State Revolving Funds for Schools Act

(1) COOPERATIVE AGREEMENTS- Subject to the provisions of this section, the Secretary of Education may enter into cooperative agreements with States for the establishment of State revolving funds and multistate revolving funds for making loans to local political subdivisions or local educational agencies for building or repairing elementary or secondary schools which provide free public education.

(2) INTERSTATE COMPACTS- 2 or more States may enter into a cooperative agreement under paragraph (1) with the Secretary for the establishment of a multistate revolving fund, to enter into an interstate compact establishing such fund in accordance with this section.

(b) FUNDING- The Secretary shall make grants to State revolving funds and multistate revolving funds in a State in a cooperative agreement under subsection (a)(1) to provide initial capital for loans provided under this section to local political subdivisions or local educational agencies. Each fund shall apply repayments of principal and interest on loans to the making of additional loans. The Secretary shall take final action on an application for a grant under this subsection within 90 days of the date of the submittal of such application.

(c) REVOLVING FUND REQUIREMENTS- In order to establish a revolving fund under this section, each State establishing the fund shall--

(1) meet the matching requirement described in subsection (d);

(2) identify an operating entity of the State as recipient of the grant if the entity has the capacity to manage loan funds;

(3) allow such funds to be used as reserve for debt issued by the State so long as proceeds are deposited in the fund for loan purposes;

(4) ensure that investment income generated by funds contributed to an account of the fund will be--

(A) credited to the account;

(B) available for use in providing loans to projects eligible for assistance from the account; and

(C) invested in United States Treasury securities, bank deposits, or such other financing instruments as the Secretary may approve to earn interest to enhance the leveraging of projects assisted by the fund;

(5) ensure that any loan from the fund will bear interest at or below the lowest interest rates being offered for bonds the income from which is exempt from Federal taxation, as determined by the State;

(6) ensure that repayment of any loan from the fund will commence not later than 1 year after the project has been completed;

(7) ensure that the term for repaying any loan will not exceed the projected useful life of the project that is the subject of the loan; and

(8) require the fund to make an annual report to the Secretary on its status and make such other reports as the Secretary may require by guidelines.

(d) MATCHING REQUIREMENT- In order to meet the matching requirement, each State establishing a revolving fund shall--

(1) contribute, at a minimum, in each account of the fund from non-Federal sources an amount equal to 25 percent of the amount of each capitalization grant made to the State and contributed to the fund under subsection (b); or

(2) require for any project financed from the fund that the local political subdivision or educational agency contribute at least 20 percent of the cost of such project from non-Federal sources.

(e) FORMS OF ASSISTANCE FROM REVOLVING FUNDS-

(1) IN GENERAL- A revolving fund established under this section may make loans to a local educational agency in an amount equal to all or part of the cost of carrying out a project eligible for assistance under this section. In the case of a project which meets the requirement of subsection (d)(2), a revolving fund established under this section may make loans to a local educational agency in an amount equal to up to 80 percent of the cost of carrying out a project eligible for assistance under this section.

(2) APPLICATIONS FOR LOANS- An application to a revolving fund by a local educational agency for a loan shall include--

(A) in the case of a renovation project, a description of each architectural, civil, structural, mechanical, or electrical deficiency to be corrected with funds under a loan and the priorities to be applied;

(B) a description of the criteria used by the applicant to determine the type of corrective action necessary for the renovation of a facility;

(D) such other information as the revolving fund may require.

A revolving fund shall take final action on a completed application submitted to it within 90 days after the date of its submittal.

(3) CRITERIA FOR LOANS- In considering applications for a loan, a revolving fund shall consider--

(A) the extent to which the local educational agency involved lacks the fiscal capacity, including the ability to raise funds through the full use of such agency's bonding capacity and otherwise, to undertake the project for which the loan would be used without the loan;

(B) the threat that the condition of the physical plant in the project poses to the safety and well-being of students;

(C) the demonstrated need for the construction, reconstruction, or renovation based on the condition of the facility in the project; and

(D) the age of such facility.

(f) QUALIFYING PROJECTS- A project is eligible for a loan from a revolving fund if it is a project that consists of--

(1) the construction of new elementary or secondary schools to meet the needs imposed by enrollment growth;

(2) the repair or upgrading of classrooms or structures related to academic learning, including the repair of leaking roofs, crumbling walls, inadequate plumbing, poor ventilation equipment, and inadequate heating or light equipment;

(3) an activity to increase physical safety at the educational facility involved;

(4) an activity to enhance the educational facility involved to provide access for students, teachers, and other individuals with disabilities;

(5) an activity to address environmental hazards at the educational facility involved, such as poor ventilation, indoor air quality, or lighting;

(6) the provision of basic infrastructure that facilitates educational technology, such as communications outlets, electrical systems, power outlets, or a communication closet;

(7) work that will bring an educational facility into conformity with the requirements of--

(A) environmental protection or health and safety programs mandated by Federal, State, or local law if such requirements were not in effect when the facility was initially constructed; and

(B) hazardous waste disposal, treatment, and storage requirements mandated by the Resource Conservation and Recovery Act of 1976 or similar State laws; and

(8) work to detect, remove, or otherwise contain asbestos hazards in educational facilities.

(g) LOAN FORGIVENESS- A State may forgive all or part of any loan described in this section if the total projected principal and interest repayments for all loans granted by the State and not forgiven under this subsection equal or exceed the combined total of all Federal capitalization grants provided to the State and any matching funds described in subsection (d)(1) provided by the State.

(h) SUPPLEMENTATION- Any loan made by a revolving fund shall be used to supplement and not supplant other Federal, State, and local funds available.

(i) LIMITATION ON REPAYMENTS- Notwithstanding any other provision of law, the repayment of a loan from a revolving fund under this section may not be credited toward the non-Federal share of the cost of any project.

(j) SECRETARIAL REQUIREMENTS- In administering this section, the Secretary shall specify procedures and guidelines for establishing, operating, and providing assistance from a revolving fund.

(k) UNITED STATES NOT OBLIGATED- The contribution of Federal funds into a revolving fund established under this section shall not be construed as a commitment, guarantee, or obligation on the part of the United States to any third party, nor shall any third party have any right against the United States for payment solely by virtue of the contribution. Any security or debt financing instrument issued by the revolving fund shall expressly state that the security or instrument does not constitute a commitment, guarantee, or obligation of the United States.

(l) MANAGEMENT OF FEDERAL FUNDS- Sections 3335 and 6503 of title 31, United States Code, shall not apply to funds contributed under this section.

(m) PROGRAM ADMINISTRATION- For each of fiscal years 2004 through 2008, a State may expend an amount not to exceed 2 percent of the Federal funds contributed to a revolving fund established by the State under this section to pay the reasonable costs of administering the fund.

(n) SECRETARIAL REVIEW- The Secretary shall review the financial condition of each revolving fund established under this section biennially and transmit to Congress a report on the results of such review not later than 90 days after the completion of the review.

(o) AUTHORIZATION OF APPROPRIATIONS- For grants to States for the initial capitalization of revolving funds there are authorized to be appropriated $1,000,000,000 for fiscal year 2004 and for each of the 4 succeeding fiscal years.

SEC. 3. DEFINITIONS.

The terms used in this Act shall have the meaning given such terms in section 9101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801).

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