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[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1 Introduced in Senate (IS)]

105th CONGRESS
  1st Session
                                  S. 1

              To provide for safe and affordable schools.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                            January 21, 1997

 Mr. Coverdell (for himself, Mr. Coats, Mr. Gregg, Mr. Lott, Mr. Bond, 
   Mr. Abraham, Mr. Allard, Mr. Ashcroft, Mr. Craig, Mr. DeWine, Mr. 
 Domenici, Mr. Faircloth, Mr. Gorton, Mr. Grams, Mr. Hagel, Mr. Hatch, 
Mrs. Hutchison, Mr. Hutchinson, Mr. Kyl, Mr. McCain, Mr. McConnell, Mr. 
 Murkowski, Mr. Nickles, Mr. Smith of New Hampshire, Mr. Thurmond, and 
  Mr. Warner) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
              To provide for safe and affordable schools.

    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 ``Safe and Affordable Schools Act of 
1997''.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--Congress finds that--
            (1) in too many of our Nation's elementary and secondary 
        schools the test confronting our Nation's children is survival, 
        not learning;
            (2) our Nation's schools will not be restored to excellence 
        unless parents, States, and local communities take the lead; 
        and
            (3) the Federal Government's role in education is quite 
        properly to encourage, not to mandate.
    (b) Purpose.--The purpose of this Act is--
            (1) to ensure that parents, local communities and States 
        have the primary role in educating our Nation's children;
            (2) to restore excellence to our Nation's schools;
            (3) to give local communities and States maximum 
        flexibility in administering Federal education programs;
            (4) to allow education reforms to be tailored to the unique 
        needs of local communities and States;
            (5) to place the highest priority on providing our Nation's 
        students with safe, drug-free learning environments;
            (6) to ensure that the choice of whether to attend college 
        is to the greatest extent possible the result of individual 
        student desire and initiative, not the result of economic 
        circumstances that leave young parents wondering how they can 
        best provide such an education in the face of staggering 
        college tuition costs;
            (7) to focus resources on adult education, realizing that 
        education often is a lifelong process; and
            (8) to promote literacy by attacking our Nation's 
        unacceptably high level of illiteracy.

             TITLE I--SAFE AND DRUG-FREE SCHOOLS INITIATIVE

               Subtitle A--Student Opportunity and Safety

SEC. 111. SHORT TITLE.

    This subtitle may be cited as the ``Student Opportunity and Safety 
Act''.

SEC. 112. FINDINGS AND PURPOSE.

    (a) Findings.--The Congress finds as follows:
            (1) Violence, crime, and illegal drug activity have 
        increased significantly in our Nation's public schools.
            (2) It is estimated that 3,000,000 violent acts or thefts 
        occur in or near schools, and that one in five public high 
        school students carries a weapon.
            (3) The incidence of violence, and criminal and illegal 
        drug activity within public elementary and secondary schools 
        threatens the school environment and interferes with the 
        learning process.
            (4) 2,000,000 more children are using drugs in 1997 than 
        were doing so in 1993. For the first time in the 1990s, over 
half of our Nation's graduating high school seniors have experimented 
with drugs and approximately 1 out of every 4 of the students have used 
drugs in the past month.
            (5) After 11 years of declining marijuana use among 
        children aged 12 to 17, such use doubled between 1992 and 1995. 
        The number of 8th graders who have used marijuana in the past 
        month has more than tripled since 1991.
            (6) More of our Nation's school children are becoming 
        involved with hard core drugs at earlier ages, as use of heroin 
        and cocaine by 8th graders has more than doubled since 1991.
            (7) Students have a right to be safe and secure in their 
        persons while attending school.
            (8) Low-income families whose children attend high poverty 
        public schools generally lack the financial ability to enroll 
        their children in private schools or the opportunity to choose 
        to enroll their children in public schools less impacted by 
        poverty, illegal drugs, or violence, while such alternatives 
        are typically available to more affluent families.
            (9) Numerous research studies, including the 1993 National 
        Assessment of the Chapter 1 Program, have concluded that 
        students attending high poverty public schools have much lower 
        levels of academic achievement than other students, regardless 
        of the income level of the family of such students.
            (10) Federally supported efforts to meet the educational 
        needs of disadvantaged children attending high poverty schools 
        have had little, if any, success in improving student 
        achievement, especially in the highest poverty schools and 
        school districts.
            (11) Evidence obtained from systematic evaluations of 
        school choice demonstration projects that involve public and 
        private, including sectarian, schools will make an important 
        contribution toward resolving debates over the most effective 
        means of improving the academic achievement of disadvantaged 
        children.
            (12) It is increasingly important that children from 
        families of all income levels meet high standards of academic 
        achievement, in order to exercise the responsibilities of 
        citizenship and to compete in globally competitive markets.
    (b) Purpose.--It is the purpose of this subtitle--
            (1) to provide children from low-income families who attend 
        unsafe schools with the option of attending safer schools;
            (2) to improve schools and academic programs by providing 
        certain low-income parents with increased consumer power and 
        dollars to choose safer and drug-free schools and programs that 
        such parents determine best fit the needs of their children;
            (3) to engage more fully certain low-income parents in 
        their children's schooling;
            (4) through families, to provide at the school site new 
        dollars that teachers and principals may use to help certain 
        children achieve high educational standards; and
            (5) to demonstrate, through a discretionary demonstration 
        grant program, the effects of projects that provide certain 
        low-income families with more of the same choices regarding all 
        schools, including public, private, or sectarian schools, that 
        wealthier families have.

SEC. 113. DEFINITIONS.

    As used in this subtitle--
            (1) the term ``choice school'' means any public or private 
        school, including a private sectarian school or a public 
        charter school, that--
                    (A) is involved in a demonstration project assisted 
                under this subtitle; and
                    (B) is not an unsafe school;
            (2) the term ``eligible child'' means a child in any of the 
        grades 1 through 12--
                    (A) whose family income does not exceed 185 percent 
                of the poverty line; and
                    (B) who would normally be assigned to attend an 
                unsafe school in the absence of--
                            (i) a demonstration project under this 
                        subtitle; or
                            (ii) participation, prior to the date of 
                        enactment of this Act, in a school choice 
                        program;
            (3) the term ``eligible entity'' means a public agency, 
        institution, or organization, such as a State, a State or local 
        educational agency, a consortium of public agencies, or a 
        consortium of public and private nonprofit organizations, that 
        can demonstrate, to the satisfaction of the Secretary, its 
        ability to--
                    (A) receive, disburse, and account for Federal 
                funds; and
                    (B) carry out the activities described in its 
                application under this subtitle;
            (4) the term ``evaluating agency'' means any academic 
        institution, consortium of professionals, or private or 
        nonprofit organization, with demonstrated experience in 
        conducting evaluations, that is not an agency or 
        instrumentality of the Federal Government;
            (5) the term ``local educational agency'' has the same 
        meaning given such term in section 14101 of the Elementary and 
        Secondary Education Act of 1965 (20 U.S.C. 8801);
            (6) the term ``parent'' includes a legal guardian or other 
        individual acting in loco parentis;
            (7) the term ``poverty line'' means the poverty line (as 
        defined by the Office of Management and Budget, and revised 
        annually in accordance with section 673(2) of the Community 
        Services Block Grant Act (42 U.S.C. 9902(2))) applicable to a 
        family of the size involved;
            (8) the term ``school'' means a school that provides 
        elementary education or secondary education (through grade 12), 
        as determined under State law;
            (9) the term ``Secretary'' means the Secretary of 
        Education;
            (10) the term ``State'' means each of the 50 States of the 
        United States, the District of Columbia, and the Commonwealth 
        of Puerto Rico; and
            (11) the term ``unsafe school'' means a school that has 
        serious crime, violence, illegal drug, and discipline problems, 
        as indicated by conditions that may include high rates of--
                    (A) expulsions and suspensions of students from 
                school;
                    (B) referrals of students to alternative schools 
                for disciplinary reasons, to special programs or 
                schools for delinquent youth, or to juvenile court;
                    (C) victimization of students or teachers by 
                criminal acts, including robbery, assault and homicide;
                    (D) enrolled students who are under court 
                supervision for past criminal behavior;
                    (E) possession, use, sale or distribution of 
                illegal drugs;
                    (F) enrolled students who are attending school 
                while under the influence of illegal drugs;
                    (G) possession or use of guns or other weapons;
                    (H) participation in youth gangs; or
                    (I) crimes against property, such as theft or 
                vandalism.

SEC. 114. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated $50,000,000 for the fiscal 
year 1998, and such sums as may be necessary for each of the fiscal 
years 1999 through 2002, to carry out this subtitle.

SEC. 115. PROGRAM AUTHORIZED.

    (a) Reservation.--From the amount appropriated pursuant to the 
authority of section 114 in any fiscal year, the Secretary shall 
reserve and make available to the Comptroller General of the United 
States 2 percent for evaluation of programs assisted under this 
subtitle in accordance with section 121.
    (b) Grants.--
            (1) In general.--From the amount appropriated pursuant to 
        the authority of section 114 and not reserved under subsection 
        (a) for any fiscal year, the Secretary shall award grants to 
        eligible entities to enable such entities to carry out at least 
        20, but not more than 30, demonstration projects under which 
        low-income parents receive education certificates for the costs 
        of enrolling their eligible children in a choice school.
            (2) Amount.--The Secretary shall award grants under 
        paragraph (1) for fiscal year 1998 so that--
                    (A) not more than 2 grants are awarded in amounts 
                of $5,000,000 or less; and
                    (B) grants not described in subparagraph (A) are 
                awarded in amounts of $3,000,000 or less.
            (3) Continuing eligibility.--The Secretary shall continue a 
        demonstration project under this subtitle by awarding a grant 
        under paragraph (1) to an eligible entity that received such a 
        grant for a fiscal year preceding the fiscal year for which the 
        determination is made, if the Secretary determines that such 
        eligible entity was in compliance with this subtitle for such 
        preceding fiscal year.
            (4) Priority.--The Secretary shall give priority to 
        awarding a grant under paragraph (1) to an eligible entity 
        that--
                    (A) is conducting a school choice program, 
                involving public or private schools, on the date of 
                enactment of this Act; and
                    (B) operates a school choice program, involving 
                public and private schools, that is authorized by 
                Federal law.
    (c) Use of Grants.--Grants awarded under subsection (b) shall be 
used to pay the costs of--
            (1) providing education certificates to low-income parents 
        to enable such parents to pay the tuition, the fees, the 
        allowable costs of transportation, if any, and the costs of 
        complying with section 119(a)(1), if any, for their eligible 
        children to attend a choice school; and
            (2) administration of the demonstration project, which 
        shall not exceed 15 percent of the amount received in the first 
        fiscal year for which the eligible entity provides education 
        certificates under this subtitle or 10 percent in any 
        subsequent year, including--
                    (A) seeking the involvement of choice schools in 
                the demonstration project;
                    (B) providing information about the demonstration 
                project, and the schools involved in the demonstration 
                project, to parents of eligible children;
                    (C) making determinations of eligibility for 
                participation in the demonstration project for eligible 
                children;
                    (D) selecting students to participate in the 
                demonstration project;
                    (E) determining the amount of, and issuing, 
                education certificates;
                    (F) compiling and maintaining such financial and 
                programmatic records as the Secretary may prescribe; 
                and
                    (G) collecting such information about the effects 
                of the demonstration project as the evaluating agency 
                may need to conduct the evaluation described in section 
                121.
    (d) Special Rule.--Any school participating in the demonstration 
program under this subtitle shall comply with title VI of the Civil 
Rights Act of 1964 (42 U.S.C. 2000d et seq.) and not discriminate on 
the basis of race, color, or national origin.
    (e) Supplement Not Supplant.--Each eligible entity receiving funds 
under this subtitle shall use such funds to supplement and not supplant 
the amount of funds that would, in the absence of such Federal funds, 
be made available from other sources to carry out the activities 
assisted under this subtitle.
    (f) Supplementation of Funding.--Each eligible entity receiving 
funds under this section is encouraged to supplement the funding 
received under this subtitle with funding received from State, local, 
or private sources.
    (g) Education Certificates.--
            (1) Assistance to families, not choice schools.--Education 
        certificates provided under this subtitle shall be considered 
        to be aid to families, not choice schools. A parent's use of an 
        education certificate at a choice school under this subtitle 
        shall not be construed to be Federal financial aid or 
        assistance to that choice school.
            (2) Taxes and determinations of eligibility for other 
        federal programs.--Education certificates provided under this 
        subtitle shall not be considered as income to an eligible child 
        or the parent of such eligible child for Federal, State, or 
        local tax purposes or for determining eligibility for any other 
        Federal program.

SEC. 116. AUTHORIZED PROJECTS; PRIORITY.

    (a) Authorized Projects.--The Secretary may award a grant under 
this subtitle only for a demonstration project that--
            (1) involves at least one local educational agency that--
                    (A) receives funds under section 1124A of the 
                Elementary and Secondary Education Act of 1965 (20 
                U.S.C. 6334); and
                    (B) is among the 20 percent of local educational 
                agencies receiving funds under section 1124A of such 
                Act (20 U.S.C. 6334) in the State and having the 
                highest number or greatest percentage of children 
                described in section 1124(c) of such Act (20 U.S.C. 
                6333(c)); and
            (2) includes the involvement of a sufficient number of 
        public and private choice schools, including sectarian schools, 
        to allow for a valid demonstration project.
    (b) Priority.--In awarding grants under this subtitle, the 
Secretary shall give priority to demonstration projects--
            (1) in which choice schools offer an enrollment opportunity 
        to the broadest range of eligible children;
            (2) that involve diverse types of choice schools; and
            (3) that will contribute to the geographic diversity of 
        demonstration projects assisted under this subtitle, including 
        awarding grants for demonstration projects in States that are 
        primarily rural and awarding grants for demonstration projects 
        in States that are primarily urban.

SEC. 117. APPLICATIONS.

    (a) In General.--Any eligible entity that wishes to receive a grant 
under this subtitle shall submit an application to the Secretary at 
such time and in such manner as the Secretary may prescribe.
    (b) Contents.--Each application described in subsection (a) shall 
contain--
            (1) information demonstrating the eligibility for 
        participation in the demonstration program of the eligible 
        entity;
            (2) a description of how the eligible entity will determine 
        a school to be a unsafe school in accordance with section 
        113(11);
            (3) with respect to choice schools--
                    (A) a description of the types of potential choice 
                schools that will be involved in the demonstration 
                project;
                    (B)(i) a description of the procedures used to 
                encourage public and private schools to be involved in 
                the demonstration project; and
                    (ii) a description of how the eligible entity will 
                annually determine the number of spaces available for 
                eligible children in each choice school;
                    (C) an assurance that each choice school will not 
                impose higher standards for admission or participation 
                in its programs and activities for eligible children 
                provided education certificates under this subtitle 
                than the choice school does for other children;
                    (D) an assurance that the eligible entity will 
                terminate the involvement of any choice school that 
                fails to comply with the conditions of its involvement 
                in the demonstration project; and
                    (E) a description of the extent to which choice 
                schools will accept education certificates under this 
                subtitle as full or partial payment for tuition and 
                fees;
            (4) with respect to the participation in the demonstration 
        project of eligible children--
                    (A) a description of the procedures to be used to 
                make a determination of eligibility for participation 
                in the demonstration project for an eligible child;
                    (B) a description of the procedures to be used to 
                ensure that, in selecting eligible children to 
                participate in the demonstration project, the eligible 
                entity will--
                            (i) apply the same criteria to both public 
                        and private school eligible children; and
                            (ii) give priority to eligible children 
                        from the lowest income families;
                    (C) a description of the procedures to be used to 
                ensure maximum choice of schools for participating 
                eligible children; and
                    (D) a description of the procedures to be used to 
                ensure compliance with section 119(a)(1), which may 
                include--
                            (i) the direct provision of services by a 
                        local educational agency; and
                            (ii) arrangements made by a local 
                        educational agency with other service 
                        providers;
            (5) with respect to the operation of the demonstration 
        project--
                    (A) a description of the procedures to be used for 
                the issuance and redemption of education certificates 
                under this subtitle;
                    (B) a description of the procedures by which a 
                choice school will make a pro rata refund of the 
                education certificate under this subtitle for any 
                participating eligible child who withdraws from the 
                school for any reason, before completing 75 percent of 
                the school attendance period for which the education 
                certificate was issued;
                    (C) a description of the procedures to be used to 
                provide the parental notification described in section 
                120;
                    (D) an assurance that the eligible entity will 
                place all funds received under this subtitle into a 
                separate account, and that no other funds will be 
                placed in such account;
                    (E) an assurance that the eligible entity will 
                cooperate with the Comptroller General of the United 
                States and the evaluating agency in carrying out the 
                evaluations described in section 121; and
                    (F) an assurance that the eligible entity will--
                            (i) maintain such records as the Secretary 
                        may require; and
                            (ii) comply with reasonable requests from 
                        the Secretary for information; and
            (6) such other assurances and information as the Secretary 
        may require.

SEC. 118. EDUCATION CERTIFICATES.

    (a) Education Certificates.--
            (1) Amount.--The amount of an eligible child's education 
        certificate under this subtitle shall be determined by the 
        eligible entity, but shall be an amount that provides to the 
        recipient of the education certificate the maximum degree of 
        choice in selecting the choice school the eligible child will 
        attend.
            (2) Considerations.--
                    (A) In general.--Subject to such regulations as the 
                Secretary shall prescribe, in determining the amount of 
                an education certificate under this subtitle an 
                eligible entity shall consider--
                            (i) the additional reasonable costs of 
                        transportation directly attributable to the 
                        eligible child's participation in the 
                        demonstration project; and
                            (ii) the cost of complying with section 
                        119(a)(1).
                    (B) Schools charging tuition.--If an eligible child 
                participating in a demonstration project under this 
                subtitle was attending a public or private school that 
                charged tuition for the year preceding the first year 
                of such participation, then in determining the amount 
                of an education certificate for such eligible child 
                under this subtitle the eligible entity shall 
                consider--
                            (i) the tuition charged by such school for 
                        such eligible child in such preceding year; and
                            (ii) the amount of the education 
                        certificates under this subtitle that are 
                        provided to other eligible children.
            (3) Special rule.--An eligible entity may provide an 
        education certificate under this subtitle to the parent of an 
        eligible child who chooses to attend a school that does not 
        charge tuition or fees, to pay the additional reasonable costs 
        of transportation directly attributable to the eligible child's 
        participation in the demonstration project or the cost of 
        complying with section 119(a)(1).
    (b) Adjustment.--The amount of the education certificate for a 
fiscal year may be adjusted in the second and third years of an 
eligible child's participation in a demonstration project under this 
subtitle to reflect any increase or decrease in the tuition, fees, or 
transportation costs directly attributable to that eligible child's 
continued attendance at a choice school, but shall not be increased for 
this purpose by more than 10 percent of the amount of the education 
certificate for the fiscal year preceding the fiscal year for which the 
determination is made. The amount of the education certificate may also 
be adjusted in any fiscal year to comply with section 119(a)(1).
    (c) Maximum Amount.--Notwithstanding any other provision of this 
section, the amount of an eligible child's education certificate shall 
not exceed the per pupil expenditure for elementary or secondary 
education, as appropriate, by the local educational agency in which the 
public school to which the eligible child would normally be assigned is 
located for the fiscal year preceding the fiscal year for which the 
determination is made.

SEC. 119. EFFECT ON OTHER PROGRAMS.

    (a) Effect on Other Programs.--
            (1) In general.--An eligible child participating in a 
        demonstration project under this subtitle, who, in the absence 
        of such a demonstration project, would have received services 
        under part A of title I of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 6311 et seq.) shall be 
        provided such services.
            (2) Part b of the individuals with disabilities education 
        act.--Nothing in this subtitle shall be construed to affect the 
        requirements of part B of the Individuals with Disabilities 
        Education Act (20 U.S.C. 1411 et seq.).
    (b) Counting of Eligible Children.--Notwithstanding any other 
provision of law, any local educational agency participating in a 
demonstration project under this subtitle may count eligible children 
who, in the absence of such a demonstration project, would attend the 
schools of such agency, for purposes of receiving funds under any 
program administered by the Secretary.
    (c) Sectarian Institutions.--Nothing in this subtitle shall be 
construed to supersede or modify any provision of a State constitution 
that prohibits the expenditure of public funds in or by sectarian 
institutions.

SEC. 120. PARENTAL NOTIFICATION.

    Each eligible entity receiving a grant under this subtitle shall 
provide timely notice of the demonstration project to parents of 
eligible children residing in the area to be served by the 
demonstration project. At a minimum, such notice shall--
            (1) describe the demonstration project;
            (2) describe the eligibility requirements for participation 
        in the demonstration project;
            (3) describe the information needed to make a determination 
        of eligibility for participation in the demonstration project 
        for an eligible child;
            (4) describe the selection procedures to be used if the 
        number of eligible children seeking to participate in the 
        demonstration project exceeds the number that can be 
        accommodated in the demonstration project;
            (5) provide information about each choice school, including 
        information about any admission requirements or criteria for 
        each choice school participating in the demonstration project; 
        and
            (6) include the schedule for parents to apply for their 
        eligible children to participate in the demonstration project.

SEC. 121. EVALUATION.

    (a) Annual Evaluation.--
            (1) Contract.--The Comptroller General of the United States 
        shall enter into a contract, with an evaluating agency that has 
        demonstrated experience in conducting evaluations, for the 
        conduct of an ongoing rigorous evaluation of the demonstration 
        program under this subtitle.
            (2) Annual evaluation requirement.--The contract described 
        in paragraph (1) shall require the evaluating agency entering 
        into such contract to annually evaluate each demonstration 
        project under this subtitle in accordance with the evaluation 
        criteria described in subsection (b).
            (3) Transmission.--The contract described in paragraph (1) 
        shall require the evaluating agency entering into such contract 
        to transmit to the Comptroller General of the United States--
                    (A) the findings of each annual evaluation under 
                paragraph (1); and
                    (B) a copy of each report received pursuant to 
                section 122(a) for the applicable year.
    (b) Evaluation Criteria.--The Comptroller General of the United 
States, in consultation with the Secretary, shall establish minimum 
criteria for evaluating the demonstration program under this subtitle. 
Such criteria shall provide for--
            (1) a description of the implementation of each 
        demonstration project under this subtitle and the demonstration 
        project's effects on all participants, schools, and communities 
        in the demonstration project area, with particular attention 
        given to the effect of parent participation in the life of the 
        school and the level of parental satisfaction with the 
        demonstration program; and
            (2) a comparison of the educational achievement of, and the 
        incidences of violence and drug activity related to, all 
        students in the demonstration project area, including a 
        comparison of similar--
                    (A) students receiving education certificates under 
                this subtitle; and
                    (B) students not receiving education certificates 
                under this subtitle.

SEC. 122. REPORTS.

    (a) Report by Grant Recipient.--Each eligible entity receiving a 
grant under this subtitle shall submit to the evaluating agency 
entering into the contract under section 121(a)(1) an annual report 
regarding the demonstration project under this subtitle. Each such 
report shall be submitted at such time, in such manner, and accompanied 
by such information, as such evaluating agency may require.
    (b) Reports by Comptroller General.--
            (1) Annual reports.--The Comptroller General of the United 
        States shall report annually to the Congress on the findings of 
        the annual evaluation under section 121(a)(2) of each 
        demonstration project under this subtitle. Each such report 
        shall contain a copy of--
                    (A) the annual evaluation under section 121(a)(2) 
                of each demonstration project under this subtitle; and
                    (B) each report received under subsection (a) for 
                the applicable year.
            (2) Final report.--The Comptroller General shall submit a 
        final report to the Congress within 6 months after the 
        conclusion of the demonstration program under this subtitle 
        that summarizes the findings of the annual evaluations 
conducted pursuant to section 121(a)(2).

                 Subtitle B--Common Sense School Safety

SEC. 141. SHORT TITLE.

    This subtitle may be cited as the ``Common Sense School Safety 
Act''.

               CHAPTER I--PUPIL SAFETY AND FAMILY CHOICE

SEC. 151. PUPIL SAFETY AND FAMILY SCHOOL CHOICE.

    Subpart 1 of part A of title I of the Elementary and Secondary 
Education Act of 1965 (20 U.S.C. 6311 et seq.) is amended by inserting 
after section 1115A of such Act (20 U.S.C. 6316) the following:

``SEC. 1115B. PUPIL SAFETY AND FAMILY SCHOOL CHOICE.

    ``(a) In General.--If a student is eligible to be served under 
section 1115(b), or attends a school eligible for a schoolwide program 
under section 1114, and becomes a victim of a violent criminal offense 
while in or on the grounds of a public elementary school or secondary 
school that the student attends and that receives assistance under this 
part, then the local educational agency may use funds provided under 
this part to pay the supplementary costs for such student to attend 
another school. The agency may use the funds to pay for the 
supplementary costs of such student to attend any other public or 
private elementary school or secondary school, including a sectarian 
school, in the same State as the school where the criminal offense 
occurred, that is selected by the student's parent. The State 
educational agency shall determine what actions constitute a violent 
criminal offense for purposes of this section.
    ``(b) Supplementary Costs.--The supplementary costs referred to in 
subsection (a) shall not exceed--
            ``(1) in the case of a student for whom funds under this 
        section are used to enable the student to attend a public 
        elementary school or secondary school served by a local 
        educational agency that also serves the school where the 
        violent criminal offense occurred, the costs of supplementary 
        educational services and activities described in section 
        1114(b) or 1115(c) that are provided to the student;
            ``(2) in the case of a student for whom funds under this 
        section are used to enable the student to attend a public 
        elementary school or secondary school served by a local 
        educational agency that does not serve the school where the 
        violent criminal offense occurred but is located in the same 
        State--
                    ``(A) the costs of supplementary educational 
                services and activities described in section 1114(b) or 
                1115(c) that are provided to the student; and
                    ``(B) the reasonable costs of transportation for 
                the student to attend the school selected by the 
                student's parent; and
            ``(3) in the case of a student for whom funds under this 
        section are used to enable the student to attend a private 
        elementary school or secondary school, including a sectarian 
        school, the costs of tuition, required fees, and the reasonable 
        costs of such transportation.
    ``(c) Construction.--Nothing in this Act or any other Federal law 
shall be construed to prevent a parent assisted under this section from 
selecting the public or private elementary school or secondary school 
that a child of the parent will attend within the State.
    ``(d) Consideration of Assistance.--Assistance used under this 
section to pay the costs for a student to attend a private school shall 
not be considered to be Federal aid to the school, and the Federal 
Government shall have no authority to influence or regulate the 
operations of a private school as a result of assistance received under 
this section.
    ``(e) Continuing Eligibility.--A student assisted under this 
section shall remain eligible to continue receiving assistance under 
this section for at least 3 academic years without regard to whether 
the student is eligible for assistance under section 1114 or 1115(b).
    ``(f) State Law.--All actions undertaken under this section shall 
be undertaken in accordance with State law and may be undertaken only 
to the extent such actions are permitted under State law.
    ``(g) Tuition Charges.--Assistance under this section may not be 
used to pay tuition or required fees at a private elementary school or 
secondary school in an amount that is greater than the tuition and 
required fees paid by students not assisted under this section at such 
school.
    ``(h) Special Rule.--Any school receiving assistance provided under 
this section shall comply with title VI of the Civil Rights Act of 1964 
(42 U.S.C. 2000d et seq.) and not discriminate on the basis of race, 
color, or national origin.
    ``(i) Assistance; Taxes and Other Federal Programs.--
            ``(1) Assistance to families, not schools.--Assistance 
        provided under this section shall be considered to be aid to 
        families, not schools. Use of such assistance at a school shall 
        not be construed to be Federal financial aid or assistance to 
that school.
            ``(2) Taxes and determinations of eligibility for other 
        federal programs.--Assistance provided under this section to a 
        student shall not be considered to be income of the student or 
        the parent of such student for Federal, State, or local tax 
        purposes or for determining eligibility for any other Federal 
        program.
    ``(j) Part B of the Individuals With Disabilities Education Act.--
Nothing in this section shall be construed to affect the requirements 
of part B of the Individuals with Disabilities Education Act (20 U.S.C. 
1411 et seq.).
    ``(k) Sectarian Institutions.--Nothing in this section shall be 
construed to supersede or modify any provision of a State constitution 
that prohibits the expenditure of public funds in or by sectarian 
institutions.
    ``(l) Maximum Amount.--Notwithstanding any other provision of this 
section, the amount of assistance provided under this part for a 
student shall not exceed the per pupil expenditure for elementary or 
secondary education, as appropriate, by the local educational agency 
that serves the school where the criminal offense occurred for the 
fiscal year preceding the fiscal year for which the determination is 
made.''.

SEC. 152. TRANSFER OF REVENUES.

    (a) In General.--Notwithstanding any other provision of Federal 
law, a State, a State educational agency, or a local educational agency 
may transfer any non-Federal public funds associated with the education 
of a student who is a victim of a violent criminal offense while in or 
on the grounds of a public elementary school or secondary school served 
by a local educational agency to another local educational agency or to 
a private elementary school or secondary school, including a sectarian 
school.
    (b) Definitions.--For the purpose of subsection (a), the terms 
``elementary school'', ``secondary school'', ``local educational 
agency'', and ``State educational agency'' have the meanings given such 
terms in section 14101 of the Elementary and Secondary Education Act of 
1965 (20 U.S.C. 8801).

                 CHAPTER II--VICTIM ASSISTANCE PROGRAMS

SEC. 161. AMENDMENTS TO VICTIMS OF CRIME ACT OF 1984.

    (a) Victim Compensation.--Section 1403 of the Victims of Crime Act 
of 1984 (42 U.S.C. 10602) is amended by adding at the end the 
following:
    ``(f) Victims of School Violence.--Notwithstanding any other 
provision of law, an eligible crime victim compensation program may 
expend funds granted under this section to offer compensation to 
elementary and secondary school students who are victims of elementary 
and secondary school violence (as school violence is defined under 
applicable State law).''.
    (b) Victim and Witness Assistance.--Section 1404(c) of the Victims 
of Crime Act of 1984 (42 U.S.C. 10603(c)) is amended by adding at the 
end the following:
            ``(4) Assistance for victims of and witnesses to school 
        violence.--Notwithstanding any other provision of law, the 
        Director may make a grant under this section for a 
        demonstration project or for training and technical assistance 
        services to a program that assists local educational agencies 
        (as local educational agency is defined in section 14101 of the 
        Elementary and Secondary Education Act of 1965 (20 U.S.C. 
        8801)) in developing, establishing, and operating programs that 
        are designed to protect victims of and witnesses to incidents 
        of elementary and secondary school violence (as school violence 
        is defined under applicable State law), including programs 
        designed to protect witnesses testifying in school disciplinary 
        proceedings.''.

       CHAPTER III--INNOVATIVE PROGRAMS TO IMPROVE UNSAFE SCHOOLS

SEC. 171. FINDINGS AND PURPOSE.

    (a) Findings.--Congress finds that--
            (1) the continued presence in schools of violent students 
        who are a thereat to both teachers and other students is 
        incompatible with a safe learning environment;
            (2) unsafe school environments place students who are 
        already at risk of school failure for other reasons in further 
        jeopardy;
            (3) recently, over one-fourth of high school students 
        surveyed reported being threatened at school;
            (4) 2,000,000 more children are using drugs in 1997 than 
        were doing so a few short years prior to 1997;
            (5) nearly 1 out of every 20 students in 6th through 12th 
        grade uses drugs on school grounds;
            (6) more of our children are becoming involved with hard 
        drugs at earlier ages, as use of heroin and cocaine by 8th 
        graders has more than doubled since 1991; and
            (7) greater cooperation between schools, parents, law 
        enforcement, the courts, and the community is essential to 
        making our schools safe from drugs and violence.

SEC. 172. PURPOSE.

    It is the purpose of this chapter--
            (1) to urge States, State educational agencies, and local 
        educational agencies to provide comprehensive services to 
        victims and witnesses of school violence;
            (2) to urge States, State educational agencies, and local 
        educational agencies to remove violent and drug selling student 
        offenders from school premises;
            (3) to urge States, State educational agencies, and local 
        educational agencies to report violent crimes and drug dealing 
        on school grounds to appropriate law enforcement authorities;
            (4) to provide incentive grants for States, State 
        educational agencies, and local educational agencies to involve 
        parents, former armed forces personnel, and community 
        volunteers in efforts to improve school safety; and
            (5) to provide incentive grants to States, State 
        educational agencies, and local educational agencies to develop 
        innovative programs to improve the safety of our Nation's 
        schools and to better serve at-risk students.

SEC. 173. DEFINITIONS.

    In this chapter:
            (1) Elementary school, local educational agency, secondary 
        school, and state educational agency.--The terms ``elementary 
        school'', ``local educational agency'', ``secondary school'', 
        and ``State educational agency'' have the meanings given the 
        terms in section 14101 of the Elementary and Secondary 
        Education Act of 1965 (20 U.S.C. 8801).
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of Education.

SEC. 174. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated such sums as may be 
necessary to carry out this chapter.

SEC. 175. PROGRAM AUTHORIZED.

    (a) In General.--The Secretary is authorized to award grants to 
States, State educational agencies, and local educational agencies to 
develop, establish, or conduct innovative programs to improve unsafe 
elementary schools or secondary schools.
    (b) Priority.--The Secretary shall give priority to awarding grants 
under subsection (a) to--
            (1) programs that provide parent and teacher notification 
        of crimes or drug activity occurring at school;
            (2) programs that provide for the suspension, delay, or 
        restriction of driving privileges of persons under the age of 
        18 who have a conviction, an adjudication in a juvenile 
        proceeding, or a finding in a school disciplinary proceeding, 
        involving illegal drugs;
            (3) programs that link local educational agencies with 
        community-based mentoring programs in order to link individual 
        at-risk youth with responsible, individual adults who serve as 
        mentors for the purpose of--
                    (A) discouraging at-risk youth from--
                            (i) using illegal drugs;
                            (ii) violence;
                            (iii) using dangerous weapons;
                            (iv) criminal activity; and
                            (v) involvement in gangs;
                    (B) increasing youth participation in, and 
                enhancing the ability of such youth to benefit from, 
                elementary and secondary education;
                    (C) promoting personal and social responsibility;
                    (D) encouraging at-risk youth participation in 
                community service and community activities; and
                    (E) providing general guidance to at-risk youth;
            (4) programs that include cooperative efforts between the 
        Secretary and the Secretary of Defense to share the training 
        and salary costs of former members of the Armed Forces who are 
        hired as teachers and assigned to teach in public elementary 
        schools and secondary schools, especially those programs 
        located in communities that are adversely affected by the 
        recent closing or substantial downsizing of a military base or 
        facility; and
            (5) programs to enhance school security measures that may 
        include--
                    (A) equipping schools with metal detectors, fences, 
                closed circuit cameras, and other physical security 
                measures;
                    (B) providing increased police patrols in and 
                around elementary schools and secondary schools, 
                including canine patrols;
                    (C) mailings to parents at the beginning of the 
                school year stating that the possession of a gun or 
                other weapon, or the sale of drugs in school, will not 
                be tolerated by school authorities; and
                    (D) gun hotlines.

SEC. 176. APPLICATION.

    (a) In General.--Each State, State educational agency, or local 
educational agency desiring a grant under this chapter shall submit an 
application to the Secretary at such time, in such manner, and 
accompanied by such information as the Secretary may require.
    (b) Contents.--Each application submitted under subsection (a) 
shall contain an assurance that the State or agency has implemented or 
will implement policies that--
            (1) provide protections for victims and witnesses to school 
        crime, including protections for attendance at school 
        disciplinary proceedings;
            (2) expel students who, on school grounds, sell drugs, or 
        who commit a violent offense that causes serious bodily injury 
        of another student or teacher; and
            (3) require referral to law enforcement authorities or 
        juvenile authorities of any student who on school grounds--
                    (A) commits a violent offense resulting in serious 
                bodily injury; or
                    (B) sells drugs.
    (c) Special Rule.--For purposes of paragraphs (2) and (3) of 
subsection (b), State law shall determine what constitutes a violent 
offense or serious bodily injury.

   CHAPTER IV--NOTIFICATION FOR JUVENILE JUSTICE AND LAW ENFORCEMENT 
                                PURPOSES

SEC. 181. NOTIFICATION FOR JUVENILE JUSTICE AND LAW ENFORCEMENT 
              PURPOSES.

    The Secretary of Education, not later than 90 days after the date 
of enactment of this Act, shall prepare and distribute to State 
educational agencies and local educational agencies a notice regarding 
the extent of permissible disclosure of educational records under 
subparagraphs (E) and (J) of section 444(b) of the General Education 
Provisions Act (20 U.S.C. 1232g), including under the regulations 
issued pursuant to such subparagraphs.

 TITLE II--AMENDMENTS TO THE ELEMENTARY AND SECONDARY EDUCATION ACT OF 
                                  1965

SEC. 201. SHORT TITLE.

    This title may be cited as the ``State Education Flexibility Act''.

SEC. 202. AMENDMENTS TO ESEA.

    Subsection (b) of section 6301 of the Elementary and Secondary 
Education Act of 1965 (20 U.S.C. 7351) is amended--
            (1) in paragraph (7), by striking ``and'' after the 
        semicolon;
            (2) in paragraph (8), by striking the period and inserting 
        a semicolon; and
            (3) by adding at the end the following:
            ``(9) programs using scholarships or vouchers provided to a 
        parent by a local educational agency that permit the parent to 
        select the public or private, including sectarian, school that 
        the parent's child will attend, which programs may be similar 
        to the program assisted under title I of the Safe and 
        Affordable Schools Act of 1997, except that the provisions of 
        sections 6402 and 14507, and any generally applicable provision 
        relating to a prohibition against the use of Federal funds for 
        religious worship or instruction, shall not apply to any 
        program operated pursuant to this paragraph;
            ``(10) education reform projects that provide same gender 
        schools, as long as comparable educational opportunities are 
        offered for students of both sexes; and
            ``(11) education reform projects that reward teachers, 
        administrators, and schools with cash bonuses and other 
        incentives for significantly improving the academic performance 
        of their students.''.

             TITLE III--TAX INCENTIVES FOR HIGHER EDUCATION

SEC. 300. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This title may be cited as the ``Affordable 
College Act''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this title an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 301. BOB DOLE EDUCATION INVESTMENT ACCOUNTS.

    (a) In General.--Part VIII of subchapter F of chapter 1 (relating 
to qualified State tuition programs) is amended by adding at the end 
the following new section:

``SEC. 530. BOB DOLE EDUCATION INVESTMENT ACCOUNTS.

    ``(a) General Rule.--A Bob Dole education investment account 
(hereafter in this section referred to as an `education investment 
account') shall be exempt from taxation under this subtitle. 
Notwithstanding the preceding sentence, the education investment 
account shall be subject to the taxes imposed by section 511 (relating 
to imposition of tax on unrelated business income of charitable 
organizations).
    ``(b) Limitations on Accounts.--
            ``(1) Account may not be established for benefit of more 
        than 1 individual.--An education investment account may not be 
        established for the benefit of more than 1 individual.
            ``(2) Special rule where more than 1 account.--If, at any 
        time during a calendar year, 2 or more education investment 
        accounts are maintained for the benefit of an individual, only 
        the account first established shall be treated as a Bob Dole 
        education investment account for purposes of this section. This 
        paragraph shall not apply to the extent more than 1 account 
        exists solely by reason of a rollover contribution.
    ``(c) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Bob dole education investment account.--The term `Bob 
        Dole education investment account' means a trust created or 
        organized in the United States exclusively for the purpose of 
        paying the qualified higher education expenses of the account 
        holder, but only if the written governing instrument creating 
        the trust meets the following requirements:
                    ``(A) No contribution will be accepted--
                            ``(i) unless it is in cash,
                            ``(ii) except in the case of rollover 
                        contributions from another education investment 
                        account, in excess of $1,000 for any calendar 
                        year, and
                            ``(iii) after the date on which the account 
                        holder attains age 18.
                    ``(B) The trustee is a bank (as defined in section 
                408(n)) or another person who demonstrates to the 
                satisfaction of the Secretary that the manner in which 
                that person will administer the trust will be 
                consistent with the requirements of this section.
                    ``(C) No part of the trust assets will be invested 
                in life insurance contracts (other than contracts the 
                beneficiary of which is the trust and the face amount 
                of which does not exceed the amount by which the 
                maximum amount which can be contributed to the 
                education investment account exceeds the sum of the 
                amounts contributed to the account for all taxable 
                years).
                    ``(D) The assets of the trust shall not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
                    ``(E) Any balance in the education investment 
                account on the day after the date on which the 
                individual for whose benefit the trust is established 
                attains age 30 (or, if earlier, the date on which such 
                individual dies) shall be distributed within 30 days of 
                such date to the account holder (or in the case of 
                death, the beneficiary).
            ``(2) Time when contributions deemed made.--A taxpayer 
        shall be deemed to have made a contribution on the last day of 
        the preceding taxable year if the contribution is made on 
        account of such taxable year and is made not later than the 
        time prescribed by law for filing the return for such taxable 
        year (including extensions thereof).
            ``(3) Qualified higher education expenses.--
                    ``(A) In general.--The term `qualified higher 
                education expenses' has the same meaning given such 
                term by section 529(e)(3), except that such expenses 
                shall be reduced by any amount described in section 
                135(d)(1) (relating to certain scholarships and 
                veterans benefits).
                    ``(B) State tuition plans.--Such term shall include 
                amounts paid or incurred to purchase tuition credits or 
                certificates, or to make contributions to an account, 
                under a qualified State tuition program (as defined in 
                section 529(b)).
            ``(4) Eligible educational institution.--The term `eligible 
        educational institution' has the meaning given such term by 
        section 135(c)(3).
            ``(5) Account holder.--The term `account holder' means the 
        individual for whose benefit the education investment account 
        is established.
    ``(d) Tax Treatment of Distributions.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, any amount paid or distributed out of an education 
        investment account shall be included in gross income of the 
        payee or distributee for the taxable year in the manner 
        prescribed by section 72. For purposes of the preceding 
        sentence, rules similar to the rules of section 408(d)(2) shall 
        apply.
            ``(2) Distribution used to pay educational expenses.--
        Paragraph (1) shall not apply to any payment or distribution 
        out of an education investment account to the extent such 
        payment or distribution is used exclusively to pay 
the qualified higher education expenses of the account holder.
            ``(3) Special rule for applying section 2503.--If any 
        payment or distribution from an education investment account is 
        used exclusively for the payment to an eligible educational 
        institution of the qualified higher education expenses of the 
        account holder, such payment shall be treated as a qualified 
        transfer for purposes of section 2503(e).
            ``(4) Additional tax for distributions not used for 
        educational expenses.--
                    ``(A) In general.--The tax imposed by this chapter 
                for any taxable year on any taxpayer who receives a 
                payment or distribution from an education investment 
                account which is includible in gross income under 
                paragraph (1) shall be increased by 10 percent of the 
                amount which is so includible.
                    ``(B) Exception for disability, death, or 
                scholarship.--Subparagraph (A) shall not apply if the 
                payment or distribution is--
                            ``(i) made on account of the death or 
                        disability of the account holder, or
                            ``(ii) made on account of a scholarship (or 
                        allowance or payment described in section 
                        135(d)(1) (B) or (C)) received by the account 
                        holder to the extent the amount of the payment 
                        or distribution does exceed the amount of the 
                        scholarship, allowance, or payment.
                    ``(C) Excess contributions returned before due date 
                of return.--Subparagraph (A) shall not apply to the 
                distribution to a contributor of any contribution paid 
                during a taxable year to an education investment 
                account to the extent that such contribution, when 
                added to previous contributions to the account during 
                the taxable year, exceeds $1,000 if--
                            ``(i) such distribution is received on or 
                        before the day prescribed by law (including 
                        extensions of time) for filing such 
                        contributor's return for such taxable year, and
                            ``(ii) such distribution is accompanied by 
                        the amount of net income attributable to such 
                        excess contribution.
                Any net income described in clause (ii) shall be 
                included in the gross income of the contributor for the 
                taxable year in which such excess contribution was 
                made.
            ``(5) Rollover contributions.--Paragraph (1) shall not 
        apply to any amount paid or distributed from an education 
        investment account to the extent that the amount received is 
        paid into another education investment account for the benefit 
        of the account holder not later than the 60th day after the day 
        on which the holder receives the payment or distribution. The 
        preceding sentence shall not apply to any payment or 
        distribution if it applied to any prior payment or distribution 
        during the 12-month period ending on the date of the payment or 
        distribution.
            ``(6) Special rules for death and divorce.--Rules similar 
        to the rules of section 220(f) (7) and (8) shall apply.
    ``(e) Tax Treatment of Accounts.--Rules similar to the rules of 
paragraphs (2) and (4) of section 408(e) shall apply to any education 
investment account, and any amount treated as distributed under such 
rules shall be treated as not used to pay qualified higher education 
expenses.
    ``(f) Community Property Laws.--This section shall be applied 
without regard to any community property laws.
    ``(g) Custodial Accounts.--For purposes of this section, a 
custodial account shall be treated as a trust if the assets of such 
account are held by a bank (as defined in section 408(n)) or another 
person who demonstrates, to the satisfaction of the Secretary, that the 
manner in which he will administer the account will be consistent with 
the requirements of this section, and if the custodial account would, 
except for the fact that it is not a trust, constitute an account 
described in subsection (b)(1). For purposes of this title, in the case 
of a custodial account treated as a trust by reason of the preceding 
sentence, the custodian of such account shall be treated as the trustee 
thereof.
    ``(h) Reports.--The trustee of an education investment account 
shall make such reports regarding such account to the Secretary and to 
the account holder with respect to contributions, distributions, and 
such other matters as the Secretary may require under regulations. The 
reports required by this subsection shall be filed at such time and in 
such manner and furnished to such individuals at such time and in such 
manner as may be required by those regulations.''
    (b) Tax on Prohibited Transactions.--Section 4975 (relating to 
prohibited transactions) is amended--
            (1) by adding at the end of subsection (c) the following 
        new paragraph:
            ``(5) Special rule for education investment accounts.--An 
        individual for whose benefit an education investment account is 
        established and any contributor to such account shall be exempt 
        from the tax imposed by this section with respect to any 
        transaction concerning such account (which would otherwise be 
        taxable under this section) if, with respect to such 
        transaction, the account ceases to be an education investment 
        account by reason of the application of section 530 to such 
        account.''; and
            (2) in subsection (e)(1), by striking ``or'' at the end of 
        subparagraph (D), by redesignating subparagraph (E) as 
        subparagraph (F), and by inserting after subparagraph (D) the 
        following new subparagraph:
                    ``(E) an education investment account described in 
                section 530, or''.
    (c) Failure To Provide Reports on Education Investment Accounts.--
Section 6693 (relating to failure to provide reports on individual 
retirement accounts or annuities) is amended--
            (1) by inserting ``or on education investment accounts'' 
        after ``annuities'' in the heading of such section, and
            (2) in subsection (a)(2), by striking ``and'' at the end of 
        subparagraph (A), by striking the period at the end of 
        subparagraph (B) and inserting ``, and'', and by adding at the 
        end the following new subparagraph:
                    ``(C) section 530(h) (relating to education 
                investment accounts).''
    (d) Coordination with Savings Bond Exclusion.--Section 135(d)(1) is 
amended by striking ``or'' at the end of subparagraph (C), by striking 
the period at the end of subparagraph (D) and inserting ``, or'', and 
by inserting at the end the following new subparagraph:
                    ``(E) a payment or distribution from an education 
                investment account (as defined in section 530).''
    (e) Clerical Amendments.--
            (1) The table of sections for part VIII of subchapter F of 
        chapter 1 is amended by adding at the end the following new 
        item:

                              ``Sec. 530. Bob Dole education investment 
                                        accounts.''
            (2)(A) The heading for part VIII of subchapter F of chapter 
        1 is amended to read as follows:

           ``PART VIII--HIGHER EDUCATION SAVINGS ENTITIES''.

            (B) The table of parts for subchapter F of chapter 1 is 
        amended by striking the item relating to part VIII and 
        inserting:

                              ``Part VIII. Higher education savings 
                                        entities.''
            (3) The table of sections for subchapter B of chapter 68 is 
        amended by striking the item relating to section 6693 and 
        inserting the following new item:

                              ``Sec. 6693. Failure to provide reports 
                                        on individual retirement 
                                        accounts or annuities or on 
                                        education investment 
                                        accounts.''
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1996.

SEC. 302. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE PROGRAMS.

    (a) Permanent Extension.--Section 127 of the Internal Revenue Code 
of 1986 (relating to exclusion for educational assistance programs) is 
amended by striking subsection (d) and by redesignating subsection (e) 
as subsection (d).
    (b) Repeal of Limitation on Graduate Education.--The last sentence 
of section 127(c)(1) of such Code is amended by striking ``, and such 
term also does not include any payment for, or the provision of any 
benefits with respect to, any graduate level course of a kind normally 
taken by an individual pursuing a program leading to a law, business, 
medical, or other advanced academic or professional degree''.
    (c) Effective Dates.--
            (1) Extension.--The amendments made by subsection (a) shall 
        apply to taxable years beginning after December 31, 1996.
            (2) Graduate education.--The amendment made by subsection 
        (b) shall apply with respect to expenses relating to courses 
        beginning after June 30, 1996.

SEC. 303. MODIFICATIONS OF TAX TREATMENT OF QUALIFIED STATE TUITION 
              PROGRAMS.

    (a) Exclusion of Distributions Used for Educational Purposes.--
Subparagraph (B) of section 529(c)(3) is amended to read as follows:
                    ``(B) Distributions for qualified higher education 
                expenses.--Subparagraph (A) shall not apply to any 
                distribution to the extent--
                            ``(i) the distribution is used exclusively 
                        to pay qualified higher education expenses of 
                        the distributee, or
                            ``(ii) the distribution consists of 
                        providing a benefit to the distributee which, 
                        if paid for by the distributee, would 
                        constitute payment of a qualified higher 
                        education expense.''
    (b) Qualified Higher Education Expenses To Include Room and 
Board.--Section 529(e)(3) is amended to read as follows:
            ``(3) Qualified higher education expenses.--The term 
        `qualified higher education expenses' means the cost of 
        attendance (within the meaning of section 472 of the Higher 
        Education Act of 1965 (20 U.S.C. 1087ll), as in effect on the 
        date of the enactment of the Affordable College Act) of a 
        designated beneficiary at an eligible educational institution 
        (as defined in section 135(c)(3)).''
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1996.

SEC. 304. DEDUCTION FOR INTEREST ON EDUCATION LOANS.

    (a) In General.--Part VII of subchapter B of chapter 1 (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. 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) Maximum Deduction.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        deduction allowed by subsection (a) for the taxable year shall 
        not exceed $2,500.
            ``(2) Limitation based on modified adjusted gross income.--
                    ``(A) In general.--If the modified adjusted gross 
                income of the taxpayer for the taxable year exceeds 
                $45,000 ($65,000 in the case of a joint return), the 
                amount which would (but for this paragraph) be 
                allowable as a deduction under this section shall be 
                reduced (but not below zero) by the amount which bears 
                the same ratio to the amount which would be so 
                allowable as such excess bears to $20,000.
                    ``(B) Modified adjusted gross income.--The term 
                `modified adjusted gross income' means adjusted gross 
                income determined--
                            ``(i) without regard to this section and 
                        sections 135, 911, 931, and 933, and
                            ``(ii) after application of sections 86, 
                        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.
                    ``(C) Inflation adjustment.--In the case of any 
                taxable year beginning after 1997, the $45,000 and 
                $65,000 amounts referred to in subparagraph (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, 
                        by substituting `1996' for `1992'.
                    ``(D) Rounding.--If any amount as adjusted under 
                subparagraph (C) is not a multiple of $50, such amount 
                shall be rounded to the nearest multiple of $50.
    ``(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) Limit on Period Deduction Allowed.--A deduction shall be 
allowed under this section only with respect to interest paid on any 
qualified education loan during the first 60 months (whether or not 
consecutive) in which interest payments are required. For purposes of 
this paragraph, any loan and all refinancings of such loan shall be 
treated as 1 loan.
    ``(e) 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, 
                the taxpayer's spouse, or any dependent of the taxpayer 
                as of the time the indebtedness was incurred,
                    ``(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' means the cost of 
        attendance (as defined in section 472 of the Higher Education 
        Act of 1965, 20 U.S.C. 1087ll, as in effect on the day before 
        the date of the enactment of this Act) of the taxpayer or the 
        taxpayer's spouse at an eligible educational institution, 
        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 the preceding sentence, the term `eligible 
        educational institution' has the same meaning given such term 
        by section 135(c)(3), except that such term 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.
    ``(f) 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 is amended by inserting after 
paragraph (16) the following new paragraph:
            ``(17) Interest on education loans.--The deduction allowed 
        by section 221.''
    (c) Reporting Requirement.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 (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 221(e)(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) in paragraph (1)(B), by redesignating clauses 
                (x) through (xv) as clauses (xi) through (xvi), 
                respectively, and by inserting after clause (ix) the 
                following new clause:
                            ``(x) section 6050S (relating to returns 
                        relating to education loan interest received in 
                        trade or business from individuals),'', and
                    (B) in paragraph (2), 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 6050S(d) (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. 221. Interest on education loans.
                              ``Sec. 222. Cross reference.''.

    (e) Effective Date.--The amendments made by this section shall 
apply to any qualified education loan (as defined in section 221(e)(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, 1996.

SEC. 305. EXCLUSION OF FEDERAL WORK STUDY PAYMENTS.

    (a) In General.--Section 117 (relating to exclusion of qualified 
scholarships) is amended by adding at the end the following new 
subsection:
    ``(e) Exclusion for Work Study Payments.--Notwithstanding any other 
provision of this section, gross income does not include any amount 
received for services performed under a Federal work study program 
operated under section 441 of the Higher Education Act of 1965 (42 
U.S.C. 2751), as in effect on the date of the enactment of this 
subsection.''
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1996.

   TITLE IV--FUNDING FOR PART B OF THE INDIVIDUALS WITH DISABILITIES 
                             EDUCATION ACT

SEC. 401. FUNDING FOR PART B OF THE INDIVIDUALS WITH DISABILITIES 
              EDUCATION ACT.

    Section 611(h) of the Individuals with Disabilities Education Act 
(20 U.S.C. 1411(h)) is amended by striking ``such sums as may be 
necessary'' and inserting ``not less than $4,107,522 for fiscal year 
1998, not less than $5,607,522 for fiscal year 1999, not less than 
$7,107,522 for fiscal year 2000, not less than $8,607,522 for fiscal 
year 2001, not less than $10,107,522 for fiscal year 2002, not less 
than $11,607,522 for fiscal year 2003, not less than $13,107,522 for 
fiscal year 2004, and such sums as may be necessary for each succeeding 
fiscal year.''.

              TITLE V--ADULT EDUCATION AND FAMILY LITERACY

                    Subtitle A--Adult Education Act

SEC. 511. AUTHORIZATION OF ADULT EDUCATION ACT.

    The Adult Education Act (20 U.S.C. 1201 et seq.) is amended to read 
as follows:

                 ``TITLE III--ADULT EDUCATION PROGRAMS

``SEC. 301. SHORT TITLE.

    ``This title may be cited as the `Adult Education Act'.

``SEC. 302. STATEMENT OF PURPOSE.

    ``It is the purpose of this title to assist the States and the 
outlying areas to provide--
            ``(1) to adults, the basic educational skills necessary for 
        employment and self-sufficiency; and
            ``(2) to adults who are parents, the educational skills 
        necessary to be full partners in the educational development of 
        their children.

``SEC. 303. DEFINITIONS.

    ``As used in this title:
            ``(1) Adult education.--The term `adult education' means 
        services or instruction below the postsecondary level for 
        individuals--
                    ``(A) who have attained 16 years of age;
                    ``(B) who are not enrolled or required to be 
                enrolled in secondary school;
                    ``(C)(i) who lack sufficient mastery of basic 
                educational skills to enable the individuals to 
                function effectively in society; or
                    ``(ii) who do not have a certificate of graduation 
                from a school providing secondary education and who 
                have not achieved an equivalent level of education; and
                    ``(D) who lack a mastery of basic skills and are 
                therefore unable to speak, read, or write the English 
                language.
            ``(2) Adult education and literacy activities.--The term 
        `adult education and literacy activities' means the activities 
        authorized in section 315.
            ``(3) Community-based organization.--The term `community-
        based organization' means a private nonprofit organization of 
        demonstrated effectiveness that is representative of a 
        community or a significant segment of a community.
            ``(4) Eligible agency.--The term `eligible agency' means--
                    ``(A) the individual, entity, or agency in a State 
                or an outlying area responsible for administering or 
                setting policies for adult education and literacy 
                services in such State or outlying area pursuant to the 
                law of the State or outlying area; or
                    ``(B) if no individual, entity, or agency is 
                responsible for administering or setting such policies 
                pursuant to the law of the State or outlying area, the 
                individual, entity, or agency in a State or outlying 
                area responsible for administering or setting policies 
                for adult education and literacy services in such State 
                or outlying area on the date of enactment of this Act.
            ``(5) Eligible provider.--The term `eligible provider', 
        used with respect to adult education and literacy activities 
        described in section 315(b), means a provider determined to be 
        eligible for assistance in accordance with section 314.
            ``(6) English literacy program.--The term `English literacy 
        program' means a program of instruction designed to help 
        individuals of limited English proficiency achieve full 
        competence in the English language.
            ``(7) Family literacy services.--The term `family literacy 
        services' means services that are of sufficient intensity in 
        terms of hours, and of sufficient duration, to make sustainable 
        changes in a family and that integrate all of the following 
        activities:
                    ``(A) Interactive literacy activities between 
                parents and their children.
                    ``(B) Training for parents on how to be the primary 
                teacher for their children and full partners in the 
                education of their children.
                    ``(C) Parent literacy training.
                    ``(D) An age-appropriate education program for 
                children.
            ``(8) Individual of limited english proficiency.--The term 
        `individual of limited English proficiency' means an 
        individual--
                    ``(A) who has limited ability in speaking, reading, 
                or writing the English language; and
                    ``(B)(i) whose native language is a language other 
                than English; or
                    ``(ii) who lives in a family or community 
                environment where a language other than English is the 
                dominant language.
            ``(9) Individual with a disability.--
                    ``(A) In general.--The term `individual with a 
                disability' means an individual with any disability (as 
                defined in section 3 of the Americans with Disabilities 
                Act of 1990 (42 U.S.C. 12102)).
                    ``(B) Individuals with disabilities.--The term 
                `individuals with disabilities' means more than 1 
                individual with a disability.
            ``(10) Literacy.--The term `literacy', used with respect to 
        an individual, means the ability of the individual to speak, 
        read, and write English, and compute and solve problems, at 
        levels of proficiency necessary--
                    ``(A) to function on the job, in the family of the 
                individual, and in society;
                    ``(B) to achieve the goals of the individual; and
                    ``(C) to develop the knowledge potential of the 
                individual.
            ``(11) Local educational agency.--The term `local 
        educational agency' has the meaning given such term in section 
        14101 of the Elementary and Secondary Education Act of 1965 (20 
        U.S.C. 8801).
            ``(12) Outlying area.--The term `outlying area' means 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.
            ``(13) Postsecondary educational institution.--The term 
        `postsecondary educational institution' means an institution of 
        higher education (as such term is defined in section 481 of the 
        Higher Education Act of 1965 (20 U.S.C. 1088)) that continues 
        to meet the eligibility and certification requirements under 
        title IV of such Act (20 U.S.C. 1070 et seq.).
            ``(14) Secretary.--The term `Secretary' means the Secretary 
        of Education.
            ``(15) 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. 304. AUTHORIZATION OF APPROPRIATIONS.

    ``(a) In General.--There are authorized to be appropriated to carry 
out this title (except section 321) $400,000,000 for fiscal year 1998, 
and such sums as may be necessary for each of the fiscal years 1999 
through 2003.
    ``(b) Reservation of Funds for National Leadership Activities.--For 
any fiscal year, the Secretary may reserve not more than $4,500,000 of 
the amount appropriated under subsection (a) to establish and carry out 
the program of national leadership and evaluation activities described 
in section 322.
    ``(c) Program Year.--Appropriations for any fiscal year for 
programs and activities carried out under part A shall be available for 
obligation only on the basis of a program year. The program year shall 
begin on July 1 in the fiscal year for which the appropriation is made.

                 ``PART A--GRANTS TO ELIGIBLE AGENCIES

``SEC. 311. AUTHORITY TO MAKE GRANTS.

    ``(a) In General.--In the case of each eligible agency that in 
accordance with section 313 submits to the Secretary a plan for a 
fiscal year, the Secretary shall make a grant for the year to the 
eligible agency for the purpose specified in subsection (b). The grant 
shall consist of the initial and additional allotments determined for 
the eligible agency under section 312.
    ``(b) Purpose of Grants.--The Secretary may make a grant under 
subsection (a) only if the applicant involved agrees to expend the 
grant for adult education and literacy activities in accordance with 
the provisions of this part.

``SEC. 312. ALLOTMENTS.

    ``(a) Initial Allotments.--From the sums available for the purpose 
of making grants under this part for any fiscal year, the Secretary 
shall allot to each eligible agency that in accordance with section 313 
submits to the Secretary a plan for the year an initial amount as 
follows:
            ``(1) $100,000, in the case of an eligible agency of the 
        United States Virgin Islands, Guam, American Samoa, the 
        Commonwealth of the Northern Mariana Islands, the Republic of 
        the Marshall Islands, the Federated States of Micronesia, and 
        the Republic of Palau.
            ``(2) $250,000, in the case of any other eligible agency.
    ``(b) Additional Allotments.--
            ``(1) In general.--From the remainder available for the 
        purpose of making grants under this part for any fiscal year 
        after the application of subsection (a), the Secretary shall 
        allot to each eligible agency that receives an initial 
        allotment under such subsection an additional amount that bears 
        the same relationship to such remainder as the number of 
        qualifying adults in the State or outlying area of the agency 
        bears to the number of such adults in all States and outlying 
        areas.
            ``(2) Qualifying adult.--For purposes of this subsection, 
        the term `qualifying adult' means an adult who--
                    ``(A) is at least 16 years of age, but less than 61 
                years of age;
                    ``(B) is beyond the age of compulsory school 
                attendance under the law of the State or outlying area;
                    ``(C) does not have a certificate of graduation 
                from a school providing secondary education and has not 
                achieved an equivalent level of education; and
                    ``(D) is not currently enrolled in secondary 
                school.
    ``(c) Special Rule.--
            ``(1) In general.--Notwithstanding any other provision of 
        this section and using funds allotted for the Republic of the 
        Marshall Islands, the Federated States of Micronesia, and the 
        Republic of Palau under this section, the Secretary shall award 
        grants to Guam, American Samoa, the Commonwealth of the 
        Northern Mariana Islands, the Republic of the Marshall Islands, 
        the Federated States of Micronesia, or the Republic of Palau to 
        carry out activities described in this part in accordance with 
        the provisions of this part that the Secretary determines are 
        not inconsistent with this subsection.
            ``(2) Award basis.--The Secretary shall award grants 
        pursuant to paragraph (1) on a competitive basis and pursuant 
        to recommendations from the Pacific Region Educational 
        Laboratory in Honolulu, Hawaii.
            ``(3) Termination of eligibility.--Notwithstanding any 
        other provision of law, the Republic of the Marshall Islands, 
        the Federated States of Micronesia, and the Republic of Palau 
        shall not receive any funds under this part for any fiscal year 
        that begins after September 30, 2001.
            ``(4) Administrative costs.--The Secretary may provide not 
        more than 5 percent of the funds made available for grants 
        under this subsection to pay the administrative costs of the 
        Pacific Region Educational Laboratory regarding activities 
        assisted under this subsection.

``SEC. 313. AGENCY PLAN.

    ``For an eligible agency to be eligible to receive a grant under 
this part for any fiscal year, the agency shall submit to the Secretary 
a plan for the year that includes the following:
            ``(1) A description of the adult education and literacy 
        activities that will be carried out with funds received under 
        the grant.
            ``(2) A description of how such activities will be 
        integrated with other adult education and career development 
        activities in the State or outlying area of the agency.
            ``(3) A description of how the eligible agency annually 
        will evaluate the effectiveness of the adult education and 
        literacy activities that are carried out with funds received 
        under the grant.
            ``(4) A description of the benchmarks required under 
        section 317 and how such benchmarks will ensure continuous 
        improvement of adult education and literacy services in the 
        State or outlying area of the agency.
            ``(5) An assurance that the funds received under the grant 
        will not be expended for any purpose other than the activities 
        described in sections 314 and 315.
            ``(6) An assurance that the eligible agency will expend the 
        funds received under the grant only in a manner consistent with 
        the fiscal requirements in section 316.

``SEC. 314. USE OF FUNDS.

    ``(a) In General.--Of the sum that is made available under this 
part to an eligible agency for any program year--
            ``(1) not less than 85 percent shall be made available to 
        award grants in accordance with this section to carry out adult 
        education and literacy activities;
            ``(2) not more than 10 percent shall be made available to 
        carry out activities described in section 315(a); and
            ``(3) subject to paragraph (1), not more than 5 percent, or 
        $50,000, whichever is greater, shall be made available for 
        administrative expenses at the State level (or the level of the 
        outlying area).
    ``(b) Grants.--
            ``(1) In general.--Except as provided in paragraph (2), 
        from the amount made available to an eligible agency for adult 
        education and literacy under subsection (a)(1) for a program 
        year, such agency shall award grants, on a competitive basis, 
        to local educational agencies, correctional education agencies, 
        community-based organizations of demonstrated effectiveness, 
        volunteer literacy organizations, libraries, public or private 
        nonprofit agencies, postsecondary educational institutions, 
        public housing authorities, and other nonprofit institutions, 
        that have the ability to provide literacy services to adults 
        and families, or consortia of agencies, organizations, or 
        institutions described in this subsection, to enable such 
        agencies, organizations, institutions, and consortia to carry 
        out adult education and literacy activities.
            ``(2) Consortia.--An eligible agency may award a grant 
        under this section to a consortium that includes a provider 
        described in paragraph (1) and a for-profit agency, 
        organization, or institution, if such agency, organization, or 
        institution--
                    ``(A) can make a significant contribution to 
                carrying out the objectives of this title; and
                    ``(B) enters into a contract with such provider to 
                carry out adult education and literacy activities.
    ``(c) Grant Requirements.--
            ``(1) Required local activities.--An eligible agency shall 
        require that each provider receiving a grant under this section 
        use the grant in accordance with section 315(b).
            ``(2) Equitable access.--Each eligible agency awarding a 
        grant under this section for adult education and literacy 
        activities shall ensure that the providers described in 
        subsection (b) will be provided direct and equitable access to 
        all Federal funds provided under this section.
            ``(3) Special rule.--Each eligible agency awarding a grant 
        under this section shall not use any funds made available under 
        this title for adult education and literacy activities for the 
        purpose of supporting or providing programs, services, or 
        activities for individuals who are not individuals described in 
        subparagraphs (A) and (B) of section 303(1), except that such 
        agency may use such funds for such purpose if such programs, 
        services, or activities are related to family literacy 
        services.
            ``(4) Considerations.--In awarding grants under this 
        section, the eligible agency shall consider--
                    ``(A) the past effectiveness of a provider 
                described in subsection (b) in providing services 
                (especially with respect to recruitment and retention 
                of educationally disadvantaged adults and the learning 
                gains demonstrated by such adults);
                    ``(B) the degree to which the provider will 
                coordinate services with other literacy and social 
                services available in the community; and
                    ``(C) the commitment of the provider to serve 
                individuals in the community who are most in need of 
                literacy services.
    ``(d) Local Administrative Cost Limits.--
            ``(1) In general.--Except as provided in paragraph (2), of 
        the funds provided under this section by an eligible agency to 
        a provider described in subsection (b), not less than 95 
        percent shall be expended for provision of adult education and 
        literacy activities. The remainder shall be used for planning, 
        administration, personnel development, and interagency 
        coordination.
            ``(2) Special rule.--In cases where the cost limits 
        described in paragraph (1) will be too restrictive to allow for 
        adequate planning, administration, personnel development, and 
        interagency coordination supported under this section, the 
        eligible agency shall negotiate with the provider described in 
        subsection (b) in order to determine an adequate level of funds 
        to be used for noninstructional purposes.

``SEC. 315. ADULT EDUCATION AND LITERACY ACTIVITIES.

    ``(a) Permissible Agency Activities.--An eligible agency may use 
not more than 10 percent of the funds made available to the eligible 
agency under this part for activities that may include--
            ``(1) the establishment or operation of professional 
        development programs to improve the quality of instruction 
        provided pursuant to local activities required under subsection 
        (b), including instruction provided by volunteers or by 
        personnel of a State or outlying area;
            ``(2) the provision of technical assistance to eligible 
        providers of activities authorized in this section;
            ``(3) the provision of technology assistance to eligible 
        providers of activities authorized in this section to enable 
        the providers to improve the quality of such activities;
            ``(4) the support of State or regional networks of literacy 
        resource centers; and
            ``(5) the monitoring and evaluation of the quality of and 
        the improvement in activities authorized in this section.
    ``(b) Required Local Activities.--The eligible agency shall require 
that each eligible provider receiving a grant under section 314 use the 
grant to establish or operate 1 or more programs that provide 
instruction or services in 1 or more of the following categories:
            ``(1) Adult education and literacy services.
            ``(2) Family literacy services.
            ``(3) English literacy programs.

``SEC. 316. FISCAL REQUIREMENTS AND RESTRICTIONS RELATED TO USE OF 
              FUNDS.

    ``(a) Supplement not Supplant.--Funds made available under this 
part for adult education and literacy activities shall supplement, and 
may not supplant, other public funds expended to carry out activities 
described in section 315.
    ``(b) Maintenance of Effort.--
            ``(1) Determination.--
                    ``(A) In general.--Except as provided in 
                subparagraphs (B) and (C), and paragraph (2), no 
                payments shall be made under this part for any program 
                year to an eligible agency for adult education and 
                literacy activities unless the Secretary of Education 
                determines that the fiscal effort per student or the 
                aggregate expenditures of such eligible agency for 
                activities described in section 315 for the program 
                year preceding the program year for which the 
                determination is made, equaled or exceeded such effort 
                or expenditures for activities described in such 
                section for the second program year preceding the 
                fiscal year for which the determination is made.
                    ``(B) Computation.--In computing the fiscal effort 
                or aggregate expenditures pursuant to subparagraph (A), 
                the Secretary of Education shall exclude capital 
                expenditures, special one-time project costs, and 
                similar windfalls.
                    ``(C) Decrease in federal support.--If the amount 
                made available for adult education and literacy 
                activities under this part for a fiscal year is less 
                than the amount made available for adult education and 
                literacy activities under this part for the preceding 
                fiscal year, then the fiscal effort per student or the 
                aggregate expenditures of an eligible agency required 
                by subparagraph (A) for such preceding fiscal year 
                shall be decreased by the same percentage as the 
                percentage decrease in the amount so made available.
            ``(2) Waiver.--The Secretary of Education may waive the 
        requirements of paragraph (1) (with respect to not more than 5 
        percent of expenditures required for the preceding fiscal year 
        by any eligible agency) for 1 program year only, after making a 
        determination that such waiver would be equitable due to 
        exceptional or uncontrollable circumstances affecting the 
        ability of the eligible agency to meet such requirements, such 
        as a natural disaster or an unforeseen and precipitous decline 
        in financial resources. No level of funding permitted under 
        such a waiver may be used as the basis for computing the fiscal 
        effort or aggregate expenditures required under this subsection 
for years subsequent to the year covered by such waiver. The fiscal 
effort or aggregate expenditures for the subsequent years shall be 
computed on the basis of the level of funding that would, but for such 
waiver, have been required.
    ``(c) Expenditures of Non-Federal Funds for Adult Education and 
Literacy Activities.--For any program year for which a grant is made to 
an eligible agency under this part, the eligible agency shall expend, 
on programs and activities relating to adult education and literacy 
activities, an amount, derived from sources other than the Federal 
Government, equal to 25 percent of the amount made available to the 
eligible agency under this part for adult education and literacy 
activities.

``SEC. 317. ACCOUNTABILITY AND CONTINUOUS IMPROVEMENT.

    ``(a) Goal.--Each eligible agency that receives a grant under this 
part shall use such grant to meet the goal of enhancing and developing 
more fully the literacy skills of the adult population in the State or 
outlying area of the agency.
    ``(b) Benchmarks.--To be eligible to receive a grant under this 
part, an eligible agency shall develop and identify in the agency plan, 
submitted under section 313, proposed quantifiable benchmarks to 
measure the progress of the eligible agency toward meeting the goal 
described in subsection (a) throughout the State or outlying area of 
the agency, which shall include, at a minimum, measures for 
participants of--
            ``(1) demonstrated improvements in literacy skill levels;
            ``(2) attainment of secondary school diplomas or general 
        equivalency diplomas;
            ``(3) placement in, retention in, or completion of, 
        postsecondary education, training, or employment; and
            ``(4) attainment of the literacy skills and knowledge 
        individuals need to be productive and responsible citizens and 
        to become more actively involved in the education of their 
        children.
    ``(c) Populations.--
            ``(1) Performance measures.--In developing and identifying 
        measures of progress of the eligible agency toward meeting the 
        goal described in subsection (a), an eligible agency shall 
        develop and identify in the agency plan, in addition to the 
        benchmarks described in subsection (b), proposed quantifiable 
        benchmarks for populations that include, at a minimum--
                    ``(A) low-income individuals;
                    ``(B) at-risk youth and young adults;
                    ``(C) individuals with disabilities; and
                    ``(D) individuals of limited literacy, as 
                determined by the eligible agency.
            ``(2) Additional measures.--In addition to the benchmarks 
        described in paragraph (1), an eligible agency may develop and 
        identify in the agency plan proposed quantifiable benchmarks to 
        measure the progress of the eligible agency toward meeting the 
        goal described in subsection (a) for populations with multiple 
        barriers to educational enhancement.

                      ``PART B--NATIONAL PROGRAMS

``SEC. 321. NATIONAL INSTITUTE FOR LITERACY.

    ``(a) Establishment.--
            ``(1) In general.--There is established the National 
        Institute for Literacy (in this section referred to as the 
        `Institute'). The Institute shall be administered under the 
        terms of an interagency agreement entered into by the Secretary 
        of Education with the Secretary of Labor and the Secretary of 
        Health and Human Services (in this section referred to as the 
        `Interagency Group'). The Interagency Group may include in the 
        Institute any research and development center, institute, or 
        clearinghouse established within the Department of Education, 
        the Department of Labor, or the Department of Health and Human 
        Services whose purpose is determined by the Interagency Group 
        to be related to the purpose of the Institute.
            ``(2) Offices.--The Institute shall have offices separate 
        from the offices of the Department of Education, the Department 
        of Labor, and the Department of Health and Human Services.
            ``(3) Board recommendations.--The Interagency Group shall 
        consider the recommendations of the National Institute for 
        Literacy Advisory Board (in this section referred to as the 
        `Board') established under subsection (d) in planning the goals 
        of the Institute and in the implementation of any programs to 
        achieve such goals.
            ``(4) Daily operations.--The daily operations of the 
        Institute shall be carried out by the Director of the Institute 
        appointed under subsection (g).
    ``(b) Duties.--
            ``(1) In general.--The Institute shall improve the quality 
        and accountability of the adult basic skills and literacy 
        delivery system by--
                    ``(A) providing national leadership for the 
                improvement and expansion of the system for delivery of 
                literacy services;
                    ``(B) coordinating the delivery of such services 
                across Federal agencies;
                    ``(C) identifying effective models of basic skills 
                and literacy education for adults and families that are 
                essential to success in job training, work, the family, 
                and the community;
                    ``(D) supporting the creation of new methods of 
                offering improved literacy services;
                    ``(E) funding a network of State or regional adult 
                literacy resource centers to assist State and local 
                public and private nonprofit efforts to improve 
                literacy by--
                            ``(i) encouraging the coordination of 
                        literacy services;
                            ``(ii) carrying out evaluations of the 
                        effectiveness of adult education and literacy 
                        activities;
                            ``(iii) enhancing the capacity of State and 
                        local organizations to provide literacy 
                        services; and
                            ``(iv) serving as a reciprocal link between 
                        the Institute and providers of adult education 
                        and literacy activities for the purpose of 
                        sharing information, data, research, expertise, 
                        and literacy resources;
                    ``(F) supporting the development of models at the 
                State and local level of accountability systems that 
                consist of goals, performance measures, benchmarks, and 
                assessments that can be used to improve the quality of 
                adult education and literacy activities;
                    ``(G) providing technical assistance, information, 
                and other program improvement activities to national, 
                State, and local organizations, such as--
                            ``(i) improving the capacity of national, 
                        State, and local public and private 
                        organizations that provide literacy and basic 
                        skills services, professional development, and 
                        technical assistance, such as the State or 
                        regional adult literacy resource centers 
                        referred to in subparagraph (E); and
                            ``(ii) establishing a national literacy 
                        electronic database and communications network;
                    ``(H) working with the Interagency Group, Federal 
                agencies, and the Congress to ensure that such Group, 
                agencies, and the Congress have the best information 
                available on literacy and basic skills programs in 
                formulating Federal policy with respect to the issues 
                of literacy, basic skills, and workforce and career 
                development; and
                    ``(I) assisting with the development of policy with 
                respect to literacy and basic skills.
            ``(2) Grants, contracts, and agreements.--The Institute may 
        make grants to, or enter into contracts or cooperative 
        agreements with, individuals, public or private institutions, 
        agencies, organizations, or consortia of such institutions, 
        agencies, or organizations to carry out the activities of the 
        Institute. Such grants, contracts, or agreements shall be 
        subject to the laws and regulations that generally apply to 
        grants, contracts, or agreements entered into by Federal 
        agencies.
    ``(c) Literacy Leadership.--
            ``(1) Fellowships.--The Institute, in consultation with the 
        Board, may award fellowships, with such stipends and allowances 
        as the Director considers necessary, to outstanding individuals 
        pursuing careers in adult education or literacy in the areas of 
        instruction, management, research, or innovation.
            ``(2) Use of fellowships.--Fellowships awarded under this 
        subsection shall be used, under the auspices of the Institute, 
        to engage in research, education, training, technical 
        assistance, or other activities to advance the field of adult 
        education or literacy, including the training of volunteer 
        literacy providers at the national, State, or local level.
            ``(3) Interns and volunteers.--The Institute, in 
        consultation with the Board, may award paid and unpaid 
        internships to individuals seeking to assist the Institute in 
        carrying out its mission. Notwithstanding section 1342 of title 
        31, United States Code, the Institute may accept and use 
        voluntary and uncompensated services as the Institute 
        determines necessary.
    ``(d) National Institute for Literacy Advisory Board.--
            ``(1) Establishment.--
                    ``(A) In general.--There is established a National 
                Institute for Literacy Advisory Board. The Board shall 
                consist of 10 individuals appointed by the President, 
                with the advice and consent of the Senate, from 
                individuals who--
                            ``(i) are not otherwise officers or 
                        employees of the Federal Government; and
                            ``(ii) are representative of entities or 
                        groups described in subparagraph (B).
                    ``(B) Entities or groups described.--The entities 
                or groups referred to in subparagraph (A) are--
                            ``(i) literacy organizations and providers 
                        of literacy services, including--
                                    ``(I) nonprofit providers of 
                                literacy services;
                                    ``(II) providers of programs and 
                                services involving English language 
                                instruction; and
                                    ``(III) providers of services 
                                receiving assistance under this title;
                            ``(ii) businesses that have demonstrated 
                        interest in literacy programs;
                            ``(iii) literacy students;
                            ``(iv) experts in the area of literacy 
                        research;
                            ``(v) State and local governments; and
                            ``(vi) representatives of employees.
            ``(2) Duties.--The Board--
                    ``(A) shall make recommendations concerning the 
                appointment of the Director and staff of the Institute;
                    ``(B) shall provide independent advice on the 
                operation of the Institute; and
                    ``(C) shall receive reports from the Interagency 
                Group and the Director.
            ``(3) Federal advisory committee act.--Except as otherwise 
        provided, the Board established by this subsection shall be 
        subject to the provisions of the Federal Advisory Committee Act 
        (5 U.S.C. App.).
            ``(4) Terms.--
                    ``(A) In general.--Each member of the Board shall 
                be appointed for a term of 3 years, except that the 
                initial terms for members may be 1, 2, or 3 years in 
                order to establish a rotation in which \1/3\ of the 
                members are selected each year. Any such member may be 
                appointed for not more than 2 consecutive terms.
                    ``(B) Vacancy appointments.--Any member appointed 
                to fill a vacancy occurring before the expiration of 
                the term for which the member's predecessor was 
                appointed shall be appointed only for the remainder of 
                that term. A member may serve after the expiration of 
                that member's term until a successor has taken office. 
                A vacancy in the Board shall be filled in the manner in 
                which the original appointment was made. A vacancy in 
                the Board shall not affect the powers of the Board.
            ``(5) Quorum.--A majority of the members of the Board shall 
        constitute a quorum but a lesser number may hold hearings. Any 
        recommendation of the Board may be passed only by a majority of 
        the Board's members present.
            ``(6) Election of officers.--The Chairperson and Vice 
        Chairperson of the Board shall be elected by the members of the 
        Board. The term of office of the Chairperson and Vice 
        Chairperson shall be 2 years.
            ``(7) Meetings.--The Board shall meet at the call of the 
        Chairperson or a majority of the members of the Board.
    ``(e) Gifts, Bequests, and Devises.--The Institute may accept, 
administer, and use gifts or donations of services, money, or property, 
both real and personal.
    ``(f) Mails.--The Board and the Institute may use the United States 
mails in the same manner and under the same conditions as other 
departments and agencies of the Federal Government.
    ``(g) Director.--The Interagency Group, after considering 
recommendations made by the Board, shall appoint and fix the pay of a 
Director.
    ``(h) Applicability of Certain Civil Service Laws.--The Director 
and staff of the Institute may be appointed without regard to the 
provisions of title 5, United States Code, governing appointments in 
the competitive service, and may be paid without regard to the 
provisions of chapter 51 and subchapter III of chapter 53 of that title 
relating to classification and General Schedule pay rates, except that 
an individual so appointed may not receive pay in excess of the maximum 
rate payable under section 5376 of title 5, United States Code.
    ``(i) Experts and Consultants.--The Board and the Institute may 
procure temporary and intermittent services under section 3109(b) of 
title 5, United States Code.
    ``(j) Report.--The Institute shall submit a report biennially to 
the Committee on Education and the Workforce of the House of 
Representatives and the Committee on Labor and Human Resources of the 
Senate. Each report submitted under this subsection shall include--
            ``(1) a comprehensive and detailed description of the 
        Institute's operations, activities, financial condition, and 
        accomplishments in the field of literacy for the period covered 
        by the report;
            ``(2) a description of how plans for the operation of the 
        Institute for the succeeding two fiscal years will facilitate 
        achievement of the goals of the Institute and the goals of the 
        literacy programs within the Department of Education, the 
        Department of Labor, and the Department of Health and Human 
        Services; and
            ``(3) any additional minority, or dissenting views 
        submitted by members of the Board.
    ``(k) Funding.--Any amounts appropriated to the Secretary of 
Education, the Secretary of Labor, or the Secretary of Health and Human 
Services for purposes that the Institute is authorized to perform under 
this section may be provided to the Institute for such purposes.
    ``(l) Authorization of Appropriations.--There are authorized to be 
appropriated $10,000,000 for fiscal year 1998 and such sums as may be 
necessary for each of the fiscal years 1999 through 2003 to carry out 
this section.

``SEC. 322. NATIONAL LEADERSHIP ACTIVITIES.

    ``The Secretary shall establish and carry out a program of national 
leadership activities to enhance the quality of adult education and 
family literacy programs nationwide. Such activities shall include the 
following:
            ``(1) Providing technical assistance to recipients of 
        assistance under part A in developing and using benchmarks and 
        performance measures for improvement of adult education and 
        literacy activities, including family literacy services.
            ``(2) Awarding grants, on a competitive basis, to an 
        institution of higher education, a public or private 
        organization or agency, or a consortium of such institutions, 
        organizations, or agencies to carry out research and technical 
        assistance--
                    ``(A) for the purpose of developing, improving, and 
                identifying the most successful methods and techniques 
                for addressing the education needs of adults; and
                    ``(B) to increase the effectiveness of, and improve 
                the quality of, adult education and literacy 
                activities, including family literacy services.
            ``(3) Providing for the conduct of an independent 
        evaluation and assessment of adult education and literacy 
        activities, through studies and analyses conducted 
        independently through grants and contracts awarded on a 
        competitive basis. Such evaluation and assessment shall include 
        descriptions of--
                    ``(A) the effect of benchmarks, performance 
                measures, and other measures of accountability on the 
                delivery of adult education and literacy activities, 
                including family literacy services;
                    ``(B) the extent to which the adult education and 
                literacy activities, including family literacy 
                services, increase the literacy skills of adults (and 
                of children, in the case of family literacy services), 
                lead the participants in such activities to involvement 
                in further education and training, enhance the 
                employment and earnings of such participants, and, if 
                applicable, lead to other positive outcomes, such as 
                reductions in recidivism in the case of prison-based 
                adult education and literacy services; and
                    ``(C) the extent to which eligible agencies have 
                distributed funds part A to meet the needs of adults 
                through community-based organizations.
            ``(4) Carrying out demonstration programs, replicating 
        model programs, disseminating best practices information, and 
        providing technical assistance, for the purposes of developing, 
improving, and identifying the most successful methods and techniques 
for providing the activities assisted under part A.''.

SEC. 512. EXTENSION OF FUNCTIONAL LITERACY AND LIFE SKILLS PROGRAM FOR 
              STATE AND LOCAL PRISONERS.

    Paragraph (3) of section 601(i) of the National Literacy Act of 
1991 (20 U.S.C. 1211-2(i)) is amended--
            (1) by striking ``1994, and'' and inserting ``1994,''; and
            (2) by inserting ``, and such sums as may be necessary for 
        each of the fiscal years 1998, 1999, 2000, 2001, 2002, and 
        2003'' before the period.

SEC. 513. CONFORMING ADULT EDUCATION ACT AMENDMENTS.

    (a) Refugee Education Assistance Act.--Subsection (b) of section 
402 of the Refugee Education Assistance Act of 1980 (8 U.S.C. 1522 
note) is repealed.
    (b) Elementary and Secondary Education Act of 1965.--
            (1) Section 1206 of esea.--Section 1206(a)(1)(A) of the 
        Elementary and Secondary Education Act of 1965 (20 U.S.C. 
        6366(a)(1)(A)) is amended by striking ``an adult basic 
        education program'' and inserting ``adult education and 
        literacy activities''.
            (2) Section 3113 of esea.--Section 3113(1) of such Act (20 
        U.S.C. 6813(1)) is amended by striking ``section 312'' and 
        inserting ``section 303''.
            (3) Section 9161 of esea.--Section 9161(2) of such Act (20 
        U.S.C. 7881(2)) is amended by striking ``section 312(2)'' and 
        inserting ``section 303''.

  Subtitle B--Demonstration Programs and Projects To Promote Literacy

SEC. 521. SHORT TITLE.

    Title X of the Elementary and Secondary Education Act of 1965 (20 
U.S.C. 8001 et seq.) is amended by adding at the end the following:

   ``PART N--DEMONSTRATION PROGRAMS AND PROJECTS TO PROMOTE LITERACY

``SEC. 10996. DEMONSTRATION PARTNERSHIPS TO PROMOTE LITERACY.

    ``(a) Training Demonstration Programs and Projects.--The Secretary 
is authorized to make grants to, and enter into contracts and 
cooperative agreements with, State educational agencies, local 
educational agencies, institutions of higher education, and other 
public and private agencies, organizations, and institutions to--
            ``(1) provide in-service training for teachers, and, where 
        appropriate, other staff such as teacher's aides, in language 
        acquisition skills and systematic phonics;
            ``(2) provide pre-service training for teachers, and, where 
        appropriate, other staff, in language acquisition skills and 
        systematic phonics; and
            ``(3) provide training opportunities for parents, community 
        volunteers, and other persons interested in obtaining language 
        acquisition and systematic phonics skills for the purpose of 
        improving their literacy or the literacy skills of children or 
        other adults.
    ``(b) Other Demonstration Programs and Projects.--The Secretary is 
authorized to make grants to, and enter into contracts with, State 
educational agencies, local educational agencies, and private nonprofit 
agencies or organizations that use practices determined by replicated 
experimental research to be effective in preventing and responding to 
illiteracy in children and adults. Such grants shall be awarded for 
time-limited, demonstration programs and projects as follows:
            ``(1) Family literacy programs.--The Secretary shall award 
        grants for programs that encourage parental involvement with 
        their children in family literacy services (as defined in 
        section 303 of the Adult Education Act). Such programs may 
        combine literacy activities with parent training, in order to 
        emphasize the parent's role as their child's primary teacher.
            ``(2) School and community partnerships.--The Secretary 
        shall award grants to local educational agencies and private 
        nonprofit organizations for the development of partnerships 
        among schools, parents, private, nonprofit community volunteer 
        organizations, and other community associations. Such 
        partnerships shall demonstrate in the application submitted 
        under subsection (c) the partnership's commitment to, and 
        participation in, programs involving voluntary tutoring 
        sessions for--
                    ``(A) children in kindergarten through 4th grade; 
                and
                    ``(B) the parents of such children, where requested 
                by the parent.
    ``(c) Application.--Each entity desiring assistance under this 
section shall submit an application to the Secretary, at such time, in 
such manner, and accompanied by such information as the Secretary may 
require.
    ``(d) Annual Evaluation.--
            ``(1) In general.--In making grants and entering into 
        contracts and cooperative agreements for demonstration programs 
        and projects under this section, the Secretary, in cooperation 
        with the Comptroller General, shall require all such programs 
        and projects to be evaluated for their effectiveness using 
        nationally recognized standardized assessments which measure 
        reading achievement.
            ``(2) Funding.--The Secretary may provide funding for the 
        evaluations described in paragraph (1) through--
                    ``(A) a stated percentage of funds awarded under a 
                grant or contracted under this subsection; or
                    ``(B) a separate grant made by the Secretary for 
                evaluating an individual demonstration program or 
                project, or group of demonstration programs or 
                projects.
            ``(3) Reservation.--The Secretary is authorized to reserve 
        not more than 2 percent of the amount appropriated under 
        subsection (e) for each fiscal year to fund the evaluations 
        under this subsection.
    ``(e) Authorization of Appropriations.--There are authorized to be 
appropriated $100,000,000 for fiscal year 1998 and such sums as may be 
necessary for each of the 4 succeeding fiscal years.''.

              Subtitle C--National Commission on Literacy

SEC. 531. SHORT TITLE.

    This subtitle may be cited as the ``National Commission on 
Literacy''.

SEC. 532. FINDINGS.

    Congress finds as follows:
            (1) Since 1965, the United States has spent over 
        $500,000,000,000 on Federal education programs, yet 66 percent 
        of 17-year olds do not read at a proficient level and reading 
        scores have been declining for 3 decades. More over 75 percent 
        of 4th graders, nationally, scored below the proficient level 
        of reading.
            (2) 85 percent of juvenile delinquents cannot read.
            (3) American businesses are spending more than 
        $30,000,000,000 in retraining employees, primarily because the 
        employees cannot read at an adult level.
            (4) In most junior colleges, at least one-third of the 
        students must take remedial English because the students are 
        not able to read at college level.

SEC. 533. NATIONAL COMMISSION ON LITERACY.

    (a) Establishment.--There is hereby established a commission to be 
known as the ``National Commission on Literacy'' (in this subtitle 
referred to as the ``Commission'').
    (b) Membership.--
            (1) In general.--The Commission shall consist of--
                    (A) 5 members to be appointed by the President of 
                the United States;
                    (B) 5 members to be appointed by the Speaker of the 
                House of Representatives; and
                    (C) 5 members to be appointed by the Majority 
                Leader of the Senate.
            (2) Appointments.--
                    (A) In general.--The President, the Speaker of the 
                House of Representatives, and the Majority Leader of 
                the Senate shall each appoint as members of the 
                Commission any United States citizen, including 
                educators and other professionals involved in the 
research, study, and analysis of illiteracy.
                    (B) Prohibition.--An individual with a direct 
                financial interest in the outcome of the Commission 
                shall not be appointed to the Commission.
            (3) Consultation.--The appointments made pursuant to 
        subparagraphs (B) and (C) of paragraph (1) shall be made in 
        consultation with the chairpersons of the Committee on 
        Education and the Workplace of the House of Representatives and 
        the Committee on Labor and Human Resources of the Senate.
    (c) Duties.--
            (1) In general.--The Commission shall--
                    (A) conduct a comprehensive review of the social 
                and economic impact of illiteracy in the United States 
                and any correlation between such impact and welfare 
                costs, juvenile delinquency, special education, adult 
                literacy programs, drug addiction, and underemployment;
                    (B) examine matters including--
                            (i) a review of--
                                    (I) requirements set for 
                                prospective reading teachers studying 
                                at colleges of education; and
                                    (II) whether such requirements 
                                include obtaining knowledge about 
                                direct, intensive, and systematic 
                                phonics with decodable text as an 
                                important step in reading instruction;
                            (ii) a review of the available testing 
                        instruments that determine whether, and to what 
                        extent, children can decode the English 
                        language;
                            (iii) an assessment of the extent to which 
                        the use of experimentally unverified methods 
                        and teaching materials contributes to 
                        illiteracy;
                            (iv) a review of medical and neurological 
                        evidence regarding how individuals acquire the 
                        skill of reading;
                            (v) a review of the cost of illiteracy to 
                        business and industry;
                            (vi) an assessment of the negative impact 
                        of illiteracy on the economy in general, and in 
                        particular the impact of illiteracy on 
                        economically depressed areas; and
                            (vii) other issues that a majority of the 
                        members of the Commission deem appropriate to 
                        investigate in accordance with this subtitle.
            (2) Public hearings.--The Commission (and any committees 
        the Commission may form) shall conduct public hearings in 
        different geographic areas of the United States, both urban and 
        rural, in order to receive the views of a broad spectrum of the 
        public on the issue of literacy and on ways to enhance the 
        reading proficiency of children, adults, and families in the 
        United States.
            (3) Testimony.--The Commission is authorized to receive 
        testimony from individuals, including--
                    (A) representatives of public and private 
                organizations and institutions with an interest in the 
                literacy of children, adults, and families in the 
                United States;
                    (B) educators;
                    (C) religious leaders;
                    (D) providers of social services;
                    (E) representatives of organizations with children 
                as members;
                    (F) elected and appointed public officials; and
                    (G) other individuals speaking on their own behalf.
    (d) Interim and Final Reports to President and Congress; 
Recommendations.--
            (1) Interim reports.--The Commission may submit to the 
        President, the Committee on Labor and Human Resources of the 
        Senate, the Committee on Education and the Workplace of the 
        House of Representatives, and to the public, interim reports 
        regarding the duties of the Commission undertaken pursuant to 
        subsection (c).
            (2) Final report.--The Commission shall submit to the 
        President, the Committee on Labor and Human Resources of the 
        Senate, and the Committee on Education and the Workplace of the 
        House of Representatives a final report no later than September 
        30, 2000. The final report shall set forth recommendations 
        regarding the findings of the Commission.
            (3) Availability.--Copies of interim reports and the final 
        report of the Commission shall be made available in sufficient 
        quantity for public review.
    (e) Time of Appointment of Members; Vacancies; Selection of 
Chairman; Quorum; Calling of Meetings; Number of Meetings; Voting; 
Compensation and Expenses.--
            (1) In general.--The President, the Speaker of the House of 
        Representatives, and the Majority Leader of the Senate shall 
        make their respective appointments to the Commission not later 
        than 60 days after the date of enactment of this Act, for terms 
        ending 60 days after the Commission issues its final report.
            (2) Vacancy.--Any vacancy that occurs during the life of 
        the Commission shall not affect the powers of the Commission, 
        and shall be filled in the same manner as the original 
        appointment not later than 30 days after the vacancy occurs.
            (3) Chairman.--The Majority Leader of the Senate, in 
        consultation with the Speaker of the House of Representatives 
        and with the President shall designate one member of the 
        Commission as Chairman of the Commission no later than 60 days 
        after the establishment of the Commission.
            (4) Quorum.--A majority of the members of the Commission 
        shall constitute a quorum for the transaction of business, but 
        the Commission may establish a lesser quorum for conducting 
        hearings scheduled by the Commission.
            (5) Meetings.--The Commission shall meet at the call of the 
        Chairman of the Commission, or at the call of a majority of the 
        members of the Commission. The initial meeting of the 
        Commission shall be conducted no later than 30 days after the 
        appointment of the last member of the Commission, or no later 
        than 30 days after the date on which funds are made available 
        for the Commission.
            (6) Voting.--Decisions of the Commission shall be according 
        to the vote of a simple majority of the members of the 
        Commission present and voting at a properly called meeting.
            (7) Rules.--The Commission may establish by majority vote 
        any other rules for the conduct of the Commission's business, 
        if such rules are not inconsistent with this subtitle or other 
        applicable law.
            (8) Compensation.--Each member of the Commission who is not 
        an officer or employee of the Federal Government, or whose 
        compensation as a member of the Commission is not precluded by 
        a Federal, State, or local law, shall be compensated at a rate 
        equal to the daily equivalent of the annual rate of basic pay 
        prescribed for Level IV of the Executive Schedule under section 
        5315 of title 5, United States Code, for each day (including 
        travel time) during which such member is engaged in the 
        performance of the duties of the Commission. All members of the 
        Commission who are officers or employees of the United States 
        shall serve without compensation in addition to the 
        compensation received for their services as officers or 
        employees of the United States.
            (9) Travel expenses.--The members of the Commission shall 
        be allowed travel expenses, including per diem in lieu of 
        subsistence, at rates authorized for employees of agencies 
        under subchapter I of chapter 57 of title 5, United States 
        Code, while away from their homes or regular places of business 
        in the performance of service for the Commission.
    (f) Executive Director and Additional Personnel; Appointment and 
Compensation; Consultants.--
            (1) Executive director and additional personnel.--The 
        Commission may appoint an Executive Director of the Commission, 
        and the Commission may appoint and fix the compensation of such 
        personnel as the Commission deems advisable. The Executive 
        Director shall be compensated at a rate not to exceed the rate 
payable for Level V of the Executive Schedule under section 5316 of 
title 5, United States Code. Compensation of other personnel may be set 
without regard to the provisions of such title 5 that govern 
appointments in the competitive services, and the provisions of chapter 
51 and subchapter III of chapter 53 of such title 5 that relate to 
classifications and the General Schedule pay rates, except that the 
rate of pay for such personnel may not exceed the rate payable for 
Level V of the Executive Schedule under section 5316 of such title.
            (2) Detailees.--Any Federal Government employee, with the 
        approval of the head of the appropriate Federal agency, may be 
        detailed to the Commission without reimbursement, and such 
        detail shall be without interruption or loss of civil service 
        status, benefits, or privilege.
            (3) Temporary or intermittent services.--The Commission may 
        procure temporary and intermittent services under section 
        3109(b) of title 5, United States Code, at rates for 
        individuals not to exceed the daily equivalent of the annual 
        rate of basic pay prescribed for Level V of the Executive 
        Schedule under section 5316 of such title.
            (4) Construction.--Nothing in this section shall be 
        construed to limit the ability of the Commission to enter into 
        contracts with public or private organizations, for research 
        necessary to carry out the Commission's duties under subsection 
        (c).
    (g) Time and Place of Hearings and Nature of Testimony 
Authorized.--
            (1) In general.--The Commission may hold such hearings, sit 
        and act at such times and places, administer such oaths, take 
        such testimony, and receive such evidence as the Commission 
        considers advisable.
            (2) Witnesses.--Witnesses requested to appear before the 
        Commission shall be paid the same fees as are paid to witnesses 
        under section 1821 of title 28, United States Code. The per 
        diem and mileage allowances for witnesses shall be paid from 
        funds appropriated to the Commission.
            (3) Subpoenas.--If a person fails to supply information 
        requested by the Commission, the Commission may by majority 
        vote require by subpoena the production of any written or 
        recorded information, document, report, answer, record, 
        account, paper, computer file, or other data or documentary 
        evidence necessary to carry out its duties under subsection 
        (c).
            (4) Information.--The Commission may secure directly from 
        any Federal department or agency such information as the 
        Commission considers necessary to carry out its duties under 
        subsection (c). Upon the request of the Commission, the head of 
        such department or agency may furnish such information to the 
        Commission.
            (5) Disclosure of confidential information.--The Commission 
        shall be considered an agency of the Federal Government for 
        purposes of section 1905 of title 18, United States Code, and 
        any individual employed by an entity or organization under 
        contract to the Commission shall be subject to such section. 
        Information obtained by the Commission, other than information 
        available to the public, shall not be disclosed to any person 
        in any manner, except--
                    (A) to Commission employees or employees of any 
                individual, entity, or organization under contract to 
                the Commission under subsection (f) for the purpose of 
                receiving, reviewing, or processing such information;
                    (B) upon court order; or
                    (C) when publicly released by the Commission in an 
                aggregate or summary form that does not directly or 
                indirectly disclose--
                            (i) the identity of any person or business 
                        entity; or
                            (ii) any information which could not be 
                        released under section 1905 of title 18, United 
                        States Code.
    (h) Support Services.--The Comptroller General shall provide to the 
Commission, on a reimbursable basis, such administrative support 
services as the Commission may request.
    (i) Definitions.--In this subtitle:
            (1) Illiteracy.--The term ``illiteracy'' means the lack of 
        ability to read and write competently.
            (2) State.--The term ``State'' means each of the several 
        States of the United States, the District of Columbia, the 
        Commonwealth of Puerto Rico, the United States Virgin Islands, 
        Guam, American Samoa, and the Commonwealth of the Northern 
        Mariana Islands.
            (3) Systematic phonics.--The term ``systematic phonics'' 
        means the direct teaching of a pre-planned sequence of 
        relationships between speech sounds and all their letter 
        equivalents.
    (j) Authorization of Appropriations.--There are authorized to be 
appropriated for each of the fiscal years 1998, 1999, and 2000, such 
sums as may be necessary to carry out this section.
                                 <all>
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