Equity and Choice Act of 1985

Equity and Choice Act of 1985 - Amends chapter 1 (Financial Assistance to Meet the Special Educational Needs of Disadvantaged Children) of the Educational Consolidation and Improvement Act of 1981 (ECIA) (hereinafter referred to as Chapter 1) to add provisions for educational vouchers.

Requires each local educational agency (LEA) to provide an educational voucher, upon parental request, to the parents of each educationally deprived child selected to participate in the LEA's Chapter 1 program.

Requires each LEA to: (1) provide written notice to such parents of the options available to them under Chapter 1, including their right to obtain an educational voucher for their child; (2) afford such parents a reasonable period of time to request such vouchers; and (3) convene an annual public meeting to discuss the availability and authorized uses of such vouchers, and invite parents of all eligible children and representatives of private eligible educational institutions to such meeting.

Sets forth authorized uses of such vouchers. Allows such vouchers to be used as payment toward tuition and/or to obtain compensatory services at: (1) a public school outside the child's school attendance area (if the LEA permits this); (2) a public school outside the child's district; or (3) private school. Sets forth formulas for determining the amount of such a voucher.

Requires each LEA to provide regular Chapter 1 programs and projects for eligible public and private school children whose parents do not request educational vouchers from that LEA.

Sets forth requirements for LEA applications for Chapter 1 assistance.

Declares that such voucher payments to a private school or a public school outside the child's school district shall not constitute Federal financial assistance to the private school or that public school. Declares that the use of such funds by such private or public schools shall not constitute a program or activity receiving Federal financial assistance.

Provides that such voucher payments to parents shall not be subject to Federal, State, or local income taxes.

Requires that any private school eligible for such voucher payments include a statement that it does not discriminate against student applicants or students on the basis of race in any published bylaws, advertisements, admission application forms, or other published materials.

Makes inapplicable to such voucher programs specified Chapter 1 provisions relating to authorized program design and description and application approval and assurances.

Allows each LEA to use Chapter 1 funds to provide for transportation, on an equitable basis, to eligible children whose parents obtain vouchers and enroll such children at public schools outside their school attendance area or school district or at private schools. Makes such use of funds an administrative cost of carrying out Chapter 1 programs and projects.

Sets forth provisions relating to nondiscrimination by private schools in such voucher program. Prohibits voucher payments with respect to any private school if there is in effect a judgment by a U.S. district court declaring that such school follows a racially discriminatory policy, or if a U.S. court of appeals has ordered the district court to enter such a judgment. Requires each private school, before receiving voucher payments, to file with the LEA a verified statement: (1) declaring that such school has not followed a racially discriminatory policy during the previous 12 months; (2) indicating whether such a declaratory judgment or order has been entered against the school in an action brought under this Act; and (3) attesting that the school has complied with the requirement to include a statement of nondiscrimination in its published materials. Grants the Attorney General exclusive jurisdiction to investigate and determine whether a private school is following a racially discriminatory policy. Defines "racially discriminatory policy" for purposes of this Act. Declares that a racially discriminatory policy shall not include failure of any institution to pursue or achieve any racial quota, proportion, or representation in the student body. Defines "race" to include color or national origin.

Authorizes the Attorney General to have sole discretion to seek a declaratory judgment against any private school upon: (1) receipt within the previous one-year period of any allegation of discrimination against such institution; and (2) a finding of good cause by the Attorney General. Authorizes the U.S. district court for the district in which the private school is located to make a declaration with respect to whether such institution follows a racially discriminatory policy, upon the filing of an appropriate pleading by the Attorney General. Sets forth procedures with respect to such allegations, pleadings, and declarations. Authorizes the Attorney General to have sole discretion to enter into settlement agreements prior to and in lieu of filing such actions. Authorizes the court to award costs and reasonable attorneys' fees to any private school which prevails in such actions unless the court determines that the Attorney General was substantially justified. Provides for post-judgment motions for declarations that a school no longer follows a racially discriminatory policy.

Sets forth technical and conforming amendments to ECIA and to specified provisions of Federal law relating to the creation of the declaratory judgment remedy.