I
106TH CONGRESS
1ST SESSION
H. R. 1760
To amend the Internal Revenue Code of 1986 to expand the incentives
for the construction, repair, rehabilitation, and renovation of public schools.
IN THE HOUSE OF REPRESENTATIVES
MAY 11, 1999
Mrs. JOHNSON of Connecticut introduced the following bill; which was referred
to the Committee on Ways and Means, and in addition to the Committee
on Education and the Workforce, for a period to be subsequently deter-
mined by the Speaker, in each case for consideration of such provisions
as fall within the jurisdiction of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to expand
the incentives for the construction, repair, rehabilitation,
and renovation of public schools.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘America’s Better
Classrooms Act of 1999’’.
SEC. 2. FINDINGS.
The Congress hereby finds:
(1) Public school buildings in urban, suburban,
and rural school districts across the United States
need extensive repair, rehabilitation, and renovation.
(2) New buildings will be needed in many
school districts as a result of a surge in student en-
rollments.
(3) The General Accounting Office has found
that more than 14 million children attend schools in
need of extensive repair or replacement, 7 million
children attend schools with safety code violations,
and 12 million children attend schools with leaky
roofs.
(4) Many public schools do not have the appro-
priate infrastructure to be able to use computers
and other technology needed to adequately prepare
students to meet the challenges of the 21st Century.
(5) The Federal Government can support public
school repair, modernization, and construction with-
out interfering with local control.
SEC. 3. CREDIT TO HOLDERS OF QUALIFIED PUBLIC
SCHOOL CONSTRUCTION BONDS.
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end the following new
section:
‘‘SEC. 30B. CREDIT TO HOLDERS OF QUALIFIED PUBLIC
SCHOOL CONSTRUCTION BONDS.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax-
payer who holds a qualified school construction bond on
a credit allowance date of such bond which occurs during
the taxable year, there shall be allowed as a credit against
the tax imposed by this chapter for such taxable year an
amount equal to the sum of the credits determined under
subsection (b) with respect to credit allowance dates dur-
ing such year on which the taxpayer holds such bond.
‘‘(b) AMOUNT OF CREDIT.—
‘‘(1) IN GENERAL.—The amount of the credit
determined under this subsection with respect to any
credit allowance date for a qualified school construc-
tion bond is 25 percent of the annual credit deter-
mined with respect to such bond.
‘‘(2) ANNUAL CREDIT.—The annual credit de-
termined with respect to any qualified school con-
struction bond is the product of—
‘‘(A) the applicable credit rate, multiplied
by
‘‘(B) the outstanding face amount of the
bond.
‘‘(3) APPLICABLE CREDIT RATE.—For purposes
of paragraph (1), the applicable credit rate with re-
spect to an issue is the rate equal to an average
market yield (as of the day before the date of
issuance of the issue) on outstanding long-term cor-
porate debt obligations (determined under regula-
tions prescribed by the Secretary).
‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE-
DEMPTION.—In the case of a bond which is issued
during the 3-month period ending on a credit allow-
ance date, the amount of the credit determined
under this subsection with respect to such credit al-
lowance date shall be a ratable portion of the credit
otherwise determined based on the portion of the 3-
month period during which the bond is outstanding.
A similar rule shall apply when the bond is re-
deemed.
‘‘(c) QUALIFIED SCHOOL CONSTRUCTION BOND.—
For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified school
construction 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 the construction,
rehabilitation, or repair of a public school facil-
ity or for the acquisition of land on which such
a facility is to be constructed with part of the
proceeds of such issue,
‘‘(B) the bond is issued by a State or local
government within the jurisdiction of which
such school is located,
‘‘(C) the issuer designates such bond for
purposes of this section, and
‘‘(D) the term of each bond which is part
of such issue does not exceed 15 years.
‘‘(2) LIMITATION ON AMOUNT OF BONDS DES-
IGNATED.—The maximum aggregate face amount of
bonds issued during any calendar year which may be
designated under paragraph (1) by any issuer shall
not exceed the limitation amount allocated under
paragraph (3) for such calendar year to such issuer.
‘‘(3) NATIONAL
LIMITATION
ON
AMOUNT
OF
BONDS DESIGNATED.—There is a national qualified
school construction bond limitation for each calendar
year. Such limitation is—
‘‘(A) $12,500,000,000 for 2000,
‘‘(B) $12,500,000,000 for 2001, and
‘‘(C) except as provided in paragraph (5),
zero after 2001.
‘‘(4) ALLOCATION
OF
LIMITATION
AMONG
STATES.—
‘‘(A) IN GENERAL.—The limitation appli-
cable under paragraph (3) for any calendar
year shall be allocated among the States by the
Secretary. The amount allocated to a State for
a calendar year shall be equal to the sum of—
‘‘(i) the amount allocated to the State
for such year under subparagraph (B), and
‘‘(ii) the amount allocated to the State
for such year under subparagraph (C).
The limitation amount allocated to a State
under the preceding sentence shall be allocated
by the State education agency to issuers within
such State and such allocations may be made
only if there is an approved State application.
‘‘(B) ALLOCATION
ON
BASIS
OF
BASIC
GRANTS UNDER TITLE I OF THE ELEMENTARY
AND SECONDARY EDUCATION ACT OF 1965.—
One-half of the limitation applicable under
paragraph (3) for any calendar year shall be al-
located 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 Elementary and Secondary Education
Act of 1965 (20 U.S.C. 6331 et seq.) for the
most recent fiscal year ending before such cal-
endar year.
‘‘(C) ALLOCATION ON BASIS OF TOTAL EL-
EMENTARY AND SECONDARY SCHOOL AGE POP-
ULATION.—One-half of the limitation applicable
under paragraph (3) for any calendar year shall
be allocated among the States in proportion to
the respective numbers of children in each State
who have attained age 5 but not age 18 for the
most recent fiscal year ending before such cal-
endar year.
‘‘(D) 
MINIMUM
ALLOCATIONS
TO
STATES.—
‘‘(i) IN
GENERAL.—The Secretary
shall adjust the allocations under this
paragraph for any calendar year for each
State to the extent necessary to ensure
that the amount allocated to such State
under this paragraph for such year is not
less than an amount equal to such State’s
minimum percentage of one-half of the
amount to be allocated under subpara-
graph (A) for the calendar year.
‘‘(ii) 
MINIMUM
PERCENTAGE.—A
State’s minimum percentage for any cal-
endar year is the minimum percentage de-
scribed in section 1124(d) of the Elemen-
tary and Secondary Education Act of 1965
(20 U.S.C. 6334(d)) for such State for the
most recent fiscal year ending before such
calendar year.
‘‘(E) ALLOCATIONS TO CERTAIN POSSES-
SIONS.—The amount to be allocated under sub-
paragraph (A) to any possession of the United
States other than Puerto Rico shall be the
amount which would have been allocated if all
allocations under subparagraph (A) were made
on the basis of respective populations of individ-
uals below the poverty line (as defined by the
Office of Management and Budget). In making
other allocations, the amount to be allocated
under subparagraph (A) shall be reduced by the
aggregate amount allocated under this subpara-
graph to possessions of the United States.
‘‘(F) APPROVED
STATE
APPLICATION.—
For purposes of subparagraph (A), the term
‘approved State application’ means an applica-
tion which is approved by the Secretary of Edu-
cation and which includes—
‘‘(i) the results of a recent publicly-
available survey (undertaken by the State
with the involvement of local education of-
ficials, members of the public, and experts
in school construction and management) of
such State’s needs for public school facili-
ties, including descriptions of—
‘‘(I) health and safety problems
at such facilities,
‘‘(II) the capacity of public
schools in the State to house projected
enrollments, and
‘‘(III) the extent to which the
public schools in the State offer the
physical infrastructure needed to pro-
vide a high-quality education to all
students, and
‘‘(ii) a description of how the State
will allocate to local educational agencies,
or otherwise use, its allocation under this
subsection to address the needs identified
under subparagraph (A), including a de-
scription of how it will—
‘‘(I) give high priority to local-
ities with the greatest needs, as dem-
onstrated by inadequate school facili-
ties coupled with a low level of re-
sources to meet those needs,
‘‘(II) use its allocation under this
subsection to assist localities that lack
the fiscal capacity to issue bonds on
their own,
‘‘(III) ensure that its allocation
under this subsection is used only to
supplement, and not supplant, the
amount of school construction, reha-
bilitation, and repair in the State that
would have occurred in the absence of
such allocation, and
‘‘(IV) ensure that the needs of
both rural and urban areas are recog-
nized.
Any allocation under subparagraph (A) by a
State education agency shall be binding if such
agency reasonably determined that the alloca-
tion was in accordance with the plan approved
under this subparagraph.
‘‘(5) CARRYOVER OF UNUSED LIMITATION.—If
for any calendar year—
‘‘(A) the amount allocated under para-
graph (4) to any State, exceeds
‘‘(B) the amount of bonds issued during
such year which are designated under para-
graph (1) pursuant to such allocation,
the limitation amount under paragraph (4) for such
State for the following calendar year shall be in-
creased by the amount of such excess.
‘‘(d) LIMITATION BASED ON AMOUNT OF TAX.—
‘‘(1) IN GENERAL.—The credit allowed under
subsection (a) for any taxable year shall not exceed
the excess of—
‘‘(A) the sum of the regular tax liability
(as defined in section 26(b)) plus the tax im-
posed by section 55, over
‘‘(B) the sum of the credits allowable
under part IV of subchapter A (other than sub-
part C thereof, relating to refundable credits).
‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the
credit allowable under subsection (a) exceeds the
limitation imposed by paragraph (1) for such taxable
year, such excess shall be carried to the succeeding
taxable year and added to the credit allowable under
subsection (a) for such taxable year.
‘‘(e) OTHER DEFINITIONS.—For purposes of this
section—
‘‘(1) CREDIT
ALLOWANCE
DATE.—The term
‘credit allowance date’ means—
‘‘(A) March 15,
‘‘(B) June 15,
‘‘(C) September 15, and
‘‘(D) December 15.
Such term includes the last day on which the bond
is outstanding.
‘‘(2) LOCAL EDUCATIONAL AGENCY.—The term
‘local educational agency’ has the meaning given to
such term by section 14101 of the Elementary and
Secondary Education Act of 1965. Such term in-
cludes the local educational agency that serves the
District of Columbia but does not include any other
State agency.
‘‘(3) BOND.—The term ‘bond’ includes any ob-
ligation.
‘‘(4) STATE.—The term ‘State’ includes the
District of Columbia and any possession of the
United States.
‘‘(5) PUBLIC
SCHOOL
FACILITY.—The term
‘public school facility’ shall not include—
‘‘(A) any stadium or other facility pri-
marily used for athletic contests or exhibitions
or other events for which admission is charged
to the general public, or
‘‘(B) any facility which is not owned by a
State or local government or any agency or in-
strumentality of a State or local government.
‘‘(f) CREDIT INCLUDED IN GROSS INCOME.—Gross
income includes the amount of the credit allowed to the
taxpayer under this section (determined without regard to
subsection (d)) and the amount so included shall be treat-
ed as interest income.
‘‘(g) BONDS HELD
BY REGULATED INVESTMENT
COMPANIES.—If any qualified school construction bond is
held by a regulated investment company, the credit deter-
mined under subsection (a) shall be allowed to share-
holders of such company under procedures prescribed by
the Secretary.
‘‘(h) CREDITS MAY BE STRIPPED.—Under regula-
tions prescribed by the Secretary—
‘‘(1) IN GENERAL.—There may be a separation
(including at issuance) of the ownership of a quali-
fied school construction bond and the entitlement to
the credit under this section with respect to such
bond. In case of any such separation, the credit
under this section shall be allowed to the person who
on the credit allowance date holds the instrument ev-
idencing the entitlement to the credit and not to the
holder of the bond.
‘‘(2) CERTAIN RULES TO APPLY.—In the case
of a separation described in paragraph (1), the rules
of section 1286 shall apply to the qualified school
construction bond as if it were a stripped bond and
to the credit under this section as if it were a
stripped coupon.
‘‘(i) TREATMENT FOR ESTIMATED TAX PURPOSES.—
Solely for purposes of sections 6654 and 6655, the credit
allowed by this section to a taxpayer by reason of holding
a qualified school construction bond on a credit allowance
date shall be treated as if it were a payment of estimated
tax made by the taxpayer on such date.
‘‘(j) CREDIT MAY BE TRANSFERRED.—Nothing in
any law or rule of law shall be construed to limit the trans-
ferability of the credit allowed by this section through sale
and repurchase agreements.
‘‘(k) REPORTING.—Issuers of qualified school con-
struction bonds shall submit reports similar to the reports
required under section 149(e).
‘‘(l) TERMINATION.—This section shall not apply to
any bond issued after December 31, 2004.’’
(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
SCHOOL CONSTRUCTION BONDS.—
‘‘(A) IN GENERAL.—For purposes of sub-
section (a), the term ‘interest’ includes amounts
includible in gross income under section 30B(f)
and such amounts shall be treated as paid on
the credit allowance date (as defined in section
30B(e)(1)).
‘‘(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 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.’’
(3) The table of sections for subpart B of part
IV of subchapter A of chapter 1 of such Code is
amended by adding at the end the following new
item:
‘‘Sec. 30B. Credit to holders of qualified public school construc-
tion bonds.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to obligations issued after Decem-
ber 31, 1999.
SEC. 4. APPLICATION OF CERTAIN LABOR STANDARDS ON
CONSTRUCTION 
PROJECTS 
FINANCED
UNDER 
PUBLIC 
SCHOOL 
CONSTRUCTION
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
3 of the America’s Better Classrooms Act of 1999.
‘‘(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. 5. 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 is designed to provide
trained workers for projects for the construction
or reconstruction of public school facilities re-
ceiving funding assistance under an applicable
program.
‘‘(C) The program is designed to ensure
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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