Requires states to use those funds to develop and implement:

• a teacher evaluation system that has at least three different performance ratings and is based on student academic outcomes and observations of teacher performance; and
• a school principal evaluation system that has at least three different performance ratings and is based on student academic outcomes, principal leadership practices, and the recruitment, development, evaluation, and retention of effective teachers.

Adds to the permissible uses of such funds the development of teacher and principal licensure systems that provide a single license for entry into the profession for candidates who complete a state-approved teacher or principal preparation program.

Requires local educational agencies (LEAs) that receive a subgrant under part A to use at least 10% of the subgrant for programs and activities to improve principal effectiveness.

Adds to the educator training, retention, and recruiting efforts those subgrants may fund:

• the development of strategies that provide differentiated pay and recognition for teachers and principals based on effectiveness and increased responsibilities;
• efforts to increase the knowledge and skills of principal managers, principals, assistant principals, coaches and teacher leaders;
• the implementation of the teacher and principal evaluation systems developed by their state; and
• the implementation of a formal evaluation system to determine the effectiveness of the programs carried out under such systems.

Redefines "professional development" as a comprehensive system of professional learning to increase educator effectiveness in improving student learning and achievement that:

• fosters collective responsibility for improved student performance;
• is aligned with rigorous state student academic achievement standards and related LEA and school improvement goals;
• is conducted among educators at the school and facilitated by well-prepared school principals and school-based professional development coaches, mentors, master teachers, or other teacher leaders who have demonstrated success with the given student population;
• primarily occurs several times per week, or the equivalent of several hours per week, among established teams of teachers, principals, and other instructional staff members that engage in a continuous cycle of improvement; and
• may be supported by activities such as courses, workshops, institutes, networks, and conferences that are provided by entities outside the school.