(ii) based on scientifically based reading research. (D) How the activities assisted under section 1202 will address the needs of teachers and other instructional staff in implementing the essential components of reading instruction.

(E) How subgrants made by the State educational agency under section 1202 will meet the requirements of section 1202, including how the State educational agency will ensure that eligible local educational agencies receiving subgrants under section 1202 will use practices based on scientifically based reading research.

(F) How the State educational agency will, to the extent practicable, make grants to eligible local educational agencies in both rural and urban areas.

(G) How the State educational agency will build on, and promote coordination among literacy programs in the State (including federally funded programs such as programs under the Adult Education and Family Literacy Act, the Individuals with Disabilities Education Act, and subpart 2), to increase the effectiveness of the programs in improving reading for adults and children and to avoid duplication of the efforts of the program.

(H) How the State educational agency will assess and evaluate, on a regular basis, eligible local educational agency activities assisted under section 1202, with respect to whether the activities have been effective in achieving the purposes of section 1202.

(I) Any other information that the Secretary may reasonably require.

(c) APPROVAL OF APPLICATIONS.

(1) IN GENERAL.-The Secretary shall approve an application of a State educational agency under this section only if such application meets the requirements of this section.

(2) PEER REVIEW.—

(A) IN GENERAL.-The Secretary, in consultation with the National Institute for Literacy, shall convene a panel to evaluate applications under this section. At a minimum, the panel shall include

(i) three individuals selected by the Secretary;

(ii) three individuals selected by the National Institute for Literacy;

(iii) three individuals selected by the National Research Council of the National Academy of Sciences; and

(iv) three individuals selected by the National Institute of Child Health and Human Development. (B) EXPERTS.-The panel shall include

(i) experts who are competent, by virtue of their training, expertise, or experience, to evaluate applications under this section;

(ii) experts who provide professional development to individuals who teach reading to children and adults based on scientifically based reading research;

(iii) experts who provide professional development to other instructional staff based on scientifically based reading research; and

(iv) an individual who has expertise in screening, diagnostic, and classroom-based instructional reading assessments.

(C) RECOMMENDATIONS.-The panel shall recommend grant applications from State educational agencies under this section to the Secretary for funding or for disapproval. (d) READING AND LITERACY PARTNERSHIPS.

(1) ÎN GENERAL.-For a State educational agency to receive a grant under section 1202, the Governor of the State, in consultation with the State educational agency, shall establish a reading and literacy partnership.

(2) REQUIRED PARTICIPANTS.-The reading and literacy partnership shall include the following participants: (A) The Governor of the State.

(B) The chief State school officer.

(C) The chairman and the ranking member of each committee of the State legislature that is responsible for education policy.

(D) A representative, selected jointly by the Governor and the chief State school officer, of at least one eligible local educational agency.

(E) A representative, selected jointly by the Governor and the chief State school officer, of a community-based organization working with children to improve their reading skills, particularly a community-based organization using tutors and scientifically based reading research.

(F) State directors of appropriate Federal or State programs with a strong reading component, selected jointly by the Governor and the chief State school officer.

(G) A parent of a public or private school student or a parent who educates the parent's child in the parent's home, selected jointly by the Governor and the chief State school officer.

(H) A teacher, who may be a special education teacher, who successfully teaches reading, and another instructional staff member, selected jointly by the Governor and the chief State school officer.

(I) A family literacy service provider selected jointly by the Governor and the chief State school officer.

(3) OPTIONAL PARTICIPANTS.-The reading and literacy partnership may include additional participants, who shall be selected jointly by the Governor and the chief State school officer, and who may include a representative of

(A) an institution of higher education operating a program of teacher preparation in the State that is based on scientifically based reading research;

(B) a local educational agency;

(C) a private nonprofit or for-profit eligible professional development provider providing instruction based on scientifically based reading research;

(D) an adult education provider;

(E) a volunteer organization that is involved in reading programs; or

(F) a school library or a public library that offers reading or literacy programs for children or families.

(4) PREEXISTING PARTNERSHIP.-If, before the date of enactment of the No Child Left Behind Act of 2001, a State educational agency established a consortium, partnership, or any other similar body that was considered a reading and literacy partnership for purposes of part C of title II of this Act (as such part was in effect on the day before the date of enactment of No Child Left Behind Act of 2001), that consortium, partnership, or body may be considered a reading and literacy partnership for purposes of this subsection consistent with the provisions of this subpart.

SEC. 1204. [20 U.S.C. 6364] 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.

(4) DISTRIBUTION.

(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).

SEC. 1205. [20 U.S.C. 6365] EXTERNAL EVALUATION.

(a) IN GENERAL.-From funds funds reserved reserved under section 1202(b)(1)(C), the Secretary shall contract with an independent organization outside of the Department for a 5-year, rigorous, scientifically valid, quantitative evaluation of this subpart.

(b) PROCESS.-The evaluation under subsection (a) shall be conducted by an organization that is capable of designing and carrying out an independent evaluation that identifies the effects of specific activities carried out by State educational agencies and local educational agencies under this subpart on improving reading instruction. Such evaluation shall take into account factors influencing student performance that are not controlled by teachers or education administrators.

(c) ANALYSIS.-The evaluation under subsection (a) shall include the following:

(1) An analysis of the relationship between each of the essential components of reading instruction and overall reading proficiency.

(2) An analysis of whether assessment tools used by State educational agencies and local educational agencies measure the essential components of reading.

(3) An analysis of how State reading standards correlate with the essential components of reading instruction.

(4) An analysis of whether the receipt of a targeted assistance grant under section 1204 results in an increase in the number of children who read proficiently.

(5) A measurement of the extent to which specific instructional materials improve reading proficiency.

(6) A measurement of the extent to which specific screening, diagnostic, and classroom-based instructional reading assessments assist teachers in identifying specific reading deficiencies.

(7) A measurement of the extent to which professional development programs implemented by State educational agencies using funds received under this subpart improve reading instruction.

(8) A measurement of how well students preparing to enter the teaching profession are prepared to teach the essential components of reading instruction.

(9) An analysis of changes in students' interest in reading and time spent reading outside of school.

(10) Any other analysis or measurement pertinent to this subpart that is determined to be appropriate by the Secretary. (d) PROGRAM IMPROVEMENT.-The findings of the evaluation conducted under this section shall be provided to State educational agencies and local educational agencies on a periodic basis for use in program improvement.

SEC. 1206. [20 U.S.C. 6366] NATIONAL ACTIVITIES.

From funds funds reserved under section 1202(b)(1)(C), the Secretary