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[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1720 Received in Senate (RDS)]

104th CONGRESS
  2d Session
                                H. R. 1720

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

           September 24 (legislative day, September 20), 1996

                                Received

_______________________________________________________________________

                                 AN ACT

 
To reorganize the Student Loan Marketing Association, to privatize the 
 College Construction Loan Insurance Association, to amend the Museum 
Services Act to include provisions improving and consolidating Federal 
           library service programs, and for other purposes.

    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 ``Government-
Sponsored Enterprise Privatization Act of 1996''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
               TITLE I--REORGANIZATION AND PRIVATIZATION

Sec. 101. Reorganization of the Student Loan Marketing Association 
                            through the formation of a holding company.
Sec. 102. Connie Lee privatization.
Sec. 103. Eligible institution.
                    TITLE II--MUSEUMS AND LIBRARIES

Sec. 201. Museum and library services.
Sec. 202. National Commission on Libraries and Information Science.
Sec. 203. Transfer of functions from Institute of Museum Services.
Sec. 204. Service of individuals serving on date of enactment.
Sec. 205. Consideration.
Sec. 206. Transition and transfer of funds.
                    TITLE III--EXTENSION OF PROGRAMS

Sec. 301. Extension of National Literacy Act of 1991.
Sec. 302. Adult Education Act Amendments.
Sec. 303. Extension of Carl D. Perkins Vocational and Applied 
                            Technology Education Act.
              TITLE IV--REPEALS AND CONFORMING AMENDMENTS

Sec. 401. Repeals.
Sec. 402. Conforming amendments.

               TITLE I--REORGANIZATION AND PRIVATIZATION

SEC. 101. REORGANIZATION OF THE STUDENT LOAN MARKETING ASSOCIATION 
              THROUGH THE FORMATION OF A HOLDING COMPANY.

    (a) Amendment.--Part B of title IV of the Higher Education Act of 
1965 (20 U.S.C. 1071 et seq.) is amended by inserting after section 439 
(20 U.S.C. 1087-2) the following new section:

``SEC. 440. REORGANIZATION OF THE STUDENT LOAN MARKETING ASSOCIATION 
              THROUGH THE FORMATION OF A HOLDING COMPANY.

    ``(a) Actions by the Association's Board of Directors.--The Board 
of Directors of the Association shall take or cause to be taken all 
such action as the Board of Directors deems necessary or appropriate to 
effect, upon the shareholder approval described in subsection (b), a 
restructuring of the common stock ownership of the Association, as set 
forth in a plan of reorganization adopted by the Board of Directors 
(the terms of which shall be consistent with this section) so that all 
of the outstanding common shares of the Association shall be directly 
owned by a Holding Company. Such actions may include, in the Board of 
Director's discretion, a merger of a wholly owned subsidiary of the 
Holding Company with and into the Association, which would have the 
effect provided in the plan of reorganization and the law of the 
jurisdiction in which such subsidiary is incorporated. As part of the 
restructuring, the Board of Directors may cause--
            ``(1) the common shares of the Association to be converted, 
        on the reorganization effective date, to common shares of the 
        Holding Company on a one for one basis, consistent with 
        applicable State or District of Columbia law; and
            ``(2) Holding Company common shares to be registered with 
        the Securities and Exchange Commission.
    ``(b) Shareholder Approval.--The plan of reorganization adopted by 
the Board of Directors pursuant to subsection (a) shall be submitted to 
common shareholders of the Association for their approval. The 
reorganization shall occur on the reorganization effective date, 
provided that the plan of reorganization has been approved by the 
affirmative votes, cast in person or by proxy, of the holders of a 
majority of the issued and outstanding shares of the Association common 
stock.
    ``(c) Transition.--In the event the shareholders of the Association 
approve the plan of reorganization under subsection (b), the following 
provisions shall apply beginning on the reorganization effective date:
            ``(1) In general.--Except as specifically provided in this 
        section, until the dissolution date the Association shall 
        continue to have all of the rights, privileges and obligations 
        set forth in, and shall be subject to all of the limitations 
        and restrictions of, section 439, and the Association shall 
        continue to carry out the purposes of such section. The Holding 
        Company and any subsidiary of the Holding Company (other than 
        the Association) shall not be entitled to any of the rights, 
        privileges, and obligations, and shall not be subject to the 
        limitations and restrictions, applicable to the Association 
        under section 439, except as specifically provided in this 
        section. The Holding Company and any subsidiary of the Holding 
        Company (other than the Association or a subsidiary of the 
        Association) shall not purchase loans insured under this Act 
        until such time as the Association ceases acquiring such loans, 
        except that the Holding Company may purchase such loans if the 
        Association is merely continuing to acquire loans as a lender 
        of last resort pursuant to section 439(q) or under an agreement 
        with the Secretary described in paragraph (6).
            ``(2) Transfer of certain property.--
                    ``(A) In general.--Except as provided in this 
                section, on the reorganization effective date or as 
                soon as practicable thereafter, the Association shall 
                use the Association's best efforts to transfer to the 
                Holding Company or any subsidiary of the Holding 
                Company (or both), as directed by the Holding Company, 
                all real and personal property of the Association (both 
                tangible and intangible) other than the remaining 
                property. Subject to the preceding sentence, such 
                transferred property shall include all right, title, 
                and interest in--
                            ``(i) direct or indirect subsidiaries of 
                        the Association (excluding special purpose 
                        funding companies in existence on the date of 
                        enactment of this section and any interest in 
                        any government-sponsored enterprise);
                            ``(ii) contracts, leases, and other 
                        agreements of the Association;
                            ``(iii) licenses and other intellectual 
                        property of the Association; and
                            ``(iv) any other property of the 
                        Association.
                    ``(B) Construction.--Nothing in this paragraph 
                shall be construed to prohibit the Association from 
                transferring remaining property from time to time to 
                the Holding Company or any subsidiary of the Holding 
                Company, subject to the provisions of paragraph (4).
            ``(3) Transfer of personnel.--On the reorganization 
        effective date, employees of the Association shall become 
        employees of the Holding Company (or any subsidiary of the 
        Holding Company), and the Holding Company (or any subsidiary of 
        the Holding Company) shall provide all necessary and 
        appropriate management and operational support (including loan 
        servicing) to the Association, as requested by the Association. 
        The Association, however, may obtain such management and 
        operational support from persons or entities not associated 
        with the Holding Company.
            ``(4) Dividends.--The Association may pay dividends in the 
        form of cash or noncash distributions so long as at the time of 
        the declaration of such dividends, after giving effect to the 
        payment of such dividends as of the date of such declaration by 
        the Board of Directors of the Association, the Association's 
        capital would be in compliance with the capital standards and 
        requirements set forth in section 439(r). If, at any time after 
        the reorganization effective date, the Association fails to 
        comply with such capital standards, the Holding Company shall 
        transfer with due diligence to the Association additional 
        capital in such amounts as are necessary to ensure that the 
        Association again complies with the capital standards.
            ``(5) Certification prior to dividend.--Prior to the 
        payment of any dividend under paragraph (4), the Association 
        shall certify to the Secretary of the Treasury that the payment 
        of the dividend will be made in compliance with paragraph (4) 
        and shall provide copies of all calculations needed to make 
        such certification.
            ``(6) Restrictions on new business activity or acquisition 
        of assets by association.--
                    ``(A) In general.--After the reorganization 
                effective date, the Association shall not engage in any 
                new business activities or acquire any additional 
                program assets described in section 439(d) other than 
                in connection with--
                            ``(i) student loan purchases through 
                        September 30, 2007;
                            ``(ii) contractual commitments for future 
                        warehousing advances, or pursuant to letters of 
                        credit or standby bond purchase agreements, 
                        which are outstanding as of the reorganization 
                        effective date;
                            ``(iii) the Association serving as a 
                        lender-of-last-resort pursuant to section 
                        439(q); and
                            ``(iv) the Association's purchase of loans 
                        insured under this part, if the Secretary, with 
                        the approval of the Secretary of the Treasury, 
                        enters into an agreement with the Association 
                        for the continuation or resumption of the 
                        Association's secondary market purchase program 
                        because the Secretary determines there is 
                        inadequate liquidity for loans made under this 
                        part.
                    ``(B) Agreement.--The Secretary is authorized to 
                enter into an agreement described in clause (iv) of 
                subparagraph (A) with the Association covering such 
                secondary market activities. Any agreement entered into 
                under such clause shall cover a period of 12 months, 
                but may be renewed if the Secretary determines that 
                liquidity remains inadequate. The fee provided under 
                section 439(h)(7) shall not apply to loans acquired 
                under any such agreement with the Secretary.
            ``(7) Issuance of debt obligations during the transition 
        period; attributes of debt obligations.--After the 
        reorganization effective date, the Association shall not issue 
        debt obligations which mature later than September 30, 2008, 
        except in connection with serving as a lender-of-last-resort 
        pursuant to section 439(q) or with purchasing loans under an 
        agreement with the Secretary as described in paragraph (6). 
        Nothing in this section shall modify the attributes accorded 
        the debt obligations of the Association by section 439, 
        regardless of whether such debt obligations are incurred prior 
        to, or at any time following, the reorganization effective date 
        or are transferred to a trust in accordance with subsection 
        (d).
            ``(8) Monitoring of safety and soundness.--
                    ``(A) Obligation to obtain, maintain, and report 
                information.--The Association shall obtain such 
                information and make and keep such records as the 
                Secretary of the Treasury may from time to time 
                prescribe concerning--
                            ``(i) the financial risk to the Association 
                        resulting from the activities of any associated 
                        person, to the extent such activities are 
                        reasonably likely to have a material impact on 
                        the financial condition of the Association, 
                        including the Association's capital ratio, the 
                        Association's liquidity, or the Association's 
                        ability to conduct and finance the 
                        Association's operations; and
                            ``(ii) the Association's policies, 
                        procedures, and systems for monitoring and 
                        controlling any such financial risk.
                    ``(B) Summary reports.--The Secretary of the 
                Treasury may require summary reports of the information 
                described in subparagraph (A) to be filed no more 
                frequently than quarterly. If, as a result of adverse 
                market conditions or based on reports provided pursuant 
                to this subparagraph or other available information, 
                the Secretary of the Treasury has concerns regarding 
                the financial or operational condition of the 
                Association, the Secretary of the Treasury may, 
                notwithstanding the preceding sentence and subparagraph 
                (A), require the Association to make reports concerning 
                the activities of any associated person whose business 
                activities are reasonably likely to have a material 
                impact on the financial or operational condition of the 
                Association.
                    ``(C) Separate operation of corporations.--
                            ``(i) In general.--The funds and assets of 
                        the Association shall at all times be 
                        maintained separately from the funds and assets 
                        of the Holding Company or any subsidiary of the 
                        Holding Company and may be used by the 
                        Association solely to carry out the 
                        Association's purposes and to fulfill the 
                        Association's obligations.
                            ``(ii) Books and records.--The Association 
                        shall maintain books and records that clearly 
                        reflect the assets and liabilities of the 
                        Association, separate from the assets and 
                        liabilities of the Holding Company or any 
                        subsidiary of the Holding Company.
                            ``(iii) Corporate office.--The Association 
                        shall maintain a corporate office that is 
                        physically separate from any office of the 
                        Holding Company or any subsidiary of the 
                        Holding Company.
                            ``(iv) Director.--No director of the 
                        Association who is appointed by the President 
                        pursuant to section 439(c)(1)(A) may serve as a 
                        director of the Holding Company.
                            ``(v) One officer requirement.--At least 
                        one officer of the Association shall be an 
                        officer solely of the Association.
                            ``(vi) Transactions.--Transactions between 
                        the Association and the Holding Company or any 
                        subsidiary of the Holding Company, including 
                        any loan servicing arrangements, shall be on 
                        terms no less favorable to the Association than 
                        the Association could obtain from an unrelated 
                        third party offering comparable services.
                            ``(vii) Credit prohibition.--The 
                        Association shall not extend credit to the 
                        Holding Company or any subsidiary of the 
                        Holding Company nor guarantee or provide any 
                        credit enhancement to any debt obligations of 
                        the Holding Company or any subsidiary of the 
                        Holding Company.
                            ``(viii) Amounts collected.--Any amounts 
                        collected on behalf of the Association by the 
                        Holding Company or any subsidiary of the 
                        Holding Company with respect to the assets of 
                        the Association, pursuant to a servicing 
                        contract or other arrangement between the 
                        Association and the Holding Company or any 
                        subsidiary of the Holding Company, shall be 
                        collected solely for the benefit of the 
                        Association and shall be immediately deposited 
                        by the Holding Company or such subsidiary to an 
                        account under the sole control of the 
                        Association.
                    ``(D) Encumbrance of assets.--Notwithstanding any 
                Federal or State law, rule, or regulation, or legal or 
                equitable principle, doctrine, or theory to the 
                contrary, under no circumstances shall the assets of 
                the Association be available or used to pay claims or 
                debts of or incurred by the Holding Company. Nothing in 
                this subparagraph shall be construed to limit the right 
                of the Association to pay dividends not otherwise 
                prohibited under this subparagraph or to limit any 
                liability of the Holding Company explicitly provided 
                for in this section.
                    ``(E) Holding company activities.--After the 
                reorganization effective date and prior to the 
                dissolution date, all business activities of the 
                Holding Company shall be conducted through subsidiaries 
                of the Holding Company.
                    ``(F) Confidentiality.--Any information provided by 
                the Association pursuant to this section shall be 
                subject to the same confidentiality obligations 
                contained in section 439(r)(12).
                    ``(G) Definition.--For purposes of this paragraph, 
                the term `associated person' means any person, other 
                than a natural person, who is directly or indirectly 
                controlling, controlled by, or under common control 
                with, the Association.
            ``(9) Issuance of stock warrants.--On the reorganization 
        effective date, the Holding Company shall issue to the 
        Secretary of the Treasury a number of stock warrants that is 
        equal to one percent of the outstanding shares of the 
        Association, determined as of the last day of the fiscal 
        quarter preceding the date of enactment of this section, with 
        each stock warrant entitling the holder of the stock warrant to 
        purchase from the Holding Company one share of the registered 
        common stock of the Holding Company or the Holding Company's 
        successors or assigns, at any time on or before September 30, 
        2008. The exercise price for such warrants shall be an amount 
        equal to the average closing price of the common stock of the 
        Association for the 20 business days prior to the date of 
        enactment of this section on the exchange or market which is 
        then the primary exchange or market for the common stock of the 
        Association. The number of shares of Holding Company common 
        stock subject to each warrant and the exercise price of each 
        warrant shall be adjusted as necessary to reflect--
                    ``(A) the conversion of Association common stock 
                into Holding Company common stock as part of the plan 
                of reorganization approved by the Association's 
                shareholders; and
                    ``(B) any issuance or sale of stock (including 
                issuance or sale of treasury stock), stock split, 
                recapitalization, reorganization, or other corporate 
                event, if agreed to by the Secretary of the Treasury 
                and the Association.
            ``(10) Restrictions on transfer of association shares and 
        bankruptcy of association.--After the reorganization effective 
        date, the Holding Company shall not sell, pledge, or otherwise 
        transfer the outstanding shares of the Association, or agree to 
        or cause the liquidation of the Association or cause the 
        Association to file a petition for bankruptcy under title 11, 
        United States Code, without prior approval of the Secretary of 
        the Treasury and the Secretary of Education.
    ``(d) Termination of the Association.--In the event the 
shareholders of the Association approve a plan of reorganization under 
subsection (b), the Association shall dissolve, and the Association's 
separate existence shall terminate on September 30, 2008, after 
discharge of all outstanding debt obligations and liquidation pursuant 
to this subsection. The Association may dissolve pursuant to this 
subsection prior to such date by notifying the Secretary of Education 
and the Secretary of the Treasury of the Association's intention to 
dissolve, unless within 60 days after receipt of such notice the 
Secretary of Education notifies the Association that the Association 
continues to be needed to serve as a lender of last resort pursuant to 
section 439(q) or continues to be needed to purchase loans under an 
agreement with the Secretary described in paragraph (6). On the 
dissolution date, the Association shall take the following actions:
            ``(1) Establishment of a trust.--The Association shall, 
        under the terms of an irrevocable trust agreement that is in 
        form and substance satisfactory to the Secretary of the 
        Treasury, the Association and the appointed trustee, 
        irrevocably transfer all remaining obligations of the 
        Association to the trust and irrevocably deposit or cause to be 
        deposited into such trust, to be held as trust funds solely for 
        the benefit of holders of the remaining obligations, money or 
        direct noncallable obligations of the United States or any 
        agency thereof for which payment the full faith and credit of 
        the United States is pledged, maturing as to principal and 
        interest in such amounts and at such times as are determined by 
        the Secretary of the Treasury to be sufficient, without 
        consideration of any significant reinvestment of such interest, 
        to pay the principal of, and interest on, the remaining 
        obligations in accordance with their terms. To the extent the 
        Association cannot provide money or qualifying obligations in 
        the amount required, the Holding Company shall be required to 
        transfer money or qualifying obligations to the trust in the 
        amount necessary to prevent any deficiency.
            ``(2) Use of trust assets.--All money, obligations, or 
        financial assets deposited into the trust pursuant to this 
        subsection shall be applied by the trustee to the payment of 
        the remaining obligations assumed by the trust.
            ``(3) Obligations not transferred to the trust.--The 
        Association shall make proper provision for all other 
        obligations of the Association not transferred to the trust, 
        including the repurchase or redemption, or the making of proper 
        provision for the repurchase or redemption, of any preferred 
        stock of the Association outstanding. Any obligations of the 
        Association which cannot be fully satisfied shall become 
        liabilities of the Holding Company as of the date of 
        dissolution.
            ``(4) Transfer of remaining assets.--After compliance with 
        paragraphs (1) and (3), any remaining assets of the trust shall 
        be transferred to the Holding Company or any subsidiary of the 
        Holding Company, as directed by the Holding Company.
    ``(e) Operation of the Holding Company.--In the event the 
shareholders of the Association approve the plan of reorganization 
under subsection (b), the following provisions shall apply beginning on 
the reorganization effective date:
            ``(1) Holding company board of directors.--The number of 
        members and composition of the Board of Directors of the 
        Holding Company shall be determined as set forth in the Holding 
        Company's charter or like instrument (as amended from time to 
        time) or bylaws (as amended from time to time) and as permitted 
        under the laws of the jurisdiction of the Holding Company's 
        incorporation.
            ``(2) Holding company name.--The names of the Holding 
        Company and any subsidiary of the Holding Company (other than 
        the Association)--
                    ``(A) may not contain the name `Student Loan 
                Marketing Association'; and
                    ``(B) may contain, to the extent permitted by 
                applicable State or District of Columbia law, `Sallie 
                Mae' or variations thereof, or such other names as the 
                Board of Directors of the Association or the Holding 
                Company deems appropriate.
            ``(3) Use of sallie mae name.--Subject to paragraph (2), 
        the Association may assign to the Holding Company, or any 
        subsidiary of the Holding Company, the `Sallie Mae' name as a 
        trademark and service mark, except that neither the Holding 
        Company nor any subsidiary of the Holding Company (other than 
        the Association or any subsidiary of the Association) may use 
        the `Sallie Mae' name on, or to identify the issuer of, any 
        debt obligation or other security offered or sold by the 
        Holding Company or any subsidiary of the Holding Company (other 
        than a debt obligation or other security issued to and held by 
        the Holding Company or any subsidiary of the Holding Company). 
        The Association shall remit to the Secretary of the Treasury 
        $5,000,000 within 60 days of the reorganization effective date 
        as compensation for the right to assign such trademark or 
        service mark.
            ``(4) Disclosure required.--Until 3 years after the 
        dissolution date, the Holding Company, and any subsidiary of 
        the Holding Company (other than the Association), shall 
        prominently display--
                    ``(A) in any document offering the Holding 
                Company's securities, a statement that the obligations 
                of the Holding Company and any subsidiary of the 
                Holding Company are not guaranteed by the full faith 
                and credit of the United States; and
                    ``(B) in any advertisement or promotional materials 
                which use the `Sallie Mae' name or mark, a statement 
                that neither the Holding Company nor any subsidiary of 
                the Holding Company is a government-sponsored 
                enterprise or instrumentality of the United States.
    ``(f) Strict Construction.--Except as specifically set forth in 
this section, nothing in this section shall be construed to limit the 
authority of the Association as a federally chartered corporation, or 
of the Holding Company as a State or District of Columbia chartered 
corporation.
    ``(g) Right To Enforce.--The Secretary of Education or the 
Secretary of the Treasury, as appropriate, may request that the 
Attorney General bring an action in the United States District Court 
for the District of Columbia for the enforcement of any provision of 
this section, or may, under the direction or control of the Attorney 
General, bring such an action. Such court shall have jurisdiction and 
power to order and require compliance with this section.
    ``(h) Deadline for Reorganization Effective Date.--This section 
shall be of no further force and effect in the event that the 
reorganization effective date does not occur on or before 18 months 
after the date of enactment of this section.
    ``(i) Definitions.--For purposes of this section:
            ``(1) Association.--The term `Association' means the 
        Student Loan Marketing Association.
            ``(2) Dissolution date.--The term `dissolution date' means 
        September 30, 2008, or such earlier date as the Secretary of 
        Education permits the transfer of remaining obligations in 
        accordance with subsection (d).
            ``(3) Holding company.--The term `Holding Company' means 
        the new business corporation established pursuant to this 
        section by the Association under the laws of any State of the 
        United States or the District of Columbia for the purposes of 
        the reorganization and restructuring described in subsection 
        (a).
            ``(4) Remaining obligations.--The term `remaining 
        obligations' means the debt obligations of the Association 
        outstanding as of the dissolution date.
            ``(5) Remaining property.--The term `remaining property' 
        means the following assets and liabilities of the Association 
        which are outstanding as of the reorganization effective date:
                    ``(A) Debt obligations issued by the Association.
                    ``(B) Contracts relating to interest rate, 
                currency, or commodity positions or protections.
                    ``(C) Investment securities owned by the 
                Association.
                    ``(D) Any instruments, assets, or agreements 
                described in section 439(d) (including, without 
                limitation, all student loans and agreements relating 
                to the purchase and sale of student loans, forward 
                purchase and lending commitments, warehousing advances, 
                academic facilities obligations, letters of credit, 
                standby bond purchase agreements, liquidity agreements, 
                and student loan revenue bonds or other loans).
                    ``(E) Except as specifically prohibited by this 
                section or section 439, any other nonmaterial assets or 
                liabilities of the Association which the Association's 
                Board of Directors determines to be necessary or 
                appropriate to the Association's operations.
            ``(6) Reorganization.--The term `reorganization' means the 
        restructuring event or events (including any merger event) 
        giving effect to the Holding Company structure described in 
        subsection (a).
            ``(7) Reorganization effective date.--The term 
        `reorganization effective date' means the effective date of the 
        reorganization as determined by the Board of Directors of the 
        Association, which shall not be earlier than the date that 
        shareholder approval is obtained pursuant to subsection (b) and 
        shall not be later than the date that is 18 months after the 
        date of enactment of this section.
            ``(8) Subsidiary.--The term `subsidiary' means one or more 
        direct or indirect subsidiaries.''.
    (b) Technical Amendments.--
            (1) Eligible lender.--
                    (A) Amendments to the higher education act.--
                            (i) Definition of eligible lender.--Section 
                        435(d)(1)(F) of the Higher Education Act of 
                        1965 (20 U.S.C. 1085(d)(1)(F)) is amended by 
                        inserting after ``Student Loan Marketing 
                        Association'' the following: ``or the Holding 
                        Company of the Student Loan Marketing 
                        Association, including any subsidiary of the 
                        Holding Company, created pursuant to section 
                        440,''.
                            (ii) Definition of eligible lender and 
                        federal consolidation loans.--Sections 
                        435(d)(1)(G) and 428C(a)(1)(A) of such Act (20 
                        U.S.C. 1085(d)(1)(G) and 1078-3(a)(1)(A)) are 
                        each amended by inserting after ``Student Loan 
                        Marketing Association'' the following: ``or the 
                        Holding Company of the Student Loan Marketing 
                        Association, including any subsidiary of the 
                        Holding Company, created pursuant to section 
                        440''.
                    (B) Effective date.--The amendments made by this 
                paragraph shall take effect on the reorganization 
                effective date as defined in section 440(h) of the 
                Higher Education Act of 1965 (as added by subsection 
                (a)).
            (2) Enforcement of safety and soundness requirements.--
        Section 439(r) of the Higher Education Act of 1965 (20 U.S.C. 
        1087-2(r)) is amended--
                    (A) in the first sentence of paragraph (12), by 
                inserting ``or the Association's associated persons'' 
                after ``by the Association'';
                    (B) by redesignating paragraph (13) as paragraph 
                (15); and
                    (C) by inserting after paragraph (12) the following 
                new paragraph:
            ``(13) Enforcement of safety and soundness requirements.--
        The Secretary of Education or the Secretary of the Treasury, as 
        appropriate, may request that the Attorney General bring an 
        action in the United States District Court for the District of 
        Columbia for the enforcement of any provision of this section, 
        or may, under the direction or control of the Attorney General, 
        bring such an action. Such court shall have jurisdiction and 
        power to order and require compliance with this section.''.
            (3) Financial safety and soundness.--Section 439(r) of the 
        Higher Education Act of 1965 (20 U.S.C. 1087-2(r)) is further 
        amended--
                    (A) in paragraph (1)--
                            (i) by striking ``and'' at the end of 
                        subparagraph (A);
                            (ii) by striking the period at the end of 
                        subparagraph (B) and inserting ``; and''; and
                            (iii) by adding at the end the following 
                        new subparagraph:
                    ``(C)(i) financial statements of the Association 
                within 45 days of the end of each fiscal quarter; and
                    ``(ii) reports setting forth the calculation of the 
                capital ratio of the Association within 45 days of the 
                end of each fiscal quarter.'';
                    (B) in paragraph (2)--
                            (i) by striking clauses (i) and (ii) of 
                        subparagraph (A) and inserting the following:
                    ``(i) appoint auditors or examiners to conduct 
                audits of the Association from time to time to 
                determine the condition of the Association for the 
                purpose of assessing the Association's financial safety 
                and soundness and to determine whether the requirements 
                of this section and section 440 are being met; and
                    ``(ii) obtain the services of such experts as the 
                Secretary of the Treasury determines necessary and 
                appropriate, as authorized by section 3109 of title 5, 
                United States Code, to assist in determining the 
                condition of the Association for the purpose of 
                assessing the Association's financial safety and 
                soundness, and to determine whether the requirements of 
                this section and section 440 are being met.''; and
                            (ii) by adding at the end the following new 
                        subparagraph:
            ``(D) Annual assessment.--
                    ``(i) In general.--For each fiscal year beginning 
                on or after October 1, 1996, the Secretary of the 
                Treasury may establish and collect from the Association 
                an assessment (or assessments) in amounts sufficient to 
                provide for reasonable costs and expenses of carrying 
                out the duties of the Secretary of the Treasury under 
                this section and section 440 during such fiscal year. 
                In no event may the total amount so assessed exceed, 
                for any fiscal year, $800,000, adjusted for each fiscal 
                year ending after September 30, 1997, by the ratio of 
                the Consumer Price Index for All Urban Consumers 
                (issued by the Bureau of Labor Statistics) for the 
                final month of the fiscal year preceding the fiscal 
                year for which the assessment is made to the Consumer 
                Price Index for All Urban Consumers for September 1997.
                    ``(ii) Deposit.--Amounts collected from assessments 
                under this subparagraph shall be deposited in an 
                account within the Treasury of the United States as 
                designated by the Secretary of the Treasury for that 
                purpose. The Secretary of the Treasury is authorized 
                and directed to pay out of any funds available in such 
                account the reasonable costs and expenses of carrying 
                out the duties of the Secretary of the Treasury under 
                this section and section 440. None of the funds 
                deposited into such account shall be available for any 
                purpose other than making payments for such costs and 
                expenses.''; and
                    (C) by inserting after paragraph (13) (as added by 
                paragraph (2)(C)) the following new paragraph:
            ``(14) Actions by secretary.--
                    ``(A) In general.--For any fiscal quarter ending 
                after January 1, 2000, the Association shall have a 
                capital ratio of at least 2.25 percent. The Secretary 
                of the Treasury may, whenever such capital ratio is not 
                met, take any one or more of the actions described in 
                paragraph (7), except that--
                            ``(i) the capital ratio to be restored 
                        pursuant to paragraph (7)(D) shall be 2.25 
                        percent; and
                            ``(ii) if the relevant capital ratio is in 
                        excess of or equal to 2 percent for such 
                        quarter, the Secretary of the Treasury shall 
                        defer taking any of the actions set forth in 
                        paragraph (7) until the next succeeding quarter 
                        and may then proceed with any such action only 
                        if the capital ratio of the Association remains 
                        below 2.25 percent.
                    ``(B) Applicability.--The provisions of paragraphs 
                (4), (5), (6), (8), (9), (10), and (11) shall be of no 
                further application to the Association for any period 
                after January 1, 2000.''.
            (4) Information required; dividends.--Section 439(r) of the 
        Higher Education Act of 1965 (20 U.S.C. 1087-2(r)) is further 
        amended--
                    (A) by adding at the end of paragraph (2) (as 
                amended in paragraph (3)(B)(ii)) the following new 
                subparagraph:
            ``(E) Obligation to obtain, maintain, and report 
        information.--
                    ``(i) In general.--The Association shall obtain 
                such information and make and keep such records as the 
                Secretary of the Treasury may from time to time 
                prescribe concerning--
                            ``(I) the financial risk to the Association 
                        resulting from the activities of any associated 
                        person, to the extent such activities are 
                        reasonably likely to have a material impact on 
                        the financial condition of the Association, 
                        including the Association's capital ratio, the 
                        Association's liquidity, or the Association's 
                        ability to conduct and finance the 
                        Association's operations; and
                            ``(II) the Association's policies, 
                        procedures, and systems for monitoring and 
                        controlling any such financial risk.
                    ``(ii) Summary reports.--The Secretary of the 
                Treasury may require summary reports of such 
                information to be filed no more frequently than 
                quarterly. If, as a result of adverse market conditions 
                or based on reports provided pursuant to this 
                subparagraph or other available information, the 
                Secretary of the Treasury has concerns regarding the 
                financial or operational condition of the Association, 
                the Secretary of the Treasury may, notwithstanding the 
                preceding sentence and clause (i), require the 
                Association to make reports concerning the activities 
                of any associated person, whose business activities are 
                reasonably likely to have a material impact on the 
                financial or operational condition of the Association.
                    ``(iii) Definition.--For purposes of this 
                subparagraph, the term `associated person' means any 
                person, other than a natural person, directly or 
                indirectly controlling, controlled by, or under common 
                control with the Association.''; and
                    (B) by adding at the end the following new 
                paragraphs:
            ``(16) Dividends.--The Association may pay dividends in the 
        form of cash or noncash distributions so long as at the time of 
        the declaration of such dividends, after giving effect to the 
        payment of such dividends as of the date of such declaration by 
        the Board of Directors of the Association, the Association's 
        capital would be in compliance with the capital standards set 
        forth in this section.
            ``(17) Certification prior to payment of dividend.--Prior 
        to the payment of any dividend under paragraph (16), the 
        Association shall certify to the Secretary of the Treasury that 
        the payment of the dividend will be made in compliance with 
        paragraph (16) and shall provide copies of all calculations 
        needed to make such certification.''.
    (c) Sunset of the Association's Charter if No Reorganization Plan 
Occurs.--Section 439 of the Higher Education Act of 1965 (20 U.S.C. 
1087-2) is amended by adding at the end the following new subsection:
    ``(s) Charter Sunset.--
            ``(1) Application of provisions.--This subsection applies 
        beginning 18 months and one day after the date of enactment of 
        this subsection if no reorganization of the Association occurs 
        in accordance with the provisions of section 440.
            ``(2) Sunset plan.--
                    ``(A) Plan submission by the association.--Not 
                later than July 1, 2007, the Association shall submit 
                to the Secretary of the Treasury and to the Chairman 
                and Ranking Member of the Committee on Labor and Human 
                Resources of the Senate and the Chairman and Ranking 
                Member of the Committee on Economic and Educational 
                Opportunities of the House of Representatives, a 
                detailed plan for the orderly winding up, by July 1, 
                2013, of business activities conducted pursuant to the 
                charter set forth in this section. Such plan shall--
                            ``(i) ensure that the Association will have 
                        adequate assets to transfer to a trust, as 
                        provided in this subsection, to ensure full 
                        payment of remaining obligations of the 
                        Association in accordance with the terms of 
                        such obligations;
                            ``(ii) provide that all assets not used to 
                        pay liabilities shall be distributed to 
                        shareholders as provided in this subsection; 
                        and
                            ``(iii) provide that the operations of the 
                        Association shall remain separate and distinct 
                        from that of any entity to which the assets of 
                        the Association are transferred.
                    ``(B) Amendment of the plan by the association.--
                The Association shall from time to time amend such plan 
                to reflect changed circumstances, and submit such 
                amendments to the Secretary of the Treasury and to the 
                Chairman and Ranking Minority Member of the Committee 
                on Labor and Human Resources of the Senate and Chairman 
                and Ranking Minority Member of the Committee on 
                Economic and Educational Opportunities of the House of 
                Representatives. In no case may any amendment extend 
                the date for full implementation of the plan beyond the 
                dissolution date provided in paragraph (3).
                    ``(C) Plan monitoring.--The Secretary of the 
                Treasury shall monitor the Association's compliance 
                with the plan and shall continue to review the plan 
                (including any amendments thereto).
                    ``(D) Amendment of the plan by the secretary of the 
                treasury.--The Secretary of the Treasury may require 
                the Association to amend the plan (including any 
                amendments to the plan), if the Secretary of the 
                Treasury deems such amendments necessary to ensure full 
                payment of all obligations of the Association.
                    ``(E) Implementation by the association.--The 
                Association shall promptly implement the plan 
                (including any amendments to the plan, whether such 
                amendments are made by the Association or are required 
                to be made by the Secretary of the Treasury).
            ``(3) Dissolution of the association.--The Association 
        shall dissolve and the Association's separate existence shall 
        terminate on July 1, 2013, after discharge of all outstanding 
        debt obligations and liquidation pursuant to this subsection. 
        The Association may dissolve pursuant to this subsection prior 
        to such date by notifying the Secretary of Education and the 
        Secretary of the Treasury of the Association's intention to 
        dissolve, unless within 60 days of receipt of such notice the 
        Secretary of Education notifies the Association that the 
        Association continues to be needed to serve as a lender of last 
        resort pursuant to subsection (q) or continues to be needed to 
        purchase loans under an agreement with the Secretary described 
        in paragraph (4)(A). On the dissolution date, the Association 
        shall take the following actions:
                    ``(A) Establishment of a trust.--The Association 
                shall, under the terms of an irrevocable trust 
                agreement in form and substance satisfactory to the 
                Secretary of the Treasury, the Association, and the 
                appointed trustee, irrevocably transfer all remaining 
                obligations of the Association to a trust and 
                irrevocably deposit or cause to be deposited into such 
                trust, to be held as trust funds solely for the benefit 
                of holders of the remaining obligations, money or 
                direct noncallable obligations of the United States or 
                any agency thereof for which payment the full faith and 
                credit of the United States is pledged, maturing as to 
                principal and interest in such amounts and at such 
                times as are determined by the Secretary of the 
                Treasury to be sufficient, without consideration of any 
                significant reinvestment of such interest, to pay the 
                principal of, and interest on, the remaining 
                obligations in accordance with their terms.
                    ``(B) Use of trust assets.--All money, obligations, 
                or financial assets deposited into the trust pursuant 
                to this subsection shall be applied by the trustee to 
                the payment of the remaining obligations assumed by the 
                trust. Upon the fulfillment of the trustee's duties 
                under the trust, any remaining assets of the trust 
                shall be transferred to the persons who, at the time of 
                the dissolution, were the shareholders of the 
                Association, or to the legal successors or assigns of 
                such persons.
                    ``(C) Obligations not transferred to the trust.--
                The Association shall make proper provision for all 
                other obligations of the Association, including the 
                repurchase or redemption, or the making of proper 
                provision for the repurchase or redemption, of any 
                preferred stock of the Association outstanding.
                    ``(D) Transfer of remaining assets.--After 
                compliance with subparagraphs (A) and (C), the 
                Association shall transfer to the shareholders of the 
                Association any remaining assets of the Association.
            ``(4) Restrictions relating to winding up.--
                    ``(A) Restrictions on new business activity or 
                acquisition of assets by the association.--
                            ``(i) In general.--Beginning on July 1, 
                        2009, the Association shall not engage in any 
                        new business activities or acquire any 
                        additional program assets (including acquiring 
                        assets pursuant to contractual commitments) 
                        described in subsection (d) other than in 
                        connection with the Association--
                                    ``(I) serving as a lender of last 
                                resort pursuant to subsection (q); and
                                    ``(II) purchasing loans insured 
                                under this part, if the Secretary, with 
                                the approval of the Secretary of the 
                                Treasury, enters into an agreement with 
                                the Association for the continuation or 
                                resumption of the Association's 
                                secondary market purchase program 
                                because the Secretary determines there 
                                is inadequate liquidity for loans made 
                                under this part.
                            ``(ii) Agreement.--The Secretary is 
                        authorized to enter into an agreement described 
                        in subclause (II) of clause (i) with the 
                        Association covering such secondary market 
                        activities. Any agreement entered into under 
                        such subclause shall cover a period of 12 
                        months, but may be renewed if the Secretary 
                        determines that liquidity remains inadequate. 
                        The fee provided under subsection (h)(7) shall 
                        not apply to loans acquired under any such 
                        agreement with the Secretary.
                    ``(B) Issuance of debt obligations during the wind 
                up period; attributes of debt obligations.--The 
                Association shall not issue debt obligations which 
                mature later than July 1, 2013, except in connection 
                with serving as a lender of last resort pursuant to 
                subsection (q) or with purchasing loans under an 
                agreement with the Secretary as described in 
                subparagraph (A). Nothing in this subsection shall 
                modify the attributes accorded the debt obligations of 
                the Association by this section, regardless of whether 
                such debt obligations are transferred to a trust in 
                accordance with paragraph (3).
                    ``(C) Use of association name.--The Association may 
                not transfer or permit the use of the name `Student 
                Loan Marketing Association', `Sallie Mae', or any 
                variation thereof, to or by any entity other than a 
                subsidiary of the Association.''.
    (d) Discrimination in Secondary Markets Prohibited.--Part B of 
title IV of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.) 
is amended by adding after section 440 (as added by subsection (a)) the 
following new section:

``SEC. 440A. DISCRIMINATION IN SECONDARY MARKETS PROHIBITED.

    ``The Student Loan Marketing Association (and, if the Association 
is privatized under section 440, any successor entity functioning as a 
secondary market for loans under this part, including the Holding 
Company described in such section) shall not engage directly or 
indirectly in any pattern or practice that results in a denial of a 
borrower's access to loans under this part because of the borrower's 
race, sex, color, religion, national origin, age, disability status, 
income, attendance at a particular eligible institution, length of the 
borrower's educational program, or the borrower's academic year at an 
eligible institution.''.
    (e) Repeals.--
            (1) In general.--Sections 439 of the Higher Education Act 
        of 1965 (20 U.S.C. 1087-2) and 440 of such Act (as added by 
        subsection (a) of this section) are repealed.
            (2) Effective date.--The repeals made by paragraph (1) 
        shall be effective one year after--
                    (A) the date on which all of the obligations of the 
                trust established under section 440(d)(1) of the Higher 
                Education Act of 1965 (as added by subsection (a)) have 
                been extinguished, if a reorganization occurs in 
                accordance with section 440 of such Act; or
                    (B) the date on which all of the obligations of the 
                trust established under subsection 439(s)(3)(A) of such 
                Act (as added by subsection (c)) have been 
                extinguished, if a reorganization does not occur in 
                accordance with section 440 of such Act.
    (f) Association Names.--Upon dissolution in accordance with section 
439(s) of the Higher Education Act of 1965 (20 U.S.C. 1087-2), the 
names ``Student Loan Marketing Association'', ``Sallie Mae'', and any 
variations thereof may not be used by any entity engaged in any 
business similar to the business conducted pursuant to section 439 of 
such Act (as such section was in effect on the date of enactment of 
this Act) without the approval of the Secretary of the Treasury.
    (g) Right to Enforce.--The Secretary of Education or the Secretary 
of the Treasury, as appropriate, may request that the Attorney General 
bring an action in the United States District Court for the District of 
Columbia for the enforcement of any provision of subsection (f), or 
may, under the direction or control of the Attorney General, bring such 
an action. Such court shall have jurisdiction and power to order and 
require compliance with subsection (f).

SEC. 102. CONNIE LEE PRIVATIZATION.

    (a) Status of the Corporation and Corporate Powers; Obligations Not 
Federally Guaranteed.--
            (1) Status of the corporation.--The Corporation shall not 
        be an agency, instrumentality, or establishment of the United 
        States Government, nor a Government corporation, nor a 
        Government controlled corporation, as such terms are defined in 
        section 103 of title 5, United States Code. No action under 
        section 1491 of title 28, United States Code (commonly known as 
        the Tucker Act) shall be allowable against the United States 
        based on the actions of the Corporation.
            (2) Corporate powers.--The Corporation shall be subject to 
        the provisions of this section, and, to the extent not 
        inconsistent with this section, to the District of Columbia 
        Business Corporation Act (or the comparable law of another 
        State, if applicable). The Corporation shall have the powers 
        conferred upon a corporation by the District of Columbia 
        Business Corporation Act (or such other applicable State law) 
        as from time to time in effect in order to conduct the 
        Corporation's affairs as a private, for-profit corporation and 
        to carry out the Corporation's purposes and activities 
        incidental thereto. The Corporation shall have the power to 
        enter into contracts, to execute instruments, to incur 
        liabilities, to provide products and services, and to do all 
        things as are necessary or incidental to the proper management 
        of the Corporation's affairs and the efficient operation of a 
        private, for-profit business.
            (3) Limitation on ownership of stock.--
                    (A) Secretary of the treasury.--The Secretary of 
                the Treasury, in completing the sale of stock pursuant 
                to subsection (c), may not sell or issue the stock held 
                by the Secretary of Education to an agency, 
                instrumentality, or establishment of the United States 
                Government, or to a Government corporation or a 
                Government controlled corporation, as such terms are 
                defined in section 103 of title 5, United States Code, 
                or to a government-sponsored enterprise as such term is 
                defined in section 3 of the Congressional Budget Act of 
                1974 (2 U.S.C. 622).
                    (B) Student loan marketing association.--The 
                Student Loan Marketing Association shall not increase 
                its share of the ownership of the Corporation in excess 
                of 42 percent of the shares of stock of the Corporation 
                outstanding on the date of enactment of this Act. The 
                Student Loan Marketing Association shall not control 
                the operation of the Corporation, except that the 
                Student Loan Marketing Association may participate in 
                the election of directors as a shareholder, and may 
                continue to exercise the Student Loan Marketing 
                Association's right to appoint directors under section 
                754 of the Higher Education Act of 1965 (20 U.S.C. 
                1132f-3) as long as that section is in effect.
                    (C) Prohibition.--Until such time as the Secretary 
                of the Treasury sells the stock of the Corporation 
                owned by the Secretary of Education pursuant to 
                subsection (c), the Student Loan Marketing Association 
                shall not provide financial support or guarantees to 
                the Corporation.
                    (D) Financial support or guarantees.--After the 
                Secretary of the Treasury sells the stock of the 
                Corporation owned by the Secretary of Education 
                pursuant to subsection (c), the Student Loan Marketing 
                Association may provide financial support or guarantees 
                to the Corporation, if such support or guarantees are 
                subject to terms and conditions that are no more 
                advantageous to the Corporation than the terms and 
                conditions the Student Loan Marketing Association 
                provides to other entities, including, where 
                applicable, other monoline financial guaranty 
                corporations in which the Student Loan Marketing 
                Association has no ownership interest.
            (4) No federal guarantee.--
                    (A) Obligations insured by the corporation.--
                            (i) Full faith and credit of the united 
                        states.--No obligation that is insured, 
                        guaranteed, or otherwise backed by the 
                        Corporation shall be deemed to be an obligation 
                        that is guaranteed by the full faith and credit 
                        of the United States.
                            (ii) Student loan marketing association.--
                        No obligation that is insured, guaranteed, or 
                        otherwise backed by the Corporation shall be 
                        deemed to be an obligation that is guaranteed 
                        by the Student Loan Marketing Association.
                            (iii) Special rule.--This paragraph shall 
                        not affect the determination of whether such 
                        obligation is guaranteed for purposes of 
                        Federal income taxes.
                    (B) Securities offered by the corporation.--No debt 
                or equity securities of the Corporation shall be deemed 
                to be guaranteed by the full faith and credit of the 
                United States.
            (5) Definition.--The term ``Corporation'' as used in this 
        section means the College Construction Loan Insurance 
        Association as in existence on the day before the date of 
        enactment of this Act, and any successor corporation.
    (b) Related Privatization Requirements.--
            (1) Notice requirements.--
                    (A) In general.--During the six-year period 
                following the date of enactment of this Act, the 
                Corporation shall include, in each of the Corporation's 
                contracts for the insurance, guarantee, or reinsurance 
                of obligations, and in each document offering debt or 
                equity securities of the Corporation, a prominent 
                statement providing notice that--
                            (i) such obligations or such securities, as 
                        the case may be, are not obligations of the 
                        United States, nor are such obligations or such 
                        securities, as the case may be, guaranteed in 
                        any way by the full faith and credit of the 
                        United States; and
                            (ii) the Corporation is not an 
                        instrumentality of the United States.
                    (B) Additional notice.--During the five-year period 
                following the sale of stock pursuant to subsection 
                (c)(1), in addition to the notice requirements in 
                subparagraph (A), the Corporation shall include, in 
                each of the contracts and documents referred to in such 
                subparagraph, a prominent statement providing notice 
                that the United States is not an investor in the 
                Corporation.
            (2) Corporate charter.--The Corporation's charter shall be 
        amended as necessary and without delay to conform to the 
        requirements of this section.
            (3) Corporate name.--The name of the Corporation, or of any 
        direct or indirect subsidiary thereof, may not contain the term 
        ``College Construction Loan Insurance Association'', or any 
        substantially similar variation thereof.
            (4) Articles of incorporation.--The Corporation shall amend 
        the Corporation's articles of incorporation without delay to 
        reflect that one of the purposes of the Corporation shall be to 
        guarantee, insure, and reinsure bonds, leases, and other 
        evidences of debt of educational institutions, including 
        Historically Black Colleges and Universities and other academic 
        institutions which are ranked in the lower investment grade 
        category using a nationally recognized credit rating system.
            (5) Requirements until stock sale.--Notwithstanding 
        subsection (d), the requirements of sections 754 and 760 of the 
        Higher Education Act of 1965 (20 U.S.C. 1132f-3 and 1132f-9), 
        as such sections were in effect on the day before the date of 
        enactment of this Act, shall continue to be effective until the 
        day immediately following the date of closing of the purchase 
        of the Secretary of Education's stock (or the date of closing 
        of the final purchase, in the case of multiple transactions) 
        pursuant to subsection (c)(1) of this Act.
    (c) Sale of Federally Owned Stock.--
            (1) Sale of stock required.--The Secretary of the Treasury 
        shall sell, pursuant to section 324 of title 31, United States 
        Code, the stock of the Corporation owned by the Secretary of 
        Education as soon as possible after the date of enactment of 
        this Act, but not later than six months after such date.
            (2) Purchase by the corporation.--In the event that the 
        Secretary of the Treasury is unable to sell the stock, or any 
        portion thereof, at a price acceptable to the Secretary of 
        Education and the Secretary of the Treasury, the Corporation 
        shall purchase, within six months after the date of enactment 
        of this Act, such stock at a price determined by the Secretary 
        of the Treasury and acceptable to the Corporation based on the 
        independent appraisal of one or more nationally recognized 
        financial firms, except that such price shall not exceed the 
        value of the Secretary of Education's stock as determined by 
        the Congressional Budget Office in House Report 104-153, dated 
        June 22, 1995.
            (3) Reimbursement of costs of sale.--The Secretary of the 
        Treasury shall be reimbursed from the proceeds of the sale of 
        the stock under this subsection for all reasonable costs 
        related to such sale, including all reasonable expenses 
        relating to one or more independent appraisals under this 
        subsection.
            (4) Assistance by the corporation.--The Corporation shall 
        provide such assistance as the Secretary of the Treasury and 
        the Secretary of Education may require to facilitate the sale 
        of the stock under this subsection.
    (d) Repeal of Statutory Restrictions and Related Provisions.--Part 
D of title VII of the Higher Education Act of 1965 (20 U.S.C. 1001 et 
seq.) is repealed.

SEC. 103. ELIGIBLE INSTITUTION.

    (a) Amendment.--Section 481(b) of the Higher Education Act of 1965 
(20 U.S.C. 1088(b)) is amended by inserting after the end of the first 
sentence the following new sentence: ``For the purposes of determining 
whether an institution meets the requirements of clause (6), the 
Secretary shall not consider the financial information of any 
institution for a fiscal year that began on or before April 30, 
1994.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to any determination made on or after July 1, 1994, by the 
Secretary of Education pursuant to section 481(b)(6) of the Higher 
Education Act of 1965 (20 U.S.C. 1088(b)(6)).

                    TITLE II--MUSEUMS AND LIBRARIES

SEC. 201. MUSEUM AND LIBRARY SERVICES.

    The Museum Services Act (20 U.S.C. 961 et seq.) is amended to read 
as follows:

                ``TITLE II--MUSEUM AND LIBRARY SERVICES

                    ``Subtitle A--General Provisions

``SEC. 201. SHORT TITLE.

    ``This title may be cited as the `Museum and Library Services Act'.

``SEC. 202. GENERAL DEFINITIONS.

    ``As used in this title:
            ``(1) Commission.--The term `Commission' means the National 
        Commission on Libraries and Information Science established 
        under section 3 of the National Commission on Libraries and 
        Information Sciences Act (20 U.S.C. 1502).
            ``(2) Director.--The term `Director' means the Director of 
        the Institute appointed under section 204.
            ``(3) Institute.--The term `Institute' means the Institute 
        of Museum and Library Services established under section 203.
            ``(4) Museum board.--The term `Museum Board' means the 
        National Museum Services Board established under section 275.

``SEC. 203. INSTITUTE OF MUSEUM AND LIBRARY SERVICES.

    ``(a) Establishment.--There is established, within the National 
Foundation on the Arts and the Humanities, an Institute of Museum and 
Library Services.
    ``(b) Offices.--The Institute shall consist of an Office of Museum 
Services and an Office of Library Services. There shall be a National 
Museum Services Board in the Office of Museum Services.

``SEC. 204. DIRECTOR OF THE INSTITUTE.

    ``(a) Appointment.--
            ``(1) In general.--The Institute shall be headed by a 
        Director, appointed by the President, by and with the advice 
        and consent of the Senate.
            ``(2) Term.--The Director shall serve for a term of 4 
        years.
            ``(3) Qualifications.--Beginning with the first individual 
        appointed to the position of Director after the date of the 
        enactment of the Government-Sponsored Enterprise Privatization 
        Act of 1996, every second individual so appointed shall be 
        appointed from among individuals who have special competence 
        with regard to library and information services. Beginning with 
        the second individual appointed to the position of Director 
        after the date of enactment of the Government-Sponsored 
        Enterprise Privatization Act of 1996, every second individual 
        so appointed shall be appointed from among individuals who have 
        special competence with regard to museum services.
    ``(b) Compensation.--The Director may be compensated at the rate 
provided for level III of the Executive Schedule under section 5314 of 
title 5, United States Code.
    ``(c) Duties and Powers.--The Director shall perform such duties 
and exercise such powers as may be prescribed by law, including 
awarding financial assistance for activities described in this title.
    ``(d) Nondelegation.--The Director shall not delegate any of the 
functions of the Director to any person who is not an officer or 
employee of the Institute.
    ``(e) Coordination.--The Director shall ensure coordination of the 
policies and activities of the Institute with the policies and 
activities of other agencies and offices of the Federal Government 
having interest in and responsibilities for the improvement of museums 
and libraries and information services.

``SEC. 205. DEPUTY DIRECTORS.

    ``The Office of Library Services shall be headed by a Deputy 
Director, who shall be appointed by the Director from among individuals 
who have a graduate degree in library science and expertise in library 
and information services. The Office of Museum Services shall be headed 
by a Deputy Director, who shall be appointed by the Director from among 
individuals who have expertise in museum services.

``SEC. 206. PERSONNEL.

    ``(a) In General.--The Director may, in accordance with applicable 
provisions of title 5, United States Code, appoint and determine the 
compensation of such employees as the Director determines to be 
necessary to carry out the duties of the Institute.
    ``(b) Voluntary Services.--The Director may accept and utilize the 
voluntary services of individuals and reimburse the individuals for 
travel expenses, including per diem in lieu of subsistence, in the same 
amounts and to the same extent as authorized under section 5703 of 
title 5, United States Code, for persons employed intermittently in 
Federal Government service.

``SEC. 207. CONTRIBUTIONS.

    ``The Institute is authorized to solicit, accept, receive, and 
invest in the name of the United States, gifts, bequests, or devises of 
money and other property or services and to use such property or 
services in furtherance of the functions of the Institute. Any proceeds 
from such gifts, bequests, or devises, after acceptance by the 
Institute, shall be paid by the donor or the representative of the 
donor to the Director. The Director shall enter the proceeds in a 
special interest-bearing account to the credit of the Institute for the 
purposes specified in each case.

             ``Subtitle B--Library Services and Technology

``SEC. 211. SHORT TITLE.

    ``This subtitle may be cited as the `Library Services and 
Technology Act'.

``SEC. 212. PURPOSE.

    ``It is the purpose of this subtitle--
            ``(1) to consolidate Federal library service programs;
            ``(2) to stimulate excellence and promote access to 
        learning and information resources in all types of libraries 
        for individuals of all ages;
            ``(3) to promote library services that provide all users 
        access to information through State, regional, national and 
        international electronic networks;
            ``(4) to provide linkages among and between libraries; and
            ``(5) to promote targeted library services to people of 
        diverse geographic, cultural, and socioeconomic backgrounds, to 
        individuals with disabilities, and to people with limited 
        functional literacy or information skills.

``SEC. 213. DEFINITIONS.

    ``As used in this subtitle:
            ``(1) Indian tribe.--The term `Indian tribe' means any 
        tribe, band, nation, or other organized group or community, 
        including any Alaska native village, regional corporation, or 
        village corporation, as defined in or established pursuant to 
        the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et 
        seq.), which is recognized by the Secretary of the Interior as 
        eligible for the special programs and services provided by the 
        United States to Indians because of their status as Indians.
            ``(2) Library.--The term `library' includes--
                    ``(A) a public library;
                    ``(B) a public elementary school or secondary 
                school library;
                    ``(C) an academic library;
                    ``(D) a research library, which for the purposes of 
                this subtitle means a library that--
                            ``(i) makes publicly available library 
                        services and materials suitable for scholarly 
                        research and not otherwise available to the 
                        public; and
                            ``(ii) is not an integral part of an 
                        institution of higher education; and
                    ``(E) a private library, but only if the State in 
                which such private library is located determines that 
                the library should be considered a library for purposes 
                of this subtitle.
            ``(3) Library consortium.--The term `library consortium' 
        means any local, statewide, regional, interstate, or 
        international cooperative association of library entities which 
        provides for the systematic and effective coordination of the 
        resources of school, public, academic, and special libraries 
        and information centers, for improved services for the 
        clientele of such library entities.
            ``(4) State.--The term `State', unless otherwise specified, 
        includes each of the 50 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.
            ``(5) State library administrative agency.--The term `State 
        library administrative agency' means the official agency of a 
        State charged by the law of the State with the extension and 
        development of public library services throughout the State.
            ``(6) State plan.--The term `State plan' means the document 
        which gives assurances that the officially designated State 
        library administrative agency has the fiscal and legal 
        authority and capability to administer all aspects of this 
        subtitle, provides assurances for establishing the State's 
        policies, priorities, criteria, and procedures necessary to the 
        implementation of all programs under this subtitle, submits 
        copies for approval as required by regulations promulgated by 
        the Director, identifies a State's library needs, and sets 
        forth the activities to be taken toward meeting the identified 
        needs supported with the assistance of Federal funds made 
        available under this subtitle.

``SEC. 214. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) Authorization of Appropriations.--
            ``(1) In general.--There are authorized to be appropriated 
        $150,000,000 for fiscal year 1997 and such sums as may be 
        necessary for each of the fiscal years 1998 through 2002 to 
        carry out this subtitle.
            ``(2) Transfer.--The Secretary of Education shall--
                    ``(A) transfer any funds appropriated under the 
                authority of paragraph (1) to the Director to enable 
                the Director to carry out this subtitle; and
                    ``(B) not exercise any authority concerning the 
                administration of this title other than the transfer 
                described in subparagraph (A).
    ``(b) Forward Funding.--
            ``(1) In general.--To the end of affording the responsible 
        Federal, State, and local officers adequate notice of available 
        Federal financial assistance for carrying out ongoing library 
        activities and projects, appropriations for grants, contracts, 
        or other payments under any program under this subtitle are 
        authorized to be included in the appropriations Act for the 
        fiscal year preceding the fiscal year during which such 
        activities and projects shall be carried out.
            ``(2) Additional authorization of appropriations.--In order 
        to effect a transition to the timing of appropriation action 
        authorized by subsection (a), the application of this section 
        may result in the enactment, in a fiscal year, of separate 
        appropriations for a program under this subtitle (whether in 
        the same appropriations Act or otherwise) for two consecutive 
        fiscal years.
    ``(c) Administration.--Not more than 3 percent of the funds 
appropriated under this section for a fiscal year may be used to pay 
for the Federal administrative costs of carrying out this subtitle.

                ``CHAPTER 1--BASIC PROGRAM REQUIREMENTS

``SEC. 221. RESERVATIONS AND ALLOTMENTS.

    ``(a) Reservations.--
            ``(1) In general.--From the amount appropriated under the 
        authority of section 214 for any fiscal year, the Director--
                    ``(A) shall reserve 1\1/2\ percent to award grants 
                in accordance with section 261; and
                    ``(B) shall reserve 4 percent to award national 
                leadership grants or contracts in accordance with 
                section 262.
            ``(2) Special rule.--If the funds reserved pursuant to 
        paragraph (1)(B) for a fiscal year have not been obligated by 
        the end of such fiscal year, then such funds shall be allotted 
        in accordance with subsection (b) for the fiscal year 
        succeeding the fiscal year for which the funds were so 
        reserved.
    ``(b) Allotments.--
            ``(1) In general.--From the sums appropriated under the 
        authority of section 214 and not reserved under subsection (a) 
        for any fiscal year, the Director shall award grants from 
        minimum allotments, as determined under paragraph (3), to each 
        State. Any sums remaining after minimum allotments are made for 
        such year shall be allotted in the manner set forth in 
        paragraph (2).
            ``(2) Remainder.--From the remainder of any sums 
        appropriated under the authority of section 214 that are not 
        reserved under subsection (a) and not allotted under paragraph 
        (1) for any fiscal year, the Director shall award grants to 
        each State in an amount that bears the same relation to such 
        remainder as the population of the State bears to the 
        population of all States.
            ``(3) Minimum allotment.--
                    ``(A) In general.--For the purposes of this 
                subsection, the minimum allotment for each State shall 
                be $340,000, except that the minimum allotment shall be 
                $40,000 in the case of 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.
                    ``(B) Ratable reductions.--If the sum appropriated 
                under the authority of section 214 and not reserved 
                under subsection (a) for any fiscal year is 
                insufficient to fully satisfy the aggregate of the 
                minimum allotments for all States for that purpose for 
                such year, each of such minimum allotments shall be 
                reduced ratably.
                    ``(C) Special rule.--
                            ``(i) In general.--Notwithstanding any 
                        other provision of this subsection and using 
                        funds allotted for the Republic of the Marshall 
                        Islands, the Federated States of Micronesia, 
                        and the Republic of Palau under this 
                        subsection, the Director shall award grants to 
                        Guam, American Samoa, the Commonwealth of the 
                        Northern Mariana Islands, the Republic of the 
                        Marshall Islands, the Federated States of 
                        Micronesia, or the Republic of Palau to carry 
                        out activities described in this subtitle in 
                        accordance with the provisions of this subtitle 
                        that the Director determines are not 
                        inconsistent with this subparagraph.
                            ``(ii) Award basis.--The Director shall 
                        award grants pursuant to clause (i) on a 
                        competitive basis and pursuant to 
                        recommendations from the Pacific Region 
                        Educational Laboratory in Honolulu, Hawaii.
                            ``(iii) Termination of eligibility.--
                        Notwithstanding any other provision of law, the 
                        Republic of the Marshall Islands, the Federated 
                        States of Micronesia, and the Republic of Palau 
                        shall not receive any funds under this subtitle 
                        for any fiscal year that begins after September 
                        30, 2001.
                            ``(iv) Administrative costs.--The Director 
                        may provide not more than 5 percent of the 
                        funds made available for grants under this 
                        subparagraph to pay the administrative costs of 
                        the Pacific Region Educational Laboratory 
                        regarding activities assisted under this 
                        subparagraph.
            ``(4) Data.--The population of each State and of all the 
        States shall be determined by the Director on the basis of the 
        most recent data available from the Bureau of the Census.

``SEC. 222. ADMINISTRATION.

    ``(a) In General.--Not more than 4 percent of the total amount of 
funds received under this subtitle for any fiscal year by a State may 
be used for administrative costs.
    ``(b) Construction.--Nothing in this section shall be construed to 
limit spending for evaluation costs under section 224(c) from sources 
other than this subtitle.

``SEC. 223. PAYMENTS; FEDERAL SHARE; AND MAINTENANCE OF EFFORT 
              REQUIREMENTS.

    ``(a) Payments.--Subject to appropriations provided pursuant to 
section 214, the Director shall pay to each State library 
administrative agency having a State plan approved under section 224 
the Federal share of the cost of the activities described in the State 
plan.
    ``(b) Federal Share.--
            ``(1) In general.--The Federal share shall be 66 percent.
            ``(2) Non-federal share.--The non-Federal share of payments 
        shall be provided from non-Federal, State, or local sources.
    ``(c) Maintenance of Effort.--
            ``(1) State expenditures.--
                    ``(A) Requirement.--
                            ``(i) In general.--The amount otherwise 
                        payable to a State for a fiscal year pursuant 
                        to an allotment under this chapter shall be 
                        reduced if the level of State expenditures, as 
                        described in paragraph (2), for the previous 
                        fiscal year is less than the average of the 
                        total of such expenditures for the 3 fiscal 
                        years preceding that previous fiscal year. The 
                        amount of the reduction in allotment for any 
                        fiscal year shall be equal to the amount by 
                        which the level of such State expenditures for 
                        the fiscal year for which the determination is 
                        made is less than the average of the total of 
                        such expenditures for the 3 fiscal years 
                        preceding the fiscal year for which the 
                        determination is made.
                            ``(ii) Calculation.--Any decrease in State 
                        expenditures resulting from the application of 
                        subparagraph (B) shall be excluded from the 
                        calculation of the average level of State 
                        expenditures for any 3-year period described in 
                        clause (i).
                    ``(B) Decrease in federal support.--If the amount 
                made available under this subtitle for a fiscal year is 
                less than the amount made available under this subtitle 
                for the preceding fiscal year, then the expenditures 
                required by subparagraph (A) for such preceding fiscal 
                year shall be decreased by the same percentage as the 
                percentage decrease in the amount so made available.
            ``(2) Level of state expenditures.--The level of State 
        expenditures for the purposes of paragraph (1) shall include 
        all State dollars expended by the State library administrative 
        agency for library programs that are consistent with the 
        purposes of this subtitle. All funds included in the 
        maintenance of effort calculation under this subsection shall 
        be expended during the fiscal year for which the determination 
        is made, and shall not include capital expenditures, special 
        one-time project costs, or similar windfalls.
            ``(3) Waiver.--The Director may waive the requirements of 
        paragraph (1) if the Director determines that such a waiver 
        would be equitable due to exceptional or uncontrollable 
        circumstances such as a natural disaster or a precipitous and 
        unforeseen decline in the financial resources of the State.

``SEC. 224. STATE PLANS.

    ``(a) State Plan Required.--
            ``(1) In general.--In order to be eligible to receive a 
        grant under this subtitle, a State library administrative 
        agency shall submit a State plan to the Director not later than 
        April 1, 1997.
            ``(2) Duration.--The State plan shall cover a period of 5 
        fiscal years.
            ``(3) Revisions.--If a State library administrative agency 
        makes a substantive revision to its State plan, then the State 
        library administrative agency shall submit to the Director an 
        amendment to the State plan containing such revision not later 
        than April 1 of the fiscal year preceding the fiscal year for 
        which the amendment will be effective.
    ``(b) Contents.--The State plan shall--
            ``(1) establish goals, and specify priorities, for the 
        State consistent with the purposes of this subtitle;
            ``(2) describe activities that are consistent with the 
        goals and priorities established under paragraph (1), the 
        purposes of this subtitle, and section 231, that the State 
        library administrative agency will carry out during such year 
        using such grant;
            ``(3) describe the procedures that such agency will use to 
        carry out the activities described in paragraph (2);
            ``(4) describe the methodology that such agency will use to 
        evaluate the success of the activities established under 
        paragraph (2) in achieving the goals and meeting the priorities 
        described in paragraph (1);
            ``(5) describe the procedures that such agency will use to 
        involve libraries and library users throughout the State in 
        policy decisions regarding implementation of this subtitle; and
            ``(6) provide assurances satisfactory to the Director that 
        such agency will make such reports, in such form and containing 
        such information, as the Director may reasonably require to 
        carry out this subtitle and to determine the extent to which 
        funds provided under this subtitle have been effective in 
        carrying out the purposes of this subtitle.
    ``(c) Evaluation and Report.--Each State library administrative 
agency receiving a grant under this subtitle shall independently 
evaluate, and report to the Director regarding, the activities assisted 
under this subtitle, prior to the end of the 5-year plan.
    ``(d) Information.--Each library receiving assistance under this 
subtitle shall submit to the State library administrative agency such 
information as such agency may require to meet the requirements of 
subsection (c).
    ``(e) Approval.--
            ``(1) In general.--The Director shall approve any State 
        plan under this subtitle that meets the requirements of this 
        subtitle and provides satisfactory assurances that the 
        provisions of such plan will be carried out.
            ``(2) Public availability.--Each State library 
        administrative agency receiving a grant under this subtitle 
        shall make the State plan available to the public.
            ``(3) Administration.--If the Director determines that the 
        State plan does not meet the requirements of this section, the 
        Director shall--
                    ``(A) immediately notify the State library 
                administrative agency of such determination and the 
                reasons for such determination;
                    ``(B) offer the State library administrative agency 
                the opportunity to revise its State plan;
                    ``(C) provide technical assistance in order to 
                assist the State library administrative agency in 
                meeting the requirements of this section; and
                    ``(D) provide the State library administrative 
                agency the opportunity for a hearing.

                     ``CHAPTER 2--LIBRARY PROGRAMS

``SEC. 231. GRANTS TO STATES.

    ``(a) In General.--Of the funds provided to a State library 
administrative agency under section 214, such agency shall expend, 
either directly or through subgrants or cooperative agreements, at 
least 96 percent of such funds for--
            ``(1) establishing or enhancing electronic linkages among 
        or between libraries and library consortia; and
            ``(2) targeting library and information services to persons 
        having difficulty using a library and to underserved urban and 
        rural communities, including children (from birth through age 
        17) from families with incomes below the poverty line (as 
        defined by the Office of Management and Budget and revised 
        annually in accordance with section 673(2) of the Community 
        Services Block Grant Act (42 U.S.C. 9902(2)) applicable to a 
        family of the size involved.
    ``(b) Special Rule.--Each State library administrative agency 
receiving funds under this chapter may apportion the funds available 
for the purposes described in subsection (a) between the two purposes 
described in paragraphs (1) and (2) of such subsection, as appropriate, 
to meet the needs of the individual State.

                 ``CHAPTER 3--ADMINISTRATIVE PROVISIONS

                   ``Subchapter A--State Requirements

``SEC. 251. STATE ADVISORY COUNCILS.

    ``Each State desiring assistance under this subtitle may establish 
a State advisory council which is broadly representative of the library 
entities in the State, including public, school, academic, special, and 
institutional libraries, and libraries serving individuals with 
disabilities.

                  ``Subchapter B--Federal Requirements

``SEC. 261. SERVICES FOR INDIAN TRIBES.

    ``From amounts reserved under section 221(a)(1)(A) for any fiscal 
year the Director shall award grants to organizations primarily serving 
and representing Indian tribes to enable such organizations to carry 
out the activities described in section 231.

``SEC. 262. NATIONAL LEADERSHIP GRANTS OR CONTRACTS.

    ``(a) In General.--From the amounts reserved under section 
221(a)(1)(B) for any fiscal year the Director shall establish and carry 
out a program awarding national leadership grants or contracts to 
enhance the quality of library services nationwide and to provide 
coordination between libraries and museums. Such grants or contracts 
shall be used for activities that may include--
            ``(1) education and training of persons in library and 
        information science, particularly in areas of new technology 
        and other critical needs, including graduate fellowships, 
        traineeships, institutes, or other programs;
            ``(2) research and demonstration projects related to the 
        improvement of libraries, education in library and information 
        science, enhancement of library services through effective and 
        efficient use of new technologies, and dissemination of 
        information derived from such projects;
            ``(3) preservation or digitization of library materials and 
        resources, giving priority to projects emphasizing 
        coordination, avoidance of duplication, and access by 
        researchers beyond the institution or library entity 
        undertaking the project; and
            ``(4) model programs demonstrating cooperative efforts 
        between libraries and museums.
    ``(b) Grants or Contracts.--
            ``(1) In general.--The Director may carry out the 
        activities described in subsection (a) by awarding grants to, 
        or entering into contracts with, libraries, agencies, 
        institutions of higher education, or museums, where 
        appropriate.
            ``(2) Competitive basis.--Grants and contracts under this 
        section shall be awarded on a competitive basis.
    ``(c) Special Rule.--The Director shall make every effort to ensure 
that activities assisted under this section are administered by 
appropriate library and museum professionals or experts.

``SEC. 263. STATE AND LOCAL INITIATIVES.

    ``Nothing in this subtitle shall be construed to interfere with 
State and local initiatives and responsibility in the conduct of 
library services. The administration of libraries, the selection of 
personnel and library books and materials, and insofar as consistent 
with the purposes of this subtitle, the determination of the best uses 
of the funds provided under this subtitle, shall be reserved for the 
States and their local subdivisions.

                     ``Subtitle C--Museum Services

``SEC. 271. PURPOSE.

    ``It is the purpose of this subtitle--
            ``(1) to encourage and assist museums in their educational 
        role, in conjunction with formal systems of elementary, 
        secondary, and postsecondary education, and with programs of 
        nonformal education for all age groups;
            ``(2) to assist museums in modernizing their methods and 
        facilities so that the museums are better able to conserve the 
        cultural, historic, and scientific heritage of the United 
        States; and
            ``(3) to ease the financial burden borne by museums as a 
        result of their increasing use by the public.

``SEC. 272. DEFINITIONS.

    ``As used in this subtitle:
            ``(1) Museum.--The term `museum' means a public or private 
        nonprofit agency or institution organized on a permanent basis 
        for essentially educational or aesthetic purposes, that 
        utilizes a professional staff, owns or utilizes tangible 
        objects, cares for the tangible objects, and exhibits the 
        tangible objects to the public on a regular basis.
            ``(2) State.--The term `State' means each of the 50 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.

``SEC. 273. MUSEUM SERVICES ACTIVITIES.

    ``(a) Grants.--The Director, subject to the policy direction of the 
Museum Board, may make grants to museums to pay for the Federal share 
of the cost of increasing and improving museum services, through such 
activities as--
            ``(1) programs that enable museums to construct or install 
        displays, interpretations, and exhibitions in order to improve 
        museum services provided to the public;
            ``(2) assisting museums in developing and maintaining 
        professionally trained or otherwise experienced staff to meet 
        the needs of the museums;
            ``(3) assisting museums in meeting the administrative costs 
        of preserving and maintaining the collections of the museums, 
        exhibiting the collections to the public, and providing 
        educational programs to the public through the use of the 
        collections;
            ``(4) assisting museums in cooperating with each other in 
        developing traveling exhibitions, meeting transportation costs, 
        and identifying and locating collections available for loan;
            ``(5) assisting museums in the conservation of their 
        collections;
            ``(6) developing and carrying out specialized programs for 
        specific segments of the public, such as programs for urban 
        neighborhoods, rural areas, Indian reservations, and penal and 
        other State institutions; and
            ``(7) model programs demonstrating cooperative efforts 
        between libraries and museums.
    ``(b) Contracts and Cooperative Agreements.--
            ``(1) Projects to strengthen museum services.--The 
        Director, subject to the policy direction of the Museum Board, 
        is authorized to enter into contracts and cooperative 
        agreements with appropriate entities, as determined by the 
        Director, to pay for the Federal share of enabling the entities 
        to undertake projects designed to strengthen museum services, 
        except that any contracts or cooperative agreements entered 
        into pursuant to this subsection shall be effective only to 
        such extent or in such amounts as are provided in 
        appropriations acts.
            ``(2) Limitation on amount.--The aggregate amount of 
        financial assistance made available under this subsection for a 
        fiscal year shall not exceed 15 percent of the amount 
        appropriated under this subtitle for such fiscal year.
            ``(3) Operational expenses.--No financial assistance may be 
        provided under this subsection to pay for operational expenses.
    ``(c) Federal Share.--
            ``(1) 50 percent.--Except as provided in paragraph (2), the 
        Federal share described in subsections (a) and (b) shall be not 
        more than 50 percent.
            ``(2) Greater than 50 percent.--The Director may use not 
        more than 20 percent of the funds made available under this 
        subtitle for a fiscal year to make grants under subsection (a), 
        or enter into contracts or agreements under subsection (b), for 
        which the Federal share may be greater than 50 percent.
    ``(d) Review and Evaluation.--The Director shall establish 
procedures for reviewing and evaluating grants, contracts, and 
cooperative agreements made or entered into under this subtitle. 
Procedures for reviewing grant applications or contracts and 
cooperative agreements for financial assistance under this subtitle 
shall not be subject to any review outside of the Institute.

``SEC. 274. AWARD.

    ``The Director, with the advice of the Museum Board, may annually 
award a National Award for Museum Service to outstanding museums that 
have made significant contributions in service to their communities.

``SEC. 275. NATIONAL MUSEUM SERVICES BOARD.

    ``(a) Establishment.--There is established in the Institute a 
National Museum Services Board.
    ``(b) Composition and Qualifications.--
            ``(1) Composition.--The Museum Board shall consist of the 
        Director and 14 members appointed by the President, by and with 
        the advice and consent of the Senate.
            ``(2) Qualifications.--The appointive members of the Museum 
        Board shall be selected from among citizens of the United 
        States--
                    ``(A) who are members of the general public;
                    ``(B) who are or have been affiliated with--
                            ``(i) resources that, collectively, are 
                        broadly representative of the curatorial, 
                        conservation, educational, and cultural 
                        resources of the United States; or
                            ``(ii) museums that, collectively, are 
                        broadly representative of various types of 
                        museums, including museums relating to science, 
                        history, technology, art, zoos, and botanical 
                        gardens; and
                    ``(C) who are recognized for their broad knowledge, 
                expertise, or experience in museums or commitment to 
                museums.
            ``(3) Geographic and other representation.--Members of the 
        Museum Board shall be appointed to reflect persons from various 
        geographic regions of the United States. The Museum Board may 
        not include, at any time, more than 3 members from a single 
        State. In making such appointments, the President shall give 
        due regard to equitable representation of women, minorities, 
        and persons with disabilities who are involved with museums.
    ``(c) Terms.--
            ``(1) In general.--Each appointive member of the Museum 
        Board shall serve for a term of 5 years, except that--
                    ``(A) of the members first appointed, 3 shall serve 
                for terms of 5 years, 3 shall serve for terms of 4 
                years, 3 shall serve for terms of 3 years, 3 shall 
                serve for terms of 2 years, and 2 shall serve for terms 
                of 1 year, as designated by the President at the time 
                of nomination for appointment; and
                    ``(B) any member appointed to fill a vacancy shall 
                serve for the remainder of the term for which the 
                predecessor of the member was appointed.
            ``(2) Reappointment.--No member of the Museum Board who has 
        been a member for more than 7 consecutive years shall be 
        eligible for reappointment.
            ``(3) Service until successor takes office.--
        Notwithstanding any other provision of this subsection, a 
        member of the Museum Board shall serve after the expiration of 
        the term of the member until the successor to the member takes 
        office.
    ``(d) Duties and Powers.--The Museum Board shall have the 
responsibility to advise the Director on general policies with respect 
to the duties, powers, and authority of the Institute relating to 
museum services, including general policies with respect to--
            ``(1) financial assistance awarded under this subtitle for 
        museum services; and
            ``(2) projects described in section 262(a)(4).
    ``(e) Chairperson.--The President shall designate 1 of the 
appointive members of the Museum Board as Chairperson of the Museum 
Board.
    ``(f) Meetings.--
            ``(1) In general.--The Museum Board shall meet--
                    ``(A) not less than 3 times each year, including--
                            ``(i) not less than 2 times each year 
                        separately; and
                            ``(ii) not less than 1 time each year in a 
                        joint meeting with the Commission, convened for 
                        purposes of making general policies with 
                        respect to financial assistance for projects 
                        described in section 262(a)(4); and
                    ``(B) at the call of the Director.
            ``(2) Vote.--All decisions by the Museum Board with respect 
        to the exercise of the duties and powers of the Museum Board 
        shall be made by a majority vote of the members of the Museum 
        Board who are present. All decisions by the Commission and the 
        Museum Board with respect to the policies described in 
        paragraph (1)(A)(ii) shall be made by a \2/3\ majority vote of 
        the total number of the members of the Commission and the 
        Museum Board who are present.
    ``(g) Quorum.--A majority of the members of the Museum Board shall 
constitute a quorum for the conduct of business at official meetings of 
the Museum Board, but a lesser number of members may hold hearings. A 
majority of the members of the Commission and a majority of the members 
of the Museum Board shall constitute a quorum for the conduct of 
business at official joint meetings of the Commission and the Museum 
Board.
    ``(h) Compensation and Travel Expenses.--
            ``(1) Compensation.--Each member of the Museum Board who is 
        not an officer or employee of the Federal Government may be 
        compensated at a rate to be fixed by the President, but not to 
        exceed the daily equivalent of the maximum rate authorized for 
        a position above grade GS-15 of the General Schedule under 
        section 5108 of title 5, United States Code, for each day 
        (including travel time) during which such member is engaged in 
        the performance of the duties of the Museum Board. All members 
        of the Museum Board who are officers or employees of the 
        Federal Government shall serve without compensation in addition 
        to compensation received for their services as officers or 
        employees of the Federal Government.
            ``(2) Travel expenses.--The members of the Museum Board may 
        be allowed travel expenses, including per diem in lieu of 
        subsistence, in the same amounts and to the same extent, as 
        authorized under section 5703 of title 5, United States Code, 
        for persons employed intermittently in Federal Government 
        service.
    ``(i) Coordination.--The Museum Board, with the advice of the 
Director, shall take steps to ensure that the policies and activities 
of the Institute are coordinated with other activities of the Federal 
Government.

``SEC. 276. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) Grants.--For the purpose of carrying out this subtitle, there 
are authorized to be appropriated to the Director $28,700,000 for the 
fiscal year 1997, and such sums as may be necessary for each of the 
fiscal years 1998 through 2002.
    ``(b) Administration.--Not more than 10 percent of the funds 
appropriated under this section for a fiscal year may be used to pay 
for the administrative costs of carrying out this subtitle.
    ``(c) Sums Remaining Available.--Sums appropriated pursuant to 
subsection (a) for any fiscal year shall remain available for 
obligation until expended.''.

SEC. 202. NATIONAL COMMISSION ON LIBRARIES AND INFORMATION SCIENCE.

    (a) Functions.--Section 5 of the National Commission on Libraries 
and Information Science Act (20 U.S.C. 1504) is amended--
            (1) by redesignating subsections (b) through (d) as 
        subsections (d) through (f), respectively; and
            (2) by inserting after subsection (a) the following:
    ``(b) The Commission shall have the responsibility to advise the 
Director of the Institute of Museum and Library Services on general 
policies with respect to the duties, powers, and authority of the 
Institute of Museum and Library Services relating to library services, 
including--
            ``(1) general policies with respect to--
                    ``(A) financial assistance awarded under the Museum 
                and Library Services Act for library services; and
                    ``(B) projects described in section 262(a)(4) of 
                such Act; and
            ``(2) measures to ensure that the policies and activities 
        of the Institute of Museum and Library Services are coordinated 
        with other activities of the Federal Government.
    ``(c)(1) The Commission shall meet not less than 1 time each year 
in a joint meeting with the National Museum Services Board, convened 
for purposes of providing advice on general policy with respect to 
financial assistance for projects described in section 262(a)(4) of 
such Act.
    ``(2) All decisions by the Commission and the National Museum 
Services Board with respect to the advice on general policy described 
in paragraph (1) shall be made by a \2/3\ majority vote of the total 
number of the members of the Commission and the National Museum 
Services Board who are present.
    ``(3) A majority of the members of the Commission and a majority of 
the members of the National Museum Services Board shall constitute a 
quorum for the conduct of business at official joint meetings of the 
Commission and the National Museum Services Board.''.
    (b) Membership.--Section 6 of the National Commission on Libraries 
and Information Science Act (20 U.S.C. 1505) is amended--
            (1) in subsection (a)--
                    (A) in the first sentence, by striking ``Librarian 
                of Congress'' and inserting ``Librarian of Congress, 
                the Director of the Institute of Museum and Library 
                Services (who shall serve as an ex officio, nonvoting 
                member),'';
                    (B) in the second sentence--
                            (i) by striking ``special competence or 
                        interest in'' and inserting ``special 
                        competence in or knowledge of''; and
                            (ii) by inserting before the period the 
                        following: ``and at least one other of whom 
                        shall be knowledgeable with respect to the 
                        library and information service and science 
                        needs of the elderly'';
                    (C) in the third sentence, by inserting 
                ``appointive'' before ``members''; and
                    (D) in the last sentence, by striking ``term and at 
                least'' and all that follows and inserting ``term.''; 
                and
            (2) in subsection (b), by striking ``the rate specified'' 
        and all that follows through ``and while'' and inserting ``the 
        daily equivalent of the maximum rate authorized for a position 
        above grade GS-15 of the General Schedule under section 5108 of 
        title 5, United States Code, for each day (including 
        traveltime) during which the members are engaged in the 
        business of the Commission. While''.

SEC. 203. TRANSFER OF FUNCTIONS FROM INSTITUTE OF MUSEUM SERVICES.

    (a) Definitions.--For purposes of this section, unless otherwise 
provided or indicated by the context--
            (1) the term ``Federal agency'' has the meaning given to 
        the term ``agency'' by section 551(1) of title 5, United States 
        Code;
            (2) the term ``function'' means any duty, obligation, 
        power, authority, responsibility, right, privilege, activity, 
        or program; and
            (3) the term ``office'' includes any office, 
        administration, agency, institute, unit, organizational entity, 
        or component thereof.
    (b) Transfer of Functions From the Institute of Museum Services and 
the Library Program Office.--There are transferred to the Director of 
the Institute of Museum and Library Services established under section 
203 of the Museum and Library Services Act--
            (1) all functions that the Director of the Institute of 
        Museum Services exercised before the date of enactment of this 
        section (including all related functions of any officer or 
        employee of the Institute of Museum Services); and
            (2) all functions that the Director of Library Programs in 
        the Office of Educational Research and Improvement in the 
        Department of Education exercised before the date of enactment 
        of this section and any related function of any officer or 
        employee of the Department of Education.
    (c) Determinations of Certain Functions by the Office of Management 
and Budget.--If necessary, the Office of Management and Budget shall 
make any determination of the functions that are transferred under 
subsection (b).
    (d) Delegation and Assignment.--Except where otherwise expressly 
prohibited by law or otherwise provided by this section, the Director 
of the Institute of Museum and Library Services may delegate any of the 
functions transferred to the Director of the Institute of Museum and 
Library Services by this section and any function transferred or 
granted to such Director of the Institute of Museum and Library 
Services after the effective date of this section to such officers and 
employees of the Institute of Museum and Library Services as the 
Director of the Institute of Museum and Library Services may designate, 
and may authorize successive redelegations of such functions as may be 
necessary or appropriate, except that any delegation of any such 
functions with respect to libraries shall be made to the Deputy 
Director of the Office of Library Services and with respect to museums 
shall be made to the Deputy Director of the Office of Museum Services. 
No delegation of functions by the Director of the Institute of Museum 
and Library Services under this section or under any other provision of 
this section shall relieve such Director of the Institute of Museum and 
Library Services of responsibility for the administration of such 
functions.
    (e) Reorganization.--The Director of the Institute of Museum and 
Library Services may allocate or reallocate any function transferred 
under subsection (b) among the officers of the Institute of Museum and 
Library Services, and may establish, consolidate, alter, or discontinue 
such organizational entities in the Institute of Museum and Library 
Services as may be necessary or appropriate.
    (f) Rules.--The Director of the Institute of Museum and Library 
Services may prescribe, in accordance with chapters 5 and 6 of title 5, 
United States Code, such rules and regulations as the Director of the 
Institute of Museum and Library Services determines to be necessary or 
appropriate to administer and manage the functions of the Institute of 
Museum and Library Services.
    (g) Transfer and Allocations of Appropriations and Personnel.--
Except as otherwise provided in this section, the personnel employed in 
connection with, and the assets, liabilities, contracts, property, 
records, and unexpended balances of appropriations, authorizations, 
allocations, and other funds employed, used, held, arising from, 
available to, or to be made available in connection with the functions 
transferred by this section, subject to section 1531 of title 31, 
United States Code, shall be transferred to the Institute of Museum and 
Library Services. Unexpended funds transferred pursuant to this 
subsection shall be used only for the purposes for which the funds were 
originally authorized and appropriated.
    (h) Incidental Transfers.--The Director of the Office of Management 
and Budget, at such time or times as the Director shall provide, may 
make such determinations as may be necessary with regard to the 
functions transferred by this section, and make such additional 
incidental dispositions of personnel, assets, liabilities, grants, 
contracts, property, records, and unexpended balances of 
appropriations, authorizations, allocations, and other funds held, 
used, arising from, available to, or to be made available in connection 
with such functions, as may be necessary to carry out this section. The 
Director of the Office of Management and Budget shall provide for the 
termination of the affairs of all entities terminated by this section 
and for such further measures and dispositions as may be necessary to 
effectuate the purposes of this section.
    (i) Effect on Personnel.--
            (1) In general.--Except as otherwise provided by this 
        section, the transfer pursuant to this section of full-time 
        personnel (except special Government employees) and part-time 
        personnel holding permanent positions shall not cause any such 
        employee to be separated or reduced in grade or compensation 
        for 1 year after the date of transfer of such employee under 
        this section.
            (2) Executive schedule positions.--Except as otherwise 
        provided in this section, any person who, on the day preceding 
        the effective date of this section, held a position compensated 
        in accordance with the Executive Schedule prescribed in chapter 
        53 of title 5, United States Code, and who, without a break in 
        service, is appointed in the Institute of Museum and Library 
        Services to a position having duties comparable to the duties 
        performed immediately preceding such appointment shall continue 
        to be compensated in such new position at not less than the 
        rate provided for such previous position, for the duration of 
        the service of such person in such new position.
    (j) Savings Provisions.--
            (1) Continuing effect of legal documents.--All orders, 
        determinations, rules, regulations, permits, agreements, 
        grants, contracts, certificates, licenses, registrations, 
        privileges, and other administrative actions--
                    (A) that have been issued, made, granted, or 
                allowed to become effective by the President, any 
                Federal agency or official of a Federal agency, or by a 
                court of competent jurisdiction, in the performance of 
                functions that are transferred under this section; and
                    (B) that were in effect before the effective date 
                of this section, or were final before the effective 
                date of this section and are to become effective on or 
                after the effective date of this section;
        shall continue in effect according to their terms until 
        modified, terminated, superseded, set aside, or revoked in 
        accordance with law by the President, the Director of the 
        Institute of Museum and Library Services or other authorized 
        official, a court of competent jurisdiction, or by operation of 
        law.
            (2) Proceedings not affected.--This section shall not 
        affect any proceedings, including notices of proposed 
        rulemaking, or any application for any license, permit, 
        certificate, or financial assistance pending before the 
        Institute of Museum Services on the effective date of this 
        section, with respect to functions transferred by this section. 
        Such proceedings and applications shall be continued. Orders 
        shall be issued in such proceedings, appeals shall be taken 
        from the orders, and payments shall be made pursuant to the 
        orders, as if this section had not been enacted, and orders 
        issued in any such proceedings shall continue in effect until 
        modified, terminated, superseded, or revoked by a duly 
        authorized official, by a court of competent jurisdiction, or 
        by operation of law. Nothing in this paragraph shall be 
        construed to prohibit the discontinuance or modification of any 
        such proceeding under the same terms and conditions and to the 
        same extent that such proceeding could have been discontinued 
        or modified if this section had not been enacted.
            (3) Suits not affected.--This section shall not affect 
        suits commenced before the effective date of this section, and 
        in all such suits, proceedings shall be had, appeals taken, and 
        judgments rendered in the same manner and with the same effect 
        as if this section had not been enacted.
            (4) Nonabatement of actions.--No suit, action, or other 
        proceeding commenced by or against the Institute of Museum 
        Services, or by or against any individual in the official 
        capacity of such individual as an officer of the Institute of 
        Museum Services, shall abate by reason of the enactment of this 
        section.
            (5) Administrative actions relating to promulgation of 
        regulations.--Any administrative action relating to the 
        preparation or promulgation of a regulation by the Institute of 
        Museum Services relating to a function transferred under this 
        section may be continued by the Institute of Museum and Library 
        Services with the same effect as if this section had not been 
        enacted.
    (k) Transition.--The Director of the Institute of Museum and 
Library Services may utilize--
            (1) the services of such officers, employees, and other 
        personnel of the Institute of Museum Services with respect to 
        functions transferred to the Institute of Museum and Library 
        Services by this section; and
            (2) funds appropriated to such functions for such period of 
        time as may reasonably be needed to facilitate the orderly 
        implementation of this section.
    (l) References.--A reference in any other Federal law, Executive 
order, rule, regulation, or delegation of authority, or any document of 
or relating to--
            (1) the Director of the Institute of Museum Services with 
        regard to functions transferred under subsection (b), shall be 
        deemed to refer to the Director of the Institute of Museum and 
        Library Services; and
            (2) the Institute of Museum Services with regard to 
        functions transferred under subsection (b), shall be deemed to 
        refer to the Institute of Museum and Library Services.
    (m) Additional Conforming Amendments.--
            (1) Recommended legislation.--After consultation with the 
        appropriate committees of Congress and the Director of the 
        Office of Management and Budget, the Director of the Institute 
        of Museum and Library Services shall prepare and submit to the 
        appropriate committees of Congress recommended legislation 
        containing technical and conforming amendments to reflect the 
        changes made by this section.
            (2) Submission to congress.--Not later than 6 months after 
        the effective date of this section, the Director of the 
        Institute of Museum and Library Services shall submit to the 
        appropriate committees of Congress the recommended legislation 
        referred to under paragraph (1).

SEC. 204. SERVICE OF INDIVIDUALS SERVING ON DATE OF ENACTMENT.

    Notwithstanding section 204 of the Museum and Library Services Act, 
the individual who was appointed to the position of Director of the 
Institute of Museum Services under section 205 of the Museum Services 
Act (as such section was in effect on the day before the date of 
enactment of this Act) and who is serving in such position on the day 
before the date of enactment of this Act shall serve as the first 
Director of the Institute of Museum and Library Services under section 
204 of the Museum and Library Services Act (as added by section 201 of 
this title), and shall serve at the pleasure of the President.

SEC. 205. CONSIDERATION.

    Consistent with title 5, United States Code, in appointing 
employees of the Office of Library Services, the Director of the 
Institute of Museum and Library Services shall give strong 
consideration to individuals with experience in administering State-
based and national library and information services programs.

SEC. 206. TRANSITION AND TRANSFER OF FUNDS.

    (a) Transition.--The Director of the Office of Management and 
Budget shall take appropriate measures to ensure an orderly transition 
from the activities previously administered by the Director of Library 
Programs in the Office of Educational Research and Improvement in the 
Department of Education to the activities administered by the Institute 
for Museum and Library Services under this title. Such measures may 
include the transfer of appropriated funds.
    (b) Transfer.--The Secretary of Education shall transfer to the 
Director the amount of funds necessary to ensure the orderly transition 
from activities previously administered by the Director of the Office 
of Library Programs in the Office of Educational Research and 
Improvement in the Department of Education to the activities 
administered by the Institute for Museum and Library Services. In no 
event shall the amount of funds transferred pursuant to the preceding 
sentence be less than $200,000.

                    TITLE III--EXTENSION OF PROGRAMS

SEC. 301. EXTENSION OF NATIONAL LITERACY ACT OF 1991.

    (a) National Workforce Literacy Assistance Collaborative.--
Subsection (c) of section 201 of the National Literacy Act of 1991 (20 
U.S.C. 1211-1(c)) is amended by striking ``$5,000,000'' and all that 
follows through the period and inserting ``such sums as may be 
necessary for fiscal year 1997.''.
    (b) Functional Literacy and Life Skills Program for State and Local 
Prisoners.--Paragraph (3) of section 601(i) of the National Literacy 
Act of 1991 (20 U.S.C. 1211-2(i)) is amended by striking 
``$10,000,000'' and all that follows through the period and inserting 
``such sums as may be necessary for fiscal year 1997.''.

SEC. 302. ADULT EDUCATION ACT AMENDMENTS.

    The Adult Education Act (20 U.S.C. 1201 et seq.) is amended--
            (1) in section 312--
                    (A) in each of subparagraphs (A) and (B) of 
                paragraph (11), by moving the margins two ems to the 
                right;
                    (B) in each of paragraphs (11) through (15), by 
                moving the margins two ems to the right; and
                    (C) by adding at the end the following:
            ``(16) The term `family literacy services' means services 
        that are of sufficient intensity in terms of hours, and of 
        sufficient duration, to make sustainable changes in a family 
        and that integrate all of the following activities:
                    ``(A) Interactive literacy activities between 
                parents and their children.
                    ``(B) Training for parents on how to be the primary 
                teacher for their children and full partners in the 
                education of their children.
                    ``(C) Parent literacy training.
                    ``(D) An age-appropriate education program for 
                children.'';
            (2) in section 313(a), by striking ``the fiscal year 
        1991,'' and all that follows through ``1995'' and inserting 
        ``fiscal year 1997'';
            (3) in section 321, by inserting ``and family literacy 
        services'' after ``and activities'';
            (4) in the first sentence of section 322(a)(1), by 
        inserting ``and family literacy services'' after ``adult 
        education programs'';
            (5) in section 341(a), by inserting ``and for family 
        literacy services'' after ``adult education'';
            (6) in section 356(k), by striking ``$25,000,000'' and all 
        that follows through the period and inserting ``such sums as 
        may be necessary for fiscal year 1997.'';
            (7) in section 371(e)(1), by striking ``the fiscal year 
        1991,'' and all that follows through the period and inserting 
        ``fiscal year 1997.'';
            (8) in section 384, by striking subsections (c) through 
        (n); and
            (9) by adding at the end the following:

``SEC. 386. NATIONAL INSTITUTE FOR LITERACY.

    ``(a) Establishment.--
            ``(1) In general.--There is established the National 
        Institute for Literacy (in this section referred to as the 
        `Institute'). The Institute shall be administered under the 
        terms of an interagency agreement entered into by the Secretary 
        of Education with the Secretary of Labor and the Secretary of 
        Health and Human Services (in this section referred to as the 
        `Interagency Group'). The Interagency Group may include in the 
        Institute any research and development center, institute, or 
        clearinghouse established within the Department of Education, 
        the Department of Labor, or the Department of Health and Human 
        Services whose purpose is determined by the Interagency Group 
        to be related to the purpose of the Institute.
            ``(2) Offices.--The Institute shall have offices separate 
        from the offices of the Department of Education, the Department 
        of Labor, and the Department of Health and Human Services.
            ``(3) Board recommendations.--The Interagency Group shall 
        consider the recommendations of the National Institute for 
        Literacy Advisory Board (in this section referred to as the 
        `Board') established under subsection (d) in planning the goals 
        of the Institute and in the implementation of any programs to 
        achieve such goals.
            ``(4) Daily operations.--The daily operations of the 
        Institute shall be carried out by the Director of the Institute 
        appointed under subsection (g).
    ``(b) Duties.--
            ``(1) In general.--The Institute shall improve the quality 
        and accountability of the adult basic skills and literacy 
        delivery system by--
                    ``(A) providing national leadership for the 
                improvement and expansion of the system for delivery of 
                literacy services;
                    ``(B) coordinating the delivery of such services 
                across Federal agencies;
                    ``(C) identifying effective models of basic skills 
                and literacy education for adults and families that are 
                essential to success in job training, work, the family, 
                and the community;
                    ``(D) supporting the creation of new methods of 
                offering improved literacy services;
                    ``(E) funding a network of State or regional adult 
                literacy resource centers to assist State and local 
                public and private nonprofit efforts to improve 
                literacy by--
                            ``(i) encouraging the coordination of 
                        literacy services;
                            ``(ii) carrying out evaluations of the 
                        effectiveness of adult education and literacy 
                        activities;
                            ``(iii) enhancing the capacity of State and 
                        local organizations to provide literacy 
                        services; and
                            ``(iv) serving as a reciprocal link between 
                        the Institute and providers of adult education 
                        and literacy activities for the purpose of 
                        sharing information, data, research, expertise, 
                        and literacy resources;
                    ``(F) supporting the development of models at the 
                State and local level of accountability systems that 
                consist of goals, performance measures, benchmarks, and 
                assessments that can be used to improve the quality of 
                adult education and literacy activities;
                    ``(G) providing information, and other program 
                improvement activities to national, State, and local 
                organizations, such as--
                            ``(i) improving the capacity of national, 
                        State, and local public and private 
                        organizations that provide literacy and basic 
                        skills services, professional development, and 
                        technical assistance, such as the State or 
                        regional adult literacy resource centers 
                        referred to in subparagraph (E); and
                            ``(ii) establishing a national literacy 
                        electronic database and communications network;
                    ``(H) working with the Interagency Group, Federal 
                agencies, and the Congress to ensure that such Group, 
                agencies, and the Congress have the best information 
                available on literacy and basic skills programs in 
                formulating Federal policy with respect to the issues 
                of literacy, basic skills, and workforce and career 
                development; and
                    ``(I) assisting with the development of policy with 
                respect to literacy and basic skills.
            ``(2) Grants, contracts, and agreements.--The Institute may 
        make grants to, or enter into contracts or cooperative 
        agreements with, individuals, public or private institutions, 
        agencies, organizations, or consortia of such institutions, 
        agencies, or organizations to carry out the activities of the 
        Institute. Such grants, contracts, or agreements shall be 
        subject to the laws and regulations that generally apply to 
        grants, contracts, or agreements entered into by Federal 
        agencies.
    ``(c) Literacy Leadership.--
            ``(1) Fellowships.--The Institute, in consultation with the 
        Board, may award fellowships, with such stipends and allowances 
        as the Director considers necessary, to outstanding individuals 
        pursuing careers in adult education or literacy in the areas of 
        instruction, management, research, or innovation.
            ``(2) Use of fellowships.--Fellowships awarded under this 
        subsection shall be used, under the auspices of the Institute, 
        to engage in research, education, training, technical 
        assistance, or other activities to advance the field of adult 
        education or literacy, including the training of volunteer 
        literacy providers at the national, State, or local level.
            ``(3) Interns and volunteers.--The Institute, in 
        consultation with the Board, may award paid and unpaid 
        internships to individuals seeking to assist the Institute in 
        carrying out its mission. Notwithstanding section 1342 of title 
        31, United States Code, the Institute may accept and use 
        voluntary and uncompensated services as the Institute 
        determines necessary.
    ``(d) National Institute for Literacy Advisory Board.--
            ``(1) Establishment.--
                    ``(A) In general.--There is established a National 
                Institute for Literacy Advisory Board. The Board shall 
                consist of 10 individuals appointed by the President, 
                with the advice and consent of the Senate, from 
                individuals who--
                            ``(i) are not otherwise officers or 
                        employees of the Federal Government; and
                            ``(ii) are representative of entities or 
                        groups described in subparagraph (B).
                    ``(B) Entities or groups described.--The entities 
                or groups referred to in subparagraph (A) are--
                            ``(i) literacy organizations and providers 
                        of literacy services, including--
                                    ``(I) nonprofit providers of 
                                literacy services;
                                    ``(II) providers of programs and 
                                services involving English language 
                                instruction; and
                                    ``(III) providers of services 
                                receiving assistance under this title;
                            ``(ii) businesses that have demonstrated 
                        interest in literacy programs;
                            ``(iii) literacy students;
                            ``(iv) experts in the area of literacy 
                        research;
                            ``(v) State and local governments; and
                            ``(vi) representatives of employees.
            ``(2) Duties.--The Board--
                    ``(A) shall make recommendations concerning the 
                appointment of the Director and staff of the Institute;
                    ``(B) shall provide independent advice on the 
                operation of the Institute; and
                    ``(C) shall receive reports from the Interagency 
                Group and the Director.
            ``(3) Federal advisory committee act.--Except as otherwise 
        provided, the Board established by this subsection shall be 
        subject to the provisions of the Federal Advisory Committee Act 
        (5 U.S.C. App.).
            ``(4) Terms.--
                    ``(A) In general.--Each member of the Board shall 
                be appointed for a term of 3 years, except that the 
                initial terms for members may be 1, 2, or 3 years in 
                order to establish a rotation in which \1/3\ of the 
                members are selected each year. Any such member may be 
                appointed for not more than 2 consecutive terms.
                    ``(B) Vacancy appointments.--Any member appointed 
                to fill a vacancy occurring before the expiration of 
                the term for which the member's predecessor was 
                appointed shall be appointed only for the remainder of 
                that term. A member may serve after the expiration of 
                that member's term until a successor has taken office. 
                A vacancy in the Board shall be filled in the manner in 
                which the original appointment was made. A vacancy in 
                the Board shall not affect the powers of the Board.
            ``(5) Quorum.--A majority of the members of the Board shall 
        constitute a quorum but a lesser number may hold hearings. Any 
        recommendation of the Board may be passed only by a majority of 
        the Board's members present.
            ``(6) Election of officers.--The Chairperson and Vice 
        Chairperson of the Board shall be elected by the members of the 
        Board. The term of office of the Chairperson and Vice 
        Chairperson shall be 2 years.
            ``(7) Meetings.--The Board shall meet at the call of the 
        Chairperson or a majority of the members of the Board.
    ``(e) Gifts, Bequests, and Devises.--The Institute may accept, 
administer, and use gifts or donations of services, money, or property, 
both real and personal.
    ``(f) Mails.--The Board and the Institute may use the United States 
mails in the same manner and under the same conditions as other 
departments and agencies of the Federal Government.
    ``(g) Director.--The Interagency Group, after considering 
recommendations made by the Board, shall appoint and fix the pay of a 
Director.
    ``(h) Applicability of Certain Civil Service Laws.--The Director 
and staff of the Institute may be appointed without regard to the 
provisions of title 5, United States Code, governing appointments in 
the competitive service, and may be paid without regard to the 
provisions of chapter 51 and subchapter III of chapter 53 of that title 
relating to classification and General Schedule pay rates, except that 
an individual so appointed may not receive pay in excess of the maximum 
rate payable under section 5376 of title 5, United States Code.
    ``(i) Experts and Consultants.--The Board and the Institute may 
procure temporary and intermittent services under section 3109(b) of 
title 5, United States Code.
    ``(j) Report.--The Institute shall submit a report biennially to 
the Committee on Economic and Educational Opportunities of the House of 
Representatives and the Committee on Labor and Human Resources of the 
Senate. Each report submitted under this subsection shall include--
            ``(1) a comprehensive and detailed description of the 
        Institute's operations, activities, financial condition, and 
        accomplishments in the field of literacy for the period covered 
        by the report;
            ``(2) a description of how plans for the operation of the 
        Institute for the succeeding two fiscal years will facilitate 
        achievement of the goals of the Institute and the goals of the 
        literacy programs within the Department of Education, the 
        Department of Labor, and the Department of Health and Human 
        Services; and
            ``(3) any additional minority, or dissenting views 
        submitted by members of the Board.
    ``(k) Funding.--Any amounts appropriated to the Secretary of 
Education, the Secretary of Labor, or the Secretary of Health and Human 
Services for purposes that the Institute is authorized to perform under 
this section may be provided to the Institute for such purposes.
    ``(l) Authorization of Appropriations.--There are authorized to be 
appropriated $10,000,000 for fiscal year 1997 and such sums as may be 
necessary for each of the fiscal years 1998 through 2002 to carry out 
this section.''.

SEC. 303. EXTENSION OF CARL D. PERKINS VOCATIONAL AND APPLIED 
              TECHNOLOGY EDUCATION ACT.

    Subsection (a) of section 3 of the Carl D. Perkins Vocational and 
Applied Technology Act is amended by striking ``appropriated'' and all 
that follows through ``1995'' and inserting ``appropriated for fiscal 
year 1997 such sums as may be necessary''.

              TITLE IV--REPEALS AND CONFORMING AMENDMENTS

SEC. 401. REPEALS.

    (a) General Immediate Repeals.--The following provisions are 
repealed:
            (1) Section 204 of the Immigration Reform and Control Act 
        of 1986 (8 U.S.C. 1255a note).
            (2) Title II of Public Law 95-250 (92 Stat. 172).
            (3) The Library Services and Construction Act (20 U.S.C. 
        351 et seq.).
            (4) Part F of the Technology for Education Act of 1994 
        (contained in title III of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 7001 et seq.)).
            (5) Section 211 of the Appalachian Regional Development Act 
        of 1965 (40 U.S.C. App. 211).
            (6) Title VII of the Stewart B. McKinney Homeless 
        Assistance Act (42 U.S.C. 11421 et seq.), except subtitle B and 
        section 738 of such title (42 U.S.C. 11431 et seq. and 11448).
    (b) Immediate Repeal of Higher Education Act of 1965 Provisions.--
The following provisions of the Higher Education Act of 1965 (20 U.S.C. 
1001 et seq.) are repealed:
            (1) Part B of title I (20 U.S.C. 1011 et seq.), relating to 
        articulation agreements.
            (2) Part C of title I (20 U.S.C. 1015 et seq.), relating to 
        access and equity to education for all Americans through 
        telecommunications.
            (3) Title II (20 U.S.C. 1021 et seq.), relating to academic 
        libraries and information services.
            (4) Chapter 3 of subpart 2 of part A of title IV (20 U.S.C. 
        1070a-31 et seq.), relating to presidential access 
        scholarships.
            (5) Chapter 4 of subpart 2 of part A of title IV (20 U.S.C. 
        1070a-41 et seq.), relating to model program community 
        partnerships and counseling grants.
            (6) Section 409B (20 U.S.C. 1070a-52), relating to an early 
        awareness information program.
            (7) Chapter 8 of subpart 2 of part A of title IV (20 U.S.C. 
        1070a-81), relating to technical assistance for teachers and 
        counselors.
            (8) Subpart 8 of part A of title IV (20 U.S.C. 1070f), 
        relating to special child care services for disadvantaged 
        college students.
            (9) Section 428J (20 U.S.C. 1078-10), relating to loan 
        forgiveness for teachers, individuals performing national 
        community service and nurses.
            (10) Section 486 (20 U.S.C. 1093), relating to training in 
        financial aid services.
            (11) Subpart 1 of part H of title IV (20 U.S.C. 1099a et 
        seq.) relating to State postsecondary review programs.
            (12) Part A of title V (20 U.S.C. 1102 et seq.), relating 
        to State and local programs for teacher excellence.
            (13) Part B of title V (20 U.S.C. 1103 et seq.), relating 
        to national teacher academies.
            (14) Subpart 1 of part C of title V (20 U.S.C. 1104 et 
        seq.), relating to Paul Douglas teacher scholarships.
            (15) Subpart 3 of part C of title V (20 U.S.C. 1106 et 
        seq.), relating to the teacher corps.
            (16) Subpart 3 of part D of title V (20 U.S.C. 1109 et 
        seq.), relating to class size demonstration grants.
            (17) Subpart 4 of part D of title V (20 U.S.C. 1110 et 
        seq.), relating to middle school teaching demonstration 
        programs.
            (18) Subpart 1 of part E of title V (20 U.S.C. 1111 et 
        seq.), relating to new teaching careers.
            (19) Subpart 1 of part F of title V (20 U.S.C. 1113), 
        relating to the national mini corps programs.
            (20) Section 586 (20 U.S.C. 1114), relating to 
        demonstration grants for critical language and area studies.
            (21) Section 587 (20 U.S.C. 1114a), relating to development 
        of foreign languages and cultures instructional materials.
            (22) Subpart 4 of part F of title V (20 U.S.C. 1116), 
        relating to faculty development grants.
            (23) Section 597 and subsection (b) of section 599 (20 
        U.S.C. 1117a and 1117c), relating to early childhood staff 
        training and professional enhancement.
            (24) Section 605 (20 U.S.C. 1124a), relating to intensive 
        summer language institutes.
            (25) Section 607 (20 U.S.C. 1125a), relating to periodicals 
        and other research material published outside the United 
        States.
            (26) Part A of title VII (20 U.S.C. 1132b et seq.), 
        relating to improvement of academic and library facilities.
            (27) Title VIII (20 U.S.C. 1133 et seq.), relating to 
        cooperative education programs.
            (28) Part D of title X (20 U.S.C. 1135f), relating to the 
        Dwight D. Eisenhower leadership program.
    (c) Immediate Repeal of Education Amendments of 1986 Provisions.--
The following provisions of the Higher Education Amendments of 1986 are 
repealed:
            (1) Part D of title XIII (20 U.S.C. 1029 note), relating to 
        library resources.
            (2) Part E of title XIII (20 U.S.C. 1221-1 note), relating 
        to a National Academy of Science study.
            (3) Part B of title XV (20 U.S.C. 4441 et seq.), relating 
        to Native Hawaiian and Alaska Native culture and art 
        development.
    (d) Immediate Repeal of Education Amendments of 1974 Provision.--
Section 519 of the Education Amendments of 1974 (20 U.S.C. 1221i) is 
repealed.
    (e) Immediate Repeal of Education Amendments of 1992 Provisions.--
The following provisions of the Higher Education Amendments of 1992 are 
repealed:
            (1) Part F of title XIII (25 U.S.C. 3351 et seq.), relating 
        to American Indian postsecondary economic development 
        scholarships.
            (2) Part G of title XIII (25 U.S.C. 3371), relating to 
        American Indian teacher training.
            (3) Section 1406 (20 U.S.C. 1221e-1 note), relating to a 
        national survey of factors associated with participation.
            (4) Section 1409 (20 U.S.C. 1132a note), relating to a 
        study of environmental hazards in institutions of higher 
        education.
            (5) Section 1412 (20 U.S.C. 1101 note), relating to a 
        national job bank for teacher recruitment.
            (6) Part B of title XV (20 U.S.C. 1452 note), relating to a 
        national clearinghouse for postsecondary education materials.
            (7) Part C of title XV (20 U.S.C. 1101 note), relating to a 
        school-based decisionmakers demonstration program.
            (8) Part D of title XV (20 U.S.C. 1145h note), relating to 
        grants for sexual offenses education.
            (9) Part E of title XV (20 U.S.C. 1070 note), relating to 
        Olympic scholarships.
            (10) Part G of title XV (20 U.S.C. 1070a-11 note), relating 
        to advanced placement fee payment programs.

SEC. 402. CONFORMING AMENDMENTS.

    (a) References to Section 204 of the Immigration Reform and Control 
Act of 1986.--The table of contents for the Immigration Reform and 
Control Act of 1986 is amended by striking the item relating to section 
204 of such Act.
    (b) References to Title II of Public Law 95-250.--Section 103 of 
Public Law 95-250 (16 U.S.C. 79l) is amended--
            (1) by striking the second sentence of subsection (a); and
            (2) by striking the second sentence of subsection (b).
    (c) References to Library Services and Construction Act.--
            (1) Technology for education act of 1994.--The Technology 
        for Education Act of 1994 (20 U.S.C. 6801 et seq.) is amended 
        in section 3113(10) by striking ``section 3 of the Library 
        Services and Construction Act;'' and inserting ``section 213 of 
        the Library Services and Technology Act;''.
            (2) Omnibus education reconciliation act of 1981.--Section 
        528 of the Omnibus Education Reconciliation Act of 1981 (20 
        U.S.C. 3489) is amended--
                    (A) by striking paragraph (12); and
                    (B) by redesignating paragraphs (13) through (15) 
                as paragraphs (12) through (14), respectively.
            (3) Elementary and secondary education act of 1965.--
        Section 3113(10) of the Elementary and Secondary Education Act 
        of 1965 (20 U.S.C. 6813(10)) is amended by striking ``section 3 
        of the Library Services and Construction Act'' and inserting 
        ``section 213 of the Library Services and Technology Act''.
            (4) Community improvement volunteer act of 1994.--Section 
        7305 of the Community Improvement Volunteer Act of 1994 (40 
        U.S.C. 276d-3) is amended--
                    (A) by striking paragraph (1); and
                    (B) by redesignating paragraphs (2) through (6) as 
                paragraphs (1) through (5), respectively.
            (5) Appalachian regional development act of 1965.--Section 
        214(c) of the Appalachian Regional Development Act of 1965 (40 
        U.S.C. App. 214(c)) is amended by striking ``Library Services 
        and Construction Act;''.
            (6) Demonstration cities and metropolitan development act 
        of 1966.--Section 208(2) of the Demonstration Cities and 
        Metropolitan Development Act of 1966 (42 U.S.C. 3338(2)) is 
        amended by striking ``title II of the Library Services and 
        Construction Act;''.
            (7) Public law 87-688.--Subsection (c) of the first section 
        of the Act entitled ``An Act to extend the application of 
        certain laws to American Samoa'', approved September 25, 1962 
        (48 U.S.C. 1666(c)) is amended by striking ``the Library 
        Services Act (70 Stat. 293; 20 U.S.C. 351 et seq.),''.
            (8) Communications act of 1934.--Paragraph (4) of section 
        254(h) of the Communications Act of 1934 (47 U.S.C. 254(h)(4)) 
        is amended by striking ``library not eligible for participation 
        in State-based plans for funds under title III of the Library 
        Services and Construction Act (20 U.S.C. 335c et seq.)'' and 
        inserting ``library or library consortium not eligible for 
        assistance from a State library administrative agency under the 
        Library Services and Technology Act''.
    (d) Reference to School Dropout Assistance Act.--Section 441 of the 
General Education Provisions Act (42 U.S.C. 1232d), as amended by 
section 261(f) of the Improving America's Schools Act of 1994, is 
further amended by striking ``(subject to the provisions of part C of 
title V of the Elementary and Secondary Education Act of 1965)''.
    (e) References to Title VII of the Stewart B. McKinney Homeless 
Assistance Act.--
            (1) Table of contents.--The table of contents of the 
        Stewart B. McKinney Homeless Assistance Act (42 U.S.C. 1142 et 
        seq.) is amended by striking the items relating to title VII of 
        such Act, except subtitle B and section 738 of such title.
            (2) Title 31, united states code.--Section 6703(a) of title 
        31, United States Code, is amended--
                    (A) by striking paragraph (15); and
                    (B) by redesignating paragraphs (16) through (19) 
                as paragraphs (15) through (18), respectively.
    (f) References to Institute of Museum Services.--
            (1) Title 5, united states code.--Section 5315 of title 5, 
        United States Code, is amended by striking the following:
            ``Director of the Institute of Museum Services.'' and 
        inserting the following:
            ``Director of the Institute of Museum and Library 
        Services.''.
            (2) Department of education organization act.--Section 301 
        of the Department of Education Organization Act (20 U.S.C. 
        3441) is amended--
                    (A) in subsection (a)--
                            (i) by striking paragraph (5); and
                            (ii) by redesignating paragraphs (6) and 
                        (7) as paragraphs (5) and (6), respectively; 
                        and
                    (B) in subsection (b)--
                            (i) by striking paragraph (4); and
                            (ii) by redesignating paragraphs (5) 
                        through (7) as paragraphs (4) through (6), 
                        respectively.
            (3) Elementary and secondary education act of 1965.--
                    (A) Sections 2101(b), 2205(c)(1)(D), 
                2208(d)(1)(H)(v), and 2209(b)(1)(C)(vi), and 
                subsections (d)(6) and (e)(2) of section 10401 of the 
                Elementary and Secondary Education Act of 1965 (20 
                U.S.C. 6621(b), 6645(c)(1)(D), 6648(d)(1)(H)(v), 
                6649(b)(1)(C)(vi), and 8091 (d)(6) and (e)(2)) are 
                amended by striking ``the Institute of Museum 
                Services'' and inserting ``the Institute of Museum and 
                Library Services''.
                    (B) Section 10412(b) of such Act (20 U.S.C. 
                8102(b)) is amended--
                            (i) in paragraph (2), by striking ``the 
                        Director of the Institute of Museum Services,'' 
                        and inserting ``the Director of the Institute 
                        of Museum and Library Services,''; and
                            (ii) in paragraph (7), by striking ``the 
                        Director of the Institute of Museum Services,'' 
                        and inserting ``the Director of the Institute 
                        of Museum and Library Services,''.
                    (C) Section 10414(a)(2)(B) of such Act (20 U.S.C. 
                8104(a)(2)(B)) is amended by striking clause (iii) and 
                inserting the following new clause:
                            ``(iii) the Institute of Museum and Library 
                        Services.''.
    (g) References to Office of Libraries and Learning Resources.--
Section 413(b)(1) of the Department of Education Organization Act (20 
U.S.C. 3473(b)(1)) is amended--
            (1) by striking subparagraph (H); and
            (2) by redesignating subparagraphs (I) through (M) as 
        subparagraphs (H) through (L), respectively.
    (h) References to State Postsecondary Review Entity Programs.--The 
Higher Education Act of 1965 is amended--
            (1) in section 356(b)(2) (20 U.S.C. 10696(b)), by striking 
        ``II,'';
            (2) in section 453(c)(2) (20 U.S.C. 1087c(c)(2))--
                    (A) by striking subparagraph (E); and
                    (B) by redesignating subparagraphs (F) through (H) 
                as subparagraphs (E) through (G), respectively;
            (3) in section 487(a)(3) (20 U.S.C. 1094(a)(3)), by 
        striking subparagraph (B) and redesignating subparagraphs (C) 
        and (D) as subparagraphs (B) and (C), respectively;
            (4) in section 487(a)(15) (20 U.S.C. 1094(a)(15)), by 
        striking ``the Secretary of Veterans Affairs, and State review 
        entities under subpart 1 of part H'' and inserting ``and the 
        Secretary of Veterans Affairs'';
            (5) in section 487(a)(21) (20 U.S.C. 1094(a)(21)), by 
        striking ``, State postsecondary review entities,'';
            (6) in section 487(c)(1)(A)(i) (20 U.S.C. 
        1094(c)(1)(A)(i)), by striking ``State agencies, and the State 
        review entities referred to in subpart 1 of part H'' and 
        inserting ``and State agencies'';
            (7) in section 487(c)(4) (20 U.S.C. 1094(c)(4)), by 
        striking ``, after consultation with each State review entity 
        designated under subpart 1 of part H,'';
            (8) in section 487(c)(5) (20 U.S.C. 1094(c)(5)), by 
        striking ``State review entities designated under subpart 1 of 
        part H,'';
            (9) in section 496(a)(7) (20 U.S.C. 1099b(a)(7)), by 
        striking ``and the appropriate State postsecondary review 
        entity'';
            (10) in section 496(a)(8) (20 U.S.C. 1099b(a)(8)), by 
        striking ``and the State postsecondary review entity of the 
        State in which the institution of higher education is 
        located'';
            (11) in section 498(g)(2) (20 U.S.C. 1099c(g)(2)), by 
        striking everything after the first sentence;
            (12) in section 498A(a)(2)(D) (20 U.S.C. 1099c-1(a)(2)(D)), 
        by striking ``by the appropriate State postsecondary review 
        entity designated under subpart 1 of this part or'';
            (13) in section 498A(a)(2) (20 U.S.C. 1099c-1(a)(2))--
                    (A) by inserting ``and'' after the semicolon at the 
                end of subparagraph (E);
                    (B) by striking subparagraph (F); and
                    (C) by redesignating subparagraph (G) as 
                subparagraph (F); and
            (14) in section 498A(a)(3) (20 U.S.C. 1099c-1(a)(3))--
                    (A) by inserting ``and'' after the semicolon at the 
                end of subparagraph (C);
                    (B) by striking ``; and'' at the end of 
                subparagraph (D) and inserting a period; and
                    (C) by striking subparagraph (E).

            Passed the House of Representatives September 24, 1996.

            Attest:

                                                ROBIN H. CARLE,

                                                                 Clerk.
```