SECTION 1. CLASS SIZE REDUCTION.

    Title VI of the Elementary and Secondary Education Act of 1965 (20 
U.S.C. 6601 et seq.) is amended--
            (1) by striking ``this title'' each place such term appears 
        and inserting ``this title (excluding part E)''; and
            (2) by adding at the end the following:

                     ``PART E--CLASS SIZE REDUCTION

``SEC. 6501. GRANT PROGRAM.

    ``(a) Purpose.--The purposes of this section are--
            ``(1) to reduce class size through the use of fully 
        qualified teachers;
            ``(2) to assist States and local educational agencies in 
        recruiting, hiring, and training 100,000 teachers in order to 
        reduce class sizes nationally, in grades 1 through 3, to an 
        average of 18 students per regular classroom; and
            ``(3) to improve teaching in those grades so that all 
        students can learn to read independently and well by the end of 
        the 3d grade.
    ``(b) Allotment to States.--
            ``(1) Reservation.--From the amount made available to carry 
        out this part for a fiscal year, the Secretary shall reserve 
        not more than 1 percent for the Secretary of the Interior (on 
        behalf of the Bureau of Indian Affairs) and the outlying areas 
        for activities carried out in accordance with this section.
            ``(2) State allotments.--
                    ``(A) Hold harmless.--
                            ``(i) In general.--Subject to subparagraph 
                        (B) and clause (ii), from the amount made 
                        available to carry out this part for a fiscal 
                        year and not reserved under paragraph (1), the 
                        Secretary shall allot to each State an amount 
                        equal to the amount that such State received 
                        for the preceding fiscal year under this 
                        section or section 306 of the Department of 
                        Education Appropriations Act, 2001, as the case 
                        may be.
                            ``(ii) Ratable reduction.--If the amount 
                        made available to carry out this part for a 
                        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 such 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 amount made 
                        available to carry out this part and not 
                        reserved under paragraph (1) exceeds the amount 
                        made available to the States for the preceding 
                        year under the authorities described in 
                        subparagraph (A)(i), the Secretary shall allot 
                        to each of those States the percentage of the 
                        excess amount that is the greater of--
                                    ``(I) the percentage the State 
                                received for the preceding fiscal year 
                                of the total amount made available to 
                                the States under section 1122; or
                                    ``(II) the percentage so received 
                                of the total amount made available to 
                                the States under section 2202(b).
                            ``(ii) Ratable reductions.--If the excess 
                        amount for a fiscal year is insufficient to pay 
                        the full amounts that all States are eligible 
                        to receive under clause (i) for such fiscal 
                        year, the Secretary shall ratably reduce such 
                        amounts for such fiscal year.
    ``(c) Allocation to Local Educational Agencies.--
            ``(1) Allocation.--Each State that receives funds under 
        this section shall allocate 100 percent of those funds to local 
        educational agencies, of which--
                    ``(A) 80 percent shall be allocated to those local 
                educational agencies in proportion to the number of 
                children, age 5 through 17, 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, who reside 
                in the school district served by that local educational 
                agency for the most recent fiscal year for which 
                satisfactory data are available, compared to the number 
                of those children who reside in the school districts 
                served by all the local educational agencies in the 
                State for that fiscal year; and
                    ``(B) 20 percent shall be allocated to those local 
                educational agencies in accordance with the relative 
                enrollments of children, age 5 through 17, in public 
                and private nonprofit elementary schools and secondary 
                schools within the areas served by those agencies.
            ``(2) Exception.--Notwithstanding paragraph (1) and 
        subsection (d)(2)(B), if the award to a local educational 
        agency under this section is less than the starting salary for 
        a new fully qualified teacher for a school served by that 
        agency, that agency may use funds made available under this 
        section to--
                    ``(A) help pay the salary of a full- or part-time 
                fully qualified teacher hired to reduce class size, 
                which may be done in combination with the expenditure 
                of other Federal, State, or local funds; or
                    ``(B) pay for activities described in subsection 
                (d)(2)(A)(iii) that may be related to teaching in 
                smaller classes.
    ``(d) Use of Funds.--
            ``(1) Mandatory uses.--Each local educational agency that 
        receives funds under this section shall use those funds to 
        carry out effective approaches to reducing class size through 
        use of fully qualified teachers to improve educational 
        achievement for both regular and special needs children, with 
        particular consideration given to reducing class size in the 
        early elementary grades for which some research has shown class 
        size reduction is most effective.
            ``(2) Permissible uses.--
                    ``(A) In general.--Each such local educational 
                agency may use funds made available under this section 
                for--
                            ``(i) recruiting (including through the use 
                        of signing bonuses, and other financial 
                        incentives), hiring, and training fully 
                        qualified regular and special education 
                        teachers (which may include hiring special 
                        education teachers to team-teach with regular 
                        teachers in classrooms that contain both 
                        children with disabilities and non-disabled 
                        children) and teachers of special needs 
                        children;
                            ``(ii) testing new teachers for academic 
                        content knowledge, and to meet State 
                        certification or licensing requirements that 
                        are consistent with title II of the Higher 
                        Education Act of 1965; and
                            ``(iii) providing professional development 
                        (which may include such activities as promoting 
                        retention and mentoring) for teachers, 
                        including special education teachers and 
                        teachers of special needs children, in order to 
                        meet the goal of ensuring that all teachers 
                        have the general knowledge, teaching skills, 
                        and subject matter knowledge necessary to teach 
                        effectively in the content areas in which the 
                        teachers teach, consistent with title II of the 
                        Higher Education Act of 1965.
                    ``(B) Limitation on testing and professional 
                development.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), a local educational agency may use 
                        not more than a total of 25 percent of the 
                        funds received by the agency under this section 
                        for activities described in clauses (ii) and 
                        (iii) of subparagraph (A).
                            ``(ii) Special rule.--A local educational 
                        agency may use more than 25 percent of the 
                        funds the agency receives under this section 
                        for activities described in subparagraph 
                        (A)(iii) for the purpose of helping teachers 
                        who are not yet fully qualified in attaining 
                        full qualification if 10 percent or more of the 
                        elementary school classes in a school are 
                        taught by individuals who are not fully 
                        qualified teachers or the State educational 
                        agency has waived State certification or 
                        licensing requirements for 10 percent or more 
                        of such teachers.
                    ``(C) Use of funds by agencies that have reduced 
                class size.--Notwithstanding subparagraph (B), a local 
                educational agency that has already reduced class size 
                in the early elementary grades to 18 or fewer children 
                (or has already reduced class size to a State or local 
                class size reduction goal that was in effect on 
                November 28, 1999 if that goal is 20 or fewer children) 
                may use funds received under this section--
                            ``(i) to make further class size reductions 
                        in kindergarten through third grade;
                            ``(ii) to reduce class size in other 
                        grades; or
                            ``(iii) to carry out activities to improve 
                        teacher quality, including professional 
                        development.
            ``(3) Supplement, not supplant.--Each such agency shall use 
        funds made available under this section only to supplement, and 
        not to supplant, State and local funds that, in the absence of 
        funds made available under this section, would otherwise be 
expended for activities described in this section.
            ``(4) Limitation on use for salaries and benefits.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), no funds made available under this 
                section may be used to increase the salaries of, or 
                provide benefits (other than participation in 
                professional development and enrichment programs) to, 
                teachers who are not hired under this section.
                    ``(B) Exception.--Funds made available under this 
                section may be used to pay the salaries of teachers 
                hired under section 306 of the Department of Education 
                Appropriations Act, 2001.
    ``(e) Reports.--
            ``(1) State activities.--Each State receiving funds under 
        this section shall prepare and submit to the Secretary a 
        biennial report on activities carried out in the State under 
        this section that provides the information described in section 
        6202(a)(2) with respect to the activities.
            ``(2) Progress concerning class size and qualified 
        teachers.--Each State and local educational agency receiving 
        funds under this section shall annually report to parents and 
        the public, in numeric form as compared to the previous year, 
        on--
                    ``(A) the agency's progress in reducing class size, 
                and increasing the percentage of classes in core 
                academic areas taught by fully qualified teachers; and
                    ``(B) the impact that hiring additional fully 
                qualified teachers and reducing class size, has had, if 
                any, on increasing student academic achievement.
            ``(3) Notice.--Each local educational agency that receives 
        funds under this section shall provide to each individual 
        parent of a child who attends a school in such local 
        educational agency timely, written notice if the child has been 
        assigned or has been taught for 2 or more consecutive weeks by 
        a substitute teacher, as defined by such local educational 
        agency, or a teacher who is not fully qualified.
    ``(f) Private Schools.--If a local educational agency uses funds 
made available under this section for professional development 
activities, the agency shall ensure the equitable participation of 
private nonprofit elementary schools and secondary schools in such 
activities in accordance with section 6402. Section 6402 shall not 
apply to other activities carried out under this section.
    ``(g) Administrative Expenses.--A local educational agency that 
receives funds under this section may use not more than 3 percent of 
such funds for local administrative costs.
    ``(h) Request for Funds.--Each local educational agency that 
desires to receive funds under this section shall include in the 
application required under section 6303 a description of the agency's 
program to reduce class size by hiring additional fully qualified 
teachers.
    ``(i) Certification, Licensing, and Competency.--No funds made 
available under this section may be used to pay the salary of any 
teacher unless such teachers is fully qualified.
    ``(j) Definitions.--As used in this section--
            ``(1) the term `certified' includes certification through 
        State or local alternative routes; and
            ``(2) the term `fully qualified'--
                    ``(A) when used with respect to an elementary or 
                secondary school teacher, means that the teacher has 
                obtained certification or passed the State licensing 
                exam and holds a license; and
                    ``(B) when used with respect to--
                            ``(i) an elementary school teacher, means 
                        that the teacher holds a bachelor's degree and 
                        demonstrates general knowledge, teaching skill, 
                        and subject matter knowledge required to teach 
                        at the elementary school level in the core 
                        academic subjects; or
                            ``(ii) a middle or secondary school 
                        teacher, means that the teacher holds a 
                        bachelor's degree and demonstrates a high level 
                        of competency in all subject areas in which he 
                        or she teaches through--
                                    ``(I) a high level of performance 
                                on a rigorous academic subject area 
                                test; or
                                    ``(II) completion of an academic 
                                major in each of the subject areas in 
                                which he or she provides instruction.

``SEC. 6502. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this part 
$2,000,000,000 for fiscal year 2002 and such sums as may be necessary 
for fiscal years 2003 through 2006.''.
Amends the Elementary and Secondary Education Act of 1965 to establish a grants program to help States and local educational agencies recruit, train, and hire 100,000 additional teachers over a seven-year period in order to: (1) reduce class sizes nationally, in grades one through three, to an average of 18 students per classroom; and (2) improve teaching in the early grades so that all students can learn to read independently and well by the end of the third grade.
To amend the Elementary and Secondary Education Act of 1965 to reduce class size through the use of fully qualified teachers, and for other purposes.