[Congressional Record Volume 144, Number 20 (Wednesday, March 4, 1998)]
[Extensions of Remarks]
[Pages E278-E279]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                PUBLIC SCHOOL MODERNIZATION ACT OF 1998

                                 ______
                                 

                         HON. CHARLES B. RANGEL

                              of new york

                    in the house of representatives

                        Wednesday, March 4, 1998

  Mr. RANGEL. Mr. Speaker, today, I am introducing legislation, 
entitled the Public School Modernization Act of 1998, which consists of 
two education tax incentives that are contained in the President's 
budget recommendations for fiscal year 1999. I am very pleased that 
more than fifty Members have joined me as cosponsors of this needed 
legislation.
  It is my hope to continue to work with the Administration to 
introduce the President's domestic initiatives that are within Ways and 
Means jurisdiction. I will also continue to urge consideration by the 
Congress of these important proposals.
  My bill would expand opportunities for students in kindergarten 
through twelfth grade and beyond. This goal is crucial to the country's 
social and economic well being. It's a well known fact, that without 
the proper educational tools, young people lose hope for the future. We 
have only to look at the high levels of crime, drug use, juvenile 
delinquency, teen pregnancy, and unemployment to know the value of a 
good education. Without basic academic opportunities, the future is 
bleak. My bill identifies communities that shoulder a disproportionate 
share of these social problems and offers a solution--a future of hope.
  The Taxpayer Relief Act of 1997 provided additional financial 
resources to assist families in meeting the cost of higher education. I 
believe that assistance is vitally important but not enough. We must do 
more to ensure that those students who wish to pursue higher education 
are prepared for the challenges of a college education. We also must 
work harder both to educate and train those students who choose or need 
to earn a full-time living after high school. In pursuit of this goal, 
this legislation would provide assistance to public educational 
institutions to make this a reality. Therefore, our bill expands the 
education zone tax incentives that were enacted last year. Those 
incentives are designed to enhance academic achievement below the 
college level through public-private education partnerships. I believe 
that we must have greater private-sector involvement in our educational 
system, and our bill expands existing tax provisions designed to 
encourage that involvement.
  Our bill also includes tax incentives to assist local governments in 
improving and constructing public school facilities. This aspect of our 
bill does not require a public-private partnership and is not limited 
to schools in distressed areas or with a large population of poor 
students. This aspect of our bill provides $19.4 billion over the next 
two years in interest-free capital for school infrastructure projects. 
Providing all students with clean and safe public school facilities is 
a necessary first step in assuring a high quality educational system.

  Some have argued that the Federal government should have no role in 
assisting the public school system at the K through 12 level. I 
strongly disagree. The Federal government historically has provided 
financial resources to the public school system. It has done so in part 
by providing tax-exempt bond financing that enables State and local 
governments to fund capital needs through low-interest loans. The bill 
that we are introducing today, in many respects, is very similar to tax 
exempt bond financing. This bill does not require any additional layers 
of bureaucracy at the Federal or State level. It provides special tax 
benefits to holders of certain State and local education bonds. The 
procedures used to determine whether bonds are eligible for those 
special payments are substantially the same as the procedures currently 
applicable in determining whether a State or local bond is eligible for 
tax-exempt bond financing.
  I also want to be very clear that this bill supports our public 
school system. I believe that improving our public school system should 
be our highest priority. Approximately 90 percent of the students 
attending kindergarten through grade 12 attend public school. If we can 
find the resources to provide additional tax incentives, those 
incentives should be focused on improving the public school system that 
serves such a large segment of our student population. I have and will 
continue to oppose legislation such as the so-called ``Coverdell'' 
legislation, that diverts scarce resources away from our public school 
system.
  Although the bill that we are introducing today contains only tax 
provisions, I recognize that tax provisions alone cannot provide 
sufficient additional resources needed to assist students in obtaining 
a quality education. Therefore, I also support the other education 
improvements included in the President's budget.
  Currently, this Nation is enjoying one of the longest periods of 
economic expansion in its history, with low unemployment and continued 
creation of new jobs. Much of the credit for that rests with the 
deficit reduction efforts of the Clinton Administration and the 
technological advantages that our industries enjoy over their 
competitors in other countries.
  We will not remain competitive in the world economy unless we invest 
in our human capital to maintain that technological advantage. Any 
available resources should be invested in human capital. A survey last 
year of economists by the Wall Street Journal found that 43 percent of 
the economists surveyed stated that increased spending on education and 
research and development would be the one policy with the most positive 
impact on the economy.
  Amazingly, while the concept of investing in human capital goes 
unchallenged in debate, elected leaders are still spending more of our 
nation's limited budget resources on back-end, punitive programs like 
law enforcement and prisons, rather than front-end investments like 
education and training that can really pay off in increased workforce 
productivity.
  Unfortunately, these skewed priorities are present at the local 
level, too. New York City spends $84,000 per year to keep a young man 
in Riker's Island Prison, yet only $7,000 each year to educate a child 
in Harlem.
  We must change our priorities. Let's invest in the future of this 
country through our children. Let's bring the same zeal to encouraging 
and educating our children that we now apply to punishment and 
incarceration.
  The following is a brief description of the provisions contained in 
our bill.

                        Description of the Bill

       The bill would include the following two provisions as 
     recommended in the President's budget. These tax incentives 
     would cost approximately $3.6 billion over the next 5 years.


                    1. Education Zone Academy Bonds

       Section 226 of the 1997 Taxpayer Relief Act provides a 
     source of capital at no or nominal interest for costs 
     incurred by certain public schools in connection with the 
     establishment of special academic programs from kindergarten 
     through secondary schools. To be eligible to participate in 
     the program, the public school must be located in an 
     empowerment zone or enterprise community or at least 35 
     percent of the students at the school must be eligible for 
     free or reduced-cost lunches under the Federal school lunch 
     program. In addition the school must enter into a partnership 
     with one or more nongovernmental entities.
       The provision provides the interest-free capital by 
     permitting the schools to issue special bonds called 
     ``Qualified Zone Academy Bonds.'' Interest on those bonds 
     will in effect be paid by the Federal government through a 
     tax credit to the holder.
       The bill would increase the caps on the amount of bonds 
     that can be issued under the program as shown in the 
     following table. The bill would also permit the bonds to be 
     used for new construction.

------------------------------------------------------------------------
                                                   Additions            
                                        Current    under the     Total  
                Year                      law        bill      issuance 
                                       (million)   (billion)      cap   
------------------------------------------------------------------------
1998................................        $400  ..........    \1\ $400
1999................................         400        $1.0     \2\ 1.4
2000................................           0         1.4    \2\ 1.4 
------------------------------------------------------------------------
\1\ Million.    \2\ Billion.                                            

[[Page E279]]

                                                                        

       The bill would make several technical modification to last 
     year's legislation. It would repeal the provision that 
     restricts ownership of qualified zone academy bonds to 
     financial institutions, it would require a maximum maturity 
     of 15 years, rather than a maximum maturity determined under 
     a formula, it would change the formula for allocating the 
     national limit to make it consistent with the formula used in 
     allocating the limit on qualified school construction bonds, 
     and it would provide an indefinite carryover of any unused 
     credit.


                 2. Qualified School Construction Bonds

       The bill would also permit State and local governments to 
     issue qualified school construction bonds to fund the 
     construction or rehabilitation of public schools. Interest on 
     qualified school construction bonds would in effect be paid 
     by the Federal government through an annual tax credit. The 
     credit would be provided in the same manner as the credit for 
     qualified school academy bonds.
       Under the bill, a total of $9.7 billion of qualified school 
     construction bonds could be issued in 1999 and in 2000. Half 
     of the annual cap would be allocated among the States on the 
     basis of their population of low-income children, weighted 
     the State's expenditures per pupil for education (the Title I 
     basic grant formula). The other half of the annual cap would 
     be allocated among the hundred school districts with the 
     highest number of low-income children and that allocation 
     would be based on each district's Title I share.
       The following chart shows the aggregate amount of qualified 
     school construction bonds that could be issued in each State 
     under the bill. The total includes amounts allocated to large 
     school districts in the State. An additional $600 million is 
     reserved for allocations to other school districts not in the 
     largest 100 districts.


                       [In thousands of dollars]

        State                                       Estimate allocation
Alabama........................................................$285,079
Alaska...........................................................36,902
Arizona.........................................................257,957
Arkansas........................................................145,925
California....................................................2,281,018
Colorado........................................................165,781
Connecticut.....................................................205,080
Delaware.........................................................36,902
District of Columbia.............................................75,395
Florida.......................................................1,047,028
Georgia.........................................................476,055
Hawaii...........................................................40,984
Idaho............................................................43,463
Illinois........................................................911,455
Indiana.........................................................276,395
Iowa............................................................103,120
Kansas..........................................................126,821
Kentucky........................................................277,115
Louisiana.......................................................463,217
Maine............................................................61,639
Maryland........................................................306,488
Massachusetts...................................................354,978
Michigan........................................................857,280
Minnesota.......................................................220,820
Mississippi.....................................................253,547
Missouri........................................................314,131
Montana..........................................................52,274
Nebraska.........................................................78,955
Nevada...........................................................71,817
New Hampshire....................................................36,902
New Jersey......................................................414,267
New Mexico......................................................145,570
New York......................................................2,166,015
North Carolina..................................................297,397
North Dakota.....................................................36,902
Ohio............................................................782,970
Oklahoma........................................................203,043
Oregon..........................................................155,387
Pennsylvania....................................................852,156
Puerto Rico.....................................................494,937
Rhode Island.....................................................72,188
South Carolina..................................................198,015
South Dakota.....................................................38,002
Tennessee.......................................................331,119
Texas.........................................................1,614,095
Utah.............................................................66,771
Vermont..........................................................36,196
Virginia........................................................258,862
Washington......................................................236,595
West Virginia...................................................142,557
Wisconsin.......................................................332,401
Wyoming..........................................................33,059



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