Rural Education Initiative Act of 1999

Establishes an REI subpart 1 Small and Rural School Program.

Makes an local educational agency (LEA) eligible for alternative use formula grants from States, and for direct grants from the Secretary of Education if: (1) the total number of students in average daily attendance at all of the schools served by the LEA is less than 600; and (2) all of the schools served by the LEA are located in a rural community (with a Rural-Urban Continuum Code of 6, 7, 8, or 9; but allows waiver of this requirement where the LEA is certified as located in a rural area by a State agency).

Provides, under the alternative use formula grant program, that an eligible LEA may use applicable funding that it is eligible to receive from the State educational agency (SEA) for a fiscal year to support local or statewide education reform efforts intended to improve the achievement of elementary school and secondary school students and the quality of instruction provided for the students. Defines applicable funding as funds received under the following ESEA provisions: (1) title II (Dwight D. Eisenhower Professional Development Program); (2) title IV (Safe and Drug-Free Schools and Communities); (3) title VI (Innovative Education Program Strategies); (4) part A and part C of title VII; and (5) part I of title X. Requires each SEA receiving applicable funding to disburse it to LEAs for alternative uses at the same times it disburses it to LEAs that do not intend to use it for alternative uses for that fiscal year.

Authorizes the Secretary to award grants to eligible LEAs to support local or statewide education reform efforts intended to improve the achievement of elementary school and secondary school students and the quality of instruction provided for the students. Sets forth formulas for determining the amounts of such grants, based on numbers of children in average daily attendance at schools served by the LEAs, minus amounts received under applicable funding.

Sets forth accountability requirements. Requires LEAs that receive REI alternative use formula grants or competitive grants to administer tests to assess the academic achievement of students in their schools. Requires each SEA that receives applicable funding to: (1) determine, after the second year of an LEA's participation in either subpart 1 grant program, whether the LEA's students performed in accordance with specified requirements; and (2) only allow continued participation by LEAs that met certain requirements.

Establishes an REI subpart 2 Low-Income and Rural School Program.

Directs the Secretary to make grants to SEAs for elementary and secondary education development by LEAs that are eligible if: (1) 20 percent or more of the children aged five through 17, whom the LEA serves, are from families with incomes below the poverty line; and (2) all of the schools served by the LEA are located in a rural community (with a Rural-Urban Continuum Code of 6, 7, 8, or 9).

Reserves a specified portion of grant funds for schools operated by the Bureau of Indian Affairs.

Sets forth an allotment formula for grants to State educational agencies (SEAs) to make grants to eligible LEAs.

Authorizes the Secretary to make direct competitive grants to specially qualified eligible rural LEAs in nonparticipating States.

Requires LEAs or their schools to use grant funds for: (1) educational technology, including software and hardware; (2) professional development; (3) technical assistance; (4) teacher recruitment and retention; (5) parental involvement activities; or (6) academic enrichment programs.

Requires SEAs to award grants on a competitive or formula basis. Limits to five percent that portion of a subpart 2 grant which may be used for State administrative costs.

Requires subpart 2 program reports by SEAS, specially qualified LEAs, and the Secretary.

Authorizes appropriations. Requires that such amounts for REI be distributed equally between the subpart 1 and subpart 2 programs.