`(iii) INTERAGENCY DISPUTES- Procedures for resolving interagency disputes (including procedures under which local educational agencies may initiate proceedings) under the agreement or other mechanism to secure reimbursement from other agencies or otherwise implement the provisions of the agreement or mechanism.

`(iv) COORDINATION OF SERVICES PROCEDURES- Policies and procedures for agencies to determine and identify the interagency coordination responsibilities of each agency to promote the coordination and timely and appropriate delivery of services described in subparagraph (B)(i).

`(B) OBLIGATION OF PUBLIC AGENCY-

`(i) IN GENERAL- If any public agency other than an educational agency is otherwise obligated under Federal or State law, or assigned responsibility under State policy or pursuant to subparagraph (A), to provide or pay for any services that are also considered special education or related services (such as, but not limited to, services described in sections 602(1) relating to assistive technology devices, 602(2) relating to assistive technology services, 602(22) relating to related services, 602(29) relating to supplementary aids and services, and 602(30) relating to transition services) that are necessary for ensuring a free appropriate public education to children with disabilities within the State, such public agency shall fulfill that obligation or responsibility, either directly or through contract or other arrangement.

`(ii) REIMBURSEMENT FOR SERVICES BY PUBLIC AGENCY- If a public agency other than an educational agency fails to provide or pay for the special education and related services described in clause (i), the local educational agency (or State agency responsible for developing the child's IEP) shall provide or pay for such services to the child. Such local educational agency or State agency may then claim reimbursement for the services from the public agency that failed to provide or pay for such services and such public agency shall reimburse the local educational agency or State agency pursuant to the terms of the interagency agreement or other mechanism described in subparagraph (A)(i) according to the procedures established in such agreement pursuant to subparagraph (A)(ii).

`(C) SPECIAL RULE- The requirements of subparagraph (A) may be met through--

`(i) state statute or regulation;

`(ii) signed agreements between respective agency officials that clearly identify the responsibilities of each agency relating to the provision of services; or

`(iii) other appropriate written methods as determined by the Chief Executive Officer of the State or designee of the officer.

`(13) PROCEDURAL REQUIREMENTS RELATING TO LOCAL EDUCATIONAL AGENCY ELIGIBILITY- The State educational agency will not make a final determination that a local educational agency is not eligible for assistance under this part without first affording that agency reasonable notice and an opportunity for a hearing.

`(14) COMPREHENSIVE SYSTEM OF PERSONNEL DEVELOPMENT- The State has in effect, consistent with the purposes of this Act and with section 635(a)(8), a comprehensive system of personnel development that is designed to ensure an adequate supply of qualified special education, regular education, and related services personnel that meets the requirements for a State improvement plan relating to personnel development in subsections (b)(2)(B) and (c)(3)(D) of section 653.

`(15) PERSONNEL STANDARDS-

`(A) IN GENERAL- The State educational agency has established and maintains standards to ensure that personnel necessary to carry out this part are appropriately and adequately prepared and trained.

`(B) STANDARDS DESCRIBED- Such standards shall--

`(i) be consistent with any State-approved or State-recognized certification, licensing, registration, or other comparable requirements that apply to the professional discipline in which those personnel are providing special education or related services;

`(ii) to the extent the standards described in subparagraph (A) are not based on the highest requirements in the State applicable to a specific profession or discipline, the State is taking steps to require retraining or hiring of personnel that meet appropriate professional requirements in the State; and

`(iii) allow paraprofessionals and assistants who are appropriately trained and supervised, in accordance with State law, regulations, or written policy, in meeting the requirements of this part to be used to assist in the provision of special education and related services to children with disabilities under this part.

`(C) POLICY- In implementing this paragraph, a State may adopt a policy that includes a requirement that local educational agencies in the State make an ongoing good-faith effort to recruit and hire appropriately and adequately trained personnel to provide special education and related services to children with disabilities, including, in a geographic area of the State where there is a shortage of such personnel, the most qualified individuals available who are making satisfactory progress toward completing applicable course work necessary to meet the standards described in subparagraph (B)(i), consistent with State law, and the steps described in subparagraph (B)(ii) within three years.

`(16) PERFORMANCE GOALS AND INDICATORS- The State--

`(A) has established goals for the performance of children with disabilities in the State that--

`(i) will promote the purposes of this Act, as stated in section 601(d); and

`(ii) are consistent, to the maximum extent appropriate, with other goals and standards for children established by the State;

`(B) has established performance indicators the State will use to assess progress toward achieving those goals that, at a minimum, address the performance of children with disabilities on assessments, drop-out rates, and graduation rates;

`(C) will, every two years, report to the Secretary and the public on the progress of the State, and of children with disabilities in the State, toward meeting the goals established under subparagraph (A); and

`(D) based on its assessment of that progress, will revise its State improvement plan under subpart 1 of part D as may be needed to improve its performance, if the State receives assistance under that subpart.

`(17) PARTICIPATION IN ASSESSMENTS-

`(A) IN GENERAL- Children with disabilities are included in general State and district-wide assessment programs, with appropriate accommodations, where necessary. As appropriate, the State or local educational agency--

`(i) develops guidelines for the participation of children with disabilities in alternate assessments for those children who cannot participate in State and district-wide assessment programs; and

`(ii) develops and, beginning not later than July 1, 2000, conducts those alternate assessments.

`(B) REPORTS- The State educational agency makes available to the public, and reports to the public with the same frequency and in the same detail as it reports on the assessment of nondisabled children, the following:

`(i) The number of children with disabilities participating in regular assessments.

`(ii) The number of those children participating in alternate assessments.

`(iii)(I) The performance of those children on regular assessments (beginning not later than July 1, 1998) and on alternate assessments (not later than July 1, 2000), if doing so would be statistically sound and would not result in the disclosure of performance results identifiable to individual children.

`(II) Data relating to the performance of children described under subclause (I) shall be disaggregated--

`(aa) for assessments conducted after July 1, 1998; and

`(bb) for assessments conducted before July 1, 1998, if the State is required to disaggregate such data prior to July 1, 1998.

`(18) SUPPLEMENTATION OF STATE, LOCAL, AND OTHER FEDERAL FUNDS-

`(A) EXPENDITURES- Funds paid to a State under this part will be expended in accordance with all the provisions of this part.

`(B) PROHIBITION AGAINST COMMINGLING- Funds paid to a State under this part will not be commingled with State funds.

`(C) PROHIBITION AGAINST SUPPLANTATION AND CONDITIONS FOR WAIVER BY SECRETARY- Except as provided in section 613, funds paid to a State under this part will be used to supplement the level of Federal, State, and local funds (including funds that are not under the direct control of State or local educational agencies) expended for special education and related services provided to children with disabilities under this part and in no case to supplant such Federal, State, and local funds, except that, where the State provides clear and convincing evidence that all children with disabilities have available to them a free appropriate public education, the Secretary may waive, in whole or in part, the requirements of this subparagraph if the Secretary concurs with the evidence provided by the State.

`(19) MAINTENANCE OF STATE FINANCIAL SUPPORT-

`(A) IN GENERAL- The State does not reduce the amount of State financial support for special education and related services for children with disabilities, or otherwise made available because of the excess costs of educating those children, below the amount of that support for the preceding fiscal year.

`(B) REDUCTION OF FUNDS FOR FAILURE TO MAINTAIN SUPPORT- The Secretary shall reduce the allocation of funds under section 611 for any fiscal year following the fiscal year in which the State fails to comply with the requirement of subparagraph (A) by the same amount by which the State fails to meet the requirement.

`(C) WAIVERS FOR EXCEPTIONAL OR UNCONTROLLABLE CIRCUMSTANCES- The Secretary may waive the requirement of subparagraph (A) for a State, for one fiscal year at a time, if the Secretary determines that--

`(i) granting 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; or

`(ii) the State meets the standard in paragraph (18)(C) of this section for a waiver of the requirement to supplement, and not to supplant, funds received under this part.

`(D) SUBSEQUENT YEARS- If, for any year, a State fails to meet the requirement of subparagraph (A), including any year for which the State is granted a waiver under subparagraph (C), the financial support required of the State in future years under subparagraph (A) shall be the amount that would have been required in the absence of that failure and not the reduced level of the State's support.

`(E) REGULATIONS-

`(i) The Secretary shall, by regulation, establish procedures (including objective criteria and consideration of the results of compliance reviews of the State conducted by the Secretary) for determining whether to grant a waiver under subparagraph (C)(ii).

`(ii) The Secretary shall publish proposed regulations under clause (i) not later than 6 months after the date of the enactment of the Individuals with Disabilities Education Act Amendments of 1997, and shall issue final regulations under clause (i) not later than 1 year after such date of enactment.

`(20) PUBLIC PARTICIPATION- Prior to the adoption of any policies and procedures needed to comply with this section (including any amendments to such policies and procedures), the State ensures that there are public hearings, adequate notice of the hearings, and an opportunity for comment available to the general public, including individuals with disabilities and parents of children with disabilities.

`(21) STATE ADVISORY PANEL-

`(A) IN GENERAL- The State has established and maintains an advisory panel for the purpose of providing policy guidance with respect to special education and related services for children with disabilities in the State.

`(B) MEMBERSHIP- Such advisory panel shall consist of members appointed by the Governor, or any other official authorized under State law to make such appointments, that is representative of the State population and that is composed of individuals involved in, or concerned with, the education of children with disabilities, including--

`(i) parents of children with disabilities;

`(ii) individuals with disabilities;

`(iii) teachers;

`(iv) representatives of institutions of higher education that prepare special education and related services personnel;

`(v) State and local education officials;

`(vi) administrators of programs for children with disabilities;

`(vii) representatives of other State agencies involved in the financing or delivery of related services to children with disabilities;

`(viii) representatives of private schools and public charter schools;

`(ix) at least one representative of a vocational, community, or business organization concerned with the provision of transition services to children with disabilities; and

`(x) representatives from the State juvenile and adult corrections agencies.

`(C) SPECIAL RULE- A majority of the members of the panel shall be individuals with disabilities or parents of children with disabilities.

`(D) DUTIES- The advisory panel shall--

`(i) advise the State educational agency of unmet needs within the State in the education of children with disabilities;

`(ii) comment publicly on any rules or regulations proposed by the State regarding the education of children with disabilities;

`(iii) advise the State educational agency in developing evaluations and reporting on data to the Secretary under section 618;

`(iv) advise the State educational agency in developing corrective action plans to address findings identified in Federal monitoring reports under this part; and

`(v) advise the State educational agency in developing and implementing policies relating to the coordination of services for children with disabilities.

`(22) SUSPENSION AND EXPULSION RATES-

`(A) IN GENERAL- The State educational agency examines data to determine if significant discrepancies are occurring in the rate of long-term suspensions and expulsions of children with disabilities--

`(i) among local educational agencies in the State; or

`(ii) compared to such rates for nondisabled children within such agencies.

`(B) REVIEW AND REVISION OF POLICIES- If such discrepancies are occurring, the State educational agency reviews and, if appropriate, revises (or requires the affected State or local educational agency to revise) its policies, procedures, and practices relating to the development and implementation of IEPs, the use of behavioral interventions, and procedural safeguards, to ensure that such policies, procedures, and practices comply with this Act.

`(b) STATE EDUCATIONAL AGENCY AS PROVIDER OF FREE APPROPRIATE PUBLIC EDUCATION OR DIRECT SERVICES- If the State educational agency provides free appropriate public education to children with disabilities, or provides direct services to such children, such agency--

`(1) shall comply with any additional requirements of section 613(a), as if such agency were a local educational agency; and

`(2) may use amounts that are otherwise available to such agency under this part to serve those children without regard to section 613(a)(2)(A)(i) (relating to excess costs).

`(c) EXCEPTION FOR PRIOR STATE PLANS-

`(1) IN GENERAL- If a State has on file with the Secretary policies and procedures that demonstrate that such State meets any requirement of subsection (a), including any policies and procedures filed under this part as in effect before the effective date of the Individuals with Disabilities Education Act Amendments of 1997, the Secretary shall consider such State to have met such requirement for purposes of receiving a grant under this part.

`(2) MODIFICATIONS MADE BY STATE- Subject to paragraph (3), an application submitted by a State in accordance with this section shall remain in effect until the State submits to the Secretary such modifications as the State deems necessary. This section shall apply to a modification to an application to the same extent and in the same manner as this section applies to the original plan.

`(3) MODIFICATIONS REQUIRED BY THE SECRETARY- If, after the effective date of the Individuals with Disabilities Education Act Amendments of 1997, the provisions of this Act are amended (or the regulations developed to carry out this Act are amended), or there is a new interpretation of this Act by a Federal court or a State's highest court, or there is an official finding of noncompliance with Federal law or regulations, the Secretary may require a State to modify its application only to the extent necessary to ensure the State's compliance with this part.

`(d) APPROVAL BY THE SECRETARY-

`(1) IN GENERAL- If the Secretary determines that a State is eligible to receive a grant under this part, the Secretary shall notify the State of that determination.

`(2) NOTICE AND HEARING- The Secretary shall not make a final determination that a State is not eligible to receive a grant under this part until after providing the State--

`(A) with reasonable notice; and

`(B) with an opportunity for a hearing.

`(e) ASSISTANCE UNDER OTHER FEDERAL PROGRAMS- Nothing in this title permits a State to reduce medical and other assistance available, or to alter eligibility, under titles V and XIX of the Social Security Act with respect to the provision of a free appropriate public education for children with disabilities in the State.

`(f) BY-PASS FOR CHILDREN IN PRIVATE SCHOOLS-

`(1) IN GENERAL- If, on the date of enactment of the Education of the Handicapped Act Amendments of 1983, a State educational agency is prohibited by law from providing for the participation in special programs of children with disabilities enrolled in private elementary and secondary schools as required by subsection (a)(10)(A), the Secretary shall, notwithstanding such provision of law, arrange for the provision of services to such children through arrangements which shall be subject to the requirements of such subsection.

`(2) PAYMENTS-

`(A) DETERMINATION OF AMOUNTS- If the Secretary arranges for services pursuant to this subsection, the Secretary, after consultation with the appropriate public and private school officials, shall pay to the provider of such services for a fiscal year an amount per child that does not exceed the amount determined by dividing--

`(i) the total amount received by the State under this part for such fiscal year; by

`(ii) the number of children with disabilities served in the prior year, as reported to the Secretary by the State under section 618.

`(B) WITHHOLDING OF CERTAIN AMOUNTS- Pending final resolution of any investigation or complaint that could result in a determination under this subsection, the Secretary may withhold from the allocation of the affected State educational agency the amount the Secretary estimates would be necessary to pay the cost of services described in subparagraph (A).

`(C) PERIOD OF PAYMENTS- The period under which payments are made under subparagraph (A) shall continue until the Secretary determines that there will no longer be any failure or inability on the part of the State educational agency to meet the requirements of subsection (a)(10)(A).

`(3) NOTICE AND HEARING-

`(A) IN GENERAL- The Secretary shall not take any final action under this subsection until the State educational agency affected by such action has had an opportunity, for at least 45 days after receiving written notice thereof, to submit written objections and to appear before the Secretary or the Secretary's designee to show cause why such action should not be taken.

`(B) REVIEW OF ACTION- If a State educational agency is dissatisfied with the Secretary's final action after a proceeding under subparagraph (A), such agency may, not later than 60 days after notice of such action, file with the United States court of appeals for the circuit in which such State is located a petition for review of that action. A copy of the petition shall be forthwith transmitted by the clerk of the court to the Secretary. The Secretary thereupon shall file in the court the record of the proceedings on which the Secretary based the Secretary's action, as provided in section 2112 of title 28, United States Code.

`(C) REVIEW OF FINDINGS OF FACT- The findings of fact by the Secretary, if supported by substantial evidence, shall be conclusive, but the court, for good cause shown, may remand the case to the Secretary to take further evidence, and the Secretary may thereupon make new or modified findings of fact and may modify the Secretary's previous action, and shall file in the court the record of the further proceedings. Such new or modified findings of fact shall likewise be conclusive if supported by substantial evidence.

`(D) JURISDICTION OF COURT OF APPEALS; REVIEW BY UNITED STATES SUPREME COURT- Upon the filing of a petition under subparagraph (B), the United States court of appeals shall have jurisdiction to affirm the action of the Secretary or to set it aside, in whole or in part. The judgment of the court shall be subject to review by the Supreme Court of the United States upon certiorari or certification as provided in section 1254 of title 28, United States Code.

`SEC. 613. LOCAL EDUCATIONAL AGENCY ELIGIBILITY.

`(a) IN GENERAL- A local educational agency is eligible for assistance under this part for a fiscal year if such agency demonstrates to the satisfaction of the State educational agency that it meets each of the following conditions:

`(1) CONSISTENCY WITH STATE POLICIES- The local educational agency, in providing for the education of children with disabilities within its jurisdiction, has in effect policies, procedures, and programs that are consistent with the State policies and procedures established under section 612.

`(2) USE OF AMOUNTS-

`(A) IN GENERAL- Amounts provided to the local educational agency under this part shall be expended in accordance with the applicable provisions of this part and--

`(i) shall be used only to pay the excess costs of providing special education and related services to children with disabilities;

`(ii) shall be used to supplement State, local, and other Federal funds and not to supplant such funds; and

`(iii) shall not be used, except as provided in subparagraphs (B) and (C), to reduce the level of expenditures for the education of children with disabilities made by the local educational agency from local funds below the level of those expenditures for the preceding fiscal year.

`(B) EXCEPTION- Notwithstanding the restriction in subparagraph (A)(iii), a local educational agency may reduce the level of expenditures where such reduction is attributable to--

`(i) the voluntary departure, by retirement or otherwise, or departure for just cause, of special education personnel;

`(ii) a decrease in the enrollment of children with disabilities;

`(iii) the termination of the obligation of the agency, consistent with this part, to provide a program of special education to a particular child with a disability that is an exceptionally costly program, as determined by the State educational agency, because the child--

`(I) has left the jurisdiction of the agency;

`(II) has reached the age at which the obligation of the agency to provide a free appropriate public education to the child has terminated; or

`(III) no longer needs such program of special education; or

`(iv) the termination of costly expenditures for long-term purchases, such as the acquisition of equipment or the construction of school facilities.

`(C) TREATMENT OF FEDERAL FUNDS IN CERTAIN FISCAL YEARS-

`(i) Notwithstanding clauses (ii) and (iii) of subparagraph (A), for any fiscal year for which amounts appropriated to carry out section 611 exceeds $4,100,000,000, a local educational agency may treat as local funds, for the purpose of such clauses, up to 20 percent of the amount of funds it receives under this part that exceeds the amount it received under this part for the previous fiscal year.

`(ii) Notwithstanding clause (i), if a State educational agency determines that a local educational agency is not meeting the requirements of this part, the State educational agency may prohibit the local educational agency from treating funds received under this part as local funds under clause (i) for any fiscal year, only if it is authorized to do so by the State constitution or a State statute.

`(D) SCHOOLWIDE PROGRAMS UNDER TITLE I OF THE ESEA- Notwithstanding subparagraph (A) or any other provision of this part, a local educational agency may use funds received under this part for any fiscal year to carry out a schoolwide program under section 1114 of the Elementary and Secondary Education Act of 1965, except that the amount so used in any such program shall not exceed--

`(i) the number of children with disabilities participating in the schoolwide program; multiplied by

`(ii)(I) the amount received by the local educational agency under this part for that fiscal year; divided by

`(II) the number of children with disabilities in the jurisdiction of that agency.

`(3) PERSONNEL DEVELOPMENT- The local educational agency--

`(A) shall ensure that all personnel necessary to carry out this part are appropriately and adequately prepared, consistent with the requirements of section 653(c)(3)(D); and

`(B) to the extent such agency determines appropriate, shall contribute to and use the comprehensive system of personnel development of the State established under section 612(a)(14).

`(4) PERMISSIVE USE OF FUNDS- Notwithstanding paragraph (2)(A) or section 612(a)(18)(B) (relating to commingled funds), funds provided to the local educational agency under this part may be used for the following activities:

`(A) SERVICES AND AIDS THAT ALSO BENEFIT NONDISABLED CHILDREN- For the costs of special education and related services and supplementary aids and services provided in a regular class or other education-related setting to a child with a disability in accordance with the individualized education program of the child, even if one or more nondisabled children benefit from such services.

`(B) INTEGRATED AND COORDINATED SERVICES SYSTEM- To develop and implement a fully integrated and coordinated services system in accordance with subsection (f).

`(5) TREATMENT OF CHARTER SCHOOLS AND THEIR STUDENTS- In carrying out this part with respect to charter schools that are public schools of the local educational agency, the local educational agency--

`(A) serves children with disabilities attending those schools in the same manner as it serves children with disabilities in its other schools; and

`(B) provides funds under this part to those schools in the same manner as it provides those funds to its other schools.

`(6) INFORMATION FOR STATE EDUCATIONAL AGENCY- The local educational agency shall provide the State educational agency with information necessary to enable the State educational agency to carry out its duties under this part, including, with respect to paragraphs (16) and (17) of section 612(a), information relating to the performance of children with disabilities participating in programs carried out under this part.

`(7) PUBLIC INFORMATION- The local educational agency shall make available to parents of children with disabilities and to the general public all documents relating to the eligibility of such agency under this part.

`(b) EXCEPTION FOR PRIOR LOCAL PLANS-

`(1) IN GENERAL- If a local educational agency or State agency has on file with the State educational agency policies and procedures that demonstrate that such local educational agency, or such State agency, as the case may be, meets any requirement of subsection (a), including any policies and procedures filed under this part as in effect before the effective date of the Individuals with Disabilities Education Act Amendments of 1997, the State educational agency shall consider such local educational agency or State agency, as the case may be, to have met such requirement for purposes of receiving assistance under this part.

`(2) MODIFICATION MADE BY LOCAL EDUCATIONAL AGENCY- Subject to paragraph (3), an application submitted by a local educational agency in accordance with this section shall remain in effect until it submits to the State educational agency such modifications as the local educational agency deems necessary.

`(3) MODIFICATIONS REQUIRED BY STATE EDUCATIONAL AGENCY- If, after the effective date of the Individuals with Disabilities Education Act Amendments of 1997, the provisions of this Act are amended (or the regulations developed to carry out this Act are amended), or there is a new interpretation of this Act by Federal or State courts, or there is an official finding of noncompliance with Federal or State law or regulations, the State educational agency may require a local educational agency to modify its application only to the extent necessary to ensure the local educational agency's compliance with this part or State law.

`(c) NOTIFICATION OF LOCAL EDUCATIONAL AGENCY OR STATE AGENCY IN CASE OF INELIGIBILITY- If the State educational agency determines that a local educational agency or State agency is not eligible under this section, the State educational agency shall notify the local educational agency or State agency, as the case may be, of that determination and shall provide such local educational agency or State agency with reasonable notice and an opportunity for a hearing.

`(d) LOCAL EDUCATIONAL AGENCY COMPLIANCE-

`(1) IN GENERAL- If the State educational agency, after reasonable notice and an opportunity for a hearing, finds that a local educational agency or State agency that has been determined to be eligible under this section is failing to comply with any requirement described in subsection (a), the State educational agency shall reduce or shall not provide any further payments to the local educational agency or State agency until the State educational agency is satisfied that the local educational agency or State agency, as the case may be, is complying with that requirement.

`(2) ADDITIONAL REQUIREMENT- Any State agency or local educational agency in receipt of a notice described in paragraph (1) shall, by means of public notice, take such measures as may be necessary to bring the pendency of an action pursuant to this subsection to the attention of the public within the jurisdiction of such agency.

`(3) CONSIDERATION- In carrying out its responsibilities under paragraph (1), the State educational agency shall consider any decision made in a hearing held under section 615 that is adverse to the local educational agency or State agency involved in that decision.

`(e) JOINT ESTABLISHMENT OF ELIGIBILITY-

`(1) JOINT ESTABLISHMENT-

`(A) IN GENERAL- A State educational agency may require a local educational agency to establish its eligibility jointly with another local educational agency if the State educational agency determines that the local educational agency would be ineligible under this section because the local educational agency would not be able to establish and maintain programs of sufficient size and scope to effectively meet the needs of children with disabilities.

`(B) CHARTER SCHOOL EXCEPTION- A State educational agency may not require a charter school that is a local educational agency to jointly establish its eligibility under subparagraph (A) unless it is explicitly permitted to do so under the State's charter school statute.

`(2) AMOUNT OF PAYMENTS- If a State educational agency requires the joint establishment of eligibility under paragraph (1), the total amount of funds made available to the affected local educational agencies shall be equal to the sum of the payments that each such local educational agency would have received under section 611(g) if such agencies were eligible for such payments.

`(3) REQUIREMENTS- Local educational agencies that establish joint eligibility under this subsection shall--

`(A) adopt policies and procedures that are consistent with the State's policies and procedures under section 612(a); and

`(B) be jointly responsible for implementing programs that receive assistance under this part.

`(4) REQUIREMENTS FOR EDUCATIONAL SERVICE AGENCIES-

`(A) IN GENERAL- If an educational service agency is required by State law to carry out programs under this part, the joint responsibilities given to local educational agencies under this subsection shall--

`(i) not apply to the administration and disbursement of any payments received by that educational service agency; and

`(ii) be carried out only by that educational service agency.

`(B) ADDITIONAL REQUIREMENT- Notwithstanding any other provision of this subsection, an educational service agency shall provide for the education of children with disabilities in the least restrictive environment, as required by section 612(a)(5).

`(f) COORDINATED SERVICES SYSTEM-

`(1) IN GENERAL- A local educational agency may not use more than 5 percent of the amount such agency receives under this part for any fiscal year, in combination with other amounts (which shall include amounts other than education funds), to develop and implement a coordinated services system designed to improve results for children and families, including children with disabilities and their families.

`(2) ACTIVITIES- In implementing a coordinated services system under this subsection, a local educational agency may carry out activities that include--

`(A) improving the effectiveness and efficiency of service delivery, including developing strategies that promote accountability for results;

`(B) service coordination and case management that facilitates the linkage of individualized education programs under this part and individualized family service plans under part C with individualized service plans under multiple Federal and State programs, such as title I of the Rehabilitation Act of 1973 (vocational rehabilitation), title XIX of the Social Security Act (Medicaid), and title XVI of the Social Security Act (supplemental security income);

`(C) developing and implementing interagency financing strategies for the provision of education, health, mental health, and social services, including transition services and related services under this Act; and

`(D) interagency personnel development for individuals working on coordinated services.

`(3) COORDINATION WITH CERTAIN PROJECTS UNDER ELEMENTARY AND SECONDARY EDUCATION ACT OF 1965- If a local educational agency is carrying out a coordinated services project under title XI of the Elementary and Secondary Education Act of 1965 and a coordinated services project under this part in the same schools, such agency shall use amounts under this subsection in accordance with the requirements of that title.

`(g) SCHOOL-BASED IMPROVEMENT PLAN-

`(1) IN GENERAL- Each local educational agency may, in accordance with paragraph (2), use funds made available under this part to permit a public school within the jurisdiction of the local educational agency to design, implement, and evaluate a school-based improvement plan that is consistent with the purposes described in section 651(b) and that is designed to improve educational and transitional results for all children with disabilities and, as appropriate, for other children consistent with subparagraphs (A) and (B) of subsection (a)(4) in that public school.

`(2) AUTHORITY-

`(A) IN GENERAL- A State educational agency may grant authority to a local educational agency to permit a public school described in paragraph (1) (through a school-based standing panel established under paragraph (4)(B)) to design, implement, and evaluate a school-based improvement plan described in paragraph (1) for a period not to exceed 3 years.

`(B) RESPONSIBILITY OF LOCAL EDUCATIONAL AGENCY- If a State educational agency grants the authority described in subparagraph (A), a local educational agency that is granted such authority shall have the sole responsibility of oversight of all activities relating to the design, implementation, and evaluation of any school-based improvement plan that a public school is permitted to design under this subsection.

`(3) PLAN REQUIREMENTS- A school-based improvement plan described in paragraph (1) shall--

`(A) be designed to be consistent with the purposes described in section 651(b) and to improve educational and transitional results for all children with disabilities and, as appropriate, for other children consistent with subparagraphs (A) and (B) of subsection (a)(4), who attend the school for which the plan is designed and implemented;

`(B) be designed, evaluated, and, as appropriate, implemented by a school-based standing panel established in accordance with paragraph (4)(B);

`(C) include goals and measurable indicators to assess the progress of the public school in meeting such goals; and

`(D) ensure that all children with disabilities receive the services described in the individualized education programs of such children.

`(4) RESPONSIBILITIES OF THE LOCAL EDUCATIONAL AGENCY- A local educational agency that is granted authority under paragraph (2) to permit a public school to design, implement, and evaluate a school-based improvement plan shall--

`(A) select each school under the jurisdiction of such agency that is eligible to design, implement, and evaluate such a plan;

`(B) require each school selected under subparagraph (A), in accordance with criteria established by such local educational agency under subparagraph (C), to establish a school-based standing panel to carry out the duties described in paragraph (3)(B);

`(C) establish--

`(i) criteria that shall be used by such local educational agency in the selection of an eligible school under subparagraph (A);

`(ii) criteria that shall be used by a public school selected under subparagraph (A) in the establishment of a school-based standing panel to carry out the duties described in paragraph (3)(B) and that shall ensure that the membership of such panel reflects the diversity of the community in which the public school is located and includes, at a minimum--

`(I) parents of children with disabilities who attend such public school, including parents of children with disabilities from unserved and underserved populations, as appropriate;

`(II) special education and general education teachers of such public school;

`(III) special education and general education administrators, or the designee of such administrators, of such public school; and

`(IV) related services providers who are responsible for providing services to the children with disabilities who attend such public school; and

`(iii) criteria that shall be used by such local educational agency with respect to the distribution of funds under this part to carry out this subsection;

`(D) disseminate the criteria established under subparagraph (C) to local school district personnel and local parent organizations within the jurisdiction of such local educational agency;

`(E) require a public school that desires to design, implement, and evaluate a school-based improvement plan to submit an application at such time, in such manner, and accompanied by such information as such local educational agency shall reasonably require; and

`(F) establish procedures for approval by such local educational agency of a school-based improvement plan designed under this subsection.

`(5) LIMITATION- A school-based improvement plan described in paragraph (1) may be submitted to a local educational agency for approval only if a consensus with respect to any matter relating to the design, implementation, or evaluation of the goals of such plan is reached by the school-based standing panel that designed such plan.

`(6) ADDITIONAL REQUIREMENTS-

`(A) PARENTAL INVOLVEMENT- In carrying out the requirements of this subsection, a local educational agency shall ensure that the parents of children with disabilities are involved in the design, evaluation, and, where appropriate, implementation of school-based improvement plans in accordance with this subsection.

`(B) PLAN APPROVAL- A local educational agency may approve a school-based improvement plan of a public school within the jurisdiction of such agency for a period of 3 years, if--

`(i) the approval is consistent with the policies, procedures, and practices established by such local educational agency and in accordance with this subsection; and

`(ii) a majority of parents of children who are members of the school-based standing panel, and a majority of other members of the school-based standing panel, that designed such plan agree in writing to such plan.

`(7) EXTENSION OF PLAN- If a public school within the jurisdiction of a local educational agency meets the applicable requirements and criteria described in paragraphs (3) and (4) at the expiration of the 3-year approval period described in paragraph (6)(B), such agency may approve a school-based improvement plan of such school for an additional 3-year period.

`(h) DIRECT SERVICES BY THE STATE EDUCATIONAL AGENCY-

`(1) IN GENERAL- A State educational agency shall use the payments that would otherwise have been available to a local educational agency or to a State agency to provide special education and related services directly to children with disabilities residing in the area served by that local agency, or for whom that State agency is responsible, if the State educational agency determines that the local education agency or State agency, as the case may be--

`(A) has not provided the information needed to establish the eligibility of such agency under this section;

`(B) is unable to establish and maintain programs of free appropriate public education that meet the requirements of subsection (a);

`(C) is unable or unwilling to be consolidated with one or more local educational agencies in order to establish and maintain such programs; or

`(D) has one or more children with disabilities who can best be served by a regional or State program or service-delivery system designed to meet the needs of such children.

`(2) MANNER AND LOCATION OF EDUCATION AND SERVICES- The State educational agency may provide special education and related services under paragraph (1) in such manner and at such locations (including regional or State centers) as the State agency considers appropriate. Such education and services shall be provided in accordance with this part.

`(i) STATE AGENCY ELIGIBILITY- Any State agency that desires to receive a subgrant for any fiscal year under section 611(g) shall demonstrate to the satisfaction of the State educational agency that--

`(1) all children with disabilities who are participating in programs and projects funded under this part receive a free appropriate public education, and that those children and their parents are provided all the rights and procedural safeguards described in this part; and

`(2) the agency meets such other conditions of this section as the Secretary determines to be appropriate.

`(j) DISCIPLINARY INFORMATION- The State may require that a local educational agency include in the records of a child with a disability a statement of any current or previous disciplinary action that has been taken against the child and transmit such statement to the same extent that such disciplinary information is included in, and transmitted with, the student records of nondisabled children. The statement may include a description of any behavior engaged in by the child that required disciplinary action, a description of the disciplinary action taken, and any other information that is relevant to the safety of the child and other individuals involved with the child. If the State adopts such a policy, and the child transfers from one school to another, the transmission of any of the child's records must include both the child's current individualized education program and any such statement of current or previous disciplinary action that has been taken against the child.

`SEC. 614. EVALUATIONS, ELIGIBILITY DETERMINATIONS, INDIVIDUALIZED EDUCATION PROGRAMS, AND EDUCATIONAL PLACEMENTS.

`(a) EVALUATIONS AND REEVALUATIONS-

`(1) INITIAL EVALUATIONS-

`(A) IN GENERAL- A State educational agency, other State agency, or local educational agency shall conduct a full and individual initial evaluation, in accordance with this paragraph and subsection (b), before the initial provision of special education and related services to a child with a disability under this part.

`(B) PROCEDURES- Such initial evaluation shall consist of procedures--

`(i) to determine whether a child is a child with a disability (as defined in section 602(3)); and

`(ii) to determine the educational needs of such child.

`(C) PARENTAL CONSENT-

`(i) IN GENERAL- The agency proposing to conduct an initial evaluation to determine if the child qualifies as a child with a disability as defined in section 602(3)(A) or 602(3)(B) shall obtain an informed consent from the parent of such child before the evaluation is conducted. Parental consent for evaluation shall not be construed as consent for placement for receipt of special education and related services.

`(ii) REFUSAL- If the parents of such child refuse consent for the evaluation, the agency may continue to pursue an evaluation by utilizing the mediation and due process procedures under section 615, except to the extent inconsistent with State law relating to parental consent.

`(2) REEVALUATIONS- A local educational agency shall ensure that a reevaluation of each child with a disability is conducted--

`(A) if conditions warrant a reevaluation or if the child's parent or teacher requests a reevaluation, but at least once every 3 years; and

`(B) in accordance with subsections (b) and (c).

`(b) EVALUATION PROCEDURES-

`(1) NOTICE- The local educational agency shall provide notice to the parents of a child with a disability, in accordance with subsections (b)(3), (b)(4), and (c) of section 615, that describes any evaluation procedures such agency proposes to conduct.

`(2) CONDUCT OF EVALUATION- In conducting the evaluation, the local educational agency shall--

`(A) use a variety of assessment tools and strategies to gather relevant functional and developmental information, including information provided by the parent, that may assist in determining whether the child is a child with a disability and the content of the child's individualized education program, including information related to enabling the child to be involved in and progress in the general curriculum or, for preschool children, to participate in appropriate activities;

`(B) not use any single procedure as the sole criterion for determining whether a child is a child with a disability or determining an appropriate educational program for the child; and

`(C) use technically sound instruments that may assess the relative contribution of cognitive and behavioral factors, in addition to physical or developmental factors.

`(3) ADDITIONAL REQUIREMENTS- Each local educational agency shall ensure that--

`(A) tests and other evaluation materials used to assess a child under this section--

`(i) are selected and administered so as not to be discriminatory on a racial or cultural basis; and

`(ii) are provided and administered in the child's native language or other mode of communication, unless it is clearly not feasible to do so; and

`(B) any standardized tests that are given to the child--

`(i) have been validated for the specific purpose for which they are used;

`(ii) are administered by trained and knowledgeable personnel; and

`(iii) are administered in accordance with any instructions provided by the producer of such tests;

`(C) the child is assessed in all areas of suspected disability; and

`(D) assessment tools and strategies that provide relevant information that directly assists persons in determining the educational needs of the child are provided.

`(4) DETERMINATION OF ELIGIBILITY- Upon completion of administration of tests and other evaluation materials--

`(A) the determination of whether the child is a child with a disability as defined in section 602(3) shall be made by a team of qualified professionals and the parent of the child in accordance with paragraph (5); and

`(B) a copy of the evaluation report and the documentation of determination of eligibility will be given to the parent.

`(5) SPECIAL RULE FOR ELIGIBILITY DETERMINATION- In making a determination of eligibility under paragraph (4)(A), a child shall not be determined to be a child with a disability if the determinant factor for such determination is lack of instruction in reading or math or limited English proficiency.

`(c) ADDITIONAL REQUIREMENTS FOR EVALUATION AND REEVALUATIONS-

`(1) REVIEW OF EXISTING EVALUATION DATA- As part of an initial evaluation (if appropriate) and as part of any reevaluation under this section, the IEP Team described in subsection (d)(1)(B) and other qualified professionals, as appropriate, shall--

`(A) review existing evaluation data on the child, including evaluations and information provided by the parents of the child, current classroom-based assessments and observations, and teacher and related services providers observation; and

`(B) on the basis of that review, and input from the child's parents, identify what additional data, if any, are needed to determine--

`(i) whether the child has a particular category of disability, as described in section 602(3), or, in case of a reevaluation of a child, whether the child continues to have such a disability;

`(ii) the present levels of performance and educational needs of the child;

`(iii) whether the child needs special education and related services, or in the case of a reevaluation of a child, whether the child continues to need special education and related services; and

`(iv) whether any additions or modifications to the special education and related services are needed to enable the child to meet the measurable annual goals set out in the individualized education program of the child and to participate, as appropriate, in the general curriculum.

`(2) SOURCE OF DATA- The local educational agency shall administer such tests and other evaluation materials as may be needed to produce the data identified by the IEP Team under paragraph (1)(B).

`(3) PARENTAL CONSENT- Each local educational agency shall obtain informed parental consent, in accordance with subsection (a)(1)(C), prior to conducting any reevaluation of a child with a disability, except that such informed parent consent need not be obtained if the local educational agency can demonstrate that it had taken reasonable measures to obtain such consent and the child's parent has failed to respond.

`(4) REQUIREMENTS IF ADDITIONAL DATA ARE NOT NEEDED- If the IEP Team and other qualified professionals, as appropriate, determine that no additional data are needed to determine whether the child continues to be a child with a disability, the local educational agency--

`(A) shall notify the child's parents of--

`(i) that determination and the reasons for it; and

`(ii) the right of such parents to request an assessment to determine whether the child continues to be a child with a disability; and

`(B) shall not be required to conduct such an assessment unless requested to by the child's parents.

`(5) EVALUATIONS BEFORE CHANGE IN ELIGIBILITY- A local educational agency shall evaluate a child with a disability in accordance with this section before determining that the child is no longer a child with a disability.

`(d) INDIVIDUALIZED EDUCATION PROGRAMS-

`(1) DEFINITIONS- As used in this title:

`(A) INDIVIDUALIZED EDUCATION PROGRAM- The term `individualized education program' or `IEP' means a written statement for each child with a disability that is developed, reviewed, and revised in accordance with this section and that includes--

`(i) a statement of the child's present levels of educational performance, including--

`(I) how the child's disability affects the child's involvement and progress in the general curriculum; or

`(II) for preschool children, as appropriate, how the disability affects the child's participation in appropriate activities;

`(ii) a statement of measurable annual goals, including benchmarks or short-term objectives, related to--

`(I) meeting the child's needs that result from the child's disability to enable the child to be involved in and progress in the general curriculum; and

`(II) meeting each of the child's other educational needs that result from the child's disability;

`(iii) a statement of the special education and related services and supplementary aids and services to be provided to the child, or on behalf of the child, and a statement of the program modifications or supports for school personnel that will be provided for the child--

`(I) to advance appropriately toward attaining the annual goals;

`(II) to be involved and progress in the general curriculum in accordance with clause (i) and to participate in extracurricular and other nonacademic activities; and

`(III) to be educated and participate with other children with disabilities and nondisabled children in the activities described in this paragraph;

`(iv) an explanation of the extent, if any, to which the child will not participate with nondisabled children in the regular class and in the activities described in clause (iii);

`(v)(I) a statement of any individual modifications in the administration of State or districtwide assessments of student achievement that are needed in order for the child to participate in such assessment; and

`(II) if the IEP Team determines that the child will not participate in a particular State or districtwide assessment of student achievement (or part of such an assessment), a statement of--

`(aa) why that assessment is not appropriate for the child; and

`(bb) how the child will be assessed;

`(vi) the projected date for the beginning of the services and modifications described in clause (iii), and the anticipated frequency, location, and duration of those services and modifications;

`(vii)(I) beginning at age 14, and updated annually, a statement of the transition service needs of the child under the applicable components of the child's IEP that focuses on the child's courses of study (such as participation in advanced-placement courses or a vocational education program);

`(II) beginning at age 16 (or younger, if determined appropriate by the IEP Team), a statement of needed transition services for the child, including, when appropriate, a statement of the interagency responsibilities or any needed linkages; and

`(III) beginning at least one year before the child reaches the age of majority under State law, a statement that the child has been informed of his or her rights under this title, if any, that will transfer to the child on reaching the age of majority under section 615(m); and

`(viii) a statement of--

`(I) how the child's progress toward the annual goals described in clause (ii) will be measured; and

`(II) how the child's parents will be regularly informed (by such means as periodic report cards), at least as often as parents are informed of their nondisabled children's progress, of--

`(aa) their child's progress toward the annual goals described in clause (ii); and

`(bb) the extent to which that progress is sufficient to enable the child to achieve the goals by the end of the year.

`(B) INDIVIDUALIZED EDUCATION PROGRAM TEAM- The term `individualized education program team' or `IEP Team' means a group of individuals composed of--

`(i) the parents of a child with a disability;

`(ii) at least one regular education teacher of such child (if the child is, or may be, participating in the regular education environment);

`(iii) at least one special education teacher, or where appropriate, at least one special education provider of such child;

`(iv) a representative of the local educational agency who--

`(I) is qualified to provide, or supervise the provision of, specially designed instruction to meet the unique needs of children with disabilities;

`(II) is knowledgeable about the general curriculum; and

`(III) is knowledgeable about the availability of resources of the local educational agency;

`(v) an individual who can interpret the instructional implications of evaluation results, who may be a member of the team described in clauses (ii) through (vi);

`(vi) at the discretion of the parent or the agency, other individuals who have knowledge or special expertise regarding the child, including related services personnel as appropriate; and

`(vii) whenever appropriate, the child with a disability.

THIS IS NOT THE END OF THE DOCUMENT

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