[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4169 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 4169

 To improve educational facilities, reduce class size, provide parents 
with additional educational choices for their children, and for certain 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 25, 1998

  Mr. Forbes introduced the following bill; which was referred to the 
   Committee on Education and the Workforce, and in addition to the 
Committee on Ways and Means, for a period to be subsequently determined 
 by the Speaker, in each case for consideration of such provisions as 
        fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
 To improve educational facilities, reduce class size, provide parents 
with additional educational choices for their children, and for certain 
                            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 ``Putting America's Children First Act 
of 1998''.

              TITLE I--EDUCATIONAL FACILITIES IMPROVEMENT

SEC. 101. PROVISION OF ASSISTANCE FOR CONSTRUCTION AND RENOVATION OF 
              EDUCATIONAL FACILITIES.

    Title XII of the Elementary and Secondary Education Act of 1965 (20 
U.S.C. 8501 et seq.) is amended--
            (1) by striking sections 12002 and 12003;
            (2) by redesignating sections 12001 and 12004 through 
        12013, as sections 12101 and 12102 through 12111, respectively;

``SEC. 12001. FINDINGS.

    ``The Congress finds the following:
            ``(1) The General Accounting Office performed a 
        comprehensive survey of the Nation's public elementary and 
        secondary school facilities, and found severe levels of 
        disrepair in all areas of the United States.
            ``(2) The General Accounting Office concluded more than 
        14,000,000 children attend schools in need of extensive repair 
        or replacement. Seven million children attend schools with life 
        safety code violations. Twelve million children attend schools 
        with leaky roofs.
            ``(3) The General Accounting Office found the problem of 
        crumbling schools transcends demographic and geographic 
        boundaries. At 38 percent of urban schools, 30 percent of rural 
        schools, and 29 percent of suburban schools, at least one 
        building is in need of extensive repair or should be completely 
        replaced.
            ``(4) The condition of school facilities has a direct 
        effect on the safety of students and teachers, and on the 
        ability of students to learn.
            ``(5) Academic research has proven a direct correlation 
        between the condition of school facilities and student 
        achievement. At Georgetown University, researchers found 
        students assigned to schools in poor condition can be expected 
        to fall 10.9 percentage points below those in buildings in 
        excellent condition. Similar studies have demonstrated up to a 
        20 percent improvement in test scores when students were moved 
        from a poor facility to a new facility.
            ``(6) The General Accounting Office found most schools are 
        not prepared to incorporate modern technology into the 
        classroom. Forty-six percent of schools lack adequate 
        electrical wiring to support the full-scale use of technology. 
        More than a third of schools lack the requisite electrical 
        power. Fifty-six percent of schools have insufficient phone 
        lines for modems.
            ``(7) The Department of Education reported that elementary 
        and secondary school enrollment, already at a record high 
        level, will continue to grow during the period between 1996 and 
        2000, and that in order to accommodate this growth, the United 
        States will need to build an additional 6,000 schools over this 
        time period.
            ``(8) The General Accounting Office found it will cost 
        $112,000,000,000 just to bring schools up to good, overall 
        condition, not including the cost of modernizing schools so the 
        schools can utilize 21st century technology, nor including the 
        cost of expansion to meet record enrollment levels.
            ``(9) State and local financing mechanisms have proven 
        inadequate to meet the challenges facing today's aging school 
        facilities. Large numbers of local educational agencies have 
        difficulties securing financing for school facility 
        improvement.
            ``(10) The Federal Government can support elementary and 
        secondary school facilities, and can leverage additional funds 
        for the improvement of elementary and secondary school 
        facilities.

``SEC. 12002. PURPOSE.

    ``The purpose of this title is to help State and local authorities 
improve the quality of education at their public schools through the 
provision of Federal funds to enable the State and local authorities to 
meet the cost associated with the improvement of school facilities 
within their jurisdictions.

     ``PART A--GENERAL INFRASTRUCTURE IMPROVEMENT GRANT PROGRAM'';

        and
            (4) by adding at the end the following:

       ``PART B--CONSTRUCTION AND RENOVATION BOND SUBSIDY PROGRAM

``SEC. 12201. DEFINITIONS.

    ``As used in this part:
            ``(1) Educational facility.--The term `educational 
        facility' has the meaning given the term `school' in section 
        12110.
            ``(2) Local area.--The term `local area' means the 
        geographic area served by a local educational agency.
            ``(3) Local bond authority.--The term `local bond 
        authority' means--
                    ``(A) a local educational agency with authority to 
                issue a bond for construction or renovation of 
                educational facilities in a local area; and
                    ``(B) a political subdivision of a State with 
                authority to issue such a bond for an area including a 
                local area.
            ``(4) Poverty line.--The term `poverty line' means the 
        official poverty line (as defined by the Office of Management 
        and Budget, and revised annually in accordance with section 
        673(2) of the Omnibus Budget Reconciliation Act of 1981 (42 
        U.S.C. 9902(2))) applicable to a family of the size involved.
            ``(5) State.--The term `State' means each of the several 
        States of the United States, the District of Columbia, and the 
        Commonwealth of Puerto Rico.

``SEC. 12202. AUTHORIZATION OF PROGRAM.

    ``(a) Program Authority.--Of the amount appropriated under section 
12210 for a fiscal year and not reserved under subsection (b), the 
Secretary shall use--
            ``(1) 20 percent of such amount to award grants to local 
        bond authorities for not more than 125 eligible local areas as 
        provided for under section 12203; and
            ``(2) 80 percent of such amount to award grants to States 
        as provided for under section 12204.
    ``(b) Special Rule.--The Secretary may reserve--
            ``(1) not more than 1 percent of the amount appropriated 
        under section 12210 to provide assistance to Indian schools in 
        accordance with the purpose of this title;
            ``(2) not more than 0.5 percent of the amount appropriated 
        under section 12210 to provide assistance to Guam, the United 
        States Virgin Islands, American Samoa, the Commonwealth of the 
        Northern Mariana Islands, the Republic of the Marshall Islands, 
        the Federated States of Micronesia, and the Republic of Palau 
        to carry out the purpose of this title; and
            ``(3) not more than 0.1 percent of the amount appropriated 
        under section 12210 to carry out section 12209.

``SEC. 12203. DIRECT GRANTS TO LOCAL BOND AUTHORITIES.

    ``(a) In General.--The Secretary shall award a grant under section 
12202(a)(1) to eligible local bond authorities to provide assistance 
for construction or renovation of educational facilities in a local 
area.
    ``(b) Use of Funds.--The local bond authority shall use amounts 
received through a grant made under section 12202(a)(1) to pay a 
portion of the interest costs applicable to any local bond issued to 
finance an activity described in section 12205 with respect to the 
local area.
    ``(c) Eligibility and Determination.--
            ``(1) Eligibility.--To be eligible to receive a grant under 
        section 12202(a)(1) for a local area, a local bond authority 
        shall demonstrate the capacity to issue a bond for an area that 
        includes 1 of the 125 local areas for which the Secretary has 
        made a determination under paragraph (2).
            ``(2) Determination.--
                    ``(A) Mandatory.--The Secretary shall make a 
                determination of the 100 local areas that have the 
                highest numbers of children who are--
                            ``(i) aged 5 to 17, inclusive; and
                            ``(ii) members of families with incomes 
                        that do not exceed 100 percent of the poverty 
                        line.
                    ``(B) Discretionary.--The Secretary may make a 
                determination of 25 local areas, for which the 
                Secretary has not made a determination under 
                subparagraph (A), that have extraordinary needs for 
                construction or renovation of educational facilities 
                that the local bond authority serving the local area is 
                unable to meet.
    ``(d) Application.--To be eligible to receive a grant under section 
12202(a)(1), a local bond authority shall prepare and submit to the 
Secretary an application at such time, in such manner, and containing 
such information as the Secretary may require, including--
            ``(1) an assurance that the application was developed in 
        consultation with parents and classroom teachers;
            ``(2) information sufficient to enable the Secretary to 
        make a determination under subsection (c)(2) with respect to 
        such local authority;
            ``(3) a description of the architectural, civil, 
        structural, mechanical, or electrical construction or 
        renovation to be supported with the assistance provided under 
        this part;
            ``(4) a cost estimate of the proposed construction or 
        renovation;
            ``(5) an identification of other resources, such as unused 
        bonding capacity, that are available to carry out the 
        activities for which assistance is requested under this part;
            ``(6) a description of how activities supported with funds 
        provided under this part will promote energy conservation; and
            ``(7) such other information and assurances as the 
        Secretary may require.
    ``(e) Award of Grants.--
            ``(1) In general.--In awarding grants under section 
        12202(a)(1), the Secretary shall give preference to a local 
        bond authority based on--
                    ``(A) the extent to which the local educational 
                agency serving the local area involved or the 
                educational facility for which the authority seeks a 
                grant (as appropriate) meets the criteria described in 
                section 12103(a);
                    ``(B) the extent to which the educational facility 
                is overcrowded; and
                    ``(C) the extent to which assistance provided 
                through the grant will be used to fund construction or 
                renovation that, but for receipt of the grant, would 
                not otherwise be possible to undertake.
            ``(2) Amount of Assistance.--
                    ``(A) In general.--In determining the amount of 
                assistance for which local bond authorities are 
                eligible under section 12202(a)(1), the Secretary 
                shall--
                            ``(i) give preference to a local bond 
                        authority based on the criteria specified in 
                        paragraph (1); and
                            ``(ii) consider--
                                    ``(I) the amount of the cost 
                                estimate contained in the application 
                                of the local bond authority under 
                                subsection (d)(4);
                                    ``(II) the relative size of the 
                                local area served by the local bond 
                                authority; and
                                    ``(III) any other factors 
                                determined to be appropriate by the 
                                Secretary.
                    ``(B) Maximum amount of assistance.--A local bond 
                authority shall be eligible for assistance under 
                section 12202(a)(1) in an amount that does not exceed 
                the appropriate percentage under section 12204(f)(3) of 
                the interest costs applicable to any local bond issued 
                to finance an activity described in section 12205 with 
                respect to the local area involved.

``SEC. 12204. GRANTS TO STATES.

    ``(a) In General.--The Secretary shall award a grant under section 
12202(a)(2) to each eligible State to provide assistance to the State, 
or local bond authorities in the State, for construction and renovation 
of educational facilities in local areas.
    ``(b) Use of Funds.--The State shall use amounts received through a 
grant made under section 12202(a)(2)--
            ``(1) to pay a portion of the interest costs applicable to 
        any State bond issued to finance an activity described in 
        section 12205 with respect to the local areas; or
            ``(2) to provide assistance to local bond authorities in 
        the State to pay a portion of the interest costs applicable to 
        any local bond issued to finance an activity described in 
        section 12205 with respect to the local areas.
    ``(c) Amount of Grant to State.--
            ``(1) In general.--From the amount available for grants 
        under section 12202(a)(2), the Secretary shall award a grant to 
        each eligible State that is equal to the total of--
                    ``(A) a sum that bears the same relationship to 50 
                percent of such amount as the total amount of funds 
                made available for all eligible local educational 
                agencies in the State under part A of title I for such 
                year bears to the total amount of funds made available 
                for all eligible local educational agencies in all 
                States under such part for such year; and
                    ``(B) a sum that bears the same relationship to 50 
                percent of such amount as the total amount of funds 
                made available for all eligible local educational 
                agencies in the State under title VI for such year 
                bears to the total amount of funds made available for 
                all eligible local educational agencies in all States 
                under such title for such year.
            ``(2) Eligible local educational agencies.--For the purpose 
        of paragraph (1) the term `eligible local educational agency' 
        means a local educational agency that does not serve a local 
        area for which an eligible local bond authority received a 
        grant under section 12203.
    ``(d) State Applications Required.--To be eligible to receive a 
grant under section 12202(a)(2), a State shall prepare and submit to 
the Secretary an application at such time, in such manner, and 
containing such information as the Secretary may require. Such 
application shall contain--
            ``(1) a description of the process the State will use to 
        determine which local bond authorities will receive assistance 
        under subsection (b)(2).
            ``(2) an assurance that grant funds under this section will 
        be used to increase the amount of school construction or 
        renovation in the State for a fiscal year compared to such 
        amount in the State for the preceding fiscal years.``(e) 
        Administering Agency.--
            ``(1) In general.--The State agency with authority to issue 
        bonds for the construction or renovation of educational 
        facilities, or with the authority to otherwise finance such 
        construction or renovation, shall administer the amount 
        received through the grant.
            ``(2) Special rule.--If no agency described in paragraph 
        (1) exits, or if there is more than one such agency, then the 
        chief executive officer of the State and the chief State school 
        officer shall designate a State entity or individual to 
        administer the amounts received through the grant.
    ``(f) Assistance to Local Bond Authorities.--
            ``(1) In general.--To be eligible to receive assistance 
        from a State under this section, a local bond authority shall 
        prepare and submit to the State agency designated under 
        subsection (e) an application at such time, in such manner, and 
        containing such information as the State agency may require, 
        including the information described in section 12203(d).
            ``(2) Criteria.--In awarding grants under this section, the 
        State agency shall give preference to a local bond authority 
        based on--
                    ``(A) the extent to which the local educational 
                agency serving the local area involved or the 
                educational facility for which the authority seeks the 
                grant (as appropriate) meets the criteria described in 
                section 12103(a);
                    ``(B) the extent to which the educational facility 
                is overcrowded; and
                    ``(C) the extent to which assistance provided 
                through the grant will be used to fund construction or 
                renovation that, but for receipt of the grant, would 
                not otherwise be possible to undertake.
            ``(3) Amount of assistance.--A local bond authority seeking 
        assistance for a local area served by a local educational 
        agency described in--
                    ``(A) clause (i)(I) or clause (ii)(I) of section 
                1125(c)(2)(A), shall be eligible for assistance in an 
                amount that does not exceed 10 percent;
                    ``(B) clause (i)(II) or clause (ii)(II) of section 
                1125(c)(2)(A), shall be eligible for assistance in an 
                amount that does not exceed 20 percent;
                    ``(C) clause (i)(III) or clause (ii)(III) of 
                section 1125(c)(2)(A), shall be eligible for assistance 
                in an amount that does not exceed 30 percent;
                    ``(D) clause (i)(IV) or clause (ii)(IV) of section 
                1125(c)(2)(A), shall be eligible for assistance in an 
                amount that does not exceed 40 percent; and
                    ``(E) clause (i)(V) or clause (ii)(V) of section 
                1125(c)(2)(A), shall be eligible for assistance in an 
                amount that does not exceed 50 percent;
        of the interest costs applicable to any local bond issued to 
        finance an activity described in section 12205 with respect to 
        the local area.
    ``(g) Assistance to State.--
            ``(1) In general.--If a State issues a bond to finance an 
        activity described in section 12205 with respect to local 
        areas, the State shall be eligible for assistance in an amount 
        that does not exceed the percentage calculated under the 
        formula described in paragraph (2) of the interest costs 
        applicable to the State bond with respect to the local areas.
            ``(2) Formula.--The Secretary shall develop a formula for 
        determining the percentage referred to in paragraph (1). The 
        formula shall specify that the percentage shall consist of a 
        weighted average of the percentages referred to in 
        subparagraphs (A) through (E) of subsection (f)(3) for the 
        local areas involved.

``SEC. 12205. AUTHORIZED ACTIVITIES.

    ``An activity described in this section is a project of significant 
size and scope that consists of--
            ``(1) the repair or upgrading of classrooms or structures 
        related to academic learning, including the repair of leaking 
        roofs, crumbling walls, inadequate plumbing, poor ventilation 
        equipment, and inadequate heating or light equipment;
            ``(2) an activity to increase physical safety at the 
        educational facility involved;
            ``(3) an activity to enhance the educational facility 
        involved to provide access for students, teachers, and other 
        individuals with disabilities;
            ``(4) an activity to improve the energy efficiency of the 
        educational facility involved;
            ``(5) an activity to address environmental hazards at the 
        educational facility involved, such as poor ventilation, indoor 
        air quality, or lighting;
            ``(6) the provision of basic infrastructure that 
        facilitates educational technology, such as communications 
        outlets, electrical systems, power outlets, or a communication 
        closet;
            ``(7) the construction of new schools to meet the needs 
        imposed by enrollment growth;
            ``(8) additional construction for existing schools to meet 
        needs imposed by overcrowding; and
            ``(9) any other activity the Secretary determines achieves 
        the purpose of this title.

``SEC. 12206. STATE GRANT WAIVERS.

    ``(a) Waiver for State Issuance of Bond.--
            ``(1) In general.--A State that issues a bond described in 
        section 12204(b)(1) with respect to a local area may request 
        that the Secretary waive the limits described in section 
        12204(f)(3) for the local area, in calculating the amount of 
        assistance the State may receive under section 12204(g). The 
        State may request the waiver only if no local entity is able, 
        for one of the reasons described in subparagraphs (A) through 
        (F) of paragraph (2), to issue bonds on behalf of the local 
        area. Under such a waiver, the Secretary may permit the State 
        to use amounts received through a grant made under section 
        12202(a)(2) to pay for not more than 80 percent of the interest 
        costs applicable to the State bond with respect to the local 
        area.
            ``(2) Demonstration by State.--To be eligible to receive a 
        waiver under this subsection, a State shall demonstrate to the 
        satisfaction of the Secretary that--
                    ``(A) the local bond authority serving the local 
                area has reached a limit on its borrowing authority as 
                a result of a debt ceiling or property tax cap;
                    ``(B) the local area has a high percentage of low-
                income residents, or an unusually high property tax 
                rate;
                    ``(C) the demographic composition of the local area 
                will not support additional school spending;
                    ``(D) the local bond authority has a history of 
                failed attempts to pass bond referenda;
                    ``(E) the local area contains a significant 
                percentage of Federally-owned land that is not subject 
                to local taxation; or
                    ``(F) for another reason, no local entity is able 
                to issue bonds on behalf of the local area.
    ``(b) Waiver for Other Financing Sources.--
            ``(1) In general.--A State may request that the Secretary 
        waive the use requirements of section 12204(b) for a local bond 
        authority to permit the State to provide assistance to the 
        local bond authority to finance construction or renovation by 
        means other than through the issuance of bonds.
            ``(2) Use of funds.--A State that receives a waiver granted 
        under this subsection may provide assistance to a local bond 
        authority in accordance with the criteria described in section 
        12204(f)(2) to enable the local bond authority to repay the 
        costs incurred by the local bond authority in financing an 
        activity described in section 12205. The local bond authority 
        shall be eligible to receive the amount of such assistance that 
        the Secretary estimates the local bond authority would be 
        eligible to receive under section 12204(f)(3) if the 
        construction or renovation were financed through the issuance 
        of a bond.
            ``(3) Matching requirement.--The State shall make available 
        to the local bond authority (directly or through donations from 
        public or private entities) non-Federal contributions in an 
        amount equal to not less than $1 for every $1 of Federal funds 
        provided to the local bond authority through the grant.
    ``(c) Waiver for Other Uses.--
            ``(1) In general.--A State may request that the Secretary 
        waive the use requirements of section 12204(b) for a State to 
        permit the State to carry out activities that achieve the 
        purpose of this title.
            ``(2) Demonstration by state.--To be eligible to receive a 
        waiver under this subsection, a State shall demonstrate to the 
        satisfaction of the Secretary that the use of assistance 
        provided under the waiver--
                    ``(A) will result in an equal or greater amount of 
                construction or renovation of educational facilities 
                than the provision of assistance to defray the interest 
                costs applicable to a bond for such construction or 
                renovation; and
                    ``(B) will be used to fund activities that are 
                effective in carrying out the activities described in 
                section 12205, such as--
                            ``(i) the capitalization of a revolving 
                        loan fund for such construction or renovation;
                            ``(ii) the use of funds for reinsurance or 
                        guarantees with respect to the financing of 
                        such construction or renovation;
                            ``(iii) the creation of a mechanism to 
                        leverage private sector resources for such 
                        construction or renovation;
                            ``(iv) the capitalization of authorities 
                        similar to State Infrastructure Banks to 
                        leverage additional funds for such construction 
                        or renovation; or
                            ``(v) any other activity the Secretary 
                        determines achieves the purpose of this title.
    ``(d) Local Bond Authority Waiver.--
            ``(1) In general.--A local bond authority may request the 
        Secretary waive the use requirements of section 12203(b) for a 
        local head authority to permit the authority to finance 
        construction or renovation of educational facilities by means 
        other than through use of bonds.
            ``(2) Demonstration.--To be eligible to receive a waiver 
        under this subsection, a local bond authority shall demonstrate 
        that the amounts made available through a grant under the 
        waiver will result in an equal or greater amount of 
        construction or renovation of educational facilities than the 
        provision of assistance to defray the interest costs applicable 
        to a bond for such construction or renovation.
    ``(e) Request for Waiver.--A State or local bond authority that 
desires a waiver under this section shall submit a waiver request to 
the Secretary that--
            ``(1) identifies the type of waiver requested;
            ``(2) with respect to a waiver described in subsection (a), 
        (c), or (d), makes the demonstration described in subsection 
        (a)(2), (c)(2), or (d)(2), respectively;
            ``(3) describes the manner in which the waiver will further 
        the purpose of this title; and
            ``(4) describes the use of assistance provided under such 
        waiver.
    ``(f) Action by Secretary.--The Secretary shall make a 
determination with respect to a request submitted under subsection (d) 
not later than 90 days after the date on which such request was 
submitted.
    ``(g) General Requirements.--
            ``(1) States.--In the case of a waiver request submitted by 
        a State under this section, the State shall--
                    ``(A) provide all interested local educational 
                agencies in the State with notice and a reasonable 
                opportunity to comment on the request;
                    ``(B) submit the comments to the Secretary; and
                    ``(C) provide notice and information to the public 
                regarding the waiver request in the manner that the 
                applying State customarily provides similar notices and 
                information to the public.
            ``(2) Local bond authorities.--In the case of a waiver 
        request submitted by a local bond authority under this section, 
        the local bond authority shall--
                    ``(A) provide the affected local educational agency 
                with notice and a reasonable opportunity to comment on 
                the request;
                    ``(B) submit the comments to the Secretary; and
                    ``(C) provide notice and information to the public 
                regarding the waiver request in the manner that the 
                applying local bond authority customarily provides 
                similar notices and information to the public.

``SEC. 12207. GENERAL PROVISIONS.

    ``(a) Failure to Issue Bonds.--
            ``(1) States.--If a State that receives assistance under 
        this part fails to issue a bond for which the assistance is 
        provided, the amount of such assistance shall be made available 
        to the State as provided for under section 12204, during the 
        first fiscal year following the date of repayment.
            ``(2) Local bond authorities and local areas.--If a local 
        bond authority that receives assistance under this part fails 
        to issue a bond, or a local area that receives such assistance 
        fails to become the beneficiary of a bond, for which the 
        assistance is provided, the amount of such assistance--
                    ``(A) in the case of assistance received under 
                section 12202(a)(1), shall be repaid to the Secretary 
                and made available as provided for under section 12203; 
                and
                    ``(B) in the case of assistance received under 
                section 12202(a)(2), shall be repaid to the State and 
                made available as provided for under section 12204.
    ``(b) Liability of the Federal Government.--The Secretary shall not 
be liable for any debt incurred by a State or local bond authority for 
which assistance is provided under this part. If such assistance is 
used by a local educational agency to subsidize a debt other than the 
issuance of a bond, the Secretary shall have no obligation to repay the 
lending institution to whom the debt is owed if the local educational 
agency defaults.

``SEC. 12208. FAIR WAGES.

    ``The provisions of section 12107 shall apply with respect to all 
laborers and mechanics employed by contractors or subcontractors in the 
performance of any contract and subcontract for the repair, renovation, 
alteration, or construction, including painting and decorating, of any 
building or work that is financed in whole or in part using assistance 
provided under this part.

``SEC. 12209. REPORT.

    ``From amounts reserved under section 12202(b)(3) for each fiscal 
year the Secretary shall--
            ``(1) collect such data as the Secretary determines 
        necessary at the school, local, and State levels;
            ``(2) conduct studies and evaluations, including national 
        studies and evaluations, in order to--
                    ``(A) monitor the progress of activities supported 
                with funds provided under this part; and
                    ``(B) evaluate the state of United States 
                educational facilities; and
            ``(3) report to the appropriate committees of Congress 
        regarding the findings of the studies and evaluations described 
        in paragraph (2).

``SEC. 12210. FUNDING.

    ``(a) In General.--There are authorized to be appropriated 
$5,000,000,000 for fiscal year 1999 to carry out this part.
    ``(b) Entitlement.--Subject to subsection (a), each State or local 
bond authority awarded a grant under this part shall be entitled to 
payments under the grant.
    ``(c) Availability.--Any amounts appropriated pursuant to the 
authority of subsection (a) shall remain available until expended.''.

SEC. 102. CONFORMING AMENDMENTS.

    (a) Cross References.--Part A of title XII of the Elementary and 
Secondary Education Act of 1965 (as redesignated by section 102(3)) is 
amended--
            (1) in section 12102(a) (as redesignated by section 
        102(2))--
                    (A) in paragraph (1)--
                            (i) by striking ``12013'' and inserting 
                        ``12111'';
                            (ii) by striking ``12005'' and inserting 
                        ``12103''; and
                            (iii) by striking ``12007'' and inserting 
                        ``12105''; and
                    (B) in paragraph (2), by striking ``12013'' and 
                inserting ``12111''; and
            (2) in section 12110(3)(C) (as redesignated by section 
        102(2)), by striking ``12006'' and inserting ``12104''.
    (b) Conforming Amendments.--Part A of title XII of the Elementary 
and Secondary Education Act of 1965 (as redesignated by section 202(3)) 
(20 U.S.C. 8501 et seq.) is further amended--
            (1) in section 12101 (as redesignated by section 102(2)), 
        by striking ``This title'' and inserting ``This part''; and
            (2) in sections 12102(a)(2), 12102(b)(1), 12103(a), 
        12103(b), 12103(b)(2), 12103(c), 12103(d), 12104(a), 
        12104(b)(2), 12104(b)(3), 12104(b)(4), 12104(b)(6), 
        12104(b)(7), 12105(a), 12105(b), 12106(a), 12106(b), 12106(c), 
        12106(c)(1), 12106(c)(7), 12106(e), 12107, 12108(a)(1), 
        12108(a)(2), 12108(b)(1), 12108(b)(2), 12108(b)(3), 
        12108(b)(4), 12109(2)(A), and 12110 (as redesignated by section 
        102(2)), by striking ``this title'' each place it appears and 
        inserting ``this part''.

                     TITLE II--REDUCING CLASS SIZE

SEC. 201. FINDINGS.

    Congress makes the following findings:
            (1) Qualified teachers in small classes can provide 
        students with more individualized attention, spend more time on 
        instruction and less on other tasks, cover more material 
        effectively, and are better able to work with parents to help 
        the parents further their children's education.
            (2) Rigorous research has shown that students attending 
        small classes in the early grades make more rapid educational 
        progress than the students in larger classes, and that those 
        achievement gains persist through at least the 8th grade. For 
        example:
                    (A) In a landmark 4-year experimental study of 
                class size reduction in grades kindergarten through 
                grade 3 in Tennessee, researchers found that students 
                in smaller classes earned significantly higher scores 
                on basic skills tests in all 4 years and in all types 
                of schools, including urban, rural, and suburban 
                schools.
                    (B) After 2 years in reduced class sizes, students 
                in the Flint, Michigan Public School District improved 
                their reading scores by 44 percent.
            (3) The benefits of smaller classes are greatest for lower-
        achieving, minority, poor, and inner-city children. One study 
        found that urban 4th-graders in smaller than average classes 
        were 3/4 of a school year ahead of their counterparts in larger 
        than average classes.
            (4) Smaller classes allow teachers to identify and work 
        sooner with students who have learning disabilities and, 
        potentially, can reduce those students' need for special 
        education services in the later grades.
            (5) Students in smaller classes are able to become more 
        actively engaged in learning than their peers in large classes.
            (6) Efforts to improve educational outcomes by reducing 
        class sizes in the early grades are likely to be successful 
        only if well-qualified teachers are hired to fill additional 
        classroom positions and if teachers received intensive, 
        continuing training in working effectively in smaller classroom 
        settings.
            (7) State certified and licensed teachers help ensure high 
        quality instruction in the classroom.
            (8) According to the National Commission on Teaching and 
        America's Future, the most important influence on student 
        achievement is the expertise of their teachers. One New York 
        City study comparing high- and low-achieving elementary schools 
        with similar student characteristics, found that more than 90 
        percent of the variation in achievement in mathematics and 
        reading was due to differences in teacher qualifications.
            (9) Our Nation needs more qualified teachers to meet 
        changing demographics and to help students meet high standards, 
        as demonstrated by the following:
                    (A) Over the next decade, our Nation will need to 
                hire over 2,000,000 teachers to meet increasing student 
                enrollments and teacher retirements.
                    (B) 1 out of 4 high school teachers does not have a 
                major or minor in the main subject that they teach. 
                This is true for more than 30 percent of mathematics 
                teachers.
                    (C) In schools with the highest minority 
                enrollments, students have less than a 50 percent 
                chance of getting a science or mathematics teacher who 
                holds a degree in that field.
                    (D) In 1991, 25 percent of new public school 
                teachers had not completed the requirements for a 
                license in their main assignment field. This number 
                increased to 27 percent by 1994, including 11 percent 
                who did not have a license.
            (10) We need more teachers who are adequately prepared for 
        the challenges of the 21st century classroom, as demonstrated 
        by the fact that--
                    (A) 50 percent of teachers have little or no 
                experience using technology in the classroom; and
                    (B) in 1994, only 10 percent of new teachers felt 
                they were prepared to integrate new technology into 
                their instruction.
            (11) Teacher quality cannot be further compromised to meet 
        the demographic demand for new teachers and smaller class 
        sizes. Comprehensive improvements in teacher preparation and 
        development programs are also necessary to ensure the 
        effectiveness of new teachers and the academic success of 
        students in the classroom. These comprehensive improvements 
        should include encouraging more institutions of higher 
        education that operate teacher preparation programs to work in 
        partnership with local educational agencies and elementary and 
        secondary schools; providing more hands-on, classroom 
        experience to prospective teachers; creating mentorship 
        programs for new teachers; providing high quality content area 
        training and classroom skills for new teachers; and training 
        teachers to incorporate technology into the classroom.
            (12) Efforts should be made to provide prospective teachers 
        with a greater knowledge of instructional programs that are 
        research-based, of demonstrated effectiveness, replicable in 
        diverse and challenging circumstances, and supported by 
        networks of experts and experienced practitioners.
            (13) Several States have begun serious efforts to reduce 
        class sizes in the early elementary grades, but these actions 
        may be impeded by financial limitations or difficulties in 
        hiring qualified teachers.
            (14) The Federal Government can assist in this effort by 
        providing funding for class size reductions in grades 1 through 
        3, and by helping to ensure that the new teachers brought into 
        the classroom are well-qualified.

SEC. 202. PURPOSE.

    It is the purpose of this title to help States and local 
educational agencies recruit, train, and hire 100,000 additional 
qualified teachers in order to reduce class sizes nationally, in grades 
1 through 3, to an average of 18 students per classroom and to improve 
teaching in the early grades so that all students can learn to read 
independently and well by the end of the third grade.

SEC. 203. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to carry out this title 
$1,100,000,000 for fiscal year 1999, $1,300,000,000 for fiscal year 
2000, $1,500,000,000 for fiscal year 2001, $1,700,000,000 for fiscal 
year 2002, $1,700,000,000 for fiscal year 2003, $2,300,000,000 for 
fiscal year 2004, and $2,800,000,000 for fiscal year 2005.

SEC. 204. ALLOTMENT TO STATES.

    (a) Entitlement to Payments.--Each State having an application 
approved under section 205 shall be entitled to a payment for a fiscal 
year in an amount equal to the State's allotment under this section.
    (b) Reservations.--
            (1) Evaluations.--From the amount made available under 
        section 203 for a fiscal year, the Secretary may reserve not 
        more than $1,000,000,000 to carry out the evaluation required 
        under section 213.
            (2) Outlying areas; secretary of the interior.--From the 
        amount made available under section 203 and not reserved under 
paragraph (1) for a fiscal year, the Secretary shall reserve not more 
than 1 percent for payments to the outlying areas, and to the Secretary 
of the Interior for schools supported by the Bureau of Indian Affairs, 
for activities that are consistent with the purpose of this title. The 
Secretary shall allocate funds among the outlying areas and the 
Secretary of the Interior in accordance with their respective needs for 
assistance under this title.
    (c) Allotment Formula.--From the amount made available under 
section 203 and not reserved under subsection (b) for a fiscal year, 
the Secretary shall allot to each State an amount that bears the same 
relationship to the amount so made available as the amount of funding 
the State received under part A of title I of the Elementary and 
Secondary Education Act of 1965 (20 U.S.C. 6311 et seq.) for the 
previous fiscal year bears to the total amount so received by all 
States for the previous fiscal year.
    (d) Reallotment.--If the Secretary determines that any amount of a 
State's allotment under this section will not be available to the State 
for such year, then the Secretary shall reallot such amount to other 
States in the same manner as the funds were originally allotted under 
subsection (b).
    (e) Definitions.--In this title:
            (1) Outlying area.--The term `outlying area' means the 
        United States Virgin Islands, Guam, American Samoa, and the 
        Commonwealth of the Northern Mariana Islands.
            (2) State.--The term `State' means each of the several 
        States of the United States, the District of Columbia, and the 
        Commonwealth of Puerto Rico.

SEC. 205. APPLICATIONS.

    (a) In General.--The State educational agency of each State 
desiring to receive funding under this title shall submit an 
application to the Secretary at such time, in such form, and containing 
such information as the Secretary may require.
    (b) Contents.--The application shall include--
            (1) the State educational agency's goals for using funds 
        under this title to reduce average class sizes in grades 1 
        through 3, including a description of current class sizes in 
        the schools served by local educational agencies of the State;
            (2) a description of the State educational agency's plan 
        for using funds under this title to reduce average class size 
        in grades 1 through 3;
            (3) a description of the State educational agency's plan 
        for allocating funds provided under this title within the 
        State, including an estimate of the impact of those allocations 
        on class sizes in the schools served by individual local 
        educational agencies of the State, and an assurance that the 
        State educational agency will make this plan public within the 
        State;
            (4) a description of the State educational agency's 
        strategy for improving teacher quality in grades 1 through 3 
        within the State (which may be a part of a broader strategy to 
        improve teacher quality generally), including actions the State 
        educational agency will take to ensure the availability, within 
        the State, of a sufficient number of qualified teachers to fill 
        the positions created with funds provided under this title, 
        which strategy shall describe how the State educational agency 
        and the local educational agencies within the State will ensure 
        that--
                    (A) individuals hired for positions created with 
                funds provided under this title will meet all of the 
                State's requirements for full certification or 
                licensure of teachers, or will make satisfactory 
                progress toward achieving such full certification or 
                licensure (which may include individuals pursuing 
                alternative routes to such certification or licensure); 
                and
                    (B) individuals hired for positions created with 
                funds provided under this title, and other teachers 
                affected by the funds, will be prepared to teach 
                reading effectively to all children and will take part 
                in continuing professional development in effective 
                reading instruction and in teaching effectively in 
                small classes; and
            (5) a description of how the State will use other funds, 
        including other Federal funds, to improve teacher quality and 
        reading achievement within the State.
    (c) Approval.--The Secretary shall approve an application of a 
State if such application meets the requirements of this section and 
holds reasonable promise of achieving the purpose of this title.

SEC. 206. WITHIN STATE ALLOCATIONS.

    (a) Reservation.--From the amount allotted to a State under this 
title for a fiscal year, the State may reserve a total of not more than 
1 percent for the administrative costs of the State educational agency 
under this title and for State level activities described in section 
207.
    (b) Allocations.--
            (1) Minimum allocation to certain local educational 
        agencies.--
                    (A) In general.--From the amount allotted to a 
                State under this title and not reserved under 
                subsection (a) for a fiscal year, the State shall make 
                an allocation to each local educational agency in the 
                State that is described in subparagraph (B) in an 
                amount that bears the same relation to such amount as 
                the amount such local educational agency received under 
                part A of title I of the Elementary and Secondary 
                Education Act of 1965 (20 U.S.C. 6311 et seq.) for the 
                preceding fiscal year bears to the total amount all 
                such local educational agencies in the State received 
                under such part for the preceding year.
                    (B) Certain local educational agencies.--A local 
                educational agency referred to in subparagraph (A) is a 
                local educational agency that serves schools in which--
                            (i) at least 30 percent of the children 
                        enrolled in the schools are from families with 
                        incomes below the poverty line; or
                            (ii) at least 10,000 of the children 
                        enrolled in the schools are from such families.
            (2) Remainder.--From the amount allotted to a State under 
        this title, not reserved under subsection (a), and that remain 
        after application of paragraph (1), the State shall make 
        allocations to local educational agencies in the State--
                    (A) on the basis of--
                            (i) the local educational agencies' current 
                        or projected class sizes in grades 1 through 3; 
                        and
                            (ii) the relative ability of the local 
                        educational agencies to finance class size 
                        reductions with local educational agency funds; 
                        and
                    (B) in such a manner as to enable local educational 
                agencies to reduce their average class sizes, in grades 
                1 through 3, to the average class size proposed in the 
                State application.
            (3) Clarification regarding certain local educational 
        agencies.--A State shall make an allocation under paragraph (1) 
        to a local educational agency described in paragraph (1)(B) and 
        may make an allocation under paragraph (2) to a local 
        educational agency described in paragraph (1)(B).

SEC. 207. STATE LEVEL ACTIVITIES.

    From the amount reserved under section 206(a) for a fiscal year the 
State may carry out activities described in the application submitted 
under section 205. Such activities may include--
            (1) revision of State teacher certification or licensure 
        standards so as to promote the hiring of teachers with high 
        academic and pedagogical qualifications;
            (2) developing opportunities for professional development 
        for teachers with respect to skills and strategies that enable 
        the teachers to teach effectively in smaller classes; and
            (3) monitoring of activities assisted under this title and 
        other administrative costs associated with the operation of the 
        activities.

SEC. 208. LOCAL USES OF FUNDS.

    (a) Local Educational Agencies.--
            (1) In general.--
                    (A) Hiring of teachers.--Each local educational 
                agency receiving an allocation under this title shall 
                use the allocated funds, with the exception of funds 
                reserved under paragraph (2), for the payment of the 
                salaries and benefits for the additional teachers 
                needed to reduce class sizes in grades 1 through 3 to 
                the level determined as the State goal in the State 
                application under section 205(b)(1).
                    (B) Special rule.--A local educational agency that 
                has achieved the goal described in section 205(b)(1) 
                may use the allocated funds--
                            (i) to make further class size reductions 
                        in grades 1 through 3;
                            (ii) to reduce class sizes in grades other 
                        than grades 1 through 3; or
                            (iii) to undertake quality improvement 
                        activities such as the activities described in 
                        paragraph (2).
            (2) Special rule.--From the amount allocated to a local 
        educational agency under this title for each of the fiscal 
        years 1999 through 2003, the local educational agency shall use 
        not less than 10 percent for activities to ensure that teachers 
        hired with funds provided under this title, and other teachers 
        who will teach smaller classes as a result of activities 
        assisted under this title, are prepared to teach reading and 
        other subjects effectively in a smaller class setting. 
Activities undertaken in pursuit of this objective may include--
                    (A) training teachers in effective reading 
                instructional practices (including practices for 
                teaching students who experience initial difficulty in 
                learning to read) and in effective instructional 
                practices in small classes;
                    (B) paying the costs for teachers hired in grades 1 
                through 3 who are not fully certified or licensed to 
                obtain full certification or licensure;
                    (C) providing mentors or other support for teachers 
                in grades 1 through 3;
                    (D) establishing programs for the recruitment of 
                qualified teachers for schools that have a shortage of 
                certified or licensed teachers; and
                    (E) providing scholarships or other aid to 
                paraprofessionals or undergraduate students in order to 
                expand the pool of qualified teachers.
    (b) Schools.--Each school receiving funds from a local educational 
agency under this title may use the funds to produce for the public an 
annual report regarding the school's--
            (1) student achievement in reading (using the assessments 
        the State uses under section 1111(b) of the Elementary and 
        Secondary Education Act of 1965 (20 U.S.C. 6311(b)), and 
        disaggregating data in the same manner as required under such 
        section;
            (2) average class size; and
            (3) teacher qualifications for teachers of grades 1 through 
        3.

SEC. 209. MATCHING REQUIREMENT.

    (a) Matching Funds.--In order to receive an allocation under this 
title for a fiscal year a local educational agency shall provide 
matching funds, in the amount determined under subsection (b), to pay 
the cost of activities assisted under this title for the fiscal year.
    (b) Amount.--The amount of matching funds required under subsection 
(a)--
            (1) in the case of a local educational agency for which the 
        number of children from families with incomes below the poverty 
        line that are served by the agency is 25 percent or greater 
        than 25 percent of all students served by the agency, 0 percent 
        of the cost of activities to be assisted under this title;
            (2) in the case of a local educational agency for which 
        such number is 20 percent or greater but less than 25 percent, 
        shall be not less than 10 percent of the costs;
            (3) in the case of a local educational agency for which 
        such number is 15 percent or greater but less than 20 percent, 
        shall be not less than 20 percent of the costs;
            (4) in the case of a local educational agency for which 
        such number is 10 percent or greater but less than 15 percent, 
        shall be not less than 30 percent of the costs;
            (5) in the case of a local educational agency for which 
        such number is 5 percent or greater but less than 10 percent, 
        shall be not less than 40 percent of the costs; and
            (6) in the case of a local educational agency for which 
        such number is less than 5 percent, shall be not less than 50 
        percent of the costs.
    (c) Determination.--For purposes of determining the applicable 
matching requirement under subsection (a), the Secretary shall 
determine the number of children from families with incomes below the 
poverty line (as defined by the Office of Management and Budget, and 
revised annually in accordance with section 673(2) of the Community 
Services Block Grant Act (42 U.S.C. 9902(2)) for individual local 
educational agencies.
    (d) Special Rule.--A local educational agency shall meet the 
matching requirement determined in subsection (b) through cash 
expenditures from non-Federal sources, except that schools operating 
schoolwide programs under section 1114 of the Elementary and Secondary 
Education Act of 1965 (20 U.S.C. 6314) may use funds provided under 
part A of title I of such Act (20 U.S.C. 6311 et seq.) to meet the 
requirements, if the use of the part A funds is consistent with the 
school plan under section 1112 of such Act (20 U.S.C. 6312) and the 
requirements of sections 1120(c) and 1120A(b) of such Act (20 U.S.C. 
6321(c) and 6322).

SEC. 210. CARRYOVER.

    Notwithstanding section 421 of the General Education Provisions Act 
(20 U.S.C. 1225), funds made available to a local educational agency 
under this title shall be available for obligation until September 30, 
2008.

SEC. 211. ACCOUNTABILITY.

    (a) In General.--Not later than 3 years after a local educational 
agency receives funds under this title, the local educational agency 
shall provide to the State educational agency evidence of the 
achievement of the local educational agencies' students, in grades 1 
through 4, in reading. Such evidence shall be--
            (1) in a form determined by the State educational agency;
            (2) based on the assessments local educational agencies are 
        using under section 1111(b) of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 6311(b)) or on comparably 
        rigorous State or local assessments; and
            (3) disaggregated to show the achievement of students in 
        individual schools and of students in different racial groups, 
        by gender, by family income, and for students with disabilities 
        and with limited English proficiency.
    (b) Improvement Plan.--Each local educational agency serving a 
school that fails to show improvement in reading achievement after 
receiving funds under this title for 3 years shall develop a program 
improvement plan that is approved by the Secretary. The program 
improvement plan may provide for--
            (1) additional technical assistance, in the school failing 
        to show improvement, in order to change curriculum, change 
        school leadership, or more effectively use staff;
            (2) implementation, in the school, of comprehensive, 
        research-based education reform models; or
            (3) any other improvement strategy agreed to by the local 
        educational agency and the Secretary.
    (c) Reduction of Allocation.--Beginning with fiscal year 2004, a 
State educational agency shall reduce the allocation to any local 
educational agency under section 206 for a fiscal year if the State 
educational agency determines that the local educational agency serves 
a school which fails to show improvement in reading achievement. The 
reduction shall be in an amount equivalent to the amount made available 
to the school for the fiscal year for which the determination is made.

SEC. 212. PARTICIPATION OF PRIVATE SCHOOL TEACHERS.

    (a) In General.--Proportionate to the number of children who are 
enrolled in private elementary schools or secondary schools in the area 
served by a local educational agency that receives an allocation under 
this title, the local educational agency shall provide for the 
inclusion of private school teachers in the professional development 
activities the local educational agencies and the schools served by 
such agency carries out under this title.
    (b) Waiver.--If, by reason of any provision of law, a local 
educational agency is prohibited from providing for the professional 
development activities for private school teachers and administrators 
as required by subsection (a), or if the Secretary determines that the 
agency is unwilling or unable to do so, the Secretary shall waive that 
requirement and shall use a portion of the agency's grant to arrange 
for the provision of those activities.

SEC. 213. EVALUATION.

    From the amount reserved under section 204(b)(1), the Secretary 
shall carry out an evaluation of--
            (1) the extent to which the activities assisted under this 
        title achieve the objective of reducing class sizes;
            (2) the impact of the activities on reading achievement;
            (3) the quality of the teachers hired with funds provided 
        under this title;
            (4) the success of State and local efforts to use funds 
        provided under this title to ensure high quality teaching; and
            (5) the effectiveness of the requirements under section 
        211.

                       TITLE III--CHARTER SCHOOLS

SEC. 301. INNOVATIVE CHARTER SCHOOLS.

    Title VI of the Elementary and Secondary Education Act of 1965 (20 
U.S.C. 7301 et seq.) is amended--
            (1) in section 6201(a)--
                    (A) in paragraph (1)(C), by striking ``and'' after 
                the semicolon;
                    (B) by redesignating paragraph (2) as paragraph 
                (3); and
                    (C) by inserting after paragraph (1) the following:
            ``(2) support for planning, designing, and initial 
        implementation of charter schools as described in part C of 
        title X; and''; and
            (2) in section 6301(b)--
                    (A) in paragraph (7), by striking ``and'' after the 
                semicolon;
                    (B) by redesignating paragraph (8) as paragraph 
                (9); and
                    (C) by inserting after paragraph (7) the following:
            ``(8) planning, designing, and initial implementation of 
        charter schools as described in part C of title X; and''.

SEC. 302. CHARTER SCHOOLS.

    Part C of title X of the Elementary and Secondary Education Act of 
1965 is amended to read as follows:

                    ``PART C--PUBLIC CHARTER SCHOOLS

``SEC. 10301. FINDINGS AND PURPOSE.

    ``(a) Findings.--The Congress finds that--
            ``(1) enhancement of parent and student choices among 
        public schools can assist in promoting comprehensive 
        educational reform and give more students the opportunity to 
        learn to challenging State content standards and challenging 
        State student performance standards, if sufficiently diverse 
        and high-quality choices, and genuine opportunities to take 
        advantage of such choices, are available to all students;
            ``(2) useful examples of such choices can come from States 
        and communities that experiment with methods of offering 
        teachers and other educators, parents, and other members of the 
        public the opportunity to design and implement new public 
        schools and to transform existing public schools;
            ``(3) charter schools are a mechanism for testing a variety 
        of educational approaches and should, therefore, be exempted 
        from restrictive rules and regulations if the leadership of 
        such schools commits to attaining specific and ambitious 
        educational results for educationally disadvantaged students 
        consistent with challenging State content standards and 
        challenging State student performance standards for all 
        students;
            ``(4) charter schools, as such schools have been 
        implemented in a few States, can embody the necessary mixture 
        of enhanced choice, exemption from restrictive regulations, and 
a focus on learning gains;
            ``(5) charter schools, including charter schools that are 
        schools-within-schools, can help reduce school size, which can 
        have a significant effect on student achievement;
            ``(6) the Federal Government should test, evaluate, and 
        disseminate information on a variety of charter school models 
        in order to help demonstrate the benefits of this promising 
        educational reform; and
            ``(7) there is a strong documented need for cash-flow 
        assistance to charter schools that are starting up, because 
        State and local operating revenue streams are not immediately 
        available.
    ``(b) Purposes.--The purposes of this part are--
            ``(1) to provide financial assistance for the planning, 
        design, initial implementation of charter schools;
            ``(2) to facilitate the ability of States and localities to 
        increase the number of charter schools in the Nation to not 
        less than 3,000 by the year 2000; and
            ``(3) to evaluate the effects of charter schools, including 
        the effects on students, student achievement, staff, and 
        parents.

``SEC. 10302. PROGRAM AUTHORIZED.

    ``(a) In General.--The Secretary may award grants to State 
educational agencies having applications approved pursuant to section 
10303 to enable such agencies to conduct a charter school grant program 
in accordance with this part.
    ``(b) Special Rule.--If a State educational agency elects not to 
participate in the program authorized by this part or does not have an 
application approved under section 10303, the Secretary may award a 
grant to an eligible applicant that serves such State and has an 
application approved pursuant to section 10303.
    ``(c) Program Periods.--
            ``(1) Grants to states.--
                    ``(A) Basic grants.--Grants awarded to State 
                educational agencies under this part for planning, 
                design, or initial implementation of charter schools, 
                shall be awarded for a period of not more than 5 years.
                    ``(B) Extension.--Any State educational agency that 
                has received a grant or subgrant under this part prior 
                to October 1, 1998, shall be eligible to receive an 
                additional grant for a period not to exceed 2 years in 
                accordance with this section, notwithstanding that such 
                a State does not meet the requirements of section 
                10309(1)(A).
            ``(2) Grants to eligible applicants.--
                    ``(A) Basic grants.--Grants awarded by the 
                Secretary to eligible applicants or subgrants awarded 
                by State educational agencies to eligible applicants 
                under this part shall be awarded for planning, design, 
                or initial implementation of charter schools, for a 
                period not to exceed more than 5 years, of which the 
                eligible applicant may use--
                            ``(i) not more than 30 months for planning 
                        and program design; and
                            ``(ii) not more than 4 years for the 
                        initial implementation of a charter school.
                    ``(B) Extension.--Any eligible applicant that has 
                received a grant or subgrant under this part prior to 
                October 1, 1998, shall be eligible to receive an 
                additional grant for a period not to exceed 2 years in 
                accordance with this section, notwithstanding that such 
                an eligible applicant does not meet the requirements of 
                section 10309(1)(A).
    ``(d) Limitation.--Except as otherwise provided under subsection 
(c), the Secretary shall not award more than one grant and State 
educational agencies shall not award more than one subgrant under this 
part to support a particular charter school.
    ``(e) Priority and Requirements.--
            ``(1) Priority.--
                    ``(A) Fiscal years 1999, 2000, and 2001.--In 
                awarding grants under this part for any of the fiscal 
                years 1999, 2000, and 2001 from funds appropriated 
                under section 10310 that are in excess of $51,000,000 
                for the fiscal year, the Secretary shall give priority 
                to State educational agencies in accordance with 
                subparagraph (C).
                    ``(B) Succeeding fiscal years.--In awarding grants 
                under this part for fiscal year 2001 or any succeeding 
                fiscal year from any funds appropriated under section 
                10310, the Secretary shall consider the number of 
                charter schools in each State and shall give priority 
                to State educational agencies in accordance with 
                subparagraph (C).
                    ``(C) Priority order.--In awarding grants under 
                subparagraphs (A) and (B), the Secretary shall, in the 
                order listed, give priority to a State that--
                            ``(i) meets all requirements of paragraph 
                        (2);
                            ``(ii) meets 2 requirements of paragraph 
                        (2); and
                            ``(iii) meets 1 requirement of paragraph 
                        (2).
            ``(2) Requirements.--The requirements referred to in 
        paragraph (1)(C) are as follows:
                    ``(A) The State law regarding charter schools 
                ensures that each charter school has a high degree of 
                autonomy over its budgets and expenditures.
                    ``(B) The State law regarding charter schools 
                provides that not less than 1 chartering authority in 
                the State allows for an increase in the number of 
                charter schools from 1 year to the next year; and
                    ``(C) The State law regarding charter schools 
                provides for periodic review and evaluation by the 
                authorized public chartering agency of each charter 
                school to determine whether the school is meeting or 
                exceeding the academic performance requirements and 
                goals for charter schools as set forth under State law 
                or the school's charter.

``SEC. 10303. APPLICATIONS.

    ``(a) Applications From State Agencies.--Each State educational 
agency desiring a grant from the Secretary under this part shall submit 
to the Secretary an application at such time, in such manner, and 
containing or accompanied by such information as the Secretary may 
require.
    ``(b) Contents of a State Educational Agency Application.--Each 
application submitted pursuant to subsection (a) shall--
            ``(1) describe the objectives of the State educational 
        agency's charter school grant program and a description of how 
        such objectives will be fulfilled, including steps taken by the 
        State educational agency to inform teachers, parents, and 
        communities of the State educational agency's charter school 
        grant program;
            ``(2) describe how the State educational agency will inform 
        each charter school of available Federal programs and funds 
        that each such school is eligible to receive and ensure that 
        each such school receives its appropriate share of Federal 
        education funds allocated by formula; and
            ``(3) contain assurances that the State educational agency 
        will require each eligible applicant desiring to receive a 
        subgrant to submit an application to the State educational 
        agency containing--
                    ``(A) a description of the educational program to 
                be implemented by the proposed charter school, 
                including--
                            ``(i) how the program will enable all 
                        students to meet challenging State student 
                        performance standards;
                            ``(ii) the grade levels or ages of children 
                        to be served; and
                            ``(iii) the curriculum and instructional 
                        practices to be used;
                    ``(B) a description of how the charter school will 
                be managed;
                    ``(C) a description of--
                            ``(i) the objectives of the charter school; 
                        and
                            ``(ii) the methods by which the charter 
                        school will determine its progress toward 
                        achieving those objectives;
                    ``(D) a description of the administrative 
                relationship between the charter school and the 
                authorized public chartering agency;
                    ``(E) a description of how parents and other 
                members of the community will be involved in the design 
                and implementation of the charter school;
                    ``(F) a description of how the authorized public 
                chartering agency will provide for continued operation 
                of the school once the Federal grant has expired, if 
                such agency determines that the school has met the 
                objectives described in subparagraph (C)(i);
                    ``(G) a request and justification for waivers of 
                any Federal statutory or regulatory provisions that the 
                applicant believes are necessary for the successful 
                operation of the charter school, and a description of 
                any State or local rules, generally applicable to 
                public schools, that will be waived for, or otherwise 
                not apply to, the school;
                    ``(H) a description of how the subgrant funds or 
                grant funds, as appropriate, will be used, including a 
                description of how such funds will be used in 
                conjunction with other Federal programs administered by 
                the Secretary;
                    ``(I) a description of how students in the 
                community will be--`(i) informed about the charter 
                school; and `(ii) given an equal opportunity to attend 
                the charter school;
                    ``(J) an assurance that the eligible applicant will 
                annually provide the Secretary and the State 
                educational agency such information as may be required 
                to determine if the charter school is making 
                satisfactory progress toward achieving the objectives 
                described in subparagraph (C)(i);
                    ``(K) an assurance that the applicant will 
                cooperate with the Secretary and the State educational 
                agency in evaluating the program assisted under this 
                part;
                    ``(L)(i) an assurance that the charter school that 
                is a local educational agency or the local educational 
                agency in which the charter school is located, as the 
                case may be, will comply with the requirements of the 
                Individuals with Disabilities Education Act (20 U.S.C. 
                1400 et seq.) with respect to the provision of special 
                education and related services to children with 
                disabilities in charter schools; and
                    ``(ii) a description of how the charter school that 
                is a local educational agency or the local educational 
                agency in which the charter school is located, as the 
                case may be, will ensure, consistent with such 
                requirements, the receipt of special education and 
                related services by children with disabilities in 
                charter schools; and
                    ``(M) such other information and assurances as the 
                Secretary and the State educational agency may require; 
                and
            ``(4) describe how the State educational agency will use 
        administrative funds provided under section 10304(f)(4) to 
        disseminate best or promising practices of charter schools in 
        such State to each local educational agency in the State, 
        except that such dissemination shall result, to the extent 
        practicable, in a minimum of paperwork for a State educational 
        agency, eligible applicant, or charter school.
    ``(c) Contents of Eligible Applicant Application.--Each eligible 
applicant desiring a grant pursuant to section 10302 shall submit an 
application to the State educational agency or Secretary, respectively, 
at such time, in such manner, and accompanied by such information as 
the State educational agency or Secretary, respectively, may reasonably 
require.
    ``(d) Contents of Application.--Each application submitted pursuant 
to subsection (c) shall contain--
            ``(1) the information and assurances described in 
        subparagraphs (A) through (L) of subsection (b)(3), except that 
        for purposes of this subsection subparagraphs (J), (K), and (L) 
        of such subsection shall be applied by striking `and the State 
        educational agency' each place such term appears; and
            ``(2) assurances that the State educational agency--
                    ``(A) will grant, or will obtain, waivers of State 
                statutory or regulatory requirements; and
                    ``(B) will assist each subgrantee in the State in 
                receiving a waiver under section 10304(e).

``SEC. 10304. ADMINISTRATION.

    ``(a) Selection Criteria for State Educational Agencies.--The 
Secretary shall award grants to State educational agencies under this 
part on the basis of the quality of the applications submitted under 
section 10303(b), after taking into consideration such factors as--
            ``(1) the contribution that the charter schools grant 
        program will make to assisting educationally disadvantaged and 
        other students to achieving State content standards and State 
        student performance standards and, in general, a State's 
        education improvement plan;
            ``(2) the degree of flexibility afforded by the State 
        educational agency to charter schools under the State's charter 
        schools law;
            ``(3) the ambitiousness of the objectives for the State 
        charter school grant program;
            ``(4) the quality of the strategy for assessing achievement 
        of those objectives;
            ``(5) the likelihood that the charter school grant program 
        will meet those objectives and improve educational results for 
        students; and
            ``(6) the number of charter schools created under this part 
        in the State.
    ``(b) Selection Criteria for Eligible Applicants.--The Secretary 
shall award grants to eligible applicants under this part on the basis 
of the quality of the applications submitted under section 10303(c), 
after taking into consideration such factors as--
            ``(1) the quality of the proposed curriculum and 
        instructional practices;
            ``(2) the degree of flexibility afforded by the State 
        educational agency and, if applicable, the local educational 
        agency to the charter school;
            ``(3) the extent of community support for the application;
            ``(4) the ambitiousness of the objectives for the charter 
        school;
            ``(5) the quality of the strategy for assessing achievement 
        of those objectives; and
            ``(6) the likelihood that the charter school will meet 
        those objectives and improve educational results for students.
    ``(c) Peer Review.--The Secretary, and each State educational 
agency receiving a grant under this part, shall use a peer review 
process to review applications for assistance under this part.
    ``(d) Diversity of Projects.--The Secretary and each State 
educational agency receiving a grant under this part, shall award 
subgrants under this part in a manner that, to the extent possible, 
ensures that such grants and subgrants--
            ``(1) are distributed throughout different areas of the 
        Nation and each State, including urban and rural areas; and
            ``(2) will assist charter schools representing a variety of 
        educational approaches, such as approaches designed to reduce 
        school size.
    ``(e) Waivers.--The Secretary may waive any statutory or regulatory 
requirement over which the Secretary exercises administrative authority 
except any such requirement relating to the elements of a charter 
school described in section 10309(1), if--
            ``(1) the waiver is requested in an approved application 
        under this part; and
            ``(2) the Secretary determines that granting such a waiver 
        will promote the purpose of this part.
    ``(f) Use of Funds.--
            ``(1) State educational agencies.--Each State educational 
        agency receiving a grant under this part shall use such grant 
        funds to award subgrants to one or more eligible applicants in 
        the State to enable such applicant to plan and implement a 
        charter school in accordance with this part.
            ``(2) Eligible applicants.--Each eligible applicant 
        receiving funds from the Secretary or a State educational 
        agency shall use such funds to plan and implement a charter 
        school in accordance with this part.
            ``(3) Allowable activities for basic grants.--An eligible 
        applicant receiving a basic grant or subgrant under section 
        10302(c)(2) may use the grant or subgrant funds only for--
                    ``(A) post-award planning and design of the 
                educational program, which may include--
                            ``(i) refinement of the desired educational 
                        results and of the methods for measuring 
                        progress toward achieving those results; and
                            ``(ii) professional development of teachers 
                        and other staff who will work in the charter 
                        school; and
                    ``(B) initial implementation of the charter school, 
                which may include--
                            ``(i) informing the community about the 
                        school;
                            ``(ii) acquiring necessary equipment and 
                        educational materials and supplies;
                            ``(iii) acquiring or developing curriculum 
                        materials; and
                            ``(iv) other initial operational costs that 
                        cannot be met from State or local sources.
            ``(4) Administrative expenses.--Each State educational 
        agency receiving a grant pursuant to this part may reserve not 
        more than 5 percent of such grant funds for administrative 
        expenses associated with the charter school grant program 
        assisted under this part.
    ``(g) Tribally Controlled Schools.--Each State that receives a 
grant under this part and designates a tribally controlled school as a 
charter school shall not consider payments to a school under the 
Tribally Controlled Schools Act of 1988 (25 U.S.C. 2507) in 
determining--
            ``(1) the eligibility of the school to receive any other 
        Federal, State, or local aid; or
            ``(2) the amount of such aid.

``SEC. 10305. NATIONAL ACTIVITIES.

    ``The Secretary shall reserve for each fiscal year the lesser of 5 
percent of the amount appropriated to carry out this part for the 
fiscal year or $5,000,000, to carry out, giving highest priority to 
carrying out paragraph (3), the following:
            ``(1) To provide charter schools, either directly or 
        through the State educational agency, with information 
        regarding available education funds that such school is 
        eligible to receive, and assistance in applying for Federal 
        education funds which are allocated by formula, including 
        filing deadlines and submission of applications; and
            ``(2) To provide, through 1 or more contracts using a 
        competitive bidding process--
                    ``(A) charter schools with assistance in accessing 
                private capital;
                    ``(B) pilot projects in a variety of States to 
                better understand and improve access to private capital 
                by charter schools; and
                    ``(C) collection on a nationwide basis, of 
                information regarding successful programs that access 
                private capital for charter schools and disseminate any 
                such relevant information and model descriptions to all 
                charter schools.
            ``(3) To provide for the completion of the 4-year national 
        study (which began in 1995) of charter schools and any related 
        present or future evaluations or studies which shall include 
        the evaluation of the impact of charter schools on student 
        achievement, including information regarding--
                    ``(A) the number of students who applied for 
                admission to charter schools and the number of such 
                students who enrolled in charter schools, disaggregated 
                on the basis of race, age, disability, gender, limited 
                English proficiency, and previous enrollment in a 
                public school;
                    ``(B) student achievement; and
                    ``(C) qualifications of school employees at the 
                charter school, including the number of teachers within 
                a charter school that have been certified or licensed 
                by the State and the turnover of the teaching force.
            ``(4)(A) To provide information to applicants for 
        assistance under this part;
            ``(B) assistance to applicants for assistance under this 
        part with the preparation of applications under section 10303;
            ``(C) assistance in the planning and startup of charter 
        schools;
            ``(D) ongoing training and technical assistance to existing 
        charter schools; and
            ``(E) for the dissemination of best practices in charter 
        schools to other public schools.

``SEC. 10306. FEDERAL FORMULA ALLOCATION DURING FIRST YEAR AND FOR 
              SUCCESSIVE ENROLLMENT EXPANSIONS.

    ``For purposes of the allocation to schools by the States or their 
agencies of funds under part A of title I, and any other Federal funds 
which the Secretary allocates to States on a formula basis, the 
Secretary and each State educational agency shall take such measures 
not later than 6 months after the date of the enactment of this part as 
are necessary to ensure that every charter school receives the Federal 
funding for which it is eligible not later than 5 months after first 
opening, notwithstanding the fact that the identity and characteristics 
of the students enrolling in that school are not fully and completely 
determined until that school actually opens. These measures shall 
similarly ensure that every charter school expanding its enrollment in 
any subsequent year of operation receives the Federal funding for which 
it is eligible not later than 5 months after such expansion.

``SEC. 10307. RECORDS TRANSFER.

    ``State and local educational agencies, to the extent practicable, 
shall ensure that a student's records and if applicable a student's 
individualized education program as defined in section 602(11) of the 
Individuals with Disabilities Education Act (20 U.S.C. 1401(11)), are 
transferred to the charter school upon transfer of a student to a 
charter school in accordance with applicable State law.

``SEC. 10308. PAPERWORK REDUCTION.

    ``To the extent practicable, the Secretary and each authorized 
public chartering agency, shall ensure that implementation of this part 
results in a minimum of paperwork for any eligible applicant or charter 
school.

``SEC. 10309. DEFINITIONS.

    ``As used in this part:
            ``(1) The term `charter school' means a public school 
        that--
                    ``(A) in accordance with a specific State charter 
                school statute, is exempted from significant State or 
                local rules that inhibit the flexible operation and 
                management of public schools, but not from any rules 
                relating to the other requirements of this paragraph;
                    ``(B) is created by a developer as a public school, 
                or is adapted by a developer from an existing public 
                school, and is operated under public supervision and 
                direction;
                    ``(C) operates in pursuit of a specific set of 
                educational objectives determined by the school's 
                developer and agreed to by the authorized public 
                chartering agency;
                    ``(D) provides a program of elementary or secondary 
                education, or both;
                    ``(E) is nonsectarian in its programs, admissions 
                policies, employment practices, and all other 
                operations, and is not affiliated with a sectarian 
                school or religious institution;
                    ``(F) does not charge tuition;
                    ``(G) complies with the Age Discrimination Act of 
                1975, title VI of the Civil Rights Act of 1964, title 
                IX of the Education Amendments of 1972, section 504 of 
                the Rehabilitation Act of 1973, and part B of the 
                Individuals with Disabilities Education Act;
                    ``(H) is a school to which parents choose to send 
                their children, and that admits students on the basis 
                of a lottery, if more students apply for admission than 
                can be accommodated;
                    ``(I) agrees to comply with the same Federal and 
                State audit requirements as do other elementary and 
                secondary schools in the State, unless such 
                requirements are specifically waived for the purpose of 
                this program;
                    ``(J) meets all applicable Federal, State, and 
                local health and safety requirements;
                    ``(K) operates in accordance with State law; and
                    ``(L) has a written performance contract with the 
                authorized public chartering agency in the State.
            ``(2) The term `developer' means an individual or group of 
        individuals (including a public or private nonprofit 
        organization), which may include teachers, administrators and 
        other school staff, parents, or other members of the local 
        community in which a charter school project will be carried 
        out.
            ``(3) The term `eligible applicant' means an authorized 
        public chartering agency participating in a partnership with a 
        developer to establish a charter school in accordance with this 
        part.
            ``(4) The term `authorized public chartering agency' means 
        a State educational agency, local educational agency, or other 
        public entity that has the authority pursuant to State law and 
        approved by the Secretary to authorize or approve a charter 
        school.

``SEC. 10310. AUTHORIZATION OF APPROPRIATIONS.

    ``For the purpose of carrying out this part, there are authorized 
to be appropriated $100,000,000 for fiscal year 1999 and such sums as 
may be necessary for each of the four succeeding fiscal years.

``SEC. 10311. PROHIBITION OF CONTRACTS.

    ``If it has been finally determined by a court or Federal agency 
that any person intentionally affixed a fraudulent label bearing a 
`Made in America' inscription, or any inscription with the same 
meaning, to any product sold in or shipped to the United States that 
was not made in the United States, such person shall be ineligible to 
receive any contract or subcontract made with funds provided pursuant 
to this part, pursuant to the debarment, suspension, and ineligibility 
procedures described in section 9.400 through 9.409 of title 48, Code 
of Federal Regulations.''.

                         TITLE IV--SCHOLARSHIPS

SEC. 401. DEFINITIONS.

    Section 6003 of the Elementary and Secondary Education Act of 1965 
is amended--
            (1) in the section heading by striking ``definition'' and 
        inserting ``definitions'';
            (2) in the matter preceding subparagraph (A)--
                    (A) by striking ``(1)'', ``(2)'', and ``(3)'';
                    (B) by striking ``title the term'' and inserting 
                the following: ``title--
            ``(1) the term'';
            (3) by striking the period at the end; and
            (4) by adding at the end the following:
            ``(2) the term `poverty line' means the poverty line (as 
        defined by the Office of Management and Budget, and revised 
        annually in accordance with section 673(2) of the Community 
        Services Block Grant Act (42 U.S.C. 9902(2)) applicable to a 
        family of the size involved; and
            ``(3) the term `voluntary public and private parental 
        choice program' means a program that meets the requirements of 
        section 6301(b)(9), is authorized by State law, and includes 1 
        or more private schools to allow low-income parents to choose 
        the appropriate school for their children.''.

SEC. 402. ALLOCATION TO LOCAL EDUCATIONAL AGENCIES.

    Section 6102(a) of the Elementary and Secondary Education Act of 
1965 is amended to read as follows:
    ``(a) Distribution Rule.--
            ``(1) In general.--Except as provided in paragraph (2), 
        from the sums made available each year to carry out this title, 
        the State educational agency shall distribute not less than 90 
        percent to local educational agencies within such State 
        according to the relative enrollments in public and private, 
        nonprofit schools within the school districts of such agencies, 
        adjusted, in accordance with criteria approved by the 
        Secretary, to provide higher per pupil allocations to local 
        educational agencies which have the greatest numbers or 
        percentages of children whose education imposes a higher than 
        average cost per child, such as--
                    ``(A) children living in areas with high 
                concentrations of low-income families;
                    ``(B) children from low-income families; and
            `
                    ``(C) children living in sparsely populated areas.
            ``(2) Exception.--A State that has enacted or will enact a 
        law that establishes a voluntary public and private parental 
        choice program and that complies with the provisions of section 
        6301(b)(9) may reserve an additional 15 percent from the sums 
        made available each year to carry out this title if the 
        additional amount reserved is used exclusively for voluntary 
        public and private parental choice programs.''.

 SEC. 403. USES OF FUNDS.

    (a) State Uses of Funds.--Section 6201(a)(1) of the Elementary and 
Secondary Education Act of 1965 is amended--
            (1) in subparagraph (C), by striking ``and'' after the 
        semicolon;
            (2) by inserting after subparagraph (C) the following:
                    ``(D) establishing voluntary public and private 
                parental choice programs in accordance with section 
                6301(b)(9); and''.
    (b) Local Uses of Funds.--Section 6301(b) of the Elementary and 
Secondary Education Act of 1965 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 inserting after paragraph (8) the following:
            ``(9) voluntary public and private parental choice programs 
        that--
                    ``(A) are located in an area that has the greatest 
                numbers or percentages of children--
                            ``(i) living in areas with a high 
                        concentration of low-income families;
                            ``(ii) from low-income families; or
                            ``(iii) living in sparsely populated areas;
                    ``(B) ensure that participation in such a voluntary 
                public and private parental choice program is limited 
                to families whose family income does not exceed 185 
                percent of the poverty line;
                    ``(C) ensure that--
                            ``(i) the maximum amount of a voluntary 
                        public and private parental choice scholarship 
                        does not exceed the per pupil expenditure of 
                        the local educational agency in which an 
                        applicant for a voluntary public and private 
                        parental choice scholarship resides;
                            ``(ii) the minimum amount of a voluntary 
                        public and private parental choice scholarship 
                        is not less than 60 percent of the per pupil 
                        expenditure of the local educational agency in 
                        which an applicant for a voluntary public and 
                        private parental choice scholarship resides or 
                        the cost of tuition at a private school, 
                        whichever is less;
                    ``(D) ensure that for a private school that chooses 
                to participate in a voluntary public and private 
                parental choice program--
                            ``(i) such a school is permitted to impose 
                        the same academic requirements for all 
                        students, including students selected for a 
                        scholarship as provided under this paragraph;
                            ``(ii) receipt of funds under this title is 
                        not conditioned with requirements or 
                        regulations that preclude the use of such funds 
                        for sectarian educational purposes or require 
                        removal of religious art, icons, scripture, or 
                        other symbols; and
                            ``(iii) such a school is in compliance with 
                        all State requirements applicable to the 
                        operation of a private school that are in 
                        effect in the year preceding the date of the 
                        enactment of the Helping Empower Low-income 
                        Parents (HELP) Scholarships Amendments of 1997;
                    ``(E) may allow State, local, and private funds to 
                be used for voluntary public and private parental 
                choice programs; and
                    ``(F) ensure priority for students who were 
                enrolled in a public school in the school year 
                preceding the school year in which a voluntary public 
                and private parental choice school begins operation.''.

SEC. 404. EVALUATION.

    Part D of title VI of the Elementary and Secondary Education Act of 
1965 is amended--
            (1) by adding at the end of section 6402 the following new 
        subsection:
    ``(j) Application.--This section shall not apply to funds that a 
State or local educational agency uses to establish a voluntary public 
and private parental choice program in accordance with section 
6301(b)(9).''; and
            (2) by adding at the end of such part the following new 
        sections:

``SEC. 6404. EVALUATION.

    ``(a) Annual Evaluation.--
            ``(1) Contract.--The Comptroller General of the United 
        States shall enter into a contract, with an evaluating agency 
        that has demonstrated experience in conducting evaluations, for 
        the conduct of an ongoing rigorous evaluation of the programs 
        established under section 6301(b)(9).
            ``(2) Annual evaluation requirement.--The contract 
        described in paragraph (1) shall require the evaluating agency 
        entering into such contract to evaluate annually each program 
        established under section 6301(b)(9) in accordance with the 
        evaluation criteria described in subsection (b).
            ``(3) Transmission.--The contract described in paragraph 
        (1) shall require the evaluating agency entering into such 
        contract to transmit to the Comptroller General of the United 
        States the findings of each annual evaluation under paragraph 
        (1).
    ``(b) Evaluation Criteria.--The Comptroller General of the United 
States, in consultation with the Secretary, shall establish minimum 
criteria for evaluating each program established under section 
6301(b)(9). Such criteria shall provide for--
            ``(1) a description of the implementation of each program 
        established under section 6301(b)(9) and the program's effects 
        on all participants, schools, and communities in the program 
        area, with particular attention given to the effect of parent 
        participation in the life of the school and the level of 
        parental satisfaction with the program; and
            ``(2) a comparison of the educational achievement of all 
        students in the program area, including a comparison between--
                    ``(A) students receiving a voluntary public and 
                private parental choice scholarships under section 
                6301(b)(9); and
                    ``(B) students not receiving a voluntary public and 
                private parental choice scholarships under such 
                section.
    ``(c) Evaluation Funds.--Pursuant to the authority provided under 
section 14701, the Secretary shall reserve not more than 0.50 percent 
of the amount of funds made available under section 6002 to carry out 
this section.

``SEC. 6405. APPLICABILITY.

    ``(a) Not School Aid.--Subject to subsection (b), funds used under 
this title to establish a voluntary public and private parental choice 
program shall be considered assistance to the student and shall not be 
considered as assistance to any school that chooses to participate in 
such program.
    ``(b) No Federal Control.--The Secretary is not permitted to 
exercise any direction, supervision, or control over curricula, program 
of instruction, administration, or personnel of any school that chooses 
to participate in a voluntary public and private choice program 
established under 6309(b)(9).''.

                   TITLE V--VOLUNTARY NATIONAL TESTS

SEC. 501. OERI ANNUAL SPENDING PLAN.

    Notwithstanding any other provision of law, the Assistant Secretary 
for Educational Research and Improvement shall submit to the Committee 
on Appropriations of the Senate a spending plan for activities funded 
through the Office of Educational Research and Improvement for each 
fiscal year, prior to the obligation of any funds for the fiscal year.

SEC. 502. EXCLUSIVE AUTHORITY.

    Notwithstanding any other provision of law, the National Assessment 
Governing Board established under section 412 of the National Education 
Statistics Act of 1994 (20 U.S.C. 9011) (hereafter in this section 
referred to as the ``Board'') shall hereafter have exclusive authority 
over all policies, direction, and guidelines for establishing and 
implementing voluntary national tests for 4th grade English reading and 
8th grade mathematics.

SEC. 503. AVAILABILITY OF TESTS.

    The tests described in section 504(b) shall be made available to a 
State, local educational agency, or private or parochial school, upon 
the request of the State, agency, or school, and the use of the tests 
shall not be a condition for receiving any Federal funds.

SEC. 504. CONTRACT AUTHORITY.

    (a) In General.--Within 90 days after the date of enactment of this 
Act, the Board shall review the national test development contract in 
effect on the date of enactment of this Act, and modify the contract as 
the Board determines necessary. If the contract cannot be modified to 
the extent determined necessary by the Board, the contract shall be 
terminated and the Board shall negotiate a new contract, under the 
Board's exclusive control, for the tests.
    (b) Board Duties.--In exercising the Board's responsibilities under 
paragraph (a) regarding the national tests, and notwithstanding any 
action undertaken by the Department of Education or a person 
contracting with or providing services for the Department regarding the 
planning, or the development of specifications, for the tests, the 
Board shall--
            (1) ensure that the content and standards for the tests are 
        the same as the content and standards for the National 
        Assessment;
            (2) exercise exclusive authority over any expert panel or 
        advisory committee that will be or is established with respect 
        to the tests;
            (3) ensure that the tests are linked to the National 
        Assessment to the maximum degree possible;
            (4) develop test objectives, test specifications, and test 
        methodology;
            (5) develop policies for test administration, including 
        guidelines for inclusion of, and accommodations for, students 
        with disabilities and students with limited English 
        proficiency;
            (6) develop policies for reporting test results, including 
        the use of standards or performance levels, and for test use;
            (7) have final authority over the appropriateness of all 
        test items;
            (8) ensure that all items selected for use on the tests are 
        free from racial, cultural, or gender bias; and
            (9) take such actions and make such policies as the Board 
        determines necessary.

SEC. 505. CONSENT REQUIREMENT.

    No State or local educational agency may require any private or 
parochial school student, or home-schooled individual, to take any test 
developed under this title without the written consent of the student 
or individual.

SEC. 506. CONFORMING AMENDMENTS.

    Section 412 of the National Education Statistics Act of 1994 (20 
U.S.C. 9011) is amended--
            (1) in subsection (b)(1)--
                    (A) by amending subparagraph (A) to read as 
                follows:
                    ``(A) three Governors, or former Governors, of whom 
                not more than 1 shall be a member of the same political 
                party as the President;'';
                    (B) by amending subparagraph (B) to read as 
                follows:
                    ``(B) two State legislators, of whom not more than 
                1 shall be a member of the same political party as the 
                President;'';
                    (C) in subparagraph (H), by striking `one 
                representative' and inserting `three representatives';
                    (D) by amending subparagraph (I) to read as 
                follows:
                    ``(I) two mayors, of whom not more than 1 shall be 
                a member of the same political party as the 
                President;';
            (E) by striking subparagraph (J); and
            (F) by redesignating subparagraphs (K), (L), and (M) as 
        subparagraphs (J), (K), and (L), respectively;
            (2) in subsection (c)--
                    (A) in paragraph (1), by striking ``and may not 
                exceed a period of 3'' and inserting ``and shall be for 
                periods of 4''; and
                    (B) in paragraph (2), by inserting ``consecutive'' 
                after ``two'';
            (3) by amending subsection (d) to read as follows:
    ``(d) Vacancies.--As vacancies on the Board occur, new members of 
the Board shall be appointed by the Secretary from among individuals 
who are nominated by the Board after consultation with representatives 
of the individuals described in subsection (b)(1). For each vacancy, 
the Board shall nominate at least 3 individuals who are qualified by 
experience or training to fill the particular Board vacancy.''; and
            (4) in subsection (e) by adding at the end the following:
            ``(7) Independence.--In the exercise of its functions, 
        powers, and duties, the Board shall be independent of the 
        Secretary and the other offices and officers of the Department. 
        The Secretary shall, by written delegation of authority, 
        authorize the Board to award grants and contracts, and 
        otherwise operate, to the maximum extent practicable, 
        independent of the Department.''.

SEC. 507. APPOINTMENTS.

    Not later than 30 days after the date of enactment of this Act, the 
Secretary of Education, in consultation with the Speaker and Minority 
Leader of the House of Representatives, and the Majority Leader and 
Minority Leader of the Senate, shall appoint individuals to fill 
vacancies on the National Assessment Governing Board caused by the 
expiration of the terms of members of the Board, or the creation of new 
membership positions on the Board pursuant to amendments made by this 
Act.

          TITLE VI--A+ ACCOUNTS FOR PUBLIC AND PRIVATE SCHOOLS

SEC. 601. SHORT TITLE.

    This title may be cited as the ``A+ Accounts for Public and Private 
Schools Act''.

SEC. 602. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS.

    (a) Tax-Free Expenditures for Elementary and Secondary School 
Expenses.--
            (1) In general.--Section 530(b)(2) of the Internal Revenue 
        Code of 1986 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) but only with respect to amounts in the 
                account which are attributable to contributions for any 
                taxable year ending before January 1, 2003, and 
                earnings on such contributions.
                    ``(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) of such Code 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 tuition, fees, 
                tutoring, special needs services, books, supplies, 
                computer equipment (including related software and 
                services) and other equipment, transportation, and 
                supplementary expenses required for the enrollment or 
                attendance of the designated beneficiary of the trust 
                at a public, private, or religious school.
                    ``(B) Special rule for homeschooling.--Such term 
                shall include expenses described in subparagraph (A) 
                required for education provided for 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 (through grade 12), as determined under State 
                law.''.
            (3) Conforming amendments.--Subsections (b)(1) and (d)(2) 
        of section 530 of such Code are each amended by striking 
        ``higher'' each place it appears in the text and heading 
        thereof.
    (b) Temporary Increase in Maximum Annual Contributions.--
            (1) In general.--Section 530(b)(1)(A)(iii) of the Internal 
        Revenue Code of 1986 is amended by striking ``$500'' and 
        inserting ``the contribution limit for such taxable year''.
            (2) Contribution limit.--Section 530(b) of such Code is 
        amended by adding at the end the following new paragraph:
            ``(4) Contribution limit.--The term `contribution limit' 
        means $2,500 ($500 in the case of any taxable year ending after 
        December 31, 2002).''.
            (3) Conforming amendments.--
                    (A) Section 530(d)(4)(C) of such Code is amended by 
                striking ``$500'' and inserting ``the contribution 
                limit for such taxable year''.
                    (B) Section 4973(e)(1)(A) of such Code is amended 
                by striking ``$500'' and inserting ``the contribution 
                limit (as defined in section 530(b)(4)) for such 
                taxable year''.
    (c) Waiver of Age Limitations for Children With Special Needs.--
Paragraph (1) of section 530(b) of the Internal Revenue Code of 1986 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.--Paragraph 
(1) of section 530(c) of the Internal Revenue Code of 1986 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) Effective Date; References.--
            (1) Effective date.--The amendments made by this section 
        shall take effect as if included in the amendments made by 
        section 213 of the Taxpayer Relief Act of 1997.
            (2) References.--Any reference in this section to any 
        section of the Internal Revenue Code of 1986 shall be a 
        reference to such section as added by the Taxpayer Relief Act 
        of 1997.

                  TITLE VII--DOLLARS TO THE CLASSROOM

SEC. 701. SHORT TITLE.

    This title may be cited as the ``Dollars to the Classroom Act''.

SEC. 702. DIRECT AWARDS OF CERTAIN EDUCATION FUNDING TO STATES.

    (a) Direct Awards of Certain Education Funding.--
            (1) In general.--Notwithstanding any other provision of 
        law, for each fiscal year the Secretary shall award the total 
        amount of funds described in paragraph (2) directly to States 
        in accordance with this subsection.
            (2) Applicable funding.--The total amount of funds referred 
        to in paragraph (1) are all funds not used to carry out 
        paragraph (6)(B) for the fiscal year that are appropriated for 
        the Department of Education for the fiscal year to carry out 
        programs or activities under the following provisions of law:
                    (A) Title III of the Goals 2000: Educate America 
                Act (20 U.S.C. 5881 et seq.).
                    (B) Title IV of the Goals 2000: Educate America Act 
                (20 U.S.C. 5911 et seq.).
                    (C) Title VI of the Goals 2000: Educate America Act 
                (20 U.S.C. 5951).
                    (D) The Educational Research, Development, 
                Disseminations, and Improvement Act of 1994 (20 U.S.C. 
                6001 et seq.).
                    (E) Titles II, III, and IV of the School-to-Work 
                Opportunities Act of 1994 (20 U.S.C. 6121 et seq., 6171 
                et seq., and 6191 et seq.).
                    (F) Section 1502 of the Elementary and Secondary 
                Education Act of 1965 (20 U.S.C. 6492).
                    (G) Section 1503 of the Elementary and Secondary 
                Education Act of 1965 (20 U.S.C. 6493).
                    (H) Part A of title II of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 6621 et 
                seq.).
                    (I) Part B of title II of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 6641 et 
                seq.).
                    (J) Section 3132 of the Elementary and Secondary 
                Education Act of 1965 (20 U.S.C. 6842 et seq.).
                    (K) Title III of the Elementary and Secondary 
                Education Act of 1965 (20 U.S.C. 6801 et seq.) (other 
                than section 3132 of such title).
                    (L) Subpart 1 of part A of title IV of the 
                Elementary and Secondary Education Act of 1965 (20 
                U.S.C. 7111 et seq.).
                    (M) Subpart 2 of part A of title IV of the 
                Elementary and Secondary Education Act of 1965 (20 
                U.S.C. 7131 et seq.).
                    (N) Part A of title V of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 7201 et 
                seq.).
                    (O) Part B of title V of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 7231 et 
                seq.).
                    (P) Part B of title IX of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 7901 et 
                seq.).
                    (Q) Part C of title IX of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 7931 et 
                seq.).
                    (R) Part A of title X of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8001 et 
                seq.).
                    (S) Part B of title X of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8031 et 
                seq.).
                    (T) Part D of title X of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8091 et 
                seq.).
                    (U) Part F of title X of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8141 et 
                seq.).
                    (V) Part G of title X of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8161 et 
                seq.).
                    (W) Part I of title X of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8241 et 
                seq.).
                    (X) Part J of title X of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8271 et 
                seq.).
                    (Y) Part K of title X of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8331 et 
                seq.).
                    (Z) Part L of title X of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8351 et 
                seq.).
                    (AA) Part A of title XIII of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8621 et 
                seq.).
                    (BB) Part C of title XIII of the Elementary and 
                Secondary Education Act of 1965 (20 U.S.C. 8671 et 
                seq.).
                    (CC) Part B of title VII of the Stewart B. McKinney 
                Homeless Assistance Act (42 U.S.C. 11421 et seq.).
            (3) Timelines.--
                    (A) Census determination.--
                            (i) In general.--Not later than 21 days 
                        after the beginning of an academic year, each 
                        State shall conduct a census to determine the 
                        number of kindergarten through grade 12 
                        students in the State for the academic year.
                            (ii) Submission.--Each State shall submit 
                        the number described in clause (i) to the 
                        Secretary not later than February 1 of the 
                        academic year.
                    (B) Publication.--The Secretary shall publish in 
                the Federal Register not later than March 15 of each 
                fiscal year the amount each State shall receive under 
                this subsection for the succeeding fiscal year.
                    (C) Disbursal.--The Secretary shall disburse the 
                amount awarded to a State under this subsection for a 
                fiscal year not later than July 1 of the fiscal year.
            (4) Determination of award.--From the total amount made 
        available under paragraph (2) and not used to carry out 
        paragraph (6)(B), the Secretary, using the information provided 
        under paragraph (3), shall award to each State an amount that 
        bears the same relation to the total amount as the number of 
        kindergarten through grade 12 students in the State for the 
        academic year preceding the fiscal year bears to the total 
        number of all such students in all States for the academic 
        year.
            (5) Penalty.--If the Secretary determines that a State has 
        knowingly submitted false information under paragraph (3) for 
        the purpose of gaining additional funds under paragraph (1), 
        then the State shall be fined an amount equal to twice the 
difference between the amount the State received under this subsection, 
and the correct amount the State would have received if the State had 
submitted accurate information under paragraph (3).
            (6) Hold harmless.--
                    (A) In general.--No State shall receive an award 
                under this subsection--
                            (i) for fiscal year 1999 in an amount that 
                        is less than the amount the State would have 
                        received to carry out programs or activities 
                        under the provisions of law described in 
                        subparagraphs (A), (F), (I), (J), (L), and (DD) 
                        of paragraph (2) for fiscal year 1999;
                            (ii) for fiscal year 2000 in an amount that 
                        is less than 95 percent of the minimum amount 
                        the State is eligible to receive under clause 
                        (i) for fiscal year 1999;
                            (iii) for fiscal year 2001 in an amount 
                        that is less than 90 percent of the minimum 
                        amount the State is eligible to receive under 
                        clause (ii) for fiscal year 2000;
                            (iv) for fiscal year 2002 in an amount that 
                        is less than 85 percent of the minimum amount 
                        the State is eligible to receive under clause 
                        (iii) for fiscal year 2001; and
                            (v) for fiscal year 2003 in an amount that 
                        is less than 80 percent of the minimum amount 
                        the State is eligible to receive under clause 
                        (iv) for fiscal year 2002.
                    (B) Multiyear awards.--The Secretary shall use 
                funds appropriated to carry out the programs or 
                activities under the provisions of law described in 
                paragraph (2) (other than subparagraphs (A), (F), (I), 
                (J), (L), and (DD) of paragraph (2)) to make payments 
                to eligible recipients under such provisions pursuant 
                to any multiyear award made under such provisions prior 
                to the date of enactment of this Act.
    (b) Payments and Availability.--
            (1) Payments.--Funds awarded to a State under this 
        subsection shall be paid to the Governor of the State.
            (2) Availability.--The Governor of the State shall make the 
        funds provided under this subsection available to the 
        individual or entity in the State that is responsible for the 
        State administration of Federal education funds pursuant to 
        State law.
    (c) Use of State Awards.--
            (1) In general.--From the amount made available to a State 
        under subsection (a) for a fiscal year, the State--
                    (A) shall use not more than 5 percent of the amount 
                to support programs or activities, for kindergarten 
                through grade 12 students, that the State determines 
                appropriate, of which the State shall distribute 20 
                percent of the 5 percent to local educational agencies 
                in the State to pay the administrative expenses of the 
                local educational agencies that are associated with the 
                activities and services assisted under this section; 
                and
                    (B) shall distribute not less than 95 percent of 
                the amount to local educational agencies in the State 
                for the fiscal year to enable the local educational 
                agencies to pay the costs of activities or services, 
                for kindergarten through grade 12 students, that--
                            (i) the local educational agencies 
                        determine appropriate; and
                            (ii) are provided in the classroom.
            (2) Classroom activities and services.--For the purpose of 
        paragraph (1)(B), the costs of activities and services provided 
        in the classroom exclude the administrative expenses associated 
        with the activities and services.
    (d) Regulations.--
            (1) In general.--No head of a Federal department or agency 
        other than the Secretary may promulgate regulations under this 
        section.
            (2) Classroom activities and services.--The Secretary of 
        Education shall not issue any regulation regarding the type of 
        classroom activities or services that may be assisted under 
        this section.
    (e) Report.--Each Governor of a State receiving assistance under 
this section shall prepare and submit, not later than 60 days after the 
date of enactment of this Act, to the Committee on Labor and Human 
Resources of the Senate and the Committee on Education and the 
Workforce of the House of Representatives, a report that defines 
classroom activities and services and specifies what such activities 
and services will be included in the State under this section.

SEC. 703. TITLE I FUNDING.

    Section 1603 of the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 6513) is amended by adding at the end the following:
    ``(d) Dollars to the Classroom.--
            ``(1) In general.--Notwithstanding any other provision of 
        law, from the funds made available to a local educational 
        agency under this part for a fiscal year, not less than 95 
        percent of the funds shall be used for the costs of activities 
        and services that--
                    ``(A) the local educational agency deems 
                appropriate; and
                    ``(B) are provided in the classroom.
            ``(2) Classroom activities and services.--For the purpose 
        of paragraph (1), the costs of activities and services provided 
        in the classroom exclude the administrative expenses associated 
        with the activities and services.
            ``(3) Plan.--Not later than 6 months after the date of 
        enactment of the Dollars to the Classroom Act, the Secretary 
        shall--
                    ``(A) develop and implement a plan for streamlining 
                regulations and eliminating bureaucracy so that 95 
                percent of the funds made available to local 
                educational agencies under this part are used for the 
                costs of activities and services provided in the 
                classroom; and
                    ``(B) prepare and submit to Congress recommended 
                legislation containing changes to Federal law that are 
                needed for 95 percent of the funds to be so used.''.

SEC. 704. PARTICIPATION OF CHILDREN ENROLLED IN PRIVATE AND HOME 
              SCHOOLS.

    Each local educational agency that receives funds under section 702 
shall provide for the participation of children enrolled in private and 
home schools in the activities and services assisted under such section 
in the same manner as private school children participate in activities 
and services under the Elementary and Secondary Education Act of 1965 
(20 U.S.C. 6301 et seq.) pursuant to sections 14503, 14504, 14505, and 
14506 of such Act (20 U.S.C. 8893, 8894, 8895, and 8896).

SEC. 705. DEFINITIONS.

    In this title--
            (1) the term ``local educational agency'' has the meaning 
        given the term in section 14101 of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 8801);
            (2) the term ``Secretary'' means the Secretary of 
        Education; and
            (3) the term ``State'' means each of the several States of 
        the United States, the District of Columbia, the Commonwealth 
        of Puerto Rico, Guam, American Samoa, the Commonwealth of the 
        Northern Mariana Islands, and the United States Virgin Islands.
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