I
106TH CONGRESS
1ST SESSION
H. R. 2
To send more dollars to the classroom and for certain other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 11, 1999
Mr. GOODLING (for himself, Mr. PITTS, Mr. SMITH of Washington, Mr.
GOODE, Mr. CASTLE, Mr. MCKEON, and Ms. PRYCE of Ohio) introduced
the following bill; which was referred to the Committee on Education and
the Workforce, and in addition to the Committee on Ways and Means,
for a period to be subsequently determined by the Speaker, in each case
for consideration of such provisions as fall within the jurisdiction of the
committee concerned
A BILL
To send more dollars to the classroom and for certain other
purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Dollars to the Class-
room Act’’.
SEC. 2. FINDINGS.
The Congress finds the following:
(1) Strengthening America’s public schools is
critically important to the future of our children and
our Nation.
(2) Education is a local responsibility, a State
priority, and a national concern.
(3) Strengthening our Nation’s public schools
while respecting State and local control is a top pri-
ority of the 106th Congress.
(4) Working with the Nation’s Governors, par-
ents, teachers, and principals must take place in
order to strengthen public schools and foster edu-
cational excellence.
(5) More flexibility must be given to our Na-
tion’s Governors and educators at the State and
local level in implementing Federal education pro-
grams.
(6) The consolidation of various Federal edu-
cation programs will benefit our Nation’s children,
parents, and teachers by sending more dollars di-
rectly to the classroom.
(7) Sending more dollars to the classroom also
entails providing new tax incentives and options for
financing our public schools.
(8) Federal school renovation options should be
available to school districts in rural, urban, and sub-
urban areas.
(9) We will work with Governors and State and
local educators to send more Federal education dol-
lars to the classroom, provide more flexibility, and
repair, renovate, and rebuild schools.
TITLE I—FUNDS TO THE
CLASSROOM
SEC. 101. FINDINGS AND SENSE OF CONGRESS.
(a) FINDINGS.—Congress finds the following:
(1) We know that effective teaching takes place
when we begin:
(A) helping children master basic academ-
ics;
(B) engaging and involving parents;
(C) creating safe and orderly classrooms;
and
(D) getting dollars to the classroom.
(2) Our Nation’s children deserve an edu-
cational system which will provide opportunities to
excel.
(3) States and localities must spend a signifi-
cant amount of Federal education tax dollars apply-
ing for and administering Federal education dollars.
(4) Several States have reported that although
they receive less than 10 percent of their education
funding from the Federal Government, more than
50 percent of their paperwork is associated with
those Federal dollars.
(5) While it is unknown exactly what percent-
age of Federal education dollars reaches the class-
room, a recent audit of New York City public
schools found that only 43 percent of their local edu-
cation budget reaches the classroom. Further, it is
thought that only 85 percent of funds administered
by the United States Department of Education for
elementary and secondary education reach the school
district level. Even if 65 percent of Federal edu-
cation funds presently reach the classroom, it still
means that billions of dollars are not directly spent
on children in the classroom.
(6) American students are not performing up to
their full academic potential, despite significant Fed-
eral education initiatives, which span multiple Fed-
eral agencies.
(7) According to the Digest of Education Sta-
tistics, in 1994 only $150,521,920,000 out of
$278,965,657,000 spent on elementary and second-
ary education was spent on ‘‘instruction’’.
(8) According to the National Center for Edu-
cation Statistics, in 1995 only 52 percent of staff
employed in public elementary and secondary school
systems were teachers.
(9) Too much of our Federal education funding
is spent on bureaucracy and too little is spent on our
Nation’s youth.
(10) Getting 95 percent of Department of Edu-
cation elementary and secondary education funds to
the classroom could provide substantial additional
funding per classroom across the United States.
(11) More education funding should be put in
the hands of someone in a child’s classroom who
knows the child’s name.
(12) Burdensome regulations and mandates
should be removed so that school districts can devote
more resources to children in classrooms.
(13) President Clinton has stated: ‘‘We cannot
ask the American people to spend more on education
until we do a better job with the money we’ve got
now.’’.
(14) President Clinton and Vice President Gore
agree that the reinventing of public education will
not begin in Washington but in communities across
America and that we must ask fundamental ques-
tions about how our public school systems’ dollars
are spent.
(15) President Clinton and Vice President Gore
agree that in an age of tight budgets, we should be
spending public funds on teachers and children, not
on unnecessary overhead and bloated bureaucracy.
(b) SENSE OF CONGRESS.—Congress urges the De-
partment of Education, States, and local educational
agencies to work together to ensure that not less than 95
percent of all funds appropriated for the purpose of carry-
ing out elementary and secondary education programs ad-
ministered by the Department of Education is spent for
our children in their classrooms.
TITLE II—EDUCATION FLEXIBIL-
ITY PARTNERSHIP ACT OF
1999
SEC. 201. SHORT TITLE.
This title may be cited as the ‘‘Education Flexibility
Partnership Act of 1999’’.
SEC. 202. FINDINGS.
Congress makes the following findings:
(1) States differ substantially in demographics,
in school governance, and in school finance and
funding. The administrative and funding mecha-
nisms that help schools in 1 State improve may not
prove successful in other States.
(2) Although the Elementary and Secondary
Education Act of 1965 and other Federal education
statutes afford flexibility to State and local edu-
cational agencies in implementing Federal programs,
certain requirements of Federal education statutes
or regulations may impede local efforts to reform
and improve education.
(3) By granting waivers of certain statutory
and regulatory requirements, the Federal Govern-
ment can remove impediments for local educational
agencies in implementing educational reforms and
raising the achievement levels of all children.
(4) State educational agencies are closer to
local school systems, implement statewide edu-
cational reforms with both Federal and State funds,
and are responsible for maintaining accountability
for local activities consistent with State standards
and assessment systems. Therefore, State edu-
cational agencies are often in the best position to
align waivers of Federal and State requirements
with State and local initiatives.
(5) The Education Flexibility Partnership Dem-
onstration Act allows State educational agencies the
flexibility to waive certain Federal requirements,
along with related State requirements, but allows
only 12 States to qualify for such waivers.
(6) Expansion of waiver authority will allow for
the waiver of statutory and regulatory requirements
that impede implementation of State and local edu-
cational improvement plans, or that unnecessarily
burden program administration, while maintaining
the intent and purposes of affected programs, and
maintaining such fundamental requirements as those
relating to civil rights, educational equity, and ac-
countability.
(7) To achieve the State goals for the education
of children in the State, the focus must be on results
in raising the achievement of all students, not proc-
ess.
SEC. 203. DEFINITIONS.
In this title:
(1) LOCAL EDUCATIONAL AGENCY; STATE EDU-
CATIONAL AGENCY.—The terms ‘‘local educational
agency’’ and ‘‘State educational agency’’ have the
meanings given such terms in section 14101 of the
Elementary and Secondary Education Act of 1965.
(2) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Education.
(3) STATE.—The term ‘‘State’’ means each of
the 50 States, the District of Columbia, the Com-
monwealth of Puerto Rico, and each of the outlying
areas.
SEC. 204. EDUCATION FLEXIBILITY PARTNERSHIP.
(a) EDUCATION FLEXIBILITY PROGRAM.—
(1) PROGRAM AUTHORIZED.—
(A) IN
GENERAL.—The Secretary may
carry out an education flexibility program under
which the Secretary authorizes a State edu-
cational agency that serves an eligible State to
waive statutory or regulatory requirements ap-
plicable to 1 or more programs or Acts de-
scribed in subsection (b), other than require-
ments described in subsection (c), for the State
educational agency or any local educational
agency or school within the State.
(B) DESIGNATION.—Each eligible State
participating in the program described in sub-
paragraph (A) shall be known as an ‘‘Ed-Flex
Partnership State’’.
(2) ELIGIBLE STATE.—For the purpose of this
subsection the term ‘‘eligible State’’ means a State
that—
(A)(i) has—
(I) developed and implemented the
challenging State content standards, chal-
lenging State student performance stand-
ards, and aligned assessments described in
section 1111(b) of the Elementary and
Secondary Education Act of 1965, and for
which local educational agencies in the
State are producing the individual school
performance profiles required by section
1116(a) of such Act; or
(II) made substantial progress, as de-
termined by the Secretary, toward develop-
ing and implementing the standards and
assessments, and toward having local edu-
cational agencies in the State produce the
profiles, described in subclause (I); and
(ii) holds local educational agencies and
schools accountable for meeting the educational
goals described in the local applications submit-
ted under paragraph (4), and for taking correc-
tive actions, consistent with section 1116 of the
Elementary and Secondary Education Act of
1965, for the local educational agencies that do
not meet the goals; and
(B) waives State statutory or regulatory
requirements relating to education while holding
local educational agencies or schools within the
State that are affected by such waivers account-
able for the performance of the students who
are affected by such waivers.
(3) STATE APPLICATION.—
(A) IN GENERAL.—Each State educational
agency desiring to participate in the education
flexibility program under this section shall sub-
mit an application to the Secretary at such
time, in such manner, and containing such in-
formation as the Secretary may reasonably re-
quire. Each such application shall demonstrate
that the eligible State has adopted an edu-
cational flexibility plan for the State that
includes—
(i) a description of the process the
State educational agency will use to evalu-
ate applications from local educational
agencies or schools requesting waivers of—
(I) Federal statutory or regu-
latory requirements as described in
paragraph (1)(A); and
(II) State statutory or regulatory
requirements relating to education;
and
(ii) a detailed description of the State
statutory and regulatory requirements re-
lating to education that the State edu-
cational agency will waive.
(B) APPROVAL
AND
CONSIDERATIONS.—
The Secretary may approve an application de-
scribed in subparagraph (A) only if the Sec-
retary determines that such application dem-
onstrates substantial promise of assisting the
State educational agency and affected local edu-
cational agencies and schools within such State
in carrying out comprehensive educational re-
form, after considering—
(i) the comprehensiveness and quality
of the educational flexibility plan described
in subparagraph (A);
(ii) the ability of such plan to ensure
accountability for the activities and goals
described in such plan;
(iii) the significance of the State stat-
utory or regulatory requirements relating
to education that will be waived; and
(iv) the quality of the State edu-
cational agency’s process for approving ap-
plications for waivers of Federal statutory
or regulatory requirements as described in
paragraph (1)(A) and for monitoring and
evaluating the results of such waivers.
(4) LOCAL APPLICATION.—
(A) IN GENERAL.—Each local educational
agency or school requesting a waiver of a Fed-
eral statutory or regulatory requirement as de-
scribed in paragraph (1)(A) and any relevant
State statutory or regulatory requirement from
a State educational agency shall submit an ap-
plication to the State educational agency at
such time, in such manner, and containing such
information as the State educational agency
may reasonably require. Each such application
shall—
(i) indicate each Federal program af-
fected and the statutory or regulatory re-
quirement that will be waived;
(ii) describe the purposes and overall
expected results of waiving each such re-
quirement;
(iii) describe for each school year spe-
cific, measurable, educational goals for
each local educational agency or school af-
fected by the proposed waiver; and
(iv) explain why the waiver will assist
the local educational agency or school in
reaching such goals.
(B) EVALUATION
OF
APPLICATIONS.—A
State educational agency shall evaluate an ap-
plication submitted under subparagraph (A) in
accordance with the State’s educational flexibil-
ity plan described in paragraph (3)(A).
(C) 
APPROVAL.—A 
State 
educational
agency shall not approve an application for a
waiver under this paragraph unless—
(i) the local educational agency or
school requesting such waiver has devel-
oped a local reform plan that is applicable
to such agency or school, respectively; and
(ii) the waiver of Federal statutory or
regulatory requirements as described in
paragraph (1)(A) will assist the local edu-
cational agency or school in reaching its
educational goals.
(5) 
MONITORING.—Each 
State 
educational
agency participating in the program under this sec-
tion shall annually monitor the activities of local
educational agencies and schools receiving waivers
under this section and shall submit an annual report
regarding such monitoring to the Secretary.
(6) DURATION OF FEDERAL WAIVERS.—
(A) IN GENERAL.—The Secretary shall not
approve the application of a State educational
agency under paragraph (3) for a period ex-
ceeding 5 years, except that the Secretary may
extend such period if the Secretary determines
that such agency’s authority to grant waivers
has been effective in enabling such State or af-
fected local educational agencies or schools to
carry out their local reform plans.
(B) PERFORMANCE
REVIEW.—The Sec-
retary shall periodically review the performance
of any State educational agency granting waiv-
ers of Federal statutory or regulatory require-
ments as described in paragraph (1)(A) and
shall terminate such agency’s authority to grant
such waivers if the Secretary determines, after
notice and opportunity for hearing, that such
agency’s performance has been inadequate to
justify continuation of such authority.
(7) AUTHORITY TO ISSUE WAIVERS.—Notwith-
standing any other provision of law, the Secretary is
authorized to carry out the education flexibility pro-
gram under this subsection for each of the fiscal
years 2000 through 2004.
(b) INCLUDED PROGRAMS.—The statutory or regu-
latory requirements referred to in subsection (a)(1)(A) are
any such requirements under the following programs or
Acts:
(1) Title I of the Elementary and Secondary
Education Act of 1965.
(2) Part B of title II of the Elementary and
Secondary Education Act of 1965.
(3) Subpart 2 of part A of title III of the Ele-
mentary and Secondary Education Act of 1965
(other than section 3136 of such Act).
(4) Title IV of the Elementary and Secondary
Education Act of 1965.
(5) Title VI of the Elementary and Secondary
Education Act of 1965.
(6) Part C of title VII of the Elementary and
Secondary Education Act of 1965.
(7) The Carl D. Perkins Vocational and Tech-
nical Education Act of 1998.
(c) WAIVERS NOT AUTHORIZED.—The Secretary
may not waive any statutory or regulatory requirement of
the programs or Acts authorized to be waived under sub-
section (a)(1)(A)—
(1) relating to—
(A) maintenance of effort;
(B) comparability of services;
(C) the equitable participation of students
and professional staff in private schools;
(D) parental participation and involve-
ment;
(E) the distribution of funds to States or
to local educational agencies;
(F) use of Federal funds to supplement,
not supplant, non-Federal funds; and
(G) applicable civil rights requirements;
and
(2) unless the underlying purposes of the statu-
tory requirements of each program or Act for which
a waiver is granted continue to be met to the satis-
faction of the Secretary.
(d) CONSTRUCTION.—Nothing in this title shall be
construed to affect the authority of a State educational
agency that has been granted waiver authority under the
following provisions of law:
(1) Section 311(e) of the Goals 2000: Educate
America Act.
(2) The proviso referring to such section 311(e)
under the heading ‘‘EDUCATION REFORM’’ in the
Department of Education Appropriations Act, 1996
(Public Law 104–134; 110 Stat. 1321–229).
(e) ACCOUNTABILITY.—In deciding whether to ex-
tend a request for a State educational agency’s authority
to issue waivers under this section, the Secretary shall re-
view the progress of the State educational agency, local
educational agency, or school affected by such waiver or
authority to determine if such agency or school has made
progress toward achieving the desired results described in
the 
application 
submitted 
pursuant 
to 
subsection
(e)(4)(A)(ii).
(f) PUBLICATION.—A notice of the Secretary’s deci-
sion to authorize State educational agencies to issue waiv-
ers under this section shall be published in the Federal
Register and the Secretary shall provide for the dissemina-
tion of such notice to State educational agencies, inter-
ested parties, including educators, parents, students, advo-
cacy and civil rights organizations, other interested par-
ties, and the public.
TITLE 
III—MODIFICATION 
OF
ARBITRAGE REBATE RULES
APPLICABLE TO BONDS USED
TO 
FINANCE 
PUBLIC
SCHOOLS
SEC. 301. ADDITIONAL INCREASE IN ARBITRAGE REBATE
EXCEPTION 
FOR 
GOVERNMENTAL 
BONDS
USED TO FINANCE PUBLIC SCHOOL FACILI-
TIES.
(a) IN GENERAL.—Section 148(f )(4)(D)(vii) of the
Internal Revenue Code of 1986 (relating to increase in
exception for bonds financing public school capital expend-
itures) is amended by striking ‘‘$5,000,000’’ the second
place it appears and inserting ‘‘$10,000,000’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to obligations issued after De-
cember 31, 1999.
SEC. 302. MODIFICATION OF ARBITRAGE REBATE RULES
APPLICABLE TO PUBLIC SCHOOL CONSTRUC-
TION BONDS.
(a) IN GENERAL.—Subparagraph (C) of section
148(f)(4) of the Internal Revenue Code of 1986 is amend-
ed by adding at the end the following new clause:
‘‘(xviii) 4-YEAR
SPENDING
REQUIRE-
MENT FOR PUBLIC SCHOOL CONSTRUCTION
ISSUE.—
‘‘(I) IN GENERAL.—In the case
of a public school construction issue,
the spending requirements of clause
(ii) shall be treated as met if at least
10 percent of the available construc-
tion proceeds of the construction issue
are spent for the governmental pur-
poses of the issue within the 1-year
period beginning on the date the
bonds are issued, 30 percent of such
proceeds are spent for such purposes
within the 2-year period beginning on
such date, 50 percent of such pro-
ceeds are spent for such purposes
within the 3-year period beginning on
such date, and 100 percent of such
proceeds are spent for such purposes
within the 4-year period beginning on
such date.
‘‘(II) 
PUBLIC
SCHOOL
CON-
STRUCTION ISSUE.—For purposes of
this clause, the term ‘public school