[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 50 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 50

            To improve options for excellence in education.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 19, 1999

 Mrs. Hutchison (for herself and Mr. DeWine) introduced the following 
  bill; which was read twice and referred to the Committee on Health, 
                     Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
            To improve options for excellence in education.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Options for Excellence in Education 
Act of 1999''.

SEC. 2. FINDINGS.

    The Congress makes the following findings:
            (1) A quality, safe, and effective education for every 
        American child has and will continue to be key to our success 
        or failure as a Nation.
            (2) As America continues to lead the world economic and 
        technological revolution, our Nation must strengthen our 
        Nation's commitment to ensuring that every child is equipped to 
        face the challenges of the next century.
            (3) Since the inception of public education, it has been 
        the States and local communities that have built and shaped our 
        public school system.
            (4) While the Federal Government must continue to have a 
        strong supportive role in public education, it should reward 
        successful State and local policies, not dictate what those 
        policies should be.
            (5) The recent success of many States in improving their 
        educational standards and outcomes proves that State and local 
        education agencies are in the best position to understand the 
        unique needs of their students and to develop and implement 
        appropriate educational reforms.
            (6) Although several Federal education programs today do 
        offer some measure of flexibility, far too many mandates, 
        conditions, and reporting requirements exist, draining precious 
        dollars away from the classroom.
            (7) The proper focus of Federal education policy should be 
        on student performance outcomes, not on process.
            (8) Our Nation's children are far too precious to delay a 
        comprehensive change in the way the Federal Government supports 
        and encourages excellence in our Nation's public schools.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) In general.--The terms ``elementary school'', ``local 
        educational agency'', ``secondary school'', ``Secretary'', 
        ``State'', and ``State educational agency'' have the meanings 
        given the terms in section 14101 of the Elementary and 
        Secondary Education Act of 1965.
            (2) Poverty line.--The term ``poverty line'' means the 
        poverty line (as defined by the Office of Management and 
        Budget, and revised annually in accordance with section 673(2) 
        of the Community Services Block Grant Act (42 U.S.C. 9902(2)) 
        applicable to a family of the size involved.

SEC. 4. ED-FLEX EXPANSION.

    (a) Program Established.--The Secretary shall carry out an 
education flexibility program under which the Secretary authorizes 
qualified State educational agencies to waive Federal statutory and 
regulatory requirements applicable to State educational agencies, local 
educational agencies, and individual schools under all or a portion of 
the requirements of any State administered program authorized by the 
Elementary and Secondary Education Act of 1965 (other than a program 
authorized under title VIII of the Elementary and Secondary Education 
Act of 1965), the Goals 2000: Educate America Act, and the Carl D. 
Perkins Vocational and Technical Education Act of 1998, including 
programs under titles I, II, III, IV, and VI, and part C of title VII, 
of the Elementary and Secondary Education Act of 1965.
    (b) Requirements.--
            (1) Supplement not supplant.--Federal funds received under 
        any of the programs for which a waiver is granted under this 
        section may only be used to supplement, and not supplant State 
        and local funds that would otherwise be spent to carry out the 
        fundamental purposes of the programs.
            (2) Administrative expenses.--If the Secretary determines 
        that a State educational agency is spending for administrative 
        expenses a greater percentage of the funds awarded under a 
        program for which a waiver is granted under this section than 
        the State spent in the year immediately preceding the granting 
of the waiver, then the Secretary shall reduce the funds made available 
to that State under the program in an amount equal to the increased 
expenditure.
    (c) Definition of Qualified State Educational Agency.--In this 
section the term ``qualified State educational agency'' means a State 
educational agency that has in place or develops specific, measurable 
educational improvement goals and expected outcomes, and comprehensive, 
challenging statewide student assessments.
    (d) Duration.--Each waiver under subsection (a) shall be granted 
for a period of 5 years.
    (e) Reimposition of Specific Statutory or Regulatory 
Requirements.--
            (1) Specific waivers authorized.--If the Secretary finds 
        that the fundamental purposes of any program for which a waiver 
        is granted under subsection (a) are not being achieved, then 
        the Secretary may require the State educational agency to 
        submit an application for a waiver of specific statutory or 
        regulatory requirements under that program. The application 
        shall set forth the justification for failing to meet the 
        fundamental purposes of that program, including how the waiver 
        of the specific requirements will help to raise overall student 
        performance. If the Secretary finds that the granting of the 
        waiver of the specific requirements will help to raise overall 
        student performance, then the Secretary shall grant a 2-year 
        waiver of the specific requirements, except that the duration 
        of the waiver of the specific requirements shall not exceed the 
        5 year period applicable to the State educational agency's 
        waiver authority under subsection (a).
            (2) Failure.--If the Secretary does not grant a waiver of 
        the specific requirements under this subsection, then the 
        Secretary may reimpose any existing statutory or regulatory 
        requirements under the program that are necessary to ensure 
        that the fundamental purposes of the program are achieved.
    (f) Application.--Each qualified State educational agency desiring 
a grant under this section shall submit an application to the Secretary 
at such time, in such manner, and accompanied by such information as 
the Secretary may require.
    (g) Reports.--
            (1) State educational agency report.--Each qualified State 
        educational agency granted waiver authority under this section 
        shall--
                    (A) annually report the results of the student 
                assessments described in subsection (c) to the 
                Secretary; and
                    (B) not less than annually submit a comprehensive 
                report to the Secretary on the development, 
                implementation, and results of the goals and outcomes 
                described in subsection (c), including an explanation 
                of how the State educational agency is achieving the 
                fundamental purposes of each of the programs for which 
                a waiver is granted under this section.
            (2) Secretary.--The Secretary shall compile the results of 
        the student assessments and make the results widely available 
        (including via the Internet) to the general public in a 
        standardized, simplified format, including student performance 
        results at the State, school district, and individual school 
        levels, and, where practicable, how the results compare with 
        previous years.

SEC. 5. EXCELLENCE GRANTS.

    (a) Authorization of Appropriations.--There are authorized to be 
appropriated $3,000,000,000 for fiscal year 2000, and such sums as may 
be necessary for each of the fiscal years 2001 through 2004 to carry 
out this section, of which--
            (1) $1,000,000,000 shall be available to carry out 
        subsection (b) for each fiscal year;
            (2) $1,000,000,000 shall be available to carry out 
        subsection (c) for each fiscal year; and
            (3) $1,000,000,000 shall be available to carry out 
        subsection (d) for each fiscal year.
    (b) Student Excellence.--
            (1) Allotment.--From funds made available under subsection 
        (a)(1) for a fiscal year, the Secretary shall make an allotment 
        to each State educational agency in an amount that bears the 
        same relation to such funds as the amount the State received 
        under part A of title I of the Elementary and Secondary 
        Education Act of 1965 for such year bears to the amount 
        received by all States under such part for such year.
            (2) Grants.--From amounts made available under paragraph 
        (1) the State educational agency shall award grants on a 
        competitive basis to 25 percent of the local educational 
        agencies in the State that demonstrate in the application 
        submitted under subsection (e)--
                    (A) the greatest improvement, from a year to the 
                succeeding year, in student performance, as measured by 
the State educational agency; or
                    (B) the most innovative, comprehensive and cost-
                effective approaches to raising student performance.
            (3) Uses.--Grant funds awarded under this subsection shall 
        be used to further the most successful and cost-effective 
        elements of curriculum and standards development, student 
        performance evaluation, student motivation, and other efforts 
        directly related to student performance.
    (c) School Excellence.--
            (1) Allotment.--From funds made available under subsection 
        (a)(2) for a fiscal year, the Secretary shall make an allotment 
        to each State educational agency in an amount that bears the 
        same relation to such funds as the amount the State received 
        under part A of title I of the Elementary and Secondary 
        Education Act of 1965 for such year bears to the amount 
        received by all States under such part for such year.
            (2) In general.--From amounts made available under 
        paragraph (1), the State educational agency shall award grants 
        on a competitive basis to 25 percent of the elementary schools 
        or secondary schools in the State that demonstrate in the 
        application submitted under subsection (e)--
                    (A) the greatest improvement, from a year to the 
                succeeding year, in student performance, as measured by 
                the State educational agency; or
                    (B) the most innovative, comprehensive, and cost-
                effective approaches to school support.
            (2) Uses.--Grant funds awarded under this subsection shall 
        be used to further the most successful and cost-effective 
        elements of school systemic support, including technology 
        development and administrative enhancement.
    (d) Teacher Excellence.--
            (1) In general.--From amounts made available under 
        subsection (a)(3) for a fiscal year, the Secretary shall award 
        grants on a competitive basis to State educational agencies 
        that demonstrate in the application submitted under subsection 
        (e)--
                    (A) the greatest improvement, from a year to the 
                succeeding year, with respect to strengthening the 
                educational, certification, and performance standards 
                of teachers in the State; or
                    (B) the most innovative, comprehensive, and cost-
                effective approaches to teacher certification and 
                professional development.
            (2) Uses.--Grant funds awarded under this subsection shall 
        be used to further the most successful elements of the State 
        educational agency's efforts regarding the standards described 
        in paragraph (1)(A).
            (3) Priority.--In awarding grants under this subsection, 
        the Secretary shall give priority to State educational agencies 
        that--
                    (A) emphasize and reward substantive mastery over 
                subject matter taught; and
                    (B) provide incentives to reward teacher 
                performance.
    (e) Application.--Each State educational agency desiring a grant 
under this section shall submit to the Secretary an application at such 
time, in such manner, and accompanied by such information as the 
Secretary may require.

SEC. 6. EDUCATIONAL OPTIONS.

    (a) Program Authorized.--
            (1) Determination.--For each State the Secretary shall 
        determine the 25 percent of local educational agencies within 
        the State that demonstrate in the application submitted under 
        subsection (c), that the agencies serve the lowest performing 
        students in the State, as measured by the State educational 
        agency.
            (2) Reductions.--The Secretary shall reduce the amount of 
        Federal education assistance provided under the provisions of 
        law described in section 4(a) and that is provided to each 
        local educational agency for which a determination is made 
        under paragraph (1) for a fiscal year by an amount equal to 5 
        percent of the amount of such assistance awarded (either 
        directly or through the State educational agency) to the local 
        educational agency for the preceding fiscal year. Such funds 
        may be referred to as a local educational agency's ``School 
        Improvement Fund''.
            (3) Choice programs.--The Secretary shall make the total 
        amount reduced under paragraph (2) for each local educational 
        agency for which a determination is made under paragraph (1) 
        available to the State to carry out 1 or more choice programs 
        described in subsection (b).
    (b) Choice Programs.--
            (1) Public school choice.--A State may establish a public 
        school choice program that meets the following requirements:
                    (A) The program shall allow students attending 
                public schools (including at minimum students attending 
                a school served by a local educational agency, for 
                which a determination is made under subsection (a)(1)) 
                to attend the public school of their choice within the 
                school district, region, or State, as provided by the 
                State.
                    (B)(i) The program shall provide that if a student 
                is unable to enroll in a high performing school within 
                the student's school district, then the student shall 
                be allowed to enroll in a school within a reasonable 
                distance from the student's residence.
                    (ii) The term ``high performing school'' means a 
                school at which student performance, as measured by the 
                State, ranks in the top half of all schools statewide.
                    (C) The program shall not require the State to 
                provide transportation or other costs incurred by the 
                student if the school chosen by the student is farther 
                than 50 miles from the student's residence.
                    (D) Federal funds made available under this program 
                shall be used for all costs associated with adequately 
                implementing the program, including transportation, 
                tuition transfer payments to schools to which students 
                transfer under the program, school construction if 
                necessary to accommodate high-demand schools, public 
                education campaigns to inform students and parents 
                about the program, administrative costs, and other 
                costs reasonably necessary to implement the program.
            (2) Private school choice.--A State may establish a private 
        school choice program that meets the following requirements:
                    (A) The program shall enable students attending 
                public schools in the State, including at a minimum 
                students whose families have incomes below the poverty 
                line, whose performance on statewide student 
                performance examinations place the students in the 
                bottom half of students at their grade level, and who 
                attend schools served by local educational agencies for 
                which a determination is made under subsection (a)(1), 
                as measured or determined by the State, to attend the 
                private or parochial school of their choice.
                    (B) Federal funds provided under the program may be 
                used--
                            (i) by parents with children participating 
                        in the program, for tuition payments to private 
                        or parochial schools, not to exceed $5,000 per 
                        student, per year; and
                            (ii) for administrative and other costs 
                        directly related to implementation of the 
                        program.
            (3) Alternative school choice.--A State may establish an 
        alternative school choice program that meets the following 
        requirements:
                    (A) The program shall improve the educational 
                options available to students and their parents through 
                greater school choice and competition, including the 
                establishment or expansion of charter schools and 
                magnet schools. Such program shall be targeted, at a 
                minimum, to serving local educational agencies for 
                which a determination is made under subsection (a)(1) 
                and other local educational agencies that the State 
                determines to be chronically underperforming.
                    (B) If, after 2 years of implementing the program, 
                the Secretary determines that a State has failed to 
                substantially improve and expand the quality and 
                quantity of educational options available to students 
                served by the local educational agencies described in 
                subparagraph (A), then the funds shall be used by the 
                State to implement a public school choice program under 
                paragraph (1) or a private school choice program under 
                paragraph (2).

SEC. 7. CAREERS TO CLASSROOMS.

    (a) Placement Program.--The Secretary may establish a program of 
awarding grants to States--
            (1) to enable the States to assist eligible individuals to 
        obtain--
                    (A) certification or licensure as elementary school 
                or secondary school teachers; or
                    (B) the credentials necessary to serve as teachers' 
                aides; and
            (2) to facilitate the employment of the eligible 
        individuals by local educational agencies identified under 
        subsection (b)(2) as experiencing a shortage of teachers or 
        teachers' aides.
    (b) States With Alternative Certification Requirements and Teacher 
and Teacher's Aide Shortages.--Upon the establishment of the placement 
program authorized by subsection (a), the Secretary shall--
            (1) conduct a survey of States to identify those States 
        that have alternative certification or licensure requirements 
        for teachers;
            (2) periodically request information from States identified 
        under paragraph (1) to identify in these States those local 
        educational agencies that--
                    (A) are receiving grants under title I of the 
                Elementary and Secondary Education Act of 1965 (20 
                U.S.C. 6301 et seq.) as a result of having within their 
                jurisdictions concentrations of children from low-
                income families; and
                    (B) are also experiencing a shortage of qualified 
                teachers, in particular a shortage of science, 
                mathematics, computer science, or engineering teachers; 
                and
            (3) periodically request information from all States to 
        identify local educational agencies that--
                    (A) are receiving grants under title I of the 
                Elementary and Secondary Education Act of 1965 (20 
                U.S.C. 6301 et seq.) as a result of having within their 
                jurisdictions concentrations of children from low-
                income families; and
                    (B) are experiencing a shortage of teachers' aides.
    (c) Definition of Eligible Individual.--In this section the term 
``eligible individual'' means an individual who has received--
            (1) in the case of an individual applying for assistance 
        for placement as an elementary school or secondary school 
        teacher, a baccalaureate or advanced degree from an accredited 
        institution of higher education; or
            (2) in the case of an individual applying for assistance 
        for placement as a teacher's aide in an elementary school or 
        secondary school, an associate, baccalaureate, or advanced 
        degree from an accredited institution of higher education or a 
        junior or community college.
    (d) Selection of Eligible Individuals.--
            (1) In general.--Selection of eligible individuals to 
        participate in the placement program authorized by subsection 
        (a) shall be made on the basis of applications submitted to a 
        State. An application shall be in such form and contain such 
        information as the State may require.
            (2) Priority.--In selecting eligible individuals to receive 
        assistance for placement as elementary school or secondary 
        school teachers, the State shall give priority to eligible 
        individuals who--
                    (A) have substantial, demonstrated career 
                experience in science, mathematics, computer science, 
                or engineering and agree to seek employment as science, 
                mathematics, computer science, or engineering teachers 
                in elementary schools or secondary schools; or
                    (B) have substantial, demonstrated career 
                experience in another subject area identified by the 
                State, as important for national educational objectives 
                and agree to seek employment in that subject area in 
                elementary schools or secondary schools.
    (e) Agreement.--An eligible individual selected to participate in 
the placement program authorized by subsection (a) shall be required to 
enter into an agreement with the State, in which the eligible 
individual agrees--
            (1) to obtain, within such time as the State may require, 
        certification or licensure as an elementary school or secondary 
        school teacher or the necessary credentials to serve as a 
        teacher's aide in an elementary school or secondary school; and
            (2) to accept--
                    (A) in the case of an eligible individual selected 
                for assistance for placement as a teacher, an offer of 
                full-time employment as an elementary school or 
                secondary school teacher for not less than two school 
                years with a local educational agency identified under 
                subsection (b)(2), to begin the school year after 
                obtaining that certification or licensure; or
                    (B) in the case of an eligible individual selected 
                for assistance for placement as a teacher's aide, an 
                offer of full-time employment as a teacher's aide in an 
                elementary school or secondary school for not less than 
                2 school years with a local educational agency 
                identified under subsection (b)(3), to begin the school 
                year after obtaining the necessary credentials.
    (f) Stipend for Participants.--
            (1) In general.--The State shall pay to an eligible 
        individual participating in the placement program a stipend in 
        an amount equal to the lesser of--
                    (A) $5,000; or
                    (B) the total costs of the type described in 
                paragraphs (1), (2), (3), (8), and (9) of section 472 
                of the Higher Education Act of 1965 (20 U.S.C. 1087ll) 
                incurred by the eligible individual while obtaining 
                teacher certification or licensure or the necessary 
                credentials to serve as a teacher's aide and employment 
                as an elementary school or secondary school teacher or 
                teacher aide.
            (2) Relation to other assistance.--A stipend paid under 
        paragraph (1) shall be taken into account in determining the 
        eligibility of the eligible individual for Federal student 
        financial assistance provided under title IV of the Higher 
        Education Act of 1965 (20 U.S.C. 1070 et seq.).
    (g) Grants To Facilitate Placement.--
            (1) Teachers.--In the case of an eligible individual in the 
        placement program obtaining teacher certification or licensure, 
        the State may offer to enter into an agreement under this 
        subsection with the first local educational agency identified 
        under subsection (b)(2) that employs the eligible individual as 
        a full-time elementary school or secondary school teacher after 
        the eligible individual obtains teacher certification or 
        licensure.
            (2) Teacher's aides.--In the case of an eligible individual 
        in the program obtaining credentials to serve as a teacher's 
        aide, the State may offer to enter into an agreement under this 
subsection with the first local educational agency identified under 
subsection (b)(3) that employs the participant as a full-time teacher's 
aide.
            (3) Agreements contracts.--Under an agreement referred to 
        in paragraph (1) or (2)--
                    (A) the local educational agency shall agree to 
                employ the eligible individual full time for not less 
                than 2 consecutive school years (at a basic salary to 
                be certified to the State) in a school of the local 
                educational agency that--
                            (i) serves a concentration of children from 
                        low-income families; and
                            (ii) has an exceptional need for eligible 
                        individuals; and
                    (B) the State shall agree to pay to the local 
                educational agency for each eligible individual, from 
                amounts provided under this section, $5,000 per year 
                for a maximum of 2 years.
    (h) Reimbursement Under Certain Circumstances.--
            (1) In general.--If an eligible individual in the placement 
        program fails to obtain teacher certification or licensure or 
        employment as an elementary school or secondary school teacher 
        or employment as a teacher's aide as required under the 
        agreement or voluntarily leaves, or is terminated for cause, 
        from the employment during the 2 years of required service, the 
        eligible individual shall be required to reimburse the State 
        for any stipend paid to the eligible individual under 
        subsection (f)(1) in an amount that bears the same ratio to the 
        amount of the stipend as the unserved portion of required 
        service bears to the 2 years of required service. A State shall 
        forward the proceeds of any reimbursement received under this 
        paragraph to the Secretary.
            (2) Obligation to reimburse.--The obligation to reimburse 
        the State under this subsection is, for all purposes, a debt 
        owing the United States. A discharge in bankruptcy under title 
        11 shall not release a participant from the obligation to 
        reimburse the State. Any amount owed by an eligible individual 
        under paragraph (1) shall bear interest at the rate equal to 
        the highest rate being paid by the United States on the day on 
        which the reimbursement is determined to be due for securities 
        having maturities of 90 days or less and shall accrue from the 
        day on which the eligible individual is first notified of the 
        amount due.
    (i) Exceptions to Reimbursement Provisions.--
            (1) In general.--An eligible individual in the placement 
        program shall not be considered to be in violation of an 
        agreement entered into under subsection (e) during any period 
        in which the participant--
                    (A) is pursuing a full-time course of study related 
                to the field of teaching at an eligible institution;
                    (B) is serving on active duty as a member of the 
                Armed Forces;
                    (C) is temporarily totally disabled for a period of 
                time not to exceed 3 years as established by sworn 
                affidavit of a qualified physician;
                    (D) is unable to secure employment for a period not 
                to exceed 12 months by reason of the care required by a 
                spouse who is disabled;
                    (E) is seeking and unable to find full-time 
                employment as a teacher or teacher's aide in an 
                elementary school or secondary school for a single 
                period not to exceed 27 months; or
                    (F) satisfies the provisions of additional 
                reimbursement exceptions that may be prescribed by the 
                Secretary.
            (2) Forgiveness.--An eligible individual shall be excused 
        from reimbursement under subsection (h) if the eligible 
        individual becomes permanently totally disabled as established 
        by sworn affidavit of a qualified physician. The Secretary may 
        also waive reimbursement in cases of extreme hardship to the 
        participant, as determined by the Secretary.
    (j) Definitions.--In this section:
            (1) State.--The term ``State'' means each of the several 
        States of the United States, the District of Columbia, American 
        Samoa, the Federated States of Micronesia, Guam, the Republic 
        of the Marshall Islands, the Commonwealth of the Northern 
        Mariana Islands, the Commonwealth of Puerto Rico, the Republic 
        of Palau, and the United States Virgin Islands.
            (2) Alternative certification or licensure.--The term 
        ``alternative certification or licensure requirements'' means 
        State or local teacher certification or licensure requirements 
        that permit a demonstrated competence in appropriate subject 
        areas gained in careers outside of education to be substituted 
        for traditional teacher training course work.

SEC. 8. TREATMENT OF QUALIFIED PUBLIC EDUCATIONAL FACILITY BONDS AS 
              EXEMPT FACILITY BONDS.

    (a) Treatment as Exempt Facility Bond.--Subsection (a) of section 
142 of the Internal Revenue Code of 1986 (relating to exempt facility 
bond) is amended by striking ``or'' at the end of paragraph (11), by 
striking the period at the end of paragraph (12) and inserting ``, 
or'', and by adding at the end the following:
            ``(13) qualified public educational facilities.''.
    (b) Qualified Public Educational Facilities.--Section 142 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following:
    ``(k) Qualified Public Educational Facilities.--
            ``(1) In general.--For purposes of subsection (a)(13), the 
        term `qualified public educational facility' means any school 
        facility which is--
                    ``(A) part of a public elementary school or a 
                public secondary school,
                    ``(B) except as provided in paragraph (7)(B)(iii), 
                located in a high-growth school district or a low-
                income school district, and
                    ``(C) owned by a private, for-profit corporation 
                pursuant to a public-private partnership agreement with 
                a State or local educational agency described in 
                paragraph (2).
            ``(2) Public-private partnership agreement described.--A 
        public-private partnership agreement is described in this 
        paragraph if it is an agreement--
                    ``(A) under which the corporation agrees--
                            ``(i) to do 1 or more of the following: 
                        construct, rehabilitate, refurbish, or equip a 
                        school facility, and
                            ``(ii) at the end of the contract term, to 
                        transfer the school facility to such agency for 
                        no additional consideration, and
                    ``(B) the term of which does not exceed the term of 
                the underlying issue.
            ``(3) School facility.--For purposes of this subsection, 
        the term `school facility' means--
                    ``(A) school buildings,
                    ``(B) functionally related and subordinate 
                facilities and land with respect to such buildings, 
                including any stadium or other facility primarily used 
                for school events, and
                    ``(C) any property, to which section 168 applies 
                (or would apply but for section 179), for use in the 
                facility.
            ``(4) Public schools.--For purposes of this subsection, the 
        terms `elementary school' and `secondary school' have the 
        meanings given such terms by section 14101 of the Elementary 
        and Secondary Education Act of 1965 (20 U.S.C. 8801), as in 
        effect on the date of the enactment of this subsection.
            ``(5) High-growth school district.--For purposes of this 
        subsection, the term `high-growth school district' means a 
        school district established under State law which had an 
        enrollment of at least 5,000 students in the second academic 
        year preceding the date of the issuance of the bond and an 
        increase in student enrollment of at least 20 percent during 
        the 5-year period ending with such academic year.
            ``(6) Low-income school district.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `low-income school 
                district' means a school district established under 
                State law 35 percent of the enrollment of which is 
                students from families with incomes below the Federal 
                poverty line.
                    ``(B) Federal poverty line.--The term `Federal 
                poverty line' means the income official poverty line 
                (as defined by the Office of Management and Budget, and 
                revised annually in accordance with section 673(2) of 
                the Omnibus Budget Reconciliation Act of 1981) 
                applicable to a family of the size involved.
            ``(7) Annual aggregate face amount of tax-exempt 
        financing.--
                    ``(A) In general.--An issue shall not be treated as 
                an issue described in subsection (a)(13) if the 
                aggregate face amount of bonds issued by the State 
                pursuant thereto (when added to the aggregate face 
                amount of bonds previously so issued during the 
                calendar year) exceeds an amount equal to the greater 
                of--
                            ``(i) $10 multiplied by the State 
                        population, or
                            ``(ii) $20,000,000.
                    ``(B) Allocation rules.--
                            ``(i) In general.--Except as otherwise 
                        provided in this subparagraph, the State may 
                        allocate in a calendar year the amount 
                        described in subparagraph (A) for such year in 
                        such manner as the State determines 
                        appropriate.
                            ``(ii) Rules for carryforward of unused 
                        amount.--With respect to any calendar year, a 
State may make an election under rules similar to the rules of section 
146(f), except that the sole carryforward purpose with respect to such 
election is the issuance of exempt facility bonds described in section 
142(a)(13).
                            ``(iii) Special allocation rule for schools 
                        outside high-growth or low-income school 
                        districts.--A State may elect to allocate an 
                        aggregate face amount of bonds not to exceed 
                        $5,000,000 from the amount described in 
                        subparagraph (A) for each calendar year for 
                        qualified public educational facilities without 
                        regard to the requirement under paragraph 
                        (1)(B).''.
    (c) Exemption From General State Volume Caps.--Paragraph (3) of 
section 146(g) of the Internal Revenue Code of 1986 (relating to 
exception for certain bonds) is amended--
            (1) by striking ``or (12)'' and inserting ``(12), or 
        (13)'', and
            (2) by striking ``and environmental enhancements of 
        hydroelectric generating facilities'' and inserting 
        ``environmental enhancements of hydroelectric generating 
        facilities, and qualified public educational facilities''.
    (d) Exemption From Limitation on Use for Land Acquisition.--Section 
147(h) of the Internal Revenue Code of 1986 (relating to certain rules 
not apply) is amended--
            (1) by adding at the end the following:
            ``(3) Exempt facility bonds for qualified public 
        educational facilities.--Subsection (c) shall not apply to any 
        exempt facility bond issued as part of an issue described in 
        section 142(a)(13) (relating to qualified public educational 
        facilities).'', and
            (2) by striking ``Mortgage Revenue Bonds, Qualified Student 
        Loan Bonds, and Qualified 501(c)(3) Bonds'' in the heading and 
        inserting ``Certain Bonds''.
    (e) Effective Date.--The amendments made by this section shall 
apply to bonds issued after December 31, 1998.

SEC. 9. ADDITIONAL INCREASE IN ARBITRAGE REBATE EXCEPTION FOR 
              GOVERNMENTAL BONDS USED TO FINANCE EDUCATION FACILITIES.

    (a) In General.--Section 148(f)(4)(D)(vii) of the Internal Revenue 
Code of 1986 (relating to increase in exception for bonds financing 
public school capital expenditures) is amended by striking 
``$5,000,000'' the second place it appears and inserting 
``$10,000,000''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to obligations issued after December 31, 1998.
                                 <all>