IMPACT AID REFORM ACT OF 1970 TUESDAY, APRIL 21, 1970 HOUSE OF REPRESENTATIVES, GENERAL SUBCOMMITTEE ON EDUCATION OF THE, Washington, D.C. The subcommittee met at 10 o'clock a.m., pursuant to recess, in room 2251 Rayburn House Office Building, Hon. Roman C. Pucinski (chairman of the subcommittee) presiding. Present: Representatives Pucinski, Bell and Quie. Staff Members Present: John F. Jennings, majority counsel; Alexandra Kisla, clerk; and Sheldon Batchelder, Minority Research As sistant. Mr. PUCINSKI. Gentlemen, why don't we get started. We will have other members joining us as we move along. We have a number of other meetings going along, but we do want to make a record. We will have you gentlemen join us at the witness table. Dr. George Balling, Assistant Superintendent for State and Federal Relations, Chicago Board of Education; Dr. Mario Nascati, Deputy Director of Finance, Philadelphia Public Schools; Dr. Gerald Moeller, Division of Education and Research, St. Louis Board of Education; we are going to be in St. Louis later this week, as you knowand Mr. Tom Vopat, Assistant Superintendent, Federal Progress Coordinator, Orofino, Idaho, Schools. We are very pleased to have you here this morning to continue our hearings on H.R. 16307 and particularly anxious to hear the testimony of the larger city groups to see how this legislation will affect us. Dr. Balling, you have a prepared statement. If it is all right with you, it will be in the record in their entirety at this point. (The statement of Dr. Balling follows:) STATEMENT OF DR. GEORGE R. BALLING, ASSISTANT SUPERINTENDENT, CHICAGO PUBLIC SCHOOLS I am George R. Balling, Assistant Superintendent for Federal and State Relations for the Chicago Public Schools. Today I represent Dr. James F. Redmond, General Superintendent of Schools, when I present this statement on H.R. 16307 and 16384, the Impact Aid Reform Act of 1970. It is a privilege to have this opportunity to present the views of the Chicago public schools on this important matter to this distinguished subcommittee. It is our opinion that Public Law 874 of the 81st Congress has been one of the very best and most justifiable vehicles for providing Federal assistance to school districts. The impact aid program is founded on a very basic concept that the Federal government is responsible for and should try to alleviate the distress which has been created in local school districts by the removal of property from tax rolls due to Federal activity. This is a morally sound principle and, except for minor inequities, P.L. 874 has accomplished the task well. After almost twenty years of operation it was wise to commission the Battelle Memorial Institute to study the operation of the impact aid program and make recommendations for improvement. Unfortunately it appears that the Battelle group has drawn some questionable conclusions from their study and as a result made some recommendations which are considered faulty. We agree with the Battelle conclusions that the Federal government should continue to provide a program of school assistance in Federally affected areas, that the basic features of the current programs are sound, and that certain “B” students should not be counted if the place of the parent's employment could not conceivably be taxed for local school purposes. We strongly disagree, however, with the recommendations that the school district should absorb the cost of a sizable percentage of Federally impacted students and that public housing should not be considered for impact aid. The bills under consideration, H.R. 16307 and 16384, include the absorption principle which we feel places an undue burden on impacted school districts. There is really no sound reason why a school system should "absorb" or carry the impact of any Federally-connected pupils. It is recommended that the provision for the absorption of the first 1,000 or 3% of Federally-connected pupils be eliminated from the final bill. While it is not mentioned in the bill, it is our understanding that the Impact Aid Reform Act of 1970 would eliminate the sections of Public Laws 81-874 and 81-815 which were amended by H.R. 514 to include children residing in low-rent public housing as Federally-connected children. In effect, this would negate all the hard work that has been done by you, Mr. Chairman, and others over the past several years to provide for the impact on school districts caused by public housing projects assisted under the United States Housing Act of 1937. In Chicago, the hardship on the schools resulting from the need to educate some 63,000 pupils who live in tax-free public housing is far greater than that caused by the 17,000 pupils whose parents work on Federal property. Public housing pupils comprise 11% of the total enrollment of the Chicago public schools and the Federally-connected pupils slightly under 3%. The payment-in-lieu-of-taxes received by the Chicago schools last year from the low-rent public housing authorities amounted to $794,852, which figures out to be $12.62 per pupil. Contrast this with the $550 provided by local taxes for each non-public housing pupil and the financial impact of low-rent public housing becomes quite apparent. In addition to the cost of operating the schools to educate the pupils residing in low-rent public housing, there is a tremendous burden caused by the capital outlay required to build the school buildings to accommodate these pupils. In Chicago 48 new schools or additions have been built at a cost of some $40 million as the direct result of the construction of low-rent public housing units. It was possible to build these new schools only by issuing bonds and depriving other sections of the city, which pay real estate taxes, of the schools they need and rightly deserve. This is an area in which Public Law 81-815 could provide valuable assistance in reducing the impact if public housing pupils are considered eligible under that law. It should be noted that the impact of low-rent public housing on the Chicago public school system has been cumulative over the past twenty years or more. Based on a conservative estimated average loss of tax revenue per public housing pupil of $300 per year and an average number of such pupils of about 32,000 over the past twenty years, the financial impact on the Chicago public school system would be approximately $200 million. In 1965, an extensive and impartial study of the fiscal effect of tax-free public housing on the Chicago public schools was made in connection with the doctoral dissertation of Dr. Carl Thornblad.' On the basis of reliable data, it was calculated in this study that the impact on the Chicago schools amounted to over $24 million a year and that the educational tax rate would need to be increased in excess of 10% to overcome this impact. We strongly recommend that the Impact Aid Reform Act of 1970 be amended to include children residing in low-rent public housing assisted under the United States Housing Act of 1937 as Federally-connected and the school district in which they live be considered eligible for assistance under Public Laws 81-874 and 81-815. 1 The Fiscal Impact of a High Concentration of Low-Income Families Upon the Public Schools, Carl Eric Thornblad, published doctoral dissertation, University of Illinois. 1966, 132 pages. In the Chicago schools the majority of Federally-connected pupils is classed as 3"B," and the Federal property on which most of their parents work is located entirely within the county. Thus, the greatest number would be considered as "B"-in pupils under the Reform Act and be counted on the basis of 40% in determining the adjusted number of Federal impact pupils. The number of such pupils on the last survey was 16,673. There were also 410 "B"-out pupils whose parents work on Federal property located entirely outside Cook County and who actually cause very little impact on the school system. Counting these "B"-out pupils in the same manner as "B"-in pupils has been the chief form of inequity in Public Law 874 and also the main source of criticism of the law. We support the principle that "B"-out pupils should carry less weight in the calculations to establish impact aid payments under Public Law 81-874. For the information of the subcommittee, pertinent data involved in the calculation of the entitlement of the Chicago public schools under Public Law 81-874 are provided herewith. There are only 69 pupils in Chicago who live on Federal property with parents who are in the uniformed services or work on Federal property and are thus considered "A" pupils. Practically all of these "A" pupils live on the Air Force Base at O'Hare Field. The financial impact of these pupils on the Chicago public school system is considerable since at present a payment in excess of $750 tuition per pupil is being made to a neighboring suburban school system due to the remoteness of O'Hare Field from the nearest Chicago public school. Under the present Impact Aid Law, with the payment rate based on comparable districts and an ADA of 14,673 "B" pupils and 59 "A" pupils, the entitlement of Chicago schools would be $3,786,240. Based on the same ADA but calculated using 60% of the national average per pupil expenditure and the absorption factor required in the Impact Aid Reform Act, the entitlement of the Chicago schools would be $2,117,265. This would indicate a reduction in entitlement for payments under P.L. 874 of over 44%. Thus, while the impact of the Federally-connected pupils remains the same, the possibility of financial relief from that impact would be drastically reduced under the proposed legislation. In conclusion, we are opposed to H.R. 16307 and H.R. 16384 in the present form and strongly recommend dropping the bill entirely or at least amending it by including pupils living in low-rent public housing as Federally-connected and eliminating the absorption principle entirely. Thank you, Mr. Chairman, for the opportunity to appear before this committee to present this testimony. STATEMENT OF DR. GEORGE BALLING, ASSISTANT SUPERINTENDENT FOR FEDERAL AND STATE RELATIONS, CHICAGO BOARD OF EDUCATION Dr. BALLING. Mr. Chairman, I am George R. Balling, Assistant Superintendent for Federal and State Relations for the Chicago Public Schools. Today I represent Dr. James F. Redmond, General Superintendent of Schools, when I present this statement on H.R. 16307 and 16384, the Impact Aid Reform Act of 1970. It is a privilege to have this opportunity to present the views of the Chicago Public Schools on this important matter to this distinguished committee. In compliance with your suggestion, I will not read the prepared statement, but will restrict my presentation to a brief summary of the main points. It is our opinion that Public Law 874 of the 81st Congress has been one of the very best and most justifiable vehicles for providing federal assistance to school districts. The Impact Aid Program is founded on a very basic concept that the federal government is responsible for and should try to alleviate the distress which has been created in local school districts by the removal of property for tax rolls, due to federal activity. This is a morally sound principle and, except for minor inequities, Public Law 874 has accomplished the task well. However, we do think that after almost twenty years of operation, it was wise to commission the Battelle Memorial Institute to study the operation of the Impact Aid Program and make recommendations for improvement. Unfortunately, it appears that the Battelle group has drawn some questionable conclusions from their study and, as a result, made some recommendations which are considered faulty. We agree with the Battelle conclusions that the federal government should continue to provide a program of school assistance in federally affected areas; that the basic features of the current program are sound; and that certain "B" students should not be counted, if the place of the parents' employment could not conceivably be taxed for local school purposes. The B-out students are probably the greatest source of criticism of Public Law 874 and we think this is one of the features that should be corrected. We strongly disagree, however, with the recommendations that the school districts should absorb the cost of a sizable percentage of federally impacted students, and that public housing should not be considered for impact aid. The bills under consideration, H.R. 16307 and 16384, include the absorption principle, which we feel places an undue burden on impacted school districts. Obviously, it is a way to reduce overall costs, but it really doesn't reduce those costs in an equitable manner, at least in our opinion. There is really no sound reason why a school system should absorb or carry the impact of any federally connected pupils. It is our recommendation that the provision for aborption of the first one thousand or 3 percent of federally connected pupils be eliminated from the final bill. While it is not mentioned in the bill, it is our understanding that the Impact Aid Reform Act of 1970 would eliminate the sections of Public Law 81-874 and 81-815 which were amended by Public Law 91-230 to include children residing in low-rent public housing as federally connected children. In effect, this would negate all of the hard work that has been done by you, Mr. Chairman, and others over the past several years to provide for the impact on school districts caused by public housing projects assisted under U.S. Housing Act of 1937 and certain other acts. In Chicago, the hardship on the schools resulting from the need to educate some 63,000 pupils who live in tax free public housing is far greater than that caused by the 17,000 pupils whose parents work on federal property. That is the reason we are stressing at this time the public housing aspect, because to us it is definitely the most important one of all. Public housing pupils comprise 11 percent of the total enrollment of the Chicago public schools, while the federally connected pupils are slightly under 3 percent. The payment in lieu of taxes received by the Chicago schools last year from the low-rent public housing authorities amounted to $794,852, which figures out to be $12.62 per pupil. If you contrast this with $550 provided by local taxes for each non-public housing pupil, then the financial impact of low rent public housing becomes quite apparent. One thing I might say on that, there is very little income from the place of occupation of the people who live in low-rent public housing. At least a third of the pupils come from families on ADC and over a half come from families that are receiving at least some public assistance. So this really is a case where we get only the $12.62 for most of the pupils. In addition to the cost of operating the schools to educate the pupils residing in low-rent public housing, there is a tremendous burden caused by the capital outlay required to build the school buildings to accommodate these pupils. In Chicago, 48 new schools or additions have been built in the last 15 or 18 years, at a cost of some $40 million, as the direct result of construction of low-rent public housing units. It was possible for us to build these schools only by issuing bonds and depriving other sections of the City, which pay real estate taxes, of the schools they need and rightly deserve. This is an area in which Public Law 81-815 could provide valuable assistance in reducing impact, if public housing pupils are considered eligible under the law. It should be noted that the impact of low-rent public housing on the Chicago public school system has been cumulative over the last 20 years or more. Based on conservative estimates, (we didn't have the exact figures), the average loss of tax revenue per public housing pupil of $300 per year and an average number of such pupils of about 32,000 over the past 20 years, the financial impact on the Chicago public school system would be approximately $200 million. Of course, that $200 million is money that we have had to make up in other ways and, of course, is one of the reasons why the Chicago public schools are so desperately in need of funds right now. In 1965, an extensive an impartial study of the fiscal effect of tax free public housing on the Chicago public schools was made in connection with the doctoral dissertation of Dr. Carl Thornblad. On the basis of reliable data, it was calculated in this study that the impact of tax-free public housing on the Chicago public schools amounted to over $24 million a year and that the educational tax rate would need to be increased in excess of ten percent to overcome this impact. We strongly recommend that the Impact Aid Reform Act of 1970 be amended to include children residing in low rent public housing assisted under the U.S. Housing Act of 1937 as federally connected, and the school district in which they live be considered eligible for assistance under Public Law 81-874 and 81-815. I am going to skip much of the material on the usual impact figures. I furnished it so the committee would have it available, and I will just say in conclusion we are opposed to H.R. 16307 and 16384 in the present form and strongly recommend dropping the bill entirely or at least amending it by including pupils living in low-rent public housing as federally connected, and eliminating the absorption principle entirely. Thank you, Mr. Chairman, for this opportunity to present this testimony. |