Sets forth a grant formula favoring states that: (1) have curricula aligned with state early learning standards; (2) use nationally-established, or better, best practices for class size and teacher-to-student ratios; (3) require each teacher to have at least an associate degree in early childhood education or a related field; (4) require such programs to operate for at least a full academic year; and (5) have a plan for meeting the requirement, within five years of receiving such grant, that teachers have at least a baccalaureate degree in early childhood education or have such degree in a related field, but have also completed specialized training 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.

Requires states to give priority, in using grant funds, to preschool programs in communities with high concentrations of impoverished children.

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 duration; and (5) improving program monitoring and learning environments.

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