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(a) RESERVATIONS AND ALLOTMENT- From the amount made available to carry out this subpart under section 2404(b)(1) for a fiscal year—

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(1) the Secretary shall reserve—

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(A) three-fourths of 1 percent for the Secretary of the Interior for programs under this subpart for schools operated or funded by the Bureau of Indian Affairs;

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(B) one-half of 1 percent to provide assistance under this subpart to the outlying areas; and

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(C) such sums as may be necessary for continuation awards on grants awarded under section 3136 prior to the date of enactment of the No Child Left Behind Act of 2001; and

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(2) from the remainder of such amount and subject to subsection (b), the Secretary shall make grants by allotting to each eligible State educational agency under this subpart an amount that bears the same relationship to such remainder for such year as the amount received under part A of title I for such year by such State educational agency bears to the amount received under such part for such year by all State educational agencies.

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(b) MINIMUM ALLOTMENT- The amount of any State educational agencys allotment under subsection (a)(2) for any fiscal year may not be less than one-half of 1 percent of the amount made available for allotments to States under this part for such year.

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(c) REALLOTMENT OF UNUSED FUNDS- If any State educational agency does not apply for an allotment under this subpart for a fiscal year, or does not use its entire allotment under this subpart for that fiscal year, the Secretary shall reallot the amount of the State educational agencys allotment, or the unused portion of the allotment, to the remaining State educational agencies that use their entire allotments under this subpart in accordance with this section.

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(d) STATE EDUCATIONAL AGENCY DEFINED- In this section, the term State educational agency does not include an agency of an outlying area or the Bureau of Indian Affairs.