[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2646 Enrolled Bill (ENR)]

        H.R.2646

                       One Hundred Fifth Congress

                                 of the

                        United States of America


                          AT THE SECOND SESSION

          Begun and held at the City of Washington on Tuesday,
the twenty-seventh day of January, one thousand nine hundred and ninety-
                                  eight


                                 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.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Education Savings and School 
Excellence Act of 1998''.

                 TITLE I--TAX INCENTIVES FOR EDUCATION

SEC. 100. AMENDMENT TO 1986 CODE.

    Except as otherwise expressly provided, whenever in this title 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.

                Subtitle A--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), as amended by subsection 
    (e), is amended by adding at the end the following new 
    subparagraph:
            ``(E) 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 amendment.--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) Technical Corrections.--
        (1) Section 530(b)(1) is amended by inserting ``an individual 
    who is'' before ``the designated beneficiary'' in the material 
    preceding subparagraph (A).
        (2)(A) Section 530(b)(1)(E) is amended to read as follows:
            ``(E) Except as provided in subsection (d)(7), 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 of such beneficiary.''.
        (B) Section 530(d)(7) is amended by inserting at the end the 
    following new sentence: ``In applying the preceding sentence, 
    members of the family of the designated beneficiary shall be 
    treated in the same manner as the spouse under such paragraph 
    (8).''.
        (C) Section 530(d) 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.''.
        (3)(A) Section 530(d)(1) is amended by striking ``section 
    72(b)'' and inserting ``section 72''.
        (B) Section 72(e) 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.''.
        (4) Section 135(d)(2) is amended to read as follows:
        ``(2) Coordination with other higher education benefits.--The 
    amount of the qualified higher education expenses otherwise taken 
    into account under subsection (a) with respect to the education of 
    an individual shall be reduced (before the application of 
    subsection (b)) by--
            ``(A) the amount of such expenses which are taken into 
        account in determining the credit allowable to the taxpayer or 
        any other person under section 25A with respect to such 
        expenses; and
            ``(B) the amount of such expenses which are taken into 
        account in determining the exclusion under section 
        530(d)(2).''.
        (5) Section 530(d)(2) is amended by adding at the end the 
    following new subparagraph:
            ``(D) 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.''.
        (6) Section 530(d)(4)(B) 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.''.
        (7) So much of section 530(d)(4)(C) as precedes clause (ii) 
    thereof is amended to read as follows:
            ``(C) Contributions returned before due date of return.--
        Subparagraph (A) shall not apply to the distribution of any 
        contribution made during a taxable year on behalf of the 
        designated beneficiary if--
                ``(i) such distribution is made on or before the day 
            prescribed by law (including extensions of time) for filing 
            the beneficiary's return of tax for the taxable year or, if 
            the beneficiary is not required to file such a return, the 
            15th day of the 4th month of the taxable year following the 
            taxable year; and''.
        (8) Section 135(c)(2)(C) is amended--
            (A) by inserting ``and education individual retirement 
        accounts'' in the heading after ``program''; and
            (B) by striking ``section 529(c)(3)(A)'' and inserting 
        ``section 72''.
        (9) Section 4973(e)(1) is amended to read as follows:
        ``(1) In general.--In the case of education individual 
    retirement accounts maintained for the benefit of any one 
    beneficiary, the term `excess contributions' means the sum of--
            ``(A) the amount by which the amount contributed for the 
        taxable year to such accounts exceeds $500 (or, if less, the 
        sum of the maximum amounts permitted to be contributed under 
        section 530(c) by the contributors to such accounts for such 
        year);
            ``(B) if any amount is contributed during such year to a 
        qualified State tuition program for the benefit of such 
        beneficiary, any amount contributed to such accounts for such 
        taxable year; and
            ``(C) the amount determined under this subsection for the 
        preceding taxable year, reduced by the sum of--
                ``(i) the distributions out of the accounts for the 
            taxable year which are included in gross income; and
                ``(ii) the excess (if any) of the maximum amount which 
            may be contributed to the accounts for the taxable year 
            over the amount contributed to the accounts for the taxable 
            year.''.
        (10)(A) Paragraph (5) of section 530(d) is amended by striking 
    the first sentence and inserting the following new sentence: 
    ``Paragraph (1) shall not apply to any amount paid or distributed 
    from an education individual retirement account to the extent that 
    the amount received is paid, not later than the 60th day after the 
    date of such payment or distribution, into another education 
    individual retirement account for the benefit of the same 
    beneficiary or a member of the family (within the meaning of 
    section 529(e)(2) of such beneficiary who has not attained age 30 
    as of such date.''.
        (B) Paragraph (6) of section 530(d) is amended by inserting 
    before the period ``and has not attained age 30 as of the date of 
    such change''.
    (f) 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 
    (e) shall take effect as if included in the amendments made by 
    section 213 of the Taxpayer Relief Act of 1997.

SEC. 102. 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) Eligible Educational Institutions Permitted to Maintain 
Qualified Tuition Programs.--
        (1) In general.--Section 529(b)(1) (defining qualified State 
    tuition program) is amended by inserting ``or, in the case of 
    taxable years beginning after December 31, 2005, by one or more 
    eligible educational institutions'' after ``maintained by a State 
    or agency or instrumentality thereof''.
        (2) Private qualified tuition programs limited to benefit 
    plans.--Section 529(b)(1) is amended by adding at the end the 
    following flush sentence:
    ``Clause (ii) of subparagraph (A) shall only apply to a program 
    established and maintained by a State or agency or instrumentality 
    thereof.''.
        (3) Limitation on contributions to private qualified tuition 
    programs.--Section 529(b) is amended by adding at the end the 
    following new paragraph:
        ``(8) Limitation on contributions to private qualified tuition 
    programs.--In the case of a program not established and maintained 
    by a State or agency or instrumentality thereof, such program shall 
    not be treated as a qualified tuition program unless it limits the 
    annual contribution to the program on behalf of a designated 
    beneficiary to an amount equal to the lesser of--
            ``(A) $5,000; or
            ``(B) the excess of--
                ``(i) $50,000, over
                ``(ii) the aggregate amount contributed to such program 
            on behalf of such beneficiary for all prior taxable 
            years.''.
        (4) Tax on excess contributions.--
            (A) In general.--Section 4973(a) (relating to tax imposed) 
        is amended by striking ``or'' at the end of paragraph (3), 
        inserting ``or'' at the end of paragraph (4), and inserting 
        after paragraph (4) the following new paragraph:
        ``(5) a private qualified tuition program (as defined in 
    subsection (g)),''.
            (B) Excess contributions defined.--Section 4973 is amended 
        by adding at the end the following new subsection:
    ``(g) Excess Contributions to Private Qualified Tuition Program.--
For purposes of this section--
        ``(1) In general.--In the case of private qualified tuition 
    programs, the term `excess contributions' means, with respect to 
    any one beneficiary--
            ``(A) the amount by which the amounts contributed for the 
        taxable year to such programs exceed the lesser of--
                ``(i) $5,000; or
                ``(ii) the excess of--

                    ``(I) $50,000, over
                    ``(II) the aggregate amount contributed to all 
                private qualified tuition programs on behalf of such 
                beneficiary for all prior taxable years; and

            ``(B) the amount determined under this subsection for the 
        preceding taxable year, reduced by the sum of--
                ``(i) the distributions out of such programs for the 
            taxable year which are included in gross income; and
                ``(ii) the excess (if any) of the maximum amount which 
            may be contributed to such programs for the taxable year 
            over the amount contributed to such programs for the 
            taxable year.
        ``(2) Special rule if contributions made to a state tuition 
    program or an education individual retirement account.--
    Notwithstanding paragraph (1), with respect to any one beneficiary, 
    the amount contributed to a private qualified tuition program for 
    any taxable year shall be treated as excess contributions if any 
    amount is contributed during such year for the benefit of such 
    beneficiary to--
            ``(A) a qualified tuition program (as defined in section 
        529) that is established and maintained by a State or any 
        agency or instrumentality thereof; or
            ``(B) an education individual retirement account (as 
        defined in section 530).
        ``(3) Special rules.--The contributions described in subsection 
    (e)(2) shall not be taken into account.
        ``(4) Private qualified tuition program.--The term `private 
    qualified tuition program' means a qualified tuition program (as 
    defined in section 529) not established and maintained by a State 
    or any agency or instrumentality thereof.''.
        (5) Technical amendments.--
            (A) The text of sections 72(e)(9), 529, 530(b)(2)(B), and 
        4973(e)(1)(B) are amended by striking ``qualified State tuition 
        program'' each place it appears and inserting ``qualified 
        tuition program''.
            (B)(i) The heading of section 529 is amended to read as 
        follows:

``SEC. 529. QUALIFIED TUITION PROGRAMS.''.

            (ii) The item relating to section 529 in the table of 
        sections for part VIII of subchapter F of chapter 1 is amended 
        by striking ``State''.
    (e) Technical Corrections.--
        (1) Section 135(c)(3) is amended to read as follows:
        ``(3) Eligible educational institution.--The term `eligible 
    educational institution' has the meaning given such term by section 
    529(e)(5).''.
        (2) Section 529(c)(3)(A) is amended by striking ``section 
    72(b)'' and inserting ``section 72''.
        (3) Section 529(e)(2) is amended to read as follows:
        ``(2) Member of family.--The term `member of the family' means, 
    with respect to any designated beneficiary--
            ``(A) the spouse of such beneficiary;
            ``(B) an individual who bears a relationship to such 
        beneficiary which is described in paragraphs (1) through (8) of 
        section 152(a); and
            ``(C) the spouse of any individual described in 
        subparagraph (B).''.
    (f) Effective Dates.--
        (1) In general.--Except as provided in paragraphs (2) and (3), 
    the amendments made by this section shall apply to taxable years 
    beginning after December 31, 1998.
        (2) Eligible educational institutions permitted to maintain 
    qualified tuition programs.--The amendments made by subsection (d) 
    shall apply to taxable years beginning after December 31, 2005.
        (3) Technical corrections.--The amendments made by subsection 
    (e) shall take effect as if included in the amendments made by 
    section 211 of the Taxpayer Relief Act of 1997.

SEC. 103. EXTENSION OF EXCLUSION FOR EMPLOYER-PROVIDED EDUCATIONAL 
              ASSISTANCE.

    Section 127(d) (relating to termination of exclusion for 
educational assistance programs) is amended by striking ``May 31, 
2000'' and inserting ``December 31, 2002''.

SEC. 104. 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. 105. EXCLUSION OF CERTAIN AMOUNTS RECEIVED UNDER THE NATIONAL 
              HEALTH CORPS SCHOLARSHIP PROGRAM AND THE F. EDWARD HEBERT 
              ARMED FORCES HEALTH PROFESSIONS SCHOLARSHIP AND FINANCIAL 
              ASSISTANCE 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) Exceptions.--Paragraph (1) shall not apply to any amount 
    received by an individual under--
            ``(A) the National Health Corps Scholarship Program under 
        section 338A(g)(1)(A) of the Public Health Service Act; or
            ``(B) the Armed Forces Health Professions Scholarship and 
        Financial Assistance Program under subchapter I of chapter 105 
        of title 10, United States Code.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to amounts received in taxable years beginning after December 31, 
1993.

                          Subtitle B--Revenue

SEC. 111. OVERRULING OF SCHMIDT BAKING COMPANY CASE.

    (a) In General.--Section 404(a) (relating to general rule) is 
amended by adding at the end the following new paragraph:
        ``(11) Determinations relating to deferred compensation.--For 
    purposes of determining under this section--
            ``(A) whether compensation of an employee is deferred 
        compensation; and
            ``(B) 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) Effective Date.--
        (1) In general.--The amendment made by subsection (a) shall 
    apply to taxable years ending after December 31, 2001.
        (2) Phase-in of increase.--In the case of the first taxable 
    year of the taxpayer ending after December 31, 2001, only 60 
    percent of the amount of the increase in tax resulting from the 
    amendment made by subsection (a) shall be taken into account for 
    purposes of sections 6654 and 6655 of the Internal Revenue Code of 
    1986 (relating to failure to pay estimated income tax).
        (3) Change in method of accounting.--In the case of any 
    taxpayer required by this section to change its method of 
    accounting for its first taxable year ending after December 31, 
    2001--
            (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.

Subtitle C--Identification of Limited Tax Benefits Subject To Line Item 
                                  Veto

SEC. 121. IDENTIFICATION OF LIMITED TAX BENEFITS SUBJECT TO LINE ITEM 
              VETO.

    Section 1021(a)(3) of the Congressional Budget and Impoundment 
Control Act of 1974 shall only apply to section 104(a) (relating to 
additional increase in arbitrage rebate exception for governmental 
bonds used to finance education facilities).

          TITLE II--MEASURES TO ENCOURAGE RESULTS IN TEACHING

SEC. 201. 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 F;
            (B) by redesignating sections 2401 and 2402 as sections 
        2601 and 2602, 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 III--EQUAL EDUCATIONAL OPPORTUNITY

SEC. 301. 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 IV--SENSE OF THE CONGRESS

SEC. 401. 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. 402. SENSE OF THE CONGRESS.

    It is the sense of the 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 V--READING EXCELLENCE

SEC. 501. SHORT TITLE.

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

                       Subtitle A--Reading Grants

SEC. 511. AMENDMENT TO THE ELEMENTARY AND SECONDARY EDUCATION ACT OF 
              1965 FOR READING GRANTS.

    Title II of the Elementary and Secondary Education Act of 1965 (20 
U.S.C. 6601 et seq.) is amended further by inserting after part D (as 
inserted by section 201(d)(1)(C) of this Act) the following:

                        ``PART E--READING GRANTS

``SEC. 2501. 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 third 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. 2502. 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. 2503. 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 2504 
and 2505.
    ``(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 
            one local educational agency that has at least one 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 2504 and 2505;
            ``(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 2504 and 2505 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 2504 makes 
        available, upon request and in an understandable and uniform 
        format, to any parent of a student attending any school 
        selected under section 2504(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 2504 and 2505, 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 third 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 2504 and 2505;
        ``(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 2504 and 2505 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 
    2504--
            ``(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 first 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 one through three 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 2505; and
            ``(B) will make local educational agencies described in 
        section 2505(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 one-third 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 2510(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 2504, 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. 2504. LOCAL READING IMPROVEMENT SUBGRANTS.

    ``(a) In General.--
        ``(1) Subgrants.--A reading and literacy partnership that 
    receives a grant under section 2503 shall make subgrants, on a 
    competitive basis, to local educational agencies that have at least 
    one 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 one or more 
        community-based organizations that have established a record of 
        effectiveness with respect to reading readiness, reading 
        instruction for children in kindergarten through third 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 one 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 one 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 six 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 six 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 first 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 one through three 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 2505(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 one 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 one 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 one 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 first grade, particularly 
        students experiencing difficulty with reading skills.
            ``(H) Providing, for students who are enrolled in grades 
        one through three 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 
        2505(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. 2505. TUTORIAL ASSISTANCE SUBGRANTS.

    ``(a) In General.--
        ``(1) Subgrants.--A reading and literacy partnership that 
    receives a grant under section 2503 shall make subgrants on a 
    competitive basis to--
            ``(A) local educational agencies that have at least one 
        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 one 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 one 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 third 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. 2506. PROGRAM EVALUATION.

    ``(a) In General.--From funds reserved under section 2510(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 2503(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 2503(f).

``SEC. 2507. INFORMATION DISSEMINATION.

    ``(a) In General.--From funds reserved under section 2510(b)(2), 
the National Institute for Literacy shall disseminate information on 
reliable, replicable research on reading and information on subgrantee 
projects under section 2504 or 2505 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 2503, 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. 2508. 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 2503(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 Committee on Education and the Workforce of 
the House of Representatives.

``SEC. 2509. 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 2503, 2504, 
2505, and 2506.

``SEC. 2510. 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 2506(a);
        ``(2) shall reserve $5,075,000 to carry out sections 2503(f)(2) 
    and 2507, of which $5,000,000 shall be reserved for section 2507; 
    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. 521. 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 
    2510(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 2503, 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 2502).
        ``(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. 522. 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. 523. 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. 524. 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. 525. RESEARCH.

    The Elementary and Secondary Education Act of 1965 (20 U.S.C. 6301 
et seq.) is amended further by inserting after section 1210 (as 
inserted by section 524(a)(2) of this Act) 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 2507, the results of the research 
described in subsection (a) to States and recipients of subgrants under 
this part.''.

                   TITLE VI--MISCELLANEOUS PROVISIONS

SEC. 601. MULTILINGUALISM STUDY.

    (a) Findings.--Congress finds that--
        (1) 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; 
    and
        (2) education is the primary responsibility of State and local 
    governments and communities, and these entities are responsible for 
    developing policies in this subject area.
    (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 one 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 who 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. 602. 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).''.

SEC. 603. 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.''.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.