[Congressional Record Volume 147, Number 14 (Thursday, February 1, 2001)]
[Senate]
[Pages S1018-S1021]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. JOHNSON (for himself, Mr. Bingaman, Mr. Daschle, Mr. 
        Inouye, Mr. Cochran, Mr. Baucus, Mr. Reid, Mr. Akaka, and Mr. 
        Campbell):
  S. 243. 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.
  Mr. JOHNSON. Mr. President, I, along with Senators Bingaman, Daschle, 
Campbell, Inouye, Cochran, Reid, Akaka, and Baucus 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 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.
  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

[[Page S1019]]

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.
  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 printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 243

       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. INDIAN SCHOOL CONSTRUCTION.

       (a) Definitions.--In this section:
       (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 or the Bureau for the 
     education of Indian children and that receives financial 
     assistance for its operation under an appropriation for 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) or under the Tribally Controlled Schools 
     Act of 1988 (25 U.S.C. 2501 et seq.) under a contract, a 
     grant, or an agreement, or for a Bureau-operated school.
       (5) Tribe.--The term ``tribe'' has the meaning given the 
     term ``Indian tribal government'' by section 7701(a)(40) of 
     the Internal Revenue Code of 1986, including the application 
     of section 7871(d) of such Code. Such term includes any 
     consortium of tribes approved by the Secretary.
       (b) Issuance of Bonds.--
       (1) In general.--The Secretary shall establish a pilot 
     program under which eligible tribes have the authority to 
     issue qualified tribal school modernization bonds to provide 
     funding for the construction, rehabilitation, or repair of 
     tribal schools, including the advance planning and design 
     thereof.
       (2) Eligibility.--
       (A) In general.--To be eligible to issue any qualified 
     tribal school modernization bond under the program under 
     paragraph (1), a tribe shall--
       (i) prepare and submit to the Secretary a plan of 
     construction that meets the requirements of subparagraph (B);
       (ii) provide for quarterly and final inspection of the 
     project by the Bureau; and
       (iii) pledge that the facilities financed by such bond will 
     be used primarily for elementary and secondary educational 
     purposes for not less than the period such bond remains 
     outstanding.
       (B) Plan of construction.--A plan of construction meets the 
     requirements of this subparagraph if such plan--
       (i) contains a description of the construction to be 
     undertaken with funding provided under a qualified tribal 
     school modernization bond;
       (ii) demonstrates that a comprehensive survey has been 
     undertaken concerning the construction needs of the tribal 
     school involved;
       (iii) contains assurances that funding under the bond will 
     be used only for the activities described in the plan;
       (iv) contains response to the evaluation criteria contained 
     in Instructions and Application for Replacement School 
     Construction, Revision 6, dated February 6, 1999; and
       (v) contains any other reasonable and related information 
     determined appropriate by the Secretary.
       (C) Priority.--In determining whether a tribe is eligible 
     to participate in the program under this subsection, the 
     Secretary shall give priority to tribes that, as demonstrated 
     by the relevant plans of construction, will fund projects--
       (i) described in the Education Facilities Replacement 
     Construction Priorities List as of FY 2000 of the Bureau of 
     Indian Affairs (65 Fed. Reg. 4623-4624);
       (ii) described in any subsequent priorities list published 
     in the Federal Register; or
       (iii) which meet the criteria for ranking schools as 
     described in Instructions and Application for Replacement 
     School Construction, Revision 6, dated February 6, 1999.
       (D) Advance planning and design funding.--A tribe may 
     propose in its plan of construction to receive advance 
     planning and design funding from the tribal school 
     modernization escrow account established under paragraph 
     (6)(B). Before advance planning and design funds are 
     allocated from the escrow account, the tribe shall agree to 
     issue qualified tribal school modernization bonds after the 
     receipt of such funds and agree as a condition of each bond 
     issuance that the tribe will deposit into such account or a 
     fund managed by the trustee as described in paragraph (4)(C) 
     an amount equal to the amount of such funds received from the 
     escrow account.
       (3) Permissible activities.--In addition to the use of 
     funds permitted under paragraph (1), a tribe may use amounts 
     received through the issuance of a qualified tribal school 
     modernization bond to--
       (A) enter into and make payments under contracts with 
     licensed and bonded architects, engineers, and construction 
     firms in order to determine the needs of the tribal school 
     and for the design and engineering of the school;
       (B) enter into and make payments under contracts with 
     financial advisors, underwriters, attorneys, trustees, and 
     other professionals who would be able to provide assistance 
     to the tribe in issuing bonds; and
       (C) carry out other activities determined appropriate by 
     the Secretary.
       (4) Bond trustee.--
       (A) In general.--Notwithstanding any other provision of 
     law, any qualified tribal school modernization bond issued by 
     a tribe under this subsection shall be subject to a trust 
     agreement between the tribe and a trustee.
       (B) Trustee.--Any bank or trust company that meets 
     requirements established by the Secretary may be designated 
     as a trustee under subparagraph (A).
       (C) Content of trust agreement.--A trust agreement entered 
     into by a tribe under this paragraph shall specify that the 
     trustee, with respect to any bond issued under this 
     subsection shall--
       (i) act as a repository for the proceeds of the bond;
       (ii) make payments to bondholders;
       (iii) receive, as a condition to the issuance of such bond, 
     a transfer of funds from the tribal school modernization 
     escrow account established under paragraph (6)(B) or from 
     other funds furnished by or on behalf of the tribe in an 
     amount, which together with interest earnings from the 
     investment of such funds in obligations of or fully 
     guaranteed by the United States or from other investments 
     authorized by paragraph (10), will produce moneys sufficient 
     to timely pay in full the entire principal amount of such 
     bond on the stated maturity date therefor;
       (iv) invest the funds received pursuant to clause (iii) as 
     provided by such clause; and
       (v) hold and invest the funds in a segregated fund or 
     account under the agreement, which fund or account shall be 
     applied solely to the payment of the costs of items described 
     in paragraph (3).
       (D) Requirements for making direct payments.--
       (i) In general.--Notwithstanding any other provision of 
     law, the trustee shall make any payment referred to in 
     subparagraph (C)(v) in accordance with requirements that the 
     tribe shall prescribe in the trust agreement entered into 
     under subparagraph (C). Before making a payment to a 
     contractor under subparagraph (C)(v), the trustee shall 
     require an inspection of the project by a local financial 
     institution or an independent inspecting architect or 
     engineer, to ensure the completion of the project.
       (ii) Contracts.--Each contract referred to in paragraph (3) 
     shall specify, or be renegotiated to specify, that payments 
     under the contract shall be made in accordance with this 
     paragraph.
       (5) Payments of principal and interest.--
       (A) Principal.--No principal payments on any qualified 
     tribal school modernization bond shall be required until the 
     final, stated maturity of such bond, which stated maturity 
     shall be within 15 years from the date of issuance. Upon the 
     expiration of such period, the entire outstanding principal 
     under the bond shall become due and payable.
       (B) Interest.--In lieu of interest on a qualified tribal 
     school modernization bond there shall be awarded a tax credit 
     under section 1400K of the Internal Revenue Code of 1986.
       (6) Bond guarantees.--
       (A) In general.--Payment of the principal portion of a 
     qualified tribal school modernization bond issued under this 
     subsection

[[Page S1020]]

     shall be guaranteed solely by amounts deposited with each 
     respective bond trustee as described in paragraph 
     (4)(C)(iii).
       (B) Establishment of account.--
       (i) In general.--Notwithstanding any other provision of 
     law, beginning in fiscal year 2002, from amounts made 
     available for school replacement under the construction 
     account of the Bureau, the Secretary is authorized to deposit 
     not more than $30,000,000 each fiscal year into a tribal 
     school modernization escrow account.
       (ii) Payments.--The Secretary shall use any amounts 
     deposited in the escrow account under clauses (i) and (iii) 
     to make payments to trustees appointed and acting pursuant to 
     paragraph (4) or to make payments described in paragraph 
     (2)(D).
       (iii) Transfers of excess proceeds.--Excess proceeds held 
     under any trust agreement that are not needed for any of the 
     purposes described in clauses (iii) and (v) of paragraph 
     (4)(C) shall be transferred, from time to time, by the 
     trustee for deposit into the tribal school modernization 
     escrow account.
       (7) Limitations.--
       (A) Obligation to repay.--Notwithstanding any other 
     provision of law, the principal amount on any qualified 
     tribal school modernization bond issued under this subsection 
     shall be repaid only to the extent of any escrowed funds 
     furnished under paragraph (4)(C)(iii). No qualified tribal 
     school modernization bond issued by a tribe shall be an 
     obligation of, nor shall payment of the principal thereof be 
     guaranteed by, the United States, the tribes, nor their 
     schools.
       (B) Land and facilities.--Any land or facilities purchased 
     or improved with amounts derived from qualified tribal school 
     modernization bonds issued under this subsection shall not be 
     mortgaged or used as collateral for such bonds.
       (8) Sale of bonds.--Qualified tribal school modernization 
     bonds may be sold at a purchase price equal to, in excess of, 
     or at a discount from the par amount thereof.
       (9) Treatment of trust agreement earnings.--Any amounts 
     earned through the investment of funds under the control of a 
     trustee under any trust agreement described in paragraph (4) 
     shall not be subject to Federal income tax.
       (10) Investment of sinking funds.--Any sinking fund 
     established for the purpose of the payment of principal on a 
     qualified tribal school modernization bond shall be invested 
     in obligations issued by or guaranteed by the United States 
     or in such other assets as the Secretary of the Treasury may 
     by regulation allow.
       (c) 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 XI--Tribal School Modernization Provisions

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

     ``SEC. 1400K. 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 date of 
     sale of the issue) on outstanding long-term corporate 
     obligations (as determined 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 tribal school 
     modernization bond' means, subject to subparagraph (B), any 
     bond issued as part of an issue under section 2(c) of the 
     Indian School Construction Act, as in effect on the date of 
     the enactment of this section, if--
       ``(i) 95 percent or more of the proceeds of such issue are 
     to be used for the construction, rehabilitation, or repair of 
     a school facility funded by the Bureau of Indian Affairs of 
     the Department of the Interior 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 a 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.--
       ``(i) National limitation.--There is a national qualified 
     tribal school modernization bond limitation for each calendar 
     year. Such limitation is--

       ``(I) $200,000,000 for 2002,
       ``(II) $200,000,000 for 2003, and
       ``(III) zero after 2004.

       ``(ii) Allocation of limitation.--The national qualified 
     tribal school modernization bond limitation shall be 
     allocated to tribes by the Secretary of the Interior subject 
     to the provisions of section 2 of the Indian School 
     Construction Act, as in effect on the date of the enactment 
     of this section.
       ``(iii) Designation subject to limitation amount.--The 
     maximum aggregate face amount of bonds issued during any 
     calendar year which may be designated under subsection (d)(1) 
     with respect to any tribe shall not exceed the limitation 
     amount allocated to such government under clause (ii) for 
     such calendar year.
       ``(iv) Carryover of unused limitation.--If for any calendar 
     year--

       ``(I) the limitation amount under this subparagraph, 
     exceeds
       ``(II) the amount of qualified tribal school modernization 
     bonds issued during such year,

     the limitation amount under this subparagraph 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 2010.
       ``(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 the 
     term ``Indian tribal government'' by section 7701(a)(40), 
     including the application of section 7871(d). Such term 
     includes any consortium of tribes approved by the Secretary 
     of the Interior.
       ``(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.

[[Page S1021]]

       ``(k) Reporting.--Issuers of qualified tribal school 
     modernization bonds shall submit reports similar to the 
     reports required under section 149(e).''.
       (d) Additional Provisions.--
       (1) Sovereign immunity.--This section and the amendments 
     made by this section shall not be construed to impact, limit, 
     or affect the sovereign immunity of the Federal Government or 
     any State or tribal government.
       (2) Application.--This section and the amendments made by 
     this section shall take effect on the date of the enactment 
     of this Act with respect to bonds issued after December 31, 
     2001, regardless of the status of regulations promulgated 
     thereunder.
                                 ______