[Congressional Record (Bound Edition), Volume 146 (2000), Part 2]
[Senate]
[Pages 1745-1752]
[From the U.S. Government Publishing Office, www.gpo.gov]



                          AMENDMENTS SUBMITTED

                                 ______
                                 

                  THE AFFORDABLE EDUCATION ACT OF 1999

                                 ______
                                 

                  DODD (AND OTHERS) AMENDMENT NO. 2857

  Mr. REID (for Mr. Dodd (for himself, Mr. Reid, Mr. Kennedy, and Mr. 
Reed)) proposed an amendment to the bill (S. 1134) 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; as follows:

       Strike section 101 and insert the following:

     SEC. 101. IDEA.

       There are appropriated to carry out part B of the 
     Individuals with Disabilities Education Act $1,200,000,000, 
     which amount is equal to the projected revenue increase 
     resulting from striking the amendments made to the Internal 
     Revenue Code of 1986 by section 101 of this Act as reported 
     by the Committee on Finance of the Senate.
                                 ______
                                 

                        WYDEN AMENDMENT NO. 2858

  (Ordered to lie on the table.)
  Mr. WYDEN submitted an amendment intended to be proposed by him to 
the bill, S. 1134, supra; as follows:

       At the appropriate place, insert the following:

     SEC.   . DETENTION OF JUVENILES WHO UNLAWFULLY POSSESS 
                   FIREARMS IN SCHOOLS.

       Section 4112(a) of the Elementary and Secondary Education 
     Act of 1965 (20 U.S.C. 7112(a)) is amended--
       (1) in paragraph (4), by striking ``and'' at the end;
       (2) by redesignating paragraph (5) as paragraph (6); and
       (3) by inserting after paragraph (4) the following:
       ``(5) contains an assurance that the State has in effect a 
     policy or practice that requires State and local law 
     enforcement agencies to detain in an appropriate juvenile 
     community-based placement or in an appropriate juvenile 
     justice facility, for not less than 24 hours, any juvenile 
     who unlawfully possesses a firearm in a school, upon a 
     finding by a judicial officer that the juvenile may be a 
     danger to himself or herself or to the community; and''.
                                 ______
                                 

                        KERRY AMENDMENT NO. 2859

  (Ordered to lie on the table.)
  Mr. KERRY submitted an amendment intended to be proposed by him to 
the bill, S. 1134, supra; as follows:

       On page 21, between lines 3 and 4, insert:

     SEC. 204. EXCLUSION OF NATIONAL SERVICE EDUCATIONAL AWARDS.

       (a) In General.--Section 117 (relating to qualified 
     scholarships) is amended by adding at the end the following:
       ``(e) Qualified National Service Educational Awards.--
       ``(1) In general.--Gross income for any taxable year shall 
     not include any qualified national service educational award.

[[Page 1746]]

       ``(2) Qualified national service educational award.--For 
     purposes of this subsection--
       ``(A) In general.--The term `qualified national service 
     educational award' means any amount received by an individual 
     in a taxable year as a national service educational award or 
     other amount under section 148 of the National and Community 
     Service Act of 1990 (42 U.S.C. 12604) to the extent such 
     amount does not exceed the qualified tuition and related 
     expenses (as defined in subsection (b)(2)) of the individual 
     for such taxable year.
       ``(B) Limitation.--The total amount of the qualified 
     tuition and related expenses (as so defined) which may be 
     taken into account under subparagraph (A) with respect to an 
     individual for the taxable year shall be reduced (after the 
     application of the reduction provided in section 25A(g)(2)) 
     by the amount of such expenses which were taken into account 
     in determining the credit allowed to the taxpayer or any 
     other person under section 25A with respect to such 
     expenses.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to amounts received in taxable years beginning 
     after December 31, 1999.
                                 ______
                                 

                        HUTCHISON AMENDMENT 2860

  (Ordered to lie on the table.)
  Mrs. HUTCHISON submitted an amendment intended to be proposed by her 
to the bill, S. 1134, supra; as follows:

       At the appropriate place, insert the following:

     SEC. __. CAREERS TO CLASSROOMS.

       (a) Definitions.--In this section:
       (1) In general.--The terms ``elementary school'', ``local 
     educational agency'', ``secondary school'', and ``Secretary'' 
     have the meanings given the terms in section 14101 of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     8801).
       (2) Alternative certification or licensure requirements.--
     The term ``alternative certification or licensure 
     requirements'' means State or local teacher certification or 
     licensure requirements that permit a demonstrated competence 
     in appropriate subject areas gained in careers outside of 
     education to be substituted for traditional teacher training 
     course work.
       (3) Eligible individual.--The term ``eligible individual'' 
     means an individual who has received--
       (A) in the case of an individual applying for assistance 
     for placement as an elementary school or secondary school 
     teacher, a baccalaureate or advanced degree from an 
     institution of higher education; or
       (B) in the case of an individual applying for assistance 
     for placement as a teacher's aide in an elementary school or 
     secondary school, an associate, baccalaureate, or advanced 
     degree from an institution of higher education.
       (4) Institution of higher education.--The term 
     ``institution of higher education'' has the meaning given the 
     term in section 101 of the Higher Education Act of 1965 (20 
     U.S.C. 1001)
       (5) State.--The term ``State'' means each of the several 
     States of the United States, the District of Columbia, 
     American Samoa, the Federated States of Micronesia, Guam, the 
     Republic of the Marshall Islands, the Commonwealth of the 
     Northern Mariana Islands, the Commonwealth of Puerto Rico, 
     the Republic of Palau, and the United States Virgin Islands.
       (b) Placement Program.--The Secretary may establish a 
     program of awarding grants to States--
       (1) to enable the States to assist eligible individuals to 
     obtain--
       (A) certification or licensure as elementary school or 
     secondary school teachers; or
       (B) the credentials necessary to serve as teachers' aides; 
     and
       (2) to facilitate the employment of the eligible 
     individuals by local educational agencies identified under 
     subsection (c)(2) as experiencing a shortage of teachers or 
     teachers' aides.
       (c) States With Alternative Certification Requirements and 
     Teacher and Teacher's Aide Shortages.--Upon the establishment 
     of the placement program authorized by subsection (b), the 
     Secretary shall--
       (1) conduct a survey of States to identify those States 
     that have alternative certification or licensure requirements 
     for teachers;
       (2) periodically request information from States identified 
     under paragraph (1) to identify in these States those local 
     educational agencies that--
       (A) are receiving grants under part A of title I of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6311 et seq.) as a result of having within their 
     jurisdictions concentrations of children from low-income 
     families; and
       (B) are also experiencing a shortage of qualified teachers, 
     in particular a shortage of science, mathematics, computer 
     science, or engineering teachers; and
       (3) periodically request information from all States to 
     identify local educational agencies that--
       (A) are receiving grants under part A of title I of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6311 et seq.) as a result of having within their 
     jurisdictions concentrations of children from low-income 
     families; and
       (B) are experiencing a shortage of teachers' aides.
       (d) Selection of Eligible Individuals.--
       (1) In general.--Selection of eligible individuals to 
     participate in the placement program authorized by subsection 
     (b) shall be made on the basis of applications submitted to a 
     State. An application shall be in such form and contain such 
     information as the State may require.
       (2) Priority.--In selecting eligible individuals to receive 
     assistance for placement as elementary school or secondary 
     school teachers, the State shall give priority to eligible 
     individuals who--
       (A) have substantial, demonstrated career experience in 
     science, mathematics, computer science, or engineering and 
     agree to seek employment as science, mathematics, computer 
     science, or engineering teachers in elementary schools or 
     secondary schools; or
       (B) have substantial, demonstrated career experience in 
     another subject area identified by the State as important for 
     national educational objectives and agree to seek employment 
     in that subject area in elementary schools or secondary 
     schools.
       (e) Agreement.--An eligible individual selected to 
     participate in the placement program authorized by subsection 
     (b) shall be required to enter into an agreement with the 
     State, in which the eligible individual agrees--
       (1) to obtain, within such time as the State may require, 
     certification or licensure as an elementary school or 
     secondary school teacher or the necessary credentials to 
     serve as a teacher's aide in an elementary school or 
     secondary school; and
       (2) to accept--
       (A) in the case of an eligible individual selected for 
     assistance for placement as a teacher, an offer of full-time 
     employment as an elementary school or secondary school 
     teacher for not less than two school years with a local 
     educational agency identified under subsection (c)(2), to 
     begin the school year after obtaining that certification or 
     licensure; or
       (B) in the case of an eligible individual selected for 
     assistance for placement as a teacher's aide, an offer of 
     full-time employment as a teacher's aide in an elementary 
     school or secondary school for not less than 2 school years 
     with a local educational agency identified under subsection 
     (c)(3), to begin the school year after obtaining the 
     necessary credentials.
       (f) Stipend for Participants.--
       (1) In general.--The State shall pay to an eligible 
     individual participating in the placement program a stipend 
     in an amount equal to the lesser of--
       (A) $5,000; or
       (B) the total costs of the type described in paragraphs 
     (1), (2), (3), (8), and (9) of section 472 of the Higher 
     Education Act of 1965 (20 U.S.C. 1087ll) incurred by the 
     eligible individual while obtaining teacher certification or 
     licensure or the necessary credentials to serve as a 
     teacher's aide and employment as an elementary school or 
     secondary school teacher or teacher aide.
       (2) Relation to other assistance.--A stipend paid under 
     paragraph (1) shall be taken into account in determining the 
     eligibility of the eligible individual for Federal student 
     financial assistance provided under title IV of the Higher 
     Education Act of 1965 (20 U.S.C. 1070 et seq.).
       (g) Grants To Facilitate Placement.--
       (1) Teachers.--In the case of an eligible individual in the 
     placement program obtaining teacher certification or 
     licensure, the State may offer to enter into an agreement 
     under this subsection with the first local educational agency 
     identified under subsection (b)(2) that employs the eligible 
     individual as a full-time elementary school or secondary 
     school teacher after the eligible individual obtains teacher 
     certification or licensure.
       (2) Teacher's aides.--In the case of an eligible individual 
     in the program obtaining credentials to serve as a teacher's 
     aide, the State may offer to enter into an agreement under 
     this subsection with the first local educational agency 
     identified under subsection (b)(3) that employs the 
     participant as a full-time teacher's aide.
       (3) Agreements contracts.--Under an agreement referred to 
     in paragraph (1) or (2)--
       (A) the local educational agency shall agree to employ the 
     eligible individual full time for not less than 2 consecutive 
     school years (at a basic salary to be certified to the State) 
     in a school of the local educational agency that--
       (i) serves a concentration of children from low-income 
     families; and
       (ii) has an exceptional need for eligible individuals; and
       (B) the State shall agree to pay to the local educational 
     agency for each eligible individual, from amounts provided 
     under this section, $5,000 per year for a maximum of 2 years.
       (h) Reimbursement Under Certain Circumstances.--
       (1) In general.--If an eligible individual in the placement 
     program fails to obtain teacher certification or licensure, 
     employment as

[[Page 1747]]

     an elementary school or secondary school teacher, or 
     employment as a teacher's aide as required under the 
     agreement or voluntarily leaves, or is terminated for cause, 
     from the employment during the 2 years of required service, 
     the eligible individual shall be required to reimburse the 
     State for any stipend paid to the eligible individual under 
     subsection (f)(1) in an amount that bears the same ratio to 
     the amount of the stipend as the unserved portion of required 
     service bears to the 2 years of required service. A State 
     shall forward the proceeds of any reimbursement received 
     under this paragraph to the Secretary.
       (2) Obligation to reimburse.--The obligation to reimburse 
     the State under this subsection is, for all purposes, a debt 
     owing the United States. A discharge in bankruptcy under 
     title 11 shall not release a participant from the obligation 
     to reimburse the State. Any amount owed by an eligible 
     individual under paragraph (1) shall bear interest at the 
     rate equal to the highest rate being paid by the United 
     States on the day on which the reimbursement is determined to 
     be due for securities having maturities of 90 days or less 
     and shall accrue from the day on which the eligible 
     individual is first notified of the amount due.
       (i) Exceptions to Reimbursement Provisions.--
       (1) In general.--An eligible individual in the placement 
     program shall not be considered to be in violation of an 
     agreement entered into under subsection (e) during any period 
     in which the participant--
       (A) is pursuing a full-time course of study related to the 
     field of teaching at an institution of higher education;
       (B) is serving on active duty as a member of the Armed 
     Forces;
       (C) is temporarily totally disabled for a period of time 
     not to exceed 3 years as established by sworn affidavit of a 
     qualified physician;
       (D) is unable to secure employment for a period not to 
     exceed 12 months by reason of the care required by a spouse 
     who is disabled;
       (E) is seeking and unable to find full-time employment as a 
     teacher or teacher's aide in an elementary school or 
     secondary school for a single period not to exceed 27 months; 
     or
       (F) satisfies the provisions of additional reimbursement 
     exceptions that may be prescribed by the Secretary.
       (2) Forgiveness.--An eligible individual shall be excused 
     from reimbursement under subsection (h) if the eligible 
     individual becomes permanently totally disabled as 
     established by sworn affidavit of a qualified physician. The 
     Secretary may also waive reimbursement in cases of extreme 
     hardship to the participant, as determined by the Secretary.
                                 ______
                                 

                  ROBB (AND OTHERS) AMENDMENT NO. 2861

  Mr. ROBB (for himself, Mr. Harkin, Mr. Conrad, and Mr. Lautenberg) 
proposed an amendment to the bill, S. 1134, supra; as follows:

       Strike section 101 and insert:

     SEC. 101. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT 
                   ACCOUNTS.

       (a) 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) is amended by adding at the 
     end the following new paragraph:
       ``(4) Contribution limit.--The term `contribution limit' 
     means $500 ($2,000 in the case of any taxable year beginning 
     after December 31, 2000, and ending before January 1, 
     2004).''
       (3) Conforming amendment.--Section 4973(e)(1)(A) is amended 
     by striking ``$500'' and inserting ``the contribution limit 
     (as defined in section 530(b)(4)) for such taxable year''.
       (b) 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 and 
     paragraphs (5) and (6) of subsection (d) shall not apply to 
     any designated beneficiary with special needs (as determined 
     under regulations prescribed by the Secretary).''
       (c) Entities 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''.
       (d) Time When Contributions Deemed Made.--
       (1) In general.--Section 530(b) (relating to definitions 
     and special rules) is amended by adding at the end the 
     following new paragraph:
       ``(5) Time when contributions deemed made.--An individual 
     shall be deemed to have made a contribution to an education 
     individual retirement account on the last day of the 
     preceding taxable year if the contribution is made on account 
     of such taxable year and is made not later than the time 
     prescribed by law for filing the return for such taxable year 
     (not including extensions thereof).''
       (2) Extension of time to return excess contributions.--
     Subparagraph (C) of section 530(d)(4) (relating to additional 
     tax for distributions not used for educational expenses) is 
     amended--
       (A) by striking clause (i) and inserting the following new 
     clause:
       ``(i) such distribution is made before the 1st day of the 
     6th month of the taxable year following the taxable year, 
     and'', and
       (B) by striking ``due date of return'' in the heading and 
     inserting ``june''.
       (e) Coordination With Hope and Lifetime Learning Credits 
     and Qualified Tuition Programs.--
       (1) In general.--Section 530(d)(2)(C) is amended to read as 
     follows:
       ``(C) Coordination with hope and lifetime learning credits 
     and qualified tuition programs.--
       ``(i) Credit coordination.--

       ``(I) In general.--Except as provided in subclause (II), 
     subparagraph (A) shall not apply for any taxable year to any 
     qualified higher education expenses with respect to any 
     individual if a credit is allowed under section 25A with 
     respect to such expenses for such taxable year.
       ``(II) Special coordination rule.--In the case of any 
     taxable year beginning after December 31, 2000, and before 
     January 1, 2004, subclause (I) shall not apply, but the total 
     amount of qualified higher education expenses otherwise taken 
     into account under subparagraph (A) with respect to an 
     individual for such taxable year shall be reduced (after the 
     application of the reduction provided in section 25A(g)(2)) 
     by the amount of such expenses which were taken into account 
     in determining the credit allowed to the taxpayer or any 
     other person under section 25A with respect to such expenses.

       ``(ii) Coordination with qualified tuition programs.--If 
     the aggregate distributions to which subparagraph (A) and 
     section 529(c)(3)(B) apply exceed the total amount of 
     qualified higher education expenses otherwise taken into 
     account under subparagraph (A) (after the application of 
     clause (i)) with respect to an individual for any taxable 
     year, the taxpayer shall allocate such expenses among such 
     distributions for purposes of determining the amount of the 
     exclusion under subparagraph (A) and section 529(c)(3)(B).''
       (2) Conforming amendments.--
       (A) Subsection (e) of section 25A is amended to read as 
     follows:
       ``(e) Election Not To Have Section Apply.--A taxpayer may 
     elect not to have this section apply with respect to the 
     qualified tuition and related expenses of an individual for 
     any taxable year.''
       (B) Section 135(d)(2)(A) is amended by striking 
     ``allowable'' and inserting ``allowed''.
       (C) Section 530(b)(2)(A) is amended by striking ``, reduced 
     as provided in section 25A(g)(2)''.
       (D) Section 530(d)(2)(D) is amended--
       (i) by striking ``or credit'', and
       (ii) by striking ``credit or'' in the heading.
       (E) Section 4973(e)(1) is amended by adding ``and'' at the 
     end of subparagraph (A), by striking subparagraph (B), and by 
     redesignating subparagraph (C) as subparagraph (B).
       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 101A. EXPANSION OF INCENTIVES FOR PUBLIC SCHOOLS.

       (a) Findings.--Congress makes the following findings:
       (1) Record numbers of students are enrolled in our Nation's 
     elementary and secondary schools and that record is expected 
     to be broken every year through 2007. The record numbers are 
     straining many school facilities. Addressing that growth will 
     require an increasing commitment of resources to build and 
     modernize schools, and to hire and train new teachers. In 
     addition, the increasing use of technology in the workplace 
     is creating new demands to incorporate computers and other 
     high-technology equipment into the classroom and into 
     curricula.
       (2) The General Accounting Office (in this section referred 
     to as the ``GAO'') has performed a comprehensive survey of 
     the Nation's public elementary and secondary school 
     facilities and has found severe levels of disrepair in all 
     areas of the United States. The GAO report concluded that 
     more than 14,000,000 children attend schools in need of 
     extensive repair or replacement, 7,000,000 children attend 
     schools with life safety code violations, and 12,000,000 
     children attend schools with leaky roofs.
       (3) The General Accounting Office has found the problem of 
     crumbling schools transcends demographic and geographic 
     boundaries. At 38 percent of urban schools, 30 percent of 
     rural schools, and 29 percent of suburban schools, at least 
     one building is in need of extensive repair or should be 
     completely replaced.
       (4) The condition of school facilities has a direct effect 
     on the safety of students and teachers and on the ability of 
     students to learn. Academic research has provided a direct 
     correlation between the condition of

[[Page 1748]]

     school facilities and student achievement. At Georgetown 
     University, researchers have found the test scores of 
     students assigned to schools in poor condition can be 
     expected to fall 10.9 percentage points below the test scores 
     of students in buildings in excellent condition. Similar 
     studies have demonstrated up to a 20 percent improvement in 
     test scores when students were moved from a poor facility to 
     a new facility.
       (5) Furthermore, a recent study by the Environmental 
     Working Group concluded that portable trailers, utilized by 
     many school districts to accommodate school over-crowding, 
     can ``expose children to toxic chemicals at levels that pose 
     an unacceptable risk of cancer or other serious illnesses.'' 
     Because ventilation in portable trailers is poor, the 
     pollution through the build-up of toxins can be significant. 
     This is particularly hazardous to those children who have 
     asthma. The prevalence of asthma in children increased by 160 
     percent between 1980 and 1994. The report also stated, 
     ``Schools are facing two epidemics: an epidemic of 
     deteriorating facilities and an epidemic of asthma among 
     children.''
       (6) The General Accounting Office has found most schools 
     are not prepared to incorporate modern technology in the 
     classroom. Forty-six percent of schools lack adequate 
     electrical wiring to support the full-scale use of 
     technology. More than a third of schools lack the requisite 
     electrical power. Fifty-six percent of schools have 
     insufficient phone lines for modems.
       (7) The Department of Education has reported that 
     elementary and secondary school enrollment, already at a 
     record high level, will continue to grow over the next 10 
     years, and that in order to accommodate this growth, the 
     United States will need to build an additional 2,400 schools.
       (8) The General Accounting Office has determined the cost 
     of bringing schools up to good, overall condition to be 
     $112,000,000,000, not including the cost of modernizing 
     schools to accommodate technology, or the cost of building 
     additional facilities needed to meet record enrollment 
     levels.
       (9) Schools run by the Bureau of Indian Affairs (in this 
     section referred to as the ``BIA'') for Native American 
     children are also in dire need of repair and renovation. The 
     General Accounting Office has reported that the cost of total 
     inventory repairs needed for BIA facilities is $754,000,000. 
     The December 1997 report by the Comptroller General of the 
     United States states that, ``Compared with other schools 
     nationally, BIA schools are generally in poorer physical 
     condition, have more unsatisfactory environmental factors, 
     more often lack key facilities requirements for education 
     reform, and are less able to support computer and 
     communications technology.''
       (10) Across the Nation, schools will need to recruit and 
     hire an additional 2,000,000 teachers during the period from 
     1998 through 2008. More than 200,000 teachers will be needed 
     annually, yet current teacher development programs produce 
     only 100,000 to 150,000 teachers per year. This level of 
     recruitment is simply the level needed to maintain existing 
     student-teacher ratios.
       (11) The rapid growth in the student population, in 
     addition to the imminent shortage of qualified teachers and 
     recent efforts by Congress to help States reduce class size, 
     present urgent infrastructure needs across the Nation.
       (12) State and local financing mechanisms have proven 
     inadequate to meet the challenges facing today's aging school 
     facilities. Large numbers of local educational agencies have 
     difficulties securing financing for school facility 
     improvement.
       (13) The Federal Government has provided resources for 
     school construction in the past. For example, between 1933 
     and 1939, the Federal Government assisted in 70 percent of 
     all new school construction.
       (14) The Federal Government can support elementary and 
     secondary school facilities without interfering in issues of 
     local control, and should help communities leverage 
     additional funds for the improvement of elementary and 
     secondary school facilities.
       (b) Public School Modernization.--Chapter 1 is amended by 
     adding at the end the following new subchapter:

         ``Subchapter X--Public School Modernization Provisions

``Part I. Credit to holders of qualified public school modernization 
              bonds.
``Part II. Qualified school construction bonds.
``Part III. Incentives for education zones.

 ``PART I--CREDIT TO HOLDERS OF QUALIFIED PUBLIC SCHOOL MODERNIZATION 
                                 BONDS

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

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

       ``(a) Allowance of Credit.--In the case of a taxpayer who 
     holds a qualified public 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 public 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 public 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 Public School Modernization Bond; Credit 
     Allowance Date.--For purposes of this section--
       ``(1) Qualified public school modernization bond.--The term 
     `qualified public school modernization bond' means--
       ``(A) a qualified school construction bond, and
       ``(B) a qualified zone academy bond.
       ``(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.
       ``(e) Other Definitions.--For purposes of this subchapter--
       ``(1) Local educational agency.--The term `local 
     educational agency' has the meaning given to such term by 
     section 14101 of the Elementary and Secondary Education Act 
     of 1965. Such term includes the local educational agency that 
     serves the District of Columbia but does not include any 
     other State agency.
       ``(2) Bond.--The term `bond' includes any obligation.
       ``(3) State.--The term `State' includes the District of 
     Columbia and any possession of the United States.
       ``(4) Public school facility.--The term `public school 
     facility' shall not include any facility which is not owned 
     by a State or local government or any agency or 
     instrumentality of a State or local government.
       ``(f) 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.
       ``(g) Bonds Held by Regulated Investment Companies.--If any 
     qualified public 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.
       ``(h) 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 public 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 public school modernization bond as if 
     it were a stripped bond and to the credit under this section 
     as if it were a stripped coupon.
       ``(i) Treatment for Estimated Tax Purposes.--Solely for 
     purposes of sections 6654

[[Page 1749]]

     and 6655, the credit allowed by this section to a taxpayer by 
     reason of holding qualified public 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.
       ``(j) 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.
       ``(k) 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.
       ``(l) Reporting.--Issuers of qualified public school 
     modernization bonds shall submit reports similar to the 
     reports required under section 149(e).
       ``(m) Termination.--This section shall not apply to any 
     bond issued after September 30, 2005.

             ``PART II--QUALIFIED SCHOOL CONSTRUCTION BONDS

``Sec. 1400G. Qualified school construction bonds.

     ``SEC. 1400G. QUALIFIED SCHOOL CONSTRUCTION BONDS.

       ``(a) Qualified School Construction Bond.--For purposes of 
     this subchapter, the term `qualified school construction 
     bond' means any bond issued as part of an issue if--
       ``(1) 95 percent or more of the proceeds of such issue are 
     to be used for the construction, rehabilitation, or repair of 
     a public 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,
       ``(2) the bond is issued by a State or local government 
     within the jurisdiction of which such school is located,
       ``(3) the issuer designates such bond for purposes of this 
     section, and
       ``(4) the term of each bond which is part of such issue 
     does not exceed 15 years.
       ``(b) Limitation on Amount of Bonds Designated.--The 
     maximum aggregate face amount of bonds issued during any 
     calendar year which may be designated under subsection (a) by 
     any issuer shall not exceed the sum of--
       ``(1) the limitation amount allocated under subsection (d) 
     for such calendar year to such issuer, and
       ``(2) if such issuer is a large local educational agency 
     (as defined in subsection (e)(4)) or is issuing on behalf of 
     such an agency, the limitation amount allocated under 
     subsection (e) for such calendar year to such agency.
       ``(c) National Limitation on Amount of Bonds Designated.--
     There is a national qualified school construction bond 
     limitation for each calendar year. Such limitation is--
       ``(1) $11,800,000,000 for 2001,
       ``(2) $11,800,000,000 for 2005, and
       ``(3) except as provided in subsection (f), zero after 2001 
     and before 2005, and after 2005.
       ``(d) Sixty-Five Percent of Limitation Allocated Among 
     States.--
       ``(1) In general.--Sixty-five percent of the limitation 
     applicable under subsection (c) for any calendar year shall 
     be allocated among the States under paragraph (2) by the 
     Secretary. The limitation amount allocated to a State under 
     the preceding sentence shall be allocated by the State to 
     issuers within such State and such allocations may be made 
     only if there is an approved State application.
       ``(2) Allocation formula.--The amount to be allocated under 
     paragraph (1) for any calendar year shall be allocated among 
     the States in proportion to the respective amounts each such 
     State received for Basic Grants under subpart 2 of part A of 
     title I of the Elementary and Secondary Education Act of 1965 
     (20 U.S.C. 6331 et seq.) for the most recent fiscal year 
     ending before such calendar year. For purposes of the 
     preceding sentence, Basic Grants attributable to large local 
     educational agencies (as defined in subsection (e)) shall be 
     disregarded.
       ``(3) Minimum allocations to states.--
       ``(A) In general.--The Secretary shall adjust the 
     allocations under this subsection for any calendar year for 
     each State to the extent necessary to ensure that the sum 
     of--
       ``(i) the amount allocated to such State under this 
     subsection for such year, and
       ``(ii) the aggregate amounts allocated under subsection (e) 
     to large local educational agencies in such State for such 
     year,

     is not less than an amount equal to such State's minimum 
     percentage of the amount to be allocated under paragraph (1) 
     for the calendar year.
       ``(B) Minimum percentage.--A State's minimum percentage for 
     any calendar year is the minimum percentage described in 
     section 1124(d) of the Elementary and Secondary Education Act 
     of 1965 (20 U.S.C. 6334(d)) for such State for the most 
     recent fiscal year ending before such calendar year.
       ``(4) Allocations to certain possessions.--The amount to be 
     allocated under paragraph (1) to any possession of the United 
     States other than Puerto Rico shall be the amount which would 
     have been allocated if all allocations under paragraph (1) 
     were made on the basis of respective populations of 
     individuals below the poverty line (as defined by the Office 
     of Management and Budget). In making other allocations, the 
     amount to be allocated under paragraph (1) shall be reduced 
     by the aggregate amount allocated under this paragraph to 
     possessions of the United States.
       ``(5) Allocations for indian schools.--In addition to the 
     amounts otherwise allocated under this subsection, 
     $200,000,000 for calendar year 2001, and $200,000,000 for 
     calendar year 2005, shall be allocated by the Secretary of 
     the Interior for purposes of the construction, 
     rehabilitation, and repair of schools funded by the Bureau of 
     Indian Affairs. In the case of amounts allocated under the 
     preceding sentence, Indian tribal governments (as defined in 
     section 7871) shall be treated as qualified issuers for 
     purposes of this subchapter.
       ``(6) Approved state application.--For purposes of 
     paragraph (1), the term `approved State application' means an 
     application which is approved by the Secretary of Education 
     and which includes--
       ``(A) the results of a recent publicly-available survey 
     (undertaken by the State with the involvement of local 
     education officials, members of the public, and experts in 
     school construction and management) of such State's needs for 
     public school facilities, including descriptions of--
       ``(i) health and safety problems at such facilities,
       ``(ii) the capacity of public schools in the State to house 
     projected enrollments, and
       ``(iii) the extent to which the public schools in the State 
     offer the physical infrastructure needed to provide a high-
     quality education to all students, and
       ``(B) a description of how the State will allocate to local 
     educational agencies, or otherwise use, its allocation under 
     this subsection to address the needs identified under 
     subparagraph (A), including a description of how it will--
       ``(i) give highest priority to localities with the greatest 
     needs, as demonstrated by inadequate school facilities 
     coupled with a low level of resources to meet those needs,
       ``(ii) use its allocation under this subsection to assist 
     localities that lack the fiscal capacity to issue bonds on 
     their own, and
       ``(iii) ensure that its allocation under this subsection is 
     used only to supplement, and not supplant, the amount of 
     school construction, rehabilitation, and repair in the State 
     that would have occurred in the absence of such allocation.

     Any allocation under paragraph (1) by a State shall be 
     binding if such State reasonably determined that the 
     allocation was in accordance with the plan approved under 
     this paragraph.
       ``(e) Thirty-Five Percent of Limitation Allocated Among 
     Largest School Districts.--
       ``(1) In general.--Thirty-five percent of the limitation 
     applicable under subsection (c) for any calendar year shall 
     be allocated under paragraph (2) by the Secretary among local 
     educational agencies which are large local educational 
     agencies for such year. No qualified school construction bond 
     may be issued by reason of an allocation to a large local 
     educational agency under the preceding sentence unless such 
     agency has an approved local application.
       ``(2) Allocation formula.--The amount to be allocated under 
     paragraph (1) for any calendar year shall be allocated among 
     large local educational agencies in proportion to the 
     respective amounts each such agency received for Basic Grants 
     under subpart 2 of part A of title I of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 6331 et seq.) for 
     the most recent fiscal year ending before such calendar year.
       ``(3) Allocation of unused limitation to state.--The amount 
     allocated under this subsection to a large local educational 
     agency for any calendar year may be reallocated by such 
     agency to the State in which such agency is located for such 
     calendar year. Any amount reallocated to a State under the 
     preceding sentence may be allocated as provided in subsection 
     (d)(1).
       ``(4) Large local educational agency.--For purposes of this 
     section, the term `large local educational agency' means, 
     with respect to a calendar year, any local educational agency 
     if such agency is--
       ``(A) among the 100 local educational agencies with the 
     largest numbers of children aged 5 through 17 from families 
     living below the poverty level, as determined by the 
     Secretary using the most recent data available from the 
     Department of Commerce that are satisfactory to the 
     Secretary, or
       ``(B) 1 of not more than 25 local educational agencies 
     (other than those described in subparagraph (A)) that the 
     Secretary of Education determines (based on the most recent 
     data available satisfactory to the Secretary) are in 
     particular need of assistance, based on a low level of 
     resources for school construction, a high level of enrollment 
     growth, or such other factors as the Secretary deems 
     appropriate.
       ``(5) Approved local application.--For purposes of 
     paragraph (1), the term `approved local application' means an 
     application which is approved by the Secretary of Education 
     and which includes--
       ``(A) the results of a recent publicly-available survey 
     (undertaken by the local educational agency or the State with 
     the involvement of school officials, members of the

[[Page 1750]]

     public, and experts in school construction and management) of 
     such agency's needs for public school facilities, including 
     descriptions of--
       ``(i) the overall condition of the local educational 
     agency's school facilities, including health and safety 
     problems,
       ``(ii) the overcrowded conditions of the agency's schools 
     and the capacity of such schools to house projected 
     enrollments, and
       ``(iii) the extent to which the agency's schools offer the 
     physical infrastructure needed to provide a high-quality 
     education to all students,
       ``(B) a description of how the local educational agency 
     will use its allocation under this subsection to address the 
     needs identified under subparagraph (A), including a 
     description of how the agency will--
       ``(i) give high priority to localities with the greatest 
     needs, as demonstrated by inadequate school facilities 
     coupled with a low level of resources to meet those needs,
       ``(ii) use its allocation under this subsection to assist 
     localities that lack the fiscal capacity to issue bonds on 
     their own,
       ``(iii) ensure that its allocation under this subsection is 
     used only to supplement, and not supplant, the amount of 
     school construction, rehabilitation, and repair in the State 
     that would have occurred in the absence of such allocation, 
     and
       ``(iv) ensure that the needs of both rural and urban areas 
     are recognized, and
       ``(C) a description of how the local educational agency 
     will ensure that its allocation under this subsection is used 
     only to supplement, and not supplant, the amount of school 
     construction, rehabilitation, or repair in the locality that 
     would have occurred in the absence of such allocation.

     A rule similar to the rule of the last sentence of subsection 
     (d)(6) shall apply for purposes of this paragraph.
       ``(f) Carryover of Unused Limitation.--If for any calendar 
     year--
       ``(1) the amount allocated under subsection (d) to any 
     State, exceeds
       ``(2) the amount of bonds issued during such year which are 
     designated under subsection (a) pursuant to such allocation,

     the limitation amount under such subsection for such State 
     for the following calendar year shall be increased by the 
     amount of such excess. A similar rule shall apply to the 
     amounts allocated under subsection (d)(5) or (e).
       ``(g) Special Rules Relating to Arbitrage.--
       ``(1) In general.--A bond shall not be treated as failing 
     to meet the requirement of subsection (a)(1) solely by reason 
     of the fact that the proceeds of the issue of which such bond 
     is a part are invested for a temporary period (but not more 
     than 36 months) until such proceeds are needed for the 
     purpose for which such issue was issued.
       ``(2) Binding commitment requirement.--Paragraph (1) shall 
     apply to an issue only if, as of the date of issuance, there 
     is a reasonable expectation that--
       ``(A) at least 10 percent of the proceeds of the issue will 
     be spent within the 6-month period beginning on such date for 
     the purpose for which such issue was issued, and
       ``(B) the remaining proceeds of the issue will be spent 
     with due diligence for such purpose.
       ``(3) Earnings on proceeds.--Any earnings on proceeds 
     during the temporary period shall be treated as proceeds of 
     the issue for purposes of applying subsection (a)(1) and 
     paragraph (1) of this subsection.

               ``PART III--INCENTIVES FOR EDUCATION ZONES

``Sec. 1400H. Qualified zone academy bonds.

     ``SEC. 1400H. QUALIFIED ZONE ACADEMY BONDS.

       ``(a) Qualified Zone Academy Bond.--For purposes of this 
     subchapter--
       ``(1) In general.--The term `qualified zone academy bond' 
     means any bond issued as part of an issue if--
       ``(A) 95 percent or more of the proceeds of such issue are 
     to be used for a qualified purpose with respect to a 
     qualified zone academy established by a local educational 
     agency,
       ``(B) the bond is issued by a State or local government 
     within the jurisdiction of which such academy is located,
       ``(C) the issuer--
       ``(i) designates such bond for purposes of this section,
       ``(ii) certifies that it has written assurances that the 
     private business contribution requirement of paragraph (2) 
     will be met with respect to such academy, and
       ``(iii) certifies that it has the written approval of the 
     local educational agency for such bond issuance, and
       ``(D) the term of each bond which is part of such issue 
     does not exceed 15 years.
     Rules similar to the rules of section 1400G(g) shall apply 
     for purposes of paragraph (1).
       ``(2) Private business contribution requirement.--
       ``(A) In general.--For purposes of paragraph (1), the 
     private business contribution requirement of this paragraph 
     is met with respect to any issue if the local educational 
     agency that established the qualified zone academy has 
     written commitments from private entities to make qualified 
     contributions having a present value (as of the date of 
     issuance of the issue) of not less than 10 percent of the 
     proceeds of the issue.
       ``(B) Qualified contributions.--For purposes of 
     subparagraph (A), the term `qualified contribution' means any 
     contribution (of a type and quality acceptable to the local 
     educational agency) of--
       ``(i) equipment for use in the qualified zone academy 
     (including state-of-the-art technology and vocational 
     equipment),
       ``(ii) technical assistance in developing curriculum or in 
     training teachers in order to promote appropriate market 
     driven technology in the classroom,
       ``(iii) services of employees as volunteer mentors,
       ``(iv) internships, field trips, or other educational 
     opportunities outside the academy for students, or
       ``(v) any other property or service specified by the local 
     educational agency.
       ``(3) Qualified zone academy.--The term `qualified zone 
     academy' means any public school (or academic program within 
     a public school) which is established by and operated under 
     the supervision of a local educational agency to provide 
     education or training below the postsecondary level if--
       ``(A) such public school or program (as the case may be) is 
     designed in cooperation with business to enhance the academic 
     curriculum, increase graduation and employment rates, and 
     better prepare students for the rigors of college and the 
     increasingly complex workforce,
       ``(B) students in such public school or program (as the 
     case may be) will be subject to the same academic standards 
     and assessments as other students educated by the local 
     educational agency,
       ``(C) the comprehensive education plan of such public 
     school or program is approved by the local educational 
     agency, and
       ``(D)(i) such public school is located in an empowerment 
     zone or enterprise community (including any such zone or 
     community designated after the date of the enactment of this 
     section), or
       ``(ii) there is a reasonable expectation (as of the date of 
     issuance of the bonds) that at least 35 percent of the 
     students attending such school or participating in such 
     program (as the case may be) will be eligible for free or 
     reduced-cost lunches under the school lunch program 
     established under the Richard B. Russell National School 
     Lunch Act.
       ``(4) Qualified purpose.--The term `qualified purpose' 
     means, with respect to any qualified zone academy--
       ``(A) constructing, rehabilitating, or repairing the public 
     school facility in which the academy is established,
       ``(B) acquiring the land on which such facility is to be 
     constructed with part of the proceeds of such issue,
       ``(C) providing equipment for use at such academy,
       ``(D) developing course materials for education to be 
     provided at such academy, and
       ``(E) training teachers and other school personnel in such 
     academy.
       ``(b) Limitations on Amount of Bonds Designated.--
       ``(1) In general.--There is a national zone academy bond 
     limitation for each calendar year. Such limitation is--
       ``(A) $400,000,000 for 1998,
       ``(B) $400,000,000 for 1999,
       ``(C) $400,000,000 for 2000,
       ``(D) $400,000,000 for 2001, and
       ``(C) except as provided in paragraph (3), zero after 2001.
       ``(2) Allocation of limitation.--
       ``(A) Allocation among states.--
       ``(i) 1998 and 1999 limitations.--The national zone academy 
     bond limitations for calendar years 1998 and 1999 shall be 
     allocated by the Secretary among the States on the basis of 
     their respective populations of individuals below the poverty 
     line (as defined by the Office of Management and Budget).
       ``(ii) Limitation after 1999.--The national zone academy 
     bond limitation for any calendar year after 1999 shall be 
     allocated by the Secretary among the States in the manner 
     prescribed by section 1400G(d); except that in making the 
     allocation under this clause, the Secretary shall take into 
     account--

       ``(I) Basic Grants attributable to large local educational 
     agencies (as defined in section 1400G(e)(4)).
       ``(II) the national zone academy bond limitation.

       ``(B) Allocation to local educational agencies.--The 
     limitation amount allocated to a State under subparagraph (A) 
     shall be allocated by the State education agency to qualified 
     zone academies within such State.
       ``(C) Designation subject to limitation amount.--The 
     maximum aggregate face amount of bonds issued during any 
     calendar year which may be designated under subsection (a) 
     with respect to any qualified zone academy shall not exceed 
     the limitation amount allocated to such academy under 
     subparagraph (B) for such calendar year.
       ``(3) Carryover of unused limitation.--If for any calendar 
     year--
       ``(A) the limitation amount under this subsection for any 
     State, exceeds
       ``(B) the amount of bonds issued during such year which are 
     designated under subsection (a) (or the corresponding 
     provisions of prior law) with respect to qualified zone 
     academies within such State,


[[Page 1751]]


     the limitation amount under this subsection for such State 
     for the following calendar year shall be increased by the 
     amount of such excess. Any carryforward of a limitation 
     amount may be carried only to the first 2 years (3 years for 
     carryforwards from 1998 or 1999) following the unused 
     limitation year. For purposes of the preceding sentence, a 
     limitation amount shall be treated as used on a first-in 
     first-out basis.''
       (c) Reporting.--Subsection (d) of section 6049 (relating to 
     returns regarding payments of interest) is amended by adding 
     at the end the following new paragraph:
       ``(8) Reporting of credit on qualified public school 
     modernization bonds.--
       ``(A) In general.--For purposes of subsection (a), the term 
     `interest' includes amounts includible in gross income under 
     section 1400F(f) and such amounts shall be treated as paid on 
     the credit allowance date (as defined in section 
     1400F(d)(2)).
       ``(B) Reporting to corporations, etc.--Except as otherwise 
     provided in regulations, in the case of any interest 
     described in subparagraph (A) of this paragraph, subsection 
     (b)(4) of this section shall be applied without regard to 
     subparagraphs (A), (H), (I), (J), (K), and (L)(i).
       ``(C) Regulatory authority.--The Secretary may prescribe 
     such regulations as are necessary or appropriate to carry out 
     the purposes of this paragraph, including regulations which 
     require more frequent or more detailed reporting.''
       (d) Conforming Amendments.--
       (1) Subchapter U of chapter 1 is amended by striking part 
     IV, by redesignating part V as part IV, and by redesignating 
     section 1397F as section 1397E.
       (2) The table of subchapters for chapter 1 is amended by 
     adding at the end the following new item:

``Subchapter X. Public school modernization provisions.''

       (3) The table of parts of subchapter U of chapter 1 is 
     amended by striking the last 2 items and inserting the 
     following item:

``Part IV. Regulations.''

       (e) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to obligations 
     issued after December 31, 1999.
       (2) Repeal of restriction on zone academy bond holders.--In 
     the case of bonds to which section 1397E of the Internal 
     Revenue Code of 1986 (as in effect before the date of the 
     enactment of this Act) applies, the limitation of such 
     section to eligible taxpayers (as defined in subsection 
     (d)(6) of such section) shall not apply after the date of the 
     enactment of this Act.

     SEC. 101C. PUBLIC SCHOOL REPAIR AND RENOVATION.

       Title XII of the Elementary and Secondary Education Act of 
     1965 (20 U.S.C. 8501 et seq.) is amended to read as follows:

            ``TITLE XII--PUBLIC SCHOOL REPAIR AND RENOVATION

     ``SEC. 12001. FINDINGS.

       ``Congress finds the following:
       ``(1) The General Accounting Office estimated in 1995 that 
     it would cost $112,000,000,000 to bring our Nation's school 
     facilities into good overall condition.
       ``(2) The General Accounting Office also found in 1995 that 
     60 percent of the Nation's schools, serving 28,000,000 
     students, reported that 1 or more building features, such as 
     roofs and plumbing, needed to be extensively repaired, 
     overhauled, or replaced.
       ``(3) The National Center for Education Statistics reported 
     that the average age for a school building in 1998 was 42 
     years and that local educational agencies with relatively 
     high rates of poverty tend to have relatively old buildings.
       ``(4) School condition is positively correlated with 
     student achievement, according to a number of research 
     studies.
       ``(5) The results of a recent survey indicate that the 
     condition of schools with large proportions of students 
     living on Indian lands is particularly poor.
       ``(6) While school repair and renovation are primarily a 
     State and local concern, some States and communities are not, 
     on their own, able to meet the burden of providing adequate 
     school facilities for all students, and the poorest 
     communities have had the greatest difficulty meeting this 
     need. It is, therefore, appropriate for the Federal 
     Government to provide assistance to high-need communities for 
     school repair and renovation.

     ``SEC. 12002. PURPOSE.

       ``The purpose of this title is to assist high-need local 
     educational agencies in making urgent repairs and renovations 
     to public school facilities in order to--
       ``(1) reduce health and safety problems, including 
     violations of State or local fire codes, faced by students; 
     and
       ``(2) improve the ability of students to learn in their 
     school environment.

     ``SEC. 12003. AUTHORIZED ACTIVITIES.

       ``(a) In General.--A recipient of a grant or loan under 
     this title shall use the grant or loan funds to carry out the 
     purpose of this title by--
       ``(1) repairing or replacing roofs, electrical wiring, or 
     plumbing systems;
       ``(2) repairing, replacing, or installing heating, 
     ventilation, or air conditioning systems;
       ``(3) ensuring that repairs and renovations under this 
     title comply with the requirements of section 504 of the 
     Rehabilitation Act of 1973 and the Americans with 
     Disabilities Act of 1990 relating to the accessibility of 
     public school programs to individuals with disabilities; and
       ``(4) making other types of school repairs and renovations 
     that the Secretary may reasonably determine are urgently 
     needed, particularly projects to correct facilities problems 
     that endanger the health and safety of students and staff 
     such as violations of State or local fire codes.
       ``(b) Limitation.--The Secretary shall not approve an 
     application for a grant or loan under this title unless the 
     applicant demonstrates to the Secretary's satisfaction that 
     the applicant lacks sufficient funds, from other sources, to 
     carry out the repairs or renovations for which the applicant 
     is requesting assistance.

     ``SEC. 12004. GRANTS TO LOCAL EDUCATIONAL AGENCIES WITH HIGH 
                   CONCENTRATIONS OF STUDENTS LIVING ON INDIAN 
                   LANDS.

       ``(a) Grants Authorized.--From funds available under 
     section 12008(a), the Secretary shall award grants to local 
     educational agencies to enable the agencies to carry out the 
     authorized activities described in section 12003 and 
     subsection (e).
       ``(b) Eligibility.--A local educational agency is eligible 
     for a grant under this section if the number of children 
     determined under section 8003(a)(1)(C) of this Act for that 
     agency constituted at least 50 percent of the number of 
     children who were in average daily attendance at the schools 
     of the agency during the preceding school year.
       ``(c) Allocation of Funds.--The Secretary shall allocate 
     funds available to carry out this section to eligible local 
     educational agencies based on their respective numbers of 
     children in average daily attendance who are counted under 
     section 8003(a)(1)(C) of this Act.
       ``(d) Applications.--Each eligible local educational agency 
     that desires to receive a grant under this section shall 
     submit an application to the Secretary that includes--
       ``(1) a statement of how the agency will use the grant 
     funds;
       ``(2) a description of the steps the agency will take to 
     adequately maintain the facilities that the agency repairs, 
     renovates, or constructs with those funds; and
       ``(3) such other information and assurances as the 
     Secretary may reasonably require.
       ``(e) Construction of New Schools.--In addition to any 
     other activity authorized under section 12003, an eligible 
     local educational agency may use grant funds received under 
     this section to construct a new school if the agency 
     demonstrates to the Secretary's satisfaction that the agency 
     will replace an existing school that is in such poor 
     condition that renovating the school will not be cost-
     effective.

     ``SEC. 12005. GRANTS TO HIGH-POVERTY LOCAL EDUCATIONAL 
                   AGENCIES.

       ``(a) Grants Authorized.--From funds available under 
     section 12008(b)(1), the Secretary shall make grants, on a 
     competitive basis, to local educational agencies with poverty 
     rates of 20 percent or greater to enable the agencies to 
     carry out the authorized activities described in section 
     12003.
       ``(b) Criteria for Awarding Grants.--In making grants under 
     this section, the Secretary shall consider--
       ``(1) the poverty rate, the need for school repairs and 
     renovations, and the fiscal capacity of each local 
     educational agency; and
       ``(2) such other factors as the Secretary determines 
     appropriate.
       ``(c) Applications.--Each eligible local educational agency 
     that desires to receive a grant under this section shall 
     submit an application to the Secretary that includes--
       ``(1) a description of the agency's urgent need for school 
     repair and renovation and of how the agency will use funds 
     available under this section to meet those needs;
       ``(2) information on the fiscal effort that the agency is 
     making in support of education and evidence demonstrating 
     that the agency lacks the capacity to meet the agency's 
     urgent school repair and renovation needs without assistance 
     made available under this section;
       ``(3) a description of the steps the agency will take to 
     adequately maintain the facilities that the agency repairs or 
     renovates with the assistance; and
       ``(4) such other information and assurances as the 
     Secretary may reasonably require.

     ``SEC. 12006. SCHOOL RENOVATION GRANTS AND LOANS.

       ``(a) Grants and Loans.--From funds available under section 
     12008(b)(2), the Secretary shall make grants, and shall pay 
     the cost of loans made, on a competitive basis, to local 
     educational agencies that lack the ability to fund urgent 
     school repairs without a grant or loan provided under this 
     section, to enable the agencies to carry out the authorized 
     activities described in section 12003.
       ``(b) Loan Period.--Each loan under this section shall be 
     for a period of 7 years and shall carry an interest rate of 0 
     percent.
       ``(c) Criteria for Making Grants and Loans.--In making 
     grants and loans under this section, the Secretary shall 
     consider--

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       ``(1) the extent of poverty, the need for school repairs 
     and renovations, and the fiscal capacity of each local 
     educational agency; and
       ``(2) such other factors as the Secretary determines 
     appropriate.
       ``(d) Applications.--Each eligible local educational agency 
     that desires to receive a grant or loan under this section 
     shall submit an application to the Secretary that includes 
     the information described in section 12005(c).
       ``(e) Credit Standards.--In carrying out this section, the 
     Secretary--
       ``(1) shall not extend credit without finding that there is 
     reasonable assurance of repayment; and
       ``(2) may use credit enhancement techniques, as 
     appropriate, to reduce the credit risk of loans.

     ``SEC. 12007. PROGRESS REPORTS.

       ``The Secretary shall require recipients of grants and 
     loans under this title to submit progress reports and such 
     other information as the Secretary determines necessary to 
     ensure compliance with this title and to evaluate the impact 
     of the activities assisted under this title.

     ``SEC. 12008. AUTHORIZATION OF APPROPRIATIONS.

       ``(a) Grants Under Section 12004.--For the purpose of 
     making grants under section 12004, there are authorized to be 
     appropriated $50,000,000 for fiscal year 2001 and such sums 
     as may be necessary for each of the 4 succeeding fiscal 
     years.
       ``(b) Grants Under Section 12005 and Grants and Loans Under 
     Section 12006.--For the purpose of making grants under 
     section 12005, and grants and loans under section 12006, 
     there are authorized to be appropriated $1,250,000,000 for 
     fiscal year 2001 and such sums as may be necessary for each 
     of the succeeding 4 fiscal years, of which--
       ``(1) 10 percent shall be available for grants under 
     section 12005; and
       ``(2) 90 percent shall be available to make grants and to 
     pay the cost of loans under section 12006.
       ``(c) Limitation on Loan Volume.--Within the available 
     resources and authority, gross obligations for the principal 
     amount of direct loans offered by the Secretary under section 
     12006 for fiscal year 2001 shall not exceed $7,000,000,000, 
     or the amount specified in an applicable appropriations Act, 
     whichever is greater.

     ``SEC. 12009. DEFINITIONS.

       ``For the purpose of this title, the following terms have 
     the following meanings:
       ``(1) Local educational agency.--The term `local 
     educational agency' has the meaning given that term in 
     section 14101(18) (A) and (B) of this Act.
       ``(2) Public school facility.--
       ``(A) In general.--The term `public school facility' means 
     a public building whose primary purpose is the instruction of 
     public elementary or secondary students.
       ``(B) Exclusions.--The term excludes athletic stadiums or 
     any other structure or facility intended primarily for 
     athletic exhibitions, contests, games, or events for which 
     admission is charged to the general public.
       ``(3) Repair and renovation.--The term `repair and 
     renovation' used with respect to an existing public school 
     facility, means the repair or renovation of the facility 
     without increasing the size of the facility.''.

     SEC. 101D. USE OF NET PROCEEDS.

       Notwithstanding any other provision of law--
       (1) section 439(a) of the General Education Provisions Act 
     shall apply with respect to the construction, reconstruction, 
     rehabilitation, or repair of any school facility to the 
     extent funded by net proceeds obtained through any provision 
     enacted or amended by this Act,
       (2) such net proceeds may not be used to fund the 
     construction, reconstruction, rehabilitation, or repair of 
     any stadium or other facility primarily used for athletic or 
     non-academic events, and
       (3) such net proceeds may be used to build small schools or 
     create smaller learning environments within existing public 
     school facilities.

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