SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Low-Income and Rural School 
Program''.

SEC. 2. PROGRAM AUTHORIZED.

    (a) Reservations.--From amounts appropriated under section 7 for 
this Act for a fiscal year, the Secretary shall reserve \1/2\ of 1 
percent to make awards to elementary or secondary schools operated or 
supported by the Bureau of Indian Affairs to carry out the purpose of 
this Act.
    (b) Grants to States.--
            (1) In general.--From amounts appropriated under section 7 
        for this Act that are not reserved under subsection (a), the 
        Secretary shall award grants for a fiscal year to State 
        educational agencies that have applications approved under 
        section 4 to enable the State educational agencies to award 
        subgrants to eligible local educational agencies for local 
        authorized activities described in subsection (c)(2).
            (2) Allocation.--From amounts appropriated for this Act, 
        the Secretary shall allocate to each State educational agency 
        for a fiscal year an amount that bears the same ratio to the 
        amount of funds appropriated under section 7 for this Act that 
        are not reserved under subsection (a) as the number of students 
        in average daily attendance served by eligible local 
        educational agencies in the State bears to the number of all 
        such students served by eligible local educational agencies in 
        all States for that fiscal year.
            (3) Direct awards to specially qualified agencies.--
                    (A) Nonparticipating state.--If a State educational 
                agency elects not to participate in the program under 
                this Act or does not have an application approved under 
                section 4 a specially qualified agency in such State 
                desiring a grant under this Act shall apply directly to 
                the Secretary to receive such a grant.
                    (B) Direct awards to specially qualified 
                agencies.--The Secretary may award, on a competitive 
                basis, the amount the State educational agency is 
                eligible to receive under paragraph (2) directly to 
                specially qualified agencies in the State.
    (c) Local Awards.--
            (1) Eligibility.--A local educational agency shall be 
        eligible to receive funds under this Act if--
                    (A) 20 percent or more of the children aged 5 to 
                17, inclusive, served by the local educational agency 
                are from families with incomes below the poverty line; 
                and
                    (B) all of the schools served by the agency are 
                located in a community with a School Locale code of 6, 
                7, or 8, as determined by the Secretary of Education.
            (2) Uses of funds.--Grant funds awarded to local 
        educational agencies or made available to schools under this 
        Act shall be used for--
                    (A) teacher recruitment and retention, including 
                the use of signing bonuses and other financial 
                incentives;
                    (B) teacher professional development, including 
                programs that train teachers to utilize technology to 
                improve teaching and to train special needs teachers;
                    (C) educational technology, including software and 
                hardware as described in title III of the Elementary 
                and Secondary Education Act of 1965; or
                    (D) programs that promote academic enrichment.

SEC. 3. STATE DISTRIBUTION OF FUNDS.

    (a) Award Basis.--A State educational agency shall award grants to 
eligible local educational agencies--
            (1) on a competitive basis; or
            (2) according to a formula based on the number of students 
        in average daily attendance served by the eligible local 
        educational agencies or schools (as appropriate) in the State, 
        as determined by the State.
    (b) Administrative Costs.--A State educational agency receiving a 
grant under this Act may not use more than 5 percent of the amount of 
the grant for State administrative costs.

SEC. 4. APPLICATIONS.

    Each State educational agency and specially qualified agency 
desiring to receive a grant under this Act shall submit an application 
to the Secretary at such time, in such manner, and accompanied by such 
information as the Secretary may require. Such application shall 
include specific measurable goals and objectives relating to increased 
student academic achievement, decreased student drop-out rates, or such 
other factors that the State educational agency or specially qualified 
agency may choose to measure.

SEC. 5. REPORTS.

    (a) State Reports.--Each State educational agency that receives a 
grant under this Act shall provide an annual report to the Secretary. 
The report shall describe--
            (1) the method the State educational agency used to award 
        grants to eligible local educational agencies and to provide 
        assistance to schools under this Act;
            (2) how local educational agencies and schools used funds 
        provided under this Act; and
            (3) the degree to which progress has been made toward 
        meeting the goals and objectives described in the application 
        submitted under section 4.
    (b) Specially Qualified Agency Report.--Each specially qualified 
agency that receives a grant under this Act shall provide an annual 
report to the Secretary. Such report shall describe--
            (1) how such agency uses funds provided under this Act; and
            (2) the degree to which progress has been made toward 
        meeting the goals and objectives described in the application 
        submitted under section 2(b)(4)(A).
    (c) Report to Congress.--The Secretary shall prepare and submit to 
the Committee on Education and the Workforce for the House of 
Representatives and the Committee on Health, Education, Labor, and 
Pensions for the Senate an annual report. The report shall describe--
            (1) the methods the State educational agency used to award 
        grants to eligible local educational agencies and to provide 
        assistance to schools under this Act;
            (2) how eligible local educational agencies and schools 
        used funds provided under this Act; and
            (3) progress made in meeting specific measurable 
        educational goals and objectives.

SEC. 6. DEFINITIONS.

    For the purposes of this Act--
            (1) The term ``poverty line'' means 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.
            (2) The term ``specially qualified agency'' means an 
        eligible local educational agency, located in a State that does 
        not participate in a program under this Act in a fiscal year, 
        that may apply directly to the Secretary for a grant in such 
        year in accordance with section 2(b)(4).
            (3) The term ``State'' means each of the 50 States, the 
        District of Columbia, and the Commonwealth of Puerto Rico.

SEC. 7. PERFORMANCE REVIEW.

    Three years after a State educational agency or specifically 
qualified agency receives funds under this Act, the Secretary shall 
review the progress of such agency toward achieving the goals and 
objectives included in its application to determine if the agency has 
made progress toward meeting such goals and objectives. To review the 
performance of each agency, the Secretary shall--
            (1) review the use of funds of such agency under section 
        2(c)(2); and
            (2) deny the provision of additional funds in subsequent 
        fiscal years to an agency only if the Secretary determines, 
        after notice and an opportunity for a hearing, that the 
        agency's use of funds has been inadequate to justify the 
        continuation of such funding.

SEC. 8. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to carry out this Act 
$125,000,000 for fiscal year 2002 and such sums as may be necessary for 
each of 4 succeeding fiscal years.
Output: Low-Income and Rural School Program - Establishes a Low-Income and Rural School Program. Directs the Secretary of Education to award formula grants to State educational agencies to make competitive or formula subgrants to certain rural and low-income local educational agencies (LEAs). Authorizes the Secretary to make direct competitive grants to specially qualified LEAs in nonparticipating States. Reserves a portion of program funds for schools operated or supported by the Bureau of Indian Affairs. Requires LEAs or schools to use program grant funds for: (1) teacher recruitment and retention, including signing bonuses and other financial incentives; (2) professional development, including training for special needs teachers and in technology use; (3) educational technology, including software and hardware; or (4) academic enrichment programs.