II

106TH CONGRESS

1ST SESSION S. 223

To help communities modernize public school facilities, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JANUARY 19, 1999

Mr. LAUTENBERG (for himself, Mr. ROBB, Mr. KENNEDY, Mr. DASCHLE, Mr.

CONRAD, Mr. BINGAMAN, Mr. EDWARDS, Mr. TORRICELLI, Mr. KERRY,

Mr. BREAUX, Mr. INOUYE, Mrs. BOXER, and Mr. JOHNSON) introduced

the following bill; which was read twice and referred to the Committee

on Finance

A BILL

To help communities modernize public school facilities, and

for other purposes.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Public School Mod5 ernization Act of 1999’’.

6 SEC. 2. FINDINGS AND PURPOSE.

7 (a) FINDINGS.—Congress makes the following find8 ings:
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1 (1) According to the General Accounting Office,

2 one-third of all elementary and secondary schools in

3 the United States, serving 14,000,000 students,

4 need extensive repair or renovation.

5 (2) School infrastructure problems exist across

6 the country, in urban, suburban, and rural school

7 districts.

8 (3) Many States and school districts will need

9 to build new schools in order to accommodate in10 creasing student enrollments; the Department of

11 Education has predicted that the Nation will need

12 an additional 6,000 schools by 2006.

13 (4) Many schools do not have the physical in14 frastructure to take advantage of computers and

15 other technology needed to meet the challenges of

16 the next century.

17 (5) The Federal Government, by providing tax

18 credits to bondholders to substitute for interest paid

19 by school districts, can lower the costs of State and

20 local school infrastructure investment, creating an

21 incentive for States and localities to increase their

22 own infrastructure improvement efforts and help en23 sure that all students are able to attend schools that

24 are equipped for the 21st century.
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1 (b) PURPOSE.—The purpose of this Act is to provide

2 Federal tax credits to bondholders, in lieu of interest owed

3 by school districts, to help States and localities to modern4 ize public school facilities and build the additional public

5 schools needed to educate the increasing number of stu6 dents who will enroll in the next decade.

7 SEC. 3. EXPANSION OF INCENTIVES FOR PUBLIC SCHOOLS.

8 (a) IN GENERAL.—Part IV of subchapter U of chap9 ter 1 of the Internal Revenue Code of 1986 (relating to

10 incentives for education zones) is amended to read as fol11 lows:

12 ‘‘PART IV—INCENTIVES FOR QUALIFIED PUBLIC

13 SCHOOL MODERNIZATION BONDS

‘‘Sec. 1397E. Credit to holders of qualified public school modernization bonds.

‘‘Sec. 1397F. Qualified zone academy bonds.

‘‘Sec. 1397G. Qualified school construction bonds.

14 ‘‘SEC. 1397E. CREDIT TO HOLDERS OF QUALIFIED PUBLIC

15 SCHOOL MODERNIZATION BONDS.

16 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax17 payer who holds a qualified public school modernization

18 bond on the credit allowance date of such bond which oc19 curs during the taxable year, there shall be allowed as a

20 credit against the tax imposed by this chapter for such

21 taxable year the amount determined under subsection (b).

22 ‘‘(b) AMOUNT OF CREDIT.—
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1 ‘‘(1) IN GENERAL.—The amount of the credit

2 determined under this subsection with respect to any

3 qualified public school modernization bond is the

4 amount equal to the product of—

5 ‘‘(A) the credit rate determined by the Sec6 retary under paragraph (2) for the month in

7 which such bond was issued, multiplied by

8 ‘‘(B) the face amount of the bond held by

9 the taxpayer on the credit allowance date.

10 ‘‘(2) DETERMINATION.—During each calendar

11 month, the Secretary shall determine a credit rate

12 which shall apply to bonds issued during the follow13 ing calendar month. The credit rate for any month

14 is the percentage which the Secretary estimates will

15 on average permit the issuance of qualified public

16 school modernization bonds without discount and

17 without interest cost to the issuer.

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

19 ‘‘(1) IN GENERAL.—The credit allowed under

20 subsection (a) for any taxable year shall not exceed

21 the excess of—

22 ‘‘(A) the sum of the regular tax liability

23 (as defined in section 26(b)) plus the tax im24 posed by section 55, over
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1 ‘‘(B) the sum of the credits allowable

2 under part IV of subchapter A (other than sub3 part C thereof, relating to refundable credits).

4 ‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the

5 credit allowable under subsection (a) exceeds the

6 limitation imposed by paragraph (1) for such taxable

7 year, such excess shall be carried to the succeeding

8 taxable year and added to the credit allowable under

9 subsection (a) for such taxable year.

10 ‘‘(d) QUALIFIED PUBLIC SCHOOL MODERNIZATION

11 BOND; CREDIT ALLOWANCE DATE.—For purposes of this

12 section—

13 ‘‘(1) QUALIFIED PUBLIC SCHOOL MODERNIZA14 TION BOND.—The term ‘qualified public school mod15 ernization bond’ means—

16 ‘‘(A) a qualified zone academy bond, and

17 ‘‘(B) a qualified school construction bond.

18 ‘‘(2) CREDIT ALLOWANCE DATE.—The term

19 ‘credit allowance date’ means, with respect to any

20 issue, the last day of the 1-year period beginning on

21 the date of issuance of such issue and the last day

22 of each successive 1-year period thereafter.

23 ‘‘(e) OTHER DEFINITIONS.—For purposes of this

24 part—
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1 ‘‘(1) LOCAL EDUCATIONAL AGENCY.—The term

2 ‘local educational agency’ has the meaning given to

3 such term by section 14101 of the Elementary and

4 Secondary Education Act of 1965. Such term in5 cludes the local educational agency that serves the

6 District of Columbia but does not include any other

7 State agency.

8 ‘‘(2) BOND.—The term ‘bond’ includes any ob9 ligation.

10 ‘‘(3) STATE.—The term ‘State’ includes the

11 District of Columbia and any possession of the

12 United States.

13 ‘‘(4) PUBLIC SCHOOL FACILITY.—The term

14 ‘public school facility’ shall not include any stadium

15 or other facility primarily used for athletic contests

16 or exhibitions or other events for which admission is

17 charged to the general public.

18 ‘‘(f) CREDIT INCLUDED IN GROSS INCOME.—Gross

19 income includes the amount of the credit allowed to the

20 taxpayer under this section and the amount so included

21 shall be treated as interest income.

22 ‘‘(g) BONDS HELD BY REGULATED INVESTMENT

23 COMPANIES.—If any qualified public school modernization

24 bond is held by a regulated investment company, the credit

25 determined under subsection (a) shall be allowed to share-
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1 holders of such company under procedures prescribed by

2 the Secretary.

3 ‘‘SEC. 1397F. QUALIFIED ZONE ACADEMY BONDS.

4 ‘‘(a) QUALIFIED ZONE ACADEMY BOND.—For pur5 poses of this part—

6 ‘‘(1) IN GENERAL.—The term ‘qualified zone

7 academy bond’ means any bond issued as part of an

8 issue if—

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

10 such issue are to be used for a qualified pur11 pose with respect to a qualified zone academy

12 established by a local educational agency,

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

14 government within the jurisdiction of which

15 such academy is located,

16 ‘‘(C) the issuer—

17 ‘‘(i) designates such bond for purposes

18 of this section,

19 ‘‘(ii) certifies that it has written as20 surances that the private business con21 tribution requirement of paragraph (2) will

22 be met with respect to such academy, and

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

24 approval of the local educational agency

25 for such bond issuance, and
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1 ‘‘(D) the term of each bond which is part

2 of such issue does not exceed 15 years.

3 ‘‘(2) PRIVATE BUSINESS CONTRIBUTION RE4 QUIREMENT.—

5 ‘‘(A) IN GENERAL.—For purposes of para6 graph (1), the private business contribution re7 quirement of this paragraph is met with respect

8 to any issue if the local educational agency that

9 established the qualified zone academy has writ10 ten commitments from private entities to make

11 qualified contributions having a present value

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

13 less than 10 percent of the proceeds of the

14 issue.

15 ‘‘(B) QUALIFIED CONTRIBUTIONS.—For

16 purposes of subparagraph (A), the term ‘quali17 fied contribution’ means any contribution (of a

18 type and quality acceptable to the local edu19 cational agency) of—

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

21 zone academy (including state-of-the-art

22 technology and vocational equipment),

23 ‘‘(ii) technical assistance in developing

24 curriculum or in training teachers in order
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1 to promote appropriate market driven tech2 nology in the classroom,

3 ‘‘(iii) services of employees as volun4 teer mentors,

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

6 educational opportunities outside the acad7 emy for students, or

8 ‘‘(v) any other property or service

9 specified by the local educational agency.

10 ‘‘(3) QUALIFIED ZONE ACADEMY.—The term

11 ‘qualified zone academy’ means any public school (or

12 academic program within a public school) which is

13 established by and operated under the supervision of

14 a local educational agency to provide education or

15 training below the postsecondary level if—

16 ‘‘(A) such public school or program (as the

17 case may be) is designed in cooperation with

18 business to enhance the academic curriculum,

19 increase graduation and employment rates, and

20 better prepare students for the rigors of college

21 and the increasingly complex workforce,

22 ‘‘(B) students in such public school or pro23 gram (as the case may be) will be subject to the

24 same academic standards and assessments as
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1 other students educated by the local educational

2 agency,

3 ‘‘(C) the comprehensive education plan of

4 such public school or program is approved by

5 the local educational agency, and

6 ‘‘(D)(i) such public school is located in an

7 empowerment zone or enterprise community

8 (including any such zone or community des9 ignated after the date of enactment of this sec10 tion), or

11 ‘‘(ii) there is a reasonable expectation (as

12 of the date of issuance of the bonds) that at

13 least 35 percent of the students attending such

14 school or participating in such program (as the

15 case may be) will be eligible for free or reduced16 cost lunches under the school lunch program es17 tablished under the National School Lunch Act.

18 ‘‘(4) QUALIFIED PURPOSE.—The term ‘quali19 fied purpose’ means, with respect to any qualified

20 zone academy—

21 ‘‘(A) constructing, rehabilitating, or repair22 ing the public school facility in which the acad23 emy is established,

24 ‘‘(B) providing equipment for use at such

25 academy,
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1 ‘‘(C) developing course materials for edu2 cation to be provided at such academy, and

3 ‘‘(D) training teachers and other school

4 personnel in such academy.

5 ‘‘(5) TEMPORARY PERIOD EXCEPTION.—A bond

6 shall not be treated as failing to meet the require7 ment of paragraph (1)(A) solely by reason of the

8 fact that the proceeds of the issue of which such

9 bond is a part are invested for a reasonable tem10 porary period (but not more than 36 months) until

11 such proceeds are needed for the purpose for which

12 such issue was issued. Any earnings on such pro13 ceeds during such period shall be treated as proceeds

14 of the issue for purposes of applying paragraph

15 (1)(A).

16 ‘‘(b) LIMITATIONS ON AMOUNT OF BONDS DES17 IGNATED.—

18 ‘‘(1) IN GENERAL.—There is a national zone

19 academy bond limitation for each calendar year.

20 Such limitation is—

21 ‘‘(A) $400,000,000 for 1999,

22 ‘‘(B) $1,400,000,000 for 2000,

23 ‘‘(C) $1,400,000,000 for 2001, and

24 ‘‘(D) except as provided in paragraph (3),

25 zero after 2001.
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1 ‘‘(2) ALLOCATION OF LIMITATION.—

2 ‘‘(A) ALLOCATION AMONG STATES.—

3 ‘‘(i) 1999 LIMITATION.—The national

4 zone academy bond limitation for calendar

5 year 1999 shall be allocated by the Sec6 retary among the States on the basis of

7 their respective populations of individuals

8 below the poverty line (as defined by the

9 Office of Management and Budget).

10 ‘‘(ii) LIMITATION AFTER 1999.—The

11 national zone academy bond limitation for

12 any calendar year after 1999 shall be allo13 cated by the Secretary among the States in

14 the manner prescribed by section

15 1397G(d); except that, in making the allo16 cation under this clause, the Secretary

17 shall take into account Basic Grants at18 tributable to large local educational agen19 cies (as defined in section 1397G(e)).

20 ‘‘(B) ALLOCATION TO LOCAL EDU21 CATIONAL AGENCIES.—The limitation amount

22 allocated to a State under subparagraph (A)

23 shall be allocated by the State education agency

24 to qualified zone academies within such State.
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1 ‘‘(C) DESIGNATION SUBJECT TO LIMITA2 TION AMOUNT.—The maximum aggregate face

3 amount of bonds issued during any calendar

4 year which may be designated under subsection

5 (a) with respect to any qualified zone academy

6 shall not exceed the limitation amount allocated

7 to such academy under subparagraph (B) for

8 such calendar year.

9 ‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If

10 for any calendar year—

11 ‘‘(A) the limitation amount under this sub12 section for any State, exceeds

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

14 such year which are designated under sub15 section (a) with respect to qualified zone acad16 emies within such State,

17 the limitation amount under this subsection for such

18 State for the following calendar year shall be in19 creased by the amount of such excess. The preceding

20 sentence shall not apply if such following calendar

21 year is after 2003.

22 ‘‘SEC. 1397G. QUALIFIED SCHOOL CONSTRUCTION BONDS.

23 ‘‘(a) QUALIFIED SCHOOL CONSTRUCTION BOND.—

24 For purposes of this part, the term ‘qualified school con-
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1 struction bond’ means any bond issued as part of an issue

2 if—

3 ‘‘(1) 95 percent or more of the proceeds of such

4 issue are to be used for the construction, rehabilita5 tion, or repair of a public school facility,

6 ‘‘(2) the bond is issued by a State or local gov7 ernment within the jurisdiction of which such school

8 is located,

9 ‘‘(3) the issuer designates such bond for pur10 poses of this section, and

11 ‘‘(4) the term of each bond which is part of

12 such issue does not exceed 15 years.

13 Rules similar to the rules of section 1397F(a)(5) shall

14 apply for purposes of paragraph (1).

15 ‘‘(b) LIMITATION ON AMOUNT OF BONDS DES16 IGNATED.—The maximum aggregate face amount of

17 bonds issued during any calendar year which may be des18 ignated under subsection (a) by any issuer shall not exceed

19 the sum of—

20 ‘‘(1) the limitation amount allocated under sub21 section (d) for such calendar year to such issuer,

22 and

23 ‘‘(2) if such issuer is a large local educational

24 agency (as defined in subsection (e)) or is issuing on

25 behalf of such an agency, the limitation amount allo-
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1 cated under subsection (e) for such calendar year to

2 such agency.

3 ‘‘(c) NATIONAL LIMITATION ON AMOUNT OF BONDS

4 DESIGNATED.—

5 ‘‘(1) IN GENERAL.—There is a national quali6 fied school construction bond limitation for each cal7 endar year equal to the dollar amount specified in

8 paragraph (2) for such year, reduced, in the case of

9 calendar years 2000 and 2001, by 1.5 percent of

10 such amount.

11 ‘‘(2) DOLLAR AMOUNT SPECIFIED.—The dollar

12 amount specified in this paragraph is—

13 ‘‘(A) $9,700,000,000 for 2000,

14 ‘‘(B) $9,700,000,000 for 2001, and

15 ‘‘(C) except as provided in subsection (f),

16 zero after 2001.

17 ‘‘(d) 65-PERCENT OF LIMITATION ALLOCATED

18 AMONG STATES.—

19 ‘‘(1) IN GENERAL.—Sixty-five percent of the

20 limitation applicable under subsection (c) for any

21 calendar year shall be allocated among the States

22 under paragraph (2) by the Secretary. The limita23 tion amount allocated to a State under the preceding

24 sentence shall be allocated by the State education

25 agency to issuers within such State and such alloca-
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1 tions may be made only if there is an approved State

2 application.

3 ‘‘(2) ALLOCATION FORMULA.—The amount to

4 be allocated under paragraph (1) for any calendar

5 year shall be allocated among the States in propor6 tion to the respective amounts each such State re7 ceived for Basic Grants under subpart 2 of part A

8 of title I of the Elementary and Secondary Edu9 cation Act of 1965 (20 U.S.C. 6331 et seq.) for the

10 most recent fiscal year ending before such calendar

11 year. For purposes of the preceding sentence, Basic

12 Grants attributable to large local educational agen13 cies (as defined in subsection (e)) shall be dis14 regarded.

15 ‘‘(3) MINIMUM ALLOCATIONS TO STATES.—

16 ‘‘(A) IN GENERAL.—The Secretary shall

17 adjust the allocations under this subsection for

18 any calendar year for each State to the extent

19 necessary to ensure that the sum of—

20 ‘‘(i) the amount allocated to such

21 State under this subsection for such year,

22 and

23 ‘‘(ii) the aggregate amounts allocated

24 under subsection (e) to large local edu-
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1 cational agencies in such State for such

2 year,

3 is not less than an amount equal to such

4 State’s minimum percentage of 65 percent of

5 the national qualified school construction bond

6 limitation under subsection (c) for the calendar

7 year.

8 ‘‘(B) MINIMUM PERCENTAGE.—A State’s

9 minimum percentage for any calendar year is

10 the minimum percentage described in section

11 1124(d) of the Elementary and Secondary Edu12 cation Act of 1965 (20 U.S.C. 6334(d)) for

13 such State for the most recent fiscal year end14 ing before such calendar year.

15 ‘‘(4) ALLOCATIONS TO CERTAIN POSSES16 SIONS.—The amount to be allocated under para17 graph (1) to any possession of the United States

18 other than Puerto Rico shall be the amount which

19 would have been allocated if all allocations under

20 paragraph (1) were made on the basis of respective

21 populations of individuals below the poverty line (as

22 defined by the Office of Management and Budget).

23 In making other allocations, the amount to be allo24 cated under paragraph (1) shall be reduced by the
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1 aggregate amount allocated under this paragraph to

2 possessions of the United States.

3 ‘‘(5) APPROVED STATE APPLICATION.—For

4 purposes of paragraph (1), the term ‘approved State

5 application’ means an application which is approved

6 by the Secretary of Education and which includes—

7 ‘‘(A) the results of a recent publicly-avail8 able survey (undertaken by the State with the

9 involvement of local education officials, mem10 bers of the public, and experts in school con11 struction and management) of such State’s

12 needs for public school facilities, including de13 scriptions of—

14 ‘‘(i) health and safety problems at

15 such facilities,

16 ‘‘(ii) the capacity of public schools in

17 the State to house projected enrollments,

18 and

19 ‘‘(iii) the extent to which the public

20 schools in the State offer the physical in21 frastructure needed to provide a high-qual22 ity education to all students, and

23 ‘‘(B) a description of how the State will al24 locate to local educational agencies, or other25 wise use, its allocation under this subsection to
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1 address the needs identified under subpara2 graph (A), including a description of how it

3 will—

4 ‘‘(i) give highest priority to localities

5 with the greatest needs, as demonstrated

6 by inadequate or overcrowded school facili7 ties coupled with a low level of resources to

8 meet those needs,

9 ‘‘(ii) use its allocation under this sub10 section to assist localities that lack the fis11 cal capacity to issue bonds on their own,

12 including the issuance of bonds by the

13 State on behalf of such localities, and

14 ‘‘(iii) ensure that its allocation under

15 this subsection is used only to supplement,

16 and not supplant, the amount of school

17 construction, rehabilitation, and repair in

18 the State that would have occurred in the

19 absence of such allocation.

20 Any allocation under paragraph (1) by a State edu21 cation agency shall be binding if such agency reason22 ably determined that the allocation was in accord23 ance with the plan approved under this paragraph.

24 ‘‘(e) 35-PERCENT OF LIMITATION ALLOCATED

25 AMONG LARGEST SCHOOL DISTRICTS.—
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1 ‘‘(1) IN GENERAL.—Thirty-five percent of the

2 limitation applicable under subsection (c) for any

3 calendar year shall be allocated under paragraph (2)

4 by the Secretary among local educational agencies

5 which are large local educational agencies for such

6 year. No qualified school construction bond may be

7 issued by reason of an allocation to a large local

8 educational agency under the preceding sentence un9 less such agency has an approved local application.

10 ‘‘(2) ALLOCATION FORMULA.—The amount to

11 be allocated under paragraph (1) for any calendar

12 year shall be allocated among large local educational

13 agencies in proportion to the respective amounts

14 each such agency received for Basic Grants under

15 subpart 2 of part A of title I of the Elementary and

16 Secondary Education Act of 1965 (20 U.S.C. 6331

17 et seq.) for the most recent fiscal year ending before

18 such calendar year.

19 ‘‘(3) LARGE LOCAL EDUCATIONAL AGENCY.—

20 For purposes of this section, the term ‘large local

21 educational agency’ means, with respect to a cal22 endar year, any local educational agency if such

23 agency is—

24 ‘‘(A) among the 100 local educational

25 agencies with the largest numbers of children
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1 aged 5 through 17 from families living below

2 the poverty level, as determined by the Sec3 retary using the most recent data available

4 from the Department of Commerce that are

5 satisfactory to the Secretary, or

6 ‘‘(B) 1 of not more than 25 local edu7 cational agencies (other than those described in

8 clause (i)) that the Secretary of Education de9 termines (based on the most recent data avail10 able satisfactory to the Secretary) are in par11 ticular need of assistance, based on a low level

12 of resources for school construction, a high level

13 of enrollment growth, or such other factors as

14 the Secretary deems appropriate.

15 ‘‘(4) APPROVED LOCAL APPLICATION.—For

16 purposes of paragraph (1), the term ‘approved local

17 application’ means an application which is approved

18 by the Secretary of Education and which includes—

19 ‘‘(A) the results of a recent publicly-avail20 able survey (undertaken by the local educational

21 agency with the involvement of school officials,

22 members of the public, and experts in school

23 construction and management) of such agency’s

24 needs for public school facilities, including de25 scriptions of—
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1 ‘‘(i) the overall condition of the local

2 educational agency’s school facilities, in3 cluding health and safety problems,

4 ‘‘(ii) the capacity of the agency’s

5 schools to house projected enrollments, and

6 ‘‘(iii) the extent to which the agency’s

7 schools offer the physical infrastructure

8 needed to provide a high-quality education

9 to all students,

10 ‘‘(B) a description of how the local edu11 cational agency will use its allocation under this

12 subsection to address the needs identified under

13 subparagraph (A), and

14 ‘‘(C) a description of how the local edu15 cational agency will ensure that its allocation

16 under this subsection is used only to supple17 ment, and not supplant, the amount of school

18 construction, rehabilitation, or repair in the lo19 cality that would have occurred in the absence

20 of such allocation.

21 A rule similar to the rule of the last sentence of sub22 section (d)(5) shall apply for purposes of this para23 graph.

24 ‘‘(f) CARRYOVER OF UNUSED LIMITATION.—If for

25 any calendar year—
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1 ‘‘(1) the amount allocated under subsection (d)

2 to any State, exceeds

3 ‘‘(2) the amount of bonds issued during such

4 year which are designated under subsection (a) pur5 suant to such allocation,

6 the limitation amount under such subsection for such

7 State for the following calendar year shall be increased

8 by the amount of such excess. A similar rule shall apply

9 to the amounts allocated under subsection (e). The sub10 section shall not apply if such following calendar year is

11 after 2003.

12 ‘‘(g) SET-ASIDE ALLOCATED AMONG INDIAN

13 TRIBES.—

14 ‘‘(1) IN GENERAL.—The 1.5 percent set-aside

15 applicable under subsection (c)(1) for any calendar

16 year shall be allocated under paragraph (2) among

17 Indian tribes for the construction, rehabilitation, or

18 repair of tribal schools. No allocation may be made

19 under the preceding sentence unless the Indian tribe

20 has an approved application.

21 ‘‘(2) ALLOCATION FORMULA.—The amount to

22 be allocated under paragraph (1) for any calendar

23 year shall be allocated among Indian tribes on a

24 competitive basis by the Secretary of Interior, in

25 consultation with the Secretary of the Education—
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1 ‘‘(A) through a negotiated rulemaking pro2 cedure with the tribes in the same manner as

3 the procedure described in section 106(b)(2) of

4 the Native American Housing Assistance and

5 Self-Determination Act of 1996 (25 U.S.C.

6 4116(b)(2)), and

7 ‘‘(B) based on criteria described in para8 graphs (1), (3), (4), (5), and (6) of section

9 12005(a) of the Elementary and Secondary

10 Education Act of 1965 (20 U.S.C. 8505(a)).

11 ‘‘(3) APPROVED APPLICATION.—For purposes

12 of paragraph (1), the term ‘approved application’

13 means an application submitted by an Indian tribe

14 which is approved by the Secretary of Education and

15 which includes—

16 ‘‘(A) the basis upon which the applicable

17 tribal school meets the criteria described in

18 paragraph (2)(B), and

19 ‘‘(B) an assurance by the Indian tribe that

20 such tribal school will not receive funds pursu21 ant to allocations described in subsection (d) or

22 (e).

23 ‘‘(4) DEFINITIONS.—For purposes of this

24 subsection—
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1 ‘‘(A) INDIAN TRIBE.—The term ‘Indian

2 tribe’ has the meaning given such term by sec3 tion 45A(c)(6).

4 ‘‘(B) TRIBAL SCHOOL.—The term ‘tribal

5 school’ means a school that is operated by an

6 Indian tribe for the education of Indian chil7 dren with financial assistance under grant

8 under the Tribally Controlled Schools Act of

9 1988 (25 U.S.C. 2501 et seq.) or a contract

10 with the Bureau of Indian Affairs under the In11 dian Self-Determination and Education Assist12 ance Act (25 U.S.C. 450f et seq.).’’

13 (b) REPORTING.—Subsection (d) of section 6049 of

14 the Internal Revenue Code of 1986 (relating to returns

15 regarding payments of interest) is amended by adding at

16 the end the following:

17 ‘‘(8) REPORTING OF CREDIT ON QUALIFIED

18 PUBLIC SCHOOL MODERNIZATION BONDS.—

19 ‘‘(A) IN GENERAL.—For purposes of sub20 section (a), the term ‘interest’ includes amounts

21 includible in gross income under section

22 1397E(f) and such amounts shall be treated as

23 paid on the credit allowance date (as defined in

24 section 1397E(d)(2)).
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1 ‘‘(B) REPORTING TO CORPORATIONS,

2 ETC.—Except as otherwise provided in regula3 tions, in the case of any interest described in

4 subparagraph (A) of this paragraph, subsection

5 (b)(4) of this section shall be applied without

6 regard to subparagraphs (A), (H), (I), (J), (K),

7 and (L)(i).

8 ‘‘(C) REGULATORY AUTHORITY.—The Sec9 retary may prescribe such regulations as are

10 necessary or appropriate to carry out the pur11 poses of this paragraph, including regulations

12 which require more frequent or more detailed

13 reporting.’’

14 (c) CLERICAL AMENDMENTS.—

15 (1) The table of parts for subchapter U of

16 chapter 1 of the Internal Revenue Code of 1986 is

17 amended by striking the item relating to part IV

18 and inserting the following:

‘‘Part IV. Incentives for qualified public school modernization

bonds.’’

19 (2) Part V of subchapter U of chapter 1 of

20 such Code is amended by redesignating both section

21 1397F and the item relating thereto in the table of

22 sections for such part as section 1397H.

23 (d) EFFECTIVE DATES.—
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1 (1) IN GENERAL.—Except as provided in para2 graph (2), the amendments made by this section

3 shall apply to obligations issued after December 31,

4 1998.

5 (2) REPEAL OF RESTRICTION ON ZONE ACAD6 EMY BOND HOLDERS.—The repeal of the limitation

7 of section 1397E of the Internal Revenue Code of

8 1986 (as in effect on the day before the date of en9 actment of this Act) to eligible taxpayers (as defined

10 in subsection (d)(6) of such section) shall apply to

11 obligations issued after December 31, 1997.

12 SEC. 4. SENSE OF THE SENATE REGARDING FUNDING FOR

13 BIA SCHOOL FACILITIES.

14 (a) FINDINGS.—The Senate finds that—

15 (1) the Bureau of Indian Affairs operates 1 of

16 only 2 federally-run school systems; and

17 (2) there is a clear Federal responsibility to en18 sure that the more than 50,000 students attending

19 these schools have decent, safe schools.

20 (b) SENSE OF THE SENATE.—It is the sense of the

21 Senate that—

22 (1) sufficient funds should be provided in fiscal

23 year 2000 to begin construction of 3 new Bureau of

24 Indian Affairs school facilities and to increase funds
28

•S 223 IS

1 available for the improvement and repair of existing

2 facilities; and

3 (2) in addition, Congress should consider enact4 ing legislation to establish other funding mechanisms

5 that would leverage Federal investments on behalf of

6 Bureau of Indian Affairs schools in order to address

7 the serious construction backlog which exists at trib8 al schools.

Æ