[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2646 Engrossed Amendment Senate (EAS)]

  
  
  
  
  
  
  
  
  
  

                  In the Senate of the United States,

                                                        April 23, 1998.
      Resolved, That the bill from the House of Representatives (H.R. 
2646) entitled ``An Act to amend the Internal Revenue Code of 1986 to 
allow tax-free expenditures from education individual retirement 
accounts for elementary and secondary school expenses, to increase the 
maximum annual amount of contributions to such accounts, and for other 
purposes.'', do pass with the following

                               AMENDMENT:

            Strike out all after the enacting clause and insert:

SECTION 1. SHORT TITLE; AMENDMENT TO 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Parent and Student 
Savings Account PLUS Act''.
    (b) Amendment to 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; amendment to 1986 Code; table of contents.

                 TITLE I--TAX INCENTIVES FOR EDUCATION

Sec. 101. Modifications to education individual retirement accounts.
Sec. 102. Prohibition on federally sponsored testing.
Sec. 103. Student improvement incentive awards.
Sec. 104. Exclusion from gross income of education distributions from 
                            qualified State tuition programs.
Sec. 105. Extension of exclusion for employer-provided educational 
                            assistance.
Sec. 106. Additional increase in arbitrage rebate exception for 
                            governmental bonds used to finance 
                            education facilities.
Sec. 107. Exclusion of certain amounts received under the National 
                            Health Corps Scholarship program.
Sec. 108. Treatment of qualified public educational facility bonds as 
                            exempt facility bonds.

                           TITLE II--REVENUE

Sec. 201. Clarification of deduction for deferred compensation.
Sec. 202. Modification to foreign tax credit carryback and carryover 
                            periods.

          TITLE III--MEASURES TO ENCOURAGE RESULTS IN TEACHING

Sec. 301. State incentives for teacher testing and merit pay.

                TITLE IV--EQUAL EDUCATIONAL OPPORTUNITY

Sec. 401. Equal educational opportunity.

                       TITLE V--EDUCATION FUNDING

Sec. 501. Direct awards of certain education funding.
Sec. 502. Direct awards of part A of title I funding.
Sec. 503. Direct awards of bilingual education funding.
Sec. 504. Participation of children enrolled in private schools.
Sec. 505. Accountability.
Sec. 506. Definitions.
Sec. 507. Construction.

                      TITLE VI--SENSE OF CONGRESS

Sec. 601. Findings.
Sec. 602. Sense of Congress.

                     TITLE VII--READING EXCELLENCE

Sec. 701. Short title.

                       Subtitle A--Reading Grants

Sec. 711. Amendment to ESEA for reading grants.

     Subtitle B--Amendments to Even Start Family Literacy Programs

Sec. 721. Reservation for grants.
Sec. 722. Definitions.
Sec. 723. Evaluation.
Sec. 724. Indicators of program quality.
Sec. 725. Research.

       TITLE VIII--DROPOUT PREVENTION AND STATE RESPONSIBILITIES

Sec. 801. Short title.

                     Subtitle A--Dropout Prevention

Sec. 811. Dropout prevention.
Sec. 812. Office of Dropout Prevention and Program Completion.

                   Subtitle B--State Responsibilities

Sec. 821. State responsibilities.

                   TITLE IX--MISCELLANEOUS PROVISIONS

Sec. 901. Multilingualism study.
Sec. 902. Safer schools.

                 TITLE I--TAX INCENTIVES FOR EDUCATION

SEC. 101. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS.

    (a) Tax-Free Expenditures for Elementary and Secondary School 
Expenses.--
            (1) In general.--Section 530(b)(2) (defining qualified 
        higher education expenses) is amended to read as follows:
            ``(2) Qualified education expenses.--
                    ``(A) In general.--The term `qualified education 
                expenses' means--
                            ``(i) qualified higher education expenses 
                        (as defined in section 529(e)(3)), and
                            ``(ii) qualified elementary and secondary 
                        education expenses (as defined in paragraph 
                        (4)).
                Such expenses shall be reduced as provided in section 
                25A(g)(2).
                    ``(B) Qualified state tuition programs.--Such term 
                shall include amounts paid or incurred to purchase 
                tuition credits or certificates, or to make 
                contributions to an account, under a qualified State 
                tuition program (as defined in section 529(b)) for the 
                benefit of the beneficiary of the account.''.
            (2) Qualified elementary and secondary education 
        expenses.--Section 530(b) (relating to definitions and special 
        rules) is amended by adding at the end the following new 
        paragraph:
            ``(4) Qualified elementary and secondary education 
        expenses.--
                    ``(A) In general.--The term `qualified elementary 
                and secondary education expenses' means--
                            ``(i) expenses for tuition, fees, academic 
                        tutoring, special needs services, books, 
                        supplies, computer equipment (including related 
                        software and services), and other equipment 
                        which are incurred in connection with the 
                        enrollment or attendance of the designated 
                        beneficiary of the trust as an elementary or 
                        secondary school student at a public, private, 
                        or religious school, or
                            ``(ii) expenses for room and board, 
                        uniforms, transportation, and supplementary 
                        items and services (including extended day 
                        programs) which are required or provided by a 
                        public, private, or religious school in 
                        connection with such enrollment or attendance.
                    ``(B) Special rule for homeschooling.--Such term 
                shall include expenses described in subparagraph (A)(i) 
                in connection with education provided by homeschooling 
                if the requirements of any applicable State or local 
                law are met with respect to such education.
                    ``(C) School.--The term `school' means any school 
                which provides elementary education or secondary 
                education (kindergarten through grade 12), as 
                determined under State law.''.
            (3) Special rules for applying exclusion to elementary and 
        secondary expenses.--Section 530(d)(2) (relating to 
        distributions for qualified higher education expenses) is 
        amended by adding at the end the following new subparagraph:
                    ``(D) Special rules for elementary and secondary 
                expenses.--
                            ``(i) In general.--The aggregate amount of 
                        qualified elementary and secondary education 
                        expenses taken into account for purposes of 
                        this paragraph with respect to any education 
                        individual retirement account for all taxable 
                        years shall not exceed the sum of the aggregate 
                        contributions to such account for taxable years 
                        beginning after December 31, 1998, and before 
                        January 1, 2003, and earnings on such 
                        contributions.
                            ``(ii) Special operating rules.--For 
                        purposes of clause (i)--
                                    ``(I) the trustee of an education 
                                individual retirement account shall 
                                keep separate accounts with respect to 
                                contributions and earnings described in 
                                clause (i), and
                                    ``(II) if there are distributions 
                                in excess of qualified elementary and 
                                secondary education expenses for any 
                                taxable year, such excess distributions 
                                shall be allocated first to 
                                contributions and earnings not 
                                described in clause (i).''.
            (4) Conforming amendments.--Subsections (b)(1) and (d)(2) 
        of section 530 are each amended by striking ``higher'' each 
        place it appears in the text and heading thereof.
    (b) Maximum Annual Contributions.--
            (1) In general.--Section 530(b)(1)(A)(iii) (defining 
        education individual retirement account) is amended by striking 
        ``$500'' and inserting ``the contribution limit for such 
        taxable year''.
            (2) Contribution limit.--Section 530(b) (relating to 
        definitions and special rules), as amended by subsection 
        (a)(2), is amended by adding at the end the following new 
        paragraph:
            ``(5) Contribution limit.--The term `contribution limit' 
        means $500 ($2,000 in the case of any taxable year beginning 
        after December 31, 1998, and ending before January 1, 2003).''.
            (3) Conforming amendments.--
                    (A) Section 530(d)(4)(C) is amended by striking 
                ``$500'' and inserting ``the contribution limit for 
                such taxable year''.
                    (B) Section 4973(e)(1)(A) is amended by striking 
                ``$500'' and inserting ``the contribution limit (as 
                defined in section 530(b)(5)) for such taxable year''.
    (c) Waiver of Age Limitations for Children With Special Needs.--
Section 530(b)(1) (defining education individual retirement account) is 
amended by adding at the end the following flush sentence:
        ``The age limitations in the preceding sentence shall not apply 
        to any designated beneficiary with special needs (as determined 
        under regulations prescribed by the Secretary).''.
    (d) Corporations Permitted To Contribute to Accounts.--Section 
530(c)(1) (relating to reduction in permitted contributions based on 
adjusted gross income) is amended by striking ``The maximum amount 
which a contributor'' and inserting ``In the case of a contributor who 
is an individual, the maximum amount the contributor''.
    (e) No Double Benefit.--Section 530(d)(2) (relating to 
distributions for qualified education expenses), as amended by 
subsection (a)(3), is amended by adding at the end the following new 
subparagraph:
                    ``(E) Disallowance of excluded amounts as credit or 
                deduction.--No deduction or credit shall be allowed to 
                the taxpayer under any other section of this chapter 
                for any qualified education expenses to the extent 
                taken into account in determining the amount of the 
                exclusion under this paragraph.''.
    (f) Technical Corrections.--
            (1)(A) Section 530(b)(1)(E) (defining education individual 
        retirement account) is amended to read as follows:
                    ``(E) Any balance to the credit of the designated 
                beneficiary on the date on which the beneficiary 
                attains age 30 shall be distributed within 30 days 
                after such date to the beneficiary or, if the 
                beneficiary dies before attaining age 30, shall be 
                distributed within 30 days after the date of death to 
                the estate of such beneficiary.''.
            (B) Section 530(d) (relating to tax treatment of 
        distributions) is amended by adding at the end the following 
        new paragraph:
            ``(8) Deemed distribution on required distribution date.--
        In any case in which a distribution is required under 
        subsection (b)(1)(E), any balance to the credit of a designated 
        beneficiary as of the close of the 30-day period referred to in 
        such subsection for making such distribution shall be deemed 
        distributed at the close of such period.''.
            (2)(A) Section 530(d)(1) is amended by striking ``section 
        72(b)'' and inserting ``section 72''.
            (B) Section 72(e) (relating to amounts not received as 
        annuities) is amended by inserting after paragraph (8) the 
        following new paragraph:
            ``(9) Extension of paragraph (2)(b) to qualified state 
        tuition programs and educational individual retirement 
        accounts.--Notwithstanding any other provision of this 
        subsection, paragraph (2)(B) shall apply to amounts received 
        under a qualified State tuition program (as defined in section 
        529(b)) or under an education individual retirement account (as 
        defined in section 530(b)). The rule of paragraph (8)(B) shall 
        apply for purposes of this paragraph.''.
            (3) Section 530(d)(4)(B) (relating to exceptions) is 
        amended by striking ``or'' at the end of clause (ii), by 
        striking the period at the end of clause (iii) and inserting 
        ``, or'', and by adding at the end the following new clause:
                            ``(iv) an amount which is includible in 
                        gross income solely because the taxpayer 
                        elected under paragraph (2)(C) to waive the 
                        application of paragraph (2) for the taxable 
                        year.''.
    (g) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 1998.
            (2) Technical corrections.--The amendments made by 
        subsection (f) shall take effect as if included in the 
        amendments made by section 213 of the Taxpayer Relief Act of 
        1997.

SEC. 102. PROHIBITION ON FEDERALLY SPONSORED TESTING.

    (a) Findings.--Congress makes the following findings:
            (1) High State and local standards in reading, mathematics, 
        and other core academic subjects are essential to the future 
        well-being of elementary and secondary education in the United 
        States.
            (2) State and local control of education is the hallmark of 
        education in the United States.
            (3) Each of the 50 States already utilizes numerous tests 
        to measure student achievement, including State and 
        commercially available assessments. State assessments are based 
        primarily upon State and locally developed academic standards.
            (4) Public Law 105-78, the Departments of Labor, Health and 
        Human Services, and Education, and Related Agencies 
        Appropriations Act, 1998, ensures that Federal funds may not be 
        used to field test, pilot test, implement, administer, or 
        distribute in any way, any federally sponsored national test in 
        fiscal year 1998, requires the National Academy of Sciences to 
        conduct a study to determine whether an equivalency scale can 
        be developed that would allow existing tests to be compared one 
        to another, and permits very limited test development 
        activities in fourth grade reading and eighth grade mathematics 
        in fiscal year 1998.
            (5) There is no specific or explicit authority in current 
        Federal law authorizing the proposed federally sponsored 
        national tests in fourth grade reading and eighth grade 
        mathematics.
            (6) The decision of whether or not the United States 
        implements, administers, disseminates, or otherwise has 
        federally sponsored national tests in fourth grade reading and 
        eighth grade mathematics or any other subject, will be 
        determined primarily through the normal legislative process 
        involving Congress and the respective authorizing committees.
    (b) Prohibition on Federally Sponsored Testing.--Part C of the 
General Education Provisions Act (20 U.S.C. 1231 et seq.) is amended by 
adding at the end the following:

``SEC. 447. PROHIBITION ON FEDERALLY SPONSORED TESTING.

    ``(a) General Prohibition.--Notwithstanding any other provision of 
Federal law and, except as provided in sections 305 through 311 of 
Public Law 105-78, the Departments of Labor, Health and Human Services, 
and Education, and Related Agencies Appropriations Act, 1998, funds 
provided to the Department of Education or to an applicable program 
under this Act or any other Act, may not be used to develop, plan, 
implement (including pilot testing or field testing), or administer any 
federally sponsored national test in reading, mathematics, or any other 
subject that is not specifically and explicitly provided for in 
authorizing legislation enacted into law.
    ``(b) Exceptions.--Subsection (a) shall not apply to the Third 
International Mathematics and Science Study or other international 
comparative assessments developed under the authority of section 
404(a)(6) of the National Education Statistics Act of 1994 (20 U.S.C. 
9003(a)(6) et seq.), and administered to only a representative sample 
of pupils in the United States and in foreign nations.''.

SEC. 103. STUDENT IMPROVEMENT INCENTIVE AWARDS.

    Section 6201 of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 7331) is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)(C), by striking ``and'' after 
                the semicolon;
                    (B) in paragraph (2), by striking the period and 
                inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(3) student improvement incentive awards described in 
        subsection (c).''; and
            (2) by adding at the end the following:
    ``(c) Student Improvement Incentive Awards.--
            ``(1) Awards.--A State educational agency may use funds 
        made available for State use under this title to make awards to 
        public schools in the State that are determined to be 
        outstanding schools pursuant to a statewide assessment 
        described in paragraph (2).
            ``(2) Statewide assessment.--The statewide assessment 
        referred to in paragraph (1)--
                    ``(A) shall--
                            ``(i) determine the educational progress of 
                        students attending public schools within the 
                        State; and
                            ``(ii) allow for an objective analysis of 
                        the assessment on a school-by-school basis; and
                    ``(B) may involve exit exams.''.

SEC. 104. EXCLUSION FROM GROSS INCOME OF EDUCATION DISTRIBUTIONS FROM 
              QUALIFIED STATE TUITION PROGRAMS.

    (a) In General.--Section 529(c)(3)(B) (relating to distributions) 
is amended to read as follows:
                    ``(B) Distributions for qualified higher education 
                expenses.--
                            ``(i) In general.--No amount shall be 
                        includible in gross income under subparagraph 
                        (A) if the qualified higher education expenses 
                        of the designated beneficiary during the 
                        taxable year are not less than the aggregate 
                        distributions during the taxable year.
                            ``(ii) Distributions in excess of 
                        expenses.--If such aggregate distributions 
                        exceed such expenses during the taxable year, 
                        the amount otherwise includible in gross income 
                        under subparagraph (A) shall be reduced by the 
                        amount which bears the same ratio to the amount 
                        so includible (without regard to this 
                        subparagraph) as such expenses bear to such 
                        aggregate distributions.
                            ``(iii) Election to waive exclusion.--A 
                        taxpayer may elect to waive the application of 
                        this subparagraph for any taxable year.
                            ``(iv) In-kind distributions.--Any benefit 
                        furnished to a designated beneficiary under a 
                        qualified State tuition program shall be 
                        treated as a distribution to the beneficiary 
                        for purposes of this paragraph.
                            ``(v) Disallowance of excluded amounts as 
                        credit or deduction.--No deduction or credit 
                        shall be allowed to the taxpayer under any 
                        other section of this chapter for any qualified 
                        higher education expenses to the extent taken 
                        into account in determining the amount of the 
                        exclusion under this paragraph.''.
    (b) Definition of Qualified Higher Education Expenses.--Section 
529(e)(3)(A) (defining qualified higher education expenses) is amended 
to read as follows:
                    ``(A) In general.--The term `qualified higher 
                education expenses' means expenses for tuition, fees, 
                academic tutoring, special needs services, books, 
                supplies, computer equipment (including related 
                software and services), and other equipment which are 
                incurred in connection with the enrollment or 
                attendance of the designated beneficiary at an eligible 
                educational institution.''.
    (c) Coordination With Education Credits.--Section 25A(e)(2) 
(relating to coordination with exclusions) is amended--
            (1) by inserting ``a qualified State tuition program or'' 
        before ``an education individual retirement account'', and
            (2) by striking ``section 530(d)(2)'' and inserting 
        ``section 529(c)(3)(B) or 530(d)(2)''.
    (d) Technical Correction.--Section 529(c)(3)(A) is amended by 
striking ``section 72(b)'' and inserting ``section 72''.
    (e) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to taxable years 
        beginning after December 31, 1998.
            (2) Technical correction.--The amendment made by subsection 
        (d) shall take effect as if included in the amendments made by 
        section 211 of the Taxpayer Relief Act of 1997.

SEC. 105. EXTENSION OF EXCLUSION FOR EMPLOYER-PROVIDED EDUCATIONAL 
              ASSISTANCE.

    (a) In General.--Section 127(d) (relating to termination of 
exclusion for educational assistance programs) is amended by striking 
``May 31, 2000'' and inserting ``December 31, 2002''.
    (b) Repeal of Limitation on Graduate Education.--The last sentence 
of section 127(c)(1) (defining educational assistance) is amended by 
striking ``, and such term also does not include any payment for, or 
the provision of any benefits with respect to, any graduate level 
course of a kind normally taken by an individual pursuing a program 
leading to a law, business, medical, or other advanced academic or 
professional degree''.
    (c) Effective Dates.--
            (1) Extension.--The amendment made by subsection (a) shall 
        apply to expenses paid with respect to courses beginning after 
        May 31, 2000.
            (2) Graduate education.--The amendment made by subsection 
        (b) shall apply to expenses paid with respect to courses 
        beginning after December 31, 1997.

SEC. 106. ADDITIONAL INCREASE IN ARBITRAGE REBATE EXCEPTION FOR 
              GOVERNMENTAL BONDS USED TO FINANCE EDUCATION FACILITIES.

    (a) In General.--Section 148(f)(4)(D)(vii) (relating to increase in 
exception for bonds financing public school capital expenditures) is 
amended by striking ``$5,000,000'' the second place it appears and 
inserting ``$10,000,000''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to obligations issued after December 31, 1998.

SEC. 107. EXCLUSION OF CERTAIN AMOUNTS RECEIVED UNDER THE NATIONAL 
              HEALTH CORPS SCHOLARSHIP PROGRAM.

    (a) In General.--Section 117(c) (relating to the exclusion from 
gross income amounts received as a qualified scholarship) is amended--
            (1) by striking ``Subsections (a)'' and inserting the 
        following:
            ``(1) In general.--Except as provided in paragraph (2), 
        subsections (a)''; and
            (2) by adding at the end the following new paragraph:
            ``(2) National health corps scholarship program.--Paragraph 
        (1) shall not apply to any amount received by an individual 
        under the National Health Corps Scholarship Program under 
        section 338A(g)(1)(A) of the Public Health Service Act.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to amounts received in taxable years beginning after December 31, 
1993.

SEC. 108. TREATMENT OF QUALIFIED PUBLIC EDUCATIONAL FACILITY BONDS AS 
              EXEMPT FACILITY BONDS.

    (a) Treatment as Exempt Facility Bond.--Subsection (a) of section 
142 (relating to exempt facility bond) is amended by striking ``or'' at 
the end of paragraph (11), by striking the period at the end of 
paragraph (12) and inserting ``, or'', and by adding at the end the 
following:
            ``(13) qualified public educational facilities.''.
    (b) Qualified Public Educational Facilities.--Section 142 is 
amended by adding at the end the following:
    ``(k) Qualified Public Educational Facilities.--
            ``(1) In general.--For purposes of subsection (a)(13), the 
        term `qualified public educational facility' means any school 
        facility which is--
                    ``(A) part of a public elementary school or a 
                public secondary school,
                    ``(B) except as provided in paragraph (6)(B)(iii), 
                located in a high-growth school district, and
                    ``(C) owned by a private, for-profit corporation 
                pursuant to a public-private partnership agreement with 
                a State or local educational agency described in 
                paragraph (2).
            ``(2) Public-private partnership agreement described.--A 
        public-private partnership agreement is described in this 
        paragraph if it is an agreement--
                    ``(A) under which the corporation agrees--
                            ``(i) to do 1 or more of the following: 
                        construct, rehabilitate, refurbish, or equip a 
                        school facility, and
                            ``(ii) at the end of the contract term, to 
                        transfer the school facility to such agency for 
                        no additional consideration, and
                    ``(B) the term of which does not exceed the term of 
                the underlying issue.
            ``(3) School facility.--For purposes of this subsection, 
        the term `school facility' means--
                    ``(A) school buildings,
                    ``(B) functionally related and subordinate 
                facilities and land with respect to such buildings, 
                including any stadium or other facility primarily used 
                for school events, and
                    ``(C) any property, to which section 168 applies 
                (or would apply but for section 179), for use in the 
                facility.
            ``(4) Public schools.--For purposes of this subsection, the 
        terms `elementary school' and `secondary school' have the 
        meanings given such terms by section 14101 of the Elementary 
        and Secondary Education Act of 1965 (20 U.S.C. 8801), as in 
        effect on the date of the enactment of this subsection.
            ``(5) High-growth school district.--For purposes of this 
        subsection, the term `high-growth school district' means a 
        school district established under State law which had an 
        enrollment of at least 5,000 students in the second academic 
        year preceding the date of the issuance of the bond and an 
        increase in student enrollment of at least 20 percent during 
        the 5-year period ending with such academic year.
            ``(6) Annual aggregate face amount of tax-exempt 
        financing.--
                    ``(A) In general.--An issue shall not be treated as 
                an issue described in subsection (a)(13) if the 
                aggregate face amount of bonds issued by the State 
                pursuant thereto (when added to the aggregate face 
                amount of bonds previously so issued during the 
                calendar year) exceeds an amount equal to the greater 
                of--
                            ``(i) $10 multiplied by the State 
                        population, or
                            ``(ii) $5,000,000.
                    ``(B) Allocation rules.--
                            ``(i) In general.--Except as otherwise 
                        provided in this subparagraph, the State may 
                        allocate in a calendar year the amount 
                        described in subparagraph (A) for such year in 
                        such manner as the State determines 
                        appropriate.
                            ``(ii) Rules for carryforward of unused 
                        amount.--With respect to any calendar year, a 
                        State may make an election under rules similar 
                        to the rules of section 146(f), except that the 
                        sole carryforward purpose with respect to such 
                        election is the issuance of exempt facility 
                        bonds described in section 142(a)(13).
                            ``(iii) Special allocation rule for schools 
                        outside high-growth school districts.--A State 
                        may elect to allocate an aggregate face amount 
                        of bonds not to exceed $5,000,000 from the 
                        amount described in subparagraph (A) for each 
                        calendar year for qualified public educational 
                        facilities without regard to the requirement 
                        under paragraph (1)(A).''.
    (c) Exemption From General State Volume Caps.--Paragraph (3) of 
section 146(g) (relating to exception for certain bonds) is amended--
            (1) by striking ``or (12)'' and inserting ``(12), or 
        (13)'', and
            (2) by striking ``and environmental enhancements of 
        hydroelectric generating facilities'' and inserting 
        ``environmental enhancements of hydroelectric generating 
        facilities, and qualified public educational facilities''.
    (d) Exemption From Limitation on Use for Land Acquisition.--Section 
147(h) (relating to certain rules not apply) is amended--
            (1) by adding at the end the following:
            ``(3) Exempt facility bonds for qualified public 
        educational facilities.--Subsection (c) shall not apply to any 
        exempt facility bond issued as part of an issue described in 
        section 142(a)(13) (relating to qualified public educational 
        facilities).'', and
            (2) by striking ``Mortgage Revenue Bonds, Qualified Student 
        Loan Bonds, and Qualified 501(c)(3) Bonds'' in the heading and 
        inserting ``Certain Bonds''.
    (e) Effective Date.--The amendments made by this section shall 
apply to bonds issued after December 31, 1998.

                           TITLE II--REVENUE

SEC. 201. CLARIFICATION OF DEDUCTION FOR DEFERRED COMPENSATION.

    (a) In General.--Section 404(a) (relating to deduction for 
contributions of an employer to an employee's trust or annuity plan and 
compensation under a deferred-payment plan) is amended by adding at the 
end the following new paragraph:
            ``(11) Determinations relating to deferred compensation.--
                    ``(A) In general.--For purposes of determining 
                under this section--
                            ``(i) whether compensation of an employee 
                        is deferred compensation, and
                            ``(ii) when deferred compensation is paid,
                no amount shall be treated as received by the employee, 
                or paid, until it is actually received by the employee.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to severance pay.''.
    (b) Effective Date.--
            (1) In general.--The amendment made by subsection (a) shall 
        apply to taxable years ending after the date of the enactment 
        of this Act.
            (2) Change in method of accounting.--In the case of any 
        taxpayer required by the amendment made by subsection (a) to 
        change its method of accounting for its first taxable year 
        ending after the date of the enactment of this Act--
                    (A) such change shall be treated as initiated by 
                the taxpayer,
                    (B) such change shall be treated as made with the 
                consent of the Secretary of the Treasury, and
                    (C) the net amount of the adjustments required to 
                be taken into account by the taxpayer under section 481 
                of the Internal Revenue Code of 1986 shall be taken 
                into account in such first taxable year.

SEC. 202. MODIFICATION TO FOREIGN TAX CREDIT CARRYBACK AND CARRYOVER 
              PERIODS.

    (a) In General.--Section 904(c) (relating to limitation on credit) 
is amended--
            (1) by striking ``in the second preceding taxable year,'', 
        and
            (2) by striking ``or fifth'' and inserting ``fifth, sixth, 
        or seventh''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to credits arising in taxable years beginning after December 31, 
2000.

          TITLE III--MEASURES TO ENCOURAGE RESULTS IN TEACHING

SEC. 301. STATE INCENTIVES FOR TEACHER TESTING AND MERIT PAY.

    (a) Short Title.--This section may be cited as the ``Measures to 
Encourage Results in Teaching Act of 1998''.
    (b) Findings.--Congress makes the following findings:
            (1) All students deserve to be taught by well-educated, 
        competent, and qualified teachers.
            (2) More than ever before, education has and will continue 
        to become the ticket not only to economic success but to basic 
        survival. Students will not succeed in meeting the demands of a 
        knowledge-based, 21st century society and economy if the 
        students do not encounter more challenging work in school. For 
        future generations to have the opportunities to achieve success 
        the future generations will need to have an education and a 
        teacher workforce second to none.
            (3) No other intervention can make the difference that a 
        knowledgeable, skillful teacher can make in the learning 
        process. At the same time, nothing can fully compensate for 
        weak teaching that, despite good intentions, can result from a 
        teacher's lack of opportunity to acquire the knowledge and 
        skill needed to help students master the curriculum.
            (4) The Federal Government established the Dwight D. 
        Eisenhower Professional Development Program in 1985 to ensure 
        that teachers and other educational staff have access to 
        sustained and high-quality professional development. This 
        ongoing development must include the ability to demonstrate and 
        judge the performance of teachers and other instructional 
        staff.
            (5) States should evaluate their teachers on the basis of 
        demonstrated ability, including tests of subject matter 
        knowledge, teaching knowledge, and teaching skill. States 
        should develop a test for their teachers and other 
        instructional staff with respect to the subjects taught by the 
        teachers and staff, and should administer the test every 3 to 5 
        years.
            (6) Evaluating and rewarding teachers with a compensation 
        system that supports teachers who become increasingly expert in 
        a subject area, are proficient in meeting the needs of students 
        and schools, and demonstrate high levels of performance 
        measured against professional teaching standards, will 
        encourage teachers to continue to learn needed skills and 
        broaden teachers' expertise, thereby enhancing education for 
        all students.
    (c) Purposes.--The purposes of this section are as follows:
            (1) To provide incentives for States to establish and 
        administer periodic teacher testing and merit pay programs for 
        elementary school and secondary school teachers.
            (2) To encourage States to establish merit pay programs 
        that have a significant impact on teacher salary scales.
            (3) To encourage programs that recognize and reward the 
        best teachers, and encourage those teachers that need to do 
        better.
    (d) State Incentives for Teacher Testing and Merit Pay.--
            (1) Amendments.--Title II of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 6601 et seq.) is amended--
                    (A) by redesignating part D as part E;
                    (B) by redesignating sections 2401 and 2402 as 
                sections 2501 and 2502, respectively; and
                    (C) by inserting after part C the following:

      ``PART D--STATE INCENTIVES FOR TEACHER TESTING AND MERIT PAY

``SEC. 2401. STATE INCENTIVES FOR TEACHER TESTING AND MERIT PAY.

    ``(a) State Awards.--Notwithstanding any other provision of this 
title, from funds described in subsection (b) that are made available 
for a fiscal year, the Secretary shall make an award to each State 
that--
            ``(1) administers a test to each elementary school and 
        secondary school teacher in the State, with respect to the 
        subjects taught by the teacher, every 3 to 5 years; and
            ``(2) has an elementary school and secondary school teacher 
        compensation system that is based on merit.
    ``(b) Available Funding.--The amount of funds referred to in 
subsection (a) that are available to carry out this section for a 
fiscal year is 50 percent of the amount of funds appropriated to carry 
out this title that are in excess of the amount so appropriated for 
fiscal year 1999, except that no funds shall be available to carry out 
this section for any fiscal year for which--
            ``(1) the amount appropriated to carry out this title 
        exceeds $600,000,000; or
            ``(2) each of the several States is eligible to receive an 
        award under this section.
    ``(c) Award Amount.--A State shall receive an award under this 
section in an amount that bears the same relation to the total amount 
available for awards under this section for a fiscal year as the number 
of States that are eligible to receive such an award for the fiscal 
year bears to the total number of all States so eligible for the fiscal 
year.
    ``(d) Use of Funds.--Funds provided under this section may be used 
by States to carry out the activities described in section 2207.
    ``(e) Definition of State.--For the purpose of this section, the 
term `State' means each of the 50 States and the District of 
Columbia.''.
            (2) Effective Date.--The amendments made by paragraph (1) 
        shall take effect on October 2, 1999.
    (e) Teacher Testing and Merit Pay.--
            (1) In General.--Notwithstanding any other provision of 
        law, a State may use Federal education funds--
                    (A) to carry out a test of each elementary school 
                or secondary school teacher in the State with respect 
                to the subjects taught by the teacher; or
                    (B) to establish a merit pay program for the 
                teachers.
            (2) Definitions.--In this subsection, the terms 
        ``elementary school'' and ``secondary school'' have the 
        meanings given the terms in section 14101 of the Elementary and 
        Secondary Education Act of 1965 (20 U.S.C. 8801).

                TITLE IV--EQUAL EDUCATIONAL OPPORTUNITY

SEC. 401. EQUAL EDUCATIONAL OPPORTUNITY.

    Subsection (b) of section 6301 of the Elementary and Secondary 
Education Act of 1965 (20 U.S.C. 7351) is amended--
            (1) in paragraph (7), by striking ``and'' after the 
        semicolon;
            (2) in paragraph (8), by striking the period and inserting 
        ``; and''; and
            (3) by adding at the end the following:
            ``(9) education reform projects that provide same gender 
        schools and classrooms, as long as comparable educational 
        opportunities are offered for students of both sexes.''.

                       TITLE V--EDUCATION FUNDING

SEC. 501. DIRECT AWARDS OF CERTAIN EDUCATION FUNDING.

    (a) State Options.--
            (1) In general.--Notwithstanding any other provision of law 
        and subject to subsection (b)(2), each State shall notify the 
        Secretary regarding the State's election to receive the State's 
        portion of the applicable funding described in subsection (e) 
        according to one of the following options:
                    (A) State block grant option.--The State may 
                receive the funding pursuant to a State allotment 
                described in subsection (c)(1)(A).
                    (B) Local block grant option.--The State may direct 
                the Secretary to send the funding directly to local 
                educational agencies in the State pursuant to a local 
                allotment described in subsection (c)(1)(B).
                    (C) Federal statute option.--The State may receive 
                the funding according to the provisions of law 
                described in subsection (e).
            (2) Option requirements.--
                    (A) In general.--A State shall select an option 
                described in paragraph (1)--
                            (i) within 1 year of the date of enactment 
                        of this Act;
                            (ii) pursuant to a majority vote of the 
                        State legislature; and
                            (iii) with the concurrence of the Governor.
                    (B) Failure to select an option.--
                            (i) In general.--If a State legislature 
                        meets within 1 year of the date of enactment of 
                        this Act and fails to select an option in 
                        accordance with this subsection, the Secretary 
                        shall award the applicable funding pursuant to 
                        paragraph (1)(B).
                            (ii) Legislature which does not meet.--If a 
                        State does not select an option described in 
                        paragraph (1) in accordance with this 
                        subsection because the State legislature does 
                        not meet within 1 year of the date of enactment 
                        of this Act, the State may select, at the first 
                        meeting of the State legislature after such 
                        date, any such option in accordance with this 
                        subsection, which option shall take effect for 
                        the fiscal year that begins after such meeting.
                    (C) Changes.--
                            (i) Block grant options.--If a State 
                        selects the option described in subparagraph 
                        (A) or (B) of paragraph (1), the State may 
                        alter the selection made under paragraph (1) 
                        only once and only after receiving the 
                        applicable funding for 3 years pursuant to the 
                        option described in such subparagraph.
                            (ii) Federal statute option.--Subject to 
                        clause (i), if a State selects the option 
                        described in paragraph (1)(C) for a fiscal 
                        year, the State may select the option described 
                        in subparagraph (A) or (B) of paragraph (1) for 
                        the succeeding fiscal year.
            (3) Minimum.--No State shall receive an amount under this 
        section for a fiscal year that is less than 0.5 percent of the 
        applicable funding available for the fiscal year.
            (4) Definitions.--In this section--
                    (A) the term ``State'' means each of the several 
                States of the United States, the District of Columbia, 
                and the Commonwealth of Puerto Rico; and
                    (B) the term ``outlying area'' means Guam, American 
                Samoa, the Commonwealth of the Northern Mariana 
                Islands, the United States Virgin Islands, the Republic 
                of the Marshall Islands, the Federated States of 
                Micronesia, and the Republic of Palau.
    (b) Reservation and Applicability.--
            (1) Reservation.--From the total amount of applicable 
        funding available for a fiscal year, the Secretary shall 
        reserve 1 percent to make awards to the Bureau of Indian 
        Affairs and the outlying areas according to their respective 
        needs for assistance under this section.
            (2) Applicability.--The provisions of this section shall 
        not apply--
                    (A) for fiscal year 1999, if the total amount 
                appropriated to carry out the provisions of law 
                described in subsection (e) for the fiscal year is less 
                than $2,564,000,000;
                    (B) for fiscal year 2000, if the total amount so 
                appropriated for the fiscal year is less than 
                $2,625,000,000;
                    (C) for fiscal year 2001, if the total amount so 
                appropriated for the fiscal year is less than 
                $2,687,000,000;
                    (D) for fiscal year 2002, if the total amount so 
                appropriated for the fiscal year is less than 
                $2,750,000,000; and
                    (E) for fiscal year 2003, if the total amount so 
                appropriated for the fiscal year is less than 
                $2,817,000,000.
    (c) Block Grants.--
            (1) Allotments.--
                    (A) States.--From the total applicable funding 
                available for a fiscal year, and not reserved under 
                subsection (b)(1) for the fiscal year, the Secretary 
                may make allotments to each State selecting the option 
                described in subsection (a)(1)(A) in an amount that 
                bears the same relation--
                            (i) to 50 percent of such total applicable 
                        funding as the number of individuals in the 
                        State who are aged 5 through 17 bears to the 
                        total number of such individuals in all States; 
                        and
                            (ii) to 50 percent of such total applicable 
                        funding as the total amount all local 
                        educational agencies in the State are eligible 
                        to receive under part A of title I of the 
                        Elementary and Secondary Education Act of 1965 
                        for the fiscal year bears to the total amount 
                        all local educational agencies in all States 
                        are eligible to receive under such part for the 
                        fiscal year.
                    (B) Local educational agencies.--From the total 
                applicable funding available for a fiscal year, and not 
                reserved under subsection (b)(1) for the fiscal year, 
                the Secretary may make allotments to each local 
                educational agency in a State selecting the option 
                described in subsection (a)(1)(B) in an amount that 
                bears the same relation--
                            (i) to 50 percent of such total applicable 
                        funding as the number of individuals in the 
                        school district served by the local educational 
                        agency who are aged 5 through 17 bears to the 
                        total number of such individuals in all school 
                        districts served by all local educational 
                        agencies in all States; and
                            (ii) to 50 percent of such total amount as 
                        the total amount all local educational agencies 
                        in the State are eligible to receive under part 
                        A of title I of the Elementary and Secondary 
                        Education Act of 1965 for the fiscal year bears 
                        to the total amount all local educational 
                        agencies in all States are eligible to receive 
                        under such part for the fiscal year.
            (2) Use of allotted funds.--
                    (A) In general.--A State or local educational 
                agency receiving an allotment under paragraph (1) shall 
                use the allotted funds for innovative assistance 
                programs described in subparagraph (B).
                    (B) Innovative assistance.--The innovative 
                assistance programs referred to in subparagraph (A) 
                include--
                            (i) technology programs related to the 
                        implementation of school-based reform programs, 
                        including professional development to assist 
                        teachers and other school officials regarding 
                        how to use effectively such equipment and 
                        software;
                            (ii) programs for the acquisition and use 
                        of instructional and educational materials, 
                        including library services and materials 
                        (including media materials), assessments, 
                        reference materials, computer software and 
                        hardware for instructional use, and other 
                        curricular materials that--
                                    (I) are tied to high academic 
                                standards;
                                    (II) will be used to improve 
                                student achievement; and
                                    (III) are part of an overall 
                                education reform program;
                            (iii) promising education reform programs, 
                        including effective schools and magnet schools;
                            (iv) programs to improve the higher order 
                        thinking skills of disadvantaged elementary 
                        school and secondary school students and to 
                        prevent students from dropping out of school;
                            (v) programs to combat illiteracy in the 
                        student and adult populations, including parent 
                        illiteracy;
                            (vi) programs to provide for the 
                        educational needs of gifted and talented 
                        children;
                            (vii) hiring of teachers or teaching 
                        assistants to decrease a school, school 
                        district, or statewide student-to-teacher 
                        ratio; and
                            (viii) school improvement programs or 
                        activities described in sections 1116 and 1117 
                        of the Elementary and Secondary Education Act 
                        of 1965.
            (3) State funding rule.--
                    (A) Administrative expenses and statewide 
                activities.--A State that receives an allotment under 
                paragraph (1)(A) for a fiscal year may use not more 
                than 5 percent of the allotted funds for the fiscal 
                year for administrative expenses or statewide 
                activities.
                    (B) State funding rules.--A State that receives an 
                allotment under paragraph (1)(A)--
                            (i) may, at the State's discretion, place 
                        limits on the use of the allotted funds; and
                            (ii) may allocate the allotted funds to 
                        public and private entities within the State as 
                        the State determines appropriate.
            (4) Hold harmless requirements.--
                    (A) States.--Notwithstanding any other provision of 
                this section, no State that selects the option 
                described in subsection (a)(1)(A) for a fiscal year 
                shall receive an amount under this section for the 
                fiscal year that is less than the amount the State is, 
                or all local educational agencies in the State are, 
                eligible to receive pursuant to the provisions of law 
                described in subsection (e) for the fiscal year.
                    (B) Local educational agencies.--Notwithstanding 
                any other provision of this section, no local 
                educational agency for which the option described in 
                subsection (a)(1)(B) is applicable for a fiscal year 
                shall receive an amount under this section for the 
                fiscal year that is less than the amount the local 
                educational agency is eligible to receive pursuant to 
                the provisions of law described in subsection (e) for 
                the fiscal year.
    (d) Federal Statute Option.--
            (1) In general.--From the applicable funding that remains 
        after making the reservation under subsection (b)(1) and 
        allotments under subsection (c) for a fiscal year, the 
        Secretary may make awards according to the provisions of law 
        described in subsection (e), to State and local recipients, in 
        States making the election described in subsection (a)(1)(C).
            (2) Percentage reductions.--The Secretary, after making the 
        allotments under subsection (c) for a fiscal year, shall reduce 
        the total amount of applicable funding available to carry out 
        the provisions of law described in subsection (e) for the 
        fiscal year, for any State selecting the option described in 
        subsection (a)(1)(C), by an equal percentage for each such 
        provision.
    (e) Applicable Funding.--
            (1) Definition.--In this section, the term ``applicable 
        funding'' means all funds not used to carry out paragraph (2) 
        for a fiscal year that are appropriated for the Department of 
        Education for the fiscal year to carry out programs or 
        activities under the following provisions of law:
                    (A) Title III of the Goals 2000: Educate America 
                Act (20 U.S.C. 5881 et seq.).
                    (B) Title IV of the Goals 2000: Educate America Act 
                (20 U.S.C. 5911 et seq.).
                    (C) Title VI of the Goals 2000: Educate America Act 
                (20 U.S.C. 5951).
                    (D) Titles II, III, and IV of the School-to-Work 
                Opportunities Act of 1994 (20 U.S.C. 6121 et seq., 6171 
                et seq., and 6191 et seq.).
                    (E) Part A of title II of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 6621 et 
                seq.).
                    (F) Section 3122 of the Elementary and Secondary 
                Education Act of 1965 (20 U.S.C. 6832).
                    (G) Sections 3132 and 3136 of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 6842 and 
                6846).
                    (H) Section 3141 of the Elementary and Secondary 
                Education Act of 1965 (20 U.S.C. 6861).
                    (I) Part B of title III of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 6891 et 
                seq.).
                    (J) Part C of title III of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 6921 et 
                seq.).
                    (K) Part D of title III of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 6951 et 
                seq.).
                    (L) Subpart 1 of part A of title IV of the 
                Elementary and Secondary Education Act of 1965 (20 
                U.S.C. 7111 et seq.).
                    (M) Subpart 2 of part A of title IV of the 
                Elementary and Secondary Education Act of 1965 (20 
                U.S.C. 7131 et seq.).
                    (N) Part A of title V of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 7201 et 
                seq.).
                    (O) Title VI of the Elementary and Secondary 
                Education Act of 1965 (20 U.S.C. 311 et seq.).
                    (P) Part A of title X of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8001 et 
                seq.).
                    (Q) Part B of title X of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8031 et 
                seq.).
                    (R) Part G of title X of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8161 et 
                seq.).
                    (S) Part I of title X of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8241 et 
                seq.).
                    (T) Part A of title XIII of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8621 et 
                seq.).
                    (U) Part C of title XIII of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8671 et 
                seq.).
            (2) Multiyear awards.--The Secretary shall use funds 
        appropriated to carry out the provisions of law described in 
        paragraph (1) (other than subparagraphs (A), (B), and (O) of 
        paragraph (1)) for each fiscal year to make payments to 
        eligible recipients under such provisions pursuant to any 
        multiyear award made under such provisions prior to the date of 
        enactment of this Act. The payments shall be made for the 
        duration of the multiyear award.
    (f) Census Determination.--
            (1) In general.--Each local educational agency shall 
        conduct a census to determine the number of kindergarten 
        through grade 12 students that are in the school district 
        served by the local educational agency for an academic year.
            (2) Private school students.--In carrying out paragraph 
        (1), each local educational agency shall determine the number 
        of private school students described in such paragraph for an 
        academic year on the basis of data the agency determines 
        reliable.
            (3) Submission.--Each local educational agency shall submit 
        the total number of public and private school children 
        described in this paragraph for an academic year to the 
        Secretary not later than February 1 of the academic year.
            (4) Penalty.--If the Secretary determines that a local 
        educational agency has knowingly submitted false information 
        under this subsection for the purpose of gaining additional 
        funds under this section, then the local educational agency 
        shall be fined an amount equal to twice the difference between 
        the amount the local educational agency received under this 
        section, and the correct amount the local educational agency 
        would have received if the agency had submitted accurate 
        information under this subsection.

SEC. 502. DIRECT AWARDS OF PART A OF TITLE I FUNDING.

    (a) Direct Awards.--
            (1) In general.--Notwithstanding any other provision of law 
        and subject to subsection (c), the Secretary shall award the 
        total amount of funds appropriated to carry out part A of title 
        I of the Elementary and Secondary Education Act of 1965 (20 
        U.S.C. 6311 et seq.) for a fiscal year directly to local 
        educational agencies in accordance with paragraph (2) to enable 
        the local educational agencies to support programs or 
        activities, for kindergarten through grade 12 students, that 
        the local educational agencies deem appropriate.
            (2) Eligible local educational agencies.--The Secretary 
        shall make awards under this section for a fiscal year only to 
        local educational agencies that are eligible for assistance 
        under part A of title I of the Elementary and Secondary 
        Education Act of 1965 for the fiscal year.
    (b) Amount.--Each local educational agency shall receive an amount 
awarded under this subsection for a fiscal year equal to the amount the 
local educational agency is eligible to receive under part A of title I 
of the Elementary and Secondary Education Act of 1965 for the fiscal 
year.
    (c) Applicability.--The provisions of this section shall not 
apply--
            (1) for fiscal year 1999, if the total amount appropriated 
        to carry out part A of title I of the Elementary and Secondary 
        Education Act of 1965 for the fiscal year is less than 
        $7,694,000,000;
            (2) for fiscal year 2000, if the total amount so 
        appropriated for the fiscal year is less than $7,875,000,000;
            (3) for fiscal year 2001, if the total amount so 
        appropriated for the fiscal year is less than $8,064,000,000;
            (4) for fiscal year 2002, if the total amount so 
        appropriated for the fiscal year is less than $8,251,000,000; 
        and
            (5) for fiscal year 2003, if the total amount so 
        appropriated for the fiscal year is less than $8,426,000,000.
    (d) Requirements.--
            (1) Eligible school attendance areas.--A local educational 
        agency shall use funds received under this section only in 
        eligible school attendance areas determined in accordance with 
        section 1113 of the Elementary and Secondary Education Act of 
        1965 other than subsection (c) of such section.
            (2) Eligible pupils.--A local educational agency shall use 
        funds received under this section--
                    (A) in the case of a school that meets the criteria 
                described in section 1114(a)(1), to serve all pupils in 
                the school; and
                    (B) in the case of a school that does not meet such 
                criteria, to serve the children attending the school 
                who are eligible children described in section 1115(b).

SEC. 503. DIRECT AWARDS OF BILINGUAL EDUCATION FUNDING.

    (a) State Options.--
            (1) In general.--Notwithstanding any other provision of law 
        and subject to subsection (b)(2), each State shall notify the 
        Secretary regarding the State's election to receive the State's 
        portion of the finds appropriated to carry out parts A, B, and 
        C of title VII of the Elementary and Secondary Education Act of 
        1965 (20 U.S.C. 7401 et seq., 7511 et seq., and 7541 et seq.) 
        according to one of the following options:
                    (A) State block grant option.--The State may 
                receive the funding pursuant to a State allotment 
                described in subsection (c)(1)(A).
                    (B) Local block grant option.--The State may direct 
                the Secretary to send the funding directly to local 
                educational agencies in the State that serve the 
                recipients in the State under parts A, B, and C 
                pursuant to a local allotment described in subsection 
                (c)(1)(B).
                    (C) Federal statute option.--The State may receive 
                the funding according to the provisions of law 
                described in subsection (e).
            (2) Option requirements.--
                    (A) In general.--A State shall select an option 
                described in paragraph (1)--
                            (i) within 1 year of the date of enactment 
                        of this Act;
                            (ii) pursuant to a majority vote of the 
                        State legislature; and
                            (iii) with the concurrence of the Governor.
                    (B) Failure to select an option.--
                            (i) In general.--If a State legislature 
                        meets within 1 year of the date of enactment of 
                        this Act and fails to select an option in 
                        accordance with this subsection, the Secretary 
                        shall award the applicable funding pursuant to 
                        paragraph (1)(B).
                            (ii) Legislature which does not meet.--If a 
                        State does not select an option described in 
                        paragraph (1) in accordance with this 
                        subsection because the State legislature does 
                        not meet within 1 year of the date of enactment 
                        of this Act, the State may select, at the first 
                        meeting of the State legislature after such 
                        date, any such option in accordance with this 
                        subsection, which option shall take effect for 
                        the fiscal year that begins after such meeting.
                    (C) Changes.--
                            (i) Block grants.--If a State selects the 
                        option described in subparagraph (A) or (B) of 
                        paragraph (1), the State may alter the 
                        selection made under paragraph (1) only once 
                        and only after receiving the funding for 3 
                        years pursuant to the option described in such 
                        subparagraph.
                            (ii) Federal statute option.--Subject to 
                        clause (i), if a State selects the option 
                        described in paragraph (1)(C) for a fiscal 
                        year, the State may select the option described 
                        in subparagraph (A) or (B) of paragraph (1) for 
                        the succeeding fiscal year.
            (3) Multiyear awards.--The Secretary shall use funds 
        appropriated to carry out parts A, B, and C of title VII of the 
        Elementary and Secondary Education Act of 1965 for each fiscal 
        year to make payments to eligible recipients under such parts 
        pursuant to any multiyear award under such parts made prior to 
        the date of enactment of this Act. The payments shall be made 
        for the duration of the multiyear award.
            (4) Definitions.--In this section--
                    (A) the term ``State'' means each of the several 
                States of the United States and the District of 
                Columbia; and
                    (B) the term ``outlying area'' means the 
                Commonwealth of Puerto Rico, Guam, American Samoa, the 
                Commonwealth of the Northern Mariana Islands, the 
                United States Virgin Islands, the Republic of the 
                Marshall Islands, the Federated States of Micronesia, 
                and the Republic of Palau.
    (b) Reservation and Applicability.--
            (1) Reservation.--From the total amount of funds 
        appropriated to carry out parts A, B, and C of title VII of the 
        Elementary and Secondary Education Act of 1965 for a fiscal 
        year that are not used to carry out subsection (a)(3) for the 
        fiscal year, the Secretary shall reserve 1 percent to make 
        awards to the Bureau of Indian Affairs and the outlying areas 
        according to their respective needs for assistance under this 
        section.
            (2) Applicability.--The provisions of this section shall 
        not apply--
                    (A) for fiscal year 1999, if the total amount 
                appropriated to carry out parts A, B, and C of title 
                VII of the Elementary and Secondary Education Act of 
                1965 for the fiscal year is less than $362,000,000;
                    (B) for fiscal year 2000, if the total amount so 
                appropriated for the fiscal year is less than 
                $370,000,000;
                    (C) for fiscal year 2001, if the total amount so 
                appropriated for the fiscal year is less than 
                $379,000,000;
                    (D) for fiscal year 2002, if the total amount so 
                appropriated for the fiscal year is less than 
                $388,000,000; and
                    (E) for fiscal year 2003, if the total amount so 
                appropriated for the fiscal year is less than 
                $398,000,000.
    (c) Block Grants.--
            (1) Allotments.--
                    (A) States.--From the total amount of funds 
                appropriated to carry out parts A, B, and C of title 
                VII of the Elementary and Secondary Education Act of 
                1965 for a fiscal year that are not used to carry out 
                subsection (a)(3) for the fiscal year, and are not 
                reserved under subsection (b)(1) for the fiscal year, 
                the Secretary may make allotments to each State 
                selecting the option described in subsection (a)(1)(A) 
                in an amount that bears the same relation to such total 
                amount of funds as the amount all entities in the State 
                received under such parts for fiscal year 1998 bears to 
                the total amount all entities in all States received 
                under such parts for fiscal year 1998.
                    (B) Local educational agencies.--From the total 
                amount of funds appropriated to carry out parts A, B, 
                and C of title VII of the Elementary and Secondary 
                Education Act of 1965 for a fiscal year that are not 
                used to carry out subsection (a)(3) for the fiscal 
                year, and are not reserved under subsection (b)(1) for 
                the fiscal year, the Secretary may make allotments to 
                each local educational agency in a State selecting the 
                option described in subsection (a)(1)(B) in an amount 
                that bears the same relation to such total amount of 
                funds as the amount all recipients in the area served 
                by the local educational agency received under such 
                parts for fiscal year 1998 bears to the total amount 
                all recipients in all areas served by all local 
                educational agencies received under such parts for 
                fiscal year 1998.
            (2) Use of allotted funds.--Funds awarded under this 
        section shall be used to pay for enhanced instructional 
        opportunities for limited English proficient children and 
        youth, that may include--
                    (A) family literacy, parent outreach, and training 
                activities designed to assist parents to become active 
                participants in the education of their children;
                    (B) salaries of personnel, including teacher aids, 
                who have been specifically trained, or are being 
                trained, to provide services to limited English 
                proficient children and youth;
                    (C) tutorials, mentoring, and academic or career 
                counseling for limited English proficient children and 
                youth;
                    (D) identification and acquisition of curricular 
                materials, educational software, and technologies to be 
                used;
                    (E) basic instructional services that are directly 
                attributable to the presence of limited English 
                proficient children, including the costs of providing 
                additional classroom supplies, overhead costs, costs of 
                construction, acquisition or rental of space, costs of 
                transportation, or such other costs as are directly 
                attributable to such additional basic instructional 
                services; and
                    (F) such other activities, related to innovative 
                programs described in subparagraphs (A) through (E), as 
                the Secretary may authorize.
            (3) State funding rule.--
                    (A) Administrative expenses and statewide 
                activities.--A State that receives an allotment under 
                paragraph (1)(A) for a fiscal year may use not more 
                than 5 percent of the allotted funds for the fiscal 
                year for administrative expenses or statewide 
                activities.
                    (B) State funding rules.--A State that receives an 
                allotment under paragraph (1)(A)--
                            (i) may, at the State's discretion, place 
                        limits on the use of the allotted funds; and
                            (ii) subject to subsection (f), may 
                        allocate the allotted funds to public and 
                        private entities within the State as the State 
                        determines appropriate.
    (d) Federal Statute Option.--
            (1) In general.--From the total amount of funds 
        appropriated to carry out parts A, B, and C of the Elementary 
        and Secondary Education Act of 1965 for a fiscal year that 
        remain after carrying out subsection (a)(3) for the fiscal 
        year, making the reservation under subsection (b) for the 
        fiscal year, and making allotments under subsection (c) for the 
        fiscal year, the Secretary may make awards according to the 
        provisions of such parts A, B, and C, respectively, to State 
        and local recipients, in States making the election described 
        in subsection (a)(1)(C).
            (2) Percentage reductions.--The Secretary, after making the 
        allotments under subsection (c) for a fiscal year, shall reduce 
        the total amount of funding available to carry out such parts 
        A, B, and C for the fiscal year, for any State selecting the 
        option described in subsection (a)(1)(C), by an equal 
        percentage for each such part.
    (e) Construction.--Nothing in this section shall be construed--
            (1) to prohibit a local educational agency from serving 
        limited English proficient children simultaneously with 
        students with similar educational needs, in the same 
        educational settings where appropriate; and
            (2) to mandate a particular type of curriculum or 
        educational method for limited English proficient children and 
        youth, which decisions--
                    (A) shall be the sole responsibility of the State 
                educational agency, local educational agency, or other 
                State or local recipients; and
                    (B) shall be made in accordance with applicable 
                State law.

SEC. 504. PARTICIPATION OF CHILDREN ENROLLED IN PRIVATE SCHOOLS.

    (a) In General.--Each local educational agency that receives 
assistance under section 501 or 503 shall provide for the participation 
of children enrolled in private schools in the activities and services 
assisted under section 501 or 503, respectively, in the same manner as 
the children participate in activities and services under the 
Elementary and Secondary Education Act of 1965 (20 U.S.C. 6301 et seq.) 
pursuant to sections 14503, 14504, 14505, and 14506 of such Act (20 
U.S.C. 8893, 8894, 8895, and 8896).
    (b) Part A of Title I Funding.--Each local educational agency that 
receives assistance under section 502 shall provide for the 
participation of children enrolled in private schools in the activities 
and services assisted under section 502 in the same manner as the 
children participate in activities and services under the Elementary 
and Secondary Education Act of 1965 (20 U.S.C. 6301 et seq.) pursuant 
to section 1120 such Act (20 U.S.C. 6321).

SEC. 505. ACCOUNTABILITY.

    (a) Standard Application and Reporting Forms.--The Secretary shall 
develop standard forms for applications for assistance under this title 
and for reporting with respect to activities assisted under this title. 
In developing the forms, the Secretary shall ensure that not more than 
2 percent of the assistance provided to an entity under this title is 
used to complete the forms.
    (b) Public Input.--Each entity receiving assistance under this 
title shall--
            (1) involve parents and members of the public in planning 
        for the use of funds provided under this title; and
            (2) disseminate to the public reports regarding the use and 
        effects of funds provided under this title.

SEC. 506. DEFINITIONS.

    In this title--
            (1) the term ``local educational agency'' has the meaning 
        given the term in section 14101 of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 8801); and
            (2) the term ``Secretary'' means the Secretary of 
        Education.

SEC. 507. CONSTRUCTION.

    Nothing in this title shall be construed to supersede the authority 
of a State or State educational agency over State education policies.

                      TITLE VI--SENSE OF CONGRESS

SEC. 601. FINDINGS.

    Congress makes the following findings:
            (1) The people of the United States know that effective 
        teaching takes place when the people of the United States begin 
        (A) helping children master basic academics, (B) engaging and 
        involving parents, (C) creating safe and orderly classrooms, 
        and (D) getting dollars to the classroom.
            (2) Our Nation's children deserve an educational system 
        which will provide opportunities to excel.
            (3) States and localities must spend a significant amount 
        of Federal education tax dollars applying for and administering 
        Federal education dollars.
            (4) Several States have reported that although the States 
        receive less than 10 percent of their education funding from 
        the Federal Government, more than 50 percent of their paperwork 
        is associated with those Federal dollars.
            (5) While it is unknown exactly what percentage of Federal 
        education dollars reaches the classroom, a recent audit of New 
        York City public schools found that only 43 percent of their 
        local education budget reaches the classroom; further, it is 
        thought that only 85 percent of funds administered by the 
        Department of Education for elementary and secondary education 
        reach the school district level; and even if 65 percent of 
        Federal education funds reach the classroom, it still means 
        that billions of dollars are not directly spent on children in 
        the classroom.
            (6) American students are not performing up to their full 
        academic potential, despite the more than 760 Federal education 
        programs, which span 39 Federal agencies at the price of nearly 
        $100,000,000,000 annually.
            (7) According to the Digest of Education Statistics, in 
        1993 only $141,598,786,000 out of $265,285,370,000 spent on 
        elementary and secondary education was spent on instruction.
            (8) According to the National Center for Education 
        Statistics, in 1994 only 52 percent of staff employed in public 
        elementary and secondary school systems were teachers.
            (9) Too much of our Federal education funding is spent on 
        bureaucracy, and too little is spent on our Nation's youth.
            (10) Getting 95 percent of Department of Education 
        elementary and secondary education funds to the classroom could 
        provide approximately $2,094 in additional funding per 
        classroom across the United States.
            (11) More education funding should be put in the hands of 
        someone in a child's classroom who knows the child's name.
            (12) President Clinton has stated: ``We cannot ask the 
        American people to spend more on education until we do a better 
        job with the money we've got now.''.
            (13) President Clinton and Vice President Gore agree that 
        the reinventing of public education will not begin in 
        Washington but in communities across the United States and that 
        the people of the United States must ask fundamental questions 
        about how our Nation's public school systems' dollars are 
        spent.
            (14) President Clinton and Vice President Gore agree that 
        in an age of tight budgets, our Nation should be spending 
        public funds on teachers and children, not on unnecessary 
        overhead and bloated bureaucracy.

SEC. 602. SENSE OF CONGRESS.

    It is the sense of Congress that the Department of Education, 
States, and local educational agencies should work together to ensure 
that not less than 95 percent of all funds appropriated for the purpose 
of carrying out elementary and secondary education programs 
administered by the Department of Education is spent for our Nation's 
children in their classrooms.

                     TITLE VII--READING EXCELLENCE

SEC. 701. SHORT TITLE.

    This title may be cited as the ``Reading Excellence Act''.

                       Subtitle A--Reading Grants

SEC. 711. AMENDMENT TO ESEA FOR READING GRANTS.

    Title II of the Elementary and Secondary Education Act of 1965 (20 
U.S.C. 6601 et seq.) is amended--
            (1) by redesignating part D as part E; and
            (2) by inserting after part C the following:

                        ``PART D--READING GRANTS

``SEC. 2351. PURPOSE.

    ``The purposes of this part are as follows:
            ``(1) To teach every child to read in their early childhood 
        years--
                    ``(A) as soon as they are ready to read; or
                    ``(B) as soon as possible once they enter school, 
                but not later than 3d grade.
            ``(2) To improve the reading skills of students, and the 
        in-service instructional practices for teachers who teach 
        reading, through the use of findings from reliable, replicable 
        research on reading, including phonics.
            ``(3) To expand the number of high-quality family literacy 
        programs.
            ``(4) To reduce the number of children who are 
        inappropriately referred to special education due to reading 
        difficulties.

``SEC. 2352. DEFINITIONS.

    ``For purposes of this part:
            ``(1) Eligible professional development provider.--The term 
        `eligible professional development provider' means a provider 
        of professional development in reading instruction to teachers 
        that is based on reliable, replicable research on reading.
            ``(2) Eligible research institution.--The term `eligible 
        research institution' means an institution of higher education 
        at which reliable, replicable research on reading has been 
        conducted.
            ``(3) Family literacy services.--The term `family literacy 
        services' means services provided to participants on a 
        voluntary basis that are of sufficient intensity in terms of 
        hours, and of sufficient duration, to make sustainable changes 
        in a family (such as eliminating or reducing welfare 
        dependency) and that integrate all of the following activities:
                    ``(A) Interactive literacy activities between 
                parents and their children.
                    ``(B) Equipping parents to partner with their 
                children in learning.
                    ``(C) Parent literacy training, including training 
                that contributes to economic self-sufficiency.
                    ``(D) Appropriate instruction for children of 
                parents receiving parent literacy services.
            ``(4) Reading.--The term `reading' means the process of 
        comprehending the meaning of written text by depending on--
                    ``(A) the ability to use phonics skills, that is, 
                knowledge of letters and sounds, to decode printed 
                words quickly and effortlessly, both silently and 
                aloud;
                    ``(B) the ability to use previously learned 
                strategies for reading comprehension; and
                    ``(C) the ability to think critically about the 
                meaning, message, and aesthetic value of the text.
            ``(5) Reading readiness.--The term `reading readiness' 
        means activities that--
                    ``(A) provide experience and opportunity for 
                language development;
                    ``(B) create appreciation of the written word;
                    ``(C) develop an awareness of printed language, the 
                alphabet, and phonemic awareness; and
                    ``(D) develop an understanding that spoken and 
                written language is made up of phonemes, syllables, and 
                words.
            ``(6) Reliable, replicable research.--The term `reliable, 
        replicable research' means objective, valid, scientific studies 
        that--
                    ``(A) include rigorously defined samples of 
                subjects that are sufficiently large and representative 
                to support the general conclusions drawn;
                    ``(B) rely on measurements that meet established 
                standards of reliability and validity;
                    ``(C) test competing theories, where multiple 
                theories exist;
                    ``(D) are subjected to peer review before their 
                results are published; and
                    ``(E) discover effective strategies for improving 
                reading skills.

``SEC. 2353. GRANTS TO READING AND LITERACY PARTNERSHIPS.

    ``(a) Program Authorized.--The Secretary may make grants on a 
competitive basis to reading and literacy partnerships for the purpose 
of permitting such partnerships to make subgrants under sections 2354 
and 2355.
    ``(b) Reading and Literacy Partnerships.--
            ``(1) Composition.--
                    ``(A) Required participants.--In order to receive a 
                grant under this section, a State shall establish a 
                reading and literacy partnership consisting of at least 
                the following participants:
                            ``(i) The Governor of the State.
                            ``(ii) The chief State school officer.
                            ``(iii) The chairman and the ranking member 
                        of each committee of the State legislature that 
                        is responsible for education policy.
                            ``(iv) A representative, selected jointly 
                        by the Governor and the chief State school 
                        officer, of at least 1 local educational agency 
                        that has at least 1 school that is identified 
                        for school improvement under section 1116(c) in 
                        the geographic area served by the agency.
                            ``(v) A representative, selected jointly by 
                        the Governor and the chief State school 
                        officer, of a community-based organization 
                        working with children to improve their reading 
                        skills, particularly a community-based 
                        organization using volunteers.
                    ``(B) Optional participants.--A reading and 
                literacy partnership may include additional 
                participants, who shall be selected jointly by the 
                Governor and the chief State school officer, which may 
                include--
                            ``(i) State directors of appropriate 
                        Federal or State programs with a strong reading 
                        component;
                            ``(ii) a parent of a public or private 
                        school student or a parent who educates their 
                        child or children in their home;
                            ``(iii) a teacher who teaches reading; or
                            ``(iv) a representative of (I) an 
                        institution of higher education operating a 
                        program of teacher preparation in the State; 
                        (II) a local educational agency; (III) an 
                        eligible research institution; (IV) a private 
                        nonprofit or for-profit eligible professional 
                        development provider providing instruction 
                        based on reliable, replicable research on 
                        reading; (V) a family literacy service 
                        provider; (VI) an adult education provider; 
                        (VII) a volunteer organization that is involved 
                        in reading programs; or (VIII) a school or a 
                        public library that offers reading or literacy 
                        programs for children or families.
            ``(2) Agreement.--The contractual agreement that 
        establishes a reading and literacy partnership--
                    ``(A) shall specify--
                            ``(i) the nature and extent of the 
                        association among the participants referred to 
                        in paragraph (1); and
                            ``(ii) the roles and duties of each such 
                        participant; and
                    ``(B) shall remain in effect during the entire 
                grant period proposed in the partnership's grant 
                application under subsection (e).
            ``(3) Functions.--Each reading and literacy partnership for 
        a State shall prepare and submit an application under 
        subsection (e) and, if the partnership receives a grant under 
        this section--
                    ``(A) shall solicit applications for, and award, 
                subgrants under sections 2354 and 2355;
                    ``(B) shall oversee the performance of the 
                subgrants and submit performance reports in accordance 
                with subsection (h);
                    ``(C) if sufficient grant funds are available under 
                this part--
                            ``(i) work to enhance the capacity of 
                        agencies in the State to disseminate reliable, 
                        replicable research on reading to schools, 
                        classrooms, and providers of early education 
                        and child care;
                            ``(ii) facilitate the provision of 
                        technical assistance to subgrantees under 
                        sections 2354 and 2355 by providing the 
                        subgrantees information about technical 
                        assistance providers; and
                            ``(iii) build on, and promote coordination 
                        among, literacy programs in the State, in order 
                        to increase their effectiveness and to avoid 
                        duplication of their efforts; and
                    ``(D) shall ensure that each local educational 
                agency to which the partnership makes a subgrant under 
                section 2354 makes available, upon request and in an 
                understandable and uniform format, to any parent of a 
                student attending any school selected under section 
                2354(a)(2) in the geographic area served by the agency, 
                information regarding the qualifications of the 
                student's classroom teacher to provide instruction in 
                reading.
            ``(4) Fiscal agent.--The State educational agency shall act 
        as the fiscal agent for the reading and literacy partnership 
        for the purposes of receipt of funds from the Secretary, 
        disbursement of funds to subgrantees under sections 2354 and 
        2355, and accounting for such funds.
    ``(c) Preexisting Partnership.--If, before the date of the 
enactment of the Reading Excellence Act, a State established a 
consortium, partnership, or any other similar body, that includes the 
Governor and the chief State school officer and has, as a central part 
of its mission, the promotion of literacy for children in their early 
childhood years through the 3d grade, but that does not satisfy the 
requirements of subsection (b)(1), the State may elect to treat that 
consortium, partnership, or body as the reading and literacy 
partnership for the State notwithstanding such subsection, and the 
consortium, partnership, or body shall be considered a reading and 
literacy partnership for purposes of the other provisions of this part.
    ``(d) Multi-State Partnership Arrangements.--A reading and literacy 
partnership that satisfies the requirements of subsection (b) may join 
with other such partnerships in other States to develop a single 
application that satisfies the requirements of subsection (e) and 
identifies which State educational agency, from among the States 
joining, shall act as the fiscal agent for the multi-State arrangement. 
For purposes of the other provisions of this part, any such multi-State 
arrangement shall be considered to be a reading and literacy 
partnership.
    ``(e) Applications.--A reading and literacy partnership that 
desires to receive a grant under this section shall submit an 
application to the Secretary at such time, in such manner, and 
including such information as the Secretary may require. The 
application--
            ``(1) shall describe how the partnership will ensure that 
        95 percent of the grant funds are used to make subgrants under 
        sections 2354 and 2355;
            ``(2) shall be integrated, to the maximum extent possible, 
        with State plans and programs under this Act, the Individuals 
        with Disabilities Education Act (20 U.S.C. 1400 et seq.), and, 
        to the extent appropriate, the Adult Education Act (20 U.S.C. 
        1201 et seq.);
            ``(3) shall describe how the partnership will ensure that 
        professional development funds available at the State and local 
        levels are used effectively to improve instructional practices 
        for reading and are based on reliable, replicable research on 
        reading;
            ``(4) shall describe--
                    ``(A) the contractual agreement that establishes 
                the partnership, including at least the elements of the 
                agreement referred to in subsection (b)(2);
                    ``(B) how the partnership will assess, on a regular 
                basis, the extent to which the activities undertaken by 
                the partnership and the partnership's subgrantees under 
                this part have been effective in achieving the purposes 
                of this part;
                    ``(C) what evaluation instruments the partnership 
                will use to determine the success of local educational 
                agencies to whom subgrants under sections 2354 and 2355 
                are made in achieving the purposes of this part;
                    ``(D) how subgrants made by the partnership under 
                such sections will meet the requirements of this part, 
                including how the partnership will ensure that 
                subgrantees will use practices based on reliable, 
                replicable research on reading; and
                    ``(E) how the partnership will, to the extent 
                practicable, make grants to subgrantees in both rural 
                and urban areas;
            ``(5) shall include an assurance that each local 
        educational agency to whom the partnership makes a subgrant 
        under section 2354--
                    ``(A) will carry out family literacy programs based 
                on the Even Start family literacy model authorized 
                under part B of title I to enable parents to be their 
                child's first and most important teacher, and will make 
                payments for the receipt of technical assistance for 
                the development of such programs;
                    ``(B) will carry out programs to assist those 
                kindergarten students who are not ready for the 
                transition to 1st grade, particularly students 
                experiencing difficulty with reading skills;
                    ``(C) will use supervised individuals (including 
                tutors), who have been appropriately trained using 
                reliable, replicable research on reading, to provide 
                additional support, before school, after school, on 
                weekends, during non-instructional periods of the 
                school day, or during the summer, for students in 
                grades 1 through 3 who are experiencing difficulty 
                reading; and
                    ``(D) will carry out professional development for 
                the classroom teacher and other appropriate teaching 
                staff on the teaching of reading based on reliable, 
                replicable research on reading; and
            ``(6) shall describe how the partnership--
                    ``(A) will ensure that a portion of the grant funds 
                that the partnership receives in each fiscal year will 
                be used to make subgrants under section 2355; and
                    ``(B) will make local educational agencies 
                described in section 2355(a)(1) aware of the 
                availability of such subgrants.
    ``(f) Peer Review Panel.--
            ``(1) Composition of peer review panel.--
                    ``(A) In general.--The National Institute for 
                Literacy, in consultation with the National Research 
                Council of the National Academy of Sciences, the 
                National Institute of Child Health and Human 
                Development, and the Secretary, shall convene a panel 
                to evaluate applications under this section. At a 
                minimum the panel shall include representatives of the 
                National Institute for Literacy, the National Research 
                Council of the National Academy of Sciences, the 
                National Institute of Child Health and Human 
                Development, and the Secretary.
                    ``(B) Experts.--The panel shall include experts who 
                are competent, by virtue of their training, expertise, 
                or experience, to evaluate applications under this 
                section, and experts who provide professional 
                development to teachers of reading to children and 
                adults, based on reliable, replicable research on 
                reading.
                    ``(C) Limitation.--Not more than \1/3\ of the panel 
                may be composed of individuals who are employees of the 
                Federal Government.
            ``(2) Payment of fees and expenses of certain members.--The 
        Secretary shall use funds reserved under section 2260(b)(2) to 
        pay the expenses and fees of panel members who are not 
        employees of the Federal Government.
            ``(3) Duties of panel.--
                    ``(A) Model application forms.--The peer review 
                panel shall develop a model application form for 
                reading and literacy partnerships desiring to apply for 
                a grant under this section. The peer review panel shall 
                submit the model application form to the Secretary for 
                final approval.
                    ``(B) Selection of applications.--
                            ``(i) Recommendations of panel.--
                                    ``(I) In general.--The Secretary 
                                shall receive grant applications from 
                                reading and literacy partnerships under 
                                this section and shall provide the 
                                applications to the peer review panel 
                                for evaluation. With respect to each 
                                application, the peer review panel 
                                shall initially recommend the 
                                application for funding or for 
                                disapproval.
                                    ``(II) Priority.--In recommending 
                                applications to the Secretary, the 
                                panel shall give priority to 
                                applications from States that have 
                                modified, are modifying, or provide an 
                                assurance that not later than 1 year 
                                after receiving a grant under this 
                                section the State will modify, State 
                                teacher certification in the area of 
                                reading to reflect reliable, replicable 
                                research, except that nothing in this 
                                part shall be construed to establish a 
                                national system of teacher 
                                certification.
                                    ``(III) Ranking of applications.--
                                With respect to each application 
                                recommended for funding, the panel 
                                shall assign the application a rank, 
                                relative to other recommended 
                                applications, based on the priority 
                                described in subclause (II), the extent 
                                to which the application furthers the 
                                purposes of this part, and the overall 
                                quality of the application.
                                    ``(IV) Recommendation of amount.--
                                With respect to each application 
                                recommended for funding, the panel 
                                shall make a recommendation to the 
                                Secretary with respect to the amount of 
                                the grant that should be made.
                            ``(ii) Secretarial selection.--
                                    ``(I) In general.--Subject to 
                                clause (iii), the Secretary shall 
                                determine, based on the peer review 
                                panel's recommendations, which 
                                applications from reading and literacy 
                                partnerships shall receive funding and 
                                the amounts of such grants. In 
                                determining grant amounts, the 
                                Secretary shall take into account the 
                                total amount of funds available for all 
                                grants under this section and the types 
                                of activities proposed to be carried 
                                out by the partnership.
                                    ``(II) Effect of ranking by 
                                panel.--In making grants under this 
                                section, the Secretary shall select 
                                applications according to the ranking 
                                of the applications by the peer review 
                                panel, except in cases where the 
                                Secretary determines, for good cause, 
                                that a variation from that order is 
                                appropriate.
                            ``(iii) Minimum grant amounts.--Each 
                        reading and literacy partnership selected to 
                        receive a grant under this section shall 
                        receive an amount for each fiscal year that is 
                        not less than $100,000.
    ``(g) Limitation on Administrative Expenses.--A reading and 
literacy partnership that receives a grant under this section may use 
not more than 3 percent of the grant funds for administrative costs.
    ``(h) Reporting.--
            ``(1) In general.--A reading and literacy partnership that 
        receives a grant under this section shall submit performance 
        reports to the Secretary pursuant to a schedule to be 
        determined by the Secretary, but not more frequently than 
        annually. Such reports shall include--
                    ``(A) the results of use of the evaluation 
                instruments referred to in subsection (e)(4)(C);
                    ``(B) the process used to select subgrantees;
                    ``(C) a description of the subgrantees receiving 
                funds under this part; and
                    ``(D) with respect to subgrants under section 2354, 
                the model or models of reading instruction, based on 
                reliable, replicable research on reading, selected by 
                subgrantees.
            ``(2) Provision to peer review panel.--The Secretary shall 
        provide the reports submitted under paragraph (1) to the peer 
        review panel convened under subsection (f). The panel shall use 
        such reports in recommending applications for funding under 
        this section.

``SEC. 2354. LOCAL READING IMPROVEMENT SUBGRANTS.

    ``(a) In General.--
            ``(1) Subgrants.--A reading and literacy partnership that 
        receives a grant under section 2353 shall make subgrants, on a 
        competitive basis, to local educational agencies that have at 
        least 1 school that is identified for school improvement under 
        section 1116(c) in the geographic area served by the agency.
            ``(2) Role of local educational agencies.--A local 
        educational agency that receives a subgrant under this section 
        shall use the subgrant in a manner consistent with this section 
        to advance reform of reading instruction in any school selected 
        by the agency that--
                    ``(A) is identified for school improvement under 
                section 1116(c) at the time the agency receives the 
                subgrant; and
                    ``(B) has a contractual association with 1 or more 
                community-based organizations that have established a 
                record of effectiveness with respect to reading 
                readiness, reading instruction for children in 
                kindergarten through 3d grade, and early childhood 
                literacy.
    ``(b) Grant Period.--A subgrant under this section shall be for a 
period of 3 years and may not be revoked or terminated on the ground 
that a school ceases, during the grant period, to be identified for 
school improvement under section 1116(c).
    ``(c) Applications.--A local educational agency that desires to 
receive a subgrant under this section shall submit an application to 
the reading and literacy partnership at such time, in such manner, and 
including such information as the partnership may require. The 
application--
            ``(1) shall describe how the local educational agency will 
        work with schools selected by the agency under subsection 
        (a)(2) to select 1 or more models of reading instruction, 
        developed using reliable, replicable research on reading, as a 
        model for implementing and improving reading instruction by all 
        teachers and for all children in each of the schools selected 
        by the agency under such subsection and, where appropriate, 
        their parents;
            ``(2) shall select 1 or more models described in paragraph 
        (1), for the purpose described in such paragraph, and shall 
        describe each such selected model;
            ``(3) shall demonstrate that a person responsible for the 
        development of each such model, or a person with experience or 
        expertise about such model and its implementation, has agreed 
        to work with the applicant in connection with such 
        implementation and improvement efforts;
            ``(4) shall describe--
                    ``(A) how the applicant will ensure that funds 
                available under this part, and funds available for 
                reading for grades kindergarten through grade 6 from 
                other appropriate sources, are effectively coordinated 
                and, where appropriate, integrated, with funds under 
                this Act in order to improve existing activities in the 
                areas of reading instruction, professional development, 
                program improvement, parental involvement, technical 
                assistance, and other activities that can help meet the 
                purposes of this part; and
                    ``(B) the amount of funds available for reading for 
                grades kindergarten through grade 6 from appropriate 
                sources other than this part, including title I (except 
                that such description shall not be required to include 
                funds made available under part B of title I unless the 
                applicant has established a contractual association in 
                accordance with subsection (d)(2) with an eligible 
                entity under such part B), the Individuals with 
                Disabilities Education Act (20 U.S.C. 1400 et seq.), 
                and any other law providing Federal financial 
                assistance for professional development for teachers of 
                such grades who teach reading, which will be used to 
                help achieve the purposes of this part;
            ``(5) shall describe the amount and nature of funds from 
        any other public or private sources, including funds received 
        under this Act and the Individuals with Disabilities Education 
        Act (20 U.S.C. 1400 et seq.), that will be combined with funds 
        received under the subgrant;
            ``(6) shall include an assurance that the applicant--
                    ``(A) will carry out family literacy programs based 
                on the Even Start family literacy model authorized 
                under part B of title I to enable parents to be their 
                child's first and most important teacher, will make 
                payments for the receipt of technical assistance for 
                the development of such programs;
                    ``(B) will carry out programs to assist those 
                kindergarten students who are not ready for the 
                transition to 1st grade, particularly students 
                experiencing difficulty with reading skills;
                    ``(C) will use supervised individuals (including 
                tutors), who have been appropriately trained using 
                reliable, replicable research on reading, to provide 
                additional support, before school, after school, on 
                weekends, during non-instructional periods of the 
                school day, or during the summer, for students in 
                grades 1 through 3 who are experiencing difficulty 
                reading; and
                    ``(D) will carry out professional development for 
                the classroom teacher and other teaching staff on the 
                teaching of reading based on reliable, replicable 
                research on reading;
            ``(7) shall describe how the local educational agency 
        provides instruction in reading to children who have not been 
        determined to be a child with a disability (as defined in 
        section 602 of the Individuals with Disabilities Education Act 
        (20 U.S.C. 1401)), pursuant to section 614(b)(5) of such Act 
        (20 U.S.C. 1414(a)(5)), because of a lack of instruction in 
        reading; and
            ``(8) shall indicate the amount of the subgrant funds (if 
        any) that the applicant will use to carry out the duties 
        described in section 2355(b)(2).
    ``(d) Priority.--In approving applications under this section, a 
reading and literacy partnership shall give priority to an application 
submitted by an applicant who demonstrates that the applicant has 
established--
            ``(1) a contractual association with 1 or more Head Start 
        programs under the Head Start Act (42 U.S.C. 9801 et seq.) 
        under which--
                    ``(A) the Head Start program agrees to select the 
                same model or models of reading instruction, as a model 
                for implementing and improving the reading readiness of 
                children participating in the program, as was selected 
                by the applicant; and
                    ``(B) the applicant agrees--
                            ``(i) to share with the Head Start program 
                        an appropriate amount of the applicant's 
                        information resources with respect to the 
                        model, such as curricula materials; and
                            ``(ii) to train personnel from the Head 
                        Start program;
            ``(2) a contractual association with 1 or more State- or 
        federally-funded preschool programs, or family literacy 
        programs, under which--
                    ``(A) the program agrees to select the same model 
                or models of reading instruction, as a model for 
                implementing and improving reading instruction in the 
                program's activities, as was selected by the applicant; 
                and
                    ``(B) the applicant agrees to train personnel from 
                the program who work with children and parents in 
                schools selected under subsection (a)(2); or
            ``(3) a contractual association with 1 or more public 
        libraries providing reading or literacy services to preschool 
        children, or preschool children and their families, under 
        which--
                    ``(A) the library agrees to select the same model 
                or models of reading instruction, as a model for 
                implementing and improving reading instruction in the 
                library's reading or literacy programs, as was selected 
                by the applicant; and
                    ``(B) the applicant agrees to train personnel, 
                including volunteers, from such programs who work with 
                preschool children, or preschool children and their 
                families, in schools selected under subsection (a)(2).
    ``(e) Use of Funds.--
            ``(1) In general.--Subject to paragraph (2), an applicant 
        who receives a subgrant under this section may use the subgrant 
        funds to carry out activities that are authorized by this part 
        and described in the subgrant application, including the 
        following:
                    ``(A) Making reasonable payments for technical and 
                other assistance to a person responsible for the 
                development of a model of reading instruction, or a 
                person with experience or expertise about such model 
                and its implementation, who has agreed to work with the 
                recipient in connection with the implementation of the 
                model.
                    ``(B) Carrying out a contractual agreement 
                described in subsection (d).
                    ``(C) Professional development (including training 
                of volunteers), purchase of curricular and other 
                supporting materials, and technical assistance.
                    ``(D) Providing, on a voluntary basis, training to 
                parents of children enrolled in a school selected under 
                subsection (a)(2) on how to help their children with 
                school work, particularly in the development of reading 
                skills. Such training may be provided directly by the 
                subgrant recipient, or through a grant or contract with 
                another person. Such training shall be consistent with 
                reading reforms taking place in the school setting.
                    ``(E) Carrying out family literacy programs based 
                on the Even Start family literacy model authorized 
                under part B of title I to enable parents to be their 
                child's first and most important teacher, and making 
                payments for the receipt of technical assistance for 
                the development of such programs.
                    ``(F) Providing instruction for parents of children 
                enrolled in a school selected under subsection (a)(2), 
                and others who volunteer to be reading tutors for such 
                children, in the instructional practices based on 
                reliable, replicable research on reading used by the 
                applicant.
                    ``(G) Programs to assist those kindergarten 
                students enrolled in a school selected under subsection 
                (a)(2) who are not ready for the transition to 1st 
                grade, particularly students experiencing difficulty 
                with reading skills.
                    ``(H) Providing, for students who are enrolled in 
                grades 1 through 3 in a school selected under 
                subsection (a)(2) and are experiencing difficulty 
                reading, additional support before school, after 
                school, on weekends, during non-instructional periods 
                of the school day, or during the summer, using 
                supervised individuals (including tutors) who have been 
                appropriately trained using reliable, replicable 
                research on reading.
                    ``(I) Carrying out the duties described in section 
                2355(b)(2) for children enrolled in a school selected 
                under subsection (a)(2).
                    ``(J) Providing reading assistance to children who 
                have not been determined to be a child with a 
                disability (as defined in section 602 of the 
                Individuals with Disabilities Education Act (20 U.S.C. 
                1401)), pursuant to section 614(b)(5) of such Act (20 
                U.S.C. 1414(b)(5)), because of a lack of instruction in 
                reading.
            ``(2) Limitation on administrative expenses.--A recipient 
        of a subgrant under this section may use not more than 3 
        percent of the subgrant funds for administrative costs.
    ``(f) Training Nonrecipients.--A recipient of a subgrant under this 
section may train, on a fee-for-service basis, personnel who are from 
schools, or local educational agencies, that are not receiving such a 
subgrant in the instructional practices based on reliable, replicable 
research on reading used by the recipient. Such a non-recipient school 
may use funds received under title I, and other appropriate Federal 
funds used for reading instruction, to pay for such training, to the 
extent consistent with the law under which such funds were received.

``SEC. 2355. TUTORIAL ASSISTANCE SUBGRANTS.

    ``(a) In General.--
            ``(1) Subgrants.--A reading and literacy partnership that 
        receives a grant under section 2353 shall make subgrants on a 
        competitive basis to--
                    ``(A) local educational agencies that have at least 
                1 school in the geographic area served by the agency 
                that--
                            ``(i) is located in an area designated as 
                        an empowerment zone under part I of subchapter 
                        U of chapter 1 of the Internal Revenue Code of 
                        1986; or
                            ``(ii) is located in an area designated as 
                        an enterprise community under part I of 
                        subchapter U of chapter 1 of the Internal 
                        Revenue Code of 1986; or
                    ``(B) in the case of local educational agencies 
                that do not have any such empowerment zone or 
                enterprise community in the State in which the agency 
                is located, local educational agencies that have at 
                least 1 school that is identified for school 
                improvement under section 1116(c) in the geographic 
                area served by the agency.
            ``(2) Applications.--A local educational agency that 
        desires to receive a subgrant under this section shall submit 
        an application to the reading and literacy partnership at such 
        time, in such manner, and including such information as the 
        partnership may require. The application shall include an 
        assurance that the agency will use the subgrant funds to carry 
        out the duties described in subsection (b) for children 
        enrolled in 1 or more schools selected by the agency and 
        described in paragraph (1).
    ``(b) Use of Funds.--
            ``(1) In general.--A local educational agency that receives 
        a subgrant under this section shall carry out, using the funds 
        provided under the subgrant, each of the duties described in 
        paragraph (2).
            ``(2) Duties.--The duties described in this paragraph are 
        the provision of tutorial assistance in reading to children who 
        have difficulty reading, using instructional practices based on 
        the principles of reliable, replicable research, through the 
        following:
                    ``(A) The promulgation of a set of objective 
                criteria, pertaining to the ability of a tutorial 
                assistance provider successfully to provide tutorial 
                assistance in reading, that will be used to determine 
                in a uniform manner, at the beginning of each school 
                year, the eligibility of tutorial assistance providers, 
                subject to the succeeding subparagraphs of this 
                paragraph, to be included on the list described in 
                subparagraph (B) (and thereby be eligible to enter into 
                a contract pursuant to subparagraph (F)).
                    ``(B) The promulgation, maintenance, and approval 
                of a list of tutorial assistance providers eligible to 
                enter into a contract pursuant to subparagraph (F) 
                who--
                            ``(i) have established a record of 
                        effectiveness with respect to reading 
                        readiness, reading instruction for children in 
                        kindergarten through 3d grade, and early 
                        childhood literacy;
                            ``(ii) are located in a geographic area 
                        convenient to the school or schools attended by 
                        the children who will be receiving tutorial 
                        assistance from the providers; and
                            ``(iii) are capable of providing tutoring 
                        in reading to children who have difficulty 
                        reading, using instructional practices based on 
                        the principles of reliable, replicable research 
                        and consistent with the instructional methods 
                        used by the school the child attends.
                    ``(C) The development of procedures (i) for the 
                receipt of applications for tutorial assistance, from 
                parents who are seeking such assistance for their child 
                or children, that select a tutorial assistance provider 
                from the list described in subparagraph (B) with whom 
                the child or children will enroll, for tutoring in 
                reading; and (ii) for considering children for tutorial 
                assistance who are identified under subparagraph (D) 
                and for whom no application has been submitted, 
                provided that such procedures are in accordance with 
                this paragraph and give such parents the right to 
                select a tutorial assistance provider from the list 
                referred to in subparagraph (B), and shall permit a 
                local educational agency to recommend a tutorial 
                assistance provider from the list under subparagraph 
                (B) in a case where a parent asks for assistance in the 
                making of such selection.
                    ``(D) The development of a selection process for 
                providing tutorial assistance in accordance with this 
                paragraph that limits the provision of assistance to 
                children identified, by the school the child attends, 
                as having difficulty reading, including difficulty 
                mastering essential phonic, decoding, or vocabulary 
                skills. In the case of a child included in the 
                selection process for whom no application has been 
                submitted by a parent of the child, the child's 
                eligibility for receipt of tutorial assistance shall be 
                determined under the same procedures, timeframe, and 
                criteria for consideration as is used to determine the 
                eligibility of a child whose parent has submitted such 
                an application. Such local educational agency shall 
                apply the provisions of subparagraphs (F) and (G) to a 
                tutorial assistance provider selected for a child whose 
                parent has not submitted an application pursuant to 
                subparagraph (C)(i) in the same manner as the 
                provisions are applied to a provider selected in an 
                application submitted pursuant to subparagraph (C)(i).
                    ``(E) The development of procedures for selecting 
                children to receive tutorial assistance, to be used in 
                cases where insufficient funds are available to provide 
                assistance with respect to all children identified by a 
                school under subparagraph (D) that--
                            ``(i) gives priority to children who are 
                        determined, through State or local reading 
                        assessments, to be most in need of tutorial 
                        assistance; and
                            ``(ii) gives priority, in cases where 
                        children are determined, through State or local 
                        reading assessments, to be equally in need of 
                        tutorial assistance, based on a random 
                        selection principle.
                    ``(F) The development of a methodology by which 
                payments are made directly to tutorial assistance 
                providers who are identified and selected pursuant to 
                subparagraphs (C), (D), and (E). Such methodology shall 
                include the making of a contract, consistent with State 
                and local law, between the tutorial assistance provider 
                and the local educational agency carrying out this 
                paragraph. Such contract--
                            ``(i) shall contain specific goals and 
                        timetables with respect to the performance of 
                        the tutorial assistance provider;
                            ``(ii) shall require the tutorial 
                        assistance provider to report to the parent and 
                        the local educational agency on the provider's 
                        performance in meeting such goals and 
                        timetables; and
                            ``(iii) shall contain provisions with 
                        respect to the making of payments to the 
                        tutorial assistance provider by the local 
                        educational agency.
                    ``(G) The development of procedures under which the 
                local educational agency carrying out this paragraph--
                            ``(i) will ensure oversight of the quality 
                        and effectiveness of the tutorial assistance 
                        provided by each tutorial assistance provider 
                        that is selected for funding;
                            ``(ii) will remove from the list under 
                        subparagraph (B) ineffective and unsuccessful 
                        providers (as determined by the local 
                        educational agency based upon the performance 
                        of the provider with respect to the goals and 
                        timetables contained in the contract between 
                        the agency and the provider under subparagraph 
                        (F));
                            ``(iii) will provide to each parent of a 
                        child identified under subparagraph (D) who 
                        requests such information for the purpose of 
                        selecting a tutorial assistance provider for 
                        the child, in a comprehensible format, 
                        information with respect to the quality and 
                        effectiveness of the tutorial assistance 
                        referred to in clause (i); and
                            ``(iv) will ensure that each school 
                        identifying a child under subparagraph (D) will 
                        provide upon request, to a parent of the child, 
                        assistance in selecting, from among the 
                        tutorial assistance providers who are included 
                        on the list described in subparagraph (B), the 
                        provider who is best able to meet the needs of 
                        the child.
    ``(c) Definition.--For the purpose of this section the term 
`parent' includes a legal guardian.

``SEC. 2356. PROGRAM EVALUATION.

    ``(a) In General.--From funds reserved under section 2260(b)(1), 
the Secretary shall conduct a national assessment of the programs under 
this part. In developing the criteria for the assessment, the Secretary 
shall receive recommendations from the peer review panel convened under 
section 2353(f).
    ``(b) Submission to Peer Review Panel.--The Secretary shall submit 
the findings from the assessment under subsection (a) to the peer 
review panel convened under section 2353(f).

``SEC. 2357. INFORMATION DISSEMINATION.

    ``(a) In General.--From funds reserved under section 2260(b)(2), 
the National Institute for Literacy shall disseminate information on 
reliable, replicable research on reading and information on subgrantee 
projects under section 2354 or 2355 that have proven effective. At a 
minimum, the institute shall disseminate such information to all 
recipients of Federal financial assistance under titles I and VII, the 
Head Start Act (42 U.S.C. 9801 et seq.), the Individuals with 
Disabilities Education Act (20 U.S.C. 1400 et seq.), and the Adult 
Education Act (20 U.S.C. 1201 et seq.).
    ``(b) Coordination.--In carrying out this section, the National 
Institute for Literacy--
            ``(1) shall use, to the extent practicable, information 
        networks developed and maintained through other public and 
        private persons, including the Secretary, the National Center 
        for Family Literacy, and the Readline Program;
            ``(2) shall work in conjunction with any panel convened by 
        the National Institute of Child Health and Human Development 
        and the Secretary, and any panel convened by the Office of 
        Educational Research and Improvement to assess the current 
        status of research-based knowledge on reading development, 
        including the effectiveness of various approaches to teaching 
        children to read, with respect to determining the criteria by 
        which the National Institute for Literacy judges reliable, 
        replicable research and the design of strategies to disseminate 
        such information; and
            ``(3) shall assist any reading and literacy partnership 
        selected to receive a grant under section 2353, and that 
        requests such assistance--
                    ``(A) in determining whether applications for 
                subgrants submitted to the partnership meet the 
                requirements of this part relating to reliable, 
                replicable research on reading; and
                    ``(B) in the development of subgrant application 
                forms.

``SEC. 2358. STATE EVALUATIONS.

    ``(a) In General.--Each reading and literacy partnership that 
receives a grant under this part shall reserve not more than 2 percent 
of such grant funds for the purpose of evaluating the success of the 
partnership's subgrantees in meeting the purposes of this part. At a 
minimum, the evaluation shall measure the extent to which students who 
are the intended beneficiaries of the subgrants made by the partnership 
have improved their reading.
    ``(b) Contract.--A reading and literacy partnership shall carry out 
the evaluation under this section by entering into a contract with an 
eligible research institution under which the institution will perform 
the evaluation.
    ``(c) Submission.--A reading and literacy partnership shall submit 
the findings from the evaluation under this section to the Secretary 
and the peer review panel convened under section 2353(f). The Secretary 
and the peer review panel shall submit a summary of the findings from 
the evaluations under this subsection to the appropriate committees of 
the Congress, including the Education and the Workforce Committee of 
the House of Representatives.

``SEC. 2359. PARTICIPATION OF CHILDREN ENROLLED IN PRIVATE SCHOOLS.

    ``Each reading and literacy partnership that receives funds under 
this part shall provide for, or ensure that subgrantees provide for, 
the participation of children in private schools in the activities and 
services assisted under this part in the same manner as the children 
participate in activities and services pursuant to sections 2353, 2354, 
2355, and 2356.

``SEC. 2260. AUTHORIZATION OF APPROPRIATIONS; RESERVATIONS FROM 
              APPROPRIATIONS; APPLICABILITY; SUNSET.

    ``(a) Authorization.--There are authorized to be appropriated to 
carry out this part $210,000,000 for fiscal years 1999, 2000, and 2001.
    ``(b) Reservations.--From the amount appropriated under subsection 
(a) for each fiscal year, the Secretary--
            ``(1) shall reserve 1.5 percent to carry out section 
        2356(a);
            ``(2) shall reserve $5,075,000 to carry out sections 
        2353(f)(2) and 2357, of which $5,000,000 shall be reserved for 
        section 2357; and
            ``(3) shall reserve $10,000,000 to carry out section 
        1202(c).
    ``(c) Applicability.--Part E shall not apply to this part.
    ``(d) Sunset.--Notwithstanding section 422(a) of the General 
Education Provisions Act (20 U.S.C. 1226a(a)), this part is repealed, 
effective September 30, 2001, and is not subject to extension under 
such section.''.

     Subtitle B--Amendments to Even Start Family Literacy Programs

SEC. 721. RESERVATION FOR GRANTS.

    Section 1202(c) of the Elementary and Secondary Education Act of 
1965 (20 U.S.C. 6362(c)) is amended to read as follows:
    ``(c) Reservation for Grants.--
            ``(1) Grants authorized.--From funds reserved under section 
        2260(b)(3), the Secretary shall award grants, on a competitive 
        basis, to States to enable such States to plan and implement, 
        statewide family literacy initiatives to coordinate and 
        integrate existing Federal, State, and local literacy resources 
        consistent with the purposes of this part. Such coordination 
        and integration shall include coordination and integration of 
        funds available under the Adult Education Act (20 U.S.C. 1201 
        et seq.), Head Start (42 U.S.C. 9801 et seq.), this part, part 
        A of this title, and part A of title IV of the Social Security 
        Act.
            ``(2) Consortia.--
                    ``(A) Establishment.--To receive a grant under this 
                subsection, a State shall establish a consortium of 
                State-level programs under the following laws:
                            ``(i) This title.
                            ``(ii) The Head Start Act.
                            ``(iii) The Adult Education Act.
                            ``(iv) All other State-funded preschool 
                        programs and programs providing literacy 
                        services to adults.
                    ``(B) Plan.--To receive a grant under this 
                subsection, the consortium established by a State shall 
                create a plan to use a portion of the State's 
                resources, derived from the programs referred to in 
                subparagraph (A), to strengthen and expand family 
                literacy services in such State.
                    ``(C) Coordination with title ii.--The consortium 
                shall coordinate its activities with the activities of 
                the reading and literacy partnership for the State 
                established under section 2353, if the State receives a 
                grant under such section.
            ``(3) Reading instruction.--Statewide family literacy 
        initiatives implemented under this subsection shall base 
        reading instruction on reliable, replicable research on reading 
        (as such terms are defined in section 2352).
            ``(4) Technical assistance.--The Secretary shall provide, 
        directly or through a grant or contract with an organization 
        with experience in the development and operation of successful 
        family literacy services, technical assistance to States 
        receiving a grant under this subsection.
            ``(5) Matching requirement.--The Secretary shall not make a 
        grant to a State under this subsection unless the State agrees 
        that, with respect to the costs to be incurred by the eligible 
        consortium in carrying out the activities for which the grant 
        was awarded, the State will make available non-Federal 
        contributions in an amount equal to not less than the Federal 
        funds provided under the grant.''.

SEC. 722. DEFINITIONS.

    Section 1202(e) of the Elementary and Secondary Education Act of 
1965 (20 U.S.C. 6362(e)) is amended--
            (1) by redesignating paragraphs (3) and (4) as paragraphs 
        (4) and (5), respectively; and
            (2) by inserting after paragraph (2) the following:
            ``(3) the term `family literacy services' means services 
        provided to participants on a voluntary basis that are of 
        sufficient intensity in terms of hours, and of sufficient 
        duration, to make sustainable changes in a family (such as 
        eliminating or reducing welfare dependency) and that integrate 
        all of the following activities:
                    ``(A) Interactive literacy activities between 
                parents and their children.
                    ``(B) Equipping parents to partner with their 
                children in learning.
                    ``(C) Parent literacy training, including training 
                that contributes to economic self-sufficiency.
                    ``(D) Appropriate instruction for children of 
                parents receiving parent literacy services.''.

SEC. 723. EVALUATION.

    Section 1209 of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 6369) is amended--
            (1) in paragraph (1), by striking ``and'' at the end;
            (2) in paragraph (2), by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(3) to provide States and eligible entities receiving a 
        subgrant under this part, directly or through a grant or 
        contract with an organization with experience in the 
        development and operation of successful family literacy 
        services, technical assistance to ensure local evaluations 
        undertaken under section 1205(10) provide accurate information 
        on the effectiveness of programs assisted under this part.''.

SEC. 724. INDICATORS OF PROGRAM QUALITY.

    (a) In General.--The Elementary and Secondary Education Act of 1965 
(20 U.S.C. 6301 et seq.) is amended--
            (1) by redesignating section 1210 as section 1212; and
            (2) by inserting after section 1209 the following:

``SEC. 1210. INDICATORS OF PROGRAM QUALITY.

    ``Each State receiving funds under this part shall develop, based 
on the best available research and evaluation data, indicators of 
program quality for programs assisted under this part. Such indicators 
shall be used to monitor, evaluate, and improve such programs within 
the State. Such indicators shall include the following:
            ``(1) With respect to eligible participants in a program 
        who are adults--
                    ``(A) achievement in the areas of reading, writing, 
                English language acquisition, problem solving, and 
                numeracy;
                    ``(B) receipt of a secondary school diploma or its 
                recognized equivalent;
                    ``(C) entry into a postsecondary school, a job 
                retraining program, or employment or career 
                advancement, including the military; and
                    ``(D) such other indicators as the State may 
                develop.
            ``(2) With respect to eligible participants in a program 
        who are children--
                    ``(A) improvement in ability to read on grade level 
                or reading readiness;
                    ``(B) school attendance;
                    ``(C) grade retention and promotion; and
                    ``(D) such other indicators as the State may 
                develop.''.
    (b) State Level Activities.--Section 1203(a) of the Elementary and 
Secondary Education Act of 1965 (20 U.S.C. 6363(a)) is amended--
            (1) in paragraph (1), by striking ``and'' at the end;
            (2) in paragraph (2), by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following:
            ``(3) carrying out section 1210.''.
    (c) Award of Subgrants.--Paragraphs (3) and (4) of section 1208(b) 
of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6368) 
are amended to read as follows:
            ``(3) Continuing eligibility.--In awarding subgrant funds 
        to continue a program under this part for the second, third, or 
        fourth year, the State educational agency shall evaluate the 
        program based on the indicators of program quality developed by 
        the State under section 1210. Such evaluation shall take place 
        after the conclusion of the startup period, if any.
            ``(4) Insufficient progress.--The State educational agency 
        may refuse to award subgrant funds if such agency finds that 
        the eligible entity has not sufficiently improved the 
        performance of the program, as evaluated based on the 
        indicators of program quality developed by the State under 
        section 1210, after--
                    ``(A) providing technical assistance to the 
                eligible entity; and
                    ``(B) affording the eligible entity notice and an 
                opportunity for a hearing.''.

SEC. 725. RESEARCH.

    The Elementary and Secondary Education Act of 1965 (20 U.S.C. 6301 
et seq.), as amended by section 524 of this Act, is further amended by 
inserting after section 1210 the following:

``SEC. 1211. RESEARCH.

    ``(a) In General.--The Secretary shall carry out, through grant or 
contract, research into the components of successful family literacy 
services. The purpose of the research shall be--
            ``(1) to improve the quality of existing programs assisted 
        under this part or other family literacy programs carried out 
        under this Act or the Adult Education Act (20 U.S.C. 1201 et 
        seq.); and
            ``(2) to develop models for new programs to be carried out 
        under this Act or the Adult Education Act.
    ``(b) Dissemination.--The National Institute for Literacy shall 
disseminate, pursuant to section 2357, the results of the research 
described in subsection (a) to States and recipients of subgrants under 
this part.''.

       TITLE VIII--DROPOUT PREVENTION AND STATE RESPONSIBILITIES

SEC. 801. SHORT TITLE.

    This title may be cited as the ``National Dropout Prevention Act of 
1998''.

                     Subtitle A--Dropout Prevention

SEC. 811. DROPOUT PREVENTION.

    Part C of title V of the Elementary and Secondary Education Act of 
1965 (20 U.S.C. 7261 et seq.) is amended to read as follows:

        ``PART C--ASSISTANCE TO ADDRESS SCHOOL DROPOUT PROBLEMS

               ``Subpart 1--Coordinated National Strategy

``SEC. 5311. NATIONAL ACTIVITIES.

    ``(a) National Priority.--It shall be a national priority, for the 
5-year period beginning on the date of enactment of the National 
Dropout Prevention Act of 1998, to lower the school dropout rate, and 
increase school completion, for middle school and secondary school 
students in accordance with Federal law. As part of this priority, all 
Federal agencies that carry out activities that serve students at risk 
of dropping out of school or that are intended to help address the 
school dropout problem shall make school dropout prevention a top 
priority in the agencies' funding priorities during the 5-year period.
    ``(b) Enhanced Data Collection.--The Secretary shall collect 
systematic data on the participation of different racial and ethnic 
groups (including migrant and limited English proficient students) in 
all Federal programs.

``SEC. 5312. NATIONAL SCHOOL DROPOUT PREVENTION STRATEGY.

    ``(a) Plan.--The Director shall develop, implement, and monitor an 
interagency plan (in this section referred to as the ``plan'') to 
assess the coordination, use of resources, and availability of funding 
under Federal law that can be used to address school dropout 
prevention, or middle school or secondary school reentry. The plan 
shall be completed and transmitted to the Secretary and Congress not 
later than 180 days after the first Director is appointed.
    ``(b) Coordination.--The plan shall address inter- and intra-agency 
program coordination issues at the Federal level with respect to school 
dropout prevention and middle school and secondary school reentry, 
assess the targeting of existing Federal services to students who are 
most at risk of dropping out of school, and the cost-effectiveness of 
various programs and approaches used to address school dropout 
prevention.
    ``(c) Available Resources.--The plan shall also describe the ways 
in which State and local agencies can implement effective school 
dropout prevention programs using funds from a variety of Federal 
programs, including the programs under title I of the Elementary and 
Secondary Education Act of 1965 (20 U.S.C. 6301 et seq.) and the 
School-to-Work Opportunities Act of 1994 (20 U.S.C. 6101 et seq.).
    ``(d) Scope.--The plan will address all Federal programs with 
school dropout prevention or school reentry elements or objectives, 
programs under chapter 1 of subpart 2 of part A of title IV of the 
Higher Education Act of 1965 (20 U.S.C. 1070a-11 et seq.), title I of 
the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6301 et 
seq.), the School-to-Work Opportunities Act of 1994 (20 U.S.C. 6101 et 
seq.), and part B of title IV of the Job Training Partnership Act (29 
U.S.C. 1691 et seq.), and other programs.

``SEC. 5313. NATIONAL CLEARINGHOUSE.

    ``Not later than 6 months after the date of enactment of the 
National Dropout Prevention Act of 1998, the Director shall establish a 
national clearinghouse on effective school dropout prevention, 
intervention and reentry programs. The clearinghouse shall be 
established through a competitive grant or contract awarded to an 
organization with a demonstrated capacity to provide technical 
assistance and disseminate information in the area of school dropout 
prevention, intervention, and reentry programs. The clearinghouse 
shall--
            ``(1) collect and disseminate to educators, parents, and 
        policymakers information on research, effective programs, best 
        practices, and available Federal resources with respect to 
        school dropout prevention, intervention, and reentry programs, 
        including dissemination by an electronically accessible 
        database, a worldwide Web site, and a national journal; and
            ``(2) provide technical assistance regarding securing 
        resources with respect to, and designing and implementing, 
        effective and comprehensive school dropout prevention, 
        intervention, and reentry programs.

``SEC. 5314. NATIONAL RECOGNITION PROGRAM.

    ``(a) In General.--The Director shall carry out a national 
recognition program that recognizes schools that have made 
extraordinary progress in lowering school dropout rates under which a 
public middle school or secondary school from each State will be 
recognized. The Director shall use uniform national guidelines that are 
developed by the Director for the recognition program and shall 
recognize schools from nominations submitted by State educational 
agencies.
    ``(b) Eligible Schools.--The Director may recognize any public 
middle school or secondary school (including a charter school) that has 
implemented comprehensive reforms regarding the lowering of school 
dropout rates for all students at that school.
    ``(c) Support.--The Director may make monetary awards to schools 
recognized under this section, in amounts determined by the Director. 
Amounts received under this section shall be used for dissemination 
activities within the school district or nationally.

       ``Subpart 2--National School Dropout Prevention Initiative

``SEC. 5321. FINDINGS.

    ``Congress finds that, in order to lower dropout rates and raise 
academic achievement levels, improved and redesigned schools must--
            ``(1) challenge all children to attain their highest 
        academic potential; and
            ``(2) ensure that all students have substantial and ongoing 
        opportunities to--
                    ``(A) achieve high levels of academic and technical 
                skills;
                    ``(B) prepare for college and careers;
                    ``(C) learn by doing;
                    ``(D) work with teachers in small schools within 
                schools;
                    ``(E) receive ongoing support from adult mentors;
                    ``(F) access a wide variety of information about 
                careers and postsecondary education and training;
                    ``(G) use technology to enhance and motivate 
                learning; and
                    ``(H) benefit from strong links among middle 
                schools, secondary schools, and postsecondary 
                institutions.

``SEC. 5322. PROGRAM AUTHORIZED.

    ``(a) Allotments to States.--
            ``(1) In general.--From the sum made available under 
        section 5332(b) for a fiscal year the Secretary shall make an 
        allotment to each State in an amount that bears the same 
        relation to the sum as the amount the State received under 
        title I of the Elementary and Secondary Education Act of 1965 
        (20 U.S.C. 6301 et seq.) for the preceding fiscal year bears to 
        the amount received by all States under such title for the 
        preceding fiscal year.
            ``(2) Definition of state.--In this subpart, the term 
        ``State'' means each of the several States of the United 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, the United States Virgin Islands, Guam, American Samoa, 
        the Commonwealth of the Northern Mariana Islands, the Republic 
        of the Marshall Islands, the Federated States of Micronesia, 
        and the Republic of Palau.
    ``(b) Grants.--From amounts made available to a State under 
subsection (a), the State educational agency may award grants to public 
middle schools or secondary schools, that have school dropout rates 
which are in the highest \1/3\ of all school dropout rates in the 
State, to enable the schools to pay only the startup and implementation 
costs of effective, sustainable, coordinated, and whole school dropout 
prevention programs that involve activities such as--
            ``(1) professional development;
            ``(2) obtaining curricular materials;
            ``(3) release time for professional staff;
            ``(4) planning and research;
            ``(5) remedial education;
            ``(6) reduction in pupil-to-teacher ratios;
            ``(7) efforts to meet State student achievement standards; 
        and
            ``(8) counseling for at-risk students.
    ``(b) Intent of Congress.--It is the intent of Congress that the 
activities started or implemented under subsection (a) shall be 
continued with funding provided under part A of title I of the 
Elementary and Secondary Education Act of 1965 (20 U.S.C. 6311 et 
seq.).
    ``(c) Amount.--
            ``(1) In general.--Subject to subsection (d) and except as 
        provided in paragraph (2), a grant under this subpart shall be 
        awarded--
                    ``(A) in the first year that a school receives a 
                grant payment under this subpart, in an amount that is 
                not less than $50,000 and not more than $100,000, based 
                on factors such as--
                            ``(i) school size;
                            ``(ii) costs of the model being 
                        implemented; and
                            ``(iii) local cost factors such as poverty 
                        rates;
                    ``(B) in the second such year, in an amount that is 
                not less than 75 percent of the amount the school 
                received under this subpart in the first such year;
                    ``(C) in the third year, in an amount that is not 
                less than 50 percent of the amount the school received 
                under this subpart in the first such year; and
                    ``(D) in each succeeding year in an amount that is 
                not less than 30 percent of the amount the school 
                received under this subpart in the first such year.
            ``(2) Increases.--The Director shall increase the amount 
        awarded to a school under this subpart by 10 percent if the 
        school creates smaller learning communities within the school 
        and the creation is certified by the State educational agency.
    ``(d) Duration.--A grant under this subpart shall be awarded for a 
period of 3 years, and may be continued for a period of 2 additional 
years if the State educational agency determines, based on the annual 
reports described in section 5328(a), that significant progress has 
been made in lowering the school dropout rate for students 
participating in the program assisted under this subpart compared to 
students at similar schools who are not participating in the program.

``SEC. 5323. STRATEGIES AND ALLOWABLE MODELS.

    ``(a) Strategies.--Each school receiving a grant under this subpart 
shall implement research-based, sustainable, and widely replicated, 
strategies for school dropout prevention and reentry that address the 
needs of an entire school population rather than a subset of students. 
The strategies may include--
            ``(1) specific strategies for targeted purposes; and
            ``(2) approaches such as breaking larger schools down into 
        smaller learning communities and other comprehensive reform 
        approaches, developing clear linkages to career skills and 
        employment, and addressing specific gatekeeper hurdles that 
        often limit student retention and academic success.
    ``(b) Allowable Models.--The Director shall annually establish and 
publish in the Federal Register the principles, criteria, models, and 
other parameters regarding the types of effective, proven program 
models that are allowed to be used under this subpart, based on 
existing research.
    ``(c) Capacity Building.--
            ``(1) In general.--The Director, through a contract with a 
        non-Federal entity, shall conduct a capacity building and 
        design initiative in order to increase the types of proven 
        strategies for dropout prevention on a schoolwide level.
            ``(2) Number and duration.--
                    ``(A) Number.--The Director shall award not more 
                than 5 contracts under this subsection.
                    ``(B) Duration.--The Director shall award a 
                contract under this section for a period of not more 
                than 5 years.
    ``(d) Support for Existing Reform Networks.--
            ``(1) In general.--The Director shall provide appropriate 
        support to eligible entities to enable the eligible entities to 
        provide training, materials, development, and staff assistance 
        to schools assisted under this subpart.
            ``(2) Definition of eligible entity.--The term `eligible 
        entity' means an entity that, prior to the date of enactment of 
        the National Dropout Prevention Act of 1998--
                    ``(A) provided training, technical assistance, and 
                materials to 100 or more elementary schools or 
                secondary schools; and
                    ``(B) developed and published a specific 
                educational program or design for use by the schools.

``SEC. 5324. SELECTION OF SCHOOLS.

    ``(a) School Application.--
            ``(1) In general.--Each school desiring a grant under this 
        subpart shall submit an application to the State educational 
        agency at such time, in such manner, and accompanied by such 
        information as the State educational agency may require.
            ``(2) Contents.--Each application submitted under paragraph 
        (1) shall--
                    ``(A) contain a certification from the local 
                educational agency serving the school that--
                            ``(i) the school has the highest number or 
                        rates of school dropouts in the age group 
                        served by the local educational agency;
                            ``(ii) the local educational agency is 
                        committed to providing ongoing operational 
                        support, for the school's comprehensive reform 
                        plan to address the problem of school dropouts, 
                        for a period of 5 years; and
                            ``(iii) the local educational agency will 
                        support the plan, including--
                                    ``(I) release time for teacher 
                                training;
                                    ``(II) efforts to coordinate 
                                activities for feeder schools; and
                                    ``(III) encouraging other schools 
                                served by the local educational agency 
                                to participate in the plan;
                    ``(B) demonstrate that the faculty and 
                administration of the school have agreed to apply for 
                assistance under this subpart, and provide evidence of 
                the school's willingness and ability to use the funds 
                under this subpart, including providing an assurance of 
                the support of 80 percent or more of the professional 
                staff at the school;
                    ``(C) describe the instructional strategies to be 
                implemented, how the strategies will serve all 
                students, and the effectiveness of the strategies;
                    ``(D) describe a budget and timeline for 
                implementing the strategies;
                    ``(E) contain evidence of interaction with an 
                eligible entity described in section 5323(d)(2);
                    ``(F) contain evidence of coordination with 
                existing resources;
                    ``(G) provide an assurance that funds provided 
                under this subpart will supplement and not supplant 
                other Federal, State, and local funds;
                    ``(H) describe how the activities to be assisted 
                conform with an allowable model described in section 
                5323(b); and
                    ``(I) demonstrate that the school and local 
                educational agency have agreed to conduct a schoolwide 
                program under 1114.
    ``(b) State Agency Review and Award.--The State educational agency 
shall review applications and award grants to schools under subsection 
(a) according to a review by a panel of experts on school dropout 
prevention.
    ``(c) Criteria.--The Director shall establish clear and specific 
selection criteria for awarding grants to schools under this subpart. 
Such criteria shall be based on school dropout rates and other relevant 
factors for State educational agencies to use in determining the number 
of grants to award and the type of schools to be awarded grants.
    ``(d) Eligibility.--
            ``(1) In general.--A school is eligible to receive a grant 
        under this subpart if the school is--
                    ``(A) a public school--
                            ``(i) that is eligible to receive 
                        assistance under part A of title I of the 
                        Elementary and Secondary Education Act of 1965 
                        (20 U.S.C. 6311 et seq.), including a 
                        comprehensive secondary school, a vocational or 
                        technical secondary school, and a charter 
                        school; and
                            ``(ii)(I) that serves students 50 percent 
                        or more of whom are low-income individuals; or
                            ``(II) with respect to which the feeder 
                        schools that provide the majority of the 
                        incoming students to the school serve students 
                        50 percent or more of whom are low-income 
                        individuals; or
                    ``(B) is participating in a schoolwide program 
                under section 1114 during the grant period.
            ``(2) Other schools.--A private or parochial school, an 
        alternative school, or a school within a school, is not 
        eligible to receive a grant under this subpart, but an 
        alternative school or school within a school may be served 
        under this subpart as part of a whole school reform effort 
        within an entire school building.
    ``(e) Community-Based Organizations.--A school that receives a 
grant under this subpart may use the grant funds to secure necessary 
services from a community-based organization, including private sector 
entities, if--
            ``(1) the school approves the use;
            ``(2) the funds are used to provide school dropout 
        prevention and reentry activities related to schoolwide 
        efforts; and
            ``(3) the community-based organization has demonstrated the 
        organization's ability to provide effective services as 
        described in section 107(a) of the Job Training Partnership Act 
        (29 U.S.C. 1517(a)).
    ``(f) Coordination.--Each school that receives a grant under this 
subpart shall coordinate the activities assisted under this subpart 
with other Federal programs, such as programs assisted under chapter 1 
of subpart 2 of part A of title IV of the Higher Education Act of 1965 
(20 U.S.C. 1070a-11 et seq.) and the School-to-Work Opportunities Act 
of 1994 (20 U.S.C. 6101 et seq.).

``SEC. 5325. DISSEMINATION ACTIVITIES.

    ``Each school that receives a grant under this subpart shall 
provide information and technical assistance to other schools within 
the school district, including presentations, document-sharing, and 
joint staff development.

``SEC. 5326. PROGRESS INCENTIVES.

    ``Notwithstanding any other provision of law, each local 
educational agency that receives funds under title I of the Elementary 
and Secondary Education Act of 1965 (20 U.S.C. 6301 et seq.) shall use 
such funding to provide assistance to schools served by the agency that 
have not made progress toward lowering school dropout rates after 
receiving assistance under this subpart for 2 fiscal years.

``SEC. 5327. SCHOOL DROPOUT RATE CALCULATION.

    ``For purposes of calculating a school dropout rate under this 
subpart, a school shall use--
            ``(1) the annual event school dropout rate for students 
        leaving a school in a single year determined in accordance with 
        the National Center for Education Statistics' Common Core of 
        Data, if available; or
            ``(2) in other cases, a standard method for calculating the 
        school dropout rate as determined by the State educational 
        agency.

``SEC. 5328. REPORTING AND ACCOUNTABILITY.

    ``(a) Reporting.--In order to receive funding under this subpart 
for a fiscal year after the first fiscal year a school receives funding 
under this subpart, the school shall provide, on an annual basis, to 
the Director a report regarding the status of the implementation of 
activities funded under this subpart, the disaggregated outcome data 
for students at schools assisted under this subpart such as dropout 
rates, and certification of progress from the eligible entity whose 
strategies the school is implementing.
    ``(b) Accountability.--On the basis of the reports submitted under 
subsection (a), the Director shall evaluate the effect of the 
activities assisted under this subpart on school dropout prevention 
compared to a control group.

``SEC. 5329. PROHIBITION ON TRACKING.

    ``(a) In General.--A school shall be ineligible to receive funding 
under this subpart for a fiscal year, if the school--
            ``(1) has in place a general education track;
            ``(2) provides courses with significantly different 
        material and requirements to students at the same grade level; 
        or
            ``(3) fails to encourage all students to take a core 
        curriculum of courses.
    ``(b) Regulations.--The Secretary shall promulgate regulations 
implementing subsection (a).

       ``Subpart 3--Definitions; Authorization of Appropriations

``SEC. 5331. DEFINITIONS.

    ``In this Act:
            ``(1) Director.--The term ``Director'' means the Director 
        of the Office of Dropout Prevention and Program Completion 
        established under section 219 of the General Education 
        Provisions Act.
            ``(2) Low-income.--The term ``low-income'', used with 
        respect to an individual, means an individual determined to be 
        low-income in accordance with measures described in section 
        1113(a)(5) of the Elementary and Secondary Education Act of 
        1965 (20 U.S.C. 6313(a)(5)).
            ``(3) School dropout.--The term ``school dropout'' has the 
        meaning given the term in section 4(17) of the School-to-Work 
        Opportunities Act of 1994 (20 U.S.C. 6103(17)).

``SEC. 5332. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) Subpart 1.--There are authorized to be appropriated to carry 
out subpart 1, $5,000,000 for fiscal year 1999 and such sums as may be 
necessary for each of the 4 succeeding fiscal years.
    ``(b) Subpart 2.--There are authorized to be appropriated to carry 
out subpart 2, $145,000,000 for fiscal year 1999 and such sums as may 
be necessary for each of the 4 succeeding fiscal years, of which--
            ``(1) $125,000,000 shall be available to carry out section 
        5322; and
            ``(2) $20,000,000 shall be available to carry out section 
        5323.''.

SEC. 812. OFFICE OF DROPOUT PREVENTION AND PROGRAM COMPLETION.

    Title II of the Department of Education Organization Act (20 U.S.C. 
3411) is amended--
            (1) by redesignating section 216 (as added by Public Law 
        103-227) as section 218; and
            (2) by adding after section 218 (as redesignated by 
        paragraph (1)) the following:

         ``office of dropout prevention and program completion

    ``Sec. 219. (a) Establishment.--There shall be in the Department of 
Education an Office of Dropout Prevention and Program Completion 
(hereafter in this section referred to as the `Office'), to be 
administered by the Director of the Office of Dropout Prevention and 
Program Completion. The Director of the Office shall report directly to 
the Secretary and shall perform such additional functions as the 
Secretary may prescribe.
    ``(b) Duties.--The Director of the Office of Dropout Prevention and 
Program Completion (hereafter in this section referred to as the 
`Director'), through the Office, shall--
            ``(1) help coordinate Federal, State, and local efforts to 
        lower school dropout rates and increase program completion by 
        middle school, secondary school, and college students;
            ``(2) recommend Federal policies, objectives, and 
        priorities to lower school dropout rates and increase program 
        completion;
            ``(3) oversee the implementation of subpart 2 of part C of 
        title V of the Elementary and Secondary Education Act of 1965;
            ``(4) develop and implement the National School Dropout 
        Prevention Strategy under section 5312 of the Elementary and 
        Secondary Education Act of 1965;
            ``(5) annually prepare and submit to Congress and the 
        Secretary a national report describing efforts and recommended 
        actions regarding school dropout prevention and program 
        completion;
            ``(6) recommend action to the Secretary and the President, 
        as appropriate, regarding school dropout prevention and program 
        completion; and
            ``(7) consult with and assist State and local governments 
        regarding school dropout prevention and program completion.
    ``(c) Scope of Duties.--The scope of the Director's duties under 
subsection (b) shall include examination of all Federal and non-Federal 
efforts related to--
            ``(1) promoting program completion for children attending 
        middle school or secondary school;
            ``(2) programs to obtain a secondary school diploma or its 
        recognized equivalent (including general equivalency diploma 
        (GED) programs), or college degree programs; and
            ``(3) reentry programs for individuals aged 12 to 24 who 
        are out of school.
    ``(d) Detailing.--In carrying out the Director's duties under this 
section, the Director may request the head of any Federal department or 
agency to detail personnel who are engaged in school dropout prevention 
activities to another Federal department or agency in order to 
implement the National School Dropout Prevention Strategy.''.

                   Subtitle B--State Responsibilities

SEC. 821. STATE RESPONSIBILITIES.

    Title XIV of the Elementary and Secondary Education Act of 1965 (20 
U.S.C. 8801 et seq.) is amended by adding at the end the following:

                      ``PART I--DROPOUT PREVENTION

``SEC. 14851. DROPOUT PREVENTION.

    ``In order to receive any assistance under this Act, a State 
educational agency shall comply with the following provisions regarding 
school dropouts:
            ``(1) Uniform data collection.--Within 1 year after the 
        date of enactment of the National Dropout Prevention Act of 
        1998, a State educational agency shall report to the Secretary 
        and statewide, all school district and school data regarding 
        school dropout rates in the State, and demographic breakdowns, 
        according to procedures that conform with the National Center 
        for Education Statistics' Common Core of Data.
            ``(2) Attendance-neutral funding policies.--Within 2 years 
        after the date of enactment of the National Dropout Prevention 
        Act of 1998, a State educational agency shall develop and 
        implement education funding formula policies for public schools 
        that provide appropriate incentives to retain students in 
        school throughout the school year, such as--
                    ``(A) a student count methodology that does not 
                determine annual budgets based on attendance on a 
                single day early in the academic year; and
                    ``(B) specific incentives for retaining enrolled 
                students throughout each year.
            ``(3) Suspension and expulsion policies.--Within 2 years 
        after the date of enactment of the National Dropout Prevention 
        Act of 1998, a State educational agency shall develop uniform, 
        long-term suspension and expulsion policies for serious 
        infractions resulting in more than 10 days of exclusion from 
        school per academic year so that similar violations result in 
        similar penalties.''.

                   TITLE IX--MISCELLANEOUS PROVISIONS

SEC. 901. MULTILINGUALISM STUDY.

    (a) Findings.--Congress finds that even though all residents of the 
United States should be proficient in English, without regard to their 
country of birth, it is also of vital importance to the competitiveness 
of the United States that those residents be encouraged to learn other 
languages.
    (b) Resident of the United States Defined.--In this section, the 
term ``resident of the United States'' means an individual who resides 
in the United States, other than an alien who is not lawfully present 
in the United States.
    (c) Study.--
            (1) In general.--Not later than 180 days after the date of 
        enactment of this Act, the Comptroller General of the United 
        States (referred to in this section as the ``Comptroller 
        General'') shall conduct a study of multilingualism in the 
        United States in accordance with this section.
            (2) Requirements.--
                    (A) In general.--The study conducted under this 
                section shall ascertain--
                            (i) the percentage of residents in the 
                        United States who are proficient in English and 
                        at least 1 other language;
                            (ii) the predominant language other than 
                        English in which residents referred to in 
                        clause (i) are proficient;
                            (iii) the percentage of the residents 
                        described in clause (i) who were born in a 
                        foreign country;
                            (iv) the percentage of the residents 
                        described in clause (i) who were born in the 
                        United States;
                            (v) the percentage of the residents 
                        described in clause (iv) who are second-
                        generation residents of the United States; and
                            (vi) the percentage of the residents 
                        described in clause (iv) who are third-
                        generation residents of the United States.
                    (B) Age-specific categories.--The study under this 
                section shall, with respect to the residents described 
                in subparagraph (A)(i), determine the number of those 
                residents in each of the following categories:
                            (i) Residents who have not attained the age 
                        of 12.
                            (ii) Residents have attained the age of 12, 
                        but have not attained the age of 18.
                            (iii) Residents who have attained the age 
                        of 18, but have not attained the age of 50.
                            (iv) Residents who have attained the age of 
                        50.
                    (C) Federal programs.--In conducting the study 
                under this section, the Comptroller General shall 
                establish a list of each Federal program that 
                encourages multilingualism with respect to any category 
                of residents described in subparagraph (B).
                    (D) Comparisons.--In conducting the study under 
                this section, the Comptroller General shall compare the 
                multilingual population described in subparagraph (A) 
                with the multilingual populations of foreign 
                countries--
                            (i) in the Western hemisphere; and
                            (ii) in Asia.
    (d) Report.--Upon completion of the study under this section, the 
Comptroller General shall prepare, and submit to Congress, a report 
that contains the results of the study conducted under this section, 
and such findings and recommendations as the Comptroller General 
determines to be appropriate.

SEC. 902. SAFER SCHOOLS.

    (a) Short Title.--This section may be cited as the ``Safer Schools 
Act of 1998''.
    (b) Amendment.--Section 14601 of the Gun-Free Schools Act of 1994 
(20 U.S.C. 8921) is amended by adding at the end the following new 
subsection:
    ``(g) For the purposes of this section, a weapon that has been 
determined to have been brought to a school by a student shall be 
admissible as evidence in any internal school disciplinary proceeding 
(related to an expulsion under this section).''.

            Attest:

                                                             Secretary.
105th CONGRESS

  2d Session

                               H. R. 2646

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                               AMENDMENT

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