agreed upon by the State and the agency, from the
list under section 4(a).
(b) STATE APPROVAL.—When submitting a perform-
ance agreement to the Secretary, an eligible local edu-
cational agency described in subsection (a) shall provide
written documentation from the State in which such agen-
cy is located that it has no objection to the agency’s pro-
posal for a performance agreement.
(c) APPLICATION.—
(1) IN GENERAL.—Except as provided in this
section, and to the extent applicable, the require-
ments of this Act shall apply to an eligible local edu-
cational agency that submits a performance agree-
ment in the same manner as the requirements apply
to a State.
(2) EXCEPTIONS.—The following provisions
shall not apply to an eligible local educational agen-
cy:
(A) WITHIN
STATE
DISTRIBUTION
FOR-
MULA NOT APPLICABLE.—The formula for the
allocation of funds under section 5 shall not
apply.
(B) 
STATE
SET
ASIDE
SHALL
NOT
APPLY.—The State set aside for administrative
funds in section 7 shall not apply.
SEC. 7. LIMITATIONS ON STATE AND LOCAL EDUCATIONAL
AGENCY ADMINISTRATIVE EXPENDITURES.
(a) IN GENERAL.—Except as otherwise provided
under subsection (b), a State that includes part A of title
I of the Elementary and Secondary Education Act of 1965
in the performance agreement may use not more than 1
percent of such total amount of funds allocated to such
State under the programs included in the performance
agreement for administrative purposes.
(b) EXCEPTION.—A State that does not include part
A of title I of the Elementary and Secondary Education
Act of 1965 in the performance agreement may use not
more than 3 percent of the total amount of funds allocated
to such State under the programs included in the perform-
ance agreement for administrative purposes.
(c) LOCAL EDUCATIONAL AGENCY.—A local edu-
cational agency participating in this Act under a perform-
ance agreement under section 6 may not use for adminis-
trative purposes more than 4 percent of the total amount
of funds allocated to such agency under the programs in-
cluded in the performance agreement.
SEC. 8. PERFORMANCE REVIEW.
(a) MID-TERM PERFORMANCE REVIEW.—If, during
the 5-year term of the performance agreement, student
achievement significantly declines for three consecutive
years in the academic performance categories established
in the performance agreement, the Secretary may, after
notice and opportunity for a hearing, terminate the agree-
ment
(b) FAILURE TO MEET TERMS.—If at the end of the
5-year term of the performance agreement a State has not
substantially met the performance goals submitted in the
performance agreement, the Secretary shall, after notice
and an opportunity for a hearing, terminate the perform-
ance agreement and the State shall be required to comply
with the program requirements, in effect at the time of
termination, for each program included in the perform-
ance agreement.
(c) PENALTY FOR FAILURE TO IMPROVE STUDENT
PERFORMANCE.—If a State has made no progress toward
achieving its performance goals by the end of the term
of the agreement, the Secretary may reduce funds for
State administrative costs for each program included in
the performance agreement by up to 50 percent for each
year of the 2-year period following the end of the term
of the performance agreement.
SEC. 9. RENEWAL OF PERFORMANCE AGREEMENT.
(a) NOTIFICATION.—A State that wishes to renew its
performance agreement shall notify the Secretary of its
renewal request not less than 6 months prior to the end
of the term of the performance agreement.
(b) RENEWAL REQUIREMENTS.—A State that has
met or has substantially met its performance goals sub-
mitted in the performance agreement at the end of the
5-year term may reapply to the Secretary to renew its per-
formance agreement for an additional 5-year period. Upon
the completion of the 5-year term of the performance
agreement or as soon thereafter as the State submits data
required under the agreement, the Secretary shall renew,
for an additional 5-year term, the performance agreement
of any State that has met or has substantially met its per-
formance goals.
SEC. 10. ACHIEVEMENT GAP REDUCTION REWARDS.
(a) CLOSING THE GAP REWARD FUND.—
(1) IN GENERAL.—To reward States that make
significant progress in eliminating achievement gaps
by raising the achievement levels of the lowest per-
forming students, the Secretary shall set aside suffi-
cient funds from the Fund for the Improvement of
Education under part A of title X of the Elementary
and Secondary Education Act of 1965 to grant a re-
ward to States that meet the conditions set forth in
subsection (b) by the end of their 5-year perform-
ance agreement.
(2) REWARD AMOUNT.—The amount of the re-
ward referred to in paragraph (1) shall be not less
than 5 percent of funds allocated to the State during
the first year of the performance agreement for pro-
grams included in the agreement.
(b) CONDITIONS OF PERFORMANCE REWARD.—Sub-
ject to paragraph (3), a State is eligible to receive a re-
ward under this section as follows:
(1) A State is eligible for such an award if the
State reduces by not less than 25 percent, over the
5-year term of the performance agreement, the dif-
ference between the percentage of highest and lowest
performing groups of students that meet the State’s
definition of ‘‘proficient’’ as referenced in section
1111(b)(1)(D)(i)(II) of the Elementary and Sec-
ondary Education Act of 1965.
(2) A State is eligible for such an award if a
State increases the proportion of two or more groups
of students under section 3(d)(5)(C) that meet State
proficiency standards by 25 percent.
(3) A State shall receive such an award if the
following requirements are met:
(A) CONTENT
AREAS.—The reduction in
the achievement gap or approvement in achieve-
ment shall include not less than two content
areas, one of which shall be mathematics or
reading.
(B) GRADES TESTED.—The reduction in
the achievement gap or improvement in achieve-
ment shall occur in at least two grade levels.
(c) RULE OF CONSTRUCTION.—Student achievement
gaps shall not be considered to have been reduced in cir-
cumstances where the average academic performance of
the highest performing quintile of students has decreased.
SEC. 11. STRAIGHT A’S PERFORMANCE REPORT.
The Secretary shall make the annual State reports
described in section 3 available to the House Committee
on Education and the Workforce and the Senate Com-
mittee on Health, Education, Labor and Pensions not
later than 60 days after the Secretary receives the report.
SEC. 12. APPLICABILITY OF TITLE XIV OF THE ELEMEN-
TARY AND SECONDARY EDUCATION ACT OF
1965.
To the extent that provisions of title XIV of the Ele-
mentary and Secondary Education Act of 1965 are incon-
sistent with this Act, this Act shall be construed as super-
seding such provisions.
SEC. 13. APPLICABILITY OF GENERAL EDUCATION PROVI-
SIONS ACT.
To the extent that the provisions of the General Edu-
cation Provisions Act are inconsistent with this Act, this
Act shall be construed as superseding such provisions, ex-
given such term in section 14101 of the Elementary
and Secondary Education Act of 1965 (20 U.S.C.
8801).
(4) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Education.
(5) STATE.—The term ‘‘State’’ means each of
the 50 States, the District of Columbia, the Com-
monwealth of Puerto Rico, Guam, the United States
Virgin Islands, the Commonwealth of the Northern
Mariana Islands, and American Samoa.
SEC. 17. EFFECTIVE DATE.
This Act shall take effect with respect to funds appro-
priated for the fiscal year beginning October 1, 2000.
Passed the House of Representatives October 21,
1999.
Attest:
Clerk.