(a) Reservation
From the funds appropriated under section 7176 of this title for any fiscal year, the Secretary shall reserve—

(1) such amounts as may be necessary to make continuation awards to subgrant recipients under covered programs (under the terms of those grants);

(2) not more than 1 percent for national activities, which the Secretary may carry out directly or through grants and contracts, such as providing technical assistance to eligible entities carrying out programs under this part or conducting a national evaluation; and

(3) not more than 1 percent for payments to the outlying areas and the Bureau of Indian Education, to be allotted in accordance with their respective needs for assistance under this part, as determined by the Secretary, to enable the outlying areas and the Bureau to carry out the purpose of this part.

(b) State allotments

(1) Determination
From the funds appropriated under section 7176 of this title for any fiscal year and remaining after the Secretary makes reservations under subsection (a), the Secretary shall allot to each State for the fiscal year an amount that bears the same relationship to the remainder as the amount the State received under subpart 2 of part A of subchapter I for the preceding fiscal year bears to the amount all States received under that subpart for the preceding fiscal year, except that no State shall receive less than an amount equal to one-half of 1 percent of the total amount made available to all States under this subsection.

(2) Reallotment of unused funds
If a State does not receive an allotment under this part for a fiscal year, the Secretary shall reallot the amount of the State's allotment to the remaining States in accordance with this part.

(c) State use of funds

(1) In general
Each State that receives an allotment under this part shall reserve not less than 93 percent of the amount allotted to such State under subsection (b), for each fiscal year for awards to eligible entities under section 7174 of this title.

(2) State administration
A State educational agency may use not more than 2 percent of the amount made available to the State under subsection (b) for—

(A) the administrative costs of carrying out its responsibilities under this part;

(B) establishing and implementing a rigorous peer-review process for subgrant applications described in section 7174(b) of this title (including consultation with the Governor and other State agencies responsible for administering youth development programs and adult learning activities); and

(C) awarding of funds to eligible entities (in consultation with the Governor and other State agencies responsible for administering youth development programs and adult learning activities).

(3) State activities
A State educational agency may use not more than 5 percent of the amount made available to the State under subsection (b) for the following activities:

(A) Monitoring and evaluating programs and activities assisted under this part.

(B) Providing capacity building, training, and technical assistance under this part.

(C) Conducting a comprehensive evaluation (directly, or through a grant or contract) of the effectiveness of programs and activities assisted under this part.

(D) Providing training and technical assistance to eligible entities that are applicants for or recipients of awards under this part.

(E) Ensuring that any eligible entity that receives an award under this part from the State aligns the activities provided by the program with the challenging State academic standards.

(F) Ensuring that any such eligible entity identifies and partners with external organizations, if available, in the community.

(G) Working with teachers, principals, parents, the local workforce, the local community, and other stakeholders to review and improve State policies and practices to support the implementation of effective programs under this part.

(H) Coordinating funds received under this part with other Federal and State funds to implement high-quality programs.

(I) Providing a list of prescreened external organizations, as described under section 7173(a)(11) of this title.