II

105TH CONGRESS

2D SESSION S. 1962

To provide for an Education Modernization Fund, and for other purposes.

IN THE SENATE OF THE UNITED STATES

APRIL 21, 1998

Mr. FAIRCLOTH introduced the following bill; which was read twice and

referred to the Committee on Finance

A BILL

To provide for an Education Modernization Fund, and for

other purposes.

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 ‘‘Education Moderniza5 tion Fund Act’’.

6 SEC. 2. EDUCATION MODERNIZATION LOANS AND FUND.

7 (a) LOANS.—

8 (1) IN GENERAL.—The Secretary of Education

9 (referred to in this subsection as the ‘‘Secretary’’)

10 shall make loans to States for the purpose of con-
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1 structing and modernizing elementary schools and

2 secondary schools.

3 (2) TERMS.—The Secretary shall make low in4 terest, long-term loans, as determined by the Sec5 retary, under paragraph (1). The Secretary shall de6 termine the eligibility requirements for, and the

7 terms of, any loan made under paragraph (1).

8 (3) ALLOCATION OF FUNDS.—The Secretary

9 shall determine a formula for allocating the funds

10 made available under subsection (b)(4) to States for

11 loans under paragraph (1). The Secretary shall en12 sure that the formula provides for the allocation of

13 funds for such loans to each eligible State. In deter14 mining the formula, the Secretary shall take into

15 consideration the need for financial assistance of

16 States with significant increases in populations of el17 ementary school and secondary school students.

18 (4) DEFINITIONS.—In this subsection, the

19 terms ‘‘elementary school’’ and ‘‘secondary school’’

20 have the meanings given the terms in section 14101

21 of the Elementary and Secondary Education Act of

22 1965 (20 U.S.C. 8801).

23 (b) FUND.—

24 (1) ESTABLISHMENT.—There is established in

25 the Treasury of the United States a trust fund, to
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1 be known as the ‘‘Education Modernization Fund’’,

2 consisting of the amounts transferred to or deposited

3 in the Trust Fund under paragraph (2) and any in4 terest earned on investment of the amounts in the

5 Trust Fund under paragraph (3).

6 (2) TRANSFERS AND DEPOSITS.—

7 (A) TRANSFER.—The Secretary of the

8 Treasury shall transfer to the Trust Fund an

9 amount equal to $5,000,000,000 from the mod10 ernization fund described in section 5302 of

11 title 31, United States Code.

12 (B) DEPOSITS.—There shall be deposited

13 in the Trust Fund all amounts received by the

14 Secretary of Education incident to loan oper15 ations under subsection (a), including all collec16 tions of principal and interest.

17 (3) INVESTMENT OF TRUST FUND.—

18 (A) IN GENERAL.—The Secretary of the

19 Treasury shall invest the portion of the Trust

20 Fund that is not, in the Secretary’s judgment,

21 required to meet current withdrawals.

22 (B) OBLIGATIONS.—Such investments may

23 be made only in interest-bearing obligations of

24 the United States or in obligations guaranteed

25 as to both principal and interest by the United
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1 States. For such purpose, such obligations may

2 be acquired—

3 (i) on original issue at the issue price;

4 or

5 (ii) by purchase of outstanding obliga6 tions at the market price.

7 (C) PURPOSES FOR OBLIGATIONS OF THE

8 UNITED STATES.—The purposes for which obli9 gations of the United States may be issued

10 under chapter 31 of title 31, United States

11 Code, are extended to authorize the issuance at

12 par of special obligations exclusively to the

13 Trust Fund.

14 (D) INTEREST.—Such special obligations

15 shall bear interest at a rate equal to the aver16 age rate of interest, computed as to the end of

17 the calendar month next preceding the date of

18 such issue, borne by all marketable interest19 bearing obligations of the United States then

20 forming a part of the Public Debt, except that

where such average rate is not a multiple of 1 21 ⁄8

22 of 1 percent, the rate of interest of such special

obligations shall be the multiple of 1 23 ⁄8 of 1 per24 cent next lower than such average rate.
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1 (E) DETERMINATION.—Such special obli2 gations shall be issued only if the Secretary of

3 the Treasury determines that the purchase of

4 other interest-bearing obligations of the United

5 States, or of obligations guaranteed as to both

6 principal and interest by the United States on

7 original issue or at the market price, is not in

8 the public interest.

9 (F) SALE OF OBLIGATION.—Any obligation

10 acquired by the Trust Fund (except special obli11 gations issued exclusively to the Trust Fund)

12 may be sold by the Secretary of the Treasury

13 at the market price, and such special obliga14 tions may be redeemed at par plus accrued in15 terest.

16 (G) CREDITS TO TRUST FUND.—The inter17 est on, and the proceeds from the sale or re18 demption of, any obligations held in the Trust

19 Fund shall be credited to and form a part of

20 the Trust Fund.

21 (4) EXPENDITURES FROM TRUST FUND.—

22 Amounts in the Trust Fund shall be available to the

23 Secretary of Education for making expenditures to

24 carry out subsection (a).

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