[Congressional Record Volume 144, Number 31 (Thursday, March 19, 1998)]
[Senate]
[Pages S2247-S2248]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       PUBLIC SCHOOL CONSTRUCTION

  Mr. GRAHAM. Mr. President, in this period for morning business, I 
would

[[Page S2248]]

like to discuss with my colleagues a provision which will be contained 
in the legislation introduced by the Senator from Georgia, Senator 
Coverdell, relative to education. This provision relates to public 
school construction.
  Mr. President, as you and others in this Chamber and millions of 
Americans know, we are facing a near crisis in terms of the 
construction of public school facilities. Too many communities in 
America have schools which are crumbling because of age and 
inattention. Other communities have dramatically oversized classrooms 
because they do not have the financing to build enough new schools to 
meet their exploding student population.
  There is no simple answer to this issue. The General Accounting 
Office recently estimated that it would cost about $112 billion to 
repair our schools sufficiently to bring them into good condition. 
Additionally, although there is no single authoritative source of 
information on the need for new school construction, that cost is also 
estimated in the range of $110 billion to $120.
  It is clear to me, and to others who have looked at this issue, that 
we need to look for opportunities to provide flexibility to school 
districts in responding to this massive need for school construction 
and repair. If I can quote Mr. Roger Cuevas, who is the superintendent 
of schools for Dade County, FL, when he recently wrote:

       It is important that financing options be defined in as 
     flexible a manner as possible and especially not be limited 
     to general obligation bonds . . . Flexibility in the choice 
     of the type of eligible debt financing, as well as the 
     capacity of the program to adapt to State-by-State 
     differences are as critical to all school districts in the 
     Nation as is its funding level.

  The provision which will be contained in the legislation of Senator 
Coverdell provides for public school construction the same 
opportunities which are currently available in a wide variety of other 
public-need areas; namely, airports, seaports, mass transit facilities, 
water and sewer facilities, solid waste disposal facilities, qualified 
residential rental projects, local furnishing of electric energy and 
gas, heating and cooling facilities, qualified hazardous waste 
facilities, high-speed inter-city rail facilities and environmental 
enhancements of hydroelectric generating facilities. In all of those 12 
separate areas, the U.S. Congress has provided assistance in the 
financing through what is known as private activity bonds.
  This legislation adds a 13th category for public schools. This new 
category builds upon the experience that already exists from using 
private activity bonds to finance transportation, energy, 
environmental, and housing projects.
  What would be the essence of this proposal? This proposal would 
provide to each State the opportunity to issue tax-exempt private 
activity bonds to finance construction of public schools. These bonds 
would be administered at the State level, just as are the other 12 
categories of private activity bonds. States containing school 
districts experiencing high growth would be allowed to issue bonds each 
year in an amount equal to $10 multiplied by the population of the 
State. For example, if a State with high-growth school districts has a 
population of 5 million, it could issue up to $50 million of bonds to 
finance school construction. A high-growth school district is defined 
as one with an enrollment of at least 5,000 students and the enrollment 
has grown by at least 20 percent during the five years previous to the 
year of bond issue. States without high-growth school districts would 
still receive $5 million of bond authority.

  Potentially, this could provide to the Nation bonding capacity for 
public school construction of about $2.5 billion a year, if each State 
fully participates. That would be a noticeable contribution toward the 
enormous need that the Nation faces for financing the construction of 
new public schools and the rehabilitation of old ones.
  More important, it would provide a new source of financing for public 
school construction, because the nature of private activity bonds 
involves a partnership between a public agency--in this case typically 
a local school district--and a private entity. A typical example of 
what would be anticipated under this legislation would be that a school 
district needing to build two new elementary schools would solicit 
requests from the private sector for the construction and financing of 
those schools. The school district would select which of the proposals 
that best served the interest of that school district. The school 
district would then enter into a leaseback arrangement where the 
private builder would construct the building, would be responsible for 
paying the indebtedness on the private activity bonds and, at the end 
of the lease term, would turn the facilities over to the school system 
with no additional consideration. This would allow the school district 
to take advantage of private sector innovation in design and 
construction, as well as the private sector involvement in financing.
  I might say that I had an opportunity in October of last year during 
one of my monthly work days to work on McNiclo Middle School in 
Hollywood, FL, which was being built under this type of arrangement, 
although the financing was the conventional type of general obligation 
bond financing. In this case, because the contractor was doing a 
design-and-build project, the construction time and cost were less than 
they would have been under standard procedures.
  There happened to even be a third benefit. This school was being 
built not only to meet educational standards, but also was being 
further strengthened so that it would serve as a community shelter in 
the event of a hurricane or other emergency situation. This legislation 
seeks to encourage and accelerate those kinds of innovative public-
private relationships.
  So, with this description, I hope that my colleagues will see the 
benefit of the flexibility and creativity that this provision will 
bring and the appropriateness of the Federal Government offering this 
degree of assistance to our public schools, just as it has in a whole 
variety of other public activities.
  The Federal Government is not intruding into areas of curriculum or 
personnel or other aspects of education which are the appropriate 
responsibility of the local school district. But we are extending a 
hand to States and local governments to help them see that all American 
children go into a classroom which is safe, which is adequate, which 
meets modern educational needs and into a school in which there are 
sufficient classrooms so that there can be that relationship between 
the teacher and the student that will advance quality education.
  Thank you, Mr. President.
  The PRESIDING OFFICER (Mr. Inhofe). Under the previous order, the 
Senator from Nevada is recognized to speak for up to 10 minutes.
  Mr. BRYAN. I thank the Chair.

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