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There is no way Title I money could be substituted for PL874 funds. Title I is categorical and for good reason. There is no relationship between Title I, ESEA, and PL874 from a philosophical or conceptual viewpoint. To intermix these funding concepts would create havoc for schools.

All schools have suffered a staggering loss trying to live with new Federal and State mandates in Special Education, Due Process, and Title IX, to name a few. Congress passes these laws yet provides few dollars to implement them. On top of this the Office of Education creates additional problems through trying to withhold money Congress approved or through broad interpretations of regulations not intended by Congress. All public buildings face a huge financial outlay to conform with the proposed building requirements or remodeling to assist handicapped individuals.

Hopefully, the Congress will again review the sound logic upon which PL874 is built. The Federal government has an obligation to pay schools in lieu of the loss we incur due to the non-taxable property required to operate a large base such as Wright-Patterson. We provide all the children of Fairborn a good education and with the possible loss of Category B money this can only have an effect on all the children.

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1. I would like to respectfully request your consideration of the following remarks regarding the overall program of assistance in federally affected areas and the particular importance of support to school systems for children in category 3-B civilian.






The importance of PL 81-874 assistance to school systems with a large concentration of federal activities within their jurisdiction cannot be overstated.

Federal assistance to this school system under this program is about
$2,000,000 annually and represents about 7% of the annual budget.
This can be translated into approximately two hundred (200) teacher
units. Pupils from category 3-B civilian makes up about 74% of the
total population for which assistance funding is received.

As you are well aware, the concept and purpose of such assistance is
in lieu of certain property taxes and is designed to augment current oper-
ating expenses of LEA's affected by the impact of federal activities.

In recent years local LEA's are constantly having to defend the need
and the basis for impact money; we especially have to restate and re-
justify the necessity for assistance for category B civilian students.

Those who would curtail or eliminate assistance for this pupil category reason that "because families of such children pay property taxes, LEA's are not entitled to such assistance". This type of rationale would lead one to assume or conclude that no business or commercial

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firm should pay real estate taxes since their employees pay taxes on their residence. Should this concept or reasoning be employed throughout the spectrum of our taxing scheme, the present base for taxation would be drastically altered because approximately one-half of the tax base in this country is from nonresidential property.

I do not believe that the philosophy presented by opponents of assistance to school districts is valid; I do not believe that this philosophy represents the will and intent of the citizenry and of the Congress. I do believe:




That it is just and proper for business and commercial firms to pay real estate taxes.

That it is just and proper for federal business-type operations to render assistance to LEA's as "in lieu of taxes" to support operations which serve citizens within their local jurisdiction.

Should it be the desire of the Congress to eliminate such assistance to LEA's, it should at the same time, remove present exemptions and provide a means for local governments to impose necessary taxes to provide required services.

For those school systems with expanding federal activities, it is virtually impossible for local communities to meet the demands of a large scale build-up without outside assistance. Once stabilized, the permanent loss of the property tax base curtails the ability of local governments with regards to raising revenue to support on-going operational demands. To curtail or eliminate support to LEA's in the face of spiriling operational cost would impose insurmountable hardships upon many school districts throughout the country.

9. In conclusion, it is my opinion that the original basis for aid to local school districts under PL 81-874 has not changed and that the need for such aid is more prevelant today than at any other time.

May I respectfully request that you give serious consideration to
strengthening support to LEA's rather than curtailment of any of the
provisions as now enacted.

Respectfully yours,

V.M. puskat

V. M. Burkett

Assistant Superintendent

Written testimony by

J. E. Sutton, Superintendent Emeritus

Midwest City-Del City Schools

Midwest City, Oklahoma 73110

Before the House Subcommittee on Elementary, Secondary and Vocational Education

Mr. Chairman and Members of the Committee:

Thank you for this opportunity to present written testimony in behalf of some 400 Impact Aid School Districts in Oklahoma.

I am J. E. Sutton, Superintendent Emeritus of the Midwest City-Del City Schools, Midwest City, Oklahoma. I believe that Congress has been both wise and fair in authorizing and financing P.L. 874 since 1950. However, current proposals by the Administration are inadequate to maintain the levels of funding needed by the education programs for 1978. The authorization bill which you consider must eliminate the inequities. It may be wise to change the name from Impact Aid to In Lieu of Tax to forever eliminate the Category "B" struggle.

In October, 1949, the Special Investigating Subcommittee of the House Committee on Education and Labor opened hearings on H. R. 4115 which was a bill to provide for the education of children residing on certain nonsupporting federally owned property, and children residing in localities overburdened with increased school enrollments resulting from federal activities in the areas, and for other purposes. Subcommittee chairmen were appointed and directed to take their committees into the areas affected and hold hearings on the local level to determine the direction Congress should follow. School representatives all over the nation appeared before the Special Subcommittee. Committee reports stressed (1) federal ownership of property reduces local tax income for school purposes, and (2) a federal project or activity causes an influx of persons into a community, resulting in an increased number of children to be educated.

In September, 1950, Congress passed P.L. 815 and P.L. 874. These two laws were based on the philosophy that recognized the role of the federal government

as a responsible agent who, though not subject to local taxation, could and would provide funds to local school districts when the activities of the government placed an undue burden on the financial resources of a local community. The purpose of the law was to reimburse states and local school districts for the cost of education brought about by federal activities which reduced potential tax revenues or increased excessively the number of children to be educated.

The argument of the Administration to cut the funds from "B" category pupils has already been studied and reported to Congress by two major studies of Impact Aid which were funded by Congress. These two studies were the Battelle and Stanford Reports.

These reports to Congress concluded that Category "B" funds are as justified as Category "A" funds on the basic economic fact that approximately half of the local revenues from property taxes come from nonresidential property. Congress took this in consideration when P.L. 874 became law in 1950 by permitting Category "B" funds to be only 50% of Category "A" entitlement.

It has never been disputed that Category "B" parents pay taxes on their homes, but it is questioned that the federal property is not taxed and therefore the school district economy is affected by this loss of revenue. Thus, to maintain that because the "B" parents pay property tax on their homes removes the obligation for the government to make Category "B" payment shows a complete disregard for the structure of local tax support for education and the local taxpayers would be forced to assume the burden if permitted by law or the educational program would be reduced to mediocrity.

P. L. 93-380, the Educational Amendments Act of 1974, made major reforms in the Impact Aid program. Various categories were added and "B" students entitlement was further reduced. The reductions now through Tier II allows only

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