A bill to protect the concept of neighborhood schools, to provide financial assistance to local educational agencies in each State in order to strengthen neighborhood schools and to increase the use of such schools as community, cultural, and educational centers.

Title I: Neighborhood Schools Program - Neighborhood School Act - Makes it the policy of the United States to encourage the concept of the neighborhood school so that students are assigned to a public elementary or secondary school solely on the basis of residence within the geographic zone which that school serves.

Makes it a policy of the United States that no student may be denied attendance at that neighborhood school serving the geographic zone in which he resides on the basis of race, creed, color, religion, or national origin.

Provides that any student has the right to transfer and be provided transportation out of the neighborhood public elementary or secondary school serving the geographic zone in which he resides if such a student is a member of a minority group and that minority group constitutes at least fifty percent of the students enrolled in that school. Authorizes Federal funds to be made available under the Elementary and Secondary Education Act of 1965 or any other provision of law to pay the cost of the assignment or transportation of students in accordance with the provisions contained in this title.

Prohibits any officer or employee of any department agency or the Federal Government from ordering or requiring the assignment of transportation of students inconsistent with the policy set forth in this title.

Title II: Prize Schools Program - Elementary and Secondary Education Systems Act - States that it is the purpose of this title to strengthen the concept of the neighborhood school through a program of financial assistance for use in meeting the special needs of educationally disadvantaged children in such schools and for establishing such schools as educational and cultural centers for a better community.

Provides that the Commissioner of Education shall in accordance with the provisions of this Act, make payments to State educational agencies for the period beginning July 1, 1972 and ending June 30, 1976.

Authorizes to be appropriated for each fiscal year for the purpose of making such grants an amount equal to not more than 3 percent of the amount appropriated for such year for payments to States under this title.

Provides that the maximum grant which a local educational agency shall be eligible to receive under this title for any fiscal year shall be an amount equal to the Federal percentage (65 percent) multipled by the average per pupil expenditure in that State, or if greater in the United States, and multiplied by the number of children enrolled in the neighborhood schools of such agency who are age five to seventeen years, inclusive.

Defines the term "neighborhood schools" to mean any public elementary or secondary school in which: (1) not less than 75 percent of the children enrolled in such school are assigned to that school on the basis of residence within a specified geographic area which that school serves and not more than 25 percent are assigned to such school on the basis of voluntary request by the parents or guardian of such children or by reason of an order of a court of competent jurisdiction; and (2) (A) not less than 40 percent of the children enrolled in such school are (i) in families having an annual income of less than the low-income factor ($4,000), (ii) in families receiving an annual income in excess of the low-income factor from payments under the program of aid to families with dependent children under a State Plan Approved Under title IV of the Social Security Act, or (iii) living in instituions for neglected or delinquent children (other than such instituions operated by the United States) but not counted for the purpose of a grant to a State agency, or being supported in foster homes with public funds; or (B) not less than 40 percent of the children enrolled in such school are members of a minority group.

Provides that funds available for grants under this title shall be used only in neighborhood schools for programs and projects designed to meet the special educational needs of educationally deprived children and new or innovative school and community educational and recreational programs designed to strengthen community involvement in a more effective use of the neighborhood schools.

States that a local educational agency may receive grants under this title for any fiscal year only upon application approved by the appropriate State educational agency upon its determination consistent with such criteria as the Commissioner may establish: (1) that programs and activities for which assistance is sought will be administered by or under the direct supervision of the applicant; (2) that such assistance will be expended only in neighborhood schools and described with particularity the programs and activities for which such assistance is sought; (3) that policies and procedures will be established to assure the Federal funds made available under this title for any fiscal year (A) will not be commingled with State funds, and (B) will be so used as to supplement and, to the extent practical, increase the level of funds that would, in the absence of such Federal funds, be available for the purposes described in this title, and in no case supplant such funds; (4) that effective procedures will be adopted for evaluating at least annually the effectiveness of programs and activities assisted under this title; (5) that fiscal control and fund accounting procedures will be established as may be necessary to assure proper disbursal of, and accounting for, Federal funds paid to the applicant under this title; (6) reasonable reports will be furnished in such form and containing such information as the Commissioner may reasonably require and such records will be kept and access furnished thereto as the Commissoner may find necessary to assure the correctness and verification of such reports.

Provides that any State desiring to participate under this title shall submit through the State educational agency to the Commissioner an application which provides satisfactory assurances: (1) that payments under this act will be used only for programs activities in neighborhood schools which have been approved by the State educational agency; (2) that such fiscal control and fund accounting procedures will be adopted as may be necessary to assure proper disbursement of, and accounting for, Federal funds paid to the State; and (3) that the State educational agency will make to the Commissioner periodic reports evaluating the effectiveness of payments under this Act and such other reports as may be necessary to enable the Commissioner to perform his duties under this title.

Authorizes the Commissioner to withhold funds under this title if he finds: (1) that the program or activity for which such grant was made has been so changed that it no longer complies with the provisions of this title; or (2) that in the operation of the program or activity there is failure to comply substantially with any such provision. Provides for judicial review of the Commissioner's final action with respect to the approval of an application or with his final action with respect to the withholding of funds.

Sets forth definitions of terms used in this title.