or modularization as determined by 
the Secretary of Defense and force 
structure change or force relocation,’’; 
and 
(IV) by inserting before the pe-
riod at the end the following: ‘‘or dur-
ing such time as activities associated 
with base closure and realignment, 
modularization, 
force 
structure 
change, or force relocation is ongo-
ing’’; and 
(ii) in clause (ii) by striking ‘‘(D) or 
(E)’’ both places such term appears and 
inserting ‘‘(C)’’; 
(3) in subsection (b)(3)(B)— 
(A) by redesignating clause (iv) as (v); and 
(B) by inserting after clause (iii) the fol-
lowing: 
‘‘(iv) For any local educational agency 
that is providing a program of distant 
learning to children not residing within the 
legally defined boundaries of the agency, 
the Secretary shall disregard such children 
from such agency’s total enrollment when 
calculating the percentage under subclause 
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(I) of clause (i) and shall disregard any 
funds received for such children when cal-
culating the total current expenditures at-
tributed to the operation of such agency 
when calculating the percentage under sub-
clause (II) of clause (i).’’; 
(4) in subsection (b)(3)(C) by striking ‘‘or (E) 
of paragraph (2), as the case may be’’ and inserting 
‘‘of paragraph (2)’’. 
(5) in subsection (b)(3), by amending subpara-
graph (D) to read as follows: 
‘‘(D) RATABLE
DISTRIBUTION.—For any 
fiscal year described in subparagraph (A) for 
which the sums available exceed the amount re-
quired to pay each local educational agency 100 
percent of its threshold payment the Secretary 
shall distribute the excess sums to each eligible 
local educational agency that has not received 
its full amount computed under paragraph (1) 
or (2) (as the case may be) by multiplying— 
‘‘(i) a percentage, the denominator of 
which is the difference between the full 
amount computed under paragraph (1) or 
(2) (as the case may be) for all local edu-
cational agencies and the amount of the 
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threshold payment (as calculated under 
subparagraphs (B) and (C) of all local 
educational agencies, and the numerator of 
which is the aggregate amount of the ex-
cess sums by: 
‘‘(ii) the difference between the full 
amount computed under paragraph (1) or 
(2) (as the case may be) for the agency 
and the amount of the threshold payment 
as calculated under subparagraphs (B) and 
(C) of the agency.’’; 
(6) in subsection (c) by amending paragraph 
(2) to read as follows: 
‘‘(2) EXCEPTION.—Calculation of payments for 
a local educational agency shall be based on data 
from the fiscal year for which the agency is making 
an application for payment if such agency: 
‘‘(A) is newly established by a State (first 
year of operation only), or 
‘‘(B)(i) was eligible to receive a payment 
under this section in the previous fiscal year 
and such agency has had an overall increase (as 
determined by the Secretary of Education in 
consultation with the Secretary of Defense, the 
Secretary of Interior or other Federal agencies) 
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of not less than 250 students or 10 percent as 
described in section 8003(a)(1)(A), (B), (C), 
(D) or (F) and (G) if those children described 
in (F) or (G) are civilian dependents of employ-
ees of the Department of Defense and/or the 
Department of the Interior; and 
‘‘(ii) such increase occurred during the pe-
riod between the end of the school year pre-
ceding the fiscal year for which the application 
is being made and the beginning of the school 
year immediately preceding that school year as 
the result of closure or realignment of military 
installations under the base closure process or 
the relocation of members of the Armed Forces 
and civilian employees of the Department of 
Defense as part of force structure changes or 
movements of units or personnel between mili-
tary installations or because of actions initiated 
by the Secretary of Interior or other Federal 
agency.’’; 
(7) in subsection (e) by striking paragraphs (1) 
and (2) and inserting the following: 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
the total amount the Secretary shall pay a local edu-
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cation agency received under subsection (b)(1), 
(b)(2) or (b)(2)(B)(ii)— 
‘‘(A) for fiscal year 2008 shall not be less 
than 90 percent of the total amount that the 
local education agency received under sub-
section (b)(1), (b)(2) or (b)(2)(B)(ii) for fiscal 
year 2007; 
‘‘(B) for fiscal year 2009 shall not be less 
than 80 percent of the total amount that the 
local educational agency received under sub-
section (b)(1), (b)(2) or (b)(2)(B)(ii) for fiscal 
year 2007; 
‘‘(C) for fiscal year 2010 shall not be less 
than 70 percent of the total amount that the 
local educational agency received under sub-
section (b)(1), (b)(2) or (b)(2)(B)(ii) for fiscal 
year 2007 of which such amount shall be con-
sidered a foundation payment for each suc-
ceeding fiscal year until such time as the agen-
cy’s maximum payment as determined under 
paragraphs (1) or (2) of subsection (b) as the 
case may be, exceeds the amount provided for 
under this subparagraph. 
‘‘(2) RATABLE REDUCTION.— 
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‘‘(A) IN
GENERAL.—If the sums made 
available under this title for any fiscal year are 
insufficient to pay the full amounts that all 
local educational agencies in all States are eligi-
ble to receive under paragraph (1) for such 
year, then the Secretary shall ratably reduce 
the payments to all agencies for such year. 
‘‘(B) ADDITIONAL
FUNDS.—If additional 
funds become available for making payments 
under paragraph (1) for such fiscal year, pay-
ments that were reduced under subparagraph 
(A) shall be increased on the same basis as 
such payments were reduced.’’; and 
(8) by striking subsection (g). 
SEC. 4. CONSTRUCTION. 
Section 8007 of that Act (20 U.S.C. 7707) is amend-
ed— 
(1) in subsection (a)— 
(A) in paragraph (1), by striking ‘‘40 per-
cent’’ and inserting ‘‘80 percent’’; 
(B) in paragraph (2) by adding at the end 
the following: 
‘‘(C) The agency is eligible under section 
8003(b)(2) or is receiving a basic support pay-
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