122
the tax imposed by this subtitle for the taxable year an
amount equal to the unpaid child support of such individ-
ual for such year.
‘‘(b) DEFINITIONS.—For purposes of this section—
‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible
individual’ means any individual—
‘‘(A) who is entitled to receive child sup-
port payments during the taxable year, and
‘‘(B) who, as of the close of such taxable
year, has not received all of the child support
payments to which such individual is entitled
for such year.
‘‘(2) UNPAID CHILD SUPPORT.—The term ‘un-
paid child support’ means, with respect to an indi-
vidual for any taxable year, the excess of—
‘‘(A) the aggregate child support payments
such individual is entitled to receive during
such year, over
‘‘(B) the child support payments such indi-
vidual received during such year.
‘‘(3) CHILD SUPPORT PAYMENT.—
‘‘(A) IN GENERAL.—The term ‘child sup-
port payment’ means, with respect to any tax-
able year—
123
‘‘(i) any periodic payment of a fixed
amount, or
‘‘(ii) any payment of a medical or
educational expense, insurance premium,
or other similar item,
which is required to be paid to the taxpayer
during such taxable year by an individual under
a support instrument for the support of any
child of such individual.
‘‘(B) COORDINATION
WITH
AFDC.—The
term ‘child support payment’ shall not include
any payment the right to which has been as-
signed to a State under section 402(a)(26) of
the Social Security Act.
‘‘(c) TAXPAYER REQUIRED TO IDENTIFY INDIVID-
UAL REQUIRED TO PAY SUPPORT.—No credit shall be al-
lowed under this section for a taxable year unless the tax-
payer includes on the return for such year the name and
TIN on each individual required to make support pay-
ments to the taxpayer during such taxable year.
‘‘(d) INCREASE IN TAX OF INDIVIDUAL FAILING TO
MAKE REQUIRED SUPPORT PAYMENTS.—
‘‘(1) IN GENERAL.—If credit is allowed under
this section for any taxable year with respect to un-
paid support payments, the tax imposed by this
124
chapter of the individual failing to make such pay-
ment (for such individual’s taxable year which be-
gins in the calendar year in which the taxable year
of the taxpayer begins) shall be increased by the
amount of such credit.
‘‘(2) NO CREDITS AGAINST TAX, ETC.—Any in-
crease in tax under this subsection shall not be
treated as a tax imposed by this chapter for pur-
poses of determining—
‘‘(A) the amount of any other credit under
this part, or
‘‘(B) the minimum tax under section 55.’’
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 1324(b) of title
31, United States Code, is amended by inserting be-
fore the period ‘‘or from section 35 of such Code’’.
(2) The table of sections for subpart C of part
IV of subchapter A of chapter 1 is amended by
striking the item relating to section 35 and inserting
the following new items:
‘‘Sec. 35. Unpaid child support.
‘‘Sec. 36. Overpayments of tax.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
125
TITLE V—EDUCATING OUR
CHILDREN
SEC. 501. FINDINGS AND PURPOSES.
(a) FINDINGS.—The Congress finds as follows:
(1) According to the General Accounting Office,
one-third of all elementary and secondary schools in
the United States, serving 14,000,000 students,
need extensive repair or renovation.
(2) School infrastructure problems exist across
the country, but are most severe in central cities and
in schools with high proportions of poor and minor-
ity children.
(3) Many States and school districts will need
to build new schools in order to accommodate in-
creasing student enrollments; the Department of
Education has predicted that the Nation will need
6,000 more schools by the year 2006.
(4) Many schools do not have the physical in-
frastructure to take advantage of computers and
other technology needed to meet the challenges of
the next century.
(5) While school construction and maintenance
are primarily a State and local concern, States and
communities have not, on their own, met the in-
creasing burden of providing acceptable school facili-
126
ties for all students, and the poorest communities
have had the greatest difficulty meeting this need.
(6) The Federal Government, by providing in-
terest subsidies and similar types of support, can
lower the costs of State and local school infrastruc-
ture investment, creating an incentive for States and
localities to increase their own infrastructure im-
provement efforts and helping ensure that all stu-
dents are able to attend schools that are equipped
for the 21st century.
(b) PURPOSE.—The purpose of this title is to provide
Federal interest subsidies, or similar assistance, to States
and localities to help them bring all public school facilities
up to an acceptable standard and build the additional pub-
lic schools needed to educate the additional numbers of
students who will enroll in the next decade.
SEC. 502. DEFINITIONS.
Except as otherwise provided, as used in this title,
the following terms have the following meanings:
(1) CHARTER
SCHOOL.—The term ‘‘charter
school’’ has the meaning given that term in section
10306(1) of the Elementary and Secondary Edu-
cation Act of 1965 (20 U.S.C. 8066(1)).
(2) COMMUNITY SCHOOL.—The term ‘‘commu-
nity school’’ means a school, or part of a school, that
127
serves as a center for after-school and summer pro-
grams and delivery of education, tutoring, cultural,
and recreational services, and as a safe haven for all
members of the community by—
(A) collaborating with other public and pri-
vate nonprofit agencies (including libraries and
other educational, human-service, cultural, and
recreational entities) and private businesses in
the provision of services;
(B) providing services such as literacy and
reading programs; senior citizen programs; chil-
dren’s day-care services; nutrition services; serv-
ices for individuals with disabilities; employ-
ment counseling, training, and placement; and
other educational, health, cultural, and rec-
reational services; and
(C) providing those services outside the
normal school day and school year, such as
through safe and drug-free safe havens for
learning.
(3)(A) CONSTRUCTION.—The term ‘‘construc-
tion’’ means—
(i) the preparation of drawings and speci-
fications for school facilities;
128
(ii) erecting, building, acquiring, remodel-
ing, renovating, improving, repairing or extend-
ing school facilities;
(iii) demolition, in preparation for rebuild-
ing school facilities; and
(iv) the inspection and supervision of the
construction of school facilities.
(B) The term ‘‘construction’’ does not include
the acquisition of any interest in real property.
(4) LOCAL EDUCATIONAL AGENCY.—The term
‘‘local educational agency’’ has the meaning given
that term in section 14101(18) (A) and (B) of the
Elementary and Secondary Education Act of 1965
(20 U.S.C. 8801(18) (A) and (B)).
(5) SCHOOL FACILITY.—(A) Term ‘‘school facil-
ity’’ means—
(i) a public structure suitable for use as a
classroom, laboratory, library, media center, or
related facility, whose primary purpose is the
instruction of public elementary or secondary
students; and
(ii) initial equipment, machinery, and utili-
ties necessary or appropriate for school pur-
poses.
129
(B) The term ‘‘school facility’’ does not include
an athletic stadium, or any other structure or facil-
ity intended primarily for athletic exhibitions, con-
tests, games, or events for which admission is
charged to the general public.
(6) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Education.
(7) STATE.—The term ‘‘State’’ means each of
the 50 States and the Commonwealth of Puerto
Rico.
(8) STATE EDUCATIONAL AGENCY.—The term
‘‘State educational agency’’ has the meaning given
that term in section 14101(28) of the Elementary
and Secondary Education Act of 1965 (20 U.S.C.
8801(28)).
SEC. 503. FUNDS APPROPRIATED.
There are appropriated $5,000,000,000 for the pur-
pose of carrying out this title, which shall be available for
obligation by the Secretary of Education from October 1,
1997 until September 30, 2001.
SEC. 504. ALLOCATION OF FUNDS.
(a) RESERVATION FOR THE SECRETARY OF THE IN-
TERIOR AND THE OUTLYING AREAS.—
(1) The Secretary shall reserve up to 2 percent
of the funds appropriated by section 503 to—
130
(A) provide assistance to the Secretary of
the Interior, which the Secretary of the Interior
shall use for the school construction priorities
described in section 1125(c) of the Education
Amendments of 1978 (25 U.S.C. 2005(c)); and
(B) make grants to American Samoa,
Guam, the Virgin Islands, and the Common-
wealth of the Northern Mariana Islands, in ac-
cordance with their respective needs, as deter-
mined by the Secretary.
(2) Grants provided under paragraph (1)(B)
shall be used for activities that the Secretary deter-
mines best meet the school infrastructure needs of
the areas identified in that paragraph, subject to the
terms and conditions, consistent with the purpose of
this title, that the Secretary may establish.
(b) ALLOCATION OF REMAINING FUNDS.—Of the re-
maining funds appropriated by section 503—
(1) 50 percent shall be used for formula grants
to States under section 511;
(2) 35 percent shall be used for direct formula
grants to local educational agencies under section
526; and
131
(3) 15 percent shall be used for competitive
grants to local educational agencies under section
527.
PART 2—GRANTS TO STATES
SEC. 511. ALLOCATION OF FUNDS.
(a) FORMULA GRANTS TO STATES.—Subject to sub-
section (b), the Secretary shall allocate the funds available
under section 504(b)(1) among the States in proportion
to the relative amounts each State would have received
for Basic Grants under subpart 2 of part A of title I of
the Elementary and Secondary Education Act of 1965 (20
U.S.C. 6331 et seq.) for the most recent fiscal year if the
Secretary had disregarded the numbers of children count-
ed under that subpart who were enrolled in schools of local
educational agencies that are eligible to receive direct
grants under section 526 of this title.
(b) ADJUSTMENTS
TO
ALLOCATIONS.—The Sec-
retary shall adjust the allocations under subsection (a),
as necessary, to ensure that, of the total amount allocated
to States under subsection (a) and to local educational
agencies under section 526, the percentage allocated to a
State under this section and to localities in the State
under section 526 is at least the minimum percentage for
the State described in section 1124(d) of the Elementary
132
and Secondary Education Act of 1965 (20 U.S.C.
6334(d)) for the previous fiscal year.
(c) REALLOCATIONS.—If a State does not apply for
its allocation, applies for less than its full allocation, or
fails to submit an approvable application, the Secretary
may reallocate all or a portion of the State’s allocation,
as the case may be, to the remaining States in the same
proportions as the original allocations were made to those
States under subsections (a) and (b).
SEC. 512. ELIGIBLE STATE AGENCY.
The Secretary shall award each State’s grant to the
State agency, such as a State educational agency, a State
school construction agency, or a State bond bank, that the
Governor, with the agreement of the chief State school of-
ficer, designates as best able to administer the grant.
SEC. 513. ALLOWABLE USE OF FUNDS.
Each State shall use its grant under this part only
for one or more of the following activities to subsidize the
cost of eligible school construction projects described in
section 514:
(1) Providing a portion of the interest cost (or
of another financing cost approved by the Secretary)
on bonds, certificates of participation, purchase or
lease arrangements, or other forms of indebtedness
133
issued or entered into by a State or its instrumental-
ity for the purpose of financing eligible projects.
(2) State-level expenditures approved by the
Secretary for credit enhancement for the debt or fi-
nancing instruments described in paragraph (1).
(3) Making subgrants, or making loans through
a State revolving fund, to local educational agencies
or (with the agreement of the affected local edu-
cational agency) to other qualified public agencies to
subsidize—
(A) the interest cost (or another financing
cost approved by the Secretary) of bonds, cer-
tificates of participation, purchase or lease ar-
rangements, or other forms of indebtedness is-
sued or entered into by a local educational
agency or other agency or unit of local govern-
ment for the purpose of financing eligible
projects; or
(B) local expenditures approved by the
Secretary for credit enhancement for the debt
or financing instruments described in subpara-
graph (A).
(4) Other State and local expenditures approved
by the Secretary that leverage funds for additional
school construction.
134
SEC. 514. ELIGIBLE CONSTRUCTION PROJECTS; PERIOD OF
INITIATION.
(a) ELIGIBLE PROJECTS.—States and their sub-
grantees may use funds under this part, in accordance
with section 513, to subsidize the cost of—
(1) construction of elementary and secondary
school facilities in order to ensure the health and
safety of all students, which may include the removal
of environmental hazards; improvements in air qual-
ity, plumbing, lighting, heating and air conditioning,
electrical systems, or basic school infrastructure; and
building improvements that increase school safety;
(2) construction activities needed to meet the
requirements of section 504 of the Rehabilitation
Act of 1973 (29 U.S.C. 794) or of the Americans
with Disabilities Act of 1990 (42 U.S.C. 12101 et
seq.);
(3) construction activities that increase the en-
ergy efficiency of school facilities;
(4) construction that facilitates the use of mod-
ern educational technologies;
(5) construction of new school facilities that are
needed to accommodate growth in school enroll-
ments; or
135
(6) construction projects needed to facilitate the
establishment of charter schools and community
schools.
(b) PERIOD FOR INITIATION OF PROJECT.—(1) Each
State shall use its grant under this part only to subsidize
construction projects described in subsection (a) that the
State or its localities have chosen to initiate, through the
vote of a school board, passage of a bond issue, or similar
public decision, made between July 11, 1996 and Septem-
ber 30, 2001.
(2) If a State determines, after September 30, 2001,
that an eligible project for which it has obligated funds
under this part will not be carried out, the State may use
those funds (or any available portion of those funds) for
other eligible projects selected in accordance with this
part.
(c) REALLOCATION.—If the Secretary determines, by
a date before September 30, 2001 selected by the Sec-
retary, that a State is not making satisfactory progress
in carrying out its plan for the use of the funds allocated
to it under this part, the Secretary may reallocate all or
part of those funds, including any interest earned by the
State on those funds, to one or more other States that
are making satisfactory progress.
136
SEC. 515. SELECTION OF LOCALITIES AND PROJECTS.
(a) PRIORITIES.—In determining which localities and
activities to support with grant funds, each State shall
give the highest priority to—
(1) localities with the greatest needs, as dem-
onstrated by inadequate educational facilities, cou-
pled with a low level of resources available to meet
school construction needs; and
(2) localities that will achieve the greatest
leveraging effect on school construction from assist-
ance under this part.
(b) ADDITIONAL CRITERIA.—In addition to the prior-
ities required by subsection (a), each State shall consider
each of the following in determining the use of its grant
funds under this part:
(1) The condition of the school facilities in dif-
ferent communities in the State.
(2) The energy efficiency and the effect on the
environment of projects proposed by communities,
and the extent to which these projects use cost-effi-
cient architectural design.
(3) The commitment of communities to finance
school construction and renovation projects with as-
sistance from the State’s grant, as demonstrated by
their incurring indebtedness or by similar public or
137
private commitments for the purposes described in
section 514(a).
(4) The ability of communities to repay bonds
or other forms of indebtedness supported with grant
funds.
(5) The particular needs, if any, of rural com-
munities in the State for assistance under this title.
(6) The receipt by local educational agencies in
the State of grants under part 3, except that a local
educational agency is not ineligible for a subgrant
under this part solely because it receives such a
grant.
SEC. 516. STATE APPLICATIONS.
(a) APPLICATION REQUIRED.—A State that wishes
to receive a grant under this part shall submit an applica-
tion to the Secretary, in the manner the Secretary may
require, not later than two years after the date of enact-
ment of this title.
(b) DEVELOPMENT OF APPLICATION.—(1) The State
agency designated under section 512 shall develop the
State’s application under this part only after broadly con-
sulting with the State board of education, and representa-
tives of local school boards, school administrators, the
business community, parents, and teachers in the State
about the best means of carrying out this part.
138
(2) If the State educational agency is not the State
agency designated under section 512, the designated agen-
cy shall consult with the State educational agency and ob-
tain its approval before submitting the State’s application.
(c) STATE SURVEY.—(1) Before submitting the
State’s application, the State agency designated under sec-
tion 512, with the involvement of local school officials and
experts in building construction and management, shall
survey the needs throughout the State (including in local-
ities receiving grants under part 3) for construction and
renovation of school facilities, including, at a minimum—
(A) the overall condition of school facilities in
the State, including health and safety problems;
(B) the capacity of the schools in the State to
house projected enrollments; and
(C) the extent to which the schools in the State
offer the physical infrastructure needed to provide a
high-quality education to all students.
(2) A State need not conduct a new survey under
paragraph (1) if it has previously completed a survey that
meets the requirements of that paragraph and that the
Secretary finds is sufficiently recent for the purpose of
carrying out this part.
(d) APPLICATION CONTENTS.—Each State applica-
tion under this part shall include—
139
(1) an identification of the State agency des-
ignated by the Governor under section 512 to receive
the State’s grant under this part;
(2) a summary of the results of the State’s sur-
vey of its school facility needs, as described in sub-
section (c);
(3) a description of how the State will imple-
ment its program under this part;
(4) a description of how the State will allocate
its grant funds, including a description of how the
State will implement the priorities and criteria de-
scribed in section 515;
(5)(A) a description of the mechanisms that will
be used to finance construction projects supported
by grant funds; and
(B) a statement of how the State will determine
the amount of the Federal subsidy to be applied, in
accordance with section 517(a), to each local project
that the State will support;
(6) a description of how the State will ensure
that the requirements of this part are met by sub-
grantees under this part;
(7) a description of the steps the State will take
to ensure that local educational agencies will ade-
140
quately maintain the facilities that are constructed
or improved with funds under this part;
(8) an assurance that the State will use its
grant only to supplement the funds that the State,
and the localities receiving subgrants, would spend
on school construction and renovation in the absence
of a grant under this part, and not to supplant those
funds;
(9) an assurance that, during the four-year pe-
riod beginning with the year the State receives its
grant, the combined expenditures for school con-
struction by the State and the localities that benefit
from the State’s program under this part (which, at
the State’s option, may include private contribu-
tions) will be at least 125 percent of those combined
expenditures for that purpose for the four preceding
years; and
(10) other information and assurances that the
Secretary may require.
(e) WAIVER OF REQUIREMENT TO INCREASE EX-
PENDITURES.—The Secretary may waive or modify the re-
quirement of subsection (d)(9) for a particular State if
the State demonstrates to the Secretary’s satisfaction that
that requirement is unduly burdensome because the State
or its localities have incurred a particularly high level of
142
or (2), such as for certificates of participation, pur-
chase or lease arrangements, reduction of the
amount of principal to be borrowed, or credit en-
hancements for individual construction projects, the
Federal subsidy shall be not more than one-half of
the interest cost, as determined by the State in ac-
cordance with paragraph (4), that would have been
incurred if bonds had been used to finance the
project.
(4) The interest cost referred to in paragraphs
(1), (2), and (3) shall be—
(A) calculated on the basis of net present
value; and
(B) determined in accordance with an am-
ortization schedule and any other criteria and
conditions the Secretary considers necessary, in-
cluding provisions to ensure comparable treat-
ment of different financing mechanisms.
(b) STATE-FUNDED PROJECTS.—For a construction
project under this part funded directly by the State
through the use of State-issued bonds or other financial
instruments, the Secretary shall determine the Federal
subsidy in accordance with subsection (a).
(c) NON-FEDERAL SHARE.—A State, and localities
in the State receiving subgrants under this part, may use
143
any non-Federal funds, including State, local, and private-
sector funds, for the financing costs that are not covered
by the Federal subsidy under subsection (a).
SEC. 518. SEPARATE FUNDS OR ACCOUNTS’ PRUDENT IN-
VESTMENT.
(a) SEPARATE FUNDS OR ACCOUNTS REQUIRED.—
Each State that receives a grant, and each recipient of
a subgrant under this part, shall deposit the grant or
subgrant proceeds in a separate fund or account, from
which it shall make bond repayments and pay other ex-
penses allowable under this part.
(b) PRUDENT INVESTMENT REQUIRED.—Each State
that receives a grant, and each recipient of a subgrant
under this part, shall—
(1) invest the grant or subgrant in a fiscally pru-
dent manner, in order to generate amounts needed
to make repayments on bonds and other forms of in-
debtedness described in section 513; and
(2) notwithstanding section 6503 of title 31,
United States Code or any other law, use the pro-
ceeds of that investment to carry out this part.
SEC. 519. STATE REPORTS.
(a) REPORTS REQUIRED.—
(1) Each State receiving a grant under this
part shall report to the Secretary on its activities
144
under this part, in the form and manner the Sec-
retary may prescribe.
(2) If the State educational agency is not the
State agency designated under section 512, the
State’s report shall include the approval of the State
educational agency or its comments on the report.
(b) CONTENTS.—Each report shall—
(1) describe the State’s implementation of this
part, including how the State has met the require-
ments of this part;
(2) identify the specific school facilities con-
structed, renovated, or modernized with support
from the grant, and the mechanisms used to finance
those activities;
(3) identify the level of Federal subsidy pro-
vided to each construction project carried out with
support from the State’s grant; and
(4) include any other information the Secretary
may require.
(c) FREQUENCY.—(1) Each State shall submit its
first report under this section not later than 24 months
after it receives its grant under this part.
(2) Each State shall submit an annual report for each
of the three years after submitting its first report, and
145
subsequently shall submit periodic reports as long as the
State or localities in the State are using grant funds.
PART 3—DIRECT GRANTS TO LOCAL EDUCATIONAL
AGENCIES
SEC. 521. ELIGIBLE LOCAL EDUCATIONAL AGENCIES.
(a) ELIGIBLE AGENCIES.—Except as provided in
subsection (b), the local educational agencies that are eli-
gible to receive formula grants under section 526 and com-
petitive grants under section 527 from the Secretary are
the 100 local educational agencies with the largest num-
bers of children aged 5 through 17 from families living
below the poverty level, as determined by the Secretary
using the most recent data available from the Department
of Commerce that are satisfactory to the Secretary.
(b) CERTAIN JURISDICTIONS INELIGIBLE.—For the
purpose of this part, the local educational agencies for Ha-
waii and the Commonwealth of Puerto Rico are not eligi-
ble local educational agencies.
SEC. 522. GRANTEES.
For each local educational agency described in section
521(a) for which an approvable application is submitted,
the Secretary shall make any grant under this part to the
local educational agency or to another public agency, on
behalf of the local educational agency, if the Secretary de-
termines, on the basis of the local educational agency’s
146
recommendation, that the other agency is better able to
carry out activities under this part.
SEC. 523. ALLOWABLE USE OF FUNDS.
Each grantee under this part shall use its grant only
for one or more of the following activities to reduce the
cost of financing eligible school construction projects de-
scribed in section 524:
(1) Providing a portion of the interest cost (or
of any other financing cost approved by the Sec-
retary) on bonds, certificates of participation, pur-
chase or lease arrangements, or other forms of in-
debtedness issued or entered into by a local edu-
cational agency or other unit or agency of local gov-
ernment for the purpose of financing eligible school
construction projects.
(2) Local expenditures approved by the Sec-
retary for credit enhancement for the debt or financ-
ing instruments described in paragraph (1).
(3) Other local expenditures approved by the
Secretary that leverage funds for additional school
construction.
SEC. 524. ELIGIBLE CONSTRUCTION PROJECTS; REDIS-
TRIBUTION.
(a) ELIGIBLE PROJECTS.—A grantee under this part
may use its grant, in accordance with section 523, to sub-
147
sidize the cost of the activities described in section 514(a)
for projects that the local educational agency has chosen
to initiate, through the vote of the school board, passage
of a bond issue, or similar public decision, made between
July 11, 1996 and September 30, 2001.
(b) REDISTRIBUTION.—If the Secretary determines,
by a date before September 30, 2001 selected by the Sec-
retary, that a local educational agency is not making satis-
factory progress in carrying out its plan for the use of
funds awarded to it under this part, the Secretary may
redistribute all or part of those funds, and any interest
earned by that agency on those funds, to one or more
other local educational agencies that are making satisfac-
tory progress.
SEC. 525. LOCAL APPLICATIONS.
(a) APPLICATION REQUIRED.—A local educational
agency, or an alternative agency described in section 522
(both referred to in this part as the ‘‘local agency’’), that
wishes to receive a grant under this part shall submit an
application to the Secretary, in the manner the Secretary
may require, not later than two years after the date of
enactment of this title.
(b) DEVELOPMENT OF APPLICATION.—(1) The local
agency shall develop the local application under this part
only after broadly consulting with parents, administrators,
148
teachers, the business community, and other members of
the local community about the best means of carrying out
this part.
(2) If the local educational agency is not the appli-
cant, the applicant shall consult with the local educational
agency, and shall obtain its approval before submitting its
application to the Secretary.
(c) LOCAL SURVEY.—(1) Before submitting its appli-
cation, the local agency, with the involvement of local
school officials and experts in building construction and
management, shall survey the local need for construction
and renovation of school facilities, including, at a mini-
mum—
(A) the overall condition of school facilities in
the local educational agency, including health and
safety problems;
(B) the capacity of the local educational agen-
cy’s schools to house projected enrollments; and
(C) the extent to which the local educational
agency’s schools offer the physical infrastructure
needed to provide a high-quality education to all stu-
dents.
(2) A local educational agency need not conduct a
new survey under paragraph (1) if it has previously com-
pleted a survey that meets the requirements of that para-
150
with funds under this part will be adequately main-
tained;
(9) an assurance that the agency will use its
grant only to supplement the funds that the locality
would spend on school construction and renovation
in the absence of a grant under this part, and not
to supplant those funds;
(10) an assurance that, during the four-year
period beginning with the year the local educational
agency receives its grant, its expenditures for school
construction (which, at that agency’s option, may in-
clude private contributions) will be at least 125 per-
cent of its expenditures for that purpose for the four
preceding years; and
(11) other information and assurances that the
Secretary may require.
(e) WAIVER OF REQUIREMENT TO INCREASE EX-
PENDITURES.—The Secretary may waive or modify the re-
quirement of subsection (d)(10) for a local educational
agency that demonstrates to the Secretary’s satisfaction
that that requirement is unduly burdensome because that
agency has incurred a particularly high level of school con-
struction expenditures during the previous four years.
151
SEC. 526. FORMULA GRANTS.
(a) ALLOCATIONS.—The Secretary shall allocate the
funds available under section 504(b)(2) to the local edu-
cational agencies identified under section 521(a) on the
basis of their relative allocations under section 1124 of
the Elementary and Secondary Education Act of 1965 (20
U.S.C. 6333) in the most recent year for which that infor-
mation is available to the Secretary.
(b) REALLOCATIONS.—If a local educational agency
does not apply for its allocation, applies for less than its
full allocation, or fails to submit an approvable applica-
tion, the Secretary may reallocate all or a portion of its
allocation, as the case may be, to the remaining local edu-
cational agencies in the same proportions as the original
allocations were made to those agencies under subsection
(a).
SEC. 527. COMPETITIVE GRANTS.
(a) GRANTS AUTHORIZED.—The Secretary shall use
funds available under section 504(b)(3) to make additional
grants, on a competitive basis, to recipients of formula
grants under section 526.
(b) ADDITIONAL APPLICATION MATERIALS.—Any el-
igible applicant under section 526 that wishes to receive
additional funds under this section shall include in its ap-
plication under section 525 the following additional infor-
mation:
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(1) The amount of funds requested under this
section, in accordance with ranges or limits that the
Secretary may establish based on factors such as rel-
ative size of the eligible applicants.
(2) A description of the additional construction
activities that the applicant would carry out with
those funds.
(3) Information on the current financial effort
the applicant is making for elementary and second-
ary education, including support from private
sources, relative to its resources.
(4) Information on the extent to which the ap-
plicant will increase its own (or other public or pri-
vate) spending for school construction in the year in
which it receives a grant under this section, above
the average annual amount for construction activity
during the preceding four years.
(5) A description of the energy efficiency and
the effect on the environment of the projects that
the applicant will undertake, both with its grant
under this section and its grant under section 526,
and of the extent to which those projects will use
cost-efficient architectural design.
(6) Other information that the Secretary may
require.
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(c) SELECTION OF GRANTEES.—The Secretary shall
select grantees under this section on the basis of criteria,
consistent with the purpose of this title, that the Secretary
may establish, which shall include—
(1) the relative need of applicants, as dem-
onstrated by inadequate educational facilities and a
low level of resources to meet their school construc-
tion needs;
(2) the commitment of applicants to meet their
school construction needs and the leveraging effect
that assistance under this part would have, as dem-
onstrated by the additional resources that they will
provide, from non-Federal sources, to meet those
needs, in accordance with subsection (b)(4).
SEC. 528. AMOUNT OF FEDERAL SUBSIDY.
(a) AMOUNT OF FEDERAL SUBSIDY.—For each con-
struction project assisted under this part, the Secretary
shall determine the amount of the Federal subsidy in ac-
cordance with section 517(a).
(b) NON-FEDERAL SHARE.—A grantee under this
part may use any non-Federal funds, including State,
local, and private-sector funds, for the financing costs that
are not covered by the Federal subsidy under subsection
(a).
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SEC. 529. SEPARATE FUNDS OR ACCOUNTS; PRUDENT IN-
VESTMENT
(a) SEPARATE FUNDS OR ACCOUNTS REQUIRED.—
Each grantee under this part shall deposit the grant pro-
ceeds in a separate fund or account, from which it shall
make bond repayments and pay other expenses allowable
under this part.
(b) 
PRUDENT
INVESTMENT
REQUIRED.—Each
grantee under this part shall—
(1) invest the grant funds in a fiscally prudent
manner, in order to generate amounts needed to
make repayments on bonds and other forms of in-
debtedness; and
(2) Notwithstanding section 6503 of title 31,
United States Code or any other law, use the pro-
ceeds of that investment to carry out this part.
SEC. 530. LOCAL REPORTS.
(a) REPORTS REQUIRED.—(1) Each grantee under
this part shall report to the Secretary on its activities
under this part, in the form and manner the Secretary
may prescribe.
(2) If the local educational agency is not the grantee
under this part, the grantee’s report shall include the ap-
proval of the local educational agency or its comments on
the report.
(b) CONTENTS.—Each report shall—
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(1) describe the grantee’s implementation of
this part, including how it has met the requirements
of this part;
(2) identify the specific school facilities con-
structed, renovated, or modernized with support
from the grant, and the mechanisms used to finance
those activities; and
(3) other information the Secretary may re-
quire.
(c) FREQUENCY.—(1) Each grantee shall submit its
first report under this section not later than 24 months
after it receives its grant under this part.
(2) Each grantee shall submit an annual report for
each of the three years after submitting its first report,
and subsequently shall submit periodic reports as long as
it is using grant funds.
PART 4—GENERAL PROVISIONS
SEC. 531. TECHNICAL EMPLOYEES.
For the purpose of carrying out this title, the Sec-
retary, without regard to the provisions of title 5, United
States Code, governing appointments in the competitive
service, may appoint not more than 10 technical employees
who may be paid without regard to the provisions of chap-
ter 51 and subchapter IV of chapter 5 of that title relating
to classification and General Schedule pay rates.
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SEC. 532. WAGE RATES.
(a) PREVAILING WAGE.—The Secretary shall ensure
that all laborers and mechanics employed by contractors
and subcontractors on any project assisted under this title
are paid wages at rates not less than those prevailing as
determined by the Secretary of Labor in accordance with
the Act of March 3, 1931, as amended (40 U.S.C. 276a
et seq.). The Secretary of Labor has, with respect to this
section, the authority and functions established in Reorga-
nization Plan Numbered 14 of 1950 (effective May 24,
1950, 64 Stat. 1267) and section 2 of the Act of June
13, 1934 (40 U.S.C. 276c).
(b) WAIVER FOR VOLUNTEERS.—Section 7305 of the
Federal Acquisition Streamlining Act of 1994 (40 U.S.C.
276d–3) is amended—
(1) in paragraph (5), by striking out the ‘‘and’’
at the end thereof;
(2) in paragraph (6), by striking out the period
at the end thereof and inserting a semi-colon and
‘‘and’’; and
(3) by adding at the end thereof the following
new paragraph:
‘‘(7) the Partnership to Rehabilitate America’s
Schools Act of 1997.’’.
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SEC. 533. NO LIABILITY OF FEDERAL GOVERNMENT.
(a) NO FEDERAL LIABILITY.—Any financial instru-
ments, including but not limited to contracts, bonds, bills,
notes, certificates of participation, or purchase or lease ar-
rangements, issued by States, localities or instrumental-
ities thereof in connection with any assistance provided by
the Secretary under this title are obligations of such
States, localities or instrumentalities and not obligations
of the United States and are not guaranteed by the full
faith and credit of the United States.
(b) NOTICE REQUIREMENT.—Documents relating to
any financial instruments, including but not limited to
contracts, bonds, bills, notes, offering statements, certifi-
cates of participation, or purchase or lease arrangements,
issued by States, localities or instrumentalities thereof in
connection with any assistance provided under this title,
shall include a prominent statement providing notice that
the financial instruments are not obligations of the United
States and are not guaranteed by the full faith and credit
of the United States.
SEC. 534. CONSULTATION WITH SECRETARY OF THE
TREASURY.
The Secretary shall consult with the Secretary of the
Treasury in carrying out this title.
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TITLE VI—BUDGETING
PROVISIONS
SEC. 601. INCREASE IN BUDGET FUNCTIONS FOR DOMES-
TIC PROGRAMS.
The Director of the Congressional Budget Office
shall determine, by budget function, the amount of new
budget authority and the amount of outlays for fiscal year
1998 resulting from the provisions of this Act. The
amounts so determined shall be considered for all purposes
as increases in the amounts provided in the Concurrent
Resolution on the Budget for Fiscal Year 1998 (as adopt-
ed) for new budget authority, and the amounts provided
in such resolution for outlays, for fiscal year 1998 for
those budget functions.
SEC. 602. OFFSETTING REDUCTIONS IN DEFENSE BUDGET
FUNCTION.
The amount provided in the Concurrent Resolution
on the Budget for Fiscal Year 1998 (as adopted) for new
budget authority, and the amount provided in such resolu-
tion for outlays, for fiscal year 1998 for the national de-
fense budget function (function 050) are hereby reduced
by the amounts (as determined by Director of the Con-
gressional Budget Office) necessary to offset the total in-
159
creases in amounts for new budget authority and for out-
lays under section 601.
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