To amend the Elementary and Secondary Education Act of 1965 to authorize grants to States to encourage retention of teachers by paying bonuses to teachers, and for other purposes.

Amends the Elementary and Secondary Education Act of 1965 (ESEA) to establish a program of teacher retention grants as a new part F of title II (Dwight D. Eisenhower Professional Development Program). Authorizes the Secretary of Education to make such grants to applicant States to pay bonuses to teachers to encourage their retention.

Requires States to use such grants to award a bonus of $5,000 to each individual who: (1) is employed as a teacher at a public elementary or secondary school in the State for a period which is at least five continuous years before the date of entering into a continuing employment agreement; (2) receives a satisfactory performance evaluation by the appropriate local educational agency (LEA) for the most recent five years of that period; (3) enters into an agreement with that State to continue employment as a teacher in a public elementary or secondary school in that State for two years; (4) completes that employment; and (5) receives a satisfactory performance evaluation for that employment by the appropriate LEA.

Prohibits such grants from being used to offset a reduction in the salary or benefits of an individual.

Allows the Secretary to make such grants only to the extent or in the amounts provided in advance in appropriations Acts.

Authorizes appropriations for such grants program.

Provides additional funding for such program by allowing States to use specified ESEA title II funds for State-level activities to pay to such individual teachers: (1) amounts for which a State is obligated under the continuing employment agreement, to the extent that part F grants to the State are insufficient; or (2) amounts in excess of those for which a State is obligated under an such agreement.