203 
‘‘(d) QUALIFYING ADULT.—For the purpose of sub-
section (c)(2), the term ‘qualifying adult’ means an adult 
who— 
‘‘(1) is at least 16 years of age; 
‘‘(2) is beyond the age of compulsory school at-
tendance under the law of the State or outlying 
area; 
‘‘(3) does not have a secondary school diploma, 
General Educational Development credential (GED), 
or other State-recognized equivalent; and 
‘‘(4) is not enrolled in secondary school. 
‘‘(e) SPECIAL RULE.— 
‘‘(1) IN GENERAL.—From amounts made avail-
able under subsection (c) for the Republic of Palau, 
the Secretary shall award grants to Guam, American 
Samoa, the Commonwealth of the Northern Mariana 
Islands, or the Republic of Palau to carry out activi-
ties described in this title in accordance with the 
provisions of this title as determined by the Sec-
retary. 
‘‘(2) TERMINATION OF ELIGIBILITY.—Notwith-
standing any other provision of law, the Republic of 
Palau shall be eligible to receive a grant under this 
title until an agreement for the extension of United 
States education assistance under the Compact of 
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Free Association for the Republic of Palau becomes 
effective. 
‘‘(3) ADMINISTRATIVE COSTS.—The Secretary 
may provide not more than 5 percent of the funds 
made available for grants under this subsection to 
pay the administrative costs of the Pacific Region 
Educational Laboratory regarding activities assisted 
under this subsection. 
‘‘(f) HOLD-HARMLESS PROVISIONS.— 
‘‘(1) IN GENERAL.—Notwithstanding subsection 
(c), and subject to paragraphs (2) and (3), for fiscal 
year 2012 and each succeeding fiscal year, no eligi-
ble agency shall receive an allotment under this title 
that is less than 90 percent of the allotment the eli-
gible agency received for the preceding fiscal year 
under this title. 
‘‘(2) EXCEPTION.—An eligible agency that re-
ceives for the preceding fiscal year only an initial al-
lotment under subsection (c)(1) (and no additional 
allotment under subsection (c)(2)) shall receive an 
allotment equal to 100 percent of the initial allot-
ment. 
‘‘(3) RATABLE REDUCTION.—If for any fiscal 
year the amount available for allotment under this 
title is insufficient to satisfy the provisions of para-
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graph (1), the Secretary shall ratably reduce the 
payments to all eligible agencies, as necessary. 
‘‘(g) REALLOTMENT.—The portion of any eligible 
agency’s allotment under this title for a fiscal year that 
the Secretary determines will not be required for the pe-
riod such allotment is available for carrying out activities 
under this title, shall be available for reallotment from 
time to time, on such dates during such period as the Sec-
retary shall fix, to other eligible agencies in proportion to 
the original allotments to such agencies under this title 
for such year. 
‘‘SEC. 212. PERFORMANCE ACCOUNTABILITY SYSTEM. 
‘‘(a) PURPOSE.—The purpose of this section is to es-
tablish a comprehensive performance accountability sys-
tem, composed of the activities described in this section, 
to assess the effectiveness of eligible agencies in achieving 
continuous improvement of adult education and family lit-
eracy education programs funded under this title, in order 
to optimize the return on investment of Federal funds in 
adult education and family literacy education programs. 
‘‘(b) ELIGIBLE
AGENCY
PERFORMANCE
MEAS-
URES.— 
‘‘(1) IN GENERAL.—For each eligible agency, 
the eligible agency performance measures shall con-
sist of— 
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‘‘(A)(i) the core indicators of performance 
described in paragraph (2)(A); and 
‘‘(ii) employment performance indicators 
identified by the eligible agency under para-
graph (2)(B); and 
‘‘(B) an eligible agency adjusted level of 
performance for each indicator described in 
subparagraph (A). 
‘‘(2) INDICATORS OF PERFORMANCE.— 
‘‘(A) CORE
INDICATORS
OF
PERFORM-
ANCE.—The core indicators of performance 
shall include the following: 
‘‘(i) Measurable improvements in lit-
eracy, including basic skill levels in read-
ing, writing, and speaking the English lan-
guage and basic math, leading to pro-
ficiency in each skill. 
‘‘(ii) Receipt of a secondary school di-
ploma, General Educational Development 
credential (GED), or other State-recog-
nized equivalent. 
‘‘(iii) Placement in post-secondary 
education or other training programs. 
‘‘(B) EMPLOYMENT
PERFORMANCE
INDI-
CATORS.—Consistent with applicable Federal 
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and State privacy laws, an eligible agency shall 
identify in the State plan the following indi-
vidual participant employment performance in-
dicators: 
‘‘(i) Entry into employment. 
‘‘(ii) Retention in employment. 
‘‘(iii) Increase in earnings. 
‘‘(3) LEVELS OF PERFORMANCE.— 
‘‘(A) ELIGIBLE AGENCY ADJUSTED LEVELS 
OF PERFORMANCE FOR CORE INDICATORS.— 
‘‘(i) IN GENERAL.—For each eligible 
agency submitting a State plan, there shall 
be established, in accordance with this sub-
paragraph, levels of performance for each 
of the core indicators of performance de-
scribed in paragraph (2)(A) for adult edu-
cation and family literacy education pro-
grams authorized under this title. The lev-
els of performance established under this 
subparagraph shall, at a minimum— 
‘‘(I) be expressed in an objective, 
quantifiable, and measurable form; 
and 
‘‘(II) show the progress of the el-
igible agency toward continuously and 
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significantly improving the agency’s 
performance outcomes in an objective, 
quantifiable, and measurable form. 
‘‘(ii) 
IDENTIFICATION
IN
STATE 
PLAN.—Each eligible agency shall identify, 
in the State plan submitted under section 
224, expected levels of performance for 
each of the core indicators of performance 
for the first 3 program years covered by 
the State plan. 
‘‘(iii) 
AGREEMENT
ON
ELIGIBLE 
AGENCY ADJUSTED LEVELS OF PERFORM-
ANCE FOR FIRST 3 YEARS.—In order to en-
sure an optimal return on the investment 
of Federal funds in adult education and 
family literacy education programs author-
ized under this title, the Secretary and 
each eligible agency shall reach agreement 
on levels of student performance for each 
of the core indicators of performance, for 
the first 3 program years covered by the 
State plan, taking into account the levels 
identified in the State plan under clause 
(ii) and the factors described in clause (iv). 
The levels agreed to under this clause shall 
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be considered to be the eligible agency ad-
justed levels of performance for the eligible 
agency for such years and shall be incor-
porated into the State plan prior to the ap-
proval of such plan. 
‘‘(iv) FACTORS.—The agreement de-
scribed in clause (iii) or (v) shall take into 
account— 
‘‘(I) how the levels involved com-
pare with the eligible agency’s ad-
justed levels of performance, taking 
into account factors including the 
characteristics of participants when 
the participants entered the program; 
and 
‘‘(II) the extent to which such 
levels promote continuous and signifi-
cant improvement in performance on 
the student proficiency measures used 
by such eligible agency and ensure op-
timal return on the investment of 
Federal funds. 
‘‘(v) AGREEMENT ON ELIGIBLE AGEN-
CY ADJUSTED LEVELS OF PERFORMANCE 
FOR SECOND 3 YEARS.—Prior to the fourth 
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program year covered by the State plan, 
the Secretary and each eligible agency 
shall reach agreement on levels of student 
performance for each of the core indicators 
of performance for the fourth, fifth, and 
sixth program years covered by the State 
plan, taking into account the factors de-
scribed in clause (iv). The levels agreed to 
under this clause shall be considered to be 
the eligible agency adjusted levels of per-
formance for the eligible agency for such 
years and shall be incorporated into the 
State plan. 
‘‘(vi) REVISIONS.—If unanticipated 
circumstances arise in a State resulting in 
a significant change in the factors de-
scribed in clause (iv)(I), the eligible agency 
may request that the eligible agency ad-
justed levels of performance agreed to 
under clause (iii) or (v) be revised. 
‘‘(B) LEVELS OF EMPLOYMENT PERFORM-
ANCE.—The eligible agency shall identify, in the 
State plan, eligible agency levels of performance 
for each of the employment performance indica-
tors described in paragraph (2)(B). Such levels 
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shall be considered to be eligible agency ad-
justed levels of performance for purposes of this 
title. 
‘‘(c) DEFINITIONS FOR INDICATORS OF PERFORM-
ANCE.—In order to ensure comparability of performance 
data across States, the Secretary shall issue definitions for 
the indicators of performance under paragraph (2). 
‘‘(d) REPORT.— 
‘‘(1) IN GENERAL.—Each eligible agency that 
receives a grant under section 211(b) shall annually 
prepare and submit to the Secretary, the Governor, 
the State legislature, and eligible providers a report 
on the progress of the eligible agency in achieving el-
igible agency performance measures, including the 
following: 
‘‘(A) Information on the levels of perform-
ance achieved by the eligible agency with re-
spect to the core indicators of performance and 
employment performance indicators. 
‘‘(B) The number and type of each eligible 
provider that receives funding under such 
grant. 
‘‘(2) INFORMATION DISSEMINATION.—The Sec-
retary— 
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‘‘(A) shall make the information contained 
in such reports available to the general public 
through publication (including on the Internet 
site of the Department of Education) and other 
appropriate methods; 
‘‘(B) shall disseminate State-by-State com-
parisons of the information; and 
‘‘(C) shall provide the appropriate commit-
tees of the Congress with copies of such re-
ports. 
‘‘SEC. 213. INCENTIVE GRANTS FOR STATES. 
‘‘(a) IN GENERAL.—From funds appropriated under 
section 211(a)(1), the Secretary may award grants to 
States for exemplary performance in carrying out pro-
grams under this title. Such awards shall be based on 
States exceeding the core indicators of performance estab-
lished under section 212(b)(2)(A) and may be based on 
the performance of the State in serving populations, such 
as those described in section 224(b)(10), including the lev-
els of service provided and the performance outcomes, and 
such other factors relating to the performance of the State 
under this title as the Secretary determines appropriate. 
‘‘(b) USE OF FUNDS.—The funds awarded to a State 
under this paragraph may be used to carry out any activi-
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ties authorized under this title, including demonstrations 
and innovative programs for hard-to-serve populations. 
‘‘CHAPTER 2—STATE PROVISIONS 
‘‘SEC. 221. STATE ADMINISTRATION. 
‘‘Each eligible agency shall be responsible for the fol-
lowing activities under this title: 
‘‘(1) The development, submission, implementa-
tion, and monitoring of the State plan. 
‘‘(2) Consultation with other appropriate agen-
cies, groups, and individuals that are involved in, or 
interested in, the development and implementation 
of activities assisted under this title. 
‘‘(3) Coordination and avoidance of duplication 
with other Federal and State education, training, 
corrections, public housing, and social service pro-
grams. 
‘‘SEC. 222. STATE DISTRIBUTION OF FUNDS; MATCHING RE-
QUIREMENT. 
‘‘(a) STATE DISTRIBUTION OF FUNDS.—Each eligi-
ble agency receiving a grant under this title for a fiscal 
year— 
‘‘(1) shall use an amount not less than 82.5 
percent of the grant funds to award grants and con-
tracts under section 231 and to carry out section 
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225, of which not more than 10 percent of such 
amount shall be available to carry out section 225; 
‘‘(2) shall use not more than 12.5 percent of 
the grant funds to carry out State leadership activi-
ties under section 223; and 
‘‘(3) shall use not more than 5 percent of the 
grant funds, or $75,000, whichever is greater, for 
the administrative expenses of the eligible agency. 
‘‘(b) MATCHING REQUIREMENT.— 
‘‘(1) IN GENERAL.—In order to receive a grant 
from the Secretary under section 211(b), each eligi-
ble agency shall provide, for the costs to be incurred 
by the eligible agency in carrying out the adult edu-
cation and family literacy education programs for 
which the grant is awarded, a non-Federal contribu-
tion in an amount at least equal to— 
‘‘(A) in the case of an eligible agency serv-
ing an outlying area, 12 percent of the total 
amount of funds expended for adult education 
and family literacy education programs in the 
outlying area, except that the Secretary may 
decrease the amount of funds required under 
this subparagraph for an eligible agency; and 
‘‘(B) in the case of an eligible agency serv-
ing a State, 25 percent of the total amount of 
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