TITLE I—EDUCATIONAL
FACILITIES IMPROVEMENT
SEC. 101. PROVISION OF ASSISTANCE FOR CONSTRUCTION
AND RENOVATION OF EDUCATIONAL FACILI-
TIES.
Title XII of the Elementary and Secondary Edu-
cation Act of 1965 (20 U.S.C. 8501 et seq.) is amended—
(1) by striking sections 12002 and 12003;
(2) by redesignating sections 12001 and 12004
through 12013, as sections 12101 and 12102
through 12111, respectively;
‘‘SEC. 12001. FINDINGS.
‘‘The Congress finds the following:
‘‘(1) The General Accounting Office performed
a comprehensive survey of the Nation’s public ele-
mentary and secondary school facilities, and found
severe levels of disrepair in all areas of the United
States.
‘‘(2) The General Accounting Office concluded
more than 14,000,000 children attend schools in
need of extensive repair or replacement. Seven mil-
lion children attend schools with life safety code vio-
lations. Twelve million children attend schools with
leaky roofs.
‘‘(3) The General Accounting Office found the
problem of crumbling schools transcends demo-
graphic and geographic boundaries. At 38 percent of
urban schools, 30 percent of rural schools, and 29
percent of suburban schools, at least one building is
in need of extensive repair or should be completely
replaced.
‘‘(4) The condition of school facilities has a di-
rect effect on the safety of students and teachers,
and on the ability of students to learn.
‘‘(5) Academic research has proven a direct cor-
relation between the condition of school facilities and
student achievement. At Georgetown University, re-
searchers found students assigned to schools in poor
condition can be expected to fall 10.9 percentage
points below those in buildings in excellent condition.
Similar studies have demonstrated up to a 20 per-
cent improvement in test scores when students were
moved from a poor facility to a new facility.
‘‘(6) The General Accounting Office found most
schools are not prepared to incorporate modern tech-
nology into the classroom. Forty-six percent of
schools lack adequate electrical wiring to support the
full-scale use of technology. More than a third of
schools lack the requisite electrical power. Fifty-six
percent of schools have insufficient phone lines for
modems.
‘‘(7) The Department of Education reported
that elementary and secondary school enrollment, al-
ready at a record high level, will continue to grow
during the period between 1996 and 2000, and that
in order to accommodate this growth, the United
States will need to build an additional 6,000 schools
over this time period.
‘‘(8) The General Accounting Office found it
will cost $112,000,000,000 just to bring schools up
to good, overall condition, not including the cost of
modernizing schools so the schools can utilize 21st
century technology, nor including the cost of expan-
sion to meet record enrollment levels.
‘‘(9) State and local financing mechanisms have
proven inadequate to meet the challenges facing to-
day’s aging school facilities. Large numbers of local
educational agencies have difficulties securing fi-
nancing for school facility improvement.
‘‘(10) The Federal Government can support ele-
mentary and secondary school facilities, and can le-
verage additional funds for the improvement of ele-
mentary and secondary school facilities.
‘‘SEC. 12002. PURPOSE.
‘‘The purpose of this title is to help State and local
authorities improve the quality of education at their public
schools through the provision of Federal funds to enable
the State and local authorities to meet the cost associated
with the improvement of school facilities within their juris-
dictions.
‘‘PART A—GENERAL INFRASTRUCTURE
IMPROVEMENT GRANT PROGRAM’’;
and
(4) by adding at the end the following:
‘‘PART B—CONSTRUCTION AND RENOVATION
BOND SUBSIDY PROGRAM
‘‘SEC. 12201. DEFINITIONS.
‘‘As used in this part:
‘‘(1) EDUCATIONAL FACILITY.—The term ‘edu-
cational facility’ has the meaning given the term
‘school’ in section 12110.
‘‘(2) LOCAL
AREA.—The term ‘local area’
means the geographic area served by a local edu-
cational agency.
‘‘(3) LOCAL
BOND
AUTHORITY.—The term
‘local bond authority’ means—
‘‘(A) a local educational agency with au-
thority to issue a bond for construction or ren-
ovation of educational facilities in a local area;
and
‘‘(B) a political subdivision of a State with
authority to issue such a bond for an area in-
cluding a local area.
‘‘(4) POVERTY LINE.—The term ‘poverty line’
means the official poverty line (as defined by the Of-
fice of Management and Budget, and revised annu-
ally in accordance with section 673(2) of the Omni-
bus Budget Reconciliation Act of 1981 (42 U.S.C.
9902(2))) applicable to a family of the size involved.
‘‘(5) STATE.—The term ‘State’ means each of
the several States of the United States, the District
of Columbia, and the Commonwealth of Puerto Rico.
‘‘SEC. 12202. AUTHORIZATION OF PROGRAM.
‘‘(a) PROGRAM AUTHORITY.—Of the amount appro-
priated under section 12210 for a fiscal year and not re-
served under subsection (b), the Secretary shall use—
‘‘(1) 20 percent of such amount to award
grants to local bond authorities for not more than
125 eligible local areas as provided for under section
12203; and
‘‘(2) 80 percent of such amount to award
grants to States as provided for under section
12204.
‘‘(b) SPECIAL RULE.—The Secretary may reserve—
‘‘(1) not more than 1 percent of the amount ap-
propriated under section 12210 to provide assistance
to Indian schools in accordance with the purpose of
this title;
‘‘(2) not more than 0.5 percent of the amount
appropriated under section 12210 to provide assist-
ance to Guam, the United States Virgin Islands,
American Samoa, the Commonwealth of the North-
ern Mariana Islands, the Republic of the Marshall
Islands, the Federated States of Micronesia, and the
Republic of Palau to carry out the purpose of this
title; and
‘‘(3) not more than 0.1 percent of the amount
appropriated under section 12210 to carry out sec-
tion 12209.
‘‘SEC. 12203. DIRECT GRANTS TO LOCAL BOND AUTHORI-
TIES.
‘‘(a) IN GENERAL.—The Secretary shall award a
grant under section 12202(a)(1) to eligible local bond au-
thorities to provide assistance for construction or renova-
tion of educational facilities in a local area.
‘‘(b) USE OF FUNDS.—The local bond authority shall
use amounts received through a grant made under section
12202(a)(1) to pay a portion of the interest costs applica-
ble to any local bond issued to finance an activity de-
scribed in section 12205 with respect to the local area.
‘‘(c) ELIGIBILITY AND DETERMINATION.—
‘‘(1) ELIGIBILITY.—To be eligible to receive a
grant under section 12202(a)(1) for a local area, a
local bond authority shall demonstrate the capacity
to issue a bond for an area that includes 1 of the
125 local areas for which the Secretary has made a
determination under paragraph (2).
‘‘(2) DETERMINATION.—
‘‘(A) MANDATORY.—The Secretary shall
make a determination of the 100 local areas
that have the highest numbers of children who
are—
‘‘(i) aged 5 to 17, inclusive; and
‘‘(ii) members of families with in-
comes that do not exceed 100 percent of
the poverty line.
‘‘(B) 
DISCRETIONARY.—The 
Secretary
may make a determination of 25 local areas, for
which the Secretary has not made a determina-
tion under subparagraph (A), that have extraor-
dinary needs for construction or renovation of
educational facilities that the local bond author-
ity serving the local area is unable to meet.
‘‘(d) APPLICATION.—To be eligible to receive a grant
under section 12202(a)(1), a local bond authority shall
prepare and submit to the Secretary an application at
such time, in such manner, and containing such informa-
tion as the Secretary may require, including—
‘‘(1) an assurance that the application was de-
veloped in consultation with parents and classroom
teachers;
‘‘(2) information sufficient to enable the Sec-
retary to make a determination under subsection
(c)(2) with respect to such local authority;
‘‘(3) a description of the architectural, civil,
structural, mechanical, or electrical construction or
renovation to be supported with the assistance pro-
vided under this part;
‘‘(4) a cost estimate of the proposed construc-
tion or renovation;
‘‘(5) an identification of other resources, such
as unused bonding capacity, that are available to
carry out the activities for which assistance is re-
quested under this part;
‘‘(6) a description of how activities supported
with funds provided under this part will promote en-
ergy conservation; and
‘‘(7) such other information and assurances as
the Secretary may require.
‘‘(e) AWARD OF GRANTS.—
‘‘(1) IN GENERAL.—In awarding grants under
section 12202(a)(1), the Secretary shall give pref-
erence to a local bond authority based on—
‘‘(A) the extent to which the local edu-
cational agency serving the local area involved
or the educational facility for which the author-
ity seeks a grant (as appropriate) meets the cri-
teria described in section 12103(a);
‘‘(B) the extent to which the educational
facility is overcrowded; and
‘‘(C) the extent to which assistance pro-
vided through the grant will be used to fund
construction or renovation that, but for receipt
of the grant, would not otherwise be possible to
undertake.
‘‘(2) AMOUNT OF ASSISTANCE.—
‘‘(A) IN
GENERAL.—In determining the
amount of assistance for which local bond au-
thorities are eligible under section 12202(a)(1),
the Secretary shall—
‘‘(i) give preference to a local bond
authority based on the criteria specified in
paragraph (1); and
‘‘(ii) consider—
‘‘(I) the amount of the cost esti-
mate contained in the application of
the local bond authority under sub-
section (d)(4);
‘‘(II) the relative size of the local
area served by the local bond author-
ity; and
‘‘(III) any other factors deter-
mined to be appropriate by the Sec-
retary.
‘‘(B) 
MAXIMUM
AMOUNT
OF
ASSIST-
ANCE.—A local bond authority shall be eligible
for assistance under section 12202(a)(1) in an
amount that does not exceed the appropriate
percentage under section 12204(f)(3) of the in-
terest costs applicable to any local bond issued
to finance an activity described in section
12205 with respect to the local area involved.
‘‘SEC. 12204. GRANTS TO STATES.
‘‘(a) IN GENERAL.—The Secretary shall award a
grant under section 12202(a)(2) to each eligible State to
provide assistance to the State, or local bond authorities
in the State, for construction and renovation of edu-
cational facilities in local areas.
‘‘(b) USE OF FUNDS.—The State shall use amounts
received 
through 
a 
grant 
made 
under 
section
12202(a)(2)—
‘‘(1) to pay a portion of the interest costs appli-
cable to any State bond issued to finance an activity
described in section 12205 with respect to the local
areas; or
‘‘(2) to provide assistance to local bond authori-
ties in the State to pay a portion of the interest
costs applicable to any local bond issued to finance
an activity described in section 12205 with respect
to the local areas.
‘‘(c) AMOUNT OF GRANT TO STATE.—
‘‘(1) IN GENERAL.—From the amount available
for grants under section 12202(a)(2), the Secretary
shall award a grant to each eligible State that is
equal to the total of—
‘‘(A) a sum that bears the same relation-
ship to 50 percent of such amount as the total
amount of funds made available for all eligible
local educational agencies in the State under
part A of title I for such year bears to the total
amount of funds made available for all eligible
local educational agencies in all States under
such part for such year; and
‘‘(B) a sum that bears the same relation-
ship to 50 percent of such amount as the total
amount of funds made available for all eligible
local educational agencies in the State under
title VI for such year bears to the total amount
of funds made available for all eligible local
educational agencies in all States under such
title for such year.
‘‘(2) ELIGIBLE
LOCAL
EDUCATIONAL
AGEN-
CIES.—For the purpose of paragraph (1) the term
‘eligible local educational agency’ means a local edu-
cational agency that does not serve a local area for
which an eligible local bond authority received a
grant under section 12203.
‘‘(d) STATE APPLICATIONS REQUIRED.—To be eligi-
ble to receive a grant under section 12202(a)(2), a State
shall prepare and submit to the Secretary an application
at such time, in such manner, and containing such infor-
mation as the Secretary may require. Such application
shall contain—
‘‘(1) a description of the process the State will
use to determine which local bond authorities will re-
ceive assistance under subsection (b)(2).
‘‘(2) an assurance that grant funds under this
section will be used to increase the amount of school
construction or renovation in the State for a fiscal
year compared to such amount in the State for the
preceding fiscal years.‘‘(e) ADMINISTERING AGEN-
CY.—
‘‘(1) IN GENERAL.—The State agency with au-
thority to issue bonds for the construction or renova-
tion of educational facilities, or with the authority to
otherwise finance such construction or renovation,
shall administer the amount received through the
grant.
‘‘(2) SPECIAL RULE.—If no agency described in
paragraph (1) exits, or if there is more than one
such agency, then the chief executive officer of the
State and the chief State school officer shall des-
ignate a State entity or individual to administer the
amounts received through the grant.
‘‘(f) ASSISTANCE TO LOCAL BOND AUTHORITIES.—
‘‘(1) IN GENERAL.—To be eligible to receive as-
sistance from a State under this section, a local
bond authority shall prepare and submit to the State
ance in an amount that does not exceed 10 per-
cent;
‘‘(B) clause (i)(II) or clause (ii)(II) of sec-
tion 1125(c)(2)(A), shall be eligible for assist-
ance in an amount that does not exceed 20 per-
cent;
‘‘(C) clause (i)(III) or clause (ii)(III) of
section 1125(c)(2)(A), shall be eligible for as-
sistance in an amount that does not exceed 30
percent;
‘‘(D) clause (i)(IV) or clause (ii)(IV) of
section 1125(c)(2)(A), shall be eligible for as-
sistance in an amount that does not exceed 40
percent; and
‘‘(E) clause (i)(V) or clause (ii)(V) of sec-
tion 1125(c)(2)(A), shall be eligible for assist-
ance in an amount that does not exceed 50 per-
cent;
of the interest costs applicable to any local bond
issued to finance an activity described in section
12205 with respect to the local area.
‘‘(g) ASSISTANCE TO STATE.—
‘‘(1) IN GENERAL.—If a State issues a bond to
finance an activity described in section 12205 with
respect to local areas, the State shall be eligible for
assistance in an amount that does not exceed the
percentage calculated under the formula described in
paragraph (2) of the interest costs applicable to the
State bond with respect to the local areas.
‘‘(2) FORMULA.—The Secretary shall develop a
formula for determining the percentage referred to
in paragraph (1). The formula shall specify that the
percentage shall consist of a weighted average of the
percentages referred to in subparagraphs (A)
through (E) of subsection (f)(3) for the local areas
involved.
‘‘SEC. 12205. AUTHORIZED ACTIVITIES.
‘‘An activity described in this section is a project of
significant size and scope that consists of—
‘‘(1) the repair or upgrading of classrooms or
structures related to academic learning, including
the repair of leaking roofs, crumbling walls, inad-
equate plumbing, poor ventilation equipment, and in-
adequate heating or light equipment;
‘‘(2) an activity to increase physical safety at
the educational facility involved;
‘‘(3) an activity to enhance the educational fa-
cility involved to provide access for students, teach-
ers, and other individuals with disabilities;
‘‘(4) an activity to improve the energy efficiency
of the educational facility involved;
‘‘(5) an activity to address environmental haz-
ards at the educational facility involved, such as
poor ventilation, indoor air quality, or lighting;
‘‘(6) the provision of basic infrastructure that
facilitates educational technology, such as commu-
nications outlets, electrical systems, power outlets, or
a communication closet;
‘‘(7) the construction of new schools to meet
the needs imposed by enrollment growth;
‘‘(8) additional construction for existing schools
to meet needs imposed by overcrowding; and
‘‘(9) any other activity the Secretary determines
achieves the purpose of this title.
‘‘SEC. 12206. STATE GRANT WAIVERS.
‘‘(a) WAIVER FOR STATE ISSUANCE OF BOND.—
‘‘(1) IN GENERAL.—A State that issues a bond
described in section 12204(b)(1) with respect to a
local area may request that the Secretary waive the
limits described in section 12204(f)(3) for the local
area, in calculating the amount of assistance the
State may receive under section 12204(g). The State
may request the waiver only if no local entity is able,
for one of the reasons described in subparagraphs
(A) through (F) of paragraph (2), to issue bonds on
behalf of the local area. Under such a waiver, the
Secretary may permit the State to use amounts re-
ceived through a grant made under section
12202(a)(2) to pay for not more than 80 percent of
the interest costs applicable to the State bond with
respect to the local area.
‘‘(2) DEMONSTRATION BY STATE.—To be eligi-
ble to receive a waiver under this subsection, a State
shall demonstrate to the satisfaction of the Secretary
that—
‘‘(A) the local bond authority serving the
local area has reached a limit on its borrowing
authority as a result of a debt ceiling or prop-
erty tax cap;
‘‘(B) the local area has a high percentage
of low-income residents, or an unusually high
property tax rate;
‘‘(C) the demographic composition of the
local area will not support additional school
spending;
‘‘(D) the local bond authority has a history
of failed attempts to pass bond referenda;
‘‘(E) the local area contains a significant
percentage of Federally-owned land that is not
subject to local taxation; or
‘‘(F) for another reason, no local entity is
able to issue bonds on behalf of the local area.
‘‘(b) WAIVER FOR OTHER FINANCING SOURCES.—
‘‘(1) IN GENERAL.—A State may request that
the Secretary waive the use requirements of section
12204(b) for a local bond authority to permit the
State to provide assistance to the local bond author-
ity to finance construction or renovation by means
other than through the issuance of bonds.
‘‘(2) USE OF FUNDS.—A State that receives a
waiver granted under this subsection may provide
assistance to a local bond authority in accordance
with the criteria described in section 12204(f)(2) to
enable the local bond authority to repay the costs in-
curred by the local bond authority in financing an
activity described in section 12205. The local bond
authority shall be eligible to receive the amount of
such assistance that the Secretary estimates the
local bond authority would be eligible to receive
under section 12204(f)(3) if the construction or ren-
ovation were financed through the issuance of a
bond.
‘‘(3) MATCHING
REQUIREMENT.—The State
shall make available to the local bond authority (di-
rectly or through donations from public or private
entities) non-Federal contributions in an amount
equal to not less than $1 for every $1 of Federal
funds provided to the local bond authority through
the grant.
‘‘(c) WAIVER FOR OTHER USES.—
‘‘(1) IN GENERAL.—A State may request that
the Secretary waive the use requirements of section
12204(b) for a State to permit the State to carry
out activities that achieve the purpose of this title.
‘‘(2) DEMONSTRATION BY STATE.—To be eligi-
ble to receive a waiver under this subsection, a State
shall demonstrate to the satisfaction of the Secretary
that the use of assistance provided under the waiv-
er—
‘‘(A) will result in an equal or greater
amount of construction or renovation of edu-
cational facilities than the provision of assist-
ance to defray the interest costs applicable to a
bond for such construction or renovation; and
‘‘(B) will be used to fund activities that
are effective in carrying out the activities de-
scribed in section 12205, such as—
‘‘(i) the capitalization of a revolving
loan fund for such construction or renova-
tion;
‘‘(ii) the use of funds for reinsurance
or guarantees with respect to the financing
of such construction or renovation;
‘‘(iii) the creation of a mechanism to
leverage private sector resources for such
construction or renovation;
‘‘(iv) the capitalization of authorities
similar to State Infrastructure Banks to
leverage additional funds for such con-
struction or renovation; or
‘‘(v) any other activity the Secretary
determines achieves the purpose of this
title.
‘‘(d) LOCAL BOND AUTHORITY WAIVER.—
‘‘(1) IN GENERAL.—A local bond authority may
request the Secretary waive the use requirements of
section 12203(b) for a local head authority to permit
the authority to finance construction or renovation
of educational facilities by means other than through
use of bonds.
‘‘(2) DEMONSTRATION.—To be eligible to re-
ceive a waiver under this subsection, a local bond
authority shall demonstrate that the amounts made
available through a grant under the waiver will re-
sult in an equal or greater amount of construction
or renovation of educational facilities than the provi-
sion of assistance to defray the interest costs appli-
cable to a bond for such construction or renovation.
‘‘(e) REQUEST FOR WAIVER.—A State or local bond
authority that desires a waiver under this section shall
submit a waiver request to the Secretary that—
‘‘(1) identifies the type of waiver requested;
‘‘(2) with respect to a waiver described in sub-
section (a), (c), or (d), makes the demonstration de-
scribed in subsection (a)(2), (c)(2), or (d)(2), respec-
tively;
‘‘(3) describes the manner in which the waiver
will further the purpose of this title; and
‘‘(4) describes the use of assistance provided
under such waiver.
‘‘(f) ACTION BY SECRETARY.—The Secretary shall
make a determination with respect to a request submitted
under subsection (d) not later than 90 days after the date
on which such request was submitted.
‘‘(g) GENERAL REQUIREMENTS.—
‘‘(1) STATES.—In the case of a waiver request
submitted by a State under this section, the State
shall—
‘‘(A) provide all interested local edu-
cational agencies in the State with notice and a
reasonable opportunity to comment on the re-
quest;
‘‘(B) submit the comments to the Sec-
retary; and
‘‘(C) provide notice and information to the
public regarding the waiver request in the man-
ner that the applying State customarily pro-
vides similar notices and information to the
public.
‘‘(2) LOCAL BOND AUTHORITIES.—In the case
of a waiver request submitted by a local bond au-
thority under this section, the local bond authority
shall—
‘‘(A) provide the affected local educational
agency with notice and a reasonable oppor-
tunity to comment on the request;
‘‘(B) submit the comments to the Sec-
retary; and
‘‘(C) provide notice and information to the
public regarding the waiver request in the man-
ner that the applying local bond authority cus-
tomarily provides similar notices and informa-
tion to the public.
‘‘SEC. 12207. GENERAL PROVISIONS.
‘‘(a) FAILURE TO ISSUE BONDS.—
‘‘(1) STATES.—If a State that receives assist-
ance under this part fails to issue a bond for which
the assistance is provided, the amount of such as-
sistance shall be made available to the State as pro-
vided for under section 12204, during the first fiscal
year following the date of repayment.
‘‘(2) LOCAL
BOND
AUTHORITIES
AND
LOCAL
AREAS.—If a local bond authority that receives as-
sistance under this part fails to issue a bond, or a
local area that receives such assistance fails to be-
come the beneficiary of a bond, for which the assist-
ance is provided, the amount of such assistance—
‘‘(A) in the case of assistance received
under section 12202(a)(1), shall be repaid to
the Secretary and made available as provided
for under section 12203; and
‘‘(B) in the case of assistance received
under section 12202(a)(2), shall be repaid to
the State and made available as provided for
under section 12204.
‘‘(b) LIABILITY OF THE FEDERAL GOVERNMENT.—
The Secretary shall not be liable for any debt incurred
by a State or local bond authority for which assistance
is provided under this part. If such assistance is used by
a local educational agency to subsidize a debt other than
the issuance of a bond, the Secretary shall have no obliga-
tion to repay the lending institution to whom the debt is
owed if the local educational agency defaults.
‘‘SEC. 12208. FAIR WAGES.
‘‘The provisions of section 12107 shall apply with re-
spect to all laborers and mechanics employed by contrac-
tors or subcontractors in the performance of any contract
and subcontract for the repair, renovation, alteration, or
construction, including painting and decorating, of any
building or work that is financed in whole or in part using
assistance provided under this part.
‘‘SEC. 12209. REPORT.
‘‘From amounts reserved under section 12202(b)(3)
for each fiscal year the Secretary shall—
‘‘(1) collect such data as the Secretary deter-
mines necessary at the school, local, and State levels;
‘‘(2) conduct studies and evaluations, including
national studies and evaluations, in order to—
‘‘(A) monitor the progress of activities sup-
ported with funds provided under this part; and
‘‘(B) evaluate the state of United States
educational facilities; and
‘‘(3) report to the appropriate committees of
Congress regarding the findings of the studies and
evaluations described in paragraph (2).
‘‘SEC. 12210. FUNDING.
‘‘(a) IN GENERAL.—There are authorized to be ap-
propriated $5,000,000,000 for fiscal year 1999 to carry
out this part.
‘‘(b) ENTITLEMENT.—Subject to subsection (a), each
State or local bond authority awarded a grant under this
part shall be entitled to payments under the grant.
‘‘(c) AVAILABILITY.—Any amounts appropriated pur-
suant to the authority of subsection (a) shall remain avail-
able until expended.’’.
SEC. 102. CONFORMING AMENDMENTS.
(a) CROSS REFERENCES.—Part A of title XII of the
Elementary and Secondary Education Act of 1965 (as re-
designated by section 102(3)) is amended—
(1) in section 12102(a) (as redesignated by sec-
tion 102(2))—
(A) in paragraph (1)—
(i) by striking ‘‘12013’’ and inserting
‘‘12111’’;
(ii) by striking ‘‘12005’’ and inserting
‘‘12103’’; and
(iii) by striking ‘‘12007’’ and insert-
ing ‘‘12105’’; and
(B) in paragraph (2), by striking ‘‘12013’’
and inserting ‘‘12111’’; and
(2) in section 12110(3)(C) (as redesignated by
section 102(2)), by striking ‘‘12006’’ and inserting
‘‘12104’’.
(b) CONFORMING AMENDMENTS.—Part A of title XII
of the Elementary and Secondary Education Act of 1965
(as redesignated by section 202(3)) (20 U.S.C. 8501 et
seq.) is further amended—
(1) in section 12101 (as redesignated by section
102(2)), by striking ‘‘This title’’ and inserting ‘‘This
part’’; and
(2) in sections 12102(a)(2), 12102(b)(1),
12103(a), 
12103(b), 
12103(b)(2), 
12103(c),
12103(d), 
12104(a), 
12104(b)(2), 
12104(b)(3),
12104(b)(4), 12104(b)(6), 12104(b)(7), 12105(a),
12105(b), 
12106(a), 
12106(b), 
12106(c),
12106(c)(1), 
12106(c)(7), 
12106(e), 
12107,
12108(a)(1), 
12108(a)(2), 
12108(b)(1),
12108(b)(2), 
12108(b)(3), 
12108(b)(4),
12109(2)(A), and 12110 (as redesignated by section
102(2)), by striking ‘‘this title’’ each place it ap-
pears and inserting ‘‘this part’’.
TITLE II—REDUCING CLASS SIZE
SEC. 201. FINDINGS.
Congress makes the following findings:
(1) Qualified teachers in small classes can pro-
vide students with more individualized attention,
spend more time on instruction and less on other
tasks, cover more material effectively, and are better
able to work with parents to help the parents further
their children’s education.
(2) Rigorous research has shown that students
attending small classes in the early grades make
more rapid educational progress than the students in
larger classes, and that those achievement gains per-
sist through at least the 8th grade. For example:
(A) In a landmark 4-year experimental
study of class size reduction in grades kinder-
garten through grade 3 in Tennessee, research-
ers found that students in smaller classes
earned significantly higher scores on basic skills
tests in all 4 years and in all types of schools,
including urban, rural, and suburban schools.
(B) After 2 years in reduced class sizes,
students in the Flint, Michigan Public School
District improved their reading scores by 44
percent.
(3) The benefits of smaller classes are greatest
for lower-achieving, minority, poor, and inner-city
children. One study found that urban 4th-graders in
smaller than average classes were 3/4 of a school
year ahead of their counterparts in larger than aver-
age classes.
(4) Smaller classes allow teachers to identify
and work sooner with students who have learning
disabilities and, potentially, can reduce those stu-
dents’ need for special education services in the later
grades.
(5) Students in smaller classes are able to be-
come more actively engaged in learning than their
peers in large classes.
(6) Efforts to improve educational outcomes by
reducing class sizes in the early grades are likely to
be successful only if well-qualified teachers are hired
to fill additional classroom positions and if teachers
received intensive, continuing training in working ef-
fectively in smaller classroom settings.
(7) State certified and licensed teachers help
ensure high quality instruction in the classroom.
(8) According to the National Commission on
Teaching and America’s Future, the most important
influence on student achievement is the expertise of
their teachers. One New York City study comparing
high- and low-achieving elementary schools with
similar student characteristics, found that more than
90 percent of the variation in achievement in mathe-
matics and reading was due to differences in teacher
qualifications.
(9) Our Nation needs more qualified teachers to
meet changing demographics and to help students
meet high standards, as demonstrated by the follow-
ing:
(A) Over the next decade, our Nation will
need to hire over 2,000,000 teachers to meet in-
creasing student enrollments and teacher retire-
ments.
(B) 1 out of 4 high school teachers does
not have a major or minor in the main subject
that they teach. This is true for more than 30
percent of mathematics teachers.
(C) In schools with the highest minority
enrollments, students have less than a 50 per-
cent chance of getting a science or mathematics
teacher who holds a degree in that field.
(D) In 1991, 25 percent of new public
school teachers had not completed the require-
ments for a license in their main assignment
field. This number increased to 27 percent by
1994, including 11 percent who did not have a
license.
(10) We need more teachers who are adequately
prepared for the challenges of the 21st century
classroom, as demonstrated by the fact that—
(A) 50 percent of teachers have little or no
experience using technology in the classroom;
and
(B) in 1994, only 10 percent of new teach-
ers felt they were prepared to integrate new
technology into their instruction.
(11) Teacher quality cannot be further com-
promised to meet the demographic demand for new
teachers and smaller class sizes. Comprehensive im-
provements in teacher preparation and development
programs are also necessary to ensure the effective-
ness of new teachers and the academic success of
students in the classroom. These comprehensive im-
provements should include encouraging more institu-
tions of higher education that operate teacher prepa-
ration programs to work in partnership with local
educational agencies and elementary and secondary
schools; providing more hands-on, classroom experi-
ence to prospective teachers; creating mentorship
programs for new teachers; providing high quality
content area training and classroom skills for new
teachers; and training teachers to incorporate tech-
nology into the classroom.
(12) Efforts should be made to provide prospec-
tive teachers with a greater knowledge of instruc-
tional programs that are research-based, of dem-
onstrated effectiveness, replicable in diverse and
challenging circumstances, and supported by net-
works of experts and experienced practitioners.
(13) Several States have begun serious efforts
to reduce class sizes in the early elementary grades,
but these actions may be impeded by financial limi-
tations or difficulties in hiring qualified teachers.
(14) The Federal Government can assist in this
effort by providing funding for class size reductions
in grades 1 through 3, and by helping to ensure that
the new teachers brought into the classroom are
well-qualified.
SEC. 202. PURPOSE.
It is the purpose of this title to help States and local
educational agencies recruit, train, and hire 100,000 addi-
tional qualified teachers in order to reduce class sizes na-
tionally, in grades 1 through 3, to an average of 18 stu-
dents per classroom and to improve teaching in the early
grades so that all students can learn to read independently
and well by the end of the third grade.
SEC. 203. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out
this 
title 
$1,100,000,000 
for 
fiscal 
year 
1999,
$1,300,000,000 for fiscal year 2000, $1,500,000,000 for
fiscal year 2001, $1,700,000,000 for fiscal year 2002,
$1,700,000,000 for fiscal year 2003, $2,300,000,000 for
fiscal year 2004, and $2,800,000,000 for fiscal year 2005.
SEC. 204. ALLOTMENT TO STATES.
(a) ENTITLEMENT TO PAYMENTS.—Each State hav-
ing an application approved under section 205 shall be en-
titled to a payment for a fiscal year in an amount equal
to the State’s allotment under this section.
(b) RESERVATIONS.—
(1) EVALUATIONS.—From the amount made
available under section 203 for a fiscal year, the
Secretary 
may 
reserve 
not 
more 
than
$1,000,000,000 to carry out the evaluation required
under section 213.
(2) OUTLYING AREAS; SECRETARY OF THE IN-
TERIOR.—From the amount made available under
section 203 and not reserved under paragraph (1)
for a fiscal year, the Secretary shall reserve not
more than 1 percent for payments to the outlying
areas, and to the Secretary of the Interior for
schools supported by the Bureau of Indian Affairs,
for activities that are consistent with the purpose of
this title. The Secretary shall allocate funds among
the outlying areas and the Secretary of the Interior
in accordance with their respective needs for assist-
ance under this title.
(c) ALLOTMENT FORMULA.—From the amount made
available under section 203 and not reserved under sub-
section (b) for a fiscal year, the Secretary shall allot to
each State an amount that bears the same relationship
to the amount so made available as the amount of funding
the State received under part A of title I of the Elemen-
tary and Secondary Education Act of 1965 (20 U.S.C.
6311 et seq.) for the previous fiscal year bears to the total
amount so received by all States for the previous fiscal
year.
(d) REALLOTMENT.—If the Secretary determines
that any amount of a State’s allotment under this section
will not be available to the State for such year, then the
Secretary shall reallot such amount to other States in the
same manner as the funds were originally allotted under
subsection (b).
(e) DEFINITIONS.—In this title:
(1) OUTLYING AREA.—The term ‘outlying area’
means the United States Virgin Islands, Guam,
American Samoa, and the Commonwealth of the
Northern Mariana Islands.
(2) STATE.—The term ‘State’ means each of
the several States of the United States, the District
of Columbia, and the Commonwealth of Puerto Rico.
SEC. 205. APPLICATIONS.
(a) IN GENERAL.—The State educational agency of
each State desiring to receive funding under this title shall
submit an application to the Secretary at such time, in
such form, and containing such information as the Sec-
retary may require.
(b) CONTENTS.—The application shall include—
(1) the State educational agency’s goals for
using funds under this title to reduce average class
sizes in grades 1 through 3, including a description
of current class sizes in the schools served by local
educational agencies of the State;
(2) a description of the State educational agen-
cy’s plan for using funds under this title to reduce
average class size in grades 1 through 3;
(3) a description of the State educational agen-
cy’s plan for allocating funds provided under this
title within the State, including an estimate of the
impact of those allocations on class sizes in the
schools served by individual local educational agen-
cies of the State, and an assurance that the State
educational agency will make this plan public within
the State;
(4) a description of the State educational agen-
cy’s strategy for improving teacher quality in grades
1 through 3 within the State (which may be a part
of a broader strategy to improve teacher quality gen-
erally), including actions the State educational agen-
cy will take to ensure the availability, within the
State, of a sufficient number of qualified teachers to
fill the positions created with funds provided under
this title, which strategy shall describe how the State
educational agency and the local educational agen-
cies within the State will ensure that—
(A) individuals hired for positions created
with funds provided under this title will meet
all of the State’s requirements for full certifi-
cation or licensure of teachers, or will make sat-
isfactory progress toward achieving such full
certification or licensure (which may include in-
dividuals pursuing alternative routes to such
certification or licensure); and
(B) individuals hired for positions created
with funds provided under this title, and other
teachers affected by the funds, will be prepared
to teach reading effectively to all children and
will take part in continuing professional devel-
opment in effective reading instruction and in
teaching effectively in small classes; and
(5) a description of how the State will use other
funds, including other Federal funds, to improve
teacher quality and reading achievement within the
State.
(c) APPROVAL.—The Secretary shall approve an ap-
plication of a State if such application meets the require-
ments of this section and holds reasonable promise of
achieving the purpose of this title.
SEC. 206. WITHIN STATE ALLOCATIONS.
(a) RESERVATION.—From the amount allotted to a
State under this title for a fiscal year, the State may re-
serve a total of not more than 1 percent for the adminis-
trative costs of the State educational agency under this
title and for State level activities described in section 207.
(b) ALLOCATIONS.—
(1) MINIMUM ALLOCATION TO CERTAIN LOCAL
EDUCATIONAL AGENCIES.—
(A) IN GENERAL.—From the amount allot-
ted to a State under this title and not reserved
under subsection (a) for a fiscal year, the State
shall make an allocation to each local edu-
cational agency in the State that is described in
subparagraph (B) in an amount that bears the
same relation to such amount as the amount
such local educational agency received under
part A of title I of the Elementary and Second-
ary Education Act of 1965 (20 U.S.C. 6311 et
seq.) for the preceding fiscal year bears to the
total amount all such local educational agencies
in the State received under such part for the
preceding year.
(B) CERTAIN LOCAL EDUCATIONAL AGEN-
CIES.—A local educational agency referred to in
subparagraph (A) is a local educational agency
that serves schools in which—
(i) at least 30 percent of the children
enrolled in the schools are from families
with incomes below the poverty line; or
(ii) at least 10,000 of the children en-
rolled in the schools are from such fami-
lies.
(2) REMAINDER.—From the amount allotted to
a State under this title, not reserved under sub-
section (a), and that remain after application of
paragraph (1), the State shall make allocations to
local educational agencies in the State—
(A) on the basis of—
(i) the local educational agencies’ cur-
rent or projected class sizes in grades 1
through 3; and
(ii) the relative ability of the local
educational agencies to finance class size
reductions with local educational agency
funds; and
(B) in such a manner as to enable local
educational agencies to reduce their average
class sizes, in grades 1 through 3, to the aver-
age class size proposed in the State application.
(3) CLARIFICATION REGARDING CERTAIN LOCAL
EDUCATIONAL AGENCIES.—A State shall make an
allocation under paragraph (1) to a local educational
agency described in paragraph (1)(B) and may make
an allocation under paragraph (2) to a local edu-
cational agency described in paragraph (1)(B).
SEC. 207. STATE LEVEL ACTIVITIES.
From the amount reserved under section 206(a) for
a fiscal year the State may carry out activities described
in the application submitted under section 205. Such ac-
tivities may include—
(1) revision of State teacher certification or li-
censure standards so as to promote the hiring of
teachers with high academic and pedagogical quali-
fications;
(2) developing opportunities for professional de-
velopment for teachers with respect to skills and
strategies that enable the teachers to teach effec-
tively in smaller classes; and
(3) monitoring of activities assisted under this
title and other administrative costs associated with
the operation of the activities.
SEC. 208. LOCAL USES OF FUNDS.
(a) LOCAL EDUCATIONAL AGENCIES.—
(1) IN GENERAL.—
(A) HIRING
OF
TEACHERS.—Each local
educational agency receiving an allocation under
this title shall use the allocated funds, with the
exception of funds reserved under paragraph
(2), for the payment of the salaries and benefits
for the additional teachers needed to reduce
class sizes in grades 1 through 3 to the level de-
termined as the State goal in the State applica-
tion under section 205(b)(1).
(B) SPECIAL RULE.—A local educational
agency that has achieved the goal described in
section 205(b)(1) may use the allocated
funds—
(i) to make further class size reduc-
tions in grades 1 through 3;
(ii) to reduce class sizes in grades
other than grades 1 through 3; or
(iii) to undertake quality improvement
activities such as the activities described in
paragraph (2).
(2) SPECIAL
RULE.—From the amount allo-
cated to a local educational agency under this title
for each of the fiscal years 1999 through 2003, the
local educational agency shall use not less than 10
percent for activities to ensure that teachers hired
with funds provided under this title, and other
teachers who will teach smaller classes as a result of
activities assisted under this title, are prepared to
teach reading and other subjects effectively in a
smaller class setting. Activities undertaken in pur-
suit of this objective may include—
(A) training teachers in effective reading
instructional practices (including practices for
teaching students who experience initial dif-
ficulty in learning to read) and in effective in-
structional practices in small classes;
(B) paying the costs for teachers hired in
grades 1 through 3 who are not fully certified
or licensed to obtain full certification or licen-
sure;
(C) providing mentors or other support for
teachers in grades 1 through 3;
(D) establishing programs for the recruit-
ment of qualified teachers for schools that have
a shortage of certified or licensed teachers; and
(E) providing scholarships or other aid to
paraprofessionals or undergraduate students in
order to expand the pool of qualified teachers.
(b) SCHOOLS.—Each school receiving funds from a
local educational agency under this title may use the funds
to produce for the public an annual report regarding the
school’s—
(1) student achievement in reading (using the
assessments the State uses under section 1111(b) of
restrictive regulations, and a focus on learning
gains;
‘‘(5) charter schools, including charter schools
that are schools-within-schools, can help reduce
school size, which can have a significant effect on
student achievement;
‘‘(6) the Federal Government should test, evalu-
ate, and disseminate information on a variety of
charter school models in order to help demonstrate
the benefits of this promising educational reform;
and
‘‘(7) there is a strong documented need for
cash-flow assistance to charter schools that are
starting up, because State and local operating reve-
nue streams are not immediately available.
‘‘(b) PURPOSES.—The purposes of this part are—
‘‘(1) to provide financial assistance for the plan-
ning, design, initial implementation of charter
schools;
‘‘(2) to facilitate the ability of States and local-
ities to increase the number of charter schools in the
Nation to not less than 3,000 by the year 2000; and
‘‘(3) to evaluate the effects of charter schools,
including the effects on students, student achieve-
ment, staff, and parents.