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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 2932 Introduced in Senate (IS)]

111th CONGRESS
  2d Session
                                S. 2932

  To amend the public charter school provisions of the Elementary and 
        Secondary Education Act of 1965, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            January 20, 2010

  Mr. Vitter introduced the following bill; which was read twice and 
  referred to the Committee on Health, Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL

 
  To amend the public charter school provisions of the Elementary and 
        Secondary Education Act of 1965, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``21st Century 
Charter School Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Purpose.
Sec. 3. Program authorized.
Sec. 4. Applications.
Sec. 5. Administration.
Sec. 6. National activities.
Sec. 7. Federal formula allocation.
Sec. 8. Credit enhancement.
Sec. 9. Definitions.
Sec. 10. Authorization of appropriations.
Sec. 11. Reorganization.
Sec. 12. Conforming amendments.

SEC. 2. PURPOSE.

    Section 5201 of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 7221) is amended--
            (1) in paragraph (3), by striking ``and'';
            (2) by redesignating paragraph (4) as paragraph (6);
            (3) by inserting after paragraph (3) the following:
            ``(4) encouraging the growth of high-quality charter 
        schools through the replication and expansion of successful 
        charter school models;
            ``(5) disseminating charter school innovations throughout 
        public education; and''; and
            (4) in paragraph (6) (as redesignated by paragraph (2))--
                    (A) by striking ``more nearly''; and
                    (B) by striking ``have typically provided'' and 
                inserting ``provide''.

SEC. 3. PROGRAM AUTHORIZED.

    Section 5202 of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 7221a) is amended--
            (1) in subsection (a)--
                    (A) by striking ``State educational agencies'' and 
                inserting ``eligible entities'';
                    (B) by striking ``such agencies'' and inserting 
                ``such entities''; and
                    (C) by striking ``this subpart'' and inserting 
                ``section 5204'';
            (2) in subsection (b)--
                    (A) by striking ``Special Rule.--If'' and inserting 
                the following: ``Special Rule; Reserve Account.--
            ``(1) Special rule.--If'';
                    (B) by striking ``a State educational agency'' and 
                inserting ``an eligible entity'';
                    (C) by striking ``subpart'' and inserting 
                ``section''; and
                    (D) by adding at the end the following:
            ``(2) Reserve accounts.--
                    ``(A) In general.--In order to assist eligible 
                entities to accomplish the purposes described in 
                section 5201, an eligible entity receiving a grant 
                under this section shall, directly or indirectly, alone 
                or in collaboration with others, deposit the funds 
                received under this section in a reserve account 
                established and maintained by the eligible entity for 
                this purpose, in accordance with State and local law.
                    ``(B) Investment.--Funds received under this 
                section that are deposited in the reserve account 
                established under subparagraph (A), shall be invested, 
                to the extent practicable, in obligations issued or 
                guaranteed by the United States or a State, or in other 
                similarly low risk securities, in the same manner as 
                funds of a State are invested under chapter 65 of title 
                31, United States Code.
                    ``(C) Reinvestment of earnings.--Any earnings on 
                funds received under this section shall be deposited in 
                a reserve account and used in support of public charter 
                schools in accordance with activities authorized under 
                this Act.'';
            (3) in subsection (c)--
                    (A) by striking ``subpart'' each place the term 
                occurs and inserting ``section'';
                    (B) in paragraph (1)--
                            (i) by striking ``State educational 
                        agencies'' and inserting ``eligible entities''; 
                        and
                            (ii) by striking ``not more than 3 years'' 
                        and inserting ``not more than 5 years''; and
                    (C) in paragraph (2)--
                            (i) by striking ``State educational 
                        agencies'' and inserting ``eligible entities''; 
                        and
                            (ii) by striking ``not more than 3 years'' 
                        and all that follows through the period at the 
                        end and inserting ``not more than 5 years. An 
                        eligible applicant may use a portion of the 
                        grant period for planning and program 
                        design.'';
            (4) by striking subsection (d) and inserting the following:
    ``(d) Charter Schools With Multiple Campuses.--The Secretary shall 
allow an eligible entity to award multiple subgrants under section 
5204(f)(1) to an eligible applicant in order to support multiple 
campuses of a charter school.'';
            (5) in subsection (e)--
                    (A) by striking paragraph (1) and inserting the 
                following:
            ``(1) In general.--In awarding grants under this section 
        for fiscal year 2010 or any succeeding fiscal year from any 
        funds appropriated under section 5212 (other than funds 
        reserved to carry out section 5205(c)), the Secretary shall 
        give priority to an eligible entity to the extent that the 
        State in which the eligible entity proposes to carry out the 
        activities under the grant meets the criteria described in 
        paragraph (2) and one or more of the criteria described in 
        subparagraphs (A) through (H) of paragraph (3).'';
                    (B) in paragraph (3)--
                            (i) in subparagraph (A)--
                                    (I) by striking ``a State 
                                educational agency'' and inserting ``an 
                                eligible entity''; and
                                    (II) by striking ``subpart'' and 
                                inserting ``section'';
                            (ii) by redesignating subparagraph (C) as 
                        subparagraph (D);
                            (iii) in subparagraph (B)--
                                    (I) by redesignating clause (ii) as 
                                subparagraph (C), and aligning the 
                                margins of such subparagraph with the 
                                margins of subparagraph (A);
                                    (II) by striking ``The State'' and 
                                all that follows through ``provides'' 
                                and inserting ``The State provides''; 
                                and
                                    (III) by striking ``law; or'' and 
                                inserting ``law.'';
                            (iv) in subparagraph (C) (as redesignated 
                        by clause (iii)(I)), by striking ``in the 
                        case'' and all that follows through ``allows'' 
                        and inserting ``The State allows'';
                            (v) in subparagraph (D) (as redesignated by 
                        clause (ii))--
                                    (I) by striking ``school has a'' 
                                and inserting ``school has--
                            ``(i) a'';
                                    (II) by striking ``expenditures.'' 
                                and inserting ``expenditures; and''; 
                                and
                                    (III) by adding at the end the 
                                following:
                            ``(iii) an independent governing board that 
                        enters into a written performance contract with 
                        an authorized public chartering agency.''; and
                            (vi) by adding at the end the following:
                    ``(E) The State--
                            ``(i) provides public charter schools with 
                        funding commensurate with the funding provided 
                        to other public schools, including capital or 
                        facilities aid distributed through a formula or 
                        revenue generated by bonds; and
                            ``(ii) ensures that the State and local 
                        educational agencies provide public charter 
                        schools with the Federal, State, and local 
                        funds to which the public charter schools are 
                        entitled in a timely manner.
                    ``(F) The State makes it a priority to create 
                charter schools in local educational agencies with 
                large numbers of schools designated as in need of 
                improvement, corrective action, or restructuring under 
                paragraph (1), (7), or (8) of section 1116(b).
                    ``(G) The State has developed a transparent 
                authorizer accreditation, training, or review process 
                for evaluating the effectiveness and quality of the 
                State's authorized public chartering agencies, or each 
                authorized public chartering agency in the State has 
                implemented such a process, including--
                            ``(i) a process for reviewing and 
                        evaluating the performance of the authorized 
                        public chartering agencies in the State in 
                        authorizing or approving public charter 
                        schools, including a process that enables the 
                        authorized public chartering agencies to 
                        respond to any State concerns or deficiencies 
                        regarding such authorizing or approving; and
                            ``(ii) any other necessary policies to 
                        ensure effective charter school authorizing in 
                        the State that are developed in conjunction 
                        with the State's charter school community and 
                        in accordance with the principles of high 
                        quality charter school authorizing, as 
                        determined by the State in consultation with 
                        the charter school community and stakeholders.
                    ``(H) The State does not have a cap on charter 
                schools that constrains growth and limits parental 
                options in an unreasonable manner.''; and
            (6) in subsection (f)--
                    (A) by striking ``subpart to a State educational 
                agency'' and inserting ``section to an eligible 
                entity''; and
                    (B) by striking ``in the State'' and inserting ``in 
                the State where the grant activities will be carried 
                out''.

SEC. 4. APPLICATIONS.

    Section 5203 of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 7221b) is amended--
            (1) by striking ``this subpart'' each place the term 
        appears and inserting ``section 5202'';
            (2) in subsection (a), by striking ``State Agencies.--Each 
        State educational agency'' and inserting ``Eligible Entities.--
        An eligible entity'';
            (3) in subsection (b)--
                    (A) in the subsection heading, by striking ``a 
                State Educational Agency'' and inserting ``an Eligible 
                Entity'';
                    (B) in paragraph (1)--
                            (i) by striking ``State educational 
                        agency's'' each place the term appears and 
                        inserting ``eligible entity's''; and
                            (ii) by striking ``State educational 
                        agency'' and inserting ``eligible entity'';
                    (C) in paragraph (2)--
                            (i) in the matter preceding subparagraph 
                        (A), by striking ``describe how the State 
                        educational agency--'' and inserting ``describe 
                        the State's level of participation and 
                        involvement in the grant, including a letter 
                        from the State describing how the State--'';
                            (ii) in the matter preceding clause (i) of 
                        subparagraph (A), by striking ``in the State'' 
                        and inserting ``area served by the grant'';
                            (iii) in subparagraph (B)--
                                    (I) by striking ``in the State'' 
                                and inserting ``in the area served by 
                                the grant''; and
                                    (II) by striking ``and'' after the 
                                semicolon;
                            (iv) in subparagraph (C), by striking ``to 
                        each local'' and all that follows through ``; 
                        and'' and inserting ``related to such areas as 
                        budgeting, scheduling, staffing, and 
                        instruction to public schools, including public 
                        charter schools in the State;''; and
                            (v) by adding at the end the following:
                    ``(D) will ensure the proper handling and 
                management of Federal funds; and
                    ``(E) will oversee and hold accountable the 
                authorized public chartering agencies in the State, 
                including through a transparent authorizer 
                accreditation, training, and review process described 
                in subsection (e)(3)(G);'';
                    (D) by redesignating paragraph (3) as paragraph 
                (4);
                    (E) by inserting after paragraph (2) the following:
            ``(3) describe the criteria that the eligible entity will 
        use to award subgrants to eligible applicants to ensure high-
        quality charter schools;'';
                    (F) in paragraph (4) (as redesignated by 
                subparagraph (D))--
                            (i) in the matter preceding subparagraph 
                        (A), by striking ``State educational agency'' 
                        each place the term appears and inserting 
                        ``eligible entity'';
                            (ii) in subparagraph (A)--
                                    (I) by redesignating clauses (ii) 
                                and (iii) as clauses (iii) and (iv), 
                                respectively; and
                                    (II) by inserting after clause (i) 
                                the following:
                            ``(ii) the charter school's plan for using 
                        academic assessments to measure and report 
                        student academic progress;'';
                            (iii) in subparagraph (B), by striking 
                        ``managed;'' and inserting the following: 
                        ``managed, including--
                            ``(i) the charter school's financial plan 
                        and policies, including financial controls and 
                        annual audit requirements;
                            ``(ii) a clear description of the roles and 
                        responsibilities for the charter school's 
                        governing board, leadership, and management 
                        team, and any other organizations critical to 
                        the charter school's operations or success;
                            ``(iii) plans for recruiting and developing 
                        the charter school's leadership and staff;
                            ``(iv) the charter school's leadership and 
                        teacher employment policies, including 
                        performance evaluation plans;
                            ``(v) the proposed governing bylaws of the 
                        charter school; and
                            ``(vi) a detailed charter school start-up 
                        plan, that identifies tasks, timelines, and 
                        responsible parties;'';
                            (iv) in subparagraph (E), by inserting ``, 
                        including documentation of the parents' and 
                        community members' support for the school'' 
                        before the semicolon;
                            (v) in subparagraph (F), by striking ``a 
                        description of how'' and inserting ``an 
                        assurance from the authorized public chartering 
                        agency that'';
                            (vi) in subparagraph (H), by inserting 
                        ``and how such funds will be used for planning, 
                        program design, and the initial implementation 
                        of a charter school'' before the semicolon at 
                        the end;
                            (vii) in subparagraph (I)(ii), by inserting 
                        ``, including through a lottery process if the 
                        number of applicants exceeds the number of 
                        seats available at the charter school'' before 
                        the semicolon;
                            (viii) in subparagraphs (J) and (K), by 
                        striking ``State educational agency'' each 
                        place the term appears and inserting ``eligible 
                        entity'';
                            (ix) by striking subparagraph (M);
                            (x) by redesignating subparagraph (N) as 
                        subparagraph (O);
                            (xi) by inserting after subparagraph (L) 
                        the following:
                    ``(M) demonstration of support for the charter 
                school from the State's charter school community;
                    ``(N) a description of how the independent 
                governing board of the charter school, including a 
                board overseeing multi-campus charters, is encouraged 
                to include individuals with a diversity of skills, 
                including business management, financial management, 
                real estate finance, and curriculum and instruction; 
                and''; and
                            (xii) in subparagraph (O) (as redesignated 
                        by clause (x))--
                                    (I) by striking ``State educational 
                                agency'' and inserting ``eligible 
                                entity''; and
                                    (II) by striking the period at the 
                                end and inserting ``; and''; and
                    (G) by adding at the end the following:
            ``(5) in the case of an eligible entity that is an 
        authorized public chartering agency--
                    ``(A) describe such eligible entity's strategic 
                goal for chartering schools and progress towards that 
                goal; and
                    ``(B) provide an assurance that the eligible entity 
                will annually file a plan with the State in which the 
                eligible entity is located that covers such topics 
                necessary for effective charter school oversight, 
                including, at a minimum--
                            ``(i) the academic and financial 
                        performance of all operating public charter 
                        schools overseen by the eligible entity, 
                        according to the performance expectations for 
                        each public charter school set forth in the 
                        school's contract;
                            ``(ii) the status of the eligible entity's 
                        public charter school portfolio, identifying 
                        all public charter schools in each of the 
                        following categories: approved (but not yet 
                        open), operating, renewed, transferred, 
                        revoked, not renewed, voluntarily closed, or 
                        never opened;
                            ``(iii) the authorizing functions provided 
                        by the eligible entity to the public charter 
                        schools the eligible entity oversees, including 
                        the eligible entity's operating costs and 
                        expenses detailed in annual audited financial 
                        statements that conform with generally accepted 
                        accounting principles; and
                            ``(iv) the services purchased from the 
                        eligible entity by the public charter schools 
                        overseen by the eligible entity, including an 
                        itemized accounting of the actual costs of 
                        these services.''; and
            (4) in subsection (d)--
                    (A) in paragraph (1)--
                            (i) by striking ``(A) through (N)'' and 
                        inserting ``(A) through (O)'';
                            (ii) by striking ``and (N)'' and inserting 
                        ``and (O)''; and
                            (iii) by striking ``State educational 
                        agency'' and inserting ``eligible entity''; and
                    (B) in paragraph (2)--
                            (i) in the matter preceding subparagraph 
                        (A), by striking ``State educational agency'' 
                        and inserting ``eligible entity''; and
                            (ii) in paragraph (3)--
                                    (I) by striking ``State educational 
                                agency'' and inserting ``eligible 
                                entity''; and
                                    (II) by striking ``subgrant if'' 
                                and all that follows through the period 
                                and inserting ``subgrant.''.

SEC. 5. ADMINISTRATION.

    Section 5204 of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 7221c) is amended--
            (1) in subsection (a)--
                    (A) in the subsection heading, by striking ``State 
                Educational Agencies'' and inserting ``Eligible 
                Entities'';
                    (B) by striking ``this subpart'' each place the 
                term appears and inserting ``section 5202'';
                    (C) in the matter preceding paragraph (1), by 
                striking ``State educational agencies'' and inserting 
                ``eligible entities'';
                    (D) in paragraph (1), by inserting ``, including 
                efforts at closing the achievement gap by meeting the 
                annual objectives described in section 
                1111(b)(2)(C)(v)'' before the semicolon;
                    (E) in paragraph (2), by inserting ``and autonomy'' 
                after ``flexibility'';
                    (F) in paragraph (5), by inserting ``and'' after 
                the semicolon;
                    (G) in paragraph (6), by striking ``; and'' and 
                inserting a period; and
                    (H) by striking paragraph (7);
            (2) in subsection (b)--
                    (A) by striking ``this subpart'' and inserting 
                ``section 5202''; and
                    (B) by striking paragraph (7);
            (3) in subsection (c)--
                    (A) by striking ``this subpart'' and inserting 
                ``section 5202''; and
                    (B) by striking ``State educational agency'' and 
                inserting ``eligible entity'';
            (4) in subsection (d)--
                    (A) in the matter preceding paragraph (1)--
                            (i) by striking ``State educational agency 
                        receiving a grant under this subpart'' and 
                        inserting ``eligible entity receiving a grant 
                        under section 5202''; and
                            (ii) by striking ``this subpart in'' and 
                        inserting ``such section in''; and
                    (B) in paragraph (2), by inserting ``or use non-
                traditional curricula'' before the period at the end;
            (5) in subsection (e)--
                    (A) in the matter preceding subparagraph (1), by 
                striking ``5210(1)'' and inserting ``5211(1)''; and
                    (B) in paragraph (1), by striking ``this subpart'' 
                and inserting ``section 5203'';
            (6) in subsection (f)--
                    (A) in paragraph (1)--
                            (i) in the paragraph heading, by striking 
                        ``State Educational Agencies.--Each State 
                        educational agency'' and inserting the 
                        following: ``eligible Entities.--
                    ``(A) In general.--Each eligible entity'';
                            (ii) by striking ``under this subpart'' and 
                        inserting ``under section 5202'';
                            (iii) by inserting ``, including a new 
                        campus or expansion of an existing charter 
                        school,'' after ``charter school'';
                            (iv) by striking ``in the State'' and 
                        inserting ``in the area to be served by the 
                        grant''; and
                            (v) by striking ``except that'' and all 
                        that follows through ``paragraph (6).'' and 
                        inserting a period;
                    (B) by striking paragraph (6);
                    (C) by redesignating paragraphs (2) through (5) as 
                paragraphs (4) through (7), respectively;
                    (D) by inserting after paragraph (1) the following:
            ``(2) Charter school developers.--In awarding subgrants 
        under this section, an eligible entity shall ensure that--
                    ``(A) most of the subgrant funds are awarded to 
                eligible applicants described in section 5211(3)(A); 
                and
                    ``(B) subgrants are awarded, to the extent 
                practicable, to a mix of such eligible applicants.
            ``(3) Amount of subgrants.--An eligible entity may vary the 
        amount of a subgrant under this section based upon a variety of 
        factors, including--
                    ``(A) whether the eligible applicant is a start-up 
                charter school or a conversion charter school (as 
                defined by the eligible entity); and
                    ``(B) whether the eligible applicant is creating a 
                charter school under a new charter or an existing 
                charter.'';
                    (E) in paragraph (4) (as redesignated by 
                subparagraph (C))--
                            (i) by striking ``a State educational 
                        agency'' and inserting ``an eligible entity''; 
                        and
                            (ii) by striking ``, or to disseminate 
                        information about the charter school and 
                        successful practices in the charter school,'';
                    (F) in paragraph (5) (as redesignated by 
                subparagraph (C))--
                            (i) in the matter preceding subparagraph 
                        (A), by striking ``this subpart'' and inserting 
                        ``section 5202'';
                            (ii) in subparagraph (A)(ii), by striking 
                        ``and'' after the semicolon;
                            (iii) in subparagraph (B)(iv), by striking 
                        the period and inserting ``; and''; and
                            (iv) by adding at the end the following:
                    ``(C) providing assistance, through activities 
                described in section 5205(b)(4), in implementing 
                charter school innovations and disseminating 
                information regarding such innovations.'';
                    (G) in paragraph (6)(A) (as redesignated by 
                subparagraph (C))--
                            (i) in the subparagraph heading, by 
                        striking ``State Educational Agency'' and 
                        inserting ``Eligible Entity'';
                            (ii) by striking ``State educational 
                        agency'' and inserting ``eligible entity'';
                            (iii) by striking ``pursuant to this 
                        subpart'' and inserting ``pursuant to section 
                        5202'';
                            (iv) by striking ``this subpart'' and 
                        inserting ``such section''; and
                            (v) by adding at the end the following: 
                        ``An eligible entity may use a portion of the 
                        reserved funds to improve the charter school 
                        authorizing policies and practices of the area 
                        served by the eligible entity, which may 
                        include the approval, monitoring, and renewal 
                        of charter schools.''; and
                    (H) in paragraph (7) (as redesignated by 
                subparagraph (C))--
                            (i) by striking ``State educational 
                        agency'' and inserting ``eligible entity'';
                            (ii) by striking ``this subpart'' and 
                        inserting ``section 5202'';
                            (iii) by striking ``10'' and inserting 
                        ``20''; and
                            (iv) by striking ``the State educational 
                        agency'' and all that follows through 
                        ``sources.'' and inserting ``the eligible 
                        entity, for expenses necessary to plan, begin 
                        operations, and subsequently operate a public 
                        charter school.''; and
            (7) by striking subsection (g).

SEC. 6. NATIONAL ACTIVITIES.

    Section 5205 of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 7221d) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (3)(E), by striking ``schools'' 
                each place the term occurs and inserting ``schools, 
                authorized public chartering agencies, and charter 
                support organizations''; and
                    (B) by adding at the end the following:
            ``(6) To provide technical assistance to charter schools on 
        how to meet the requirements of part B of the Individuals with 
        Disabilities Education Act.'';
            (2) by redesignating subsections (b) and (c) as subsections 
        (c) and (d), respectively;
            (3) by inserting after subsection (a) the following:
    ``(b) National Dissemination.--
            ``(1) In general.--To carry out this subsection, the 
        Secretary shall reserve for each fiscal year not more than 
        $8,000,000 of the amount appropriated to carry out this 
        subpart.
            ``(2) Eligibility.--In order to receive a grant under this 
        subsection, an entity shall--
                    ``(A) be--
                            ``(i) a charter school;
                            ``(ii) an eligible applicant;
                            ``(iii) an eligible entity; or
                            ``(iv) a consortium of entities described 
                        in clauses (i), (ii), and (iii); and
                    ``(B) submit an application to the Secretary at 
                such time, in such manner, and containing such 
                information as the Secretary may require.
            ``(3) Criteria.--The Secretary shall award grants under 
        this subsection on the basis of--
                    ``(A) the quality of the application;
                    ``(B) the capacity of the applicant to execute the 
                application; and
                    ``(C) the scale of the expected impact of the 
                application.
            ``(4) Activities.--A recipient of a grant under this 
        subsection shall use funds received under the grant to assist 
        other schools in the recipient's State and in other States in 
        adopting charter school innovations, or to disseminate 
        information about charter school innovations, through 
        activities such as--
                    ``(A) assisting other entities with the planning 
                and start-up of one or more new public schools, 
                including charter schools;
                    ``(B) developing partnerships designed to improve 
                student academic achievement;
                    ``(C) developing curriculum materials, assessments, 
                and other materials that promote increased student 
                achievement and are based on successful practices at 
                charter schools;
                    ``(D) conducting evaluations and developing 
                materials that document successful practices at charter 
                schools and that are designed to improve student 
                performance in other schools; and
                    ``(E) training, regarding the innovative practices 
                developed at the original site, for personnel of--
                            ``(i) local educational agencies that are 
                        adopting innovations or successful practices 
                        used at charter schools;
                            ``(ii) authorized public chartering 
                        agencies; or
                            ``(iii) charter support organizations.''; 
                        and
            (4) in subsection (c) (as redesignated by paragraph (2))--
                    (A) in paragraph (2)(A), by striking ``paragraphs 
                (2) and (3)(B) of section 5211(b)'' and inserting 
                ``section 5212'';
                    (B) by redesignating paragraphs (5) and (6) as 
                paragraphs (6) and (7), respectively;
                    (C) by inserting after paragraph (4) the following:
            ``(5) Special rule.--A State that provides public charter 
        schools with access to existing adequate facility space may 
        apply for a grant under this subsection, if the State agrees 
        that the State will, upon receipt of the grant, develop a 
        capital aid program consistent with the program described in 
        this subsection during the grant period.''; and
                    (D) in paragraph (7) (as redesignated by 
                subparagraph (B)), by striking ``(A), (B), and (C)'' 
                and inserting ``(A) through (F)''.

SEC. 7. FEDERAL FORMULA ALLOCATION.

    Section 5206 of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 7221e) is amended--
            (1) by striking the section heading and inserting the 
        following:

``SEC. 5206. FEDERAL FORMULA ALLOCATION.'';

        and
            (2) in subsection (a), by inserting ``or is in operation'' 
        after ``actually opens''.

SEC. 8. CREDIT ENHANCEMENT.

    Subpart 1 of part B of title V of the Elementary and Secondary 
Education Act of 1965 (as amended by this Act) (20 U.S.C. 7221 et seq.) 
is further amended--
            (1) by redesignating sections 5207 through 5211 as sections 
        5208 through 5212, respectively; and
            (2) by inserting after section 5206 the following:

``SEC. 5207. CREDIT ENHANCEMENT FOR CHARTER SCHOOL FACILITIES PROGRAMS.

    ``(a) Purpose.--The purpose of this section is to provide grants to 
eligible entities to permit the eligible entities to demonstrate 
innovative credit enhancement initiatives that assist charter schools 
to address the cost of acquiring, constructing, and renovating 
facilities.
    ``(b) Grants to Eligible Entities.--After reserving any funds as 
necessary for grant evaluation or administration consistent with any 
applicable provisions (including section 9601(a) of this Act and 
section 402(b)(1) of the Department of Education Organization Act), the 
Secretary shall use the amounts available to carry out this section to 
award, on a competitive basis, not less than 3 grants to eligible 
entities that have applications approved under this section to 
demonstrate innovative methods of assisting charter schools to address 
the cost of acquiring, constructing, and renovating facilities by 
enhancing the availability of loans or bond financing for charter 
schools.
    ``(c) Grantee Selection.--
            ``(1) Evaluation of application.--The Secretary shall 
        evaluate each application submitted under subsection (e), and 
        shall determine whether the application is sufficient to merit 
        approval.
            ``(2) Distribution of grants.--
                    ``(A) In general.--Subject to subparagraph (B) and 
                paragraph (3), the Secretary shall award--
                            ``(i) not less than 1 grant to an eligible 
                        entity described in section 5211(6)(A);
                            ``(ii) not less than 1 grant to an eligible 
                        entity described in section 5211(6)(B); and
                            ``(iii) not less than 1 grant to an 
                        eligible entity described in section 
                        5211(6)(C).
                    ``(B) Exception.--Subparagraph (A) shall only apply 
                if applications are submitted that permit the Secretary 
                to do so without approving an application that is not 
                of sufficient quality to merit approval.
            ``(3) Special rule.--In the event the Secretary determines 
        that the funds made available under this section are 
        insufficient to permit the Secretary to award not less than 3 
        grants in accordance with this section, the 3-grant minimum 
        under paragraph (2) shall not apply, and the Secretary may 
        determine the appropriate number of grants to be awarded in 
        accordance with subsection (d).
    ``(d) Grant Characteristics.--Grants under this section shall be of 
a sufficient size, scope, and quality so as to ensure an effective 
demonstration of an innovative means of enhancing credit for the 
financing of charter school acquisition, construction, or renovation.
    ``(e) Applications.--
            ``(1) In general.--To receive a grant under this section, 
        an eligible entity shall submit to the Secretary an application 
        in such form as the Secretary may reasonably require.
            ``(2) Contents.--An application submitted under paragraph 
        (1) shall contain--
                    ``(A) a statement identifying the activities 
                proposed to be undertaken with funds received under 
                this section, including how the eligible entity will 
                determine which charter schools will receive 
                assistance, and how much and what types of assistance 
                charter schools will receive;
                    ``(B) a description of the involvement of charter 
                schools in the application's development and the design 
                of the proposed activities;
                    ``(C) a description of the eligible entity's 
                expertise in capital market financing;
                    ``(D) a description of how the proposed activities 
                will leverage the maximum amount of private-sector 
                financing capital relative to the amount of Federal and 
                State funds used and otherwise enhance credit available 
                to charter schools, including how the applicant will 
                offer a combination of rates and terms more favorable 
                than rates and terms that a charter school could 
                receive without assistance under this section;
                    ``(E) a description of how the eligible entity 
                possesses sufficient expertise in education to evaluate 
                the likelihood of success of a charter school program 
                for which facilities financing is sought;
                    ``(F) in the case of an application submitted by an 
                eligible entity that is a State governmental entity, a 
                description of the actions that the entity has taken, 
                or will take, to ensure that charter schools within the 
                State receive the funding needed to have adequate 
                facilities; and
                    ``(G) such other information as the Secretary may 
                reasonably require.
    ``(f) Charter School Objectives.--An eligible entity receiving a 
grant under this section shall use the funds deposited in the reserve 
account established under subsection (g)(1) to assist 1 or more charter 
schools to access private sector capital in order to accomplish one or 
more of the following objectives:
            ``(1) The acquisition (by purchase, lease, donation, or 
        otherwise) of an interest (including an interest held by a 
        third party for the benefit of a charter school) in improved or 
        unimproved real property that is necessary to commence or 
        continue the operation of a charter school.
            ``(2) The construction (including predevelopment costs in a 
        case where construction or renovation cannot proceed as a 
        result of predevelopment findings) of new facilities, or the 
        renovation, repair, or alteration of existing facilities, 
        necessary to commence or continue the operation of a charter 
        school.
    ``(g) Reserve Account.--
            ``(1) Use of funds.--To assist charter schools to 
        accomplish the objectives described in subsection (f), an 
        eligible entity receiving a grant under this section shall, in 
        accordance with State and local law, directly or indirectly, 
        alone or in collaboration with others, deposit the funds 
        received under this section (other than funds used for 
        administrative costs in accordance with subsection (h)) in a 
        reserve account established and maintained by the eligible 
        entity for this purpose. Amounts deposited in such account 
        shall be used by the eligible entity for one or more of the 
        following purposes:
                    ``(A) Guaranteeing, insuring, and reinsuring bonds, 
                notes, evidences of debt, loans, and interests therein, 
                the proceeds of which are used for an objective 
                described in subsection (f).
                    ``(B) Guaranteeing and insuring leases of personal 
                and real property for an objective described in 
                subsection (f).
                    ``(C) Facilitating financing by identifying 
                potential lending sources, encouraging private lending, 
                and other similar activities that directly promote 
                lending to, or for the benefit of, charter schools.
                    ``(D) Facilitating the issuance of bonds by charter 
                schools, or by other public entities for the benefit of 
                charter schools, by providing technical, 
                administrative, and other appropriate assistance 
                (including the recruitment of bond counsel, 
                underwriters, and potential investors and the 
                consolidation of multiple charter school projects 
                within a single bond issue).
                    ``(E) Making limited loans to charter schools, 
                under such terms and conditions as the Secretary may 
                prescribe.
            ``(2) Investment.--Funds received under this section and 
        deposited in the reserve account established under paragraph 
        (1) shall be invested in obligations issued or guaranteed by 
        the United States or a State, or in other similarly low-risk 
        securities.
            ``(3) Reinvestment of earnings.--Any earnings on funds 
        received under this section shall be deposited in the reserve 
        account established under paragraph (1) and used in accordance 
        with such paragraph.
    ``(h) Limitation on Administrative Costs.--An eligible entity may 
use not more than 2 percent of the funds received for any fiscal year 
under this section for the administrative costs of carrying out its 
responsibilities under this section.
    ``(i) Audits and Reports.--
            ``(1) Financial record maintenance and audit.--The 
        financial records of each eligible entity receiving a grant 
        under this section shall be maintained in accordance with 
        generally accepted accounting principles and shall be subject 
        to an annual audit by an independent public accountant.
            ``(2) Reports.--
                    ``(A) Grantee annual reports.--Each eligible entity 
                receiving a grant under this section annually shall 
                submit to the Secretary a report of the eligible 
                entity's operations and activities under this section.
                    ``(B) Contents.--Each annual report submitted under 
                subparagraph (A) shall include--
                            ``(i) a copy of the most recent financial 
                        statements, and any accompanying opinion on 
                        such statements, prepared by the independent 
                        public accountant reviewing the financial 
                        records of the eligible entity;
                            ``(ii) a copy of any report made on an 
                        audit of the financial records of the eligible 
                        entity that was conducted under paragraph (1) 
                        during the reporting period;
                            ``(iii) an evaluation by the eligible 
                        entity of the effectiveness of its use of the 
                        Federal funds provided under this section in 
                        leveraging private funds;
                            ``(iv) a listing and description of the 
                        charter schools served during the reporting 
                        period;
                            ``(v) a description of the activities 
                        carried out by the eligible entity to assist 
                        charter schools in meeting the objectives set 
                        forth in subsection (f); and
                            ``(vi) a description of the characteristics 
                        of lenders and other financial institutions 
                        participating in the activities undertaken by 
                        the eligible entity under this section during 
                        the reporting period.
                    ``(C) Secretarial report.--The Secretary shall 
                review the reports submitted under paragraph (2)(A) and 
                shall provide a comprehensive annual report to Congress 
                on the activities conducted under this section.
    ``(j) No Full Faith and Credit for Grantee Obligations.--No 
financial obligation of an eligible entity entered into pursuant to 
this section (such as an obligation under a guarantee, bond, note, 
evidence of debt, or loan) shall be an obligation of, or guaranteed in 
any respect by, the United States. The full faith and credit of the 
United States is not pledged to the payment of funds which may be 
required to be paid under any obligation made by an eligible entity 
pursuant to any provision of this section.
    ``(k) Recovery of Funds.--
            ``(1) In general.--The Secretary, in accordance with 
        chapter 37 of title 31, United States Code, shall collect--
                    ``(A) all of the funds in a reserve account 
                established by an eligible entity under subsection 
                (g)(1) if the Secretary determines, not earlier than 2 
                years after the date on which the eligible entity first 
                received funds under this section, that the eligible 
                entity has failed to make substantial progress in 
                carrying out the purposes described in this section; or
                    ``(B) all or a portion of the funds in a reserve 
                account established by an eligible entity under 
                subsection (g)(1) if the Secretary determines that the 
                eligible entity has permanently ceased to use all or a 
                portion of the funds in such account to accomplish any 
                purpose described in this section.
            ``(2) Exercise of authority.--The Secretary shall not 
        exercise the authority provided in paragraph (1) to collect 
        from any eligible entity any funds that are being properly used 
        to achieve one or more of the objectives described in 
        subsection (f).
            ``(3) Procedures.--The provisions of sections 451, 452, and 
        458 of the General Education Provisions Act shall apply to the 
        recovery of funds under paragraph (1).
            ``(4) Construction.--Nothing in this section shall be 
        construed to impair or affect the authority of the Secretary to 
        recover funds under part D of the General Education Provisions 
        Act.
    ``(l) Reservation.--To carry out this section, the Secretary shall 
reserve for each fiscal year not less than 5 percent and not more than 
15 percent of the amount appropriated under section 5212.''.

SEC. 9. DEFINITIONS.

    Section 5211 of the Elementary and Secondary Education Act of 1965 
(as redesignated by section 8(1)) (20 U.S.C. 7221i) is amended--
            (1) in paragraph (1)--
                    (A) by striking subparagraph (L);
                    (B) by redesignating subparagraphs (D) through (K) 
                as subparagraphs (E) through (L), respectively;
                    (C) by inserting after subparagraph (B) the 
                following:
                    ``(C) has an independent governing board that 
                enters into a performance-based agreement that 
                encompasses one or more campuses with an authorized 
                public chartering agency in the State, which agreement 
                shall include a description of--
                            ``(i) how student performance will be 
                        measured in each charter school pursuant to the 
                        State assessments that are required of other 
                        schools and any other assessments or 
                        evaluations mutually agreeable to the 
                        authorized public chartering agency and the 
                        charter school; and
                            ``(ii) criteria for renewal or revocation 
                        of the charter;'';
                    (D) in subparagraph (E) (as redesignated by 
                subparagraph (B)), by striking ``elementary or 
                secondary education, or both'' and inserting 
                ``prekindergarten, elementary, or secondary education, 
                or adult education if permitted by State charter law, 
                or any combination of such types of education'';
                    (E) in subparagraph (I) (as redesignated by 
                subparagraph (B))--
                            (i) by striking ``school to'' and inserting 
                        ``school--
                            ``(i) to'';
                            (ii) by striking ``children, and that'' and 
                        inserting ``children;
                            ``(ii) that''; and
                            (iii) by striking ``accommodated;'' and 
                        inserting ``accommodated; and
                            ``(iii) that does not give admissions 
                        preference to any student on the basis of prior 
                        academic achievement;'';
                    (F) in subparagraph (K) (as redesignated by 
                subparagraph (B)), by inserting ``and'' after the 
                semicolon; and
                    (G) in subparagraph (L) (as redesignated by 
                subparagraph (B)), by striking ``; and'' and inserting 
                a period;
            (2) by striking paragraph (3) and inserting the following:
            ``(3) Eligible applicant.--The term `eligible applicant' 
        means--
                    ``(A) a developer that has applied to an authorized 
                public chartering agency to operate a charter school 
                and provided adequate and timely notice to that 
                authority under section 5203(d)(3); or
                    ``(B) a charter support organization.'';
            (3) by adding at the end the following:
            ``(5) Charter support organization.--The term `charter 
        support organization' means a public or private nonprofit 
        organization that provides assistance to a developer of a 
        charter school during the planning, program design, and initial 
        implementation of a charter school.
            ``(6) Eligible entity.--The term `eligible entity' means--
                    ``(A) a public entity, such as a State educational 
                agency or other State or local governmental entity;
                    ``(B) a private nonprofit entity; or
                    ``(C) a consortium of entities described in 
                subparagraph (A) or (B).''; and
            (4) by redesignating paragraphs (1) through (6) as 
        paragraphs (2), (4), (5), (1), (3), and (6), respectively.

SEC. 10. AUTHORIZATION OF APPROPRIATIONS.

    Section 5212 of the Elementary and Secondary Education Act of 1965 
(as redesignated by section 8(1)) (20 U.S.C. 7221j) is amended to read 
as follows:

``SEC. 5212. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) In General.--There are authorized to be appropriated to carry 
out this subpart $650,000,000 for fiscal year 2010 and such sums as may 
be necessary for each of the 5 succeeding fiscal years.
    ``(b) Allocation.--In allocating funds under this subpart for any 
fiscal year, the Secretary shall consider the relative need between the 
programs under section 5202, section 5205(c), and section 5211 and the 
quality of the applications submitted under such sections.''.

SEC. 11. REORGANIZATION.

    Part B of title V of the Elementary and Secondary Education Act of 
1965 (20 U.S.C. 7221 et seq.) is amended--
            (1) by striking subpart 2; and
            (2) by redesignating subpart 3 as subpart 2.

SEC. 12. CONFORMING AMENDMENTS.

    (a) Conforming Amendment.--Section 5247(1) of the Elementary and 
Secondary Education Act of 1965 (20 U.S.C. 7225f(1)) is amended by 
striking ``5210'' and inserting ``5211''.
    (b)  Table of Contents.--The table of contents for the Elementary 
and Secondary Education Act of 1965 is amended--
            (1) by striking the items relating to sections 5206 through 
        5211 and inserting the following:

``Sec. 5206. Federal formula allocation.
``Sec. 5207. Credit enhancement for charter school facilities programs.
``Sec. 5208. Solicitation of input from charter school operators.
``Sec. 5209. Records transfer.
``Sec. 5210. Paperwork reduction.
``Sec. 5211. Definitions.
``Sec. 5212. Authorization of appropriations.'';
            (2) by striking the item relating to subpart 2 of part B of 
        title V;
            (3) by striking the items relating to sections 5221 through 
        5231; and
            (4) by striking the item relating to subpart 3 of part B of 
        title V and inserting the following:

        ``subpart 2--voluntary public school choice programs''.

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