School Capacity Relief Act

School Capacity Relief Act - Amends the Elementary and Secondary Education Act of 1965 (ESEA) to authorize local educational agencies (LEAs) to prohibit the transfer of students from schools identified for school improvement to another school if that school is at or above capacity or if such transfer would increase that school's average class size above what the State prescribes.

Provides that children retain certain rights to remain in schools to which they have already been transferred under ESEA school improvement provisions.

Requires an LEA to enter into a cooperative agreement for school transfers with another LEA in the area, if all of the LEA's public schools are either: (1) identified for school improvement, corrective action, or restructuring; or (2) are determined by the LEA to be at or above capacity or otherwise ineligible for a transfer.

Authorizes the Secretary of Education to award grants to eligible LEAs to increase capacity at high-performance schools, through measures that may include renovating or constructing facilities, hiring teachers, or purchasing instructional materials. Makes an LEA eligible for such a grant if it has a high percentage or number of students at schools identified under ESEA for school improvement, corrective action, or restructuring. Provides that a high-performance school is one that is not identified for such school improvement, corrective action, or restructuring.

Authorizes LEAs to establish limits on duration or distance of transportation to be provided or paid for under ESEA school improvement provisions for transferring students.