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OVERSIGHT HEARINGS ON THE IMPACT AID LAWS

AND TESTIMONY ON H.R. 5181

WEDNESDAY, APRIL 9, 1975

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON ELEMENTARY, SECONDARY,

AND VOCATIONAL EDUCATION OF THE
COMMITTEE ON EDUCATION AND LABOR,

Washington, D.C. The subcommittee met at 9:43 a.m., pursuant to call, in room 2175, Rayburn House Oflice Building, Hon. Carl D. Perkins (chairman of the subcommittee) presiding.

Members present: Representatives Perkins, Ford, Meeds, Lehman, Blouin, Risenhoover, Zeferetti, Miller, Mottl and Goodling.

Staff members present : John F. Jennings, counsel; Thomas R. Jolly, counsel; and Charles W. Radcliffe, minority counsel.

Chairman PERKINS. The committee will come to order.
A quorum is present.

The Subcommittee on Elementary, Secondary, and Vocational Education is conducting a hearing today on H.R. 5181 which would delay until October 1, 1976, the effective date for the implementation of various amendments to the impact aid program, Public Law 874, adopted by Congress last summer in the education amendments of 1974, Public Law 93-380.

Those amendments in Public Law 93-380 would have caused a suhstantial restructuring of the impact aid program. Their original effective date however was delayed until July 1, 1975 so that the Department of Health, Education, and Welfare would have sufficient time to analyze the amendments and to produce data by school district showing Congress the results of those amendments and how they would affect the individual impacted school districts throughout the country.

I introduced H.R. 5181 because the administration has failed to carry out its responsibilities in collecting that data and in implementing those amendments.

We learned from our oversight hearing on impact aid conducted on February 27 that the Commissioner of Education did not feel his office could fully implement those programs by July 1 this year.

Then we felt that we should get busy and delay the effective date of these amendments.

That conclusion is understandable since the Office of Education did not conduct any special surveys of school districts up until that date in order to determine the effects of those amendments.

Nor did the Office of Education assign any additional personnel to the impact aid office to assist in that task.

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Nor had the administration submitted final regulations to the Congress to implement those amendments.

I drafted and introduced H.R. 5181 because of those failings of the Office of Education.

I am pleased to say that as a result of H.R. 5181 being introduced the Office of Education has finally produced some statistics and has sent final regulations on impact aid to the Congress.

But both of these things were done on Monday of this week which is less than 85 days until the new amendments are to go into effect.

We are here today to see what various witnesses have to say about these actions and about H.R. 5181.

Text of HI.R. 5181 follows:]

(H.R. 5181, 94th Cong., 1st sess.) A BILL To amend the Education Amendments of 1974 to delay the effective date of

certain amendments to the Act of September 30, 1950 (Public Law 874, Eighty-first Congress), and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) section 3(b) of the Act of September 30, 1950 (Public Law 874, Eighty-first Congress) is amended by striking out “July 1, 1975” and inserting "October 1, 1976".

(b) Section 304(c)(3) of the Education Amendments of 1974 is amended to read as follows:

“(3) The amendments made by this subsection shall take effect with respect to the fiscal year ending June 30, 1975, and the fiscal year ending June 30, 1976, and with respect to the period beginning July 1, 1976, and ending September 30, 1976.".

SEC. 2. (a) The paragraph which immediately follows the amendments made by section 305(a) (3) of the Education Amendments of 1974 is amended by striking out “The amendments made by paragraphs (1) and (2) of subsection (a) shall be effective on and with respect to appropriations for fiscal years beginning on and after July 1, 1975," and inserting in lieu thereof “The amendments made by pa ragraphs (1) and (2) of subsection (a) shall take effect on and with respect to appropriations for fiscal years beginning on and after October 1, 1976,".

(b) The first sentence of subparagraph (B) of the paragraph (2) which immediately follows the paragraph immediately following the amendments made by section 305 (a) (3) of the Education Amendments of 1974 is amended by striking out "July 1, 1978" and inserting in lieu thereof “October 1, 1978”.

SEC. 3. (a) The amendment made by subsection (b) shall take effect on the date of enactment of this Act with respect to appropriations for fiscal years ending prior to October 1, 1976.

(b) Section 5(c) of the Act of September 30, 1950 (Public Law 874, Eightyfirst Congress) is amended to read as follows:

"(c) (1) If the sums appropriated for any fiscal year for making payments under this title are not sufficient to pay in full the total amounts which the Commissioner estimates all local educational agencies will be entitled to receive under this title for such year, the Commissioner shall

“(A) (i) determine the part of the entitlement of each such local educational agency which is attributable to determinations under subsections (a) and (b) of section 3 of the number of children who reside on, or resided with a parent employed on, property which is part of a low-rent housing project assisted under the United States Housing Act of 1937, section 516 of the Hlousing Act of 1949, or part B of title III of the Economic Opportunity Act of 1964, and (ii) pay to each such local educational agency an amount which bears the same ratio to $63,000,000 of such sums as the part of the entitlement of that local educational agency determined under subclause (i) bears to the total amount of the parts of the entitlements of all the local educational agencies determined under subclause (i);

“(B) in the case where such sums are in excess of $63,000,000, shall allocate such excess, other than so much of such excess as he estimates may be required for carrying out the provisions of section 6, among sections 2, 3, and 4(a) in the proportion that the amount he estimates to be required under each such section bears to the total estimated to be required under all such sections, except that the Commissioner shall not take into consideration any part of any entitlement determined under subclause (i) of clause (A). The amount so allocated to any such section shall be available for payment of a percentage of the amount to which each local educational agency is entitled under such section. Such percentage shall be equal to the percentage which the amount allocated to a section under this clause is of the amount to which all such agencies are entitled under such section. For the purposes of this clause, in determining the amount to which each local educational agency is entitled under section 3, the Commissioner shall include any increases under paragraph (4) of section (c) thereof, and shall exclude any part of any entitlement determined under subclause (i) of clause (A); and

(C) in the case where the sums available for allocation under clause (B) for any fiscal year exceed the amount necessary to fully satisfy entitlements for which allocations will be made under such clause, pay to each local educational agency an amount which bears the same ratio to such excess as the part of the entitlement of that agency determined under subclause (i) of clause (A) which remains after the payments under subclause (ii) of such clause bears to the total amount of the parts of the entitlements of all the local educational agencies determined under such sublcause (i) which

remain after the payments under such subclause (ii). “(2) The Commission shall determine that part of the entitlement of each local educational agency for each fiscal year which is attributable to determinations under subsections (a) and (b) of section 3 of the number of children who reside on, or resided with a parent employed on, property which is a part of a low-rent housing project assisted under the United States Housing Act of 1937, Section 516 of the Housing Act of 1949, or part B of title III of the Economic Opportunity Act of 1964, and the amount of the payment to each such agency which is so determined shall be used for special programs and projects designed to meet the special educational needs of educationally deprived children from low-income families.

SEC. 4. (a) The amendment made by subsection (b) shall take effect on the date of the enactment of this Act with respect to appropriations for fiscal years ending prior to October 1, 1976.

(b) Section 3(c) of the Act of September 30, 1950 (Public Law 874, Eightyfirst Congress) is amended by adding at the end thereof the following new paragraph :

“(6) (A) The amount of the entitlement of any local educational agency under this section for any fiscal year with respect to handicapped children and children with specific learning disabilities for whom a determination is made under subsection (a) (2) or (b) (3) and for whom such local educational agency is providing a program designed to meet the special educational and related needs of such children shall be the amount determined under paragraph (1) with respect to such children for such fiscal year multiplied by 150 per centum.

"(B) For the purposes of subparagraph (A), programs designed to meet the special educational and related needs of such children shall be consistent with criteria established under subparagraph (C).

(C) The Commissioner shall by regulation establish criteria for assuring that programs (including preschool programs) provided by local educational agencies for children with respect to whom this subparagraph applies are of sufficient size, scope, and quality (taking into consideration the special educational needs of such children) as to give reasonable promise of substantial progress toward meeting those needs, and in the implementation of such regulations the Commissioner shall consult with persons in charge of special education programs for handicapped children in the educational agency of the State in which such local educational agency is located.

“(D) For the purpose of this subparagraph the term 'handicapped children' has the same meaning as specified in section 602 (1) of the Education of the Handicapped Act and the term 'children with specific learning disabilities' has the same meaning as specified in section 602 (15) of such Act."

SEC. 5. The paragraph which immediately follows the amendments made by section 305(a) (3) of the Education Amendments of 1974 is amended by inserting "(bi (1)"immediately before the first sentence thereof.

Chairman PERKINS. Our first witnesses will be representatives of the impact area schools.

I want to call around at this time Dr. H. David Fish, special projects director, San Diego City schools, accompanied by Mr. Thomas Bobo, director of Federal programs, Montgomery, Ala., public schools, Mr. Sam Husk, Council of the Great Cities Schools and Mr. Frederick J. Weintraub, Council for Exceptional Children.

Come around to the table, all of you.
You start out, Dr. Fish.
[Prepared statement of H. David Fish follows:]

PREPARED STATEMENT OF DR. H. DAVID FISH, PRESIDENT-ELECT, AND DIRECTOR OF

SPECIAL PROJECTS, SAN DIEGO UNIFIED SCHOOL DISTRICT On behalf of Impact Area Schools, I want to thank you for the opportunity to appear before you today to offer comments on H.R. 5181 and its relationship to Public Law 93–380 and the Impact Aid Program.

Efforts over the years to reform the Impact Aid Program were rewarded only last year with the passage of Public Law 93–380, the Education Amendments of 1974. The rewording, however, appears to be a mixed and unknown blessing because the Amendments have brought confusion to school administrators, misinformation and unreliable data to both this Committee and the U.S. Office of Education, and concern to many on what the actual effect will be on local school districts.

The program has been extended to two major student classifications, those living in low rent housing and handicapped students from military families participating in approved programs. Neither of these groups has been completely counted before. School districts can conduct surveys next year which will supply information as accurate as the current count of federally connected students; but, it must be remembered that many districts have never reported low rent housing students and that many more districts with low rent housing have never participated in the Impact Aid Program. Guidelines have not yet been published on these categorical programs and other parts of the program as modified by P.L. 93–380, so school districts do not know how the funds can be used. Adding these important programs in FY 1976 is as much change as the program can manage at the state and federal levels.

The reform also removed or changed many minor but extremely important sections of Impact Aid. On a national scale the changes seem insignificant; however, to school districts affected the result can be financially disastrous. As an example, Section 2, a special program for districts that lost a substantial portion of their tax base to federal installations, would cost only an estimated $11 million in FY 1976; however, for the districts involved the loss of funds for next year is a major immediate problem. Also while the provisions for school districts experiencing a sudden increase in federal activity may apply only in a few limited cases, the people in those communities may really regret the disappearance of this very minor section from the program. Finally, there is some question whether early or emergency payments can be made to those heavily impacted districts which need Impact Aid funds to begin the school year. These real difficulties taken together show dislocations that may be just the most obvious problems. Other serious inequities may become apparent only when the new law goes into operation, because the data have not been developed prior to implementation.

The current acute financial condition of school districts allows no room for experimentation. Putting the law into effect and then waiting for the results to surface as fiscal problems could create terrible local situations. We do not claim that we have found all of the problem areas nor do we presume to suggest corrections at this time. The main point, we believe, is to indicate the need for the one-year delay of certain of these Amendments to allow the U.S. Office of Education to adequately advise Congress of the effects on local school districts.

The local school districts do not know how to estimate income under the new law. We have found a great amount of confusion among school administrators as they attempt to compute the amounts that will be due their districts in the coming year under the various categories as defined by P.L. 93–380. The attached data, using FY 1975 as a comparison base, was compiled from worksheets filled

in by local school districts. In a majority of cases correction adjustments had to be made because of misunderstanding of rates, authorization amount and ap propriation sums as they relate to the new categories and the tier system of funding.

Some districts are enclosing letters of distress with the returned worksheets. Comments range from outright disbelief that Congress really intended so drastic a cutback to expressings of the extreme corrective action required at the local level to either replace lost funds or reduce educational programs. Many local districts are very hard pressed as the combined effects of inflation on what they. purchase and recession on local tax income are forcing them into deficit positions.

The data attached to this statement was compiled with the help of the office of Education which supplied correct marking lists and adjusted local contribution rates as well as administrative guidance required to secure correct information.

School districts returned worksheets to Lance Eldred, president of the Impact Area Schools, for review and correction using FY 1975 ADA and FY 1975 local contribution rates. The total cost of education used is also FY 1975. The recap includes data received prior to April 2, 1975, and is listed by state and congressional district.

Scanning these statistics will show that the losses far outnumber gains in the "difference" column when the "New Law Tier 2" is compared to the “Old Law". present level of funding. No so-called "hold harmless provisions” have been applied as each requires a separate calculation based on additional information. In some of the cases the losses will not appear too great when compared to the total cost of education; however, in today's tight education budgets any loss of federal income will directly affect the quality of education through reductions in personnel hired and books and supplies purchased.

The column labeled “Administration 5% Reduction on T.C.E.” reports the estimated reduction in Impact Aid funds if the Administration's proposal for further changes in the Impact Aid Program were to be enacted into law. We have used the last column to compare to the column labeled “New Law Tier 2" as an indication of loss to each district and have placed an asterisk next to each sum in the last column if that district is entirely eliminated from Impact Aid under the 5 per cent proposal.

We believe that we have sufficient data from the school districts to warrant support of the bill now before you. Surely the delay of one year can only show that this Congress is concerned about the orderly and non-destructive adjustment of the Impact Aid Law.

The author of the bill has seen to the protection of the new sections providing for handicapped programs and low rent housing children. The addition of these new programs should go forward; but, implementing them will take a major effort. At the present time we do not believe that the SAFA office in the Office of Education has been provided the resources to accomplish the new tasks.

Although, at first glance, it might appear that this bill is taking the most costly provision of the new and old versions of Impact Aid, we want to point out some unique features of the new law. The basic appropriation must include two of the "hold harmless" provisions—the small one relating to military base closings and the one providing for an orderly phase down or out of districts that are dependent on funding for students ineligible under the new program. At this time we are very dubious of any estimate of the cost of funding this Tier 2 and “hold harmless" combination. We know that the low rent housing statistics have been derived only from districts that have participated in the Impact Aid Program in prior years and many reporting districts in our survey have informed us that their estimates are extremely rough. Also the accounting of handicapped students and the related categorical provisions have not been made. These factors are important because any beginning miscalculations are compounded as the various "hold harmlesses” are computed. We believe that in estimating the cost of the new law we are looking up a mountain whose top cannot be seen. Unfortunately for all impact aid school districts unless enough money is appropriated to get a certain point, then they fall all the way back down to a much lower level. (Under the 93–380 provisions unless all of the second tier of payments are funded, none of it can be paid.)

School districts cannot afford the gamble of insufficient funding at the Tier 1 level. Even with Tier 2 funding and the 90 or so per cent "hold harmless" protection, most school districts will be taking income losses that will result in layoffs at a time of high unemployment. The bill before you, however, provides

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