SECTION 1. CLASS SIZE DEMONSTRATION GRANTS.

    Subpart 3 of part D of title V of the Higher Education Act of 1965 
(20 U.S.C. 1109 et seq.) is amended to read as follows:

              ``Subpart 3--Class Size Demonstration Grants

``SEC. 561. PURPOSE.

    ``It is the purpose of this subpart to provide grants to State 
educational agencies to enable such agencies to determine the benefits, 
in various school settings, of reducing class size on the educational 
performance of students and on classroom management and organization.

``SEC. 562. PROGRAM AUTHORIZED.

    ``(a) Program Authorized.--
            ``(1) In general.--The Secretary shall award grants, on a 
        competitive basis, to State educational agencies to pay the 
        Federal share of the costs of conducting demonstration projects 
        that demonstrate methods of reducing class size that may 
        provide information meaningful to other State educational 
        agencies and local educational agencies.
            ``(2) Federal share.--The Federal share shall be 50 
        percent.
    ``(b) Reservation.--The Secretary may reserve not more than 5 
percent of the amount appropriated under section 565A for each fiscal 
year to carry out the activities described in section 565.
    ``(c) Selection Criteria.--The Secretary shall make grants to State 
educational agencies on the basis of--
            ``(1) the need and the ability of a State educational 
        agency to reduce the class size of an elementary school or 
        secondary school served by such agency;
            ``(2) the ability of a State educational agency to furnish 
        the non-Federal share of the costs of the demonstration project 
        for which assistance is sought;
            ``(3) the ability of a State educational agency to continue 
        the project for which assistance is sought after the 
        termination of Federal financial assistance under this subpart; 
        and
            ``(4) the degree to which a State educational agency 
        demonstrates in the application submitted pursuant to section 
        564 consultation in program implementation and design with 
        parents, teachers, school administrators, and local teacher 
        organizations, where applicable.
    ``(d) Priority.--In awarding grants under this subpart, the 
Secretary shall give priority to demonstration projects that involve 
at-risk students in the earliest grades, including educationally or 
economically disadvantaged students, students with disabilities, and 
limited English proficient students.
    ``(e) Grants Must Supplement Other Funds.--A State educational 
agency shall use the Federal funds received under this subpart to 
supplement and not supplant other Federal, State, and local funds 
available to the State educational agency to carry out the purpose of 
this subpart.

``SEC. 563. PROGRAM REQUIREMENTS.

    ``(a) Annual Competition.--In each fiscal year, the Secretary shall 
announce the factors to be examined in a demonstration project assisted 
under this subpart. Such factors may include--
            ``(1) the magnitude of the reduction in class size to be 
        achieved;
            ``(2) the level of education in which the demonstration 
        projects shall occur;
            ``(3) the form of the instructional strategy to be 
        demonstrated; and
            ``(4) the duration of the project.
    ``(b) Random Techniques and Appropriate Comparison Groups.--
Demonstration projects assisted under this subpart shall be designed to 
utilize randomized techniques or appropriate comparison groups.

``SEC. 564. APPLICATION.

    ``(a) In General.--In order to receive a grant under this subpart, 
a State educational agency shall submit an application to the Secretary 
that is responsive to the announcement described in section 563(a), at 
such time, in such manner, and containing or accompanied by such 
information as the Secretary may reasonably require.
    ``(b) Duration.--The Secretary shall encourage State educational 
agencies to submit applications under this subpart for a period of 5 
years.
    ``(c) Contents.--Each application submitted under subsection (a) 
shall include--
            ``(1) a description of the objectives to be attained with 
        the grant funds and the manner in which the grant funds will be 
        used to reduce class size;
            ``(2) a description of the steps to be taken to achieve 
        target class sizes, including, where applicable, the 
        acquisition of additional teaching personnel and classroom 
        space;
            ``(3) a statement of the methods for the collection of data 
        necessary for the evaluation of the impact of class size 
        reduction programs on student achievement;
            ``(4) an assurance that the State educational agency will 
        pay, from non-Federal sources, the non-Federal share of the 
        costs of the demonstration project for which assistance is 
        sought; and
            ``(5) such additional assurances as the Secretary may 
        reasonably require.
    ``(d) Sufficient Size and Scope Required.--The Secretary shall 
award grants under this subpart only to State educational agencies 
submitting applications which described projects of sufficient size and 
scope to contribute to carrying out the purpose of this subpart.

``SEC. 565. EVALUATION AND DISSEMINATION.

    ``(a) National Evaluation.--The Secretary shall conduct a national 
evaluation of the demonstration projects assisted under this subpart to 
determine the costs incurred in achieving the reduction in class size 
and the effects of the reductions on results, such as student 
performance in the affected subjects or grades, attendance, discipline, 
classroom organization, management, and teacher satisfaction and 
retention.
    ``(b) Cooperation.--Each State educational agency receiving a grant 
under this subpart shall cooperate in the national evaluation described 
in subsection (a) and shall provide such information to the Secretary 
as the Secretary may reasonably require.
    ``(c) Reports.--The Secretary shall report to Congress on the 
results of the evaluation conducted under subsection (a).
    ``(d) Dissemination.--The Secretary shall widely disseminate 
information about the results of the class size demonstration projects 
assisted under this subpart.

``SEC. 565A. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this subpart 
$15,000,000 for fiscal year 1999 and each of the 4 succeeding fiscal 
years.''.

SEC. 2. PRIVATE SECTOR FUNDING FOR RESEARCH AND DEVELOPMENT BY NASA 
              RELATING TO AIRCRAFT PERFORMANCE.

    The Administrator of the National Aeronautics and Space 
Administration may not carry out research and development activities 
relating to the performance of aircraft (including supersonic aircraft 
and subsonic aircraft) unless the Administrator receives payment in 
full for such activities from the private sector.
Output: Amends the Higher Education Act of 1965 to establish a competitive Class Size Demonstration Grants program. 
Directs the Secretary of Education to award such grants to State educational agencies (SEAs) to pay half of the costs of conducting projects that demonstrate methods of reducing class size that may provide information meaningful to other SEAs and local educational agencies (LEAs).  Authorizes the Secretary to reserve up to five percent of funds for this Act for each fiscal year to carry out national evaluation and dissemination activities. 
Sets forth program requirements for:  (1) grant selection criteria; (2) priority for projects that involve at-risk students in the earliest grades, including educationally or economically disadvantaged students, students with disabilities, and limited English proficient students; (3) annual competitions; (4) random techniques and appropriate comparison groups; (5) applications; and (6) sufficient size and scope of projects. 
Directs the Secretary to:  (1) conduct, and report to the Congress on, a national evaluation of such projects to determine the costs incurred in achieving the reduction in class size and the effects of the reductions on results; and (2) widely disseminate information about the results of such projects. 
Authorizes appropriations. 
(Sec. 2) Prohibits the Administrator of the National Aeronautics and Space Administration from carrying out research and development activities relating to the performance of aircraft (including supersonic aircraft and subsonic aircraft) unless the Administrator receives payment in full for such activities from the private sector.