SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Equal Education Funding Act''.

SEC. 2. FORMULA CHANGES.

    (a) Amount of Grants.--Subsection (a) of section 1005 of the 
Elementary and Secondary Education Act of 1965 is amended--
            (1) in paragraph (1)--
                    (A) by inserting ``and puerto rico'' after ``Grants 
                for territories'';
                    (B) by striking ``1 percent'' and inserting ``4.5 
                percent''; and
                    (C) by inserting ``and Puerto Rico'' after ``Virgin 
                Islands'' each place it appears;
            (2) in paragraph (2)--
                    (A) by striking ``and Puerto Rico'' after ``Grants 
                for local educational agencies'';
                    (B) subparagraph (A), by striking ``determined by 
                multiplying'' and all that follows through the end of 
                clause (ii) and inserting the following:
                ``the sum of--
                            ``(i) the product of--
                                    ``(I) 50 percent of the number of 
                                children counted under subsection (c); 
                                and
                                    ``(II) the average educational cost 
                                factor of the State, except as provided 
                                in subparagraph (C); and
                            ``(ii) the product of--
                                    ``(I) 50 percent of the number of 
                                children counted under subsection (c); 
                                and
                                    ``(II) the average per pupil effort 
                                factor of the State, except as provided 
                                in subparagraph (C); and
                    (C) by amending subparagraph (C) to read as 
                follows:
                    ``(C)(i) In determining the amount under 
                subparagraph (A)(i)--
                            ``(I) if the amount of the average 
                        educational cost factor in the State is less 
                        than 80 percent of the amount of the average 
                        educational cost factor in the United States, 
                        the amount of the average educational cost 
                        factor shall be 80 percent of the average 
                        educational cost factor in the United States; 
                        or
                            ``(II) if the amount of the average 
                        educational cost factor in the State is more 
                        than 120 percent of the amount of the average 
                        educational cost factor in the United States, 
                        the amount of the average educational cost 
                        factor shall be 120 percent of the average 
                        educational cost factor in the United States.
                    ``(ii) In determining the amount under subparagraph 
                (A)(ii)--
                            ``(I) if the amount of the average per 
                        pupil effort factor in the State is less than 
                        80 percent of the amount of the average per 
                        pupil effort factor in the United States, the 
                        amount of the average per pupil effort shall be 
                        80 percent of the average per pupil effort 
                        factor in the United States; or
                            ``(II) if the amount of the average per 
                        pupil effort factor in the State is more than 
                        120 percent of the amount of the average per 
                        pupil effort factor in the United States, the 
                        amount of the average per pupil effort factor 
                        shall be 120 percent of the average per pupil 
                        effort factor in the United States.''
            (3) in paragraph (4), by inserting ``Puerto Rico'' after 
        the ``Virgin Islands''.
    (b) Determination of Number of Children.--Subparagraph (A) of 
section 1005(c)(2) of the Elementary and Secondary Education Act of 
1965 is amended by striking ``on the basis of'' and all that follows 
through ``decennial census'' and inserting the following:
                ``for local educational agencies (or, if such data are 
                not available for such agencies, for counties) on the 
                basis of--
                            ``(i) if available, criteria developed by 
                        the Department of Commerce to determine annual 
                        poverty statistics by age; or
                            ``(ii) if the information described in 
                        clause (i) is not available, annual percentage 
                        adjustments to the most recent poverty 
                        statistics available, derived by applying the 
                        most recent calculation of the number of 
                        students aged 5 to 17 determined by the Bureau 
                        of Census in its annual Population Statistics 
                        to the percentage in poverty in a State from 
                        such poverty statistics.''.

SEC. 3. DEFINITIONS.

    Part A of chapter 1 of title I of the Elementary and Secondary 
Education Act of 1965 is amended by inserting after section 1005, the 
following:

``SEC. 1005a. TERMS DEFINED FOR BASIC GRANTS.

    ``For purposes of section 1005--
            ``(1) the term `average per pupil expenditure' means in the 
        case of a State or the United States, the aggregate current 
        expenditures, during the fiscal year for which the computation 
        is made (or, if unavailable, the most recent fiscal year 
        preceding the fiscal year for which the computation is made,) 
        of all local educational agencies in the State plus any direct 
        current expenditures by the State or in the United States 
        (which for the purposes of this paragraph means the 50 States 
        and the District of Columbia), divided by the number of 
        children enrolled in schools of such agency on the closest 
        school day to October 1 of such fiscal year;
            ``(2) the term `average educational cost factor' means the 
        sum of 50 percent of the ratio of the average per pupil 
        expenditure of a State in relation to all States, and 50 
        percent of the average instructional staff salaries factor of 
        such State;
            ``(3) The term `average instructional staff salaries 
        factor' means the average salary of classroom teachers in 
        elementary and secondary schools in a State divided by the 
        average of such salaries for all States;
            ``(4) The term `per pupil income' means the total gross 
        personal income of a State during a specific year as reported 
        by the Department of Commerce, Bureau of Economic Analysis, 
        divided by the total number of children aged 5 to 17 for such 
        State for the same year as reported by the Department of 
        Commerce, Bureau of Census.
            ``(5) The term `average per pupil effort factor' means the 
        average per pupil expenditure of the State divided by the 
        average per pupil income factor of the State; divided by the 
        quotient of the average per pupil expenditure of the United 
        States and the average per pupil income factor of the United 
        States.''.
Equal Education Funding Act - Amends the Elementary and Secondary Education Act of 1965 to revise the formula for determining the amount of grants to States under the chapter 1 title I program for educationally disadvantaged children. 
Adds definitions for such basic grant program, including an average per pupil effort factor based on State and national average per pupil expenditures and income factors.
Equal Education Funding Act