I 

109TH CONGRESS 

1ST SESSION H. R. 238

To amend the Internal Revenue Code of 1986 to designate educational empowerment zones in certain low-income areas and to give a tax incentive 

to attract teachers to work in such areas. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 4, 2005

Mr. TOWNS introduced the following bill; which was referred to the Committee 

on Ways and Means, and in addition to the Committee on Education and 

the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL

To amend the Internal Revenue Code of 1986 to designate 

educational empowerment zones in certain low-income 

areas and to give a tax incentive to attract teachers 

to work in such areas.

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 ‘‘Educational Empower5 ment Act’’. 
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1 SEC. 2. DESIGNATION OF EDUCATIONAL EMPOWERMENT 

2 ZONES. 

3 (a) IN GENERAL.—Chapter 1 of the Internal Rev4 enue Code of 1986 is amended by adding at the end the 

5 following new subchapter: 

6 ‘‘Subchapter X—Educational Empowerment 

7 Zones

‘‘Sec. 1400E. Designation of educational empowerment zones. 

8 ‘‘SEC. 1400E. DESIGNATION OF EDUCATIONAL EMPOWER9 MENT ZONES. 

10 ‘‘(a) DESIGNATION.—

11 ‘‘(1) EDUCATIONAL EMPOWERMENT ZONE.—

12 For purposes of this title, the term ‘educational em13 powerment zone’ means any area—

14 ‘‘(A) which is nominated by one or more 

15 local governments and the State or States in 

16 which it is located for designation as an edu17 cational empowerment zone (hereinafter in this 

18 section referred to as a ‘nominated area’), and 

19 ‘‘(B) which the Secretary of Health and 

20 Human Services and the Secretary of Edu21 cation (hereinafter in this section referred to as 

22 the ‘Secretaries concerned’) jointly designate as 

23 an educational empowerment zone. 
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1 ‘‘(2) NUMBER OF DESIGNATIONS.—The Secre2 taries concerned may designate not more than 30 

3 nominated areas as educational empowerment zones. 

4 ‘‘(3) AREAS DESIGNATED BASED ON DEGREE

5 OF POVERTY, ETC.—Except as otherwise provided in 

6 this section, the nominated areas designated as edu7 cational empowerment zones under this subsection 

8 shall be those nominated areas with the highest av9 erage ranking with respect to the criteria described 

10 in subsection (c)(3). For purposes of the preceding 

11 sentence, an area shall be ranked within each such 

12 criterion on the basis of the amount by which the 

13 area exceeds such criterion, with the area which ex14 ceeds such criterion by the greatest amount given 

15 the highest ranking. 

16 ‘‘(4) LIMITATION ON DESIGNATIONS.—

17 ‘‘(A) PUBLICATION OF REGULATIONS.—

18 The Secretaries concerned shall prescribe by 

19 regulation no later than 4 months after the 

20 date of the enactment of this section—

21 ‘‘(i) the procedures for nominating an 

22 area under paragraph (1)(A); 

23 ‘‘(ii) the parameters relating to the 

24 size and population characteristics of an 

25 educational empowerment zone; and 
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1 ‘‘(iii) the manner in which nominated 

2 areas will be evaluated based on the cri3 teria specified in subsection (c). 

4 ‘‘(B) TIME LIMITATIONS.—The Secretaries 

5 concerned may designate nominated areas as 

6 educational empowerment zones only during the 

7 24-month period beginning on the first day of 

8 the first month following the month in which 

9 the regulations described in subparagraph (A) 

10 are prescribed. 

11 ‘‘(C) PROCEDURAL RULES.—The Secre12 taries concerned shall not make any designation 

13 of a nominated area as an educational em14 powerment zone under paragraph (2) unless—

15 ‘‘(i) a nomination regarding such area 

16 is submitted in such a manner and in such 

17 form, and contains such information, as 

18 the Secretaries concerned shall by regula19 tion prescribe, and 

20 ‘‘(ii) the Secretaries concerned deter21 mine that any information furnished is 

22 reasonably accurate. 

23 ‘‘(5) NOMINATION PROCESS FOR INDIAN RES24 ERVATIONS.—For purposes of this subchapter, in 

25 the case of a nominated area on an Indian reserva-
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1 tion, the reservation governing body (as determined 

2 by the Secretary of the Interior) shall be treated as 

3 being both the State and local governments with re4 spect to such area. 

5 ‘‘(b) PERIOD FOR WHICH DESIGNATION IS IN EF6 FECT.—Any designation of an area as an educational em7 powerment zone shall remain in effect during the period 

8 beginning on the date of the designation and ending on 

9 the earliest of—

10 ‘‘(1) December 31, 2008, 

11 ‘‘(2) the termination date designated by the 

12 State and local governments in their nomination, or 

13 ‘‘(3) the date the Secretaries concerned revoke 

14 such designation. 

15 ‘‘(c) AREA AND ELIGIBILITY REQUIREMENTS.—

16 ‘‘(1) IN GENERAL.—The Secretary of Com17 merce may designate a nominated area as an edu18 cational empowerment zone under subsection (a) 

19 only if the area meets the requirements of para20 graphs (2) and (3) of this subsection. 

21 ‘‘(2) AREA REQUIREMENTS.—For purposes of 

22 paragraph (1), a nominated area meets the require23 ments of this paragraph if—

24 ‘‘(A) the area is within the jurisdiction of 

25 one or more local governments, 
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1 ‘‘(B) the boundary of the area is contin2 uous, and 

3 ‘‘(C) the area does not include an em4 powerment zone (as defined in section 1393(b)) 

5 other than such a zone designated under section 

6 1391(g). 

7 ‘‘(3) ELIGIBILITY REQUIREMENTS.—For pur8 poses of paragraph (1), a nominated are meets the 

9 requirements of this paragraph if the State and the 

10 local governments in which it is located certify that 

11 the nominated area satisfies such conditions as the 

12 Secretary of Education deems appropriate. 

13 ‘‘(4) CONSIDERATION OF DROPOUT RATE, 

14 ETC.—The Secretary of Education, in setting forth 

15 the conditions for eligibility pursuant to paragraph 

16 (3), shall take into account the extent to which an 

17 area has low-income families, a high dropout rate, a 

18 high rate of teen pregnancy, and large school class 

19 size. 

20 ‘‘(d) COORDINATION WITH TREATMENT OF ENTER21 PRISE COMMUNITIES.—For purposes of this title, if there 

22 are in effect with respect to the same area both—

23 ‘‘(1) a designation as an educational empower24 ment zone, and 

25 ‘‘(2) a designation as an enterprise community, 
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1 both of such designations shall be given full effect with 

2 respect to such area. 

3 ‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur4 poses of this subchapter, rules similar to the rules of para5 graphs (2), (3), (5), and (7) of section 1393 shall apply.’’. 

6 (b) CLERICAL AMENDMENT.—The table of sub7 chapters for chapter 1 is amended by adding at the end 

8 the following new item: 

‘‘SUBCHAPTER X. Educational Empowerment Zones.’’. 

9 SEC. 3. CREDIT FOR DONATIONS TO SCHOOL DISTRICTS IN 

10 EDUCATIONAL EMPOWERMENT ZONES. 

11 (a) IN GENERAL.—Subpart B of part IV of sub12 chapter A of chapter 1 of the Internal Revenue Code of 

13 1986 is amended by inserting after section 30A the fol14 lowing new section: 

15 ‘‘SEC. 30B. CONTRIBUTIONS TO SCHOOL DISTRICTS IN EDU16 CATIONAL EMPOWERMENT ZONES. 

17 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al18 lowed as a credit against the tax imposed by this chapter 

19 for the taxable year an amount equal to the amount of 

20 qualified educational empowerment zone contributions 

21 made by the taxpayer during such year. 

22 ‘‘(b) MAXIMUM CREDIT.—The amount of the credit 

23 allowed by subsection (a)— 

24 ‘‘(1) in the case of an individual, shall not ex25 ceed $2,000, and 
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1 ‘‘(2) in the case of any other taxpayer, shall not 

2 exceed $10,000. 

3 ‘‘(c) DEFINITION OF QUALIFIED EDUCATIONAL EM4 POWERMENT ZONE CONTRIBUTIONS.—For purposes of 

5 this section, the term ‘qualified educational empowerment 

6 zone contributions’ means cash contributions made to any 

7 school district located in an educational empowerment 

8 zone (as designated under section 1400E) if such con9 tributions— 

10 ‘‘(1) but for subsection (d), would be allowable 

11 as a deduction under section 170, and 

12 ‘‘(2) are used for any of the following purposes 

13 by the school district: 

14 ‘‘(A) Hiring new teachers. 

15 ‘‘(B) Increasing teacher salaries. 

16 ‘‘(C) Training teachers. 

17 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—No deduction 

18 shall be allowed under this chapter for any contribution 

19 taken into account in computing the credit under this sec20 tion. 

21 ‘‘(e) ELECTION.—This section shall apply to any tax22 payer for any taxable year only if such taxpayer elects (at 

23 such time and in such manner as the Secretary may by 

24 regulations prescribe) to have this section apply for such 

25 taxable year. 
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1 ‘‘(f) APPLICATION WITH OTHER CREDITS; CARRY2 OVER OF EXCESS CREDIT.—The credit allowed by sub3 section (a) for any taxable year shall not exceed the excess 

4 (if any) of— 

5 ‘‘(1) the regular tax for the taxable year re6 duced by the sum of the credits allowable under sub7 part A and the preceding sections of this subpart, 

8 over 

9 ‘‘(2) the tentative minimum tax for the taxable 

10 year. 

11 If the credit under subsection (a) exceeds the limitation 

12 of the preceding sentence, such excess shall be added to 

13 the credit allowable under subsection (a) for the suc14 ceeding taxable year.’’. 

15 (b) CLERICAL AMENDMENT.—The table of sections 

16 for subpart B of part IV of subchapter A of chapter 1 

17 of such Code is amended by inserting after the item relat18 ing to section 30A the following new item: 

‘‘Sec. 30B. Contributions to school districts in educational empowerment 

zones.’’. 

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

20 this section shall apply to taxable years beginning after 

21 December 31, 2005. 
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1 SEC. 4. TEACHER LOAN FORGIVENESS PROGRAM. 

2 Part B of title IV of the Higher Education Act of 

3 1965 is amended by inserting after section 428K (20 

4 U.S.C. 1078–11) the following new section: 

5 ‘‘SEC. 428L. LOAN FORGIVENESS FOR MATHEMATICS AND 

6 SCIENCE TEACHERS. 

7 ‘‘(a) PURPOSE.—It is the purpose of this section to 

8 encourage more individuals to enter and stay in the field 

9 of teaching mathematics, science, and related fields. 

10 ‘‘(b) PROGRAM.— 

11 ‘‘(1) IN GENERAL.—The Secretary shall carry 

12 out a program of assuming the obligation to repay, 

13 pursuant to subsection (c), a loan made, insured, or 

14 guaranteed under this part or part D (excluding 

15 loans made under sections 428B and 428C or com16 parable loans made under Part D) for any new bor17 rower after October 12, 1998, who— 

18 ‘‘(A) has been employed as a full-time 

19 teacher for 3 consecutive complete school years 

20 in a school that is located in an educational em21 powerment zone, as such term is defined in sec22 tion 1400E of the Internal Revenue Code of 

23 1986; 

24 ‘‘(B) is a fully qualified teacher; and 

25 ‘‘(C) is not in default on a loan for which 

26 the borrower seeks forgiveness. 
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1 ‘‘(2) AWARD BASIS; PRIORITY.— 

2 ‘‘(A) AWARD BASIS.—Subject to subpara3 graph (B), loan repayment under this section 

4 shall be on a first-come, first-served basis and 

5 subject to the availability of appropriations. 

6 ‘‘(B) PRIORITY.—The Secretary shall give 

7 priority in providing loan repayment under this 

8 section for a fiscal year to student borrowers 

9 who received loan repayment under this section 

10 for the preceding fiscal year. 

11 ‘‘(3) REGULATIONS.—The Secretary is author12 ized to prescribe such regulations as may be nec13 essary to carry out the provisions of this section. 

14 ‘‘(c) LOAN REPAYMENT.— 

15 ‘‘(1) ELIGIBLE AMOUNT.—The amount the Sec16 retary may repay on behalf of any individual under 

17 this section shall not exceed— 

18 ‘‘(A) 80 percent of the sum of the principal 

19 amounts outstanding of the individual’s quali20 fying loans at the end of 3 consecutive complete 

21 school years of service described in subsection 

22 (b)(1)(A); 

23 ‘‘(B) an additional 10 percent of such sum 

24 at the end of each of the next 2 consecutive 

25 complete school years of such service; and 
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1 ‘‘(C) a total of more than $10,000. 

2 ‘‘(2) CONSTRUCTION.—Nothing in this section 

3 shall be construed to authorize the refunding of any 

4 repaying of a loan made under this part or part D. 

5 ‘‘(3) INTEREST.—If a portion of a loan is re6 paid by the Secretary under this section for any 

7 year, the proportionate amount of interest on such 

8 loan which accrues for such year shall be repaid by 

9 the Secretary. 

10 ‘‘(4) DOUBLE BENEFITS PROHIBITED.—No bor11 rower may, for the same service, receive a benefit 

12 under both this section and subtitle D of title I of 

13 the National and Community Service Act of 1990 

14 (42 U.S.C. 12601 et seq.). No borrower may receive 

15 a reduction of loan obligations under both this sec16 tion and section 428J or 460. 

17 ‘‘(d) REPAYMENT TO ELIGIBLE LENDERS.—The Sec18 retary shall pay to each eligible lender or holder for each 

19 fiscal year an amount equal to the aggregate amount of 

20 loans which are subject to repayment pursuant to this sec21 tion for such year. 

22 ‘‘(e) APPLICATION FOR REPAYMENT.— 

23 ‘‘(1) IN GENERAL.—Each eligible individual de24 siring loan repayment under this section shall sub25 mit a complete and accurate application to the Sec-
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1 retary at such time, in such manner, and containing 

2 such information as the Secretary may require. 

3 ‘‘(2) CONDITIONS.—An eligible individual may 

4 apply for loan repayment under this section after 

5 completing the required number of years of quali6 fying employment. 

7 ‘‘(3) FULLY QUALIFIED TEACHERS.—An appli8 cation for loan repayment under this section shall 

9 include such information as is necessary to dem10 onstrate that the applicant— 

11 ‘‘(A) if teaching in a public elementary or 

12 secondary school (other than as a teacher in a 

13 public charter school), has obtained State cer14 tification as a teacher (including certification 

15 obtained through alternative routes to certifi16 cation) or passed the State teacher licensing 

17 exam and holds a license to teach in such State; 

18 and 

19 ‘‘(B) if teaching in— 

20 ‘‘(i) an elementary school, holds a 

21 bachelor’s degree and demonstrates knowl22 edge and teaching skills in reading, writ23 ing, mathematics, science, and other areas 

24 of the elementary school curriculum; or 
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1 ‘‘(ii) a middle or secondary school, 

2 holds a bachelor’s degree and demonstrates 

3 a high level of competency in all subject 

4 areas in which he or she teaches through— 

5 ‘‘(I) a high level of performance 

6 on a rigorous State or local academic 

7 subject areas test; or 

8 ‘‘(II) completion of an academic 

9 major in each of the subject areas in 

10 which he or she provides instruction. 

11 ‘‘(f) EVALUATION.— 

12 ‘‘(1) IN GENERAL.—The Secretary shall con13 duct, by grant or contract, an independent national 

14 evaluation of the impact of the program assisted 

15 under this section. 

16 ‘‘(2) COMPETITIVE BASIS.—The grant or con17 tract described in subsection (b) shall be awarded on 

18 a competitive basis. 

19 ‘‘(3) CONTENTS.—The evaluation described in 

20 this subsection shall— 

21 ‘‘(A) determine the number of individuals 

22 who were encouraged by the program assisted 

23 under this section to pursue teaching careers; 

24 ‘‘(B) determine the number of individuals 

25 who remain employed in teaching mathematics, 
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1 science, or related fields as a result of participa2 tion in the program; 

3 ‘‘(C) identify the barriers to the effective4 ness of the program; 

5 ‘‘(D) assess the cost-effectiveness of the 

6 program; and 

7 ‘‘(E) identify the number of years each in8 dividual participates in the program. 

9 ‘‘(4) INTERIM AND FINAL EVALUATION RE10 PORTS.—The Secretary shall prepare and submit to 

11 the President and the Congress such interim reports 

12 regarding the evaluation described in this subsection 

13 as the Secretary deems appropriate, and shall pre14 pare and so submit a final report regarding the eval15 uation by January 1, 2008.’’. 

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