To amend the Elementary and Secondary Education Act of 1965 to adjust funding levels for certain outlying areas.

Summary: Amends part A of title I of the Elementary and Secondary Education Act of 1965 to eliminate the current reservation of 1% of the school improvement funds for outlying areas and Indian education. Reserves .67% of the school improvement funds for Indian education, but raises that reservation to .75% beginning with the fiscal year the allocations to states equal or surpass FY2015 levels after subtracting .75% of those allocations for Indian education. Establishes formulae for determining the minimum allotment to American Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin Islands of school improvement funds for: (1) basic grants to local educational agencies (LEAs), (2) concentration grants to LEAs, (3) targeted grants to LEAs, and (4) grants under the education finance incentive grant program.

SECTION 1. GRANTS FOR THE SECRETARY OF THE INTERIOR.

    (a) In General.--Section 1121 of the Elementary and Secondary 
Education Act of 1965 (20 U.S.C. 6331) is amended--
            (1) in the section heading, by striking ``the outlying 
        areas and'';
            (2) by amending subsection (a) to read as follows:
    ``(a) Reservation of Funds.--
            ``(1) In general.--From the amount appropriated for 
        payments to States for any fiscal year under sections 1002(a) 
        and 1125A(f), the Secretary shall reserve--
                    ``(A) for each fiscal year until the fiscal year 
                described in paragraph (2), .67 percent to provide 
                assistance to the Secretary of the Interior in the 
                amount necessary to make payments pursuant to 
                subsection (b); and
                    ``(B) for the fiscal year described in paragraph 
                (2) and each succeeding fiscal year, 0.75 percent to 
                provide assistance to the Secretary of the Interior in 
                the amount necessary to make payments pursuant to such 
                subsection.
            ``(2) Description of fiscal year.--A fiscal year described 
        in this paragraph is a fiscal year for which the total amount 
        allocated under this part for each State, after reserving funds 
        in accordance with paragraph (1)(B), would be an amount that is 
        not less than the total amount allocated under this part for 
        such State for fiscal year 2015.'';
            (3) by striking subsections (b) and (c);
            (4) by redesignating subsection (d) as subsection (b); and
            (5) in subsection (b), as so redesignated--
                    (A) by amending paragraph (1) to read as follows:
            ``(1) In general.--The amount allotted for payments to the 
        Secretary of the Interior under subsection (a) for any fiscal 
        year shall be used to meet the special educational needs of--
                    ``(A) Indian children on reservations served by 
                elementary schools and secondary schools for Indian 
                children operated or supported by the Department of the 
                Interior; and
                    ``(B) out-of-State Indian children in elementary 
                schools and secondary schools in local educational 
                agencies under special contracts with the Department of 
                the Interior.''; and
                    (B) in paragraph (2), by striking ``subsection 
                (a)(2)'' and inserting ``subsection (a)''.
    (b) Conforming Amendments.--The Elementary and Secondary Education 
Act of 1965 (20 U.S.C. 6301 et seq.) is amended--
            (1) in paragraph (30) of section 9101, by striking 
        ``section 1121(b) and any other'' and inserting ``any''; and
            (2) in paragraph (2)(B)(i), of section 5477, by striking 
        ``eligible under section 1121(d)(1)(A)'' and inserting 
        ``eligible under section 1121(b)(1)(A)''.

SEC. 2. ALLOCATIONS TO STATES.

    Section 1122 of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 6332) is amended by striking subsection (e).

SEC. 3. BASIC GRANTS TO LOCAL EDUCATIONAL AGENCIES.

    Section 1124(d) of the Elementary and Secondary Education Act of 
1965 (20 U.S.C. 6333(d)) is amended--
            (1) in paragraph (2), by redesignating subparagraphs (A) 
        and (B) as clauses (i) and (ii), respectively, and indenting 
        appropriately;
            (2) by redesignating paragraphs (1) and (2) as 
        subparagraphs (A) and (B), respectively, and indenting 
        appropriately;
            (3) by striking ``Notwithstanding section 1122'' and 
        inserting the following:
            ``(1) In general.--Notwithstanding section 1122 and except 
        as provided in paragraph (2)'';
            (4) in paragraph (1)(B)(i) (as so redesignated), by 
        striking ``calculated in paragraph (1)'' and inserting 
        ``calculated in subparagraph (A)''; and
            (5) by adding at the end the following new paragraph:
            ``(2) Exception.--American Samoa, Guam, the Commonwealth of 
        the Northern Mariana Islands, and the United States Virgin 
        Islands shall each receive one-half of the lesser of the 
        amounts calculated for each such jurisdiction under 
        subparagraphs (A) and (B) of paragraph (1).''.

SEC. 4. CONCENTRATION GRANTS TO LOCAL EDUCATIONAL AGENCIES.

    Section 1124A(a)(1)(B) of the Elementary and Secondary Education 
Act of 1965 (20 U.S.C. 6334(a)(1)(B)) is amended--
            (1) by inserting ``State minimum.--'' after the 
        subparagraph enumerator;
            (2) in clause (ii)--
                    (A) in subclause (II), by redesignating items (aa) 
                and (bb) as subitems (AA) and (BB), respectively, and 
                indenting appropriately; and
                    (B) by redesignating subclauses (I) and (II) as 
                items (aa) and (bb), respectively, and indenting 
                appropriately;
            (3) by redesignating clauses (i) and (ii) as subclauses (I) 
        and (II), respectively, and indenting appropriately;
            (4) by striking ``Notwithstanding section 1122'' and 
        inserting the following:
                            ``(i) In general.--Notwithstanding section 
                        1122 and except as provided in clause (ii)'';
            (5) in clause (i)(II)(aa) (as so redesignated) by striking 
        ``calculated under clause (i)'' and inserting ``calculated 
        under subclause (I)''; and
            (6) by adding at the end the following new clause:
                            ``(ii) Exception.--American Samoa, Guam, 
                        the Commonwealth of the Northern Mariana 
                        Islands, and the United States Virgin Islands 
                        shall each receive one-half of the lesser of 
                        the amounts calculated for each such 
                        jurisdiction under subclauses (I) and (II) of 
                        clause (i).''.

SEC. 5. TARGETED GRANTS TO LOCAL EDUCATIONAL AGENCIES.

    Section 1125(e) of the Elementary and Secondary Education Act of 
1965 (20 U.S.C. 6335(e)) is amended--
            (1) in paragraph (2), by redesignating subparagraphs (A) 
        and (B) as clauses (i) and (ii), respectively, and indenting 
        appropriately;
            (2) by redesignating paragraphs (1) and (2) as 
        subparagraphs (A) and (B), respectively, and indenting 
        appropriately;
            (3) by striking ``Notwithstanding any other provision of 
        this section or section 1122'' and inserting the following:
            ``(1) In general.--Notwithstanding section 1122 and except 
        as provided in paragraph (2)''; and
            (4) by adding at the end the following new paragraph:
            ``(2) Exception.--American Samoa, Guam, the Commonwealth of 
        the Northern Mariana Islands, and the United States Virgin 
        Islands shall each receive one-half of the lesser of the 
        amounts calculated for each such jurisdiction under 
        subparagraphs (A) and (B) of paragraph (1).''.

SEC. 6. EDUCATION FINANCE INCENTIVE GRANT PROGRAM.

    Section 1125A(b) of the Elementary and Secondary Education Act of 
1965 (20 U.S.C. 6337(b)) is amended--
            (1) in paragraph (1)(B)--
                    (A) in clause (ii), by redesignating subclauses (I) 
                and (II) as items (aa) and (bb), respectively, and 
                indenting appropriately;
                    (B) by redesignating clauses (i) and (ii) as 
                subclauses (I) and (II), respectively, and indenting 
                appropriately;
                    (C) by striking ``Notwithstanding any other 
                provision of this section or section 1122'' and 
                inserting the following:
                            ``(i) In general.--Notwithstanding section 
                        1122 and except as provided in clause (ii)''; 
                        and
                    (D) by adding at the end the following new clause:
                            ``(ii) Exception.--American Samoa, Guam, 
                        the Commonwealth of the Northern Mariana 
                        Islands, and the United States Virgin Islands 
                        shall each receive one-half of the lesser of 
                        the amounts calculated for each such 
                        jurisdiction under subclauses (I) and (II) of 
                        clause (i).''; and
            (2) in paragraph (2)(B)--
                    (A) in the subparagraph heading, by inserting ``and 
                certain outlying areas'' before the period at the end; 
                and
                    (B) by adding after ``Commonwealth of Puerto Rico'' 
                the following: ``, American Samoa, Guam, the 
                Commonwealth of the Northern Mariana Islands, and the 
                United States Virgin Islands''.