SECTION 1. RURAL EDUCATION INITIATIVE.

    Title X of the Elementary and Secondary Education Act of 1965 (20 
U.S.C. 8001 et seq.) is amended--
            (1) by redesignating part L as part M; and
            (2) by inserting after part K the following:

                  ``PART L--RURAL EDUCATION INITIATIVE

``SEC. 10995A. SHORT TITLE.

    ``This part may be cited as the `Rural Education Achievement 
Program'.

``SEC. 10995B. PURPOSE.

    ``It is the purpose of this part to address the unique needs of 
rural school districts that frequently--
            ``(1) lack the personnel and resources needed to compete 
        for Federal competitive grants; and
            ``(2) receive formula allocations in amounts too small to 
        be effective in meeting their intended purposes.

``SEC. 10995C. DEFINITIONS.

    ``In this part:
            ``(1) Poverty line.--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) Specially qualified agency.--The term `specially 
        qualified agency' means an eligible local educational agency, 
        located in a State that does not participate in a program 
        carried out under this part for a fiscal year, which may apply 
        directly to the Secretary for a grant for such year in 
        accordance with section 10995D(b).

``SEC. 10995D. PROGRAM AUTHORIZED.

    ``(a) Grants to States.--
            ``(1) In general.--From the amount made available to carry 
        out this part for a fiscal year, the Secretary shall award 
        grants, from allotments made under paragraph (2), to State 
        educational agencies that have applications approved under 
        section 10995F to enable the State educational agencies to 
        award grants to eligible local educational agencies for 
        innovative assistance activities described in section 6301(b).
            ``(2) Allotment.--From the amount made available to carry 
        out this part for a fiscal year, the Secretary shall allot to 
        each State educational agency an amount that bears the same 
        ratio to the sum as the number of students in average daily 
        attendance at the schools served by eligible local educational 
        agencies in the State for that fiscal year bears to the number 
        of all such students at the schools served by eligible local 
        educational agencies in all States for that fiscal year.
    ``(b) Direct Grants to Specially Qualified Agencies.--
            ``(1) Nonparticipating state.--If a State educational 
        agency elects not to participate in the program carried out 
        under this part or does not have an application approved under 
        section 10995F, a specially qualified agency in such State 
        desiring a grant under this part shall apply directly to the 
        Secretary under section 10995F to receive a grant under this 
        part.
            ``(2) 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 
        subsection (a)(2) directly to specially qualified agencies in 
        the State.
    ``(c) Administrative Costs.--A State educational agency that 
receives a grant under this part may not use more than 5 percent of the 
amount of the grant for State administrative costs.

``SEC. 10995E. STATE DISTRIBUTION OF FUNDS.

    ``(a) In General.--A State educational agency that receives a grant 
under this part may use the funds made available through the grant to 
award grants to eligible local educational agencies to enable the local 
educational agencies to carry out innovative assistance activities 
described in section 6301(b).
    ``(b) Local Awards.--
            ``(1) Eligibility.--A local educational agency shall be 
        eligible to receive a grant under this part if--
                    ``(A) 20 percent or more of the children age 5 
                through 17 that are 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 
                located in a community with a School-Locale Code of 6, 
                7, or 8, as determined by the Secretary of Education.
    ``(c) Award Basis.--The State educational agency shall award the 
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 at schools served by the 
        eligible local educational agencies.

``SEC. 10995F. APPLICATIONS.

    ``(a) In General.--Each State educational agency and specially 
qualified agency desiring to receive a grant under this part shall 
submit an application to the Secretary at such time, in such manner, 
and accompanied by such information as the Secretary may require.
    ``(b) Contents.--At a minimum, such application shall include 
information on specific measurable goals and objectives to be achieved 
through the activities carried out through the grant, which may include 
specific educational goals and objectives relating to--
            ``(1) increasing student academic achievement;
            ``(2) decreasing student dropout rates;
            ``(3) narrowing the achievement gap between the students in 
        the State who are economically disadvantaged and the students 
        in the State who are not economically disadvantaged; or
            ``(4) such other factors as the State educational agency or 
        specially qualified agency may choose to measure.

``SEC. 10995G. ACCOUNTABILITY.

    ``(a) State Reports.--Each State educational agency that receives a 
grant under this part shall prepare and submit to the Secretary an 
annual report. The report shall describe--
            ``(1) the method the State educational agency used to award 
        grants to eligible local educational agencies under this part;
            ``(2) how the local educational agencies used the funds 
        provided under this part; and
            ``(3) the degree to which the State made progress toward 
        meeting the goals and objectives described in the application 
        submitted under section 10995F.
    ``(b) Specially Qualified Agency Report.--Each specially qualified 
agency that receives a grant under this part shall prepare and submit 
to the Secretary an annual report. The report shall describe--
            ``(1) how such agency used the funds provided under this 
        part; and
            ``(2) the degree to which the agency made progress toward 
        meeting the goals and objectives described in the application 
        submitted under section 10995F.
    ``(c) Academic Achievement.--
            ``(1) In general.--Each local educational agency that 
        receives a grant under this part for a fiscal year shall--
                    ``(A) administer an assessment that is used 
                statewide and is consistent with the assessment 
                described in section 1111(b), to assess the academic 
                achievement of students in the schools served by the 
                local educational agency; or
                    ``(B) in the case of a local educational agency for 
                which there is no statewide assessment described in 
                subparagraph (A), administer a test, that is selected 
                by the local educational agency, to assess the academic 
                achievement of students in the schools served by the 
                local educational agency.
            ``(2) Special Rule.--Each local educational agency that 
        receives a grant under this part shall use the same assessment 
        or test described in paragraph (1) for each year of 
        participation in the program carried out under this part.
    ``(d) State Educational Agency Determination Regarding Continuing 
Participation.--Each State educational agency that receives a grant 
under this part shall--
            ``(1) after the fifth year that a local educational agency 
        in the State participates in the program authorized under this 
        part and on the basis of the results of the assessments or 
        tests described in subsection (c), determine whether the 
        students served by the local educational agency participating 
        in the program performed better on the assessments or tests 
        after the fifth year of the participation than the students 
        performed on the assessments or tests after the first year of 
        the participation;
            ``(2) permit only the local educational agencies that 
        participated in the program and served students that performed 
        better on the assessments or tests, as described in paragraph 
        (1), to continue to participate in the program for an 
        additional period of 5 years; and
            ``(3) prohibit the local educational agencies that 
        participated in the program and served students that did not 
        perform better on the assessments or tests, as described in 
        paragraph (1), from participating in the program for a period 
        of 5 years from the date of the determination.

``SEC. 10995H. SUPPLEMENT NOT SUPPLANT.

    ``Funds made available under this part shall be used to supplement 
and not supplant any other Federal, State, or local education funds.

``SEC. 10995I. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this part 
$150,000,000 for fiscal year 2002, and such sums as may be necessary 
for each of the 5 succeeding fiscal years.''.
Rural Education Achievement Program - Amends the Elementary and Secondary Education Act of 1965 to establish a Rural Education Initiative program of: (1) formula grants to applicant State educational agencies to award subgrants to local educational agencies (LEAs) for innovative assistance activities; and (2) direct competitive grants for such activities to specially qualified LEAs in nonparticipating States.
A bill to provide for a Rural Education Initiative.