each local educational agency within the State for each 
school year, the amount that is allocated to that local edu-
cational agency for that school year pursuant to the per-
formance 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. 
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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 activi-
ties 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 par-
ents 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 con-
siders 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 sub-
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section if the State has demonstrated the adequate yearly 
progress required by this Act and has substantially com-
plied 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 dur-
ing 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 pro-
gram. The process shall include the following: 
(1) APPLICATION.—To be considered for par-
ticipation, a State must submit an application to the 
Secretary in such form, and containing such infor-
mation, as the Secretary may require. The State 
must submit the application not later than March 
31, 2007, but after that date may modify the appli-
cation (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 perform-
ance agreement that the State proposes to enter into 
for purposes of the pilot program. 
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(3) CERTIFICATION OF COMPLIANCE WITH NO-
TICE AND COMMENT REQUIREMENTS.—The applica-
tion 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 require-
ments 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
AGREE-
MENT.—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 Au-
gust 15, 2007. 
SEC. 16. PERFORMANCE REVIEW AND EARLY TERMI-
NATION. 
(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 dem-
onstrated the adequate yearly progress required by this 
Act and has substantially complied with its other obliga-
tions under this Act. 
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(b) EARLY TERMINATION.—The Secretary may ter-
minate 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 sub-
section (a) is a reduction by not less than 25 percent, of 
the difference between the percentage of highest and low-
est 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 
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grant amounts received by the State pursuant to the per-
formance 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. 
Æ 
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