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SEC. 1003. SCHOOL IMPROVEMENT.

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(a) STATE RESERVATIONS- Each State shall reserve 2 percent of the amount the State receives under subpart 2 of part A for fiscal years 2002 and 2003, and 4 percent of the amount received under such subpart for fiscal years 2004 through 2007, to carry out subsection (b) and to carry out the States responsibilities under sections 1116 and 1117, including carrying out the State educational agencys statewide system of technical assistance and support for local educational agencies.
(b) USES- Of the amount reserved under subsection (a) for any fiscal year, the State educational agency —

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(1) shall allocate not less than 95 percent of that amount directly to local educational agencies for schools identified for school improvement, corrective action, and restructuring, for activities under section 1116(b); or

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(2) may, with the approval of the local educational agency, directly provide for these activities or arrange for their provision through other entities such as school support teams or educational service agencies.

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(c) PRIORITY- The State educational agency, in allocating funds to local educational agencies under this section, shall give priority to local educational agencies that —

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(1) serve the lowest-achieving schools;

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(2) demonstrate the greatest need for such funds; and

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(3) demonstrate the strongest commitment to ensuring that such funds are used to enable the lowest-achieving schools to meet the progress goals in school improvement plans under section 1116 (b)(3)(A)(v).

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(d) UNUSED FUNDS- If, after consultation with local educational agencies in the State, the State educational agency determines that the amount of funds reserved to carry out subsection (b) is greater than the amount needed to provide the assistance described in that subsection, the State educational agency shall allocate the excess amount to local educational agencies in accordance with —

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(1) the relative allocations the State educational agency made to those agencies for that fiscal year under subpart 2 of part A; or

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(2) section 1126(c).

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(e) SPECIAL RULE- Notwithstanding any other provision of this section, the amount of funds reserved by the State educational agency under subsection (a) in any fiscal year shall not decrease the amount of funds each local educational agency receives under subpart 2 below the amount received by such local educational agency under such subpart for the preceding fiscal year.
(f) REPORTING- The State educational agency shall make publicly available a list of those schools that have received funds or services pursuant to subsection (b) and the percentage of students from each school from families with incomes below the poverty line.
(g) ASSISTANCE FOR LOCAL SCHOOL IMPROVEMENT-

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(1) PROGRAM AUTHORIZED- The Secretary shall award grants to States to enable the States to provide subgrants to local educational agencies for the purpose of providing assistance for school improvement consistent with section 1116.

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(2) STATE ALLOTMENTS- Such grants shall be allotted among States, the Bureau of Indian Affairs, and the outlying areas, in proportion to the funds received by the States, the Bureau of Indian Affairs, and the outlying areas, respectively, for the fiscal year under parts A, C, and D of this title. The Secretary shall expeditiously allot a portion of such funds to States for the purpose of assisting local educational agencies and schools that were in school improvement status on the date preceding the date of enactment of the No Child Left Behind Act of 2001.

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(3) REALLOCATIONS- If a State does not receive funds under this subsection, the Secretary shall reallocate such funds to other States in the same proportion funds are allocated under paragraph (2).

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(4) STATE APPLICATIONS- Each State educational agency that desires to receive funds under this subsection shall submit an application to the Secretary at such time, and containing such information, as the Secretary shall reasonably require, except that such requirement shall be waived if a State educational agency submitted such information as part of its State plan under this part. Each State application shall describe how the State educational agency will allocate such funds in order to assist the State educational agency and local educational agencies in complying with school improvement, corrective action, and restructuring requirements of section 1116.

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(5) LOCAL EDUCATIONAL AGENCY GRANTS- A grant to a local educational agency under this subsection shall be —

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(A) of sufficient size and scope to support the activities required under sections 1116 and 1117, but not less than $50,000 and not more than $500,000 for each participating school;

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(B) integrated with other funds awarded by the State under this Act; and

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(C) renewable for two additional 1-year periods if schools are meeting the goals in their school improvement plans developed under section 1116.

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(6) PRIORITY- The State, in awarding such grants, shall give priority to local educational agencies with the lowest-achieving schools that demonstrate —

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(A) the greatest need for such funds; and

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(B) the strongest commitment to ensuring that such funds are used to provide adequate resources to enable the lowest-achieving schools to meet the goals under school and local educational agency improvement, corrective action, and restructuring plans under section 1116.

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(7) ALLOCATION- A State educational agency that receives a grant under this subsection shall allocate at least 95 percent of the grant funds directly to local educational agencies for schools identified for school improvement, corrective action, or restructuring to carry out activities under section 1116(b), or may, with the approval of the local educational agency, directly provide for these activities or arrange for their provision through other entities such as school support teams or educational service agencies.

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(8) ADMINISTRATIVE COSTS- A State educational agency that receives a grant award under this subsection may reserve not more than 5 percent of such grant funds for administration, evaluation, and technical assistance expenses.

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(9) LOCAL AWARDS- Each local educational agency that applies for assistance under this subsection shall describe how it will provide the lowest-achieving schools the resources necessary to meet goals under school and local educational agency improvement, corrective action, and restructuring plans under section 1116.