[Federal Register Volume 67, Number 77 (Monday, April 22, 2002)]
[Notices]
[Pages 19626-19629]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-9808]



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Part II





Department of Education





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State Flexibility Program; Notice

  Federal Register / Vol. 67, No. 77 / Monday, April 22, 2002 / 
Notices  

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DEPARTMENT OF EDUCATION


State Flexibility Program

AGENCY: Office of Elementary and Secondary Education, Department of 
Education.

ACTION: Notice of proposed application requirements, selection 
criteria, and competition schedule.

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SUMMARY: We propose application requirements, selection criteria, and a 
competition schedule for granting State educational agencies (SEAs) 
State flexibility (State-Flex) authority under the Elementary and 
Secondary Education Act of 1965 (ESEA), as amended by the No Child Left 
Behind Act of 2001 (Pub. L. 107-110). We are taking this action to 
implement the State-Flex competitions, under which the Secretary will 
grant State-Flex authority to up to seven SEAs. The authority will 
assist these SEAs, and the local educational agencies (LEAs) with which 
they enter into performance agreements, in making adequate yearly 
progress and narrowing achievement gaps.

DATES: We must receive your comments and recommendations on the 
application requirements, selection criteria, and competition schedule 
proposed in this notice on or before May 22, 2002.

ADDRESSES: Address all comments about the application requirements, 
selection criteria, and competition schedule proposed in this notice to 
Mr. Charles Lovett, Group Leader, Office of School Support and 
Technology Programs, U.S. Department of Education, 400 Maryland Avenue, 
SW., room 3E241, Washington, DC 20202. If you prefer to send your 
comments by facsimile transmission, use the following number: (202) 
205-5870. If you prefer to send your comments through the Internet, use 
the following address: [email protected].
    If you want to comment on the information collection requirements, 
you must send your comments to the Department representative named in 
this section.

FOR FURTHER INFORMATION CONTACT: Mr. Charles Lovett, Group Leader. 
Telephone: (202) 401-0039 or via Internet: [email protected].
    If you use a telecommunications device for the deaf (TDD), you may 
call the Federal Information Relay Service (FIRS) at 1-800-877-8339. 
Individuals with disabilities may obtain this notice in an alternative 
format (e.g., Braille, large print, audiotape, or computer diskette) on 
request to the contact person listed above.

SUPPLEMENTARY INFORMATION:   

Invitation to Comment

    We invite you to submit comments regarding the proposed application 
requirements and selection criteria. All comments submitted in response 
to this notice will be available for public inspection, during and 
after the comment period, in Room 3E241, 400 Maryland Avenue, SW., 
Washington, DC between the hours of 8:30 a.m. and 4 p.m., Eastern time, 
Monday through Friday of each week except Federal holidays.

Assistance to Individuals With Disabilities in Reviewing the 
Rulemaking Record

    On request, we will supply an appropriate aid, such as a reader or 
print magnifier, to an individual with a disability who needs 
assistance to review the comments. If you want to schedule an 
appointment for this type of aid, please contact the person listed 
under FOR FURTHER INFORMATION CONTACT.

General

    The ESEA, as amended, authorizes the Secretary of Education to 
grant State flexibility (State-Flex) authority to up to seven State 
educational agencies (SEAs). (20 U.S.C. 7311 et seq.) With this 
authority, SEAs may (1) consolidate certain Federal education funds 
that are provided for State-level activities and State administration 
and use those funds for any educational purpose authorized under the 
ESEA in order to meet the State's definition of adequate yearly 
progress (AYP) under section 1111(b)(2) of the ESEA and advance the 
education priorities of the State and its LEAs; and (2) specify how 
LEAs in the State may use funds allocated under section 5112(a) of the 
ESEA (State Grants for Innovative Programs). In addition, an SEA with 
State-Flex authority must enter into performance agreements with not 
fewer than four, nor more than ten, LEAs (at least half of which must 
be high-poverty LEAs), giving those LEAs the flexibility to consolidate 
certain Federal education funds and to use those funds for any 
educational purpose permitted under the ESEA in order to meet the 
State's definition of AYP and specific, measurable goals for improving 
student achievement and narrowing achievement gaps. An SEA must propose 
the LEA performance agreements as part of its State-Flex application to 
the Secretary, and the Secretary will approve the agreements as part of 
the grant of State-Flex authority.
    The purpose of the program is to create options for SEAs selected 
for State-Flex authority and for LEAs that enter into performance 
agreements to --
    (1) Improve the academic achievement of all students and to focus 
the resources of the Federal government on this achievement;
    (2) Improve teacher quality and subject matter mastery, especially 
in mathematics, reading, and science;
    (3) Better empower parents, educators, administrators, and schools 
to effectively address the needs of their children and students;
    (4) Provide greater flexibility in determining how to increase 
their students' academic achievement and implement education reforms in 
their schools;
    (5) Eliminate barriers to implementing effective State and local 
education reform, while preserving the goals of opportunity for all 
students and accountability for student progress;
    (6) Hold them accountable for increasing the academic achievement 
of all students, especially disadvantaged students; and
    (7) Narrow achievement gaps between the lowest and highest 
achieving groups of students so that no child is left behind.
    The Secretary will grant State-Flex authority to SEAs on a 
competitive basis using a peer review process. The grant of State-Flex 
authority will be for a period of five years, but that time period may 
be shortened or extended depending on an SEA's compliance with the 
terms of the grant of authority and the performance of SEAs and LEAs 
with performance agreements under that authority.
    To be eligible for State-Flex, an SEA must submit to the Department 
an application that, among other things, demonstrates that the grant of 
authority offers substantial promise of (1) assisting the SEA in making 
adequate yearly progress; and (2) aligning State and local reforms and 
assisting the LEAs that enter into performance agreements with the SEA 
in making adequate yearly progress.
    An SEA does not receive additional Federal funding for 
participating in State-Flex. Rather, an SEA with State-Flex authority 
receives greater flexibility in spending funds allocated for State-
level activities and for State administration under the following ESEA 
provisions: section 1004 (Improving the Academic Achievement of 
Disadvantaged Children); paragraphs (4) and (5) of section 1202(d) 
(Reading First); section 2113(a)(3) (Teacher and Principal Training and 
Recruitment); section 2412(a)(1) (Enhancing Education

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through Technology); subsection (a) of section 4112 (Safe and Drug-Free 
Schools and Communities Governor's funds, with agreement of the 
Governor); subsection (b)(2) and (c)(1) of section 4112 (Safe and Drug-
Free Schools and Communities SEA funds); paragraphs (2) and (3) of 
section 4202(c) (21st Century Community Learning Centers); and section 
5112(b) (Innovative Programs). An SEA with State-Flex authority may 
consolidate and use these funds for any educational purpose authorized 
under the ESEA in order to make adequate yearly progress and advance 
the educational priorities of the State and the LEAs with which the SEA 
enters into performance agreements. In addition, an SEA with State-Flex 
authority may specify how all LEAs in the State must use the funds that 
they receive under section 5112(a) of the ESEA, but the SEA must comply 
with the requirements in part A of title V for allocating those funds.
    As noted above, an SEA seeking State-Flex authority must propose to 
enter into performance agreements with not less than four, nor more 
than ten, LEAs. At least half of these LEAs must be ``high-poverty 
LEAs,'' which are defined in section 6141(b)(2) of the ESEA as LEAs in 
which 20 percent or more of the children who are age five through 
seventeen and served by the LEAs are from families with incomes below 
the Federal poverty line. The term ``poverty line'' is defined in 
section 9101(33) of the ESEA.
    If any of an SEA's proposed performance agreements involve a 
consortium of two or more LEAs rather than an individual LEA, each LEA 
in the consortium is counted separately for purposes of determining 
compliance with the statutory provision governing the number of LEAs in 
a State that may enter into agreements and of determining if at least 
half of the participating LEAs are high-poverty LEAs.
    The Secretary will approve the performance agreements as part of 
his initial grant of State-Flex authority to an SEA. An SEA may 
subsequently seek to amend its grant of authority to add or remove 
performance agreements, but at no time may there be performance 
agreements with fewer than four nor more than ten LEAs, at least half 
of which must be with high-poverty LEAs.
    Like an SEA that receives State-Flex authority from the Secretary, 
an LEA that enters into a performance agreement with its SEA does not 
receive additional Federal funding for entering into the agreement. 
Rather, the LEA receives additional flexibility in spending funds that 
are allocated to it by formula under the following ESEA provisions: 
Subpart 2 of part A of title II (Teacher and Principal Training and 
Recruiting); subpart 1 of part D of title II (Enhancing Education 
Through Technology); subpart 1 of part A of title IV (Safe and Drug-
Free Schools and Communities); and subpart 1 of part A of title V 
(Innovative Programs). An LEA with a performance agreement may 
consolidate and use these funds for any educational purpose authorized 
under the ESEA in order to make adequate yearly progress and meet 
specific, measurable goals for improving student achievement and 
narrowing achievement gaps. The activities that an LEA would undertake 
under a performance agreement must be consistent with the activities 
that an SEA would undertake with its grant of authority. An LEA must 
also demonstrate that it would meet the general purposes of the 
programs included in the consolidation.
    Participation in State-Flex does not relieve an SEA or the LEAs 
with which it enters into performance agreements of their 
responsibility to provide equitable services for private school 
students and teachers under the affected programs.
    The performance agreements between an SEA and LEAs in States with 
State-Flex authority are essentially the same as the local flexibility 
(Local-Flex) demonstration agreements between the Secretary and LEAs in 
States that do not have State-Flex authority. On February 22, 2002, the 
Secretary published in the Federal Register (67 FR 8442-8444) a notice 
proposing application requirements and selection criteria for the 
Local-Flex program, which is authorized under sections 6151 through 
6156 of the ESEA, and announcing that the Department intends to conduct 
two Local-Flex and two State-Flex competitions. We encourage you to 
review the Local-Flex notice in order to gain a better understanding of 
the relationship between State-Flex and Local-Flex. This notice is 
available on the Department's web site at: http://www.ed.gov/legislation/FedRegister.
    As discussed in the Local-Flex notice, under the Local-Flex program 
the Secretary may enter into local flexibility demonstration agreements 
with (1) no more than three LEAs in a State; (2) a total of no more 
than 80 LEAs; and (3) only LEAs in States that do not have State-Flex 
authority. Furthermore, under the Local-Flex legislation, if an SEA 
notifies the Secretary, by May 8, 2002, that it will be applying for 
State-Flex, an LEA in that State will be precluded from applying for 
Local-Flex until the Department makes a final determination concerning 
the SEA's State-Flex application, should the SEA subsequently submit 
one. The May 8, 2002 date is not the deadline for submission of a 
State-Flex application. Rather, it is the final date by which an SEA 
may preclude its LEAs from applying for Local-Flex by the SEA notifying 
the Department that it intends to apply for State-Flex.
    An SEA that chooses not to notify the Department prior to May 8, 
2002 that it will be applying for State-Flex may nonetheless seek 
State-Flex authority when the State-Flex competitions are conducted. 
LEAs in that State, however, would have an opportunity to seek Local-
Flex before that SEA seeks State-Flex. An SEA would not be precluded 
from applying for State-Flex so long as it agrees to incorporate into 
its State-Flex proposal any Local-Flex agreements already entered into 
between the Secretary and LEAs in the State.
    In the February 22, 2002 Federal Register notice, the Secretary 
indicated that he intends to publish a notice inviting applications for 
the first Local-Flex competition during the spring and would select the 
initial group of Local-Flex participants shortly thereafter. The 
Secretary also announced that he intends to conduct the initial State-
Flex competition in late summer and would select three to four SEAs for 
State-Flex during that competition. Later this year, the Secretary 
would hold another Local-Flex and State-Flex competition. The Secretary 
invited comments on the proposed two-staged processes and will announce 
the final State-Flex and Local-Flex competition processes in a future 
notice in the Federal Register.

I. Proposed State-Flex Application Requirements

    In order that the Secretary can select State-Flex participants in 
accordance with the statutory requirements, the Secretary proposes that 
State-Flex applicants be required to submit the following information, 
together with other information addressing the application requirements 
in sections 6141(b) and (c) of the ESEA and the proposed selection 
criteria:
    (a) Evidence of the State's definition of adequate yearly progress. 
Each SEA seeking a grant of State-Flex authority from the Secretary 
would be required to provide, as part of its application, evidence that 
the State has established a definition of adequate yearly progress 
(AYP) that meets the requirements in section 1111(b)(2)(B) of the 
reauthorized ESEA, unless the SEA has already submitted to the 
Department evidence that it has established an AYP definition that 
meets the new statutory

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requirements. An SEA would be eligible to participate in State-Flex 
only if the State has established the required AYP definition and its 
definition is reviewed by peer reviewers and approved by the Secretary 
either prior to the SEA's submission of a State-Flex application or as 
part of the State-Flex review process. (A description of the new AYP 
requirements is provided in a January 18, 2002 Federal Register notice 
(67 FR 2770-2772) requesting advice and recommendations on regulatory 
issues, which is available on the Department's website at http://www.ed.gov/legislation/FedRegister.)
    (b) The SEA's strategies for consolidating funds, making adequate 
yearly progress, and advancing the education priorities of the State. 
Each SEA seeking State-Flex authority would submit a five-year plan 
that describes how the SEA would consolidate and use funds from 
programs included in the scope of the State-Flex authority to assist 
the SEA in making adequate yearly progress and in advancing the 
education priorities of the State and the LEAs with which the SEA 
enters into performance agreements. In describing strategies for using 
State-Flex to make adequate yearly progress and to advance its 
education priorities, an SEA would also describe the specific 
limitations, if any, that it would impose on the use of funds provided 
to LEAs in the State under section 5112(a) of the ESEA.
    (c) Proposed performance agreements with LEAs. Each SEA seeking 
State-Flex authority would submit, as part of its application, five-
year performance agreements that the SEA proposes to enter into with 
not fewer than four, and not more than ten, LEAs (at least half of 
which must be high-poverty LEAs). The SEA would indicate why it 
proposes to enter into agreements with these LEAs rather than other 
LEAs in the State.
    The SEA would describe the strategies that each LEA with a 
performance agreement would implement in order to meet the State's 
definition of adequate yearly progress and the LEA's specific, 
measurable goals for improving student achievement and narrowing 
achievement gaps. In particular, the SEA would describe how each of 
these LEAs would consolidate and use funds received under subpart 2 of 
part A of title II (Teacher and Principal Training and Recruitment); 
subpart 1 of part D of title II (Enhancing Education Through 
Technology); subpart 1 of part A of title IV (Safe and Drug-Free 
Schools and Communities); and subpart 1 of part A of title V 
(Innovative Programs); and what each LEA would seek to achieve under 
its proposed agreement. The SEA would describe how an LEA's use of 
consolidated funds under a performance agreement would be consistent 
with the activities that the SEA would undertake with its grant of 
State-Flex authority. The goals in each LEA's proposed performance 
agreement would have to relate to the State's definition of AYP under 
section 1111(b)(2)(B) of the ESEA.

II. Proposed State-Flex Selection Criteria

    The Secretary proposes to use the following criteria in selecting 
the SEAs to which he will grant State-Flex authority:
    (a) Identification of the Need for the State-Flex Authority and the 
Proposed Performance Agreements. The Secretary considers the SEA's need 
for State-Flex authority, including the need for the performance 
agreements that the SEA proposes in its State-Flex application. In 
determining need, the Secretary considers the extent to which--
    (i) The SEA's proposal identifies achievement gaps among different 
groups of students, particularly in each of the LEAs with which the SEA 
proposes to enter into a performance agreement.
    (ii) The State-Flex authority and proposed performance agreements 
would address the needs of students most at risk of educational 
failure.
    (iii) The LEAs that would enter into performance agreements with 
the SEA serve a substantial portion of the students in the State who 
are most at risk of educational failure.
    (iv) Requirements in the Federal programs that the SEA and LEAs 
with performance agreements would consolidate create barriers to 
implementing specific State and local education reform strategies.
    (b) Quality of SEA and LEA Strategies for Making Adequate Yearly 
Progress and Enhancing Education Priorities. The Secretary considers 
the quality of the strategies that the SEA will implement under its 
grant of State-Flex authority, including the quality of the strategies 
in each of the proposed performance agreements, for making adequate 
yearly progress and for enhancing State and local education priorities. 
In determining the quality of these strategies, the Secretary considers 
the extent to which--
    (i) The strategies that the SEA proposes for consolidating and 
using funds under the scope of the State-Flex authority and for 
directing how LEAs in the State will use funds under section 5112(a) of 
the ESEA will likely assist the State in meeting its definition of 
adequate yearly progress and in advancing its education priorities.
    (ii) The performance agreements that the SEA proposes to enter into 
with LEAs in the State will likely assist the State in meeting its 
definition of adequate yearly progress and in advancing its education 
priorities.
    (iii) The strategies in each of the proposed performance 
agreements, especially the strategies for consolidating and using funds 
under the scope of the agreements, will likely assist each affected LEA 
in meeting the State's definition of adequate yearly progress and 
specific, measurable goals for improving student achievement and 
narrowing achievement gaps.
    (iv) The State-Flex proposal and each of the proposed performance 
agreements represent a coherent, sustained approach for meeting the 
purposes of the State-Flex program.
    (v) The timelines for implementing the strategies in the State-Flex 
proposal, including timelines in the proposed performance agreements, 
are reasonable.
    (c) Quality of the Management Plans. The Secretary considers that 
quality of the management plans that the SEA and affected LEAs would 
follow in implementing State-Flex activities. In reviewing the quality 
of the management plans, the Secretary considers the extent to which--
    (i) The SEA will provide effective technical assistance and support 
to LEAs with performance agreements.
    (ii) The SEA and each LEA with a performance agreement will use 
disaggregated student achievement data and data on other academic 
indicators to manage their proposed activities, to monitor their own 
progress on an ongoing basis, and to make appropriate adjustments to 
their implementation strategies.
    (iii) The SEA will monitor LEA activities under each of the 
performance agreements, evaluate the effectiveness of each agreement, 
and propose modifications to LEA activities or to the agreements, as 
appropriate.
    (d) Adequacy of the Resources. The Secretary considers the adequacy 
of the resources for the grant of State-Flex authority and the proposed 
performance agreements. In considering the adequacy of the resources, 
the Secretary considers the extent to which --
    (i) The funds that the SEA proposes to consolidate under the grant 
of State-Flex authority are adequate to support the strategies that it 
seeks to implement with these funds.
    (ii) The funds that each LEA would consolidate under its respective 
performance agreement are adequate to support the strategies in its 
agreement.
    (iii) The SEA will coordinate the activities supported with funds

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consolidated under its grant of State-Flex authority with activities 
funded with other resources to meet the purposes of the State-Flex 
initiative.
    (iv) Each LEA with a performance agreement will coordinate the 
activities supported with funds consolidated under its agreement with 
activities funded with other resources to meet the purposes of the 
agreement.
    (v) The costs that the SEA and affected LEAs will incur under the 
grant of State-Flex authority and the proposed performance agreements 
are reasonable in relationship to the goals that will be achieved.

III. Proposed Competition Schedule

    In the notice proposing application requirements and selection 
criteria for the Local-Flex program (67 FR 8442-8444), the Secretary 
announced that the Department intends to conduct two Local-Flex 
competitions and two State-Flex competitions. The Secretary received no 
comments on the two-staged processes for these flexibility programs.
    The Secretary plans to publish a notice inviting applications for 
the first round of State-flex applications during June 2002. Those 
applications would be due on October 1, 2002. Under the application 
requirements that are proposed above, an SEA seeking State-Flex 
authority at that time would be required to submit, among other things, 
evidence that the State has established a definition of adequate yearly 
progress that meets the requirements in section 1111(b)(2)(B) of the 
reauthorized ESEA, unless the SEA has already submitted to the 
Department evidence that the State has already established an AYP 
definition that meets the new statutory requirements. The SEA would 
also have to submit its strategies for consolidating funds, and 
proposed performance agreements with not fewer than four, nor more than 
ten, LEAs.
    The Secretary proposes to grant three to four SEAs State-Flex 
authority in the initial competition, and would award the remaining 
State-Flex slots in a subsequent competition that would be announced 
later this year.
    The Secretary invites comments on whether this competition schedule 
is reasonable and provides SEAs with sufficient time and opportunity to 
seek State-Flex authority in light of the new Title I requirements.

Executive Order 12866

    This notice has been reviewed in accordance with Executive Order 
12866. Under the terms of the order, we have assessed the potential 
costs and benefits of this regulatory action.
    The potential costs associated with the notice are those resulting 
from statutory requirements and those we have determined as necessary 
for administering this program effectively and efficiently.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of this notice, we have determined that the benefits 
justify the costs.
    We have also determined that this regulatory action does not unduly 
interfere with State, local, and tribal governments in the exercise of 
their governmental functions.
    Summary of Potential Costs and Benefits: It is not anticipated that 
the application requirements proposed in this notice will impose any 
significant costs on applicants. Since these regulations provide a 
basis for the Secretary to grant State-Flex authority to up to seven 
SEAs, giving the SEAs the flexibility to consolidate certain Federal 
education funds, direct LEAs' use of funds under part A of title V of 
the ESEA, and enter into performance agreements with four to ten LEAs, 
the regulations would not impose any unfunded mandates on States or 
LEAs. The benefits of the program are described in the SUMMARY section 
of this notice.

Regulatory Flexibility Act Certification

    The Secretary certifies that the requirements in this notice would 
not have a significant economic impact on a substantial number of small 
entities. The small entities affected by this notice would be small 
LEAs. Since the Secretary is authorized to grant State-Flex authority 
only to seven SEAs, and each of those SEAs must enter into performance 
agreements with four to ten LEAs, the requirements proposed in this 
notice will not affect a significant number of LEAs. In addition, these 
requirements are minimal and are necessary to ensure effective program 
management.

Federalism

    Executive Order 13132 requires us to ensure meaningful and timely 
input by State and local elected officials in the development of 
regulatory policies that have federalism implications. ``Federalism 
implications'' means substantial direct effects on the States, on the 
relationship between the National Government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. Although we do not believe these proposed application 
requirements and selection criteria would have federalism implications 
as defined in Executive Order 13132, we encourage State and local 
elected officials to review them and to provide comments.

Paperwork Reduction Act of 1995

    This document contains proposed data requirements. The feedback 
received on these data requirements will eventually result in a new 
information collection and will be under the review of the Office of 
Management and Budget (OMB) until OMB approves the data requirements at 
the time of the final notice.
    If you want to comment on the proposed information collection 
requirements, please send your comments to Mr. Charles Lovett, Office 
of School Support and Technology Programs, U.S. Department of 
Education, 400 Maryland Avenue, SW., room 3E241, Washington, DC 20202. 
Electronic Access to this Document: You may view this document, as well 
as other Department of Education documents published in the Federal 
Register in text or Adobe Portable Document Format (PDF) on the 
Internet at the following site: www.ed.gov/legislation/FedRegister.
    To use PDF you must have Adobe Acrobat Reader, which is available 
free at this site. If you have questions about using PDF, call the U.S. 
Government Printing Office (GPO), toll-free, at 1-888-293-6498; or in 
the Washington DC, area at (202) 512-1530.

    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official version of the Federal Register and the Code of Federal 
Regulations is available on GPO access at: www.access.gpo.gov/nara/index.html.


    Program Authority: 20 U.S.C. 7311 et seq.

    Dated: April 17, 2002.
Susan B. Neuman,
Assistant Secretary for Elementary and Secondary Education.
[FR Doc. 02-9808 Filed 4-19-02; 8:45 am]
BILLING CODE 4000-01-P