(3) in the case of a local educational agency for
which such number is 15 percent or greater but less
than 20 percent, shall be not less than 20 percent
of the costs;
(4) in the case of a local educational agency for
which such number is 10 percent or greater but less
than 15 percent, shall be not less than 30 percent
of the costs;
(5) in the case of a local educational agency for
which such number is 5 percent or greater but less
than 10 percent, shall be not less than 40 percent
of the costs; and
(6) in the case of a local educational agency for
which such number is less than 5 percent, shall be
not less than 50 percent of the costs.
(c) DETERMINATION.—For purposes of determining
the applicable matching requirement under subsection (a),
the Secretary shall determine the number of children from
families with incomes below the poverty line (as defined
by the Office of Management and Budget, and revised an-
nually in accordance with section 673(2) of the Commu-
nity Services Block Grant Act (42 U.S.C. 9902(2)) for
individual local educational agencies.
(d) SPECIAL RULE.—A local educational agency shall
meet the matching requirement determined in subsection
(b) through cash expenditures from non-Federal sources,
except that schools operating schoolwide programs under
section 1114 of the Elementary and Secondary Education
Act of 1965 (20 U.S.C. 6314) may use funds provided
under part A of title I of such Act (20 U.S.C. 6311 et
seq.) to meet the requirements, if the use of the part A
funds is consistent with the school plan under section
1112 of such Act (20 U.S.C. 6312) and the requirements
of sections 1120(c) and 1120A(b) of such Act (20 U.S.C.
6321(c) and 6322).
SEC. 210. CARRYOVER.
Notwithstanding section 421 of the General Edu-
cation Provisions Act (20 U.S.C. 1225), funds made avail-
able to a local educational agency under this title shall
be available for obligation until September 30, 2008.
SEC. 211. ACCOUNTABILITY.
(a) IN GENERAL.—Not later than 3 years after a
local educational agency receives funds under this title, the
local educational agency shall provide to the State edu-
cational agency evidence of the achievement of the local
educational agencies’ students, in grades 1 through 4, in
reading. Such evidence shall be—
(1) in a form determined by the State edu-
cational agency;
(2) based on the assessments local educational
agencies are using under section 1111(b) of the Ele-
mentary and Secondary Education Act of 1965 (20
U.S.C. 6311(b)) or on comparably rigorous State or
local assessments; and
(3) disaggregated to show the achievement of
students in individual schools and of students in dif-
ferent racial groups, by gender, by family income,
and for students with disabilities and with limited
English proficiency.
(b) IMPROVEMENT PLAN.—Each local educational
agency serving a school that fails to show improvement
in reading achievement after receiving funds under this
title for 3 years shall develop a program improvement plan
that is approved by the Secretary. The program improve-
ment plan may provide for—
(1) additional technical assistance, in the school
failing to show improvement, in order to change cur-
riculum, change school leadership, or more effec-
tively use staff;
(2) implementation, in the school, of com-
prehensive, research-based education reform models;
or
(3) any other improvement strategy agreed to
by the local educational agency and the Secretary.
(c) REDUCTION OF ALLOCATION.—Beginning with
fiscal year 2004, a State educational agency shall reduce
the allocation to any local educational agency under sec-
tion 206 for a fiscal year if the State educational agency
determines that the local educational agency serves a
school which fails to show improvement in reading achieve-
ment. The reduction shall be in an amount equivalent to
the amount made available to the school for the fiscal year
for which the determination is made.
SEC. 212. PARTICIPATION OF PRIVATE SCHOOL TEACHERS.
(a) IN GENERAL.—Proportionate to the number of
children who are enrolled in private elementary schools or
secondary schools in the area served by a local educational
agency that receives an allocation under this title, the local
educational agency shall provide for the inclusion of pri-
vate school teachers in the professional development activi-
ties the local educational agencies and the schools served
by such agency carries out under this title.
(b) WAIVER.—If, by reason of any provision of law,
a local educational agency is prohibited from providing for
the professional development activities for private school
teachers and administrators as required by subsection (a),
or if the Secretary determines that the agency is unwilling
or unable to do so, the Secretary shall waive that require-
ment and shall use a portion of the agency’s grant to ar-
range for the provision of those activities.
SEC. 213. EVALUATION.
From the amount reserved under section 204(b)(1),
the Secretary shall carry out an evaluation of—
(1) the extent to which the activities assisted
under this title achieve the objective of reducing
class sizes;
(2) the impact of the activities on reading
achievement;
(3) the quality of the teachers hired with funds
provided under this title;
(4) the success of State and local efforts to use
funds provided under this title to ensure high quality
teaching; and
(5) the effectiveness of the requirements under
section 211.
TITLE III—CHARTER SCHOOLS
SEC. 301. INNOVATIVE CHARTER SCHOOLS.
Title VI of the Elementary and Secondary Education
Act of 1965 (20 U.S.C. 7301 et seq.) is amended—
(1) in section 6201(a)—
(A) in paragraph (1)(C), by striking ‘‘and’’
after the semicolon;
(B) by redesignating paragraph (2) as
paragraph (3); and
(C) by inserting after paragraph (1) the
following:
‘‘(2) support for planning, designing, and initial
implementation of charter schools as described in
part C of title X; and’’; and
(2) in section 6301(b)—
(A) in paragraph (7), by striking ‘‘and’’
after the semicolon;
(B) by redesignating paragraph (8) as
paragraph (9); and
(C) by inserting after paragraph (7) the
following:
‘‘(8) planning, designing, and initial implemen-
tation of charter schools as described in part C of
title X; and’’.
SEC. 302. CHARTER SCHOOLS.
Part C of title X of the Elementary and Secondary
Education Act of 1965 is amended to read as follows:
‘‘PART C—PUBLIC CHARTER SCHOOLS
‘‘SEC. 10301. FINDINGS AND PURPOSE.
‘‘(a) FINDINGS.—The Congress finds that—
‘‘(1) enhancement of parent and student choices
among public schools can assist in promoting com-
does not meet the requirements of section
10309(1)(A).
‘‘(2) GRANTS TO ELIGIBLE APPLICANTS.—
‘‘(A) BASIC GRANTS.—Grants awarded by
the Secretary to eligible applicants or subgrants
awarded by State educational agencies to eligi-
ble applicants under this part shall be awarded
for planning, design, or initial implementation
of charter schools, for a period not to exceed
more than 5 years, of which the eligible appli-
cant may use—
‘‘(i) not more than 30 months for
planning and program design; and
‘‘(ii) not more than 4 years for the
initial implementation of a charter school.
‘‘(B) EXTENSION.—Any eligible applicant
that has received a grant or subgrant under
this part prior to October 1, 1998, shall be eli-
gible to receive an additional grant for a period
not to exceed 2 years in accordance with this
section, notwithstanding that such an eligible
applicant does not meet the requirements of
section 10309(1)(A).
‘‘(d) LIMITATION.—Except as otherwise provided
under subsection (c), the Secretary shall not award more
than one grant and State educational agencies shall not
award more than one subgrant under this part to support
a particular charter school.
‘‘(e) PRIORITY AND REQUIREMENTS.—
‘‘(1) PRIORITY.—
‘‘(A) FISCAL YEARS 1999, 2000, AND 2001.—
In awarding grants under this part for any of
the fiscal years 1999, 2000, and 2001 from
funds appropriated under section 10310 that
are in excess of $51,000,000 for the fiscal year,
the Secretary shall give priority to State edu-
cational agencies in accordance with subpara-
graph (C).
‘‘(B) SUCCEEDING
FISCAL
YEARS.—In
awarding grants under this part for fiscal year
2001 or any succeeding fiscal year from any
funds appropriated under section 10310, the
Secretary shall consider the number of charter
schools in each State and shall give priority to
State educational agencies in accordance with
subparagraph (C).
‘‘(C) 
PRIORITY
ORDER.—In 
awarding
grants under subparagraphs (A) and (B), the
Secretary shall, in the order listed, give priority
to a State that—
‘‘(i) meets all requirements of para-
graph (2);
‘‘(ii) meets 2 requirements of para-
graph (2); and
‘‘(iii) meets 1 requirement of para-
graph (2).
‘‘(2) REQUIREMENTS.—The requirements re-
ferred to in paragraph (1)(C) are as follows:
‘‘(A) The State law regarding charter
schools ensures that each charter school has a
high degree of autonomy over its budgets and
expenditures.
‘‘(B) The State law regarding charter
schools provides that not less than 1 chartering
authority in the State allows for an increase in
the number of charter schools from 1 year to
the next year; and
‘‘(C) The State law regarding charter
schools provides for periodic review and evalua-
tion by the authorized public chartering agency
of each charter school to determine whether the
school is meeting or exceeding the academic
performance requirements and goals for charter
schools as set forth under State law or the
school’s charter.
‘‘SEC. 10303. APPLICATIONS.
‘‘(a) APPLICATIONS FROM STATE AGENCIES.—Each
State educational agency desiring a grant from the Sec-
retary under this part shall submit to the Secretary an
application at such time, in such manner, and containing
or accompanied by such information as the Secretary may
require.
‘‘(b) CONTENTS OF A STATE EDUCATIONAL AGENCY
APPLICATION.—Each application submitted pursuant to
subsection (a) shall—
‘‘(1) describe the objectives of the State edu-
cational agency’s charter school grant program and
a description of how such objectives will be fulfilled,
including steps taken by the State educational agen-
cy to inform teachers, parents, and communities of
the State educational agency’s charter school grant
program;
‘‘(2) describe how the State educational agency
will inform each charter school of available Federal
programs and funds that each such school is eligible
to receive and ensure that each such school receives
its appropriate share of Federal education funds al-
located by formula; and
‘‘(3) contain assurances that the State edu-
cational agency will require each eligible applicant
desiring to receive a subgrant to submit an applica-
tion to the State educational agency containing—
‘‘(A) a description of the educational pro-
gram to be implemented by the proposed char-
ter school, including—
‘‘(i) how the program will enable all
students to meet challenging State student
performance standards;
‘‘(ii) the grade levels or ages of chil-
dren to be served; and
‘‘(iii) the curriculum and instructional
practices to be used;
‘‘(B) a description of how the charter
school will be managed;
‘‘(C) a description of—
‘‘(i) the objectives of the charter
school; and
‘‘(ii) the methods by which the charter
school will determine its progress toward
achieving those objectives;
‘‘(D) a description of the administrative re-
lationship between the charter school and the
authorized public chartering agency;
‘‘(E) a description of how parents and
other members of the community will be in-
volved in the design and implementation of the
charter school;
‘‘(F) a description of how the authorized
public chartering agency will provide for contin-
ued operation of the school once the Federal
grant has expired, if such agency determines
that the school has met the objectives described
in subparagraph (C)(i);
‘‘(G) a request and justification for waivers
of any Federal statutory or regulatory provi-
sions that the applicant believes are necessary
for the successful operation of the charter
school, and a description of any State or local
rules, generally applicable to public schools,
that will be waived for, or otherwise not apply
to, the school;
‘‘(H) a description of how the subgrant
funds or grant funds, as appropriate, will be
used, including a description of how such funds
will be used in conjunction with other Federal
programs administered by the Secretary;
‘‘(I) a description of how students in the
community will be—‘(i) informed about the
charter school; and ‘(ii) given an equal oppor-
tunity to attend the charter school;
‘‘(J) an assurance that the eligible appli-
cant will annually provide the Secretary and the
State educational agency such information as
may be required to determine if the charter
school is making satisfactory progress toward
achieving the objectives described in subpara-
graph (C)(i);
‘‘(K) an assurance that the applicant will
cooperate with the Secretary and the State edu-
cational agency in evaluating the program as-
sisted under this part;
‘‘(L)(i) an assurance that the charter
school that is a local educational agency or the
local educational agency in which the charter
school is located, as the case may be, will com-
ply with the requirements of the Individuals
with Disabilities Education Act (20 U.S.C.
1400 et seq.) with respect to the provision of
special education and related services to chil-
dren with disabilities in charter schools; and
‘‘(ii) a description of how the charter
school that is a local educational agency or the
local educational agency in which the charter
school is located, as the case may be, will en-
sure, consistent with such requirements, the re-
ceipt of special education and related services
by children with disabilities in charter schools;
and
‘‘(M) such other information and assur-
ances as the Secretary and the State edu-
cational agency may require; and
‘‘(4) describe how the State educational agency
will use administrative funds provided under section
10304(f)(4) to disseminate best or promising prac-
tices of charter schools in such State to each local
educational agency in the State, except that such
dissemination shall result, to the extent practicable,
in a minimum of paperwork for a State educational
agency, eligible applicant, or charter school.
‘‘(c) CONTENTS OF ELIGIBLE APPLICANT APPLICA-
TION.—Each eligible applicant desiring a grant pursuant
to section 10302 shall submit an application to the State
educational agency or Secretary, respectively, at such
time, in such manner, and accompanied by such informa-
tion as the State educational agency or Secretary, respec-
tively, may reasonably require.
‘‘(d) CONTENTS OF APPLICATION.—Each application
submitted pursuant to subsection (c) shall contain—
‘‘(1) the information and assurances described
in subparagraphs (A) through (L) of subsection
(b)(3), except that for purposes of this subsection
subparagraphs (J), (K), and (L) of such subsection
shall be applied by striking ‘and the State edu-
cational agency’ each place such term appears; and
‘‘(2) assurances that the State educational
agency—
‘‘(A) will grant, or will obtain, waivers of
State statutory or regulatory requirements; and
‘‘(B) will assist each subgrantee in the
State in receiving a waiver under section
10304(e).
‘‘SEC. 10304. ADMINISTRATION.
‘‘(a) SELECTION
CRITERIA
FOR
STATE
EDU-
CATIONAL AGENCIES.—The Secretary shall award grants
to State educational agencies under this part on the basis
of the quality of the applications submitted under section
10303(b), after taking into consideration such factors
as—
‘‘(1) the contribution that the charter schools
grant program will make to assisting educationally
disadvantaged and other students to achieving State
content standards and State student performance
standards and, in general, a State’s education im-
provement plan;
‘‘(2) the degree of flexibility afforded by the
State educational agency to charter schools under
the State’s charter schools law;
‘‘(3) the ambitiousness of the objectives for the
State charter school grant program;
‘‘(4) the quality of the strategy for assessing
achievement of those objectives;
‘‘(5) the likelihood that the charter school grant
program will meet those objectives and improve edu-
cational results for students; and
‘‘(6) the number of charter schools created
under this part in the State.
‘‘(b) SELECTION CRITERIA FOR ELIGIBLE APPLI-
CANTS.—The Secretary shall award grants to eligible ap-
plicants under this part on the basis of the quality of the
applications submitted under section 10303(c), after tak-
ing into consideration such factors as—
‘‘(1) the quality of the proposed curriculum and
instructional practices;
‘‘(2) the degree of flexibility afforded by the
State educational agency and, if applicable, the local
educational agency to the charter school;
‘‘(3) the extent of community support for the
application;
‘‘(4) the ambitiousness of the objectives for the
charter school;
‘‘(5) the quality of the strategy for assessing
achievement of those objectives; and
‘‘(6) the likelihood that the charter school will
meet those objectives and improve educational re-
sults for students.
‘‘(c) PEER REVIEW.—The Secretary, and each State
educational agency receiving a grant under this part, shall
use a peer review process to review applications for assist-
ance under this part.
‘‘(d) DIVERSITY OF PROJECTS.—The Secretary and
each State educational agency receiving a grant under this
part, shall award subgrants under this part in a manner
that, to the extent possible, ensures that such grants and
subgrants—
‘‘(1) are distributed throughout different areas
of the Nation and each State, including urban and
rural areas; and
‘‘(2) will assist charter schools representing a
variety of educational approaches, such as ap-
proaches designed to reduce school size.
‘‘(e) WAIVERS.—The Secretary may waive any statu-
tory or regulatory requirement over which the Secretary
exercises administrative authority except any such require-
ment relating to the elements of a charter school described
in section 10309(1), if—
‘‘(1) the waiver is requested in an approved ap-
plication under this part; and
‘‘(2) the Secretary determines that granting
such a waiver will promote the purpose of this part.
‘‘(f) USE OF FUNDS.—
‘‘(1) STATE
EDUCATIONAL
AGENCIES.—Each
State educational agency receiving a grant under
this part shall use such grant funds to award sub-
grants to one or more eligible applicants in the State
to enable such applicant to plan and implement a
charter school in accordance with this part.
‘‘(2) ELIGIBLE APPLICANTS.—Each eligible ap-
plicant receiving funds from the Secretary or a State
educational agency shall use such funds to plan and
implement a charter school in accordance with this
part.
‘‘(3) 
ALLOWABLE
ACTIVITIES
FOR
BASIC
GRANTS.—An eligible applicant receiving a basic
grant or subgrant under section 10302(c)(2) may
use the grant or subgrant funds only for—
‘‘(A) post-award planning and design of
the educational program, which may include—
‘‘(i) refinement of the desired edu-
cational results and of the methods for
measuring progress toward achieving those
results; and
‘‘(ii) 
professional 
development 
of
teachers and other staff who will work in
the charter school; and
‘‘(B) initial implementation of the charter
school, which may include—
‘‘(i) informing the community about
the school;
‘‘(ii) acquiring necessary equipment
and educational materials and supplies;
‘‘(iii) acquiring or developing curricu-
lum materials; and
‘‘(iv) other initial operational costs
that cannot be met from State or local
sources.
‘‘(4) ADMINISTRATIVE EXPENSES.—Each State
educational agency receiving a grant pursuant to
this part may reserve not more than 5 percent of
such grant funds for administrative expenses associ-
ated with the charter school grant program assisted
under this part.
‘‘(g) TRIBALLY CONTROLLED SCHOOLS.—Each State
that receives a grant under this part and designates a trib-
ally controlled school as a charter school shall not consider
payments to a school under the Tribally Controlled
Schools Act of 1988 (25 U.S.C. 2507) in determining—
‘‘(1) the eligibility of the school to receive any
other Federal, State, or local aid; or
‘‘(2) the amount of such aid.
‘‘SEC. 10305. NATIONAL ACTIVITIES.
‘‘The Secretary shall reserve for each fiscal year the
lesser of 5 percent of the amount appropriated to carry
out this part for the fiscal year or $5,000,000, to carry
out, giving highest priority to carrying out paragraph (3),
the following:
‘‘(1) To provide charter schools, either directly
or through the State educational agency, with infor-
mation regarding available education funds that
such school is eligible to receive, and assistance in
applying for Federal education funds which are allo-
cated by formula, including filing deadlines and sub-
mission of applications; and
‘‘(2) To provide, through 1 or more contracts
using a competitive bidding process—
‘‘(A) charter schools with assistance in ac-
cessing private capital;
‘‘(B) pilot projects in a variety of States to
better understand and improve access to private
capital by charter schools; and
‘‘(C) collection on a nationwide basis, of
information regarding successful programs that
access private capital for charter schools and
disseminate any such relevant information and
model descriptions to all charter schools.
‘‘(3) To provide for the completion of the 4-year
national study (which began in 1995) of charter
schools and any related present or future evaluations
or studies which shall include the evaluation of the
impact of charter schools on student achievement,
including information regarding—
‘‘(A) the number of students who applied
for admission to charter schools and the num-
ber of such students who enrolled in charter
schools, disaggregated on the basis of race, age,
disability, gender, limited English proficiency,
and previous enrollment in a public school;
‘‘(B) student achievement; and
‘‘(C) qualifications of school employees at
the charter school, including the number of
teachers within a charter school that have been
certified or licensed by the State and the turn-
over of the teaching force.
‘‘(4)(A) To provide information to applicants
for assistance under this part;
‘‘(B) assistance to applicants for assistance
under this part with the preparation of applications
under section 10303;
‘‘(C) assistance in the planning and startup of
charter schools;
‘‘(D) ongoing training and technical assistance
to existing charter schools; and
‘‘(E) for the dissemination of best practices in
charter schools to other public schools.
‘‘SEC. 10306. FEDERAL FORMULA ALLOCATION DURING
FIRST YEAR AND FOR SUCCESSIVE ENROLL-
MENT EXPANSIONS.
‘‘For purposes of the allocation to schools by the
States or their agencies of funds under part A of title I,
and any other Federal funds which the Secretary allocates
to States on a formula basis, the Secretary and each State
educational agency shall take such measures not later
than 6 months after the date of the enactment of this part
as are necessary to ensure that every charter school re-
ceives the Federal funding for which it is eligible not later
than 5 months after first opening, notwithstanding the
fact that the identity and characteristics of the students
enrolling in that school are not fully and completely deter-
mined until that school actually opens. These measures
shall similarly ensure that every charter school expanding
its enrollment in any subsequent year of operation receives
the Federal funding for which it is eligible not later than
5 months after such expansion.
‘‘SEC. 10307. RECORDS TRANSFER.
‘‘State and local educational agencies, to the extent
practicable, shall ensure that a student’s records and if
applicable a student’s individualized education program as
defined in section 602(11) of the Individuals with Disabil-
ities Education Act (20 U.S.C. 1401(11)), are transferred
to the charter school upon transfer of a student to a char-
ter school in accordance with applicable State law.
‘‘SEC. 10308. PAPERWORK REDUCTION.
‘‘To the extent practicable, the Secretary and each
authorized public chartering agency, shall ensure that im-
plementation of this part results in a minimum of paper-
work for any eligible applicant or charter school.
‘‘SEC. 10309. DEFINITIONS.
‘‘As used in this part:
‘‘(1) The term ‘charter school’ means a public
school that—
‘‘(A) in accordance with a specific State
charter school statute, is exempted from signifi-
cant State or local rules that inhibit the flexible
operation and management of public schools,
but not from any rules relating to the other re-
quirements of this paragraph;
‘‘(B) is created by a developer as a public
school, or is adapted by a developer from an ex-
isting public school, and is operated under pub-
lic supervision and direction;
‘‘(C) operates in pursuit of a specific set of
educational 
objectives 
determined 
by 
the
school’s developer and agreed to by the author-
ized public chartering agency;
‘‘(D) provides a program of elementary or
secondary education, or both;
‘‘(E) is nonsectarian in its programs, ad-
missions policies, employment practices, and all
other operations, and is not affiliated with a
sectarian school or religious institution;
‘‘(F) does not charge tuition;
‘‘(G) complies with the Age Discrimination
Act of 1975, title VI of the Civil Rights Act of
1964, title IX of the Education Amendments of
1972, section 504 of the Rehabilitation Act of
1973, and part B of the Individuals with Dis-
abilities Education Act;
‘‘(H) is a school to which parents choose to
send their children, and that admits students
on the basis of a lottery, if more students apply
for admission than can be accommodated;
‘‘(I) agrees to comply with the same Fed-
eral and State audit requirements as do other
elementary and secondary schools in the State,
unless such requirements are specifically waived
for the purpose of this program;
‘‘(J) meets all applicable Federal, State,
and local health and safety requirements;
‘‘(K) operates in accordance with State
law; and
‘‘(L) has a written performance contract
with the authorized public chartering agency in
the State.
‘‘(2) The term ‘developer’ means an individual
or group of individuals (including a public or private
nonprofit organization), which may include teachers,
administrators and other school staff, parents, or
other members of the local community in which a
charter school project will be carried out.
‘‘(3) The term ‘eligible applicant’ means an au-
thorized public chartering agency participating in a
partnership with a developer to establish a charter
school in accordance with this part.
‘‘(4) The term ‘authorized public chartering
agency’ means a State educational agency, local edu-
cational agency, or other public entity that has the
authority pursuant to State law and approved by the
Secretary to authorize or approve a charter school.
‘‘SEC. 10310. AUTHORIZATION OF APPROPRIATIONS.
‘‘For the purpose of carrying out this part, there are
authorized to be appropriated $100,000,000 for fiscal year
1999 and such sums as may be necessary for each of the
four succeeding fiscal years.
‘‘SEC. 10311. PROHIBITION OF CONTRACTS.
‘‘If it has been finally determined by a court or Fed-
eral agency that any person intentionally affixed a fraudu-
lent label bearing a ‘Made in America’ inscription, or any
inscription with the same meaning, to any product sold
in or shipped to the United States that was not made in
the United States, such person shall be ineligible to receive
any contract or subcontract made with funds provided
pursuant to this part, pursuant to the debarment, suspen-
sion, and ineligibility procedures described in section
9.400 through 9.409 of title 48, Code of Federal Regula-
tions.’’.
TITLE IV—SCHOLARSHIPS
SEC. 401. DEFINITIONS.
Section 6003 of the Elementary and Secondary Edu-
cation Act of 1965 is amended—
(1) in the section heading by striking ‘‘defini-
tion’’ and inserting ‘‘definitions’’;
(2) in the matter preceding subparagraph (A)—
(A) by striking ‘‘(1)’’, ‘‘(2)’’, and ‘‘(3)’’;
(B) by striking ‘‘title the term’’ and insert-
ing the following: ‘‘title—
‘‘(1) the term’’;
(3) by striking the period at the end; and
(4) by adding at the end the following:
‘‘(2) the term ‘poverty line’ means the poverty
line (as defined by the Office of Management and
Budget, and revised annually in accordance with sec-
tion 673(2) of the Community Services Block Grant
Act (42 U.S.C. 9902(2)) applicable to a family of
the size involved; and
‘‘(3) the term ‘voluntary public and private pa-
rental choice program’ means a program that meets
the requirements of section 6301(b)(9), is authorized
by State law, and includes 1 or more private schools
to allow low-income parents to choose the appro-
priate school for their children.’’.
SEC. 402. ALLOCATION TO LOCAL EDUCATIONAL AGEN-
CIES.
Section 6102(a) of the Elementary and Secondary
Education Act of 1965 is amended to read as follows:
‘‘(a) DISTRIBUTION RULE.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), from the sums made available each year
to carry out this title, the State educational agency
shall distribute not less than 90 percent to local edu-
cational agencies within such State according to the
relative enrollments in public and private, nonprofit
schools within the school districts of such agencies,
adjusted, in accordance with criteria approved by the
Secretary, to provide higher per pupil allocations to
local educational agencies which have the greatest
numbers or percentages of children whose education
imposes a higher than average cost per child, such
as—
‘‘(A) children living in areas with high con-
centrations of low-income families;
‘‘(B) children from low-income families;
and
‘
‘‘(C) children living in sparsely populated
areas.
‘‘(2) EXCEPTION.—A State that has enacted or
will enact a law that establishes a voluntary public
and private parental choice program and that com-
plies with the provisions of section 6301(b)(9) may
reserve an additional 15 percent from the sums
made available each year to carry out this title if the
additional amount reserved is used exclusively for
voluntary public and private parental choice pro-
grams.’’.
SEC. 403. USES OF FUNDS.
(a) STATE USES OF FUNDS.—Section 6201(a)(1) of
the Elementary and Secondary Education Act of 1965 is
amended—
(1) in subparagraph (C), by striking ‘‘and’’
after the semicolon;
(2) by inserting after subparagraph (C) the fol-
lowing:
‘‘(D) establishing voluntary public and pri-
vate parental choice programs in accordance
with section 6301(b)(9); and’’.
(b) LOCAL USES OF FUNDS.—Section 6301(b) of the
Elementary and Secondary Education Act of 1965 is
amended—
(1) in paragraph (7), by striking ‘‘and’’ after
the semicolon;
(2) in paragraph (8), by striking the period and
inserting ‘‘; and’’; and
(3) by inserting after paragraph (8) the follow-
ing:
‘‘(9) voluntary public and private parental
choice programs that—
‘‘(A) are located in an area that has the
greatest numbers or percentages of children—
‘‘(i) living in areas with a high con-
centration of low-income families;
‘‘(ii) from low-income families; or
‘‘(iii) living in sparsely populated
areas;
‘‘(B) ensure that participation in such a
voluntary public and private parental choice
program is limited to families whose family in-
come does not exceed 185 percent of the pov-
erty line;
‘‘(C) ensure that—
‘‘(i) the maximum amount of a vol-
untary public and private parental choice
scholarship does not exceed the per pupil
expenditure of the local educational agency
in which an applicant for a voluntary pub-
lic and private parental choice scholarship
resides;
‘‘(ii) the minimum amount of a vol-
untary public and private parental choice
scholarship is not less than 60 percent of
the per pupil expenditure of the local edu-
cational agency in which an applicant for
a voluntary public and private parental
choice scholarship resides or the cost of
tuition at a private school, whichever is
less;
‘‘(D) ensure that for a private school that
chooses to participate in a voluntary public and
private parental choice program—
‘‘(i) such a school is permitted to im-
pose the same academic requirements for
all students, including students selected for
a scholarship as provided under this para-
graph;
‘‘(ii) receipt of funds under this title
is not conditioned with requirements or
regulations that preclude the use of such
funds for sectarian educational purposes or
require removal of religious art, icons,
scripture, or other symbols; and
‘‘(iii) such a school is in compliance
with all State requirements applicable to
the operation of a private school that are
in effect in the year preceding the date of
the enactment of the Helping Empower
Low-income Parents (HELP) Scholarships
Amendments of 1997;
‘‘(E) may allow State, local, and private
funds to be used for voluntary public and pri-
vate parental choice programs; and
‘‘(F) ensure priority for students who were
enrolled in a public school in the school year
preceding the school year in which a voluntary
public and private parental choice school begins
operation.’’.
SEC. 404. EVALUATION.
Part D of title VI of the Elementary and Secondary
Education Act of 1965 is amended—
(1) by adding at the end of section 6402 the
following new subsection:
‘‘(j) APPLICATION.—This section shall not apply to
funds that a State or local educational agency uses to es-
tablish a voluntary public and private parental choice pro-
gram in accordance with section 6301(b)(9).’’; and
(2) by adding at the end of such part the fol-
lowing new sections:
‘‘SEC. 6404. EVALUATION.
‘‘(a) ANNUAL EVALUATION.—
‘‘(1) CONTRACT.—The Comptroller General of
the United States shall enter into a contract, with
an evaluating agency that has demonstrated experi-
ence in conducting evaluations, for the conduct of an
ongoing rigorous evaluation of the programs estab-
lished under section 6301(b)(9).
‘‘(2) ANNUAL
EVALUATION
REQUIREMENT.—
The contract described in paragraph (1) shall re-
quire the evaluating agency entering into such con-
tract to evaluate annually each program established
under section 6301(b)(9) in accordance with the
evaluation criteria described in subsection (b).
‘‘(3) TRANSMISSION.—The contract described
in paragraph (1) shall require the evaluating agency
entering into such contract to transmit to the Comp-
troller General of the United States the findings of
each annual evaluation under paragraph (1).
‘‘(b) EVALUATION CRITERIA.—The Comptroller Gen-
eral of the United States, in consultation with the Sec-
retary, shall establish minimum criteria for evaluating
each program established under section 6301(b)(9). Such
criteria shall provide for—
‘‘(1) a description of the implementation of
each program established under section 6301(b)(9)
and the program’s effects on all participants,
schools, and communities in the program area, with
particular attention given to the effect of parent par-
ticipation in the life of the school and the level of
parental satisfaction with the program; and
‘‘(2) a comparison of the educational achieve-
ment of all students in the program area, including
a comparison between—
‘‘(A) students receiving a voluntary public
and private parental choice scholarships under
section 6301(b)(9); and
‘‘(B) students not receiving a voluntary
public and private parental choice scholarships
under such section.
‘‘(c) EVALUATION FUNDS.—Pursuant to the author-
ity provided under section 14701, the Secretary shall re-
serve not more than 0.50 percent of the amount of funds
made available under section 6002 to carry out this sec-
tion.
‘‘SEC. 6405. APPLICABILITY.
‘‘(a) NOT SCHOOL AID.—Subject to subsection (b),
funds used under this title to establish a voluntary public
and private parental choice program shall be considered
assistance to the student and shall not be considered as
assistance to any school that chooses to participate in such
program.
‘‘(b) NO FEDERAL CONTROL.—The Secretary is not
permitted to exercise any direction, supervision, or control
over curricula, program of instruction, administration, or
personnel of any school that chooses to participate in a
voluntary public and private choice program established
under 6309(b)(9).’’.
TITLE V—VOLUNTARY
NATIONAL TESTS
SEC. 501. OERI ANNUAL SPENDING PLAN.
Notwithstanding any other provision of law, the As-
sistant Secretary for Educational Research and Improve-
ment shall submit to the Committee on Appropriations of
the Senate a spending plan for activities funded through
the Office of Educational Research and Improvement for
each fiscal year, prior to the obligation of any funds for
the fiscal year.
SEC. 502. EXCLUSIVE AUTHORITY.
Notwithstanding any other provision of law, the Na-
tional Assessment Governing Board established under sec-
tion 412 of the National Education Statistics Act of 1994
(20 U.S.C. 9011) (hereafter in this section referred to as
the ‘‘Board’’) shall hereafter have exclusive authority over
all policies, direction, and guidelines for establishing and
implementing voluntary national tests for 4th grade
English reading and 8th grade mathematics.
SEC. 503. AVAILABILITY OF TESTS.
The tests described in section 504(b) shall be made
available to a State, local educational agency, or private
or parochial school, upon the request of the State, agency,
or school, and the use of the tests shall not be a condition
for receiving any Federal funds.
SEC. 504. CONTRACT AUTHORITY.
(a) IN GENERAL.—Within 90 days after the date of
enactment of this Act, the Board shall review the national
test development contract in effect on the date of enact-
ment of this Act, and modify the contract as the Board
determines necessary. If the contract cannot be modified
to the extent determined necessary by the Board, the con-
tract shall be terminated and the Board shall negotiate
a new contract, under the Board’s exclusive control, for
the tests.
(b) BOARD DUTIES.—In exercising the Board’s re-
sponsibilities under paragraph (a) regarding the national
tests, and notwithstanding any action undertaken by the
Department of Education or a person contracting with or
providing services for the Department regarding the plan-
ning, or the development of specifications, for the tests,
the Board shall—
(1) ensure that the content and standards for
the tests are the same as the content and standards
for the National Assessment;
(2) exercise exclusive authority over any expert
panel or advisory committee that will be or is estab-
lished with respect to the tests;
(3) ensure that the tests are linked to the Na-
tional Assessment to the maximum degree possible;
(4) develop test objectives, test specifications,
and test methodology;
(5) develop policies for test administration, in-
cluding guidelines for inclusion of, and accommoda-
tions for, students with disabilities and students
with limited English proficiency;
(6) develop policies for reporting test results,
including the use of standards or performance levels,
and for test use;
(7) have final authority over the appropriate-
ness of all test items;
(8) ensure that all items selected for use on the
tests are free from racial, cultural, or gender bias;
and
(9) take such actions and make such policies as
the Board determines necessary.
SEC. 505. CONSENT REQUIREMENT.
No State or local educational agency may require any
private or parochial school student, or home-schooled indi-
vidual, to take any test developed under this title without
the written consent of the student or individual.
SEC. 506. CONFORMING AMENDMENTS.
Section 412 of the National Education Statistics Act
of 1994 (20 U.S.C. 9011) is amended—
(1) in subsection (b)(1)—
(A) by amending subparagraph (A) to read
as follows:
‘‘(A) three Governors, or former Gov-
ernors, of whom not more than 1 shall be a
member of the same political party as the
President;’’;
(B) by amending subparagraph (B) to read
as follows:
‘‘(B) two State legislators, of whom not
more than 1 shall be a member of the same po-
litical party as the President;’’;
(C) in subparagraph (H), by striking ‘one
representative’ and inserting ‘three representa-
tives’;
(D) by amending subparagraph (I) to read
as follows:
‘‘(I) two mayors, of whom not more than
1 shall be a member of the same political party
as the President;’;
(E) by striking subparagraph (J); and
(F) by redesignating subparagraphs (K), (L),
and (M) as subparagraphs (J), (K), and (L), respec-
tively;
(2) in subsection (c)—
(A) in paragraph (1), by striking ‘‘and
may not exceed a period of 3’’ and inserting
‘‘and shall be for periods of 4’’; and
(B) in paragraph (2), by inserting ‘‘con-
secutive’’ after ‘‘two’’;
(3) by amending subsection (d) to read as fol-
lows:
‘‘(d) VACANCIES.—As vacancies on the Board occur,
new members of the Board shall be appointed by the Sec-
retary from among individuals who are nominated by the
Board after consultation with representatives of the indi-
viduals described in subsection (b)(1). For each vacancy,
the Board shall nominate at least 3 individuals who are
qualified by experience or training to fill the particular
Board vacancy.’’; and
(4) in subsection (e) by adding at the end the
following:
‘‘(7) INDEPENDENCE.—In the exercise of its
functions, powers, and duties, the Board shall be
independent of the Secretary and the other offices
and officers of the Department. The Secretary shall,
by written delegation of authority, authorize the
Board to award grants and contracts, and otherwise
operate, to the maximum extent practicable, inde-
pendent of the Department.’’.
SEC. 507. APPOINTMENTS.
Not later than 30 days after the date of enactment
of this Act, the Secretary of Education, in consultation
with the Speaker and Minority Leader of the House of
Representatives, and the Majority Leader and Minority
Leader of the Senate, shall appoint individuals to fill va-
cancies on the National Assessment Governing Board
caused by the expiration of the terms of members of the
Board, or the creation of new membership positions on
the Board pursuant to amendments made by this Act.
TITLE VI—A+ ACCOUNTS FOR
PUBLIC AND PRIVATE SCHOOLS
SEC. 601. SHORT TITLE.
This title may be cited as the ‘‘A+ Accounts for Pub-
lic and Private Schools Act’’.
SEC. 602. MODIFICATIONS TO EDUCATION INDIVIDUAL RE-
TIREMENT ACCOUNTS.
(a) TAX-FREE EXPENDITURES
FOR ELEMENTARY
AND SECONDARY SCHOOL EXPENSES.—
(1) IN GENERAL.—Section 530(b)(2) of the In-
ternal Revenue Code of 1986 is amended to read as
follows:
‘‘(2) QUALIFIED EDUCATION EXPENSES.—
‘‘(A) IN
GENERAL.—The term ‘qualified
education expenses’ means—
‘‘(i) qualified higher education ex-
penses (as defined in section 529(e)(3)),
and
‘‘(ii) qualified elementary and second-
ary education expenses (as defined in para-
graph (4)).
Such expenses shall be reduced as provided in
section 25A(g)(2) but only with respect to
amounts in the account which are attributable
to contributions for any taxable year ending be-
fore January 1, 2003, and earnings on such
contributions.
‘‘(B) QUALIFIED
STATE
TUITION
PRO-
GRAMS.—Such term shall include amounts paid
or incurred to purchase tuition credits or cer-
tificates, or to make contributions to an ac-
count, under a qualified State tuition program
(as defined in section 529(b)) for the benefit of
the beneficiary of the account.’’.
(2) QUALIFIED ELEMENTARY AND SECONDARY
EDUCATION
EXPENSES.—Section 530(b) of such
Code is amended by adding at the end the following
new paragraph:
‘‘(4) QUALIFIED ELEMENTARY AND SECONDARY
EDUCATION EXPENSES.—
‘‘(A) IN GENERAL.—The term ‘qualified el-
ementary and secondary education expenses’
means tuition, fees, tutoring, special needs serv-
ices, books, supplies, computer equipment (in-
cluding related software and services) and other
equipment, transportation, and supplementary
expenses required for the enrollment or attend-
ance of the designated beneficiary of the trust
at a public, private, or religious school.
‘‘(B) 
SPECIAL
RULE
FOR
HOMESCHOOLING.—Such term shall include ex-
penses described in subparagraph (A) required
for education provided for homeschooling if the
requirements of any applicable State or local
law are met with respect to such education.
‘‘(C) SCHOOL.—The term ‘school’ means
any school which provides elementary education
or secondary education (through grade 12), as
determined under State law.’’.
(3) CONFORMING
AMENDMENTS.—Subsections
(b)(1) and (d)(2) of section 530 of such Code are
each amended by striking ‘‘higher’’ each place it ap-
pears in the text and heading thereof.
(b) TEMPORARY INCREASE IN MAXIMUM ANNUAL
CONTRIBUTIONS.—
(1) IN GENERAL.—Section 530(b)(1)(A)(iii) of
the Internal Revenue Code of 1986 is amended by
striking ‘‘$500’’ and inserting ‘‘the contribution
limit for such taxable year’’.
(2) CONTRIBUTION LIMIT.—Section 530(b) of
such Code is amended by adding at the end the fol-
lowing new paragraph:
‘‘(4) CONTRIBUTION
LIMIT.—The term ‘con-
tribution limit’ means $2,500 ($500 in the case of
any taxable year ending after December 31, 2002).’’.
(3) CONFORMING AMENDMENTS.—
(A) Section 530(d)(4)(C) of such Code is
amended by striking ‘‘$500’’ and inserting ‘‘the
contribution limit for such taxable year’’.
(B) Section 4973(e)(1)(A) of such Code is
amended by striking ‘‘$500’’ and inserting ‘‘the
contribution 
limit 
(as 
defined 
in 
section
530(b)(4)) for such taxable year’’.
(c) WAIVER OF AGE LIMITATIONS FOR CHILDREN
WITH SPECIAL NEEDS.—Paragraph (1) of section 530(b)
of the Internal Revenue Code of 1986 is amended by add-
ing at the end the following flush sentence:
‘‘The age limitations in the preceding sentence shall
not apply to any designated beneficiary with special
needs (as determined under regulations prescribed
by the Secretary).’’.
(d) CORPORATIONS PERMITTED TO CONTRIBUTE TO
ACCOUNTS.—Paragraph (1) of section 530(c) of the Inter-
nal Revenue Code of 1986 is amended by striking ‘‘The
maximum amount which a contributor’’ and inserting ‘‘In
the case of a contributor who is an individual, the maxi-
mum amount the contributor’’.
(e) EFFECTIVE DATE; REFERENCES.—
(1) EFFECTIVE DATE.—The amendments made
by this section shall take effect as if included in the
amendments made by section 213 of the Taxpayer
Relief Act of 1997.
(2) REFERENCES.—Any reference in this sec-
tion to any section of the Internal Revenue Code of
1986 shall be a reference to such section as added
by the Taxpayer Relief Act of 1997.
TITLE VII—DOLLARS TO THE
CLASSROOM
SEC. 701. SHORT TITLE.
This title may be cited as the ‘‘Dollars to the Class-
room Act’’.
SEC. 702. DIRECT AWARDS OF CERTAIN EDUCATION FUND-
ING TO STATES.
(a) DIRECT
AWARDS
OF
CERTAIN
EDUCATION
FUNDING.—
(1) IN GENERAL.—Notwithstanding any other
provision of law, for each fiscal year the Secretary
shall award the total amount of funds described in
paragraph (2) directly to States in accordance with
this subsection.
(2) APPLICABLE FUNDING.—The total amount
of funds referred to in paragraph (1) are all funds
not used to carry out paragraph (6)(B) for the fiscal
year that are appropriated for the Department of
Education for the fiscal year to carry out programs
or activities under the following provisions of law:
(A) Title III of the Goals 2000: Educate
America Act (20 U.S.C. 5881 et seq.).
(B) Title IV of the Goals 2000: Educate
America Act (20 U.S.C. 5911 et seq.).
(C) Title VI of the Goals 2000: Educate
America Act (20 U.S.C. 5951).
(D) The Educational Research, Develop-
ment, Disseminations, and Improvement Act of
1994 (20 U.S.C. 6001 et seq.).
(E) Titles II, III, and IV of the School-to-
Work Opportunities Act of 1994 (20 U.S.C.
6121 et seq., 6171 et seq., and 6191 et seq.).
(F) Section 1502 of the Elementary and
Secondary Education Act of 1965 (20 U.S.C.
6492).
(G) Section 1503 of the Elementary and
Secondary Education Act of 1965 (20 U.S.C.
6493).
(H) Part A of title II of the Elementary
and Secondary Education Act of 1965 (20
U.S.C. 6621 et seq.).
(I) Part B of title II of the Elementary
and Secondary Education Act of 1965 (20
U.S.C. 6641 et seq.).
(J) Section 3132 of the Elementary and
Secondary Education Act of 1965 (20 U.S.C.
6842 et seq.).
(K) Title III of the Elementary and Sec-
ondary Education Act of 1965 (20 U.S.C. 6801
et seq.) (other than section 3132 of such title).
(L) Subpart 1 of part A of title IV of the
Elementary and Secondary Education Act of
1965 (20 U.S.C. 7111 et seq.).
(M) Subpart 2 of part A of title IV of the
Elementary and Secondary Education Act of
1965 (20 U.S.C. 7131 et seq.).
(N) Part A of title V of the Elementary
and Secondary Education Act of 1965 (20
U.S.C. 7201 et seq.).
(O) Part B of title V of the Elementary
and Secondary Education Act of 1965 (20
U.S.C. 7231 et seq.).
(P) Part B of title IX of the Elementary
and Secondary Education Act of 1965 (20
U.S.C. 7901 et seq.).
(Q) Part C of title IX of the Elementary
and Secondary Education Act of 1965 (20
U.S.C. 7931 et seq.).
(R) Part A of title X of the Elementary
and Secondary Education Act of 1965 (20
U.S.C. 8001 et seq.).
(S) Part B of title X of the Elementary
and Secondary Education Act of 1965 (20
U.S.C. 8031 et seq.).
(T) Part D of title X of the Elementary
and Secondary Education Act of 1965 (20
U.S.C. 8091 et seq.).
(U) Part F of title X of the Elementary
and Secondary Education Act of 1965 (20
U.S.C. 8141 et seq.).
(V) Part G of title X of the Elementary
and Secondary Education Act of 1965 (20
U.S.C. 8161 et seq.).
(W) Part I of title X of the Elementary
and Secondary Education Act of 1965 (20
U.S.C. 8241 et seq.).
(X) Part J of title X of the Elementary
and Secondary Education Act of 1965 (20
U.S.C. 8271 et seq.).
(Y) Part K of title X of the Elementary
and Secondary Education Act of 1965 (20
U.S.C. 8331 et seq.).
(Z) Part L of title X of the Elementary
and Secondary Education Act of 1965 (20
U.S.C. 8351 et seq.).
(AA) Part A of title XIII of the Elemen-
tary and Secondary Education Act of 1965 (20
U.S.C. 8621 et seq.).
(BB) Part C of title XIII of the Elemen-
tary and Secondary Education Act of 1965 (20
U.S.C. 8671 et seq.).
(CC) Part B of title VII of the Stewart B.
McKinney Homeless Assistance Act (42 U.S.C.
11421 et seq.).
(3) TIMELINES.—
(A) CENSUS DETERMINATION.—
(i) IN GENERAL.—Not later than 21
days after the beginning of an academic
year, each State shall conduct a census to
determine the number of kindergarten
through grade 12 students in the State for
the academic year.
(ii) SUBMISSION.—Each State shall
submit the number described in clause (i)
to the Secretary not later than February 1
of the academic year.
(B) PUBLICATION.—The Secretary shall
publish in the Federal Register not later than
March 15 of each fiscal year the amount each
State shall receive under this subsection for the
succeeding fiscal year.
(C) DISBURSAL.—The Secretary shall dis-
burse the amount awarded to a State under
this subsection for a fiscal year not later than
July 1 of the fiscal year.
(4) DETERMINATION
OF
AWARD.—From the
total amount made available under paragraph (2)
and not used to carry out paragraph (6)(B), the
Secretary, using the information provided under
paragraph (3), shall award to each State an amount
that bears the same relation to the total amount as
the number of kindergarten through grade 12 stu-
dents in the State for the academic year preceding
the fiscal year bears to the total number of all such
students in all States for the academic year.
(5) PENALTY.—If the Secretary determines
that a State has knowingly submitted false informa-
tion under paragraph (3) for the purpose of gaining
additional funds under paragraph (1), then the
State shall be fined an amount equal to twice the
difference between the amount the State received
under this subsection, and the correct amount the
State would have received if the State had submitted
accurate information under paragraph (3).
(6) HOLD HARMLESS.—
(A) IN GENERAL.—No State shall receive
an award under this subsection—
(i) for fiscal year 1999 in an amount
that is less than the amount the State
would have received to carry out programs
or activities under the provisions of law de-
scribed in subparagraphs (A), (F), (I), (J),
(L), and (DD) of paragraph (2) for fiscal
year 1999;
(ii) for fiscal year 2000 in an amount
that is less than 95 percent of the mini-
mum amount the State is eligible to receive
under clause (i) for fiscal year 1999;
(iii) for fiscal year 2001 in an amount
that is less than 90 percent of the mini-
mum amount the State is eligible to receive
under clause (ii) for fiscal year 2000;
(iv) for fiscal year 2002 in an amount
that is less than 85 percent of the mini-
mum amount the State is eligible to receive
under clause (iii) for fiscal year 2001; and
(v) for fiscal year 2003 in an amount
that is less than 80 percent of the mini-
mum amount the State is eligible to receive
under clause (iv) for fiscal year 2002.
(B) MULTIYEAR AWARDS.—The Secretary
shall use funds appropriated to carry out the
programs or activities under the provisions of
law described in paragraph (2) (other than sub-
paragraphs (A), (F), (I), (J), (L), and (DD) of
paragraph (2)) to make payments to eligible re-
cipients under such provisions pursuant to any
multiyear award made under such provisions
prior to the date of enactment of this Act.
(b) PAYMENTS AND AVAILABILITY.—
(1) PAYMENTS.—Funds awarded to a State
under this subsection shall be paid to the Governor
of the State.
(2) AVAILABILITY.—The Governor of the State
shall make the funds provided under this subsection
available to the individual or entity in the State that
is responsible for the State administration of Fed-
eral education funds pursuant to State law.
(c) USE OF STATE AWARDS.—