Page images


DEPARTMENT, NEWPORT, RHODE ISLAND Mr. WILLIAMS. Thank you, Mr. Chairman. I echo your sentiments about Senator Pell because he has been one of the big champions of Public Law 874, and of education.

Newport, Rhode Island is probably best known for mansions, tall ships, the home of the American Navy, and currently the Americus Cup Challenge. But, we have also been dedicated to quality in education.

We are one of the original 69 right-to-read sites in the United States, and currently one of 13 of the NIE Title I sites, trying to do what is compatible with Mr. Quie's recently introduced legislation. Because of our dedication to quality in education, we feel that impact aid has been vital to the maintenance of that quality.

Let me summarize briefly the summary which I have already submitted for the record.

In a ten-year period of time, the amount of money in percentages that we have received, for example, for the Category A students dropped from a high of 64 percent to last year's record of 44.3 percent, and in the B's from a high of 32 percent to a low last year of 20 percent. In an economy which is continuing to inflate the share of impact aid in per pupil cost is dropping.

We have approximately 1,674 eligible children in our district who come under Categories A and B representing about 36 percent of our school population. Most of the monies used to educate these children falls upon the local taxpayer.

The most recent figures available to us indicate that it costs us approximately $1,700 per year to educate a student. Of that amount of money, a little less than half comes for the A students, and about half of that comes for the B's.

If impact aid were to be phased out in any period of time, using present figures we would have to raise the local tax rate ove $3 per thousand on a 70 percent assessment.

While Newport has been, as I indicated, fairly prominent in the news in the years, we have approximately 52 percent of our property off the tax rolls. Now, that is about 400 acres out of 2,860 acres.

The taxable property in Newport News is valued at close to $200 million. The land which is off the tax rolls primarily used by the Federal Government is valued land only at approximately $28 million.

Now, this does not include any improvements upon the land. We would estimate that we could easily raise over $1 million more in tax revenue if we had that land. But, Newport as a whole has valued the presence of the Federal Government, in particular the Navy, ever since it first came there.

I can only respectfully request that the Congress continue the impact aid and in particular continue the funding of the B students.

Thank you.
Mr. CROSS. Thank you very much.
Dr. Paxson, I believe you have a statement to make.
[The statement of Mr. Paxson follows:]




Wayne M. Paxson

Associate Superintendent of the Bellevue Public Schools

Bellevue, Nebraska

Presented to the Sub-Committee on Elementary

Secondary and Vocational Education

Chairman, Congressman Carl Perkins

Office of the Superintendent

June, 1977

Mr. Chairman and distinguished members of the Sub-Committee: I

want to thank you for the opportunity to appear before your Committee.

I am Wayne Paxson, the Associate Superintendent of Schools at Bellevue,

Nebraska. Our district serves Offutt Air Force Base and Headquarters, Strategic Air Command and is a prime example of a severely impacted district. Approximately two-thirds of our enrollment are dependents of those

employed at the Air Base.

of the federally connected pupils, about one

half live on base,

I have been asked to comment on the local contribution rates used to determine payment rates under . PL 874.

Congressional intent appears to be that the payment rate for an "A"

pupil should be sufficient to insure that the lost tax base for such pupils

has been replaced by the federal government.

The methods currently used to determine the rates vary with the

financial structure of the different states. For instance, Nebraska until

this year established a single group rate for all applicants which represent

ed the average number of dollars raised locally in the state per pupil. The

major weakness of this procedure is that the effect of federal impaction

reflects negatively upon the state rate. It is and has been our contention that it was the intent of Congress that the local contribution rate of the

average of the non-impacted districts should be used in order to achieve

comparability. We have asked that the OE regulations be drafted which

provide for this method.

For this reason, Nebraska changed to the individually selected

comparable method this past year. Under this method, each individual

applicant selects five non-PL 874 districts which are judged to be other

[ocr errors]

wise comparable to the applicant. The average dollars raised locally per

pupil by the five comparable districts then becomes the rate for the applicant

districts. Standards of comparability have been developed in the regulations

used by OE.

Districts not applying individually are by law insured a minimum

rate equal to one-half the state average cost per pupil or one-half the

national average cost per pupil whichever is greater.

Several concerns have been expressed with respect to the methods used in calculating the LCR. One has already been mentioned, that of in

cluding the obviously low LCR's of impacted districts in the data when

calculating a group rate.

Another concern is that the rates are calculated on cost figures

that are two years old. In the high inflationary period, this has developed

rates well below actual costs.

A third concern has been the increasing reliance in some states

upon state aid. If for example, a state were to provide, say 75% of the

cost of education, and the PL 874 rate for an applicant district. was at one

half of the state average cost per pupil, it is theoretically possible for

a district to receive 125% of the cost for educating an "A" pupil. It was

for this reason that the equalization section of the law was enacted which

allows states to reduce their state aid payments. to PL 874 recipients when

fully equalized state aid programs has been implemented in the state. Thus,

it appears that any possible abuses of the minimum rate structure have been

already corrected in the current legislation.

In summary:


The two-year lag in rate calculations develops rates that
are lower than actual costs.

(2) The group rate structure should provide that PL 874 applicants

not be required to include their own LCR's in the data for

establishing a group rate.

(3) The individually selected comparable districts method is time

consuming and requires reviews of each application at local,

state and national levels. It should be retained however, for

those states where inequities develop under the group rate


(4) Minimum rates are justified in those states with high state aid

programs since this insures that the federal government meets

some part of its obligation for the impaction and allows states

with full equalization programs to reduce their state aid

payments to PL 874 recipients.



Mr. PAXSON. Mr. Chairman, members of the subcommittee, I would like to devote my remarks to a portion of the GAO report which dealt with the elimination of B funding and its costs to local districts and increased property taxes. (See Appendix 5) My district in Bellevue, Nebraska, along with Papillion and Plattsmouth are three districts among that 8 percent which the GAO report indicated would have to increase local taxes by more than 25 percent if B funding were eliminated. All three districts serve Offutt Air Force Base, and headquarters of the Strategic Air Command, and all have significant portions of B students.

In our own district, rather than the 25 percent, the amount of increase that would be required would be 33 percent. If the GAO report of 8 percent can be projected to the nation as a whole--and I question that that 8 percent should be quoted unless it can be so projected—there are 360 such school districts in the United States which are this highly dependent upon B funding.

The GAO report also indicated that the elimination of B funding would increase taxes on a $40,000 home by less than 50 percent for 81 percent of the districts. Our three districts that I have mentioned are among that 81 percent that would be in excess of that.

In the case of my own district, a home assessed at $40,000 real value pays a school tax of $720 per year. A 33 percent increase would equal $280 per year, more than five times the amount quoted in the GAO report. I believe that P.L. 874 was created to deal with the extremes in impacts, not just with averages.

The GAO report made another assumption that in the case of our district I would like to correct. This is the implication that districts would in fact increase their local taxes to make up for the losses in

« PreviousContinue »