SECTION 1. INSTRUCTIONAL LEVEL ASSESSMENT PILOT PROGRAM.

    Part A of title VI of the Elementary and Secondary Education Act of 
1965 (20 U.S.C. 7301 et seq.) is amended by adding at the end the 
following:

              ``Subpart 5--Instructional Level Assessment

``SEC. 6171. INSTRUCTIONAL-LEVEL ASSESSMENT PILOT PROGRAM.

    ``(a) Grant Authority.--
            ``(1) In general.--The Secretary shall award grants on a 
        competitive basis to no more than ten State educational 
        agencies to conduct pilot programs to determine the 
        effectiveness of assessing students with disabilities who are 
        achieving significantly below grade-level proficiency at their 
        instructional level, and to facilitate quality instruction for 
        such students.
            ``(2) Grant period.--Grants described under paragraph (1) 
        shall be made for a 3 year period.
    ``(b) Application.--A State that desires the grant described under 
paragraph (1) shall submit an application for such grant, at such time, 
in such manner and in such format as the Secretary may prescribe. In 
order to be eligible to receive a grant under this section, an State 
shall--
            ``(1) be determined by the Secretary to not be in need of 
        intervention or substantial intervention in implementing the 
        requirements as described in part B, section 616(d)(2) (20 
        U.S.C. 1416) of the Individuals with Disabilities Education 
        Act;
            ``(2) have developed and implemented alternate assessments 
        to modified academic achievement standards;
            ``(3) as part of such application, provide assurances such 
        agency has identified a minimum of 5 local education agencies, 
        considering geographic diversity, the mix of rural and urban 
        districts, and the mix of small and large districts, to 
        participate in the pilot;
            ``(4) demonstrate such agency will provide guidance to the 
        participating local education agencies on--
                    ``(A) how to appropriately select students for the 
                pilot;
                    ``(B) scientifically valid assessment & evaluation 
                tools to be utilized; and
                    ``(C) data collection and reporting;
            ``(5) as part of such application, provide an assurance 
        that participating local education agencies have implemented a 
        response to intervention approach as defined in section 9101 
        that ensures that all students have received data driven, 
        quality instruction in the grade-level content; and
            ``(6) ensure monitoring and oversight of the participating 
        local education agencies, including establishment of a process 
        to review documentation provided by the individualized 
        education program team (or `IEP Team') (as defined in section 
        614(d)(1)(B) of the Individuals with Disabilities Education Act 
        (20 U.S.C. 1414(d)(1)(B))), for each student recommended for 
        participation in the pilot to ensure that students are 
        appropriately identified for participation.
    ``(c) Program Elements.--In implementing the pilot, a State 
educational agency and the participating local educational agencies 
shall--
            ``(1) limit participation of students in the pilot program 
        to .5 percent of the total population of students assessed in 
        each participating local educational agency;
            ``(2) ensure that the participating student's IEP Team has 
        determined that the alternate assessment to modified 
        achievement standards is the appropriate annual assessment for 
        the student and secured the written consent of the parents of 
        such student prior to such students being assessed under the 
        pilot program;
            ``(3) ensure that all students participating in the pilot 
        program are receiving data driven, quality instruction in the 
        grade level content in the subject areas to be assessed;
            ``(4) ensure the IEP Team shall--
                    ``(A) examine the student's testing data, formative 
                assessments, student work, IEP progress notes, data 
                from the response to intervention approaches, teacher 
                recommendations and other data that indicates a 
                student's instructional level;
                    ``(B) determine whether the student is performing 
                three or more grade levels below their current grade 
                level in either reading or math, as measured by 
                scientifically-valid and reliable instruments, and the 
                measures described in subparagraph (A); and
                    ``(C) administer scientifically-valid and reliable 
                assessments based on the student's instructional level 
                in reading and/or math; and
            ``(5) based on the student's instructional level 
        assessment, ensure the IEP Team will develop, and the local 
        education agency will implement, a series of targeted 
        interventions that directly address and are designed to 
        remediate identified gaps in the student's instructional and 
        grade-level content knowledge.
    ``(d) Accountability.--
            ``(1) The data from instructional level assessments shall 
        not be used for purpose of determining whether a student meets 
        or exceeds a proficient level of achievement as described under 
        section 1111(b).
            ``(2) The results of any such instructional leveal 
        assessments administered under this Act shall not be used to 
        determine whether a school, local educational agency, or State 
        educational agency has made adequate yearly progress, as 
        described under section 1111(b).
    ``(e) Reports.--
            ``(1) Each local education agency participating in the 
        pilot will compile a report documenting progress on each 
        student's instructional level proficiency and progress made 
        toward reaching grade level proficiency based on either an 
        alternate assessment based on modified academic achievement 
        standards or regular academic achievement standards and a 
        scientifically valid and reliable instructional level 
        assessment.
            ``(2) Each State education agency participating in the 
        pilot shall submit an annual report to the Secretary, 
        describing how many students participated in the pilot, and the 
        progress made towards closing the gap between their current 
        grade level proficiency and instructional level proficiency.
            ``(3) Data collected shall be used by the Secretary to 
        inform the report in section 1111(b)(2)(S).
            ``(4) The Secretary shall issue a report to Congress 
        indicating how many students participated in the pilot and 
        changes in the gap between their instructional and grade level 
        proficiency before participation in the pilot and after their 
        participation.
    ``(f) Authorization of Funds.--There are authorized to be 
appropriated $5,000,000 to make grants under this section for fiscal 
year 2008.''.
Output: Amends the Elementary and Secondary Education Act of 1965 to require the Secretary of Education to: (1) award competitive grants to up to 10 states for pilot programs to determine the effectiveness of assessing disabled students who are achieving significantly below grade-level proficiency at their instructional level; and (2) provide quality instruction to such students.

Requires each grantee to identify a minimum of five local educational agencies (LEAs) to participate in its pilot program and limit student participation to 0.5% of the students assessed in each participating LEA.

Requires such states and LEAs to ensure that each participating student's individualized education program team: (1) administers, after securing parental consent, a scientifically-valid and reliable assessment based on the student's instructional level in reading and/or math; and (2) based on such assessment, develops a series of targeted interventions designed to close identified gaps in the student's instructional and grade-level content knowledge. Prohibits the use of such assessment results in determinations of adequate yearly progress (AYP) toward state academic performance standards.