I 

108TH CONGRESS 

1ST SESSION H. R. 717

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 

FEBRUARY 12, 2003

Mr. RANGEL 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,

3 SECTION 1. SHORT TITLE. 

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

5 Classroom Act of 2003’’. 
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1 SEC. 2. EXPANSION OF INCENTIVES FOR PUBLIC SCHOOLS. 

2 (a) IN GENERAL.—Chapter 1 of the Internal Rev3 enue Code of 1986 is amended by adding at the end the 

4 following new subchapter: 

5 ‘‘Subchapter Z—Public School Modernization 

6 Provisions

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

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

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

7 ‘‘SEC. 1400N. CREDIT TO HOLDERS OF QUALIFIED PUBLIC 

8 SCHOOL MODERNIZATION BONDS. 

9 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax10 payer who holds a qualified public school modernization 

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

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

13 against the tax imposed by this chapter for such taxable 

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

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

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

17 ‘‘(b) AMOUNT OF CREDIT.—

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

19 determined under this subsection with respect to any 

20 credit allowance date for a qualified public school 

21 modernization bond is 25 percent of the annual 

22 credit determined with respect to such bond. 
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1 ‘‘(2) ANNUAL CREDIT.—The annual credit de2 termined with respect to any qualified public school 

3 modernization bond is the product of—

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

5 by 

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

7 bond. 

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

9 of paragraph (1), the applicable credit rate with re10 spect to an issue is the rate equal to an average 

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

12 issuance of the issue) on outstanding long-term cor13 porate debt obligations (determined under regula14 tions prescribed by the Secretary). 

15 ‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE16 DEMPTION.—In the case of a bond which is issued 

17 during the 3-month period ending on a credit allow18 ance date, the amount of the credit determined 

19 under this subsection with respect to such credit al20 lowance date shall be a ratable portion of the credit 

21 otherwise determined based on the portion of the 3-

22 month period during which the bond is outstanding. 

23 A similar rule shall apply when the bond is re24 deemed. 

25 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—
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1 ‘‘(1) IN GENERAL.—The credit allowed under 

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

3 the excess of—

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

5 (as defined in section 26(b)) plus the tax im6 posed by section 55, over 

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

8 under part IV of subchapter A (other than sub9 part C thereof, relating to refundable credits). 

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

11 credit allowable under subsection (a) exceeds the 

12 limitation imposed by paragraph (1) for such taxable 

13 year, such excess shall be carried to the succeeding 

14 taxable year and added to the credit allowable under 

15 subsection (a) for such taxable year. 

16 ‘‘(d) QUALIFIED PUBLIC SCHOOL MODERNIZATION

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

18 section—

19 ‘‘(1) QUALIFIED PUBLIC SCHOOL MODERNIZA20 TION BOND.—The term ‘qualified public school mod21 ernization bond’ means—

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

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

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

25 ‘credit allowance date’ means—
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1 ‘‘(A) March 15, 

2 ‘‘(B) June 15, 

3 ‘‘(C) September 15, and 

4 ‘‘(D) December 15. 

5 Such term includes the last day on which the bond 

6 is outstanding. 

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

8 subchapter— 

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

10 ‘local educational agency’ has the meaning given to 

11 such term by section 14101 of the Elementary and 

12 Secondary Education Act of 1965. Such term in13 cludes the local educational agency that serves the 

14 District of Columbia but does not include any other 

15 State agency. 

16 ‘‘(2) BOND.—The term ‘bond’ includes any ob17 ligation. 

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

19 District of Columbia and any possession of the 

20 United States. 

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

22 ‘public school facility’ shall not include—

23 ‘‘(A) any stadium or other facility pri24 marily used for athletic contests or exhibitions
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1 or other events for which admission is charged 

2 to the general public, or 

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

4 State or local government or any agency or in5 strumentality of a State or local government. 

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

7 income includes the amount of the credit allowed to the 

8 taxpayer under this section (determined without regard to 

9 subsection (c)) and the amount so included shall be treat10 ed as interest income. 

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

12 CESSATION OF COMPLIANCE.—

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

14 issued purported to be a qualified public school mod15 ernization bond ceases to be a qualified public school 

16 modernization bond, the issuer shall pay to the 

17 United States (at the time required by the Sec18 retary) an amount equal to the sum of—

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

20 under this section with respect to such bond 

21 (determined without regard to subsection (c)) 

22 for taxable years ending during the calendar 

23 year in which such cessation occurs and the 2 

24 preceding calendar years, and 
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1 ‘‘(B) interest at the underpayment rate 

2 under section 6621 on the amount determined 

3 under subparagraph (A) for each calendar year 

4 for the period beginning on the first day of 

5 such calendar year. 

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

7 timely pay the amount required by paragraph (1) 

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

9 chapter on each holder of any such bond which is 

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

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

12 the aggregate decrease in the credits allowed under 

13 this section to such holder for taxable years begin14 ning in such 3 calendar years which would have re15 sulted solely from denying any credit under this sec16 tion with respect to such issue for such taxable 

17 years. 

18 ‘‘(3) SPECIAL RULES.—

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

20 the taxable year shall be increased under para21 graph (2) only with respect to credits allowed 

22 by reason of this section which were used to re23 duce tax liability. In the case of credits not so 

24 used to reduce tax liability, the carryforwards 
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1 and carrybacks under section 39 shall be appro2 priately adjusted. 

3 ‘‘(B) NO CREDITS AGAINST TAX.—Any in4 crease in tax under paragraph (2) shall not be 

5 treated as a tax imposed by this chapter for 

6 purposes of determining—

7 ‘‘(i) the amount of any credit allow8 able under this part, or 

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

10 by section 55. 

11 ‘‘(h) BONDS HELD BY REGULATED INVESTMENT

12 COMPANIES.—If any qualified public school modernization 

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

14 determined under subsection (a) shall be allowed to share15 holders of such company under procedures prescribed by 

16 the Secretary. 

17 ‘‘(i) CREDITS MAY BE STRIPPED.—Under regula18 tions prescribed by the Secretary— 

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

20 (including at issuance) of the ownership of a quali21 fied public school modernization bond and the enti22 tlement to the credit under this section with respect 

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

24 credit under this section shall be allowed to the per25 son who on the credit allowance date holds the in-
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1 strument evidencing the entitlement to the credit 

2 and not to the holder of the bond. 

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

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

5 of section 1286 shall apply to the qualified public 

6 school modernization bond as if it were a stripped 

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

8 were a stripped coupon. 

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

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

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

12 a qualified public school modernization bond on a credit 

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

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

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

16 any law or rule of law shall be construed to limit the trans17 ferability of the credit allowed by this section through sale 

18 and repurchase agreements. 

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

20 modernization bonds shall submit reports similar to the 

21 reports required under section 149(e). 

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

23 any bond issued after September 30, 2008.
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1 ‘‘SEC. 1400O. 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 2004, 

11 ‘‘(2) $11,000,000,000 for 2005, and 

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

13 after 2005. 

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 2004, and $200,000,000 for calendar year 2005, 

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. 1400P. 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 1400O(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) $400,000,000 for 2002, 

20 ‘‘(F) $400,000,000 for 2003, 

21 ‘‘(G) $1,400,000,000 for 2004, 

22 ‘‘(H) $1,400,000,000 for 2005, and 

23 ‘‘(I) except as provided in paragraph (3), 

24 zero after 2005. 

25 ‘‘(2) ALLOCATION OF LIMITATION.—
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1 ‘‘(A) ALLOCATION AMONG STATES.—

2 ‘‘(i) PRE-2004 LIMITATIONS.—The na3 tional zone academy bond limitations for 

4 calendar years before 2004 shall be allo5 cated by the Secretary among the States 

6 on the basis of their respective populations 

7 of individuals below the poverty line (as de8 fined by the Office of Management and 

9 Budget). 

10 ‘‘(ii) LIMITATION AFTER 2003.—The 

11 national zone academy bond limitation for 

12 any calendar year after 2003 shall be allo13 cated by the Secretary among the States in 

14 proportion to the respective amounts each 

15 such State received for Basic Grants under 

16 subpart 2 of part A of title I of the Ele17 mentary and Secondary Education Act of 

18 1965 (20 U.S.C. 6331 et seq.) for the 

19 most recent fiscal year ending before such 

20 calendar year. 

21 ‘‘(B) ALLOCATION TO LOCAL EDU22 CATIONAL AGENCIES.—The limitation amount 

23 allocated to a State under subparagraph (A) 

24 shall be allocated by the State to qualified zone 

25 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 1400N(f) and such amounts shall be treated as 

7 paid on the credit allowance date (as defined in 

8 section 1400N(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 Z. 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, 2003. 

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 2003. 

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