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‘‘(I) Federal statutory or regu-
latory requirements as described in
paragraph (1)(A); and
‘‘(II) State statutory or regulatory
requirements relating to education;
‘‘(ii) a detailed description of the State
statutory and regulatory requirements relat-
ing to education that the State educational
agency will waive;
‘‘(iii) a description of clear educational
objectives the State intends to meet under
the educational flexibility plan;
‘‘(iv) a description of how the edu-
cational flexibility plan is consistent with
and will assist in implementing the State
comprehensive reform plan or, if a State
does not have a comprehensive reform plan,
a description of how the educational flexi-
bility plan is coordinated with activities de-
scribed in section 1111(b);
‘‘(v) a description of how the State
educational agency will evaluate, consistent
with the requirements of title I, the per-
formance of students in the schools and local
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educational agencies affected by the waivers;
and
‘‘(vi) a description of how the State
educational agency will meet the require-
ments of paragraph (8).
‘‘(B) APPROVAL
AND
CONSIDERATIONS.—
The Secretary may approve an application de-
scribed in subparagraph (A) only if the Sec-
retary determines that such application dem-
onstrates substantial promise of assisting the
State educational agency and affected local edu-
cational agencies and schools within the State in
carrying out comprehensive educational reform,
after considering—
‘‘(i) the eligibility of the State as de-
scribed in paragraph (2);
‘‘(ii) the comprehensiveness and qual-
ity of the educational flexibility plan de-
scribed in subparagraph (A);
‘‘(iii) the ability of the educational
flexibility plan to ensure accountability for
the activities and goals described in such
plan;
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‘‘(iv) the degree to which the State’s ob-
jectives 
described 
in 
subparagraph
(A)(iii)—
‘‘(I) are clear and have the ability
to be assessed; and
‘‘(II) take into account the per-
formance of local educational agencies
or schools, and students, particularly
those affected by waivers;
‘‘(v) the significance of the State statu-
tory or regulatory requirements relating to
education that will be waived; and
‘‘(vi) the quality of the State edu-
cational agency’s process for approving ap-
plications for waivers of Federal statutory
or regulatory requirements as described in
paragraph (1)(A) and for monitoring and
evaluating the results of such waivers.
‘‘(4) LOCAL APPLICATION.—
‘‘(A) IN GENERAL.—Each local educational
agency or school requesting a waiver of a Federal
statutory or regulatory requirement as described
in paragraph (1)(A) and any relevant State
statutory or regulatory requirement from a State
educational agency shall submit an application
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to the State educational agency at such time, in
such manner, and containing such information
as the State educational agency may reasonably
require. Each such application shall—
‘‘(i) indicate each Federal program af-
fected and each statutory or regulatory re-
quirement that will be waived;
‘‘(ii) describe the purposes and overall
expected results of waiving each such re-
quirement;
‘‘(iii) describe, for each school year,
specific, measurable, educational goals for
each local educational agency or school af-
fected by the proposed waiver, and for the
students served by the local educational
agency or school who are affected by the
waiver;
‘‘(iv) explain why the waiver will as-
sist the local educational agency or school
in reaching such goals; and
‘‘(v) in the case of an application from
a local educational agency, describe how the
local educational agency will meet the re-
quirements of paragraph (8).
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‘‘(B) EVALUATION
OF
APPLICATIONS.—A
State educational agency shall evaluate an ap-
plication submitted under subparagraph (A) in
accordance with the State’s educational flexi-
bility plan described in paragraph (3)(A).
‘‘(C) 
APPROVAL.—A 
State 
educational
agency shall not approve an application for a
waiver under this paragraph unless—
‘‘(i) the local educational agency or
school requesting such waiver has developed
a local reform plan that is applicable to
such agency or school, respectively;
‘‘(ii) the waiver of Federal statutory or
regulatory requirements as described in
paragraph (1)(A) will assist the local edu-
cational agency or school in reaching its
educational goals, particularly goals with
respect to school and student performance;
and
‘‘(iii) the State educational agency is
satisfied that the underlying purposes of the
statutory requirements of each program for
which a waiver is granted will continue to
be met.
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‘‘(D) TERMINATION.—The State educational
agency shall annually review the performance of
any local educational agency or school granted a
waiver of Federal statutory or regulatory re-
quirements as described in paragraph (1)(A) in
accordance with the evaluation requirement de-
scribed in paragraph (3)(A)(v), and shall termi-
nate any waiver granted to the local educational
agency or school if the State educational agency
determines, after notice and an opportunity for
a hearing, that the local educational agency or
school’s performance with respect to meeting the
accountability requirement described in para-
graph (2)(C) and the goals described in para-
graph (4)(A)(iii)—
‘‘(i) has been inadequate to justify con-
tinuation of such waiver; or
‘‘(ii) has decreased for two consecutive
years, unless the State educational agency
determines that the decrease in performance
was justified due to exceptional or uncon-
trollable circumstances.
‘‘(5) OVERSIGHT AND REPORTING.—
‘‘(A) OVERSIGHT.—Each State educational
agency participating in the educational flexi-
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bility program under this section shall annually
monitor the activities of local educational agen-
cies and schools receiving waivers under this sec-
tion.
‘‘(B) STATE REPORTS.—
‘‘(i) ANNUAL
REPORTS.—The State
educational agency shall submit to the Sec-
retary an annual report on the results of
such oversight and the impact of the waiv-
ers on school and student performance.
‘‘(ii) PERFORMANCE DATA.—Not later
than 2 years after the date a State is des-
ignated an Ed-Flex Partnership State, each
such State shall include, as part of the
State’s annual report submitted under
clause (i), data demonstrating the degree to
which progress has been made toward meet-
ing the State’s educational objectives. The
data, when applicable, shall include—
‘‘(I) information on the total
number of waivers granted for Federal
and State statutory and regulatory re-
quirements under this section, includ-
ing the number of waivers granted for
each type of waiver;
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‘‘(II) information describing the
effect of the waivers on the implemen-
tation of State and local educational
reforms pertaining to school and stu-
dent performance;
‘‘(III) information describing the
relationship of the waivers to the per-
formance of schools and students af-
fected by the waivers; and
‘‘(IV) an assurance from State
program managers that the data re-
ported under this section are reliable,
complete, and accurate, as defined by
the State, or a description of a plan
for improving the reliability, complete-
ness, and accuracy of such data as de-
fined by the State.
‘‘(C) SECRETARY’S
REPORTS.—The Sec-
retary, not later than 2 years after the date of
enactment of the Education Flexibility Partner-
ship Act of 1999 and annually thereafter, shall—
‘‘(i) make each State report submitted
under subparagraph (B) available to Con-
gress and the public; and
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‘‘(ii) submit to Congress a report that
summarizes the State reports and describes
the effects that the educational flexibility
program under this section had on the im-
plementation of State and local educational
reforms and on the performance of students
affected by the waivers.
‘‘(6) DURATION OF FEDERAL WAIVERS.—
‘‘(A) IN GENERAL.—The Secretary shall not
approve the application of a State educational
agency under paragraph (3) for a period exceed-
ing 5 years, except that the Secretary may ex-
tend such period if the Secretary determines that
such agency’s authority to grant waivers—
‘‘(i) has been effective in enabling such
State or affected local educational agencies
or schools to carry out their State or local
reform plans and to continue to meet the
accountability requirement described in
paragraph (2)(C); and
‘‘(ii) has improved student perform-
ance.
‘‘(B) PERFORMANCE REVIEW.—Three years
after the date a State is designated an Ed-Flex
Partnership State, the Secretary shall review the
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results described in the application sub-
mitted pursuant to paragraph (4)(A)(iii).
‘‘(7) AUTHORITY TO ISSUE WAIVERS.—Notwith-
standing any other provision of law, the Secretary is
authorized to carry out the educational flexibility
program under this section for each of the fiscal years
2002 through 2008.
‘‘(8) PUBLIC
NOTICE
AND
COMMENT.—Each
State educational agency seeking waiver authority
under this section and each local educational agency
seeking a waiver under this section—
‘‘(A) shall provide the public with adequate
and efficient notice of the proposed waiver au-
thority or waiver, consisting of a description of
the agency’s application for the proposed waiver
authority or waiver in a widely read or distrib-
uted medium, including a description of any im-
proved student performance that is expected to
result from the waiver authority or waiver;
‘‘(B) shall provide the opportunity for par-
ents, educators, and all other interested members
of the community to comment regarding the pro-
posed waiver authority or waiver;
‘‘(C) shall provide the opportunity described
in subparagraph (B) in accordance with any ap-
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plicable State law specifying how the comments
may be received, and how the comments may be
reviewed by any member of the public; and
‘‘(D) shall submit the comments received
with the agency’s application to the Secretary or
the State educational agency, as appropriate.
‘‘(b) INCLUDED PROGRAMS.—The statutory or regu-
latory requirements referred to in subsection (a)(1)(A) are
any such requirements for programs carried out under the
following provisions:
‘‘(1) Title I (other than subsections (a) and (c)
of section 1116, subpart 2 of part B, and part F).
‘‘(2) Subparts 1, 2, and 3 of part A of title II.
‘‘(3) Part C of title II.
‘‘(4) Part C of title III.
‘‘(5) Part A of title IV.
‘‘(6) Subpart 4 of this part.
‘‘(7) The Carl D. Perkins Vocational and Tech-
nical Education Act of 1998.
‘‘(c) WAIVERS NOT AUTHORIZED.—The Secretary and
the State educational agency may not waive under sub-
section (a)(1)(A) any statutory or regulatory requirement—
‘‘(1) relating to—
‘‘(A) maintenance of effort;
‘‘(B) comparability of services;
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‘‘(C) equitable participation of students and
professional staff in private schools;
‘‘(D) parental participation and involve-
ment;
‘‘(E) distribution of funds to States or to
local educational agencies;
‘‘(F) serving eligible school attendance areas
in rank order under section 1113(a)(3);
‘‘(G) the selection of a school attendance
area or school under subsections (a) and (b) of
section 1113, except that a State educational
agency may grant a waiver to allow a school at-
tendance area or school to participate in activi-
ties under part A of title I if the percentage of
children from low-income families in the school
attendance area of such school or who attend
such school is not less than 10 percentage points
below the lowest percentage of such children for
any school attendance area or school of the local
educational agency that meets the requirements
of such subsections (a) and (b);
‘‘(H) use of Federal funds to supplement,
not supplant, non-Federal funds; and
‘‘(I) applicable civil rights requirements;
and
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‘‘(2) unless the underlying purposes of the statu-
tory requirements of the program for which a waiver
is granted continue to be met to the satisfaction of the
Secretary.
‘‘(d) TREATMENT OF EXISTING ED-FLEX PARTNER-
SHIP STATES.—
‘‘(1) IN GENERAL.—Except as provided in para-
graphs (3) and (4), this section shall not apply to a
State educational agency that has been granted waiv-
er authority under the provisions of law described in
paragraph (2) (as such provisions were in effect on
the day before the date of enactment of the Better
Education for Students and Teachers Act) for the du-
ration of the waiver authority.
‘‘(2) APPLICABLE PROVISIONS.—The provisions
of law referred to in paragraph (1) are as follows:
‘‘(A) Section 311(e) of the Goals 2000: Edu-
cate America Act (as such section was in effect
on the day before the date of enactment of the
Better Education for Students and Teachers
Act).
‘‘(B) The proviso referring to such section
311(e) under the heading ‘EDUCATION REFORM’
in the Department of Education Appropriations
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Act, 1996 (Public Law 104–134; 110 Stat. 1321–
229).
‘‘(3) SPECIAL
RULE.—If a State educational
agency granted waiver authority pursuant to the pro-
visions of law described in subparagraph (A) or (B)
of paragraph (2) applies to the Secretary for waiver
authority under this section—
‘‘(A) the Secretary shall review the progress
of the State educational agency in achieving the
objectives set forth in the application submitted
pursuant to section 311(e) of the Goals 2000:
Educate America Act (as such section was in ef-
fect on the day before the date of enactment of
the Better Education for Students and Teachers
Act); and
‘‘(B) the Secretary shall administer the
waiver authority granted under this section in
accordance with the requirements of this section.
‘‘(4) TECHNOLOGY.—In the case of a State edu-
cational agency granted waiver authority under the
provisions of law described in subparagraph (A) or
(B) of paragraph (2), the Secretary shall permit a
State educational agency to expand, on or after the
date of enactment of the Better Education for Stu-
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dents and Teachers Act, the waiver authority to in-
clude programs under part C of title II.
‘‘(e) PUBLICATION.—A notice of the Secretary’s deci-
sion to authorize State educational agencies to issue waivers
under this section, including a description of the rationale
the Secretary used to approve applications under subsection
(a)(3)(B), shall be published in the Federal Register and
the Secretary shall provide for the dissemination of such
notice to State educational agencies, interested parties (in-
cluding educators, parents, students, and advocacy and
civil rights organizations), and the public.
‘‘Subpart 2—Rural Education Initiative
‘‘SEC. 5221. SHORT TITLE.
‘‘This subpart may be cited as the ‘Rural Education
Achievement Program’.
‘‘SEC. 5222. PURPOSE.
‘‘It is the purpose of this subpart to address the unique
needs of rural school districts that frequently—
‘‘(1) lack the personnel and resources needed to
compete for Federal competitive grants; and
‘‘(2) receive formula allocations in amounts too
small to be effective in meeting their intended pur-
poses.
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‘‘SEC. 5223. AUTHORIZATION OF APPROPRIATIONS.
‘‘There are authorized to be appropriated to carry out
this subpart—
‘‘(1) to carry out chapter 1—
‘‘(A) $150,000,000 for fiscal year 2002; and
‘‘(B) such sums as may be necessary for
each of the 6 succeeding fiscal years; and
‘‘(2) to carry out chapter 2—
‘‘(A) $150,000,000 for fiscal year 2002; and
‘‘(B) such sums as may be necessary for
each of the 6 succeeding fiscal years.
‘‘Chapter 1—Small, Rural School Achievement
Program
‘‘SEC. 5231. FORMULA GRANT PROGRAM AUTHORIZED.
‘‘(a) ALTERNATIVE USES.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision of law, an eligible local educational agency
may use the applicable funding, that the agency is el-
igible to receive from the State educational agency for
a fiscal year, to carry out activities described in sec-
tion 1114, 1115, 1116, 2123, 4116, or 5331(b).
‘‘(2) NOTIFICATION.—An eligible local edu-
cational agency shall notify the State educational
agency of the local educational agency’s intention to
use the applicable funding in accordance with para-
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graph (1) not later than a date that is established by
the State educational agency for the notification.
‘‘(b) ELIGIBILITY.—A local educational agency shall be
eligible to use the applicable funding in accordance with
subsection (a) if—
‘‘(1)(A) the total number of students in average
daily attendance at all of the schools served by the
local educational agency is less than 600; or
‘‘(B) each county in which a school served by the
local educational agency is located has a total popu-
lation density of less than 10 persons per square mile;
and
‘‘(2) all of the schools served by the local edu-
cational agency are designated with a School Locale
Code of 7 or 8, as determined by the Secretary, except
that the Secretary may waive the School Locale Code
requirement of this paragraph if the Secretary deter-
mines, based on certification provided by the local
educational agency or the State educational agency
on behalf of the local educational agency, that the
local educational agency is located in an area defined
as rural by a governmental agency of the State.
‘‘(c) APPLICABLE FUNDING.—In this section, the term
‘applicable funding’ means funds provided under each of
titles II and IV, and subpart 4 of this part.
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‘‘SEC. 5232. COMPETITIVE GRANT PROGRAM AUTHORIZED.
‘‘(a) IN GENERAL.—The Secretary is authorized to
award grants to eligible local educational agencies to enable
the local educational agencies to carry out activities de-
scribed in section 1114, 1115, 1116, 2123, 2213, 2306, 4116,
or 5331(b).
‘‘(b) ELIGIBILITY.—A local educational agency shall be
eligible to receive a grant under this section if—
‘‘(1)(A) the total number of students in average
daily attendance at all of the schools served by the
local educational agency is less than 600; or
‘‘(B) each county in which a school served by the
local educational agency is located has a total popu-
lation density of less than 10 persons per square mile;
and
‘‘(2) all of the schools served by the local edu-
cational agency are designated with a School Locale
Code of 7 or 8, as determined by the Secretary, except
that the Secretary may waive the School Locale Code
requirement of this paragraph if the Secretary deter-
mines, based on certification provided by the local
educational agency or the State educational agency
on behalf of the local educational agency, that the
local educational agency is located in an area defined
as rural by a governmental agency of the State.
‘‘(c) AMOUNT.—
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‘‘(1) IN GENERAL.—The Secretary shall award a
grant to a local educational agency under this section
for a fiscal year in an amount equal to the amount
determined under paragraph (2) for the fiscal year
minus the total amount received under the provisions
of law described under section 5231(c) for the fiscal
year.
‘‘(2) DETERMINATION.—The amount referred to
in paragraph (1) is equal to $100 multiplied by the
total number of students in excess of 50 students that
are in average daily attendance at the schools served
by the local educational agency, plus $20,000, except
that the amount may not exceed $60,000.
‘‘(3) CENSUS DETERMINATION.—
‘‘(A) IN GENERAL.—Each local educational
agency desiring a grant under this section shall
conduct a census not later than December 1 of
each year to determine the number of kinder-
garten through grade 12 students in average
daily attendance at the schools served by the
local educational agency.
‘‘(B) SUBMISSION.—Each local educational
agency shall submit the number described in sub-
paragraph (A) to the Secretary not later than
March 1 of each year.
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‘‘(4) PENALTY.—If the Secretary determines that
a local educational agency has knowingly submitted
false information under paragraph (3) for the pur-
pose of gaining additional funds under this section,
then the local educational agency shall be fined an
amount equal to twice the difference between the
amount the local educational agency received under
this section, and the correct amount the local edu-
cational agency would have received under this sec-
tion if the agency had submitted accurate information
under paragraph (3).
‘‘(d) DISBURSAL.—The Secretary shall disburse the
funds awarded to a local educational agency under this sec-
tion for a fiscal year not later than July 1 of that year.
‘‘(e) SUPPLEMENT
NOT
SUPPLANT.—Funds made
available under this section shall be used to supplement and
not supplant any other Federal, State, or local education
funds.
‘‘(f) CONSTRUCTION.—Nothing in this chapter shall be
construed to prohibit a local educational agency that enters
into cooperative arrangements with other local educational
agencies for the provision of special, compensatory, or other
education services pursuant to State law or a written agree-
ment from entering into similar arrangements for the use
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or the coordination of the use of the funds made available
under this section.
‘‘SEC. 5233. ACCOUNTABILITY.
‘‘(a) ACADEMIC ACHIEVEMENT.—
‘‘(1) IN GENERAL.—Each local educational agen-
cy that uses or receives funds under section 5231 or
5232 for a fiscal year shall—
‘‘(A) administer an assessment that is used
statewide and is consistent with the assessment
described in section 1111(b), to assess the aca-
demic achievement of students in the schools
served by the local educational agency; or
‘‘(B) in the case of a local educational agen-
cy for which there is no statewide assessment de-
scribed in subparagraph (A), administer a test,
that is selected by the local educational agency,
to assess the academic achievement of students in
the schools served by the local educational agen-
cy.
‘‘(2) SPECIAL
RULE.—Each local educational
agency that uses or receives funds under section 5231
or 5232 shall use the same assessment or test de-
scribed in paragraph (1) for each year of participa-
tion in the program carried out under such section.
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‘‘(b) STATE EDUCATIONAL AGENCY DETERMINATION
REGARDING
CONTINUING
PARTICIPATION.—Each State
educational agency that receives funding under the provi-
sions of law described in section 5231(c) shall—
‘‘(1) after the 3rd year that a local educational
agency in the State participates in a program au-
thorized under section 5231 or 5232 and on the basis
of the results of the assessments or tests described in
subsection (a), determine whether the students served
by the local educational agency participating in the
program performed better on the assessments or tests
after the 3rd year of the participation than the stu-
dents performed on the assessments or tests after the
1st year of the participation;
‘‘(2) permit only the local educational agencies
that participated in the program and served students
that performed better on the assessments or tests, as
described in paragraph (1), to continue to participate
in the program for an additional period of 3 years;
and
‘‘(3) prohibit the local educational agencies that
participated in the program and served students that
did not perform better on the assessments or tests, as
described in paragraph (1), from participating in the
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program, for a period of 3 years from the date of the
determination.
‘‘SEC. 5234. RATABLE REDUCTIONS IN CASE OF INSUFFI-
CIENT APPROPRIATIONS.
‘‘(a) IN GENERAL.—If the amount appropriated for
any fiscal year and made available for grants under this
chapter is insufficient to pay the full amount for which all
agencies are eligible under this chapter, the Secretary shall
ratably reduce each such amount.
‘‘(b) ADDITIONAL AMOUNTS.—If additional funds be-
come available for making payments under paragraph (1)
for such fiscal year, payments that were reduced under sub-
section (a) shall be increased on the same basis as such pay-
ments were reduced.
‘‘Chapter 2—Low-Income and Rural School Program
‘‘SEC. 5241. DEFINITIONS.
‘‘In this chapter:
‘‘(1) POVERTY
LINE.—The term ‘poverty line’
means the poverty line (as defined by the Office of
Management and Budget, and revised annually in ac-
cordance with section 673(2) of the Community Serv-
ices Block Grant Act (42 U.S.C. 9902(2))) applicable
to a family of the size involved.
‘‘(2) SPECIALLY QUALIFIED AGENCY.—The term
‘specially qualified agency’ means an eligible local
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educational agency, located in a State that does not
participate in a program carried out under this
chapter for a fiscal year, which may apply directly
to the Secretary for a grant for such year in accord-
ance with section 5242(b).
‘‘SEC. 5242. PROGRAM AUTHORIZED.
‘‘(a) GRANTS TO STATES.—
‘‘(1) IN GENERAL.—From the sum appropriated
under section 5223 for a fiscal year and made avail-
able to carry out this chapter, the Secretary shall
award grants, from allotments made under paragraph
(2), to State educational agencies that have applica-
tions approved under section 5244 to enable the State
educational agencies to award grants to eligible local
educational agencies for innovative assistance activi-
ties described in section 5331(b).
‘‘(2) ALLOTMENT.—From the sum appropriated
under section 5223 for a fiscal year and made avail-
able to carry out this chapter, the Secretary shall
allot to each State educational agency an amount
that bears the same ratio to the sum as the number
of students in average daily attendance at the schools
served by eligible local educational agencies in the
State for that fiscal year bears to the number of all
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such students at the schools served by eligible local
educational agencies in all States for that fiscal year.
‘‘(b) DIRECT
GRANTS
TO
SPECIALLY
QUALIFIED
AGENCIES.—
‘‘(1) NONPARTICIPATING STATE.—If a State edu-
cational agency elects not to participate in the pro-
gram carried out under this chapter or does not have
an application approved under section 5244, a spe-
cially qualified agency in such State desiring a grant
under this chapter shall apply directly to the Sec-
retary under section 5244 to receive a grant under
this chapter.
‘‘(2) DIRECT AWARDS TO SPECIALLY QUALIFIED
AGENCIES.—The Secretary may award, on a competi-
tive basis, the amount the State educational agency is
eligible to receive under subsection (a)(2) directly to
specially qualified agencies in the State.
‘‘(c) ADMINISTRATIVE COSTS.—A State educational
agency that receives a grant under this chapter may not
use more than 5 percent of the amount of the grant for State
administrative costs.
‘‘SEC. 5243. STATE DISTRIBUTION OF FUNDS.
‘‘(a) IN GENERAL.—A State educational agency that
receives a grant under this chapter may use the funds made
available through the grant to award grants to eligible local
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educational agencies to enable the local educational agencies
to carry out innovative assistance activities described in
section 5331(b).
‘‘(b) LOCAL AWARDS.—
‘‘(1) ELIGIBILITY.—A local educational agency
shall be eligible to receive a grant under this chapter
if—
‘‘(A) 20 percent or more of the children age
5 through 17 that are served by the local edu-
cational agency are from families with incomes
below the poverty line; and
‘‘(B) all of the schools served by the agency
are located in a community with a Locale Code
of 6, 7, or 8, as determined by the Secretary of
Education.
‘‘(c) AWARD BASIS.—The State educational agency
shall award the grants to eligible local educational
agencies—
‘‘(1) on a competitive basis; or
‘‘(2) according to a formula based on the number
of students in average daily attendance at schools
served by the eligible local educational agencies.
‘‘SEC. 5244. APPLICATIONS.
‘‘(a) IN GENERAL.—Each State educational agency
and specially qualified agency desiring to receive a grant
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under this chapter shall submit an application to the Sec-
retary at such time, in such manner, and accompanied by
such information as the Secretary may require.
‘‘(b) CONTENTS.—At a minimum, such application
shall include information on specific measurable goals and
objectives to be achieved through the activities carried out
through the grant, which may include specific educational
goals and objectives relating to—
‘‘(1) increased student academic achievement;
‘‘(2) decreased student dropout rates; or
‘‘(3) such other factors as the State educational
agency or specially qualified agency may choose to
measure.
‘‘SEC. 5245. ACCOUNTABILITY.
‘‘(a) STATE REPORTS.—Each State educational agen-
cy that receives a grant under this chapter shall prepare
and submit to the Secretary an annual report. The report
shall describe—
‘‘(1) the method the State educational agency
used to award grants to eligible local educational
agencies under this chapter;
‘‘(2) how the local educational agencies used the
funds provided under this chapter; and
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‘‘(3) the degree to which the State made progress
toward meeting the goals and objectives described in
the application submitted under section 5244.
‘‘(b) SPECIALLY QUALIFIED AGENCY REPORT.—Each
specially qualified agency that receives a grant under this
chapter shall prepare and submit to the Secretary an an-
nual report. The report shall describe—
‘‘(1) how such agency used the funds provided
under this chapter; and
‘‘(2) the degree to which the agency made
progress toward meeting the goals and objectives de-
scribed in the application submitted under section
5244.
‘‘(c) ACADEMIC ACHIEVEMENT.—
‘‘(1) IN GENERAL.—Each local educational agen-
cy that receives a grant under this chapter for a fiscal
year shall—
‘‘(A) administer an assessment that is used
statewide and is consistent with the assessment
described in section 1111(b), to assess the aca-
demic achievement of students in the schools
served by the local educational agency; or
‘‘(B) in the case of a local educational agen-
cy for which there is no statewide assessment de-
scribed in subparagraph (A), administer a test,
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that is selected by the local educational agency,
to assess the academic achievement of students in
the schools served by the local educational agen-
cy.
‘‘(2) SPECIAL
RULE.—Each local educational
agency that receives a grant under this chapter shall
use the same assessment or test described in para-
graph (1) for each year of participation in the pro-
gram carried out under this chapter.
‘‘(d) STATE EDUCATIONAL AGENCY DETERMINATION
REGARDING
CONTINUING
PARTICIPATION.—Each State
educational agency that receives a grant under this chapter
shall—
‘‘(1) after the 3rd year that a local educational
agency in the State participates in the program au-
thorized under this chapter and on the basis of the re-
sults of the assessments or tests described in subsection
(c), determine whether the students served by the local
educational agency participating in the program per-
formed better on the assessments or tests after the 3rd
year of the participation than the students performed
on the assessments or tests after the 1st year of the
participation;
‘‘(2) permit only the local educational agencies
that participated in the program and served students
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that performed better on the assessments or tests, as
described in paragraph (1), to continue to participate
in the program for an additional period of 3 years;
and
‘‘(3) prohibit the local educational agencies that
participated in the program and served students that
did not perform better on the assessments or tests, as
described in paragraph (1), from participating in the
program for a period of 3 years from the date of the
determination.
‘‘SEC. 5246. SUPPLEMENT NOT SUPPLANT.
‘‘Funds made available under this chapter shall be
used to supplement and not supplant any other Federal,
State, or local education funds.
‘‘SEC. 5247. SPECIAL RULE.
‘‘No local educational agency may concurrently par-
ticipate in activities carried out under chapter 1 and ac-
tivities carried out under this chapter.
‘‘Subpart 3—Waivers
‘‘SEC. 5251. WAIVERS OF STATUTORY AND REGULATORY RE-
QUIREMENTS.
‘‘(a) IN GENERAL.—Except as provided in subsection
(c), the Secretary may waive any statutory or regulatory
requirement of this Act for a State educational agency, local
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educational agency, Indian tribe, or school through a local
educational agency, that—
‘‘(1) receives funds under a program authorized
by this Act; and
‘‘(2) requests a waiver under subsection (b).
‘‘(b) REQUEST FOR WAIVER.—
‘‘(1) IN GENERAL.—A State educational agency,
local educational agency, or Indian tribe which de-
sires a waiver shall submit a waiver request to the
Secretary that—
‘‘(A) identifies the Federal programs af-
fected by such requested waiver;
‘‘(B) describes which Federal requirements
are to be waived and how the waiving of such re-
quirements will—
‘‘(i) increase the quality of instruction
for students; or
‘‘(ii) improve the academic perform-
ance of students;
‘‘(C) if applicable, describes which similar
State and local requirements will be waived and
how the waiving of such requirements will assist
the local educational agencies, Indian tribes or
schools, as appropriate, to achieve the objectives
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described in clauses (i) and (ii) of subparagraph
(B);
‘‘(D) describes specific, measurable edu-
cational improvement goals and expected out-
comes for all affected students;
‘‘(E) describes the methods to be used to
measure progress in meeting such goals and out-
comes; and
‘‘(F) describes how schools will continue to
provide assistance to the same populations served
by programs for which waivers are requested.
‘‘(2) 
ADDITIONAL
INFORMATION.—Such
requests—
‘‘(A) may provide for waivers of require-
ments applicable to State educational agencies,
local educational agencies, Indian tribes, and
schools; and
‘‘(B) shall be developed and submitted—
‘‘(i)(I) by local educational agencies
(on behalf of such agencies and schools) to
State educational agencies; and
‘‘(II) by State educational agencies (on
behalf of, and based upon the requests of,
local educational agencies) to the Secretary;
or
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‘‘(ii) by Indian tribes (on behalf of
schools operated by such tribes) to the Sec-
retary.
‘‘(3) GENERAL REQUIREMENTS.—
‘‘(A) STATE
EDUCATIONAL
AGENCIES.—In
the case of a waiver request submitted by a State
educational agency acting in its own behalf, the
State educational agency shall—
‘‘(i) provide all interested local edu-
cational agencies in the State with notice
and a reasonable opportunity to comment
on the request;
‘‘(ii) submit the comments to the Sec-
retary; and
‘‘(iii) provide notice and information
to the public regarding the waiver request
in the manner that the applying agency
customarily provides similar notices and
information to the public.
‘‘(B) LOCAL EDUCATIONAL AGENCIES.—In
the case of a waiver request submitted by a local
educational agency that receives funds under this
Act—
‘‘(i) such request shall be reviewed by
the State educational agency and be accom-
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panied by the comments, if any, of such
State educational agency; and
‘‘(ii) notice and information regarding
the waiver request shall be provided to the
public by the agency requesting the waiver
in the manner that such agency customarily
provides similar notices and information to
the public.
‘‘(c) RESTRICTIONS.—The Secretary shall not waive
under this section any statutory or regulatory requirements
relating to—
‘‘(1) the allocation or distribution of funds to
States, local educational agencies, or other recipients
of funds under this Act;
‘‘(2) maintenance of effort;
‘‘(3) comparability of services;
‘‘(4) use of Federal funds to supplement, not sup-
plant, non-Federal funds;
‘‘(5) equitable participation of private school stu-
dents and teachers;
‘‘(6) parental participation and involvement;
‘‘(7) applicable civil rights requirements;
‘‘(8) the requirement for a charter school under
subpart 1 of part A;
‘‘(9) the prohibitions regarding—
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‘‘(A) State aid in section 5; or
‘‘(B) use of funds for religious worship or
instruction in section 10; or
‘‘(10) the selection of a school attendance area or
school under subsections (a) and (b) of section 1113,
except that the Secretary may grant a waiver to allow
a school attendance area or school to participate in
activities under part A of title I if the percentage of
children from low-income families in the school at-
tendance area of such school or who attend such school
is not less than 10 percentage points below the lowest
percentage of such children for any school attendance
area or school of the local educational agency that
meets the requirements of such subsections (a) and
(b).
‘‘(d) DURATION AND EXTENSION OF WAIVER.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the duration of a waiver approved by the
Secretary under this section may be for a period not
to exceed 3 years.
‘‘(2) EXTENSION.—The Secretary may extend the
period described in paragraph (1) if the Secretary de-
termines that—
‘‘(A) the waiver has been effective in ena-
bling the State or affected recipients to carry out
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the activities for which the waiver was requested
and the waiver has contributed to improved stu-
dent performance; and
‘‘(B) such extension is in the public interest.
‘‘(e) REPORTS.—
‘‘(1) LOCAL WAIVER.—A local educational agen-
cy that receives a waiver under this section shall at
the end of the second year for which a waiver is re-
ceived under this section, and each subsequent year,
submit a report to the State educational agency
that—
‘‘(A) describes the uses of such waiver by
such agency or by schools;
‘‘(B) describes how schools continued to pro-
vide assistance to the same populations served by
the programs for which waivers are requested;
and
‘‘(C) evaluates the progress of such agency
and of schools in improving the quality of in-
struction or the academic performance of stu-
dents.
‘‘(2) STATE WAIVER.—A State educational agen-
cy that receives reports required under paragraph (1)
shall annually submit a report to the Secretary that
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is based on such reports and contains such informa-
tion as the Secretary may require.
‘‘(3) INDIAN TRIBE WAIVER.—An Indian tribe
that receives a waiver under this section shall annu-
ally submit a report to the Secretary that—
‘‘(A) describes the uses of such waiver by
schools operated by such tribe; and
‘‘(B) evaluates the progress of such schools
in improving the quality of instruction or the
academic performance of students.
‘‘(4) REPORT TO CONGRESS.—Beginning in fis-
cal year 2002 and each subsequent year, the Secretary
shall submit to the Committee on Education and the
Workforce of the House of Representatives and the
Committee on Health, Education, Labor, and Pen-
sions of the Senate a report—
‘‘(A) summarizing the uses of waivers by
State educational agencies, local educational
agencies, Indian tribes, and schools; and
‘‘(B) describing whether such waivers—
‘‘(i) increased the quality of instruc-
tion to students; or
‘‘(ii) improved the academic perform-
ance of students.
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‘‘(f) TERMINATION OF WAIVERS.—The Secretary shall
terminate a waiver under this section if the Secretary deter-
mines that the performance of the State or other recipient
affected by the waiver has been inadequate to justify a con-
tinuation of the waiver or if the waiver is no longer nec-
essary to achieve its original purposes.
‘‘(g) PUBLICATION.—A notice of the Secretary’s deci-
sion to grant each waiver under subsection (a) shall be pub-
lished in the Federal Register and the Secretary shall pro-
vide for the dissemination of such notice to State edu-
cational agencies, interested parties, including educators,
parents, students, advocacy and civil rights organizations,
and the public.
‘‘Subpart 4—Innovative Education Program
Strategies
‘‘SEC. 5301. PURPOSE; STATE AND LOCAL RESPONSIBILITY.
‘‘(a) PURPOSE.—The purpose of this subpart is—
‘‘(1) to support local education reform efforts
that are consistent with and support statewide edu-
cation reform efforts;
‘‘(2) to provide funding to enable State and local
educational agencies to implement promising edu-
cational reform strategies;
‘‘(3) to provide a continuing source of innova-
tion and educational improvement, including support
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for library services and instructional and media ma-
terials; and
‘‘(4) to develop and implement education pro-
grams to improve school, student, and teacher per-
formance, including professional development activi-
ties and class size reduction programs.
‘‘(b) STATE AND LOCAL RESPONSIBILITY.—The basic
responsibility for the administration of funds made avail-
able under this subpart is within the State educational
agencies, but it is the intent of Congress that the responsi-
bility be carried out with a minimum of paperwork and
that the responsibility for the design and implementation
of programs assisted under this subpart will be mainly that
of local educational agencies, school superintendents and
principals, and classroom teachers and supporting per-
sonnel, because such agencies and individuals have the most
direct contact with students and are most likely to be able
to design programs to meet the educational needs of students
in their own school districts.
‘‘SEC. 5302. AUTHORIZATION OF APPROPRIATIONS; DURA-
TION OF ASSISTANCE.
‘‘(a) AUTHORIZATION.—To carry out the purposes of
this subpart, there are authorized to be appropriated
$850,000,000 for fiscal year 2002 and such sums as may
be necessary for each of the 6 succeeding fiscal years.
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‘‘(b) DURATION OF ASSISTANCE.—During the period
beginning October 1, 2002, and ending September 30, 2008,
the Secretary, in accordance with the provisions of this sub-
part, shall make payments to State educational agencies for
the purpose of this subpart.
‘‘SEC. 5303. DEFINITION OF EFFECTIVE SCHOOLS PROGRAM.
‘‘In this subpart the term ‘effective schools program’
means a school-based program that—
‘‘(1) may encompass preschool through secondary
school levels; and
‘‘(2) has the objectives of—
‘‘(A) promoting school-level planning, in-
structional improvement, and staff development
for all personnel;
‘‘(B) increasing the academic performance
levels of all children and particularly education-
ally disadvantaged children; and
‘‘(C) achieving as an ongoing condition in
the school the following factors identified through
effective schools research:
‘‘(i) Strong and effective administra-
tive and instructional leadership.
‘‘(ii) A safe and orderly school environ-
ment that enables teachers and students to
focus on academic performance.
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‘‘(iii) Continuous assessment of stu-
dents and initiatives to evaluate instruc-
tional techniques.
‘‘Chapter 1—State and Local Programs
‘‘SEC. 5311. ALLOTMENT TO STATES.
‘‘(a) RESERVATIONS.—From the sums appropriated to
carry out this subpart in any fiscal year, the Secretary
shall reserve not more than 1 percent for payments to out-
lying areas to be allotted in accordance with their respective
needs.
‘‘(b) ALLOTMENT.—From the remainder of such sums,
the Secretary shall allot to each State an amount which
bears the same ratio to the amount of such remainder as
the school-age population of the State bears to the school-
age population of all States, except that no State shall re-
ceive less than an amount equal to 1⁄2 of 1 percent of such
remainder.
‘‘(c) DEFINITIONS.—In this chapter:
‘‘(1) 
SCHOOL-AGE
POPULATION.—The 
term
‘school-age population’ means the population aged 5
through 17.
‘‘(2) STATE.—The term ‘State’ includes the 50
States of the United States, the District of Columbia,
and the Commonwealth of Puerto Rico.
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‘‘SEC. 5312. ALLOCATION TO LOCAL EDUCATIONAL AGEN-
CIES.
‘‘(a) FORMULA.—From the sums made available each
year to carry out this subpart, the State educational agency
shall distribute not less than 85 percent to local educational
agencies within such State according to the relative enroll-
ments in public and private elementary schools and sec-
ondary schools within the school districts of such agencies,
adjusted, in accordance with criteria approved by the Sec-
retary, to provide higher per pupil allocations to local edu-
cational agencies serving the greatest numbers or percent-
ages of children whose education imposes a higher than av-
erage cost per child, such as—
‘‘(1) children living in areas with high con-
centrations of low-income families;
‘‘(2) children from low-income families; and
‘‘(3) children living in sparsely populated areas.
‘‘(b) CALCULATION OF ENROLLMENTS.—
‘‘(1) IN GENERAL.—The calculation of relative
enrollments under subsection (a) shall be on the basis
of the total of—
‘‘(A) the number of children enrolled in
public schools; and
‘‘(B) the number of children enrolled in pri-
vate nonprofit schools that desire that their chil-
dren participate in programs or projects assisted
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under this subpart, for the fiscal year preceding
the fiscal year for which the determination is
made.
‘‘(2) CONSTRUCTION.—Nothing in this subsection
shall diminish the responsibility of local educational
agencies to contact, on an annual basis, appropriate
officials from private nonprofit schools within the
areas served by such agencies in order to determine
whether such schools desire that their children partici-
pate in programs assisted under this subpart.
‘‘(3) ADJUSTMENTS.—
‘‘(A) IN
GENERAL.—Relative enrollments
under subsection (a) shall be adjusted, in accord-
ance with criteria approved by the Secretary
under subparagraph (B), to provide higher per
pupil allocations only to local educational agen-
cies which serve the greatest numbers or percent-
ages of—
‘‘(i) children living in areas with high
concentrations of low-income families;
‘‘(ii) children from low-income fami-
lies; or
‘‘(iii) children living in sparsely popu-
lated areas.
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‘‘(B) CRITERIA.—The Secretary shall review
criteria submitted by a State educational agency
for adjusting allocations under subparagraph (A)
and shall approve such criteria only if the Sec-
retary determines that such criteria are reason-
ably calculated to produce an adjusted allocation
that reflects the relative needs within the State’s
local educational agencies based on the factors set
forth in subparagraph (A).
‘‘(c) PAYMENT OF ALLOCATIONS.—
‘‘(1) DISTRIBUTION.—From the funds paid to a
State educational agency pursuant to section 5311 for
a fiscal year, a State educational agency shall dis-
tribute to each eligible local educational agency which
has submitted an application as required in section
5333 the amount of such local educational agency’s
allocation as determined under subsection (a).
‘‘(2) ADDITIONAL FUNDS.—
‘‘(A) IN
GENERAL.—Additional funds re-
sulting from higher per pupil allocations pro-
vided to a local educational agency on the basis
of adjusted enrollments of children described in
subsection (a), may, at the discretion of the local
educational agency, be allocated for expenditures
to provide services for children enrolled in public
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and private nonprofit schools in direct propor-
tion to the number of children described in sub-
section (a) and enrolled in such schools within
the local educational agency.
‘‘(B) REQUIREMENT.—In any fiscal year,
any local educational agency that elects to allo-
cate such additional funds in the manner de-
scribed in subparagraph (A) shall allocate all
additional funds to schools within the local edu-
cational agency in such manner.
‘‘(C) CONSTRUCTION.—The provisions of
subparagraphs (A) and (B) may not be con-
strued to require any school to limit the use of
such additional funds to the provision of services
to specific students or categories of students.
‘‘Chapter 2—State Programs
‘‘SEC. 5321. STATE USES OF FUNDS.
‘‘(a) AUTHORIZED ACTIVITIES.—A State educational
agency may use funds made available for State use under
this subpart only for—
‘‘(1) State administration of programs under
this subpart, including—
‘‘(A) supervision of the allocation of funds
to local educational agencies;
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‘‘SEC. 5322. STATE APPLICATIONS.
‘‘(a) APPLICATION REQUIREMENTS.—Any State which
desires to receive assistance under this subpart shall submit
to the Secretary an application which—
‘‘(1) designates the State educational agency as
the State agency responsible for administration and
supervision of programs assisted under this subpart;
‘‘(2) provides for a biennial submission of data
on the use of funds, the types of services furnished,
and the students served under this subpart;
‘‘(3) sets forth the allocation of such funds re-
quired to implement section 5342;
‘‘(4) provides that the State educational agency
will keep such records and provide such information
to the Secretary as may be required for fiscal audit
and program evaluation (consistent with the respon-
sibilities of the Secretary under this section);
‘‘(5) provides assurances that, apart from tech-
nical and advisory assistance and monitoring compli-
ance with this subpart, the State educational agency
has not exercised and will not exercise any influence
in the decisionmaking processes of local educational
agencies as to the expenditure made pursuant to an
application under section 5333;
‘‘(6) contains assurances that there is compliance
with the specific requirements of this subpart; and
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‘‘(7) provides for timely public notice and public
dissemination of the information provided pursuant
to paragraph (2).
‘‘(b) PERIOD OF APPLICATION.—An application filed
by the State under subsection (a) shall be for a period not
to exceed 3 years, and may be amended annually as may
be necessary to reflect changes without filing a new applica-
tion.
‘‘(c) AUDIT RULE.—A local educational agency that
receives less than an average of $10,000 under this subpart
for 3 fiscal years shall not be audited more frequently than
once every 5 years.
‘‘Chapter 3—Local Innovative Education Programs
‘‘SEC. 5331. TARGETED USE OF FUNDS.
‘‘(a) GENERAL RULE.—Funds made available to local
educational agencies under section 5312 shall be used for
innovative assistance described in subsection (b).
‘‘(b) INNOVATIVE ASSISTANCE.—
‘‘(1) IN
GENERAL.—The innovative assistance
programs referred to in subsection (a) include—
‘‘(A) programs for the acquisition and use
of instructional and educational materials, in-
cluding library services and materials (including
media materials), assessments, and other cur-
ricular materials;
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‘‘(B) programs to improve teaching and
learning, including professional development ac-
tivities, that are consistent with comprehensive
State and local systemic education reform efforts;
‘‘(C) activities that encourage and expand
improvements throughout the local educational
agency that are designed to advance student per-
formance;
‘‘(D) initiatives to generate, maintain, and
strengthen parental and community involvement,
including initiatives creating activities for
school-age children and activities to meet the
educational needs of children aged birth through
5;
‘‘(E) programs to recruit, hire, and train
certified teachers (including teachers certified
through State and local alternative routes) in
order to reduce class size;
‘‘(F) programs to improve the academic
performance of educationally disadvantaged ele-
mentary school and secondary school students,
including activities to prevent students from
dropping out of school;
‘‘(G) programs and activities that expand
learning opportunities through best practice
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models designed to improve classroom learning
and teaching;
‘‘(H) programs to improve the literacy skills
of adults, especially the parents of children
served by the local educational agency, including
adult education and family literacy programs;
‘‘(I) technology activities related to the im-
plementation of school-based reform efforts, in-
cluding professional development to assist teach-
ers and other school personnel (including school
library media personnel) regarding how to effec-
tively use technology in the classrooms and the
school library media centers involved;
‘‘(J) school improvement programs or ac-
tivities under section 1116 or 1117;
‘‘(K) programs to provide for the edu-
cational needs of gifted and talented children;
‘‘(L) programs to provide same gender
schools and classrooms, consistent with applica-
ble law;
‘‘(M) service learning activities;
‘‘(N) school safety programs;
‘‘(O) activities to promote consumer, eco-
nomic, and personal finance education, such as
disseminating and encouraging the use of the
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best practices for teaching the basic principles of
economics and promoting the concept of achiev-
ing financial literacy through the teaching of
personal financial management skills (including
the basic principles involved in earning, spend-
ing, saving, and investing);
‘‘(P) programs that employ research-based
cognitive and perceptual development approaches
and rely on a diagnostic-prescriptive model to
improve students’ learning of academic content
at the preschool, elementary, and secondary lev-
els; and
‘‘(Q) supplemental educational services as
defined in section 1116(f)(6).
‘‘(2) REQUIREMENTS.—The innovative assistance
programs referred to in subsection (a) shall be—
‘‘(A) tied to promoting high academic
standards;
‘‘(B) used to improve student performance;
and
‘‘(C) part of an overall education reform
strategy.
‘‘(c) AWARD CRITERIA AND OTHER GUIDELINES.—Not
later than 120 days after the date of enactment of the Better
Education for Students and Teachers Act, the Secretary
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shall issue specific award criteria and other guidelines for
local educational agencies seeking funding for activities
under subsection (b)(1)(L).
‘‘SEC. 5332. ADMINISTRATIVE AUTHORITY.
‘‘In order to conduct the activities authorized by this
subpart, each State or local educational agency may use
funds made available under this subpart to make grants
to and to enter into contracts with local educational agen-
cies, institutions of higher education, libraries, museums,
and other public and private nonprofit agencies, organiza-
tions, and institutions.
‘‘SEC. 5333. LOCAL APPLICATIONS.
‘‘(a) CONTENTS OF APPLICATION.—A local educational
agency or consortium of such agencies may receive an allo-
cation of funds under this subpart for any year for which
an application is submitted to the State educational agency
and such application is certified to meet the requirements
of this section. The State educational agency shall certify
any such application if such application—
‘‘(1)(A) sets forth the planned allocation of funds
among innovative assistance programs described in
section 5331 and describes the programs, projects, and
activities designed to carry out such innovative assist-
ance which the local educational agency intends to
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support, together with the reasons for the selection of
such programs, projects, and activities; and
‘‘(B) sets forth the allocation of such funds re-
quired to implement section 5342;
‘‘(2) describes how assistance under this subpart
will contribute to improving student achievement or
improving the quality of education for students;
‘‘(3) provides assurances of compliance with the
provisions of this subpart, including the participation
of children enrolled in private, nonprofit schools in
accordance with section 5342;
‘‘(4) provides an assurance that the local edu-
cational agency will keep such records, and provide
such information to the State educational agency, as
reasonably may be required for fiscal audit and pro-
gram evaluation, consistent with the responsibilities
of the State educational agency under this subpart;
and
‘‘(5) provides in the allocation of funds for the
assistance authorized by this subpart, and in the de-
sign, planning, and implementation of such pro-
grams, for systematic consultation with parents of
children attending elementary schools and secondary
schools in the area served by the local educational
agency, with teachers and administrative personnel
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in such schools, and with other groups involved in the
implementation of this subpart (such as librarians,
school counselors, and other pupil services personnel)
as may be considered appropriate by the local edu-
cational agency.
‘‘(b) PERIOD OF APPLICATION.—An application filed
by a local educational agency under subsection (a) shall be
for a period not to exceed 3 fiscal years, may provide for
the allocation of funds to programs for a period of 3 years,
and may be amended annually as may be necessary to re-
flect changes without filing a new application.
‘‘(c) LOCAL EDUCATIONAL AGENCY DISCRETION.—
Subject to the limitations and requirements of this subpart,
a local educational agency shall have complete discretion
in determining how funds under this chapter shall be di-
vided among the areas of targeted assistance. In exercising
such discretion, a local educational agency shall ensure that
expenditures under this chapter carry out the purposes of
this subpart and are used to meet the educational needs
within the schools of such local educational agency.
‘‘Chapter 4—General Administrative Provisions
‘‘SEC. 5341. MAINTENANCE OF EFFORT; FEDERAL FUNDS
SUPPLEMENTARY.
‘‘(a) MAINTENANCE OF EFFORT.—
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‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), a State is entitled to receive its full alloca-
tion of funds under this subpart for any fiscal year
if the Secretary finds that either the combined fiscal
effort per student or the aggregate expenditures within
the State with respect to the provision of free public
education for the fiscal year preceding the fiscal year
for which the determination is made was not less
than 90 percent of such combined fiscal effort or ag-
gregate expenditures for the second fiscal year pre-
ceding the fiscal year for which the determination is
made.
‘‘(2) REDUCTION
OF
FUNDS.—The Secretary
shall reduce the amount of the allocation of funds
under this subpart in any fiscal year in the exact
proportion to which the State fails to meet the re-
quirements of paragraph (1) by falling below 90 per-
cent of both the fiscal effort per student and aggregate
expenditures (using the measure most favorable to the
State), and no such lesser amount shall be used for
computing the effort required under paragraph (1) for
subsequent years.
‘‘(3) WAIVERS.—The Secretary may waive, for 1
fiscal year only, the requirements of this section if the
Secretary determines that such a waiver would be eq-
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uitable due to exceptional or uncontrollable cir-
cumstances such as a natural disaster or a precipi-
tous and unforeseen decline in the financial resources
of the State.
‘‘(b) FEDERAL FUNDS SUPPLEMENTARY.—A State or
local educational agency may use and allocate funds re-
ceived under this subpart only so as to supplement and,
to the extent practical, increase the level of funds that
would, in the absence of Federal funds made available under
this subpart, be made available from non-Federal sources,
and in no case may such funds be used so as to supplant
funds from non-Federal sources.
‘‘SEC. 5342. PARTICIPATION OF CHILDREN ENROLLED IN
PRIVATE SCHOOLS.
‘‘(a) PARTICIPATION ON EQUITABLE BASIS.—
‘‘(1) IN GENERAL.—To the extent consistent with
the number of children in the school district of a local
educational agency which is eligible to receive funds
under this subpart or which serves the area in which
a program or project assisted under this subpart is lo-
cated who are enrolled in private nonprofit elemen-
tary and secondary schools, or with respect to instruc-
tional or personnel training programs funded by the
State educational agency from funds made available
for State use, such agency, after consultation with ap-
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propriate private school officials, shall provide for the
benefit of such children in such schools secular, neu-
tral, and nonideological services, materials, and
equipment, including the participation of the teachers
of such children (and other educational personnel
serving such children) in training programs, and the
repair, minor remodeling, or construction of public
facilities as may be necessary for their provision (con-
sistent with subsection (c) of this section), or, if such
services, materials, and equipment are not feasible or
necessary in one or more such private schools as de-
termined by the local educational agency after con-
sultation with the appropriate private school officials,
shall provide such other arrangements as will assure
equitable participation of such children in the pur-
poses and benefits of this subpart.
‘‘(2) OTHER PROVISIONS FOR SERVICES.—If no
program or project is carried out under paragraph
(1) in the school district of a local educational agen-
cy, the State educational agency shall make arrange-
ments, such as through contracts with nonprofit agen-
cies or organizations, under which children in private
schools in such district are provided with services and
materials to the extent that would have occurred if the
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local educational agency had received funds under
this subpart.
‘‘(3) APPLICATION OF REQUIREMENTS.—The re-
quirements of this section relating to the participa-
tion of children, teachers, and other personnel serving
such children shall apply to programs and projects
carried out under this subpart by a State or local
educational agency, whether directly or through
grants to or contracts with other public or private
agencies, institutions, or organizations.
‘‘(b) EQUAL EXPENDITURES.—Expenditures for pro-
grams pursuant to subsection (a) shall be equal (consistent
with the number of children to be served) to expenditures
for programs under this subpart for children enrolled in
the public schools of the local educational agency, taking
into account the needs of the individual children and other
factors which relate to such expenditures, and when funds
available to a local educational agency under this subpart
are used to concentrate programs or projects on a particular
group, attendance area, or grade or age level, children en-
rolled in private schools who are included within the group,
attendance area, or grade or age level selected for such con-
centration shall, after consultation with the appropriate
private school officials, be assured equitable participation
in the purposes and benefits of such programs or projects.
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‘‘(c) FUNDS.—
‘‘(1) ADMINISTRATION
OF
FUNDS
AND
PROP-
ERTY.—The control of funds provided under this sub-
part, and title to materials, equipment, and property
repaired, remodeled, or constructed with such funds,
shall be in a public agency for the uses and purposes
provided in this subpart, and a public agency shall
administer such funds and property.
‘‘(2) PROVISION OF SERVICES.—The provision of
services pursuant to this subpart shall be provided by
employees of a public agency or through contract by
such public agency with a person, an association,
agency, or corporation who or which, in the provision
of such services, is independent of such private school
and of any religious organizations, and such employ-
ment or contract shall be under the control and super-
vision of such public agency, and the funds provided
under this subpart shall not be commingled with
State or local funds.
‘‘(d) STATE PROHIBITION WAIVER.—If by reason of
any provision of law a State or local educational agency
is prohibited from providing for the participation in pro-
grams of children enrolled in private elementary schools
and secondary schools, as required by this section, the Sec-
retary shall waive such requirements and shall arrange for
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the provision of services to such children through arrange-
ments which shall be subject to the requirements of this sec-
tion.
‘‘(e) WAIVER AND PROVISION OF SERVICES.—
‘‘(1) FAILURE TO COMPLY.—If the Secretary de-
termines that a State or a local educational agency
has substantially failed or is unwilling to provide for
the participation on an equitable basis of children en-
rolled in private elementary schools and secondary
schools as required by this section, the Secretary may
waive such requirements and shall arrange for the
provision of services to such children through arrange-
ments which shall be subject to the requirements of
this section.
‘‘(2) WITHHOLDING
OF
ALLOCATION.—Pending
final resolution of any investigation or complaint
that could result in a determination under this sub-
section or subsection (d), the Secretary may withhold
from the allocation of the affected State or local edu-
cational agency the amount estimated by the Sec-
retary to be necessary to pay the cost of those services.
‘‘(f) DETERMINATION.—Any determination by the Sec-
retary under this section shall continue in effect until the
Secretary determines that there will no longer be any fail-
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ure or inability on the part of the State or local educational
agency to meet the requirements of subsections (a) and (b).
‘‘(g) PAYMENT FROM STATE ALLOTMENT.—When the
Secretary arranges for services pursuant to this section, the
Secretary shall, after consultation with the appropriate
public and private school officials, pay the cost of such serv-
ices, including the administrative costs of arranging for
those services, from the appropriate allotment of the State
under this subpart.
‘‘(h) REVIEW.—
‘‘(1) WRITTEN OBJECTIONS.—The Secretary shall
not take any final action under this section until the
State educational agency and the local educational
agency affected by such action have had an oppor-
tunity, for not less than 45 days after receiving writ-
ten notice thereof, to submit written objections and to
appear before the Secretary or the Secretary’s des-
ignee to show cause why that action should not be
taken.
‘‘(2) COURT ACTION.—If a State or local edu-
cational agency is dissatisfied with the Secretary’s
final action after a proceeding under paragraph (1),
such agency may, not later than 60 days after notice
of such action, file with the United States court of ap-
peals for the circuit in which such State is located a
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petition for review of that action. A copy of the peti-
tion shall be transmitted by the clerk of the court to
the Secretary. The Secretary thereupon shall file in
the court the record of the proceedings on which the
Secretary based this action, as provided in section
2112 of title 28, United States Code.
‘‘(3) REMAND TO SECRETARY.—The findings of
fact by the Secretary, if supported by substantial evi-
dence, shall be conclusive; but the court, for good
cause shown, may remand the case to the Secretary
to take further evidence and the Secretary may make
new or modified findings of fact and may modify the
Secretary’s previous action, and shall file in the court
the record of the further proceedings. Such new or
modified findings of fact shall likewise be conclusive
if supported by substantial evidence.
‘‘(4) COURT REVIEW.—Upon the filing of such
petition, the court shall have jurisdiction to affirm the
action of the Secretary or to set such action aside, in
whole or in part. The judgment of the court shall be
subject to review by the Supreme Court of the United
States upon certiorari or certification as provided in
section 1254 of title 28, United States Code.
‘‘(i) PRIOR DETERMINATION.—Any bypass determina-
tion by the Secretary under chapter 2 of part I of this Act
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(as such chapter was in effect on the day preceding the date
of enactment of the Improving America’s Schools Act of
1994) shall, to the extent consistent with the purposes of
this subpart, apply to programs under this subpart.
‘‘SEC. 5343. FEDERAL ADMINISTRATION.
‘‘(a) TECHNICAL ASSISTANCE.—The Secretary, upon
request, shall provide technical assistance to State and local
educational agencies under this subpart.
‘‘(b) RULEMAKING.—The Secretary shall issue regula-
tions under this subpart to the extent that such regulations
are necessary to ensure that there is compliance with the
specific requirements and assurances required by this sub-
part.
‘‘(c) AVAILABILITY
OF APPROPRIATIONS.—Notwith-
standing any other provision of law, unless expressly in
limitation of this subsection, funds appropriated in any fis-
cal year to carry out activities under this subpart shall be-
come available for obligation on July 1 of such fiscal year
and shall remain available for obligation until the end of
the subsequent fiscal year.
‘‘Chapter 5—School Construction
‘‘SEC. 5351. DEFINITIONS.
‘‘In this chapter:
‘‘(1) CONSTRUCTION.—
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‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the term ‘construction’ means—
‘‘(i) preparation of drawings and spec-
ifications for school facilities;
‘‘(ii) building new school facilities, or
acquiring, remodeling, demolishing, ren-
ovating, improving, or repairing facilities
to establish new school facilities; and
‘‘(iii) inspection and supervision of the
construction of new school facilities.
‘‘(B) RULE.—An activity described in sub-
paragraph (A) shall be considered to be construc-
tion only if the labor standards described in sec-
tion 439 of the General Education Provisions
Act (20 U.S.C. 1232b) are applied with respect
to such activity.
‘‘(2) SCHOOL FACILITY.—The term ‘school facil-
ity’ means a public structure suitable for use as a
classroom, laboratory, library, media center, or re-
lated facility the primary purpose of which is the in-
struction of public elementary school or secondary
school students. The term does not include an athletic
stadium or any other structure or facility intended
primarily for athletic exhibitions, contests, or games
for which admission is charged to the general public.
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‘‘SEC. 5352. PROGRAM AUTHORIZED.
‘‘(a) IN GENERAL.—Funds made available to local
educational agencies under section 5312 may, notwith-
standing section 5331(a), be used to enable the local edu-
cational agencies to carry out the construction of new public
elementary school and secondary school facilities.
‘‘(b) NONAPPLICATION OF PROVISIONS.—The provi-
sions of chapter 4 shall not apply to this chapter.
‘‘SEC. 5353. CONDITIONS FOR USE OF FUNDS.
‘‘In order to use funds for construction under this
chapter a local educational agency shall meet the following
requirements:
‘‘(1) Reduce school sizes for public elementary
schools and secondary schools served by the local edu-
cational agency to—
‘‘(A) not more than 500 students in the case
of a school serving kindergarten through grade 5
students;
‘‘(B) not more than 750 students in the case
of a school serving grade 6 through grade 8 stu-
dents; and
‘‘(C) not more than 1,000 students in the
case of a school serving grade 9 through grade 12
students.
‘‘(2) Provide matching funds, with respect to the
cost to be incurred in carrying out the activities for
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which the grant is awarded, from non-Federal sources
in an amount equal to the Federal funds provided
under the grant.
‘‘SEC. 5354. APPLICATIONS.
‘‘(a) IN GENERAL.—Each local educational agency de-
siring to use funds under this chapter shall submit an ap-
plication to the State educational agency at such time and
in such manner as the State educational agency may re-
quire.
‘‘(b) CONTENTS.—Each application shall contain—
‘‘(1) an assurance that the grant funds will be
used in accordance with this chapter;
‘‘(2) a brief description of the construction to be
conducted;
‘‘(3) a cost estimate of the activities to be con-
ducted; and
‘‘(4) a description of available non-Federal
matching funds.
‘‘PART C—FLEXIBILITY IN THE USE OF
ADMINISTRATIVE AND OTHER FUNDS
‘‘SEC. 5401. CONSOLIDATION OF STATE ADMINISTRATIVE
FUNDS FOR ELEMENTARY AND SECONDARY
EDUCATION PROGRAMS.
‘‘(a) CONSOLIDATION OF ADMINISTRATIVE FUNDS.—
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‘‘(1) IN GENERAL.—A State educational agency
may consolidate the amounts specifically made avail-
able to such agency for State administration under
one or more of the programs specified under para-
graph (2) if such State educational agency can dem-
onstrate that the majority of such agency’s resources
come from non-Federal sources.
‘‘(2) APPLICABILITY.—This section applies to
programs under title I, those covered programs de-
scribed in subparagraphs (C), (D), (E), and (F) of
section 3(10).
‘‘(b) USE OF FUNDS.—
‘‘(1) IN GENERAL.—A State educational agency
shall use the amount available under this section for
the administration of the programs included in the
consolidation under subsection (a).
‘‘(2) ADDITIONAL
USES.—A State educational
agency may also use funds available under this sec-
tion for administrative activities designed to enhance
the effective and coordinated use of funds under the
programs included in the consolidation under sub-
section (a), such as—
‘‘(A) the coordination of such programs
with other Federal and non-Federal programs;
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‘‘(B) the establishment and operation of
peer-review mechanisms under this Act;
‘‘(C) the administration of this part, part
D, and sections 3 through 17;
‘‘(D) the dissemination of information re-
garding model programs and practices; and
‘‘(E) technical assistance under programs
specified in subsection (a)(2).
‘‘(c) RECORDS.—A State educational agency that con-
solidates administrative funds under this section shall not
be required to keep separate records, by individual program,
to account for costs relating to the administration of pro-
grams included in the consolidation under subsection (a).
‘‘(d) REVIEW.—To determine the effectiveness of State
administration under this section, the Secretary may peri-
odically review the performance of State educational agen-
cies in using consolidated administrative funds under this
section and take such steps as the Secretary finds appro-
priate to ensure the effectiveness of such administration.
‘‘(e) UNUSED ADMINISTRATIVE FUNDS.—If a State
educational agency does not use all of the funds available
to such agency under this section for administration, such
agency may use such funds during the applicable period
of availability as funds available under one or more pro-
grams included in the consolidation under subsection (a).
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‘‘(f) CONSOLIDATION OF FUNDS FOR STANDARDS AND
ASSESSMENT DEVELOPMENT.—In order to develop chal-
lenging State standards and assessments, a State edu-
cational agency may consolidate the amounts made avail-
able to such agency for such purposes under title I of this
Act.
‘‘SEC. 5402. SINGLE LOCAL EDUCATIONAL AGENCY STATES.
‘‘A State educational agency that also serves as a local
educational agency, in such agency’s applications or plans
under this Act, shall describe how such agency will elimi-
nate duplication in the conduct of administrative functions.
‘‘SEC. 5403. CONSOLIDATION OF FUNDS FOR LOCAL ADMIN-
ISTRATION.
‘‘(a) GENERAL AUTHORITY.—In accordance with regu-
lations of the Secretary, a local educational agency, with
the approval of its State educational agency, may consoli-
date and use for the administration of one or more covered
programs for any fiscal year not more than the percentage,
established in each covered program, of the total amount
available to the local educational agency under such covered
programs.
‘‘(b) STATE PROCEDURES.—Within one year from the
date of enactment of the Improving America’s Schools Act
of 1994, a State educational agency shall, in collaboration
with local educational agencies in the State, establish proce-
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dures for responding to requests from local educational
agencies to consolidate administrative funds under sub-
section (a) and for establishing limitations on the amount
of funds under covered programs that may be used for ad-
ministration on a consolidated basis.
‘‘(c) CONDITIONS.—A local educational agency that
consolidates administrative funds under this section for any
fiscal year shall not use any other funds under the programs
included in the consolidation for administration for that
fiscal year.
‘‘(d) USES OF ADMINISTRATIVE FUNDS.—A local edu-
cational agency that consolidates administrative funds
under this section may use such consolidated funds for the
administration of covered programs and for the uses de-
scribed in section 5401(b)(2).
‘‘(e) RECORDS.—A local educational agency that con-
solidates administrative funds under this section shall not
be required to keep separate records, by individual covered
program, to account for costs relating to the administration
of covered programs included in the consolidation.
‘‘SEC. 5404. ADMINISTRATIVE FUNDS STUDIES.
‘‘(a) FEDERAL FUNDS STUDY.—
‘‘(1) IN GENERAL.—The Secretary shall conduct
a study of the use of funds under this Act for the ad-
ministration, by State and local educational agencies,
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of all covered programs, including the percentage of
grant funds used for such purpose in all covered pro-
grams.
‘‘(2) STATE
DATA.—Beginning in fiscal year
1995 and each succeeding fiscal year thereafter, each
State educational agency which receives funds under
title I shall submit to the Secretary a report on the
use of title I funds for the State administration of ac-
tivities assisted under title I. Such report shall in-
clude the proportion of State administrative funds
provided under section 1903 that are expended for—
‘‘(A) basic program operation and compli-
ance monitoring;
‘‘(B) statewide program services such as de-
velopment of standards and assessments, cur-
riculum development, and program evaluation;
and
‘‘(C) technical assistance and other direct
support to local educational agencies and schools.
‘‘(3) FEDERAL FUNDS REPORT.—The Secretary
shall complete the study conducted under this section
not later than July 1, 1997, and shall submit to the
President and the appropriate committees of the Con-
gress a report regarding such study within 30 days
of the completion of such study.
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‘‘(4) RESULTS.—Based on the results of the
study described in subsection (a)(1), which may in-
clude collection and analysis of the data under para-
graph (2) and section 410(b) of the Improving Amer-
ica’s Schools Act of 1994, the Secretary shall—
‘‘(A) develop a definition of what types of
activities constitute the administration of pro-
grams under this Act by State and local edu-
cational agencies; and
‘‘(B) within one year of the completion of
such study, promulgate final regulations or
guidelines regarding the use of funds for admin-
istration under all programs, including the use
of such funds on a consolidated basis and limita-
tions on the amount of such funds that may be
used for administration where such limitation is
not otherwise specified in law.
‘‘(b) GENERAL ADMINISTRATIVE FUNDS STUDY AND
REPORT.—Upon the date of completion of the pilot model
data system described in section 410(b) of the Improving
America’s Schools Act of 1994, the Secretary shall study
the information obtained through the use of such data sys-
tem and other relevant information, as well as any other
data systems which are in use on such date that account
for administrative expenses at the school, local educational
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agency, and State educational agency level, and shall report
to the Congress not later than July 1, 1997, regarding—
‘‘(1) the potential for the reduction of adminis-
trative expenses at the school, local educational agen-
cy, and State educational agency levels;
‘‘(2) the potential usefulness of such data system
to reduce such administrative expenses;
‘‘(3) any other methods which may be employed
by schools, local educational agencies or State edu-
cational agencies to reduce administrative expenses
and maximize the use of funds for functions directly
affecting student learning; and
‘‘(4) if appropriate, steps which may be taken to
assist schools, local educational agencies and State
educational agencies to account for and reduce ad-
ministrative expenses.
‘‘SEC. 5405. CONSOLIDATED SET-ASIDE FOR DEPARTMENT
OF THE INTERIOR FUNDS.
‘‘(a) GENERAL AUTHORITY.—
‘‘(1) TRANSFER.—The Secretary shall transfer to
the Department of the Interior, as a consolidated
amount for covered programs, the Indian education
programs under part A of title VII of this Act, and
the education for homeless children and youth pro-
gram under subtitle B of title VII of the Stewart B.
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McKinney Homeless Assistance Act, the amounts al-
lotted to the Department of the Interior under those
programs.
‘‘(2) AGREEMENT.—(A) The Secretary and the
Secretary of the Interior shall enter into an agree-
ment, consistent with the requirements of the pro-
grams specified in paragraph (1), for the distribution
and use of those program funds under terms that the
Secretary determines best meet the purposes of those
programs.
‘‘(B) The agreement shall—
‘‘(i) set forth the plans of the Secretary of
the Interior for the use of the amount trans-
ferred, and set forth performance measures to as-
sess program effectiveness, including measurable
goals and objectives; and
‘‘(ii) be developed in consultation with In-
dian tribes.
‘‘(b) ADMINISTRATION.—The Department of the Inte-
rior may use not more than 1.5 percent of the funds consoli-
dated under this section for such department’s costs related
to the administration of the funds transferred under this
section.
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‘‘SEC. 5406. AVAILABILITY OF UNNEEDED PROGRAM FUNDS.
‘‘With the approval of its State educational agency,
a local educational agency that determines for any fiscal
year that funds under a covered program (other than part
A of title I) are not needed for the purpose of that covered
program, may use such funds, not to exceed five percent
of the total amount of such local educational agency’s funds
under that covered program, for the purpose of another cov-
ered program.
‘‘PART D—COORDINATION OF PROGRAMS; CON-
SOLIDATED STATE AND LOCAL PLANS AND
APPLICATIONS
‘‘SEC. 5501. PURPOSE.
‘‘It is the purpose of this part to improve teaching and
learning by encouraging greater cross-program coordina-
tion, planning, and service delivery under this Act and en-
hanced integration of programs under this Act with edu-
cational activities carried out with State and local funds.
‘‘SEC. 5502. OPTIONAL CONSOLIDATED STATE PLANS OR AP-
PLICATIONS.
‘‘(a) GENERAL AUTHORITY.—
‘‘(1) SIMPLIFICATION.—In order to simplify ap-
plication requirements and reduce the burden for
State educational agencies under this Act, the Sec-
retary, in accordance with subsection (b), shall estab-
lish procedures and criteria under which, after con-
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sultation with the Governor, a State educational
agency may submit a consolidated State plan or a
consolidated State application meeting the require-
ments of this section for—
‘‘(A) each of the covered programs in which
the State participates; and
‘‘(B) the additional programs described in
paragraph (2).
‘‘(2) ADDITIONAL
PROGRAMS.—After consulta-
tion with the Governor, a State educational agency
may also include in its consolidated State plan or
consolidated State application—
‘‘(A) the Even Start program under part B
of title I;
‘‘(B) the Prevention and Intervention Pro-
grams for Youth Who Are Neglected, Delinquent,
or At-Risk of Dropping Out under part D of
title I; and
‘‘(C) such other programs as the Secretary
may designate.
‘‘(3) 
CONSOLIDATED
APPLICATIONS
AND
PLANS.—After consultation with the Governor, a
State educational agency that submits a consolidated
State plan or a consolidated State application under
this section shall not be required to submit separate
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State plans or applications under any of the pro-
grams to which the consolidated State plan or consoli-
dated State application under this section applies.
‘‘(b) COLLABORATION.—
‘‘(1) IN GENERAL.—In establishing criteria and
procedures under this section, the Secretary shall col-
laborate with State educational agencies and, as ap-
propriate, with other State agencies, local educational
agencies, public and private nonprofit agencies, orga-
nizations, and institutions, private schools, and rep-
resentatives of parents, students, and teachers.
‘‘(2) 
CONTENTS.—Through 
the 
collaborative
process described in subsection (b)(1), the Secretary
shall establish, for each program under the Act to
which this section applies, the descriptions, informa-
tion, assurances, and other material required to be in-
cluded in a consolidated State plan or consolidated
State application.
‘‘(3) NECESSARY
MATERIALS.—The Secretary
shall require only descriptions, information, assur-
ances (including assurances of compliance with appli-
cable provisions regarding participation by private
school children and teachers), and other materials
that are absolutely necessary for the consideration of
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the consolidated State plan or consolidated State ap-
plication.
‘‘SEC. 5503. GENERAL APPLICABILITY OF STATE EDU-
CATIONAL AGENCY ASSURANCES.
‘‘(a) ASSURANCES.—A State educational agency that
submits a consolidated State plan or consolidated State ap-
plication under this Act, whether separately or under sec-
tion 5502, shall have on file with the Secretary a single
set of assurances, applicable to each program for which such
plan or application is submitted, that provides that—
‘‘(1) each such program will be administered in
accordance with all applicable statutes, regulations,
program plans, and applications;
‘‘(2)(A) the control of funds provided under each
such program and title to property acquired with
program funds will be in a public agency, in a non-
profit private agency, institution, or organization, or
in an Indian tribe if the law authorizing the program
provides for assistance to such entities; and
‘‘(B) the public agency, nonprofit private agen-
cy, institution, or organization, or Indian tribe will
administer such funds and property to the extent re-
quired by the authorizing law;
‘‘(3) the State will adopt and use proper methods
of administering each such program, including—
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‘‘(A) the enforcement of any obligations im-
posed by law on agencies, institutions, organiza-
tions, and other recipients responsible for car-
rying out each program;
‘‘(B) the correction of deficiencies in pro-
gram operations that are identified through au-
dits, monitoring, or evaluation; and
‘‘(C) the adoption of written procedures for
the receipt and resolution of complaints alleging
violations of law in the administration of such
programs;
‘‘(4) the State will cooperate in carrying out any
evaluation of each such program conducted by or for
the Secretary or other Federal officials;
‘‘(5) the State will use such fiscal control and
fund accounting procedures as will ensure proper dis-
bursement of, and accounting for, Federal funds paid
to the State under each such program;
‘‘(6) the State will—
‘‘(A) make reports to the Secretary as may
be necessary to enable the Secretary to perform
the Secretary’s duties under each such program;
and
‘‘(B) maintain such records, provide such
information to the Secretary, and afford access
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to the records as the Secretary may find nec-
essary to carry out the Secretary’s duties; and
‘‘(7) before the plan or application was sub-
mitted to the Secretary, the State has afforded a rea-
sonable opportunity for public comment on the plan
or application and has considered such comment.
‘‘(b) GEPA PROVISION.—Section 441 of the General
Education Provisions Act shall not apply to programs
under this Act.
‘‘SEC. 5504. ADDITIONAL COORDINATION.
‘‘(a) ADDITIONAL COORDINATION.—In order to explore
ways for State educational agencies to reduce administra-
tive burdens and promote the coordination of the education
services of this Act with other health and social service pro-
grams administered by such agencies, the Secretary is di-
rected to seek agreements with other Federal agencies (in-
cluding the Departments of Health and Human Services,
Justice, Labor and Agriculture) for the purpose of estab-
lishing procedures and criteria under which a State edu-
cational agency would submit a consolidated State plan or
consolidated State application that meets the requirements
of the covered programs.
‘‘(b) REPORT.—The Secretary shall report to the rel-
evant committees 6 months after the date of enactment of
the Improving America’s Schools Act of 1994.
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‘‘SEC. 5505. CONSOLIDATED LOCAL PLANS OR APPLICA-
TIONS.
‘‘(a) GENERAL
AUTHORITY.—A local educational
agency receiving funds under more than one covered pro-
gram may submit plans or applications to the State edu-
cational agency under such programs on a consolidated
basis.
‘‘(b) REQUIRED CONSOLIDATED PLANS OR APPLICA-
TIONS.—A State educational agency that has submitted and
had approved a consolidated State plan or application
under section 5502 may require local educational agencies
in the State receiving funds under more than one program
included in the consolidated State plan or consolidated
State application to submit consolidated local plans or ap-
plications under such programs.
‘‘(c) COLLABORATION.—A State educational agency
shall collaborate with local educational agencies in the State
in establishing procedures for the submission of the consoli-
dated State plans or consolidated State applications under
this section.
‘‘(d) NECESSARY MATERIALS.—The State educational
agency shall require only descriptions, information, assur-
ances, and other material that are absolutely necessary for
the consideration of the local educational agency plan or
application.
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‘‘SEC. 5506. OTHER GENERAL ASSURANCES.
‘‘(a) ASSURANCES.—Any applicant other than a State
educational agency that submits a plan or application
under this Act, whether separately or pursuant to section
5504, shall have on file with the State educational agency
a single set of assurances, applicable to each program for
which a plan or application is submitted, that provides
that—
‘‘(1) each such program will be administered in
accordance with all applicable statutes, regulations,
program plans, and applications;
‘‘(2)(A) the control of funds provided under each
such program and title to property acquired with
program funds will be in a public agency or in a
nonprofit private agency, institution, organization, or
Indian tribe, if the law authorizing the program pro-
vides for assistance to such entities; and
‘‘(B) the public agency, nonprofit private agen-
cy, institution, or organization, or Indian tribe will
administer such funds and property to the extent re-
quired by the authorizing statutes;
‘‘(3) the applicant will adopt and use proper
methods 
of 
administering 
each 
such 
program,
including—
‘‘(A) the enforcement of any obligations im-
posed by law on agencies, institutions, organiza-
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tions, and other recipients responsible for car-
rying out each program; and
‘‘(B) the correction of deficiencies in pro-
gram operations that are identified through au-
dits, monitoring, or evaluation;
‘‘(4) the applicant will cooperate in carrying out
any evaluation of each such program conducted by or
for the State educational agency, the Secretary or
other Federal officials;
‘‘(5) the applicant will use such fiscal control
and fund accounting procedures as will ensure proper
disbursement of, and accounting for, Federal funds
paid to such applicant under each such program;
‘‘(6) the applicant will—
‘‘(A) make reports to the State educational
agency and the Secretary as may be necessary to
enable such agency and the Secretary to perform
their duties under each such program; and
‘‘(B) maintain such records, provide such
information, and afford access to the records as
the State educational agency or the Secretary
may find necessary to carry out the State edu-
cational agency’s or the Secretary’s duties; and
‘‘(7) before the application was submitted, the
applicant afforded a reasonable opportunity for pub-
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lic comment on the application and has considered
such comment.
‘‘(b) GEPA PROVISION.—Section 442 of the General
Education Provisions Act does not apply to programs under
this Act.
‘‘PART E—ADVANCED PLACEMENT PROGRAMS
‘‘SEC. 5601. SHORT TITLE.
‘‘This part may be cited as the ‘Access to High Stand-
ards Act’.
‘‘SEC. 5602. FINDINGS AND PURPOSES.
‘‘(a) FINDINGS.—Congress finds that—
‘‘(1) far too many students are not being pro-
vided sufficient academic preparation in secondary
school, which results in limited employment opportu-
nities, college dropout rates of over 25 percent for the
first year of college, and remediation for almost one-
third of incoming college freshmen;
‘‘(2) there is a growing consensus that raising
academic standards, establishing high academic ex-
pectations, and showing concrete results are at the
core of improving public education;
‘‘(3) modeling academic standards on the well-
known program of advanced placement courses is an
approach that many education leaders and almost
half of all States have endorsed;
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‘‘(4) advanced placement programs already are
providing 30 different college-level courses, serving al-
most 60 percent of all secondary schools, reaching
over 1,000,000 students (of whom 80 percent attend
public schools, 55 percent are females, and 30 percent
are minorities), and providing test scores that are ac-
cepted for college credit at over 3,000 colleges and
universities, every university in Germany, France,
and Austria, and most institutions in Canada and
the United Kingdom;
‘‘(5) 24 States are now funding programs to in-
crease participation in advanced placement pro-
grams, including 19 States that provide funds for ad-
vanced placement teacher professional development, 3
States that require that all public secondary schools
offer advanced placement courses, 10 States that pay
the fees for advanced placement tests for some or all
students, and 4 States that require that their public
universities grant uniform academic credit for scores
of 3 or better on advanced placement tests; and
‘‘(6) the State programs described in paragraph
(5) have shown the responsiveness of schools and stu-
dents to such programs, raised the academic stand-
ards both for students participating in such programs
and for other children taught by teachers who are in-
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volved in advanced placement courses, and have
shown tremendous success in increasing enrollment,
achievement, and minority participation in advanced
placement programs.
‘‘(b) PURPOSES.—The purposes of this part are—
‘‘(1) to encourage more of the 600,000 students
who take advanced placement courses but do not take
advanced placement exams each year to demonstrate
their achievements through taking the exams;
‘‘(2) to build on the many benefits of advanced
placement programs for students, which benefits may
include the acquisition of skills that are important to
many employers, Scholastic Aptitude Tests (SAT)
scores that are 100 points above the national aver-
ages, and the achievement of better grades in sec-
ondary school and in college than the grades of stu-
dents who have not participated in the programs;
‘‘(3) to support State and local efforts to raise
academic standards through advanced placement pro-
grams, and thus further increase the number of stu-
dents who participate and succeed in advanced place-
ment programs;
‘‘(4) to increase the availability and broaden the
range of schools that have advanced placement pro-
grams, which programs are still often distributed un-
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evenly among regions, States, and even secondary
schools within the same school district, while also in-
creasing and diversifying student participation in the
programs;
‘‘(5) to build on the State programs described in
subsection (a)(5) and demonstrate that larger and
more diverse groups of students can participate and
succeed in advanced placement programs;
‘‘(6) to provide greater access to advanced place-
ment courses for low-income and other disadvantaged
students;
‘‘(7) to provide access to advanced placement
courses for secondary school juniors at schools that do
not offer advanced placement programs, increase the
rate of secondary school juniors and seniors who par-
ticipate in advanced placement courses to 25 percent
of the secondary school student population, and in-
crease the numbers of students who receive advanced
placement test scores for which college academic credit
is awarded; and
‘‘(8) to increase the participation of low-income
individuals in taking advanced placement tests
through the payment or partial payment of the costs
of the advanced placement test fees.
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‘‘SEC. 5603. FUNDING DISTRIBUTION RULE.
‘‘From amounts appropriated under section 5608 for
a fiscal year, the Secretary shall give first priority to fund-
ing activities under section 5606, and shall distribute any
remaining funds not so applied according to the following
ratio:
‘‘(1) Seventy percent of the remaining funds
shall be available to carry out section 5604.
‘‘(2) Thirty percent of the remaining funds shall
be available to carry out section 5605.
‘‘SEC. 5604. ADVANCED PLACEMENT PROGRAM GRANTS.
‘‘(a) GRANTS AUTHORIZED.—
‘‘(1) IN GENERAL.—From amounts appropriated
under section 5608 and made available under section
5603(1) for a fiscal year, the Secretary shall award
grants, on a competitive basis, to eligible entities to
enable the eligible entities to carry out the authorized
activities described in subsection (c).
‘‘(2) DURATION AND PAYMENTS.—
‘‘(A) 
DURATION.—The 
Secretary 
shall
award a grant under this section for a period of
3 years.
‘‘(B) PAYMENTS.—The Secretary shall make
grant payments under this section on an annual
basis.
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‘‘(3) DEFINITION OF ELIGIBLE ENTITY.—In this
section, the term ‘eligible entity’ means a State edu-
cational agency or a local educational agency in the
State.
‘‘(b) PRIORITY.—In awarding grants under this sec-
tion the Secretary shall give priority to eligible entities sub-
mitting 
applications 
under 
subsection 
(d) 
that
demonstrate—
‘‘(1) a pervasive need for access to advanced
placement incentive programs;
‘‘(2) the involvement of business and community
organizations in the activities to be assisted;
‘‘(3) the availability of matching funds from
State or local sources to pay for the cost of activities
to be assisted;
‘‘(4) a focus on developing or expanding ad-
vanced placement programs and participation in the
core academic areas of English, mathematics, and
science; and
‘‘(5)(A) in the case of an eligible entity that is
a State educational agency, the State educational
agency carries out programs in the State that
target—
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‘‘(i) local educational agencies serving
schools with a high concentration of low-income
students; or
‘‘(ii) schools with a high concentration of
low-income students; or
‘‘(B) in the case of an eligible entity that is a
local educational agency, the local educational agency
serves schools with a high concentration of low-income
students.
‘‘(c) AUTHORIZED ACTIVITIES.—An eligible entity
may use grant funds under this section to expand access
for low-income individuals to advanced placement incentive
programs that involve—
‘‘(1) teacher training;
‘‘(2) preadvanced placement course development;
‘‘(3) curriculum coordination and articulation
between grade levels that prepare students for ad-
vanced placement courses;
‘‘(4) curriculum development;
‘‘(5) books and supplies; and
‘‘(6) any other activity directly related to ex-
panding access to and participation in advanced
placement incentive programs particularly for low-in-
come individuals.
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‘‘(d) APPLICATION.—Each eligible entity desiring a
grant under this section shall submit an application to the
Secretary at such time, in such manner, and accompanied
by such information as the Secretary may require.
‘‘(e) DATA COLLECTION AND REPORTING.—
‘‘(1) DATA COLLECTION.—Each eligible entity re-
ceiving a grant under this section shall annually re-
port to the Secretary—
‘‘(A) the number of students taking ad-
vanced placement courses who are served by the
eligible entity;
‘‘(B) the number of advanced placement
tests taken by students served by the eligible enti-
ty;
‘‘(C) the scores on the advanced placement
tests; and
‘‘(D) demographic information regarding
individuals taking the advanced placement
courses and tests disaggregated by race, eth-
nicity, sex, English proficiency status, and socio-
economic status.
‘‘(2) REPORT.—The Secretary shall annually
compile the information received from each eligible
entity under paragraph (1) and report to Congress
regarding the information.
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‘‘SEC. 5605. ONLINE ADVANCED PLACEMENT COURSES.
‘‘(a) GRANTS AUTHORIZED.—From amounts appro-
priated under section 5608 and made available under sec-
tion 5603(2) for a fiscal year, the Secretary shall award
grants to State educational agencies to enable such agencies
to award grants to local educational agencies to provide
students with online advanced placement courses.
‘‘(b) STATE EDUCATIONAL AGENCY APPLICATIONS.—
‘‘(1) APPLICATION REQUIRED.—Each State edu-
cational agency desiring a grant under this section
shall submit an application to the Secretary at such
time, in such manner, and accompanied by such in-
formation as the Secretary may require.
‘‘(2) AWARD BASIS.—The Secretary shall award
grants under this section on a competitive basis.
‘‘(c) GRANTS TO LOCAL EDUCATIONAL AGENCIES.—
Each State educational agency receiving a grant under sub-
section (b) shall award grants to local educational agencies
within the State to carry out activities described in sub-
section (e). In awarding grants under this subsection, the
State educational agency shall give priority to local edu-
cational agencies that—
‘‘(1) serve high concentrations of low-income stu-
dents;
‘‘(2) serve rural areas; and
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‘‘(3) the State educational agency determines
will not have access to online advanced placement
courses without assistance provided under this sec-
tion.
‘‘(d) CONTRACTS.—A local educational agency that re-
ceives a grant under this section may enter into a contract
with a nonprofit or for-profit organization to provide the
online advanced placement courses, including contracting
for necessary support services.
‘‘(e) USES.—Grant funds provided under this section
may be used to purchase the online curriculum, to train
teachers with respect to the use of online curriculum, and
to purchase course materials.
‘‘SEC. 5606. ADVANCED PLACEMENT INCENTIVE PROGRAM.
‘‘(a) GRANTS AUTHORIZED.—From amounts appro-
priated under section 5608 and made available under sec-
tion 5603 for a fiscal year, the Secretary shall award grants
to State educational agencies having applications approved
under subsection (c) to enable the State educational agencies
to reimburse low-income individuals to cover part or all
of the costs of advanced placement test fees, if the low-in-
come individuals—
‘‘(1) are enrolled in an advanced placement
class; and
‘‘(2) plan to take an advanced placement test.
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‘‘(b) AWARD BASIS.—In determining the amount of
the grant awarded to each State educational agency under
this section for a fiscal year, the Secretary shall consider
the number of children eligible to be counted under section
1124(c) in the State in relation to the number of such chil-
dren so counted in all the States.
‘‘(c) INFORMATION DISSEMINATION.—A State edu-
cational agency shall disseminate information regarding
the availability of advanced placement test fee payments
under this section to eligible individuals through secondary
school teachers and guidance counselors.
‘‘(d) APPLICATIONS.—Each State educational agency
desiring a grant under this section shall submit an applica-
tion to the Secretary at such time, in such manner, and
accompanied by such information as the Secretary may re-
quire. At a minimum, each State educational agency appli-
cation shall—
‘‘(1) describe the advanced placement test fees the
State educational agency will pay on behalf of low-
income individuals in the State from grant funds
made available under this section;
‘‘(2) provide an assurance that any grant funds
received under this section, other than funds used in
accordance with subsection (e), shall be used only to
pay for advanced placement test fees; and
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‘‘(3) contain such information as the Secretary
may require to demonstrate that the State will ensure
that a student is eligible for payments under this sec-
tion, including documentation required under chapter
1 of subpart 2 of part A of title IV of the Higher
Education Act of 1965.
‘‘(e) ADDITIONAL USES OF FUNDS.—If each eligible
low-income individual in a State pays not more than a
nominal fee to take an advanced placement test in a core
subject, then a State educational agency may use grant
funds made available under this section that remain after
advanced placement test fees have been paid on behalf of
all eligible low-income individuals in the State, for activi-
ties directly related to increasing—
‘‘(1) the enrollment of low-income individuals in
advanced placement courses;
‘‘(2) the participation of low-income individuals
in advanced placement courses; and
‘‘(3) the availability of advanced placement
courses in schools serving high-poverty areas.
‘‘(f) SUPPLEMENT, NOT SUPPLANT.—Grant funds pro-
vided under this section shall supplement, and not sup-
plant, other non-federal funds that are available to assist
low-income individuals in paying for the cost of advanced
placement test fees.
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‘‘(g) REGULATIONS.—The Secretary shall prescribe
such regulations as are necessary to carry out this section.
‘‘(h) REPORT.—Each State educational agency annu-
ally shall report to the Secretary information regarding—
‘‘(1) the number of low-income individuals in the
State who received assistance under this section; and
‘‘(2) any activities carried out pursuant to sub-
section (e).
‘‘(i) DEFINITIONS.—In this section:
‘‘(1) ADVANCED
PLACEMENT
TEST.—The term
‘advanced placement test’ includes only an advanced
placement test approved by the Secretary for the pur-
poses of this section.
‘‘(2) LOW-INCOME INDIVIDUAL.—The term ‘low-
income individual’ has the meaning given the term in
section 402A(g)(2) of the Higher Education Act of
1965.
‘‘SEC. 5607. DEFINITIONS.
‘‘In this part:
‘‘(1) ADVANCED
PLACEMENT
INCENTIVE
PRO-
GRAM.—The term ‘advanced placement incentive pro-
gram’ means a program that provides advanced
placement activities and services to low-income indi-
viduals.
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‘‘(2) ADVANCED
PLACEMENT
TEST.—The term
‘advanced placement test’ means an advanced place-
ment test administered by the College Board or ap-
proved by the Secretary.
‘‘(3) HIGH
CONCENTRATION
OF
LOW-INCOME
STUDENTS.—The term ‘high concentration of low-in-
come students’, used with respect to a State edu-
cational agency, local educational agency or school,
means an agency or school, as the case may be, that
serves a student population 40 percent or more of
whom are from families with incomes below the pov-
erty level, as determined in the same manner as the
determination is made under section 1124(c)(2).
‘‘(4) LOW-INCOME INDIVIDUAL.—The term ‘low-
income individual’ means, other than for purposes of
section 5606, a low-income individual (as defined in
section 402A(g)(2) of the Higher Education Act of
1965) who is academically prepared to take success-
fully an advanced placement test as determined by a
school teacher or advanced placement coordinator tak-
ing into consideration factors such as enrollment and
performance in an advanced placement course or su-
perior academic ability.
‘‘(5) INSTITUTION OF HIGHER EDUCATION.—The
term ‘institution of higher education’ has the meaning
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given the term in section 101(a) of the Higher Edu-
cation Act of 1965.
‘‘(6) STATE.—The term ‘State’ means each of the
several States of the United States, the District of Co-
lumbia, the Commonwealth of Puerto Rico, Guam,
American Samoa, the United States Virgin Islands,
the Republic of the Marshall Islands, the Federated
States of Micronesia, and the Republic of Palau.
‘‘SEC. 5608. AUTHORIZATION OF APPROPRIATIONS.
‘‘There are authorized to be appropriated to carry out
this part $50,000,000 for fiscal year 2002, and such sums
as may be necessary for each of the 6 succeeding fiscal years.
‘‘PART F—PERFORMANCE AGREEMENTS
‘‘SEC. 5701. SHORT TITLE.
‘‘This part may be cited as the ‘Performance Agree-
ments Act’.
‘‘SEC. 5702. PURPOSE.
‘‘The purpose of this part is to create options for se-
lected State educational agencies and local educational
agencies—
‘‘(1) to improve the academic achievement of all
students served by State educational agencies and
local educational agencies, and to focus the resources
of the Federal Government on that achievement;
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‘‘(2) to better empower parents, educators, ad-
ministrators, and schools to effectively address the
needs of their children and students;
‘‘(3) to give participating State educational
agencies and local educational agencies greater flexi-
bility in determining how to increase their students’
academic achievement and implement education re-
forms in their schools;
‘‘(4) to eliminate barriers to implementing effec-
tive State and local education reform, while pre-
serving the goals of equality of opportunity for all
students and accountability for student progress;
‘‘(5) to hold participating State educational
agencies and local educational agencies accountable
for increasing the academic achievement of all stu-
dents, especially disadvantaged students; and
‘‘(6) to narrow achievement gaps between the
lowest and highest performing groups of students,
particularly low-income and minority students, so
that no child is left behind.
‘‘SEC. 5703. PROGRAM AUTHORITY; SELECTION OF STATE
EDUCATIONAL AGENCIES AND LOCAL EDU-
CATIONAL AGENCIES.
‘‘(a) PROGRAM AUTHORITY.—
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‘‘(1) IN GENERAL.—Except as otherwise provided
in this part, the Secretary shall enter into perform-
ance agreements—
‘‘(A) with State educational agencies and
local educational agencies that submit approv-
able performance agreement proposals and are
selected under paragraph (2); and
‘‘(B) under which the agencies may consoli-
date and use funds as described in section 5705.
‘‘(2) SELECTION OF STATE EDUCATIONAL AGEN-
CIES AND LOCAL EDUCATIONAL AGENCIES FOR PAR-
TICIPATION.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graphs (C) and (D), the Secretary shall select not
more than 7 State educational agencies and 25
local educational agencies to enter into perform-
ance agreements under this part. The State edu-
cational agencies and local educational agencies
shall be selected from among those State edu-
cational agencies and local educational agencies
that—
‘‘(i) demonstrate, to the satisfaction of
the Secretary, that the proposed perform-
ance agreement of the agency—
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‘‘(I) has substantial promise of
meeting the requirements of this part;
and
‘‘(II) describes a plan to combine
and use funds (as described in section
5705(a)(1)) under the agreement to ex-
ceed, by a statistically significant
amount, the State’s definition of ade-
quate yearly progress (as described in
subparagraph (B)) while meeting the
requirements of sections 1111 and
1116;
‘‘(ii) have developed, and are admin-
istering, the assessments described in section
1111(b)(3);
‘‘(iii) provide information in the pro-
posed performance agreement regarding how
the State educational agency—
‘‘(I) has notified the local edu-
cational agencies within the State of
the State educational agency’s intent to
submit a proposed performance agree-
ment; and
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HR 1 EAS
‘‘(II) consulted with the Governor
of the State about the terms of the pro-
posed performance agreement;
‘‘(iv) consulted and involved parents
and educators in the development of the
proposal; and
‘‘(v) provide such other information, at
such time and in such manner, as the Sec-
retary may reasonably require.
‘‘(B) DEFINITION
OF
ADEQUATE
YEARLY
PROGRESS.—In this part the term ‘adequate
yearly progress’ means the adequate yearly
progress determined by the State pursuant to
section 1111(b)(2)(B).
‘‘(C) GEOGRAPHIC DISTRIBUTION.—If more
than 7 State educational agencies or 25 local
educational agencies submit approvable perform-
ance agreements under this part, then the Sec-
retary shall select agencies for performance
agreements under this part in a manner that en-
sures, to the greatest extent possible, an equitable
geographic distribution of such agencies selected
for performance agreements. In addition, if more
than 25 local educational agencies submit ap-
provable performance agreements under this
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part, then the Secretary shall select local edu-
cational agencies for performance agreements
under this part in a manner that ensures an eq-
uitable distribution of such agencies selected for
performance agreements among such agencies
serving urban and rural areas.
‘‘(D) LOCAL EDUCATIONAL AGENCY PARTICI-
PATION.—
‘‘(i) IN
GENERAL.—If a local edu-
cational agency is located in a State that
does not enter into a performance agreement
under subparagraph (A), then the local edu-
cational agency may be selected to enter
into a performance agreement with the Sec-
retary under subparagraph (A), but only if
the local educational agency—
‘‘(I) meets the requirements of this
part that are applicable to the local
educational agency pursuant to clause
(iii), except as provided under clause
(v);
‘‘(II) 
notifies 
the 
State 
edu-
cational agency of the local educational
agency’s intent to enter into a perform-
ance agreement under this part; and
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‘‘(III) notifies the Governor of the
State regarding the terms of the pro-
posed performance agreement.
‘‘(ii) PROHIBITION.—In the event that
a local educational agency enters into a
performance agreement under this part, the
State educational agency serving the State
in which the local educational agency is lo-
cated may not enter into a performance
agreement under this part unless—
‘‘(I) the State educational agency
has consulted the local educational
agency; and
‘‘(II) the term of the local edu-
cational agency’s original performance
agreement has ended.
‘‘(iii) APPLICABILITY.—Except as pro-
vided in clauses (iv) and (v), each require-
ment and limitation under this part that is
applicable to a State educational agency
with respect to a performance agreement
under this part shall be applicable to a
local educational agency with respect to a
performance agreement under this section,
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to the extent the Secretary determines ap-
propriate.
‘‘(iv) LOCAL
EDUCATIONAL
AGENCY
WAIVER.—
‘‘(I) WAIVER.—If a local edu-
cational agency does not wish to par-
ticipate in the State educational agen-
cy’s performance agreement, then the
local educational agency shall apply to
the State educational agency for a
waiver within 45 days of notification
from the State educational agency of
the State educational agency’s desire to
participate in a performance agree-
ment.
‘‘(II) RESPONSE.—A State edu-
cational agency that receives a waiver
application under subclause (I) shall
respond to the waiver application
within 45 days of receipt of the appli-
cation. In order to obtain the waiver,
the local educational agency shall rea-
sonably demonstrate to the State edu-
cational agency that the local edu-
cational agency would be better able to
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exceed adequate yearly progress by opt-
ing out of the performance agreement
and remaining subject to the require-
ments of the affected Federal programs.
If the State educational agency denies
the waiver, the State educational agen-
cy shall explain to the local edu-
cational agency the State educational
agency’s reasons for the denial.
‘‘(III) APPLICABILITY.—If a local
educational agency receives a waiver
under this clause, then the agency shall
receive funds and be subject to the pro-
visions of Federal law governing each
Federal program included in the State
educational 
agency’s 
performance
agreement.
‘‘(v) INAPPLICABILITY.—The following
provisions shall not apply to a local edu-
cational agency with respect to a perform-
ance agreement under this part:
‘‘(I) The provisions of section
5703(a)(2)(A)(iii) relating to State
educational agency information.
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‘‘(II) The provisions of section
5704(a)(3)(B) limiting the use of funds
other than those funds provided under
part A of title I.
‘‘(III) The provisions of section
5705(b), to the extent that those provi-
sions permit the consolidation of funds
that are awarded by a State on a com-
petitive basis.
‘‘(IV) The provisions relating to
distribution of funds under section
5706.
‘‘(V) 
The 
provisions 
limiting
State use of funds for administrative
purposes under section 5708(a).
‘‘(VI) The provisions of section
5709(e)(1) regarding State sanctions.
‘‘(b) ED-FLEX PROHIBITION.—Each State or local
educational agency that enters into a performance agree-
ment under this part shall be ineligible to receive a waiver
under part B for the term of the performance agreement.
‘‘SEC. 5704. PERFORMANCE AGREEMENT.
‘‘(a) TERMS OF PERFORMANCE AGREEMENT.—
‘‘(1) REQUIRED PROVISIONS.—Each performance
agreement entered into by the Secretary and a State
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educational agency or a local educational agency
under this part shall—
‘‘(A) be for a term of 5 years, except as pro-
vided in section 5709(a);
‘‘(B) provide that no requirements of any
program described in section 5705(b) and in-
cluded in the scope of the agreement shall apply,
except as otherwise provided in this part;
‘‘(C) list which of the programs described in
section 5705(b) are included in the scope of the
performance agreement;
‘‘(D) contain a 5-year plan describing how
the State educational agency will—
‘‘(i) ensure compliance with sections
1003, 1111 (other than subsections (c) (3)
and (10)), 1112 (other than subsections (b)
(3) and (9), (c) (5), (7), and (9), and
(d)(3)), 1114, 1115, 1116, 1117, and 1118
(c), (d), and (e) (1), (3), and (7), except
that section 1114(a)(1) shall be applied sub-
stituting ‘35 percent’ for ‘40 percent’;
‘‘(ii) address professional development
under the performance agreement;
‘‘(iii) combine and use the funds from
programs included in the scope of the per-
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formance agreement to exceed, by a statis-
tically significant amount, the State’s defi-
nition of adequate yearly progress;
‘‘(iv) if title II is included in the per-
formance agreement, ensure compliance
with sections 2141(a) and 2142(a), as ap-
plicable; and
‘‘(v) if title III is included in the per-
formance agreement, ensure compliance
with section 3329;
‘‘(E) contain an assurance that the State
educational agency has provided parents, teach-
ers, schools, and local educational agencies in the
State, with notice and an opportunity to com-
ment on the proposed terms of the performance
agreement, including the distribution and use of
funds to be consolidated, in accordance with
State law;
‘‘(F) provide that the State educational
agency will use fiscal control and fund-account-
ing procedures that will ensure proper disburse-
ment of, and accounting for, Federal funds con-
solidated and used under the performance agree-
ment;
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‘‘(G) contain an assurance that the State
educational agency will meet the requirements of
all applicable Federal civil rights laws in car-
rying out the performance agreement and in con-
solidating and using the funds under the per-
formance agreement;
‘‘(H) require that, in consolidating and
using funds under the performance agreement,
the State educational agency will comply with
the equitable participation requirements de-
scribed in section 5705(c);
‘‘(I) provide that the State educational
agency will, for the duration of the performance
agreement, use funds consolidated and used
under section 5705 only to supplement the
amount of funds that would, in the absence of
those Federal funds, be made available from non-
Federal sources for the education of students par-
ticipating in programs assisted with the consoli-
dated funds and used under section 5705, and
not to supplant those funds;
‘‘(J) contain an assurance that the State
educational agency will comply with the mainte-
nance of effort requirements of paragraph (2);
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‘‘(K) provide that, not later than 1 year
after the date on which the Secretary and the
State educational agency enter into the perform-
ance agreement, and annually thereafter during
the term of the agreement, the State educational
agency will disseminate widely to parents (in a
format and, to the extent practicable, in a lan-
guage the parents can understand) and the gen-
eral public, transmit to the Secretary, distribute
to print and broadcast media, and post on the
Internet, a report that includes—
‘‘(i) the data as described in section
1111(j);
‘‘(ii) a detailed description of how the
State educational agency used the funds
consolidated under the performance agree-
ment to exceed, by a statistically significant
amount, its definition of adequate yearly
progress; and
‘‘(iii) whether the State educational
agency has met the teacher quality goals es-
tablished under title II; and
‘‘(L) in the case of an agency that includes
subpart 1 of part A of title IV in its performance
agreement, contain an assurance that—
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‘‘(i) the agency will not diminish its
ability to provide a drug and violence free
learning environment as a result of entering
into the performance agreement, except that
nothing in this clause shall be construed to
limit the ability of the agency to participate
in a program under title IV due to an un-
foreseen event involving drugs or violence;
‘‘(ii) the agency will prepare the needs
assessment described in section 4112(a)(2)
and the report described in section 4117 (b)
and (c), as appropriate, for each school
year; and
‘‘(iii) the agency will use the informa-
tion in the assessment and report described
in clause (ii) to ensure compliance with
clause (i).
‘‘(2) MAINTENANCE OF STATE FINANCIAL SUP-
PORT.—
‘‘(A) IN
GENERAL.—Each State entering
into a performance agreement under this part
shall not reduce the amount of State financial
support for education for a fiscal year below the
amount of such support for the preceding fiscal
year.
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‘‘(B) REDUCTION OF FUNDS FOR FAILURE
TO MAINTAIN EFFORT.—The Secretary shall re-
duce the allotment of funds to a State pursuant
to the terms of the performance agreement for
any fiscal year following a fiscal year in which
the State fails to comply with subparagraph (A)
by the same amount by which the State fails to
meet the requirements of subparagraph (A).
‘‘(C) WAIVERS FOR EXCEPTIONAL OR UN-
CONTROLLABLE CIRCUMSTANCES.—The Secretary
may waive the requirement of subparagraph (A)
for a State, for one fiscal year at a time, if the
Secretary determines that granting a waiver
would be equitable due to exceptional or uncon-
trollable circumstances such as a natural dis-
aster or a precipitous and unforeseen decline in
the financial resources of the State.
‘‘(D) SUBSEQUENT
YEARS.—If, for any
year, a State fails to meet the requirement of
subparagraph (A), including any year for which
the State is granted a waiver under subpara-
graph (C), then the financial support required of
the State in future years under subparagraph
(A) shall be the amount that would have been re-
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quired in the absence of that failure and not the
reduced level of the State’s support.
‘‘(3) MAINTENANCE OF LOCAL FINANCIAL SUP-
PORT.—
‘‘(A) IN GENERAL.—Each local educational
agency entering into a performance agreement
under this part shall not reduce the amount of
local educational agency financial support for
education for a fiscal year below 90 percent of
the amount of that support for the preceding fis-
cal year.
‘‘(B) REDUCTION OF FUNDS FOR FAILURE
TO MAINTAIN SUPPORT.—The Secretary shall re-
duce the amount made available to a local edu-
cational agency under a performance agreement
under this part for any fiscal year following the
fiscal year in which the local educational agency
fails to comply with subparagraph (A) by the
same amount by which the local educational
agency fails to meet the requirements of subpara-
graph (A).
‘‘(C) WAIVERS FOR EXCEPTIONAL OR UN-
CONTROLLABLE CIRCUMSTANCES.—The Secretary
may waive the requirement of subparagraph (A)
for a local educational agency if the Secretary
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determines that granting a waiver would be eq-
uitable due to exceptional or uncontrollable cir-
cumstances such as a natural disaster or a pre-
cipitous and unforeseen decline in the financial
resources of the local educational agency, or to
permit the local educational agency to adjust for
changes in student population within the schools
served by the local educational agency.
‘‘(D) SUBSEQUENT
YEARS.—If, for any
year, a local educational agency fails to meet the
requirement of subparagraph (A), including any
year for which the local educational agency is
granted a waiver under subparagraph (C), then
the financial support required of the local edu-
cational agency in future years under subpara-
graph (A) shall be the amount that would have
been required in the absence of that failure and
not the reduced level of the local educational
agency’s support.
‘‘(4) PROGRAM-SPECIFIC PROVISIONS.—
‘‘(A) PART A OF TITLE I FUNDS.—If part A
of title I is included in the scope of the perform-
ance agreement, the performance agreement shall
provide that sections 1113, and 1124 through
1127, shall apply to the allocation of funds
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under such part, unless the State educational
agency demonstrates, to the satisfaction of the
Secretary and prior to approval of the perform-
ance agreement, that the State educational agen-
cy will use an alternative allocation method that
will better target poverty or educational need.
Any alternative method shall result in the per-
centage of such funds allocated to each local edu-
cational agency served by the State educational
agency that meets the eligibility criteria for a
concentration grant according to section 1124A
exceeding the percentage of such funds allocated
to such local educational agency under part A of
title I. Such alternative allocation methods may
include implementation of a State’s weighted for-
mula, use of a State’s most current census data
to better target poor children, or a State setting
higher thresholds for poverty so that funding is
more targeted to schools with higher concentra-
tions of poverty.
‘‘(B) NONTITLE I FUNDS.—The performance
agreement shall provide that, for funds other
than those under part A of title I that are con-
solidated and used under section 5705(b), the
State educational agency will demonstrate, to the
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satisfaction of the Secretary and prior to ap-
proval of the performance agreement, that the
State educational agency will allocate the funds
in a manner that, each year, allocates funds to
serve high concentrations of children from low-
income families at a level proportional to or
higher than the level that would occur without
such consolidation or use.
‘‘(b) APPROVAL OF PERFORMANCE AGREEMENT.—
‘‘(1) IN GENERAL.—Subject to section 5703(a),
not later than 90 days after the deadline established
by the Secretary for receipt of a complete proposed
performance agreement, the Secretary shall approve
the performance agreement, or provide the State edu-
cational agency with a written explanation for not
approving the performance agreement.
‘‘(2) PEER REVIEW.—The Secretary shall—
‘‘(A) establish a peer review process to assist
in the review of proposed performance agree-
ments under this part; and
‘‘(B) appoint individuals to the peer review
process who are representative of parents, teach-
ers, State educational agencies, and local edu-
cational agencies, and who are familiar with
educational standards, assessments, account-
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ability, curriculum, instruction and staff devel-
opment, and other diverse educational needs of
students.
‘‘(c) AMENDMENT TO PERFORMANCE AGREEMENT.—
‘‘(1) IN GENERAL.—Not later than 1 year after
entering into a performance agreement under this
part, a State educational agency may amend its
agreement to—
‘‘(A) remove from the scope of the agreement
any program described in section 5705(b); or
‘‘(B) include in the scope of the agreement
any additional program described in section
5705(b), or any additional achievement indica-
tors for which the State educational agency will
be held accountable.
‘‘(2) APPROVAL OF AMENDMENT.—
‘‘(A) IN GENERAL.—Not later than 90 days
after the receipt of a complete proposed amend-
ment described in paragraph (1), the Secretary
shall approve the amendment unless the Sec-
retary, by that deadline, provides the State edu-
cational agency with a written determination
that the plan, as amended, would no longer have
substantial promise of meeting the requirements
of this part and meeting the State educational
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agency’s objective to exceed adequate yearly
progress.
‘‘(B) TREATMENT
AS
APPROVED.—Each
amendment for which the Secretary fails to take
the action required under subparagraph (A) in
the time period described in that subparagraph
shall be considered to be approved.
‘‘(3) ADDITIONAL AMENDMENTS.—In addition to
the amendments described in paragraph (1), the State
educational agency, at any time, may amend its per-
formance agreement if the State educational agency
demonstrates, to the satisfaction of the Secretary,
that—
‘‘(A) the plan, as amended, will continue to
have substantial promise of meeting the require-
ments of this part; and
‘‘(B) the amendment sought by the State
will not substantially alter the original agree-
ment.
‘‘(4) TREATMENT
OF
PROGRAM
FUNDS
WITH-
DRAWN
FROM
AGREEMENT.—The addition, or re-
moval, of a program to or from the scope of a per-
formance agreement under paragraph (1) shall take
effect with respect to the participating agency’s use of
funds made available under that program beginning
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on the first day of the first full academic year fol-
lowing the approval of the amendment.
‘‘SEC. 5705. CONSOLIDATION AND USE OF FUNDS.
‘‘(a) IN GENERAL.—
‘‘(1) AUTHORITY.—Under a performance agree-
ment entered into under this part, a State edu-
cational agency may consolidate, subject to subsection
(c), Federal funds made available to the State edu-
cational agency under the provisions listed in sub-
section (b) and use those funds for any purpose or use
permitted under any of the eligible programs listed in
section 5705(b), subject to paragraph (3).
‘‘(2) PROGRAM REQUIREMENTS.—Except as oth-
erwise provided in this part, a State educational
agency may use funds under paragraph (1) notwith-
standing the requirements of the program under
which the funds were made available to the State edu-
cational agency.
‘‘(3) CONTINUATION
AWARDS.—A State edu-
cational agency shall make continuation awards for
the duration of the grants to recipients of multiyear
competitive grants under any of the programs de-
scribed in subsection (b) that were initially awarded
prior to entering into the performance agreement, and
shall not consolidate any funds under subsection (b)
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for any year until after those continuation awards
are made.
‘‘(b) ELIGIBLE PROGRAMS.—Only funds made avail-
able for fiscal year 2002 or any succeeding fiscal year to
State educational agencies under programs under any of
the following provisions of law may be consolidated and
used under subsection (a):
‘‘(1) Part A (other than section 1003), subpart
1 of part B, part F or G, or subpart 2 of part H (but
only if appropriations for such subpart exceed
$250,000,000 and the program becomes a State for-
mula grant program), of title I.
‘‘(2) Subpart 1 or 2 of part A, or part C, of title
II.
‘‘(3) Part A or D, as appropriate, of title III
(other than grant funds made available under section
3324(c)(1)).
‘‘(4) Subpart 1 of part A of title IV.
‘‘(5) Subpart 3 of part A, or subpart 4 of part
B, of title V.
‘‘(6) Any appropriation subsequent to fiscal year
2001 for the purposes described in section 310 of the
Department of Education Appropriations Act, 2000.
‘‘(7) Any appropriation subsequent to fiscal year
2001 for the purposes described in section 321(b)(2)
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of the Department of Education Appropriations Act,
2001.
‘‘(8) Any other program under this Act that is
enacted after the date of enactment of the Better Edu-
cation for Students and Teachers Act under which the
Secretary provides grants to State educational agen-
cies to assist elementary and secondary education on
the basis of a formula.
‘‘(c) EQUITABLE PARTICIPATION REQUIREMENTS.—If
a State educational agency or local educational agency in-
cludes in the scope of its performance agreement programs
described in subsection (b) that have requirements relating
to the equitable participation of private schools, then—
‘‘(1) each local educational agency in the State,
or the local educational agency, as appropriate, shall
determine the amount of consolidated funds to be used
for services and benefits for private school students
and teachers by—
‘‘(A) calculating separately the amount of
funds for services and benefits for private school
students and teachers under each program that
is consolidated and to which those requirements
apply; and
‘‘(B) totaling the amounts calculated under
subparagraph (A);
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‘‘(2) except as described in paragraph (3), all eq-
uitable participation requirements, including any by-
pass requirements, applicable to the program that is
consolidated shall continue to apply to the funds con-
solidated under the agreement from that program;
and
‘‘(3) the agency may use the amount of funds de-
termined under paragraph (1) only for those services
and benefits for private school students and teachers
in accordance with any of the consolidated programs
to which the equitable participation requirements
apply, but may not provide any additional benefits
or services beyond those allowable under the applica-
ble equitable participation requirements under this
Act.
‘‘SEC. 5706. STATE RESERVATION FOR STATE-LEVEL ACTIVI-
TIES.
‘‘(a) STATE-LEVEL ACTIVITIES.—In order to carry out
State-level activities under the purposes described in section
5705(a)(1) to exceed, by a statistically significant amount,
the State’s definition of adequate yearly progress, a State
educational agency that—
‘‘(1) includes part A of title I in the scope of its
performance agreement, may reserve not more than 5
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percent of the funds under that part to carry out such
activities; and
‘‘(2) includes programs other than part A of title
I in the scope of its performance agreement, may re-
serve not more than 10 percent of the funds under
those other programs to carry out such activities.
‘‘(b) DISTRIBUTION OF REMAINDER.—A State edu-
cational agency shall distribute the consolidated funds not
used under subsection (a) to local educational agencies in
the State in a manner determined by the State educational
agency in accordance with section 5707.
‘‘SEC. 5707. DISTRIBUTION OF FUNDS UNDER AGREEMENT.
‘‘The distribution of funds consolidated under a per-
formance agreement shall be determined by the State edu-
cational agency in consultation with the Governor of the
State, subject to the requirements of this part.
‘‘SEC. 5708. LIMITATIONS ON ADMINISTRATIVE EXPENDI-
TURES.
‘‘(a) STATE EDUCATIONAL AGENCY.—Subject to sec-
tion 5709(e)(1), each State educational agency that has en-
tered into a performance agreement under this part may
reserve for administrative purposes not more than 1 percent
of the total amount of funds made available to the State
educational agency under the programs included in the
scope of the performance agreement.
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‘‘(b) LOCAL EDUCATIONAL AGENCY.—Subject to sec-
tion 5709(e)(2), each local educational agency that has en-
tered into a performance agreement with the Secretary
under this part may use for administrative purposes not
more than 4 percent of the total amount of funds made
available to the local educational agency under the pro-
grams included in the scope of the performance agreement.
‘‘SEC. 5709. PERFORMANCE REVIEW AND PENALTIES.
‘‘(a) EARLY TERMINATION OF AGREEMENT.—
‘‘(1) PERFORMANCE GOAL FAILURE.—Beginning
with the first full academic year after a State edu-
cational agency enters into a performance agreement
under this part, and after providing the State edu-
cational agency with notice and an opportunity for
a hearing (including the opportunity to provide infor-
mation as provided in paragraph (3)), if the State
educational agency fails to meet its definition of ade-
quate yearly progress for 2 consecutive years, or fails
to exceed, by a statistically significant amount, its
definition of adequate yearly progress for 3 consecu-
tive years, then the Secretary shall terminate prompt-
ly the performance agreement.
‘‘(2) NONCOMPLIANCE.—The Secretary may,
after providing notice and an opportunity for a hear-
ing (including the opportunity to provide information
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as provided in paragraph (3)), terminate a perform-
ance agreement if there is evidence that the State edu-
cational agency has failed to comply with the terms
of the performance agreement.
‘‘(3) INFORMATION.—If a State educational
agency believes that the Secretary’s determination
under this subsection is in error for statistical or
other substantive reasons, the State educational agen-
cy may provide supporting evidence to the Secretary,
and the Secretary shall consider that evidence before
making a final early termination determination.
‘‘(b) NO RENEWAL IF PERFORMANCE UNSATISFAC-
TORY.—If, at the end of the 5-year term of a performance
agreement entered into under this part, a State educational
agency has not substantially met the State’s definition of
adequate yearly progress, then the Secretary shall not renew
the agreement under section 5710.
‘‘(c) TWO-YEAR WAIT-OUT PERIOD.—A State edu-
cational agency whose performance agreement was termi-
nated under subsection (a), or was not renewed in accord-
ance with subsection (b), may not enter into another per-
formance agreement under this part until after the State
educational agency meets its definition of adequate yearly
progress for 2 consecutive years following the termination
or nonrenewal.
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‘‘(d) PROGRAM REQUIREMENTS
IN EFFECT AFTER
TERMINATION OR NONRENEWAL OF THE AGREEMENT.—Be-
ginning on the first day of the first full academic year fol-
lowing the end of a performance agreement under this part
(including through termination under subsection (a)) the
State educational agency shall comply with each of the pro-
gram requirements in effect on that date for each program
included in the performance agreement.
‘‘(e) SANCTIONS.—
‘‘(1) STATE SANCTIONS.—If, beginning with the
first full academic year after a State educational
agency enters into a performance agreement under
this part—
‘‘(A) the Secretary determines, on the basis
of data from the State assessment system de-
scribed in section 1111 and data from State as-
sessments under the National Assessment of Edu-
cational Progress of 4th and 8th grade reading
and mathematics skills, for 2 consecutive years,
that—
‘‘(i) the State educational agency has
failed to exceed, by a statistically signifi-
cant amount, the State’s definition of ade-
quate yearly progress; and
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‘‘(ii) students who are racial and eth-
nic minorities, and economically disadvan-
taged students, in the State failed to make
statistically significant progress in the aca-
demic subjects for which the State has devel-
oped State content and student performance
standards,
then the amount that the State educational agen-
cy may use for administrative expenses in ac-
cordance with section 5708 shall be reduced by
30 percent;
‘‘(B) the Secretary determines that a State
educational agency which included title II in its
performance agreement failed to comply with
section 2141(a), then the Secretary shall with-
hold funds as described in section 2141(d); and
‘‘(C) the Secretary determines that a State
educational agency which included title III in
its performance agreement failed to comply with
section 3329, then the Secretary shall withhold
funds as described in section 3329(b).
‘‘(2) LOCAL EDUCATIONAL AGENCIES.—If, begin-
ning with the first full academic year after a local
educational agency enters into a performance agree-
ment under this part, the Secretary determines, on
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the basis of data from the State assessment system de-
scribed in section 1111 that a local educational agen-
cy failed to exceed, by a statistically significant
amount, the State’s definition of adequate yearly
progress for 2 consecutive years, then the amount that
the local educational agency may use for administra-
tive expenses in accordance with section 5708 shall be
reduced by 30 percent.
‘‘SEC. 5710. RENEWAL OF PERFORMANCE AGREEMENT.
‘‘(a) IN GENERAL.—Except as provided in section
5709 (a) and (b), and in accordance with this section, the
Secretary shall renew for 1 additional 5-year term a per-
formance agreement under this part if the Secretary deter-
mines, on the basis of the information reported under sec-
tion 5704(a)(1)(K), that the adequate yearly progress de-
scribed in the performance agreement has been exceeded by
a statistically significant amount.
‘‘(b) NOTIFICATION.—The Secretary shall not renew a
performance agreement under this part unless the State
educational agency seeking the renewal notifies the Sec-
retary of the agency’s intention to renew the performance
agreement not less than 6 months prior to the end of the
original term of the performance agreement.
‘‘(c) EFFECTIVE DATE.—A renewal under this section
shall be effective at the end of the original term of the per-