[Federal Register Volume 76, Number 107 (Friday, June 3, 2011)]
[Rules and Regulations]
[Pages 32073-32081]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-13589]


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DEPARTMENT OF EDUCATION

34 CFR Chapter II

[Docket ID ED-2011-OII-0001]


Investing in Innovation Fund

AGENCY: Office of Innovation and Improvement, Department of Education.

ACTION: Final revisions to priorities, requirements, and selection 
criteria.

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SUMMARY: The Assistant Deputy Secretary for Innovation and Improvement 
amends the final priorities, requirements, and selection criteria under 
the Investing in Innovation Fund (i3) program as established in the 
notice of final priorities, requirements, definitions, and selection 
criteria (2010 i3 NFP) that was published in the Federal Register on 
March 12, 2010. The 2010 i3 NFP established specific priorities, 
requirements, definitions, and selection criteria to be used in 
evaluating grant applications for the i3 program. This document 
provides the Secretary with additional flexibility in using the 
priorities and selection criteria for i3 competitions in fiscal year 
(FY) 2011 and subsequent years. In addition, the document modifies the 
requirements on the ``Limits on Grant Awards'' and ``Cost Sharing or 
Matching.'' The revisions we establish in this document respond to 
specific lessons learned from the first competition of the i3 program 
in FY 2010 and allow the Department to simplify and improve the design 
of the i3 program to better achieve its purposes and goals.

DATES: Effective Date: These revisions to priorities, requirements, and 
selection criteria are effective July 5, 2011.

FOR FURTHER INFORMATION CONTACT: Thelma Leenhouts, U.S. Department of 
Education, 400 Maryland Avenue, SW., room 4W302, Washington, DC 20202. 
Telephone: (202) 453-7122; or by e-mail: [email protected].
    If you use a telecommunications device for the deaf (TDD), call the 
Federal Relay Service, toll free, at 1-800-877-8339.

SUPPLEMENTARY INFORMATION:
    Purpose of Program: The Investing in Innovation Fund, established 
under section 14007 of the American Recovery and Reinvestment Act of 
2009 (ARRA),

[[Page 32074]]

provides funding to (1) local educational agencies (LEAs), and (2) 
nonprofit organizations in partnership with (a) one or more LEAs or (b) 
a consortium of schools. The purpose of the i3 program is to provide 
competitive grants to applicants with a record of improving student 
achievement and attainment in order to expand the implementation of, 
and investment in, innovative practices that are demonstrated to have 
an impact on improving student achievement or student growth, closing 
achievement gaps, decreasing dropout rates, increasing high school 
graduation rates, or increasing college enrollment and completion 
rates.
    Grants awarded under the i3 program (1) Allow eligible entities to 
expand and develop innovative practices that can serve as models of 
best practices, (2) allow eligible entities to carry out that work in 
partnership with the private sector and the philanthropic community, 
and (3) support eligible entities in identifying and documenting best 
practices that can be shared and taken to scale based on demonstrated 
success.
    Program Authority: American Recovery and Reinvestment Act of 2009, 
Division A, Section 14007, Public Law 111-5.
    Applicable Regulations: (a) The Education Department General 
Administrative Regulations (EDGAR) in 34 CFR parts 74, 75, 77, 79, 80, 
81, 82, 84, 85, 86, 97, 98, and 99. (b) The notice of final priorities, 
requirements, definitions, and selection criteria for this program, 
published in the Federal Register on March 12, 2010 (75 FR 12004-
12071).
    Background: The Department published a proposed notice of revisions 
to priorities, requirements, and selection criteria (2011 Notice of 
Proposed i3 Revisions) in the Federal Register on January 10, 2011 (76 
FR 1412-1415). That notice contained background information and our 
reasons for the proposed revisions.
    There is one difference between the proposed revisions to 
priorities, requirements, and selection criteria and these final 
revisions to priorities, requirements, and selection criteria.
    Public Comment: In response to our invitation in the 2011 Notice of 
Proposed i3 Revisions, 18 parties, including nonprofit organizations, 
professional associations, and private citizens, submitted comments.
    We address general comments and then discuss other substantive 
issues under the title of the item to which they pertain. Generally, we 
do not address technical and other minor changes.
    Analysis of Comments and Changes: An analysis of the comments 
received on, and any changes to, the revisions to the priorities, 
requirements, and selection criteria since publication of the 2011 
Notice of Proposed i3 Revisions follows.

General Comments

    Comment: While one commenter endorsed all of the proposed 
revisions, a few commenters expressed dissatisfaction with the overall 
structure and operation of the i3 program, stating that the proposed 
revisions were insufficient and would not improve the program.
    Discussion: The Department appreciates the feedback on how the i3 
program could be improved. However, the proposed revisions to the 
priorities, requirements, and selection criteria were not intended to 
substantially change the program but, instead, were intended to give 
the Secretary flexibility in a few discrete areas (selecting priorities 
and selection criteria and adjusting the private-sector matching 
percentages on a competition-by-competition basis) and to modify our 
requirement on grant award limits. We believe that by establishing the 
flexibility to select the most appropriate priorities, requirements, 
and selection criteria for each type of grant (Scale-up, Validation, or 
Development) under this program in any year in which the Department 
makes new i3 awards, the Secretary will be able to use the i3 program 
to meet the evolving needs of the American education system. A 
substantial revision of the structure and operation of the i3 program 
could be proposed by the Department in the future. If the Department 
decides to propose such a revision, the concerns raised and suggestions 
made in comments regarding the overall structure of the i3 program 
would be considered.
    Changes: None.

Priorities

    Comment: A few commenters stated that the Department should use all 
four absolute priorities in all future i3 competitions. One commenter 
stated that the integrity of the i3 program relies on whole-scale 
reform that can be achieved only by applying all four absolute 
priorities in all future competitions. One commenter noted that the 
priorities established under the 2010 i3 NFP are generally broad and 
would be relevant in most years of the foreseeable future, which would 
make it unnecessary to exclude a priority in a given year.
    Discussion: The Department agrees that all four absolute priorities 
are important to whole-scale education reform. However, the Department 
also recognizes that one or more of the four absolute priorities may be 
relatively more important in a given year. With the flexibility to 
select the absolute priorities for a given i3 competition, the 
Secretary can consider and select priorities that best support the 
needs of the American education system in a given year.
    Additionally, although applicants selected for funding in the FY 
2010 competition officially applied under one absolute priority, they 
tended to address several of the absolute priorities in responding to 
the selection criteria. Therefore, even if all four absolute priorities 
established in the 2010 i3 NFP are not used in a given year's 
competition, it is still likely that we would receive applications 
addressing the four reform areas.
    Changes: None.
    Comment: One commenter stated that the applications funded in the 
FY 2010 i3 competition under Absolute Priority 1: Innovations that 
Support Effective Teachers and Principals focused predominantly on 
teachers instead of principals, resulting in minimal funding of efforts 
to improve school leadership. The commenter recommended that the 
Department separate Absolute Priority 1 into two separate priorities--
one focused on teachers and one focused on principals.
    Discussion: Absolute Priority 1 focuses on practices, strategies, 
or programs that increase the number or percentages of highly effective 
teachers or principals (or reduce the number or percentages of 
ineffective teachers or principals), especially for high-need students. 
Under this priority, applicants already may determine whether their 
proposed project will focus on teachers or principals.
    The 2011 Notice of Proposed i3 Revisions did not propose any 
changes to the text of the absolute priorities established in the 2010 
i3 NFP. For this reason, we do not believe it is appropriate to make 
changes to the text of the priorities through this notice. However, 
when designing future i3 competitions, the Department may consider 
revising Absolute Priority 1 or developing a priority focused 
exclusively on school leadership. If in a future competition the 
Department decides to propose such a new priority or revise an existing 
priority, rather than select from the established priorities, the 
Department would comply with any applicable rulemaking requirements.
    Changes: None.

[[Page 32075]]

    Comment: A number of commenters recommended additional priorities 
for the Department to use in future i3 competitions, including 
priorities on promoting diversity, expanding learning time, supporting 
school start-up models, and using technology to improve instruction.
    Discussion: While the Department recognizes the importance of the 
issues and topics mentioned by the commenters, this notice is not 
intended to specify the absolute or competitive preference priorities 
that will be used in a given year's i3 competition. Rather, the purpose 
of this notice is to provide the Secretary with the flexibility to use 
any of the absolute or competitive preference priorities announced in 
the 2010 i3 NFP in any future i3 competition. When designing future i3 
competitions, the Department may consider using other priorities, 
including the priorities recommended by the commenters as well as the 
Secretary's Supplemental Priorities, published in the Federal Register 
on December 15, 2011 (75 FR 78486-78511). If in a future competition 
the Department decides to propose a new priority or revise an 
established i3 priority, rather than select from existing priorities, 
the Department would comply with any applicable rulemaking 
requirements.
    Changes: None.
    Comment: A few commenters expressed support for giving the 
Secretary the flexibility to use one or more of the established 
competitive preference priorities in a given year's competition. One 
commenter requested that the Department use this flexibility to remove 
Competitive Preference Priority 8: Innovations that Serve Schools in 
Rural LEAs because, according to the commenter, it disadvantages all 
other applicants.
    Discussion: We appreciate the commenters' support for providing the 
Secretary with the flexibility to use one or more of the established 
priorities in a given year's competition.
    With regard to the commenter's recommendation that the Department 
use the flexibility afforded under this notice to remove Competitive 
Preference Priority 8: Innovations that Serve Schools in Rural LEAs, we 
note that the flexibility provided enables the Secretary to select 
priorities on a competition-by-competition basis--that is, through the 
notice inviting applications, not this notice. In any given year, 
Competitive Preference Priority 8 may be appropriate because it 
acknowledges that solutions to educational challenges may be different 
in rural areas than in urban and suburban communities and that there is 
a need for solutions to unique rural challenges. The Department aims to 
ensure that projects serving high-needs students in diverse contexts 
can compete for i3 funding.
    Changes: None.
    Comment: A few commenters opposed giving the Secretary the 
flexibility to use one or more of the established competitive 
preference priorities in a given year's competition. One commenter 
recommended that the Department use all of the competitive preference 
priorities established in the 2010 i3 NFP in all future competitions. 
Another commenter opposed the proposed revision because it would allow 
any future Secretary to determine that early learning is not a priority 
in a given year.
    Discussion: In the FY 2010 i3 competition, the Department 
identified four competitive preference priorities aligned with the 
Department's reform goals. Although we recognize the importance of 
these priorities, we appreciate that the needs of the American 
education system may change. We believe it is important that the 
Secretary have the flexibility to consider multiple factors in 
determining whether to award competitive preference points in a given 
competition. This notice allows for that consideration by providing the 
Secretary with flexibility to use one or more of the competitive 
preference priorities established in the 2010 i3 NFP.
    Changes: None.
    Comment: Two commenters expressed support for providing the 
Secretary with the flexibility to use one or more of the established 
priorities in a given year's competition, but recommended that the 
Department provide the public with the opportunity to comment on the 
selected priorities for each year's competition.
    Discussion: Under the General Education Provisions Acts (GEPA) and 
the Administrative Procedures Act (APA), the Department, in most cases, 
is required to seek public comment on proposed rules, including 
proposed priorities, requirements, definitions, and selection criteria 
for a grant competition, and then publish a final rule along with 
responses to the comments received on the proposed rule. The Department 
already sought, received, and responded to public comment on the 
absolute and competitive preference priorities established in the 2010 
i3 NFP. As we stated in that notice, in any year in which we choose to 
use these priorities, we will announce them in a notice inviting 
applications published in the Federal Register. Following this process 
(rather than seeking additional public comment on priorities that have 
already gone through rulemaking) allows the Department to award grants 
on a more efficient and timely basis. However, if in a future 
competition the Department decides to propose a new priority or revise 
an established i3 priority, rather than select from existing 
priorities, the Department would comply with any applicable rulemaking 
requirements.
    Changes: None.

Requirement on Limits on Grant Awards

    Comment: Many commenters supported the proposed change that 
clarified that the limit of two grant awards applies to a single year's 
competition. However, two commenters recommended that the Department 
apply the requirement differently depending on the type of grant award 
(Scale-up, Validation, or Development). One commenter stated that the 
limit of two grant awards in a single year's competition should apply 
only to Validation and Development grants and that a Scale-up grantee 
should not be permitted to reapply or receive funding for the same or a 
similar project in the year immediately following the year it was 
awarded a grant. In addition, one commenter recommended that no grantee 
be allowed to receive more than two Scale-up or Validation grants in a 
single year's competition.
    Discussion: In the 2010 i3 NFP, the Department established the 
requirement on the ``Limits on Grant Awards'' to ensure that i3 funds 
are used to support the widest possible array of innovative projects. 
Generally, we agree with commenters that the limitations on grant 
awards for Scale-up and Validation grantees should be more stringent 
than the limitation on grant awards for Development grants because of 
the size of the awards and the complexity of these grants. As a result, 
we have modified the proposed requirement on the ``Limit on Grant 
Awards'' to further limit the number of Scale-up and Validation grants 
a grantee may receive to only one grant in two consecutive years. Thus, 
if a grantee receives a Scale-up or Validation grant in one year, that 
grantee would not be eligible to receive a Scale-up or Validation grant 
the next year.
    We have also modified the requirement on ``Limits on Grant Awards'' 
to clarify that the limit applies to new grant awards made in a year in 
which the Department funds down the slate from a prior year's 
competition, but not to continuation awards. The

[[Page 32076]]

purpose of this requirement is to limit the number of new awards 
received by a single grantee, whether through a competition or funding 
down the slate from a prior year's competition; the purpose is not to 
limit possible continuation awards.
    Changes: We have revised the proposed ``Limits on Grant Awards'' 
requirement to clarify that the limitation applies to new awards. 
Specifically, the revised requirement states that (a) No grantee may 
receive more than two new grant awards of any type under the i3 program 
in a single year; (b) In any two-year period, no grantee may receive 
more than one new Scale-up or Validation grant; and (c) No grantee may 
receive more than $55 million in new grant awards under the i3 program 
in a single year.
    Comment: One commenter opposed the proposed change to limit an 
applicant to two grant awards in a single year's competition. The 
commenter stated that limiting grant awards in only a single year's 
competition would allow successful applicants to pull further ahead of 
unsuccessful applicants and, thus, would increase the resource gap 
among applicants.
    Discussion: As discussed elsewhere in this notice, in addition to 
clarifying that no grantee may receive more than two grant awards in a 
single year, the Department further modified the requirement on the 
``Limits on Grant Awards'' so that no Scale-up or Validation grantee 
can receive more than one Scale-up or Validation grant in any two-year 
period. The Department appreciates the commenter's concern and believes 
that this additional change appropriately balances the program's 
purpose of supporting the implementation of and investment in 
innovative practices that are demonstrated to improve student academic 
achievement and attainment with the desire to support a wide array of 
innovative projects.
    With regard to Development grants, we note that most of the i3 
applications submitted in the FY 2010 i3 competition were applications 
for Development grants. Given the high volume of applications, and our 
expectation that the competition for Development grants will remain 
highly competitive, we are not establishing this same limitation on 
Development grantees.
    Changes: As noted elsewhere in this notice, we have revised the 
``Limits on Grant Awards'' requirement to state that no grantee may 
receive more than two new grant awards of any type under the i3 program 
in a single year; in any two-year period, no grantee may receive more 
than one new Scale-up or Validation grant; and no grantee may receive 
more than $55 million in new grant awards under the i3 program in a 
single year.

Requirement on Cost-Sharing or Matching

    Comment: Many commenters expressed support for the proposed 
revisions to the ``Cost Sharing and Matching'' requirement, which 
provides the Secretary with the flexibility to determine the required 
amount of private-sector matching funds or in-kind contributions that 
an eligible applicant must obtain for an i3 grant in a given year. One 
commenter stated that replacing a ``one-size fits all'' policy with 
this flexibility to determine the private-sector match on a more 
customized basis would broaden participation in future competitions.
    In addition, two commenters provided recommendations on how the 
Department might use the proposed flexibility to require different 
matching levels for the different types of i3 grant awards (Scale-up, 
Validation, or Development). One commenter encouraged the Department to 
consider limiting the percentage of private-sector matches required for 
Scale-up grantees because they would have already received a 
significant level of private funding. In contrast, another commenter 
recommended that the Department maintain a significant matching 
requirement for Scale-up and Validation grants, but that a lower 
matching requirement be set for Development grants.
    Discussion: The ``Cost Sharing or Matching'' requirement contained 
in the 2011 Notice of Proposed i3 Revisions states that to be eligible 
for an award, an eligible applicant must obtain private-sector matching 
funds or in-kind contributions equal to an amount that the Secretary 
will specify in the notice inviting applications for a particular i3 
competition. We appreciate the commenters' support for this revision to 
the ``Cost Sharing or Matching'' requirement.
    With respect to the comments requesting that we further modify this 
requirement to provide for different matching levels for the different 
types of grants, we do not believe that establishing fixed matching 
levels in this notice is appropriate. Furthermore, such a modification 
is not necessary because the proposed revision allows the Department to 
establish different matching levels for different types of grants when 
designing future i3 competitions.
    Changes: None.
    Comment: Two commenters expressed general support for the proposed 
changes to the ``Cost Sharing or Matching'' requirement in the 2011 
Proposed i3 Revisions, but recommended that the Department also 
establish a ceiling on the private-sector match that could be required 
under any i3 competition.
    Discussion: As noted in the 2010 i3 NFP, the Department considers 
the private-sector match to be a strong indicator of the potential for 
the scalability and sustainability of a proposed project over time. We 
decline to set a ceiling on the private-sector match because doing so 
would limit the Department's flexibility to leverage public- and 
private-sector investments in education. The flexibility offered by the 
revision will allow the Department to consider multiple factors when 
determining the required private-sector match, including the economic 
climate or the amount of time available for the highest-rated 
applicants to secure their private-sector matches.
    Changes: None.
    Comment: Two commenters suggested that the Department allow local 
educational agency (LEA) funds or other public funds to be used to meet 
the matching requirement. One commenter stated that this change would 
encourage LEAs to demonstrate their commitment to i3 projects, which 
would enhance the sustainability of those projects. Another commenter 
stated that it may be difficult for potential applicants to secure 
sizeable private-sector contributions and that undue reliance on the 
private sector could result in LEAs becoming overly beholden to private 
funders.
    Discussion: Section 14007(b)(3) of the ARRA specifically requires a 
private-sector match for this program. Thus, an eligible applicant may 
not use funding from other Federal programs or other public sources 
(including an LEA's own funds) to satisfy the statutory ``Cost Sharing 
or Matching'' requirement. However, nothing prohibits an eligible 
applicant from securing public funds in addition to the required 
private-sector matching funds or in-kind contributions. In addition, 
eligible applicants can establish the terms and conditions of their 
private-sector partnerships and diversify the sources from which they 
seek support for i3 projects in order to avoid becoming unduly 
dependent on or beholden to any particular source or type of funding.
    The Department understands the commenter's concern about the 
challenges of securing significant private-sector investments. This 
concern, however, is addressed by the

[[Page 32077]]

flexibility provided in the ``Cost Sharing or Matching'' requirement, 
which allows the Secretary to determine the required amount of private-
sector matching funds or in-kind contributions that eligible applicants 
must obtain under an i3 competition in a given year. We expect this 
determination to be based on an assessment of the capacity and 
resources available in that particular year. Moreover, an eligible 
applicant continues to have the option, under this requirement, to 
request in its application that the Secretary decrease the private-
sector match amount it must provide.
    Changes: None.
    Comment: One commenter opposed the proposed revisions to the ``Cost 
Sharing or Matching'' requirement. Specifically, the commenter opposed 
providing the Secretary with the flexibility to determine the required 
amount of private-sector matching funds or in-kind contributions that 
an eligible applicant must obtain for an i3 competition in a given 
year. The commenter stated that requiring a private-sector partnership 
would be a violation of State and local laws.
    Discussion: As noted elsewhere in this notice, an eligible 
applicant must demonstrate that it has established one or more 
partnerships with the private sector and that the private sector will 
provide matching funds. The ``Cost Sharing or Matching'' requirement is 
based on the cost-sharing and matching requirement in the authorizing 
legislation for the i3 program. Moreover, the commenter did not cite, 
and the Department is not aware of, any State or local laws that 
prohibit State and local governmental entities or private organizations 
from securing a private sector matching requirement in a Federal grant 
program.
    Changes: None.

Selection Criteria

    Comment: A few commenters supported permitting the Department, in 
establishing selection criteria used in grant competitions conducted 
under the i3 program, to choose selection criteria and factors--(i) 
From those established in the 2010 i3 NFP for the i3 program, (ii) from 
the menu of general selection criteria in the Education Department 
General Administrative Regulations (EDGAR) in 34 CFR 75.210, (iii) 
based on statutory provisions in accordance with 34 CFR 75.209, or (iv) 
from any combination of (i) through (iii) for competitions in FY 2011 
and in subsequent years. However, one commenter encouraged the 
Department to maintain the selection criteria that focus on strength of 
research and evaluation.
    Some commenters encouraged the Department to publish the specific 
selection criteria for a given competition as far in advance as 
possible. Two commenters recommended that the Department provide the 
public with an opportunity to comment on the selection criteria for 
each year's competition.
    Discussion: We decline to establish specific mandatory selection 
criteria and factors within each criterion that must be used in all i3 
competitions. As we discussed in the 2011 Notice of Proposed i3 
Revisions, the purpose of the revisions concerning the use of the i3 
selection criteria is to provide the Secretary with the flexibility to 
choose the selection criteria, and the factors included under each 
criterion, in order to better align the selection criteria used for the 
different types of grants (Scale-up, Validation, and Development) with 
the critical aims of that specific grant type and to better ensure that 
i3 projects address the most critical needs of education in a given 
year. With regard to the comment requesting that we maintain the 
selection criterion on strength of research evidence, we note that 
whether or not the Department uses this selection criterion, the 
evidence standards requirement must be met in order for an application 
to be eligible to receive an award. Specifically, an application for a 
Scale-up grant must be supported by strong evidence (as defined in the 
2010 i3 NFP), an application for a Validation grant must be supported 
by moderate evidence (as defined in the 2010 i3 NFP), and an 
application for a Development grant must be supported by a reasonable 
hypothesis.
    Regarding the recommendation that the specific selection criteria 
for each competition be submitted for public comment, the Department 
already sought, received, and responded to public comments on the 
selection criteria established in the 2010 i3 NFP, as well as the 
general selection criteria in EDGAR. However, in any year in which we 
choose to use these selection criteria, we will announce them in a 
notice inviting applications published in the Federal Register. 
Following this process (rather than seeking additional public comment 
on priorities that have already gone through rulemaking) allows the 
Department to award grants on a more efficient and timely basis. 
However, if in a future competition the Department decides to propose 
new selection criteria or revise the established selection criteria 
rather than select from among them, the Department would comply with 
all applicable rulemaking requirements.
    Changes: None.
    Comment: One commenter expressed concern that the proposed revision 
to the selection criteria would not simplify or improve the design of 
the program. The commenter further stated that the optional menu of 
EDGAR criteria suggests that the Department is unsure of the direction 
of the i3 program and suggested that applicants would prefer more 
predictability and responsiveness.
    Discussion: Section 75.200 of EDGAR establishes that, to evaluate 
the applications for new grants, the Secretary may use: (i) The 
selection criteria established in Sec.  75.209, (ii) the selection 
criteria in program-specific regulations, (iii) the selection criteria 
established under Sec.  75.210, and (iv) any combination of criteria 
from (i) through (iii) of that section. We disagree that the proposed 
revision would not simplify or improve the design of the i3 program. We 
note that it is not unusual for Department programs to use the EDGAR 
selection criteria found in Sec.  75.210 or developed under Sec.  
75.209 or to use different selection criteria in a given year. We 
believe that having greater flexibility to choose the selection 
criteria and the factors included in each criterion will allow the 
Department to simplify and better align the competition design and 
priorities for the three types of grants for a particular year's 
competition thereby resulting in projects that address the most 
pressing needs of the American educational system at that time.
    Changes: None.

Comments Not Directly Related to Proposed Changes

    We received a number of comments on issues that were unrelated to 
the specific proposals in the 2011 Notice of Proposed i3 Revisions. 
These comments focused on the overall design of the i3 program. 
Although the Department previously addressed these issues in the 2009 
i3 notice of proposed priorities, requirements, definitions, and 
selection criteria or in the 2010 i3 NFP, we want to be responsive and 
transparent in establishing rules under the i3 program and, therefore, 
are addressing these comments in this notice.
    Comment: Three commenters provided recommendations on who may apply 
for and receive an i3 grant award. One commenter encouraged the 
Department to continue to allow nonprofit organizations in partnership 
with LEAs or schools to be eligible applicants. In contrast, another 
commenter recommended that the Department allow only LEAs to be

[[Page 32078]]

eligible applicants for Development grants. Another commenter 
recommended that the Department allow for-profit organizations to be 
eligible applicants or official partners that may receive subgrants.
    Discussion: Section 14007(a)(1) of the ARRA specifies the types of 
entities that are eligible to apply for funding under this program. 
Entities eligible for i3 grants are:
    (a) An LEA
    (b) A partnership between a nonprofit organization and--
    (1) One or more LEAs; or
    (2) A consortium of schools.
    The Department has no authority to revise or expand these 
statutorily prescribed eligibility requirements.
    Changes: None.
    Comment: One commenter recommended that the Department redefine the 
role of the official partner, a term that is defined in the 2010 i3 
NFP, so that schools without a track record of success can participate 
in future i3 projects.
    Discussion: A low-performing LEA or school may participate in 
projects under this program as either an official partner (as defined 
in the 2010 i3 NFP) or other partner (as defined in the 2010 i3 NFP). 
While an LEA that applies for funds under section 14007(a)(1)(A) of the 
ARRA must meet the requirements in section 14007(b)(1) through (b)(3) 
of the ARRA, as amended by section 307 of Division D of the 
Consolidated Appropriations Act, 2010 (Pub. L. 111-117), nothing in the 
statute or the priorities, requirements, definitions, or selection 
criteria for this program prohibits such an eligible LEA from proposing 
a project that involves the LEA partnering with other partners, 
including other LEAs. Such other partners may be low-performing LEAs or 
schools. In addition, a partnership between a non-profit organization 
and one or more LEAs or a consortium of schools could include one or 
more LEAs, either as an official partner (as defined in the 2010 i3 
NFP) or as an other partner (as defined in the 2010 i3 NFP) that does 
not meet the eligibility requirements. This is because such a 
partnership is deemed to have met the eligibility requirements in 
section 14007(b)(1) through (b)(3) of the ARRA if the nonprofit 
organization in the partnership satisfies the requirements in section 
14007(c) of the ARRA.
    Changes: None.
    Comment: One commenter stated that the term ``high-need student'' 
should be deleted from the 2010 i3 NFP because the term is defined too 
broadly and does not focus solely on reducing the achievement gap among 
the subgroups of students specified in the Elementary and Secondary 
Education Act of 1965, as amended (ESEA) (e.g., economically 
disadvantaged students, students from major racial and ethnic groups, 
students with disabilities, and limited English proficient students).
    Discussion: The 2010 i3 NFP established a requirement that all 
eligible applicants implement practices, strategies, or programs for 
high-need students. The 2010 i3 NFP also defined a high-need student as 
a student at risk of educational failure or otherwise in need of 
special assistance and support. This requirement and definition of 
high-need student were not within the scope of the 2011 Notice of 
Proposed i3 Revisions. However, as noted in the 2010 i3 NFP, we believe 
that this program's focus on funding projects that serve high-need 
students is consistent with the goal of this program, which is to 
improve student academic achievement and attainment. We believe that it 
is important to improve the academic achievement and attainment of any 
student at risk of educational failure. In addition, we note that the 
definition of high-need student included in the 2010 i3 NFP is 
appropriate because it also includes students who attend high-minority 
schools, who are far below grade level, who are over-age and under-
credited, who have left school before receiving a regular high school 
diploma, who are at risk of not graduating with a regular high school 
diploma on time, who are homeless, who are in foster care, and who have 
been incarcerated. These students typically have very high needs, but 
are not included among the subgroups of students specified in the ESEA. 
Consequently, we do not believe the definition of high-need student in 
the 2010 i3 NFP is too broad.
    Changes: None.
    Comment: One commenter recommended that the Department set aside 
more funding for early-stage innovation or Development grants.
    Discussion: As noted in the 2010 i3 NFP, the Department has found 
that the structure of this program and the use of three categories of 
grants appropriately balance support for the development of promising 
yet relatively untested ideas with the growth and scaling of practices 
that have made demonstrable improvements in student achievement and 
attainment outcomes. The Department will consider multiple factors, 
including the quality of the applications received and the amount of 
funds available for new grant awards in a given year, when determining 
the number of awards made under each type of grant.
    Changes: None.
    Comment: Two commenters opposed any additional funding for the 
Department's innovative discretionary grant programs. These commenters 
argued that formula grants are a more reliable stream of funding for 
LEAs and are particularly beneficial for small and rural LEAs that 
often lack the resources to compete for discretionary funds. Both 
commenters expressed concern with the Department's lack of emphasis on 
the needs of rural schools and one commenter recommended that a 
specific set-aside be available to rural States or LEAs that 
demonstrate innovative initiatives that are expressly applicable in 
rural settings.
    Discussion: The Department understands and shares the commenters' 
concerns about the unique challenges of schools in rural LEAs. In the 
FY 2010 i3 competition, we addressed those challenges by providing up 
to two competitive preference priority points for innovations that are 
designed to focus on the unique challenges of high-needs students in 
schools in rural LEAs. The other competitive preference priorities were 
awarded only one point. As with all of the Department's competitions, 
we have learned from experience, and we understand that more needs to 
be done under the i3 program to adequately address the needs of rural 
States and LEAs. In future i3 competitions, we will increase our 
outreach efforts to rural applicants as well as our efforts to recruit 
peer reviewers who are from rural areas or who have other experience 
working in rural schools and communities. We also hope that the 
flexibility this notice establishes in terms of choosing selection 
criteria and factors will allow the Department to simplify the 
application, thus minimizing the burden on schools and LEAs with 
limited resources.
    Changes: None.
    Comment: One commenter expressed concern that the selection 
criterion on strategy and capacity to scale is an impediment to 
applicants from rural America because the criterion requires applicants 
to serve 100,000, 250,000, and 500,000 students with their proposed i3 
projects. The commenter encouraged the Department to reward scale-up 
strategies that are appropriate to the project instead of rewarding 
applicants that propose to serve an arbitrary number of students.
    Discussion: The i3 program does not include requirements for 
scaling proposed projects to a specific number of students. Under 
selection criterion E(4) of the 2010 i3 NFP, the Secretary considers 
cost estimates both-- (a) for

[[Page 32079]]

the total number of students to be served by the proposed project, 
which is determined by the eligible applicant, and (b) for the eligible 
applicant or others (including other partners) to reach the scaling 
targets for the respective grant types (100,000, 250,000, and 500,000 
students for Development and Validation grants; and 100,000, 500,000, 
and 1,000,000 students for Scale-up grants). An eligible applicant is 
free to propose the number of students it will serve under its project, 
consistent with its project goals, capacity, and resources, and is 
expected to serve that number of students by the end of the grant 
period. The scaling targets, in contrast, are theoretical and allow 
peer reviewers to assess the general cost-effectiveness of proposed 
projects, whether implemented by the eligible applicant or by any other 
entity. Grantees are not required to reach these numbers during the 
grant period or to provide a plan to do so.
    Changes: None.
    Comment: One commenter recommended that the Department provide more 
emphasis on ``social return on investment'' than unit cost and scale 
numbers.
    Discussion: The Department agrees that ``social return on 
investment'' would provide valuable information about a project's cost-
effectiveness. However, the Department recognizes the challenges of 
calculating ``social return on investment'' and believes that requiring 
such a measure would increase the burden on applicants.
    Changes: None.
    Comment: One commenter encouraged the Department to allow 
applicants to modify existing practices, strategies, or programs as 
part of their plans to scale and sustain their proposed projects.
    Discussion: As noted in the 2010 i3 NFP, evidence of the 
effectiveness of a proposed practice, strategy, or program will be 
stronger in terms of internal validity if the prior research applies to 
the same innovation the eligible applicant is proposing, rather than to 
a similar innovation or to a component of the proposed strategy or 
program. The 2010 i3 NFP does not prohibit applicants from proposing in 
their applications to modify an existing practice, strategy, or program 
as part of their plans to scale or sustain the project. However, 
modification and adaptation of existing, well-tested practices for new 
contexts may mean that strong evidence of effectiveness in the original 
context is only moderate evidence of effectiveness in the new context. 
To the extent possible, if an eligible applicant is proposing to modify 
or adapt an existing, well-tested practice, then it should provide a 
rationale for the proposed changes in its application and justify why 
those changes are desirable or necessary in order to improve the 
effectiveness of the project or to scale or sustain the project, and 
why the eligible applicant believes those changes would not invalidate 
the prior evidence of effectiveness.
    Changes: None.
    Comment: Some commenters submitted recommendations regarding the 
strong and moderate evidence requirements for the Scale-up and 
Validation grants. One commenter encouraged the Department to use the 
changes proposed in the 2011 Notice of Proposed i3 Revisions that 
provide for additional flexibility in using selection criteria in order 
to apply selection criteria that accurately reflect the state of 
research in the field of education.
    Two commenters stated that the current evidence requirements 
established in the 2010 i3 NFP focus too heavily on experimental and 
quasi-experimental studies that are typically possible only for more 
mature organizations and recommended that the Department give more 
weight to publicly reported data. One commenter expressed concern that 
the current evidence requirements are overly restrictive and discourage 
LEAs from applying on their own because it is rare for an LEA to 
produce research evidence. The commenter recommended that the 
Department remove the moderate evidence requirement for Validation 
grants and instead require proposed projects to be supported by 
evidence of effectiveness (e.g., school-based outcome data, student 
progress across performance levels, attainment of adequate yearly 
progress (AYP), gains exceeding comparable schools, subgroup progress, 
closing achievement gaps, graduation and dropout data, course 
completion, engagement indicators, teacher evaluation improvements, 
program evaluations). In contrast, another commenter encouraged the 
Department to retain the evidence definitions and requirements included 
in the 2010 i3 NFP and recommended that applications proposing 
evaluation plans that would get them to the next level of evidence 
receive additional points.
    Discussion: The 2010 i3 NFP established standards of evidence for 
each type of grant under this program. Specifically, to be eligible for 
an award, an application for a Scale-up grant must be supported by 
strong evidence (as defined in the 2010 i3 NFP), an application for a 
Validation grant must be supported by moderate evidence (as defined in 
the 2010 i3 NFP), and an application for a Development grant must be 
supported by a reasonable hypothesis. The Department believes that, 
given the magnitude of public investment and the scale on which Scale-
up and Validation grants will be implemented, the requirements for 
strong and moderate evidence are appropriate. Nothing would preclude an 
applicant from using publicly available data to meet the moderate and 
strong evidence requirements. The evidence standards requirement 
addresses the design of the study as opposed to the source of the data 
used by the study.
    Regarding the comment that the Department provide additional points 
to applications proposing evaluation plans that would meet the next 
level of evidence, all applications in the FY 2010 i3 competition were 
judged in part on the quality of the eligible applicant's plan to 
evaluate its proposed project (see Selection Criterion D (Quality of 
the Project Evaluation) of the 2010 i3 NFP). The Department believes 
that this selection criterion adequately rewards applications with 
well-designed evaluation plans.
    Changes: None.
    Comment: One commenter recommended that the Department add 
``intervention'' and ``service'' to the list of ``proposed practice, 
strategy, or program,'' in every place where the list occurs in the i3 
priorities and selection criteria. The commenter expressed concern that 
without these revisions applicants might assume that projects focused 
on interventions or services could not be funded under the i3 program.
    Discussion: The Department understands that, in the context of the 
i3 program, a ``practice, strategy, or program'' includes an 
``intervention'' or ``service.''
    Changes: None.
    Comment: Two commenters requested clarification regarding the 
Department's policies on open educational resources and intellectual 
property.
    Discussion: The Department's regulations on project materials and 
copyrightable intellectual property produced with grant funds apply to 
grants awarded under this program. Specifically, under 34 CFR 75.621, 
grantees may copyright project materials produced with Department grant 
funds. However, under 34 CFR 74.36 and 80.34, the Department retains a 
non-exclusive and irrevocable license to reproduce, publish, or 
otherwise use those project materials for government purposes.
    Changes: None.

[[Page 32080]]

    Comment: A few commenters requested that the Department provide 
additional information on the i3 application process, including the 
requirements for securing an independent evaluator and the assumptions 
under which the Department may standardize application scores. One 
commenter thanked the Department for its efforts to provide a 
transparent application process and noted areas where the process might 
be improved, including by streamlining the application and 
incorporating responses to frequently asked questions into future 
notices inviting applications for the i3 program. One commenter 
recommended the Department provide additional training as well as 
audits to ensure consistent scoring among reviewers.
    Discussion: The Department maintains an i3 Web site that addresses 
many of the issues highlighted by the comments. The Department's i3 Web 
site is available at http://www2.ed.gov/programs/innovation/index.html.
    Changes: None.

Final Priorities

    The Secretary may use any of the priorities established in the 
notice of final priorities, requirements, definitions, and selection 
criteria (2010 i3 NFP) that was published in the Federal Register on 
March 12, 2010 (75 FR 12004-12071) when establishing the priorities for 
a particular i3 competition. We may apply one or more of these 
priorities in any year in which this program is in effect.

Final Requirements

    The Secretary modifies the following requirements for the i3 
program:
    Limits on Grant Awards: (a) No grantee may receive more than two 
new grant awards of any type under the i3 program in a single year; (b) 
In any two-year period, no grantee may receive more than one new Scale-
up or Validation grant; and (c) No grantee may receive more than $55 
million in new grant awards under the i3 program in a single year.
    Cost Sharing or Matching: To be eligible for an award, an eligible 
applicant must demonstrate that it has established one or more 
partnerships with an entity or organization in the private sector, 
which may include philanthropic organizations, and that the entity or 
organization in the private sector will provide matching funds in order 
to help bring project results to scale. An eligible applicant must 
obtain matching funds or in-kind donations equal to an amount that the 
Secretary will specify in the notice inviting applications for the 
specific i3 competition. Selected eligible applicants must submit 
evidence of the full amount of private-sector matching funds following 
the peer review of applications. An award will not be made unless the 
applicant provides adequate evidence that the full amount of the 
private-sector match has been committed or the Secretary approves the 
eligible applicant's request to reduce the matching-level requirement.
    The Secretary may consider decreasing the matching requirement in 
the most exceptional circumstances, on a case-by-case basis. An 
eligible applicant that anticipates being unable to meet the full 
amount of the private-sector matching requirement must include in its 
application a request to the Secretary to reduce the matching-level 
requirement, along with a statement of the basis for the request.

Final Selection Criteria

    The Secretary may use one or more of the selection criteria 
established in the 2010 i3 NFP, any of the selection criteria in 34 CFR 
75.210, criteria based on the statutory requirements for the i3 program 
in accordance with 34 CFR 75.209, or any combination of these when 
establishing selection criteria for each particular type of grant 
(Scale-up, Validation, and Development) in an i3 competition. This 
includes the authority to reduce the number of selection criteria. In 
addition, within each criterion from these sources, the Secretary may 
further define each criterion by selecting one or more specific factors 
within a criterion or assigning factors from one criterion, from any of 
those sources, to another criterion, in any of those sources. The 
Secretary may apply one or more of these criteria in any year in which 
this program is in effect. The Secretary may also select one or more of 
these selection criteria to review pre-applications, if the Secretary 
decides to invite pre-applications in accordance with 34 CFR 75.103. In 
the notice inviting applications, the application package, or both, we 
would announce the maximum possible points assigned to each criterion.

    Note:  This notice does not solicit applications. In any year in 
which we choose to use these priorities, requirements, and selection 
criteria, we invite applications through a notice in the Federal 
Register.

    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 proposed regulatory 
action.
    The potential costs associated with this final regulatory action 
are those resulting from statutory requirements and those we have 
determined as necessary for administering the Department's 
discretionary grant programs effectively and efficiently.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of this final regulatory action, we have determined 
that the benefits of the proposed priorities and definitions justify 
the costs.
    We have determined, also, that this final regulatory action does 
not unduly interfere with State, local, and tribal governments in the 
exercise of their governmental functions.
    We summarized the costs and benefits of this regulatory action in 
the 2011 Notice of Proposed i3 Revisions, published in the Federal 
Register on January 10, 2011 (76 FR1412-1415).
    Intergovernmental Review: This program is subject to Executive 
Order 12372 and the regulations in 34 CFR part 79. One of the 
objectives of the Executive order is to foster an intergovernmental 
partnership and a strengthened federalism. The Executive order relies 
on processes developed by State and local governments for coordination 
and review of proposed Federal financial assistance.
    This document provides early notification of our specific plans and 
actions for this program.
    Accessible Format: Individuals with disabilities can obtain this 
document in an accessible format (e.g., braille, large print, 
audiotape, or computer diskette) on request to the program contact 
person listed under FOR FURTHER INFORMATION CONTACT.
    Electronic Access to This Document: The official version of this 
document is the document published in the Federal Register. Free 
Internet access to the official edition of the Federal Register and the 
Code of Federal Regulations is available via the Federal Digital System 
at: http://www.gpo.gov/fdsys. At this site you can view this document, 
as well as all other documents of this Department published in the 
Federal Register, in text or Adobe Portable Document Format (PDF). To 
use PDF you must have Adobe Acrobat Reader, which is available free at 
the site.
    You may also access documents of the Department published in the 
Federal Register by using the article search feature at: http://www.federalregister.gov. Specifically, through the advanced search 
feature at this site, you can limit your search to documents published 
by the Department.

[[Page 32081]]

    Catalog of Federal Domestic Assistance (CFDA) Numbers: 84.411A 
(Scale-up grants), 84.411B (Validation grants), and 84.411C 
(Development grants).

    Dated: May 26, 2011.
James H. Shelton, III,
Assistant Deputy Secretary for Innovation and Improvement.
[FR Doc. 2011-13589 Filed 6-2-11; 8:45 am]
BILLING CODE 4000-01-P