SECTION 1. HOLD-HARMLESS AMOUNTS FOR PAYMENTS RELATING TO FEDERAL 
              ACQUISITION OF REAL PROPERTY.

    Section 8002 of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 7702) is amended by adding at the end the following new 
subsections:
    ``(g) Former Districts.--
            ``(1) In general.--Where the school district of any local 
        educational agency described in paragraph (2) is formed at any 
        time after 1938 by the consolidation of two or more former 
        school districts, such agency may elect (at any time such 
        agency files an application under section 8005) for any fiscal 
        year to have (A) the eligibility of such local educational 
        agency, and (B) the amount which such agency shall be eligible 
        to receive, determined under this section only with respect to 
        such of the former school districts comprising such 
        consolidated school districts as such agency shall designate in 
        such election.
            ``(2) Eligible local educational agencies.--A local 
        educational agency referred to in paragraph (1) is any local 
        educational agency that, for fiscal year 1994 or any preceding 
        fiscal year, applied for and was determined eligible under 
        section 2(c) of the Act of September 30, 1950 (Public Law 874, 
        81st Congress) as such section was in effect on September 30, 
        1994.
    ``(h) Hold-Harmless Amounts.--
            ``(1) In general.--Except as provided in paragraph (2)(A), 
        the total amount that the Secretary shall pay a local 
        educational agency under subsection (b)--
                    ``(A) for fiscal year 1995 shall not be less than 
                85 percent of the amount such agency received for 
                fiscal year 1994 under section 2 of the Act of 
                September 30, 1950 (Public Law 874, 81st Congress) as 
                such section was in effect on September 30, 1994; or
                    ``(B) for fiscal year 1996 shall not be less than 
                85 percent of the amount such agency received for 
                fiscal year 1995 under subsection (b).
            ``(2) Ratable reductions.--(A)(i) If necessary in order to 
        make payments to local educational agencies in accordance with 
        paragraph (1) for any fiscal year, the Secretary first shall 
        ratably reduce payments under subsection (b) for such year to 
        local educational agencies that do not receive a payment under 
        this subsection for such year.
            ``(ii) If additional funds become available for making 
        payments under subsection (b) for such year, then payments that 
        were reduced under clause (i) shall be increased on the same 
        basis as such payments were reduced.
            ``(B)(i) If the sums made available under this title for 
        any fiscal year are insufficient to pay the full amounts that 
        all local educational agencies in all States are eligible to 
        receive under paragraph (1) after the application of 
        subparagraph (A) for such year, then the Secretary shall 
        ratably reduce payments under paragraph (1) to all such 
        agencies for such year.
            ``(ii) If additional funds become available for making 
        payments under paragraph (1) for such fiscal year, then 
        payments that were reduced under clause (i) shall be increased 
        on the same basis as such payments were reduced.''.

SEC. 2. APPLICATIONS FOR INCREASED PAYMENTS.

    (a) Payments.--Notwithstanding any other provision of law--
            (1) the Bonesteel-Fairfax School District Number 26-5, 
        South Dakota, and the Wagner Community School District Number 
        11-4, South Dakota, shall be eligible to apply for payment for 
        fiscal year 1994 under section 3(d)(2)(B) of the Act of 
        September 30, 1950 (Public Law 874, 81st Congress) (as such 
        section was in effect on September 30, 1994); and
            (2) the Secretary of Education shall use a subgroup of 10 
        or more generally comparable local educational agencies for the 
        purpose of calculating a payment described in paragraph (1), 
        and the local contribution rate applicable to such payment, for 
        a local educational agency described in such paragraph.
    (b) Application.--In order to be eligible to receive a payment 
described in subsection (a), a school district described in such 
subsection shall apply for such payment within 30 days after the date 
of enactment of this Act.
    (c) Construction.--Nothing in this section shall be construed to 
require a local educational agency that received a payment under 
section 3(d)(2)(B) of the Act of September 30, 1950 (Public Law 874, 
81st Congress) (as such section was in effect on September 30, 1994) 
for fiscal year 1994 to return such payment or a portion of such 
payment to the Federal Government.

SEC. 3. MAXIMUM PAYMENTS.

    Subparagraph (B) of section 8003(f)(3) of the Elementary and 
Secondary Education Act of 1965 (20 U.S.C. 7703(f)(3)) is amended to 
read as follows:
                    ``(B) Special rule.--The Secretary shall determine 
                the maximum amount that a local educational agency 
                described in clause (ii) or (iii) of paragraph (2)(A) 
                may receive under this subsection in accordance with 
                the following computations:
                            ``(i) The Secretary shall multiply the 
                        average per-pupil expenditure for all States by 
                        0.7, except that such amount may not exceed 125 
                        percent of the average per-pupil expenditure 
                        for all local educational agencies in the 
                        State.
                            ``(ii) The Secretary shall next multiply 
                        the product determined under clause (i) by the 
                        number of students who are served by the local 
                        educational agency and described in 
                        subparagraph (A) or (B) of subsection (a)(1).
                            ``(iii) The Secretary shall next subtract 
                        the total amount of payments received by the 
                        local educational agency under subsections (b) 
                        and (d) for a fiscal year from the amount 
                        determined under clause (ii).''.

            Passed the Senate December 22, 1995.

            Attest:

                                             KELLY D. JOHNSTON,

                                                             Secretary.
Amends the Elementary and Secondary Education Act of 1965 regarding impact aid payments. 
Provides hold-harmless payment amounts for impact-aid payments relating to Federal acquisition of real property.  Provides that no eligible local educational agency shall receive less than 85 percent of the preceding year's amount in such a payment for any fiscal year.  Provides for ratable reductions and increases in certain types of impact-aid payments in specified circumstances. 
Allows two specified school districts in South Dakota to claim eligibility as heavily-impacted districts for the current year, and amend their applications for increased payments. 
Revises provisions with respect to maximum payments for certain heavily impacted local educational agencies.
A bill to amend the Impact Aid program to provide for hold-harmless with respect to amounts for payments relating to the Federal acquisition of real property, to permit certain local educational agencies to apply for increased payments for fiscal year 1994 under the Impact Aid program, and to amend the Impact Aid program to make a technical correction with respect to maximum payments for certain heavily impacted local educational agencies.