ENTITLEMENTS AND PAYMENTS.

SEC. 2014. ENTITLEMENTS AND PAYMENTS. (a) Amount for Section 3(a) Children.—Section 3(d)(1)(A) of the Act is amended to read as follows: “(A) in the case of any local educational agency with respect to which the number of children is determined under subsection (a) an amount equal to 100 per centum of the local contribution rate multiplied by the number of children determined under such subsection plus the product obtained with respect to such agency under subparagraph (B); and”. (b) Amount for Other Children.—Section 3(d)(1)(B) of the Act is amended to read as follows: “(B) in any other case, an amount equal to 25 per centum of the local contribution rate multiplied by the number of children determined with respect to such agency for such fiscal year under subsection (b).”. 102 STAT. 295 (c) Special Rules.—(1) Section 3(d)(2)(B)(i) of the Act is amended to read as follows: “(i) the amount of payment resulting from paragraph (1), as is otherwise provided in this subsection with respect to any local educational agency for any fiscal year, together with the funds available to such agency from State and local sources and from other sections of this title, determined in accordance with subparagraph (E), is less than the amount necessary to enable such agency to provide a level of education equivalent to the State average during the preceding fiscal year or to the average of that maintained during the preceding fiscal year in three or more of the school districts of the State which are generally comparable to the school district of such agency, whichever is higher, increased or decreased, as the case may be, in the same percentage as the cost of such level of education increased or decreased from the second preceding fiscal year to the prior fiscal year;”. (2) Section 3(d)(2)(B) of the Act is amended by inserting after the first sentence the following new sentences: “The increase computed under this subparagraph shall be sufficient to allow the school district of the local educational agency to provide a level of education (calculated in accordance with this subparagraph) equal to the average of the three comparable districts in the State or the State average, whichever is greater, as described in clause (i). For the purpose of clause (ii), the Secretary shall determine that a reasonable tax effort has been made if the tax rate of the agency in the year for which the determination is made is an amount that is at least equal to 80 percent of the average tax rate for general fund purposes of comparable school districts for such fiscal year. Coterminous military districts shall be deemed to meet the requirement of such reasonable tax effort. Except for coterminous military districts, payments made to any agency under this subparagraph in any fiscal year shall be reduced by the percentage that the average tax rate for operational purposes of the comparable school districts or, if none, the State average tax rate, exceeds the tax rate of such agency.”. (3) Section 3(d)(2)(E) of the Act is amended to read as follows: “(E) For the purpose of subparagraph (B)(i) of this paragraph— “(i) available funds may not include any cash balance at the end of a year allowed under State law; or “(ii) whenever no State law governing cash balance exists, available funds may not include 30 percent of the local educational agency’s operating costs.”. (d) Districts With Unusual Geographic Factors.—(1) Section 3(d)(3)(B)(ii) of the Act is amended by striking out “is authorized to” and inserting in lieu thereof “shall”. (2) Section 3(d)(3)(B)(ii) of the Act is amended by adding at the end thereof the following new sentence: “The amount of any such supplementary payment may not exceed the per pupil share (computed with regard to all children in average daily attendance), as determined by the Secretary, of the increased current expenditures necessitated by such unusual geographical factors.”. (e) Coterminous Agency Rule.—Section 3(h) of the Act is amended— (1) by inserting “(1)” after the subsection designation; and (2) by adding at the end the following: 102 STAT. 296 “(2) For the fiscal year beginning October 1, 1987, and for each year thereafter, the local contribution rate for coterminous local educational agencies under paragraph (1) shall be not less than 70 per centum of the average per pupil expenditure in all States during the second preceding year prior to the fiscal year for which the determination is made unless such payment would raise the per pupil expenditure above the average for that State. Whenever the preceding sentence applies, the local contribution rate may not be less than the amount necessary to raise the per pupil expenditure for that district to the average per pupil expenditure for the State in which such agency is located. The first 2 sentences of this paragraph shall not apply for local educational agencies in any State in which the State equalization law would prohibit the local educational agency from retaining such additional funds or in which State law would require that the State contribution would be reduced in proportion to such additional funds. The local contribution rate for local educational agencies under this paragraph may not be less than 50 per centum of the average per pupil expenditure in all States during the second preceding fiscal year prior to the fiscal year for which the determination is made.”.