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own support of the schools. The final point, I suppose, I would make is this-and in this respect, I am in total agreement with the Wall Street Journal's editorial position over a period of years in its opposition to revenue sharing—it seems to me the path of great danger for a federal system to have elected politicians at one level of government responsible for spending the money while elected politicians at another level of government are responsible for raising the tax dollars.
If I were a Governor, of course I would like that situation, for all I would have to do would be worry about how to spend the money, and simply wait for Uncle Sam to drop the money into the State capitol like manna from heaven.
That path seems to me to be the prescription for all kinds of dangers, and one only has to look at elected State politicians, some of them, I shall make no specific allusions, because this pertains to State politicians of both political parties, who have certainly been sharing revenues from state taxes, but among themselves. I do not want to make it any easier for that kind of thing.
I do not mind going back to my electorate, and saying, yes, I voted for these spending proposals but I also voted for the taxes. So, gentlemen, I hope you will consider that your revenue sharing ideas may be totally undermining the federal system in eroding any sense of accountability to the public, for, to repeat, you impose the taxing requirement on one level of elected politicians while you let the other politicians be responsible for taxing.
Thank you, Mr. Chairman.
Mr. PUCINSKI. Mr. Commissioner, there is one aspect of this proposal that has been somewhat disturbing to me.
It puts a great thrust in channeling these programs through the State
agency. Now, in the emergency school bill, which you worked so hard to get through the Congress, we dealt directly with the school district, the Secretary and Commissioner. In looking at some rather interesting figures and statistics, it seems to me the large cities, the 25 major cities of the country, do not fare very well when you channel these programs through State agencies.
Are you really hard and fast on that?
Commissioner MARLAND. I personally would still hold to what the Constitution has established regarding responsibilities for education in the States.
Yes, I would, and for other reasons too, Mr. Pucinski, beyond the Constitution.
The issue is one of feasibility.
The Office of Education cannot in any imaginable way serve 19,000 school districts in a direct sense.
It just would be a horrible maze of bureaucratic management.
The 50 States, we agree, vary in their competence; they vary in their expertise: they vary in their staffing. Our position is to strengthen the States, to strengthen their competence, to strengthen their technical ability to handle this kind of a network, so that those 50 States, centering on the Office of Education, will become more responsible, more productive.
Mr. Pucinski. I want to thank you, and, Doctor Kurzman, and your other assistants here, for your really candid answers.
It is always a great pleasure to have you before the committee.
You come well prepared. You know your subject. I appreciate the fact that you talk in complete candor.
I think when we get through with the testimony here, there will be no questions.
We may not agree, but at least you are frank enough to take a strong position on these things, and I appreciate that.
Commissioner MARLAND. Thank you very much.
Mrs. GREEN. I would like to make one final comment, Mr. Chairman.
It seems to me those people who are proposing, and they are indeed advocating a shared revenue, miss an awfully important point, a point which I have never yet heard made. I do not understand why.
We have revenue sharing at the present time. The Federal Government insists on sharing the revenue from the States, and of the municipalities. Moreover, the Federal Government has been doing so for many decades; but it all comes to the Federal Government, and the Federal Government is the one that spends it. Now let's share the funds collected from the States and cities with the States and cities and also share the responsibility for decisions on how the money is spent with the States and cities. In other words, let's decentralize the decisionmaking
process. Mr. KURZMAN. That is precisely our proposal. Commissioner MARLAND. The President said: 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.
That is precisely the theme you were citing. That is what we are trying to press for. What you have just said is true, and we want to work
Chairman PERKINS. Well, let me thank both of you, Dr. Marland and Dr. Kurzman, for your appearance here this morning.
You certainly have been helpful to the Committee because we never knew, really, what the administration had in mind.
You have told the committee that you will put in another appearance as soon as you have any further suggestions for elementary and secondary education revenue sharing. I want to thank you for your appearance. Let us know when you are ready to return.
We will be available to hear you.
At this point I would like to insert in the record a letter addressed to Mr. Pucinski from the Honorable Robert W. Scott, Governor of North Carolina, together with the statement to which he refers.
STATE OF NORTH CAROLINA,
Raleigh, N.C., December 22, 1971. Hon. ROMAN C. PUCINSKI, U.S. Representative, Chairman, General Subcommittee on Education, Rayburn
House Office Building, Washington, D.C. DEAR MR. CHAIRMAN: As Governor of the State of North Carolina and Chairs man of the Education Commission of the States, I have been concerned with the direction of Special Revenue Sharing measures under consideration by the recently adjourned first session of the ninety-second congress and which, presumably, will come before the next convening ninety-second session. S. 1669, the proposed Education Revenue Act of 1971, is a case in point.
The enclosed testimony on S. 1669 will, I think, adequately inform your Subcommittee of my convictions with regard to this measure. I take this opporunity to express my deep appreciation to you and the distinguished members of your Committee for providing for the record to remain open to receive my comments. I believe that the modifications suggested therein have validity and that if given consideration by your Committee will serve to provide the Congress and the nation with a more acceptable measure and a more workable ordinance after its passage.
Again, accept this expression of my gratitude both to you, Mr. Chairman, and to the members of your Committee. I have the honor to be.
ROBERT W. SCOTT,
Governor of North Carolina Chairman, Education Commission of the States, 1971-72. STATEMENT OF HON. ROBERT W. SCOTT, GOVERNOR OF NORTH CAROLINA AND
CHAIRMAN OF THE EDUCATION COMMISSION OF THE STATES Mr. Chairman, Members of the Committee, as Chairman of the Education Commission of the States, I appreciate the opportunity this statement of S. 1669, the proposed Education Revenue Act of 1971.
The Education Commission of the States was formed by the Compact for Education in 1966, for the purpose of encouraging effective working relationships among governors, state legislators, and professional and lay people from all elements of the educational community. Forty-three states and territories are now members of ECS. We recognize the primary responsibility of state government in the field of education, and the need for imaginative and effective leadership from the states in the improvement and reform of educational policies, and the development of better means of financing education.
The potential impact of passage of revenue sharing bill for education is enormous. The decisions of the Congress on this subject and on other bills pending in the Congress to carry out the President's revenue sharing proposals will determine the fundamental relationships between the Federal Government and the States for years to come. The adoption of revenue sharing, as a concept of government, would truly alter the structure of American Government-to the great advantage of the American citizen.
The Education Commission of the States, in a number of policy statements, has supported the concepts of grant consolidation as essential to a more flexible and logical system of Federal assistance for education. Secretary Richardson's statement before this Committee on S. 1669 aptly describes the ludicrous situation produced by the multiplicity of programs that exist under current laws, and is an excellent exposition of the need of consolidation. S. 1669 would streamline present processes by combing 33 existing formula grant programs concerned with secondary and elementary education into one program that would provide assistance in five broad areas of national concern; cut away many of the red tape requirements of the present programs; and give the States greater flexibility in planning and deciding on the application of Federal funds to their particular needs.
However, S. 1669, would not, in and of itself, provide for increased Federal assistance to States or school systems; it would not provide any general support funds for education; and it would not transfer full authority over the funds which it authorizes to the states. In short, despite its title it is a grant consolidation bill rather than a revenue sharing bill. This is not to deny the worth of grant consolidation, which ECS strongly supports, but rather to clarify what we are talking about.
A fundamental premise of this legislation is that the states should have the authority and opportunity to develop a comprehensive plan for the use of these funds. I would point out, however, that approximately 60 percent of the funds made available under S. 1669. including all funds for disadvantaged children and children living on Federal property, would be passed through to the local education agencies. Only the remainder would be subject to authority of State Government. These would be retained at the state level for the operation of state-wide programs and for distribution among local education agencies, according to relative needs for the types of assistance available, in accordance with a State Plan for each fiscal year developed consultation with a State Advisory Council which must be broadly representative of the education community in the state and the public.
This Committee and, indeed, everyone concerned with the future of education in the country must note a strong trend in increased state involvement and responsibility in the field of education. A number of states have taken steps administratively or legislatively toward state funding of education. This trend recognizes the limits of the real property tax as a means of financing local school systems and recognizes the right, as yet unfulfilled, of every child to equal educational opportunity without regard to place of residence. As seems to be ever the case, the judiciary has also taken a role in this process. Recent decisions of the Supreme Court of California and Minnesota are reflections of this trend.
As the trend toward full state funding of education continues, as we believe it will, these pass through provisions may become obsolete. I would urge this Committee to take account of this in framing the legislation before you, so as to permit maximum discretion on the part of state government to accommodate to the demand for, and to facilitate the development of, uniform educational opportunities throughout the nation. If a pass through provision of funds for disadvantaged children is considered necessary, there should be at least some mechanism for appropriate adjustment as states move in the direction of full state funding.
We have some reservations about the degree of administrative discretion in the basic formula for allocating funds to the States. Heavy weighting of children from low income families as a factor undoubtedly has validity in measuring fiscal capacity of the recipient state and the magnitude of its educational responsibility. However, S. 1669 does not define low income families, but rather vests in the Secretary authority to define the term in accordance with such criteria as he may prescribe. Since this legislation is premised on the elimination of arbitrary Federal controls and administration, and the establishment of a clearly defined program of assistance for the states, such executive latitude is out of place.
Also, the 10 percent reservation of discretionary funds under S. 1669 is not keeping with the philosophy of either revenue sharing or grant consolidation. If the states and local education agencies are in a better position to judge the needs and priorities than is the Department of Health, Education and Welfare, it is difficult to see the justification for a discretionary fund which would be in excess of $300 million in the first full year even at the current inadequate levels of funding. Further this does not take account of the funding anticipated for the proposed National Institute of Education.
Beyond these suggestions for modification of S. 1669, we urge this Committee to examine the basic premise of the Bill, in the context of the General Revenue Sharing proposal, and consider making this legislation the vehicle for implementing a much broader program than it now contains. Secretary Richardson and other officials of the Administration have testified that the legislation as drafted is "open ended” with respect to funding, but it is clear from the fiscal year 1971 budget that it is not regarded as a vehicle for major increases in Federal support for education. The funds which would flow to the states and local educational agencies under its authority would be those which currently are available under existing Federal programs, albeit with fewer strings.
Spokesmen for the Administration have repeatedly indicated that advocates of more substantial Federal support for education should look to general rerenue sharing for such support. I would submit that a number of considerations argue for amendment of S. 1669, to provide for Federal support for education which is broader in application and more substantial in amount than now contemplated.
First, General Revenue Sharing, which would be established at 1.3 percent of the Federal individual income tax base and produce approximately $5 billion in the first full year, would not entail as much support for education as might be supposed. Half of the money would be earmarked for local general purpose gorernments. Presumably, this would exclude school districts except where schools are operated as an integral part of a city or county government, or where such local governments voluntarily make payments to school districts. In theory, Federal revenues shared with municipalities and counties should reduce their dependence upon real property taxes, allowing school districts to raise their leries. However, this would be a most awkward procedure, running counter to the whole concept of revenue sharing, which is to reduce dependence upon real property taxes; and it would be inconsistent with the principle of educational equalization, by tending to force school districts to rely on widely disparate tax resources.
This means that most, if not all, of the money which might be contemplated for education out of general revenue sharing would come from the funds allocated to the state governments. While education would undoubtedly have the highest priority on these funds in the states, the President's General Revenge Sharing proposal contemplates that only half of the funds to be available under that program would be subject to the authority of the state governments.
Second, it is only fair to say that prospects for early initiation of General Revenue Sharing are no good. The proposal has been pending in the Congress for a year without visible movement toward passage, and the States and local educational agencies which bear more than 90 percent of the costs of elementary and secondary education need help now.
I would like to suggest to this Committee that it amend S. 1669 to provide for a further category of assistance-an authorization of unrestricted funds for education to be administered under state authority and funded for the first fiscal year at the rate of $2 billion. I suggest this figure as a result of some very simple arithmetic. Secretary Richardson has noted that approximately 40 percent of state and local expenditures are for elementary and secondary education and he has suggested that this pattern may reasonably be expected to continue with funds made available under General Revenue Sharing. $2 billion is 40 percent of the $5 billion expected to be available in the first full year of General Revenue Sharing. These funds would be authorized for allocation to the states by formula, possibly the formula proposed for General Revenue Sharing, and would be available for any educational purposes in accordance with the State Plan required by S. 1669. An automatic payment of Federal revenues, as contemplated in the President's General Revenue Sharing proposal, of course, would be highly desirable. But under the circumstances, it would be better to proceed along the authorization and appropriation route now, than to wait for the ultimate.
In further support of this proposition, I would emphasize that, while the categories of assistance included in S. 1669 are valid, they do not provide any support for the general improvement of education, including the rapidly increasing costs of teacher salaries. As Governor of a state which has a number of school districts with a high incidence of children from low income families. I know from first-hand experience that what these districts need is general operating support and that such support would be of primary benefit to disadvantaged children. It is certainly desirable to have special programs for disadvantaged children, but in some cases this approach puts the cart before the horse when the schools are severely handicapped by very limited budgets for general operations.
The inclusion of a state-administered general aid program in this legislation would lend strong support to the movement toward state equalization in education. It would also greatly facilitate the development of cooperative programs among districts and, indeed, further school district consolidation where warranted. It would slow or halt the upward spiral of local property taxes which clearly are inadequate and inequitable.
The categorical assistance envisioned in S. 1669 reflects an effort to put together a workable program which is acceptable to the many interests which have affected Federal education legislation in the past. ECS is in accord with its purposes and philosophy. We would urge, however, that you carry this philosophy one step further and truly transform this legislation from a grant consolidation bill to a special revenue sharing bill for education.
Mr. Chairman, revenue sharing is not a matter of the states asking the Federal Government to solve their problems. The states and local education agencies bear more than 90 percent of the costs of elementary and secondary education ; however, they are dependent upon very inelastic sources of revenues. Where support for education is based largely upon real property taxes which are slow to increase, the result is a perpetual fiscal crisis for states and local education agencies. State income taxes are limited substantially by the revenue taken by the Federal Government which increases one and a half percent (112%) for every one percent increase in personal income. This means that the Federal Government gets more tax revenue without the painful necessity of increases in the tax rate. It also means that the tax siphons off from the taxpayer an increasing percentage of his ability to pay. The demand for revenue results from this major, built-in, deficiency in the Federal tax structure.
As has been noted, 40 percent of state and local budgets go for elementary and secondary education. This will rise in the years ahead as state govern ment answers greater program and fiscal responsibilities for education.