plying subsection (a)(1) and paragraph (1) of this
subsection.
‘‘SEC. 1400M. QUALIFIED ZONE ACADEMY BONDS.
‘‘(a) QUALIFIED ZONE ACADEMY BOND.—For pur-
poses of this subchapter—
‘‘(1) IN GENERAL.—The term ‘qualified zone
academy bond’ means any bond issued as part of an
issue if—
‘‘(A) 95 percent or more of the proceeds of
such issue are to be used for a qualified pur-
pose with respect to a qualified zone academy
established by a local educational agency,
‘‘(B) the bond is issued by a State or local
government within the jurisdiction of which
such academy is located,
‘‘(C) the issuer—
‘‘(i) designates such bond for purposes
of this section,
‘‘(ii) certifies that it has written as-
surances that the private business con-
tribution requirement of paragraph (2) will
be met with respect to such academy, and
‘‘(iii) certifies that it has the written
approval of the local educational agency
for such bond issuance, and
‘‘(D) the term of each bond which is part
of such issue does not exceed 15 years.
Rules similar to the rules of section 1400L(g) shall
apply for purposes of paragraph (1).
‘‘(2) PRIVATE
BUSINESS
CONTRIBUTION
RE-
QUIREMENT.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the private business contribution re-
quirement of this paragraph is met with respect
to any issue if the local educational agency that
established the qualified zone academy has writ-
ten commitments from private entities to make
qualified contributions having a present value
(as of the date of issuance of the issue) of not
less than 10 percent of the proceeds of the
issue.
‘‘(B) QUALIFIED
CONTRIBUTIONS.—For
purposes of subparagraph (A), the term ‘quali-
fied contribution’ means any contribution (of a
type and quality acceptable to the local edu-
cational agency) of—
‘‘(i) equipment for use in the qualified
zone academy (including state-of-the-art
technology and vocational equipment),
‘‘(ii) technical assistance in developing
curriculum or in training teachers in order
to promote appropriate market driven tech-
nology in the classroom,
‘‘(iii) services of employees as volun-
teer mentors,
‘‘(iv) internships, field trips, or other
educational opportunities outside the acad-
emy for students, or
‘‘(v) any other property or service
specified by the local educational agency.
‘‘(3) QUALIFIED
ZONE
ACADEMY.—The term
‘qualified zone academy’ means any public school (or
academic program within a public school) which is
established by and operated under the supervision of
a local educational agency to provide education or
training below the postsecondary level if—
‘‘(A) such public school or program (as the
case may be) is designed in cooperation with
business to enhance the academic curriculum,
increase graduation and employment rates, and
better prepare students for the rigors of college
and the increasingly complex workforce,
‘‘(B) students in such public school or pro-
gram (as the case may be) will be subject to the
same academic standards and assessments as
other students educated by the local educational
agency,
‘‘(C) the comprehensive education plan of
such public school or program is approved by
the local educational agency, and
‘‘(D)(i) such public school is located in an
empowerment zone or enterprise community
(including any such zone or community des-
ignated after the date of the enactment of this
section), or
‘‘(ii) there is a reasonable expectation (as
of the date of issuance of the bonds) that at
least 35 percent of the students attending such
school or participating in such program (as the
case may be) will be eligible for free or reduced-
cost lunches under the school lunch program es-
tablished under the National School Lunch Act.
‘‘(4) QUALIFIED PURPOSE.—The term ‘quali-
fied purpose’ means, with respect to any qualified
zone academy—
‘‘(A) constructing, rehabilitating, or repair-
ing the public school facility in which the acad-
emy is established,
‘‘(B) acquiring the land on which such fa-
cility is to be constructed with part of the pro-
ceeds of such issue,
‘‘(C) providing equipment for use at such
academy,
‘‘(D) developing course materials for edu-
cation to be provided at such academy, and
‘‘(E) training teachers and other school
personnel in such academy.
‘‘(b) LIMITATIONS
ON AMOUNT
OF BONDS DES-
IGNATED.—
‘‘(1) IN GENERAL.—There is a national zone
academy bond limitation for each calendar year.
Such limitation is—
‘‘(A) $400,000,000 for 1998,
‘‘(B) $400,000,000 for 1999,
‘‘(C) $400,000,000 for 2000,
‘‘(D) $400,000,000 for 2001,
‘‘(E) $1,400,000,000 for 2002,
‘‘(F) $1,400,000,000 for 2003, and
‘‘(G) except as provided in paragraph (3),
zero after 2003.
‘‘(2) ALLOCATION OF LIMITATION.—
‘‘(A) ALLOCATION AMONG STATES.—
‘‘(i) 1998, 1999, 2000, AND 2001 LIMI-
TATIONS.—The national zone academy
bond limitations for calendar years 1998,
1999, 2000, and 2001 shall be allocated by
the Secretary among the States on the
basis of their respective populations of in-
dividuals below the poverty line (as defined
by the Office of Management and Budget).
‘‘(ii) LIMITATION
AFTER
2001.—The
national zone academy bond limitation for
any calendar year after 2001 shall be allo-
cated by the Secretary among the States in
proportion to the respective amounts each
such State received for Basic Grants under
subpart 2 of part A of title I of the Ele-
mentary and Secondary Education Act of
1965 (20 U.S.C. 6331 et seq.) for the
most recent fiscal year ending before such
calendar year.
‘‘(B) 
ALLOCATION
TO
LOCAL
EDU-
CATIONAL
AGENCIES.—The limitation amount
allocated to a State under subparagraph (A)
shall be allocated by the State to qualified zone
academies within such State.
‘‘(C) DESIGNATION SUBJECT TO LIMITA-
TION AMOUNT.—The maximum aggregate face
amount of bonds issued during any calendar
year which may be designated under subsection
(a) with respect to any qualified zone academy
shall not exceed the limitation amount allocated
to such academy under subparagraph (B) for
such calendar year.
‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If
for any calendar year—
‘‘(A) the limitation amount under this sub-
section for any State, exceeds
‘‘(B) the amount of bonds issued during
such year which are designated under sub-
section (a) (or the corresponding provisions of
prior law) with respect to qualified zone acad-
emies within such State,
the limitation amount under this subsection for such
State for the following calendar year shall be in-
creased by the amount of such excess.’’
(b) REPORTING.—Subsection (d) of section 6049 of
such Code (relating to returns regarding payments of in-
terest) is amended by adding at the end the following new
paragraph:
‘‘(8) REPORTING
OF
CREDIT
ON
QUALIFIED
PUBLIC SCHOOL MODERNIZATION BONDS.—
‘‘(A) IN GENERAL.—For purposes of sub-
section (a), the term ‘interest’ includes amounts
includible in gross income under section
1400K(f) and such amounts shall be treated as
paid on the credit allowance date (as defined in
section 1400K(d)(2)).
‘‘(B) 
REPORTING
TO
CORPORATIONS,
ETC.—Except as otherwise provided in regula-
tions, in the case of any interest described in
subparagraph (A) of this paragraph, subsection
(b)(4) of this section shall be applied without
regard to subparagraphs (A), (H), (I), (J), (K),
and (L)(i).
‘‘(C) REGULATORY AUTHORITY.—The Sec-
retary may prescribe such regulations as are
necessary or appropriate to carry out the pur-
poses of this paragraph, including regulations
which require more frequent or more detailed
reporting.’’
(c) CONFORMING AMENDMENTS.—
(1) Subchapter U of chapter 1 of such Code is
amended by striking part IV, by redesignating part
V as part IV, and by redesignating section 1397F
as section 1397E.
(2) The table of subchapters for chapter 1 of
such Code is amended by adding at the end the fol-
lowing new item:
‘‘Subchapter Y. Public school modernization provisions.’’
(3) The table of parts of subchapter U of chap-
ter 1 of such Code is amended by striking the last
2 items and inserting the following item:
‘‘Part IV. Regulations.’’
(d) EFFECTIVE DATES.—
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by
this section shall apply to obligations issued after
December 31, 2001.
(2) REPEAL OF RESTRICTION ON ZONE ACAD-
EMY
BOND
HOLDERS.—In the case of bonds to
which section 1397E of the Internal Revenue Code
of 1986 (as in effect before the date of the enact-
ment of this Act) applies, the limitation of such sec-
tion to eligible taxpayers (as defined in subsection
(d)(6) of such section) shall not apply after the date
of the enactment of this Act.
SEC. 3. APPLICATION OF CERTAIN LABOR STANDARDS ON
CONSTRUCTION 
PROJECTS 
FINANCED
UNDER PUBLIC SCHOOL MODERNIZATION
PROGRAM.
Section 439 of the General Education Provisions Act
(relating to labor standards) is amended—
(1) by inserting ‘‘(a)’’ before ‘‘All laborers and
mechanics’’, and
(2) by adding at the end the following:
‘‘(b)(1) For purposes of this section, the term ‘appli-
cable program’ also includes the qualified zone academy
bond provisions enacted by section 226 of the Taxpayer
Relief Act of 1997 and the program established by section
2 of the America’s Better Classroom Act of 2001.
‘‘(2) A State or local government participating in a
program described in paragraph (1) shall—
‘‘(A) in the awarding of contracts, give priority
to contractors with substantial numbers of employ-
ees residing in the local education area to be served
by the school being constructed; and
‘‘(B) include in the construction contract for
such school a requirement that the contractor give
priority in hiring new workers to individuals residing
in such local education area.
‘‘(3) In the case of a program described in paragraph
(1), nothing in this subsection or subsection (a) shall be
construed to deny any tax credit allowed under such pro-
gram. If amounts are required to be withheld from con-
tractors to pay wages to which workers are entitled, such
amounts shall be treated as expended for construction pur-
poses in determining whether the requirements of such
program are met.’’.
SEC. 4. EMPLOYMENT AND TRAINING ACTIVITIES RELAT-
ING TO CONSTRUCTION OR RECONSTRUC-
TION OF PUBLIC SCHOOL FACILITIES.
(a) IN GENERAL.—Section 134 of the Workforce In-
vestment Act of 1998 (29 U.S.C. 2864) is amended by
adding at the end the following:
‘‘(f) LOCAL EMPLOYMENT AND TRAINING ACTIVI-
TIES RELATING TO CONSTRUCTION OR RECONSTRUCTION
OF PUBLIC SCHOOL FACILITIES.—
‘‘(1) IN GENERAL.—In order to provide training
services related to construction or reconstruction of
public school facilities receiving funding assistance
under an applicable program, each State shall estab-
lish a specialized program of training meeting the
following requirements:
‘‘(A) The specialized program provides
training for jobs in the construction industry.
‘‘(B) The program provides trained work-
ers for projects for the construction or recon-
struction of public school facilities receiving
funding assistance under an applicable pro-
gram.
‘‘(C) The program ensures that skilled
workers (residing in the area to be served by
the school facilities) will be available for the
construction or reconstruction work.
‘‘(2) COORDINATION.—The specialized program
established under paragraph (1) shall be integrated
with other activities under this Act, with the activi-
ties carried out under the National Apprenticeship
Act of 1937 by the State Apprenticeship Council or
through the Bureau of Apprenticeship and Training
in the Department of Labor, as appropriate, and
with activities carried out under the Carl D. Perkins
Vocational and Technical Education Act of 1998.
Nothing in this subsection shall be construed to re-
quire services duplicative of those referred to in the
preceding sentence.
‘‘(3) APPLICABLE
PROGRAM.—In this sub-
section, the term ‘applicable program’ has the mean-
ing given the term in section 439(b) of the General
Education Provisions Act (relating to labor stand-
ards).’’.
(b) STATE PLAN.—Section 112(b)(17)(A) of the
Workforce 
Investment 
Act 
of 
1998 
(29 
U.S.C.
2822(b)(17)(A)) is amended—
(1) in clause (iii), by striking ‘‘and’’ at the end;
(2) by redesignating clause (iv) as clause (v);
and
(3) by inserting after clause (iii) the following:
‘‘(iv) how the State will establish and
carry out a specialized program of training
under section 134(f); and’’.
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