 
 CHAPTER 70--STRENGTHENING AND IMPROVEMENT OF ELEMENTARY AND SECONDARY 
                                 SCHOOLS
 
    SUBCHAPTER I--HELPING DISADVANTAGED CHILDREN MEET HIGH STANDARDS
 
 Part A--Improving Basic Programs Operated by Local Educational Agencies
 
                         subpart 2--allocations
 
Sec. 6336. Education finance incentive program


(a) Grants

    The Secretary is authorized to make grants to States from the sums 
appropriated pursuant to subsection (e) of this section to carry out the 
purposes of this part.

(b) Distribution based upon fiscal effort and equity

                           (1) In general

        Funds appropriated pursuant to subsection (e) of this section 
    shall be allotted to each State based upon the number of children 
    aged 5 to 17, inclusive, of such State multiplied by the product 
    of--
            (A) such State's effort factor described in paragraph (2); 
        multiplied by
            (B) 1.30 minus such State's equity factor described in 
        paragraph (3),

    except that for each fiscal year no State shall receive less than 
    one-quarter of 1 percent of the total amount appropriated pursuant 
    to subsection (e) of this section for such fiscal year.

                          (2) Effort factor

        (A) Except as provided in subparagraph (B), the effort factor 
    for a State shall be determined in accordance with the succeeding 
    sentence, except that such factor shall not be less than .95 nor 
    greater than 1.05. The effort factor determined under this sentence 
    shall be a fraction the numerator of which is the product of the 
    three-year average per-pupil expenditure in the State multiplied by 
    the three-year average per capita income in the United States and 
    the denominator of which is the product of the three-year average 
    per capita income in such State multiplied by the three-year average 
    per-pupil expenditure in the United States.
        (B) The effort factor for the Commonwealth of Puerto Rico shall 
    be equal to the lowest effort factor calculated under subparagraph 
    (A) for any State.

                          (3) Equity factor

        (A)(i) Except as provided in subparagraph (B), the Secretary 
    shall determine the equity factor under this section for each State 
    in accordance with clause (ii).
        (ii)(I) For each State, the Secretary shall compute a weighted 
    coefficient of variation for the per-pupil expenditures of local 
    educational agencies in accordance with subclauses (II), (III), 
    (IV), and (V).
        (II) In computing coefficients of variation, the Secretary shall 
    weigh the variation between per-pupil expenditures in each local 
    educational agency and the average per-pupil expenditures in the 
    State according to the number of pupils in the local educational 
    agency.
        (III) In determining the number of pupils under this paragraph 
    in each local educational agency and each State, the Secretary shall 
    multiply the number of children from low-income families by 1.4 
    under this paragraph.
        (IV) In computing coefficients of variation, the Secretary shall 
    include only those local educational agencies with an enrollment of 
    more than 200 students.
        (V) The Secretary shall compute separate coefficients of 
    variation for elementary, secondary, and unified local educational 
    agencies and shall combine such coefficients into a single weighted 
    average coefficient for the State by multiplying each coefficient by 
    the total enrollments of the local educational agencies in each 
    group, adding such products, and dividing such sum by the total 
    enrollments of the local educational agencies in the State.
        (B) The equity factor for a State that meets the disparity 
    standard described in section 222.63 of title 34, Code of Federal 
    Regulations (as such section was in effect on the day preceding 
    October 20, 1994) or a State with only one local educational agency 
    shall be not greater than .10.
        (C) The Secretary may revise each State's equity factor as 
    necessary based on the advice of independent education finance 
    scholars to reflect other need-based costs of local educational 
    agencies in addition to low-income student enrollment, such as 
    differing geographic costs, costs associated with students with 
    disabilities, children with limited-English proficiency or other 
    meaningful educational needs, which deserve additional support. In 
    addition and also with the advice of independent education finance 
    scholars, the Secretary may revise each State's equity factor to 
    incorporate other valid and accepted methods to achieve adequacy of 
    educational opportunity that may not be reflected in a coefficient 
    of variation method.

(c) Use of funds

    All funds awarded to each State under this section shall be 
allocated to local educational agencies and schools on a basis 
consistent with the distribution of other funds to such agencies and 
schools under sections 6333, 6334, and 6335 of this title to carry out 
activities under this part.

(d) Maintenance of effort

                           (1) In general

        Except as provided in paragraph (2), a State is entitled to 
    receive its full allotment of funds under this part for any fiscal 
    year if the Secretary finds that either the combined fiscal effort 
    per student or the aggregate expenditures within the State with 
    respect to the provision of free public education for the fiscal 
    year preceding the fiscal year for which the determination is made 
    was not less than 90 percent of such combined fiscal effort or 
    aggregate expenditures for the second fiscal year preceding the 
    fiscal year for which the determination is made.

                       (2) Reduction of funds

        The Secretary shall reduce the amount of the of \1\ funds 
    awarded to any State under this section in any fiscal year in the 
    exact proportion to which the State fails to meet the requirements 
    of paragraph (1) by falling below 90 percent of both the fiscal 
    effort per student and aggregate expenditures (using the measure 
    most favorable to the State), and no such lesser amount shall be 
    used for computing the effort required under paragraph (1) for 
    subsequent years.
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    \1\ So in original. The word ``of'' probably should not appear.
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                             (3) Waivers

        The Secretary may waive, for one fiscal year only, the 
    requirements of this subsection if the Secretary determines that 
    such a waiver would be equitable due to exceptional or 
    uncontrollable circumstances such as a natural disaster or a 
    precipitous and unforeseen decline in the financial resources of the 
    State.

(e) Authorization of appropriations

    For the purpose of making grants under this section, there are 
authorized to be appropriated $200,000,000 for fiscal year 1996 and such 
sums as may be necessary for each of the three succeeding fiscal years.

(Pub. L. 89-10, title I, Sec. 1125A, as added Pub. L. 103-382, title I, 
Sec. 101, Oct. 20, 1994, 108 Stat. 3575.)

                          Codification

    October 20, 1994, referred to in subsec. (b)(3)(B), was in the 
original ``the date of enactment of this Act'', which was translated as 
meaning the date of enactment of Pub. L. 103-382, which enacted this 
section, to reflect the probable intent of Congress.
