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really don't deserve to receive impact aid because there is really no impact in those districts, namely the districts where the Federal property is located is not in the school district which receives impact aid funds, what I refer to as “B-out's." I don't see that objection here, although I do see an objection that their payments far exceed the cost of local government in educating Federal pupils.

I would think you could also say that there are costs of educating Federal pupils borne by local residents in some instances which far exceed what they receive in impact aid moneys. It is a two-headed coin.

Why do you not have something in your objections about B-out's ? Mr. BELL. Mr. Alford, do you want to respond to that?

Mr. ALFORD. Mr. Meeds, we do have. The B-out state would be excluded.

Mr. MEEDS. I see.

Mr. ALFORD. The comment would be made that ours has the advantage of simplicity. It does not have a number of the refinements ...

Mr. MEEDS. I will agree with that.

Mr. ALFORD. It does not have a number of refinements that we did have in earlier proposals we made, relating to this type of thing. So perhaps there are some needed refinements that could be given. But that is not included at the present time.

Mr. MEEDS. I must say in concluding that of all the reasons you advance some of them I think are valid. But the major ones, the B-out's, I don't see here. But I would hope that would be your rationale with respect to that concept.

Thank you very much.
Thank you, Mr. Chairman.
Mr. Ford. Thank you, Mr. Meeds.

Mr. Commissioner. I would just like to share with you a concern. I don't believe there is anybody here in the city who is more sensitive to the need for maintaining our credibility at the Federal level with local school officials and school boards. Probably the most corrosive thing that occurs is sudden shifts and changes, primarily because of late funding, which means less money than they were going to anticipate, but also with formula changes in programs, dropped categorical programs, shifts in consolidation, things like this.

The greatest complaint is they suggest that we sandbag.

I really don't feel that we are moving toward the ultimate support of elementary and secondary education. But most of this committee agrees that the Federal Government should be assuming the responsibility, and we aren't going to do that without the support of the educational community.

Mr. BELL. Right. Mr. Ford. It just seems to me that we are courting disaster here. Here we recognize, sitting here today, that it is not possible for you to have final regulations and even run them through the computer to tell us what the impact is going to be of these changes before the time they would actually be receiving the money.

Then we would find it very difficult to restore the confidence.

I am not trving to be unfair. But would vou consider that reasonable men ought to be contemplating the possibility of legislation to delay

these formula changes until we can look at the work to determine what they are going to do?

Mr. BELL. This may very well be needed. I feel that is true. I recognize that we need to accelerate our efforts in getting data together and moving forward as rapidly as we can with the regulations.

I feel that, as we said in our testimony, we have an enormously complex bill to administer. Perhaps we can come to you with some recommendations that may simplify it from where it is.

Other than that, by delay, I guess, we can possibly handle that without delay if technical amendments move rapidly. Since I am new to the scene you would know about that better than I would.

Mr. Quis. Would the gentleman yield?
Mr. FORD. Yes.

Mr. QUIE. I would say, Commissioner, that I doubt there is going to be any legislation that is going to save the day for you because everybody has ideas they want to hang on to it when an education bill comes through.

Talking to the other body, they are talking about doing that sometime toward the middle of next year. That means you are going to be toward the end of fiscal year 1976 before you get any legislation.

So I think you had better make up your mind to send the regulations up to Congress and see what reactions they have.

Mr. BELL. We have never proceeded on any other basis.

But I would say again that I think this legislation can be improved upon.

I think what you are saying, Mr. Quie, is, let us look further down the road and the timetable for implementing what we have.

Mr. QUIE. That is the way it looks to me from the conversation I have had around here.

Mr. Ford. I think I was right in pushing the feeling of urgency. We do react when you get enough people who know there is an emergency around here.

So I would hope that your people would keep us advised of how close we are coming to an emergency and working together with the other people.

Mr. BELL. Right.

Mr. Ford. I wouldn't want to see it end up as an amendment to an appropriations bill. Mr. BELL. Right. Mr. Ford. Thank you very much, Commissioner. The Committee is very appreciative of your efforts here.

I would just like to add that I have a whole group of questions that I wasn't smart enough to put together. But my staff did. I want to submit them by letter. Some of them call for rather detailed answers.

Mr. BELL. Very good.
Mr. Ford. Thank you very much to you and to all of you.

Next will be Mr. Lantson C. Eldred, national president of the Impacted School Districts of the United States, accompanied by Dr. Fish of the San Diego Unified School District.

Without objection the full statement will be inserted in the record at this time.

You may proceed to discuss it, comment on it, or supplement it as you see fit.

[Prepared statement of Lantson C. Eldred follows:]

PREPARED STATEMENT OF LANTSON C. ELDRED, ASSOCIATE SUPERINTENDENT OF

SCHOOL OF NATIONAL CITY, CALIF., AND NATIONAL PRESIDENT OF THE IMPACTED SCHOOL DISTRICTS OF THE UNITED STATES

Mr. Chairman and Members of the Committee, I wish to thank you for the opportunity to appear before you today to offer comments on effects of PL 93-380 on the Impact Aid Program and other related proposals.

Joining with me are Dr. Fish from San Diego, California and Dr. Lehne from the Chicago Public Schools, who will address themselves to specific problems related to PL 93-380.

Perhaps, the most immediate concern facing local school districts is the relationship between the current economic pressures on Federal spending and the New Tier levels of Authorization and Appropriation for Impact Aid under PL 93-380. Attached at the back of this statement are the first recaps on estimated' effects on local school districts comparing the Old Law and the Vew Law at Tier II of funding without the application of the so-called “hold harmless clause." This recap is shown on both F. Y. 74 and F. Y. 75 cost and count information. It should be noted that information from school districts was requested using F. Y. 75 base date and then changes computed to arrive at F. Y. 74 figures. We are aware that a few of the F. Y. 75 figures may have been F. Y. 74 figures furnished in haste by local school districts. The effects in this recap will prore negligible and such misconsistencies will be removed from all following recaps.

A brief look at the recap will show percentage losses from current year levels of payment which would run to possible heights of 50%, such as Jackson, Alabama. A further look would show that losses would fall most often in the 25-35% range while, at least by this recap, districts that show any gains are somewhat hard to find.

Local school districts are already faced with lack of local tax funds due to failure of people to be able to meet their tax bills. Further hesitancy by State Legislatures to allocate funds to keep up with inflation has added to this financial bind. Now to the above problems must be added the possible loss of those Federal funds that are justly due local school districts because of activities of the Federal government.

Let me try an example using Onslow County, North Carolina and an imaginary pupil.

a. Becky Anderson, daughter of Lt. Col. Charles Anderson, attends the base schools at Camp Lejeune. The Federal government pays up to $962.36 per year for her education.

b. For some good reason, perhaps to participate in a school program not provided on the base schools, Becky transfers to an Onslow County School while continuing to reside on the base. Being in “A” category, the Federal government pays $130.15 per year for her education.

C. Then suddenly, Col. Anderson receives orders to go to Southeast Asia. This requires his family to move off the base into Onslow County where Becky will continue attending the same school. Now for the very same Becky Anderson the Federal government will pay 70% of $215.07, or $131.00 per year on her education. For this year, that is, Nothing at all next year. If her father happened to decide to retire rather than ship out, nothing would be paid this year.

It seems unavoidable that the quality of Becky's education will diminish if the schools lose the resources on which they have depended and still depend.

It seems only reasonable that our government consider the bargain it is getting under PL 874, especially as regards the military connected child. If a comparison is made between what it pars to base schools and the formula amount under the Impact program the difference is considerable_$962.36 on the one hand and $151.00 on the other. If these children now attending our schools were to be picked up and transported to base schools and buildings, staff, materials and equipment were provided for them the extra cost would indeed be fantastic.

Now on the top of the above problems the Onslow County schools could lose under PL 93-380 17% from the above payments should the “hold harmless clauses" not be funded.

The possible results of decreased Impact Aid on local schools range from reduction in programs to refusal to educate the Federal child in some states to drastic increases in local tax rates to keep the current levels of education, With people already in financial trouble due to economic conditions, I fear that any effort to raise local taxes to replace lost Federal funds would meet with great hostility both with the local Board of Education and Federal districts by PL 93-380.

The concepts of Section 2, PL 874 predates the law itself. It is the only section of the present law that was carried over from the Lanham Act whereby entitlements were calculated upon a loss of assessed valuation and a resulting continuing financial need.

Section 2 of PL 874 affects approximately 170 schools districts in 25 states of the union. All of these school districts must have lost at least 10% of their assessed valuation due to Federal acquisition of real property within the school district since 1938. The real estate loss to many school districts is well over 50%; some as high as 80%.

Approximately 33143% of the school districts in the nation that receive entitlements under Section 2 of PL 874 do not receive money from any other section of the law. They are totally dependent upon this one part for a substantial portion of their budgets.

While Section 2 of PL 874 has been one of the least controversial sections of the law and has been consistently paid out at 100% of entitlement, PL 93–380 cleals with it more harshly than any other remaining section of the law as slown below:

Payment Prior to PL 93-980, 100% of entitlement.
Payment Under PL 93–380:

Percent
Paragraph I Funding-

23 Paragraph II Funding-

3.

Total through Paragraph II.---

60 As indicated above, Section 2 has a 40% penalty through Tier II funding ; a penalty far in excess of any of the other sections.

In addition, Section 2 is not covered by any of the "hold harmless clauses" of PL 93-380. Therefore, there is no way that Section 2 could participate in any of the safeguards of PL 93–380.

Since Section 2 of PL 874 is distributed on a "need" basis, it should be returned the 100% funding level at paragraph 1. The amount of money required to fund this entire section of the law at a 100% level is not great. It is estimated by the Department of Health, Education and Welfare for fiscal year 1974 at 9 million; 1975–10 million; and 1976–11 million dollars.

It is further urged that Section 2 should be included in the intent of the “hold harmless clauses" related to reductions in entitlements caused by changes in the law.

One of the effects of PL 93–380 was the elimination of any post office facilities from qualification under Impact Aid. We would concur that those facilities that are leased to the Federal government by private concerns are of questionable qualification. We do feel, however, that those facilities such as large collection and distribution centers that are Federal property are as much of a burden on local school districts as any military facility and should be reinstated in the Impact Aid Law.

Possible difficulties may arise as a result of confusion in administering the four so-called “hold harmless clauses" of PL 93–380. It appears that two of the clauses may be included in an initial appropriation bill and the other two in possible supplemental appropriation bills. Should the opportunity arise, we would hope this Committee would aid in joining these clauses together and making them true "hold harmless" in nature.

The Department of Defense has employees who may wear a uniform or who may not. PL 93–380 makes a distinction in the rate of entitlement between the children of these two types of employees which is not necessarily shared by local school districts. Whether or not the father wears a uniform makes no difference in the Impact on a school district as a rule. We would hope the Committee might take another look at this distinction and offer the following information from the Defense Department to show how trends in types of employees may increase the burden on local school districts.

FY 1966 through FY 1968.—114,000 Military positions were converted to 92,000 civilian positions.

FY 1973 through FY 1975.-48,000 Military positions were converted to 39,000 civilian positions.

A total of 162,000 military positions have or will be converted to 121,000 civilian positions. In converting from military to cvilian positions there is a difference in the figures because civilian personnel do not require extra support personnel as the military does.

The level of funding required to fund through Tier II with the whold harmless" provisions added appears to be significant, but not necessarily known at this time. Recent estimates released by U.S.O.E. can give the mathematician cause to doubt if the true figure is known. I can, however, by C'.S.O.E. figures arrive at estimates that range from $746,472,000 to as high as $884,522,000 for funding through Tier II with the "hold harmless clauses.” It should be noted that even at that level some districts still lose from current entitlement as much as 10% to 20%.

It does appear that costs through Tier II with "hold harmless" provisions will fall well within the 800 million dollar range and fast approaching 900 million dollars. Such figures in these hard times cause us to express concern, not only for education, but also the general welfare. At a time we are concerned with the retraining of so many unemployed, any proposal that detracts from the basic eudcational needs of our people must be viewed with some degree of alarm.

Although not part of PL 93–380, the Administration's new proposals for F. Y. 76 on Impact Aid are worthy of mention. I am informed that the new legislation proposes a new formula which reflects more accurately the Federal responsibility for Impact Aid. Funding priorities in the existing law in terms of "A and B" children would remain essentially the same; however, school districts would be required to absorb a portion of the costs of educating eligible children whether they are "A" or "B" children.

The scheme goes further to require a reduction from each school district's entitlement of an amount equal to 5% of its total operating budget.

If it was really the Administration's intent to "more accurately reflect the Federal responsibility" there would be no two-year old local contribution rate used to offset current costs and further, there would be a budget proposal that would include full funding for all sections of Impact Aid.

Should the Administration's proposal for F. Y. 76 become fact than I fear for the ability of many school districts to remain operable.

Let me offer as an example what will occur in the little district of Gwinn Area Community Schools in Michigan with a total enrollment of 3,250, of which 2,02.) are “A” and “B” Impact children.

Tax rate one year ago=10 mils.
Tax rate now=19 mils.
Tax rate after new Administration proposal=31 mils.

Tax rate at Tier I of funding=63 mils. This example can well be applied to all 4.600 some-oda Impact Aid school districts and as far as 3,500 of these districts are concerned, they no longer will be concerned with Impact Aid.

Gentlemen. I trust that some need for either adequate levels of funding or amendment to current law have been shown. I also trust, Mr. Chairman, that I shall be forgiven if I appeal to you by pointing out that school districts in your own state of Kentucky are particularly hard-hit under PL 93-380, with losses woll up in the 30% to 40% range should Tier II and "hold harmless clauses" not he funded for F. Y. 76. However, even at that level losses will be 1064, or 20% from this year's level of funding.

Thank you, Mr. Chairman, for your courtesy in permitting me to present this testimony and should I be of further assistance to the Committee, I should be honored. Thank you.

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