reports and statements required under section 305(c), or to pay the required insurance premiums, he shall disqualify such lender for further insurance on loans granted pursuant to this title until he is satisfied that such failure has ceased and finds that there is reasonable assurance that the lender will in the future exercise necessary care and diligence or comply with such requirements, as the case may be.

(e) As used in this section, the term "insurance beneficiary" means the insured or its authorized assignee, if the certificate of insurance is held by such assignee.

REVOLVING INSURANCE FUND

SEC. 307. (a) There is hereby established a Vocational Student Loan Insurance Fund (hereafter in this section called the "Fund") which shall be available without fiscal year limitation to the Commissioner for carrying out the provisions of this title, and the Commissioner is hereby authorized to transfer to the Fund from time to time from the appropriations provided under subsection (b) of this section such sums as he deems necessary to provide capital for the Fund. All amounts received by the Commissioner as premium charges for insurance and as receipts, earnings, or proceeds derived from any claim or other assets acquired by the Commissioner in connection with his operations under this title, and any other moneys, property, or assets derived by the Commissioner from his operations in connection with this section, shall be deposited in the Fund. All expenses under this title shall be paid from the Fund, including (within the limits authorized from year to year in appropriation Acts to be paid for such purpose from the Fund) all administrative expenses which the Commissioner determines are reasonably attributable to his operations under this title. Moneys in the Fund not needed for current operations under this section may be invested in bonds or other obligations guaranteed as to principal and interest by the United States. If at any time the Commissioner determines the capital surplus and reserves of the Fund exceed the present and any reasonably prospective future requirements of the Fund, such excess may be deposited in the Treasury as miscellaneous receipts.

(b) (1) For the purpose of carrying out the provisions of this title, there are authorized to be appropriated for transfer to the Fund, pursuant to subsection (a) of this section

(A) the sum of $100,000: and

(B) such further sum, if any, as may become necessary for the adequacy of the Fund.

Any sums appropriated under this subsection shall remain available until expended.

(2) Interest shall accrue to the Treasury on outstanding capital resulting from transfers to the Fund from appropriations under paragraph (1) of this subsection. The rate of such interest with respect to each such transfer shall be determined by the Secretary of the Treasury, taking into consideration the current average market yield, during the month preceding such transfer, on outstanding marketable obligations of the United States having maturities comparable to those of loans insured under this title. From time to time and at least at the close of each fiscal year, the Commissioner shall pay to the Treasury, as miscellaneous receipts, all accrued interest.

(2) If at any time the moneys in the Fund (including any appropriation available for transfer to the Fund pursuant to this section) are insufficient to make payments in connection with the default of any loan insured under this title, the Commissioner is authorized to issue to the Secretary of the Treasury notes or other obligations in such forms and denominations, bearing such maturities, and subject to such terms and conditions as may be prescribed by the Commissioner with the approval of the Secretary of the Treasury. Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States of comparable maturities during the month preceding the issuance of such notes or other obligations. The Secretary of the Treasury is authorized and directed to purchase any notes or other obligations issued hereunder and for such purpose he is authorized to use as a public debt transaction the proceeds from the sale of any securities issued

under the Second Liberty Bond Act, as amended, and the purposes for which securities may be issued under such Act, as amended, are extended to include any purchases of such notes and obligations. The Secretary of the Treasury may at any time sell any of the notes or other obligations acquired by him under this paragraph. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes or other obligations shall be treated as public debt transactions of the United States. Sums borrowed under this paragraph shall be deposited in the Fund and redemption of such notes and obligations shall be made by the Commissioner from such Fund.

LEGAL POWERS AND RESPONSIBILITIES

SEC. 308. (a) In the performance of, and with respect to, the functions, powers, and duties vested in him by this title, the Commissioner may

(1) prescribe such regulations as may be necessary to carry out the purposes of this title;

(2) sue and be sued in any court of record of a State having general jurisdiction or in any district court of the United States, and such district courts shall have jurisdiction of civil actions arising under this title without regard to the amount in controversy, and any action instituted under this subsection by or against the Commissioner shall survive notwithstanding any change in the person occupying the office of Commissioner or any vacancy in such office; but no attachment, injunction, garnishment, or other similar process, mesne or final, shall be issued against the Commissioner or property under his control, and nothing herein shall be construed to except litigation arising out of activities under this title from the application of sections 507 (b) and 2679 of title 28 of the United States Code and of section 367 of the Revised Statutes (5 U.S.C. 316);

(3) include in any contract for insurance such terms, conditions, and covenants relating to repayment of principal and payment of interest, relating to his obligations and rights and to those of eligible lenders, and borrowers in case of default, and relating to other matters as the Commissioner determines to be necessary to assure that the purposes of this title will be achieved; and any term, condition, and covenant made pursuant to this clause or any other provision of this title may be modified by the Commissioner if he determines such modification is necessary to protect the financial interest of the United States;

(4) subject to the specific limitations in this title, consent to the modification with respect to rate of interest, time of payment of any installment of principal and interest or any portion thereof, or any other provision, of any note or other instrument evidencing a loan which has been insured under the title;

(5) enforce, pay, or compromise any claim on, or arising because of, any such insurance; and

(6) enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.

(b) The Commissioner shall, with respect to the financial operations arising by reason of this title

(1) prepare annually and submit a budget program as provided for wholly owned Government corporations by the Government Corporation Control Act;

(2) maintain an integral set of accounts, which shall be audited annually by the General Accounting Office in accordance with principles and procedures applicable to commercial corporate transactions, as provided by section 105 of the Government Corporation Control Act with respect to insurance under this title, except that the transactions of the Commissioner, including the settlement of insurance claims, and transactions related thereto and vouchers approved by the Commissioner in connection with such transactions, shall be final and conclusive upon all accounting and other officers of the Government.

DEFINITIONS

SEC. 309. For the purpose of this title the terms "Commissioner" and "area vocational education program" have the meanings provided in section 108 of title I of this Act.

[Committee Print]

June 3, 1963

AMENDMENT TO H.R. 4955 ADOPTED BY GENERAL SUBCOMMITTEE ON EDUCATION

Strike out all after the enacting clause and insert:

Declaration of purpose

Section 1. It is the purpose of this Act to authorize Federal grants to States to assist them to maintain, extend, and improve existing programs of vocational education, and to develop new programs of vocational education so that persons of all ages in all communities of the State-those in high school, those who have completed or discontinued their formal education and are preparing to enter the labor market, those who have already entered the labor market but need to upgrade their skills or learn new ones, and those with special educational handicaps will have ready access to vocational training or retraining which is of high quality, which is realistic in the light of actual or anticipated opportunities for gainful employment, and which is suited to their needs, interests, and ability to benefit from such training.

Authorization of appropriations

Sec. 2. There are hereby authorized to be appropriated for the fiscal year ending June 30, 1964, $45,000,000, for the fiscal year ending June 30, 1965, $90,000,000 for the fiscal year ending June 30, 1966, $135,000,000, and for the fiscal year ending June 30, 1967, and each fiscal year thereafter, $180,000,000, for the purpose of making grants to States as provided in this Act.

Allotments to States

Sec. 3. (a) Ninety-five per centum of the sums appropriated pursuant to section 2 shall be allotted among the States on the basis of the number of persons in the various age groups needing vocational education and the per capita income in the respective States as follows: The Commissioner shall allot to each State for each fiscal year—

(1) an amount which bears the same ratio to 50 per centum of the sums 80 appropriated for such year, as the product of the population aged fifteen to nineteen, inclusive, in the State in the preceding fiscal year and the State's allotment ratio bears to the sum of the corresponding products for all the States; plus

(2) an amount which bears the same ratio to 20 per centum of the sums so appropriated for such year, as the product of the population aged twenty to twenty-four, inclusive, in the State in the preceding fiscal year and the State's allotment ratio bears to the sum of the corresponding products for all the States; plus

(3) an amount which bears the same ratio to 15 per centum of the sums so appropriated for such year, as the product of the population aged twentyfive to sixty-five, inclusive, in the State in the preceding fiscal year and the State's allotment ratio bears to the sum of the corresponding products for all the States; plus

(4) an amount which bears the same ratio to 10 per centum of the sums so appropriated for such year, as the sum of the amounts allotted to the State under paragraphs (1), (2), and (3) for such year bears to the sum of the amounts allotted to all the States under paragraphs (1), (2), and (3) for such year.

(b) The amount of any State's allotment under subsection (a) for any fiscal year which the Commissioner determines will not be required for such fiscal year for carrying out the State's plan approved under section 5 shall be available for reallotment from time to time, on such dates during such year as the Commis

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sioner may fix, to other States in proportion to the original allotments to such States under such subsection for such year, but with such proportionate amount for any of such other States being reduced to the extent it exceeds the sum the Sommissioner estimates such State needs and will be able to use under the approved plan of such State for such year and the total of such reductions shall be similarly reallotted among the States and not suffering such a reduction. Any amount reallotted to a State under this subsection during such year shall be deemed part of its allotment under subsection (a) for such year.

(c)(1) The "allotment ratio" for any State shall be 1.00 less the product of (A) .50 and (B) the quotient obtained by dividing the per capita income for the State by the per capita income for all the States (exclusive of Puerto Rico, Guam, American Samoa, and the Virgin Islands), except that (i) the allotment ratio shall in no case be less than .25 or more than .75, (ii) the allotment ratio for Puerto Rico, Guam, American Samoa, and the Virgin Islands shall be .75, and (iii) the allotment ratio of any State shall be .50 for any fiscal year if the Commissioner finds that the cost of education in such State exceeds the median of such costs in all the States by a factor of 2 or more as determined by him on the basis of an index of the average per pupil cost of constructing minimum school facilities in the States as determined for such fiscal year under section 15(6) of the Act of September 23, 1950, as amended (20 U.S.C. 645) (relating to Federal school construction assistance in federally affected areas), or, in the Commissioner's discretion, on the basis of such index and such other statistics and data as the Commissioner shall deem adequate and appropriate.

(2) The allotment ratios shall be promulgated by the Commissioner for each fiscal year, between July 1 and September 30 of the preceding fiscal year, cæcept that for the fiscal year ending June 30, 1964, such allotment ratios shall be promulgated as soon as possible after the enactment of this Act. Allotment ratios shall be computed on the basis of the average of the per capita incomes for a State and for all the States (exclusive of Puerto Rico, Guam, American Samoa, and the Virgin Islands) for the three most recent consecutive fiscal years for which satisfactory data is available from the Department of Commerce. (3) The term "per capita income" for a State or for all the States (exclusive of Puerto Rico, Guam, American Samoa, and the Virgin Islands) for any fiscal year, means the total personal income for such State, and for all such States, respectively, in the calendar year ending in such fiscal year, divided by the population of such State, and of all such States, respectively, in such fiscal year. (4) The total population and the population of particular age groups of a State or of all the States shall be determined by the Commissioner on the basis of the latest available estimates furnished by the Department of Commerce.

Uses of Federal Funds

Sec. 4. (a) Except as otherwise provided in subsection (b), a State's allotment under section 3 may be used, in accordance with its approved State plan, for any or all of the following purposes:

(1) Vocational education for persons attending high school;

(2) Vocational education for persons who have completed or left high school and who are available for full-time study in preparation for entering the labor market;

(3) Vocational education for persons (other than persons who are receiving training allowances under the Manpower Development and Training Act of 1962 (Public Law 87-415), the Area Redevelopment Act (Public Law 87-27), or the Trade Expansion Act of 1962 (Public Law 87-794) who have already entered the labor market and who need training or retraining to achieve stability or advancement in employment;

(4) Vocational education for persons who have academic, socioeconomic, or other handicaps that prevent them from succeeding in the regular vocational education program;

(5) Construction of area vocational education school facilities;

(6) Ancillary services and activities to assure quality in all vocational education programs, such as inservice teacher training and supervision, program evaluation, special demonstration and experimental programs, development of instructional materials, and State administration and leadership, including periodic evaluation of State and local vocational education programs and services in light of information regarding current and projected manpower needs and job opportunities.

(b) At least 25 per centum of each State's allotment may be used only for the purposes set forth in paragraph (2) or (5), or both, of a subsection (a), and at least 3 per centum of each State's allotment may be used only for the purposes set forth in paragraph (6) of subsection (a), except that the Commissioner may, upon request of a State, permit such State to use a smaller percentage of its allotment for any year for the purposes specified above if he determines that such smaller percentage will adequately meet such purposes in such State.

(c) Five per centum of the sums appropriated pursuant to section 2 for each fiscal year shall be used by the Commissioner to make grants to State Boards, or with the approval of the appropriate State Board, to local education agencies, and to colleges, universities, and other public or nonprofit private agencies or institutions, to pay part of the cost of research, experimental, developmental, or pilot programs developed by such Boards, agencies, or institutions and designed to meet the special vocational education needs of youths, particularly youths in economically depressed communities, who have academic, socioeconomic, or other handicaps that prevent them from succeeding in the regular vocational education programs.

State Plans

Sec. 5. (a) A State which desires to receive its allotments of Federal funds under this Act shall submit through its State Board to the Commissioner a State plan, in such detail as the Commissioner deems necessary, which—

(1) designates the State Board as the sole agency for administration of the State plan, or for supervision of the administration thereof by local educational agencies; and, if such State Board does not include as members persons familiar with the vocational education needs and objectives of management and labor in the State, provides for the designation or creation of a State advisory council which shall include such persons, to consult with the State Board in carrying out the State plan;

(2) sets forth the policies and procedures to be followed by the State in allocating each such allotment among the various uses set forth in paragraphs (1), (2), (3), (4), (5), and (6) of section 4(a), and in allocating Federal funds to local educational agencies in the State, which policies and procedures insure that due consideration will be given to the results of periodic evaluations of State and local vocational education programs and services in light of information regarding current and projected manpower needs and job opportunities, and to the relative vocational education needs of all groups in all communities in the State, and that Federal funds made available under this Act will be so used as to supplement, and, to the extent practical, increase the amounts of State or local funds that would in the absence of such Federal funds be made available for the uses set forth in section 4a, and in no case supplant such State or local funds;

(3) provides minimum qualifications for teachers, teacher-trainers, supervisors, directors and others having responsibilities under the State plan;

(4) provides for entering into cooperative arrangements with the system of public employment offices in the States, approved by the State Board and by the State head of such system, looking toward such offices making available to the State Board and local educational agencies occupational information regarding reasonable prospects of employment in the community and elsewhere, and toward consideration of such information by such Board and agencies in providing vocational guidance and counseling to students and prospective students and in determining the occupations for which persons are to be trained; and looking toward guidance and counseling personnel of the State Board and local educational agencies making available to public employment offices information regarding the occupational qualifications of persons leaving or completing vocational education courses or schools, and toward consideration of such information by such offices in the occupational guidance and placement of such persons;

(5) sets forth procedures for such fiscal control and fund accounting procedures as may be necessary to assure proper disbursement of, and accounting for, Federal funds paid to the State (including such funds paid by the State to local educational agencies) under this Act;

(6) provides assurance that the requirements of section 7 will be complied with on all construction projects in the State assisted under this part; and