SECTION 1. ESTABLISHMENT OF WORKFORCE SKILLS AND DEVELOPMENT LOAN 
              PROGRAM.

    (a) In General.--Part B of title III of the Job Training 
Partnership Act (29 U.S.C. 1662 et seq.) is amended by adding at the 
end the following new section:

``SEC. 327. WORKFORCE SKILLS AND DEVELOPMENT LOAN PROGRAM.

    ``(a) Findings and Purposes.--
            ``(1) Findings.--The Congress finds that--
                    ``(A) the changing nature of the workforce in the 
                United States is forcing more and more workers to 
                obtain skills upgrading to keep pace;
                    ``(B) employees who receive formal skills upgrading 
                enjoy earning advantages of 25 percent or more over 
                those with no such upgrading;
                    ``(C) the return on investment from formal training 
                through increased productivity is equivalent to 3 times 
                the cost of such training;
                    ``(D) approximately 40 percent of business 
                executives say they cannot modernize their equipment 
                due to worker skill deficiencies;
                    ``(E) companies cite the lack of funds as a major 
                reason for failure to establish and carry out workforce 
                skills upgrading programs;
                    ``(F) although the training of the workforce in the 
                United States is a national concern of utmost 
                importance, limited resources at the Federal level make 
                it infeasible to effectively and efficiently address 
                this concern alone; and
                    ``(G) States, employers, and representatives of 
                employees need to share the responsibility in providing 
                skills upgrading for employees.
            ``(2) Purposes.--The purposes of this section are--
                    ``(A) to encourage industry-based investment in 
                human resource development that promotes the 
                competitiveness of the Nation's industries through 
                productivity and product quality enhancement;
                    ``(B) to ensure secure jobs for those who 
                successfully complete skills upgrading; and
                    ``(C) to supplement, and not supplant, funds 
                available through existing skills upgrading programs 
                conducted by employers, employee representatives, and 
                the government; and
                    ``(D) to establish programs which will not replace, 
                parallel, supplant, compete with, or duplicate in any 
                way existing skills upgrading programs.
    ``(b) Authorization.--
            ``(1) In general.--From amounts reserved under section 
        302(a)(2) for any fiscal year, the Secretary may use not less 
        than 5 percent, but not more than 10 percent, of such amounts 
        to provide grants to States to provide loans to eligible 
        entities described in paragraph (2) to assist such entities in 
        providing skills upgrading for non-managerial employees.
            ``(2) Eligible entities.--An eligible entity described in 
        this paragraph is--
                    ``(A) an employer;
                    ``(B) a representative of employees;
                    ``(C) a business association;
                    ``(D) a trade organization; or
                    ``(E) a consortium consisting of--
                            ``(i) more than 1 of the entities described 
                        in subparagraphs (A) through (D); or
                            ``(ii) an institution of higher education 
                        (as such term is defined in section 481 of the 
                        Higher Education Act of 1965 (20 U.S.C. 1088) 
                        which continues to meet the eligibility and 
                        certification requirements under section 498 of 
                        such Act) and 1 or more of the entities 
                        described in subparagraphs (A) through (D).
    ``(c) Application.--The Secretary may provide a grant to a State 
under subsection (b) only if such State submits to the Secretary an 
application which contains such information as the Secretary may 
reasonably require.
    ``(d) Priority.--In providing grants under subsection (b), the 
Secretary shall give priority to States that have demonstrated the 
ability to expeditiously establish and carry out loan guarantee 
programs described in subsection (f).
    ``(e) Limitations.--
            ``(1) Maximum annual grant amount.--The amount of a grant 
        provided to a State under subsection (b) for any fiscal year 
        shall not exceed $2,000,000.
            ``(2) Maximum total grant amount.--The total amount of 
        grants provided to a State under subsection (b) shall not 
        exceed $5,000,000.
    ``(f) Use of Amounts.--A State shall use amounts received from a 
grant under subsection (b) to establish a loan guarantee program to 
assist eligible entities described in subsection (b)(2) to provide 
skills upgrading for non-managerial employees. In carrying out such 
program, the State shall meet the following requirements:
            ``(1) Establishment of reserve fund for loan guarantees.--
        The State shall establish a reserve fund from amounts received 
        from such grant for the purpose of making commitments to 
        guarantee the payment of principal and interest on loans made 
        by financial institutions to such eligible entities to provide 
        skills upgrading for non-managerial employees.
            ``(2) Criteria for loan guarantees.--The State, in 
        conjunction with appropriate financial institutions, shall 
        establish and publish criteria for providing loan guarantees to 
        eligible entities under the program, including criteria that 
        provides for the following:
                    ``(A) A loan guarantee may be issued under the 
                program only if, at the time such guarantee is issued 
                the eligible entity agrees to pay as an insurance 
                premium an amount equal to 1 percent of the principal 
                received by such entity under the loan to the State's 
                reserve fund.
                    ``(B)(i) Subject to clause (ii), the eligible 
                entity will use amounts received from the loan to 
                provide skills upgrading for mid- and lower- level 
                employees, which may include (but is not limited to)--
                            ``(I) training in total quality management, 
                        statistical process control, production 
                        techniques, office automation, materials 
                        resource planning; and
                            ``(II) training to improve basic skills, 
                        including reading, writing, and arithmatic.
                    ``(ii) In providing such skills upgrading, the 
                eligible entity shall give priority to non-managerial 
                employees who--
                            ``(I) directly produce or deliver goods or 
                        services; or
                            ``(II) are in danger of being terminated or 
                        laid off as a result of modernization in the 
                        workplace, corporate downsizing, foreign or 
                        domestic competition, or Federal policies 
                        adversely affecting 1 or more industries.
                    ``(C) Amounts from a loan shall not be used to pay 
                the wages or other benefits of any employee receiving 
                assistance under the program.
            ``(3) Payment by state to financial institutions in cases 
        of default.--
                    ``(A) In general.--In accordance with criteria 
                developed by the Secretary, the State shall make 
                payments from the State's reserve fund to financial 
                institutions that have provided loans to eligible 
                entities that have defaulted on such loans for the 
                purpose of reimbursing such institutions for the amount 
                of principal and interest remaining unpaid to the 
                institutions by reason of such default.
                    ``(B) No full faith and credit of the united 
                states.--Loans provided by financial institutions to 
                eligible entities under loan guarantee programs under 
                this section shall not be obligations of, or guaranteed 
                in any respect by, the United States.
            ``(4) Limitations on loan guarantees.--The authority of a 
        State to extend loan guarantees under this section shall not at 
        any time exceed an amount equal to 1,000 percent of the 
        aggregate principal amount in the State's reserve fund.
            ``(5) Interest from amounts in reserve fund.--Any interest 
        earned from amounts in the State's reserve fund shall be 
        credited to such fund.
    ``(g) Additional Amounts.--In addition to amounts received from a 
grant under subsection (b), the Governor of a State may use not more 
than 5 percent of the amount reserved under section 302(c) for a fiscal 
year to establish and carry out the loan guarantee program under 
subsection (f).
    ``(h) Federal and State Share.--
            ``(1) Federal share.--The Federal share under this section 
        may not exceed 50 percent of the total cost of the program 
        established under subsection (f) for any fiscal year.
            ``(2) State share.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the State share shall be provided 
                from non-Federal sources and may be in cash or in-kind, 
                fairly evaluated.
                    ``(B) Exception.--The State share may include 
                amounts reserved in accordance with subsection (g).''.
    (b) Conforming Amendments.--
            (1) Reservation of amounts.--Paragraph (1) of section 
        302(c) of the Job Training Partnership Act (29 U.S.C. 
        1652(c)(1)) is amended--
                    (A) in subparagraph (D), by striking ``program 
                system; and'' and inserting ``program system;'';
                    (B) by striking the period at the end of 
                subparagraph (E) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                subparagraph:
            ``(F) establishing and carrying out the loan guarantee 
        program under section 327(f).''.
            (2) Table of contents.--The table of contents of such Act 
        is amended by inserting after the item relating to section 326 
        the following new item:

``Sec. 327. Workforce skills and development loan program.''.

SEC. 2. INFORMATION RELATING TO SKILLS UPGRADING ACTIVITIES FOR 
              CAPACITY BUILDING AND INFORMATION AND DISSEMINATION 
              NETWORK.

    Section 453(b)(2) of the Job Training Partnership Act (29 U.S.C. 
1733(b)(2)) is amended--
            (1) in subparagraph (C)(ii)(V), by striking the period at 
        the end of such subparagraph and inserting ``; and''; and
            (2) by adding at the end the following new subparagraph:
                    ``(D)(i) collect and disseminate information--
                            ``(I) on successful programs to upgrade the 
                        skills of workers carried out pursuant to 
                        section 327;
                            ``(II) on research and evaluation conducted 
                        concerning such programs; and
                            ``(III) that will assist employers, 
                        representatives of employees, business 
                        associations, trade organizations, and 
                        consortia consisting of more than 1 of the 
                        preceding entities in designing and 
                        implementing the most effective skills 
                        upgrading methods available today; and
                    ``(ii) facilitate communication and the exchange of 
                information and ideas among States and the entities 
                described in clause (i)(III) carrying out such skills 
                upgrading pursuant to section 327.''.

SEC. 3. AMENDMENT TO HIGHER EDUCATION ACT OF 1965.

    Section 439(d)(1) of the Higher Education Act of 1965 is amended by 
adding at the end the following new sentence: ``For purposes of this 
section, loans made pursuant to section 327 of the Job Training 
Partnership Act may be considered to be student loans which are not 
insured or guaranteed as provided for in this subsection.''.
Amends the Job Training Partnership Act to establish a workforce skills and development loan program. 
Directs the Secretary of Labor to use certain amounts to make grants to States to establish reserve funds to guarantee loans to employers, employee representatives, and other eligible entities to provide skills upgrading for non-managerial employees.  Gives grant priority to States with demonstrated ability to expeditiously establish and carry out such loan programs. 
Requires the capacity building and information and dissemination network to include information relating to such skills upgrading activities.
To amend the Job Training Partnership Act to establish a workforce skills and development loan program to provide grants to States to guarantee loans made to employers, representatives of employees, and other entities to provide skills upgrading for non-managerial employees, and for other purposes.