The school modernization bonds in the America's Better Classrooms Act provide a federal tax credit in lieu of interest. The responsibility for the bond principal is with the states and local communities. At the same time, all decision-making prerogatives related to the actual school renovation and construction remains a local community decision. The federal government provides an interest subsidy while leaving the decisions about the construction of the schools at the local level. The Johnson Rangel bill allocates the credits to the states through the Treasury Department.
States then make sub-allocations to school districts.
That is the extent of the federal involvement. Decisions about where to build, how to build and what to build are made at the local level. The President has proposed private activity bonds as a means to address the nation's school facility problems. We appreciate that this proposal recognizes the need for federal support for local school districts. Private activity bonds, which require the participation of a developer, can be used by some school districts.