‘‘(c) QUALIFIED REVITALIZATION BUILDINGS AND
EXPENDITURES.—For purposes of this section—
‘‘(1) QUALIFIED REVITALIZATION BUILDING.—
The term ‘qualified revitalization building’ means
any building (and its structural components) if—
‘‘(A) such building is located in a renewal
community and is placed in service after the
designation of such renewal community under
section 1400,
‘‘(B) a commercial revitalization credit
amount is allocated to the building under sub-
section (e), and
‘‘(C) depreciation (or amortization in lieu
of depreciation) is allowable with respect to the
building.
‘‘(2) QUALIFIED
REVITALIZATION
EXPENDI-
TURE.—
‘‘(A) IN
GENERAL.—The term ‘qualified
revitalization expenditure’ means any amount
properly chargeable to capital account—
‘‘(i) for property for which deprecia-
tion is allowable under section 168 and
which is—
‘‘(I) nonresidential real property,
or
‘‘(II) an addition or improvement
to property described in subclause (I),
‘‘(ii) in connection with the construc-
tion or substantial rehabilitation or recon-
struction of a qualified revitalization build-
ing, or
‘‘(iii) for the acquisition of land in
connection with the qualified revitalization
building.
‘‘(B) DOLLAR
LIMITATION.—The aggre-
gate amount which may be treated as qualified
revitalization expenditures with respect to any
qualified revitalization building for any taxable
year shall not exceed the excess of—
‘‘(i) $10,000,000, reduced by
‘‘(ii) any such expenditures with re-
spect to the building taken into account by
the taxpayer or any predecessor in deter-
mining the amount of the credit under this
section for all preceding taxable years.
‘‘(C) CERTAIN
EXPENDITURES
NOT
IN-
CLUDED.—The term ‘qualified revitalization ex-
penditure’ does not include—
‘‘(i) STRAIGHT
LINE
DEPRECIATION
MUST BE USED.—Any expenditure (other
than with respect to land acquisitions) with
respect to which the taxpayer does not use
the straight line method over a recovery
period determined under subsection (c) or
(g) of section 168. The preceding sentence
shall not apply to any expenditure to the
extent the alternative depreciation system
of section 168(g) applies to such expendi-
ture by reason of subparagraph (B) or (C)
of section 168(g)(1).
‘‘(ii) ACQUISITION COSTS.—The costs
of acquiring any building or interest there-
in and any land in connection with such
building to the extent that such costs ex-
ceed 30 percent of the qualified revitaliza-
tion expenditures determined without re-
gard to this clause.
‘‘(iii) OTHER CREDITS.—Any expendi-
ture which the taxpayer may take into ac-
count in computing any other credit allow-
able under this title unless the taxpayer
elects to take the expenditure into account
only for purposes of this section.
‘‘(5) SUBSTANTIAL
REHABILITATION
OR
RE-
CONSTRUCTION.—For purposes of this subsection, a
rehabilitation or reconstruction shall be treated as a
substantial rehabilitation or reconstruction only if
the qualified revitalization expenditures in connec-
tion with the rehabilitation or reconstruction exceed
25 percent of the fair market value of the building
(and its structural components) immediately before
the rehabilitation or reconstruction.
‘‘(d) WHEN
EXPENDITURES
TAKEN
INTO
AC-
COUNT.—
‘‘(1) IN GENERAL.—Qualified revitalization ex-
penditures with respect to any qualified revitaliza-
tion building shall be taken into account for the tax-
able year in which the qualified revitalization build-
ing is placed in service. For purposes of the preced-
ing sentence, a substantial rehabilitation or recon-
struction of a building shall be treated as a separate
building.
‘‘(2) PROGRESS
EXPENDITURE
PAYMENTS.—
Rules similar to the rules of subsections (b)(2) and
(d) of section 47 shall apply for purposes of this sec-
tion.
‘‘(e) LIMITATION ON AGGREGATE CREDITS ALLOW-
ABLE WITH RESPECT
TO BUILDINGS LOCATED
IN
A
STATE.—
‘‘(1) IN GENERAL.—The amount of the credit
determined under this section for any taxable year
with respect to any building shall not exceed the
commercial revitalization credit amount (in the case
of 
an 
amount 
determined 
under 
subsection
(b)(1)(B), the present value of such amount as de-
termined under the rules of section 42(b)(2)(C)) al-
located to such building under this subsection by the
commercial revitalization credit agency. Such alloca-
tion shall be made at the same time and in the same
manner as under paragraphs (1) and (7) of section
42(h).
‘‘(2) COMMERCIAL
REVITALIZATION
CREDIT
AMOUNT FOR AGENCIES.—
‘‘(A) IN GENERAL.—The aggregate com-
mercial revitalization credit amount which a
commercial revitalization credit agency may al-
locate for any calendar year is the amount of
the State commercial revitalization credit ceil-
ing determined under this paragraph for such
calendar year for such agency.
‘‘(B) STATE COMMERCIAL REVITALIZATION
CREDIT CEILING.—
‘‘(i) IN
GENERAL.—The State com-
mercial revitalization credit ceiling applica-
ble to any State for any calendar year is
$2,000,000 for each renewal community in
the State.
‘‘(ii) SPECIAL RULE WHERE COMMU-
NITY LOCATED IN MORE THAN 1 STATE.—
If a renewal community is located in more
than 1 State, a State’s share of the
amount specified in clause (i) with respect
to such community shall be an amount
that bears the same ratio to $2,000,000 as
the population in the State bears to the
population in all States in which such com-
munity is located.
‘‘(iii) OTHER SPECIAL RULES.—Rules
similar to the rules of subparagraphs (D),
(E), (F), and (G) of section 42(h)(3) shall
apply for purposes of this subsection.
‘‘(C) COMMERCIAL REVITALIZATION CRED-
IT AGENCY.—For purposes of this section, the
term ‘commercial revitalization credit agency’
means any agency authorized by a State to
carry out this section.
‘‘(f) RESPONSIBILITIES OF COMMERCIAL REVITAL-
IZATION CREDIT AGENCIES.—
‘‘(1) PLANS FOR ALLOCATION.—Notwithstand-
ing any other provision of this section, the commer-
cial revitalization credit amount with respect to any
building shall be zero unless—
‘‘(A) such amount was allocated pursuant
to a qualified allocation plan of the commercial
revitalization credit agency which is approved
(in accordance with rules similar to the rules of
section 147(f)(2) (other than subparagraph
(B)(ii) thereof)) by the governmental unit of
which such agency is a part, and
‘‘(B) such agency notifies the chief execu-
tive officer (or its equivalent) of the local juris-
diction within which the building is located of
such allocation and provides such individual a
reasonable opportunity to comment on the allo-
cation.
‘‘(2) QUALIFIED ALLOCATION PLAN.—For pur-
poses of this subsection, the term ‘qualified alloca-
tion plan’ means any plan—
‘‘(A) which sets forth selection criteria to
be used to determine priorities of the commer-
cial revitalization credit agency which are ap-
propriate to local conditions,
‘‘(B) which considers—
‘‘(i) the degree to which a project con-
tributes to the implementation of a strate-
gic plan that is devised for a renewal com-
munity through a citizen participation
process,
‘‘(ii) the amount of any increase in
permanent, full-time employment by reason
of any project, and
‘‘(iii) the active involvement of resi-
dents and nonprofit groups within the re-
newal community, and
‘‘(C) which provides a procedure that the
agency (or its agent) will follow in monitoring
compliance with this section.
‘‘(g) TERMINATION.—This section shall not apply to
any building placed in service after December 31, 2002.
‘‘SEC. 1400G. INCREASE IN EXPENSING UNDER SECTION 179.
‘‘(a) GENERAL RULE.—In the case of a renewal com-
munity business (as defined in section 1400B), for pur-
poses of section 179—
‘‘(1) the limitation under section 179(b)(1)
shall be increased by the lesser of—
‘‘(A) $35,000, or
‘‘(B) the cost of section 179 property
which is qualified renewal property placed in
service during the taxable year, and
‘‘(2) the amount taken into account under sec-
tion 179(b)(2) with respect to any section 179 prop-
erty which is qualified renewal property shall be 50
percent of the cost thereof.
‘‘(b) RECAPTURE.—Rules similar to the rules under
section 179(d)(10) shall apply with respect to any quali-
fied renewal property which ceases to be used in a renewal
community by a renewal community business.
‘‘(c) QUALIFIED RENEWAL PROPERTY.—
‘‘(1) GENERAL
RULE.—For purposes of this
section—
‘‘(A) IN
GENERAL.—The term ‘qualified
renewal property’ means any property to which
section 168 applies (or would apply but for sec-
tion 179) if—
‘‘(i) such property was acquired by
the taxpayer by purchase (as defined in
section 179(d)(2)) after the date on which
the designation of the renewal community
took effect,
‘‘(ii) the original use of which in a re-
newal community commences with the tax-
payer, and
‘‘(iii) substantially all of the use of
which is in a renewal community and is in
the active conduct of a qualified business
(as defined in section 1400B(d)) by the
taxpayer in such renewal community.
‘‘(B) SPECIAL
RULE
FOR
SUBSTANTIAL
RENOVATIONS.—In the case of any property
which is substantially renovated by the tax-
payer, the requirements of clauses (i) and (ii)
of subparagraph (A) shall be treated as satis-
fied. For purposes of the preceding sentence,
property shall be treated as substantially ren-
ovated by the taxpayer only if, during any 24-
month period beginning after the date on which
the designation of the renewal community took
effect, additions to basis with respect to such
property in the hands of the taxpayer exceed
the greater of (i) an amount equal to the ad-
justed basis at the beginning of such 24-month
period in the hands of the taxpayer, or (ii)
$5,000.
‘‘(2) SPECIAL RULES FOR SALE-LEASEBACKS.—
For purposes of paragraph (1)(A)(ii), if property is
sold and leased back by the taxpayer within 3
months after the date such property was originally
placed in service, such property shall be treated as
originally placed in service not earlier than the date
on which such property is used under the leaseback.
‘‘SEC. 1400H. EXPENSING OF RENEWAL COMMUNITY ENVI-
RONMENTAL REMEDIATION COSTS.
‘‘(a) TREATMENT AS EXPENSE.—A taxpayer may
elect to treat any renewal community environmental reme-
diation cost as an expense which is not chargeable to cap-
ital account. Any cost so treated shall be allowable as a
deduction for the taxable year in which the cost is paid
or incurred.
‘‘(b) RENEWAL COMMUNITY ENVIRONMENTAL RE-
MEDIATION COST.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘renewal commu-
nity environmental remediation cost’ means any cost
which—
‘‘(A) is chargeable to capital account (de-
termined without regard to this section),
‘‘(B) is paid or incurred in connection with
the abatement or control of environmental con-
taminants at a site located within a renewal
community, and
‘‘(C) is certified by the applicable Federal
or State authority as being required by, and in
compliance with, applicable Federal and State
laws governing abatement and control of envi-
ronmental contaminants.
‘‘(2) EXCEPTIONS.—Such term shall not in-
clude any amount paid or incurred—
‘‘(A) for equipment which is used in the
environmental remediation and which is of a
character subject to an allowance for deprecia-
tion or amortization, or
‘‘(B) in connection with a site which is on
the national priorities list under section
105(a)(8)(B) of the Comprehensive Environ-
mental Response, Compensation, and Liability
Act of 1980 (42 U.S.C. 9605(a)(8)(B)).
‘‘(c) SPECIAL RULES.—For purposes of this sec-
tion—
‘‘(1) LIMITATION
BASED
ON
INCOME
FROM
TRADE OR BUSINESS.—The amount allowed as a de-
duction under subsection (a) for any taxable year
shall not exceed the aggregate amount of taxable in-
come of the taxpayer for such taxable year which is
derived from the active conduct by the taxpayer of
any trade or business during such taxable year. For
purposes of this paragraph, rules similar to the rules
of subparagraphs (B) and (C) of section 179(b)(3)
shall apply. In the case of a partnership, S corpora-
tion, trust or other pass thru entity, this paragraph
shall be applied at both the entity and owner levels.
‘‘(2) RECAPTURE RULES.—
‘‘(A) PROPERTY NOT USED IN TRADE OR
BUSINESS.—The Secretary shall, by regulations,
provide for recapturing the benefit of any de-
duction allowable under subsection (a) with re-
spect to any property not used predominantly in
a trade or business at any time.
‘‘(B) TREATMENT OF GAIN AS ORDINARY
INCOME.—For purposes of section 1245—
‘‘(i) the deduction allowable under
subsection (a) shall be treated as a deduc-
tion allowable to the taxpayer for deprecia-
tion or amortization; and
‘‘(ii) property (other than section
1245 property) to which the deduction
would otherwise have been chargeable shall
be treated as section 1245 property solely
for purposes of applying section 1245 to
such deduction.’’
(b) DEDUCTION FOR CONTRIBUTIONS TO FAMILY
DEVELOPMENT ACCOUNTS ALLOWABLE WHETHER
OR
NOT TAXPAYER ITEMIZES.—Subsection (a) of section 62
of the Internal Revenue Code of 1986 (relating to adjusted
gross income defined) is amended by inserting after para-
graph (15) the following new paragraph:
‘‘(16) FAMILY DEVELOPMENT ACCOUNTS.—The
deduction allowed by section 1400C(a)(1)(A).’’
SEC. 202. EXTENSION OF WORK OPPORTUNITY TAX CREDIT
FOR RENEWAL COMMUNITIES
(a) EXTENSION.—Paragraph (4) of section 51(c) of
the Internal Revenue Code of 1986 (relating to termi-
nation) is amended to read as follows:
‘‘(4) TERMINATION.—
‘‘(A) IN
GENERAL.—The term ‘wages’
shall not include any amount paid or incurred
to an individual who begins work for the em-
ployer—
‘‘(i) after December 31, 1994, and be-
fore October 1, 1996, or
‘‘(ii) after September 30, 1997.
‘‘(B) SPECIAL RULE FOR RENEWAL COM-
MUNITIES.—If—
‘‘(i) the employer is engaged in a
trade or business in a renewal community
throughout the 1-year period referred to in
subsection (b)(2),
‘‘(ii) the individual who begins work
for the employer is a resident of such re-
newal community throughout such 1-year
period, and
‘‘(iii) substantially all of the services
which such individual performs for the em-
ployer during such 1-year period are per-
formed in such renewal community,
then subparagraph (A)(ii) shall be applied by
substituting the last day for which the designa-
tion of such renewal community under section
1400 is in effect for ‘September 30, 1997.’ ’’
(b) CONGRUENT TREATMENT OF RENEWAL COMMU-
NITIES
AND ENTERPRISE ZONES
FOR PURPOSES
OF
YOUTH RESIDENCE REQUIREMENTS.—
(1) HIGH-RISK YOUTH.—Subparagraphs (A)(ii)
and (B) of section 51(d)(5) of such Code are each
amended by striking ‘‘empowerment zone or enter-
prise community’’ and inserting ‘‘empowerment
zone, enterprise community, or renewal community’’.
(2) QUALIFIED SUMMER YOUTH EMPLOYEE.—
Clause (iv) of section 51(d)(7)(A) of such Code is
amended by striking ‘‘empowerment zone or enter-
prise community’’ and inserting ‘‘empowerment
zone, enterprise community, or renewal community’’.
(3) HEADINGS.—Paragraphs (5)(B) and (7)(C)
of section 51(d) of such Code are each amended by
inserting ‘‘OR
COMMUNITY’’ in the heading after
‘‘ZONE’’.
SEC. 203. ALLOWANCE OF COMMERCIAL REVITALIZATION
CREDIT.
Section 46 of the Internal Revenue Code of 1986 (re-
lating to investment credit) is amended by striking ‘‘and’’
at the end of paragraph (2), by striking the period at the
end of paragraph (3) and inserting ‘‘, and’’, and by adding
at the end the following new paragraph:
‘‘(4) the commercial revitalization credit pro-
vided under section 1400F.’’
SEC. 204. CONFORMING AND CLERICAL AMENDMENTS.
(a) TAX ON EXCESS CONTRIBUTIONS.—
(1) TAX IMPOSED.—Subsection (a) of section
4973 of such Code is amended by striking ‘‘or’’ at
the end of paragraph (2), adding ‘‘or’’ at the end of
paragraph (3), and inserting after paragraph (3) the
following new paragraph:
‘‘(4) a family development account (within the
meaning of section 1400C(e)),’’
(2) EXCESS CONTRIBUTIONS.—Section 4973 of
such Code is amended by adding at the end the fol-
lowing new subsection:
‘‘(e) FAMILY DEVELOPMENT ACCOUNTS.—For pur-
poses of this section, in the case of a family development
account, the term ‘excess contributions’ means the sum
of—
‘‘(1) the excess (if any) of—
‘‘(A) the amount contributed for the tax-
able year to the account (other than a qualified
rollover, as defined in section 1400C(c)(7), or a
contribution under section 1400D), over
‘‘(B) the amount allowable as a deduction
under section 1400C for such contributions,
and
‘‘(2) the amount determined under this sub-
section for the preceding taxable year reduced by the
sum of—
‘‘(A) the distributions out of the account
for the taxable year which were included in the
gross income of the payee under section
1400C(b)(1),
‘‘(B) the distributions out of the account
for the taxable year to which rules similar to
the rules of section 408(d)(5) apply by reason
of section 1400C(b)(3), and
‘‘(C) the excess (if any) of the maximum
amount allowable as a deduction under section
1400C for the taxable year over the amount
contributed to the account for the taxable year
(other than a contribution under section
1400D).
For purposes of this subsection, any contribution which
is distributed from the family development account in a
distribution to which rules similar to the rules of section
408(d)(4) apply by reason of section 1400C(b)(3) shall be
treated as an amount not contributed.’’
(3) HEADING.—The heading of section 4973 of
such Code is amended by inserting ‘‘FAMILY DE-
VELOPMENT ACCOUNTS,’’ after ‘‘CONTRACTS,’’.
(b) TAX ON PROHIBITED TRANSACTIONS.—Section
4975 of such Code is amended—
(1) by adding at the end of subsection (c) the
following new paragraph:
‘‘(5) SPECIAL
RULE
FOR
FAMILY
DEVELOP-
MENT ACCOUNTS.—An individual for whose benefit a
family development account is established and any
contributor to such account shall be exempt from the
tax imposed by this section with respect to any
transaction concerning such account (which would
otherwise be taxable under this section) if, with re-
spect to such transaction, the account ceases to be
a family development account by reason of the appli-
cation of section 1400C(d)(2) to such account.’’, and
(2) in subsection (e)(1), by striking ‘‘or’’ at the
end of subparagraph (D), by redesignating subpara-
graph (E) as subparagraph (F), and by inserting
after subparagraph (D) the following new subpara-
graph:
‘‘(E) a family development account de-
scribed in section 1400C(e), or’’.
(c) INFORMATION RELATING TO CERTAIN TRUSTS
AND ANNUITY PLANS.—Subsection (c) of section 6047 of
such Code is amended—
(1) by inserting ‘‘or section 1400C’’ after ‘‘sec-
tion 219’’, and
(2) by inserting ‘‘, of any family development
account described in section 1400C(e),’’, after ‘‘sec-
tion 408(a)’’.
(d) INSPECTION OF APPLICATIONS FOR TAX EXEMP-
TION.—Clause (i) of section 6104(a)(1)(B) of such Code
is amended by inserting ‘‘a family development account
described in section 1400C(e),’’ after ‘‘section 408(a),’’.
(e) FAILURE TO PROVIDE REPORTS ON FAMILY DE-
VELOPMENT ACCOUNTS.—Section 6693 of such Code is
amended—
(1) by inserting ‘‘OR ON FAMILY DEVELOP-
MENT
ACCOUNTS’’ after ‘‘ANNUITIES’’ in the
heading of such section, and
(2) in subsection (a)(2), by striking ‘‘and’’ at
the end of subparagraph (A), by striking the period
and inserting ‘‘, and’’ in subparagraph (B), and by
adding at the end the following new subparagraph:
‘‘(C) section 1400C(g)(7) (relating to fam-
ily development accounts).’’
(f) CONFORMING AMENDMENTS REGARDING COM-
MERCIAL REVITALIZATION CREDIT.—
(1) Section 39(d) of such Code is amended by
adding at the end the following new paragraph:
‘‘(8) NO CARRYBACK OF SECTION 1400F CREDIT
BEFORE DATE OF ENACTMENT.—No portion of the
unused business credit for any taxable year which is
attributable to any commercial revitalization credit
determined under section 1400F may be carried
back to a taxable year ending before the date of the
enactment of section 1400F.’’
(2) Subparagraph (B) of section 48(a)(2) of
such Code is amended by inserting ‘‘or commercial
revitalization’’ after ‘‘rehabilitation’’ each place it
appears in the text and heading.
(3) Subparagraph (C) of section 49(a)(1) of
such Code is amended by striking ‘‘and’’ at the end
of clause (ii), by striking the period at the end of
clause (iii) and inserting ‘‘, and’’, and by adding at
the end the following new clause:
‘‘(iv) the portion of the basis of any
qualified revitalization building attributable
to qualified revitalization expenditures.’’
(4) Paragraph (2) of section 50(a) of such Code
is amended by inserting ‘‘or 1400F(d)(2)’’ after
‘‘section 47(d)’’ each place it appears.
(5) Subparagraph (A) of section 50(b)(2) of
such Code is amended by inserting ‘‘or qualified re-
vitalization building (respectively)’’ after ‘‘qualified
rehabilitated building’’.
(6) Subparagraph (B) of section 50(a)(2) of
such Code is amended by adding at the end the fol-
lowing new sentence: ‘‘A similar rule shall apply for
purposes of section 1400F.’’
(7) Paragraph (2) of section 50(b) of such Code
is amended by striking ‘‘and’’ at the end of subpara-
graph (C), by striking the period at the end of sub-
paragraph (D) and inserting ‘‘; and’’, and by adding
at the end the following new subparagraph:
‘‘(E) a qualified revitalization building (as
defined in section 1400F) to the extent of the
portion of the basis which is attributable to
qualified revitalization expenditures (as defined
in section 1400F).’’
(8) Subparagraph (C) of section 50(b)(4) of
such Code is amended—
(A) by inserting ‘‘or commercial revitaliza-
tion’’ after ‘‘rehabilitated’’ in the text and head-
ing, and
(B) by inserting ‘‘or commercial revitaliza-
tion’’ after ‘‘rehabilitation’’.
(9) Subparagraph (C) of section 469(i)(3) is
amended—
(A) by inserting ‘‘or section 1400F’’ after
‘‘section 42’’; and
(B) by striking ‘‘CREDIT’’ in the heading
and inserting ‘‘AND COMMERCIAL REVITALIZA-
TION CREDITS’’.
(g) CLERICAL AMENDMENTS.—
(1) The table of subchapters for chapter 1 of
the Internal Revenue Code of 1986 is amended by
adding at the end the following new item:
‘‘Subchapter W. Renewal Communities.’’
(2) The table of parts for subchapter W of
chapter 1 of such Code (as added by title I) is
amended by adding at the end the following new
items:
‘‘Part II.
Renewal community capital gain and stock.
‘‘Part III. Family development accounts.
‘‘Part IV.
Additional Incentives.’’
(3) The table of sections for chapter 43 of such
Code is amended by striking the item relating to sec-
tion 4973 and inserting the following new item:
‘‘Sec. 4973. Tax on excess contributions to individual retirement
accounts, medical savings accounts, certain section
403(b) contracts, family development accounts, and
certain individual retirement annuities.’’
(4) The table of sections for part I of sub-
chapter B of chapter 68 of such Code is amended
by striking the item relating to section 6693 and in-
serting the following new item:
‘‘Sec. 6693. Failure to provide reports on individual retirement
accounts or annuities or on family development ac-
counts; penalties relating to designated nondeduct-
ible contributions.’’
Subtitle B—Charitable
Contributions Credit
SEC. 211. CREDIT FOR CERTAIN CHARITABLE CONTRIBU-
TIONS.
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to nonrefundable personal credits) is
amended by adding at the end the following new section:
‘‘SEC. 26A. CREDIT FOR CERTAIN CHARITABLE CONTRIBU-
TIONS.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a credit against the tax imposed
by this chapter for the taxable year an amount equal to
75 percent of the qualified charitable contributions which
are paid by the taxpayer during the taxable year.
‘‘(b) LIMITATION.—The amount of the qualified
charitable contributions paid by a taxpayer which are
taken into account under subsection (a) for any taxable
year shall not exceed $100 ($200 in the case of a joint
return).
‘‘(c) QUALIFIED CHARITABLE CONTRIBUTION.—For
purposes of this section, the term ‘qualified charitable con-
tribution’ means any charitable contribution (as defined
in section 170(c)) made in cash to a qualified charity aid-
ing the poor.
‘‘(d) QUALIFIED CHARITY AIDING THE POOR.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified charity aiding the poor’
means, for any taxable year, any organization de-
scribed in section 501(c)(3) and exempt from tax
under section 501(a)—
‘‘(A) which is—
‘‘(i) certified by the Secretary as
meeting the requirements of paragraphs
(2), (3), and (4),
‘‘(ii) organized under the laws of the
United States or of any State in which the
organization is qualified to operate, and
‘‘(iii) required, or elects to be treated
as being required, to file returns under sec-
tion 6033, and
‘‘(B) for which the taxpayer has performed
10 or more hours of volunteer service during
the taxable year.
‘‘(2) CHARITY MUST PRIMARILY ASSIST POOR
INDIVIDUALS.—
‘‘(A) IN GENERAL.—An organization meets
the requirements of this paragraph only if the
predominant activity of such organization is the
provision of direct services to individuals whose
annual incomes generally do not exceed 185
percent of the official poverty line (as defined
by the Office of Management and Budget).
‘‘(B) FOOD
AID
AND
HOMELESS
SHEL-
TERS.—Except as otherwise provided in regula-
tions, for purposes of subparagraph (A), serv-
ices to individuals in the form of—
‘‘(i) temporary donations of food or
meals, or
‘‘(ii) temporary shelter to homeless in-
dividuals,
shall be treated as provided to individuals de-
scribed in subparagraph (A) if the location and
operation of such services are such that the
service provider may reasonably conclude that
the beneficiaries of such services are predomi-
nantly individuals described in subparagraph
(A).
‘‘(3) EXPENDITURES FOR CHARITABLE SERV-
ICES TO THE POOR.—
‘‘(A) IN GENERAL.—An organization meets
the requirements of this paragraph only if for
the immediately preceding taxable year (and the
Secretary reasonably expects that for the cur-
rent taxable year), except as provided in sub-
paragraph (B), all annual expenditures of the
organization are used to provide the direct serv-
ices referred to in paragraph (2).
‘‘(B) PERMISSIBLE
EXPENDITURES
FOR
ADMINISTRATION AND FUNDRAISING.—An orga-
nization shall not be treated as failing to meet
the requirements of subparagraph (A) with re-
spect to any taxable year by reason of the fact
that 25 percent or less of the annual aggregate
expenditures of the organization for such tax-
able year are—
‘‘(i) administrative expenditures in
support of direct services referred to in
paragraph (2), and
‘‘(ii) expenditures for purposes of
fundraising on behalf of the organization
providing direct services referred to in
paragraph (2).
‘‘(4) LIMITATION ON POLITICAL ACTIVITY.—An
organization meets the requirements of this para-
graph only if for the immediately preceding taxable
year (and the Secretary reasonably expects that for
the current taxable year) the organization does not
engage in any of the following:
‘‘(A) Activity for the purpose of influencing
legislation.
‘‘(B) Litigation on behalf of any individual
referred to in paragraph (2).
‘‘(C) Voter registration, political organiz-
ing, public policy advocacy, or public policy re-
search.
‘‘(5) SPECIAL
RULE
FOR
NEW
ORGANIZA-
TIONS.—In the case of an organization which has no
preceding taxable year, paragraphs (3) and (4) shall
be applied without regard to the words ‘for the im-
mediately preceding taxable year’.
‘‘(e) 
TIME
WHEN
CONTRIBUTIONS
DEEMED
MADE.—For purposes of this section, at the election of
the taxpayer, a contribution which is made not later than
the time prescribed by law for filing the return for the
taxable year (not including extensions thereof) shall be
treated as made on the last day of such taxable year.
‘‘(f) COORDINATION WITH DEDUCTION FOR CHARI-
TABLE CONTRIBUTIONS.—
‘‘(1) CREDIT
IN
LIEU
OF
DEDUCTION.—The
credit provided by subsection (a) for any qualified
charitable contribution shall be in lieu of any deduc-
tion otherwise allowable under this chapter for such
contribution.
‘‘(2) 
ELECTION
TO
HAVE
SECTION
NOT
APPLY.—A taxpayer may elect for any taxable year
to have this section not apply.
‘‘(g) TERMINATION.—This section shall not apply to
contributions made after December 31, 1999.’’
(b) PUBLIC INSPECTION OF ANNUAL RETURNS.—
Subsection (e) of section 6104 of such Code (relating to
public inspection of certain annual returns and applica-
tions for exemption) is amended by adding at the end the
following new paragraph:
‘‘(4) CHARITIES RECEIVING CREDITABLE CON-
TRIBUTIONS REQUIRED TO PROVIDE COPIES OF AN-
NUAL RETURN.—
‘‘(A) IN GENERAL.—Every qualified char-
ity aiding the poor (as defined in section
26A(d)) shall, upon request of an individual
made at an office where such organization’s an-
nual return filed under section 6033 is required
under paragraph (1) to be available for inspec-
tion, provide a copy of such return to such indi-
vidual without charge other than a reasonable
fee for any reproduction and mailing costs. If
the request is made in person, such copies shall
be provided immediately and, if made other
than in person, shall be provided within 30
days.
‘‘(B) PERIOD OF AVAILABILITY.—Subpara-
graph (A) shall apply only during the 3-year pe-
riod beginning on the filing date (as defined in
paragraph (1)(D)) of the return requested.’’
(c) CLERICAL AMENDMENT.—The table of sections
for subpart A of part IV of subchapter A of chapter 1
of such Code is amended by adding at the end the follow-
ing new item:
‘‘Sec. 26A. Credit for certain charitable contributions.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to contributions made after the
date of the enactment of this Act.
TITLE 
III—LOW-INCOME 
EDU-
CATIONAL 
OPPORTUNITY
SCHOLARSHIP PROGRAM
SEC. 301. SHORT TITLE.
This title may be cited as the ‘‘Low-Income Edu-
cational Opportunity Act of 1997’’.
SEC. 302. FINDINGS; PRECEDENTS.
(a) FINDINGS.—Congress makes the following find-
ings:
(1) Significant improvements in the education
of educationally deprived children can be accom-
plished by—
(A) increasing educational opportunities
for the children by expanding the range of edu-
cational choices that best meet the needs of the
children;
(B) fostering diversity and competition
among school programs for the children;
(C) providing the families of the children
more of the educational choices already avail-
able to affluent families; and
(D) enhancing the quality of American
education in general by increasing parental in-
volvement in the direction of the education of
the children.
(2) Costs are often much lower in private
schools than corresponding costs in public schools.
(3) Not all children are alike and therefore
there is no one school or program that fits the needs
of all children.
(4) The formation of sound values and moral
character is crucial to helping young people escape
from lives of poverty, family break-up, drug abuse,
crime, and school failure.
(5) In addition to offering knowledge and skills,
education should contribute positively to the forma-
tion of the internal norms and values which are vital
to a child’s success in life and to the well-being of
society.
(6) Schools should help to provide young people
with a sound moral foundation which is consistent
with the values of their parents. To find such a
school, parents need a full range of choice to deter-
mine where their children can best be educated.
(b) PRECEDENTS.—The United States Supreme
Court has determined that programs giving parents choice
and increased input in their children’s education, includ-
ing the choice of a religious education, do not violate the
Constitution. The Supreme Court has held that as long
as the beneficiary decides where education funds will be
spent on such individual’s behalf, public funds can be used
for education in a religious institution because the public
entity has neither advanced nor hindered a particular reli-
gion and therefore has not violated the establishment
clause of the first amendment to the Constitution. Su-
preme Court precedents include—
(1) Wisconsin v. Yoder, 406 U.S. 205 (1972);
Pierce v. Society of Sisters, 268 U.S. 510 (1925);
and Meyer v. Nebraska, 262 U.S. 390 (1923) which
held that parents have the primary role in and are
the primary decision makers in all areas regarding
the education and upbringing of their children;
(2) Mueller v. Allen, 463 U.S. 388 (1983)
which declared a Minnesota tax deduction program
that provided State income tax benefits for edu-
cational expenditures by parents, including tuition in
religiously affiliated schools, does not violate the
Constitution;
(3) Witters v. Department of Services for the
Blind, 474 U.S. 481 (1986) in which the Supreme
Court ruled unanimously that public funds for the
vocational training of the blind could be used at a
Bible college for ministry training;
(4) Zobrest v. Catalina Foothills School Dis-
trict, 509 U.S. 1 (1993) which held that a deaf child
could receive an interpreter, paid for by the public,
in a private religiously affiliated school under the In-
dividuals with Disabilities Education Act (20 U.S.C.
1400 et seq.). The case held that providing an inter-
preter in a religiously affiliated school did not violate
the establishment clause of the first amendment of
the Constitution.
SEC. 303. PURPOSES.
The purposes of this title are as follows:
(1) To assist renewal communities—
(A) in giving children from low-income
families more choices in selecting elementary
schools and secondary schools that children
from wealthier families already have;
(B) in improving schools and other aca-
demic programs by financially enhancing the
consumer power of low-income families to
choose the schools and programs that the fami-
lies determine best fit the needs of their chil-
dren;
(C) in engaging low-income parents more
fully in their children’s schooling;
(D) in providing low-income parents with a
wide range of choice in selecting a school for
their children, including public schools, private
schools, and private religious schools, without
promoting or discriminating against the choice
of a particular type of school; and
(E) in combating crime, drugs, and illegit-
imacy in low-income communities by encourag-
ing the restoration of moral character.
(2) To demonstrate the effects of State and
local programs that give low-income families more of
the choices in schools (public, private, or religious)
that wealthier families already have.
SEC. 304. DEFINITIONS.
In this title:
(1) ALTERNATIVE PUBLIC SCHOOL.—The term
‘‘alternative public school’’ means a public elemen-
tary school or secondary school, other than the pub-
lic elementary school or secondary school to which
an eligible child normally would be assigned, that is
within a reasonable transportation distance from the
eligible child’s residence.
(2) ELIGIBLE ASSISTANCE.—The term ‘‘eligible
assistance’’ means tuition, fees, or transportation as-
sistance provided pursuant to section 306 to parents
of eligible children who participate in a scholarship
program.
(3) ELIGIBLE
CHILD.—The term ‘‘eligible
child’’ means a child whose parents qualify to receive
eligible assistance under section 307.
(4) 
ELEMENTARY
SCHOOL; 
LOCAL
EDU-
CATIONAL AGENCY; PARENT; SECONDARY SCHOOL.—
The terms ‘‘elementary school’’, ‘‘local educational
agency’’, ‘‘parent’’, and ‘‘secondary school’’ have the
meanings given the terms in section 14101 of the
Elementary and Secondary Education Act of 1965
(20 U.S.C. 8801).
(5) LOW-INCOME FAMILY.—The term ‘‘low-in-
come family’’ means a family with a total family in-
come that does not exceed 185 percent of the pov-
erty line.
(6) POVERTY LINE.—The term ‘‘poverty line’’
means the poverty line (as defined by the Office of
Management and Budget, and revised annually in
accordance with section 673(2) of the Community
Services Block Grant Act (42 U.S.C. 9902(2))) ap-
plicable to a family of the size involved.
(7) RENEWAL
COMMUNITY.—The term ‘‘re-
newal community’’ has the meaning given such term
in section 1400 of the Internal Revenue Code of
1986.
(8) SCHOLARSHIP.—The term ‘‘scholarship’’
means a certificate for eligible assistance awarded to
a parent of an eligible child pursuant to section 307.
(9) SCHOLARSHIP PROGRAM.—The term ‘‘schol-
arship program’’ means a program within the re-
newal community that provides scholarships to eligi-
ble children in accordance with this title.
(10) SCHOLARSHIP SCHOOL.—The term ‘‘schol-
arship school’’ means a private elementary school or
secondary school that chooses to accept eligible as-
sistance.
(11) 
SECRETARY.—The 
term 
‘‘Secretary’’
means the Secretary of Education.
(12) STATE.—The term ‘‘State’’ means each of
the 50 States, the District of Columbia, and the
Commonwealth of Puerto Rico.
(13) TRANSPORTATION ASSISTANCE.—The term
‘‘transportation assistance’’ means direct or indirect
subsidization of the costs of transporting eligible
children participating in the scholarship program to
scholarship schools or alternative public schools.
SEC. 305. PLAN SUBMISSION; REQUIREMENTS.
(a) PLAN.—A community designated as a renewal
community under section 1400 of the Internal Revenue
Code of 1986 shall submit a plan to carry out a scholar-
ship program to the Secretary not later than 60 days after
receiving such designation. Such plan shall include the fol-
lowing:
(1) DESIGNATION.—A designation of a public
or private office, agency, or organization that will be
responsible for the establishment and operation of
the scholarship program and for the distribution of
eligible assistance to parents.
(2) OPTIONS.—A description of the actions to
be taken by the State or renewal community to in-
crease educational options for low-income children,
including—
(A) public school choice programs;
(B) private school choice programs;
(C) quasi-public or charter school pro-
grams; and
(D) programs privatizing services such as
transportation, administration, or food prepara-
tion or distribution.
(3) OTHER FUNDING SOURCES.—A description
of State and local funds (including tax benefits) and
nongovernmental funds, if any, that will be available
to supplement eligible assistance provided under this
title.
(4) PROCEDURES.—A description of the proce-
dures the applicant will use, including timely and
meaningful consultation with private school officials,
to encourage public and private elementary schools
and secondary schools to participate in the scholar-
ship program and to ensure maximum educational
choices for the parents of eligible children and for
other children residing in the renewal community.
(5) INFORMING
PARENTS.—A description of
how the applicant will inform parents and schools of
the scholarship program and of the choices available
to parents under the scholarship program.
(6) SELECTION.—A description of procedures
the applicant will use to determine which eligible
children will receive eligible assistance.
(7) RECORDS.—An assurance that the appli-
cant will maintain such records relating to the schol-
arship program as the Secretary may require and
will comply with the Secretary’s reasonable requests
for information about the scholarship program.
(b) REQUIREMENTS.—A community that is so des-
ignated as a renewal community shall establish and oper-
ate a scholarship program and distribute scholarships to
parents during the first school year beginning on or after
the 90th day following the day of such designation. Such
scholarship program shall meet the following require-
ments:
(1) CHOICE.—The scholarship program shall
provide a choice of schools to families with eligible
children who reside in the renewal community.
(2) ELIGIBLE
ASSISTANCE.—The scholarship
program shall provide eligible assistance to parents
of eligible children to enable the eligible children to
attend public and private elementary schools and
secondary schools, including religious schools, that
serve the renewal community.
(3) PARTICIPATION.—The scholarship program
shall allow all or any lawfully operating public and
private elementary schools or secondary schools, in-
cluding religious schools, that serve the renewal com-
munity to participate in a scholarship program if the
school so chooses, subject to the qualifications speci-
fied in section 310.
(c) COMPLIANCE.—The Secretary shall notify the
Secretary of Housing and Urban Development if a renewal
community fails to comply with the requirements of sub-
section (a) or (b). Upon such notification, the Secretary
of Housing and Urban Development may begin a review
to determine whether to revoke the designation of the re-
newal community as a renewal community.
SEC. 306. USES OF FUNDS.
A community that receives renewal community des-
ignation under section 1400 of the Internal Revenue Code
of 1986 shall use funds received under this title—
(1) to provide scholarships to assist in the pay-
ment of tuition and fees at a scholarship school se-
lected by the parents of an eligible child, and to as-
sist in the payment of transportation assistance to
enable eligible children to attend scholarship schools
or alternative public schools selected by such par-
ents;
100
(2) to pay the cost of administering the edu-
cational opportunity scholarship program, except
that the costs may not exceed 10 percent of the
funds a renewal community receives under this title
for any fiscal year; and
(3) to pay for the education of children from
low-income families attending public schools in ac-
cordance with section 313.
SEC. 307. SCHOLARSHIP PROGRAM.
(a) ELIGIBLE CHILDREN.—From the amounts made
available under this title, each renewal community shall
provide, to the extent practicable, eligible assistance to a
parent who has applied for the eligible assistance and has
a child who—
(1) is a member of a low-income family;
(2) resides in the renewal community; and
(3)(A) seeks to attend a scholarship school that
participates in the scholarship program; or
(B) seeks to attend an alternative public school
that participates in the scholarship program.
(b) SELECTION AMONG ELIGIBLE CHILDREN.—
(1) IN GENERAL.—In the event that a renewal
community has insufficient funds to provide eligible
assistance to all eligible children whose parents have
101
applied for eligible assistance, the renewal commu-
nity may select students according to—
(A) random selection;
(B) the date of the parents’ application for
the eligible assistance with preference given to
parents who applied earlier; or
(C) any other selection criteria developed
by the renewal community, subject to the limi-
tations provided in subsection (c).
(2) PRIORITY.—A renewal community shall give
priority to providing eligible assistance to a parent
for an eligible child who received eligible assistance
pursuant to this title during the preceding school
year.
(c) CRITERIA FOR SELECTION.—The renewal com-
munity may choose any criteria the renewal community
wishes in order to make the selection described in sub-
section (b), except that such criteria shall not—
(1) discriminate on the basis of race or religion;
(2) discriminate on the basis of the school or
type of school selected by the parent; or
(3) discriminate against an eligible child be-
cause the parent of the eligible child has chosen to
receive a scholarship to attend a scholarship school
under section 309(b)(2) rather than a scholarship to
104
(1) 80 percent shall be allocated among renewal
communities according to the formula provided in
subsection (b).
(2) 20 percent shall be allocated among renewal
communities according to the formula provided in
subsection (c).
(b) BASIC FUNDING ALLOCATION.—Except as pro-
vided in subsection (d), each renewal community shall re-
ceive a percentage of the funds provided under subsection
(a)(1) based on—
(1) the number of children from low-income
families who reside in a renewal community; com-
pared to
(2) the number of children from low-income
families who reside in all renewal communities.
(c) ADDITIONAL MATCHING FUNDS.—Each renewal
community shall receive a percentage of funds provided
under subsection (a)(2) based on—
(1) the total value of matching contributions for
scholarships provided from local governmental,
State, or private charitable sources within a renewal
community; compared to
(2) the total value of matching contributions for
scholarships provided from local governmental,
105
State, or private charitable sources in all renewal
communities.
(d) POSSIBLE EXCEPTION.—Notwithstanding sub-
section (b), if the Commonwealth of Puerto Rico or com-
munities in the Commonwealth of Puerto Rico are des-
ignated as renewal communities, such renewal commu-
nities, in aggregate, shall receive a percentage of the funds
made available under this title in a fiscal year that is not
more than the percentage of the funds made available
under title I of the Elementary and Secondary Education
Act of 1965 (20 U.S.C. 6301 et seq.) for fiscal year 1995
that the Commonwealth of Puerto Rico received under
such title for such year.
SEC. 309. PARENTAL RIGHT OF CHOICE IN EDUCATION.
(a) IN GENERAL.—Parents of each eligible child who
receive eligible assistance under this title shall be given
the maximum degree of choice with respect to enrolling
their eligible children in public and private elementary and
secondary schools, including religious schools, that serve
the renewal community.
(b) TYPES OF ELIGIBLE ASSISTANCE.—
(1) IN GENERAL.—The type of eligible assist-
ance provided to the parent of an eligible child se-
lected to participate in the scholarship program shall
106
be determined by the type of school that the parent
selects for the eligible child.
(2) SCHOLARSHIP
SCHOOL.—If the parent
elects to have an eligible child attend a scholarship
school, the parent shall receive a scholarship for—
(A) tuition and fees at the scholarship
school; and
(B) transportation assistance.
(3) ALTERNATIVE PUBLIC SCHOOL.—If the par-
ent elects to have the eligible child attend an alter-
native public school, the parent shall receive a schol-
arship for transportation assistance.
(c) NO GUARANTEE OF ADMISSION.—Eligible chil-
dren whose parents have applied to receive a scholarship
under this title shall be subject to the admission criteria
of the scholarship school or alternative public school that
the parent selects, and nothing in this title shall be con-
strued to guarantee the right of an eligible child to attend
any scholarship school or alternative public school.
(d) LIMITATION
ON NUMBER
OF CHILDREN AS-
SISTED.—The number of eligible children receiving eligible
assistance from a renewal community shall be determined
by the funds available to such renewal community from—
(1) Federal funds provided under this title; and
107
(2) other funds provided by public and private
sources.
(e) PARENTAL NOTIFICATION.—
(1) IN
GENERAL.—Each renewal community
shall provide timely notice of the scholarship pro-
gram to parents of eligible children residing in the
renewal community and to the schools in the renewal
community. At a minimum, such notice shall—
(A) describe the scholarship program;
(B) describe the eligibility requirements for
scholarships;
(C) describe the selection procedures to be
used if the number of eligible children seeking
to participate in the scholarship program ex-
ceeds the number that can be accommodated in
the scholarship program;
(D) provide information about scholarship
schools and alternative public schools, including
information about any admission requirements
or criteria for each school participating in the
scholarship program; and
(E) include the procedures and a schedule
for parents to apply for their eligible children to
participate in the scholarship program.
108
(2) NOTIFICATION
METHODS.—Each renewal
community is encouraged to use a variety of means
to provide information to parents in the renewal
community, including direct distribution, mail, dis-
tribution of materials in publicly frequented places,
public advertisements, and cooperative efforts with
local community groups.
(f) INFORMATION.—Renewal communities, upon re-
quest by any and all schools eligible to become scholarship
schools, shall fully cooperate with such schools in a timely
and reasonable manner to provide to parents of eligible
children information prepared by the school regarding the
school’s participation in the scholarship program.
SEC. 310. ELIGIBLE SCHOOLS.
(a) STANDARDS.—Each scholarship school located in
the renewal community or within a reasonable transpor-
tation distance of the renewal community is eligible to re-
deem scholarships and to become a scholarship school if—
(1) the school complies with the antidiscrimina-
tion provisions of section 601 of title VI of the Civil
Rights Act of 1964 (42 U.S.C. 2000) and does not
discriminate on the basis of race;
(2) the school satisfies requirements established
by State and local governments, where applicable,
for curriculum and facilities that applied to scholar-
109
ship schools as of January 1, 1997 in the renewal
community in which the scholarship school is lo-
cated; and
(3) the school meets the health and safety
standards that applied to scholarship schools as of
January 1, 1997 in the renewal community in which
the school is located.
(b) LIMITS ON THE REGULATION OF SCHOOLS.—Any
Federal, State, or local laws applicable to a scholarship
school shall be subject to the following limitations:
(1) PROHIBITION
OF
ADDITIONAL
REQUIRE-
MENTS
OR
REGULATIONS.—No additional require-
ments or regulations (including paperwork require-
ments) other than those requirements or regulations
in effect on the date of the enactment of this Act or
established pursuant to this title may be imposed
upon scholarship schools.
(2) ADMISSION
PREFERENCE.—Students who
are enrolled in a scholarship school in the preceding
school year may be given an admissions preference
over new students who apply for such enrollment.
(3) RELIGIOUS INSTRUCTION OR EDUCATION.—
No requirements or regulations may prohibit or limit
the authority of scholarship schools to provide reli-
gious instruction or education.
110
(4) RELIGIOUS FREEDOM.—Scholarship schools
shall be protected by the rights granted in the Reli-
gious Freedom Restoration Act of 1993 (42 U.S.C.
2000bb et seq.).
(5) RELIGIOUS TENETS OR TEACHINGS.—Ex-
cept for the limitation concerning discrimination on
the basis of race expressed in subsection (a)(1), any
scholarship school operated by a religious organiza-
tion may require its employees to adhere to the reli-
gious tenets and teachings of such organization.
(6) GENDER.—No requirement or regulation
shall prohibit a scholarship school from—
(A) admitting students of a single gender;
(B) operating classes which are separated
on the basis of gender; or
(C) employing teaching personnel whose
gender the school deems appropriate in the edu-
cation of certain categories of students.
(c) INELIGIBLE
SCHOOLS.—Notwithstanding any
other provision of this title, a school that advocates crimi-
nal behavior or which is operated by an organization which
advocates criminal behavior, is ineligible to participate in
the program authorized by this title.
111
SEC. 311. ADMINISTRATION OF PROGRAM AND TREATMENT
OF FUNDS.
(a) FUNDS NOT AID TO INSTITUTIONS.—Eligible as-
sistance provided under this title is an award of aid to
a family, not to a school. Use of eligible assistance shall
not constitute Federal financial aid or assistance to a
school, nor shall the use of the eligible assistance be con-
strued to invoke any regulation of an activity beyond the
regulations explicitly referred to or provided for in this
title.
(b) TREATMENT OF FUNDS.—A Federal, State, or
local agency may not take into account, in any year, Fed-
eral funds provided to a renewal community, a school, or
a parent of any eligible child under this title in determin-
ing whether to provide any other funds from Federal,
State, or local resources, or in determining the amount
of such funds.
(c) NO AUTHORIZATION OF FEDERAL REGULATION
OF EDUCATION.—Nothing in this Act shall be construed
to authorize the Secretary to exercise any direction, super-
vision, or control over the curriculum, program of instruc-
tion, administration, or personnel of any school participat-
ing in a program under this title.
(d) SECTARIAN INSTITUTIONS.—Nothing in this title
shall be construed to supersede or modify any provision
of a State constitution or State law that prohibits the ex-
112
penditure of public funds in or by sectarian schools, except
that no provision of a State constitution or State law shall
be construed to prohibit the expenditure in or by sectarian
schools of any Federal funds provided under this title.
(e) REGULATION
OF
SCHOOLS
NOT
RECEIVING
SCHOLARSHIPS.—A rule or requirement established for
scholarship schools shall not apply to a scholarship school
that chooses not to become a scholarship school.
(f) SCHOLARSHIPS NOT DEEMED INCOME.—Funds
used to provide scholarships for an eligible child shall not
be deemed income of the parents of the eligible child (or
of the eligible child) for Federal income tax purposes or
for determining eligibility for any other Federal programs.
SEC. 312. CONTRIBUTIONS TO SCHOLARSHIP PROGRAM
FROM OTHER SOURCES.
(a) IN GENERAL.—The renewal community is en-
couraged to seek or provide additional funds for tuition,
fees, and transportation assistance from other sources, in-
cluding—
(1) local government funds;
(2) State government funds;
(3) contributions from private businesses; and
(4) contributions from private charitable orga-
nizations.
113
(b) PARENTAL
PAYMENTS
NOT
COUNTED
AS
MATCHING CONTRIBUTIONS.—For purposes of section
308(c), payments of tuition and education fees by parents
of eligible children shall not be considered matching con-
tributions.
SEC. 313. USE OF EXCESS FUNDS FOR ADDITIONAL EDU-
CATIONAL PURPOSES.
(a) IN GENERAL.—If any funds provided under this
title remain available to a renewal community after the
renewal community has provided scholarships to all eligi-
ble children whose parents have applied for eligible assist-
ance in accordance with this title, the renewal community
may use such funds for the general education of children
from low-income families who attend public elementary
schools and secondary schools within the renewal commu-
nity, subject to the limitation in subsection (b).
(b) LIMITATION.—A renewal community may not use
the funds described in subsection (a) for the purposes de-
scribed in such subsection if the Secretary determines that
the renewal community—
(1) has failed to fully inform the parents of eli-
gible children of—
(A) the availability of eligible assistance;
and
114
(B) the full range of choices of schools
available under the scholarship program;
(2) has in any way discouraged or impeded par-
ents of eligible children from using eligible assist-
ance;
(3) has in any way discouraged or impeded
scholarship schools or alternative public schools from
participation in the scholarship program; or
(4) has unreasonably hindered the establish-
ment of new private elementary schools or secondary
schools within the renewal community.
(c) FORFEITURE OF SURPLUS FUNDS.—In the event
that the Secretary determines that a renewal community
has met one or more of the conditions described in sub-
section (b), the renewal community shall return the funds
described in subsection (a) to the Treasury of the United
States.
SEC. 314. EVALUATION.
(a) IN GENERAL.—The Secretary shall conduct a na-
tional evaluation of the scholarship programs authorized
by this title not later than 2 years after the date the first
scholarship program begins and shall conduct a second
such evaluation 4 years after such date. The evaluations
shall—