IMPACT AID REFORM ACT OF 1970

TUESDAY, MARCH 24, 1970

HOUSE OF REPRESENTATIVES,

GENERAL SUBCOMMITTEE ON EDUCATION OF THE

COMMITTEE ON EDUCATION AND LABOR,

Washington, D.C.

The General Subcommittee met at 10 a.m., pursuant to recess, in room 2175, Rayburn House Office Building, Hon. Roman C. Pucinski (chairman of the subcommittee) presiding.

Present: Representatives Pucinski, Ford, Mink, Meeds and Quie. Staff members present: John F. Jennings majority counsel; Charles Radcliffe, minority counsel; and Alexandra Kisla, clerk.

Mr. PUCINSKI. We will start. I learned a long time ago that when you sit around here and you wait for the members to assemble, you lose half of your morning. So the committee will come to order.

We will proceed with our hearings on H.R. 16307 and 16384. This is a matter of paramount importance to the members who will be assembling here very soon. We will have the rest of them here as we go along, but I believe we ought to proceed with testimony.

As I said, it is the hope of this committee to conclude these hearings as quickly as possible and bring this legislation to the Congress for action, so that whatever judgment the Congress decides on will be reflected in the 1971 appropriation.

As you know, the Appropriations Committee this year is planning to have a separate appropriation for education and so it seems to me that we ought to try and get the authorization out of the way as quickly as possible.

With that thought in mind, we are very pleased to have with us this morning Mr. John Lumley, Assistant Executive Secretary for Legislation and Federal Relations, National Education Association. Mr. Lumley is accompanied by Mrs. Flanigan, who is a research expert at the NEA.

We also have several other witnesses this morning: Mr. Jack Manwaring, Superintendent, Unit School District 19, Mascoutah, Illinois, Mr. John Koontz, Representative of the D. C. Schools, and Mrs. Ruth A. Lewis, Superintendent of Ridgecrest, California. I would ask them whether they would prefer to join us at the witness

table now so that we can work as a panel or whether they would prefer to testify separately.

I have found that we make much better progress when we work as a panel rather than have you sit here all morning. Time runs away and you never get a chance to state your views. So if you would like, you are perfectly welcome to join us at the witness table now and we will start out with NEA testimony and then move along.

Mr. LUMLEY, why don't you proceed in whatever manner you wish. I don't know whether you have a prepared statement. If you do, it will be in the record in its entirety at this point and then you can proceed in any way that you think is most convenient to you, sir.

STATEMENT OF JOHN LUMLEY, ASSISTANT EXECUTIVE SECRETARY FOR LEGISLATION AND FEDERAL RELATIONS, NATIONAL EDUCATION ASSOCIATION; ACCOMPANIED BY MRS. FLANIGAN, RESEARCH DIVISION, NEA

Mr. LUMLEY. We have a prepared statement, Mr. Chairman, but you can put this in the record if you will and I will pick some points from it.

Mr. PUCINSKI. Your statement will be in the record. (Statement referred to follows:)

STATEMENT OF JOHN M. LUMLEY, ASSISTANT EXECUTIVE SECRETARY FOR LEGISLATION AND FEDERAL RELATIONS, NATIONAL EDUCATION ASSOCIATION

I am John M. Lumley, Assistant Executive Secretary for Legislation and Federal Relations of the National Education Association and Executive Secretary of the NEA Legislative Commission. I wish to express the appreciation of the NEA for this opportunity to present its views on H.R. 16307, "Impact Aid Reform Act of 1970."

The NEA is the professional association of classroom teachers and other educators. There are more than one million direct members of NEA this year and another one million educators belonging to NEA's state and local affiliated organizations and national affiliated and associated organizations. The policies of NEA regarding Federal legislation are made democratically by our governing bodies under general guidelines or Resolutions of our annual Representative Assembly comprised of more than 6,000 elected delegates. Interim policies are made by the NEA Board of Directors and Executive Committee. The NEA Legislative Commission is charged with developing programs to carry out the Association's policies in the area of Federal legislation and administration. If I may take one minute, I would like to commend the Chairman of this Committee, Mr. Pucinski, and other Committee members who worked long, hard, and late into the night to support the Fiscal Year 1970 Health, Education and Welfare appropriations. As you know, the final appropriations were far less than the full funding of authorized programs which we asked for, but far more than President Nixon recommended. Had the President's original recommendations been enacted, many more school systems of this country would have been added to the growing number now in fiscal crisis. Even with the appropriations that were passed, some schools are now finding it necessary to shorten school sessions and curtail programs.

The Federal government is a substantial landowner and employer-the largest in the United States. Land owned by the Federal government is onethird of all land in the United States and was acquired at an original cost of $4.8 billion. In 1968, Federal buildings within the United States totaled 417,559 and were carried on the inventory of the General Accounting Office at a cost figure of $26.8 billion. We can only speculate what the assessed value would be today.

At the end of 1968, the Federal government employed 2,400,000 civilian workers at jobs within the United States and had over 2,200,000 men and women in the armed forces stationed in the United States. This amounts to 5.6 percent of the labor force of 82.6 million in December 1968.

The Federal government is a heavy user of state and local governmentfinanced services, including schools. At the same time, the Federal government removes a substantial part of property from the tax rolls.

Property owned by private citizens and corporations is largely taxable and, to the extent that the Federal government does not pay its way, private and corporate property taxes must be increased to meet the cost of services.

Federal installations are much sought after by local and state governments for the economic aspects of increased money in the community. But they are no more sought after than new business and industry which, in addition to increasing the economy of an area, also pay taxes in substantial amounts to state and local governments. It is specious to argue that a Federal installation is so economically desirable that the government does not need to make inlieu-of-tax payments.

P.L. 874 was originally designed to provide aid to school systems which were overburdened or heavily impacted with large members of children of Federal military and civilian employees. It provided a sort of in-lieu-of-tax paymentbut not quite. I say a form of in-lieu-of-tax payment because the payment was made to the school system which the Federally-connected student attended rather than to the school system in which the parent's Federal job was located, and because the payment was related to local school expenditures rather than to the proceeds of the school tax rate on the assessed value of the Federal installation.

From the point of view of the recipients, impact aid has worked very well. It has provided a type of general aid with a minimum of administrative overburden. From the standpoint of the Federal administration, it has been unsatisfactory because the large Federal involvement does not provide for the kind of intervention, direction, and control of school programs that the Federal government has become accustomed to having in administering special aids programs.

The NEA has recognized certain shortcomings in the distribution of funds under P.L. 874:

the funds are uncertain from year to year and even from quarter to quarter;

⚫ the state's authority to equalize educational opportunity among school systems is disrupted.

However, we do not believe that this proposal corrects these shortcomings. There is no question of the Federal responsibility for support of the education of the "A" pupils whose parents live and work on Federal property. However, in H.R. 16307, there is no real basis for the different percentage support proposed for "B" and "C" pupils. The 40 percent for "B" pupils whose parents work on Federal property within the schools system is drawn arbitrarily from the national average ratio of nonresidential assessed valuations of real property to total assessed valuation. This rough measure does not account for the fact that state tax sources supply about 40 percent of school revenue and among the states the perecentage ranges from 9 percent to 87 percent. The 20 percent support for pupils whose parents work on Federal property outside

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the school system is defensible only as half of 40 percent. The other 20 percent is retained by the Federal government rather than going to the school system where the Federal property is located and is impacting the local property tax base.

The states have objected, and very legitimately so I believe, that the impact aid distorts the states' efforts to equalize local school revenues among systems. Nevertheless this proposal continues to prohibit the states from counting Federal impact aid as local revenue in calculating the state aid due a district.

In light of the criticisms leveled by the Administration against P.L. 874 in regard to the allocation of funds to wealthy communities and without regard to need, I must observe that the proposed distribution formula in H.R. 16307 does not contain an element of need. In fact, the effort index in Section 12 would increase the aid to New York state school systems where school expenditures and income are highest by about 36 percent (see chart 1).

H.R. 16307 does not correct the major weakness of P.L. 874-authorization without certain funding. The bill establishes a pecking order of claims on the funds available under the assumption that money will not be adequate. The school systems and Congress will not be relieved of the arduous annual effort to fully fund the authorization and to see that the money is allocated to local school systems after it is appropriated.

It is extremely difficult to assess the impact of this proposal on large school systems in urban centers. This proposal does not consider the impact of pupils from public housing or the pupils from Indian reservations. These omissions are critical.

No doubt the way the 3 percent limitation is calculated will deprive many large systems of funds under this proposed reform. Because the problems of financing education in the big cities are so acute at this time we would prefer to withhold support of this legislation until the President's whole package of proposed education legislation is available. I refer specifically to the legislative proposals recommended by the President's Task Force on Urban Education. It is foolhardy to withhold impact funds at this time of deepening crisis in city schools without a substantial increase planned in other Federal programs.

The 3 percent limitation proposed is based on the assumption that all school systems can absorb at least 3 percent of the cost of educating Federallyconnected pupils. I must point out that this is a 3 percent limitation only on "A" category pupils; it is, in effect, a 72 percent limitation on "B" pupils, and a 15 percent limitation on "C" pupils. This is because "B" pupils are counted at 40 percent and "C" pupils at 20 percent.

Under Section 12(e), the Commissioner would be directed to deduct from the local educational agency's entitlement amounts in proportion to funds received from shared revenues as well as other payments with respect to the Federal property. These shared revenues which come primarily from minerals extracted, have traditionally been considered to be due the state because of the state's entitlement to mineral rights. These shared revenues are extremely important sources of school revenue in a few Western states where the state passes the shared revenue through to the school systems.

This has been a difficult year in school finance. Costs are rising about as fast as revenues. School systems are hard pressed to seek out funds to make any subtantial improvements in school programs. The problem is compounded by the decrease in Federal funds, the increase in the demand for improved schools, and the increase in local taxpayer resistance to additional property taxes.

I am disappointed that the Administration's proposal does not correct the inequities in P.L. 874 that President Nixon cited. We can not support H.R. 16307 which would further decrease Federal funds and would cause distress