(1) ADEQUATE YEARLY PROGRESS.—The term 
‘‘adequate yearly progress’’ has the meaning given 
the term in section 1111(b)(2)(C) of the Elementary 
and Secondary Education Act of 1965 (20 U.S.C. 
6311(b)(2)(C)). 
(2) EXTERNAL PARTNER.—The term ‘‘external 
partner’’ means an entity— 
(A) that is an organization such as a non-
profit organization, community-based organiza-
tion, local education fund, service organization, 
educational service agency, or institution of 
higher education; and 
(B) that has demonstrated expertise and 
effectiveness in providing targeted support such 
as data analysis, professional development, or 
provision of nonacademic support and inte-
grated student services to local educational 
agencies, schools, or students that leads to im-
proved teaching, learning, and outcomes for 
students, including for those students who are 
failing to make sufficient progress to graduate 
in the standard amount of years or who have 
dropped out of high school. 
(3) LOW-INCOME LOCAL EDUCATIONAL AGEN-
CY.—The term ‘‘low-income local educational agen-
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cy’’ means a local educational agency in which not 
less than 15 percent of the students served by such 
agency are from families with incomes below the 
poverty line. 
(4) MIDDLE
GRADES.—The term ‘‘middle 
grades’’ means any of grades 5 through 8. 
(5) POVERTY LINE.—The term ‘‘poverty line’’ 
means the poverty line described in section 673 of 
the Community Services Block Grant Act (42 U.S.C. 
9902), applicable to a family of the size involved. 
(6) SECONDARY SCHOOL REFORM PARTNER.— 
The term ‘‘secondary school reform partner’’ means 
an organization, such as a school reform organiza-
tion, community-based organization, local education 
fund, educational service agency, or institution of 
higher education, with expertise in analyzing school 
performance data and a track record of success in 
improving student achievement and graduation rates 
in low-performing high schools. 
SEC. 104. GRANTS AUTHORIZED. 
(a) IN GENERAL.—The Secretary is authorized to 
make grants, through allotments under subsection (b), to 
State educational agencies with approved State plans that 
will— 
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(1) improve student achievement and gradua-
tion rates; and 
(2) effectively target resources and technical as-
sistance to high schools in whole school reform or re-
placement, as described in clause (ii) or (iii) of sec-
tion 106(b)(2)(B). 
(b) DETERMINATION OF ALLOTMENTS.— 
(1) RESERVATION OF FUNDS.—From the total 
amount appropriated under section 113, the Sec-
retary shall reserve not more than— 
(A) the lesser of 3 percent or $50,000,000, 
to— 
(i) provide technical assistance and 
ongoing regional training programs that 
are equitably distributed— 
(I) among the different geo-
graphic regions of the United States; 
and 
(II) among State and local edu-
cational agencies serving urban and 
rural areas; 
(ii) 
evaluate 
activities 
authorized 
under this title in order to determine the 
most effective strategies for improving stu-
dent achievement and outcomes for stu-
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dents attending high schools identified for 
targeted intervention, whole school reform, 
or replacement under section 106(b)(2); 
and 
(iii) disseminate the findings of such 
evaluations; 
(B) the lesser of 4 percent or $75,000,000, 
to build the capacity of secondary school reform 
partners and external partners to provide serv-
ices under this Act that benefit high schools 
and support the development or enhancement of 
research-based whole secondary school reform 
or new secondary school models, of which not 
less than 35 percent of such reserved funds 
shall be awarded, on a competitive basis, to sec-
ondary school reform partners or external part-
ners that will provide services under this Act 
that benefit high schools designated with a 
school locale code of Fringe Rural (41), Distant 
Rural (42), or Remote Rural (43), as deter-
mined by the Secretary; and 
(C) 2 percent to the Secretary of the Inte-
rior, to enable the Secretary to carry out the 
purposes of this Act for schools operated or 
funded by the Bureau of Indian Affairs. 
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(2) 
STATE
ALLOTMENT.—From 
the 
total 
amount appropriated under section 113 for a fiscal 
year and not reserved under paragraph (1), the Sec-
retary shall make allotments as follows: 
(A) LOW-INCOME
LOCAL
EDUCATIONAL 
AGENCIES.—From such amount, the Secretary 
shall allot to each State an amount that bears 
the same ratio to 50 percent of the sums being 
allotted as the percentage of students enrolled 
in schools served by low-income local edu-
cational agencies in the State bears to the total 
of such percentages for all the States. 
(B) LOWEST GRADUATION RATE CALCULA-
TION.—From such amount, the Secretary shall 
allot to each State for which the graduation 
rate is within the lowest one-third of the grad-
uation rates for all States, an amount that 
bears the same ratio to 25 percent of the sums 
being allotted as the number of students en-
rolled in high schools in the State bears to the 
total of such students in all of such States with 
the lowest one-third graduation rates. 
(C) MIDDLE GRADUATION RATE CALCULA-
TION.—From such amount, the Secretary shall 
allot to each State for which the graduation 
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rate is within the middle one-third of the grad-
uation rates for all States, an amount that 
bears the same ratio to 15 percent of the sums 
being allotted as the number of students en-
rolled in high schools in the State bears to the 
total of such students in all of such States with-
in the middle one-third graduation rates. 
(D) HIGHEST
GRADUATION
RATE
CAL-
CULATION.—From such amount, the Secretary 
shall allot to each State for which the gradua-
tion rate is within the highest one-third of the 
graduation rates for all States, an amount that 
bears the same ratio to 10 percent of the sums 
being allotted as the number of students en-
rolled in high schools in the State bears to the 
total of such students in all of such States with-
in the highest one-third graduation rates. 
(3) REALLOTMENT.—If any State does not 
apply for an allotment under this subsection for any 
fiscal year, the Secretary shall reallot the amount of 
the allotment to the remaining States in accordance 
with this subsection. 
(4) USING FIRST-YEAR DATA.—In calculating 
allotments under this subsection for the second and 
each subsequent year of the grant period, the Sec-
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retary shall use the data relating to low-income local 
educational agencies and graduation rates used for 
the first year of the grant period. 
(5) HOLD
HARMLESS.—Notwithstanding any 
other provision of this subsection but subject to 
paragraph (6), no State shall receive an allotment 
under this section for a fiscal year in an amount 
that is less than the amount the State received 
under this section for the first fiscal year of the 
grant period. 
(6) RATABLE REDUCTION.—If the amount ap-
propriated in a fiscal year is not sufficient to pay 
the minimum allotments to all eligible institutions 
under paragraph (5), the amount of the minimum 
allotment to each such eligible institution shall be 
ratably reduced. 
(c) SUPPLEMENT, NOT SUPPLANT.—A State edu-
cational agency that receives a grant under this title shall 
use the grant funds to supplement, and not supplant, Fed-
eral and non-Federal funds available to high schools. 
(d) MATCHING FUNDS.—A State educational agency 
that receives a grant under this section shall provide 
matching funds, from non-Federal sources, in an amount 
equal to 25 percent of the amount of grant funds provided 
to the State to carry out the activities supported by the 
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grant. Such matching funds may be provided in cash or 
in-kind, except that— 
(1) not more than 10 percent of the amount of 
grant funds may be provided through in-kind con-
tributions; and 
(2) any in-kind contributions shall be directed 
toward supporting the State educational agency’s 
technical assistance efforts or the operation of the 
State’s differentiated high school improvement sys-
tem under section 106. 
SEC. 105. SECRETARIAL PEER REVIEW AND APPROVAL. 
(a) IN GENERAL.—The Secretary shall— 
(1) establish a peer-review process to assist in 
the review and approval of State plans; 
(2) appoint individuals to the peer-review proc-
ess who are educators and experts in educational 
standards, assessments, accountability, high school 
improvement, dropout prevention, academic needs of 
English language learners, and other educational 
needs of high school students; 
(3) approve a State plan submitted under this 
title not later than 120 days after the date of the 
submission of the plan unless the Secretary deter-
mines that the plan does not meet the requirements 
of this title; 
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(4) if the Secretary determines that the State 
plan does not meet the requirements of this title, im-
mediately notify the State of such determination and 
the reasons for such determination; 
(5) if the Secretary determines that the State 
does not have the capacity to carry out the school 
improvement 
activities 
described 
in 
sections 
106(b)(2) and 108, offer technical assistance to 
carry out such activities for States directly or 
through contracts with secondary school reform 
partners; 
(6) not deny a State’s plan before— 
(A) offering the State an opportunity to 
revise the State’s plan; 
(B) providing the State with technical as-
sistance in order to submit a successful plan; 
and 
(C) providing the State an opportunity for 
a hearing or accepting input from the State; 
and 
(7) have the authority to deny a State plan for 
not meeting the requirements of this title. 
(b) ACCURACY.—In approving a State plan, the Sec-
retary shall ensure that— 
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(1) the process the State educational agency 
proposes for differentiating school improvement ac-
tions under sections 106(b)(2) and 108, which proc-
ess will assign high schools to each of the school im-
provement categories described in section 106(b)(2) 
in such a way that accurately identifies the high 
school and leads to the implementation of the inter-
ventions necessary to meet the needs of the students 
attending the high school; and 
(2) the annual growth targets proposed by the 
State educational agency under section 106(b)(3)(D) 
are meaningful and achievable, and demonstrate 
continuous and substantial progress. 
SEC. 106. STATE PLAN TO DEVELOP DIFFERENTIATED 
HIGH SCHOOL IMPROVEMENT SYSTEM. 
(a) IN GENERAL.—For a State to be eligible to re-
ceive a grant under this title, the State educational agency 
shall submit a plan to the Secretary at such time, in such 
manner, and containing such information as the Secretary 
may reasonably require. 
(b) CONTENTS.—Each plan submitted under this sec-
tion shall include the following: 
(1) SCHOOL
IMPROVEMENT
PROCESS.—The 
State educational agency shall describe how the 
State educational agency will use funds authorized 
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under this title to establish or expand a statewide 
differentiated high school improvement system de-
scribed in section 108. 
(2) 
STATEWIDE
DIFFERENTIATED
HIGH 
SCHOOL IMPROVEMENT.— 
(A) PROCESS OF DIFFERENTIATION.—The 
State educational agency shall describe a data- 
driven process for categorizing high schools into 
the categories described in subparagraph (B) 
using— 
(i) the indicators used to determine 
adequate yearly progress; and 
(ii) data from the school performance 
indicators described in paragraph (3). 
(B) DIFFERENTIATED HIGH SCHOOL IM-
PROVEMENT
CATEGORIES.—The State edu-
cational agency shall describe how local edu-
cational agencies will use the process estab-
lished under subparagraph (A) to categorize the 
high schools in the State that do not make ade-
quate yearly progress for 2 consecutive years 
into one of the following school improvement 
categories: 
(i) SCHOOLS
NEEDING
TARGETED 
INTERVENTIONS.—High schools whose per-
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formance on the school performance indi-
cators described in paragraph (3) dem-
onstrate a need for targeted interventions 
described in section 111(b) to improve stu-
dent outcomes and make adequate yearly 
progress. 
(ii) 
SCHOOLS
NEEDING
WHOLE 
SCHOOL
REFORMS.—High schools whose 
performance on the school performance in-
dicators demonstrate a need for com-
prehensive schoolwide reform described in 
section 111(c) to improve student out-
comes and make adequate yearly progress. 
(iii) SCHOOLS
NEEDING
REPLACE-
MENT.—High schools whose school per-
formance indicators demonstrate a need 
for replacement, as described in section 
111(d). 
(C) SPECIAL RULE.—A State educational 
agency may propose in the plan under this sec-
tion additional levels of differentiation within a 
particular school improvement category de-
scribed in subparagraph (B) to further target 
and prioritize school needs and to align dif-
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