[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 8 Introduced in Senate (IS)]







108th CONGRESS
  1st Session
                                  S. 8

   To encourage lifelong learning by investing in public schools and 
   improving access to and affordability of higher education and job 
                               training.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 7, 2003

 Mr. Daschle (for himself, Mr. Kennedy, Mrs. Murray, Ms. Mikulski, Mr. 
 Dodd, Mr. Breaux, Mr. Johnson, Mr. Leahy, Mr. Rockefeller, Mr. Levin, 
  Mr. Durbin, Mr. Sarbanes, Mrs. Clinton, Mr. Akaka, Mr. Schumer, Mr. 
Biden, Ms. Stabenow, Mr. Corzine, Mr. Dayton, Mr. Lautenberg, Mr. Reid, 
and Mr. Baucus) introduced the following bill; which was read twice and 
  referred to the Committee on Health, Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
   To encourage lifelong learning by investing in public schools and 
   improving access to and affordability of higher education and job 
                               training.

    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 ``Educational Excellence for All 
Learners Act of 2003''.

SEC. 2. TABLE OF CONTENTS.

    The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.
                   TITLE I--FUNDING EDUCATION REFORM

Sec. 101. Sense of the Senate.
       Subtitle A--Elementary and Secondary Education Act of 1965

Sec. 111. Increase in authorization.
        Subtitle B--Individuals With Disabilities Education Act

Sec. 121. Helping children succeed by fully funding part B of the 
                            Individuals with Disabilities Education 
                            Act.
                     Subtitle C--Educational Equity

Sec. 131. Findings and purposes.
   Chapter 1subchapter a--access to educational opportunityl Systems
Sec. 135. State public school systems.
Sec. 136. Fundamentsubchapter b--state accountability
Sec. 141. State accountability plan.
Sec. 142. Cosubchapter c--report to congress and the public
Sec. 151. Annual report onsubchapter d--remedy systems.
Sec. 161. Civil action for enforcement.
 Chapter 2--Effects Of Educational Disparities on Economic Growth and 
                            National Defense

Sec. 171. Effects on economic growth and productivity.
Sec. 172. Effects on national defense.
                     Chapter 3--General Provisions

Sec. 181. Definitions.
Sec. 182. Rulemaking.
Sec. 183. Construction.
                TITLE II--MODERNIZING SCHOOL FACILITIES

Sec. 201. Short title.
Sec. 202. Expansion of incentives for public schools.
Sec. 203. Application of certain labor standards on construction 
                            projects financed under public school 
                            modernization program.
Sec. 204. Employment and training activities relating to construction 
                            or reconstruction of public school 
                            facilities.
Sec. 205. Indian school construction.
           TITLE III--MAKING HIGHER EDUCATION MORE ACCESSIBLE

                       Subtitle A--College Access

Sec. 301. Expansion of gearup and trio.
Sec. 302. Programs for students whose families are engaged in migrant 
                            and seasonal farmwork.
    Subtitle B--Enhancing Programs for Minority Serving Institutions

Sec. 311. Increasing diversity.
          Subtitle C--NTIA Digital Network Technology Program

Sec. 331. Establishment of program.
Sec. 332. Definitions.
Sec. 333. Authorization of appropriations.
              Subtitle D--Higher Education and Immigration

Sec. 341. Restoration of State option to determine residency for 
                            purposes of higher education benefits.
Sec. 342. Cancellation of removal and adjustment of status of certain 
                            alien high school graduates who are long-
                            term residents of the United States.
Sec. 343. Annual report.
              TITLE IV--MAKING HIGHER EDUCATION AFFORDABLE

                        Subtitle A--Pell Grants

Sec. 411. Sense of the Senate.
Sec. 412. Covering Pell Grant shortfall.
               Subtitle B--Student Loan Origination Fees

Sec. 421. Phaseout of student loan origination fees.
                      Subtitle C--Hope Scholarship

Sec. 431. Hope and lifetime learning credits to be refundable.

                   TITLE I--FUNDING EDUCATION REFORM

SEC. 101. SENSE OF THE SENATE.

    (a) Findings.--The Senate finds the following:
            (1) Congress enacted, with bipartisan support, and the 
        President signed into law the No Child Left Behind Act of 2001, 
        that reauthorized the Elementary and Secondary Education Act of 
        1965 (20 U.S.C. 6301 et seq.). The new law required States to 
        set high standards for learning and required schools to 
        implement reforms to help improve student achievement. In 
        return, Congress and the President pledged to make sure schools 
        would have resources to carry out the reforms as called for in 
        the new law.
            (2) $9,000,000,000 in additional resources are needed to 
        fully fund the Elementary and Secondary Education Act of 1965 
        (20 U.S.C. 6301 et seq.) in fiscal year 2003.
            (3) The Administration's budget request for fiscal year 
        2003 cut funding for programs in the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 6301 et seq.) by $90,000,000, 
        meaning schools would have fewer resources to implement the new 
        law.
            (4) The Administration's budget request for fiscal year 
        2003 provides insufficient resources to help communities 
        modernize schools and address overcrowding.
            (5) Because of declining revenues due to the economic 
        recession and stock market declines, many States are being 
        forced to cut back support for public schools.
    (b) Sense of the Senate.--It is the sense of the Senate that--
            (1) it is in the best interest of the Nation that all 
        students have access to a high quality elementary and secondary 
        education; and
            (2) the No Child Left Behind Act of 2001 should be fully 
        funded.

       Subtitle A--Elementary and Secondary Education Act of 1965

SEC. 111. INCREASE IN AUTHORIZATION.

    The Elementary and Secondary Education Act of 1965 (20 U.S.C. 6301 
et seq.) is amended--
            (1) in section 1002--
                    (A) in subsection (a), by striking paragraphs (3) 
                through (6) and inserting the following:
            ``(3) $18,500,000,000 for fiscal year 2004;
            ``(4) $21,612,000,000 for fiscal year 2005;
            ``(5) $24,724,000,000 for fiscal year 2006;
            ``(6) $27,837,000,000 for fiscal year 2007;
            ``(7) $30,949,000,000 for fiscal year 2008;
            ``(8) $34,061,000,000 for fiscal year 2009;
            ``(9) $37,173,000,000 for fiscal year 2010;
            ``(10) $40,286,000,000 for fiscal year 2011;
            ``(11) $43,398,000,000 for fiscal year 2012; and
            ``(12) $46,510,000,000 for fiscal year 2013.''; and
                    (B) in subsection (c), by striking ``2002 and such 
                sums as may be necessary for each of the 5 succeeding 
                fiscal years'' and inserting ``2002, such sums as may 
                be necessary for fiscal year 2003, $500,000,000 for 
                fiscal year 2004, and such sums as may be necessary for 
                each succeeding fiscal year'';
            (2) in section 1705, by adding at the end the following:
    ``(g) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $44,000,000 for fiscal year 
2004, and such sums as may be necessary for each succeeding fiscal 
year.'';
            (3) in section 1803, by striking ``2002 and such sums as 
        may be necessary for each of the 5 succeeding fiscal years,'' 
        and inserting ``2002, such sums as may be necessary for fiscal 
        year 2003, $125,000,000 for fiscal year 2004, and such sums as 
        may be necessary for each succeeding fiscal year,'';
            (4) by striking section 2103(a) and inserting the 
        following:
    ``(a) Grants to States, Local Education Agencies, and Eligible 
Partnerships.--There are authorized to be appropriated to carry out 
this part (other than subpart 5) $3,175,000,000 for fiscal year 2002, 
such sums as may be necessary for fiscal year 2003, $3,500,000,000 for 
fiscal year 2004, and such sums as may be necessary for each succeeding 
fiscal year.'';
            (5) by striking section 3001(a)(1) and inserting the 
        following:
            ``(1) In general.--Subject to subsection (b), there are 
        authorized to be appropriated to carry out this title, except 
        for subpart 4 of part B, $750,000,000 for fiscal year 2002, 
        such sums as may be necessary for fiscal year 2003, 
        $1,200,000,000 for fiscal year 2004, and such sums as may be 
        necessary for each succeeding fiscal year.'';
            (6) by striking section 4003 and inserting the following:

``SEC. 4003. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated--
            ``(1) $650,000,000 for fiscal year 2002, such sums as may 
        be necessary for fiscal year 2003, $700,000,000 for fiscal year 
        2004, and such sums as may be necessary for each succeeding 
        fiscal year, for State grants under subpart 1; and
            ``(2) such sums as may be necessary for fiscal years 2002 
        and 2003, $225,000,000 for fiscal year 2004, and such sums as 
        may be necessary for each succeeding fiscal year, for national 
        programs under subpart 2.'';
            (7) by striking section 4206 and inserting the following:

``SEC. 4206. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated $1,250,000,000 for fiscal 
year 2002, $1,500,000,000 for fiscal year 2003, $2,000,000,000 for 
fiscal year 2004, and such sums as may be necessary for each succeeding 
fiscal year.''; and
            (8) in section 6234, by striking ``2002 and such sums as 
        may be necessary for each of the 5 succeeding fiscal years,'' 
        and inserting ``2002, such sums as may be necessary for fiscal 
        year 2003, $300,000,000 for fiscal year 2004, and such sums as 
        may be necessary for each succeeding fiscal year,''.

        Subtitle B--Individuals With Disabilities Education Act

SEC. 121. HELPING CHILDREN SUCCEED BY FULLY FUNDING PART B OF THE 
              INDIVIDUALS WITH DISABILITIES EDUCATION ACT.

    (a) Findings.--Congress makes the following findings:
            (1) All children deserve a quality education.
            (2) In Pennsylvania Association for Retarded Children v. 
        Commonwealth of Pennsylvania (334 F. Supp. 1247) (E. Dist. Pa. 
        1971), and Mills v. Board of Education of the District of 
        Columbia (348 F. Supp. 866) (Dist. D.C. 1972), the courts found 
        that children with disabilities are entitled to an equal 
        opportunity to an education under the 14th amendment to the 
        Constitution.
            (3) In 1975, Congress passed what is now known as the 
        Individuals with Disabilities Education Act (referred to in 
        this section as ``IDEA'') (20 U.S.C. 1400 et seq.) to help 
        States provide all children with disabilities a free, 
        appropriate public education in the least restrictive 
        environment. At full funding, Congress contributes 40 percent 
        of the excess cost of educating children with disabilities.
            (4) Before 1975, only \1/5\ of the children with 
        disabilities received a formal education. At that time, many 
        States had laws that specifically excluded many children with 
        disabilities, including children who were blind, deaf, or 
        emotionally disturbed, from receiving such an education.
            (5) IDEA currently serves an estimated 200,000 infants and 
        toddlers, 600,000 preschoolers, and 5,400,000 children 6 to 21 
        years of age, and their families.
            (6) IDEA enables children with disabilities to be educated 
        in their communities, and thus, has assisted in dramatically 
        reducing the number of children with disabilities who must live 
        in State institutions away from their families.
            (7) The number of children with disabilities who complete 
        high school has grown significantly since the enactment of 
        IDEA.
            (8) The number of children with disabilities who enroll in 
        college as freshmen has more than tripled since the enactment 
        of IDEA.
            (9) The overall effectiveness of IDEA depends upon well-
        trained special education and general education teachers, 
        related services personnel, and other school personnel. 
        Congress recognizes concerns about the nationwide shortage of 
personnel serving students with disabilities and the need for 
improvement in the qualifications of such personnel.
            (10) IDEA has raised the Nation's awareness about the 
        abilities and capabilities of children with disabilities.
            (11) Improvements to IDEA in the 1997 amendments increased 
        the academic achievement of children with disabilities and 
        helped them to lead productive, independent lives.
            (12) Changes made in 1997 also addressed the needs of those 
        children whose behavior impedes learning by implementing 
        behavioral assessments and intervention strategies to ensure 
        that they receive appropriate supports in order to receive a 
        quality education.
            (13) IDEA requires a full partnership between parents of 
        children with disabilities and education professionals in the 
        design and implementation of the educational services provided 
        to children with disabilities.
            (14) While the Federal Government has more than doubled 
        funding for part B of IDEA since 1995, the Federal Government 
        has never provided more than 16 percent of the maximum State 
        grant allocation for educating children with disabilities.
            (15) By fully funding part B of IDEA, Congress will 
        strengthen the ability of States and localities to implement 
        the requirements of IDEA.
    (b) Funding.--Section 611(j) of the Individuals with Disabilities 
Education Act (20 U.S.C. 1411(j)) is amended to read as follows:
    ``(j) Funding.--For the purpose of carrying out this part, other 
than section 619, there are authorized to be appropriated--
            ``(1) $11,029,000,000 for fiscal year 2004, and, there are 
        hereby appropriated $2,500,000,000 for fiscal year 2004, which 
        shall become available for obligation on July 1, 2004, and 
        shall remain available through September 30, 2005;
            ``(2) $13,529,000,000 for fiscal year 2005, and, there are 
        hereby appropriated $5,000,000,000 for fiscal year 2005, which 
        shall become available for obligation on July 1, 2005, and 
        shall remain available through September 30, 2006;
            ``(3) $16,029,000,000 for fiscal year 2006, and, there are 
        hereby appropriated $7,500,000,000 for fiscal year 2006, which 
        shall become available for obligation on July 1, 2006, and 
        shall remain available through September 30, 2007;
            ``(4) $18,529,000,000 for fiscal year 2007, and, there are 
        hereby appropriated $10,000,000,000 for fiscal year 2007, which 
        shall become available for obligation on July 1, 2007, and 
        shall remain available through September 30, 2008;
            ``(5) $21,029,000,000 for fiscal year 2008, and, there are 
        hereby appropriated $12,500,000,000 for fiscal year 2008, which 
        shall become available for obligation on July 1, 2008, and 
        shall remain available through September 30, 2009;
            ``(6) $23,192,000,000, or the sum of the maximum amounts of 
        grants that all States may receive under subsection (a)(2), 
        whichever is lower, for fiscal year 2009, and there are hereby 
        appropriated $14,663,000,000 for fiscal year 2009, which shall 
        become available for obligation on July 1, 2009, and shall 
        remain available through September 30, 2010, except that if 
        such sum is less than $23,192,000,000, then the amount 
        appropriated under this paragraph shall be reduced by the 
        difference between $23,192,000,000 and such sum;
            ``(7) $23,845,000,000, or the sum of the maximum amount of 
        grants that all States may receive under subsection (a)(2), 
        whichever is lower, for fiscal year 2010, and there are hereby 
        appropriated $15,317,000,000 for fiscal year 2010, which shall 
        become available for obligation on July 1, 2010, and shall 
        remain available through September 30, 2011, except that if 
        such sum is less than $23,845,000,000, then the amount 
        appropriated under this paragraph shall be reduced by the 
        difference between $23,845,000,000 and such sum;
            ``(8) $24,483,000,000, or the sum of the maximum amount of 
        grants that all States may receive under subsection (a)(2), 
        whichever is lower, for fiscal year 2011, and there are hereby 
        appropriated $15,955,000,000 for fiscal year 2011, which shall 
        become available for obligation on July 1, 2011, and shall 
        remain available through September 30, 2012, except that if 
        such sum is less than $24,483,000,000, then the amount 
        appropriated under this paragraph shall be reduced by the 
        difference between $24,483,000,000 and such sum;
            ``(9) $25,125,000,000, or the sum of the maximum amount of 
        grants that all States may receive under subsection (a)(2), 
        whichever is lower, for fiscal year 2012, and there are hereby 
        appropriated $16,596,000,000 for fiscal year 2012, which shall 
        become available for obligation on July 1, 2012, and shall 
        remain available through September 30, 2013, except that if 
        such sum is less than $25,125,000,000, then the amount 
        appropriated under this paragraph shall be reduced by the 
        difference between $25,125,000,000 and such sum;
            ``(10) $25,758,000,000, or the sum of the maximum amount of 
        grants that all States may receive under subsection (a)(2), 
        whichever is lower, for fiscal year 2013, and there are hereby 
        appropriated $17,229,000,000 for fiscal year 2013, which shall 
        become available for obligation on July 1, 2013, and shall 
        remain available through September 30, 2014, except that if 
        such sum is less than $25,758,000,000, then the amount 
        appropriated under this paragraph shall be reduced by the 
        difference between $25,758,000,000 and such sum; and
            ``(11) such sums as may be necessary for fiscal year 2014 
        and each subsequent fiscal year.''.

                     Subtitle C--Educational Equity

SEC. 131. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds the following:
            (1) A high-quality, highly competitive education for all 
        students is imperative for the economic growth and productivity 
        of the United States, for its effective national defense, and 
to achieve the historical aspiration to be one Nation of equal 
citizens. It is therefore necessary and proper to overcome the 
nationwide phenomenon of State public school systems that do not meet 
the requirements of section 135(a), in which high-quality public 
schools typically serve high-income communities and poor-quality 
schools typically serve low-income, urban, rural, and minority 
communities.
            (2) There exists in the States a significant educational 
        opportunity gap for low-income, urban, rural, and minority 
        students characterized by the following:
                    (A) Continuing disparities within States in 
                students' access to the fundamentals of educational 
                opportunity described in section 136.
                    (B) Highly differential educational expenditures 
                (adjusted for cost and need) among school districts 
                within States.
                    (C) Radically differential educational achievement 
                among students in school districts within States as 
                measured by the following:
                            (i) Achievement in mathematics, reading or 
                        language arts, and science on State academic 
                        assessments required under section 1111(b)(3) 
                        of the Elementary and Secondary Education Act 
                        of 1965 (20 U.S.C. 6311(b)(3)) and on the 
                        National Assessment of Educational Progress.
                            (ii) Advanced placement courses taken.
                            (iii) SAT and ACT test scores.
                            (iv) Dropout rates and graduation rates.
                            (v) College-going and college-completion 
                        rates.
                            (vi) Job placement and retention rates and 
                        indices of job quality.
            (3) As a consequence of this educational opportunity gap, 
        the quality of a child's education depends largely upon where 
        the child's family can afford to live, and the detriments of 
        lower quality education are imposed particularly on--
                    (A) children from low-income families;
                    (B) children living in urban and rural areas; and
                    (C) minority children.
            (4) Since 1785, Congress, exercising the power to admit new 
        States under section 3 of article IV of the Constitution (and 
        previously, the Congress of the Confederation of States under 
        the Articles of Confederation), has imposed upon every State, 
        as a fundamental condition of the State's admission, that the 
        State provide for the establishment and maintenance of systems 
        of public schools open to all children in such State.
            (5) Over the years since the landmark ruling in Brown v. 
        Board of Education, 347 U.S. 483, 493 (1954), when a unanimous 
        Supreme Court held that ``the opportunity of an education..., 
        where the State has undertaken to provide it, is a right which 
        must be made available to all on equal terms'', courts in 44 
        States have heard challenges to the establishment, maintenance, 
        and operation of State public school systems that are separate 
        and not educationally adequate.
            (6) In 1970, the Presidential Commission on School Finance 
        found that significant disparities in the distribution of 
        educational resources existed among school districts within 
        States because the States relied too significantly on local 
        district financing for educational revenues, and that reforms 
        in systems of school financing would increase the Nation's 
        ability to serve the educational needs of all children.
            (7) In 1999, the National Research Council of the National 
        Academy of Sciences published a report entitled ``Making Money 
        Matter, Financing America's Schools'', which found that the 
        concept of funding adequacy, which moves beyond the more 
        traditional concepts of finance equity to focus attention on 
the sufficiency of funding for desired educational outcomes, is an 
important step in developing a fair and productive educational system.
            (8) In 2001, the Executive Order establishing the 
        President's Commission on Educational Resource Equity declared, 
        ``A quality education is essential to the success of every 
        child in the 21st century and to the continued strength and 
        prosperity of our Nation. . . . [L]ong-standing gaps in access 
        to educational resources exist, including disparities based on 
        race and ethnicity.'' (Exec. Order No. 13190, 66 Fed. Reg. 5424 
        (2001)).
            (9) According to the Secretary of Education, as stated in a 
        letter (with enclosures) from the Secretary to States dated 
        January 19, 2001--
                    (A) racial and ethnic minorities continue to suffer 
                from lack of access to educational resources, including 
                ``experienced and qualified teachers, adequate 
                facilities, and instructional programs and support, 
                including technology, as well as...the funding 
                necessary to secure these resources''; and
                    (B) these inadequacies are ``particularly acute in 
                high-poverty schools, including urban schools, where 
                many students of color are isolated and where the 
                effect of the resource gaps may be cumulative. In other 
                words, students who need the most may often receive the 
                least, and these students often are students of 
                color.''.
            (10) In the amendments made by the No Child Left Behind Act 
        of 2001, Congress--
                    (A)(i) required each State to establish standards 
                and assessments in mathematics, reading or language 
                arts, and science; and
                    (ii) required schools to ensure that all students 
                are proficient in mathematics, reading or language 
                arts, and science not later than 12 years after the end 
                of the 2001-2002 school year, and held schools 
                accountable for the students' progress; and
                    (B) required each State to describe how the State 
                will help local educational agencies and schools to 
                develop the capacity to improve student academic 
                achievement.
            (11) The standards and accountability movement will succeed 
        only if, in addition to standards and accountability, all 
        schools have access to the educational resources necessary to 
        enable students to achieve.
            (12) Raising standards without ensuring access to 
        educational resources may in fact exacerbate achievement gaps 
        and set children up for failure.
            (13) According to the World Economic Forum's Global 
        Competitiveness Report 2001-2002, the United States ranks last 
        among developed countries in the difference in the quality of 
        schools available to rich and poor children.
            (14) The persistence of pervasive inadequacies in the 
        quality of education provided by State public school systems 
        effectively deprives millions of children throughout the United 
        States of the opportunity for an education adequate to enable 
        the children to--
                    (A) acquire the knowledge and skills necessary for 
                responsible citizenship in a diverse democracy, 
                including the ability to participate fully in the 
                political process through informed electoral choice;
                    (B) meet challenging student academic achievement 
                standards; and
                    (C) be able to compete and succeed in a global 
                economy.
            (15) Each State government has ultimate authority to 
        determine every important aspect and priority of the public 
        school system that provides elementary and secondary education 
        to children in the State, including whether students throughout 
        the State have access to the fundamentals of educational 
        opportunity described in section 136.
            (16) Because a well-educated populace is critical to the 
        Nation's political and economic well-being and national 
        security, the Federal Government has a substantial interest in 
        ensuring that States provide a high-quality education by 
        ensuring that all students have access to the fundamentals of 
        educational opportunity described in section 136 to enable the 
        students to succeed academically and in life.
    (b) Purposes.--The purposes of this subtitle are the following:
            (1) To further the goals of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 6301 et seq.) (as amended by 
        the No Child Left Behind Act of 2001), by holding States 
        accountable for providing all students with access to the 
        fundamentals of educational opportunity described in section 
        136.
            (2) To ensure that all students in public elementary 
        schools and secondary schools receive educational opportunities 
        that enable such students to--
                    (A) acquire the knowledge and skills necessary for 
                responsible citizenship in a diverse democracy, 
                including the ability to participate fully in the 
                political process through informed electoral choice;
                    (B) meet challenging student academic achievement 
                standards; and
                    (C) be able to compete and succeed in a global 
                economy.
            (3) To end the pervasive pattern of States maintaining 
        public school systems that do not meet the requirements of 
        section 135(a).

   CHAPTER 1--EDUCATIONAL OPPORTUNITY IN STATE PUBLIC SCHOOL SYSTEMS

            Subchapter A--Access to Educational Opportunity

SEC. 135. STATE PUBLIC SCHOOL SYSTEMS.

    (a) Requirements.--Each State receiving Federal financial 
assistance for elementary or secondary education shall ensure that the 
State's public school system provides all students within the State 
with an education that enables the students to acquire the knowledge 
and skills necessary for responsible citizenship in a diverse 
democracy, including the ability to participate fully in the 
political process through informed electoral choice, to meet 
challenging student academic achievement standards, and to be able to 
compete and succeed in a global economy, through--
            (1) the provision of fundamentals of educational 
        opportunity described in section 136, at adequate or ideal 
        levels as defined by the State under section 141(a)(1)(A) to 
        students at each public elementary school and secondary school 
        in the State;
            (2) the provision of educational services in school 
        districts that receive funds under part A of title I of the 
        Elementary and Secondary Education Act of 1965 (20 U.S.C. 6311 
        et seq.) that are, taken as a whole, at least comparable to 
        educational services provided in school districts not receiving 
        such funds; and
            (3) compliance with any final Federal or State court order 
        in any matter concerning the adequacy or equitableness of the 
        State's public school system.
    (b) Determinations Concerning State Public School Systems.--Not 
later than October 1 of each year, the Secretary shall determine 
whether each State maintains a public school system that meets the 
requirements of subsection (a). The Secretary may make a determination 
that a State public school system does not meet such requirements only 
after providing notice and an opportunity for a hearing.
    (c) Publication.--The Secretary shall publish and make available to 
the general public (including by means of the Internet) the 
determinations made under subsection (b).

SEC. 136. FUNDAMENTALS OF EDUCATIONAL OPPORTUNITY.

    The fundamentals of educational opportunity are the following:
            (1) Highly qualified teachers, principals, and academic 
        support personnel.--
                    (A) Highly qualified teachers.--Instruction from 
                highly qualified teachers in core academic subjects.
                    (B) Highly qualified principals.--Leadership, 
                management, and guidance from principals who meet State 
                certification standards.
                    (C) Highly qualified academic support personnel.--
                Necessary additional academic support in reading or 
                language arts, mathematics, and other core academic 
                subjects from personnel who meet applicable State 
                standards.
            (2) Rigorous academic standards, curricula, and methods of 
        instruction.--Rigorous academic standards, curricula, and 
        methods of instruction, as measured by the extent to which each 
        school district succeeds in providing high-quality academic 
        standards, curricula, and methods of instruction to students in 
        each public elementary school and secondary school within the 
        district.
            (3) Small class sizes.--Small class sizes, as measured by--
                    (A) the average class size and the range of class 
                sizes; and
                    (B) the percentage of classes with 17 or fewer 
                students.
            (4) Textbooks, instructional materials, and supplies.--
        Textbooks, instructional materials, and supplies, as measured 
        by--
                    (A) the average age and quality of textbooks, 
                instructional materials, and supplies used in core 
                academic subjects; and
                    (B) the percentage of students who begin the school 
                year with school-issued textbooks, instructional 
                materials, and supplies.
            (5) Library resources.--Library resources, as measured by--
                    (A) the size and qualifications of the library's 
                staff, including whether the library is staffed by a 
                full-time librarian certified under applicable State 
                standards;
                    (B) the size (relative to the number of students) 
                and quality (including age) of the library's collection 
                of books and periodicals; and
                    (C) the library's hours of operation.
            (6) School facilities and computer technology.--
                    (A) Quality school facilities.--Quality school 
                facilities, as measured by--
                            (i) the physical condition of school 
                        buildings and major school building features;
                            (ii) environmental conditions in school 
                        buildings; and
                            (iii) the quality of instructional space.
                    (B) Computer technology.--Computer technology, as 
                measured by--
                            (i) the ratio of computers to students;
                            (ii) the quality of computers and software 
                        available to students;
                            (iii) Internet access;
                            (iv) the quality of system maintenance and 
                        technical assistance for the computers; and
                            (v) the number of computer laboratory 
                        courses taught by qualified computer 
                        instructors.
            (7) Quality guidance counseling.--Qualified guidance 
        counselors, as measured by the ratio of students to qualified 
        guidance counselors who have been certified under an applicable 
        State or national program.

                   Subchapter B--State Accountability

SEC. 141. STATE ACCOUNTABILITY PLAN.

    (a) General Plan.--
            (1) Contents.--Each State receiving Federal financial 
        assistance for elementary and secondary education shall 
        annually submit to the Secretary a plan, developed by the State 
        educational agency, in consultation with local educational 
        agencies, teachers, principals, pupil services personnel, 
        administrators, other staff, and parents, that contains the 
        following:
                    (A) A description of 2 levels of high access 
                (adequate and ideal) to each of the fundamentals of 
                educational opportunity described in section 136 that 
                measure how well the State, through school districts, 
                public elementary schools, and public secondary 
                schools, is achieving the purposes of this subtitle by 
                providing children with the resources they need to 
                succeed academically and in life.
                    (B) A description of a third level of access 
                (basic) to each of the fundamentals of educational 
                opportunity described in section 136 that measures how 
                well the State, through school districts, public 
                elementary schools, and public secondary schools, is 
                achieving the purposes of this subtitle by providing 
                children with the resources they need to succeed 
                academically and in life.
                    (C) A description of the level of access of each 
                school district, public elementary school, and public 
                secondary school in the State to each of the 
                fundamentals of educational opportunity described in 
                section 136, including identification of any such 
                schools that lack high access (as described in 
                subparagraph (A)) to any of the fundamentals.
                    (D) An estimate of the additional cost, if any, of 
                ensuring that the system meets the requirements of 
                section 135(a).
                    (E) Information stating the percentage of students 
                in each school district, public elementary school, and 
                public secondary school in the State that are 
                proficient in mathematics, reading or language arts, 
                and science, as measured through assessments 
                administered as described in section 1111(b)(3)(C)(v) 
                of the Elementary and Secondary Education Act of 1965 
                (20 U.S.C. 6311(b)(3)(C)(v)).
                    (F) Information stating whether each school 
                district, public elementary school, and public 
                secondary school in the State is making adequate yearly 
                progress, as defined under section 1111(b)(2) of the 
                Elementary and Secondary Education Act of 1965 (20 
                U.S.C. 6311(b)(2)).
                    (G)(i) For each school district, public elementary 
                school, and public secondary school in the State, 
                information stating--
                            (I) the number and percentage of children 
                        counted under section 1124(c) of the Elementary 
                        and Secondary Education Act of 1965 (20 U.S.C. 
                        6333(c)); and
                            (II) the number and percentage of students 
                        described in section 1111(b)(3)(C)(xiii) of the 
                        Elementary and Secondary Education Act of 1965 
                        (20 U.S.C. 6311(b)(3)(C)(xiii)).
                    (ii) For each such school district, information 
                stating whether the district is an urban, mixed, or 
                rural district (as defined by the National Center for 
                Education Statistics).
            (2) Levels of access.--For purposes of the plan submitted 
        under paragraph (1)--
                    (A) in defining basic, adequate, and ideal levels 
                of access to each of the fundamentals of educational 
                opportunity, each State shall consider, in addition to 
                the factors described in section 136, the access 
                available to students in the highest achieving decile 
                of public elementary schools and secondary schools, the 
                unique needs of low-income, urban and rural, and 
                minority students, and other educationally appropriate 
                factors; and
                    (B) the levels of access described in subparagraphs 
                (A) and (B) of paragraph (1) shall be aligned with the 
                challenging academic content standards, challenging 
                student academic achievement standards, and high-
                quality academic assessments required under the 
                Elementary and Secondary Education Act of 1965 (20 
                U.S.C. 6301 et seq.).
            (3) Information.--The State shall annually disseminate to 
        parents, in an understandable and uniform format, the 
        descriptions, estimate, and information described in paragraph 
        (1).
    (b) Accountability and Remediation.--
            (1) Accountability.--If the Secretary determines under 
        section 135(b) that a State maintains a public school system 
        that fails to meet the requirements of section 135(a)(1), the 
        plan submitted under subsection (a)(1) shall--
                    (A) demonstrate that the State has developed and is 
                implementing a single, statewide State accountability 
                system that will be effective in ensuring that the 
                State makes adequate yearly progress under this 
subtitle (as defined by the State in a manner that annually reduces the 
number of public elementary schools and secondary schools in the State 
without high access (as described in subsection (a)(1)(A)) to each of 
the fundamentals of educational opportunity described in section 136);
                    (B) demonstrate, based on the levels of access 
                described in paragraph (1) what constitutes adequate 
                yearly progress of the State under this subtitle toward 
                providing all students with high access to the 
                fundamentals of educational opportunity described in 
                section 136; and
                    (C) ensure--
                            (i) the establishment of a timeline for 
                        that adequate yearly progress that includes 
                        interim yearly goals for the reduction of the 
                        number of public elementary schools and 
                        secondary schools in the State without high 
                        access to each of the fundamentals of 
                        educational opportunity described in section 
                        136; and
                            (ii) that not later than 12 years after the 
                        end of the 2001-2002 school year, each public 
                        elementary or secondary school in the State 
                        shall have high access to each of the 
                        fundamentals of educational opportunity 
                        described in section 136.
            (2) Remediation.--If the Secretary determines under section 
        135(b) that a State maintains a public school system that fails 
        to meet the requirements of section 135(a)(2), not later than 1 
        year after the Secretary makes the determination, the State 
        shall include in the plan submitted under subsection (a)(1) a 
        strategy to remediate the conditions that caused the Secretary 
        to make such determination, not later than the end of the 
        second school year beginning after submission of the plan.
    (c) Amendments.--A State may amend the plan submitted under 
subsection (a)(1) to improve the plan or to take into account 
significantly changed circumstances.
    (d) Disapproval.--The Secretary may disapprove the plan submitted 
under subsection (a)(1) (or an amendment to such a plan) if the 
Secretary determines, after notice and opportunity for hearing, that 
the plan (or amendment) is inadequate to meet the requirements 
described in subsections (a) and (b).
    (e) Waiver.--
            (1) In general.--A State may request, and the Secretary may 
        grant, a waiver of the requirements of subsections (a) and (b) 
        for 1 year for exceptional circumstances, such as a precipitous 
        decrease in State revenues, or another circumstance that the 
        Secretary determines to be exceptional, that prevents a State 
        from complying with the requirements of subsections (a) and 
        (b).
            (2) Contents of waiver request.--A State that requests a 
        waiver under paragraph (1) shall include in the request--
                    (A) a description of the exceptional circumstance 
                that prevents the State from complying with the 
                requirements of subsections (a) and (b); and
                    (B) a plan that details the manner in which the 
                State will comply with such requirements by the end of 
                the waiver period.

SEC. 142. CONSEQUENCES OF FAILURE TO MEET REQUIREMENTS.

    (a) Interim Yearly Goals.--
            (1) In general.--For a fiscal year and a State described in 
        section 141(b)(1), the Secretary shall withhold from the State 
        2.75 percent of funds otherwise available to the State for the 
        administration of Federal elementary and secondary education 
        programs, for each covered goal that the Secretary determines 
the State is not meeting during that year.
            (2) Definition.--In this subsection, the term ``covered 
        goal'', used with respect to a fiscal year, means an interim 
        yearly goal described in section 141(b)(1)(C)(i) that is 
        applicable to that year or a prior fiscal year.
    (b) Consequences of Nonremediation.--Notwithstanding any other 
provision of law, if the Secretary determines that a State required to 
include a strategy under section 141(b)(2) continues to maintain a 
public school system that does not meet the requirements of section 
135(a)(2) at the end of the second school year described in section 
141(b)(2), the Secretary shall withhold from the State not more than 
33\1/3\ percent of funds otherwise available to the State for the 
administration of Federal elementary and secondary education programs 
until the Secretary determines that the State maintains a public school 
system that meets the requirements of section 135(a)(2).
    (c) Consequences of Noncompliance With Court Orders.--If the 
Secretary determines under section 135(b) that a State maintains a 
public school system that fails to meet the requirements of section 
135(a)(3), the Secretary shall withhold from the State not more than 
33\1/3\ percent of funds otherwise available to the State for the 
administration of Federal elementary and secondary education programs.
    (d) Disposition of Funds Withheld.--
            (1) Determination.--Not later than 1 year after the 
        Secretary withholds funds from a State under this section, the 
        Secretary shall determine whether the State has corrected the 
        condition that led to the withholding.
            (2) Disposition.--
                    (A) Correction.--If the Secretary determines under 
                paragraph (1), that the State has corrected the 
                condition that led to the withholding, the Secretary 
                shall make the withheld funds available to the State to 
                use for the original purpose of the funds during 1 or 
                more fiscal years specified by the Secretary.
                    (B) Noncorrection.--If the Secretary determines 
                under paragraph (1), that the State has not corrected 
                the condition that led to the withholding, the 
                Secretary shall allocate the withheld funds to public 
                school districts, public elementary schools, or public 
                secondary schools in the State that are most adversely 
affected by the condition that led to the withholding, to enable the 
districts or schools to correct the condition during 1 or more fiscal 
years specified by the Secretary.
            (3) Availability.--Amounts made available or allocated 
        under subparagraph (A) or (B) of paragraph (2) shall remain 
        available during the fiscal years specified by the Secretary 
        under that subparagraph.

            Subchapter C--Report to Congress and the Public

SEC. 151. ANNUAL REPORT ON STATE PUBLIC SCHOOL SYSTEMS.

    (a) Annual Report to Congress.--Not later than October 1 of each 
year, beginning the year after completion of the first full school year 
after the date of enactment of this subtitle, the Secretary shall 
submit to Congress a report that includes a full and complete analysis 
of the public school system of each State.
    (b) Contents of Report.--The analysis conducted under subsection 
(a) shall include the following:
            (1) Public school system information.--The following 
        information related to the public school system of each State:
                    (A) The number of school districts, public 
                elementary schools, public secondary schools, and 
                students in the system.
                    (B)(i) For each such school district and school--
                            (I) information stating the number and 
                        percentage of children counted under section 
                        1124(c) of the Elementary and Secondary 
                        Education Act of 1965 (20 U.S.C. 6333(c)); and
                            (II) the number and percentage of students, 
                        disaggregated by groups described in section 
                        1111(b)(3)(C)(xiii) of the Elementary and 
                        Secondary Education Act of 1965 (20 U.S.C. 
                        6311(b)(3)(C)(xiii)).
                    (ii) For each such district, information stating 
                whether the district is an urban, mixed, or rural 
                district (as defined by the National Center for 
                Education Statistics).
                    (C) The average per-pupil expenditure (both in 
                actual dollars and adjusted for cost and need) for the 
                State and for each school district in the State.
                    (D) Each school district's decile ranking as 
                measured by achievement in mathematics, reading or 
                language arts, and science on State academic 
                assessments required under section 1111(b)(3) of the 
                Elementary and Secondary Education Act of 1965 (20 
                U.S.C. 6311(b)(3)) and on the National Assessment of 
                Educational Progress.
                    (E) For each school district, public elementary 
                school, and public secondary school--
                            (i) the level of access (as described in 
                        section 141(a)(1)) to each of the fundamentals 
                        of educational opportunity described in section 
                        136;
                            (ii) the percentage of students that are 
                        proficient in mathematics, reading or language 
                        arts, and science, as measured through 
                        assessments administered as described in 
                        section 1111(b)(3)(C)(v) of the Elementary and 
                        Secondary Education Act of 1965 (20 U.S.C. 
                        6311(b)(3)(C)(v)); and
                            (iii) whether the school district or school 
                        is making adequate yearly progress--
                                    (I) as defined under section 
                                1111(b)(2) of the Elementary and 
                                Secondary Education Act of 1965 (20 
                                U.S.C. 6311(b)(2)); and
                                    (II) as defined by the State under 
                                section 141(b)(1)(A).
                    (F) For each State, the number of public elementary 
                schools and secondary schools that lack, and names of 
                each such school that lacks, high access (as described 
                in section 141(a)(1)(A)) to any of the fundamentals of 
                educational opportunity described in section 136.
                    (G) For the year covered by the report, a summary 
                of any changes in the data required in subparagraphs 
                (A) through (F) for each of the preceding 3 years 
                (which may be based on such data as are available, for 
                the first 3 reports submitted under subsection (a)).
                    (H) Such other information as the Secretary 
                considers useful and appropriate.
            (2) State actions.--For each State that the Secretary 
        determines under section 135(b) maintains a public school 
        system that fails to meet the requirements of section 135(a), a 
        detailed description and evaluation of the success of any 
        actions taken by the State, and measures proposed to be taken 
        by the State, to meet the requirements.
            (3) State plans.--A copy of each State's most recent plan 
        submitted under section 141(a)(1).
            (4) Relationship between compliance and achievement.--An 
        analysis of the relationship between meeting the requirements 
        of section 135(a) and improving student academic achievement, 
        as measured on State academic assessments required under 
        section 1111(b)(3) of the Elementary and Secondary Education 
        Act of 1965 (20 U.S.C. 6311(b)(3)).
    (c) Scope of Report.--The report required under subsection (a) 
shall cover the school year ending in the calendar year in which the 
report is required to be submitted.
    (d) Submission of Data to Secretary.--Each State receiving Federal 
financial assistance for elementary and secondary education shall 
submit to the Secretary, at such time and in such manner as the 
Secretary may reasonably require, such data as the Secretary determines 
to be necessary to make a determination under section 135(b) and to 
submit the report under this section. Such data shall include the 
information used to measure the State's success in providing the 
fundamentals of educational opportunity described in section 136.
    (e) Failure To Submit Data.--If a State fails to submit the data 
that the Secretary determines to be necessary to make a determination 
under section 135(b) regarding whether the State maintains a public 
school system that meets the requirements of section 135(a)--
            (1) such State's public school system shall be deemed not 
        to have met the applicable requirements until the State submits 
        such data and the Secretary is able to make such determination 
        under section 135(b); and
            (2) the Secretary shall provide, to the extent practicable, 
        the analysis required in subsection (a) for the State based on 
        the best data available to the Secretary.
    (f) Publication.--The Secretary shall publish and make available to 
the general public (including by means of the Internet) the report 
required under subsection (a).

                          Subchapter D--Remedy

SEC. 161. CIVIL ACTION FOR ENFORCEMENT.

    A student or parent of a student aggrieved by a violation of this 
subtitle may bring a civil action against the appropriate official in 
an appropriate Federal district court seeking declaratory or injunctive 
relief to enforce the requirements of this subtitle, together with 
reasonable attorney's fees and the costs of the action.

 CHAPTER 2--EFFECTS OF EDUCATIONAL DISPARITIES ON ECONOMIC GROWTH AND 
                            NATIONAL DEFENSE

SEC. 171. EFFECTS ON ECONOMIC GROWTH AND PRODUCTIVITY.

    (a) Study.--The Commissioner for Education Statistics, in 
consultation with the Secretary of Commerce, Secretary of Labor, 
Secretary of the Treasury, and the National Research Council of the 
National Academy of Sciences, shall conduct a comprehensive study 
concerning the effects on economic growth and productivity of ensuring 
that each State public school system meets the requirements of section 
135(a). Such study shall include assessments of--
            (1) the economic costs to the Nation resulting from the 
        maintenance by States of public school systems that do not meet 
        the requirements of section 135(a);
            (2) the economic gains to be expected from States' 
        compliance with the requirements of section 135(a); and
            (3) the costs, if any, of ensuring that each State 
        maintains a public school system that meets the requirements of 
        section 135(a).
    (b) Report to Congress.--Not later than 1 year after the date of 
enactment of this subtitle, the Commissioner for Education Statistics 
shall submit to Congress a final report detailing the results of the 
study required under subsection (a).

SEC. 172. EFFECTS ON NATIONAL DEFENSE.

    (a) Study.--The Commissioner for Education Statistics, in 
consultation with the Secretary of Defense, shall conduct a 
comprehensive study concerning the effects on national defense of 
ensuring that each State public school system meets the requirements of 
section 135(a). Such study shall include assessments of--
            (1) the detriments to national defense resulting from the 
        maintenance by States of public school systems that do not meet 
        the requirements of section 135(a), including the effects on--
                    (A) knowledge and skills necessary for the 
                effective functioning of the Armed Forces;
                    (B) the costs to the Armed Forces of training; and
                    (C) efficiency resulting from the use of 
                sophisticated equipment and information technology; and
            (2) the gains to national defense to be expected from 
        ensuring that each State public school system meets the 
        requirements of section 135(a).
    (b) Report to Congress.--Not later than 1 year after the date of 
enactment of this subtitle, the Commissioner for Education Statistics 
shall submit to Congress a final report detailing the results of the 
study required under subsection (a).

                     CHAPTER 3--GENERAL PROVISIONS

SEC. 181. DEFINITIONS.

    In this subtitle:
            (1) Referenced terms.--The terms ``elementary school'', 
        ``secondary school'', ``local educational agency'', ``highly 
        qualified'', ``core academic subjects'', ``parent'', and 
        ``average per-pupil expenditure'' have the meanings given those 
        terms in section 9101 of the Elementary and Secondary Education 
        Act of 1965 (20 U.S.C. 7801).
            (2) Federal elementary and secondary education programs.--
        The term ``Federal elementary and secondary education 
        programs'' means programs providing Federal financial 
        assistance for elementary or secondary education, other than 
        programs under the following provisions of law:
                    (A) The Individuals with Disabilities Education Act 
                (20 U.S.C. 1400 et seq.).
                    (B) Title III of the Elementary and Secondary 
                Education Act of 1965 (20 U.S.C. 6801 et seq.).
                    (C) The Richard B. Russell National School Lunch 
                Act (42 U.S.C. 1751 et seq.).
                    (D) The Child Nutrition Act of 1966 (42 U.S.C. 1771 
                et seq.).
            (3) Public school system.--The term ``public school 
        system'' means a State's system of public elementary and 
        secondary education.
            (4) State.--The term ``State'' means each of the several 
        States, the District of Columbia, and the Commonwealth of 
        Puerto Rico.

SEC. 182. RULEMAKING.

    The Secretary may prescribe regulations to carry out this subtitle.

SEC. 183. CONSTRUCTION.

    Nothing in this subtitle shall be construed to require a 
jurisdiction to increase its property tax or other tax rates or to 
redistribute revenues from such taxes.

                TITLE II--MODERNIZING SCHOOL FACILITIES

SEC. 201. SHORT TITLE.

    This title may be cited as the ``America's Better Classrooms Act of 
2003''.

SEC. 202. EXPANSION OF INCENTIVES FOR PUBLIC SCHOOLS.

    (a) In General.--Chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subchapter:

         ``Subchapter Z--Public School Modernization Provisions

                              ``Sec. 1400M. Credit to holders of 
                                        qualified public school 
                                        modernization bonds.
                              ``Sec. 1400N. Qualified school 
                                        construction bonds.
                              ``Sec. 1400O. Qualified zone academy 
                                        bonds.

``SEC. 1400M. CREDIT TO HOLDERS OF QUALIFIED PUBLIC SCHOOL 
              MODERNIZATION BONDS.

    ``(a) Allowance of Credit.--In the case of a taxpayer who holds a 
qualified public school modernization bond on a credit allowance date 
of such bond which occurs during the taxable year, there shall be 
allowed as a credit against the tax imposed by this chapter for such 
taxable year an amount equal to the sum of the credits determined under 
subsection (b) with respect to credit allowance dates during such year 
on which the taxpayer holds such bond.
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any credit allowance date 
        for a qualified public school modernization bond is 25 percent 
        of the annual credit determined with respect to such bond.
            ``(2) Annual credit.--The annual credit determined with 
        respect to any qualified public school modernization bond is 
        the product of--
                    ``(A) the applicable credit rate, multiplied by
                    ``(B) the outstanding face amount of the bond.
            ``(3) Applicable credit rate.--For purposes of paragraph 
        (2), the applicable credit rate with respect to an issue is the 
        rate equal to an average market yield (as of the day before the 
        date of issuance of the issue) on outstanding long-term 
        corporate debt obligations (determined under regulations 
        prescribed by the Secretary).
            ``(4) Special rule for issuance and redemption.--In the 
        case of a bond which is issued during the 3-month period ending 
        on a credit allowance date, the amount of the credit determined 
        under this subsection with respect to such credit allowance 
        date shall be a ratable portion of the credit otherwise 
        determined based on the portion of the 3-month period during 
        which the bond is outstanding. A similar rule shall apply when 
        the bond is redeemed.
    ``(c) Limitation Based on Amount of Tax.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under part 
                IV of subchapter A (other than subpart C thereof, 
                relating to refundable credits).
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year.
    ``(d) Qualified Public School Modernization Bond; Credit Allowance 
Date.--For purposes of this section--
            ``(1) Qualified public school modernization bond.--The term 
        `qualified public school modernization bond' means--
                    ``(A) a qualified zone academy bond, or
                    ``(B) a qualified school construction bond.
            ``(2) Credit allowance date.--The term `credit allowance 
        date' means--
                    ``(A) March 15,
                    ``(B) June 15,
                    ``(C) September 15, and
                    ``(D) December 15.
        Such term includes the last day on which the bond is 
        outstanding.
    ``(e) Other Definitions.--For purposes of this subchapter--
            ``(1) Local educational agency.--The term `local 
        educational agency' has the meaning given to such term by 
        section 14101 of the Elementary and Secondary Education Act of 
        1965. Such term includes the local educational agency that 
        serves the District of Columbia but does not include any other 
        State agency.
            ``(2) Bond.--The term `bond' includes any obligation.
            ``(3) State.--The term `State' includes the District of 
        Columbia and any possession of the United States.
            ``(4) Public school facility.--The term `public school 
        facility' shall not include--
                    ``(A) any stadium or other facility primarily used 
                for athletic contests or exhibitions or other events 
                for which admission is charged to the general public, 
                or
                    ``(B) any facility which is not owned by a State or 
                local government or any agency or instrumentality of a 
                State or local government.
    ``(f) Credit Included in Gross Income.--Gross income includes the 
amount of the credit allowed to the taxpayer under this section 
(determined without regard to subsection (c)) and the amount so 
included shall be treated as interest income.
    ``(g) Bonds Held by Regulated Investment Companies.--If any 
qualified public school modernization bond is held by a regulated 
investment company, the credit determined under subsection (a) shall be 
allowed to shareholders of such company under procedures prescribed by 
the Secretary.
    ``(h) Credits May Be Stripped.--Under regulations prescribed by the 
Secretary--
            ``(1) In general.--There may be a separation (including at 
        issuance) of the ownership of a qualified public school 
        modernization bond and the entitlement to the credit under this 
        section with respect to such bond. In case of any such 
        separation, the credit under this section shall be allowed to 
        the person who on the credit allowance date holds the 
        instrument evidencing the entitlement to the credit and not to 
        the holder of the bond.
            ``(2) Certain rules to apply.--In the case of a separation 
        described in paragraph (1), the rules of section 1286 shall 
        apply to the qualified public school modernization bond as if 
        it were a stripped bond and to the credit under this section as 
        if it were a stripped coupon.
    ``(i) Treatment for Estimated Tax Purposes.--Solely for purposes of 
sections 6654 and 6655, the credit allowed by this section to a 
taxpayer by reason of holding a qualified public school modernization 
bond on a credit allowance date shall be treated as if it were a 
payment of estimated tax made by the taxpayer on such date.
    ``(j) Credit May Be Transferred.--Nothing in any law or rule of law 
shall be construed to limit the transferability of the credit allowed 
by this section through sale and repurchase agreements.
    ``(k) Reporting.--Issuers of qualified public school modernization 
bonds shall submit reports similar to the reports required under 
section 149(e).
    ``(l) Termination.--This section shall not apply to any bond issued 
after September 30, 2008.

``SEC. 1400N. QUALIFIED SCHOOL CONSTRUCTION BONDS.

    ``(a) Qualified School Construction Bond.--For purposes of this 
subchapter, the term `qualified school construction bond' means any 
bond issued as part of an issue if--
            ``(1) 95 percent or more of the proceeds of such issue are 
        to be used for the construction, rehabilitation, or repair of a 
        public school facility or for the acquisition of land on which 
        such a facility is to be constructed with part of the proceeds 
        of such issue,
            ``(2) the bond is issued by a State or local government 
        within the jurisdiction of which such school is located,
            ``(3) the issuer designates such bond for purposes of this 
        section, and
            ``(4) the term of each bond which is part of such issue 
        does not exceed 15 years.
    ``(b) Limitation on Amount of Bonds Designated.--The maximum 
aggregate face amount of bonds issued during any calendar year which 
may be designated under subsection (a) by any issuer shall not exceed 
the sum of--
            ``(1) the limitation amount allocated under subsection (d) 
        for such calendar year to such issuer, and
            ``(2) if such issuer is a large local educational agency 
        (as defined in subsection (e)(4)) or is issuing on behalf of 
        such an agency, the limitation amount allocated under 
        subsection (e) for such calendar year to such agency.
    ``(c) National Limitation on Amount of Bonds Designated.--There is 
a national qualified school construction bond limitation for each 
calendar year. Such limitation is--
            ``(1) $11,000,000,000 for 2004,
            ``(2) $11,000,000,000 for 2005, and
            ``(3) except as provided in subsection (f), zero after 
        2005.
    ``(d) 60 Percent of Limitation Allocated Among States.--
            ``(1) In general.--60 percent of the limitation applicable 
        under subsection (c) for any calendar year shall be allocated 
        by the Secretary among the States in proportion to the 
        respective numbers of children in each State who have attained 
        age 5 but not age 18 for the most recent fiscal year ending 
        before such calendar year. The limitation amount allocated to a 
        State under the preceding sentence shall be allocated by the 
        State to issuers within such State.
            ``(2) Minimum allocations to states.--
                    ``(A) In general.--The Secretary shall adjust the 
                allocations under this subsection for any calendar year 
                for each State to the extent necessary to ensure that 
                the sum of--
                            ``(i) the amount allocated to such State 
                        under this subsection for such year, and
                            ``(ii) the aggregate amounts allocated 
                        under subsection (e) to large local educational 
                        agencies in such State for such year,
                is not less than an amount equal to such State's 
                minimum percentage of the amount to be allocated under 
                paragraph (1) for the calendar year.
                    ``(B) Minimum percentage.--A State's minimum 
                percentage for any calendar year is the minimum 
                percentage described in section 1124(d) of the 
                Elementary and Secondary Education Act of 1965 (20 
                U.S.C. 6334(d)) for such State for the most recent 
                fiscal year ending before such calendar year.
            ``(3) Allocations to certain possessions.--The amount to be 
        allocated under paragraph (1) to any possession of the United 
        States  other than Puerto Rico shall be the amount which would 
have been allocated if all allocations under paragraph (1) were made on 
the basis of respective populations of individuals below the poverty 
line (as defined by the Office of Management and Budget). In making 
other allocations, the amount to be allocated under paragraph (1) shall 
be reduced by the aggregate amount allocated under this paragraph to 
possessions of the United States.
            ``(4) Allocations for indian schools.--The provisions of 
        section 1400P shall apply with respect to the construction, 
        rehabilitation, and repair of schools funded by the Bureau of 
        Indian Affairs. No funds may be allocated under this section 
        for such schools.
    ``(e) 40 Percent of Limitation Allocated Among Largest School 
Districts.--
            ``(1) In general.--40 percent of the limitation applicable 
        under subsection (c) for any calendar year shall be allocated 
        under paragraph (2) by the Secretary among local educational 
        agencies which are large local educational agencies for such 
        year.
            ``(2) Allocation formula.--The amount to be allocated under 
        paragraph (1) for any calendar year shall be allocated among 
        large local educational agencies in proportion to the 
        respective amounts each such agency received for Basic Grants 
        under subpart 2 of part A of title I of the Elementary and 
        Secondary Education Act of 1965 (20 U.S.C. 6331 et seq.) for 
        the most recent fiscal year ending before such calendar year.
            ``(3) Allocation of unused limitation to state.--The amount 
        allocated under this subsection to a large local educational 
        agency for any calendar year may be reallocated by such agency 
        to the State in which such agency is located for such calendar 
        year. Any amount reallocated to a State under the preceding 
        sentence may be allocated as provided in subsection (d)(1).
            ``(4) Large local educational agency.--For purposes of this 
        section, the term `large local educational agency' means, with 
        respect to a calendar year, any local educational agency if 
        such agency is--
                    ``(A) among the 100 local educational agencies with 
                the largest numbers of children aged 5 through 17 from 
                families living below the poverty level, as determined 
                by the Secretary using the most recent data available 
                from the Department of Commerce that are satisfactory 
                to the Secretary, or
                    ``(B) 1 of not more than 25 local educational 
                agencies (other than those described in subparagraph 
                (A)) that the Secretary of Education determines (based 
                on the most recent data available satisfactory to the 
                Secretary) are in particular need of assistance, based 
                on a low level of resources for school construction, a 
                high level of enrollment growth, or such other factors 
                as the Secretary deems appropriate.
    ``(f) Carryover of Unused Limitation.--If for any calendar year--
            ``(1) the amount allocated under subsection (d) to any 
        State, exceeds
            ``(2) the amount of bonds issued during such year which are 
        designated under subsection (a) pursuant to such allocation,
the limitation amount under such subsection for such State for the 
following calendar year shall be increased by the amount of such 
excess. A similar rule shall apply to the amounts allocated under 
subsection (e).
    ``(g) Special Rules Relating to Arbitrage.--
            ``(1) In general.--A bond shall not be treated as failing 
        to meet the requirement of subsection (a)(1) solely by reason 
        of the fact that the proceeds of the issue of which such bond 
        is a part are invested for a temporary period (but not more 
        than 36 months) until such proceeds are needed for the purpose 
        for which such issue was issued.
            ``(2) Binding commitment requirement.--Paragraph (1) shall 
        apply to an issue only if, as of the date of issuance, there is 
        a reasonable expectation that--
                    ``(A) at least 10 percent of the proceeds of the 
                issue will be spent within the 6-month period beginning 
                on such date for the purpose for which such issue was 
                issued, and
                    ``(B) the remaining proceeds of the issue will be 
                spent with due diligence for such purpose.
            ``(3) Earnings on proceeds.--Any earnings on proceeds 
        during the temporary period shall be treated as proceeds of the 
        issue for purposes of applying subsection (a)(1) and paragraph 
        (1) of this subsection.

``SEC. 1400O. QUALIFIED ZONE ACADEMY BONDS.

    ``(a) Qualified Zone Academy Bond.--For purposes of this 
subchapter--
            ``(1) In general.--The term `qualified zone academy bond' 
        means any bond issued as part of an issue if--
                    ``(A) 95 percent or more of the proceeds of such 
                issue are to be used for a qualified purpose with 
                respect to a qualified zone academy established by a 
                local educational agency,
                    ``(B) the bond is issued by a State or local 
                government within the jurisdiction of which such 
                academy is located,
                    ``(C) the issuer--
                            ``(i) designates such bond for purposes of 
                        this section,
                            ``(ii) certifies that it has written 
                        assurances that the private business 
                        contribution requirement of paragraph (2) will 
                        be met with respect to such academy, and
                            ``(iii) certifies that it has the written 
                        approval of the local educational agency for 
                        such bond issuance, and
                    ``(D) the term of each bond which is part of such 
                issue does not exceed 15 years.
        Rules similar to the rules of section 1400N(g) shall apply for 
        purposes of paragraph (1).
            ``(2) Private business contribution requirement.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the private business contribution requirement of this 
                paragraph is met with respect to any issue if the local 
                educational agency that established the qualified zone 
                academy has written commitments from private entities 
                to make qualified contributions having a present value 
                (as of the date of issuance of the issue) of not less 
                than 10 percent of the proceeds of the issue.
                    ``(B) Qualified contributions.--For purposes of 
                subparagraph (A), the term `qualified contribution' 
                means any contribution (of a type and quality 
                acceptable to the local educational agency) of--
                            ``(i) equipment for use in the qualified 
                        zone academy (including state-of-the-art 
                        technology and vocational equipment),
                            ``(ii) technical assistance in developing 
                        curriculum or in training teachers in order to 
                        promote appropriate market driven technology in 
                        the classroom,
                            ``(iii) services of employees as volunteer 
                        mentors,
                            ``(iv) internships, field trips, or other 
                        educational opportunities outside the academy 
                        for students, or
                            ``(v) any other property or service 
                        specified by the local educational agency.
            ``(3) Qualified zone academy.--The term `qualified zone 
        academy' means any public school (or academic program within a 
        public school) which is established by and operated under the 
        supervision of a local educational agency to provide education 
        or training below the postsecondary level if--
                    ``(A) such public school or program (as the case 
                may be) is designed in cooperation with business to 
                enhance the academic curriculum, increase graduation 
                and employment rates, and better prepare students for 
                the rigors of college and the increasingly complex 
                workforce,
                    ``(B) students in such public school or program (as 
                the case may be) will be subject to the same academic 
                standards and assessments as other students educated by 
                the local educational agency,
                    ``(C) the comprehensive education plan of such 
                public school or program is approved by the local 
                educational agency, and
                    ``(D)(i) such public school is located in an 
                empowerment zone or enterprise community (including any 
                such zone or community designated after the date of the 
                enactment of this section), or
                    ``(ii) there is a reasonable expectation (as of the 
                date of issuance of the bonds) that at least 35 percent 
                of the students attending such school or participating 
                in such program (as the case may be) will be eligible 
                for free or reduced-cost lunches under the school lunch 
                program established under the Richard B. Russell 
                National School Lunch Act.
            ``(4) Qualified purpose.--The term `qualified purpose' 
        means, with respect to any qualified zone academy--
                    ``(A) constructing, rehabilitating, or repairing 
                the public school facility in which the academy is 
                established,
                    ``(B) acquiring the land on which such facility is 
                to be constructed with part of the proceeds of such 
                issue,
                    ``(C) providing equipment for use at such academy,
                    ``(D) developing course materials for education to 
                be provided at such academy, and
                    ``(E) training teachers and other school personnel 
                in such academy.
    ``(b) Limitations on Amount of Bonds Designated.--
            ``(1) In general.--There is a national zone academy bond 
        limitation for each calendar year. Such limitation is--
                    ``(A) $400,000,000 for 2003,
                    ``(B) $400,000,000 for 2004,
                    ``(C) $400,000,000 for 2005,
                    ``(D) $400,000,000 for 2006,
                    ``(E) $1,400,000,000 for 2007,
                    ``(F) $1,400,000,000 for 2008, and
                    ``(G) except as provided in paragraph (3), zero 
                after 2008.
            ``(2) Allocation of limitation.--
                    ``(A) Allocation among states.--
                            ``(i) 2003, 2004, 2005, and 2006 
                        limitations.--The national zone academy bond 
                        limitations for calendar years 2003, 2004, 
                        2005, and 2006 shall be allocated by the 
                        Secretary among the States on the basis of 
                        their respective populations of individuals 
                        below the poverty line (as defined by the 
                        Office of Management and Budget).
                            ``(ii) Limitation after 2006.--The national 
                        zone academy bond limitation for any calendar 
                        year after 2006 shall be allocated by the 
                        Secretary among the States in proportion to the 
                        respective amounts each such State received for 
                        Basic Grants under subpart 2 of part A of title 
                        I of the Elementary and Secondary Education Act 
                        of 1965 (20 U.S.C. 6331 et seq.) for the most 
                        recent fiscal year ending before such calendar 
                        year.
                    ``(B) Allocation to local educational agencies.--
                The limitation amount allocated to a State under 
                subparagraph (A) shall be allocated by the State to 
                qualified zone academies within such State.
                    ``(C) Designation subject to limitation amount.--
                The maximum aggregate face amount of bonds issued 
                during any calendar year which may be designated under 
                subsection (a) with respect to any qualified zone 
                academy shall not exceed the limitation amount 
                allocated to such academy under subparagraph (B) for 
                such calendar year.
            ``(3) Carryover of unused limitation.--If for any calendar 
        year--
                    ``(A) the limitation amount under this subsection 
                for any State, exceeds
                    ``(B) the amount of bonds issued during such year 
                which are designated under subsection (a) (or the 
                corresponding provisions of prior law) with respect to 
                qualified zone academies within such State,
        the limitation amount under this subsection for such State for 
        the following calendar year shall be increased by the amount of 
        such excess.''.
    (b) Reporting.--Subsection (d) of section 6049 of the Internal 
Revenue Code of 1986 (relating to returns regarding payments of 
interest) is amended by adding at the end the following new paragraph:
            ``(8) Reporting of credit on qualified public school 
        modernization bonds.--
                    ``(A) In general.--For purposes of subsection (a), 
                the term `interest' includes amounts includible in 
                gross income under section 1400M(f) and such amounts 
                shall be treated as paid on the credit allowance date 
                (as defined in section 1400M(d)(2)).
                    ``(B) Reporting to corporations, etc.--Except as 
                otherwise provided in regulations, in the case of any 
                interest described in subparagraph (A) of this 
                paragraph, subsection (b)(4) of this section shall be 
                applied without regard to subparagraphs (A), (H), (I), 
                (J), (K), and (L)(i).
                    ``(C) Regulatory authority.--The Secretary may 
                prescribe such regulations as are necessary or 
                appropriate to carry out the purposes of this 
                paragraph, including regulations which require more 
                frequent or more detailed reporting.''.
    (c) Conforming Amendments.--
            (1) Subchapter U of chapter 1 of the Internal Revenue Code 
        of 1986 is amended by striking part IV, by redesignating part V 
        as part IV, and by redesignating section 1397F as section 
        1397E.
            (2) The table of subchapters for chapter 1 of the Internal 
        Revenue Code of 1986 is amended by adding at the end the 
        following new item:

                              ``Subchapter Z. Public school 
                                        modernization provisions.''
            (3) The table of parts of subchapter U of chapter 1 of the 
        Internal Revenue Code of 1986 is amended by striking the last 2 
        items and inserting the following item:

                              ``Part IV. Regulations.''
    (d) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall apply to 
        obligations issued after December 31, 2002.
            (2) Repeal of restriction on zone academy bond holders.--In 
        the case of bonds to which section 1397E of the Internal 
        Revenue Code of 1986 (as in effect before the date of the 
        enactment of this Act) applies, the limitation of such section 
        to eligible taxpayers (as defined in subsection (d)(6) of such 
        section) shall not apply after the date of the enactment of 
        this Act.

SEC. 203. APPLICATION OF CERTAIN LABOR STANDARDS ON CONSTRUCTION 
              PROJECTS FINANCED UNDER PUBLIC SCHOOL MODERNIZATION 
              PROGRAM.

    Section 439 of the General Education Provisions Act (relating to 
labor standards) (20 U.S.C. 1232b) is amended--
            (1) by inserting ``(a)'' before ``All laborers and 
        mechanics''; and
            (2) by adding at the end the following:
    ``(b)(1) For purposes of this section, the term `applicable 
program' also includes the qualified zone academy bond provisions 
enacted by section 226 of the Taxpayer Relief Act of 1997 and the 
program established by section 202 of the America's Better Classrooms 
Act of 2003.
    ``(2) A State or local government participating in a program 
described in paragraph (1) shall--
            ``(A) in the awarding of contracts, give priority to 
        contractors with substantial numbers of employees residing in 
        the local education area to be served by the school being 
        constructed; and
            ``(B) include in the construction contract for such school 
        a requirement that the contractor give priority in hiring new 
        workers to individuals residing in such local education area.
    ``(3) In the case of a program described in paragraph (1), nothing 
in this subsection or subsection (a) shall be construed to deny any tax 
credit allowed under such program. If amounts are required to be 
withheld from contractors to pay wages to which workers are entitled, 
such amounts shall be treated as expended for construction purposes in 
determining whether the requirements of such program are met.''.

SEC. 204. EMPLOYMENT AND TRAINING ACTIVITIES RELATING TO CONSTRUCTION 
              OR RECONSTRUCTION OF PUBLIC SCHOOL FACILITIES.

    (a) In General.--Section 134 of the Workforce Investment Act of 
1998 (29 U.S.C. 2864) is amended by adding at the end the following:
    ``(f) Local Employment and Training Activities Relating to 
Construction or Reconstruction of Public School Facilities.--
            ``(1) In general.--In order to provide training services 
        related to construction or reconstruction of public school 
        facilities receiving funding assistance under an applicable 
        program, each State shall establish a specialized program of 
        training meeting the following requirements:
                    ``(A) The specialized program provides training for 
                jobs in the construction industry.
                    ``(B) The program provides trained workers for 
                projects for the construction or reconstruction of 
                public school facilities receiving funding assistance 
                under an applicable program.
                    ``(C) The program ensures that skilled workers 
                (residing in the area to be served by the school 
                facilities) will be available for the construction or 
                reconstruction work.
            ``(2) Coordination.--The specialized program established 
        under paragraph (1) shall be integrated with other activities 
        under this Act, with the activities carried out under the 
        National Apprenticeship Act of 1937 by the State Apprenticeship 
        Council or through the Bureau of Apprenticeship and Training in 
        the Department of Labor, as appropriate, and with activities 
        carried out under the Carl D. Perkins Vocational and Technical 
        Education Act of 1998. Nothing in this subsection shall be 
        construed to require services duplicative of those referred to 
        in the preceding sentence.
            ``(3) Applicable program.--In this subsection, the term 
        `applicable program' has the meaning given the term in section 
        439(b) of the General Education Provisions Act (relating to 
        labor standards).''.
    (b) State Plan.--Section 112(b)(17)(A) of the Workforce Investment 
Act of 1998 (29 U.S.C. 2822(b)(17)(A)) is amended--
            (1) in clause (iii), by striking ``and'' at the end;
            (2) by redesignating clause (iv) as clause (v); and
            (3) by inserting after clause (iii) the following:
                            ``(iv) how the State will establish and 
                        carry out a specialized program of training 
                        under section 134(f); and''.

SEC. 205. INDIAN SCHOOL CONSTRUCTION.

    (a) Definitions.--In this section:
            (1) Bureau.--The term ``Bureau'' means the Bureau of Indian 
        Affairs of the Department of the Interior.
            (2) Indian.--The term ``Indian'' means any individual who 
        is a member of a tribe.
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of the Interior.
            (4) Tribal school.--The term ``tribal school'' means an 
        elementary school, secondary school, or dormitory that is 
        operated by a tribal organization or the Bureau for the 
        education of Indian children and that receives financial 
        assistance for its operation under an appropriation for the 
        Bureau under section 102, 103(a), or 208 of the Indian Self-
        Determination and Education Assistance Act (25 U.S.C. 450f, 
        450h(a), and 458d) or under the Tribally Controlled Schools Act 
        of 1988 (25 U.S.C. 2501 et seq.) under a contract, a grant, or 
        an agreement, or for a Bureau-operated school.
            (5) Tribe.--The term ``tribe'' has the meaning given the 
        term ``Indian tribal government'' by section 7701(a)(40) of the 
        Internal Revenue Code of 1986, including the application of 
        section 7871(d) of such Code. Such term includes any consortium 
        of tribes approved by the Secretary.
    (b) Issuance of Bonds.--
            (1) In general.--The Secretary shall establish a pilot 
        program under which eligible tribes have the authority to issue 
        qualified tribal school modernization bonds to provide funding 
        for the construction, rehabilitation, or repair of tribal 
        schools, including the advance planning and design thereof.
            (2) Eligibility.--
                    (A) In general.--To be eligible to issue any 
                qualified tribal school modernization bond  under the 
program under paragraph (1), a tribe shall--
                            (i) prepare and submit to the Secretary a 
                        plan of construction that meets the 
                        requirements of subparagraph (B);
                            (ii) provide for quarterly and final 
                        inspection of the project by the Bureau; and
                            (iii) pledge that the facilities financed 
                        by such bond will be used primarily for 
                        elementary and secondary educational purposes 
                        for not less than the period such bond remains 
                        outstanding.
                    (B) Plan of construction.--A plan of construction 
                meets the requirements of this subparagraph if such 
                plan--
                            (i) contains a description of the 
                        construction to be undertaken with funding 
                        provided under a qualified tribal school 
                        modernization bond;
                            (ii) demonstrates that a comprehensive 
                        survey has been undertaken concerning the 
                        construction needs of the tribal school 
                        involved;
                            (iii) contains assurances that funding 
                        under the bond will be used only for the 
                        activities described in the plan;
                            (iv) contains response to the evaluation 
                        criteria contained in Instructions and 
                        Application for Replacement School 
                        Construction, Revision 6, dated February 6, 
                        1999; and
                            (v) contains any other reasonable and 
                        related information determined appropriate by 
                        the Secretary.
                    (C) Priority.--In determining whether a tribe is 
                eligible to participate in the program under this 
                subsection, the Secretary shall give priority to tribes 
                that, as demonstrated by the relevant plans of 
                construction, will fund projects--
                            (i) described in the Education Facilities 
                        Replacement Construction Priorities List as of 
                        FY 2000 of the Bureau of Indian Affairs (65 
                        Fed. Reg. 4623-4624);
                            (ii) described in any subsequent priorities 
                        list published in the Federal Register; or
                            (iii) which meet the criteria for ranking 
                        schools as described in Instructions and 
                        Application for Replacement School 
                        Construction, Revision 6, dated February 6, 
                        1999.
                    (D) Advance planning and design funding.--A tribe 
                may propose in its plan of construction to receive 
                advance planning and design funding from the tribal 
                school modernization escrow account established under 
                paragraph (6)(B). Before advance planning and design 
                funds are allocated from the escrow account, the tribe 
                shall agree to issue qualified tribal school 
                modernization bonds after the receipt of such funds and 
                agree as a condition of each bond issuance that the 
                tribe will deposit into such account or a fund managed 
                by the trustee as described in paragraph (4)(C) an 
                amount equal to the amount of such funds received from 
                the escrow account.
            (3) Permissible activities.--In addition to the use of 
        funds permitted under paragraph (1), a tribe may use amounts 
        received through the issuance of a qualified tribal school 
        modernization bond to--
                    (A) enter into and make payments under contracts 
                with licensed and bonded architects, engineers, and 
                construction firms in order to determine the needs of 
                the tribal school and for the design and engineering of 
                the school;
                    (B) enter into and make payments under contracts 
                with financial advisors, underwriters, attorneys, 
                trustees, and other professionals who would be able to 
                provide assistance to the tribe in issuing bonds; and
                    (C) carry out other activities determined 
                appropriate by the Secretary.
            (4) Bond trustee.--
                    (A) In general.--Notwithstanding any other 
                provision of law, any qualified tribal school 
                modernization bond issued by a tribe under this 
                subsection shall be subject to a trust agreement 
                between the tribe and a trustee.
                    (B) Trustee.--Any bank or trust company that meets 
                requirements established by the Secretary may be 
                designated as a trustee under subparagraph (A).
                    (C) Content of trust agreement.--A trust agreement 
                entered into by a tribe under this paragraph shall 
                specify that the trustee,  with respect to any bond 
issued under this subsection shall--
                            (i) act as a repository for the proceeds of 
                        the bond;
                            (ii) make payments to bondholders;
                            (iii) receive, as a condition to the 
                        issuance of such bond, a transfer of funds from 
                        the tribal school modernization escrow account 
                        established under paragraph (6)(B) or from 
                        other funds furnished by or on behalf of the 
                        tribe in an amount, which together with 
                        interest earnings from the investment of such 
                        funds in obligations of or fully guaranteed by 
                        the United States or from other investments 
                        authorized by paragraph (10), will produce 
                        moneys sufficient to timely pay in full the 
                        entire principal amount of such bond on the 
                        stated maturity date therefore;
                            (iv) invest the funds received pursuant to 
                        clause (iii) as provided by such clause; and
                            (v) hold and invest the funds in a 
                        segregated fund or account under the agreement, 
                        which fund or account shall be applied solely 
                        to the payment of the costs of items described 
                        in paragraph (3).
                    (D) Requirements for making direct payments.--
                            (i) In general.--Notwithstanding any other 
                        provision of law, the trustee shall make any 
                        payment referred to in subparagraph (C)(v) in 
                        accordance with requirements that the tribe 
                        shall prescribe in the trust agreement entered 
                        into under subparagraph (C). Before making a 
                        payment to a contractor under subparagraph 
                        (C)(v), the trustee shall require an inspection 
                        of the project by a local financial institution 
                        or an independent inspecting architect or 
                        engineer, to ensure the completion of the 
                        project.
                            (ii) Contracts.--Each contract referred to 
                        in paragraph (3) shall specify, or be 
                        renegotiated to specify, that payments under 
                        the contract shall be made in accordance with 
                        this paragraph.
            (5) Payments of principal and interest.--
                    (A) Principal.--No principal payments on any 
                qualified tribal school modernization bond shall be 
                required until the final, stated maturity of such bond, 
                which stated maturity shall be within 15 years from the 
                date of issuance. Upon the expiration of such period, 
                the entire outstanding principal under the bond shall 
                become due and payable.
                    (B) Interest.--In lieu of interest on a qualified 
                tribal school modernization bond there shall be awarded 
                a tax credit under section 1400P of the Internal 
                Revenue Code of 1986.
            (6) Bond guarantees.--
                    (A) In general.--Payment of the principal portion 
                of a qualified tribal school modernization bond issued 
                under this subsection shall be guaranteed solely by 
                amounts deposited with each respective bond trustee as 
                described in paragraph (4)(C)(iii).
                    (B) Establishment of account.--
                            (i) In general.--Notwithstanding any other 
                        provision of law, beginning in fiscal year 
                        2003, from amounts made available for school 
                        replacement under the construction account of 
                        the Bureau, the Secretary is authorized to 
                        deposit not more than $30,000,000 each fiscal 
year into a tribal school modernization escrow account.
                            (ii) Payments.--The Secretary shall use any 
                        amounts deposited in the escrow account under 
                        clauses (i) and (iii) to make payments to 
                        trustees appointed and acting pursuant to 
                        paragraph (4) or to make payments described in 
                        paragraph (2)(D).
                            (iii) Transfers of excess proceeds.--Excess 
                        proceeds held under any trust agreement that 
                        are not needed for any of the purposes 
                        described in clauses (iii) and (v) of paragraph 
                        (4)(C) shall be transferred, from time to time, 
                        by the trustee for deposit into the tribal 
                        school modernization escrow account.
            (7) Limitations.--
                    (A) Obligation to repay.--Notwithstanding any other 
                provision of law, the principal amount on any qualified 
                tribal school modernization bond issued under this 
                subsection shall be repaid only to the extent of any 
                escrowed funds furnished under paragraph (4)(C)(iii). 
                No qualified tribal school modernization bond issued by 
                a tribe shall be an obligation of, nor shall payment of 
                the principal thereof be guaranteed by, the United 
                States.
                    (B) Land and facilities.--Any land or facilities 
                purchased or improved with amounts derived from 
                qualified tribal school modernization bonds issued 
                under this subsection shall not be mortgaged or used as 
                collateral for such bonds.
            (8) Sale of bonds.--Qualified tribal school modernization 
        bonds may be sold at a purchase price equal to, in excess of, 
        or at a discount from the par amount thereof.
            (9) Treatment of trust agreement earnings.--Any amounts 
        earned through the investment of funds under the control of a 
        trustee under any trust agreement described in paragraph (4) 
        shall not be subject to Federal income tax.
            (10) Investment of sinking funds.--Any sinking fund 
        established for the purpose of the payment of principal on a 
        qualified tribal school modernization bond shall be invested in 
        obligations issued by or guaranteed by the United States or in 
        such other assets as the Secretary of the Treasury may by 
        regulation allow.
    (c) Expansion of Incentives for Tribal Schools.--Chapter 1 of the 
Internal Revenue Code of 1986 (as amended by section 2) is further 
amended by adding at the end the following new subchapter:

        ``Subchapter AA--Tribal School Modernization Provisions

``Sec. 1400P. Credit to holders of qualified tribal school 
                            modernization bonds.

``SEC. 1400P. CREDIT TO HOLDERS OF QUALIFIED TRIBAL SCHOOL 
              MODERNIZATION BONDS.

    ``(a) Allowance of Credit.--In the case of a taxpayer who holds a 
qualified tribal school modernization bond on a credit allowance date 
of such bond which occurs during the taxable year, there shall be 
allowed as a credit against the tax imposed by this chapter for such 
taxable year an amount equal to the sum of the credits determined under 
subsection (b) with respect to credit allowance dates during such year 
on which the taxpayer holds such bond.
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any credit allowance date 
        for a qualified tribal school modernization bond is 25 percent 
        of the annual credit determined with respect to such bond.
            ``(2) Annual credit.--The annual credit determined with 
        respect to any qualified tribal school modernization bond is 
        the product of--
                    ``(A) the applicable credit rate, multiplied by
                    ``(B) the outstanding face amount of the bond.
            ``(3) Applicable credit rate.--For purposes of paragraph 
        (2), the applicable credit rate with respect to an issue is the 
        rate equal to an average market yield (as of the date of sale 
        of the issue) on outstanding long-term corporate obligations 
        (as determined by the Secretary).
            ``(4) Special rule for issuance and redemption.--In the 
        case of a bond which is issued during the 3-month period ending 
        on a credit allowance date, the amount of the credit determined 
        under this subsection with respect to such credit allowance 
        date shall be a ratable portion of the credit otherwise 
        determined based on the portion of the 3-month period during 
        which the bond is outstanding. A similar rule shall apply when 
        the bond is redeemed.
    ``(c) Limitation Based on Amount of Tax.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under part 
                IV of subchapter A (other than subpart C thereof, 
                relating to refundable credits).
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year.
    ``(d) Qualified Tribal School Modernization Bond; Other 
Definitions.--For purposes of this section--
            ``(1) Qualified tribal school modernization bond.--
                    ``(A) In general.--The term `qualified tribal 
                school modernization bond' means, subject to 
                subparagraph (B), any bond issued as part of an issue 
                under section 2(c) of the Indian School Construction 
                Act, as in effect on the date of the enactment of this 
                section, if--
                            ``(i) 95 percent or more of the proceeds of 
                        such issue are to be used for the construction, 
                        rehabilitation, or repair of a school facility 
                        funded by the Bureau of Indian Affairs of the 
                        Department of the Interior or for the 
                        acquisition of land on which such a facility is 
                        to be constructed with part of the proceeds of 
                        such issue,
                            ``(ii) the bond is issued by a tribe,
                            ``(iii) the issuer designates such bond for 
                        purposes of this section, and
                            ``(iv) the term of each bond which is part 
                        of such issue does not exceed 15 years.
                    ``(B) National limitation on amount of bonds 
                designated.--
                            ``(i) National limitation.--There is a 
                        national qualified tribal school modernization 
                        bond limitation for each calendar year. Such 
                        limitation is--
                                    ``(I) $200,000,000 for 2004,
                                    ``(II) $200,000,000 for 2005, and
                                    ``(III) zero after 2005.
                            ``(ii) Allocation of limitation.--The 
                        national qualified tribal school modernization 
                        bond limitation shall be allocated to tribes by 
                        the Secretary of the Interior subject to the 
                        provisions of section 2 of the Indian School 
                        Construction Act, as in effect on the date of 
                        the enactment of this section.
                            ``(iii) Designation subject to limitation 
                        amount.--The maximum aggregate face amount of 
                        bonds issued during any calendar year which may 
                        be designated under subsection (d)(1) with 
                        respect to any tribe shall not exceed the 
                        limitation amount allocated to such government 
                        under clause (ii) for such calendar year.
                            ``(iv) Carryover of unused limitation.--If 
                        for any calendar year--
                                    ``(I) the limitation amount under 
                                this subparagraph, exceeds
                                    ``(II) the amount of qualified 
                                tribal school modernization bonds 
                                issued during such year,
                        the limitation amount under this subparagraph 
                        for the following calendar year shall be 
                        increased by the amount of such excess. The 
                        preceding sentence shall not apply if such 
                        following calendar year is after 2012.
            ``(2) Credit allowance date.--The term `credit allowance 
        date' means--
                    ``(A) March 15,
                    ``(B) June 15,
                    ``(C) September 15, and
                    ``(D) December 15.
        Such term includes the last day on which the bond is 
        outstanding.
            ``(3) Bond.--The term `bond' includes any obligation.
            ``(4) Tribe.--The term `tribe' has the meaning given the 
        term `Indian tribal government' by section 7701(a)(40), 
        including the application of section 7871(d). Such term 
        includes any consortium of tribes approved by the Secretary of 
        the Interior.
    ``(e) Credit Included in Gross Income.--Gross income includes the 
amount of the credit allowed to the taxpayer under this section 
(determined without regard to subsection (c)) and the amount so 
included shall be treated as interest income.
    ``(f) Bonds Held by Regulated Investment Companies.--If any 
qualified tribal school modernization bond is held by a regulated 
investment company, the credit determined under subsection (a) shall be 
allowed to shareholders of such company under procedures prescribed by 
the Secretary.
    ``(g) Credits May Be Stripped.--Under regulations prescribed by the 
Secretary--
            ``(1) In general.--There may be a separation (including at 
        issuance) of the ownership of a qualified tribal school 
        modernization bond and the entitlement to the credit under this 
        section with respect to such bond. In case of any such 
        separation, the credit under this section shall be allowed to 
        the person who on the credit allowance date holds the 
        instrument evidencing the entitlement to the credit and not to 
        the holder of the bond.
            ``(2) Certain rules to apply.--In the case of a separation 
        described in paragraph (1), the rules of section 1286 shall 
        apply to the qualified tribal school modernization bond as if 
        it were a stripped bond and to the credit under this section as 
        if it were a stripped coupon.
    ``(h) Treatment for Estimated Tax Purposes.--Solely for purposes of 
sections 6654 and 6655, the credit allowed by this section to a 
taxpayer by reason of holding a qualified tribal school modernization 
bond on a credit allowance date shall be treated as if it were a 
payment of estimated tax made by the taxpayer on such date.
    ``(i) Credit May Be Transferred.--Nothing in any law or rule of law 
shall be construed to limit the transferability of the credit allowed 
by this section through sale and repurchase agreements.
    ``(j) Credit Treated as Allowed Under Part IV of Subchapter A.--For 
purposes of subtitle F, the credit allowed by this section shall be 
treated as a credit allowable under part IV of subchapter A of this 
chapter.
    ``(k) Reporting.--Issuers of qualified tribal school modernization 
bonds shall submit reports similar to the reports required under 
section 149(e).''.
    (d) Additional Provisions.--
            (1) Sovereign immunity.--This section and the amendments 
        made by this section shall not be construed to impact, limit, 
        or affect the sovereign immunity of the Federal Government or 
        any State or tribal government.
            (2) Application.--This section and the amendments made by 
        this section shall take effect on the date of the enactment of 
        this Act with respect to bonds issued after December 31, 2002, 
        regardless of the status of regulations promulgated thereunder.

           TITLE III--MAKING HIGHER EDUCATION MORE ACCESSIBLE

                       Subtitle A--College Access

SEC. 301. EXPANSION OF GEARUP AND TRIO.

    The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) is 
amended--
            (1) in section 402A(f), by striking ``$700,000,000 for 
        fiscal year 1999, and such sums as may be necessary for each of 
        the 4 succeeding fiscal years'' and inserting ``$700,000,000 
        for fiscal year 1999, such sums as may be necessary for each of 
        fiscal years 2000 through 2003, $1,000,000,000 for fiscal year 
        2004, and such sums as may be necessary for each of the 
        succeeding fiscal years''; and
            (2) by striking section 404H and inserting the following:

``SEC. 404H. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this chapter 
$200,000,000 for fiscal year 1999, such sums as may be necessary for 
each of fiscal years 2000 through 2003, $570,000,000 for fiscal year 
2004, and such sums as may be necessary for each of the succeeding 
fiscal years.''.

SEC. 302. PROGRAMS FOR STUDENTS WHOSE FAMILIES ARE ENGAGED IN MIGRANT 
              AND SEASONAL FARMWORK.

    Section 418A(h) of the Higher Education Act of 1965 (20 U.S.C. 
1070d-2(h)) is amended--
            (1) in paragraph (1), by striking ``$15,000,000 for fiscal 
        year 1999 and such sums as may be necessary for each of the 4 
        succeeding fiscal years'' and inserting ``$15,000,000 for 
        fiscal year 1999, such sums as may be necessary for each of 
        fiscal years 2000 through 2003, $29,000,000 for fiscal year 
        2004, and such sums as may be necessary for each of the 
        succeeding fiscal years''; and
            (2) in paragraph (2), by striking ``$5,000,000 for fiscal 
        year 1999 and such sums as may be necessary for each of the 4 
        succeeding fiscal years'' and inserting ``$5,000,000 for fiscal 
        year 1999, such sums as may be necessary for each of fiscal 
        years 2000 through 2003, $21,000,000 for fiscal year 2004, and 
        such sums as may be necessary for each of the succeeding fiscal 
        years''.

    Subtitle B--Enhancing Programs for Minority Serving Institutions

SEC. 311. INCREASING DIVERSITY.

    The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) is 
amended--
            (1) in section 399(a)--
                    (A) by striking paragraph (1)(B) and inserting the 
                following:
                    ``(B) There are authorized to be appropriated to 
                carry out section 316, $10,000,000 for fiscal year 
                1999, such sums as may be necessary for each of fiscal 
                years 2000 through 2003, $35,000,000 for fiscal year 
                2004, and such sums as may be necessary for each of the 
                succeeding fiscal years.'';
                    (B) by striking paragraph (1)(C) and inserting the 
                following:
                    ``(C) There are authorized to be appropriated to 
                carry out section 317, $5,000,000 for fiscal year 1999, 
                such sums as may be necessary for each of fiscal years 
                2000 through 2003, $13,000,000 for fiscal year 2004, 
                and such sums as may be necessary for each of the 
                succeeding fiscal years.'';
                    (C) in paragraph (2)--
                            (i) in subparagraph (A), by striking ``and 
                        such sums as may be necessary for each of the 4 
                        succeeding fiscal years'' and inserting ``such 
                        sums as may be necessary for each of fiscal 
                        years 2000 through 2003, $412,000,000 for 
                        fiscal year 2004, and such sums as may be 
                        necessary for each of the succeeding fiscal 
                        years''; and
                            (ii) in subparagraph (B), by striking ``and 
                        such sums as may be necessary for each of the 4 
                        succeeding fiscal years'' and inserting ``such 
                        sums as may be necessary for each of fiscal 
                        years 2000 through 2003, $98,000,000 for fiscal 
                        year 2004, and such sums as may be necessary 
                        for each of the succeeding fiscal years'';
                    (D) in paragraph (3), by striking ``and such sums 
                as may be necessary for each of the 4 succeeding fiscal 
                years'' and inserting ``such sums as may be necessary 
                for each of fiscal years 2000 through 2003, $50,000,000 
                for fiscal year 2004, and such sums as may be necessary 
                for each of the succeeding fiscal years''; and
                    (E) in paragraph (5), by striking ``and such sums 
                as may be necessary for each of the 4 succeeding fiscal 
                years'' and inserting ``such sums as may be necessary 
                for each of fiscal years 2000 through 2003, $17,000,000 
                for fiscal year 2004, and such sums as may be necessary 
                for each of the succeeding fiscal years''; and
            (2) by striking section 518(a) and inserting the following:
    ``(a) Authorizations.--There are authorized to be appropriated to 
carry out this title $62,500,000 for fiscal year 1999, such sums as may 
be necessary for each of fiscal years 2000 through 2003, $172,000,000 
for fiscal year 2004, and such sums as may be necessary for each of the 
succeeding fiscal years.''.

          Subtitle C--NTIA Digital Network Technology Program

SEC. 331. ESTABLISHMENT OF PROGRAM.

    Title I of the National Telecommunications and Information 
Administration Organization Act (47 U.S.C. 901 et seq.) is amended by 
adding at the end the following:

              ``PART D--DIGITAL NETWORK TECHNOLOGY PROGRAM

``SEC. 171. PROGRAM AUTHORIZED.

    ``The Secretary shall establish, within the NTIA's Technology 
Opportunities Program a digital network technologies program to 
strengthen the ability of eligible institutions to provide capacity for 
instruction in digital network technologies by providing grants to, or 
executing contracts or cooperative agreements with, those institutions 
to provide such instruction.

``SEC. 172. ACTIVITIES SUPPORTED.

    ``An eligible institution shall use a grant, contract, or 
cooperative agreement awarded under this part--
            ``(1) to acquire the equipment, instrumentation, networking 
        capability, hardware and software, digital network technology, 
        and infrastructure;
            ``(2) to develop and provide educational services, 
        including faculty development, to prepare students or faculty 
        seeking a degree or certificate that is approved by the State, 
        or a regional accrediting body recognized by the Secretary of 
        Education;
            ``(3) to provide teacher education, library and media 
        specialist training, and preschool and teacher aid 
        certification to individuals who seek to acquire or enhance 
        technology skills in order to use technology in the classroom 
        or instructional process;
            ``(4) to implement a joint project to provide education 
        regarding technology in the classroom with a State or State 
        educational agency, local educational agency, community-based 
        organization, national nonprofit organization, or business, 
        including minority business or a business located in HUB zones, 
as defined by the Small Business Administration; or
            ``(5) to provide professional development to administrators 
        and faculty of eligible institutions with institutional 
        responsibility for technology education.

``SEC. 173. APPLICATION AND REVIEW PROCEDURE.

    ``(a) In General.--To be eligible to receive a grant, contract, or 
cooperative agreement under this part, an eligible institution shall 
submit an application to the Secretary at such time, in such manner, 
and accompanied by such information as the Secretary may reasonably 
require. The Secretary, in consultation with the panel described in 
subsection (b), shall establish a procedure by which to accept such 
applications and publish an announcement of such procedure, including a 
statement regarding the availability of funds, in the Federal Register.
    ``(b) Peer Review Panel.--The Secretary shall establish a peer 
review panel to aid the Secretary in establishing the application 
procedure described in subsection (a) and selecting applicants to 
receive grants, contracts, and cooperative agreements under section 
171. In selecting the members for such panel, the Secretary may consult 
with appropriate cabinet-level officials, representatives of non-
Federal organizations, and representatives of eligible institutions to 
ensure that the membership of such panel reflects membership of the 
minority higher education community, including Federal agency personnel 
and other individuals who are knowledgeable about issues regarding 
minority education institutions.

``SEC. 174. MATCHING REQUIREMENT.

    ``The Secretary may not award a grant, contract, or cooperative 
agreement to an eligible institution under this part unless such 
institution agrees that, with respect to the costs to be incurred by 
the institution in carrying out the program for which the grant, 
contract, or cooperative agreement was awarded, such institution will 
make available (directly or through donations from public or private 
entities) non-Federal contributions in an amount equal to \1/4\ of the 
amount of the grant, contract, or cooperative agreement awarded by the 
Secretary, or $500,000, whichever is the lesser amount. The Secretary 
shall waive the matching requirement for any institution or consortium 
with no endowment, or an endowment that has a current dollar value 
lower than $50,000,000.

``SEC. 175. LIMITATION.

    ``An eligible institution that receives a grant, contract, or 
cooperative agreement under this part that exceeds $2,500,000, shall 
not be eligible to receive another grant, contract, or cooperative 
agreement under this part until every other eligible institution has 
received a grant, contract, or cooperative agreement under this part.

``SEC. 176. ANNUAL REPORT AND EVALUATION.

    ``(a) Annual Report Required From Recipients.--Each institution 
that receives a grant, contract, or cooperative agreement under this 
part shall provide an annual report to the Secretary on its use of the 
grant, contract, or cooperative agreement.
    ``(b) Evaluation by Secretary.--The Secretary, in consultation with 
the Secretary of Education, shall--
            ``(1) review the reports provided under subsection (a) each 
        year;
            ``(2) evaluate the program authorized by section 171 on the 
        basis of those reports; and
            ``(3) conduct an evaluation at the end of the third year.
    ``(c) Contents of Evaluation.--The Secretary, in the evaluation, 
shall describe the activities undertaken by those institutions and 
shall assess the short-range and long-range impact of activities 
carried out under the grant, contract, or cooperative agreement on the 
students, faculty, and staff of the institutions.
    ``(d) Report to Congress.--The Secretary shall submit a report to 
Congress based on the evaluation not later than 1 year after conducting 
the evaluation. In the report, the Secretary shall include such 
recommendations, including recommendations concerning the continuing 
need for Federal support of the program, as may be appropriate.''.

SEC. 332. DEFINITIONS.

    Section 102(a) of the National Telecommunications and Information 
Administration Organization Act (47 U.S.C. 901(a)) is amended by adding 
at the end the following:
            ``(6) The term `eligible institution' means an institution 
        that is--
                    ``(A) a part B institution, as defined in section 
                322(2) of the Higher Education Act of 1965 (20 U.S.C. 
                1061(2)), an institution identified in subparagraph 
                (A), (B), or (C) of section 326(e)(1) of such Act (20 
                U.S.C. 1063b(e)(1) (A), (B), or (C)), or a consortium 
                of institutions described in this subparagraph;
                    ``(B) a Hispanic-serving institution, as defined in 
                section 502(a)(5) of the Higher Education Act of 1965 
                (20 U.S.C. 1101a(a)(5));
                    ``(C) a tribal college or university, as defined in 
                section 316(b)(3) of the Higher Education Act of 1965 
                (20 U.S.C. 1059c(b)(3));
                    ``(D) an Alaska Native-serving institution under 
                section 317(b) of the Higher Education Act of 1965 (20 
                U.S.C. 1059d(b));
                    ``(E) a Native Hawaiian-serving institution under 
                section 317(b) of the Higher Education Act of 1965 (20 
                U.S.C. 1059d(b)); or
                    ``(F) an institution determined by the Secretary, 
                in consultation with the Secretary of Education, to 
                have enrolled a substantial number of minority, low-
                income students during the previous academic year who 
                received assistance under subpart 1 of part A of title 
                IV of the Higher Education Act of 1965 (20 U.S.C. 1070a 
                et seq.) for that year.''.

SEC. 333. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to the Secretary of 
Commerce to carry out part D of title I of the National 
Telecommunications and Information Administration Organization Act not 
more than $250,000,000 for the period of fiscal years 2003 through 
2007.

              Subtitle D--Higher Education and Immigration

SEC. 341. RESTORATION OF STATE OPTION TO DETERMINE RESIDENCY FOR 
              PURPOSES OF HIGHER EDUCATION BENEFITS.

    Section 505 of the Illegal Immigration Reform and Immigrant 
Responsibility Act of 1996 (Division C of Public Law 104-208; 110 Stat. 
3009-672; 8 U.S.C. 1623) is repealed.

SEC. 342. CANCELLATION OF REMOVAL AND ADJUSTMENT OF STATUS OF CERTAIN 
              ALIEN HIGH SCHOOL GRADUATES WHO ARE LONG-TERM RESIDENTS 
              OF THE UNITED STATES.

    (a) Special Rule for Certain Alien High School Graduates.--
            (1) In general.--Except as otherwise provided in paragraph 
        (2), notwithstanding any other provision of law, the Attorney 
        General may cancel the removal of, and adjust to the status of 
        an alien lawfully admitted for permanent residence, an alien 
        who is inadmissible or deportable from the United States, if 
        the alien applies for such cancellation and adjustment of 
        status and demonstrates that--
                    (A) the alien has attained 12 years of age prior to 
                the date of enactment of this Act;
                    (B) the alien has not, prior to the date of filing 
                the application for cancellation of removal and 
                adjustment of status under this subsection, attained 
                the age of 21 years;
                    (C) the alien, prior to the date of filing an 
                application for cancellation of removal and adjustment 
                of status under this subsection, has received a 
                certificate of graduation from a school providing 
                secondary education or the recognized equivalent of 
                such certificate;
                    (D) has maintained a continuous physical presence 
                in the United States for a period of not less than 5 
                years immediately preceding the date of enactment of 
                this Act;
                    (E) the alien is a person of good moral character; 
                and
                    (F) is not inadmissible under section 212(a)(2) (8 
                U.S.C. 1182(a)(2)) or 212(a)(3) (8 U.S.C. 1182(a)(3)) 
                or deportable under section 237(a)(2) (8 U.S.C. 
                1227(a)(2)) or 237(a)(4) (8 U.S.C. 1227(a)(4)) of the 
                Immigration and Nationality Act.
            (2) Exceptions.--
                    (A) Rehabilitation and hardship to certain 
                aliens.--Notwithstanding subparagraph (F) of paragraph 
                (1), the Attorney General may cancel the removal of, 
                and adjust to the status of an alien lawfully admitted 
                for permanent residence, an alien (other than an alien 
                convicted of an aggravated felony, as defined in 
                section 101(a)(43) of the Immigration and Nationality 
                Act (8 U.S.C. 1101(a)(43)) or an alien who is 
                inadmissible under section 212(a)(3) (8 U.S.C. 
                1182(a)(3)) or deportable under section 237(a)(4) (8 
                U.S.C. 1227(a)(4)) of such Act) who but for that 
                subparagraph would qualify for cancellation of removal 
                and adjustment of status under this section if the 
                alien demonstrates rehabilitation and that the alien's 
                removal will result in exceptional and extremely 
                unusual hardship to the alien or a United States 
                citizen or lawful permanent resident spouse, parent, or 
                child.
                    (B) Aliens qualifying before the date of 
                enactment.--Notwithstanding paragraph (1), the Attorney 
                General may cancel the removal of, and adjust to the 
                status of an alien lawfully admitted for permanent 
                residence, an alien if--
                            (i) the alien would have met the 
                        requirements of paragraph (1) at any time 
                        during the 4-year period immediately preceding 
                        the date of enactment of this Act; and
                            (ii) the alien has graduated from, or is, 
                        on the date of filing an application for 
                        cancellation of removal under this subsection, 
                        enrolled in the United States in an institution 
                        of higher education, as defined by section 101 
                        of the Higher Education Act of 1965 (20 U.S.C. 
                        1001).
            (3) Procedures.--
                    (A) In general.--The Attorney General shall by 
                regulation establish a procedure that permits aliens to 
                apply for cancellation of removal and adjustment of 
                status available under this subsection without being 
                placed in removal proceedings, except that, in 
                addition, such cancellation of removal and adjustment 
                of status shall be available in removal proceedings. In 
                the case of an alien in an exclusion or deportation 
                hearing, suspension of deportation on the same grounds 
                as are provided under this subsection for cancellation 
                of removal, together with adjustment of status, shall 
                be available.
                    (B) Treatment prior to graduation.--
                            (i) In general.--Notwithstanding any other 
                        provision of law, an alien described in clause 
                        (ii) may not be removed so long as the alien 
                        continues to meet the criteria of that clause.
                            (ii) Covered aliens.--An alien described in 
                        this clause is an alien who does not meet the 
                        requirements of paragraph (1)(C) but is 
                        otherwise able to demonstrate prima facie 
                        eligibility for cancellation of removal and 
                        adjustment of status under this section and has 
                        a reasonable opportunity of meeting all the 
                        requirements of cancellation of removal and 
                        adjustment of status under this section in the 
                        future.
                            (iii) Work authorization.--The Attorney 
                        General shall grant an alien described in 
                        clause (ii) authorization to engage in 
                        employment in the United States.
                    (C) Expedited processing of applications; 
                prohibition on fees.--Regulations promulgated under 
this paragraph shall provide that applications for cancellation of 
removal and adjustment of status under this subsection will be 
considered on an expedited basis and without a requirement for the 
payment by the applicant of any additional fee for such expedited 
processing.
            (4) Confidentiality of information.--
                    (A) Prohibition.--Neither the Attorney General nor 
                any other official or employee of the Department of 
                Justice may--
                            (i) use the information furnished by the 
                        applicant pursuant to an application filed 
                        under this subsection for any purpose other 
                        than to make a determination on the 
                        application;
                            (ii) make any publication whereby the 
                        information furnished by any particular 
                        individual can be identified; or
                            (iii) permit anyone other than a sworn 
                        officer or employee of the Department of 
                        Justice or, with respect to an application 
                        filed under this subsection with a designated 
                        entity, that designated entity, to examine 
                        applications filed under this subsection.
                    (B) Penalty.--Whosoever knowingly uses, publishes, 
                or permits information to be examined in violation of 
                this subsection shall be fined not more than $10,000.
    (b) Termination of Period of Continuous Period.--For purposes of 
this section, any period of continuous physical presence in the United 
States of an alien who applies for cancellation of removal and 
adjustment of status under subsection (a) shall not terminate when the 
alien is served a notice to appear under section 239(a) of the 
Immigration and Nationality Act (8 U.S.C. 1229) or any other document 
notifying the alien of the initiation of immigration proceedings under 
that Act.
    (c) Treatment of Certain Breaks in Presence.--An alien shall be 
considered to have failed to maintain continuous physical presence in 
the United States under subsection (a)(1)(D) if the alien has departed 
from the United States for any period in excess of 90 days or for any 
periods in the aggregate exceeding 180 days, except that an alien may 
remain eligible for cancellation of removal and adjustment of status 
under this section notwithstanding a failure to maintain continuous 
physical presence in the United States if the alien demonstrates that 
failure is due to exceptional circumstances, as defined by section 
240(e)(1) of the Immigration and Nationality Act (8 U.S.C. 
1229a(e)(1)), or circumstances described in subparagraphs (A), (B), or 
(C) of section 244(b)(1) of the Immigration and Nationality Act (8 
U.S.C. 1254a(b)(1)).
    (d) Statutory Construction.--Nothing in this section may be 
construed to apply a numerical limitation on the number of aliens who 
may be eligible for cancellation of removal under section 240A of the 
Immigration and Nationality Act (8 U.S.C. 1229b).
    (e) Regulations.--Not later than 180 days after the date of 
enactment of this Act, the Attorney General shall publish regulations 
implementing this section. Such regulations shall be effective 
immediately on an interim, final basis, but are subject to change and 
revision after public notice and opportunity for a period for public 
comment.

SEC. 343. ANNUAL REPORT.

    Not later than one year after the date of enactment of this Act, 
and annually thereafter, the Attorney General shall submit a report to 
the Committees on the Judiciary of the Senate and the House of 
Representatives and to the Secretary of Education setting forth--
            (1) the number of aliens who applied for cancellation of 
        removal and adjustment of status under section 3;
            (2) the number of aliens who were granted cancellation of 
        removal and adjustment of status under section 3;
            (3) the number of aliens who applied for cancellation of 
        removal and adjustment of status under section 3 but whose 
        applications were denied and the basis for the denial of each 
        application; and
            (4) the number of pending applications for cancellation of 
        removal and adjustment of status under section 3.

              TITLE IV--MAKING HIGHER EDUCATION AFFORDABLE

                        Subtitle A--Pell Grants

SEC. 411. SENSE OF THE SENATE.

    (a) Findings.--Congress makes the following findings:
            (1) Increasing the percentage of individuals who obtain a 
        postsecondary education has become increasingly important, not 
        just to the individual beneficiary, but to the Nation as a 
        whole. The growth and continued expansion of the Nation's 
        economy is heavily dependent on an educated and highly skilled 
        workforce.
            (2) The opportunity to gain a postsecondary education also 
        is important to the Nation as a means to help advance the 
        American ideals of progress and equality.
            (3) Not all qualified students have the opportunity to earn 
        a college degree because of significant financial barriers. 
        According to Empty Promises, a report of the Advisory Committee 
        on Student Financial Assistance, in 2003, nearly \1/2\ of all 
        low- and moderate-income secondary school graduates (more than 
        400,000 students) will be unable to attend a 4-year college and 
        170,000 of these students will attend no college at all.
            (4) The Federal Government plays an invaluable role in 
        making student financial aid available to ensure that qualified 
        students are able to attend college, regardless of their 
        financial means. Since the inception of the Pell Grant program 
        in 1973, nearly 80,000,000 grants have helped low- and middle-
        income students go to college, enrich their lives, and become 
        productive members of society.
            (5) Nationwide, almost 63 percent of secondary school 
        graduates continue on to higher education immediately after 
        completing secondary school. This degree of college 
        participation would not exist without the Federal investment in 
        student aid, especially the Pell Grant program. More than 
        4,000,000 low- and middle-income students receive Pell Grants; 
        95 percent of whom have a family income of not more than 
        $40,000.
            (6) In the next 10 years, the number of undergraduate 
        students enrolled in the Nation's colleges and universities 
        will increase by 15 percent to more than 15,000,000 students. 
        Many of these students will be the first in their families to 
        attend college. The continued investment in the Pell Grant 
        program is essential if college is to remain an achievable part 
        of the American dream.
            (7) Increasing the maximum Pell Grant to $4,500 would allow 
        approximately 430,000 additional students to benefit from the 
        program.
            (8) Increasing the maximum Pell Grant to $4,500 would 
        result in 200,000 new Pell grant recipients.
            (9) Pell Grant recipients are more likely to graduate with 
        student loan debt and to amass more debt than other student 
        borrowers. Increasing the maximum Pell Grant to $4,500 will 
help remedy this disparity.
    (b) Sense of the Senate.--It is the sense of the Senate that--
            (1) the maximum Pell Grant should be increased to $4,500 
        during award year 2003-2004; and
            (2) the maximum Pell Grant amount set by Congress should be 
        the amount eligible students receive.

SEC. 412. COVERING PELL GRANT SHORTFALL.

    The following sums are appropriated, out of any money in the 
Treasury not otherwise appropriated for the fiscal year ending 
September 30, 2003, for an additional amount for ``Student Financial 
Assistance'' for carrying out subpart 1 of part A of title IV of the 
Higher Education Act of 1965, as amended, not more than $3,500,000,000, 
to remain available through September 30, 2004: Provided, That the 
Congress designates the entire amount as an emergency requirement 
pursuant to section 252(e) of the Balanced Budget and Emergency Deficit 
Control Act of 1985.

               Subtitle B--Student Loan Origination Fees

SEC. 421. PHASEOUT OF STUDENT LOAN ORIGINATION FEES.

    The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) is 
amended--
            (1) in section 438(c)(2), by striking ``is authorized to 
        charge the borrower an origination fee in an amount not to 
        exceed 3.0 percent'' and inserting ``is authorized to charge 
        the borrower an origination fee during fiscal year 2003 in an 
        amount not to exceed 3.0 percent, during fiscal year 2004 in an 
        amount not to exceed 2.0 percent, and during fiscal year 2005 
        in amount not to exceed 1.0 percent''; and
            (2) by striking section 455(c) and inserting the following:
    ``(c) Loan Fee.--The Secretary shall charge the borrower of a loan 
made under this part--
            ``(1) during fiscal year 2003 an origination fee of 3.0 
        percent of the principal amount of loan;
            ``(2) during fiscal year 2004 an origination fee of 2.0 
        percent of the principal amount of loan; and
            ``(3) during fiscal year 2005 an origination fee of 1.0 
        percent of the principal amount of loan.''.

                      Subtitle C--Hope Scholarship

SEC. 431. HOPE AND LIFETIME LEARNING CREDITS TO BE REFUNDABLE.

    (a) Credit To Be Refundable.--Section 25A of the Internal Revenue 
Code of 1986 (relating to Hope and Lifetime Learning credits) is hereby 
moved to subpart C of part IV of subchapter A of chapter 1 of such Code 
(relating to refundable credits) and inserted after section 35.
    (b) Technical Amendments.--
            (1) Section 36 of such Code is redesignated as section 37.
            (2) Section 25A of such Code (as moved by subsection (a)) 
        is redesignated as section 36.
            (3) Paragraph (1) of section 36(a) of such Code (as 
        redesignated by paragraph (2)) is amended by striking ``this 
        chapter'' and inserting ``this subtitle''.
            (4) Subparagraph (B) of section 72(t)(7) of such Code is 
        amended by striking ``section 25A(g)(2)'' and inserting 
        ``section 36(g)(2)''.
            (5) Subparagraph (A) of section 135(d)(2) of such Code is 
        amended by striking ``section 25A'' and inserting ``section 
        36''.
            (6) Section 221(d) of such Code is amended--
                    (A) by striking ``section 25A(g)(2)'' in paragraph 
                (2)(B) and inserting ``section 36(g)(2)'',
                    (B) by striking ``section 25A(f)(2)'' in paragraph 
                (2)(B) and inserting ``section 36(f)(2)'', and
                    (C) by striking ``section 25A(b)(3)'' in paragraph 
                (3) and inserting ``section 36(b)(3)''.
            (7) Section 222 of such Code is amended--
                    (A) by striking ``section 25A'' in subparagraph (A) 
                of subsection (c)(2) and inserting ``section 36'',
                    (B) by striking ``section 25A(f)'' in subsection 
                (d)(1) and inserting ``section 36(f)'', and
                    (C) by striking ``section 25A(g)(2)'' in subsection 
                (d)(1) and inserting ``section 36(g)(2)''.
            (8) Section 529 of such Code is amended--
                    (A) by striking ``section 25A(g)(2)'' in subclause 
                (I) of subsection (c)(3)(B)(v) and inserting ``section 
                36(g)(2)'',
                    (B) by striking ``section 25A'' in subclause (II) 
                of subsection (c)(3)(B)(v) and inserting ``section 
                36'', and
                    (C) by striking ``section 25A(b)(3)'' in clause (i) 
                of subsection (e)(3)(B) and inserting ``section 
                36(b)(3)''.
            (9) Section 530 of such Code is amended--
                    (A) by striking ``section 25A(g)(2)'' in subclause 
                (I) of subsection (d)(2)(C)(i) and inserting ``section 
                36(g)(2)'',
                    (B) by striking ``section 25A'' in subclause (II) 
                of subsection (d)(2)(C)(i) and inserting ``section 
                36'', and
                    (C) by striking ``section 25A(g)(2)'' in clause 
                (iii) of subsection (d)(4)(B) and inserting ``section 
                36(g)(2)''.
            (10) Subsection (e) of section 6050S of such Code is 
        amended by striking ``section 25A'' and inserting ``section 
        36''.
            (11) Subparagraph (J) of section 6213(g)(2) of such Code is 
        amended by striking ``section 25A(g)(1)'' and inserting 
        ``section 36(g)(1)''.
            (12) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``or 
        from section 36 of such Code''.
            (13) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by striking the item relating to section 36 and 
        inserting the following:

                              ``Sec. 36. Hope and Lifetime Learning 
                                        credits.
                              ``Sec. 37. Overpayments of tax.''.
            (14) The table of sections for subpart A of such part IV is 
        amended by striking the item relating to section 25A.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.
                                 <all>