I

107TH CONGRESS

1ST SESSION H. R. 1076

To amend the Internal Revenue Code of 1986 to expand the incentives

for the construction and renovation of public schools.

IN THE HOUSE OF REPRESENTATIVES

MARCH 15, 2001

Mrs. JOHNSON of Connecticut (for herself, Mr. RANGEL, Mr. HOUGHTON, Mr.

STARK, Mr. RAMSTAD, Mr. MATSUI, Mr. ENGLISH, Mr. COYNE, Mrs.

MORELLA, Mr. LEVIN, Mr. LEACH, Mr. CARDIN, Mrs. KELLY, Mr.

MCDERMOTT, Mr. GILMAN, Mr. KLECZKA, Mr. BOEHLERT, Mr. LEWIS

of Georgia, Mr. LATOURETTE, Mr. NEAL of Massachusetts, Mr. KING,

Mr. MCNULTY, Ms. ROS-LEHTINEN, Mr. JEFFERSON, Mr. NEY, Mr.

BECERRA, Mr. FERGUSON, Mrs. THURMAN, Mr. HORN, Mr. POMEROY,

Mr. QUINN, Mr. GEPHARDT, Mr. SMITH of New Jersey, Mr. GEORGE

MILLER of California, Mr. MCHUGH, Mr. ETHERIDGE, Mr. WALSH, Mr.

CONYERS, Mr. MOAKLEY, Mr. HOEFFEL, Ms. SCHAKOWSKY, Mrs.

TAUSCHER, Mr. MALONEY of Connecticut, Mr. ENGEL, Ms. DELAURO,

Mr. KILDEE, Mr. BERRY, and Mr. LARSEN of Washington) introduced

the following bill; which was referred to the Committee on Ways and

Means, and in addition to the Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each

case for consideration of such provisions as fall within the jurisdiction of

the committee concerned

A BILL

To amend the Internal Revenue Code of 1986 to expand

the incentives for the construction and renovation of

public schools.

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

2 This Act may be cited as the ‘‘America’s Better

3 Classroom Act of 2001’’.

4 SEC. 2. EXPANSION OF INCENTIVES FOR PUBLIC SCHOOLS.

5 (a) IN GENERAL.—Chapter 1 of the Internal Rev6 enue Code of 1986 is amended by adding at the end the

7 following new subchapter:

8 ‘‘Subchapter Y—Public School Modernization

9 Provisions

‘‘Sec. 1400K. Credit to holders of qualified public school modernization bonds.

‘‘Sec. 1400L. Qualified school construction bonds.

‘‘Sec. 1400M. Qualified zone academy bonds.

10 ‘‘SEC. 1400K. CREDIT TO HOLDERS OF QUALIFIED PUBLIC

11 SCHOOL MODERNIZATION BONDS.

12 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax13 payer who holds a qualified public school modernization

14 bond on a credit allowance date of such bond which occurs

15 during the taxable year, there shall be allowed as a credit

16 against the tax imposed by this chapter for such taxable

17 year an amount equal to the sum of the credits determined

18 under subsection (b) with respect to credit allowance dates

19 during such year on which the taxpayer holds such bond.

20 ‘‘(b) AMOUNT OF CREDIT.—

21 ‘‘(1) IN GENERAL.—The amount of the credit

22 determined under this subsection with respect to any

23 credit allowance date for a qualified public school
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1 modernization bond is 25 percent of the annual

2 credit determined with respect to such bond.

3 ‘‘(2) ANNUAL CREDIT.—The annual credit de4 termined with respect to any qualified public school

5 modernization bond is the product of—

6 ‘‘(A) the applicable credit rate, multiplied

7 by

8 ‘‘(B) the outstanding face amount of the

9 bond.

10 ‘‘(3) APPLICABLE CREDIT RATE.—For purposes

11 of paragraph (1), the applicable credit rate with re12 spect to an issue is the rate equal to an average

13 market yield (as of the day before the date of

14 issuance of the issue) on outstanding long-term cor15 porate debt obligations (determined under regula16 tions prescribed by the Secretary).

17 ‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE18 DEMPTION.—In the case of a bond which is issued

19 during the 3-month period ending on a credit allow20 ance date, the amount of the credit determined

21 under this subsection with respect to such credit al22 lowance date shall be a ratable portion of the credit

23 otherwise determined based on the portion of the 3-

24 month period during which the bond is outstanding.
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1 A similar rule shall apply when the bond is re2 deemed.

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

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

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

6 the excess of—

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

8 (as defined in section 26(b)) plus the tax im9 posed by section 55, over

10 ‘‘(B) the sum of the credits allowable

11 under part IV of subchapter A (other than sub12 part C thereof, relating to refundable credits).

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

14 credit allowable under subsection (a) exceeds the

15 limitation imposed by paragraph (1) for such taxable

16 year, such excess shall be carried to the succeeding

17 taxable year and added to the credit allowable under

18 subsection (a) for such taxable year.

19 ‘‘(d) QUALIFIED PUBLIC SCHOOL MODERNIZATION

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

21 section—

22 ‘‘(1) QUALIFIED PUBLIC SCHOOL MODERNIZA23 TION BOND.—The term ‘qualified public school mod24 ernization bond’ means—

25 ‘‘(A) a qualified zone academy bond, and
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1 ‘‘(B) a qualified school construction bond.

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

3 ‘credit allowance date’ means—

4 ‘‘(A) March 15,

5 ‘‘(B) June 15,

6 ‘‘(C) September 15, and

7 ‘‘(D) December 15.

8 Such term includes the last day on which the bond

9 is outstanding.

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

11 subchapter—

12 ‘‘(1) LOCAL EDUCATIONAL AGENCY.—The term

13 ‘local educational agency’ has the meaning given to

14 such term by section 14101 of the Elementary and

15 Secondary Education Act of 1965. Such term in16 cludes the local educational agency that serves the

17 District of Columbia but does not include any other

18 State agency.

19 ‘‘(2) BOND.—The term ‘bond’ includes any ob20 ligation.

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

22 District of Columbia and any possession of the

23 United States.

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

25 ‘public school facility’ shall not include—
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1 ‘‘(A) any stadium or other facility pri2 marily used for athletic contests or exhibitions

3 or other events for which admission is charged

4 to the general public, or

5 ‘‘(B) any facility which is not owned by a

6 State or local government or any agency or in7 strumentality of a State or local government.

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

9 income includes the amount of the credit allowed to the

10 taxpayer under this section (determined without regard to

11 subsection (c)) and the amount so included shall be treat12 ed as interest income.

13 ‘‘(g) RECAPTURE OF PORTION OF CREDIT WHERE

14 CESSATION OF COMPLIANCE.—

15 ‘‘(1) IN GENERAL.—If any bond which when

16 issued purported to be a qualified public school mod17 ernization bond ceases to be a qualified public school

18 modernization bond, the issuer shall pay to the

19 United States (at the time required by the Sec20 retary) an amount equal to the sum of—

21 ‘‘(A) the aggregate of the credits allowable

22 under this section with respect to such bond

23 (determined without regard to subsection (c))

24 for taxable years ending during the calendar
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1 year in which such cessation occurs and the 2

2 preceding calendar years, and

3 ‘‘(B) interest at the underpayment rate

4 under section 6621 on the amount determined

5 under subparagraph (A) for each calendar year

6 for the period beginning on the first day of

7 such calendar year.

8 ‘‘(2) FAILURE TO PAY.—If the issuer fails to

9 timely pay the amount required by paragraph (1)

10 with respect to such bond, the tax imposed by this

11 chapter on each holder of any such bond which is

12 part of such issue shall be increased (for the taxable

13 year of the holder in which such cessation occurs) by

14 the aggregate decrease in the credits allowed under

15 this section to such holder for taxable years begin16 ning in such 3 calendar years which would have re17 sulted solely from denying any credit under this sec18 tion with respect to such issue for such taxable

19 years.

20 ‘‘(3) SPECIAL RULES.—

21 ‘‘(A) TAX BENEFIT RULE.—The tax for

22 the taxable year shall be increased under para23 graph (2) only with respect to credits allowed

24 by reason of this section which were used to re25 duce tax liability. In the case of credits not so
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1 used to reduce tax liability, the carryforwards

2 and carrybacks under section 39 shall be appro3 priately adjusted.

4 ‘‘(B) NO CREDITS AGAINST TAX.—Any in5 crease in tax under paragraph (2) shall not be

6 treated as a tax imposed by this chapter for

7 purposes of determining—

8 ‘‘(i) the amount of any credit allow9 able under this part, or

10 ‘‘(ii) the amount of the tax imposed

11 by section 55.

12 ‘‘(h) BONDS HELD BY REGULATED INVESTMENT

13 COMPANIES.—If any qualified public school modernization

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

15 determined under subsection (a) shall be allowed to share16 holders of such company under procedures prescribed by

17 the Secretary.

18 ‘‘(i) CREDITS MAY BE STRIPPED.—Under regula19 tions prescribed by the Secretary—

20 ‘‘(1) IN GENERAL.—There may be a separation

21 (including at issuance) of the ownership of a quali22 fied public school modernization bond and the enti23 tlement to the credit under this section with respect

24 to such bond. In case of any such separation, the

25 credit under this section shall be allowed to the per-
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1 son who on the credit allowance date holds the in2 strument evidencing the entitlement to the credit

3 and not to the holder of the bond.

4 ‘‘(2) CERTAIN RULES TO APPLY.—In the case

5 of a separation described in paragraph (1), the rules

6 of section 1286 shall apply to the qualified public

7 school modernization bond as if it were a stripped

8 bond and to the credit under this section as if it

9 were a stripped coupon.

10 ‘‘(j) TREATMENT FOR ESTIMATED TAX PURPOSES.—

11 Solely for purposes of sections 6654 and 6655, the credit

12 allowed by this section to a taxpayer by reason of holding

13 a qualified public school modernization bonds on a credit

14 allowance date shall be treated as if it were a payment

15 of estimated tax made by the taxpayer on such date.

16 ‘‘(k) CREDIT MAY BE TRANSFERRED.—Nothing in

17 any law or rule of law shall be construed to limit the trans18 ferability of the credit allowed by this section through sale

19 and repurchase agreements.

20 ‘‘(l) REPORTING.—Issuers of qualified public school

21 modernization bonds shall submit reports similar to the

22 reports required under section 149(e).

23 ‘‘(m) TERMINATION.—This section shall not apply to

24 any bond issued after September 30, 2006.
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1 ‘‘SEC. 1400L. QUALIFIED SCHOOL CONSTRUCTION BONDS.

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

3 For purposes of this subchapter, the term ‘qualified school

4 construction bond’ means any bond issued as part of an

5 issue if—

6 ‘‘(1) 95 percent or more of the proceeds of such

7 issue are to be used for the construction, rehabilita8 tion, or repair of a public school facility or for the

9 acquisition of land on which such a facility is to be

10 constructed with part of the proceeds of such issue,

11 ‘‘(2) the bond is issued by a State or local gov12 ernment within the jurisdiction of which such school

13 is located,

14 ‘‘(3) the issuer designates such bond for pur15 poses of this section, and

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

17 such issue does not exceed 15 years.

18 ‘‘(b) LIMITATION ON AMOUNT OF BONDS DES19 IGNATED.—The maximum aggregate face amount of

20 bonds issued during any calendar year which may be des21 ignated under subsection (a) by any issuer shall not exceed

22 the sum of—

23 ‘‘(1) the limitation amount allocated under sub24 section (d) for such calendar year to such issuer,

25 and
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1 ‘‘(2) if such issuer is a large local educational

2 agency (as defined in subsection (e)(4)) or is issuing

3 on behalf of such an agency, the limitation amount

4 allocated under subsection (e) for such calendar year

5 to such agency.

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

7 DESIGNATED.—There is a national qualified school con8 struction bond limitation for each calendar year. Such lim9 itation is—

10 ‘‘(1) $11,000,000,000 for 2002,

11 ‘‘(2) $11,000,000,000 for 2003, and

12 ‘‘(3) except as provided in subsection (f), zero

13 after 2003.

14 ‘‘(d) 60 PERCENT OF LIMITATION ALLOCATED

15 AMONG STATES.—

16 ‘‘(1) IN GENERAL.—60 percent of the limitation

17 applicable under subsection (c) for any calendar year

18 shall be allocated by the Secretary among the States

19 in proportion to the respective numbers of children

20 in each State who have attained age 5 but not age

21 18 for the most recent fiscal year ending before such

22 calendar year. The limitation amount allocated to a

23 State under the preceding sentence shall be allocated

24 by the State to issuers within such State.

25 ‘‘(2) MINIMUM ALLOCATIONS TO STATES.—
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1 ‘‘(A) IN GENERAL.—The Secretary shall

2 adjust the allocations under this subsection for

3 any calendar year for each State to the extent

4 necessary to ensure that the sum of—

5 ‘‘(i) the amount allocated to such

6 State under this subsection for such year,

7 and

8 ‘‘(ii) the aggregate amounts allocated

9 under subsection (e) to large local edu10 cational agencies in such State for such

11 year,

12 is not less than an amount equal to such

13 State’s minimum percentage of the amount to

14 be allocated under paragraph (1) for the cal15 endar year.

16 ‘‘(B) MINIMUM PERCENTAGE.—A State’s

17 minimum percentage for any calendar year is

18 the minimum percentage described in section

19 1124(d) of the Elementary and Secondary Edu20 cation Act of 1965 (20 U.S.C. 6334(d)) for

21 such State for the most recent fiscal year end22 ing before such calendar year.

23 ‘‘(3) ALLOCATIONS TO CERTAIN POSSES24 SIONS.—The amount to be allocated under para25 graph (1) to any possession of the United States
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1 other than Puerto Rico shall be the amount which

2 would have been allocated if all allocations under

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

4 populations of individuals below the poverty line (as

5 defined by the Office of Management and Budget).

6 In making other allocations, the amount to be allo7 cated under paragraph (1) shall be reduced by the

8 aggregate amount allocated under this paragraph to

9 possessions of the United States.

10 ‘‘(4) ALLOCATIONS FOR INDIAN SCHOOLS.—In

11 addition to the amounts otherwise allocated under

12 this subsection, $200,000,000 for calendar year

13 2002, and $200,000,000 for calendar year 2003,

14 shall be allocated by the Secretary of the Interior for

15 purposes of the construction, rehabilitation, and re16 pair of schools funded by the Bureau of Indian Af17 fairs. In the case of amounts allocated under the

18 preceding sentence, Indian tribal governments (as

19 defined in section 7871) shall be treated as qualified

20 issuers for purposes of this subchapter.

21 ‘‘(e) 40 PERCENT OF LIMITATION ALLOCATED

22 AMONG LARGEST SCHOOL DISTRICTS.—

23 ‘‘(1) IN GENERAL.—40 percent of the limitation

24 applicable under subsection (c) for any calendar year

25 shall be allocated under paragraph (2) by the Sec-
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1 retary among local educational agencies which are

2 large local educational agencies for such year.

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

4 be allocated under paragraph (1) for any calendar

5 year shall be allocated among large local educational

6 agencies in proportion to the respective amounts

7 each such agency received for Basic Grants under

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

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

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

11 such calendar year.

12 ‘‘(3) ALLOCATION OF UNUSED LIMITATION TO

13 STATE.—The amount allocated under this subsection

14 to a large local educational agency for any calendar

15 year may be reallocated by such agency to the State

16 in which such agency is located for such calendar

17 year. Any amount reallocated to a State under the

18 preceding sentence may be allocated as provided in

19 subsection (d)(1).

20 ‘‘(4) LARGE LOCAL EDUCATIONAL AGENCY.—

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

22 educational agency’ means, with respect to a cal23 endar year, any local educational agency if such

24 agency is—
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1 ‘‘(A) among the 100 local educational

2 agencies with the largest numbers of children

3 aged 5 through 17 from families living below

4 the poverty level, as determined by the Sec5 retary using the most recent data available

6 from the Department of Commerce that are

7 satisfactory to the Secretary, or

8 ‘‘(B) 1 of not more than 25 local edu9 cational agencies (other than those described in

10 subparagraph (A)) that the Secretary of Edu11 cation determines (based on the most recent

12 data available satisfactory to the Secretary) are

13 in particular need of assistance, based on a low

14 level of resources for school construction, a high

15 level of enrollment growth, or such other factors

16 as the Secretary deems appropriate.

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

18 any calendar year—

19 ‘‘(1) the amount allocated under subsection (d)

20 to any State, exceeds

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

22 year which are designated under subsection (a) pur23 suant to such allocation,

24 the limitation amount under such subsection for such

25 State for the following calendar year shall be increased
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1 by the amount of such excess. A similar rule shall apply

2 to the amounts allocated under subsection (d)(4) or (e).

3 ‘‘(g) SPECIAL RULES RELATING TO ARBITRAGE.—

4 ‘‘(1) IN GENERAL.—A bond shall not be treated

5 as failing to meet the requirement of subsection

6 (a)(1) solely by reason of the fact that the proceeds

7 of the issue of which such bond is a part are in8 vested for a temporary period (but not more than 36

9 months) until such proceeds are needed for the pur10 pose for which such issue was issued.

11 ‘‘(2) BINDING COMMITMENT REQUIREMENT.—

12 Paragraph (1) shall apply to an issue only if, as of

13 the date of issuance, there is a reasonable expecta14 tion that—

15 ‘‘(A) at least 10 percent of the proceeds of

16 the issue will be spent within the 6-month pe17 riod beginning on such date for the purpose for

18 which such issue was issued, and

19 ‘‘(B) the remaining proceeds of the issue

20 will be spent with due diligence for such pur21 pose.

22 ‘‘(3) EARNINGS ON PROCEEDS.—Any earnings

23 on proceeds during the temporary period shall be

24 treated as proceeds of the issue for purposes of ap-
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1 plying subsection (a)(1) and paragraph (1) of this

2 subsection.

3 ‘‘SEC. 1400M. QUALIFIED ZONE ACADEMY BONDS.

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

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 Rules similar to the rules of section 1400L(g) shall

4 apply for purposes of paragraph (1).

5 ‘‘(2) PRIVATE BUSINESS CONTRIBUTION RE6 QUIREMENT.—

7 ‘‘(A) IN GENERAL.—For purposes of para8 graph (1), the private business contribution re9 quirement of this paragraph is met with respect

10 to any issue if the local educational agency that

11 established the qualified zone academy has writ12 ten commitments from private entities to make

13 qualified contributions having a present value

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

15 less than 10 percent of the proceeds of the

16 issue.

17 ‘‘(B) QUALIFIED CONTRIBUTIONS.—For

18 purposes of subparagraph (A), the term ‘quali19 fied contribution’ means any contribution (of a

20 type and quality acceptable to the local edu21 cational agency) of—

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

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

24 technology and vocational equipment),
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1 ‘‘(ii) technical assistance in developing

2 curriculum or in training teachers in order

3 to promote appropriate market driven tech4 nology in the classroom,

5 ‘‘(iii) services of employees as volun6 teer mentors,

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

8 educational opportunities outside the acad9 emy for students, or

10 ‘‘(v) any other property or service

11 specified by the local educational agency.

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

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

14 academic program within a public school) which is

15 established by and operated under the supervision of

16 a local educational agency to provide education or

17 training below the postsecondary level if—

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

19 case may be) is designed in cooperation with

20 business to enhance the academic curriculum,

21 increase graduation and employment rates, and

22 better prepare students for the rigors of college

23 and the increasingly complex workforce,

24 ‘‘(B) students in such public school or pro25 gram (as the case may be) will be subject to the
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1 same academic standards and assessments as

2 other students educated by the local educational

3 agency,

4 ‘‘(C) the comprehensive education plan of

5 such public school or program is approved by

6 the local educational agency, and

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

8 empowerment zone or enterprise community

9 (including any such zone or community des10 ignated after the date of the enactment of this

11 section), or

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

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

14 least 35 percent of the students attending such

15 school or participating in such program (as the

16 case may be) will be eligible for free or reduced17 cost lunches under the school lunch program es18 tablished under the National School Lunch Act.

19 ‘‘(4) QUALIFIED PURPOSE.—The term ‘quali20 fied purpose’ means, with respect to any qualified

21 zone academy—

22 ‘‘(A) constructing, rehabilitating, or repair23 ing the public school facility in which the acad24 emy is established,
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1 ‘‘(B) acquiring the land on which such fa2 cility is to be constructed with part of the pro3 ceeds of such issue,

4 ‘‘(C) providing equipment for use at such

5 academy,

6 ‘‘(D) developing course materials for edu7 cation to be provided at such academy, and

8 ‘‘(E) training teachers and other school

9 personnel in such academy.

10 ‘‘(b) LIMITATIONS ON AMOUNT OF BONDS DES11 IGNATED.—

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

13 academy bond limitation for each calendar year.

14 Such limitation is—

15 ‘‘(A) $400,000,000 for 1998,

16 ‘‘(B) $400,000,000 for 1999,

17 ‘‘(C) $400,000,000 for 2000,

18 ‘‘(D) $400,000,000 for 2001,

19 ‘‘(E) $1,400,000,000 for 2002,

20 ‘‘(F) $1,400,000,000 for 2003, and

21 ‘‘(G) except as provided in paragraph (3),

22 zero after 2003.

23 ‘‘(2) ALLOCATION OF LIMITATION.—

24 ‘‘(A) ALLOCATION AMONG STATES.—
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1 ‘‘(i) 1998, 1999, 2000, AND 2001 LIMI2 TATIONS.—The national zone academy

3 bond limitations for calendar years 1998,

4 1999, 2000, and 2001 shall be allocated by

5 the Secretary among the States on the

6 basis of their respective populations of in7 dividuals below the poverty line (as defined

8 by the Office of Management and Budget).

9 ‘‘(ii) LIMITATION AFTER 2001.—The

10 national zone academy bond limitation for

11 any calendar year after 2001 shall be allo12 cated by the Secretary among the States in

13 proportion to the respective amounts each

14 such State received for Basic Grants under

15 subpart 2 of part A of title I of the Ele16 mentary and Secondary Education Act of

17 1965 (20 U.S.C. 6331 et seq.) for the

18 most recent fiscal year ending before such

19 calendar year.

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 to qualified zone

24 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) (or the corresponding provisions of

16 prior law) with respect to qualified zone acad17 emies within such State,

18 the limitation amount under this subsection for such

19 State for the following calendar year shall be in20 creased by the amount of such excess.’’

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

22 such Code (relating to returns regarding payments of in23 terest) is amended by adding at the end the following new

24 paragraph:
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1 ‘‘(8) REPORTING OF CREDIT ON QUALIFIED

2 PUBLIC SCHOOL MODERNIZATION BONDS.—

3 ‘‘(A) IN GENERAL.—For purposes of sub4 section (a), the term ‘interest’ includes amounts

5 includible in gross income under section

6 1400K(f) and such amounts shall be treated as

7 paid on the credit allowance date (as defined in

8 section 1400K(d)(2)).

9 ‘‘(B) REPORTING TO CORPORATIONS,

10 ETC.—Except as otherwise provided in regula11 tions, in the case of any interest described in

12 subparagraph (A) of this paragraph, subsection

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

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

15 and (L)(i).

16 ‘‘(C) REGULATORY AUTHORITY.—The Sec17 retary may prescribe such regulations as are

18 necessary or appropriate to carry out the pur19 poses of this paragraph, including regulations

20 which require more frequent or more detailed

21 reporting.’’

22 (c) CONFORMING AMENDMENTS.—

23 (1) Subchapter U of chapter 1 of such Code is

24 amended by striking part IV, by redesignating part
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1 V as part IV, and by redesignating section 1397F

2 as section 1397E.

3 (2) The table of subchapters for chapter 1 of

4 such Code is amended by adding at the end the fol5 lowing new item:

‘‘Subchapter Y. Public school modernization provisions.’’

6 (3) The table of parts of subchapter U of chap7 ter 1 of such Code is amended by striking the last

8 2 items and inserting the following item:

‘‘Part IV. Regulations.’’

9 (d) EFFECTIVE DATES.—

10 (1) IN GENERAL.—Except as otherwise pro11 vided in this subsection, the amendments made by

12 this section shall apply to obligations issued after

13 December 31, 2001.

14 (2) REPEAL OF RESTRICTION ON ZONE ACAD15 EMY BOND HOLDERS.—In the case of bonds to

16 which section 1397E of the Internal Revenue Code

17 of 1986 (as in effect before the date of the enact18 ment of this Act) applies, the limitation of such sec19 tion to eligible taxpayers (as defined in subsection

20 (d)(6) of such section) shall not apply after the date

21 of the enactment of this Act.
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1 SEC. 3. APPLICATION OF CERTAIN LABOR STANDARDS ON

2 CONSTRUCTION PROJECTS FINANCED

3 UNDER PUBLIC SCHOOL MODERNIZATION

4 PROGRAM.

5 Section 439 of the General Education Provisions Act

6 (relating to labor standards) is amended—

7 (1) by inserting ‘‘(a)’’ before ‘‘All laborers and

8 mechanics’’, and

9 (2) by adding at the end the following:

10 ‘‘(b)(1) For purposes of this section, the term ‘appli11 cable program’ also includes the qualified zone academy

12 bond provisions enacted by section 226 of the Taxpayer

13 Relief Act of 1997 and the program established by section

14 2 of the America’s Better Classroom Act of 2001.

15 ‘‘(2) A State or local government participating in a

16 program described in paragraph (1) shall—

17 ‘‘(A) in the awarding of contracts, give priority

18 to contractors with substantial numbers of employ19 ees residing in the local education area to be served

20 by the school being constructed; and

21 ‘‘(B) include in the construction contract for

22 such school a requirement that the contractor give

23 priority in hiring new workers to individuals residing

24 in such local education area.

25 ‘‘(3) In the case of a program described in paragraph

26 (1), nothing in this subsection or subsection (a) shall be
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1 construed to deny any tax credit allowed under such pro2 gram. If amounts are required to be withheld from con3 tractors to pay wages to which workers are entitled, such

4 amounts shall be treated as expended for construction pur5 poses in determining whether the requirements of such

6 program are met.’’.

7 SEC. 4. EMPLOYMENT AND TRAINING ACTIVITIES RELAT8 ING TO CONSTRUCTION OR RECONSTRUC9 TION OF PUBLIC SCHOOL FACILITIES.

10 (a) IN GENERAL.—Section 134 of the Workforce In11 vestment Act of 1998 (29 U.S.C. 2864) is amended by

12 adding at the end the following:

13 ‘‘(f) LOCAL EMPLOYMENT AND TRAINING ACTIVI14 TIES RELATING TO CONSTRUCTION OR RECONSTRUCTION

15 OF PUBLIC SCHOOL FACILITIES.—

16 ‘‘(1) IN GENERAL.—In order to provide training

17 services related to construction or reconstruction of

18 public school facilities receiving funding assistance

19 under an applicable program, each State shall estab20 lish a specialized program of training meeting the

21 following requirements:

22 ‘‘(A) The specialized program provides

23 training for jobs in the construction industry.

24 ‘‘(B) The program provides trained work25 ers for projects for the construction or recon-
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1 struction of public school facilities receiving

2 funding assistance under an applicable pro3 gram.

4 ‘‘(C) The program ensures that skilled

5 workers (residing in the area to be served by

6 the school facilities) will be available for the

7 construction or reconstruction work.

8 ‘‘(2) COORDINATION.—The specialized program

9 established under paragraph (1) shall be integrated

10 with other activities under this Act, with the activi11 ties carried out under the National Apprenticeship

12 Act of 1937 by the State Apprenticeship Council or

13 through the Bureau of Apprenticeship and Training

14 in the Department of Labor, as appropriate, and

15 with activities carried out under the Carl D. Perkins

16 Vocational and Technical Education Act of 1998.

17 Nothing in this subsection shall be construed to re18 quire services duplicative of those referred to in the

19 preceding sentence.

20 ‘‘(3) APPLICABLE PROGRAM.—In this sub21 section, the term ‘applicable program’ has the mean22 ing given the term in section 439(b) of the General

23 Education Provisions Act (relating to labor stand24 ards).’’.
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1 (b) STATE PLAN.—Section 112(b)(17)(A) of the

2 Workforce Investment Act of 1998 (29 U.S.C.

3 2822(b)(17)(A)) is amended—

4 (1) in clause (iii), by striking ‘‘and’’ at the end;

5 (2) by redesignating clause (iv) as clause (v);

6 and

7 (3) by inserting after clause (iii) the following:

8 ‘‘(iv) how the State will establish and

9 carry out a specialized program of training

10 under section 134(f); and’’.

Æ