at risk for reading failure or who are having difficulty reading;

(III) shall be provided by eligible professional development providers; and

(IV) will assist teachers in becoming highly qualified in reading instruction in accordance with the requirements of section 1119.

(v) Collecting and summarizing data—

(I) to document the effectiveness of activities carried out under this subpart in individual schools and in the local educational agency as a whole; and

(II) to stimulate and accelerate improvement by identifying the schools that produce significant gains in reading achievement.

(vi) Reporting data for all students and categories of students described in section 1111(b)(2)(C)(v)(II).

(vii) Promoting reading and library programs that provide access to engaging reading material, including coordination with programs funded through grants received under subpart 4, where applicable.

(B) ADDITIONAL USES.-Subject to paragraph (8), an eligible local educational agency that receives a subgrant under this subsection may use the funds provided under the subgrant to carry out the following activities:

(i) Humanities-based family literacy programs (which may be referred to as "Prime Time Family Reading Time") that bond families around the acts of reading and using public libraries.

(ii) Providing training in the essential components of reading instruction to a parent or other individual who volunteers to be a student's reading tutor, to enable such parent or individual to support instructional practices that are based on scientifically based reading research and are being used by the student's teacher.

(iii) Assisting parents, through the use of materials and reading programs, strategies, and approaches (including family literacy services) that are based on scientifically based reading research, to encourage reading and support their child's reading development.

(8) LOCAL PLANNING AND ADMINISTRATION.-An eligible local educational agency that receives a subgrant under this subsection may use not more than 3.5 percent of the funds provided under the subgrant for planning and administration. (d) STATE USES OF FUNDS.

(1) IN GENERAL.-A State educational agency that receives a grant under this section may expend not more than a total of 20 percent of the grant funds to carry out the activities described in paragraphs (3), (4), and (5).

(2) PRIORITY.-A State educational agency shall give priority to carrying out the activities described in paragraphs (3), (4), and (5) for schools described in subsection (c)(6).

(3) PROFESSIONAL INSERVICE AND PRESERVICE DEVELOPMENT AND REVIEW.-A State educational agency may expend

not more than 65 percent of the amount of the funds made available under paragraph (1)

(A) to develop and implement a program of professional development for teachers, including special education teachers, of kindergarten through grade 3 that

(i) will prepare these teachers in all the essential components of reading instruction;

(ii) shall include

(I) information on instructional materials, programs, strategies, and approaches based on scientifically based reading research, including early intervention and reading remediation materials, programs, and approaches; and

(II) instruction in the use of screening, diagnostic, and classroom-based instructional reading assessments and other scientifically based procedures that effectively identify students who may be at risk for reading failure or who are having difficulty reading; and

(iii) shall be provided by eligible professional development providers;

(B) to strengthen and enhance preservice courses for students preparing, at all public institutions of higher education in the State, to teach kindergarten through grade 3 by

(i) reviewing such courses to determine whether the courses' content is consistent with the findings of the most current scientifically based reading research, including findings on the essential components of reading instruction;

(ii) following up such reviews with recommendations to ensure that such institutions offer courses that meet the highest standards; and

(iii) preparing a report on the results of such reviews, submitting the report to the reading and literacy partnership for the State established under section 1203(d), and making the report available for public review by means of the Internet; and

(C) to make recommendations on how the State licensure and certification standards in the area of reading might be improved.

(4) TECHNICAL ASSISTANCE FOR LOCAL EDUCATIONAL AGENCIES AND SCHOOLS.-A State educational agency may expend not more than 25 percent of the amount of the funds made available under paragraph (1) for one or more of the following: (A) Assisting local educational agencies in accomplishing the tasks required to design and implement a program under this subpart, including

(i) selecting and implementing a program or programs of reading instruction based on scientifically based reading research;

(ii) selecting screening, diagnostic, and classroombased instructional reading assessments; and

(iii) identifying eligible professional development providers to help prepare reading teachers to teach

students using the programs and assessments described in clauses (i) and (ii).

(B) Providing expanded opportunities to students in kindergarten through grade 3 who are served by eligible local educational agencies for receiving reading assistance from alternative providers that includes

(i) screening, diagnostic, and classroom-based instructional reading assessments; and

(ii) as need is indicated by the assessments under clause (i), instruction based on scientifically based reading research that includes the essential components of reading instruction.

(5) PLANNING, ADMINISTRATION, AND REPORTING.—

(A) EXPENDITURE OF FUNDS.-A State educational agency may expend not more than 10 percent of the amount of funds made available under paragraph (1) for the activities described in this paragraph.

(B) PLANNING AND ADMINISTRATION.-A State educational agency that receives a grant under this section may expend funds made available under subparagraph (A) for planning and administration relating to the State uses of funds authorized under this subpart, including the following:

(i) Administering the distribution of competitive subgrants to eligible local educational agencies under subsection (c) and section 1204(d).

(ii) Assessing and evaluating, on a regular basis, eligible local educational agency activities assisted under this subpart, with respect to whether they have been effective in increasing the number of children in grades 1, 2, and 3 served under this subpart who can read at or above grade level.

(C) ANNUAL REPORTING.

(i) IN GENERAL.-A State educational agency that receives a grant under this section shall expend funds made available under subparagraph (A) to provide the Secretary annually with a report on the implementation of this subpart.

(ii) INFORMATION INCLUDED.-Each report under this subparagraph shall include information on the following:

(I) Evidence that the State educational agency is fulfilling its obligations under this subpart.

(II) Specific identification of those schools and local educational agencies that report the largest gains in reading achievement.

(III) The progress the State educational agency and local educational agencies within the State are making in reducing the number of students served under this subpart in grades 1, 2, and 3 who are reading below grade level, as demonstrated by such information as teacher reports and school evaluations of mastery of the essential components of reading instruction.

(IV) Evidence on whether the State educational agency and local educational agencies within the State have significantly increased the number of students reading at grade level or above, significantly increased the percentages of students described in section 1111(b)(2)(C)(v)(II) who are reading at grade level or above, and successfully implemented this subpart.

(iii) PRIVACY PROTECTION.-Data in the report shall be reported in a manner that protects the privacy of individuals.

(iv) CONTRACT.-To the extent practicable, a State educational agency shall enter into a contract with an entity that conducts scientifically based reading research, under which contract the entity will assist the State educational agency in producing the reports required to be submitted under this subparagraph. (e) REVIEW.

(1) PROGRESS REPORT.

(A) SUBMISSION.-Not later than 60 days after the termination of the third year of the grant period, each State educational agency receiving a grant under this section. shall submit a progress report to the Secretary.

(B) INFORMATION INCLUDED.-The progress report shall include information on the progress the State educational agency and local educational agencies within the State are making in reducing the number of students served under this subpart in grades 1, 2, and 3 who are reading below grade level (as demonstrated by such information as teacher reports and school evaluations of mastery of the essential components of reading instruction). The report shall also include evidence from the State educational agency and local educational agencies within the State that the State educational agency and the local educational agencies have significantly increased the number of students reading at grade level or above, significantly increased the percentages of students described in section 1111(b)(2)(C)(v)(II) who are reading at grade level or above, and successfully implemented this subpart.

(2) PEER REVIEW.-The progress report described in paragraph (1) shall be reviewed by the peer review panel convened under section 1203(c)(2).

(3) CONSEQUENCES OF INSUFFICIENT PROGRESS.—After submission of the progress report described in paragraph (1), if the Secretary determines that the State educational agency is not making significant progress in meeting the purposes of this subpart, the Secretary may withhold from the State educational agency, in whole or in part, further payments under this section in accordance with section 455 of the General Education Provisions Act or take such other action authorized by law as the Secretary determines necessary, including providing technical assistance upon request of the State educational agency.

(f) FUNDS NOT USED FOR STATE LEVEL ACTIVITIES.-Any portion of funds described in subsection (d)(1) that a State educational

agency does not expend in accordance with subsection (d)(1) shall be expended for the purpose of making subgrants in accordance with subsection (c).

SEC. 1203. [20 U.S.C. 6363] STATE FORMULA GRANT APPLICATIONS. (a) APPLICATIONS.

(1) IN GENERAL.-A State educational agency that desires to receive a grant under section 1202 shall submit an application to the Secretary at such time and in such form as the Secretary may require. The application shall contain the information described in subsection (b).

(2) SPECIAL APPLICATION PROVISIONS.-For those State educational agencies that have received a grant under part C of title II (as such part was in effect on the day before the date of enactment of the No Child Left Behind Act of 2001), the Secretary shall establish a modified set of requirements for an application under this section that takes into account the information already submitted and approved under that program and minimizes the duplication of effort on the part of such State educational agencies.

(b) CONTENTS.-An application under this section shall contain the following:

(1) An assurance that the Governor of the State, in consultation with the State educational agency, has established a reading and literacy partnership described in subsection (d), and a description of how such partnership

(A) coordinated the development of the application; and

(B) will assist in the oversight and evaluation of the State educational agency's activities under this subpart. (2) A description, if applicable, of the State's strategy to expand, continue, or modify activities authorized under part C of title II (as such part was in effect on the day before the date of enactment of the No Child Left Behind Act of 2001).

(3) An assurance that the State educational agency, and any local educational agencies receiving a subgrant from that State educational agency under section 1202, will, if requested, participate in the external evaluation under section 1205.

(4) A State educational agency plan containing a description of the following:

(A) How the State educational agency will assist local educational agencies in identifying screening, diagnostic, and classroom-based instructional reading assessments.

(B) How the State educational agency will assist local educational agencies in identifying instructional materials, programs, strategies, and approaches, based on scientif ically based reading research, including early intervention and reading remediation materials, programs, and approaches.

(C) How the State educational agency will ensure that professional development activities related to reading instruction and provided under section 1202 are

(i) coordinated with other Federal, State, and local level funds, and used effectively to improve instructional practices for reading; and