[Congressional Record (Bound Edition), Volume 152 (2006), Part 8]
[Senate]
[Pages 10929-10959]
[From the U.S. Government Publishing Office, www.gpo.gov]




          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      Mr. VOINOVICH:
  S. 3492. A bill to strengthen performance management in the Federal 
Government, to make the annual general pay increase for Federal 
employees contingent on performance, and for other purposes; to the 
Committee on Homeland Security and Governmental Affairs.
  Mr. VOINOVICH. Mr. President, I rise today to introduce the Federal 
Workforce Performance Appraisal and Management Improvement Act. Before 
I describe for my colleagues the details of this legislation, I would 
like to provide background on why I believe it is important for 
Congress to consider legislation reforming the performance appraisal 
processes of the government.
  My interest in the federal workforce began after working with the 
Federal Government for 18 years as an outside force, 10 years as mayor 
of Cleveland and 8 years as Governor of Ohio. Through my work as 
chairman of the Subcommittee on Oversight of Government Management, the 
Federal Workforce and the District of Columbia, I continue to observe 
that investing in personnel and workforce management; in fact, 
management in general, struggles to be a priority in the Federal 
Government. My own experience as county auditor, county commissioner, 
mayor, and governor has taught me that, of all the things in which 
government can invest, resources dedicated to human capital bring the 
greatest return.
  I continue to applaud the current administration for its systematic 
approach to improving and scrutinizing the management practices of the 
Federal Government through the President's Management Agenda and its 
related scorecard. Each year, the administration raises the bar as to 
what earns an agency a green, or successful, rating. One of the 
criteria used to evaluate a department or agency for strategic 
management of human capital this year is demonstrating a strong 
performance appraisal system for the Senior Executive Service, agency 
managers, and 60 percent of the workforce.
  I believe that an effective performance management system is 
fundamental to building a results-oriented organization. By developing 
a system where employees have regular discussions with their 
supervisors about expectations for their performance, both employees 
and supervisors will be more effective in achieving their agency's 
mission. The primary goal of the Federal Workforce Performance 
Appraisal and Management Improvement Act of 2006 is to build and 
maintain this environment.
  This legislation would strengthen and improve the employee 
performance appraisal system, which now is vague in its requirements. 
While some organizations have taken steps to modernize their 
performance management systems and tools such as the President's 
Management Agenda have moved agencies in that direction, there is no 
comprehensive governmentwide mandate to do so. This legislation would 
begin the reform process by layering a modern performance management 
system over the existing General Schedule system.
  This legislation would require that every Federal employee receive 
annually a written performance appraisal. That appraisal must align 
with the agency's strategic goals, be developed with the employee, make 
meaningful distinctions among employee performance, and use the results 
in making decisions for training, rewarding, promoting, reassigning, 
and removing employees.
  This legislation would require the Office of Personnel Management to 
provide technical assistance to agencies and approve the system. The 
government must utilize the Office of Personnel Management's 
institutional expertise.
  This legislation would require that managers receive the appropriate 
training to judge the performance of their subordinates, make 
expectations clear to employees, and give constructive feedback.
  This legislation would stipulate that if an employee does not achieve 
a successful rating under the new appraisal system, then that employee 
would be ineligible for the annual pay increase or a within grade 
increase.
  This legislation would provide individuals hired as senior level or 
senior technical to access level II of the Executive Schedule with an 
OPM certified performance appraisal system, consistent with statute for 
the Senior Executive Service.
  I am introducing this legislation because I believe that employees 
should receive a rigorous evaluation each year and that their pay 
should be determined based upon their performance. I agree with the 
observation that has been made repeatedly by Comptroller General David 
Walker, that the passage of time should not be the single most 
important factor in determining an employee's pay. Instead, it should 
be determined by productivity, effectiveness, and contributions of that 
employee.
  I have implemented pay for performance before, and it can work. 
However, it requires a significant commitment on behalf of managers and 
leaders. Instead of taking one giant bite at the apple, I believe it 
will be easier for Federal agencies to implement enhanced employee 
appraisals first. By instituting a more rigorous performance management 
standard on top of the current general schedule, I am optimistic this 
will create less anxiety among Federal employees.
  I also would like to stress that I intend this effort to be 
completely bipartisan. The proposal I have outlined here today is not 
set in stone, and I imagine that it will undergo many changes.
  I would like to transform the culture of the Federal workforce into a 
high-performing, continually improving organization that focuses on 
achieving results for the American people. The Federal workforce must 
be as agile, nimble, and intellectually energetic as the leading 
nongovernmental organizations or dot-com companies, capable of 
addressing the wide ranging challenges facing the U.S., from national 
security to global economic competitiveness to providing vital social 
services.
  We must discuss the challenges before us and ask if the rules and 
culture of today's Federal workforce get the job done. We must engage 
in a dialogue about the future of the public service and ask the 
difficult questions about what we want it to achieve and how do we make 
it happen. This conversation will make many people uncomfortable, but 
it must take place. For as all of us who work on Federal workforce 
issues know, there is great disagreement about the types of reforms and 
changes that should be made going forward. We must ask, what should the 
Federal workforce be doing for America to meet the challenges of the 
21st century? Once we have answered that

[[Page 10930]]

question, we can begin to discuss how we build that workforce.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3492

       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 ``Federal Workforce 
     Performance Appraisal and Management Improvement Act of 
     2006''.

     SEC. 2. PERFORMANCE APPRAISAL SYSTEMS.

       Subchapter 1 of chapter 43 of title 5, United States Code, 
     is amended--
       (1) by amending section 4302 to read as follows:

     ``Sec. 4302. Establishment of performance appraisal systems

       ``(a)(1) Subject to paragraphs (2) and (3), each agency 
     shall establish 1 or more performance appraisal systems to 
     promote high performance.
       ``(2) In designing and applying a performance appraisal 
     system established under this subsection, each agency shall--
       ``(A) link the system with the strategic goals and annual 
     performance plan of the agency;
       ``(B) involve employees in the development of their 
     performance standards;
       ``(C) provide each employee with a written performance 
     appraisal annually;
       ``(D) make meaningful distinctions in performance; and
       ``(E) use the results of performance appraisals as a basis 
     for training, rewarding, compensating, reassigning, 
     promoting, reducing in grade, retaining, and removing 
     employees.
       ``(3) Consistent with section 4304, each performance 
     appraisal system established under this subsection shall be 
     developed with appropriate technical assistance from the 
     Office of Personnel Management and shall be reviewed before 
     implementation and from time to time thereafter by the 
     Director of the Office to determine whether the system meets 
     the requirements of this subchapter. The agency shall 
     promptly take any corrective action directed by the Director 
     of the Office at any time under section 4304 (b)(3).
       ``(b) Under regulations which the Director of the Office of 
     Personnel Management shall prescribe, each performance 
     appraisal system shall provide for--
       ``(1) holding supervisors and managers accountable in their 
     performance appraisal for effectively managing the 
     performance of employees, which includes--
       ``(A) assessing performance;
       ``(B) providing ongoing feedback and preparing written 
     performance appraisals;
       ``(C) addressing poor performance; and
       ``(D) promoting and rewarding excellent performance;
       ``(2) establishing performance standards related to 
     relevant assigned tasks for each employee or position under 
     the system which will permit--
       ``(A) the accurate evaluation of performance on the basis 
     of objective criteria, to the maximum extent feasible; and
       ``(B) making meaningful distinctions in performance;
       ``(3) communicating to each employee at the beginning of 
     each appraisal period the performance standards and the 
     critical elements of the employee's position;
       ``(4) evaluating each employee during the appraisal period 
     on such standards;
       ``(5) assisting employees in improving unacceptable 
     performance;
       ``(6) reassigning, reducing in grade, or removing employees 
     who continue to have unacceptable performance, but only after 
     an opportunity to demonstrate acceptable performance;
       ``(7) establishing multiple levels of summary performance 
     ratings which provide for making meaningful distinctions in 
     performance, including at least--
       ``(A) a summary level of fully successful (or equivalent);
       ``(B) a summary level of unacceptable; and
       ``(C) a summary level above fully successful; and
       ``(8) recognizing and rewarding employees whose performance 
     so warrants.''; and
       (2) by amending section 4304 to read as follows:

     ``Sec. 4304. Responsibilities of the Office of Personnel 
       Management

       ``(a) The Office of Personnel Management shall make 
     technical assistance available to agencies in the development 
     of performance appraisal systems.
       ``(b)(1) The Director of the Office shall review each 
     performance appraisal system developed by any agency under 
     this subchapter prior to its implementation and determine 
     whether the performance appraisal system as designed meets 
     the requirements of this subchapter.
       ``(2) The Director of the Office shall--
       ``(A) review agency performance appraisal systems developed 
     under this subchapter from time to time after their 
     implementation to determine the extent to which the 
     application of any such system meets the requirements of this 
     subchapter; and
       ``(B) report to the President and Congress any finding that 
     an agency has failed to meet those requirements.
       ``(3) If the Director of the Office determines that a 
     system does not meet the requirements of this subchapter 
     (including regulations prescribed under section 4305), the 
     Director of the Office shall direct the agency to implement 
     an appropriate system or to correct operations under the 
     system, and any such agency shall take any action so 
     required.''.

     SEC. 3. MANDATORY TRAINING PROGRAMS FOR SUPERVISORS.

       (a) In General.--Section 4121 of title 5, United States 
     Code, is amended to read as follows:

     ``Sec. 4121. Specific training programs

       ``(a) In this section, the term `supervisor' means--
       ``(1) a supervisor as defined under section 7103(a)(10); 
     and
       ``(2) any other employee as the Director of the Office may 
     by regulation prescribe.
       ``(b) Under operating standards promulgated by, and in 
     consultation with, the Director of the Office of Personnel 
     Management, the head of each agency shall establish--
       ``(1) a comprehensive management succession program to 
     provide training to employees to develop managers for the 
     agency; and
       ``(2) a program to provide training to supervisors on 
     actions, options, and strategies a supervisor may use in--
       ``(A) communicating performance expectations and conducting 
     employee performance appraisals;
       ``(B) mentoring employees and improving employee 
     performance and productivity;
       ``(C) dealing with employees whose performance is 
     unacceptable; and
       ``(D) otherwise carrying out the duties and 
     responsibilities of a supervisor.
       ``(c)(1) Not later than 1 year after the date on which an 
     individual is appointed to the position of supervisor, and 
     every 5 years thereafter, that individual shall be required 
     to complete the program established under subsection (b)(2).
       ``(2) Each program established under subsection (b)(2) 
     shall include provisions under which credit may be given for 
     periods of similar training previously completed.
       ``(d) The Director of the Office of Personnel Management 
     shall prescribe regulations to carry out this section.''.
       (b) Effective Date and Application.--
       (1) In general.--The amendments made by this section shall 
     take effect as provided under section 8 and apply to--
       (A) each individual appointed to the position of a 
     supervisor, as defined under section 4121(a) of title 5, 
     United States Code, (as added by subsection (a) of this 
     section) on or after that effective date; and
       (B) each individual who is employed in the position of a 
     supervisor on that effective date as provided under paragraph 
     (2).
       (2) Supervisors on effective date.--Each individual who is 
     employed in the position of a supervisor on the effective 
     date of this section shall be required to --
       (A) complete the program established under section 
     4121(b)(2) of title 5, United States Code (as added by 
     subsection (a) of this section), not later than 3 years after 
     the effective date of this section; and
       (B) complete that program every 5 years thereafter in 
     accordance with section 4121(c) of such title.

     SEC. 4. PAY RATES AND SYSTEMS.

       Chapter 53 of title 5, United States Code, is amended--
       (1) in section 5303, by adding at the end the following:
       ``(h)(1) An employee covered under subchapter III whose 
     summary rating of performance for the most recently completed 
     appraisal period is below the fully successful level, as 
     defined by the Director of the Office of Personnel 
     Management, may not receive an increase in the rate of basic 
     pay of that employee as the result of an adjustment under 
     this section. The Director shall prescribe such rules as may 
     be necessary to administer this subsection, including rules 
     regarding the treatment of an employee whose rate of basic 
     pay falls below the minimum rate of the applicable grade (or 
     between steps of a grade) and the treatment of an employee 
     whose performance subsequently improves.
       ``(2) When a determination is made that an employee covered 
     under subchapter III will not receive an increase in the rate 
     of basic pay of that employee because the employee's summary 
     rating of performance for the most recently completed 
     appraisal period is below the fully successful level, the 
     employee is entitled to prompt written notice of that 
     determination and an opportunity for reconsideration of the 
     determination within the agency, as specified in the 
     procedures prescribed by the Director of the Office of 
     Personnel Management under section 5335(c). If the 
     determination is affirmed on reconsideration, the employee is 
     entitled to appeal to the Merit Systems Protection Board 
     under the same terms and conditions as specified in such 
     section.'';
       (2) in section 5304, by amending subsection (i) to read as 
     follows:
       ``(i) The Director of the Office of Personnel Management 
     shall prescribe regulations, consistent with this section, 
     governing the payment of comparability payments to employees. 
     The regulations shall provide that,

[[Page 10931]]

     at the time of an increase in a comparability payment, the 
     rate of basic pay of an employee covered under subchapter 
     III, or any other pay system designated by the Director, 
     whose summary rating of performance for the most recently 
     completed appraisal period is below the fully successful 
     level, as defined by the Director, shall be reduced by an 
     amount that results in retaining the employee's total rate of 
     pay under this section and sections 5303 and 5304a, as in 
     effect immediately before any increase under such sections. 
     Such a reduction in an employee's rate of basic pay shall not 
     be considered a reduction in pay for the purpose of applying 
     the adverse action procedures under section 7512.''; and
       (3) in section 5305, by amending subsection (f) to read as 
     follows:
       ``(f)(1) When a schedule of special rates established under 
     this section is adjusted under subsection (d), the special 
     rate of an employee shall be adjusted in accordance with 
     conversion rules prescribed by the Director of the Office of 
     Personnel Management (or by such other agency as the 
     President may designate under the last sentence of subsection 
     (a)(1)).
       ``(2) The conversion rules prescribed under paragraph (1), 
     shall provide that a covered employee whose summary rating of 
     performance for the most recently completed appraisal period 
     is below the fully successful level, as defined by the 
     Director of the Office of Personnel Management, may not 
     receive an increase in the special rate of that employee as 
     the result of an adjustment under subsection (d). The 
     Director shall prescribe such rules as may be necessary to 
     administer this paragraph, including rules regarding the 
     treatment of an employee whose rate of basic pay falls below 
     the minimum rate of the applicable grade (or between pay 
     rates or steps of a grade) and the treatment of an employee 
     whose performance subsequently improves. The rules may 
     provide for reducing an employee's rate of basic pay to the 
     extent necessary to prevent any increase in the employee's 
     special rate. Such a reduction in an employee's rate of basic 
     pay shall not be considered a reduction in pay for the 
     purpose of applying the adverse action procedures in section 
     7512.
       ``(3) When a determination is made that a covered employee 
     will not receive an increase in the special rate of that 
     employee under this subsection because the employee's summary 
     rating of performance for the most recently completed 
     appraisal period is below the fully successful level, the 
     employee is entitled to prompt written notice of that 
     determination and an opportunity for reconsideration of the 
     determination within the agency, as specified in the 
     procedures prescribed by the Director under section 5335(c). 
     If the determination is affirmed on reconsideration, the 
     employee is entitled to appeal to the Merit Systems 
     Protection Board under the same terms and conditions as 
     specified in such section.'';
       (4) in section 5335--
       (A) in subsection (a) by amending subparagraph (B) to read 
     as follows:
       ``(B) the employee's summary rating of performance for the 
     most recently completed appraisal period is at least at the 
     fully successful level, as defined by the Director of the 
     Office of Personnel Management.''; and
       (B) by amending subsection (c) to read as follows:
       ``(c)(1) When an employee's summary rating of performance 
     for the most recently completed appraisal period is below the 
     fully successful level, the pay of that employee may not be 
     increased under this section. Such an employee is entitled to 
     prompt written notice of the determination not to increase 
     the pay of that employee and an opportunity for 
     reconsideration of the determination within the agency under 
     uniform procedures prescribed by the Director of the Office 
     of Personnel Management. If the determination is affirmed on 
     reconsideration, the employee is entitled to appeal to the 
     Merit Systems Protection Board. If the reconsideration or 
     appeal results in a reversal of the earlier determination, 
     the new determination supersedes the earlier determination 
     and is deemed to have been made as of the date of the earlier 
     determination. The authority of the Director to prescribe 
     procedures and the entitlement of the employee to appeal to 
     the Board do not apply to a determination made by the 
     Librarian of Congress.
       ``(2) Notwithstanding any other provision of law, an 
     employee may grieve or appeal the first pay determination 
     under this subsection or under section 5303(h), 5305(f), or 
     5363(b)(2(C) that is based on the employee's most recent 
     summary rating of performance. An employee may not grieve or 
     appeal any subsequent pay determination made that is based on 
     the same summary rating of performance''; and
       (5) by amending section 5338 to read as follows:

     ``Sec. 5338. Regulations

       ``The Director of the Office of Personnel Management may 
     prescribe regulations necessary for the administration of 
     this subchapter. Such regulations shall address how 
     paysetting rules apply to an employee whose rate of basic pay 
     is not equal to 1 of the scheduled step rates as a result of 
     a determination not to increase the rate of basic pay of that 
     employee under section 5303(h) or 5305(f) or to reduce the 
     rate of basic pay of that employee under section 5304(i) or 
     5305(f).'';
       (6) in section 5343 (relating to prevailing rate wage 
     systems)--
       (A) in subsection (e)--
       (i) by amending paragraph (2) to read as follows:
       ``(2) A prevailing rate employee under a regular wage 
     schedule whose summary rating of performance for the most 
     recently completed appraisal period is at least at the fully 
     successful level, as defined by the Director of the Office of 
     Personnel Management, shall advance automatically to the next 
     higher step within the grade at the beginning of the first 
     applicable pay period following the completion by that 
     employee of--
       ``(A) 26 calendar weeks of service in step 1;
       ``(B) 78 calendar weeks of service in step 2; and
       ``(C) 104 calendar weeks of service in each of steps 3 and 
     4.'';
       (ii) by amending paragraph (4) to read as follows:
       ``(4) Supervisory wage schedules and special wage schedules 
     authorized under subsection (c)(3) may have single or 
     multiple rates or steps according to prevailing practices in 
     the industry on which the schedule is based. A prevailing 
     rate employee under a supervisory or special wage schedule 
     with multiple rates or steps whose summary rating of 
     performance for the most recently completed appraisal period 
     is at least at the fully successful level, as defined by the 
     Director of the Office of Personnel Management, shall advance 
     automatically to the next higher step within the grade at the 
     beginning of the first applicable pay period following the 
     completion by that employee of any required waiting 
     period.''; and
       (iii) by adding at the end the following:
       ``(5)(A) When a summary rating of performance of an 
     employee covered under this subchapter for the most recently 
     completed appraisal period is below the fully successful 
     level, as defined by the Director of the Office of Personnel 
     Management, the employee may not be advanced to the next 
     higher step within the grade under paragraph (2) or (4). Such 
     an employee is entitled to prompt written notice of the 
     determination not to increase the pay of that employee and an 
     opportunity for reconsideration of the determination within 
     the agency under uniform procedures prescribed by the 
     Director of the Office of Personnel Management. If the 
     determination is affirmed on reconsideration, the employee is 
     entitled to appeal to the Merit Systems Protection Board. If 
     the reconsideration or appeal results in a reversal of the 
     earlier determination, the new determination supersedes the 
     earlier determination and is deemed to have been made as of 
     the date of the earlier determination.
       ``(B) Notwithstanding any other provision of law, an 
     employee may grieve or appeal the first pay determination 
     under this paragraph, subsection (g), or section 
     5363(b)(2)(C) when such determinations are made based on the 
     same summary rating of performance. An employee may not 
     grieve or appeal any subsequent pay determination made that 
     is based on the same summary rating of performance.''
       (B) by adding at the end the following:
       ``(g)(1) An employee covered under this subchapter whose 
     summary rating of performance for the most recently completed 
     appraisal period is below the fully successful level, as 
     defined by the Director of the Office of Personnel 
     Management, may not receive an increase in the rate of basic 
     pay of that employee as the result of an adjustment in any 
     wage schedule established under this subchapter. The Director 
     may prescribe such rules as may be necessary to administer 
     this subsection, including rules regarding the treatment of 
     an employee whose rate of basic pay falls below the minimum 
     rate of the applicable grade (or between steps of a grade) 
     and the treatment of an employee whose performance 
     subsequently improves.
       ``(2) When a determination is made that a covered employee 
     will not receive an increase in the rate of basic pay of that 
     employee at the time of an adjustment in a wage schedule 
     because the employee's summary rating of performance for the 
     most recently completed appraisal period is below the fully 
     successful level, the employee is entitled to prompt written 
     notice of that determination and an opportunity for 
     reconsideration of the determination within the agency, as 
     specified in the procedures prescribed by the Director of the 
     Office of Personnel Management under subsection (e)(5). If 
     the determination is affirmed on reconsideration, the 
     employee is entitled to appeal to the Merit Systems 
     Protection Board under the same terms and conditions as 
     specified under subsection (e)(5).'';
       (7) in section 5363(b)(2) (relating to pay retention)--
       (A) in subparagraph (B) by striking ``A rate'' and 
     inserting ``Except as provided in subparagraph (C), a rate''; 
     and
       (B) by adding at the end the following:
       ``(C)(i) An employee's retained rate may not be increased 
     under subparagraph (B) if the employee's summary rating of 
     performance for the most recently completed appraisal period 
     is below the fully successful level, as defined by the 
     Director of the Office of Personnel Management. The Director

[[Page 10932]]

     shall prescribe such rules as may be necessary to administer 
     this subparagraph, including rules regarding the treatment of 
     an employee whose performance subsequently improves.
       ``(ii) When a determination is made that an employee will 
     not receive an increase in the retained rate of that employee 
     because the employee's summary rating of performance for the 
     most recently completed appraisal period is below the fully 
     successful level, the employee is entitled to prompt written 
     notice of that determination and an opportunity for 
     reconsideration of the determination within the agency, as 
     specified in the procedures prescribed by the Director of the 
     Office of Personnel Management under section 5335(c). If the 
     determination is affirmed on reconsideration, the employee is 
     entitled to appeal to the Merit Systems Protection Board 
     under the same terms and conditions as specified under 
     section 5335(c).'';
       (8) in section 5376(b) (relating to pay for certain senior-
     level positions)--
       (A) in paragraph (2), by striking ``Subject to paragraph 
     (1)'' and inserting ``Subject to paragraphs (1) and (3)''; 
     and
       (B) by adding at the end the following:
       ``(3) Notwithstanding any other provision of this section, 
     an employee covered under this section whose summary rating 
     of performance for the most recently completed appraisal 
     period is below the fully successful level, as defined by the 
     Director of the Office of Personnel Management, may not 
     receive an increase in the rate of basic pay of that 
     employee. The Director shall prescribe such rules as may be 
     necessary to administer this paragraph, including rules 
     regarding the treatment of an employee whose rate of basic 
     pay falls below the otherwise applicable minimum rate 
     prescribed by paragraph (1)(A) and the treatment of an 
     employee whose performance subsequently improves.'';
       (9) in section 5382(a), in the first sentence, by inserting 
     ``(except as provided by section 5383(a))'' after ``for the 
     Senior Executive Service, and''; and
       (10) in section 5383, by amending subsection (a) to read as 
     follows:
       ``(a) Each appointing authority shall determine, in 
     accordance with criteria established by the Director of the 
     Office of Personnel Management, which of the rates within a 
     range established under section 5382 shall be paid to each 
     senior executive under such appointing authority. Such 
     criteria shall provide that a member of the Senior Executive 
     Service may not receive an increase in the rate of basic pay 
     of that member if such member's summary rating of performance 
     for the most recently completed appraisal period is below the 
     fully successful level, as defined by the Director. The 
     Director shall prescribe such rules as may be necessary to 
     administer this subsection, including rules regarding the 
     treatment of a member whose rate of basic pay falls below the 
     otherwise applicable minimum rate prescribed by section 
     5382(a) and the treatment of a member whose performance 
     subsequently improves.''.

     SEC. 5. SENIOR EXECUTIVE SERVICE PLACEMENT IN OTHER PERSONNEL 
                   SYSTEMS.

       Section 3594(c)(2) of title 5, United States Code, is 
     amended to read as follows:
       ``(2)(A) Except as provided in subparagraph (B) of this 
     paragraph, an employee who is receiving basic pay under 
     paragraph (1)(B)(ii) or (iii) is entitled to have the rate of 
     basic pay of the employee increased by 50 percent of the 
     amount of each increase in the maximum rate of basic pay for 
     the grade of the position in which the employee is placed 
     under subsection (a) or (b) until the rate is equal to the 
     rate in effect under paragraph (1)(B)(i) for the position in 
     which the employee is placed.
       ``(B) A rate of basic pay established under paragraph 
     (1)(B)(ii) or (iii) may not be increased under subparagraph 
     (A) if the employee's summary rating of performance for the 
     most recently completed appraisal period is below the fully 
     successful level, as defined by the Director of the Office of 
     Personnel Management. The Director shall prescribe such rules 
     as may be necessary to administer this subparagraph, 
     including rules regarding the treatment of an employee whose 
     performance subsequently improves.''.

     SEC. 6. CERTAIN SENIOR-LEVEL POSITIONS.

       (a) Locality Pay.--Section 5304 of title 5, United States 
     Code, as amended by section 4 of this Act, is further 
     amended--
       (1) in subsection (g), by amending paragraph (2) to read as 
     follows:
       ``(2) The applicable maximum under this subsection shall be 
     level III of the Executive Schedule for--
       ``(A) positions under subparagraphs (A) and (B) of 
     subsection (h)(1); and
       ``(B) any positions under subsection (h)(1)(C) as the 
     President may determine.''; and
       (2) in subsection (h)--
       (A) in paragraph (1)--
       (i) by striking subparagraph (A);
       (ii) by redesignating subparagraphs (B), (C), and (D) as 
     subparagraphs (A), (B), and (C), respectively;
       (iii) in clause (v), by striking ``or'' at the end;
       (iv) in clause (vi), by striking the period at the end and 
     inserting ``; or''; and
       (v) by adding at the end the following:
       ``(vii) a position to which section 5376 applies (relating 
     to certain senior-level and scientific and professional 
     positions).'';
       (B) in paragraph (2)(B)--
       (i) in clause (i)--

       (I) by striking ``subparagraphs (A) through (C)'' and 
     inserting ``subparagraphs (A) and (B)''; and
       (II) by striking ``or (vi)'' and inserting ``(vi), or 
     (vii)''; and

       (ii) in clause (ii)--

       (I) by striking ``paragraph (1)(D)'' and inserting 
     ``paragraph (1)(C)''; and
       (II) by striking ``or (vi)'' and inserting ``(vi), or 
     (vii)''.

       (b) Access to Higher Maximum Rate of Basic Pay.--Section 
     5376(b) of title 5, United States Code, as amended by section 
     4 of this Act, is further amended--
       (1) in paragraph (1) by amending subparagraph (B) to read 
     as follows:
       ``(B) subject to paragraph (4), not greater than the rate 
     of basic pay payable for level III of the Executive 
     Schedule.''; and
       (2) by adding at the end the following:
       ``(4) In the case of an agency which, under section 
     5307(d), has a performance appraisal system which, as 
     designed and applied, is certified as making meaningful 
     distinctions based on relative performance, paragraph (1)(B) 
     shall apply as if the reference to `level III' were a 
     reference to `level II'.
       ``(5) No employee may suffer a reduction in pay by reason 
     of transfer from an agency with an applicable maximum rate of 
     pay prescribed under paragraph (4) to an agency with an 
     applicable maximum rate of pay prescribed under paragraph 
     (1)(B).''.
       (c) Authority for Employment; Appointments; Classification 
     Standards.--Title 5, United States Code is amended--
       (1) in section 3104(a), in the second sentence, by striking 
     ``prescribes'' and inserting ``prescribes and publishes in 
     such form as the Office may determine'';
       (2) in section 3324(a) by striking ``the Office of 
     Personnel Management'' and inserting: ``the Director of the 
     Office of Personnel Management on the basis of qualification 
     standards developed by the agency involved in accordance with 
     criteria specified in regulations prescribed by the 
     Director'';
       (3) in section 3325--
       (A) in subsection (a), in the second sentence, by striking 
     ``or its designee for this purpose'' and inserting the 
     following: ``on the basis of standards developed by the 
     agency involved in accordance with criteria specified in 
     regulations prescribed by the Director of the Office of 
     Personnel Management''; and
       (B) by adding at the end the following:
       ``(c) The Director of the Office of Personnel Management 
     shall prescribe such regulations as may be necessary to carry 
     out the purpose of this section.''; and
       (4) in section 5108(a)(2) by inserting ``published by the 
     Director of the Office of Personnel Management in such form 
     as the Office may determine'' after ``and procedures''.

     SEC. 7. REGULATIONS.

       Not later than 1 year after the date of enactment of this 
     Act, the Director of the Office of Personnel Management shall 
     prescribe regulations to carry out this Act, including the 
     amendments made by this Act.

     SEC. 8. EFFECTIVE DATES AND IMPLEMENTATION.

       (a) Sections 2 and 3.--
       (1) Effective date.--The amendments made by sections 2 and 
     3 shall take effect on the earlier of--
       (A) 180 days after the date of enactment of this Act; or
       (B) the effective date of implementing regulations 
     prescribed by the Director of the Office of Personnel 
     Management.
       (2) Submissions.--
       (A) Performance appraisal systems.--Not later than July 1, 
     2007, each agency covered by subchapter I of chapter 43 of 
     title 5, United States Code, shall submit to the Director of 
     the Office of Personnel Management each performance appraisal 
     system established under that subchapter so that the Director 
     may determine whether the system meets the requirements of 
     the subchapter. Each submission under this paragraph shall 
     include all information the Director requires in order to 
     make the determination.
       (B) Report to congress.--Not later than November 1, 2007, 
     the Director of the Office of Personnel Management shall 
     submit a report regarding the Director's review under section 
     4304(b)(1) of title 5, United States Code, as amended by 
     section 2 of this Act, to the President and Congress.
       (b) Sections 4 and 5.--The amendments made by sections 4 
     and 5 shall apply with respect to any employee beginning on 
     the first day of the first pay period following the 
     completion of 52 weeks after the date on which the first 
     annual adjustments in rates of basic pay under section 5303 
     of title 5, United States Code, occur following the date of 
     enactment of this Act.
       (c) Section 6.--
       (1) Effective date.--The amendments made by section 6 shall 
     take effect on the first day of the first pay period 
     beginning on or after the 180th day following the date of 
     enactment of this Act.
       (2) No reductions in rates of pay.--
       (A) In general.--The amendments made by section 6 may not 
     result, at the time such amendments take effect, in a 
     reduction in the rate of basic pay for an individual holding 
     a position to which section 5376 of title 5, United States 
     Code, applies.

[[Page 10933]]

       (B) Determination of rate of pay.--For the purposes of 
     subparagraph (A), the rate of basic pay for an individual 
     described in that subparagraph shall be deemed to be the rate 
     of basic pay set for the individual under such section 5376, 
     plus applicable locality pay paid to that individual, as of 
     the effective date under paragraph (1).
       (d) References to Maximum Rates.--Except as otherwise 
     provided by law, any reference in a provision of law to the 
     maximum rate under section 5376 of title 5, United States 
     Code--
       (1) as provided before the effective date of the amendments 
     made by section 6, shall be considered a reference to the 
     rate of basic pay for level IV of the Executive Schedule; and
       (2) as provided on or after the effective date of the 
     amendments made by section 6, shall be considered a reference 
     to--
       (A) the rate of basic pay for level III of the Executive 
     Schedule; or
       (B) if the head of the agency responsible for administering 
     the applicable pay system certifies that the employees are 
     covered by a performance appraisal system meeting 
     requirements established by the Director of the Office of 
     Personnel Management, level II of the Executive Schedule.
                                 ______
                                 
      By Mr. BAUCUS (for himself, Mr. Smith, Mr. McCain, Mr. Kerry, Mr. 
        Hagel, Mr. Lugar, Ms. Murkowski, and Mr. Carper):
  S. 3495. A bill to authorize the extension of nondiscriminatory 
treatment (normal trade relations treatment) to the products of 
Vietnam; to the Committee on Finance.
  Mr. BAUCUS. Mr. President, today, I introduce with Senator Gordon 
Smith a bill to grant Vietnam permanent normal trade relations status.
  Thirty-one years ago, the lights went out on the relationship between 
the United States and Vietnam. Diplomatic relations were broken off, 
and trade ceased. The story between our two countries became one of 
refugees, prisoners of war, and soldiers missing in action. Hostility 
and mistrust prevailed. Normalization was a dream of the visionary or 
the fool.
  In 1991--16 years after the last helicopters took off from the roof 
of the U.S. Embassy in Saigon--flickers of reconciliation emerged out 
of the darkness. In April of that year, President George H.W. Bush 
presented the Vietnamese government with a roadmap for normalization. 
That started a process of healing that lasted through successive 
Republican and Democratic administrations and was supported by 
courageous bipartisan action in the Congress: Between 1991 and 1993, 
veterans Senator John Kerry, Senator McCain, and former Senator Bob 
Smith led the Senate Select Committee on POW/MIA Affairs in the most 
exhaustive investigation of the status of POWs and MIAs ever conducted. 
In Feberuary of 1994, President Bill Clinton lifted the trade embargo 
on Vietnam. 17 months later, in July of 1995, he announced the 
normalization of political relations with Vietnam. In July of 2000, the 
United States and Vietnam concluded a comprehensive Bilateral Trade 
Agreement, allowing the United States to provide, for the first time, 
nondiscriminatory treatment to Vietnam's products. And just last month, 
the United States and Vietnam signed another trade agreement, paving 
the way for Vietnam's accession to the World Trade Organization.
  Today, we continue the legacy of reconciliation.
  This morning, Senator Smith and I--along with Senators McCain, Kerry, 
Hagel, Lugar, Murkowski, and Carper--introduced a bill to grant Vietnam 
Permanent Normal Trade Relations status, or PNTR. I congratulate 
Representatives Ramstad and Thompson for introducing the House version 
of this bill.
  This is the final step on the road to normalization. With this bill, 
we will complete the process begun 15 years ago.
  Today, we open a new book to the future.
  With 83 million people and a median age just over 25 years old, 
Vietnam is one of the most important emerging markets in Asia. Our 
trade with Vietnam has grown to 30 times what it was in 1994.
  With PNTR, we begin the story of full engagement between the United 
States and Vietnam. It is a story of economic cooperation and cultural 
understanding. It is a story where trade and markets overshadow 
memories of guns and war.
  I look forward to working with my Senate and House colleagues, the 
administration, and all interested parties to pass this historic bill 
by the August recess.
  I ask that a copy of the text of the bill be printed into the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3495

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. FINDINGS.

       Congress finds the following:
       (1) In July 1995, President Bill Clinton announced the 
     formal normalization of diplomatic relations between the 
     United States and Vietnam.
       (2) Vietnam has taken cooperative steps with the United 
     States under the United States Joint POW/MIA Accounting 
     Command (formerly the Joint Task Force-Full Accounting) 
     established in 1992 by President George H. W. Bush to provide 
     the fullest possible accounting of MIA and POW cases.
       (3) In 2000, the United States and Vietnam concluded a 
     bilateral trade agreement that included commitments on goods, 
     services, intellectual property rights, and investment. The 
     agreement was approved by joint resolution enacted pursuant 
     to section 405(c) of the Trade Act of 1974 (19 U.S.C. 
     2435(c)), and entered into force in December 2001.
       (4) Since 2001, normal trade relations treatment has 
     consistently been extended to Vietnam pursuant to title IV of 
     the Trade Act of 1974.
       (5) Vietnam has undertaken significant market-based 
     economic reforms, including the reduction of government 
     subsidies, tariffs and nontariff barriers, and extensive 
     legal reform. These measures have dramatically improved 
     Vietnam's business and investment climate.
       (6) Vietnam is in the process of acceding to the World 
     Trade Organization. On May 31, 2006, the United States and 
     Vietnam signed a comprehensive bilateral agreement providing 
     greater market access for goods and services and other trade 
     liberalizing commitments as part of the World Trade 
     Organization accession process.

     SEC. 2. TERMINATION OF APPLICATION OF TITLE IV OF THE TRADE 
                   ACT OF 1974 TO VIETNAM.

       (a) Presidential Determinations and Extension of Non-
     Discriminatory Treatment.--Notwithstanding any provision of 
     title IV of the Trade Act of 1974 (19 U.S.C. 2431 et seq.), 
     the President may--
       (1) determine that such title should no longer apply to 
     Vietnam; and
       (2) after making a determination under paragraph (1) with 
     respect to Vietnam, proclaim the extension of 
     nondiscriminatory treatment (normal trade relations 
     treatment) to the products of that country.
       (b) Termination of the Applicability of Title IV.--On and 
     after the effective date of the extension of 
     nondiscriminatory treatment to the products of Vietnam under 
     subsection (a), title IV of the Trade Act of 1974 shall cease 
     to apply to that country.

  Mr. SMITH. Mr. President, I rise to join the Senator from Montana, 
Mr. Baucus, in offering legislation that would grant Vietnam permanent 
normalized trade relations treatment and help to pave the way for 
Vietnam's accession to the World Trade Organization. I am proud to also 
be joined in this effort by Senators McCain, Kerry, Hagel, Lugar, 
Murkowski, and Carper.
  Last December, I was privileged to lead a delegation of U.S. Senators 
to Vietnam. During our visit, we met with President Luong and other 
Vietnamese officials to discuss the importance of our bilateral 
relationship and the need to get a good market access agreement between 
the United States and Vietnam that will help cement that relationship.
  I congratulate Ambassadors Rob Portman and Susan Schwab and the USTR 
team for their work to get this agreement. This is a great achievement.
  Over the last decade, our relationship with Vietnam has been 
characterized by increased cooperation and engagement. The passage of 
our legislation will enhance those ties and create new economic 
opportunities for U.S. businesses.
  In recent years, Vietnam has undertaken a number of market-based 
economic reforms, including the reduction of government subsidies, 
tariffs, and non-tariff barriers, and extensive legal reforms. These 
reforms have spurred dramatic economic growth. Vietnam is now the 
fastest growing economy in Southeast Asia and a growing market for U.S. 
exporters.

[[Page 10934]]

  In 2000, the United States and Vietnam concluded a bilateral trade 
agreement. Since that agreement entered into force, U.S. exports to 
Vietnam have increased by 150 percent. Last year alone, U.S. exports to 
Vietnam rose by 24 percent.
  The recently negotiated market access agreement will build upon that 
success by further lowering trade barriers to a wide range of U.S. 
industrial and agricultural products and services. Upon Vietnam's 
accession to the WTO, U.S. businesses will enjoy greater access to a 
market of more than 83 million people.
  Agricultural producers will benefit from immediate tariff reductions 
on U.S. exports as well as new commitments by Vietnam to improve 
implementation of sanitary and phytosanitary measures. Oregon growers 
will benefit as tariffs on apples and pears are cut from 40 percent to 
10 percent over the next 5 years and tariffs on frozen French fries are 
reduced from 50 percent to 13 percent over the next 6 years.
  Oregon manufacturing and branding companies have long had a presence 
in Vietnam. These companies will immediately benefit from increased 
market access and greater regulatory transparency.
  Having Vietnam within the rules-based global trading system will be 
good for U.S. businesses. This accession agreement will be key to 
ensuring that Vietnam follows global trade rules.
  It will also ensure that the Vietnamese people will be able to 
realize the benefits of trade liberalization. By increasing 
transparency and implementing market-based reforms, Vietnam is 
essentially opening itself to international commerce. Countries that 
open themselves to trade attract investment, which in turn creates jobs 
and enhances individual welfare.
  The passage of PNTR legislation will mark the final step toward 
normalizing our relationship with Vietnam. This bill represents a 
historic moment in our relationship with Vietnam and a definitive 
statement of how we have moved beyond our past divisions.
  I am especially pleased with the strong bipartisan support that we 
have received for this bill. I am hopeful that we will be able to move 
this bill before Congress leaves for the August recess, so that it can 
be signed into law before President Bush's visit to Vietnam in 
November.
                                 ______
                                 
      By Mr. KYL (for himself and Mr. McCain):
  S. 3497. A bill to provide for the exchange of certain Bureau of Land 
Management land in Pima County, Arizona, and for other purposes; to the 
Committee on Energy and Natural Resources.
  Mr. KYL. Mr. President, today I am pleased to join with Senator 
McCain to introduce the Las Cienegas Enhancement Act of 2006. This 
legislation directs a land exchange between the Bureau of Land 
Management and the Las Cienegas Conservation, LLC. in southeastern 
Arizona. The bill is the product of consensus. State and local 
officials, conservationists, and other stakeholders have worked 
together to structure an exchange that is fair and in the public 
interest.
  Let me explain the details of the exchange. The land to be 
transferred out of Federal ownership, approximately 1,280 acres, is 
referred to as the ``Sahuarita property.'' This property is BLM-managed 
land south of Tucson near Corona de Tucson. The land is low-lying 
Sonoran desert and has been identified for disposal by the BLM through 
its land-use planning process.
  The private land to be brought into Federal ownership is 
approximately 2,392 acres of land referred to as the ``Empirita-
Simonson property.'' This property lies north of the Las Cienegas 
National Conservation Area managed by the BLM. The Empirita-Simonson 
property lies within the ``Sonoita Valley Acquisition Planning 
District'' established by Public Law 106-538, which designated the Las 
Cienegas National Conservation Area. The act directed the Department of 
the Interior to acquire lands from willing sellers within the planning 
district for inclusion within the conservation area to further protect 
the important resource values for which the area was designated.
  Although this bill is centered on the land exchange I just described, 
it also accomplishes two other important objectives: addressing water 
withdrawals at Ciengas Creek and providing road access to a popular 
recreation destination, the Whetstone Mountains controlled by the 
Forest Service.
  Let's talk about water. Arizonans understand that protecting our 
water supply is crucial to the State's future. For this reason, when we 
can, we look for ways to promote responsible use of our limited water 
supply. This bill is one of those examples of responsible use. There is 
a prior claim to a well site on the private land that will be 
exchanged. That prior claim would allow the developer to withdraw 1,600 
acre feet of water a year. Pima County and the community at large are 
concerned about the future of Ciengas Creek and the entire riparian 
area if these water withdrawals occur.
  To address this concern, the land exchange is conditioned on Las 
Cienegas Conservation Inc. conveying the well site to Pima County and 
relinquishing those water rights it controls. The net result is a water 
savings of 1,050 acre-feet per year. This is a significant benefit to 
this riparian area.
  Overall, this bill allows us to accomplish important environmental 
and conservation objectives while managing our development. It is a 
bill with broad support that includes the Governor of Arizona, Pima 
County, the city of Tucson, and many others. I urge my colleagues to 
work with me to approve this legislation at the earliest possible date.
                                 ______
                                 
      By Mr. KYL (for himself, Mr. Grassley, Mr. DeWine, Mr. Cornyn, 
        Mr. Brownback, Ms. Snowe, Mr. Burns, Mrs. Hutchison, and Mr. 
        Allen):
  S. 3499. A bill to amend title 18, United States Code, to protect 
youth from exploitation by adults using the Internet, and for other 
purposes; to the Committee on the Judiciary.
  Mr. KYL. Mr. President, I rise today to introduce the Internet SAFETY 
Act of 2006. The word ``SAFETY'' in the bill's title stands for Stop 
Adults Facilitating the Exploitation of Youth. It is a fairly 
descriptive acronym, for the provisions of the Internet SAFETY Act are 
designed to crack down on the spread of Internet child pornography and 
related conduct. The act does so by creating new Federal offenses and 
causes of action targeted at those who produce or knowingly facilitate 
Internet child pornography, by increasing penalties for child 
pornography, sex trafficking, and sexual abuse offenses, and by 
increasing resources available for prosecution and prevention of child 
sexual-abuse offenses, including authorizing 200 new assistant U.S. 
attorneys across the country to prosecute child pornography and sexual 
exploitation crimes.
  The need for renewed law-enforcement attention to child pornography 
is demonstrated in a recent report of the U.S. Justice Department 
titled ``Project Safe Childhood.'' I will ask to have an extended 
excerpt from the report printed in the Record at the conclusion of my 
remarks. As the report notes, ``judging simply by [recent] crime 
statistics, it is clear that the Internet is helping to fuel an 
epidemic of child pornography'' in this country. Unfortunately, by 
providing greater technical ease and increased anonymity in trading 
images, the Internet has ``taken down barriers that one time served as 
a deterrent to child pornographers.'' In 2003, an estimated 20,000 
images of child pornography were posted on the Internet every week. 
Between 1998 and 2004, child pornography reports made to the National 
Center for Missing and Exploited Children increased from 3,267 to 
106,119--a thirty-fold increase over a 6-year period. The Justice 
Department also notes that there has been an escalation in the severity 
of abuse depicted in child pornography in recent years, ``with the 
images found today more frequently involving younger children--
including toddlers and even infants--and despicable acts such as 
penetration of infants.'' The Project Safe Childhood report concludes 
that ``the nation should be

[[Page 10935]]

alarmed at the fact that child pornography is being produced, pos-
sessed, and distributed in record numbers.'' As the report notes, child 
pornography's harm extends beyond that done to the children who are 
sexually abused to produce such images: ``child pornography [also] 
plays a central role in child molestations, serving to justify 
offenders' conduct, assist them in gaining compliance with their 
victims, and to provide a means to blackmail the children they have 
molested in order to prevent exposure.''
  The Internet SAFETY Act does the following things. It creates a new 
Federal offense, punishable by a maximum of 10 years in prison, for 
financially facilitating access to child pornography on the Internet. 
The act also deters Internet facilitation of child pornography by 
imposing civil penalties for Internet communications providers that 
fail to report child pornography, criminal penalties for Web site 
operators who insert words or images into source code with the intent 
to deceive persons into viewing obscene material on the Internet, and 
by requiring commercial Web site operators to place warning marks 
prescribed by the Federal Trade Commission on Web pages that contain 
sexually explicit material.
  The Internet SAFETY Act also punishes the operation of child 
pornography enterprises. It creates a new Federal offense, punishable 
by a minimum of 10 years in prison, for the operation of an enterprise 
that profits from the sexual exploitation of children. The act also 
imposes mandatory, consecutive 10 year sentences for any child 
pornography or exploitation offense committed by a registered sex 
offender. In addition, the act increases penalties for offenses 
involving child pornography, child prostitution and sex trafficking, 
child sexual abuse, and sexual assault.
  The Internet SAFETY Act also expands the Federal private right of 
action against child pornographers. It allows a victim, including 
parents of a minor victim, to seek civil remedies, and also allows a 
victim to seek remedies as an adult. This provision is inspired by a 
young girl named Masha who was adopted from Russia by a man who 
repeatedly molested her, photographed her, and posted pornographic 
images of her on the Internet. In addition, the act adds the obscenity 
and child pornography statutes to the RICO predicates and adds 
electronic mail fraud to the wiretap predicates.
  The Internet SAFETY Act also establishes within the Justice 
Department an Office on Sexual Violence and Crimes Against Children to 
coordinate sex offender registration and notification programs and 
grant programs, and to assist State, local, and tribal governments and 
other entities with sex offender registration or notification and other 
measures.
  Finally, the act authorizes and directs the Attorney General to make 
grants to States, local governments, Indian tribes, and nonprofit 
organizations for child sexual abuse prevention programs. In addition, 
the act authorizes appropriations for 200 additional child exploitation 
prosecutors in U.S. Attorneys' Offices around the country and 20 
additional Internet Crimes Against Children task forces.
  I ask unanimous consent that the following passages from the Justice 
Department's report Project Safe Childhood be printed in the Record.
  There being no objection, the additional material was ordered to be 
printed in the Record, as follows:

 Project Safe Childhood--Protecting Children From Online Exploitation 
                               and Abuse


                              INTRODUCTION

       The Internet and other communications technologies are 
     increasingly used by sexual predators and abusers as tools 
     for exploiting and victimizing our children. First, these 
     technologies have contributed to a significant increase in 
     the proliferation and severity of child pornography. They 
     provide pornographers with an easily accessible and seemingly 
     anonymous means for collecting large number of images of 
     child sexual abuse. Eventually, some predators turn to 
     producing their own images. The result has been that images 
     of child sexual abuse today are more disturbing, more 
     graphic, and more sadistic than ever before, and they involve 
     younger and younger children. Second, as the Internet and 
     related technologies have grown, children have become 
     increasingly at risk of being sexually solicited online by 
     predators. Law enforcement is uncovering an escalating number 
     of ``enticement'' cases, where perpetrators contact children 
     in chat rooms or through instant messaging and arrange to 
     meet at a designated location for the purpose of making 
     sexual contact.

                           *   *   *   *   *


    Part II. The Need for a national initiative to protect children

       Two types of dangers to children are especially 
     problematic. First, the threat of sexual predators contacting 
     children online, with the hope of luring them to meet in 
     person, has been amply demonstrated by academic studies as 
     well as recent investigative journalism reports. A Youth 
     Internet Safety Survey conducted between August 1999 and 
     January 2000 found that approximately one in five children 
     per year receives an unwanted sexual solicitation online. One 
     in thirty-three children per year receives an aggressive 
     sexual solicitation--i.e., one in which a solicitor asks to 
     meet them somewhere, calls them on the telephone, or sends 
     mail, money, or gifts. And one in four per year has an 
     unwanted exposure to sexually explicit material. Meanwhile, 
     only 25 percent of the youth who encountered a sexual 
     solicitation told a parent. Only a fraction of all episodes 
     were reported to authorities, such as a law enforcement 
     agency, an Internet service provider, or a hotline. According 
     to a recent media report, at any given time, 50,000 predators 
     are on the Internet prowling for children. These figures make 
     clear that the threat of online enticement of children is 
     immense.
       Second, the victimization of children through the 
     production and distribution of child pornography is equally 
     troubling, and on the rise. It was estimated, even in 2003, 
     that more than 20,000 images of child pornography are posted 
     on the Internet each week. NCMEC's CyberTipline logged a 39 
     percent increase in reports of the possession, creation, or 
     distribution of child pornography in 2004. The gravity of 
     these increases is more dramatically demonstrated by 
     comparing the actual number of reports in 1998 to those 
     logged in 2004, rather than merely reciting percentage 
     increases. In 1998, the CyberTipline received 3,267 reports 
     of child pornography. In 2004, the CyberTipline received 
     106,119 of these reports, marking more than a 30-fold 
     increase in child pornography reports in a six year period. 
     Judging simply by crime statistics, it is clear that the 
     Internet is helping to fuel an epidemic of child pornography.
       Not only is there an increase in the volume of pornographic 
     images, there is also an escalation in the severity of the 
     abuse depicted, with the images found today more frequently 
     involving younger children-including toddlers and even 
     infants-and despicable acts such as penetration of infants. 
     And technology lends itself to the dissemination of more 
     graphic images via the web, with its easy access, low cost, 
     and apparent anonymity.
       Experts agree that the escalation in both the prevalence 
     and severity of child pornography is driven at least in part 
     by advances in computer technology and increased access to 
     the Internet. According to a recent study, 78.6 percent of 
     Americans go online, and almost two-thirds of Americans use 
     the Internet at home. While it is impossible to determine 
     exactly how many people are looking at child pornography, 
     experts attribute the escalation in the quantity of child 
     pornography being created and distributed to the growth of 
     the Internet, and the concomitant ease with which child 
     predators can now buy, sell, and swap images. The resulting 
     sense of community among child predators is in turn helping 
     to embolden those who may have had misgivings about a sexual 
     interest in children, and it is thus driving a market for new 
     images with fresh faces. Before the Internet, it was 
     difficult and risky for child exploiters to go out and find 
     other child exploiters with whom to share images, which left 
     the child pornography industry relegated to small black 
     markets in underground bookstores or secret mailings. Today, 
     the Internet has provided these pedophiles with an 
     accessible, convenient, and anonymous means for interacting 
     with their community and obtaining illicit material. The 
     Internet has thus taken down borders that at one time served 
     as a deterrent to child pornographers.


     THESE ESCALATING TRENDS PRESENT A SERIOUS RISK TO OUR SOCIETY

       The harm caused by enticement offenses is beyond question. 
     Sexual abuse is a serious crime that deeply affects any 
     victim, especially children, and it has dramatic secondary 
     effects on our society. The looming danger of our children 
     being preyed upon by pedophiles in chat rooms or through 
     social networking sites is, in short, among the gravest 
     threats facing children today.
       The impact of child pornography on victims, and on society 
     as a whole, is far less appreciated today than the threat of 
     enticement offenses. Child pornography images are not just 
     pictures, akin to any number of other images legally 
     available on the Internet. Most images of child pornography 
     depict victims--children--who have been exploited and abused. 
     These images are permanent visual records of child sexual 
     abuse. For this

[[Page 10936]]

     reason, the very term commonly used to describe these 
     terrible images--``child pornography''--does not adequately 
     convey the horrors these images depict. A more accurate term 
     would be ``images of child sexual abuse,'' because the very 
     production of the images necessarily involves the sexual 
     abuse of a child. And the child is re-victimized each time 
     they are viewed.
       The nation should be alarmed at the fact that child 
     pornography is being produced, possessed, and distributed in 
     record numbers. According to a 2005 study entitled ``Child-
     Pornography Possessors Arrested in Internet-Related Crimes: 
     Findings from the National Juvenile Online Victimization 
     Study,'' which studied defendants arrested and charged with 
     possession of child pornography between July 2000 and June 
     2001:
       More than 80 percent of arrested [child pornography] 
     possessors had images of prepubescent children, and 80 
     percent had images of minors being sexually penetrated. 
     Approximately 1 in 5 (21 percent) arrested [child 
     pornography] possessors had images of children enduring 
     bondage, sadistic sex, and other sexual violence. More than 1 
     in 3 (39 percent) [child pornography] possessors had videos 
     depicting child pornography with motion and sound.
       Although their identities are often unknown, many of the 
     children in these graphic images were sexually victimized and 
     assaulted. Those who possess these pictures--for sexual 
     gratification, curiosity, as a means of profit, or for other 
     reasons--are adding to the burdens of these young victims, 
     whose trauma may be increased by knowing their pictures are 
     circulating globally on the Internet with no hope of 
     permanent removal or could be entered into circulation in the 
     future.
       Child pornography victimizes children in a very real and 
     dramatic way. Of course, no child can consent to being 
     sexually exploited through the production of sexually-
     explicit images. Each time the image is viewed or 
     distributed, the child is again victimized. ``[N]o mere words 
     could ever truly describe the daily torture of victims who 
     were forced to participate in child pornography years ago and 
     now, as adults, see images of themselves `performing' on the 
     Internet. In addition to the obvious physical injuries that a 
     child can suffer due to sexual abuse, the emotional and 
     psychological trauma is devastating, and lasting. Many child 
     victims suffer from depression, withdrawal, anger, and other 
     conditions that often continue into adulthood. They 
     experience feelings of guilt and responsibility for the 
     abuse, a sense of powerlessness and feelings of 
     worthlessness.
       Thus, for the sole fact of the victimization and damage 
     that child pornography visits upon children, possession of 
     child pornography is a heinous crime that must be stamped 
     out. But that is only half of the story of the pernicious 
     effect of child pornography. Possession of child pornography 
     is a serious crime for four additional reasons, each of which 
     is described more fully below:
       1. The exchange of child pornography by and between child 
     exploiters validates and encourages them in their beliefs and 
     behaviors;
       2. The greater availability of child pornography has led to 
     the production, receipt, and distribution of more shocking, 
     graphic images, which are increasingly involving younger 
     children and infants;
       3. The compulsion to collect child pornography images may 
     lead to a compulsion to molest children, or may be indicative 
     of a propensity to molest children; and
       4. Child pornography is frequently used by molesters as an 
     affirmative tool, either to silence their victims, to 
     blackmail them into further exploitation, or to entice other 
     children.


                      Validation and Encouragement

       Use of the Internet by child pornographers to exchange 
     images and communications regarding those images provides 
     positive reinforcement for them in their beliefs and 
     behaviors, encouraging further exploitation of children. One 
     study of offenders revealed that exploiters' relationships 
     with other offenders, forged online, ``legitimize[d] and 
     normalize[d] their interests'' in their own minds. In short, 
     the process of collecting and trading child pornography bonds 
     the offenders together, and having an extensive child 
     pornography collection heightens an offender's status within 
     this community. The incentives to abuse children, capture the 
     abuse, and share the images are strong, allowing the producer 
     a way into the community and a means for obtaining yet more 
     images of abuse from other producers or distributors. Child 
     pornography is used as a means of establishing trust and 
     camaraderie amongst child exploiters and molesters, as proof 
     of good intentions when initiating contacts with one another. 
     It is, in part, for these reasons that offenders are 
     frequently found with thousands of images.
       In considering this factor, one can see the important role 
     that the Internet has played in the growth of the child 
     pornography market. Before the Internet, child exploiters 
     were isolated. Without knowing that others like them existed, 
     pedophilia or a sexual interest in children was a shameful 
     secret. Through the Internet, however, persons who desire to 
     exploit children get to know that others like them exist, 
     they share their preferences and their child pornography, and 
     they no longer feel abnormal. The child exploiter sees in the 
     Internet a way of validating his behavior: he is able to 
     convince himself that his behavior or obsession is not 
     abnormal, but is in fact shared by thousands of other people 
     who, in the predator's mind, are sensitive, intelligent, and 
     caring people.


                     MORE SHOCKING, GRAPHIC IMAGES

       A more distressing trend is that, as pedophiles collect 
     more and more images of child sexual abuse, they become de-
     sensitized to the horrors contained within their existing 
     collections, and they seek gratification through novel and 
     yet more disturbing images. The only way that this demand can 
     be met is through a supply of new images involving more 
     horrific images of I hands-on sexual abuse than that already 
     present in the person's collection of images. The result has 
     been a rise in demand for pornographic images of younger 
     children, including babies and toddlers. Twenty percent of 
     the images seized depicting sexual exploitation of children 
     involved images of babies and two- and three-year-olds. And, 
     disturbingly, the abuse is getting worse, with the depictions 
     being more sadistic than ever.


           INCREASED COMPULSION/PROPENSITY TO MOLEST CHILDREN

       As an offender's interest in children draws him to the 
     child pornography market, his compulsion to view and collect 
     images may become entwined with, or lead to, a compulsion to 
     molest children. A study conducted by Ethel Quayle and Max 
     Taylor revealed that the subject's access to child 
     pornography ``intensified his levels of sexual arousal and 
     behavior and fueled his desire to engage in a relationship 
     with a child.'' The subject progressed from viewing images, 
     to entering chat rooms, to attempting to meet children 
     offline.
       Several factors other than mere sexual perversion may cause 
     the tendency of child pornography collectors to begin to 
     molest children. For instance, a collector's desire for novel 
     and more graphic images could provide an incentive simply to 
     produce the images himself, and computer technology today 
     makes it easier to create the images and distribute them. In 
     addition, collectors often feel that they have to produce new 
     images because, in order to continue trading for new images, 
     they have to offer up their own new images as part of the 
     rules of some child pornography communities.
       Empirical studies support the proposition that individuals 
     who view child pornography are often also child molesters. 
     According to a study completed in 2000 by Dr. Andres E. 
     Hernandez, Director of the Sex Offender Treatment Program at 
     the Butner Federal Correctional Complex in North Carolina, 
     79.6% of 54 offenders convicted of child pornography offenses 
     admitted that they had molested significant numbers of 
     children without detection. On average, the offenders had 
     26.37 child sex victims and admitted to over 1,424 contact 
     sexual crimes. Of these 1,400+ contact sexual crimes, only 53 
     were detected or known about and taken into account at 
     sentencing.
       Consistent with these studies, a 1986 Report of the U.S. 
     Senate Permanent Subcommittee on Investigations on Child 
     Pornography and Pedophilia stated: ``No single characteristic 
     of pedophilia is more pervasive than the obsession with child 
     pornography. The fascination of pedophiles with child 
     pornography and child abuse has been documented in many 
     studies and has been established by hundreds of sexually 
     explicit materials involving children.''
       Although the U.S. Senate Subcommittee found no direct 
     evidence of causality--i.e., that possession of child 
     pornography causes people to commit child sex offenses--it 
     did conclude that child pornography plays a central role in 
     child molestations, ``serving to justify [the offender's] 
     conduct, assist them in seducing their victims and provide a 
     means to blackmail the children they have molested in order 
     to prevent exposure.'' In a 2005 study of child pornography 
     possessors arrested in Internet-related crimes, the reviewers 
     concluded that ``one out of six [child pornography] 
     possession cases beginning with an investigation of or 
     allegation about [child pornography] possession discovered a 
     dual offender who had also sexually victimized a child or 
     attempted to do so.''
       According to Raymond Smith, Assistant Inspector-in-Charge 
     of the Special Investigations Division and the manager of 
     USPIS's Child Exploitation Program, the USPIS began in 1997 
     compiling statistical information on the number of child 
     pornography suspects arrested by U.S. Postal Inspectors that 
     were also child molesters. Additionally, the USPIS began to 
     collect data on the number of child victims identified and 
     rescued from further sexual abuse as a result of 
     investigations conducted by Postal Inspectors. Since 1997, 
     802 child molesters were identified and stopped, and 1,048 
     victimized children were rescued. According to Smith, of the 
     more than 2,400 individuals arrested since 1997 for using the 
     U.S. Mail and the Internet to sexually exploit children, 
     child molesters were identified in one out of every three 
     cases.


                     AFFIRMATIVE TOOLS OF MOLESTERS

       Not only do images of child pornography record horrific 
     abuse and victimization of

[[Page 10937]]

     children, but they often are also used as affirmative tools 
     by the abusers. Abusers frequently use such pornography to 
     lower another child's inhibitions with images that appear to 
     show the victim enjoying the abuse or to validate sex between 
     children and adults as normal. Moreover, offenders use the 
     images to blackmail the victim into silence or into 
     performing further acts of abuse, threatening to release the 
     images to parents, peers, or others if the victim talks or 
     does not allow further exploitation. Such blackmailing even 
     can be aimed at forcing kids into prostitution and the child 
     trafficking trade.
       Child pornography plays a central role in child 
     molestations, serving to justify offenders' conduct, to 
     assist them in gaining compliance from their victims, and to 
     provide a means to blackmail the children they have molested 
     in order to prevent exposure. Consequently, child pornography 
     does not simply involve abuse of the individual child victim 
     whose image is created; it is also used affirmatively to 
     perpetuate the sexual exploitation of the same child or other 
     children.
       Child and adult pornography is frequently used by child 
     exploiters to lure children into physical sex acts. After a 
     child molester befriends a child and gains the child's trust, 
     he will expose the child to pornography to persuade the child 
     that the behavior is normal and acceptable, and to coax him 
     or her into participation. The Sexually Exploited Child Unit 
     of the Los Angeles Police Department conducted a ten year 
     study and found that adult and child pornography was 
     reportedly used in over 87% of all their child molestation 
     cases. Child pornography is therefore not just a tool for 
     perpetuating more (and more graphic) child pornography--it is 
     also a tool for exploiters to gain opportunities to exploit 
     and molest even more children.


                             A CALL TO ARMs

       The measures taken to this point have not served to 
     dramatically lessen the number of incidents of child 
     exploitation. Indeed, all of the evidence leads to the 
     conclusion that the exploitation of children is a burgeoning 
     problem. The explosion in the production and trafficking of 
     child pornography, in particular, represents nothing short of 
     an epidemic confronting our country.
                                 ______
                                 
      By Mr. THOMAS (for himself, Mr. Conrad, Mr. Harkin, Mr. Roberts, 
        Ms. Collins, Mr. Dayton, Mr. Salazar, Mr. Domenici, Mr. Burns, 
        Mr. Dorgan, Mr. Thune, Mr. Johnson, Mr. Nelson of Nebraska, Ms. 
        Murkowski and Ms. Snowe):
  S. 3500. A bill to amend title VIII of the Social Security Act to 
protect and preserve access of Medicare beneficiaries in rural areas to 
health care providers under the Medicare program, and for other 
purposes; to the Committee on Finance.
  Mr. THOMAS. Mr. President, I am pleased to rise today to introduce 
the Rural Hospital and Provider Equity, R-HoPE, Act of 2006 with 
Senator Conrad, Senator Harkin, Senator Roberts, and fellow Senate 
Rural Health Caucus members Senators Collins, Dayton, Salazar, Burns, 
Domenici, Dorgan, Thune, Johnson, Ben Nelson, and Murkowski. As always, 
it is important to note that rural health care legislation has a long 
history of bipartisan collaboration and cooperation.
  The 108th Congress reaped unparalleled successes in terms of rural 
health care legislation. When Congress enacted the Medicare 
Modernization Act, MMA, it included a comprehensive health care package 
specifically tailored with rural communities, hospitals, and providers 
in mind. This was the largest rural provider payment package ever 
considered by Congress.
  As Republican cochairman of the Senate Rural Health Caucus, I was 
proud to help lead the effort to put rural providers on a level playing 
field with their urban neighbors. We enacted commonsense Medicare 
payment equity provisions critical to maintaining access to quality 
health care in isolated and underserved areas. Rural America achieved a 
significant victory, and we have much to celebrate. However, our 
mission is not complete. Several of the MMA's rural health provisions 
have expired, or are set to expire this year. That is why I have 
introduced the Rural Hospital and Provider Equity Act--to finish the 
work we started 3 years ago.
  This legislation not only reauthorizes expiring rural MMA provisions 
but also takes additional steps to address inequities in the Medicare 
payment system that continually place rural providers at a 
disadvantage. My bill recognizes the unique needs of rural hospitals 
and levels the playing field between rural and urban providers.
  Rural hospitals are more dependent on Medicare payments as part of 
their total revenue. In fact, Medicare accounts for almost 70 percent 
of total revenue for small, rural hospitals. Rural hospitals have lower 
patient volumes, but must compete nationally to recruit providers due 
to the nursing--and other health professional--workforce shortages. 
Additional burdens are placed on rural hospitals and providers because 
of higher uninsured and underinsured rates in rural America. Also, 
seniors living in rural areas tend to be poorer and have more chronic 
conditions than their urban and suburban counterparts.
  First, the Rural Hospital and Provider Equity Act recognizes the 
special circumstances rural hospitals face and addresses these issues 
by equalizing Medicare disproportionate share hospital, DSH, payments. 
These add-on payments help hospitals cover the costs of serving a high 
proportion of low-income and uninsured patients. Current law allows 
urban facilities to receive unlimited add-ons corresponding with the 
amount of patients served. However, small or rural hospital add-on 
payments are capped at 12 percent. This measure eliminates the rural 
hospital cap, bringing their payments in line with the benefits urban 
facilities receive.
  Second, the bill recognizes that low-volume hospitals have a higher 
cost per case which results in negative operating margins. To alleviate 
this problem, we established a low-volume inpatient payment adjustment 
for hospitals that have less than 2000 annual discharges per year and 
are located more than 15 miles from another hospital. This provision 
will improve payments for approximately one-third of all rural 
hospitals.
  In addition to these Medicare payment reforms, this legislation 
strengthens the over 3,000 rural health clinics that serve many rural 
Americans. Under current law, rural health clinics receive an all-
inclusive payment rate that is capped at approximately $63. This 
payment has not been adjusted--except for inflation--since 1988. To 
recognize the rising costs of health care, this bill raises the rural 
health clinic cap to $82, making it comparable to the rate Community 
Health Centers receive. By caring for folks in underserved areas, rural 
health clinics and community health centers are a key component of the 
rural health care delivery system. As not every small town can sustain 
a hospital, we need to ensure these types of facilities are paid 
adequately and are provided enough flexibility to meet the health care 
needs of the communities they serve.
  Home health care agencies are another critical element of the 
continuum of care in rural areas. These providers face unique 
circumstances in the distances they are required to travel to provide 
services. The current Medicare payment system does not make adequate 
adjustments to reflect the reality of rural and frontier health care. 
This bill recognizes the situation these providers face by ensuring 
their Medicare payments cover their costs to provide Medicare services.
  As you all may know, there are approximately 1,165 hospitals 
nationwide that have converted to critical access hospital, CAH, 
status. This program was created in the Balanced Budget Act of 1997 to 
ensure folks in small, rural communities would have access to 24-hour 
emergency services as well as some hospital care in their hometowns. 
Fifty-two percent of my State's hospitals have downsized to Critical 
Access Hospital status. The measure I have introduced contains several 
provisions to strengthen this important rural hospital program.
  The Rural Hospital and Provider Equity Act will also ensure rural 
areas can maintain access to important emergency medical services, EMS. 
Rural EMS providers are primarily volunteers who have difficulty 
recruiting, retaining, and educating EMS personnel. Rural EMS providers 
also have less capital to buy and upgrade essential, lifesaving 
equipment. The legislation will assist ambulance providers in 
collecting payments for transporting

[[Page 10938]]

patients to the hospital after answering a 911 call regardless of the 
final diagnosis. This is a commonsense approach and ensures that all 
aspects of emergency care are operating under the same definition of 
emergency.
  It is important for the Federal Government to remember that one 
payment system does not fit all. Rural providers care for patients 
under much different circumstances than their urban counterparts. This 
legislation is designed to ensure rural hospitals, rural health 
clinics, rural ambulance providers, rural home health agencies, rural 
mental health providers, rural physicians, and other critical allied 
health clinicians are paid accurately and fairly. I strongly encourage 
all my colleagues with an interest in rural health to cosponsor this 
legislation.
  Finally, I want to thank the American Hospital Association, the 
National Rural Health Association, the Federation of American 
Hospitals, the National Association of Rural Health Clinics, the 
National Association for Home Care, the American Academy of Nurse 
Practitioners, the American Ambulance Association, and the Association 
of Marriage and Family Therapists, for their work and support in this 
effort.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3500

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Rural 
     Hospital and Provider Equity (HoPE) Act of 2006''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Fairness in the Medicare disproportionate share hospital (DSH) 
              adjustment for rural hospitals.
Sec. 3. Extension and Expansion of Medicare hold harmless provision 
              under the prospective payment system for hospital 
              outpatient department (HOPD) services.
Sec. 4. Improvement of definition of low-volume hospital for purposes 
              of the Medicare inpatient hospital payment adjustment.
Sec. 5. Extension of Medicare wage index reclassifications for certain 
              hospitals.
Sec. 6. Extension of Medicare reasonable costs payments for certain 
              clinical diagnostic laboratory tests furnished to 
              hospital patients in certain rural areas.
Sec. 7. Critical access hospital improvements.
Sec. 8. Capital infrastructure revolving loan program.
Sec. 9. Extension of Medicare incentive payment program for physician 
              scarcity areas.
Sec. 10. Extension of floor on medicare work geographic adjustment.
Sec. 11. Medicare home health care planning improvements.
Sec. 12. Rural health clinic improvements.
Sec. 13. Community health center collaborative access expansion.
Sec. 14. Applying add-on policy for home health services furnished in a 
              rural area for 2007.
Sec. 15. Use of medical conditions for coding ambulance services.
Sec. 16. Extension of increased Medicare payments for ground ambulance 
              services in rural areas.
Sec. 17. Improvement in payments to retain emergency and other capacity 
              for ambulances in rural areas.
Sec. 18. Coverage of marriage and family therapist services and mental 
              health counselor services under part B of the Medicare 
              program.
Sec. 19. Medicare remote monitoring pilot projects.
Sec. 20. Facilitating the provision of telehealth services across State 
              lines.

     SEC. 2. FAIRNESS IN THE MEDICARE DISPROPORTIONATE SHARE 
                   HOSPITAL (DSH) ADJUSTMENT FOR RURAL HOSPITALS.

       Section 1886(d)(5)(F)(xiv)(II) of the Social Security Act 
     (42 U.S.C. 1395ww(d)(5)(F)(xiv)(II)) is amended--
       (1) by striking ``or, in the case'' and all that follows 
     through ``subparagraph (G)(iv)''; and
       (2) by inserting at the end the following new sentence: 
     ``The preceding sentence shall not apply to any hospital with 
     respect to discharges occurring on or after October 1, 
     2006.''.

     SEC. 3. EXTENSION AND EXPANSION OF MEDICARE HOLD HARMLESS 
                   PROVISION UNDER THE PROSPECTIVE PAYMENT SYSTEM 
                   FOR HOSPITAL OUTPATIENT DEPARTMENT (HOPD) 
                   SERVICES.

       (a) Extension.--
       (1) In general.--Section 1833(t)(7)(D)(i) of the Social 
     Security Act (42 U.S.C. 1395l(t)(7)(D)(i)), as amended by 
     section 5105 of the Deficit Reduction Act of 2005 (Public Law 
     109-171), is amended--
       (A) in subclause (I)--
       (i) by striking ``(I)'';
       (ii) by striking ``(iii)) located in a rural area'' and 
     inserting ``(iii))''; and
       (iii) by striking ``before January 1, 2006'' and inserting 
     ``before January 1, 2009''; and
       (B) by striking subclause (II).
       (2) Effective date.--The amendments made by paragraph (1) 
     shall apply to covered OPD services furnished on or after 
     January 1, 2006.
       (b) Study and Report.--
       (1) Study.--The Secretary of Health and Human Services 
     shall conduct a study to determine if, under the prospective 
     payment system for hospital outpatient department services 
     under section 1833(t) of the Social Security Act (42 U.S.C. 
     1395l(t)), costs incurred by sole community hospitals (as 
     defined in section 1886(d)(5)(D)(iii) of such Act (42 U.S.C. 
     1395ww(d)(5)(D)(iii))) located in urban areas by ambulatory 
     payment classification groups (APCs) exceed those costs 
     incurred by other hospitals located in urban areas.
       (2) Report.--Not later than January 1, 2008, the Secretary 
     of Health and Human Services shall submit to Congress a 
     report on the study conducted under paragraph (1) together 
     with recommendations for such legislation and administrative 
     action as the Secretary determines to be appropriate.

     SEC. 4. IMPROVEMENT OF DEFINITION OF LOW-VOLUME HOSPITAL FOR 
                   PURPOSES OF THE MEDICARE INPATIENT HOSPITAL 
                   PAYMENT ADJUSTMENT.

       Section 1886(d)(12)(C)(i) of the Social Security Act (42 
     U.S.C. 1395ww(d)(12)(C)(i)) is amended by inserting ``(or, 
     beginning with fiscal year 2007, 2,000 discharges)'' after 
     ``800 discharges''.

     SEC. 5. EXTENSION OF MEDICARE WAGE INDEX RECLASSIFICATIONS 
                   FOR CERTAIN HOSPITALS.

       (a) MMA Provision.--Section 508 of the Medicare 
     Prescription Drug, Improvement, and Modernization Act of 2003 
     (42 U.S.C. 1395ww note) is amended by adding at the end the 
     following new subsection:
       ``(g) Three-Year Extension for Certain Hospitals.--
       ``(1) In general.--In the case of a hospital described in 
     paragraph (2)--
       ``(A) subsections (a)(3) and (b) shall be applied by 
     substituting `6-year period' for `3-year period'; and
       ``(B) the limitation under subsection (e) shall not apply 
     after March 31, 2007.
       ``(2) Hospital described.--A hospital described in this 
     paragraph is a hospital--
       ``(A) that is reclassified to an area under this section as 
     of the day before the date of enactment of this subsection; 
     and
       ``(B)(i) that is located in a State with less than 10 
     people per square mile; or
       ``(ii)(I) that is located in a rural area; and
       ``(II) for which the Secretary has determined the extension 
     under this subsection to be appropriate.''.
       (b) Additional Provision.--The Secretary of Health and 
     Human Services shall extend the special exception 
     reclassification of a sole community hospital located in a 
     State with less than 10 people per square mile (made under 
     the authority of section 1886(d)(5)(I)(i) of the Social 
     Security Act (42 U.S.C. 1395ww(d)(5)(I)(i)) and contained in 
     the final rule promulgated by the Secretary in the Federal 
     Register on August 11, 2004 (69 Fed. Reg. 49107)) for 3 years 
     through fiscal year 2010.

     SEC. 6. EXTENSION OF MEDICARE REASONABLE COSTS PAYMENTS FOR 
                   CERTAIN CLINICAL DIAGNOSTIC LABORATORY TESTS 
                   FURNISHED TO HOSPITAL PATIENTS IN CERTAIN RURAL 
                   AREAS.

       Section 416(b) of the Medicare Prescription Drug, 
     Improvement, and Modernization Act of 2003 (Public Law 108-
     173; 117 Stat. 2282; 42 U.S.C. 1395l-4(b)) is amended by 
     striking ``2-year'' and inserting ``4-year''.

     SEC. 7. CRITICAL ACCESS HOSPITAL IMPROVEMENTS.

       (a) Clarification of Payment for Clinical Laboratory Tests 
     Furnished by Critical Access Hospitals.--
       (1) In general.--Section 1834(g)(4) of the Social Security 
     Act (42 U.S.C. 1395m(g)(4)) is amended--
       (A) in the heading, by striking ``no beneficiary cost-
     sharing'' and inserting ``treatment of''; and
       (B) by adding at the end the following new sentence: ``For 
     purposes of the preceding sentence and section 1861(mm)(3), 
     clinical diagnostic laboratory services furnished by a 
     critical access hospital shall be treated as being furnished 
     as part of outpatient critical access services without regard 
     to whether--
       ``(A) the individual with respect to whom such services are 
     furnished is physically present in the critical access 
     hospital at the time the specimen is collected;
       ``(B) such individual is registered as an outpatient on the 
     records of, and receives such services directly from, the 
     critical access hospital; or

[[Page 10939]]

       ``(C) payment is (or, but for this subsection, would be) 
     available for such services under the fee schedule 
     established under section 1833(h).''.
       (2) Effective date.--The amendments made by paragraph (1) 
     shall apply to cost reporting periods beginning on or after 
     October 1, 2003.
       (b) Elimination of Isolation Test for Cost-Based Ambulance 
     Reimbursement.--
       (1) In general.--Section 1834(l)(8) of the Social Security 
     Act (42 U.S.C. 1395m(l)(8)) is amended--
       (A) in subparagraph (B)--
       (i) by striking ``owned and''; and
       (ii) by inserting ``(including when such services are 
     provided by the entity under an arrangement with the 
     hospital)'' after ``hospital''; and
       (B) by striking the comma at the end of subparagraph (B) 
     and all that follows and inserting a period.
       (2) Effective date.--The amendments made by this subsection 
     shall apply to services furnished on or after January 1, 
     2007.

     SEC. 8. CAPITAL INFRASTRUCTURE REVOLVING LOAN PROGRAM.

       (a) In General.--Part A of title XVI of the Public Health 
     Service Act (42 U.S.C. 300q et seq.) is amended by adding at 
     the end the following new section:


            ``CAPITAL INFRASTRUCTURE REVOLVING LOAN PROGRAM

       ``Sec. 1603.  (a) Authority To Make and Guarantee Loans.--
       ``(1) Authority to make loans.--The Secretary may make 
     loans from the fund established under section 1602(d) to any 
     rural entity for projects for capital improvements, 
     including--
       ``(A) the acquisition of land necessary for the capital 
     improvements;
       ``(B) the renovation or modernization of any building;
       ``(C) the acquisition or repair of fixed or major movable 
     equipment; and
       ``(D) such other project expenses as the Secretary 
     determines appropriate.
       ``(2) Authority to guarantee loans.--
       ``(A) In general.--The Secretary may guarantee the payment 
     of principal and interest for loans made to rural entities 
     for projects for any capital improvement described in 
     paragraph (1) to any non-Federal lender.
       ``(B) Interest subsidies.--In the case of a guarantee of 
     any loan made to a rural entity under subparagraph (A), the 
     Secretary may pay to the holder of such loan, for and on 
     behalf of the project for which the loan was made, amounts 
     sufficient to reduce (by not more than 3 percent) the net 
     effective interest rate otherwise payable on such loan.
       ``(b) Amount of Loan.--The principal amount of a loan 
     directly made or guaranteed under subsection (a) for a 
     project for capital improvement may not exceed $5,000,000.
       ``(c) Funding Limitations.--
       ``(1) Government credit subsidy exposure.--The total of the 
     Government credit subsidy exposure under the Credit Reform 
     Act of 1990 scoring protocol with respect to the loans 
     outstanding at any time with respect to which guarantees have 
     been issued, or which have been directly made, under 
     subsection (a) may not exceed $50,000,000 per year.
       ``(2) Total amounts.--Subject to paragraph (1), the total 
     of the principal amount of all loans directly made or 
     guaranteed under subsection (a) may not exceed $250,000,000 
     per year.
       ``(d) Capital Assessment and Planning Grants.--
       ``(1) Nonrepayable grants.--Subject to paragraph (2), the 
     Secretary may make a grant to a rural entity, in an amount 
     not to exceed $50,000, for purposes of capital assessment and 
     business planning.
       ``(2) Limitation.--The cumulative total of grants awarded 
     under this subsection may not exceed $2,500,000 per year.
       ``(e) Termination of Authority.--The Secretary may not 
     directly make or guarantee any loan under subsection (a) or 
     make a grant under subsection (d) after September 30, 
     2010.''.
       (b) Rural Entity Defined.--Section 1624 of the Public 
     Health Service Act (42 U.S.C. 300s-3) is amended by adding at 
     the end the following new paragraph:
       ``(15)(A) The term `rural entity' includes--
       ``(i) a rural health clinic, as defined in section 
     1861(aa)(2) of the Social Security Act;
       ``(ii) any medical facility with at least 1 bed, but with 
     less than 50 beds, that is located in--
       ``(I) a county that is not part of a metropolitan 
     statistical area; or
       ``(II) a rural census tract of a metropolitan statistical 
     area (as determined under the most recent modification of the 
     Goldsmith Modification, originally published in the Federal 
     Register on February 27, 1992 (57 Fed. Reg. 6725));
       ``(iii) a hospital that is classified as a rural, regional, 
     or national referral center under section 1886(d)(5)(C) of 
     the Social Security Act; and
       ``(iv) a hospital that is a sole community hospital (as 
     defined in section 1886(d)(5)(D)(iii) of the Social Security 
     Act).
       ``(B) For purposes of subparagraph (A), the fact that a 
     clinic, facility, or hospital has been geographically 
     reclassified under the Medicare program under title XVIII of 
     the Social Security Act shall not preclude a hospital from 
     being considered a rural entity under clause (i) or (ii) of 
     subparagraph (A).''.
       (c) Conforming Amendments.--Section 1602 of the Public 
     Health Service Act (42 U.S.C. 300q-2) is amended--
       (1) in subsection (b)(2)(D), by inserting ``or 
     1603(a)(2)(B)'' after ``1601(a)(2)(B)''; and
       (2) in subsection (d)--
       (A) in paragraph (1)(C), by striking ``section 
     1601(a)(2)(B)'' and inserting ``sections 1601(a)(2)(B) and 
     1603(a)(2)(B)''; and
       (B) in paragraph (2)(A), by inserting ``or 1603(a)(2)(B)'' 
     after ``1601(a)(2)(B)''.

     SEC. 9. EXTENSION OF MEDICARE INCENTIVE PAYMENT PROGRAM FOR 
                   PHYSICIAN SCARCITY AREAS.

       Section 1833(u)(1) of the Social Security Act (42 U.S.C. 
     1395l(u)(1)) is amended by striking ``before January 1, 
     2008'' and inserting ``before January 1, 2009''.

     SEC. 10. EXTENSION OF FLOOR ON MEDICARE WORK GEOGRAPHIC 
                   ADJUSTMENT.

       Section 1848(e)(1)(E) of the Social Security Act (42 U.S.C. 
     1395w-4(e)(1)(E)) is amended by striking ``before January 1, 
     2007'' and inserting ``before January 1, 2009''.

     SEC. 11. MEDICARE HOME HEALTH CARE PLANNING IMPROVEMENTS.

       (a) In General.--Section 1814(a)(2) of the Social Security 
     Act (42 U.S.C. 1395f(a)(2)), in the matter preceding 
     subparagraph (A), is amended--
       (1) by striking ``subparagraph (B)'' and inserting 
     ``subparagraphs (B) and (C)'';
       (2) by inserting ``(as those terms are defined in section 
     1861(aa)(5))'' after ``clinical nurse specialist'';
       (3) by inserting ``or home health agency (as the case may 
     be)'' after ``facility''; and
       (4) by inserting ``(or in the case of services described in 
     subparagraph (C), a physician assistant (as defined in 
     1861(aa)(5)) under the supervision of a physician)'' after 
     ``collaboration with a physician''.
       (b) Conforming Amendments.--(1) Section 1814(a) of the 
     Social Security Act (42 U.S.C. 1395f(a)) is amended--
       (A) in paragraph (2)(C), by inserting ``a nurse 
     practitioner, a clinical nurse specialist, or a physician 
     assistant (as the case may be)'' after ``physician'' each 
     place it appears;
       (B) in the second sentence, by striking ``or clinical nurse 
     specialist'' and inserting ``clinical nurse specialist, or 
     physician assistant'';
       (C) in the third sentence--
       (i) by striking ``physician certification'' and inserting 
     ``certification'';
       (ii) by inserting ``(or on January 1, 2007, in the case of 
     regulations to implement the amendments made by section 11 of 
     the Rural Hospital and Provider Equity (HoPE) Act of 2006)'' 
     after ``1981''; and
       (iii) by striking ``a physician who'' and inserting ``a 
     physician, nurse practitioner, clinical nurse specialist, or 
     physician assistant who''; and
       (D) in the fourth sentence, by inserting ``, nurse 
     practitioner, clinical nurse specialist, or physician 
     assistant'' after ``physician''.
       (2) Section 1835(a) of the Social Security Act (42 U.S.C. 
     1395n(a)) is amended--
       (A) in paragraph (2)--
       (i) in the matter preceding subparagraph (A), by inserting 
     ``or, in the case of services described in subparagraph (A), 
     a physician, or a nurse practitioner or clinical nurse 
     specialist (as those terms are defined in 1861(aa)(5)), who 
     does not have a direct or indirect employment relationship 
     with the home health agency but is working in collaboration 
     with a physician (or a physician assistant (as defined in 
     1861(aa)(5)) under the supervision of a physician)'' after 
     ``a physician''; and
       (ii) in subparagraph (A) by inserting ``a nurse 
     practitioner, a clinical nurse specialist, or a physician 
     assistant (as the case may be)'' after ``physician'' each 
     place it appears;
       (B) in the third sentence, by inserting ``, nurse 
     practitioner, clinical nurse specialist, or physician 
     assistant (as the case may be)'' after physician;
       (C) in the fourth sentence--
       (i) by striking ``physician certification'' and inserting 
     ``certification'';
       (ii) by inserting ``(or on January 1, 2007, in the case of 
     regulations to implement the amendments made by section 11 of 
     the Rural Hospital and Provider Equity (HoPE) Act of 2006)'' 
     after ``1981''; and
       (iii) by striking ``a physician who'' and inserting ``a 
     physician, nurse practitioner, clinical nurse specialist, or 
     physician assistant who''; and
       (D) in the fifth sentence, by inserting ``, nurse 
     practitioner, clinical nurse specialist, or physician 
     assistant'' after ``physician''.
       (3) Section 1861 of the Social Security Act (42 U.S.C. 
     1395x) is amended--
       (A) in subsection (m)--
       (i) in the matter preceding paragraph (1)--
       (I) by inserting ``, or a nurse practitioner, clinical 
     nurse specialist, or physician assistant (as those terms are 
     defined in subsection (aa)(5))'' after ``physician'' the 
     first place it appears; and
       (II) by inserting ``or a nurse practitioner, clinical nurse 
     specialist, or physician assistant'' after ``physician'' the 
     second place it appears; and
       (ii) in paragraph (3), by inserting ``or a nurse 
     practitioner, clinical nurse specialist,

[[Page 10940]]

     or physician assistant'' after ``physician''; and
       (B) in subsection (o)(2)--
       (i) by inserting ``, nurse practitioners, clinical nurse 
     specialists, or physician assistants (as those terms are 
     defined in subsection (aa)(5))'' after ``physicians''; and
       (ii) by inserting ``, nurse practitioner, clinical nurse 
     specialist, physician assistant,'' after ``physician''
       (4) Section 1895 of the Social Security Act (42 U.S.C. 
     1395fff) is amended--
       (A) in subsection (c)(1), by inserting ``, or the nurse 
     practitioner, clinical nurse specialist, or physician 
     assistant (as those terms are defined in section 
     1861(aa)(5)),'' after ``physician''; and
       (B) in subsection (e)--
       (i) in paragraph (1)(A), by inserting ``, or a nurse 
     practitioner, clinical nurse specialist, or physician 
     assistant (as those terms are defined in section 
     1861(aa)(5)),'' after ``physician''; and
       (ii) in paragraph (2)--
       (I) in the heading, by striking ``Physician certification'' 
     and inserting ``Rule of construction regarding requirement 
     for certification''; and
       (II) by striking ``physician''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished on or after 
     January 1, 2007.

     SEC. 12. RURAL HEALTH CLINIC IMPROVEMENTS.

       Section 1833(f) of the Social Security Act (42 U.S.C. 
     1395l(f)) is amended--
       (1) in paragraph (1), by striking ``, and'' at the end and 
     inserting a semicolon;
       (2) in paragraph (2)--
       (A) by inserting ``(before 2007)'' after ``in a subsequent 
     year''; and
       (B) by striking the period at the end and inserting a 
     semicolon; and
       (3) by adding at the end the following new paragraphs:
       ``(3) in 2007, at $82 per visit; and
       ``(4) in a subsequent year, at the limit established under 
     this subsection for the previous year increased by the 
     percentage increase in the MEI (as so defined) applicable to 
     primary care services (as so defined) furnished as of the 
     first day of that year.''

     SEC. 13. COMMUNITY HEALTH CENTER COLLABORATIVE ACCESS 
                   EXPANSION.

       Section 330 of the Public Health Service Act (42 U.S.C. 
     254b) is amended by adding at the end the following:
       ``(s) Miscellaneous Provisions.--
       ``(1) Rule of construction with respect to rural health 
     clinics.--
       ``(A) In general.--Nothing in this section shall be 
     construed to prevent a community health center from 
     contracting with a federally certified rural health clinic 
     (as defined by section 1861(aa)(2) of the Social Security 
     Act) for the delivery of primary health care services that 
     are available at the rural health clinic to individuals who 
     would otherwise be eligible for free or reduced cost care if 
     that individual were able to obtain that care at the 
     community health center. Such services may be limited in 
     scope to those primary health care services available in that 
     rural health clinic.
       ``(B) Assurances.--In order for a rural health clinic to 
     receive funds under this section through a contract with a 
     community health center under paragraph (1), such rural 
     health clinic shall establish policies to ensure--
       ``(i) nondiscrimination based upon the ability of a patient 
     to pay; and
       ``(ii) the establishment of a sliding fee scale for low-
     income patients.''.

     SEC. 14. APPLYING ADD-ON POLICY FOR HOME HEALTH SERVICES 
                   FURNISHED IN A RURAL AREA FOR 2007.

       Section 421 of Medicare Prescription Drug, Improvement, and 
     Modernization Act of 2003 (Public Law 108-173; 117 Stat. 
     2283), as amended by section 5201(b) of the Deficit Reduction 
     Act of 2005 (Public Law 109-171), is amended--
       (1) in the heading, by striking ``ONE-YEAR'' and inserting 
     ``TEMPORARY''; and
       (2) in subsection (a), by striking ``before January 1, 
     2007'' and inserting ``before January 1, 2008''.

     SEC. 15. USE OF MEDICAL CONDITIONS FOR CODING AMBULANCE 
                   SERVICES.

       Section 1834(l)(7) of the Social Security Act (42 U.S.C. 
     1395m(l)(7)) is amended to read as follows:
       ``(7) Coding system.--
       ``(A) In general.--The Secretary shall, in accordance with 
     section 1173(c)(1)(B) and not later than January 1, 2007, 
     establish a mandatory system or systems for the coding of 
     claims for ambulance services for which payment is made under 
     this subsection, including a code set specifying the medical 
     condition of the individual who is transported and the level 
     of service that is appropriate for the transportation of an 
     individual with that medical condition.
       ``(B) Medical conditions.--The code set established under 
     subparagraph (A) shall take into account the list of medical 
     conditions developed in the course of the negotiated 
     rulemaking process conducted under paragraph (1).''.

     SEC. 16. EXTENSION OF INCREASED MEDICARE PAYMENTS FOR GROUND 
                   AMBULANCE SERVICES IN RURAL AREAS.

       Section 1834(l)(13) of the Social Security Act (42 U.S.C. 
     1395m(l)(13)) is amended--
       (1) in subparagraph (A), in the matter preceding clause 
     (i), by striking ``before January 1, 2007'' and inserting 
     ``before January 1, 2008'';
       (2) in subparagraph (B), in the heading, by striking 
     ``after 2006'' and inserting ``after 2007''.

     SEC. 17. IMPROVEMENT IN PAYMENTS TO RETAIN EMERGENCY AND 
                   OTHER CAPACITY FOR AMBULANCES IN RURAL AREAS.

       (a) In General.--Section 1834(l) of the Social Security Act 
     (42 U.S.C. 1395m(l)) is amended by adding at the end the 
     following new paragraph:
       ``(15) Additional payments for providers furnishing 
     ambulance services in rural areas.--
       ``(A) In general.--In the case of ground ambulance services 
     furnished on or after January 1, 2007, for which the 
     transportation originates in a rural area (as determined 
     under subparagraph (B)), the Secretary shall provide for a 
     percent increase in the base rate of the fee schedule for a 
     trip identified under this subsection.
       ``(B) Identification of rural areas.--The Secretary, in 
     consultation with the Office of Rural Health Policy, shall 
     use the Rural-Urban Commuting Areas (RUCA) coding system, 
     adopted by that Office, to designate rural areas for the 
     purposes of this paragraph. A rural area is any area in RUCA 
     levels 2 through 10 and any unclassified area.
       ``(C) Tiering of rural areas.--The Secretary shall 
     designate 4 tiers of rural areas, using a ZIP Code 
     population-based methodology generated by the RUCA coding 
     system, as follows:
       ``(i) Tier 1.--A rural area that is a high metropolitan 
     commuting area, in which 30 percent or more of the commuting 
     flow is to an urban area, as designated by the Bureau of the 
     Census (RUCA level 2).
       ``(ii) Tier 2.--A rural area that is a low metropolitan 
     commuting area, in which less than 30 percent of the 
     commuting flow is to an urban area or to a large town, as 
     designated by the Bureau of the Census (RUCA levels 3-6).
       ``(iii) Tier 3.--A rural area that is a small town core, as 
     designated by the Bureau of the Census, in which no 
     significant portion of the commuting flow is to an area of 
     population greater than 10,000 people (RUCA levels 7-9).
       ``(iv) Tier 4.--A rural area in which there is no dominant 
     commuting flow (RUCA level 10) and any unclassified area.

     The Secretary shall consult with the Office of Rural Health 
     Policy not less often than every 2 years to update the 
     designation of rural areas in accordance with any changes 
     that are made to the RUCA system.
       ``(D) Payment adjustments for trips in rural areas.--The 
     Secretary shall adjust the payment rate under this section 
     for ambulance trips that originate in each of the tiers 
     established in subparagraph (C) according to the national 
     average cost of full-cost providers for providing ambulance 
     services in each such tier.''.
       (b) Review of Payments for Rural Ambulance Services and 
     Report to Congress.--
       (1) Review.--Not later than July 1, 2009, the Secretary of 
     Health and Human Services shall review the system for 
     adjusting payments for rural ambulance services under section 
     1834(l)(15) of the Social Security Act, as added by 
     subsection (a), to determine the adequacy and appropriateness 
     of such adjustments. In conducting such review, the Secretary 
     shall consult with providers and suppliers affected by such 
     adjustments and with representatives of the ambulance 
     industry generally to determine--
       (A) whether such adjustments adequately cover the 
     additional costs incurred in serving areas of low population 
     density; and
       (B) whether the tiered structure for making such 
     adjustments appropriately reflects the difference in costs of 
     providing services in different types of rural areas.
       (2) Report.--Not later than January 1, 2010, the Secretary 
     shall submit to Congress a report on the review conducted 
     under paragraph (1) together with any recommendations for 
     revision to the systems for adjusting payments for ambulance 
     services in rural areas that the Secretary of Health and 
     Human Services determines appropriate.
       (c) Conforming Amendments.--(1) Section 1834(l) of the 
     Social Security Act (42 U.S.C. 1395m(l)), as amended by 
     subsection (a), is amended by adding at the end the following 
     new paragraph:
       ``(16) Designation of rural areas for mileage payment 
     purposes.--In establishing any differential in the amount of 
     payment for mileage between rural and urban areas in the fee 
     schedule established under paragraph (1), the Secretary 
     shall, in the case of ambulance services furnished on or 
     after January 1, 2007, identify rural areas in the same 
     manner as provided in paragraph (15)(B).''.
       (2) Section 1834(l)(12)(A) of the Social Security Act (42 
     U.S.C. 1395m(l)(12)(A)) is amended by striking ``January 1, 
     2010'' and inserting ``January 1, 2007''.
       (3) Section 1834(l)(13)(A)(i) of the Social Security Act 
     (42 U.S.C. 1395m(l)(13)(A)(i)) is amended--
       (A) by inserting ``(or in the case of such services 
     furnished in 2007, in a rural area identified by the 
     Secretary under paragraph (15)(B))'' after ``such 
     paragraph''; and
       (B) by striking ``paragraphs (11) and (12)'' and inserting 
     ``paragraphs (11), (12), and (15)''.

[[Page 10941]]



     SEC. 18. COVERAGE OF MARRIAGE AND FAMILY THERAPIST SERVICES 
                   AND MENTAL HEALTH COUNSELOR SERVICES UNDER PART 
                   B OF THE MEDICARE PROGRAM.

       (a) Coverage of Services.--
       (1) In general.--Section 1861(s)(2) of the Social Security 
     Act (42 U.S.C. 1395x(s)(2)), as amended by section 5112 of 
     the Deficit Reduction Act of 2005 (Public Law 109-171), is 
     amended--
       (A) in subparagraph (Z), by striking ``and'' at the end;
       (B) in subparagraph (AA), by inserting ``and'' at the end; 
     and
       (C) by adding at the end the following new subparagraph:
       ``(BB) marriage and family therapist services (as defined 
     in subsection (ccc)(1)) and mental health counselor services 
     (as defined in subsection (ccc)(3));''.
       (2) Definitions.--Section 1861 of the Social Security Act 
     (42 U.S.C. 1395x), as amended by section 5112 of the Deficit 
     Reduction Act of 2005 (Public Law 109-171), is amended by 
     adding at the end the following new subsection:

     ``Marriage and Family Therapist Services; Marriage and Family 
  Therapist; Mental Health Counselor Services; Mental Health Counselor

       ``(ccc)(1) The term `marriage and family therapist 
     services' means services performed by a marriage and family 
     therapist (as defined in paragraph (2)) for the diagnosis and 
     treatment of mental illnesses, which the marriage and family 
     therapist is legally authorized to perform under State law 
     (or the State regulatory mechanism provided by State law) of 
     the State in which such services are performed, as would 
     otherwise be covered if furnished by a physician or as an 
     incident to a physician's professional service, but only if 
     no facility or other provider charges or is paid any amounts 
     with respect to the furnishing of such services.
       ``(2) The term `marriage and family therapist' means an 
     individual who--
       ``(A) possesses a master's or doctoral degree which 
     qualifies for licensure or certification as a marriage and 
     family therapist pursuant to State law;
       ``(B) after obtaining such degree has performed at least 2 
     years of clinical supervised experience in marriage and 
     family therapy; and
       ``(C) in the case of an individual performing services in a 
     State that provides for licensure or certification of 
     marriage and family therapists, is licensed or certified as a 
     marriage and family therapist in such State.
       ``(3) The term `mental health counselor services' means 
     services performed by a mental health counselor (as defined 
     in paragraph (4)) for the diagnosis and treatment of mental 
     illnesses which the mental health counselor is legally 
     authorized to perform under State law (or the State 
     regulatory mechanism provided by the State law) of the State 
     in which such services are performed, as would otherwise be 
     covered if furnished by a physician or as incident to a 
     physician's professional service, but only if no facility or 
     other provider charges or is paid any amounts with respect to 
     the furnishing of such services.
       ``(4) The term `mental health counselor' means an 
     individual who--
       ``(A) possesses a master's or doctor's degree in mental 
     health counseling or a related field;
       ``(B) after obtaining such a degree has performed at least 
     2 years of supervised mental health counselor practice; and
       ``(C) in the case of an individual performing services in a 
     State that provides for licensure or certification of mental 
     health counselors or professional counselors, is licensed or 
     certified as a mental health counselor or professional 
     counselor in such State.''.
       (3) Provision for payment under part b.--Section 
     1832(a)(2)(B) of the Social Security Act (42 U.S.C. 
     1395k(a)(2)(B)) is amended by adding at the end the following 
     new clause:
       ``(v) marriage and family therapist services and mental 
     health counselor services;''.
       (4) Amount of payment.--Section 1833(a)(1) of the Social 
     Security Act (42 U.S.C. 1395l(a)(1)) is amended--
       (A) by striking ``and (V)'' and inserting ``(V)''; and
       (B) by inserting before the semicolon at the end the 
     following: ``, and (W) with respect to marriage and family 
     therapist services and mental health counselor services under 
     section 1861(s)(2)(BB), the amounts paid shall be 80 percent 
     of the lesser of the actual charge for the services or 75 
     percent of the amount determined for payment of a 
     psychologist under subparagraph (L)''.
       (5) Exclusion of marriage and family therapist services and 
     mental health counselor services from skilled nursing 
     facility prospective payment system.--Section 
     1888(e)(2)(A)(ii) of the Social Security Act (42 U.S.C. 
     1395yy(e)(2)(A)(ii)) is amended by inserting ``marriage and 
     family therapist services (as defined in section 
     1861(ccc)(1)), mental health counselor services (as defined 
     in section 1861(ccc)(3)),'' after ``qualified psychologist 
     services,''.
       (6) Inclusion of marriage and family therapists and mental 
     health counselors as practitioners for assignment of 
     claims.--Section 1842(b)(18)(C) of the Social Security Act 
     (42 U.S.C. 1395u(b)(18)(C)) is amended by adding at the end 
     the following new clauses:
       ``(vii) A marriage and family therapist (as defined in 
     section 1861(ccc)(2)).
       ``(viii) A mental health counselor (as defined in section 
     1861(ccc)(4)).''.
       (b) Coverage of Certain Mental Health Services Provided in 
     Certain Settings.--
       (1) Rural health clinics and federally qualified health 
     centers.--Section 1861(aa)(1)(B) of the Social Security Act 
     (42 U.S.C. 1395x(aa)(1)(B)) is amended by striking ``or by a 
     clinical social worker (as defined in subsection (hh)(1)),'' 
     and inserting ``, by a clinical social worker (as defined in 
     subsection (hh)(1)), by a marriage and family therapist (as 
     defined in subsection (ccc)(2)), or by a mental health 
     counselor (as defined in subsection (ccc)(4)),''.
       (2) Hospice programs.--Section 1861(dd)(2)(B)(i)(III) of 
     the Social Security Act (42 U.S.C. 1395x(dd)(2)(B)(i)(III)) 
     is amended by inserting ``or one marriage and family 
     therapist (as defined in subsection (ccc)(2))'' after 
     ``social worker''.
       (c) Authorization of Marriage and Family Therapists to 
     Develop Discharge Plans for Post-Hospital Services.--Section 
     1861(ee)(2)(G) of the Social Security Act (42 U.S.C. 
     1395x(ee)(2)(G)) is amended by inserting ``marriage and 
     family therapist (as defined in subsection (ccc)(2)),'' after 
     ``social worker,''.
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to services furnished on or after 
     January 1, 2007.

     SEC. 19. MEDICARE REMOTE MONITORING PILOT PROJECTS.

       (a) Pilot Projects.--
       (1) In general.--Not later than 9 months after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services (in this section referred to as the ``Secretary'') 
     shall conduct pilot projects under title XVIII of the Social 
     Security Act for the purpose of providing incentives to home 
     health agencies to utilize home monitoring and communications 
     technologies that--
       (A) enhance health outcomes for Medicare beneficiaries; and
       (B) reduce expenditures under such title.
       (2) Site requirements.--
       (A) Urban and rural.--The Secretary shall conduct the pilot 
     projects under this section in both urban and rural areas.
       (B) Site in a small state.--The Secretary shall conduct at 
     least 3 of the pilot projects in a State with a population of 
     less than 1,000,000.
       (3) Definition of home health agency.--In this section, the 
     term ``home health agency'' has the meaning given that term 
     in section 1861(o) of the Social Security Act (42 U.S.C. 
     1395x(o)).
       (b) Medicare Beneficiaries Within the Scope of Projects.--
     The Secretary shall specify the criteria for identifying 
     those Medicare beneficiaries who shall be considered within 
     the scope of the pilot projects under this section for 
     purposes of the application of subsection (c) and for the 
     assessment of the effectiveness of the home health agency in 
     achieving the objectives of this section. Such criteria may 
     provide for the inclusion in the projects of Medicare 
     beneficiaries who begin receiving home health services under 
     title XVIII of the Social Security Act after the date of the 
     implementation of the projects.
       (c) Incentives.--
       (1) Performance targets.--The Secretary shall establish for 
     each home health agency participating in a pilot project 
     under this section a performance target using one of the 
     following methodologies, as determined appropriate by the 
     Secretary:
       (A) Adjusted historical performance target.--The Secretary 
     shall establish for the agency--
       (i) a base expenditure amount equal to the average total 
     payments made to the agency under parts A and B of title 
     XVIII of the Social Security Act for Medicare beneficiaries 
     determined to be within the scope of the pilot project in a 
     base period determined by the Secretary; and
       (ii) an annual per capita expenditure target for such 
     beneficiaries, reflecting the base expenditure amount 
     adjusted for risk and adjusted growth rates.
       (B) Comparative performance target.--The Secretary shall 
     establish for the agency a comparative performance target 
     equal to the average total payments under such parts A and B 
     during the pilot project for comparable individuals in the 
     same geographic area that are not determined to be within the 
     scope of the pilot project.
       (2) Incentive.--Subject to paragraph (3), the Secretary 
     shall pay to each participating home care agency an incentive 
     payment for each year under the pilot project equal to a 
     portion of the Medicare savings realized for such year 
     relative to the performance target under paragraph (1).
       (3) Limitation on expenditures.--The Secretary shall limit 
     incentive payments under this section in order to ensure that 
     the aggregate expenditures under title XVIII of the Social 
     Security Act (including incentive payments under this 
     subsection) do not exceed the amount that the Secretary 
     estimates would have been expended if the pilot

[[Page 10942]]

     projects under this section had not been implemented.
       (d) Waiver Authority.--The Secretary may waive such 
     provisions of titles XI and XVIII of the Social Security Act 
     as the Secretary determines to be appropriate for the conduct 
     of the pilot projects under this section.
       (e) Report to Congress.--Not later than 5 years after the 
     date that the first pilot project under this section is 
     implemented, the Secretary shall submit to Congress a report 
     on the pilot projects. Such report shall contain a detailed 
     description of issues related to the expansion of the 
     projects under subsection (f) and recommendations for such 
     legislation and administrative actions as the Secretary 
     considers appropriate.
       (f) Expansion.--If the Secretary determines that any of the 
     pilot projects under this section enhance health outcomes for 
     Medicare beneficiaries and reduce expenditures under title 
     XVIII of the Social Security Act, the Secretary may initiate 
     comparable projects in additional areas.
       (g) Incentive Payments Have No Effect on Other Medicare 
     Payments to Agencies.--An incentive payment under this 
     section--
       (1) shall be in addition to the payments that a home health 
     agency would otherwise receive under title XVIII of the 
     Social Security Act for the provision of home health 
     services; and
       (2) shall have no effect on the amount of such payments.

     SEC. 20. FACILITATING THE PROVISION OF TELEHEALTH SERVICES 
                   ACROSS STATE LINES.

       (a) In General.--For purposes of expediting the provision 
     of telehealth services, for which payment is made under the 
     Medicare program, across State lines, the Secretary of Health 
     and Human Services shall, in consultation with 
     representatives of States, physicians, health care 
     practitioners, and patient advocates, encourage and 
     facilitate the adoption of provisions allowing for multistate 
     practitioner practice across State lines.
       (b) Definitions.--In subsection (a):
       (1) Telehealth service.--The term ``telehealth service'' 
     has the meaning given that term in subparagraph (F) of 
     section 1834(m)(4) of the Social Security Act (42 U.S.C. 
     1395m(m)(4)).
       (2) Physician, practitioner.--The terms ``physician'' and 
     ``practitioner'' have the meaning given those terms in 
     subparagraphs (D) and (E), respectively, of such section.
       (3) Medicare program.--The term ``Medicare program'' means 
     the program of health insurance administered by the Secretary 
     of Health and Human Services under title XVIII of the Social 
     Security Act (42 U.S.C. 1395 et seq.).

  Mr. CONRAD. Mr. President, today I am pleased to join Senator Thomas 
in introducing the Rural Hospital and Provider Equity Act, or R-HoPE. 
This proposal will help shore up health care in rural areas and give 
rural Americans hope that health care will be available when they need 
it.
  R-HoPE is the next step in addressing the inequities that exist in 
Medicare reimbursement and ensuring access to health services, like 
ambulance, mental health and home health care, in rural communities. 
The proposal has strong bipartisan support. In fact we're pleased to 
have over 12 cosponsors today from both sides of the aisle.
  Our proposal also has broad support among provider groups including 
the National Rural Health Association, the American Hospital 
Association, the American Ambulance Association, Federation of American 
Hospitals, the National Association of Rural Health Clinics, National 
Association for Home Care and Hospice, and the American Academy of 
Nurse Practitioners.
  As my colleagues know, prior to the Medicare Modernization Act, 
Medicare was shortchanging rural providers. Our reimbursement was 
significantly less than our urban counterparts. For example, Mercy 
Hospital in Devil's Lake North Dakota received half as much 
reimbursement for treating pneumonia as Mercy Hospital in New York City 
did. While I will be the first to admit that health care can be more 
expensive in urban areas, it certainly isn't twice the cost. And for 
that matter, rural hospitals don't get a ``rural discount'' when they 
go to buy supplies or new technology. It costs rural hospitals even 
more to purchase technology and supplies because they can't achieve the 
economies of scale that larger, more urban hospitals can.
  The MMA recognized this disparity in reimbursement and took steps to 
close the gap. We secured over $25 billion for rural health care, but 
most of the changes were only temporary. Even with the MMA funding, 
many rural hospitals and providers continue to experience negative 
margins. In 2003, before the MMA passed, rural hospitals had overall 
Medicare margins of negative 5.4 percent--compared to negative 0.9 
percent for urban providers. In its March 2006 report, the Medicare 
Payment Advisory Commission projected that rural hospitals would 
experience negative 4.5-percent margins this year. Facilities cannot 
continue to provide high quality services if they lose over 4 percent 
on every Medicare patient.
  R-HoPE will help continue the progress made by the MMA and add new 
provisions that will protect access to rural health care.
  First, it will help ensure that everyone who chooses to live in a 
rural community has a hospital nearby. For example, the proposal 
recognizes that rural facilities can't achieve the same economies of 
scale as large hospitals by giving extra payments to hospitals with 
fewer than 2,000 patients a year. R-HoPE also reinstates provisions 
that protect rural hospitals against losses under the current 
outpatient payment system. Next, the bill extends an MMA provision that 
has helped rural hospitals to better meet their labor costs by 
improving their ``wage index'' calculation. In addition, the proposal 
would close the gap in payments hospitals receive for serving low-
income patients by giving the same level of special ``disproportionate 
share payments'' that urban areas enjoy. Lastly, the bill establishes a 
new loan program to help rural hospitals repair crumbling buildings.
  Second, R-HoPE would guarantee that rural Americans can see a doctor 
when they are sick. As is the case with most rural States, much of 
North Dakota is designated as a health professional shortage area, 
HPSA. Recruiting doctors to these areas is very difficult, and the 
Medicare program recognized that extra payments are needed when it 
established the 10-percent physician scarcity payment for doctors who 
serve Medicare patients in HPSAs. R-HoPE would extend these vital bonus 
payments. Our proposal also extends a provision from the MMA that 
erases geographic inequities in physician payments.
  Third, our bill would guarantee that when there is an emergency in a 
rural area, an ambulance is there to respond. Many rural ambulance 
services are closing because of low Medicare reimbursement. These 
services are often staffed by volunteers; few first responders are 
paid. R-HoPE would protect rural ambulance services by improving how 
Medicare pays EMS providers in rural areas. The bill also extends a 2-
percent bonus payment for rural ambulance services and takes steps to 
reduce the number of wrongful denials of payment by Medicare 
contractors.
  Fourth, R-HoPE helps to bolster a vital rural health care safety net 
provider, rural health clinics. Our bill would help preserve this 
important source of health care by increasing the all-inclusive payment 
from $63 to $82. In addition, our bill encourages rural health clinics 
to collaborate with community health centers to provide care in rural 
areas.
  Fifth, R-HoPE takes a number of steps to protect the availability of 
home and mental health in rural areas by increasing the number of 
providers who are allowed to order and provide these vital services. It 
also extends the rural add-on payment for home health services provided 
in rural areas and creates a pilot project to use home monitoring 
technology to provide home health services.
  This bill also removes barriers to telehealth. Specifically, the bill 
would address problems that arise when telehealth services are provided 
across State lines and payment is denied because the practitioner isn't 
licensed in the State where the patient resides.
  Finally, the bill we are introducing includes two small changes to 
the critical access hospital, CAH, program that will put these 
facilities on a much sounder financial footing. These provisions would 
ensure CAHs could afford to provide quality ambulance care and receive 
fair reimbursement for lab services provided outside the hospital.
  Rural America is the backbone of this country. We must not turn our 
backs on rural Americans and their health care needs. They have a right 
to

[[Page 10943]]

the same quality health care enjoyed by other Americans. And that right 
is being threatened by low Medicare reimbursement and limited access to 
providers. R-HoPE truly gives hope to those living in rural communities 
by erasing the inequities in current law that impede access to care.
  I want to thank my Senate colleagues who have joined in this effort, 
as well as the organizations who worked with us, for their cooperation 
in developing this important health care proposal. It is my hope that 
this legislation will help strengthen our rural health care system and 
preserve it for generations to come.
                                 ______
                                 
      By Mr. McCAIN:
  S. 3501. A bill to amend the Shivwits Band of the Paiute Indian Tribe 
of Utah Water Rights Settlement Act to establish an acquisition fund 
for the water rights and habitat acquisition program; to the Committee 
on Indian Affairs.
  Mr. McCAIN. Mr. President, today I am introducing legislation to 
amend the Shivwits Band of Paiute Indian Tribe of Utah Water Rights 
Settlement Act 2000 in order to bring that settlement to an orderly 
conclusion. That act ratified a negotiated settlement of the Shivwits 
Band of Paiute Indian Tribe's water entitlement to flow from the Santa 
Clara River in Utah. The Department of the Interior requested the 
amendment and provided technical assistance in crafting the 
legislation.
  As part of section 10, Water Rights Settlement, of the Shivwits 
Settlement Act a water rights and habitat acquisition program was 
authorized. Congress authorized $3.0 million to be appropriated to 
implement section 10. However, when the Department of the Interior 
attempted to implement the provision in section 10, which was intended 
to maintain the $3.0 million in an interest bearing account, the 
Treasury Department advised that the language in section 10 was 
insufficient for this purpose. The Treasury Department and Department 
of the Interior developed technical correction language to address this 
deficiency in the settlement act by amending the statutory language for 
the establishment of the acquisition fund and investment of the 
acquisition fund.
  The bill I am introducing today will allow the Shivwits Band water 
rights and habitat acquisition program authorized under section 10 of 
the settlement act to move forward. This legislation is supported by 
the Department of the Interior and will fully implement the Shivwits 
Band of Paiute Indian Tribe of Utah Water Settlement Act of 2000. I 
urge my colleagues to support this legislation.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3501

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. ACQUISITION FUND.

       Section 10 of the Shivwits Band of the Paiute Indian Tribe 
     of Utah Water Rights Settlement Act (Public Law 106-263; 114 
     Stat. 743) is amended--
       (1) in subsection (f), by striking the second sentence; and
       (2) by adding at the end the following:
       ``(g) Acquisition Fund.--
       ``(1) Establishment.--There is established in the Treasury 
     of the United States a fund to be known as the `Santa Clara 
     Water Rights and Habitat Acquisition Fund' (referred to in 
     this section as the `Acquisition Fund'), consisting of--
       ``(A) such amounts as are appropriated to the Acquisition 
     Fund under paragraph (2); and
       ``(B) any income earned on investment of amounts in the 
     Acquisition Fund under paragraph (4).
       ``(2) Transfers to acquisition fund.--There are 
     appropriated to the Acquisition Fund amounts equivalent to 
     amounts made available under subsection (f).
       ``(3) Expenditures from acquisition fund.--On request by 
     the Secretary, the Secretary of the Treasury shall transfer 
     from the Acquisition Fund to the Secretary such amounts as 
     the Secretary determines to be necessary to carry out this 
     section.
       ``(4) Investment of amounts.--
       ``(A) In general.--On request by the Secretary, the 
     Secretary of the Treasury shall invest such portion of the 
     Acquisition Fund as is not, in the judgment of the Secretary, 
     required to meet current withdrawals.
       ``(B) Obligations.--Investments may be made only in public 
     debt securities with maturities suitable to the needs of the 
     Acquisition Fund, as determined by the Secretary, that bear 
     interest at a rate determined by the Secretary of the 
     Treasury, taking into consideration current market yields on 
     outstanding marketable obligations of the United States of 
     comparable maturity.
       ``(C) Acquisition of obligations.--For the purpose of 
     investments under subparagraph (A), obligations may be 
     acquired--
       ``(i) on original issue at the issue price; or
       ``(ii) by purchase of outstanding obligations at the market 
     price.
       ``(D) Sale of obligations.--Any obligation acquired by the 
     Acquisition Fund may be sold by the Secretary of the Treasury 
     at the market price.
       ``(E) Credits to acquisition fund.--The income on, and the 
     proceeds from the sale or redemption of, any obligations held 
     in the Acquisition Fund shall be credited to, and form a part 
     of, the Acquisition Fund.
       ``(5) Transfers of amounts.--
       ``(A) In general.--The amounts required to be transferred 
     to the Acquisition Fund under this subsection shall be 
     transferred at least monthly from the general fund of the 
     Treasury to the Acquisition Fund on the basis of estimates 
     made by the Secretary of the Treasury.
       ``(B) Adjustments.--Proper adjustment shall be made in 
     amounts subsequently transferred to the extent prior 
     estimates were in excess of or less than the amounts required 
     to be transferred.
       ``(6) Management.--The Acquisition Fund (including the 
     principal of the Acquisition Fund and any interest generated 
     on that principal) shall be managed in accordance with this 
     section.''.
                                 ______
                                 
      By Mr. KENNEDY (for himself, Mrs. Clinton, and Mr. Kerry):
  S. 3502. A bill to modernize the education system of the United 
States, to arm individuals with 21st century knowledge and skills in 
order to preserve the economic and national security of the United 
States, and for other purposes; to the Committee on Health, Education, 
Labor, and Pensions.
  Mr. KENNEDY. Mr. President, American families face great challenges 
in dealing with the rapidly changing global economy. The value of their 
wages is declining, the cost of living is going up, and many jobs are 
moving overseas. More and more Americans feel the American dream is 
slowly slipping out of reach.
  We can and must deal more effectively with this problem. We have a 
responsibility to make the investments that are necessary to our 
progress--a responsibility to our families, to our economy, to our 
Nation, and even to our national security.
  We can guarantee America's continuing prosperity in the future, but 
we must work for it. We must sacrifice for it. The rest of the world is 
playing for keeps. We cannot just tinker at the margins if we expect to 
continue to be a leader in this rapidly shrinking world.
  We must ensure that our citizens can achieve the American dream once 
again. To do so, our highest priority must be a world class education 
for every American. We must make the American employee and employer the 
best educated, best trained, and most capable in the world. We need to 
strengthen the capacities of every person in the Nation.
  This isn't just my opinion. In recent years, study after study has 
emphasized education as the solution to keeping America competitive in 
the years to come.
  Last year, the Council on Competitiveness urged a focus on lifelong 
skill development--through elementary, secondary and higher education, 
and through training and workforce support, as essential to keeping 
America on the cutting edge of innovation.
  A recent National Academy of Sciences report contains these 
recommendations. Two of the report's four major recommendations state 
that education is the solution to meeting the global challenge.
  The National Association of Manufacturers has also issued a report 
urging a renewed focus on education and training to keep American 
businesses competitive.
  Other industrialized countries are embracing education as the key to 
competing in this new economy, but America is slipping behind. We rank 
28th out of 40 nations in math education. We were 3rd in the world in 
1975 in the production of new scientists and engineers, but now we rank 
15th. By

[[Page 10944]]

2008, 6 million U.S. jobs will go unfilled because our workforce will 
not be qualified to fill them.
  These shortcomings threaten both our economic security and our 
national security.
  The last time America was shocked into realizing we were unacceptably 
behind in math and science was in 1957, when the Soviet Union launched 
Sputnik. To meet that crisis, Republican President Eisenhower worked 
closely with a Democratic Congress to pass the National Defense 
Education Act. The new law declared a national ``education emergency,'' 
and we doubled the Federal investment in education virtually overnight.
  Today I join with my colleagues, Senator Clinton and Senator Kerry, 
to introduce a new National Defense Education Act for our own day and 
generation.
  To respond to this major challenge, we must ensure our education 
standards are internationally competitive, so that our high school 
graduates can succeed in the new economy. We must make a commitment to 
all students--regardless of the studies they choose to pursue--that 
cost will not be a barrier to a college degree. We must strengthen math 
and science education in this country by making college free for 
students training to become math or science teachers in high need 
schools.
  Our New National Defense Education Act responds to each of these 
imperatives. It modernizes our education system and equips Americans 
with 21st century knowledge and skills.
  It provides incentives and resources for schools to develop and 
implement more rigorous standards in math, science and reading.
  The legislation updates the Nation's report card--the National 
Assessment of Educational Progress--to ensure that it sets a national 
benchmark which is internationally competitive and is aligned with the 
demands of the 21st century global economy. It expands our ability to 
monitor science achievement. It requires the NAEP to measure student 
preparedness to enter college, the 21st century workforce, or the armed 
services. It also requires the Secretary of Education to examine 
the gaps in student performance on State-level assessments and NAEP 
assessments, and to assist States in understanding those gaps. It 
provides critical resources to states to create PreK-16 Preparedness 
Councils to help them with their efforts to improve state standards and 
ensure that they are aligned with the expectations of colleges, 
employers, and the Armed Services. It also provides funding to States 
working in collaboration to establish common standards and assessments.
  The New NDEA also directs resources to high need schools, to enable 
them to invest in math, science, engineering and technology textbooks 
and laboratories, and give their students equal access to a curriculum 
that will provide the skills they need to be successful in the 21st 
century global economy.
  The legislation recognizes the critical role of the National Science 
Foundation in ensuring our children have access to cutting-edge science 
and technology programs, by doubling the investment in elementary, 
secondary, and postsecondary education programs at NSF.
  The New NDEA also helps open the doors of college to all by creating 
the Contract for Educational Opportunity grant program, or ``CEO 
Grants,'' which guarantee students that if they work hard and are 
admitted to college, their financial need will be met through 
additional State and Federal financial aid.
  The legislation also offers additional grants to make college tuition 
free for low- and middle-income students studying science, technology, 
engineering or math, as well as critical-need foreign languages.
  The bill provides larger grants to students studying to become 
teachers in these fields who agree to work in a high poverty school for 
at least 4 years. It also provides teachers with tax credits, increased 
loan forgiveness and additional incentives to continue to teach where 
they are needed the most. It provides grants to institutions of higher 
education to develop innovative programs for recruiting and training 
new teachers, and invests in teacher training programs to support their 
continuing education.
  The bill recognizes that it is increasingly important for students to 
be exposed to other languages and cultures. In recent years, foreign 
language needs have significantly increased throughout the public and 
private sector because of the wider range of security threats, the 
emergence of new nation states, and the globalization of the U.S. 
economy. American businesses increasingly need employees experienced in 
foreign languages and international cultures to manage a culturally 
diverse workforce.
  The New NDEA responds to these needs by providing grants for 
elementary and secondary critical-need language programs, summer 
institutes to improve teachers' knowledge and instruction of foreign 
languages and international content, and study abroad and foreign 
language study opportunities for high school students, and 
undergraduate and graduate students.
  The New NDEA also continues to invest in our current workforce. The 
bill builds on existing formula funds for job training with competitive 
grants to support innovative strategies to meet emerging labor market 
needs.
  From our earliest days as a nation, education has been the engine of 
the American dream. Our country is home to the greatest universities in 
the world, and our education system has produced the world's leading 
teachers, scientists, writers, musicians, and inventors. We cannot let 
these achievements stall. Slogans are not enough. We have to put first 
things first, and give children, parents, schools, communities and 
states the support they need to refuel the amazing engine of education 
and keep our country great in the years ahead.
  I urge my colleagues to join us in making this strong new commitment 
to securing our Nation's future by supporting the New National Defense 
Education Act.
  Mr. President, I ask unanimous consent that the text of the New 
National Defense Education Act be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3502

       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 ``New National Defense 
     Education Act of 2006''.

     SEC. 2. FINDINGS.

       Congress finds the following:
       (1) Throughout our Nation's history, the skills and 
     education of our workforce have been a major determinant of 
     the standard of living of the people of the United States.
       (2) Spurred into action by the launch of Sputnik, Congress 
     passed the National Defense Education Act of 1958 (Public Law 
     85-864, 72 Stat. 1580). The law, now nearly 50 years old, 
     declared a national ``educational emergency'', and Federal 
     expenditures for education more than doubled in the 4 years 
     after its passage. The programs authorized under the Act 
     helped the United States to improve rapidly in mathematics, 
     science, engineering, technology, and foreign languages and 
     led to our dominance in the arms race and the global economy.
       (3) Today, our Nation once again faces an international 
     challenge in education: we must confront a shortage of highly 
     skilled and educated workers, especially in mathematics, 
     science, engineering, technology, and critical-need foreign 
     languages. As a percentage of total first university degrees 
     granted, the United States produced fewer graduates in 
     mathematics, science, and engineering in 2002 than the Nation 
     did in 1985. Currently, the United States Government requires 
     34,000 employees with foreign language skills in 100 
     languages across more than 80 Federal agencies. These trends 
     pose a threat to our national security and our economic 
     security.
       (4) Student achievement in mathematics and science in 
     elementary school and secondary school lags behind other 
     nations, according to the Trends in International Mathematics 
     and Science study and other studies, including the Programme 
     for International Student Assessment, that recently ranked 
     United States secondary school students 28th out of 40 first- 
     and second-world nations, and tied with Latvia, in 
     mathematics performance and problem solving.
       (5) According to the most recent National Assessment of 
     Educational Progress, less

[[Page 10945]]

     than 40 percent of the students in grade 4 and 30 percent of 
     the students in grade 8, and only 17 percent of the students 
     in grade 12, reach the proficient level in mathematics, and 
     approximately \1/3\ of the students in grades 4 and 8, and 
     nearly \1/2\ of the students in grade 12, do not reach the 
     basic level in science.
       (6) A State-by-State comparison of the 2005 National 
     Assessment of Educational Progress average scale scores for 
     8th grade mathematics reveals that 31 States--more than \1/2\ 
     of the States in the Nation--scored more than 10 points 
     (about 1 grade level) below the highest scoring State, 
     Massachusetts.
       (7) More than 200,000,000 children in China are studying 
     English, a compulsory subject for all Chinese primary school 
     students. By comparison, only about 24,000 of approximately 
     54,000,000 elementary and secondary school children in the 
     United States are studying Chinese.
       (8) There is a significant shortage of trained and 
     qualified mathematics and science teachers in the United 
     States. According to the National Science Board, in 2002, 
     between 17 and 28 percent of public secondary school science 
     teachers (depending on the specific scientific field), and 20 
     percent of public secondary school mathematics teachers, 
     lacked full certification in their teaching field.
       (9) More than \1/2\ of the 20 fastest growing occupations 
     require postsecondary degrees in mathematics or science. 
     According to the National Science Board, out of more than 
     15,000,000 college students, less than 400,000 Americans a 
     year graduate with a bachelor's degree in mathematics, 
     science, engineering, or technology. According to the 
     National Science Foundation, only 75,000 American 
     undergraduate students obtain a master's degree in 
     mathematics, science, engineering, or technology.
       (10) In a 2002 Government Accountability Office report, the 
     United States Army reported that it was experiencing serious 
     shortfalls of translators and interpreters in 5 of its 6 
     critical languages: Arabic, Korean, Mandarin Chinese, 
     Persian-Farsi, and Russian. According to the Modern Language 
     Association, enrollment in foreign languages declined from 16 
     percent of college students in 1965 to 8 percent in 1974, 
     rebounding to just 8.6 percent in 2002. Less commonly taught 
     languages accounted for only 12 percent of all language 
     enrollments. This means that 1 percent of American 
     undergraduate students are studying these critical languages.
       (11) In 2002, 79 percent of Americans agreed that students 
     should have a study-abroad experience sometime during 
     college. Only 1 percent of all United States undergraduate 
     students studied abroad in the 2001-2002 school year.
       (12) The Government Accountability Office estimates that 
     the number of students enrolled in science, technology, 
     engineering, or mathematics doctoral degree programs at 
     United States institutions of higher education declined from 
     217,395 during the 1995-1996 academic year to 198,504 during 
     the 2003-2004 academic year.
       (13) The extent of this crisis requires a coordinated 
     Federal response and an increased Federal investment in 
     programs of the Department of Education and the National 
     Science Foundation.

            TITLE I--MODERNIZING AMERICA'S EDUCATION SYSTEM

         Subtitle A--Prekindergarten Through Grade 16 Education

     SEC. 111. PURPOSES.

       The purposes of this subtitle are the following:
       (1) To ensure students receive an education competitive 
     with other industrialized countries.
       (2) To assist States in improving the rigor of standards 
     and assessments.
       (3) To provide for the establishment of prekindergarten 
     through grade 16 student preparedness councils to better link 
     early childhood education and school readiness with 
     elementary school success, elementary student skills with 
     success in secondary school, and secondary student skills and 
     curricula, especially with respect to reading, mathematics, 
     and science, with the demands of higher education, the 21st 
     century workforce, and the Armed Forces, in order to--
       (A) ensure that greater number of students, especially low-
     income and minority students, complete secondary school with 
     the coursework and skills necessary to enter--
       (i) credit-bearing coursework in higher education without 
     the need for remediation;
       (ii) high-paying employment in the 21st century workforce; 
     or
       (iii) the Armed Forces.
       (4) To establish a system that encourages local educational 
     agencies to adopt a curriculum that meets State academic 
     content standards and student academic achievement standards 
     and prepares all students for success in elementary school, 
     secondary school, and post-secondary endeavors in the 21st 
     century.

     SEC. 112. DEFINITIONS.

       In this subtitle:
       (1) In general.--The terms ``elementary school'', ``limited 
     English proficient'', ``local educational agency'', 
     ``scientifically based research'', ``secondary school'', 
     ``Secretary'', and ``State educational agency'' have the 
     meanings given such terms in section 9101 of the Elementary 
     and Secondary Education Act of 1965 (20 U.S.C. 7801).
       (2) Academic content standards; student academic 
     achievement standards.--The terms ``academic content 
     standards'' and ``student academic achievement standards'', 
     when used with respect to a particular State, mean the 
     academic content standards and student academic achievement 
     standards adopted by a State under section 1111(b)(1) of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6311(b)(1)).
       (3) 21st century curriculum.--The term ``21st century 
     curriculum'' means a course of study identified by a State as 
     preparing secondary school students for entrance into credit-
     bearing coursework in higher education without the need for 
     remediation, employment in the 21st century workforce, or 
     entrance into the Armed Forces. A State shall define the 21st 
     century curriculum in terms of content as well as course 
     names.
       (4) End of course examination.--The term ``end of course 
     examination'' means an assessment of student learning given 
     at the end of a particular course that is used to measure 
     student learning of State academic content standards in the 
     subject matter of the course.
       (5) Graduation rate.--The term ``graduation rate'' means 
     the percentage of students who graduate from secondary school 
     with a regular diploma in the standard number of years.
       (6) Institution of higher education.--The term 
     ``institution of higher education'' has the meaning given the 
     term in section 101(a) of the Higher Education Act of 1965 
     (20 U.S.C. 1001(a)).
       (7) Professional development.--The term ``professional 
     development'' includes activities that--
       (A) improve and increase teachers' knowledge of the 
     academic subjects the teachers teach, and enable teachers to 
     become highly qualified;
       (B) are an integral part of broad educational improvement 
     plans across the school and across the local educational 
     agency;
       (C) give teachers, principals, and administrators the 
     knowledge and skills to provide students with the opportunity 
     to meet the State academic content standards and student 
     academic achievement standards and the 21st century 
     curriculum demands;
       (D) are high-quality, sustained, intensive, and classroom-
     focused, in order to have a positive and lasting effect on 
     classroom instruction and the teacher's performance in the 
     classroom;
       (E) advance teacher understanding of effective 
     instructional strategies that are based on scientifically 
     based research and are directly aligned with the State 
     academic content standards and State assessments;
       (F) are designed to give teachers the knowledge and skills 
     to provide instruction and appropriate language and academic 
     support services to limited English proficient students and 
     students with special needs, including the appropriate use of 
     curricula and assessments;
       (G) are, as a whole, regularly evaluated for their impact 
     on increased teacher effectiveness and improved student 
     academic achievement, with the findings of the evaluations 
     used to improve the quality of professional development; and
       (H) include instruction in the use of data and assessments 
     to inform and instruct classroom practice.
       (8) State.--The term ``State'' means each of the several 
     States of the United States, the District of Columbia, the 
     Commonwealth of Puerto Rico, the United States Virgin 
     Islands, Guam, American Samoa, the Commonwealth of the 
     Northern Mariana Islands, the Republic of the Marshall 
     Islands, the Federated States of Micronesia, and the Republic 
     of Palau.
       (9) State assessment.--The term ``State assessment'', when 
     used with respect to a particular State, means the student 
     academic assessments implemented by the State pursuant to 
     section 1111(b)(3) of the Elementary and Secondary Education 
     Act of 1965 (20 U.S.C. 6311(b)(3)).
       (10) Student preparedness.--The term ``student 
     preparedness'' means preparedness based on the knowledge and 
     skills that--
       (A) are prerequisites for entrance into--
       (i) credit-bearing coursework in higher education without 
     the need for remediation;
       (ii) the 21st century workforce; and
       (iii) the Armed Forces;
       (B) can be measured and verified objectively using widely 
     accepted professional assessment standards; and
       (C) are consistent with widely accepted professional 
     assessment standards and competitive with international 
     levels of preparedness of students for postsecondary success.

     SEC. 113. ALIGNING STATE STANDARDS WITH NATIONAL BENCHMARKS.

       (a) Report on Results of State Assessments and National 
     Assessment.--Not

[[Page 10946]]

     later than 90 days after each release of the results of the 
     National Assessment of Educational Progress (as carried out 
     under section 303(b)(2) of the National Assessment of 
     Educational Progress Authorization Act (20 U.S.C. 9622(b)(2)) 
     and section 1111(c)(2) of the Elementary and Secondary 
     Education Act of 1965 (20 U.S.C. 6311(c)(2)) in reading or 
     mathematics (or, beginning in 2009, science) in grades 4 and 
     8, the Secretary shall--
       (1) prepare and submit to Congress the report described in 
     subsection (b) on the results of the State assessments and 
     the assessments of reading and mathematics, and, beginning in 
     2009, science, in grades 4 and 8, required under section 
     1111(c)(2) of the Elementary and Secondary Education Act of 
     1965; and
       (2) identify States with significant discrepancies in 
     performance between the 2 assessments, as described in 
     subsection (b)(3).
       (b) Contents of Report.--
       (1) In general.--The report described in this subsection 
     shall include the following information for each subject area 
     and grade described in subsection (a)(1) in each State:
       (A) The percentage of students who performed at or above 
     the basic level on the State assessment--
       (i) for the most recent applicable year;
       (ii) for the preceding year; and
       (iii) for the previous year in which the assessment 
     required under section 1111(c)(2) of the Elementary and 
     Secondary Education Act of 1965 was given in such subject,
     and the change in such percentages between those assessments.
       (B) The percentage of students who performed at or above 
     the proficient level on the State assessment--
       (i) for the most recent applicable year;
       (ii) for the preceding year; and
       (iii) for the previous year in which the assessment 
     required under section 1111(c)(2) of the Elementary and 
     Secondary Education Act of 1965 was given in such subject,
     and the change in such percentages between those assessments.
       (C) The percentage of students who performed at or above 
     the basic level on the assessment required under section 
     1111(c)(2) of the Elementary and Secondary Education Act of 
     1965--
       (i) for the most recent applicable year; and
       (ii) for the previous such assessment,
     and the change in such percentages between those assessments.
       (D) The percentage of students who performed at or above 
     the proficient level on the assessment required under section 
     1111(c)(2) of the Elementary and Secondary Education Act of 
     1965--
       (i) for the most recent applicable year; and
       (ii) for the previous such assessment,
     and the change in such percentages between those assessments.
       (E) The difference between--
       (i) the percentage of students who performed at or above 
     the basic level for the most recent applicable year on the 
     assessment required under section 1111(c)(2) of the 
     Elementary and Secondary Education Act of 1965; and
       (ii) the percentage of students who performed at or above 
     the basic level on the State assessment for such year.
       (F) The difference between--
       (i) the percentage of students who performed at or above 
     the proficient level for the most recent applicable year on 
     the assessment required under section 1111(c)(2) of the 
     Elementary and Secondary Education Act of 1965; and
       (ii) the percentage of students who performed at or above 
     the proficient level on the State assessment for such year.
       (2) Analysis.--In addition to the information described in 
     paragraph (1), the Secretary shall include in the report--
       (A) an analysis of how the achievement of students in 
     grades 4, 8, and 12, and the preparedness of students in 
     grade 12 (when such data on preparedness exists from 
     assessments described in section 303 of the National 
     Assessment of Educational Progress Authorization Act), in the 
     United States compares to the achievement and preparedness of 
     students in other industrialized countries; and
       (B) possible reasons for any deficiencies identified in the 
     achievement or preparedness of United States students 
     compared to students in other industrialized countries.
       (3) Ranking.--The Secretary shall--
       (A) using the information described in paragraph (1), rank 
     the States according to the degree to which student 
     performance on State assessments differs from performance on 
     the assessments required under section 1111(c)(2) of the 
     Elementary and Secondary Education Act of 1965; and
       (B) identify those States with the most significant 
     discrepancies in performance between the State assessments 
     and the assessments required under section 1111(c)(2) of the 
     Elementary and Secondary Education Act of 1965.
       (c) Report on State Progress.--Beginning 5 years after the 
     date of enactment of this Act, the Secretary shall include in 
     the report described in subsection (a)(1) the following:
       (1) Information about the progress made by States to 
     decrease discrepancies in student performance on the State 
     assessments and the assessments required under section 
     1111(c)(2) of the Elementary and Secondary Education Act of 
     1965.
       (2) The differences that exist in States across subject 
     areas and grades.

     SEC. 114. NATIONAL ASSESSMENT OF EDUCATIONAL PROGRESS 
                   CHANGES.

       (a) National Assessment Governing Board.--Section 302 of 
     the National Assessment of Educational Progress Authorization 
     Act (20 U.S.C. 9621) is amended--
       (1) in subsection (a), by striking ``shall formulate'' and 
     all that follows through the period at the end and inserting 
     ``shall--
       ``(1) formulate policy guidelines for the National 
     Assessment of Educational Progress (carried out under section 
     303); and
       ``(2) carry out, upon the request of a State, an alignment 
     analysis (under section 304) comparing a State's academic 
     content standards and student academic achievement standards 
     adopted under section 1111(b)(1) of the Elementary and 
     Secondary Education Act of 1965, assessment specifications, 
     assessment questions, and performance standards with national 
     benchmarks reflected in the assessments authorized under this 
     Act.'';
       (2) in subsection (b)(1), by adding at the end the 
     following:
       ``(O) One representative of the Armed Forces with expertise 
     in military personnel requirements and military preparedness, 
     who shall serve as an ex-officio, nonvoting member.'';
       (3) in subsection (c), by striking paragraph (4);
       (4) in subsection (e)--
       (A) in paragraph (1)--
       (i) in subparagraph (B), by inserting ``and grade 12 
     student preparedness levels'' after ``achievement levels'';
       (ii) in subparagraph (D), by inserting ``members of the 
     business and military communities,'' after ``parents,'';
       (iii) in subparagraph (E), by inserting ``and'' after 
     ``subject matter,'';
       (iv) by redesignating subparagraphs (G), (H), (I), and (J) 
     as subparagraphs (H), (I), (K), and (L), respectively;
       (v) by inserting after subparagraph (F) the following:
       ``(G) consistent with section 303, measure grade 12 student 
     preparedness;'';
       (vi) by inserting after subparagraph (I) (as redesignated 
     by clause (iv)) the following:
       ``(J) ensure the rigor of the National Assessment of 
     Educational Progress framework and assessments, taking into 
     consideration--
       ``(i) the knowledge and skills that are prerequisite to 
     credit-bearing coursework in higher education without the 
     need for remediation, the 21st century workforce, and the 
     Armed Forces; and
       ``(ii) rigorous international content and performance 
     standards, and how the achievement of students in grades 4, 
     8, and 12, and the preparedness of students in grade 12, in 
     the United States compare to the achievement and the 
     preparedness of students in other industrialized 
     countries;'';
       (vii) in subparagraph (K) (as redesignated by clause (iv)), 
     by striking ``and'' after the semicolon;
       (viii) in subparagraph (L) (as redesignated by clause 
     (iv)), by striking the period and inserting ``; and'';
       (ix) by inserting after subparagraph (L) the following:
       ``(M) conduct an alignment analysis as described in section 
     304 for each State that requests such analysis.''; and
       (x) in the flush matter at the end--

       (I) by inserting ``for an assessment'' after ``data'';
       (II) by inserting ``Assessment Board's'' after ``prior to 
     the''; and
       (III) by striking ``(J)'' and inserting ``(L)'';

       (B) in paragraph (4), by inserting ``of Educational 
     Progress'' after ``National Assessment'';
       (C) in paragraph (5), in the paragraph heading, by 
     inserting ``advice'' after ``Technical''; and
       (D) in paragraph (6), by inserting ``or grade 12 student 
     preparedness levels'' after ``student achievement levels''; 
     and
       (5) in subsection (g)(1), by inserting ``of Educational 
     Progress'' after ``National Assessment''.
       (b) National Assessment of Educational Progress.--Section 
     303 of the National Assessment of Educational Progress 
     Authorization Act (20 U.S.C. 9622) is amended--
       (1) in subsection (b)--
       (A) in the subsection heading, by striking ``Purpose'' and 
     inserting ``Purposes'';
       (B) by striking paragraph (1) and inserting the following:
       ``(1) Purposes.--The purposes of this section are--
       ``(A) to provide, in a timely manner, a fair and accurate 
     measurement of student achievement and grade 12 student 
     preparedness in reading, mathematics, science, and other 
     subject matter as specified in this section; and
       ``(B) to report trends in student achievement and grade 12 
     student preparedness in reading, mathematics, science, and 
     other subject matter as specified in this section.'';
       (C) in paragraph (2)--
       (i) in subparagraph (B), by striking ``reading and 
     mathematics'' and inserting ``reading, mathematics, and 
     science'';
       (ii) by striking subparagraph (C) and inserting the 
     following:

[[Page 10947]]

       ``(C) conduct a national assessment and collect and report 
     assessment data, including achievement and student 
     preparedness data trends, in a valid and reliable manner on 
     student academic achievement and student preparedness in 
     public and private schools in reading, mathematics, and 
     science at least once every 2 years in grade 12;'';
       (iii) in subparagraph (D)--

       (I) by striking ``subparagraph (B) are implemented and the 
     requirements described in subparagraph (C) are met,'' and 
     inserting ``subparagraphs (B) and (C) are implemented,''; and
       (II) by striking ``science,'';

       (iv) in subparagraph (E)--

       (I) by striking ``reading and mathematics'' and inserting 
     ``reading, mathematics, and science''; and
       (II) by striking ``subparagraph (B)'' and inserting 
     ``subparagraphs (B) and (C)''; and

       (v) in subparagraph (H), by striking ``achievement data'' 
     and inserting ``student achievement data and grade 12 student 
     preparedness data'';
       (D) in paragraph (3)--
       (i) in subparagraph (A)--

       (I) in clause (i), by striking ``reading and mathematics'' 
     and inserting ``reading, mathematics, and science'';
       (II) in clause (ii)--

       (aa) by inserting ``and grade 12 student preparedness'' 
     after ``achievement''; and
       (bb) by striking ``reading and mathematics'' and inserting 
     ``reading, mathematics, and science''; and

       (III) in clause (iv), by striking ``an evaluation'' and 
     inserting ``a review''; and

       (ii) in subparagraph (C)(ii), by striking ``reading and 
     mathematics'' and inserting ``reading, mathematics, and 
     science'';
       (E) in paragraph (4)(B), by striking ``, require, or 
     influence'' and inserting ``or require''; and
       (F) in paragraph (5)(B), by striking ``academic 
     achievement'' and inserting ``academic achievement or grade 
     12 student preparedness'';
       (2) in subsection (c)(3)(A), by striking ``academic 
     achievement'' and inserting ``academic achievement or grade 
     12 preparedness'';
       (3) in subsection (d)(3)--
       (A) in subparagraph (A), by striking ``reading and 
     mathematics in grades 4 and 8'' and inserting ``reading, 
     mathematics, and science in grades 4 and 8''; and
       (B) in subparagraph (B), by striking ``reading and 
     mathematics assessments in grades 4 and 8'' and inserting 
     ``reading, mathematics, and science assessments in grades 4 
     and 8'';
       (4) in subsection (e)--
       (A) in the subsection heading, by inserting ``and Grade 12 
     Student Preparedness Levels'' after ``Levels'';
       (B) in paragraph (1)--
       (i) by striking the paragraph heading and inserting 
     ``Development.--''; and
       (ii) by inserting ``, and develop grade 12 student 
     preparedness levels'' after ``subsection (b)(2)(F)'';
       (C) in paragraph (2)--
       (i) by striking subparagraph (A) and inserting the 
     following:
       ``(A) Student achievement and grade 12 preparedness 
     levels.--
       ``(i) Student achievement levels.--The student achievement 
     levels described in paragraph (1) shall be determined by--

       ``(I) identifying the knowledge and skills that--

       ``(aa) are prerequisite to credit-bearing coursework in 
     higher education without the need for remediation in English, 
     mathematics, or science, participation in the 21st century 
     workforce, and the Armed Forces or, in the case of grade 4 
     and grade 8 students, are prerequisite to grade 12 
     preparedness;
       ``(bb) are competitive with rigorous international content 
     and performance standards; and
       ``(cc) can be measured and verified objectively using 
     widely accepted professional assessment standards; and

       ``(II) developing student achievement levels that are--

       ``(aa) based on the knowledge and skills identified in 
     subclause (I);
       ``(bb) based on the appropriate level of subject matter 
     knowledge for the grade levels to be assessed, or the age of 
     the students, as the case may be; and
       ``(cc) consistent with relevant widely accepted 
     professional assessment standards.
       ``(ii) Grade 12 student preparedness levels.--The grade 12 
     student preparedness levels described in paragraph (1) shall 
     be determined by--

       ``(I) identifying the knowledge and skills that--

       ``(aa) are prerequisite to credit-bearing coursework in 
     higher education without the need for remediation in English, 
     mathematics, or science, participation in the 21st century 
     workforce, and the Armed Forces;
       ``(bb) are competitive with rigorous international content 
     and performance standards; and
       ``(cc) can be measured and verified objectively using 
     widely accepted professional assessment standards; and

       ``(II) developing grade 12 student preparedness levels that 
     are--

       ``(aa) based on the knowledge and skills identified in 
     subclause (I); and
       ``(bb) consistent with widely accepted professional 
     assessment standards.''; and
       (ii) in subparagraph (C), by striking ``achievement 
     levels'' and inserting ``student achievement levels and grade 
     12 student preparedness levels'';
       (D) in paragraph (3)--
       (i) by striking ``After determining that such levels'' and 
     inserting ``After determining that the student achievement 
     levels and grade 12 student preparedness levels''; and
       (ii) by striking ``an evaluation'' and inserting ``a 
     review''; and
       (E) in paragraph (4), by inserting ``or grade 12 student 
     preparedness levels'' after ``achievement levels''; and
       (5) in subsection (f)(1)--
       (A) in subparagraph (A), by inserting ``and grade 12 
     student preparedness levels'' after ``student achievement 
     levels''; and
       (B) in subparagraph (B)--
       (i) in clause (i), by inserting ``or grade 12 student 
     preparedness'' after ``achievement'';
       (ii) in clause (ii), by inserting ``and grade 12 student 
     preparedness levels'' after ``achievement levels'';
       (iii) by striking clause (iii) and inserting the following:
       ``(iii) whether any authorized assessment is being 
     administered as a random sample and is reporting the trends 
     in student achievement or grade 12 student preparedness in a 
     valid and reliable manner in the subject areas being 
     assessed;'';
       (iv) in clause (iv), by striking ``and'' after the 
     semicolon;
       (v) in clause (v), by striking ``and mathematical 
     knowledge.'' and inserting ``and mathematical knowledge and 
     scientific knowledge; and''; and
       (vi) by adding at the end the following:
       ``(vi) whether the appropriate authorized assessments are 
     measuring, consistent with this section, the preparedness of 
     students in grade 12 in the United States for entry into--
       ``(I) credit-bearing coursework in higher education without 
     the need for remediation in English, mathematics, or science;
       ``(II) the 21st century workforce; and
       ``(III) the Armed Forces.''.
       (c) National Benchmarks.--The National Assessment of 
     Educational Progress Authorization Act (20 U.S.C. 9621 et 
     seq.) is amended--
       (1) by redesignating sections 304 and 305 as sections 305 
     and 306, respectively; and
       (2) by inserting after section 303 the following:

     ``SEC. 304. NATIONAL BENCHMARKS.

       ``(a) Purposes.--The purposes of this section are--
       ``(1) to encourage the coordination of, and consistency 
     between--
       ``(A) a State's academic content standards and student 
     academic achievement standards adopted under section 
     1111(b)(1) of the Elementary and Secondary Education Act of 
     1965, assessment specifications, and assessment questions; 
     and
       ``(B) national benchmarks, as reflected in the National 
     Assessment of Educational Progress;
       ``(2) to assist States in increasing the rigor of their 
     State academic content standards, student academic 
     achievement standards, assessment specifications, and 
     assessment questions, to ensure that such are competitive 
     with rigorous national and international benchmarks; and
       ``(3) to improve the instruction and academic achievement 
     of students, beginning in the early grades, to ensure that 
     secondary school graduates are well-prepared to enter--
       ``(A) credit-bearing coursework in higher education without 
     the need for remediation;
       ``(B) the 21st century workforce; or
       ``(C) the Armed Forces.
       ``(b) Alignment Analysis.--
       ``(1) In general.--When the chief State school officer of a 
     State identifies a need for, and requests the Assessment 
     Board to conduct, an alignment analysis for the State in 
     reading, mathematics, or science in grades 4 and 8, the 
     Assessment Board shall perform an alignment analysis of the 
     State's academic content standards and student academic 
     achievement standards adopted under section 1111(b)(1) of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     6311(b)(1)), assessment specifications, and assessment 
     questions, for the identified subject in grades 4 and 8. Such 
     analysis shall begin not later than 180 days after the 
     alignment analysis is requested.
       ``(2) Assessment board responsibilities.--As part of the 
     alignment analysis, the Assessment Board shall--
       ``(A) identify the differences between the State's academic 
     content standards and student academic achievement standards, 
     assessment specifications, and assessment questions for the 
     subject identified by the State, and national benchmarks 
     reflected in the National Assessment of Educational Progress 
     in such subject in grades 4 and 8;
       ``(B) at the State's request, recommend steps for, and 
     policy questions such State should consider regarding, the 
     alignment of the State's academic content standards and 
     student academic achievement standards in the identified 
     subject, with national benchmarks reflected in the National 
     Assessment of Educational Progress in such subject in grades 
     4 and 8; and
       ``(C) at the State's request, and in conjunction with a 
     State prekindergarten through grade 16 student preparedness 
     council established under section 115 of the New National

[[Page 10948]]

     Defense Education Act of 2006, assist in the development of a 
     plan described in section 115(e)(1)(C) of such Act.
       ``(3) Contract.--At the discretion of the Assessment Board, 
     the Assessment Board may enter into a contract with an entity 
     that possesses the technical expertise to conduct the 
     analysis described in this subsection.
       ``(4) State panel.--The chief State school officer of a 
     State participating in an alignment analysis described in 
     this subsection shall appoint a panel of not less than 6 
     individuals to partner with the Assessment Board in 
     conducting the alignment analysis. Such panel--
       ``(A) shall include--
       ``(i) local and State curriculum experts;
       ``(ii) relevant content and pedagogy experts, including 
     representatives of entities with widely accepted national 
     educational standards and assessments; and
       ``(iii) not less than 1 entity that possesses the technical 
     expertise to assist the State in implementing standards-based 
     reform, which may be the same entity with which the 
     Assessment Board contracts to conduct the analysis under 
     paragraph (3); and
       ``(B) may include other State and local representatives and 
     representatives of organizations with relevant expertise.''.
       (d) Definition of Secretary.--Section 305 of the National 
     Assessment of Educational Progress Authorization Act (as 
     redesignated by subsection (c)(1)) is amended--
       (1) by redesignating paragraph (2) as paragraph (3); and
       (2) by inserting after paragraph (1) the following:
       ``(2) Secretary.--The term `Secretary' means the Secretary 
     of Education.''.
       (e) Authorization of Appropriations.--Section 306(a) of the 
     National Assessment of Educational Progress Authorization Act 
     (as redesignated by subsection (c)(1)) is amended--
       (1) by striking paragraph (1) and inserting the following:
       ``(1) for fiscal year 2007--
       ``(A) $7,500,000 to carry out section 302;
       ``(B) $200,000,000 to carry out section 303; and
       ``(C) $10,000,000 to carry out section 304; and''; and
       (2) in paragraph (2)--
       (A) by striking ``5 succeeding'' and inserting ``4 
     succeeding''; and
       (B) by striking ``and 303, as amended by section 401 of 
     this Act'' and inserting ``, 303, and 304''.
       (f) Conforming Changes and Amendments.--
       (1) Conforming changes to the elementary and secondary 
     education act of 1965.--
       (A) State plans.--Section 1111(c)(2) of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 6311(c)(2)) is 
     amended by striking ``and mathematics'' and inserting ``, 
     mathematics, and science''.
       (B) Local educational agency plans.--Section 1112(b)(1)(F) 
     of the Elementary and Secondary Education Act of 1965 (20 
     U.S.C. 6312(b)(1)(F)) is amended by striking ``reading and 
     mathematics'' and inserting ``reading, mathematics, and 
     science''.
       (2) Conforming amendment.--Section 113(a)(1) of the 
     Education Sciences Reform Act of 2002 (20 U.S.C. 9513(a)(1)) 
     is amended by striking ``section 302(e)(1)(J)'' and inserting 
     ``section 302(e)(1)(L)''.

     SEC. 115. PREKINDERGARTEN THROUGH GRADE 16 STUDENT 
                   PREPAREDNESS COUNCIL GRANTS.

       (a) Program Authorized.--
       (1) In general.--From amounts appropriated under subsection 
     (g) for a fiscal year, the Secretary is authorized to award, 
     on a competitive basis, grants to States for the purpose of 
     allowing the States to establish State prekindergarten 
     through grade 16 student preparedness councils (referred to 
     in this section as ``councils'') that--
       (A) convene stakeholders within the State and create a 
     forum for identifying and deliberating on educational issues 
     that cut across prekindergarten through grade 12 education 
     and higher education, and transcend any single system of 
     education's ability to address;
       (B) develop and implement a plan for improving the rigor of 
     a State's academic content standards, student academic 
     achievement standards, assessment specifications, and 
     assessment questions as necessary, to ensure such standards 
     and assessments meet national and international benchmarks as 
     reflected in the assessments required under section 303(b)(2) 
     of the National Assessment of Educational Progress 
     Authorization Act (20 U.S.C. 9622(b)(2)) or as defined by the 
     council as necessary for success in credit-bearing coursework 
     in higher education without the need for remediation, the 
     21st century workforce, or the Armed Forces;
       (C) inform the design and implementation of integrated 
     prekindergarten through grade 16 data systems, which--
       (i) will allow the State to track the progress of 
     individual students from prekindergarten through grade 12 and 
     into higher education; and
       (ii) shall be capable of being linked with appropriate 
     databases on service in the Armed Forces and participation in 
     the 21st century workforce; and
       (D) shall develop challenging--
       (i) school readiness standards;
       (ii) curricula for elementary schools and middle schools; 
     and
       (iii) 21st century curricula for secondary schools.
       (2) Duration.--The Secretary shall award grants under this 
     section for a period of not more than 5 years.
       (3) Existing state council.--A State with an existing State 
     council may qualify for the purposes of a grant under this 
     section if--
       (A) such council--
       (i) has the authority to carry out this section; and
       (ii) includes the members required under subsection (b); or
       (B) the State amends the membership or responsibilities of 
     the existing council to meet the requirements of subparagraph 
     (A).
       (b) Composition.--
       (1) Required members.--The members of a council described 
     in subsection (a) shall include--
       (A) the Governor of the State or the designee of the 
     Governor;
       (B) the chief executive officer of the State public 
     institution of higher education system, if such a position 
     exists;
       (C) the chief executive officer of the State Higher 
     Education Coordinating Board;
       (D) the chief State school officer;
       (E) not less than 1 representative each from--
       (i) the business community; and
       (ii) the Armed Forces;
       (F) a public elementary school teacher employed in the 
     State; and
       (G) a public secondary school teacher employed in the 
     State.
       (2) Optional members.--The council described in subsection 
     (a) may also include--
       (A) a representative from--
       (i) a private institution of higher education;
       (ii) the Chamber of Commerce for the State;
       (iii) a civic organization;
       (iv) a civil rights organization;
       (v) a community organization; or
       (vi) an organization with expertise in world cultures;
       (B) the State official responsible for economic 
     development, if such a position exists; or
       (C) a dean or similar representative for a school of 
     education at an institution of higher education or a similar 
     teacher certification or licensure program.
       (c) Timeline.--A State receiving a grant under this section 
     shall establish a council (or use or amend an existing 
     council in accordance with subsection (a)(3)) not later than 
     60 days after the receipt of the grant.
       (d) Application.--
       (1) In general.--Each State desiring a grant under this 
     section shall submit an application to the Secretary at such 
     time, in such manner, and accompanied by such information as 
     the Secretary may reasonably require.
       (2) Contents.--Each application submitted under paragraph 
     (1) shall--
       (A) demonstrate that the opinions of the larger education, 
     business, and military community, including parents, 
     students, teachers, teacher educators, principals, school 
     administrators, and business leaders, will be represented 
     during the determination of the State academic content 
     standards and student academic achievement standards, 
     assessment specifications, assessment questions, and the 
     development of curricula, if applicable;
       (B) include a comprehensive plan to provide high-quality 
     professional development for teachers, paraprofessionals, 
     principals, and school administrators;
       (C) explain how the State will provide assistance to local 
     educational agencies in implementing rigorous State standards 
     through substantive curricula, including scientifically based 
     remediation and acceleration opportunities for students; and
       (D) explain how the State and the council will leverage 
     additional State, local, and other funds to pursue curricular 
     alignment and student success.
       (e) Use of Funds.--
       (1) Required activities.--A State receiving a grant under 
     this section shall use the grant funds to establish a council 
     that shall carry out the following:
       (A) Design and implement an integrated prekindergarten 
     through grade 16 longitudinal data system for the State, if 
     such system does not exist, that will allow the State to 
     track the progress of students from prekindergarten, through 
     grade 12, and into higher education, the 21st century 
     workforce, and the Armed Forces. The data system shall--
       (i) include--

       (I) a unique statewide student identifier for each student;
       (II) student-level enrollment, demographic, and program 
     participation information, including race or ethnicity, 
     gender, and income status;
       (III) the ability to match individual students' test 
     records from year to year to measure academic growth;
       (IV) information on untested students;
       (V) a teacher identifier system with the ability to match 
     teachers to students;
       (VI) student-level transcript information, including 
     information on courses completed and grades earned;
       (VII) student-level college preparedness examination 
     scores;

[[Page 10949]]

       (VIII) student-level graduation and dropout data;
       (IX) the ability to match student records between the 
     prekindergarten through grade 12 and the postsecondary 
     systems;
       (X) a State data audit system assessing data quality, 
     validity, and reliability;
       (XI) rates of student attendance at institutions of higher 
     education;
       (XII) rates of student enrollment and retention in the 
     Armed Forces; and
       (XIII) student nonmilitary postsecondary employment 
     information;

       (ii) to the extent possible, coordinate with other relevant 
     State databases, such as criminal justice or social services 
     data systems;
       (iii) allow the State to analyze correlations between 
     course-taking patterns in prekindergarten through grade 12 
     and outcomes after secondary school graduation, including--

       (I) entry into higher education;
       (II) the need for, and cost of, remediation in higher 
     education;
       (III) graduation from higher education;
       (IV) entry into the 21st century workforce;
       (V) entry into the Armed Forces; and
       (VI) to the extent possible through linkages with 
     appropriate databases on service in the Armed Forces and 
     participation in the 21st century workforce, persistence in 
     the Armed Forces and continued participation in the 21st 
     century workforce; and

       (iv) ensure that the use of any available data does not 
     allow for the public identification of the individual 
     student's personally identifiable information, and that all 
     data shall be collected and maintained in accordance with 
     section 444 of the General Education Provisions Act (20 
     U.S.C. 1232g; commonly referred to as the Family Educational 
     Rights and Privacy Act of 1974).
       (B) If an integrated prekindergarten through grade 16 
     longitudinal data system exists or is currently being built, 
     ensure that it complies with the requirements described in 
     subparagraph (A).
       (C) Develop and implement a plan to increase the rigor of 
     standards or assessments in reading, mathematics, or science 
     in order to better align such standards or assessments with 
     national benchmarks reflected in the National Assessment of 
     Educational Progress in grades 4 and 8 (in accordance with 
     the results of the alignment analysis conducted under section 
     304 of the National Assessment of Educational Progress 
     Authorization Act), and in other grades to ensure the 
     alignment of kindergarten through grade 12 standards or 
     assessments with the revisions made in grades 4 and 8, or to 
     align such standards or assessments with the demands of 
     higher education, the 21st century workforce, or the Armed 
     Forces or other national and international benchmarks 
     identified by the council. Such plan may include--
       (i) an articulation of the steps necessary--

       (I) for revising the State academic content standards and 
     student academic achievement standards, assessment 
     specifications, and assessment questions for the identified 
     subject; and
       (II) to better align the standards and the assessment 
     specifications and questions described in subclause (I) 
     with--

       (aa) national benchmarks as reflected in the National 
     Assessment of Educational Progress required under section 303 
     of the National Assessment of Educational Progress 
     Authorization Act (20 U.S.C. 9622) for the identified 
     subject; or
       (bb) the demands of higher education, the 21st century 
     workforce, or the Armed Forces or other national or 
     international benchmarks identified by the council;
       (ii) an articulation of the steps necessary and the process 
     the State will undertake to revise standards or assessments, 
     or both, in the identified subject;
       (iii) a description of the partners the State will work 
     with to revise standards or assessments, or both; and
       (iv) a description of the activities the State will 
     undertake to implement the revised standards or assessments, 
     or both, at the State educational agency level and the local 
     educational agency level, which activities may include--

       (I) preservice and in-service teacher, paraprofessional, 
     principal, and school administrator training;
       (II) statewide meetings to provide professional development 
     opportunities for teachers and administrators;
       (III) development of curricula and instructional methods 
     and materials;
       (IV) the redesign of existing assessments, or the 
     development or purchase of new high-quality assessments, with 
     a focus on ensuring that such assessments are rigorous, 
     measure significant depth of knowledge, use multiple measures 
     and formats (such as student portfolios), and are sensitive 
     to inquiry-based, project-based, or differentiated 
     instruction; and
       (V) other activities necessary for the effective 
     implementation of the new State standards or assessments, or 
     both.

       (D) Analyze the State's level of prekindergarten through 
     grade 16 curricular alignment and the success of the State's 
     education system in preparing students for higher education, 
     the 21st century workforce, and the Armed Forces by--
       (i) using the data produced by a data system described in 
     subparagraph (A) or (B), or other information as appropriate; 
     and
       (ii) exploring a possible agreement between the State 
     educational agency and the higher education system in the 
     State on a common assessment or assessments that--

       (I) shall follow established guidelines to guarantee 
     reliability and validity;

       (II) shall provide adequate accommodations for students who 
     are limited English proficient and students with 
     disabilities; and
       (III) may be a placement examination, end of course 
     examination, college, workforce, or Armed Forces preparedness 
     examination, or admissions examination, that measures 
     secondary students' preparedness to succeed in postsecondary, 
     credit-bearing courses.

       (E) If the State has an officially designated college 
     preparatory curriculum at the time the State applies for a 
     grant under this section--
       (i) describe the extent to which students who completed the 
     college preparatory curriculum are more or less successful 
     than other students, including students who did not complete 
     a college preparatory curriculum, in entering and graduating 
     from a program of study at an institution of higher education 
     or entering the 21st century workforce or the Armed Forces;
       (ii) examine the extent to which the expectations of the 
     college preparatory curriculum are aligned with the entry 
     standards of the State's institutions of higher education, 
     including whether such curriculum enables secondary school 
     students to enter credit-bearing coursework in higher 
     education without the need for remediation; and
       (iii) examine the extent to which the curriculum allows 
     graduates to attain the skills necessary to enter the 21st 
     century workforce or the Armed Forces.
       (F) If the State has not designated a college preparatory 
     curriculum at the time the State applied for a grant under 
     this section, or if the curriculum described in subparagraph 
     (E) does not result in a higher number of students enrolling 
     in and graduating from institutions of higher education or 
     entering the 21st century workforce or the Armed Forces, or 
     is not aligned with the entry standards described in 
     subparagraph (E)(ii), develop a 21st century curriculum 
     that--
       (i) may be adopted by the local educational agencies in the 
     State for use in secondary schools;
       (ii) enables secondary school students to enter credit-
     bearing coursework in higher education without the need for 
     remediation;
       (iii) allows graduates to attain the skills necessary to 
     enter the 21st century workforce or the Armed Forces;
       (iv) reflects the input of teachers, principals, school 
     administrators, and college faculty; and
       (v) focuses on providing rigorous core courses that reflect 
     the State academic content standards and student academic 
     achievement standards.
       (G) Develop and make available specific opportunities for 
     extensive professional development for teachers, 
     paraprofessionals, principals, and school administrators, to 
     improve instruction and support mechanisms for students using 
     a curriculum described in subparagraph (E) or (F).
       (H) Develop a plan to provide remediation and additional 
     learning opportunities for students below grade level to 
     ensure that all students will have the opportunity to meet 
     the curricular standards of a curriculum described in 
     subparagraph (E) or (F).
       (I) Use data gathered by the council to improve 
     instructional methods, better tailor student support 
     services, and serve as the basis for all school reform 
     initiatives.
       (J) Implement activities designed to ensure the enrollment 
     of all students in rigorous coursework, which may include--
       (i) specifying the courses and performance levels required 
     for acceptance into public institutions of higher education;
       (ii) collaborating with institutions of higher education or 
     other State educational agencies to develop assessments 
     aligned to State academic content standards and a curriculum 
     described in subparagraph (E) or (F), which assessments may 
     be used as measures of student achievement in secondary 
     school as well as for entrance or placement at institutions 
     of higher education;
       (iii) creating ties between elementary schools and 
     secondary schools, and institutions of higher education, to 
     offer--

       (I) accelerated learning opportunities, particularly with 
     respect to mathematics, science, engineering, technology, and 
     critical-need foreign languages (as determined by the 
     Secretary under section 222) to secondary school students, 
     which may include--

       (aa) granting postsecondary credit for secondary school 
     courses;
       (bb) providing early enrollment opportunities in 
     postsecondary education for secondary students enrolled in 
     postsecondary-level coursework;
       (cc) creating dual enrollment programs;
       (dd) creating satellite secondary school campuses on the 
     campuses of institutions of higher education; and
       (ee) providing opportunities for higher education faculty 
     who are highly qualified, as such term is defined in section 
     9101 of the Elementary and Secondary Education Act of 1965 
     (20 U.S.C. 7801), to teach credit-bearing postsecondary 
     courses in secondary schools; and

[[Page 10950]]

       (II) professional development activities for teachers, 
     which may include--

       (aa) mentoring opportunities; and
       (bb) summer institutes;
       (iv) expanding or creating higher education awareness 
     programs for middle school and secondary school students;
       (v) expanding opportunities for students to enroll in 
     highly rigorous postsecondary preparatory courses, such as 
     Advanced Placement and International Baccalaureate courses; 
     and
       (vi) developing a high-quality professional development 
     curriculum to provide professional development opportunities 
     for paraprofessionals, teachers, principals, and 
     administrators.
       (2) Planning and implementation.--A State receiving a grant 
     under this section may use grant funds received for the first 
     fiscal year to form the council and plan the activities 
     described in paragraph (1). Grant funds received for 
     subsequent fiscal years shall be used for the implementation 
     of the activities described in such paragraph.
       (f) Reports and Publication.--
       (1) Reports.--
       (A) Initial report.--Not later than 9 months after a State 
     receives a grant under this section, the State shall submit a 
     report to the Secretary that includes--
       (i) an analysis of alignment and articulation across the 
     State's systems of public education for prekindergarten 
     through grade 16, including data that indicates the percent 
     of students who--

       (I) graduate from secondary school with a regular diploma 
     in the standard number of years;
       (II) complete a curriculum described in subparagraph (E) or 
     (F) of subsection (e)(1);
       (III) matriculate into an institution of higher education 
     (disaggregated by 2-year and 4-year degree-granting 
     programs);
       (IV) are secondary school graduates who need remediation in 
     reading, writing, mathematics, or science before pursuing 
     credit-bearing post-secondary courses in English, 
     mathematics, or science;
       (V) persist in an institution of higher education into the 
     second year; and
       (VI) graduate from an institution of higher education 
     within 150 percent of the expected time for degree completion 
     (within 3 years for a 2-year degree program and within 6 
     years for a baccalaureate degree);

       (ii) an analysis of the strengths and weaknesses of the 
     State--

       (I) in transitioning students from the prekindergarten 
     through grade 12 education system into higher education, the 
     21st century workforce, and the Armed Forces; and
       (II) in transitioning students from the prekindergarten 
     through grade 12 education system into mathematics, science, 
     engineering, technology, and critical-need foreign language 
     degree programs at institutions of higher education;

       (iii) an analysis of the quality and rigor of the State's 
     curriculum described in subparagraph (E) or (F) of subsection 
     (e)(1), and the accessibility of the curriculum to all 
     students in prekindergarten through grade 12;
       (iv) an analysis of the strengths and weaknesses of the 
     State in recruiting, retaining, and supporting qualified 
     teachers, including--

       (I) whether the State needs to recruit additional teachers 
     at the secondary level for specific subjects (such as 
     mathematics, science, engineering and technology education, 
     (as such term is defined in section 9101 of the Elementary 
     and Secondary Education Act of 1965 (20 U.S.C. 7801), and 
     critical-need foreign languages (as determined by the 
     Secretary under section 222)), particular schools, or local 
     educational agencies; and
       (II) recommendations on how to set and achieve goals in 
     this pursuit; and

       (v) a detailed action plan that describes how the council 
     will accomplish the goals and tasks required by the grant 
     under this section, including a timeline for accomplishing 
     all activities under the grant.
       (B) Annual reports.--Not later than 1 year following the 
     submission of the initial report described in subparagraph 
     (A), and annually thereafter for the duration of the grant, a 
     State receiving a grant under this section shall prepare and 
     submit to the Secretary a report that describes the State's 
     progress in accomplishing the goals and tasks required by the 
     grant, including progress on each item described in 
     subparagraph (A). The final annual report under this 
     subparagraph shall be submitted 1 year after the expiration 
     of the grant.
       (2) Publication.--A State submitting a report in accordance 
     with this subsection shall publish and widely disseminate the 
     report to the public, including posting the report on the 
     Internet.
       (g) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $200,000,000 for 
     fiscal year 2007, and such sums as may be necessary for each 
     of the 4 succeeding fiscal years.

     SEC. 116. COLLABORATIVE STANDARDS AND ASSESSMENTS GRANTS.

       (a) Definitions.--In this section:
       (1) Eligible state.--The term ``eligible State'' means a 
     State that demonstrates that it has analyzed and, where 
     applicable, revised the State standards and assessments, 
     through participation in a prekindergarten through grade 16 
     student preparedness council described in section 115 or 
     through other State action, to ensure the standards and 
     assessments--
       (A) are aligned with the demands of the 21st century; and
       (B) prepare students for entry into--
       (i) credit-bearing coursework in higher education without 
     the need for remediation;
       (ii) the 21st century workforce; and
       (iii) the Armed Forces
       (2) Eligible consortium.--
       (A) In general.--The term ``eligible consortium'' means a 
     consortium of 2 or more eligible States that agrees to allow 
     the Secretary, under subsection (e), to make available any 
     assessment developed by the consortium under this section to 
     a State that so requests, including a State that is not a 
     member of the consortium.
       (B) Additional members.--An eligible consortium may 
     include, in addition to 2 or more eligible States, an entity 
     with the technical expertise to carry out a grant under this 
     section.
       (b) Program Authorized.--From amounts authorized under 
     subsection (f), the Secretary shall award grants, on a 
     competitive basis, to eligible consortia to enable the 
     eligible consortia to develop common standards and 
     assessments that--
       (1) are highly rigorous, internationally competitive, and 
     aligned with the demands of higher education, the 21st 
     century workforce, and the Armed Forces; and
       (2) in the case of assessments, set rigorous performance 
     standards comparable to rigorous national and international 
     benchmarks.
       (c) Application.--An eligible consortium desiring a grant 
     under this section shall submit an application to the 
     Secretary at such time, in such manner, and containing such 
     information as the Secretary may require.
       (d) Report.--Not later than 90 days after the end of the 
     grant period, an eligible consortium receiving a grant under 
     this section shall prepare and submit a report to the 
     Secretary describing the grant activities.
       (e) Availability of Assessments.--The Secretary shall--
       (1) make available, to a State that so requests and at no 
     charge to the State, any rigorous, high-quality assessment 
     developed by an eligible consortium under this section; and
       (2) notify potential eligible States, at reasonable 
     intervals, of all assessments currently under development by 
     eligible consortia under this section.
       (f) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $75,000,000 for 
     fiscal year 2007 and such sums as are necessary for each of 
     the 4 succeeding fiscal years.

                   Subtitle B--Investing in Teachers

     SEC. 121. PURPOSE.

       The purpose of this subtitle is to increase the number and 
     quality of teachers of mathematics, science, engineering and 
     technology education, and critical-need foreign languages, in 
     order to prepare students for entry into credit-bearing 
     courses in higher education without the need for remediation, 
     the 21st century workforce, and the Armed Forces.

     SEC. 122. DEFINITION OF ENGINEERING AND TECHNOLOGY EDUCATION.

       (a) Elementary and Secondary Education Act of 1965.--
     Section 9101 of the Elementary and Secondary Education Act of 
     1965 (20 U.S.C. 7801) is amended--
       (1) by redesignating paragraphs (19) through (43) as 
     paragraphs (20) through (44), respectively; and
       (2) by inserting after paragraph (18) the following:
       ``(19) Engineering and technology education.--The term 
     `engineering and technology education' means a curriculum and 
     instruction that--
       ``(A) uses technology as a knowledge base or as a way of 
     teaching innovation using an engineering design process and 
     context;
       ``(B) develops an appreciation and fundamental 
     understanding of technology through design skills and the use 
     of materials, tools, processes, and limited resources;
       ``(C) is taught in conjunction with applied mathematics, 
     science, language arts, fine arts, and social studies as a 
     part of a comprehensive education;
       ``(D) applies the use of tools and skills employed by a 
     globalized skilled 21st century workforce that are necessary 
     for communication, manufacturing, construction, energy 
     systems, biomedical systems, transportation systems, and 
     other related fields; and
       ``(E) through the application of engineering principles and 
     concepts, develops proficiency in abstract ideas and in 
     problem-solving techniques that build a comprehensive 
     education.''.
       (b) Higher Education Act of 1965.--Section 103 of the 
     Higher Education Act of 1965 (20 U.S.C. 1003) is amended--
       (1) by redesignating paragraphs (5) through (16) as 
     paragraphs (6) through (17), respectively; and
       (2) by inserting after paragraph (4) the following:
       ``(5) Engineering and technology education.--The term 
     `engineering and technology education' has the meaning given 
     the term in section 9101 of the Elementary and Secondary 
     Education Act of 1965.''.

[[Page 10951]]



     SEC. 123. EXPANDING TEACHER LOAN FORGIVENESS.

       (a) Increased Amount; Applicability of Expanded Program to 
     Reading Specialist.--Sections 428J(c)(3) and 460(c)(3) of the 
     Higher Education Act of 1965 (20 U.S.C. 1078-10(c)(3), 
     1087j(c)(3)) are each amended--
       (1) by striking the paragraph heading and inserting 
     ``Additional amounts for teachers in mathematics, science, 
     engineering and technology education, a critical-need foreign 
     language, or special education'';
       (2) in the matter preceding subparagraph (A), by striking 
     ``$17,500'' and inserting ``$23,000''; and
       (3) in subparagraph (A)(ii), by striking ``or science'' and 
     all that follows through ``; and'' and inserting ``, science, 
     engineering and technology education, or a critical-need 
     foreign language (as determined by the Secretary under 
     section 222 of the New National Defense Education Act of 
     2006), on a full-time basis; and''.
       (b) Annual Increments Instead of End of Service Lump 
     Sums.--
       (1) FFEL loans.--Section 428J(c) of the Higher Education 
     Act of 1965 (20 U.S.C. 1078-10(c)) is amended by adding at 
     the end the following:
       ``(4) Annual increments.--Notwithstanding paragraph (1), in 
     the case of an individual qualifying for loan forgiveness 
     under paragraph (3), the Secretary shall, in lieu of waiting 
     to assume an obligation only upon completion of 5 complete 
     years of service, assume the obligation to repay--
       ``(A) after each of the first and second years of service 
     by an individual in a position qualifying under paragraph 
     (3), 15 percent of the total amount of principal and interest 
     of the loans described in paragraph (1) to such individual 
     that are outstanding immediately preceding such first year of 
     such service;
       ``(B) after each of the third and fourth years of such 
     service, 20 percent of such total amount; and
       ``(C) after the fifth year of such service, 30 percent of 
     such total amount.''.
       (2) Direct loans.--Section 460(c) of the Higher Education 
     Act of 1965 (20 U.S.C. 1087j(c)) is amended by adding at the 
     end the following:
       ``(4) Annual increments.--Notwithstanding paragraph (1), in 
     the case of an individual qualifying for loan cancellation 
     under paragraph (3), the Secretary shall, in lieu of waiting 
     to assume an obligation only upon completion of 5 complete 
     years of service, assume the obligation to repay--
       ``(A) after each of the first and second years of service 
     by an individual in a position qualifying under paragraph 
     (3), 15 percent of the total amount of principal and interest 
     of the loans described in paragraph (1) to such individual 
     that are outstanding immediately preceding such first year of 
     such service;
       ``(B) after each of the third and fourth years of such 
     service, 20 percent of such total amount; and
       ``(C) after the fifth year of such service, 30 percent of 
     such total amount.''.

     SEC. 124. EXCLUSION FROM GROSS INCOME OF COMPENSATION OF 
                   TEACHERS AND PRINCIPALS IN CERTAIN HIGH-NEED 
                   SCHOOLS AND TEACHING HIGH-NEED SUBJECTS.

       (a) In General.--Part III of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 is amended by inserting 
     after section 139A the following new section:

     ``SEC. 139B. COMPENSATION OF CERTAIN TEACHERS AND PRINCIPALS.

       ``(a) Principals in High-Need Schools.--In the case of an 
     individual employed as a principal in a high-need school 
     during the taxable year, gross income does not include so 
     much remuneration for such employment (which would but for 
     this paragraph be includible in gross income) as does not 
     exceed $15,000.
       ``(b) Teachers in High-Need Schools and of High-Need 
     Subjects.--
       ``(1) In general.--In the case of an individual employed as 
     a teacher of high-need subjects and in a high-need school 
     during the taxable year, gross income does not include so 
     much remuneration for such employment (which would but for 
     this paragraph be includible in gross income) as does not 
     exceed $15,000.
       ``(2) Teacher of high-need subjects.--For purposes of this 
     subsection, the term `teacher of high-need subjects' means 
     any teacher in a public elementary or secondary school who--
       ``(A)(i) teaches primarily 1 or more high-need subjects in 
     1 or more of grades 9 through 12, or
       ``(ii) teaches 1 or more high-need subjects in 1 or more of 
     grades kindergarten through 8,
       ``(B) received a baccalaureate or similar degree from an 
     eligible educational institution (as defined in section 
     25A(f)(2)) with a major in a high-need subject, and
       ``(C) is highly qualified (as defined in section 9101 of 
     the Elementary and Secondary Education Act of 1965 or, in the 
     case of a special education teacher, in section 602 of the 
     Individuals with Disabilities Education Act).
       ``(3) High-need subjects.--For purposes of this subsection, 
     the term `high-need subject' means mathematics, science, 
     engineering and technology education, a critical-need foreign 
     language (as determined by the Secretary of Education under 
     section 222 of the New National Defense Education Act of 
     2006), special education, teaching English language learners, 
     or any other subject identified as a high-need subject by the 
     Secretary of Education for purposes of this section.
       ``(c) Limitation on Total Remuneration Taken Into 
     Account.--In the case of any individual whose employment is 
     described in subsections (a) and (b)(1), the total amount of 
     remuneration which may be taken into account with respect to 
     such employment under this section for the taxable year shall 
     not exceed $25,000.
       ``(d) High-Need School.--For purposes of this section, the 
     term `high-need school' means a public elementary school or 
     secondary school that is eligible for assistance under 
     section 1114(a) of the Elementary and Secondary Education Act 
     of 1965 (20 U.S.C. 6314(a)).''.
       (b) Clerical Amendment.--The table of sections of such part 
     is amended by inserting after the item relating to section 
     139A the following new item:

``Sec. 139B. Compensation of certain teachers and principals''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to remuneration received in taxable years 
     beginning after the date of the enactment of this Act.

     SEC. 125. MATHEMATICS AND SCIENCE EDUCATION PARTNERSHIPS AND 
                   TEACHER INSTITUTES FOR THE 21ST CENTURY THROUGH 
                   THE NATIONAL SCIENCE FOUNDATION.

       (a) Authorization of Appropriations.--
       (1) Sense of the senate.--It is the sense of the Senate 
     that--
       (A) the activities of the mathematics and science education 
     partnerships of the National Science Foundation, described in 
     section 9 of the National Science Foundation Authorization 
     Act of 2002, meet a distinct need separate from other Federal 
     investments in improving science, technology, engineering, 
     and mathematics education;
       (B) funding for the mathematics and science education 
     partnerships for fiscal year 2007 should be increased to the 
     $400,000,000 level authorized for fiscal year 2005 under 
     section 5 of such Act, and increased by 10 percent annually 
     for each of the fiscal years 2008 through 2011; and
       (C) the increase in funding for the mathematics and science 
     education partnerships should be in addition to any other 
     amounts authorized or appropriated for the National Science 
     Foundation.
       (2) Authorization of appropriations for nsf mathematics and 
     science education partnerships.--There is authorized to be 
     appropriated to the National Science Foundation for education 
     and human resources to carry out the mathematics and science 
     education partnerships described in section 9 of the National 
     Science Foundation Authorization Act of 2002, in addition to 
     the amounts authorized under section 214(b), amounts as 
     follows:
       (A) For fiscal year 2007, $400,000,000, of which 
     $50,000,000 shall be for the teacher institutes for the 21st 
     century under section 9(a)(3)(B) of the National Science 
     Foundation Authorization Act of 2002.
       (B) For fiscal year 2008, $440,000,000, of which 
     $60,000,000 shall be for the teacher institutes for the 21st 
     century under such section.
       (C) For fiscal year 2009, $484,000,000, of which 
     $70,000,000 shall be for the teacher institutes for the 21st 
     century under such section.
       (D) For fiscal year 2010, $532,400,000, of which 80,000,000 
     shall be for the teacher institutes for the 21st century 
     under such section.
       (E) For fiscal year 2011, $585,640,000, of which 
     $90,000,000 shall be for the teacher institutes for the 21st 
     century under such section.
       (b) Teacher Institutes for the 21st Century.--Section 9(a) 
     of the National Science Foundation Authorization Act of 2002 
     (42 U.S.C. 1862n(a)) is amended--
       (1) in paragraph (3)(B), by striking ``summer or'' and 
     inserting ``teacher institutes for the 21st century, as 
     described in paragraph (7)'';
       (2) by redesignating paragraph (7) as paragraph (8); and
       (3) by inserting after paragraph (6) the following:
       ``(7) Teacher institutes for the 21st century.--
       ``(A) In general.--Teacher institutes for the 21st century 
     carried out in accordance with paragraph (3)(B) shall--
       ``(i) be carried out in conjunction with a school served by 
     the local educational agency in the partnership;
       ``(ii) be science, mathematics, engineering, and technology 
     focused institutes that provide professional development to 
     elementary school and secondary school teachers during the 
     summer;
       ``(iii) serve teachers who are considered highly qualified 
     (as defined in section 9101 of the Elementary and Secondary 
     Education Act of 1965), teach high-need subjects, and teach 
     in high-need schools (as defined in section 1114(a) of the 
     Elementary and Secondary Education Act of 1965);

[[Page 10952]]

       ``(iv) focus on the theme and structure developed by the 
     Director under subparagraph (C);
       ``(v) be content-based and build on school year curricula 
     that are object-centered, experiment-oriented, content-based, 
     and grounded in current research;
       ``(vi) ensure that any pedagogy component is designed 
     around specific strategies that are relevant to teaching the 
     subject and content on which teachers are being trained, 
     which may include training teachers in the essential 
     components of adolescent literacy instruction in order to 
     improve student reading skills within the subject areas of 
     mathematics, science, and engineering and technology 
     education (as defined in section 9101 of the Elementary and 
     Secondary Education Act of 1965);
       ``(vii) be a multiyear program that is conducted for a 
     period of not less than 2 weeks per year;
       ``(viii) provide for direct interaction between students 
     and faculty of the teacher institute;
       ``(ix) have a component that includes the use of the 
     Internet;
       ``(x) provide for followup training in the classroom during 
     the academic year for a period of not less than 3 days, which 
     may or may not be consecutive, for participants in the 
     teacher institute, except that for teachers in rural local 
     educational agencies, the followup training may be provided 
     through the Internet;
       ``(xi) provide teachers participating in the teacher 
     institute with travel expense reimbursement, stipends, and 
     classroom materials related to the teacher institute; and
       ``(xii) establish a mechanism to provide supplemental 
     support during the academic year for teacher institute 
     participants.
       ``(B) Optional members of the partnership.--In addition to 
     the partnership requirement under paragraph (2), an 
     institution of higher education or eligible nonprofit 
     organization (or consortia) desiring a grant for a teacher 
     institute for the 21st century may also partner with a museum 
     or educational partnership organization.
       ``(C) Theme and structure.--Each year, not later than 180 
     days before the application deadline for a grant under this 
     section, the Director shall, in consultation with a broad 
     group of professional education organizations, develop a 
     theme and structure for the teacher institutes of the 21st 
     century supported under paragraph (3)(B).''.

     SEC. 126. TEACH GRANTS; RECRUITING TEACHERS WITH MATHEMATICS, 
                   SCIENCE, ENGINEERING, TECHNOLOGY, OR LANGUAGE 
                   MAJORS.

       (a) TEACH Grants.--Title II of the Higher Education Act of 
     1965 (20 U.S.C. 1021 et seq.) is amended by adding at the end 
     the following:

                         ``PART C--TEACH GRANTS

     ``SEC. 231. PURPOSES.

       ``The purposes of this part are--
       ``(1) to improve student academic achievement;
       ``(2) to help recruit and prepare teachers to meet the 
     national demand for a highly qualified teacher in every 
     classroom; and
       ``(3) to increase opportunities for Americans of all 
     educational, ethnic, class, and geographic backgrounds to 
     become highly qualified teachers.

     ``SEC. 232. PROGRAM ESTABLISHED.

       ``(a) Program Authority.--
       ``(1) Payments required.--For each of the fiscal years 2007 
     through 2014, the Secretary shall pay to each eligible 
     institution of higher education such sums as may be necessary 
     to pay to each eligible student (defined in accordance with 
     section 484) who files an application and agreement in 
     accordance with section 233, and qualifies under subsection 
     (a)(2) of such section, a TEACH Grant in the amount of $7,000 
     for each academic year during which that student is in 
     attendance at an institution of higher education.
       ``(2) Reference.--Grants made under this part shall be 
     known as `Teacher Education Assistance for College and Higher 
     Education Grants' or `TEACH Grants'.
       ``(b) Payment Methodology.--
       ``(1) Prepayment.--Not less than 85 percent of such sums 
     shall be advanced to eligible institutions prior to the start 
     of each payment period and shall be based upon an amount 
     requested by the institution as needed to pay eligible 
     students until such time as the Secretary determines and 
     publishes in the Federal Register with an opportunity for 
     comment, an alternative payment system that provides payments 
     to institutions in an accurate and timely manner, except that 
     this sentence shall not be construed to limit the authority 
     of the Secretary to place an institution on a reimbursement 
     system of payment.
       ``(2) Direct payment.--Nothing in this section shall be 
     interpreted to prohibit the Secretary from paying directly to 
     students, in advance of the beginning of the academic term, 
     an amount for which they are eligible, in cases where the 
     eligible institution elects not to participate in the 
     disbursement system required by paragraph (1).
       ``(3) Distribution of grants to students.--Payments under 
     this part shall be made, in accordance with regulations 
     promulgated by the Secretary for such purpose, in such manner 
     as will best accomplish the purposes of this part. Any 
     disbursement allowed to be made by crediting the student's 
     account shall be limited to tuition and fees and, in the case 
     of institutionally owned housing, room and board. The student 
     may elect to have the institution provide other such goods 
     and services by crediting the student's account.
       ``(c) Reductions in Amount.--
       ``(1) Part-time students.--In any case where a student 
     attends an institution of higher education on less than a 
     full-time basis (including a student who attends an 
     institution of higher education on less than a half-time 
     basis) during any academic year, the amount of the TEACH 
     Grant for which that student is eligible shall be reduced in 
     proportion to the degree to which that student is not so 
     attending on a full-time basis, in accordance with a schedule 
     of reductions established by the Secretary for the purpose of 
     this part, computed in accordance with this part. Such 
     schedule of reductions shall be established by regulation and 
     published in the Federal Register in accordance with section 
     482 of this Act.
       ``(2) No exceeding cost of attendance.--No TEACH Grant for 
     a student under this part shall exceed the cost of attendance 
     (as defined in section 472) at the institution that such 
     student attends. If, with respect to any student, it is 
     determined that the amount of a TEACH Grant exceeds the cost 
     of attendance for that year, the amount of the TEACH Grant 
     shall be reduced until the TEACH Grant does not exceed the 
     cost of attendance at such institution.
       ``(d) Period of Eligibility for Grants.--
       ``(1) Undergraduate students.--The period during which an 
     undergraduate student may receive TEACH Grants shall be the 
     period required for the completion of the first undergraduate 
     baccalaureate course of study being pursued by the student at 
     the institution that the student attends, except that--
       ``(A) any period during which the student is enrolled in a 
     noncredit or remedial course of study, subject to paragraph 
     (3), shall not be counted for the purpose of this paragraph; 
     and
       ``(B) the total amount that a student may receive under 
     this part for undergraduate study shall not exceed $28,000.
       ``(2) Graduate students.--The period during which a 
     graduate student pursuing a master's degree or doctoral 
     degree may receive TEACH Grants shall be the period required 
     for the completion of a course of study for the degree at the 
     institution the student attends, except that the total amount 
     that a student may receive under this part for graduate study 
     shall not exceed $14,000 for a student pursuing a master's 
     degree or $28,000 for a student pursuing a doctoral degree.
       ``(3) Remedial course; study abroad.--Nothing in this 
     section shall exclude from eligibility a course of study that 
     is noncredit or remedial in nature (including a course in 
     English language acquisition) if such course is determined by 
     the institution to be necessary to help the student be 
     prepared for the pursuit of a first undergraduate 
     baccalaureate degree or certificate or, in the case of 
     courses in English language instruction, to be necessary to 
     enable the student to utilize existing knowledge, training, 
     or skills. Nothing in this section shall exclude from 
     eligibility a program of study abroad that is approved for 
     credit by the home institution at which the student is 
     enrolled.

     ``SEC. 233. ELIGIBILITY AND APPLICATIONS FOR GRANTS.

       ``(a) Applications; Demonstration of Eligibility.--
       ``(1) Filing required.--The Secretary shall from time to 
     time set dates by which students shall file applications for 
     TEACH Grants under this part. Each student desiring a TEACH 
     Grant for any year shall file an application therefore 
     containing such information and assurances as the Secretary 
     may deem necessary to enable the Secretary to carry out the 
     functions and responsibilities of this part.
       ``(2) Demonstration of eligibility.--Each such application 
     shall contain such information as is necessary to demonstrate 
     that--
       ``(A) if the applicant is an enrolled student--
       ``(i) the student is an eligible student for purposes of 
     section 484 (other than subsection (r) of such section);
       ``(ii) the student--

       ``(I) has a grade point average that is determined, under 
     standards prescribed by the Secretary, to be comparable to a 
     3.25 average on a zero to 4.0 scale, except that, if the 
     student is in the first year of a program of undergraduate 
     education, such grade point average shall be determined on 
     the basis of the student's cumulative secondary school grade 
     point average; or
       ``(II) displayed high academic aptitude by receiving a 
     score above the 75th percentile on at least 1 of the 
     batteries in an undergraduate or graduate school admissions 
     test; and

       ``(iii) the student is completing coursework and other 
     requirements necessary to begin a career in teaching, or 
     plans to complete such coursework and requirements prior to 
     graduating; or
       ``(B) if the applicant is a current or prospective teacher 
     applying for a grant to obtain a graduate degree--
       ``(i) the applicant is a teacher or a retiree from another 
     occupation with expertise in a

[[Page 10953]]

     field in which there is a shortage of teachers, such as 
     mathematics, science, engineering and technology education, a 
     critical-need foreign language (as determined by the 
     Secretary under section 222 of the New National Defense 
     Education Act of 2006), special education, English language 
     acquisition, or another high-need subject; or
       ``(ii) the applicant is or was a teacher who is using high-
     quality alternative certification routes, such as Teach for 
     America, to get certified.
       ``(b) Agreements to Serve.--Each application under 
     subsection (a) shall contain or be accompanied by an 
     agreement by the applicant that--
       ``(1) the applicant will--
       ``(A) serve as a full-time teacher for a total of not less 
     than 4 academic years within 8 years after completing the 
     course of study for which the applicant receives a TEACH 
     Grant under this part;
       ``(B) teach--
       ``(i) in a school eligible for assistance under section 
     1114(a) of the Elementary and Secondary Education Act of 
     1965; and
       ``(ii) in any of the following fields: mathematics, 
     science, engineering and technology education, a critical-
     need foreign language (as determined by the Secretary under 
     section 222 of the New National Defense Education Act of 
     2006), bilingual education, or special education, or as a 
     reading specialist, or another field documented as high-need 
     by the Federal Government, State government, or local 
     educational agency and submitted to the Secretary;
       ``(C) submit evidence of such employment in the form of a 
     certification by the chief administrative officer of the 
     school upon completion of each year of such service; and
       ``(D) comply with the requirements for being a highly 
     qualified teacher as defined in section 9101 of the 
     Elementary and Secondary Education Act of 1965 or, in the 
     case of a special education teacher, in section 602 of the 
     Individuals With Disabilities Education Act; and
       ``(2) in the event that the applicant is determined to have 
     failed or refused to carry out such service obligation, the 
     sum of the amounts of such TEACH Grants will be treated as a 
     loan and collected from the applicant in accordance with 
     subsection (c) and the regulations thereunder.
       ``(c) Repayment for Failure to Complete Service.--In the 
     event that any recipient of a TEACH Grant fails or refuses to 
     comply with the service obligation in the agreement under 
     subsection (b), the sum of the amounts of such TEACH Grants 
     provided to such recipient shall be treated as a Direct Loan 
     under part D of title IV, and shall be subject to repayment 
     in accordance with terms and conditions specified by the 
     Secretary in regulations promulgated to carry out this part.

     ``SEC. 234. AUTHORIZATION OF APPROPRIATIONS.

       ``There are authorized to be appropriated to carry out this 
     part $600,000,000 for fiscal year 2007 and such sums as may 
     be necessary for each of the 4 succeeding fiscal years.

 ``PART D--RECRUITING TEACHERS WITH MATHEMATICS, SCIENCE, ENGINEERING, 
                     TECHNOLOGY, OR LANGUAGE MAJORS

     ``SEC. 241. PROGRAM AUTHORIZED.

       ``(a) Definition of High-Need School.--In this section, the 
     term `high-need school' means a school described in section 
     1114(a) of the Elementary and Secondary Education Act of 
     1965.
       ``(b) Grants Authorized.--
       ``(1) In general.--From the amounts appropriated under 
     section 242, the Secretary shall make competitive grants to 
     institutions of higher education to improve the availability 
     and recruitment of teachers from among students majoring in 
     mathematics, science, engineering, technology, a critical-
     need foreign language (as determined by the Secretary under 
     section 222 of the New National Defense Education Act of 
     2006), special education, or teaching the English language to 
     students with limited English proficiency.
       ``(2) Priority.--In awarding grants under paragraph (1), 
     the Secretary shall give priority to institutions of higher 
     education offering programs that--
       ``(A) focus on preparing teachers in subjects in which 
     there is a shortage of highly qualified teachers and 
     increasing the number of teachers from minority or 
     underrepresented groups; and
       ``(B) prepare students to teach in high-need schools.
       ``(c) Application.--Any institution of higher education 
     desiring to obtain a grant under this section shall submit to 
     the Secretary an application at such time, in such form, and 
     containing such information and assurances as the Secretary 
     may require, which shall--
       ``(1) include reporting on baseline production of 
     teachers--
       ``(A) with expertise in mathematics, science, a critical-
     need foreign language, special education, or teaching 
     students with limited English proficiency;
       ``(B) from minorities or underrepresented groups; and
       ``(C) who teach for 5 years or more in a high-need school; 
     and
       ``(2) establish a goal and timeline for increasing the 
     number of teachers described in each subparagraph of 
     paragraph (1) who are prepared for teaching by the 
     institution.
       ``(d) Grant Award Amounts.--In determining the amount of a 
     grant award under this section to an institution of higher 
     education, the Secretary shall consider--
       ``(1) the extent to which the institution--
       ``(A) focuses on preparing teachers in subjects in which 
     there is a shortage of highly qualified teachers and 
     increasing the number of teachers from minority or 
     underrepresented groups; and
       ``(B) prepares students to teach in high-need schools; and
       ``(2) in the case of an institution that has previously 
     received a grant under this section, the progress made by the 
     institution in increasing the number of teachers described in 
     subsection (c)(1), as compared to the baseline production of 
     such teachers reported in the institution's initial 
     application.
       ``(e) Use of Funds.--Funds made available by a grant under 
     this section--
       ``(1) shall be used to create new recruitment incentives to 
     teaching for students from other majors, with an emphasis on 
     high-need subjects such as mathematics, science, engineering 
     and technology education, a critical-need foreign language, 
     special education, and teaching the English language to 
     students with limited English proficiency and other subjects 
     identified as high-need by the Federal Government, State 
     government, or local educational agency;
       ``(2) may be used to upgrade the curriculum in order to 
     provide all students studying to become teachers with high-
     quality instructional strategies for teaching reading and 
     teaching the English language to students with limited 
     English proficiency, and for modifying instruction to teach 
     students with special needs;
       ``(3) may be used to integrate school of education faculty 
     with other arts and science faculty in mathematics, science, 
     engineering, technology, a critical-need foreign language, or 
     teaching the English language to students with limited 
     English proficiency, through steps such as--
       ``(A) dual appointments for faculty between schools of 
     education and schools of arts and science or engineering; and
       ``(B) integrating coursework with clinical experience;
       ``(4) may be used to develop strategic plans between 
     schools of education and local educational agencies to better 
     prepare teachers for high-need schools, including the 
     creation of professional development partnerships for 
     training new teachers in state-of-the-art practice;
       ``(5) may be used to create pilot programs to foster 
     collaborations at the institution of higher education between 
     a school of science, mathematics, or engineering, or a 
     foreign language department or language center, and a school 
     of education in order to enable the collaborating entities to 
     develop a 4-year program of study that would combine a 
     baccalaureate degree in mathematics, science, engineering, or 
     technology with concurrent teacher certification or 
     licensure; and
       ``(6) may be used to develop and implement a master's 
     degree program for current mathematics, science, or 
     engineering and technology education teachers that--
       ``(A) will strengthen the participating teachers' subject 
     area knowledge and pedagogical skills; and
       ``(B) shall be designed to allow a teacher to enroll in the 
     program on a part-time basis and obtain a master's degree 
     within a 2-year period.
       ``(f) Reports.--For each year that an institution of higher 
     education receives a grant under this section, the 
     institution of higher education shall prepare and submit to 
     the Secretary an annual report documenting the baseline data 
     regarding the teachers described in subsection (c)(1) and the 
     progress made toward increasing the number of such teachers, 
     as described in subsection (c)(2).

     ``SEC. 242. AUTHORIZATION OF APPROPRIATIONS.

       ``There are authorized to be appropriated to carry out this 
     part $500,000,000 for fiscal year 2007 and such sums as may 
     be necessary for each of the 4 succeeding fiscal years.''.
       (b) Part A Authorization.--Section 210 of the Higher 
     Education Act of 1965 (20 U.S.C. 1030) is amended by striking 
     ``$300,000,000 for fiscal year 1999'' and inserting 
     ``$400,000,000 for fiscal year 2007''.

              Subtitle C--Ensuring College Access for All

     SEC. 131. CONTRACT FOR EDUCATIONAL OPPORTUNITY (CEO) GRANTS.

       (a) Definitions.--In this section:
       (1) Cohort.--The term ``cohort'' means a group of students 
     in a State who are in the same grade for an identified school 
     year.
       (2) Expected family contribution.--The term ``expected 
     family contribution'', with respect to a student, means the 
     student's expected family contribution as determined in 
     accordance with part F of the Higher Education Act of 1965 
     (20 U.S.C. 1087kk et seq.).
       (3) Unmet need.--The term ``unmet need'', with respect to a 
     student, means the difference between the cost of attendance 
     (as defined in section 472 of the Higher Education Act of 
     1965 (20 U.S.C. 108711) to attend an institution of higher 
     education for an academic year and the resources available to 
     the student for such academic year, including Federal, State, 
     and institutional financial assistance and the student's 
     expected family contribution.
       (b) Purposes.--The purposes of this section are--

[[Page 10954]]

       (1) to encourage States to provide a financial aid 
     guarantee for low-income students;
       (2) to increase student academic performance and 
     achievement;
       (3) to increase public school secondary school graduation 
     rates as well as enrollment, persistence, and graduation 
     rates in public and private institutions of higher education, 
     especially among low-income and underrepresented minority 
     students; and
       (4) to improve the overall quality and supply of a State's 
     workforce.
       (c) Payments to States Authorized.--
       (1) In general.--The Secretary shall pay to States the 
     Federal share, as determined under subsection (e), in order 
     to assist the States in awarding contract for educational 
     opportunity grants (referred to in this section as ``CEO 
     grants''), under subsection (g) to students in a cohort who 
     sign a contract for educational opportunity in grade 8 and 
     satisfy the requirements of the contract. A CEO grant shall 
     provide each such student with a need-based financial aid 
     guarantee, in an amount equal to the student's calculated 
     unmet need to attend a 2- or 4-year degree-granting public 
     institution of higher education in the State, to enable the 
     student to attend a 2- or 4-year degree-granting public or 
     private institution of higher education in the State.
       (2) Mandatory spending.--This subsection constitutes budget 
     authority in advance of appropriations Acts and represents 
     the obligation of the Secretary to provide for the payment of 
     amounts provided under this subsection.
       (d) Application.--
       (1) In general.--A State desiring a payment under 
     subsection (c) shall submit, through the State agency 
     identified in the application, to the Secretary an 
     application at such time, in such manner, and containing such 
     information as the Secretary may require.
       (2) Application.--An application submitted under paragraph 
     (1) shall include the following:
       (A) A description of how the State will establish a State 
     benchmark for increasing the overall public school secondary 
     school graduation rate and the enrollment, persistence, and 
     graduation rates at the State's 2- and 4-year degree-granting 
     public and private institutions of higher education, as well 
     as a description of strategies and activities the State will 
     employ to achieve the State's set goals as reflected in the 
     benchmark.
       (B) The identification of the State agency that will 
     administer the CEO grants program, and a description of the 
     State agency's capacity to administer such program.
       (C) A description of the entities that will contribute 
     funds for the non-Federal share of the CEO grants program.
       (D) A description of the State's academic and nonacademic 
     components of the contract for educational opportunity, 
     including 100 hours of community service, and how the State 
     defines satisfactory academic progress toward completing 
     coursework that leads to a secondary school diploma.
       (E) A description of how the State agency will provide 
     access for all students to a State curriculum that prepares 
     the students to enter into credit-bearing coursework in 
     higher education without the need for remediation, the 21st 
     century workforce, or the Armed Forces.
       (F) A description of how the State agency will notify 
     students in grade 7 of their eligibility to participate in 
     the CEO grants program and earn a CEO grant, as well as how 
     the State will specifically target students from low-income 
     and underrepresented minority families.
       (G) A description of how the State agency will regularly 
     communicate with a cohort from the time the students sign the 
     contract for educational opportunity through the period that 
     the students are eligible for CEO grants.
       (H) An assurance that the State will award a CEO grant, in 
     the amount of the student's calculated unmet need to attend a 
     2- or 4-year degree-granting public institution of higher 
     education in the State, to each student who successfully 
     meets the requirements of the contract for educational 
     opportunity.
       (I) An assurance that decisions regarding the State's 
     higher education budget shall not lead to increases in 
     tuition and fees at public 2- or 4-year degree-granting 
     institutions of higher education that are greater than the 
     Consumer Price Index.
       (J) An assurance that the State shall maintain current 
     levels of investment in State student aid programs in 
     addition to providing the non-Federal share required under 
     subsection (e)(4).
       (e) Payments; Use of Funds.--
       (1) In general.--The Secretary shall pay the Federal share 
     of the CEO grants program, in the amount described in 
     paragraph (4), to each State that submits a complete 
     application pursuant to subsection (d).
       (2) Use of funds.--The Federal share and non-Federal share 
     described in paragraph (4) shall be used exclusively for 
     awarding financial aid grants to cover the unmet need for all 
     students in a cohort who have successfully met the components 
     of the State's contract, except that a State may use not more 
     than 2 percent of such funds for administrative purposes.
       (3) Subsequent payments.--
       (A) In general.--The Secretary shall make subsequent annual 
     payments for future cohorts to States, in accordance with 
     paragraph (4), that receive a payment under this section and 
     that are not determined to be ineligible under subparagraph 
     (B).
       (B) Ineligibility.--
       (i) In general.--Except as provided in clause (ii), the 
     Secretary shall determine a State to be temporarily 
     ineligible to receive a payment under subparagraph (A) if--

       (I) the State fails to submit an annual report pursuant to 
     subsection (h); or
       (II) the Secretary determines, based on information 
     submitted in the annual report submitted under subsection 
     (h), that--

       (aa) the State is not effectively meeting the terms and 
     goals of the application; or
       (bb) that the State is not making satisfactory progress 
     toward the benchmark set forth in subsection (d)(2)(A).
       (ii) Ineligibility not to affect certain cohorts.--A 
     determination of ineligibility to receive subsequent payments 
     for future cohorts under clause (i) with respect to a State 
     shall not apply to payments for students in a cohort in the 
     State who are in grade 8, 9, 10, 11, or 12 at the time of the 
     determination.
       (iii) Reinstatement.--If the Secretary determines a State 
     is ineligible under clause (i), the Secretary may enter into 
     an agreement with the State setting forth the terms and 
     conditions under which the State may regain eligibility to 
     receive payments under this section.
       (4) Matching requirement.--The amount of the Federal share 
     under this section for an academic year shall be equal to the 
     amount of the non-Federal share provided by the State for 
     such year. The sum of the Federal share and the non-Federal 
     share for an academic year shall be an amount equal to the 
     total unmet need, for the academic year, to attend a 2- or 4-
     year degree-granting public institution of higher education 
     in the State, for all students in an identified cohort that 
     complete all eligibility requirements of a contract for 
     educational opportunity.
       (f) Reallotment or Redistribution of Funds.--If funds 
     remain for a cohort for 6 years after the cohort has 
     graduated from secondary school, the State shall return 
     excess Federal funds to the Secretary. Any returned excess 
     funds shall be used by the Secretary to carry out the program 
     under this section.
       (g) CEO grants.--
       (1) In general.--A State receiving a payment under 
     subsection (c) for a cohort shall provide, in the amount 
     determined under paragraph (3), a CEO grant to each student 
     in the cohort who--
       (A) successfully completes the requirements of the contract 
     for educational opportunity; and
       (B) enrolls in a 2- or 4-year degree-granting institution 
     of higher education in the State not later than 2 years after 
     receiving a secondary school diploma.
       (2) Contracts for educational opportunity.--
       (A) In general.--A student who is in a cohort for which a 
     State is eligible for payments under subsection (c) and who 
     desires to receive a CEO grant shall sign a contract for 
     educational opportunity when the student begins grade 8 
     stating that the student will carry out all of the following 
     by the time the student graduates from secondary school:
       (i) Receive a secondary school diploma.
       (ii) By the beginning of grade 11 (except as provided in 
     subparagraph (B)), demonstrate satisfactory academic progress 
     (as determined by the State agency) toward completing 
     coursework that leads to a secondary school diploma.
       (iii) Complete the academic components of the State 
     contract for educational opportunity, as determined by the 
     State agency.
       (iv) Complete the nonacademic portion of the State contract 
     for educational opportunity (as determined by the State 
     agency), including 100 hours of community service, of which 
     at least 50 hours of community service shall be completed 
     before the student begins grade 11 (except as provided in 
     subparagraph (B)).
       (v) Apply for admission to a 2- or 4-year degree-granting 
     institution of higher education in the State.
       (vi) Preceding the date that the student intends to enroll 
     in an institution of higher education, file for Federal 
     financial aid.
       (B) Special circumstances.--
       (i) Transition.--During the academic year following the 
     date of enactment of this Act, in the case of students in a 
     cohort who are in grade 9, 10, 11, or 12 for such academic 
     year, the students of such cohort shall be eligible for CEO 
     grants if such students sign the contract for educational 
     opportunity during the academic year and otherwise complete 
     all of the eligibility requirements for the contract for 
     educational opportunity under subparagraph (A) as applicable 
     and by such time as determined by the State and approved by 
     the Secretary.
       (ii) Students who move into the state.--In the case of a 
     student who moves into a State after the student begins grade 
     8, such student shall be eligible for a CEO grant from such 
     State if such student signs the contract for educational 
     opportunity at the time the student moves into the State and

[[Page 10955]]

     the student otherwise completes all of the eligibility 
     requirements for the contract for educational opportunity 
     under subparagraph (A), as applicable and by such time as 
     determined by the State and approved by the Secretary.
       (3) Amount of ceo grants.--
       (A) In general.--A CEO grant for an academic year shall be 
     in an amount equal to the student's calculated unmet need to 
     attend a 2- or 4-year degree-granting public institution of 
     higher education in the State for such year.
       (B) Private institutions.--A CEO grant for a student who 
     elects to enroll in a private 2- or 4-year degree-granting 
     public institution of higher education in the State shall be 
     in the amount described in subparagraph (A).
       (4) Multiple grants.--
       (A) In general.--A State shall award a CEO grant to a 
     student who meets the requirements of this section for each 
     academic year that the student attends a 2- or 4-year degree-
     granting institution of higher education in the State.
       (B) Maximum number of grants.--During the 6-year period 
     beginning on the date of receipt of a CEO grant under this 
     subsection, a student who meets the requirements of this 
     subsection shall be eligible to receive a CEO grant for each 
     year that the student is enrolled in a 2- or 4-year degree-
     granting institution of higher education in the State, except 
     that no student shall receive a total of more than 4 CEO 
     grants.
       (5) Ineligibility.--A student who otherwise meets the 
     requirements for a CEO grant shall be ineligible if the 
     student fails to maintain an acceptable level of academic 
     standing, as determined by the institution of higher 
     education that the student attends, or is dismissed from the 
     institution of higher education for disciplinary reasons.
       (h) Evaluation and Report.--A State receiving a payment 
     under subsection (c) for a cohort shall prepare and submit an 
     annual report to the Secretary on the success of the cohort. 
     The State report shall include the following:
       (1) The following information relating to the students in 
     the cohort who sign a contract for educational opportunity, 
     as applicable:
       (A) The participation and completion rates in the CEO 
     grants program under this section.
       (B) The public school secondary school graduation rate and 
     how the rate relates to the established State benchmark 
     described in subsection (d)(2).
       (C) The rate of enrollment in public and private 
     institutions of higher education and how the rate relates to 
     the established State benchmark.
       (D) The rate of persistence in public and private 
     institutions of higher education and how the rate relates to 
     the established State benchmark.
       (E) The rate of graduation from public and private 
     institutions of higher education and how the rate relates to 
     the established State benchmark.
       (F) Average CEO grant aid per student.
       (G) A description of, and justification for, any increase 
     in tuition and fees at the public 2- or 4-year degree-
     granting institutions of higher education in the State.
       (2) A comparison of the rates described in subparagraphs 
     (B) through (E) of paragraph (1) for students in the cohort 
     who sign a contract for educational opportunity to such rates 
     for a representative sample of students in the cohort in the 
     State who do not sign a contract.

   TITLE II--ARMING AMERICANS WITH 21ST CENTURY KNOWLEDGE AND SKILLS

     Subtitle A--Increasing the Number of New American Scientists, 
                    Engineers, and Language Experts

     SEC. 211. PURPOSE.

       The purpose of this subtitle is to increase the number of 
     low-income and middle-income students who pursue careers in 
     mathematics, science, technology, engineering, and critical-
     need foreign languages.

     SEC. 212. GRANTS FOR STRENGTHENING MATHEMATICS, SCIENCE, AND 
                   ENGINEERING AND TECHNOLOGY EDUCATION 
                   INFRASTRUCTURE.

       (a) Grants for Strengthening Mathematics, Science, and 
     Engineering and Technology Education Infrastructure.--Part D 
     of title V of the Elementary and Secondary Education Act of 
     1965 (20 U.S.C. 7241 et seq.) is amended by adding at the end 
     the following:

   ``SUBPART 22--GRANTS FOR STRENGTHENING MATHEMATICS, SCIENCE, AND 
          ENGINEERING AND TECHNOLOGY EDUCATION INFRASTRUCTURE

     ``SEC. 5621. GRANTS FOR STRENGTHENING MATHEMATICS, SCIENCE, 
                   AND ENGINEERING AND TECHNOLOGY EDUCATION 
                   INFRASTRUCTURE.

       ``(a) Purpose.--The purpose of this section is to improve 
     mathematics, science, and engineering and technology 
     education infrastructure in public elementary schools and 
     secondary schools to facilitate improved educational 
     opportunities for all students.
       ``(b) Definition of High-Need.--In this section, the term 
     `high-need', when used with respect to a school, means a 
     public elementary school or secondary school that is eligible 
     for assistance under section 1114(a) of the Elementary and 
     Secondary Education Act of 1965.
       ``(c) Program Authorized.--From amounts appropriated under 
     section 5401(b) for a fiscal year, and subject to subsection 
     (d), the Secretary, in consultation with the Director of the 
     National Science Foundation, shall award grants to local 
     educational agencies to enable the local educational agencies 
     to carry out the activities described in subsection (g).
       ``(d) Reservation of Funds.--From amounts appropriated 
     under section 5401(b) for a fiscal year, the Secretary shall 
     reserve a total of \1/2\ of 1 percent for the Secretary of 
     the Interior to award grants to elementary schools and 
     secondary schools operated or funded by the Bureau of Indian 
     Affairs to enable such elementary schools and secondary 
     schools to carry out the activities described in subsection 
     (g).
       ``(e) Application.--
       ``(1) In general.--A local educational agency desiring a 
     grant under subsection (c) shall submit an application to the 
     Secretary at such time, in such manner, and containing such 
     information as the Secretary may reasonably require.
       ``(2) Contents.--The application described in paragraph (1) 
     shall include the following:
       ``(A) A description of the activities under subsection (g) 
     for which assistance is sought and the costs of such 
     activities.
       ``(B) A description of the process through which the local 
     educational agency identified the activities described in 
     subparagraph (A).
       ``(C) Clear principles that the local educational agency 
     used to determine the priority of qualifying activities under 
     this section that prioritize the use of quantitative data, 
     such as student achievement on standardized assessments and 
     income data, in order to give priority to projects benefiting 
     high-need schools.
       ``(D) An assurance that the local educational agency will 
     provide a complete and detailed accounting of the use of 
     grant funds awarded to the local educational agency under 
     this section.
       ``(E) A description of the evaluation process that will 
     assess the accomplishments of the program.
       ``(f) Application Approval.--
       ``(1) Determination in consultation with national science 
     foundation.--The Secretary shall review each application 
     submitted under subsection (e) to determine whether the 
     application is sufficient. In making such a determination, 
     the Secretary shall consult with the Director of the National 
     Science Foundation, in part to ensure that the application is 
     coordinated with any preexisting National Science Foundation 
     initiatives in the State.
       ``(2) Determination of insufficient application.--If the 
     Secretary determines that an application submitted by a local 
     educational agency does not meet the requirements of 
     paragraph (1) or subsection (e), the Secretary shall provide 
     the local educational agency with--
       ``(A) a written explanation of why the application did not 
     comply with such requirements; and
       ``(B) an opportunity to submit an amended application.
       ``(3) Priority.--In awarding grants under this section, the 
     Secretary shall give priority to local educational agencies 
     with a high percentage of high-need schools.
       ``(g) Required Use of Funds.--A local educational agency 
     that receives a grant under subsection (c) shall use grant 
     funds, in accordance with the application of the local 
     educational agency, to carry out not less than 1 of the 
     following:
       ``(1) The purchase or refurbishment of mathematics, 
     science, and engineering and technology education equipment, 
     including laboratory equipment.
       ``(2) The purchase of instructional materials or curricula 
     with proven effectiveness in improving mathematics, science, 
     and engineering and technology education outcomes, including 
     age-appropriate reading materials on varying grade levels 
     that provide poor readers with access to mathematics, 
     science, and engineering and technology education subject 
     matter.
       ``(3) Support for a science, mathematics, or engineering 
     and technology education specialist in each school who is 
     responsible for--
       ``(A) assisting in the implementation of the school's 
     science, mathematics, or engineering and technology education 
     program;
       ``(B) assisting other teachers in delivering quality 
     instruction;
       ``(C) assisting in identifying and developing professional 
     development opportunities tied to the curriculum; and
       ``(D) providing guidance on curricula, equipment, and other 
     components necessary for high-quality instruction.
       ``(4) Any other directly related activity--
       ``(A) identified by the local educational agency in the 
     application required under subsection (e); and
       ``(B) approved by the Secretary, in consultation with the 
     Director of the National Science Foundation.
       ``(h) Report.--
       ``(1) In general.--A local educational agency that receives 
     a grant under this section for a fiscal year shall submit, 
     not later than January 31 of the succeeding fiscal year, a 
     report in such form and containing

[[Page 10956]]

     such information as the Secretary determines to be reasonably 
     necessary to evaluate the compliance of the local educational 
     agency with the provisions of this section.
       ``(2) Contents.--The report described in paragraph (1) 
     shall include the following:
       ``(A) A description of the activities carried out with 
     grant funds under this section.
       ``(B) A complete and detailed accounting of the use of 
     funds awarded under this section, including how the local 
     educational agency gave priority to projects benefiting 
     students served by high-need schools.
       ``(C) A description of how the local educational agency 
     assesses the impact of the program.
       ``(D) A description of how students were served by the 
     projects assisted under this section, including any expansion 
     of inquiry-based learning opportunities, and an accounting of 
     the approximate number of students so served.
       ``(E) An accounting of student academic progress made as a 
     result of activities funded under this section, using 
     previously established statewide academic achievement 
     assessments in mathematics and science.
       ``(F) Qualitative testimony from students, teachers, 
     administrators, or parents on the effect of activities funded 
     under this section.
       ``(3) Penalty.--A local educational agency that receives a 
     grant under this section for a fiscal year but does not 
     submit the report required under this subsection shall not be 
     eligible to receive any subsequent grant funds under this 
     section.''.
       (b) Authorization of Appropriations.--Section 5401 of the 
     Elementary and Secondary Education Act of 1965 (20 U.S.C. 
     7241) is amended--
       (1) by striking ``this part'' and inserting ``this part 
     (excluding subpart 22)'';
       (2) by striking ``There are'' and inserting the following:
       ``(a) General Authorization.--There are''; and
       (3) by adding at the end the following:
       ``(b) Mathematics, Science, and Engineering and Technology 
     Education Infrastructure.--There are authorized to be 
     appropriated to carry out subpart 22, $500,000,000 for fiscal 
     year 2007 and such sums as may be necessary for each of the 4 
     succeeding fiscal years.''.
       (c) Table of Contents.--The table of contents in section 2 
     of the Elementary and Secondary Education Act of 1965 is 
     amended by inserting after the item relating to section 5618 
     the following:

   ``Subpart 22--Grants for Strengthening Mathematics, Science, and 
          Engineering and Technology Education Infrastructure

``Sec. 5621. Grants for strengthening mathematics, science, and 
              engineering and technology education infrastructure.''.

     SEC. 213. SCIENCE, TECHNOLOGY, ENGINEERING, MATHEMATICS, AND 
                   CRITICAL-NEED FOREIGN LANGUAGE SCHOLARS.

       (a) Definitions.--In this section:
       (1) Institution of higher education.--The term 
     ``institution of higher education'' has the meaning given the 
     term in section 101(a) of the Higher Education Act of 1965 
     (20 U.S.C. 1001(a)).
       (2) Secretary.--The term ``Secretary'' means the Secretary 
     of Education.
       (b) Program Authorized.--From amounts appropriated under 
     subsection (j) for a fiscal year, the Secretary shall carry 
     out a program to award grants, on a competitive basis, to 
     institutions of higher education (or consortia of such 
     institutions) to enable the institutions of higher education 
     (or consortia) to provide scholarships to make higher 
     education tuition free for low-income and middle-income 
     undergraduate and graduate students who are enrolled at the 
     institutions of higher education to earn degrees in science, 
     technology, engineering, mathematics, and critical-need 
     foreign languages (as determined by the Secretary under 
     section 222).
       (c) Application.--An institution of higher education or a 
     consortium seeking a grant under this section shall submit an 
     application to the Secretary at such time, in such manner, 
     and containing such information as the Secretary may require.
       (d) Award Basis.--In awarding grants under this section, 
     the Secretary shall give special consideration to programs 
     that--
       (1) are a central organizational focus of the institution 
     of higher education or consortium;
       (2) enable scholarship recipients to become successful 
     members of the science, technology, engineering, mathematics, 
     and critical-need foreign language 21st century workforce; 
     and
       (3) recruit undergraduate and graduate students, especially 
     female and underrepresented minority students, who would 
     otherwise not pursue careers in science, technology, 
     engineering, mathematics, or a critical-need foreign 
     language.
       (e) Use of Funds.--An institution of higher education or a 
     consortium receiving a grant under this section shall use the 
     grant funds to carry out a program to encourage low-income 
     and middle-income undergraduate and graduate students 
     enrolled at the institution of higher education, or at an 
     institution of higher education that is a member of the 
     consortium, respectively, to earn degrees in science, 
     technology, engineering, mathematics, or a critical-need 
     foreign language, through administering scholarships in 
     accordance with subsection (f).
       (f) Scholarships.--
       (1) Scholarship requirements.--Scholarships under this 
     subsection shall be available to a student enrolled at an 
     institution of higher education that receives a grant under 
     this section or is a member of a consortium that receives a 
     grant under this section--
       (A)(i) whose parents have an adjusted gross income for the 
     most recent tax year available of--
       (I) less than $53,000 if single; or
       (II) less than $107,000 if married; or
       (ii) in the case of a student who is independent (as 
     defined in section 480 of the Higher Education Act of 1965 
     (20 U.S.C. 1087vv), who meets the adjusted gross income 
     requirements of clause (i); and
       (B)(i) in the case of a student in the first or second year 
     of a program of undergraduate education, who enrolls in 
     prerequisite courses for a baccalaureate degree with a major 
     in science, technology, engineering, mathematics, or a 
     critical-need foreign language, as determined by the 
     institution of higher education that the student attends;
       (ii) in the case of a student who has completed 2 years of 
     a program of undergraduate education, who is pursuing a 
     baccalaureate degree with a major in science, technology, 
     engineering, mathematics, or a critical-need foreign 
     language; or
       (iii) in the case of a graduate student, who is pursuing a 
     graduate degree in science, technology, engineering, 
     mathematics, or a critical-need foreign language.
       (2) Amount.--
       (A) Annual amount.--An institution of higher education or 
     consortium that receives a grant under this section shall 
     award a scholarship to a student described in paragraph (1) 
     in an amount that does not exceed $5,500 per academic year, 
     except that no student shall receive for any academic year an 
     amount that is more than the cost of attendance, as 
     determined under section 472 of the Higher Education Act of 
     1965 (20 U.S.C. 1087ll)), at the institution where the 
     student is enrolled for such academic year.
       (B) Reductions in amount for part-time students.--In any 
     case where a student attends an institution of higher 
     education on less than a full-time basis (including a student 
     who attends an institution of higher education on less than a 
     half-time basis) during any academic year, the amount of the 
     scholarship for which that student is eligible shall be 
     reduced in proportion to the degree to which that student is 
     not so attending on a full-time basis, in accordance with a 
     schedule of reductions established by the Secretary for the 
     purpose of this section, computed in accordance with this 
     subsection. Such schedule of reductions shall be established 
     by regulation and published in the Federal Register in 
     accordance with the schedule described in section 482 of the 
     Higher Education Act of 1965 (20 U.S.C. 1089).
       (C) Cumulative amount.--An institution of higher education 
     or consortium receiving a grant under this section may award 
     an individual a scholarship under this subsection for more 
     than 1 year, or for both undergraduate and graduate study, 
     except that--
       (i) no individual shall receive a total amount of 
     scholarship support under this subsection for undergraduate 
     study that is more than $22,000; and
       (ii) no individual shall receive a total amount of 
     scholarship support under this section for graduate study 
     that is more than $22,000.
       (g) Conditions of Support.--As a condition of acceptance of 
     a scholarship under this section, a recipient shall enter 
     into an agreement with the institution of higher education or 
     consortium--
       (1) accepting the terms of the scholarship; and
       (2) agreeing to provide the awarding institution of higher 
     education or consortium with up-to-date contact information 
     and to participate in surveys provided by the Secretary of 
     Education, institution of higher education, or consortium as 
     part of an assessment program.
       (h) Failure To Complete Obligation.--
       (1) General rule.--An individual who has received a 
     scholarship under this section shall be liable to the 
     institution of higher education or consortium that awarded 
     the scholarship, as well as to the United States, for the 
     amount of the scholarship, if such individual--
       (A) fails to maintain an acceptable level of academic 
     standing in the institution of higher education in which the 
     individual is enrolled, as determined by the institution of 
     higher education;
       (B) is dismissed from such institution for disciplinary 
     reasons; or
       (C) withdraws from the baccalaureate or graduate degree 
     program for which the scholarship was made before the 
     completion of such program, and does not transfer into 
     another program that meets the requirements of subsection 
     (f)(1)(B).
       (2) Exclusion from future scholarships.--If a circumstance 
     described in paragraph (1) occurs, all of the following shall 
     apply:
       (A) Nonrenewal of scholarship.--The institution of higher 
     education or consortium

[[Page 10957]]

     shall not renew the scholarship to the individual. However, 
     at the discretion of the institution of higher education or 
     consortium awarding the scholarship, an individual may regain 
     eligibility for a scholarship under this section after 
     completing not less than 1 academic term at the institution, 
     if the individual--
       (i) maintains an acceptable level of academic standing in 
     the institution of higher education, as determined by the 
     institution; and
       (ii) reenrolls in the baccalaureate or graduate degree 
     program for which the scholarship was made.
       (B) Ineligibility for federal scholarships.--The individual 
     shall become automatically ineligible to participate in any 
     Federal scholarship programs for future years.
       (3) Use of recovered scholarship funds.--An institution of 
     higher education or consortium that recovers funds under 
     paragraph (1) shall use such funds to provide additional 
     scholarships under subsection (f).
       (i) Data Collection.--An institution of higher education or 
     consortium receiving a grant under this section shall supply 
     to the Secretary any relevant statistical and demographic 
     data on scholarship recipients the Secretary may request.
       (j) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $750,000,000 for 
     fiscal year 2007 and such sums as may be necessary for each 
     of the 4 succeeding fiscal years.

     SEC. 214. EXPANSION OF NATIONAL SCIENCE FOUNDATION EDUCATION 
                   AND HUMAN RESOURCES DIRECTORATE.

       (a) Purpose.--The purpose of this section is to ensure the 
     continued involvement of experts at the National Science 
     Foundation in improving science, technology, engineering, and 
     mathematics at the elementary, secondary, and postsecondary 
     levels by doubling funding for the education and human 
     resources programs of the National Science Foundation, in 
     addition to the increases made under section 125 for the 
     mathematics and science partnerships described in section 9 
     of the National Science Foundation Authorization Act of 2002 
     and in addition to any other amounts authorized or 
     appropriated to the National Science Foundation.
       (b) Authorization of Appropriations for NSF Education and 
     Human Resources.--There is authorized to be appropriated to 
     the National Science Foundation for education and human 
     resources, in addition to the amounts authorized under 
     section 125(a)(2), amounts as follows:
       (1) For fiscal year 2007, $886,810,000.
       (2) For fiscal year 2008, $1,040,110,000.
       (3) For fiscal year 2009, $1,193,410,000.
       (4) For fiscal year 2010, $1,346,710,000.
       (5) For fiscal year 2011, $1,500,000,000.
       (c) Science, Mathematics, Engineering, and Technology 
     Talent Expansion Program.--Section 8(7)(C) of the National 
     Science Foundation Authorization Act of 2002 (Public Law 107-
     368) is amended--
       (1) by redesignating clauses (i) through (vi) as subclauses 
     (I) through (VI), respectively, and indenting appropriately;
       (2) by striking ``include those that promote high quality--
     '' and inserting ``include programs that--
       ``(i) promote high-quality--''; and
       (3) in clause (i)--
       (A) in subclause (III) (as redesignated by paragraph (1)), 
     by striking ``for students;'' and inserting ``for students, 
     especially underrepresented minority and female mathematics, 
     science, engineering, and technology students;''; and
       (B) in subclause (VI) (as redesignated by paragraph (1)), 
     by striking the period and inserting a semicolon; and
       (4) by adding at the end the following:
       ``(ii) finance summer internships for mathematics, science, 
     engineering, and technology undergraduate students;
       ``(iii) facilitate smaller mathematics, science, 
     engineering, and technology class sizes;
       ``(iv) facilitate the hiring of additional mathematics, 
     science, engineering, and technology faculty;
       ``(v) serve as bridges to enable underrepresented minority 
     and female secondary school students to obtain extra 
     mathematics, science, engineering, and technology training 
     prior to entering an institution of higher education; and
       ``(vi) finance mathematics, science, engineering, and 
     technology student research activities.''.

           Subtitle B--Improving Global Knowledge and Skills

     SEC. 221. DEFINITIONS.

       In this subtitle:
       (1) Institution of higher education.--The term 
     ``institution of higher education'' has the meaning given the 
     term in section 101(a) of the Higher Education Act of 1965 
     (20 U.S.C. 1001(a)).
       (2) Local educational agency; state educational agency.--
     The terms ``local educational agency'' and ``State 
     educational agency'' have the meanings given the terms in 
     section 9101 of the Elementary and Secondary Education Act of 
     1965 (20 U.S.C. 7801).
       (3) Secretary.--The term ``Secretary'' means the Secretary 
     of Education.

     SEC. 222. CRITICAL-NEED LANGUAGES.

       The Secretary shall, prior to requesting applications for 
     grants under this subtitle during each grant cycle, consult 
     with, and receive recommendations regarding, critical need 
     for expertise in foreign languages and world regions from the 
     head official, or a designee of such head official, of the 
     National Security Council, the Department of Homeland 
     Security, the Department of Defense, the Department of State, 
     the Federal Bureau of Investigation, the Department of Labor, 
     and the Department of Commerce, and the Director of National 
     Intelligence. The Secretary shall take into account such 
     recommendations when developing a list of critical-need 
     languages and when requesting applications for grants under 
     this subtitle. The Secretary shall also make available to 
     applicants the list of the critical-need languages for the 
     grant cycle.

     SEC. 223. CRITICAL-NEED LANGUAGE PROGRAM GRANTS.

       (a) Definitions.--In this section:
       (1) Eligible entity.--The term ``eligible entity'' means--
       (A) a State educational agency; or
       (B) a partnership between a local educational agency and an 
     institution of higher education.
       (2) High-need school.--The term ``high-need school'' means 
     a public elementary or secondary school that is eligible for 
     assistance under section 1114(a) of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 6314(a)).
       (b) Program Authorized.--The Secretary shall award grants, 
     on a competitive basis, to eligible entities to enable the 
     eligible entities to develop programs that allow students to 
     be exposed to and immersed in other languages and cultures 
     from the early grades throughout the students' education.
       (c) Application.--An eligible entity desiring a grant under 
     this section shall submit an application to the Secretary at 
     such time, in such manner, and containing such information as 
     the Secretary may require.
       (d) Award Basis.--In awarding grants under this section, 
     the Secretary shall give priority to eligible entities that 
     will use grant funds for programs that target a high-need 
     school.
       (e) Use of Funds.--An eligible entity receiving a grant 
     under this section shall use grant funds to carry out 1 or 
     more of the following:
       (1) Establish and maintain programs in a critical-need 
     language (as determined by the Secretary under section 222) 
     in the elementary schools served by the eligible entity.
       (2) Offer additional or more advanced critical-need 
     language classes in middle schools and secondary schools.
       (3) Create and implement effective models of instruction in 
     critical-need languages and world cultures.
       (4) Create and maintain internationally themed schools 
     that--
       (A) offer dual language immersion programs;
       (B) focus on international content; and
       (C) use technology to bring the world into the classroom 
     virtually.
       (f) Technical Assistance Centers.--
       (1) In general.--The Secretary shall enter into contracts 
     with entities to establish a system of regional critical-need 
     foreign language technical assistance centers focused on 
     developing critical-need language programs in kindergarten 
     through grade 12 education.
       (2) Application.--An entity desiring a contract under this 
     subsection shall submit an application to the Secretary at 
     such time, in such manner, and containing such information as 
     the Secretary may require.
       (3) Activities.--Each center established under this 
     subsection shall--
       (A) assist States and local educational agencies in 
     developing critical-need language curricula; and
       (B) disseminate best practices in the field.
       (g) Report.--Not later than 90 days after the last day of 
     the grant or contract period, an eligible entity receiving a 
     grant under subsection (a) or an entity receiving a contract 
     under subsection (f) shall prepare and submit a report to the 
     Secretary describing the supported activities.
       (h) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $100,000,000 for 
     fiscal year 2007 and such sums as may be necessary for each 
     of the 4 succeeding fiscal years.

     SEC. 224. INTERNATIONAL SUMMER INSTITUTE GRANTS.

       (a) Program Authorized.--The Secretary shall award grants, 
     on a competitive basis, to institutions of higher education 
     or nonprofit organizations (or consortia of such institutions 
     or organizations) to carry out summer institute programs that 
     help teachers integrate international content into the 
     curricula and improve the teachers' knowledge and teaching of 
     foreign cultures.
       (b) Partnership.--In order to receive a grant under this 
     section, an institution of higher education or a nonprofit 
     organization (or a consortium of such institutions or 
     organizations) shall enter into a partnership with a local 
     educational agency to carry out the grant activities.
       (c) Application.--An institution of higher education, 
     nonprofit organization, or consortium desiring a grant under 
     this section shall submit an application to the Secretary at 
     such time, in such manner, and containing such information as 
     the Secretary may require.

[[Page 10958]]

       (d) Use of Funds.--An institution of higher education, 
     nonprofit organization, or consortium receiving a grant under 
     this section shall use grant funds to carry out 1 or more of 
     the following:
       (1) Integrate international content into existing summer 
     institute programs.
       (2) Assist States in creating new summer institutes to 
     prepare teachers--
       (A) to teach international subjects, such as world history, 
     global economics, and geography; and
       (B) to integrate international content into other subjects 
     to improve global competence.
       (e) Report.--Not later than 90 days after the last day of 
     the grant period, an institution of higher education, 
     nonprofit organization, or consortium receiving a grant under 
     this section shall prepare and submit a report to the 
     Secretary describing the grant activities.
       (f) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $100,000,000 for 
     fiscal year 2007 and such sums as may be necessary for each 
     of the 4 succeeding fiscal years.

     SEC. 225. INTERNATIONAL AND FOREIGN LANGUAGE STUDIES.

       (a) Purpose.--The purpose of this section is to increase 
     study abroad and foreign language study opportunities in 
     critical-need languages for secondary school, undergraduate, 
     and graduate students.
       (b) Definition of Eligible Entity.--In this section, the 
     term ``eligible entity'' means--
       (1) an institution of higher education;
       (2) a consortium of institutions of higher education;
       (3) an institution of higher education in partnership with 
     an international university;
       (4) an institution of higher education in partnership with 
     a local educational agency;
       (5) a State educational agency; or   
       (6) a local educational agency.
       (c) Program Authorized.--From amounts appropriated under 
     this section for a fiscal year, the Secretary shall award 
     grants, on a competitive basis, to eligible entities to 
     enable the eligible entities to establish or strengthen 
     foreign language study programs in critical-need languages, 
     as determined by the Secretary under section 222.
       (d) Amount and Duration of Grant.--Each grant awarded under 
     this section shall be--
       (1) for an amount of not less than $500,000 for each year 
     of the grant; and
       (2) for a period of not less than 4 years.
       (e) Application.--An eligible entity that desires a grant 
     under this section shall submit an application to the 
     Secretary at such time, in such manner, and containing such 
     information as the Secretary may require.
       (f) Use of Funds.--An eligible entity receiving a grant 
     under this section shall use the grant funds to establish or 
     strengthen foreign language study programs in critical-need 
     languages, which may include the following activities:
       (1) The recruitment and retention of faculty in critical-
     need languages.
       (2) Curriculum development.
       (3) The acquisition of materials to improve instructional 
     programs.
       (4) The expansion of study abroad programs for 
     participating students.
       (5) The development of foreign language immersion programs.
       (6) Summer institutes for faculty development.
       (7) Bridge programs that allow dual enrollment for 
     secondary school students in institutions of higher 
     education.
       (8) Programs to expand the understanding and knowledge of 
     cultural, geographic, and political factors within countries 
     with populations who speak critical-need languages.
       (9) Research on, and evaluation of, the teaching of 
     critical-need foreign languages.
       (10) Participation in national programs impacting critical-
     need foreign languages.
       (11) Data collection and analysis regarding the outcomes of 
     various student recruitment strategies and program design and 
     curricula approaches, and their impact on increasing--
       (A) the number of students studying critical-need 
     languages; and
       (B) the fluency of the students in the languages.
       (g) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $100,000,000 for 
     fiscal year 2007 and such sums as may be necessary for each 
     of the 4 succeeding fiscal years.

         Subtitle C--Investing in Workers Through Job Training

     SEC. 231. PROJECTS TO PROVIDE LITERACY, TECHNOLOGY, AND 
                   TECHNICAL SKILLS TRAINING.

       (a) Definitions.--In this section:
       (1) Secretary.--The term ``Secretary'' means the Secretary 
     of Labor.
       (2) Small business.--The term ``small business'' means a 
     business with not more than 100 employees.
       (b) Projects.--The Secretary shall carry out projects to 
     provide literacy, technology, and technical skills training 
     for workers, including both employed and unemployed workers.
       (c) Grants.--In carrying out projects described in 
     subsection (b), the Secretary shall make grants to eligible 
     partnerships.
       (d) Eligible Partnerships.--
       (1) In general.--To be eligible to receive such a grant, a 
     partnership shall be a local or regional public-private 
     partnership consisting of at least--
       (A) 1 State or local workforce investment board established 
     under section 111 or 117 of the Workforce Investment Act of 
     1998 (29 U.S.C. 2821 or 2832) (including a consortium of such 
     boards in a region);
       (B) 1 institution of higher education, as defined in 
     section 101(a) of the Higher Education Act of 1965, 
     (including a consortium of such institutions);
       (C) 1 business (including a consortium of such businesses) 
     or nonprofit employer; and
       (D) 1 community-based organization, labor union, trade 
     association, or other intermediary.
       (2) Designation of responsible fiscal agents.--Each 
     partnership described in paragraph (1) shall designate a 
     responsible fiscal agent to receive and disburse grant funds 
     under this section.
       (e) Training.--
       (1) Participants.--A partnership that receives a grant 
     under subsection (c) shall provide training through a project 
     described in subsection (b) to persons who are employed and 
     who wish to obtain and upgrade skills to qualify for existing 
     jobs (as of the date such training begins) and to persons who 
     are unemployed.
       (2) Preparation.--Such training shall, to the extent 
     practicable, include the preparation of workers for a broad 
     range of positions along a career ladder.
       (f) Start-Up Activities.--
       (1) In general.--Except as provided in paragraph (2), not 
     more than 5 percent, or $75,000, whichever is less, of the 
     funds made available through a single grant made under this 
     section may be used toward the start-up costs of a 
     partnership or training project.
       (2) Exception.--In the case of partnerships consisting 
     primarily of small businesses, not more than 10 percent, or 
     $150,000, whichever is less, of the funds made available 
     through a single grant made under this section may be used 
     toward the start-up costs of a partnership or training 
     project.
       (3) Duration of start-up period.--For purposes of this 
     subsection, a start-up period consists of a period of not 
     more than 1 month, beginning on the first day of the grant 
     period. At the end of the start-up period, training shall 
     immediately begin and no further Federal funds may be used 
     for start-up costs.
       (g) Applications.--
       (1) In general.--To be eligible to receive a grant under 
     this section, a partnership shall submit an application to 
     the Secretary at such time, in such manner, and containing 
     such information as the Secretary may require.
       (2) Contents.--Each application for such a grant shall--
       (A) provide evidence of the need for the training to be 
     provided through the grant, by providing evidence of skill 
     shortages in existing or emerging industries as demonstrated 
     through reliable regional, State, or local data;
       (B) articulate the level of skills that workers will be 
     trained for and the manner by which attainment of those 
     skills will be measured; and
       (C) include an agreement that the project will be subject 
     to evaluation by the Secretary to measure the effectiveness 
     of the project.
       (3) Matching funds.--Each application for a grant to carry 
     out a project described in subsection (b) shall state the 
     manner by which the partnership will--
       (A) make available, with respect to the costs to be 
     incurred by the partnership in carrying out the project, non-
     Federal contributions (in cash or in kind) in an amount equal 
     to not less than 50 percent of the Federal funds provided 
     under the grant; and
       (B) make the contributions available directly or through 
     donations from public or private entities, and ensure that at 
     least \1/2\ of the contributions will be from businesses or 
     nonprofit employers involved in the partnership.
       (h) Considerations.--
       (1) Projects with commitments.--In making grants under this 
     section, the Secretary shall give consideration to an 
     applicant that provides a specific, measurable commitment--
       (A) upon successful completion of a training course by a 
     participant--
       (i) who is unemployed, to hire or effectuate the hiring of 
     the participant (where applicable);
       (ii) who is an incumbent worker, to increase the wages or 
     salary of the worker (where applicable); or
       (iii) to provide skill certification to the participant;
       (B) to provide training that is linked to industry-accepted 
     occupational skill standards, certificates, or licensing 
     requirements; or
       (C) to provide a project that will lead to attainment of 
     baccalaureate or associate degrees.
       (2) Expanded and collaborative projects.--In making grants 
     under this section, the Secretary shall give consideration to 
     an applicant that proposes to use grant funds--
       (A) to demonstrate a significant ability to expand a 
     training project through such

[[Page 10959]]

     means as training more workers or offering more courses; and
       (B) to carry out a training project resulting from a 
     collaboration, especially with more than 1 small business or 
     with an entity carrying out a labor-management training 
     project.
       (3) Partnerships involving small businesses.--In making 
     grants under this section, the Secretary shall give 
     consideration to an applicant that involves and directly 
     benefits more than 1 small business.
       (4) Donations from public or private entities.--In making 
     grants under this section, the Secretary shall give 
     consideration to an applicant that provides a specific 
     commitment that a portion of the non-Federal contribution 
     described in subsection (g)(3) will be made available through 
     donations from other public or private entities, so as to 
     demonstrate the long-term sustainability of the project after 
     the expiration of the grant period involved.
       (i) Administrative Costs.--A partnership that receives a 
     grant to carry out a project described in subsection (b) may 
     not use more than 10 percent of the funds made available 
     through the grant to pay for administrative costs associated 
     with the project.
       (j) Authorization of Appropriations.--There are authorized 
     to be appropriated to carry out this section $300,000,000 for 
     fiscal year 2007 and such sums as may be necessary for each 
     of the 4 succeeding fiscal years.
                                 ______
                                 
      By Mr. AKAKA:
  S. 3506. A bill to prohibit the unauthorized removal or use of 
personal information contained in a database owned, operated, or 
maintained by the Federal government; to the Committee on the 
Judiciary.
  Mr. AKAKA. Mr. President, I am introducing the Data Theft Prevention 
Act of 2006 in response to concerns that arose following the recent 
theft of computer equipment from the home of a Department of Veterans 
Affairs employee in early May. I would like to thank my friends Senator 
Schumer, Senator Murray, and Senator Clinton for being original 
cosponsors of this legislation.
  The stolen equipment contained personal information on as many as 
26.5 million veterans, Active Duty, National Guard and Reserve 
personnel. These files had been downloaded from VA databases over a 
period of 3 years by the employee without any authorization, then taken 
out of VA and placed on personal computer equipment at the employee's 
home.
  I am sure my colleagues will be as alarmed as I was when I tell them 
that this unauthorized removal of the personal information from the 
Department of Veterans Affairs was not an illegal act. In fact, I was 
told by VA's inspector general that the employee's only misdeed was of 
a recently established VA Security Guideline, which only carries the 
weight of suggested employee behavior. Despite VA's efforts to provide 
cyber security for the myriad of databases the Department controls, at 
the time of the theft there was no policy or law in place to prevent or 
deter an unauthorized act.
  The legislation I am introducing today would establish Federal 
penalties for anyone, whether a government employee or government 
contractor, who knowingly and without authorization views, uses, 
downloads, or removes any means of identification or individually 
identifiable health information that is in a Federal database. Although 
the incident which triggered my present concerns occurred in VA, this 
legislation would apply to all Federal departments and agencies. The 
legislation would also penalize those who would use any such personal 
information for criminal purposes.
  This legislation is intended to compliment existing Federal personal 
information security policies and to emphasize the need for all Federal 
departments and agencies to review existing policies and clearly lay 
out who is and isn't authorized to use, view, or download personal 
information.
  This legislation would send the clear message that anyone who 
knowingly and without authorization removes personal or health 
information from a Federal database does so at their own risk.
  VA Secretary Nicholson testified last week before the House 
Government Reform Committee that he thought that there should be 
consideration of ``putting some kind of teeth in an enforcement 
mechanism for the compromising and careless and negligent handling of 
personal information.'' This measure would do just that.
  If enacted, violation of the provisions of this law could result in a 
fine of up to $100,000, imprisonment for 1 year, or both. These 
penalties are similar to those which currently apply to Internal 
Revenue Service employees who are responsible for breaches of tax 
information.
  Given the potential impact to our veterans, Active Duty, National 
Guard, and Reserve personnel through identity theft and the incredible 
disruption and costs incurred by the government from the theft of the 
VA data, it is vital that we take steps to deter any future incidents 
and hold accountable those who are responsible.
  I urge our colleagues to support this important legislation and to 
work with me for its prompt enactment. We must do all we can to prevent 
any further compromise of personal data in the hands of the government.
  Mr. President, I ask unanimous consent that the text of this 
legislation be published in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3506

       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 ``Data Theft Prevention Act of 
     2006''.

     SEC. 2. FEDERAL DATABASES.

       (a) In General.--Chapter 101 of title 18, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 2077. Means of identification and individually 
       identifiable health information in Federal databases

       ``(a) Definitions.--In this section:
       ``(1) Federal database.--The term `Federal database' means 
     any electronic database owned, operated, or maintained by or 
     for the Federal Government.
       ``(2) Individually identifiable health information.--The 
     term `individually identifiable health information' has the 
     meaning given the term in the regulations issued under 
     section 264(c) of the Health Insurance Portability and 
     Accountability Act of 1996 (42 U.S.C. 1320d-2 note).
       ``(3) Means of identification.--The term `means of 
     identification' has the meaning given the term in section 
     1028 of this title.
       ``(b) Unauthorized Use.--It shall be unlawful for any 
     person knowingly and without authorization--
       ``(1) to view, use, download, or remove any means of 
     identification or individually identifiable health 
     information that is in a Federal database; or
       ``(2) to transfer such means of identification or 
     individually identifiable health information to, or store 
     such means of identification or individually identifiable 
     health information in, any computer, network, database, or 
     other format used to store information that is not a Federal 
     database.
       ``(c) Use for Criminal Purposes.--It shall be unlawful for 
     any person to use a means of identification or individually 
     identifiable health information obtained directly or 
     indirectly from a Federal database in furtherance of a 
     violation of any Federal or State criminal law.
       ``(d) Penalty.--Any person who violates subsection (b) or 
     (c) shall be fined not more than $100,000, imprisoned not 
     more than 1 year, or both.''.
       (b) Chapter Analysis.--The table of sections for chapter 
     101 of title 18, United States Code, is amended by adding 
     after the item relating to section 2076 the following:

``2077.  Means of identification and individually identifiable health 
              information in Federal databases.''.

                          ____________________