[Federal Register Volume 67, Number 198 (Friday, October 11, 2002)]
[Notices]
[Pages 63390-63394]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-26003]


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DEPARTMENT OF EDUCATION


State Flexibility Program

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

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

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SUMMARY: The Secretary announces final application requirements, 
selection criteria, and the competition schedule for the State 
Flexibility (State-Flex) program.

EFFECTIVE DATE: November 12, 2002.

FOR FURTHER INFORMATION CONTACT: Ms. Milagros Lanauze. 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: On April 22, 2002, we published in the 
Federal Register (67 FR 19626-19629) a notice of proposed application 
requirements, selection criteria, and competition schedule for the 
State-Flex program, which is authorized under sections 6141 through 
6144 of the Elementary and Secondary Education Act (ESEA), as amended 
by the No Child Left Behind Act of 2001 (Pub. L. 107-110). This notice 
announces final application requirements, selection criteria, and the 
competition schedule for the program.

    Note: This notice does not solicit applications. A notice 
inviting applications under the State-Flex competition is published 
separately in this issue of the Federal Register.

Analysis of Comments and Changes

    Four parties submitted various comments in response to the notice 
of proposed application requirements,

[[Page 63391]]

selection criteria, and competition schedule.
    Comment: Two commenters expressed concern about the competition 
schedule and suggested that the second State-Flex competition be held 
after the date by which States must submit their definitions of 
adequate yearly progress (AYP) to the Department. The commenters 
indicated that a later schedule would also give States sufficient time 
to prepare their State-Flex applications.
    Response: We recognize that some States may need additional time to 
develop their State-Flex proposals.
    Changes: We are revising the competition schedule and will hold the 
second State-Flex competition no earlier than Spring 2003.
    Comment: One commenter recommended that States not be required to 
submit their State definition of AYP in order to be considered eligible 
for State-Flex. Instead, the commenter suggested that in applying for 
State-Flex in the initial round of competition, States be permitted to 
submit an assurance that they will submit their AYP definition by 
January 2003.
    Response: Implementation of the AYP requirements is fundamental to 
the State-Flex program. One of the primary purposes of the State-Flex 
program is to assist States and districts in meeting AYP. Given that 
the Department has not yet published final Title I AYP regulations, the 
Department will not require an SEA to submit its State AYP definition 
at the time it applies for State-Flex authority.
    If the Department has not approved a State's AYP definition by the 
time it applies for State-Flex authority, an SEA may only be granted 
conditional State-Flex authority. The Department will not grant final 
approval of an SEA's State-Flex application unless the State submits 
its AYP definition by the AYP deadline established by the Department 
and the Department approves that definition.
    Changes: The Department has revised the State-Flex application 
requirements. An SEA will not be required to submit its State AYP 
definition prior to or as part of its State-Flex application. Instead, 
in its application, an SEA will be required to provide an assurance 
that it will submit the definition by the AYP deadline established by 
the Department.
    In conducting this competition, the Department will review the 
quality of State-Flex plans, including the quality of the local 
performance agreements that are submitted as part of those plans. Based 
on that review, the Department will grant State-Flex authority to up to 
four SEAs. If an SEA selected for State-Flex authority has not yet had 
its AYP definition approved by the Department, that SEA will receive 
conditional State-Flex authority. An SEA with conditional State-Flex 
authority will not be able to exercise its State-Flex authority or 
implement any portion of its State-Flex plan (including the local 
performance agreements) unless the Department approves the SEA's AYP 
definition by March 31, 2003.
    Comment: One commenter recommended that a State not be required to 
include in its State-Flex application the five-year performance 
agreements that the State proposes to enter into with its LEAs. 
Instead, the commenter suggested that the State be allowed to submit 
the format for the performance agreements along with LEA demographics 
and a signed assurance from participating LEAs that they will 
participate in the program and comply with its requirements.
    Response: Section 6141 of ESEA specifically requires a State to 
submit, as part of its State-Flex application, the performance 
agreements that the State proposes to enter into with eligible LEAs.
    Changes: None.
    Comment: One commenter suggested that applicants be required to 
submit the following information to enable the Secretary to evaluate 
whether they are focusing on serving the needs of students most at risk 
of educational failure: (1) Data indicating the gap between low- and 
high-achieving students in the districts for which local performance 
agreements are proposed, as well as data indicating the achievement gap 
statewide; (2) The number and percentage of schools in each district 
that qualify for Title I schoolwide programs; (3) The amount of local 
education funds spent per pupil at Title I schools compared to the per-
pupil spending at non-Title I schools; and (4) Any formula the State 
and districts would use to target consolidated Federal funds to 
students most at risk of education failure, as well as strategies to 
target State-level activities to address the achievement gap.
    Response: We agree that there is a need for applicants to provide 
statewide and LEA student achievement data to enable the Department to 
assess whether State-Flex authority will be used to address the needs 
of students most at risk of educational failure. However, we do not 
believe that the additional information suggested by the commenter is 
necessary for us to evaluate adequately a State-Flex proposal. On the 
basis of the selection criteria and the revised application 
requirements for this competition, we will be able to focus State-Flex 
agreements on SEAs serving the needs of students most at risk of 
educational failure.
    Changes: We will require applicants to submit statewide baseline 
academic data, as well as LEA student achievement profiles. We have 
clarified in the application requirements section of this notice the 
contents of local performance agreements, which include baseline 
academic data for those LEAs.
    Comment: One commenter expressed concern that States may use the 
State-Flex program in a manner that undermines the parent involvement 
provisions contained in ESEA. The commenter suggested that the 
Secretary evaluate State-Flex applications based on the degree to which 
parent involvement requirements contained in ESEA are maintained, and 
also recommended that the Secretary require an assurance that States 
will provide parents and other stakeholders with notice and opportunity 
to comment on the State-Flex application.
    Response: In the April 22, 2002 Federal Register notice, we did not 
include all of the statutory application requirements. We did not 
believe that it was necessary to seek public comments on some of the 
more explicit requirements included in the legislation. However, all of 
the statutory application requirements, including required assurances, 
are discussed in the application package.
    In addition, we agree that the Department should evaluate 
applications, in part, based on the degree to which the SEA and LEAs 
with proposed performance agreements have included parents in the 
development of their proposals.
    Changes: We have revised the selection criteria to include a factor 
relating to parental involvement in the development of the proposals.
    Comment: One commenter argued that the Department incorrectly 
stated that the five-year period of State-Flex authority may be 
shortened or extended contingent on a State's compliance with the 
State-Flex requirements, and should delete this statement. The 
commenter suggested, instead, that the overall application process 
outline a process for reviewing and deciding issues of continued 
participation in State-Flex or renewal of State-Flex authority.
    Response: The legislation states that the Secretary must, after 
providing notice and an opportunity for a hearing, promptly terminate a 
State-Flex agreement if an SEA fails to make adequate yearly progress 
for two

[[Page 63392]]

consecutive years. The legislation also provides that, after providing 
notice and an opportunity for a hearing, the Secretary may terminate a 
State-Flex agreement if there is evidence that an SEA has failed to 
comply with the terms of the agreement. In addition, the legislation 
provides that the Secretary must renew a State's State-Flex authority 
if the State has met all the terms and requirements of the State-Flex 
program.
    The Secretary does not believe that it is necessary to issue, at 
this time, additional guidance on the termination or renewal of a 
State-Flex agreement.
    Changes: None.
    Comment: One commenter suggested that the Secretary evaluate 
applications for State-Flex based on the degree to which States decline 
to direct how their LEAs use Title V, Part A funds, as the purpose of 
Title V, Part A is to support local reform efforts.
    Response: The statute allows SEAs that are granted State-Flex 
authority to specify how all LEAs in the State will use their Title V, 
Part A funds. This is one of the benefits an SEA receives under its 
grant of State-Flex authority; discouraging State-Flex participants 
from taking full advantage of the flexibility afforded to them under 
the program would be inconsistent with the intent of the legislation.
    Changes: None.
    Comment: One commenter suggested that an SEA be required to include 
in its State-Flex proposal a description of how each proposed local 
performance agreement will meet the general purposes of the programs 
that the applicable LEAs would consolidate under their agreements.
    Response: Although we did not intend to seek public comments on 
some of the more explicit requirements included in the legislation, we 
agree that this description should be part of the applications.
    Changes: We have modified the application requirements to state 
expressly that each local performance agreement must, as part of its 
five-year proposal, include a description of how the LEA will meet the 
general purposes of the programs that are consolidated.
    Comment: One commenter urged us to require each applicant to 
explain how it will continue to comply with all applicable civil rights 
requirements, and to include in its application a description of the 
accounting procedures and safeguards that it would employ to ensure 
proper disbursement of, and accounting for, Federal funds.
    Response: In the April 22, 2002 Federal Register notice of proposed 
application requirements, selection criteria, and competition schedule 
(67 FR 19626-19629), we did not include all of the statutory 
application requirements. We did not believe that it was necessary to 
seek public comments on some of the more explicit requirements included 
in the legislation. However, all of the statutory application 
requirements, including those addressed in this notice, are discussed 
in the application package.
    With respect to the comment on civil rights compliance, all 
applicants, as mandated by the legislation, will be required to submit 
an assurance that they are complying and will continue to comply with 
all applicable civil rights requirements. We will also require 
applicants to submit an assurance regarding fiscal control and fund 
accountability.
    Changes: None.

I. Application Requirements

    Each State-Flex applicant must submit--
    (a) An assurance that it will submit its State AYP definition 
required under section 1111(b)(2) of the ESEA by the AYP deadline 
established by the Department. Each SEA seeking a grant of State-Flex 
authority from the Secretary must provide, as part of its application, 
an assurance that it will submit to the Department its State AYP 
definition by the AYP deadline established by the Department.

    Note: If an SEA selected for State-Flex authority has not yet 
had its AYP definition approved by the Department, that SEA will 
receive conditional State-Flex authority. An SEA with conditional 
State-Flex authority will not be able to exercise its State-Flex 
authority or implement any portion of its State-Flex plan (including 
the local performance agreements) unless the Department approves the 
SEA's AYP definition by March 31, 2003.

    (b) Statewide baseline academic data and LEA achievement profiles. 
Each SEA seeking to enter into a State-Flex agreement with the 
Secretary must provide, as part of its proposed agreement, statewide 
student achievement data for the most recent available school year, 
including data from assessments consistent with section 1111(b)(3) of 
the predecessor ESEA, as well as descriptions of achievement trends. To 
the extent possible, an SEA must provide data for both mathematics and 
reading or language arts, and the SEA must disaggregate the results by 
each major racial and ethnic group, by English proficiency status, by 
disability status, and by status as economically disadvantaged. (These 
are the categories, among others, by which an LEA will disaggregate 
data for determining AYP under section 1111(b)(2) of the reauthorized 
ESEA. Furthermore, these are the categories, among others, by which an 
LEA had to disaggregate data for reporting assessment results under 
section 1111(b)(3) of the predecessor ESEA.)
    In addition to submitting baseline achievement data that are 
disaggregated, to the extent possible, by the categories noted above, 
SEAs may also submit baseline achievement data that are further 
disaggregated by gender and by migrant status, and baseline data on 
other academic indicators, such as grade-to-grade retention rates, 
student dropout rates, and percentages of students completing gifted 
and talented, advanced placement, and college preparatory courses. To 
the extent possible, the baseline data on other academic indicators 
should also be disaggregated.
    The SEA must also provide a profile of student achievement trends 
in LEAs across the State, and indicate why it proposes to enter into 
agreements with particular LEAs rather than others.
    (c) The SEA's strategies for consolidating funds, making AYP, 
narrowing achievement gaps, and advancing the education priorities of 
the State. Each SEA seeking State-Flex authority must submit a five-
year plan that describes--
    (i) How the SEA would consolidate and use State-level Federal funds 
from programs included in the scope of the State-Flex authority to 
assist the SEA in making AYP, narrowing achievement gaps, and advancing 
the education priorities of the State and the LEAs within the State;
    (ii) How the strategies and goals in the LEA agreements support the 
State's strategies described in this proposal and will assist the State 
in making AYP and narrowing achievement gaps; and
    (iii) 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, and how these limitations would assist all LEAs in the State in 
making AYP and narrowing achievement gaps.
    (d) Proposed performance agreements with LEAs. Each SEA seeking 
State-Flex authority must 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 should indicate why it proposes to 
enter into agreements with these LEAs, rather than with other LEAs in 
the State.
    Each proposed LEA agreement must include:

[[Page 63393]]

    (i) Baseline academic data. For each LEA with which it proposes to 
enter into a local performance agreement, the SEA must provide, on 
behalf of that LEA, student achievement data for the most recent 
available school year, including data from assessments under section 
1111(b)(3) of the predecessor ESEA, as well as descriptions of 
achievement trends. To the extent possible, the SEA must provide data 
for that LEA for both mathematics and reading or language arts, and 
must disaggregate the results by each major racial and ethnic group, by 
English proficiency status, by disability status, and by status as 
economically disadvantaged. (These are the categories by which an LEA 
will disaggregate data for determining AYP under section 1111(b)(2) of 
the reauthorized ESEA. Furthermore, these are the categories, among 
others, by which an LEA had to disaggregate data for reporting 
assessment results under section 1111(b)(3) of the predecessor ESEA.)
    In addition to submitting baseline achievement data that are 
disaggregated, to the extent possible, by the categories noted above, 
the SEA may also submit baseline achievement data on behalf of that LEA 
that are further disaggregated by gender and by migrant status, and 
baseline data on other academic indicators, such as grade-to-grade 
retention rates, student dropout rates, and percentages of students 
completing gifted and talented, advanced placement, and college 
preparatory courses. To the extent possible, the baseline data on other 
academic indicators should also be disaggregated.
    (ii) Specific, measurable education goals. For each proposed local 
performance agreement, the SEA must submit, on behalf of that LEA, a 
five-year local performance agreement plan that contains specific, 
measurable educational goals, with annual objectives, that the LEA 
seeks to achieve by consolidating and using funds in accordance with 
the terms of its proposed agreement. The goals must relate to meeting 
AYP, raising student achievement, and narrowing achievement gaps 
relative to the baseline achievement data and other baseline data that 
are submitted.
    (iii) Strategies for meeting its goals and the general purposes of 
the consolidated programs. For each proposed local performance 
agreement, the SEA must submit, on behalf of that LEA, a five-year plan 
that contains specific strategies for reaching its stated goals. In 
particular, the plan must describe how the LEA will 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).
    As part of each five-year plan, the SEA must also describe how the 
LEA will meet the general purposes of the programs that are 
consolidated under the local performance agreement. In particular, an 
SEA must describe how each proposed plan would--
    (A) Improve teacher and principal quality and increase the number 
of highly qualified teachers in classrooms (Title II, Part A);
    (B) Improve teaching and student academic achievement through the 
use of technology in schools (Title II, Part D);
    (C) Support programs that prevent violence in and around schools 
and that prevent the illegal use of alcohol, tobacco, and drugs (Title 
IV, Part A); and
    (D) Support local education reform efforts that are consistent with 
and support statewide education reform efforts (Title V, Part A).

II. Selection Criteria

    The Secretary will use the following criteria to select the SEAs 
with which he will enter into State-Flex agreements:
    (a) Identification of the Need for the State-Flex Authority and the 
Proposed Performance Agreements. (25 points) 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 
will 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 plan to consolidate create barriers to 
implementing specific State and local education reform strategies.
    (b) Quality of SEA and LEA Strategies for Making Adequate Yearly 
Progress (AYP), Narrowing Achievement Gaps, and Enhancing Education 
Priorities. (30 points) 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 AYP, narrowing achievement 
gaps, 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 AYP, 
narrowing achievement gaps, and 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 AYP, narrowing achievement gaps, and 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 AYP and specific, measurable goals 
for improving student achievement and narrowing achievement gaps.
    (iv) The extent to which the SEA and LEAs with proposed performance 
agreements included parents, especially parents of children most at 
risk of educational failure, in the development of the State-Flex 
proposal and proposed local performance agreements.
    (v) 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.
    (vi) 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. (30 points) The Secretary 
considers the 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

[[Page 63394]]

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. (15 points) 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 plans to 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 
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. Application Process

    The Secretary will conduct two separate State-Flex competitions. A 
notice inviting applications for the initial group of State-Flex SEAs 
is published elsewhere in this issue of the Federal Register. Depending 
on the number and quality of the applications submitted, the Secretary 
intends to select up to four SEAs to receive State-Flex authority 
during the initial competition.
    In conducting this competition, the Department will review the 
quality of State-Flex plans, including the quality of the local 
performance agreements that are submitted as part of those plans. Based 
on that review, the Department will grant State-Flex authority to up to 
four SEAs. If an SEA selected for State-Flex authority has not yet had 
its AYP definition approved by the Department, that SEA will receive 
conditional State-Flex authority. An SEA with conditional State-Flex 
authority will not be able to exercise its State-Flex authority or 
implement any portion of its State-Flex plan (including the local 
performance agreements) unless the Department approves the SEA's AYP 
definition by March 31, 2003.
    The remaining State-Flex slots will be awarded during a second 
State-Flex competition to be held no earlier than Spring 2003.

Electronic Access to This Document

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


    Program Authority: Sections 6141 through 6144 of the ESEA, as 
amended by the No Child Left Behind Act of 2001 (Pub.L. 107-110).

    Dated: October 8, 2002.
Susan B. Neuman,
Assistant Secretary for Elementary and Secondary Education.
[FR Doc. 02-26003 Filed 10-10-02; 8:45 am]
BILLING CODE 4000-01-P