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Did you want to say something?

Mr. GIFFORD. No. I just wanted to say that even if the impact aid amendments will not result in significant improvements they would give us $7 million. You realize how close that is to educating just the children in the housing units? That will be well in excess of $100 million.

Actually, with the million kids we have 72 million on top of a cost base something in excess of $100 million, you can see that we are talking about less than 7 percent reimbursement for these kids. This obviously represents only a first step in terms of meeting the needs of the cities that are faced with the responsibility of educating children.

Mr. FORD. In the bargaining process the use of AFDC got traded off for the great boom of public housing.

I put a statement into the record that I thought your Senator had been taught by my Republican colleagues how to make horse and rabbit stew by their definition, when you put one horse and one rabbit in, and we know who got the horse and who got the rabbit.

The big cities came out bad on the tradeoff. I computed that it cost Detroit about $13 million a year drop. Your drop didn't reflect that much at first because proportionately New York City has more public housing than other large cities.

But when you take what is proposed in the budget now, they got what they could get from one side and took what they had already from the other side.

The proposed legislation of the administration cuts you off completely. The changes that were made in the bill last year would add some hope.

I think there may be impetus to do a little better job in earmarking some appropriations for public housing than last year.

For example, I read an article a couple of days ago in the Detroit Free Press, showing a map of the city of Detroit. The center city of the city of Detroit in districts represented by Charlie Diggs and John Conyers, there is a code here. They have categories, 0 to 9 percent unemployment. There isn't any in Detroit; 10 to 18, pretty good out around the edges of the city; 19 to 27 percent, now you are really getting serious; 28 to 35, 36 to 44, 45 to 53. And would you believe this? In the areas that predictably have the location of the public housing the unemployment rate as of 2 weeks ago was now 54 to 62 percent.

The overall unemployment rate for Detroit is 21 percent. I don't know anybody that has got nerve enough to tell those people in the city of Detroit to cut back on any kind of money that goes there because we are lucky if we can keep the lid on that city. The frustration is building up there. It is worse than anything anyone has


At the end of this month the No. 1 employer, incidentally, for the center part of the city was the Chrysler Corp.

These people have not only been laid off but they have been told that Chrysler probably will not ever reopen that factory for a whole variety of reasons.

That work force tends to be predominantly black. It tends to be concentrated in the near east side.

The funds for those people run out about the end of this month. I detect around here the fact that some people are beginning to understand that this is happening to us.

So I am a little more optimistic than I have been in the past that we will get support for things like that.

Mrs. Chisholm fights very hard. What she fights very hard for gets labeled a "big-city giveaway."

But when you compare the scanty one-hundredth of 1 percent of the giveaway and see what we put into it, it doesn't work out well.

Mr. GIFFORD. We have had similar situations in New York. In fact as a result of the escalating fuel costs and utility costs in New York City the city housing authority has been forced in the past 3 years to eat some $120 million in excess operating costs because of the presence of high unemployment.

In the housing projects I think you will find unemployment rates certainly comparable with those in Detroit.

The average unemployment as you know for black teenagers in New York is now in excess of 40 percent.

I would venture to guess that the average unemployment rate among heads of households living in public housing projects is probably in excess of 25 percent.

The city is terribly reluctant to pass on increases to people who just do not know where their next paycheck is coming from.

So you are talking about hidden costs in servicing people living in public housing projects and talking about impact aid, there again is a good example of how the city which is forced to build for poor people because the suburban areas will not and the smaller communities will not. It is just a classical case of how the cities continue to be hurt by legislation that is unmindful of the very, very special demands made upon people that need public service in large cities.

So all I can do is echo the observations made by people in Detroit and say it is also happening in New York and in similar and also unsimilar wavs.

Mr. FORD. Thank you, Dr. Gifford.

Madam Chairwoman. I would like to insert the text of this article by John Polich in the record in support of the general proposition that this is no time to be cutting back on any kinds of funds going into the central city.

Mrs. CHISHOLM. We will enter it.

[Information referred to follows:1

[From the Free Press, Feb. 23, 1975]


(By John E. Polich)

The number of Detroiters receiving unemployment compensation has tripled since Nov. 1 as joblessness in the city has grown to include one of every five workers, according to the latest state and Wayne County estimates.

Unemployment in Detroit reached an estimated 21 percent of the work force this month, compared to 13 percent in 1974. For the six-county metropolitan area, the unemployment rate is now listed at 14.6 percent.

A Free Pres analysis of the new figures, projecting from where unemployment was concentrated during the 1970 census, indicates that five or six of every 10 workers may be jobless in certain central neighborhoods.

In some outlying middle class neighborhoods, the unemployment rate is estimated at 18 percent.

State aid to dependent children has been largely unaffected by the downturn in the economy. But general assistance (GA) funds that buoy men and women on the lowest rungs of the poverty ladder has increased 39 percent since January 1974.

The figures assure Detroit will keep its title as unemployment capital of the nation.

"People are just now noticing the Detroit unemployment rate because it has become topical," said Ernie Zachary, the city's senior economist. "But Detroit has had the highest unemployment rate of any major central city over the past five years. And nobody noticed."

Zachary cited 1973 as an example. About nine percent of the work force in Detroit was unemployed then, compared to 4.9 percent in Chicago, 6.4 in Los Angeles, six in New York and 7.1 in Cleveland, Zachary said.

"And that was 1973-a great year for the auto industry." He said that was because automakers are substituting capital outlays for labor, and using overtime instead of more workers.

"Now the whole thing's just gone wild," Zachary said.

Blacks are hardest hit by booming unemployment, with most experts estimating that the rate for the blacks in the metro area is twice that for whites. The metro area includes Lapeer, Livingston, Macomb, Oakland, St. Clair and Wayne counties.

Judging from what were the neighborhoods of greatest unemployment when measured by the 1970 census, Zachary believes that four or five workers out of every 10 may be jobless in certain areas.

He cited parts of southwest Detroit, the district just north of downtown and areas along Mack on the east side.

Many unemployed persons have not yet applied for state benefits because they are temporarily receiving supplementary unemployment benefit payments from the auto companies. Others qualify for food stamps, but not yet for unemployment benefits.

The number of Wayne County households certified to receive food stamps jumped 20 percent between November and January, to 73.310.

Poverty is widespread in a broad strip saddling Woodward from Grand Blvd. to the city line on the north; south of Warren between the Chrysler Freeway and Conner Lane, and in a near west side area between Tireman and Puritan from Thompson to Meyers.

Researcher John Sullivan of the Detroit office of the Michigan Department of Social Services looked over the latest statistics and said:

"We've added about 80 new workers in the past month just to help handle food stamps. If this unemployment trend continues, we're going to have quite a problem without some kind of emergency action."

Mrs. CHISHOLM. I would just like to say in conclusion, and I think Congressman Ford will agree with me, that in view of the fact that the economic squeeze is being felt very deeply by thousands of families that live in public housing projects across this country, thus placing them in a position of not being able to make a contribution to the tax rolls, supplemented by the fact that they are living on property that is nontaxable, it would seem to me these would be enough to make us on this committee reconsider the entire question of impact. aid insofar as the economy of this country now stands.

As Congressman Ford has said, I think that we are beginning to understand and see a few things that perhaps were not so visible even just last year.

I just want to thank you. Dr. Gifford, and your aides for coming here today to testify before the committee.

Our remarks are on record as an attempt to deliberate on something that is relevant and meaningful in light of what is happening in our Nation today.

We will have in the record some of the major concerns of the big cities.

Thank you very much for appearing here today.


Dr. GIFFORD. Thank you.

Mrs. CHISHOLM. The committee now stands adjourned.

[Whereupon, at 1:13 p.m., the committee adjourned, to reconvene at the call of the Chair.]

[Information submitted for inclusion in the record follows:]



Chairman, Committee on Education and Labor,
House of Representatives, Washington, D.C.

Denver, Colo., March 6, 1975.

DEAR MR. CHAIRMAN: It is my understanding that the Committee has held at least one hearing on the status and implementation of the amendments to Public Law 874 which were included in Public Law 93-380. One of these, which relaxes the prohibition on states including impact aid in school finance equalization programs, is of considerable importance to the efforts under way in many states to foster school finance reform. Senator Harder of Kansas submitted a statement on this issue with which we concur. Because ECS is working with a number of states to foster reform efforts, I am taking the liberty of writing to you about this matter.

The Office of Education is still in the process of developing regulations to implement Section 5(d)(3) of P.L. 874. It has issued a "concept paper" and has held a number of meetings with representatives of state educational agencies and others concerning this matter. In the process. it appears that the intent of the Congress in amending this section of the law is being lost. When this matter was considered by your Committee and by the conferees, it was our understanding that your intent was to allow states to consider impact aid payments to LEAs in the context of equalization programs which reflect the relative need and resources of the local agency, in other words, to permit states to eliminate the disequalizing effects of 874 funds. If a state finance program through one means or another allocates state funds to districts in a manner designed to equalize the ability of those districts to provide educational services, impact aid must be included as a local resource, or the impacted districts end up with a windfall at the expense of the other taxpayers of the state.

In this context, it was our understanding at the time that P. L. 380 was passed that the so-called "Meeds" language which was added by the conferees was intended to define equalization, as well as to prescribe a means for computing the permissible inclusion of impact aid in state systems.

In its concept paper and discussion with state officials, the Office of Education has taken a different view of Congressional intent. OE's posture is that the Congress intended to give the Commissioner of Education complete authority to define equalization and that only such state programs as conform to his definition will be permitted to consider any impact aid, and then only to the degree allowed by the Meeds formula. The legislative history cited to support this view is the language in the House Committee Report, which indicates the Committee's assumption that this provision would be of limited applicatio The introduction of this two-step approach to implementation of the law makes the whole thing much more complicated than is necessary. Our information indicates that only four states, Kansas, New Mexico, North Dakota and Maine. presently make provision under state law for consideration of impact aid payments in the calculation of state aid. Accordingly, under any interpretation of the law, only four states would presently be affected. Section 5(d) (3) is only permissive and will have effect in any other state only after action that state's legislature. However, it is important that there be a clear statement of Federal policy and law in order that sate legislators may deal with these issues in a rational manner rather than trying to guess what position the Office of Education is going to take.

I believe that an appraisal of this matter will indicate that the guidelines now being contemplated by the Office of Education will result in confusion and inequity. Currently under consideration is the imposition of a standard which allows a maximum variation of 20% in per pupil expenditures between the district of the fifth percentile and that of the 95th percentile. If a state plan met this test, the Meeds formula would then be applied district-by-district to determine the amount of impact aid which could be considered.

Certainly, the issue should be judged on a district basis because impact aid goes to districts rather than states and this is the only rational way the issue can be considered. However, the use of the 20% standard could mean that OE would allow impact aid payments to be considered in a state with a 20% variation and not at all in a state with a 21% variation. This does not make much sense. A much more logical approach is to do what the law says and allow states to count impact aid in equalization formulas to the extent to which they equalize, i.e., apply the Meeds formula. By this course the application of the law would be governed by the result, i.e., the degree of equalization thus achieved. I am writing to you with the thought that the Committee will be involved in discussions of this matter. We would be happy to arrange for a group of state legislators and school finance people to meet with you and other members of the Committee to air these issues, if you think it would be helpful.

There are two very ironic features of OE's position. The first is that the interpretation being given to the law by the Office of Education is ostensibly designed to "protect" impacted districts at the same time it is proposed to drastically reduce the funding of the program. The second irony is that the way Section 5 of P.L. 874 is structured the penalty to be imposed is a state program includes impact aid in violation of Federal restrictions is to withhold impact aid from the district to which it is being charged. Thus, the Federal Government's penalty runs against the district it is trying to protect.

ECS has no desire to see impacted districts penalized or mistreated; indeed, we believe that the impact aid program serves a valid and useful function. Our only concern is that states have the latitude to mesh impact aid with state aid in creating equitable financial systems. If a meeting of knowledgeable state people with the Committee would be helpful, let me know

Sincerely yours,


Executive Director.


Washington, D.C., February 27, 1975.

Chairman, House Education and Labor Committee,
U.S. House of Representatives,
Washington, D.C.

DEAR MR. CHAIRMAN: Unfortunately, Dr. Arthur Lehne of the Chicago Public Schools can not appear before the Subcommittee on Elementary, Secondary, and Vocational Education this morning because he had to represent his school system before the Illinois State Legislature. However, I did talk with him on Tuesday and I would like to share with you some of his observations and concerns as well as those of his colleagues about the impact aid program in FY 1976, especially regarding public housing funds.


The Administration's impact aid budget proposal is callous, to say the least, to the fiscal needs of the large city schools. To absorb 5% of their entitlements under impact aid will mean a loss of at least 58 million dollars of revenuesjust considering federally related and public housing children. This is unconscionable considering that districts such as Los Angeles, New York City, and Atlanta, are faced with staggering projected budget deficits for next year. We have attached a table of the impact of the "absorptions" to this letter. This proposal needs to be strongly rejected.


Because of the concern of the Congress about the needs of children living in impoverished areas, the public housing funds under impact should be directed at the specific needs of neighborhood schools serving low-rent public housing students. This is a categorical grant program to meet special needs. These funds will not go into the general budget. Therefore, category C public housing funds should be and must be exempted from the impact aid equalization provisions.

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