Sets forth a grant formula favoring states that: (1) have curricula aligned with state early learning standards; (2) follow nationally-established best practices for class size and teacher-to-student ratios; (3) require each teacher to hold at least an associate degree in early childhood education or a related field; and (4) have a plan for meeting the requirement, within five years of receiving such grant, that teachers hold at least a baccalaureate degree in early childhood education.

Directs the Secretary to establish a competitive process for awarding grants to other states that demonstrate that they will meet such requirements within two fiscal years.

Prohibits state grantees from reducing their preschool or child care expenditures.

Includes among grant uses: (1) increasing the qualifications of, and benefits provided to, teachers, teacher aides, and program directors; (2) decreasing class size and improving teacher-to-student ratios; (3) providing certain comprehensive services that support healthy child development; (4) extending program hours per day and weeks per year; and (5) improving program monitoring and learning environments.

Reserves funds for competitive grants to Indians for their preschool programs.