authorized to be 
appropriated to carry out this part for each of fiscal years 2002 
through 2006 (referred to in this subsection as the current fiscal 
year)--
            ``(1) an amount equal to the amount appropriated to carry 
        out section 1124 for fiscal year 2001 shall be allocated in 
        accordance with section 1124;
            ``(2) an amount equal to the amount appropriated to carry 
        out section 1124A for fiscal year 2001 shall be allocated in 
        accordance with section 1124A; and
            ``(3) an amount equal to 100 percent of the amount, if any, 
        by which the amount appropriated under section 1002(a) for the 
        current fiscal year exceeds the amount appropriated under such 
        section for fiscal year 2001 shall be allocated in accordance 
        with section 1125.
    ``(b) Adjustments Where Necessitated by Appropriations.--
            ``(1) In general.--If the sums available under this part 
        for any fiscal year are insufficient to pay the full amounts 
        that all local educational agencies in States are eligible to 
        receive under sections 1124, 1124A, and 1125 for such year, the 
        Secretary shall ratably reduce the allocations to such local 
        educational agencies, subject to subsections (c) and (d) of 
        this section.
            ``(2) Additional funds.--If additional funds become 
        available for making payments under sections 1124, 1124A, and 
        1125 for such fiscal year, allocations that were reduced under 
        paragraph (1) shall be increased on the same basis as they were 
        reduced.
    ``(c) Hold-Harmless Amounts.--
            ``(1) Amounts for sections 1124 and 1125.--For each fiscal 
        year, the amount made available to each local educational 
        agency under each of sections 1124 and 1125 shall be--
                    ``(A) not less than 95 percent of the amount made 
                available in the preceding fiscal year if the number of 
                children counted for grants under section 1124 is not 
                less than 30 percent of the total number of children 
                aged 5 to 17 years, inclusive, in the local educational 
                agency;
                    ``(B) not less than 90 percent of the amount made 
                available in the preceding fiscal year if the 
                percentage described in subparagraph (A) is between 15 
                percent and 30 percent; and
                    ``(C) not less than 85 percent of the amount made 
                available in the preceding fiscal year if the 
                percentage described in subparagraph (A) is below 15 
                percent.
            ``(2) Amount for section 1124a.--The amount made available 
        to each local educational agency under section 1124A shall be 
        not less than 85 percent of the amount made available in the 
        preceding fiscal year.
            ``(3) Payments.--If sufficient funds are appropriated, the 
        amounts described in paragraph (2) shall be paid to all local 
        educational agencies that received grants under section 1124A 
        for the preceding fiscal year, regardless of whether the local 
        educational agency meets the minimum eligibility criteria for 
        that fiscal year provided in section 1124A(a)(1)(A) except that 
        a local educational agency that does not meet such minimum 
        eligibility criteria for 4 consecutive years shall no longer be 
        eligible to receive a hold harmless amount referred to in 
        paragraph (2).
            ``(4) Population data.--In any fiscal year for which the 
        Secretary calculates grants on the basis of population data for 
        counties, the Secretary shall apply the hold harmless 
        percentages in paragraphs (1) and (2) to counties, and if the 
        Secretary's allocation for a county is not sufficient to meet 
        the hold-harmless requirements of this subsection for every 
        local educational agency within that county, the State 
        educational agency shall reallocate funds proportionately from 
        all other local educational agencies in the State that are 
        receiving funds in excess of the hold harmless amounts 
        specified in this subsection.
    ``(d) Ratable Reductions.--
            ``(1) In general.--If the sums made available under this 
        part for any fiscal year are insufficient to pay the full 
        amounts that all States are eligible to receive under 
        subsection (c) for such year, the Secretary shall ratably 
        reduce such amounts for such year.
            ``(2) Additional funds.--If additional funds become 
        available for making payments under subsection (c) for such 
        fiscal year, amounts that were reduced under paragraph (1) 
        shall be increased on the same basis as such amounts were 
        reduced.
    ``(e) Definition.--For the purpose of this section and sections 
1124, 1124A, and 1125, the term `State' means each of the 50 States, 
the District of Columbia, and the Commonwealth of Puerto Rico.

``SEC. 1124. BASIC GRANTS TO LOCAL EDUCATIONAL AGENCIES.

    ``(a) Amount of Grants.--
            ``(1) Grants for local educational agencies and puerto 
        rico.--Except as provided in paragraph (4) and in section 1126, 
        the grant that a local educational agency is eligible to 
        receive under this section for a fiscal year is the amount 
        determined by multiplying--
                    ``(A) the number of children counted under 
                subsection (c); and
                    ``(B) 40 percent of the average per-pupil 
                expenditure in the State, except that the amount 
                determined under this subparagraph shall not be less 
                than 32 percent or more than 48 percent, of the average 
                per-pupil expenditure in the United States.
            ``(2) Calculation of grants.--
                    ``(A) Allocations to local educational agencies.--
                The Secretary shall calculate grants under this section 
                on the basis of the number of children counted under 
                subsection (c) for local educational agencies, unless 
                the Secretary and the Secretary of Commerce determine 
                that some or all of those data are unreliable or that 
                their use would be otherwise inappropriate, in which 
                case--
                            ``(i) the 2 Secretaries shall publicly 
                        disclose the reasons for their determination in 
                        detail; and
                            ``(ii) paragraph (3) shall apply.
                    ``(B) Allocations to large and small local 
                educational agencies.--(i) For any fiscal year in which 
                this paragraph applies, the Secretary shall calculate 
                grants under this section for each local educational 
                agency.
                    ``(ii) The amount of a grant under this section for 
                each large local educational agency shall be the amount 
                determined under clause (i).
                    ``(iii) For small local educational agencies, the 
                State educational agency may either--
                            ``(I) distribute grants under this section 
                        in amounts determined by the Secretary under 
                        clause (i); or
                            ``(II) use an alternative method approved 
                        by the Secretary to distribute the portion of 
                        the State's total grants under this section 
                        that is based on those small agencies.
                    ``(iv) An alternative method under clause (iii)(II) 
                shall be based on population data that the State 
                educational agency determines best reflect the current 
                distribution of children in poor families among the 
                State's small local educational agencies that meet the 
                eligibility criteria of subsection (b).
                    ``(v) If a small local educational agency is 
                dissatisfied with the determination of its grant by the 
                State educational agency under clause (iii)(II), it may 
                appeal that determination to the Secretary, who shall 
                respond not later than 45 days after receipt of such 
                appeal.
                    ``(vi) As used in this subparagraph--
                            ``(I) the term `large local educational 
                        agency' means a local educational agency 
                        serving an area with a total population of 
                        20,000 or more; and
                            ``(II) the term `small local educational 
                        agency' means a local educational agency 
                        serving an area with a total population of less 
                        than 20,000.
            ``(3) Allocations to counties.--
                    ``(A) Calculation.--For any fiscal year to which 
                this paragraph applies, the Secretary shall calculate 
                grants under this section on the basis of the number of 
                children counted under section 1124(c) for counties, 
                and State educational agencies shall suballocate county 
                amounts to local educational agencies, in accordance 
                with regulations issued by the Secretary.
                    ``(B) Direct allocations.--In any State in which a 
                large number of local educational agencies overlap 
                county boundaries, or for which the State believes it 
                has data that would better target funds than allocating 
                them by county, the State educational agency may apply 
                to the Secretary for authority to make the allocations 
                under this part for a particular fiscal year directly 
                to local educational agencies without regard to 
                counties.
                    ``(C) Assurances.--If the Secretary approves the 
                State educational agency's application under 
                subparagraph (B), the State educational agency shall 
                provide the Secretary an assurance that such 
                allocations shall be made--
                            ``(i) using precisely the same factors for 
                        determining a grant as are used under this 
                        part; or
                            ``(ii) using data that the State 
                        educational agency submits to the Secretary for 
                        approval that more accurately target poverty.
                    ``(D) Appeal.--The State educational agency shall 
                provide the Secretary an assurance that it shall 
                establish a procedure through which a local educational 
                agency that is dissatisfied with its determinations 
                under subparagraph (B) may appeal directly to the 
                Secretary for a final determination.
            ``(4) Puerto rico.--
                    ``(A) In general.--For each fiscal year, the grant 
                which the Commonwealth of Puerto Rico shall be eligible 
                to receive under this section shall be the amount 
                determined by multiplying the number of children 
                counted under subsection (c) for the Commonwealth of 
                Puerto Rico by the product of--
                            ``(i) the percentage which the average per-
                        pupil expenditure in the Commonwealth of Puerto 
                        Rico is of the lowest average per-pupil 
                        expenditure of any of the 50 States; and
                            ``(ii) 32 percent of the average per-pupil 
                        expenditure in the United States.
                    ``(B) Minimum percentage.--The percentage in 
                subparagraph (A)(i) shall not be less than--
                            ``(i) for fiscal year 2002, 77.5 percent;
                            ``(ii) for fiscal year 2003, 80.0 percent;
                            ``(iii) for fiscal year 2004, 82.5 percent; 
                        and
                            ``(iv) for fiscal year 2005 and succeeding 
                        fiscal years, 85.0 percent.
                    ``(C) Limitation.--If the application of 
                subparagraph (B) would result in any of the 50 States 
                or the District of Columbia receiving less under this 
                part than it received under this part for the preceding 
                fiscal year, the percentage in subparagraph (A) shall 
                be the greater of the percentage in subparagraph (A)(i) 
                or the percentage used for the preceding fiscal year.
            ``(5) Definition.--For purposes of this subsection, the 
        term `State' does not include Guam, American Samoa, the Virgin 
        Islands, and the Northern Mariana Islands.
    ``(b) Minimum Number of Children To Qualify.--A local educational 
agency is eligible for a basic grant under this section for any fiscal 
year only if the number of children counted under subsection (c) for 
that agency is both--
            ``(1) 10 or more; and
            ``(2) more than 2 percent of the total school-age 
        population in the agency's jurisdiction.
    ``(c) Children To Be Counted.--
            ``(1) Categories of children.--The number of children to be 
        counted for purposes of this section is the aggregate of--
                    ``(A) the number of children aged 5 to 17, 
                inclusive, in the school district of the local 
                educational agency from families below the poverty 
                level as determined under paragraph (2);
                    ``(B) the number of children (determined under 
                paragraph (4) for either the preceding year as 
                described in that paragraph, or for the second 
                preceding year, as the Secretary finds appropriate) 
                aged 5 to 17, inclusive, in the school district of such 
                agency in institutions for neglected and delinquent 
                children (other than such institutions operated by the 
                United States), but not counted pursuant to subpart 1 
                of part D for the purposes of a grant to a State 
                agency, or being supported in foster homes with public 
                funds; and
                    ``(C) the number of children aged 5 to 17, 
                inclusive, in the school district of such agency from 
                families above the poverty level as determined under 
                paragraph (4).
            ``(2) Determination of number of children.--For the 
        purposes of this section, the Secretary shall determine the 
        number of children aged 5 to 17, inclusive, from families below 
        the poverty level on the basis of the most recent satisfactory 
        data, described in paragraph (3), available from the Department 
        of Commerce. The District of Columbia and the Commonwealth of 
        Puerto Rico shall be treated as individual local educational 
        agencies. If a local educational agency contains 2 or more 
        counties in their entirety, then each county will be treated as 
        if such county were a separate local educational agency for 
        purposes of calculating grants under this part. The total of 
        grants for such counties shall be allocated to such a local 
        educational agency, which local educational agency shall 
        distribute to schools in each county within such agency a share 
        of the local educational agency's total grant that is no less 
        than the county's share of the population counts used to 
        calculate the local educational agency's grant.
            ``(3) Population updates.--In fiscal year 2001 and every 2 
        years thereafter, the Secretary shall use updated data on the 
        number of children, aged 5 to 17, inclusive, from families 
        below the poverty level for local educational agencies or 
        counties, published by the Department of Commerce, unless the 
        Secretary and the Secretary of Commerce determine that use of 
        the updated population data would be inappropriate or 
        unreliable. If the Secretary and the Secretary of Commerce 
        determine that some or all of the data referred to in this 
        paragraph are inappropriate or unreliable, they shall publicly 
        disclose their reasons. In determining the families which are 
        below the poverty level, the Secretary shall utilize the 
        criteria of poverty used by the Bureau of the Census in 
        compiling the most recent decennial census, in such form as 
        those criteria have been updated by increases in the Consumer 
        Price Index for all urban consumers, published by the Bureau of 
        Labor Statistics.
            ``(4) Other children to be counted.--For the purposes of 
        this section, the Secretary shall determine the number of 
        children aged 5 to 17, inclusive, from families above the 
        poverty level on the basis of the number of such children from 
        families receiving an annual income, in excess of the current 
        criteria of poverty, from payments under a State program funded 
        under part A of title IV of the Social Security Act; and in 
        making such determinations the Secretary shall utilize the 
        criteria of poverty used by the Bureau of the Census in 
        compiling the most recent decennial census for a family of 4 in 
        such form as those criteria have been updated by increases in 
        the Consumer Price Index for all urban consumers, published by 
        the Bureau of Labor Statistics. The Secretary shall determine 
        the number of such children and the number of children aged 5 
        through 17 living in institutions for neglected or delinquent 
        children, or being supported in foster homes with public funds, 
        on the basis of the caseload data for the month of October of 
        the preceding fiscal year (using, in the case of children 
        described in the preceding sentence, the criteria of poverty 
        and the form of such criteria required by such sentence which 
        were determined for the calendar year preceding such month of 
        October) or, to the extent that such data are not available to 
        the Secretary before January of the calendar year in which the 
        Secretary's determination is made, then on the basis of the 
        most recent reliable data available to the Secretary at the 
        time of such determination. The Secretary of Health and Human 
        Services shall collect and transmit the information required by 
        this subparagraph to the Secretary not later than January 1 of 
        each year. For the purpose of this section, the Secretary shall 
        consider all children who are in correctional institutions to 
        be living in institutions for delinquent children.
            ``(5) Estimate.--When requested by the Secretary, the 
        Secretary of Commerce shall make a special updated estimate of 
        the number of children of such ages who are from families below 
        the poverty level (as determined under subparagraph (A) of this 
        paragraph) in each school district, and the Secretary is 
        authorized to pay (either in advance or by way of 
        reimbursement) the Secretary of Commerce the cost of making 
        this special estimate. The Secretary of Commerce shall give 
        consideration to any request of the chief executive of a State 
        for the collection of additional census information.
    ``(d) State Minimum.--Notwithstanding section 1122, the aggregate 
amount allotted for all local educational agencies within a State may 
not be less than the lesser of--
            ``(1) 0.25 percent of total grants under this section; or
            ``(2) the average of--
                    ``(A) one-quarter of 1 percent of the total amount 
                available for such fiscal year under this section; and
                    ``(B) the number of children in such State counted 
                under subsection (c) in the fiscal year multiplied by 
                150 percent of the national average per-pupil payment 
                made with funds available under this section for that 
                year.

``SEC. 1124A. CONCENTRATION GRANTS TO LOCAL EDUCATIONAL AGENCIES.

    ``(a) Eligibility for and Amount of Grants.--
            ``(1) In general.--(A) Except as otherwise provided in this 
        paragraph, each local educational agency, in a State other than 
        Guam, American Samoa, the Virgin Islands, and the Commonwealth 
        of the Northern Mariana Islands, which is eligible for a grant 
        under section 1124 for any fiscal year is eligible for an 
        additional grant under this section for that fiscal year if the 
        number of children counted under section 1124(c) in the agency 
        exceeds either--
                    ``(i) 6,500; or
                    ``(ii) 15 percent of the total number of children 
                aged 5 through 17 in the agency.
            ``(B) Notwithstanding section 1122, no State described in 
        subparagraph (A) shall receive less than the lesser of--
                    ``(i) 0.25 percent of total grants; or
                    ``(ii) the average of--
                            ``(I) one-quarter of 1 percent of the sums 
                        available to carry out this section for such 
                        fiscal year; and
                            ``(II) the greater of--
                                    ``(aa) $340,000; or
                                    ``(bb) the number of children in 
                                such State counted for purposes of this 
                                section in that fiscal year multiplied 
                                by 150 percent of the national average 
                                per-pupil payment made with funds 
                                available under this section for that 
                                year.
            ``(2) Special rule.--For each county or local educational 
        agency eligible to receive an additional grant under this 
        section for any fiscal year the Secretary shall determine the 
        product of--
                    ``(A) the number of children counted under section 
                1124(c) for that fiscal year; and
                    ``(B) the quotient resulting from the division of 
                the amount determined for those agencies under section 
                1124(a)(1) for the fiscal year for which the 
                determination is being made divided by the total number 
                of children counted under section 1124(c) for that 
                agency for that fiscal year.
            ``(3) Amount.--The amount of the additional grant for which 
        an eligible local educational agency or county is eligible 
        under this section for any fiscal year shall be an amount which 
        bears the same ratio to the amount available to carry out this 
        section for that fiscal year as the product determined under 
        paragraph (2) for such local educational agency for that fiscal 
        year bears to the sum of such products for all local 
        educational agencies in the United States for that fiscal year.
            ``(4) Local allocations.--(A) Grant amounts under this 
        section shall be determined in accordance with section 
        1124(a)(2) and (3).
            ``(B) For any fiscal year for which the Secretary allocates 
        funds under this section on the basis of counties, a State may 
        reserve not more than 2 percent of its allocation under this 
        section to make grants to local educational agencies that meet 
        the criteria of paragraph (1)(A)(i) or (ii) and are in 
        ineligible counties that do not meet these criteria.
    ``(b) States Receiving Minimum Grants.--In States that receive the 
minimum grant under subsection (a)(1)(B), the State educational agency 
shall allocate such funds among the local educational agencies in each 
State either--
            ``(1) in accordance with paragraphs (2) and (4) of 
        subsection (a); or
            ``(2) based on their respective concentrations and numbers 
        of children counted under section 1124(c), except that only 
        those local educational agencies with concentrations or numbers 
        of children counted under section 1124(c) that exceed the 
        statewide average percentage of such children or the statewide 
        average number of such children shall receive any funds on the 
        basis of this paragraph.

``SEC. 1125. TARGETED GRANTS TO LOCAL EDUCATIONAL AGENCIES.

    ``(a) Eligibility of Local Educational Agencies.--A local 
educational agency in a State is eligible to receive a targeted grant 
under this section for any fiscal year if the number of children in the 
local educational agency counted under subsection 1124(c), before 
application of the weighting factor described in subsection (c), is at 
least 10, and if the number of children counted for grants under 
section 1124 is at least 5 percent of the total population aged 5 to 17 
years, inclusive, in the local educational agency. For each fiscal year 
for which the Secretary uses county population data to calculate 
grants, funds made available as a result of applying this subsection 
shall be reallocated by the State educational agency to other eligible 
local educational agencies in the State in proportion to the 
distribution of other funds under this section.
    ``(b) Grants for Local Educational Agencies, the District of 
Columbia, and Puerto Rico.--
            ``(1) In general.--The amount of the grant that a local 
        educational agency in a State or that the District of Columbia 
        is eligible to receive under this section for any fiscal year 
        shall be the product of--
                    ``(A) the weighted child count determined under 
                subsection (c); and
                    ``(B) the amount in paragraph 1124(a)(1)(B).
            ``(2) Puerto rico.--For each fiscal year, the amount of the 
        grant for which the Commonwealth of Puerto Rico is eligible 
        under this section shall be equal to the number of children 
        counted under subsection (c) for Puerto Rico, multiplied by the 
        amount determined in subparagraph 1124(a)(4).
    ``(c) Weighted Child Count.--
            ``(1) Weights for allocations to counties.--
                    ``(A) In general.--For each fiscal year for which 
                the Secretary uses county population data to calculate 
                grants, the weighted child count used to determine a 
                county's allocation under this section is the larger of 
                the 2 amounts determined under clause (i) or (ii), as 
                follows:
                            ``(i) By percentage of children.--This 
                        amount is determined by adding--
                                    ``(I) the number of children 
                                determined under section 1124(c) for 
                                that county constituting up to 15 
                                percent, inclusive, of the county's 
                                total population aged 5 to 17, 
                                inclusive, multiplied by 1.0;
                                    ``(II) the number of such children 
                                constituting more than 15 percent, but 
                                not more than 19 percent, of such 
                                population, multiplied by 1.75;
                                    ``(III) the number of such children 
                                constituting more than 19 percent, but 
                                not more than 24.20 percent, of such 
                                population, multiplied by 2.5;
                                    ``(IV) the number of such children 
                                constituting more than 24.20 percent, 
                                but not more than 29.20 percent, of 
                                such population, multiplied by 3.25; 
                                and
                                    ``(V) the number of such children 
                                constituting more than 29.20 percent of 
                                such population, multiplied by 4.0.
                            ``(ii) By number of children.--This amount 
                        is determined by adding--
                                    ``(I) the number of children 
                                determined under section 1124(c) 
                                constituting up to 2,311, inclusive, of 
                                the county's total population aged 5 to 
                                17, inclusive, multiplied by 1.0;
                                    ``(II) the number of such children 
                                between 2,312 and 7,913, inclusive, in 
                                such population, multiplied by 1.5;
                                    ``(III) the number of such children 
                                between 7,914 and 23,917, inclusive, in 
                                such population, multiplied by 2.0;
                                    ``(IV) the number of such children 
                                between 23,918 and 93,810, inclusive, 
                                in such population, multiplied by 2.5; 
                                and
                                    ``(V) the number of such children 
                                in excess of 93,811 in such population, 
                                multiplied by 3.0.
                    ``(B) Puerto rico.--Notwithstanding subparagraph 
                (A), the weighted child count for Puerto Rico under 
                this paragraph shall not be greater than the total 
                number of children counted under subsection 1124(c) 
                multiplied by 1.72.
            ``(2) Weights for allocations to local educational 
        agencies.--
                    ``(A) In general.--For each fiscal year for which 
                the Secretary uses local educational agency data, the 
                weighted child count used to determine a local 
                educational agency's grant under this section is the 
                larger of the 2 amounts determined under clauses (i) 
                and (ii), as follows:
                            ``(i) By percentage of children.--This 
                        amount is determined by adding--
                                    ``(I) the number of children 
                                determined under section 1124(c) for 
                                that local educational agency 
                                constituting up to 15.233 percent, 
                                inclusive, of the agency's total 
                                population aged 5 to 17, inclusive, 
                                multiplied by 1.0;
                                    ``(II) the number of such children 
                                constituting more than 15.233 percent, 
                                but not more than 22.706 percent, of 
                                such population, multiplied by 1.75;
                                    ``(III) the number of such children 
                                constituting more than 22.706 percent, 
                                but not more than 32.213 percent, of 
                                such population, multiplied by 2.5;
                                    ``(IV) the number of such children 
                                constituting more than 32.213 percent, 
                                but not more than 41.452 percent, of 
                                such population, multiplied by 3.25; 
                                and
                                    ``(V) the number of such children 
                                constituting more than 41.452 percent 
                                of such population, multiplied by 4.0.
                            ``(ii) By number of children.--This amount 
                        is determined by adding--
                                    ``(I) the number of children 
                                determined under section 1124(c) 
                                constituting up to 710, inclusive, of 
                                the agency's total population aged 5 to 
                                17, inclusive, multiplied by 1.0;
                                    ``(II) the number of such children 
                                between 711 and 2,384, inclusive, in 
                                such population, multiplied by 1.5;
                                    ``(III) the number of such children 
                                between 2,385 and 9,645, inclusive, in 
                                such population, multiplied by 2.0;
                                    ``(IV) the number of such children 
                                between 9,646 and 54,600, inclusive, in 
                                such population, multiplied by 2.5; and
                                    ``(V) the number of such children 
                                in excess of 54,601 in such population, 
                                multiplied by 3.0.
                    ``(B) Puerto rico.--Notwithstanding subparagraph 
                (A), the weighted child count for Puerto Rico under 
                this paragraph shall not be greater than the total 
                number of children counted under section 1124(c) 
                multiplied by 1.72.
    ``(d) Calculation of Grant Amounts.--Grants under this section 
shall be calculated in accordance with section 1124(a)(2) and (3).
    ``(e) State Minimum.--Notwithstanding any other provision of this 
section or section 1122, from the total amount available for any fiscal 
year to carry out this section, each State shall be allotted at least 
the lesser of--
            ``(1) 0.25 percent of total appropriations; or
            ``(2) the average of--
                    ``(A) one-quarter of 1 percent of the total amount 
                available to carry out this section; and
                    ``(B) 150 percent of the national average grant 
                under this section per child described in section 
                1124(c), without application of a weighting factor, 
                multiplied by the State's total number of children 
                described in section 1124(c), without application of a 
                weighting factor.

``SEC. 1126. SPECIAL ALLOCATION PROCEDURES.

    ``(a) Allocations for Neglected Children.--
            ``(1) In general.--If a State educational agency determines 
        that a local educational agency in the State is unable or 
        unwilling to provide for the special educational needs of 
        children who are living in institutions for neglected children 
        as described in subparagraph (B) of section 1124(c)(1), the 
        State educational agency shall, if such agency assumes 
        responsibility for the special educational needs of such 
        children, receive the portion of such local educational 
        agency's allocation under sections 1124, 1124A, and 1125 that 
        is attributable to such children.
            ``(2) Special rule.--If the State educational agency does 
        not assume such responsibility, any other State or local public 
        agency that does assume such responsibility shall receive that 
        portion of the local educational agency's allocation.
    ``(b) Allocations Among Local Educational Agencies.--The State 
educational agency may allocate the amounts of grants under sections 
1124, 1124A, and 1125 among the affected local educational agencies--
            ``(1) if 2 or more local educational agencies serve, in 
        whole or in part, the same geographical area;
            ``(2) if a local educational agency provides free public 
        education for children who reside in the school district of 
        another local educational agency; or
            ``(3) to reflect the merger, creation, or change of 
        boundaries of 1 or more local educational agencies.
    ``(c) Reallocation.--If a State educational agency determines that 
the amount of a grant a local educational agency would receive under 
sections 1124, 1124A, and 1125 is more than such local agency will use, 
the State educational agency shall make the excess amount available to 
other local educational agencies in the State that need additional 
funds in accordance with criteria established by the State educational 
agency.

``SEC. 1127. CARRYOVER AND WAIVER.

    ``(a) Limitation on Carryover.--Notwithstanding section 421 of the 
General Education Provisions Act or any other provision of law, not 
more than 15 percent of the funds allocated to a local educational 
agency for any fiscal year under this subpart (but not including funds 
received through any reallocation under this subpart) may remain 
available for obligation by such agency for 1 additional fiscal year.
    ``(b) Waiver.--A State educational agency may, once every 3 years, 
waive the percentage limitation in subsection (a) if--
            ``(1) the agency determines that the request of a local 
        educational agency is reasonable and necessary; or
            ``(2) supplemental appropriations for this subpart become 
        available.
    ``(c) Exclusion.--The percentage limitation under subsection (a) 
shall not apply to any local educational agency that receives less than 
$50,000 under this subpart for any fiscal year.

``SEC. 1128. SECULAR, NEUTRAL, AND NONIDEOLOGICAL.

    ``Any school that receives funds under this part shall ensure that 
educational services or other benefits provided under this part, 
including materials and equipment, shall be secular, neutral, and 
nonideological.''.

           PART B--STUDENT READING SKILLS IMPROVEMENT GRANTS

SEC. 111. READING FIRST; EARLY READING FIRST.

    Part B of title I (20 U.S.C. 6361 et seq.) is amended--
            (1) by striking the part heading and inserting the 
        following:

         ``PART B--STUDENT READING SKILLS IMPROVEMENT GRANTS'';

            (2) by redesignating sections 1201 through 1212 as sections 
        1231 through 1242, respectively; and
            (3) by inserting after the part heading the following:

                       ``Subpart 1--Reading First

``SEC. 1201. FINDINGS.

    ``The Congress finds as follows:
            ``(1) The 1998 National Assessment of Educational Progress 
        found that 68 percent of fourth grade students in the United 
        States are reading below the proficient level.
            ``(2) That assessment also found that minority students, on 
        average, continue to lag far behind their non-minority 
        counterparts in reading proficiency.
            ``(3) More than \1/2\ of the students placed in special 
        education classes are identified as learning disabled and, for 
        as many as 80 percent of the students so identified, reading is 
        the primary difficulty.
            ``(4) It is estimated that, at a minimum, 10,000,000 
        children have difficulty learning to read. 10 to 15 percent of 
        those children eventually drop out of high school, and only 2 
        percent complete a 4-year program at an institution of higher 
        education.
            ``(5) It is estimated that the number of children who are 
        typically identified as poor readers can be significantly 
        reduced through the implementation of early identification and 
        prevention programs that are based on scientifically based 
        reading research.
            ``(6) The report issued by the National Reading Panel in 
        2000 found that the course of reading instruction that obtains 
        maximum benefits for students includes explicit and systematic 
        instruction in phonemic awareness, phonics, vocabulary 
        development, reading fluency, and reading comprehension 
        strategies.

``SEC. 1202. PURPOSES.

    ``The purposes of this subpart are as follows:
            ``(1) To provide assistance to States and local educational 
        agencies in establishing reading programs for students in 
        grades kindergarten through 3 that are based on scientifically 
        based reading research, in order to ensure that every student 
        can read at grade level or above by the end of the third grade.
            ``(2) To provide assistance to States and local educational 
        agencies in preparing teachers, through professional 
        development and other support, so the teachers can identify 
        specific reading barriers facing their students and so the 
        teachers have the tools to effectively help their students 
        learn to read.
            ``(3) To provide assistance to States and local educational 
        agencies in selecting or developing rigorous diagnostic reading 
        assessments that document the effectiveness of this subpart in 
        improving students' reading and in holding grant and subgrant 
        recipients accountable for their results.
            ``(4) To provide assistance to States and local educational 
        agencies in selecting or developing effective instructional 
        materials, programs, and strategies to implement scientific 
        research-based methods that have been proven to prevent or 
        remediate reading failure within a State or States.
            ``(5) To strengthen coordination among schools and early 
        literacy programs in order to improve reading achievement for 
        all children.

``SEC. 1203. FORMULA GRANTS TO STATES; COMPETITIVE SUBGRANTS TO LOCAL 
              AGENCIES.

    ``(a) In General.--
            ``(1) Authorization to make grants.--In the case of each 
        State that in accordance with section 1204 submits to the 
        Secretary an application for a 5-year period, the Secretary, 
        subject to the application's approval, shall make a grant to 
        the State for the uses specified in subsections (c) and (d). 
        The grant shall consist of the allotment determined for the 
        State under subsection (b).
            ``(2) Duration of grants.--
                    ``(A) In general.--Subject to subparagraph (B), a 
                grant under this section shall be awarded for a period 
                of not more than 5 years.
                    ``(B) Interim review.--Not later than 60 days after 
                the termination of the third year of the grant period, 
                each State receiving a grant under this section shall 
                submit a progress report to the Secretary on the 
                progress the State and local educational agencies 
                within the State are making in reducing the number of 
                students reading below grade level. The progress report 
                shall be reviewed by the peer review panel convened 
                under section 1204(c)(2). After the submission of this 
                report, if the Secretary determines that the State is 
                not making significant progress in meeting the purposes 
                of this subpart, the Secretary may withhold from the 
                State, in whole or in part, further payments under this 
                section in accordance with section 455 of the General 
                Education Provisions Act (20 U.S.C. 1234d) or take such 
                other action authorized by law as the Secretary deems 
                necessary, including providing technical assistance 
                upon request of the State.
    ``(b) Determination of Amount of Allotments.--
            ``(1) Reservations from appropriations.--From the amounts 
        appropriated under section 1002(b)(1) to carry out this subpart 
        for a fiscal year, the Secretary--
                    ``(A) shall reserve \1/2\ of 1 percent for 
                allotments for the Virgin Islands, Guam, American 
                Samoa, and the Commonwealth of the Northern Mariana 
                Islands, to be distributed among these outlying areas 
                on the basis of their relative need, as determined by 
                the Secretary in accordance with the purposes of this 
                subpart;
                    ``(B) shall reserve \1/2\ of 1 percent for the 
                Secretary of the Interior for programs under this 
                subpart in schools operated or funded by the Bureau of 
                Indian Affairs;
                    ``(C) may reserve not more than 1 percent to carry 
                out section 1207; and
                    ``(D) shall reserve $5,000,000 to carry sections 
                1208 and 1224.
            ``(2) State allotments.--From the total amount made 
        available under section 1002(b)(1) to carry out this subpart 
        for any fiscal year and not reserved under paragraph (1), the 
        Secretary shall allot 75 percent under this section among each 
        of the 50 States, the District of Columbia, and the 
        Commonwealth of Puerto Rico.
            ``(3) Determination of state allotment amounts.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Secretary shall allot the amount made available under 
                paragraph (2) for a fiscal year among the States in 
                proportion to the number of children, aged 5 to 17, who 
                reside within the State from families with incomes 
                below the poverty line (as defined by the Office of 
                Management and Budget and revised annually in 
                accordance with section 673(2) of the Community 
                Services Block Grant Act (42 U.S.C. 9902(2)) applicable 
                to a family of the size involved for the most recent 
                fiscal year for which satisfactory data are available, 
                compared to the number of such individuals who reside 
                in all such States for that fiscal year.
                    ``(B) Exception.--No State receiving an allotment 
                under subparagraph (A) may receive less than \1/4\ of 1 
                percent of the total amount allotted under subparagraph 
                (A).
            ``(4) Reallotment.--If any State does not apply for an 
        allotment under this section for any fiscal year, or if the 
        State's application is not approved, the Secretary shall 
        reallot such amount to the remaining States in accordance with 
        paragraph (3).
    ``(d) Subgrants to Local Educational Agencies.--
            ``(1) Distribution of subgrants.--The Secretary may make a 
        grant to a State under this section only if the State agrees to 
        expend at least 80 percent of the amount of the funds provided 
        under the grant for the purpose of making, in accordance with 
        this subsection, competitive subgrants to local educational 
        agencies.
            ``(2) Notice.--A State receiving a grant under this section 
        shall provide notice to all local educational agencies in the 
        State of the availability of competitive subgrants under this 
        subsection and of the requirements for applying for the 
        subgrants.
            ``(3) Local applications.--To be eligible to receive a 
        subgrant under this subsection, a local educational agency 
        shall submit an application to the State at such time, in such 
        manner, and containing such information as the State may 
        reasonably require.
            ``(4) Priority for certain local agencies.--A State 
        receiving a grant under this section shall, in distributing 
        subgrants to local educational agencies, give priority to local 
        educational agencies that--
                    ``(A) have a high percentage of students in grades 
                kindergarten through 3 reading below grade level;
                    ``(B) have jurisdiction over--
                            ``(i) a geographic area that includes an 
                        area designated as an empowerment zone, or an 
                        enterprise community, under part I of 
                        subchapter U of chapter 1 of the Internal 
                        Revenue Code of 1986; or
                            ``(ii) a significant number of schools that 
                        are identified for school improvement under 
                        section 1116(b); and
                    ``(C) are located in areas having the greatest 
                numbers of children aged 5 through 17 living in 
                families below the poverty line, as defined by the 
                Office of Management and Budget and revised annually in 
                accordance with section 673(2) of the Community 
                Services Block Grant Act (42 U.S.C. 9902(2)).
            ``(5) State Requirement.--In distributing subgrant funds to 
        local educational agencies under this subsection, a State shall 
        provide funds in sufficient concentrations to enable local 
        educational agencies to improve reading, as measured by scores 
        on rigorous diagnostic reading assessments.
            ``(6) Priority for certain schools.--In distributing 
        subgrant funds under this subsection, a local educational 
        agency shall give priority to providing the funds to schools 
        that--
                    ``(A) have a high percentage of students in grades 
                kindergarten through 3 reading below grade level;
                    ``(B) are identified for school improvement under 
                section 1116(b); and
                    ``(C) have the greatest numbers of children aged 5 
                through 17 living in families below the poverty line, 
                as defined by the Office of Management and Budget and 
                revised annually in accordance with section 673(2) of 
                the Community Services Block Grant Act (42 U.S.C. 
                9902(2)).
            ``(7) Local uses of funds.--Subject to paragraph (8), a 
        local educational agency that receives a subgrant under this 
        subsection shall use the funds provided under the subgrant to 
        carry out the following activities:
                    ``(A) Selecting or developing, and administering, 
                rigorous diagnostic reading assessments.
                    ``(B) Selecting and implementing a program or 
                programs of reading instruction based on scientifically 
                based reading research that--
                            ``(i) includes the essential components of 
                        reading instruction; and
                            ``(ii) provides such instruction to all 
                        children, including children who--
                                    ``(I) may have reading 
                                difficulties;
                                    ``(II) are at risk of being 
                                referred to special education based on 
                                these difficulties;
                                    ``(III) have been evaluated under 
                                section 614 of the Individuals with 
                                Disabilities Education Act but, in 
                                accordance with section 614(b)(5) of 
                                such Act, have not been identified as 
                                being a child with a disability (as 
                                defined in section 602 of such Act);
                                    ``(IV) are being served under such 
                                Act primarily due to being identified 
                                as being a child with a specific 
                                learning disability (as defined in 
                                section 602 of such Act) related to 
                                reading;
                                    ``(V) are deficient in their 
                                phonemic awareness and phonics skills; 
                                or
                                    ``(VI) are identified as having 
                                limited English proficiency.
                    ``(C) Procuring instructional materials based on 
                scientifically based reading research.
                    ``(D) Providing professional development for 
                teachers of grades kindergarten through 3 that--
                            ``(i) will prepare these teachers in all of 
                        the essential components of reading 
                        instruction;
                            ``(ii) shall include--
                                    ``(I) information, instructional 
                                materials, programs, strategies, and 
                                approaches based on scientifically 
                                based reading research, including early 
                                intervention and reading remediation 
                                materials, programs, and approaches; 
                                and
                                    ``(II) instruction in the use of 
                                rigorous diagnostic reading assessments 
                                and other procedures that effectively 
                                identify students who may be at risk 
                                for reading failure or who are having 
                                difficulty reading; and
                            ``(iii) shall be provided by eligible 
                        professional development providers.
                    ``(E) Providing training to individuals who 
                volunteer to be reading tutors for a student on the 
                essential components of reading instruction to enable 
                such volunteers to support instructional practices of 
                the student's teacher.
                    ``(F) Providing instruction for parents of children 
                enrolled in a school selected to receive assistance 
                under this section, and for others who volunteer to be 
                reading tutors for such children, in the instructional 
                practices that are based on scientifically based 
                reading research used by the applicant.
                    ``(G) Assisting parents, through the use of 
                materials, programs, strategies, and approaches that 
                are based on scientifically based reading research, to 
                help support their children's reading development.
                    ``(H) Collecting and summarizing data from rigorous 
                diagnostic reading assessments--
                            ``(i) to document the effectiveness of this 
                        subpart in individual schools and in the local 
                        educational agency as a whole; and
                            ``(ii) to stimulate and accelerate 
                        improvement by identifying the schools that 
                        produce the largest gains in reading 
                        achievement.
                    ``(I) Reporting aggregated data described in 
                subparagraph (H) in a manner that protects the privacy 
                of individuals--
                            ``(i) to the State; and
                            ``(ii) to the public, including parents and 
                        students, through such means as the Internet 
                        and major print and broadcast media outlets or 
                        other journal of public record.
            ``(8) Local planning and administration.--A local 
        educational agency that receives a subgrant under this 
        subsection may use not more than 2 percent of the funds 
        provided under the subgrant for planning and administration.
    ``(e) Other State Uses of Funds.--
            ``(1) Professional development.--
                    ``(A) In general.--A State that receives a grant 
                under this section may expend not more than 15 percent 
                of the amount of the funds provided under the grant to 
                develop and implement a program of professional 
                development for teachers of kindergarten through third 
                grades that--
                            ``(i) will prepare these teachers in all of 
                        the essential components of reading 
                        instruction;
                            ``(ii) shall include--
                                    ``(I) information on interventions, 
                                instructional materials, programs, and 
                                approaches based on scientifically 
                                based reading research, including early 
                                intervention and reading remediation 
                                materials, programs, and approaches; 
                                and
                                    ``(II) instruction in the use of 
                                rigorous diagnostic reading assessments 
                                and other procedures that effectively 
                                identify students who may be at risk 
                                for reading failure or who are having 
                                difficulty reading; and
                            ``(iii) shall be provided by eligible 
                        professional development providers.
                    ``(B) Funds not used for professional 
                development.--Any portion of the funds described in 
                subparagraph (A) that a State does not expend to 
                develop and implement a program described in such 
                subparagraph shall be expended for the purpose of 
                making subgrants in accordance with subsection (c).
            ``(2) Other state-level activities.--A State that receives 
        a grant under this section may expend not more than 3 percent 
        of the amount of the funds provided under the grant for one or 
        more of the following authorized State activities:
                    ``(A) Assisting local educational agencies in 
                accomplishing the tasks required to design and 
                implement a program under this subpart, including--
                            ``(i) selecting and implementing a program 
                        or programs of reading instruction based on 
                        scientifically based reading research;
                            ``(ii) selecting or developing rigorous 
                        diagnostic reading assessments; and
                            ``(iii) identifying eligible professional 
                        development providers to help prepare reading 
                        teachers to teach students using the programs 
                        and assessments described in clauses (i) and 
                        (ii);
                    ``(B) Providing to students in kindergarten through 
                third grades through alternative providers reading 
                instruction that includes--
                            ``(i) rigorous diagnostic reading 
                        assessments; and
                            ``(ii) as need is indicated by such 
                        assessments, instruction based on 
                        scientifically based reading research that 
                        includes the essential components of reading 
                        instruction.
            ``(3) Planning, administration, and reporting.--
                    ``(A) In general.--A State that receives a grant 
                under this section shall expend not more than 2 percent 
                of the amount of the funds provided under the grant for 
                the activities described in this paragraph.
                    ``(B) Planning and administration.--A State that 
                receives a grant under this section may expend funds 
                described in subparagraph (A) for planning and 
                administration relating to the State uses of funds 
                authorized under this subpart, including the following:
                            ``(i) Administering the distribution of 
                        competitive subgrants to local educational 
                        agencies under this section and sections 1205 
                        and 1206.
                            ``(ii) Collecting and summarizing data from 
                        rigorous diagnostic reading assessments--
                                    ``(I) to document the effectiveness 
                                of this subpart in individual local 
                                educational agencies and in the State 
                                as a whole; and
                                    ``(II) to stimulate and accelerate 
                                improvement by identifying the local 
                                educational agencies that produce the 
                                largest gains in reading achievement.
                    ``(C) Annual reporting.--
                            ``(i) In general.--A State that receives a 
                        grant under this section shall expend funds 
                        provided under the grant to provide the 
                        Secretary annually with a report on the 
                        implementation of this subpart. The report 
                        shall include evidence that the State is 
                        fulfilling its obligations under this subpart. 
                        The report shall also include the data required 
                        under subsection (c)(7)(I) to be reported to 
                        the State by local educational agencies. The 
                        report shall include a specific identification 
                        of those local educational agencies that report 
                        the largest gains in reading achievement.
                            ``(ii) Privacy protection.--Data in the 
                        report shall be set forth in a manner that 
                        protects the privacy of individuals.
                            ``(iii) Contract.--To the extent 
                        practicable, a State shall enter into a 
                        contract with an entity that conducts 
                        scientifically based reading research, under 
                        which contract the entity will produce the 
                        reports required to be submitted under this 
                        subparagraph.

``SEC. 1204. STATE FORMULA GRANT APPLICATIONS.

    ``(a) In General.--A State that desires to receive a grant under 
section 1203 shall submit an application to the Secretary at such time 
and in such form as the Secretary may require. The application shall 
contain the information described in subsection (b).
    ``(b) Contents.--An application under this section shall contain 
the following:
            ``(1) An assurance that the Governor of the State, in 
        consultation with the State educational agency, has established 
        a reading partnership described in subsection (d), and a 
        description of how such partnership--
                    ``(A) coordinated the development of the 
                application; and
                    ``(B)) will assist in the oversight and evaluation 
                of the State's activities under this subpart.
            ``(2) An assurance that the State will submit to the 
        Secretary, at such time and in such manner as the Secretary may 
        reasonably require, a State plan containing a description of a 
        process--
                    ``(A) to evaluate programs carried out by local 
                educational agencies under this subpart;
                    ``(B) to assist local educational agencies in 
                identifying rigorous diagnostic reading assessments; 
                and
                    ``(C) to assist local educational agencies in 
                identifying interventions, and instructional materials, 
                programs and approaches, based on scientifically based 
                reading research, including early intervention and 
                reading remediation materials, programs and approaches.
    ``(c) Approval of Applications.--
            ``(1) In general.--The Secretary, in consultation with the 
        peer review panel convened under paragraph (2), shall approve 
        an application of a State under this section if such 
        application meets the requirements of this section.
            ``(2) Peer review.--
                    ``(A) In general.--The Secretary, in consultation 
                with the National Institute for Literacy, shall convene 
                a panel to evaluate applications under this section. At 
                a minimum, the panel shall include--
                            ``(i) 3 individuals selected by the 
                        Secretary;
                            ``(ii) 3 individuals selected by the 
                        National Institute for Literacy;
                            ``(iii) 3 individuals selected by the 
                        National Research Council of the National 
                        Academy of Sciences; and
                            ``(iv) 3 individuals selected by the 
                        National Institute of Child Health and Human 
                        Development.
                    ``(B) Experts.--The panel shall include experts who 
                are competent, by virtue of their training, expertise, 
                or experience, to evaluate applications under this 
                section, and experts who provide professional 
                development to teachers of reading to children and 
                adults, and experts who provide professional 
                development to other instructional staff, based on 
                scientifically based reading research.
                    ``(C) Recommendations.--The panel shall recommend 
                grant applications from States under this section to 
                the Secretary for funding or for disapproval.
    ``(d) Reading Partnerships.--
            ``(1) In general.--In order for a State to receive a grant 
        under section 1203, the Governor of the State, in consultation 
        with the State educational agency, shall establish a reading 
        partnership. The partnership shall consist of the participants 
        described in paragraphs (2), (3), and (4).
            ``(2) Automatic participants.--The reading partnership 
        shall include the following participants:
                    ``(A) The Governor of the State.
                    ``(B) The chief State school officer.
                    ``(C) The chairman and the ranking member of each 
                committee of the State legislature that is responsible 
                for elementary education.
            ``(3) Appointed by governor.--The following members of the 
        reading partnership shall be appointed by the Governor:
                    ``(A) Parents of public, private, or home schooled 
                students who are knowledgeable about the essential 
                components of reading instruction.
                    ``(B) A representative of an institution of higher 
                education operating a program of teacher preparation in 
                which prospective reading teachers are being taught the 
                essential components of reading instruction.
                    ``(C) A representative of a literacy volunteer 
                organization where the essential components of reading 
                instruction are being taught to students or adults.
                    ``(D) A representative of a school.
                    ``(E) A representative of a public library.
            ``(4) Appointed by chief school officer.--The following 
        members of the reading partnership shall be appointed by the 
        chief State school officer:
                    ``(A) A teacher and reading specialist who 
                successfully teaches students to read using the 
                essential components of reading instruction.
                    ``(B) Representatives of at least 2 local 
                educational agencies where the essential components of 
                reading instruction are being taught.
                    ``(C) A representative of a community-based 
                organization where the essential components of reading 
                instruction are being taught.
                    ``(D) State directors of appropriate Federal or 
                State programs where the essential components of 
                reading instruction are being taught, especially in 
                programs under part A and the Individuals with 
                Disabilities Education Act.

``SEC. 1205. SUPPLEMENTAL GRANTS TO STATES; COMPETITIVE SUBGRANTS TO 
              LOCAL AGENCIES.

    ``(a) In General.--In the case of a State that in accordance with 
subsection (c) submits to the Secretary an application for fiscal year 
2002 or 2003, the Secretary may make a grant for the year to the State 
for the use specified in subsection (d). The grant shall consist of the 
allotment determined for the State under subsection (b).
    ``(b) Determination of Amount of Allotment.--
            ``(1) In general.--From the total amount made available 
        under section 1002(b)(1) to carry out this subpart for any 
        fiscal year referred to in subsection (a) that is not reserved 
        under section 1203(b)(1), the Secretary may allot 25 percent 
        under this section among each of the 50 States, the District of 
        Columbia, and the Commonwealth of Puerto Rico.
            ``(2) State allotments.--In carrying out paragraph (1), the 
        Secretary may allot such funds according to such criteria as 
        the Secretary considers appropriate and consistent with the 
        purposes of this subpart and based on the recommendations of 
        the peer review panel convened under section 1204(c)(2).
    ``(c) State Applications.--
            ``(1) In general.--A State that desires to receive a grant 
        under this section shall submit an application to the Secretary 
        at such time, in such form, and containing such information as 
        the Secretary may require.
            ``(2) Peer review.--The peer review panel convened under 
        section 1204(c)(2) shall evaluate grant applications from 
        States under this section. The panel shall recommend such 
        applications to the Secretary for funding or for disapproval.
    ``(d) Subgrants to Local Educational Agencies.--
            ``(1) In general.--The Secretary may make a grant to a 
        State under this section only if the State agrees to expend 100 
        percent of the amount of the funds provided under the grant for 
        the purpose of making competitive subgrants in accordance with 
        this subsection to local educational agencies.
            ``(2) Notice.--A State receiving a grant under this section 
        shall provide notice to all local educational agencies in the 
        State of the availability of competitive subgrants under this 
        subsection and of the requirements for applying for the 
        subgrants.
            ``(3) Local applications.--To be eligible to receive a 
        subgrant under this subsection, a local educational agency 
        shall submit an application to the State at such time, in such 
        manner, and containing such information as the State may 
        reasonably require.
            ``(4) Distribution.--A State shall distribute funds under 
        this section according to such criteria as the State considers 
        appropriate and consistent with the purposes of this subpart 
        giving special attention to those local educational agencies 
        that are making a good faith effort to improve reading skills 
        consistent with this subpart.
            ``(5) Local uses of funds.--A local educational agency that 
        receives a subgrant under this subsection--
                    ``(A) shall use the funds provided under the 
                subgrant to carry out the activities described in 
                subparagraphs (A) through (D) of section 1203(c)(7); 
                and
                    ``(B) may use such funds to carry out the 
                activities described in subparagraphs (E) through (H) 
                of such section.
    ``(e) Sunset.--This section is repealed on September 30, 2003.

``SEC. 1206. PERFORMANCE GRANTS TO STATES; COMPETITIVE SUBGRANTS TO 
              LOCAL AGENCIES.

    ``(a) In General.--In the case of a State that in accordance with 
subsection (c) submits to the Secretary an application for any fiscal 
year after fiscal year 2003, the Secretary may make a grant for the 
year to the State for the use specified in subsection (d). The grant 
shall consist of the allotment determined for the State under 
subsection (b).
    ``(b) Determination of Amount of Allotment.--
            ``(1) In general.--From the total amount made available 
        under section 1002(b)(1) to carry out this subpart for any 
        fiscal year referred to in subsection (a) that is not reserved 
        under section 1203(b)(1), the Secretary may allot 25 percent 
        under this section among each of the 50 States, the District of 
        Columbia, and the Commonwealth of Puerto Rico.
            ``(2) State allotments.--
                    ``(A) In general.--In carrying out paragraph (1), 
                the Secretary shall allot such funds to those States 
                that demonstrate the most effective implementation of 
                this subpart, as determined by the peer review panel 
                convened under section 1204(c)(2) based upon the 
                application contents described in subsection (c)(3).
    ``(c) State Applications.--
            ``(1) In general.--A State that desires to receive a grant 
        under this section shall submit an application to the Secretary 
        at such time and in such form as the Secretary may require.
            ``(2) Peer review.--The peer review panel convened under 
        section 1204(c)(2) shall evaluate grant applications from 
        States under this section. The panel shall recommend such 
        applications to the Secretary for funding or for disapproval.
            ``(3) Application contents.--A State that desires to 
        receive a grant under this section shall include in its 
        application the following:
                    ``(A) Evidence that the State has carried out its 
                obligations under this subpart.
                    ``(B) Evidence that the State has increased 
                significantly the percentage of students reading at 
                grade level or above by the end of the third grade.
                    ``(C) Evidence that the State has been successful 
                in reducing the reading deficit in terms of the 
                percentage of students in ethnic, racial, and low-
                income populations who are reading at grade level or 
                above by the end of the third grade.
                    ``(D) A description of the criteria the State 
                intends to use in distributing subgrants to local 
                educational agencies under this section to continue or 
                expand activities under this subpart.
                    ``(E) Any additional evidence that demonstrates 
                success in the implementation of this subpart.
    ``(d) Subgrants to Local Educational Agencies.--
            ``(1) In general.--The Secretary may make a grant to a 
        State under this section only if the State agrees to expend 100 
        percent of the amount of the funds provided under the grant for 
        the purpose of making competitive subgrants in accordance with 
        this subsection to local educational agencies.
            ``(2) Notice.--A State receiving a grant under this section 
        shall provide notice to all local educational agencies in the 
        State of the availability of competitive subgrants under this 
        subsection and of the requirements for applying for the 
        subgrants.
            ``(3) Application.--To be eligible to receive a subgrant 
        under this subsection, a local educational agency shall submit 
        an application to the State at such time, in such manner, and 
        containing such information as the State may reasonably 
        require.
            ``(4) Distribution.--A State shall distribute funds under 
        this section through a competitive process based on the 
        following criteria:
                    ``(A) Evidence that a local educational agency has 
                carried out its obligations under this subpart.
                    ``(B) Evidence that a local educational agency has 
                increased significantly the percentage of students 
                reading at grade level or above by the end of the third 
                grade.
                    ``(C) Evidence that a local educational agency has 
                been successful in reducing the reading deficit in 
                terms of the percentage of students in ethnic, racial, 
                and low-income populations who are reading at grade 
                level or above by the end of the third grade.
                    ``(D) The description in such application of how 
                such funds will be used to support the continuation or 
                expansion of the agency's programs under this subpart.
                    ``(E) Evidence that the local educational agency 
                will work with other eligible local educational 
                agencies in the State that have not received a subgrant 
                under this subsection to assist such nonreceiving 
                agencies in increasing the reading achievement of 
                students.
                    ``(F) Any additional evidence in a local 
                educational agency's application under paragraph (3) 
                that demonstrates success in the implementation of this 
                subpart.
            ``(5) Local uses of funds.--A local educational agency that 
        receives a subgrant under this subsection--
                    ``(A) shall use the funds provided under the 
                subgrant to carry out the activities described in 
                subparagraphs (A) through (D) of section 1203(c)(7); 
                and
                    ``(B) may use such funds to carry out the 
                activities described in subparagraphs (E) through (H) 
                of such section.

``SEC. 1207. NATIONAL ACTIVITIES.

    ``From funds reserved under section 1203(b)(1)(C), the Secretary--
            ``(1) through grants or contracts, shall conduct an 
        evaluation of the program under this subpart using criteria 
        recommended by the peer review panel convened under section 
        1204(c)(2); and
            ``(2) may provide technical assistance in achieving the 
        purposes of this subpart to States, local educational agencies, 
        and schools requesting such assistance.

``SEC. 1208. INFORMATION DISSEMINATION.

    ``(a) In General.--From funds reserved under section 1203(b)(1)(D), 
the National Institute for Literacy, in collaboration with the 
Secretary of Education, the Secretary of Health and Human Services, and 
the Director of the National Institute for Child Health and Human 
Development--
            ``(1) shall disseminate information on scientifically based 
        reading research pertaining to children, youth, and adults;
            ``(2) shall identify and disseminate information about 
        schools, local educational agencies, and States that 
        effectively developed and implemented reading programs that 
        meet the requirements of this subpart, including those 
        effective States, local educational agencies, and schools 
        identified through the evaluation and peer review provisions of 
        this subpart; and
            ``(3) shall support the continued identification and 
        dissemination of information on programs that contain the 
        essential components of reading instruction as supported by 
        scientifically based reading research, that can lead to 
        improved reading outcomes for children, youth, and adults 
        through evidence-based assessments of the scientific research 
        literature.
    ``(b) Dissemination.--At a minimum, the National Institute for 
Literacy shall disseminate such information to recipients of Federal 
financial assistance under part A of this title, part A of title III, 
the Head Start Act, the Individuals with Disabilities Education Act, 
and the Adult Education and Family Literacy Act. In carrying out this 
section, the National Institute for Literacy shall, to the extent 
practicable, utilize existing information and dissemination networks 
developed and maintained through other public and private entities.
    ``(c) Use of Funds.--The National Institute for Literacy may use 
not more than 5 percent of the funds reserved under section 
1203(b)(1)(D) for administrative purposes directly related to carrying 
out the activities authorized by this section.

``SEC. 1209. DEFINITIONS.

    ``For purposes of this subpart:
            ``(1) Eligible professional development provider.--The term 
        `eligible professional development provider' means a provider 
        of professional development in reading instruction to teachers 
        that is based on scientifically based reading research.
            ``(2) Essential components of reading instruction.--The 
        term `essential components of reading instruction' means 
        explicit and systematic instruction in--
                    ``(A) phonemic awareness;
                    ``(B) phonics;
                    ``(C) vocabulary development;
                    ``(D) oral reading fluency; and
                    ``(E) reading comprehension strategies.
            ``(3) Instructional staff.--The term `instructional 
        staff'--
                    ``(A) means individuals who have responsibility for 
                teaching children to read; and
                    ``(B) includes principals, teachers, supervisors of 
                instruction, librarians, library school media 
                specialists, teachers of academic subjects other than 
                reading, and other individuals who have responsibility 
                for assisting children to learn to read.
            ``(4) Reading.--The term `reading' means a complex system 
        of deriving meaning from print that requires all of the 
        following:
                    ``(A) The skills and knowledge to understand how 
                phonemes, or speech sounds, are connected to print.
                    ``(B) The ability to decode unfamiliar words.
                    ``(C) The ability to read fluently.
                    ``(D) Sufficient background information and 
                vocabulary to foster reading comprehension.
                    ``(E) The development of appropriate active 
                strategies to construct meaning from print.
                    ``(F) The development and maintenance of a 
                motivation to read.
            ``(5) Rigorous diagnostic reading assessments.--The term 
        `rigorous diagnostic reading assessments' means diagnostic 
        reading assessments that--
                    ``(A) are valid, reliable, and based on 
                scientifically based reading research;
                    ``(B) measure progress in developing phonemic 
                awareness and phonics skills, vocabulary, reading 
                fluency, and reading comprehension; and
                    ``(C) identify students who may be at risk for 
                reading failure or who are having difficulty reading.
            ``(6) Scientifically based reading research.--The term 
        `scientifically based reading research'--
                    ``(A) means the application of rigorous, 
                systematic, and objective procedures to obtain valid 
                knowledge relevant to reading development, reading 
                instruction, and reading difficulties; and
                    ``(B) shall include research that--
                            ``(i) employs systematic, empirical methods 
                        that draw on observation or experiment;
                            ``(ii) involves rigorous data analyses that 
                        are adequate to test the stated hypotheses and 
                        justify the general conclusions drawn;
                            ``(iii) relies on measurements or 
                        observational methods that provide valid data 
                        across evaluators and observers and across 
                        multiple measurements and observations; and
                            ``(iv) has been accepted by a peer-reviewed 
                        journal or approved by a panel of independent 
                        experts through a comparably rigorous, 
                        objective, and scientific review.

                    ``Subpart 2--Early Reading First

``SEC. 1221. PURPOSES.

    ``The purposes of this subpart are--
            ``(1) to improve prereading skills in children aged 3 
        through 5, particularly those children from low-income 
        families, in high-quality oral language and literature-rich 
        environments;
            ``(2) to provide professional development for early 
        childhood teachers that prepares them with scientific research-
        based knowledge of early reading development to assist in 
        developing the children's--
                    ``(A) automatic recognition of the letters of the 
                alphabet;
                    ``(B) understanding that spoken words are made up 
                of small segments of speech sounds and that certain 
                letters regularly represent such speech sounds; and
                    ``(C) spoken vocabulary and oral comprehension 
                abilities;
            ``(3) to identify and provide scientific research-based 
        prereading language and literacy activities and instructional 
        materials that can be used to assist in the development of 
        prereading skills in children; and
            ``(4) to integrate such scientific research-based 
        instructional materials and literacy activities with existing 
        preschool programs, Head Start centers, and family literacy 
        services.

``SEC. 1222. LOCAL EARLY READING FIRST GRANTS.

    ``(a) Program Authorized.--From amounts appropriated under section 
1002(b)(2), the Secretary shall make awards, on a competitive basis, 
for periods of not more than 4 years, to eligible applicants to enable 
such applicants to carry out activities that are consistent with the 
purposes of this subpart.
    ``(b) Definition of Eligible Applicant.--In this subpart, the term 
`eligible applicant' means--
            ``(1) a local educational agency;
            ``(2) one or more public or private organizations, acting 
        on behalf of one or more programs that serve preschool age 
        children (such as a program at a Head Start center or a family 
        literacy program), which organizations shall be located in a 
        community served by a local educational agency; or
            ``(3) one or more local educational agencies in 
        collaboration with one or more organizations described in 
        paragraph (2).
    ``(c) Applications.--An eligible applicant that desires to receive 
a grant under this section shall submit an application to the Secretary 
which shall include a description of--
            ``(1) the programs to be served by the proposed project, 
        including general demographic and socioeconomic information on 
        the communities in which the proposed project will be 
        administered;
            ``(2) how the proposed project will enhance the school 
        readiness of young children aged 3 through 5 in high-quality 
        oral language and literature-rich environments;
            ``(3) how the proposed project will provide early childhood 
        teachers with scientific research-based knowledge of early 
        reading development and assist such teachers in developing the 
        children's prereading skills;
            ``(4) how the proposed project will provide services and 
        utilize instructional materials that are based on 
        scientifically based reading research on early language 
        acquisition, prereading activities, and the development of 
        spoken vocabulary skills;
            ``(5) how the proposed project will integrate such 
        instructional materials and literacy activities with existing 
        preschool programs and family literacy services;
            ``(6) how the proposed project will help staff in the 
        programs to meet the diverse needs of children in the 
        community, including children with limited English proficiency 
        and children with learning disabilities;
            ``(7) how the proposed project will help children, 
        particularly children experiencing difficulty with spoken 
        language, prereading, and early reading skills, to make the 
        transition from preschool to formal classroom instruction in 
        school;
            ``(8) how the activities conducted under this subpart will 
        be coordinated with the eligible applicant's activities under 
        subpart 1, if the applicant has received a subgrant under such 
        subpart, at the kindergarten through third grade levels;
            ``(9) how the proposed project will evaluate the success of 
        the activities supported under this subpart in enhancing the 
        early language and reading development of children served by 
        the project; and
            ``(10) such other information as the Secretary may require.
    ``(d) Approval of Local Applications.--The Secretary shall select 
applicants for funding under this subpart on the basis of the quality 
of the applications and based on the recommendations of the peer review 
panel convened under section 1204(c)(2).
    ``(e) Local Uses of Funds.--A local educational agency that 
receives a grant under this subpart shall use the funds provided under 
the grant to carry out the following activities:
            ``(1) To provide children aged 3 through 5 with high-
        quality oral language and literature-rich environments in which 
        to acquire prereading skills.
            ``(2) To provide professional development for early 
        childhood teachers that prepares them with scientific research-
        based knowledge of early reading development to assist in 
        developing the children's--
                    ``(A) automatic recognition of the letters of the 
                alphabet;
                    ``(B) understanding that spoken words are made up 
                of small segments of speech sounds and that certain 
                letters regularly represent such speech sounds; and
                    ``(C) spoken vocabulary and oral comprehension 
                abilities.
            ``(3) To identify and provide scientific research-based 
        prereading language and literacy activities and instructional 
        materials for use in developing the children's--
                    ``(A) automatic recognition of the letters of the 
                alphabet;
                    ``(B) understanding that spoken words are made up 
                of small segments of speech sounds and that certain 
                letters regularly represent such speech sounds; and
                    ``(C) spoken vocabulary and oral comprehension 
                abilities.
    ``(4) To integrate such instructional materials and literacy 
activities with existing Head Start centers, preschool programs, and 
family literacy services.
    ``(f) Award Amounts.--The Secretary may establish a maximum award 
amount, or ranges of award amounts, for grants under this subpart.

``SEC. 1223. FEDERAL ADMINISTRATION.

    ``The Secretary shall consult with the Secretary of Health and 
Human Services in order to coordinate the activities undertaken under 
this subpart with early childhood programs administered by the 
Department of Health and Human Services.

``SEC. 1224. INFORMATION DISSEMINATION.

    ``From funds reserved under section 1203(b)(1)(D), the National 
Institute for Literacy, in consultation with the Secretary, shall 
disseminate information regarding projects assisted under this subpart 
that have proven effective.

``SEC. 1225. REPORTING REQUIREMENTS.

    ``Each eligible applicant receiving a grant under this subpart 
shall report annually to the Secretary regarding the eligible 
applicant's progress in addressing the purposes of this subpart.

``SEC. 1226. EVALUATIONS.

    ``From the total amount appropriated under section 1002(b)(2) for 
the period beginning October 1, 2002, and ending September 30, 2006, 
the Secretary shall reserve not more than $1,000,000 to conduct an 
independent evaluation of the effectiveness of this subpart.

``SEC. 1227. ADDITIONAL RESEARCH.

    ``From the amount appropriated under section 1002(b)(2) for each of 
the fiscal years 2002 through 2006, the Secretary shall reserve not 
more than $3,000,000 to conduct, in consultation with the National 
Institute for Child Health and Human Development, the National 
Institute for Literacy, and the Department of Health and Human 
Services, additional research on language and literacy development for 
children aged 3 through 5.''.

SEC. 112. AMENDMENTS TO EVEN START.

    Part B of title I (20 U.S.C. 6361 et seq.), as amended by section 
111, is further amended--
            (1) by inserting before section 1231 (as so redesignated by 
        section 111) the following:

``Subpart 3--William F. Goodling Even Start Family Literacy Programs'';

            (2) in each of sections 1231 through 1242 (as so 
        redesignated by section 111)--
                    (A) by striking ``this part'' each place such term 
                appears and inserting ``this subpart''; and
                    (B) by striking ``1002(b)'' each place such term 
                appears and inserting ``1002(b)(3)'';
            (3) in section 1231(4), by striking ``2252)'' and inserting 
        ``1209)'';
            (4) in section 1232--
                    (A) in subsection (b)--
                            (i) in paragraph (1)(A), by striking 
                        ``1209;'' and inserting ``1239;''; and
                            (ii) in paragraph (2), by striking 
                        ``1211(b)'' each place such term appears and 
                        inserting ``1241(b)''; and
                    (B) in subsection (c)--
                            (i) by amending paragraph (2)(C) to read as 
                        follows:
                    ``(C) Coordination with subpart 1.--The consortium 
                shall coordinate its activities with the activities of 
                the reading partnership for the State established under 
                section 1204(d), if the State receives a grant under 
                section 1203.''; and
                            (ii) in paragraph (3), by striking 
                        ``2252).'' and inserting ``1209).'';
            (5) in section 1233--
                    (A) by striking ``1202(d)(1)'' each place such term 
                appears and inserting ``1232(d)(1)''; and
                    (B) by striking ``1210.'' and inserting ``1240.'';
            (6) in section 1234--
                    (A) in subsection (b)--
                            (i) in paragraph (1)(A), by moving the 
                        margins of clauses (v) and (vi) 2 ems to the 
                        right; and
                            (ii) in paragraph (3), by striking 
                        ``1202(a)(1)(C)'' and inserting 
                        ``1232(a)(1)(C)''; and
                    (B) in subsection (c)--
                            (i) in paragraph (1)--
                                    (I) by striking ``1203(a),'' and 
                                inserting ``1233(a),''; and
                                    (II) by striking ``1203(b)'' and 
                                inserting ``1233(b)''; and
                            (ii) in paragraph (2), by striking 
                        ``1210.'' and inserting ``1240.'';
            (7) in section 1235--
                    (A) in paragraph (10), by striking ``2252)'' and 
                inserting ``1209)'';
                    (B) in paragraph (12), by striking ``2252),'' and 
                inserting ``1209),''; and
                    (C) in paragraph (15), by striking ``program.'' and 
                inserting ``program to be used for program 
                improvement.'';
            (8) in section 1237--
                    (A) in subsection (c)(1)--
                            (i) in subparagraph (B), by striking 
                        ``1205;'' and inserting ``1235;''; and
                            (ii) in subparagraph (F), by striking 
                        ``14306;'' and inserting ``8306;''; and
                    (B) in subsection (d), by striking ``14302.'' and 
                inserting ``8302.'';
            (9) in section 1238--
                    (A) in subsection (a)(1)--
                            (i) in subparagraph (A)(ii), by striking 
                        ``1205;'' and inserting ``1235;''; and
                            (ii) in subparagraph (F), by striking 
                        ``1204(b);'' and inserting ``1234(b);''; and
                    (B) in subsection (b)--
                            (i) in paragraph (3)--
                                    (I) by striking ``1207(c)(1)(A)'' 
                                and inserting ``1237(c)(1)(A)''; and
                                    (II) by striking ``1210.'' and 
                                inserting ``1240.'';
                            (ii) in paragraph (4), by striking 
                        ``1210,'' and inserting ``1240,''; and
                            (iii) in paragraph (5)(B), by striking 
                        ``1204(b).'' and inserting ``1234(b).'';
            (10) in section 1239--
                    (A) by striking ``1202(b)(1),'' and inserting 
                ``1232(b)(1),''; and
                    (B) by striking ``1205(10)'' and inserting 
                ``1235(10)''; and
            (11) in section 1241--
                    (A) in subsection (b)(1)--
                            (i) by striking ``1202(b)(2),'' and 
                        inserting ``1232(b)(2),''; and
                            (ii) by striking ``2252);'' and inserting 
                        ``1209);''; and
                    (B) in subsection (c), by striking ``2258,'' and 
                inserting ``1208,''.

                PART C--EDUCATION OF MIGRATORY CHILDREN

SEC. 121. STATE ALLOCATIONS.

    Section 1303 (20 U.S.C. 6393) is amended--
            (1) by amending subsection (a) to read as follows:
    ``(a) State Allocations.--
            ``(1) Fiscal year 2002.--For fiscal year 2002, each State 
        (other than the Commonwealth of Puerto Rico) is entitled to 
        receive under this part an amount equal to--
                    ``(A) the sum of the estimated number of migratory 
                children aged three through 21 who reside in the State 
                full time and the full-time equivalent of the estimated 
                number of migratory children aged three through 21 who 
                reside in the State part time, as determined in 
                accordance with subsection (e); multiplied by
                    ``(B) 40 percent of the average per-pupil 
                expenditure in the State, except that the amount 
                determined under this paragraph shall not be less than 
                32 percent, nor more than 48 percent, of the average 
                expenditure per pupil in the United States.
            ``(2) Subsequent years.--
                    ``(A) Base amount.--
                            ``(i) In general.--Except as provided in 
                        subsection (b) and clause (ii), each State 
                        (other than the Commonwealth of Puerto Rico) is 
                        entitled to receive under this part, for fiscal 
                        year 2003 and succeeding fiscal years, an 
                        amount equal to--
                                    ``(I) the amount that such State 
                                received under this part for fiscal 
                                year 2002; plus
                                    ``(II) the amount allocated to the 
                                State under subparagraph (B).
                            ``(ii) Nonparticipating states.--In the 
                        case of a State (other than the Commonwealth of 
                        Puerto Rico) that did not receive any funds for 
                        fiscal year 2002 under this part, the State 
                        shall receive, for fiscal year 2003 and 
                        succeeding fiscal years, an amount equal to--
                                    ``(I) the amount that such State 
                                would have received under this part for 
                                fiscal year 2002 if its application 
                                under section 1304 for the year had 
                                been approved; plus
                                    ``(II) the amount allocated to the 
                                State under subparagraph (B).
                    ``(B) Allocation of additional amount.--For fiscal 
                year 2003 and succeeding fiscal years, the amount (if 
                any) by which the funds appropriated to carry out this 
                part for the year exceed such funds for fiscal year 
                2002 shall be allocated to a State (other than the 
                Commonwealth of Puerto Rico) so that the State receives 
                an amount equal to--
                            ``(i) the sum of--
                                    ``(I) the number of identified 
                                eligible migratory children, aged 3 
                                through 21, residing in the State 
                                during the previous year; and
                                    ``(II) the number of identified 
                                eligible migratory children, aged 3 
                                through 21, who received services under 
                                this part in summer or intersession 
                                programs provided by the State during 
                                such year; multiplied by
                            ``(ii) 40 percent of the average per-pupil 
                        expenditure in the State, except that the 
                        amount determined under this clause may not be 
                        less than 32 percent, or more than 48 percent, 
                        of the average per-pupil expenditure in the 
                        United States.'';
            (2) by amending subsection (b) to read as follows:
    ``(b) Allocation to Puerto Rico.--
            ``(1) In general.--For each fiscal year, the grant which 
        the Commonwealth of Puerto Rico shall be eligible to receive 
        under this part shall be the amount determined by multiplying 
        the number of children counted under subsection (a)(1)(A) for 
        the Commonwealth of Puerto Rico by the product of--
                    ``(A) the percentage which the average per pupil 
                expenditure in the Commonwealth of Puerto Rico is of 
                the lowest average per pupil expenditure of any of the 
                50 States; and
                    ``(B) 32 percent of the average per pupil 
                expenditure in the United States.
            ``(2) Minimum percentage.--The percentage in paragraph 
        (1)(A) shall not be less than--
                    ``(A) for fiscal year 2002, 77.5 percent;
                    ``(B) for fiscal year 2003, 80.0 percent;
                    ``(C) for fiscal year 2004, 82.5 percent; and
                    ``(D) for fiscal year 2005 and succeeding fiscal 
                years, 85.0 percent.
            ``(3) Limitation.--If the application of paragraph (2) 
        would result in any of the 50 States or the District of 
        Columbia receiving less under this part than it received under 
        this part for the preceding fiscal year, the percentage in 
        paragraph (1) shall be the greater of the percentage in 
        paragraph (1)(A) or the percentage used for the preceding 
        fiscal year.''; and
            (3) by striking subsections (d) and (e).

SEC. 122. STATE APPLICATIONS; SERVICES.

    (a) Program Information.--Section 1304(b) (20 U.S.C. 6394(b)) is 
amended--
            (1) in paragraph (1), by striking ``addressed through'' and 
        all that follows through the semicolon at the end and inserting 
        the following:
        ``addressed through--
                    ``(A) the full range of services that are available 
                for migratory children from appropriate local, State, 
                and Federal educational programs;
                    ``(B) joint planning among local, State, and 
                Federal educational programs serving migrant children, 
                including programs under part A of title III;
                    ``(C) the integration of services available under 
                this part with services provided by those other 
                programs; and
                    ``(D) measurable program goals and outcomes;'';
            (2) in paragraph (5), by striking ``the requirements of 
        paragraph (1); and'' and inserting ``the numbers and needs of 
        migratory children, the requirements of subsection (d), and the 
        availability of funds from other Federal, State, and local 
        programs;''; and
            (3) in paragraph (6), by striking the period at the end and 
        inserting ``; and''.
    (b) Assurances.--Section 1304(c) (20 U.S.C. 6394(c)) is amended--
            (1) in paragraph (1), by striking ``1306(b)(1);'' and 
        inserting ``1306(a);'';
            (2) in paragraph (2), by striking ``part F;'' and inserting 
        ``part H;''
            (3) in paragraph (3)--
                    (A) by striking ``appropriate'';
                    (B) by striking ``out, to the extent feasible,'' 
                and inserting ``out''; and
                    (C) by striking ``1118;'' and inserting ``1118, 
                unless extraordinary circumstances make implementation 
                consistent with such section impractical;''; and
            (4) in paragraph (7), by striking ``section 1303(e)'' and 
        inserting ``paragraphs (1)(A) and (2)(B)(i) of section 
        1303(a)''.

SEC. 123. AUTHORIZED ACTIVITIES.

    Section 1306 (20 U.S.C. 6396) is amended to read as follows:

``SEC. 1306. AUTHORIZED ACTIVITIES.

    ``(a) In General.--
            ``(1) Flexibility.--Each State educational agency, through 
        its local educational agencies, shall have the flexibility to 
        determine the activities to be provided with funds made 
        available under this part, except that such funds shall first 
        be used to meet the identified needs of migratory children that 
        result from their migratory lifestyle, and to permit these 
        children to participate effectively in school.
            ``(2) Unaddressed needs.--Funds provided under this part 
        shall be used to address the needs of migratory children that 
        are not addressed by services available from other Federal or 
        non-Federal programs, except that migratory children who are 
        eligible to receive services under part A of this title may 
        receive those services through funds provided under that part, 
        or through funds under this part that remain after the agency 
        addresses the needs described in paragraph (1).
    ``(b) Construction.--Nothing in this part shall be construed to 
prohibit a local educational agency from serving migratory children 
simultaneously with students with similar educational needs in the same 
educational settings, where appropriate.
    ``(c) Special Rule.--Notwithstanding section 1114, a school that 
receives funds under this part shall continue to address the identified 
needs described in subsection (a)(1).''.

SEC. 124. COORDINATION OF MIGRANT EDUCATION ACTIVITIES.

    (a) Duration.--Section 1308(a)(2) (20 U.S.C. 6398(a)(2)) is amended 
by striking ``subpart'' and inserting ``subsection''.
    (b) Student Records.--Section 1308(b) (20 U.S.C. 6398(b)) is 
amended to read as follows:
    ``(b) Student Records.--
            ``(1) Assistance.--The Secretary shall assist States in 
        developing effective methods for the transfer of student 
        records and in determining the number of migratory children in 
        each State. The Secretary, in consultation with the States, 
        shall determine the minimum data elements that each State 
        receiving funds under this part shall collect and maintain. The 
        Secretary shall assist States to implement a system of linking 
        their student record transfer systems for the purpose of 
        electronic records maintenance and transfer for migrant 
        students.
            ``(2) No cost for certain transfers.--A State educational 
        agency or local educational agency receiving assistance under 
        this part shall make student records available to another State 
        or local educational agency that requests the records at no 
        cost to the requesting agency, if the request is made in order 
        to meet the needs of a migratory child.''.
    (c) Availability of Funds.--Section 1308(c) (20 U.S.C. 6398(c)) is 
amended by striking ``$6,000,000'' and inserting ``$10,000,000''.
    (d) Incentive Grants.--Section 1308(d) (20 U.S.C. 6398(d)) is 
amended to read as follows:
    ``(d) Incentive Grants.--From the amounts made available to carry 
out this section for any fiscal year, the Secretary may reserve not 
more than $3,000,000 to award grants of not more than $250,000 on a 
competitive basis to State educational agencies that propose a 
consortium arrangement with another State or other appropriate entity 
that the Secretary determines, pursuant to criteria that the Secretary 
shall establish, will improve the delivery of services to migratory 
children whose education is interrupted.''.

                 PART D--NEGLECTED OR DELINQUENT YOUTH

SEC. 131. NEGLECTED OR DELINQUENT YOUTH.

    The heading for part D of title I is amended to read as follows:

    ``PART D--PREVENTION AND INTERVENTION PROGRAMS FOR NEGLECTED OR 
                    DELINQUENT CHILDREN AND YOUTH''.

SEC. 132. FINDINGS.

    Section 1401(a) (20 U.S.C. 6421(a)) is amended by striking 
paragraphs (6) through (9) and inserting the following:
            ``(6) Youth returning from correctional facilities need to 
        be involved in programs that provide them with high-level 
        skills and other support to help them stay in school and 
        complete their education.
            ``(7) Pregnant and parenting teenagers are a high-at-risk 
        group for dropping out of school and should be targeted by 
        dropout prevention programs.''.

SEC. 133. ALLOCATION OF FUNDS.

    Section 1412(b) (20 U.S.C. 6432(b)) is amended to read as follows:
    ``(b) Subgrants to State Agencies in Puerto Rico.--
            ``(1) In general.--For each fiscal year, the amount of the 
        subgrant which a State agency in the Commonwealth of Puerto 
        Rico shall be eligible to receive under this part shall be the 
        amount determined by multiplying the number of children counted 
        under subparagraph (a)(1)(A) for the Commonwealth of Puerto 
        Rico by the product of--
                    ``(A) the percentage which the average per-pupil 
                expenditure in the Commonwealth of Puerto Rico is of 
                the lowest average per-pupil expenditure of any of the 
                50 States; and
                    ``(B) 32 percent of the average per-pupil 
                expenditure in the United States.
            ``(2) Minimum percentage.--The percentage in paragraph 
        (1)(A) shall not be less than--
                    ``(A) for fiscal year 2002, 77.5 percent;
                    ``(B) for fiscal year 2003, 80.0 percent;
                    ``(C) for fiscal year 2004, 82.5 percent; and
                    ``(D) for fiscal year 2005 and succeeding fiscal 
                years, 85.0 percent.
            ``(3) Limitation.--If the application of paragraph (2) 
        would result in any of the 50 States or the District of 
        Columbia receiving less under this part than it received under 
        this part for the preceding fiscal year, the percentage in 
        paragraph (1) shall be the greater of the percentage in 
        paragraph (1)(A) or the percentage used for the preceding 
        fiscal year.''.

SEC. 134. STATE PLAN AND STATE AGENCY APPLICATIONS.

    Section 1414 (20 U.S.C. 6434) is amended to read as follows:

``SEC. 1414. STATE PLAN AND STATE AGENCY APPLICATIONS.

    ``(a) State Plan.--
            ``(1) In general.--Each State educational agency that 
        desires to receive a grant under this part shall submit, for 
        approval by the Secretary, a plan for meeting the educational 
        needs of neglected and delinquent youth, for assisting in their 
        transition from institutions to locally operated programs, and 
        which is integrated with other programs under this Act or other 
        Acts, as appropriate, consistent with section 8306.
            ``(2) Contents.--Each such State plan shall--
                    ``(A) describe the program goals, objectives, and 
                performance measures established by the State that will 
                be used to assess the effectiveness of the program in 
                improving academic and vocational and technical skills 
                of children in the program;
                    ``(B) provide that, to the extent feasible, such 
                children will have the same opportunities to learn as 
                such children would have if such children were in the 
                schools of local educational agencies in the State; and
                    ``(C) contain assurances that the State educational 
                agency will--
                            ``(i) ensure that programs assisted under 
                        this part will be carried out in accordance 
                        with the State plan described in this 
                        subsection;
                            ``(ii) carry out the evaluation 
                        requirements of section 1416;
                            ``(iii) ensure that the State agencies 
                        receiving subgrants under this subpart comply 
                        with all applicable statutory and regulatory 
                        requirements; and
                            ``(iv) provide such other information as 
                        the Secretary may reasonably require.
            ``(3) Duration of the plan.--Each such State plan shall--
                    ``(A) remain in effect for the duration of the 
                State's participation under this part; and
                    ``(B) be periodically reviewed and revised by the 
                State, as necessary, to reflect changes in the State's 
                strategies and programs under this part.
    ``(b) Secretarial Approval and Peer Review.--
            ``(1) Secretarial approval.--The Secretary shall approve 
        each State plan that meets the requirements of this part.
            ``(2) Peer review.--The Secretary may review any State plan 
        with the assistance and advice of individuals with relevant 
        expertise.
    ``(c) State Agency Applications.--Any State agency that desires to 
receive funds to carry out a program under this part shall submit an 
application to the State educational agency that--
            ``(1) describes the procedures to be used, consistent with 
        the State plan under section 1111, to assess the educational 
        needs of the children to be served;
            ``(2) provides assurances that in making services available 
        to youth in adult correctional facilities, priority will be 
        given to such youth who are likely to complete incarceration 
        within a 2-year period;
            ``(3) describes the program, including a budget for the 
        first year of the program, with annual updates to be provided 
        to the State educational agency;
            ``(4) describes how the program will meet the goals and 
        objectives of the State plan under this subpart;
            ``(5) describes how the State agency will consult with 
        experts and provide the necessary training for appropriate 
        staff, to ensure that the planning and operation of 
        institution-wide projects under section 1416 are of high 
        quality;
            ``(6) describes how the agency will carry out the 
        evaluation requirements of section 8651 and how the results of 
        the most recent evaluation are used to plan and improve the 
        program;
            ``(7) includes data showing that the agency has maintained 
        fiscal effort required of a local educational agency, in 
        accordance with section 8501;
            ``(8) describes how the programs will be coordinated with 
        other appropriate State and Federal programs, such as programs 
        under title I of the Workforce Investment Act of 1998 (29 
        U.S.C. 2801 et seq.), vocational and technical education 
        programs, State and local dropout prevention programs, and 
        special education programs;
            ``(9) describes how States will encourage correctional 
        facilities receiving funds under this subpart to coordinate 
        with local educational agencies or alternative education 
        programs attended by incarcerated youth prior to their 
        incarceration to ensure that student assessments and 
        appropriate academic records are shared jointly between the 
        correctional facility and the local educational agency or 
        alternative education program;
            ``(10) describes how appropriate professional development 
        will be provided to teachers and other staff;
            ``(11) designates an individual in each affected 
        institution to be responsible for issues relating to the 
        transition of children and youth from the institution to 
        locally operated programs;
            ``(12) describes how the agency will endeavor to coordinate 
        with businesses for training and mentoring for participating 
        youth;
            ``(13) provides assurances that the agency will assist in 
        locating alternative programs through which students can 
        continue their education if students are not returning to 
        school after leaving the correctional facility;
            ``(14) provides assurances that the agency will work with 
        parents to secure parents' assistance in improving the 
        educational achievement of their children and preventing their 
        children's further involvement in delinquent activities;
            ``(15) provides assurances that the agency works with 
        special education youth in order to meet an existing 
        individualized education program and an assurance that the 
        agency will notify the youth's local school if such youth--
                    ``(A) is identified as in need of special education 
                services while the youth is in the facility; and
                    ``(B) intends to return to the local school;
            ``(16) provides assurances that the agency will work with 
        youth who dropped out of school before entering the facility to 
        encourage the youth to reenter school once the term of 
        incarceration has been completed or provide the youth with the 
        skills necessary to gain employment, continue the education of 
        the youth, or achieve a secondary school diploma or the 
        recognized equivalent if the youth does not intend to return to 
        school;
            ``(17) provides assurances that teachers and other 
        qualified staff are also trained to work with children with 
        disabilities and other students with special needs, taking into 
        consideration the unique needs of such students;
            ``(18) describes any additional services to be provided to 
        youth, such as career counseling, distance learning, and 
        assistance in securing student loans and grants; and
            ``(19) provides assurances that the program under this 
        subpart will be coordinated with any programs operated under 
        the Juvenile Justice and Delinquency Prevention Act of 1974 (42 
        U.S.C. 5601 et seq.) or other comparable programs, if 
        applicable.''.

SEC. 135. USE OF FUNDS.

    Section 1415(a) (20 U.S.C. 6435(a)) is amended--
            (1) in paragraph (1)(B), by inserting ``, vocational and 
        technical training,'' after ``secondary school completion'';
            (2) in paragraph (2)(B)--
                    (A) in clause (i), by inserting ``and'' after the 
                semicolon;
                    (B) in clause (ii), by striking ``; and'' and 
                inserting a period; and
                    (C) by striking clause (iii);
            (3) in paragraph (2)(C), by striking ``part F of this 
        title'' and inserting ``part H''; and
            (4) in paragraph (2)(D), by striking ``section 14701'' and 
        inserting ``section 8651''.

SEC. 136. TRANSITION SERVICES.

    Section 1418(a) (20 U.S.C. 6438(a)) is amended by striking ``10 
percent'' and inserting ``15 percent''.

SEC. 137. PURPOSE.

    Section 1421(3) (20 U.S.C. 6451(3)) is amended to read as follows:
            ``(3) operate programs in local schools for youth returning 
        from correctional facilities and programs which may also serve 
        youth at risk of dropping out of school.''.

SEC. 138. PROGRAMS OPERATED BY LOCAL EDUCATIONAL AGENCIES.

    Section 1422 (20 U.S.C. 6452) is amended--
            (1) in subsection (a), by striking ``retained'';
            (2) by amending subsection (b) to read as follows:
    ``(b) Special Rule.--A local educational agency which includes a 
correctional facility that operates a school is not required to operate 
a program of support for children returning from such school to a 
school not operated by a correctional agency but served by such local 
educational agency if more than 30 percent of the youth attending the 
school operated by the correctional facility will reside outside the 
boundaries of the local educational agency after leaving such 
facility.''; and
            (3) by adding at the end the following:
    ``(d) Transitional and Academic Services.--Transitional and 
supportive programs operated in local educational agencies under this 
subpart shall be designed primarily to meet the transitional and 
academic needs of students returning to local educational agencies or 
alternative education programs from correctional facilities. Services 
to students at risk of dropping out of school shall not have a negative 
impact on meeting the transitional and academic needs of the students 
returning from correctional facilities.''.

SEC. 139. LOCAL EDUCATIONAL AGENCY APPLICATIONS.

    Section 1423 (20 U.S.C. 6453) is amended by striking paragraphs (4) 
through (9) and inserting the following:
            ``(4) a description of the program operated by 
        participating schools for children returning from correctional 
        facilities and the types of services that such schools will 
        provide such youth and other at-risk youth;
            ``(5) a description of the characteristics (including 
        learning difficulties, substance abuse problems, and other 
        special needs) of the youth who will be returning from 
        correctional facilities and, as appropriate, other at-risk 
        youth expected to be served by the program and how the school 
        will coordinate existing educational programs to meet the 
        unique educational needs of such youth;
            ``(6) as appropriate, a description of how schools will 
        coordinate with existing social, health, and other services to 
        meet the needs of students returning from correctional 
        facilities, students at risk of dropping out of school, and 
        other participating students, including prenatal health care 
        and nutrition services related to the health of the parent and 
        child, parenting and child development classes, child care, 
        targeted reentry and outreach programs, referrals to community 
        resources, and scheduling flexibility;
            ``(7) as appropriate, a description of any partnerships 
        with local businesses to develop training, curriculum-based 
        youth entrepreneurship education, and mentoring services for 
        participating students;
            ``(8) as appropriate, a description of how programs will 
        involve parents in efforts to improve the educational 
        achievement of their children, prevent the involvement of their 
        children in delinquent activities, and encourage their children 
        to remain in school and complete their education;
            ``(9) a description of how the program under this subpart 
        will be coordinated with other Federal, State, and local 
        programs, such as programs under title I of the Workforce 
        Investment Act of 1998 (29 U.S.C. 2801 et seq.) and vocational 
        and technical education programs serving this at-risk 
        population of youth.''.

SEC. 140. USES OF FUNDS.

    Section 1424 (20 U.S.C. 6454) is amended by striking paragraphs (1) 
through (3) and inserting the following:
            ``(1) programs that serve youth returning from correctional 
        facilities to local schools, to assist in the transition of 
        such youth to the school environment and help them remain in 
        school in order to complete their education;
            ``(2) providing assistance to other youth at risk of 
        dropping out of school, including pregnant and parenting 
        teenagers;
            ``(3) the coordination of social, health, and other 
        services, including day care, for participating youth, if the 
        provision of such services will improve the likelihood that 
        such youth will complete their education;
            ``(4) special programs to meet the unique academic needs of 
        participating youth, including vocational and technical 
        education, special education, career counseling, curriculum-
        based youth entrepreneurship education, and assistance in 
        securing student loans or grants for postsecondary education; 
        and
            ``(5) programs providing mentoring and peer mediation.''.

SEC. 141. PROGRAM REQUIREMENTS.

    Section 1425 (20 U.S.C. 6455) is amended--
            (1) in the section heading, by striking ``THIS SECTION'' 
        and inserting ``THIS SUBPART'';
            (2) in the matter preceding paragraph (1), by striking 
        ``this section'' and inserting ``this subpart'';
            (3) in paragraph (1), by striking ``where feasible, ensure 
        educational programs'' and inserting ``to the extent 
        practicable, ensure that educational programs'';
            (4) in paragraphs (3) and (8), by striking ``where 
        feasible,'' and inserting ``to the extent practicable,'';
            (5) in paragraph (9)--
                    (A) by striking ``this program'' and inserting 
                ``this subpart'';
                    (B) by inserting ``and technical'' after 
                ``vocational''; and
                    (C) by inserting ``(20 U.S.C. 2801 et seq.)'' after 
                ``Workforce Investment Act of 1998'';
            (6) in paragraph (10), by inserting ``(42 U.S.C. 5601 et 
        seq.)'' after ``Juvenile Justice and Delinquency Prevention Act 
        of 1974''; and
            (7) by amending paragraph (11) to read as follows:
            ``(11) if appropriate, work with local businesses to 
        develop training, curriculum-based youth entrepreneurship 
        education, and mentoring programs for youth.''.

SEC. 142. PROGRAM EVALUATIONS.

    Section 1431(a) (20 U.S.C. 6471(a)) is amended by striking ``sex, 
and if feasible,'' and inserting ``gender,''.

             PART E--FEDERAL EVALUATIONS AND DEMONSTRATIONS

SEC. 151. EVALUATIONS.

    Section 1501 (20 U.S.C. 6491) is amended to read as follows:

``SEC. 1501. EVALUATIONS.

    ``(a) National Assessment.--
            ``(1) In general.--In accordance with this section, the 
        Secretary shall conduct a national assessment of programs 
        assisted under this title.
            ``(2) Issues to be examined.--In conducting the assessment 
        under this subsection, the Secretary shall examine--
                    ``(A) the implementation of programs assisted under 
                this title and the impact of such implementation on 
                increasing student academic achievement, particularly 
                schools with high concentrations of children living in 
                poverty;
                    ``(B) the implementation of State standards, 
                assessments, and accountability systems developed under 
                this title and the impact of such implementation on 
                educational programs and instruction at the local 
                level;
                    ``(C) the impact of schoolwide programs and 
                targeted assistance programs under this title on 
                improving student academic achievement;
                    ``(D) the extent to which varying models of 
                comprehensive school reform are funded under this 
                title, and the effect of the implementation of such 
                models on improving achievement of disadvantaged 
                students;
                    ``(E) the cost-effectiveness of programs assisted 
                under this title;
                    ``(F) the impact of school choice options under 
                section 1116 on the academic achievement of 
                disadvantaged students and schools in school 
                improvement;
                    ``(G) the extent to which corrective actions 
                authorized under section 1116 of this title are 
                employed by State and local educational agencies to 
                improve the academic achievement of students in low-
                performing schools, and the effectiveness of the 
                implementation of such corrective actions;
                    ``(H) the extent to which technical assistance made 
                available under this title is used to improve the 
                achievement of students in low-performing schools, and 
                the impact of such assistance on such achievement;
                    ``(I) the extent to which State and local fiscal 
                accounting requirements under this title limit the 
                flexibility of schoolwide programs;
                    ``(J) the impact of the professional development 
                activities assisted under this title on instruction and 
                student performance;
                    ``(K) the extent to which the assistance made 
                available under this title is targeted to disadvantaged 
                students and schools that need them the most;
                    ``(L) the effectiveness of Federal administration 
                assistance made available under this title, including 
                monitoring and technical assistance; and
                    ``(M) such other issues as the Secretary considers 
                appropriate.
            ``(3) Sources of information.--In conducting the assessment 
        under this subsection, the Secretary shall use information from 
        a variety of sources, including the National Assessment of 
        Educational Progress (carried out under section 411 of the 
        National Education Statistics Act of 1994 (20 U.S.C. 9010)), 
        state evaluations, and other research studies.
            ``(4) Coordination.--In carrying out this subsection, the 
        Secretary shall--
                    ``(A) coordinate conducting the national assessment 
                with conducting the longitudinal study described in 
                subsection (c); and
                    ``(B) ensure that the independent review panel 
                described in subsection (d) participates in conducting 
                the national assessment, including planning for and 
                reviewing the assessment.
            ``(5) Reports.--
                    ``(A) Interim report.--Not later than 3 years after 
                the date of enactment of the Leave No Child Behind Act 
                of 2001, the Secretary shall transmit to the President 
                and the Congress an interim report on the national 
                assessment conducted under this subsection.
                    ``(B) Final report.--Not later than 4 years after 
                the date of enactment of the Leave No Child Behind Act 
                of 2001, the Secretary shall transmit to the President 
                and the Congress a final report on the national 
                assessment conducted under this subsection.
    ``(b) Studies and Data Collection.--
            ``(1) In general.--In addition to other activities 
        described in this section, the Secretary may, directly or 
        through the making of grants to or contracts with appropriate 
        entities--
                    ``(A) conduct studies and evaluations of the need 
                for, and effectiveness of, each program authorized 
                under this title;
                    ``(B) collect the data necessary to comply with the 
                Government Performance and Results Act of 1993; and
                    ``(C) provide guidance and technical assistance to 
                State education agencies and local educational agencies 
                in developing and maintaining management information 
                systems through which such agencies can develop program 
                performance indicators in order to improve services and 
                performance.
            ``(2) Minimum information.--Under this subsection, the 
        Secretary shall collect, at a minimum, trend information on the 
        effect of each program authorized under this title, which shall 
        complement the data collected and reported under subsections 
        (a) and (c).
    ``(c) National Longitudinal Study.--
            ``(1) In general.--The Secretary shall conduct a 
        longitudinal study of schools receiving assistance under this 
        title.
            ``(2) Issues to be examined.--In carrying out this 
        subsection, the Secretary shall ensure that the study referred 
        to in paragraph (1) provides the Congress and educators with 
        each of the following:
                    ``(A) An accurate description and analysis of 
                short-term and long-term effectiveness of the 
                assistance made available under this title upon 
                academic performance.
                    ``(B) Information that can be used to improve the 
                effectiveness of the assistance made available under 
                this title in enabling students to meet challenging 
                achievement standards.
                    ``(C) An analysis of educational practices or model 
                programs that are effective in improving the 
                achievement of disadvantaged children.
                    ``(D) An analysis of the cost-effectiveness of the 
                assistance made available under this title in improving 
                the achievement of disadvantaged children.
                    ``(E) An analysis of the effects of the 
                availability of school choice options under section 
                1116 on the academic achievement of disadvantaged 
                students and schools in school improvement.
                    ``(F) Such other information as the Secretary 
                considers appropriate.
            ``(3) Scope.--In conducting the study referred to in 
        paragraph (1), the Secretary shall ensure that the study--
                    ``(A) bases its analysis on a nationally 
                representative sample of schools participating in 
                programs under this part;
                    ``(B) to the extent practicable, includes in its 
                analysis students who transfer to different schools 
                during the course of the study; and
                    ``(C) analyzes varying models or strategies for 
                delivering school services, including--
                            ``(i) schoolwide and targeted services; and
                            ``(ii) comprehensive school reform models.
    ``(d) Independent Review Panel.--
            ``(1) In general.--The Secretary shall establish an 
        independent review panel (in this subsection referred to as the 
        `Review Panel') to advise the Secretary on methodological and 
        other issues that arise in carrying out subsections (a) and 
        (c).
            ``(2) Appointment of members.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Secretary shall appoint members of the Review Panel 
                from among qualified individuals who are--
                            ``(i) specialists in statistics, 
                        evaluation, research, and assessment;
                            ``(ii) education practitioners, including 
                        teachers, principals, and local and State 
                        superintendents; and
                            ``(iii) other individuals with technical 
                        expertise who would contribute to the overall 
                        rigor and quality of the program evaluation.
                    ``(B) Limitations.--In appointing members of the 
                Review Panel under this subparagraph (A), the Secretary 
                shall ensure that--
                            ``(i) in order to ensure diversity, a 
                        majority of the number of individuals appointed 
                        under subparagraph (A)(i) represent disciplines 
                        or programs outside the field of education; and
                            ``(ii) the total number of the individuals 
                        appointed under subparagraph (A)(ii) or 
                        (A)(iii) does not exceed \1/3\ of the total 
                        number of the individuals appointed under this 
                        paragraph.
            ``(3) Functions.--The Review Panel shall consult with and 
        advise the Secretary--
                    ``(A) to ensure that the assessment conducted under 
                subsection (a) and the study conducted under subsection 
                (c)--
                            ``(i) adhere to the highest possible 
                        standards of quality with respect to research 
                        design, statistical analysis, and the 
                        dissemination of findings; and
                            ``(ii) use valid and reliable measures to 
                        document program implementation and impacts; 
                        and
                    ``(B) to ensure--
                            ``(i) that the final report described in 
                        subsection (a)(5)(B) is reviewed not later than 
                        120 days after its completion by not less than 
                        2 independent experts in program evaluation;
                            ``(ii) that such experts evaluate and 
                        comment on the degree to which the report 
                        complies with subsection (a); and
                            ``(iii) that the comments of such experts 
                        are transmitted with the report under 
                        subsection (a)(5)(B).''.

SEC. 152. DEMONSTRATIONS OF INNOVATIVE PRACTICES.

    (a) In General.--Section 1502 (20 U.S.C. 6492) is amended--
            (1) by striking subsection (b);
            (2) by striking ``(a) Demonstration Programs'' and all that 
        follows through ``In general.--From the funds'' and inserting 
        ``(a) In General.--From the funds'';
            (3) by moving paragraph (2) 2 ems to the left;
            (4) by redesignating paragraph (2) as subsection (b); and
            (5) in subsection (a) (as redesignated by paragraph (2) of 
        this section)--
                    (A) by moving each of subparagraphs (A) through (F) 
                2 ems to the left; and
                    (B) by redesignating subparagraphs (A) through (F) 
                as paragraphs (1) through (6), respectively.
    (b) Promising Strategies.--Section 1502(a) (as amended by 
subsection (a) of this section) is further is amended--
            (1) by inserting ``charter schools,'' after ``other public 
        agencies,'';
            (2) in paragraph (1), by striking ``accelerated curricula'' 
        and all that follows through ``to reach such standards'' and 
        inserting ``innovative instructional programs and practices 
        based on reliable, replicable research'';
            (3) in paragraph (2), by striking ``integration of 
        education services'' and all that follows through ``enterprise 
        communities'' and inserting ``public and private school choice, 
        charter schools, and other such programs to promote school 
        improvement'';
            (4) in paragraph (3), by striking ``whole school reform'' 
        and inserting ``comprehensive school reform'';
            (5) by adding ``and'' at the end of paragraph (4);
            (6) by striking ``; and'' at the end of paragraph (5) and 
        inserting ``, including the use of incentives such as 
        differential or performance based pay to serve areas of high 
        need.''; and
            (7) by striking paragraph (6).

                  PART F--COMPREHENSIVE SCHOOL REFORM

SEC. 161. SCHOOL REFORM.

    Part F of title I is amended to read as follows:

                 ``PART F--COMPREHENSIVE SCHOOL REFORM

``SEC. 1601. COMPREHENSIVE SCHOOL REFORM.

    ``(a) Findings and Purpose.--
            ``(1) Findings.--Congress finds the following:
                    ``(A) A number of schools across the country have 
                shown impressive gains in student performance through 
                the use of comprehensive models for schoolwide change 
                that incorporate virtually all aspects of school 
                operations.
                    ``(B) No single comprehensive school reform model 
                may be suitable for every school, however, schools 
                should be encouraged to examine successful, externally 
                developed comprehensive school reform approaches as 
                they undertake comprehensive school reform.
                    ``(C) Comprehensive school reform is an important 
                means by which children are assisted in meeting 
                challenging State student performance standards.
            ``(2) Purpose.--The purpose of this section is to provide 
        financial incentives for schools to develop comprehensive 
        school reforms, based upon scientifically-based research and 
        effective practices that include an emphasis on basic academics 
        and parental involvement so that all children can meet 
        challenging State content and performance standards.
    ``(b) Program Authorized.--
            ``(1) In general.--The Secretary is authorized to provide 
        grants to State educational agencies to provide subgrants to 
        local educational agencies to carry out the purpose described 
        in subsection (a)(2).
            ``(2) Allocation.--
                    ``(A) Reservation.--Of the amount appropriated 
                under this section, the Secretary may reserve--
                            ``(i) not more than 1 percent for schools 
                        supported by the Bureau of Indian Affairs and 
                        in the United States Virgin Islands, Guam, 
                        American Samoa, and the Commonwealth of the 
                        Northern Mariana Islands; and
                            ``(ii) not more than 1 percent to conduct 
                        national evaluation activities described under 
                        subsection (e).
                    ``(B) In general.--Of the amount of funds remaining 
                after the reservation under subparagraph (A), the 
                Secretary shall allocate to each State for a fiscal 
                year, an amount that bears the same ratio to the amount 
                appropriated for that fiscal year as the amount made 
                available under section 1124 to the State for the 
                preceding fiscal year bears to the total amount 
                allocated under section 1124 to all States for that 
                year.
                    ``(C) Reallocation.--If a State does not apply for 
                funds under this section, the Secretary shall 
                reallocate such funds to other States that do apply in 
                proportion to the amount allocated to such States under 
                subparagraph (B).
    ``(c) State Awards.--
            ``(1) State application.--
                    ``(A) In general.--Each State educational agency 
                that desires to receive a grant under this section 
                shall submit an application to the Secretary at such 
                time, in such manner and containing such other 
                information as the Secretary may reasonably require.
                    ``(B) Contents.--Each State application shall also 
                describe--
                            ``(i) the process and selection criteria by 
                        which the State educational agency, using 
                        expert review, will select local educational 
                        agencies to receive subgrants under this 
                        section;
                            ``(ii) how the agency will ensure that only 
                        comprehensive school reforms that are based on 
                        scientifically-based research receive funds 
                        under this section;
                            ``(iii) how the agency will disseminate 
                        materials regarding information on 
                        comprehensive school reforms that are based on 
                        scientifically-based research;
                            ``(iv) how the agency will evaluate the 
                        implementation of such reforms and measure the 
                        extent to which the reforms resulted in 
                        increased student academic performance; and
                            ``(v) how the agency will provide, upon 
                        request, technical assistance to the local 
                        educational agency in evaluating, developing, 
                        and implementing comprehensive school reform.
            ``(2) Uses of funds.--
                    ``(A) In general.--Except as provided in 
                subparagraph (E), a State educational agency that 
                receives an award under this section shall use such 
                funds to provide competitive grants to local 
                educational agencies receiving funds under part A.
                    ``(B) Grant requirements.--A grant to a local 
                educational agency shall be--
                            ``(i) of sufficient size and scope to 
                        support the initial costs for the particular 
                        comprehensive school reform plan selected or 
                        designed by each school identified in the 
                        application of the local educational agency;
                            ``(ii) in an amount not less than $50,000 
                        to each participating school; and
                            ``(iii) renewable for two additional 1-year 
                        periods after the initial 1-year grant is made 
                        if schools are making substantial progress in 
                        the implementation of their reforms.
                    ``(C) Priority.--The State, in awarding grants 
                under this paragraph, shall give priority to local 
                educational agencies that--
                            ``(i) plan to use the funds in schools 
                        identified as being in need of improvement or 
                        corrective action under section 1116(c); and
                            ``(ii) demonstrate a commitment to assist 
                        schools with budget allocation, professional 
                        development, and other strategies necessary to 
                        ensure the comprehensive school reforms are 
                        properly implemented and are sustained in the 
                        future.
                    ``(D) Grant consideration.--In making subgrant 
                awards under this part, the State educational agency 
                shall take into account the equitable distribution of 
                awards to different geographic regions within the 
                State, including urban and rural areas, and to schools 
                serving elementary and secondary students.
                    ``(E) Administrative costs.--A State educational 
                agency that receives a grant award under this section 
                may reserve not more than 5 percent of such award for 
                administrative, evaluation, and technical assistance 
                expenses.
                    ``(F) Supplement.--Funds made available under this 
                section shall be used to supplement, not supplant, any 
                other Federal, State, or local funds that would 
                otherwise be available to carry out this section.
            ``(3) Reporting.--Each State educational agency that 
        receives an award under this section shall provide to the 
        Secretary such information as the Secretary may require, 
        including the names of local educational agencies and schools 
        selected to receive subgrant awards under this section, the 
        amount of such award, and a description of the comprehensive 
        school reform model selected and in use.
    ``(d) Local Awards.--
            ``(1) In general.--Each local educational agency that 
        applies for a subgrant under this section shall--
                    ``(A) identify which schools eligible for funds 
                under part A plan to implement a comprehensive school 
                reform program, including the projected costs of such a 
                program;
                    ``(B) describe the scientifically-based 
                comprehensive school reforms that such schools will 
                implement;
                    ``(C) describe how the agency will provide 
                technical assistance and support for the effective 
                implementation of the scientifically-based school 
                reforms selected by such schools; and
                    ``(D) describe how the agency will evaluate the 
                implementation of such reforms and measure the results 
                achieved in improving student academic performance.
            ``(2) Components of the program.--A local educational 
        agency that receives a subgrant award under this section shall 
        provide such funds to schools that implement a comprehensive 
        school reform program that--
                    ``(A) employs innovative strategies and proven 
                methods for student learning, teaching, and school 
                management that are based on scientifically-based 
                research and effective practices and have been 
                replicated successfully in schools with diverse 
                characteristics;
                    ``(B) integrates a comprehensive design for 
                effective school functioning, including instruction, 
                assessment, classroom management, professional 
                development, parental involvement, and school 
                management, that aligns the school's curriculum, 
                technology, professional development into a 
                comprehensive reform plan for schoolwide change 
                designed to enable all students to meet challenging 
                State content and challenging student performance 
                standards and addresses needs identified through a 
                school needs assessment;
                    ``(C) provides high-quality and continuous teacher 
                and staff professional development;
                    ``(D) includes measurable goals for student 
                performance and benchmarks for meeting such goals;
                    ``(E) is supported by teachers, principals, 
                administrators, and other professional staff;
                    ``(F) provides for the meaningful involvement of 
                parents and the local community in planning and 
                implementing school improvement activities;
                    ``(G) uses high quality external technical support 
                and assistance from an entity, which may be an 
                institution of higher education, with experience and 
                expertise in schoolwide reform and improvement;
                    ``(H) includes a plan for the evaluation of the 
                implementation of school reforms and the student 
                results achieved; and
                    ``(I) identifies how other resources, including 
                Federal, State, local, and private resources, available 
                to the school will be used to coordinate services to 
                support and sustain the school reform effort.
            ``(3) Special rule.--A school that receives funds to 
        develop a comprehensive school reform program shall not be 
        limited to using the approaches identified or developed by the 
        Department of Education, but may develop its own comprehensive 
        school reform programs for schoolwide change that comply with 
        paragraph (2).
    ``(e) Evaluation and Report.--
            ``(1) In general.--The Secretary shall develop a plan for a 
        national evaluation of the programs developed pursuant to this 
        section.
            ``(2) Evaluation.--This national evaluation shall evaluate 
        the implementation and results achieved by schools after 3 
        years of implementing comprehensive school reforms, and assess 
        the effectiveness of comprehensive school reforms in schools 
        with diverse characteristics.
            ``(3) Reports.--Prior to the completion of a national 
        evaluation, the Secretary shall submit an interim report 
        outlining first year implementation activities to the 
        Committees on Education and the Workforce and Appropriations of 
        the House of Representatives and the Committees on Health, 
        Education, Labor, and Pensions and Appropriations of the 
        Senate.

                        PART G--RURAL EDUCATION

SEC. 171. RURAL EDUCATION.

    Title I is amended by adding at the end the following new part:

          ``PART G--RURAL EDUCATION FLEXIBILITY AND ASSISTANCE

``SEC. 1701. SHORT TITLE.

    ``This part may be cited as the `Rural Education Initiative Act'.

``SEC. 1702. FINDINGS.

    ``Congress finds the following:
            ``(1) While there are rural education initiatives 
        identified at the State and local level, no Federal education 
        policy focuses on the specific and unique needs of rural school 
        districts and schools.
            ``(2) Small school districts often cannot use Federal grant 
        funds distributed by formula because the formula allocation 
        does not provide enough revenue to carry out the program the 
        grant is intended to fund.
            ``(3) Rural schools often cannot compete for Federal 
        funding distributed by competitive grants because the schools 
        lack the personnel needed to prepare grant applications and the 
        resources to hire specialists in the writing of Federal grant 
        proposals.
            ``(4) A critical problem for rural school districts 
        involves the hiring and retention of qualified administrators 
        and certified teachers (especially in reading, science, and 
        mathematics). As a result, teachers in rural schools are almost 
        twice as likely to provide instruction in three or more subject 
        areas than teachers in urban schools. Rural schools also face 
        other tough challenges, such as shrinking local tax bases, high 
        transportation costs, aging buildings, limited course 
        offerings, and limited resources.

                ``Subpart 1--Rural Education Flexibility

``SEC. 1711. FORMULA GRANT PROGRAM AUTHORIZED.

    ``(a) Alternative Uses.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, an eligible local educational agency may use the 
        applicable funding, that the agency is eligible to receive from 
        the State educational agency for a fiscal year, to support 
        local or statewide education reform efforts intended to improve 
        the academic achievement of elementary school and secondary 
        school students and the quality of instruction provided for the 
        students.
            ``(2) Notification.--An eligible local educational agency 
        shall notify the State educational agency of the local 
        educational agency's intention to use the applicable funding in 
        accordance with paragraph (1) not later than a date that is 
        established by the State educational agency for the 
        notification.
    ``(b) Eligibility.--
            ``(1) In general.--A local educational agency shall be 
        eligible to use the applicable funding in accordance with 
        subsection (a) if--
                    ``(A)(i) the total number of students in average 
                daily attendance at all of the schools served by the 
                local educational agency is less than 600; and
                    ``(ii) all of the schools served by the local 
                educational agency are designated with a school locale 
                code of 6, 7, or 8 as determined by the Secretary of 
                Education; or
            ``(B) the agency meets the criteria established in 
        subparagraph (A)(i) and the Secretary, in accordance with 
        paragraph (2), grants the local educational agency's request to 
        waive the criteria described in subparagraph (A)(ii).
            ``(2) Certification.--The Secretary shall determine whether 
        or not to waive the criteria described in paragraph (1)(A)(ii) 
        based on certification provided by the local educational 
        agency, or the State educational agency on behalf of the local 
        educational agency, that the local educational agency is 
        located in an area defined as rural by a governmental agency of 
        the State.
    ``(c) Applicable Funding.--In this section, the term `applicable 
funding' means funds provided under each of part A of title II, title 
III, title IV, and parts A and B of title V.
    ``(d) Disbursement.--Each State educational agency that receives 
applicable funding for a fiscal year shall disburse the applicable 
funding to local educational agencies for alternative uses under this 
section for the fiscal year at the same time that the State educational 
agency disburses the applicable funding to local educational agencies 
that do not intend to use the applicable funding for such alternative 
uses for the fiscal year.
    ``(e) Supplement Not Supplant.--Funds used under this section shall 
be used to supplement and not supplant any other Federal, State, or 
local education funds that would otherwise be available for the purpose 
of this subpart.
    ``(f) Special Rule.--References in Federal law to funds for the 
provisions of law set forth in subsection (c) may be considered to be 
references to funds for this section.

``SEC. 1712. PROGRAM AUTHORIZED.

    ``(a) In General.--The Secretary is authorized to award grants to 
eligible local educational agencies to enable the local educational 
agencies to support local or statewide education reform efforts 
intended to improve the academic achievement of elementary school and 
secondary school students and the quality of instruction provided for 
the students.
    ``(b) Eligibility.--
            ``(1) In general.--A local educational agency shall be 
        eligible to receive a grant under this section if--
                    ``(A)(i) the total number of students in average 
                daily attendance at all of the schools served by the 
                local educational agency is less than 600; and
                    ``(ii) all of the schools served by the local 
                educational agency are designated with a school locale 
                code of 6, 7, or 8 as determined by the Secretary of 
                Education; or
                    ``(B) the agency meets the criteria established in 
                subparagraph (A)(i) and the Secretary, in accordance 
                with paragraph (2), grants the local educational 
                agency's request to waive the criteria described in 
                subparagraph (A)(ii).
            ``(2) Certification.--The Secretary shall determine whether 
        or not to waive the criteria described in paragraph (1)(A)(ii) 
        based on certification provided by the local educational 
        agency, or the State educational agency on behalf of the local 
        educational agency, that the local educational agency is 
        located in an area defined as rural by a governmental agency of 
        the State.
    ``(c) Allocation.--
            ``(1) In general.--Except as provided in paragraph (3), the 
        Secretary shall award a grant to an eligible local educational 
        agency for a fiscal year in an amount equal to the initial 
        amount determined under paragraph (2) for the fiscal year minus 
        the total amount received under the provisions of law described 
        under section 1711(c) for the preceding fiscal year.
            ``(2) Determination of the initial amount.--The initial 
        amount referred to in paragraph (1) is equal to $100 multiplied 
        by the total number of students, over 50 students, in average 
        daily attendance in such eligible agency plus $20,000, except 
        that the initial amount may not exceed $60,000.
            ``(3) Ratable adjustment.--
                    ``(A) In general.--If the amount made available for 
                this subpart for any fiscal year is not sufficient to 
                pay in full the amounts that local educational agencies 
                are eligible to receive under paragraph (1) for such 
                year, the Secretary shall ratably reduce such amounts 
                for such year.
                    ``(B) Additional amounts.--If additional funds 
                become available for making payments under paragraph 
                (1) for such fiscal year, payments that were reduced 
                under subparagraph (A) shall be increased on the same 
                basis as such payments were reduced.
            ``(5) Census determination.--
                    ``(A) In general.--Each local educational agency 
                desiring a grant under this section shall conduct a 
                census not later than December 1 of each year to 
                determine the number of kindergarten through grade 12 
                students in average daily attendance at the schools 
                served by the local educational agency.
                    ``(B) Submission.--Each local educational agency 
                shall submit the number described in subparagraph (A) 
                to the Secretary not later than March 1 of each year.
    ``(d) Disbursal.--The Secretary shall disburse the funds awarded to 
a local educational agency under this section for a fiscal year not 
later than July 1 of that year.
    ``(e) Special Rule.--A local educational agency that is eligible to 
receive a grant under this subpart for a fiscal year shall be 
ineligible to receive funds for such fiscal year under subpart 2.
    ``(f) Supplement Not Supplant.--Funds made available under this 
section shall be used to supplement and not supplant any other Federal, 
State or local education funds.

``SEC. 1713. ACCOUNTABILITY.

    ``(a) Academic Achievement.--
            ``(1) In general.--Each local educational agency that uses 
        or receives funds under section 1711 or 1712 for a fiscal year 
        shall administer an assessment consistent with section 1111.
            ``(2) Special rule.--Each local educational agency that 
        uses or receives funds under section 1711 or 1712 shall use the 
        same assessment described in paragraph (1) for each year of 
        participation in the program under such section.
    ``(b) State Educational Agency Determination Regarding Continuing 
Participation.--Each State educational agency that receives funding 
under the provisions of law described in section 1711(c) shall--
            ``(1) after the second year that a local educational agency 
        participates in a program under section 1711 or 1712 and on the 
        basis of the results of the assessments described in subsection 
        (a), determine whether the students served by the local 
        educational agency participating in the program performed in 
        accordance with section 1111; and
            ``(2) only permit those local educational agencies that so 
        participated and met the requirements of section 1111(b)(2) to 
        continue to so participate.

                ``Subpart 2--Rural Education Assistance

``SEC. 1721. PROGRAM AUTHORIZED.

    ``(a) Reservations.--From amounts appropriated under section 1732 
for this subpart for a fiscal year, the Secretary shall reserve \1/2\ 
of 1 percent to make awards to elementary or secondary schools operated 
or supported by the Bureau of Indian Affairs to carry out the purpose 
of this subpart.
    ``(b) Grants to States.--
            ``(1) In general.--From amounts appropriated under section 
        1732 for this subpart that are not reserved under subsection 
        (a), the Secretary shall award grants for a fiscal year to 
        State educational agencies that have applications approved 
        under section 1723 to enable the State educational agencies to 
        award subgrants to eligible local educational agencies for 
        local authorized activities described in subsection (c)(2).
            ``(2) Allocation.--From amounts appropriated for this 
        subpart, the Secretary shall allocate to each State educational 
        agency for a fiscal year an amount that bears the same ratio to 
        the amount of funds appropriated under section 1732 for this 
        subpart that are not reserved under subsection (a) as the 
        number of students in average daily attendance served by 
        eligible local educational agencies in the State bears to the 
        number of all such students served by eligible local 
        educational agencies in all States for that fiscal year.
            ``(3) Direct awards to specially qualified agencies.--
                    ``(A) Nonparticipating state.--If a State 
                educational agency elects not to participate in the 
                program under this subpart or does not have an 
                application approved under section 1723 a specially 
                qualified agency in such State desiring a grant under 
                this subpart shall apply directly to the Secretary to 
                receive an award under this subpart.
                    ``(B) Direct awards to specially qualified 
                agencies.--The Secretary may award, on a competitive 
                basis, the amount the State educational agency is 
                eligible to receive under paragraph (2) directly to 
                specially qualified agencies in the State.
    ``(c) Local Awards.--
            ``(1) Eligibility.--A local educational agency shall be 
        eligible to receive funds under this subpart if--
                    ``(A) 20 percent or more of the children aged 5 to 
                17, inclusive, served by the local educational agency 
                are from families with incomes below the poverty line; 
                and
                    ``(B) all of the schools served by the agency are 
                designated with a school code of 6, 7, or 8 as 
                determined by the Secretary of Education.
            ``(2) Uses of funds.--Grant funds awarded to local 
        educational agencies or made available to schools under this 
        subpart shall be used for--
                    ``(A) teacher recruitment and retention, including 
                the use of signing bonuses and other financial 
                incentives;
                    ``(B) teacher professional development, including 
                programs that train teachers to utilize technology to 
                improve teaching and to train special needs teachers;
                    ``(C) educational technology, including software 
                and hardware as described in part B of title V;
                    ``(D) parental involvement activities; or
                    ``(E) programs to improve student academic 
                achievement.

``SEC. 1722. STATE DISTRIBUTION OF FUNDS.

    ``(a) Award Basis.--A State educational agency shall award grants 
to eligible local educational agencies--
            ``(1) on a competitive basis; or
            ``(2) according to a formula based on the number of 
        students in average daily attendance served by the eligible 
        local educational agencies or schools (as appropriate) in the 
        State, as determined by the State.
    ``(b) Administrative Costs.--A State educational agency receiving a 
grant under this subpart may not use more than 5 percent of the amount 
of the grant for State administrative costs.

``SEC. 1723. APPLICATIONS.

    ``Each State educational agency and specially qualified agency 
desiring to receive a grant under this subpart shall submit an 
application to the Secretary at such time, in such manner, and 
accompanied by such information as the Secretary may require. Such 
application shall include specific measurable goals and objectives 
relating to increased student academic achievement, decreased student 
drop-out rates, or such other factors that the State educational agency 
or specially qualified agency may choose to measure.

``SEC. 1724. REPORTS.

    ``(a) State Reports.--Each State educational agency that receives a 
grant under this subpart shall provide an annual report to the 
Secretary. The report shall describe--
            ``(1) the method the State educational agency used to award 
        grants to eligible local educational agencies and to provide 
        assistance to schools under this subpart;
            ``(2) how local educational agencies and schools used funds 
        provided under this subpart; and
            ``(3) the degree to which progress has been made toward 
        meeting the goals and objectives described in the application 
        submitted under section 1723.
    ``(b) Specially Qualified Agency Report.--Each specially qualified 
agency that receives a grant under this subpart shall provide an annual 
report to the Secretary. Such report shall describe--
            ``(1) how such agency uses funds provided under this 
        subpart; and
            ``(2) the degree to which progress has been made toward 
        meeting the goals and objectives described in the application 
        submitted under section 1721(b)(4)(A).
    ``(c) Report to Congress.--The Secretary shall prepare and submit 
to the Committee on Education and the Workforce for the House of 
Representatives and the Committee on Health, Education, Labor, and 
Pensions for the Senate an annual report. The report shall describe--
            ``(1) the methods the State educational agency used to 
        award grants to eligible local educational agencies and to 
        provide assistance to schools under this subpart;
            ``(2) how eligible local educational agencies and schools 
        used funds provided under this subpart; and
            ``(3) progress made in meeting specific measurable 
        educational goals and objectives.

``SEC. 1725. PERFORMANCE REVIEW.

    ``Three years after a State educational agency or specially 
qualified agency receives funds under this part, the Secretary shall 
review the progress of such agency toward achieving the goals and 
objectives included in its application, to determine whether the agency 
has made progress toward meeting such goals and objectives. To review 
the performance of each agency, the Secretary shall--
            ``(1) Review the use of funds of such agency under section 
        1721(c)(2); and
            ``(2) deny the provision of additional funds in subsequent 
        fiscal years to an agency only if the Secretary determines, 
        after notice and an opportunity for a hearing, that the 
        agency's use of funds has been inadequate to justify 
        continuation of such funding.

``SEC. 1726. DEFINITIONS.

    ``In this subpart--
            ``(1) The term `poverty line' means the poverty line (as 
        defined by the Office of Management and Budget, and revised 
        annually in accordance with section 673(2) of the Community 
        Services Block Grant Act (42 U.S.C. 9902(2))) applicable to a 
        family of the size involved.
            ``(2) The term `specially qualified agency' means an 
        eligible local educational agency, located in a State that does 
        not participate in a program under this subpart in a fiscal 
        year, that may apply directly to the Secretary for a grant in 
        such year in accordance with section 1721(b)(4).

                    ``Subpart 3--General Provisions

``SEC. 1731. DEFINITION.

    ``In this part, the term `State' means each of the 50 States, the 
District of Columbia, and the Commonwealth of Puerto Rico.''.

                 PART H--GENERAL PROVISIONS OF TITLE I

SEC. 181. GENERAL PROVISIONS.

    Title I is amended further by adding at the end the following:

                     ```PART H--GENERAL PROVISIONS

``SEC. 1801. FEDERAL REGULATIONS.

    ``(a) In General.--The Secretary is authorized to issue such 
regulations as are necessary to ensure reasonable compliance with this 
title.
    ``(b) Negotiated Rulemaking Process.--
            ``(1) In general.--Prior to publishing in the Federal 
        Register proposed regulations to carry out this title, the 
        Secretary shall obtain the advice and recommendations of 
        representatives of Federal, State, and local administrators, 
        parents, teachers, paraprofessionals, and members of local 
        boards of education involved with the implementation and 
        operation of programs under this title.
            ``(2) Meetings and electronic exchange.--Such advice and 
        recommendation may be obtained through such mechanisms as 
        regional meetings and electronic exchanges of information.
            ``(3) Proposed regulations.--After obtaining such advice 
        and recommendations, and prior to publishing proposed 
        regulations, the Secretary shall--
                    ``(A) establish a negotiated rulemaking process on 
                a minimum of three key issues, including--
                            ``(i) accountability;
                            ``(ii) implementation of assessments; and
                            ``(iii) use of paraprofessionals;
                    ``(B) select individuals to participate in such 
                process from among individuals or groups which provided 
                advice and recommendations, including representation 
                from all geographic regions of the United States; and
                    ``(C) prepare a draft of proposed regulations that 
                shall be provided to the individuals selected by the 
                Secretary under subparagraph (B) not less than 15 days 
                prior to the first meeting under such process.
            ``(4) Process.--Such process--
                    ``(A) shall be conducted in a timely manner to 
                ensure that final regulations are issued by the 
                Secretary not later than 1 year after the date of the 
                enactment of the No Child Left Behind Act of 2001; and
                    ``(B) shall not be subject to the Federal Advisory 
                Committee Act but shall otherwise follow the provisions 
                of the Negotiated Rulemaking Act of 1990 (5 U.S.C. 561 
                et seq.).
            ``(5) Emergency situation.--In an emergency situation in 
        which regulations to carry out this title must be issued within 
        a very limited time to assist State and local educational 
        agencies with the operation of a program under this title, the 
        Secretary may issue proposed regulations without following such 
        process but shall, immediately thereafter and prior to issuing 
        final regulations, conduct regional meetings to review such 
        proposed regulations.
    ``(c) Limitation.--Regulations to carry out this part may not 
require local programs to follow a particular instructional model, such 
as the provision of services outside the regular classroom or school 
program.

``SEC. 1802. AGREEMENTS AND RECORDS.

    ``(a) Agreements.--All published proposed regulations shall conform 
to agreements that result from negotiated rulemaking described in 
section 1601 unless the Secretary reopens the negotiated rulemaking 
process or provides a written explanation to the participants involved 
in the process explaining why the Secretary decided to depart from and 
not adhere to such agreements.
    ``(b) Records.--The Secretary shall ensure that an accurate and 
reliable record of agreements reached during the negotiations process 
is maintained.

``SEC. 1803. STATE ADMINISTRATION.

    ``(a) Rulemaking.--
            ``(1) In general.--Each State that receives funds under 
        this title shall--
                    ``(A) ensure that any State rules, regulations, and 
                policies relating to this title conform to the purposes 
                of this title and provide any such proposed rules, 
                regulations, and policies to the committee of 
                practitioners under subsection (b) for their review and 
                comment;
                    ``(B) minimize such rules, regulations, and 
                policies to which their local educational agencies and 
                schools are subject;
                    ``(C) eliminate or modify State and local fiscal 
                accounting requirements in order to facilitate the 
                ability of schools to consolidate funds under 
                schoolwide programs; and
                    ``(D) identify any such rule, regulation, or policy 
                as a State-imposed requirement.
            ``(2) Support and facilitation.--State rules, regulations, 
        and policies under this title shall support and facilitate 
        local educational agency and school-level systemic reform 
        designed to enable all children to meet the challenging State 
        student performance standards.
    ``(b) Committee of Practitioners.--
            ``(1) In general.--Each State educational agency shall 
        create a State committee of practitioners to advise the State 
        in carrying out its responsibilities under this title.
            ``(2) Membership.--Each such committee shall include--
                    ``(A) as a majority of its members, representatives 
                from local educational agencies;
                    ``(B) administrators, including the administrators 
                of programs described in other parts of this title;
                    ``(C) teachers, including vocational educators;
                    ``(D) parents;
                    ``(E) members of local boards of education;
                    ``(F) representatives of private school children; 
                and
                    ``(G) pupil services personnel.
            ``(3) Duties.--The duties of such committee shall include a 
        review, prior to publication, of any proposed or final State 
        rule or regulation pursuant to this title. In an emergency 
        situation where such rule or regulation must be issued within a 
        very limited time to assist local educational agencies with the 
        operation of the program under this title, the State 
        educational agency may issue a regulation without prior 
        consultation, but shall immediately thereafter convene the 
        State committee of practitioners to review the emergency 
        regulation prior to issuance in final form.

``SEC. 1804. LOCAL ADMINISTRATIVE COST LIMITATION.

    ``(a) Local Administrative Cost Limitation.--Each local educational 
agency may use not more than 4 percent of funds received under part A 
for administrative expenses.
    ``(b) Regulations.--The Secretary, after consulting with State and 
local officials and other experts in school finance, shall develop and 
issue regulations that define the term administrative cost for purposes 
of this title. Such definition shall be consistent with generally 
accepted accounting principles. The Secretary shall publish final 
regulations on this section not later than 1 year after the date of the 
enactment of the No Child Left Behind Act of 2001.

``SEC. 1805. APPLICABILITY.

    ``Nothing in this title shall be construed to affect home schools 
nor shall any home schooled student be required to participate in any 
assessment referenced in this title.

``SEC. 1806. PRIVATE SCHOOLS.

    ``Nothing in this title shall be construed to affect any private 
school that does not receive funds or services under this title.

``SEC. 1807. PRIVACY OF ASSESSMENT RESULTS.

    ``Any results from individual assessments referenced in this title 
which become part of the education records of the student shall have 
the protections as provided in section 444 of the General Education 
Provisions Act.''.

     TITLE II--PREPARING, TRAINING, AND RECRUITING QUALITY TEACHERS

SEC. 201. TEACHER QUALITY TRAINING AND RECRUITING FUND; TEACHER 
              LIABILITY.

    Title II (20 U.S.C. 6601 et seq.) is amended to read as follows:

    ``TITLE II--PREPARING, TRAINING, AND RECRUITING QUALITY TEACHERS

         ``PART A--TEACHER QUALITY TRAINING AND RECRUITING FUND

``SEC. 2001. PURPOSE.

    ``The purpose of this part is to provide grants to States and local 
educational agencies in order to assist their efforts to increase 
student academic achievement through such strategies as improving 
teacher quality and increasing the number of highly qualified teachers 
in the classroom.

``Subpart 1--Grants to States to Prepare, Train, and Recruit Qualified 
                                Teachers

``SEC. 2011. FORMULA GRANTS TO STATES.

    ``(a) In General.--In the case of each State that in accordance 
with section 2013 submits to the Secretary an application for a fiscal 
year, the Secretary shall make a grant for the year to the State for 
the uses specified in section 2012. The grant shall consist of the 
allotment determined for the State under subsection (b).
    ``(b) Determination of Amount of Allotment.--
            ``(1) Reservation of funds.--From the amount made available 
        to carry out this subpart for any fiscal year, the Secretary 
        shall reserve--
                    ``(A) \1/2\ of 1 percent for allotments for the 
                Virgin Islands, Guam, American Samoa, and the 
                Commonwealth of the Northern Mariana Islands, to be 
                distributed among these outlying areas on the basis of 
                their relative need, as determined by the Secretary in 
                accordance with the purpose of this part; and
                    ``(B) \1/2\ of 1 percent for the Secretary of the 
                Interior for programs under this part for professional 
                development activities for teachers, other staff, and 
                administrators in schools operated or funded by the 
                Bureau of Indian Affairs.
            ``(2) State allotments.--
                    ``(A) Hold harmless.--
                            ``(i) In general.--Subject to subparagraph 
                        (B), from the total amount made available to 
                        carry out this subpart for any fiscal year and 
                        not reserved under paragraph (1), the Secretary 
                        shall allot to each of the 50 States, the 
                        District of Columbia, and the Commonwealth of 
                        Puerto Rico an amount equal to the total amount 
                        that such State received for fiscal year 2001 
                        under--
                                    ``(I) section 2202(b) of this Act 
                                (as in effect on the day before the 
                                date of the enactment of the No Child 
                                Left Behind Act of 2001); and
                                    ``(II) section 306 of the 
                                Department of Education Appropriations 
                                Act, 2001 (as enacted into law by 
                                section 1(a)(1) of Public Law 106-554).
                            ``(ii) Nonparticipating states.--In the 
                        case of a State that did not receive any funds 
                        for fiscal year 2001 under one or both of the 
                        provisions referred to in subclauses (I) and 
                        (II) of clause (i), the amount allotted to the 
                        State under such clause shall be the total 
                        amount that the State would have received for 
                        fiscal year 2001 if it had elected to 
                        participate in all of the programs for which it 
                        was eligible under each of the provisions 
                        referred to in such subclauses.
                            ``(iii) Ratable reduction.--If the total 
                        amount made available to carry out this subpart 
                        for any fiscal year and not reserved under 
                        paragraph (1) is insufficient to pay the full 
                        amounts that all States are eligible to receive 
                        under clause (i) for any fiscal year, the 
                        Secretary shall ratably reduce such amounts for 
                        such fiscal year.
                    ``(B) Allotment of additional funds.--
                            ``(i) In general.--Subject to clause (ii), 
                        for any fiscal year for which the total amount 
                        made available to carry out this subpart and 
                        not reserved under paragraph (1) exceeds the 
                        total amount made available to the 50 States, 
                        the District of Columbia, and the Commonwealth 
                        of Puerto Rico for fiscal year 2001 under the 
                        authorities described in subparagraph (A)(i), 
                        the Secretary shall allot such excess amount as 
                        follows:
                                    ``(I) 50 percent of such excess 
                                amount shall be allotted among such 
                                States on the basis of their relative 
                                populations of individuals aged 5 
                                through 17, as determined by the 
                                Secretary on the basis of the most 
                                recent satisfactory data.
                                    ``(II) 50 percent of such excess 
                                amount shall be allotted among such 
                                States in proportion to the number of 
                                children, aged 5 to 17, who reside 
                                within the State from families with 
                                incomes below the poverty line (as 
                                defined by the Office of Management and 
                                Budget and revised annually in 
                                accordance with section 673(2) of the 
                                Community Services Block Grant Act (42 
                                U.S.C. 9902(2)) applicable to a family 
                                of the size involved for the most 
                                recent fiscal year for which 
                                satisfactory data are available, 
                                compared to the number of such 
                                individuals who reside in all such 
                                States for that fiscal year.
                            ``(ii) Exception.--No State receiving an 
                        allotment under clause (i) may receive less 
                        than \1/2\ of 1 percent of the total excess 
                        amount allotted under clause (i).
            ``(3) Reallotment.--If any State does not apply for an 
        allotment under this subsection for any fiscal year, the 
        Secretary shall reallot such amount to the remaining States in 
        accordance with this subsection.

``SEC. 2012. WITHIN-STATE ALLOCATIONS.

    ``(a) Use of Funds.--Each State receiving a grant under this 
subpart shall use the funds provided under the grant in accordance with 
this section to carry out activities for the improvement of teaching 
and learning.
    ``(b) Reservation of Funds.--
            ``(1) In general.--A State that receives a grant under this 
        subpart may reserve not more than 5 percent of the amount of 
        the funds provided under the grant for--
                    ``(A) one or more of the authorized State 
                activities described in subsection (e); and
                    ``(B) planning and administration related to 
                carrying out such activities and making subgrants to 
                local educational agencies under subparts 2 and 3.
            ``(2) Limitation on administrative costs.--The amount 
        reserved by a State under paragraph (1)(B) may not exceed 2 
        percent of the total amount authorized to be reserved under 
        paragraph (1).
    ``(c) Math and Science Partnerships.--The Secretary may make a 
grant to a State under this subpart only if the State agrees to 
distribute at least 15 percent of the amount of the funds provided 
under the grant and not reserved under subsection (b) through a 
competitive subgrant process in accordance with subpart 2.
    ``(d) Subgrants to Local Educational Agencies.--
            ``(1) In general.--The Secretary may make a grant to a 
        State under this subpart only if the State agrees to expend at 
        least 85 percent of the amount of the funds provided under the 
        grant and not reserved under subsection (b) for the purpose of 
        making subgrants to local educational agencies under subpart 3.
            ``(2) Formula for distribution of subgrants under subpart 
        3.--A State receiving a grant under this subpart shall 
        distribute the amount described in paragraph (1) through a 
        formula under which--
                    ``(A) 50 percent is allocated to local educational 
                agencies in accordance with the relative enrollment in 
                public and private nonprofit elementary and secondary 
                schools within the boundaries of such agencies; and
                    ``(B) 50 percent is allocated to local educational 
                agencies in proportion to the number of children, aged 
                5 to 17, who reside within the geographic area served 
                by such agency from families with incomes below the 
                poverty line (as defined by the Office of Management 
                and Budget and revised annually in accordance with 
                section 673(2) of the Community Services Block Grant 
                Act (42 U.S.C. 9902(2))) applicable to a family of the 
                size involved for the most recent fiscal year for which 
                satisfactory data are available, compared to the number 
                of such individuals who reside in the geographic areas 
                served by all the local educational agencies in the 
                State for that fiscal year.
    ``(e) Authorized State Activities.--The authorized State activities 
referred to in subsection (b)(1)(A) are the following:
            ``(1) Reforming teacher certification, recertification, or 
        licensure requirements to ensure that--
                    ``(A) teachers have the necessary teaching skills 
                and academic content knowledge in the subject areas in 
                which they are assigned to teach;
                    ``(B) teacher certification, recertification, or 
                licensure requirements are aligned with the State's 
                challenging State content standards; and
                    ``(C) teachers have the knowledge and skills 
                necessary to help students meet challenging State 
                student achievement standards.
            ``(2) Carrying out programs that--
                    ``(A) include support during the initial teaching 
                experience, such as mentoring programs that--
                            ``(i) provide mentoring to beginning 
                        teachers from veteran teachers with expertise 
                        in the same subject matter that the beginning 
                        teachers will be teaching;
                            ``(ii) provide mentors time for activities 
                        such as coaching, observing, and assisting the 
                        teachers who are mentored; and
                            ``(iii) use standards or assessments for 
                        guiding beginning teachers that are consistent 
                        with the State's student achievement standards 
                        and with the requirements for professional 
                        development activities under section 2033; and
                    ``(B) establish, expand, or improve alternative 
                routes to State certification of teachers, especially 
                in the areas of mathematics and science, for highly 
                qualified individuals with a baccalaureate degree, 
                including mid-career professionals from other 
                occupations, paraprofessionals, former military 
                personnel, and recent college or university graduates 
                with records of academic distinction who demonstrate 
                the potential to become highly effective teachers.
            ``(3) Developing and implementing effective mechanisms to 
        assist local educational agencies and schools in effectively 
        recruiting and retaining highly qualified and effective 
        teachers and principals.
            ``(4) Reforming tenure systems and implementing teacher 
        testing and other procedures to expeditiously remove 
        incompetent and ineffective teachers from the classroom.
            ``(5) Developing enhanced performance systems to measure 
        the effectiveness of specific professional development programs 
        and strategies.
            ``(6) Providing technical assistance to local educational 
        agencies consistent with this part.
            ``(7) Funding projects to promote reciprocity of teacher 
        certification or licensure between or among States, except that 
        no reciprocity agreement developed under this paragraph or 
        developed using funds provided under this part may lead to the 
        weakening of any State teaching certification or licensing 
        requirement.
            ``(8) Developing or assisting local educational agencies or 
        eligible partnerships (as defined in section 2026) in the 
        development and utilization of proven, innovative strategies to 
        deliver intensive professional development programs that are 
        both cost-effective and easily accessible, such as through the 
        use of technology and distance learning.
            ``(9) Providing assistance to local educational agencies 
        and eligible partnerships (as defined in section 2026) for the 
        development and implementation of innovative professional 
        development programs that train teachers to use technology to 
        improve teaching and learning and are consistent with the 
        requirements of section 2033.
            ``(10) Developing or assisting local educational agencies 
        in developing merit-based performance systems, rigorous 
        assessments for teachers, and strategies which provide 
        differential and bonus pay for teachers in high-need subject 
        areas such as reading, math, and science and in high-poverty 
        schools and districts.
    ``(f) Coordination.--States receiving grants under section 202 of 
the Higher Education Act of 1965 shall coordinate the use of such funds 
with activities carried out under this section.

``SEC. 2013. APPLICATIONS BY STATES.

    ``(a) In General.--To be eligible to receive a grant under this 
subpart, a State shall submit an application to the Secretary at such 
time, in such manner, and containing such information as the Secretary 
may reasonably require.
    ``(b) Contents.--Each application under this section shall include 
the following:
            ``(1) A description of how the State will ensure that a 
        local educational agency receiving a subgrant under subpart 3 
        will comply with the requirements of such subpart.
            ``(2) A plan to ensure all teachers within the State are 
        fully qualified not later than December 31, 2005.
            ``(3) A description of how the State will coordinate 
        professional development activities authorized under this part 
        with professional development activities provided under other 
        Federal, State, and local programs, including those authorized 
        under title I, part A of title V, part B of title V, part A of 
        title III, and (where applicable) the Individuals with 
        Disabilities Education Act and the Carl D. Perkins Vocational 
        and Technical Education Act. The application shall also 
        describe the comprehensive strategy that the State will take as 
        part of such coordination effort, to ensure that teachers are 
        trained in the utilization of technology so that technology and 
        its applications are effectively used in the classroom to 
        improve teaching and learning in all curriculum and content 
        areas, as appropriate.
            ``(4) A description of how the State will encourage the 
        development of proven, innovative strategies to deliver 
        intensive professional development programs that are both cost-
        effective and easily accessible, such as through the use of 
        technology and distance learning.
            ``(5) A description of how the State will ensure that local 
        educational agencies will comply with the requirements under 
        section 2033, especially with respect to ensuring the 
        participation of teachers and parents.
    ``(c) Application Approval.--A State application submitted to the 
Secretary under this section shall be deemed approved by the Secretary 
unless the Secretary makes a written determination, within 90 days 
after receiving the application, that the application is in violation 
of the provisions of this subpart. The Secretary shall not finally 
disapprove a State application except after giving the State notice and 
opportunity for a hearing.

               ``Subpart 2--Math and Science Partnerships

``SEC. 2021. PURPOSE.

    ``The purpose of this subpart is to improve the achievement of 
students in the areas of mathematics and science by encouraging States, 
institutions of higher education, and local educational agencies to 
participate in programs that--
            ``(1) focus on education and training of mathematics and 
        science teachers that improves teachers' knowledge and skills 
        and encourages intellectual growth;
            ``(2) improve mathematics and science teaching by 
        encouraging institutions of higher education to assume greater 
        responsibility for improving mathematics and science teacher 
        education through the establishment of a comprehensive, 
        integrated system of recruiting, training, and advising such 
        teachers; and
            ``(3) bring mathematics and science teachers in elementary 
        and secondary schools together with scientists, mathematicians, 
        and engineers to increase the subject matter knowledge of 
        teachers and improve their teaching skills through the use of 
        sophisticated laboratory equipment and work space, computing 
        facilities, libraries, and other resources that institutions of 
        higher education are better able to provide than the schools.

``SEC. 2022. APPLICATION REQUIREMENTS.

    ``(a) In General.--An eligible partnership seeking to receive a 
subgrant from a State under this subpart shall submit an application to 
the State at such time, in such manner, and accompanied by such 
information as the State may require.
    ``(b) Partnership Application Contents.--Each such application 
shall include--
            ``(1) an assessment of the teacher quality and professional 
        development of all the schools and agencies participating in 
        the eligible partnership with respect to the teaching and 
        learning of mathematics and science;
            ``(2) a description of how the activities to be carried out 
        by the eligible partnership will be aligned with State content 
        standards in mathematics and science and with other educational 
        reform activities that promote student achievement in 
        mathematics and science;
            ``(3) a description of how the activities to be carried out 
        by the eligible partnership will be based on a review of 
        relevant research, and an explanation of why the activities are 
        expected to improve student achievement and to strengthen the 
        quality of mathematics and science instructions; and
            ``(4) a description of--
                    ``(A) how the eligible partnership will carry out 
                the activities described in section 2023(c); and
                    ``(B) the eligible partnership's evaluation and 
                accountability plan described in section 2024.

``SEC. 2023. MATH AND SCIENCE PARTNERSHIP SUBGRANTS.

    ``(a) In General.--From the amount described in section 2012(c), 
the State educational agency, working in conjunction with the State 
agency for higher education (if such agencies are separate), shall 
award subgrants on a competitive basis to eligible partnerships to 
enable such partnerships to carry out activities described in 
subsection (c).
    ``(b) Duration.--The State shall award subgrants under this subpart 
for a period of not less than 2 and not more than 5 years.
    ``(c) Authorized Activities.--A recipient of funds provided under 
this subpart may use the funds for the following activities related to 
elementary or secondary schools:
            ``(1) Establishing and operating mathematics and science 
        summer professional development workshops or institutes for 
        elementary and secondary teachers that--
                    ``(A) shall--
                            ``(i) directly relate to the curriculum and 
                        content areas in which the teacher provides 
                        instruction, and focus only secondarily on 
                        pedagogy;
                            ``(ii) enhance the ability of a teacher to 
                        understand and use the State's content 
                        standards for mathematics and science and to 
                        select appropriate curricula;
                            ``(iii) train teachers to use curricula 
                        that are--
                                    ``(I) based on scientific research;
                                    ``(II) aligned with State content 
                                standards; and
                                    ``(III) object-centered, 
                                experiment-oriented, and concept- and 
                                content-based; and
                            ``(iv) provide supplemental assistance and 
                        follow-up training during the school year for 
                        summer institute graduates; and
                    ``(B) may include--
                            ``(i) programs that provide prospective 
                        teachers and novice teachers opportunities to 
                        work under the guidance of experienced teachers 
                        and college faculty;
                            ``(ii) instruction in the use of data and 
                        assessments to inform and instruct classroom 
                        practice;
                            ``(iii) professional development 
                        activities, including supplemental and follow-
                        up activities, such as distance learning and 
                        activities that train teachers to utilize 
                        technology in the classroom.
            ``(2) Recruiting to the teaching profession--
                    ``(A) students studying mathematics, engineering, 
                and science; or
                    ``(B) mathematicians, engineers, and scientists 
                currently working in the field.
            (3) Designing programs to bring teachers into contact with 
        working scientists to expand teacher content knowledge of and 
        research in science and mathematics.
    ``(d) Priority.--In awarding subgrants under this subpart, States 
shall give priority to applications seeking funding for the activity 
described in subsection (c)(1).
    ``(e) Coordination.--Partnerships receiving grants under section 
203 of the Higher Education Act of 1965 (20 U.S.C. 1023) shall 
coordinate the use of such funds with any related activities carried 
out by such partnership with funds made available under this subpart.

``SEC. 2024. EVALUATION AND ACCOUNTABILITY PLAN.

    ``(a) al.--Each eligible partnership receiving a subgrant under 
this subpart shall develop an evaluation and accountability plan for 
activities assisted under this subpart that includes rigorous 
performance objectives that measure the impact of activities funded 
under this subpart.
    ``(b) Contents.--The plan--
            ``(1) shall include measurable goals to increase the number 
        of mathematics and science teachers who participate in content-
        based professional development activities; and
            ``(2) may include objectives and measures for--
                    ``(A) improved student achievement on State 
                mathematics and science assessments;
                    ``(B) increased participation by students in 
                advanced courses in mathematics and science;
                    ``(C) increased percentages of elementary school 
                teachers with academic majors or minors, or group 
                majors or minors, in mathematics or the sciences; and
                    ``(D) increased percentages of secondary school 
                classes in mathematics and science taught by teachers 
                with academic majors in mathematics and science, 
                respectively.

``SEC. 2025. REPORTS; REVOCATION OF SUBGRANTS.

    ``(a) Reports.--Each eligible partnership receiving a subgrant 
under this subpart annually shall report to the State regarding the 
eligible partnership's progress in meeting the performance objectives 
described in section 2024.
    ``(b) Revocation.--If the State determines that an eligible 
partnership that receives a subgrant under this subpart for 5 years is 
not making substantial progress in meeting the performance objectives 
described in section 2024 by the end of the third year of the subgrant, 
the subgrant payments shall not be made for the fourth and fifth years.

``SEC. 2026. DEFINITIONS.

    ``In this subpart:
            ``(1) Eligible partnership.--The term `eligible 
        partnership' means a partnership that--
                    ``(A) shall include--
                            ``(i) a State educational agency;
                            ``(ii) a mathematics or science department 
                        of a private independent institution of higher 
                        education or a State-supported public 
                        institution of higher education; and
                            ``(iii) a high need local educational 
                        agency; and
                    ``(B) may include--
                            ``(i) another institution of higher 
                        education or the teacher training department of 
                        such an institution;
                            ``(ii) additional local educational 
                        agencies, public charter schools, public or 
                        private elementary or secondary schools, or a 
                        consortium of such schools;
                            ``(iii) a business; or
                            ``(iv) a nonprofit organization of 
                        demonstrated effectiveness, including a museum 
                        or research institution.
            ``(2) Summer professional development workshop or 
        institute.--The term `summer professional development workshop 
        or institute' means a workshop or institute that--
                    ``(A) is conducted during a period of not less than 
                2 weeks;
                    ``(B) includes as a component a program that 
                provides direct interaction between students and 
                faculty; and
                    ``(C) provides for follow-up training during the 
                academic year that shall be conducted in the classroom 
                for a period of not less than 3 consecutive or 
                nonconsecutive days, except that--
                            ``(i) if the workshop or institute is 
                        conducted during a two-week period, the follow-
                        up training shall be conducted for a period of 
                        at least 4 days; and
                            ``(ii) if the follow-up training is for 
                        teachers in rural school districts, it may be 
                        conducted through distance learning.

          ``Subpart 3--Subgrants to Local Educational Agencies

``SEC. 2031. LOCAL USE OF FUNDS.

    ``Each local educational agency that receives a subgrant under this 
subpart may use the subgrant to carry out the following activities:
            ``(1) Initiatives to assist in recruiting and hiring fully 
        qualified teachers who will be assigned teaching positions 
        within their field, including--
                    ``(A) providing signing bonuses or other financial 
                incentives, such as differential pay, for teachers to 
                teach in academic subject areas in which there exists a 
                shortage of such fully qualified teachers within a 
                school or the local educational agency;
                    ``(B) establishing programs that--
                            ``(i) recruit professionals from other 
                        fields and provide such professionals with 
                        alternative routes to teacher certification; 
                        and
                            ``(ii) provide increased opportunities for 
                        minorities, individuals with disabilities, and 
                        other individuals underrepresented in the 
                        teaching profession; and
                    ``(C) implementing hiring policies that ensure 
                comprehensive recruitment efforts as a way to expand 
                the applicant pool, such as through identifying 
                teachers certified through alternative routes, coupled 
                with a system of intensive screening designed to hire 
                the most qualified applicant.
            ``(2) Initiatives to promote retention of highly qualified 
        teachers and principals, particularly within elementary and 
        secondary schools with a high percentage of low-achieving 
        students, including programs that provide--
                    ``(A) mentoring to newly hired teachers, such as 
                from master teachers;
                    ``(B) incentives, including financial incentives, 
                to retain teachers who have a record of success in 
                helping low-achieving students improve their academic 
                success; or
                    ``(C) incentives, including financial incentives, 
                to principals who have a record of improving the 
                performance of all students, but particularly students 
                from economically disadvantaged families and students 
                from racial and ethnic minority groups.
            ``(3) Programs and activities that are designed to improve 
        the quality of the teacher force, such as--
                    ``(A) innovative professional development programs 
                (which may be through partnerships including 
                institutions of higher education), including programs 
                that train teachers and principals to utilize 
                technology to improve teaching and learning, are 
                consistent with the requirements of section 2033, and 
                are coordinated with part B of title V;
                    ``(B) development and utilization of proven, cost-
                effective strategies for the implementation of 
                professional development activities, such as through 
                the utilization of technology and distance learning;
                    ``(C) tenure reform;
                    ``(D) merit pay;
                    ``(E) testing of elementary and secondary school 
                teachers in the subject areas taught by such teachers;
                    ``(F) professional development programs that 
                provide instruction in how to teach children with 
                different learning styles, particularly children with 
                disabilities and children with special learning needs 
                (including those who are gifted and talented);
                    ``(G) professional development programs that 
                provide instruction in how best to discipline children 
                in the classroom and identify early and appropriate 
                interventions to help children described in 
                subparagraph (F) learn; and
                    ``(H) professional development programs that 
                provide instruction in how to teach character education 
                in a manner that--
                            ``(i) reflects the values of parents, 
                        teachers, and local communities; and
                            ``(ii) incorporates elements of good 
                        character, including honesty, citizenship, 
                        courage, justice, respect, personal 
                        responsibility, and trustworthiness.
            ``(4) Teacher opportunity payments, consistent with section 
        2034.
            ``(5) Professional activities designed to improve the 
        quality of principals.
            ``(6) Hiring fully qualified teachers, including teachers 
        who become fully qualified through State and local alternative 
        routes, and special education teachers, in order to reduce 
        class size.

``SEC. 2032. LOCAL APPLICATIONS.

    ``(a) In General.--A local educational agency seeking to receive a 
subgrant from a State under this subpart shall submit an application to 
the State--
            ``(1) at such time as the State shall require; and
            ``(2) which is coordinated with other programs under this 
        Act, or other Acts, as appropriate.
    ``(b) Local Application Contents.--The local application described 
in subsection (a), shall include, at a minimum, the following:
            ``(1) An assurance that the local educational agency will 
        target funds to schools within the jurisdiction of the local 
        educational agency that--
                    ``(A) have the lowest proportion of fully qualified 
                teachers;
                    ``(B) have the largest average class size; or
                    ``(C) are identified for school improvement under 
                section 1116(b).
            ``(2) A description of how the local educational agency 
        will coordinate professional development activities authorized 
        under this subpart with professional development activities 
        provided through other Federal, State, and local programs, 
        including those authorized under title I, part A of title V, 
        part B of title V, part A of title III, and (where applicable) 
        the Individuals with Disabilities Education Act and the Carl D. 
        Perkins Vocational and Technical Education Act.
            ``(3) A description of how the local educational agency 
        will integrate funds under this subpart with funds received 
        under part B of title V that are used for professional 
        development to train teachers to utilize technology to improve 
        teaching and learning.
            ``(4) A description of how the local educational agency has 
        collaborated with teachers, principals, parents, and 
        administrators in the preparation of the application.

``SEC. 2033. PROFESSIONAL DEVELOPMENT FOR TEACHERS.

    ``(a) Requirements for Professional Development Activities.--
Professional development activities under this subpart shall--
            ``(1) support professional development activities that give 
        teachers, principals, and administrators the knowledge and 
        skills to provide students with the opportunity to meet 
        challenging State content standards and student achievement 
        standards;
            ``(2) support the recruiting, hiring, and training of fully 
        qualified teachers, including teachers fully qualified through 
        State and local alternative routes;
            ``(3) advance teacher understanding of effective 
        instructional strategies based on scientifically based research 
        for improving student achievement, at a minimum, in reading or 
        language arts and mathematics;
            ``(4) be directly related to the curriculum and content 
        areas in which the teacher provides instruction, except this 
        does not apply to activities that instruct in methods of 
        disciplining children;
            ``(5) be designed to enhance the ability of a teacher to 
        understand and use the State's standards for the subject area 
        in which the teacher provides instruction;
            ``(6) be tied to scientifically based research 
        demonstrating the effectiveness of such professional 
        development activities or programs in increasing student 
        achievement or substantially increasing the knowledge and 
        teaching skills of teachers;
            ``(7) be of sufficient intensity and duration (not to 
        include 1-day or short-term workshops and conferences) to have 
        a positive and lasting impact on the teacher's performance in 
        the classroom;
            ``(8) be developed with extensive participation of 
        teachers, principals, parents, and administrators of schools to 
        be served under this part;
            ``(9) to the extent appropriate, provide training for 
        teachers and principals in the use of technology so that 
        technology and its applications are effectively used in the 
        classroom to improve teaching and learning in the curriculum 
        and academic content areas in which the teachers provide 
        instruction; and
            ``(10) as a whole, be regularly evaluated for their impact 
        on increased teacher effectiveness and improved student 
        achievement, with the findings of such evaluations used to 
        improve the quality of professional development.
    ``(b) Professional Development Activities.--Professional 
development activities under this subpart may include--
            ``(1) instruction in the use of data and assessments to 
        inform and instruct classroom practice;
            ``(2) instruction in ways that teachers, principals, pupil 
        services personnel, and school administrators may work more 
        effectively with parents;
            ``(3) the forming of partnerships with institutions of 
        higher education to establish school-based teacher training 
        programs that provide prospective teachers and novice teachers 
        with an opportunity to work under the guidance of experienced 
        teachers and college faculty;
            ``(4) the creation of programs for paraprofessionals 
        (assisting teachers employed by a local educational agency 
        receiving assistance under this part) to obtain the education 
        necessary for such paraprofessionals to become licensed and 
        certified teachers; and
            ``(5) instruction in ways to teach special needs children.
    ``(c) Accountability.--
            ``(1) In general.--A State shall notify a local educational 
        agency that the agency is on notice of the possibility that the 
        agency may be subject to the requirement in paragraph (3) if, 
        after any fiscal year, the State determines that the programs 
        or activities funded by the agency fail to meet the 
        requirements of subsection (a).
            ``(2) Technical assistance.--A local educational agency 
        that has been put on notice pursuant to paragraph (1) may 
        request technical assistance from the State in order to provide 
        the opportunity for such local educational agency to comply 
        with the requirements of subsection (a).
            ``(3) Requirement to provide teacher opportunity 
        payments.--A local educational agency that has been put on 
        notice by the State pursuant to paragraph (1) during any 2 
        consecutive fiscal years shall expend under section 2034 for 
        the succeeding fiscal year a proportion of the amount made 
        available to the agency under this subpart equal to the 
        proportion of such amount expended by the agency on 
        professional development for the second fiscal year in which it 
        was put on notice.

``SEC. 2034. TEACHER OPPORTUNITY PAYMENTS.

    ``(a) In General.--A local educational agency receiving funds under 
this subpart may (or, in the case of a local educational agency 
described in section 2033(c)(3), shall) provide funds directly to a 
teacher or a group of teachers seeking opportunities to participate in 
a professional development activity of their choice.
    ``(b) Notice to Teachers.--Local educational agencies distributing 
funds under this section shall establish and implement a timely process 
through which proper notice of availability of funds will be given to 
all teachers within schools identified by the agency and shall develop 
a process whereby teachers will be specifically recommended by 
principals to participate in such program by virtue of--
            ``(1) their not being fully qualified to teach in the 
        subject or subjects in which they teach; or
            ``(2) their need for additional assistance to ensure that 
        their students make progress toward meeting challenging State 
        content standards and student achievement standards.
    ``(c) Selection of Teachers.--In the event adequate funding is not 
available to provide payments under this section to all teachers 
seeking such assistance, or identified as needing such assistance 
pursuant to subsection (b), a local educational agency shall establish 
procedures for selecting teachers which provide a priority for those 
teachers described in paragraph (1) or (2) of subsection (b).
    ``(d) Eligible Program.--Teachers receiving a payment under this 
section shall have the choice of attending any professional development 
program that meets the criteria set forth in section 2033(a).

                ``Subpart 4--Troops-to-Teachers Program

``SEC. 2041. AUTHORIZATION OF TROOPS-TO-TEACHERS PROGRAM.

    ``(a) Program Authorized.--The Secretary may carry out a program 
(to be known as the `Troops-to-Teachers Program')--
            ``(1) to assist eligible members and former members of the 
        Armed Forces described in section 2042 to obtain certification 
        or licensure as elementary school teachers, secondary school 
        teachers, or vocational or technical teachers; and
            ``(2) to facilitate the employment of such members in 
        elementary schools or secondary schools or as vocational or 
        technical teachers.
    ``(b) Administration of Program.--The Secretary shall enter into a 
memorandum of agreement with the Secretary of Defense under which the 
Secretary of Defense, acting through the Defense Activity for Non-
Traditional Education Support of the Department of Defense, will 
perform the actual administration of the Program, other than section 
2045. Using funds appropriated to the Secretary to carry out this 
subpart, the Secretary shall transfer to the Secretary of Defense such 
amounts as may be necessary to administer the Program pursuant to the 
memorandum of agreement.
    ``(c) Information Regarding Program.--The Secretary shall provide 
to the Secretary of Defense, for distribution as part of preseparation 
counseling provided under section 1142 of title 10, United States Code, 
to members of the Armed Forces described in section 2042, information 
regarding the Troops-to-Teachers Program and applications to 
participate in the program.
    ``(d) Placement Assistance and Referral Services.--As part of the 
Troops-to-Teachers Program, the Secretary may, with the agreement of 
the Secretary of Defense, provide placement assistance and referral 
services regarding employment opportunities with local educational 
agencies to members of the Armed Forces who are discharged or released 
from active duty under other than adverse conditions. Unless the member 
is also selected to participate in the Program under section 2042, a 
member receiving placement assistance and referral services under the 
authority of this subsection is not eligible for financial assistance 
under section 2043.

``SEC. 2042. RECRUITMENT AND SELECTION OF PROGRAM PARTICIPANTS.

    ``(a) Eligible Members.--The following members and former members 
of the Armed Forces are eligible for selection to participate in the 
Troops-to-Teachers Program:
            ``(1) Any member who--
                    ``(A) on or after October 1, 1999, becomes entitled 
                to retired or retainer pay in the manner provided in 
                title 10 or title 14, United States Code; or
                    ``(B) on or after the date of the enactment of the 
                No Child Left Behind Act of 2001, has an approved date 
                of voluntary retirement and, as of the date the member 
                submits an application to participate in the Program, 
                has one year or less of active duty remaining before 
                retirement.
            ``(2) Any member who, on or after the date of the enactment 
        of the No Child Left Behind Act of 2001--
                    ``(A) is separated or released from active duty 
                after six or more years of continuous active duty 
                immediately before the separation or release; and
                    ``(B) executes a reserve commitment agreement for a 
                period of three years under subsection (e)(2).
            ``(3) Any member who, on or after the date of the enactment 
        of the No Child Left Behind Act of 2001, is retired or 
        separated for physical disability under chapter 61 of title 10, 
        United States Code.
            ``(4) Any member who--
                    ``(A) during the period beginning on October 1, 
                1990, and ending on September 30, 1999, was 
                involuntarily discharged or released from active duty 
                for purposes of a reduction of force after six or more 
                years of continuous active duty immediately before the 
                discharge or release; or
                    ``(B) applied for the teacher placement program 
                administered under section 1151 of title 10, United 
                States Code, before its repeal, and who satisfied the 
                eligibility criteria specified in subsection (c) of 
                such section 1151.
    ``(b) Submission of Applications.--
            ``(1) Form and submission.--Selection of eligible members 
        and former members of the Armed Forces to participate in the 
        Troops-to-Teachers Program shall be made on the basis of 
        applications submitted to the Secretary within the time periods 
        specified in paragraph (2). An application shall be in such 
        form and contain such information as the Secretary may require.
            ``(2) Time for submission.--An application shall be 
        considered to be submitted on a timely basis under paragraph 
        (1) if--
                    ``(A) in the case of a member or former member of 
                the Armed Forces described in paragraph (1), (2), or 
                (3) of subsection (a), the application is submitted not 
                later than four years after the date on which the 
                member is retired or separated or released from active 
                duty, whichever applies to the member; or
                    ``(B) in the case of a member or former member 
                described in subsection (a)(4), the application is 
                submitted not later than September 30, 2003.
    ``(c) Selection Criteria.--
            ``(1) Establishment.--Subject to paragraphs (2) and (3), 
        the Secretary shall prescribe the criteria to be used to select 
        eligible members and former members of the Armed Forces to 
        participate in the Troops-to-Teachers Program.
            ``(2) Educational background.--If a member or former member 
        of the Armed Forces described in paragraph (1), (2), or (3) of 
        subsection (a) is applying for assistance for placement as an 
        elementary or secondary school teacher, the Secretary shall 
        require the member to have received a baccalaureate or advanced 
        degree from an accredited institution of higher education. If 
        such a member is applying for assistance for placement as a 
        vocational or technical teacher, the Secretary shall require 
        the member--
                    ``(A) to have received the equivalent of one year 
                of college from an accredited institution of higher 
                education and have six or more years of military 
                experience in a vocational or technical field; or
                    ``(B) to otherwise meet the certification or 
                licensure requirements for a vocational or technical 
                teacher in the State in which the member seeks 
                assistance for placement under the Program.
            ``(3) Honorable service.--A member or former member of the 
        Armed Forces is eligible to participate in the Troops-to-
        Teachers Program only if the member's last period of service in 
        the Armed Forces was characterized as honorable. If the member 
        is selected to participate in the Program before the retirement 
        of the member or the separation or release of the member from 
        active duty, the member may continue to participate in the 
        Program only if, upon the retirement or separation or release 
        from active duty, the member's last period of service is 
        characterized as honorable.
    ``(d) Selection Priorities.--In selecting eligible members and 
former members of the Armed Forces to receive assistance for placement 
as elementary or secondary school teachers or vocational or technical 
teachers, the Secretary shall give priority to members who have 
educational or military experience in science, mathematics, special 
education, or vocational or technical subjects and agree to seek 
employment as science, mathematics, or special education teachers in 
elementary or secondary schools or in other schools under the 
jurisdiction of a local educational agency.
    ``(e) Other Conditions on Selection.--
            ``(1) Selection subject to funding.--The Secretary may not 
        select an eligible member or former member of the Armed Forces 
        to participate in the Troops-to-Teachers Program under this 
        section and receive financial assistance under section 2043 
        unless the Secretary has sufficient appropriations for the 
        Program available at the time of the selection to satisfy the 
        obligations to be incurred by the United States under section 
        2043 with respect to the member.
            ``(2) Reserve commitment agreement.--The Secretary may not 
        select an eligible member or former member of the Armed Forces 
        described in subsection (a)(2)(A) to participate in the Troops-
        to-Teachers Program under this section and receive financial 
        assistance under section 2043 unless--
                    ``(A) the Secretary notifies the Secretary 
                concerned and the member that the Secretary has 
                reserved a full stipend or bonus under section 2043 for 
                the member; and
                    ``(B) the member executes a written agreement with 
                the Secretary concerned to serve as a member of the 
                Selected Reserve of a reserve component of the Armed 
                Forces for a period of three years (in addition to any 
                other reserve commitment the member may have).

``SEC. 2043. PARTICIPATION AGREEMENT AND FINANCIAL ASSISTANCE.

    ``(a) Participation Agreement.--An eligible member or former member 
of the Armed Forces selected to participate in the Troops-to-Teachers 
Program under section 2042 and receive financial assistance under this 
section shall be required to enter into an agreement with the Secretary 
in which the member agrees--
            ``(1) to obtain, within such time as the Secretary may 
        require, certification or licensure as an elementary school 
        teacher, secondary school teacher, or vocational or technical 
        teacher; and
            ``(2) to accept an offer of full-time employment as an 
        elementary school teacher, secondary school teacher, or 
        vocational or technical teacher for not less than three school 
        years with a local educational agency or public charter school, 
        to begin the school year after obtaining that certification or 
        licensure.
    ``(b) Violation of Participation Agreement; Exceptions.--A 
participant in the Troops-to-Teachers Program shall not be considered 
to be in violation of the participation agreement entered into under 
subsection (a) during any period in which the participant--
            ``(1) is pursuing a full-time course of study related to 
        the field of teaching at an institution of higher education;
            ``(2) is serving on active duty as a member of the Armed 
        Forces;
            ``(3) is temporarily totally disabled for a period of time 
        not to exceed three years as established by sworn affidavit of 
        a qualified physician;
            ``(4) is unable to secure employment for a period not to 
        exceed 12 months by reason of the care required by a spouse who 
        is disabled;
            ``(5) is seeking and unable to find full-time employment as 
        a teacher in an elementary or secondary school or as a 
        vocational or technical teacher for a single period not to 
        exceed 27 months; or
            ``(6) satisfies the provisions of additional reimbursement 
        exceptions that may be prescribed by the Secretary.
    ``(c) Stipend for Participants.--
            ``(1) Stipend authorized.--Subject to paragraph (2), the 
        Secretary may pay to a participant in the Troops-to-Teachers 
        Program selected under section 2042 a stipend in an amount up 
        to $5,000.
            ``(2) Limitation.--The total number of stipends that may be 
        paid under paragraph (1) in any fiscal year may not exceed 
        3,000.
    ``(d) Bonus for Participants.--
            ``(1) Bonus authorized.--Subject to paragraph (2), the 
        Secretary may, in lieu of paying a stipend under subsection 
        (c), pay a bonus of $10,000 to a participant in the Troops-to-
        Teachers Program selected under section 2042 who agrees in the 
        participation agreement under subsection (a) to accept full-
        time employment as an elementary school teacher, secondary 
        school teacher, or vocational or technical teacher for not less 
        than three years in a high need school.
            ``(2) Limitation.--The total number of bonuses that may be 
        paid under paragraph (1) in any fiscal year may not exceed 
        1,000.
            ``(3) High need school defined.--For purposes of this 
        subsection, the term `high need school' means a public 
        elementary school, public secondary school, or public charter 
        school that meets one or more of the following criteria:
                    ``(A) At least 50 percent of the students enrolled 
                in the school were children counted under subsection 
                (c) of section 1124 for purposes of making grants under 
                such section to local educational agencies, when such 
                counting was most recently performed.
                    ``(B) The school has a large percentage of students 
                who qualify for assistance under part B of the 
                Individuals with Disabilities Education Act (20 U.S.C. 
                1411 et seq.).
                    ``(C) The school meets any other criteria 
                established by the Secretary in consultation with the 
                National Assessment Governing Board.
    ``(e) Treatment of Stipend and Bonus.--A stipend or bonus paid 
under this section to a participant in the Troops-to-Teachers Program 
shall be taken into account in determining the eligibility of the 
participant for Federal student financial assistance provided under 
title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.).
    ``(f) Reimbursement Under Certain Circumstances.--
            ``(1) Reimbursement required.--A participant in the Troops-
        to-Teachers Program who is paid a stipend or bonus under this 
        section shall be required to repay the stipend or bonus under 
        the following circumstances:
                    ``(A) The participant fails to obtain teacher 
                certification or licensure or employment as an 
                elementary school teacher, secondary school teacher, or 
                vocational or technical teacher as required by the 
                participation agreement under subsection (a).
                    ``(B) The participant voluntarily leaves, or is 
                terminated for cause, from employment as an elementary 
                school teacher, secondary school teacher, or vocational 
                or technical teacher during the three years of required 
                service in violation of the participation agreement.
                    ``(C) The participant executed a written agreement 
                with the Secretary concerned under section 2042(e)(2) 
                to serve as a member of a reserve component of the 
                Armed Forces for a period of three years and fails to 
                complete the required term of service.
            ``(2) Amount of reimbursement.--A participant required to 
        reimburse the Secretary for a stipend or bonus paid to the 
        participant under this section shall pay an amount that bears 
        the same ratio to the amount of the stipend or bonus as the 
        unserved portion of required service bears to the three years 
        of required service. Any amount owed by the participant shall 
        bear interest at the rate equal to the highest rate being paid 
        by the United States on the day on which the reimbursement is 
        determined to be due for securities having maturities of ninety 
        days or less and shall accrue from the day on which the 
        participant is first notified of the amount due.
            ``(3) Treatment of obligation.--The obligation to reimburse 
        the Secretary under this subsection is, for all purposes, a 
        debt owing the United States. A discharge in bankruptcy under 
        title 11, United States Code, shall not release a participant 
        from the obligation to reimburse the Secretary.
            ``(4) Exceptions to reimbursement requirement.--A 
        participant shall be excused from reimbursement under this 
        subsection if the participant becomes permanently totally 
        disabled as established by sworn affidavit of a qualified 
        physician. The Secretary may also waive reimbursement in cases 
        of extreme hardship to the participant, as determined by the 
        Secretary.
    ``(g) Relationship to Educational Assistance Under Montgomery GI 
Bill.--The receipt by a participant in the Troops-to-Teachers Program 
of a stipend or bonus under this section shall not reduce or otherwise 
affect the entitlement of the participant to any benefits under chapter 
30 of title 38, United States Code, or chapter 1606 of title 10, United 
States Code.

``SEC. 2044. PARTICIPATION BY STATES.

    ``(a) Discharge of State Activities Through Consortia of States.--
The Secretary may permit States participating in the Troops-to-Teachers 
Program to carry out activities authorized for such States under the 
Program through one or more consortia of such States.
    ``(b) Assistance to States.--
            ``(1) Grants authorized.--Subject to paragraph (2), the 
        Secretary may make grants to States participating in the 
        Troops-to-Teachers Program, or to consortia of such States, in 
        order to permit such States or consortia of States to operate 
        offices for purposes of recruiting eligible members and former 
        members of the Armed Forces for participation in the Program 
        and facilitating the employment of participants in the Program 
        as elementary school teachers, secondary school teachers, and 
        vocational or technical teachers.
            ``(2) Limitation.--The total amount of grants under 
        paragraph (1) in any fiscal year may not exceed $4,000,000.

``SEC. 2045. SUPPORT OF INNOVATIVE PRERETIREMENT TEACHER CERTIFICATION 
              PROGRAMS.

    ``(a) Development, Implementation and Demonstration.--The Secretary 
may enter into a memorandum of agreement with a State, an institution 
of higher education, or a consortia of States or institutions of higher 
education, to develop, implement, and demonstrate teacher certification 
programs for members of the Armed Forces described in section 
2042(a)(1)(B) for the purpose of assisting such members to consider and 
prepare for a career as an elementary school teacher, secondary school 
teacher, or vocational or technical teacher upon their retirement from 
the Armed Forces.
    ``(b) Program Elements.--A teacher certification program under 
subsection (a) must--
            ``(1) provide recognition of military experience and 
        training as related to licensure or certification requirements;
            ``(2) provide courses of instruction that may be conducted 
        on or near a military installation;
            ``(3) incorporate alternative approaches to achieve teacher 
        certification, such as innovative methods to gaining field-
        based teaching experiences, and assessment of background and 
        experience as related to skills, knowledge, and abilities 
        required of elementary school teachers, secondary school 
        teachers, or vocational or technical teachers;
            ``(4) provide for courses to also be delivered via distance 
        education methods; and
            ``(5) address any additional requirements or specifications 
        as established by the Secretary.
    ``(c) Application Procedures.--A State or institution of higher 
education (or a consortia of States or institutions of higher 
education) that has a program leading to State approved teacher 
certification programs may submit a proposal to the Secretary for 
consideration under subsection (a). The Secretary shall give preference 
to proposals that provide for a sharing of the costs to carry out the 
teacher certification program.
    ``(d) Continuation of Programs.--The purpose of this section is to 
provide funding to develop, implement, and demonstrate teacher 
certification programs under subsection (a). Upon successful completion 
of the demonstration phase, the continued operation of the teacher 
certification programs shall not be the responsibility of the 
Secretary.
    ``(e) Funding Limitation.--The total amount obligated by the 
Secretary under this section in any fiscal year may not exceed 
$5,000,000.

``SEC. 2046. REPORTING REQUIREMENTS.

    ``(a) Report Required.--Not later than March 31 of each year, the 
Secretary (in consultation with the Secretary of Defense and the 
Secretary of Transportation) and the Comptroller General shall each 
submit to Congress a report on the effectiveness of the Troops-to-
Teachers Program in the recruitment and retention of qualified 
personnel by local educational agencies and public charter schools.
    ``(b) Elements of Report.--The report under subsection (a) shall 
include information on the following:
            ``(1) The number of participants in the Troops-to-Teachers 
        Program.
            ``(2) The schools in which the participants are employed.
            ``(3) The grade levels at which the participants teach.
            ``(4) The subject matters taught by the participants.
            ``(5) The rates of retention of the participants by the 
        local educational agencies and public charter schools employing 
        the participants.
            ``(6) Such other matters as the Secretary or the 
        Comptroller General, as the case may be, considers appropriate.
    ``(c) Recommendations.--The report of the Comptroller General under 
this section shall also include any recommendations of the Comptroller 
General regarding any means of improving the Troops-to-Teachers 
Program, including means of enhancing the recruitment and retention of 
participants in the Program.

``SEC. 2047. DEFINITIONS.

    ``For purposes of this subpart:
            ``(1) Armed forces.--The term `Armed Forces' means the 
        Army, Navy, Air Force, Marine Corps, and Coast Guard.
            ``(2) Program.--The term `Program' means the Troops-to-
        Teachers Program authorized by this subpart.
            ``(3) Reserve component.--The term `reserve component' 
        means--
                    ``(A) the Army National Guard of the United States;
                    ``(B) the Army Reserve;
                    ``(C) the Naval Reserve;
                    ``(D) the Marine Corps Reserve;
                    ``(E) the Air National Guard of the United States;
                    ``(F) the Air Force Reserve; and
                    ``(G) the Coast Guard Reserve.
            ``(4) Secretary concerned.--The term `Secretary concerned' 
        means--
                    ``(A) the Secretary of the Army, with respect to 
                matters concerning a reserve component of the Army;
                    ``(B) the Secretary of the Navy, with respect to 
                matters concerning a reserve component of the Navy;
                    ``(C) the Secretary of the Air Force, with respect 
                to matters concerning a reserve component of the Air 
                Force; and
                    ``(D) the Secretary of Transportation, with respect 
                to matters concerning the Coast Guard Reserve.

                          ``Subpart 5--Funding

``SEC. 2051. AUTHORIZATIONS OF APPROPRIATIONS.

    ``(a) In General.--For the purpose of carrying out this part, other 
than subpart 4, there are authorized to be appropriated $2,600,000,000 
for fiscal year 2002 and such sums as may be necessary for each of 
fiscal years 2003 through 2006.
    ``(b) Subpart 4.--For the purpose of carrying out subpart 4, there 
are authorized to be appropriated $30,000,000 for fiscal year 2002 and 
such sums as may be necessary for each of fiscal years 2003 through 
2006.

                    ``Subpart 6--General Provisions

``SEC. 2061. DEFINITIONS.

    ``For purposes of this part--
            ``(1) Arts and sciences.--The term `arts and sciences' 
        means--
                    ``(A) when referring to an organizational unit of 
                an institution of higher education, any academic unit 
                that offers one or more academic majors in disciplines 
                or content areas corresponding to the academic subject 
                matter areas in which teachers provide instruction; and
                    ``(B) when referring to a specific academic subject 
                matter area, the disciplines or content areas in which 
                academic majors are offered by the arts and sciences 
                organizational unit.
            ``(2) Beginning teacher.--The term `beginning teacher' 
        means an educator in a public school who has not yet been 
        teaching 3 full school years.
            ``(3) Mentoring program.--The term `mentoring program' 
        means to provide professional support and development, 
        instruction, and guidance to beginning teachers, but does not 
        include a teacher or individual who begins to work in a 
        supervisory position.
            ``(4) Publicly report.--The term `publicly report', when 
        used with respect to the dissemination of information, means 
        that the information is made widely available to the public, 
        including parents and students, through such means as the 
        Internet and major print and broadcast media outlets.

``SEC. 2062. PROVISIONS RELATED TO PRIVATE SCHOOLS.

    ``The provisions of sections 8503 through 8506 apply to programs 
under this part.

                 ``PART B--TEACHER LIABILITY PROTECTION

``SEC. 2101. TEACHER IMMUNITY.

    ``(a) Immunity.--Notwithstanding any other provision of law, no 
school board member of, or teacher or administrator in, a local 
educational agency that receives funds under this Act shall be liable 
for monetary damages in his or her personal capacity for an action that 
was taken in carrying out his or her official duties and intended to 
maintain school discipline, so long as that action was not prohibited 
under State or local law and did not constitute reckless or criminal 
misconduct.
    ``(b) Limitation.--The immunity established under subsection (a) 
shall apply only to liability arising under Federal law.''.

TITLE III--EDUCATION OF LIMITED ENGLISH PROFICIENT CHILDREN; INDIAN AND 
                        ALASKA NATIVE EDUCATION

        PART A--EDUCATION OF LIMITED ENGLISH PROFICIENT CHILDREN

SEC. 301. PROGRAMS AUTHORIZED.

    (a) Title Heading.--The heading for title III is amended to read as 
follows:

 ``TITLE III--EDUCATION OF LIMITED ENGLISH PROFICIENT CHILDREN; INDIAN 
                     AND ALASKA NATIVE EDUCATION''.

    (b) Short Title.--Section 3101 (20 U.S.C. 6801) is repealed.
    (c) Limitation on Availability of Certain Funds for Schools.--
Section 3601 (20 U.S.C. 7001)--
            (1) is transferred to part B of title V (as amended by 
        section 501) and inserted after section 5204 (as so amended);
            (2) is redesignated as section 5205; and
            (3) is amended by striking ``this title'' each place such 
        term appears and inserting ``this part''.
    (d) Limited English Proficient Children.--Parts A through E of 
title III (20 U.S.C. 6811 et seq.) are amended to read as follows:

       ``PART A--EDUCATION OF LIMITED ENGLISH PROFICIENT CHILDREN

                ``Subpart 1--English Language Education

``SEC. 3101. SHORT TITLE.

    ``This subpart may be cited as the `English Language Proficiency 
and Academic Achievement Act'.

``SEC. 3102. FINDINGS AND PURPOSES.

    ``(a) Findings.--The Congress finds as follows:
            ``(1) English is the common language of the United States 
        and every citizen and other person residing in the United 
        States should have a command of the English language in order 
        to develop to their full potential.
            ``(2) Limited English proficient children, including recent 
        immigrant children, must overcome a number of challenges in 
        receiving an education in order to participate fully in 
        American society, including--
                    ``(A) segregated education programs;
                    ``(B) disproportionate and improper placement in 
                special education and other special programs due to the 
                use of inappropriate evaluation procedures;
                    ``(C) the limited English proficiency of their own 
                parents, which hinders the parents' ability to fully 
                participate in the education of their children; and
                    ``(D) a need for additional teachers and other 
                staff who are professionally trained and qualified to 
                serve such children.
            ``(3) States and local educational agencies need assistance 
        in developing the capacity to provide programs of instruction 
        that offer and provide an equal educational opportunity to 
        children who need special assistance because English is not 
        their dominant language.
            ``(4) Native Americans, including native residents of the 
        outlying areas, and Native American languages (as such terms 
        are defined in section 103 of the Native American Languages 
        Act) have a unique status under Federal law that requires 
        special policies within the broad purposes of this subpart to 
        serve the educational needs of language minority students in 
        the United States.
            ``(5) Research, evaluation, and data collection 
        capabilities in the field of instruction for limited English 
        proficient children need to be strengthened so that educators 
        and other staff teaching limited English proficient children in 
        the classroom can better identify and promote programs, program 
        implementation strategies, and instructional practices that 
        result in the effective education of limited English proficient 
        children.
    ``(b) Purposes.--The purposes of this part are--
            ``(1) to help ensure that children who are limited English 
        proficient, including recent immigrant children, attain English 
        proficiency, develop high levels of academic attainment in 
        English, and meet the same challenging State content standards 
        and challenging State student achievement standards expected of 
        all children;
            ``(2) to develop high-quality programs designed to assist 
        local educational agencies in teaching limited English 
        proficient children;
            ``(3) to assist local educational agencies to develop and 
        enhance their capacity to provide high-quality instructional 
        programs designed to prepare limited English proficient 
        students, including recent immigrant students, to enter all-
        English instructional settings within 3 years; and
            ``(4) to provide State educational agencies and local 
        educational agencies with the flexibility to implement 
        instructional programs, tied to scientifically based research, 
        that the agencies believe to be the most effective for teaching 
        English.

``SEC. 3103. PARENTAL NOTIFICATION AND CONSENT FOR ENGLISH LANGUAGE 
              INSTRUCTION.

    ``(a) Notification.--If an eligible entity uses funds under this 
subpart to provide English language instruction to limited English 
proficient children, the entity shall inform a parent or the parents of 
a child participating in an English language instruction program for 
limited English proficient children assisted under this subpart of--
            ``(1) the reasons for the identification of the child as 
        being in need of English language instruction;
            ``(2) the child's level of English proficiency, how such 
        level was assessed, and the status of the child's academic 
        achievement;
            ``(3) how the English language instruction program will 
        specifically help the child acquire English and meet age-
        appropriate standards for grade promotion and graduation;
            ``(4) what the specific exit requirements are for the 
        program;
            ``(5) the expected rate of transition from the program into 
        a classroom that is not tailored for limited English proficient 
        children; and
            ``(6) the expected rate of graduation from high school for 
        the program if funds under this part are used for children in 
        secondary schools.
    ``(b) Consent.--
            ``(1) In general.--A parent or the parents of a limited 
        English proficient child who is identified for participation in 
        an English language instruction program for limited English 
        proficient children assisted under this subpart shall--
                    ``(A) sign a form consenting to the student's 
                placement in such a program prior to such time as the 
                student is enrolled in the program; and
                    ``(B) select among methods of instruction, if more 
                than 1 method is offered in the program.
            ``(2) Removal from program upon parental request.--A parent 
        or the parents of a limited English proficient child who is 
        participating in an English language instruction program for 
        limited English proficient children assisted under this subpart 
        shall have the right to have their child immediately removed 
        from the program upon their request.
    ``(c) Receipt of Information.--A parent or the parents of a limited 
English proficient child who is identified for participation in an 
English language instruction program for limited English proficient 
children assisted under this subpart shall receive, in a manner and 
form understandable to the parent or parents, the information required 
by this subsection. At a minimum, the parent or parents shall receive--
            ``(1) timely information about English language instruction 
        programs for limited English proficient children assisted under 
        this subpart;
            ``(2) if a parent of a participating child so desires, 
        notice of opportunities for regular meetings for the purpose of 
        formulating and responding to recommendations from such 
        parents; and
            ``(3) procedural information for removing a child from a 
        program for limited English proficient children.
    ``(d) Basis for Admission or Exclusion.--Students shall not be 
admitted to, or excluded from, any federally-assisted education program 
on the basis of a surname or language-minority status.

``SEC. 3104. TESTING OF LIMITED ENGLISH PROFICIENT CHILDREN.

    ``(a) In General.--Assessments of limited English proficient 
children participating in programs funded under this subpart, to the 
extent practicable, shall be in the language and form most likely to 
yield accurate and reliable information on what such students know and 
can do in content areas.
    ``(b) Special Rule.--Notwithstanding subsection (a), in the case of 
an assessment of reading or language arts of any student who has 
attended school in the United States (excluding Puerto Rico) for 3 or 
more consecutive school years, the assessment shall be in the form of a 
test written in English, except that, if the eligible entity 
determines, on a case-by-case individual basis, that assessments in 
another language and form would likely yield more accurate and reliable 
information on what such students know and can do, the eligible entity 
may assess such students in the appropriate language other than English 
for 1 additional year.

``SEC. 3105. AUTHORIZATIONS OF APPROPRIATIONS.

    ``For the purpose of carrying out this subpart, there are 
authorized to be appropriated $460,000,000 for fiscal year 2002 and 
such sums as may be necessary for each of the 4 succeeding fiscal 
years.

``SEC. 3106. FORMULA GRANTS TO STATES.

    ``(a) In General.--In the case of each State that in accordance 
with section 3108 submits to the Secretary an application for a fiscal 
year, the Secretary shall make a grant for the year to the State for 
the purposes specified in subsection (b). The grant shall consist of 
the allotment determined for the State under subsection (c).
    ``(b) Purposes of Grants.--
            ``(1) Required expenditures.--The Secretary may make a 
        grant under subsection (a) only if the State involved agrees 
        that the State will expend at least 95 percent of its allotment 
        under subsection (c) for the purpose of making subgrants to 
        eligible entities to provide assistance to limited English 
        proficient children in accordance with section 3109.
            ``(2) Authorized expenditures.--Subject to paragraph (3), a 
        State that receives a grant under subsection (a) may expend not 
        more than 5 percent of its allotment under subsection (c) for 1 
        or more of the following purposes:
                    ``(A) Professional development and activities that 
                assist personnel in meeting State and local 
                certification requirements for teaching limited English 
                proficient children.
                    ``(B) Providing scholarships and fellowships to 
                students who agree to teach limited English proficient 
                children once they graduate.
                    ``(C) Planning, administration, and interagency 
                coordination related to the subgrants referred to in 
                paragraph (1).
                    ``(D) Providing technical assistance and other 
                forms of assistance to local educational agencies 
                that--
                            ``(i) educate limited English proficient 
                        children; and
                            ``(ii) are not receiving a subgrant from a 
                        State under this subpart.
                    ``(E) Providing bonuses to subgrantees whose 
                performance has been exceptional in terms of the speed 
                with which children enrolled in the subgrantee's 
                programs and activities attain English language 
                proficiency and meet challenging State content 
                standards and challenging State student achievement 
                standards.
            ``(3) Limitation on administrative costs.--In carrying out 
        paragraph (2), a State that receives a grant under subsection 
        (a) may expend not more than 2 percent of its allotment under 
        subsection (c) for the purposes described in paragraph (2)(C).
    ``(c) Determination of Allotment Amounts.--
            ``(1) Reservations.--From the amount appropriated under 
        section 3105 to carry out this subpart for each fiscal year, 
        the Secretary shall reserve--
                    ``(A) .5 percent of such amount for payments to 
                entities that are considered to be local educational 
                agencies under section 3107(a) for activities approved 
                by the Secretary;
                    ``(B) .5 percent of such amount for payments to 
                outlying areas, to be allotted in accordance with their 
                respective needs for assistance under this subpart, as 
                determined by the Secretary, for activities, approved 
                by the Secretary, consistent with this subpart; and
                    ``(C) .5 percent of such amount for payments to the 
                Commonwealth of Puerto Rico for activities, approved by 
                the Secretary, consistent with this subpart.
            ``(2) State allotments.--
                    ``(A) In general.--From the amount appropriated 
                under section 3105 to carry out this subpart for each 
                fiscal year that remains after making the reservations 
                described in paragraph (1), the Secretary shall allot 
                to each State an amount which bears the same ratio to 
                such amount as the total number of children who are 
                limited English proficient and who reside in the State 
                bears to the total number of such children residing in 
                all States that, in accordance with section 3108, 
                submit to the Secretary an application for the year.
                    ``(B) Hold harmless amounts.--For fiscal year 2002, 
                and for each of the 4 succeeding fiscal years, 
                notwithstanding subparagraph (A), the total amount 
                allotted to each State under such subparagraph shall be 
                not less than 85 percent of the total amount the State 
                and entities within the State received for the previous 
                fiscal year under--
                            ``(i) parts A and B of title VII (as such 
                        parts were in effect on the day before the date 
                        of the enactment of the No Child Left Behind 
                        Act of 2001); or
                            ``(ii) this subpart.
                    ``(C) Reallocation.--
                            ``(i) In general.--If any State does not 
                        submit to the Secretary an application for a 
                        fiscal year, or submits an application (or any 
                        modification to an application) that the 
                        Secretary, after reasonable notice and 
                        opportunity for a hearing, determines does not 
                        satisfy the requirements of this subpart, the 
                        Secretary--
                                    ``(I) shall endeavor to make that 
                                State's allotment available on a 
                                competitive basis to specially 
                                qualified agencies within the State 
                                that satisfy the requirements 
                                applicable to eligible entities under 
                                section 3109 and any additional 
                                requirements that may be imposed by the 
                                Secretary; and
                                    ``(II) shall reallot any portion of 
                                such allotment remaining after the 
                                application of subclause (I) to the 
                                remaining States in accordance with 
                                subparagraph (A).
                            ``(ii) Requirements on specially qualified 
                        agencies.--If a specially qualified agency 
                        receives funds under this subparagraph, the 
                        requirements of subsection (b) shall not apply 
                        to the agency. In lieu of those requirements, 
                        the specially qualified agency shall expend the 
                        funds for the authorized activities described 
                        in section 3109(b) and otherwise shall satisfy 
                        the requirements of section 3109.
                    ``(D) Definition.--In this paragraph, the term 
                `State' means each of the 50 States and the District of 
                Columbia.
            ``(3) Use of state data for determinations.--For purposes 
        of paragraph (2), any determination of the number of children 
        who are limited English proficient and reside in a State shall 
        be made using the most recent limited English proficient school 
        enrollment data available to, and reported to the Secretary by, 
        the State. The State shall provide assurances to the Secretary 
        that such data are valid and reliable. In a case described in 
        paragraph (2)(C), specially qualified agencies applying for a 
        State's allotment shall satisfy the requirements of this 
        paragraph to the maximum extent practicable.
            ``(4) No reduction permitted based on teaching method.--The 
        Secretary may not reduce a State's allotment based on the 
        State's selection of the immersion method of instruction as its 
        preferred method of teaching the English language to children 
        who are limited English proficient.

``SEC. 3107. NATIVE AMERICAN AND ALASKA NATIVE CHILDREN IN SCHOOL.

    ``(a) Eligible Entities.--For the purpose of carrying out programs 
under this subpart for individuals served by elementary, secondary, and 
postsecondary schools operated predominately for Native American or 
Alaska Native children, the following shall be considered to be a local 
educational agency:
            ``(1) An Indian tribe.
            ``(2) A tribally sanctioned educational authority.
            ``(3) A Native Hawaiian or Native American Pacific Islander 
        native language educational organization.
            ``(4) An elementary or secondary school that is operated or 
        funded by the Bureau of Indian Affairs, or a consortium of such 
        schools.
            ``(5) An elementary or secondary school operated under a 
        contract with or grant from the Bureau of Indian Affairs, in 
        consortium with another such school or a tribal or community 
        organization.
            ``(6) An elementary or secondary school operated by the 
        Bureau of Indian Affairs and an institution of higher 
        education, in consortium with an elementary or secondary school 
        operated under a contract with or grant from the Bureau of 
        Indian Affairs or a tribal or community organization.
    ``(b) Submission of Applications for Assistance.--Notwithstanding 
any other provision of this subpart, an entity that is considered to be 
a local educational agency under subsection (a), and that desires to 
submit an application for Federal financial assistance under this 
subpart, shall submit the application to the Secretary. In all other 
respects, such an entity shall be eligible for a grant under this 
subpart on the same basis as any other local educational agency.

``SEC. 3108. APPLICATIONS BY STATES.

    ``For purposes of section 3106, an application submitted by a State 
for a grant under such section for a fiscal year is in accordance with 
this section if the application--
            ``(1) describes the process that the State will use in 
        making subgrants to eligible entities under this subpart;
            ``(2) contains an agreement that the State--
                    ``(A) will provide 1 year of funding for an 
                application for a subgrant under section 3109 from an 
                eligible entity that describes a program that, on the 
                day preceding the date of the enactment of the No Child 
                Left Behind Act of 2001, was receiving funding under a 
                grant--
                            ``(i) awarded by the Secretary under 
                        subpart 1 or 3 of part A of the Bilingual 
                        Education Act (as such Act was in effect on 
                        such day); and
                            ``(ii) that was not under its terms due to 
                        expire before a period of 1 year or more had 
                        elapsed; and
                    ``(B) after such 1-year extension, will give 
                special consideration to such applications if the 
                period of their award would not yet otherwise have 
                expired if the No Child Left Behind Act of 2001 had not 
                been enacted;
            ``(3) contains an agreement that, in carrying out this 
        subpart, the State will address the needs of school systems of 
        all sizes and in all geographic areas, including rural and 
        urban schools;
            ``(4) contains an agreement that subgrants to eligible 
        entities under section 3109 shall be of sufficient size and 
        scope to allow such entities to carry out high quality 
        education programs for limited English proficient children;
            ``(5) contains an agreement that the State will coordinate 
        its programs and activities under this subpart with its other 
        programs and activities under this Act and other Acts, as 
        appropriate;
            ``(6) contains an agreement that the State--
                    ``(A) shall monitor the progress of students 
                enrolled in programs and activities receiving 
                assistance under this subpart in attaining English 
                proficiency and in attaining challenging State content 
                standards and challenging State achievement standards;
                    ``(B) shall establish standards and benchmarks for 
                English language development that are aligned with 
                State content and achievement standards;
                    ``(C) subject to subparagraph (D), after the 1-year 
                period described in such subparagraph, shall withdraw 
                funding from such programs and activities in cases 
                where 75 percent of students are not attaining English 
                proficiency and attaining challenging State content 
                standards and challenging State achievement standards 
                after 3 academic years of enrollment based on the 
                evaluation measures in section 3121(d); and
                    ``(D) shall provide technical assistance to 
                eligible entities that fail to satisfy the criterion in 
                subparagraph (C) for 1 year prior to the withdrawal of 
                funding under such subparagraph;
            ``(7) contains an assurance that the State will develop 
        high-quality annual assessments to measure English language 
        proficiency and require eligible entities receiving a subgrant 
        under section 3109 annually to assess the English proficiency 
        of all children with limited English proficiency participating 
        in a program funded under this subpart;
            ``(8) contains an agreement that the State will develop 
        annual performance objectives for raising the level of English 
        proficiency of each limited English proficient student, and 
        that these objectives shall include percentage increases in 
        performance on annual assessments in reading, writing, 
        speaking, and listening comprehension as compared to the 
        preceding school year; and
            ``(9) contains an agreement that the State will require 
        eligible entities receiving a grant under this subpart to use 
        the grant in ways that will build such recipient's capacity to 
        continue to offer high-quality English language instruction and 
        programs which assist limited English proficient children in 
        attaining challenging State content standards and challenging 
        State achievement standards once assistance under this subpart 
        is no longer available.

``SEC. 3109. SUBGRANTS TO ELIGIBLE ENTITIES.

    ``(a) Purposes of Subgrants.--A State may make a subgrant to an 
eligible entity from funds received by the State under this subpart 
only if the entity agrees to expend the funds to improve the education 
of limited English proficient children and their families, through the 
acquisition of English and the attainment of challenging State academic 
content standards and challenging State achievement standards, using 
approaches and methodologies based on scientifically based reading 
research and sound research and theory on teaching limited English 
proficient children, by--
            ``(1) developing and implementing new English language and 
        academic content instructional programs for children who are 
        limited English proficient, including programs of early 
        childhood education and kindergarten through 12th grade 
        education;
            ``(2) carrying out highly focused, innovative, locally 
        designed projects to expand or enhance existing English 
        language and academic content instruction programs for limited 
        English proficient children;
            ``(3) implementing, within an individual school, schoolwide 
        programs for restructuring, reforming, and upgrading all 
        relevant programs and operations relating to English language 
        and academic content instruction for limited English proficient 
        students; or
            ``(4) implementing, within the entire jurisdiction of a 
        local educational agency, agencywide programs for 
        restructuring, reforming, and upgrading all relevant programs 
        and operations relating to English language and academic 
        content instruction for limited English proficient students.
    ``(b) Authorized Subgrantee Activities.--
            ``(1) In general.--Subject to paragraph (2), a State may 
        make a subgrant to an eligible entity from funds received by 
        the State under this subpart in order that the eligible entity 
        may achieve 1 of the purposes described in subsection (a) by 
        undertaking 1 or more of the following activities to improve 
        the understanding, and use, of the English language, based on a 
        child's learning skills:
                    ``(A) Upgrading program objectives and effective 
                instructional strategies.
                    ``(B) Improving the instruction program for limited 
                English proficient students by identifying, acquiring, 
                and upgrading curricula, instructional materials, 
                educational software, and assessment procedures.
                    ``(C) Providing--
                            ``(i) tutorials and academic or vocational 
                        education for limited English proficient 
                        children; and
                            ``(ii) intensified instruction.
                    ``(D) Developing and implementing elementary or 
                secondary school English language instructional 
                programs that are coordinated with other relevant 
                programs and services.
                    ``(E) Providing professional development to 
                classroom teachers, principals, administrators, and 
                other school or community-based organizational 
                personnel to improve the instruction and assessment of 
                children who are limited English proficient children.
                    ``(F) Improving the English language proficiency 
                and academic performance of limited English proficient 
                children.
                    ``(G) Improving the instruction of limited English 
                proficient children by providing for the acquisition or 
                development of education technology or instructional 
                materials, access to and participation in electronic 
                networks for materials, training and communications, 
                and incorporation of such resources in curricula and 
                programs, such as those funded under this subpart.
                    ``(H) Developing tutoring programs for limited 
                English proficient children that provide early 
                intervention and intensive instruction in order to 
                improve academic achievement, to increase graduation 
                rates among limited English proficient children, and to 
                prepare students for transition as soon as possible 
                into classrooms where instruction is not tailored for 
                limited English proficient children.
                    ``(I) Providing family literacy services and parent 
                outreach and training activities to limited English 
                proficient children and their families to improve their 
                English language skills and assist parents in helping 
                their children to improve their academic performance.
                    ``(J) Other activities that are consistent with the 
                purposes of this subpart.
            ``(2) Moving children out of specialized classrooms.--Any 
        program or activity undertaken by an eligible entity using a 
        subgrant from a State under this subpart shall be designed to 
        assist students enrolled in the program or activity to attain 
        English proficiency and meet challenging State content 
        standards and challenging State achievement standards as soon 
        as possible, but not later than after 3 consecutive years of 
        school attendance, and to move into a classroom where 
        instruction is not tailored for limited English proficient 
        children.
    ``(c) Selection of Method of Instruction.--To receive a subgrant 
from a State under this subpart, an eligible entity shall select 1 or 
more methods or forms of instruction to be used in the programs and 
activities undertaken by the entity to assist limited English 
proficient children to attain English proficiency and meet challenging 
State content standards and challenging State student achievement 
standards. Such selection shall be consistent with sections 3134 and 
3135.
    ``(d) Duration of Subgrants.--The duration of a subgrant made by a 
State under this section shall be determined by the State in its 
discretion.
    ``(e) Applications by Eligible Entities.--
            ``(1) In general.--To receive a subgrant from a State under 
        this subpart, an eligible entity shall submit an application to 
        the State at such time, in such form, and containing such 
        information as the State may require.
            ``(2) Required documentation.--The application shall--
                    ``(A) describe the programs and activities proposed 
                to be developed, implemented, and administered under 
                the subgrant;
                    ``(B) describe how the eligible entity will use the 
                subgrant funds to satisfy the requirement in subsection 
                (b)(2);
                    ``(C) describe how the eligible entity will hold 
                elementary schools and secondary schools accountable 
                for--
                            ``(i) meeting such achievement goals; and
                            ``(ii) making adequate yearly progress with 
                        limited English proficient students in the core 
                        academic subjects as described in section 
                        1111(b)(2); and
                    ``(D) describe how the eligible entity will use the 
                disaggregated results of the student assessments 
                required under section 1111(b)(4), and other measures 
                or indicators available to the entity, to review 
                annually the progress of each school served by the 
                agency under this part and under title I to determine 
                whether the schools are making the adequate yearly 
                progress necessary to ensure that limited English 
                proficient students attending the schools will meet the 
                State's proficient level of performance on the State 
                assessment described in section 1111(b)(4) within 10 
                years after the date of enactment of the No Child Left 
                Behind Act of 2001.
            ``(3) Requirements for approval.--The application shall 
        contain assurances that--
                    ``(A) the eligible entity will use qualified 
                personnel who have appropriate training and 
                professional credentials in teaching English to 
                children who are limited English proficient, and who 
                are proficient in English, including written and oral 
                communication skills;
                    ``(B) if the eligible entity includes 1 or more 
                local educational agencies, each such agency is 
                complying with section 3103(b) prior to, and 
                throughout, each school year;
                    ``(C) the eligible entity annually will assess the 
                English proficiency of all children with limited 
                English proficiency participating in programs funded 
                under this subpart;
                    ``(D) the eligible entity has based its proposal on 
                scientifically based reading research and sound 
                research and theory on teaching limited English 
                proficient children;
                    ``(E) the eligible entity has described in the 
                application how students enrolled in the programs and 
                activities proposed in the application will be fluent 
                in English after 3 academic years of enrollment;
                    ``(F) the eligible entity will ensure that programs 
                will enable children to speak, read, write, and 
                comprehend the English language and meet challenging 
                State content and challenging State achievement 
                standards; and
                    ``(G) the eligible entity is not in violation of 
                any State law, including State constitutional law, 
                regarding the education of limited English proficient 
                children, consistent with sections 3134 and 3135.
            ``(4) Quality.--In determining which applications to select 
        for approval, a State shall consider the quality of each 
        application and ensure that it is of sufficient size and scope 
        to meet the purposes of this subpart.

``SEC. 3110. DISTRIBUTION OF GRANTS TO ELIGIBLE ENTITIES.

    ``(a) In General.--Subject to subsection (b), a State receiving a 
grant under this subpart shall distribute subgrants to eligible 
entities on a competitive basis.
    ``(b) Priority.--In distributing subgrants to eligible entities, a 
State receiving a grant under this subpart shall give priority to an 
eligible entity that is, or includes as a participant, a local 
educational agency that--
            ``(1) enrolls a large percentage or a large number of 
        children who are limited English proficient, as compared to the 
        enrollments of other local educational agencies that are 
        seeking a subgrant; and
            ``(2) is in need of assistance in order to address a need 
        brought about through a significant increase, as compared to 
        the previous 2 years, in the percentage or number of children 
        who are limited English proficient in a school or in the 
        agency, including schools and agencies in areas with low 
        concentrations of such children.

                      ``Subpart 2--Administration

``SEC. 3121. EVALUATIONS.

    ``(a) In General.--Each eligible entity that receives a subgrant 
from a State under subpart 1 shall provide the State, at the conclusion 
of every second fiscal year during which the subgrant is received, with 
an evaluation, in a form prescribed by the State, of--
            ``(1) the programs and activities conducted by the entity 
        with funds received under subpart 1 during the 2 immediately 
        preceding fiscal years;
            ``(2) the progress made by students in learning the English 
        language and meeting challenging State content standards and 
        challenging State student achievement standards;
            ``(3) the number and percentage of students in the programs 
        and activities attaining English language proficiency by the 
        end of each school year, as determined by a valid and reliable 
        assessment of English proficiency; and
            ``(4) the progress made by students in meeting challenging 
        State content and challenging State achievement standards for 
        each of the 2 years after such students are no longer receiving 
        services under this part.
    ``(b) Use of Evaluation.--An evaluation provided by an eligible 
entity under subsection (a) shall be used by the entity and the State--
            ``(1) for improvement of programs and activities;
            ``(2) to determine the effectiveness of programs and 
        activities in assisting children who are limited English 
        proficient to attain English proficiency (as measured 
        consistent with subsection (d)) and meet challenging State 
        content standards and challenging State student achievement 
        standards; and
            ``(3) in determining whether or not to continue funding for 
        specific programs or projects.
    ``(c) Evaluation Components.--An evaluation provided by an eligible 
entity under subsection (a) shall include--
            ``(1) an evaluation of whether students enrolling in a 
        program or activity conducted by the entity with funds received 
        under subpart 1--
                    ``(A) have attained English proficiency and are 
                meeting challenging State content standards and 
                challenging State student achievement standards; and
                    ``(B) have achieved a working knowledge of the 
                English language that is sufficient to permit them to 
                perform, in English, in a classroom that is not 
                tailored to limited English proficient children; and
            ``(2) such other information as the State may require.
    ``(d) Evaluation Measures.--In prescribing the form of an 
evaluation provided by an entity under subsection (a), a State shall 
approve evaluation measures, as applicable, for use under subsection 
(c) that are designed to assess--
            ``(1) oral language proficiency in kindergarten;
            ``(2) oral language proficiency, including speaking and 
        listening skills, in first grade;
            ``(3) both oral language proficiency, including speaking 
        and listening skills, and reading and writing proficiency in 
        grades 2 and higher; and
            ``(4) attainment of challenging State achievement 
        standards.

``SEC. 3122. REPORTING REQUIREMENTS.

    ``(a) States.--Based upon the evaluations provided to a State under 
section 3121, each State that receives a grant under subpart 1 shall 
prepare and submit every second year to the Secretary a report on 
programs and activities undertaken by the State under such subpart and 
the effectiveness of such programs and activities in improving the 
education provided to children who are limited English proficient.
    ``(b) Secretary.--Every second year, the Secretary shall prepare 
and submit to the Committee on Education and the Workforce of the House 
of Representatives and the Committee on Health, Education, Labor, and 
Pensions of the Senate a report on--
            ``(1) programs and activities undertaken by States under 
        subpart 1 and the effectiveness of such programs and activities 
        in improving the education provided to children who are limited 
        English proficient;
            ``(2) the types of instructional programs used under 
        subpart 1 to teach limited English proficient children;
            ``(3) the number of programs or projects, if any, that were 
        terminated because they were not able to reach program goals; 
        and
            ``(4) other information gathered from the reports submitted 
        under subsection (a).

``SEC. 3123. COORDINATION WITH RELATED PROGRAMS.

    ``In order to maximize Federal efforts aimed at serving the 
educational needs of children and youth of limited English proficiency, 
the Secretary shall coordinate and ensure close cooperation with other 
programs serving language-minority and limited English proficient 
students that are administered by the Department and other agencies.

                    ``Subpart 3--General Provisions

``SEC. 3131. DEFINITIONS.

    ``For purposes of this part:
            ``(1) Children and youth.--The term `children and youth' 
        means individuals aged 3 through 21.
            ``(2) Community-based organization.--The term `community-
        based organization' means a private nonprofit organization of 
        demonstrated effectiveness or Indian tribe or tribally 
        sanctioned educational authority which is representative of a 
        community or significant segments of a community and which 
        provides educational or related services to individuals in the 
        community. Such term includes a Native Hawaiian or Native 
        American Pacific Islander native language educational 
        organization.
            ``(3) Eligible entity.--The term `eligible entity' means--
                    ``(A) 1 or more local educational agencies; or
                    ``(B) 1 or more local educational agencies in 
                collaboration with an institution of higher education, 
                community-based organization, or State educational 
                agency.
            ``(4) Native hawaiian or native american pacific islander 
        native language educational organization.--The term `Native 
        Hawaiian or Native American Pacific Islander native language 
        educational organization' means a nonprofit organization with a 
        majority of its governing board and employees consisting of 
        fluent speakers of the traditional Native American languages 
        used in their educational programs and with not less than 5 
        years successful experience in providing educational services 
        in traditional Native American languages.
            ``(5) Native language.--The term `native language', when 
        used with reference to an individual who is limited English 
        proficient, means the language normally used by such 
        individual.
            ``(6) Specially qualified agency.--The term `specially 
        qualified agency', when used with respect to a fiscal year, 
        means an eligible entity located in a State that, for that 
        year--
                    ``(A) does not submit to the Secretary an 
                application under sections 3106(a) and 3108; or
                    ``(B) submits an application (or any modification 
                to an application) that the Secretary, after reasonable 
                notice and opportunity for a hearing, determines does 
                not satisfy the requirements of subpart 1.
            ``(7) Tribally sanctioned educational authority.--The term 
        `tribally sanctioned educational authority' means--
                    ``(A) any department or division of education 
                operating within the administrative structure of the 
                duly constituted governing body of an Indian tribe; and
                    ``(B) any nonprofit institution or organization 
                that is--
                            ``(i) chartered by the governing body of an 
                        Indian tribe to operate a school described in 
                        section 3107(a) or otherwise to oversee the 
                        delivery of educational services to members of 
                        the tribe; and
                            ``(ii) approved by the Secretary for the 
                        purpose of carrying out programs under subpart 
                        1 for individuals served by a school described 
                        in section 3107(a).

``SEC. 3132. RULES OF CONSTRUCTION.

    ``Nothing in subpart 1 shall be construed--
            ``(1) to prohibit a local educational agency from serving 
        limited English proficient children and youth simultaneously 
        with students with similar educational needs, in the same 
        educational settings where appropriate;
            ``(2) to require a State or a local educational agency to 
        establish, continue, or eliminate any particular type of 
        instructional program for limited English proficient children; 
        or
            ``(3) to limit the preservation or use of Native American 
        languages as defined in the Native American Languages Act of 
        1990.

``SEC. 3133. LIMITATION ON FEDERAL REGULATIONS.

    ``The Secretary shall issue regulations under this part only to the 
extent that such regulations are necessary to ensure compliance with 
the specific requirements of this part.

``SEC. 3134. LEGAL AUTHORITY UNDER STATE LAW.

    ``Nothing in this part shall be construed to negate or supersede 
the legal authority, under State law, of any State agency, State 
entity, or State public official over programs that are under the 
jurisdiction of the State agency, entity, or official.

``SEC. 3135. CIVIL RIGHTS.

    ``Nothing in this part shall be construed in a manner inconsistent 
with any Federal law guaranteeing a civil right.

``SEC. 3136. PROGRAMS FOR NATIVE AMERICANS AND PUERTO RICO.

    ``Programs authorized under subpart 1 that serve Native American 
children, Native Pacific Island children, and children in the 
Commonwealth of Puerto Rico, notwithstanding any other provision of 
subpart 1, may include programs of instruction, teacher training, 
curriculum development, evaluation, and testing designed for Native 
American children learning and studying Native American languages and 
children of limited Spanish proficiency, except that a primary outcome 
of programs serving such children shall be increased English 
proficiency among such children.''.

SEC. 302. CONFORMING AMENDMENT TO DEPARTMENT OF EDUCATION ORGANIZATION 
              ACT.

    (a) In General.--The Department of Education Organization Act is 
amended by striking ``Office of Bilingual Education and Minority 
Languages Affairs'' each place such term appears in the text and 
inserting ``Office of Educational Services for Limited English 
Proficient Children''.
    (b) Clerical Amendments.--
            (1) Section 209.--The section heading for section 209 of 
        the Department of Education Organization Act is amended to read 
        as follows:

    ``office of educational services for limited english proficient 
                              children''.

            (2) Section 216.--The section heading for section 216 of 
        the Department of Education Organization Act is amended to read 
        as follows:

``SEC. 216. OFFICE OF EDUCATIONAL SERVICES FOR LIMITED ENGLISH 
              PROFICIENT CHILDREN.''.

            (3) Table of contents.--
                    (A) Section 209.--The table of contents of the 
                Department of Education Organization Act is amended by 
                amending the item relating to section 209 to read as 
                follows:

``Sec. 209. Office of Educational Services for Limited English 
                            Proficient Children.''.
                    (B) Section 216.--The table of contents of the 
                Department of Education Organization Act is amended by 
                amending the item relating to section 216 to read as 
                follows:

``Sec. 216. Office of Educational Services for Limited English 
                            Proficient Children.''.

               PART B--INDIAN AND ALASKA NATIVE EDUCATION

SEC. 311. ELEMENTARY AND SECONDARY EDUCATION ACT OF 1965.

    (a) In General.--Title III (as amended by section 301 of this Act) 
is further amended by adding at the end the following new part:

              ``PART B--INDIAN AND ALASKA NATIVE EDUCATION

                     ``Subpart 1--Indian Education

``SEC. 3201. FINDINGS.

    ``Congress finds that--
            ``(1) the Federal Government has a special responsibility 
        to ensure that educational programs for all American Indian and 
        Alaska Native children and adults--
                    ``(A) are based on high-quality, internationally 
                competitive content standards and student performance 
                standards and build on Indian culture and the Indian 
                community;
                    ``(B) assist local educational agencies, Indian 
                tribes, and other entities and individuals in providing 
                Indian students the opportunity to achieve such 
                standards; and
                    ``(C) meet the unique educational and culturally 
                related academic needs of American Indian and Alaska 
                Native students;
            ``(2) since the date of the enactment of the initial Indian 
        Education Act in 1972, the level of involvement of Indian 
        parents in the planning, development, and implementation of 
        educational programs that affect such parents and their 
        children has increased significantly, and schools should 
        continue to foster such involvement;
            ``(3) although the number of Indian teachers, 
        administrators, and university professors has increased since 
        1972, teacher training programs are not recruiting, training, 
        or retraining a sufficient number of Indian individuals as 
        educators to meet the needs of a growing Indian student 
        population in elementary, secondary, vocational, adult, and 
        higher education;
            ``(4) the dropout rate for Indian students is unacceptably 
        high; 9 percent of Indian students who were eighth graders in 
        1988 had dropped out of school by 1990;
            ``(5) during the period from 1980 to 1990, the percentage 
        of Indian individuals living at or below the poverty level 
        increased from 24 percent to 31 percent, and the readiness of 
        Indian children to learn is hampered by the high incidence of 
        poverty, unemployment, and health problems among Indian 
        children and their families; and
            ``(6) research related specifically to the education of 
        Indian children and adults is very limited, and much of the 
        research is of poor quality or is focused on limited local or 
        regional issues.

``SEC. 3202. PURPOSE.

    ``(a) Purpose.--It is the purpose of this subpart to support the 
efforts of local educational agencies, Indian tribes and organizations, 
postsecondary institutions, and other entities to meet the unique 
educational and culturally related academic needs of American Indians 
and Alaska Natives, so that such students can achieve to the same 
challenging State performance standards expected of all other students.
    ``(b) Programs.--this subpart carries out the purpose described in 
subsection (a) by authorizing programs of direct assistance for--
            ``(1) meeting the unique educational and culturally related 
        academic needs of American Indians and Alaska Natives;
            ``(2) the education of Indian children and adults;
            ``(3) the training of Indian persons as educators and 
        counselors, and in other professions serving Indian people; and
            ``(4) research, evaluation, data collection, and technical 
        assistance.

       ``CHAPTER I--FORMULA GRANTS TO LOCAL EDUCATIONAL AGENCIES

``SEC. 3211. PURPOSE.

    ``It is the purpose of this chapter to support local educational 
agencies in their efforts to reform elementary and secondary school 
programs that serve Indian students in order to ensure that such 
programs--
            ``(1) are based on challenging State content standards and 
        State student performance standards that are used for all 
        students; and
            ``(2) are designed to assist Indian students in meeting 
        those standards and assist the Nation in reaching the National 
        Education Goals.

``SEC. 3212. GRANTS TO LOCAL EDUCATIONAL AGENCIES.

    ``(a) In General.--
            ``(1) Enrollment requirements.--A local educational agency 
        shall be eligible for a grant under this chapter for any fiscal 
        year if the number of Indian children eligible under section 
        3217 and who were enrolled in the schools of the agency, and to 
        whom the agency provided free public education, during the 
        preceding fiscal year--
                    ``(A) was at least 10; or
                    ``(B) constituted not less than 25 percent of the 
                total number of individuals enrolled in the schools of 
                such agency.
            ``(2) Exclusion.--The requirement of paragraph (1) shall 
        not apply in Alaska, California, or Oklahoma, or with respect 
        to any local educational agency located on, or in proximity to, 
        a reservation.
    ``(b) Indian Tribes.--
            ``(1) In general.--If a local educational agency that is 
        eligible for a grant under this chapter does not establish a 
        parent committee under section 3214(c)(4) for such grant, an 
        Indian tribe that represents not less than one-half of the 
        eligible Indian children who are served by such local 
        educational agency may apply for such grant.
            ``(2) Special rule.--The Secretary shall treat each Indian 
        tribe applying for a grant pursuant to paragraph (1) as if such 
        Indian tribe were a local educational agency for purposes of 
        this chapter, except that any such tribe is not subject to 
        section 3214(c)(4), section 3218(c), or section 3219.

``SEC. 3213. AMOUNT OF GRANTS.

    ``(a) Amount of Grant Awards.--
            ``(1) In general.--Except as provided in subsection (b) and 
        paragraph (2), the Secretary shall allocate to each local 
        educational agency which has an approved application under this 
        chapter an amount equal to the product of--
                    ``(A) the number of Indian children who are 
                eligible under section 3217 and served by such agency; 
                and
                    ``(B) the greater of--
                            ``(i) the average per pupil expenditure of 
                        the State in which such agency is located; or
                            ``(ii) 80 percent of the average per pupil 
                        expenditure in the United States.
            ``(2) Reduction.--The Secretary shall reduce the amount of 
        each allocation determined under paragraph (1) in accordance 
        with subsection (e).
    ``(b) Minimum Grant.--
            ``(1) In general.--Notwithstanding subsection (e), a local 
        educational agency or an Indian tribe (as authorized under 
        section 3212(b)) that is eligible for a grant under section 
        3212, and a school that is operated or supported by the Bureau 
        of Indian Affairs that is eligible for a grant under subsection 
        (d), that submits an application that is approved by the 
        Secretary, shall, subject to appropriations, receive a grant 
        under this chapter in an amount that is not less than $3,000.
            ``(2) Consortia.--Local educational agencies may form a 
        consortium for the purpose of obtaining grants under this 
        chapter.
            ``(3) Increase.--The Secretary may increase the minimum 
        grant under paragraph (1) to not more than $4,000 for all 
        grantees if the Secretary determines such increase is necessary 
        to ensure the quality of the programs provided.
    ``(c) Definition.--For the purpose of this section, the term 
`average per pupil expenditure of a State' means an amount equal to--
            ``(1) the sum of the aggregate current expenditures of all 
        the local educational agencies in the State, plus any direct 
        current expenditures by the State for the operation of such 
        agencies, without regard to the sources of funds from which 
        such local or State expenditures were made, during the second 
        fiscal year preceding the fiscal year for which the computation 
        is made; divided by
            ``(2) the aggregate number of children who were included in 
        average daily attendance for whom such agencies provided free 
        public education during such preceding fiscal year.
    ``(d) Schools Operated or Supported by the Bureau of Indian 
Affairs.--(1) Subject to subsection (e), in addition to the grants 
awarded under subsection (a), the Secretary shall allocate to the 
Secretary of the Interior an amount equal to the product of--
            ``(A) the total number of Indian children enrolled in 
        schools that are operated by--
                    ``(i) the Bureau of Indian Affairs; or
                    ``(ii) an Indian tribe, or an organization 
                controlled or sanctioned by an Indian tribal 
                government, for the children of that tribe under a 
                contract with, or grant from, the Department of the 
                Interior under the Indian Self-Determination Act or the 
                Tribally Controlled Schools Act of 1988; and
            ``(B) the greater of--
                    ``(i) the average per pupil expenditure of the 
                State in which the school is located; or
                    ``(ii) 80 percent of the average per pupil 
                expenditure in the United States.
    ``(2) Any school described in paragraph (1)(A) that wishes to 
receive an allocation under this chapter shall submit an application in 
accordance with section 3214, and shall otherwise be treated as a local 
educational agency for the purpose of this chapter, except that such 
school shall not be subject to section 3214(c)(4), section 3218(c), or 
section 3219.
    ``(e) Ratable Reductions.--If the sums appropriated for any fiscal 
year under section 3252(a) are insufficient to pay in full the amounts 
determined for local educational agencies under subsection (a)(1) and 
for the Secretary of the Interior under subsection (d), each of those 
amounts shall be ratably reduced.

``SEC. 3214. APPLICATIONS.

    ``(a) Application Required.--Each local educational agency that 
desires to receive a grant under this chapter shall submit an 
application to the Secretary at such time, in such manner, and 
containing such information as the Secretary may reasonably require.
    ``(b) Comprehensive Program Required.--Each application submitted 
under subsection (a) shall include a comprehensive program for meeting 
the needs of Indian children served by the local educational agency, 
including the language and cultural needs of the children, that--
            ``(1) provides programs and activities to meet the 
        culturally related academic needs of American Indian and Alaska 
        Native students;
            ``(2)(A) is consistent with State and local plans under 
        other provisions of this Act; and
            ``(B) includes academic content and student performance 
        goals for such children, and benchmarks for attaining such 
        goals, that are based on the challenging State standards under 
        title I;
            ``(3) explains how Federal, State, and local programs, 
        especially under title I, will meet the needs of such students;
            ``(4) demonstrates how funds made available under this 
        chapter will be used for activities described in section 3215;
            ``(5) describes the professional development opportunities 
        that will be provided, as needed, to ensure that--
                    ``(A) teachers and other school professionals who 
                are new to the Indian community are prepared to work 
                with Indian children; and
                    ``(B) all teachers who will be involved in programs 
                assisted under this chapter have been properly trained 
                to carry out such programs; and
            ``(6) describes how the local educational agency--
                    ``(A) will periodically assess the progress of all 
                Indian children enrolled in the schools of the local 
                educational agency, including Indian children who do 
                not participate in programs assisted under this 
                chapter, in meeting the goals described in paragraph 
                (2);
                    ``(B) will provide the results of each assessment 
                referred to in subparagraph (A) to--
                            ``(i) the committee of parents described in 
                        subsection (c)(4); and
                            ``(ii) the community served by the local 
                        educational agency; and
                    ``(C) is responding to findings of any previous 
                assessments that are similar to the assessments 
                described in subparagraph (A).
    ``(c) Assurances.--Each application submitted under subsection (a) 
shall include assurances that--
            ``(1) the local educational agency will use funds received 
        under this chapter only to supplement the level of funds that, 
        in the absence of the Federal funds made available under this 
        chapter, such agency would make available for the education of 
        Indian children, and not to supplant such funds;
            ``(2) the local educational agency will submit such reports 
        to the Secretary, in such form and containing such information, 
        as the Secretary may require to--
                    ``(A) carry out the functions of the Secretary 
                under this chapter; and
                    ``(B) determine the extent to which funds provided 
                to the local educational agency under this chapter are 
                effective in improving the educational achievement of 
                Indian students served by such agency;
            ``(3) the program for which assistance is sought--
                    ``(A) is based on a comprehensive local assessment 
                and prioritization of the unique educational and 
                culturally related academic needs of the American 
                Indian and Alaska Native students to whom the local 
                educational agency is providing an education;
                    ``(B) will use the best available talents and 
                resources, including individuals from the Indian 
                community; and
                    ``(C) was developed by such agency in open 
                consultation with parents of Indian children and 
                teachers, and, if appropriate, Indian students from 
                secondary schools, including public hearings held by 
                such agency to provide the individuals described in 
                this subparagraph a full opportunity to understand the 
                program and to offer recommendations regarding the 
                program; and
            ``(4) the local educational agency developed the program 
        with the participation and written approval of a committee--
                    ``(A) that is composed of, and selected by--
                            ``(i) parents of Indian children in the 
                        local educational agency's schools and 
                        teachers; and
                            ``(ii) if appropriate, Indian students 
                        attending secondary schools;
                    ``(B) a majority of whose members are parents of 
                Indian children;
                    ``(C) that sets forth such policies and procedures, 
                including policies and procedures relating to the 
                hiring of personnel, as will ensure that the program 
                for which assistance is sought will be operated and 
                evaluated in consultation with, and with the 
                involvement of, parents of the children, and 
                representatives of the area, to be served;
                    ``(D) with respect to an application describing a 
                schoolwide program in accordance with section 3215(c), 
                that has--
                            ``(i) reviewed in a timely fashion the 
                        program; and
                            ``(ii) determined that the program will not 
                        diminish the availability of culturally related 
                        activities for American Indian and Alaskan 
                        Native students; and
                    ``(E) that has adopted reasonable bylaws for the 
                conduct of the activities of the committee and abides 
                by such bylaws.

``SEC. 3215. AUTHORIZED SERVICES AND ACTIVITIES.

    ``(a) General Requirements.--Each local educational agency that 
receives a grant under this chapter shall use the grant funds, in a 
manner consistent with the purpose specified in section 3211, for 
services and activities that--
            ``(1) are designed to carry out the comprehensive program 
        of the local educational agency for Indian students, and 
        described in the application of the local educational agency 
        submitted to the Secretary under section 3214(b);
            ``(2) are designed with special regard for the language and 
        cultural needs of the Indian students; and
            ``(3) supplement and enrich the regular school program of 
        such agency.
    ``(b) Particular Activities.--The services and activities referred 
to in subsection (a) may include--
            ``(1) culturally related activities that support the 
        program described in the application submitted by the local 
        educational agency;
            ``(2) early childhood and family programs that emphasize 
        school readiness;
            ``(3) enrichment programs that focus on problem solving and 
        cognitive skills development and directly support the 
        attainment of challenging State content standards and State 
        student performance standards;
            ``(4) integrated educational services in combination with 
        other programs that meet the needs of Indian children and their 
        families;
            ``(5) career preparation activities to enable Indian 
        students to participate in programs such as the programs 
        supported by the Carl D. Perkins Vocational and Technical 
        Education Act of 1998, including programs for tech-prep, 
        mentoring, and apprenticeship;
            ``(6) activities to educate individuals concerning 
        substance abuse and to prevent substance abuse;
            ``(7) the acquisition of equipment, but only if the 
        acquisition of the equipment is essential to meet the purposes 
        described in section 3211; and
            ``(8) family literacy services.
    ``(c) Schoolwide Programs.--Notwithstanding any other provision of 
law, a local educational agency may use funds made available to such 
agency under this chapter to support a schoolwide program under section 
1114 if--
            ``(1) the committee composed of parents established 
        pursuant to section 3214(c)(4) approves the use of the funds 
        for the schoolwide program; and
            ``(2) the schoolwide program is consistent with the 
        purposes described in section 3211.
    ``(d) Limitation on Administrative Costs.--Not more than 5 percent 
of the funds provided to a grantee under this chapter for any fiscal 
year may be used for administrative purposes.

``SEC. 3216. INTEGRATION OF SERVICES AUTHORIZED.

    ``(a) Plan.--An entity receiving funds under this chapter may 
submit a plan to the Secretary for the integration of education and 
related services provided to Indian students.
    ``(b) Coordination of Programs.--Upon the receipt of an acceptable 
plan, the Secretary, in cooperation with each Federal agency providing 
grants for the provision of education and related services to the 
applicant, shall authorize the applicant to coordinate, in accordance 
with such plan, its federally funded education and related services 
programs, or portions thereof, serving Indian students in a manner that 
integrates the program services involved into a single, coordinated, 
comprehensive program and reduces administrative costs by consolidating 
administrative functions.
    ``(c) Programs Affected.--The funds that may be consolidated in a 
demonstration project under any such plan referred to in subsection (b) 
shall include funds for any Federal program exclusively serving Indian 
children or the funds reserved under any program to exclusively serve 
Indian children under which the applicant is eligible for receipt of 
funds under a statutory or administrative formula for the purposes of 
providing education and related services which would be used to serve 
Indian students.
    ``(d) Plan Requirements.--For a plan to be acceptable pursuant to 
subsection (b), it shall--
            ``(1) identify the programs or funding sources to be 
        consolidated;
            ``(2) be consistent with the purposes of this section 
        authorizing the services to be integrated in a demonstration 
        project;
            ``(3) describe a comprehensive strategy which identifies 
        the full range of potential educational opportunities and 
        related services to be provided to assist Indian students to 
        achieve the goals set forth in this chapter;
            ``(4) describe the way in which services are to be 
        integrated and delivered and the results expected from the 
        plan;
            ``(5) identify the projected expenditures under the plan in 
        a single budget;
            ``(6) identify the local, State, or tribal agency or 
        agencies to be involved in the delivery of the services 
        integrated under the plan;
            ``(7) identify any statutory provisions, regulations, 
        policies, or procedures that the applicant believes need to be 
        waived in order to implement its plan;
            ``(8) set forth measures of student achievement and 
        performance goals designed to be met within a specified period 
        of time; and
            ``(9) be approved by a parent committee formed in 
        accordance with section 3214(c)(4), if such a committee exists.
    ``(e) Plan Review.--Upon receipt of the plan from an eligible 
entity, the Secretary shall consult with the Secretary of each Federal 
department providing funds to be used to implement the plan, and with 
the entity submitting the plan. The parties so consulting shall 
identify any waivers of statutory requirements or of Federal 
departmental regulations, policies, or procedures necessary to enable 
the applicant to implement its plan. Notwithstanding any other 
provision of law, the Secretary of the affected department or 
departments shall have the authority to waive any regulation, policy, 
or procedure promulgated by that department that has been so identified 
by the applicant or department, unless the Secretary of the affected 
department determines that such a waiver is inconsistent with the 
intent of this chapter or those provisions of the statute from which 
the program involved derives its authority which are specifically 
applicable to Indian students.
    ``(f) Plan Approval.--Within 90 days after the receipt of an 
applicant's plan by the Secretary, the Secretary shall inform the 
applicant, in writing, of the Secretary's approval or disapproval of 
the plan. If the plan is disapproved, the applicant shall be informed, 
in writing, of the reasons for the disapproval and shall be given an 
opportunity to amend its plan or to petition the Secretary to 
reconsider such disapproval.
    ``(g) Responsibilities of Department of Education.--Not later than 
180 days after the date of the enactment of the No Child Left Behind 
Act of 2001, the Secretary of Education, the Secretary of the Interior, 
and the head of any other Federal department or agency identified by 
the Secretary of Education, shall enter into an interdepartmental 
memorandum of agreement providing for the implementation of the 
demonstration projects authorized under this section. The lead agency 
head for a demonstration program under this section shall be--
            ``(1) the Secretary of the Interior, in the case of 
        applicant meeting the definition of contract or grant school 
        under title XI of the Education Amendments of 1978; or
            ``(2) the Secretary of Education, in the case of any other 
        applicant.
    ``(h) Responsibilities of Lead Agency.--The responsibilities of the 
lead agency shall include--
            ``(1) the use of a single report format related to the plan 
        for the individual project which shall be used by an eligible 
        entity to report on the activities undertaken under the 
        project;
            ``(2) the use of a single report format related to the 
        projected expenditures for the individual project which shall 
        be used by an eligible entity to report on all project 
        expenditures;
            ``(3) the development of a single system of Federal 
        oversight for the project, which shall be implemented by the 
        lead agency; and
            ``(4) the provision of technical assistance to an eligible 
        entity appropriate to the project, except that an eligible 
        entity shall have the authority to accept or reject the plan 
        for providing such technical assistance and the technical 
        assistance provider.
    ``(i) Report Requirements.--A single report format shall be 
developed by the Secretary, consistent with the requirements of this 
section. Such report format, together with records maintained on the 
consolidated program at the local level, shall contain such information 
as will allow a determination that the eligible entity has complied 
with the requirements incorporated in its approved plan, including the 
demonstration of student achievement, and will provide assurances to 
each Secretary that the eligible entity has complied with all directly 
applicable statutory requirements and with those directly applicable 
regulatory requirements which have not been waived.
    ``(j) No Reduction in Amounts.--In no case shall the amount of 
Federal funds available to an eligible entity involved in any 
demonstration project be reduced as a result of the enactment of this 
section.
    ``(k) Interagency Fund Transfers Authorized.--The Secretary is 
authorized to take such action as may be necessary to provide for an 
interagency transfer of funds otherwise available to an eligible entity 
in order to further the purposes of this section.
    ``(l) Administration of Funds.--
            ``(1) In general.--Program funds shall be administered in 
        such a manner as to allow for a determination that funds from 
        specific a program or programs are spent on allowable 
        activities authorized under such program, except that the 
        eligible entity shall determine the proportion of the funds 
        granted which shall be allocated to such program.
            ``(2) Separate records not required.--Nothing in this 
        section shall be construed as requiring the eligible entity to 
        maintain separate records tracing any services or activities 
        conducted under its approved plan to the individual programs 
        under which funds were authorized, nor shall the eligible 
        entity be required to allocate expenditures among such 
        individual programs.
    ``(m) Overage.--All administrative costs may be commingled and 
participating entities shall be entitled to the full amount of such 
costs (under each program or department's regulations), and no overage 
shall be counted for Federal audit purposes, provided that the overage 
is used for the purposes provided for under this section.
    ``(n) Fiscal Accountability.--Nothing in this subpart shall be 
construed so as to interfere with the ability of the Secretary or the 
lead agency to fulfill the responsibilities for the safeguarding of 
Federal funds pursuant to the Single Audit Act of 1984.
    ``(o) Report on Statutory Obstacles to Program Integration.--
            ``(1) Preliminary report.--Not later than 2 years after the 
        date of the enactment of the No Child Left Behind Act of 2001, 
        the Secretary of Education shall submit a preliminary report to 
        the Committee on Health, Education, Labor, and Pensions of the 
        Senate and the Committee on Education and the Workforce of the 
        House of Representatives on the status of the implementation of 
        the demonstration program authorized under this section.
            ``(2) Final report.--Not later than 5 years after the date 
        of the enactment of the No Child Left Behind Act of 2001, the 
        Secretary of Education shall submit a report to the Committee 
        on Health, Education, Labor, and Pensions of the Senate and the 
        Committee on Education and the Workforce of the House of 
        Representatives on the results of the implementation of the 
        demonstration program authorized under this section. Such 
        report shall identify statutory barriers to the ability of 
        participants to integrate more effectively their education and 
        related services to Indian students in a manner consistent with 
        the purposes of this section.
    ``(p) Definitions.--For the purposes of this section, the term 
`Secretary' means--
            ``(1) the Secretary of the Interior, in the case of 
        applicant meeting the definition of contract or grant school 
        under title XI of the Education Amendments of 1978; or
            ``(2) the Secretary of Education, in the case of any other 
        applicant.

``SEC. 3217. STUDENT ELIGIBILITY FORMS.

    ``(a) In General.--The Secretary shall require that, as part of an 
application for a grant under this chapter, each applicant shall 
maintain a file, with respect to each Indian child for whom the local 
educational agency provides a free public education, that contains a 
form that sets forth information establishing the status of the child 
as an Indian child eligible for assistance under this chapter and that 
otherwise meets the requirements of subsection (b).
    ``(b) Forms.--
            ``(1) In general.--The form described in subsection (a) 
        shall include--
                    ``(A) either--
                            ``(i)(I) the name of the tribe or band of 
                        Indians (as described in section 3251(3)) with 
                        respect to which the child claims membership;
                            ``(II) the enrollment number establishing 
                        the membership of the child (if readily 
                        available); and
                            ``(III) the name and address of the 
                        organization that maintains updated and 
                        accurate membership data for such tribe or band 
                        of Indians; or
                            ``(ii) if the child is not a member of a 
                        tribe or band of Indians, the name, the 
                        enrollment number (if readily available), and 
                        the organization (and address thereof) 
                        responsible for maintaining updated and 
                        accurate membership rolls of the tribe of any 
                        parent or grandparent of the child from whom 
                        the child claims eligibility;
                    ``(B) a statement of whether the tribe or band of 
                Indians with respect to which the child, parent, or 
                grandparent of the child claims membership is federally 
                recognized;
                    ``(C) the name and address of the parent or legal 
                guardian of the child;
                    ``(D) a signature of the parent or legal guardian 
                of the child that verifies the accuracy of the 
                information supplied; and
                    ``(E) any other information that the Secretary 
                considers necessary to provide an accurate program 
                profile.
            ``(2) Minimum information.--In order for a child to be 
        eligible to be counted for the purpose of computing the amount 
        of a grant award made under section 3213, an eligibility form 
        prepared pursuant to this section for a child shall include--
                    ``(A) the name of the child;
                    ``(B) the name of the tribe or band of Indians (as 
                described in section 3251(3)) with respect to which the 
                child claims eligibility; and
                    ``(C) the dated signature of the parent or guardian 
                of the child.
            ``(3) Failure.--The failure of an applicant to furnish any 
        information described in this subsection other than the 
        information described in paragraph (2) with respect to any 
        child shall have no bearing on the determination of whether the 
        child is an eligible Indian child for the purposes of 
        determining the amount of a grant award made under section 
        3213.
    ``(c) Statutory Construction.--Nothing in this section shall be 
construed to affect a definition contained in section 3251.
    ``(d) Forms and Standards of Proof.--The forms and the standards of 
proof (including the standard of good faith compliance) that were in 
use during the 1985-1986 academic year to establish the eligibility of 
a child for entitlement under the Indian Elementary and Secondary 
School Assistance Act shall be the forms and standards of proof used--
            ``(1) to establish such eligibility; and
            ``(2) to meet the requirements of subsection (a).
    ``(e) Documentation.--For purposes of determining whether a child 
is eligible to be counted for the purpose of computing the amount of a 
grant under section 3213, the membership of the child, or any parent or 
grandparent of the child, in a tribe or band of Indians may be 
established by proof other than an enrollment number, notwithstanding 
the availability of an enrollment number for a member of such tribe or 
band. Nothing in subsection (b) shall be construed to require the 
furnishing of an enrollment number.
    ``(f) Monitoring and Evaluation Review.--
            ``(1) In general.--(A) For each fiscal year, in order to 
        provide such information as is necessary to carry out the 
        responsibility of the Secretary to provide technical assistance 
        under this chapter, the Secretary shall conduct a monitoring 
        and evaluation review of a sampling of the recipients of grants 
        under this chapter. The sampling conducted under this 
        subparagraph shall take into account the size of the local 
        educational agency and the geographic location of such agency.
            ``(B) A local educational agency may not be held liable to 
        the United States or be subject to any penalty, by reason of 
        the findings of an audit that relates to the date of 
        completion, or the date of submission, of any forms used to 
        establish, before April 28, 1988, the eligibility of a child 
        for entitlement under the Indian Elementary and Secondary 
        School Assistance Act.
            ``(2) False information.--Any local educational agency that 
        provides false information in an application for a grant under 
        this chapter shall--
                    ``(A) be ineligible to apply for any other grant 
                under this subpart; and
                    ``(B) be liable to the United States for any funds 
                that have not been expended.
            ``(3) Excluded children.--A student who provides false 
        information for the form required under subsection (a) shall 
        not be counted for the purpose of computing the amount of a 
        grant under section 3213.
    ``(g) Tribal Grant and Contract Schools.--Notwithstanding any other 
provision of this section, in awarding funds under this chapter to a 
tribal school that receives a grant or contract from the Bureau of 
Indian Affairs, the Secretary shall use only one of the following, as 
selected by the school:
            ``(1) A count of the number of students in those schools 
        certified by the Bureau.
            ``(2) A count of the number of students for whom the school 
        has eligibility forms that comply with this section.
    ``(h) Timing of Child Counts.--For purposes of determining the 
number of children to be counted in calculating the amount of a local 
educational agency's grant under this chapter (other than in the case 
described in subsection (g)(1)), the local educational agency shall--
            ``(1) establish a date on, or a period not longer than 31 
        consecutive days during which, the agency counts those 
        children, so long as that date or period occurs before the 
        deadline established by the Secretary for submitting an 
        application under section 3214; and
            ``(2) determine that each such child was enrolled, and 
        receiving a free public education, in a school of the agency on 
        that date or during that period, as the case may be.

``SEC. 3218. PAYMENTS.

    ``(a) In General.--Subject to subsections (b) and (c), the 
Secretary shall pay to each local educational agency that submits an 
application that is approved by the Secretary under this chapter the 
amount determined under section 3213. The Secretary shall notify the 
local educational agency of the amount of the payment not later than 
June 1 of the year for which the Secretary makes the payment.
    ``(b) Payments Taken Into Account by the State.--The Secretary may 
not make a grant under this chapter to a local educational agency for a 
fiscal year if, for such fiscal year, the State in which the local 
educational agency is located takes into consideration payments made 
under this chapter in determining the eligibility of the local 
educational agency for State aid, or the amount of the State aid, with 
respect to the free public education of children during such fiscal 
year or the preceding fiscal year.
    ``(c) Reduction of Payment for Failure To Maintain Fiscal Effort.--
            ``(1) In general.--The Secretary may not pay a local 
        educational agency the full amount of a grant award determined 
        under section 3213 for any fiscal year unless the State 
        educational agency notifies the Secretary, and the Secretary 
        determines that, with respect to the provision of free public 
        education by the local educational agency for the preceding 
        fiscal year, the combined fiscal effort of the local 
        educational agency and the State, computed on either a per 
        student or aggregate expenditure basis, was not less than 90 
        percent of the amount of the combined fiscal effort, computed 
        on the same basis, for the second preceding fiscal year.
            ``(2) Failure to maintain effort.--If, for any fiscal year, 
        the Secretary determines that a local educational agency failed 
        to maintain the fiscal effort of such agency at the level 
        specified in paragraph (1), the Secretary shall--
                    ``(A) reduce the amount of the grant that would 
                otherwise be made to such agency under this chapter in 
                the exact proportion of such agency's failure to 
                maintain its fiscal effort at such level; and
                    ``(B) not use the reduced amount of the agency's 
                expenditures for the preceding year to determine 
                compliance with paragraph (1) for any succeeding fiscal 
                year, but shall use the amount of expenditures that 
                would have been required to comply with paragraph (1).
            ``(3) Waiver.--(A) The Secretary may waive the requirement 
        of paragraph (1), for not more than 1 year at a time, if the 
        Secretary determines that the failure to comply with such 
        requirement is due to exceptional or uncontrollable 
        circumstances, such as a natural disaster or a precipitous and 
        unforeseen decline in the agency's financial resources.
            ``(B) The Secretary shall not use the reduced amount of 
        such agency's expenditures for the fiscal year preceding the 
        fiscal year for which a waiver is granted to determine 
        compliance with paragraph (1) for any succeeding fiscal year, 
        but shall use the amount of expenditures that would have been 
        required to comply with paragraph (1) in the absence of the 
        waiver.
    ``(d) Reallocations.--The Secretary may reallocate, in a manner 
that the Secretary determines will best carry out the purpose of this 
chapter, any amounts that--
            ``(1) based on estimates made by local educational agencies 
        or other information, the Secretary determines will not be 
        needed by such agencies to carry out approved programs under 
        this chapter; or
            ``(2) otherwise become available for reallocation under 
        this chapter.

``SEC. 3219. STATE EDUCATIONAL AGENCY REVIEW.

    ``Before submitting an application to the Secretary under section 
3214, a local educational agency shall submit the application to the 
State educational agency, which may comment on such application. If the 
State educational agency comments on the application, it shall comment 
on all applications submitted by local educational agencies in the 
State and shall provide those comments to the respective local 
educational agencies, with an opportunity to respond.

  ``CHAPTER II--SPECIAL PROGRAMS AND PROJECTS TO IMPROVE EDUCATIONAL 
                   OPPORTUNITIES FOR INDIAN CHILDREN

``SEC. 3221. IMPROVEMENT OF EDUCATIONAL OPPORTUNITIES FOR INDIAN 
              CHILDREN.

    ``(a) Purpose.--
            ``(1) In general.--It is the purpose of this section to 
        support projects to develop, test, and demonstrate the 
        effectiveness of services and programs to improve educational 
        opportunities and achievement of Indian children.
            ``(2) Coordination.--The Secretary shall take such actions 
        as are necessary to achieve the coordination of activities 
        assisted under this chapter with--
                    ``(A) other programs funded under this Act; and
                    ``(B) other Federal programs operated for the 
                benefit of American Indian and Alaska Native children.
    ``(b) Eligible Entities.--For the purpose of this section, the term 
`eligible entity' means a State educational agency, local educational 
agency, Indian tribe, Indian organization, federally supported 
elementary and secondary school for Indian students, Indian 
institution, including an Indian institution of higher education, or a 
consortium of such institutions.
    ``(c) Grants Authorized.--
            ``(1) In general.--The Secretary shall award grants to 
        eligible entities to enable such entities to carry out 
        activities that meet the purpose specified in subsection 
        (a)(1), including--
                    ``(A) innovative programs related to the 
                educational needs of educationally disadvantaged 
                children;
                    ``(B) educational services that are not available 
                to such children in sufficient quantity or quality, 
                including remedial instruction, to raise the 
                achievement of Indian children in one or more of the 
                core academic subjects of English, mathematics, 
                science, foreign languages, art, history, and 
                geography;
                    ``(C) bilingual and bicultural programs and 
                projects;
                    ``(D) special health and nutrition services, and 
                other related activities, that address the unique 
                health, social, and psychological problems of Indian 
                children;
                    ``(E) special compensatory and other programs and 
                projects designed to assist and encourage Indian 
                children to enter, remain in, or reenter school, and to 
                increase the rate of secondary school graduation;
                    ``(F) comprehensive guidance, counseling, and 
                testing services;
                    ``(G) early childhood and kindergarten programs, 
                including family-based preschool programs that 
                emphasize school readiness and parental skills, and the 
                provision of services to Indian children with 
                disabilities;
                    ``(H) partnership projects between local 
                educational agencies and institutions of higher 
                education that allow secondary school students to 
                enroll in courses at the postsecondary level to aid 
                such students in the transition from secondary school 
                to postsecondary education;
                    ``(I) partnership projects between schools and 
                local businesses for career preparation programs 
                designed to provide Indian youth with the knowledge and 
                skills such youth need to make an effective transition 
                from school to a high-skill, high-wage career;
                    ``(J) programs designed to encourage and assist 
                Indian students to work toward, and gain entrance into, 
                an institution of higher education;
                    ``(K) family literacy services; or
                    ``(L) other services that meet the purpose 
                described in subsection (a)(1).
            ``(2) Professional development.--Professional development 
        of teaching professionals and paraprofessional may be a part of 
        any program assisted under this section.
    ``(d) Grant Requirements and Applications.--
            ``(1) Grant requirements.--(A) The Secretary may make 
        multiyear grants under this section for the planning, 
        development, pilot operation, or demonstration of any activity 
        described in subsection (c) for a period not to exceed 5 years.
            ``(B) In making multiyear grants under this section, the 
        Secretary shall give priority to applications that present a 
        plan for combining two or more of the activities described in 
        subsection (c) over a period of more than 1 year.
            ``(C) The Secretary shall make a grant payment to an 
        eligible entity after the initial year of the multiyear grant 
        only if the Secretary determines that the eligible entity has 
        made substantial progress in carrying out the activities 
        assisted under the grant in accordance with the application 
        submitted under paragraph (2) and any subsequent modifications 
        to such application.
            ``(D)(i) In addition to awarding the multiyear grants 
        described in subparagraph (A), the Secretary may award grants 
        to eligible entities for the dissemination of exemplary 
        materials or programs assisted under this section.
            ``(ii) The Secretary may award a dissemination grant under 
        this subparagraph if, prior to awarding the grant, the 
        Secretary determines that the material or program to be 
        disseminated has been adequately reviewed and has 
        demonstrated--
                    ``(I) educational merit; and
                    ``(II) the ability to be replicated.
            ``(2) Application.--(A) Any eligible entity that desires to 
        receive a grant under this section shall submit an application 
        to the Secretary at such time and in such manner as the 
        Secretary may require.
            ``(B) Each application submitted to the Secretary under 
        subparagraph (A), other than an application for a dissemination 
        grant under paragraph (1)(D), shall contain--
                    ``(i) a description of how parents of Indian 
                children and representatives of Indian tribes have 
                been, and will be, involved in developing and 
                implementing the activities for which assistance is 
                sought;
                    ``(ii) assurances that the applicant will 
                participate, at the request of the Secretary, in any 
                national evaluation of activities assisted under this 
                section;
                    ``(iii) information demonstrating that the proposed 
                program is either a research-based program (which may 
                be a research-based program that has been modified to 
                be culturally appropriate for the students who will be 
                served);
                    ``(iv) a description of how the applicant will 
                incorporate the proposed services into the ongoing 
                school program once the grant period is over; and
                    ``(v) such other assurances and information as the 
                Secretary may reasonably require.
    ``(e) Administrative Costs.--Not more than 5 percent of the funds 
provided to a grantee under this chapter for any fiscal year may be 
used for administrative purposes.

``SEC. 3222. PROFESSIONAL DEVELOPMENT FOR TEACHERS AND EDUCATION 
              PROFESSIONALS.

    ``(a) Purposes.--The purposes of this section are--
            ``(1) to increase the number of qualified Indian 
        individuals in teaching or other education professions that 
        serve Indian people;
            ``(2) to provide training to qualified Indian individuals 
        to enable such individuals to become teachers, administrators, 
        teacher aides, social workers, and ancillary educational 
        personnel; and
            ``(3) to improve the skills of qualified Indian individuals 
        who serve in the capacities described in paragraph (2).
    ``(b) Eligible Entities.--For the purpose of this section, the term 
`eligible entity' means--
            ``(1) an institution of higher education, including an 
        Indian institution of higher education;
            ``(2) a State or local educational agency, in consortium 
        with an institution of higher education; and
            ``(3) an Indian tribe or organization, in consortium with 
        an institution of higher education.
    ``(c) Program Authorized.--The Secretary is authorized to award 
grants to eligible entities having applications approved under this 
section to enable such entities to carry out the activities described 
in subsection (d).
    ``(d) Authorized Activities.--
            ``(1) In general.--Grant funds under this section shall be 
        used to provide support and training for Indian individuals in 
        a manner consistent with the purposes of this section. Such 
        activities may include but are not limited to, continuing 
        programs, symposia, workshops, conferences, and direct 
        financial support.
            ``(2) Special rules.--(A) For education personnel, the 
        training received pursuant to a grant under this section may be 
        inservice or preservice training.
            ``(B) For individuals who are being trained to enter any 
        field other than teaching, the training received pursuant to a 
        grant under this section shall be in a program that results in 
        a graduate degree.
    ``(e) Application.--Each eligible entity desiring a grant under 
this section shall submit an application to the Secretary at such time, 
in such manner and accompanied by such information, as the Secretary 
may reasonably require.
    ``(f) Special Rule.--In making grants under this section, the 
Secretary--
            ``(1) shall consider the prior performance of the eligible 
        entity; and
            ``(2) may not limit eligibility to receive a grant under 
        this section on the basis of--
                    ``(A) the number of previous grants the Secretary 
                has awarded such entity; or
                    ``(B) the length of any period during which such 
                entity received such grants.
    ``(g) Grant Period.--Each grant under this section shall be awarded 
for a period of not more than 5 years.
    ``(h) Service Obligation.--
            ``(1) In general.--The Secretary shall require, by 
        regulation, that an individual who receives training pursuant 
        to a grant made under this section--
                    ``(A) perform work--
                            ``(i) related to the training received 
                        under this section; and
                            ``(ii) that benefits Indian people; or
                    ``(B) repay all or a prorated part of the 
                assistance received.
            ``(2) Reporting.--The Secretary shall establish, by 
        regulation, a reporting procedure under which a grant recipient 
        under this section shall, not later than 12 months after the 
        date of completion of the training, and periodically 
        thereafter, provide information concerning the compliance of 
        such recipient with the work requirement under paragraph (1).

              ``CHAPTER III--NATIONAL RESEARCH ACTIVITIES

``SEC. 3231. NATIONAL ACTIVITIES.

    ``(a) Authorized Activities.--The Secretary may use funds made 
available under section 3252(b) for each fiscal year to--
            ``(1) conduct research related to effective approaches for 
        the education of Indian children and adults;
            ``(2) evaluate federally assisted education programs from 
        which Indian children and adults may benefit;
            ``(3) collect and analyze data on the educational status 
        and needs of Indians; and
            ``(4) carry out other activities that are consistent with 
        the purpose of this subpart.
    ``(b) Eligibility.--The Secretary may carry out any of the 
activities described in subsection (a) directly or through grants to, 
or contracts or cooperative agreements with Indian tribes, Indian 
organizations, State educational agencies, local educational agencies, 
institutions of higher education, including Indian institutions of 
higher education, and other public and private agencies and 
institutions.
    ``(c) Coordination.--Research activities supported under this 
section--
            ``(1) shall be carried out in consultation with the Office 
        of Educational Research and Improvement to assure that such 
        activities are coordinated with and enhance the research and 
        development activities supported by the Office; and
            ``(2) may include collaborative research activities which 
        are jointly funded and carried out by the Office of Indian 
        Education Programs and the Office of Educational Research and 
        Improvement.

                  ``CHAPTER IV--FEDERAL ADMINISTRATION

``SEC. 3241. NATIONAL ADVISORY COUNCIL ON INDIAN EDUCATION.

    ``(a) Membership.--There is established a National Advisory Council 
on Indian Education (hereafter in this section referred to as the 
`Council'), which shall--
            ``(1) consist of 15 Indian members, who shall be appointed 
        by the President from lists of nominees furnished, from time-
        to-time, by Indian tribes and organizations; and
            ``(2) represent different geographic areas of the United 
        States.
    ``(b) Duties.--The Council shall--
            ``(1) advise the Secretary concerning the funding and 
        administration (including the development of regulations and 
        administrative policies and practices) of any program, 
        including any program established under this subpart--
                    ``(A) with respect to which the Secretary has 
                jurisdiction; and
                    ``(B)(i) that includes Indian children or adults as 
                participants; or
                    ``(ii) that may benefit Indian children or adults;
            ``(2) make recommendations to the Secretary for filling the 
        position of Director of Indian Education whenever a vacancy 
        occurs; and
            ``(3) submit to the Congress, not later than June 30 of 
        each year, a report on the activities of the Council, 
        including--
                    ``(A) any recommendations that the Council 
                considers appropriate for the improvement of Federal 
                education programs that include Indian children or 
                adults as participants, or that may benefit Indian 
                children or adults; and
                    ``(B) recommendations concerning the funding of any 
                program described in subparagraph (A).

``SEC. 3242. PEER REVIEW.

    ``The Secretary may use a peer review process to review 
applications submitted to the Secretary under chapter II or III.

``SEC. 3243. PREFERENCE FOR INDIAN APPLICANTS.

    ``In making grants under chapter II or III, the Secretary shall 
give a preference to Indian tribes, organizations, and institutions of 
higher education under any program with respect to which Indian tribes, 
organizations, and institutions are eligible to apply for grants.

``SEC. 3244. MINIMUM GRANT CRITERIA.

    ``The Secretary may not approve an application for a grant under 
subpart 2 unless the application is for a grant that is--
            ``(1) of sufficient size, scope, and quality to achieve the 
        purpose or objectives of such grant; and
            ``(2) based on relevant research findings.

       ``CHAPTER V--DEFINITIONS; AUTHORIZATIONS OF APPROPRIATIONS

``SEC. 3251. DEFINITIONS.

    ``For the purposes of this subpart:
            ``(1) Adult.--The term `adult' means an individual who--
                    ``(A) has attained the age of 16 years; or
                    ``(B) has attained an age that is greater than the 
                age of compulsory school attendance under an applicable 
                State law.
            ``(2) Free public education.--The term `free public 
        education' means education that is--
                    ``(A) provided at public expense, under public 
                supervision and direction, and without tuition charge; 
                and
                    ``(B) provided as elementary or secondary education 
                in the applicable State or to preschool children.
            ``(3) Indian.--The term `Indian' means an individual who 
        is--
                    ``(A) a member of an Indian tribe or band, as 
                membership is defined by the tribe or band, including--
                            ``(i) any tribe or band terminated since 
                        1940; and
                            ``(ii) any tribe or band recognized by the 
                        State in which the tribe or band resides;
                    ``(B) a descendant, in the first or second degree, 
                of an individual described in subparagraph (A);
                    ``(C) considered by the Secretary of the Interior 
                to be an Indian for any purpose;
                    ``(D) an Eskimo, Aleut, or other Alaska Native; or
                    ``(E) a member of an organized Indian group that 
                received a grant under the Indian Education Act of 1988 
                as it was in effect the day preceding the date of the 
                enactment of the Improving America's Schools Act of 
                1994.

``SEC. 3252. AUTHORIZATIONS OF APPROPRIATIONS.

    ``(a) Chapter I.--For the purpose of carrying out chapter I of this 
subpart, there are authorized to be appropriated $92,800,000 for fiscal 
year 2002, and such sums as may be necessary for each of fiscal years 
2003 through 2006.
    ``(b) Chapters II and III.--For the purpose of carrying out 
chapters II and III of this subpart, there are authorized to be 
appropriated $22,700,000 for fiscal year 2002, and such sums as may be 
necessary for each of the fiscal years 2003 through 2006.''.
    (b) Savings Provision.--Funds appropriated for part A of title IX 
of the Elementary and Secondary Education Act of 1965 (as in effect on 
the day before the date of the enactment of this Act) shall be 
available for use under subpart 1 of part B of title III of such Act, 
as added by this section.

SEC. 312. ALASKA NATIVE EDUCATION.

    (a) In General.--Part B of title III (as added by section 311 of 
this Act) is further amended by adding at the end the following new 
subpart:

                  ``Subpart 2--Alaska Native Education

``SEC. 3301. SHORT TITLE.

    ``This subpart may be cited as the `Alaska Native Educational 
Equity, Support, and Assistance Act'.

``SEC. 3302. FINDINGS.

    ``The Congress finds and declares:
            ``(1) The attainment of educational success is critical to 
        the betterment of the conditions, long-term well-being and 
        preservation of the culture of Alaska Natives.
            ``(2) It is the policy of the Federal Government to 
        encourage the maximum participation by Alaska Natives in the 
        planning and the management of Alaska Native education 
        programs.
            ``(3) Alaska Native children enter and exit school with 
        serious educational handicaps.
            ``(4) The educational achievement of Alaska Native children 
        is far below national norms. In addition to low Native 
        performance on standardized tests, Native student dropout rates 
        are high, and Natives are significantly underrepresented among 
        holders of baccalaureate degrees in the State of Alaska. As a 
        result, Native students are being denied their opportunity to 
        become full participants in society by grade school and high 
        school educations that are condemning an entire generation to 
        an underclass status and a life of limited choices.
            ``(5) The programs authorized herein, combined with 
        expanded Head Start, infant learning and early childhood 
        education programs, and parent education programs are essential 
        if educational handicaps are to be overcome.
            ``(6) The sheer magnitude of the geographic barriers to be 
        overcome in delivering educational services in rural and 
        village Alaska should be addressed through the development and 
        implementation of innovative, model programs in a variety of 
        areas.
            ``(7) Congress finds that Native children should be 
        afforded the opportunity to begin their formal education on a 
        par with their non-Native peers. The Federal Government should 
        lend support to efforts developed by and undertaken within the 
        Alaska Native community to improve educational opportunity for 
        all students.

``SEC. 3303. PURPOSE.

    ``It is the purpose of this subpart to--
            ``(1) recognize the unique educational needs of Alaska 
        Natives;
            ``(2) authorize the development of supplemental educational 
        programs to benefit Alaska Natives;
            ``(3) supplement existing programs and authorities in the 
        area of education to further the purposes of this subpart; and
            ``(4) provide direction and guidance to appropriate 
        Federal, State and local agencies to focus resources, including 
        resources made available under this subpart, on meeting the 
        educational needs of Alaska Natives.

``SEC. 3304. PROGRAM AUTHORIZED.

    ``(a) General Authority.--
            ``(1) Program authorized.--The Secretary is authorized to 
        make grants to, or enter into contracts with, Alaska Native 
        organizations, educational entities with experience in 
        developing or operating Alaska Native programs or programs of 
        instruction conducted in Alaska Native languages, and consortia 
        of such organizations and entities to carry out programs that 
        meet the purpose of this subpart.
            ``(2) Permissible activities.--Programs under this subpart 
        may include--
                    ``(A) the development and implementation of plans, 
                methods, and strategies to improve the education of 
                Alaska Natives;
                    ``(B) the development of curricula and educational 
                programs that address the educational needs of Alaska 
                Native students, including--
                            ``(i) curriculum materials that reflect the 
                        cultural diversity or the contributions of 
                        Alaska Natives;
                            ``(ii) instructional programs that make use 
                        of Native Alaskan languages; and
                            ``(iii) networks that introduce successful 
                        programs, materials, and techniques to urban 
                        and rural schools;
                    ``(C) professional development activities for 
                educators, including--
                            ``(i) programs to prepare teachers to 
                        address the cultural diversity and unique needs 
                        of Alaska Native students;
                            ``(ii) in-service programs to improve the 
                        ability of teachers to meet the unique needs of 
                        Alaska Native students; and
                            ``(iii) recruiting and preparing teachers 
                        who are Alaska Natives, reside in communities 
                        with high concentrations of Alaska Native 
                        students, or are likely to succeed as teachers 
                        in isolated, rural communities and engage in 
                        cross-cultural instruction;
                    ``(D) the development and operation of home 
                instruction programs for Alaska Native preschool 
                children, the purpose of which is to ensure the active 
                involvement of parents in their children's education 
                from the earliest ages;
                    ``(E) family literacy services;
                    ``(F) the development and operation of student 
                enrichment programs in science and mathematics that--
                            ``(i) are designed to prepare Alaska Native 
                        students from rural areas, who are preparing to 
                        enter high school, to excel in science and 
                        math; and
                            ``(ii) provide appropriate support services 
                        to the families of such students that are 
                        needed to enable such students to benefit from 
                        the program;
                    ``(G) research and data collection activities to 
                determine the educational status and needs of Alaska 
                Native children and adults;
                    ``(H) other research and evaluation activities 
                related to programs under this subpart; and
                    ``(I) other activities, consistent with the 
                purposes of this subpart, to meet the educational needs 
                of Alaska Native children and adults.
            ``(3) Home instruction programs.--Home instruction programs 
        for Alaska Native preschool children under paragraph (2)(D) may 
        include--
                    ``(A) programs for parents and their infants, from 
                prenatal through age three;
                    ``(B) preschool programs; and
                    ``(C) training, education, and support for parents 
                in such areas as reading readiness, observation, story-
                telling, and critical thinking.
    ``(b) Limitation on Administrative Costs.--Not more than 5 percent 
of funds provided to a grantee under this section for any fiscal year 
may be used for administrative purposes.
    ``(c) Authorization of Appropriations.--There are authorized to be 
appropriated $15,000,000 for fiscal year 2002, and such sums as may be 
necessary for each of the fiscal years 2003 through 2006 to carry out 
this subpart.

``SEC. 3305. ADMINISTRATIVE PROVISIONS.

    ``(a) Application Required.--No grant may be made under this 
subpart, nor any contract be entered into under this subpart, unless an 
application is submitted to the Secretary in such form, in such manner, 
and containing such information as the Secretary may determine 
necessary to carry out the provisions of this subpart.
    ``(b) Applications.--State and local educational agencies may apply 
for an award under this subpart only as subpart of a consortium 
involving an Alaska Native organization. This consortium may include 
other eligible applicants.
    ``(c) Consultation Required.--Each applicant for funding shall 
provide for ongoing advice from and consultation with representatives 
of the Alaska Native community.
    ``(d) Local Educational Agency Coordination.--Each applicant for an 
award under this subpart shall inform each local educational agency 
serving students who would participate in the project about its 
application.

``SEC. 3306. DEFINITIONS.

    ``For purposes of this subpart--
            ``(1) the term `Alaska Native' has the same meaning as the 
        term `Native' has in section 3(b) of the Alaska Native Claims 
        Settlement Act; and
            ``(2) the term `Alaska Native organization' means a 
        federally recognized tribe, consortium of tribes, regional 
        nonprofit Native association, and other Alaska Native 
        organizations that--
                    ``(A) has or commits to acquire expertise in the 
                education of Alaska Natives; and
                    ``(B) has Alaska Natives in substantive and policy-
                making positions within the organization.''.
    (b) Savings Provision.--Funds appropriated for part C of title IX 
of the Elementary and Secondary Education Act of 1965 (as in effect on 
the day before the date of the enactment of this Act) shall be 
available for use under subpart 2 of part B of title III of such Act, 
as added by this section.

SEC. 313. AMENDMENTS TO THE EDUCATION AMENDMENTS OF 1978.

    Part B of title XI of the Education Amendments of 1978 (25 U.S.C. 
2001 et seq.) is amended to read as follows:

              ``PART B--BUREAU OF INDIAN AFFAIRS PROGRAMS

``SEC. 1120. FINDING AND POLICY.

    ``(a) Finding.--Congress finds and recognizes that the Federal 
Government has the sole responsibility for the operation and financial 
support of the Bureau of Indian Affairs funded school system that it 
has established on or near Indian reservations and Indian trust lands 
throughout the Nation for Indian children.
    ``(b) Policy.--It is the policy of the United States to work in 
full cooperation with Indian tribes toward the goal of assuring that 
the programs of the Bureau of Indian Affairs funded school system are 
of the highest quality and meet the unique educational and cultural 
needs of Indian children.

``SEC. 1121. ACCREDITATION AND STANDARDS FOR THE BASIC EDUCATION OF 
              INDIAN CHILDREN IN BUREAU OF INDIAN AFFAIRS SCHOOLS.

    ``(a) Purpose.--The purpose of the standards implemented under this 
section shall be to afford Indian students being served by a school 
funded by the Bureau of Indian Affairs the same opportunities as all 
other students in the United States to achieve the same challenging 
State performance standards expected of all students.
    ``(b) Studies and Surveys Relating to Standards.--Not later than 1 
year after the date of the enactment of the No Child Left Behind Act of 
2001, the Secretary, in consultation with the Secretary of Education, 
consortia of education organizations, and Indian organizations and 
tribes, and making the fullest use possible of other existing studies, 
surveys, and plans, shall carry out by contract with an Indian 
organization, studies and surveys to establish and revise standards for 
the basic education of Indian children attending Bureau funded schools. 
Such studies and surveys shall take into account factors such as 
academic needs, local cultural differences, type and level of language 
skills, geographic isolation, and appropriate teacher-student ratios 
for such children, and shall be directed toward the attainment of equal 
educational opportunity for such children.
    ``(c) Revision of Minimum Academic Standards.--
            ``(1) In general.--Not later than 2 years after the date of 
        the enactment of the No Child Left Behind Act of 2001, the 
        Secretary shall--
                    ``(A) propose revisions to the minimum academic 
                standards published in the Federal Register on 
                September 9, 1995 (50 Fed. Reg. 174) for the basic 
                education of Indian children attending Bureau funded 
                schools in accordance with the purpose described in 
                subsection (a) and the findings of the studies and 
                surveys conducted under subsection (b);
                    ``(B) publish such proposed revisions to such 
                standards in the Federal Register for the purpose of 
                receiving comments from the tribes, tribal school 
                boards, Bureau funded schools, and other interested 
                parties; and
                    ``(C) consistent with the provisions of this 
                section and section 1131, take such actions as are 
                necessary to coordinate standards implemented under 
                this section with the Comprehensive School Reform Plan 
                developed by the Bureau and--
                            ``(i) with the standards of the improvement 
                        plans for the States in which any school 
                        operated by the Bureau of Indian Affairs is 
                        located; or
                            ``(ii) in the case where schools operated 
                        by the Bureau are within the boundaries of 
                        reservation land of one tribe but within the 
                        boundaries of more than one State, with the 
                        standards of the State improvement plan of one 
                        such State selected by the tribe.
            ``(2) Further revisions.--Not later that 6 months after the 
        close of the comment period, the Secretary shall establish 
        final standards, distribute such standards to all tribes and 
        publish such final standards in the Federal Register. The 
        Secretary shall revise such standards periodically as 
        necessary. Prior to any revision of such final standards, the 
        Secretary shall distribute such proposed revision to all the 
        tribes, and publish such proposed revision in the Federal 
        Register, for the purpose of receiving comments from the tribes 
        and other interested parties.
            ``(3) Applicability of standards.--Except as provided in 
        subsection (e), the final standards published under paragraph 
        (2) shall apply to all Bureau funded schools not accredited 
        under subsection (f), and may also serve as a model for 
        educational programs for Indian children in public schools.
            ``(4) Considerations when establishing and revising 
        standards.--In establishing and revising such standards, the 
        Secretary shall take into account the unique needs of Indian 
        students and support and reinforcement of the specific cultural 
        heritage of each tribe.
    ``(d) Alternative or Modified Standards.--The Secretary shall 
provide alternative or modified standards in lieu of the standards 
established under subsection (c), where necessary, so that the programs 
of each school are in compliance with the minimum accreditation 
standards required for schools in the State or region where the school 
is located.
    ``(e) Waiver of Standards; Alternative Standards.--A tribal 
governing body, or the local school board so designated by the tribal 
governing body, shall have the local authority to waive, in part or in 
whole, the standards established under subsections (c) and (d) if such 
standards are deemed by such body to be inappropriate. The tribal 
governing body or designated school board shall, not later than 60 days 
after a waiver under this subsection, submit to the Secretary a 
proposal for alternative standards that take into account the specific 
needs of the tribe's children. Such alternative standards shall be 
established by the Secretary unless specifically rejected by the 
Secretary for good cause and in writing to the affected tribes or local 
school board, which rejection shall be final and not subject to review.
    ``(f) Accreditation and Implementation of Standards.--
            ``(1) Deadline for meeting standards.--Not later the second 
        academic year after publication of the standards, to the extent 
        necessary funding is provided, all Bureau funded schools shall 
        meet the standards established under subsections (c) and (d) or 
        shall be accredited--
                    ``(A) by a tribal accrediting body, if the 
                accreditation standards of the tribal accrediting body 
                have been accepted by formal action of the tribal 
                governing body and are equal to or exceed the 
                accreditation standards of the State or region in which 
                the school is located;
                    ``(B) by a regional accreditation agency; or
                    ``(C) by State accreditation standards for the 
                State in which it is located.
            ``(2) Determination of standards to be applied.--The 
        accreditation type or standards applied for each school shall 
        be determined by the school board of the school, in 
        consultation with the Administrator of the school, provided 
        that in the case where the School Board and the Administrator 
        fail to agree on the type of accreditation and standards to 
        apply, the decision of the school board with the approval of 
        the tribal governing body shall be final.
            ``(3) Assistance to school boards.--The Secretary, through 
        contracts and grants, shall assist school boards of contract or 
        grant schools in implementation of the standards established 
        under subsections (c) and (d), if the school boards request 
        that such standards, in part or in whole, be implemented.
            ``(4) Fiscal control and fund accounting standards.--The 
        Bureau shall, either directly or through contract with an 
        Indian organization, establish a consistent system of reporting 
        standards for fiscal control and fund accounting for all 
        contract and grant schools. Such standards shall provide data 
        comparable to those used by Bureau operated schools.
    ``(g) Annual Plan for Meeting of Standards.--Except as provided in 
subsections (e) and (f), the Secretary shall begin to implement the 
standards established under this section immediately upon the date of 
their establishment. On an annual basis, the Secretary shall submit to 
the appropriate committees of Congress, all Bureau funded schools, and 
the tribal governing bodies of such schools a detailed plan to bring 
all Bureau schools and contract or grant schools up to the level 
required by the applicable standards established under this section. 
Such plan shall include detailed information on the status of each 
school's educational program in relation to the applicable standards 
established under this section, specific cost estimates for meeting 
such standards at each school and specific timelines for bringing each 
school up to the level required by such standards.
    ``(h) Closure or Consolidation of Schools.--
            ``(1) In general.--Except as specifically required by 
        statute, no school or peripheral dormitory operated by the 
        Bureau on or after January 1, 1992, may be closed or 
        consolidated or have its program substantially curtailed unless 
        done according to the requirements of this subsection.
            ``(2) Exceptions.--This subsection shall not apply--
                    ``(A) in those cases where the tribal governing 
                body, or the local school board concerned (if so 
                designated by the tribal governing body), requests 
                closure or consolidation; or
                    ``(B) when a temporary closure, consolidation, or 
                substantial curtailment is required by plant conditions 
                which constitute an immediate hazard to health and 
                safety.
            ``(3) Regulations.--The Secretary shall, by regulation, 
        promulgate standards and procedures for the closure, transfer 
        to another authority, consolidation, or substantial curtailment 
        of Bureau schools, in accordance with the requirements of this 
        subsection.
            ``(4) Notice.--Whenever closure, transfer to another 
        authority, consolidation, or substantial curtailment of a 
        school is under active consideration or review by any division 
        of the Bureau or the Department of the Interior, the affected 
        tribe, tribal governing body, and designated local school 
        board, will be notified immediately, kept fully and currently 
        informed, and afforded an opportunity to comment with respect 
        to such consideration or review. When a formal decision is made 
        to close, transfer to another authority, consolidate, or 
        substantially curtail a school, the affected tribe, tribal 
        governing body, and designated school board shall be notified 
        at least 6 months prior to the end of the school year preceding 
        the proposed closure date. Copies of any such notices and 
        information shall be transmitted promptly to the appropriate 
        committees of Congress and published in the Federal Register.
            ``(5) Report.--The Secretary shall make a report to the 
        appropriate committees of Congress, the affected tribe, and the 
        designated school board describing the process of the active 
        consideration or review referred to in paragraph (4). The 
        report shall include a study of the impact of such action on 
        the student population, identify those students with particular 
        educational and social needs, and ensure that alternative 
        services are available to such students. Such report shall 
        include the description of the consultation conducted between 
        the potential service provider, current service provider, 
        parents, tribal representatives and the tribe or tribes 
        involved, and the Director of the Office of Indian Education 
        Programs within the Bureau regarding such students.
            ``(6) Limitation on certain actions.--No irrevocable action 
        may be taken in furtherance of any such proposed school 
        closure, transfer to another authority, consolidation, or 
        substantial curtailment (including any action which would 
        prejudice the personnel or programs of such school) prior to 
        the end of the first full academic year after such report is 
        made.
            ``(7) Tribal governing body approval required for certain 
        actions.--The Secretary may terminate, contract, transfer to 
        any other authority, consolidate, or substantially curtail the 
        operation or facilities of--
                    ``(A) any Bureau funded school that is operated on 
                or after of January 1, 1999;
                    ``(B) any program of such a school that is operated 
                on or after January 1, 1999; or
                    ``(C) any school board of a school operated under a 
                grant under the Tribally Controlled Schools Act of 
                1988,
        only if the tribal governing body approves such action.
    ``(i) Application for Contracts or Grants for Non-Bureau Funded 
Schools or Expansion of Bureau Funded Schools.--
            ``(1) In general.--(A)(i) The Secretary shall only consider 
        the factors described in subparagraph (B) in reviewing--
                    ``(I) applications from any tribe for the awarding 
                of a contract or grant for a school that is not a 
                Bureau funded school; and
                    ``(II) applications from any tribe or school board 
                of any Bureau funded school for--
                            ``(aa) a school which is not a Bureau 
                        funded school; or
                            ``(bb) the expansion of a Bureau funded 
                        school which would increase the amount of funds 
                        received by the Indian tribe or school board 
                        under section 1127.
            ``(ii) With respect to applications described in this 
        subparagraph, the Secretary shall give consideration to all the 
        factors described in subparagraph (B), but no such application 
        shall be denied based primarily upon the geographic proximity 
        of comparable public education.
            ``(B) With respect to applications described in 
        subparagraph (A) the Secretary shall consider the following 
        factors relating to the program and services that are the 
        subject of the application:
                    ``(i) The adequacy of the facilities or the 
                potential to obtain or provide adequate facilities.
                    ``(ii) Geographic and demographic factors in the 
                affected areas.
                    ``(iii) The adequacy of the applicant's program 
                plans or, in the case of a Bureau funded school, of 
                projected needs analysis done either by the tribe or 
                the Bureau.
                    ``(iv) Geographic proximity of comparable public 
                education.
                    ``(v) The stated needs of all affected parties, 
                including students, families, tribal governments at 
                both the central and local levels, and school 
                organizations.
                    ``(vi) Adequacy and comparability of programs 
                already available.
                    ``(vii) Consistency of available programs with 
                tribal educational codes or tribal legislation on 
                education.
                    ``(viii) The history and success of these services 
                for the proposed population to be served, as determined 
                from all factors, including but not limited to 
                standardized examination performance.
            ``(2) Determination on application.--(A) The Secretary 
        shall make a determination of whether to approve any 
        application described in paragraph (1)(A) not later than 180 
        days after such application is submitted to the Secretary.
            ``(B) If the Secretary fails to make the determination with 
        respect to an application by the date described in subparagraph 
        (A), the application shall be treated a having been approved by 
        the Secretary.
            ``(3) Requirements for applications.--(A) Notwithstanding 
        paragraph (2)(B), an application described in paragraph (1)(A) 
        may be approved by the Secretary only if--
                    ``(i) the application has been approved by the 
                tribal governing body of the students served by (or to 
                be served by) the school or program that is the subject 
                of the application; and
                    ``(ii) written evidence of such approval is 
                submitted with the application.
            ``(B) Each application described in paragraph (1)(A) shall 
        provide information concerning each of the factors described in 
        paragraph (1)(B).
            ``(4) Denial of applications.--Whenever the Secretary makes 
        a determination to deny approval of any application described 
        in paragraph (1)(A), the Secretary shall--
                    ``(A) state the objections in writing to the 
                applicant not later 180 days after the application is 
                submitted to the Secretary;
                    ``(B) provide assistance to the applicant to 
                overcome stated objections; and
                    ``(C) provide the applicant a hearing, under the 
                same rules and regulations pertaining to the Indian 
                Self-Determination and Education Assistance Act and an 
                opportunity to appeal the objections raised by the 
                Secretary.
            ``(5) Effective date of a subject application.--(A) Except 
        as otherwise provided in this paragraph, the action which is 
        the subject of any application described in paragraph (1)(A) 
        that is approved by the Secretary shall become effective at the 
        beginning of the academic year following the fiscal year in 
        which the application is approved, or at an earlier date 
        determined by the Secretary.
            ``(B) If an application is treated as having been approved 
        by the Secretary under paragraph (2)(B), the action that is the 
        subject of the application shall become effective on the date 
        that is 18 months after the date on which the application is 
        submitted to the Secretary, or at an earlier date determined by 
        the Secretary.
            ``(6) Statutory construction.--Nothing in this section 
        shall be read so as to preclude the expansion of grades and 
        related facilities at a Bureau funded school where such 
        expansion and the maintenance of such expansion is occasioned 
        or paid for with non-Bureau funds.
    ``(j) General Use of Funds.--Funds received by Bureau funded 
schools from the Bureau of Indian Affairs and under any program from 
the Department of Education or any other Federal agency for the purpose 
of providing education or related services may be used for schoolwide 
projects to improve the educational program for all Indian students.
    ``(k) Study on Adequacy of Funds and Formulas.--The Comptroller 
General shall conduct a study, in consultation with Indian tribes and 
local school boards, to determine the adequacy of funding, and formulas 
used by the Bureau to determine funding, for programs operated by 
Bureau funded schools, taking into account unique circumstances 
applicable to Bureau funded schools, as well as expenditures for 
comparable purposes in public schools nationally. Upon completion of 
the study, the Secretary of the Interior shall take such action as 
necessary to ensure distribution of the findings of the study to all 
affected Indian tribes, local school boards, and associations of local 
school boards.

``SEC. 1122. NATIONAL CRITERIA FOR HOME-LIVING SITUATIONS.

    ``(a) In General.--The Secretary, in consultation with the 
Secretary of Education, Indian organizations and tribes, and Bureau 
funded schools, shall revise the national standards for home-living 
(dormitory) situations to include such factors as heating, lighting, 
cooling, adult-child ratios, needs for counselors (including special 
needs related to off-reservation home-living (dormitory) situations), 
therapeutic programs, space, and privacy. Such standards shall be 
implemented in Bureau operated schools, and shall serve as minimum 
standards for contract or grant schools. Once established, any 
revisions of such standards shall be developed according to the 
requirements established under section 1138A.
    ``(b) Implementation.--The Secretary shall implement the revised 
standards established under this section immediately upon their 
completion.
    ``(c) Plan.--At the time of each annual budget submission for 
Bureau educational services is presented, the Secretary shall submit to 
the appropriate committees of Congress, the tribes, and the affected 
schools, and publish in the Federal Register, a detailed plan to bring 
all Bureau funded schools that provide home-living (dormitory) 
situations up to the standards established under this section. Such 
plan shall include a statement of the relative needs of each Bureau 
funded home-living (dormitory) school, projected future needs of each 
Bureau funded home-living (dormitory) school, detailed information on 
the status of each school in relation to the standards established 
under this section, specific cost estimates for meeting each standard 
for each such school, aggregate cost estimates for bringing all such 
schools into compliance with the criteria established under this 
section, and specific timelines for bringing each school into 
compliance with such standards.
    ``(d) Waiver.--The criteria established under this section may be 
waived in the same manner as the standards provided under section 
1121(c) may be waived.
    ``(e) Closure for Failure To Meet Standards Prohibited.--No school 
in operation on or before January 1, 1987 (regardless of compliance or 
noncompliance with the criteria established under this section), may be 
closed, transferred to another authority, consolidated, or have its 
program substantially curtailed for failure to meet the criteria.

``SEC. 1123. CODIFICATION OF REGULATIONS.

    ``(a) Part 32 of Title 25 of Code of Federal Regulations.--The 
provisions of part 32 of title 25 of the Code of Federal Regulations, 
as in effect on January 1, 1987, are incorporated into this Act and 
shall be treated as though such provisions are set forth in this 
subsection. Such provisions may be altered only by means of an Act of 
Congress. To the extent that such provisions of part 32 do not conform 
with this Act or any statutory provision of law enacted before November 
1, 1978, the provisions of this Act and the provisions of such other 
statutory law shall govern.
    ``(b) Regulation Defined.--For purposes of this part, the term 
`regulation' means any rules, regulations, guidelines, interpretations, 
orders, or requirements of general applicability prescribed by any 
officer or employee of the executive branch.

``SEC. 1124. SCHOOL BOUNDARIES.

    ``(a) Establishment by Secretary.--The Secretary shall establish, 
by regulation, separate geographical attendance areas for each Bureau 
funded school.
    ``(b) Establishment by Tribal Body.--In any case where there is 
more than one Bureau funded school located on an Indian reservation, at 
the direction of the tribal governing body, the relevant school boards 
of the Bureau funded schools on the reservation may, by mutual consent, 
establish the relevant attendance areas for such schools, subject to 
the approval of the tribal governing body. Any such boundaries so 
established shall be accepted by the Secretary.
    ``(c) Boundary Revisions.--
            ``(1) In general.--On or after July 1, 2001, no 
        geographical attendance area shall be revised or established 
        with respect to any Bureau funded school unless the tribal 
        governing body or the local school board concerned (if so 
        designated by the tribal governing body) has been afforded--
                    ``(A) at least 6 months notice of the intention of 
                the Bureau to revise or establish such attendance area; 
                and
                    ``(B) the opportunity to propose alternative 
                boundaries.
        Any tribe may petition the Secretary for revision of existing 
        attendance area boundaries. The Secretary shall accept such 
        proposed alternative or revised boundaries unless the Secretary 
        finds, after consultation with the affected tribe or tribes, 
        that such revised boundaries do not reflect the needs of the 
        Indian students to be served or do not provide adequate 
        stability to all of the affected programs. The Secretary shall 
        cause such revisions to be published in the Federal Register.
            ``(2) Tribal resolution determination.--Nothing in this 
        section shall be interpreted as denying a tribal governing body 
        the authority, on a continuing basis, to adopt a tribal 
        resolution allowing parents the choice of the Bureau funded 
        school their children may attend, regardless of the attendance 
        boundaries established under this section.
    ``(d) Funding Restrictions.--The Secretary shall not deny funding 
to a Bureau funded school for any eligible Indian student attending the 
school solely because that student's home or domicile is outside of the 
geographical attendance area established for that school under this 
section. No funding shall be made available without tribal 
authorization to enable a school to provide transportation for any 
student to or from the school and a location outside the approved 
attendance area of the school.
    ``(e) Reservation as Boundary.--In any case where there is only one 
Bureau funded program located on an Indian reservation, the attendance 
area for the program shall be the boundaries (established by treaty, 
agreement, legislation, court decisions, or executive decisions and as 
accepted by the tribe) of the reservation served, and those students 
residing near the reservation shall also receive services from such 
program.
    ``(f) Off-Reservation Home-Living (Dormitory) Schools.--
Notwithstanding any geographical attendance areas, attendance at off-
reservation home-living (dormitory) schools shall include students 
requiring special emphasis programs to be implemented at each off-
reservation home-living (dormitory) school. Such attendance shall be 
coordinated between education line officers, the family, and the 
referring and receiving programs.

``SEC. 1125. FACILITIES CONSTRUCTION.

    ``(a) Compliance With Health and Safety Standards.--The Secretary 
shall immediately begin to bring all schools, dormitories, and other 
Indian education-related facilities operated by the Bureau or under 
contract or grant with the Bureau into compliance with all applicable 
tribal, Federal, or State health and safety standards, whichever 
provides greater protection (except that the tribal standards to be 
applied shall be no greater than any otherwise applicable Federal or 
State standards), with section 504 of the Rehabilitation Act of 1973, 
and with the Americans with Disabilities Act of 1990. Nothing in this 
section shall require termination of the operations of any facility 
which does not comply with such provisions and which is in use on the 
date of the enactment of the No Child Left Behind Act of 2001.
    ``(b) Compliance Plan.--At the time that the annual budget request 
for Bureau educational services is presented, the Secretary shall 
submit to the appropriate committees of Congress a detailed plan to 
bring all facilities covered under subsection (a) of this section into 
compliance with the standards referred to in subsection (a). Such plan 
shall include detailed information on the status of each facility's 
compliance with such standards, specific cost estimates for meeting 
such standards at each school, and specific timelines for bringing each 
school into compliance with such standards.
    ``(c) Construction Priorities.--
            ``(1) System to establish priorities.--On an annual basis 
        the Secretary shall submit to the appropriate committees of 
        Congress and cause to be published in the Federal Register, the 
        system used to establish priorities for replacement and 
        construction projects for Bureau funded schools and home-living 
        schools, including boarding schools and dormitories. At the 
        time any budget request for education is presented, the 
        Secretary shall publish in the Federal Register and submit with 
        the budget request the current list of all Bureau funded school 
        construction priorities.
            ``(2) Long-term construction and replacement list.--In 
        addition to the plan submitted under subsection (b), the 
        Secretary shall--
                    ``(A) not later than 18 months after the date of 
                the enactment of the No Child Left Behind Act of 2001, 
                establish a long-term construction and replacement list 
                for all Bureau funded schools;
                    ``(B) using the list prepared under subparagraph 
                (A), propose a list for the orderly replacement of all 
                Bureau funded education-related facilities over a 
                period of 40 years to enable planning and scheduling of 
                budget requests;
                    ``(C) cause the list prepared under subsection (B) 
                to be published in the Federal Register and allow a 
                period of not less than 120 days for public comment;
                    ``(D) make such revisions to the list prepared 
                under subparagraph (B) as are appropriate based on the 
                comments received; and
                    ``(E) cause the final list to be published in the 
                Federal Register.
            ``(3) Effect on other list.--Nothing in this section shall 
        be construed as interfering with or changing in any way the 
        construction priority list as it exists on the date of the 
        enactment of the No Child Left Behind Act of 2001.
    ``(d) Hazardous Condition at Bureau School.--
            ``(1) Closure or consolidation.--A Bureau funded school may 
        be closed or consolidated, and the programs of a Bureau funded 
        school may be substantially curtailed by reason of plant 
        conditions that constitute an immediate hazard to health and 
        safety only if a health and safety officer of the Bureau 
        determines that such conditions exist at the Bureau funded 
        school.
            ``(2) Inspection.--(A) After making a determination 
        described in paragraph (1), the Bureau health and safety 
        officer shall conduct an inspection of the condition of such 
        plant accompanied by an appropriate tribal, county, municipal, 
        or State health and safety officer in order to determine 
        whether conditions at such plant constitute an immediate hazard 
        to health and safety. Such inspection shall be completed by not 
        later than the date that is 30 days after the date on which the 
        action described in paragraph (1) is taken. No further negative 
        action may be taken unless the findings are concurred in by the 
        second, non-Bureau of Indian Affairs inspector.
            ``(B) If the health and safety officer conducting the 
        inspection of a plant required under subparagraph (A) 
        determines that conditions at the plant do not constitute an 
        immediate hazard to health and safety, any consolidation or 
        curtailment that was made under paragraph (1) shall immediately 
        cease and any school closed by reason of conditions at the 
        plant shall be reopened immediately.
            ``(C) If a Bureau funded school is temporarily closed or 
        consolidated or the programs of a Bureau funded school are 
        substantially curtailed under this subsection and the Secretary 
        determines that the closure, consolidation, or curtailment will 
        exceed 1 year, the Secretary shall submit to the Congress, by 
        not later than 6 months after the date on which the closure, 
        consolidation, or curtailment was initiated, a report which 
        sets forth the reasons for such temporary actions, the actions 
        the Secretary is taking to eliminate the conditions that 
        constitute the hazard, and an estimated date by which such 
        actions will be concluded.
    ``(e) Funding Requirement.--
            ``(1) Distribution of funds.--Beginning with the fiscal 
        year following the year of the date of the enactment of the No 
        Child Left Behind Act of 2001, all funds appropriated for the 
        operations and maintenance of Bureau funded schools shall be 
        distributed by formula to the schools. No funds from this 
        account may be retained or segregated by the Bureau to pay for 
        administrative or other costs of any facilities branch or 
        office, at any level of the Bureau.
            ``(2) Requirements for certain uses.--No funds shall be 
        withheld from the distribution to the budget of any school 
        operated under contract or grant by the Bureau for maintenance 
        or any other facilities or road related purpose, unless such 
        school has consented, as a modification to the contract or in 
        writing for grants schools, to the withholding of such funds, 
        including the amount thereof, the purpose for which the funds 
        will be used, and the timeline for the services to be provided. 
        The school may, at the end of any fiscal year, cancel an 
        agreement under this paragraph upon giving the Bureau 30 days 
        notice of its intent to do so.
    ``(f) No Reduction in Federal Funding.--Nothing in this section 
shall be construed to diminish any Federal funding due to the receipt 
by the school of funding for facilities improvement or construction 
from a State or any other source.

``SEC. 1126. BUREAU OF INDIAN AFFAIRS EDUCATION FUNCTIONS.

    ``(a) Formulation and Establishment of Policy and Procedure; 
Supervision of Programs and Expenditures.--The Secretary shall vest in 
the Assistant Secretary for Indian Affairs all functions with respect 
to formulation and establishment of policy and procedure and 
supervision of programs and expenditures of Federal funds for the 
purpose of Indian education administered by the Bureau. The Assistant 
Secretary shall carry out such functions through the Director of the 
Office of Indian Education Programs.
    ``(b) Direction and Supervision of Personnel Operations.--Not later 
than 6 months after the date of the enactment of the No Child Left 
Behind Act of 2001, the Director of the Office of Indian Education 
Programs shall direct and supervise the operations of all personnel 
directly and substantially involved in the provision of education 
services by the Bureau, including school or institution custodial or 
maintenance personnel, facilities management, contracting, procurement, 
and finance personnel. The Assistant Secretary for Indian Affairs shall 
coordinate the transfer of functions relating to procurement, 
contracts, operation, and maintenance of schools and other support 
functions to the Director.
    ``(c) Evaluation of Programs; Services and Support Functions; 
Technical and Coordinating Assistance.--Education personnel who are 
under the direction and supervision of the Director of the Office of 
Indian Education Programs in accordance with the first sentence of 
subsection (b) shall--
            ``(1) monitor and evaluate Bureau education programs;
            ``(2) provide all services and support functions for 
        education programs with respect to personnel matters involving 
        staffing actions and functions; and
            ``(3) provide technical and coordinating assistance in 
        areas such as procurement, contracting, budgeting, personnel, 
        curriculum, and operation and maintenance of school facilities.
    ``(d) Construction, Improvement, Operation, and Maintenance of 
Facilities.--
            ``(1) Plan for construction.--The Assistant Secretary shall 
        submit in the annual budget a plan--
                    ``(A) for school facilities to be constructed under 
                section 1125(c);
                    ``(B) for establishing priorities among projects 
                and for the improvement and repair of educational 
                facilities, which together shall form the basis for the 
                distribution of appropriated funds; and
                    ``(C) for capital improvements to be made over the 
                five succeeding years.
            ``(2) Program for operation and maintenance.--
                    ``(A) Establishment.--The Assistant Secretary shall 
                establish a program, including the distribution of 
                appropriated funds, for the operation and maintenance 
                of education facilities. Such program shall include--
                            ``(i) a method of computing the amount 
                        necessary for each educational facility;
                            ``(ii) similar treatment of all Bureau 
                        funded schools;
                            ``(iii) a notice of an allocation of 
                        appropriated funds from the Director of the 
                        Office of Indian Education Programs directly to 
                        the education line officers and appropriate 
                        school officials;
                            ``(iv) a method for determining the need 
                        for, and priority of, facilities repair and 
                        maintenance projects, both major and minor. In 
                        making such determination, the Assistant 
                        Secretary shall cause to be conducted a series 
                        of meetings at the agency and area level with 
                        representatives of the Bureau funded schools in 
                        those areas and agencies to receive comment on 
                        the lists and prioritization of such projects; 
                        and
                            ``(v) a system for the conduct of routine 
                        preventive maintenance.
                    ``(B) Local supervisors.--The appropriate education 
                line officers shall make arrangements for the 
                maintenance of education facilities with the local 
                supervisors of the Bureau maintenance personnel. The 
                local supervisors of Bureau maintenance personnel shall 
                take appropriate action to implement the decisions made 
                by the appropriate education line officers, except that 
                no funds under this chapter may be authorized for 
                expenditure unless such appropriate education line 
                officer is assured that the necessary maintenance has 
                been, or will be, provided in a reasonable manner.
            ``(3) Implementation.--The requirements of this subsection 
        shall be implemented as soon as practicable after the date of 
        the enactment of the No Child Left Behind Act of 2001.
    ``(e) Acceptance of Gifts and Bequests.--Notwithstanding any other 
provision of law, the Director shall promulgate guidelines for the 
establishment of mechanisms for the acceptance of gifts and bequests 
for the use and benefit of particular schools or designated Bureau 
operated education programs, including, where appropriate, the 
establishment and administration of trust funds. When a Bureau operated 
program is the beneficiary of such a gift or bequest, the Director 
shall make provisions for monitoring its use and shall report to the 
appropriate committees of Congress the amount and terms of such gift or 
bequest, the manner in which such gift or bequest shall be used, and 
any results achieved by such action.
    ``(f) Functions Clarified.--For the purpose of this section, the 
term `functions' includes powers and duties.

``SEC. 1127. ALLOTMENT FORMULA.

    ``(a) Factors Considered; Revision To Reflect Standards.--
            ``(1) Formula.--The Secretary shall establish, by 
        regulation adopted in accordance with section 1138A, a formula 
        for determining the minimum annual amount of funds necessary to 
        sustain each Bureau funded school. In establishing such 
        formula, the Secretary shall consider--
                    ``(A) the number of eligible Indian students served 
                and total student population of the school;
                    ``(B) special cost factors, such as--
                            ``(i) the isolation of the school;
                            ``(ii) the need for special staffing, 
                        transportation, or educational programs;
                            ``(iii) food and housing costs;
                            ``(iv) maintenance and repair costs 
                        associated with the physical condition of the 
                        educational facilities;
                            ``(v) special transportation and other 
                        costs of isolated and small schools;
                            ``(vi) the costs of home-living (dormitory) 
                        arrangements, where determined necessary by a 
                        tribal governing body or designated school 
                        board;
                            ``(vii) costs associated with greater 
                        lengths of service by education personnel;
                            ``(viii) the costs of therapeutic programs 
                        for students requiring such programs; and
                            ``(ix) special costs for gifted and 
                        talented students;
                    ``(C) the cost of providing academic services which 
                are at least equivalent to those provided by public 
                schools in the State in which the school is located; 
                and
                    ``(D) such other relevant factors as the Secretary 
                determines are appropriate.
            ``(2) Revision of formula.--Upon the establishment of the 
        standards required in sections 1121 and 1122, the Secretary 
        shall revise the formula established under this subsection to 
        reflect the cost of funding such standards. Not later than 
        January 1, 2003, the Secretary shall review the formula 
        established under this section and shall take such steps as are 
        necessary to increase the availability of counseling and 
        therapeutic programs for students in off-reservation home-
        living (dormitory) schools and other Bureau operated 
        residential facilities. Concurrent with such action, the 
        Secretary shall review the standards established under section 
        1122 to be certain that adequate provision is made for parental 
        notification regarding, and consent for, such counseling and 
        therapeutic programs.
    ``(b) Pro Rata Allotment.--Notwithstanding any other provision of 
law, Federal funds appropriated for the general local operation of 
Bureau funded schools shall be allotted pro rata in accordance with the 
formula established under subsection (a).
    ``(c) Annual Adjustment; Reservation of Amount for School Board 
Activities.--
            ``(1) Annual adjustment.--For fiscal year 2003, and for 
        each subsequent fiscal year, the Secretary shall adjust the 
        formula established under subsection (a) to ensure that the 
        formula does the following:
                    ``(A) Uses a weighted unit of 1.2 for each eligible 
                Indian student enrolled in the seventh and eighth 
                grades of the school in considering the number of 
                eligible Indian students served by the school.
                    ``(B) Considers a school with an enrollment of less 
                than 50 eligible Indian students as having an average 
                daily attendance of 50 eligible Indian students for 
                purposes of implementing the adjustment factor for 
                small schools.
                    ``(C) Takes into account the provision of 
                residential services on less than a 9-month basis at a 
                school when the school board and supervisor of the 
                school determine that a less than 9-month basis will be 
                implemented for the school year involved.
                    ``(D) Uses a weighted unit of 2.0 for each eligible 
                Indian student that--
                            ``(i) is gifted and talented; and
                            ``(ii) is enrolled in the school on a full-
                        time basis,
                in considering the number of eligible Indian students 
                served by the school.
                    ``(E) Uses a weighted unit of 0.25 for each 
                eligible Indian student who is enrolled in a yearlong 
                credit course in an Indian or Native language as part 
                of the regular curriculum of a school, in considering 
                the number of eligible Indian students served by such 
                school. The adjustment required under this subparagraph 
                shall be used for such school after--
                            ``(i) the certification of the Indian or 
                        Native language curriculum by the school board 
                        of such school to the Secretary, together with 
                        an estimate of the number of full-time students 
                        expected to be enrolled in the curriculum in 
                        the second school year for which the 
                        certification is made; and
                            (ii) the funds appropriated for allotment 
                        under this section are designated by the 
                        appropriations Act appropriating such funds as 
                        the amount necessary to implement such 
                        adjustment at such school without reducing 
                        allotments made under this section to any 
                        school by virtue of such adjustment.
            ``(2) Reservation of amount.--
                    ``(A) In general.--From the funds allotted in 
                accordance with the formula established under 
                subsection (a) for each Bureau school, the local school 
                board of such school may reserve an amount which does 
                not exceed the greater of--
                            ``(i) $8,000; or
                            ``(ii) the lesser of--
                                    ``(I) $15,000; or
                                    ``(II) 1 percent of such allotted 
                                funds,
                for school board activities for such school, including 
                (notwithstanding any other provision of law) meeting 
                expenses and the cost of membership in, and support of, 
                organizations engaged in activities on behalf of Indian 
                education.
                    ``(B) Training.--Each school board shall see that 
                each new member of the school board receives, within 12 
                months of the individual's assuming a position on the 
                school board, 40 hours of training relevant to that 
                individual's service on the board. Such training may 
                include legal issues pertaining to schools funded by 
                the Bureau, legal issues pertaining to school boards, 
                ethics, and other topics deemed appropriate by the 
                school board.
    ``(d) Reservation of Amount for Emergencies.--The Secretary shall 
reserve from the funds available for distribution for each fiscal year 
under this section an amount which, in the aggregate, shall equal 1 
percent of the funds available for such purpose for that fiscal year. 
Such funds shall be used, at the discretion of the Director of the 
Office of Indian Education Programs, to meet emergencies and unforeseen 
contingencies affecting the education programs funded under this 
section. Funds reserved under this subsection may only be expended for 
education services or programs, including emergency repairs of 
educational facilities, at a schoolsite (as defined by section 
5204(c)(2) of the Tribally Controlled Schools Act of 1988). Funds 
reserved under this subsection shall remain available without fiscal 
year limitation until expended. However, the aggregate amount available 
from all fiscal years may not exceed 1 percent of the current year 
funds. Whenever, the Secretary makes funds available under this 
subsection, the Secretary shall report such action to the appropriate 
committees of Congress within the annual budget submission.
    ``(e) Supplemental Appropriations.--Supplemental appropriations 
enacted to meet increased pay costs attributable to school level 
personnel shall be distributed under this section.
    ``(f) Eligible Indian Student Defined.--For the purpose of this 
section, the term `eligible Indian student' means a student who--
            ``(1) is a member of or is at least one-fourth degree 
        Indian blood descendant of a member of an Indian tribe which is 
        eligible for the special programs and services provided by the 
        United States through the Bureau because of their status as 
        Indians; and
            ``(2) resides on or near an Indian reservation or meets the 
        criteria for attendance at a Bureau off-reservation home-living 
        (dormitory) school.
    ``(g) Tuition.--
            ``(1) In general.--An eligible Indian student may not be 
        charged tuition for attendance at a Bureau school or contract 
        or grant school. A student attending a Bureau school under 
        paragraph (2)(C) may not be charged tuition for attendance at 
        such a school.
            ``(2) Attendance of non-indian students at bureau 
        schools.--The Secretary may permit the attendance at a Bureau 
        school of a student who is not an eligible Indian student if--
                    ``(A) the Secretary determines that the student's 
                attendance will not adversely affect the school's 
                program for eligible Indian students because of cost, 
                overcrowding, or violation of standards or 
                accreditation;
                    ``(B) the school board consents;
                    ``(C) the student is a dependent of a Bureau, 
                Indian Health Service, or tribal government employee 
                who lives on or near the schoolsite; or
                    ``(D) a tuition is paid for the student that is not 
                more than that charged by the nearest public school 
                district for out-of-district students, and shall be in 
                addition to the school's allocation under this section.
            ``(3) Attendance of non-indian students at contract and 
        grant schools.--The school board of a contract or grant school 
        may permit students who are not eligible Indian students under 
        this subsection to attend its contract school or grant school 
        and any tuition collected for those students shall be in 
        addition to funding received under this section.
    ``(h) Funds Available Without Fiscal Year Limitation.--
Notwithstanding any other provision of law, at the election of the 
school board of a Bureau school made at any time during the fiscal 
year, a portion equal to not more than 15 percent of the funds 
allocated with respect to a school under this section for any fiscal 
year shall remain available to the school for expenditure without 
fiscal year limitation. The Assistant Secretary shall take steps as may 
be necessary to implement this provision.
    ``(i) Students at Richfield Dormitory, Richfield, Utah.--Tuition 
for out-of-State Indian students in home-living (dormitory) 
arrangements at the Richfield dormitory in Richfield, Utah, who attend 
Sevier County high schools in Richfield, Utah, shall be paid from the 
Indian school equalization program funds authorized in this section and 
section 1130 at a rate not to exceed the amounts per weighted student 
unit for that year for the instruction of such students. No additional 
administrative cost funds shall be added to the grant.

``SEC. 1128. ADMINISTRATIVE COST GRANTS.

    ``(a) Grants; Effect Upon Appropriated Amounts.--
            ``(1) Grants.--Subject to the availability of appropriated 
        funds, the Secretary shall provide grants to each tribe or 
        tribal organization operating a contract school or grant school 
        in the amount determined under this section with respect to the 
        tribe or tribal organization for the purpose of paying the 
        administrative and indirect costs incurred in operating 
        contract or grant schools, provided that no school operated as 
        a stand-alone institution shall receive less than $200,000 per 
        year for these purposes, in order to--
                    ``(A) enable tribes and tribal organizations 
                operating such schools, without reducing direct program 
                services to the beneficiaries of the program, to 
                provide all related administrative overhead services 
                and operations necessary to meet the requirements of 
                law and prudent management practice; and
                    ``(B) carry out other necessary support functions 
                which would otherwise be provided by the Secretary or 
                other Federal officers or employees, from resources 
                other than direct program funds, in support of 
                comparable Bureau operated programs.
            ``(2) Effect upon appropriated amounts.--Amounts 
        appropriated to fund the grants provided under this section 
        shall be in addition to, and shall not reduce, the amounts 
        appropriated for the program being administered by the contract 
        or grant school.
    ``(b) Determination of Grant Amount.--
            ``(1) In general.--The amount of the grant provided to each 
        tribe or tribal organization under this section for each fiscal 
        year shall be determined by applying the administrative cost 
        percentage rate of the tribe or tribal organization to the 
        aggregate of the Bureau elementary and secondary functions 
        operated by the tribe or tribal organization for which funds 
        are received from or through the Bureau. The administrative 
        cost percentage rate determined under subsection (c) does not 
        apply to other programs operated by the tribe or tribal 
        organization.
            ``(2) Direct cost base funds.--The Secretary shall--
                    ``(A) reduce the amount of the grant determined 
                under paragraph (1) to the extent that payments for 
                administrative costs are actually received by an Indian 
                tribe or tribal organization under any Federal 
                education program included in the direct cost base of 
                the tribe or tribal organization; and
                    ``(B) take such actions as may be necessary to be 
                reimbursed by any other department or agency of the 
                Federal Government for the portion of grants made under 
                this section for the costs of administering any program 
                for Indians that is funded by appropriations made to 
                such other department or agency.
    ``(c) Administrative Cost Percentage Rate.--
            ``(1) In general.--For purposes of this section, the 
        administrative cost percentage rate for a contract or grant 
        school for a fiscal year is equal to the percentage determined 
        by dividing--
                    ``(A) the sum of--
                            ``(i) the amount equal to--
                                    ``(I) the direct cost base of the 
                                tribe or tribal organization for the 
                                fiscal year, multiplied by
                                    ``(II) the minimum base rate; plus
                            ``(ii) the amount equal to--
                                    ``(I) the standard direct cost 
                                base; multiplied by
                                    ``(II) the maximum base rate; by
                    ``(B) the sum of--
                            ``(i) the direct cost base of the tribe or 
                        tribal organization for the fiscal year; plus
                            ``(ii) the standard direct cost base.
            ``(2) Rounding.--The administrative cost percentage rate 
        shall be determined to the \1/100\ of a decimal point.
    ``(d) Combining Funds.--
            ``(1) In general.--Funds received by a tribe or contract or 
        grant school as grants under this section for tribal elementary 
        or secondary educational programs may be combined by the tribe 
        or contract or grant school into a single administrative cost 
        account without the necessity of maintaining separate funding 
        source accounting.
            ``(2) Indirect cost funds.--Indirect cost funds for 
        programs at the school which share common administrative 
        services with tribal elementary or secondary educational 
        programs may be included in the administrative cost account 
        described in paragraph (1).
    ``(e) Availability of Funds.--Funds received as grants under this 
section with respect to tribal elementary or secondary education 
programs shall remain available to the contract or grant school without 
fiscal year limitation and without diminishing the amount of any grants 
otherwise payable to the school under this section for any fiscal year 
beginning after the fiscal year for which the grant is provided.
    ``(f) Treatment of Funds.--Funds received as grants under this 
section for Bureau funded programs operated by a tribe or tribal 
organization under a contract or agreement shall not be taken into 
consideration for purposes of indirect cost underrecovery and 
overrecovery determinations by any Federal agency for any other funds, 
from whatever source derived.
    ``(g) Treatment of Entity Operating Other Programs.--In applying 
this section and section 105 of the Indian Self-Determination and 
Education Assistance Act with respect to an Indian tribe or tribal 
organization that--
            ``(1) receives funds under this section for administrative 
        costs incurred in operating a contract or grant school or a 
        school operated under the Tribally Controlled Schools Act of 
        1988; and
            ``(2) operates one or more other programs under a contract 
        or grant provided under the Indian Self-Determination and 
        Education Assistance Act,
the Secretary shall ensure that the Indian tribe or tribal organization 
is provided with the full amount of the administrative costs that are 
associated with operating the contract or grant school, and of the 
indirect costs, that are associated with all of such other programs, 
provided that funds appropriated for implementation of this section 
shall be used only to supply the amount of the grant required to be 
provided by this section.
    ``(h) Definitions.--For purposes of this section:
            ``(1) Administrative cost.--(A) The term `administrative 
        cost' means the costs of necessary administrative functions 
        which--
                    ``(i) the tribe or tribal organization incurs as a 
                result of operating a tribal elementary or secondary 
                educational program;
                    ``(ii) are not customarily paid by comparable 
                Bureau operated programs out of direct program funds; 
                and
                    ``(iii) are either--
                            ``(I) normally provided for comparable 
                        Bureau programs by Federal officials using 
                        resources other than Bureau direct program 
                        funds; or
                            ``(II) are otherwise required of tribal 
                        self-determination program operators by law or 
                        prudent management practice.
            ``(B) The term `administrative cost' may include--
                    ``(i) contract or grant (or other agreement) 
                administration;
                    ``(ii) executive, policy, and corporate leadership 
                and decisionmaking;
                    ``(iii) program planning, development, and 
                management;
                    ``(iv) fiscal, personnel, property, and procurement 
                management;
                    ``(v) related office services and record keeping; 
                and
                    ``(vi) costs of necessary insurance, auditing, 
                legal, safety and security services.
            ``(2) Bureau elementary and secondary functions.--The term 
        `Bureau elementary and secondary functions' means--
                    ``(A) all functions funded at Bureau schools by the 
                Office;
                    ``(B) all programs--
                            ``(i) funds for which are appropriated to 
                        other agencies of the Federal Government; and
                            ``(ii) which are administered for the 
                        benefit of Indians through Bureau schools; and
                    ``(C) all operation, maintenance, and repair funds 
                for facilities and government quarters used in the 
                operation or support of elementary and secondary 
                education functions for the benefit of Indians, from 
                whatever source derived.
            ``(3) Direct cost base.--(A) Except as otherwise provided 
        in subparagraph (B), the direct cost base of a tribe or tribal 
        organization for the fiscal year is the aggregate direct cost 
        program funding for all tribal elementary or secondary 
        educational programs operated by the tribe or tribal 
        organization during--
                    ``(i) the second fiscal year preceding such fiscal 
                year; or
                    ``(ii) if such programs have not been operated by 
                the tribe or tribal organization during the two 
                preceding fiscal years, the first fiscal year preceding 
                such fiscal year.
            ``(B) In the case of Bureau elementary or secondary 
        education functions which have not previously been operated by 
        a tribe or tribal organization under contract, grant, or 
        agreement with the Bureau, the direct cost base for the initial 
        year shall be the projected aggregate direct cost program 
        funding for all Bureau elementary and secondary functions to be 
        operated by the tribe or tribal organization during that fiscal 
        year.
            ``(4) Maximum base rate.--The term `maximum base rate' 
        means 50 percent.
            ``(5) Minimum base rate.--The term `minimum base rate' 
        means 11 percent.
            ``(6) Standard direct cost base.--The term `standard direct 
        cost base' means $600,000.
            ``(7) Tribal elementary or secondary educational 
        programs.--The term `tribal elementary or secondary educational 
        programs' means all Bureau elementary and secondary functions, 
        together with any other Bureau programs or portions of programs 
        (excluding funds for social services that are appropriated to 
        agencies other than the Bureau and are expended through the 
        Bureau, funds for major subcontracts, construction, and other 
        major capital expenditures, and unexpended funds carried over 
        from prior years) which share common administrative cost 
        functions, that are operated directly by a tribe or tribal 
        organization under a contract, grant, or agreement with the 
        Bureau.
    ``(i) Studies for Determination of Factors Affecting Costs; Base 
Rates Limits; Standard Direct Cost Base; Report to Congress.--
            ``(1) Studies.--Not later than 120 days after the date of 
        the enactment of the No Child Left Behind Act of 2001, the 
        Director of the Office of Indian Education Programs shall--
                    ``(A) conduct such studies as may be needed to 
                establish an empirical basis for determining relevant 
                factors substantially affecting required administrative 
                costs of tribal elementary and secondary education 
                programs, using the formula set forth in subsection 
                (c); and
            ``(B) conduct a study to determine--
                    ``(i) a maximum base rate which ensures that the 
                amount of the grants provided under this section will 
                provide adequate (but not excessive) funding of the 
                administrative costs of the smallest tribal elementary 
                or secondary educational programs;
                    ``(ii) a minimum base rate which ensures that the 
                amount of the grants provided under this section will 
                provide adequate (but not excessive) funding of the 
                administrative costs of the largest tribal elementary 
                or secondary educational programs; and
                    ``(iii) a standard direct cost base which is the 
                aggregate direct cost funding level for which the 
                percentage determined under subsection (c) will--
                            ``(I) be equal to the median between the 
                        maximum base rate and the minimum base rate; 
                        and
                            ``(II) ensure that the amount of the grants 
                        provided under this section will provide 
                        adequate (but not excessive) funding of the 
                        administrative costs of tribal elementary or 
                        secondary educational programs closest to the 
                        size of the program.
            ``(2) Guidelines.--The studies required under paragraph (1) 
        shall--
                    ``(A) be conducted in full consultation (in 
                accordance with section 1131) with--
                            ``(i) the tribes and tribal organizations 
                        that are affected by the application of the 
                        formula set forth in subsection (c); and
                            ``(ii) all national and regional Indian 
                        organizations of which such tribes and tribal 
                        organizations are typically members;
                    ``(B) be conducted onsite with a representative 
                statistical sample of the tribal elementary or 
                secondary educational programs under a contract entered 
                into with a nationally reputable public accounting and 
                business consulting firm;
                    ``(C) take into account the availability of skilled 
                labor; commodities, business and automatic data 
                processing services, related Indian preference and 
                Indian control of education requirements, and any other 
                market factors found substantially to affect the 
                administrative costs and efficiency of each such tribal 
                elementary or secondary educational program studied in 
                order to assure that all required administrative 
                activities can reasonably be delivered in a cost 
                effective manner for each such program, given an 
                administrative cost allowance generated by the values, 
                percentages, or other factors found in the studies to 
                be relevant in such formula;
                    ``(D) identify, and quantify in terms of 
                percentages of direct program costs, any general 
                factors arising from geographic isolation, or numbers 
                of programs administered, independent of program size 
                factors used to compute a base administrative cost 
                percentage in such formula; and
                    ``(E) identify any other incremental cost factors 
                substantially affecting the costs of required 
                administrative cost functions at any of the tribal 
                elementary or secondary educational programs studied 
                and determine whether the factors are of general 
                applicability to other such programs, and (if so) how 
                the factors may effectively be incorporated into such 
                formula.
            ``(3) Consultation with inspector general.--In carrying out 
        the studies required under this subsection, the Director shall 
        obtain the input of, and afford an opportunity to participate 
        to, the Inspector General of the Department of the Interior.
            ``(4) Consideration of delivery of administrative 
        services.--Determinations described in paragraph (2)(C) shall 
        be based on what is practicable at each location studied, given 
        prudent management practice, irrespective of whether required 
        administrative services were actually or fully delivered at 
        these sites, or whether other services were delivered instead, 
        during the period of the study.
            ``(5) Report.--Upon completion of the studies conducted 
        under paragraph (1), the Director shall submit to Congress a 
        report on the findings of the studies, together with 
        determinations based upon such studies that would affect the 
        definitions set forth under subsection (e) that are used in the 
        formula set forth in subsection (c).
            ``(6) Projection of costs.--The Secretary shall include in 
        the Bureau's justification for each appropriations request 
        beginning in the first fiscal year after the completion of the 
        studies conducted under paragraph (1), a projection of the 
        overall costs associated with the formula set forth in 
        subsection (c) for all tribal elementary or secondary education 
        programs which the Secretary expects to be funded in the fiscal 
        year for which the appropriations are sought.
            ``(7) Determination of program size.--For purposes of this 
        subsection, the size of tribal elementary or secondary 
        educational programs is determined by the aggregate direct cost 
        program funding level for all Bureau funded programs which 
        share common administrative cost functions.
    ``(j) Authorization of Appropriations.--
            ``(1) In general.--There are authorized to be appropriated 
        such sums as necessary to carry out this section.
            ``(2) Reductions.--If the total amount of funds necessary 
        to provide grants to tribes and tribal organizations in the 
        amounts determined under subsection (b) for a fiscal year 
        exceeds the amount of funds appropriated to carry out this 
        section for such fiscal year, the Secretary shall reduce the 
        amount of each grant determined under subsection (b) for such 
        fiscal year by an amount that bears the same relationship to 
        such excess as the amount of such grants determined under 
        subsection (b) bears to the total of all grants determined 
        under subsection (b) section for all tribes and tribal 
        organizations for such fiscal year.
    ``(k) Applicability to Schools Operating Under Tribally Controlled 
Schools Act of 1988.--The provisions of this section shall also apply 
to those schools operating under the Tribally Controlled Schools Act of 
1988.

``SEC. 1129. DIVISION OF BUDGET ANALYSIS.

    ``(a) Establishment.--Not later than 12 months after the date of 
the enactment of the No Child Left Behind Act of 2001, the Secretary 
shall establish within the Office of Indian Education Programs a 
Division of Budget Analysis (hereinafter referred to as the 
`Division'). Such Division shall be under the direct supervision and 
control of the Director of the Office.
    ``(b) Functions.--In consultation with the tribal governing bodies 
and tribal school boards, the Director of the Office, through the 
Division, shall conduct studies, surveys, or other activities to gather 
demographic information on Bureau funded schools and project the amount 
necessary to provide Indian students in such schools the educational 
program set forth in this part.
    ``(c) Annual Reports.--Not later than the date that the Assistant 
Secretary for Indian Affairs makes the annual budget submission, for 
each fiscal year after the date of the enactment of the No Child Left 
Behind Act of 2001, the Director of the Office shall submit to the 
appropriate committees of Congress (including the Appropriations 
committees), all Bureau funded schools, and the tribal governing bodies 
of such schools, a report which shall contain--
            ``(1) projections, based upon the information gathered 
        pursuant to subparagraph (b) and any other relevant 
        information, of amounts necessary to provide Indian students in 
        Bureau funded schools the educational program set forth in this 
        part;
            ``(2) a description of the methods and formulas used to 
        calculate the amounts projected pursuant to paragraph (1); and
            ``(3) such other information as the Director of the Office 
        considers appropriate.
    ``(d) Use of Reports.--The Director of the Office and the Assistant 
Secretary for Indian Affairs shall use the annual report required by 
subsection (c) when preparing their annual budget submissions.

``SEC. 1130. UNIFORM DIRECT FUNDING AND SUPPORT.

    ``(a) Establishment of System and Forward Funding.--
            ``(1) In general.--The Secretary shall establish, by 
        regulation adopted in accordance with section 1138, a system 
        for the direct funding and support of all Bureau funded 
        schools. Such system shall allot funds in accordance with 
        section 1127. All amounts appropriated for distribution under 
        this section may be made available under paragraph (2).
            ``(2) Timing for use of funds.--(A) For the purposes of 
        affording adequate notice of funding available pursuant to the 
        allotments made under section 1127, amounts appropriated in an 
        appropriations Act for any fiscal year shall become available 
        for obligation by the affected schools on July 1 of the fiscal 
        year in which such amounts are appropriated without further 
        action by the Secretary, and shall remain available for 
        obligation through the succeeding fiscal year.
            ``(B) The Secretary shall, on the basis of the amount 
        appropriated in accordance with this paragraph--
                    ``(i) publish, not later than July 1 of the fiscal 
                year for which the funds are appropriated, allotments 
                to each affected school made under section 1127 of 85 
                percent of such appropriation; and
                    ``(ii) publish, not later than September 30 of such 
                fiscal year, the allotments to be made under section 
                1127 of the remaining 15 percent of such appropriation, 
                adjusted to reflect the actual student attendance.
            ``(3) Limitation.--(A) Notwithstanding any other provision 
        of law or regulation, the supervisor of a Bureau funded school 
        may expend an aggregate of not more than $50,000 of the amount 
        allotted the school under section 1127 to acquire materials, 
        supplies, equipment, services, operation, and maintenance for 
        the school without competitive bidding if--
                    ``(i) the cost for any single item purchased does 
                not exceed $15,000;
                    ``(ii) the school board approves the procurement;
                    ``(iii) the supervisor certifies that the cost is 
                fair and reasonable;
                    ``(iv) the documents relating to the procurement 
                executed by the supervisor or other school staff cite 
                this paragraph as authority for the procurement; and
                    ``(v) the transaction is documented in a journal 
                maintained at the school clearly identifying when the 
                transaction occurred, what was acquired and from whom, 
                the price paid, the quantities acquired, and any other 
                information the supervisor or school board considers 
                relevant.
            ``(B) Not later than 6 months after the date of the 
        enactment of the No Child Left Behind Act of 2001, the 
        Secretary shall cause to be sent to each supervisor of a Bureau 
        operated program and school board chairperson, the education 
        line officer or officers of each agency and area, and the 
        Bureau Division in charge of procurement, at both the local and 
        national levels, notice of this paragraph.
            ``(C) The Director shall be responsible for determining the 
        application of this paragraph, including the authorization of 
        specific individuals to carry out this paragraph, and shall be 
        responsible for the provision of guidelines on the use of this 
        paragraph and adequate training on such guidelines.
            ``(4) Effect of sequestration order.--If a sequestration 
        order issued under the Balanced Budget and Emergency Deficit 
        Control Act of 1985 reduces the amount of funds available for 
        allotment under section 1127 for any fiscal year by more than 7 
        percent of the amount of funds available for allotment under 
        such section during the preceding fiscal year--
                    ``(A) to fund allotments under section 1127, the 
                Secretary, notwithstanding any other law, may use--
                            ``(i) funds appropriated for the operation 
                        of any Bureau school that is closed or 
                        consolidated; and
                            ``(ii) funds appropriated for any program 
                        that has been curtailed at any Bureau school; 
                        and
                    ``(B) the Secretary may waive the application of 
                the provisions of section 1121(h) with respect to the 
                closure or consolidation of a school, or the 
                curtailment of a program at a school, during such 
                fiscal year if the funds described in clauses (i) and 
                (ii) of subparagraph (A) with respect to such school 
                are used to fund allotments made under section 1127 for 
                such fiscal year.
    ``(b) Local Financial Plans for Expenditure of Funds.--
            ``(1) Plan required.--In the case of all Bureau operated 
        schools, allotted funds shall be expended on the basis of local 
        financial plans which ensure meeting the accreditation 
        requirements or standards for the school established pursuant 
        to section 1121 and which shall be prepared by the local school 
        supervisor in active consultation with the local school board 
        for each school. The local school board for each school shall 
        have the authority to ratify, reject, or amend such financial 
        plan, and expenditures thereunder, and, on its own 
        determination or in response to the supervisor of the school, 
        to revise such financial plan to meet needs not foreseen at the 
        time of preparation of the financial plan.
            ``(2) The supervisor--
                    ``(A) shall put into effect the decisions of the 
                school board;
                    ``(B) shall provide the appropriate local union 
                representative of the education employees with copies 
                of proposed draft financial plans and all amendments or 
                modifications thereto, at the same time such copies are 
                submitted to the local school board; and
                    ``(C) may appeal any such action of the local 
                school board to the appropriate education line officer 
                of the Bureau agency by filing a written statement 
                describing the action and the reasons the supervisor 
                believes such action should be overturned. A copy of 
                such statement shall be submitted to the local school 
                board and such board shall be afforded an opportunity 
                to respond, in writing, to such appeal. After reviewing 
                such written appeal and response, the appropriate 
                education line officer may, for good cause, overturn 
                the action of the local school board. The appropriate 
                education line officer shall transmit the determination 
                of such appeal in the form of a written opinion to such 
                board and to such supervisor identifying the reasons 
                for overturning such action.
    ``(c) Use of Self-Determination Grants Funds.--Funds for self-
determination grants under section 103(a)(2) of the Indian Self-
Determination and Education Assistance Act shall not be used for 
providing technical assistance and training in the field of education 
by the Bureau unless such services are provided in accordance with a 
plan, agreed to by the tribe or tribes affected and the Bureau, under 
which control of education programs is intended to be transferred to 
such tribe or tribes within a specific period of time negotiated under 
such agreement. The Secretary may approve applications for funding 
tribal divisions of education and development of tribal codes of 
education from funds appropriated pursuant to section 104(a) of such 
Act.
    ``(d) Technical Assistance and Training.--In the exercise of its 
authority under this section, a local school board may request 
technical assistance and training from the Secretary, and the Secretary 
shall, to the greatest extent possible, provide such services, and make 
appropriate provisions in the budget of the Office for such services.
    ``(e) Summer Program of Academic and Support Services.--
            ``(1) In general.--A financial plan under subsection (b) 
        for a school may include, at the discretion of the local 
        administrator and the school board of such school, a provision 
        for a summer program of academic and support services for 
        students of the school. Any such program may include activities 
        related to the prevention of alcohol and substance abuse. The 
        Assistant Secretary for Indian Affairs shall provide for the 
        utilization of any such school facility during any summer in 
        which such utilization is requested.
            ``(2) Use of other funds.--Notwithstanding any other 
        provision of law, funds authorized under the Act of April 16, 
        1934, and this Act may be used to augment the services provided 
        in each summer program at the option, and under the control, of 
        the tribe or Indian controlled school receiving such funds.
            ``(3) Technical assistance and program coordination.--The 
        Assistant Secretary for Indian Affairs, acting through the 
        Director of the Office, shall provide technical assistance and 
        coordination for any program described in paragraph (1) and 
        shall, to the extent possible, encourage the coordination of 
        such programs with any other summer programs that might benefit 
        Indian youth, regardless of the funding source or 
        administrative entity of any such program.
    ``(f) Cooperative Agreements.--
            ``(1) In general.--From funds allotted to a Bureau school 
        under section 1127, the Secretary shall, if specifically 
        requested by the tribal governing body (as defined in section 
        1141), implement any cooperative agreement entered into between 
        the tribe, the Bureau school board, and the local public school 
        district which meets the requirements of paragraph (2) and 
        involves the school. The tribe, the Bureau school board, and 
        the local public school district shall determine the terms of 
        the agreement. Such agreement may encompass coordination of all 
        or any part of the following:
                    ``(A) Academic program and curriculum, unless the 
                Bureau school is currently accredited by a State or 
                regional accrediting entity and would not continue to 
                be so accredited.
                    ``(B) Support services, including procurement and 
                facilities maintenance.
                    ``(C) Transportation.
            ``(2) Equal benefit and burden.--Each agreement entered 
        into pursuant to the authority provided in paragraph (1) shall 
        confer a benefit upon the Bureau school commensurate with the 
        burden assumed, though this requirement shall not be construed 
        so as to require equal expenditures or an exchange of similar 
        services.
    ``(g) Product or Result of Student Projects.--Notwithstanding any 
other provision of law, where there is agreement on action between the 
superintendent and the school board of a Bureau funded school, the 
product or result of a project conducted in whole or in major part by a 
student may be given to that student upon the completion of such 
project.
    ``(h) Not Considered Federal Funds for Matching Requirements.--
Notwithstanding any other provision of law, funds received by a Bureau 
funded school under this part shall not be considered Federal funds for 
the purposes of meeting a matching funds requirement for any Federal 
program.

``SEC. 1131. POLICY FOR INDIAN CONTROL OF INDIAN EDUCATION.

    ``(a) Facilitation of Indian Control.--It shall be the policy of 
the Secretary and the Bureau, in carrying out the functions of the 
Bureau, to facilitate tribal control of Indian affairs in all matters 
relating to education.
    ``(b) Consultation With Tribes.--
            ``(1) In general.--All actions under this Act shall be done 
        with active consultation with tribes.
            ``(2) Requirements.--The consultation required under 
        paragraph (1) means a process involving the open discussion and 
        joint deliberation of all options with respect to potential 
        issues or changes between the Bureau and all interested 
        parties. During such discussions and joint deliberations, 
        interested parties (including tribes and school officials) 
        shall be given an opportunity to present issues including 
        proposals regarding changes in current practices or programs 
        which will be considered for future action by the Bureau. All 
        interested parties shall be given an opportunity to participate 
        and discuss the options presented or to present alternatives, 
        with the views and concerns of the interested parties given 
        effect unless the Secretary determines, from information 
        available from or presented by the interested parties during 
        one or more of the discussions and deliberations, that there is 
        a substantial reason for another course of action. The 
        Secretary shall submit to any Member of Congress, within 18 
        days of the receipt of a written request by such Member, a 
        written explanation of any decision made by the Secretary which 
        is not consistent with the views of the interested parties.

``SEC. 1132. INDIAN EDUCATION PERSONNEL.

    ``(a) In General.--Chapter 51, subchapter III of chapter 53, and 
chapter 63 of title 5, United States Code, relating to classification, 
pay and leave, respectively, and the sections of such title relating to 
the appointment, promotion, hours of work, and removal of civil service 
employees, shall not apply to educators or to education positions (as 
defined in subsection (p)).
    ``(b) Regulations.--Not later than 60 days after the date of the 
enactment of the No Child Left Behind Act of 2001, the Secretary shall 
prescribe regulations to carry out this section. Such regulations shall 
include--
            ``(1) the establishment of education positions;
            ``(2) the establishment of qualifications for educators and 
        education personnel;
            ``(3) the fixing of basic compensation for educators and 
        education positions;
            ``(4) the appointment of educators;
            ``(5) the discharge of educators;
            ``(6) the entitlement of educators to compensation;
            ``(7) the payment of compensation to educators;
            ``(8) the conditions of employment of educators;
            ``(9) the leave system for educators;
            ``(10) the annual leave and sick leave for educators; and
            ``(11) such matters as may be appropriate.
    ``(c) Qualifications of Educators.--
            ``(1) Requirements.--In prescribing regulations to govern 
        the qualifications of educators, the Secretary shall require--
                    ``(A)(i) that lists of qualified and interviewed 
                applicants for education positions be maintained in 
                each agency and area office of the Bureau from among 
                individuals who have applied at the agency or area 
                level for an education position or who have applied at 
                the national level and have indicated in such 
                application an interest in working in certain areas or 
                agencies; and
                    ``(ii) that a list of qualified and interviewed 
                applicants for education positions be maintained in the 
                Office from among individuals who have applied at the 
                national level for an education position and who have 
                expressed interest in working in an education position 
                anywhere in the United States;
                    ``(B) that a local school board shall have the 
                authority to waive on a case-by-case basis, any formal 
                education or degree qualifications established by 
                regulation pursuant to subsection (b)(2), in order for 
                a tribal member to be hired in an education position to 
                teach courses on tribal culture and language and that 
                subject to subsection (e)(2), a determination by a 
                school board that such a person be hired shall be 
                instituted supervisor; and
                    ``(C) that it shall not be a prerequisite to the 
                employment of an individual in an education position at 
                the local level that such individual's name appear on 
                the national list maintained pursuant to subparagraph 
                (A)(ii) or that such individual has applied at the 
                national level for an education position.
            ``(2) Exception for certain temporary employment.--The 
        Secretary may authorize the temporary employment in an 
        education position of an individual who has not met the 
        certification standards established pursuant to regulations, if 
        the Secretary determines that failure to do so would result in 
        that position remaining vacant.
    ``(d) Hiring of Educators.--
            ``(1) Requirements.--In prescribing regulations to govern 
        the appointment of educators, the Secretary shall require--
                    ``(A)(i) that educators employed in a Bureau 
                operated school (other than the supervisor of the 
                school) shall be hired by the supervisor of the school. 
                In cases where there are no qualified applicants 
                available, such supervisor may consult the national 
                list maintained pursuant to subsection (c)(1)(A)(ii);
                    ``(ii) each school supervisor shall be hired by the 
                education line officer of the agency office of the 
                Bureau in which the school is located;
                    ``(iii) educators employed in an agency office of 
                the Bureau shall be hired by the superintendent for 
                education of the agency office; and
                    ``(iv) each education line officer and educators 
                employed in the Office of the Director of Indian 
                Education Programs shall be hired by the Director;
                    ``(B) that before an individual is employed in an 
                education position in a school by the supervisor of a 
                school (or with respect to the position of supervisor, 
                by the appropriate agency education line officer), the 
                local school board for the school shall be consulted. A 
                determination by such school board that such individual 
                should or should not be so employed shall be instituted 
                by the supervisor (or with respect to the position of 
                supervisor, by the agency superintendent for 
                education);
                    ``(C) that before an individual may be employed in 
                an education position at the agency level, the 
                appropriate agency school board shall be consulted, and 
                that a determination by such school board that such 
                individual should or should not be employed shall be 
                instituted by the agency superintendent for education; 
                and
                    ``(D) that before an individual may be employed in 
                an education position in the Office of the Director 
                (other than the position of Director), the national 
                school boards representing all Bureau schools shall be 
                consulted.
            ``(2) Information regarding application at national 
        level.--Any individual who applies at the local level for an 
        education position shall state on such individual's application 
        whether or not such individual has applied at the national 
        level for an education position in the Bureau. If such 
        individual is employed at the local level, such individual's 
        name shall be immediately forwarded to the Secretary, who 
        shall, as soon as practicable but in no event in more than 30 
        days, ascertain the accuracy of the statement made by such 
        individual pursuant to the first sentence of this paragraph. 
        Notwithstanding subsection (e), if the individual's statement 
        is found to have been false, such individual, at the 
        Secretary's discretion, may be disciplined or discharged. If 
        the individual has applied at the national level for an 
        education position in the Bureau, the appointment of such 
        individual at the local level shall be conditional for a period 
        of 90 days, during which period the Secretary may appoint a 
        more qualified individual (as determined by the Secretary) from 
        the list maintained at the national level pursuant to 
        subsection (c)(1)(A)(ii) to the position to which such 
        individual was appointed.
            ``(3) Statutory construction.--Except as expressly 
        provided, nothing in this section shall be construed as 
        conferring upon local school boards authority over, or control 
        of, educators at Bureau funded schools or the authority to 
        issue management decisions.
    ``(e) Discharge and Conditions of Employment of Educators.--
            ``(1) Regulations.--In prescribing regulations to govern 
        the discharge and conditions of employment of educators, the 
        Secretary shall require--
                    ``(A) that procedures be established for the rapid 
                and equitable resolution of grievances of educators;
                    ``(B) that no educator may be discharged without 
                notice of the reasons therefore and opportunity for a 
                hearing under procedures that comport with the 
                requirements of due process; and
                    ``(C) that educators employed in Bureau schools be 
                notified 30 days prior to the end of the school year 
                whether their employment contract will be renewed for 
                the following year.
            ``(2) Procedures for discharge.--The supervisor of a Bureau 
        school may discharge (subject to procedures established under 
        paragraph (1)(B)) for cause (as determined under regulations 
        prescribed by the Secretary) any educator employed in such 
        school. Upon giving notice of proposed discharge to an 
        educator, the supervisor involved shall immediately notify the 
        local school board for the school of such action. A 
        determination by the local school board that such educator 
        shall not be discharged shall be followed by the supervisor. 
        The supervisor shall have the right to appeal such action to 
        the education line officer of the appropriate agency office of 
        the Bureau. Upon such an appeal, the agency education line 
        officer may, for good cause and in writing to the local school 
        board, overturn the determination of the local school board 
        with respect to the employment of such individual.
            ``(3) Recommendations of school boards for discharge.--Each 
        local school board for a Bureau school shall have the right--
                    ``(A) to recommend to the supervisor of such school 
                that an educator employed in the school be discharged; 
                and
                    ``(B) to recommend to the education line officer of 
                the appropriate agency office of the Bureau and to the 
                Director of the Office, that the supervisor of the 
                school be discharged.
    ``(f) Applicability of Indian Preference Laws.--
            ``(1) In general.--Notwithstanding any provision of the 
        Indian preference laws, such laws shall not apply in the case 
        of any personnel action under this section respecting an 
        applicant or employee not entitled to Indian preference if each 
        tribal organization concerned grants a written waiver of the 
        application of such laws with respect to such personnel action 
        and states that such waiver is necessary. This paragraph shall 
        not relieve the Bureau's responsibility to issue timely and 
        adequate announcements and advertisements concerning any such 
        personnel action if such action is intended to fill a vacancy 
        (no matter how such vacancy is created).
            ``(2) Tribal organization defined.--For purposes of this 
        subsection, the term `tribal organization' means--
                    ``(A) the recognized governing body of any Indian 
                tribe, band, nation, pueblo, or other organized 
                community, including a Native village (as defined in 
                section 3(c) of the Alaska Native Claims Settlement 
                Act); or
                    ``(B) in connection with any personnel action 
                referred to in this subsection, any local school board 
                as defined in section 1141 which has been delegated by 
                such governing body the authority to grant a waiver 
                under this subsection with respect to personnel action.
            ``(3) Indian preference law defined.--The term `Indian 
        preference laws' means section 12 of the Act of June 18, 1934, 
        or any other provision of law granting a preference to Indians 
        in promotions and other personnel actions. Such term shall not 
        include section 7(b) of the Indian Self-Determination and 
        Education Assistance Act.
    ``(g) Compensation or Annual Salary.--
            ``(1) In general.--(A) Except as otherwise provided in this 
        section, the Secretary shall fix the basic compensation for 
        educators and education positions at rates in effect under the 
        General Schedule for individuals with comparable 
        qualifications, and holding comparable positions, to whom 
        chapter 51 of title 5, United States Code, is applicable or on 
        the basis of the Federal Wage System schedule in effect for the 
        locality, and for the comparable positions, the rates of 
        compensation in effect for the senior executive service.
            ``(B) The Secretary shall establish the rate of basic 
        compensation, or annual salary rates, for the positions of 
        teachers and counselors (including dormitory counselors and 
        home-living counselors) at the rates of basic compensation 
        applicable (on the date of the enactment of the No Child Left 
        Behind Act of 2001 and thereafter) to comparable positions in 
        the overseas schools under the Defense Department Overseas 
        Teachers Pay Act. The Secretary shall allow the local school 
        boards authority to implement only the aspects of the Defense 
        Department Overseas Teacher pay provisions that are considered 
        essential for recruitment and retention. Implementation of such 
        provisions shall not be construed to require the implementation 
        of the Act in its entirety.
            ``(C)(i) Beginning with the fiscal year following the date 
        of the enactment of the No Child Left Behind Act of 2001, each 
        school board may set the rate of compensation or annual salary 
        rate for teachers and counselors (including academic 
        counselors) who are new hires at the school and who have not 
        worked at the school on the date of implementation of this 
        provision, at rates consistent with the rates paid for 
        individuals in the same positions, with the same tenure and 
        training, in any other school within whose boundaries the 
        Bureau school lies. In instances where the adoption of such 
        rates cause a reduction in the payment of compensation from 
        that which was in effect for the fiscal year following the date 
        of the enactment of the No Child Left Behind Act of 2001, the 
        new rate may be applied to the compensation of employees of the 
        school who worked at the school on of the date of the enactment 
        of that Act by applying those rates to each contract renewal 
        such that the reduction takes effect in three equal 
        installments. Where adoption of such rates lead to an increase 
        in the payment of compensation from that which was in effect 
        for the fiscal year following the date of the enactment of the 
        No Child Left Behind Act of 2001, the school board may make 
        such rates applicable at the next contract renewal such that 
        either--
                    ``(I) the increase occurs in its entirety; or
                    ``(II) the increase is applied in three equal 
                installments.
            ``(ii) The establishment of rates of basic compensation and 
        annual salary rates under subparagraphs (B) and (C) shall not 
        preclude the use of regulations and procedures used by the 
        Bureau prior to April 28, 1988, in making determinations 
        regarding promotions and advancements through levels of pay 
        that are based on the merit, education, experience, or tenure 
        of the educator.
            ``(D) The establishment of rates of basic compensation and 
        annual salary rates under subparagraphs (B) and (C) shall not 
        affect the continued employment or compensation of an educator 
        who was employed in an education position on October 31, 1979, 
        and who did not make an election under subsection (p) is in 
        effect on January 1, 1990.
            ``(2) Post-differential rates.--(A) The Secretary may pay a 
        post-differential rate not to exceed 25 percent of the rate of 
        basic compensation, on the basis of conditions of environment 
        or work which warrant additional pay as a recruitment and 
        retention incentive.
            ``(B)(i) Upon the request of the supervisor and the local 
        school board of a Bureau school, the Secretary shall grant the 
        supervisor of the school authorization to provide one or more 
        post-differentials under subparagraph (A) unless the Secretary 
        determines for clear and convincing reasons (and advises the 
        board in writing of those reasons) that certain of the 
        requested post-differentials should be disapproved or decreased 
        because there is no disparity of compensation for the involved 
        employees or positions in the Bureau school, as compared with 
        the nearest public school, that is either--
                    ``(I) at least 5 percent; or
                    ``(II) less than 5 percent and affects the 
                recruitment or retention of employees at the school.
            ``(ii) A request under clause (i) shall be deemed granted 
        at the end of the 60th day after the request is received in the 
        Central Office of the Bureau unless before that time the 
        request is approved, approved with modification, or disapproved 
        by the Secretary.
            ``(iii) The Secretary or the supervisor of a Bureau school 
        may discontinue or decrease a post-differential authorized 
        under this subparagraph at the beginning of a school year if--
                    ``(I) the local school board requests that such 
                differential be discontinued or decreased; or
                    ``(II) the Secretary or the supervisor determines 
                for clear and convincing reasons (and advises the board 
                in writing of those reasons) that there is no disparity 
                of compensation that would affect the recruitment or 
                retention of employees at the school after the 
                differential is discontinued or decreased.
            ``(iv) On or before February 1 of each year, the Secretary 
        shall submit to Congress a report describing the requests and 
        grants of authority under this subparagraph during the previous 
        year and listing the positions contracted under those grants of 
        authority.
    ``(h) Liquidation of Remaining Leave Upon Termination.--Upon 
termination of employment with the Bureau, any annual leave remaining 
to the credit of an individual within the purview of this section shall 
be liquidated in accordance with sections 5551(a) and 6306 of title 5, 
United States Code, except that leave earned or accrued under 
regulations prescribed pursuant to subsection (b)(10) of this section 
shall not be so liquidated.
    ``(i) Transfer of Remaining Sick Leave Upon Transfer, Promotion, or 
Reemployment.--In the case of any educator who is transferred, 
promoted, or reappointed, without break in service, to a position in 
the Federal Government under a different leave system, any remaining 
leave to the credit of such person earned or credited under the 
regulations prescribed pursuant to subsection (b)(10) shall be 
transferred to such person's credit in the employing agency on an 
adjusted basis in accordance with regulations which shall be prescribed 
by the Office of Personnel Management.
    ``(j) Ineligibility for Employment of Voluntarily Terminated 
Educators.--An educator who voluntarily terminates employment with the 
Bureau before the expiration of the existing employment contract 
between such educator and the Bureau shall not be eligible to be 
employed in another education position in the Bureau during the 
remainder of the term of such contract.
    ``(k) Dual Compensation.--In the case of any educator employed in 
an education position described in subsection (l)(1)(A) who--
            ``(1) is employed at the close of a school year;
            ``(2) agrees in writing to serve in such position for the 
        next school year; and
            ``(3) is employed in another position during the recess 
        period immediately preceding such next school year, or during 
        such recess period receives additional compensation referred to 
        in section 5533 of title 5, United States Code, relating to 
        dual compensation,
shall not apply to such educator by reason of any such employment 
during a recess period for any receipt of additional compensation.
    ``(l) Voluntary Services.--Notwithstanding section 1342 of title 
31, United States Code, the Secretary may, subject to the approval of 
the local school board concerned, accept voluntary services on behalf 
of Bureau schools. Nothing in this part shall be construed to require 
Federal employees to work without compensation or to allow the use of 
volunteer services to displace or replace Federal employees. An 
individual providing volunteer services under this section is a Federal 
employee only for purposes of chapter 81 of title 5, United States 
Code, and chapter 171 of title 28, United States Code.
    ``(m) Proration of Pay.--
            ``(1) Election of employee.--Notwithstanding any other 
        provision of law, including laws relating to dual compensation, 
        the Secretary, at the election of the employee, shall prorate 
        the salary of an employee employed in an education position for 
        the academic school year over the entire 12-month period. Each 
        educator employed for the academic school year shall annually 
        elect to be paid on a 12-month basis or for those months while 
        school is in session. No educator shall suffer a loss of pay or 
        benefits, including benefits under unemployment or other 
        Federal or federally assisted programs, because of such 
        election.
            ``(2) Change of election.--During the course of such year 
        the employee may change election once.
            ``(3) Lump sum payment.--That portion of the employee's pay 
        which would be paid between academic school years may be paid 
        in a lump sum at the election of the employee.
            ``(4) Definitions.--For purposes of this subsection, the 
        terms `educator' and `education position' have the meanings 
        contained in paragraphs (1) and (2) of subsection (o). This 
        subsection applies to those individuals employed under the 
        provisions of section 1132 of this title or title 5, United 
        States Code.
    ``(n) Extracurricular Activities.--
            ``(1) Stipend.--Notwithstanding any other provision of law, 
        the Secretary may provide, for each Bureau area, a stipend in 
        lieu of overtime premium pay or compensatory time off. Any 
        employee of the Bureau who performs additional activities to 
        provide services to students or otherwise support the school's 
        academic and social programs may elect to be compensated for 
        all such work on the basis of the stipend. Such stipend shall 
        be paid as a supplement to the employee's base pay.
            ``(2) Election not to receive stipend.--If an employee 
        elects not to be compensated through the stipend established by 
        this subsection, the appropriate provisions of title 5, United 
        States Code, shall apply.
            ``(3) Applicability of subsection.--This subsection applies 
        to all Bureau employees, whether employed under section 1132 of 
        this title or title 5, United States Code.
    ``(o) Definitions.--For the purpose of this section--
            ``(1) Education position.--The term `education position' 
        means a position in the Bureau the duties and responsibilities 
        of which--
                    ``(A) are performed on a school-year basis 
                principally in a Bureau school and involve--
                            ``(i) classroom or other instruction or the 
                        supervision or direction of classroom or other 
                        instruction;
                            ``(ii) any activity (other than teaching) 
                        which requires academic credits in educational 
                        theory and practice equal to the academic 
                        credits in educational theory and practice 
                        required for a bachelor's degree in education 
                        from an accredited institution of higher 
                        education;
                            ``(iii) any activity in or related to the 
                        field of education notwithstanding that 
                        academic credits in educational theory and 
                        practice are not a formal requirement for the 
                        conduct of such activity; or
                            ``(iv) support services at, or associated 
                        with, the site of the school; or
                    ``(B) are performed at the agency level of the 
                Bureau and involve the implementation of education-
                related programs other than the position for agency 
                superintendent for education.
            ``(2) Educator.--The term `educator' means an individual 
        whose services are required, or who is employed, in an 
        education position.
    ``(p) Covered Individuals; Election.--This section shall apply with 
respect to any educator hired after November 1, 1979 (and to any 
educator who elected for coverage under that provision after November 
1, 1979) and to the position in which such individual is employed. The 
enactment of this section shall not affect the continued employment of 
an individual employed on October 31, 1979 in an education position, or 
such person's right to receive the compensation attached to such 
position.

``SEC. 1133. COMPUTERIZED MANAGEMENT INFORMATION SYSTEM.

    ``(a) Establishment of System.--Not later than July 1, 2003, the 
Secretary shall establish within the Office, a computerized management 
information system, which shall provide processing and information to 
the Office. The information provided shall include information 
regarding--
            ``(1) student enrollment;
            ``(2) curriculum;
            ``(3) staffing;
            ``(4) facilities;
            ``(5) community demographics;
            ``(6) student assessment information;
            ``(7) information on the administrative and program costs 
        attributable to each Bureau program, divided into discreet 
        elements;
            ``(8) relevant reports;
            ``(9) personnel records;
            ``(10) finance and payroll; and
            ``(11) such other items as the Secretary deems appropriate.
    ``(b) Implementation of System.--Not later than July 1, 2004, the 
Secretary shall complete implementation of such a system at each field 
office and Bureau funded school.

``SEC. 1134. UNIFORM EDUCATION PROCEDURES AND PRACTICES.

    ``The Secretary shall cause the various divisions of the Bureau to 
formulate uniform procedures and practices with respect to such 
concerns of those divisions as relate to education, and shall report 
such practices and procedures to the Congress.

``SEC. 1135. RECRUITMENT OF INDIAN EDUCATORS.

    ``The Secretary shall institute a policy for the recruitment of 
qualified Indian educators and a detailed plan to promote employees 
from within the Bureau. Such plan shall include opportunities for 
acquiring work experience prior to actual work assignment.

``SEC. 1136. BIENNIAL REPORT; AUDITS.

    ``(a) Biennial Reports.--The Secretary shall submit to each 
appropriate committee of Congress, all Bureau funded schools, and the 
tribal governing bodies of such schools, a detailed biennial report on 
the state of education within the Bureau and any problems encountered 
in Indian education during the 2-year period covered by the report. 
Such report shall contain suggestions for the improvement of the Bureau 
educational system and for increasing tribal or local Indian control of 
such system. Such report shall also include the current status of 
tribally controlled community colleges. The annual budget submission 
for the Bureau's education programs shall include--
            ``(1) information on the funds provided to previously 
        private schools under section 208 of the Indian Self-
        Determination and Education Assistance Act, and recommendations 
        with respect to the future use of such funds;
            ``(2) the needs and costs of operations and maintenance of 
        tribally controlled community colleges eligible for assistance 
        under the Tribally Controlled Community College Assistance Act 
        of 1978 and recommendations with respect to meeting such needs 
        and costs; and
            ``(3) the plans required by sections 1121 (g), 1122(c), and 
        1125(b).
    ``(b) Financial and Compliance Audits.--The Inspector General of 
the Department of the Interior shall establish a system to ensure that 
financial and compliance audits are conducted of each Bureau operated 
school at least once in every 3 years. Audits of Bureau schools shall 
be based upon the extent to which such school has complied with its 
local financial plan under section 1130.

``SEC. 1137. RIGHTS OF INDIAN STUDENTS.

    ``The Secretary shall prescribe such rules and regulations as are 
necessary to ensure the constitutional and civil rights of Indian 
students attending Bureau funded schools, including such students' 
right to privacy under the laws of the United States, such students' 
right to freedom of religion and expression, and such students' right 
to due process in connection with disciplinary actions, suspensions, 
and expulsions.

``SEC. 1138. REGULATIONS.

    ``(a) In General.--The Secretary is authorized to issue only such 
regulations as are necessary to ensure compliance with the specific 
provision of this Act. The Secretary shall publish proposed regulations 
in the Federal Register, shall provide a period of not less than 90 
days for public comment thereon, and shall place in parentheses after 
each regulatory section the citation to any statutory provision 
providing authority to promulgate such regulatory provision.
    ``(b) Miscellaneous.--
            ``(1) Construction.--The provisions of this Act shall 
        supersede any conflicting provisions of law (including any 
        conflicting regulations) in effect on the day before the date 
        of the enactment of this Act and the Secretary is authorized to 
        repeal any regulation inconsistent with the provisions of this 
        Act.
            ``(2) Legal authority to be stated.--Regulations issued to 
        implement this Act shall contain, immediately following each 
        substantive provision of such regulations, citations to the 
        particular section or sections of statutory law or other legal 
        authority upon which provision is based.

``SEC. 1138A. REGIONAL MEETINGS AND NEGOTIATED RULEMAKING.

    ``(a) Meetings.--
            ``(1) In general.--The Secretary shall obtain tribal 
        involvement in the development of proposed regulations under 
        this part and the Tribally Controlled Schools Act of 1988. The 
        Secretary shall obtain the advice of and recommendations from 
        representatives of Indian tribes with Bureau funded schools on 
        their reservations, Indian tribes whose children attend Bureau 
        funded off-reservation boarding schools, school boards, 
        administrators or employees of Bureau funded schools, and 
        parents and teachers of students enrolled in Bureau funded 
        schools.
            ``(2) Issues.--The Secretary shall provide for a 
        comprehensive discussion and exchange of information concerning 
        the implementation of this part and the Tribally Controlled 
        Schools Act of 1988 through such mechanisms as regional 
        meetings and electronic exchanges of information. The Secretary 
        shall take into account the information received through such 
        mechanisms in the development of proposed regulations and shall 
        publish a summary of such information in the Federal Register 
        together with such proposed regulations.
    ``(b) Draft Regulations.--
            ``(1) In general.--After obtaining the advice and 
        recommendations described in subsection (a)(1) and before 
        publishing proposed regulations in the Federal Register, the 
        Secretary shall prepare draft regulations implementing this 
        part and the Tribally Controlled Schools Act of 1988 and shall 
        submit such regulations to a negotiated rulemaking process. 
        Participants in the negotiations process shall be chosen by the 
        Secretary from individuals nominated by the entities described 
        in subsection (a)(1). To the maximum extent possible, the 
        Secretary shall ensure that the tribal representative 
        membership chosen pursuant to the preceding sentence reflects 
        the proportionate share of students from tribes served by the 
        Bureau funded school system. The negotiation process shall be 
        conducted in a timely manner in order that the final 
        regulations may issued by the Secretary no later than 18 months 
        after the enactment of this section.
            ``(2) Notification to congress.--If draft regulations 
        implementing this part and the Tribally Controlled Schools Act 
        of 1988 are not issued in final form by the deadline provided 
        in paragraph (1), the Secretary shall notify the appropriate 
        committees of Congress of which draft regulations were not 
        issued in final form by the deadline and the reason such final 
        regulations were not issued.
            ``(3) Expansion of negotiated rulemaking.--All regulations 
        pertaining to this part and the Tribally Controlled Schools Act 
        of 1988 that are promulgated after the date of the enactment of 
        this subsection shall be subject to a negotiated rulemaking 
        (including the selection of the regulations to be negotiated), 
        unless the Secretary determines that applying such a 
        requirement with respect to given regulations is impracticable, 
        unnecessary, or contrary to the public interest (within the 
        meaning of section 553(b)(3)(B) of title 5), and publishes the 
        basis for such determination in the Federal Register at the 
        same time as the proposed regulations in question are first 
        published. All published proposed regulations shall conform to 
        agreements resulting from such negotiated rulemaking unless the 
        Secretary reopens the negotiated rulemaking process or provides 
        a written explanation to the participants in that process why 
        the Secretary has decided to depart from such agreements. Such 
        negotiated rulemaking shall be conducted in accordance with the 
        provisions of subsection (a), and the Secretary shall ensure 
        that a clear and reliable record of agreements reached during 
        the negotiation process is maintained.
    ``(c) Applicability of Federal Advisory Committee Act.--The Federal 
Advisory Committee Act shall apply to activities carried out under this 
section.

``SEC. 1139. EARLY CHILDHOOD DEVELOPMENT PROGRAM.

    ``(a) In General.--The Secretary shall provide grants to tribes, 
tribal organizations, and consortia of tribes and tribal organizations 
to fund early childhood development programs that are operated by such 
tribes, organizations, or consortia.
    ``(b) Amount of Grants.--
            ``(1) In general.--The total amount of the grants provided 
        under subsection (a) with respect to each tribe, tribal 
        organization, or consortium of tribes or tribal organizations 
        for each fiscal year shall be equal to the amount which bears 
        the same relationship to the total amount appropriated under 
        the authority of subsection (g) for such fiscal year (less 
        amounts provided under subsection (f)) as--
                    ``(A) the total number of children under 6 years of 
                age who are members of--
                            ``(i) such tribe;
                            ``(ii) the tribe that authorized such 
                        tribal organization; or
                            ``(iii) any tribe that--
                                    ``(I) is a member of such 
                                consortium; or
                                    ``(II) authorizes any tribal 
                                organization that is a member of such 
                                consortium; bears to
                    ``(B) the total number of all children under 6 
                years of age who are members of any tribe that--
                            ``(i) is eligible to receive funds under 
                        subsection (a);
                            ``(ii) is a member of a consortium that is 
                        eligible to receive such funds; or
                            ``(iii) authorizes a tribal organization 
                        that is eligible to receive such funds.
            ``(2) Limitation.--No grant may be provided under 
        subsection (a)--
                    ``(A) to any tribe that has less than 500 members;
                    ``(B) to any tribal organization which is 
                authorized--
                            ``(i) by only one tribe that has less than 
                        500 members; or
                            ``(ii) by one or more tribes that have a 
                        combined total membership of less than 500 
                        members; or
                    ``(C) to any consortium composed of tribes, or 
                tribal organizations authorized by tribes, that have a 
                combined total tribal membership of less than 500 
                members.
    ``(c) Application.
            ``(1) In general.--A grant may be provided under subsection 
        (a) to a tribe, tribal organization, or consortia of tribes and 
        tribal organizations only if the tribe, organization, or 
        consortia submits to the Secretary an application for the grant 
        at such time and in such form as the Secretary shall prescribe.
            ``(2) Contents.--Applications submitted under paragraph (1) 
        shall set forth the early childhood development program that 
        the applicant desires to operate.
    ``(d) Requirement of Programs Funded.--The early childhood 
development programs that are funded by grants provided under 
subsection (a)--
            ``(1) shall coordinate existing programs and may provide 
        services that meet identified needs of parents and children 
        under 6 years of age which are not being met by existing 
        programs, including--
                    ``(A) prenatal care;
                    ``(B) nutrition education;
                    ``(C) health education and screening;
                    ``(D) family literacy services;
                    ``(E) educational testing; and
                    ``(F) other educational services;
            ``(2) may include instruction in the language, art, and 
        culture of the tribe; and
            ``(3) shall provide for periodic assessment of the program.
    ``(e) Coordination of Family Literacy Programs.--Family literacy 
programs operated under this section and other family literacy programs 
operated by the Bureau of Indian Affairs shall be coordinated with 
family literacy programs for Indian children under part B of title I of 
the Elementary and Secondary Education Act of 1965 in order to avoid 
duplication and to encourage the dissemination of information on 
quality family literacy programs serving Indians.
    ``(f) Administrative Costs.--The Secretary shall, out of funds 
appropriated under subsection (g), include in the grants provided under 
subsection (a) amounts for administrative costs incurred by the tribe, 
tribal organization, or consortium of tribes in establishing and 
maintaining the early childhood development program.
    ``(g) Authorization of Appropriations.--For the purpose of carrying 
out the provisions of this section, there are authorized to be 
appropriated $10,000,000 for fiscal year 2002 and such sums as may be 
necessary for each of the fiscal years 2003, 2004, 2005, and 2006.

``SEC. 1140. TRIBAL DEPARTMENTS OR DIVISIONS OF EDUCATION.

    ``(a) In General.--Subject to the availability of appropriations, 
the Secretary shall provide grants and technical assistance to tribes 
for the development and operation of tribal departments of education 
for the purpose of planning and coordinating all educational programs 
of the tribe.
    ``(b) Grants.--Grants provided under this section shall--
            ``(1) be based on applications from the governing body of 
        the tribe;
            ``(2) reflect factors such as geographic and population 
        diversity;
            ``(3) facilitate tribal control in all matters relating to 
        the education of Indian children on Indian reservations (and on 
        former Indian reservations in Oklahoma);
            ``(4) provide for the development of coordinated 
        educational programs on Indian reservations (and on former 
        Indian reservations in Oklahoma) (including all preschool, 
        elementary, secondary, and higher or vocational educational 
        programs funded by tribal, Federal, or other sources) by 
        encouraging tribal administrative support of all Bureau funded 
        educational programs as well as encouraging tribal cooperation 
        and coordination with all educational programs receiving 
        financial support from State agencies, other Federal agencies, 
        or private entities;
            ``(5) provide for the development and enforcement of tribal 
        educational codes, including tribal educational policies and 
        tribal standards applicable to curriculum, personnel, students, 
        facilities, and support programs; and
            ``(6) otherwise comply with regulations for grants under 
        section 103(a) of the Indian Self-Determination and Educational 
        Assistance Act that are in effect on the date that application 
        for such grants are made.
    ``(c) Priorities.--
            ``(1) In general.--In making grants under this section, the 
        Secretary shall give priority to any application that--
                    ``(A) includes assurances from the majority of 
                Bureau funded schools located within the boundaries of 
                the reservation of the applicant that the tribal 
                department of education to be funded under this section 
                will provide coordinating services and technical 
                assistance to all of such schools, including the 
                submission to each applicable agency of a unified 
                application for funding for all of such schools which 
                provides that--
                            ``(i) no administrative costs other than 
                        those attributable to the individual programs 
                        of such schools will be associated with the 
                        unified application; and
                            ``(ii) the distribution of all funds 
                        received under the unified application will be 
                        equal to the amount of funds provided by the 
                        applicable agency to which each of such schools 
                        is entitled under law;
                    ``(B) includes assurances from the tribal governing 
                body that the tribal department of education funded 
                under this section will administer all contracts or 
                grants (except those covered by the other provisions of 
                this title and the Tribally Controlled Community 
                College Assistance Act of 1978) for education programs 
                administered by the tribe and will coordinate all of 
                the programs to the greatest extent possible;
                    ``(C) includes assurances for the monitoring and 
                auditing by or through the tribal department of 
                education of all education programs for which funds are 
                provided by contract or grant to ensure that the 
                programs meet the requirements of law; and
                    ``(D) provides a plan and schedule for--
                            ``(i) the assumption over the term of the 
                        grant by the tribal department of education of 
                        all assets and functions of the Bureau agency 
                        office associated with the tribe, insofar as 
                        those responsibilities relate to education; and
                            ``(ii) the termination by the Bureau of 
                        such operations and office at the time of such 
                        assumption,
                except that when mutually agreeable between the tribal 
                governing body and the Assistant Secretary, the period 
                in which such assumption is to occur may be modified, 
                reduced, or extended after the initial year of the 
                grant.
            ``(2) Time period of grant.--Subject to the availability of 
        appropriated funds, grants provided under this section shall be 
        provided for a period of 3 years and the grant may, if 
        performance by the grantee is satisfactory to the Secretary, be 
        renewed for additional 3-year terms.
    ``(d) Terms, Conditions, or Requirements.--The Secretary shall not 
impose any terms, conditions, or requirements on the provision of 
grants under this section that are not specified in this section.
    ``(e) Authorization of Appropriations.--For the purpose of carrying 
out the provisions of this section, there are authorized to be 
appropriated $2,000,000 for fiscal year 2002 and such sums as may be 
necessary for each of the fiscal years 2003, 2004, 2005, and 2006.

``SEC. 1141. DEFINITIONS.

    ``For the purposes of this part, unless otherwise specified:
            ``(1) Agency school board.--The term `agency school board' 
        means a body, the members of which are appointed by all of the 
        school boards of the schools located within an agency, 
        including schools operated under contract or grant, and the 
        number of such members shall be determined by the Secretary in 
        consultation with the affected tribes, except that, in agencies 
        serving a single school, the school board of such school shall 
        fulfill these duties, and in agencies having schools or a 
        school operated under contract or grant, one such member at 
        least shall be from such a school.
            ``(2) Bureau.--The term `Bureau' means the Bureau of Indian 
        Affairs of the Department of the Interior.
            ``(3) Bureau funded school.--The term `Bureau funded 
        school' means--
                    ``(A) a Bureau school;
                    ``(B) a contract or grant school; or
                    ``(C) a school for which assistance is provided 
                under the Tribally Controlled Schools Act of 1988.
            ``(4) Bureau school.--The term `Bureau school' means a 
        Bureau operated elementary or secondary day or boarding school 
        or a Bureau operated dormitory for students attending a school 
        other than a Bureau school.
            ``(5) Contract or grant school.--The term `contract or 
        grant school' means an elementary or secondary school or 
        dormitory which receives financial assistance for its operation 
        under a contract, grant or agreement with the Bureau under 
        section 102, 103(a), or 208 of the Indian Self-Determination 
        and Education Assistance Act, or under the Tribally Controlled 
        Schools Act of 1988.
            ``(6) Education line officer.--The term `education line 
        officer' means education personnel under the supervision of the 
        Director, whether located in the central, area, or agency 
        offices.
            ``(7) Family literacy services.--The term `family literacy 
        services' has the meaning given that term in section 14101 of 
        the Elementary and Secondary Education Act of 1965 (20 U.S.C. 
        8801).
            ``(8) Financial plan.--The term `financial plan' means a 
        plan of services provided by each Bureau school.
            ``(9) Indian organization.--the term `Indian organization' 
        means any group, association, partnership, corporation, or 
        other legal entity owned or controlled by a federally 
        recognized Indian tribe or tribes, or a majority of whose 
        members are members of federally recognized tribes.
            ``(10) Local educational agency.--The term `local 
        educational agency' means a board of education or other legally 
        constituted local school authority having administrative 
        control and direction of free public education in a county, 
        township, independent, or other school district located within 
        a State, and includes any State agency which directly operates 
        and maintains facilities for providing free public education.
            ``(11) Local school board.--The term `local school board', 
        when used with respect to a Bureau school, means a body chosen 
        in accordance with the laws of the tribe to be served or, in 
        the absence of such laws, elected by the parents of the Indian 
        children attending the school, except that in schools serving a 
        substantial number of students from different tribes, the 
        members shall be appointed by the governing bodies of the 
        tribes affected, and the number of such members shall be 
        determined by the Secretary in consultation with the affected 
        tribes.
            ``(12) Office.--The term `Office' means the Office of 
        Indian Education Programs within the Bureau.
            ``(13) Secretary.--The term `Secretary' means the Secretary 
        of the Interior.
            ``(14) Supervisor.--The term `supervisor' means the 
        individual in the position of ultimate authority at a Bureau 
        school.
            ``(15) Tribal governing body.--The term `tribal governing 
        body' means, with respect to any school, the tribal governing 
        body, or tribal governing bodies, that represent at least 90 
        percent of the students served by such school.
            ``(16) Tribe.--The term `tribe' means any Indian tribe, 
        band, nation, or other organized group or community, including 
        any Alaska Native village or regional or village corporation as 
        defined in or established pursuant to the Alaska Native Claims 
        Settlement Act, which is recognized as eligible for the special 
        programs and services provided by the United States to Indians 
        because of their status as Indians.''.

SEC. 314. TRIBALLY CONTROLLED SCHOOLS ACT OF 1988.

    Sections 5202 through 5212 of Public Law 100-297 (25 U.S.C. 2501 et 
seq.) are amended to read as follows:

``SEC. 5202. FINDINGS.

    ``Congress, after careful review of the Federal Government's 
historical and special legal relationship with, and resulting 
responsibilities to, Indians, finds that--
            ``(1) the Indian Self-Determination and Education 
        Assistance Act, which was a product of the legitimate 
        aspirations and a recognition of the inherent authority of 
        Indian nations, was and is a crucial positive step towards 
        tribal and community control;
            ``(2) the Bureau of Indian Affairs' administration and 
        domination of the contracting process under such Act has not 
        provided the full opportunity to develop leadership skills 
        crucial to the realization of self-government and has denied 
        Indians an effective voice in the planning and implementation 
        of programs for the benefit of Indians which are responsive to 
        the true needs of Indian communities;
            ``(3) Indians will never surrender their desire to control 
        their relationships both among themselves and with non-Indian 
        governments, organizations, and persons;
            ``(4) true self-determination in any society of people is 
        dependent upon an educational process which will ensure the 
        development of qualified people to fulfill meaningful 
        leadership roles;
            ``(5) the Federal administration of education for Indian 
        children has not effected the desired level of educational 
        achievement or created the diverse opportunities and personal 
        satisfaction that education can and should provide;
            ``(6) true local control requires the least possible 
        Federal interference; and
            ``(7) the time has come to enhance the concepts made 
        manifest in the Indian Self-Determination and Education 
        Assistance Act.

``SEC. 5203. DECLARATION OF POLICY.

    ``(a) Recognition.--Congress recognizes the obligation of the 
United States to respond to the strong expression of the Indian people 
for self-determination by assuring maximum Indian participation in the 
direction of educational services so as to render such services more 
responsive to the needs and desires of those communities.
    ``(b) Commitment.--Congress declares its commitment to the 
maintenance of the Federal Government's unique and continuing trust 
relationship with and responsibility to the Indian people through the 
establishment of a meaningful Indian self-determination policy for 
education which will deter further perpetuation of Federal bureaucratic 
domination of programs.
    ``(c) National Goal.--Congress declares that a major national goal 
of the United States is to provide the resources, processes, and 
structure which will enable tribes and local communities to effect the 
quantity and quality of educational services and opportunities which 
will permit Indian children to compete and excel in the life areas of 
their choice and to achieve the measure of self-determination essential 
to their social and economic well-being.
    ``(d) Educational Needs.--Congress affirms the reality of the 
special and unique educational needs of Indian peoples, including the 
need for programs to meet the linguistic and cultural aspirations of 
Indian tribes and communities. These may best be met through a grant 
process.
    ``(e) Federal Relations.--Congress declares its commitment to these 
policies and its support, to the full extent of its responsibility, for 
Federal relations with the Indian Nations.
    ``(f) Termination.--Congress hereby repudiates and rejects House 
Resolution 108 of the 83d Congress and any policy of unilateral 
termination of Federal relations with any Indian Nation.

``SEC. 5204. GRANTS AUTHORIZED.

    ``(a) In General.--
            ``(1) Eligibility.--The Secretary shall provide grants to 
        Indian tribes, and tribal organizations that--
                    ``(A) operate contract schools under title XI of 
                the Education Amendments of 1978 and notify the 
                Secretary of their election to operate the schools with 
                assistance under this part rather than continuing as 
                contract school;
                    ``(B) operate other tribally controlled schools 
                eligible for assistance under this part and submit 
                applications (which are approved by their tribal 
                governing bodies) to the Secretary for such grants; or
                    ``(C) elect to assume operation of Bureau funded 
                schools with the assistance under this part and submit 
                applications (which are approved by their tribal 
                governing bodies) to the Secretary for such grants.
            ``(2) Deposit of funds.--Grants provided under this part 
        shall be deposited into the general operating fund of the 
        tribally controlled school with respect to which the grant is 
        made.
            ``(3) Use of funds.--(A) Except as otherwise provided in 
        this paragraph, grants provided under this part shall be used 
        to defray, at the discretion of the school board of the 
        tribally controlled school with respect to which the grant is 
        provided, any expenditures for education related activities for 
        which any funds that compose the grant may be used under the 
        laws described in section 5205(a), including, but not limited 
        to, expenditures for--
                    ``(i) school operations, academic, educational, 
                residential, guidance and counseling, and 
                administrative purposes; and
                    ``(ii) support services for the school, including 
                transportation.
            ``(B) Grants provided under this part may, at the 
        discretion of the school board of the tribally controlled 
        school with respect to which such grant is provided, be used to 
        defray operations and maintenance expenditures for the school 
        if any funds for the operation and maintenance of the school 
        are allocated to the school under the provisions of any of the 
        laws described in section 5205(a).
    ``(b) Limitations.--
            ``(1) One grant per tribe or organization per fiscal 
        year.--Not more than one grant may be provided under this part 
        with respect to any Indian tribe or tribal organization for any 
        fiscal year.
            ``(2) Nonsectarian use.--Funds provided under any grant 
        made under this part may not be used in connection with 
        religious worship or sectarian instruction.
            ``(3) Administrative costs limitation.--Funds provided 
        under any grant under this part may not be expended for 
        administrative costs (as defined in section 1128(h)(1) of the 
        Education Amendments of 1978) in excess of the amount generated 
        for such costs under section 1128 of such Act.
    ``(c) Limitation on Transfer of Funds Among Schoolsites.--
            ``(1) In general.--In the case of a grantee that operates 
        schools at more than one schoolsite, the grantee may expend not 
        more than the lesser of--
                    ``(A) 10 percent of the funds allocated for such 
                schoolsite under section 1128 of the Education 
                Amendments of 1978; or
                    ``(B) $400,000 of such funds, at any other 
                schoolsite.
            ``(2) Definition of schoolsite.--For purposes of this 
        subsection, the term `schoolsite' means the physical location 
        and the facilities of an elementary or secondary educational or 
        residential program operated by, or under contract or grant 
        with, the Bureau for which a discreet student count is 
        identified under the funding formula established under section 
        1127 of the Education Amendments of 1978.
    ``(d) No Requirement To Accept Grants.--Nothing in this part may be 
construed--
            ``(1) to require a tribe or tribal organization to apply 
        for or accept; or
            ``(2) to allow any person to coerce any tribe or tribal 
        organization to apply for, or accept,
a grant under this part to plan, conduct, and administer all of, or any 
portion of, any Bureau program. Such applications and the timing of 
such applications shall be strictly voluntary. Nothing in this part may 
be construed as allowing or requiring any grant with any entity other 
than the entity to which the grant is provided.
    ``(e) No Effect on Federal Responsibility.--Grants provided under 
this part shall not terminate, modify, suspend, or reduce the 
responsibility of the Federal Government to provide a program.
    ``(f) Retrocession.--
            ``(1) In general.--Whenever a tribal governing body 
        requests retrocession of any program for which assistance is 
        provided under this part, such retrocession shall become 
        effective upon a date specified by the Secretary that is not 
        later than 120 days after the date on which the tribal 
        governing body requests the retrocession. A later date as may 
        be specified if mutually agreed upon by the Secretary and the 
        tribal governing body. If such a program is retroceded, the 
        Secretary shall provide to any Indian tribe served by such 
        program at least the same quantity and quality of services that 
        would have been provided under such program at the level of 
        funding provided under this part prior to the retrocession.
            ``(2) Status after retrocession.--The tribe requesting 
        retrocession shall specify whether the retrocession is to 
        status as a Bureau operated school or as a school operated 
        under contract under title XI of the Education Amendments of 
        1978.
            ``(3) Transfer of equipment and materials.--Except as 
        otherwise determined by the Secretary, the tribe or tribal 
        organization operating the program to be retroceded must 
        transfer to the Secretary (or to the tribe or tribal 
        organization which will operate the program as a contract 
        school) the existing equipment and materials which were 
        acquired--
                    ``(A) with assistance under this part; or
                    ``(B) upon assumption of operation of the program 
                under this part if the school was a Bureau funded 
                school under title XI of the Education Amendments of 
                1978 before receiving assistance under this part.
    ``(g) Prohibition of Termination for Administrative Convenience.--
Grants provided under this part may not be terminated, modified, 
suspended, or reduced solely for the convenience of the administering 
agency.

``SEC. 5205. COMPOSITION OF GRANTS.

    ``(a) In General.--The grant provided under this part to an Indian 
tribe or tribal organization for any fiscal year shall consist of--
            ``(1) the total amount of funds allocated for such fiscal 
        year under sections 1127 and 1128 of the Education Amendments 
        of 1978 with respect to the tribally controlled schools 
        eligible for assistance under this part which are operated by 
        such Indian tribe or tribal organization, including, but not 
        limited to, funds provided under such sections, or under any 
        other provision of law, for transportation costs;
            ``(2) to the extent requested by such Indian tribe or 
        tribal organization, the total amount of funds provided from 
        operations and maintenance accounts and, notwithstanding 
        section 105 of the Indian Self-Determination Act, or any other 
        provision of law, other facilities accounts for such schools 
        for such fiscal year (including but not limited to those 
        referenced under section 1126(d) of the Education Amendments of 
        1978 or any other law); and
            ``(3) the total amount of funds that are allocated to such 
        schools for such fiscal year under--
                    ``(A) title I of the Elementary and Secondary 
                Education Act of 1965;
                    ``(B) the Individuals with Disabilities Education 
                Act; and
                    ``(C) any other Federal education law, that are 
                allocated to such schools for such fiscal year.
    ``(b) Special Rules.--
            ``(1) In general.--(A) Funds allocated to a tribally 
        controlled school by reason of paragraph (1) or (2) of 
        subsection (a) shall be subject to the provisions of this part 
        and shall not be subject to any additional restriction, 
        priority, or limitation that is imposed by the Bureau with 
        respect to funds provided under--
                    ``(i) title I of the Elementary and Secondary 
                Education Act of 1965;
                    ``(ii) the Individuals with Disabilities Education 
                Act; or
                    ``(iii) any Federal education law other than title 
                XI of the Education Amendments of 1978.
            ``(B) Indian tribes and tribal organizations to which 
        grants are provided under this part, and tribally controlled 
        schools for which such grants are provided, shall not be 
        subject to any requirements, obligations, restrictions, or 
        limitations imposed by the Bureau that would otherwise apply 
        solely by reason of the receipt of funds provided under any law 
        referred to in clause (i), (ii), or (iii) of subparagraph (A).
            ``(2) Schools considered contract schools.--Tribally 
        controlled schools for which grants are provided under this 
        part shall be treated as contract schools for the purposes of 
        allocation of funds under sections 1126(d), 1127, and 1128 of 
        the Education Amendments of 1978.
            ``(3) Schools considered bureau schools.--Tribally 
        controlled schools for which grants are provided under this 
        chapter shall be treated as Bureau schools for the purposes of 
        allocation of funds provided under--
                    ``(A) title I of the Elementary and Secondary 
                Education Act of 1965;
                    ``(B) the Individuals with Disabilities Education 
                Act; and
                    ``(C) any other Federal education law, that are 
                distributed through the Bureau.
            ``(4) Accounts; use of certain funds.--(A) Notwithstanding 
        section 5204(a)(2), with respect to funds from facilities 
        improvement and repair, alteration and renovation (major or 
        minor), health and safety, or new construction accounts 
        included in the grant under section 5204(a), the grantee shall 
        maintain a separate account for such funds. At the end of the 
        period designated for the work covered by the funds received, 
        the grantee shall submit to the Secretary a separate accounting 
        of the work done and the funds expended to the Secretary. Funds 
        received from these accounts may only be used for the purpose 
        for which they were appropriated and for the work encompassed 
        by the application or submission under which they were 
        received.
            ``(B) Notwithstanding subparagraph (A), a school receiving 
        a grant under this part for facilities improvement and repair 
        may use such grant funds for new construction if the tribal 
        government or other organization provides funding for the new 
        construction equal to at least 25 percent of the total cost of 
        such new construction.
            ``(C) Where the appropriations measure or the application 
        submission does not stipulate a period for the work covered by 
        the funds so designated, the Secretary and the grantee shall 
        consult and determine such a period prior to the transfer of 
        the funds. A period so determined may be extended upon mutual 
        agreement of the Secretary and the grantee.
            ``(5) Enforcement of request to include funds.--If the 
        Secretary fails to carry out a request made under subsection 
        (a)(2) within 180 days of a request filed by an Indian tribe or 
        tribal organization to include in such tribe or organization's 
        grant the funds described in subsection (a)(2), the Secretary 
        shall be deemed to have approved such request and the Secretary 
        shall immediately amend the grant accordingly. Such tribe or 
        organization may enforce its rights under subsection (a)(2) and 
        this paragraph, including any denial or failure to act on such 
        tribe or organization's request, pursuant to the disputes 
        authority described in section 5209(e).

``SEC. 5206. ELIGIBILITY FOR GRANTS.

    ``(a) Rules.--
            ``(1) In general.--A tribally controlled school is eligible 
        for assistance under this part if the school--
                    ``(A) on April 28, 1988, was a contract school 
                under title XI of the Education Amendments of 1978 and 
                the tribe or tribal organization operating the school 
                submits to the Secretary a written notice of election 
                to receive a grant under this part;
                    ``(B) was a Bureau operated school under title XI 
                of the Education Amendments of 1978 and has met the 
                requirements of subsection (b);
                    ``(C) is a school for which the Bureau has not 
                provided funds, but which has met the requirements of 
                subsection (c); or
                    ``(D) is a school with respect to which an election 
                has been made under paragraph (2) and which has met the 
                requirements of subsection (b).
            ``(2) New schools.--Any application which has been 
        submitted under the Indian Self-Determination and Education 
        Assistance Act by an Indian tribe for a school which is not in 
        operation on the date of the enactment of the No Child Left 
        Behind Act of 2001 shall be reviewed under the guidelines and 
        regulations for applications submitted under the Indian Self-
        Determination and Education Assistance Act that were in effect 
        at the time the application was submitted, unless the Indian 
        tribe or tribal organization elects to have the application 
        reviewed under the provisions of subsection (b).
    ``(b) Additional Requirements for Bureau Funded Schools and Certain 
Electing Schools.--
            ``(1) Bureau funded schools.--A school that was a Bureau 
        funded school under title XI of the Education Amendments of 
        1978 on the date of the enactment of the No Child Left Behind 
        Act of 2001, and any school with respect to which an election 
        is made under subsection (a)(2), meets the requirements of this 
        subsection if--
                    ``(A) the Indian tribe or tribal organization that 
                operates, or desires to operate, the school submits to 
                the Secretary an application requesting that the 
                Secretary--
                            ``(i) transfer operation of the school to 
                        the Indian tribe or tribal organization, if the 
                        Indian tribe or tribal organization is not 
                        already operating the school; and
                            ``(ii) make a determination as to whether 
                        the school is eligible for assistance under 
                        this part; and
                    ``(B) the Secretary makes a determination that the 
                school is eligible for assistance under this part.
            ``(2) Certain electing schools.--(A) By not later than the 
        date that is 120 days after the date on which an application is 
        submitted to the Secretary under paragraph (1)(A), the 
        Secretary shall determine--
                    ``(i) in the case of a school which is not being 
                operated by the Indian tribe or tribal organization, 
                whether to transfer operation of the school to the 
                Indian tribe or tribal organization; and
                    ``(ii) whether the school is eligible for 
                assistance under this part.
            ``(B) In considering applications submitted under paragraph 
        (1)(A), the Secretary--
                    ``(i) shall transfer operation of the school to the 
                Indian tribe or tribal organization, if the tribe or 
                tribal organization is not already operating the 
                school; and
                    ``(ii) shall determine that the school is eligible 
                for assistance under this part, unless the Secretary 
                finds by clear and convincing evidence that the 
                services to be provided by the Indian tribe or tribal 
                organization will be deleterious to the welfare of the 
                Indians served by the school.
            ``(C) In considering applications submitted under paragraph 
        (1)(A), the Secretary shall consider whether the Indian tribe 
        or tribal organization would be deficient in operating the 
        school with respect to--
                    ``(i) equipment;
                    ``(ii) bookkeeping and accounting procedures;
                    ``(iii) ability to adequately manage a school; or
                    ``(iv) adequately trained personnel.
    ``(c) Additional Requirements for a School Which Is Not a Bureau 
Funded School.--
            ``(1) In general.--A school which is not a Bureau funded 
        school under title XI of the Education Amendments of 1978 meets 
        the requirements of this subsection if--
                    ``(A) the Indian tribe or tribal organization that 
                operates, or desires to operate, the school submits to 
                the Secretary an application requesting a determination 
                by the Secretary as to whether the school is eligible 
                for assistance under this part; and
                    ``(B) the Secretary makes a determination that a 
                school is eligible for assistance under this part.
            ``(2) Deadline for determination by secretary.--(A) By not 
        later than the date that is 180 days after the date on which an 
        application is submitted to the Secretary under paragraph 
        (1)(A), the Secretary shall determine whether the school is 
        eligible for assistance under this part.
            ``(B) In making the determination under subparagraph (A), 
        the Secretary shall give equal consideration to each of the 
        following factors:
                    ``(i) with respect to the applicant's proposal--
                            ``(I) the adequacy of facilities or the 
                        potential to obtain or provide adequate 
                        facilities;
                            ``(II) geographic and demographic factors 
                        in the affected areas;
                            ``(III) adequacy of the applicant's program 
                        plans;
                            ``(IV) geographic proximity of comparable 
                        public education; and
                            ``(V) the needs as expressed by all 
                        affected parties, including but not limited to 
                        students, families, tribal governments at both 
                        the central and local levels, and school 
                        organizations; and
                    ``(ii) with respect to all education services 
                already available--
                            ``(I) geographic and demographic factors in 
                        the affected areas;
                            ``(II) adequacy and comparability of 
                        programs already available;
                            ``(III) consistency of available programs 
                        with tribal education codes or tribal 
                        legislation on education; and
                            ``(IV) the history and success of these 
                        services for the proposed population to be 
                        served, as determined from all factors 
                        including, if relevant, standardized 
                        examination performance.
            ``(C) The Secretary may not make a determination under this 
        paragraph that is primarily based upon the geographic proximity 
        of comparable public education.
            ``(D) Applications submitted under paragraph (1)(A) shall 
        include information on the factors described in subparagraph 
        (B)(i), but the applicant may also provide the Secretary such 
        information relative to the factors described in subparagraph 
        (B)(ii) as the applicant considers appropriate.
            ``(E) If the Secretary fails to make a determination under 
        subparagraph (A) with respect to an application within 180 days 
        after the date on which the Secretary received the application, 
        the Secretary shall be treated as having made a determination 
        that the tribally controlled school is eligible for assistance 
        under the title and the grant shall become effective 18 months 
        after the date on which the Secretary received the application, 
        or on an earlier date, at the Secretary's discretion.
    ``(d) Filing of Applications and Reports.--
            ``(1) In general.--All applications and reports submitted 
        to the Secretary under this part, and any amendments to such 
        applications or reports, shall be filed with the education line 
        officer designated by the Director of the Office of Indian 
        Education Programs of the Bureau of Indian Affairs. The date on 
        which such filing occurs shall, for purposes of this part, be 
        treated as the date on which the application or amendment was 
        submitted to the Secretary.
            ``(2) Supporting documentation.--Any application that is 
        submitted under this chapter shall be accompanied by a document 
        indicating the action taken by the tribal governing body in 
        authorizing such application.
    ``(e) Effective Date for Approved Applications.--Except as provided 
by subsection (c)(2)(E), a grant provided under this part, and any 
transfer of the operation of a Bureau school made under subsection (b), 
shall become effective beginning the academic year succeeding the 
fiscal year in which the application for the grant or transfer is made, 
or at an earlier date determined by the Secretary.
    ``(f) Denial of Applications.--
            ``(1) In general.--Whenever the Secretary refuses to 
        approve a grant under this chapter, to transfer operation of a 
        Bureau school under subsection (b), or determines that a school 
        is not eligible for assistance under this part, the Secretary 
        shall--
                    ``(A) state the objections in writing to the tribe 
                or tribal organization within the allotted time;
                    ``(B) provide assistance to the tribe or tribal 
                organization to overcome all stated objections.
                    ``(C) at the request of the tribe or tribal 
                organization, provide the tribe or tribal organization 
                a hearing on the record under the same rules and 
                regulations that apply under the Indian Self-
                Determination and Education Assistance Act; and
                    ``(D) provide an opportunity to appeal the 
                objection raised.
            ``(2) Timeline for reconsideration of amended 
        applications.--The Secretary shall reconsider any amended 
        application submitted under this part within 60 days after the 
        amended application is submitted to the Secretary.
    ``(g) Report.--The Bureau shall submit an annual report to the 
Congress on all applications received, and actions taken (including the 
costs associated with such actions), under this section at the same 
time that the President is required to submit to Congress the budget 
under section 1105 of title 31, United States Code.

``SEC. 5207. DURATION OF ELIGIBILITY DETERMINATION.

    ``(a) In General.--If the Secretary determines that a tribally 
controlled school is eligible for assistance under this part, the 
eligibility determination shall remain in effect until the 
determination is revoked by the Secretary, and the requirements of 
subsection (b) or (c) of section 5206, if applicable, shall be 
considered to have been met with respect to such school until the 
eligibility determination is revoked by the Secretary.
    ``(b) Annual Reports.--
            ``(1) In general.--Each recipient of a grant provided under 
        this part shall complete an annual report which shall be 
        limited to--
                    ``(A) an annual financial statement reporting 
                revenue and expenditures as defined by the cost 
                accounting established by the grantee;
                    ``(B) an annual financial audit conducted pursuant 
                to the standards of the Single Audit Act of 1984;
                    ``(C) an annual submission to the Secretary of the 
                number of students served and a brief description of 
                programs offered under the grant; and
                    ``(D) a program evaluation conducted by an 
                impartial evaluation review team, to be based on the 
                standards established for purposes of subsection 
                (c)(1)(A)(ii).
            ``(2) Evaluation review teams.--Where appropriate, other 
        tribally controlled schools and representatives of tribally 
        controlled community colleges shall make up members of the 
        evaluation review teams.
            ``(3) Evaluations.--In the case of a school which is 
        accredited, evaluations will be conducted at intervals under 
        the terms of accreditation.
            ``(4) Submission of report.--
                    ``(A) To tribally governing body.--Upon completion 
                of the report required under paragraph (a), the 
                recipient of the grant shall send (via first class 
                mail, return receipt requested) a copy of such annual 
                report to the tribal governing body (as defined in 
                section 1132(f) of the Education Amendments of 1978) of 
                the tribally controlled school.
                    ``(B) To secretary.--Not later than 30 days after 
                receiving written confirmation that the tribal 
                governing body has received the report send pursuant to 
                subsection (A), the recipient of the grant shall send a 
                copy of the report to the Secretary.
    ``(c) Revocation of Eligibility.--
            ``(1) In general.--(A) The Secretary shall not revoke a 
        determination that a school is eligible for assistance under 
        this part if--
                    ``(i) the Indian tribe or tribal organization 
                submits the reports required under subsection (b) with 
                respect to the school; and
                    ``(ii) at least one of the following subclauses 
                applies with respect to the school:
                            ``(I) The school is certified or accredited 
                        by a State or regional accrediting association 
                        or is a candidate in good standing for such 
                        accreditation under the rules of the State or 
                        regional accrediting association, showing that 
                        credits achieved by the students within the 
                        education programs are, or will be, accepted at 
                        grade level by a State certified or regionally 
                        accredited institution.
                            ``(II) A determination made by the 
                        Secretary that there is a reasonable 
                        expectation that the accreditation described in 
                        subclause (I), or the candidacy in good 
                        standing for such accreditation, will be 
                        reached by the school within 3 years and that 
                        the program offered by the school is beneficial 
                        to the Indian students.
                            ``(III) The school is accredited by a 
                        tribal department of education if such 
                        accreditation is accepted by a generally 
                        recognized regional or State accreditation 
                        agency.
                            ``(IV) The schools accept the standards 
                        promulgated under section 1121 of the Education 
                        Amendments of 1978 and an evaluation of 
                        performance is conducted under this section in 
                        conformance with the regulations pertaining to 
                        Bureau operated schools by an impartial 
                        evaluator chosen by the grantee, but no grantee 
                        shall be required to comply with these 
                        standards to a higher degree than a comparable 
                        Bureau operated school.
                            ``(V) A positive evaluation of the school 
                        is conducted by an impartial evaluator agreed 
                        upon by the Secretary and the grantee every 2 
                        years under standards adopted by the contractor 
                        under a contract for a school entered into 
                        under the Indian Self-Determination and 
                        Education Assistance Act (or revisions of such 
                        standards agreed to by the Secretary and the 
                        grantee) prior to the date of the enactment of 
                        this Act. If the Secretary and the grantee 
                        other than the tribal governing body fail to 
                        agree on such an evaluator, the tribal 
                        governing body shall choose the evaluator or 
                        perform the evaluation. If the Secretary and a 
                        grantee which is the tribal governing body fail 
                        to agree on such an evaluator, this subclause 
                        shall not apply.
            ``(B) The choice of standards employed for the purpose of 
        subparagraph (A)(ii) shall be consistent with section 1121(e) 
        of the Education Amendments of 1978.
            ``(2) Notice requirements for revocation.--The Secretary 
        shall not revoke a determination that a school is eligible for 
        assistance under this part, or reassume control of a school 
        that was a Bureau school prior to approval of an application 
        submitted under section 5206(b)(1)(A) until the Secretary--
                    ``(A) provides notice to the tribally controlled 
                school and the tribal governing body (within the 
                meaning of section 1141(14) of the Education Amendments 
                of 1978) of the tribally controlled school which 
                states--
                            ``(i) the specific deficiencies that led to 
                        the revocation or resumption determination; and
                            ``(ii) the actions that are needed to 
                        remedy such deficiencies; and
                    ``(B) affords such authority an opportunity to 
                effect the remedial actions.
            ``(3) Technical assistance.--The Secretary shall provide 
        such technical assistance as is practicable to effect such 
        remedial actions. Such notice and technical assistance shall be 
        in addition to a hearing and appeal to be conducted pursuant to 
        the regulations described in section 5206(f)(1)(C).
    ``(d) Applicability of Section Pursuant to Election Under Section 
5209(b).--With respect to a tribally controlled school which receives 
assistance under this part pursuant to an election made under section 
5209(b)--
            ``(1) subsection (b) of this section shall apply; and
            ``(2) the Secretary may not revoke eligibility for 
        assistance under this part except in conformance with 
        subsection (c) of this section.

``SEC. 5208. PAYMENT OF GRANTS; INVESTMENT OF FUNDS.

    ``(a) Payments.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the Secretary shall make payments to grantees under 
        this part in two payments, of which--
                    ``(A) the first payment shall be made not later 
                than July 15 of each year in an amount equal to 85 
                percent of the amount which the grantee was entitled to 
                receive during the preceding academic year; and
                    ``(B) the second payment, consisting of the 
                remainder to which the grantee is entitled for the 
                academic year, shall be made not later than December 1 
                of each year.
            ``(2) Newly funded schools.--For any school for which no 
        payment under this part was made from Bureau funds in the 
        preceding academic year, full payment of the amount computed 
        for the first academic year of eligibility under this part 
        shall be made not later than December 1 of the academic year.
            ``(3) Late funding.--With regard to funds for grantees that 
        become available for obligation on October 1 of the fiscal year 
        for which such funds are appropriated, the Secretary shall make 
        payments to grantees not later than December 1 of the fiscal 
        year.
            ``(4) Applicability of certain title 31 provisions.--The 
        provisions of chapter 39 of Title 31, United States Code, shall 
        apply to the payments required to be made by paragraphs (1), 
        (2), and (3).
            ``(5) Restrictions.--Paragraphs (1), (2), and (3) shall be 
        subject to any restriction on amounts of payments under this 
        part that are imposed by a continuing resolution or other Act 
        appropriating the funds involved.
    ``(b) Investment of Funds.--
            ``(1) Treatment of interest and investment income.--
        Notwithstanding any other provision of law, any interest or 
        investment income that accrues to any funds provided under this 
        part after such funds are paid to the Indian tribe or tribal 
        organization and before such funds are expended for the purpose 
        for which such funds were provided under this part shall be the 
        property of the Indian tribe or tribal organization and shall 
        not be taken into account by any officer or employee of the 
        Federal Government in determining whether to provide 
        assistance, or the amount of assistance, under any provision of 
        Federal law. Such interest income shall be spent on behalf of 
        the school.
            ``(2) Permissible investments.--Funds provided under this 
        part may be invested by the Indian tribe or tribal organization 
        before such funds are expended for the purposes of this part so 
        long as such funds are--
                    ``(A) invested by the Indian tribe or tribal 
                organization only in obligations of the United States, 
                or in obligations or securities that are guaranteed or 
                insured by the United States, or mutual (or other) 
                funds registered with the Securities and Exchange 
                Commission and which only invest in obligations of the 
                United States, or securities that are guaranteed or 
                insured by the United States; or
                    ``(B) deposited only into accounts that are insure 
                by and agency or instrumentality of the United States, 
                or are fully collateralized to ensure protection of the 
                funds, even in the event of a bank failure.
    ``(c) Recoveries.--For the purposes of underrecovery and 
overrecovery determinations by any Federal agency for any other funds, 
from whatever source derived, funds received under this part shall not 
be taken into consideration.

``SEC. 5209. APPLICATION WITH RESPECT TO INDIAN SELF-DETERMINATION AND 
              EDUCATION ASSISTANCE ACT.

    ``(a) Certain Provisions To Apply to Grants.--The following 
provisions of the Indian Self-Determination and Education Assistance 
Act (and any subsequent revisions thereto or renumbering thereof), 
shall apply to grants provided under this part:
            ``(1) Section 5(f) (relating to single agency audit).
            ``(2) Section 6 (relating to criminal activities; 
        penalties).
            ``(3) Section 7 (relating to wage and labor standards).
            ``(4) Section 104 (relating to retention of Federal 
        employee coverage).
            ``(5) Section 105(f) (relating to Federal property).
            ``(6) Section 105(k) (relating to access to Federal sources 
        of supply).
            ``(7) Section 105(l) (relating to lease of facility used 
        for administration and delivery of services).
            ``(8) Section 106(e) (relating to limitation on remedies 
        relating to cost allowances).
            ``(9) Section 106(i) (relating to use of funds for matching 
        or cost participation requirements).
            ``(10) Section 106(j) (relating to allowable uses of 
        funds).
            ``(11) Section 108(c) (Model Agreements provisions 
        (1)(a)(5) (relating to limitations of costs), (1)(a)(7) 
        (relating to records and monitoring), (1)(a)(8) (relating to 
        property), and (a)(1)(9) (relating to availability of funds).
            ``(12) Section 109 (relating to reassumption).
            ``(13) Section 111 (relating to sovereign immunity and 
        trusteeship rights unaffected).
    ``(b) Election for Grant in Lieu of Contract.--
            ``(1) In general.--Contractors for activities to which this 
        part applies who have entered into a contract under the Indian 
        Self-Determination and Education Assistance Act that is in 
        effect upon the date of the enactment of the No Child Left 
        Behind Act of 2001 may, by giving notice to the Secretary, 
        elect to have the provisions of this part apply to such 
        activity in lieu of such contract.
            ``(2) Effective date of election.--Any election made under 
        paragraph (1) shall take effect on the later of--
                    ``(A) October 1 of the fiscal year succeeding the 
                fiscal year in which such election is made; or
                    ``(B) 60 days after the date of such election.
            ``(3) Exception.--In any case in which the 60-day period 
        referred to in paragraph (2)(B) is less than 60 days before the 
        beginning of the succeeding fiscal year, such election shall 
        not take effect until the fiscal year after the fiscal year 
        succeeding the election.
    ``(c) No Duplication.--No funds may be provided under any contract 
entered into under the Indian Self-Determination and Education 
Assistance Act to pay any expenses incurred in providing any program or 
services if a grant has been made under this part to pay such expenses.
    ``(d) Transfers and Carryovers.--
            ``(1) Buildings, equipment, supplies, materials.--A tribe 
        or tribal organization assuming the operation of--
                    ``(A) a Bureau school with assistance under this 
                part shall be entitled to the transfer or use of 
                buildings, equipment, supplies, and materials to the 
                same extent as if it were contracting under the Indian 
                Self-Determination and Education Assistance Act; or
                    ``(B) a contract school with assistance under this 
                part shall be entitled to the transfer or use of 
                buildings, equipment, supplies and materials that were 
                used in the operation of the contract school to the 
                same extent as if it were contracting under the Indian 
                Self-Determination and Education Assistance Act.
            ``(2) Funds.--Any tribe or tribal organization which 
        assumes operation of a Bureau school with assistance under this 
        part and any tribe or tribal organization which elects to 
        operate a school with assistance under this part rather that to 
        continue as a contract school shall be entitled to any funds 
        which would carryover from the previous fiscal year as if such 
        school were operated as a contract school.
    ``(e) Exceptions, Problems, and Disputes.--Any exception or problem 
cited in an audit conducted pursuant to section 5207(b)(2), any dispute 
regarding a grant authorized to be made pursuant to this part or any 
amendment to such grant, and any dispute involving an administrative 
cost grant under section 1128 of the Education Amendments of 1978 shall 
be administered under the provisions governing such exceptions, 
problems, or disputes in the case of contracts under the Indian Self-
Determination and Education Assistance Act of 1975. The Equal Access to 
Justice Act shall apply to administrative appeals filed after September 
8, 1988, by grantees regarding a grant under this part, including an 
administrative cost grant.

``SEC. 5210. ROLE OF THE DIRECTOR.

    ``Applications for grants under this part, and all application 
modifications, shall be reviewed and approved by personnel under the 
direction and control of the Director of the Office of Indian Education 
Programs. Required reports shall be submitted to education personnel 
under the direction and control of the Director of such Office.

``SEC. 5211. REGULATIONS.

    ``The Secretary is authorized to issue regulations relating to the 
discharge of duties specifically assigned to the Secretary by this 
part. In all other matters relating to the details of planning, 
development, implementing, and evaluating grants under this part, the 
Secretary shall not issue regulations. Regulations issued pursuant to 
this part shall not have the standing of a Federal statute for the 
purposes of judicial review.

``SEC. 5212. THE TRIBALLY CONTROLLED GRANT SCHOOL ENDOWMENT PROGRAM.

    ``(a) In General.--
            ``(1) Trust funds.--Each school receiving grants under this 
        part may establish, at a Federally insured banking and savings 
        institution, a trust fund for the purposes of this section.
            ``(2) Authority of schools regarding trust funds.--The 
        school may provide--
                    ``(A) for the deposit into the trust fund, only 
                funds from non-Federal sources, except that the 
                interest on funds received from grants under this part 
                may be used for this purpose;
                    ``(B) for the deposit in the account of any 
                earnings on funds deposited in the account; and
                    ``(C) for the sole use of the school any noncash, 
                in-kind contributions of real or personal property, 
                such property may at any time be converted to cash.
    ``(b) Interest.--Interest from the fund established under 
subsection (a) may periodically be withdrawn and used, at the 
discretion of the school, to defray any expenses associated with the 
operation of the school.

``SEC. 5213. DEFINITIONS.

    ``For the purposes of this part:
            ``(1) Bureau.--The term `Bureau' means the Bureau of Indian 
        Affairs of the Department of the Interior.
            ``(2) Eligible indian student.--The term `eligible Indian 
        student' has the meaning of such term in section 1127(f) of the 
        Education Amendments of 1978.
            ``(3) Indian tribe.--The term `Indian tribe' means any 
        Indian tribe, band, nation, or other organized group or 
        community, including Alaska Native Village or regional 
        corporations (as defined in or established pursuant to the 
        Alaskan Native Claims Settlement Act, which is recognized as 
        eligible for the special programs and services provided by the 
        United States to Indians because of their status as Indians.
            ``(4) Local educational agency.--The term `local 
        educational agency' means a public board of education or other 
        public authority legally constituted within a State for either 
        administrative control or direction of, or to perform a service 
        function for, public elementary or secondary schools in a city, 
        county, township, school district, or other political 
        subdivision of a State or such combination of school districts 
        or counties as are recognized in a State as an administrative 
        agency for its public elementary or secondary schools. Such 
        term includes any other public institution or agency having 
        administrative control and direction of a public elementary or 
        secondary school.
            ``(5) Secretary.--The term `Secretary' means the Secretary 
        of the Interior.
            ``(6) Tribal organization.--(A) The term `tribal 
        organization' means--
                    ``(i) the recognized governing body of any Indian 
                tribe; or
                    ``(ii) any legally established organization of 
                Indians which--
                            ``(I) is controlled, sanctioned, or 
                        chartered by such governing body or is 
                        democratically elected by the adult members of 
                        the Indian community to be served by such 
                        organization; and
                            ``(II) includes the maximum participation 
                        of Indians in all phases of its activities.
            ``(B) In any case in which a grant is provided under this 
        part to an organization to provide services benefiting more 
        than one Indian tribe, the approval of the governing bodies of 
        Indian tribes representing 80 percent of those students 
        attending the tribally controlled school shall be considered a 
        sufficient tribal authorization for such grant.
            ``(7) Tribally controlled school.--The term `tribally 
        controlled school' means a school operated by a tribe or a 
        tribal organization, enrolling students in kindergarten through 
        grade 12, including preschools, which is not a local 
        educational agency and which is not directly administered by 
        the Bureau of Indian Affairs.''.

  TITLE IV--PROMOTING INFORMED PARENTAL CHOICE AND INNOVATIVE PROGRAMS

                      PART A--INNOVATIVE PROGRAMS

SEC. 401. PROMOTING INFORMED PARENTAL CHOICE AND INNOVATIVE PROGRAMS.

    Title IV is amended to read as follows:

 ``TITLE IV--PROMOTING INFORMED PARENTAL CHOICE AND INNOVATIVE PROGRAMS

                     ``PART A--INNOVATIVE PROGRAMS

``SEC. 4101. FINDINGS AND STATEMENT OF PURPOSE.

    ``(a) Findings.--Congress finds that this part--
            ``(1) provides flexibility to meet local needs;
            ``(2) promotes local and State education reforms;
            ``(3) contributes to the improvement of academic 
        achievement for all students;
            ``(4) provides funding for critical activities; and
            ``(5) provides services for private school students.
    ``(b) Statement of Purpose.--It is the purpose of programs under 
this part--
            ``(1) to provide funding to enable States and local 
        educational agencies to implement promising educational reform 
        programs and school improvement initiatives based on 
        scientifically based research;
            ``(2) to provide a continuing source of innovation and 
        educational improvement, including support for library services 
        and instructional and media materials; and
            ``(3) to meet the educational needs of all students, 
        including at-risk youth.
    ``(c) State and Local Responsibility.--
            ``(1) In general.--The States shall have the basic 
        responsibility for the administration of funds made available 
        under this part, but such administration shall be carried out 
        with a minimum of paperwork.
            ``(2) Design and implementation.--Notwithstanding paragraph 
        (1), local educational agencies, school superintendents and 
        principals, and classroom teachers and supporting personnel 
        shall be mainly responsible for the design and implementation 
        of programs assisted under this part, because such agencies and 
        individuals have the most direct contact with students and are 
        most likely to be able to design programs to meet the 
        educational needs of students in their own school districts.

                 ``Subpart 1--State and Local Programs

``SEC. 4111. ALLOCATION TO STATES.

    ``(a) Reservations.--From the sums appropriated to carry out this 
part for each fiscal year, the Secretary shall reserve not more than 1 
percent for payments to outlying areas to be allotted in accordance 
with their respective needs.
    ``(b) Allocation of Remainder.--From the remainder of such sums, 
the Secretary shall allocate, and make available in accordance with 
this part, to each State an amount which bears the same ratio to the 
amount of such remainder as the school-age population of the State 
bears to the school-age population of all States, except that no State 
shall receive less than an amount equal to \1/2\ of 1 percent of such 
remainder.

``SEC. 4112. ALLOCATION TO LOCAL EDUCATIONAL AGENCIES.

    ``(a) Distribution Rule.--
            ``(1) In general.--Subject to paragraph (2), from the sums 
        made available each year to carry out this part, the State 
        shall distribute not less than 85 percent to local educational 
        agencies within such State according to the relative 
        enrollments in public and private, nonprofit schools within the 
        jurisdictions of such agencies, adjusted, in accordance with 
        criteria approved by the Secretary, to provide higher per-pupil 
        allocations to local educational agencies that have the 
        greatest numbers or percentages of children whose education 
        imposes a higher than average cost per child, such as--
                    ``(A) children living in areas with high 
                concentrations of economically disadvantaged families;
                    ``(B) children from economically disadvantaged 
                families; and
                    ``(C) children living in sparsely populated areas.
            ``(2) Exception.--100 percent of any amount by which the 
        funds paid to a State under this part for a fiscal year exceed 
        the amount of such funds paid to the State for fiscal year 2001 
        shall be distributed to local educational agencies and used 
        locally for innovative assistance described in section 4131(b).
            ``(3) Limitation on administrative costs.--Not more than 4 
        percent of the funds paid to a State under this part for a 
        fiscal year may be used by the agency for administration and 
        supervision of programs assisted under this part.
    ``(b) Calculation of Enrollments.--
            ``(1) In general.--The calculation of relative enrollments 
        under subsection (a)(1) shall be on the basis of the total of--
                    ``(A) the number of children enrolled in public 
                schools; and
                    ``(B) the number of children enrolled in private, 
                nonprofit schools whose parents would like their 
                children to participate in programs or projects 
                assisted under this part, for the fiscal year preceding 
                the fiscal year for which the determination is made.
            ``(2) Construction.--Nothing in this subsection shall 
        diminish the responsibility of each local educational agency to 
        contact, on an annual basis, appropriate officials from private 
        nonprofit schools within the areas served by such agencies in 
        order to determine whether such schools desire that their 
        children participate in programs assisted under this subpart.
            ``(3) Adjustments.--
                    ``(A) In general.--Relative enrollments calculated 
                under subsection (a)(1) shall be adjusted, in 
                accordance with criteria approved by the Secretary 
                under subparagraph (B), to provide higher per-pupil 
                allocations only to local educational agencies that 
                serve the greatest numbers or percentages of--
                            ``(i) children living in areas with high 
                        concentrations of economically disadvantaged 
                        families;
                            ``(ii) children from economically 
                        disadvantaged families; or
                            ``(iii) children living in sparsely 
                        populated areas.
                    ``(B) Criteria.--The Secretary shall review 
                criteria submitted by a State for adjusting allocations 
                under paragraph (1) and shall approve such criteria 
                only if the Secretary determines that such criteria are 
                reasonably calculated to produce an adjusted allocation 
                that reflects the relative needs of the State's local 
                educational agencies based on the factors set forth in 
                subparagraph (A).
    ``(c) Payment of Allocations.--
            ``(1) Distribution.--From the funds paid to a State under 
        this part for a fiscal year, a State shall distribute to each 
        eligible local educational agency that has submitted an 
        application as required in section 4133 the amount of such 
        local educational agency's allocation, as determined under 
        subsection (a).
            ``(2) Additional funds.--
                    ``(A) In general.--Additional funds resulting from 
                higher per-pupil allocations provided to a local 
                educational agency on the basis of adjusted enrollments 
                of children described in subsection (a)(1) may, in the 
                discretion of the local educational agency, be 
                allocated for expenditures to provide services for 
                children enrolled in public and private, nonprofit 
                schools in direct proportion to the number of children 
                described in subsection (a)(1) and enrolled in such 
                schools within the local educational agency.
                    ``(B) Election.--In any fiscal year, any local 
                educational agency that elects to allocate such 
                additional funds in the manner described in 
                subparagraph (A) shall allocate all additional funds to 
                schools within the local educational agency in such 
                manner.
                    ``(C) Construction.--Subparagraphs (A) and (B) may 
                not be construed to require any school to limit the use 
                of the additional funds described in subparagraph (A) 
                to the provision of services to specific students or 
                categories of students.

                      ``Subpart 2--State Programs

``SEC. 4121. STATE USE OF FUNDS.

    ``A State may use funds made available for State use under this 
part only for--
            ``(1) State administration of programs under this part 
        including--
                    ``(A) supervision of the allocation of funds to 
                local educational agencies;
                    ``(B) planning, supervision, and processing of 
                State funds; and
                    ``(C) monitoring and evaluation of programs and 
                activities under this part;
            ``(2) support for planning, designing, and initial 
        implementation of charter schools as described in part B;
            ``(3) statewide education reform and school improvement 
        activities and technical assistance and direct grants to local 
        educational agencies which assist such agencies under section 
        4131; and
            ``(4) support for arrangements that provide for independent 
        analysis to measure and report on school district achievement.

``SEC. 4122. STATE APPLICATIONS.

    ``(a) Application Requirements.--Any State that desires to receive 
assistance under this part shall submit to the Secretary an application 
that--
            ``(1) provides for an annual statewide summary of how 
        assistance under this part is contributing toward improving 
        student achievement or improving the quality of education for 
        students;
            ``(2) provides information setting forth the allocation of 
        such funds required to implement section 4142;
            ``(3) provides that the State will keep such records and 
        provide such information to the Secretary as may be required 
        for fiscal audit and program evaluation (consistent with the 
        responsibilities of the Secretary under this section);
            ``(4) provides assurance that, apart from technical and 
        advisory assistance and monitoring compliance with this part, 
        the State has not exercised and will not exercise any influence 
        in the decisionmaking processes of local educational agencies 
        as to the expenditure made pursuant to an application under 
        section 4133;
            ``(5) contains assurances that there is compliance with the 
        specific requirements of this part; and
            ``(6) provides for timely public notice and public 
        dissemination of the information provided under paragraph (2).
    ``(b) Statewide Summary.--The statewide summary referred to in 
subsection (a)(1) shall be submitted to the Secretary and shall be 
derived from the evaluation information submitted by local educational 
agencies to the State under section 4133(a)(8). The format and content 
of such summary shall be in the discretion of the State and may include 
statistical measures such as the number of students served by each type 
of innovative assistance described in section 4131(b), including the 
number of teachers trained.
    ``(c) Period of Application.--An application filed by the State 
under subsection (a) shall be for a period not to exceed 3 years, and 
may be amended annually as may be necessary to reflect changes without 
filing a new application.
    ``(d) Audit Limitation.--Each local educational agency receiving 
less than an average of $5,000 under this part may not be audited more 
frequently than once every 5 years.

            ``Subpart 3--Local Innovative Education Programs

``SEC. 4131. USE OF FUNDS.

    ``(a) In General.--Funds made available to local educational 
agencies under section 4112 shall be used for innovative assistance 
described in subsection (b).
    ``(b) Innovative Assistance.--The innovative assistance programs 
referred to in subsection (a) may include--
            ``(1) professional development activities and the hiring of 
        teachers, including activities carried out in accordance with 
        title II, that give teachers, principals, and administrators 
        the knowledge and skills to provide students with the 
        opportunity to meet challenging State or local content 
        standards and student achievement standards;
            ``(2) technology related to the implementation of school-
        based reform programs, including professional development to 
        assist teachers, and other school officials, regarding how to 
        use effectively such equipment and software;
            ``(3) programs for the development or acquisition and use 
        of instructional and educational materials, including library 
        services and materials (including media materials), 
        assessments, reference materials, computer software and 
        hardware for instructional use, and other curricular materials 
        that are tied to high academic standards, that will be used to 
        improve student achievement, and that are part of an overall 
        education reform program;
            ``(4) promising education reform projects, including 
        effective schools and magnet schools;
            ``(5) programs to improve the academic skills of 
        disadvantaged elementary and secondary school students and to 
        prevent students from dropping out of school;
            ``(6) programs to combat illiteracy;
            ``(7) programs to provide for the educational needs of 
        gifted and talented children;
            ``(8) planning, designing, and initial implementation of 
        charter schools as described in part B;
            ``(9) school improvement programs or activities under 
        sections 1116 and 1117;
            ``(10) community service programs that use qualified school 
        personnel to train and mobilize young people to measurably 
        strengthen their communities through nonviolence, 
        responsibility, compassion, respect, and moral courage;
            ``(11) activities to promote consumer, economic, and 
        personal finance education, such as disseminating and 
        encouraging the best practices for teaching the basic 
        principles of economics and promoting the concept of achieving 
        financial literacy through the teaching of personal financial 
        management skills (including the basic principles involved with 
        earning, spending, saving, and investing);
            ``(12) activities to promote, implement, or expand public 
        school choice;
            ``(13) activities to promote, implement, or expand private 
        school choice for disadvantaged children in failing public 
        schools;
            ``(14) expanding and improving school-based mental health 
        services, including early identification of drug use and 
        violence, assessment, and direct individual or group counseling 
        services provided to students, parents, and school personnel by 
        qualified school based mental health services personnel;
            ``(15) alternative educational programs for those students 
        who have been expelled or suspended from their regular 
        educational setting, including programs to assist students to 
        reenter the regular educational setting upon return from 
        treatment or alternative educational programs;
            ``(16) activities to improve the quality of civics and 
        government education to foster civic competence and 
        responsibility, by educating students about the history and 
        principles of the Constitution of the United States, including 
        the Bill of Rights; and
            ``(17) programs that improve academic achievement by 
        strengthening arts education as an integral part of the 
        elementary and secondary school curriculum.

``SEC. 4132. ADMINISTRATIVE AUTHORITY.

    ``In order to conduct the activities authorized by this part, each 
State or local educational agency may use funds made available under 
this part to make grants to, and to enter into contracts with, local 
educational agencies, institutions of higher education, libraries, 
museums, and other public and private nonprofit agencies, 
organizations, and institutions, including religious organizations.

``SEC. 4133. LOCAL APPLICATIONS.

    ``(a) Certification.--
            ``(1) In general.--A local educational agency or a 
        consortium of such agencies may receive an allocation of funds 
        under this part for any year for which the agency or consortium 
        submits an application under this section that is certified by 
        the State under paragraph (2) to meet the requirements of this 
        section.
            (2) Contents of Application.--The State shall certify each 
        application that--
            ``(1) describes locally identified needs relative to the 
        purposes of this part and to the innovative assistance 
        described in section 4131(b);
            ``(2) based on the needs identified in paragraph (1), sets 
        forth the planned allocation of funds among innovative 
        assistance programs described in section 4131 and describes the 
        programs, projects, and activities designed to carry out such 
        innovative assistance programs that the local educational 
        agency intends to support;
            ``(3) contains information setting forth the allocation of 
        such funds required to implement section 4142;
            ``(4) describes how assistance under this part will 
        contribute to improving student academic achievement;
            ``(5) provides assurances of compliance with the provisions 
        of this part, including the participation of children enrolled 
        in private, nonprofit schools in accordance with section 4142;
            ``(6) provides assurance that the local educational agency 
        will keep such records, and provide such information to the 
        State as may be reasonably required for fiscal audit and 
        program evaluation, consistent with the responsibilities of the 
        State under this part;
            ``(7) provides in the allocation of funds for the 
        assistance authorized by this part, and in the design, 
        planning, and implementation of such programs, for systematic 
        consultation with parents of children attending elementary and 
        secondary schools in the area served by the local educational 
        agency, with teachers and administrative personnel in such 
        schools, and with other groups involved in the implementation 
        of this part (such as librarians, school counselors, and other 
        pupil services personnel) as may be considered appropriate by 
        the local educational agency; and
            ``(8) provides assurance that--
                    ``(A) programs, services, and activities will be 
                evaluated annually;
                    ``(B) such evaluation will be used to determine and 
                implement appropriate changes in program services and 
                activities for the subsequent year;
                    ``(C) such evaluation will describe how assistance 
                under this part contributed toward improving student 
                academic achievement; and
                    ``(D) such evaluation will be submitted to the 
                State in the time and manner requested by the State.
    ``(b) Time Period to Which Application Relates.--An application 
submitted by a local educational agency under subsection (a) may seek 
allocations under this part for a period of time not to exceed 3 fiscal 
years and may be amended annually as may be necessary to reflect 
changes without the filing of a new application.
    ``(c) Local Educational Agency Discretion.--
            ``(1) In general.--Subject to the limitations and 
        requirements of this part, a local educational agency shall 
        have complete discretion in determining how funds made 
        available under this subpart will be divided among programs and 
        activities described in section 4131.
            ``(2) Limitation.--In exercising the discretion described 
        in paragraph (1), a local educational agency shall ensure that 
        expenditures under this subpart carry out the purposes of this 
        part and are used to meet the educational needs within the 
        schools of such local educational agency.

                    ``Subpart 4--General Provisions

``SEC. 4141. MAINTENANCE OF EFFORT; FEDERAL FUNDS SUPPLEMENTARY.

    ``(a) Maintenance of Effort.--
            ``(1) In general.--Except as provided in paragraph (2), a 
        State is entitled to receive its full allocation of funds under 
        this subpart for any fiscal year only if the Secretary 
        determines that either the combined fiscal effort per student 
        or the aggregate expenditures within the State with respect to 
        the provision of free public education for the fiscal year 
        preceding the fiscal year for which the determination is made 
        was not less than 90 percent of such combined fiscal effort or 
        aggregate expenditures for the fiscal year that is 2 fiscal 
        years before the fiscal year for which the determination is 
        made.
            ``(2) Reduction of funds.--The Secretary shall reduce the 
        amount of the allocation of funds under this subpart in any 
        fiscal year in the exact proportion to which the State fails to 
        meet the requirements of paragraph (1) by falling below 90 
        percent of both the fiscal effort per student and aggregate 
        expenditures (using the measure most favorable to the State), 
        and no such lesser amount shall be used for computing the 
        effort required under paragraph (1) for subsequent years.
            ``(3) Waiver.--The Secretary may waive, for 1 fiscal year 
        only, the requirements of this section if the Secretary 
        determines that such a waiver would be equitable due to 
        exceptional or uncontrollable circumstances such as a natural 
        disaster or a precipitous and unforeseen decline in the 
        financial resources of the State.
    ``(b) Federal Funds Supplementary.--A State or local educational 
agency may use and allocate funds received under this subpart only to 
supplement and, to the extent practical, to increase the level of funds 
that would, in the absence of Federal funds made available under this 
subpart, be made available from non-Federal sources, and in no case may 
such funds be used so as to supplant funds from non-Federal sources.

``SEC. 4142. PARTICIPATION OF CHILDREN ENROLLED IN PRIVATE SCHOOLS.

    ``(a) Participation on Equitable Basis.--
            ``(1) In general.--To the extent consistent with the number 
        of children in the school district of a local educational 
        agency which is eligible to receive funds under this part or 
        which serves the area in which a program or project assisted 
        under this part is located, who are enrolled in private 
        nonprofit elementary and secondary schools, or with respect to 
        instructional or personnel training programs funded by the 
        State from funds made available for State use, such agency, 
        after consultation with appropriate private school officials--
                    ``(A) shall provide for the benefit of such 
                children in such schools secular, neutral, and 
                nonideological services, materials, and equipment, 
                including the participation of the teachers of such 
                children (and other educational personnel serving such 
                children) in training programs, and the repair or minor 
                remodeling of public facilities as may be necessary for 
                their provision (consistent with subsection (c) of this 
                section); or
                    ``(B) if such services, materials, and equipment 
                are not feasible or necessary in 1 or more such private 
                schools as determined by the local educational agency 
                after consultation with the appropriate private school 
                officials, shall provide such other arrangements as 
                will assure equitable participation of such children in 
                the purposes and benefits of this part.
            ``(2) Other provisions for services.--If no program or 
        project is carried out under paragraph (1) in the school 
        district of a local educational agency, the State shall make 
        arrangements, such as through contracts with nonprofit agencies 
        or organizations, under which children in private schools in 
        such district are provided with services and materials to the 
        extent that would have occurred if the local educational agency 
        had received funds under this part.
            ``(3) Application of requirements.--The requirements of 
        this section relating to the participation of children, 
        teachers, and other personnel serving such children shall apply 
        to programs and projects carried out under this part by a State 
        or local educational agency, whether directly or through grants 
        to or contracts with other public or private agencies, 
        institutions, or organizations.
    ``(b) Equal Expenditures.--
            ``(1) In general.--Expenditures for programs pursuant to 
        subsection (a) shall be equal (consistent with the number of 
        children to be served) to expenditures for programs under this 
        part for children enrolled in the public schools of the local 
        educational agency.
            ``(2) Concentrated programs.--Taking into account the needs 
        of the individual children and other factors which relate to 
        the expenditures referred to in paragraph (1), and when funds 
        available to a local educational agency under this part are 
        used to concentrate programs or projects on a particular group, 
        attendance area, or grade or age level, children enrolled in 
        private schools who are included within the group, attendance 
        area, or grade or age level selected for such concentration 
        shall, after consultation with the appropriate private school 
        officials, be assured equitable participation in the purposes 
        and benefits of such programs or projects.
    ``(c) Administrative Rules.--
            ``(1) Funds and property.--The control of funds provided 
        under this part, and title to materials, equipment, and 
        property repaired, remodeled, or constructed with such funds, 
        shall be in a public agency for the uses and purposes provided 
        in this part, and a public agency shall administer such funds 
        and property.
            ``(2) Provision of services.--The provision of services 
        pursuant to this part shall be provided by employees of a 
        public agency or through contract by such public agency with a 
        person, an association, agency, or corporation who or which, in 
        the provision of such services, is independent of such private 
        school and of any religious organizations, and such employment 
        or contract shall be under the control and supervision of such 
        public agency, and the funds provided under this part shall not 
        be commingled with State or local funds.
    ``(d) Waiver.--
            ``(1) State prohibition waiver.--If by reason of any 
        provision of law a State or local educational agency is 
        prohibited from providing for the participation in programs of 
        children enrolled in private elementary and secondary schools, 
        as required by this section, the Secretary shall waive such 
        requirements and shall arrange for the provision of services to 
        such children through arrangements which shall be subject to 
        the requirements of this section.
            ``(2) Failure to comply.--If the Secretary determines that 
        a State or a local educational agency has substantially failed 
        or is unwilling to provide for the participation on an 
        equitable basis of children enrolled in private elementary and 
        secondary schools as required by this section, the Secretary 
        may waive such requirements and shall arrange for the provision 
        of services to such children through arrangements which shall 
        be subject to the requirements of this section.
    ``(e) Withholding of Allocation.--Pending final resolution of any 
investigation or complaint that could result in a waiver under 
subsection (d)(1) or (d)(2), the Secretary may withhold from the 
allocation of the affected State or local educational agency the amount 
estimated by the Secretary to be necessary to pay the cost of services 
to be provided by the Secretary under such subsection.
    ``(f) Term of Determinations.--Any determination by the Secretary 
under this section shall continue in effect until the Secretary 
determines that there will no longer be any failure or inability on the 
part of the State or local educational agency to meet the requirements 
of subsections (a) and (b).
    ``(g) Payment From State Allotment.--When the Secretary arranges 
for services pursuant to this section, the Secretary shall, after 
consultation with the appropriate public and private school officials, 
pay the cost of such services, including the administrative costs of 
arranging for those services, from the appropriate allotment of the 
State under this part.
    ``(h) Review.--
            ``(1) Written objections.--The Secretary shall not take any 
        final action under this section until the State and the local 
        educational agency affected by such action have had an 
        opportunity, for not less than 45 days after receiving written 
        notice thereof, to submit written objections and to appear 
        before the Secretary or the Secretary's designee to show cause 
        why that action should not be taken.
            ``(2) Court action.--If a State or local educational agency 
        is dissatisfied with the Secretary's final action after a 
        proceeding under paragraph (1), such agency may, not later than 
        60 days after notice of such action, file with the United 
        States court of appeals for the circuit in which such State is 
        located a petition for review of that action. A copy of the 
        petition shall be transmitted by the clerk of the court to the 
        Secretary. The Secretary thereupon shall file in the court the 
        record of the proceedings on which the Secretary based this 
        action, as provided in section 2112 of title 28, United States 
        Code.
            ``(3) Remand to secretary.--The findings of fact by the 
        Secretary, if supported by substantial evidence, shall be 
        conclusive; but the court, for good cause shown, may remand the 
        case to the Secretary to take further evidence and the 
        Secretary may make new or modified findings of fact and may 
        modify the Secretary's previous action, and shall file in the 
        court the record of the further proceedings. Such new or 
        modified findings of fact shall likewise be conclusive if 
        supported by substantial evidence.
            ``(4) Court review.--Upon the filing of such petition, the 
        court shall have jurisdiction to affirm the action of the 
        Secretary or to set such action aside, in whole or in part. The 
        judgment of the court shall be subject to review by the Supreme 
        Court of the United States upon certiorari or certification as 
        provided in section 1254 of title 28, United States Code.

``SEC. 4143. FEDERAL ADMINISTRATION.

    ``(a) Technical Assistance.--The Secretary, upon request, shall 
provide technical assistance to States and local educational agencies 
under this part.
    ``(b) Rulemaking.--The Secretary shall issue regulations under this 
part only to the extent that such regulations are necessary to ensure 
that there is compliance with the specific requirements and assurances 
required by this part.
    ``(c) Availability of Appropriations.--Notwithstanding any other 
provision of law, unless expressly in limitation of this subsection, 
funds appropriated in any fiscal year to carry out activities under 
this part shall become available for obligation on July 1 of such 
fiscal year and shall remain available for obligation until the end of 
the subsequent fiscal year.

``SEC. 4144. DEFINITIONS.

    ``In this part, the following definitions apply:
            ``(1) School-age population.--The term `school-age 
        population' means the population aged 5 through 17.
            ``(2) State.--The term `State' means each of the 50 States, 
        the District of Columbia, and the Commonwealth of Puerto Rico.

``SEC. 4145. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this part 
$472,000,000 for fiscal year 2002 and such sums as may be necessary for 
each of fiscal years 2003 through 2006.''.

                     PART B--PUBLIC CHARTER SCHOOLS

SEC. 411. PUBLIC CHARTER SCHOOLS.

    Part B of title IV is amended to read as follows:

                    ``PART B--PUBLIC CHARTER SCHOOLS

``SEC. 4201. FINDINGS AND PURPOSE.

    ``(a) Findings.--The Congress finds that--
            ``(1) enhancement of parent and student choices among 
        public schools can assist in promoting comprehensive 
        educational reform and give more students the opportunity to 
        learn to challenging State content standards and challenging 
        State student performance standards, if sufficiently diverse 
        and high-quality choices, and genuine opportunities to take 
        advantage of such choices, are available to all students;
            ``(2) useful examples of such choices can come from States 
        and communities that experiment with methods of offering 
        teachers and other educators, parents, and other members of the 
        public the opportunity to design and implement new public 
        schools and to transform existing public schools;
            ``(3) charter schools are a mechanism for testing a variety 
        of educational approaches and should, therefore, be exempted 
        from restrictive rules and regulations if the leadership of 
        such schools commits to attaining specific and ambitious 
        educational results for educationally disadvantaged students 
        consistent with challenging State content standards and 
        challenging State student performance standards for all 
        students;
            ``(4) charter schools, as such schools have been 
        implemented in a few States, can embody the necessary mixture 
        of enhanced choice, exemption from restrictive regulations, and 
        a focus on learning gains;
            ``(5) charter schools, including charter schools that are 
        schools-within-schools, can help reduce school size, which 
        reduction can have a significant effect on student achievement;
            ``(6) the Federal Government should test, evaluate, and 
        disseminate information on a variety of charter school models 
        in order to help demonstrate the benefits of this promising 
        educational reform; and
            ``(7) there is a strong documented need for cash-flow 
        assistance to charter schools that are starting up, because 
        State and local operating revenue streams are not immediately 
        available.
    ``(b) Purpose.--It is the purpose of this part to increase national 
understanding of the charter schools model by--
            ``(1) providing financial assistance for the planning, 
        program design and initial implementation of charter schools;
            ``(2) evaluating the effects of such schools, including the 
        effects on students, student achievement, staff, and parents; 
        and
            ``(3) expanding the number of high-quality charter schools 
        available to students across the Nation.

``SEC. 4202. PROGRAM AUTHORIZED.

    ``(a) In General.--The Secretary may award grants to State 
educational agencies having applications approved pursuant to section 
4203 to enable such agencies to conduct a charter school grant program 
in accordance with this part.
    ``(b) Special Rule.--If a State educational agency elects not to 
participate in the program authorized by this part or does not have an 
application approved under section 4203, the Secretary may award a 
grant to an eligible applicant that serves such State and has an 
application approved pursuant to section 4203(c).
    ``(c) Program Periods.--
            ``(1) Grants to states.--Grants awarded to State 
        educational agencies under this part shall be awarded for a 
        period of not more than 3 years.
            ``(2) Grants to eligible applicants.--Grants awarded by the 
        Secretary to eligible applicants or subgrants awarded by State 
        educational agencies to eligible applicants under this part 
        shall be awarded for a period of not more than 3 years, of 
        which the eligible applicant may use--
                    ``(A) not more than 18 months for planning and 
                program design;
                    ``(B) not more than 2 years for the initial 
                implementation of a charter school; and
                    ``(C) not more than 2 years to carry out 
                dissemination activities described in section 
                4204(f)(6)(B).
    ``(d) Limitation.--A charter school may not receive--
            ``(1) more than one grant for activities described in 
        subparagraphs (A) and (B) of subsection (c)(2); or
            ``(2) more than one grant for activities under subparagraph 
        (C) of subsection (c)(2).
    ``(e) Priority Treatment.--In awarding grants under this part from 
any funds appropriated under section 4211, the Secretary shall give 
priority to States to the extent that the States meet the criteria 
described in paragraph (2) and one or more of the criteria described in 
subparagraph (A), (B), or (C) of paragraph (3).
            ``(2) Review and evaluation priority criteria.--The 
        criteria referred to in paragraph (1) is that the State 
        provides for periodic review and evaluation by the authorized 
        public chartering agency of each charter school, at least once 
        every 5 years unless required more frequently by State law, to 
        determine whether the charter school is meeting the terms of 
        the school's charter, and is meeting or exceeding the academic 
        performance requirements and goals for charter schools as set 
        forth under State law or the school's charter.
            ``(3) Priority criteria.--The criteria referred to in 
        paragraph (1) are the following:
                    ``(A) The State has demonstrated progress, in 
                increasing the number of high quality charter schools 
                that are held accountable in the terms of the schools' 
                charters for meeting clear and measurable objectives 
                for the educational progress of the students attending 
                the schools, in the period prior to the period for 
                which a State educational agency or eligible applicant 
                applies for a grant under this part.
                    ``(B) The State--
                            ``(i) provides for one authorized public 
                        chartering agency that is not a local 
                        educational agency, such as a State chartering 
                        board, for each individual or entity seeking to 
                        operate a charter school pursuant to such State 
                        law; or
                            ``(ii) in the case of a State in which 
                        local educational agencies are the only 
                        authorized public chartering agencies, allows 
                        for an appeals process for the denial of an 
                        application for a charter school.
                    ``(C) The State ensures that each charter school 
                has a high degree of autonomy over the charter school's 
                budgets and expenditures.
    ``(f) Amount Criteria.--In determining the amount of a grant to be 
awarded under this part to a State educational agency, the Secretary 
shall take into consideration the number of charter schools that are 
operating, or are approved to open, in the State.

``SEC. 4203. APPLICATIONS.

    ``(a) Applications From State Agencies.--Each State educational 
agency desiring a grant from the Secretary under this part shall submit 
to the Secretary an application at such time, in such manner, and 
containing or accompanied by such information as the Secretary may 
require.
    ``(b) Contents of a State Educational Agency Application.--Each 
application submitted pursuant to subsection (a) shall--
            ``(1) describe the objectives of the State educational 
        agency's charter school grant program and a description of how 
        such objectives will be fulfilled, including steps taken by the 
        State educational agency to inform teachers, parents, and 
        communities of the State educational agency's charter school 
        grant program; and
            ``(2) describe how the State educational agency--
                    ``(A) will inform each charter school in the State 
                regarding--
                            ``(i) Federal funds that the charter school 
                        is eligible to receive; and
                            ``(ii) Federal programs in which the 
                        charter school may participate;
                    ``(B) will ensure that each charter school in the 
                State receives the charter school's commensurate share 
                of Federal education funds that are allocated by 
                formula each year, including during the first year of 
                operation of the charter school; and
                    ``(C) will disseminate best or promising practices 
                of charter schools to each local educational agency in 
                the State; and
            ``(3) contain assurances that the State educational agency 
        will require each eligible applicant desiring to receive a 
        subgrant to submit an application to the State educational 
        agency containing--
                    ``(A) a description of the educational program to 
                be implemented by the proposed charter school, 
                including--
                            ``(i) how the program will enable all 
                        students to meet challenging State student 
                        performance standards;
                            ``(ii) the grade levels or ages of children 
                        to be served; and
                            ``(iii) the curriculum and instructional 
                        practices to be used;
                    ``(B) a description of how the charter school will 
                be managed;
                    ``(C) a description of--
                            ``(i) the objectives of the charter school; 
                        and
                            ``(ii) the methods by which the charter 
                        school will determine its progress toward 
                        achieving those objectives;
                    ``(D) a description of the administrative 
                relationship between the charter school and the 
                authorized public chartering agency;
                    ``(E) a description of how parents and other 
                members of the community will be involved in the 
                planning, program design and implementation of the 
                charter school;
                    ``(F) a description of how the authorized public 
                chartering agency will provide for continued operation 
                of the school once the Federal grant has expired, if 
                such agency determines that the school has met the 
                objectives described in subparagraph (C)(i);
                    ``(G) a request and justification for waivers of 
                any Federal statutory or regulatory provisions that the 
                applicant believes are necessary for the successful 
                operation of the charter school, and a description of 
                any State or local rules, generally applicable to 
                public schools, that will be waived for, or otherwise 
                not apply to, the school;
                    ``(H) a description of how the subgrant funds or 
                grant funds, as appropriate, will be used, including a 
                description of how such funds will be used in 
                conjunction with other Federal programs administered by 
                the Secretary;
                    ``(I) a description of how students in the 
                community will be--
                            ``(i) informed about the charter school; 
                        and
                            ``(ii) given an equal opportunity to attend 
                        the charter school;
                    ``(J) an assurance that the eligible applicant will 
                annually provide the Secretary and the State 
                educational agency such information as may be required 
                to determine if the charter school is making 
                satisfactory progress toward achieving the objectives 
                described in subparagraph (C)(i);
                    ``(K) an assurance that the applicant will 
                cooperate with the Secretary and the State educational 
                agency in evaluating the program assisted under this 
                part;
                    ``(L) a description of how a charter school that is 
                considered a local educational agency under State law, 
                or a local educational agency in which a charter school 
                is located, will comply with sections 613(a)(5) and 
                613(e)(1)(B) of the Individuals with Disabilities 
                Education Act;
                    ``(M) if the eligible applicant desires to use 
                subgrant funds for dissemination activities under 
                section 4202(c)(2)(C), a description of those 
                activities and how those activities will involve 
                charter schools and other public schools, local 
                educational agencies, developers, and potential 
                developers; and
                    ``(N) such other information and assurances as the 
                Secretary and the State educational agency may require.
    ``(c) Contents of Eligible Applicant Application.--Each eligible 
applicant desiring a grant pursuant to section 4202(b) shall submit an 
application to the State educational agency or Secretary, respectively, 
at such time, in such manner, and accompanied by such information as 
the State educational agency or Secretary, respectively, may reasonably 
require.
    ``(d) Contents of Application.--Each application submitted pursuant 
to subsection (c) shall contain--
            ``(1) the information and assurances described in 
        subparagraphs (A) through (N) of subsection (b)(3), except that 
        for purposes of this subsection subparagraphs (J), (K), and (N) 
        of such subsection shall be applied by striking `and the State 
        educational agency' each place such term appears; and
            ``(2) assurances that the State educational agency--
                    ``(A) will grant, or will obtain, waivers of State 
                statutory or regulatory requirements; and
                    ``(B) will assist each subgrantee in the State in 
                receiving a waiver under section 4204(e).

``SEC. 4204. ADMINISTRATION.

    ``(a) Selection Criteria for State Educational Agencies.--The 
Secretary shall award grants to State educational agencies under this 
part on the basis of the quality of the applications submitted under 
section 4203(b), after taking into consideration such factors as--
            ``(1) the contribution that the charter schools grant 
        program will make to assisting educationally disadvantaged and 
        other students to achieving State content standards and State 
        student performance standards and, in general, a State's 
        education improvement plan;
            ``(2) the degree of flexibility afforded by the State 
        educational agency to charter schools under the State's charter 
        schools law;
            ``(3) the ambitiousness of the objectives for the State 
        charter school grant program;
            ``(4) the quality of the strategy for assessing achievement 
        of those objectives;
            ``(5) the likelihood that the charter school grant program 
        will meet those objectives and improve educational results for 
        students;
            ``(6) the number of high quality charter schools created 
        under this part in the State; and
            ``(7) in the case of State educational agencies that 
        propose to use grant funds to support dissemination activities 
        under section 4202(c)(2)(C), the quality of those activities 
        and the likelihood that those activities will improve student 
        achievement.
    ``(b) Selection Criteria for Eligible Applicants.--The Secretary 
shall award grants to eligible applicants under this part on the basis 
of the quality of the applications submitted under section 4203(c), 
after taking into consideration such factors as--
            ``(1) the quality of the proposed curriculum and 
        instructional practices;
            ``(2) the degree of flexibility afforded by the State 
        educational agency and, if applicable, the local educational 
        agency to the charter school;
            ``(3) the extent of community support for the application;
            ``(4) the ambitiousness of the objectives for the charter 
        school;
            ``(5) the quality of the strategy for assessing achievement 
        of those objectives;
            ``(6) the likelihood that the charter school will meet 
        those objectives and improve educational results for students; 
        and
            ``(7) in the case of an eligible applicant that proposes to 
        use grant funds to support dissemination activities under 
        section 4202(c)(2)(C), the quality of those activities and the 
        likelihood that those activities will improve student 
        achievement.
    ``(c) Peer Review.--The Secretary, and each State educational 
agency receiving a grant under this part, shall use a peer review 
process to review applications for assistance under this part.
    ``(d) Diversity of Projects.--The Secretary and each State 
educational agency receiving a grant under this part, shall award 
subgrants under this part in a manner that, to the extent possible, 
ensures that such grants and subgrants--
            ``(1) are distributed throughout different areas of the 
        Nation and each State, including urban and rural areas; and
            ``(2) will assist charter schools representing a variety of 
        educational approaches, such as approaches designed to reduce 
        school size.
    ``(e) Waivers.--The Secretary may waive any statutory or regulatory 
requirement over which the Secretary exercises administrative authority 
except any such requirement relating to the elements of a charter 
school described in section 4210(1), if--
            ``(1) the waiver is requested in an approved application 
        under this part; and
            ``(2) the Secretary determines that granting such a waiver 
        will promote the purpose of this part.
    ``(f) Use of Funds.--
            ``(1) State educational agencies.--Each State educational 
        agency receiving a grant under this part shall use such grant 
        funds to award subgrants to one or more eligible applicants in 
        the State to enable such applicant to plan and implement a 
        charter school in accordance with this part, except that the 
        State educational agency may reserve not more than 10 percent 
        of the grant funds to support dissemination activities 
        described in paragraph (6).
            ``(2) Eligible applicants.--Each eligible applicant 
        receiving funds from the Secretary or a State educational 
        agency shall use such funds to plan and implement a charter 
        school, or to disseminate information about the charter school 
        and successful practices in the charter school, in accordance 
        with this part.
            ``(3) Allowable activities.--An eligible applicant 
        receiving a grant or subgrant under this part may use the grant 
        or subgrant funds only for--
                    ``(A) post-award planning and design of the 
                educational program, which may include--
                            ``(i) refinement of the desired educational 
                        results and of the methods for measuring 
                        progress toward achieving those results; and
                            ``(ii) professional development of teachers 
                        and other staff who will work in the charter 
                        school; and
                    ``(B) initial implementation of the charter school, 
                which may include--
                            ``(i) informing the community about the 
                        school;
                            ``(ii) acquiring necessary equipment and 
                        educational materials and supplies;
                            ``(iii) acquiring or developing curriculum 
                        materials; and
                            ``(iv) other initial operational costs that 
                        cannot be met from State or local sources.
            ``(4) Administrative expenses.--Each State educational 
        agency receiving a grant pursuant to this part may reserve not 
        more than 5 percent of such grant funds for administrative 
        expenses associated with the charter school grant program 
        assisted under this part.
            ``(5) Revolving loan funds.--Each State educational agency 
        receiving a grant pursuant to this part may reserve not more 
        than 10 percent of the grant amount for the establishment of a 
        revolving loan fund. Such fund may be used to make loans to 
        eligible applicants that have received a subgrant under this 
        part, under such terms as may be determined by the State 
        educational agency, for the initial operation of the charter 
        school grant program of such recipient until such time as the 
        recipient begins receiving ongoing operational support from 
        State or local financing sources.
            ``(6) Dissemination.--
                    ``(A) In general.--A charter school may apply for 
                funds under this part, whether or not the charter 
                school has applied for or received funds under this 
                part for planning, program design, or implementation, 
                to carry out the activities described in subparagraph 
                (B) if the charter school has been in operation for at 
                least 3 consecutive years and has demonstrated overall 
                success, including--
                            ``(i) substantial progress in improving 
                        student achievement;
                            ``(ii) high levels of parent satisfaction; 
                        and
                            ``(iii) the management and leadership 
                        necessary to overcome initial start-up problems 
                        and establish a thriving, financially viable 
                        charter school.
                    ``(B) Activities.--A charter school described in 
                subparagraph (A) may use funds reserved under paragraph 
                (1) to assist other schools in adapting the charter 
                school's program (or certain aspects of the charter 
                school's program), or to disseminate information about 
                the charter school, through such activities as--
                            ``(i) assisting other individuals with the 
                        planning and start-up of one or more new public 
                        schools, including charter schools, that are 
                        independent of the assisting charter school and 
                        the assisting charter school's developers, and 
                        that agree to be held to at least as high a 
                        level of accountability as the assisting 
                        charter school;
                            ``(ii) developing partnerships with other 
                        public schools, including charter schools, 
                        designed to improve student performance in each 
                        of the schools participating in the 
                        partnership;
                            ``(iii) developing curriculum materials, 
                        assessments, and other materials that promote 
                        increased student achievement and are based on 
                        successful practices within the assisting 
                        charter school; and
                            ``(iv) conducting evaluations and 
                        developing materials that document the 
                        successful practices of the assisting charter 
                        school and that are designed to improve student 
                        performance in other schools.
    ``(g) Tribally Controlled Schools.--Each State that receives a 
grant under this part and designates a tribally controlled school as a 
charter school shall not consider payments to a school under the 
Tribally Controlled Schools Act of 1988 (25 U.S.C. 2507) in 
determining--
            ``(1) the eligibility of the school to receive any other 
        Federal, State, or local aid; or
            ``(2) the amount of such aid.

``SEC. 4205. NATIONAL ACTIVITIES.

    ``(a) In General.--The Secretary shall reserve for each fiscal year 
the greater of 5 percent or $5,000,000 of the amount appropriated to 
carry out this part, except that in no fiscal year shall the total 
amount so reserved exceed $8,000,000, to carry out the following 
activities:
            ``(1) To provide charter schools, either directly or 
        through State educational agencies, with--
                    ``(A) information regarding--
                            ``(i) Federal funds that charter schools 
                        are eligible to receive; and
                            ``(ii) other Federal programs in which 
                        charter schools may participate; and
                    ``(B) assistance in applying for Federal education 
                funds that are allocated by formula, including 
                assistance with filing deadlines and submission of 
                applications.
            ``(2) To provide for other evaluations or studies that 
        include the evaluation of the impact of charter schools on 
        student achievement, including information regarding--
                    ``(A) students attending charter schools reported 
                on the basis of race, age, disability, gender, limited 
                English proficiency, and previous enrollment in public 
                school; and
                    ``(B) the professional qualifications of teachers 
                within a charter school and the turnover of the 
                teaching force.
            ``(3) To provide--
                    ``(A) information to applicants for assistance 
                under this part;
                    ``(B) assistance to applicants for assistance under 
                this part with the preparation of applications under 
                section 4203;
                    ``(C) assistance in the planning and startup of 
                charter schools;
                    ``(D) training and technical assistance to existing 
                charter schools; and
                    ``(E) for the dissemination to other public schools 
                of best or promising practices in charter schools.
            ``(4) To provide (including through the use of one or more 
        contracts that use a competitive bidding process) for the 
        collection of information regarding the financial resources 
        available to charter schools, including access to private 
        capital, and to widely disseminate to charter schools any such 
        relevant information and model descriptions of successful 
        programs.
    ``(b) Construction.--Nothing in this section shall be construed to 
require charter schools to collect any data described in subsection 
(a).

``SEC. 4206. FEDERAL FORMULA ALLOCATION DURING FIRST YEAR AND FOR 
              SUCCESSIVE ENROLLMENT EXPANSIONS.

    ``(a) In General.--For purposes of the allocation to schools by the 
States or their agencies of funds under part A of title I, and any 
other Federal funds which the Secretary allocates to States on a 
formula basis, the Secretary and each State educational agency shall 
take such measures not later than 6 months after the date of the 
enactment of the Charter School Expansion Act of 1998 as are necessary 
to ensure that every charter school receives the Federal funding for 
which the charter school is eligible not later than 5 months after the 
charter school first opens, notwithstanding the fact that the identity 
and characteristics of the students enrolling in that charter school 
are not fully and completely determined until that charter school 
actually opens. The measures similarly shall ensure that every charter 
school expanding its enrollment in any subsequent year of operation 
receives the Federal funding for which the charter school is eligible 
not later than 5 months after such expansion.
    ``(b) Adjustment and Late Openings.--
            ``(1) In general.--The measures described in subsection (a) 
        shall include provision for appropriate adjustments, through 
        recovery of funds or reduction of payments for the succeeding 
        year, in cases where payments made to a charter school on the 
        basis of estimated or projected enrollment data exceed the 
        amounts that the school is eligible to receive on the basis of 
        actual or final enrollment data.
            ``(2) Rule.--For charter schools that first open after 
        November 1 of any academic year, the State, in accordance with 
        guidance provided by the Secretary and applicable Federal 
        statutes and regulations, shall ensure that such charter 
        schools that are eligible for the funds described in subsection 
        (a) for such academic year have a full and fair opportunity to 
        receive those funds during the charter schools' first year of 
        operation.

``SEC. 4207. SOLICITATION OF INPUT FROM CHARTER SCHOOL OPERATORS.

    ``To the extent practicable, the Secretary shall ensure that 
administrators, teachers, and other individuals directly involved in 
the operation of charter schools are consulted in the development of 
any rules or regulations required to implement this part, as well as in 
the development of any rules or regulations relevant to charter schools 
that are required to implement part A of title I, the Individuals with 
Disabilities Education Act (20 U.S.C. 1400 et seq.), or any other 
program administered by the Secretary that provides education funds to 
charter schools or regulates the activities of charter schools.

``SEC. 4208. RECORDS TRANSFER.

    ``State educational agencies and local educational agencies, to the 
extent practicable, shall ensure that a student's records and, if 
applicable, a student's individualized education program as defined in 
section 602(11) of the Individuals with Disabilities Education Act (20 
U.S.C. 1401(11)), are transferred to a charter school upon the transfer 
of the student to the charter school, and to another public school upon 
the transfer of the student from a charter school to another public 
school, in accordance with applicable State law.

``SEC. 4209. PAPERWORK REDUCTION.

    ``To the extent practicable, the Secretary and each authorized 
public chartering agency shall ensure that implementation of this part 
results in a minimum of paperwork for any eligible applicant or charter 
school.

``SEC. 4210. DEFINITIONS.

    ``As used in this part:
            ``(1) The term `charter school' means a public school 
        that--
                    ``(A) in accordance with a specific State statute 
                authorizing the granting of charters to schools, is 
                exempted from significant State or local rules that 
                inhibit the flexible operation and management of public 
                schools, but not from any rules relating to the other 
                requirements of this paragraph;
                    ``(B) is created by a developer as a public school, 
                or is adapted by a developer from an existing public 
                school, and is operated under public supervision and 
                direction;
                    ``(C) operates in pursuit of a specific set of 
                educational objectives determined by the school's 
                developer and agreed to by the authorized public 
                chartering agency;
                    ``(D) provides a program of elementary or secondary 
                education, or both;
                    ``(E) is nonsectarian in its programs, admissions 
                policies, employment practices, and all other 
                operations, and is not affiliated with a sectarian 
                school or religious institution;
                    ``(F) does not charge tuition;
                    ``(G) complies with the Age Discrimination Act of 
                1975, title VI of the Civil Rights Act of 1964, title 
                IX of the Education Amendments of 1972, section 504 of 
                the Rehabilitation Act of 1973, and part B of the 
                Individuals with Disabilities Education Act;
                    ``(H) is a school to which parents choose to send 
                their children, and that admits students on the basis 
                of a lottery, or in another nondiscriminatory manner 
                consistent with State law, if more students apply for 
                admission than can be accommodated;
                    ``(I) agrees to comply with the same Federal and 
                State audit requirements as do other elementary and 
                secondary schools in the State, unless such 
                requirements are specifically waived for the purpose of 
                this program;
                    ``(J) meets all applicable Federal, State, and 
                local health and safety requirements;
                    ``(K) operates in accordance with State law; and
                    ``(L) has a written performance contract with the 
                authorized public chartering agency in the State that 
                includes a description of how student performance will 
                be measured in charter schools pursuant to State 
                assessments that are required of other schools and 
                pursuant to any other assessments mutually agreeable to 
                the authorized public chartering agency and the charter 
                school.
            ``(2) The term `developer' means an individual or group of 
        individuals (including a public or private nonprofit 
        organization), which may include teachers, administrators and 
        other school staff, parents, or other members of the local 
        community in which a charter school project will be carried 
        out.
            ``(3) The term `eligible applicant' means an authorized 
        public chartering agency participating in a partnership with a 
        developer to establish a charter school in accordance with this 
        part.
            ``(4) The term `authorized public chartering agency' means 
        a State educational agency, local educational agency, or other 
        public entity that has the authority pursuant to State law and 
        approved by the Secretary to authorize or approve a charter 
        school.

``SEC. 4211. AUTHORIZATION OF APPROPRIATIONS.

    ``For the purpose of carrying out this part, there are authorized 
to be appropriated $200,000,000 for fiscal year 2002 and such sums as 
may be necessary for each of the 4 succeeding fiscal years.''.

            PART C--SCHOOL CHOICE RESEARCH AND DEMONSTRATION

SEC. 421. SCHOOL CHOICE RESEARCH AND DEMONSTRATION

    Part C of title IV is amended to read as follows:

                 ``PART C--EDUCATIONAL OPPORTUNITY FUND

``SEC. 4311. PURPOSE.

    ``The purpose of this part is to determine the effectiveness of 
school choice in improving the academic achievement of disadvantaged 
students and the overall quality of public schools and local 
educational agencies.

``SEC. 4312. PROGRAM AUTHORIZED.

    ``The Secretary is authorized to make competitive awards to 
eligible entities to carry out and evaluate, through contracts or 
grants, research projects that demonstrate how school choice options 
increase the academic achievement of students, schools, and local 
educational agencies.

``SEC. 4313. ELIGIBLE ENTITIES.

    ``For purposes of this part an eligible entity is--
            ``(1) a State educational agency;
            ``(2) a county agency;
            ``(3) a municipal agency;
            ``(4) a local educational agency;
            ``(5) a nonprofit corporation; or
            ``(6) a consortia thereof.

``SEC. 4314. APPLICATIONS.

    ``Each eligible entity desiring an award under this part shall 
submit an application to the Secretary that shall include--
            ``(1) a description of the proposed research project, 
        including a designation from which local educational agency or 
        agencies eligible students will be selected to participate in a 
        choice program;
            ``(2) a description of the annual costs of the project;
            ``(3) a description of the research design that the 
        eligible entity will employ in carrying out the project;
            ``(4) a description of the project evaluation that will be 
        conducted by an independent third party entity, including--
                    ``(A) the name and qualifications of the 
                independent entity that will conduct the evaluation; 
                and
                    ``(B) a description of how the evaluation will 
                measure the academic achievement of students 
                participating in the program, parental satisfaction and 
                the effect of the project on the schools and agencies 
                designated in paragraph (1);
            ``(5) a description of how the eligible entity will ensure 
        the participation of students selected for the control group;
            ``(6) a description of the assessment that the eligible 
        entity will use to assess annually the progress of participants 
        in the research project in grades 3 through 8 in mathematics 
        and reading and how it is comparable to assessments used by the 
        agency or agencies described under paragraph (1);
            ``(7) an assurance that the eligible entity will assess all 
        students that are participating in the program or in the 
        control group at the beginning of the project;
            ``(8) an assurance that the eligible entity will report 
        annually to the Secretary on the impact of the project on 
        student achievement, including a discussion of the meaning and 
        an attestation of validity of the achievement data;
            ``(9) an assurance that, if the number of students applying 
        to participate in the project is greater than the number of 
        students the project can serve, participants wi