II
104TH CONGRESS
2D SESSION
H. R. 1720
IN THE SENATE OF THE UNITED STATES
SEPTEMBER 24 (legislative day, SEPTEMBER 20), 1996
Received
AN ACT
To reorganize the Student Loan Marketing Association, to
privatize the College Construction Loan Insurance Asso-
ciation, to amend the Museum Services Act to include
provisions improving and consolidating Federal library
service programs, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Government-Sponsored Enterprise Privatization Act of
1996’’.
(b) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—REORGANIZATION AND PRIVATIZATION
Sec. 101. Reorganization of the Student Loan Marketing Association through
the formation of a holding company.
Sec. 102. Connie Lee privatization.
Sec. 103. Eligible institution.
TITLE II—MUSEUMS AND LIBRARIES
Sec. 201. Museum and library services.
Sec. 202. National Commission on Libraries and Information Science.
Sec. 203. Transfer of functions from Institute of Museum Services.
Sec. 204. Service of individuals serving on date of enactment.
Sec. 205. Consideration.
Sec. 206. Transition and transfer of funds.
TITLE III—EXTENSION OF PROGRAMS
Sec. 301. Extension of National Literacy Act of 1991.
Sec. 302. Adult Education Act Amendments.
Sec. 303. Extension of Carl D. Perkins Vocational and Applied Technology
Education Act.
TITLE IV—REPEALS AND CONFORMING AMENDMENTS
Sec. 401. Repeals.
Sec. 402. Conforming amendments.
TITLE I—REORGANIZATION AND
PRIVATIZATION
SEC. 101. REORGANIZATION OF THE STUDENT LOAN MAR-
KETING ASSOCIATION THROUGH THE FOR-
MATION OF A HOLDING COMPANY.
(a) AMENDMENT.—Part B of title IV of the Higher
Education Act of 1965 (20 U.S.C. 1071 et seq.) is amend-
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ed by inserting after section 439 (20 U.S.C. 1087–2) the
following new section:
‘‘SEC. 440. REORGANIZATION OF THE STUDENT LOAN MAR-
KETING ASSOCIATION THROUGH THE FOR-
MATION OF A HOLDING COMPANY.
‘‘(a) ACTIONS BY THE ASSOCIATION’S BOARD OF DI-
RECTORS.—The Board of Directors of the Association
shall take or cause to be taken all such action as the Board
of Directors deems necessary or appropriate to effect,
upon the shareholder approval described in subsection (b),
a restructuring of the common stock ownership of the As-
sociation, as set forth in a plan of reorganization adopted
by the Board of Directors (the terms of which shall be
consistent with this section) so that all of the outstanding
common shares of the Association shall be directly owned
by a Holding Company. Such actions may include, in the
Board of Director’s discretion, a merger of a wholly owned
subsidiary of the Holding Company with and into the As-
sociation, which would have the effect provided in the plan
of reorganization and the law of the jurisdiction in which
such subsidiary is incorporated. As part of the restructur-
ing, the Board of Directors may cause—
‘‘(1) the common shares of the Association to
be converted, on the reorganization effective date, to
common shares of the Holding Company on a one
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for one basis, consistent with applicable State or
District of Columbia law; and
‘‘(2) Holding Company common shares to be
registered with the Securities and Exchange Com-
mission.
‘‘(b) SHAREHOLDER APPROVAL.—The plan of reor-
ganization adopted by the Board of Directors pursuant to
subsection (a) shall be submitted to common shareholders
of the Association for their approval. The reorganization
shall occur on the reorganization effective date, provided
that the plan of reorganization has been approved by the
affirmative votes, cast in person or by proxy, of the holders
of a majority of the issued and outstanding shares of the
Association common stock.
‘‘(c) TRANSITION.—In the event the shareholders of
the Association approve the plan of reorganization under
subsection (b), the following provisions shall apply begin-
ning on the reorganization effective date:
‘‘(1) IN GENERAL.—Except as specifically pro-
vided in this section, until the dissolution date the
Association shall continue to have all of the rights,
privileges and obligations set forth in, and shall be
subject to all of the limitations and restrictions of,
section 439, and the Association shall continue to
carry out the purposes of such section. The Holding
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Company and any subsidiary of the Holding Com-
pany (other than the Association) shall not be enti-
tled to any of the rights, privileges, and obligations,
and shall not be subject to the limitations and re-
strictions, applicable to the Association under section
439, except as specifically provided in this section.
The Holding Company and any subsidiary of the
Holding Company (other than the Association or a
subsidiary of the Association) shall not purchase
loans insured under this Act until such time as the
Association ceases acquiring such loans, except that
the Holding Company may purchase such loans if
the Association is merely continuing to acquire loans
as a lender of last resort pursuant to section 439(q)
or under an agreement with the Secretary described
in paragraph (6).
‘‘(2) TRANSFER OF CERTAIN PROPERTY.—
‘‘(A) IN GENERAL.—Except as provided in
this section, on the reorganization effective date
or as soon as practicable thereafter, the Asso-
ciation shall use the Association’s best efforts to
transfer to the Holding Company or any sub-
sidiary of the Holding Company (or both), as
directed by the Holding Company, all real and
personal property of the Association (both tan-
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gible and intangible) other than the remaining
property. Subject to the preceding sentence,
such transferred property shall include all right,
title, and interest in—
‘‘(i) direct or indirect subsidiaries of
the Association (excluding special purpose
funding companies in existence on the date
of enactment of this section and any inter-
est in any government-sponsored enter-
prise);
‘‘(ii) contracts, leases, and other
agreements of the Association;
‘‘(iii) licenses and other intellectual
property of the Association; and
‘‘(iv) any other property of the Asso-
ciation.
‘‘(B) CONSTRUCTION.—Nothing in this
paragraph shall be construed to prohibit the As-
sociation from transferring remaining property
from time to time to the Holding Company or
any subsidiary of the Holding Company, subject
to the provisions of paragraph (4).
‘‘(3) TRANSFER OF PERSONNEL.—On the reor-
ganization effective date, employees of the Associa-
tion shall become employees of the Holding Com-
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pany (or any subsidiary of the Holding Company),
and the Holding Company (or any subsidiary of the
Holding Company) shall provide all necessary and
appropriate management and operational support
(including loan servicing) to the Association, as re-
quested by the Association. The Association, how-
ever, may obtain such management and operational
support from persons or entities not associated with
the Holding Company.
‘‘(4) DIVIDENDS.—The Association may pay
dividends in the form of cash or noncash distribu-
tions so long as at the time of the declaration of
such dividends, after giving effect to the payment of
such dividends as of the date of such declaration by
the Board of Directors of the Association, the Asso-
ciation’s capital would be in compliance with the
capital standards and requirements set forth in sec-
tion 439(r). If, at any time after the reorganization
effective date, the Association fails to comply with
such capital standards, the Holding Company shall
transfer with due diligence to the Association addi-
tional capital in such amounts as are necessary to
ensure that the Association again complies with the
capital standards.
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‘‘(5) CERTIFICATION
PRIOR
TO
DIVIDEND.—
Prior to the payment of any dividend under para-
graph (4), the Association shall certify to the Sec-
retary of the Treasury that the payment of the divi-
dend will be made in compliance with paragraph (4)
and shall provide copies of all calculations needed to
make such certification.
‘‘(6) RESTRICTIONS ON NEW BUSINESS ACTIV-
ITY OR ACQUISITION OF ASSETS BY ASSOCIATION.—
‘‘(A) IN GENERAL.—After the reorganiza-
tion effective date, the Association shall not en-
gage in any new business activities or acquire
any additional program assets described in sec-
tion 439(d) other than in connection with—
‘‘(i) student loan purchases through
September 30, 2007;
‘‘(ii) contractual commitments for fu-
ture warehousing advances, or pursuant to
letters of credit or standby bond purchase
agreements, which are outstanding as of
the reorganization effective date;
‘‘(iii) the Association serving as a
lender-of-last-resort pursuant to section
439(q); and
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‘‘(iv) the Association’s purchase of
loans insured under this part, if the Sec-
retary, with the approval of the Secretary
of the Treasury, enters into an agreement
with the Association for the continuation
or resumption of the Association’s second-
ary market purchase program because the
Secretary determines there is inadequate
liquidity for loans made under this part.
‘‘(B) AGREEMENT.—The Secretary is au-
thorized to enter into an agreement described in
clause (iv) of subparagraph (A) with the Asso-
ciation covering such secondary market activi-
ties. Any agreement entered into under such
clause shall cover a period of 12 months, but
may be renewed if the Secretary determines
that liquidity remains inadequate. The fee pro-
vided under section 439(h)(7) shall not apply to
loans acquired under any such agreement with
the Secretary.
‘‘(7) ISSUANCE OF DEBT OBLIGATIONS DURING
THE TRANSITION PERIOD; ATTRIBUTES OF DEBT OB-
LIGATIONS.—After the reorganization effective date,
the Association shall not issue debt obligations which
mature later than September 30, 2008, except in
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connection with serving as a lender-of-last-resort
pursuant to section 439(q) or with purchasing loans
under an agreement with the Secretary as described
in paragraph (6). Nothing in this section shall mod-
ify the attributes accorded the debt obligations of
the Association by section 439, regardless of whether
such debt obligations are incurred prior to, or at any
time following, the reorganization effective date or
are transferred to a trust in accordance with sub-
section (d).
‘‘(8) MONITORING
OF
SAFETY
AND
SOUND-
NESS.—
‘‘(A) OBLIGATION TO OBTAIN, MAINTAIN,
AND REPORT INFORMATION.—The Association
shall obtain such information and make and
keep such records as the Secretary of the
Treasury may from time to time prescribe con-
cerning—
‘‘(i) the financial risk to the Associa-
tion resulting from the activities of any as-
sociated person, to the extent such activi-
ties are reasonably likely to have a mate-
rial impact on the financial condition of
the Association, including the Association’s
capital ratio, the Association’s liquidity, or
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the Association’s ability to conduct and fi-
nance the Association’s operations; and
‘‘(ii) the Association’s policies, proce-
dures, and systems for monitoring and
controlling any such financial risk.
‘‘(B) SUMMARY REPORTS.—The Secretary
of the Treasury may require summary reports
of the information described in subparagraph
(A) to be filed no more frequently than quar-
terly. If, as a result of adverse market condi-
tions or based on reports provided pursuant to
this subparagraph or other available informa-
tion, the Secretary of the Treasury has con-
cerns regarding the financial or operational con-
dition of the Association, the Secretary of the
Treasury may, notwithstanding the preceding
sentence and subparagraph (A), require the As-
sociation to make reports concerning the activi-
ties of any associated person whose business ac-
tivities are reasonably likely to have a material
impact on the financial or operational condition
of the Association.
‘‘(C) SEPARATE OPERATION OF CORPORA-
TIONS.—
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‘‘(i) IN GENERAL.—The funds and as-
sets of the Association shall at all times be
maintained separately from the funds and
assets of the Holding Company or any sub-
sidiary of the Holding Company and may
be used by the Association solely to carry
out the Association’s purposes and to fulfill
the Association’s obligations.
‘‘(ii) BOOKS AND RECORDS.—The As-
sociation shall maintain books and records
that clearly reflect the assets and liabilities
of the Association, separate from the as-
sets and liabilities of the Holding Company
or any subsidiary of the Holding Company.
‘‘(iii) CORPORATE OFFICE.—The As-
sociation shall maintain a corporate office
that is physically separate from any office
of the Holding Company or any subsidiary
of the Holding Company.
‘‘(iv) DIRECTOR.—No director of the
Association who is appointed by the Presi-
dent pursuant to section 439(c)(1)(A) may
serve as a director of the Holding Com-
pany.
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‘‘(v) ONE OFFICER REQUIREMENT.—
At least one officer of the Association shall
be an officer solely of the Association.
‘‘(vi) 
TRANSACTIONS.—Transactions
between the Association and the Holding
Company or any subsidiary of the Holding
Company, including any loan servicing ar-
rangements, shall be on terms no less fa-
vorable to the Association than the Asso-
ciation could obtain from an unrelated
third party offering comparable services.
‘‘(vii) 
CREDIT
PROHIBITION.—The
Association shall not extend credit to the
Holding Company or any subsidiary of the
Holding Company nor guarantee or pro-
vide any credit enhancement to any debt
obligations of the Holding Company or any
subsidiary of the Holding Company.
‘‘(viii) AMOUNTS
COLLECTED.—Any
amounts collected on behalf of the Associa-
tion by the Holding Company or any sub-
sidiary of the Holding Company with re-
spect to the assets of the Association, pur-
suant to a servicing contract or other ar-
rangement between the Association and the
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section shall be subject to the same confiden-
tiality 
obligations 
contained 
in 
section
439(r)(12).
‘‘(G) DEFINITION.—For purposes of this
paragraph, the term ‘associated person’ means
any person, other than a natural person, who is
directly or indirectly controlling, controlled by,
or under common control with, the Association.
‘‘(9) ISSUANCE OF STOCK WARRANTS.—On the
reorganization effective date, the Holding Company
shall issue to the Secretary of the Treasury a num-
ber of stock warrants that is equal to one percent
of the outstanding shares of the Association, deter-
mined as of the last day of the fiscal quarter preced-
ing the date of enactment of this section, with each
stock warrant entitling the holder of the stock war-
rant to purchase from the Holding Company one
share of the registered common stock of the Holding
Company or the Holding Company’s successors or
assigns, at any time on or before September 30,
2008. The exercise price for such warrants shall be
an amount equal to the average closing price of the
common stock of the Association for the 20 business
days prior to the date of enactment of this section
on the exchange or market which is then the pri-
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mary exchange or market for the common stock of
the Association. The number of shares of Holding
Company common stock subject to each warrant and
the exercise price of each warrant shall be adjusted
as necessary to reflect—
‘‘(A) the conversion of Association common
stock into Holding Company common stock as
part of the plan of reorganization approved by
the Association’s shareholders; and
‘‘(B) any issuance or sale of stock (includ-
ing issuance or sale of treasury stock), stock
split, recapitalization, reorganization, or other
corporate event, if agreed to by the Secretary of
the Treasury and the Association.
‘‘(10) RESTRICTIONS ON TRANSFER OF ASSO-
CIATION
SHARES
AND
BANKRUPTCY
OF
ASSOCIA-
TION.—After the reorganization effective date, the
Holding Company shall not sell, pledge, or otherwise
transfer the outstanding shares of the Association,
or agree to or cause the liquidation of the Associa-
tion or cause the Association to file a petition for
bankruptcy under title 11, United States Code, with-
out prior approval of the Secretary of the Treasury
and the Secretary of Education.
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‘‘(d) TERMINATION OF THE ASSOCIATION.—In the
event the shareholders of the Association approve a plan
of reorganization under subsection (b), the Association
shall dissolve, and the Association’s separate existence
shall terminate on September 30, 2008, after discharge
of all outstanding debt obligations and liquidation pursu-
ant to this subsection. The Association may dissolve pur-
suant to this subsection prior to such date by notifying
the Secretary of Education and the Secretary of the
Treasury of the Association’s intention to dissolve, unless
within 60 days after receipt of such notice the Secretary
of Education notifies the Association that the Association
continues to be needed to serve as a lender of last resort
pursuant to section 439(q) or continues to be needed to
purchase loans under an agreement with the Secretary de-
scribed in paragraph (6). On the dissolution date, the As-
sociation shall take the following actions:
‘‘(1) ESTABLISHMENT OF A TRUST.—The Asso-
ciation shall, under the terms of an irrevocable trust
agreement that is in form and substance satisfactory
to the Secretary of the Treasury, the Association
and the appointed trustee, irrevocably transfer all
remaining obligations of the Association to the trust
and irrevocably deposit or cause to be deposited into
such trust, to be held as trust funds solely for the
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benefit of holders of the remaining obligations,
money or direct noncallable obligations of the United
States or any agency thereof for which payment the
full faith and credit of the United States is pledged,
maturing as to principal and interest in such
amounts and at such times as are determined by the
Secretary of the Treasury to be sufficient, without
consideration of any significant reinvestment of such
interest, to pay the principal of, and interest on, the
remaining obligations in accordance with their
terms. To the extent the Association cannot provide
money or qualifying obligations in the amount re-
quired, the Holding Company shall be required to
transfer money or qualifying obligations to the trust
in the amount necessary to prevent any deficiency.
‘‘(2) USE OF TRUST ASSETS.—All money, obli-
gations, or financial assets deposited into the trust
pursuant to this subsection shall be applied by the
trustee to the payment of the remaining obligations
assumed by the trust.
‘‘(3) OBLIGATIONS NOT TRANSFERRED TO THE
TRUST.—The Association shall make proper provi-
sion for all other obligations of the Association not
transferred to the trust, including the repurchase or
redemption, or the making of proper provision for
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the repurchase or redemption, of any preferred stock
of the Association outstanding. Any obligations of
the Association which cannot be fully satisfied shall
become liabilities of the Holding Company as of the
date of dissolution.
‘‘(4) TRANSFER OF REMAINING ASSETS.—After
compliance with paragraphs (1) and (3), any re-
maining assets of the trust shall be transferred to
the Holding Company or any subsidiary of the Hold-
ing Company, as directed by the Holding Company.
‘‘(e) OPERATION OF THE HOLDING COMPANY.—In
the event the shareholders of the Association approve the
plan of reorganization under subsection (b), the following
provisions shall apply beginning on the reorganization ef-
fective date:
‘‘(1) HOLDING
COMPANY
BOARD
OF
DIREC-
TORS.—The number of members and composition of
the Board of Directors of the Holding Company
shall be determined as set forth in the Holding Com-
pany’s charter or like instrument (as amended from
time to time) or bylaws (as amended from time to
time) and as permitted under the laws of the juris-
diction of the Holding Company’s incorporation.
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‘‘(2) HOLDING COMPANY NAME.—The names of
the Holding Company and any subsidiary of the
Holding Company (other than the Association)—
‘‘(A) may not contain the name ‘Student
Loan Marketing Association’; and
‘‘(B) may contain, to the extent permitted
by applicable State or District of Columbia law,
‘Sallie Mae’ or variations thereof, or such other
names as the Board of Directors of the Associa-
tion or the Holding Company deems appro-
priate.
‘‘(3) USE OF SALLIE MAE NAME.—Subject to
paragraph (2), the Association may assign to the
Holding Company, or any subsidiary of the Holding
Company, the ‘Sallie Mae’ name as a trademark and
service mark, except that neither the Holding Com-
pany nor any subsidiary of the Holding Company
(other than the Association or any subsidiary of the
Association) may use the ‘Sallie Mae’ name on, or
to identify the issuer of, any debt obligation or other
security offered or sold by the Holding Company or
any subsidiary of the Holding Company (other than
a debt obligation or other security issued to and held
by the Holding Company or any subsidiary of the
Holding Company). The Association shall remit to
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the Secretary of the Treasury $5,000,000 within 60
days of the reorganization effective date as com-
pensation for the right to assign such trademark or
service mark.
‘‘(4) DISCLOSURE
REQUIRED.—Until 3 years
after the dissolution date, the Holding Company,
and any subsidiary of the Holding Company (other
than the Association), shall prominently display—
‘‘(A) in any document offering the Holding
Company’s securities, a statement that the obli-
gations of the Holding Company and any sub-
sidiary of the Holding Company are not guar-
anteed by the full faith and credit of the United
States; and
‘‘(B) in any advertisement or promotional
materials which use the ‘Sallie Mae’ name or
mark, a statement that neither the Holding
Company nor any subsidiary of the Holding
Company is a government-sponsored enterprise
or instrumentality of the United States.
‘‘(f) STRICT CONSTRUCTION.—Except as specifically
set forth in this section, nothing in this section shall be
construed to limit the authority of the Association as a
federally chartered corporation, or of the Holding Com-
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pany as a State or District of Columbia chartered corpora-
tion.
‘‘(g) RIGHT TO ENFORCE.—The Secretary of Edu-
cation or the Secretary of the Treasury, as appropriate,
may request that the Attorney General bring an action
in the United States District Court for the District of Co-
lumbia for the enforcement of any provision of this sec-
tion, or may, under the direction or control of the Attorney
General, bring such an action. Such court shall have juris-
diction and power to order and require compliance with
this section.
‘‘(h) DEADLINE FOR REORGANIZATION EFFECTIVE
DATE.—This section shall be of no further force and effect
in the event that the reorganization effective date does not
occur on or before 18 months after the date of enactment
of this section.
‘‘(i) DEFINITIONS.—For purposes of this section:
‘‘(1) ASSOCIATION.—The term ‘Association’
means the Student Loan Marketing Association.
‘‘(2) DISSOLUTION DATE.—The term ‘dissolu-
tion date’ means September 30, 2008, or such ear-
lier date as the Secretary of Education permits the
transfer of remaining obligations in accordance with
subsection (d).
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‘‘(3) HOLDING COMPANY.—The term ‘Holding
Company’ means the new business corporation es-
tablished pursuant to this section by the Association
under the laws of any State of the United States or
the District of Columbia for the purposes of the re-
organization and restructuring described in sub-
section (a).
‘‘(4) REMAINING OBLIGATIONS.—The term ‘re-
maining obligations’ means the debt obligations of
the Association outstanding as of the dissolution
date.
‘‘(5) REMAINING
PROPERTY.—The term ‘re-
maining property’ means the following assets and li-
abilities of the Association which are outstanding as
of the reorganization effective date:
‘‘(A) Debt obligations issued by the Asso-
ciation.
‘‘(B) Contracts relating to interest rate,
currency, or commodity positions or protections.
‘‘(C) Investment securities owned by the
Association.
‘‘(D) Any instruments, assets, or agree-
ments described in section 439(d) (including,
without limitation, all student loans and agree-
ments relating to the purchase and sale of stu-
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dent loans, forward purchase and lending com-
mitments, warehousing advances, academic fa-
cilities obligations, letters of credit, standby
bond purchase agreements, liquidity agree-
ments, and student loan revenue bonds or other
loans).
‘‘(E) Except as specifically prohibited by
this section or section 439, any other nonmate-
rial assets or liabilities of the Association which
the Association’s Board of Directors determines
to be necessary or appropriate to the Associa-
tion’s operations.
‘‘(6) REORGANIZATION.—The term ‘reorganiza-
tion’ means the restructuring event or events (in-
cluding any merger event) giving effect to the Hold-
ing Company structure described in subsection (a).
‘‘(7) REORGANIZATION EFFECTIVE DATE.—The
term ‘reorganization effective date’ means the effec-
tive date of the reorganization as determined by the
Board of Directors of the Association, which shall
not be earlier than the date that shareholder ap-
proval is obtained pursuant to subsection (b) and
shall not be later than the date that is 18 months
after the date of enactment of this section.
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‘‘(8) 
SUBSIDIARY.—The 
term 
‘subsidiary’
means one or more direct or indirect subsidiaries.’’.
(b) TECHNICAL AMENDMENTS.—
(1) ELIGIBLE LENDER.—
(A) AMENDMENTS TO THE HIGHER EDU-
CATION ACT.—
(i) DEFINITION OF ELIGIBLE LEND-
ER.—Section 435(d)(1)(F) of the Higher
Education 
Act 
of 
1965 
(20 
U.S.C.
1085(d)(1)(F)) is amended by inserting
after ‘‘Student Loan Marketing Associa-
tion’’ the following: ‘‘or the Holding Com-
pany of the Student Loan Marketing Asso-
ciation, including any subsidiary of the
Holding Company, created pursuant to
section 440,’’.
(ii) DEFINITION OF ELIGIBLE LEND-
ER
AND
FEDERAL
CONSOLIDATION
LOANS.—Sections 
435(d)(1)(G) 
and
428C(a)(1)(A) of such Act (20 U.S.C.
1085(d)(1)(G) and 1078–3(a)(1)(A)) are
each amended by inserting after ‘‘Student
Loan Marketing Association’’ the follow-
ing: ‘‘or the Holding Company of the Stu-
dent Loan Marketing Association, includ-
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ing any subsidiary of the Holding Com-
pany, created pursuant to section 440’’.
(B) EFFECTIVE DATE.—The amendments
made by this paragraph shall take effect on the
reorganization effective date as defined in sec-
tion 440(h) of the Higher Education Act of
1965 (as added by subsection (a)).
(2) ENFORCEMENT
OF
SAFETY
AND
SOUND-
NESS REQUIREMENTS.—Section 439(r) of the High-
er Education Act of 1965 (20 U.S.C. 1087–2(r)) is
amended—
(A) in the first sentence of paragraph (12),
by inserting ‘‘or the Association’s associated
persons’’ after ‘‘by the Association’’;
(B) by redesignating paragraph (13) as
paragraph (15); and
(C) by inserting after paragraph (12) the
following new paragraph:
‘‘(13) ENFORCEMENT OF SAFETY AND SOUND-
NESS REQUIREMENTS.—The Secretary of Education
or the Secretary of the Treasury, as appropriate,
may request that the Attorney General bring an ac-
tion in the United States District Court for the Dis-
trict of Columbia for the enforcement of any provi-
sion of this section, or may, under the direction or
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control of the Attorney General, bring such an ac-
tion. Such court shall have jurisdiction and power to
order and require compliance with this section.’’.
(3) FINANCIAL SAFETY AND SOUNDNESS.—Sec-
tion 439(r) of the Higher Education Act of 1965
(20 U.S.C. 1087–2(r)) is further amended—
(A) in paragraph (1)—
(i) by striking ‘‘and’’ at the end of
subparagraph (A);
(ii) by striking the period at the end
of subparagraph (B) and inserting ‘‘;
and’’; and
(iii) by adding at the end the follow-
ing new subparagraph:
‘‘(C)(i) financial statements of the Associa-
tion within 45 days of the end of each fiscal
quarter; and
‘‘(ii) reports setting forth the calculation of
the capital ratio of the Association within 45
days of the end of each fiscal quarter.’’;
(B) in paragraph (2)—
(i) by striking clauses (i) and (ii) of
subparagraph (A) and inserting the follow-
ing:
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‘‘(i) appoint auditors or examiners to con-
duct audits of the Association from time to time
to determine the condition of the Association
for the purpose of assessing the Association’s fi-
nancial safety and soundness and to determine
whether the requirements of this section and
section 440 are being met; and
‘‘(ii) obtain the services of such experts as
the Secretary of the Treasury determines nec-
essary and appropriate, as authorized by section
3109 of title 5, United States Code, to assist in
determining the condition of the Association for
the purpose of assessing the Association’s fi-
nancial safety and soundness, and to determine
whether the requirements of this section and
section 440 are being met.’’; and
(ii) by adding at the end the following
new subparagraph:
‘‘(D) ANNUAL ASSESSMENT.—
‘‘(i) IN
GENERAL.—For each fiscal year
beginning on or after October 1, 1996, the Sec-
retary of the Treasury may establish and collect
from the Association an assessment (or assess-
ments) in amounts sufficient to provide for rea-
sonable costs and expenses of carrying out the
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duties of the Secretary of the Treasury under
this section and section 440 during such fiscal
year. In no event may the total amount so as-
sessed exceed, for any fiscal year, $800,000, ad-
justed for each fiscal year ending after Septem-
ber 30, 1997, by the ratio of the Consumer
Price Index for All Urban Consumers (issued
by the Bureau of Labor Statistics) for the final
month of the fiscal year preceding the fiscal
year for which the assessment is made to the
Consumer Price Index for All Urban Consum-
ers for September 1997.
‘‘(ii) DEPOSIT.—Amounts collected from
assessments under this subparagraph shall be
deposited in an account within the Treasury of
the United States as designated by the Sec-
retary of the Treasury for that purpose. The
Secretary of the Treasury is authorized and di-
rected to pay out of any funds available in such
account the reasonable costs and expenses of
carrying out the duties of the Secretary of the
Treasury under this section and section 440.
None of the funds deposited into such account
shall be available for any purpose other than
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making payments for such costs and ex-
penses.’’; and
(C) by inserting after paragraph (13) (as
added by paragraph (2)(C)) the following new
paragraph:
‘‘(14) ACTIONS BY SECRETARY.—
‘‘(A) IN GENERAL.—For any fiscal quarter
ending after January 1, 2000, the Association
shall have a capital ratio of at least 2.25 per-
cent. The Secretary of the Treasury may, when-
ever such capital ratio is not met, take any one
or more of the actions described in paragraph
(7), except that—
‘‘(i) the capital ratio to be restored
pursuant to paragraph (7)(D) shall be
2.25 percent; and
‘‘(ii) if the relevant capital ratio is in
excess of or equal to 2 percent for such
quarter, the Secretary of the Treasury
shall defer taking any of the actions set
forth in paragraph (7) until the next suc-
ceeding quarter and may then proceed with
any such action only if the capital ratio of
the Association remains below 2.25 per-
cent.
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‘‘(B) APPLICABILITY.—The provisions of
paragraphs (4), (5), (6), (8), (9), (10), and
(11) shall be of no further application to the
Association for any period after January 1,
2000.’’.
(4) INFORMATION
REQUIRED; DIVIDENDS.—
Section 439(r) of the Higher Education Act of 1965
(20 U.S.C. 1087–2(r)) is further amended—
(A) by adding at the end of paragraph (2)
(as amended in paragraph (3)(B)(ii)) the fol-
lowing new subparagraph:
‘‘(E) OBLIGATION TO OBTAIN, MAINTAIN, AND
REPORT INFORMATION.—
‘‘(i) IN GENERAL.—The Association shall
obtain such information and make and keep
such records as the Secretary of the Treasury
may from time to time prescribe concerning—
‘‘(I) the financial risk to the Associa-
tion resulting from the activities of any as-
sociated person, to the extent such activi-
ties are reasonably likely to have a mate-
rial impact on the financial condition of
the Association, including the Association’s
capital ratio, the Association’s liquidity, or
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the Association’s ability to conduct and fi-
nance the Association’s operations; and
‘‘(II) the Association’s policies, proce-
dures, and systems for monitoring and
controlling any such financial risk.
‘‘(ii) SUMMARY REPORTS.—The Secretary
of the Treasury may require summary reports
of such information to be filed no more fre-
quently than quarterly. If, as a result of ad-
verse market conditions or based on reports
provided pursuant to this subparagraph or
other available information, the Secretary of the
Treasury has concerns regarding the financial
or operational condition of the Association, the
Secretary of the Treasury may, notwithstanding
the preceding sentence and clause (i), require
the Association to make reports concerning the
activities of any associated person, whose busi-
ness activities are reasonably likely to have a
material impact on the financial or operational
condition of the Association.
‘‘(iii) DEFINITION.—For purposes of this
subparagraph, the term ‘associated person’
means any person, other than a natural person,
directly or indirectly controlling, controlled by,
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or under common control with the Associa-
tion.’’; and
(B) by adding at the end the following new
paragraphs:
‘‘(16) DIVIDENDS.—The Association may pay
dividends in the form of cash or noncash distribu-
tions so long as at the time of the declaration of
such dividends, after giving effect to the payment of
such dividends as of the date of such declaration by
the Board of Directors of the Association, the Asso-
ciation’s capital would be in compliance with the
capital standards set forth in this section.
‘‘(17) CERTIFICATION PRIOR TO PAYMENT OF
DIVIDEND.—Prior to the payment of any dividend
under paragraph (16), the Association shall certify
to the Secretary of the Treasury that the payment
of the dividend will be made in compliance with
paragraph (16) and shall provide copies of all cal-
culations needed to make such certification.’’.
(c) SUNSET OF THE ASSOCIATION’S CHARTER IF NO
REORGANIZATION PLAN OCCURS.—Section 439 of the
Higher Education Act of 1965 (20 U.S.C. 1087–2) is
amended by adding at the end the following new sub-
section:
‘‘(s) CHARTER SUNSET.—
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‘‘(1) APPLICATION OF PROVISIONS.—This sub-
section applies beginning 18 months and one day
after the date of enactment of this subsection if no
reorganization of the Association occurs in accord-
ance with the provisions of section 440.
‘‘(2) SUNSET PLAN.—
‘‘(A) PLAN SUBMISSION BY THE ASSOCIA-
TION.—Not later than July 1, 2007, the Asso-
ciation shall submit to the Secretary of the
Treasury and to the Chairman and Ranking
Member of the Committee on Labor and
Human Resources of the Senate and the Chair-
man and Ranking Member of the Committee on
Economic and Educational Opportunities of the
House of Representatives, a detailed plan for
the orderly winding up, by July 1, 2013, of
business activities conducted pursuant to the
charter set forth in this section. Such plan
shall—
‘‘(i) ensure that the Association will
have adequate assets to transfer to a trust,
as provided in this subsection, to ensure
full payment of remaining obligations of
the Association in accordance with the
terms of such obligations;
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‘‘(ii) provide that all assets not used
to pay liabilities shall be distributed to
shareholders as provided in this subsection;
and
‘‘(iii) provide that the operations of
the Association shall remain separate and
distinct from that of any entity to which
the assets of the Association are trans-
ferred.
‘‘(B) AMENDMENT OF THE PLAN BY THE
ASSOCIATION.—The Association shall from time
to time amend such plan to reflect changed cir-
cumstances, and submit such amendments to
the Secretary of the Treasury and to the Chair-
man and Ranking Minority Member of the
Committee on Labor and Human Resources of
the Senate and Chairman and Ranking Minor-
ity Member of the Committee on Economic and
Educational Opportunities of the House of Rep-
resentatives. In no case may any amendment
extend the date for full implementation of the
plan beyond the dissolution date provided in
paragraph (3).
‘‘(C) PLAN MONITORING.—The Secretary
of the Treasury shall monitor the Association’s
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compliance with the plan and shall continue to
review the plan (including any amendments
thereto).
‘‘(D) AMENDMENT OF THE PLAN BY THE
SECRETARY OF THE TREASURY.—The Secretary
of the Treasury may require the Association to
amend the plan (including any amendments to
the plan), if the Secretary of the Treasury
deems such amendments necessary to ensure
full payment of all obligations of the Associa-
tion.
‘‘(E) IMPLEMENTATION BY THE ASSOCIA-
TION.—The Association shall promptly imple-
ment the plan (including any amendments to
the plan, whether such amendments are made
by the Association or are required to be made
by the Secretary of the Treasury).
‘‘(3) DISSOLUTION OF THE ASSOCIATION.—The
Association shall dissolve and the Association’s sepa-
rate existence shall terminate on July 1, 2013, after
discharge of all outstanding debt obligations and liq-
uidation pursuant to this subsection. The Associa-
tion may dissolve pursuant to this subsection prior
to such date by notifying the Secretary of Education
and the Secretary of the Treasury of the Associa-
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tion’s intention to dissolve, unless within 60 days of
receipt of such notice the Secretary of Education no-
tifies the Association that the Association continues
to be needed to serve as a lender of last resort pur-
suant to subsection (q) or continues to be needed to
purchase loans under an agreement with the Sec-
retary described in paragraph (4)(A). On the dis-
solution date, the Association shall take the follow-
ing actions:
‘‘(A) ESTABLISHMENT OF A TRUST.—The
Association shall, under the terms of an irrev-
ocable trust agreement in form and substance
satisfactory to the Secretary of the Treasury,
the Association, and the appointed trustee, ir-
revocably transfer all remaining obligations of
the Association to a trust and irrevocably de-
posit or cause to be deposited into such trust,
to be held as trust funds solely for the benefit
of holders of the remaining obligations, money
or direct noncallable obligations of the United
States or any agency thereof for which payment
the full faith and credit of the United States is
pledged, maturing as to principal and interest
in such amounts and at such times as are de-
termined by the Secretary of the Treasury to be
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sufficient, without consideration of any signifi-
cant reinvestment of such interest, to pay the
principal of, and interest on, the remaining obli-
gations in accordance with their terms.
‘‘(B) USE OF TRUST ASSETS.—All money,
obligations, or financial assets deposited into
the trust pursuant to this subsection shall be
applied by the trustee to the payment of the re-
maining obligations assumed by the trust. Upon
the fulfillment of the trustee’s duties under the
trust, any remaining assets of the trust shall be
transferred to the persons who, at the time of
the dissolution, were the shareholders of the As-
sociation, or to the legal successors or assigns
of such persons.
‘‘(C) OBLIGATIONS NOT TRANSFERRED TO
THE TRUST.—The Association shall make prop-
er provision for all other obligations of the As-
sociation, including the repurchase or redemp-
tion, or the making of proper provision for the
repurchase or redemption, of any preferred
stock of the Association outstanding.
‘‘(D) TRANSFER OF REMAINING ASSETS.—
After compliance with subparagraphs (A) and
(C), the Association shall transfer to the share-
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holders of the Association any remaining assets
of the Association.
‘‘(4) RESTRICTIONS
RELATING
TO
WINDING
UP.—
‘‘(A) RESTRICTIONS ON NEW BUSINESS AC-
TIVITY OR ACQUISITION OF ASSETS BY THE AS-
SOCIATION.—
‘‘(i) IN GENERAL.—Beginning on July
1, 2009, the Association shall not engage
in any new business activities or acquire
any additional program assets (including
acquiring assets pursuant to contractual
commitments) described in subsection (d)
other than in connection with the Associa-
tion—
‘‘(I) serving as a lender of last
resort pursuant to subsection (q); and
‘‘(II) purchasing loans insured
under this part, if the Secretary, with
the approval of the Secretary of the
Treasury, enters into an agreement
with the Association for the continu-
ation or resumption of the Associa-
tion’s secondary market purchase pro-
gram because the Secretary deter-
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mines there is inadequate liquidity for
loans made under this part.
‘‘(ii) AGREEMENT.—The Secretary is
authorized to enter into an agreement de-
scribed in subclause (II) of clause (i) with
the Association covering such secondary
market activities. Any agreement entered
into under such subclause shall cover a pe-
riod of 12 months, but may be renewed if
the Secretary determines that liquidity re-
mains inadequate. The fee provided under
subsection (h)(7) shall not apply to loans
acquired under any such agreement with
the Secretary.
‘‘(B) ISSUANCE
OF
DEBT
OBLIGATIONS
DURING THE WIND UP PERIOD; ATTRIBUTES OF
DEBT OBLIGATIONS.—The Association shall not
issue debt obligations which mature later than
July 1, 2013, except in connection with serving
as a lender of last resort pursuant to subsection
(q) or with purchasing loans under an agree-
ment with the Secretary as described in sub-
paragraph (A). Nothing in this subsection shall
modify the attributes accorded the debt obliga-
tions of the Association by this section, regard-
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less of whether such debt obligations are trans-
ferred to a trust in accordance with paragraph
(3).
‘‘(C) USE
OF
ASSOCIATION
NAME.—The
Association may not transfer or permit the use
of the name ‘Student Loan Marketing Associa-
tion’, ‘Sallie Mae’, or any variation thereof, to
or by any entity other than a subsidiary of the
Association.’’.
(d) DISCRIMINATION IN SECONDARY MARKETS PRO-
HIBITED.—Part B of title IV of the Higher Education Act
of 1965 (20 U.S.C. 1071 et seq.) is amended by adding
after section 440 (as added by subsection (a)) the follow-
ing new section:
‘‘SEC. 440A. DISCRIMINATION IN SECONDARY MARKETS
PROHIBITED.
‘‘The Student Loan Marketing Association (and, if
the Association is privatized under section 440, any suc-
cessor entity functioning as a secondary market for loans
under this part, including the Holding Company described
in such section) shall not engage directly or indirectly in
any pattern or practice that results in a denial of a bor-
rower’s access to loans under this part because of the bor-
rower’s race, sex, color, religion, national origin, age, dis-
ability status, income, attendance at a particular eligible
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institution, length of the borrower’s educational program,
or the borrower’s academic year at an eligible institu-
tion.’’.
(e) REPEALS.—
(1) IN GENERAL.—Sections 439 of the Higher
Education Act of 1965 (20 U.S.C. 1087–2) and 440
of such Act (as added by subsection (a) of this sec-
tion) are repealed.
(2) EFFECTIVE DATE.—The repeals made by
paragraph (1) shall be effective one year after—
(A) the date on which all of the obligations
of the trust established under section 440(d)(1)
of the Higher Education Act of 1965 (as added
by subsection (a)) have been extinguished, if a
reorganization occurs in accordance with section
440 of such Act; or
(B) the date on which all of the obligations
of the trust established under subsection
439(s)(3)(A) of such Act (as added by sub-
section (c)) have been extinguished, if a reorga-
nization does not occur in accordance with sec-
tion 440 of such Act.
(f) ASSOCIATION NAMES.—Upon dissolution in ac-
cordance with section 439(s) of the Higher Education Act
of 1965 (20 U.S.C. 1087–2), the names ‘‘Student Loan
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Marketing Association’’, ‘‘Sallie Mae’’, and any variations
thereof may not be used by any entity engaged in any
business similar to the business conducted pursuant to
section 439 of such Act (as such section was in effect on
the date of enactment of this Act) without the approval
of the Secretary of the Treasury.
(g) RIGHT TO ENFORCE.—The Secretary of Edu-
cation or the Secretary of the Treasury, as appropriate,
may request that the Attorney General bring an action
in the United States District Court for the District of Co-
lumbia for the enforcement of any provision of subsection
(f), or may, under the direction or control of the Attorney
General, bring such an action. Such court shall have juris-
diction and power to order and require compliance with
subsection (f).
SEC. 102. CONNIE LEE PRIVATIZATION.
(a) STATUS OF THE CORPORATION AND CORPORATE
POWERS; OBLIGATIONS
NOT
FEDERALLY
GUARAN-
TEED.—
(1) STATUS OF THE CORPORATION.—The Cor-
poration shall not be an agency, instrumentality, or
establishment of the United States Government, nor
a Government corporation, nor a Government con-
trolled corporation, as such terms are defined in sec-
tion 103 of title 5, United States Code. No action
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under section 1491 of title 28, United States Code
(commonly known as the Tucker Act) shall be allow-
able against the United States based on the actions
of the Corporation.
(2) CORPORATE
POWERS.—The Corporation
shall be subject to the provisions of this section, and,
to the extent not inconsistent with this section, to
the District of Columbia Business Corporation Act
(or the comparable law of another State, if applica-
ble). The Corporation shall have the powers con-
ferred upon a corporation by the District of Colum-
bia Business Corporation Act (or such other applica-
ble State law) as from time to time in effect in order
to conduct the Corporation’s affairs as a private,
for-profit corporation and to carry out the Corpora-
tion’s purposes and activities incidental thereto. The
Corporation shall have the power to enter into con-
tracts, to execute instruments, to incur liabilities, to
provide products and services, and to do all things
as are necessary or incidental to the proper manage-
ment of the Corporation’s affairs and the efficient
operation of a private, for-profit business.
(3) LIMITATION ON OWNERSHIP OF STOCK.—
(A) SECRETARY OF THE TREASURY.—The
Secretary of the Treasury, in completing the
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sale of stock pursuant to subsection (c), may
not sell or issue the stock held by the Secretary
of Education to an agency, instrumentality, or
establishment of the United States Government,
or to a Government corporation or a Govern-
ment controlled corporation, as such terms are
defined in section 103 of title 5, United States
Code, or to a government-sponsored enterprise
as such term is defined in section 3 of the Con-
gressional Budget Act of 1974 (2 U.S.C. 622).
(B) STUDENT LOAN MARKETING ASSOCIA-
TION.—The Student Loan Marketing Associa-
tion shall not increase its share of the owner-
ship of the Corporation in excess of 42 percent
of the shares of stock of the Corporation out-
standing on the date of enactment of this Act.
The Student Loan Marketing Association shall
not control the operation of the Corporation,
except that the Student Loan Marketing Asso-
ciation may participate in the election of direc-
tors as a shareholder, and may continue to ex-
ercise the Student Loan Marketing Associa-
tion’s right to appoint directors under section
754 of the Higher Education Act of 1965 (20
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U.S.C. 1132f–3) as long as that section is in ef-
fect.
(C) PROHIBITION.—Until such time as the
Secretary of the Treasury sells the stock of the
Corporation owned by the Secretary of Edu-
cation pursuant to subsection (c), the Student
Loan Marketing Association shall not provide
financial support or guarantees to the Corpora-
tion.
(D) FINANCIAL
SUPPORT
OR
GUARAN-
TEES.—After the Secretary of the Treasury
sells the stock of the Corporation owned by the
Secretary of Education pursuant to subsection
(c), the Student Loan Marketing Association
may provide financial support or guarantees to
the Corporation, if such support or guarantees
are subject to terms and conditions that are no
more advantageous to the Corporation than the
terms and conditions the Student Loan Market-
ing Association provides to other entities, in-
cluding, where applicable, other monoline finan-
cial guaranty corporations in which the Student
Loan Marketing Association has no ownership
interest.
(4) NO FEDERAL GUARANTEE.—
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(A) OBLIGATIONS INSURED BY THE COR-
PORATION.—
(i) FULL FAITH AND CREDIT OF THE
UNITED STATES.—No obligation that is in-
sured, guaranteed, or otherwise backed by
the Corporation shall be deemed to be an
obligation that is guaranteed by the full
faith and credit of the United States.
(ii) STUDENT LOAN MARKETING ASSO-
CIATION.—No obligation that is insured,
guaranteed, or otherwise backed by the
Corporation shall be deemed to be an obli-
gation that is guaranteed by the Student
Loan Marketing Association.
(iii) SPECIAL RULE.—This paragraph
shall not affect the determination of
whether such obligation is guaranteed for
purposes of Federal income taxes.
(B) SECURITIES OFFERED BY THE COR-
PORATION.—No debt or equity securities of the
Corporation shall be deemed to be guaranteed
by the full faith and credit of the United
States.
(5) DEFINITION.—The term ‘‘Corporation’’ as
used in this section means the College Construction
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Loan Insurance Association as in existence on the
day before the date of enactment of this Act, and
any successor corporation.
(b) RELATED PRIVATIZATION REQUIREMENTS.—
(1) NOTICE REQUIREMENTS.—
(A) IN GENERAL.—During the six-year pe-
riod following the date of enactment of this Act,
the Corporation shall include, in each of the
Corporation’s contracts for the insurance, guar-
antee, or reinsurance of obligations, and in each
document offering debt or equity securities of
the Corporation, a prominent statement provid-
ing notice that—
(i) such obligations or such securities,
as the case may be, are not obligations of
the United States, nor are such obligations
or such securities, as the case may be,
guaranteed in any way by the full faith
and credit of the United States; and
(ii) the Corporation is not an instru-
mentality of the United States.
(B) ADDITIONAL
NOTICE.—During the
five-year period following the sale of stock pur-
suant to subsection (c)(1), in addition to the
notice requirements in subparagraph (A), the
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Corporation shall include, in each of the con-
tracts and documents referred to in such sub-
paragraph, a prominent statement providing no-
tice that the United States is not an investor in
the Corporation.
(2) CORPORATE CHARTER.—The Corporation’s
charter shall be amended as necessary and without
delay to conform to the requirements of this section.
(3) CORPORATE NAME.—The name of the Cor-
poration, or of any direct or indirect subsidiary
thereof, may not contain the term ‘‘College Con-
struction Loan Insurance Association’’, or any sub-
stantially similar variation thereof.
(4) ARTICLES OF INCORPORATION.—The Cor-
poration shall amend the Corporation’s articles of
incorporation without delay to reflect that one of the
purposes of the Corporation shall be to guarantee,
insure, and reinsure bonds, leases, and other evi-
dences of debt of educational institutions, including
Historically Black Colleges and Universities and
other academic institutions which are ranked in the
lower investment grade category using a nationally
recognized credit rating system.
(5) REQUIREMENTS UNTIL STOCK SALE.—Not-
withstanding subsection (d), the requirements of sec-
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tions 754 and 760 of the Higher Education Act of
1965 (20 U.S.C. 1132f–3 and 1132f–9), as such
sections were in effect on the day before the date of
enactment of this Act, shall continue to be effective
until the day immediately following the date of clos-
ing of the purchase of the Secretary of Education’s
stock (or the date of closing of the final purchase,
in the case of multiple transactions) pursuant to
subsection (c)(1) of this Act.
(c) SALE OF FEDERALLY OWNED STOCK.—
(1) SALE OF STOCK REQUIRED.—The Secretary
of the Treasury shall sell, pursuant to section 324
of title 31, United States Code, the stock of the Cor-
poration owned by the Secretary of Education as
soon as possible after the date of enactment of this
Act, but not later than six months after such date.
(2) PURCHASE BY THE CORPORATION.—In the
event that the Secretary of the Treasury is unable
to sell the stock, or any portion thereof, at a price
acceptable to the Secretary of Education and the
Secretary of the Treasury, the Corporation shall
purchase, within six months after the date of enact-
ment of this Act, such stock at a price determined
by the Secretary of the Treasury and acceptable to
the Corporation based on the independent appraisal
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of one or more nationally recognized financial firms,
except that such price shall not exceed the value of
the Secretary of Education’s stock as determined by
the Congressional Budget Office in House Report
104–153, dated June 22, 1995.
(3) REIMBURSEMENT OF COSTS OF SALE.—The
Secretary of the Treasury shall be reimbursed from
the proceeds of the sale of the stock under this sub-
section for all reasonable costs related to such sale,
including all reasonable expenses relating to one or
more independent appraisals under this subsection.
(4) ASSISTANCE BY THE CORPORATION.—The
Corporation shall provide such assistance as the Sec-
retary of the Treasury and the Secretary of Edu-
cation may require to facilitate the sale of the stock
under this subsection.
(d) REPEAL OF STATUTORY RESTRICTIONS AND RE-
LATED PROVISIONS.—Part D of title VII of the Higher
Education Act of 1965 (20 U.S.C. 1001 et seq.) is re-
pealed.
SEC. 103. ELIGIBLE INSTITUTION.
(a) AMENDMENT.—Section 481(b) of the Higher
Education Act of 1965 (20 U.S.C. 1088(b)) is amended
by inserting after the end of the first sentence the follow-
ing new sentence: ‘‘For the purposes of determining
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whether an institution meets the requirements of clause
(6), the Secretary shall not consider the financial informa-
tion of any institution for a fiscal year that began on or
before April 30, 1994.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to any determination made on
or after July 1, 1994, by the Secretary of Education pur-
suant to section 481(b)(6) of the Higher Education Act
of 1965 (20 U.S.C. 1088(b)(6)).
TITLE II—MUSEUMS AND
LIBRARIES
SEC. 201. MUSEUM AND LIBRARY SERVICES.
The Museum Services Act (20 U.S.C. 961 et seq.)
is amended to read as follows:
‘‘TITLE II—MUSEUM AND
LIBRARY SERVICES
‘‘Subtitle A—General Provisions
‘‘SEC. 201. SHORT TITLE.
‘‘This title may be cited as the ‘Museum and Library
Services Act’.
‘‘SEC. 202. GENERAL DEFINITIONS.
‘‘As used in this title:
‘‘(1) COMMISSION.—The term ‘Commission’
means the National Commission on Libraries and
Information Science established under section 3 of
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the National Commission on Libraries and Informa-
tion Sciences Act (20 U.S.C. 1502).
‘‘(2) DIRECTOR.—The term ‘Director’ means
the Director of the Institute appointed under section
204.
‘‘(3) INSTITUTE.—The term ‘Institute’ means
the Institute of Museum and Library Services estab-
lished under section 203.
‘‘(4) MUSEUM
BOARD.—The term ‘Museum
Board’ means the National Museum Services Board
established under section 275.
‘‘SEC. 203. INSTITUTE OF MUSEUM AND LIBRARY SERVICES.
‘‘(a) ESTABLISHMENT.—There is established, within
the National Foundation on the Arts and the Humanities,
an Institute of Museum and Library Services.
‘‘(b) OFFICES.—The Institute shall consist of an Of-
fice of Museum Services and an Office of Library Services.
There shall be a National Museum Services Board in the
Office of Museum Services.
‘‘SEC. 204. DIRECTOR OF THE INSTITUTE.
‘‘(a) APPOINTMENT.—
‘‘(1) IN
GENERAL.—The Institute shall be
headed by a Director, appointed by the President, by
and with the advice and consent of the Senate.
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‘‘(2) TERM.—The Director shall serve for a
term of 4 years.
‘‘(3) QUALIFICATIONS.—Beginning with the
first individual appointed to the position of Director
after the date of the enactment of the Government-
Sponsored Enterprise Privatization Act of 1996,
every second individual so appointed shall be ap-
pointed from among individuals who have special
competence with regard to library and information
services. Beginning with the second individual ap-
pointed to the position of Director after the date of
enactment of the Government-Sponsored Enterprise
Privatization Act of 1996, every second individual so
appointed shall be appointed from among individuals
who have special competence with regard to museum
services.
‘‘(b) COMPENSATION.—The Director may be com-
pensated at the rate provided for level III of the Executive
Schedule under section 5314 of title 5, United States
Code.
‘‘(c) DUTIES AND POWERS.—The Director shall per-
form such duties and exercise such powers as may be pre-
scribed by law, including awarding financial assistance for
activities described in this title.
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‘‘(d) NONDELEGATION.—The Director shall not dele-
gate any of the functions of the Director to any person
who is not an officer or employee of the Institute.
‘‘(e) COORDINATION.—The Director shall ensure co-
ordination of the policies and activities of the Institute
with the policies and activities of other agencies and of-
fices of the Federal Government having interest in and
responsibilities for the improvement of museums and li-
braries and information services.
‘‘SEC. 205. DEPUTY DIRECTORS.
‘‘The Office of Library Services shall be headed by
a Deputy Director, who shall be appointed by the Director
from among individuals who have a graduate degree in
library science and expertise in library and information
services. The Office of Museum Services shall be headed
by a Deputy Director, who shall be appointed by the Di-
rector from among individuals who have expertise in mu-
seum services.
‘‘SEC. 206. PERSONNEL.
‘‘(a) IN GENERAL.—The Director may, in accordance
with applicable provisions of title 5, United States Code,
appoint and determine the compensation of such employ-
ees as the Director determines to be necessary to carry
out the duties of the Institute.
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‘‘(b) VOLUNTARY SERVICES.—The Director may ac-
cept and utilize the voluntary services of individuals and
reimburse the individuals for travel expenses, including
per diem in lieu of subsistence, in the same amounts and
to the same extent as authorized under section 5703 of
title 5, United States Code, for persons employed intermit-
tently in Federal Government service.
‘‘SEC. 207. CONTRIBUTIONS.
‘‘The Institute is authorized to solicit, accept, receive,
and invest in the name of the United States, gifts, be-
quests, or devises of money and other property or services
and to use such property or services in furtherance of the
functions of the Institute. Any proceeds from such gifts,
bequests, or devises, after acceptance by the Institute,
shall be paid by the donor or the representative of the
donor to the Director. The Director shall enter the pro-
ceeds in a special interest-bearing account to the credit
of the Institute for the purposes specified in each case.
‘‘Subtitle B—Library Services and
Technology
‘‘SEC. 211. SHORT TITLE.
‘‘This subtitle may be cited as the ‘Library Services
and Technology Act’.
‘‘SEC. 212. PURPOSE.
‘‘It is the purpose of this subtitle—
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‘‘(1) to consolidate Federal library service pro-
grams;
‘‘(2) to stimulate excellence and promote access
to learning and information resources in all types of
libraries for individuals of all ages;
‘‘(3) to promote library services that provide all
users access to information through State, regional,
national and international electronic networks;
‘‘(4) to provide linkages among and between li-
braries; and
‘‘(5) to promote targeted library services to peo-
ple of diverse geographic, cultural, and socio-
economic backgrounds, to individuals with disabil-
ities, and to people with limited functional literacy
or information skills.
‘‘SEC. 213. DEFINITIONS.
‘‘As used in this subtitle:
‘‘(1) INDIAN TRIBE.—The term ‘Indian tribe’
means any tribe, band, nation, or other organized
group or community, including any Alaska native
village, regional corporation, or village corporation,
as defined in or established pursuant to the Alaska
Native Claims Settlement Act (43 U.S.C. 1601 et
seq.), which is recognized by the Secretary of the In-
terior as eligible for the special programs and serv-
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ices provided by the United States to Indians be-
cause of their status as Indians.
‘‘(2) LIBRARY.—The term ‘library’ includes—
‘‘(A) a public library;
‘‘(B) a public elementary school or second-
ary school library;
‘‘(C) an academic library;
‘‘(D) a research library, which for the pur-
poses of this subtitle means a library that—
‘‘(i) makes publicly available library
services and materials suitable for schol-
arly research and not otherwise available
to the public; and
‘‘(ii) is not an integral part of an in-
stitution of higher education; and
‘‘(E) a private library, but only if the State
in which such private library is located deter-
mines that the library should be considered a li-
brary for purposes of this subtitle.
‘‘(3) LIBRARY CONSORTIUM.—The term ‘library
consortium’ means any local, statewide, regional,
interstate, or international cooperative association of
library entities which provides for the systematic and
effective coordination of the resources of school, pub-
lic, academic, and special libraries and information
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centers, for improved services for the clientele of
such library entities.
‘‘(4) STATE.—The term ‘State’, unless other-
wise specified, includes each of the 50 States of the
United States, the District of Columbia, the Com-
monwealth of Puerto Rico, the United States Virgin
Islands, Guam, American Samoa, the Common-
wealth of the Northern Mariana Islands, the Repub-
lic of the Marshall Islands, the Federated States of
Micronesia, and the Republic of Palau.
‘‘(5) STATE LIBRARY ADMINISTRATIVE AGEN-
CY.—The term ‘State library administrative agency’
means the official agency of a State charged by the
law of the State with the extension and development
of public library services throughout the State.
‘‘(6) STATE
PLAN.—The term ‘State plan’
means the document which gives assurances that the
officially designated State library administrative
agency has the fiscal and legal authority and capa-
bility to administer all aspects of this subtitle, pro-
vides assurances for establishing the State’s policies,
priorities, criteria, and procedures necessary to the
implementation of all programs under this subtitle,
submits copies for approval as required by regula-
tions promulgated by the Director, identifies a
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State’s library needs, and sets forth the activities to
be taken toward meeting the identified needs sup-
ported with the assistance of Federal funds made
available under this subtitle.
‘‘SEC. 214. AUTHORIZATION OF APPROPRIATIONS.
‘‘(a) AUTHORIZATION OF APPROPRIATIONS.—
‘‘(1) IN GENERAL.—There are authorized to be
appropriated $150,000,000 for fiscal year 1997 and
such sums as may be necessary for each of the fiscal
years 1998 through 2002 to carry out this subtitle.
‘‘(2) TRANSFER.—The Secretary of Education
shall—
‘‘(A) transfer any funds appropriated
under the authority of paragraph (1) to the Di-
rector to enable the Director to carry out this
subtitle; and
‘‘(B) not exercise any authority concerning
the administration of this title other than the
transfer described in subparagraph (A).
‘‘(b) FORWARD FUNDING.—
‘‘(1) IN GENERAL.—To the end of affording the
responsible Federal, State, and local officers ade-
quate notice of available Federal financial assistance
for carrying out ongoing library activities and
projects, appropriations for grants, contracts, or
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other payments under any program under this sub-
title are authorized to be included in the appropria-
tions Act for the fiscal year preceding the fiscal year
during which such activities and projects shall be
carried out.
‘‘(2) ADDITIONAL AUTHORIZATION OF APPRO-
PRIATIONS.—In order to effect a transition to the
timing of appropriation action authorized by sub-
section (a), the application of this section may result
in the enactment, in a fiscal year, of separate appro-
priations for a program under this subtitle (whether
in the same appropriations Act or otherwise) for two
consecutive fiscal years.
‘‘(c) ADMINISTRATION.—Not more than 3 percent of
the funds appropriated under this section for a fiscal year
may be used to pay for the Federal administrative costs
of carrying out this subtitle.
‘‘CHAPTER 1—BASIC PROGRAM
REQUIREMENTS
‘‘SEC. 221. RESERVATIONS AND ALLOTMENTS.
‘‘(a) RESERVATIONS.—
‘‘(1) IN GENERAL.—From the amount appro-
priated under the authority of section 214 for any
fiscal year, the Director—
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‘‘(A) shall reserve 11⁄2 percent to award
grants in accordance with section 261; and
‘‘(B) shall reserve 4 percent to award na-
tional leadership grants or contracts in accord-
ance with section 262.
‘‘(2) SPECIAL
RULE.—If the funds reserved
pursuant to paragraph (1)(B) for a fiscal year have
not been obligated by the end of such fiscal year,
then such funds shall be allotted in accordance with
subsection (b) for the fiscal year succeeding the fis-
cal year for which the funds were so reserved.
‘‘(b) ALLOTMENTS.—
‘‘(1) IN
GENERAL.—From the sums appro-
priated under the authority of section 214 and not
reserved under subsection (a) for any fiscal year, the
Director shall award grants from minimum allot-
ments, as determined under paragraph (3), to each
State. Any sums remaining after minimum allot-
ments are made for such year shall be allotted in the
manner set forth in paragraph (2).
‘‘(2) REMAINDER.—From the remainder of any
sums appropriated under the authority of section
214 that are not reserved under subsection (a) and
not allotted under paragraph (1) for any fiscal year,
the Director shall award grants to each State in an
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amount that bears the same relation to such remain-
der as the population of the State bears to the popu-
lation of all States.
‘‘(3) MINIMUM ALLOTMENT.—
‘‘(A) IN GENERAL.—For the purposes of
this subsection, the minimum allotment for each
State shall be $340,000, except that the mini-
mum allotment shall be $40,000 in the case of
the United States Virgin Islands, Guam, Amer-
ican Samoa, the Commonwealth of the North-
ern Mariana Islands, the Republic of the Mar-
shall Islands, the Federated States of Microne-
sia, and the Republic of Palau.
‘‘(B) RATABLE REDUCTIONS.—If the sum
appropriated under the authority of section 214
and not reserved under subsection (a) for any
fiscal year is insufficient to fully satisfy the ag-
gregate of the minimum allotments for all
States for that purpose for such year, each of
such minimum allotments shall be reduced rat-
ably.
‘‘(C) SPECIAL RULE.—
‘‘(i) IN
GENERAL.—Notwithstanding
any other provision of this subsection and
using funds allotted for the Republic of the
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Marshall Islands, the Federated States of
Micronesia, and the Republic of Palau
under this subsection, the Director shall
award grants to Guam, American Samoa,
the Commonwealth of the Northern Mari-
ana Islands, the Republic of the Marshall
Islands, the Federated States of Microne-
sia, or the Republic of Palau to carry out
activities described in this subtitle in ac-
cordance with the provisions of this sub-
title that the Director determines are not
inconsistent with this subparagraph.
‘‘(ii) AWARD
BASIS.—The Director
shall award grants pursuant to clause (i)
on a competitive basis and pursuant to rec-
ommendations from the Pacific Region
Educational Laboratory in Honolulu, Ha-
waii.
‘‘(iii) 
TERMINATION
OF
ELIGI-
BILITY.—Notwithstanding any other provi-
sion of law, the Republic of the Marshall
Islands, the Federated States of Microne-
sia, and the Republic of Palau shall not re-
ceive any funds under this subtitle for any
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fiscal year that begins after September 30,
2001.
‘‘(iv) ADMINISTRATIVE
COSTS.—The
Director may provide not more than 5 per-
cent of the funds made available for grants
under this subparagraph to pay the admin-
istrative costs of the Pacific Region Edu-
cational Laboratory regarding activities as-
sisted under this subparagraph.
‘‘(4) DATA.—The population of each State and
of all the States shall be determined by the Director
on the basis of the most recent data available from
the Bureau of the Census.
‘‘SEC. 222. ADMINISTRATION.
‘‘(a) IN GENERAL.—Not more than 4 percent of the
total amount of funds received under this subtitle for any
fiscal year by a State may be used for administrative costs.
‘‘(b) CONSTRUCTION.—Nothing in this section shall
be construed to limit spending for evaluation costs under
section 224(c) from sources other than this subtitle.
‘‘SEC. 223. PAYMENTS; FEDERAL SHARE; AND MAINTE-
NANCE OF EFFORT REQUIREMENTS.
‘‘(a) PAYMENTS.—Subject to appropriations provided
pursuant to section 214, the Director shall pay to each
State library administrative agency having a State plan
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approved under section 224 the Federal share of the cost
of the activities described in the State plan.
‘‘(b) FEDERAL SHARE.—
‘‘(1) IN GENERAL.—The Federal share shall be
66 percent.
‘‘(2) NON-FEDERAL SHARE.—The non-Federal
share of payments shall be provided from non-Fed-
eral, State, or local sources.
‘‘(c) MAINTENANCE OF EFFORT.—
‘‘(1) STATE EXPENDITURES.—
‘‘(A) REQUIREMENT.—
‘‘(i) IN GENERAL.—The amount oth-
erwise payable to a State for a fiscal year
pursuant to an allotment under this chap-
ter shall be reduced if the level of State ex-
penditures, as described in paragraph (2),
for the previous fiscal year is less than the
average of the total of such expenditures
for the 3 fiscal years preceding that pre-
vious fiscal year. The amount of the reduc-
tion in allotment for any fiscal year shall
be equal to the amount by which the level
of such State expenditures for the fiscal
year for which the determination is made
is less than the average of the total of such
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expenditures for the 3 fiscal years preced-
ing the fiscal year for which the determina-
tion is made.
‘‘(ii) CALCULATION.—Any decrease in
State expenditures resulting from the ap-
plication of subparagraph (B) shall be ex-
cluded from the calculation of the average
level of State expenditures for any 3-year
period described in clause (i).
‘‘(B) DECREASE IN FEDERAL SUPPORT.—
If the amount made available under this sub-
title for a fiscal year is less than the amount
made available under this subtitle for the pre-
ceding fiscal year, then the expenditures re-
quired by subparagraph (A) for such preceding
fiscal year shall be decreased by the same per-
centage as the percentage decrease in the
amount so made available.
‘‘(2) LEVEL OF STATE EXPENDITURES.—The
level of State expenditures for the purposes of para-
graph (1) shall include all State dollars expended by
the State library administrative agency for library
programs that are consistent with the purposes of
this subtitle. All funds included in the maintenance
of effort calculation under this subsection shall be
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expended during the fiscal year for which the deter-
mination is made, and shall not include capital ex-
penditures, special one-time project costs, or similar
windfalls.
‘‘(3) WAIVER.—The Director may waive the re-
quirements of paragraph (1) if the Director deter-
mines that such a waiver would be equitable due to
exceptional or uncontrollable circumstances such as
a natural disaster or a precipitous and unforeseen
decline in the financial resources of the State.
‘‘SEC. 224. STATE PLANS.
‘‘(a) STATE PLAN REQUIRED.—
‘‘(1) IN GENERAL.—In order to be eligible to
receive a grant under this subtitle, a State library
administrative agency shall submit a State plan to
the Director not later than April 1, 1997.
‘‘(2) DURATION.—The State plan shall cover a
period of 5 fiscal years.
‘‘(3) REVISIONS.—If a State library administra-
tive agency makes a substantive revision to its State
plan, then the State library administrative agency
shall submit to the Director an amendment to the
State plan containing such revision not later than
April 1 of the fiscal year preceding the fiscal year
for which the amendment will be effective.
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‘‘(b) CONTENTS.—The State plan shall—
‘‘(1) establish goals, and specify priorities, for
the State consistent with the purposes of this sub-
title;
‘‘(2) describe activities that are consistent with
the goals and priorities established under paragraph
(1), the purposes of this subtitle, and section 231,
that the State library administrative agency will
carry out during such year using such grant;
‘‘(3) describe the procedures that such agency
will use to carry out the activities described in para-
graph (2);
‘‘(4) describe the methodology that such agency
will use to evaluate the success of the activities es-
tablished under paragraph (2) in achieving the goals
and meeting the priorities described in paragraph
(1);
‘‘(5) describe the procedures that such agency
will use to involve libraries and library users
throughout the State in policy decisions regarding
implementation of this subtitle; and
‘‘(6) provide assurances satisfactory to the Di-
rector that such agency will make such reports, in
such form and containing such information, as the
Director may reasonably require to carry out this
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subtitle and to determine the extent to which funds
provided under this subtitle have been effective in
carrying out the purposes of this subtitle.
‘‘(c) EVALUATION AND REPORT.—Each State library
administrative agency receiving a grant under this subtitle
shall independently evaluate, and report to the Director
regarding, the activities assisted under this subtitle, prior
to the end of the 5-year plan.
‘‘(d) INFORMATION.—Each library receiving assist-
ance under this subtitle shall submit to the State library
administrative agency such information as such agency
may require to meet the requirements of subsection (c).
‘‘(e) APPROVAL.—
‘‘(1) IN GENERAL.—The Director shall approve
any State plan under this subtitle that meets the re-
quirements of this subtitle and provides satisfactory
assurances that the provisions of such plan will be
carried out.
‘‘(2) PUBLIC
AVAILABILITY.—Each State li-
brary administrative agency receiving a grant under
this subtitle shall make the State plan available to
the public.
‘‘(3) ADMINISTRATION.—If the Director deter-
mines that the State plan does not meet the require-
ments of this section, the Director shall—
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‘‘(A) immediately notify the State library
administrative agency of such determination
and the reasons for such determination;
‘‘(B) offer the State library administrative
agency the opportunity to revise its State plan;
‘‘(C) provide technical assistance in order
to assist the State library administrative agency
in meeting the requirements of this section; and
‘‘(D) provide the State library administra-
tive agency the opportunity for a hearing.
‘‘CHAPTER 2—LIBRARY PROGRAMS
‘‘SEC. 231. GRANTS TO STATES.
‘‘(a) IN GENERAL.—Of the funds provided to a State
library administrative agency under section 214, such
agency shall expend, either directly or through subgrants
or cooperative agreements, at least 96 percent of such
funds for—
‘‘(1) establishing or enhancing electronic link-
ages among or between libraries and library consor-
tia; and
‘‘(2) targeting library and information services
to persons having difficulty using a library and to
underserved urban and rural communities, including
children (from birth through age 17) from families
with incomes below the poverty line (as defined by
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the Office of Management and Budget and revised
annually in accordance with section 673(2) of the
Community Services Block Grant Act (42 U.S.C.
9902(2)) applicable to a family of the size involved.
‘‘(b) SPECIAL RULE.—Each State library administra-
tive agency receiving funds under this chapter may appor-
tion the funds available for the purposes described in sub-
section (a) between the two purposes described in para-
graphs (1) and (2) of such subsection, as appropriate, to
meet the needs of the individual State.
‘‘CHAPTER 3—ADMINISTRATIVE
PROVISIONS
‘‘Subchapter A—State Requirements
‘‘SEC. 251. STATE ADVISORY COUNCILS.
‘‘Each State desiring assistance under this subtitle
may establish a State advisory council which is broadly
representative of the library entities in the State, including
public, school, academic, special, and institutional librar-
ies, and libraries serving individuals with disabilities.
‘‘Subchapter B—Federal Requirements
‘‘SEC. 261. SERVICES FOR INDIAN TRIBES.
‘‘From amounts reserved under section 221(a)(1)(A)
for any fiscal year the Director shall award grants to orga-
nizations primarily serving and representing Indian tribes
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to enable such organizations to carry out the activities de-
scribed in section 231.
‘‘SEC. 262. NATIONAL LEADERSHIP GRANTS OR CON-
TRACTS.
‘‘(a) IN GENERAL.—From the amounts reserved
under section 221(a)(1)(B) for any fiscal year the Direc-
tor shall establish and carry out a program awarding na-
tional leadership grants or contracts to enhance the qual-
ity of library services nationwide and to provide coordina-
tion between libraries and museums. Such grants or con-
tracts shall be used for activities that may include—
‘‘(1) education and training of persons in li-
brary and information science, particularly in areas
of new technology and other critical needs, including
graduate fellowships, traineeships, institutes, or
other programs;
‘‘(2) research and demonstration projects relat-
ed to the improvement of libraries, education in li-
brary and information science, enhancement of li-
brary services through effective and efficient use of
new technologies, and dissemination of information
derived from such projects;
‘‘(3) preservation or digitization of library ma-
terials and resources, giving priority to projects em-
phasizing coordination, avoidance of duplication, and
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access by researchers beyond the institution or li-
brary entity undertaking the project; and
‘‘(4) model programs demonstrating cooperative
efforts between libraries and museums.
‘‘(b) GRANTS OR CONTRACTS.—
‘‘(1) IN
GENERAL.—The Director may carry
out the activities described in subsection (a) by
awarding grants to, or entering into contracts with,
libraries, agencies, institutions of higher education,
or museums, where appropriate.
‘‘(2) COMPETITIVE
BASIS.—Grants and con-
tracts under this section shall be awarded on a com-
petitive basis.
‘‘(c) SPECIAL RULE.—The Director shall make every
effort to ensure that activities assisted under this section
are administered by appropriate library and museum pro-
fessionals or experts.
‘‘SEC. 263. STATE AND LOCAL INITIATIVES.
‘‘Nothing in this subtitle shall be construed to inter-
fere with State and local initiatives and responsibility in
the conduct of library services. The administration of li-
braries, the selection of personnel and library books and
materials, and insofar as consistent with the purposes of
this subtitle, the determination of the best uses of the
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funds provided under this subtitle, shall be reserved for
the States and their local subdivisions.
‘‘Subtitle C—Museum Services
‘‘SEC. 271. PURPOSE.
‘‘It is the purpose of this subtitle—
‘‘(1) to encourage and assist museums in their
educational role, in conjunction with formal systems
of elementary, secondary, and postsecondary edu-
cation, and with programs of nonformal education
for all age groups;
‘‘(2) to assist museums in modernizing their
methods and facilities so that the museums are bet-
ter able to conserve the cultural, historic, and sci-
entific heritage of the United States; and
‘‘(3) to ease the financial burden borne by mu-
seums as a result of their increasing use by the pub-
lic.
‘‘SEC. 272. DEFINITIONS.
‘‘As used in this subtitle:
‘‘(1) MUSEUM.—The term ‘museum’ means a
public or private nonprofit agency or institution or-
ganized on a permanent basis for essentially edu-
cational or aesthetic purposes, that utilizes a profes-
sional staff, owns or utilizes tangible objects, cares
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for the tangible objects, and exhibits the tangible ob-
jects to the public on a regular basis.
‘‘(2) STATE.—The term ‘State’ means each of
the 50 States of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, the
United States Virgin Islands, Guam, American
Samoa, the Commonwealth of the Northern Mariana
Islands, the Republic of the Marshall Islands, the
Federated States of Micronesia, and the Republic of
Palau.
‘‘SEC. 273. MUSEUM SERVICES ACTIVITIES.
‘‘(a) GRANTS.—The Director, subject to the policy di-
rection of the Museum Board, may make grants to muse-
ums to pay for the Federal share of the cost of increasing
and improving museum services, through such activities
as—
‘‘(1) programs that enable museums to con-
struct or install displays, interpretations, and exhibi-
tions in order to improve museum services provided
to the public;
‘‘(2) assisting museums in developing and
maintaining professionally trained or otherwise expe-
rienced staff to meet the needs of the museums;
‘‘(3) assisting museums in meeting the adminis-
trative costs of preserving and maintaining the col-
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lections of the museums, exhibiting the collections to
the public, and providing educational programs to
the public through the use of the collections;
‘‘(4) assisting museums in cooperating with
each other in developing traveling exhibitions, meet-
ing transportation costs, and identifying and locat-
ing collections available for loan;
‘‘(5) assisting museums in the conservation of
their collections;
‘‘(6) developing and carrying out specialized
programs for specific segments of the public, such as
programs for urban neighborhoods, rural areas, In-
dian reservations, and penal and other State institu-
tions; and
‘‘(7) model programs demonstrating cooperative
efforts between libraries and museums.
‘‘(b) 
CONTRACTS
AND
COOPERATIVE
AGREE-
MENTS.—
‘‘(1) PROJECTS
TO
STRENGTHEN
MUSEUM
SERVICES.—The Director, subject to the policy di-
rection of the Museum Board, is authorized to enter
into contracts and cooperative agreements with ap-
propriate entities, as determined by the Director, to
pay for the Federal share of enabling the entities to
undertake projects designed to strengthen museum
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services, except that any contracts or cooperative
agreements entered into pursuant to this subsection
shall be effective only to such extent or in such
amounts as are provided in appropriations acts.
‘‘(2) LIMITATION ON AMOUNT.—The aggregate
amount of financial assistance made available under
this subsection for a fiscal year shall not exceed 15
percent of the amount appropriated under this sub-
title for such fiscal year.
‘‘(3) OPERATIONAL
EXPENSES.—No financial
assistance may be provided under this subsection to
pay for operational expenses.
‘‘(c) FEDERAL SHARE.—
‘‘(1) 50 PERCENT.—Except as provided in para-
graph (2), the Federal share described in sub-
sections (a) and (b) shall be not more than 50 per-
cent.
‘‘(2) GREATER THAN 50 PERCENT.—The Direc-
tor may use not more than 20 percent of the funds
made available under this subtitle for a fiscal year
to make grants under subsection (a), or enter into
contracts or agreements under subsection (b), for
which the Federal share may be greater than 50
percent.
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‘‘(d) REVIEW AND EVALUATION.—The Director shall
establish procedures for reviewing and evaluating grants,
contracts, and cooperative agreements made or entered
into under this subtitle. Procedures for reviewing grant
applications or contracts and cooperative agreements for
financial assistance under this subtitle shall not be subject
to any review outside of the Institute.
‘‘SEC. 274. AWARD.
‘‘The Director, with the advice of the Museum Board,
may annually award a National Award for Museum Serv-
ice to outstanding museums that have made significant
contributions in service to their communities.
‘‘SEC. 275. NATIONAL MUSEUM SERVICES BOARD.
‘‘(a) ESTABLISHMENT.—There is established in the
Institute a National Museum Services Board.
‘‘(b) COMPOSITION AND QUALIFICATIONS.—
‘‘(1) COMPOSITION.—The Museum Board shall
consist of the Director and 14 members appointed
by the President, by and with the advice and consent
of the Senate.
‘‘(2) QUALIFICATIONS.—The appointive mem-
bers of the Museum Board shall be selected from
among citizens of the United States—
‘‘(A) who are members of the general pub-
lic;
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‘‘(B) who are or have been affiliated
with—
‘‘(i) resources that, collectively, are
broadly representative of the curatorial,
conservation, educational, and cultural re-
sources of the United States; or
‘‘(ii) museums that, collectively, are
broadly representative of various types of
museums, including museums relating to
science, history, technology, art, zoos, and
botanical gardens; and
‘‘(C) who are recognized for their broad
knowledge, expertise, or experience in museums
or commitment to museums.
‘‘(3) GEOGRAPHIC
AND
OTHER
REPRESENTA-
TION.—Members of the Museum Board shall be ap-
pointed to reflect persons from various geographic
regions of the United States. The Museum Board
may not include, at any time, more than 3 members
from a single State. In making such appointments,
the President shall give due regard to equitable rep-
resentation of women, minorities, and persons with
disabilities who are involved with museums.
‘‘(c) TERMS.—
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‘‘(1) IN GENERAL.—Each appointive member of
the Museum Board shall serve for a term of 5 years,
except that—
‘‘(A) of the members first appointed, 3
shall serve for terms of 5 years, 3 shall serve
for terms of 4 years, 3 shall serve for terms of
3 years, 3 shall serve for terms of 2 years, and
2 shall serve for terms of 1 year, as designated
by the President at the time of nomination for
appointment; and
‘‘(B) any member appointed to fill a va-
cancy shall serve for the remainder of the term
for which the predecessor of the member was
appointed.
‘‘(2) REAPPOINTMENT.—No member of the
Museum Board who has been a member for more
than 7 consecutive years shall be eligible for re-
appointment.
‘‘(3) SERVICE
UNTIL
SUCCESSOR
TAKES
OF-
FICE.—Notwithstanding any other provision of this
subsection, a member of the Museum Board shall
serve after the expiration of the term of the member
until the successor to the member takes office.
‘‘(d) DUTIES AND POWERS.—The Museum Board
shall have the responsibility to advise the Director on gen-
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eral policies with respect to the duties, powers, and au-
thority of the Institute relating to museum services, in-
cluding general policies with respect to—
‘‘(1) financial assistance awarded under this
subtitle for museum services; and
‘‘(2) projects described in section 262(a)(4).
‘‘(e) CHAIRPERSON.—The President shall designate
1 of the appointive members of the Museum Board as
Chairperson of the Museum Board.
‘‘(f) MEETINGS.—
‘‘(1) IN GENERAL.—The Museum Board shall
meet—
‘‘(A) not less than 3 times each year, in-
cluding—
‘‘(i) not less than 2 times each year
separately; and
‘‘(ii) not less than 1 time each year in
a joint meeting with the Commission, con-
vened for purposes of making general poli-
cies with respect to financial assistance for
projects described in section 262(a)(4);
and
‘‘(B) at the call of the Director.
‘‘(2) VOTE.—All decisions by the Museum
Board with respect to the exercise of the duties and
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powers of the Museum Board shall be made by a
majority vote of the members of the Museum Board
who are present. All decisions by the Commission
and the Museum Board with respect to the policies
described in paragraph (1)(A)(ii) shall be made by
a 2⁄3 majority vote of the total number of the mem-
bers of the Commission and the Museum Board who
are present.
‘‘(g) QUORUM.—A majority of the members of the
Museum Board shall constitute a quorum for the conduct
of business at official meetings of the Museum Board, but
a lesser number of members may hold hearings. A major-
ity of the members of the Commission and a majority of
the members of the Museum Board shall constitute a
quorum for the conduct of business at official joint meet-
ings of the Commission and the Museum Board.
‘‘(h) COMPENSATION AND TRAVEL EXPENSES.—
‘‘(1) COMPENSATION.—Each member of the
Museum Board who is not an officer or employee of
the Federal Government may be compensated at a
rate to be fixed by the President, but not to exceed
the daily equivalent of the maximum rate authorized
for a position above grade GS–15 of the General
Schedule under section 5108 of title 5, United
States Code, for each day (including travel time)
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during which such member is engaged in the per-
formance of the duties of the Museum Board. All
members of the Museum Board who are officers or
employees of the Federal Government shall serve
without compensation in addition to compensation
received for their services as officers or employees of
the Federal Government.
‘‘(2) TRAVEL EXPENSES.—The members of the
Museum Board may be allowed travel expenses, in-
cluding per diem in lieu of subsistence, in the same
amounts and to the same extent, as authorized
under section 5703 of title 5, United States Code,
for persons employed intermittently in Federal Gov-
ernment service.
‘‘(i) COORDINATION.—The Museum Board, with the
advice of the Director, shall take steps to ensure that the
policies and activities of the Institute are coordinated with
other activities of the Federal Government.
‘‘SEC. 276. AUTHORIZATION OF APPROPRIATIONS.
‘‘(a) GRANTS.—For the purpose of carrying out this
subtitle, there are authorized to be appropriated to the Di-
rector $28,700,000 for the fiscal year 1997, and such
sums as may be necessary for each of the fiscal years 1998
through 2002.
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‘‘(b) ADMINISTRATION.—Not more than 10 percent
of the funds appropriated under this section for a fiscal
year may be used to pay for the administrative costs of
carrying out this subtitle.
‘‘(c) SUMS REMAINING AVAILABLE.—Sums appro-
priated pursuant to subsection (a) for any fiscal year shall
remain available for obligation until expended.’’.
SEC. 202. NATIONAL COMMISSION ON LIBRARIES AND IN-
FORMATION SCIENCE.
(a) FUNCTIONS.—Section 5 of the National Commis-
sion on Libraries and Information Science Act (20 U.S.C.
1504) is amended—
(1) by redesignating subsections (b) through (d)
as subsections (d) through (f), respectively; and
(2) by inserting after subsection (a) the follow-
ing:
‘‘(b) The Commission shall have the responsibility to
advise the Director of the Institute of Museum and Li-
brary Services on general policies with respect to the du-
ties, powers, and authority of the Institute of Museum and
Library Services relating to library services, including—
‘‘(1) general policies with respect to—
‘‘(A) financial assistance awarded under
the Museum and Library Services Act for li-
brary services; and
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‘‘(B) 
projects 
described 
in 
section
262(a)(4) of such Act; and
‘‘(2) measures to ensure that the policies and
activities of the Institute of Museum and Library
Services are coordinated with other activities of the
Federal Government.
‘‘(c)(1) The Commission shall meet not less than 1
time each year in a joint meeting with the National Mu-
seum Services Board, convened for purposes of providing
advice on general policy with respect to financial assist-
ance for projects described in section 262(a)(4) of such
Act.
‘‘(2) All decisions by the Commission and the Na-
tional Museum Services Board with respect to the advice
on general policy described in paragraph (1) shall be made
by a 2⁄3 majority vote of the total number of the members
of the Commission and the National Museum Services
Board who are present.
‘‘(3) A majority of the members of the Commission
and a majority of the members of the National Museum
Services Board shall constitute a quorum for the conduct
of business at official joint meetings of the Commission
and the National Museum Services Board.’’.
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(b) MEMBERSHIP.—Section 6 of the National Com-
mission on Libraries and Information Science Act (20
U.S.C. 1505) is amended—
(1) in subsection (a)—
(A) in the first sentence, by striking ‘‘Li-
brarian of Congress’’ and inserting ‘‘Librarian
of Congress, the Director of the Institute of
Museum and Library Services (who shall serve
as an ex officio, nonvoting member),’’;
(B) in the second sentence—
(i) by striking ‘‘special competence or
interest in’’ and inserting ‘‘special com-
petence in or knowledge of’’; and
(ii) by inserting before the period the
following: ‘‘and at least one other of whom
shall be knowledgeable with respect to the
library and information service and science
needs of the elderly’’;
(C) in the third sentence, by inserting ‘‘ap-
pointive’’ before ‘‘members’’; and
(D) in the last sentence, by striking ‘‘term
and at least’’ and all that follows and inserting
‘‘term.’’; and
(2) in subsection (b), by striking ‘‘the rate spec-
ified’’ and all that follows through ‘‘and while’’ and
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inserting ‘‘the daily equivalent of the maximum rate
authorized for a position above grade GS–15 of the
General Schedule under section 5108 of title 5,
United States Code, for each day (including travel-
time) during which the members are engaged in the
business of the Commission. While’’.
SEC. 203. TRANSFER OF FUNCTIONS FROM INSTITUTE OF
MUSEUM SERVICES.
(a) DEFINITIONS.—For purposes of this section, un-
less otherwise provided or indicated by the context—
(1) the term ‘‘Federal agency’’ has the meaning
given to the term ‘‘agency’’ by section 551(1) of title
5, United States Code;
(2) the term ‘‘function’’ means any duty, obli-
gation, power, authority, responsibility, right, privi-
lege, activity, or program; and
(3) the term ‘‘office’’ includes any office, ad-
ministration, agency, institute, unit, organizational
entity, or component thereof.
(b) TRANSFER OF FUNCTIONS FROM THE INSTITUTE
OF MUSEUM SERVICES AND THE LIBRARY PROGRAM OF-
FICE.—There are transferred to the Director of the Insti-
tute of Museum and Library Services established under
section 203 of the Museum and Library Services Act—
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(1) all functions that the Director of the Insti-
tute of Museum Services exercised before the date of
enactment of this section (including all related func-
tions of any officer or employee of the Institute of
Museum Services); and
(2) all functions that the Director of Library
Programs in the Office of Educational Research and
Improvement in the Department of Education exer-
cised before the date of enactment of this section
and any related function of any officer or employee
of the Department of Education.
(c) DETERMINATIONS OF CERTAIN FUNCTIONS BY
THE OFFICE OF MANAGEMENT AND BUDGET.—If nec-
essary, the Office of Management and Budget shall make
any determination of the functions that are transferred
under subsection (b).
(d) DELEGATION AND ASSIGNMENT.—Except where
otherwise expressly prohibited by law or otherwise pro-
vided by this section, the Director of the Institute of Mu-
seum and Library Services may delegate any of the func-
tions transferred to the Director of the Institute of Mu-
seum and Library Services by this section and any func-
tion transferred or granted to such Director of the Insti-
tute of Museum and Library Services after the effective
date of this section to such officers and employees of the
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and Library Services determines to be necessary or appro-
priate to administer and manage the functions of the In-
stitute of Museum and Library Services.
(g) TRANSFER AND ALLOCATIONS OF APPROPRIA-
TIONS AND PERSONNEL.—Except as otherwise provided
in this section, the personnel employed in connection with,
and the assets, liabilities, contracts, property, records, and
unexpended balances of appropriations, authorizations, al-
locations, and other funds employed, used, held, arising
from, available to, or to be made available in connection
with the functions transferred by this section, subject to
section 1531 of title 31, United States Code, shall be
transferred to the Institute of Museum and Library Serv-
ices. Unexpended funds transferred pursuant to this sub-
section shall be used only for the purposes for which the
funds were originally authorized and appropriated.
(h) INCIDENTAL TRANSFERS.—The Director of the
Office of Management and Budget, at such time or times
as the Director shall provide, may make such determina-
tions as may be necessary with regard to the functions
transferred by this section, and make such additional inci-
dental dispositions of personnel, assets, liabilities, grants,
contracts, property, records, and unexpended balances of
appropriations, authorizations, allocations, and other
funds held, used, arising from, available to, or to be made
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available in connection with such functions, as may be nec-
essary to carry out this section. The Director of the Office
of Management and Budget shall provide for the termi-
nation of the affairs of all entities terminated by this sec-
tion and for such further measures and dispositions as
may be necessary to effectuate the purposes of this sec-
tion.
(i) EFFECT ON PERSONNEL.—
(1) IN
GENERAL.—Except as otherwise pro-
vided by this section, the transfer pursuant to this
section of full-time personnel (except special Govern-
ment employees) and part-time personnel holding
permanent positions shall not cause any such em-
ployee to be separated or reduced in grade or com-
pensation for 1 year after the date of transfer of
such employee under this section.
(2) EXECUTIVE SCHEDULE POSITIONS.—Except
as otherwise provided in this section, any person
who, on the day preceding the effective date of this
section, held a position compensated in accordance
with the Executive Schedule prescribed in chapter
53 of title 5, United States Code, and who, without
a break in service, is appointed in the Institute of
Museum and Library Services to a position having
duties comparable to the duties performed imme-
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diately preceding such appointment shall continue to
be compensated in such new position at not less
than the rate provided for such previous position, for
the duration of the service of such person in such
new position.
(j) SAVINGS PROVISIONS.—
(1) CONTINUING
EFFECT
OF
LEGAL
DOCU-
MENTS.—All orders, determinations, rules, regula-
tions, permits, agreements, grants, contracts, certifi-
cates, licenses, registrations, privileges, and other
administrative actions—
(A) that have been issued, made, granted,
or allowed to become effective by the President,
any Federal agency or official of a Federal
agency, or by a court of competent jurisdiction,
in the performance of functions that are trans-
ferred under this section; and
(B) that were in effect before the effective
date of this section, or were final before the ef-
fective date of this section and are to become
effective on or after the effective date of this
section;
shall continue in effect according to their terms until
modified, terminated, superseded, set aside, or re-
voked in accordance with law by the President, the
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Director of the Institute of Museum and Library
Services or other authorized official, a court of com-
petent jurisdiction, or by operation of law.
(2) PROCEEDINGS NOT AFFECTED.—This sec-
tion shall not affect any proceedings, including no-
tices of proposed rulemaking, or any application for
any license, permit, certificate, or financial assist-
ance pending before the Institute of Museum Serv-
ices on the effective date of this section, with respect
to functions transferred by this section. Such pro-
ceedings and applications shall be continued. Orders
shall be issued in such proceedings, appeals shall be
taken from the orders, and payments shall be made
pursuant to the orders, as if this section had not
been enacted, and orders issued in any such proceed-
ings shall continue in effect until modified, termi-
nated, superseded, or revoked by a duly authorized
official, by a court of competent jurisdiction, or by
operation of law. Nothing in this paragraph shall be
construed to prohibit the discontinuance or modifica-
tion of any such proceeding under the same terms
and conditions and to the same extent that such pro-
ceeding could have been discontinued or modified if
this section had not been enacted.
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(3) SUITS NOT AFFECTED.—This section shall
not affect suits commenced before the effective date
of this section, and in all such suits, proceedings
shall be had, appeals taken, and judgments rendered
in the same manner and with the same effect as if
this section had not been enacted.
(4) NONABATEMENT OF ACTIONS.—No suit, ac-
tion, or other proceeding commenced by or against
the Institute of Museum Services, or by or against
any individual in the official capacity of such individ-
ual as an officer of the Institute of Museum Serv-
ices, shall abate by reason of the enactment of this
section.
(5) ADMINISTRATIVE
ACTIONS
RELATING
TO
PROMULGATION OF REGULATIONS.—Any administra-
tive action relating to the preparation or promulga-
tion of a regulation by the Institute of Museum
Services relating to a function transferred under this
section may be continued by the Institute of Mu-
seum and Library Services with the same effect as
if this section had not been enacted.
(k) TRANSITION.—The Director of the Institute of
Museum and Library Services may utilize—
(1) the services of such officers, employees, and
other personnel of the Institute of Museum Services
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with respect to functions transferred to the Institute
of Museum and Library Services by this section; and
(2) funds appropriated to such functions for
such period of time as may reasonably be needed to
facilitate the orderly implementation of this section.
(l) REFERENCES.—A reference in any other Federal
law, Executive order, rule, regulation, or delegation of au-
thority, or any document of or relating to—
(1) the Director of the Institute of Museum
Services with regard to functions transferred under
subsection (b), shall be deemed to refer to the Direc-
tor of the Institute of Museum and Library Services;
and
(2) the Institute of Museum Services with re-
gard to functions transferred under subsection (b),
shall be deemed to refer to the Institute of Museum
and Library Services.
(m) ADDITIONAL CONFORMING AMENDMENTS.—
(1) RECOMMENDED LEGISLATION.—After con-
sultation with the appropriate committees of Con-
gress and the Director of the Office of Management
and Budget, the Director of the Institute of Museum
and Library Services shall prepare and submit to the
appropriate committees of Congress recommended
legislation containing technical and conforming
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amendments to reflect the changes made by this sec-
tion.
(2) SUBMISSION TO CONGRESS.—Not later than
6 months after the effective date of this section, the
Director of the Institute of Museum and Library
Services shall submit to the appropriate committees
of Congress the recommended legislation referred to
under paragraph (1).
SEC. 204. SERVICE OF INDIVIDUALS SERVING ON DATE OF
ENACTMENT.
Notwithstanding section 204 of the Museum and Li-
brary Services Act, the individual who was appointed to
the position of Director of the Institute of Museum Serv-
ices under section 205 of the Museum Services Act (as
such section was in effect on the day before the date of
enactment of this Act) and who is serving in such position
on the day before the date of enactment of this Act shall
serve as the first Director of the Institute of Museum and
Library Services under section 204 of the Museum and
Library Services Act (as added by section 201 of this
title), and shall serve at the pleasure of the President.
SEC. 205. CONSIDERATION.
Consistent with title 5, United States Code, in ap-
pointing employees of the Office of Library Services, the
Director of the Institute of Museum and Library Services
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TITLE III—EXTENSION OF
PROGRAMS
SEC. 301. EXTENSION OF NATIONAL LITERACY ACT OF 1991.
(a) NATIONAL WORKFORCE LITERACY ASSISTANCE
COLLABORATIVE.—Subsection (c) of section 201 of the
National Literacy Act of 1991 (20 U.S.C. 1211–1(c)) is
amended by striking ‘‘$5,000,000’’ and all that follows
through the period and inserting ‘‘such sums as may be
necessary for fiscal year 1997.’’.
(b) FUNCTIONAL LITERACY AND LIFE SKILLS PRO-
GRAM FOR STATE AND LOCAL PRISONERS.—Paragraph
(3) of section 601(i) of the National Literacy Act of 1991
(20 
U.S.C. 
1211–2(i)) 
is 
amended 
by 
striking
‘‘$10,000,000’’ and all that follows through the period and
inserting ‘‘such sums as may be necessary for fiscal year
1997.’’.
SEC. 302. ADULT EDUCATION ACT AMENDMENTS.
The Adult Education Act (20 U.S.C. 1201 et seq.)
is amended—
(1) in section 312—
(A) in each of subparagraphs (A) and (B)
of paragraph (11), by moving the margins two
ems to the right;
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(B) in each of paragraphs (11) through
(15), by moving the margins two ems to the
right; and
(C) by adding at the end the following:
‘‘(16) The term ‘family literacy services’ means
services that are of sufficient intensity in terms of
hours, and of sufficient duration, to make sustain-
able changes in a family and that integrate all of the
following activities:
‘‘(A) Interactive literacy activities between
parents and their children.
‘‘(B) Training for parents on how to be the
primary teacher for their children and full part-
ners in the education of their children.
‘‘(C) Parent literacy training.
‘‘(D) An age-appropriate education pro-
gram for children.’’;
(2) in section 313(a), by striking ‘‘the fiscal
year 1991,’’ and all that follows through ‘‘1995’’
and inserting ‘‘fiscal year 1997’’;
(3) in section 321, by inserting ‘‘and family lit-
eracy services’’ after ‘‘and activities’’;
(4) in the first sentence of section 322(a)(1), by
inserting ‘‘and family literacy services’’ after ‘‘adult
education programs’’;
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(5) in section 341(a), by inserting ‘‘and for
family literacy services’’ after ‘‘adult education’’;
(6) 
in 
section 
356(k), 
by 
striking
‘‘$25,000,000’’ and all that follows through the pe-
riod and inserting ‘‘such sums as may be necessary
for fiscal year 1997.’’;
(7) in section 371(e)(1), by striking ‘‘the fiscal
year 1991,’’ and all that follows through the period
and inserting ‘‘fiscal year 1997.’’;
(8) in section 384, by striking subsections (c)
through (n); and
(9) by adding at the end the following:
‘‘SEC. 386. NATIONAL INSTITUTE FOR LITERACY.
‘‘(a) ESTABLISHMENT.—
‘‘(1) IN
GENERAL.—There is established the
National Institute for Literacy (in this section re-
ferred to as the ‘Institute’). The Institute shall be
administered under the terms of an interagency
agreement entered into by the Secretary of Edu-
cation with the Secretary of Labor and the Secretary
of Health and Human Services (in this section re-
ferred to as the ‘Interagency Group’). The Inter-
agency Group may include in the Institute any re-
search and development center, institute, or clear-
inghouse established within the Department of Edu-
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cation, the Department of Labor, or the Department
of Health and Human Services whose purpose is de-
termined by the Interagency Group to be related to
the purpose of the Institute.
‘‘(2) OFFICES.—The Institute shall have offices
separate from the offices of the Department of Edu-
cation, the Department of Labor, and the Depart-
ment of Health and Human Services.
‘‘(3) BOARD RECOMMENDATIONS.—The Inter-
agency Group shall consider the recommendations of
the National Institute for Literacy Advisory Board
(in this section referred to as the ‘Board’) estab-
lished under subsection (d) in planning the goals of
the Institute and in the implementation of any pro-
grams to achieve such goals.
‘‘(4) DAILY OPERATIONS.—The daily operations
of the Institute shall be carried out by the Director
of the Institute appointed under subsection (g).
‘‘(b) DUTIES.—
‘‘(1) IN GENERAL.—The Institute shall improve
the quality and accountability of the adult basic
skills and literacy delivery system by—
‘‘(A) providing national leadership for the
improvement and expansion of the system for
delivery of literacy services;
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‘‘(B) coordinating the delivery of such
services across Federal agencies;
‘‘(C) identifying effective models of basic
skills and literacy education for adults and fam-
ilies that are essential to success in job train-
ing, work, the family, and the community;
‘‘(D) supporting the creation of new meth-
ods of offering improved literacy services;
‘‘(E) funding a network of State or re-
gional adult literacy resource centers to assist
State and local public and private nonprofit ef-
forts to improve literacy by—
‘‘(i) encouraging the coordination of
literacy services;
‘‘(ii) carrying out evaluations of the
effectiveness of adult education and lit-
eracy activities;
‘‘(iii) enhancing the capacity of State
and local organizations to provide literacy
services; and
‘‘(iv) serving as a reciprocal link be-
tween the Institute and providers of adult
education and literacy activities for the
purpose of sharing information, data, re-
search, expertise, and literacy resources;
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‘‘(F) supporting the development of models
at the State and local level of accountability
systems that consist of goals, performance
measures, benchmarks, and assessments that
can be used to improve the quality of adult edu-
cation and literacy activities;
‘‘(G) providing information, and other pro-
gram improvement activities to national, State,
and local organizations, such as—
‘‘(i) improving the capacity of na-
tional, State, and local public and private
organizations that provide literacy and
basic skills services, professional develop-
ment, and technical assistance, such as the
State or regional adult literacy resource
centers referred to in subparagraph (E);
and
‘‘(ii) establishing a national literacy
electronic database and communications
network;
‘‘(H) working with the Interagency Group,
Federal agencies, and the Congress to ensure
that such Group, agencies, and the Congress
have the best information available on literacy
and basic skills programs in formulating Fed-
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eral policy with respect to the issues of literacy,
basic skills, and workforce and career develop-
ment; and
‘‘(I) assisting with the development of pol-
icy with respect to literacy and basic skills.
‘‘(2) 
GRANTS, 
CONTRACTS, 
AND
AGREE-
MENTS.—The Institute may make grants to, or
enter into contracts or cooperative agreements with,
individuals, public or private institutions, agencies,
organizations, or consortia of such institutions,
agencies, or organizations to carry out the activities
of the Institute. Such grants, contracts, or agree-
ments shall be subject to the laws and regulations
that generally apply to grants, contracts, or agree-
ments entered into by Federal agencies.
‘‘(c) LITERACY LEADERSHIP.—
‘‘(1) FELLOWSHIPS.—The Institute, in con-
sultation with the Board, may award fellowships,
with such stipends and allowances as the Director
considers necessary, to outstanding individuals pur-
suing careers in adult education or literacy in the
areas of instruction, management, research, or inno-
vation.
‘‘(2) 
USE
OF
FELLOWSHIPS.—Fellowships
awarded under this subsection shall be used, under
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the auspices of the Institute, to engage in research,
education, training, technical assistance, or other ac-
tivities to advance the field of adult education or lit-
eracy, including the training of volunteer literacy
providers at the national, State, or local level.
‘‘(3) INTERNS AND VOLUNTEERS.—The Insti-
tute, in consultation with the Board, may award
paid and unpaid internships to individuals seeking to
assist the Institute in carrying out its mission. Not-
withstanding section 1342 of title 31, United States
Code, the Institute may accept and use voluntary
and uncompensated services as the Institute deter-
mines necessary.
‘‘(d) NATIONAL INSTITUTE FOR LITERACY ADVISORY
BOARD.—
‘‘(1) ESTABLISHMENT.—
‘‘(A) IN GENERAL.—There is established a
National Institute for Literacy Advisory Board.
The Board shall consist of 10 individuals ap-
pointed by the President, with the advice and
consent of the Senate, from individuals who—
‘‘(i) are not otherwise officers or em-
ployees of the Federal Government; and
‘‘(ii) are representative of entities or
groups described in subparagraph (B).
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‘‘(B) ENTITIES OR GROUPS DESCRIBED.—
The entities or groups referred to in subpara-
graph (A) are—
‘‘(i) literacy organizations and provid-
ers of literacy services, including—
‘‘(I) nonprofit providers of lit-
eracy services;
‘‘(II) providers of programs and
services involving English language in-
struction; and
‘‘(III) providers of services re-
ceiving assistance under this title;
‘‘(ii) 
businesses 
that 
have 
dem-
onstrated interest in literacy programs;
‘‘(iii) literacy students;
‘‘(iv) experts in the area of literacy re-
search;
‘‘(v) State and local governments; and
‘‘(vi) representatives of employees.
‘‘(2) DUTIES.—The Board—
‘‘(A) shall make recommendations concern-
ing the appointment of the Director and staff
of the Institute;
‘‘(B) shall provide independent advice on
the operation of the Institute; and
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‘‘(C) shall receive reports from the Inter-
agency Group and the Director.
‘‘(3) FEDERAL
ADVISORY
COMMITTEE
ACT.—
Except as otherwise provided, the Board established
by this subsection shall be subject to the provisions
of the Federal Advisory Committee Act (5 U.S.C.
App.).
‘‘(4) TERMS.—
‘‘(A) IN GENERAL.—Each member of the
Board shall be appointed for a term of 3 years,
except that the initial terms for members may
be 1, 2, or 3 years in order to establish a rota-
tion in which 1⁄3 of the members are selected
each year. Any such member may be appointed
for not more than 2 consecutive terms.
‘‘(B) 
VACANCY
APPOINTMENTS.—Any
member appointed to fill a vacancy occurring
before the expiration of the term for which the
member’s predecessor was appointed shall be
appointed only for the remainder of that term.
A member may serve after the expiration of
that member’s term until a successor has taken
office. A vacancy in the Board shall be filled in
the manner in which the original appointment
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was made. A vacancy in the Board shall not af-
fect the powers of the Board.
‘‘(5) QUORUM.—A majority of the members of
the Board shall constitute a quorum but a lesser
number may hold hearings. Any recommendation of
the Board may be passed only by a majority of the
Board’s members present.
‘‘(6) ELECTION
OF
OFFICERS.—The Chair-
person and Vice Chairperson of the Board shall be
elected by the members of the Board. The term of
office of the Chairperson and Vice Chairperson shall
be 2 years.
‘‘(7) MEETINGS.—The Board shall meet at the
call of the Chairperson or a majority of the members
of the Board.
‘‘(e) GIFTS, BEQUESTS, AND DEVISES.—The Insti-
tute may accept, administer, and use gifts or donations
of services, money, or property, both real and personal.
‘‘(f) MAILS.—The Board and the Institute may use
the United States mails in the same manner and under
the same conditions as other departments and agencies of
the Federal Government.
‘‘(g) DIRECTOR.—The Interagency Group, after con-
sidering recommendations made by the Board, shall ap-
point and fix the pay of a Director.
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‘‘(h) APPLICABILITY
OF CERTAIN CIVIL SERVICE
LAWS.—The Director and staff of the Institute may be
appointed without regard to the provisions of title 5, Unit-
ed States Code, governing appointments in the competitive
service, and may be paid without regard to the provisions
of chapter 51 and subchapter III of chapter 53 of that
title relating to classification and General Schedule pay
rates, except that an individual so appointed may not re-
ceive pay in excess of the maximum rate payable under
section 5376 of title 5, United States Code.
‘‘(i) EXPERTS AND CONSULTANTS.—The Board and
the Institute may procure temporary and intermittent
services under section 3109(b) of title 5, United States
Code.
‘‘(j) REPORT.—The Institute shall submit a report bi-
ennially to the Committee on Economic and Educational
Opportunities of the House of Representatives and the
Committee on Labor and Human Resources of the Senate.
Each report submitted under this subsection shall in-
clude—
‘‘(1) a comprehensive and detailed description
of the Institute’s operations, activities, financial con-
dition, and accomplishments in the field of literacy
for the period covered by the report;
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‘‘(2) a description of how plans for the oper-
ation of the Institute for the succeeding two fiscal
years will facilitate achievement of the goals of the
Institute and the goals of the literacy programs
within the Department of Education, the Depart-
ment of Labor, and the Department of Health and
Human Services; and
‘‘(3) any additional minority, or dissenting
views submitted by members of the Board.
‘‘(k) FUNDING.—Any amounts appropriated to the
Secretary of Education, the Secretary of Labor, or the
Secretary of Health and Human Services for purposes
that the Institute is authorized to perform under this sec-
tion may be provided to the Institute for such purposes.
‘‘(l) AUTHORIZATION OF APPROPRIATIONS.—There
are authorized to be appropriated $10,000,000 for fiscal
year 1997 and such sums as may be necessary for each
of the fiscal years 1998 through 2002 to carry out this
section.’’.
SEC. 303. EXTENSION OF CARL D. PERKINS VOCATIONAL
AND 
APPLIED 
TECHNOLOGY 
EDUCATION
ACT.
Subsection (a) of section 3 of the Carl D. Perkins
Vocational and Applied Technology Act is amended by
striking ‘‘appropriated’’ and all that follows through
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‘‘1995’’ and inserting ‘‘appropriated for fiscal year 1997
such sums as may be necessary’’.
TITLE IV—REPEALS AND
CONFORMING AMENDMENTS
SEC. 401. REPEALS.
(a) GENERAL IMMEDIATE REPEALS.—The following
provisions are repealed:
(1) Section 204 of the Immigration Reform and
Control Act of 1986 (8 U.S.C. 1255a note).
(2) Title II of Public Law 95–250 (92 Stat.
172).
(3) The Library Services and Construction Act
(20 U.S.C. 351 et seq.).
(4) Part F of the Technology for Education Act
of 1994 (contained in title III of the Elementary
and Secondary Education Act of 1965 (20 U.S.C.
7001 et seq.)).
(5) Section 211 of the Appalachian Regional
Development Act of 1965 (40 U.S.C. App. 211).
(6) Title VII of the Stewart B. McKinney
Homeless Assistance Act (42 U.S.C. 11421 et seq.),
except subtitle B and section 738 of such title (42
U.S.C. 11431 et seq. and 11448).
(b) IMMEDIATE REPEAL
OF HIGHER EDUCATION
ACT OF 1965 PROVISIONS.—The following provisions of
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(9) Section 428J (20 U.S.C. 1078–10), relating
to loan forgiveness for teachers, individuals perform-
ing national community service and nurses.
(10) Section 486 (20 U.S.C. 1093), relating to
training in financial aid services.
(11) Subpart 1 of part H of title IV (20 U.S.C.
1099a et seq.) relating to State postsecondary re-
view programs.
(12) Part A of title V (20 U.S.C. 1102 et seq.),
relating to State and local programs for teacher ex-
cellence.
(13) Part B of title V (20 U.S.C. 1103 et seq.),
relating to national teacher academies.
(14) Subpart 1 of part C of title V (20 U.S.C.
1104 et seq.), relating to Paul Douglas teacher
scholarships.
(15) Subpart 3 of part C of title V (20 U.S.C.
1106 et seq.), relating to the teacher corps.
(16) Subpart 3 of part D of title V (20 U.S.C.
1109 et seq.), relating to class size demonstration
grants.
(17) Subpart 4 of part D of title V (20 U.S.C.
1110 et seq.), relating to middle school teaching
demonstration programs.
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(18) Subpart 1 of part E of title V (20 U.S.C.
1111 et seq.), relating to new teaching careers.
(19) Subpart 1 of part F of title V (20 U.S.C.
1113), relating to the national mini corps programs.
(20) Section 586 (20 U.S.C. 1114), relating to
demonstration grants for critical language and area
studies.
(21) Section 587 (20 U.S.C. 1114a), relating to
development of foreign languages and cultures in-
structional materials.
(22) Subpart 4 of part F of title V (20 U.S.C.
1116), relating to faculty development grants.
(23) Section 597 and subsection (b) of section
599 (20 U.S.C. 1117a and 1117c), relating to early
childhood staff training and professional enhance-
ment.
(24) Section 605 (20 U.S.C. 1124a), relating to
intensive summer language institutes.
(25) Section 607 (20 U.S.C. 1125a), relating to
periodicals and other research material published
outside the United States.
(26) Part A of title VII (20 U.S.C. 1132b et
seq.), relating to improvement of academic and li-
brary facilities.
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(27) Title VIII (20 U.S.C. 1133 et seq.), relat-
ing to cooperative education programs.
(28) Part D of title X (20 U.S.C. 1135f), relat-
ing to the Dwight D. Eisenhower leadership pro-
gram.
(c) IMMEDIATE REPEAL
OF EDUCATION AMEND-
MENTS OF 1986 PROVISIONS.—The following provisions
of the Higher Education Amendments of 1986 are re-
pealed:
(1) Part D of title XIII (20 U.S.C. 1029 note),
relating to library resources.
(2) Part E of title XIII (20 U.S.C. 1221–1
note), relating to a National Academy of Science
study.
(3) Part B of title XV (20 U.S.C. 4441 et
seq.), relating to Native Hawaiian and Alaska Na-
tive culture and art development.
(d) IMMEDIATE REPEAL
OF EDUCATION AMEND-
MENTS OF 1974 PROVISION.—Section 519 of the Edu-
cation Amendments of 1974 (20 U.S.C. 1221i) is re-
pealed.
(e) IMMEDIATE REPEAL
OF EDUCATION AMEND-
MENTS OF 1992 PROVISIONS.—The following provisions
of the Higher Education Amendments of 1992 are re-
pealed:
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(1) Part F of title XIII (25 U.S.C. 3351 et
seq.), relating to American Indian postsecondary
economic development scholarships.
(2) Part G of title XIII (25 U.S.C. 3371), re-
lating to American Indian teacher training.
(3) Section 1406 (20 U.S.C. 1221e–1 note), re-
lating to a national survey of factors associated with
participation.
(4) Section 1409 (20 U.S.C. 1132a note), relat-
ing to a study of environmental hazards in institu-
tions of higher education.
(5) Section 1412 (20 U.S.C. 1101 note), relat-
ing to a national job bank for teacher recruitment.
(6) Part B of title XV (20 U.S.C. 1452 note),
relating to a national clearinghouse for postsecond-
ary education materials.
(7) Part C of title XV (20 U.S.C. 1101 note),
relating to a school-based decisionmakers demonstra-
tion program.
(8) Part D of title XV (20 U.S.C. 1145h note),
relating to grants for sexual offenses education.
(9) Part E of title XV (20 U.S.C. 1070 note),
relating to Olympic scholarships.
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(10) Part G of title XV (20 U.S.C. 1070a–11
note), relating to advanced placement fee payment
programs.
SEC. 402. CONFORMING AMENDMENTS.
(a) REFERENCES TO SECTION 204 OF THE IMMIGRA-
TION REFORM AND CONTROL ACT OF 1986.—The table
of contents for the Immigration Reform and Control Act
of 1986 is amended by striking the item relating to section
204 of such Act.
(b) REFERENCES TO TITLE II OF PUBLIC LAW 95–
250.—Section 103 of Public Law 95–250 (16 U.S.C. 79l)
is amended—
(1) by striking the second sentence of sub-
section (a); and
(2) by striking the second sentence of sub-
section (b).
(c) REFERENCES TO LIBRARY SERVICES AND CON-
STRUCTION ACT.—
(1) TECHNOLOGY
FOR
EDUCATION
ACT
OF
1994.—The Technology for Education Act of 1994
(20 U.S.C. 6801 et seq.) is amended in section
3113(10) by striking ‘‘section 3 of the Library Serv-
ices and Construction Act;’’ and inserting ‘‘section
213 of the Library Services and Technology Act;’’.