To establish a pilot program under which the Secretary of Education allows selected States to combine certain funds under the Elementary and Secondary Education Act of 1965 to improve the academic achievement of its students.

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Partnership for 
Academic Success in the States Act'' or the ``PASS Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Pilot program required.
Sec. 3. Performance agreements.
Sec. 4. Eligible education grant programs.
Sec. 5. Maintenance of academic performance standards.
Sec. 6. Maintenance of funding levels spent by States on education.
Sec. 7. Permissible uses of funds.
Sec. 8. Allocation of funds within State.
Sec. 9. Administrative expenses.
Sec. 10. Equitable participation of private schools.
Sec. 11. Fiscal responsibilities.
Sec. 12. Annual reports.
Sec. 13. Terms of performance agreements.
Sec. 14. Modification of performance agreements.
Sec. 15. Competitive selection process.
Sec. 16. Performance review and early termination.
Sec. 17. Awards for reducing achievement gaps.

SEC. 2. PILOT PROGRAM REQUIRED.

    The Secretary of Education shall carry out a pilot program under 
this Act, to be participated in by up to 10 States.

SEC. 3. PERFORMANCE AGREEMENTS.

    (a) Performance Agreement Required.--For each State participating 
in the pilot program, the Secretary shall, pursuant to a performance 
agreement entered into with that State--
            (1) grant directly to the State the grant amounts that the 
        State (or any entity within the State, if applicable) would 
        otherwise receive under one or more eligible education grant 
        programs covered by the agreement; and
            (2) waive the applicability to the State (or any entity 
        within the State, if applicable) of one or more requirements of 
        those programs.
    (b) Specification of Programs To Be Covered and Requirements to Be 
Waived.--The performance agreement shall specify the programs covered 
by the agreement and the requirements to be waived pursuant to the 
agreement.
    (c) Requirements That Cannot Be Waived.--The Secretary shall not, 
pursuant to a performance agreement under this Act, waive any 
requirement under any of the following provisions of the Elementary and 
Secondary Education Act of 1965:
            (1) Section 1111(b) (20 U.S.C. 6311(b); relating to 
        academic standards, academic assessments, and accountability).
            (2) Section 1111(h) (20 U.S.C. 63111(h); relating to report 
        cards).
            (3) Section 1116(b)(1)(E) (20 U.S.C. 6316(b)(1)(E); 
        relating to public school choice).

SEC. 4. ELIGIBLE EDUCATION GRANT PROGRAMS.

    For purposes of this Act, the eligible education grant programs are 
the following:
            (1) In title I of the Elementary and Secondary Education 
        Act of 1965--
                    (A) part A (relating to improving basic programs 
                operated by local educational agencies);
                    (B) subpart 3 of part B (relating to William F. 
                Goodling Even Start Family Literacy Programs);
                    (C) part C (relating to education of migratory 
                children);
                    (D) part D (relating to prevention and intervention 
                programs for children and youth who are neglected, 
                delinquent, or at-risk); and
                    (E) part F (relating to comprehensive school 
                reform).
            (2) In title II of that Act--
                    (A) part A (relating to teacher and principal 
                training and recruiting fund); and
                    (B) subpart 1 of part D (relating to State and 
                local technology grants).
            (3) In title III of that Act, part A (relating to English 
        language acquisition, language enhancement, and academic 
        achievement).
            (4) In title IV of that Act, part A (relating to safe and 
        drug-free schools and communities).
            (5) In title V of that Act--
                    (A) part A (relating to innovative programs); and
                    (B) part D (relating to the fund for the 
                improvement of education).
            (6) In title VII of that Act, part A (relating to Indian 
        education).
            (7) Sections 115 and 116, and parts B and C of title I, of 
        the Carl D. Perkins Vocational Technical Education Act.
            (8) Subtitle B of title VII of the McKinney-Vento Homeless 
        Assistance Act.

SEC. 5. MAINTENANCE OF ACADEMIC PERFORMANCE STANDARDS.

    Each State participating in the pilot program shall, throughout the 
term of the performance agreement--
            (1) maintain a uniform level of challenging student 
        academic performance standards and assessments; and
            (2) demonstrate adequate yearly progress toward achieving 
        those standards.

SEC. 6. MAINTENANCE OF FUNDING LEVELS SPENT BY STATES ON EDUCATION.

    For each State participating in the pilot program, for each school 
year of the performance agreement, the aggregate amount of funds spent 
by the State on elementary and secondary education shall be not less 
than the aggregate amount of funds spent by the State on elementary and 
secondary education for school year 2007. If a State demonstrates that 
exceptional or uncontrollable circumstances, such as a natural disaster 
or a precipitous and unforeseen decline in the financial resources of 
the State, prevent the State from complying with this requirement, the 
Secretary may waive the applicability of this requirement to the State.

SEC. 7. PERMISSIBLE USES OF FUNDS.

    Grant amounts received pursuant to a performance agreement under 
this Act may be used for any elementary and secondary education 
purposes permitted by State law, in a manner that advances the 
education priorities of the State, improves student achievement, and 
narrows achievement gaps between students.

SEC. 8. ALLOCATION OF FUNDS WITHIN STATE.

    (a) In General.--Grant amounts received pursuant to a performance 
agreement under this Act shall be distributed within the State as 
provided by State law, subject to subsection (b).
    (b) No Reduction in Part A Title I Allocation.--To the extent such 
grant amounts are derived from part A of title I of the Elementary and 
Secondary Education Act of 1965, the State shall ensure that, for each 
local educational agency within the State for each school year, the 
amount that is allocated to that local educational agency for that 
school year pursuant to the performance agreement is not less than the 
amount that was allocated to that local educational agency for school 
year 2007 pursuant to part A of title I of that Act. If the State 
cannot comply with this subsection because the total grant amounts 
derived from part A of title I of that Act are inadequate, the State 
shall reduce each local educational agency's allocation by a uniform 
percentage.

SEC. 9. ADMINISTRATIVE EXPENSES.

    A State may use not more than 1 percent of the grant amounts 
received pursuant to a performance agreement under this Act for 
administrative expenses.

SEC. 10. EQUITABLE PARTICIPATION OF PRIVATE SCHOOLS.

    Grant amounts received pursuant to a performance agreement under 
this Act shall be used in a manner that provides for the equitable 
participation of private schools, and the students and professional 
staff of such schools.

SEC. 11. FISCAL RESPONSIBILITIES.

    Grant amounts received pursuant to a performance agreement under 
this Act shall be subject to fiscal control and fund accounting 
procedures that ensure that those amounts are properly disbursed and 
accounted for.

SEC. 12. ANNUAL REPORTS.

    (a) In General.--After each school year during which a State has 
participated in the pilot program, the State shall submit to the 
Secretary a report on the activities carried out under the performance 
agreement during that school year. The report shall describe in detail 
how the State has complied with the performance agreement and with the 
other requirements of this Act. The State shall ensure that the report 
is disseminated widely to parents and the general public, distributed 
to print and broadcast media, and posted on the Internet.
    (b) Submission to Congress.--Not later than 60 days after the 
Secretary receives a report under subsection (a), the Secretary shall 
submit that report to Congress, together with any other information the 
Secretary considers appropriate.

SEC. 13. TERMS OF PERFORMANCE AGREEMENTS.

    (a) Initial Term.--Each performance agreement under this Act shall 
apply for an initial term beginning with school year 2008 and ending 
with school year 2012.
    (b) Additional Term.--Each such performance agreement may, with the 
approval of the State and the Secretary entered into before the 
expiration of the initial term, be extended for an additional term 
beginning with school year 2013 and ending with school year 2017. The 
Secretary shall not withhold approval under this subsection if the 
State has demonstrated the adequate yearly progress required by this 
Act and has substantially complied with its other obligations under 
this Act.

SEC. 14. MODIFICATION OF PERFORMANCE AGREEMENTS.

    The terms of a performance agreement may, with the approval of the 
State and the Secretary, be modified during the term of the performance 
agreement for school years that have not yet begun.

SEC. 15. COMPETITIVE SELECTION PROCESS.

    The Secretary shall, by regulation, establish a process for the 
selection of States to participate in the pilot program. The process 
shall include the following:
            (1) Application.--To be considered for participation, a 
        State must submit an application to the Secretary in such form, 
        and containing such information, as the Secretary may require. 
        The State must submit the application not later than March 31, 
        2007, but after that date may modify the application (including 
        the draft performance agreement described in paragraph (2)) 
        with the approval of the Secretary.
            (2) Proposed performance agreement.--The application must 
        include a draft of the performance agreement that the State 
        proposes to enter into for purposes of the pilot program.
            (3) Certification of compliance with notice and comment 
        requirements.--The application must include the certification 
        of the Governor of the State that the performance agreement 
        that the State proposes has been developed by the State in 
        accordance with the notice and comment requirements that apply 
        under State law.
            (4) Selection.--The Secretary shall select States for 
        participation on a competitive basis, using criteria 
        established by the Secretary. Each selection shall be completed 
        not later than June 30, 2007.
            (5) Entering into performance agreement.--For each State so 
        selected, the Secretary and the State shall enter into the 
        performance agreement proposed by the State. Each performance 
        agreement shall be entered into not later than August 15, 2007.

SEC. 16. PERFORMANCE REVIEW AND EARLY TERMINATION.

    (a) Periodic Review.--For each State participating in the pilot 
program, the Secretary shall periodically carry out a review to 
determine whether the State has demonstrated the adequate yearly 
progress required by this Act and has substantially complied with its 
other obligations under this Act.
    (b) Early Termination.--The Secretary may terminate a performance 
agreement, before the term of that agreement expires, if--
            (1) the State does not, for three consecutive school years, 
        demonstrate the adequate yearly progress required by this Act; 
        or
            (2) the State does not substantially comply with any other 
        obligation under this Act.

SEC. 17. AWARDS FOR REDUCING ACHIEVEMENT GAPS.

    (a) Awards Required.--The Secretary shall make awards to each State 
that completes the initial term of its performance agreement and, over 
that term, achieves the reduction described in subsection (b).
    (b) Reduction.--The reduction referred to in subsection (a) is a 
reduction by not less than 25 percent, of the difference between the 
percentage of highest and lowest performing groups of students that 
meet the State's definition of ``proficient'', as referenced in section 
1111(b)(1)(D)(ii)(II) of the Elementary and Secondary Education Act of 
1965. The reduction must apply to at least two grade levels and at 
least two of the following content areas: mathematics, reading, and 
science.
    (c) Amount of Award.--The amount of an award under this section 
shall be not less than 5 percent of the grant amounts received by the 
State pursuant to the performance agreement for school year 2008.
    (d) Source of Funds.--Awards under this section are subject to the 
availability of appropriations and shall be paid from the Fund for the 
Improvement of Education under part D of title V of the Elementary and 
Secondary Education Act of 1965.

Summary: Partnership for Academic Success in the States Act, or the PASS Act - Directs the Secretary of Education to implement a competitive pilot program, in up to 10 states, under which, pursuant to a performance agreement with each state, the Secretary: (1) directly provides the grant amount that such state would otherwise receive under one or more specified elementary and secondary education grant programs. And (2) waives the applicability of one or more of the requirements of such programs. Allows the Secretary to terminate a state's participation in the pilot program if it fails for three consecutive years to demonstrate adequate yearly progress toward achieving challenging academic performance standards. Requires the equitable participation of private schools in the use of such grants. Provides for awards to states for reducing achievement gaps.