case may be) will be eligible for free or reduced- 
cost lunches under the school lunch program es-
tablished under the National School Lunch Act. 
‘‘(4) QUALIFIED PURPOSE.—The term ‘quali-
fied purpose’ means, with respect to any qualified 
zone academy— 
‘‘(A) constructing, rehabilitating, or repair-
ing the public school facility in which the acad-
emy is established, 
‘‘(B) acquiring the land on which such fa-
cility is to be constructed with part of the pro-
ceeds of such issue, 
‘‘(C) providing equipment for use at such 
academy, 
‘‘(D) developing course materials for edu-
cation to be provided at such academy, and 
‘‘(E) training teachers and other school 
personnel in such academy. 
‘‘(b) LIMITATIONS
ON AMOUNT
OF BONDS DES-
IGNATED.— 
‘‘(1) IN GENERAL.—There is a national zone 
academy bond limitation for each calendar year. 
Such limitation is— 
‘‘(A) $1,400,000,000, for 2008, 
‘‘(B) $1,400,000,000 for 2009, and 
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‘‘(C) except as provided in paragraph (3), 
zero after 2009. 
‘‘(2) ALLOCATION OF LIMITATION.— 
‘‘(A) ALLOCATION
AMONG
STATES.—The 
national zone academy bond limitation for any 
calendar year shall be allocated by the Sec-
retary among the States in proportion to the re-
spective 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. 
‘‘(B) 
ALLOCATION
TO
LOCAL
EDU-
CATIONAL
AGENCIES.—The limitation amount 
allocated to a State under subparagraph (A) 
shall be allocated by the State to qualified zone 
academies within such State. 
‘‘(C) DESIGNATION SUBJECT TO LIMITA-
TION AMOUNT.—The maximum aggregate face 
amount of bonds issued during any calendar 
year which may be designated under subsection 
(a) with respect to any qualified zone academy 
shall not exceed the limitation amount allocated 
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to such academy under subparagraph (B) for 
such calendar year. 
‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If 
for any calendar year— 
‘‘(A) the limitation amount under this sub-
section for any State, exceeds 
‘‘(B) the amount of bonds issued during 
such year which are designated under sub-
section (a) (or the corresponding provisions of 
prior law) with respect to qualified zone acad-
emies within such State, 
the limitation amount under this subsection for such 
State for the following calendar year shall be in-
creased by the amount of such excess.’’. 
(b) REPORTING.—Subsection (d) of section 6049 of 
such Code (relating to returns regarding payments of in-
terest) is amended by adding at the end the following new 
paragraph: 
‘‘(8) REPORTING
OF
CREDIT
ON
QUALIFIED 
PUBLIC SCHOOL MODERNIZATION BONDS.— 
‘‘(A) IN GENERAL.—For purposes of sub-
section (a), the term ‘interest’ includes amounts 
includible in gross income under section 54A 
and such amounts shall be treated as paid on 
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