text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Education Modernization Fund Act''.
  
  SEC. 2. EDUCATION MODERNIZATION LOANS AND FUND.
  
      (a) Loans.--
              (1) In general.--The Secretary of Education (referred to in 
          this subsection as the ``Secretary'') shall make loans to 
          States for the purpose of constructing and modernizing 
          elementary schools and secondary schools.
              (2) Terms.--The Secretary shall make low interest, long-
          term loans, as determined by the Secretary, under paragraph 
          (1). The Secretary shall determine the eligibility requirements 
          for, and the terms of, any loan made under paragraph (1).
              (3) Allocation of funds.--The Secretary shall determine a 
          formula for allocating the funds made available under 
          subsection (b)(4) to States for loans under paragraph (1). The 
          Secretary shall ensure that the formula provides for the 
          allocation of funds for such loans to each eligible State. In 
          determining the formula, the Secretary shall take into 
          consideration the need for financial assistance of States with 
          significant increases in populations of elementary school and 
          secondary school students.
              (4) Definitions.--In this subsection, the terms 
          ``elementary school'' and ``secondary school'' have the 
          meanings given the terms in section 14101 of the Elementary and 
          Secondary Education Act of 1965 (20 U.S.C. 8801).
      (b) Fund.--
              (1) Establishment.--There is established in the Treasury of 
          the United States a trust fund, to be known as the ``Education 
          Modernization Fund'', consisting of the amounts transferred to 
          or deposited in the Trust Fund under paragraph (2) and any 
          interest earned on investment of the amounts in the Trust Fund 
          under paragraph (3).
              (2) Transfers and deposits.--
                      (A) Transfer.--The Secretary of the Treasury shall 
                  transfer to the Trust Fund an amount equal to 
                  $5,000,000,000 from the modernization fund described in 
                  section 5302 of title 31, United States Code.
                      (B) Deposits.--There shall be deposited in the 
                  Trust Fund all amounts received by the Secretary of 
                  Education incident to loan operations under subsection 
                  (a), including all collections of principal and 
                  interest.
              (3) Investment of trust fund.--
                      (A) In general.--The Secretary of the Treasury 
                  shall invest the portion of the Trust Fund that is not, 
                  in the Secretary's judgment, required to meet current 
                  withdrawals.
                      (B) Obligations.--Such investments may be made only 
                  in interest-bearing obligations of the United States or 
                  in obligations guaranteed as to both principal and 
                  interest by the United States. For such purpose, such 
                  obligations may be acquired--
                              (i) on original issue at the issue price; 
                          or
                              (ii) by purchase of outstanding obligations 
                          at the market price.
                      (C) Purposes for obligations of the united 
                  states.--The purposes for which obligations of the 
                  United States may be issued under chapter 31 of title 
                  31, United States Code, are extended to authorize the 
                  issuance at par of special obligations exclusively to 
                  the Trust Fund.
                      (D) Interest.--Such special obligations shall bear 
                  interest at a rate equal to the average rate of 
                  interest, computed as to the end of the calendar month 
                  next preceding the date of such issue, borne by all 
                  marketable interest-bearing obligations of the United 
                  States then forming a part of the Public Debt, except 
                  that where such average rate is not a multiple of \1/8\ 
                  of 1 percent, the rate of interest of such special 
                  obligations shall be the multiple of \1/8\ of 1 percent 
                  next lower than such average rate.
                      (E) Determination.--Such special obligations shall 
                  be issued only if the Secretary of the Treasury 
                  determines that the purchase of other interest-bearing 
                  obligations of the United States, or of obligations 
                  guaranteed as to both principal and interest by the 
                  United States on original issue or at the market price, 
                  is not in the public interest.
                      (F) Sale of obligation.--Any obligation acquired by 
                  the Trust Fund (except special obligations issued 
                  exclusively to the Trust Fund) may be sold by the 
                  Secretary of the Treasury at the market price, and such 
                  special obligations may be redeemed at par plus accrued 
                  interest.
                      (G) Credits to trust fund.--The interest on, and 
                  the proceeds from the sale or redemption of, any 
                  obligations held in the Trust Fund shall be credited to 
                  and form a part of the Trust Fund.
              (4) Expenditures from trust fund.--Amounts in the Trust 
          Fund shall be available to the Secretary of Education for 
          making expenditures to carry out subsection (a).
target: Education Modernization Fund Act - Directs the Secretary of Education to make low-interest, long-term loans to States for constructing and modernizing elementary and secondary schools. 
  Requires the Secretary of Education to determine a formula for allocating such loans to eligible States, taking into consideration the needs of States with significant increases in school student populations. 
  Establishes the Education Modernization Fund (EMF) in the Treasury to provide funds for such loans. 
  Directs the Secretary of the Treasury to:  (1) transfer to the EMF a specified amount from the Treasury's Exchange Stabilization Fund; and (2) invest, in a specified manner, the portion of the EMF that is not required to meet current withdrawals. 
  Directs the Secretary of Education to deposit in the EMF all amounts received by incident to such loan operations, including all collections of principal and interest.
feat_title: Education Modernization Fund Act