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Office of the Press Secretary

For Immediate Release January 21, 1999

                             January 21, 1999                         

Last year, the Congress funded the first year of the President's initiative to hire 100,000 new teachers to reduce class size in the early grades. This year, it is imperative that the Congress act on the Administration proposal to help schools provide well-equipped classrooms to accommodate smaller class sizes. The President's FY2000 budget will propose Federal tax credits to pay interest on nearly $25 billion in bonds to build and renovate public schools. Two types of bonds are being proposed: School Modernization Bonds ($22.4 billion) and Qualified Zone Academy Bonds ($2.4 billion). The tax credits on these bonds will cost the Treasury a total of $3.7 billion over 5 years. School modernization is an urgent national need:

     A record 52.7 million children are enrolled in elementary and 
     secondary schools, and this number is expected to climb further 
     to 54.3 million by 2008.

     The average public school in America is 42 years old, according 
     to new National Center for Education Statistics (NCES) data 
     released last week.  Nearly three-quarters of today's schools 
     were built before 1970, primarily to accommodate the baby boom 
     generation.  A school's original equipment, including the roof 
     and electrical equipment, should be replaced when schools are 
     between 30 and 40 years old, and school buildings begin rapid
     deterioration after 40 years.

     The NCES report shows that 30 percent of all public schools are 
     in the "oldest condition" -- built before 1970 and never 
     renovated or renovated before 1980.

     The oldest schools are also lagging behind other schools in the 
     push to connect to the Internet.  While almost 60 percent of 
     schools built in since 1985 were connected to the Internet in 
     1995, only 42 percent of schools in the oldest condition were 
     connected to the Internet.

School Modernization Bonds

$22 billion in School Modernization Bonds will be available over two years ($11 billion in 2000 and $11 billion in 2001) for construction and renovation of public school facilities. Federal tax credits will pay the interest on these bonds.

Half of the bonds ($11 billion) would be allocated to the 100-125 school districts with the largest number of low-income children, in proportion to their share of funds under the Federal "Title I" Basic Grant formula, to provide assistance in accordance with each school district's plan.

The other half of the bonds ($11 billion) would be allocated to States according to the proportion of low-income children (Title I Basic Grant funds), not counting the children in the school districts described above.

To qualify for these bonds, States, territories, and the eligible 100-125 school districts would submit to the Secretary of Education the following information: (1) a comprehensive study of the construction and renovation needs in the jurisdiction, (2) a description of how the jurisdiction will ensure that the bond funds are used for the purposes intended by this proposal; and, for States only (3) a description of how highest priority will be given to localities with greatest needs and how special consideration will be given to rural and high-growth areas.

Qualified Zone Academy Bonds

This program, created by the Taxpayer Relief Act of 1997, provides a tax credit to pay interest on bonds for a variety of expenses (including building renovation) related to certain public school-business partnerships. The FY2000 Budget would expand these bonds to cover new school construction. In total, $2.4 billion in bonds ($1 billion in 2000 and $1.4 billion in 2001) would be allocated to States on the basis of their respective populations of individuals with incomes below the poverty line.

New Native American School Component

In addition to the $22 billion of School Modernization Bonds described above, the proposal includes a new component for Native American schools. The Secretary of Interior would allocate $400 million in School Modernization Bonds ($200 million in 2000 and $200 million in 2001) to tribes or tribal organizations for the construction and renovation of BIA funded schools.