I 
110TH CONGRESS 
1ST SESSION H. R. 2577 
To amend the Elementary and Secondary Education Act of 1965 to provide 
additional flexibility to State and local educational agencies to raise 
the academic achievement of all students. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 6, 2007 
Mr. MCKEON (for himself, Mr. BOEHNER, Mr. CASTLE, Mr. REGULA, Mr. 
MARCHANT, Mr. HELLER of Nevada, Mr. WALBERG, Mr. RENZI, and Mr. 
PAUL) introduced the following bill; which was referred to the Committee 
on Education and Labor 
A BILL 
To amend the Elementary and Secondary Education Act 
of 1965 to provide additional flexibility to State and 
local educational agencies to raise the academic achieve-
ment of all students. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘State and Local Flexi-
bility Improvement Act’’. 
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SEC. 2. INCREASED USE OF STATE AND LOCAL TRANSFER-
ABILITY OF FUNDS. 
(a) TRANSFERS BY STATES.—Section 6123(a) of the 
Elementary and Secondary Education Act of 1965 (20 
U.S.C. 7305b(a)) is amended— 
(1) in paragraph (1)— 
(A) by striking ‘‘not more than 50 per-
cent’’ and inserting ‘‘up to 100 percent’’; and 
(2) in paragraph (2)— 
(A) by striking ‘‘and subject to the 50 per-
cent limitation described in paragraph (1).’’. 
(b) TRANSFERS
BY LOCAL EDUCATIONAL AGEN-
CIES.—Section 6123(b) of the Elementary and Secondary 
Education Act of 1965 (20 U.S.C. 7305b(b))is amended— 
(1) in paragraph (1)— 
(A) by amending subparagraph (A) to read 
as follows: 
‘‘(A) IN
GENERAL.—In accordance with 
this subpart, a local educational agency may 
transfer up to 100 percent of the funds allo-
cated to it (including funds transferred under 
subparagraph (B)) under each of the provisions 
listed in paragraph (2) for a fiscal year to one 
or more of its allocations for such fiscal year 
under any other provision listed in paragraph 
(2).’’; 
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(B) by striking subparagraph (B); 
(C) by redesignating subparagraph (C) as 
subparagraph (B); and 
(D) in subparagraph (B), as redesignated, 
by striking, ‘‘and subject to the percentage limi-
tation described in subparagraph (A) or (B), as 
applicable’’; and 
(2) in paragraph (2), by striking ‘‘subpara-
graph (A), (B), or (C)’’ and inserting ‘‘subpara-
graph (A) or (B)’’. 
(c) Section 6123(e) of the Elementary and Secondary 
Education Act of 1965 (20 U.S.C. 7305b(e)) is amend-
ed— 
(1) in paragraph (1), by striking ‘‘IN
GEN-
ERAL’’ and inserting ‘‘PARTIAL
TRANSFER
OF 
FUNDS’’; 
(2) by redesignating paragraph (2) as para-
graph (3); and 
(3) by inserting after paragraph (2) the fol-
lowing: 
‘‘(2) TOTAL TRANSFER OF FUNDS.—If a State 
or local educational agency transfers 100 percent of 
the funds allocated to it for any of the programs 
under subsection (a)(1) or subsection (b)(2) respec-
tively, the funds so transferred shall not be subject 
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to the rules and requirements applicable to the funds 
under the provision from which the transferred 
funds are transferred.’’. 
SEC. 3. STRENGTHENING STATE AND LOCAL CONTROL TO 
ENCOURAGE INNOVATION IN THE CLASS-
ROOM. 
Subpart 3 of part A of title VI of the Elementary 
and Secondary Education Act of 1965 (20 U.S.C. 7311 
et seq.) is amended to read as follows: 
‘‘SUBPART 3—STATE FLEXIBILITY PERFORMANCE 
AGREEMENTS 
‘‘SEC. 6131. PURPOSE. 
‘‘The purpose of this subpart is to provide States 
greater flexibility in determining how— 
‘‘(1) to increase the academic achievement of all 
students so that all students will meet or exceed the 
State’s proficient level of academic achievement in 
reading and math by school year 2013–2014; 
‘‘(2) to narrow achievement gaps between the 
lowest- and highest-achieving groups of students; 
and 
‘‘(3) to eliminate barriers to implementing ef-
fective education reforms and directing Federal re-
sources to where they are most needed. 
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‘‘SEC. 6132. STATE FLEXIBILITY PERFORMANCE AGREE-
MENTS. 
‘‘(a) AUTHORITY.—In accordance with this subpart, 
a State may enter into a performance agreement with the 
Secretary under which, except as otherwise provided in 
this subpart, the State may— 
‘‘(1) waive statutory or regulatory program re-
quirements pursuant to section 6133, including 
those requirements for any local educational agency 
or school within the State; 
‘‘(2) consolidate the Federal funds described in 
section 6133 and use those funds for any edu-
cational purpose authorized under State law; 
‘‘(3) enter into local performance agreements 
with local educational agencies in the State in ac-
cordance with section 6134 in order to— 
‘‘(A) assist those agencies in making ade-
quate yearly progress (as described in section 
1111(b)); 
‘‘(B) advance the educational priorities of 
the State; 
‘‘(C) improve student achievement and 
narrow achievement gaps; and 
‘‘(D) allow those agencies to consolidate 
funds under the Federal programs described in 
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section 6134 and use those funds for any edu-
cational purpose authorized under State law; 
‘‘(4) use an alternative method for making allo-
cations to local educational agencies under part A of 
title I, provided that the Secretary determines that 
the method of allocation proposed by the State tar-
gets a greater proportion of funds to local edu-
cational agencies with high concentrations of chil-
dren from low-income families than would the alloca-
tion pursuant to subpart 2 of that part; and 
‘‘(5) permit local educational agencies to use al-
ternative criteria for directing funds provided under 
part A of title I to schools, in order to target serv-
ices more effectively to schools that serve a high con-
centration of students from low-income families. 
‘‘(b) TERMS OF PERFORMANCE AGREEMENT.—Each 
performance agreement entered into by the Secretary 
under this subpart shall include the following provisions: 
‘‘(1) DURATION.—A statement that the dura-
tion of the performance agreement shall be for a pe-
riod of 5 years. 
‘‘(2) LIST AND DESCRIPTION OF PROGRAM RE-
QUIREMENTS.—A list and description of the Federal 
statutory and regulatory program requirements de-
scribed in section 6133 that the State expects to 
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waive and included in the performance agreement, 
and an assurance that the State will waive only 
those requirements described in that section. 
‘‘(3) APPLICATION
OF
PROGRAM
REQUIRE-
MENTS.—A statement that no program requirements 
of any program included by the State in the per-
formance agreement shall apply, except as otherwise 
provided in this subpart. 
‘‘(4) USE
OF
FUNDS
TO
IMPROVE
STUDENT 
ACHIEVEMENT.—A 5-year plan describing how the 
State intends to use the flexibility included in the 
performance agreement to advance the education 
priorities of the State, improve student achievement, 
and narrow achievement gaps between groups of stu-
dents. 
‘‘(5) ACCOUNTABILITY
REQUIREMENTS.—If a 
State includes any part of part A of title I in its per-
formance agreement, the State shall include a cer-
tification that the State has developed and continues 
to implement the challenging State academic stand-
ards, academic assessments, and accountability sys-
tems described in section 1111(b) and had those sys-
tems approved by the Secretary pursuant to section 
1111(e). 
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‘‘(6) STUDENT
ACADEMIC
ACHIEVEMENT
RE-
QUIREMENTS.—If a State includes any part of part 
A of title I in its performance agreement, the State 
shall include a description of how it will hold local 
educational agencies and schools accountable for stu-
dent performance that includes a procedure for iden-
tifying local educational agencies and schools in need 
of improvement, and assistance and interventions for 
those local educational agencies and schools to en-
sure that their students make substantial gains in 
achievement. 
‘‘(7) PUBLIC
SCHOOL
CHOICE
AND
SUPPLE-
MENTAL
EDUCATIONAL
SERVICES.—If a State in-
cludes any part of part A of title I in its perform-
ance agreement, the State shall include a certifi-
cation that the State accountability system developed 
in paragraph (6) includes public school choice and 
supplemental education services for those schools not 
making adequate yearly progress for two or more 
consecutive years. 
‘‘(8) LOCAL EDUCATIONAL AGENCIES RESPON-
SIBILITIES.—A description of how a State will select 
local educational agencies within the State with 
which to enter into local performance agreements 
pursuant to section 6134 and a description of how 
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the State will evaluate the performance of local edu-
cational agencies within the State with local per-
formance agreements pursuant to section 6134 and 
the circumstances under which it will terminate 
those agreements. 
‘‘(9) ALTERNATIVE METHOD FOR ALLOCATING 
FUNDS.—In the case of a State that seeks to use an 
alternative method for allocating funds under part A 
of title I to local educational agencies, a description 
of that method and evidence that demonstrates that 
the alternative method will target funds to local edu-
cational agencies with high concentrations of chil-
dren from low-income families more effectively than 
the allocation method required under that part. 
‘‘(10) ALTERNATIVE
CRITERIA
FOR
ALLO-
CATING FUNDS.—In the case of a State that intends 
to permit local educational agencies within the State 
to use alternative criteria for allocating funds under 
part A of title I to schools, a description of the cri-
teria and an analysis of the effect those criteria 
would have on those allocations. 
‘‘(11) FISCAL
RESPONSIBILITIES.—An assur-
ance that the State will use fiscal control and funds 
accounting procedures that will ensure proper dis-
bursement of, and accounting for, Federal funds 
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paid to the State under this Act and an assurance 
that the State will not reduce the level of spending 
of State funds for elementary and secondary edu-
cation during the term of the performance agree-
ment. 
‘‘(12) CIVIL RIGHTS.—An assurance that the 
State will meet the requirements of applicable Fed-
eral civil rights laws. 
‘‘(13) STATE
APPROVAL.—An assurance that 
not less than 2 of the following approved the pro-
posed performance agreement: 
‘‘(A) The Governor of the State. 
‘‘(B) The State legislature. 
‘‘(C) The State educational agency. 
‘‘(c) APPROVAL OF PERFORMANCE AGREEMENT.— 
‘‘(1) IN
GENERAL.—Not later than 90 days 
after the receipt of a proposed performance agree-
ment submitted by a State, the Secretary shall ap-
prove the performance agreement or provide the 
State with a written determination detailing the rea-
sons why the performance agreement fails to satisfy 
the purposes, goals, or a requirement of this sub-
part. 
‘‘(2) PEER-REVIEW PROCESS.—In carrying out 
paragraph (1), the Secretary shall establish a peer- 
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review process to assist in the review of applications 
under this section, and shall appoint as peer review-
ers individuals who represent a broad range of edu-
cational stakeholders. 
‘‘(3) TREATMENT
AS
APPROVED.—Each per-
formance agreement for which the Secretary fails to 
take the action required in paragraph (1) in the 
time period described in that paragraph shall be con-
sidered to be approved. 
‘‘(4) DISAPPROVAL OF PERFORMANCE AGREE-
MENT.—If the Secretary disapproves a State’s per-
formance agreement, the State shall have 30 days to 
resubmit a revised performance agreement. The Sec-
retary shall approve the revised performance agree-
ment within 30 days of receipt of the revised per-
formance agreement or provide the State with a 
written determination that the revised performance 
agreement fails to satisfy the purposes, goals, or a 
requirement of this subpart. 
‘‘(d) 
AMENDMENT
TO
PERFORMANCE
AGREE-
MENT.— 
‘‘(1) IN GENERAL.—In each of the following 
circumstances, the Secretary, subject to approval 
under paragraph (2), shall agree to amend a per-
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formance agreement entered into with a State under 
this subpart: 
‘‘(A) REDUCTION IN SCOPE OF PERFORM-
ANCE AGREEMENT.—A State seeks to amend 
the performance agreement to remove from the 
scope of the performance agreement any pro-
gram requirement described in section 6133. 
‘‘(B) EXPANSION OF SCOPE OF PERFORM-
ANCE AGREEMENT.—A State seeks to amend 
the performance agreement to include within 
the scope of the performance agreement any ad-
ditional program requirement described in sec-
tion 6133. 
‘‘(2) APPROVAL OF AMENDMENT.— 
‘‘(A) IN
GENERAL.—Not later than 60 
days after the receipt of a proposed perform-
ance agreement amendment submitted by a 
State, the Secretary shall approve the amend-
ment or provide the State with a written deter-
mination that the amendment fails to satisfy 
the purposes, goals, or a requirement of this 
subpart. 
‘‘(B) TREATMENT
AS
APPROVED.—Each 
amendment for which the Secretary fails to 
take the action required in subparagraph (A) in 
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the time period described in such subparagraph 
shall be considered to be approved. 
‘‘(3) TREATMENT OF PROGRAM REQUIREMENTS 
WITHDRAWN FROM AGREEMENT.—Beginning on the 
effective date of an amendment executed under 
paragraph (1)(A), each program requirement of each 
program removed from the scope of a performance 
agreement shall apply to the State’s use of funds 
made available under the program. 
‘‘(e) WITHIN-STATE DISTRIBUTION OF FUNDS.— 
‘‘(1) IN GENERAL.—The distribution of funds 
from programs included in a performance agreement 
from a State to a local educational agency within the 
State shall be determined by the Governor of the 
State and the State legislature. In a State in which 
the constitution or State law designates another in-
dividual, entity, or agency to be responsible for edu-
cation, the allocation of funds from programs in-
cluded in the performance agreement from a State 
to a local educational agency within the State shall 
be determined by that individual, entity, or agency, 
in consultation with the Governor and State Legisla-
ture. Nothing in this section shall be construed to 
supersede or modify any provision of a State con-
stitution or State law. 
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‘‘(2) LOCAL INPUT.—States shall provide par-
ents, teachers, and local schools and educational 
agencies notice and opportunity to comment on the 
proposed allocation of funds as provided under gen-
eral State law notice-and-comment provisions. 
‘‘SEC. 6133. ELIGIBLE PROGRAM REQUIREMENTS. 
‘‘(a) SCOPE.—A State may choose to include within 
the scope of its performance agreement— 
‘‘(1) any statutory or regulatory program re-
quirement authorized under this Act, except section 
1111, 
‘‘(2) any program for which Congress makes 
funds available to the State if the program is for a 
purpose described in section 1001, except any pro-
gram funded pursuant to the Individuals with Dis-
abilities Education Act, and 
‘‘(3) notwithstanding paragraph (1), additional 
models and systems for measuring student progress 
for purposes of determining whether a local edu-
cational agency or school has made adequate yearly 
progress described in section 1111(b). 
Such models and systems that measure student progress 
under this paragraph may include growth models that 
demonstrate progress based on longitudinal student as-
sessment results indicating improvement in the academic 
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performance of individual students over time and ensure 
that all students will meet or exceed the State’s proficient 
level of academic achievement in reading and math by 
school year 2013–2014. 
‘‘(b) USES OF FUNDS.—Funds made available to a 
State pursuant to a performance agreement under this 
subpart shall be used for any educational purpose per-
mitted by State law of the State participating in the per-
formance agreement. 
‘‘SEC. 6134. LOCAL PERFORMANCE AGREEMENTS. 
‘‘(a) IN GENERAL.— 
‘‘(1) A State that has entered into a perform-
ance agreement with the Secretary pursuant to sec-
tion 6132 may enter into local performance agree-
ments with local educational agencies in the State to 
waive statutory or regulatory program requirements 
and consolidate Federal funds to improve student 
achievement and narrow achievement gaps. A State 
shall include a priority on entering into such agree-
ments with high-need local educational agencies as 
described in paragraph (3). 
‘‘(2) TERMS OF PERFORMANCE AGREEMENT.— 
A local performance agreement entered into with the 
State under this subpart shall include specific, meas-
urable educational goals, with annual objectives, that 
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the local educational agency plans to accomplish 
under the agreement. The agreement shall waive 
only those statutory or regulatory program require-
ments included in the performance agreement au-
thorized under section 6132. 
‘‘(3) HIGH-NEED LOCAL EDUCATIONAL AGEN-
CY.—The term ‘high-need local educational agency’ 
means a local educational agency that— 
‘‘(A) has not made adequate yearly 
progress for the two preceding academic years; 
and 
‘‘(B) serves a larger number, or percent-
age, of economically disadvantaged students 
than the average number or percentage, as the 
case may be, of such students served by local 
educational agencies in the State. 
‘‘(b) FUNDS AVAILABLE TO BE CONSOLIDATED.— 
A local educational agency that has entered into a local 
performance agreement with a State under this section 
may consolidate the funds received by the local educational 
agency and use the consolidated funds for any educational 
purpose authorized under State law. 
‘‘(c) 
TERMINATION
OF
LOCAL
PERFORMANCE 
AGREEMENT.—A State may, after providing notice and an 
opportunity for a hearing, terminate a local educational 
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agency’s local performance agreement if the State deter-
mines that the local educational agency has failed to com-
ply with the performance agreement. 
‘‘SEC. 6135. ADMINISTRATIVE EXPENSES. 
‘‘(a) STATE CONSOLIDATING FUNDS UNDER PART A 
OF TITLE I.—Each State that includes part A of title I 
within the scope of a performance agreement under this 
subpart may use, for administrative expenses, not more 
than 1 percent of the total amount of funds made available 
to the State under the programs included within the scope 
of the performance agreement. 
‘‘(b) STATES NOT CONSOLIDATING FUNDS UNDER 
PART A OF TITLE I.—Each State that does not include 
part A of title I within the scope of a performance agree-
ment under this subpart may use, for administrative ex-
penses, not more than 3 percent of the total amount of 
funds made available to the State under the programs in-
cluded within the scope of the performance agreement. 
‘‘(c) LOCAL EDUCATIONAL AGENCIES.—Each local 
educational agency that enters into a local performance 
agreement with a State pursuant to section 6134 may use, 
for administrative expenses, not more than 4 percent of 
the total amount of funds allocated to such agency under 
the programs included within the scope of the performance 
agreement. 
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‘‘SEC. 6136. PARTICIPATION BY PRIVATE SCHOOL CHIL-
DREN AND TEACHERS. 
‘‘Each State consolidating and using funds pursuant 
to a performance agreement under this subpart shall pro-
vide for the participation of private school children and 
teachers in the activities assisted under the performance 
agreement in the same manner as participation is provided 
to private school children and teachers under section 
9501. 
‘‘SEC. 6137. ANNUAL REPORTS. 
‘‘(a) IN GENERAL.—Not later than 1 year after the 
execution of the performance agreement, and annually 
thereafter, each State shall disseminate widely to the par-
ents, the general public, and the Secretary, a report that 
includes— 
‘‘(1) student performance data disaggregated in 
the same manner as data are disaggregated under 
section 1111(b)(3)(C)(xiii); and 
‘‘(2) a description of how the State has used 
Federal funds to improve academic achievement, 
narrow the achievement gap, and improve edu-
cational opportunities for the disadvantaged. 
‘‘(b) SUBMISSION TO CONGRESS.—Not later than 60 
days after the Secretary receives a report under subsection 
(a), the Secretary shall submit that report to the Con-
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gress, together with any other information the Secretary 
considers appropriate. 
‘‘SEC. 6138. PERFORMANCE REVIEW AND EARLY TERMI-
NATION. 
‘‘(a) REVIEW.—For each State having in effect a per-
formance agreement under this subpart, the Secretary 
shall carry out a review of the performance agreement, 
at the midpoint of the duration of the performance agree-
ment, in order to determine whether the State has met 
the terms of the performance agreement described in sec-
tion 6132. 
‘‘(b) EARLY TERMINATION.—The Secretary may ter-
minate a performance agreement, before the duration of 
that performance agreement expires, if the State does not, 
for 3 consecutive school years, meet the terms of the per-
formance agreement described in section 6132. Such ter-
mination shall occur after the Secretary provides notice 
and an opportunity for a hearing.’’. 
SEC. 4. ENHANCING FLEXIBILITY FOR LOCAL SCHOOL DIS-
TRICTS 
THAT 
OFFER 
SCHOOLWIDE 
PRO-
GRAMS. 
Section 1114(a)(1) of the Elementary and Secondary 
Education Act is amended by striking ‘‘40 percent’’ each 
place it appears and inserting ‘‘25 percent’’. 
Æ 
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