I
105TH CONGRESS
1ST SESSION
H. R. 2878
To amend the Elementary and Secondary Education Act of 1965 to establish
a loan program and a bond guarantee program to assist local educational
agencies in the construction, reconstruction, and renovation of public
elementary and secondary schools.
IN THE HOUSE OF REPRESENTATIVES
NOVEMBER 7, 1997
Mr. ANDREWS (for himself and Mr. MENENDEZ) introduced the following bill;
which was referred to the Committee on Education and the Workforce
A BILL
To amend the Elementary and Secondary Education Act
of 1965 to establish a loan program and a bond guaran-
tee program to assist local educational agencies in the
construction, reconstruction, and renovation of public ele-
mentary and secondary schools.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. LOAN PROGRAM FOR SCHOOL FACILITIES IM-
PROVEMENT.
Title XII of the Elementary and Secondary Edu-
cation Act of 1965 (20 U.S.C. 8501 et seq.) is amended
to read as follows:
‘‘TITLE XII—SCHOOL FACILITIES
IMPROVEMENT ACT
‘‘SEC. 12001. FINDINGS.
‘‘The Congress finds the following:
‘‘(1) According to a 1991 survey conducted by
the American Association of School Administrators,
74 percent of all public school buildings in the Unit-
ed States need to be replaced.
‘‘(2) Almost one-third of such buildings were
built prior to World War II.
‘‘(3) It is estimated that 1 of every 4 public
school buildings in the United States is in inad-
equate condition, and of such buildings, 61 percent
need maintenance or major repairs, 43 percent are
obsolete, 42 percent contain environmental hazards,
25 percent are overcrowded, and 13 percent are
structurally unsound.
‘‘(4) According to a 1996 General Accounting
Office report, 14,000,000 students attend schools in
which 1 or more school buildings (original, addi-
tional, or temporary) are in need of extensive repair
or replacement.
‘‘(5) Large numbers of local educational agen-
cies have difficulties securing financing for school fa-
cility improvement.
‘‘SEC. 12002. PURPOSE.
‘‘The purpose of this title is to leverage limited Fed-
eral funds to enable local educational agencies to finance
the costs associated with the improvement of school facili-
ties within their jurisdiction.
‘‘SEC. 12003. FEDERAL ASSISTANCE IN THE FORM OF
LOANS.
‘‘(a) AUTHORITY AND CONDITIONS FOR LOANS.—To
assist local educational agencies in the construction of
schools to replace schools which are 50 years of age or
older, or in the reconstruction or renovation of schools
which are 50 years of age or older, the Secretary may
make loans of funds to such agencies for the construction,
reconstruction, or renovation of such schools. Such assist-
ance shall only be provided—
‘‘(1) to local educational agencies eligible for
grants under section 1124A, schools located on In-
dian reservations, or local educational agencies eligi-
ble for payments under sections 8003 and 8004; and
‘‘(2) if the Secretary finds that such construc-
tions will be undertaken in an economical manner,
and that any such construction, reconstruction or
renovation is not or will not be of elaborate or ex-
travagant design or materials.
‘‘(b) PRIORITIES.—
‘‘(1) IN GENERAL.—In approving loans under
this title, the Secretary shall consider—
‘‘(A) the difficulty of the applicant in se-
curing affordable financing from other sources;
‘‘(B) the threat the condition of the phys-
ical plant poses to the safety and well-being of
students;
‘‘(C) the demonstrated need for the con-
struction, reconstruction, or renovation as based
on the condition of the facility; and
‘‘(D) the age of the facility to be renovated
or replaced.
‘‘(2) PREFERENCE.—In approving loans under
this title, the Secretary shall give preference to ap-
plicants from States that have made a loan to the
applicant in an amount not less than 25 percent of
the amount of the loan amount requested in the ap-
plication and for the purpose described in the appli-
cation.
‘‘(c) AMOUNT AND CONDITIONS OF LOANS.—A loan
to a local educational agency—
‘‘(1) may be in an amount not exceeding the
total development cost of the facility, as determined
by the Secretary;
‘‘(2) shall be secured in such manner, as may
be determined by the Secretary;
‘‘(3) shall be repaid within 30 years; and
‘‘(4) shall bear interest at a rate, determined by
the Secretary, that will cover the cost (as defined in
section 502 of the Federal Credit Reform Act of
1990) of the loan, and the administrative cost to the
Federal Government of the loan.
‘‘SEC. 12004. FEDERAL ASSISTANCE IN THE FORM OF DEBT
GUARANTEES.
‘‘(a) AUTHORITY AND CONDITIONS FOR DEBT GUAR-
ANTEES.—To assist local educational agencies in the con-
struction of schools to replace schools which are 50 years
of age or older, or in the reconstruction or renovation of
schools which are 50 years of age or older, the Secretary
may guarantee and make commitments to guarantee eligi-
ble debt instruments issued by such agencies for the con-
struction, reconstruction, or renovation of such schools.
Such assistance shall only be provided—
‘‘(1) to local educational agencies eligible for
grants under section 1124A, schools located on In-
dian reservations, or local educational agencies eligi-
ble for payments under sections 8003 and 8004; and
‘‘(2) if the Secretary finds that such construc-
tions will be undertaken in an economical manner,
and that any such construction, reconstruction or
renovation is not or will not be of elaborate or ex-
travagant design or materials.
‘‘(b) PRIORITIES.—
‘‘(1) IN GENERAL.—In approving debt guaran-
tees under this title, the Secretary shall consider—
‘‘(A) the difficulty of the applicant in se-
curing affordable financing guarantees from
other sources;
‘‘(B) the threat the condition of the phys-
ical plant poses to the safety and well-being of
students;
‘‘(C) the demonstrated need for the con-
struction, reconstruction, or renovation as based
on the condition of the facility; and
‘‘(D) the age of the facility to be renovated
or replaced.
‘‘(2) PREFERENCE.—In approving debt guaran-
tees under this title, the Secretary shall give pref-
erence to applicants from States that have made a
loan to the applicant for the purpose described in
the application and in an amount not less than 25
percent of the aggregate principal amount of the
debt instruments to be guaranteed.
‘‘(c) AMOUNT AND CONDITIONS OF GUARANTEES.—
A debt guarantee to a local educational agency—
‘‘(1) may be in an amount not exceeding the
total development cost of the facility, as determined
by the Secretary;
‘‘(2) shall be secured in such manner, as may
be determined by the Secretary; and
‘‘(3) shall be made only with respect to debt in-
struments that—
‘‘(A) have a maturity of 30 years;
‘‘(B) bear interest at a maximum rate, de-
termined by the Secretary taking into account
the interest rate paid by the Federal Govern-
ment with respect to Federal debt instruments
of a similar nature; and
‘‘(C) otherwise are in such form and de-
nomination, and are subject to such other con-
ditions, as the Secretary shall prescribe.
‘‘(d) FULL FAITH AND CREDIT.—The full faith and
credit of the United States is hereby pledged to the pay-
ment of all guarantees made under this section. Any such
guarantee made by the Secretary shall be conclusive evi-
dence of the eligibility of the debt instrument for such
guarantee with respect to principal and interest, and the
validity of any such guarantee so made shall be incontest-
able in the hands of a holder of the guaranteed debt in-
strument.
‘‘SEC. 12005. GENERAL PROVISIONS.
‘‘(a) BUDGET AND ACCOUNTING.—In the perform-
ance of, and with respect to, the functions, powers, and
duties under this title, the Secretary, notwithstanding the
provisions of any other law, shall—
‘‘(1) prepare annually and submit a budget pro-
gram as provided for wholly owned Government cor-
porations by chapter 91 of title 31, United States
Code; and
‘‘(2) maintain a set of accounts which shall be
audited by the Comptroller General in accordance
with the provisions of chapter 35 of title 31, United
States Code.
‘‘(b) USE OF FUNDS.—Funds made available to the
Secretary pursuant to the provisions of this title shall be
deposited in a checking account or accounts with the
Treasurer of the United States. Receipts and assets ob-
tained or held by the Secretary in connection with the per-
formance of functions under this title, and all funds avail-
able for carrying out the functions of the Secretary under
this title (including appropriations therefor, which are
hereby authorized), shall be available, in such amounts as
may from year to year be authorized by the Congress, for
the administrative expenses of the Secretary in connection
with the performance of such functions.
‘‘(c) LEGAL POWERS.—In the performance of, and
with respect to, the functions, powers, and duties under
this title, the Secretary, notwithstanding the provisions of
any other law, may—
‘‘(1) prescribe such rules and regulations as
may be necessary to carry out the purposes of this
title;
‘‘(2) sue and be sued;
‘‘(3) foreclose on any property or commence any
action to protect or enforce any right conferred upon
the Secretary by any law, contract, or other agree-
ment, and bid for and purchase at any foreclosure
or any other sale any property in connection with
which the Secretary has made a loan pursuant to
this title;
‘‘(4) in the event of any such acquisition, not-
withstanding any other provision of law relating to
the acquisition, handling, or disposal of real property
by the United States, complete, administer, remodel
and convert, dispose of, lease, and otherwise deal
with, such property, but any such acquisition of real
property shall not deprive any State or political sub-
division thereof of its civil or criminal jurisdiction in
and over such property or impair the civil rights
under the State or local laws of the inhabitants on
such property;
‘‘(5) sell or exchange at public or private sale,
or lease, real or personal property, and sell or ex-
change any securities or obligations, upon such
terms as the Secretary may fix;
‘‘(6) obtain insurance against loss in connection
with property and other assets held; and
‘‘(7) include in any contract or instrument
made pursuant to this title such other covenants,
conditions, or provisions as may be necessary to as-
sure that the purposes of this title will be achieved.
‘‘(d) CONTRACTS FOR SUPPLIES OR SERVICES.—Sec-
tion 3709 of the Revised Statutes shall not apply to any
contract for services or supplies on account of any prop-
erty acquired pursuant to this title if the amount of such
contract does not exceed $1,000.
‘‘(e) APPLICABILITY OF GOVERNMENT CORPORATION
CONTROL ACT.—The provisions of section 9107(a) of title
31, United States Code, which are applicable to corpora-
tions or agencies subject to chapter 91 of such title, shall
also be applicable to the activities of the Secretary under
this title.
‘‘(f) LABOR STANDARDS.—
‘‘(1) LABORERS AND MECHANICS.—All laborers
and mechanics employed by contractors or sub-
contractors in the performance of any contract or
subcontract for the repair, renovation, alteration, or
construction, including painting or decorating, of
any building or work that is financed in whole or in
part by a grant, loan, or debt guarantee under this
title, shall be paid wages not less than those deter-
mined by the Secretary of Labor in accordance with
the Act of March 3, 1931 (Davis Bacon Act), as
amended. The Secretary of Labor shall have the au-
thority and functions set forth in Reorganization
Plan Number 14 of 1950 (15 FR 3176; 64 Stat.
1267) and section 276c of title 40.
‘‘(2) EXCEPTIONS.—The requirements of this
subsection shall not apply to an individual—
‘‘(A) who volunteers—
‘‘(i) to perform a service directly to a
local educational agency for civic, chari-
table, or humanitarian reasons, without
promise, expectation, or receipt of com-
pensation for services rendered, other than
expenses, reasonable benefits, or a nominal
fee (as defined in subsection (b) of this
section), but solely for the personal pur-
pose or pleasure of the individual; and
‘‘(ii) to provide such service freely and
without pressure or coercion, direct or im-
plied, from any employer;
‘‘(B) whose contribution of service is not
for the direct or indirect benefit of any contrac-
tor otherwise performing or seeking to perform
work on the same project for which the individ-
ual is volunteering;
‘‘(C) who is not employed by and does not
provide services to a contractor or subcontrac-
tor at any time on any contract or subcontract
for the repair, renovation, alteration, or con-
struction, including painting or decorating, of
any building or work that is financed in part by
a loan, or debt guarantee under this sub-
chapter, for which the individual is volunteer-
ing; and
‘‘(D) who is not otherwise employed by the
same local educational agency to perform the
same type of services as those for which the in-
dividual proposes to volunteer.
‘‘(3) PAYMENTS
TO
VOLUNTEERS.—Payments
of expenses, reasonable benefits, or a nominal fee
may be provided to volunteers described in para-
graph (2) of this subsection only in accordance with
regulations issued by the Secretary of Labor. In pre-
scribing the regulations, the Secretary shall take
into consideration criteria such as the total amount
of payments made (relating to expenses, benefits, or
fees) in the context of the economic realities. The
regulations shall include provisions that provide
that—
‘‘(A) a payment for an expense may be re-
ceived by a volunteer for items such as uniform
allowances, protective gear and clothing, reim-
bursement for approximate out-of-pocket ex-
penses, or for the cost or expense of meals and
transportation;
‘‘(B) a reasonable benefit may include the
inclusion of a volunteer in a group insurance
plan (such as a liability, health, life, disability,
or worker’s compensation plan) or pension plan,
or the awarding of a length of service award;
and
‘‘(C) a nominal fee may not be used as a
substitute for compensation and may not be
connected to productivity.
The decision as to what constitutes a nominal fee for
purposes of subparagraph (C) shall be determined
based on the context of the economic realities of the
situation involved and shall be made by the Sec-
retary of Labor.
‘‘(4) DETERMINATION OF PAYMENT.—For pur-
poses of paragraph (2) of this subsection, in deter-
mining whether an expense, benefit, or fee described
in such subsection may be paid to volunteers in the
context of the economic realities of the particular
situation, the Secretary of Labor may not permit
any such expense, benefit, or fee that has the effect
of undermining labor standards by creating down-
ward pressure on prevailing wages in the local con-
struction industry.
‘‘(g) LIMITATIONS.—
‘‘(1) SUCCESSIVE
LOANS.—No loan or bond
guarantee shall be made under this title to any local
educational agency until 5 years after the date on
which a previous loan or bond guarantee to that
agency was made under this title, unless the loan is
intended to be used to construct or reconstruct a fa-
cility damaged as a result of a natural disaster, as
declared by the President.
‘‘(2) SCHOOLS IN ONE STATE.—Not more than
12.5 percent of the amount of the funds annually
provided for in this title in the form of loans or bond
guarantees shall be made available to educational in-
stitutions within any one State.
‘‘SEC. 12006. DEFINITION.
‘‘The term ‘school’ is defined as public structures
suitable for use as classrooms, laboratories, libraries, and
related facilities, the primary purpose of which is the in-
struction of elementary and secondary school students.
‘‘SEC. 12007. AUTHORIZATION OF APPROPRIATIONS.
‘‘There are authorized to be appropriated to carry out
this title, $200,000,000 for fiscal year 1999 and such
sums as may be necessary for each of the 4 succeeding
fiscal years.’’.
Æ