article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Education Modernization Fund Act''. SEC. 2. EDUCATION MODERNIZATION LOANS AND FUND. (a) Loans.-- (1) In general.--The Secretary of Education (referred to in this subsection as the ``Secretary'') shall make loans to States for the purpose of constructing and modernizing elementary schools and secondary schools. (2) Terms.--The Secretary shall make low interest, long- term loans, as determined by the Secretary, under paragraph (1). The Secretary shall determine the eligibility requirements for, and the terms of, any loan made under paragraph (1). (3) Allocation of funds.--The Secretary shall determine a formula for allocating the funds made available under subsection (b)(4) to States for loans under paragraph (1). The Secretary shall ensure that the formula provides for the allocation of funds for such loans to each eligible State. In determining the formula, the Secretary shall take into consideration the need for financial assistance of States with significant increases in populations of elementary school and secondary school students. (4) Definitions.--In this subsection, the terms ``elementary school'' and ``secondary school'' have the meanings given the terms in section 14101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 8801). (b) Fund.-- (1) Establishment.--There is established in the Treasury of the United States a trust fund, to be known as the ``Education Modernization Fund'', consisting of the amounts transferred to or deposited in the Trust Fund under paragraph (2) and any interest earned on investment of the amounts in the Trust Fund under paragraph (3). (2) Transfers and deposits.-- (A) Transfer.--The Secretary of the Treasury shall transfer to the Trust Fund an amount equal to $5,000,000,000 from the modernization fund described in section 5302 of title 31, United States Code. (B) Deposits.--There shall be deposited in the Trust Fund all amounts received by the Secretary of Education incident to loan operations under subsection (a), including all collections of principal and interest. (3) Investment of trust fund.-- (A) In general.--The Secretary of the Treasury shall invest the portion of the Trust Fund that is not, in the Secretary's judgment, required to meet current withdrawals. (B) Obligations.--Such investments may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. For such purpose, such obligations may be acquired-- (i) on original issue at the issue price; or (ii) by purchase of outstanding obligations at the market price. (C) Purposes for obligations of the united states.--The purposes for which obligations of the United States may be issued under chapter 31 of title 31, United States Code, are extended to authorize the issuance at par of special obligations exclusively to the Trust Fund. (D) Interest.--Such special obligations shall bear interest at a rate equal to the average rate of interest, computed as to the end of the calendar month next preceding the date of such issue, borne by all marketable interest-bearing obligations of the United States then forming a part of the Public Debt, except that where such average rate is not a multiple of \1/8\ of 1 percent, the rate of interest of such special obligations shall be the multiple of \1/8\ of 1 percent next lower than such average rate. (E) Determination.--Such special obligations shall be issued only if the Secretary of the Treasury determines that the purchase of other interest-bearing obligations of the United States, or of obligations guaranteed as to both principal and interest by the United States on original issue or at the market price, is not in the public interest. (F) Sale of obligation.--Any obligation acquired by the Trust Fund (except special obligations issued exclusively to the Trust Fund) may be sold by the Secretary of the Treasury at the market price, and such special obligations may be redeemed at par plus accrued interest. (G) Credits to trust fund.--The interest on, and the proceeds from the sale or redemption of, any obligations held in the Trust Fund shall be credited to and form a part of the Trust Fund. (4) Expenditures from trust fund.--Amounts in the Trust Fund shall be available to the Secretary of Education for making expenditures to carry out subsection (a).
summary: Education Modernization Fund Act - Directs the Secretary of Education to make low-interest, long-term loans to States for constructing and modernizing elementary and secondary schools. Requires the Secretary of Education to determine a formula for allocating such loans to eligible States, taking into consideration the needs of States with significant increases in school student populations. Establishes the Education Modernization Fund (EMF) in the Treasury to provide funds for such loans. Directs the Secretary of the Treasury to: (1) transfer to the EMF a specified amount from the Treasury's Exchange Stabilization Fund; and (2) invest, in a specified manner, the portion of the EMF that is not required to meet current withdrawals. Directs the Secretary of Education to deposit in the EMF all amounts received by incident to such loan operations, including all collections of principal and interest.