I 

109TH CONGRESS 

2D SESSION H. R. 4945 

To amend the Internal Revenue Code of 1986 to encourage new school 

construction through the creation of a new class of bond. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 14, 2006 

Ms. LORETTA SANCHEZ of California (for herself, Mr. OWENS, Mr. CASE, Ms. 

MILLENDER-MCDONALD, Ms. JACKSON-LEE of Texas, Ms. LEE, Mr. 

PAUL, Mr. BOUCHER, Mr. SHERMAN, Mrs. CHRISTENSEN, Ms. ROYBALALLARD, Mr. HONDA, Ms. CORRINE BROWN of Florida, Mr. KUCINICH, 

and Ms. MCKINNEY) introduced the following bill; which was referred to 

the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to encourage 

new school construction through the creation of a new 

class of bond. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Expand and Rebuild 

5 America’s Schools Act of 2006’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds the following: 


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1 (1) The National Center for Education Statis2 tics projects that public school enrollment will reach 

3 53,000,000 in 2010, an increase of 3,500,000 from 

4 the 2003 enrollment level. Many States and school 

5 districts will need to build new schools in order to 

6 accommodate this increase in student enrollments. 

7 (2) In response to reduced class mandates en8 forced by State governments and increased enroll9 ment, many school districts have been forced to uti10 lize temporary classrooms and other structures to 

11 accommodate increased school populations, along 

12 with resorting to year-round schedules for students. 

13 (3) Research has proven a direct correlation be14 tween the condition of school facilities and student 

15 achievement. Research has shown that students as16 signed to schools in poor condition can be expected 

17 to fall 10.9 percentage points behind those in build18 ings in excellent condition. Similar studies have dem19 onstrated up to a 20 percent improvement in test 

20 scores when students were moved from a school with 

21 poor facilities to a new facility. 

22 (4) While school construction and maintenance 

23 are primarily a State and local concern, States and 

24 communities have not, on their own, met the in25 creasing burden of providing acceptable school faciliVerDate Aug 31 2005 22:34 Mar 15, 2006 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4945.IH H4945

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1 ties, and the poorest communities have had the 

2 greatest difficulty meeting this need. 

3 (5) Many local educational agencies have dif4 ficulties securing financing for school facility con5 struction and renovation, especially in States that 

require a 2 6 ⁄3 majority of voter approval for the pas7 sage of local bond initiatives. 

8 (6) The Federal Government, by providing in9 terest subsidies and similar types of support, can 

10 lower the costs of State and local school infrastruc11 ture investment, creating an incentive for businesses 

12 to support local school infrastructure improvement 

13 efforts. 

14 (7) The United States competitive position 

15 within the world economy is vulnerable if America’s 

16 future workforce continues to be educated in schools 

17 not equipped for the 21st century. America must do 

18 everything in its power to properly educate its people 

19 to compete in the global marketplace. 

20 SEC. 3. PURPOSES. 

21 The purposes of this Act are— 

22 (1) to encourage public-private partnerships for 

23 the financing of school construction and expansion, 

24 and 


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1 (2) to help local educational agencies bring all 

2 public school facilities up to an acceptable standard 

3 and build the additional classrooms needed to edu4 cate the growing number of students who will enroll 

5 in the next decade. 

6 SEC. 4. CREDIT TO HOLDERS OF SCHOOL CONSTRUCTION 

7 BONDS. 

8 (a) IN GENERAL.—Subpart B of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 

10 1986 (relating to business-related credits) is amended by 

11 adding at the end the following new section: 

12 ‘‘SEC. 30D. CREDIT TO HOLDERS OF SCHOOL CONSTRUC13 TION BONDS. 

14 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an eli15 gible taxpayer who holds a school construction bond on 

16 the credit allowance date of such bond which occurs during 

17 the taxable year, there shall be allowed as a credit against 

18 the tax imposed by this chapter for such taxable year the 

19 amount determined under subsection (b). 

20 ‘‘(b) AMOUNT OF CREDIT.—The amount of the credit 

21 determined under this subsection with respect to any 

22 school construction bond is the amount equal to the prod23 uct of— 


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1 ‘‘(1) the credit rate determined by the Sec2 retary under section 1397E(b)(2) for the month in 

3 which such bond was issued, multiplied by 

4 ‘‘(2) the face amount of the bond held by the 

5 taxpayer on the credit allowance date. 

6 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—The 

7 credit allowed under subsection (a) for any taxable year 

8 shall not exceed the excess of— 

9 ‘‘(1) the sum of the regular tax liability (as de10 fined in section 26(b)) plus the tax imposed by sec11 tion 55, over 

12 ‘‘(2) the sum of the credits allowable under this 

13 part (other than under this section and subpart C 

14 thereof, relating to refundable credits) and section 

15 1397E. 

16 ‘‘(d) SCHOOL CONSTRUCTION BOND.—For purposes 

17 of this section— 

18 ‘‘(1) IN GENERAL.—The term ‘school construc19 tion bond’ means any bond issued as part of an 

20 issue if— 

21 ‘‘(A) 95 percent or more of the proceeds of 

22 such issue are to be used for a qualified pur23 pose with respect to a new qualified school es24 tablished by an eligible local education agency, 


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1 ‘‘(B) the bond is issued by a State or local 

2 government within the jurisdiction of which 

3 such school is located, 

4 ‘‘(C) the issuer— 

5 ‘‘(i) designates such bond for purposes 

6 of this section, 

7 ‘‘(ii) certifies that it has written as8 surances that the private business con9 tribution requirement of paragraph (2) will 

10 be met with respect to such school, and 

11 ‘‘(iii) certifies that it has the written 

12 approval of the eligible local education 

13 agency for such bond issuance, and 

14 ‘‘(D) the term of each bond which is part 

15 of such issue does not exceed the maximum 

16 term permitted under section 1397E(d)(3). 

17 ‘‘(2) PRIVATE BUSINESS CONTRIBUTION RE18 QUIREMENT.— 

19 ‘‘(A) IN GENERAL.—For purposes of para20 graph (1), the private business contribution re21 quirement of this paragraph is met with respect 

22 to any issue if the eligible local education agen23 cy that established the qualified school has writ24 ten commitments from private entities to make 

25 qualified contributions having a present value 


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1 (as of the date of issuance of the issue) of not 

2 less than 10 percent of the proceeds of the 

3 issue. 

4 ‘‘(B) QUALIFIED CONTRIBUTIONS.—For 

5 purposes of subparagraph (A), the term ‘quali6 fied contribution’ means any contribution (of a 

7 type and quality acceptable to the eligible local 

8 education agency) of— 

9 ‘‘(i) equipment for use in the qualified 

10 school (including state-of-the-art tech11 nology and vocational equipment), 

12 ‘‘(ii) technical assistance in developing 

13 curriculum or in training teachers in order 

14 to promote appropriate market driven tech15 nology in the classroom, 

16 ‘‘(iii) services of employees as volun17 teer mentors, 

18 ‘‘(iv) internships, field trips, or other 

19 educational opportunities outside the 

20 school for students, or 

21 ‘‘(v) any other property or service 

22 specified by the eligible local education 

23 agency. 

24 ‘‘(3) QUALIFIED SCHOOL.— 


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1 ‘‘(A) IN GENERAL.—The term ‘qualified 

2 school’ means any public school which is estab3 lished by and operated under the supervision of 

4 an eligible local education agency to provide 

5 education or training below the postsecondary 

6 level if— 

7 ‘‘(i) such public school is designed in 

8 cooperation with business to enhance the 

9 academic curriculum, increase graduation 

10 and employment rates, and better prepare 

11 students for the rigors of college and the 

12 increasingly complex workforce, 

13 ‘‘(ii) students in such public school 

14 will be subject to the same academic stand15 ards and assessments as other students 

16 educated by the local education agency, 

17 ‘‘(iii) a well-structured program to al18 leviate overcrowding and to improve stu19 dents’ education has been constructed and 

20 implemented in the opinion of the Sec21 retary of Education, and 

22 ‘‘(iv) at least 2 of the following re23 quirements are met: 

24 ‘‘(I) There is a reasonable expec25 tation (as of the date of issuance of 


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1 the bonds) that at least 35 percent of 

2 the population attending such public 

3 school will be eligible for free or re4 duced-cost lunches under the school 

5 lunch program established under the 

6 National School Lunch Act. 

7 ‘‘(II) There is a reasonable ex8 pectation (as of the date of issuance 

9 of the bonds) that the student growth 

10 rate over the next 5 years for the 

11 school district in which such public 

12 school is to be located will be at least 

13 10 percent. 

14 ‘‘(III) The average student-teach15 er ratio for such district as of the 

16 date of issuance of the bonds is at 

17 least 28 to 1. 

18 ‘‘(B) ELIGIBLE LOCAL EDUCATION AGEN19 CY.—The term ‘eligible local education agency’ 

20 means any local educational agency as defined 

21 in section 14101 of the Elementary and Sec22 ondary Education Act of 1965. 

23 ‘‘(4) QUALIFIED PURPOSE.— 


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1 ‘‘(A) IN GENERAL.—The term ‘qualified 

2 purpose’ means, with respect to any qualified 

3 school— 

4 ‘‘(i) constructing a new school facility, 

5 and 

6 ‘‘(ii) providing equipment for use at 

7 such facility. 

8 ‘‘(B) SCHOOL FACILITY.—The term ‘school 

9 facility’ means a new public structure suitable 

10 for use as a classroom, laboratory, library, 

11 media center, or related facility whose primary 

12 purpose is the instruction of public elementary 

13 or secondary students. Such term does not in14 clude an athletic stadium, or any other struc15 ture or facility intended primarily for athletic 

16 exhibitions, contests, games, or events for which 

17 admission is charged to the general public. 

18 ‘‘(e) LIMITATION ON AMOUNT OF BONDS DES19 IGNATED.— 

20 ‘‘(1) NATIONAL LIMITATION.—There is a na21 tional school construction bond limitation for each 

22 calendar year. Such limitation is $400,000,000 for 

23 2007 and 2008, and, except for carryovers as pro24 vided under the rules applicable under paragraph 

25 (4), zero thereafter. 


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1 ‘‘(2) ALLOCATION OF LIMITATION.—The na2 tional school construction bond limitation for a cal3 endar year shall be allocated by the Secretary among 

4 the States on the basis of their respective popu5 lations of individuals below the poverty line (as de6 fined by the Office of Management and Budget). 

7 The limitation amount allocated to a State under the 

8 preceding sentence shall be allocated by the Sec9 retary of Education to qualified schools within such 

10 State. 

11 ‘‘(3) DESIGNATION SUBJECT TO LIMITATION

12 AMOUNT.—The maximum aggregate face amount of 

13 bonds issued during any calendar year which may be 

14 designated under subsection (d)(1) with respect to 

15 any qualified school shall not exceed the limitation 

16 amount allocated to such school under paragraph (2) 

17 for such calendar year. 

18 ‘‘(4) CARRYOVER OF UNUSED LIMITATION.—If 

19 for any calendar year— 

20 ‘‘(A) the limitation amount for any State, 

21 exceeds 

22 ‘‘(B) the amount of bonds issued during 

23 such year which are designated under sub24 section (d)(1) with respect to qualified schools 

25 within such State, the limitation amount for 


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1 such State for the following calendar year shall 

2 be increased by the amount of such excess. 

3 ‘‘(f) OTHER DEFINITIONS.—The definitions in sub4 sections (d)(6) and (f) of section 1397E shall apply for 

5 purposes of this section. 

6 ‘‘(g) CREDIT INCLUDED IN GROSS INCOME.—Gross 

7 income includes the amount of the credit allowed to the 

8 taxpayer under this section.’’ 

9 (b) CONFORMING AMENDMENT.—The table of sec10 tions for subpart B of part IV of subchapter A of chapter 

11 1 of such Code is amended by adding at the end the fol12 lowing new item: 

‘‘Sec. 30D. Credit to holders of school construction bonds.’’. 

13 (c) EFFECTIVE DATE.—The amendments made by 

14 this section shall apply to obligations issued after Decem15 ber 31, 2006. 

Æ 


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