charter schools to help improve struggling schools 
and local educational agencies. 
‘‘(E) The State entity partners with an or-
ganization that has a demonstrated record of 
success in developing management organizations 
to support the development of charter schools in 
the State. 
‘‘(F) The State entity supports charter 
schools that support at-risk students through ac-
tivities such as dropout prevention or dropout 
recovery. 
‘‘(G) The State entity authorizes all charter 
schools in the State to serve as school food au-
thorities. 
‘‘(H) The State entity has taken steps to en-
sure that all authorizing public chartering agen-
cies implement best practices for charter school 
authorizing. 
‘‘(g) LOCAL USES OF FUNDS.—An eligible applicant 
receiving a subgrant under this section shall use such funds 
to carry out activities related to opening and preparing to 
operate a new charter school, a replicated, high-quality 
charter school model, or an expanded, high-quality charter 
school, such as— 
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‘‘(1) preparing teachers and school leaders, in-
cluding through professional development; 
‘‘(2) acquiring equipment, educational materials, 
and supplies; and 
‘‘(3) necessary renovations and minor facilities 
repairs (excluding construction). 
‘‘(h) REPORTING REQUIREMENTS.—Each State entity 
receiving a grant under this section shall submit to the Sec-
retary, at the end of the third year of the 5-year grant pe-
riod and at the end of such grant period, a report on— 
‘‘(1) the number of students served by each 
subgrant awarded under this section and, if applica-
ble, how many new students were served during each 
year of the subgrant period; 
‘‘(2) the progress the State entity made toward 
meeting the priorities described in subsection (f)(2), 
as applicable; 
‘‘(3) how the State entity met the objectives of the 
quality charter school program described in the State 
entity’s application under subsection (e); 
‘‘(4) how the State entity complied with, and en-
sured that eligible applicants complied with, the as-
surances described in the State entity’s application; 
‘‘(5) how the State entity worked with authorized 
public chartering agencies, including how the agencies 
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worked with the management company or leadership 
of the schools that received subgrants under this sec-
tion; and 
‘‘(6) the number of subgrants awarded under this 
section to carry out each of the following: 
‘‘(A) The opening of new charter schools. 
‘‘(B) The opening of replicated, high-quality 
charter school models. 
‘‘(C) The opening of expanded, high-quality 
charter schools. 
‘‘(i) STATE ENTITY DEFINED.—For purposes of this 
section, the term ‘State entity’ means— 
‘‘(1) a State educational agency; 
‘‘(2) a State charter school board; 
‘‘(3) a Governor of a State; or 
‘‘(4) a charter school support organization.’’. 
SEC. 6. FACILITIES FINANCING ASSISTANCE. 
Section 5204 (20 U.S.C. 7221c) is amended to read 
as follows: 
‘‘SEC. 5204. FACILITIES FINANCING ASSISTANCE. 
‘‘(a) GRANTS TO ELIGIBLE ENTITIES.— 
‘‘(1) IN GENERAL.—From the amount reserved 
under section 5202(b)(1), the Secretary shall not use 
less than 50 percent to award grants to eligible enti-
ties that have the highest-quality applications ap-
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proved under subsection (d), after considering the di-
versity of such applications, to demonstrate innova-
tive methods of assisting charter schools to address the 
cost of acquiring, constructing, and renovating facili-
ties by enhancing the availability of loans or bond fi-
nancing. 
‘‘(2) ELIGIBLE ENTITY DEFINED.—For purposes 
of this section, the term ‘eligible entity’ means— 
‘‘(A) a public entity, such as a State or 
local governmental entity; 
‘‘(B) a private nonprofit entity; or 
‘‘(C) a consortium of entities described in 
subparagraphs (A) and (B). 
‘‘(b) GRANTEE
SELECTION.—The Secretary shall 
evaluate each application submitted under subsection (d), 
and shall determine whether the application is sufficient 
to merit approval. 
‘‘(c) GRANT CHARACTERISTICS.—Grants under sub-
section (a) shall be of a sufficient size, scope, and quality 
so as to ensure an effective demonstration of an innovative 
means of enhancing credit for the financing of charter 
school acquisition, construction, or renovation. 
‘‘(d) APPLICATIONS.— 
‘‘(1) IN
GENERAL.—To receive a grant under 
subsection (a), an eligible entity shall submit to the 
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Secretary an application in such form as the Sec-
retary may reasonably require. 
‘‘(2) 
CONTENTS.—An 
application 
submitted 
under paragraph (1) shall contain— 
‘‘(A) a statement identifying the activities 
proposed to be undertaken with funds received 
under subsection (a), including how the eligible 
entity will determine which charter schools will 
receive assistance, and how much and what types 
of assistance charter schools will receive; 
‘‘(B) a description of the involvement of 
charter schools in the application’s development 
and the design of the proposed activities; 
‘‘(C) a description of the eligible entity’s ex-
pertise in capital market financing; 
‘‘(D) a description of how the proposed ac-
tivities will leverage the maximum amount of 
private-sector financing capital relative to the 
amount of public funding used and otherwise en-
hance credit available to charter schools, includ-
ing how the eligible entity will offer a combina-
tion of rates and terms more favorable than the 
rates and terms that a charter school could re-
ceive without assistance from the eligible entity 
under this section; 
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‘‘(E) a description of how the eligible entity 
possesses sufficient expertise in education to 
evaluate the likelihood of success of a charter 
school program for which facilities financing is 
sought; and 
‘‘(F) in the case of an application submitted 
by a State governmental entity, a description of 
the actions that the entity has taken, or will 
take, to ensure that charter schools within the 
State receive the funding the charter schools need 
to have adequate facilities. 
‘‘(e) CHARTER SCHOOL OBJECTIVES.—An eligible en-
tity receiving a grant under this section shall use the funds 
deposited in the reserve account established under subsection 
(f) to assist one or more charter schools to access private 
sector capital to accomplish one or more of the following 
objectives: 
‘‘(1) The acquisition (by purchase, lease, dona-
tion, or otherwise) of an interest (including an inter-
est held by a third party for the benefit of a charter 
school) in improved or unimproved real property that 
is necessary to commence or continue the operation of 
a charter school. 
‘‘(2) The construction of new facilities, or the 
renovation, repair, or alteration of existing facilities, 
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necessary to commence or continue the operation of a 
charter school. 
‘‘(3) The predevelopment costs required to assess 
sites for purposes of paragraph (1) or (2) and which 
are necessary to commence or continue the operation 
of a charter school. 
‘‘(f) RESERVE ACCOUNT.— 
‘‘(1) USE OF FUNDS.—To assist charter schools 
to accomplish the objectives described in subsection 
(e), an eligible entity receiving a grant under sub-
section (a) shall, in accordance with State and local 
law, directly or indirectly, alone or in collaboration 
with others, deposit the funds received under sub-
section (a) (other than funds used for administrative 
costs in accordance with subsection (g)) in a reserve 
account established and maintained by the eligible en-
tity for this purpose. Amounts deposited in such ac-
count shall be used by the eligible entity for one or 
more of the following purposes: 
‘‘(A) Guaranteeing, insuring, and rein-
suring bonds, notes, evidences of debt, loans, and 
interests therein, the proceeds of which are used 
for an objective described in subsection (e). 
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‘‘(B) Guaranteeing and insuring leases of 
personal and real property for an objective de-
scribed in subsection (e). 
‘‘(C) Facilitating financing by identifying 
potential lending sources, encouraging private 
lending, and other similar activities that directly 
promote lending to, or for the benefit of, charter 
schools. 
‘‘(D) Facilitating the issuance of bonds by 
charter schools, or by other public entities for the 
benefit of charter schools, by providing technical, 
administrative, and other appropriate assistance 
(including the recruitment of bond counsel, un-
derwriters, and potential investors and the con-
solidation of multiple charter school projects 
within a single bond issue). 
‘‘(2) INVESTMENT.—Funds received under this 
section and deposited in the reserve account estab-
lished under paragraph (1) shall be invested in obli-
gations issued or guaranteed by the United States or 
a State, or in other similarly low-risk securities. 
‘‘(3) REINVESTMENT OF EARNINGS.—Any earn-
ings on funds received under subsection (a) shall be 
deposited in the reserve account established under 
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paragraph (1) and used in accordance with such 
paragraph. 
‘‘(g) LIMITATION ON ADMINISTRATIVE COSTS.—An eli-
gible entity may use not more than 2.5 percent of the funds 
received under subsection (a) for the administrative costs 
of carrying out its responsibilities under this section (ex-
cluding subsection (k)). 
‘‘(h) AUDITS AND REPORTS.— 
‘‘(1) FINANCIAL
RECORD
MAINTENANCE
AND 
AUDIT.—The financial records of each eligible entity 
receiving a grant under subsection (a) shall be main-
tained in accordance with generally accepted account-
ing principles and shall be subject to an annual audit 
by an independent public accountant. 
‘‘(2) REPORTS.— 
‘‘(A) GRANTEE ANNUAL REPORTS.—Each el-
igible entity receiving a grant under subsection 
(a) annually shall submit to the Secretary a re-
port of its operations and activities under this 
section. 
‘‘(B) CONTENTS.—Each annual report sub-
mitted under subparagraph (A) shall include— 
‘‘(i) a copy of the most recent financial 
statements, and any accompanying opinion 
on such statements, prepared by the inde-
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pendent public accountant reviewing the fi-
nancial records of the eligible entity; 
‘‘(ii) a copy of any report made on an 
audit of the financial records of the eligible 
entity that was conducted under paragraph 
(1) during the reporting period; 
‘‘(iii) an evaluation by the eligible en-
tity of the effectiveness of its use of the Fed-
eral funds provided under subsection (a) in 
leveraging private funds; 
‘‘(iv) a listing and description of the 
charter schools served during the reporting 
period, including the amount of funds used 
by each school, the type of project facilitated 
by the grant, and the type of assistance pro-
vided to the charter schools; 
‘‘(v) a description of the activities car-
ried out by the eligible entity to assist char-
ter schools in meeting the objectives set forth 
in subsection (e); and 
‘‘(vi) a description of the characteris-
tics of lenders and other financial institu-
tions participating in the activities under-
taken by the eligible entity under this sec-
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tion (excluding subsection (k)) during the 
reporting period. 
‘‘(C) 
SECRETARIAL
REPORT.—The 
Sec-
retary shall review the reports submitted under 
subparagraph (A) and shall provide a com-
prehensive annual report to Congress on the ac-
tivities conducted under this section (excluding 
subsection (k)). 
‘‘(i) NO FULL FAITH AND CREDIT FOR GRANTEE OB-
LIGATION.—No financial obligation of an eligible entity en-
tered into pursuant to this section (such as an obligation 
under a guarantee, bond, note, evidence of debt, or loan) 
shall be an obligation of, or guaranteed in any respect by, 
the United States. The full faith and credit of the United 
States is not pledged to the payment of funds which may 
be required to be paid under any obligation made by an 
eligible entity pursuant to any provision of this section. 
‘‘(j) RECOVERY OF FUNDS.— 
‘‘(1) IN GENERAL.—The Secretary, in accordance 
with chapter 37 of title 31, United States Code, shall 
collect— 
‘‘(A) all of the funds in a reserve account es-
tablished by an eligible entity under subsection 
(f)(1) if the Secretary determines, not earlier 
than 2 years after the date on which the eligible 
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sroberts on DSK5SPTVN1PROD with BILLS
entity first received funds under this section (ex-
cluding subsection (k)), that the eligible entity 
has failed to make substantial progress in car-
rying out the purposes described in subsection 
(f)(1); or 
‘‘(B) all or a portion of the funds in a re-
serve account established by an eligible entity 
under subsection (f)(1) if the Secretary deter-
mines that the eligible entity has permanently 
ceased to use all or a portion of the funds in 
such account to accomplish any purpose de-
scribed in subsection (f)(1). 
‘‘(2) EXERCISE OF AUTHORITY.—The Secretary 
shall not exercise the authority provided in paragraph 
(1) to collect from any eligible entity any funds that 
are being properly used to achieve one or more of the 
purposes described in subsection (f)(1). 
‘‘(3) PROCEDURES.—The provisions of sections 
451, 452, and 458 of the General Education Provi-
sions Act 20 U.S.C. 124, 1234a, 1234g shall apply to 
the recovery of funds under paragraph (1). 
‘‘(4) CONSTRUCTION.—This subsection shall not 
be construed to impair or affect the authority of the 
Secretary to recover funds under part D of the Gen-
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eral Education Provisions Act (20 U.S.C. 1234 et 
seq.). 
‘‘(k) PER-PUPIL FACILITIES AID PROGRAM.— 
‘‘(1) DEFINITION OF PER-PUPIL FACILITIES AID 
PROGRAM.—In this subsection, the term ‘per-pupil fa-
cilities aid program’ means a program in which a 
State makes payments, on a per-pupil basis, to char-
ter schools to provide the schools with financing— 
‘‘(A) that is dedicated solely for funding 
charter school facilities; or 
‘‘(B) a portion of which is dedicated for 
funding charter school facilities. 
‘‘(2) GRANTS.— 
‘‘(A) IN
GENERAL.—From the amount 
under section 5202(b)(1) remaining after the 
Secretary makes grants under subsection (a), the 
Secretary shall make grants, on a competitive 
basis, to States to pay for the Federal share of 
the cost of establishing or enhancing, and admin-
istering per-pupil facilities aid programs. 
‘‘(B) PERIOD.—The Secretary shall award 
grants under this subsection for periods of not 
more than 5 years. 
‘‘(C) FEDERAL SHARE.—The Federal share 
of the cost described in subparagraph (A) for a 
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per-pupil facilities aid program shall be not 
more than— 
‘‘(i) 90 percent of the cost, for the first 
fiscal year for which the program receives 
assistance under this subsection; 
‘‘(ii) 80 percent in the second such 
year; 
‘‘(iii) 60 percent in the third such 
year; 
‘‘(iv) 40 percent in the fourth such 
year; and 
‘‘(v) 20 percent in the fifth such year. 
‘‘(D) STATE SHARE.—A State receiving a 
grant under this subsection may partner with 1 
or more organizations to provide up to 50 per-
cent of the State share of the cost of establishing 
or enhancing, and administering the per-pupil 
facilities aid program. 
‘‘(E) MULTIPLE GRANTS.—A State may re-
ceive more than 1 grant under this subsection, so 
long as the amount of such funds provided to 
charter schools increases with each successive 
grant. 
‘‘(3) USE OF FUNDS.— 
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‘‘(A) IN GENERAL.—A State that receives a 
grant under this subsection shall use the funds 
made available through the grant to establish or 
enhance, and administer, a per-pupil facilities 
aid program for charter schools in the State of 
the applicant. 
‘‘(B) EVALUATIONS; 
TECHNICAL
ASSIST-
ANCE; DISSEMINATION.—From the amount made 
available to a State through a grant under this 
subsection for a fiscal year, the State may re-
serve not more than 5 percent to carry out eval-
uations, to provide technical assistance, and to 
disseminate information. 
‘‘(C) SUPPLEMENT, NOT SUPPLANT.—Funds 
made available under this subsection shall be 
used to supplement, and not supplant, State and 
local public funds expended to provide per pupil 
facilities aid programs, operations financing 
programs, or other programs, for charter schools. 
‘‘(4) REQUIREMENTS.— 
‘‘(A) VOLUNTARY PARTICIPATION.—No State 
may be required to participate in a program 
carried out under this subsection. 
‘‘(B) STATE LAW.— 
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‘‘(i) IN GENERAL.—Except as provided 
in clause (ii), to be eligible to receive a 
grant under this subsection, a State shall 
establish or enhance, and administer, a per- 
pupil facilities aid program for charter 
schools in the State, that— 
‘‘(I) is specified in State law; and 
‘‘(II) provides annual financing, 
on a per-pupil basis, for charter school 
facilities. 
‘‘(ii) 
SPECIAL
RULE.—Notwith-
standing clause (i), a State that is required 
under State law to provide its charter 
schools with access to adequate facility 
space, but which does not have a per-pupil 
facilities aid program for charter schools 
specified in State law, may be eligible to re-
ceive a grant under this subsection if the 
State agrees to use the funds to develop a 
per-pupil facilities aid program consistent 
with the requirements of this subsection. 
‘‘(5) APPLICATIONS.—To be eligible to receive a 
grant under this subsection, a State shall submit an 
application to the Secretary at such time, in such 
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manner, and containing such information as the Sec-
retary may require.’’. 
SEC. 7. NATIONAL ACTIVITIES. 
Section 5205 (20 U.S.C. 7221d) is amended to read 
as follows: 
‘‘SEC. 5205. NATIONAL ACTIVITIES. 
‘‘(a) IN GENERAL.—From the amount reserved under 
section 5202(b)(2), the Secretary shall— 
‘‘(1) use not less than 75 percent of such funds 
to award grants in accordance with subsection (b); 
and 
‘‘(2) use not more than 25 percent of such funds 
to— 
‘‘(A) provide technical assistance to State 
entities in awarding subgrants under section 
5203, and eligible entities and States receiving 
grants under section 5204; 
‘‘(B) disseminate best practices; and 
‘‘(C) evaluate the impact of the charter 
school program, including the impact on student 
achievement, carried out under this subpart. 
‘‘(b) GRANTS.— 
‘‘(1) IN
GENERAL.—The Secretary shall make 
grants, on a competitive basis, to eligible applicants 
for the purpose of carrying out the activities described 
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in section 5202(a)(1), subparagraphs (A) through (C) 
of section 5203(a)(1), and section 5203(g). 
‘‘(2) TERMS AND CONDITIONS.—Except as other-
wise provided in this subsection, grants awarded 
under this subsection shall have the same terms and 
conditions as grants awarded to State entities under 
section 5203. 
‘‘(3) CHARTER MANAGEMENT ORGANIZATIONS.— 
The Secretary shall— 
‘‘(A) use not less than 75 percent of the 
funds described in subsection (a)(1) to make 
grants, on a competitive basis, to eligible appli-
cants described in paragraph (4)(C); and 
‘‘(B) notwithstanding paragraphs (1)(A) 
and (2) of section 5203(f)— 
‘‘(i) award grants to eligible appli-
cants on the basis of the quality of the ap-
plications submitted under this subsection; 
and 
‘‘(ii) in awarding grants to eligible ap-
plicants described in paragraph (4)(C), give 
priority to each such eligible applicant 
that— 
‘‘(I) demonstrates a high propor-
tion of high-quality charter schools 
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