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[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 12 Introduced in Senate (IS)]

105th CONGRESS
  1st Session
                                 S. 12

               To improve education for the 21st Century.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            January 21, 1997

    Mr. Daschle  (for himself; Mr. Kennedy, Ms. Moseley-Braun, Ms. 
 Mikulski; Mr. Dodd, Mr. Reid, Mr. Dorgan, Mrs. Murray, Mr. Ford, Mr. 
    Rockefeller, Mr. Inouye, Mr, Kerry, Mr. Levin, Mr. Cleland, Mr. 
Johnson, Mr. Breaux, Mr. Torricelli, Mr. Durbin, Mr. Glenn, Mrs. Boxer, 
 Mr. Wellstone, Mr. Bryan and Mr. Lautenberg) introduced the following 
  bill; which was read twice and referred to the Committees on Finance

_______________________________________________________________________

                                 A BILL

 
               To improve education for the 21st Century.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Education for the 21st Century 
Act''.

SEC. 2. FINDINGS.

    Congress finds as follows:
            (1) Quality public education is necessary not only for the 
        future of our children and our families, but for the future of 
        America. A better educated citizenry and workforce are 
        essential to compete in the global economy and to maintain a 
        strong democracy.
            (2) The investment America makes today in the education of 
        its people will determine the future of the Nation. In order to 
        promote growth and prosperity in our economy, and ensure 
        individual opportunity, America must maintain education as a 
        national priority.
            (3) Strong leadership in education is needed more than 
        ever. Schools are facing the challenge of educating more highly 
        skilled workers to meet the demands of a modern economy. The 
        Bureau of Labor Statistics estimates that 60 percent of all 
        jobs created between 1992 and 2005 will require more than a 
        high school education.
            (4) Mounting evidence suggests that far more rigorous 
        levels of academic achievement will be required to equip 
        American students for the 21st century workplace. Employers 
        will demand increasingly sophisticated levels of literacy, 
        communication, mathematical, and technological skills. Sixty 
        percent of all jobs will require computer skills.
            (5) Literacy is a crucial element of academic success. 
        However, in 1994, 40 percent of 4th grade students failed to 
        attain the basic level of reading on the National Assessment of 
        Educational Progress. Seventy percent did not attain the 
        proficient level. Students who are not reading at grade-level 
        are very unlikely to graduate from high school. One-on-one 
        tutoring is a key component of bringing students up to reading 
        grade-level.
            (6) Students are learning in decrepit school buildings. 
        According to 2 recent Government Accounting Office reports, 
        14,000,000 children in a third of the Nation's schools are 
        learning in substandard classrooms. Half of the schools have at 
        least 1 unsatisfactory environmental condition, such as poor 
        air quality.
            (7) College costs are rising. College tuition has risen in 
        private colleges and universities and in State institutions as 
        State appropriations have eroded. From 1985 to 1994, the 
        average cost of attending college rose by 30 percent after 
        adjusting for inflation. During the same period, the median 
        income increased by only 1 percent.
            (8) Meeting the challenge of the next century will require 
        the involvement of all Americans, including public officials, 
        educators, parents, business and community leaders, and 
        students. Encouraging active participation by all segments of 
        communities is essential for the success of students in the 
21st century.

              TITLE I--TAX INCENTIVES FOR HIGHER EDUCATION

SEC. 101. REFUNDABLE CREDIT FOR HIGHER EDUCATION EXPENSES.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 35 as section 36 and by inserting 
after section 34 the following new section:

``SEC. 35. HIGHER EDUCATION TUITION AND FEES.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this subtitle 
for the taxable year the amount of qualified higher education expenses 
paid by the taxpayer during such taxable year.
    ``(b) Credit Limited To $1,500 Per Academic Year.--
            ``(1) In general.--The amount allowed as a credit under 
        subsection (a) for any taxable year with respect to an eligible 
        student shall not exceed the sum of the credit amounts for 
        qualified academic periods beginning during such taxable year 
        or the first 3 months of the next taxable year. A qualified 
        academic period may not be taken into account under the 
        preceding sentence more than once.
            ``(2) Credit allowed only for first 2 academic years of 
        post-secondary education.--For purposes of paragraph (1), the 
        term `qualified academic period' means, with respect to any 
        student, any academic period for which such student is an 
        eligible student if such period, when added to prior periods 
        that such student was an eligible student, does not exceed 2 
        full-time academic years (or the equivalent thereof).
            ``(3) Credit amount.--For purposes of paragraph (1), except 
        as otherwise provided in regulations prescribed by the 
        Secretary, the credit amount for any academic period is the 
        amount equal to--
                    ``(A) $1,500, divided by
                    ``(B) the number of such academic periods during 
                the academic year.
        In the case of an eligible student who is not a full-time 
        student for an academic period, the credit amount for such 
        period shall be one-half the amount determined under the 
        preceding sentence.
            ``(4) Inflation adjustment of credit limitation for 
        academic year.--
                    ``(A) In general.--In the case of a taxable year 
                beginning after 1998, the $1,500 amount in paragraph 
                (3)(A) shall be increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        determined by substituting `calendar year 1999' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.
                    ``(B) Rounding.--If any amount as adjusted under 
                subparagraph (A) is not a multiple of $5,000 such 
                amount shall be rounded to the next lowest multiple of 
                $5,000.
    ``(c) Limitation Based on Modified Adjusted Gross Income.--
            ``(1) In general.--The amount which would (but for this 
        subsection) be taken into account under subsection (a) for the 
        taxable year shall be reduced (but not below zero) by the 
        amount determined under paragraph (2).
            ``(2) Amount of reduction.--The amount determined under 
        this paragraph is the amount which bears the same ratio to the 
        amount which would be so taken into account as--
                    ``(A) the excess of--
                            ``(i) the taxpayer's modified adjusted 
                        gross income for such taxable year, over
                            ``(ii) $50,000 ($80,000 in the case of a 
                        joint return), bears to
                    ``(B) $20,000.
            ``(3) Modified adjusted gross income.--The term `modified 
        adjusted gross income' means the adjusted gross income of the 
        taxpayer for the taxable year--
                    ``(A) determined without regard to section 221, and
                    ``(B) increased by any amount excluded from gross 
                income under section 911, 931, or 933.
            ``(4) Inflation adjustment.--
                    ``(A) In general.--In the case of a taxable year 
                beginning after 2000, the $50,000 and $80,000 amounts 
                in paragraph (2), section 221(b)(2)(B)(i)(II), and 
                section 222(b)(2)(A)(ii) shall each be increased by an 
                amount equal to--
                            ``(i) such dollar amounts, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        determined by substituting `calendar year 1999' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.
                    ``(B) Rounding.--If any amount as adjusted under 
                subparagraph (A) is not a multiple of $5,000, such 
                amount shall be rounded to the next lowest multiple of 
                $5,000.
    ``(d) Qualified Higher Education Expenses.--For purposes of this 
section--
            ``(1) Qualified higher education expenses.--
                    ``(A) In general.--The term `qualified higher 
                education expenses' means tuition and fees required for 
                the enrollment or attendance of--
                            ``(i) the taxpayer,
                            ``(ii) the taxpayer's spouse, or
                            ``(iii) any dependent of the taxpayer with 
                        respect to whom the taxpayer is allowed a 
                        deduction under section 151,
                as an eligible student at an institution of higher 
                education.
                    ``(B) Exception for education involving sports, 
                etc.--Such term does not include expenses with respect 
                to any course or other education involving sports, 
                games, or hobbies, unless such course or other 
                education is part of the student's degree program.
                    ``(C) Exception for nonacademic fees.--Such term 
                does not include student activity fees, athletic fees, 
                insurance expenses, or other expenses unrelated to a 
                student's academic course of instruction.
                    ``(D) Eligible student.--
                            ``(i) In general.--The term `eligible 
                        student' means, with respect to any academic 
                        period, a student who--
                                    ``(I) meets the requirements of 
                                section 484(a)(1) of the Higher 
                                Education Act of 1965 (20 U.S.C. 
                                1091(a)(1)), as in effect on the date 
                                of the enactment of this section, and
                                    ``(II) is carrying at least \1/2\ 
                                the normal full-time work load for the 
                                course of study the student is 
                                pursuing, as reasonably determined by 
                                the institution of higher education.
                            ``(ii) Grade-point requirement.--A student 
                        shall not be treated as an eligible student if 
                        the student did not have a grade-point average 
                        of at least 2.75 on a 4-point scale (or met a 
                        substantially similar measure of achievement) 
                        for the students' high school education (or 
                        equivalent).
            ``(2) Institution of higher education.--The term 
        `institution of higher education' means an institution--
                    ``(A) which is described in section 481 of the 
                Higher Education Act of 1965 (20 U.S.C. 1088), as in 
                effect on the date of the enactment of this section, 
                and
                    ``(B) which is eligible to participate in programs 
                under title IV of such Act.
            ``(3) Full-time student.--The term `full-time student' 
        means any student who is carrying at least the normal full-time 
        work load for the course of study the student is pursuing, as 
        reasonably determined by the institution of higher education.
    ``(e) Special Rules.--
            ``(1) Denial of credit if student convicted of drug 
        offense.--No credit shall be allowed under subsection (a) for 
        qualified higher education expenses for the enrollment or 
        attendance of a student for any academic period if such student 
        has been convicted of a Federal or State offense consisting of 
        the possession or distribution of a controlled substance before 
        the end of the taxable year with or within which such period 
        ends.
            ``(2) No double benefit.--
                    ``(A) In general.--No credit shall be allowed under 
                subsection (a) for qualified higher education expenses 
                for the enrollment or attendance of a student for any 
                academic period if any such expense for the enrollment 
                or attendance of such student for such period is 
                allowed as a deduction to the taxpayer under any other 
                provision of this chapter.
                    ``(B) Dependents.--No credit shall be allowed under 
                subsection (a) to any individual with respect to whom a 
                deduction under section 151 is allowable to another 
                taxpayer for a taxable year beginning in the calendar 
                year in which such individual's taxable year begins.
            ``(3) Identification requirement.--No credit shall be 
        allowed under subsection (a) to a taxpayer with respect to an 
        eligible student other than the taxpayer unless the taxpayer 
        includes the name and taxpayer identification number of such 
        eligible student on the return of tax for the taxable year.
            ``(4) Adjustment for certain scholarships.--The amount of 
        qualified higher education expenses otherwise taken into 
        account under subsection (a) with respect to the education of 
        an individual for an academic period shall be reduced (before 
        the application of subsections (b) and (c)) by the sum of--
                    ``(A) the amounts received with respect to such 
                individual which are allocable to such period as--
                            ``(i) a qualified scholarship which under 
                        section 117 is not includable in gross income,
                            ``(ii) an educational assistance allowance 
                        under chapter 30, 31, 32, 34, or 35 of title 
                        38, United States Code, or
                            ``(iii) a payment (other than a gift, 
                        bequest, devise, or inheritance within the 
                        meaning of section 102(a)) for educational 
                        expenses, or attributable to enrollment at an 
                        eligible educational institution, which is 
                        exempt from income taxation by any law of the 
                        United States, and
                    ``(B) the amount excludable from gross income under 
                section 135 which is allocable to such expenses with 
                respect to such individual for such period.
            ``(5) No credit for married individuals filing separate 
        returns.--If the taxpayer is a married individual (within the 
        meaning of section 7703), this section shall apply only if the 
        taxpayer and the taxpayer's spouse file a joint return for the 
        taxable year.
            ``(6) Nonresident aliens.--If the taxpayer is a nonresident 
        alien individual for any portion of the taxable year, this 
        section shall apply only if such individual is treated as a 
        resident alien of the United States for purposes of this 
        chapter by reason of an election under subsection (g) or (h) of 
        section 6013.
            ``(7) Regulations.--The Secretary may, in consultation with 
        the Secretary of Education, prescribe such regulations as may 
        be necessary or appropriate to carry out this section, 
        including--
                    ``(A) regulations requiring recordkeeping and 
                information reporting by the taxpayer and any other 
                person the Secretary determines appropriate, and
                    ``(B) regulations providing for a recapture of 
                credit allowed under this section in cases where there 
                is a refund in a subsequent taxable year of any amount 
                which was taken into account in determining the amount 
                of such credit.''
    (b) Extension of Procedures Applicable to Mathematical or Clerical 
Errors.--Paragraph (2) of section 6213(g) of such Code (relating to the 
definition of mathematical or clerical errors) is amended by striking 
``and'' at the end of subparagraph (G), by striking the period at the 
end of subparagraph (H) and inserting a comma, and by inserting after 
subparagraph (H) the following new subparagraph:
                    ``(I) an omission of a correct TIN required under 
                section 35(e)(3) or under section 220(d)(3)(B) 
                (relating to higher education tuition and fees) to be 
                included on a return.''
    (c) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``or 
        from section 35 of such Code''.
            (2) The table of sections for subpart C of part IV of 
        subchapter B of chapter 1 of such Code is amended by striking 
        the last item and inserting the following new items:

                              ``Sec. 35. Higher education tuition and 
                                        fees.
                              ``Sec. 36. Overpayments of tax.''
    (d) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to taxable years beginning after December 31, 1997.
            (2) Periods before 1998 taken into account.--For purposes 
        of applying section 35(b)(2)(A) of the Internal Revenue Code of 
        1986 (as added by this section), periods before January 1, 
        1998, that the student was an eligible student shall be taken 
        into account.

SEC. 102. DEDUCTION FOR HIGHER EDUCATION EXPENSES.

    (a) Deduction Allowed.-- Part VII of subchapter B of chapter 1 of 
the Internal Revenue Code of 1986 (relating to additional itemized 
deductions for individuals) is amended by redesignating section 221 as 
section 222 and by inserting after section 220 the following new 
section:

``SEC. 221. HIGHER EDUCATION TUITION AND FEES.

    ``(a) Allowance of Deduction.--In the case of an individual, there 
shall be allowed as a deduction the amount of qualified higher 
education expenses paid by the taxpayer during the taxable year.
    ``(b) Limitations.--
            ``(1) Dollar limitation.--
                    ``(A) In general.--The amount allowed as a 
                deduction under subsection (a) for any taxable year 
                shall not exceed $10,000.
                    ``(B) Phase-in.--In the case of taxable years 
                beginning in 1998 or 1999, subparagraph (A) shall be 
                applied by substituting `$5,000' for `$10,000'.
            ``(2) Limitation based on modified adjusted gross income.--
                    ``(A) In general.--The amount allowed as a 
                deduction under subsection (a) (after application of 
                paragraph (1)) shall be reduced (but not below zero) by 
                the amount determined under subparagraph (B).
                    ``(B) Amount of reduction.--The amount determined 
                under this subparagraph equals the amount which bears 
                the same ratio to the deduction (determined without 
                regard to this paragraph) as--
                            ``(i) the excess of--
                                    ``(I) the taxpayer's modified 
                                adjusted gross income for such taxable 
                                year, over
                                    ``(II) $50,000 ($80,000 in the case 
                                of a joint return), bears to
                            ``(ii) $20,000.
                    ``(C) Modified adjusted gross income.--For purposes 
                of subparagraph (B), the term `modified adjusted gross 
                income' means the adjusted gross income of the taxpayer 
                for the taxable year determined--
                            ``(i) without regard to this section and 
                        sections 911, 931, and 933, and
                            ``(ii) after the application of sections 
                        86, 135, 137, 219, and 469.
                For purposes of sections 86, 135, 219, and 469, 
                adjusted gross income shall be determined without 
                regard to the deduction allowed under this section.
                    ``(D) Cross Reference.--

                                ``For inflation adjustment of $50,000 
and $80,000 amounts, see section 35(c)(4).
    ``(c) Definitions.--For purposes of this section--
            ``(1) In general.--Except as provided in paragraph (2), 
        terms used in this section which are also used in section 35 
        have the respective meanings given such terms in section 35.
            ``(2) Deduction available for education to acquire or 
        improve job skills.--For purposes of applying this section, the 
        requirement of section 35(d)(1)(D)(ii) shall be treated as met 
        if the student is enrolled in a course which enables the 
        student to improve the student's job skills or to acquire new 
        job skills.
    ``(d) Special Rules.--
            ``(1) Denial of double benefit.--No deduction shall be 
        allowed under subsection (a) for qualified higher education 
        expenses with respect to which a deduction is allowable to the 
        taxpayer under any other provision of this chapter unless the 
        taxpayer irrevocably waives his right to the deduction of such 
        expenses under such other provision.
            ``(2) Limitation on taxable year of deduction.--
                    ``(A) In general.--A deduction shall be allowed 
                under subsection (a) for any taxable year only to the 
                extent the qualified higher education expenses are in 
                connection with enrollment at an institution of higher 
                education during the taxable year.
                    ``(B) Certain prepayments allowed.--Subparagraph 
                (A) shall not apply to qualified higher education 
                expenses paid during a taxable year if such expenses 
                are in connection with an academic term beginning 
                during such taxable year or during the 1st 3 months of 
                the next taxable year.
            ``(3) Certain rules to apply.--Rules similar to the 
        following rules of section 35(e) shall apply for purposes of 
        this section:
                    ``(A) Paragraph (2)(B) (relating to denial of 
                double benefit for dependents).
                    ``(B) Paragraph (3) (relating to identification 
                requirement).
                    ``(C) Paragraph (4) (relating to adjustment for 
                certain scholarships).
                    ``(D) Paragraph (5) (relating to no benefit for 
                married individuals filing separate returns).
                    ``(E) Paragraph (6) (relating to nonresident 
                aliens).
            ``(4) Regulations.--The Secretary may prescribe such 
        regulations as may be necessary or appropriate to carry out 
        this section, including regulations requiring recordkeeping and 
        information reporting.''
    (b) Deduction Allowed in Computing Adjusted Gross Income.--Section 
62(a) of such Code is amended by inserting after paragraph (16) the 
following new paragraph:
            ``(17) Higher education tuition and fees.--The deduction 
        allowed by section 221.''
    (c) Conforming Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 of such Code is amended by striking the item 
relating to section 221 and inserting:

                              ``Sec. 221. Higher education tuition and 
                                        fees.
                              ``Sec. 222. Cross reference.''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1997.

SEC. 103. DEDUCTION FOR INTEREST ON EDUCATION LOANS.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional itemized 
deductions for individuals), as amended by section 102, is amended by 
redesignating section 222 as section 223 and by inserting after section 
221 the following new section:

``SEC. 222. INTEREST ON EDUCATION LOANS.

    ``(a) Allowance of Deduction.--In the case of an individual, there 
shall be allowed as a deduction for the taxable year an amount equal to 
the interest paid by the taxpayer during the taxable year on any 
qualified education loan.
    ``(b) Limitation Based on Modified Adjusted Gross Income.--
            ``(1) In general.--The amount allowed as a deduction under 
        subsection (a) shall be reduced (but not below zero) by the 
        amount determined under paragraph (2).
            ``(2) Amount of reduction.--The amount determined under 
        this paragraph equals the amount which bears the same ratio to 
        the deduction (determined without regard to this subsection) 
        as--
                    ``(A) the excess of--
                            ``(i) the taxpayer's modified adjusted 
                        gross income for such taxable year, over
                            ``(ii) $50,000 ($80,000 in the case of a 
                        joint return), bears to
                    ``(B) $20,000.
            ``(3) Modified adjusted gross income.--For purposes of 
        paragraph (2), the term `modified adjusted gross income' means 
        the adjusted gross income of the taxpayer for the taxable year 
        determined--
                    ``(A) without regard to this section and sections 
                911, 931, and 933, and
                    ``(B) after the application of sections 86, 135, 
                137, 219, 221, and 469.
        For purposes of sections 86, 135, 219, 221, and 469, adjusted 
        gross income shall be determined without regard to the 
        deduction allowed under this section.
            ``(4) Cross reference.--

                                ``For inflation adjustment of $50,000 
and $80,000 amounts, see section 35(c)(4).
    ``(c) Dependents Not Eligible for Deduction.--No deduction shall be 
allowed by this section to an individual for the taxable year if a 
deduction under section 151 with respect to such individual is allowed 
to another taxpayer for the taxable year beginning in the calendar year 
in which such individual's taxable year begins.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Qualified education loan.--The term `qualified 
        education loan' means any indebtedness incurred to pay 
        qualified higher education expenses--
                    ``(A) which are incurred on behalf of the taxpayer 
                or the taxpayer's spouse,
                    ``(B) which are paid or incurred within a 
                reasonable period of time before or after the 
                indebtedness is incurred, and
                    ``(C) which are attributable to education furnished 
                during a period during which the recipient was at least 
                a half-time student.
        Such term includes indebtedness used to refinance indebtedness 
        which qualifies as a qualified education loan. The term 
        `qualified education loan' shall not include any indebtedness 
        owed to a person who is related (within the meaning of section 
        267(b) or 707(b)(1)) to the taxpayer.
            ``(2) Qualified higher education expenses.--The term 
        `qualified higher education expenses' has the meaning given 
        such term by section 35(d) (without regard to paragraph 
        (1)(D)(ii)), reduced by the sum of--
                    ``(A) the amount excluded from gross income under 
                section 135 by reason of such expenses, and
                    ``(B) the amount of the reduction described in 
                section 135(d)(1).
        For purposes of applying section 35(d) under the preceding 
        sentence, the term `eligible educational institution' shall 
        also include an institution conducting an internship or 
        residency program leading to a degree or certificate awarded by 
        an institution of higher education, a hospital, or a health 
        care facility which offers postgraduate training.
            ``(3) Half-time student.--The term `half-time student' 
        means any individual who would be a student as defined in 
        section 151(c)(4) if `half-time' were substituted for `full-
        time' each place it appears in such section.
            ``(4) Dependent.--The term `dependent' has the meaning 
        given such term by section 152.
    ``(e) Special Rules.--
            ``(1) Denial of double benefit.--No deduction shall be 
        allowed under this section for any amount for which a deduction 
        is allowable under any other provision of this chapter.
            ``(2) Married couples must file joint return.--If the 
        taxpayer is married at the close of the taxable year, the 
        deduction shall be allowed under subsection (a) only if the 
        taxpayer and the taxpayer's spouse file a joint return for the 
        taxable year.
            ``(3) Marital status.--Marital status shall be determined 
        in accordance with section 7703.''
    (b) Deduction Allowed Whether or Not Taxpayer Itemizes Other 
Deductions.--Subsection (a) of section 62 of such Code, as amended by 
section 102, is amended by inserting after paragraph (17) the following 
new paragraph:
            ``(18) Interest on education loans.--The deduction allowed 
        by section 222.''
    (c) Reporting Requirement.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 of such Code (relating to information concerning 
        transactions with other persons) is amended by inserting after 
        section 6050R the following new section:

``SEC. 6050S. RETURNS RELATING TO EDUCATION LOAN INTEREST RECEIVED IN 
              TRADE OR BUSINESS FROM INDIVIDUALS.

    ``(a) Education Loan Interest of $600 or More.--Any person--
            ``(1) who is engaged in a trade or business, and
            ``(2) who, in the course of such trade or business, 
        receives from any individual interest aggregating $600 or more 
        for any calendar year on 1 or more qualified education loans,
shall make the return described in subsection (b) with respect to each 
individual from whom such interest was received at such time as the 
Secretary may by regulations prescribe.
    ``(b) Form and Manner of Returns.--A return is described in this 
subsection if such return--
            ``(1) is in such form as the Secretary may prescribe,
            ``(2) contains--
                    ``(A) the name, address, and TIN of the individual 
                from whom the interest described in subsection (a)(2) 
                was received,
                    ``(B) the amount of such interest received for the 
                calendar year, and
                    ``(C) such other information as the Secretary may 
                prescribe.
    ``(c) Application to Governmental Units.--For purposes of 
subsection (a)--
            ``(1) Treated as persons.--The term `person' includes any 
        governmental unit (and any agency or instrumentality thereof).
            ``(2) Special rules.--In the case of a governmental unit or 
        any agency or instrumentality thereof--
                    ``(A) subsection (a) shall be applied without 
                regard to the trade or business requirement contained 
                therein, and
                    ``(B) any return required under subsection (a) 
                shall be made by the officer or employee appropriately 
                designated for the purpose of making such return.
    ``(d) Statements To Be Furnished to Individuals With Respect to 
Whom Information Is Required.--Every person required to make a return 
under subsection (a) shall furnish to each individual whose name is 
required to be set forth in such return a written statement showing--
            ``(1) the name and address of the person required to make 
        such return, and
            ``(2) the aggregate amount of interest described in 
        subsection (a)(2) received by the person required to make such 
        return from the individual to whom the statement is required to 
        be furnished.
The written statement required under the preceding sentence shall be 
furnished on or before January 31 of the year following the calendar 
year for which the return under subsection (a) was required to be made.
    ``(e) Qualified Education Loan Defined.--For purposes of this 
section, except as provided in regulations prescribed by the Secretary, 
the term `qualified education loan' has the meaning given such term by 
section 222(d)(1).
    ``(f) Returns Which Would Be Required To Be Made by 2 or More 
Persons.--Except to the extent provided in regulations prescribed by 
the Secretary, in the case of interest received by any person on behalf 
of another person, only the person first receiving such interest shall 
be required to make the return under subsection (a).''
            (2) Assessable penalties.--Section 6724(d) (relating to 
        definitions) is amended--
                    (A) by redesignating clauses (x) through (xv) as 
                clauses (xi) through (xvi), respectively, in paragraph 
                (1)(B) and by inserting after clause (ix) of such 
                paragraph the following new clause:
                            ``(x) section 6050S (relating to returns 
                        relating to education loan interest received in 
                        trade or business from individuals),'', and
                    (B) by striking ``or'' at the end of the next to 
                last subparagraph, by striking the period at the end of 
                the last subparagraph and inserting ``, or'', and by 
                adding at the end the following new subparagraph:
                    ``(Z) section 6050R (relating to returns relating 
                to education loan interest received in trade or 
                business from individuals).''
    (d) Clerical Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 is amended by striking the last item and 
inserting the following new items:

                              ``Sec. 222. Interest on education loans.
                              ``Sec. 223. Cross reference.''
    (e) Effective Date.--The amendments made by this section shall 
apply to any qualified education loan (as defined in section 222(d)(1) 
of the Internal Revenue Code of 1986, as added by this section) 
incurred on, before, or after the date of the enactment of this Act, 
but only with respect to any loan interest payment due after December 
31, 1997.

              TITLE II--EDUCATIONAL FACILITIES IMPROVEMENT

SEC. 201. SHORT TITLE.

    This title may be cited as the ``Educational Facilities Improvement 
Act''.

SEC. 202. PROVISION OF ASSISTANCE FOR CONSTRUCTION AND RENOVATION OF 
              EDUCATIONAL FACILITIES.

    Title XII of the Elementary and Secondary Education Act of 1965 (20 
U.S.C. 8501 et seq.) is amended--
            (1) by repealing sections 12002 and 12003;
            (2) by redesignating sections 12001 and 12004 through 
        12013, as sections 12101 and 12102 through 12111, respectively;
            (3) by inserting after the title heading the following:

``SEC. 12001. FINDINGS.

    ``The Congress finds the following:
            ``(1) The General Accounting Office performed a 
        comprehensive survey of the Nation's public elementary and 
        secondary school facilities, and found severe levels of 
        disrepair in all areas of the United States.
            ``(2) The General Accounting Office concluded more than 
        14,000,000 children attend schools in need of extensive repair 
        or replacement. Seven million children attend schools with life 
        safety code violations. Twelve million children attend schools 
        with leaky roofs.
            ``(3) The General Accounting Office found the problem of 
        crumbling schools transcends demographic and geographic 
        boundaries. At 38 percent of urban schools, 30 percent of rural 
        schools, and 29 percent of suburban schools, at least one 
        building is in need of extensive repair or should be completely 
        replaced.
            ``(4) The condition of school facilities has a direct 
        affect on the safety of students and teachers, and on the 
        ability of students to learn.
            ``(5) Academic research has proven a direct correlation 
        between the condition of school facilities and student 
        achievement. At Georgetown University, researchers found 
        students assigned to schools in poor condition can be expected 
        to fall 10.9 percentage points below those in buildings in 
        excellent condition. Similar studies have demonstrated up to a 
        20 percent improvement in test scores when students were moved 
        from a poor facility to a new facility.
            ``(6) The General Accounting Office found most schools are 
        not prepared to incorporate modern technology into the 
        classroom. Forty-six percent of schools lack adequate 
        electrical wiring to support the full-scale use of technology. 
        More than a third of schools lack the requisite electrical 
        power. Fifty-six percent of schools have insufficient phone 
        lines for modems.
            ``(7) The Department of Education reported that elementary 
        and secondary school enrollment, already at a record high 
        level, will continue to grow during the period between 1996 and 
        2000, and that in order to accommodate this growth, the United 
        States will need to build an additional 6,000 schools over this 
        time period.
            ``(8) The General Accounting Office found it will cost 
        $112,000,000,000 just to bring schools up to good, overall 
        condition, not including the cost of modernizing schools so the 
        schools can utilize 21st century technology, nor including the 
        cost of expansion to meet record enrollment levels.
            ``(9) State and local financing mechanisms have proven 
        inadequate to meet the challenges facing today's aging school 
        facilities. Large numbers of local educational agencies have 
        difficulties securing financing for school facility 
        improvement.
            ``(10) The Federal Government can support elementary and 
        secondary school facilities, and can leverage additional funds 
        for the improvement of elementary and secondary school 
        facilities.

``SEC. 12002. PURPOSE.

    ``The purpose of this title is to help State and local authorities 
improve the quality of education at their public schools through the 
provision of Federal funds to enable the State and local authorities to 
meet the cost associated with the improvement of school facilities 
within their jurisdictions.

     ``PART A--GENERAL INFRASTRUCTURE IMPROVEMENT GRANT PROGRAM'';

        and
            (4) by adding at the end the following:

       ``PART B--CONSTRUCTION AND RENOVATION BOND SUBSIDY PROGRAM

``SEC. 12201. DEFINITIONS.

    ``As used in this part:
            ``(1) Educational facility.--The term `educational 
        facility' has the meaning given the term `school' in section 
        12110.
            ``(2) Local area.--The term `local area' means the 
        geographic area served by a local educational agency.
            ``(3) Local bond authority.--The term `local bond 
        authority' means--
                    ``(A) a local educational agency with authority to 
                issue a bond for construction or renovation of 
                educational facilities in a local area; and
                    ``(B) a political subdivision of a State with 
                authority to issue such a bond for an area including a 
                local area.
            ``(4) Poverty line.--The term `poverty line' means the 
        official poverty line (as defined by the Office of Management 
        and Budget, and revised annually in accordance with section 
        673(2) of the Omnibus Budget Reconciliation Act of 1981 (42 
        U.S.C. 9902(2))) applicable to a family of the size involved.
            ``(5) State.--The term `State' means each of the several 
        States of the United States, the District of Columbia, and the 
        Commonwealth of Puerto Rico.

``SEC. 12202. AUTHORIZATION OF PROGRAM.

    ``(a) Program Authority.--Of the amount appropriated under section 
12210 for a fiscal year and not reserved under subsection (b), the 
Secretary shall use--
            ``(1) 20 percent of such amount to award grants to local 
        bond authorities for not more than 125 eligible local areas as 
        provided for under section 12203; and
            ``(2) 80 percent of such amount to award grants to States 
        as provided for under section 12204.
    ``(b) Special Rule.--The Secretary may reserve--
            ``(1) not more than 1 percent of the amount appropriated 
        under section 12210 to provide assistance to Indian schools in 
        accordance with the purpose of this title;
            ``(2) not more than 0.5 percent of the amount appropriated 
        under section 12210 to provide assistance to Guam, the United 
        States Virgin Islands, 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 
        to carry out the purpose of this title; and
            ``(3) not more than 0.1 percent of the amount appropriated 
        under section 12210 to carry out section 12209.

``SEC. 12203. DIRECT GRANTS TO LOCAL BOND AUTHORITIES.

    ``(a) In General.--The Secretary shall award a grant under section 
12202(a)(1) to eligible local bond authorities to provide assistance 
for construction or renovation of educational facilities in a local 
area.
    ``(b) Use of Funds.--The local bond authority shall use amounts 
received through a grant made under section 12202(a)(1) to pay a 
portion of the interest costs applicable to any local bond issued to 
finance an activity described in section 12205 with respect to the 
local area.
    ``(c) Eligibility and Determination.--
            ``(1) Eligibility.--To be eligible to receive a grant under 
        section 12202(a)(1) for a local area, a local bond authority 
        shall demonstrate the capacity to issue a bond for an area that 
        includes 1 of the 125 local areas for which the Secretary has 
        made a determination under paragraph (2).
            ``(2) Determination.--
                    ``(A) Mandatory.--The Secretary shall make a 
                determination of the 100 local areas that have the 
                highest numbers of children who are--
                            ``(i) aged 5 to 17, inclusive; and
                            ``(ii) members of families with incomes 
                        that do not exceed 100 percent of the poverty 
                        line.
                    ``(B) Discretionary.--The Secretary may make a 
                determination of 25 local areas, for which the 
                Secretary has not made a determination under 
                subparagraph (A), that have extraordinary needs for 
                construction or renovation of educational facilities 
                that the local bond authority serving the local area is 
                unable to meet.
    ``(d) Application.--To be eligible to receive a grant under section 
12202(a)(1), a local bond authority shall prepare and submit to the 
Secretary an application at such time, in such manner, and containing 
such information as the Secretary may require, including--
            ``(1) an assurance that the application was developed in 
        consultation with parents and classroom teachers;
            ``(2) information sufficient to enable the Secretary to 
        make a determination under subsection (c)(2) with respect to 
        such local authority;
            ``(3) a description of the architectural, civil, 
        structural, mechanical, or electrical construction or 
        renovation to be supported with the assistance provided under 
        this part;
            ``(4) a cost estimate of the proposed construction or 
        renovation;
            ``(5) an identification of other resources, such as unused 
        bonding capacity, that are available to carry out the 
        activities for which assistance is requested under this part;
            ``(6) a description of how activities supported with funds 
        provided under this part will promote energy conservation; and
            ``(7) such other information and assurances as the 
        Secretary may require.
    ``(e) Award of Grants.--
            ``(1) In general.--In awarding grants under section 
        12202(a)(1), the Secretary shall give preference to a local 
        bond authority based on--
                    ``(A) the extent to which the local educational 
                agency serving the local area involved or the 
                educational facility for which the authority seeks a 
                grant (as appropriate) meets the criteria described in 
                section 12103(a);
                    ``(B) the extent to which the educational facility 
                is overcrowded; and
                    ``(C) the extent to which assistance provided 
                through the grant will be used to fund construction or 
                renovation that, but for receipt of the grant, would 
                not otherwise be possible to undertake.
            ``(2) Amount of assistance.--
                    ``(A) In general.--In determining the amount of 
                assistance for which local bond authorities are 
                eligible under section 12202(a)(1), the Secretary 
                shall--
                            ``(i) give preference to a local bond 
                        authority based on the criteria specified in 
                        paragraph (1); and
                            ``(ii) consider--
                                    ``(I) the amount of the cost 
                                estimate contained in the application 
                                of the local bond authority under 
                                subsection (d)(4);
                                    ``(II) the relative size of the 
                                local area several by the local bond 
                                authority; and
                                    ``(III) any other factors 
                                determined to be appropriate by the 
                                Secretary.
                    ``(B) Maximum amount of assistance.--A local bond 
                authority shall be eligible for assistance under 
                section 12202(a)(1) in an amount that does not exceed 
                the appropriate percentage under section 12204(f)(3) of 
                the interest costs applicable to any local bond issued 
                to finance an activity described in section 12205 with 
                respect to the local area involved.

``SEC. 12204. GRANTS TO STATES.

    ``(a) In General.--The Secretary shall award a grant under section 
12202(a)(2) to each eligible State to provide assistance to the State, 
or local bond authorities in the State, for construction and renovation 
of educational facilities in local areas.
    ``(b) Use of Funds.--The State shall use amounts received through a 
grant made under section 12202(a)(2)--
            ``(1) to pay a portion of the interest costs applicable to 
        any State bond issued to finance an activity described in 
        section 12205 with respect to the local areas; or
            ``(2) to provide assistance to local bond authorities in 
        the State to pay a portion of the interest costs applicable to 
        any local bond issued to finance an activity described in 
        section 12205 with respect to the local areas.
    ``(c) Amount of Grant to State.--
            ``(1) In general.--From the amount available for grants 
        under section 12202(a)(2), the Secretary shall award a grant to 
        each eligible State that is equal to the total of--
                    ``(A) a sum that bears the same relationship to 50 
                percent of such amount as the total amount of funds 
                made available for all eligible local educational 
                agencies in the State under part A of title I for such 
                year bears to the total amount of funds made available 
                for all eligible local educational agencies in all 
                States under such part for such year; and
                    ``(B) a sum that bears the same relationship to 50 
                percent of such amount as the total amount of funds 
                made available for all eligible local educational 
                agencies in the State under title VI for such year 
                bears to the total amount of funds made available for 
                all eligible local educational agencies in all States 
                under such title for such year.
            ``(2) Eligible local educational agencies.--For the purpose 
        of paragraph (1) the term `eligible local educational agency' 
        means a local educational agency that does not serve a local 
        area for which an eligible local bond authority received a 
        grant under section 12203.
    ``(d) State Applications Required.--To be eligible to receive a 
grant under section 12202(a)(2), a State shall prepare and submit to 
the Secretary an application at such time, in such manner, and 
containing such information as the Secretary may require. Such 
application shall contain--
            ``(1) a description of the process the State will use to 
        determine which local bond authorities will receive assistance 
        under subsection (b)(2).
            ``(2) an assurance that grant funds under this section will 
        be used to increase the amount of school construction or 
        renovation in the State for a fiscal year compared to such 
        amount in the State for the preceding fiscal years.
    ``(e) Administering Agency.--
            ``(1) In general.--The State agency with authority to issue 
        bonds for the construction or renovation of educational 
        facilities, or with the authority to otherwise finance such 
        construction or renovation, shall administer the amount 
        received through the grant.
            ``(2) Special rule.--If no agency described in paragraph 
        (1) exits, or if there is more than one such agency, then the 
        chief executive officer of the State and the chief State school 
        officer shall designate a State entity or individual to 
        administer the amounts received through the grant.
    ``(f) Assistance to Local Bond Authorities.--
            ``(1) In general.--To be eligible to receive assistance 
        from a State under this section, a local bond authority shall 
        prepare and submit to the State agency designated under 
        subsection (e) an application at such time, in such manner, and 
        containing such information as the State agency may require, 
        including the information described in section 12203(d).
            ``(2) Criteria.--In awarding grants under this section, the 
        State agency shall give preference to a local bond authority 
        based on--
                    ``(A) the extent to which the local educational 
                agency serving the local area involved or the 
                educational facility for which the authority seeks the 
                grant (as appropriate) meets the criteria described in 
                section 12103(a);
                    ``(B) the extent to which the educational facility 
                is overcrowded; and
                    ``(C) the extent to which assistance provided 
                through the grant will be used to fund construction or 
                renovation that, but for receipt of the grant, would 
                not otherwise be possible to undertake.
            ``(3) Amount of assistance.--A local bond authority seeking 
        assistance for a local area served by a local educational 
        agency described in--
                    ``(A) clause (i)(I) or clause (ii)(I) of section 
                1125(c)(2)(A), shall be eligible for assistance in an 
                amount that does not exceed 10 percent;
                    ``(B) clause (i)(II) or clause (ii)(II) of section 
                1125(c)(2)(A), shall be eligible for assistance in an 
                amount that does not exceed 20 percent;
                    ``(C) clause (i)(III) or clause (ii)(III) of 
                section 1125(c)(2)(A), shall be eligible for assistance 
                in an amount that does not exceed 30 percent;
                    ``(D) clause (i)(IV) or clause (ii)(IV) of section 
                1125(c)(2)(A), shall be eligible for assistance in an 
                amount that does not exceed 40 percent; and
                    ``(E) clause (i)(V) or clause (ii)(V) of section 
                1125(c)(2)(A), shall be eligible for assistance in an 
                amount that does not exceed 50 percent;
        of the interest costs applicable to any local bond issued to 
        finance an activity described in section 12205 with respect to 
        the local area.
    ``(g) Assistance to State.--
            ``(1) In general.--If a State issues a bond to finance an 
        activity described in section 12205 with respect to local 
        areas, the State shall be eligible for assistance in an amount 
        that does not exceed the percentage calculated under the 
        formula described in paragraph (2) of the interest costs 
        applicable to the State bond with respect to the local areas.
            ``(2) Formula.--The Secretary shall develop a formula for 
        determining the percentage referred to in paragraph (1). The 
        formula shall specify that the percentage shall consist of a 
        weighted average of the percentages referred to in 
        subparagraphs (A) through (E) of subsection (f)(3) for the 
        local areas involved.

``SEC. 12205. AUTHORIZED ACTIVITIES.

    ``An activity described in this section is a project of significant 
size and scope that consists of--
            ``(1) the repair or upgrading of classrooms or structures 
        related to academic learning, including the repair of leaking 
        roofs, crumbling walls, inadequate plumbing, poor ventilation 
        equipment, and inadequate heating or light equipment;
            ``(2) an activity to increase physical safety at the 
        educational facility involved;
            ``(3) an activity to enhance the educational facility 
        involved to provide access for students, teachers, and other 
        individuals with disabilities;
            ``(4) an activity to improve the energy efficiency of the 
        educational facility involved;
            ``(5) an activity to address environmental hazards at the 
        educational facility involved, such as poor ventilation, indoor 
        air quality, or lighting;
            ``(6) the provision of basic infrastructure that 
        facilitates educational technology, such as communications 
        outlets, electrical systems, power outlets, or a communication 
        closet;
            ``(7) the construction of new schools to meet the needs 
        imposed by enrollment growth; and
            ``(8) any other activity the Secretary determines achieves 
        the purpose of this title.

``SEC. 12206. STATE GRANT WAIVERS.

    ``(a) Waiver for State Issuance of Bond.--
            ``(1) In general.--A State that issues a bond described in 
        section 12204(b)(1) with respect to a local area may request 
        that the Secretary waive the limits described in section 
        12204(f)(3) for the local area, in calculating the amount of 
        assistance the State may receive under section 12204(g). The 
        State may request the waiver only if no local entity is able, 
        for one of the reasons described in subparagraphs (A) through 
        (F) of paragraph (2), to issue bonds on behalf of the local 
        area. Under such a waiver, the Secretary may permit the State 
        to use amounts received through a grant made under section 
        12202(a)(2) to pay for not more than 80 percent of the interest 
        costs applicable to the State bond with respect to the local 
        area.
            ``(2) Demonstration by state.--To be eligible to receive a 
        waiver under this subsection, a State shall demonstrate to the 
        satisfaction of the Secretary that--
                    ``(A) the local bond authority serving the local 
                area has reached a limit on its borrowing authority as 
                a result of a debt ceiling or property tax cap;
                    ``(B) the local area has a high percentage of low-
                income residents, or an unusually high property tax 
                rate;
                    ``(C) the demographic composition of the local area 
                will not support additional school spending;
                    ``(D) the local bond authority has a history of 
                failed attempts to pass bond referenda;
                    ``(E) the local area contains a significant 
                percentage of Federally-owned land that is not subject 
                to local taxation; or
                    ``(F) for another reason, no local entity is able 
                to issue bonds on behalf of the local area.
    ``(b) Waiver for Other Financing Sources.--
            ``(1) In general.--A State may request that the Secretary 
        waive the use requirements of section 12204(b) for a local bond 
        authority to permit the State to provide assistance to the 
        local bond authority to finance construction or renovation by 
        means other than through the issuance of bonds.
            ``(2) Use of funds.--A State that receives a waiver granted 
        under this subsection may provide assistance to a local bond 
        authority in accordance with the criteria described in section 
        12204(f)(2) to enable the local bond authority to repay the 
        costs incurred by the local bond authority in financing an 
        activity described in section 12205. The local bond authority 
        shall be eligible to receive the amount of such assistance that 
        the Secretary estimates the local bond authority would be 
        eligible to receive under section 12204(f)(3) if the 
        construction or renovation were financed through the issuance 
        of a bond.
            ``(3) Matching requirement.--The State shall make available 
        to the local bond authority (directly or through donations from 
        public or private entities) non-Federal contributions in an 
        amount equal to not less than $1 for every $1 of Federal funds 
        provided to the local bond authority through the grant.
    ``(c) Waiver for Other Uses.--
            ``(1) In general.--A State may request that the Secretary 
        waive the use requirements of section 12204(b) for a State to 
        permit the State to carry out activities that achieve the 
        purpose of this title.
            ``(2) Demonstration by state.--To be eligible to receive a 
        waiver under this subsection, a State shall demonstrate to the 
        satisfaction of the Secretary that the use of assistance 
        provided under the waiver--
                    ``(A) will result in an equal or greater amount of 
                construction or renovation of educational facilities 
                than the provision of assistance to defray the interest 
                costs applicable to a bond for such construction or 
                renovation; and
                    ``(B) will be used to fund activities that are 
                effective in carrying out the activities described in 
                section 12205, such as--
                            ``(i) the capitalization of a revolving 
                        loan fund for such construction or renovation;
                            ``(ii) the use of funds for reinsurance or 
                        guarantees with respect to the financing of 
                        such construction or renovation;
                            ``(iii) the creation of a mechanism to 
                        leverage private sector resources for such 
                        construction or renovation;
                            ``(iv) the capitalization of authorities 
                        similar to State Infrastructure Banks to 
                        leverage additional funds for such construction 
                        or renovation; or
                            ``(v) any other activity the Secretary 
                        determines achieves the purpose of this title.
    ``(d) Local Bond Authority Waiver.--
            ``(1) In general.--A local bond authority may request the 
        Secretary waive the use requirements of section 12203(b) for a 
        local head authority to permit the authority to finance 
        construction or renovation of educational facilities by means 
        other than through use of bonds.
            ``(2) Demonstration.--To be eligible to receive a waiver 
        under this subsection, a local bond authority shall demonstrate 
        that the amounts made available through a grant under the 
        waiver will result in an equal or greater amount of 
        construction or renovation of educational facilities than the 
        provision of assistance to defray the interest costs applicable 
        to a bond for such construction or renovation.
    ``(e) Request for Waiver.--A State or local bond authority that 
desires a waiver under this section shall submit a waiver request to 
the Secretary that--
            ``(1) identifies the type of waiver requested;
            ``(2) with respect to a waiver described in subsection (a), 
        (c), or (d), makes the demonstration described in subsection 
        (a)(2), (c)(2), or (d)(2), respectively;
            ``(3) describes the manner in which the waiver will further 
        the purpose of this title; and
            ``(4) describes the use of assistance provided under such 
        waiver.
    ``(f) Action by Secretary.--The Secretary shall make a 
determination with respect to a request submitted under subsection (d) 
not later than 90 days after the date on which such request was 
submitted.
    ``(g) General Requirements.--
            ``(1) States.--In the case of a waiver request submitted by 
        a State under this section, the State shall--
                    ``(A) provide all interested local educational 
                agencies in the State with notice and a reasonable 
                opportunity to comment on the request;
                    ``(B) submit the comments to the Secretary; and
                    ``(C) provide notice and information to the public 
                regarding the waiver request in the manner that the 
                applying State customarily provides similar notices and 
                information to the public.
            ``(2) Local bond authorities.--In the case of a waiver 
        request submitted by a local bond authority under this section, 
        the local bond authority shall--
                    ``(A) provide the affected local educational agency 
                with notice and a reasonable opportunity to comment on 
                the request;
                    ``(B) submit the comments to the Secretary; and
                    ``(C) provide notice and information to the public 
                regarding the waiver request in the manner that the 
                applying local bond authority customarily provides 
                similar notices and information to the public.

``SEC. 12207. GENERAL PROVISIONS.

    ``(a) Failure to Issue Bonds.--
            ``(1) States.--If a State that receives assistance under 
        this part fails to issue a bond for which the assistance is 
        provided, the amount of such assistance shall be made available 
        to the State as provided for under section 12204, during the 
        first fiscal year following the date of repayment.
            ``(2) Local bond authorities and local areas.--If a local 
        bond authority that receives assistance under this part fails 
        to issue a bond, or a local area that receives such assistance 
        fails to become the beneficiary of a bond, for which the 
        assistance is provided, the amount of such assistance--
                    ``(A) in the case of assistance received under 
                section 12202(a)(1), shall be repaid to the Secretary 
                and made available as provided for under section 12203; 
                and
                    ``(B) in the case of assistance received under 
                section 12202(a)(2), shall be repaid to the State and 
                made available as provided for under section 12204.
    ``(b) Liability of the Federal Government.--The Secretary shall not 
be liable for any debt incurred by a State or local bond authority for 
which assistance is provided under this part. If such assistance is 
used by a local educational agency to subsidize a debt other than the 
issuance of a bond, the Secretary shall have no obligation to repay the 
lending institution to whom the debt is owed if the local educational 
agency defaults.

``SEC. 12208. FAIR WAGES.

    ``The provisions of section 12107 shall apply with respect to all 
laborers and mechanics employed by contractors or subcontractors in the 
performance of any contract and subcontract for the repair, renovation, 
alteration, or construction, including painting and decorating, of any 
building or work that is financed in whole or in part using assistance 
provided under this part.

``SEC. 12209. REPORT.

    ``From amounts reserved under section 12202(b)(3) for each fiscal 
year the Secretary shall--
            ``(1) collect such data as the Secretary determines 
        necessary at the school, local, and State levels;
            ``(2) conduct studies and evaluations, including national 
        studies and evaluations, in order to--
                    ``(A) monitor the progress of activities supported 
                with funds provided under this part; and
                    ``(B) evaluate the state of United States 
                educational facilities; and
            ``(3) report to the appropriate committees of Congress 
        regarding the findings of the studies and evaluations described 
        in paragraph (2).

``SEC. 12210. FUNDING.

    ``(a) In General.--There are appropriated $5,000,000,000 for fiscal 
year 1998 to carry out this part.
    ``(b) Entitlement.--Subject to subsection (a), each State or local 
bond authority awarded a grant under this part shall be entitled to 
payments under the grant.
    ``(c) Availability.--Any amounts appropriated pursuant to the 
authority of subsection (a) shall remain available until expended.''.

SEC. 203. FUNDING.

    Section 12111 of the Educated Infrastructure Act of 1994 (as 
redesignated by section 202(2)) (20 U.S.C. 8513) is amended to read as 
follows:

``SEC. 12111. FUNDING.

    ``(a) Authorization.--There are authorized to be appropriated to 
carry out this part $200,000,000 for fiscal year 1995 and such sums as 
may be necessary for each of the four succeeding fiscal years.
    ``(b) Appropriation.--There are appropriated to carry out this part 
$150,000,000 for each of the fiscal years 1998 through 2002.
    ``(c) Entitlement.--Subject to subsection (b), each State or local 
bond authority awarded a grant under this part shall be entitled to 
payments under the grant.''.

SEC. 204. CONFORMING AMENDMENTS.

    (a) Cross References.--Part A of title XII of the Elementary and 
Secondary Education Act of 1965 (as redesignated by section 202(3)) is 
amended--
            (1) in section 12102(a) (as redesignated by section 
        202(2))--
                    (A) in paragraph (1)--
                            (i) by striking ``12013'' and inserting 
                        ``12111'';
                            (ii) by striking ``12005'' and inserting 
                        ``12103''; and
                            (iii) by striking ``12007'' and inserting 
                        ``12105''; and
                    (B) in paragraph (2), by striking ``12013'' and 
                inserting ``12111''; and
            (2) in section 12110(3)(C) (as redesignated by section 
        202(2)), by striking ``12006'' and inserting ``12104''.
    (b) Conforming Amendments.--Part A of title XII of the Elementary 
and Secondary Education Act of 1965 (as redesignated by section 202(3)) 
(20 U.S.C. 8501 et seq.) is further amended--
                    (1) in section 12101 (as redesignated by section 
                202(2)), by striking ``This title'' and inserting 
                ``This part''; and
                    (2) in sections 12102(a)(2), 12102(b)(1), 12103(a), 
                12103(b), 12103(b)(2), 12103(c), 12103(d), 12104(a), 
                12104(b)(2), 12104(b)(3), 12104(b)(4), 12104(b)(6), 
                12104(b)(7), 12105(a), 12105(b), 12106(a), 12106(b), 
                12106(c), 12106(c)(1), 12106(c)(7), 12106(e), 12107, 
                12108(a)(1), 12108(a)(2), 12108(b)(1), 12108(b)(2), 
                12108(b)(3), 12108(b)(4), 12109(2)(A), and 12110 (as 
                redesignated by section 202(2)), by striking ``this 
                title'' each place it appears and inserting ``this 
                part''.

                   TITLE III--AMERICA READS CHALLENGE

SEC. 301. FINDINGS.

    Congress finds as follows:
            (1) With the proper support and teaching, all children can 
        learn to read at grade-level by the end of the 3d grade.
            (2) Students who are not reading at grade-level are very 
        unlikely to graduate from high school.
            (3) Reading is a fundamental skill for learning, but in 
        1994, 40 percent of 4th grade students failed to attain the 
        basic level of reading on the National Assessment of Education 
        Progress. Seventy percent of 4th graders did not attain the 
        proficient level of reading.
            (4) Parents are the best first teachers. Parents can help 
        to increase their children's reading levels, for example, by 
        reading with their child 30 minutes a day. Evidence shows that 
        greater parental support of children's literacy success makes a 
        significant difference.
            (5) One-on-one tutoring is a key component of bringing 
        students up to reading at grade-level.
            (6) Pre-school preparation and family involvement is widely 
        recognized to improve student performance. Preparing children 
        to learn, both through parent involvement and through pre-
        school preparation, plays a crucial role in preventing students 
        from falling behind.

         Subtitle A--Parents As First Teachers Challenge Grants

SEC. 311. SHORT TITLE.

    This subtitle may be cited as the ``Parents as First Teachers 
Challenge Grant Act of 1997''.

SEC. 312. FINDING AND PURPOSE.

    (a) Finding.--Congress finds that parents are the best first 
teachers.
    (b) Purpose.--The purpose of this subtitle is to support effective, 
proven efforts that provide assistance to parents who want to help 
their children become successful readers by the end of the 3d grade.

SEC. 313. DEFINITIONS.

    In this subtitle:
            (1) Eligible child.--The term ``eligible child'' means an 
        individual eligible to attend preschool, kindergarten, or 1st, 
        2d, or 3d grade.
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of Education.

SEC. 314. GRANTS AUTHORIZED.

    (a) Grants for National or Regional Networks.--The Secretary is 
authorized to award at least 2 grants to public or private agencies or 
institutions to enable the agencies or institutions to support national 
or regional networks that share information on helping eligible 
children read.
    (b) Grants for Successful Programs or Activities.--The Secretary is 
authorized to award at least 2 grants to State or local government 
agencies, nonprofit community groups or organizations, or consortia 
thereof, to enable such agencies, groups, organizations, or consortia 
to expand or replicate successful programs or activities that helps a 
parent--
            (1) be a good teacher to the parent's eligible child; and
            (2) assist the parent's eligible child in attaining reading 
        skills while assisting the eligible child to learn to read.

SEC. 315. RECIPIENT CRITERIA.

    (a) Grants for National or Regional Networks.--In order to receive 
a grant under section 312(a), a public or private agency or institution 
shall have a proven record of working with parents of eligible 
children.
    (b) Grants for Successful Programs or Activities.--In order to 
receive a grant under section 314(b), an agency, group, organization, 
or consortium shall have a proven record of working with parents to 
improve their eligible children's reading.

SEC. 316. APPLICATIONS.

    (a) In General.--Each entity desiring a grant under this subtitle 
shall submit an application to the Secretary at such time, in such 
manner, and accompanied by such information as the Secretary may 
require.
    (b) Applications for Grants for National or Regional Networks.--
Each application submitted under subsection (a) for a grant under 
section 314(a) shall--
            (1) demonstrate the likelihood that the proposed program or 
        activity will have a substantial regional or national impact;
            (2) demonstrate the cost-effectiveness of the proposed 
        program or activity; and
            (3) describe how the proposed program or activity will be 
        coordinated with private sector programs and activities, and 
        State and local programs and activities that provide support 
        for parents of eligible children.
    (c) Applications for Grants for Successful Programs or 
Activities.--Each application submitted under subsection (a) for a 
grant under section ____04(b) shall--
            (1) describe a program or activity that is capable of 
        successful expansion or replication;
            (2) contain evidence of community support for the proposed 
        program or activity from the private sector, a school, and 
        another entity;
            (3) contain information demonstrating the cost-
        effectiveness of the proposed program or activity; and
            (4) provide an assurance that the applicant will coordinate 
        the proposed program or activity with State and local programs 
        and activities that provide support for parents of eligible 
        children.

SEC. 317. AUTHORIZATION OF APPROPRIATIONS.

    (a) Appropriations.--There are appropriated to carry out this 
subtitle $45,000,000 for fiscal year 1998, $50,000,000 for fiscal year 
1999, $60,000,000 for fiscal year 2000, $70,000,000 for fiscal year 
2001, and $75,000,000 for fiscal year 2002.
    (b) Entitlement.--Subject to subsection (a), each entity receiving 
a grant under this title for a fiscal year shall be entitled to 
payments for such year under the grant.

            Subtitle B--Challenging America's Young Readers

SEC. 321. SHORT TITLE.

    This subtitle may be cited as the ``Challenging America's Young 
Readers Act of 1997''.

SEC. 322. PURPOSE.

    The purpose of this subtitle is to raise reading levels by 
providing tutoring assistance outside regular school hours to children 
eligible to attend preschool, kindergarten, or 1st, 2d, or 3d grade.

SEC. 323. DEFINITIONS.

    In this subtitle:
            (1) Administrators.--The term ``Administrators'' means the 
        Secretary of Education and the Chief Executive Officer of the 
        Corporation for National and Community Service acting pursuant 
        to the agreement entered into under section 324(c).
            (2) Eligible child.--The term ``eligible child'' means an 
        individual eligible to attend preschool, kindergarten, or 1st, 
        2d, or 3d grade.
            (3) State.--The term ``State'' means each of the several 
        States of the United States, the District of Columbia, and the 
        Commonwealth of Puerto Rico.
            (4) State educational agency.--The term ``State educational 
        agency'' has the meaning given the term by section 14101 of the 
        Elementary and Secondary Education Act of 1965 (20 U.S.C. 
        8801).

SEC. 324. PROGRAM AUTHORIZED.

    (a) Allotment and Reservations.--
            (1) Allotment.--From the sum made available under section 
        330(b) and not reserved under paragraph (5) for a fiscal year, 
        the Administrators shall make an allotment to each State 
        educational agency for the fiscal year in an amount that bears 
        the same relation to the sum as the amount such State received 
        under part A of title I of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 6311 et seq.) for the previous 
        fiscal year bears to the amount all States received under such 
        part for the previous fiscal year.
            (2) Reservations.--
                    (A) In general.--From the sum made available under 
                section 330(b) for a fiscal year, the Administrators--
                            (i) shall reserve 10 percent of such sum to 
                        carry out local reading programs under section 
                        326;
                            (ii) shall reserve not more than 1.5 
                        percent of such sum to carry out national 
                        leadership and evaluation activities under 
                        section 327;
                            (iii) shall reserve the percentage 
                        described in subparagraph (B) of such sum to 
                        make a payment to the Secretary of the Interior 
                        to enable the Secretary of the Interior to 
                        carry out the purpose of this subtitle for 
                        Indian children; and
                            (iv) shall reserve 0.25 percent of such sum 
                        to make payments to 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 on the 
                        basis of their respective need for assistance 
                        according to such criteria as the Secretary 
                        determines will best carry out the purpose of 
                        this subtitle.
                    (B) Percentage.--The percentage referred to in 
                subparagraph (A)(iii) for a fiscal year is the 
                percentage of funds reserved under section 1121(a)(2) 
                of the Elementary and Secondary Education Act of 1965 
                (20 U.S.C. 6331(a)(2)) for the Secretary of the 
                Interior for such previous year.
    (b) Grants.--
            (1) In general.--Each State educational agency receiving an 
        allotment under subsection (a)(1) shall use such allotment to 
        award grants, on a competitive basis, to organizations in the 
        State to enable the organizations--
                    (A) to employ reading specialists to supervise 
                tutoring programs that teach eligible children to read;
                    (B) to recruit and train tutors for tutoring 
                programs that teach eligible children to read; and
                    (C) to carry out tutoring programs that teach 
                eligible children to read.
            (2) Special rule.--Each tutoring program assisted through a 
        grant awarded under paragraph (1) shall be conducted before or 
        after regular school hours, or during the weekend or the 
        summer.
    (c) Community and National Service Funds.--The Administrators shall 
use amounts reserved under section 330(a) for a fiscal year to carry 
out the activities described in subparagraphs (A) through (C) of 
subsection (b)(1) during the periods described in subsection (b)(2) in 
accordance with the National and Community Service Act of 1990 (42 
U.S.C. 12501).
    (d) Joint Administration.--
            (1) In general.--The Secretary of Education and the Chief 
        Executive Officer of the Corporation for National and Community 
        Service shall administer this subtitle jointly pursuant to an 
        agreement between the Secretary and the Chief Executive 
        Officer.
            (2) Agreement.--The agreement described in paragraph (1) 
        shall establish the responsibilities of the Secretary of 
        Education and the Chief Executive Officer of the Corporation 
        for National and Community Service for administering this 
        subtitle. Such agreement shall--
                    (A) not require more than one application from any 
                one State educational agency or local applicant;
                    (B) encourage, but not require, the use of 
                volunteers assisted through funding made available 
                under section 330(a) to serve as volunteer recruiters 
                and coordinators; and
                    (C) include only one application review process.

SEC. 325. APPLICATIONS.

    (a) State.--Each State educational agency desiring an allotment 
under this subtitle shall submit an application to the Administrators 
at such time, in such manner, and containing such information as the 
Administrators may require. Each such application shall--
            (1) describe how the State educational agency will award 
        grants under this subtitle; and
            (2) describe how the State educational agency will 
        encourage use of activities assisted under the National and 
        Community Service Act of 1990 (42 U.S.C. 12501 et seq.) and the 
        Domestic Volunteer Service Act of 1973 (42 U.S.C. 4950 et 
        seq.).
    (b) Local.--Each organization desiring a grant under section 324(b) 
shall submit an application to the State educational agency at such 
time, in such manner, and accompanied by such information as the State 
educational agency may reasonably require. Each such application 
shall--
            (1) describe how the proposed program or activity will be 
        linked with the curriculum of the appropriate local educational 
        agency, school, or classroom, and other reading enhancement 
        activities of the school and the eligible children;
            (2) contain a description of how the applicant will use the 
        grant funds to provide assistance to economically disadvantaged 
        communities, and schools, in which eligible children have the 
        greatest need for reading assistance;
            (3) contain an assurance that the proposed program or 
        activity will focus on providing individualized tutoring in 
        reading that involves trained and supervised volunteers who 
        have been approved by the applicant; and
            (4) describe the strategies that will be undertaken through 
        the program or activity to ensure that eligible children will 
        make progress in reading;
            (5) describe how the applicant will evaluate the program or 
        activity, including measuring progress toward improving the 
        reading performance of eligible children, and improve the 
        program or activity if eligible children do not make progress 
        in improving reading performance; and
            (6) demonstrate how the program or activity--
                    (A) will be coordinated with activities of local 
                school personnel, and activities assisted under the 
Head Start Act (42 U.S.C. 9831 et seq.), Even Start, other provisions 
of title I of the Elementary and Secondary Education Act of 1965 (20 
U.S.C. 6301 et seq.), and the Individuals with Disabilities Education 
Act (20 U.S.C. 1400 et seq.), particularly with respect to referral of 
eligible children; and
                    (B) will be developed and carried out with strong 
                parent, community, and private sector involvement.

SEC. 326. LOCAL READING PROGRAMS.

    (a) Grants Authorized.--
            (1) In general.--From amounts reserved under section 
        324(a)(2)(A)(i) for a fiscal year, the Administrators shall 
        award grants to local entities for the planning, 
        implementation, or expansion of local reading programs that 
        serve economically disadvantaged communities.
            (2) Special rule.--In awarding grants under paragraph (1) 
        for a fiscal year, the Administrators shall ensure that at 
        least 1 such grant is awarded to serve an urban economically 
        disadvantaged community and at least 1 such grant is awarded to 
        serve a rural economically disadvantaged community.
    (b) Application.--Each local entity desiring a grant under 
subsection (a) shall submit an application to the Administrators at 
such time, in such manner, and accompanied by such information as the 
Administrators may require. Each such application shall include the 
information and assurances described in section 325(b) with respect to 
such local entity.

SEC. 327. NATIONAL LEADERSHIP AND EVALUATION.

    (a) National Leadership.--From a portion of amounts reserved under 
section 324(a)(2)(A)(ii) for a fiscal year, the Administrators may 
carry out national leadership activities, including dissemination of 
information on effective practices, providing technical assistance 
materials, and other activities, to increase the performance of 
eligible children in the States.
    (b) Evaluation.--
            (1) In general.--From a portion of the amounts reserved 
        under section 324(a)(2)(A)(ii) for a fiscal year, the 
        Administrators, through a grant, contract, or cooperative 
        agreement, shall evaluate, and submit reports to Congress 
        regarding, the effectiveness of programs and activities 
        assisted under this subtitle.
            (2) Report dates.--The reports described in paragraph (1) 
        shall be submitted to Congress on September 1, 2000, and every 
        2 years thereafter.

SEC. 328. ADJUSTMENT OR TERMINATION OF FUNDING.

    Notwithstanding any other provision of this subtitle, the 
Administrators may decrease or terminate any funding provided under 
this subtitle if the Administrators determine that a recipient of such 
funding does not--
            (1) improve reading performance with respect to eligible 
        children; or
            (2) implement the recipient's strategies to improve reading 
        performance with respect to eligible children.

SEC. 329. NONDUPLICATION AND NONDISPLACEMENT.

    (a) Nonduplication.--Assistance provided under this subtitle shall 
be used only for a program or activity that does not duplicate, and is 
in addition to, an activity otherwise available in the locality of such 
program or activity.
    (b) Nondisplacement.--An employer shall not displace an employee or 
position, including partial displacement such as reduction in hours, 
wages, or employment benefits, as a result of the use by such employer 
of a participant in a program or activity receiving assistance under 
this subtitle.

SEC. 330. FUNDING.

    (a) Reservation.--From amounts made available to carry out the 
National and Community Service Act of 1990 (42 U.S.C. 12501 et seq.) 
for each of the fiscal years 1998 through 2002, the Chief Executive 
Officer of the Corporation for National and Community Service shall 
make available $200,000,000 to carry out this subtitle.
    (b) Appropriation.--There are appropriated to the Secretary of 
Education to carry out this subtitle $200,000,000 for fiscal year 1998, 
$250,000,000 for fiscal year 1999, $300,000,000 for fiscal year 2000, 
$350,000,000 for fiscal year 2001, and $350,000,000 for fiscal year 
2002.
    (c) Entitlement.--Subject to subsections (a) and (b), each entity 
receiving an allotment, awarded a grant, or entering into a contract or 
cooperative agreement, under this subtitle for a fiscal year shall be 
entitled to payments for such year under the allotment, grant, 
contract, or cooperative agreement.

          TITLE IV--INVESTING IN TECHNOLOGY FOR THE CLASSROOMS

                    Subtitle A--Sense of the Senate

SEC. 401. FINDINGS.

    Congress finds as follows:
            (1) Technology in the schools is a central component of 
        preparing students for the 21st century.
            (2) Equipping schools with technology is no longer a 
        luxury. It is a necessity. By the year 2000, 60 percent of all 
        jobs in the Nation will require skills in computer and network 
        use.
            (3) Technology in the classroom improves students' mastery 
        of basic skills, test scores, writing, and engagement in 
        school. With these gains come decreases in dropout rates and 
        decreases in attendance and discipline problems.
            (4) Not enough students have access to computers, distance 
        learning, and telecommunications technologies. A 1995 
        Government Accounting Report report estimates that 10,000,000 
        students, and 1 school in every 4 schools, do not have 
        sufficient computers to meet their needs.
            (5) Of the 5,800,000 computers in United States schools, 
        many are older models that do not have the power to perform 
        advanced functions such as those involving video and the 
        Internet.
            (6) Only 9 percent of all instructional rooms including 
        classrooms, laboratories, and library media, have connections 
        to the Internet.
            (7) The Federal Government began a new commitment to 
        funding education technology by investing an additional 
        $200,000,000 in subpart 2 of part A of title III of the 
        Elementary and Secondary Education Act of 1965 (20 U.S.C. 6841 
        et seq.) in fiscal year 1997. Although such investment is an 
        important investment, it is not sufficient to meet the 
        technology needs of schools and school children in the 21st 
        century.

SEC. 402. SENSE OF THE SENATE.

    It is the Sense of the Senate that it is in the Nation's best 
interest for the Federal Government to invest at least $1,800,000,000 
in additional funding for education technology programs between fiscal 
years 1998 and 2002.

           Subtitle B--Educational Technology Clearinghouses

SEC. 421. PURPOSE.

    It is the purpose of this subtitle to authorize a program to 
support regional educational technology clearinghouses that facilitate 
the donation of surplus equipment and technology to schools and 
libraries from Federal or State governmental agencies, businesses, and 
other private entities.

SEC. 422. AUTHORITY.

    (a) In General.--The Secretary of Education shall make grants to or 
enter into contracts with regional public or private nonprofit entities 
for the purpose of supporting a system of regional educational 
technology clearinghouses. In awarding the grants or contracts, the 
Secretary shall ensure that each geographic region of the United States 
is served by such an entity.
    (b) Duration.--The Secretary shall award grants and contracts under 
this subtitle for a period of 5 years.

SEC. 423. REQUIREMENTS.

    Each entity receiving a grant or contract under this subtitle 
shall--
            (1) in cooperation with State educational agencies and 
        local educational agencies, develop a regional program to 
        support a clearinghouse that facilitates the transfer of 
        surplus equipment and technology to schools and libraries from 
        Federal or State governmental agencies, businesses, and other 
        private entities;
            (2) disseminate information to State educational agencies 
        and local educational agencies about the availability and 
        procurement of the equipment and technology through the 
        clearinghouse;
            (3) disseminate information to the public about activities 
        assisted under this subtitle, including information about the 
        donations being accepted by the clearinghouse;
            (4) have in place a process for ensuring that surplus 
        equipment and technology is distributed in a fair and equitable 
        manner, with school districts with the greatest need for such 
        equipment and technology receiving priority for donations under 
        this subtitle;
            (5) provide technical assistance to a school or library to 
        ensure that the equipment and technology being donated is 
        consistent with the short- and long-term educational technology 
        plans of the school or library, respectively;
            (6) use funds under this subtitle to upgrade equipment or 
        technology only if the entity determines such upgrading meets 
        the short- and long-term educational plan of the school or 
        library receiving the equipment or technology; and
            (7) ensure that the transfer of equipment and technology 
        does not violate copyright, patent, or trademark laws.

SEC. 424. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to carry out this subtitle 
$5,000,000 for fiscal year 1998 and such sums as may be necessary for 
each of the 4 succeeding fiscal years.
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