A bill to provide incentives for States to establish and administer periodic testing and merit pay programs for elementary school and secondary school teachers, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Parent and Teacher Achievement Act 
of 2001''.

SEC. 2. STATE INCENTIVES FOR TEACHER TESTING AND MERIT PAY.

    (a) Amendments.--Title II of the Elementary and Secondary Education 
Act of 1965 (20 U.S.C. 6601 et seq.) is amended--
            (1) by redesignating part E as part F;
            (2) by redesignating sections 2401 and 2402 as sections 
        2501 and 2502, respectively; and
            (3) by inserting after part D the following:

      ``PART E--STATE INCENTIVES FOR TEACHER TESTING AND MERIT PAY

``SEC. 2401. STATE INCENTIVES FOR TEACHER TESTING AND MERIT PAY.

    ``(a) State Awards.--From funds made available under subsection (b) 
for a fiscal year, the Secretary shall make an award to each State 
that--
            ``(1) administers a test to each elementary school and 
        secondary school teacher in the State, with respect to the 
        subjects taught by the teacher, every 3 to 5 years;
            ``(2) has an elementary school and secondary school teacher 
        compensation system that is based on merit; and
            ``(3) requires elementary school and secondary school 
        teachers to earn continuing education credits as part of a 
        State recertification process.
    ``(b) Available Funding.--Notwithstanding any other provision of 
law, the amount of funds that are available to carry out this section 
for a fiscal year is 50 percent of the amount of funds appropriated to 
carry out this title that are in excess of the amount so appropriated 
for fiscal year 2001, except that no funds shall be available to carry 
out this section for any fiscal year for which--
            ``(1) the amount appropriated to carry out this title 
        exceeds $600,000,000; or
            ``(2) each of the several States is eligible to receive an 
        award under this section.
    ``(c) Award Amount.--A State shall receive an award under this 
section in an amount that bears the same relation to the total amount 
available for awards under this section for a fiscal year as the number 
of States that are eligible to receive such an award for the fiscal 
year bears to the total number of all States so eligible for the fiscal 
year.
    ``(d) Use of Funds.--Funds provided under this section may be used 
by States to carry out the activities described in section 2207.
    ``(e) Definition of State.--In this section, the term `State' means 
each of the 50 States and the District of Columbia.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on October 1, 2001.

SEC. 3. TEACHER TESTING AND MERIT PAY.

    (a) In General.--Notwithstanding any other provision of law, a 
State may use Federal education funds--
            (1) to carry out a test of each elementary school or 
        secondary school teacher in the State with respect to the 
        subjects taught by the teacher; or
            (2) to establish a merit pay program for the teachers.
    (b) Definitions.--In this section, the terms ``elementary school'' 
and ``secondary school'' have the meanings given the terms in section 
14101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 
8801).

SEC. 4. NONREFUNDABLE CREDIT FOR ELEMENTARY AND SECONDARY SCHOOL 
              EXPENSES.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to nonrefundable 
personal credits) is amended by inserting after section 25B the 
following new section:

``SEC. 25C. CREDIT FOR ELEMENTARY AND SECONDARY SCHOOL EXPENSES.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the qualified elementary and 
secondary education expenses (within the meaning of section 530(b)(4)) 
with respect to one or more qualifying students which are paid or 
incurred by the individual during such taxable year.
    ``(b) Limitations.--
            ``(1) Maximum credit.--The credit allowed by subsection (a) 
        for any taxable year shall not exceed $1000 per qualifying 
        student.
            ``(2) Maximum tuition expenses.--The tuition expenses which 
        may be taken into account in determining qualified elementary 
        and secondary education expenses for any taxable year shall not 
        exceed $500 per qualifying student.
    ``(c) Qualifying Student.--For purposes of this section, the term 
`qualifying student' means a dependent (within the meaning of section 
152) or a relative of the taxpayer who is enrolled in school (as 
defined in section 530(b)(4)(B)) on a full-time basis. For purposes of 
the preceding sentence, the term `relative' means an individual bearing 
a relationship to the taxpayer which is described in any of paragraphs 
(1) through (8) of section 152(a).
    ``(d) Denial of Double Benefit.--No deduction or exclusion shall be 
allowed under this chapter for any expense for which credit is allowed 
under this section.
    ``(e) Election To Have Credit Not Apply.--A taxpayer may elect to 
have this section not apply for any taxable year.''.
    (b) Conforming Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 25B the 
following new item:

                              ``Sec. 25C. Credit for elementary and 
                                        secondary school expenses.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 5. CREDIT FOR CONTRIBUTIONS FOR THE BENEFIT OF ELEMENTARY AND 
              SECONDARY SCHOOLS.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to other credits) is 
amended by adding at the end the following new section:

``SEC. 30B. CREDIT FOR CONTRIBUTIONS FOR THE BENEFIT OF ELEMENTARY AND 
              SECONDARY SCHOOLS.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to 75 percent of the qualified charitable contributions of the 
taxpayer for the taxable year.
    ``(b) Maximum Credit.--
            ``(1) Individuals.--In the case of a taxpayer other than a 
        corporation, the credit allowed by subsection (a) for any 
        taxable year shall not exceed $500 ($1,000 in the case of a 
        joint return).
            ``(2) Corporations.--In the case of a corporation, the 
        credit allowed by subsection (a) shall not exceed $100,000.
    ``(c) Qualified Charitable Contribution.--For purposes of this 
section--
            ``(1) In general.--The term `qualified charitable 
        contribution' means, with respect to any taxable year, the 
        aggregate amount allowable as a deduction under section 170 
        (determined without regard to subsection (d)(1)) for cash 
        contributions to a school tuition organization.
            ``(2) School tuition organization.--
                    ``(A) In general.--The term `school tuition 
                organization' means any organization which--
                            ``(i) is described in section 170(c)(2),
                            ``(ii) allocates at least 90 percent of its 
                        gross income and contributions and gifts to 
                        elementary and secondary school scholarships, 
                        and
                            ``(iii) awards scholarships to any student 
                        who is eligible for free or reduced cost lunch 
                        under the school program established under the 
                        Richard B. Russell National School Lunch Act.
                    ``(B) Elementary and secondary school 
                scholarship.--The term `elementary and secondary school 
                scholarship' means any scholarship excludable from 
                gross income under section 117 for expenses related to 
                education at or below the 12th grade.
    ``(d) Special Rules.--
            ``(1) Denial of double benefit.--No deduction shall be 
        allowed under this chapter for any contribution for which 
        credit is allowed under this section.
            ``(2) Application with other credits.--The credit allowable 
        under subsection (a) for any taxable year shall not exceed the 
        excess (if any) of--
                    ``(A) the regular tax for the taxable year, reduced 
                by the sum of the credits allowable under subpart A and 
                the preceding sections of this subpart, over
                    ``(B) the tentative minimum tax for the taxable 
                year.
            ``(3) Controlled groups.--All persons who are treated as 
        one employer under subsection (a) or (b) of section 52 shall be 
        treated as 1 taxpayer for purposes of this section.
    ``(e) Election To Have Credit Not Apply.--A taxpayer may elect to 
have this section not apply for any taxable year.''.
    (b) Conforming Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new item:

                              ``Sec. 30B. Credit for contributions for 
                                        the benefit of elementary and 
                                        secondary schools.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 6. CREDIT TO ELEMENTARY AND SECONDARY SCHOOL TEACHERS WHO PROVIDE 
              CLASSROOM MATERIALS.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to other credits), as 
amended by section 4(a), is amended by adding at the end the following 
new section:

``SEC. 30C. CREDIT TO ELEMENTARY AND SECONDARY SCHOOL TEACHERS WHO 
              PROVIDE CLASSROOM MATERIALS.

    ``(a) Allowance of Credit.--In the case of an eligible educator, 
there shall be allowed as a credit against the tax imposed by this 
chapter for the taxable year an amount equal to the qualified 
elementary and secondary education expenses which are paid or incurred 
by the taxpayer during such taxable year.
    ``(b) Maximum Credit.--The credit allowed by subsection (a) for any 
taxable year shall not exceed $1,000.
    ``(c) Definitions.--
            ``(1) Eligible educator.--The term `eligible educator' 
        means an individual who is a teacher, instructor, counselor, 
        principal, or aide in a school (as defined in section 
        530(b)(4)(B)) for at least 900 hours during a school year.
            ``(2) Qualified elementary and secondary education 
        expenses.--The term `qualified elementary and secondary 
        education expenses' means expenses for books, supplies (other 
        than nonathletic supplies for courses of instruction in health 
        or physical education), computer equipment (including related 
        software and services) and other equipment, and supplementary 
        materials used by an eligible educator in the classroom.
    ``(d) Special Rules.--
            ``(1) Denial of double benefit.--No deduction shall be 
        allowed under this chapter for any expense for which credit is 
        allowed under this section.
            ``(2) Application with other credits.--The credit allowable 
        under subsection (a) for any taxable year shall not exceed the 
        excess (if any) of--
                    ``(A) the regular tax for the taxable year, reduced 
                by the sum of the credits allowable under subpart A and 
                the preceding sections of this subpart, over
                    ``(B) the tentative minimum tax for the taxable 
                year.
    ``(e) Election To Have Credit Not Apply.--A taxpayer may elect to 
have this section not apply for any taxable year.''.
    (b) Clerical Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986, as amended by section 4(b), is amended by adding at the end the 
following new item:

                              ``Sec. 30C. Credit to elementary and 
                                        secondary school teachers who 
                                        provide classroom materials.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

SEC. 7. ADJUSTED GROSS INCOME DETERMINED BY TAKING INTO ACCOUNT 
              PROFESSIONAL DEVELOPMENT EXPENSES OF ELEMENTARY AND 
              SECONDARY SCHOOL TEACHERS.

    (a) In General.--Section 62(a)(2) of the Internal Revenue Code of 
1986 (relating to certain trade and business deductions of employees) 
is amended by adding at the end the following:
                    ``(D) Professional development expenses of 
                elementary and secondary school teachers.--The 
                deductions allowed by section 162 which consist of 
                expenses, not in excess of $1,500, paid or incurred by 
                an eligible educator (as defined section 30C(c)(1)) by 
                reason of the participation of the educator in 
                professional development courses which are related to 
                the curriculum and academic subjects in which the 
                educator provides instruction or to the students for 
                which the educator provides instruction and which are 
                part of a program of professional development which is 
                approved and certified by the appropriate local 
                educational agency (as defined by section 14101 of the 
                Elementary and Secondary Education Act of 1965, as in 
                effect on the date of the enactment of this 
                subparagraph).''.
    (b) Special Rules.--Section 62 of the Internal Revenue Code of 1986 
is amended by adding at the end the following:
    ``(d) Special Rules.--A deduction shall be allowed under subsection 
(a)(2)(D) for expenses only to the extent the amount of such expenses 
exceeds the amount excludable under section 135, 529(c)(1), or 
530(d)(2) for the taxable year.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2001.

Summary: Parent and Teacher Achievement Act of 2001 - Amends the Elementary and Secondary Education Act of 1965 to establish a program for State incentives for teacher testing and merit pay. Directs the Secretary of Education to make an award of such program funds to each State that: (1) administers a test to each elementary and secondary school teacher in the State, with respect to the subjects taught by the teacher, every three to five years. (2) has school teacher compensation system that is based on merit. And (3) requires school teachers to earn continuing education credits as part of a State recertification process. Allows States, regardless of any other Federal law, to use Federal education funds to: (1) test elementary or secondary school teachers in the subjects they teach. Or (2) establish a merit pay program for such teachers. Amends the Internal Revenue Act to provide certain tax credits for: (1) elementary and secondary school expenses, (2) contributions for the benefit of elementary and secondary schools. And (3) elementary and secondary school teachers who provide classroom materials. Allows elementary and secondary school teachers to take a tax deduction for certain professional development expenses.