SECTION 1. CLASS SIZE REDUCTION.

    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:

                     ``PART E--CLASS SIZE REDUCTION

``SEC. 6601. SHORT TITLE.

    ``This part may be cited as the `Class Size Reduction and Teacher 
Quality Act of 1999'.

``SEC. 6602. FINDINGS.

    ``Congress finds as follows:
            ``(1) Rigorous research has shown that students attending 
        small classes in the early grades make more rapid educational 
        progress than students in larger classes, and that these 
        achievement gains persist through at least the elementary 
        grades.
            ``(2) The benefits of smaller classes are greatest for 
        lower achieving, minority, poor, and inner-city children. One 
        study found that urban fourth-graders in smaller-than-average 
        classes were \3/4\ of a school year ahead of their counterparts 
        in larger-than-average classes.
            ``(3) Teachers in small classes can provide students with 
        more individualized attention, spend more time on instruction 
        and less on other tasks, cover more material effectively, and 
        are better able to work with parents to further their 
        children's education.
            ``(4) Smaller classes allow teachers to identify and work 
        more effectively with students who have learning disabilities 
        and, potentially, can reduce those students' need for special 
        education services in the later grades.
            ``(5) Students in smaller classes are able to become more 
        actively engaged in learning than their peers in large classes.
            ``(6) Efforts to improve educational achievement by 
        reducing class sizes in the early grades are likely to be more 
        successful if--
                    ``(A) well-prepared teachers are hired and 
                appropriately assigned to fill additional classroom 
                positions; and
                    ``(B) teachers receive intensive, continuing 
                training in working effectively in smaller classroom 
                settings.
            ``(7) Several States have begun a serious effort to reduce 
        class sizes in the early elementary grades, but these actions 
        may be impeded by financial limitations or difficulties in 
        hiring well-prepared teachers.
            ``(8) The Federal Government can assist in this effort by 
        providing funding for class-size reductions in grades 1 through 
        3, and by helping to ensure that the new teachers brought into 
        the classroom are well prepared.

``SEC. 6603. PURPOSE.

    ``The purpose of this part is to help States and local educational 
agencies recruit, train, and hire 100,000 additional teachers over a 7-
year period in order to--
            ``(1) reduce class sizes nationally, in grades 1 through 3, 
        to an average of 18 students per classroom; and
            ``(2) improve teaching in the early grades so that all 
        students can learn to read independently and well by the end of 
        the third grade.

``SEC. 6604. PROGRAM AUTHORIZED.

    ``(a) Authorization of Appropriations.--For the purpose of carrying 
out this part, there are authorized to be appropriated, $1,400,000,000 
for fiscal year 2000, $1,500,000,000 for fiscal year 2001, 
$1,700,000,000 for fiscal year 2002, $1,735,000,000 for fiscal year 
2003, $2,300,000,000 for fiscal year 2004, and $2,800,000,000 for 
fiscal year 2005.
    ``(b) Allotments.--
            ``(1) In general.--From the amount appropriated under 
        subsection (a) for a fiscal year the Secretary--
                    ``(A) shall make a total of 1 percent available to 
                the Secretary of the Interior (on behalf of the Bureau 
                of Indian Affairs) and the outlying areas for 
                activities that meet the purpose of this part; and
                    ``(B) shall allot to each State the same percentage 
                of the remaining funds as the percentage it received of 
                funds allocated to States for the previous fiscal year 
                under section 1122 or section 2202(b), whichever 
                percentage is greater, except that such allotments 
                shall be ratably decreased as necessary.
            ``(2) Definition of state.--In this part the term ``State'' 
        means each of the several States of the United States, the 
        District of Columbia and the Commonwealth of Puerto Rico.
            ``(3) State-level expenses.--Each State may use not more 
        than a total of \1/2\ of 1 percent of the amount the State 
        receives under this part, or $50,000, whichever is greater, for 
        a fiscal year, for the administrative costs of the State 
        educational agency.
    ``(c) Within State Distribution.--
            ``(1) In general.--Each State that receives an allotment 
        under this section shall distribute the amount of the allotted 
        funds that remain after using funds in accordance with 
        subsection (b)(3) to local educational agencies in the State, 
        of which--
                    ``(A) 80 percent of such remainder shall be 
                allocated to such local educational agencies in 
                proportion to the number of children, aged 5 to 17, who 
                reside in the school district served by such local 
                educational agency and are from families with incomes 
                below the poverty line (as defined by the Office of 
                Management and Budget and revised annually in 
                accordance with section 673(2) of the Community 
                Services Block Grant Act (42 U.S.C. 9902(2)) applicable 
                to a family of the size involved) for the most recent 
                fiscal year for which satisfactory data is available 
                compared to the number of such individuals who reside 
                in the school districts served by all the local 
                educational agencies in the State for that fiscal year, 
                except that a State may adjust such data, or use 
                alternative child-poverty data, to carry out this 
                subparagraph if the State demonstrates to the 
                Secretary's satisfaction that such adjusted or 
                alternative data more accurately reflects the relative 
                incidence of children living in poverty within local 
                educational agencies in the State; and
                    ``(B) 20 percent of such remainder shall be 
                allocated to such local educational agencies in 
                accordance with the relative enrollments of children, 
                aged 5 to 17, in public and private nonprofit 
                elementary schools and secondary schools in the school 
                districts within the boundaries of such agencies.
            ``(2) Award rule.--Notwithstanding paragraph (1), if the 
        award to a local educational agency under this section is less 
        than the starting salary for a new teacher in that agency, the 
        State shall not make the award unless--
                    ``(A) the local educational agency agrees to form a 
                consortium with not less than 1 other local educational 
                agency for the purpose of reducing class size; or
                    ``(B) the local educational agency agrees to 
                supplement the award with non-Federal funds sufficient 
                to pay the cost of hiring a teacher.

``SEC. 6605. USE OF FUNDS.

    ``(a) In General.--Each local educational agency that receives 
funds under this part shall use such funds to carry out effective 
approaches to reducing class size with highly qualified teachers to 
improve educational achievement for both regular and special-needs 
children, with particular consideration given to reducing class size in 
the early elementary grades for which some research has shown class 
size reduction is most effective.
    ``(b) Class Reduction.--
            ``(1) In general.--Each such local educational agency may 
        pursue the goal of reducing class size through--
                    ``(A) recruiting, hiring, and training certified 
                regular and special education teachers and teachers of 
                special-needs children, including teachers certified 
                through State and local alternative routes;
                    ``(B) testing new teachers for academic content 
                knowledge, and to meet State certification requirements 
                that are consistent with title II of the Higher 
                Education Act of 1965; and
                    ``(C) providing professional development to 
                teachers, including special education teachers and 
                teachers of special-needs children, consistent with 
                title II of the Higher Education Act of 1965.
            ``(2) Restriction.--A local educational agency may use not 
        more than a total of 15 percent of the funds received under 
        this part for each of the fiscal years 2000 through 2003 to 
        carry out activities described in subparagraphs (B) and (C) of 
        paragraph (1), and may not use any funds received under this 
        part for fiscal year 2004 or 2005 for those activities.
            ``(3) Special rule.--A local educational agency that has 
        already reduced class size in the early grades to 18 or fewer 
        children may use funds received under this part--
                    ``(A) to make further class-size reductions in 
                grades 1 through 3;
                    ``(B) to reduce class size in kindergarten or other 
                grades; or
                    ``(C) to carry out activities to improve teacher 
                quality, including professional development activities.
    ``(c) Supplement Not Supplant.--A local educational agency shall 
use funds under this part only to supplement, and not to supplant, 
State and local funds that, in the absence of such funds, would 
otherwise be spent for activities under this part.
    ``(d) Prohibition.--No funds made available under this part may be 
used to increase the salaries of or provide benefits to (other than 
participation in professional development and enrichment programs) 
teachers who are, or have been, employed by the local educational 
agency.
    ``(e) Professional Development.--If a local educational agency uses 
funds made available under this part for professional development 
activities, the agency shall ensure the equitable participation of 
private nonprofit elementary and secondary schools in such activities. 
Section 6402 shall not apply to other activities under this section.
    ``(f) Administrative Expenses.--A local educational agency that 
receives funds under this part may use not more than 3 percent of such 
funds for local administrative expenses.

``SEC. 6606. COST-SHARING REQUIREMENT.

    ``(a) Federal Share.--The Federal share of the cost of activities 
carried out under this part--
            ``(1) may be up to 100 percent in local educational 
        agencies with child-poverty levels of 50 percent or greater; 
        and
            ``(2) shall be no more than 65 percent for local 
        educational agencies with child-poverty rates of less than 50 
        percent.
    ``(b) Local Share.--A local educational agency shall provide the 
non-Federal share of a project under this part through cash 
expenditures from non-Federal sources, except that if an agency has 
allocated funds under section 1113(c) to one or more schoolwide 
programs under section 1114, it may use those funds for the non-Federal 
share of activities under this program that benefit those schoolwide 
programs, to the extent consistent with section 1120A(c) and 
notwithstanding section 1114(a)(3)(B).

``SEC. 6607. REQUEST FOR FUNDS.

    ``Each local educational agency that desires to receive funds under 
this part shall include in the application submitted under section 6303 
a description of the agency's program under this part to reduce class 
size by hiring additional highly qualified teachers.

``SEC. 6608. REPORTS.

    ``(a) State.--Each State receiving funds under this part shall 
report on activities in the State under this section, consistent with 
section 6202(a)(2).
    ``(b) School.--Each school receiving assistance under this part, or 
the local educational agency serving that school, shall produce an 
annual report to parents, the general public, and the State educational 
agency, in easily understandable language, regarding student 
achievement that is a result of hiring additional highly qualified 
teachers and reducing class size.''.
Output: Class Size Reduction and Teacher Quality Act of 1999 - Amends the Elementary and Secondary Education Act of 1965 to establish a grants program to help States and local educational agencies recruit, train, and hire 100,000 additional teachers over a seven-year period in order to: (1) reduce class sizes nationally, in grades one through three, to an average of 18 students per classroom; and (2) improve teaching in the early grades so that all students can learn to read independently and well by the end of the third grade. 
Authorizes appropriations. 
Sets forth program requirements for: (1) allotments to States; (2) within-State allocations; (3) local uses of funds; and (4) cost-sharing.