[Congressional Record Volume 144, Number 124 (Thursday, September 17, 1998)]
[Senate]
[Pages S10529-S10530]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  SCHOOL MODERNIZATION TAX INCENTIVES

  Ms. MOSELEY-BRAUN. Mr. President, today, 39 of my olleagues and I are 
sending a letter to the Senate Majority Leader, Senator Lott, and the 
chairman of the Senate Finance Committee, Senator Roth, urging them to 
include school modernization tax incentives in any tax legislation 
considered by the Senate this year. While we may have different 
positions on the advisability of enacting such legislation, and 
different positions on what that legislation should include, we are 
united in believing that any tax legislation must include significant 
relief for communities seeking to rebuild and modernize their schools.
  This month, according to a recent report from the Department of 
Education, a record number of students are pouring into our nation's 
classrooms. 52.7 million children enrolled in elementary and secondary 
schools this year, a 500,000 student increase from last year. Ten years 
from now, according to the report, enrollment is expected to reach 54.3 
million. We cannot continue to pack these children into today's 
schools. We need to build an estimated 6,000 new schools over the next 
10 years just to keep up with rising enrollment.
  In addition, the U.S. General Accounting Office has documented $112 
billion worth of deferred maintenance and neglect of existing school 
buildings. It will cost $112 billion nationwide--$13 billion in 
Illinois alone--to bring existing school buildings up to good, overall 
condition. That is not the cost of equipping them with new computers, 
or even of retrofitting them so teachers have a place to plug in new 
computers. That is just the cost of bringing existing buildings up to 
good, overall condition.
  Crumbling and overcrowded schools are found in every type of 
community, all across the nation. The GAO found that 38 percent of 
urban schools, 30 percent of rural schools, and 29 percent of suburban 
schools are crumbling down around our children.
  The problem is so pervasive because it is a symptom of our failed 
school finance structure. For more than 100 years, we have relied on 
local property taxes to finance our schools. This system may have made 
sense when the nation's wealth was held and measured in terms of 
property, but it does not make sense today.
  According to the GAO, our school finance system actually militates 
against most communities' best efforts to improve their schools. In 35 
states, poor districts have higher tax rates than wealthy 
districts, but raise less revenue because of lower property values.

  In 11 states, courts have actually declared school finance systems 
unconstitutional. In nearly every case, states have complied by raising 
property or sales taxes to fund school improvements. Similar litigation 
is pending in another 16 states, and many of these lawsuits appear 
likely to result in higher state and local taxes as well.
  The Senate has an opportunity this year to break this cycle of 
crumbling schools and higher local taxes. We have an opportunity to 
create a new partnership between the federal government, states, and 
communities to improve our schools. We can do this in a way that does 
not reduce the projected budget surplus, which is properly being 
reserved for Social Security, and in a way that maintains continued 
fiscal discipline.
  In last year's Taxpayer Relief Act, the Congress took the first steps 
toward the creation of this new partnership, when it enacted the 
Qualified Zone Academy Bond program. Under this program, school 
districts issue zero-interest bonds, and purchasers of these bonds 
receive federal income tax credits in lieu of interest. This mechanism 
can cut the cost of major school improvements by 30 to 50 percent. In 
Chicago, the school system will presently issue $14 million worth of 
these bonds for a school renovation project. By using these bonds 
instead of regular municipal bonds, the school system will save Chicago 
taxpayers $7 million in interest costs. In other words, this project 
will cost $14 million, instead of $21 million.
  I propose that we use the same mechanism to facilitate school 
improvements nationwide. According to the Joint Committee on Taxation, 
we can supply $22 billion worth of these special bonds to states and 
communities at a cost of only $3.3 billion to the federal treasury over 
the next five years. That $3.3 billion cost actually represents tax 
relief for purchasers of these school modernization bonds. Under this 
plan, communities get better schools and children get a better 
education; local property taxpayers and federal income taxpayers get 
lower bills. This is the kind of innovative partnership we need to 
rebuild and modernize our schools for the 21st century.
  Last week, President Clinton, Vice President Gore, governors, members 
of Congress, cabinet members, parents, teachers, and school officials 
gathered at 84 sites around the country to focus attention on the 
urgent need to create a new partnership to modernize our schools. 
Speaking at a school in Maryland, President Clinton said our ``children 
deserve schools that are as modern as the world in which they will 
live.'' He went on to say that, ``Nothing we do will have a greater 
effect on the future of this country than guaranteeing every child, 
without regard to race or station in life or region in this country, a 
world-class education. Nothing.''
  That statement could not be more true. The rungs on the ladder of 
opportunity in America have always been crafted in the classroom, and 
in the emerging global economy, the importance of education continues 
to grow. As H.G. Wells noted, ``Human history becomes more and more a 
race between education and catastrophe.''

[[Page S10530]]

  As we approach the 21st century, we are faced with the real problem 
that too many of our schools do not provide the kind of learning 
environment necessary to educate our children for a competitive, global 
economy. Studies have proven a correlation between building conditions, 
student achievement, student discipline. The fact is, our children 
cannot learn in schools that are falling down around them.
  I hope the Congress can use the remaining time we are in session, 
short as it may be, to create a school modernization partnership that 
will carry our children into the next century. I look forward to 
working with my colleagues on both sides of the aisle to ensure that 
our plan is a part of any tax legislation considered this year.
  According to a recent Gallup poll, 86 percent of adults support 
providing federal funds to repair and replace older school buildings. 
That figure suggests that the American people want Congress to put 
aside partisanship and ideology and work together to help improve our 
schools. I hope we won't let them down.
  Mr. President, I ask that the text of the letter to Senator Lott be 
printed in the Record. An identical copy of the letter has been sent to 
Senator Roth.
  The text of the letter follows:

                                                  U.S. Senate,

                               Washington, DC, September 17, 1998.
     Hon. Trent Lott,
     Majority Leader, U.S. Senate, Washington, DC.
       Dear Mr. Leader: As you know, the House and Senate have 
     each passed fiscal year 1999 Budget Resolutions calling for 
     the enactment of substantial tax relief legislation. We 
     believe that any such legislation should include major tax 
     relief for communities seeking to rebuild and modernize their 
     school facilities.
       The problem of crumbling and overcrowded schools has grown 
     too large and is too important for Congress to ignore. 
     According to the U.S. General Accounting Office (GAO), it 
     will cost $112 billion just to bring existing schools up to 
     good, overall condition. In addition, the Department of 
     Education reports that the nation's school districts will 
     need to build an additional 6,000 schools over the next ten 
     years simply to keep class sizes at current levels as student 
     enrollment rises. Crumbling and overcrowded schools are found 
     in virtually every kind of community and every part of the 
     country. The GAO found that 38 percent of urban schools, 30 
     percent of rural schools, and 29 percent of suburban schools 
     reported needing extensive repair or replacement of one or 
     more buildings.
       The large and growing school infrastructure deficit in the 
     United States reflects problems and inequities in our system 
     of school finance. In 35 States, poor districts have higher 
     tax rates than wealthy districts but raise less revenue 
     because of lower property values. School financing systems 
     have been ruled unconstitutional in 11 states. In nearly 
     every case, States have complied by raising property or sales 
     taxes to fund school improvements. Similar litigation is 
     pending in 16 other States, and many of these lawsuits appear 
     likely to result in higher state and local taxes as well.
       The Senate has an opportunity in this year's tax 
     legislation to break this cycle of crumbling schools and 
     higher local taxes. We have an opportunity to create a new 
     partnership between the federal government, States, and 
     communities to improve the learning environment for our 
     children--our economy's most precious asset. We believe this 
     objective can be accomplished in a manner that does not 
     reduce the projected budget surplus, which is properly being 
     reserved for Social Security, and that maintains continued 
     fiscal discipline.
       The condition of school facilities has been found to have a 
     direct effect on student behavior and achievement. By helping 
     States and communities rebuild and modernize their schools, 
     the federal government can make a constructive contribution 
     to the quality of education in America, while helping to free 
     resources at the local level for other school initiatives or 
     much-deserved property and sales tax relief.
       This subject has been of growing concern to us in recent 
     years. Earlier proposals to commit federal resources to 
     address this problem have been unsuccessful, and it has 
     become clear that needed assistance to schools will only be 
     acceptable to a majority of Senators if it is in the form of 
     tax relief. Therefore, as the Senate considers tax 
     legislation this year, we look forward to working with you to 
     provide substantial tax relief targeted to the rebuilding and 
     modernizing of our nation's schools.
           Sincerely,
         Carol Moseley-Braun, Ted Kennedy, Patty Murray, John F. 
           Kerry, Robert Torricelli, Tom Daschle, Fritz Hollings, 
           Charles Robb, Chris Dodd, Dale Bumpers.
         Max Cleland, Daniel Akaka, Joseph Lieberman, Byron L. 
           Dorgan, Frank R. Lautenberg, Paul S. Sarbanes, Dianne 
           Feinstein, Carl Levin, Mary L. Landrieu, Tom Harkin, 
           Kent Conrad, Jeff Bingaman, Barbara A. Mikulski, Tim 
           Johnson, Harry Reid, Herb Kohl, Barbara Boxer, John 
           Glenn.
         Daniel K. Inouye, Jack Reed, Wendell Ford, Dick Durbin, 
           Richard H. Bryan, Max Baucus, Paul Wellstone, Jay 
           Rockefeller, Bob Kerrey, John Breaux, Patrick Leahy, 
           Ron Wyden.

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