I
107TH CONGRESS
1ST SESSION
H. R. 221
To amend the Internal Revenue Code of 1986 to designate educational em-
powerment zones in certain low-income areas and to give a tax incentive
to attract teachers to work in such areas.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 3, 2001
Mr. TOWNS introduced the following bill; which was referred to the Committee
on Ways and Means, and in addition to the Committee on Education and
the Workforce, for a period to be subsequently determined by the Speak-
er, in each case for consideration of such provisions as fall within the ju-
risdiction of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to designate
educational empowerment zones in certain low-income
areas and to give a tax incentive to attract teachers
to work in such areas.
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 ‘‘Educational Empower-
ment Act’’.
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SEC. 2. DESIGNATION OF EDUCATIONAL EMPOWERMENT
ZONES.
(a) IN GENERAL.—Chapter 1 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the
following new subchapter:
‘‘Subchapter X—Educational Empowerment
Zones
‘‘Sec. 1400E. Designation of educational empowerment zones.
‘‘SEC. 1400E. DESIGNATION OF EDUCATIONAL EMPOWER-
MENT ZONES.
‘‘(a) DESIGNATION.—
‘‘(1) EDUCATIONAL
EMPOWERMENT
ZONE.—
For purposes of this title, the term ‘educational em-
powerment zone’ means any area—
‘‘(A) which is nominated by one or more
local governments and the State or States in
which it is located for designation as an edu-
cational empowerment zone (hereinafter in this
section referred to as a ‘nominated area’), and
‘‘(B) which the Secretary of Health and
Human Services and the Secretary of Edu-
cation (hereinafter in this section referred to as
the ‘Secretaries concerned’) jointly designate as
an educational empowerment zone.
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‘‘(2) NUMBER OF DESIGNATIONS.—The Secre-
taries concerned may designate not more than 30
nominated areas as educational empowerment zones.
‘‘(3) AREAS DESIGNATED BASED ON DEGREE
OF POVERTY, ETC.—Except as otherwise provided in
this section, the nominated areas designated as edu-
cational empowerment zones under this subsection
shall be those nominated areas with the highest av-
erage ranking with respect to the criteria described
in subsection (c)(3). For purposes of the preceding
sentence, an area shall be ranked within each such
criterion on the basis of the amount by which the
area exceeds such criterion, with the area which ex-
ceeds such criterion by the greatest amount given
the highest ranking.
‘‘(4) LIMITATION ON DESIGNATIONS.—
‘‘(A) PUBLICATION
OF
REGULATIONS.—
The Secretaries concerned shall prescribe by
regulation no later than 4 months after the
date of the enactment of this section—
‘‘(i) the procedures for nominating an
area under paragraph (1)(A),
‘‘(ii) the parameters relating to the
size and population characteristics of an
educational empowerment zone, and
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‘‘(iii) the manner in which nominated
areas will be evaluated based on the cri-
teria specified in subsection (c).
‘‘(B) TIME LIMITATIONS.—The Secretaries
concerned may designate nominated areas as
educational empowerment zones only during the
24-month period beginning on the first day of
the first month following the month in which
the regulations described in subparagraph (A)
are prescribed.
‘‘(C) PROCEDURAL
RULES.—The Secre-
taries concerned shall not make any designation
of a nominated area as an educational em-
powerment zone under paragraph (2) unless—
‘‘(i) a nomination regarding such area
is submitted in such a manner and in such
form, and contains such information, as
the Secretaries concerned shall by regula-
tion prescribe, and
‘‘(ii) the Secretaries concerned deter-
mine that any information furnished is
reasonably accurate.
‘‘(5) NOMINATION PROCESS FOR INDIAN RES-
ERVATIONS.—For purposes of this subchapter, in
the case of a nominated area on an Indian reserva-
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tion, the reservation governing body (as determined
by the Secretary of the Interior) shall be treated as
being both the State and local governments with re-
spect to such area.
‘‘(b) PERIOD FOR WHICH DESIGNATION IS IN EF-
FECT.—Any designation of an area as an educational em-
powerment zone shall remain in effect during the period
beginning on the date of the designation and ending on
the earliest of—
‘‘(1) December 31, 2005,
‘‘(2) the termination date designated by the
State and local governments in their nomination, or
‘‘(3) the date the Secretaries concerned revoke
such designation.
‘‘(c) AREA AND ELIGIBILITY REQUIREMENTS.—
‘‘(1) IN
GENERAL.—The Secretary of Com-
merce may designate a nominated area as an edu-
cational empowerment zone under subsection (a)
only if the area meets the requirements of para-
graphs (2) and (3) of this subsection.
‘‘(2) AREA REQUIREMENTS.—For purposes of
paragraph (1), a nominated area meets the require-
ments of this paragraph if—
‘‘(A) the area is within the jurisdiction of
one or more local governments,
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‘‘(B) the boundary of the area is con-
tinuous, and
‘‘(C) the area does not include an em-
powerment zone (as defined in section
1393(b)) other than such a zone des-
ignated under section 1391(g).
‘‘(3) ELIGIBILITY
REQUIREMENTS.—For pur-
poses of paragraph (1), a nominated area meets the
requirements of this paragraph if the State and the
local governments in which it is located certify that
the nominated area satisfies such conditions as the
Secretary of Education deems appropriate.
‘‘(4) CONSIDERATION
OF
DROPOUT
RATE,
ETC.—The Secretary of Education, in setting forth
the conditions for eligibility pursuant to paragraph
(3), shall take into account the extent to which an
area has low-income families, a high dropout rate, a
high rate of teen pregnancy, and large school class
sizes.
‘‘(d) COORDINATION WITH TREATMENT OF ENTER-
PRISE COMMUNITIES.—For purposes of this title, if there
are in effect with respect to the same area both—
‘‘(1) a designation as an educational empower-
ment zone, and
‘‘(2) a designation as an enterprise community,
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both of such designations shall be given full effect with
respect to such area.
‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this subchapter, rules similar to the rules of para-
graphs (2), (3), (5), and (7) of section 1393 shall apply.’’.
(b) CLERICAL AMENDMENT.—The table of sub-
chapters for chapter 1 is amended by adding at the end
the following new item:
‘‘Subchapter X. Educational Empowerment Zones.’’
SEC. 3. CREDIT FOR DONATIONS TO SCHOOL DISTRICTS IN
EDUCATIONAL EMPOWERMENT ZONES.
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after section 30A the fol-
lowing new section:
‘‘SEC. 30B. CONTRIBUTIONS TO SCHOOL DISTRICTS IN EDU-
CATIONAL EMPOWERMENT ZONES.
‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-
lowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to the amount of
qualified educational empowerment zone contributions
made by the taxpayer during such year.
‘‘(b) MAXIMUM CREDIT.—The amount of the credit
allowed by subsection (a)—
‘‘(1) in the case of an individual, shall not ex-
ceed $2,000, and
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‘‘(2) in the case of any other taxpayer, shall not
exceed $10,000.
‘‘(c) DEFINITION OF QUALIFIED EDUCATIONAL EM-
POWERMENT ZONE CONTRIBUTIONS.—For purposes of
this section, the term ‘qualified educational empowerment
zone contributions’ means cash contributions made to any
school district located in an educational empowerment
zone (as designated under section 1400E) if such
contributions—
‘‘(1) but for subsection (d), would be allowable
as a deduction under section 170, and
‘‘(2) are used for any of the following purposes
by the school district:
‘‘(A) Hiring new teachers.
‘‘(B) Increasing teacher salaries.
‘‘(C) Training teachers.
‘‘(d) DENIAL OF DOUBLE BENEFIT.—No deduction
shall be allowed under this chapter for any contribution
taken into account in computing the credit under this sec-
tion.
‘‘(e) ELECTION.—This section shall apply to any tax-
payer for any taxable year only if such taxpayer elects (at
such time and in such manner as the Secretary may by
regulations prescribe) to have this section apply for such
taxable year.
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‘‘(f) APPLICATION WITH OTHER CREDITS; CARRY-
OVER OF EXCESS CREDIT.—The credit allowed by sub-
section (a) for any taxable year shall not exceed the excess
(if any) of—
‘‘(1) the regular tax for the taxable year re-
duced by the sum of the credits allowable under sub-
part A and the preceding sections of this subpart,
over
‘‘(2) the tentative minimum tax for the taxable
year.
If the credit under subsection (a) exceeds the limitation
of the preceding sentence, such excess shall be added to
the credit allowable under subsection (a) for the suc-
ceeding taxable year.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for subpart B of part IV of subchapter A of chapter 1
of such Code is amended by inserting after the item relat-
ing to section 30A the following new item:
‘‘Sec. 30B. Contributions to school districts in educational em-
powerment zones.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
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SEC. 4. TEACHER LOAN FORGIVENESS PROGRAM.
Part B of title IV of the Higher Education Act of
1965 is amended by inserting after section 428K (20
U.S.C. 1078–11) the following new section:
‘‘SEC. 428L. LOAN FORGIVENESS FOR MATHEMATICS AND
SCIENCE TEACHERS.
‘‘(a) PURPOSE.—It is the purpose of this section to
encourage more individuals to enter and stay in the field
of teaching mathematics, science, and related fields.
‘‘(b) PROGRAM.—
‘‘(1) IN GENERAL.—The Secretary shall carry
out a program of assuming the obligation to repay,
pursuant to subsection (c), a loan made, insured, or
guaranteed under this part or part D (excluding
loans made under sections 428B and 428C or com-
parable loans made under part D) for any new bor-
rower after October 1, 1998, who—
‘‘(A) has been employed as a full-time
teacher for 3 consecutive complete school years
in a school that is located in an educational em-
powerment zone, as such term is defined in sec-
tion 1400E of the Internal Revenue Code of
1986;
‘‘(B) is a fully qualified teacher; and
‘‘(C) is not in default on a loan for which
the borrower seeks forgiveness.
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‘‘(2) AWARD BASIS; PRIORITY.—
‘‘(A) AWARD BASIS.—Subject to subpara-
graph (B), loan repayment under this section
shall be on a first-come, first-served basis and
subject to the availability of appropriations.
‘‘(B) PRIORITY.—The Secretary shall give
priority in providing loan repayment under this
section for a fiscal year to student borrowers
who received loan repayment under this section
for the preceding fiscal year.
‘‘(3) REGULATIONS.—The Secretary is author-
ized to prescribe such regulations as may be nec-
essary to carry out the provisions of this section.
‘‘(c) LOAN REPAYMENT.—
‘‘(1) ELIGIBLE AMOUNT.—The amount the Sec-
retary may repay on behalf of any individual under
this section shall not exceed—
‘‘(A) 80 percent of the sum of the principal
amounts outstanding of the individual’s quali-
fying loans at the end of 3 consecutive complete
school years of service described in subsection
(b)(1)(A);
‘‘(B) an additional 10 percent of such sum
at the end of each of the next 2 consecutive
complete school years of such service; and
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‘‘(C) a total of more than $10,000.
‘‘(2) CONSTRUCTION.—Nothing in this section
shall be construed to authorize the refunding of any
repayment of a loan made under this part or part
D.
‘‘(3) INTEREST.—If a portion of a loan is re-
paid by the Secretary under this section for any
year, the proportionate amount of interest on such
loan which accrues for such year shall be repaid by
the Secretary.
‘‘(4) DOUBLE BENEFITS PROHIBITED.—No bor-
rower may, for the same service, receive a benefit
under both this section and subtitle D of title I of
the National and Community Service Act of 1990
(42 U.S.C. 12601 et seq.). No borrower may receive
a reduction of loan obligations under both this sec-
tion and section 428J or 460.
‘‘(d) REPAYMENT TO ELIGIBLE LENDERS.—The Sec-
retary shall pay to each eligible lender or holder for each
fiscal year an amount equal to the aggregate amount of
loans which are subject to repayment pursuant to this sec-
tion for such year.
‘‘(e) APPLICATION FOR REPAYMENT.—
‘‘(1) IN GENERAL.—Each eligible individual de-
siring loan repayment under this section shall sub-
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‘‘(ii) a middle or secondary school,
holds a bachelor’s degree and demonstrates
a high level of competency in all subject
areas in which he or she teaches through—
‘‘(I) a high level of performance
on a rigorous State or local academic
subject areas test; or
‘‘(II) completion of an academic
major in each of the subject areas in
which he or she provides instruction.
‘‘(f) EVALUATION.—
‘‘(1) IN GENERAL.—The Secretary shall con-
duct, by grant or contract, an independent national
evaluation of the impact of the program assisted
under this section.
‘‘(2) COMPETITIVE BASIS.—The grant or con-
tract described in subsection (b) shall be awarded on
a competitive basis.
‘‘(3) CONTENTS.—The evaluation described in
this subsection shall—
‘‘(A) determine the number of individuals
who were encouraged by the program assisted
under this section to pursue teaching careers;
‘‘(B) determine the number of individuals
who remain employed in teaching mathematics,
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science, or related fields as a result of participa-
tion in the program;
‘‘(C) identify the barriers to the effective-
ness of the program;
‘‘(D) assess the cost-effectiveness of the
program; and
‘‘(E) identify the number of years each in-
dividual participates in the program.
‘‘(4) INTERIM
AND
FINAL
EVALUATION
RE-
PORTS.—The Secretary shall prepare and submit to
the President and the Congress such interim reports
regarding the evaluation described in this subsection
as the Secretary deems appropriate, and shall pre-
pare and so submit a final report regarding the eval-
uation by January 1, 2004.’’.
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