S 92

112th CONGRESS
1st Session

S. 92

To amend the public charter school provisions of the Elementary and Secondary Education Act of 1965, and for other purposes.

IN THE SENATE OF THE UNITED STATES

January 25 (legislative day, January 5), 2011

Mr. VITTER introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions


A BILL

To amend the public charter school provisions of the Elementary and Secondary Education Act of 1965, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title- This Act may be cited as the `21st Century Charter School Act'.

    (b) Table of Contents- The table of contents of this Act is as follows:

      Sec. 1. Short title; table of contents.

      Sec. 2. Purpose.

      Sec. 3. Program authorized.

      Sec. 4. Applications.

      Sec. 5. Administration.

      Sec. 6. National activities.

      Sec. 7. Federal formula allocation.

      Sec. 8. Credit enhancement.

      Sec. 9. Definitions.

      Sec. 10. Authorization of appropriations.

      Sec. 11. Reorganization.

      Sec. 12. Conforming amendments.

SEC. 2. PURPOSE.

    Section 5201 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7221) is amended--

      (1) in paragraph (3), by striking `and';

      (2) by redesignating paragraph (4) as paragraph (6);

      (3) by inserting after paragraph (3) the following:

      `(4) encouraging the growth of high-quality charter schools through the replication and expansion of successful charter school models;

      `(5) disseminating charter school innovations throughout public education; and'; and

      (4) in paragraph (6) (as redesignated by paragraph (2))--

        (A) by striking `more nearly'; and

        (B) by striking `have typically provided' and inserting `provide'.

SEC. 3. PROGRAM AUTHORIZED.

    Section 5202 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7221a) is amended--

      (1) in subsection (a)--

        (A) by striking `State educational agencies' and inserting `eligible entities';

        (B) by striking `such agencies' and inserting `such entities'; and

        (C) by striking `this subpart' and inserting `section 5204';

      (2) in subsection (b)--

        (A) by striking `Special Rule- If' and inserting the following: `Special Rule; Reserve Account-

      `(1) SPECIAL RULE- If';

        (B) by striking `a State educational agency' and inserting `an eligible entity';

        (C) by striking `subpart' and inserting `section'; and

        (D) by adding at the end the following:

      `(2) RESERVE ACCOUNTS-

        `(A) IN GENERAL- In order to assist eligible entities to accomplish the purposes described in section 5201, an eligible entity receiving a grant under this section shall, directly or indirectly, alone or in collaboration with others, deposit the funds received under this section in a reserve account established and maintained by the eligible entity for this purpose, in accordance with State and local law.

        `(B) INVESTMENT- Funds received under this section that are deposited in the reserve account established under subparagraph (A), shall be invested, to the extent practicable, in obligations issued or guaranteed by the United States or a State, or in other similarly low risk securities, in the same manner as funds of a State are invested under chapter 65 of title 31, United States Code.

        `(C) REINVESTMENT OF EARNINGS- Any earnings on funds received under this section shall be deposited in a reserve account and used in support of public charter schools in accordance with activities authorized under this Act.';

      (3) in subsection (c)--

        (A) by striking `subpart' each place the term occurs and inserting `section';

        (B) in paragraph (1)--

          (i) by striking `State educational agencies' and inserting `eligible entities'; and

          (ii) by striking `not more than 3 years' and inserting `not more than 5 years'; and

        (C) in paragraph (2)--

          (i) by striking `State educational agencies' and inserting `eligible entities'; and

          (ii) by striking `not more than 3 years' and all that follows through the period at the end and inserting `not more than 5 years. An eligible applicant may use a portion of the grant period for planning and program design.';

      (4) by striking subsection (d) and inserting the following:

    `(d) Charter Schools With Multiple Campuses- The Secretary shall allow an eligible entity to award multiple subgrants under section 5204(f)(1) to an eligible applicant in order to support multiple campuses of a charter school.';

      (5) in subsection (e)--

        (A) by striking paragraph (1) and inserting the following:

      `(1) IN GENERAL- In awarding grants under this section for fiscal year 2011 or any succeeding fiscal year from any funds appropriated under section 5212 (other than funds reserved to carry out section 5205(c)), the Secretary shall give priority to an eligible entity to the extent that the State in which the eligible entity proposes to carry out the activities under the grant meets the criteria described in paragraph (2) and one or more of the criteria described in subparagraphs (A) through (H) of paragraph (3).';

        (B) in paragraph (3)--

          (i) in subparagraph (A)--

            (I) by striking `a State educational agency' and inserting `an eligible entity'; and

            (II) by striking `subpart' and inserting `section';

          (ii) by redesignating subparagraph (C) as subparagraph (D);

          (iii) in subparagraph (B)--

            (I) by redesignating clause (ii) as subparagraph (C), and aligning the margins of such subparagraph with the margins of subparagraph (A);

            (II) by striking `The State' and all that follows through `provides' and inserting `The State provides'; and

            (III) by striking `law; or' and inserting `law.';

          (iv) in subparagraph (C) (as redesignated by clause (iii)(I)), by striking `in the case' and all that follows through `allows' and inserting `The State allows';

          (v) in subparagraph (D) (as redesignated by clause (ii))--

            (I) by striking `school has a' and inserting `school has--

          `(i) a';

            (II) by striking `expenditures.' and inserting `expenditures; and'; and

            (III) by adding at the end the following:

          `(iii) an independent governing board that enters into a written performance contract with an authorized public chartering agency.'; and

          (vi) by adding at the end the following:

        `(E) The State--

          `(i) provides public charter schools with funding commensurate with the funding provided to other public schools, including capital or facilities aid distributed through a formula or revenue generated by bonds; and

          `(ii) ensures that the State and local educational agencies provide public charter schools with the Federal, State, and local funds to which the public charter schools are entitled in a timely manner.

        `(F) The State makes it a priority to create charter schools in local educational agencies with large numbers of schools designated as in need of improvement, corrective action, or restructuring under paragraph (1), (7), or (8) of section 1116(b).

        `(G) The State has developed a transparent authorizer accreditation, training, or review process for evaluating the effectiveness and quality of the State's authorized public chartering agencies, or each authorized public chartering agency in the State has implemented such a process, including--

          `(i) a process for reviewing and evaluating the performance of the authorized public chartering agencies in the State in authorizing or approving public charter schools, including a process that enables the authorized public chartering agencies to respond to any State concerns or deficiencies regarding such authorizing or approving; and

          `(ii) any other necessary policies to ensure effective charter school authorizing in the State that are developed in conjunction with the State's charter school community and in accordance with the principles of high quality charter school authorizing, as determined by the State in consultation with the charter school community and stakeholders.

        `(H) The State does not have a cap on charter schools that constrains growth and limits parental options in an unreasonable manner.'; and

      (6) in subsection (f)--

        (A) by striking `subpart to a State educational agency' and inserting `section to an eligible entity'; and

        (B) by striking `in the State' and inserting `in the State where the grant activities will be carried out'.

SEC. 4. APPLICATIONS.

    Section 5203 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7221b) is amended--

      (1) by striking `this subpart' each place the term appears and inserting `section 5202';

      (2) in subsection (a), by striking `State Agencies- Each State educational agency' and inserting `Eligible Entities- An eligible entity';

      (3) in subsection (b)--

        (A) in the subsection heading, by striking `a State Educational Agency' and inserting `an Eligible Entity';

        (B) in paragraph (1)--

          (i) by striking `State educational agency's' each place the term appears and inserting `eligible entity's'; and

          (ii) by striking `State educational agency' and inserting `eligible entity';

        (C) in paragraph (2)--

          (i) in the matter preceding subparagraph (A), by striking `describe how the State educational agency--' and inserting `describe the State's level of participation and involvement in the grant, including a letter from the State describing how the State--';

          (ii) in the matter preceding clause (i) of subparagraph (A), by striking `in the State' and inserting `area served by the grant';

          (iii) in subparagraph (B)--

            (I) by striking `in the State' and inserting `in the area served by the grant'; and

            (II) by striking `and' after the semicolon;

          (iv) in subparagraph (C), by striking `to each local' and all that follows through `; and' and inserting `related to such areas as budgeting, scheduling, staffing, and instruction to public schools, including public charter schools in the State;'; and

          (v) by adding at the end the following:

        `(D) will ensure the proper handling and management of Federal funds; and

        `(E) will oversee and hold accountable the authorized public chartering agencies in the State, including through a transparent authorizer accreditation, training, and review process described in subsection (e)(3)(G);';

        (D) by redesignating paragraph (3) as paragraph (4);

        (E) by inserting after paragraph (2) the following:

      `(3) describe the criteria that the eligible entity will use to award subgrants to eligible applicants to ensure high-quality charter schools;';

        (F) in paragraph (4) (as redesignated by subparagraph (D))--

          (i) in the matter preceding subparagraph (A), by striking `State educational agency' each place the term appears and inserting `eligible entity';

          (ii) in subparagraph (A)--

            (I) by redesignating clauses (ii) and (iii) as clauses (iii) and (iv), respectively; and

            (II) by inserting after clause (i) the following:

          `(ii) the charter school's plan for using academic assessments to measure and report student academic progress;';

          (iii) in subparagraph (B), by striking `managed;' and inserting the following: `managed, including--

          `(i) the charter school's financial plan and policies, including financial controls and annual audit requirements;

          `(ii) a clear description of the roles and responsibilities for the charter school's governing board, leadership, and management team, and any other organizations critical to the charter school's operations or success;

          `(iii) plans for recruiting and developing the charter school's leadership and staff;

          `(iv) the charter school's leadership and teacher employment policies, including performance evaluation plans;

          `(v) the proposed governing bylaws of the charter school; and

          `(vi) a detailed charter school start-up plan, that identifies tasks, timelines, and responsible parties;';

          (iv) in subparagraph (E), by inserting `, including documentation of the parents' and community members' support for the school' before the semicolon;

          (v) in subparagraph (F), by striking `a description of how' and inserting `an assurance from the authorized public chartering agency that';

          (vi) in subparagraph (H), by inserting `and how such funds will be used for planning, program design, and the initial implementation of a charter school' before the semicolon at the end;

          (vii) in subparagraph (I)(ii), by inserting `, including through a lottery process if the number of applicants exceeds the number of seats available at the charter school' before the semicolon;

          (viii) in subparagraphs (J) and (K), by striking `State educational agency' each place the term appears and inserting `eligible entity';

          (ix) by striking subparagraph (M);

          (x) by redesignating subparagraph (N) as subparagraph (O);

          (xi) by inserting after subparagraph (L) the following:

        `(M) demonstration of support for the charter school from the State's charter school community;

        `(N) a description of how the independent governing board of the charter school, including a board overseeing multi-campus charters, is encouraged to include individuals with a diversity of skills, including business management, financial management, real estate finance, and curriculum and instruction; and'; and

          (xii) in subparagraph (O) (as redesignated by clause (x))--

            (I) by striking `State educational agency' and inserting `eligible entity'; and

            (II) by striking the period at the end and inserting `; and'; and

        (G) by adding at the end the following:

      `(5) in the case of an eligible entity that is an authorized public chartering agency--

        `(A) describe such eligible entity's strategic goal for chartering schools and progress towards that goal; and

        `(B) provide an assurance that the eligible entity will annually file a plan with the State in which the eligible entity is located that covers such topics necessary for effective charter school oversight, including, at a minimum--

          `(i) the academic and financial performance of all operating public charter schools overseen by the eligible entity, according to the performance expectations for each public charter school set forth in the school's contract;

          `(ii) the status of the eligible entity's public charter school portfolio, identifying all public charter schools in each of the following categories: approved (but not yet open), operating, renewed, transferred, revoked, not renewed, voluntarily closed, or never opened;

          `(iii) the authorizing functions provided by the eligible entity to the public charter schools the eligible entity oversees, including the eligible entity's operating costs and expenses detailed in annual audited financial statements that conform with generally accepted accounting principles; and

          `(iv) the services purchased from the eligible entity by the public charter schools overseen by the eligible entity, including an itemized accounting of the actual costs of these services.'; and

      (4) in subsection (d)--

        (A) in paragraph (1)--

          (i) by striking `(A) through (N)' and inserting `(A) through (O)';

          (ii) by striking `and (N)' and inserting `and (O)'; and

          (iii) by striking `State educational agency' and inserting `eligible entity'; and

        (B) in paragraph (2)--

          (i) in the matter preceding subparagraph (A), by striking `State educational agency' and inserting `eligible entity'; and

          (ii) in paragraph (3)--

            (I) by striking `State educational agency' and inserting `eligible entity'; and

            (II) by striking `subgrant if' and all that follows through the period and inserting `subgrant.'.

SEC. 5. ADMINISTRATION.

    Section 5204 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7221c) is amended--

      (1) in subsection (a)--

        (A) in the subsection heading, by striking `State Educational Agencies' and inserting `Eligible Entities';

        (B) by striking `this subpart' each place the term appears and inserting `section 5202';

        (C) in the matter preceding paragraph (1), by striking `State educational agencies' and inserting `eligible entities';

        (D) in paragraph (1), by inserting `, including efforts at closing the achievement gap by meeting the annual objectives described in section 1111(b)(2)(C)(v)' before the semicolon;

        (E) in paragraph (2), by inserting `and autonomy' after `flexibility';

        (F) in paragraph (5), by inserting `and' after the semicolon;

        (G) in paragraph (6), by striking `; and' and inserting a period; and

        (H) by striking paragraph (7);

      (2) in subsection (b)--

        (A) by striking `this subpart' and inserting `section 5202'; and

        (B) by striking paragraph (7);

      (3) in subsection (c)--

        (A) by striking `this subpart' and inserting `section 5202'; and

        (B) by striking `State educational agency' and inserting `eligible entity';

      (4) in subsection (d)--

        (A) in the matter preceding paragraph (1)--

          (i) by striking `State educational agency receiving a grant under this subpart' and inserting `eligible entity receiving a grant under section 5202'; and

          (ii) by striking `this subpart in' and inserting `such section in'; and

        (B) in paragraph (2), by inserting `or use non-traditional curricula' before the period at the end;

      (5) in subsection (e)--

        (A) in the matter preceding subparagraph (1), by striking `5210(1)' and inserting `5211(1)'; and

        (B) in paragraph (1), by striking `this subpart' and inserting `section 5203';

      (6) in subsection (f)--

        (A) in paragraph (1)--

          (i) in the paragraph heading, by striking `State Educational Agencies- Each State educational agency' and inserting the following: `eligible Entities-

        `(A) IN GENERAL- Each eligible entity';

          (ii) by striking `under this subpart' and inserting `under section 5202';

          (iii) by inserting `, including a new campus or expansion of an existing charter school,' after `charter school';

          (iv) by striking `in the State' and inserting `in the area to be served by the grant'; and

          (v) by striking `except that' and all that follows through `paragraph (6).' and inserting a period;

        (B) by striking paragraph (6);

        (C) by redesignating paragraphs (2) through (5) as paragraphs (4) through (7), respectively;

        (D) by inserting after paragraph (1) the following:

      `(2) CHARTER SCHOOL DEVELOPERS- In awarding subgrants under this section, an eligible entity shall ensure that--

        `(A) most of the subgrant funds are awarded to eligible applicants described in section 5211(3)(A); and

        `(B) subgrants are awarded, to the extent practicable, to a mix of such eligible applicants.

      `(3) AMOUNT OF SUBGRANTS- An eligible entity may vary the amount of a subgrant under this section based upon a variety of factors, including--

        `(A) whether the eligible applicant is a start-up charter school or a conversion charter school (as defined by the eligible entity); and

        `(B) whether the eligible applicant is creating a charter school under a new charter or an existing charter.';

        (E) in paragraph (4) (as redesignated by subparagraph (C))--

          (i) by striking `a State educational agency' and inserting `an eligible entity'; and

          (ii) by striking `, or to disseminate information about the charter school and successful practices in the charter school,';

        (F) in paragraph (5) (as redesignated by subparagraph (C))--

          (i) in the matter preceding subparagraph (A), by striking `this subpart' and inserting `section 5202';

          (ii) in subparagraph (A)(ii), by striking `and' after the semicolon;

          (iii) in subparagraph (B)(iv), by striking the period and inserting `; and'; and

          (iv) by adding at the end the following:

        `(C) providing assistance, through activities described in section 5205(b)(4), in implementing charter school innovations and disseminating information regarding such innovations.';

        (G) in paragraph (6)(A) (as redesignated by subparagraph (C))--

          (i) in the subparagraph heading, by striking `State Educational Agency' and inserting `Eligible Entity';

          (ii) by striking `State educational agency' and inserting `eligible entity';

          (iii) by striking `pursuant to this subpart' and inserting `pursuant to section 5202';

          (iv) by striking `this subpart' and inserting `such section'; and

          (v) by adding at the end the following: `An eligible entity may use a portion of the reserved funds to improve the charter school authorizing policies and practices of the area served by the eligible entity, which may include the approval, monitoring, and renewal of charter schools.'; and

        (H) in paragraph (7) (as redesignated by subparagraph (C))--

          (i) by striking `State educational agency' and inserting `eligible entity';

          (ii) by striking `this subpart' and inserting `section 5202';

          (iii) by striking `10' and inserting `20'; and

          (iv) by striking `the State educational agency' and all that follows through `sources.' and inserting `the eligible entity, for expenses necessary to plan, begin operations, and subsequently operate a public charter school.'; and

      (7) by striking subsection (g).

SEC. 6. NATIONAL ACTIVITIES.

    Section 5205 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7221d) is amended--

      (1) in subsection (a)--

        (A) in paragraph (3)(E), by striking `schools' each place the term occurs and inserting `schools, authorized public chartering agencies, and charter support organizations'; and

        (B) by adding at the end the following:

      `(6) To provide technical assistance to charter schools on how to meet the requirements of part B of the Individuals with Disabilities Education Act.';

      (2) by redesignating subsections (b) and (c) as subsections (c) and (d), respectively;

      (3) by inserting after subsection (a) the following:

    `(b) National Dissemination-

      `(1) IN GENERAL- To carry out this subsection, the Secretary shall reserve for each fiscal year not more than $8,000,000 of the amount appropriated to carry out this subpart.

      `(2) ELIGIBILITY- In order to receive a grant under this subsection, an entity shall--

        `(A) be--

          `(i) a charter school;

          `(ii) an eligible applicant;

          `(iii) an eligible entity; or

          `(iv) a consortium of entities described in clauses (i), (ii), and (iii); and

        `(B) submit an application to the Secretary at such time, in such manner, and containing such information as the Secretary may require.

      `(3) CRITERIA- The Secretary shall award grants under this subsection on the basis of--

        `(A) the quality of the application;

        `(B) the capacity of the applicant to execute the application; and

        `(C) the scale of the expected impact of the application.

      `(4) ACTIVITIES- A recipient of a grant under this subsection shall use funds received under the grant to assist other schools in the recipient's State and in other States in adopting charter school innovations, or to disseminate information about charter school innovations, through activities such as--

        `(A) assisting other entities with the planning and start-up of one or more new public schools, including charter schools;

        `(B) developing partnerships designed to improve student academic achievement;

        `(C) developing curriculum materials, assessments, and other materials that promote increased student achievement and are based on successful practices at charter schools;

        `(D) conducting evaluations and developing materials that document successful practices at charter schools and that are designed to improve student performance in other schools; and

        `(E) training, regarding the innovative practices developed at the original site, for personnel of--

          `(i) local educational agencies that are adopting innovations or successful practices used at charter schools;

          `(ii) authorized public chartering agencies; or

          `(iii) charter support organizations.'; and

      (4) in subsection (c) (as redesignated by paragraph (2))--

        (A) in paragraph (2)(A), by striking `paragraphs (2) and (3)(B) of section 5211(b)' and inserting `section 5212';

        (B) by redesignating paragraphs (5) and (6) as paragraphs (6) and (7), respectively;

        (C) by inserting after paragraph (4) the following:

      `(5) SPECIAL RULE- A State that provides public charter schools with access to existing adequate facility space may apply for a grant under this subsection, if the State agrees that the State will, upon receipt of the grant, develop a capital aid program consistent with the program described in this subsection during the grant period.'; and

        (D) in paragraph (7) (as redesignated by subparagraph (B)), by striking `(A), (B), and (C)' and inserting `(A) through (F)'.

SEC. 7. FEDERAL FORMULA ALLOCATION.

    Section 5206 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7221e) is amended--

      (1) by striking the section heading and inserting the following:

`SEC. 5206. FEDERAL FORMULA ALLOCATION.';

      and

      (2) in subsection (a), by inserting `or is in operation' after `actually opens'.

SEC. 8. CREDIT ENHANCEMENT.

    Subpart 1 of part B of title V of the Elementary and Secondary Education Act of 1965 (as amended by this Act) (20 U.S.C. 7221 et seq.) is further amended--

      (1) by redesignating sections 5207 through 5211 as sections 5208 through 5212, respectively; and

      (2) by inserting after section 5206 the following:

`SEC. 5207. CREDIT ENHANCEMENT FOR CHARTER SCHOOL FACILITIES PROGRAMS.

    `(a) Purpose- The purpose of this section is to provide grants to eligible entities to permit the eligible entities to demonstrate innovative credit enhancement initiatives that assist charter schools to address the cost of acquiring, constructing, and renovating facilities.

    `(b) Grants to Eligible Entities- After reserving any funds as necessary for grant evaluation or administration consistent with any applicable provisions (including section 9601(a) of this Act and section 402(b)(1) of the Department of Education Organization Act), the Secretary shall use the amounts available to carry out this section to award, on a competitive basis, not less than 3 grants to eligible entities that have applications approved under this section to demonstrate innovative methods of assisting charter schools to address the cost of acquiring, constructing, and renovating facilities by enhancing the availability of loans or bond financing for charter schools.

    `(c) Grantee Selection-

      `(1) EVALUATION OF APPLICATION- The Secretary shall evaluate each application submitted under subsection (e), and shall determine whether the application is sufficient to merit approval.

      `(2) DISTRIBUTION OF GRANTS-

        `(A) IN GENERAL- Subject to subparagraph (B) and paragraph (3), the Secretary shall award--

          `(i) not less than 1 grant to an eligible entity described in section 5211(6)(A);

          `(ii) not less than 1 grant to an eligible entity described in section 5211(6)(B); and

          `(iii) not less than 1 grant to an eligible entity described in section 5211(6)(C).

        `(B) EXCEPTION- Subparagraph (A) shall only apply if applications are submitted that permit the Secretary to do so without approving an application that is not of sufficient quality to merit approval.

      `(3) SPECIAL RULE- In the event the Secretary determines that the funds made available under this section are insufficient to permit the Secretary to award not less than 3 grants in accordance with this section, the 3-grant minimum under paragraph (2) shall not apply, and the Secretary may determine the appropriate number of grants to be awarded in accordance with subsection (d).

    `(d) Grant Characteristics- Grants under this section shall be of a sufficient size, scope, and quality so as to ensure an effective demonstration of an innovative means of enhancing credit for the financing of charter school acquisition, construction, or renovation.

    `(e) Applications-

      `(1) IN GENERAL- To receive a grant under this section, an eligible entity shall submit to the Secretary an application in such form as the Secretary may reasonably require.

      `(2) CONTENTS- An application submitted under paragraph (1) shall contain--

        `(A) a statement identifying the activities proposed to be undertaken with funds received under this section, including how the eligible entity will determine which charter schools will receive assistance, and how much and what types of assistance charter schools will receive;

        `(B) a description of the involvement of charter schools in the application's development and the design of the proposed activities;

        `(C) a description of the eligible entity's expertise in capital market financing;

        `(D) a description of how the proposed activities will leverage the maximum amount of private-sector financing capital relative to the amount of Federal and State funds used and otherwise enhance credit available to charter schools, including how the applicant will offer a combination of rates and terms more favorable than rates and terms that a charter school could receive without assistance under this section;

        `(E) a description of how the eligible entity possesses sufficient expertise in education to evaluate the likelihood of success of a charter school program for which facilities financing is sought;

        `(F) in the case of an application submitted by an eligible entity that is a State governmental entity, a description of the actions that the entity has taken, or will take, to ensure that charter schools within the State receive the funding needed to have adequate facilities; and

        `(G) such other information as the Secretary may reasonably require.

    `(f) Charter School Objectives- An eligible entity receiving a grant under this section shall use the funds deposited in the reserve account established under subsection (g)(1) to assist 1 or more charter schools to access private sector capital in order to accomplish one or more of the following objectives:

      `(1) The acquisition (by purchase, lease, donation, or otherwise) of an interest (including an interest held by a third party for the benefit of a charter school) in improved or unimproved real property that is necessary to commence or continue the operation of a charter school.

      `(2) The construction (including predevelopment costs in a case where construction or renovation cannot proceed as a result of predevelopment findings) of new facilities, or the renovation, repair, or alteration of existing facilities, necessary to commence or continue the operation of a charter school.

    `(g) Reserve Account-

      `(1) USE OF FUNDS- To assist charter schools to accomplish the objectives described in subsection (f), an eligible entity receiving a grant under this section shall, in accordance with State and local law, directly or indirectly, alone or in collaboration with others, deposit the funds received under this section (other than funds used for administrative costs in accordance with subsection (h)) in a reserve account established and maintained by the eligible entity for this purpose. Amounts deposited in such account shall be used by the eligible entity for one or more of the following purposes:

        `(A) Guaranteeing, insuring, and reinsuring bonds, notes, evidences of debt, loans, and interests therein, the proceeds of which are used for an objective described in subsection (f).

        `(B) Guaranteeing and insuring leases of personal and real property for an objective described in subsection (f).

        `(C) Facilitating financing by identifying potential lending sources, encouraging private lending, and other similar activities that directly promote lending to, or for the benefit of, charter schools.

        `(D) Facilitating the issuance of bonds by charter schools, or by other public entities for the benefit of charter schools, by providing technical, administrative, and other appropriate assistance (including the recruitment of bond counsel, underwriters, and potential investors and the consolidation of multiple charter school projects within a single bond issue).

        `(E) Making limited loans to charter schools, under such terms and conditions as the Secretary may prescribe.

      `(2) INVESTMENT- Funds received under this section and deposited in the reserve account established under paragraph (1) shall be invested in obligations issued or guaranteed by the United States or a State, or in other similarly low-risk securities.

      `(3) REINVESTMENT OF EARNINGS- Any earnings on funds received under this section shall be deposited in the reserve account established under paragraph (1) and used in accordance with such paragraph.

    `(h) Limitation on Administrative Costs- An eligible entity may use not more than 2 percent of the funds received for any fiscal year under this section for the administrative costs of carrying out its responsibilities under this section.

    `(i) Audits and Reports-

      `(1) FINANCIAL RECORD MAINTENANCE AND AUDIT- The financial records of each eligible entity receiving a grant under this section shall be maintained in accordance with generally accepted accounting principles and shall be subject to an annual audit by an independent public accountant.

      `(2) REPORTS-

        `(A) GRANTEE ANNUAL REPORTS- Each eligible entity receiving a grant under this section annually shall submit to the Secretary a report of the eligible entity's operations and activities under this section.

        `(B) CONTENTS- Each annual report submitted under subparagraph (A) shall include--

          `(i) a copy of the most recent financial statements, and any accompanying opinion on such statements, prepared by the independent public accountant reviewing the financial records of the eligible entity;

          `(ii) a copy of any report made on an audit of the financial records of the eligible entity that was conducted under paragraph (1) during the reporting period;

          `(iii) an evaluation by the eligible entity of the effectiveness of its use of the Federal funds provided under this section in leveraging private funds;

          `(iv) a listing and description of the charter schools served during the reporting period;

          `(v) a description of the activities carried out by the eligible entity to assist charter schools in meeting the objectives set forth in subsection (f); and

          `(vi) a description of the characteristics of lenders and other financial institutions participating in the activities undertaken by the eligible entity under this section during the reporting period.

        `(C) SECRETARIAL REPORT- The Secretary shall review the reports submitted under paragraph (2)(A) and shall provide a comprehensive annual report to Congress on the activities conducted under this section.

    `(j) No Full Faith and Credit for Grantee Obligations- No financial obligation of an eligible entity entered into pursuant to this section (such as an obligation under a guarantee, bond, note, evidence of debt, or loan) shall be an obligation of, or guaranteed in any respect by, the United States. The full faith and credit of the United States is not pledged to the payment of funds which may be required to be paid under any obligation made by an eligible entity pursuant to any provision of this section.

    `(k) Recovery of Funds-

      `(1) IN GENERAL- The Secretary, in accordance with chapter 37 of title 31, United States Code, shall collect--

        `(A) all of the funds in a reserve account established by an eligible entity under subsection (g)(1) if the Secretary determines, not earlier than 2 years after the date on which the eligible entity first received funds under this section, that the eligible entity has failed to make substantial progress in carrying out the purposes described in this section; or

        `(B) all or a portion of the funds in a reserve account established by an eligible entity under subsection (g)(1) if the Secretary determines that the eligible entity has permanently ceased to use all or a portion of the funds in such account to accomplish any purpose described in this section.

      `(2) EXERCISE OF AUTHORITY- The Secretary shall not exercise the authority provided in paragraph (1) to collect from any eligible entity any funds that are being properly used to achieve one or more of the objectives described in subsection (f).

      `(3) PROCEDURES- The provisions of sections 451, 452, and 458 of the General Education Provisions Act shall apply to the recovery of funds under paragraph (1).

      `(4) CONSTRUCTION- Nothing in this section shall be construed to impair or affect the authority of the Secretary to recover funds under part D of the General Education Provisions Act.

    `(l) Reservation- To carry out this section, the Secretary shall reserve for each fiscal year not less than 5 percent and not more than 15 percent of the amount appropriated under section 5212.'.

SEC. 9. DEFINITIONS.

    Section 5211 of the Elementary and Secondary Education Act of 1965 (as redesignated by section 8(1)) (20 U.S.C. 7221i) is amended--

      (1) in paragraph (1)--

        (A) by striking subparagraph (L);

        (B) by redesignating subparagraphs (D) through (K) as subparagraphs (E) through (L), respectively;

        (C) by inserting after subparagraph (B) the following:

        `(C) has an independent governing board that enters into a performance-based agreement that encompasses one or more campuses with an authorized public chartering agency in the State, which agreement shall include a description of--

          `(i) how student performance will be measured in each charter school pursuant to the State assessments that are required of other schools and any other assessments or evaluations mutually agreeable to the authorized public chartering agency and the charter school; and

          `(ii) criteria for renewal or revocation of the charter;';

        (D) in subparagraph (E) (as redesignated by subparagraph (B)), by striking `elementary or secondary education, or both' and inserting `prekindergarten, elementary, or secondary education, or adult education if permitted by State charter law, or any combination of such types of education';

        (E) in subparagraph (I) (as redesignated by subparagraph (B))--

          (i) by striking `school to' and inserting `school--

          `(i) to';

          (ii) by striking `children, and that' and inserting `children;

          `(ii) that'; and

          (iii) by striking `accommodated;' and inserting `accommodated; and

          `(iii) that does not give admissions preference to any student on the basis of prior academic achievement;';

        (F) in subparagraph (K) (as redesignated by subparagraph (B)), by inserting `and' after the semicolon; and

        (G) in subparagraph (L) (as redesignated by subparagraph (B)), by striking `; and' and inserting a period;

      (2) by striking paragraph (3) and inserting the following:

      `(3) ELIGIBLE APPLICANT- The term `eligible applicant' means--

        `(A) a developer that has applied to an authorized public chartering agency to operate a charter school and provided adequate and timely notice to that authority under section 5203(d)(3); or

        `(B) a charter support organization.';

      (3) by adding at the end the following:

      `(5) CHARTER SUPPORT ORGANIZATION- The term `charter support organization' means a public or private nonprofit organization that provides assistance to a developer of a charter school during the planning, program design, and initial implementation of a charter school.

      `(6) ELIGIBLE ENTITY- The term `eligible entity' means--

        `(A) a public entity, such as a State educational agency or other State or local governmental entity;

        `(B) a private nonprofit entity; or

        `(C) a consortium of entities described in subparagraph (A) or (B).'; and

      (4) by redesignating paragraphs (1) through (6) as paragraphs (2), (4), (5), (1), (3), and (6), respectively.

SEC. 10. AUTHORIZATION OF APPROPRIATIONS.

    Section 5212 of the Elementary and Secondary Education Act of 1965 (as redesignated by section 8(1)) (20 U.S.C. 7221j) is amended to read as follows:

`SEC. 5212. AUTHORIZATION OF APPROPRIATIONS.

    `(a) In General- There are authorized to be appropriated to carry out this subpart $650,000,000 for fiscal year 2011 and such sums as may be necessary for each of the 5 succeeding fiscal years.

    `(b) Allocation- In allocating funds under this subpart for any fiscal year, the Secretary shall consider the relative need between the programs under section 5202, section 5205(c), and section 5211 and the quality of the applications submitted under such sections.'.

SEC. 11. REORGANIZATION.

    Part B of title V of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7221 et seq.) is amended--

      (1) by striking subpart 2; and

      (2) by redesignating subpart 3 as subpart 2.

SEC. 12. CONFORMING AMENDMENTS.

    (a) Conforming Amendment- Section 5247(1) of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7225f(1)) is amended by striking `5210' and inserting `5211'.

    (b) Table of Contents- The table of contents in section 2 of the Elementary and Secondary Education Act of 1965 is amended--

      (1) by striking the items relating to sections 5206 through 5211 and inserting the following:

      `Sec. 5206. Federal formula allocation.

      `Sec. 5207. Credit enhancement for charter school facilities programs.

      `Sec. 5208. Solicitation of input from charter school operators.

      `Sec. 5209. Records transfer.

      `Sec. 5210. Paperwork reduction.

      `Sec. 5211. Definitions.

      `Sec. 5212. Authorization of appropriations.';

      (2) by striking the item relating to subpart 2 of part B of title V;

      (3) by striking the items relating to sections 5221 through 5231; and

      (4) by striking the item relating to subpart 3 of part B of title V and inserting the following:

`subpart 2--voluntary public school choice programs'.

END