Washington- Legislators sitting on the Ways and Means Committee have an opportunity today to take a major step in the rebuilding of our nation's schools. Two measures before the committee would provide $25 billion in zero interest bonds for the construction and renovation of public schools. Rebuild America's Schools calls for the Ways and Means Committee to include this type of meaningful provision for school modernization in the tax bill to be assembled this week.

"As the Ways and Means Committee takes up tax reduction it needs to grab this opportunity to use federal dollars creatively and in partnership with local governments to address the pressing need to renovate, modernize and build schools to educate our nation's public school students. The school modernization problem has reached critical proportions and necessitates partnerships among local, state and federal governments," said Robert Canavan chair of Rebuild America's Schools, a national coalition of more than 50 businesses, education organizations and local school districts.

"Passage of school modernization bonds will give Congress the opportunity to provide real tax relief to local taxpayers by investing federal tax credits to build and modernize schools. These bonds will save local communities and their taxpayers tens of millions of dollars in interest payments through federal tax credits," Canavan said.

Measures to create such a bond program to help local communities build, repair and modernize schools have been introduced in the current Congress by Rep. Charles Rangel of New York (HR 1660) and Rep. Nancy Johnson of Connecticut (HR 1760). Rangel and Johnson are both senior members of the House Ways and Means Committee. A comparable Senate bill (S 223) has been introduced by Senator Frank Lautenberg of New Jersey.

The Joint Committee on Taxation estimates that through such a system, a federal investment of $3.1 billion over five years would leverage $25 billion in school modernization bonds. With School Modernization Bonds, bondholders would receive a federal tax credit in lieu of interest paid by the school district. The school districts that issue these bonds would only be responsible for paying the principal. Local communities would benefit both from the savings and by the investment in the public school infrastructure.

The major difference between the Rangel and Johnson bills is the allocation of the bonds. HR 1660 allocates half of the $25 billion total to the states based on the existing Title 1 formula and the other half to the 100 school districts with the largest number of low income students. HR 1760 bases the allocation on Title I and the school aged population and allocates all the bonds directly to the states for reallocation to local communities. Under both bills, all decision-making prerogatives related to school renovation and construction are retained by the local community.

HR 1660 provides $2.4 billion in bonds ($1 billion in 2000 and $1.4 billion in 2001) under the Qualified Zone Academy Bond (QZAB) program enacted in 1997. HR 1660 also authorizes the Secretary of the Interior to 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. HR 1760 does not extend the QZAB program, nor does it provide allocations for BIA schools outside of the Title I formula. In the U.S. Senate, the Lautenberg bill (S 223) allocates 65% of the bonds to the states and 35% to the cities.

The average school district that issues $10 million in 15-year tax-exempt bonds for school construction, can expect to pay as much as $4.5 million in interest and the average school district that issues $10 million in 30-year tax-exempt bonds would pay $10 million interest. However, the average school district that issues $10 million in School Modernization Bonds would pay zero interest. The savings will help communities stretch their limited resources to pay for additional school construction.

A recently completed public opinion survey conducted by the Frank Luntz polling organization for the organization Rebuild America, indicated that 82 percent of those interviewed favored a tax-free bond program of this magnitude to rebuild and modernize public schools.

For more information about the need for school modernization, please call Robert Canavan of Rebuild America's Schools at (202) 462-5911.