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I can hear the chairman and my colleagues at anytime.

Chairman PERKINS. Thank you very much. Thank you very much. Go ahead, Commissioner Marland, we will hear from you first. Commissioner MARLAND. Thank you very much, Mr. Chairman. We appreciate and respect your remarks, and I think some of the remarks have been addressed accidentally to me.

Secretary Richardson, as you probably know, could not be here, and he has delegated his role, and the leadership of this presentation, to his Assistant Secretary for Legislation, Stephen Kurzman.

I will be assisting the Assistant Secretary, and I believe the agenda would call for his testimony to be heard first.

Thank you very much.

STATEMENT OF HON. STEPHEN KURZMAN, ASSISTANT SECRETARY FOR LEGISLATION OF THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, ACCOMPANIED BY CHRISTOPHER T. CROSS, DEPUTY ASSISTANT SECRETARY FOR LEGISLATION (EDUCATION) Mr. KURZMAN. Thank you very much, Dr. Marland.

Mr. Chairman, members of the committee, the arrangement of our testimony will be my statement first followed by Dr. Marland. My prepared statement will deal with how the education special revenuesharing proposal, which is before the committee today, fits into the general program which President Nixon has proposed to the Congress for revenue sharing, and then Dr. Marland will have a statement of his own, to explain how this special revenue sharing bill will operate with regard to education specifically. That is why we have two separate statements, Mr. Chairman.

Also, addressing those remarks which opened this morning's session, let me explain too, as I think both our statements will make even clearer, that the special revenue-sharing proposal before the committee is not designed to deal with the fiscal problems of schools today. It is designed to make more effective those programs which are already on the lawbooks. We are of course considering very carefully at this time other proposals which deal with the fiscal problems, but we are not here to testify to those proposals. We are here to deal with education revenue sharing and the proposal which is basically designed to improve existing programs.

It is very much our pleasure to be here today, and we are most pleased and gratified that the chairman has called these hearings on H.R. 7796, the Education Revenue Sharing Act, which was introduced by Congressman Quie and eight cosponsors. Accompanying me is Dr. Sidney P. Marland, Jr., Commissioner of Education, Dr. Duane J. Mattheis, Deputy Commissioner for School Systems and Mr. Christopher T. Cross, Deputy Assistant Secretary for Legislation (Education).

At this first House hearing on the bill, I would like to note that it is a measure which is of major importance to elementary and secondary education, and of central concern to President Nixon in hist efforts to reform and revitalize the structure of government in the United States.

THE PHILOSOPHY OF REVENUE SHARING

In his state of the Union message last January 22, the President declared:

The time has now come in America to reverse the flow of power and resources from the States and communities to Washington, and start power and resources flowing back from Washington to the States and communities and, more important, to the people all across America.

The time has come for a new partnership between the Federal Government and the States and localities a partnership in which we entrust the States and localities with a larger share of the Nation's responsibilities, and in which we share our Federal revenues with them so that they can meet those responsibilities.

The concept of revenue sharing is not new: it was advocated by both Presidential candidates in 1964 and appeared in both major party platforms of 1968. What is new and revolutionary about the concept is that this administration has enunciated a two-part overall strategy-embracing general return of tax revenues to the States and special revenue sharing in six areas of special national concern: education, urban and rural development, manpower, transportation and law enforcement. In each of these proposals, we evoke the spirit and the substance of self-determination-to preserve it where it exists, to strengthen it where it is weak, and to create the conditions for its re-emergence where it has disappeared.

Self-determination is the hallmark of revenue sharing. The President has proposed general revenue sharing in order to correct the increasingly severe fiscal mismatch between the States and localities, faced with demands for services which are rapidly outpacing revenues, and the Federal Government which is equipped with a faster growing tax base. Recipient State and local governments would be free to apportion shared revenues among the uses they deemed to be of the highest priority for their citizens. They would no longer be caught in the Federal straightjacket which assumes that what is good for one State is equally beneficial to another.

Since approximately 40 percent of local and State revenues are now devoted to education, it is reasonable to expect that education will receive a substantial portion of general revenue income.

SPECIAL REVENUE SHARING

In addition to the general revenue-sharing bill, the President has proposed six special revenue-sharing bills, designed to correct the complex and often inefficient way Federal assistance is provided. These bills taken together would consolidate more than 100 existing categorical programs in all areas of government into six broad systems for sharing Federal revenues with States and localities.

But the goal is not the mere simplification of Federal organization charts. The goal is twofold. First, consolidation is critically needed to free the States and localities from strangulation by the bureaucratic redtape required by the scores of individual programs. In spite of similarities among related programs in goals, guarantees, and ultimate beneficiaries, each program has its own regulations, application forms, reporting requirements, and in many cases its own State plan.

Second, special revenue sharing will give the States and localities greater freedom than they now have to determine their own priorities within broad program areas and to decide how best to meet those priorities. In this respect, special revenue sharing will accomplish a dramatic reversal of the long-term trend toward an ever greater concentration of decisionmaking power in Washington.

Although most of the national debate so far has focused primarily on general revenue sharing, I believe that special revenue sharing will have an equally significant long-range impact on the Nation. While general revenue sharing offers the prospect of substantially reducing pressures on State and local tax bases, special revenue sharing offers a new mechanism for Federal-State collaboration in matters of mutual concern. Reform and revitalization of the Federal system will not be accomplished by money alone; the funds must also be accompanied by reform of the decisionmaking process to restore the authority of State and local governments-and this is precisely what special revenue sharing is designed to accomplish.

EDUCATION REVENUE SHARING

H.R. 7796, the education revenue sharing bill before the commit→ tee today, exemplifies this strategy of governmental reform. It would redefine the Federal role in elementary and secondary education, a redefinition which has become more necessary with the passage of each new categorical program. By delineating broad areas of Federal concern, education revenue sharing would assure that national priorities continue to be met.

1. EXTRAORDINARY GROWTH OF CATEGORICAL PROGRAMS

Over the past half century there has been a growing trend toward ever-narrower categories of Federal assistance to elementary and secondary education. The categorical approach dates back to 1917 and the Smith-Hughes Act, the first vocational eduction legislation. In 1958, the National Defense Education Act continued and expanded this pattern for Federal aid. In response to national concern for strengthened curricula in science, mathematics, and foreign languages, the NDEA established a series of programs designed to encourage more young people to pursue studies and acquire skills in fields considered vital to the national defense. In subsequent years, a broader range of national educational needs was identified, and Congress passed in rapid succession a series of laws providing special help for the disadvantaged, for the handicapped, to train more teachers, to modernize vocational and technical education, and to provide more books, equipment, and technology.

Clearly, these programs have had a profound impact on America's educational system. But there is a serious question as to how many more categories can be added to the existing structure without swamping it completely. The Office of Education now administers more than 100 categorical programs. To complicate the picture even further, at least 26 Federal agencies also administer significant categorical programs affecting schools and colleges.

2. STATE AND LOCAL GOVERNMENTS' PROBLEMS UNDER THE

CATEGORICAL MAZE

Seen from ground level, the jungle of Federal guidelines, regulations, application forms, and evaluation requirements is almost impenetrable.

In order to mount a comprehensive program for disadvantaged children, for example, a local school superintendent finds himself facing the necessity of simultaneously seeking program funds under title I of the Elementary and Secondary Education Act, books under title II, and counseling under title III. In addition, he may seek assistance through special programs under the Education for the Handicapped Act, or purchase equipment under title III of NDEA, or recruit staff under part B-2 of the Education Professions Development Act. Programs under the Vocational Education Act or an Adult Education program may complicate the picture still further.

In theory these laws offer the potential for significant support of the local superintendent's program. Unfortunately, however, each categorical program requires a separate application, often to separate divisions of the State educational agency. Some programs require matching funds; others do not. Some only require an acceptable project proposal; others fund projects on a higher competitive basis. And each categorical program has its own complicated set of regulations, guidelines, and reporting requirements.

These requirements make it difficult for even the most affluent and best staffed school district to put together a coherent package of Federal assistance. For smaller, poorer systems, the task is simply impossible. Just keeping informed of the array of programs available and how, when and where to apply for them has become a nearly impossible undertaking for any local school superintendent, unless he can afford professional assistance.

The demands of grantsmanship often tend to benefit the wealthier school districts and States by creating a regressive situation in which needy districts less readily apply for or receive aid. All districts are affected by the uncertainty, multiplied by the number of different grant applications each has filed, as to whether they will receive the funds requested. All are affected by having to rely for funding of individual grants on the level of appropriations for various particular categorical programs.

Problems with the categorical approach to Federal aid are also increasingly apparent at the State level, where the paperwork required is staggering. A typical State plan for a single formula grant program is dozens of pages long and takes thousands of man-hours to prepare. States often establish separate units to do this work for programs and projects that are Federally funded, because of requirements for individual auditing and reporting. These units and their personnel are counterparts-reproductions on a smaller scale-of the units that administer the programs in the Office of Education. State education. officials frequently work more closely with various units of OE than with their own agencies, often managing their Federal funds in isolation from State resources available for the same purposes, and isolated, too, from other Federally assisted State programs. Obviously this fragmentation severely diminishes the possibility of comprehensive, coordinated educational planning at the State level; to the con

trary, it insures that what is developed is not a plan which can be meaningful to the State.

Some of the other problems resulting from the proliferation of categorical programs may seem ludicrous, but they are very real to State and local officials. An employee of a State department of education may receive several small checks each payday because his time is apportioned among different federally funded programs. The monitoring procedures necessary to assure that personnel and equipment charged to one program are not used for other purposes may also have ridiculous results. A secretary working for one program does not use a typewriter purchased for another; a bookkeeping machine purchased with categorical funds may remain idle while non-Federal units of the same office are using hand ledgers. These results may not be legally required but the categorical mentality all too often produces them.

At both the State and local levels, the paperwork involved in project grant applications sometimes results in administrative costs that may almost match the amount of the eventual grant-if, indeed, one is received at all.

3. FEDERAL LEVEL PROBLEMS UNDER CATEGORICAL PROGRAMS

The present proliferation of categorical programs produces a correspondingly wasteful impact on the Office of Education itself. The paperwork generated at the State and local levels flows into the Office of Education, where several hundred men and women are assigned to reviewing reports, records, and plans-an expenditure of manhours which, for a number of reasons, is largely waste. First, most of this work is essentially sterile, a matter of checking to see that all is in order. The laws insist upon this bureaucratic process, although it adds nothing to the content of the paper, much less to the benefit of the students, teachers, and administrators the program is intended to aid. The process serves only to move the application from desk to desk and to contribute to a cumulative delay in processing.

Second, the information contained in these documents is often of little actual value. Instead of supplying data which can be used to evaluate and improve a State's performance, it too frequently amounts to no more than a pedestrian collection of routine program descriptions, assurances that Federal requirements are being met, and voluminous statistics of doubtful worth.

Third, the time required to shuffle these documents reduces the amount of time and manpower which the Office of Education might otherwise devote to worthwhile technical assistance to States and local educational agencies-just as the time spent preparing them reduces the capacity of State officials to contribute to statewide planning efforts or to work productively with local school authorities to improve educational programs.

4. OTHER CONSEQUENCES OF CATEGORICAL PROGRAMS

It is remarkable that, despite these handicaps, most of the existing categorical programs have had some notable success in achieving their original purposes, the stimulation of new efforts to meet special educational needs. And I believe that there will always be a need for some

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