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‘‘(I) one-quarter of 1 percent of the
sums available to carry out this section for
such fiscal year; and
‘‘(II) the greater of—
‘‘(aa) $340,000; or
‘‘(bb) the number of children in
such State counted for purposes of
this section in that fiscal year multi-
plied by 150 percent of the national
average per-pupil payment made with
funds available under this section for
that year.
‘‘(2) SPECIAL RULE.—For each county or local
educational agency eligible to receive an additional
grant under this section for any fiscal year the Sec-
retary shall determine the product of—
‘‘(A) the number of children counted under
section 1124(c) for that fiscal year; and
‘‘(B) the quotient resulting from the divi-
sion of the amount determined for those agen-
cies under section 1124(a)(1) for the fiscal year
for which the determination is being made di-
vided by the total number of children counted
under section 1124(c) for that agency for that
fiscal year.
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‘‘(3) AMOUNT.—The amount of the additional
grant for which an eligible local educational agency
or county is eligible under this section for any fiscal
year shall be an amount which bears the same ratio
to the amount available to carry out this section for
that fiscal year as the product determined under
paragraph (2) for such local educational agency for
that fiscal year bears to the sum of such products
for all local educational agencies in the United
States for that fiscal year.
‘‘(4) 
LOCAL
ALLOCATIONS.—(A) 
Grant
amounts under this section shall be determined in
accordance with section 1124(a)(2) and (3).
‘‘(B) For any fiscal year for which the Sec-
retary allocates funds under this section on the basis
of counties, a State may reserve not more than 2
percent of its allocation under this section to make
grants to local educational agencies that meet the
criteria of paragraph (1)(A)(i) or (ii) and are in in-
eligible counties that do not meet these criteria.
‘‘(b) STATES RECEIVING MINIMUM GRANTS.—In
States that receive the minimum grant under subsection
(a)(1)(B), the State educational agency shall allocate such
funds among the local educational agencies in each State
either—
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‘‘(1) in accordance with paragraphs (2) and (4)
of subsection (a); or
‘‘(2) based on their respective concentrations
and numbers of children counted under section
1124(c), except that only those local educational
agencies with concentrations or numbers of children
counted under section 1124(c) that exceed the state-
wide average percentage of such children or the
statewide average number of such children shall re-
ceive any funds on the basis of this paragraph.
‘‘SEC. 1125. TARGETED GRANTS TO LOCAL EDUCATIONAL
AGENCIES.
‘‘(a) ELIGIBILITY OF LOCAL EDUCATIONAL AGEN-
CIES.—A local educational agency in a State is eligible to
receive a targeted grant under this section for any fiscal
year if the number of children in the local educational
agency counted under subsection 1124(c), before applica-
tion of the weighting factor described in subsection (c),
is at least 10, and if the number of children counted for
grants under section 1124 is at least 5 percent of the total
population aged 5 to 17 years, inclusive, in the local edu-
cational agency. For each fiscal year for which the Sec-
retary uses county population data to calculate grants,
funds made available as a result of applying this sub-
section shall be reallocated by the State educational agen-
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cy to other eligible local educational agencies in the State
in proportion to the distribution of other funds under this
section.
‘‘(b) GRANTS FOR LOCAL EDUCATIONAL AGENCIES,
THE DISTRICT OF COLUMBIA, AND PUERTO RICO.—
‘‘(1) IN GENERAL.—The amount of the grant
that a local educational agency in a State or that the
District of Columbia is eligible to receive under this
section for any fiscal year shall be the product of—
‘‘(A) the weighted child count determined
under subsection (c); and
‘‘(B) 
the 
amount 
in 
paragraph
1124(a)(1)(B).
‘‘(2) PUERTO RICO.—For each fiscal year, the
amount of the grant for which the Commonwealth of
Puerto Rico is eligible under this section shall be
equal to the number of children counted under sub-
section (c) for Puerto Rico, multiplied by the
amount determined in subparagraph 1124(a)(4).
‘‘(c) WEIGHTED CHILD COUNT.—
‘‘(1) WEIGHTS
FOR
ALLOCATIONS
TO
COUN-
TIES.—
‘‘(A) IN GENERAL.—For each fiscal year
for which the Secretary uses county population
data to calculate grants, the weighted child
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count used to determine a county’s allocation
under this section is the larger of the 2
amounts determined under clause (i) or (ii), as
follows:
‘‘(i) 
BY
PERCENTAGE
OF
CHIL-
DREN.—This amount is determined by
adding—
‘‘(I) the number of children de-
termined under section 1124(c) for
that county constituting up to 15 per-
cent, inclusive, of the county’s total
population aged 5 to 17, inclusive,
multiplied by 1.0;
‘‘(II) the number of such children
constituting more than 15 percent,
but not more than 19 percent, of such
population, multiplied by 1.75;
‘‘(III) the number of such chil-
dren constituting more than 19 per-
cent, but not more than 24.20 per-
cent, of such population, multiplied by
2.5;
‘‘(IV) the number of such chil-
dren constituting more than 24.20
percent, but not more than 29.20 per-
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cent, of such population, multiplied by
3.25; and
‘‘(V) the number of such children
constituting more than 29.20 percent
of such population, multiplied by 4.0.
‘‘(ii) BY
NUMBER
OF
CHILDREN.—
This amount is determined by adding—
‘‘(I) the number of children de-
termined under section 1124(c) con-
stituting up to 2,311, inclusive, of the
county’s total population aged 5 to
17, inclusive, multiplied by 1.0;
‘‘(II) the number of such children
between 2,312 and 7,913, inclusive, in
such population, multiplied by 1.5;
‘‘(III) the number of such chil-
dren between 7,914 and 23,917, inclu-
sive, in such population, multiplied by
2.0;
‘‘(IV) the number of such chil-
dren between 23,918 and 93,810, in-
clusive, in such population, multiplied
by 2.5; and
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‘‘(V) the number of such children
in excess of 93,811 in such popu-
lation, multiplied by 3.0.
‘‘(B) 
PUERTO
RICO.—Notwithstanding
subparagraph (A), the weighted child count for
Puerto Rico under this paragraph shall not be
greater than the total number of children
counted under subsection 1124(c) multiplied by
1.72.
‘‘(2) WEIGHTS
FOR
ALLOCATIONS
TO
LOCAL
EDUCATIONAL AGENCIES.—
‘‘(A) IN GENERAL.—For each fiscal year
for which the Secretary uses local educational
agency data, the weighted child count used to
determine a local educational agency’s grant
under this section is the larger of the 2
amounts determined under clauses (i) and (ii),
as follows:
‘‘(i) 
BY
PERCENTAGE
OF
CHIL-
DREN.—This amount is determined by
adding—
‘‘(I) the number of children de-
termined under section 1124(c) for
that local educational agency consti-
tuting up to 15.233 percent, inclusive,
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of the agency’s total population aged
5 to 17, inclusive, multiplied by 1.0;
‘‘(II) the number of such children
constituting more than 15.233 per-
cent, but not more than 22.706 per-
cent, of such population, multiplied by
1.75;
‘‘(III) the number of such chil-
dren constituting more than 22.706
percent, but not more than 32.213
percent, of such population, multiplied
by 2.5;
‘‘(IV) the number of such chil-
dren constituting more than 32.213
percent, but not more than 41.452
percent, of such population, multiplied
by 3.25; and
‘‘(V) the number of such children
constituting more than 41.452 percent
of such population, multiplied by 4.0.
‘‘(ii) BY
NUMBER
OF
CHILDREN.—
This amount is determined by adding—
‘‘(I) the number of children de-
termined under section 1124(c) con-
stituting up to 710, inclusive, of the
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agency’s total population aged 5 to
17, inclusive, multiplied by 1.0;
‘‘(II) the number of such children
between 711 and 2,384, inclusive, in
such population, multiplied by 1.5;
‘‘(III) the number of such chil-
dren between 2,385 and 9,645, inclu-
sive, in such population, multiplied by
2.0;
‘‘(IV) the number of such chil-
dren between 9,646 and 54,600, inclu-
sive, in such population, multiplied by
2.5; and
‘‘(V) the number of such children
in excess of 54,601 in such popu-
lation, multiplied by 3.0.
‘‘(B) 
PUERTO
RICO.—Notwithstanding
subparagraph (A), the weighted child count for
Puerto Rico under this paragraph shall not be
greater than the total number of children
counted under section 1124(c) multiplied by
1.72.
‘‘(d) CALCULATION OF GRANT AMOUNTS.—Grants
under this section shall be calculated in accordance with
section 1124(a)(2) and (3).
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‘‘(e) STATE MINIMUM.—Notwithstanding any other
provision of this section or section 1122, from the total
amount available for any fiscal year to carry out this sec-
tion, each State shall be allotted at least the lesser of—
‘‘(1) 0.25 percent of total appropriations; or
‘‘(2) the average of—
‘‘(A) one-quarter of 1 percent of the total
amount available to carry out this section; and
‘‘(B) 150 percent of the national average
grant under this section per child described in
section 1124(c), without application of a
weighting factor, multiplied by the State’s total
number 
of 
children 
described 
in 
section
1124(c), without application of a weighting fac-
tor.
‘‘SEC. 1126. SPECIAL ALLOCATION PROCEDURES.
‘‘(a) ALLOCATIONS FOR NEGLECTED CHILDREN.—
‘‘(1) IN
GENERAL.—If a State educational
agency determines that a local educational agency in
the State is unable or unwilling to provide for the
special educational needs of children who are living
in institutions for neglected children as described in
subparagraph (B) of section 1124(c)(1), the State
educational agency shall, if such agency assumes re-
sponsibility for the special educational needs of such
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children, receive the portion of such local educational
agency’s allocation under sections 1124, 1124A, and
1125 that is attributable to such children.
‘‘(2) SPECIAL RULE.—If the State educational
agency does not assume such responsibility, any
other State or local public agency that does assume
such responsibility shall receive that portion of the
local educational agency’s allocation.
‘‘(b) ALLOCATIONS AMONG LOCAL EDUCATIONAL
AGENCIES.—The State educational agency may allocate
the amounts of grants under sections 1124, 1124A, and
1125 among the affected local educational agencies—
‘‘(1) if two or more local educational agencies
serve, in whole or in part, the same geographical
area;
‘‘(2) if a local educational agency provides free
public education for children who reside in the
school district of another local educational agency;
or
‘‘(3) to reflect the merger, creation, or change
of boundaries of one or more local educational agen-
cies.
‘‘(c) REALLOCATION.—If a State educational agency
determines that the amount of a grant a local educational
agency would receive under sections 1124, 1124A, and
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1125 is more than such local agency will use, the State
educational agency shall make the excess amount available
to other local educational agencies in the State that need
additional funds in accordance with criteria established by
the State educational agency.
‘‘SEC. 1127. CARRYOVER AND WAIVER.
‘‘(a) LIMITATION ON CARRYOVER.—Notwithstanding
section 421 of the General Education Provisions Act or
any other provision of law, not more than 15 percent of
the funds allocated to a local educational agency for any
fiscal year under this subpart (but not including funds re-
ceived through any reallocation under this subpart) may
remain available for obligation by such agency for 1 addi-
tional fiscal year.
‘‘(b) WAIVER.—A State educational agency may,
once every 3 years, waive the percentage limitation in sub-
section (a) if—
‘‘(1) the agency determines that the request of
a local educational agency is reasonable and nec-
essary; or
‘‘(2) supplemental appropriations for this sub-
part become available.
‘‘(c) EXCLUSION.—The percentage limitation under
subsection (a) shall not apply to any local educational
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agency that receives less than $50,000 under this subpart
for any fiscal year.
‘‘SEC. 1128. SECULAR, NEUTRAL, AND NONIDEOLOGICAL.
‘‘Any school that receives funds under this part shall
ensure that educational services or other benefits provided
under this part, including materials and equipment, shall
be secular, neutral, and nonideological.’’.
PART B—STUDENT READING SKILLS
IMPROVEMENT GRANTS
SEC. 111. READING FIRST; EARLY READING FIRST.
Part B of title I (20 U.S.C. 6361 et seq.) is
amended—
(1) by striking the part heading and inserting
the following:
‘‘PART B—STUDENT READING SKILLS
IMPROVEMENT GRANTS’’;
(2) by redesignating sections 1201 through
1212 as sections 1231 through 1242, respectively;
and
(3) by inserting after the part heading the fol-
lowing:
‘‘Subpart 1—Reading First
‘‘SEC. 1201. FINDINGS.
‘‘The Congress finds as follows:
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‘‘(1) The 2000 National Assessment of Edu-
cational Progress found that 68 percent of fourth
grade students in the United States are reading
below the proficient level.
‘‘(2) According to the 2000 National Assess-
ment of Educational Progress report on reading, 63
percent of African Americans, 58 percent of His-
panic Americans, 60 percent of children living in
poverty, and 47 percent of children in urban schools
scored ‘below basic’ in reading.
‘‘(3) More than 1⁄2 of the students placed in
special education classes are identified as learning
disabled and, for as many as 80 percent of the stu-
dents so identified, reading is the primary difficulty.
‘‘(4) It is estimated that, at a minimum,
10,000,000 children have difficulty learning to read.
10 to 15 percent of those children eventually drop
out of high school, and only 2 percent complete a 4-
year program at an institution of higher education.
‘‘(5) It is estimated that the number of children
who are typically identified as poor readers can be
significantly reduced through the implementation of
early identification and prevention programs that
are based on scientifically based reading research.
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‘‘(6) The report issued by the National Reading
Panel in 2000 found that the course of reading in-
struction that obtains maximum benefits for stu-
dents includes explicit and systematic instruction in
phonemic awareness, phonics, vocabulary develop-
ment, reading fluency, and reading comprehension
strategies.
‘‘SEC. 1202. PURPOSES.
‘‘The purposes of this subpart are as follows:
‘‘(1) To provide assistance to States and local
educational agencies in establishing reading pro-
grams for students in grades kindergarten through
3 that are based on scientifically based reading re-
search, in order to ensure that every student can
read at grade level or above not later than the end
of the third grade.
‘‘(2) To provide assistance to States and local
educational agencies in preparing teachers, including
special education teachers, through professional de-
velopment and other support, so the teachers can
identify specific reading barriers facing their stu-
dents and so the teachers have the tools to effec-
tively help their students learn to read.
‘‘(3) To provide assistance to States and local
educational agencies in selecting and administering
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rigorous diagnostic reading and screening assess-
ment tools that are valid and reliable, document the
effectiveness of this subpart in improving the read-
ing skills of students, and improve classroom in-
struction.
‘‘(4) To provide assistance to States and local
educational agencies in selecting or developing effec-
tive classroom instructional materials, programs, and
strategies to implement scientific research-based
methods that have been proven to prevent or reme-
diate reading failure.
‘‘(5) To strengthen coordination among schools
and early literacy programs in order to improve
reading achievement for all children.
‘‘SEC. 1203. FORMULA GRANTS TO STATES.
‘‘(a) IN GENERAL.—
‘‘(1) AUTHORIZATION
TO
MAKE
GRANTS.—In
the case of each State that in accordance with sec-
tion 1204 submits to the Secretary an application
for a 5-year period, the Secretary, subject to the ap-
plication’s approval, shall make a grant to the State
for the uses specified in subsections (c) and (d). For
each fiscal year, the funds provided under the grant
shall equal the allotment determined for the State
under subsection (b).
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‘‘(2) DURATION OF GRANTS.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), a grant under this section shall be
awarded for a period of not more than 5 years.
‘‘(B) INTERIM REVIEW.—
‘‘(i) PROGRESS REPORT.—
‘‘(I) 
SUBMISSION.—Not 
later
than 60 days after the termination of
the third year of the grant period,
each State receiving a grant under
this section shall submit a progress
report to the Secretary.
‘‘(II) 
INFORMATION
IN-
CLUDED.—The progress report shall
include information on the progress
the State, and local educational agen-
cies within the State, are making in
reducing the number of students
served under this subpart in the first
and second grades who are reading
below grade level, as demonstrated by
such information as teacher reports
and school evaluations of mastery of
the essential components of reading
instruction. The report shall also in-
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clude evidence from the State and its
local educational agencies that they
have significantly increased the num-
ber of students reading at grade level
or above, significantly increased the
percentages of students in ethnic, ra-
cial, and low-income populations who
are reading at grade level or above,
and successfully implemented this
subpart.
‘‘(ii) PEER
REVIEW.—The progress
report described in clause (i) shall be re-
viewed by the peer review panel convened
under section 1204(c)(2).
‘‘(iii) CONSEQUENCES
OF
INSUFFI-
CIENT PROGRESS.—After the submission of
the progress report described in clause (i),
if the Secretary determines that the State
is not making significant progress in meet-
ing the purposes of this subpart, the Sec-
retary may withhold from the State, in
whole or in part, further payments under
this section in accordance with section 455
of the General Education Provisions Act
(20 U.S.C. 1234d) or take such other ac-
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tion authorized by law as the Secretary
deems necessary, including providing tech-
nical assistance upon request of the State.
‘‘(b) DETERMINATION
OF
AMOUNT
OF
ALLOT-
MENTS.—
‘‘(1) RESERVATIONS FROM APPROPRIATIONS.—
From the total amount made available under section
1002(b)(1) to carry out this subpart for a fiscal
year, the Secretary—
‘‘(A) shall reserve 1⁄2 of 1 percent for allot-
ments for the Virgin Islands, Guam, American
Samoa, and the Commonwealth of the Northern
Mariana Islands, to be distributed among these
outlying areas on the basis of their relative
need, as determined by the Secretary in accord-
ance with the purposes of this subpart;
‘‘(B) shall reserve 1⁄2 of 1 percent for the
Secretary of the Interior for programs under
this subpart in schools operated or funded by
the Bureau of Indian Affairs;
‘‘(C) shall reserve not more than 3 percent
or $30,000,000, whichever is less, to carry out
section 1206;
‘‘(D) may reserve not more than 1 percent
to carry out section 1207; and
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‘‘(E) shall reserve $5,000,000 to carry out
section 1208.
‘‘(2) STATE
ALLOTMENTS.—From the total
amount made available under section 1002(b)(1) to
carry out this subpart for a fiscal year and not re-
served under paragraph (1), the Secretary shall allot
80 percent under this section among each of the 50
States, the District of Columbia, and the Common-
wealth of Puerto Rico.
‘‘(3) DETERMINATION
OF
STATE
ALLOTMENT
AMOUNTS.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the Secretary shall allot the amount
made available under paragraph (2) for a fiscal
year among the States described in such para-
graph in proportion to the number of children,
aged 5 to 17, who reside within the State from
families with incomes below the poverty line (as
defined by the Office of Management and
Budget and revised annually in accordance with
section 673(2) of the Community Services
Block Grant Act (42 U.S.C. 9902(2)) applica-
ble to a family of the size involved for the most
recent fiscal year for which satisfactory data
are available, compared to the number of such
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individuals who reside in all such States for
that fiscal year.
‘‘(B) EXCEPTIONS.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), no State receiving an allotment under
subparagraph (A) may receive less than 1⁄4
of 1 percent of the total amount allotted
under such subparagraph.
‘‘(ii) PUERTO RICO.—The percentage
of the amount allotted under subparagraph
(A) that is allotted to the Commonwealth
of Puerto Rico for a fiscal year may not
exceed the percentage that was received by
the Commonwealth of Puerto Rico of the
funds allocated to all States under subpart
2 of part A for the preceding fiscal year.
‘‘(4) REALLOTMENT.—If a State described in
paragraph (2) does not apply for an allotment under
this section for any fiscal year, or if the State’s ap-
plication is not approved, the Secretary shall reallot
such amount to the remaining States in accordance
with paragraph (3).
‘‘(c) SUBGRANTS TO LOCAL EDUCATIONAL AGEN-
CIES.—
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‘‘(1) DISTRIBUTION OF SUBGRANTS.—The Sec-
retary may make a grant to a State under this sec-
tion only if the State agrees to expend at least 80
percent of the amount of the funds provided under
the grant for the purpose of making, in accordance
with this subsection, competitive subgrants to local
educational agencies.
‘‘(2) NOTICE.—A State receiving a grant under
this section shall provide notice to all local edu-
cational agencies in the State of the availability of
competitive subgrants under this subsection and of
the requirements for applying for the subgrants.
‘‘(3) LOCAL APPLICATIONS.—To be eligible to
receive a subgrant under this subsection, a local edu-
cational agency shall submit an application to the
State at such time, in such manner, and containing
such information as the State may reasonably re-
quire.
‘‘(4) LIMITATION
TO
CERTAIN
LOCAL
AGEN-
CIES.—A State receiving a grant under this section
may award subgrants under this subsection only to
local educational agencies—
‘‘(A) that have the highest percentages of
students in grades kindergarten through 3
reading below grade level; and
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‘‘(B) that—
‘‘(i) have jurisdiction over—
‘‘(I) a geographic area that in-
cludes an area designated as an em-
powerment zone, or an enterprise
community, under part I of sub-
chapter U of chapter 1 of the Internal
Revenue Code of 1986; or
‘‘(II) a significant number of
schools that are identified for school
improvement under section 1116(b);
or
‘‘(ii) are located in areas having the
greatest numbers or percentages of chil-
dren aged 5 through 17 from low-income
families.
‘‘(5) STATE
REQUIREMENT.—In distributing
subgrant funds to local educational agencies under
this subsection, a State shall provide funds in suffi-
cient size and scope to enable local educational agen-
cies to improve reading instruction, as determined
by rigorous diagnostic reading and screening assess-
ment tools.
‘‘(6) LIMITATION
TO
CERTAIN
SCHOOLS.—In
distributing subgrant funds under this subsection, a
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local educational agency may provide funds only to
schools—
‘‘(A) that have the highest percentages of
students in grades kindergarten through 3
reading below grade level; and
‘‘(B) that—
‘‘(i) are identified for school improve-
ment under section 1116(b); or
‘‘(ii) have the greatest numbers or
percentages of children aged 5 through 17
from low-income families.
‘‘(7) LOCAL USES OF FUNDS.—
‘‘(A) REQUIRED USES.—Subject to para-
graph (8), a local educational agency that re-
ceives a subgrant under this subsection shall
use the funds provided under the subgrant to
carry out the following activities:
‘‘(i) Selecting and administering rig-
orous diagnostic reading and screening as-
sessment tools.
‘‘(ii) Selecting and implementing a
program or programs of classroom reading
instruction based on scientifically based
reading research that—
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‘‘(I) includes the essential compo-
nents of reading instruction; and
‘‘(II) provides such instruction to
all children, including children who—
‘‘(aa) may have reading dif-
ficulties;
‘‘(bb) are at risk of being re-
ferred to special education based
on these difficulties;
‘‘(cc) have been evaluated
under section 614 of the Individ-
uals with Disabilities Education
Act but, in accordance with sec-
tion 614(b)(5) of such Act, have
not been identified as being a
child with a disability (as defined
in section 602 of such Act);
‘‘(dd) are being served under
such Act primarily due to being
identified as being a child with a
specific learning disability (as de-
fined in section 602 of such Act)
related to reading;
‘‘(ee) are deficient in their
phonemic 
awareness, 
phonics
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skills, vocabulary development,
oral reading fluency, or com-
prehension strategies; or
‘‘(ff) are identified as having
limited English proficiency.
‘‘(iii) Procuring classroom instruc-
tional materials based on scientifically
based reading research.
‘‘(iv) Providing professional develop-
ment for teachers of grades kindergarten
through 3, and special education teachers
of grades kindergarten through 12, that—
‘‘(I) will prepare these teachers
in all of the essential components of
reading instruction;
‘‘(II) shall include—
‘‘(aa) information, instruc-
tional materials, programs, strat-
egies, and approaches based on
scientifically based reading re-
search, including early interven-
tion and classroom reading mate-
rials and remedial programs and
approaches; and
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‘‘(bb) instruction in the use
of rigorous diagnostic reading
and screening assessment tools
and other procedures that effec-
tively identify students who may
be at risk for reading failure or
who are having difficulty reading;
‘‘(III) shall be provided by eligi-
ble 
professional 
development 
pro-
viders; and
‘‘(IV) will assist teachers in be-
coming fully qualified in accordance
with the requirements of section 1119.
‘‘(B) OPTIONAL USES.—Subject to para-
graph (8), a local educational agency that re-
ceives a subgrant under this subsection may use
the funds provided under the subgrant to carry
out the following activities:
‘‘(i) Providing training to parents and
other individuals who volunteer to be read-
ing tutors in the essential components of
reading instruction.
‘‘(ii) Providing family literacy serv-
ices, especially to parents enrolled in par-
ticipating schools, through the use of li-
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brary materials and reading programs,
strategies, and approaches that are based
on scientifically based reading research, to
encourage reading and support their chil-
dren’s reading development.
‘‘(8) LOCAL
PLANNING
AND
ADMINISTRA-
TION.—A local educational agency that receives a
subgrant under this subsection may use not more
than 2 percent of the funds provided under the
subgrant for planning and administration.
‘‘(d) OTHER STATE USES OF FUNDS.—
‘‘(1) PROFESSIONAL DEVELOPMENT.—
‘‘(A) IN GENERAL.—A State that receives
a grant under this section may expend not more
than 15 percent of the amount of the funds
provided under the grant—
‘‘(i) to develop and implement a pro-
gram of in-service professional development
for teachers of kindergarten through third
grade, and special education teachers of
grades kindergarten through 12, that—
‘‘(I) will prepare these teachers
in all of the essential components of
reading instruction;
‘‘(II) shall include—
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‘‘(aa) information on inter-
ventions, instructional materials,
programs, and approaches based
on scientifically based reading re-
search, including early interven-
tion and reading remediation ma-
terials, 
programs, 
and 
ap-
proaches; and
‘‘(bb) instruction in the use
of rigorous diagnostic reading
and screening assessment tools
and other procedures to improve
instruction and effectively iden-
tify students who may be at risk
for reading failure or who are
having difficulty reading; and
‘‘(III) shall be provided by eligi-
ble 
professional 
development 
pro-
viders;
‘‘(ii) to strengthen and enhance pro-
fessional development courses for students
preparing, at all public institutions of high-
er education in the State, to teach kinder-
garten through third grades by—
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‘‘(I) reviewing such courses to de-
termine whether their content is con-
sistent with the findings of the most
current scientifically based reading re-
search, including findings on the es-
sential components of reading instruc-
tion;
‘‘(II) following up such reviews
with recommendations to ensure that
such institutions offer courses that
meet the highest standards; and
‘‘(III) preparing a report on the
results of such reviews, submitting it
to the reading and literacy partner-
ship for the State established under
section 1204(d), and making it avail-
able for public review via the Internet;
and
‘‘(iii) to make recommendations on
how the State’s licensure and certification
standards in the area of reading might be
improved.
‘‘(B) FUNDS
NOT
USED
FOR
PROFES-
SIONAL
DEVELOPMENT.—Any portion of the
funds described in subparagraph (A) that a
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State does not expend in accordance with such
subparagraph shall be expended for the purpose
of making subgrants in accordance with sub-
section (c).
‘‘(2) 
OTHER
STATE-LEVEL
ACTIVITIES.—A
State that receives a grant under this section may
expend not more than 3 percent of the amount of
the funds provided under the grant for one or more
of the following authorized State activities:
‘‘(A) Assisting local educational agencies in
accomplishing the tasks required to design and
implement a classroom reading program under
this subpart, including—
‘‘(i) selecting and implementing a pro-
gram or programs of classroom reading in-
struction based on scientifically based
reading research;
‘‘(ii) 
selecting 
rigorous 
diagnostic
reading and screening assessment tools;
and
‘‘(iii) identifying eligible professional
development providers to help prepare
reading teachers to teach students using
the programs and assessments described in
clauses (i) and (ii);
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‘‘(B) Providing to students in kindergarten
through third grades, through appropriate pro-
viders, reading instruction that includes—
‘‘(i) rigorous diagnostic reading and
screening assessment tools; and
‘‘(ii) as need is indicated by such as-
sessments, instruction based on scientif-
ically based reading research that includes
the essential components of reading in-
struction.
‘‘(3) PLANNING, ADMINISTRATION, AND
RE-
PORTING.—
‘‘(A) IN GENERAL.—A State that receives
a grant under this section shall expend not
more than 2 percent of the amount of the funds
provided under the grant for the activities de-
scribed in this paragraph.
‘‘(B) PLANNING AND ADMINISTRATION.—A
State that receives a grant under this section
may expend funds described in subparagraph
(A) for—
‘‘(i) planning and administration re-
lating to the State uses of funds author-
ized under this subpart, including admin-
istering the distribution of competitive sub-
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grants to local educational agencies under
this section and section 1205; and
‘‘(ii) assessing and evaluating, on a
regular basis, local educational agency ac-
tivities assisted under this subpart, with
respect to whether they have been effective
in increasing the number of children in
first and second grades served under this
subpart who can read at or above grade
level.
‘‘(C) ANNUAL REPORTING.—
‘‘(i) IN GENERAL.—A State that re-
ceives a grant under this section shall ex-
pend funds provided under the grant to
provide the Secretary annually with a re-
port on the implementation of this subpart.
The report shall include evidence that the
State is fulfilling its obligations under this
subpart. The report shall include a specific
identification of those schools and local
educational agencies that report the largest
gains in reading achievement.
‘‘(ii) PRIVACY PROTECTION.—Data in
the report shall be set forth in a manner
that protects the privacy of individuals.
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‘‘(iii) 
CONTRACT.—To 
the 
extent
practicable, a State shall enter into a con-
tract with an entity that conducts scientif-
ically based reading research, under which
contract the entity will produce the reports
required to be submitted under this sub-
paragraph.
‘‘SEC. 1204. STATE FORMULA GRANT APPLICATIONS.
‘‘(a) IN GENERAL.—A State that desires to receive
a grant under section 1203 shall submit an application
to the Secretary at such time and in such form as the
Secretary may require. The application shall contain the
information described in subsection (b).
‘‘(b) CONTENTS.—An application under this section
shall contain the following:
‘‘(1) An assurance that the Governor of the
State, in consultation with the State educational
agency, has established a reading and literacy part-
nership described in subsection (d), and a descrip-
tion of how such partnership—
‘‘(A) coordinated the development of the
application; and
‘‘(B) will assist in the oversight and eval-
uation of the State’s activities under this sub-
part.
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‘‘(2) An assurance that the State will submit to
the Secretary, at such time and in such manner as
the Secretary may reasonably require, a State plan
containing a description of a process—
‘‘(A) to evaluate programs carried out by
local educational agencies under this subpart;
‘‘(B) to assist local educational agencies in
identifying rigorous diagnostic reading and
screening assessment tools; and
‘‘(C) to assist local educational agencies in
identifying interventions, and instructional ma-
terials, programs and approaches, based on sci-
entifically based reading research, including
early intervention and classroom reading mate-
rials and remedial programs and approaches.
‘‘(3) An assurance that the State, and local
educational agencies in the State, will participate in
all national evaluations under this subpart.
‘‘(c) APPROVAL OF APPLICATIONS.—
‘‘(1) IN GENERAL.—The Secretary, in consulta-
tion with the peer review panel convened under para-
graph (2), shall approve an application of a State
under this section if such application meets the re-
quirements of this section.
‘‘(2) PEER REVIEW.—
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‘‘(A) IN GENERAL.—The Secretary, in con-
sultation with the National Institute for Lit-
eracy, shall convene a panel to evaluate applica-
tions under this section. At a minimum, the
panel shall include—
‘‘(i) three individuals selected by the
Secretary;
‘‘(ii) three individuals selected by the
National Institute for Literacy;
‘‘(iii) three individuals selected by the
National Research Council of the National
Academy of Sciences; and
‘‘(iv) three individuals selected by the
National Institute of Child Health and
Human Development.
‘‘(B) EXPERTS.—The panel shall include
experts who are competent, by virtue of their
training, expertise, or experience, to evaluate
applications under this section, and experts who
provide professional development to teachers of
reading to children and adults, and experts who
provide professional development to other in-
structional staff, based on scientifically based
reading research.
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‘‘(C) 
RECOMMENDATIONS.—The 
panel
shall recommend grant applications from States
under this section to the Secretary for funding
or for disapproval.
‘‘(d) READING AND LITERACY PARTNERSHIPS.—
‘‘(1) IN GENERAL.—In order for a State to re-
ceive a grant under section 1203, the Governor of
the State, in consultation with the State educational
agency, shall establish a reading and literacy part-
nership.
‘‘(2) REQUIRED
PARTICIPANTS.—The reading
and literacy partnership shall include the following
participants:
‘‘(A) The Governor of the State.
‘‘(B) The chief State school officer.
‘‘(C) The chairman and the ranking mem-
ber of each committee of the State legislature
that is responsible for education policy.
‘‘(D) A representative, selected jointly by
the Governor and the chief State school officer,
of at least one local educational agency that is
eligible to receive a subgrant under section
1203.
‘‘(E) A representative, selected jointly by
the Governor and the chief State school officer,
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of a community-based organization working
with children to improve their reading skills,
particularly a community-based organization
using tutors and scientifically based reading re-
search.
‘‘(F) State directors of appropriate Federal
or State programs with a strong reading com-
ponent.
‘‘(G) A parent of a public or private school
student or a parent who educates their child or
children in their home, selected jointly by the
Governor and the chief State school officer.
‘‘(H) A teacher, who may be a special edu-
cation teacher, who successfully teaches reading
and an instructional staff member, selected
jointly by the Governor and the chief State
school officer.
‘‘(I) A family literacy service provider se-
lected jointly by the Governor and the chief
state school officer.
‘‘(3) OPTIONAL
PARTICIPANTS.—The reading
and literacy partnership may include additional par-
ticipants, who shall be selected jointly by the Gov-
ernor and the chief State school officer, and who
may include a representative of—
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‘‘(A) an institution of higher education op-
erating a program of teacher preparation based
on scientifically based reading research in the
State;
‘‘(B) a local educational agency;
‘‘(C) a private nonprofit or for-profit eligi-
ble professional development provider providing
instruction based on scientifically based reading
research;
‘‘(D) an adult education provider;
‘‘(E) a volunteer organization that is in-
volved in reading programs; or
‘‘(F) a school library or a public library
that offers reading or literacy programs for
children or families.
‘‘SEC. 1205. DISCRETIONARY GRANTS TO STATES.
‘‘(a) IN GENERAL.—In the case of a State that, in
accordance with sections 1203 and 1204, has received ap-
proval of an application for a 5-year formula grant, the
Secretary may make additional 2-year discretionary
grants to the State for the use specified in (d). For each
fiscal year, the funds provided under the discretionary
grant shall equal the allotment determined for the State
under subsection (b).
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‘‘(b) DETERMINATION
OF
AMOUNT
OF
ALLOT-
MENTS.—From the total amount made available under
section 1002(b)(1) to carry out this subpart for a fiscal
year and not reserved under paragraph (1), the Secretary,
upon the recommendation of the peer review panel con-
vened under section 1204(c)(2), shall allot 20 percent
under this section among the States described in sub-
section (a)—
‘‘(1) for fiscal years 2002 and 2003, based
upon a determination of such States’ relative likeli-
hood of effectively implementing a program under
this subpart; and
‘‘(2) for fiscal year 2004 and subsequent fiscal
years, based upon such States’ applications under
subsection (c).
‘‘(c) STATE
DISCRETIONARY
GRANT
APPLICA-
TIONS.—
‘‘(1) IN GENERAL.—A State that desires to re-
ceive a grant under this section for a grant period
that includes any fiscal year after fiscal year 2003
shall submit the information described in paragraph
(3) to the Secretary at such time and in such form
as the Secretary may require.
‘‘(2) PEER
REVIEW.—The peer review panel
convened under section 1204(c)(2) shall review the
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information submitted under this subsection. The
panel shall recommend such applications to the Sec-
retary for funding or for disapproval.
‘‘(3) 
INFORMATION.—The 
information 
de-
scribed in this paragraph is the following:
‘‘(A) An assurance that the State will
award competitive subgrants to local edu-
cational agencies consistent with subsection
(d)(4).
‘‘(B) An assurance that the State will en-
sure that local educational agencies that receive
a subgrant under subsection (d) use the funds
provided under the subgrant in accordance with
subsection (d)(5).
‘‘(C) Evidence that the State has increased
significantly the percentage of students reading
at grade level or above.
‘‘(D) Evidence that the State has been suc-
cessful in increasing the percentage of students
in ethnic, racial, and low-income populations
who are reading at grade level or above.
‘‘(E) Any additional evidence that dem-
onstrates success in the implementation of this
subpart.
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‘‘(d) SUBGRANTS TO LOCAL EDUCATIONAL AGEN-
CIES.—
‘‘(1) IN GENERAL.—The Secretary may make a
grant to a State under this section only if the State
agrees to expend 100 percent of the amount of the
funds provided under the grant for the purpose of
making competitive subgrants in accordance with
this subsection to local educational agencies.
‘‘(2) NOTICE.—A State receiving a grant under
this section shall provide notice to all local edu-
cational agencies in the State of the availability of
competitive subgrants under this subsection and of
the requirements for applying for the subgrants.
‘‘(3) APPLICATION.—To be eligible to receive a
subgrant under this subsection, a local educational
agency shall submit an application to the State at
such time, in such manner, and containing such in-
formation as the State may reasonably require.
‘‘(4) DISTRIBUTION.—
‘‘(A) IN
GENERAL.—A State shall dis-
tribute subgrants under this section through a
competitive process based on relative need and
the evidence described in this paragraph.
‘‘(B) EVIDENCE
USED
IN
ALL
YEARS.—
For all fiscal years, a State shall distribute sub-
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grants under this section based on evidence that
a local educational agency—
‘‘(i) satisfies the requirements of sec-
tion 1203(c)(4);
‘‘(ii) will carry out its obligations
under this subpart, particularly paragraph
(5); and
‘‘(iii) will work with other local edu-
cational agencies in the State that have
not received a subgrant under this sub-
section to assist such non-receiving agen-
cies in increasing the reading achievement
of students.
‘‘(C) EVIDENCE
USED
IN
FISCAL
YEARS
AFTER 2003.—For fiscal year 2004 and subse-
quent fiscal years, a State shall distribute sub-
grants under this section based on the evidence
described in subparagraph (B) and, in addition,
evidence that a local educational agency—
‘‘(i) has significantly increased the
percentage of all students reading at grade
level or above;
‘‘(ii) has significantly increased the
percentage of students in ethnic, racial,
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and low-income populations who are read-
ing at grade level or above; and
‘‘(iii) has demonstrated success in the
implementation of this subpart.
‘‘(5) LOCAL
USES
OF
FUNDS.—A local edu-
cational agency that receives a subgrant under this
subsection—
‘‘(A) shall use the funds provided under
the subgrant to carry out the activities de-
scribed in section 1203(c)(7)(A); and
‘‘(B) may use such funds to carry out the
activities described in section 1203(c)(7)(B).
‘‘(e) DEFINITION.—For purposes of this section, the
term ‘State’ means each of the 50 States, the District of
Columbia, and the Commonwealth of Puerto Rico.
‘‘SEC. 1206. EXTERNAL EVALUATION.
‘‘(a) IN GENERAL.—From funds reserved under sec-
tion 1203(b)(1)(C), the Secretary shall contract with an
independent outside organization for a 5-year, rigorous,
scientifically valid, quantitative evaluation of this subpart.
‘‘(b) PROCESS.—Such evaluation shall be conducted
by an organization outside of the Department that is capa-
ble of designing and carrying out an independent evalua-
tion that identifies the effects of specific activities carried
out by States and local educational agencies under this
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subpart on improving reading instruction. Such evaluation
shall use only data relating to students served under this
subpart and shall take into account factors influencing
student performance that are not controlled by teachers
or education administrators.
‘‘(c) ANALYSIS.—Such evaluation shall include the
following:
‘‘(1) An analysis of the relationship between
each of the essential components of reading instruc-
tion and overall reading proficiency.
‘‘(2) An analysis of whether assessment tools
used by States and local educational agencies meas-
ure the essential components of reading instruction.
‘‘(3) An analysis of how State reading stand-
ards correlate with the essential components of read-
ing instruction.
‘‘(4) An analysis of whether the receipt of a dis-
cretionary grant under section 1205 results in an in-
crease in the number of children who read pro-
ficiently.
‘‘(5) A measurement of the extent to which spe-
cific instructional materials improve reading pro-
ficiency.
‘‘(6) A measurement of the extent to which spe-
cific rigorous diagnostic reading and screening as-
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sessment tools assist teachers in identifying specific
reading deficiencies.
‘‘(7) A measurement of the extent to which pro-
fessional development programs implemented by
States using funds received under this subpart im-
prove reading instruction.
‘‘(8) A measurement of how well students pre-
paring to enter the teaching profession are prepared
to teach the essential components of reading instruc-
tion.
‘‘(9) An analysis of changes in students’ inter-
est in reading and time spent reading outside of
school.
‘‘(10) Any other analysis or measurement perti-
nent to this subpart that is determined to be appro-
priate by the Secretary.
‘‘(d) PROGRAM IMPROVEMENT.—The findings of the
evaluation conducted under this section shall be provided
to States and local educational agencies on a periodic basis
for use in program improvement.
‘‘SEC. 1207. NATIONAL ACTIVITIES.
‘‘From funds reserved under section 1203(b)(1)(D),
the Secretary may provide technical assistance in achiev-
ing the purposes of this subpart to States, local edu-
cational agencies, and schools requesting such assistance.
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‘‘SEC. 1208. INFORMATION DISSEMINATION.
‘‘(a) IN GENERAL.—From funds reserved under sec-
tion 1203(b)(1)(E), the National Institute for Literacy, in
collaboration with the Secretary of Education, the Sec-
retary of Health and Human Services, and the Director
of the National Institute for Child Health and Human
Development—
‘‘(1) shall disseminate information on scientif-
ically based reading research pertaining to children,
youth, and adults;
‘‘(2) shall identify and disseminate information
about schools, local educational agencies, and States
that effectively developed and implemented class-
room reading programs that meet the requirements
of this subpart, including those effective States, local
educational agencies, and schools identified through
the evaluation and peer review provisions of this
subpart; and
‘‘(3) shall support the continued identification
and dissemination of information on reading pro-
grams that contain the essential components of
reading instruction as supported by scientifically
based reading research, that can lead to improved
reading outcomes for children, youth, and adults.
‘‘(b) DISSEMINATION.—
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‘‘(1) IN GENERAL.—At a minimum, the Na-
tional Institute for Literacy shall disseminate such
information to—
‘‘(A) recipients of Federal financial assist-
ance under part A of this title, part A of title
III, the Head Start Act, the Individuals with
Disabilities Education Act, and the Adult Edu-
cation and Family Literacy Act; and
‘‘(B) each Bureau funded school (as de-
fined in section 1141(3) of the Education
Amendments of 1978).
‘‘(2) USE
OF
EXISTING
NETWORKS.—In car-
rying out this section, the National Institute for Lit-
eracy shall, to the extent practicable, utilize existing
information and dissemination networks developed
and maintained through other public and private en-
tities.
‘‘SEC. 1209. DEFINITIONS.
‘‘For purposes of this subpart:
‘‘(1) ELIGIBLE PROFESSIONAL DEVELOPMENT
PROVIDER.—The term ‘eligible professional develop-
ment provider’ means a provider of professional de-
velopment in reading instruction to teachers, includ-
ing special education teachers, that is based on sci-
entifically based reading research.
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‘‘(2) ESSENTIAL COMPONENTS OF READING IN-
STRUCTION.—The term ‘essential components of
reading instruction’ means explicit and systematic
instruction in—
‘‘(A) phonemic awareness;
‘‘(B) phonics;
‘‘(C) vocabulary development;
‘‘(D) oral reading fluency; and
‘‘(E) reading comprehension strategies.
‘‘(3) INSTRUCTIONAL
STAFF.—The term ‘in-
structional staff’—
‘‘(A) means individuals who have responsi-
bility for teaching children to read; and
‘‘(B) includes principals, teachers, super-
visors of instruction, librarians, library school
media specialists, teachers of academic subjects
other than reading, and other individuals who
have responsibility for assisting children to
learn to read.
‘‘(4) READING.—The term ‘reading’ means a
complex system of deriving meaning from print that
requires all of the following:
‘‘(A) The skills and knowledge to under-
stand how phonemes, or speech sounds, are
connected to print.
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‘‘(B) The ability to decode unfamiliar
words.
‘‘(C) The ability to read fluently.
‘‘(D) Sufficient background information
and vocabulary to foster reading comprehen-
sion.
‘‘(E) The development of appropriate ac-
tive strategies to construct meaning from print.
‘‘(F) The development and maintenance of
a motivation to read.
‘‘(5) RIGOROUS
DIAGNOSTIC
READING
AND
SCREENING
ASSESSMENT
TOOLS.—The term ‘rig-
orous diagnostic reading and screening assessment
tools’ means assessments that—
‘‘(A) are valid, reliable, and based on sci-
entifically based reading research;
‘‘(B) measure progress in developing pho-
nemic awareness and phonics skills, vocabulary,
reading fluency, and reading comprehension;
‘‘(C) identify students who may be at risk
for reading failure or who are having difficulty
reading; and
‘‘(D) are used to improve instruction.
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‘‘(6) SCIENTIFICALLY
BASED
READING
RE-
SEARCH.—The term ‘scientifically based reading
research’—
‘‘(A) means the application of rigorous,
systematic, and objective procedures to obtain
valid knowledge relevant to reading develop-
ment, reading instruction, and reading difficul-
ties; and
‘‘(B) shall include research that—
‘‘(i) employs systematic, empirical
methods that draw on observation or ex-
periment;
‘‘(ii) involves rigorous data analyses
that are adequate to test the stated
hypotheses and justify the general conclu-
sions drawn;
‘‘(iii) relies on measurements or obser-
vational methods that provide valid data
across evaluators and observers and across
multiple measurements and observations;
and
‘‘(iv) has been accepted by a peer-re-
viewed journal or approved by a panel of
independent experts through a comparably
rigorous, objective, and scientific review.
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‘‘Subpart 2—Early Reading First
‘‘SEC. 1221. PURPOSES.
‘‘The purposes of this subpart are as follows:
‘‘(1) To improve prereading skills in children
aged 3 through 5, particularly children from low-in-
come families, in high-quality oral language and lit-
erature-rich environments.
‘‘(2) To provide professional development for
early childhood teachers that prepares them with sci-
entific research-based knowledge of early reading de-
velopment to assist in developing the children’s—
‘‘(A) automatic recognition of the letters of
the alphabet and letter sounds;
‘‘(B) understanding that spoken words are
made up of small segments of speech sounds
and that certain letters regularly represent such
speech sounds;
‘‘(C) spoken vocabulary and oral com-
prehension abilities; and
‘‘(D) understanding of semiotic concepts.
‘‘(3) To use scientific research-based screening
tools or other appropriate measures to determine
whether preschool children are developing the skills
identified in this section.
‘‘(4) To identify and provide scientific research-
based prereading language and literacy activities and
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instructional materials that can be used to assist in
the development of prereading skills in children.
‘‘(5) To integrate such scientific research-based
instructional materials and literacy activities with
existing programs of preschools, child care agencies
and programs, and Head Start centers, and with
family literacy services.
‘‘SEC. 1222. LOCAL EARLY READING FIRST GRANTS.
‘‘(a) PROGRAM AUTHORIZED.—From amounts ap-
propriated under section 1002(b)(2), the Secretary shall
make awards, on a competitive basis and for periods of
not more than 5 years, to eligible applicants to enable such
applicants to carry out activities that are consistent with
the purposes of this subpart.
‘‘(b) DEFINITION OF ELIGIBLE APPLICANT.—In this
subpart, the term ‘eligible applicant’ means—
‘‘(1) a local educational agency;
‘‘(2) one or more public or private organizations
or agencies, acting on behalf of one or more pro-
grams that serve children aged 3 through 5 (such as
a program at a child care agency or program or
Head Start center or a family literacy program),
which organizations or agencies shall be located in a
community served by a local educational agency; or
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‘‘(14) provides assurances that the agency will
work with parents to secure parents’ assistance in
improving the educational achievement of their chil-
dren and preventing their children’s further involve-
ment in delinquent activities;
‘‘(15) provides assurances that the agency
works with special education youth in order to meet
an existing individualized education program and an
assurance that the agency will notify the youth’s
local school if such youth—
‘‘(A) is identified as in need of special edu-
cation services while the youth is in the facility;
and
‘‘(B) intends to return to the local school;
‘‘(16) provides assurances that the agency will
work with youth who dropped out of school before
entering the facility to encourage the youth to reen-
ter school once the term of incarceration has been
completed or provide the youth with the skills nec-
essary to gain employment, continue the education
of the youth, or achieve a secondary school diploma
or the recognized equivalent if the youth does not in-
tend to return to school;
‘‘(17) provides assurances that teachers and
other qualified staff are also trained to work with