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``SEC. 1418. TRANSITION SERVICES.
- ``(a) Transition Services.--Each State agency shall reserve not more than 10 percent of the amount such agency receives under this subpart for any fiscal year to support projects that facilitate the transition of children from State-operated institutions to local educational agencies.
- ``(b) Conduct of Projects.--A project supported under this section may be conducted directly by the State agency, or through a contract or other arrangement with one or more local educational agencies, other public agencies, or private nonprofit organizations.
- ``(c) Limitation.--Any funds reserved under subsection (a) shall be used only to provide transitional educational services, which may include pupil services and mentoring, to neglected and delinquent children in schools other than State-operated institutions.
- ``(d) Construction.--Nothing in this section shall be construed to prohibit a school that receives funds under subsection (a) from serving neglected and delinquent children simultaneously with students with similar educational needs, in the same educational settings where appropriate.
SEC. 1417. THREE-YEAR PROGRAMS OR PROJECTS.
Subpart 2--Local Agency Programs