[House Report 112-178]
[From the U.S. Government Publishing Office]


112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    112-178

======================================================================
 
         EMPOWERING PARENTS THROUGH QUALITY CHARTER SCHOOLS ACT

                                _______
                                

 July 22, 2011.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Hunter, from the Committee on Education and the Workforce, 
                        submitted the following


                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 2218]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Education and the Workforce, to whom was 
referred the bill (H.R. 2218) to amend the charter school 
program under the Elementary and Secondary Education Act of 
1965, having considered the same, report favorably thereon with 
an amendment and recommend that the bill as amended do pass.
    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Empowering Parents through Quality 
Charter Schools Act''.

SEC. 2. REFERENCES.

  Except as otherwise specifically provided, whenever in this Act a 
section or other provision is amended or repealed, such amendment or 
repeal shall be considered to be made to that section or other 
provision of the Elementary and Secondary Education Act of 1965 (20 
U.S.C. 6301 et seq.).

SEC. 3. PURPOSE.

  Section 5201 (20 U.S.C. 7221) is amended to read as follows:

``SEC. 5201. PURPOSE.

  ``It is the purpose of this subpart to--
          ``(1) provide financial assistance for the planning, program 
        design, and initial implementation of charter schools;
          ``(2) expand the number of high-quality charter schools 
        available to students across the Nation;
          ``(3) evaluate the impact of such schools on student 
        achievement, families, and communities, and share best 
        practices between charter schools and other public schools;
          ``(4) encourage States to provide support to charter schools 
        for facilities financing in an amount more nearly commensurate 
        to the amount the States have typically provided for 
        traditional public schools;
          ``(5) improve student services to increase opportunities for 
        students with disabilities, English language learners, and 
        other traditionally underserved students to attend charter 
        schools and meet challenging State academic achievement 
        standards; and
          ``(6) support efforts to strengthen the charter school 
        authorizing process to improve performance management, 
        including transparency, monitoring, and evaluation of such 
        schools.''.

SEC. 4. PROGRAM AUTHORIZED.

  Section 5202 (20 U.S.C. 7221a) is amended to read as follows:

``SEC. 5202. PROGRAM AUTHORIZED.

  ``(a) In General.--This subpart authorizes the Secretary to carry out 
a charter school program that supports charter schools that serve 
elementary school and secondary school students by--
          ``(1) supporting the startup, replication, and expansion of 
        charter schools;
          ``(2) assisting charter schools in accessing credit to 
        acquire and renovate facilities for school use; and
          ``(3) carrying out national activities to support--
                  ``(A) charter school development;
                  ``(B) the dissemination of best practices of charter 
                schools for all schools; and
                  ``(C) the evaluation of the impact of the program on 
                schools participating in the program.
  ``(b) Funding Allotment.--From the amount made available under 
section 5211 for a fiscal year, the Secretary shall--
          ``(1) reserve 15 percent to support charter school facilities 
        assistance under section 5204;
          ``(2) reserve not more than 5 percent to carry out national 
        activities under section 5205; and
          ``(3) use the remaining amount after the Secretary reserves 
        funds under paragraphs (1) and (2) to carry out section 5203.
  ``(c) Prior Grants and Subgrants.--The recipient of a grant or 
subgrant under this subpart, as such subpart was in effect on the day 
before the date of enactment of the Empowering Parents through Quality 
Charter Schools Act, shall continue to receive funds in accordance with 
the terms and conditions of such grant or subgrant.''.

SEC. 5. GRANTS TO SUPPORT HIGH-QUALITY CHARTER SCHOOLS.

  Section 5203 (20 U.S.C. 7221b) is amended to read as follows:

``SEC. 5203. GRANTS TO SUPPORT HIGH-QUALITY CHARTER SCHOOLS.

  ``(a) In General.--From the amount reserved under section 5202(b)(3), 
the Secretary shall award grants to State entities having applications 
approved pursuant to subsection (f) to enable such entities to--
          ``(1) award subgrants to eligible applicants for--
                  ``(A) opening new charter schools;
                  ``(B) opening replicable, high-quality charter school 
                models; or
                  ``(C) expanding high-quality charter schools; and
          ``(2) provide technical assistance to eligible applicants and 
        authorized public chartering agencies in carrying out the 
        activities described in paragraph (1) and work with authorized 
        public chartering agencies in the State to improve authorizing 
        quality.
  ``(b) State Uses of Funds.--
          ``(1) In general.--A State entity receiving a grant under 
        this section shall--
                  ``(A) use 90 percent of the grant funds to award 
                subgrants to eligible applicants, in accordance with 
                the quality charter school program described in the 
                entity's application approved pursuant to subsection 
                (f), for the purposes described in subparagraphs (A) 
                through (C) of subsection (a)(1); and
                  ``(B) reserve 10 percent of such funds to carry out 
                the activities described in subsection (a)(2), of which 
                not more than 30 percent may be used for administrative 
                costs which may include technical assistance.
          ``(2) Contracts and grants.--A State entity may use a grant 
        received under this section to carry out the activities 
        described in subparagraphs (A) and (B) of paragraph (1) 
        directly or through grants, contracts, or cooperative 
        agreements.
  ``(c) Program Periods; Peer Review; Diversity of Projects.--
          ``(1) Program periods.--
                  ``(A) Grants.--A grant awarded by the Secretary to a 
                State entity under this section shall be for a period 
                of not more than 5 years.
                  ``(B) Subgrants.--A subgrant awarded by a State 
                entity under this section shall be for a period of not 
                more than 5 years, of which an eligible applicant may 
                use not more than 18 months for planning and program 
                design.
          ``(2) Peer review.--The Secretary, and each State entity 
        receiving a grant under this section, shall use a peer review 
        process to review applications for assistance under this 
        section.
          ``(3) Diversity of projects.--Each State entity receiving a 
        grant under this section shall award subgrants under this 
        section in a manner that, to the extent possible, ensures that 
        such subgrants--
                  ``(A) are distributed throughout different areas, 
                including urban, suburban, and rural areas; and
                  ``(B) will assist charter schools representing a 
                variety of educational approaches.
  ``(d) Limitations.--
          ``(1) Grants.--A State entity may not receive more than 1 
        grant under this section for a 5-year period.
          ``(2) Subgrants.--An eligible applicant may not receive more 
        than 1 subgrant under this section per charter school for a 5-
        year period.
  ``(e) Applications.--A State entity desiring to receive a grant under 
this section shall submit an application to the Secretary at such time 
and in such manner as the Secretary may require. The application shall 
include the following:
          ``(1) Description of program.--A description of the entity's 
        objectives in running a quality charter school program under 
        this section and how the objectives of the program will be 
        carried out, including a description--
                  ``(A) of how the entity--
                          ``(i) will support both new charter school 
                        startup and the expansion and replication of 
                        high-quality charter school models;
                          ``(ii) will inform eligible charter schools, 
                        developers, and authorized public chartering 
                        agencies of the availability of funds under the 
                        program;
                          ``(iii) will work with eligible applicants to 
                        ensure that the applicants access all Federal 
                        funds that they are eligible to receive, and 
                        help the charter schools supported by the 
                        applicants and the students attending the 
                        charter schools--
                                  ``(I) participate in the Federal 
                                programs in which the schools and 
                                students are eligible to participate; 
                                and
                                  ``(II) receive the commensurate share 
                                of Federal funds the schools and 
                                students are eligible to receive under 
                                such programs;
                          ``(iv) in the case in which the entity is not 
                        a State educational agency--
                                  ``(I) will work with the State 
                                educational agency and the charter 
                                schools in the State to maximize 
                                charter school participation in Federal 
                                and State programs for charter schools; 
                                and
                                  ``(II) will work with the State 
                                educational agency to adequately 
                                operate the entity's program under this 
                                section, where applicable;
                          ``(v) will ensure eligible applicants that 
                        receive a subgrant under the entity's program 
                        are prepared to continue to operate the charter 
                        schools receiving the subgrant funds once the 
                        funds have expired;
                          ``(vi) will support charter schools in local 
                        educational agencies with large numbers of 
                        schools that must comply with the requirements 
                        of section 1116(b);
                          ``(vii) will work with charter schools to 
                        promote inclusion of all students and support 
                        all students once they are enrolled to promote 
                        retention;
                          ``(viii) will work with charter schools on 
                        recruitment practices, including efforts to 
                        engage groups that may otherwise have limited 
                        opportunities to participate in charter 
                        schools;
                          ``(ix) will share best and promising 
                        practices between charter schools and other 
                        public schools;
                          ``(x) will ensure the charter schools they 
                        support can meet the educational needs of their 
                        students, including students with disabilities 
                        and English language learners; and
                          ``(xi) will support efforts to increase 
                        quality initiatives, including meeting the 
                        quality authorizing elements described in 
                        paragraph (2)(E);
                  ``(B) of the extent to which the entity--
                          ``(i) is able to meet and carry out the 
                        priorities listed in subsection (f)(2); and
                          ``(ii) is working to develop or strengthen a 
                        cohesive statewide system to support the 
                        opening of new charter schools and replicable, 
                        high-quality charter school models, and 
                        expanding high-quality charter schools;
                  ``(C) how the entity will carry out the subgrant 
                competition, including--
                          ``(i) a description of the application each 
                        eligible applicant desiring to receive a 
                        subgrant will submit, including--
                                  ``(I) a description of the roles and 
                                responsibilities of eligible 
                                applicants, partner organizations, and 
                                management organizations, including the 
                                administrative and contractual roles 
                                and responsibilities; and
                                  ``(II) a description of the quality 
                                controls agreed to between the eligible 
                                applicant and the authorized public 
                                chartering agency involved, such as a 
                                contract or performance agreement, and 
                                how a school's performance on the 
                                State's academic accountability system 
                                will be a primary factor for renewal; 
                                and
                          ``(ii) a description of how the entity will 
                        review applications; and
                  ``(D) in the case of an entity that partners with an 
                outside organization to carry out the entity's quality 
                charter school program, in whole or in part, of the 
                roles and responsibilities of this partner.
          ``(2) Assurances.--Assurances, including a description of how 
        the assurances will be met, that--
                  ``(A) each charter school receiving funds under the 
                entity's program will have a high degree of autonomy 
                over budget and operations;
                  ``(B) the entity will support charter schools in 
                meeting the educational needs of their students as 
                described in paragraph (1)(A)(x);
                  ``(C) the entity will ensure that the authorized 
                public chartering agency of any charter school that 
                receives funds under the entity's program--
                          ``(i) ensures that the charter school is 
                        meeting the obligations under this Act, part B 
                        of the Individuals with Disabilities Education 
                        Act, title VI of the Civil Rights Act of 1964, 
                        and section 504 of the Rehabilitation Act of 
                        1973; and
                          ``(ii) adequately monitors and helps the 
                        schools in recruiting, enrolling, and meeting 
                        the needs of all students, including students 
                        with disabilities and English language 
                        learners;
                  ``(D) the entity will provide adequate technical 
                assistance to eligible applicants to--
                          ``(i) meet the objectives described in 
                        clauses (vii) and (viii) of paragraph (1)(A) 
                        and paragraph (2)(B); and
                          ``(ii) enroll traditionally underserved 
                        students, including students with disabilities 
                        and English language learners, to promote an 
                        inclusive education environment;
                  ``(E) the entity will promote quality authorizing, 
                such as through providing technical assistance, to 
                support all authorized public chartering agencies in 
                the State to improve the monitoring of their charter 
                schools, including by--
                          ``(i) using annual performance data, which 
                        may include graduation rates and student growth 
                        data, as appropriate, to measure the progress 
                        of their schools toward becoming high-quality 
                        charter schools; and
                          ``(ii) reviewing the schools' independent, 
                        annual audits of financial statements conducted 
                        in accordance with generally accepted 
                        accounting principles, and ensuring any such 
                        audits are publically reported; and
                  ``(F) the entity will work to ensure that charter 
                schools are included with the traditional public school 
                system in decision-making about the public school 
                system in the State.
          ``(3) Requests for waivers.--A request and justification for 
        waivers of any Federal statutory or regulatory provisions that 
        the entity believes are necessary for the successful operation 
        of the charter schools that will receive funds under the 
        entity's program under this section, and a description of any 
        State or local rules, generally applicable to public schools, 
        that will be waived, or otherwise not apply to such schools.
  ``(f) Selection Criteria; Priority.--
          ``(1) Selection criteria.--The Secretary shall award grants 
        to State entities under this section on the basis of the 
        quality of the applications submitted under subsection (e), 
        after taking into consideration--
                  ``(A) the degree of flexibility afforded by the 
                State's public charter school law and how the entity 
                will work to maximize the flexibility provided to 
                charter schools under the law;
                  ``(B) the ambitiousness of the entity's objectives 
                for the quality charter school program carried out 
                under this section;
                  ``(C) the quality of the strategy for assessing 
                achievement of those objectives;
                  ``(D) the likelihood that the eligible applicants 
                receiving subgrants under the program will meet those 
                objectives and improve educational results for 
                students;
                  ``(E) the proposed number of new charter schools to 
                be opened, and the number of high-quality charter 
                schools to be replicated or expanded under the program;
                  ``(F) the entity's plan to--
                          ``(i) adequately monitor the eligible 
                        applicants receiving subgrants under the 
                        entity's program; and
                          ``(ii) work with the authorized public 
                        chartering agencies involved to avoid 
                        duplication of work for the charter schools and 
                        authorized public chartering agencies;
                  ``(G) the entity's plan to provide adequate technical 
                assistance, as described in the entity's application 
                under subsection (e), for the eligible applicants 
                receiving subgrants under the entity's program under 
                this section; and
                  ``(H) the entity's plan to support quality 
                authorizing efforts in the State, consistent with the 
                objectives described in subparagraph (B).
          ``(2) Priority.--In awarding grants under this section, the 
        Secretary shall give priority to State entities to the extent 
        that they meet the following criteria:
                  ``(A) In the case in which a State entity is located 
                in a State that allows an entity other than the State 
                educational agency to be an authorized public 
                chartering agency or a State in which only a local 
                educational agency may be an authorized public 
                chartering agency, the State has an appeals process for 
                the denial of an application for a charter school.
                  ``(B) The State entity is located in a State that 
                does not impose any limitation on the number or 
                percentage of charter schools that may exist or the 
                number or percentage of students that may attend 
                charter schools in the State.
                  ``(C) The State entity is located in a State that 
                ensures equitable financing, as compared to traditional 
                public schools, for charter schools and students in a 
                prompt manner.
                  ``(D) The State entity supports full-, blended-, or 
                hybrid-online charter school models.
                  ``(E) The State entity is located in a State that 
                uses charter schools and best practices from charter 
                schools to help improve struggling schools and local 
                educational agencies.
                  ``(F) The State entity partners with an organization 
                that has a demonstrated record of success in developing 
                management organizations to support the development of 
                charter schools in the State.
                  ``(G) The State entity demonstrates quality policies 
                and practices to support and monitor charter schools 
                through factors, including--
                          ``(i) the proportion of high-quality charter 
                        schools in the State; and
                          ``(ii) the proportion of charter schools 
                        enrolling, at a rate similar to traditional 
                        public schools, traditionally underserved 
                        students, including students with disabilities 
                        and English language learners.
  ``(g) Local Uses of Funds.--An eligible applicant receiving a 
subgrant under this section shall use such funds to open new charter 
schools or replicable, high-quality charter school models, or expand 
existing high-quality charter schools.
  ``(h) Reporting Requirements.--Each State entity receiving a grant 
under this section shall submit to the Secretary, at the end of the 
third year of the 5-year grant period and at the end of such grant 
period, a report on--
          ``(1) the number of students served and, if applicable, how 
        many new students were served during each year of the grant 
        period;
          ``(2) the number of subgrants awarded under this section to 
        carry out each of the following--
                  ``(A) the opening of new charter schools;
                  ``(B) the opening of replicable, high-quality charter 
                school models; and
                  ``(C) the expansion of high-quality charter schools;
          ``(3) the progress the entity made toward meeting the 
        priorities described in subsection (f)(2), as applicable;
          ``(4) how the entity met the objectives of the quality 
        charter school program described in the entity's application 
        under subsection (e);
          ``(5) how the entity complied with, and ensured that eligible 
        applicants complied with, the assurances described in the 
        entity's application; and
          ``(6) how the entity worked with authorized public chartering 
        agencies, including how the agencies worked with the management 
        company or leadership of the schools in which the subgrants 
        were awarded.
  ``(i) State Entity Defined.--For purposes of this section, the term 
`State entity' means--
          ``(1) a State educational agency;
          ``(2) a State charter school board; or
          ``(3) a Governor of a State.''.

SEC. 6. FACILITIES FINANCING ASSISTANCE.

  Section 5204 (20 U.S.C. 7221c) is amended to read as follows:

``SEC. 5204. FACILITIES FINANCING ASSISTANCE.

  ``(a) Grants to Eligible Entities.--
          ``(1) In general.--From the amount reserved under section 
        5202(b)(1), the Secretary shall award not less than 3 grants to 
        eligible entities that have applications approved under 
        subsection (d) to demonstrate innovative methods of assisting 
        charter schools to address the cost of acquiring, constructing, 
        and renovating facilities by enhancing the availability of 
        loans or bond financing.
          ``(2) Eligible entity defined.--For purposes of this section, 
        the term `eligible entity' means--
                  ``(A) a public entity, such as a State or local 
                governmental entity;
                  ``(B) a private nonprofit entity; or
                  ``(C) a consortium of entities described in 
                subparagraphs (A) and (B).
  ``(b) Grantee Selection.--
          ``(1) Evaluation of application.--The Secretary shall 
        evaluate each application submitted under subsection (d), and 
        shall determine whether the application is sufficient to merit 
        approval.
          ``(2) Distribution of grants.--The Secretary shall award at 
        least one grant to an eligible entity described in subsection 
        (a)(2)(A), at least one grant to an eligible entity described 
        in subsection (a)(2)(B), and at least one grant to an eligible 
        entity described in subsection (a)(2)(C), if applications are 
        submitted that permit the Secretary to do so without approving 
        an application that is not of sufficient quality to merit 
        approval.
  ``(c) Grant Characteristics.--Grants under subsection (a) shall be of 
a sufficient size, scope, and quality so as to ensure an effective 
demonstration of an innovative means of enhancing credit for the 
financing of charter school acquisition, construction, or renovation.
  ``(d) Applications.--
          ``(1) In general.--To receive a grant under subsection (a), 
        an eligible entity shall submit to the Secretary an application 
        in such form as the Secretary may reasonably require.
          ``(2) Contents.--An application submitted under paragraph (1) 
        shall contain--
                  ``(A) a statement identifying the activities proposed 
                to be undertaken with funds received under subsection 
                (a), including how the eligible entity will determine 
                which charter schools will receive assistance, and how 
                much and what types of assistance charter schools will 
                receive;
                  ``(B) a description of the involvement of charter 
                schools in the application's development and the design 
                of the proposed activities;
                  ``(C) a description of the eligible entity's 
                expertise in capital market financing;
                  ``(D) a description of how the proposed activities 
                will leverage the maximum amount of private-sector 
                financing capital relative to the amount of government 
                funding used and otherwise enhance credit available to 
                charter schools, including how the entity will offer a 
                combination of rates and terms more favorable than the 
                rates and terms that a charter school could receive 
                without assistance from the entity under this section;
                  ``(E) a description of how the eligible entity 
                possesses sufficient expertise in education to evaluate 
                the likelihood of success of a charter school program 
                for which facilities financing is sought; and
                  ``(F) in the case of an application submitted by a 
                State governmental entity, a description of the actions 
                that the entity has taken, or will take, to ensure that 
                charter schools within the State receive the funding 
                the charter schools need to have adequate facilities.
  ``(e) Charter School Objectives.--An eligible entity receiving a 
grant under this section shall use the funds deposited in the reserve 
account established under subsection (f) to assist one or more charter 
schools to access private sector capital to accomplish one or both of 
the following objectives:
          ``(1) The acquisition (by purchase, lease, donation, or 
        otherwise) of an interest (including an interest held by a 
        third party for the benefit of a charter school) in improved or 
        unimproved real property that is necessary to commence or 
        continue the operation of a charter school.
          ``(2) The construction of new facilities, including 
        predevelopment costs, or the renovation, repair, or alteration 
        of existing facilities, necessary to commence or continue the 
        operation of a charter school.
  ``(f) Reserve Account.--
          ``(1) Use of funds.--To assist charter schools to accomplish 
        the objectives described in subsection (e), an eligible entity 
        receiving a grant under subsection (a) shall, in accordance 
        with State and local law, directly or indirectly, alone or in 
        collaboration with others, deposit the funds received under 
        subsection (a) (other than funds used for administrative costs 
        in accordance with subsection (g)) in a reserve account 
        established and maintained by the eligible entity for this 
        purpose. Amounts deposited in such account shall be used by the 
        eligible entity for one or more of the following purposes:
                  ``(A) Guaranteeing, insuring, and reinsuring bonds, 
                notes, evidences of debt, loans, and interests therein, 
                the proceeds of which are used for an objective 
                described in subsection (e).
                  ``(B) Guaranteeing and insuring leases of personal 
                and real property for an objective described in 
                subsection (e).
                  ``(C) Facilitating financing by identifying potential 
                lending sources, encouraging private lending, and other 
                similar activities that directly promote lending to, or 
                for the benefit of, charter schools.
                  ``(D) Facilitating the issuance of bonds by charter 
                schools, or by other public entities for the benefit of 
                charter schools, by providing technical, 
                administrative, and other appropriate assistance 
                (including the recruitment of bond counsel, 
                underwriters, and potential investors and the 
                consolidation of multiple charter school projects 
                within a single bond issue).
          ``(2) Investment.--Funds received under this section and 
        deposited in the reserve account established under paragraph 
        (1) shall be invested in obligations issued or guaranteed by 
        the United States or a State, or in other similarly low-risk 
        securities.
          ``(3) Reinvestment of earnings.--Any earnings on funds 
        received under subsection (a) shall be deposited in the reserve 
        account established under paragraph (1) and used in accordance 
        with such subsection.
  ``(g) Limitation on Administrative Costs.--An eligible entity may use 
not more than 2.5 percent of the funds received under subsection (a) 
for the administrative costs of carrying out its responsibilities under 
this section (excluding subsection (k)).
  ``(h) Audits and Reports.--
          ``(1) Financial record maintenance and audit.--The financial 
        records of each eligible entity receiving a grant under 
        subsection (a) shall be maintained in accordance with generally 
        accepted accounting principles and shall be subject to an 
        annual audit by an independent public accountant.
          ``(2) Reports.--
                  ``(A) Grantee annual reports.--Each eligible entity 
                receiving a grant under subsection (a) annually shall 
                submit to the Secretary a report of its operations and 
                activities under this section.
                  ``(B) Contents.--Each annual report submitted under 
                subparagraph (A) shall include--
                          ``(i) a copy of the most recent financial 
                        statements, and any accompanying opinion on 
                        such statements, prepared by the independent 
                        public accountant reviewing the financial 
                        records of the eligible entity;
                          ``(ii) a copy of any report made on an audit 
                        of the financial records of the eligible entity 
                        that was conducted under paragraph (1) during 
                        the reporting period;
                          ``(iii) an evaluation by the eligible entity 
                        of the effectiveness of its use of the Federal 
                        funds provided under subsection (a) in 
                        leveraging private funds;
                          ``(iv) a listing and description of the 
                        charter schools served during the reporting 
                        period, including the amount of funds used by 
                        each school, the type of project facilitated by 
                        the grant, and the type of assistance provided 
                        to the charter schools;
                          ``(v) a description of the activities carried 
                        out by the eligible entity to assist charter 
                        schools in meeting the objectives set forth in 
                        subsection (e); and
                          ``(vi) a description of the characteristics 
                        of lenders and other financial institutions 
                        participating in the activities undertaken by 
                        the eligible entity under this section 
                        (excluding subsection (k)) during the reporting 
                        period.
                  ``(C) Secretarial report.--The Secretary shall review 
                the reports submitted under subparagraph (A) and shall 
                provide a comprehensive annual report to Congress on 
                the activities conducted under this section (excluding 
                subsection (k)).
  ``(i) No Full Faith and Credit for Grantee Obligation.--No financial 
obligation of an eligible entity entered into pursuant to this section 
(such as an obligation under a guarantee, bond, note, evidence of debt, 
or loan) shall be an obligation of, or guaranteed in any respect by, 
the United States. The full faith and credit of the United States is 
not pledged to the payment of funds which may be required to be paid 
under any obligation made by an eligible entity pursuant to any 
provision of this section.
  ``(j) Recovery of Funds.--
          ``(1) In general.--The Secretary, in accordance with chapter 
        37 of title 31, United States Code, shall collect--
                  ``(A) all of the funds in a reserve account 
                established by an eligible entity under subsection 
                (f)(1) if the Secretary determines, not earlier than 2 
                years after the date on which the eligible entity first 
                received funds under this section (excluding subsection 
                (k)), that the eligible entity has failed to make 
                substantial progress in carrying out the purposes 
                described in subsection (f)(1); or
                  ``(B) all or a portion of the funds in a reserve 
                account established by an eligible entity under 
                subsection (f)(1) if the Secretary determines that the 
                eligible entity has permanently ceased to use all or a 
                portion of the funds in such account to accomplish any 
                purpose described in subsection (f)(1).
          ``(2) Exercise of authority.--The Secretary shall not 
        exercise the authority provided in paragraph (1) to collect 
        from any eligible entity any funds that are being properly used 
        to achieve one or more of the purposes described in subsection 
        (f)(1).
          ``(3)  Procedures.--The provisions of sections 451, 452, and 
        458 of the General Education Provisions Act shall apply to the 
        recovery of funds under paragraph (1).
          ``(4) Construction.--This subsection shall not be construed 
        to impair or affect the authority of the Secretary to recover 
        funds under part D of the General Education Provisions Act.
  ``(k) Per-pupil Facilities Aid Program.--
          ``(1) Definition of per-pupil facilities aid program.--In 
        this subsection, the term `per-pupil facilities aid program' 
        means a program in which a State makes payments, on a per-pupil 
        basis, to charter schools to provide the schools with 
        financing--
                  ``(A) that is dedicated solely for funding charter 
                school facilities; or
                  ``(B) a portion of which is dedicated for funding 
                charter school facilities.
          ``(2) Grants.--
                  ``(A) In general.--From the amount reserved under 
                section 5202(b)(1) remaining after the Secretary makes 
                grants under subsection (a), the Secretary shall make 
                grants, on a competitive basis, to States to pay for 
                the Federal share of the cost of establishing or 
                enhancing, and administering per-pupil facilities aid 
                programs.
                  ``(B) Period.--The Secretary shall award grants under 
                this subsection for periods of not more than 5 years.
                  ``(C) Federal share.--The Federal share of the cost 
                described in subparagraph (A) for a per-pupil 
                facilities aid program shall be not more than--
                          ``(i) 90 percent of the cost, for the first 
                        fiscal year for which the program receives 
                        assistance under this subsection;
                          ``(ii) 80 percent in the second such year;
                          ``(iii) 60 percent in the third such year;
                          ``(iv) 40 percent in the fourth such year; 
                        and
                          ``(v) 20 percent in the fifth such year.
                  ``(D) State share.--A State receiving a grant under 
                this subsection may partner with 1 or more 
                organizations to provide up to 50 percent of the State 
                share of the cost of establishing or enhancing, and 
                administering the per-pupil facilities aid program.
                  ``(E) Multiple grants.--A State may receive more than 
                1 grant under this subsection, so long as the amount of 
                such funds provided to charter schools increases with 
                each successive grant.
          ``(3) Use of funds.--
                  ``(A) In general.--A State that receives a grant 
                under this subsection shall use the funds made 
                available through the grant to establish or enhance, 
                and administer, a per-pupil facilities aid program for 
                charter schools in the State of the applicant.
                  ``(B) Evaluations; technical assistance; 
                dissemination.--From the amount made available to a 
                State through a grant under this subsection for a 
                fiscal year, the State may reserve not more than 5 
                percent to carry out evaluations, to provide technical 
                assistance, and to disseminate information.
                  ``(C) Supplement, not supplant.--Funds made available 
                under this subsection shall be used to supplement, and 
                not supplant, State, and local public funds expended to 
                provide per pupil facilities aid programs, operations 
                financing programs, or other programs, for charter 
                schools.
          ``(4) Requirements.--
                  ``(A) Voluntary participation.--No State may be 
                required to participate in a program carried out under 
                this subsection.
                  ``(B) State law.--
                          ``(i) In general.--To be eligible to receive 
                        a grant under this subsection, a State shall 
                        establish or enhance, and administer, a per-
                        pupil facilities aid program for charter 
                        schools in the State, that--
                                  ``(I) is specified in State law; and
                                  ``(II) provides annual financing, on 
                                a per-pupil basis, for charter school 
                                facilities.
                          ``(ii) Special rule.--A State that is 
                        required under State law to provide its charter 
                        schools with access to adequate facility space 
                        may be eligible to receive a grant under this 
                        subsection if the State agrees to use the funds 
                        to develop a per-pupil facilities aid program 
                        consistent with the requirements of this 
                        subsection.
          ``(5) Applications.--To be eligible to receive a grant under 
        this subsection, a State shall submit an application to the 
        Secretary at such time, in such manner, and containing such 
        information as the Secretary may require.''.

SEC. 7. NATIONAL ACTIVITIES.

  Section 5205 (20 U.S.C. 7221d) is amended to read as follows:

``SEC. 5205. NATIONAL ACTIVITIES.

  ``(a) In General.--From the amount reserved under section 5202(b)(2), 
the Secretary shall--
          ``(1) use not less than 50 percent of such funds to award 
        grants in accordance with subsection (b); and
          ``(2) use the remainder of such funds to--
                  ``(A) disseminate technical assistance to State 
                entities in awarding subgrants under section 5203;
                  ``(B) disseminate best practices; and
                  ``(C) evaluate the impact of the charter school 
                program, including the impact on student achievement, 
                carried out under this subpart.
  ``(b)  Grants.--
          ``(1) In general.--The Secretary shall make grants, on a 
        competitive basis, to eligible applicants for the purpose of 
        carrying out the activities described in section 5202(a)(1), 
        subparagraphs (A) through (C) of section 5203(a)(1), and 
        section 5203(g).
          ``(2) Terms and conditions.--Except as otherwise provided in 
        this subsection, grants awarded under this subsection shall 
        have the same terms and conditions as grants awarded to State 
        entities under section 5203.
          ``(3) Eligible applicant defined.--For purposes of this 
        subsection, the term `eligible applicant' means an eligible 
        applicant that desires to open a charter school in--
                  ``(A) a State that did not apply for a grant under 
                section 5203;
                  ``(B) a State that did not receive a grant under 
                section 5203; or
                  ``(C) a State that received a grant under section 
                5203 and is in the 4th or 5th year of the grant period 
                for such grant.
  ``(c) Contracts and Grants.--The Secretary may carry out any of the 
activities described in this section directly or through grants, 
contracts, or cooperative agreements.''.

SEC. 8. RECORDS TRANSFER.

  Section 5208 (20 U.S.C. 7221g) is amended--
          (1) by inserting ``as quickly as possible and'' before ``to 
        the extent practicable''; and
          (2) by striking ``section 602'' and inserting ``section 
        602(14)''.

SEC. 9. DEFINITIONS.

  Section 5210 (20 U.S.C. 7221i) is amended--
          (1) in paragraph (1)--
                  (A) by striking ``and'' at the end of subparagraph 
                (K);
                  (B) by striking the period at the end of subparagraph 
                (L) and inserting ``; and''; and
                  (C) by adding at the end, the following:
                  ``(M) may serve prekindergarten or post secondary 
                students.'';
          (2) in paragraph (3)(B), by striking ``under section 
        5203(d)(3)''; and
          (3) by inserting at the end the following:
          ``(5) Expansion of a high-quality charter school.--The term 
        `expansion of a high-quality charter school' means a high-
        quality charter school that either significantly increases its 
        enrollment or adds one or more grades to its school.
          ``(6) High-quality charter school.--The term `high-quality 
        charter school' means a charter school that--
                  ``(A) shows evidence of strong academic results, 
                which may include strong academic growth as determined 
                by a State;
                  ``(B) has no significant issues in the areas of 
                student safety, financial management, or statutory or 
                regulatory compliance;
                  ``(C) has demonstrated success in significantly 
                increasing student academic achievement and attainment 
                for all students served by charter schools; and
                  ``(D) has demonstrated success in increasing student 
                academic achievement for the subgroups of students 
                described in section 1111(b)(2)(C)(v)(II).
          ``(7) Replicable, high-quality charter school model.--The 
        term `replicable, high-quality charter school model' means a 
        high-quality charter school that will open a new campus under 
        an existing charter.''.

SEC. 10. AUTHORIZATION OF APPROPRIATIONS.

  Section 5211 (20 U.S.C. 7221j) is amended to read as follows:

``SEC. 5211. AUTHORIZATION OF APPROPRIATIONS.

  ``There are authorized to be appropriated to carry out this subpart 
$300,000,000 for fiscal year 2012 and each of the 5 succeeding fiscal 
years.''.

SEC. 11. CONFORMING AMENDMENTS.

  (a) Repeal.--Subpart 2 of part B of title V (20 U.S.C. 7223 et seq.) 
is repealed.
  (b) Table of Contents.--The table of contents in section 2 is 
amended--
          (1) by striking the item relating to section 5203 and 
        inserting the following:

``Sec. 5203. Grants to support high-quality charter schools.'';
          (2) by striking the item relating to section 5204 and 
        inserting the following:

``Sec. 5204. Facilities Financing Assistance.''; and
          (3) by striking subpart 2 of part B of title V.

                                Purpose

    H.R. 2218, the Empowering Parents through Quality Charter 
Schools Act, reauthorizes and modernizes the Charter School 
Program under the Elementary and Secondary Education Act. The 
bill increases the number of charter schools available to 
students and families, ensures charter schools share their best 
practices with all public schools, and improves access to 
charter schools for all students, including students with 
disabilities and English language learners.

                            Committee Action

    This bill is the second in a series of bills designed to 
reauthorize the Elementary and Secondary Education Act (ESEA). 
H.R. 2218 builds upon the Committee's efforts to examine the 
federal investment in education and evaluate elementary and 
secondary education programs.

                             111TH CONGRESS

Hearings

    On June 4, 2009, the Committee on Education and Labor held 
a hearing entitled, ``Building on What Works at Charter 
Schools.'' The purpose of the hearing was to learn how 
representatives from the U.S. Department of Education, states, 
charter school authorizers, and charter school providers 
produce high-quality charter schools and how those programs can 
be replicated and brought to scale. Testifying before the 
Committee were: The Honorable Barbara O'Brien, Lieutenant 
Governor, State of Colorado, Denver, CO; Mr. James Shelton, 
Assistant Deputy Secretary for Innovation and Improvement, U.S. 
Department of Education, Washington, DC; Mr. Steve Barr, 
Founder and Chairman, Green Dot Public Schools, Los Angeles, 
CA; Dr. John King, Managing Director, Excellence and 
Preparatory Network of Uncommon Schools, New York, NY; Mr. 
David Dunn, Executive Director, Texas Charter Schools 
Association, Austin, TX; and Mr. James Goenner, Executive 
Director, The Center for Charter Schools at Central Michigan 
University, Mount Pleasant, MI.
    On February 24, 2010, the Committee on Education and Labor 
held a hearing on quality charter schools and H.R. 4330, the 
All Students Achieving through Reform Act. The purpose of the 
hearing was to learn how charter school providers maintain 
quality in charter schools, what student populations charter 
schools serve, and the importance of keeping charter schools 
autonomous. The hearing also focused on H.R. 4430, which 
created a new program under the Charter School Program to 
provide funding for the expansion and replication of charter 
schools. Testifying before the Committee were: Ms. Eva 
Moskowitz, Founder, Success Charter Network, New York, NY; Ms. 
Robin J. Lake, Associate Director, Center on Reinventing Public 
Education, Seattle, WA; Dr. Thomas Hehir, Professor of 
Practice, Harvard Graduate School of Education, Cambridge, MA; 
Mr. Greg Richmond, President and CEO, National Association of 
Charter School Authorizers, Chicago, IL; Ms. Eileen Ahern, 
Director, National Association of State Directors of Special 
Education, Alexandria, VA; and Dr. Caprice Young, President and 
CEO, KC Distance Learning, Portland, OR.

Legislative Action

    In H.R. 3288, the FY 2010 Consolidated Appropriations Act, 
the Committee on Appropriations provided $256 million for the 
Charter School Program and reserved $50 million of those funds 
to support the expansion and replication of existing high-
quality charter schools. H.R. 3288 was signed into law on 
December 16, 2009.

                             112TH CONGRESS

Hearings

    On April 7, 2011, the Committee on Education and the 
Workforce held a hearing entitled, ``Education Reforms: 
Promoting Flexibility and Innovation.'' The purpose of the 
hearing was to discuss the appropriate federal role in K-12 
education and explore the work of state and local education 
leaders who are pushing for innovative approaches to education 
reform and greater state and local flexibility. Testifying 
before the Committee were: Dr. Janet Barresi, Oklahoma State 
Superintendent of Public Instruction, Oklahoma City, OK; Dr. 
Gary Amoroso, Superintendent, Lakeville Area Public Schools, 
Lakeville, MN; Mr. Yohance Maqubela, Chief Operating Officer, 
Howard University Middle School of Mathematics and Science, 
Washington, DC; and Dr. Terry Grier, Superintendent, Houston 
Independent School District, Houston, TX.
    On June 1, 2011, the Committee on Education and the 
Workforce Subcommittee on Early Childhood, Elementary, and 
Secondary Education held a hearing entitled, ``Education 
Reforms: Exploring the Vital Role of Charter Schools.'' The 
purpose of the hearing was to examine the contributions of 
charter schools to state and local efforts to improve public 
education and the importance of empowering parents to choose 
the best school environment for their children. Specifically, 
the hearing looked at: (1) how charter schools serve special 
populations, including students with disabilities and English 
Language Learners; (2) how charter schools serve the needs of 
the local community; and (3) how charter school authorizers 
work to improve quality. Testifying before the Subcommittee 
were: Ms. DeAnna Rowe, Executive Director, Arizona State Board 
for Charter Schools, Phoenix, AZ; Ms. Debbie Beyer, Executive 
Director, Literacy First Charter Schools, El Cajon, CA; Dr. 
Gary Miron, College of Education, Western Michigan University, 
Kalamazoo, MI; and Dr. Beth Purvis, Executive Director, Chicago 
International Charter School, Chicago, IL.

Legislative Action

    H.R. 1473, the Department of Defense and Full-Year 
Continuing Appropriations Act of 2011, included $256 million 
for the Charter School Program, and reserved $50 million to 
support the expansion and replication of existing high-quality 
charter schools. H.R. 1473 was signed into law on April 15, 
2011.
    On June 16, 2011, Rep. Duncan Hunter (R-CA) and Rep. John 
Kline (R-MN) introduced H.R. 2218, the Empowering Parents 
through Quality Charter Schools Act. This bill reauthorizes and 
improves the existing charter school provisions under the 
Elementary and Secondary Education Act. H.R. 2218 is 
cosponsored by Rep. George Miller (D-CA), Rep. Tom Petri (R-
WI), Rep. Howard P. ``Buck'' McKeon (R-CA), Rep. Phil Roe (R-
TN), Rep. Trey Gowdy (R-SC), Rep. Larry Bucshon (R-IN), Rep. 
Tim Walberg (R-MI), Rep. Scott DesJarlais (R-TN), Rep. Mike 
Kelly (R-PA), Rep. Jared Polis (D-CO), Rep. Todd Rokita (R-IN), 
and Rep. Ander Crenshaw (R-FL).
    The Committee on Education and the Workforce considered 
H.R. 2218 in legislative session on June 22, 2011, and reported 
it favorably, as amended, to the House of Representatives by a 
bipartisan vote of 34-5. The Committee considered and adopted 
one amendment to the bill, an Amendment in the Nature of a 
Substitute, offered by Rep. Duncan Hunter (R-CA).
    This amendment:
     Clarifies that charter schools must have autonomy 
from state and local policies and practices over their budgets 
and operations.
     Clarifies language requiring states and charter 
school authorizers to provide technical assistance to charter 
schools. It provides examples of the factors that charter 
school authorizers must look for as they approve and monitor 
charter schools in their state.
     Adds a priority in the grant application 
encouraging states to support quality policies and practices in 
monitoring charter schools in their state.
     Clarifies that charter schools should be part of 
any discussion or decision made about the public school system 
in the state.
     Adds a provision encouraging charter schools and 
traditional public schools to share best practices.
     Requires grantees to state they will assist 
charter schools in ensuring they support all students in an 
inclusive education environment.
     Clarifies that the Secretary of Education will 
examine student achievement when conducting an evaluation of 
the program's effects on participating charter schools.
    The Committee received letters of support for H.R. 2218 
from the following organizations: The U.S. Chamber of Commerce, 
Business Roundtable, Chiefs for Change, Knowledge Is Power 
Program (KIPP) Foundation, Council for Exceptional Children, 
Charter School Lenders Coalition, Democrats for Education 
Reform, National Association for Charter School Authorizers, 
National Alliance for Public Charter Schools, National 
Association of State Directors of Special Education, New 
Schools Venture Fund, the California Charter Schools 
Association, and the Texas Charter Schools Association.

                           Letters of Support



    Below is a summary of H.R. 2218:

                                Summary

    H.R. 2218, the Empowering Parents through Quality Charter 
Schools Act, streamlines and modernizes the existing charter 
school programs under the Elementary and Secondary Education 
Act (ESEA) from two provisions to one. The two current programs 
are:
     The Charter School Program supports grants for 
charter school developers to open or start new charter schools. 
The program also provides funds to disseminate best practices 
and provide state facilities aid to charter schools. The 
program was last authorized at $300 million in fiscal year 2002 
and such sums as necessary for fiscal year 2003 through 2007.
     The Charter School Credit Enhancement Program 
assists charter schools in accessing better credit terms to 
acquire and renovate facilities to operate a charter school. 
The program was last authorized at $150 million in fiscal year 
2002 and such sums as necessary for fiscal year 2003.
    H.R. 2218 consolidates the two provisions in current law 
into one program, refocuses the program to promote charter 
schools at the state and local level, and allows states to use 
federal funds to start new charter schools and expand and 
replicate existing high-quality charter schools. The new 
Charter School Program will consist of three parts:
     State Quality Charter School Grants will be 
awarded to a State Educational Agency, the State Charter School 
Board, or the Governor. These grants will support the expansion 
and replication of high-quality charter schools, new, 
innovative charter school models, and quality initiatives to 
improve charter school authorizing.
     Facilities Aid will be awarded to continue credit 
enhancement activities and support state facilities aid for 
charter schools.
     National Activities will allow the Secretary of 
Education to operate a start-up competition for charter schools 
in states that did not win or compete for a State Quality 
Charter School Grant, or whose state is in the fourth or fifth 
year of the grant. This section also requires the Secretary to 
offer technical assistance to eligible grantees that are 
interested in applying for the grant and technical assistance 
to help grantees properly implement the grant. The Secretary 
will also be allowed to disseminate best practices to ensure 
all public schools may benefit from the lessons learned from 
charter schools. Finally, the Secretary will conduct an 
evaluation to examine the effects of the legislation on charter 
schools, including student achievement.
    H.R. 2218, the Empowering Parents through Quality Charter 
Schools Act authorizes the Charter School Program at 
$300,000,000 for fiscal year 2012 through 2017. The bill makes 
technical corrections to other provisions in the Charter School 
Program, including modifying the definition of a charter school 
to clarify that a charter school can serve early childhood 
students as well as post-secondary students. The legislation 
adds three new definitions to the law: a high-quality charter 
school; the expansion of a high-quality charter school; and a 
replicable, high-quality charter school model.

                            Committee Views


Background

    A public charter school is a publicly funded elementary or 
secondary school operated according to the terms of a charter 
or contract granted by a public chartering agency. The terms of 
a charter typically provide the charter school operator with 
increased autonomy in how to operate the school in exchange for 
greater accountability for results or student outcomes. 
Charters are usually granted for a limited time period, 
typically ranging from less than five years to as many as 15 
years. In order to retain or renew its charter, a school must 
adhere to the accountability requirements written into its 
charter and attract enough students to continue functioning as 
a viable school.
    Charter schools are a state education reform initiative 
that began in Minnesota in 1991. The Improving America's 
Schools Act of 1994 included support for starting charter 
schools. The credit enhancement program, which began in 2001 
through the appropriations process, provides grants to eligible 
entities to leverage funds through credit enhancement 
initiatives to help charter schools leverage other funds to 
acquire, construct, renovate, or lease academic facilities.
    The first charter school opened in 1992; today, 5,200 
charter schools in 39 states and the District of Columbia serve 
1.8 million students. Forty states have enacted charter school 
laws, giving parents and students an education alternative to 
traditional public schools. However, this growth is not enough 
to meet the demand. An estimated 420,000 students are on 
waitlists to enter charter schools. Charter schools also face 
challenges in serving certain populations of students and, in 
particular, students with disabilities, including students with 
lower incidence disabilities, and English language learners.

Legislative Changes

    H.R. 2218, the Empowering Parents through Quality Charter 
Schools Act, builds on the success of the charter school 
community, improves access for traditionally underserved 
populations, supports high-quality charter schools, and 
strengthens accountability. Consolidating the two charter 
school provisions into one program better focuses support for 
all elements important to creating high-quality charter 
schools.
    The charter school movement has seen robust growth over the 
past decade. There are now several examples of high-quality 
schools that could receive federal and state support to expand 
and replicate their successes. While the Committee on 
Appropriations has supported this effort through a reservation 
for the Charter School Program appropriation, the Committee 
believes it is important to update the authorizing legislation 
to ensure states have a role in ensuring thoughtful development 
of charter schools in each state. The Empowering Parents 
through Quality Charter Schools Act includes the expansion and 
replication of high-quality charter schools as an added use of 
funds under each State Quality Charter School Grant to support 
the start-up of new, innovative charter school models, as well 
as the expansion and replication of high-quality charter 
schools.
    Charter schools receiving funds under this program must 
admit their students through a lottery system, as approved by 
state law, if the demand for attendance exceeds the available 
slots in the schools. The more than 400,000 students on 
waitlists demonstrate an intense demand for charter schools. It 
is important to assist these schools in reaching all students 
who may benefit from the opening or expansion of new charter 
schools. But the focus must be on increasing the number of 
quality education options for parents, not just increasing the 
number of charter schools available. The legislation, 
therefore, includes provisions to help grantees reach out to 
charter school developers and school leaders to recruit 
traditionally underserved students, including students with 
disabilities and English language learners; promote inclusion; 
and meet the needs of those students.
    The Empowering Parents through Quality Charter Schools Act 
supports charter schools in serving students with disabilities, 
including students with lower incidence disabilities, English 
language learners, and other traditionally underserved 
students. The legislation recognizes that charter schools need 
support in recruiting and serving students with special needs 
and includes provisions to help charter schools address those 
challenges. The Committee believes the technical assistance and 
other provisions required of grantees will help charter schools 
recruit, enroll, and serve these students.
    When recruiting students, charter schools should ensure 
parents have the information they need to make the best 
decisions possible for their children. This includes 
encouraging parents to examine the academic success of the 
school, the teaching philosophy of the school, and the ability 
of the school to meet the education needs of any student 
admitted to the school. The legislation helps charter schools 
avoid application barriers that exclude students based on 
socioeconomic status, language proficiency, academic 
performance, disability, or parental involvement. The 
legislation supports charter schools that promote an inclusive 
environment. High-quality charter schools, as defined in the 
legislation, raise the achievement of all students, including 
students with disabilities, English language learners, and 
other traditionally underserved populations.
    In modernizing the Charter School Program, H.R. 2218 
includes a new provision that reserves 10 percent of each state 
grant to support initiatives to improve charter school 
authorizing. While a small percentage will be used for state 
administrative costs, the majority of the funds will benefit 
all charter schools in the state by helping charter school 
authorizers identify key indicators of quality, including how 
to ensure the school and the authorizer are clear on the goals 
and expectations of each party, including helping charter 
schools meet their obligations under existing laws and this 
Act. The funds will also be used to increase the number of 
quality charter schools available for students, not just the 
opening of new charter schools, and support access and services 
for all students by helping charter schools recruit, enroll, 
and meet the needs of students with disabilities, including 
students with lower incidence disabilities, and English 
language learners.
    The bill requires eligible applicants to describe the 
quality controls agreed to with their authorizers in their 
contract, and the terms of contracts with other organizations. 
In the applications, charter schools must describe how their 
authorizers evaluate the success of the schools primarily on 
the academic achievement of all of their students, as well as 
through other performance measures determined by state law, the 
authorizer, and the school, as outlined in a legally binding 
performance contract. The legislation requires charter schools 
to be transparent about contractual relationships with 
management organizations. As stipulated in the U.S. Department 
of Education nonregulatory guidance for the Charter School 
Program, charter schools that receive grants under this program 
should avoid conflicts of interest. In promoting quality 
authorizing, grantees should support authorizers that ensure 
annual, independent financial audits are publicly reported and 
easily accessible, such as through posting on the school or 
authorizer website. The Committee believes it is important that 
authorizers and charter schools have as much flexibility in 
complying with these provisions as possible in order to ensure 
charter schools can meet the expectations of their respective 
authorizers and still operate in an autonomous manner to meet 
the goals of the school.
    In addition, the Empowering Parents through Quality Charter 
Schools Act allows new eligible grantees to compete for funding 
under State Quality Charter School Grants and provides more 
flexibility in the operation of the state grant competition for 
the start-up of charter schools. The bill allows state charter 
school boards and governors to apply for state grants, in 
addition to the State Educational Agency (SEA), which is 
allowed under current law. This expansion of eligible grantees 
is meant to ensure that charter schools have an opportunity to 
open and expand with the support of a grantee who believes in 
the benefit of charter schools and offers the greatest 
assistance to those schools that win subgrants. To ensure 
grantees are able to meet the requirements of the program, the 
legislation allows states to partner with an entity that can 
help it operate a quality program that adequately supports the 
thoughtful growth of charter schools in the state. While there 
may be multiple eligible grantees for each state, the Committee 
supports limiting each state to one grant to avoid duplication 
in the state and ensure funds reach as many states, and 
therefore schools, as possible across the nation.
    The new eligible grantees are also required to collaborate 
with the State Educational Agency, where appropriate. While 
this provision does not give the SEA any authority over the 
grantee or program the grantee is running, it should ensure 
that the SEA and charter school operators are working together 
in a cohesive, statewide system rather than creating parallel 
systems. The SEA may help distribute grants to schools, help 
the entity run the grant competition, or provide guidance to 
support the peer review requirement in the law.
    H.R. 2218 includes a clear listing of assurances and 
priorities for awarding charter school grants, which will 
improve charter schools, improve access to high-quality charter 
schools, and expand the availability of high-quality charter 
schools as an integral component of state public school 
systems. The bill includes an assurance that charter schools 
comply with all applicable federal laws--an obligation that 
these schools are already required to follow--such as the 
Individuals with Disabilities Education Act, section 504 of the 
Rehabilitation Act, Title VI of the Civil Rights Act of 1964, 
and the other applicable provisions of the Elementary and 
Secondary Education Act. This measure ensures state grantees 
and the charter schools they support are clear about the 
requirements that must be met. The bill also includes an 
assurance that grantees will ensure charter schools actively 
participate in decisions about the public school system, 
providing charter schools, as public schools, the same voice in 
decisions that will affect the schools and their students as 
traditional public schools. The Committee believes this 
important change is an opportunity to share best practices 
between all public schools and ensure all schools have an equal 
voice in the public school system. An assurance that each 
charter school has a high level of autonomy, particularly over 
budgets and operations, will also ensure the schools can be 
innovative in responding to the needs of the community.
    The legislation's priorities will provide an incentive to 
states to support more high-quality charter schools that meet 
the needs of the local community. Provisions that support the 
elimination of caps on students or schools will help get funds 
to states that can open new schools. The bill includes a 
priority for those states that have more than one statewide 
authorizer, or an appeals process if the only local authorizer 
is the Local Educational Agency. The Committee believes this 
will ensure charter schools are not held hostage to the 
traditional public school system that sees charter schools as 
competition rather than an enhancement to the public school 
system. A priority is also included for those states whose 
charter schools serve students with disabilities and other 
traditionally underserved students at a similar rate as the 
local schools. The Committee believes that states with a high 
proportion of charter schools demonstrating this commitment 
have created a state environment and the state infrastructure 
to help charter schools serve these students.
    The Committee believes that reporting requirements are an 
important tool for evaluating the success of grantees in 
fulfilling the purpose of the program. H.R. 2218 requires 
grantees to report to the Secretary of Education at the end of 
the third year of the five-year grant period. The information 
submitted to the Secretary on the number of students served 
during each year of the grant period should be reported by 
subgrant, but is not intended to create any increased burdens 
for the schools participating in the program.
    The legislation consolidates the existing credit 
enhancement program and the state facilities aid program to 
clarify the law. The direction to reserve 15 percent of the 
total appropriated funds ensures there are sufficient funds to 
award more than one grant each year under the credit 
enhancement program. This program helps charter schools access 
credit to obtain or renovate facilities to open the school. The 
legislative changes made to this provision increase the 
administrative reservation to 2.5 percent of each grant to 
ensure the grantee can reach out to, serve, and properly 
monitor charter schools assisted under the grant. The bill also 
removes the priority of awards under the credit enhancement 
program to ensure the best grantees are winning.
    The Empowering Parents through Quality Charter Schools Act 
updates the national activities portion of the grant to allow 
the Secretary of Education to run a competition for charter 
schools that want to open in states that did not win or compete 
for a state grant, or are in a state that is in the fourth or 
fifth year of their grant. This will ensure students are not 
left behind in states that have not demonstrated the leadership 
to support charter schools or those that have already obligated 
their funds under the grant. It is the Committee's expectation 
that the Secretary will assess the quality of applicants in the 
same manner as in the state competition. The Secretary will 
also be required to offer technical assistance to assist 
grantees in implementing their grants to maximize the impact of 
the funds. The Secretary will also disseminate best practices 
to help all public schools benefit from the success of charter 
schools. Finally, the Secretary is required to conduct an 
evaluation that will measure the effects of the program on 
charter schools, including student achievement. A rigorous 
evaluation is critical to determining whether the program has 
been successful in meeting its purpose of supporting high-
quality charter schools.

Conclusion

    H.R. 2218, the Empowering Parents through Quality Charter 
Schools Act, modernizes and streamlines the charter school 
provisions under the Elementary and Secondary Education Act. 
The bill updates the Charter School Program in line with the 
charter school landscape to better support high-quality charter 
schools. The bill consolidates the current funding streams for 
charter schools under one authorization at $300 million to 
increase efficiencies within the operation of the program and 
better leverage federal funding to improve the program.

                      Section-by-Section Analysis


Section 1--Short title

    States the short title as the ``Empowering Parents through 
Quality Charter Schools Act.''

Section 2--References

    References the Elementary and Secondary Education Act.

Section 3--Purpose

    States the purpose of the Charter School Program.

Section 4--Program authorized

    Authorizes the Charter School Program.

Section 5--Grants to support quality charter schools

    Specifies the general requirements of state grants to 
support the startup or expansion of charter schools. Specifies 
the information the Secretary of Education will look for in the 
state application, what assurances the grantee will be required 
to provide, the criteria the Secretary will use to determine 
grant winners, and the priorities for grant awards.

Section 6--Facilities financing assistance

    Specifies the general requirements for facilities financing 
assistance. Prioritizes credit enhancement activities over 
state facilities aid.

Section 7--National activities

    Specifies the activities the Secretary of Education will 
support under the program, including disseminating best 
practices, providing technical assistance, operating a startup 
competition, and conducting an evaluation of the program.

Section 8--Records transfer

    Modifies the provision to encourage more timely delivery of 
records transfer and amends the reference to the Individuals 
with Disabilities Education Act.

Section 9--Definitions

    Makes a change to the definition of a `charter school' and 
adds definitions for `Expansion of a High-Quality Charter 
School,' `High-Quality Charter School,' and `Replicable, High-
Quality Charter School Model.'

Section 10--Authorization of appropriations

    Authorizes the program at $300 million for fiscal years 
2012 through 2017.

Section 11--Conforming amendments

    Modifies the Elementary and Secondary Education Act to 
address the changes made under this legislation.

                       Explanation of Amendments

    The amendments, including the amendment in the nature of a 
substitute, are explained in the body of this report.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch. H.R. 2218 reforms and simplifies the federal charter 
schools program within the Elementary and Secondary Education 
Act. H.R. 2218 would have no direct impact on the Legislative 
Branch.

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandates Reform Act, P.L. 104-4) requires a statement of 
whether the provisions of the reported bill include unfunded 
mandates. This issue is addressed in the CBO letter.

                           Earmark Statement

    H.R. 2218 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of House Rule XXI.

                             Rollcall Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee Report to include for 
each record vote on a motion to report the measure or matter 
and on any amendments offered to the measure or matter the 
total number of votes for and against and the names of the 
Members voting for and against.


         Statement of General Performance Goals and Objectives

    In accordance with clause (3)(c) of House Rule XIII, the 
goal of H.R. 2188 is to reform and simplify the federal charter 
schools program within the Elementary and Secondary Education 
Act. The Committee expects the Department of Education to 
comply with these provisions and implement the changes to the 
law in accordance with these stated goals.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the body of this report.

               New Budget Authority and CBO Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause 3(c)(3) of rule XIII of the Rules of 
the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following estimate for H.R. 2218 from the Director of the 
Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 30, 2011.
Hon. John Kline,
Chairman, Committee on Education and the Workforce, House of 
        Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2218, the 
Empowering Parents through Quality Charter Schools Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Justin 
Humphrey.
            Sincerely,
                                         Robert A. Sunshine
                              (For Douglas W. Elmendorf, Director).
    Enclosure.

H.R. 2218--Empowering Parents through Quality Charter Schools Act

    H.R. 2218 would amend and reauthorize both the Charter 
School Programs and the Credit Enhancement for Charter School 
Initiatives under Title V of the Elementary and Secondary 
Education Act of 1965 through fiscal year 2017 and combine them 
into a single authorization. (That authorization would 
automatically be extended by one year through 2018 under the 
General Education Provisions Act.) The bill would authorize the 
appropriation of $300 million for each of fiscal years 2012 
through 2018 for grants to states to develop and expand charter 
school facilities and to public and private, nonprofit entities 
to develop means of enhancing credit to finance the 
construction and renovation of charter schools.
    For fiscal year 2011, the Department of Education allocated 
$256 million for Charter School Programs and did not allocate 
any funding for Credit Enhancement Initiatives. The previous 
authorization for Charter School Programs expired in 2008 and 
the previous authorization for Credit Enhancement for Charter 
School Initiatives expired in 2004.\1\
---------------------------------------------------------------------------
    \1\For Charter School Programs, prior law authorized the 
appropriation of $300 million for fiscal year 2002 and such sums as may 
be necessary through fiscal year 2008. For Credit Enhancement for 
Charter School Initiatives, prior law authorized the appropriation of 
$150 million for fiscal year 2002 and such sums as may be necessary 
through fiscal year 2004.
---------------------------------------------------------------------------
    As shown in the following table, CBO estimates that 
implementing the bill would cost about $1 billion over the 
2012-2016 period, assuming appropriation of the authorized 
amounts. Additional authorized amounts under H.R. 2218 would be 
spent after 2016. The costs of this legislation fall within 
budget function 500 (education, training, employment, and 
social services). For this estimate, CBO assumes that spending 
will follow historical patterns.

----------------------------------------------------------------------------------------------------------------
                                                                 By fiscal year, in millions of dollars--
                                                         -------------------------------------------------------
                                                            2012     2013     2014     2015     2016   2012-2016
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Authorization Level.....................................      300      300      300      300      300     1,500
Estimated Outlays.......................................       15      150      255      300      300     1,020
----------------------------------------------------------------------------------------------------------------

    Enacting the bill would have no impact on direct spending 
or revenues; therefore, pay-as-you-go procedures do not apply.
    H.R. 2218 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments. 
State and local entities would benefit from continued federal 
grant funding for charter schools. Any costs associated with 
receiving such grants would be incurred voluntarily as 
conditions of aid.
    The CBO staff contact for this estimate is Justin Humphrey. 
This estimate was approved by Peter H. Fontaine, Assistant 
Director for Budget Analysis.

                        Committee Cost Estimate

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison of the 
costs that would be incurred in carrying out H.R. 2218. 
However, clause 3(d)(2)(B) of that rule provides that this 
requirement does not apply when the Committee has included in 
its report a timely submitted cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 402 of the Congressional Budget Act.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

             ELEMENTARY AND SECONDARY EDUCATION ACT OF 1965




           *       *       *       *       *       *       *
SEC. 2. TABLE OF CONTENTS.

  The table of contents for this Act is as follows:
     * * * * * * *

   TITLE V--PROMOTING INFORMED PARENTAL CHOICE AND INNOVATIVE PROGRAMS

     * * * * * * *

                     Part B--Public Charter Schools

                   subpart 1--charter school programs

     * * * * * * *
[Sec. 5203. Applications.
[Sec. 5204. Administration.]
Sec. 5203. Grants to support high-quality charter schools.
Sec. 5204. Facilities Financing Assistance.
     * * * * * * *

  [subpart 2--credit enhancement initiatives to assist charter school 
           facility acquisition, construction, and renovation

[Sec. 5221. Purpose.
[Sec. 5222. Grants to eligible entities.
[Sec. 5223. Applications.
[Sec. 5224. Charter school objectives.
[Sec. 5225. Reserve account.
[Sec. 5226. Limitation on administrative costs.
[Sec. 5227. Audits and reports.
[Sec. 5228. No full faith and credit for grantee obligations.
[Sec. 5229. Recovery of funds.
[Sec. 5230. Definitions.
[Sec. 5231. Authorization of appropriations.]

           *       *       *       *       *       *       *


TITLE V--PROMOTING INFORMED PARENTAL CHOICE AND INNOVATIVE PROGRAMS

           *       *       *       *       *       *       *


                     PART B--PUBLIC CHARTER SCHOOLS

                   Subpart 1--Charter School Programs

[SEC. 5201. PURPOSE.

  [It is the purpose of this subpart to increase national 
understanding of the charter schools model by--
          [(1) providing financial assistance for the planning, 
        program design, and initial implementation of charter 
        schools;
          [(2) evaluating the effects of such schools, 
        including the effects on students, student academic 
        achievement, staff, and parents;
          [(3) expanding the number of high-quality charter 
        schools available to students across the Nation; and
          [(4) encouraging the States to provide support to 
        charter schools for facilities financing in an amount 
        more nearly commensurate to the amount the States have 
        typically provided for traditional public schools.

[SEC. 5202. PROGRAM AUTHORIZED.

  [(a) In General.--The Secretary may award grants to State 
educational agencies having applications approved pursuant to 
section 5203 to enable such agencies to conduct a charter 
school grant program in accordance with this subpart.
  [(b) Special Rule.--If a State educational agency elects not 
to participate in the program authorized by this subpart or 
does not have an application approved under section 5203, the 
Secretary may award a grant to an eligible applicant that 
serves such State and has an application approved pursuant to 
section 5203(c).
  [(c) Program Periods.--
          [(1) Grants to states.--Grants awarded to State 
        educational agencies under this subpart shall be for a 
        period of not more than 3 years.
          [(2) Grants to eligible applicants.--Grants awarded 
        by the Secretary to eligible applicants or subgrants 
        awarded by State educational agencies to eligible 
        applicants under this subpart shall be for a period of 
        not more than 3 years, of which the eligible applicant 
        may use--
                  [(A) not more than 18 months for planning and 
                program design;
                  [(B) not more than 2 years for the initial 
                implementation of a charter school; and
                  [(C) not more than 2 years to carry out 
                dissemination activities described in section 
                5204(f)(6)(B).
  [(d) Limitation.--A charter school may not receive--
          [(1) more than one grant for activities described in 
        subparagraphs (A) and (B) of subsection (c)(2); or
          [(2) more than one grant for activities under 
        subparagraph (C) of subsection (c)(2).
  [(e) Priority Treatment.--
          [(1) In general.--In awarding grants under this 
        subpart for fiscal year 2002 or any succeeding fiscal 
        year from any funds appropriated under section 5211 
        (other than funds reserved to carry out section 
        5205(b)), the Secretary shall give priority to States 
        to the extent that the States meet the criteria 
        described in paragraph (2) and one or more of the 
        criteria described in subparagraph (A), (B), or (C) of 
        paragraph (3).
          [(2) Review and evaluation priority criteria.--The 
        criteria referred to in paragraph (1) are that the 
        State provides for periodic review and evaluation by 
        the authorized public chartering agency of each charter 
        school, at least once every 5 years unless required 
        more frequently by State law, to determine whether the 
        charter school is meeting the terms of the school's 
        charter, and is meeting or exceeding the student 
        academic achievement requirements and goals for charter 
        schools as set forth under State law or the school's 
        charter.
          [(3) Priority criteria.--The criteria referred to in 
        paragraph (1) are the following:
                  [(A) The State has demonstrated progress, in 
                increasing the number of high-quality charter 
                schools that are held accountable in the terms 
                of the schools' charters for meeting clear and 
                measurable objectives for the educational 
                progress of the students attending the schools, 
                in the period prior to the period for which a 
                State educational agency or eligible applicant 
                applies for a grant under this subpart.
                  [(B) The State--
                          [(i) provides for one authorized 
                        public chartering agency that is not a 
                        local educational agency, such as a 
                        State chartering board, for each 
                        individual or entity seeking to operate 
                        a charter school pursuant to such State 
                        law; or
                          [(ii) in the case of a State in which 
                        local educational agencies are the only 
                        authorized public chartering agencies, 
                        allows for an appeals process for the 
                        denial of an application for a charter 
                        school.
                  [(C) The State ensures that each charter 
                school has a high degree of autonomy over the 
                charter school's budgets and expenditures.
  [(f) Amount Criteria.--In determining the amount of a grant 
to be awarded under this subpart to a State educational agency, 
the Secretary shall take into consideration the number of 
charter schools that are operating, or are approved to open, in 
the State.

[SEC. 5203. APPLICATIONS.

  [(a) Applications From State Agencies.--Each State 
educational agency desiring a grant from the Secretary under 
this subpart 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; and
          [(2) describe how the State educational agency--
                  [(A) will inform each charter school in the 
                State regarding--
                          [(i) Federal funds that the charter 
                        school is eligible to receive; and
                          [(ii) Federal programs in which the 
                        charter school may participate;
                  [(B) will ensure that each charter school in 
                the State receives the charter school's 
                commensurate share of Federal education funds 
                that are allocated by formula each year, 
                including during the first year of operation of 
                the charter school; and
                  [(C) will disseminate best or promising 
                practices of charter schools to each local 
                educational agency in the State; 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 academic achievement 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 planning, program 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 eligible 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 eligible applicant 
                will cooperate with the Secretary and the State 
                educational agency in evaluating the program 
                assisted under this subpart;
                  [(L) a description of how a charter school 
                that is considered a local educational agency 
                under State law, or a local educational agency 
                in which a charter school is located, will 
                comply with sections 613(a)(5) and 613(e)(1)(B) 
                of the Individuals with Disabilities Education 
                Act;
                  [(M) if the eligible applicant desires to use 
                subgrant funds for dissemination activities 
                under section 5202(c)(2)(C), a description of 
                those activities and how those activities will 
                involve charter schools and other public 
                schools, local educational agencies, 
                developers, and potential developers; and
                  [(N) such other information and assurances as 
                the Secretary and the State educational agency 
                may require.
  [(c) Eligible Applicant Application.--Each eligible applicant 
desiring a grant pursuant to section 5202(b) shall submit an 
application to the Secretary at such time, in such manner, and 
accompanied by such information as the Secretary may reasonably 
require.
  [(d) Contents of Eligible Applicant Application.--Each 
application submitted pursuant to subsection (c) shall 
contain--
          [(1) the information and assurances described in 
        subparagraphs (A) through (N) of subsection (b)(3), 
        except that for purposes of this subsection 
        subparagraphs (J), (K), and (N) of such subsection 
        shall be applied by striking ``and the State 
        educational agency'' each place such term appears;
          [(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 5204(e); 
                and
          [(3) assurances that the eligible applicant has 
        provided its authorized public chartering authority 
        timely notice, and a copy, of the application, except 
        that the State educational agency (or the Secretary, in 
        the case of an application submitted to the Secretary) 
        may waive the requirement of this paragraph in the case 
        of an application for a precharter planning grant or 
        subgrant if the authorized public chartering authority 
        to which a charter school proposal will be submitted 
        has not been determined at the time the grant or 
        subgrant application is submitted.

[SEC. 5204. ADMINISTRATION.

  [(a) Selection Criteria for State Educational Agencies.--The 
Secretary shall award grants to State educational agencies 
under this subpart on the basis of the quality of the 
applications submitted under section 5203(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 in meeting State 
        academic content standards and State student academic 
        achievement standards;
          [(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;
          [(6) the number of high-quality charter schools 
        created under this subpart in the State; and
          [(7) in the case of State educational agencies that 
        propose to use grant funds to support dissemination 
        activities under subsection (f)(6)(B), the quality of 
        those activities and the likelihood that those 
        activities will improve student academic achievement.
  [(b) Selection Criteria for Eligible Applicants.--The 
Secretary shall award grants to eligible applicants under this 
subpart on the basis of the quality of the applications 
submitted under section 5203(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;
          [(6) the likelihood that the charter school will meet 
        those objectives and improve educational results for 
        students; and
          [(7) in the case of an eligible applicant that 
        proposes to use grant funds to support dissemination 
        activities under subsection (f)(6)(B), the quality of 
        those activities and the likelihood that those 
        activities will improve student achievement.
  [(c) Peer Review.--The Secretary, and each State educational 
agency receiving a grant under this subpart, shall use a peer 
review process to review applications for assistance under this 
subpart.
  [(d) Diversity of Projects.--The Secretary and each State 
educational agency receiving a grant under this subpart, shall 
award grants and subgrants under this subpart 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 
5210(1), if--
          [(1) the waiver is requested in an approved 
        application under this subpart; and
          [(2) the Secretary determines that granting such a 
        waiver will promote the purpose of this subpart.
  [(f) Use of Funds.--
          [(1) State educational agencies.--Each State 
        educational agency receiving a grant under this subpart 
        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 subpart, except that the State 
        educational agency may reserve not more than 10 percent 
        of the grant funds to support dissemination activities 
        described in paragraph (6).
          [(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, or to disseminate 
        information about the charter school and successful 
        practices in the charter school, in accordance with 
        this subpart.
          [(3) Allowable activities.--An eligible applicant 
        receiving a grant or subgrant under this subpart 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.--
                  [(A) State educational agency administrative 
                expenses.--Each State educational agency 
                receiving a grant pursuant to this subpart may 
                reserve not more than 5 percent of such grant 
                funds for administrative expenses associated 
                with the charter school grant program assisted 
                under this subpart.
                  [(B) Local administrative expenses.--A local 
                educational agency may not deduct funds for 
                administrative fees or expenses from a subgrant 
                awarded to an eligible applicant, unless the 
                eligible applicant enters voluntarily into a 
                mutually agreed upon arrangement for 
                administrative services with the relevant local 
                educational agency. Absent such approval, the 
                local educational agency shall distribute all 
                such subgrant funds to the eligible applicant 
                without delay.
          [(5) Revolving loan funds.--Each State educational 
        agency receiving a grant pursuant to this subpart may 
        reserve not more than 10 percent of the grant funds for 
        the establishment of a revolving loan fund. Such fund 
        may be used to make loans to eligible applicants that 
        have received a subgrant under this subpart, under such 
        terms as may be determined by the State educational 
        agency, for the initial operation of the charter school 
        grant program of the eligible applicant until such time 
        as the recipient begins receiving ongoing operational 
        support from State or local financing sources.
          [(6) Dissemination.--
                  [(A) In general.--A charter school may apply 
                for funds under this subpart, whether or not 
                the charter school has applied for or received 
                funds under this subpart for planning, program 
                design, or implementation, to carry out the 
                activities described in subparagraph (B) if the 
                charter school has been in operation for at 
                least 3 consecutive years and has demonstrated 
                overall success, including--
                          [(i) substantial progress in 
                        improving student academic achievement;
                          [(ii) high levels of parent 
                        satisfaction; and
                          [(iii) the management and leadership 
                        necessary to overcome initial start-up 
                        problems and establish a thriving, 
                        financially viable charter school.
                  [(B) Activities.--A charter school described 
                in subparagraph (A) may use funds reserved 
                under paragraph (1) to assist other schools in 
                adapting the charter school's program (or 
                certain aspects of the charter school's 
                program), or to disseminate information about 
                the charter school, through such activities 
                as--
                          [(i) assisting other individuals with 
                        the planning and start-up of one or 
                        more new public schools, including 
                        charter schools, that are independent 
                        of the assisting charter school and the 
                        assisting charter school's developers, 
                        and that agree to be held to at least 
                        as high a level of accountability as 
                        the assisting charter school;
                          [(ii) developing partnerships with 
                        other public schools, including charter 
                        schools, designed to improve student 
                        academic achievement in each of the 
                        schools participating in the 
                        partnership;
                          [(iii) developing curriculum 
                        materials, assessments, and other 
                        materials that promote increased 
                        student achievement and are based on 
                        successful practices within the 
                        assisting charter school; and
                          [(iv) conducting evaluations and 
                        developing materials that document the 
                        successful practices of the assisting 
                        charter school and that are designed to 
                        improve student performance in other 
                        schools.
  [(g) Tribally Controlled Schools.--Each State that receives a 
grant under this subpart 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. 5205. NATIONAL ACTIVITIES.

  [(a) In General.--The Secretary shall reserve for each fiscal 
year the greater of 5 percent or $5,000,000 of the amount 
appropriated to carry out this subpart, except that in no 
fiscal year shall the total amount so reserved exceed 
$8,000,000, to carry out the following activities:
          [(1) To provide charter schools, either directly or 
        through State educational agencies, with--
                  [(A) information regarding--
                          [(i) Federal funds that charter 
                        schools are eligible to receive; and
                          [(ii) other Federal programs in which 
                        charter schools may participate; and
                  [(B) assistance in applying for Federal 
                education funds that are allocated by formula, 
                including assistance with filing deadlines and 
                submission of applications.
          [(2) To provide for other evaluations or studies that 
        include the evaluation of the impact of charter schools 
        on student academic achievement, including information 
        regarding--
                  [(A) students attending charter schools 
                reported on the basis of race, age, disability, 
                gender, limited English proficiency, and 
                previous enrollment in public school; and
                  [(B) the professional qualifications of 
                teachers within a charter school and the 
                turnover of the teaching force.
          [(3) To provide--
                  [(A) information to applicants for assistance 
                under this subpart;
                  [(B) assistance to applicants for assistance 
                under this subpart with the preparation of 
                applications under section 5203;
                  [(C) assistance in the planning and startup 
                of charter schools;
                  [(D) training and technical assistance to 
                existing charter schools; and
                  [(E) for the dissemination to other public 
                schools of best or promising practices in 
                charter schools.
          [(4) To provide (including through the use of one or 
        more contracts that use a competitive bidding process) 
        for the collection of information regarding the 
        financial resources available to charter schools, 
        including access to private capital, and to widely 
        disseminate to charter schools any such relevant 
        information and model descriptions of successful 
        programs.
          [(5) To carry out evaluations of, technical 
        assistance for, and information dissemination 
        regarding, the per-pupil facilities aid programs. In 
        carrying out the evaluations, the Secretary may carry 
        out one or more evaluations of State programs assisted 
        under this subsection, which shall, at a minimum, 
        address--
                  [(A) how, and the extent to which, the 
                programs promote educational equity and 
                excellence; and
                  [(B) the extent to which charter schools 
                supported through the programs are--
                          [(i) held accountable to the public;
                          [(ii) effective in improving public 
                        education; and
                          [(iii) open and accessible to all 
                        students.
  [(b) Per-Pupil Facilities Aid Programs.--
          [(1) Definition of per-pupil facilities aid 
        program.--In this subsection, the term ``per-pupil 
        facilities aid program'' means a program in which a 
        State makes payments, on a per-pupil basis, to charter 
        schools to provide the schools with financing--
                  [(A) that is dedicated solely for funding 
                charter school facilities; or
                  [(B) a portion of which is dedicated for 
                funding charter school facilities.
          [(2) Grants.--
                  [(A) In general.--From the amount made 
                available to carry out this subsection under 
                paragraphs (2) and (3)(B) of section 5211(b) 
                for any fiscal year, the Secretary shall make 
                grants, on a competitive basis, to States to 
                pay for the Federal share of the cost of 
                establishing or enhancing, and administering 
                per-pupil facilities aid programs.
                  [(B) Period.--The Secretary shall award 
                grants under this subsection for periods of not 
                more than 5 years.
                  [(C) Federal share.--The Federal share of the 
                cost described in subparagraph (A) for a per-
                pupil facilities aid program shall be not more 
                than--
                          [(i) 90 percent of the cost, for the 
                        first fiscal year for which the program 
                        receives assistance under this 
                        subsection;
                          [(ii) 80 percent in the second such 
                        year;
                          [(iii) 60 percent in the third such 
                        year;
                          [(iv) 40 percent in the fourth such 
                        year; and
                          [(v) 20 percent in the fifth such 
                        year.
          [(3) Use of funds.--
                  [(A) In general.--A State that receives a 
                grant under this subsection shall use the funds 
                made available through the grant to establish 
                or enhance, and administer, a per-pupil 
                facilities aid program for charter schools in 
                the State.
                  [(B) Evaluations; technical assistance; 
                dissemination.--From the amount made available 
                to a State through a grant under this 
                subsection for a fiscal year, the State may 
                reserve not more than 5 percent to carry out 
                evaluations, to provide technical assistance, 
                and to disseminate information.
                  [(C) Supplement, not supplant.--Funds made 
                available under this subsection shall be used 
                to supplement, and not supplant, State and 
                local public funds expended to provide per 
                pupil facilities aid programs, operations 
                financing programs, or other programs, for 
                charter schools.
          [(4) Requirements.--
                  [(A) Voluntary participation.--No State may 
                be required to participate in a program carried 
                out under this subsection.
                  [(B) State law.--To be eligible to receive a 
                grant under this subsection, a State shall 
                establish or enhance, and administer, a per-
                pupil facilities aid program for charter 
                schools in the State, that--
                          [(i) is specified in State law; and
                          [(ii) provides annual financing, on a 
                        per-pupil basis, for charter school 
                        facilities.
          [(5) Applications.--To be eligible to receive a grant 
        under this subsection, a State shall submit an 
        application to the Secretary at such time, in such 
        manner, and containing such information as the 
        Secretary may require.
          [(6) Priorities.--In making grants under this 
        subsection, the Secretary shall give priority to States 
        that meet the criteria described in paragraph (2), and 
        subparagraphs (A), (B), and (C) of paragraph (3), of 
        section 5202(e).
  [(c) Rule of Construction.--Nothing in this section shall be 
construed to require charter schools to collect any data 
described in subsection (a).]

SEC. 5201. PURPOSE.

  It is the purpose of this subpart to--
          (1) provide financial assistance for the planning, 
        program design, and initial implementation of charter 
        schools;
          (2) expand the number of high-quality charter schools 
        available to students across the Nation;
          (3) evaluate the impact of such schools on student 
        achievement, families, and communities, and share best 
        practices between charter schools and other public 
        schools;
          (4) encourage States to provide support to charter 
        schools for facilities financing in an amount more 
        nearly commensurate to the amount the States have 
        typically provided for traditional public schools;
          (5) improve student services to increase 
        opportunities for students with disabilities, English 
        language learners, and other traditionally underserved 
        students to attend charter schools and meet challenging 
        State academic achievement standards; and
          (6) support efforts to strengthen the charter school 
        authorizing process to improve performance management, 
        including transparency, monitoring, and evaluation of 
        such schools.

SEC. 5202. PROGRAM AUTHORIZED.

  (a) In General.--This subpart authorizes the Secretary to 
carry out a charter school program that supports charter 
schools that serve elementary school and secondary school 
students by--
          (1) supporting the startup, replication, and 
        expansion of charter schools;
          (2) assisting charter schools in accessing credit to 
        acquire and renovate facilities for school use; and
          (3) carrying out national activities to support--
                  (A) charter school development;
                  (B) the dissemination of best practices of 
                charter schools for all schools; and
                  (C) the evaluation of the impact of the 
                program on schools participating in the 
                program.
  (b) Funding Allotment.--From the amount made available under 
section 5211 for a fiscal year, the Secretary shall--
          (1) reserve 15 percent to support charter school 
        facilities assistance under section 5204;
          (2) reserve not more than 5 percent to carry out 
        national activities under section 5205; and
          (3) use the remaining amount after the Secretary 
        reserves funds under paragraphs (1) and (2) to carry 
        out section 5203.
  (c) Prior Grants and Subgrants.--The recipient of a grant or 
subgrant under this subpart, as such subpart was in effect on 
the day before the date of enactment of the Empowering Parents 
through Quality Charter Schools Act, shall continue to receive 
funds in accordance with the terms and conditions of such grant 
or subgrant.

SEC. 5203. GRANTS TO SUPPORT HIGH-QUALITY CHARTER SCHOOLS.

  (a) In General.--From the amount reserved under section 
5202(b)(3), the Secretary shall award grants to State entities 
having applications approved pursuant to subsection (f) to 
enable such entities to--
          (1) award subgrants to eligible applicants for--
                  (A) opening new charter schools;
                  (B) opening replicable, high-quality charter 
                school models; or
                  (C) expanding high-quality charter schools; 
                and
          (2) provide technical assistance to eligible 
        applicants and authorized public chartering agencies in 
        carrying out the activities described in paragraph (1) 
        and work with authorized public chartering agencies in 
        the State to improve authorizing quality.
  (b) State Uses of Funds.--
          (1) In general.--A State entity receiving a grant 
        under this section shall--
                  (A) use 90 percent of the grant funds to 
                award subgrants to eligible applicants, in 
                accordance with the quality charter school 
                program described in the entity's application 
                approved pursuant to subsection (f), for the 
                purposes described in subparagraphs (A) through 
                (C) of subsection (a)(1); and
                  (B) reserve 10 percent of such funds to carry 
                out the activities described in subsection 
                (a)(2), of which not more than 30 percent may 
                be used for administrative costs which may 
                include technical assistance.
          (2) Contracts and grants.--A State entity may use a 
        grant received under this section to carry out the 
        activities described in subparagraphs (A) and (B) of 
        paragraph (1) directly or through grants, contracts, or 
        cooperative agreements.
  (c) Program Periods; Peer Review; Diversity of Projects.--
          (1) Program periods.--
                  (A) Grants.--A grant awarded by the Secretary 
                to a State entity under this section shall be 
                for a period of not more than 5 years.
                  (B) Subgrants.--A subgrant awarded by a State 
                entity under this section shall be for a period 
                of not more than 5 years, of which an eligible 
                applicant may use not more than 18 months for 
                planning and program design.
          (2) Peer review.--The Secretary, and each State 
        entity receiving a grant under this section, shall use 
        a peer review process to review applications for 
        assistance under this section.
          (3) Diversity of projects.--Each State entity 
        receiving a grant under this section shall award 
        subgrants under this section in a manner that, to the 
        extent possible, ensures that such subgrants--
                  (A) are distributed throughout different 
                areas, including urban, suburban, and rural 
                areas; and
                  (B) will assist charter schools representing 
                a variety of educational approaches.
  (d) Limitations.--
          (1) Grants.--A State entity may not receive more than 
        1 grant under this section for a 5-year period.
          (2) Subgrants.--An eligible applicant may not receive 
        more than 1 subgrant under this section per charter 
        school for a 5-year period.
  (e) Applications.--A State entity desiring to receive a grant 
under this section shall submit an application to the Secretary 
at such time and in such manner as the Secretary may require. 
The application shall include the following:
          (1) Description of program.--A description of the 
        entity's objectives in running a quality charter school 
        program under this section and how the objectives of 
        the program will be carried out, including a 
        description--
                  (A) of how the entity--
                          (i) will support both new charter 
                        school startup and the expansion and 
                        replication of high-quality charter 
                        school models;
                          (ii) will inform eligible charter 
                        schools, developers, and authorized 
                        public chartering agencies of the 
                        availability of funds under the 
                        program;
                          (iii) will work with eligible 
                        applicants to ensure that the 
                        applicants access all Federal funds 
                        that they are eligible to receive, and 
                        help the charter schools supported by 
                        the applicants and the students 
                        attending the charter schools--
                                  (I) participate in the 
                                Federal programs in which the 
                                schools and students are 
                                eligible to participate; and
                                  (II) receive the commensurate 
                                share of Federal funds the 
                                schools and students are 
                                eligible to receive under such 
                                programs;
                          (iv) in the case in which the entity 
                        is not a State educational agency--
                                  (I) will work with the State 
                                educational agency and the 
                                charter schools in the State to 
                                maximize charter school 
                                participation in Federal and 
                                State programs for charter 
                                schools; and
                                  (II) will work with the State 
                                educational agency to 
                                adequately operate the entity's 
                                program under this section, 
                                where applicable;
                          (v) will ensure eligible applicants 
                        that receive a subgrant under the 
                        entity's program are prepared to 
                        continue to operate the charter schools 
                        receiving the subgrant funds once the 
                        funds have expired;
                          (vi) will support charter schools in 
                        local educational agencies with large 
                        numbers of schools that must comply 
                        with the requirements of section 
                        1116(b);
                          (vii) will work with charter schools 
                        to promote inclusion of all students 
                        and support all students once they are 
                        enrolled to promote retention;
                          (viii) will work with charter schools 
                        on recruitment practices, including 
                        efforts to engage groups that may 
                        otherwise have limited opportunities to 
                        participate in charter schools;
                          (ix) will share best and promising 
                        practices between charter schools and 
                        other public schools;
                          (x) will ensure the charter schools 
                        they support can meet the educational 
                        needs of their students, including 
                        students with disabilities and English 
                        language learners; and
                          (xi) will support efforts to increase 
                        quality initiatives, including meeting 
                        the quality authorizing elements 
                        described in paragraph (2)(E);
                  (B) of the extent to which the entity--
                          (i) is able to meet and carry out the 
                        priorities listed in subsection (f)(2); 
                        and
                          (ii) is working to develop or 
                        strengthen a cohesive statewide system 
                        to support the opening of new charter 
                        schools and replicable, high-quality 
                        charter school models, and expanding 
                        high-quality charter schools;
                  (C) how the entity will carry out the 
                subgrant competition, including--
                          (i) a description of the application 
                        each eligible applicant desiring to 
                        receive a subgrant will submit, 
                        including--
                                  (I) a description of the 
                                roles and responsibilities of 
                                eligible applicants, partner 
                                organizations, and management 
                                organizations, including the 
                                administrative and contractual 
                                roles and responsibilities; and
                                  (II) a description of the 
                                quality controls agreed to 
                                between the eligible applicant 
                                and the authorized public 
                                chartering agency involved, 
                                such as a contract or 
                                performance agreement, and how 
                                a school's performance on the 
                                State's academic accountability 
                                system will be a primary factor 
                                for renewal; and
                          (ii) a description of how the entity 
                        will review applications; and
                  (D) in the case of an entity that partners 
                with an outside organization to carry out the 
                entity's quality charter school program, in 
                whole or in part, of the roles and 
                responsibilities of this partner.
          (2) Assurances.--Assurances, including a description 
        of how the assurances will be met, that--
                  (A) each charter school receiving funds under 
                the entity's program will have a high degree of 
                autonomy over budget and operations;
                  (B) the entity will support charter schools 
                in meeting the educational needs of their 
                students as described in paragraph (1)(A)(x);
                  (C) the entity will ensure that the 
                authorized public chartering agency of any 
                charter school that receives funds under the 
                entity's program--
                          (i) ensures that the charter school 
                        is meeting the obligations under this 
                        Act, part B of the Individuals with 
                        Disabilities Education Act, title VI of 
                        the Civil Rights Act of 1964, and 
                        section 504 of the Rehabilitation Act 
                        of 1973; and
                          (ii) adequately monitors and helps 
                        the schools in recruiting, enrolling, 
                        and meeting the needs of all students, 
                        including students with disabilities 
                        and English language learners;
                  (D) the entity will provide adequate 
                technical assistance to eligible applicants 
                to--
                          (i) meet the objectives described in 
                        clauses (vii) and (viii) of paragraph 
                        (1)(A) and paragraph (2)(B); and
                          (ii) enroll traditionally underserved 
                        students, including students with 
                        disabilities and English language 
                        learners, to promote an inclusive 
                        education environment;
                  (E) the entity will promote quality 
                authorizing, such as through providing 
                technical assistance, to support all authorized 
                public chartering agencies in the State to 
                improve the monitoring of their charter 
                schools, including by--
                          (i) using annual performance data, 
                        which may include graduation rates and 
                        student growth data, as appropriate, to 
                        measure the progress of their schools 
                        toward becoming high-quality charter 
                        schools; and
                          (ii) reviewing the schools' 
                        independent, annual audits of financial 
                        statements conducted in accordance with 
                        generally accepted accounting 
                        principles, and ensuring any such 
                        audits are publically reported; and
                  (F) the entity will work to ensure that 
                charter schools are included with the 
                traditional public school system in decision-
                making about the public school system in the 
                State.
          (3) Requests for waivers.--A request and 
        justification for waivers of any Federal statutory or 
        regulatory provisions that the entity believes are 
        necessary for the successful operation of the charter 
        schools that will receive funds under the entity's 
        program under this section, and a description of any 
        State or local rules, generally applicable to public 
        schools, that will be waived, or otherwise not apply to 
        such schools.
  (f) Selection Criteria; Priority.--
          (1) Selection criteria.--The Secretary shall award 
        grants to State entities under this section on the 
        basis of the quality of the applications submitted 
        under subsection (e), after taking into consideration--
                  (A) the degree of flexibility afforded by the 
                State's public charter school law and how the 
                entity will work to maximize the flexibility 
                provided to charter schools under the law;
                  (B) the ambitiousness of the entity's 
                objectives for the quality charter school 
                program carried out under this section;
                  (C) the quality of the strategy for assessing 
                achievement of those objectives;
                  (D) the likelihood that the eligible 
                applicants receiving subgrants under the 
                program will meet those objectives and improve 
                educational results for students;
                  (E) the proposed number of new charter 
                schools to be opened, and the number of high-
                quality charter schools to be replicated or 
                expanded under the program;
                  (F) the entity's plan to--
                          (i) adequately monitor the eligible 
                        applicants receiving subgrants under 
                        the entity's program; and
                          (ii) work with the authorized public 
                        chartering agencies involved to avoid 
                        duplication of work for the charter 
                        schools and authorized public 
                        chartering agencies;
                  (G) the entity's plan to provide adequate 
                technical assistance, as described in the 
                entity's application under subsection (e), for 
                the eligible applicants receiving subgrants 
                under the entity's program under this section; 
                and
                  (H) the entity's plan to support quality 
                authorizing efforts in the State, consistent 
                with the objectives described in subparagraph 
                (B).
          (2) Priority.--In awarding grants under this section, 
        the Secretary shall give priority to State entities to 
        the extent that they meet the following criteria:
                  (A) In the case in which a State entity is 
                located in a State that allows an entity other 
                than the State educational agency to be an 
                authorized public chartering agency or a State 
                in which only a local educational agency may be 
                an authorized public chartering agency, the 
                State has an appeals process for the denial of 
                an application for a charter school.
                  (B) The State entity is located in a State 
                that does not impose any limitation on the 
                number or percentage of charter schools that 
                may exist or the number or percentage of 
                students that may attend charter schools in the 
                State.
                  (C) The State entity is located in a State 
                that ensures equitable financing, as compared 
                to traditional public schools, for charter 
                schools and students in a prompt manner.
                  (D) The State entity supports full-, blended-
                , or hybrid-online charter school models.
                  (E) The State entity is located in a State 
                that uses charter schools and best practices 
                from charter schools to help improve struggling 
                schools and local educational agencies.
                  (F) The State entity partners with an 
                organization that has a demonstrated record of 
                success in developing management organizations 
                to support the development of charter schools 
                in the State.
                  (G) The State entity demonstrates quality 
                policies and practices to support and monitor 
                charter schools through factors, including--
                          (i) the proportion of high-quality 
                        charter schools in the State; and
                          (ii) the proportion of charter 
                        schools enrolling, at a rate similar to 
                        traditional public schools, 
                        traditionally underserved students, 
                        including students with disabilities 
                        and English language learners.
  (g) Local Uses of Funds.--An eligible applicant receiving a 
subgrant under this section shall use such funds to open new 
charter schools or replicable, high-quality charter school 
models, or expand existing high-quality charter schools.
  (h) Reporting Requirements.--Each State entity receiving a 
grant under this section shall submit to the Secretary, at the 
end of the third year of the 5-year grant period and at the end 
of such grant period, a report on--
          (1) the number of students served and, if applicable, 
        how many new students were served during each year of 
        the grant period;
          (2) the number of subgrants awarded under this 
        section to carry out each of the following--
                  (A) the opening of new charter schools;
                  (B) the opening of replicable, high-quality 
                charter school models; and
                  (C) the expansion of high-quality charter 
                schools;
          (3) the progress the entity made toward meeting the 
        priorities described in subsection (f)(2), as 
        applicable;
          (4) how the entity met the objectives of the quality 
        charter school program described in the entity's 
        application under subsection (e);
          (5) how the entity complied with, and ensured that 
        eligible applicants complied with, the assurances 
        described in the entity's application; and
          (6) how the entity worked with authorized public 
        chartering agencies, including how the agencies worked 
        with the management company or leadership of the 
        schools in which the subgrants were awarded.
  (i) State Entity Defined.--For purposes of this section, the 
term ``State entity'' means--
          (1) a State educational agency;
          (2) a State charter school board; or
          (3) a Governor of a State.

SEC. 5204. FACILITIES FINANCING ASSISTANCE.

  (a) Grants to Eligible Entities.--
          (1) In general.--From the amount reserved under 
        section 5202(b)(1), the Secretary shall award not less 
        than 3 grants to eligible entities that have 
        applications approved under subsection (d) to 
        demonstrate innovative methods of assisting charter 
        schools to address the cost of acquiring, constructing, 
        and renovating facilities by enhancing the availability 
        of loans or bond financing.
          (2) Eligible entity defined.--For purposes of this 
        section, the term ``eligible entity'' means--
                  (A) a public entity, such as a State or local 
                governmental entity;
                  (B) a private nonprofit entity; or
                  (C) a consortium of entities described in 
                subparagraphs (A) and (B).
  (b) Grantee Selection.--
          (1) Evaluation of application.--The Secretary shall 
        evaluate each application submitted under subsection 
        (d), and shall determine whether the application is 
        sufficient to merit approval.
          (2) Distribution of grants.--The Secretary shall 
        award at least one grant to an eligible entity 
        described in subsection (a)(2)(A), at least one grant 
        to an eligible entity described in subsection 
        (a)(2)(B), and at least one grant to an eligible entity 
        described in subsection (a)(2)(C), if applications are 
        submitted that permit the Secretary to do so without 
        approving an application that is not of sufficient 
        quality to merit approval.
  (c) Grant Characteristics.--Grants under subsection (a) shall 
be of a sufficient size, scope, and quality so as to ensure an 
effective demonstration of an innovative means of enhancing 
credit for the financing of charter school acquisition, 
construction, or renovation.
  (d) Applications.--
          (1) In general.--To receive a grant under subsection 
        (a), an eligible entity shall submit to the Secretary 
        an application in such form as the Secretary may 
        reasonably require.
          (2) Contents.--An application submitted under 
        paragraph (1) shall contain--
                  (A) a statement identifying the activities 
                proposed to be undertaken with funds received 
                under subsection (a), including how the 
                eligible entity will determine which charter 
                schools will receive assistance, and how much 
                and what types of assistance charter schools 
                will receive;
                  (B) a description of the involvement of 
                charter schools in the application's 
                development and the design of the proposed 
                activities;
                  (C) a description of the eligible entity's 
                expertise in capital market financing;
                  (D) a description of how the proposed 
                activities will leverage the maximum amount of 
                private-sector financing capital relative to 
                the amount of government funding used and 
                otherwise enhance credit available to charter 
                schools, including how the entity will offer a 
                combination of rates and terms more favorable 
                than the rates and terms that a charter school 
                could receive without assistance from the 
                entity under this section;
                  (E) a description of how the eligible entity 
                possesses sufficient expertise in education to 
                evaluate the likelihood of success of a charter 
                school program for which facilities financing 
                is sought; and
                  (F) in the case of an application submitted 
                by a State governmental entity, a description 
                of the actions that the entity has taken, or 
                will take, to ensure that charter schools 
                within the State receive the funding the 
                charter schools need to have adequate 
                facilities.
  (e) Charter School Objectives.--An eligible entity receiving 
a grant under this section shall use the funds deposited in the 
reserve account established under subsection (f) to assist one 
or more charter schools to access private sector capital to 
accomplish one or both of the following objectives:
          (1) The acquisition (by purchase, lease, donation, or 
        otherwise) of an interest (including an interest held 
        by a third party for the benefit of a charter school) 
        in improved or unimproved real property that is 
        necessary to commence or continue the operation of a 
        charter school.
          (2) The construction of new facilities, including 
        predevelopment costs, or the renovation, repair, or 
        alteration of existing facilities, necessary to 
        commence or continue the operation of a charter school.
  (f) Reserve Account.--
          (1) Use of funds.--To assist charter schools to 
        accomplish the objectives described in subsection (e), 
        an eligible entity receiving a grant under subsection 
        (a) shall, in accordance with State and local law, 
        directly or indirectly, alone or in collaboration with 
        others, deposit the funds received under subsection (a) 
        (other than funds used for administrative costs in 
        accordance with subsection (g)) in a reserve account 
        established and maintained by the eligible entity for 
        this purpose. Amounts deposited in such account shall 
        be used by the eligible entity for one or more of the 
        following purposes:
                  (A) Guaranteeing, insuring, and reinsuring 
                bonds, notes, evidences of debt, loans, and 
                interests therein, the proceeds of which are 
                used for an objective described in subsection 
                (e).
                  (B) Guaranteeing and insuring leases of 
                personal and real property for an objective 
                described in subsection (e).
                  (C) Facilitating financing by identifying 
                potential lending sources, encouraging private 
                lending, and other similar activities that 
                directly promote lending to, or for the benefit 
                of, charter schools.
                  (D) Facilitating the issuance of bonds by 
                charter schools, or by other public entities 
                for the benefit of charter schools, by 
                providing technical, administrative, and other 
                appropriate assistance (including the 
                recruitment of bond counsel, underwriters, and 
                potential investors and the consolidation of 
                multiple charter school projects within a 
                single bond issue).
          (2) Investment.--Funds received under this section 
        and deposited in the reserve account established under 
        paragraph (1) shall be invested in obligations issued 
        or guaranteed by the United States or a State, or in 
        other similarly low-risk securities.
          (3) Reinvestment of earnings.--Any earnings on funds 
        received under subsection (a) shall be deposited in the 
        reserve account established under paragraph (1) and 
        used in accordance with such subsection.
  (g) Limitation on Administrative Costs.--An eligible entity 
may use not more than 2.5 percent of the funds received under 
subsection (a) for the administrative costs of carrying out its 
responsibilities under this section (excluding subsection (k)).
  (h) Audits and Reports.--
          (1) Financial record maintenance and audit.--The 
        financial records of each eligible entity receiving a 
        grant under subsection (a) shall be maintained in 
        accordance with generally accepted accounting 
        principles and shall be subject to an annual audit by 
        an independent public accountant.
          (2) Reports.--
                  (A) Grantee annual reports.--Each eligible 
                entity receiving a grant under subsection (a) 
                annually shall submit to the Secretary a report 
                of its operations and activities under this 
                section.
                  (B) Contents.--Each annual report submitted 
                under subparagraph (A) shall include--
                          (i) a copy of the most recent 
                        financial statements, and any 
                        accompanying opinion on such 
                        statements, prepared by the independent 
                        public accountant reviewing the 
                        financial records of the eligible 
                        entity;
                          (ii) a copy of any report made on an 
                        audit of the financial records of the 
                        eligible entity that was conducted 
                        under paragraph (1) during the 
                        reporting period;
                          (iii) an evaluation by the eligible 
                        entity of the effectiveness of its use 
                        of the Federal funds provided under 
                        subsection (a) in leveraging private 
                        funds;
                          (iv) a listing and description of the 
                        charter schools served during the 
                        reporting period, including the amount 
                        of funds used by each school, the type 
                        of project facilitated by the grant, 
                        and the type of assistance provided to 
                        the charter schools;
                          (v) a description of the activities 
                        carried out by the eligible entity to 
                        assist charter schools in meeting the 
                        objectives set forth in subsection (e); 
                        and
                          (vi) a description of the 
                        characteristics of lenders and other 
                        financial institutions participating in 
                        the activities undertaken by the 
                        eligible entity under this section 
                        (excluding subsection (k)) during the 
                        reporting period.
                  (C) Secretarial report.--The Secretary shall 
                review the reports submitted under subparagraph 
                (A) and shall provide a comprehensive annual 
                report to Congress on the activities conducted 
                under this section (excluding subsection (k)).
  (i) No Full Faith and Credit for Grantee Obligation.--No 
financial obligation of an eligible entity entered into 
pursuant to this section (such as an obligation under a 
guarantee, bond, note, evidence of debt, or loan) shall be an 
obligation of, or guaranteed in any respect by, the United 
States. The full faith and credit of the United States is not 
pledged to the payment of funds which may be required to be 
paid under any obligation made by an eligible entity pursuant 
to any provision of this section.
  (j) Recovery of Funds.--
          (1) In General.--The Secretary, in accordance with 
        chapter 37 of title 31, United States Code, shall 
        collect--
                  (A) all of the funds in a reserve account 
                established by an eligible entity under 
                subsection (f)(1) if the Secretary determines, 
                not earlier than 2 years after the date on 
                which the eligible entity first received funds 
                under this section (excluding subsection (k)), 
                that the eligible entity has failed to make 
                substantial progress in carrying out the 
                purposes described in subsection (f)(1); or
                  (B) all or a portion of the funds in a 
                reserve account established by an eligible 
                entity under subsection (f)(1) if the Secretary 
                determines that the eligible entity has 
                permanently ceased to use all or a portion of 
                the funds in such account to accomplish any 
                purpose described in subsection (f)(1).
          (2) Exercise of authority.--The Secretary shall not 
        exercise the authority provided in paragraph (1) to 
        collect from any eligible entity any funds that are 
        being properly used to achieve one or more of the 
        purposes described in subsection (f)(1).
          (3)  Procedures.--The provisions of sections 451, 
        452, and 458 of the General Education Provisions Act 
        shall apply to the recovery of funds under paragraph 
        (1).
          (4) Construction.--This subsection shall not be 
        construed to impair or affect the authority of the 
        Secretary to recover funds under part D of the General 
        Education Provisions Act.
  (k) Per-Pupil Facilities Aid Program.--
          (1) Definition of per-pupil facilities aid program.--
        In this subsection, the term ``per-pupil facilities aid 
        program'' means a program in which a State makes 
        payments, on a per-pupil basis, to charter schools to 
        provide the schools with financing--
                  (A) that is dedicated solely for funding 
                charter school facilities; or
                  (B) a portion of which is dedicated for 
                funding charter school facilities.
          (2) Grants.--
                  (A) In general.--From the amount reserved 
                under section 5202(b)(1) remaining after the 
                Secretary makes grants under subsection (a), 
                the Secretary shall make grants, on a 
                competitive basis, to States to pay for the 
                Federal share of the cost of establishing or 
                enhancing, and administering per-pupil 
                facilities aid programs.
                  (B) Period.--The Secretary shall award grants 
                under this subsection for periods of not more 
                than 5 years.
                  (C) Federal share.--The Federal share of the 
                cost described in subparagraph (A) for a per-
                pupil facilities aid program shall be not more 
                than--
                          (i) 90 percent of the cost, for the 
                        first fiscal year for which the program 
                        receives assistance under this 
                        subsection;
                          (ii) 80 percent in the second such 
                        year;
                          (iii) 60 percent in the third such 
                        year;
                          (iv) 40 percent in the fourth such 
                        year; and
                          (v) 20 percent in the fifth such 
                        year.
                  (D) State share.--A State receiving a grant 
                under this subsection may partner with 1 or 
                more organizations to provide up to 50 percent 
                of the State share of the cost of establishing 
                or enhancing, and administering the per-pupil 
                facilities aid program.
                  (E) Multiple grants.--A State may receive 
                more than 1 grant under this subsection, so 
                long as the amount of such funds provided to 
                charter schools increases with each successive 
                grant.
          (3) Use of funds.--
                  (A) In general.--A State that receives a 
                grant under this subsection shall use the funds 
                made available through the grant to establish 
                or enhance, and administer, a per-pupil 
                facilities aid program for charter schools in 
                the State of the applicant.
                  (B) Evaluations; technical assistance; 
                dissemination.--From the amount made available 
                to a State through a grant under this 
                subsection for a fiscal year, the State may 
                reserve not more than 5 percent to carry out 
                evaluations, to provide technical assistance, 
                and to disseminate information.
                  (C) Supplement, not supplant.--Funds made 
                available under this subsection shall be used 
                to supplement, and not supplant, State, and 
                local public funds expended to provide per 
                pupil facilities aid programs, operations 
                financing programs, or other programs, for 
                charter schools.
          (4) Requirements.--
                  (A) Voluntary participation.--No State may be 
                required to participate in a program carried 
                out under this subsection.
                  (B) State law.--
                          (i) In general.--To be eligible to 
                        receive a grant under this subsection, 
                        a State shall establish or enhance, and 
                        administer, a per-pupil facilities aid 
                        program for charter schools in the 
                        State, that--
                                  (I) is specified in State 
                                law; and
                                  (II) provides annual 
                                financing, on a per-pupil 
                                basis, for charter school 
                                facilities.
                          (ii) Special rule.--A State that is 
                        required under State law to provide its 
                        charter schools with access to adequate 
                        facility space may be eligible to 
                        receive a grant under this subsection 
                        if the State agrees to use the funds to 
                        develop a per-pupil facilities aid 
                        program consistent with the 
                        requirements of this subsection.
          (5) Applications.--To be eligible to receive a grant 
        under this subsection, a State shall submit an 
        application to the Secretary at such time, in such 
        manner, and containing such information as the 
        Secretary may require.

SEC. 5205. NATIONAL ACTIVITIES.

  (a) In General.--From the amount reserved under section 
5202(b)(2), the Secretary shall--
          (1) use not less than 50 percent of such funds to 
        award grants in accordance with subsection (b); and
          (2) use the remainder of such funds to--
                  (A) disseminate technical assistance to State 
                entities in awarding subgrants under section 
                5203;
                  (B) disseminate best practices; and
                  (C) evaluate the impact of the charter school 
                program, including the impact on student 
                achievement, carried out under this subpart.
  (b)  Grants.--
          (1) In general.--The Secretary shall make grants, on 
        a competitive basis, to eligible applicants for the 
        purpose of carrying out the activities described in 
        section 5202(a)(1), subparagraphs (A) through (C) of 
        section 5203(a)(1), and section 5203(g).
          (2) Terms and conditions.--Except as otherwise 
        provided in this subsection, grants awarded under this 
        subsection shall have the same terms and conditions as 
        grants awarded to State entities under section 5203.
          (3) Eligible applicant defined.--For purposes of this 
        subsection, the term ``eligible applicant'' means an 
        eligible applicant that desires to open a charter 
        school in--
                  (A) a State that did not apply for a grant 
                under section 5203;
                  (B) a State that did not receive a grant 
                under section 5203; or
                  (C) a State that received a grant under 
                section 5203 and is in the 4th or 5th year of 
                the grant period for such grant.
  (c) Contracts and Grants.--The Secretary may carry out any of 
the activities described in this section directly or through 
grants, contracts, or cooperative agreements.

           *       *       *       *       *       *       *


SEC. 5208. RECORDS TRANSFER.

  State educational agencies and local educational agencies, as 
quickly as possible and 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] 
section 602(14) of the Individuals with Disabilities Education 
Act, are transferred to a charter school upon the transfer of 
the student to the charter school, and to another public school 
upon the transfer of the student from a charter school to 
another public school, in accordance with applicable State law.

           *       *       *       *       *       *       *


SEC. 5210. DEFINITIONS.

  In this subpart:
          (1) Charter school.--The term ``charter school'' 
        means a public school that--
                  (A) * * *

           *       *       *       *       *       *       *

                  (K) operates in accordance with State law; 
                [and]
                  (L) has a written performance contract with 
                the authorized public chartering agency in the 
                State that includes a description of how 
                student performance will be measured in charter 
                schools pursuant to State assessments that are 
                required of other schools and pursuant to any 
                other assessments mutually agreeable to the 
                authorized public chartering agency and the 
                charter school[.]; and
                  (M) may serve prekindergarten or post 
                secondary students.

           *       *       *       *       *       *       *

          (3) Eligible applicant.--The term ``eligible 
        applicant'' means a developer that has--
                  (A) * * *
                  (B) provided adequate and timely notice to 
                that authority [under section 5203(d)(3)].

           *       *       *       *       *       *       *

          (5) Expansion of a high-quality charter school.--The 
        term ``expansion of a high-quality charter school'' 
        means a high-quality charter school that either 
        significantly increases its enrollment or adds one or 
        more grades to its school.
          (6) High-quality charter school.--The term ``high-
        quality charter school'' means a charter school that--
                  (A) shows evidence of strong academic 
                results, which may include strong academic 
                growth as determined by a State;
                  (B) has no significant issues in the areas of 
                student safety, financial management, or 
                statutory or regulatory compliance;
                  (C) has demonstrated success in significantly 
                increasing student academic achievement and 
                attainment for all students served by charter 
                schools; and
                  (D) has demonstrated success in increasing 
                student academic achievement for the subgroups 
                of students described in section 
                1111(b)(2)(C)(v)(II).
          (7) Replicable, high-quality charter school model.--
        The term ``replicable, high-quality charter school 
        model'' means a high-quality charter school that will 
        open a new campus under an existing charter.

[SEC. 5211. AUTHORIZATION OF APPROPRIATIONS.

  [(a) In General.--There are authorized to be appropriated to 
carry out this subpart $300,000,000 for fiscal year 2002 and 
such sums as may be necessary for each of the 5 succeeding 
fiscal years.
  [(b) Reservation.--From the amount appropriated under 
subsection (a) for each fiscal year, the Secretary shall 
reserve--
          [(1) $200,000,000 to carry out this subpart, other 
        than section 5205(b); and
          [(2) any funds in excess of $200,000,000, that do not 
        exceed $300,000,000, to carry out section 5205(b); and
          [(3)(A) 50 percent of any funds in excess of 
        $300,000,000 to carry out this subpart, other than 
        section 5205(b); and
          [(B) 50 percent of any funds in excess of 
        $300,000,000 to carry out section 5205(b).]

SEC. 5211. AUTHORIZATION OF APPROPRIATIONS.

  There are authorized to be appropriated to carry out this 
subpart $300,000,000 for fiscal year 2012 and each of the 5 
succeeding fiscal years.

  [Subpart 2--Credit Enhancement Initiatives To Assist Charter School 
           Facility Acquisition, Construction, and Renovation

[SEC. 5221. PURPOSE.

  [The purpose of this subpart is to provide grants to eligible 
entities to permit the eligible entities to demonstrate 
innovative credit enhancement initiatives that assist charter 
schools to address the cost of acquiring, constructing, and 
renovating facilities.

[SEC. 5222. GRANTS TO ELIGIBLE ENTITIES.

  [(a) Grants.--The Secretary shall use 100 percent of the 
amount available to carry out this subpart to award not less 
than three grants to eligible entities that have applications 
approved under this subpart to demonstrate innovative methods 
of assisting charter schools to address the cost of acquiring, 
constructing, and renovating facilities by enhancing the 
availability of loans or bond financing.
  [(b) Grantee Selection.--
          [(1) Evaluation of application.--The Secretary shall 
        evaluate each application submitted under section 5223, 
        and shall determine whether the application is 
        sufficient to merit approval.
          [(2) Distribution of grants.--The Secretary shall 
        award at least one grant to an eligible entity 
        described in section 5230(2)(A), at least one grant to 
        an eligible entity described in section 5230(2)(B), and 
        at least one grant to an eligible entity described in 
        section 5230(2)(C), if applications are submitted that 
        permit the Secretary to do so without approving an 
        application that is not of sufficient quality to merit 
        approval.
  [(c) Grant Characteristics.--Grants under this subpart shall 
be of a sufficient size, scope, and quality so as to ensure an 
effective demonstration of an innovative means of enhancing 
credit for the financing of charter school acquisition, 
construction, or renovation.
  [(d) Special Rule.--In the event the Secretary determines 
that the funds made available under this subpart are 
insufficient to permit the Secretary to award not less than 
three grants in accordance with subsections (a) through (c), 
such three-grant minimum and subsection (b)(2) shall not apply, 
and the Secretary may determine the appropriate number of 
grants to be awarded in accordance with subsection (c).

[SEC. 5223. APPLICATIONS.

  [(a) In General.--To receive a grant under this subpart, an 
eligible entity shall submit to the Secretary an application in 
such form as the Secretary may reasonably require.
  [(b) Contents.--An application submitted under subsection (a) 
shall contain--
          [(1) a statement identifying the activities proposed 
        to be undertaken with funds received under this 
        subpart, including how the eligible entity will 
        determine which charter schools will receive 
        assistance, and how much and what types of assistance 
        charter schools will receive;
          [(2) a description of the involvement of charter 
        schools in the application's development and the design 
        of the proposed activities;
          [(3) a description of the eligible entity's expertise 
        in capital market financing;
          [(4) a description of how the proposed activities 
        will leverage the maximum amount of private-sector 
        financing capital relative to the amount of government 
        funding used and otherwise enhance credit available to 
        charter schools;
          [(5) a description of how the eligible entity 
        possesses sufficient expertise in education to evaluate 
        the likelihood of success of a charter school program 
        for which facilities financing is sought;
          [(6) in the case of an application submitted by a 
        State governmental entity, a description of the actions 
        that the entity has taken, or will take, to ensure that 
        charter schools within the State receive the funding 
        the charter schools need to have adequate facilities; 
        and
          [(7) such other information as the Secretary may 
        reasonably require.

[SEC. 5224. CHARTER SCHOOL OBJECTIVES.

  [An eligible entity receiving a grant under this subpart 
shall use the funds deposited in the reserve account 
established under section 5225(a) to assist one or more charter 
schools to access private sector capital to accomplish one or 
both of the following objectives:
          [(1) The acquisition (by purchase, lease, donation, 
        or otherwise) of an interest (including an interest 
        held by a third party for the benefit of a charter 
        school) in improved or unimproved real property that is 
        necessary to commence or continue the operation of a 
        charter school.
          [(2) The construction of new facilities, or the 
        renovation, repair, or alteration of existing 
        facilities, necessary to commence or continue the 
        operation of a charter school.

[SEC. 5225. RESERVE ACCOUNT.

  [(a) Use of Funds.--To assist charter schools to accomplish 
the objectives described in section 5224, an eligible entity 
receiving a grant under this subpart shall, in accordance with 
State and local law, directly or indirectly, alone or in 
collaboration with others, deposit the funds received under 
this subpart (other than funds used for administrative costs in 
accordance with section 5226) in a reserve account established 
and maintained by the eligible entity for this purpose. Amounts 
deposited in such account shall be used by the eligible entity 
for one or more of the following purposes:
          [(1) Guaranteeing, insuring, and reinsuring bonds, 
        notes, evidences of debt, loans, and interests therein, 
        the proceeds of which are used for an objective 
        described in section 5224.
          [(2) Guaranteeing and insuring leases of personal and 
        real property for an objective described in section 
        5224.
          [(3) Facilitating financing by identifying potential 
        lending sources, encouraging private lending, and other 
        similar activities that directly promote lending to, or 
        for the benefit of, charter schools.
          [(4) Facilitating the issuance of bonds by charter 
        schools, or by other public entities for the benefit of 
        charter schools, by providing technical, 
        administrative, and other appropriate assistance 
        (including the recruitment of bond counsel, 
        underwriters, and potential investors and the 
        consolidation of multiple charter school projects 
        within a single bond issue).
  [(b) Investment.--Funds received under this subpart and 
deposited in the reserve account established under subsection 
(a) shall be invested in obligations issued or guaranteed by 
the United States or a State, or in other similarly low-risk 
securities.
  [(c) Reinvestment of Earnings.--Any earnings on funds 
received under this subpart shall be deposited in the reserve 
account established under subsection (a) and used in accordance 
with such subsection.

[SEC. 5226. LIMITATION ON ADMINISTRATIVE COSTS.

  [An eligible entity may use not more than 0.25 percent of the 
funds received under this subpart for the administrative costs 
of carrying out its responsibilities under this subpart.

[SEC. 5227. AUDITS AND REPORTS.

  [(a) Financial Record Maintenance and Audit.--The financial 
records of each eligible entity receiving a grant under this 
subpart shall be maintained in accordance with generally 
accepted accounting principles and shall be subject to an 
annual audit by an independent public accountant.
  [(b) Reports.--
          [(1) Grantee annual reports.--Each eligible entity 
        receiving a grant under this subpart annually shall 
        submit to the Secretary a report of its operations and 
        activities under this subpart.
          [(2) Contents.--Each annual report submitted under 
        paragraph (1) shall include--
                  [(A) a copy of the most recent financial 
                statements, and any accompanying opinion on 
                such statements, prepared by the independent 
                public accountant reviewing the financial 
                records of the eligible entity;
                  [(B) a copy of any report made on an audit of 
                the financial records of the eligible entity 
                that was conducted under subsection (a) during 
                the reporting period;
                  [(C) an evaluation by the eligible entity of 
                the effectiveness of its use of the Federal 
                funds provided under this subpart in leveraging 
                private funds;
                  [(D) a listing and description of the charter 
                schools served during the reporting period;
                  [(E) a description of the activities carried 
                out by the eligible entity to assist charter 
                schools in meeting the objectives set forth in 
                section 5224; and
                  [(F) a description of the characteristics of 
                lenders and other financial institutions 
                participating in the activities undertaken by 
                the eligible entity under this subpart during 
                the reporting period.
          [(3) Secretarial report.--The Secretary shall review 
        the reports submitted under paragraph (1) and shall 
        provide a comprehensive annual report to Congress on 
        the activities conducted under this subpart.

[SEC. 5228. NO FULL FAITH AND CREDIT FOR GRANTEE OBLIGATIONS.

  [No financial obligation of an eligible entity entered into 
pursuant to this subpart (such as an obligation under a 
guarantee, bond, note, evidence of debt, or loan) shall be an 
obligation of, or guaranteed in any respect by, the United 
States. The full faith and credit of the United States is not 
pledged to the payment of funds which may be required to be 
paid under any obligation made by an eligible entity pursuant 
to any provision of this subpart.

[SEC. 5229. RECOVERY OF FUNDS.

  [(a) In General.--The Secretary, in accordance with chapter 
37 of title 31, United States Code, shall collect--
          [(1) all of the funds in a reserve account 
        established by an eligible entity under section 5225(a) 
        if the Secretary determines, not earlier than 2 years 
        after the date on which the eligible entity first 
        received funds under this subpart, that the eligible 
        entity has failed to make substantial progress in 
        carrying out the purposes described in section 5225(a); 
        or
          [(2) all or a portion of the funds in a reserve 
        account established by an eligible entity under section 
        5225(a) if the Secretary determines that the eligible 
        entity has permanently ceased to use all or a portion 
        of the funds in such account to accomplish any purpose 
        described in section 5225(a).
  [(b) Exercise of Authority.--The Secretary shall not exercise 
the authority provided in subsection (a) to collect from any 
eligible entity any funds that are being properly used to 
achieve one or more of the purposes described in section 
5225(a).
  [(c) Procedures.--The provisions of sections 451, 452, and 
458 of the General Education Provisions Act shall apply to the 
recovery of funds under subsection (a).
  [(d) Construction.--This section shall not be construed to 
impair or affect the authority of the Secretary to recover 
funds under part D of the General Education Provisions Act.

[SEC. 5230. DEFINITIONS.

  [In this subpart:
          [(1) Charter school.--The term ``charter school'' has 
        the meaning given such term in section 5210.
          [(2) Eligible entity.--The term ``eligible entity'' 
        means--
                  [(A) a public entity, such as a State or 
                local governmental entity;
                  [(B) a private nonprofit entity; or
                  [(C) a consortium of entities described in 
                subparagraphs (A) and (B).

[SEC. 5231. AUTHORIZATION OF APPROPRIATIONS.

  [For the purpose of carrying out this subpart, there are 
authorized to be appropriated $150,000,000 for fiscal year 2002 
and such sums as may be necessary for fiscal year 2003.]

           *       *       *       *       *       *       *


                            ADDITIONAL VIEWS

    I appreciate the bipartisan efforts of the Committee to 
work together on the Empowering Parents through Quality Charter 
School Act (H.R. 2118). However, I have strong concerns that 
H.R. 2218 does not do nearly enough to advance our goal of 
providing equal, high-quality education for all students.
    For example, I believe this legislation failed to 
adequately address serving students with disabilities and 
language barriers, proper oversight and monitoring, increased 
transparency and disclosure, as well as understanding funding 
streams that function within the charter school program.
    I am troubled by the research that shows only a very small 
proportion of charter schools have similar demographic 
compositions as the local districts they serve.\1\ 
Additionally, I am concerned of increasing reports that charter 
schools are using tests as a condition of admissions, 
placement, or grade promotion tests, which have implications 
for the access and persistence of certain types of students, 
especially students with disabilities and English language 
learners.\2\
---------------------------------------------------------------------------
    \1\Miron, G., Urschel, J. L., Mathis, W, J., & Tornquist, E. 
(2010). Schools without Diversity: Education Management Organizations, 
Charter Schools and the Demographic Stratification of the American 
School System. Boulder and Tempe: Education and the Public Interest 
Center & Education Policy Research Unit. Available from http://
epicpolicy.org/publication/schools-without-diversity
    \2\Miron, G., Urschel, J.L., & Saxton, N. (2011). What makes KIPP 
work? A study of student characteristics, attrition, and school 
finance. New York, NY: National Center for the Study of Privatization 
in Education, Teachers College, Columbia University: http://ncspe.org/
publications files/OP195 3.pdf; O'Brien, T., Hupfeld, K., & Teske, P. 
(2008). Challenges and Charter Schools: How Families with Special-Needs 
Students Perceive and Use Charter School Options. Seattle, WA: National 
Charter Research Project at the Center on Reinventing Public Education, 
University of Washington
---------------------------------------------------------------------------
    Further, as charter schools become a more prominent 
component of the public school system, and in the context of 
the accountability provisions under No Child Left Behind, the 
effectiveness of the public chartering agencies (authorizers) 
that license, monitor and evaluate charter schools has become 
increasingly important. Nevertheless, many authorizers lack 
oversight and resources. Charter contracts are often vague, 
incomplete and not based in measurable outcomes.\3\
---------------------------------------------------------------------------
    \3\U.S. Department of Education. (2010) Supporting Charter School 
Excellence Through Quality Authorizing: http://
www.charterschoolcenter.orgresource/supporting-charter-school-
excellence-through-quality-authorizing0
---------------------------------------------------------------------------
    Finally, charter schools have veered away from their 
original purpose and are primarily serving to divide limited 
public resources across parallel systems that perform at 
similar levels and suffer from similar breaches in 
accountability.\4\ Many states allow private schools to convert 
to public charter schools, and the proportion of charter 
schools operated by a private management organization is 
increasing.
---------------------------------------------------------------------------
    \4\Testimony of Gary Miron. (2011). Education Reforms: Exploring 
the Vital Role of Charter Schools. Washington, DC.
---------------------------------------------------------------------------
    I believe more must be done to ensure charter schools 
operate as part of the public school system and support 
district wide collaborative approaches that improve educational 
options for all students.
    In conclusion, I believe that the role of the federal 
government is to ensure that all public school students have 
equal access to high-quality education and H.R. 2118 falls 
short of that goal.

                                                   John F. Tierney.

                                  
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