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of public assistance, and individuals with disabilities;
or
‘‘(iii) both.
‘‘(B) The incentives or awards made under subpara-
graph (A) shall be determined by the State using the per-
formance goals and indicators described in section 318
and, if appropriate, other criteria that are consistent with
the purposes of this Act.
‘‘STATE ADMINISTRATION
‘‘SEC. 314. (a) STATE EDUCATIONAL AGENCY.—The
State educational agency shall be responsible for the ad-
ministration of services and activities under this part, in-
cluding—
‘‘(1) the development, submission, and imple-
mentation of the State plan;
‘‘(2) consultation with other appropriate agen-
cies, groups, and individuals that are involved in, or
interested in, the development and implementation
of programs assisted under this title, such as busi-
ness, industry, labor organizations, corrections agen-
cies, public housing agencies, and social service
agencies; and
‘‘(3) coordination with other State and Federal
education, training, employment, corrections, public
housing, and social service programs, and one-stop
career centers.
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‘‘(b) STATE-IMPOSED REQUIREMENTS.—Whenever a
State imposes any rule or policy relating to the adminis-
tration and operation of programs funded by this part (in-
cluding any rule or policy based on State interpretation
of any Federal law, regulation, or guideline), it shall iden-
tify the rule or policy as a State-imposed requirement.
‘‘STATE PLAN
‘‘SEC. 315. (a) FOUR-YEAR PLANS.—(1) Each State
desiring to receive a grant under this part for any fiscal
year shall have the State educational agency submit to,
or have on file with, the Secretary a four-year State plan
in accordance with this section.
‘‘(2) The State educational agency may submit the
State plan as part of a comprehensive plan that includes
State plan provisions under one or more of the following
statutes: section 14302 of the Elementary and Secondary
Education Act of 1965; the Carl D. Perkins Career Prepa-
ration Education Act of 1997; the Goals 2000: Educate
America Act; the Job Training Partnership Act; and the
School-to-Work Opportunities Act of 1994.
‘‘(b) PLAN ASSESSMENT.—(1) In developing the
State plan, and any revisions to the State plan under sub-
section (e), the State educational agency shall base its
plan or revisions on a recent, objective assessment of—
‘’(A) the needs of individuals in the State for
adult education and literacy programs, including in-
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dividuals most in need or hardest to serve (such as
educationally disadvantaged adults and families, im-
migrants, individuals with limited English pro-
ficiency, incarcerated individuals, homeless individ-
uals, recipients of public assistance, and individuals
with disabilities); and
‘‘(B) the capacity of programs and providers to
meet those needs, taking into account the priorities
under section 311(b) and the State’s performance
goals under section 318(a).
‘‘(2) In its second 4-year State plan, the State edu-
cational agency shall also include in its assessment—
‘‘(A) an analysis of the State’s performance in
progressing toward its performance goals under the
preceding 4-year State plan; and
‘‘(B) any changes in the second 4-year State
plan that have been made based on that analysis.
‘‘(c) PUBLIC PARTICIPATION.—In developing the
State plan, and any revisions under subsection (e), the
State educational agency shall consult widely with individ-
uals, agencies, organizations, and institutions in the State
that have an interest in the provision and quality of adult
education and literacy, including—
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‘‘(1) individuals who currently participate, or
who want to participate, in adult education and lit-
eracy programs;
‘‘(2) practitioners and experts in adult edu-
cation and literacy, social services, and workforce de-
velopment;
‘‘(3) representatives of business and labor orga-
nizations; and
‘‘(4) other agencies, such as volunteer and com-
munity-based organizations, State and local health,
social service, public housing, public assistance, job
training, and corrections agencies, and public librar-
ies.
‘‘(d) PLAN CONTENTS.—The plan shall be in such
form and contain such information and assurances as the
Secretary may require, and shall include—
‘‘(1) a summary of the methods used to conduct
the assessment under subsection (b) and the find-
ings of that assessment;
‘‘(2) a description of how, in addressing the
needs identified in the State’s assessment, funds
under this title will be used to establish adult edu-
cation and literacy programs, or improve or expand
current programs, that will lead to high-quality
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learning outcomes, including measurable learning
gains, for individuals in such programs;
‘‘(3) a statement, expressed in terms of the per-
formance indicators published by the Secretary
under section 318(b), and any other performance in-
dicators the State may choose, of the State’s per-
formance goals established under section 318(a) and
the level of performance the State expects to achieve
in progressing toward its performance goals during
the life of the State plan;
‘‘(4) a description of the criteria the State will
use to award funds under this title to eligible appli-
cants under section 316, including how the State
will ensure that its selection of applicants to operate
programs assisted under this part will reflect the
program priorities under section 311(b) and the
findings of program evaluations carried out under
section 319(a);
‘‘(5) a description of how the State will inte-
grate services and activities under this title, includ-
ing planning and coordination of programs, with
those of other agencies, institutions, and organiza-
tions involved in adult education and literacy, such
as the public school system, early childhood and spe-
cial education programs, institutions of higher edu-
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cation, vocational education programs, libraries,
business and labor organizations, vocational rehabili-
tation programs, one-stop career centers, employ-
ment and training programs, and health, social serv-
ices, public assistance, public housing, and correc-
tions agencies, in order to ensure effective use of
funds and to avoid duplication of services;
‘‘(6) a description of how the State will ensure
that the data reported to it from its recipients of
funds under this part and the data it reports to the
Secretary are complete, accurate, and reliable;
‘‘(7) a State-wide plan for the leadership activi-
ties the State will carry out under section 313;
‘‘(8) a description of how the State will provide
incentives or rewards for exemplary services and ac-
tivities under this part, if the State elects to imple-
ment 
the 
authority 
authorized 
under 
section
313(b)(2);
‘‘(9) any comments the Governor may have on
the State plan; and
‘‘(10) assurances that—
‘‘(A) the State will comply with the re-
quirements of this part and the provisions of
the State plan; and
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‘‘(B) the State will use such fiscal control
and accounting procedures as are necessary for
the proper and efficient administration of funds
under this part.
‘‘(e) PLAN REVISIONS.—When changes in conditions
or other factors require substantial modifications to an ap-
proved State plan, the State educational agency shall sub-
mit a revision to the plan to the Secretary.
‘‘(f) CONSULTATION.—The State educational agency
shall—
‘‘(1) submit the State plan, and any revision to
the State plan, to the Governor for review and com-
ment; and
‘‘(2) ensure that any comments the Governor
may have are included with the State plan, or revi-
sion, when the State plan, or revision, is submitted
to the Secretary.
‘‘(g) PLAN APPROVAL.—(1) The Secretary shall ap-
prove a State plan, or a revision to an approved State
plan, only if the Secretary determines that it meets the
requirements of this section and the State’s performance
goals and expected level of performance under subsection
(d)(3) are sufficiently rigorous as to meet the purposes
of this title and to allow the Department of Education to
make progress toward its performance objectives and indi-
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cators established pursuant to the Government Perform-
ance and Results Act. The Secretary shall not finally dis-
approve a State plan, or a revision to an approved State
plan, except after giving the State reasonable notice and
an opportunity for a hearing.
‘‘(2) The Secretary shall establish a peer review proc-
ess to make recommendations regarding approval of State
plans and revisions to the State plans.
‘‘AWARDS TO ELIGIBLE APPLICANTS
‘‘SEC. 316. (a). AWARDS.—(1) From funds available
under section 312, States shall make subgrants and con-
tracts, as appropriate, to eligible applicants under sub-
section (b) to develop, implement, and improve adult edu-
cation and literacy programs within the State.
‘‘(2) To the extent practicable, States shall make
multi-year awards under this section.
‘‘(b) ELIGIBLITY.—(1) The following entities shall be
eligible to apply to the State for an award under this sec-
tion:
‘‘(A) local educational agencies;
‘‘(B) community-based organizations;
‘‘(C) institutions of higher education;
‘‘(D) public and private nonprofit agencies (in-
cluding State and local health, social service, public
housing, public assistance, job training, and correc-
tions agencies and public libraries); and
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‘‘(E) consortia of such agencies, organizations,
institutions, or partnerships, including consortia that
include one or more for-profit agencies, organiza-
tions, or institutions, if such agencies, organizations,
or institutions can make a significant contribution to
attaining the purposes of this title.
‘‘(2) Each State receiving funds under this part shall
ensure that all eligible applicants described under sub-
section (b)(1) receive direct and equitable access to awards
under this section.
‘‘APPLICATIONS FROM ELIGIBLE APPLICANTS
‘‘SEC. 317. (a) APPLICATION.—Any eligible applicant
under section 316(b)(1) that desires a subgrant or con-
tract under this part shall submit an application to the
State containing such information and assurances as the
State may reasonably require, including—
‘‘(1) a description of the applicant’s current
adult education and literacy programs, if any;
‘‘(2) a description of how funds awarded under
this part will be spent;
‘‘(3) a description of how the applicant’s pro-
gram will help the State address the needs identified
in the State’s assessment under section 315(b);
‘‘(4) the projected goals of the applicant with
respect to participant recruitment, retention, and
educational achievement, and how the applicant will
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measure and report to the State regarding the infor-
mation required in section 319(a); and
‘‘(5) any cooperative arrangements the appli-
cant has with others (including arrangements with
health, social services, public assistance, public hous-
ing, and corrections agencies, libraries, one-stop ca-
reer centers, business, industry, labor, and volunteer
literacy organizations) for the delivery of adult edu-
cation and literacy programs.
‘‘(b) FUNDING.—In determining which applicants re-
ceive funds under this part, the State, in addition to ad-
dressing the program priorities under section 311(b),
shall—
‘‘(1) give preference to those applicants that
serve local areas with high concentrations of individ-
uals in poverty or with low levels of literacy (includ-
ing English language proficiency), or both; and
‘‘(2) consider—
‘‘(A) the results, if any, of the evaluations
required under section 319(a); and
‘‘(B) the degree to which the applicant will
coordinate with and utilize other literacy and
social services available in the community.
‘‘PERFORMANCE GOALS AND INDICATORS
‘‘SEC. 318. (a) PERFORMANCE GOALS.—Any State
desiring to receive a grant under section 312(a), in con-
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sultation with individuals, agencies, organizations, and in-
stitutions described in section 315(c), shall identify per-
formance goals that define the level of student achieve-
ment to be attained by adult education and literacy pro-
grams, and express such goals in an objective, quantifi-
able, and measurable form.
‘‘(b) PERFORMANCE INDICATORS.—(1) After con-
sultation with Sates, local educational agencies, service
providers, representatives of business and industry, insti-
tutions of higher education, and other interested parties,
the Secretary shall publish in the Federal Register per-
formance indicators (including the definition of relevant
terms) described in paragraph (2) that States and local
recipients shall use in measuring or assessing progress to-
ward achieving the State’s performance goals under sub-
section (a).
‘‘(2) The Secretary shall publish performance indica-
tors for programs assisted under this part in the following
areas:
‘‘(A) achievement in the areas of reading, Eng-
lish language acquisition, and numeracy;
‘‘(B) receipt of a high school diploma or its
equivalent;
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‘‘(C) entry into a postsecondary school, job
training program, employment, or career advance-
ment; and
‘‘(D) such other indicators as are determined by
the Secretary.
‘‘(c) TECHNICAL ASSISTANCE.—(1) The Secretary
shall provide technical assistance to States regarding the
development of—
‘‘(A) the State’s performance goals under sub-
section (a); and
‘‘(B) uniform national performance data.
‘‘(2) The Secretary may use funds reserved under
section 303(b) to provide technical assistance under this
section.
‘‘EVALUATION, IMPROVEMENT, AND ACCOUNTABILITY
‘‘SEC. 319. (a) LOCAL EVALUATION.—The adult edu-
cation and literacy programs of each recipient of a
subgrant or contract under this part shall be evaluated
biennially, using the performance goals and indicators es-
tablished under section 318, and the recipient shall report
to the State regarding the effectiveness of its programs
in addressing the priorities under section 311 and the
needs identified in the State assessment under section
315(b).
‘‘(b) IMPROVEMENT ACTIVITIES.—If, after reviewing
the reports required in subsection (a), a State determines,
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based on the performance goals and indicators and ex-
pected level of performance included in its State plan
under section 315(d)(3), and the evaluations under sub-
section (a), that a recipient is not making substantial
progress in achieving the purposes of this title, the State
may work jointly with the recipient to develop an improve-
ment plan. If, after not more than two years of implemen-
tation of the improvement plan, the State determines that
the recipient is not making substantial progress, the State
shall take whatever corrective action it deems necessary,
which may include termination of funding or the imple-
mentation of alternative service arrangements, consistent
with State law. The State shall take corrective action
under the preceding sentence only after it has provided
technical assistance to the recipient and shall ensure, to
the extent practicable, that any corrective action it takes
allows for continued services to and activities for the re-
cipient’s students.
‘‘(c) STATE REPORT.—(1) The State educational
agency shall report annually to the Secretary on—
‘‘(A) the quality and effectiveness of the adult
education and literacy programs funded through its
subgrants and contracts under this part, based on
the performance goals and indicators and the ex-
pected level of performance included in its State
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and expected level of performance included in its State
plan under section 315(d)(3), the Secretary shall, after no-
tice and opportunity for a hearing, withhold from the
State all, or a portion, of the State’s allotment under this
part. The Secretary may use funds withheld under the
preceding sentence to provide, through alternative ar-
rangements, services and activities within the State that
meet the purposes of this title.
‘‘ALLOTMENTS; REALLOTMENT
‘‘SEC. 320. (a) ALLOTMENT TO STATES.—(1) From
the funds available under section 312(a) for each fiscal
year, the Secretary shall allot to the Commonwealth of
Puerto Rico, Guam, American Samoa, the Northern Mari-
ana Islands, and the Virgin Islands, the amount that each
would have been allotted under section 313(b) of the Adult
Education Act as it was in effect the day before the enact-
ment of the Adult Basic Education and Literacy for the
Twenty-First Century Act.
‘‘(2) From the remainder of such sums, the Secretary
shall allot—
‘‘(A) $250,000 to each of the States; and
‘‘(B) from the remainder—
‘‘(i) 95 percent of such remainder to each
of the States in an amount that bears the same
ratio to such amount as the number of adults
in the State who are 16 years of age or older
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and not enrolled, or required to be enrolled, in
secondary school and who do not possess a high
school diploma or its equivalent, bears to the
number of such adults in all the States; and
‘‘(ii) 5 percent of such remainder to each
of the States in an amount that bears the same
ratio to such amount as the number of adults
with limited English proficiency in the State
bears to the number of such adults in all the
States.
‘‘(3) The numbers of adults specified in paragraph
(2)(B) shall be determined by the Secretary, using the lat-
est estimates, satisfactory to the Secretary, that are based
on the U.S. population demographic data produced and
published by the Bureau of the Census.
‘‘(b) HOLD-HARMLESS.—(1) Notwithstanding sub-
section (a)—
‘‘(A) for fiscal year 1998, no State shall receive
under this part an allotment that is less than 90
percent of the payments made to the State for the
fiscal year 1997 for programs authorized by section
313 of the Adult Education Act as it was in effect
prior to the enactment of the Adult Basic Education
and Literacy for the Twenty-First Century Act; and
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‘‘(B) for fiscal year 1999 and each succeeding
fiscal year, no State shall receive under this part an
allotment that is less than 90 percent of the amount
it received for the preceding fiscal year for programs
under this part.
‘‘(2) If for any fiscal year the amount available for
allotment under this section is insufficient to satisfy the
provisions of paragraph (1), the Secretary shall ratably
reduce the payments to all States for such services and
activities as necessary.
‘‘(c) REALLOTMENT.—If the Secretary determines
that any amount of a State’s allotment under this section
for any fiscal year will not be required for carrying out
the program for which such amount has been allotted, the
Secretary shall make such amount available for reallot-
ment to one or more other States on the basis that the
Secretary determines would best serve the purposes of this
title. Any amount reallotted to a State under this sub-
section shall be deemed to be part of its allotment for the
fiscal year in which it is obligated.
‘‘PART B—NATIONAL LEADERSHIP
‘‘NATIONAL LEADERSHIP ACTIVITIES
‘‘SEC. 331. (a) AUTHORITY.—From the amount re-
served under section 303(b) for any fiscal year, the Sec-
retary is authorized to establish a program of national
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leadership and evaluation activities to enhance the quality
of adult education and literacy nationwide.
‘‘(b) METHOD OF FUNDING.—The Secretary may
carry out national leadership and evaluation activities di-
rectly or through grants, contracts, and cooperative agree-
ments.
‘‘(c) USES OF FUNDS.—Funds reserved under this
section may be used for—
‘‘(1) research and development, such as esti-
mates of the numbers of adults functioning at the
lowest levels of literacy proficiency;
‘‘(2) demonstration of model and innovative
programs, such as the development of models for
basic skill certificates, identification of effective
strategies for working with adults with learning dis-
abilities and with limited English proficient adults,
and development of case studies of family literacy
and workplace literacy programs;
‘‘(3) dissemination, such as information on
promising practices resulting from federally funded
demonstration programs;
‘‘(4) evaluations and assessments, such as peri-
odic independent evaluations of services and activi-
ties assisted under this title and assessments of the
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condition and progress of literacy in the United
States;
‘‘(5) efforts to support capacity building at the
State and local levels, such as technical assistance in
program planning, assessment, evaluation, and mon-
itoring of programs under this title;
‘‘(6) data collection, such as improvement of
both local and State data systems through technical
assistance and development of model performance
data collection systems;
‘‘(7) professional development, such as technical
assistance activities to advance effective training
practices, identify professional development projects,
and disseminate new findings in adult education
training;
‘‘(8) technical assistance, such as endeavors
that aid distance learning, promote and improve the
use of technology in the classroom, and assist States
in meeting the purposes of this title; and
‘‘(9) other activities designed to enhance the
quality of adult education and literacy nationwide.
‘‘AWARDS FOR NATIONAL EXCELLENCE
‘‘SEC. 332. The Secretary may, from the amount re-
served under section 303(b) for any fiscal year after fiscal
year 1999, and through a peer review process, make per-
formance awards to one or more States that have—
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‘‘(1) exceeded in an outstanding manner their
performance goals or expected level of performance
under section 315(d)(3);
‘‘(2) made exemplary progress in developing,
implementing, or improving their adult education
and literacy programs in accordance with the prior-
ities described in section 311; or
‘‘(3) provided exemplary services and activities
for those individuals within the State who are most
in need of adult education and literacy services, or
are hardest to serve.
‘‘NATIONAL INSTITUTE FOR LITERACY
‘‘SEC. 333. (2) PURPOSE.—The National Institute
for Literacy shall—
‘‘(1) provide national leadership;
‘‘(2) coordinate literacy services; and
‘‘(3) be a national resource for adult education
and family literacy, by providing the best and most
current information available and supporting the
creation of new ways to offer improved services.
‘‘(b) ESTABLISHMENT.—(1) There shall be a Na-
tional Institute for Literacy (in this section referred to as
the ‘Institute’). The Institute shall be administered under
the terms of an interagency agreement entered into by the
Secretary with the Secretary of Labor and the Secretary
of Health and Human Services (in this section referred