‘‘(2) ASSISTIVE
TECHNOLOGY
SERVICE.—The 
term ‘assistive technology service’ means any service 
that directly assists a child with a disability in the 
selection, acquisition, or use of an assistive technology 
device. Such term includes—
‘‘(A) the evaluation of the needs of such 
child, including a functional evaluation of the 
child in the child’s customary environment; 
‘‘(B) purchasing, leasing, or otherwise pro-
viding for the acquisition of assistive technology 
devices by such child; 
‘‘(C) selecting, designing, fitting, custom-
izing, adapting, applying, maintaining, repair-
ing, or replacing of assistive technology devices; 
‘‘(D) coordinating and using other thera-
pies, interventions, or services with assistive 
technology devices, such as those associated with 
existing education and rehabilitation plans and 
programs; 
‘‘(E) training or technical assistance for 
such child, or, where appropriate, the family of 
such child; and 
‘‘(F) training or technical assistance for 
professionals (including individuals providing 
education and rehabilitation services), employ-
ers, or other individuals who provide services to, 
employ, or are otherwise substantially involved 
in the major life functions of such child. 
‘‘(3) CHILD WITH A DISABILITY.—
‘‘(A) IN GENERAL.—The term ‘child with a 
disability’ means a child—
‘‘(i) with mental retardation, hearing 
impairments (including deafness), speech or 
language impairments, visual impairments 
(including blindness), serious emotional dis-
turbance (hereinafter referred to as ‘emo-
tional disturbance’), orthopedic impair-
ments, autism, traumatic brain injury, 
other health impairments, or specific learn-
ing disabilities; and 
‘‘(ii) who, by reason thereof, needs spe-
cial education and related services. 
‘‘(B) CHILD AGED 3 THROUGH 9.—The term 
‘child with a disability ’ for a child aged 3 
through 9 or any subset of that age range, in-
cluding ages 3 through 5, may, at the discretion 
of the State and the local educational agency, in-
clude a child—
‘‘(i) experiencing developmental delays, 
as defined by the State and as measured by
appropriate diagnostic instruments and 
procedures, in one or more of the following 
areas: physical development, cognitive devel-
opment, communication development, social 
or emotional development, or adaptive de-
velopment; and 
‘‘(ii) who, by reason thereof, needs spe-
cial education and related services. 
‘‘(4) EDUCATIONAL SERVICE AGENCY.—The term 
‘educational service agency’—
‘‘(A) means a regional public multiservice 
agency—
‘‘(i) authorized by State law to de-
velop, manage, and provide services or pro-
grams to local educational agencies; and 
‘‘(ii) recognized as an administrative 
agency for purposes of the provision of spe-
cial education and related services provided 
within public elementary and secondary 
schools of the State; and 
‘‘(B) includes any other public institution 
or agency having administrative control and di-
rection over a public elementary or secondary 
school.
‘‘(5) ELEMENTARY SCHOOL.—The term ‘elemen-
tary school’ means a nonprofit institutional day or 
residential school that provides elementary education, 
as determined under State law. 
‘‘(6) EQUIPMENT.—The term ‘equipment’ in-
cludes—
‘‘(A) machinery, utilities, and built-in 
equipment and any necessary enclosures or 
structures to house such machinery, utilities, or 
equipment; and 
‘‘(B) all other items necessary for the func-
tioning of a particular facility as a facility for 
the provision of educational services, including 
items such as instructional equipment and nec-
essary furniture; printed, published, and audio-
visual instructional materials; telecommuni-
cations, sensory, and other technological aids 
and devices; and books, periodicals, documents, 
and other related materials. 
‘‘(7) EXCESS
COSTS.—The term ‘excess costs’ 
means those costs that are in excess of the average an-
nual per-student expenditure in a local educational 
agency during the preceding school year for an ele-
mentary or secondary school student, as may be ap-
propriate, and which shall be computed after deduct-
ing—
‘‘(A) amounts received—
‘‘(i) under part B of this title; 
‘‘(ii) under part A of title I of the Ele-
mentary and Secondary Education Act of 
1965; and 
‘‘(iii) under title III of that Act; and 
‘‘(B) any State or local funds expended for 
programs that would qualify for assistance under 
any of the provisions of law described in sub-
paragraph (A). 
‘‘(8) FREE APPROPRIATE PUBLIC EDUCATION.—
The term ‘free appropriate public education’ means 
special education and related services that—
‘‘(A) have been provided at public expense, 
under public supervision and direction, and 
without charge; 
‘‘(B) meet the standards of the State edu-
cational agency; 
‘‘(C) include an appropriate preschool, ele-
mentary, or secondary school education in the 
State involved; and
‘‘(D) are provided in conformity with the 
individualized 
education 
program 
required 
under section 614(d). 
‘‘(9) HIGHLY
QUALIFIED.—The term ‘highly 
qualified’ has the same meaning as that term in sec-
tion 9101 of the Elementary and Secondary Edu-
cation Act of 1965. 
‘‘(10) INDIAN.—The term ‘Indian’ means an in-
dividual who is a member of an Indian tribe. 
‘‘(11) INDIAN TRIBE.—The term ‘Indian tribe’ 
means any Federal or State Indian tribe, band, 
rancheria, pueblo, colony, or community, including 
any Alaska Native village or regional village corpora-
tion (as defined in or established under the Alaska 
Native Claims Settlement Act). 
‘‘(12) INDIVIDUALIZED EDUCATION PROGRAM.—
The term ‘individualized education program’ or ‘IEP’ 
means a written statement for each child with a dis-
ability that is developed, reviewed, and revised in ac-
cordance with section 614(d). 
‘‘(13) INDIVIDUALIZED FAMILY SERVICE PLAN.—
The term ‘individualized family service plan’ has the 
meaning given such term in section 636. 
‘‘(14) INFANT
OR
TODDLER
WITH
A
DIS-
ABILITY.—The term ‘infant or toddler with a dis-
ability ’ has the meaning given such term in section 
632. 
‘‘(15) INSTITUTION
OF
HIGHER
EDUCATION.—
The term ‘institution of higher education’—
‘‘(A) has the meaning given that term in 
subsection (a) or (b) of section 101 of the Higher 
Education Act of 1965; and 
‘‘(B) also includes any community college 
receiving funding from the Secretary of the Inte-
rior under the Tribally Controlled Community 
College Assistance Act of 1978. 
‘‘(16) LOCAL EDUCATIONAL AGENCY.—
‘‘(A) The term ‘local educational agency’ 
means a public board of education or other pub-
lic authority legally constituted within a State 
for either administrative control or direction of, 
or to perform a service function for, public ele-
mentary or secondary schools in a city, county, 
township, school district, or other political sub-
division of a State, or for such combination of 
school districts or counties as are recognized in 
a State as an administrative agency for its pub-
lic elementary or secondary schools. 
‘‘(B) The term includes—
‘‘(i) an educational service agency, as 
defined in paragraph (4); and 
‘‘(ii) any other public institution or 
agency having administrative control and 
direction of a public elementary or sec-
ondary school. 
‘‘(C) The term includes an elementary or 
secondary school funded by the Bureau of Indian 
Affairs, but only to the extent that such inclusion 
makes the school eligible for programs for which 
specific eligibility is not provided to the school in 
another provision of law and the school does not 
have a student population that is smaller than 
the student population of the local educational 
agency receiving assistance under this Act with 
the smallest student population, except that the 
school shall not be subject to the jurisdiction of 
any State educational agency other than the Bu-
reau of Indian Affairs. 
‘‘(17) NATIVE LANGUAGE.—The term ‘native lan-
guage’, when used with reference to an individual of 
limited English proficiency, means the language nor-
mally used by the individual, or, in the case of a 
child, the language normally used by the parents of 
the child.
‘‘(18) NONPROFIT.—The term ‘nonprofit’, as ap-
plied to a school, agency, organization, or institution, 
means a school, agency, organization, or institution 
owned and operated by one or more nonprofit cor-
porations or associations no part of the net earnings 
of which inures, or may lawfully inure, to the benefit 
of any private shareholder or individual. 
‘‘(19) OUTLYING
AREA.—The term ‘outlying 
area’ means the United States Virgin Islands, Guam, 
American Samoa, and the Commonwealth of the 
Northern Mariana Islands. 
‘‘(20) PARENT.—The term ‘parent’—
‘‘(A) includes a legal guardian; and 
‘‘(B) except as used in sections 615(b)(2) 
and 639(a)(5), includes an individual assigned 
under either of those sections to be a surrogate 
parent. 
‘‘(21) PARENT ORGANIZATION.—The term ‘par-
ent organization’ has the meaning given that term in 
section 672(g). 
‘‘(22) PARENT TRAINING AND INFORMATION CEN-
TER.—The term ‘parent training and information 
center’ means a center assisted under sections 672 
and 673.
‘‘(23) RELATED
SERVICES.—The term ‘related 
services’ means transportation, and such develop-
mental, corrective, and other supportive services (in-
cluding speech-language pathology and audiology 
services, psychological services, physical and occupa-
tional therapy, recreation, including therapeutic 
recreation, social work services, counseling services, 
including rehabilitation counseling, orientation and 
mobility services, and medical services, except that 
such medical services shall be for diagnostic and eval-
uation purposes only) as may be required to assist a 
child with a disability to benefit from special edu-
cation, and includes the early identification and as-
sessment of disabling conditions in children. 
‘‘(24) SECONDARY
SCHOOL.—The term ‘sec-
ondary school’ means a nonprofit institutional day or 
residential school that provides secondary education, 
as determined under State law, except that it does not 
include any education beyond grade 12. 
‘‘(25) SECRETARY.—The term ‘Secretary’ means 
the Secretary of Education. 
‘‘(26) SPECIAL EDUCATION.—The term ‘special 
education’ means specially designed instruction, at no 
cost to parents, to meet the unique needs of a child 
with a disability, including—
‘‘(A) instruction conducted in the classroom, 
in the home, in hospitals and institutions, and 
in other settings; and 
‘‘(B) instruction in physical education. 
‘‘(27) SPECIFIC LEARNING DISABILITY.—
‘‘(A) IN
GENERAL.—The term ‘specific 
learning disability ’ means a disorder in one or 
more of the basic psychological processes involved 
in understanding or in using language, spoken 
or written, which disorder may manifest itself in 
imperfect ability to listen, think, speak, read, 
write, spell, or do mathematical calculations. 
‘‘(B) DISORDERS
INCLUDED.—Such term 
includes such conditions as perceptual disabil-
ities, brain injury, minimal brain dysfunction, 
dyslexia, and developmental aphasia. 
‘‘(C) DISORDERS
NOT
INCLUDED.—Such 
term does not include a learning problem that is 
primarily the result of visual, hearing, or motor 
disabilities, of mental retardation, of emotional 
disturbance, or of environmental, cultural, or 
economic disadvantage. 
‘‘(28) STATE.—The term ‘State’ means each of 
the 50 States, the District of Columbia, the Common-
wealth of Puerto Rico, and each of the outlying areas.
‘‘(29) STATE EDUCATIONAL AGENCY.—The term 
‘State educational agency’ means the State board of 
education or other agency or officer primarily respon-
sible for the State supervision of public elementary 
and secondary schools, or, if there is no such officer 
or agency, an officer or agency designated by the Gov-
ernor or by State law. 
‘‘(30) SUPPLEMENTARY AIDS AND SERVICES.—
The term ‘supplementary aids and services’ means 
aids, services, and other supports that are provided in 
regular education classes or other education-related 
settings to enable children with disabilities to be edu-
cated with nondisabled children to the maximum ex-
tent 
appropriate 
in 
accordance 
with 
section 
612(a)(5). 
‘‘(31) TRANSITION SERVICES.—The term ‘transi-
tion services’ means a coordinated set of activities for 
a child with a disability that—
‘‘(A) is designed within a results-oriented 
process, that is focused on improving the aca-
demic and developmental achievement of the 
child with a disability to facilitate the child’s 
move from school to post-school activities, includ-
ing post-secondary education, vocational train-
ing, integrated employment (including supported
employment), continuing and adult education, 
adult services, independent living, or community 
participation; 
‘‘(B) is based upon the individual child’s 
needs, taking into account the child’s skills, pref-
erences, and interests; and 
‘‘(C) includes instruction, related services, 
community experiences, the development of em-
ployment and other post-school adult living ob-
jectives, and, when appropriate, acquisition of 
daily living skills and functional vocational 
evaluation. 
‘‘SEC. 603. OFFICE OF SPECIAL EDUCATION PROGRAMS. 
‘‘(a) ESTABLISHMENT.—There shall be, within the Of-
fice of Special Education and Rehabilitative Services in the 
Department of Education, an Office of Special Education 
Programs, which shall be the principal agency in such De-
partment for administering and carrying out this Act and 
other programs and activities concerning the education of 
children with disabilities. 
‘‘(b) DIRECTOR.—The Office established under sub-
section (a) shall be headed by a Director who shall be se-
lected by the Secretary and shall report directly to the As-
sistant Secretary for Special Education and Rehabilitative 
Services.
‘‘(c) VOLUNTARY AND UNCOMPENSATED SERVICES.—
Notwithstanding section 1342 of title 31, United States 
Code, the Secretary is authorized to accept voluntary and 
uncompensated services in furtherance of the purposes of 
this Act.’’. 
SEC. 102. SECTIONS 605 THROUGH 607 OF THE INDIVIDUALS 
WITH DISABILITIES EDUCATION ACT. 
Sections 605 through 607 of the Individuals with Dis-
abilities Education Act (20 U.S.C. 1404–1406) are amend-
ed to read as follows: 
‘‘SEC. 605. ACQUISITION OF EQUIPMENT; CONSTRUCTION 
OR ALTERATION OF FACILITIES. 
‘‘(a) IN GENERAL.—If the Secretary determines that 
a program authorized under this Act would be improved 
by permitting program funds to be used to acquire appro-
priate equipment, or to construct new facilities or alter ex-
isting facilities, the Secretary is authorized to allow the use 
of those funds for those purposes. 
‘‘(b) COMPLIANCE WITH CERTAIN REGULATIONS.—
Any construction of new facilities or alteration of existing 
facilities under subsection (a) shall comply with the require-
ments of—
‘‘(1) appendix A of part 36 of title 28, Code of 
Federal Regulations (commonly known as the ‘Ameri-
cans with Disabilities Accessibility Guidelines for 
Buildings and Facilities’); or 
‘‘(2) appendix A of part 101–19.6 of title 41, 
Code of Federal Regulations (commonly known as the 
‘Uniform Federal Accessibility Standards’). 
‘‘SEC. 606. EMPLOYMENT OF INDIVIDUALS WITH DISABIL-
ITIES. 
‘‘The Secretary shall ensure that each recipient of as-
sistance under this Act makes positive efforts to employ and 
advance in employment qualified individuals with disabil-
ities, particularly as teachers, related services personnel, 
early intervention providers, and administrators, in pro-
grams assisted under this Act. 
‘‘SEC. 607. REQUIREMENTS FOR PRESCRIBING REGULA-
TIONS. 
‘‘(a) IN GENERAL.—The Secretary may issue regula-
tions under this Act only to the extent that such regulations 
are reasonably necessary to ensure that there is compliance 
with the specific requirements of this Act. 
‘‘(b) PROTECTIONS PROVIDED
TO CHILDREN.—The 
Secretary may not implement, or publish in final form, any 
regulation prescribed pursuant to this Act that would—
‘‘(1) violate or contradict any provision of this 
Act; and
‘‘(2) procedurally or substantively lessen the pro-
tections provided to children with disabilities under 
this Act, as embodied in regulations in effect on July 
20, 1983 (particularly as such protections relate to 
parental consent to initial evaluation or initial place-
ment in special education, least restrictive environ-
ment, related services, timelines, attendance of evalua-
tion personnel at individualized education program 
meetings, or qualifications of personnel), except to the 
extent that such regulation reflects the clear and un-
equivocal intent of the Congress in legislation. 
‘‘(c) PUBLIC COMMENT PERIOD.—The Secretary shall 
provide a public comment period of at least 60 days on 
any regulation proposed under part B or part C of this 
Act on which an opportunity for public comment is other-
wise required by law. 
‘‘(d) POLICY LETTERS AND STATEMENTS.—The Sec-
retary may not issue policy letters or other statements (in-
cluding on issues of national significance) that—
‘‘(1) would violate or contradict any provision of 
this Act; or 
‘‘(2) establish a rule that is required for compli-
ance with, and eligibility under, this Act without fol-
lowing the requirements of section 553 of title 5, 
United States Code.
‘‘(e) CORRESPONDENCE FROM DEPARTMENT OF EDU-
CATION DESCRIBING INTERPRETATIONS OF THIS PART.—
‘‘(1) IN GENERAL.—The Secretary shall, on a 
quarterly basis, publish in the Federal Register, and 
widely disseminate to interested entities through var-
ious additional forms of communication, a list of cor-
respondence from the Department of Education re-
ceived by individuals during the previous quarter 
that describes the interpretations of the Department of 
Education of this Act or the regulations implemented 
pursuant to this Act. 
‘‘(2) ADDITIONAL INFORMATION.—For each item 
of correspondence published in a list under paragraph 
(1), the Secretary shall—
‘‘(A) identify the topic addressed by the cor-
respondence and shall include such other sum-
mary information as the Secretary determines to 
be appropriate; and 
‘‘(B) ensure that all such correspondence is 
issued, where applicable, in compliance with sec-
tion 553 of title 5, United States Code. 
‘‘(f) EXPLANATION AND ASSURANCES.—Any written 
response by the Secretary under subsection (e) regarding a 
policy, question, or interpretation under this Act shall in-
clude an explanation in the written response that the re-
sponse—
‘‘(1) is issued, when required, in compliance 
with the requirements of section 553 of title 5, United 
States Code; and 
‘‘(2) is provided as informal guidance and rep-
resents only the interpretation by the Department of 
Education of the applicable statutory or regulatory 
requirements in the context of the specific facts pre-
sented in the original question.’’. 
SEC. 103. SECTION 608 OF THE INDIVIDUALS WITH DISABIL-
ITIES EDUCATION ACT. 
Part A of the Individuals with Disabilities Education 
Act (20 U.S.C. 1400 et seq.) is amended by adding at the 
end the following:
‘‘SEC. 608. STATE ADMINISTRATION. 
‘‘(a) RULEMAKING.—Each State that receives funds 
under this Act shall—
‘‘(1) ensure that any State rules, regulations, 
and policies relating to this Act conform to the pur-
poses of this Act; and 
‘‘(2) minimize the number of rules, regulations, 
and policies to which the State’s local educational 
agencies and schools are subject to under this Act.
‘‘(b) SUPPORT AND FACILITATION.—All State rules, 
regulations, and policies relating to this Act shall support 
and facilitate local educational agency and school-level sys-
temic reform designed to enable children with disabilities 
to meet the challenging State student academic achievement 
standards.’’. 
SEC. 104. GAO REVIEW; REPORT. 
(a) REVIEW.—The Comptroller General shall conduct 
a review of all Federal requirements under the Individuals 
with Disabilities Education Act, and the requirements of 
a reasonable sample of State and local educational agencies 
relating to such Act, to determine which requirements result 
in excessive paperwork completion burdens for teachers, re-
lated services providers, and school administrators. 
(b) REPORT.—Not later than 2 years after the date 
of the enactment of this Act, the Comptroller General shall 
prepare and submit to Congress a report that contains the 
results of the review under subsection (a).
SEC. 105. GAO REVIEW OF CERTAIN STATE DEFINITIONS 
AND EVALUATION PROCESSES. 
(a) REVIEW.—The Comptroller General of the United 
States shall conduct a review of—
(1) variation among States in definitions, and 
evaluation processes, relating to the provision of serv-
ices under the Individuals with Disabilities Edu-
cation Act to children having conditions described in 
section 602(a)(3) of such Act using the terms ‘‘emo-
tional disturbance’’, ‘‘other health impairments’’, and 
‘‘specific learning disability’’; and 
(2) the degree to which these definitions and 
evaluation processes conform to scientific, peer-re-
viewed research. 
(b) REPORT.—Not later than 2 years after the date 
of the enactment of this Act, the Comptroller General shall 
prepare and submit to Congress a report that contains the 
results of the review under subsection (a). 
SEC. 106. ADDITIONAL GAO STUDY AND REPORT. 
(a) IN GENERAL.—The Comptroller General of the 
United States shall conduct a study on existing or devel-
oping professional development programs for special edu-
cation personnel delivered through the use of technology and 
distance learning. 
(b) REPORT.—Not later than 2 years after the date 
of the enactment of this Act, the Comptroller General of the 
United States shall submit a report containing the findings 
from the study conducted under subsection (a) to the Com-
mittee on Education and the Workforce of the House of Rep-
resentatives and the Committee on Health, Education, 
Labor, and Pensions of the Senate.
SEC. 107. STUDY ON LIMITED ENGLISH PROFICIENT STU-
DENTS. 
(a) IN GENERAL.—The Comptroller General of the 
United States shall conduct a study on how limited English 
proficient students are being served under the Individuals 
with Disabilities Education Act. 
(b) REPORT.—Not later than 2 years after the date 
of the enactment of the Improving Education Results for 
Children With Disabilities Act of 2003, the Comptroller 
General of the United States shall submit a report con-
taining the findings from the study conducted under sub-
section (a) to the Committee on Education and the Work-
force of the House of Representatives and the Committee 
on Health, Education, Labor, and Pensions of the Senate. 
TITLE II—ASSISTANCE FOR EDU-
CATION OF ALL CHILDREN 
WITH DISABILITIES 
SEC. 201. AUTHORIZATION; ALLOTMENT; USE OF FUNDS; 
AUTHORIZATION OF APPROPRIATIONS. 
Section 611 of the Individuals with Disabilities Edu-
cation Act (20 U.S.C. 1411) is amended to read as follows: 
‘‘SEC. 611. AUTHORIZATION; ALLOTMENT; USE OF FUNDS; 
AUTHORIZATION OF APPROPRIATIONS. 
‘‘(a) GRANTS TO STATES.—
‘‘(1) PURPOSE OF GRANTS.—The Secretary shall 
make grants to States and the outlying areas, and
provide funds to the Secretary of the Interior, to as-
sist them to provide special education and related 
services to children with disabilities in accordance 
with this part.
‘‘(2) 
MAXIMUM
AMOUNTS.—The 
maximum 
amount of the grant a State may receive under this 
section for any fiscal year is—
‘‘(A) the number of children with disabil-
ities in the State who are receiving special edu-
cation and related services—
‘‘(i) aged 3 through 5 if the State is el-
igible for a grant under section 619; and 
‘‘(ii) aged 6 through 21; multiplied by 
‘‘(B) 40 percent of the average per-pupil ex-
penditure in public elementary and secondary 
schools in the United States. 
‘‘(3) 
LIMITATION.—Notwithstanding 
subpara-
graphs (A) and (B) of paragraph (2), the maximum 
amount of the grant a State may receive under this 
section for a fiscal year may not be based on the 
number of children ages 3 through 17, inclusive, in 
excess of 13.5 percent of the number of all children in 
that age range in the State. 
‘‘(b) OUTLYING AREAS.—
‘‘(1) FUNDS RESERVED.—From the amount ap-
propriated for any fiscal year under subsection (i), 
the Secretary shall reserve not more than one percent, 
which shall be used to provide assistance to the out-
lying areas in accordance with their respective popu-
lations of individuals aged 3 through 21. 
‘‘(2) SPECIAL RULE.—The provisions of Public 
Law 95–134, permitting the consolidation of grants 
by the outlying areas, shall not apply to funds pro-
vided to those areas under this section. 
‘‘(c) SECRETARY
OF
THE
INTERIOR.—From the 
amount appropriated for any fiscal year under subsection 
(i), the Secretary shall reserve 1.226 percent to provide as-
sistance to the Secretary of the Interior in accordance with 
subsection (h). 
‘‘(d) ALLOCATIONS TO STATES.—
‘‘(1) IN
GENERAL.—After reserving funds for 
payments to the outlying areas and the Secretary of 
the Interior under subsections (b) and (c), the Sec-
retary shall allocate the remaining amount among the 
States in accordance with this subsection. 
‘‘(2) SPECIAL RULE FOR USE OF FISCAL YEAR 
1999 AMOUNT.—If a State does not make a free appro-
priate public education available to all children with 
disabilities aged 3 through 5 in the State in any fis-
cal year, the Secretary shall compute the State’s 
amount for fiscal year 1999, solely for the purpose of 
calculating the State’s allocation in the subsequent 
year under paragraph (3) or (4), by subtracting the 
amount allocated to the State for fiscal year 1999 on 
the basis of those children. 
‘‘(3) INCREASE IN FUNDS.—If the amount avail-
able for allocations to States under paragraph (1) is 
greater than the amount allocated to the States under 
this paragraph for the preceding fiscal year, those al-
locations shall be calculated as follows: 
‘‘(A)(i) Except as provided in subparagraph 
(B), the Secretary shall allocate—
‘‘(I) to each State the amount it re-
ceived for fiscal year 1999; 
‘‘(II) 85 percent of any remaining 
funds to States on the basis of their relative 
populations of children aged 3 through 21 
who are of the same age as children with 
disabilities for whom the State ensures the 
availability of a free appropriate public 
education under this part; and 
‘‘(III) 15 percent of those remaining 
funds to States on the basis of their relative
populations of children described in sub-
clause (II) who are living in poverty. 
‘‘(ii) For the purpose of making grants 
under this paragraph, the Secretary shall use the 
most recent population data, including data on 
children living in poverty, that are available and 
satisfactory to the Secretary. 
‘‘(B) Notwithstanding subparagraph (A), 
allocations under this paragraph shall be subject 
to the following: 
‘‘(i) No State’s allocation shall be less 
than its allocation for the preceding fiscal 
year. 
‘‘(ii) No State’s allocation shall be less 
than the greatest of—
‘‘(I) the sum of—
‘‘(aa) the amount it received 
for fiscal year 1999; and 
‘‘(bb) one-third of one percent 
of the amount by which the 
amount appropriated under sub-
section (i) exceeds the amount ap-
propriated under this section for 
fiscal year 1999; 
‘‘(II) the sum of—
‘‘(aa) the amount it received 
for the preceding fiscal year; and 
‘‘(bb) that amount multiplied 
by the percentage by which the in-
crease in the funds appropriated 
from the preceding fiscal year ex-
ceeds 1.5 percent; or 
‘‘(III) the sum of—
‘‘(aa) the amount it received 
for the preceding fiscal year; and 
‘‘(bb) that amount multiplied 
by 90 percent of the percentage 
increase in the amount appro-
priated from the preceding fiscal 
year. 
‘‘(iii) Notwithstanding clause (ii), no 
State’s allocation under this paragraph 
shall exceed the sum of—
‘‘(I) the amount it received for the 
preceding fiscal year; and 
‘‘(II) that amount multiplied by 
the sum of 1.5 percent and the percent-
age increase in the amount appro-
priated.
‘‘(C) If the amount available for allocations 
under this paragraph is insufficient to pay those 
allocations in full, those allocations shall be rat-
ably reduced, subject to subparagraph (B)(i). 
‘‘(4) DECREASE IN FUNDS.—If the amount avail-
able for allocations to States under paragraph (1) is 
less than the amount allocated to the States under 
this section for the preceding fiscal year, those alloca-
tions shall be calculated as follows: 
‘‘(A) If the amount available for allocations 
is greater than the amount allocated to the 
States for fiscal year 1999, each State shall be 
allocated the sum of—
‘‘(i) the amount it received for fiscal 
year 1999; and 
‘‘(ii) an amount that bears the same 
relation to any remaining funds as the in-
crease the State received for the preceding 
fiscal year over fiscal year 1999 bears to the 
total of all such increases for all States. 
‘‘(B)(i) If the amount available for alloca-
tions is equal to or less than the amount allo-
cated to the States for fiscal year 1999, each 
State shall be allocated the amount it received 
for fiscal year 1999.
‘‘(ii) If the amount available is insufficient 
to make the allocations described in clause (i), 
those allocations shall be ratably reduced. 
‘‘(e) STATE-LEVEL ACTIVITIES.—
‘‘(1) IN GENERAL.—
‘‘(A) Each State may retain not more than 
the amount described in subparagraph (B) for 
administration and other State-level activities in 
accordance with paragraphs (2), (3), and (4). 
‘‘(B) For each fiscal year, the Secretary 
shall determine and report to the State edu-
cational agency an amount that is 25 percent of 
the amount the State received under this section 
for fiscal year 1997, cumulatively adjusted by 
the Secretary for each succeeding fiscal year by 
the lesser of—
‘‘(i) the percentage increase, if any, 
from the preceding fiscal year in the State’s 
allocation under this section; or 
‘‘(ii) the rate of inflation, as measured 
by the percentage increase, if any, from the 
preceding fiscal year in the Consumer Price 
Index For All Urban Consumers, published 
by the Bureau of Labor Statistics of the De-
partment of Labor.
‘‘(C) A State may use funds it retains 
under subparagraph (A) without regard to—
‘‘(i) the prohibition on commingling of 
funds in section 612(a)(18)(B); and 
‘‘(ii) the prohibition on supplanting 
other funds in section 612(a)(18)(C). 
‘‘(2) STATE ADMINISTRATION.—
‘‘(A) For the purpose of administering this 
part, including section 619 (including the co-
ordination of activities under this part with, 
and providing technical assistance to, other pro-
grams that provide services to children with dis-
abilities)—
‘‘(i) each State may use not more than 
20 percent of the maximum amount it may 
retain under paragraph (1)(A) for any fis-
cal year or $500,000 (adjusted by the cumu-
lative rate of inflation since fiscal year 
1998, as measured by the percentage in-
crease, if any, in the Consumer Price Index 
For All Urban Consumers, published by the 
Bureau of Labor Statistics of the Depart-
ment of Labor), whichever is greater; and 
‘‘(ii) each outlying area may use up to 
5 percent of the amount it receives under
‘‘(3) REALLOCATION OF FUNDS.—If a State edu-
cational agency determines that a local educational 
agency is adequately providing a free appropriate 
public education to all children with disabilities re-
siding in the area served by that agency with State 
and local funds, the State educational agency may re-
allocate any portion of the funds under this part that 
are not needed by that local agency to provide a free 
appropriate public education to other local edu-
cational agencies in the State that are not adequately 
providing special education and related services to all 
children with disabilities residing in the areas they 
serve. 
‘‘(g) DEFINITIONS.—For the purpose of this section—
‘‘(1) the term ‘average per-pupil expenditure in 
public elementary and secondary schools in the 
United States’ means—
‘‘(A) without regard to the source of 
funds—
‘‘(i) the aggregate current expenditures, 
during the second fiscal year preceding the 
fiscal year for which the determination is 
made (or, if satisfactory data for that year 
are not available, during the most recent 
preceding fiscal year for which satisfactory