[Congressional Record Volume 143, Number 4 (Tuesday, January 21, 1997)]
[Senate]
[Pages S163-S176]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. COVERDELL (for himself, Mr. Coats, Mr. Gregg, Mr. Lott, 
        Mr. Bond, Mr. Abraham, Mr. Allard, Mr. Ashcroft, Mr. Craig, Mr. 
        DeWine, Mr. Domenici, Mr. Faircloth, Mr. Gorton, Mr. Grams, Mr. 
        Hagel, Mr. Hatch, Mrs. Hutchison, Mr. Hutchinson, Mr. Kyl, Mr. 
        McCain, Mr. McConnell, Mr. Murkowski, Mr. Nickles, Mr. Smith, 
        Mr. Thurmond, and Mr. Warner):
  S. 1. A bill to provide for safe and affordable schools; to the 
Committee on Finance.


              THE SAFE AND AFFORDABLE SCHOOLS ACT OF 1997

  Mr. COVERDELL. Mr. President, for people to remain free, they must be 
educated. It is at the foundation of our liberty. This bill that has 
just been referred owes a great debt to Senator Coats of Indiana, 
Senator Gregg of New Hampshire, Senator Roth of Delaware, Senator 
Jeffords of Vermont, Senator Bond of Missouri, Senator Shelby of 
Alabama, and Senator Grassley of Iowa.
  Mr. President, there is a grave condition in our elementary and high 
schools across the land. Forty-six percent of our students have made at 
least one change in daily routine because of concerns about personal 
safety. Twenty-nine percent said it was easy to get illegal drugs. 
Seventy-nine percent have friends who are regular drinkers. Sixty-eight 
percent can buy marijuana within a day. Sixty-two percent have friends 
who use marijuana.
  During the last 15 years, Mr. President, tuition at 4-year public 
colleges and universities rose 234 percent. In contrast, median 
household income rose only 82 percent, putting an ever tighter squeeze 
on those families that choose to and desire to send their children to 
college.
  Since 1990, American college students have borrowed over $100 
billion, and borrowing among students and families to seek their higher 
education has skyrocketed.
  Mr. President, since 1965, the United States has spent half a 
trillion dollars--$500 billion--on Federal education

[[Page S164]]

programs, yet 66 percent of 17-year-olds do not read at a proficient 
level, and reading scores have been declining for three decades. 
Moreover, 75 percent of fourth graders nationally scored below the 
proficient level of reading.
  Mr. President, the Safe and Affordable Schools Act believes that no 
family--no family--in America should be forced to send their student to 
an unsafe, violent, and drug-infested school. I repeat, no family 
should be forced--forced--to put their child in a school that is 
certifiably unsafe, certifiably drug ridden.
  This act will provide choice for children attending unsafe schools 
and provide an escape route from those kinds of schools. This act will 
ensure safe and drug-free schools and offers a grant program to those 
schools who are building better safety in the school place.
  It is hard to believe, Mr. President, that 40 percent of our students 
today do not feel safe in school. One in five are taking a weapon to 
school. There are 2,000 acts of violence every hour in American 
classrooms.
  Every student who chooses to go to college ought to have an 
affordable plan to do it. At the center point of this legislation is 
the Bob Dole Educational Investment Account. This will allow a family 
to put $1,000 a year, after tax, into an investment account of their 
choice, and when they are ready to send their child to school, the 
funds withdrawn from that account will occur with no tax liability. In 
other words, a plan setting forth, under the name of our former 
colleague, an opportunity for families to plan for their child's future 
education.
  It will provide for the deduction of student loan interest. It will 
protect State prepaid tuition plans. It will provide and extend 
employer-provided educational assistance, and it will make nontaxable 
work-study awards, all geared toward making it possible for that 
family, that student, to provide for their higher education.
  The Presiding Officer is very familiar with the Federal Government's 
propensity to force unfunded mandates on State and local governments. 
Such is the case with the individuals in the Disabilities Education 
Act, which was mandated by the Federal Government but never really paid 
for by the Federal Government. We are only making about a 7 percent to 
8 percent contribution.
  This act will authorize spending up to $10 billion over the next 7 
years so that the Federal Government will be a true partner in that 
mandate and fund upwards to 40 percent of this act that was imposed on 
State government, freeing those State governments of funds that they 
can use to better improve their educational system.
  Mr. President, when students arrive at college they ought to be 
proficient in the basic skills. I just cited figures that said they are 
not. This act will promote adult education and family literacy. The 
legislation provides $400 million in the form of block grants to States 
to establish programs to combat illiteracy. The bill creates a separate 
$100 million fund to provide incentive grants to encourage local 
innovation in addressing the problem of illiteracy.
  Mr. President, I began my remarks by saying that one of the 
fundamental extensions of freedom is education. This has always been 
the case in America. We have come to a time when the schoolroom is not 
safe. Therefore, the education that must emanate there is severely 
impaired. This education is a function of the States. The Federal 
Government has a role in leadership and innovation and assistance. That 
is at the core of this legislation we are offering today.
  Mr. President, I appreciate the opportunity to describe the act 
today.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                  S. 1

       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 ``Safe and Affordable Schools 
     Act of 1997''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds that--
       (1) in too many of our Nation's elementary and secondary 
     schools the test confronting our Nation's children is 
     survival, not learning;
       (2) our Nation's schools will not be restored to excellence 
     unless parents, States, and local communities take the lead; 
     and
       (3) the Federal Government's role in education is quite 
     properly to encourage, not to mandate.
       (b) Purpose.--The purpose of this Act is--
       (1) to ensure that parents, local communities and States 
     have the primary role in educating our Nation's children;
       (2) to restore excellence to our Nation's schools;
       (3) to give local communities and States maximum 
     flexibility in administering Federal education programs;
       (4) to allow education reforms to be tailored to the unique 
     needs of local communities and States;
       (5) to place the highest priority on providing our Nation's 
     students with safe, drug-free learning environments;
       (6) to ensure that the choice of whether to attend college 
     is to the greatest extent possible the result of individual 
     student desire and initiative, not the result of economic 
     circumstances that leave young parents wondering how they can 
     best provide such an education in the face of staggering 
     college tuition costs;
       (7) to focus resources on adult education, realizing that 
     education often is a lifelong process; and
       (8) to promote literacy by attacking our Nation's 
     unacceptably high level of illiteracy.
             TITLE I--SAFE AND DRUG-FREE SCHOOLS INITIATIVE
               Subtitle A--Student Opportunity and Safety

     SEC. 111. SHORT TITLE.

       This subtitle may be cited as the ``Student Opportunity and 
     Safety Act''.

     SEC. 112. FINDINGS AND PURPOSE.

       (a) Findings.--The Congress finds as follows:
       (1) Violence, crime, and illegal drug activity have 
     increased significantly in our Nation's public schools.
       (2) It is estimated that 3,000,000 violent acts or thefts 
     occur in or near schools, and that one in five public high 
     school students carries a weapon.
       (3) The incidence of violence, and criminal and illegal 
     drug activity within public elementary and secondary schools 
     threatens the school environment and interferes with the 
     learning process.
       (4) 2,000,000 more children are using drugs in 1997 than 
     were doing so in 1993. For the first time in the 1990s, over 
     half of our Nation's graduating high school seniors have 
     experimented with drugs and approximately 1 out of every 4 of 
     the students have used drugs in the past month.
       (5) After 11 years of declining marijuana use among 
     children aged 12 to 17, such use doubled between 1992 and 
     1995. The number of 8th graders who have used marijuana in 
     the past month has more than tripled since 1991.
       (6) More of our Nation's school children are becoming 
     involved with hard core drugs at earlier ages, as use of 
     heroin and cocaine by 8th graders has more than doubled since 
     1991.
       (7) Students have a right to be safe and secure in their 
     persons while attending school.
       (8) Low-income families whose children attend high poverty 
     public schools generally lack the financial ability to enroll 
     their children in private schools or the opportunity to 
     choose to enroll their children in public schools less 
     impacted by poverty, illegal drugs, or violence, while such 
     alternatives are typically available to more affluent 
     families.
       (9) Numerous research studies, including the 1993 National 
     Assessment of the Chapter 1 Program, have concluded that 
     students attending high poverty public schools have much 
     lower levels of academic achievement than other students, 
     regardless of the income level of the family of such 
     students.
       (10) Federally supported efforts to meet the educational 
     needs of disadvantaged children attending high poverty 
     schools have had little, if any, success in improving student 
     achievement, especially in the highest poverty schools and 
     school districts.
       (11) Evidence obtained from systematic evaluations of 
     school choice demonstration projects that involve public and 
     private, including sectarian, schools will make an important 
     contribution toward resolving debates over the most effective 
     means of improving the academic achievement of disadvantaged 
     children.
       (12) It is increasingly important that children from 
     families of all income levels meet high standards of academic 
     achievement, in order to exercise the responsibilities of 
     citizenship and to compete in globally competitive markets.
       (b) Purpose.--It is the purpose of this subtitle--
       (1) to provide children from low-income families who attend 
     unsafe schools with the option of attending safer schools;
       (2) to improve schools and academic programs by providing 
     certain low-income parents with increased consumer power and 
     dollars to choose safer and drug-free schools and programs 
     that such parents determine best fit the needs of their 
     children;
       (3) to engage more fully certain low-income parents in 
     their children's schooling;
       (4) through families, to provide at the school site new 
     dollars that teachers and principals may use to help certain 
     children achieve high educational standards; and
       (5) to demonstrate, through a discretionary demonstration 
     grant program, the effects of

[[Page S165]]

     projects that provide certain low-income families with more 
     of the same choices regarding all schools, including public, 
     private, or sectarian schools, that wealthier families have.

     SEC. 113. DEFINITIONS.

       As used in this subtitle--
       (1) the term ``choice school'' means any public or private 
     school, including a private sectarian school or a public 
     charter school, that--
       (A) is involved in a demonstration project assisted under 
     this subtitle; and
       (B) is not an unsafe school;
       (2) the term ``eligible child'' means a child in any of the 
     grades 1 through 12--
       (A) whose family income does not exceed 185 percent of the 
     poverty line; and
       (B) who would normally be assigned to attend an unsafe 
     school in the absence of--
       (i) a demonstration project under this subtitle; or
       (ii) participation, prior to the date of enactment of this 
     Act, in a school choice program;
       (3) the term ``eligible entity'' means a public agency, 
     institution, or organization, such as a State, a State or 
     local educational agency, a consortium of public agencies, or 
     a consortium of public and private nonprofit organizations, 
     that can demonstrate, to the satisfaction of the Secretary, 
     its ability to--
       (A) receive, disburse, and account for Federal funds; and
       (B) carry out the activities described in its application 
     under this subtitle;
       (4) the term ``evaluating agency'' means any academic 
     institution, consortium of professionals, or private or 
     nonprofit organization, with demonstrated experience in 
     conducting evaluations, that is not an agency or 
     instrumentality of the Federal Government;
       (5) the term ``local educational agency'' has the same 
     meaning given such term in section 14101 of the Elementary 
     and Secondary Education Act of 1965 (20 U.S.C. 8801);
       (6) the term ``parent'' includes a legal guardian or other 
     individual acting in loco parentis;
       (7) the term ``poverty line'' means the poverty line (as 
     defined by the Office of Management and Budget, and revised 
     annually in accordance with section 673(2) of the Community 
     Services Block Grant Act (42 U.S.C. 9902(2))) applicable to a 
     family of the size involved;
       (8) the term ``school'' means a school that provides 
     elementary education or secondary education (through grade 
     12), as determined under State law;
       (9) the term ``Secretary'' means the Secretary of 
     Education;
       (10) the term ``State'' means each of the 50 States of the 
     United States, the District of Columbia, and the Commonwealth 
     of Puerto Rico; and
       (11) the term ``unsafe school'' means a school that has 
     serious crime, violence, illegal drug, and discipline 
     problems, as indicated by conditions that may include high 
     rates of--
       (A) expulsions and suspensions of students from school;
       (B) referrals of students to alternative schools for 
     disciplinary reasons, to special programs or schools for 
     delinquent youth, or to juvenile court;
       (C) victimization of students or teachers by criminal acts, 
     including robbery, assault and homicide;
       (D) enrolled students who are under court supervision for 
     past criminal behavior;
       (E) possession, use, sale or distribution of illegal drugs;
       (F) enrolled students who are attending school while under 
     the influence of illegal drugs;
       (G) possession or use of guns or other weapons;
       (H) participation in youth gangs; or
       (I) crimes against property, such as theft or vandalism.

     SEC. 114. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated $50,000,000 for the 
     fiscal year 1998, and such sums as may be necessary for each 
     of the fiscal years 1999 through 2002, to carry out this 
     subtitle.

     SEC. 115. PROGRAM AUTHORIZED.

       (a) Reservation.--From the amount appropriated pursuant to 
     the authority of section 114 in any fiscal year, the 
     Secretary shall reserve and make available to the Comptroller 
     General of the United States 2 percent for evaluation of 
     programs assisted under this subtitle in accordance with 
     section 121.
       (b) Grants.--
       (1) In general.--From the amount appropriated pursuant to 
     the authority of section 114 and not reserved under 
     subsection (a) for any fiscal year, the Secretary shall award 
     grants to eligible entities to enable such entities to carry 
     out at least 20, but not more than 30, demonstration projects 
     under which low-income parents receive education certificates 
     for the costs of enrolling their eligible children in a 
     choice school.
       (2) Amount.--The Secretary shall award grants under 
     paragraph (1) for fiscal year 1998 so that--
       (A) not more than 2 grants are awarded in amounts of 
     $5,000,000 or less; and
       (B) grants not described in subparagraph (A) are awarded in 
     amounts of $3,000,000 or less.
       (3) Continuing eligibility.--The Secretary shall continue a 
     demonstration project under this subtitle by awarding a grant 
     under paragraph (1) to an eligible entity that received such 
     a grant for a fiscal year preceding the fiscal year for which 
     the determination is made, if the Secretary determines that 
     such eligible entity was in compliance with this subtitle for 
     such preceding fiscal year.
       (4) Priority.--The Secretary shall give priority to 
     awarding a grant under paragraph (1) to an eligible entity 
     that--
       (A) is conducting a school choice program, involving public 
     or private schools, on the date of enactment of this Act; and
       (B) operates a school choice program, involving public and 
     private schools, that is authorized by Federal law.
       (c) Use of Grants.--Grants awarded under subsection (b) 
     shall be used to pay the costs of--
       (1) providing education certificates to low-income parents 
     to enable such parents to pay the tuition, the fees, the 
     allowable costs of transportation, if any, and the costs of 
     complying with section 119(a)(1), if any, for their eligible 
     children to attend a choice school; and
       (2) administration of the demonstration project, which 
     shall not exceed 15 percent of the amount received in the 
     first fiscal year for which the eligible entity provides 
     education certificates under this subtitle or 10 percent in 
     any subsequent year, including--
       (A) seeking the involvement of choice schools in the 
     demonstration project;
       (B) providing information about the demonstration project, 
     and the schools involved in the demonstration project, to 
     parents of eligible children;
       (C) making determinations of eligibility for participation 
     in the demonstration project for eligible children;
       (D) selecting students to participate in the demonstration 
     project;
       (E) determining the amount of, and issuing, education 
     certificates;
       (F) compiling and maintaining such financial and 
     programmatic records as the Secretary may prescribe; and
       (G) collecting such information about the effects of the 
     demonstration project as the evaluating agency may need to 
     conduct the evaluation described in section 121.
       (d) Special Rule.--Any school participating in the 
     demonstration program under this subtitle shall comply with 
     title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et 
     seq.) and not discriminate on the basis of race, color, or 
     national origin.
       (e) Supplement Not Supplant.--Each eligible entity 
     receiving funds under this subtitle shall use such funds to 
     supplement and not supplant the amount of funds that would, 
     in the absence of such Federal funds, be made available from 
     other sources to carry out the activities assisted under this 
     subtitle.
       (f) Supplementation of Funding.--Each eligible entity 
     receiving funds under this section is encouraged to 
     supplement the funding received under this subtitle with 
     funding received from State, local, or private sources.
       (g) Education Certificates.--
       (1) Assistance to families, not choice schools.--Education 
     certificates provided under this subtitle shall be considered 
     to be aid to families, not choice schools. A parent's use of 
     an education certificate at a choice school under this 
     subtitle shall not be construed to be Federal financial aid 
     or assistance to that choice school.
       (2) Taxes and determinations of eligibility for other 
     federal programs.--Education certificates provided under this 
     subtitle shall not be considered as income to an eligible 
     child or the parent of such eligible child for Federal, 
     State, or local tax purposes or for determining eligibility 
     for any other Federal program.

     SEC. 116. AUTHORIZED PROJECTS; PRIORITY.

       (a) Authorized Projects.--The Secretary may award a grant 
     under this subtitle only for a demonstration project that--
       (1) involves at least one local educational agency that--
       (A) receives funds under section 1124A of the Elementary 
     and Secondary Education Act of 1965 (20 U.S.C. 6334); and
       (B) is among the 20 percent of local educational agencies 
     receiving funds under section 1124A of such Act (20 U.S.C. 
     6334) in the State and having the highest number or greatest 
     percentage of children described in section 1124(c) of such 
     Act (20 U.S.C. 6333(c)); and
       (2) includes the involvement of a sufficient number of 
     public and private choice schools, including sectarian 
     schools, to allow for a valid demonstration project.
       (b) Priority.--In awarding grants under this subtitle, the 
     Secretary shall give priority to demonstration projects--
       (1) in which choice schools offer an enrollment opportunity 
     to the broadest range of eligible children;
       (2) that involve diverse types of choice schools; and
       (3) that will contribute to the geographic diversity of 
     demonstration projects assisted under this subtitle, 
     including awarding grants for demonstration projects in 
     States that are primarily rural and awarding grants for 
     demonstration projects in States that are primarily urban.

     SEC. 117. APPLICATIONS.

       (a) In General.--Any eligible entity that wishes to receive 
     a grant under this subtitle shall submit an application to 
     the Secretary at such time and in such manner as the 
     Secretary may prescribe.
       (b) Contents.--Each application described in subsection (a) 
     shall contain--

[[Page S166]]

       (1) information demonstrating the eligibility for 
     participation in the demonstration program of the eligible 
     entity;
       (2) a description of how the eligible entity will determine 
     a school to be a unsafe school in accordance with section 
     113(11);
       (3) with respect to choice schools--
       (A) a description of the types of potential choice schools 
     that will be involved in the demonstration project;
       (B)(i) a description of the procedures used to encourage 
     public and private schools to be involved in the 
     demonstration project; and
       (ii) a description of how the eligible entity will annually 
     determine the number of spaces available for eligible 
     children in each choice school;
       (C) an assurance that each choice school will not impose 
     higher standards for admission or participation in its 
     programs and activities for eligible children provided 
     education certificates under this subtitle than the choice 
     school does for other children;
       (D) an assurance that the eligible entity will terminate 
     the involvement of any choice school that fails to comply 
     with the conditions of its involvement in the demonstration 
     project; and
       (E) a description of the extent to which choice schools 
     will accept education certificates under this subtitle as 
     full or partial payment for tuition and fees;
       (4) with respect to the participation in the demonstration 
     project of eligible children--
       (A) a description of the procedures to be used to make a 
     determination of eligibility for participation in the 
     demonstration project for an eligible child;
       (B) a description of the procedures to be used to ensure 
     that, in selecting eligible children to participate in the 
     demonstration project, the eligible entity will--
       (i) apply the same criteria to both public and private 
     school eligible children; and
       (ii) give priority to eligible children from the lowest 
     income families;
       (C) a description of the procedures to be used to ensure 
     maximum choice of schools for participating eligible 
     children; and
       (D) a description of the procedures to be used to ensure 
     compliance with section 119(a)(1), which may include--
       (i) the direct provision of services by a local educational 
     agency; and
       (ii) arrangements made by a local educational agency with 
     other service providers;
       (5) with respect to the operation of the demonstration 
     project--
       (A) a description of the procedures to be used for the 
     issuance and redemption of education certificates under this 
     subtitle;
       (B) a description of the procedures by which a choice 
     school will make a pro rata refund of the education 
     certificate under this subtitle for any participating 
     eligible child who withdraws from the school for any reason, 
     before completing 75 percent of the school attendance period 
     for which the education certificate was issued;
       (C) a description of the procedures to be used to provide 
     the parental notification described in section 120;
       (D) an assurance that the eligible entity will place all 
     funds received under this subtitle into a separate account, 
     and that no other funds will be placed in such account;
       (E) an assurance that the eligible entity will cooperate 
     with the Comptroller General of the United States and the 
     evaluating agency in carrying out the evaluations described 
     in section 121; and
       (F) an assurance that the eligible entity will--
       (i) maintain such records as the Secretary may require; and
       (ii) comply with reasonable requests from the Secretary for 
     information; and
       (6) such other assurances and information as the Secretary 
     may require.

     SEC. 118. EDUCATION CERTIFICATES.

       (a) Education Certificates.--
       (1) Amount.--The amount of an eligible child's education 
     certificate under this subtitle shall be determined by the 
     eligible entity, but shall be an amount that provides to the 
     recipient of the education certificate the maximum degree of 
     choice in selecting the choice school the eligible child will 
     attend.
       (2) Considerations.--
       (A) In general.--Subject to such regulations as the 
     Secretary shall prescribe, in determining the amount of an 
     education certificate under this subtitle an eligible entity 
     shall consider--
       (i) the additional reasonable costs of transportation 
     directly attributable to the eligible child's participation 
     in the demonstration project; and
       (ii) the cost of complying with section 119(a)(1).
       (B) Schools charging tuition.--If an eligible child 
     participating in a demonstration project under this subtitle 
     was attending a public or private school that charged tuition 
     for the year preceding the first year of such participation, 
     then in determining the amount of an education certificate 
     for such eligible child under this subtitle the eligible 
     entity shall consider--
       (i) the tuition charged by such school for such eligible 
     child in such preceding year; and
       (ii) the amount of the education certificates under this 
     subtitle that are provided to other eligible children.
       (3) Special rule.--An eligible entity may provide an 
     education certificate under this subtitle to the parent of an 
     eligible child who chooses to attend a school that does not 
     charge tuition or fees, to pay the additional reasonable 
     costs of transportation directly attributable to the eligible 
     child's participation in the demonstration project or the 
     cost of complying with section 119(a)(1).
       (b) Adjustment.--The amount of the education certificate 
     for a fiscal year may be adjusted in the second and third 
     years of an eligible child's participation in a demonstration 
     project under this subtitle to reflect any increase or 
     decrease in the tuition, fees, or transportation costs 
     directly attributable to that eligible child's continued 
     attendance at a choice school, but shall not be increased for 
     this purpose by more than 10 percent of the amount of the 
     education certificate for the fiscal year preceding the 
     fiscal year for which the determination is made. The amount 
     of the education certificate may also be adjusted in any 
     fiscal year to comply with section 119(a)(1).
       (c) Maximum Amount.--Notwithstanding any other provision of 
     this section, the amount of an eligible child's education 
     certificate shall not exceed the per pupil expenditure for 
     elementary or secondary education, as appropriate, by the 
     local educational agency in which the public school to which 
     the eligible child would normally be assigned is located for 
     the fiscal year preceding the fiscal year for which the 
     determination is made.

     SEC. 119. EFFECT ON OTHER PROGRAMS.

       (a) Effect on Other Programs.--
       (1) In general.--An eligible child participating in a 
     demonstration project under this subtitle, who, in the 
     absence of such a demonstration project, would have received 
     services under part A of title I of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 6311 et seq.) 
     shall be provided such services.
       (2) Part b of the individuals with disabilities education 
     act.--Nothing in this subtitle shall be construed to affect 
     the requirements of part B of the Individuals with 
     Disabilities Education Act (20 U.S.C. 1411 et seq.).
       (b) Counting of Eligible Children.--Notwithstanding any 
     other provision of law, any local educational agency 
     participating in a demonstration project under this subtitle 
     may count eligible children who, in the absence of such a 
     demonstration project, would attend the schools of such 
     agency, for purposes of receiving funds under any program 
     administered by the Secretary.
       (c) Sectarian Institutions.--Nothing in this subtitle shall 
     be construed to supersede or modify any provision of a State 
     constitution that prohibits the expenditure of public funds 
     in or by sectarian institutions.

     SEC. 120. PARENTAL NOTIFICATION.

       Each eligible entity receiving a grant under this subtitle 
     shall provide timely notice of the demonstration project to 
     parents of eligible children residing in the area to be 
     served by the demonstration project. At a minimum, such 
     notice shall--
       (1) describe the demonstration project;
       (2) describe the eligibility requirements for participation 
     in the demonstration project;
       (3) describe the information needed to make a determination 
     of eligibility for participation in the demonstration project 
     for an eligible child;
       (4) describe the selection procedures to be used if the 
     number of eligible children seeking to participate in the 
     demonstration project exceeds the number that can be 
     accommodated in the demonstration project;
       (5) provide information about each choice school, including 
     information about any admission requirements or criteria for 
     each choice school participating in the demonstration 
     project; and
       (6) include the schedule for parents to apply for their 
     eligible children to participate in the demonstration 
     project.

     SEC. 121. EVALUATION.

       (a) Annual Evaluation.--
       (1) Contract.--The Comptroller General of the United States 
     shall enter into a contract, with an evaluating agency that 
     has demonstrated experience in conducting evaluations, for 
     the conduct of an ongoing rigorous evaluation of the 
     demonstration program under this subtitle.
       (2) Annual evaluation requirement.--The contract described 
     in paragraph (1) shall require the evaluating agency entering 
     into such contract to annually evaluate each demonstration 
     project under this subtitle in accordance with the evaluation 
     criteria described in subsection (b).
       (3) Transmission.--The contract described in paragraph (1) 
     shall require the evaluating agency entering into such 
     contract to transmit to the Comptroller General of the United 
     States--
       (A) the findings of each annual evaluation under paragraph 
     (1); and
       (B) a copy of each report received pursuant to section 
     122(a) for the applicable year.
       (b) Evaluation Criteria.--The Comptroller General of the 
     United States, in consultation with the Secretary, shall 
     establish minimum criteria for evaluating the demonstration 
     program under this subtitle. Such criteria shall provide 
     for--
       (1) a description of the implementation of each 
     demonstration project under this subtitle and the 
     demonstration project's effects on all participants, schools, 
     and communities in the demonstration project area, with 
     particular attention given to the effect of parent 
     participation in the life of the school and the level of 
     parental satisfaction with the demonstration program; and

[[Page S167]]

       (2) a comparison of the educational achievement of, and the 
     incidences of violence and drug activity related to, all 
     students in the demonstration project area, including a 
     comparison of similar--
       (A) students receiving education certificates under this 
     subtitle; and
       (B) students not receiving education certificates under 
     this subtitle.

     SEC. 122. REPORTS.

       (a) Report by Grant Recipient.--Each eligible entity 
     receiving a grant under this subtitle shall submit to the 
     evaluating agency entering into the contract under section 
     121(a)(1) an annual report regarding the demonstration 
     project under this subtitle. Each such report shall be 
     submitted at such time, in such manner, and accompanied by 
     such information, as such evaluating agency may require.
       (b) Reports by Comptroller General.--
       (1) Annual reports.--The Comptroller General of the United 
     States shall report annually to the Congress on the findings 
     of the annual evaluation under section 121(a)(2) of each 
     demonstration project under this subtitle. Each such report 
     shall contain a copy of--
       (A) the annual evaluation under section 121(a)(2) of each 
     demonstration project under this subtitle; and
       (B) each report received under subsection (a) for the 
     applicable year.
       (2) Final report.--The Comptroller General shall submit a 
     final report to the Congress within 6 months after the 
     conclusion of the demonstration program under this subtitle 
     that summarizes the findings of the annual evaluations 
     conducted pursuant to section 121(a)(2).
                 Subtitle B--Common Sense School Safety

     SEC. 141. SHORT TITLE.

       This subtitle may be cited as the ``Common Sense School 
     Safety Act''.

               CHAPTER I--PUPIL SAFETY AND FAMILY CHOICE

     SEC. 151. PUPIL SAFETY AND FAMILY SCHOOL CHOICE.

       Subpart 1 of part A of title I of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 6311 et seq.) is 
     amended by inserting after section 1115A of such Act (20 
     U.S.C. 6316) the following:

     ``SEC. 1115B. PUPIL SAFETY AND FAMILY SCHOOL CHOICE.

       ``(a) In General.--If a student is eligible to be served 
     under section 1115(b), or attends a school eligible for a 
     schoolwide program under section 1114, and becomes a victim 
     of a violent criminal offense while in or on the grounds of a 
     public elementary school or secondary school that the student 
     attends and that receives assistance under this part, then 
     the local educational agency may use funds provided under 
     this part to pay the supplementary costs for such student to 
     attend another school. The agency may use the funds to pay 
     for the supplementary costs of such student to attend any 
     other public or private elementary school or secondary 
     school, including a sectarian school, in the same State as 
     the school where the criminal offense occurred, that is 
     selected by the student's parent. The State educational 
     agency shall determine what actions constitute a violent 
     criminal offense for purposes of this section.
       ``(b) Supplementary Costs.--The supplementary costs 
     referred to in subsection (a) shall not exceed--
       ``(1) in the case of a student for whom funds under this 
     section are used to enable the student to attend a public 
     elementary school or secondary school served by a local 
     educational agency that also serves the school where the 
     violent criminal offense occurred, the costs of supplementary 
     educational services and activities described in section 
     1114(b) or 1115(c) that are provided to the student;
       ``(2) in the case of a student for whom funds under this 
     section are used to enable the student to attend a public 
     elementary school or secondary school served by a local 
     educational agency that does not serve the school where the 
     violent criminal offense occurred but is located in the same 
     State--
       ``(A) the costs of supplementary educational services and 
     activities described in section 1114(b) or 1115(c) that are 
     provided to the student; and
       ``(B) the reasonable costs of transportation for the 
     student to attend the school selected by the student's 
     parent; and
       ``(3) in the case of a student for whom funds under this 
     section are used to enable the student to attend a private 
     elementary school or secondary school, including a sectarian 
     school, the costs of tuition, required fees, and the 
     reasonable costs of such transportation.
       ``(c) Construction.--Nothing in this Act or any other 
     Federal law shall be construed to prevent a parent assisted 
     under this section from selecting the public or private 
     elementary school or secondary school that a child of the 
     parent will attend within the State.
       ``(d) Consideration of Assistance.--Assistance used under 
     this section to pay the costs for a student to attend a 
     private school shall not be considered to be Federal aid to 
     the school, and the Federal Government shall have no 
     authority to influence or regulate the operations of a 
     private school as a result of assistance received under this 
     section.
       ``(e) Continuing Eligibility.--A student assisted under 
     this section shall remain eligible to continue receiving 
     assistance under this section for at least 3 academic years 
     without regard to whether the student is eligible for 
     assistance under section 1114 or 1115(b).
       ``(f) State Law.--All actions undertaken under this section 
     shall be undertaken in accordance with State law and may be 
     undertaken only to the extent such actions are permitted 
     under State law.
       ``(g) Tuition Charges.--Assistance under this section may 
     not be used to pay tuition or required fees at a private 
     elementary school or secondary school in an amount that is 
     greater than the tuition and required fees paid by students 
     not assisted under this section at such school.
       ``(h) Special Rule.--Any school receiving assistance 
     provided under this section shall comply with title VI of the 
     Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.) and not 
     discriminate on the basis of race, color, or national origin.
       ``(i) Assistance; Taxes and Other Federal Programs.--
       ``(1) Assistance to families, not schools.--Assistance 
     provided under this section shall be considered to be aid to 
     families, not schools. Use of such assistance at a school 
     shall not be construed to be Federal financial aid or 
     assistance to that school.
       ``(2) Taxes and determinations of eligibility for other 
     federal programs.--Assistance provided under this section to 
     a student shall not be considered to be income of the student 
     or the parent of such student for Federal, State, or local 
     tax purposes or for determining eligibility for any other 
     Federal program.
       ``(j) Part B of the Individuals With Disabilities Education 
     Act.--Nothing in this section shall be construed to affect 
     the requirements of part B of the Individuals with 
     Disabilities Education Act (20 U.S.C. 1411 et seq.).
       ``(k) Sectarian Institutions.--Nothing in this section 
     shall be construed to supersede or modify any provision of a 
     State constitution that prohibits the expenditure of public 
     funds in or by sectarian institutions.
       ``(l) Maximum Amount.--Notwithstanding any other provision 
     of this section, the amount of assistance provided under this 
     part for a student shall not exceed the per pupil expenditure 
     for elementary or secondary education, as appropriate, by the 
     local educational agency that serves the school where the 
     criminal offense occurred for the fiscal year preceding the 
     fiscal year for which the determination is made.''.

     SEC. 152. TRANSFER OF REVENUES.

       (a) In General.--Notwithstanding any other provision of 
     Federal law, a State, a State educational agency, or a local 
     educational agency may transfer any non-Federal public funds 
     associated with the education of a student who is a victim of 
     a violent criminal offense while in or on the grounds of a 
     public elementary school or secondary school served by a 
     local educational agency to another local educational agency 
     or to a private elementary school or secondary school, 
     including a sectarian school.
       (b) Definitions.--For the purpose of subsection (a), the 
     terms ``elementary school'', ``secondary school'', ``local 
     educational agency'', and ``State educational agency'' have 
     the meanings given such terms in section 14101 of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     8801).

                 CHAPTER II--VICTIM ASSISTANCE PROGRAMS

     SEC. 161. AMENDMENTS TO VICTIMS OF CRIME ACT OF 1984.

       (a) Victim Compensation.--Section 1403 of the Victims of 
     Crime Act of 1984 (42 U.S.C. 10602) is amended by adding at 
     the end the following:
       ``(f) Victims of School Violence.--Notwithstanding any 
     other provision of law, an eligible crime victim compensation 
     program may expend funds granted under this section to offer 
     compensation to elementary and secondary school students who 
     are victims of elementary and secondary school violence (as 
     school violence is defined under applicable State law).''.
       (b) Victim and Witness Assistance.--Section 1404(c) of the 
     Victims of Crime Act of 1984 (42 U.S.C. 10603(c)) is amended 
     by adding at the end the following:
       ``(4) Assistance for victims of and witnesses to school 
     violence.--Notwithstanding any other provision of law, the 
     Director may make a grant under this section for a 
     demonstration project or for training and technical 
     assistance services to a program that assists local 
     educational agencies (as local educational agency is defined 
     in section 14101 of the Elementary and Secondary Education 
     Act of 1965 (20 U.S.C. 8801)) in developing, establishing, 
     and operating programs that are designed to protect victims 
     of and witnesses to incidents of elementary and secondary 
     school violence (as school violence is defined under 
     applicable State law), including programs designed to protect 
     witnesses testifying in school disciplinary proceedings.''.

       CHAPTER III--INNOVATIVE PROGRAMS TO IMPROVE UNSAFE SCHOOLS

     SEC. 171. FINDINGS AND PURPOSE.

       (a) Findings.--Congress finds that--
       (1) the continued presence in schools of violent students 
     who are a thereat to both teachers and other students is 
     incompatible with a safe learning environment;
       (2) unsafe school environments place students who are 
     already at risk of school failure for other reasons in 
     further jeopardy;
       (3) recently, over one-forth of high school students 
     surveyed reported being threatened at school;

[[Page S168]]

       (4) 2,000,000 more children are using drugs in 1997 than 
     were doing so a few short years prior to 1997;
       (5) nearly 1 out of every 20 students in 6th through 12th 
     grade uses drugs on school grounds;
       (6) more of our children are becoming involved with hard 
     drugs at earlier ages, as use of heroin and cocaine by 8th 
     graders has more than doubled since 1991; and
       (7) greater cooperation between schools, parents, law 
     enforcement, the courts, and the community is essential to 
     making our schools safe from drugs and violence.

     SEC. 172. PURPOSE.

       It is the purpose of this chapter--
       (1) to urge States, State educational agencies, and local 
     educational agencies to provide comprehensive services to 
     victims and witnesses of school violence;
       (2) to urge States, State educational agencies, and local 
     educational agencies to remove violent and drug selling 
     student offenders from school premises;
       (3) to urge States, State educational agencies, and local 
     educational agencies to report violent crimes and drug 
     dealing on school grounds to appropriate law enforcement 
     authorities;
       (4) to provide incentive grants for States, State 
     educational agencies, and local educational agencies to 
     involve parents, former armed forces personnel, and community 
     volunteers in efforts to improve school safety; and
       (5) to provide incentive grants to States, State 
     educational agencies, and local educational agencies to 
     develop innovative programs to improve the safety of our 
     Nation's schools and to better serve at-risk students.

     SEC. 173. DEFINITIONS.

       In this chapter:
       (1) Elementary school, local educational agency, secondary 
     school, and state educational agency.--The terms ``elementary 
     school'', ``local educational agency'', ``secondary school'', 
     and State educational agency'' have the meanings given the 
     terms in section 14101 of the Elementary and Secondary 
     Education Act of 1965 (20 U.S.C. 8801).
       (2) Secretary.--The term ``Secretary'' means the Secretary 
     of Education.

     SEC. 174. AUTHORIZATION OF APPROPRIATIONS.

       There are authorized to be appropriated such sums as may be 
     necessary to carry out this chapter.

     SEC. 175. PROGRAM AUTHORIZED.

       (a) In General.--The Secretary is authorized to award 
     grants to States, State educational agencies, and local 
     educational agencies to develop, establish, or conduct 
     innovative programs to improve unsafe elementary schools or 
     secondary schools.
       (b) Priority.--The Secretary shall give priority to 
     awarding grants under subsection (a) to programs that--
       (1) provide parent and teacher notification of crimes or 
     drug activity occurring at school;
       (2) provide for the suspension, delay, or restriction of 
     driving privileges of persons under the age of 18 who have a 
     conviction, an adjudication in a juvenile proceeding, or a 
     finding in a school disciplinary proceeding, involving 
     illegal drugs;
       (3) programs that link local educational agencies with 
     community-based mentoring programs in order to link 
     individual at-risk youth with responsible, individual adults 
     who serve as mentors for the purpose of--
       (A) discouraging at-risk youth from--
       (i) using illegal drugs;
       (ii) violence;
       (iii) using dangerous weapons;
       (iv) criminal activity; and
       (v) involvement in gangs;
       (B) increasing youth participation in, and enhancing the 
     ability of such youth to benefit from, elementary and 
     secondary education;
       (C) promoting personal and social responsibility;
       (D) encouraging at-risk youth participation in community 
     service and community activities; and
       (E) providing general guidance to at-risk youth;
       (4) programs that include cooperative efforts between the 
     Secretary and the Secretary of Defense to share the training 
     and salary costs of former members of the Armed Forces who 
     are hired as teachers and assigned to teach in public 
     elementary schools and secondary schools, especially those 
     programs located in communities that are adversely affected 
     by the recent closing or substantial downsizing of a military 
     base or facility; and
       (5) programs to enhance school security measures that may 
     include--
       (A) equipping schools with metal detectors, fences, closed 
     circuit cameras, and other physical security measures;
       (B) providing increased police patrols in and around 
     elementary schools and secondary schools, including canine 
     patrols;
       (C) mailings to parents at the beginning of the school year 
     stating that the possession of a gun or other weapon, or the 
     sale of drugs in school, will not be tolerated by school 
     authorities; and
       (D) gun hotlines.

     SEC. 176. APPLICATION.

       (a) In General.--Each State, State educational agency, or 
     local educational agency desiring a grant under this chapter 
     shall submit an application to the Secretary at such time, in 
     such manner, and accompanied by such information as the 
     Secretary may require.
       (b) Contents.--Each application submitted under subsection 
     (a) shall contain an assurance that the State or agency has 
     implemented or will implement policies that--
       (1) provide protections for victims and witnesses to school 
     crime, including protections for attendance at school 
     disciplinary proceedings;
       (2) expel students who, on school grounds, sell drugs, or 
     who commit a violent offense that causes serious bodily 
     injury of another student or teacher; and
       (3) require referral to law enforcement authorities or 
     juvenile authorities of any student who on school grounds--
       (A) commits a violent offense resulting in serious bodily 
     injury; or
       (B) sells drugs.
       (c) Special Rule.--For purposes of paragraphs (2) and (3) 
     of subsection (b), State law shall determine what constitutes 
     a violent offense or serious bodily injury.

   CHAPTER IV--NOTIFICATION FOR JUVENILE JUSTICE AND LAW ENFORCEMENT 
                                PURPOSES

     SEC. 181. NOTIFICATION FOR JUVENILE JUSTICE AND LAW 
                   ENFORCEMENT PURPOSES.

       The Secretary of Education, not later than 90 days after 
     the date of enactment of this Act, shall prepare and 
     distribute to State educational agencies and local 
     educational agencies a notice regarding the extent of 
     permissible disclosure of educational records under 
     subparagraphs (E) and (J) of section 444(b) of the General 
     Education Provisions Act (20 U.S.C. 1232g), including under 
     the regulations issued pursuant to such subparagraphs.
 TITLE II--AMENDMENTS TO THE ELEMENTARY AND SECONDARY EDUCATION ACT OF 
                                  1965

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``State Education 
     Flexibility Act''.

     SEC. 202. AMENDMENTS TO ESEA.

       Subsection (b) of section 6301 of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 7351) is amended--
       (1) in paragraph (7), by striking ``and'' after the 
     semicolon;
       (2) in paragraph (8), by striking the period and inserting 
     a semicolon; and
       (3) by adding at the end the following:
       ``(9) programs using scholarships or vouchers provided to a 
     parent by a local educational agency that permit the parent 
     to select the public or private, including sectarian, school 
     that the parent's child will attend, which programs may be 
     similar to the program assisted under title I of the Safe and 
     Affordable Schools Act of 1997, except that the provisions of 
     sections 6402 and 14507, and any generally applicable 
     provision relating to a prohibition against the use of 
     Federal funds for religious worship or instruction, shall not 
     apply to any program operated pursuant to this paragraph;
       ``(10) education reform projects that provide same gender 
     schools, as long as comparable educational opportunities are 
     offered for students of both sexes; and
       ``(11) education reform projects that reward teachers, 
     administrators, and schools with cash bonuses and other 
     incentives for significantly improving the academic 
     performance of their students.''.
             TITLE III--TAX INCENTIVES FOR HIGHER EDUCATION

     SEC. 300. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This title may be cited as the 
     ``Affordable College Act''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this title an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

     SEC. 301. BOB DOLE EDUCATION INVESTMENT ACCOUNTS.

       (a) In General.--Part VIII of subchapter F of chapter 1 
     (relating to qualified State tuition programs) is amended by 
     adding at the end the following new section:

     ``SEC. 530. BOB DOLE EDUCATION INVESTMENT ACCOUNTS.

       ``(a) General Rule.--A Bob Dole education investment 
     account (hereafter in this section referred to as an 
     `education investment account') shall be exempt from taxation 
     under this subtitle. Notwithstanding the preceding sentence, 
     the education investment account shall be subject to the 
     taxes imposed by section 511 (relating to imposition of tax 
     on unrelated business income of charitable organizations).
       ``(b) Limitations on Accounts.--
       ``(1) Account may not be established for benefit of more 
     than 1 individual.--An education investment account may not 
     be established for the benefit of more than 1 individual.
       ``(2) Special rule where more than 1 account.--If, at any 
     time during a calendar year, 2 or more education investment 
     accounts are maintained for the benefit of an individual, 
     only the account first established shall be treated as a Bob 
     Dole education investment account for purposes of this 
     section. This paragraph shall not apply to the extent more 
     than 1 account exists solely by reason of a rollover 
     contribution.

[[Page S169]]

       ``(c) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Bob dole education investment account.--The term `Bob 
     Dole education investment account' means a trust created or 
     organized in the United States exclusively for the purpose of 
     paying the qualified higher education expenses of the account 
     holder, but only if the written governing instrument creating 
     the trust meets the following requirements:
       ``(A) No contribution will be accepted--
       ``(i) unless it is in cash,
       ``(ii) except in the case of rollover contributions from 
     another education investment account, in excess of $1,000 for 
     any calendar year, and
       ``(iii) after the date on which the account holder attains 
     age 18.
       ``(B) The trustee is a bank (as defined in section 408(n)) 
     or another person who demonstrates to the satisfaction of the 
     Secretary that the manner in which that person will 
     administer the trust will be consistent with the requirements 
     of this section.
       ``(C) No part of the trust assets will be invested in life 
     insurance contracts (other than contracts the beneficiary of 
     which is the trust and the face amount of which does not 
     exceed the amount by which the maximum amount which can be 
     contributed to the education investment account exceeds the 
     sum of the amounts contributed to the account for all taxable 
     years).
       ``(D) The assets of the trust shall not be commingled with 
     other property except in a common trust fund or common 
     investment fund.
       ``(E) Any balance in the education investment account on 
     the day after the date on which the individual for whose 
     benefit the trust is established attains age 30 (or, if 
     earlier, the date on which such individual dies) shall be 
     distributed within 30 days of such date to the account holder 
     (or in the case of death, the beneficiary).
       ``(2) Time when contributions deemed made.--A taxpayer 
     shall be deemed to have made a contribution on the last day 
     of the preceding taxable year if the contribution is made on 
     account of such taxable year and is made not later than the 
     time prescribed by law for filing the return for such taxable 
     year (including extensions thereof).
       ``(3) Qualified higher education expenses.--
       ``(A) In general.--The term `qualified higher education 
     expenses' has the same meaning given such term by section 
     529(e)(3), except that such expenses shall be reduced by any 
     amount described in section 135(d)(1) (relating to certain 
     scholarships and veterans benefits).
       ``(B) State tuition plans.--Such term shall include amounts 
     paid or incurred to purchase tuition credits or certificates, 
     or to make contributions to an account, under a qualified 
     State tuition program (as defined in section 529(b)).
       ``(4) Eligible educational institution.--The term `eligible 
     educational institution' has the meaning given such term by 
     section 135(c)(3).
       ``(5) Account holder.--The term `account holder' means the 
     individual for whose benefit the education investment account 
     is established.
       ``(d) Tax Treatment of Distributions.--
       ``(1) In general.--Except as otherwise provided in this 
     subsection, any amount paid or distributed out of an 
     education investment account shall be included in gross 
     income of the payee or distributee for the taxable year in 
     the manner prescribed by section 72. For purposes of the 
     preceding sentence, rules similar to the rules of section 
     408(d)(2) shall apply.
       ``(2) Distribution used to pay educational expenses.--
     Paragraph (1) shall not apply to any payment or distribution 
     out of an education investment account to the extent such 
     payment or distribution is used exclusively to pay the 
     qualified higher education expenses of the account holder.
       ``(3) Special rule for applying section 2503.--If any 
     payment or distribution from an education investment account 
     is used exclusively for the payment to an eligible 
     educational institution of the qualified higher education 
     expenses of the account holder, such payment shall be treated 
     as a qualified transfer for purposes of section 2503(e).
       ``(4) Additional tax for distributions not used for 
     educational expenses.--
       ``(A) In general.--The tax imposed by this chapter for any 
     taxable year on any taxpayer who receives a payment or 
     distribution from an education investment account which is 
     includible in gross income under paragraph (1) shall be 
     increased by 10 percent of the amount which is so includible.
       ``(B) Exception for disability, death, or scholarship.--
     Subparagraph (A) shall not apply if the payment or 
     distribution is--
       ``(i) made on account of the death or disability of the 
     account holder, or
       ``(ii) made on account of a scholarship (or allowance or 
     payment described in section 135(d)(1) (B) or (C)) received 
     by the account holder to the extent the amount of the payment 
     or distribution does exceed the amount of the scholarship, 
     allowance, or payment.
       ``(C) Excess contributions returned before due date of 
     return.--Subparagraph (A) shall not apply to the distribution 
     to a contributor of any contribution paid during a taxable 
     year to an education investment account to the extent that 
     such contribution, when added to previous contributions to 
     the account during the taxable year, exceeds $1,000 if--
       ``(i) such distribution is received on or before the day 
     prescribed by law (including extensions of time) for filing 
     such contributor's return for such taxable year, and
       ``(ii) such distribution is accompanied by the amount of 
     net income attributable to such excess contribution.
     Any net income described in clause (ii) shall be included in 
     the gross income of the contributor for the taxable year in 
     which such excess contribution was made.
       ``(5) Rollover contributions.--Paragraph (1) shall not 
     apply to any amount paid or distributed from an education 
     investment account to the extent that the amount received is 
     paid into another education investment account for the 
     benefit of the account holder not later than the 60th day 
     after the day on which the holder receives the payment or 
     distribution. The preceding sentence shall not apply to any 
     payment or distribution if it applied to any prior payment or 
     distribution during the 12-month period ending on the date of 
     the payment or distribution.
       ``(6) Special rules for death and divorce.--Rules similar 
     to the rules of section 220(f) (7) and (8) shall apply.
       ``(e) Tax Treatment of Accounts.--Rules similar to the 
     rules of paragraphs (2) and (4) of section 408(e) shall apply 
     to any education investment account, and any amount treated 
     as distributed under such rules shall be treated as not used 
     to pay qualified higher education expenses.
       ``(f) Community Property Laws.--This section shall be 
     applied without regard to any community property laws.
       ``(g) Custodial Accounts.--For purposes of this section, a 
     custodial account shall be treated as a trust if the assets 
     of such account are held by a bank (as defined in section 
     408(n)) or another person who demonstrates, to the 
     satisfaction of the Secretary, that the manner in which he 
     will administer the account will be consistent with the 
     requirements of this section, and if the custodial account 
     would, except for the fact that it is not a trust, constitute 
     an account described in subsection (b)(1). For purposes of 
     this title, in the case of a custodial account treated as a 
     trust by reason of the preceding sentence, the custodian of 
     such account shall be treated as the trustee thereof.
       ``(h) Reports.--The trustee of an education investment 
     account shall make such reports regarding such account to the 
     Secretary and to the account holder with respect to 
     contributions, distributions, and such other matters as the 
     Secretary may require under regulations. The reports required 
     by this subsection shall be filed at such time and in such 
     manner and furnished to such individuals at such time and in 
     such manner as may be required by those regulations.''
       (b) Tax on Prohibited Transactions.--Section 4975 (relating 
     to prohibited transactions) is amended--
       (1) by adding at the end of subsection (c) the following 
     new paragraph:
       ``(5) Special rule for education investment accounts.--An 
     individual for whose benefit an education investment account 
     is established and any contributor to such account shall be 
     exempt from the tax imposed by this section with respect to 
     any transaction concerning such account (which would 
     otherwise be taxable under this section) if, with respect to 
     such transaction, the account ceases to be an education 
     investment account by reason of the application of section 
     530 to such account.''; and
       (2) in subsection (e)(1), by striking ``or'' at the end of 
     subparagraph (D), by redesignating subparagraph (E) as 
     subparagraph (F), and by inserting after subparagraph (D) the 
     following new subparagraph:
       ``(E) a education investment account described in section 
     530, or''.
       (c) Failure To Provide Reports on Education Investment 
     Accounts.--Section 6693 (relating to failure to provide 
     reports on individual retirement accounts or annuities) is 
     amended--
       (1) by inserting ``OR ON EDUCATION INVESTMENT ACCOUNTS'' 
     after ``ANNUITIES'' in the heading of such section, and
       (2) in subsection (a)(2), by striking ``and'' at the end of 
     subparagraph (A), by striking the period at the end of 
     subparagraph (B) and inserting ``, and'', and by adding at 
     the end the following new subparagraph:
       ``(C) section 530(h) (relating to education investment 
     accounts).''
       (d) Coordination with Savings Bond Exclusion.--Section 
     135(d)(1) is amended by striking ``or'' at the end of 
     subparagraph (C), by striking the period at the end of 
     subparagraph (D) and inserting ``, or'' , and by inserting at 
     the end the following new subparagraph:
       ``(E) a payment or distribution from an education 
     investment account (as defined in section 530).''
       (e) Clerical Amendments.--
       (1) The table of sections for part VIII of subchapter F of 
     chapter 1 is amended by adding at the end the following new 
     item:

``Sec. 530. Bob Dole education investment accounts.''
       (2)(A) The heading for part VIII of subchapter F of chapter 
     1 is amended to read as follows:

           ``PART VIII--HIGHER EDUCATION SAVINGS ENTITIES''.

       (B) The table of parts for subchapter F of chapter 1 is 
     amended by striking the item relating to part VIII and 
     inserting:

``Part VIII. Higher education savings entities.''
       (3) The table of sections for subchapter B of chapter 68 is 
     amended by striking the item

[[Page S170]]

     relating to section 6693 and inserting the following new 
     item:

``Sec. 6693. Failure to provide reports on individual retirement 
              accounts or annuities or on education investment 
              accounts.''
       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 302. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE PROGRAMS.

       (a) Permanent Extension.--Section 127 of the Internal 
     Revenue Code of 1986 (relating to exclusion for educational 
     assistance programs) is amended by striking subsection (d) 
     and by redesignating subsection (e) as subsection (d).
       (b) Repeal of Limitation on Graduate Education.--The last 
     sentence of section 127(c)(1) of such Code is amended by 
     striking ``, and such term also does not include any payment 
     for, or the provision of any benefits with respect to, any 
     graduate level course of a kind normally taken by an 
     individual pursuing a program leading to a law, business, 
     medical, or other advanced academic or professional degree''.
       (c) Effective Dates.--
       (1) Extension.--The amendments made by subsection (a) shall 
     apply to taxable years beginning after December 31, 1996.
       (2) Graduate education.--The amendment made by subsection 
     (b) shall apply with respect to expenses relating to courses 
     beginning after June 30, 1996.

     SEC. 303. MODIFICATIONS OF TAX TREATMENT OF QUALIFIED STATE 
                   TUITION PROGRAMS.

       (a) Exclusion of Distributions Used for Educational 
     Purposes.--Subparagraph (B) of section 529(c)(3) is amended 
     to read as follows:
       ``(B) Distributions for qualified higher education 
     expenses.--Subparagraph (A) shall not apply to any 
     distribution to the extent--
       ``(i) the distribution is used exclusively to pay qualified 
     higher education expenses of the distributee, or
       ``(ii) the distribution consists of providing a benefit to 
     the distributee which, if paid for by the distributee, would 
     constitute payment of a qualified higher education expense.''
       (b) Qualified Higher Education Expenses To Include Room and 
     Board.--Section 529(e)(3) is amended to read as follows:
       ``(3) Qualified higher education expenses.--The term 
     `qualified higher education expenses' means the cost of 
     attendance (within the meaning of section 472 of the Higher 
     Education Act of 1965 (20 U.S.C. 1087ll), as in effect on the 
     date of the enactment of the Affordable College Act) of a 
     designated beneficiary at an eligible educational institution 
     (as defined in section 135(c)(3)).''
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.

     SEC. 304. DEDUCTION FOR INTEREST ON EDUCATION LOANS.

       (a) In General.--Part VII of subchapter B of chapter 1 
     (relating to additional itemized deductions for individuals) 
     is amended by redesignating section 221 as section 222 and by 
     inserting after section 220 the following new section:

     ``SEC. 221. INTEREST ON EDUCATION LOANS.

       ``(a) Allowance of Deduction.--In the case of an 
     individual, there shall be allowed as a deduction for the 
     taxable year an amount equal to the interest paid by the 
     taxpayer during the taxable year on any qualified education 
     loan.
       ``(b) Maximum Deduction.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     deduction allowed by subsection (a) for the taxable year 
     shall not exceed $2,500.
       ``(2) Limitation based on modified adjusted gross income.--
       ``(A) In general.--If the modified adjusted gross income of 
     the taxpayer for the taxable year exceeds $45,000 ($65,000 in 
     the case of a joint return), the amount which would (but for 
     this paragraph) be allowable as a deduction under this 
     section shall be reduced (but not below zero) by the amount 
     which bears the same ratio to the amount which would be so 
     allowable as such excess bears to $20,000.
       ``(B) Modified adjusted gross income.--The term `modified 
     adjusted gross income' means adjusted gross income 
     determined--
       ``(i) without regard to this section and sections 135, 911, 
     931, and 933, and
       ``(ii) after application of sections 86, 219, and 469.
     For purposes of sections 86, 135, 219, and 469, adjusted 
     gross income shall be determined without regard to the 
     deduction allowed under this section.
       ``(C) Inflation adjustment.--In the case of any taxable 
     year beginning after 1997, the $45,000 and $65,000 amounts 
     referred to in subparagraph (A) shall be increased by an 
     amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section (1)(f)(3) for the calendar year in which the taxable 
     year begins, by substituting `1996' for `1992'.
       ``(D) Rounding.--If any amount as adjusted under 
     subparagraph (C) is not a multiple of $50, such amount shall 
     be rounded to the nearest multiple of $50.
       ``(c) Dependents Not Eligible for Deduction.--No deduction 
     shall be allowed by this section to an individual for the 
     taxable year if a deduction under section 151 with respect to 
     such individual is allowed to another taxpayer for the 
     taxable year beginning in the calendar year in which such 
     individual's taxable year begins.
       ``(d) Limit on Period Deduction Allowed.--A deduction shall 
     be allowed under this section only with respect to interest 
     paid on any qualified education loan during the first 60 
     months (whether or not consecutive) in which interest 
     payments are required. For purposes of this paragraph, any 
     loan and all refinancings of such loan shall be treated as 1 
     loan.
       ``(e) Definitions.--For purposes of this section--
       ``(1) Qualified education loan.--The term `qualified 
     education loan' means any indebtedness incurred to pay 
     qualified higher education expenses--
       ``(A) which are incurred on behalf of the taxpayer, the 
     taxpayer's spouse, or any dependent of the taxpayer as of the 
     time the indebtedness was incurred,
       ``(B) which are paid or incurred within a reasonable period 
     of time before or after the indebtedness is incurred, and
       ``(C) which are attributable to education furnished during 
     a period during which the recipient was at least a half-time 
     student.
     Such term includes indebtedness used to refinance 
     indebtedness which qualifies as a qualified education loan. 
     The term `qualified education loan' shall not include any 
     indebtedness owed to a person who is related (within the 
     meaning of section 267(b) or 707(b)(1)) to the taxpayer.
       ``(2) Qualified higher education expenses.--The term 
     `qualified higher education expenses' means the cost of 
     attendance (as defined in section 472 of the Higher Education 
     Act of 1965, 20 U.S.C. 1087ll, as in effect on the day before 
     the date of the enactment of this Act) of the taxpayer or the 
     taxpayer's spouse at an eligible educational institution, 
     reduced by the sum of--
       ``(A) the amount excluded from gross income under section 
     135 by reason of such expenses, and
       ``(B) the amount of the reduction described in section 
     135(d)(1).
     For purposes of the preceding sentence, the term `eligible 
     educational institution' has the same meaning given such term 
     by section 135(c)(3), except that such term shall also 
     include an institution conducting an internship or residency 
     program leading to a degree or certificate awarded by an 
     institution of higher education, a hospital, or a health care 
     facility which offers postgraduate training.
       ``(3) Half-time student.--The term `half-time student' 
     means any individual who would be a student as defined in 
     section 151(c)(4) if `half-time' were substituted for `full-
     time' each place it appears in such section.
       ``(4) Dependent.--The term `dependent' has the meaning 
     given such term by section 152.
       ``(f) Special Rules.--
       ``(1) Denial of double benefit.--No deduction shall be 
     allowed under this section for any amount for which a 
     deduction is allowable under any other provision of this 
     chapter.
       ``(2) Married couples must file joint return.--If the 
     taxpayer is married at the close of the taxable year, the 
     deduction shall be allowed under subsection (a) only if the 
     taxpayer and the taxpayer's spouse file a joint return for 
     the taxable year.
       ``(3) Marital status.--Marital status shall be determined 
     in accordance with section 7703.''.
       (b) Deduction Allowed Whether or Not Taxpayer Itemizes 
     Other Deductions.--Subsection (a) of section 62 is amended by 
     inserting after paragraph (16) the following new paragraph:
       ``(17) Interest on education loans.--The deduction allowed 
     by section 221.''
       (c) Reporting Requirement.--
       (1) In general.--Subpart B of part III of subchapter A of 
     chapter 61 (relating to information concerning transactions 
     with other persons) is amended by inserting after section 
     6050R the following new section:

     ``SEC. 6050S. RETURNS RELATING TO EDUCATION LOAN INTEREST 
                   RECEIVED IN TRADE OR BUSINESS FROM INDIVIDUALS.

       ``(a) Education Loan Interest of $600 or More.--Any 
     person--
       ``(1) who is engaged in a trade or business, and
       ``(2) who, in the course of such trade or business, 
     receives from any individual interest aggregating $600 or 
     more for any calendar year on 1 or more qualified education 
     loans,
     shall make the return described in subsection (b) with 
     respect to each individual from whom such interest was 
     received at such time as the Secretary may by regulations 
     prescribe.
       ``(b) Form and Manner of Returns.--A return is described in 
     this subsection if such return--
       ``(1) is in such form as the Secretary may prescribe,
       ``(2) contains--
       ``(A) the name, address, and TIN of the individual from 
     whom the interest described in subsection (a)(2) was 
     received,
       ``(B) the amount of such interest received for the calendar 
     year, and
       ``(C) such other information as the Secretary may 
     prescribe.
       ``(c) Application to Governmental Units.--For purposes of 
     subsection (a)--
       ``(1) Treated as persons.--The term `person' includes any 
     governmental unit (and any agency or instrumentality 
     thereof).
       ``(2) Special rules.--In the case of a governmental unit or 
     any agency or instrumentality thereof--

[[Page S171]]

       ``(A) subsection (a) shall be applied without regard to the 
     trade or business requirement contained therein, and
       ``(B) any return required under subsection (a) shall be 
     made by the officer or employee appropriately designated for 
     the purpose of making such return.
       ``(d) Statements To Be Furnished to Individuals With 
     Respect to Whom Information Is Required.--Every person 
     required to make a return under subsection (a) shall furnish 
     to each individual whose name is required to be set forth in 
     such return a written statement showing--
       ``(1) the name and address of the person required to make 
     such return, and
       ``(2) the aggregate amount of interest described in 
     subsection (a)(2) received by the person required to make 
     such return from the individual to whom the statement is 
     required to be furnished.
     The written statement required under the preceding sentence 
     shall be furnished on or before January 31 of the year 
     following the calendar year for which the return under 
     subsection (a) was required to be made.
       ``(e) Qualified Education Loan Defined.--For purposes of 
     this section, except as provided in regulations prescribed by 
     the Secretary, the term `qualified education loan' has the 
     meaning given such term by section 221(e)(1).
       ``(f) Returns Which Would Be Required To Be Made by 2 or 
     More Persons.--Except to the extent provided in regulations 
     prescribed by the Secretary, in the case of interest received 
     by any person on behalf of another person, only the person 
     first receiving such interest shall be required to make the 
     return under subsection (a).''.
       (2) Assessable penalties.--Section 6724(d) (relating to 
     definitions) is amended--
       (A) in paragraph (1)(B), by redesignating clauses (x) 
     through (xv) as clauses (xi) through (xvi), respectively, and 
     by inserting after clause (ix) the following new clause:
       ``(x) section 6050S (relating to returns relating to 
     education loan interest received in trade or business from 
     individuals),'', and
       (B) in paragraph (2), by striking ``or'' at the end of the 
     next to last subparagraph, by striking the period at the end 
     of the last subparagraph and inserting ``, or'', and by 
     adding at the end the following new subparagraph:
       ``(Z) section 6050S(d) (relating to returns relating to 
     education loan interest received in trade or business from 
     individuals).''
       (d) Clerical Amendment.--The table of sections for part VII 
     of subchapter B of chapter 1 is amended by striking the last 
     item and inserting the following new items:

``Sec. 221. Interest on education loans.
``Sec. 222. Cross reference.''.

       (e) Effective Date.--The amendments made by this section 
     shall apply to any qualified education loan (as defined in 
     section 221(e)(1) of the Internal Revenue Code of 1986, as 
     added by this section) incurred on, before, or after the date 
     of the enactment of this Act, but only with respect to any 
     loan interest payment due after December 31, 1996.

     SEC. 305. EXCLUSION OF FEDERAL WORK STUDY PAYMENTS.

       (a) In General.--Section 117 (relating to exclusion of 
     qualified scholarships) is amended by adding at the end the 
     following new subsection:
       ``(e) Exclusion for Work Study Payments.--Notwithstanding 
     any other provision of this section, gross income does not 
     include any amount received for services performed under a 
     Federal work study program operated under section 441 of the 
     Higher Education Act of 1965 (42 U.S.C. 2751), as in effect 
     on the date of the enactment of this subsection.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1996.
   TITLE IV--FUNDING FOR PART B OF THE INDIVIDUALS WITH DISABILITIES 
                             EDUCATION ACT

     SEC. 401. FUNDING FOR PART B OF THE INDIVIDUALS WITH 
                   DISABILITIES EDUCATION ACT.

       Section 611(h) of the Individuals with Disabilities 
     Education Act (20 U.S.C. 1411(h)) is amended by striking 
     ``such sums as may be necessary'' and inserting ``not less 
     than $4,107,522 for fiscal year 1998, not less than 
     $5,607,522 for fiscal year 1999, not less than $7,107,522 for 
     fiscal year 2000, not less than $8,607,522 for fiscal year 
     2001, not less than $10,107,522 for fiscal year 2002, not 
     less than $11,607,522 for fiscal year 2003, not less than 
     $13,107,522 for fiscal year 2004, and such sums as may be 
     necessary for each succeeding fiscal year.''.
              TITLE V--ADULT EDUCATION AND FAMILY LITERACY
                    Subtitle A--Adult Education Act

     SEC. 511. AUTHORIZATION OF ADULT EDUCATION ACT.

       The Adult Education Act (20 U.S.C. 1201 et seq.) is amended 
     to read as follows:
                 ``TITLE III--ADULT EDUCATION PROGRAMS

     ``SEC. 301. SHORT TITLE.

       ``This title may be cited as the ``Adult Education Act''.

     ``SEC. 302. STATEMENT OF PURPOSE.

       ``It is the purpose of this title to assist the States and 
     the outlying areas to provide--
       ``(1) to adults, the basic educational skills necessary for 
     employment and self-sufficiency; and
       ``(2) to adults who are parents, the educational skills 
     necessary to be full partners in the educational development 
     of their children.

     ``SEC. 303. DEFINITIONS.

       ``As used in this title:
       ``(1) Adult education.--The term `adult education' means 
     services or instruction below the postsecondary level for 
     individuals--
       ``(A) who have attained 16 years of age;
       ``(B) who are not enrolled or required to be enrolled in 
     secondary school;
       ``(C)(i) who lack sufficient mastery of basic educational 
     skills to enable the individuals to function effectively in 
     society; or
       ``(ii) who do not have a certificate of graduation from a 
     school providing secondary education and who have not 
     achieved an equivalent level of education; and
       ``(D) who lack a mastery of basic skills and are therefore 
     unable to speak, read, or write the English language.
       ``(2) Adult education and literacy activities.--The term 
     `adult education and literacy activities' means the 
     activities authorized in section 315.
       ``(3) Community-based organization.--The term `community-
     based organization' means a private nonprofit organization of 
     demonstrated effectiveness that is representative of a 
     community or a significant segment of a community.
       ``(4) Eligible agency.--The term `eligible agency' means--
       ``(A) the individual, entity, or agency in a State or an 
     outlying area responsible for administering or setting 
     policies for adult education and literacy services in such 
     State or outlying area pursuant to the law of the State or 
     outlying area; or
       ``(B) if no individual, entity, or agency is responsible 
     for administering or setting such policies pursuant to the 
     law of the State or outlying area, the individual, entity, or 
     agency in a State or outlying area responsible for 
     administering or setting policies for adult education and 
     literacy services in such State or outlying area on the date 
     of enactment of this Act.
       ``(5) Eligible provider.--The term `eligible provider', 
     used with respect to adult education and literacy activities 
     described in section 315(b), means a provider determined to 
     be eligible for assistance in accordance with section 314.
       ``(6) English literacy program.--The term `English literacy 
     program' means a program of instruction designed to help 
     individuals of limited English proficiency achieve full 
     competence in the English language.
       ``(7) Family literacy services.--The term `family literacy 
     services' means services that are of sufficient intensity in 
     terms of hours, and of sufficient duration, to make 
     sustainable changes in a family and that integrate all of the 
     following activities:
       ``(A) Interactive literacy activities between parents and 
     their children.
       ``(B) Training for parents on how to be the primary teacher 
     for their children and full partners in the education of 
     their children.
       ``(C) Parent literacy training.
       ``(D) An age-appropriate education program for children.
       ``(8) Individual of limited english proficiency.--The term 
     `individual of limited English proficiency' means an 
     individual--
       ``(A) who has limited ability in speaking, reading, or 
     writing the English language; and
       ``(B)(i) whose native language is a language other than 
     English; or
       ``(ii) who lives in a family or community environment where 
     a language other than English is the dominant language.
       ``(9) Individual with a disability.--
       ``(A) In general.--The term `individual with a disability' 
     means an individual with any disability (as defined in 
     section 3 of the Americans with Disabilities Act of 1990 (42 
     U.S.C. 12102)).
       ``(B) Individuals with disabilities.--The term `individuals 
     with disabilities' means more than 1 individual with a 
     disability.
       ``(10) Literacy.--The term `literacy', used with respect to 
     an individual, means the ability of the individual to speak, 
     read, and write English, and compute and solve problems, at 
     levels of proficiency necessary--
       ``(A) to function on the job, in the family of the 
     individual, and in society;
       ``(B) to achieve the goals of the individual; and
       ``(C) to develop the knowledge potential of the individual.
       ``(11) Local educational agency.--The term `local 
     educational agency' has the meaning given such term in 
     section 14101 of the Elementary and Secondary Education Act 
     of 1965 (20 U.S.C. 8801).
       ``(12) Outlying area.--The term `outlying area' means the 
     United States Virgin Islands, Guam, American Samoa, the 
     Commonwealth of the Northern Mariana Islands, the Republic of 
     the Marshall Islands, the Federated States of Micronesia, and 
     the Republic of Palau.
       ``(13) Postsecondary educational institution.--The term 
     `postsecondary educational institution' means an institution 
     of higher education (as such term is defined in section 481 
     of the Higher Education Act of 1965 (20 U.S.C. 1088)) that 
     continues to meet the eligibility and certification 
     requirements under title IV of such Act (20 U.S.C. 1070 et 
     seq.).
       ``(14) Secretary.--The term `Secretary' means the Secretary 
     of Education.
       ``(15) State.--The term `State' means each of the several 
     States of the United States,

[[Page S172]]

     the District of Columbia, and the Commonwealth of Puerto 
     Rico.

     ``SEC. 304. AUTHORIZATION OF APPROPRIATIONS.

       ``(a) In General.--There are authorized to be appropriated 
     to carry out this title (except section 321) $400,000,000 for 
     fiscal year 1998, and such sums as may be necessary for each 
     of the fiscal years 1999 through 2003.
       ``(b) Reservation of Funds for National Leadership 
     Activities.--For any fiscal year, the Secretary may reserve 
     not more than $4,500,000 of the amount appropriated under 
     subsection (a) to establish and carry out the program of 
     national leadership and evaluation activities described in 
     section 322.
       ``(c) Program Year.--Appropriations for any fiscal year for 
     programs and activities carried out under part A shall be 
     available for obligation only on the basis of a program year. 
     The program year shall begin on July 1 in the fiscal year for 
     which the appropriation is made.

                 ``PART A--GRANTS TO ELIGIBLE AGENCIES

     ``SEC. 311. AUTHORITY TO MAKE GRANTS.

       ``(a) In General.--In the case of each eligible agency that 
     in accordance with section 313 submits to the Secretary a 
     plan for a fiscal year, the Secretary shall make a grant for 
     the year to the eligible agency for the purpose specified in 
     subsection (b). The grant shall consist of the initial and 
     additional allotments determined for the eligible agency 
     under section 312.
       ``(b) Purpose of Grants.--The Secretary may make a grant 
     under subsection (a) only if the applicant involved agrees to 
     expend the grant for adult education and literacy activities 
     in accordance with the provisions of this part.

     ``SEC. 312. ALLOTMENTS.

       ``(a) Initial Allotments.--From the sums available for the 
     purpose of making grants under this part for any fiscal year, 
     the Secretary shall allot to each eligible agency that in 
     accordance with section 313 submits to the Secretary a plan 
     for the year an initial amount as follows:
       ``(1) $100,000, in the case of an eligible agency of the 
     United States Virgin Islands, Guam, American Samoa, the 
     Commonwealth of the Northern Mariana Islands, the Republic of 
     the Marshall Islands, the Federated States of Micronesia, and 
     the Republic of Palau.
       ``(2) $250,000, in the case of any other eligible agency.
       ``(b) Additional Allotments.--
       ``(1) In general.--From the remainder available for the 
     purpose of making grants under this part for any fiscal year 
     after the application of subsection (a), the Secretary shall 
     allot to each eligible agency that receives an initial 
     allotment under such subsection an additional amount that 
     bears the same relationship to such remainder as the number 
     of qualifying adults in the State or outlying area of the 
     agency bears to the number of such adults in all States and 
     outlying areas.
       ``(2) Qualifying adult.--For purposes of this subsection, 
     the term `qualifying adult' means an adult who--
       ``(A) is at least 16 years of age, but less than 61 years 
     of age;
       ``(B) is beyond the age of compulsory school attendance 
     under the law of the State or outlying area;
       ``(C) does not have a certificate of graduation from a 
     school providing secondary education and has not achieved an 
     equivalent level of education; and
       ``(D) is not currently enrolled in secondary school.
       ``(c) Special Rule.--
       ``(1) In general.--Notwithstanding any other provision of 
     this section and using funds allotted for the Republic of the 
     Marshall Islands, the Federated States of Micronesia, and the 
     Republic of Palau under this section, the Secretary shall 
     award grants to Guam, American Samoa, the Commonwealth of the 
     Northern Mariana Islands, the Republic of the Marshall 
     Islands, the Federated States of Micronesia, or the Republic 
     of Palau to carry out activities described in this part in 
     accordance with the provisions of this part that the 
     Secretary determines are not inconsistent with this 
     subsection.
       ``(2) Award basis.--The Secretary shall award grants 
     pursuant to paragraph (1) on a competitive basis and pursuant 
     to recommendations from the Pacific Region Educational 
     Laboratory in Honolulu, Hawaii.
       ``(3) Termination of eligibility.--Notwithstanding any 
     other provision of law, the Republic of the Marshall Islands, 
     the Federated States of Micronesia, and the Republic of Palau 
     shall not receive any funds under this part for any fiscal 
     year that begins after September 30, 2001.
       ``(4) Administrative costs.--The Secretary may provide not 
     more than 5 percent of the funds made available for grants 
     under this subsection to pay the administrative costs of the 
     Pacific Region Educational Laboratory regarding activities 
     assisted under this subsection.

     ``SEC. 313. AGENCY PLAN.

       ``For an eligible agency to be eligible to receive a grant 
     under this part for any fiscal year, the agency shall submit 
     to the Secretary a plan for the year that includes the 
     following:
       ``(1) A description of the adult education and literacy 
     activities that will be carried out with funds received under 
     the grant.
       ``(2) A description of how such activities will be 
     integrated with other adult education and career development 
     activities in the State or outlying area of the agency.
       ``(3) A description of how the eligible agency annually 
     will evaluate the effectiveness of the adult education and 
     literacy activities that are carried out with funds received 
     under the grant.
       ``(4) A description of the benchmarks required under 
     section 317 and how such benchmarks will ensure continuous 
     improvement of adult education and literacy services in the 
     State or outlying area of the agency.
       ``(5) An assurance that the funds received under the grant 
     will not be expended for any purpose other than the 
     activities described in sections 314 and 315.
       ``(6) An assurance that the eligible agency will expend the 
     funds received under the grant only in a manner consistent 
     with the fiscal requirements in section 316.

     ``SEC. 314. USE OF FUNDS.

       ``(a) In General.--Of the sum that is made available under 
     this part to an eligible agency for any program year--
       ``(1) not less than 85 percent shall be made available to 
     award grants in accordance with this section to carry out 
     adult education and literacy activities;
       ``(2) not more than 10 percent shall be made available to 
     carry out activities described in section 315(a); and
       ``(3) subject to paragraph (1), not more than 5 percent, or 
     $50,000, whichever is greater, shall be made available for 
     administrative expenses at the State level (or the level of 
     the outlying area).
       ``(b) Grants.--
       ``(1) In general.--Except as provided in paragraph (2), 
     from the amount made available to an eligible agency for 
     adult education and literacy under subsection (a)(1) for a 
     program year, such agency shall award grants, on a 
     competitive basis, to local educational agencies, 
     correctional education agencies, community-based 
     organizations of demonstrated effectiveness, volunteer 
     literacy organizations, libraries, public or private 
     nonprofit agencies, postsecondary educational institutions, 
     public housing authorities, and other nonprofit institutions, 
     that have the ability to provide literacy services to adults 
     and families, or consortia of agencies, organizations, or 
     institutions described in this subsection, to enable such 
     agencies, organizations, institutions, and consortia to carry 
     out adult education and literacy activities.
       ``(2) Consortia.--An eligible agency may award a grant 
     under this section to a consortium that includes a provider 
     described in paragraph (1) and a for-profit agency, 
     organization, or institution, if such agency, organization, 
     or institution--
       ``(A) can make a significant contribution to carrying out 
     the objectives of this title; and
       ``(B) enters into a contract with such provider to carry 
     out adult education and literacy activities.
       ``(c) Grant Requirements.--
       ``(1) Required local activities.--An eligible agency shall 
     require that each provider receiving a grant under this 
     section use the grant in accordance with section 315(b).
       ``(2) Equitable access.--Each eligible agency awarding a 
     grant under this section for adult education and literacy 
     activities shall ensure that the providers described in 
     subsection (b) will be provided direct and equitable access 
     to all Federal funds provided under this section.
       ``(3) Special rule.--Each eligible agency awarding a grant 
     under this section shall not use any funds made available 
     under this title for adult education and literacy activities 
     for the purpose of supporting or providing programs, 
     services, or activities for individuals who are not 
     individuals described in subparagraphs (A) and (B) of section 
     303(1), except that such agency may use such funds for such 
     purpose if such programs, services, or activities are related 
     to family literacy services.
       ``(4) Considerations.--In awarding grants under this 
     section, the eligible agency shall consider--
       ``(A) the past effectiveness of a provider described in 
     subsection (b) in providing services (especially with respect 
     to recruitment and retention of educationally disadvantaged 
     adults and the learning gains demonstrated by such adults);
       ``(B) the degree to which the provider will coordinate 
     services with other literacy and social services available in 
     the community; and
       ``(C) the commitment of the provider to serve individuals 
     in the community who are most in need of literacy services.
       ``(d) Local Administrative Cost Limits.--
       ``(1) In general.--Except as provided in paragraph (2), of 
     the funds provided under this section by an eligible agency 
     to a provider described in subsection (b), not less than 95 
     percent shall be expended for provision of adult education 
     and literacy activities. The remainder shall be used for 
     planning, administration, personnel development, and 
     interagency coordination.
       ``(2) Special rule.--In cases where the cost limits 
     described in paragraph (1) will be too restrictive to allow 
     for adequate planning, administration, personnel development, 
     and interagency coordination supported under this section, 
     the eligible agency shall negotiate with the provider 
     described in subsection (b) in order to determine an adequate 
     level of funds to be used for noninstructional purposes.

     ``SEC. 315. ADULT EDUCATION AND LITERACY ACTIVITIES.

       ``(a) Permissible Agency Activities.--An eligible agency 
     may use not more than 10

[[Page S173]]

     percent of the funds made available to the eligible agency 
     under this part for activities that may include--
       ``(1) the establishment or operation of professional 
     development programs to improve the quality of instruction 
     provided pursuant to local activities required under 
     subsection (b), including instruction provided by volunteers 
     or by personnel of a State or outlying area;
       ``(2) the provision of technical assistance to eligible 
     providers of activities authorized in this section;
       ``(3) the provision of technology assistance to eligible 
     providers of activities authorized in this section to enable 
     the providers to improve the quality of such activities;
       ``(4) the support of State or regional networks of literacy 
     resource centers; and
       ``(5) the monitoring and evaluation of the quality of and 
     the improvement in activities authorized in this section.
       ``(b) Required Local Activities.--The eligible agency shall 
     require that each eligible provider receiving a grant under 
     section 314 use the grant to establish or operate 1 or more 
     programs that provide instruction or services in 1 or more of 
     the following categories:
       ``(1) Adult education and literacy services.
       ``(2) Family literacy services.
       ``(3) English literacy programs.

     ``SEC. 316. FISCAL REQUIREMENTS AND RESTRICTIONS RELATED TO 
                   USE OF FUNDS.

       ``(a) Supplement not Supplant.--Funds made available under 
     this part for adult education and literacy activities shall 
     supplement, and may not supplant, other public funds expended 
     to carry out activities described in section 315.
       ``(b) Maintenance of Effort.--
       ``(1) Determination.--
       ``(A) In general.--Except as provided in subparagraphs (B) 
     and (C), and paragraph (2), no payments shall be made under 
     this part for any program year to an eligible agency for 
     adult education and literacy activities unless the Secretary 
     of Education determines that the fiscal effort per student or 
     the aggregate expenditures of such eligible agency for 
     activities described in section 315 for the program year 
     preceding the program year for which the determination is 
     made, equaled or exceeded such effort or expenditures for 
     activities described in such section for the second program 
     year preceding the fiscal year for which the determination is 
     made.
       ``(B) Computation.--In computing the fiscal effort or 
     aggregate expenditures pursuant to subparagraph (A), the 
     Secretary of Education shall exclude capital expenditures, 
     special one-time project costs, and similar windfalls.
       ``(C) Decrease in federal support.--If the amount made 
     available for adult education and literacy activities under 
     this part for a fiscal year is less than the amount made 
     available for adult education and literacy activities under 
     this part for the preceding fiscal year, then the fiscal 
     effort per student or the aggregate expenditures of an 
     eligible agency required by subparagraph (A) for such 
     preceding fiscal year shall be decreased by the same 
     percentage as the percentage decrease in the amount so made 
     available.
       ``(2) Waiver.--The Secretary of Education may waive the 
     requirements of paragraph (1) (with respect to not more than 
     5 percent of expenditures required for the preceding fiscal 
     year by any eligible agency) for 1 program year only, after 
     making a determination that such waiver would be equitable 
     due to exceptional or uncontrollable circumstances affecting 
     the ability of the eligible agency to meet such requirements, 
     such as a natural disaster or an unforeseen and precipitous 
     decline in financial resources. No level of funding permitted 
     under such a waiver may be used as the basis for computing 
     the fiscal effort or aggregate expenditures required under 
     this subsection for years subsequent to the year covered by 
     such waiver. The fiscal effort or aggregate expenditures for 
     the subsequent years shall be computed on the basis of the 
     level of funding that would, but for such waiver, have been 
     required.
       ``(c) Expenditures of non-Federal Funds for Adult Education 
     and Literacy Activities.--For any program year for which a 
     grant is made to an eligible agency under this part, the 
     eligible agency shall expend, on programs and activities 
     relating to adult education and literacy activities, an 
     amount, derived from sources other than the Federal 
     Government, equal to 25 percent of the amount made available 
     to the eligible agency under this part for adult education 
     and literacy activities.

     ``SEC. 317. ACCOUNTABILITY AND CONTINUOUS IMPROVEMENT.

       ``(a) Goal.--Each eligible agency that receives a grant 
     under this part shall use such grant to meet the goal of 
     enhancing and developing more fully the literacy skills of 
     the adult population in the State or outlying area of the 
     agency.
       ``(b) Benchmarks.--To be eligible to receive a grant under 
     this part, an eligible agency shall develop and identify in 
     the agency plan, submitted under section 313, proposed 
     quantifiable benchmarks to measure the progress of the 
     eligible agency toward meeting the goal described in 
     subsection (a) throughout the State or outlying area of the 
     agency, which shall include, at a minimum, measures for 
     participants of--
       ``(1) demonstrated improvements in literacy skill levels;
       ``(2) attainment of secondary school diplomas or general 
     equivalency diplomas;
       ``(3) placement in, retention in, or completion of, 
     postsecondary education, training, or employment; and
       ``(4) attainment of the literacy skills and knowledge 
     individuals need to be productive and responsible citizens 
     and to become more actively involved in the education of 
     their children.
       ``(c) Populations.--
       ``(1) Performance measures.--In developing and identifying 
     measures of progress of the eligible agency toward meeting 
     the goal described in subsection (a), an eligible agency 
     shall develop and identify in the agency plan, in addition to 
     the benchmarks described in subsection (b), proposed 
     quantifiable benchmarks for populations that include, at a 
     minimum--
       ``(A) low-income individuals;
       ``(B) at-risk youth and young adults;
       ``(C) individuals with disabilities; and
       ``(D) individuals of limited literacy, as determined by the 
     eligible agency.
       ``(2) Additional measures.--In addition to the benchmarks 
     described in paragraph (1), an eligible agency may develop 
     and identify in the agency plan proposed quantifiable 
     benchmarks to measure the progress of the eligible agency 
     toward meeting the goal described in subsection (a) for 
     populations with multiple barriers to educational 
     enhancement.

                      ``PART B--NATIONAL PROGRAMS

     ``SEC. 321. NATIONAL INSTITUTE FOR LITERACY.

       ``(a) Establishment.--
       ``(1) In general.--There is established the National 
     Institute for Literacy (in this section referred to as the 
     ``Institute''). The Institute shall be administered under the 
     terms of an interagency agreement entered into by the 
     Secretary of Education with the Secretary of Labor and the 
     Secretary of Health and Human Services (in this section 
     referred to as the ``Interagency Group''). The Interagency 
     Group may include in the Institute any research and 
     development center, institute, or clearinghouse established 
     within the Department of Education, the Department of Labor, 
     or the Department of Health and Human Services whose purpose 
     is determined by the Interagency Group to be related to the 
     purpose of the Institute.
       ``(2) Offices.--The Institute shall have offices separate 
     from the offices of the Department of Education, the 
     Department of Labor, and the Department of Health and Human 
     Services.
       ``(3) Board recommendations.--The Interagency Group shall 
     consider the recommendations of the National Institute for 
     Literacy Advisory Board (in this section referred to as the 
     ``Board'') established under subsection (d) in planning the 
     goals of the Institute and in the implementation of any 
     programs to achieve such goals.
       ``(4) Daily operations.--The daily operations of the 
     Institute shall be carried out by the Director of the 
     Institute appointed under subsection (g).
       ``(b) Duties.--
       ``(1) In general.--The Institute shall improve the quality 
     and accountability of the adult basic skills and literacy 
     delivery system by--
       ``(A) providing national leadership for the improvement and 
     expansion of the system for delivery of literacy services;
       ``(B) coordinating the delivery of such services across 
     Federal agencies;
       ``(C) identifying effective models of basic skills and 
     literacy education for adults and families that are essential 
     to success in job training, work, the family, and the 
     community;
       ``(D) supporting the creation of new methods of offering 
     improved literacy services;
       ``(E) funding a network of State or regional adult literacy 
     resource centers to assist State and local public and private 
     nonprofit efforts to improve literacy by--
       ``(i) encouraging the coordination of literacy services;
       ``(ii) carrying out evaluations of the effectiveness of 
     adult education and literacy activities;
       ``(iii) enhancing the capacity of State and local 
     organizations to provide literacy services; and
       ``(iv) serving as a reciprocal link between the Institute 
     and providers of adult education and literacy activities for 
     the purpose of sharing information, data, research, 
     expertise, and literacy resources;
       ``(F) supporting the development of models at the State and 
     local level of accountability systems that consist of goals, 
     performance measures, benchmarks, and assessments that can be 
     used to improve the quality of adult education and literacy 
     activities;
       ``(G) providing technical assistance, information, and 
     other program improvement activities to national, State, and 
     local organizations, such as--
       ``(i) improving the capacity of national, State, and local 
     public and private organizations that provide literacy and 
     basic skills services, professional development, and 
     technical assistance, such as the State or regional adult 
     literacy resource centers referred to in subparagraph (E); 
     and
       ``(ii) establishing a national literacy electronic database 
     and communications network;
       ``(H) working with the Interagency Group, Federal agencies, 
     and the Congress to ensure that such Group, agencies, and the 
     Congress have the best information available on literacy and 
     basic skills programs in formulating Federal policy with 
     respect to the issues of literacy, basic skills, and 
     workforce and career development; and

[[Page S174]]

       ``(I) assisting with the development of policy with respect 
     to literacy and basic skills.
       ``(2) Grants, contracts, and agreements.--The Institute may 
     make grants to, or enter into contracts or cooperative 
     agreements with, individuals, public or private institutions, 
     agencies, organizations, or consortia of such institutions, 
     agencies, or organizations to carry out the activities of the 
     Institute. Such grants, contracts, or agreements shall be 
     subject to the laws and regulations that generally apply to 
     grants, contracts, or agreements entered into by Federal 
     agencies.
       ``(c) Literacy Leadership.--
       ``(1) Fellowships.--The Institute, in consultation with the 
     Board, may award fellowships, with such stipends and 
     allowances as the Director considers necessary, to 
     outstanding individuals pursuing careers in adult education 
     or literacy in the areas of instruction, management, 
     research, or innovation.
       ``(2) Use of fellowships.--Fellowships awarded under this 
     subsection shall be used, under the auspices of the 
     Institute, to engage in research, education, training, 
     technical assistance, or other activities to advance the 
     field of adult education or literacy, including the training 
     of volunteer literacy providers at the national, State, or 
     local level.
       ``(3) Interns and volunteers.--The Institute, in 
     consultation with the Board, may award paid and unpaid 
     internships to individuals seeking to assist the Institute in 
     carrying out its mission. Notwithstanding section 1342 of 
     title 31, United States Code, the Institute may accept and 
     use voluntary and uncompensated services as the Institute 
     determines necessary.
       ``(d) National Institute for Literacy Advisory Board.--
       ``(1) Establishment.--
       ``(A) In general.--There is established a National 
     Institute for Literacy Advisory Board. The Board shall 
     consist of 10 individuals appointed by the President, with 
     the advice and consent of the Senate, from individuals who--
       ``(i) are not otherwise officers or employees of the 
     Federal Government; and
       ``(ii) are representative of entities or groups described 
     in subparagraph (B).
       ``(B) Entities or groups described.--The entities or groups 
     referred to in subparagraph (A) are--
       ``(i) literacy organizations and providers of literacy 
     services, including--

       ``(I) nonprofit providers of literacy services;
       ``(II) providers of programs and services involving English 
     language instruction; and
       ``(III) providers of services receiving assistance under 
     this title;

       ``(ii) businesses that have demonstrated interest in 
     literacy programs;
       ``(iii) literacy students;
       ``(iv) experts in the area of literacy research;
       ``(v) State and local governments; and
       ``(vi) representatives of employees.
       ``(2) Duties.--The Board--
       ``(A) shall make recommendations concerning the appointment 
     of the Director and staff of the Institute;
       ``(B) shall provide independent advice on the operation of 
     the Institute; and
       ``(C) shall receive reports from the Interagency Group and 
     the Director.
       ``(3) Federal advisory committee act.--Except as otherwise 
     provided, the Board established by this subsection shall be 
     subject to the provisions of the Federal Advisory Committee 
     Act (5 U.S.C. App.).
       ``(4) Terms.--
       ``(A) In general.--Each member of the Board shall be 
     appointed for a term of 3 years, except that the initial 
     terms for members may be 1, 2, or 3 years in order to 
     establish a rotation in which \1/3\ of the members are 
     selected each year. Any such member may be appointed for not 
     more than 2 consecutive terms.
       ``(B) Vacancy appointments.--Any member appointed to fill a 
     vacancy occurring before the expiration of the term for which 
     the member's predecessor was appointed shall be appointed 
     only for the remainder of that term. A member may serve after 
     the expiration of that member's term until a successor has 
     taken office. A vacancy in the Board shall be filled in the 
     manner in which the original appointment was made. A vacancy 
     in the Board shall not affect the powers of the Board.
       ``(5) Quorum.--A majority of the members of the Board shall 
     constitute a quorum but a lesser number may hold hearings. 
     Any recommendation of the Board may be passed only by a 
     majority of the Board's members present.
       ``(6) Election of officers.--The Chairperson and Vice 
     Chairperson of the Board shall be elected by the members of 
     the Board. The term of office of the Chairperson and Vice 
     Chairperson shall be 2 years.
       ``(7) Meetings.--The Board shall meet at the call of the 
     Chairperson or a majority of the members of the Board.
       ``(e) Gifts, Bequests, and Devises.--The Institute may 
     accept, administer, and use gifts or donations of services, 
     money, or property, both real and personal.
       ``(f) Mails.--The Board and the Institute may use the 
     United States mails in the same manner and under the same 
     conditions as other departments and agencies of the Federal 
     Government.
       ``(g) Director.--The Interagency Group, after considering 
     recommendations made by the Board, shall appoint and fix the 
     pay of a Director.
       ``(h) Applicability of Certain Civil Service Laws.--The 
     Director and staff of the Institute may be appointed without 
     regard to the provisions of title 5, United States Code, 
     governing appointments in the competitive service, and may be 
     paid without regard to the provisions of chapter 51 and 
     subchapter III of chapter 53 of that title relating to 
     classification and General Schedule pay rates, except that an 
     individual so appointed may not receive pay in excess of the 
     maximum rate payable under section 5376 of title 5, United 
     States Code.
       ``(i) Experts and Consultants.--The Board and the Institute 
     may procure temporary and intermittent services under section 
     3109(b) of title 5, United States Code.
       ``(j) Report.--The Institute shall submit a report 
     biennially to the Committee on Economic and Educational 
     Opportunities of the House of Representatives and the 
     Committee on Labor and Human Resources of the Senate. Each 
     report submitted under this subsection shall include--
       ``(1) a comprehensive and detailed description of the 
     Institute's operations, activities, financial condition, and 
     accomplishments in the field of literacy for the period 
     covered by the report;
       ``(2) a description of how plans for the operation of the 
     Institute for the succeeding two fiscal years will facilitate 
     achievement of the goals of the Institute and the goals of 
     the literacy programs within the Department of Education, the 
     Department of Labor, and the Department of Health and Human 
     Services; and
       ``(3) any additional minority, or dissenting views 
     submitted by members of the Board.
       ``(k) Funding.--Any amounts appropriated to the Secretary 
     of Education, the Secretary of Labor, or the Secretary of 
     Health and Human Services for purposes that the Institute is 
     authorized to perform under this section may be provided to 
     the Institute for such purposes.
       ``(l) Authorization of Appropriations.--There are 
     authorized to be appropriated $10,000,000 for fiscal year 
     1998 and such sums as may be necessary for each of the fiscal 
     years 1999 through 2003 to carry out this section.

     ``SEC. 322. NATIONAL LEADERSHIP ACTIVITIES.

       ``The Secretary shall establish and carry out a program of 
     national leadership activities to enhance the quality of 
     adult education and family literacy programs nationwide. Such 
     activities shall include the following:
       ``(1) Providing technical assistance to recipients of 
     assistance under part A in developing and using benchmarks 
     and performance measures for improvement of adult education 
     and literacy activities, including family literacy services.
       ``(2) Awarding grants, on a competitive basis, to an 
     institution of higher education, a public or private 
     organization or agency, or a consortium of such institutions, 
     organizations, or agencies to carry out research and 
     technical assistance--
       ``(A) for the purpose of developing, improving, and 
     identifying the most successful methods and techniques for 
     addressing the education needs of adults; and
       ``(B) to increase the effectiveness of, and improve the 
     quality of, adult education and literacy activities, 
     including family literacy services.
       ``(3) Providing for the conduct of an independent 
     evaluation and assessment of adult education and literacy 
     activities, through studies and analyses conducted 
     independently through grants and contracts awarded on a 
     competitive basis. Such evaluation and assessment shall 
     include descriptions of--
       ``(A) the effect of benchmarks, performance measures, and 
     other measures of accountability on the delivery of adult 
     education and literacy activities, including family literacy 
     services;
       ``(B) the extent to which the adult education and literacy 
     activities, including family literacy services, increase the 
     literacy skills of adults (and of children, in the case of 
     family literacy services), lead the participants in such 
     activities to involvement in further education and training, 
     enhance the employment and earnings of such participants, 
     and, if applicable, lead to other positive outcomes, such as 
     reductions in recidivism in the case of prison-based adult 
     education and literacy services; and
       ``(C) the extent to which eligible agencies have 
     distributed funds part A to meet the needs of adults through 
     community-based organizations.
       ``(4) Carrying out demonstration programs, replicating 
     model programs, disseminating best practices information, and 
     providing technical assistance, for the purposes of 
     developing, improving, and identifying the most successful 
     methods and techniques for providing the activities assisted 
     under part A.''.

     SEC. 512. EXTENSION OF FUNCTIONAL LITERACY AND LIFE SKILLS 
                   PROGRAM FOR STATE AND LOCAL PRISONERS.

       Paragraph (3) of section 601(i) of the National Literacy 
     Act of 1991 (20 U.S.C. 1211-2(i)) is amended--
       (1) by striking ``1994, and'' and inserting ``1994,''; and
       (2) by inserting ``, and such sums as may be necessary for 
     each of the fiscal years 1998, 1999, 2000, 2001, 2002, and 
     2003'' before the period.

     SEC. 513. CONFORMING ADULT EDUCATION ACT AMENDMENTS.

       (a) Refugee Education Assistance Act.--Subsection (b) of 
     section 402 of the Refugee

[[Page S175]]

     Education Assistance Act of 1980 (8 U.S.C. 1522 note) is 
     repealed.
       (b) Elementary and Secondary Education Act of 1965.--
       (1) Section 1206 of esea.--Section 1206(a)(1)(A) of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6366(a)(1)(A)) is amended by striking ``an adult basic 
     education program'' and inserting ``adult education and 
     literacy activities''.
       (2) Section 3113 of esea.--Section 3113(1) of such Act (20 
     U.S.C. 6813(1)) is amended by striking ``section 312'' and 
     inserting ``section 303''.
       (3) Section 9161 of esea.--Section 9161(2) of such Act (20 
     U.S.C. 7881(2)) is amended by striking ``section 312(2)'' and 
     inserting ``section 303''.
  Subtitle B--Demonstration Programs and Projects To Promote Literacy

     SEC. 521. SHORT TITLE.

       Title X of the Elementary and Secondary Education Act of 
     1965 (20 U.S.C. 8001 et seq.) is amended by adding at the end 
     the following:

   ``PART N--DEMONSTRATION PROGRAMS AND PROJECTS TO PROMOTE LITERACY

     ``SEC. 10996. DEMONSTRATION PARTNERSHIPS TO PROMOTE LITERACY.

       ``(a) Training Demonstration Programs and Projects.--The 
     Secretary is authorized to make grants to, and enter into 
     contracts and cooperative agreements with, State educational 
     agencies, local educational agencies, institutions of higher 
     education, and other public and private agencies, 
     organizations, and institutions to--
       ``(1) provide in-service training for teachers, and, where 
     appropriate, other staff such as teacher's aides, in language 
     acquisition skills and systematic phonics;
       ``(2) provide pre-service training for teachers, and, where 
     appropriate, other staff, in language acquisition skills and 
     systematic phonics; and
       ``(3) provide training opportunities for parents, community 
     volunteers, and other persons interested in obtaining 
     language acquisition and systematic phonics skills for the 
     purpose of improving their literacy or the literacy skills of 
     children or other adults.
       ``(b) Other Demonstration Programs and Projects.--The 
     Secretary is authorized to make grants to, and enter into 
     contracts with, State educational agencies, local educational 
     agencies, and private nonprofit agencies or organizations 
     that use practices determined by replicated experimental 
     research to be effective in preventing and responding to 
     illiteracy in children and adults. Such grants shall be 
     awarded for time-limited, demonstration programs and projects 
     as follows:
       ``(1) Family literacy programs.--The Secretary shall award 
     grants for programs that encourage parental involvement with 
     their children in family literacy services (as defined in 
     section 303 of the Adult Education Act). Such programs may 
     combine literacy activities with parent training, in order to 
     emphasize the parent's role as their child's primary teacher.
       ``(2) School and community partnerships.--The Secretary 
     shall award grants to local educational agencies and private 
     nonprofit organizations for the development of partnerships 
     among schools, parents, private, nonprofit community 
     volunteer organizations, and other community associations. 
     Such partnerships shall demonstrate in the application 
     submitted under subsection (c) the partnership's commitment 
     to, and participation in, programs involving voluntary 
     tutoring sessions for--
       ``(A) children in kindergarten through 4th grade; and
       ``(B) the parents of such children, where requested by the 
     parent.
       ``(c) Application.--Each entity desiring assistance under 
     this section shall submit an application to the Secretary, at 
     such time, in such manner, and accompanied by such 
     information as the Secretary may require.
       ``(d) Annual Evaluation.--
       ``(1) In general.--In making grants and entering into 
     contracts and cooperative agreements for demonstration 
     programs and projects under this section, the Secretary, in 
     cooperation with the Comptroller General, shall require all 
     such programs and projects to be evaluated for their 
     effectiveness using nationally recognized standardized 
     assessments which measure reading achievement.
       ``(2) Funding.--The Secretary may provide funding for the 
     evaluations described in paragraph (1) through--
       ``(A) a stated percentage of funds awarded under a grant or 
     contracted under this subsection; or
       ``(B) a separate grant made by the Secretary for evaluating 
     an individual demonstration program or project, or group of 
     demonstration programs or projects.
       ``(3) Reservation.--The Secretary is authorized to reserve 
     not more than 2 percent of the amount appropriated under 
     subsection (e) for each fiscal year to fund the evaluations 
     under this subsection.
       ``(e) Authorization of Appropriations.--There are 
     authorized to be appropriated $100,000,000 for fiscal year 
     1998 and such sums as may be necessary for each of the 4 
     succeeding fiscal years.''.
              Subtitle C--National Commission on Literacy

     SEC. 531. SHORT TITLE.

       This subtitle may be cited as the ``National Commission on 
     Literacy''.

     SEC. 532. FINDINGS.

       Congress finds as follows:
       (1) Since 1965, the United States has spent over 
     $500,000,000,000 on Federal education programs, yet 66 
     percent of 17-year olds do not read at a proficient level and 
     reading scores have been declining for 3 decades. More over 
     75 percent of 4th graders, nationally, scored below the 
     proficient level of reading.
       (2) 85 percent of juvenile delinquents cannot read.
       (3) American businesses are spending more than 
     $30,000,000,000 in retraining employees, primarily because 
     the employees cannot read at an adult level.
       (4) In most junior colleges, at least one-third of the 
     students must take remedial English because the students are 
     not able to read at college level.

     SEC. 533. NATIONAL COMMISSION ON LITERACY.

       (a) Establishment.--There is hereby established a 
     commission to be known as the ``National Commission on 
     Literacy'' (in this subtitle referred to as the 
     ``Commission'').
       (b) Membership.--
       (1) In general.--The Commission shall consist of--
       (A) 5 members to be appointed by the President of the 
     United States;
       (B) 5 members to be appointed by the Speaker of the House 
     of Representatives; and
       (C) 5 members to be appointed by the Majority Leader of the 
     Senate.
       (2) Appointments.--
       (A) In general.--The President, the Speaker of the House of 
     Representatives, and the Majority Leader of the Senate shall 
     each appoint as members of the Commission any United States 
     citizen, including educators and other professionals involved 
     in the research, study, and analysis of illiteracy.
       (B) Prohibition.--An individual with a direct financial 
     interest in the outcome of the Commission shall not be 
     appointed to the Commission.
       (3) Consultation.--The appointments made pursuant to 
     subparagraphs (B) and (C) of paragraph (1) shall be made in 
     consultation with the chairpersons of the Committee on 
     Education and the Workplace of the House of Representatives 
     and the Committee on Labor and Human Resources of the Senate.
       (c) Duties.--
       (1) In general.--The Commission shall--
       (A) conduct a comprehensive review of the social and 
     economic impact of illiteracy in the United States and any 
     correlation between such impact and welfare costs, juvenile 
     delinquency, special education, adult literacy programs, drug 
     addiction, and underemployment;
       (B) examine matters including--
       (i) a review of--

       (I) requirements set for prospective reading teachers 
     studying at colleges of education; and
       (II) whether such requirements include obtaining knowledge 
     about direct, intensive, and systematic phonics with 
     decodable text as an important step in reading instruction;

       (ii) a review of the available testing instruments that 
     determine whether, and to what extent, children can decode 
     the English language;
       (iii) an assessment of the extent to which the use of 
     experimentally unverified methods and teaching materials 
     contributes to illiteracy;
       (iv) a review of medical and neurological evidence 
     regarding how individuals acquire the skill of reading;
       (v) a review of the cost of illiteracy to business and 
     industry;
       (vi) an assessment of the negative impact of illiteracy on 
     the economy in general, and in particular the impact of 
     illiteracy on economically depressed areas; and
       (vii) other issues that a majority of the members of the 
     Commission deem appropriate to investigate in accordance with 
     this subtitle.
       (2) Public hearings.--The Commission (and any committees 
     the Commission may form) shall conduct public hearings in 
     different geographic areas of the United States, both urban 
     and rural, in order to receive the views of a broad spectrum 
     of the public on the issue of literacy and on ways to enhance 
     the reading proficiency of children, adults, and families in 
     the United States.
       (3) Testimony.--The Commission is authorized to receive 
     testimony from individuals, including--
       (A) representatives of public and private organizations and 
     institutions with an interest in the literacy of children, 
     adults, and families in the United States;
       (B) educators;
       (C) religious leaders;
       (D) providers of social services;
       (E) representatives of organizations with children as 
     members;
       (F) elected and appointed public officials; and
       (G) other individuals speaking on their own behalf.
       (d) Interim and Final Reports to President and Congress; 
     Recommendations.--
       (1) Interim reports.--The Commission may submit to the 
     President, the Committee on Labor and Human Resources of the 
     Senate, the Committee on Education and the Workplace of the 
     House of Representatives, and to the public, interim reports 
     regarding the duties of the Commission undertaken pursuant to 
     subsection (c).
       (2) Final report.--The Commission shall submit to the 
     President, the Committee on Labor and Human Resources of the 
     Senate, and the Committee on Education and the Workplace of 
     the House of Representatives a final report no later than 
     September 30, 2000.

[[Page S176]]

     The final report shall set forth recommendations regarding 
     the findings of the Commission.
       (3) Availability.--Copies of interim reports and the final 
     report of the Commission shall be made available in 
     sufficient quantity for public review.
       (e) Time of Appointment of Members; Vacancies; Selection of 
     Chairman; Quorum; Calling of Meetings; Number of Meetings; 
     Voting; Compensation and Expenses.--
       (1) In general.--The President, the Speaker of the House of 
     Representatives, and the Majority Leader of the Senate shall 
     make their respective appointments to the Commission not 
     later than 60 days after the date of enactment of this Act, 
     for terms ending 60 days after the Commission issues its 
     final report.
       (2) Vacancy.--Any vacancy that occurs during the life of 
     the Commission shall not affect the powers of the Commission, 
     and shall be filled in the same manner as the original 
     appointment not later than 30 days after the vacancy occurs.
       (3) Chairman.--The Majority Leader of the Senate, in 
     consultation with the Speaker of the House of Representatives 
     and with the President shall designate one member of the 
     Commission as Chairman of the Commission no later than 60 
     days after the establishment of the Commission.
       (4) Quorum.--A majority of the members of the Commission 
     shall constitute a quorum for the transaction of business, 
     but the Commission may establish a lesser quorum for 
     conducting hearings scheduled by the Commission.
       (5) Meetings.--The Commission shall meet at the call of the 
     Chairman of the Commission, or at the call of a majority of 
     the members of the Commission. The initial meeting of the 
     Commission shall be conducted no later than 30 days after the 
     appointment of the last member of the Commission, or no later 
     than 30 days after the date on which funds are made available 
     for the Commission.
       (6) Voting.--Decisions of the Commission shall be according 
     to the vote of a simple majority of the members of the 
     Commission present and voting at a properly called meeting.
       (7) Rules.--The Commission may establish by majority vote 
     any other rules for the conduct of the Commission's business, 
     if such rules are not inconsistent with this subtitle or 
     other applicable law.
       (8) Compensation.--Each member of the Commission who is not 
     an officer or employee of the Federal Government, or whose 
     compensation as a member of the Commission is not precluded 
     by a Federal, State, or local law, shall be compensated at a 
     rate equal to the daily equivalent of the annual rate of 
     basic pay prescribed for Level IV of the Executive Schedule 
     under section 5315 of title 5, United States Code, for each 
     day (including travel time) during which such member is 
     engaged in the performance of the duties of the Commission. 
     All members of the Commission who are officers or employees 
     of the United States shall serve without compensation in 
     addition to the compensation received for their services as 
     officers or employees of the United States.
       (9) Travel expenses.--The members of the Commission shall 
     be allowed travel expenses, including per diem in lieu of 
     subsistence, at rates authorized for employees of agencies 
     under subchapter I of chapter 57 of title 5, United States 
     Code, while away from their homes or regular places of 
     business in the performance of service for the Commission.
       (f) Executive Director and Additional Personnel; 
     Appointment and Compensation; Consultants.--
       (1) Executive director and additional personnel.--The 
     Commission may appoint an Executive Director of the 
     Commission, and the Commission may appoint and fix the 
     compensation of such personnel as the Commission deems 
     advisable. The Executive Director shall be compensated at a 
     rate not to exceed the rate payable for Level V of the 
     Executive Schedule under section 5316 of title 5, United 
     States Code. Compensation of other personnel may be set 
     without regard to the provisions of such title 5 that govern 
     appointments in the competitive services, and the provisions 
     of chapter 51 and subchapter III of chapter 53 of such title 
     5 that relate to classifications and the General Schedule pay 
     rates, except that the rate of pay for such personnel may not 
     exceed the rate payable for Level V of the Executive Schedule 
     under section 5316 of such title.
       (2) Detailees.--Any Federal Government employee, with the 
     approval of the head of the appropriate Federal agency, may 
     be detailed to the Commission without reimbursement, and such 
     detail shall be without interruption or loss of civil service 
     status, benefits, or privilege.
       (3) Temporary or intermittent services.--The Commission may 
     procure temporary and intermittent services under section 
     3109(b) of title 5, United States Code, at rates for 
     individuals not to exceed the daily equivalent of the annual 
     rate of basic pay prescribed for Level V of the Executive 
     Schedule under section 5316 of such title.
       (4) Construction.--Nothing in this section shall be 
     construed to limit the ability of the Commission to enter 
     into contracts with public or private organizations, for 
     research necessary to carry out the Commission's duties under 
     subsection (c).
       (g) Time and Place of Hearings and Nature of Testimony 
     Authorized.--
       (1) In general.--The Commission may hold such hearings, sit 
     and act at such times and places, administer such oaths, take 
     such testimony, and receive such evidence as the Commission 
     considers advisable.
       (2) Witnesses.--Witnesses requested to appear before the 
     Commission shall be paid the same fees as are paid to 
     witnesses under section 1821 of title 28, United States Code. 
     The per diem and mileage allowances for witnesses shall be 
     paid from funds appropriated to the Commission.
       (3) Subpoenas.--If a person fails to supply information 
     requested by the Commission, the Commission may by majority 
     vote require by subpoena the production of any written or 
     recorded information, document, report, answer, record, 
     account, paper, computer file, or other data or documentary 
     evidence necessary to carry out its duties under subsection 
     (c).
       (4) Information.--The Commission may secure directly from 
     any Federal department or agency such information as the 
     Commission considers necessary to carry out its duties under 
     subsection (c). Upon the request of the Commission, the head 
     of such department or agency may furnish such information to 
     the Commission.
       (5) Disclosure of confidential information.--The Commission 
     shall be considered an agency of the Federal Government for 
     purposes of section 1905 of title 18, United States Code, and 
     any individual employed by an entity or organization under 
     contract to the Commission shall be subject to such section. 
     Information obtained by the Commission, other than 
     information available to the public, shall not be disclosed 
     to any person in any manner, except--
       (A) to Commission employees or employees of any individual, 
     entity, or organization under contract to the Commission 
     under subsection (f) for the purpose of receiving, reviewing, 
     or processing such information;
       (B) upon court order; or
       (C) when publicly released by the Commission in an 
     aggregate or summary form that does not directly or 
     indirectly disclose--
       (i) the identity of any person or business entity; or
       (ii) any information which could not be released under 
     section 1905 of title 18, United States Code.
       (h) Support Services.--The Comptroller General shall 
     provide to the Commission, on a reimbursable basis, such 
     administrative support services as the Commission may 
     request.
       (i) Definitions.--In this subtitle:
       (1) Illiteracy.--The term ``illiteracy'' means the lack of 
     ability to read and write competently.
       (2) State.--The term ``State'' means each of the several 
     States of the United States, the District of Columbia, the 
     Commonwealth of Puerto Rico, the United States Virgin 
     Islands, Guam, American Samoa, and the Commonwealth of the 
     Northern Mariana Islands.
       (3) Systematic phonics.--The term ``systematic phonics'' 
     means the direct teaching of a pre-planned sequence of 
     relationships between speech sounds and all their letter 
     equivalents.
       (j) Authorization of Appropriations.--There are authorized 
     to be appropriated for each of the fiscal years 1998, 1999, 
     and 2000, such sums as may be necessary to carry out this 
     section.
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