[Congressional Record Volume 146, Number 61 (Wednesday, May 17, 2000)]
[Senate]
[Pages S4106-S4108]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. JOHNSON (for himself, Mr. Bingaman, Mr. Daschle, and Mr. 
        Inouye):
  S. 2580. A bill to provide for the issuance of bonds to provide 
funding for the construction of schools of the Bureau of Indian Affairs 
of the Department of the Interior, and for other purposes; to the 
Committee on Indian Affairs.


                     indian school construction act

  Mr. JOHNSON. Mr. President, I, along with Senators Bingaman, Daschle, 
and Inouye, am introducing legislation to establish an innovative 
funding mechanism to enhance the ability of Indian tribes to construct, 
repair, and maintain quality educational facilities. Representatives

[[Page S4107]]

from tribal schools in my State of South Dakota have been working with 
tribes nationwide to develop an initiative which I believe will be a 
positive first step toward addressing the serious crisis we are facing 
in Indian education.
  Mr. President, over 50 percent of the American Indian population in 
this country is age 24 or younger. Consequently, the need for improved 
educational programs and facilities, and for training the American 
Indian workforce is pressing. American Indians have been, and continue 
to be, disproportionately affected by both poverty and low educational 
achievement. The high school completion rate for Indian people aged 20 
to 24 was 12.5 percent below the national average. American Indian 
students, on average, have scored far lower on the National Assessment 
for Education Progress indicators than all other students.
  By ignoring the most fundamental aspect of education; that is, safe, 
quality educational facilities, there is little hope of breaking the 
cycle of low educational achievement, and the unemployment and poverty 
that result from neglected academic potential.
  The Indian School Construction Act establishes a bonding authority to 
use existing tribal education funds for bonds in the municipal finance 
market which currently serves local governments across the Nation. 
Instead of funding construction projects directly, these existing funds 
will be leveraged through bonds to fund substantially more tribal 
school, construction, maintenance and repair projects.
  The Bureau of Indian Affairs estimates the tribal school construction 
and repair backlog at over $1 billion. Confounding this backlog, 
inflation and facility deterioration severely increases this amount. 
The administration's school construction request for fiscal year 2001 
was over $62 million. In this budgetary climate, I believe every avenue 
for efficiently stretching the Federal dollar should be explored.
  Tribal schools in my State and around the country address the unique 
learning needs and styles of Indian students, with sensitivity to 
Native cultures, ultimately promoting higher academic achievement. 
There are strong historical and moral reasons for continued support of 
tribal schools. In keeping with our special trust responsibility to 
sovereign Indian nations, we need to promote the self-determination and 
self-sufficiency of Indian communities. Education is absolutely vital 
to this effort. Allowing the continued deterioration and decay of 
tribal schools through lack of funding would violate the Government's 
commitment and responsibility to Indian nations and only slow the 
progress of self-sufficiency.
  Mr. President, I urge my colleagues to closely examine the Indian 
School Construction Act and join me in working to make this innovative 
funding mechanism a reality. I ask unanimous consent that the text of 
the legislation be added at the end of my remarks.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2580

       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 ``Indian School Construction 
     Act''.

     SEC. 2. DEFINITIONS.

       In this Act:
       (1) Bureau.--The term ``Bureau'' means the Bureau of Indian 
     Affairs of the Department of the Interior.
       (2) Indian.--The term ``Indian'' means any individual who 
     is a member of a tribe.
       (3) Secretary.--The term ``Secretary'' means the Secretary 
     of the Interior.
       (4) Tribal school.--The term ``tribal school'' means an 
     elementary school, secondary school, or dormitory that is 
     operated by a tribal organization for the education of Indian 
     children and that receives financial assistance for its 
     operation under a contract, grant, or agreement with the 
     Bureau under section 102, 103(a), or 208 of the Indian Self-
     Determination and Education Assistance Act (25 U.S.C. 450f, 
     450h(a), and 458d).
       (5) Tribe.--The term ``tribe'' means any Indian tribe, 
     band, nation, or other organized group or community, 
     including a Native village, Regional Corporation, or Village 
     Corporation (as defined in or established pursuant to the 
     Alaska Native Claims Settlement Act), that is recognized as 
     eligible for the special programs and services provided by 
     the United States to Indians because of their status as 
     Indians.

     SEC. 3. ISSUANCE OF BONDS.

       (a) In General.--The Secretary shall establish a pilot 
     program under which eligible tribes have the authority to 
     issue tribal school modernization bonds to provide funding 
     for the improvement, repair, and new construction of tribal 
     schools.
       (b) Eligibility.--
       (1) In general.--To be eligible to issue bonds under the 
     program under subsection (a), a tribe shall prepare and 
     submit to the Secretary a plan of construction that meets the 
     requirements of paragraph (2).
       (2) Plan of construction.--A plan of construction meets the 
     requirements of this paragraph if such plan--
       (A) contains a description of the improvements, repairs, or 
     new construction to be undertaken with funding provided under 
     the bond;
       (B) demonstrates that a comprehensive survey has been 
     undertaken concerning the construction or renovation needs of 
     the tribal school involved;
       (C) contains assurances that funding under the bond will be 
     used only for the activities described in the plan; and
       (D) contains any other reasonable and related information 
     determined appropriate by the Secretary.
       (3) Priority.--In determining whether a tribe is eligible 
     to participate in the program under this section, the 
     Secretary shall give priority to tribes that, as demonstrated 
     by the relevant plans of construction, will fund projects 
     described in the Replacement School Construction priority 
     list of the Bureau of Indian Affairs, as maintained under the 
     Indian Self-Determination and Education Assistance Act.
       (4) Approval.--Except as provided in paragraph (3), the 
     Secretary shall approve the issuance of qualified tribal 
     school modernization bonds by tribes with approved plans of 
     construction on the basis of the order in which such plans 
     were received by the Secretary. Such approval shall not be 
     unreasonably withheld.
       (c) Permissible Activities.--In addition to the use of 
     funds permitted under subsection (a), a tribe may use amounts 
     received through the issuance of a bond to--
       (1) enter into contracts with architects, engineers, and 
     construction firms in order to determine the needs of the 
     tribal school and for the design and engineering of the 
     school;
       (2) enter into contracts with financial advisors, 
     underwriters, attorneys, trustees, and other professionals 
     who would be able to provide assistance to the tribe in 
     issuing bonds; and
       (3) carry out other activities determined appropriate by 
     the Secretary.
       (d) Bond Trustee.--
       (1) In general.--Notwithstanding any other provision of 
     law, any tribal school construction bond issued by a tribe 
     under this section shall be subject to a trust agreement 
     between the tribe and a trustee.
       (2) Trustee.--Any bank or trust company that meets 
     requirements established by the Secretary by regulation may 
     be designated as a trustee under paragraph (1).
       (3) Content of trust agreement.--A trust agreement entered 
     into by a tribe under this subsection shall specify that the 
     trustee, with respect to bonds issued under this section 
     shall--
       (A) act as a repository for the proceeds of the bond;
       (B) make payments to bondholders;
       (C) from any amounts in excess of the amounts necessary to 
     make payments to bondholders, in accordance with the 
     requirements of paragraph (4), make direct payments to 
     contractors with the governing body of the tribe for facility 
     improvement, repair, or new construction pursuant to this 
     section; and
       (D) invest in the tribal school modernization escrow 
     account established under subsection (f)(2) such amounts of 
     the proceeds as the trustee determines not to be necessary to 
     make payments under subparagraphs (B) and (C).
       (4) Requirements for making direct payments.--
       (A) In general.--Notwithstanding any other provision of 
     law, only the trustee shall make the direct payments referred 
     to in paragraph (3)(C) in accordance with requirements that 
     the tribe shall prescribe in the agreement entered into under 
     paragraph (3). The tribe shall require the trustee, prior to 
     making a payment to a contractor under paragraph (3)(C), to 
     inspect the project that is the subject of the contract, or 
     provide for an inspection of that project by a local 
     financial institution, to ensure the completion of the 
     project.
       (B) Contracts.--Each contract referred to in paragraph 
     (3)(C) shall specify, or be renegotiated to specify, that 
     payments under the contract shall be made in accordance with 
     this subsection.
       (e) Payments of Principal and Interest.--
       (1) Principal.--Qualified tribal school modernization bonds 
     shall be issued under this section as interest only for a 
     period of 15 years from the date of issuance. Upon the 
     expiration of such 15-year period, the entire outstanding 
     principal under the bond shall become due and payable.
       (2) Interest.--Interest on a qualified tribal school 
     modernization bond shall be in the form of a tax credit under 
     section 1400F of the Internal Revenue Code of 1986.
       (f) Bond Guarantees.--
       (1) In general.--Payment of the principal portion of a 
     qualified tribal school modernization bond issued under this 
     section shall be guaranteed by amounts deposited in the 
     tribal school modernization escrow account established under 
     paragraph (2).
       (2) Establishment of account.--

[[Page S4108]]

       (A) In general.--Notwithstanding any other provision of 
     law, subject to the availability of amounts made available 
     under an appropriations Act, beginning in fiscal year 2001, 
     the Secretary may deposit not more than $30,000,000 of 
     unobligated funds into a tribal school modernization escrow 
     account.
       (B) Payments.--The Secretary shall use any amounts 
     deposited in the escrow account under subparagraph (A) and 
     subsection (d)(3)(D) to make payments to holders of qualified 
     tribal school modernization bonds issued under this section.
       (g) Limitations.--
       (1) Obligation of tribes.--Notwithstanding any other 
     provision of law, a tribe that issues a qualified tribal 
     school modernization bond under this section shall not be 
     obligated to repay the principal on the bond.
       (2) Land and facilities.--Any land or facilities purchased 
     or improved with amounts derived from qualified tribal school 
     modernization bonds issued under this section shall not be 
     mortgaged or used as collateral for such bonds.

     SEC. 4. EXPANSION OF INCENTIVES FOR TRIBAL SCHOOLS.

       Chapter 1 of the Internal Revenue Code of 1986 is amended 
     by adding at the end the following new subchapter:

         ``Subchapter X--Tribal School Modernization Provisions

``Sec. 1400F. Credit to holders of qualified tribal school 
              modernization bonds.

     ``SEC. 1400F. CREDIT TO HOLDERS OF QUALIFIED TRIBAL SCHOOL 
                   MODERNIZATION BONDS.

       ``(a) Allowance of Credit.--In the case of a taxpayer who 
     holds a qualified tribal school modernization bond on a 
     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 an amount 
     equal to the sum of the credits determined under subsection 
     (b) with respect to credit allowance dates during such year 
     on which the taxpayer holds such bond.
       ``(b) Amount of Credit.--
       ``(1) In general.--The amount of the credit determined 
     under this subsection with respect to any credit allowance 
     date for a qualified tribal school modernization bond is 25 
     percent of the annual credit determined with respect to such 
     bond.
       ``(2) Annual credit.--The annual credit determined with 
     respect to any qualified tribal school modernization bond is 
     the product of--
       ``(A) the applicable credit rate, multiplied by
       ``(B) the outstanding face amount of the bond.
       ``(3) Applicable credit rate.--For purposes of paragraph 
     (1), the applicable credit rate with respect to an issue is 
     the rate equal to an average market yield (as of the day 
     before the date of issuance of the issue) on outstanding 
     long-term corporate debt obligations (determined under 
     regulations prescribed by the Secretary).
       ``(4) Special rule for issuance and redemption.--In the 
     case of a bond which is issued during the 3-month period 
     ending on a credit allowance date, the amount of the credit 
     determined under this subsection with respect to such credit 
     allowance date shall be a ratable portion of the credit 
     otherwise determined based on the portion of the 3-month 
     period during which the bond is outstanding. A similar rule 
     shall apply when the bond is redeemed.
       ``(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 Tribal School Modernization Bond; Other 
     Definitions.--For purposes of this section--
       ``(1) Qualified tribal school modernization bond.--
       ``(A) In general.--The term `qualified school modernization 
     bond' means, subject to subparagraph (B), any bond issued as 
     part of an issue under section 3 of the Indian School 
     Construction Act if--
       ``(i) 95 percent or more of the proceeds of such issue are 
     to be used for the construction, rehabilitation, or repair of 
     a tribal school facility or for the acquisition of land on 
     which such a facility is to be constructed with part of the 
     proceeds of such issue,
       ``(ii) the bond is issued by an Indian tribe,
       ``(iii) the issuer designates such bond for purposes of 
     this section, and
       ``(iv) the term of each bond which is part of such issue 
     does not exceed 15 years.
       ``(B) National limitation on amount of bonds designated.--
     There is a national qualified tribal school modernization 
     bond limitation for each calendar year. Such limitation is--
       ``(i) $200,000,000 for 2001,
       ``(ii) $200,000,000 for 2002, and
       ``(iii) zero after 2002.
       ``(2) Credit allowance date.--The term `credit allowance 
     date' means--
       ``(A) March 15,
       ``(B) June 15,
       ``(C) September 15, and
       ``(D) December 15.
     Such term includes the last day on which the bond is 
     outstanding.
       ``(3) Bond.--The term `bond' includes any obligation.
       ``(4) Tribe.--The term `tribe' has the meaning given such 
     term by section 2 of the Indian School Construction Act.
       ``(e) Credit Included in Gross Income.--Gross income 
     includes the amount of the credit allowed to the taxpayer 
     under this section (determined without regard to subsection 
     (c)) and the amount so included shall be treated as interest 
     income.
       ``(f) Bonds Held by Regulated Investment Companies.--If any 
     qualified tribal 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.
       ``(g) Credits May Be Stripped.--Under regulations 
     prescribed by the Secretary--
       ``(1) In general.--There may be a separation (including at 
     issuance) of the ownership of a qualified tribal school 
     modernization bond and the entitlement to the credit under 
     this section with respect to such bond. In case of any such 
     separation, the credit under this section shall be allowed to 
     the person who on the credit allowance date holds the 
     instrument evidencing the entitlement to the credit and not 
     to the holder of the bond.
       ``(2) Certain rules to apply.--In the case of a separation 
     described in paragraph (1), the rules of section 1286 shall 
     apply to the qualified tribal school modernization bond as if 
     it were a stripped bond and to the credit under this section 
     as if it were a stripped coupon.
       ``(h) Treatment for Estimated Tax Purposes.--Solely for 
     purposes of sections 6654 and 6655, the credit allowed by 
     this section to a taxpayer by reason of holding a qualified 
     tribal school modernization bonds on a credit allowance date 
     shall be treated as if it were a payment of estimated tax 
     made by the taxpayer on such date.
       ``(i) Credit May Be Transferred.--Nothing in any law or 
     rule of law shall be construed to limit the transferability 
     of the credit allowed by this section through sale and 
     repurchase agreements.
       ``(j) Credit Treated as Allowed Under Part IV of Subchapter 
     A.--For purposes of subtitle F, the credit allowed by this 
     section shall be treated as a credit allowable under part IV 
     of subchapter A of this chapter.
       ``(k) Reporting.--Issuers of qualified tribal school 
     modernization bonds shall submit reports similar to the 
     reports required under section 149(e).''.

     SEC. 5. SOVEREIGN IMMUNITY.

       This Act and the amendments made by this Act shall not be 
     construed to impact, limit, or affect the sovereign immunity 
     of the Federal Government or any State or tribal government.
                                 ______