``(1) to children with disabilities aged 3 through 5, inclusive; and

`(1) to children with disabilities aged 3 through 5, inclusive; and

(1) to children with disabilities aged 3 through 5, inclusive; and

``(b) Eligibility._A State shall be eligible for a grant under this section if such State_

``(1) is eligible under section 612 to receive a grant under this part; and

`(b) ELIGIBILITY- A State shall be eligible for a grant under this section if such State--

`(1) is eligible under section 612 to receive a grant under this part; and

(b) ELIGIBILITY- A State shall be eligible for a grant under this section if such State --

``(c) Allocations to States._

``(1) In general._The Secretary shall allocate the amount made available to carry out this section for a fiscal year among the States in accordance with paragraph (2) or (3), as the case may be.

`(c) ALLOCATIONS TO STATES-

`(1) IN GENERAL- The Secretary shall allocate funds among the States in accordance with paragraph (2) or (3), as appropriate.

(c) ALLOCATIONS TO STATES-

``(A) Allocation._

``(i) In general._Except as provided in subparagraph (B), the Secretary shall_

``(I) allocate to each State the amount the State received under this section for fiscal year 1997;

``(II) allocate 85 percent of any remaining funds to States on the basis of the States' relative populations of children aged 3 through 5; and

``(III) allocate 15 percent of those remaining funds to States on the basis of the States' relative populations of all children aged 3 through 5 who are living in poverty.

`(A)(i) Except as provided in subparagraph (B), the Secretary shall--

`(I) allocate to each State the amount it received for fiscal year 1997;

`(II) allocate 85 percent of any remaining funds to States on the basis of their relative populations of children aged 3 through 5; and

`(III) allocate 15 percent of those remaining funds to States on the basis of their relative populations of all children aged 3 through 5 who are living in poverty.

(I) allocate to each State the amount it received for fiscal year 1997;

(II) allocate 85 percent of any remaining funds to States on the basis of their relative populations of children aged 3 through 5; and

(III) allocate 15 percent of those remaining funds to States on the basis of their relative populations of all children aged 3 through 5 who are living in poverty.

``(B) Limitations._Notwithstanding subparagraph (A), allocations under this paragraph shall be subject to the following:

``(i) Preceding years._No State's allocation shall be less than its allocation under this section for the preceding fiscal year.

``(ii) Minimum._No State's allocation shall be less than the greatest of_

``(I) the sum of_

``(aa) the amount the State received under this section for fiscal year 1997; and

``(bb) 1/3 of 1 percent of the amount by which the amount appropriated under subsection (j) for the fiscal year exceeds the amount appropriated for this section for fiscal year 1997;

``(II) the sum of_

``(aa) the amount the State received under this section for the preceding fiscal year; and

``(bb) that amount multiplied by the percentage by which the increase in the funds appropriated under this section from the preceding fiscal year exceeds 1.5 percent; or

``(III) the sum of_

``(aa) the amount the State received under this section for the preceding fiscal year; and

``(bb) that amount multiplied by 90 percent of the percentage increase in the amount appropriated under this section from the preceding fiscal year.

``(iii) Maximum._Notwithstanding clause (ii), no State's allocation under this paragraph shall exceed the sum of_

``(I) the amount the State received under this section for the preceding fiscal year; and

``(II) that amount multiplied by the sum of 1.5 percent and the percentage increase in the amount appropriated under this section from the preceding fiscal year.

`(B) Notwithstanding subparagraph (A), allocations under this paragraph shall be subject to the following:

`(i) No State's allocation shall be less than its allocation for the preceding fiscal year.

`(ii) No State's allocation shall be less than the greatest of--

`(I) the sum of--

`(aa) the amount it received for fiscal year 1997; and

`(bb) one third of one percent of the amount by which the amount appropriated under subsection (j) exceeds the amount appropriated under this section for fiscal year 1997;

`(II) the sum of--

`(aa) the amount it received for the preceding fiscal year; and

`(bb) that amount multiplied by the percentage by which the increase in the funds appropriated from the preceding fiscal year exceeds 1.5 percent; or

`(III) the sum of--

`(aa) the amount it received for the preceding fiscal year; and

`(bb) that amount multiplied by 90 percent of the percentage increase in the amount appropriated from the preceding fiscal year.

`(iii) Notwithstanding clause (ii), no State's allocation under this paragraph shall exceed the sum of--

`(I) the amount it received for the preceding fiscal year; and

`(II) that amount multiplied by the sum of 1.5 percent and the percentage increase in the amount appropriated.

(i) No State's allocation shall be less than its allocation for the preceding fiscal year.

(ii) No State's allocation shall be less than the greatest of --

(I) the sum of --

(aa) the amount it received for fiscal year 1997; and

(II) the sum of --

(aa) the amount it received for the preceding fiscal year; and

(bb) that amount multiplied by the percentage by which the increase in the funds appropriated from the preceding fiscal year exceeds 1.5 percent; or

(III) the sum of --

(aa) the amount it received for the preceding fiscal year; and

(bb) that amount multiplied by 90 percent of the percentage increase in the amount appropriated from the preceding fiscal year.

(I) the amount it received for the preceding fiscal year; and

(II) that amount multiplied by the sum of 1.5 percent and the percentage increase in the amount appropriated.

``(3) Decrease in funds._If the amount available for allocations to States under paragraph (1) is less than the amount allocated to the States under this section for the preceding fiscal year, those allocations shall be calculated as follows:

``(A) Allocations._If the amount available for allocations is greater than the amount allocated to the States for fiscal year 1997, each State shall be allocated the sum of_

``(i) the amount the State received under this section for fiscal year 1997; and

``(ii) an amount that bears the same relation to any remaining funds as the increase the State received under this section for the preceding fiscal year over fiscal year 1997 bears to the total of all such increases for all States.

`(3) DECREASE IN FUNDS- If the amount available for allocations to States under paragraph (1) is less than the amount allocated to the States under this section for the preceding fiscal year, those allocations shall be calculated as follows:

`(A) If the amount available for allocations is greater than the amount allocated to the States for fiscal year 1997, each State shall be allocated the sum of--

`(i) the amount it received for fiscal year 1997; and

`(ii) an amount that bears the same relation to any remaining funds as the increase the State received for the preceding fiscal year over fiscal year 1997 bears to the total of all such increases for all States.

(3) DECREASE IN FUNDS- If the amount available for allocations to States under paragraph (1) is less than the amount allocated to the States under this section for the preceding fiscal year, those allocations shall be calculated as follows:

(A) If the amount available for allocations is greater than the amount allocated to the States for fiscal year 1997, each State shall be allocated the sum of --

(i) the amount it received for fiscal year 1997; and

(ii) an amount that bears the same relation to any remaining funds as the increase the State received for the preceding fiscal year over fiscal year 1997 bears to the total of all such increases for all States.

``(d) Reservation for State Activities._

``(1) In general._Each State may reserve not more than the amount described in paragraph (2) for administration and other State-level activities in accordance with subsections (e) and (f).

``(2) Amount described._For each fiscal year, the Secretary shall determine and report to the State educational agency an amount that is 25 percent of the amount the State received under this section for fiscal year 1997, cumulatively adjusted by the Secretary for each succeeding fiscal year by the lesser of_

``(A) the percentage increase, if any, from the preceding fiscal year in the State's allocation under this section; or

``(B) the percentage increase, if any, from the preceding fiscal year in the Consumer Price Index For All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor.

``(e) State Administration._

``(1) In general._For the purpose of administering this section (including the coordination of activities under this part with, and providing technical assistance to, other programs that provide services to children with disabilities) a State may use not more than 20 percent of the maximum amount the State may reserve under subsection (d) for any fiscal year.

``(2) Administration of part c._Funds described in paragraph (1) may also be used for the administration of part C of this Act, if the State educational agency is the lead agency for the State under that part.

``(f) Other State-Level Activities._Each State shall use any funds the State reserves under subsection (d) and does not use for administration under subsection (e)_

``(1) for support services (including establishing and implementing the mediation process required by section 615(e)), which may benefit children with disabilities younger than 3 or older than 5 as long as those services also benefit children with disabilities aged 3 through 5;

`(d) RESERVATION FOR STATE ACTIVITIES-

`(1) IN GENERAL- Each State may retain not more than the amount described in paragraph (2) for administration and other State-level activities in accordance with subsections (e) and (f).

`(2) AMOUNT DESCRIBED- For each fiscal year, the Secretary shall determine and report to the State educational agency an amount that is 25 percent of the amount the State received under this section for fiscal year 1997, cumulatively adjusted by the Secretary for each succeeding fiscal year by the lesser of--

`(A) the percentage increase, if any, from the preceding fiscal year in the State's allocation under this section; or

`(B) the percentage increase, if any, from the preceding fiscal year in the Consumer Price Index For All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor.

`(e) STATE ADMINISTRATION-

`(1) IN GENERAL- For the purpose of administering this section (including the coordination of activities under this part with, and providing technical assistance to, other programs that provide services to children with disabilities) a State may use not more than 20 percent of the maximum amount it may retain under subsection (d) for any fiscal year.

`(2) ADMINISTRATION OF PART C- Funds described in paragraph (1) may also be used for the administration of part C of this Act, if the State educational agency is the lead agency for the State under that part.

`(f) OTHER STATE-LEVEL ACTIVITIES- Each State shall use any funds it retains under subsection (d) and does not use for administration under subsection (e)--

`(1) for support services (including establishing and implementing the mediation and voluntary binding arbitration process required by section 615(e)), which may benefit children with disabilities younger than 3 or older than 5 as long as those services also benefit children with disabilities aged 3 through 5;

(d) RESERVATION FOR STATE ACTIVITIES-

(2) AMOUNT DESCRIBED- For each fiscal year, the Secretary shall determine and report to the State educational agency an amount that is 25 percent of the amount the State received under this section for fiscal year 1997, cumulatively adjusted by the Secretary for each succeeding fiscal year by the lesser of --

(A) the percentage increase, if any, from the preceding fiscal year in the State's allocation under this section; or

(e) STATE ADMINISTRATION-

``(3) for activities at the State and local levels to meet the performance goals established by the State under section 612(a)(15) and to support implementation of the State plan under subpart 1 of part D if the State receives funds under that subpart; or

``(4) to supplement other funds used to develop and implement a statewide coordinated services system designed to improve results for children and families, including children with disabilities and their families, but not more than 1 percent of the amount received by the State under this section for a fiscal year.

``(g) Subgrants to Local Educational Agencies._

``(1) Subgrants required._Each State that receives a grant under this section for any fiscal year shall distribute all of the grant funds that the State does not reserve under subsection (d) to local educational agencies in the State that have established their eligibility under section 613, as follows:

``(A) Base payments._The State shall first award each local educational agency described in paragraph (1) the amount that agency would have received under this section for fiscal year 1997 if the State had distributed 75 percent of its grant for that year under section 619(c)(3), as such section was then in effect.

``(B) Allocation of remaining funds._After making allocations under subparagraph (A), the State shall_

``(i) allocate 85 percent of any remaining funds to those local educational agencies on the basis of the relative numbers of children enrolled in public and private elementary schools and secondary schools within the local educational agency's jurisdiction; and

``(ii) allocate 15 percent of those remaining funds to those local educational agencies in accordance with their relative numbers of children living in poverty, as determined by the State educational agency.

``(2) Reallocation of funds._If a State educational agency determines that a local educational agency is adequately providing a free appropriate public education to all children with disabilities aged 3 through 5 residing in the area served by that agency with State and local funds, the State educational agency may reallocate any portion of the funds under this section that are not needed by that local educational agency to provide a free appropriate public education to other local educational agencies in the State that are not adequately providing special education and related services to all children with disabilities aged 3 through 5 residing in the areas the other local educational agencies serve.

``(h) Part C Inapplicable._Part C of this Act does not apply to any child with a disability receiving a free appropriate public education, in accordance with this part, with funds received under this section.

``(i) Definition._For the purpose of this section, the term `State' means each of the 50 States, the District of Columbia, and the Commonwealth of Puerto Rico.

`(3) for activities at the State and local levels to meet the performance goals established by the State under section 612(a)(16) and to support implementation of the State plan under subpart 1 of part D if the State receives funds under that subpart; or

`(4) to supplement other funds used to develop and implement a Statewide coordinated services system designed to improve results for children and families, including children with disabilities and their families, but not to exceed one percent of the amount received by the State under this section for a fiscal year.

`(g) SUBGRANTS TO LOCAL EDUCATIONAL AGENCIES-

`(1) SUBGRANTS REQUIRED- Each State that receives a grant under this section for any fiscal year shall distribute all of the grant funds that it does not reserve under subsection (d) to local educational agencies in the State that have established their eligibility under section 613, as follows:

`(A) BASE PAYMENTS- The State shall first award each agency described in paragraph (1) the amount that agency would have received under this section for fiscal year 1997 if the State had distributed 75 percent of its grant for that year under section 619(c)(3), as then in effect.

`(B) ALLOCATION OF REMAINING FUNDS- After making allocations under subparagraph (A), the State shall--

`(i) allocate 85 percent of any remaining funds to those agencies on the basis of the relative numbers of children enrolled in public and private elementary and secondary schools within the agency's jurisdiction; and

`(ii) allocate 15 percent of those remaining funds to those agencies in accordance with their relative numbers of children living in poverty, as determined by the State educational agency.

`(2) REALLOCATION OF FUNDS- If a State educational agency determines that a local educational agency is adequately providing a free appropriate public education to all children with disabilities aged 3 through 5 residing in the area served by that agency with State and local funds, the State educational agency may reallocate any portion of the funds under this section that are not needed by that local agency to provide a free appropriate public education to other local educational agencies in the State that are not adequately providing special education and related services to all children with disabilities aged 3 through 5 residing in the areas they serve.

`(h) PART C INAPPLICABLE- Part C of this Act does not apply to any child with a disability receiving a free appropriate public education, in accordance with this part, with funds received under this section.

`(i) DEFINITION- For the purpose of this section, the term `State' means each of the 50 States, the District of Columbia, and the Commonwealth of Puerto Rico.

(5) to supplement other funds used to develop and implement a Statewide coordinated services system designed to improve results for children and families, including children with disabilities and their families, but not to exceed one percent of the amount received by the State under this section for a fiscal year.

(g) SUBGRANTS TO LOCAL EDUCATIONAL AGENCIES-

(B) ALLOCATION OF REMAINING FUNDS- After making allocations under subparagraph (A), the State shall --

(i) allocate 85 percent of any remaining funds to those agencies on the basis of the relative numbers of children enrolled in public and private elementary and secondary schools within the agency's jurisdiction; and

(ii) allocate 15 percent of those remaining funds to those agencies in accordance with their relative numbers of children living in poverty, as determined by the State educational agency.

(2) REALLOCATION OF FUNDS- If a State educational agency determines that a local educational agency is adequately providing a free appropriate public education to all children with disabilities aged 3 through 5 residing in the area served by that agency with State and local funds, the State educational agency may reallocate any portion of the funds under this section that are not needed by that local agency to provide a free appropriate public education to other local educational agencies in the State that are not adequately providing special education and related services to all children with disabilities aged 3 through 5 residing in the areas they serve.

(i) DEFINITION- For the purpose of this section, the term 'State' means each of the 50 States, the District of Columbia, and the Commonwealth of Puerto Rico.