SEC. 1204. TARGETED ASSISTANCE GRANTS.
(a) ELIGIBILITY CRITERIA FOR AWARDING TARGETED ASSISTANCE GRANTS TO STATES- Beginning with fiscal year 2004, from funds appropriated under section 1202(b)(1)(E), the Secretary shall make grants, on a competitive basis, to those State educational agencies that —
(1) for each of 2 consecutive years, demonstrate that an increasing percentage of third graders in each of the groups described in section 1111(b)(2)(C)(v)(II) in the schools served by the local educational agencies receiving funds under section 1202 are reaching the proficient level in reading; and
(2) for each of the same such consecutive 2 years, demonstrate that schools receiving funds under section 1202 are improving the reading skills of students in grades 1, 2, and 3 based on screening, diagnostic, and classroom-based instructional reading assessments.
(b) CONTINUATION OF PERFORMANCE AWARDS- For any State educational agency that receives a competitive grant under this section, the Secretary shall make an award for each of the succeeding years that the State educational agency demonstrates it is continuing to meet the criteria described in subsection (a).
(c) DISTRIBUTION OF TARGETED ASSISTANCE GRANTS-
(1) IN GENERAL- The Secretary shall make a grant to each State educational agency with an application approved under this section in an amount that bears the same relation to the amount made available to carry out this section for a fiscal year as the number of children counted under section 1124(c) for the State bears to the number of such children so counted for all States with applications approved for that year.
(2) PEER REVIEW- The peer review panel convened under section 1203(c)(2) shall review the applications submitted under this subsection. The panel shall recommend such applications to the Secretary for funding or for disapproval.
(3) APPLICATION CONTENTS- A State educational agency that desires to receive a grant under this section shall submit an application to the Secretary at such time, in such manner, and accompanied by such information as the Secretary may require. Each such application shall include the following:
(A) Evidence that the State educational agency has carried out its obligations under section 1203.
(B) Evidence that the State educational agency has met the criteria described in subsection (a).
(C) The amount of funds requested by the State educational agency and a description of the criteria the State educational agency intends to use in distributing subgrants to eligible local educational agencies under this section to continue or expand activities under subsection (d)(5).
(D) Evidence that the State educational agency has increased significantly the percentage of students reading at grade level or above.
(E) Any additional evidence that demonstrates success in the implementation of this section.
(d) SUBGRANTS TO ELIGIBLE LOCAL EDUCATIONAL AGENCIES-
(1) IN GENERAL- The Secretary may make a grant to a State educational agency under this section only if the State educational agency agrees to expend 100 percent of the amount of the funds provided under the grant for the purpose of making competitive subgrants in accordance with this subsection to eligible local educational agencies.
(2) NOTICE- A State educational agency receiving a grant under this section shall provide notice to all local educational agencies in the State of the availability of competitive subgrants under this subsection and of the requirements for applying for the subgrants.
(3) APPLICATION- To be eligible to receive a subgrant under this subsection, an eligible local educational agency shall submit an application to the State educational agency at such time, in such manner, and containing such information as the State educational agency may reasonably require.
(A) IN GENERAL- A State educational agency shall distribute subgrants under this section through a competitive process based on relative need of eligible local educational agencies and the evidence described in this paragraph.
(B) EVIDENCE USED IN ALL YEARS- For all fiscal years, a State educational agency shall distribute subgrants under this section based on evidence that an eligible local educational agency —
(i) satisfies the requirements of section 1202(c)(4);
(ii) will carry out its obligations under this subpart;
(iii) will work with other local educational agencies in the State that have not received a subgrant under this subsection to assist such nonreceiving agencies in increasing the reading achievement of students; and
(iv) is meeting the criteria described in subsection (a).
(5) LOCAL USES OF FUNDS- An eligible local educational agency that receives a subgrant under this subsection —
(A) shall use the funds provided under the subgrant to carry out the activities described in section 1202(c)(7)(A); and
(B) may use such funds to carry out the activities described in section 1202(c)(7)(B).