[Congressional Record Volume 144, Number 46 (Thursday, April 23, 1998)]
[Senate]
[Pages S3469-S3473]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          EDUCATION SAVINGS ACT FOR PUBLIC AND PRIVATE SCHOOLS

  The PRESIDING OFFICER. Under the previous order, the Senate will now 
resume consideration of H.R. 2646, which the clerk will report.
  The legislative clerk read as follows:

       A bill (H.R. 2646) to amend the Internal Revenue Code of 
     1986 to allow tax-free expenditures from education individual 
     retirement accounts for elementary and secondary school 
     expenses, to increase the maximum annual amount of 
     contributions to such accounts, and for other purposes.

  The Senate resumed consideration of the bill.
  Pending:

       Coats amendment No. 2297, to provide an additional 
     incentive to donate to elementary and secondary schools or 
     other organizations which provide scholarships to 
     disadvantaged children.
       Levin/Bingaman amendment No. 2299, to replace the expansion 
     of education individual retirement accounts to elementary and 
     secondary school expenses with an increase in the lifetime 
     learning education credit for expenses of teachers in 
     improving technology training.
       Landrieu amendment No. 2301, to provide funding to carry 
     out a program that recognizes public and private elementary 
     and secondary schools that have established standards of 
     excellence.
       Kempthorne modified amendment No. 2302 (to amendment No. 
     2301), to provide for student improvement incentive awards.
       Levin amendment No. 2303 (to amendment No. 2299, as 
     amended), to replace the expansion of education individual 
     retirement accounts to elementary and secondary school 
     expenses with an increase in the lifetime learning education 
     credit for expenses of teachers in improving technology 
     training.


                           Amendment No. 2297

  The PRESIDING OFFICER. Under the previous order, there will now be 2 
minutes of debate prior to a vote on or in relation to the Coats 
amendment No. 2297.
  Mr. COATS addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the distinguished Senator 
from Indiana.
  Mr. COATS. Mr. President, this amendment Members will be voting on 
shortly simply adds an incentive to the current deduction that is 
allowed for individuals making contributions to tax-exempt 
organizations that provide scholarships for low-income children.
  Currently it is 100 percent deductible. We are adding an additional 
10 percent incentive so that these organizations, of which currently 
more than 30 exist around the country, can receive additional funds 
through this incentive so that they can offer additional scholarships 
to children trapped in an educational system which allows them no 
escape. There are currently programs operating in virtually every major 
city in the country. They are giving children a chance.
  Those who say, ``If you can't give everybody a chance, you can't give 
anybody a chance'', are like those standing on the Titanic saying, ``If 
we don't have enough lifeboats for all on this sinking ship, nobody 
gets to use the existing lifeboats.''
  These kids are condemned to failure with no way out of the plight 
they are in. Let us allow these organizations

[[Page S3470]]

that are reaching out through private contributions a chance to give 
these kids a chance.
  This is paid for. It is revenue neutral. Earlier the offset was an 
elimination of the gambling loss deduction. That has been replaced. 
There was controversy. We wanted the focus to be on this amendment. 
That has been replaced by two provisions of the Internal Revenue Code, 
changes that are approved by the Finance Committee. There should be no 
controversy on that.
  I urge my colleagues to give children, low-income children in 
minority situations mostly in urban schools--let us give them a chance.
  The PRESIDING OFFICER. Who yields time?
  Mr. KENNEDY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. Mr. President, this week we were supposed to be debating 
our Nation's policy on education. Where our Nation's children are going 
to school is to the public school systems. We do not have anything 
against the private school system, but we ought to be testing every 
single recommendation against does it really help our public schools or 
are we taking needed funds away from our public schools?
  This does absolutely nothing for our public schools. It gives no help 
and assistance to hard-working parents whose children are going to 
public schools. What it does do is it says we are going to give a 
preference in terms of charitable giving to these specific 
organizations over charitable giving to cancer, over charitable giving 
to heart disease, over charitable giving to Alzheimer's, over 
charitable giving to a wide range of other very worthwhile factors.
  What is possibly the justification for that? We ought to consider tax 
policy in that respect, but this is not good education policy. It does 
not advance our common interest of moving the public schools toward 
greater academic achievement and accomplishment. That ought to be the 
test. This fails on the education standard, and it fails on tax policy.
  Mr. President, I hope that the amendment will not be accepted.
  Mr. COVERDELL. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the amendment 
No. 2297. The yeas and nays have been ordered. The clerk will call the 
roll.
  The assistant legislative clerk called the roll.
  The result was announced--yeas 46, nays 54, as follows:

                      [Rollcall Vote No. 95 Leg.]

                                YEAS--46

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Brownback
     Burns
     Campbell
     Coats
     Cochran
     Coverdell
     Craig
     D'Amato
     DeWine
     Domenici
     Faircloth
     Frist
     Gorton
     Gramm
     Grams
     Gregg
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Kempthorne
     Kyl
     Lieberman
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Roberts
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner

                                NAYS--54

     Akaka
     Baucus
     Biden
     Bingaman
     Boxer
     Breaux
     Bryan
     Bumpers
     Byrd
     Chafee
     Cleland
     Collins
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Enzi
     Feingold
     Feinstein
     Ford
     Glenn
     Graham
     Grassley
     Hagel
     Harkin
     Hollings
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Mikulski
     Moseley-Braun
     Moynihan
     Murkowski
     Murray
     Nickles
     Reed
     Reid
     Robb
     Rockefeller
     Roth
     Sarbanes
     Specter
     Torricelli
     Wellstone
     Wyden
  The amendment (No. 2297) was rejected.
  Mr. KENNEDY. Mr. President, I move to reconsider the vote by which 
the amendment was rejected.
  Mr. COVERDELL. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. COVERDELL addressed the Chair.
  The PRESIDING OFFICER. The Senator from Georgia is recognized.
  Mr. COVERDELL. Mr. President, I ask unanimous consent that the next 
vote in this series be limited to 10 minutes in length.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                    Amendment No. 2302, as modified

  The PRESIDING OFFICER. Under the previous order there will now be 2 
minutes of debate prior to the vote on or in relation to the Kempthorne 
amendment 2302, as modified.
  The text of the amendment (No. 2302), as modified, is as follows:


                           amendment no. 2302

    (Purpose: To amend section 6201 of the Elementary and Secondary 
  Education Act of 1965 to provide for student improvement incentive 
                    awards, and for other purposes)

       Strike all after the first word, and insert the following:

     101. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT 
                   ACCOUNTS.

       (a) Tax-Free Expenditures for Elementary and Secondary 
     School Expenses.--
       (1) In general.--Section 530(b)(2) (defining qualified 
     higher education expenses) is amended to read as follows:
       ``(2) Qualified education expenses.--
       ``(A) In general.--The term `qualified education expenses' 
     means--
       ``(i) qualified higher education expenses (as defined in 
     section 529(e)(3)), and
       ``(ii) qualified elementary and secondary education 
     expenses (as defined in paragraph (4)).

     Such expenses shall be reduced as provided in section 
     25A(g)(2).
       ``(B) Qualified state tuition programs.--Such term shall 
     include amounts paid or incurred to purchase tuition credits 
     or certificates, or to make contributions to an account, 
     under a qualified State tuition program (as defined in 
     section 529(b)) for the benefit of the beneficiary of the 
     account.''
       (2) Qualified elementary and secondary education 
     expenses.--Section 530(b) (relating to definitions and 
     special rules) is amended by adding at the end the following 
     new paragraph:
       ``(4) Qualified elementary and secondary education 
     expenses.--
       ``(A) In general.--The term `qualified elementary and 
     secondary education expenses' means--
       ``(i) expenses for tuition, fees, academic tutoring, 
     special needs services, books, supplies, computer equipment 
     (including related software and services), and other 
     equipment which are incurred in connection with the 
     enrollment or attendance of the designated beneficiary of the 
     trust as an elementary or secondary school student at a 
     public, private, or religious school, or
       ``(ii) expenses for room and board, uniforms, 
     transportation, and supplementary items and services 
     (including extended day programs) which are required or 
     provided by a public, private, or religious school in 
     connection with such enrollment or attendance.
       ``(B) Special rule for homeschooling.--Such term shall 
     include expenses described in subparagraph (A)(i) in 
     connection with education provided by homeschooling if the 
     requirements of any applicable State or local law are met 
     with respect to such education.
       ``(C) School.--The term `school' means any school which 
     provides elementary education or secondary education 
     (kindergarten through grade 12), as determined under State 
     law.''
       (3) Special rules for applying exclusion to elementary and 
     secondary expenses.--Section 530(d)(2) (relating to 
     distributions for qualified higher education expenses) is 
     amended by adding at the end the following new subparagraph:
       ``(D) Special rules for elementary and secondary 
     expenses.--
       ``(i) In general.--The aggregate amount of qualified 
     elementary and secondary education expenses taken into 
     account for purposes of this paragraph with respect to any 
     education individual retirement account for all taxable years 
     shall not exceed the sum of the aggregate contributions to 
     such account for taxable years beginning after December 31, 
     1998, and before January 1, 2003, and earnings on such 
     contributions.
       ``(ii) Special operating rules.--For purposes of clause 
     (i)--

       ``(I) the trustee of an education individual retirement 
     account shall keep separate accounts with respect to 
     contributions and earnings described in clause (i), and
       ``(II) if there are distributions in excess of qualified 
     elementary and secondary education expenses for any taxable 
     year, such excess distributions shall be allocated first to 
     contributions and earnings not described in clause (i).''

       (4) Conforming amendments.--Subsections (b)(1) and (d)(2) 
     of section 530 are each amended by striking ``higher'' each 
     place it appears in the text and heading thereof.
       (b) Maximum Annual Contributions.--
       (1) In general.--Section 530(b)(1)(A)(iii) (defining 
     education individual retirement account) is amended by 
     striking ``$500'' and inserting ``the contribution limit for 
     such taxable year''.
       (2) Contribution limit.--Section 530(b) (relating to 
     definitions and special rules), as amended by subsection 
     (a)(2), is amended by

[[Page S3471]]

     adding at the end the following new paragraph:
       ``(5) Contribution limit.--The term `contribution limit' 
     means $500 ($2,000 in the case of any taxable year beginning 
     after December 31, 1998, and ending before January 1, 
     2003).''
       (3) Conforming amendments.--
       (A) Section 530(d)(4)(C) is amended by striking ``$500'' 
     and inserting ``the contribution limit for such taxable 
     year''.
       (B) Section 4973(e)(1)(A) is amended by striking ``$500'' 
     and inserting ``the contribution limit (as defined in section 
     530(b)(5)) for such taxable year''.
       (c) Waiver of Age Limitations for Children With Special 
     Needs.--Section 530(b)(1) (defining education individual 
     retirement account) is amended by adding at the end the 
     following flush sentence:

     ``The age limitations in the preceding sentence shall not 
     apply to any designated beneficiary with special needs (as 
     determined under regulations prescribed by the Secretary).''
       (d) Corporations Permitted To Contribute to Accounts.--
     Section 530(c)(1) (relating to reduction in permitted 
     contributions based on adjusted gross income) is amended by 
     striking ``The maximum amount which a contributor'' and 
     inserting ``In the case of a contributor who is an 
     individual, the maximum amount the contributor''.
       (e) No Double Benefit.--Section 530(d)(2) (relating to 
     distributions for qualified education expenses), as amended 
     by subsection (a)(3), is amended by adding at the end the 
     following new subparagraph:
       ``(E) Disallowance of excluded amounts as credit or 
     deduction.--No deduction or credit shall be allowed to the 
     taxpayer under any other section of this chapter for any 
     qualified education expenses to the extent taken into account 
     in determining the amount of the exclusion under this 
     paragraph.''
       (f) Technical Corrections.--
       (1)(A) Section 530(b)(1)(E) (defining education individual 
     retirement account) is amended to read as follows:
       ``(E) Any balance to the credit of the designated 
     beneficiary on the date on which the beneficiary attains age 
     30 shall be distributed within 30 days after such date to the 
     beneficiary or, if the beneficiary dies before attaining age 
     30, shall be distributed within 30 days after the date of 
     death to the estate of such beneficiary.''
       (B) Section 530(d) (relating to tax treatment of 
     distributions) is amended by adding at the end the following 
     new paragraph:
       ``(8) Deemed distribution on required distribution date.--
     In any case in which a distribution is required under 
     subsection (b)(1)(E), any balance to the credit of a 
     designated beneficiary as of the close of the 30-day period 
     referred to in such subsection for making such distribution 
     shall be deemed distributed at the close of such period.''
       (2)(A) Section 530(d)(1) is amended by striking ``section 
     72(b)'' and inserting ``section 72''.
       (B) Section 72(e) (relating to amounts not received as 
     annuities) is amended by inserting after paragraph (8) the 
     following new paragraph:
       ``(9) Extension of paragraph (2)(b) to qualified state 
     tuition programs and educational individual retirement 
     accounts.--Notwithstanding any other provision of this 
     subsection, paragraph (2)(B) shall apply to amounts received 
     under a qualified State tuition program (as defined in 
     section 529(b)) or under an education individual retirement 
     account (as defined in section 530(b)). The rule of paragraph 
     (8)(B) shall apply for purposes of this paragraph.''
       (3) Section 530(d)(4)(B) (relating to exceptions) is 
     amended by striking ``or'' at the end of clause (ii), by 
     striking the period at the end of clause (iii) and inserting 
     ``, or'', and by adding at the end the following new clause:
       ``(iv) an amount which is includible in gross income solely 
     because the taxpayer elected under paragraph (2)(C) to waive 
     the application of paragraph (2) for the taxable year.''
       (g) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after December 31, 1998.
       (2) Technical corrections.--The amendments made by 
     subsection (f) shall take effect as if included in the 
     amendments made by section 213 of the Taxpayer Relief Act of 
     1997.

     SEC. 102. STUDENT IMPROVEMENT INCENTIVE AWARDS.

       Section 6201 of the Elementary and Secondary Education Act 
     of 1965 (20 U.S.C. 7331) is amended--
       (1) in subsection (a)--
       (A) in paragraph (1)(C), by striking ``and'' after the 
     semicolon;
       (B) in paragraph (2), by striking the period and inserting 
     ``; and''; and
       (C) by adding at the end the following:
       ``(3) student improvement incentive awards described in 
     subsection (c).''; and
       (2) by adding at the end the following:
       ``(c) Student Improvement Incentive Awards.--
       ``(1) Awards.--A State educational agency may use funds 
     made available for State use under this title to make awards 
     to public schools in the State that are determined to be 
     outstanding schools pursuant to a statewide assessment 
     described in paragraph (2).
       ``(2) Statewide assessment.--The statewide assessment 
     referred to in paragraph (1)--
       ``(A) shall--
       ``(i) determine the educational progress of students 
     attending public schools within the State; and
       ``(ii) allow for an objective analysis of the assessment on 
     a school-by-school basis; and
       ``(B) may involve exit exams.''.

  Mr. KEMPTHORNE addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the Senator from Idaho.
  Mr. KEMPTHORNE. Mr. President, thank you very much.
  Mr. President, this is a very straightforward amendment. This is a 
voluntary, incentive-based approach to help improve the academic 
excellence in our public schools. It allows each State, if they wish, 
to utilize Federal funds that they receive so they can reward 
excellence and encourage their schools. There is no new requirement of 
new Federal money. It uses existing Federal money. There is no new 
Federal bureaucracy put in place. It would be taken care of, again, 
voluntarily by the States. It is simply a concept that all of us 
believe in; that is, incentive and reward. We now give a new tool to 
our public schools to utilize these funds for that purpose, if the 
States so choose.
  Thank you, Mr. President.
  The PRESIDING OFFICER (Mr. Frist). Who yields time?
  Ms. LANDRIEU addressed the Chair.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Ms. LANDRIEU. Mr. President, let me ask my colleagues to join me in 
voting against the second-degree amendment to my underlying amendment 
on blue ribbon schools. This is a do-nothing amendment. The States 
actually can already do this with the money they receive. There is no 
reason for this amendment. The only thing that this amendment does, if 
by any chance it passes, is it limits our----
  Mr. WELLSTONE. Mr. President, could we have order?
  The PRESIDING OFFICER. The Senate will be in order.
  Ms. LANDRIEU. Mr. President, this amendment is a do-nothing 
amendment. In some ways it could be harmful to the current blue ribbon 
program that is so excellent now in our country, because if this 
amendment would pass, you would not be able to reward private and 
parochial schools who are doing an excellent job. A wonderful thing 
about our blue ribbon school program is that it recognizes excellence 
across the board and helps us. It will give them more than a blue 
ribbon and a plaque; it will give them some financial incentive to 
continue to do good work.
  I ask my colleagues to vote ``no'' on the Kempthorne amendment and 
then to support our blue ribbon amendment, which is the underlying 
amendment.
  Thank you very much, Mr. President.
  Mr. KEMPTHORNE. Mr. President, I greatly respect the Senator from 
Louisiana, but I totally disagree with the characterization of the 
Senator from Louisiana. This allows the States to finally utilize these 
funds so they can make financial rewards to our schools as they should 
do.
  Thank you.
  The PRESIDING OFFICER. The time has expired.
  The yeas and nays have not yet been ordered.
  Mr. COVERDELL. Mr. President, I ask for the yeas and nays on the 
amendment.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the amendment 
of the Senator from Idaho. On this question, the yeas and nays have 
been ordered, and the clerk will call the roll.
  The legislative clerk called the roll.
  The result was announced--yeas 58, nays 42, as follows:

                      [Rollcall Vote No. 96 Leg.]

                                YEAS--58

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Brownback
     Burns
     Campbell
     Chafee
     Cleland
     Coats
     Cochran
     Collins
     Coverdell
     Craig
     D'Amato
     DeWine
     Domenici
     Enzi
     Faircloth
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kempthorne
     Kyl
     Lieberman

[[Page S3472]]


     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Reid
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner

                                NAYS--42

     Akaka
     Baucus
     Biden
     Bingaman
     Boxer
     Breaux
     Bryan
     Bumpers
     Byrd
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Feingold
     Feinstein
     Ford
     Glenn
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Mikulski
     Moseley-Braun
     Moynihan
     Murray
     Reed
     Robb
     Rockefeller
     Sarbanes
     Torricelli
     Wellstone
     Wyden
  The amendment (No. 2302), as modified, was agreed to.
  Mr. KEMPTHORNE. Mr. President, I move to reconsider the vote and I 
move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. Under the previous order, the amendment is 
modified to be a first-degree amendment.
  The amendment (No. 2302), as modified further, reads as follows:
       Strike section 101 and insert the following:

     101. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT 
                   ACCOUNTS.

       (a) Tax-Free Expenditures for Elementary and Secondary 
     School Expenses.--
       (1) In general.--Section 530(b)(2) (defining qualified 
     higher education expenses) is amended to read as follows:
       ``(2) Qualified education expenses.--
       ``(A) In general.--The term `qualified education expenses' 
     means--
       ``(i) qualified higher education expenses (as defined in 
     section 529(e)(3)), and
       ``(ii) qualified elementary and secondary education 
     expenses (as defined in paragraph (4)).

     Such expenses shall be reduced as provided in section 
     25A(g)(2).
       ``(B) Qualified state tuition programs.--Such term shall 
     include amounts paid or incurred to purchase tuition credits 
     or certificates, or to make contributions to an account, 
     under a qualified State tuition program (as defined in 
     section 529(b)) for the benefit of the beneficiary of the 
     account.''
       (2) Qualified elementary and secondary education 
     expenses.--Section 530(b) (relating to definitions and 
     special rules) is amended by adding at the end the following 
     new paragraph:
       ``(4) Qualified elementary and secondary education 
     expenses.--
       ``(A) In general.--The term `qualified elementary and 
     secondary education expenses' means--
       ``(i) expenses for tuition, fees, academic tutoring, 
     special needs services, books, supplies, computer equipment 
     (including related software and services), and other 
     equipment which are incurred in connection with the 
     enrollment or attendance of the designated beneficiary of the 
     trust as an elementary or secondary school student at a 
     public, private, or religious school, or
       ``(ii) expenses for room and board, uniforms, 
     transportation, and supplementary items and services 
     (including extended day programs) which are required or 
     provided by a public, private, or religious school in 
     connection with such enrollment or attendance.
       ``(B) Special rule for homeschooling.--Such term shall 
     include expenses described in subparagraph (A)(i) in 
     connection with education provided by homeschooling if the 
     requirements of any applicable State or local law are met 
     with respect to such education.
       ``(C) School.--The term `school' means any school which 
     provides elementary education or secondary education 
     (kindergarten through grade 12), as determined under State 
     law.''
       (3) Special rules for applying exclusion to elementary and 
     secondary expenses.--Section 530(d)(2) (relating to 
     distributions for qualified higher education expenses) is 
     amended by adding at the end the following new subparagraph:
       ``(D) Special rules for elementary and secondary 
     expenses.--
       ``(i) In general.--The aggregate amount of qualified 
     elementary and secondary education expenses taken into 
     account for purposes of this paragraph with respect to any 
     education individual retirement account for all taxable years 
     shall not exceed the sum of the aggregate contributions to 
     such account for taxable years beginning after December 31, 
     1998, and before January 1, 2003, and earnings on such 
     contributions.
       ``(ii) Special operating rules.--For purposes of clause 
     (i)--

       ``(I) the trustee of an education individual retirement 
     account shall keep separate accounts with respect to 
     contributions and earnings described in clause (i), and
       ``(II) if there are distributions in excess of qualified 
     elementary and secondary education expenses for any taxable 
     year, such excess distributions shall be allocated first to 
     contributions and earnings not described in clause (i).''

       (4) Conforming amendments.--Subsections (b)(1) and (d)(2) 
     of section 530 are each amended by striking ``higher'' each 
     place it appears in the text and heading thereof.
       (b) Maximum Annual Contributions.--
       (1) In general.--Section 530(b)(1)(A)(iii) (defining 
     education individual retirement account) is amended by 
     striking ``$500'' and inserting ``the contribution limit for 
     such taxable year''.
       (2) Contribution limit.--Section 530(b) (relating to 
     definitions and special rules), as amended by subsection 
     (a)(2), is amended by adding at the end the following new 
     paragraph:
       ``(5) Contribution limit.--The term `contribution limit' 
     means $500 ($2,000 in the case of any taxable year beginning 
     after December 31, 1998, and ending before January 1, 
     2003).''
       (3) Conforming amendments.--
       (A) Section 530(d)(4)(C) is amended by striking ``$500'' 
     and inserting ``the contribution limit for such taxable 
     year''.
       (B) Section 4973(e)(1)(A) is amended by striking ``$500'' 
     and inserting ``the contribution limit (as defined in section 
     530(b)(5)) for such taxable year''.
       (c) Waiver of Age Limitations for Children With Special 
     Needs.--Section 530(b)(1) (defining education individual 
     retirement account) is amended by adding at the end the 
     following flush sentence:

     ``The age limitations in the preceding sentence shall not 
     apply to any designated beneficiary with special needs (as 
     determined under regulations prescribed by the Secretary).''
       (d) Corporations Permitted To Contribute to Accounts.--
     Section 530(c)(1) (relating to reduction in permitted 
     contributions based on adjusted gross income) is amended by 
     striking ``The maximum amount which a contributor'' and 
     inserting ``In the case of a contributor who is an 
     individual, the maximum amount the contributor''.
       (e) No Double Benefit.--Section 530(d)(2) (relating to 
     distributions for qualified education expenses), as amended 
     by subsection (a)(3), is amended by adding at the end the 
     following new subparagraph:
       ``(E) Disallowance of excluded amounts as credit or 
     deduction.--No deduction or credit shall be allowed to the 
     taxpayer under any other section of this chapter for any 
     qualified education expenses to the extent taken into account 
     in determining the amount of the exclusion under this 
     paragraph.''
       (f) Technical Corrections.--
       (1)(A) Section 530(b)(1)(E) (defining education individual 
     retirement account) is amended to read as follows:
       ``(E) Any balance to the credit of the designated 
     beneficiary on the date on which the beneficiary attains age 
     30 shall be distributed within 30 days after such date to the 
     beneficiary or, if the beneficiary dies before attaining age 
     30, shall be distributed within 30 days after the date of 
     death to the estate of such beneficiary.''
       (B) Section 530(d) (relating to tax treatment of 
     distributions) is amended by adding at the end the following 
     new paragraph:
       ``(8) Deemed distribution on required distribution date.--
     In any case in which a distribution is required under 
     subsection (b)(1)(E), any balance to the credit of a 
     designated beneficiary as of the close of the 30-day period 
     referred to in such subsection for making such distribution 
     shall be deemed distributed at the close of such period.''
       (2)(A) Section 530(d)(1) is amended by striking ``section 
     72(b)'' and inserting ``section 72''.
       (B) Section 72(e) (relating to amounts not received as 
     annuities) is amended by inserting after paragraph (8) the 
     following new paragraph:
       ``(9) Extension of paragraph (2)(b) to qualified state 
     tuition programs and educational individual retirement 
     accounts.--Notwithstanding any other provision of this 
     subsection, paragraph (2)(B) shall apply to amounts received 
     under a qualified State tuition program (as defined in 
     section 529(b)) or under an education individual retirement 
     account (as defined in section 530(b)). The rule of paragraph 
     (8)(B) shall apply for purposes of this paragraph.''
       (3) Section 530(d)(4)(B) (relating to exceptions) is 
     amended by striking ``or'' at the end of clause (ii), by 
     striking the period at the end of clause (iii) and inserting 
     ``, or'', and by adding at the end the following new clause:
       ``(iv) an amount which is includible in gross income solely 
     because the taxpayer elected under paragraph (2)(C) to waive 
     the application of paragraph (2) for the taxable year.''
       (g) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after December 31, 1998.
       (2) Technical corrections.--The amendments made by 
     subsection (f) shall take effect as if included in the 
     amendments made by section 213 of the Taxpayer Relief Act of 
     1997.

     SEC. 102. STUDENT IMPROVEMENT INCENTIVE AWARDS.

       Section 6201 of the Elementary and Secondary Education Act 
     of 1965 (20 U.S.C. 7331) is amended--
       (1) in subsection (a)--
       (A) in paragraph (1)(C), by striking ``and'' after the 
     semicolon;
       (B) in paragraph (2), by striking the period and inserting 
     ``; and''; and
       (C) by adding at the end the following:
       ``(3) student improvement incentive awards described in 
     subsection (c).''; and
       (2) by adding at the end the following:

[[Page S3473]]

       ``(c) Student Improvement Incentive Awards.--
       ``(1) Awards.--A State educational agency may use funds 
     made available for State use under this title to make awards 
     to public schools in the State that are determined to be 
     outstanding schools pursuant to a statewide assessment 
     described in paragraph (2).
       ``(2) Statewide assessment.--The statewide assessment 
     referred to in paragraph (1)--
       ``(A) shall--
       ``(i) determine the educational progress of students 
     attending public schools within the State; and
       ``(ii) allow for an objective analysis of the assessment on 
     a school-by-school basis; and
       ``(B) may involve exit exams.''.


                           Amendment No. 2301

  The PRESIDING OFFICER. Under the previous order, there will now be 2 
minutes of debate prior to a vote on or in relation to the Landrieu 
amendment No. 2301. Who yields time?
  Ms. LANDRIEU. Mr. President, could I have some order, please?
  Mr. KENNEDY. Mr. President, may we have order? The Senator is 
entitled to be heard.
  The PRESIDING OFFICER. The Senate will be in order. The Senator from 
Louisiana.
  Ms. LANDRIEU. Mr. President, as this body knows, many on both sides 
of this aisle support blue ribbon schools because we believe that we 
should begin rewarding excellence, funding results, and we should stop 
funding failures. Blue ribbon schools are chosen by their States every 
year. Some of them are public--many of them. Some of them are private. 
Some of them are parochial. When they achieve against the odds and when 
their students succeed, we call them to Washington and they come, 250 
of them every year. We give them a beautiful, shiny plaque and a big 
blue ribbon and we send them home with nothing else but the plaque and 
the blue ribbon. They are happy to get it, but what they really want 
and need are some resources to continue doing their good work.
  So I think this is a better way to spend the $1.5 billion. Instead of 
helping just a few people in America, we can help all of our schools 
and begin rewarding results. That is what this amendment does, the blue 
ribbon school amendment. I ask my colleagues to support it.
  The PRESIDING OFFICER. The time of the Senator has expired. Who 
yields time? The Senator from Georgia.
  Mr. COVERDELL. Mr. President, there is certainly nothing wrong with 
an amendment that tries to improve blue ribbon schools. But the 
amendment by the Senator from Louisiana guts the underlying premise of 
the bill. What is substituted here is pretty simple. You have 250 
schools that would receive a grant of $100,000, or you have 20 million 
children and 14 million families that will benefit all across the 
Nation. In balance, there is just no comparison at all. So I would 
simply say again her amendment guts the underlying premise we have been 
debating for 6 months and exchanges assistance to 200-some-odd schools 
for 14 million families.
  I urge the defeat of the amendment.
  The PRESIDING OFFICER. The yeas and nays have not yet been ordered.
  Mr. COVERDELL. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the amendment. 
The yeas and nays have been ordered.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  The result was announced--yeas 34, nays 66, as follows:

                      [Rollcall Vote No. 97 Leg.]

                                YEAS--34

     Akaka
     Bingaman
     Boxer
     Bumpers
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Feingold
     Ford
     Glenn
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Mikulski
     Moseley-Braun
     Moynihan
     Murray
     Reed
     Robb
     Rockefeller
     Sarbanes
     Wellstone
     Wyden

                                NAYS--66

     Abraham
     Allard
     Ashcroft
     Baucus
     Bennett
     Biden
     Bond
     Breaux
     Brownback
     Bryan
     Burns
     Byrd
     Campbell
     Chafee
     Cleland
     Coats
     Cochran
     Collins
     Coverdell
     Craig
     D'Amato
     DeWine
     Domenici
     Enzi
     Faircloth
     Feinstein
     Frist
     Gorton
     Graham
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kempthorne
     Kyl
     Lieberman
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Reid
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Torricelli
     Warner
  The amendment (No. 2301) was rejected.
  The PRESIDING OFFICER. Under the previous order, the Senate will now 
resume consideration of Levin amendment No. 2303 on which there shall 
be 30 minutes of debate equally divided.
  Mr. LEVIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. LEVIN. Mr. President, I yield 1 minute to my good friend from 
Louisiana on an unrelated matter.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Ms. LANDRIEU. Thank you, Mr. President. I thank my colleague from 
Michigan.

                          ____________________