text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Expand and Rebuild America's Schools 
  Act of 1997''.
  
  SEC. 2. FINDINGS.
  
      The Congress finds the following:
              (1) Many States and school districts will need to build new 
          schools in order to accommodate increasing student enrollments; 
          the Department of Education has predicted that the Nation will 
          need 6,000 more schools by the year 2006.
              (2) In response to reduced class mandates enforced by State 
          governments and increased enrollment, many school districts 
          have been forced to utilize temporary classrooms and other 
          structures to accommodate increased school populations, along 
          with resorting to year-round schedules for students.
              (3) Research has proven a direct correlation between the 
          condition of school facilities and student achievement. 
          Recently, researchers found that students assigned to schools 
          in poor condition can be expected to fall 10.9 percentage 
          points behind those in buildings in excellent condition. 
          Similar studies have demonstrated up to a 20 percent 
          improvement in test scores when students were moved from a 
          school with poor facilities to a new facility.
              (4) While school construction and maintenance are primarily 
          a State and local concern, States and communities have not, on 
          their own, met the increasing burden of providing acceptable 
          school facilities, and the poorest communities have had the 
          greatest difficulty meeting this need.
              (5) Many local educational agencies have difficulties 
          securing financing for school facility construction and 
          renovation, especially in States that require a \2/3\ majority 
          of voter approval for the passage of local bond initiatives.
              (6) The Federal Government, by providing interest subsidies 
          and similar types of support, can lower the costs of State and 
          local school infrastructure investment, creating an incentive 
          for businesses to support local school infrastructure 
          improvement efforts.
              (7) The United States competitive position within the world 
          economy is vulnerable if America's future workforce continues 
          to be educated in schools not equipped for the 21st century. 
          America must do everything in its power to properly educate its 
          people to compete in the global marketplace.
  
  SEC. 3. PURPOSES.
  
      The purposes of this Act are--
              (1) to encourage public-private partnerships for the 
          financing of school construction and expansion, and
              (2) to help local educational agencies bring all public 
          school facilities up to an acceptable standard and build the 
          additional classrooms needed to educate the growing number of 
          students who will enroll in the next decade.
  
  SEC. 4. CREDIT TO HOLDERS OF SCHOOL CONSTRUCTION BONDS.
  
      (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
  of the Internal Revenue Code of 1986 (relating to business-related 
  credits) is amended by adding at the end the following new section:
  
  ``SEC. 45D. CREDIT TO HOLDERS OF SCHOOL CONSTRUCTION BONDS.
  
      ``(a) Allowance of Credit.--In the case of an eligible taxpayer who 
  holds a school construction bond on the credit allowance date of such 
  bond which occurs during the taxable year, there shall be allowed as a 
  credit against the tax imposed by this chapter for such taxable year 
  the amount determined under subsection (b).
      ``(b) Amount of Credit.--The amount of the credit determined under 
  this subsection with respect to any school construction bond is the 
  amount equal to the product of--
              ``(1) the credit rate determined by the Secretary under 
          section 1397E(b)(2) for the month in which such bond was 
          issued, multiplied by
              ``(2) the face amount of the bond held by the taxpayer on 
          the credit allowance date.
      ``(c) Limitation Based on Amount of Tax.--The credit allowed under 
  subsection (a) for any taxable year shall not exceed the excess of--
              ``(1) the sum of the regular tax liability (as defined in 
          section 26(b)) plus the tax imposed by section 55, over
              ``(2) the sum of the credits allowable under this part 
          (other than under this section and subpart C thereof, relating 
          to refundable credits) and section 1397E.
      ``(d) School Construction Bond.--For purposes of this section--
              ``(1) In general.--The term `school construction bond' 
          means any bond issued as part of an issue if--
                      ``(A) 95 percent or more of the proceeds of such 
                  issue are to be used for a qualified purpose with 
                  respect to a new qualified school established by an 
                  eligible local education agency,
                      ``(B) the bond is issued by a State or local 
                  government within the jurisdiction of which such school 
                  is located,
                      ``(C) the issuer--
                              ``(i) designates such bond for purposes of 
                          this section,
                              ``(ii) certifies that it has written 
                          assurances that the private business 
                          contribution requirement of paragraph (2) will 
                          be met with respect to such school, and
                              ``(iii) certifies that it has the written 
                          approval of the eligible local education agency 
                          for such bond issuance, and
                      ``(D) the term of each bond which is part of such 
                  issue does not exceed the maximum term permitted under 
                  section 1397E(d)(3).
              ``(2) Private business contribution requirement.--
                      ``(A) In general.--For purposes of paragraph (1), 
                  the private business contribution requirement of this 
                  paragraph is met with respect to any issue if the 
                  eligible local education agency that established the 
                  qualified school has written commitments from private 
                  entities to make qualified contributions having a 
                  present value (as of the date of issuance of the issue) 
                  of not less than 10 percent of the proceeds of the 
                  issue.
                      ``(B) Qualified contributions.--For purposes of 
                  subparagraph (A), the term `qualified contribution' 
                  means any contribution (of a type and quality 
                  acceptable to the eligible local education agency) of--
                              ``(i) equipment for use in the qualified 
                          school (including state-of-the-art technology 
                          and vocational equipment),
                              ``(ii) technical assistance in developing 
                          curriculum or in training teachers in order to 
                          promote appropriate market driven technology in 
                          the classroom,
                              ``(iii) services of employees as volunteer 
                          mentors,
                              ``(iv) internships, field trips, or other 
                          educational opportunities outside the school 
                          for students, or
                              ``(v) any other property or service 
                          specified by the eligible local education 
                          agency.
              ``(3) Qualified school.--
                      ``(A) In general.--The term `qualified school' 
                  means any public school which is established by and 
                  operated under the supervision of an eligible local 
                  education agency to provide education or training below 
                  the postsecondary level if--
                              ``(i) such public school is designed in 
                          cooperation with business to enhance the 
                          academic curriculum, increase graduation and 
                          employment rates, and better prepare students 
                          for the rigors of college and the increasingly 
                          complex workforce,
                              ``(ii) students in such public school will 
                          be subject to the same academic standards and 
                          assessments as other students educated by the 
                          local education agency,
                              ``(iii) a well-structured program to 
                          alleviate overcrowding and to improve students' 
                          education has been constructed and implemented 
                          in the opinion of the Secretary of Education, 
                          and
                              ``(iv) at least 2 of the following 
                          requirements are met:
                                      ``(I) There is a reasonable 
                                  expectation (as of the date of issuance 
                                  of the bonds) that at least 35 percent 
                                  of the population attending the such 
                                  public school will be eligible for free 
                                  or reduced-cost lunches under the 
                                  school lunch program established under 
                                  the National School Lunch Act.
                                      ``(II) There is a reasonable 
                                  expectation (as of the date of issuance 
                                  of the bonds) that the student growth 
                                  rate over the next 5 years for the 
                                  school district in which such public 
                                  school is to be located will be at 
                                  least 10 percent.
                                      ``(III) The average student-teacher 
                                  ratio for such district as of the date 
                                  of issuance of the bonds is at least 28 
                                  to 1.
                      ``(B) Eligible local education agency.--The term 
                  `eligible local education agency' means any local 
                  educational agency as defined in section 14101 of the 
                  Elementary and Secondary Education Act of 1965.
              ``(4) Qualified purpose.--
                      ``(A) In general.--The term `qualified purpose' 
                  means, with respect to any qualified school--
                              ``(i) constructing a new school facility, 
                          and
                              ``(ii) providing equipment for use at such 
                          facility.
                      ``(B) School facility.--The term `school facility' 
                  means a new public structure suitable for use as a 
                  classroom, laboratory, library, media center, or 
                  related facility whose primary purpose is the 
                  instruction of public elementary or secondary students. 
                  Such term does not include an athletic stadium, or any 
                  other structure or facility intended primarily for 
                  athletic exhibitions, contests, games, or events for 
                  which admission is charged to the general public.
              ``(5) Eligible taxpayer.--The term `eligible taxpayer' 
          means--
                      ``(A) a bank (within the meaning of section 581),
                      ``(B) an insurance company to which subchapter L 
                  applies, and
                      ``(C) a corporation actively engaged in the 
                  business of lending money.
      ``(e) Limitation on Amount of Bonds Designated.--
              ``(1) National limitation.--There is a national school 
          construction bond limitation for each calendar year. Such 
          limitation is $400,000,000 for 1998 and 1999, and, except for 
          carryovers as provided under the rules applicable under 
          paragraph (2), zero thereafter.
              ``(2) Allocation of limitation.--The national school 
          construction bond limitation for a calendar year shall be 
          allocated by the Secretary among the States on the basis of 
          their respective populations of individuals below the poverty 
          line (as defined by the Office of Management and Budget). The 
          limitation amount allocated to a State under the preceding 
          sentence shall be allocated by the Secretary of Education to 
          qualified schools within such State.
              ``(3) Designation subject to limitation amount.--The 
          maximum aggregate face amount of bonds issued during any 
          calendar year which may be designated under subsection (d)(1) 
          with respect to any qualified school shall not exceed the 
          limitation amount allocated to such school under paragraph (2) 
          for such calendar year.
              ``(4) Carryover of unused limitation.--If for any calendar 
          year--
                      ``(A) the limitation amount for any State, exceeds
                      ``(B) the amount of bonds issued during such year 
                  which are designated under subsection (d)(1) with 
                  respect to qualified schools within such State,
          the limitation amount for such State for the following calendar 
          year shall be increased by the amount of such excess.
      ``(f) Other Definitions.--The definitions in subsections (d)(6) and 
  (f) of section 1397E shall apply for purposes of this section.
      ``(g) Credit Included in Gross Income.--Gross income includes the 
  amount of the credit allowed to the taxpayer under this section.''
      (b) Conforming Amendment.--The table of sections for subpart D of 
  part IV of subchapter A of chapter 1 of such Code is amended by adding 
  at the end the following new item:
  
                                ``Sec. 45D. Credit to holders of school 
                                          construction bonds.''
      (c) Effective Date.--The amendments made by this section shall 
  apply to obligations issued after December 31, 1997.
target: Expand and Rebuild America's Schools Act of 1997 - Amends the Internal Revenue Code to allow a limited credit to eligible taxpayers holding school construction bonds.  Defines such bonds.  Establishes a private business contribution requirement for bond issuers.  Defines as eligible taxpayers certain banks, insurance companies, and corporations.  Sets a national school construction bond limit.
feat_title: Expand and Rebuild America's Schools Act of 1997