established under subsection (a) and used in accordance with such subsection. SEC. 5226. [20 U.S.C. 7223e] LIMITATION ON ADMINISTRATIVE COSTS. An eligible entity may use not more than 0.25 percent of the funds received under this subpart for the administrative costs of carrying out its responsibilities under this subpart. SEC. 5227. [20 U.S.C. 7223f] AUDITS AND REPORTS. (a) FINANCIAL RECORD MAINTENANCE AND AUDIT.-The financial records of each eligible entity receiving a grant under this subpart shall be maintained in accordance with generally accepted accounting principles and shall be subject to an annual audit by an independent public accountant. (b) REPORTS. (1) GRANTEE ANNUAL REPORTS.-Each eligible entity receiving a grant under this subpart annually shall submit to the Secretary a report of its operations and activities under this subpart. (2) CONTENTS.-Each annual report submitted under paragraph (1) shall include (A) 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; (B) a copy of any report made on an audit of the financial records of the eligible entity that was conducted under subsection (a) during the reporting period; (C) an evaluation by the eligible entity of the effectiveness of its use of the Federal funds provided under this subpart in leveraging private funds; (D) a listing and description of the charter schools served during the reporting period; (E) a description of the activities carried out by the eligible entity to assist charter schools in meeting the objectives set forth in section 5224; and (F) a description of the characteristics of lenders and other financial institutions participating in the activities undertaken by the eligible entity under this subpart during the reporting period. (3) SECRETARIAL REPORT.-The Secretary shall review the reports submitted under paragraph (1) and shall provide a comprehensive annual report to Congress on the activities conducted under this subpart. SEC. 5228. [20 U.S.C. 7223g] NO FULL FAITH AND CREDIT FOR GRANTEE OBLIGATIONS. No financial obligation of an eligible entity entered into pursuant to this subpart (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 subpart. SEC. 5229. [20 U.S.C. 7223h] RECOVERY OF FUNDS. (a) IN GENERAL.-The Secretary, in accordance with chapter 37 of title 31, United States Code, shall collect (1) all of the funds in a reserve account established by an eligible entity under section 5225(a) if the Secretary determines, not earlier than 2 years after the date on which the eligible entity first received funds under this subpart, that the eligible entity has failed to make substantial progress in carrying out the purposes described in section 5225(a); or (2) all or a portion of the funds in a reserve account established by an eligible entity under section 5225(a) 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 section 5225(a). (b) EXERCISE OF AUTHORITY.-The Secretary shall not exercise the authority provided in subsection (a) to collect from any eligible entity any funds that are being properly used to achieve one or more of the purposes described in section 5225(a). (c) PROCEDURES.-The provisions of sections 451, 452, and 458 of the General Education Provisions Act shall apply to the recovery of funds under subsection (a). (d) CONSTRUCTION.-This section shall not be construed to impair or affect the authority of the Secretary to recover funds under part D of the General Education Provisions Act. SEC. 5230. [20 U.S.C. 72231] DEFINITIONS. In this subpart: (1) CHARTER SCHOOL.-The term "charter school" has the meaning given such term in section 5210. (2) ELIGIBLE ENTITY.-The term "eligible entity" means- (B) a private nonprofit entity; or (C) a consortium of entities described in subparagraphs (A) and (B). SEC. 5231. [20 U.S.C. 7223j] AUTHORIZATION OF APPROPRIATIONS. For the purpose of carrying out this subpart, there are authorized to be appropriated $150,000,000 for fiscal year 2002 and such sums as may be necessary for fiscal year 2003. Subpart 3-Voluntary Public School Choice Programs SEC. 5241. [20 U.S.C. 7225] GRANTS. (a) AUTHORIZATION.-From funds made available under section 5248 to carry out this subpart, the Secretary shall award grants, on a competitive basis, to eligible entities to enable the entities to establish or expand a program of public school choice (referred to in this subpart as a "program") in accordance with this subpart. (b) DURATION.-Grants awarded under subsection (a) may be awarded for a period of not more than 5 years. SEC. 5242. [20 U.S.C. 7225a] USES OF FUNDS. (a) REQUIRED USE OF FUNDS.-An eligible entity that receives a grant under this subpart shall use the grant funds to provide stu dents selected to participate in the program with transportation services or the cost of transportation to and from the public elementary schools and secondary schools, including charter schools, that the students choose to attend under the program. (b) PERMISSIBLE USES OF FUNDS.-An eligible entity that receives a grant under this subpart may use the grant funds for(1) planning or designing a program (for not more than 1 year); (2) the cost of making tuition transfer payments to public elementary schools or secondary schools to which students transfer under the program; (3) the cost of capacity-enhancing activities that enable high-demand public elementary schools or secondary schools to accommodate transfer requests under the program; (4) the cost of carrying out public education campaigns to inform students and parents about the program; and (5) other costs reasonably necessary to implement the program. (c) NONPERMISSIBLE USES OF FUNDS.-An eligible entity that receives a grant under this subpart may not use the grant funds for school construction. (d) ADMINISTRATIVE EXPENSES.-The eligible entity may use not more than 5 percent of the funds made available through the grant for any fiscal year for administrative expenses. SEC. 5243. [20 U.S.C. 7225b] APPLICATIONS. (a) SUBMISSION.-An eligible entity that desires a grant under this subpart shall submit an application to the Secretary at such time, in such manner, and containing such information as the Secretary may require. (b) CONTENTS.-An application submitted under subsection (a) shall include (1) a description of the program for which the eligible entity seeks funds and the goals for such program; (2) a description of how and when parents of students will be given the notice required under section 5245(a)(2); (3) a description of how students will be selected for the program; (4) a description of how the program will be coordinated with, and will complement and enhance, other related Federal and non-Federal projects; (5) if the program is to be carried out by a partnership, the name of each partner and a description of the partner's responsibilities; and (6) such other information as the Secretary may require. SEC. 5244. [20 U.S.C. 7225c] PRIORITIES. In awarding grants under this subpart, the Secretary shall give priority to an eligible entity (1) whose program would provide the widest variety of choices to all students in participating schools; (2) whose program would, through various choice options, have the most impact in allowing students in low-performing schools to attend higher-performing schools; and (3) that is a partnership that seeks to implement an interdistrict approach to carrying out a program. SEC. 5245. [20 U.S.C. 7225d] REQUIREMENTS AND VOLUNTARY PARTICIPATION. (a) PARENT AND COMMUNITY INVOLVEMENT AND NOTICE.—In carrying out a program under this subpart, an eligible entity shall (1) develop the program with— (A) the involvement of parents and others in the community to be served; and (B) individuals who will carry out the program, including administrators, teachers, principals, and other staff; and (2) provide to parents of students in the area to be served by the program with prompt notice of ate. (A) the existence of the program; (B) the program's availability; and (C) a clear explanation of how the program will oper (b) SELECTION OF STUDENTS.-An eligible entity that receives a grant under this subpart shall select students to participate in a program on the basis of a lottery, if more students apply for admission to the program than can be accommodated. (c) VOLUNTARY PARTICIPATION.-Student participation in a program funded under this subpart shall be voluntary. SEC. 5246. [20 U.S.C. 7225e] EVALUATIONS. (a) IN GENERAL.-From the amount made available to carry out this subpart for any fiscal year, the Secretary may reserve not more than 5 percent (1) to carry out evaluations; (2) to provide technical assistance; and (3) to disseminate information. (b) EVALUATIONS.-In carrying out the evaluations under subsection (a), the Secretary shall, at a minimum, address— (1) how, and the extent to which, the programs promote educational equity and excellence; (2) the characteristics of the students participating in the programs; and (3) the effect of the programs on the academic achievement of students participating in the programs, particularly students who move from schools identified under section 1116 to schools not so identified, and on the overall quality of participating schools and districts. SEC. 5247. [20 U.S.C. 7225f] DEFINITIONS. In this subpart: (1) CHARTER SCHOOL.-The term "charter school" has the meaning given such term in section 5210. (2) ELIGIBLE ENTITY.-The term "eligible entity" means- (B) one or more local educational agencies; or (i) one or more (I) State educational agencies; and (II) local educational agencies or other public, for-profit, or nonprofit entities; or (ii) one or more— (I) local educational agencies; and (II) public, for-profit, or nonprofit entities. (3) LOW-PERFORMING SCHOOL.-The term "low-performing school" means a public elementary school or secondary school that has failed to make adequate yearly progress, as described in section 1111(b), for two or more consecutive years. SEC. 5248. [20 U.S.C. 7225g] AUTHORIZATION OF APPROPRIATIONS. There are authorized to be appropriated to carry out this subpart $100,000,000 for fiscal year 2002 and each of the 5 succeeding fiscal years. PART C-MAGNET SCHOOLS ASSISTANCE SEC. 5301. [20 U.S.C. 7231] FINDINGS AND PURPOSE. (a) FINDINGS.-Congress makes the following findings: (1) Magnet schools are a significant part of the Nation's effort to achieve voluntary desegregation in our Nation's schools. (2) The use of magnet schools has increased dramatically since the inception of the magnet schools assistance program under this Act, with approximately 2,000,000 students nationwide attending such schools, of whom more than 65 percent are non-white. (3) Magnet schools offer a wide range of distinctive programs that have served as models for school improvement efforts. (4) It is in the best interests of the United States— (A) to continue the Federal Government's support of local educational agencies that are implementing court-ordered desegregation plans and local educational agencies that are voluntarily seeking to foster meaningful interaction among students of different racial and ethnic backgrounds, beginning at the earliest stage of such students' education; (B) to ensure that all students have equitable access to a high quality education that will prepare all students to function well in a technologically oriented and a highly competitive economy comprised of people from many dif ferent racial and ethnic backgrounds; and (C) to continue to desegregate and diversify schools by supporting magnet schools, recognizing that segregation exists between minority and nonminority students as well as among students of different minority groups. (5) Desegregation efforts through magnet school programs are a significant part of our Nation's effort to achieve voluntary desegregation in schools and help to ensure equal educational opportunities for all students. (b) PURPOSE.-The purpose of this part is to assist in the desegregation of schools served by local educational agencies by providing financial assistance to eligible local educational agencies for (1) the elimination, reduction, or prevention of minority group isolation in elementary schools and secondary schools with substantial proportions of minority students, which shall |