[Congressional Record Volume 144, Number 20 (Wednesday, March 4, 1998)]
[Senate]
[Pages S1336-S1352]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Ms. MOSELEY-BRAUN (for herself, Mr. Moynihan, Mrs. Murray, Mr. 
        Kennedy, Mr. Graham, Mr. Daschle, Mr. Reid, Mr. Glenn, Mr. 
        Lautenberg, Mr. Levin, Mr. Kerry, and Mr. Reed):
  S. 1705. A bill to amend the Internal Revenue Code of 1986 to expand 
the incentives for the construction and renovation of public schools; 
to the Committee on Finance.


              THE PUBLIC SCHOOL MODERNIZATION ACT OF 1998

  Ms. MOSELEY-BRAUN. Mr. President, I send to the desk a bill and ask 
for its appropriate referral.
  The PRESIDING OFFICER. The bill will be received and appropriately 
referred.
  Ms. MOSELEY-BRAUN. Mr. President, today I am pleased to introduce, 
along with a number of my colleagues, the Public School Modernization 
Act of 1998. This legislation addresses one of the most fundamental 
problems with public education in America, and that is that many of our 
elementary and secondary schools are literally falling down around our 
children.
  The Public School Modernization Act of 1998 will help States and 
school districts finance their school improvement priorities. It will 
help them modernize classrooms so that no child misses out on the 
information age. It will help them ease overcrowding so that no child 
is forced to learn the principles of geometry in a gymnasium. It will 
help them patch leaky roofs, fix broken plumbing, and strengthen the 
facilities that provide the foundation for our children's education. 
Without this support, schools will continue to crumble under the weight 
of deferred maintenance and neglect, and our children's education, and 
their future, and our Nation's future, will suffer as a result.
  Education in America correlates with opportunity for individuals, but 
also for our country as a whole. The rungs of the ladder of opportunity 
in America are crafted in the classroom. Consider that high school 
graduates earn 46 percent more each year than those who don't graduate 
from high school. College graduates earn 155 percent more every year 
than those who do not graduate from high school. Over the course of a 
lifetime, the most educated Americans will earn five times as much as 
the least educated Americans. So education is clearly related to 
individual prosperity and the ability of people to function in this new 
economy.
  Education also correlates to almost all indicia of economic and 
social well-being. Educational attainment can directly be tied to 
income, to health, to the likelihood of being on welfare, to the 
likelihood of being incarcerated in a prison, and to the likelihood of 
voting and participating in our democracy.
  However, education is more than a tool simply to lift people out of 
poverty or to provide a better standard of living for individuals. It 
is also the engine that will drive America's economy in the 21st 
century. In a Wall Street Journal survey last year of leading U.S. 
economists, 43 percent of them said that the single most important 
thing that we could do to increase our long-term economic growth would 
be to invest more in education and research and development. Nothing 
else came close to education in that survey. One economist said, ``One 
of the few things that economists will agree upon is the fact that 
economic growth is very strongly dependent on our own abilities.''
  A recent study by the Manufacturing Institute concluded that 
increasing the education level of workers by 1 year raises the 
productivity level by 8.5 percent in manufacturing. Imagine, Mr. 
President, if you will, that in this global economy, the only way we 
will be able to hold on to our position as the country in the world 
with the highest standard of living is if we prepare our work force--as 
a whole, all of our workers--to compete at the highest level of 
competition and to produce at the highest level of productivity.

[[Page S1337]]

  The Public School Modernization Act of 1998 represents the kind of 
investment that will result in better futures for our children and a 
better future for our country. The bill strengthens the fundamental 
tenet of American education--local control. By helping schools finance 
their capital improvement priorities, the Federal Government can free 
local resources for educational activities and can help give 
communities the kind of buildings that they need before they can 
implement the kinds of school reforms that parents and educators are 
demanding.
  The Public School Modernization Act of 1998 creates a 
simple, effective, and easy-to-administer means of helping communities 
modernize their schools. The bill creates a new category of zero coupon 
bonds for States and school districts to issue to finance capital 
improvements. It allocates $21.8 billion worth of bonding authority to 
States and large school districts over the next 2 years.

  Over 5 years, the bill will cost our National Government only $3.3 
billion, but $21.8 billion worth of new construction and modernization 
will be made available by that $3.3 billion, which means for every 
Federal dollar that we invest over the next 5-year period, there will 
be an additional 6.6 in State and local dollars. That is a pretty good 
leverage capacity from this kind of investment.
  Perhaps most important, though, Mr. President, is that this bill is 
bureaucracy-free, or as close to bureaucracy-free as we can manage. 
States and school districts need only to comply with two main 
requirements before issuing these new school modernization bonds. 
First, they must conduct a survey of their school facility needs, which 
you would think that every school district would have already, but the 
truth is they don't, yet. Second, they must describe how they intend to 
allocate the bonding authority to assure that schools with the greatest 
needs and the least resources benefit. That is it. Those are the only 
strings. There is no reapplying for funds, no continuous oversight, no 
getting individual projects approved by some Federal agency. The plan 
is simple. It will work. And it will strengthen local schools.
  Mr. President, the magnitude of the school facilities problem is so 
great today that many districts cannot maintain the kind of educational 
environment necessary to teach all of our children the kinds of skills 
they will need to compete in the 21st century, global economy.
  We commissioned a study by the GAO a couple years ago. What they 
concluded was that every day some 14 million children in this country--
14 million children--attend schools in need of major renovations or 
outright replacement, 7 million children every day attend schools with 
life-threatening safety code violations, and it will cost $112 billion 
to bring the schools up to code. This is not bells and whistles, this 
is not equipping them with computers and fancy new cosmetics, but just 
to address the toll that decades of deferred maintenance have taken on 
our school facilities across this country.
  In my State of Illinois, school modernization and construction needs 
top $13 billion. Many of our school districts have a difficult time 
enough just buying textbooks, pencils, and teacher salaries, let alone 
financing capital improvements. This would free local resources for 
education by providing Federal support for bricks and mortar.
  By the way, the national school repair price tag, as enormous as it 
sounds, does not include the cost of wiring our schools for modern 
technology. One of the greatest barriers to the incorporation of modern 
computers into classrooms is the physical condition of many school 
buildings. You can't very well use a computer if you don't have an 
electrical system working in the wall to plug it into. According to the 
GAO study, almost half of all schools--half of all schools--lack enough 
electrical power for the full-scale use of computers, 60 percent lack 
the conduits to connect classroom computers to a network, and more than 
60 percent of the schools lack enough phone lines for instructional 
use.
  Last year, principal Rita Melius from Waukegan, IL, came to 
Washington and told of her experience with computer technology at her 
school. She thought she was doing the right thing by equipping her 
schools with modern school technology, but when she deployed the 
computers around the schools, fires started in the building because the 
wiring was so old. Her experience is being replicated all over this 
country as communities try to bring their schools into the information 
age. This legislation will give Ms. Melius, and others like her, the 
resources to modernize their classrooms.

  Mr. President, it will also give communities the power to relieve 
overcrowding. According to the U.S. Department of Education, just to 
keep up with growing enrollment, we will need to build some 6,000 new 
schools over the next 10 years.
  I have visited schools in Illinois where study halls are being held 
in the hallways, literally, because there is no other space. I have 
seen stairway landings converted into computer labs. I have seen 
cardboard partitions used to turn one classroom into two. I point out, 
Mr. President, that particular school was in what could be called a 
basement. It wasn't exactly a basement, it was at ground level, but 
they had cardboard separating two classes from each other. There is a 
school, frankly, where the lunchroom has been converted into two 
classrooms, where students eat in the gymnasium. And instead of having 
gym, they have ``adaptive physical education'' while they stand next to 
their desks, because the gyms are being used for lunchrooms. It is 
really shameful, Mr. President, and it is the situation that we find in 
almost a third of the schools in this country.
  Again, I point out that this phenomenon is not just an inner-city 
problem. It exists in rural communities and suburban communities as 
well--just about one-third in each type of community across the United 
States.
  Teachers and parents know full well that these conditions directly 
affect the ability of their children to learn, and research backs up 
that intuition. Two separate studies found a 10 to 11 percent 
achievement gap between those students in good buildings and those in 
shabby or poor buildings, after controlling for all other factors.
  Other studies have found that when buildings are in poor condition, 
students are more likely to misbehave. Three leading researchers 
recently concluded, ``. . .there's no doubt that building condition 
affects academic performance.''
  This morning, in a press conference in which a student from a local 
school talked about overcrowded conditions, he mentioned that they were 
having discipline problems from fights breaking out from what he called 
``hall rage,'' because the overcrowding situation in the school was so 
perverse and extreme that students were literally bumping into each 
other trying to move from class to class. So we have a situation here 
in which academic performance is affected.
  I think it is time to mention something at this point. We just saw, 
this week, the grades come in on an international math and science 
test. The results were profoundly disturbing. American students scored 
close to the bottom, or at the bottom, on every math and physics test 
offered.
  Now, here we are. A new study of high school seniors in 23 countries 
shows U.S. students scored significantly lower than students in other 
countries. This is in math, nations with scores above the international 
level: Netherlands, Sweden, Denmark, Switzerland, Iceland, and Norway. 
Nations with scores close to the international average: Italy, Russia, 
Lithuania, Czech Republic, and the United States. Nations lower than 
the international level: Cyprus and South Africa. We are in the 
category of nations with scores lower than the international level, 
which includes: France, Russia, Switzerland, Denmark, Cyprus, 
Lithuania, Australia, Greece, Sweden, Canada, Slovenia, Italy, Czech 
Republic, Germany, and the United States is next to last in advanced 
mathematics. In physics: Norway, Sweden, Russia, Denmark, Slovenia, 
Germany, Australia, Cyprus, Latvia, Greece, Switzerland, Canada, 
France, Czech Republic, Austria, and the United States. We are last. 
From the President down to the local township officials, this should be 
a clarion call that we have to work to improve the quality of our 
schools.

[[Page S1338]]

  Our school facilities problems directly result, Mr. President, from 
our archaic school funding formula and system. The current system, the 
way we fund schools, was established a century ago when the Nation's 
wealth was measured in terms of property wealth, in terms of 
landholdings. Wealth is no longer accumulated just in land, and the 
funding mechanism that ties funding of our education to the local 
property tax is no longer appropriate, nor is it adequate.

  Again, according to the GAO, poor and middle-class school districts 
try the hardest to raise revenue from the property tax, but the system 
works against them. In some 35 States, poor districts--that is, 
districts with smaller property tax bases--have higher tax rates than 
wealthy districts, but they raise less revenue because there is less 
property wealth to tax.
  This local funding model, this model of depending on the local 
property tax to fund education, does not work for school 
infrastructure, just as it would not work for our highways or any other 
infrastructure.
  It is ironic that we are here talking about the highway bill. Imagine 
what would happen if we based our system of roads on the same funding 
model we use for education. Imagine if every community was responsible 
for the construction and maintenance of the roads within its borders. 
In all likelihood, we would see smooth, good roads in the wealthy 
towns, a patchwork of mediocre roads in middle-income towns, and very 
few roads at all in poor communities. Transportation would be hostage 
to the vagaries of wealth and geography. Commerce and travel would be 
difficult, and navigation of such a system would not serve the best 
interests of our whole country. That hypothetical, unfortunately, 
precisely describes the way that we fund our public education system.
  I believe we need a new approach. We need a partnership among all 
levels of government and the private sector that preserves local 
control in education but creates a financing balance that better serves 
local property taxpayers, children, schools, and indeed our entire 
country. This new act I am introducing today represents such a new 
partnership. It is a simple and effective means of leveraging limited 
Federal resources, strengthening local control of education, and 
improving the educational opportunity for every child.
  I urge my colleagues to take a close look at the needs of the schools 
in their own States and decide what they stand for: higher property 
taxes and crumbling schools, or lower property taxes and a new 
partnership to improve our schools for the 21st century. I believe that 
we have some opportunities here.
  Again, I have visited a lot of schools and I have seen what happens 
when we engage the resources sufficient to provide an environment and 
support needed for our children to learn. American kids are no dumber 
than kids anywhere else in the world. There is no reason for us to be 
at the bottom of this international testing. It is not their fault. It 
is our fault for failing to engage appropriately, to give public 
education the kind of support that it needs to have.
  Now, there is some good news I would like to call to your attention. 
A group of some 20 Illinois school districts, led by Superintendent 
Paul Kimmelman, banded together to form a group called the First in the 
World Consortium. Their goal was to score first in the world on the 
international math and science test. At the same time that these 
results came out, Mr. President, the results from the First in the 
World Consortium came out also. They succeeded. The students in that 
consortium placed first in the world when compared with other 
countries, which is far above the dismal performance of our country as 
a whole.
  What does this consortium have that the schools in our country lack? 
It is not the makeup of students. The kids are as capable anywhere in 
the country, whether they come from rich families or poor families. We 
have some of the brightest students in the world, who need only the 
opportunity to learn. The difference, however, is what supports we, as 
a community, a national community, can provide for them--schools with 
first-rate facilities, small classes, modern technology, and supportive 
communities.
  So I hope that we will all take a look at the importance of this 
legislation. This is a way that we can engage the support of the 
National Government, our national community, acting in our national 
interest to serve our most important resource, which is our children. 
If we don't invest in them and if we don't build up these schools, many 
of which were built--I am making an assumption about age, but when you 
and I were in grammar school, Mr. President, these schools were built 
almost a generation ago and, in many instances, more than a generation 
ago. That generation saw fit to provide facilities that were suitable 
for learning. That we have not, I believe, speaks volumes for us.
  I think our generation has an absolute obligation and duty to provide 
for this generation, the next generation of Americans, no less an 
opportunity than we inherited from the last generation of Americans. We 
have a duty to see to it that they have the ability to get educated and 
to take their talent as far as those talents will take them, to 
maximize the ability of every person to rise to the absolute best level 
that he or she can, based on his or her natural talents.
  Those natural talents, though, Mr. President, have to be nurtured in 
an environment and in facilities that are suitable for learning. This 
legislation will begin, hopefully, to create the kind of partnership 
that will allow the National, State, and local governments to stop the 
finger-pointing, stop the blame game, stop pushing the buck, and say it 
is somebody else's duty, or responsibility, or fault, and allow us to 
come together on behalf of what is clearly in our interest as citizens 
not only of cities and States and local communities, but as citizens of 
this great country.
  This is why we have to come together. This is why we have to put the 
old, tired arguments behind us. This is why I think we should take a 
variety of ideas and put them out so that we can reach a consensus on 
getting some results, getting results that will serve our children's 
interests.
  The public certainly wants us to do it. According to a bipartisan 
poll released earlier this year, some 76 percent of registered voters 
would support a $30 billion, 10-year Federal commitment to rebuild and 
modernize our schools. This legislation provides for that kind of a 
partnership. I certainly hope, Mr. President, that the Members of this 
body will review the GAO reports regarding their own States, because 
this is not just an Illinois problem, this is not just a North Carolina 
problem, or a Wyoming problem; this is a problem for America, and every 
State in this country has the same problem in the same ways. I urge 
them to examine the reports by the General Accounting Office regarding 
the condition of schools in their States, I ask them to examine the 
report of the General Accounting Office regarding the property tax 
dependence in their States, and I urge them to sign on and cosponsor 
this legislation.
  Mr. President, I ask unanimous consent that the bill and a summary of 
the bill be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1705

       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 ``Public School Modernization 
     Act of 1998''.

     SEC. 2. EXPANSION OF INCENTIVES FOR PUBLIC SCHOOLS.

       (a) In General.--Part IV of subchapter U of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to incentives for 
     education zones) is amended to read as follows:

 ``PART IV--INCENTIVES FOR QUALIFIED PUBLIC SCHOOL MODERNIZATION BONDS

``Sec. 1397E. Credit to holders of qualified public school 
              modernization bonds.
``Sec. 1397F. Qualified zone academy bonds.
``Sec. 1397G. Qualified school construction bonds.

     ``SEC. 1397E. CREDIT TO HOLDERS OF QUALIFIED PUBLIC SCHOOL 
                   MODERNIZATION BONDS.

       ``(a) Allowance of Credit.--In the case of a taxpayer who 
     holds a qualified public school modernization bond on the 
     credit allowance date of such bond which occurs during the 
     taxable year, there shall be allowed as a credit against the 
     tax imposed by this chapter for such taxable year the amount 
     determined under subsection (b).
       ``(b) Amount of Credit.--

[[Page S1339]]

       ``(1) In general.--The amount of the credit determined 
     under this subsection with respect to any qualified public 
     school modernization bond is the amount equal to the product 
     of--
       ``(A) the credit rate determined by the Secretary under 
     paragraph (2) for the month in which such bond was issued, 
     multiplied by
       ``(B) the face amount of the bond held by the taxpayer on 
     the credit allowance date.
       ``(2) Determination.--During each calendar month, the 
     Secretary shall determine a credit rate which shall apply to 
     bonds issued during the following calendar month. The credit 
     rate for any month is the percentage which the Secretary 
     estimates will on average permit the issuance of qualified 
     public school modernization bonds without discount and 
     without interest cost to the issuer.
       ``(c) Limitation Based on Amount of Tax.--
       ``(1) In general.--The credit allowed under subsection (a) 
     for any taxable year shall not exceed the excess of--
       ``(A) the sum of the regular tax liability (as defined in 
     section 26(b)) plus the tax imposed by section 55, over
       ``(B) the sum of the credits allowable under part IV of 
     subchapter A (other than subpart C thereof, relating to 
     refundable credits).
       ``(2) Carryover of unused credit.--If the credit allowable 
     under subsection (a) exceeds the limitation imposed by 
     paragraph (1) for such taxable year, such excess shall be 
     carried to the succeeding taxable year and added to the 
     credit allowable under subsection (a) for such taxable year.
       ``(d) Qualified Public School Modernization Bond; Credit 
     Allowance Date.--For purposes of this section--
       ``(1) Qualified public school modernization bond.--The term 
     `qualified public school modernization bond' means--
       ``(A) a qualified zone academy bond, and
       ``(B) a qualified school construction bond.
       ``(2) Credit allowance date.--The term `credit allowance 
     date' means, with respect to any issue, the last day of the 
     1-year period beginning on the date of issuance of such issue 
     and the last day of each successive 1-year period thereafter.
       ``(e) Other Definitions.--For purposes of this part--
       ``(1) Local educational agency.--The term `local 
     educational agency' has the meaning given to such term by 
     section 14101 of the Elementary and Secondary Education Act 
     of 1965. Such term includes the local educational agency that 
     serves the District of Columbia but does not include any 
     other State agency.
       ``(2) Bond.--The term `bond' includes any obligation.
       ``(3) State.--The term `State' includes the District of 
     Columbia and any possession of the United States.
       ``(4) Public school facility.--The term `public school 
     facility' shall not include any stadium or other facility 
     primarily used for athletic contests or exhibitions or other 
     events for which admission is charged to the general public.
       ``(f) Credit Included in Gross Income.--Gross income 
     includes the amount of the credit allowed to the taxpayer 
     under this section and the amount so included shall be 
     treated as interest income.
       ``(g) Bonds Held By Regulated Investment Companies.--If any 
     qualified public school modernization bond is held by a 
     regulated investment company, the credit determined under 
     subsection (a) shall be allowed to shareholders of such 
     company under procedures prescribed by the Secretary.

     ``SEC. 1397F. QUALIFIED ZONE ACADEMY BONDS.

       ``(a) Qualified Zone Academy Bond.--For purposes of this 
     part--
       ``(1) In general.--The term `qualified zone academy bond' 
     means any bond issued as part of an issue if--
       ``(A) 95 percent or more of the proceeds of such issue are 
     to be used for a qualified purpose with respect to a 
     qualified zone academy established by a local educational 
     agency,
       ``(B) the bond is issued by a State or local government 
     within the jurisdiction of which such academy is located,
       ``(C) the issuer--
       ``(i) designates such bond for purposes of this section,
       ``(ii) certifies that it has written assurances that the 
     private business contribution requirement of paragraph (2) 
     will be met with respect to such academy, and
       ``(iii) certifies that it has the written approval of the 
     local educational agency for such bond issuance, and
       ``(D) the term of each bond which is part of such issue 
     does not exceed 15 years.
       ``(2) Private business contribution requirement.--
       ``(A) In general.--For purposes of paragraph (1), the 
     private business contribution requirement of this paragraph 
     is met with respect to any issue if the local educational 
     agency that established the qualified zone academy has 
     written commitments from private entities to make qualified 
     contributions having a present value (as of the date of 
     issuance of the issue) of not less than 10 percent of the 
     proceeds of the issue.
       ``(B) Qualified contributions.--For purposes of 
     subparagraph (A), the term `qualified contribution' means any 
     contribution (of a type and quality acceptable to the local 
     educational agency) of--
       ``(i) equipment for use in the qualified zone academy 
     (including state-of-the-art technology and vocational 
     equipment),
       ``(ii) technical assistance in developing curriculum or in 
     training teachers in order to promote appropriate market 
     driven technology in the classroom,
       ``(iii) services of employees as volunteer mentors,
       ``(iv) internships, field trips, or other educational 
     opportunities outside the academy for students, or
       ``(v) any other property or service specified by the local 
     educational agency.
       ``(3) Qualified zone academy.--The term `qualified zone 
     academy' means any public school (or academic program within 
     a public school) which is established by and operated under 
     the supervision of a local educational agency to provide 
     education or training below the postsecondary level if--
       ``(A) such public school or program (as the case may be) is 
     designed in cooperation with business to enhance the academic 
     curriculum, increase graduation and employment rates, and 
     better prepare students for the rigors of college and the 
     increasingly complex workforce,
       ``(B) students in such public school or program (as the 
     case may be) will be subject to the same academic standards 
     and assessments as other students educated by the local 
     educational agency,
       ``(D) the comprehensive education plan of such public 
     school or program is approved by the local educational 
     agency, and
       ``(E)(i) such public school is located in an empowerment 
     zone or enterprise community (including any such zone or 
     community designated after the date of the enactment of this 
     section), or
       ``(ii) there is a reasonable expectation (as of the date of 
     issuance of the bonds) that at least 35 percent of the 
     students attending such school or participating in such 
     program (as the case may be) will be eligible for free or 
     reduced-cost lunches under the school lunch program 
     established under the National School Lunch Act.
       ``(4) Qualified purpose.--The term `qualified purpose' 
     means, with respect to any qualified zone academy--
       ``(A) constructing, rehabilitating, or repairing the public 
     school facility in which the academy is established,
       ``(B) providing equipment for use at such academy,
       ``(C) developing course materials for education to be 
     provided at such academy, and
       ``(D) training teachers and other school personnel in such 
     academy.
       ``(5) Temporary period exception.--A bond shall not be 
     treated as failing to meet the requirement of paragraph 
     (1)(A) solely by reason of the fact that the proceeds of the 
     issue of which such bond is a part are invested for a 
     reasonable temporary period (but not more than 36 months) 
     until such proceeds are needed for the purpose for which such 
     issue was issued. Any earnings on such proceeds during such 
     period shall be treated as proceeds of the issue for purposes 
     of applying paragraph (1)(A).
       ``(b) Limitations on Amount of Bonds Designated.--
       ``(1) In general.--There is a national zone academy bond 
     limitation for each calendar year. Such limitation is--
       ``(A) $400,000,000 for 1998,
       ``(B) $1,400,000,000 for 1999,
       ``(C) $1,400,000,000 for 2000, and
       ``(D) except as provided in paragraph (3), zero after 2000.
       ``(2) Allocation of limitation.--
       ``(A) Allocation among states.--
       ``(i) 1998 limitation.--The national zone academy bond 
     limitation for calendar year 1998 shall be allocated by the 
     Secretary among the States on the basis of their respective 
     populations of individuals below the poverty line (as defined 
     by the Office of Management and Budget).
       ``(ii) Limitation after 1998.--The national zone academy 
     bond limitation for any calendar year after 1998 shall be 
     allocated by the Secretary among the States in the manner 
     prescribed by section 1397G(d); except that, in making the 
     allocation under this clause, the Secretary shall take into 
     account Basic Grants attributable to large local educational 
     agencies (as defined in section 1397G(e)).
       ``(B) Allocation to local educational agencies.--The 
     limitation amount allocated to a State under subparagraph (A) 
     shall be allocated by the State education agency to qualified 
     zone academies within such State.
       ``(C) Designation subject to limitation amount.--The 
     maximum aggregate face amount of bonds issued during any 
     calendar year which may be designated under subsection (a) 
     with respect to any qualified zone academy shall not exceed 
     the limitation amount allocated to such academy under 
     subparagraph (B) for such calendar year.
       ``(3) Carryover of unused limitation.--If for any calendar 
     year--
       ``(A) the limitation amount under this subsection for any 
     State, exceeds
       ``(B) the amount of bonds issued during such year which are 
     designated under subsection (a) with respect to qualified 
     zone academies within such State,

     the limitation amount under this subsection for such State 
     for the following calendar year shall be increased by the 
     amount of such excess. The preceding sentence shall not apply 
     if such following calendar year is after 2002.

     ``SEC. 1397G. QUALIFIED SCHOOL CONSTRUCTION BONDS.

       ``(a) Qualified School Construction Bond.--For purposes of 
     this part, the term `qualified school construction bond' 
     means any bond issued as part of an issue if--

[[Page S1340]]

       ``(1) 95 percent or more of the proceeds of such issue are 
     to be used for the construction, rehabilitation, or repair of 
     a public school facility,
       ``(2) the bond is issued by a State or local government 
     within the jurisdiction of which such school is located,
       ``(3) the issuer designates such bond for purposes of this 
     section, and
       ``(4) the term of each bond which is part of such issue 
     does not exceed 15 years.

     Rules similar to the rules of section 1397F(a)(5) shall apply 
     for purposes of paragraph (1).
       ``(b) Limitation on Amount of Bonds Designated.--The 
     maximum aggregate face amount of bonds issued during any 
     calendar year which may be designated under subsection (a) by 
     any issuer shall not exceed the sum of--
       ``(1) the limitation amount allocated under subsection (d) 
     for such calendar year to such issuer, and
       ``(2) if such issuer is a large local educational agency 
     (as defined in subsection (e)) or is issuing on behalf of 
     such an agency, the limitation amount allocated under 
     subsection (e) for such calendar year to such agency.
       ``(c) National Limitation on Amount of Bonds Designated.--
     There is a national qualified school construction bond 
     limitation for each calendar year. Such limitation is--
       ``(1) $9,700,000,000 for 1999,
       ``(2) $9,700,000,000 for 2000, and
       ``(3) except as provided in subsection (f), zero after 
     2000.
       ``(d) Half of Limitation Allocated Among States.--
       ``(1) In general.--One-half of the limitation applicable 
     under subsection (c) for any calendar year shall be allocated 
     among the States under paragraph (2) by the Secretary. The 
     limitation amount allocated to a State under the preceding 
     sentence shall be allocated by the State education agency to 
     issuers within such State and such allocations may be made 
     only if there is an approved State application.
       ``(2) Allocation formula.--The amount to be allocated under 
     paragraph (1) for any calendar year shall be allocated among 
     the States in proportion to the respective amounts each such 
     State received for Basic Grants under subpart 2 of part A of 
     title I of the Elementary and Secondary Education Act of 1965 
     (20 U.S.C. 6331 et seq.) for the most recent fiscal year 
     ending before such calendar year. For purposes of the 
     preceding sentence, Basic Grants attributable to large local 
     educational agencies (as defined in subsection (e)) shall be 
     disregarded.
       ``(3) Minimum allocations to states.--
       ``(A) In general.--The Secretary shall adjust the 
     allocations under this subsection for any calendar year for 
     each State to the extent necessary to ensure that the sum 
     of--
       ``(i) the amount allocated to such State under this 
     subsection for such year, and
       ``(ii) the aggregate amounts allocated under subsection (e) 
     to large local educational agencies in such State for such 
     year,

     is not less than an amount equal to such State's minimum 
     percentage of one-half of the national qualified school 
     construction bond limitation under subsection (c) for the 
     calendar year.
       ``(B) Minimum percentage.--A State's minimum percentage for 
     any calendar year is the minimum percentage described in 
     section 1124(d) of the Elementary and Secondary Education Act 
     of 1965 (20 U.S.C. 6334(d)) for such State for the most 
     recent fiscal year ending before such calendar year.
       ``(4) Allocations to certain possessions.--The amount to be 
     allocated under paragraph (1) to any possession of the United 
     States other than Puerto Rico shall be the amount which would 
     have been allocated if all allocations under paragraph (1) 
     were made on the basis of respective populations of 
     individuals below the poverty line (as defined by the Office 
     of Management and Budget). In making other allocations, the 
     amount to be allocated under paragraph (1) shall be reduced 
     by the aggregate amount allocated under this paragraph to 
     possessions of the United States.
       ``(5) Approved state application.--For purposes of 
     paragraph (1), the term `approved State application' means an 
     application which is approved by the Secretary of Education 
     and which includes--
       ``(A) the results of a recent publicly-available survey 
     (undertaken by the State with the involvement of local 
     education officials, members of the public, and experts in 
     school construction and management) of such State's needs for 
     public school facilities, including descriptions of--
       ``(i) health and safety problems at such facilities,
       ``(ii) the capacity of public schools in the State to house 
     projected enrollments, and
       ``(iii) the extent to which the public schools in the State 
     offer the physical infrastructure needed to provide a high-
     quality education to all students, and
       ``(B) a description of how the State will allocate to local 
     educational agencies, or otherwise use, its allocation under 
     this subsection to address the needs identified under 
     subparagraph (A), including a description of how it will--
       ``(i) give highest priority to localities with the greatest 
     needs, as demonstrated by inadequate school facilities 
     coupled with a low level of resources to meet those needs,
       ``(ii) use its allocation under this subsection to assist 
     localities that lack the fiscal capacity to issue bonds on 
     their own, and
       ``(iii) ensure that its allocation under this subsection is 
     used only to supplement, and not supplant, the amount of 
     school construction, rehabilitation, and repair in the State 
     that would have occurred in the absence of such allocation.

     Any allocation under paragraph (1) by a State education 
     agency shall be binding if such agency reasonably determined 
     that the allocation was in accordance with the plan approved 
     under this paragraph.
       ``(e) Half of Limitation Allocated Among Largest School 
     Districts.--
       ``(1) In general.--One-half of the limitation applicable 
     under subsection (c) for any calendar year shall be allocated 
     under paragraph (2) by the Secretary among local educational 
     agencies which are large local educational agencies for such 
     year. No qualified school construction bond may be issued by 
     reason of an allocation to a large local educational agency 
     under the preceding sentence unless such agency has an 
     approved local application.
       ``(2) Allocation formula.--The amount to be allocated under 
     paragraph (1) for any calendar year shall be allocated among 
     large local educational agencies in proportion to the 
     respective amounts each such agency received for Basic Grants 
     under subpart 2 of part A of title I of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 6331 et seq.) for 
     the most recent fiscal year ending before such calendar year.
       ``(3) Large local educational agency.--For purposes of this 
     section, the term `large local educational agency' means, 
     with respect to a calendar year, any local educational agency 
     if such agency is--
       ``(A) among the 100 local educational agencies with the 
     largest numbers of children aged 5 through 17 from families 
     living below the poverty level, as determined by the 
     Secretary using the most recent data available from the 
     Department of Commerce that are satisfactory to the 
     Secretary, or
       ``(B) 1 of not more than 25 local educational agencies 
     (other than those described in clause (i)) that the Secretary 
     of Education determines (based on the most recent data 
     available satisfactory to the Secretary) are in particular 
     need of assistance, based on a low level of resources for 
     school construction, a high level of enrollment growth, or 
     such other factors as the Secretary deems appropriate.
       ``(4) Approved local application.--For purposes of 
     paragraph (1), the term `approved local application' means an 
     application which is approved by the Secretary of Education 
     and which includes--
       ``(A) the results of a recent publicly-available survey 
     (undertaken by the local educational agency with the 
     involvement of school officials, members of the public, and 
     experts in school construction and management) of such 
     agency's needs for public school facilities, including 
     descriptions of--
       ``(i) the overall condition of the local educational 
     agency's school facilities, including health and safety 
     problems,
       ``(ii) the capacity of the agency's schools to house 
     projected enrollments, and
       ``(iii) the extent to which the agency's schools offer the 
     physical infrastructure needed to provide a high-quality 
     education to all students,
       ``(B) a description of how the local educational agency 
     will use its allocation under this subsection to address the 
     needs identified under subparagraph (A), and
       ``(C) a description of how the local educational agency 
     will ensure that its allocation under this subsection is used 
     only to supplement, and not supplant, the amount of school 
     construction, rehabilitation, or repair in the locality that 
     would have occurred in the absence of such allocation.

     A rule similar to the rule of the last sentence of subsection 
     (d)(5) shall apply for purposes of this paragraph.
       ``(f) Carryover of Unused Limitation.--If for any calendar 
     year--
       ``(1) the amount allocated under subsection (d) to any 
     State, exceeds
       ``(2) the amount of bonds issued during such year which are 
     designated under subsection (a) pursuant to such allocation,

     the limitation amount under such subsection for such State 
     for the following calendar year shall be increased by the 
     amount of such excess. A similar rule shall apply to the 
     amounts allocated under subsection (e). The subsection shall 
     not apply if such following calendar year is after 2002.''.
       (b) Reporting.--Subsection (d) of section 6049 of such Code 
     (relating to returns regarding payments of interest) is 
     amended by adding at the end the following new paragraph:
       ``(8) Reporting of Credit on Qualified Public School 
     Modernization Bonds.--
       ``(A) In general.--For purposes of subsection (a), the term 
     `interest` includes amounts includible in gross income under 
     section 1397E(f) and such amounts shall be treated as paid on 
     the credit allowance date (as defined in section 
     1397E(d)(2)).
       ``(B) Reporting to corporations, etc.--Except as otherwise 
     provided in regulations, in the case of any interest 
     described in subparagraph (A) of this paragraph, subsection 
     (b)(4) of this section shall be applied without regard to 
     subparagraphs (A), (H), (I), (J), (K), and (L)(i).
       ``(C) Regulatory authority.--The Secretary may prescribe 
     such regulations as are necessary or appropriate to carry out 
     the purposes of this paragraph, including regulations which 
     require more frequent or more detailed reporting.''

[[Page S1341]]

       (c) Clerical Amendments.--
       (1) The table of parts for subchapter U of chapter 1 of 
     such Code is amended by striking the item relating to part IV 
     and inserting the following new item:

``Part IV. Incentives for qualified public school modernization 
              bonds.''.

       (2) Part V of subchapter U of chapter 1 of such Code is 
     amended by redesignating both section 1397F and the item 
     relating thereto in the table of sections for such part as 
     section 1397H.
       (d) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to obligations 
     issued after December 31, 1998.
       (2) Repeal of restriction on zone academy bond holders.--
     The repeal of the limitation of section 1397E of the Internal 
     Revenue Code of 1986 (as in effect on the day before the date 
     of the enactment of this Act) to eligible taxpayers (as 
     defined in subsection (d)(6) of such section) shall apply to 
     obligations issued after December 31, 1997.
                                                                    ____


                              Bill Summary

       The Public School Modernization Act creates and expands tax 
     incentives to help States and school districts meet their 
     school modernization and construction priorities. The bill 
     includes two major provisions.


                  Qualified school modernization bonds

       The bill allows state and local governments to issue 
     ``qualified school modernization bonds'' to fund the 
     construction, modernization, and rehabilitation of public 
     schools. Bondholders, instead of receiving interest, would 
     receive annual Federal income tax credits. The maximum term 
     of the bonds would be 15 years.
       A total of $9.7 billion of authority to issue qualified 
     school modernization bonds would be allowed in each of 1999 
     and 2000, half to States and half to the 100 school districts 
     with the largest numbers of poor children (The District of 
     Columbia is considered a State.) The authority allocated to 
     the 100 large districts would be based on the amounts of 
     Federal assistance received under Title I, Basic Grants. In 
     addition, the Secretary of Education would have the authority 
     to designate 25 additional districts to receive bond 
     authority directly from the Federal government. The authority 
     allocated to States would also be based on the State's share 
     of Title I, Basic Grants, excluding the 100 large districts 
     and any others designated by the Secretary to receive bond 
     authority directly from the Federal government. A small 
     portion of the total amount of bond authority would be set 
     aside for each U.S. possession (other than Puerto Rico, which 
     is considered a State) based on its share of the total U.S. 
     poverty population. A State, possession, or eligible school 
     district would be permitted to carry forward any unused 
     portion of its allocation until September 30, 2003.
       Under the proposal, a bond would be treated as a qualified 
     school modernization bond if three requirements are met. 
     First, the Department of Education must approve a school 
     construction plan of the State, territory, or school district 
     that: (1) demonstrates that a survey has been undertaken of 
     the construction and renovation needs in the jurisdiction, 
     (2) describes how the jurisdiction will assure that bond 
     proceeds are used for the purposes of this proposal, and (3) 
     explains how it will use its allocation to assist localities 
     that lack the fiscal capacity to issue bonds on their own. 
     Second, the issuing government must receive an allocation for 
     the bond from the State, territory, or eligible district. 
     Third, 95 percent or more of the bond proceeds must be used 
     to construct or rehabilitate public school facilities.


                      Qualified Zone Academy Bonds

       The bill makes three changes to the existing qualified zone 
     academy bonds (created in the Taxpayer Relief Act of 1997). 
     First, the bill increases the 1999 bond cap from $400 million 
     to $1.4 billion and adds an additional $1.4 billion of bond 
     cap in 2000. Second, the bill expands the list of permissible 
     uses of proceeds to include new school construction. Third, 
     the bill sets the maximum term of qualified zone academy 
     bonds at 15 years.
       Qualified zone academy bonds can be used by school 
     districts, starting this year, for school improvement 
     purposes. The subsidy mechanism is the same as with the new 
     school modernization bonds--Federal tax credits to 
     bondholders in lieu of interest--but there are several 
     requirements associated with zone academy bonds. First, 
     schools must secure 10% of the funding for the school 
     improvement project from the private sector before issuing 
     the zone academy bonds. Second, the school must work with the 
     private sector to enhance the curriculum and increase 
     graduation rates and employment rates. Finally, in order to 
     be eligible, the school must either have 35% of students 
     eligible for the free- and reduced-price lunch program, or be 
     located in an empowerment zone or enterprise community.


                                  cost

       The Joint Committee on Taxation estimates the total cost of 
     this proposal is $3.3 billion/5 years and $9 billion/10 
     years. The Department of Treasury estimates the cost is $5 
     billion/5 years.
       The proposal is fully paid for within President Clinton's 
     balanced budget.

  Mr. KENNEDY. Mr. President, I am honored to be a sponsor of the 
Public School Modernization Act of 1998, introduced today by Senator 
Moseley-Braun to help communities across the country in their struggle 
to modernize, repair, and rebuild their school facilities.
  Schools across the nation face serious problems of overcrowding. 
Antiquated facilities are suffering from physical decay, and are not 
equipped to handle the needs of modern education.
  Across the country, 14 million children in a third of the nation's 
schools are learning in substandard buildings. Half the schools have at 
least one unsatisfactory environmental condition. It will take over 
$100 billion just to repair existing facilities nationwide.
  Massachusetts is no exception. 41% of our schools across the state 
report that at least one building needs extensive repair or should be 
replaced. Three-quarters report serious problems in buildings, such as 
plumbing or heating defects. 80% have at least one unsatisfactory 
environmental factor.
  In Boston, many schools cannot keep their heating systems functioning 
properly. On a given day, 15 to 30 schools complain that their heat is 
not working.
  The leaking roof at Revere High School is so serious that the new 
fire system is threatened. School Committee members estimate that 
fixing the roof will cost an additional $1 million, and they don't know 
where to get the money.
  It is difficult enough to teach or learn in dilapidated classrooms. 
But now, because of escalating enrollments, those classrooms are 
increasingly overcrowded. The nation will need 6,000 new schools in the 
next few years, just to maintain current class sizes.
  State governments and local communities are working hard to meet 
these challenges. In Massachusetts, under the School Building 
Assistance Act, the state will pay 50-90% of the most severe needs. 124 
schools now have approved projects, and are on a waiting list for 
funding. The state share should be $91 million this year, but only $35 
million is available. More than 50 other projects are awaiting 
approval. With that kind of deficit at the state and local level, it is 
clear that the federal government has a responsibility to act.
  I am pleased that President Clinton has made this issue one of his 
highest priorities. The legislation we are introducing will allow 
states and local governments to issue $22 billion in bonds over the 
next five years for school repairs and construction. Half of the amount 
will go to state governments, and the other half will go to the 100 
cities across the nation with the largest numbers of low-income 
children, including Boston and Springfield. The bonds will be interest-
free for the states and cities--Uncle Sam will pay the interest.
  Under this plan, the state government in Massachusetts can issue $230 
million in bonds for construction and renovation of school buildings. 
The City of Boston can issue an additional $90 million, and the City of 
Springfield can issue an additional $36 million, so that a total of 
$356 million in bonds will be available to help Massachusetts schools 
under this legislation.
  Good teaching and good schools are threatened if school buildings are 
unsafe and need repairs. President Clinton has made it a top priority 
to see that America has the best public schools in the world. And my 
Democratic colleagues and I intend to do all we can to see that we 
reach that goal.
  Investing in schools is one of the best investments America can 
possibly make. For schools across America, help is truly on the way--
and it can't come a minute too soon.
                                 ______
                                 
      By Mr. BINGAMAN:
  S. 1706. A bill to amend title 23, United States Code, to encourage 
States to enact laws that ban the sale of alcohol through a drive-up or 
drive-through sales window; to the Committee on Environment and Public 
Works.


           the drunk driving casualty prevention act of 1998

  Mr. BINGAMAN. Mr. President, I rise briefly to discuss a very 
important matter relating to the safety of our Nation's streets and 
highways, DWI-related injuries and fatalities. This is a problem that 
in spite of many prevention efforts, remains a serious concern.
  The statistics are compelling. For example, on Thanksgiving, 
Christmas, New Years Eve, and New Years Day

[[Page S1342]]

1996, there were 576 DWI-related fatalities on our Nation's highways. 
In that same year, nearly 1.1 million people were injured in alcohol-
related crashes. Motor vehicle crashes are the leading cause of death 
for 15- to 20-year-olds. About 3 in 10 Americans will be involved in an 
alcohol-related crash at some time in their lives. Alcohol-related 
crashes cost society $45 billion annually. To make matters worse, the 
loss of quality of life and pain and suffering costs total over $134 
billion annually.
  My home state of New Mexico is not exempt. In fact, the National 
Traffic Safety Administration reports that New Mexico leads the country 
in DWI-related deaths per capita, a rate of 11.79 deaths per 100,000 
people. This rate is 19 percent higher than the No. 2 state, 
Mississippi, and is more than twice the national rate of 5.05 deaths 
per 100,000.
  Indeed, these statistics paint a very grim picture. What makes this 
picture even more tragic, Mr. President, is that DWI-related injuries 
and fatalities are preventable. It clearly is within our national 
interest to do everything we can to reverse this course. One obvious 
way to prevent further deaths on our highways is to ensure the sobriety 
of drivers. That is why I proudly am co-sponsoring Senator Lautenberg's 
and Senator DeWine's bill to establish a national blood-alcohol content 
standard of .08. Additionally, I am cosponsoring Senator Dorgan's bill 
to prohibit open containers of alcohol in automobiles. I urge my Senate 
colleagues to help pass these bills this year.
  Another contributing factor to the problem that I believe would make 
a significant difference if eliminated is the practice of selling 
alcohol beverages through drive-up sales windows. This practice only 
makes it more easy for a drunk driver to purchase alcohol, and it 
contributes heavily to the DWI-fatality rate in New Mexico. Eliminating 
these drive-up liquor windows is essential to reducing these injuries 
and fatalities.
  When I was in New Mexico 2 weeks ago, I held a series of seminars 
with high school students from throughout the state, and I listened to 
their concerns about the problems in the state and in the country. One 
young man, Simon Goldfine, who is a student at Del Norte High School in 
Albuquerque, agreed that the DWI rate in New Mexico is much too high, 
and one reason he explained is these drive-in liquor windows. Simon 
explained that if a drunk person has to walk into a liquor store, it 
will be easier to determine if he is drunk than if he simply sat in his 
vehicle. And Simon asked if something could be done to eliminate the 
windows. Today I would like to tell Simon that we will do something 
about it.
  Today, at Simon's urging, I am introducing legislation, the Drunk 
Driving Casualty Prevention Act of 1998 to prohibit the sale of alcohol 
through drive-up sales windows.
  Mr. President, I believe no one in America will disagree with Simon 
that this ban will make a difference. According to one study, there are 
26 states that do not permit drive-up windows. In 1996, these states 
had a 15 percent lower average drunk driving fatality rate than the 24 
states that permit these windows. In the states with the ban, the 
average rate was 4.6 per 100,000 people, as opposed to 5.46 in all 
other states. On a percentage basis, states with a ban had a 14.5 
percent lower drunk driving fatality rate than states that permit sales 
windows.

  In 1996, comparing 19 western states in particular, the nine states 
with a ban had a 31 percent lower average drunk driving fatality rate 
than the ten states that permit the windows.
  In 1995, there were 231 drunk driving fatalities in New Mexico. Based 
on the 14-percent lower drunk driving fatality rate, it is estimated 
that closing drive-up liquor windows could save between 32 and 35 lives 
annually in New Mexico. Nowhere is it more true that if we can save one 
life by closing these windows, we should do it.
  The differences can be explained because there are three main 
benefits to closing drive-up liquor windows: first, it is easier and 
more accurate to check IDs over the sales counter. Minors have 
testified that it is very easy to illegally purchase alcohol at a 
drive-up window where it is difficult to determine their age. Second, 
it is easier to visually observe a customer for clues that they are 
impaired by alcohol or other substance if they have to walk into a 
well-lit establishment to make their purchase. Moreover, in one 
municipal court in New Mexico, 33 percent of DWI offenders reported 
having purchased their liquor at drive up windows. Some members of 
Alcoholics Anonymous say they now realize they could have known each 
other years earlier if they had only looked in their rear view mirror 
while in line at a drive-up window. And third, it sends a clear message 
to the population that drinking and driving will not be tolerated.
  The Behavior Health Research Center of the Southwest conducted a 
study, the purpose of which was to determine the characteristics and 
arrest circumstances of DWI offenders who bought alcohol at a drive-up 
liquor window compared to those who obtained alcohol elsewhere. Nearly 
70 percent of offenders studied reported having purchased the alcohol 
they drank prior to arrest. Of those offenders, 42 percent bought 
package liquor, and of those offenders, the drive-up window was the 
preferred place of purchase. Additionally, the study showed that drive-
up window users were 68 percent more likely to have a serious alcohol 
problem than other offenders. Drive-up window users also are 67 percent 
more likely to be drinking in their vehicle prior to arrest than other 
offenders. This study showed that drive-up windows facilitate alcohol 
misuse in vulnerable populations. The persons most affected are the 
high-risk problem drinkers, and when liquor availability is restricted, 
it is among those offenders that use, and consequently alcohol-related 
offenses, declines the most.
  There are some that may contend that closing these windows is going 
to hurt small businesses. To the contrary. Closing these drive-up 
liquor windows will actually help increase profits, and it is very easy 
to explain. When a customer has to walk into an establishment, he or 
she is very likely to purchase more than the original item. The 
customer is likely to pick up, for example, potato chips, sodas, and 
magazines. This is not as likely to happen at the drive-up window 
simply because the customers cannot see the items from their vehicle. 
In McKinley County, New Mexico, which is the only county in New Mexico 
to ban these windows, businesses actually saw a jump in profits. Most 
importantly, because of its DWI prevention strategy, McKinley County's 
alcohol-related injury and fatality rate dropped from 272 per 100,000 
in 1989 to 183 per 100,000 in 1997.
  Mr. President, I believe we have a great opportunity here to reduce 
DWI injuries and fatalities. Therefore, I plan to offer this bill as an 
amendment to the ISTEA legislation, and I urge my Senate colleagues to 
join me. I ask unanimous consent that the rest 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. 1706

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

     SECTION 1. BAN ON SALE OF ALCOHOL THROUGH DRIVE-UP OR DRIVE-
                   THROUGH SALES WINDOWS.

       (a) In General.--Chapter 1 of title 23, United States Code, 
     is amended by inserting after section 153 the following:

     ``Sec. 154. Ban on sale of alcohol through drive-up or drive-
       through sales windows

       ``(a) Withholding of Apportionments for Noncompliance.--
       ``(1) Fiscal year 2000.--The Secretary shall withhold 5 
     percent of the amount required to be apportioned to any State 
     under each of paragraphs (1)(A), (1)(C), and (3) of section 
     104(b) on October 1, 1999, if the State does not meet the 
     requirements of paragraph (3) on that date.
       ``(2) Subsequent fiscal years.--The Secretary shall 
     withhold 10 percent (including any amounts withheld under 
     paragraph (1)) of the amount required to be apportioned to 
     any State under each of paragraphs (1)(A), (1)(C), and (3) of 
     section 104(b) on October 1, 2000, and on October 1 of each 
     fiscal year thereafter, if the State does not meet the 
     requirements of paragraph (3) on that date.
       ``(3) Requirements.--A State meets the requirements of this 
     paragraph if the State has enacted and is enforcing a law 
     (including a regulation) that bans the sale of alcohol 
     through a drive-up or drive-through sales window.
       ``(b) Period of Availability; Effect of Compliance and 
     Noncompliance.--
       ``(1) Period of availability of withheld funds.--
       ``(A) Funds withheld on or before september 30, 2002.--Any 
     funds withheld under

[[Page S1343]]

     subsection (a) from apportionment to any State on or before 
     September 30, 2002, shall remain available until the end of 
     the third fiscal year following the fiscal year for which the 
     funds are authorized to be appropriated.
       ``(B) Funds withheld after september 30, 2002.--No funds 
     withheld under this section from apportionment to any State 
     after September 30, 2002, shall be available for 
     apportionment to the State.
       ``(2) Apportionment of withheld funds after compliance.--
     If, before the last day of the period for which funds 
     withheld under subsection (a) from apportionment are to 
     remain available for apportionment to a State under paragraph 
     (1)(A), the State meets the requirements of subsection 
     (a)(3), the Secretary shall, on the first day on which the 
     State meets the requirements, apportion to the State the 
     funds withheld under subsection (a) that remain available for 
     apportionment to the State.
       ``(3) Period of availability of subsequently apportioned 
     funds.--
       ``(A) In general.--Any funds apportioned under paragraph 
     (2) shall remain available for expenditure until the end of 
     the third fiscal year following the fiscal year in which the 
     funds are so apportioned.
       ``(B) Treatment of certain funds.--Sums not obligated at 
     the end of the period referred to in subparagraph (A) shall 
     lapse.
       ``(4) Effect of noncompliance.--If, at the end of the 
     period for which funds withheld under subsection (a) from 
     apportionment are available for apportionment to a State 
     under paragraph (1), the State does not meet the requirements 
     of subsection (a)(3), the funds shall lapse.''.
       (b) Conforming Amendment.--The analysis for chapter 1 of 
     title 23, United States Code, is amended by inserting after 
     the item relating to section 153 the following:

``154. Ban on sale of alcohol through drive-up or drive-through sales 
              windows.''.
                                 ______
                                 
      By Ms. MIKULSKI (for herself, Mr. Kennedy, Mr. Durbin, Mr. 
        Bumpers, and Mr. Byrd)
  S. 1707. A bill to amend the Federal Food, Drug, and Cosmetic Act to 
provide for improved safety of imported foods; to the Committee on 
Labor and Human Resources.


                the safety of imported food act of 1998

  Ms. MIKULSKI. Mr. President, I rise today to introduce the ``Safety 
of Imported Food Act of 1998.'' I am proud to be the sponsor of this 
important legislation to provide the American people with safer 
imported foods. This legislation is part of President Clinton's food 
safety initiative. Its purpose is to provide for improved safety of 
imported food consistent with U.S. food safety requirements.
  The bill expands FDA authority to ensure the safety of imported foods 
in two very important ways. It authorizes the Secretary to deny entry 
of imported food products if it is determined that the products do not 
meet the U.S. food safety requirements. It also authorizes the 
secretary to consider, in determining whether imported food products 
meet U.S. food safety requirements, a refusal to allow necessary 
inspections or testing.
  Our nation's food supply has gone global. Once our imported food 
consisted mainly of bulk staples. Now we import growing quantities of 
fresh fruits and vegetables, seafood, and many other foods. Thirty-
eight percent of all fruit and 12% of all vegetables consumed in the 
U.S. are imported. Imported food entries doubled in the last 7 years 
and a 30% increase is expected by 2002.
  We have been put on alert by recent cases of food borne illness. 
Michigan school children were sickened by imported strawberries 
contaminated by Hepatitis A. There have been widespread reports of 
cyclospora from imported raspberries. Soft cheese from Europe has been 
found to be contaminated with listeria and salmonella. And radish seed 
sprouts from the Far East have been found infected with Ecoli 0157:H7.
  The impact of unsafe food is staggering. As many as 33 million people 
become ill each year from contaminated meat, poultry and produce. Over 
$3 billion are spent in hospitalization due to food related illness. 
Added to that are the losses in productivity.
  Now that our food supply has gone global, our food safety measures 
must go global as well. Current authority requires FDA to rely on 
inspection and testing at the border to ensure that safety standards 
are met. With the ever increasing quantities of imported foods, it is 
impossible for FDA to inspect more than a small percentage of 
shipments. Additionally, such inspections are often impractical, given 
the perishable nature of many of the imported foods. The FDA may also 
place more general restrictions on imports, but only after a problem 
has surfaced, often after a major outbreak of illness has occurred. 
Both of these types of measures address the problem of unsafe food 
reactively.
  The ``Safety of Imported Food Act'' places the emphasis on the 
underlying food system of control at the food source, a more preventive 
means of addressing food safety. It focuses on the conditions that 
cause problems rather than the problem once it has occurred. By 
allowing FDA to consider the food safety system in place, the bill 
provides the means by which FDA can use its limited resources more 
efficiently.
  There are several things this bill does not do. It does not shut our 
borders or immediately deny entry of imported food upon enactment. It 
does not require inspections or access without consent. In fact, it 
does not create any new inspection authority, either foreign or 
domestic.
  The bill is short, but what it will achieve is significant. It will 
provide FDA with authority to ensure that all imported foods meet the 
U.S. level of protection, consistent with rights and obligations under 
international trade agreements. It provides FDA with a more effective 
enforcement tool and the ability to use its resources more effectively. 
Under the bill, foreign producers may have an incentive to upgrade 
their food safety systems. Most importantly, the bill will provide the 
American public with greater assurance that imported foods meet the 
same safety standards as do foods produced in the U.S.
  I wish to commend President Clinton and Vice President Gore in making 
food safety a top priority. By strengthening the food supply both here 
and abroad, I believe we make the world a safer place to live. I look 
forward to the Senate's support of this important legislation.
                                 ______
                                 
      By Mr. DASCHLE (for himself, Mrs. Murray, Ms. Moseley-Braun, Mr. 
        Kennedy, Mr. Dodd, Mrs. Boxer, Mr. Breaux, Mr. Robb, Mr. Levin, 
        Mr. Lautenberg, Mr. Glenn, Mr. Kerry, Mrs. Feinstein, Mr. Reid, 
        Mr. Reed and Mr. Bryan):
  S. 1708. A bill to improve education; to the Committee on Labor and 
Human Resources.


  the revitalize and empower public school communities to upgrade for 
                         long-term success act

  Mr. DASCHLE. Mr. President, today I am introducing on behalf of my 
colleagues, Senators Murray, Moseley-Braun, Kennedy, Dodd, Boxer, 
Breaux, Robb, Levin, Lautenberg, Glenn, Kerry, Feinstein, Reid, Reed, 
Bryan and myself, legislation that puts the spotlight directly on our 
efforts to strengthen and modernize our nation's public schools.
  We recognize that a strong public education system is the key to 
America's future. Our economic prosperity, our position as a world 
leader, our system of law, and our very democracy require that all of 
our children have access to the best possible education.
  We have heard a lot over the last 20 years about the things that are 
wrong with education in this country, and there's no question that we 
need to do some things better. We just learned the other day, for 
example, that our 12th graders are behind the rest of the world in math 
and science achievement. That is unacceptable and must be corrected. 
But there are signs that we have been able to make some progress. Our 
fourth-graders are well above the average in mathematics and near the 
top in science. And there are innovative programs springing up around 
the country that are taking advantage of federal funds to make 
remarkable changes in the way public schools are run. The City of 
Chicago, for example, has taken dramatic steps including ending social 
promotions, raising their standards, and providing extra help to make 
sure that children can achieve those standards. Parents and community 
members are more involved , and, while it's too early to see results in 
terms of test scores, there are dramatic improvements in attendance. 
Those who are involved are amazed at their progress.
  Despite many local improvements, our schools still face many 
challenges. Student enrollments are at record high levels and are 
expected to increase over

[[Page S1344]]

the next decade. This growth, combined with aging buildings and the 
demand of technology, is straining many school facilities. Growing 
enrollments and teacher retirements also mean that more than 2 million 
new teachers will be needed over the next decade. The quality of those 
teachers will have a significant impact on student achievement levels. 
Recent advancements require better integration of technology in our 
public schools and better training for instructors in using technology 
effectively in the classroom. While many schools have implemented 
reforms and student performance is improving in some communities, too 
many children, particularly those from low-income families, are still 
not learning up to their potential.
  The legislation we are introducing today--the RESULTS Act--will 
addresses these issues in 5 ways:
  (1) We create a new tax credit to help communities offset the cost of 
school construction and modernization;
  (2) We provide funds to help communities reduce class sizes in grades 
1 through 3 by hiring and training 100,000 new teachers;
  (3) We help communities establish additional after-school programs 
for school-aged children;
  (4) We advance the federal commitment to integrate technology into 
the classroom and provide resources to train teachers to use that 
technology effectively; and
  (5) We include the President's initiative to provide grants to high-
poverty urban and rural school districts that are serious about 
carrying out standards-based reforms, such as those occurring in 
Chicago, to improve student achievement.
  Mr. President, Democrats recognize that the federal government has an 
important role to play in encouraging all Americans--including parents, 
teachers, business and community leaders, and elected officials at all 
levels of government--to work in partnership to strengthen and 
revitalize our public schools. Our nation's commitment to a strong 
system of public education has made our country great. We renew that 
commitment today with this plan to prepare our students to lead this 
country into the 21st Century. I thank my colleagues who have worked 
with me to demonstrate our resolve to modernize and strengthen our 
public schools and invite our colleagues across the aisle to make the 
same commitment and join us to enact the important legislation.
  I ask unanimous consent that a title-by-title explanation of the 
bill, be printed in the Record.
  There being no objection, the summary was ordered to be printed in 
the Record, as follows:

                            S. 1708--Summary

        TITLE I--HELPING COMMUNITIES RENOVATE AMERICA'S SCHOOLS

       The General Accounting Office has found severe school 
     disrepair in all areas of the United States. More than 14 
     million children attend schools in need of extensive repair 
     or replacement. The repair backlog totals at least $112 
     billion, and this does not include expansions needed to 
     accommodate enrollment increases, class size reductions, and 
     integration of technology in the classroom. The problem 
     transcends demographic and geographic boundaries. For 38 
     percent of urban schools, 30 percent of rural schools, and 29 
     percent of suburban schools, at least 1 building is in need 
     of extensive repair or should be completely replaced.
       The condition of school facilities has a direct effect on 
     the safety of students and teachers, and on the ability of 
     students to learn. Researchers at Georgetown University found 
     the performance of students assigned to schools in poor 
     condition falls 10.9 percentage points below those attending 
     classes in buildings in excellent condition. Other studies 
     have demonstrated up to a 20 percent improvement in test 
     scores when students were moved from a dilapidated facility 
     to a new facility.
       This Title includes 2 initiatives to expand tax incentives 
     to help states and school districts address the school 
     construction backlog.


                  Qualified School Modernization Bonds

       State and local governments will issue qualified school 
     modernization bonds to fund the construction, modernization, 
     and rehabilitation of public schools. Bondholders will 
     receive annual Federal income tax credits in lieu of 
     interest. The maximum term of the bonds will be 15 years.
       A total of $9.7 billion of authority to issue qualified 
     school modernization bonds is allocated in 1999 and 2000--50 
     percent to states and 50 percent to the 100 largest school 
     districts. The authority allocated to the 100 largest 
     districts will be based on the amounts of Federal assistance 
     received under Title I, Basic Grants. In addition, the 
     Secretary of Education will have the authority to designate 
     25 additional districts to receive bond authority directly 
     from the Federal government. The authority allocated to 
     States will also be based on the State's share of Title I, 
     Basic Grants, excluding the 100 large districts and any 
     others designated by the Secretary to receive bond authority 
     directly from the Federal government.
       I should note that I would prefer to provide more funds to 
     the states to make sure that rural areas, many of which are 
     severely limited financially, have access to the funds they 
     need to modernize their schools as well. However, this bill 
     reflects a joint House and Senate Democrats and White House 
     initiative, so I have not made that change in this bill.
       To be treated as a qualified school modernization bond 
     program, 3 requirements must be met. First, the Department of 
     Education must approve a school construction plan of the 
     state, territory, or school district that: (1) demonstrates a 
     survey of the construction and renovation needs in the 
     jurisdiction has been undertaken; (2) describes how the 
     jurisdiction will assure that bond proceeds are used for the 
     purposes of this proposal; and (3) explains how it will use 
     its allocation to assist localities that lack the fiscal 
     capacity to issue bonds on their own. Second, the issuing 
     government must receive an allocation for the bond from the 
     State, territory, or eligible district. Third, 95 percent 
     or more of the bond proceeds must be used to construct or 
     rehabilitate public school facilities.


                      qualified zone academy bonds

       The bill makes 3 changes to the existing qualified zone 
     academy bonds (created in the Taxpayer Relief Act of 1997). 
     First, the bill increases the 1999 bond cap from $400 million 
     to $1.4 billion and adds an additional $1.4 billion of bond 
     cap in 2000. Second, the bill expands the list of permissible 
     uses of proceeds to include new school construction. Third, 
     the bill sets the maximum term of qualified zone academy 
     bonds at 15 years. The subsidy mechanism is the same as with 
     the new school modernization bonds--Federal tax credits to 
     bondholders in lieu of interest--but there are several 
     requirements associated with zone academy bonds. First, 
     schools must secure 10 percent of the funding for the school 
     improvement project from the private sector before issuing 
     the zone academy bonds. Second, the school must work with the 
     private sector to enhance the curriculum and increase 
     graduation and employment rates. Finally, in order to be 
     eligible, the school must either have 35 percent of students 
     eligible for the free- and reduced-price lunch program, or be 
     located in an Empowerment zone or enterprise community.

                     TITLE II--REDUCING CLASS-SIZE

       Qualified teachers in small classes can provide students 
     with more individualized attention, spend more time on 
     instruction and less on other administrative tasks, cover 
     more material more effectively, and work more closely with 
     parents. Research has shown that students attending small 
     classes in the early grades make better progress than 
     students in larger classes, and that those achievement gains 
     persist through at least the eighth grade. The benefits are 
     greatest for low-achieving, minority, poor, and inner-city 
     children. Smaller classes also allow teachers to identify and 
     work earlier with students who have learning disabilities, 
     potentially reducing those students' need for special 
     education in later grades.
       Efforts to reduce class sizes are likely to be successful 
     only if well-qualified teachers are hired to fill additional 
     classroom positions, and if teachers receive intensive, 
     ongoing training in teaching effectively in smaller classroom 
     settings. Currently, 1 in 4 high school teachers do not have 
     a major or minor in the main subject they teach. This is true 
     for more than 30 percent of math teachers. In schools with 
     the highest minority enrollments, students have less than a 
     50 percent chance of getting a science or math teacher who 
     holds a degree in that field.
       Over the next decade, we will need to hire over 2 million 
     teachers to meet increasing student enrollments and teacher 
     retirements. Comprehensive improvements in teacher 
     preparation and development are needed to ensure students' 
     academic success. Too many teachers graduating today have 
     insufficient experience in the classroom or are unprepared to 
     integrate technology into their lessons. The federal 
     government can assist in this effort by providing resources 
     to help communities reduce class sizes and improve the 
     quality of teacher training.
       This program is designed to help states and local 
     educational agencies recruit, train, and hire 100,000 
     additional qualified teachers in order to reduce class sizes 
     nationally, in grades 1 to 3 to an average of 18 students per 
     classroom. In addition, the program provides resources to 
     improve small classroom teaching in the early grades so that 
     all students can learn to read well and independently by the 
     end of the third grade. Funding of $1.1 billion will be 
     appropriated in the first year and $7.3 billion over 5 years.
       I want to emphasize that our proposal is aimed at improving 
     the quality of teaching, not just the quantity of teachers. 
     This is critical if we expect to see improvements in student 
     achievement.

[[Page S1345]]

                 TITLE III--EXPANDING AFTER-SCHOOL CARE

       Many children spend more of their waking hours without 
     supervision and constructive activity than they do in school. 
     As many as 5 million children are home alone after school 
     each week. Too many of these children are tempted during this 
     time to try cigarettes, alcohol, marijuana and engage in 
     other dangerous activities. The law enforcement community, 
     which has been very active in their efforts to focus our 
     attention on this problem, reports that most juvenile 
     involvement in crime--either committing them or becoming 
     victims themselves--occurs between 3 p.m. and 8 p.m. Children 
     who attend quality after-school programs, on the other hand, 
     tend to do better in school, get along better with their 
     peers, and are less likely to engage in delinquent behaviors. 
     Unfortunately, only one-third of the schools in low-income 
     neighborhoods and half of the schools in affluent areas 
     currently offer after-school programs. Expansion of both 
     school-based and community-based after-school programs is key 
     to providing safe, constructive environments for children and 
     helping communities reduce the incidence of juvenile 
     delinquency and crime.
       This bill expands the 21st Century Learning Centers Act and 
     provides $200 million each fiscal year to help communities 
     develop after-school care programs. Grantees will be required 
     to offer expanded learning opportunities for children and 
     youth in the community. Funds could be used to provide:
       (1) literacy programs;
       (2) integrated education, health, social service, 
     recreational or cultural programs;
       (3) summer and weekend school programs;
       (4) nutrition and health programs;
       (5) expanded library services;
       (6) telecommunications and technology education programs;
       (7) services for individuals with disabilities;
       (8) job skills assistance;
       (9) mentoring;
       (10) academic assistance; and
       (11) drug, alcohol, and gang prevention activities.
       While expanding after-school programs in public schools 
     will help hundreds of thousands of children. It is important 
     to note that many other community-based organizations, 
     including YMCAs, and Campfire Boys and Girls, provide high 
     quality programs for children as well. These programs also 
     need and deserve federal assistance, since it is unlikely 
     that schools will be able to meet the needs of all children. 
     While school-based care is the focus of this legislation, 
     many Democratic senators and I also strongly support 
     providing additional resources for after-school care through 
     other programs, and we would also like to see greater 
     coordination among all federal, state, and local programs in 
     order to maximize the effective use of public resources and 
     encourage more collaborative efforts at the local level.

    TITLE IV--PROMOTING EFFECTIVE USE OF TECHNOLOGY IN THE CLASSROOM

       Americans agree that integrating technology effectively in 
     the classroom must be a central component of preparing 
     students for the 21st Century. Fully 74 percent of Americans 
     believe that computers improve the quality of education and 
     half believe their public schools offer too little access to 
     adequate computers.
       The importance of strengthening students' technology skills 
     cannot be underestimated. Nearly one quarter of the jobs 
     added to our economy in the past year were in technology-
     based occupations. By the year 2000, 60 percent of all jobs 
     in the nation will require skills in computer and network 
     use. Just 22 percent of all workers have those skills today.
       Incorporating technology effectively in the classroom has 
     been proven to improve students' mastery of basic skills, 
     test scores, writing, and engagement in school. With these 
     gains comes a decrease in dropout rates, as well as fewer 
     attendance and discipline problems.
       We are making progress. While only 35 percent of schools 
     had access to the internet in 1996, now 78 percent are on-
     line. The Schools and Libraries Universal Service Fund, or 
     ``E-rate,'' will provide up to $2.25 billion annually in 
     discounts to assure every American school and library access 
     to telecommunications services, internal connection, and 
     Internet access. More than 20,000 schools and libraries have 
     already applied to participate in this program. The National 
     Governors' Association has urged Congress to maintain the 
     integrity of the E-rate, and provide adequate funding for 
     this important program now.
       Many states and localities are taking good advantage of 
     other Federal programs such as the Technology Literacy 
     Challenge Fund, Technology Innovation Challenge Grants, Star 
     Schools and other programs to obtain equipment and wire 
     schools. Additional resources are needed to continue this 
     effort as well as help train teachers in the effective use of 
     technology in the classroom.
       This legislation states that it is in the Nation's interest 
     to invest at least $4 billion in funding for Department of 
     Education technology programs between fiscal years 1999 and 
     2003.
       We also require schools and libraries participating in the 
     E-rate to establish policies to limit access to inappropriate 
     material. Our bill also includes several measures to increase 
     Federal resources to improve professional development and 
     help teachers integrate technology into the classroom. Under 
     our proposal, 30 percent of National Challenge Grant for 
     Technology grants will be directed to partnerships that are 
     focused on developing effective teaching strategies. To 
     improve training and preparation of teaching candidates and 
     new teachers, the Secretary will be authorized to award 
     grants to partnerships that train candidates and education 
     school faculty in the effective use and integration of 
     technology in teaching academic subjects.
       The bill establishes $75 million in grants to be managed 
     jointly by the Office of Education Research and Innovation 
     and the National Science Foundation to support innovative 
     research in education technology, development of research 
     results in partnerships with the private sector, and 
     evaluation that identifies the most effective approaches to 
     implementing education technology.

                  TITLE V--EDUCATION OPPORTUNITY ZONES

       Students in schools where a high proportion of children 
     come from lower-income families begin school behind their 
     peers academically and, too often, never catch up with their 
     peers. Later on, they are less likely to go to college and 
     more likely to experience unemployment. High levels of 
     poverty and the lack of resources has resulted in watered 
     down curricula, lowered expectations for their students, and 
     fewer qualified teachers. These challenges are compounded in 
     high-poverty rural schools because of their isolation and 
     small size.
       Some high-poverty schools have shown, however, that 
     students can achieve more if the schools adopt high standards 
     for students, teachers and administrators, provide extra help 
     to students, adopt proven systemic reforms, and hold schools, 
     staff, and students accountable for the results.
       This program will provide $200 million in FY1999 and $1.5 
     billion over 5 years to high-poverty urban and rural school 
     districts that are serious about carrying out standards-based 
     reform plans to improve the academic achievement. Grants will 
     be awarded to approximately 50 districts that:
       (1) agree to adopt high standards, test student 
     achievement, and provide help to students, teachers and 
     schools who need it;
       (2) ensure quality teaching, challenging curricula, and 
     extended learning time; and
       (3) end social promotion and take steps to turn around 
     failing schools.
       Lessons learned from these districts will be shared with 
     schools across the country. Schools will be encouraged to 
     provide students and parents with school report cards and 
     expanded choices with public education.
       Awards will be made according to a competitive, peer review 
     process. Consortia of large and small urban areas, and rural 
     school districts will be selected to participate.
       Schools run by the Bureau of Indian Affairs are also 
     eligible.
       Successful applicants will have broad-based partnerships to 
     support their reforms, including parents, teachers, local 
     government, business, civic groups, institutions of higher 
     education and other members of the community.

  Mr. KENNEDY. Mr. President, President Clinton and Democrats in 
Congress have made it a top priority to see that America has the best 
public schools in the world--and we intend to do all we can to see that 
we reach that goal.
  The nation's students deserve modern schools with world-class 
teachers. But too many students in too many schools in too many 
communities across the country fail to achieve that standard. The 
latest international survey of math and science achievement confirms 
the urgent need to raise standards of performance for schools, 
teachers, and students alike. It is shameful that America's twelfth 
graders ranked among the lowest of the 22 nations participating in this 
international survey of math and science.
  The challenge is clear. We must do all we can to improve teaching and 
learning for all students across the nation. That means:
  We must continue to support efforts to raise academic standards.
  We must test students early, so that we know where they need help in 
time to make that help effective.
  We must provide better training for current and new teachers, so that 
they are well-prepared to teach to high standards.
  We must reduce class size, to help students obtain the individual 
attention they need.
  We must provide after-school programs to make constructive 
alternatives available to students and keep them off the streets, away 
from drugs, and out of trouble.
  We must provide greater resources to modernize and expand the 
nation's school buildings to meet the urgent needs of schools for up-
to-date facilities.
  I will do all I can to see that the ``RESULTS! Act''--``An Act to 
Revitalize and Empower Schools to Upgrade

[[Page S1346]]

for Long-Term Success''--is approved by Congress. The bill will help 
modernize and expand the nation's schools, reduce class size, expand 
after-school care, improve education technology in schools, and create 
education opportunity zones in communities across the country.
  A necessary foundation for a successful school is a qualified teacher 
in every classroom to make sure young children receive the individual 
attention they need. That's why a pillar of the Democratic agenda is to 
help bring 100,000 new teachers to schools and reduce class size in the 
elementary grades.
  Research has shown that students attending small classes in the early 
grades make more rapid progress than students in larger classes. The 
benefits are greatest for low-achieving, minority, and low-income 
children. Smaller classes also enable teachers to identify and work 
effectively with students who have learning disabilities, and reduce 
the need for special education in later grades.
  Many states are also considering proposals to reduce class size--but 
you can't reduce class size without the ability to hire additional 
qualified teachers to fill the additional classrooms.
  Too many schools are already understaffed. During the next decade, 
rising student enrollments and massive teacher retirements mean that 
the nation will need to hire 2 million new teachers. Between 1995 and 
1997, student enrollment in Massachusetts rose by 28,000 students, 
causing a shortage of 1,600 teachers--without including teacher 
retirements.
  The teacher shortage has forced many school districts to hire 
uncertified teachers, and ask certified teachers to teach outside their 
area of expertise. Each year, more than 50,000 under-prepared teachers 
enter the classroom. One in four new teachers does not fully meet state 
certification requirements. Twelve percent of new teachers have had no 
teacher training at all. Students in inner-city schools have only a 50% 
chance of being taught by a qualified science or math teacher. In 
Massachusetts, 30% of teachers in high-poverty schools do not even have 
a minor degree in their field.
  Our proposal will reduce class size in grades K-3 to a nationwide 
average of 18 by hiring more teachers. Under our proposal, states and 
school districts will be able to recruit, train and hire 100,000 
additional qualified teachers in order to reduce class size and improve 
teaching and learning in these early grades. In the first year, 
Massachusetts will receive $22 million to support these efforts. We 
will also be working through the Higher Education Act to improve 
teacher training at colleges and universities.
  Our proposal will also help schools meet their urgent needs for 
construction, modernization, and renovation. Schools across the nation 
face serious problems. Many are overcrowded. Many others have 
antiquated facilities suffering from physical decay, with no ability to 
handle the needs of modern education. Across the country, 14 million 
children in a third of the nation's schools are learning in substandard 
buildings. Half the schools have at least one unsatisfactory 
environmental condition.
  Massachusetts is no exception. 41% of our schools across the state 
report that at least one building needs extensive repair or should be 
replaced. Three-quarters report serious problems in buildings, such as 
plumbing or heating defects. Eighty percent have at least one 
unsatisfactory environmental factor.

  It is difficult enough to teach or learn in dilapidated classrooms. 
But now, because of escalating enrollments, those classrooms are 
increasingly overcrowded. The nation will need 6,000 new schools in the 
next few years, just to maintain current class sizes.
  It will take over $100 billion just to repair existing facilities. 
Obviously, the federal government cannot do the whole job. But states 
and communities across the country are working hard to meet these 
needs, and the federal government should do more to help.
  This year, Revere, Massachusetts passed a $2.2 million bond issue to 
renovate the roofs on three of its seven schools. After these 
renovations were completed, a fourth school's roof started to leak. The 
leak is so serious that the school's new fire system is threatened. 
School Committee members estimate that fixing the roof will cost an 
additional $1 million, and they don't know where to get the money.
  Last year, half of Worcester's schools were not equipped with the 
wiring and infrastructure to handle modern technology.
  Enrollment in Springfield schools has increased by over 1,500 
students, or 6 percent, in the last two years, forcing teachers to hold 
classes in storage rooms, large closets, and in basements.
  Our proposal will authorize states and local governments to issue $22 
billion in bonds for school repairs and construction. Part of the 
amount will go to state governments and part will go to the 100 cities 
across the nation with the largest numbers of low-income children, 
including Boston and Springfield. The bonds will be interest-free for 
the states and cities--Uncle Sam will pay the interest.
  Our legislation also addresses the urgent need to provide effective 
activities for children of all ages during the many hours each week 
when they are not in school.
  Each day, 5 million children, many as young as 8 or 9 years old, are 
left home alone after school. Juvenile delinquent crime peaks in the 
hours between 3 p.m. and 8 p.m. Children unsupervised are more likely 
to be involved in anti-social activities and destructive patterns of 
behavior.
  Our goal in this legislation is to encourage communities to develop 
activities that will engage children and keep them out of trouble. 
Crime survivors, law enforcement representatives, prosecutors, and 
educators have all joined together in calling for a substantial federal 
investment in after-school programs.
  Clearly, such financial assistance is needed in states across the 
country. Too often, parents cannot afford the thousands of dollars a 
year required to pay for after-school care, if it exists at all. In 
Massachusetts, 4,000 eligible children are on waiting lists for after-
school care, and tens of thousands more have parents who have given up 
on getting help. Nationwide, half a million eligible children are on 
waiting lists for federal child care subsidies. The need for increased 
opportunities is obvious and this legislation attempts to meet it.
  Our bill will provide $1 billion over the next 5 years for after-
school programs, to enable public school districts in partnership with 
community-based organizations to bring millions more children, 
including disabled children, into such programs, and make schools into 
community learning centers as well.
  This proposal will help communities to increase the availability of 
after-school programs. It will support efforts in Boston to make after-
school services available to as many children as possible. Boston's 2-
to-6 Initiative will serve an additional 3,000 young people over the 
next four years, keep school buildings open for city programs and non-
profit programs, and challenge private sector leaders to double the 
number of available after-school jobs to 1,000 over the next two years.
  The proposed expansion of the 21st Century Community Learning Center 
program will enable schools and communities to create programs that 
meet their after-school needs--and obtain the extra resources required 
to make it happen.
  Our bill also proposes to help failing schools implement the reforms 
that they know will turn them around. Too many schools now struggle 
with watered-down curricula, low expectations, fewer qualified 
teachers, and fewer resources than other schools.
  Under the Education Opportunity Zones proposal, these school 
districts will get the extra resources they need in order to increase 
achievement, raise standards, end social promotion, upgrade teacher 
skills, and strengthen ties between the schools, the parents, and the 
community as a whole.
  The bill also calls for continued investment in education technology, 
so that cutting-edge technology will be available to as many students 
as possible. That means we must continue to invest more in computers, 
software, and high-tech training for teachers, so that every child has 
the opportunity to use technology as an effective learning tool.
  Investing in students and teachers and schools is one of the best 
investments America can make. For schools

[[Page S1347]]

across America, help can't come a minute too soon, and I urge Congress 
to enact this legislation as expeditiously as possible. The message to 
schools across the country today is clear--help is finally on the way.
  Ms. MOSELEY-BRAUN. Mr. President, I want to commend the Democratic 
leader, Senator Daschle, for assembling this important legislation, and 
I want to thank President Clinton for articulating a vision for America 
that includes a significant federal commitment toward improving the 
quality and accessibility of education for all Americans. The RESULTS 
Act is designed to help fulfill that commitment, and represents the 
type of action this Congress should take to prepare America for the 
21st century.
  I visited a number of schools in Illinois over the past several 
months, and talked with parents, teachers, children, and school 
officials at the elementary, secondary, and postsecondary levels. I 
found that without exception, education is at the top of their minds. 
Illinoisans, like most Americans, support policies designed to help 
ensure that America remains preeminent in the intensely competitive, 
global economy of the 21st century.
  Last year, this Congress took historic measures to improve the 
accessibility of quality higher education, with the enactment of 
President Clinton's HOPE Scholarship and Lifetime Learning tax credits. 
We also restored the student loan interest deduction, so that graduates 
now receive a Federal income tax deduction when they make interest 
payments on their student loans. I intend to work this year to broaden 
the deduction we created last year, so that more former students, 
struggling under a burden of debt that has grown enormously in recent 
years, can make ends meet.
  Now, this Congress must act to improve the quality of elementary and 
secondary education available to our children. We must act to ensure 
that as we approach the 21st century, no child is left behind. We must 
act to ensure that no child is forced to try to learn in an overcrowded 
classroom or a crumbling school, and that every child has access to the 
kinds of technologies he or she will need to understand to compete in 
the next millennium.
  The RESULTS Act will help States and school districts improve their 
schools for the 21st century, and includes a number of very important 
provisions, including a plan to create a new partnership between the 
Federal government and State and local governments to rebuild and 
modernize our school buildings. Under this new proposal, States and 
school districts would be able to issue new, zero-interest bonds to 
modernize and build schools. Bondholders would receive Federal income 
tax credits in lieu of interest payments. Using this mechanism, the 
Federal government can leverage almost $22 billion worth of school 
improvements, at a cost of only $3.3 billion over the next five years, 
according to the Joint Committee on Taxation.
  According to the U.S. General Accounting Office, it will cost $112 
billion to bring existing school buildings up to code--to patch the 
leaky roofs, replace the broken windows, fix the plumbing, and make 
other needed repairs. That price tag, as enormous as it sounds, does 
not include the cost of building new schools to accommodate the record 
numbers of children who are crowding our schools, nor the cost of 
upgrading classrooms for modern computers.
  This problem has overwhelmed the fiscal capacities of state and local 
authorities. It is a problem affecting all areas of the country, 
because it is a direct result of the antiquated way we pay for public 
education in this country. The local property tax, which made sense as 
a funding mechanism when wealth was accumulated in the form of land, no 
longer works as a means of funding major capital investments. In urban, 
rural, and suburban schools all across the country, the magnitude of 
the crumbling schools problem has dwarfed local financing capabilities. 
It is a problem that directly affects the ability of students to learn, 
teachers to teach, and schools to implement the kinds of educational 
reform efforts that parents are demanding to improve the quality of 
education in this country.
  According to academic data correlating building conditions and 
student achievement, children in these decrepit classrooms have less of 
a chance. Their education is at risk. They will be less able to compete 
in the 21st century job market. Ultimately, we will all come out on the 
losing end. America can't compete if its students can't learn, and our 
students can't learn if their schools are falling down.
  The legislation being introduced today gives Congress a historic 
opportunity to jump start the process of rebuilding, renovating, 
modernizing, and constructing new schools to meet the needs of all our 
children into the 21st century. The RESULTS Act engages the federal 
government in the support of elementary and secondary education in a 
way that preserves local control of education. In the same way the 
federal government helps finance highways, but the state and local 
governments decide where the roads go, the federal government can help 
state and local authorities rebuild our schools. America has a $112 
billion infrastructure problem that makes it increasingly difficult for 
our students to learn the skills they will need to keep America 
competitive in the 21st century. Now is the time for Congress to act.
  I want to congratulate the Democratic leader again for his work on 
this bill, as well as President Clinton and Secretary Riley, who helped 
shape many of its provisions. I hope the 105th Congress will approve 
this legislation quickly, and renew the promise embodied in the words 
of the 19th century American poet James Russell Lowell, who wrote: ``. 
. . [I]t was in making education not only common to all, but in some 
sense compulsory on all, that the destiny of the free republics of 
America was practically settled.''
                                 ______
                                 
      By Mr. SPECTER:
  S. 1709. A bill to authorize the Secretary of Labor to provide 
assistance to States for the implementation of enhanced pre-vocational 
training programs, in order to improve the likelihood of enabling 
welfare recipients to make transitions from public assistance to 
employment, and for other purposes; to the Committee on Labor and Human 
Resources.


         the job preparation and retention training act of 1998

  Mr. SPECTER. Mr. President, I have sought recognition to introduce 
vocational training legislation, entitled the ``Job Preparation and 
Retention Training Act of 1998,'' which is designed to respond to the 
need for pre-vocational training assistance to enable welfare 
recipients to make the transition from public assistance to work.
  I believe that the historic 1996 welfare reform law will serve the 
American people well by ending systemic dependence and creating a 
program that emphasizes employment--gainful and permanent employment--
by giving the States greater flexibility in administering their 
programs. We are already hearing about the rise in employment rates and 
the substantial drops in State welfare rolls.
  While many Americans have effectively made the transition from 
welfare to work, a need exists for skills training to enable many of 
the individuals who have been long-term welfare recipients to make 
transitions into unsubsidized employment that provides career potential 
and enables the individuals to achieve economic self-sufficiency.
  Mr. President, as Chairman of the Senate Labor, Health and Human 
Services and Education Appropriations Subcommittee, I believe that it 
would be worthwhile to recognize the need for pre-vocational training, 
a type of training that is not formally offered by the U.S. Department 
of Labor.
  Current Federal law does not adequately address the tremendously 
negative effect of unfavorable environmental and cultural factors on 
the ability of such individuals to obtain and retain gainful 
employment.
  I believe that a Federal commitment to the development of pre-
vocational training programs should focus on: improving the job 
readiness of individuals who are welfare recipients and preparing the 
individual psychologically and attitudinally for employment.
  The bill I am introducing today would authorize funding for States to 
enroll chronic welfare dependents into a training program which would 
provide the necessary skills to locate and maintain employment. The 
Secretary of Labor would award States grants on

[[Page S1348]]

a competitive basis for use in teaching individuals to fulfill 
workplace responsibilities such as punctuality, literacy, 
communication, and other survival skills. Once an adult has completed 
this short period of training, he or she would be prepared to get the 
most out of their job training and unsubsidized employment 
opportunities. The $50 million authorization would be provided for each 
of the next two years. The sunset will provide a chance to determine 
the program's efficacy. Further, training funds would be limited to no 
more than $1,200 per individual, which I am advised is a realistic cost 
of skills training and job placement programs.
  Many community-based organizations across the country have already 
recognized this need and are providing pre-vocational training. In this 
limited context, we have found that prevocational trainees have fared 
much better in the economy. I am advised that one such community-based 
organization, the Opportunities Industrialization Centers of America, 
Inc., has found that the average hourly wage of trainees prior to pre-
vocational training was $3.70, not even a minimum wage. After receiving 
pre-vocational training, these same participants started earning an 
average of $8.00 an hour. Further, pre-vocational training resulted in 
an 85% placement rate into better-paying jobs.
  I encourage my colleagues to join me in sponsoring this legislation. 
This bill is intended to enhance welfare reform and it does not tamper 
with the positive changes in existing law, such as the five-year time 
limit. Simply, I am asking for continued federal involvement in ending 
generational welfare.
                                 ______
                                 
      By Mr. COCHRAN (for himself, Mr. Levin, Mr. Leahy, Mr. Stevens, 
        Mr. Robb, Mr. Warner, Mr. Sarbanes, and Ms. Mikulski) (by 
        request):
  S. 1710. A bill to provide for the correction of retirement coverage 
errors under chapters 83 and 84 of title 5, United States Code; to the 
Committee on Governmental Affairs.


          the retirement coverage error correction act of 1998

  Mr. COCHRAN. Mr. President, today I am introducing, at the request of 
the Administration, a bill to provide for the correction of retirement 
coverage errors under chapters 83 and 84 of title 5, United States 
Code--specifically, current and former federal employees who should 
have been placed in the Federal Employee Retirement System (FERS), but 
were misclassified as Civil Service Retirement System (CSRS) or CSRS 
Offset.
  The federal government's transition from CSRS to FERS began in 1984. 
As government agencies carried out the complex job of applying two sets 
of transition rules, mistakes were made, and thousands of employees 
were placed in the wrong retirement system--many learning that their 
pensions would be less than expected. The Administration's proposal, 
``The Federal Retirement Coverage Corrections Act,'' would provide 
employees with a choice between corrected retirement coverage and the 
coverage the employee expected to receive, without disturbing Social 
Security coverage law.
  I think this bill deserves the careful consideration of the Senate. 
As Chairman of the Governmental Affairs Subcommittee with jurisdiction 
over the subject, I will try to ensure a thorough review of all the 
options for dealing with this issue.
  Among the provisions of the bill, are the following:
  (1) Generally, errors of less than 3 years would not be eligible for 
corrective action.
  (2) Social Security-covered employees who were erroneously CSRS 
covered or CSRS Offset covered, may elect to be retroactively under 
either CSRS Offset or Social Security-only coverage.
  (3) CSRS covered, CSRS Offset covered or Social Security-only covered 
employees who were erroneously FERS covered will be deemed to have 
elected FERS coverage and will remain covered by FERS, unless the 
employee declines it.
  (3) Generally, FERS covered employees, former employees, and 
annuitants who were erroneously CSRS covered or CSRS Offset covered, 
may elect retroactive coverage under either CSRS Offset or FERS 
coverage. However, this election may not be available or may be subject 
to adjustment under certain very limited circumstances.
  (5) A Thrift Plan make-whole provision to provide the earnings that 
are now disallowed on the employee's make-up contributions.
  (6) Provisions are included to deal with the retroactive application 
of Social Security upon the correction of a retirement coverage error 
in which an employee was erroneously covered by CSRS.
  (7) The Director of OPM is given discretionary authority to waive 
time limits, reimburse necessary and reasonable expenses and compensate 
losses, and waive specified repayments; and finally
  (8) Costs of the ``Retirement Coverage Error Correction Act'' would 
be paid from the Civil Service Retirement Fund, and OPM would be 
authorized to spend money from that Fund to administer the Act.
  I invite Senators to join in this effort to address a serious problem 
affecting many federal employees.
  I ask unanimous consent that a copy of the bill and a section by 
section analysis be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1710

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled, That this 
     Act may be cited as the ``Retirement Coverage Error 
     Correction Act of 1998''.

     SEC. 2. FINDINGS AND PURPOSE.

       The Congress finds that a number of Government employees 
     have been placed under erroneous retirement coverage during 
     the transition from the Civil Service Retirement System to 
     the Federal Employees Retirement System. When these errors 
     are of significant duration, they adversely affect an 
     employee's ability to plan for retirement. It is the purpose 
     of this Act to provide a remedy that treats all such 
     individuals fairly and reasonably, and demonstrates the 
     Government's concern for its employees who have been 
     disadvantaged by a Government error in their retirement 
     coverage. Affected employees should have a choice between 
     corrected retirement coverage and the benefit the employee 
     would have received under the erroneous coverage, without 
     disturbing Social Security coverage law.

     SEC. 3. DEFINITIONS.

       For the purposes of this Act--
       (1) ``Annuitant'' means an individual described by section 
     8331(9) or 8401(2) of title 5, United States Code;
       (2) ``CSRS'' means the Civil Service Retirement System 
     established under subchapter III of chapter 83 of title 5, 
     United States Code;
       (3) ``CSRS covered'' means subject to the provisions of 
     subchapter III of chapter 83 of title 5, United States Code, 
     including full CSRS employee deductions;
       (4) ``CSRS Offset covered'' means subject to the provisions 
     of subchapter III of chapter 83 of title 5, United States 
     Code, including reduced CSRS employee deductions;
       (5) ``Director'' means the Director of Office of Personnel 
     Management;
       (6) ``FERS'' means the Federal Employees Retirement System 
     established under chapter 84 of title 5, United States Code;
       (7) ``FERS covered'' means subject to the provisions of 
     chapter 84 of title 5, United States Code;
       (8) ``OASDI employee tax'' means the Old Age, Survivors and 
     Disability Insurance tax imposed on wages under section 
     3101(a) of the Internal Revenue Code of 1986;
       (9) ``OASDI employer tax'' means the Old Age, Survivors and 
     Disability Insurance tax imposed on wages under section 
     3111(a) of the Internal Revenue Code of 1986;
       (10) ``OASDI taxes'' means the sum of the OASDI employee 
     tax and OASDI employer tax;
       (11) ``former employee'' means an individual who formerly 
     was a Government employee, but who is not an annuitant;
       (12) ``Office'' means the Office of Personnel Management;
       (13) ``Retirement coverage determination'' means the 
     determination by an agency whether employment is CSRS 
     covered, CSRS Offset covered, FERS covered, or Social 
     Security only covered;
       (14) ``Retirement coverage error'' means an erroneous 
     retirement coverage determination that was in effect for a 
     minimum period of 3 years of service after December 31, 1986;
       (15) ``Service'' means a period of civilian service that is 
     creditable under section 8332 or 8411 of title 5, United 
     States Code;
       (16) ``Social Security-only covered'' means employment 
     under section 3121(b) of the Internal Revenue Code of 1986, 
     subject to OASDI taxes, but not CSRS covered, CSRS Offset 
     covered, or FERS covered; and
       (17) ``Survivor'' means an individual described by section 
     8331(10) or 8401(28) of title 5, United States Code.

     SEC. 4. ERRORS OF LESS THAN 3 YEARS EXCLUDED.

       Except as otherwise provided in this Act, an erroneous 
     retirement coverage determination that was in effect for a 
     period of less than 3 years of service after December 31, 
     1986, is not covered by this Act.

[[Page S1349]]

     SEC. 5. SOCIAL SECURITY-ONLY COVERED EMPLOYEES WHO WERE 
                   ERRONEOUSLY CSRS COVERED OR CSRS OFFSET 
                   COVERED.

       (a) This section applies in the case of a retirement 
     coverage error in which a Social Security-only covered 
     employee was erroneously CSRS covered or CSRS Offset covered.
       (b)(1) This subsection applies if the retirement coverage 
     error has not been corrected prior to the effective date of 
     the regulations described in paragraph (3).
       (2) In the case of an individual who is erroneously CSRS 
     covered, as soon as practicable after discovery of the error, 
     and subject to the right of an election under paragraph (3), 
     such a individual shall be CSRS Offset covered, retroactive 
     to the date of the retirement coverage error.
       (3) Upon written notice of a retirement coverage error, an 
     individual shall have 6 months to make an election, under 
     regulations promulgated by the Office, to be CSRS Offset 
     covered or Social Security-only covered, retroactive to the 
     date of the retirement coverage error. If the individual does 
     not make an election prior to the deadline, the individual 
     shall remain CSRS Offset covered.
       (c)(1) This subsection applies if the retirement coverage 
     error was corrected prior to the effective date of the 
     regulations described in subsection (b)(3).
       (2) Within 6 months after the date of enactment of this 
     Act, the Office shall promulgate regulations authorizing 
     individuals to elect, during the 18-month period immediately 
     following the effective date of the regulations, to be CSRS 
     Offset covered or Social Security-only covered, retroactive 
     to the date of the retirement coverage error.
       (3) If an eligible individual does not make an election 
     under paragraph (2) prior to the deadline, the corrective 
     action previously taken shall remain in effect.

     SEC. 6. SOCIAL SECURITY-ONLY COVERED EMPLOYEES NOT ELIGIBLE 
                   TO ELECT FERS WHO WERE ERRONEOUSLY FERS 
                   COVERED.

       (a) This section applies in the case of a retirement 
     coverage error in which a Social Security-only covered 
     employee not eligible to elect FERS coverage under authority 
     of section 8402(c) of title 5, United States Code, was 
     erroneously FERS covered.
       (b)(1) This subsection applies if the retirement coverage 
     error has not been corrected prior to the effective date of 
     the regulations described in paragraph (2).
       (2) Upon written notice of a retirement coverage error, an 
     individual shall have 6 months to make an election, under 
     regulations promulgated by the Office, to be FERS covered or 
     Social Security-only covered, retroactive to the date of the 
     retirement coverage error. If the individual does not make an 
     election prior to the deadline, the individual shall remain 
     FERS covered, retroactive to the date of the retirement 
     coverage error.
       (c)(1) This subsection applies if the retirement coverage 
     error was corrected prior to the effective date of the 
     regulations described in subsection (b)(2).
       (2) Within 6 months after the date of enactment of this 
     Act, the Office shall promulgate regulations authorizing 
     individuals to elect, during the 18-month period immediately 
     following the effective date of the regulations to be FERS 
     covered or Social Security-only covered, retroactive to the 
     date of the retirement coverage error.
       (3) If an eligible individual does not make an election 
     under paragraph (2) prior to the deadline, the corrective 
     action previously taken shall remain in effect.

     SEC. 7. CSRS COVERED, CSRS OFFSET COVERED, AND FERS-ELIGIBLE 
                   SOCIAL SECURITY-ONLY COVERED EMPLOYEES WHO WERE 
                   ERRONEOUSLY FERS COVERED WITHOUT AN ELECTION.

       (a) If an individual was prevented from electing FERS 
     because the individual was erroneously FERS covered during 
     the period when the individual was eligible to elect FERS 
     under title III of the Federal Employees Retirement System 
     Act of 1986, the individual is deemed to have elected FERS 
     coverage and will remain covered by FERS, unless the 
     individual declines, under regulations promulgated by the 
     Office, to be FERS covered, in which case the individual will 
     be CSRS covered, CSRS Offset covered, or Social Security-only 
     covered; as would apply in the absence of a FERS election, 
     retroactive to the date of the erroneous retirement coverage 
     determination.
       (b) In the case of an individual to whom subsection (a) 
     applies, who dies prior to discovery of the coverage error, 
     or who dies during the election period prescribed in 
     subsection (a) prior to making an election to correct the 
     error, without having the right to decline FERS coverage, the 
     individual's survivors shall have the right to make the 
     election under regulations promulgated by the Office that 
     provide for such election in a manner consistent with the 
     election rights of the individual.
       (c) This section shall be effective retroactive to January 
     1, 1987, except that this section shall not affect 
     individuals who made or were deemed to have made elections 
     similar to those provided in this section under regulations 
     promulgated by the Office prior to the effective date of this 
     Act.

     SEC. 8. FERS COVERED CURRENT AND FORMER EMPLOYEES WHO WERE 
                   ERRONEOUSLY CSRS COVERED OR CSRS OFFSET 
                   COVERED.

       (a) This section applies to a FERS covered employee or 
     former employee who was erroneously CSRS covered or CSRS 
     Offset covered as a result of a retirement coverage error.
       (b)(1) This subsection applies if the retirement coverage 
     error has not been corrected prior to the effective date of 
     the regulations described in paragraph (2). As soon as 
     practicable after discovery of the error, and subject to the 
     right of an election under paragraph (2), if CSRS covered or 
     CSRS Offset covered, such individual shall be treated as CSRS 
     Offset covered, retroactive to the date of the retirement 
     coverage error.
       (2) Upon written notice of a retirement coverage error, an 
     individual shall have 6 months to make an election, under 
     regulations promulgated by the Office, to be CSRS Offset 
     covered or FERS covered, retroactive to the date of the 
     retirement coverage error. If the individual does not make an 
     election by the deadline, a CSRS Offset covered individual 
     shall remain CSRS Offset covered and a CSRS covered 
     individual shall be treated as CSRS Offset covered.
       (c)(1) This subsection applies if the retirement coverage 
     error was corrected prior to the effective date of the 
     regulations described in subsection (b)(2).
       (2)(A) Within 6 months after the date of enactment of this 
     Act, the Office shall promulgate regulations authorizing 
     individuals to elect, during the 18-month period immediately 
     following the effective date of the regulations, to be CSRS 
     Offset covered, retroactive to the date of the retirement 
     coverage error.
       (B) An individual who previously received a payment ordered 
     by a Court or provided as a settlement of claim for losses 
     resulting from a retirement coverage error shall not be 
     entitled to make an election under this subsection unless 
     that amount is waived in whole or in part under section 12, 
     and any amount not waived is repaid.
       (C) An individual who, subsequent to correction of the 
     retirement coverage error, received a refund of retirement 
     deductions under section 8424, or a distribution under 
     section 8433, of title 5, United States Code, shall not be 
     entitled to make an election under this subsection.
       (3) If an individual is ineligible to make an election or 
     does not make an election under paragraph (2) prior to the 
     deadline, the corrective action previously taken shall remain 
     in effect.

     SEC. 9. ANNUITANTS AND SURVIVORS IN CASES WHERE FERS COVERED 
                   EMPLOYEES WERE ERRONEOUSLY CSRS COVERED OR CSRS 
                   OFFSET COVERED.

       (a) This section applies to an individual who is an 
     annuitant or a survivor of a FERS covered employee who was 
     erroneously CSRS covered or CSRS Offset covered as a result 
     of a retirement coverage error.
       (b)(1) Within 6 months after the date of enactment of this 
     Act, the Office shall promulgate regulations authorizing an 
     individual described in subsection (a) to elect CSRS Offset 
     coverage or FERS coverage, retroactive to the date of the 
     retirement coverage error.
       (2) An election under this subsection shall be made within 
     18 months after the effective date of the regulations.
       (3) If the individual elects CSRS Offset coverage, the 
     amount in the employee's Thrift Savings Plan account under 
     subchapter III of chapter 84 of title 5, United States Code, 
     at the time of retirement that represents the Government's 
     contributions and earnings on those contributions (whether or 
     not this amount was subsequently distributed from the Thrift 
     Savings Plan) will form the basis for a reduction in the 
     individual's annuity, under regulations promulgated by the 
     Office. The reduced annuity to which the individual is 
     entitled shall be equal to an amount which, when taken 
     together with the amount referred to in the preceding 
     sentence, would result in the present value of the total 
     being actuarially equivalent to the present value of an 
     unreduced CSRS Offset annuity that would have been provided 
     the individual.
       (4) If--
       (A) a surviving spouse elects CSRS Offset benefits; and
       (B) a FERS basic employee death benefit under section 
     8442(b) of title 5, United States Code, was previously paid;

     then the survivor's CSRS Offset benefit shall be subject to a 
     reduction, under regulations promulgated by the Office. The 
     reduced annuity to which the individual is entitled shall be 
     equal to an amount which, when taken together with the amount 
     of the payment referred to subparagraph (B) would result in 
     the present value of the total being actuarially equivalent 
     to the present value of an unreduced CSRS Offset annuity that 
     would have been provided the individual.
       (5) An individual who previously received a payment ordered 
     by a Court or provided as a settlement of claim for losses 
     resulting from a retirement coverage error shall not be 
     entitled to make an election under this subsection unless 
     repayment of that amount is waived in whole or in part under 
     section 12, and any amount not waived is repaid.
       (c) If the individual does not make an election under 
     subsection (b) prior to the deadline, the retirement coverage 
     shall be subject to the following rules--
       (1) If corrective action was previously taken, that 
     corrective action shall remain in effect; and
       (2) If corrective action was not previously taken, the 
     employee shall be CSRS Offset covered, retroactive to the 
     date of the retirement coverage error.

[[Page S1350]]

     SEC. 10. PROVISIONS RELATED TO SOCIAL SECURITY COVERAGE OF 
                   MISCLASSIFIED EMPLOYEES.

       (a) Reports to Commissioner of Social Security.--In order 
     to carry out the Commissioner of Social Security's 
     responsibilities under title II of the Social Security Act, 
     the Commissioner may request the head of each agency that 
     employs or employed an individual erroneously subject to CSRS 
     coverage as a result of a retirement coverage error and 
     retroactively converted to CSRS Offset coverage, FERS 
     coverage, or Social Security-only coverage to report in 
     coordination with the Office of Personnel Management, and in 
     such form and within such time frame as the Commissioner may 
     specify, any or all of the following--
       (1) the total wages (as defined in section 3121(a) of the 
     Internal Revenue Code of 1986) paid to such individual during 
     each year of the entire period of the erroneous CSRS 
     coverage;
       (2) the excess CSRS deduction amount for the individual; 
     and
       (3) such additional information as the Commissioner may 
     require for the purpose of carrying out the Commissioner's 
     responsibilities under title II of the Social Security Act.

     The head of an agency or the Office shall comply with such a 
     request from the Commissioner. For purposes of section 201 of 
     the Social Security Act, wages reported pursuant to this 
     subsection shall be deemed to be wages reported to the 
     Secretary of the Treasury or the Secretary's delegates 
     pursuant to subtitle F of the Internal Revenue Code of 1954. 
     For purposes of this section, the ``excess CSRS deduction 
     amount'' for an individual shall be an amount equal to the 
     difference between the CSRS deductions withheld and the CSRS 
     Offset or FERS deductions, if any, due with respect to the 
     individual during the entire period the individual was 
     erroneously subject to CSRS coverage as a result of a 
     retirement coverage error.
       (b) Adjustment to Transfers under Section 201 of the Social 
     Security Act.--Any amount transferred from the General Fund 
     to the Federal Old-Age and Survivors Insurance Trust Fund and 
     the Federal Disability Insurance Trust Fund under section 201 
     of the Social Security Act on the basis of reports under this 
     section shall be adjusted by amounts previously transferred 
     as a result of corrections made (including corrections made 
     before the date of enactment of this Act), and shall be 
     reduced by any excess CSRS deduction amounts determined by 
     the Director of the Office of Personnel Management to be 
     remaining to the credit of individuals in the Civil Service 
     Retirement and Disability Fund or in accounts maintained by 
     the employing agencies. Such amounts determined by the 
     Director in the preceding sentence shall be transferred to 
     the Federal Old Age and Survivors Insurance Trust Fund and 
     the Federal Disability Insurance Trust Fund in the 
     proportions indicated in sections 201 (a) and (b) of the 
     Social Security Act.
       (c) Application of OASDI Tax Provisions of the Internal 
     Revenue Code of 1986 to Affected Individuals and Employing 
     Agencies.--An individual described in subsection (a) and the 
     individual's employing agency shall be deemed to have fully 
     satisfied in a timely manner their responsibilities with 
     respect to the taxes imposed by sections 3101(a), 3102(a), 
     and 3111(a) of the Internal Revenue Code of 1986 on the wages 
     paid by the employing agency to such individual during the 
     entire period he or she was erroneously subject to CSRS 
     coverage as a result of a retirement coverage error. No 
     credit or refund of taxes on such wages shall be allowed as 
     result of the operation of this subsection.

     SEC. 11. FUTURE CSRS COVERAGE DETERMINATIONS.

       No agency shall place an individual under CSRS coverage 
     unless--
       (1) the individual has been employed with CSRS coverage 
     within the preceding 365 days; or
       (2) the Office has agreed in writing that the agency's 
     coverage determination is correct.

     SEC. 12. DISCRETIONARY ACTIONS BY DIRECTOR.

       (a) The Director is authorized to take any of the following 
     actions--
       (1) extend the deadlines for making elections under this 
     Act in circumstances involving an individual's inability to 
     make a timely election due to cause beyond the individual's 
     control;
       (2) provide for the reimbursement of necessary and 
     reasonable expenses incurred by an individual with respect to 
     settlement of a claim for losses resulting from a retirement 
     coverage error, including attorney's fees, court costs, and 
     other actual expenses;
       (3) compensate an individual for monetary losses that are a 
     direct and proximate result of a retirement coverage error, 
     excluding claimed losses relating to forgone contributions 
     and earnings under the Thrift Savings Plan under subchapter 
     III of chapter 84 of title 5, United States Code, and all 
     other investment opportunities; and
       (4) waive repayments otherwise required under this Act.
       (b) In exercising the authority under this section, the 
     Director shall, to the extent practicable, provide for 
     similar actions in situations involving similar 
     circumstances.
       (c) Actions taken under this section are final and 
     conclusive, and are not subject to administrative or judicial 
     review on any basis.
       (d) The Office of Personnel Management shall prescribe 
     regulations regarding the process and criteria used in 
     exercising the authority under this section.
       (e) The Office of Personnel Management shall, within six 
     months after the date of enactment of this Act, and annually 
     thereafter for each year in which the authority provided in 
     this section is used, submit a report to each House of 
     Congress on the operation of this section.

     SEC. 13. THRIFT PLAN TREATMENT FOR CERTAIN INDIVIDUALS.

       (a) This section applies to an individual who--
       (1) is eligible to make an election of coverage under 
     section 8 or section 9, and only if FERS coverage is elected 
     (or remains in effect) for the employee involved; or
       (2) is an employee (or former employee, annuitant, or 
     survivor, subject to conditions similar to those in section 8 
     and 9) in the case of a retirement coverage error in which a 
     FERS covered employee was erroneously Social Security-only 
     covered and is corrected to FERS coverage.
       (b)(1) With respect to an individual who whom this section 
     applies, the Director shall pay to the Thrift Savings Fund 
     under subchapter III of chapter 84 of title 5, United States 
     Code, for credit to the account of the employee involved, an 
     amount equal to the earnings which are disallowed under 
     section 8432a of such title 5 on the employee's retroactive 
     contributions to such Fund. Such amount shall represent 
     earnings, on such retroactive contributions, during the 
     period of the retirement coverage error and continuing up to 
     the date on which the amount is paid by the Director (and 
     based on distributions from the employee's Thrift Savings 
     Plan account). Such earnings shall be computed in accordance 
     with the procedures for computing lost earnings under such 
     section 8432a. The amount paid by the Director shall be 
     treated for all purposes as if that amount had actually been 
     earned on the basis of the employee's contributions.
       (2) In cases in which the retirement coverage error was 
     corrected prior to the effective date of the regulations 
     under section 8(c) or section 9(b), the employee involved 
     (including an employee described in subsection (a)(2)) shall 
     have an additional opportunity to make retroactive 
     contributions for the period of the retirement coverage error 
     (subject to applicable limits), and such contributions shall 
     be treated in accordance with the provisions of paragraph 
     (1).
       (c) The Office, in consultation with the Federal Retirement 
     Thrift Investment Board, shall prescribe regulations 
     appropriate to carry out this section.

     SEC. 14. AUTHORIZATION AND APPROPRIATION.

       All payments permitted or required by this Act to be paid 
     from the Civil Service Retirement and Disability Fund, 
     together with administrative expenses incurred by the Office 
     in administering this Act, shall be deemed to have been 
     authorized to be paid from that Fund, which is appropriated 
     for the payment thereof.

     SEC. 15. SERVICE CREDIT DEPOSITS.

       (a) In the case of a retirement coverage error in which--
       (1) a FERS covered employee was erroneously CSRS covered or 
     CSRS Offset covered;
       (2) the employee made a service credit deposit under the 
     CSRS rules; and
       (3) there is a subsequent retroactive change to FERS 
     coverage;

     the excess of the amount of the CSRS civilian or military 
     service credit deposit over the FERS civilian or military 
     service credit deposit, together with interest computed in 
     accordance with paragraphs (2) and (3) of section 8334(e) of 
     title 5, United States Code and regulations prescribed by the 
     Office, shall be a paid to the annuitant or, in the case of a 
     deceased employee, to the individual entitled to lump-sum 
     benefits under section 8342(c) or 8424(d) of title 5, United 
     States Code, as applicable.
       (b)(1) This subsection applies in the case of an erroneous 
     retirement coverage determination in which--
       (A) the employee made a service credit deposit under the 
     FERS rules; and
       (B) there is a subsequent retroactive change to CSRS or 
     CSRS Offset coverage.
       (2) If at the time of commencement of an annuity there is 
     remaining unpaid any excess of the CSRS civilian or military 
     service credit deposit over the FERS civilian or military 
     service credit deposit, the annuity shall be reduced based 
     upon the amount unpaid together with interest computed in 
     accordance with paragraphs (2) and (3) of section 8334(e) of 
     title 5, United States Code and regulations prescribed by the 
     Office. The reduced annuity to which the individual is 
     entitled shall be equal to an amount that, when taken 
     together with the amount referred to in the preceding 
     sentence, would result in the present value of the total 
     being actuarially equivalent to the present value of an 
     unreduced CSRS Offset annuity that would have been provided 
     the individual.
       (3) If at the time of commencement of a survivor annuity, 
     there is remaining unpaid any excess of the CSRS service 
     credit deposit over the FERS service credit deposit, and 
     there has been no actuarial reduction in an annuity under the 
     preceding paragraph, the survivor annuity shall be reduced 
     based upon the amount unpaid together with interest computed 
     in accordance with paragraphs (2) and (3) of section 8334(e) 
     of title 5, United States Code and regulations prescribed by 
     the Office. The reduced survivor annuity to which the 
     individual is entitled shall be equal to an amount that, when 
     taken together with the amount referred to in the

[[Page S1351]]

     preceding sentence, would result in the present value of the 
     total being actuarially equivalent to the present value of an 
     unreduced CSRS Offset survivor annuity that would have been 
     provided the individual.

     SEC. 16. REGULATIONS.

       (a) In addition to the regulations specifically authorized 
     in this Act, the Office may prescribe such other regulations 
     as are necessary for the administration of this Act.
       (b) The regulations issued under this Act shall provide for 
     protection of the rights of a former spouse with entitlement 
     to an apportionment of benefits or to survivor benefits based 
     on the service of the employee.

     SEC. 17. EFFECTIVE DATE.

       Except as otherwise provided herein, this Act shall be 
     effective on the date of enactment.
                                                                    ____


 Retirement Coverage Error Correction Act of 1998--Section-by-Section 
                                Analysis

       The first section provides a title for the bill, the 
     ``Retirement Coverage Error Correction Act of 1998''.
       Section 2 explains the Congressional findings and purpose 
     of the Act.
       Section 3 defines the terms used in the Act. Among the 
     definitions, ``retirement coverage error'' means erroneous 
     coverage that was in effect for at least 3 years of service 
     after December 31, 1986.
       Section 4 provides that, except as otherwise provided in 
     this Act, errors of less than 3 years are excluded from 
     eligibility for corrective action under the Act. The primary 
     exception to the three-year rule is in Section 7, concerning 
     FERS covered employees who should have been, but were not, 
     given the opportunity to elect whether to be covered by FERS.
       Section 5 deals with cases of retirement coverage errors in 
     which a Social Security-only covered employee was erroneously 
     CSRS covered or CSRS Offset covered. Under this provision, 
     OPM will promulgate regulations giving such individuals the 
     option to elect to be retroactively under either CSRS Offset 
     or Social Security-only coverage. If erroneously under CSRS 
     coverage, the employee will be placed under interim CSRS 
     Offset coverage as soon as practicable, and will have the 
     right to make the coverage election under the regulations.
       There will be an 18-month election period applicable to 
     cases where there was a correction of the coverage error 
     prior to the effective date of the regulations. In such 
     cases, if the individual does not make a timely election, 
     then the corrective action previously taken shall remain in 
     effect.
       In cases where the coverage error was not corrected prior 
     to the effective date of the regulations (other than interim 
     conversion from CSRS to CSRS Offset), the individual will 
     have 6 months after notification of the error in which to 
     make an election. In such cases, if the individual does not 
     make a timely election, then the individual will remain under 
     CSRS Offset.
       Section 6 deals with cases of retirement coverage errors in 
     which a Social Security-only covered employee who was not 
     entitled to elect FERS was erroneously FERS covered. Under 
     this provision, OPM will promulgate regulations giving such 
     individuals the option to elect to be retroactively under 
     either FERS coverage or Social Security-only coverage.
       There will be an 18-month election period applicable to 
     cases where there was a correction of the coverage error 
     prior to the effective date of the regulations. In such 
     cases, if the individual does not make a timely election, 
     then the corrective action previously taken shall remain in 
     effect.
       In cases where the coverage error was not corrected prior 
     to the regulations, the individual will have 6 months after 
     notification of the error in which to make an election. In 
     such cases, if the individual does not make a timely 
     election, then the individual will remain under FERS 
     coverage.
       Section 7 provides that in the case of an erroneous 
     retirement coverage determination in which a CSRS covered, 
     CSRS Offset covered or FERS-eligible Social Security-only 
     covered employee was erroneously FERS covered, the employee 
     is deemed to have elected FERS coverage and will remain 
     covered by FERS, unless the employee declines, under 
     regulations promulgated by OPM, to be FERS covered. This form 
     of corrective action is appropriate, regardless of whether 
     the error lasted 3 years, when the individual was prevented 
     from electing FERS during the statutory election period 
     provided by title III of the FERS Act of 1986. Individuals 
     who previously had the right to make such an election under 
     OPM regulations will not be given an additional opportunity 
     to make an election. This section ratifies OPM's authority to 
     issue regulatory provisions to provide appropriate treatment 
     in this situation, in accordance with court decisions. This 
     section will be effective retroactive to January 1, 1987.
       Section 8 applies to employees and former employees (but 
     not annuitants) in cases in which a FERS covered employee was 
     erroneously CSRS covered or CSRS Offset covered. Under this 
     provision, OPM will promulgate regulations giving such 
     individuals the option to elect to be retroactively under 
     either CSRS Offset or FERS coverage. CSRS covered employees 
     will be immediately and retroactively converted to CSRS 
     Offset coverage, since Social Security coverage is automatic 
     by action of law, with the right to make the coverage 
     election under the regulations.
       There will be an 18-month election period applicable to 
     cases where there was a correction of the coverage error 
     prior to the effective date of the regulations. In such 
     cases, if the individual does not make a timely election, 
     then the corrective action previously taken shall remain in 
     effect.
       In cases where the coverage error has not been corrected 
     prior to the effective date of the regulations (other than 
     interim conversion from CSRS to CSRS Offset), the individual 
     will have 6 months after notification of the error in which 
     to make an election. In such cases, if the individual does 
     not make a timely election, then the individual will remain 
     under CSRS Offset.
       In two situation, individuals will not be permitted to make 
     an election. When an individual elects to receive a refund of 
     FERS employee contributions or a Thrift Savings Plan payout, 
     the individual waives the right to benefits based on the 
     service. Accordingly, if, subsequent to correction of the 
     error and placement under FERS, the individual takes either 
     of those actions, there is no justification to reinstate the 
     rights to retirement benefits which were given up knowingly 
     and voluntarily.
       In addition, individuals who previously received a payment 
     ordered by a Court or provided as a settlement of claim for 
     losses resulting from a retirement coverage error will not be 
     entitled to make an election unless repayment is made, or is 
     waived by the Director of OPM.
       Section 9 deals with the same types of errors as section 8, 
     but in cases where the employee has retired or died. The 
     basic provisions are essentially the same, but there are 
     provisions for actuarial adjustments to prospective annuity 
     payments when a retroactive election divests the right to 
     payments which have already been made.
       Section 10 deals with the retroactive application of Social 
     Security upon the correction of a retirement coverage error 
     in which an employee was erroneously covered by CSRS. 
     Subsection (a) provides discretionary authority for the 
     Commissioner of Social Security to request wage and other 
     relevant information directly from the employing agencies, in 
     a form and manner prescribed by the Commissioner. Such 
     information is necessary to correctly compute the employee's 
     Social Security benefit as if the employee had not been 
     erroneously classified. Exercise of this authority would 
     provide for a more efficient provision of such information 
     than current law and procedures, particularly for years 
     prior to the 3-year limitation on assessment of taxes. 
     Information for years prior to the 3-year period open to 
     assessment of taxes would otherwise have to be provided by 
     each individual employee or be provided at the discretion 
     of the employing agency. The authority contained in this 
     subsection would enable the Commissioner of Social 
     Security to prescribe specific procedures, if those 
     procedures are determined to be necessary, to receive 
     directly the information for these employees to ensure 
     that their wage records properly reflect their earnings 
     history.
       Subsection (b) provides that any amounts which may be 
     transferred to the Social Security Trust Funds as a result of 
     the reports which may be required under subsection (a) shall 
     be reduced by certain amounts previously and erroneously 
     deducted for CSRS, and that these amounts shall be 
     transferred from the Civil Service Retirement and Disability 
     Fund to the Social Security Trust Funds in order to correct 
     the retirement and Social Security coverage error. Subsection 
     (c) provides that the OASDI employee tax and OASDI employer 
     tax are deemed to have been paid for the entire period of the 
     erroneous CSRS coverage.
       Section 11 requires agencies, before placing any employee 
     in CSRS coverage, to obtain written agreement from OPM that 
     CSRS coverage is correct, unless the individual has been 
     employed with CSRS coverage within the preceding 365 days, 
     the generally applicable statutory period for exclusion from 
     Social Security. It is intended to prevent future coverage 
     errors.
       Section 12 gives the Director of OPM specific discretionary 
     authority to waive time limits, reimburse necessary and 
     reasonable expenses and compensate losses, and waive 
     specified repayments. The authority to compensate an 
     individual for losses does not extend to claims relating to 
     forgone Thrift Savings Plan contributions and earnings or 
     other investment opportunities. In view of the judgmental 
     nature of such relief, the provision bars administrative or 
     judicial review of these actions. The provisions requires OPM 
     to report to Congress on the use of the authority under this 
     section within six months after enactment, and annually 
     thereafter, if the authority is used.
       Section 13 provides for costs of the Act to be paid from 
     the Civil Service Retirement Fund. It also authorizes OPM to 
     spend money from that Fund to administer the Act.
       Section 14 deals with service credit deposits which can be 
     affected by actions under the Act. Subsection (a) provides 
     for payment of interest on partial refunds of service credit 
     deposits required as a result of corrective actions. 
     Subsection (b) provides for collection by actuarial annuity 
     reduction of certain additional service credit deposits 
     required as a result of corrective actions.
       Section 15 provides that the Office may prescribe 
     regulations necessary for the administration of the Act. In 
     addition, it requires that OPM's regulations protect the 
     rights of a former spouse with entitlement to an 
     apportionment of benefits or to survivor

[[Page S1352]]

     benefits based on the service of the employee.
       Section 16 provides that except as otherwise provided, the 
     Act shall be effective upon enactment.

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