SECTION 1. SHORT TITLE.

    This Act may be cited as the ``School Capacity Relief Act''.

SEC. 2. TRANSFER OF STUDENTS TO SCHOOLS AT OR ABOVE CAPACITY.

    (a) In General.--Paragraph (1) of section 1116(b) of the Elementary 
and Secondary Education Act of 1965 (20 U.S.C. 6316(b)(1)) is amended--
            (1) in subparagraph (E)(i), by striking ``In the case of a 
        school'' and inserting ``Subject to clauses (ii) and (iii) of 
        subparagraph (F), in the case of a school''; and
            (2) in subparagraph (F)--
                    (A) by striking ``(F) Transfer.--Students who use'' 
                and inserting the following:
                    ``(F) Transfer.--
                            ``(i) In general.--Students who use''; and
                    (B) by adding at the end the following:
                            ``(ii) Transfer to school above capacity.--
                        Subject to the right of a child who has been 
                        transferred to another school under this 
                        subsection to remain in that school under 
                        paragraph (13), a local educational agency may 
                        prohibit the transfer under subparagraph (E), 
                        paragraph (5)(A), (7)(C)(i), or (8)(A)(i), or 
                        subsection (c)(10)(C)(vii), of any student to a 
                        school served by the agency, if the agency 
                        determines (for purposes of the school year at 
                        issue) that the school is at or above capacity 
                        or that the transfer of an additional student 
                        would increase the average class size of the 
                        school above the average class size prescribed 
                        by the State.
                            ``(iii) No mandatory increase of 
                        capacity.--A local educational agency may not 
                        be required to increase the capacity of any 
                        school served by the agency for the purpose of 
                        transferring any student to that school under 
                        subparagraph (E), paragraph (5)(A), (7)(C)(i), 
                        or (8)(A)(i), or subsection (c)(10)(C)(vii).''.
    (b) Cooperative Agreement.--Paragraph (11) of section 1116(b) of 
the Elementary and Secondary Education Act of 1965 (20 U.S.C. 
6316(b)(11)) is amended to read as follows:
            ``(11) Cooperative agreement.--In any case described in 
        paragraph (1)(E), (5)(A), (7)(C)(i), or (8)(A)(i), or 
        subsection (c)(10)(C)(vii), if all public schools served by the 
        local educational agency to which a child may transfer are 
        identified for school improvement, corrective action, or 
        restructuring, or are determined by the agency to be at or 
        above capacity or otherwise ineligible for a transfer under 
        paragraph (1)(F)(ii), the agency shall, to the extent 
        practicable, establish a cooperative agreement with other local 
        educational agencies in the area for a transfer.''.

SEC. 3. GRANTS FOR INCREASING SCHOOL CAPACITY.

    (a) Grants.--Title IV of the Elementary and Secondary Education Act 
of 1965 (20 U.S.C. 7101 et seq.) is amended by adding at the end the 
following:

                  ``PART D--INCREASING SCHOOL CAPACITY

``SEC. 4401. GRANTS.

    ``(a) Authority.--The Secretary may award grants to eligible local 
educational agencies for the purpose of increasing capacity at high-
performance schools.
    ``(b) Use of Funds.--The Secretary may not make a grant under this 
section unless the eligible local educational agency involved agrees 
that the agency will use the funds received under the grant only for 
measures to increase the capacity of high-performance schools served by 
that agency. Such measures may include renovating or constructing 
facilities at the high-performance school involved, hiring teachers to 
teach at such school, or purchasing instructional materials for use at 
such school.
    ``(c) Application.--To seek a grant under this section, an eligible 
local educational agency shall submit an application to the Secretary 
at such time, in such manner, and containing such information as the 
Secretary may require.

``SEC. 4402. DEFINITIONS.

    ``For purposes of this part:
            ``(1) The term `eligible local educational agency' means a 
        local educational agency with a high percentage or number of 
        students at schools identified for school improvement, 
        corrective action, or restructuring under section 1116(b).
            ``(2) The term `high-performance school' means a school 
        that is not identified for school improvement, corrective 
        action, or restructuring under section 1116(b).

``SEC. 4403. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this part 
such sums as may be necessary for each of fiscal years 2004 through 
2007.''.
    (b) Conforming Amendment.--The table of contents at section 2 of 
the Elementary and Secondary Education Act of 1965 is amended by 
inserting after the item relating to section 4304 the following:

                  ``Part D--Increasing School Capacity

``Sec. 4401. Grants.
``Sec. 4402. Definitions.
``Sec. 4403. Authorization of appropriations.''.

SEC. 4. ESTABLISHMENT OF LIMITS ON DURATION OR DISTANCE OF 
              TRANSPORTATION PROVIDED TO TRANSFERRING STUDENTS.

    Paragraph (9) of section 1116(b) of the Elementary and Secondary 
Education Act of 1965 (20 U.S.C. 6316(b)(9)) is amended by inserting 
before the period the following: ``, unless the agency establishes a 
limit on the duration or distance of transportation to be provided or 
paid for under this paragraph and determines that transporting the 
student would exceed such limit.''.
Output: School Capacity Relief Act - Amends the Elementary and Secondary Education Act of 1965 (ESEA) to authorize local educational agencies (LEAs) to prohibit the transfer of students from schools identified for school improvement to another school if that school is at or above capacity or if such transfer would increase that school's average class size above what the State prescribes.Provides that children retain certain rights to remain in schools to which they have already been transferred under ESEA school improvement provisions.Requires an LEA to enter into a cooperative agreement for school transfers with another LEA in the area, if all of the LEA's public schools are either: (1) identified for school improvement, corrective action, or restructuring; or (2) are determined by the LEA to be at or above capacity or otherwise ineligible for a transfer.Authorizes the Secretary of Education to award grants to eligible LEAs to increase capacity at high-performance schools, through measures that may include renovating or constructing facilities, hiring teachers, or purchasing instructional materials. Makes an LEA eligible for such a grant if it has a high percentage or number of students at schools identified under ESEA for school improvement, corrective action, or restructuring. Provides that a high-performance school is one that is not identified for such school improvement, corrective action, or restructuring.Authorizes LEAs to establish limits on duration or distance of transportation to be provided or paid for under ESEA school improvement provisions for transferring students.