Debate on Education Bill Postponed
Agreement will Include School Construction Proposal
By Remy Trupin
Debate in the Senate on the "Education Savings Accounts" -- HR 2646 -- has been postponed until after the Easter Recess. Senate Majority Leader Trent Lott (MS), agreed to allow 12 preset Democratic and five Republican amendments when debate resumes April 20. The compromise would allow the introduction of amendments which would include the President's initiatives on education. The President's proposals, including new bond authority for school construction, are supported by the Conference.
The Administration's initiative, offered as a substitute amendment, would cover all of the interest on nearly $22 billion in state and local bonds to build, renovate, and modernize public schools. Local governments would be able to issue "qualified school modernization bonds" to fund the construction or rehabilitation of public schools. The holder of one of these bonds would receive annual federal income tax credits in lieu of interest payments. Because the annual credits compensate the holder for lending money, they would be treated as payments of interest for federal income tax purposes, and accordingly would be included in the holder's gross income.
Under this proposal, a total of $9.7 billion of authority to issue qualified school modernization bonds would be allocated among states and the 100 school districts with largest number of children in poverty in 1999 and 2000. Fifty percent of the money would go to the 100 school districts, with the balance to the states.
The "Education Savings Accounts" bill -- which does not address school construction priorities -- would raise the limits on annual contributions to existing education savings accounts from $500 to $2,000 a year, which would grow with interest. Tax-free withdrawals could be made for education expenses. The money could be spent on children enrolled in private, religious and attending home-school. The President has indicated that he would veto this bill.
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