Question: Legislation authorizing "pinpoint disaster" assistance to schools was enacted January 2, 1968, and yet regulations were not issued to implement the law until November, 1976. Why did the Office of Education fail to implement this law for nearly nine years?

The

Answer: Until the Comptroller General's opinion was issued in 1975, the "pinpoint" disaster provisions were not planned to be implemented. following include the principal reasons for nonimplementation of the program: (1) uncertainty as to what the program might cost; (2) difficulty in distinguishing between the types of losses eligible for grants under P.L. 874 from those eligible for loans under P.L. 815; (3) problem in defining "negligence and malicious action" causing ineligibility; (4) shortly after the authorizations were enacted, a survey indicated that local school districts in 29 States could not accept loans, and potential barriers existed in some other State laws with respect to the ability of local education authorities to borrow from the Federal Government; (5) the question of the Federal Government supplanting the operation of private insurance of school property.

Question: When regulations were issued in November, why was the effective date for application purposes established as July 1, 1975?

Answer: The Comptroller General of the United States rendered his opinion on June 30, 1975 that the Pinpoint Disaster Program should be implemented. It was believed at that time that the program should be immediately implemented thereafter, thus the effective date for application purposes was set at July 1, 1975. After further consideration of this matter, as

requested by the General Accounting Office, the Office of Education revised its position and plans to publish a notice in the Federal Register on or about August 1 making the program retroactive to January 2, 1968, the enactment date of the enabling legislation.

Question: Could you explain the grant and loan provisions of the "pinpoint" law and how they apply to a local school district?

Per

Answer: Under Section 16 of P.L. 815, School Construction Assistance in Cases of Certain Disasters, pinpoint disaster assistance for the restoration or reconstruction of a seriously damaged or destroyed school facility shall be in the form of a repayable advance (loan) subject to such terms and conditions as the Commissioner considers to be in the public interest. ("In all cases determined pursuant to clause (1)(B) of this subsection... such assistance shall be in the form of a repayable advance...") regulation (45 CFR 112.3(c)) the loan period is not more than 5 years at the prevailing rate set by the Small Business Administration for disaster assistance. Under Section 7(c) of P.L. 874, Assistance for Current School Expenditures in Cases of Certain Disaster, pinpoint disaster assistance to school districts is in the form of a grant--paid in advance or by way of reimbursement and in such installments as the Commissioner may determine.

Question: I understand that you currently have a tremendous backlog of applications for assistance under the pinpoint law, and that after more than nine years, the Office of Education has yet to approve aid under the pinpoint provision. You mentioned in your testimony that you are currently

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investigating the resources that are available to the Commissioner for funding those requests. If the backlog is so great, and since this is obviously an emergency situation for many districts, why haven't you asked the Congress for an emergency appropriation to fund eligible districts?

Answer: The greatest portion of disaster assistance to local educational agencies is rendered under Section 7 of P.L. 874. Up to FY 1977, appropriations for this Act, made available on the basis of estimated needs, usually provided more than sufficient amounts to fund the sections of the law to the limits allowed in the appropriations laws. Therefore, the monies in excess of that needed for regular provisions of the law were used to fund major disaster assistance. In FY 1977, however, the appropriation for P.L. 874 is not sufficient to fund regular entitlements for payments under Sections 2, 3, 4 and 6, and also to fund eligible major and pinpoint disaster claims.

Disaster assistance requirements for a given year are difficult to anticipate. Therefore, Section 7(c) of the Act authorizes the expenditures of monies to meet these needs to occur from any available appropriation. Since this is the first year that sufficient P.L. 874 funds have not been available to cover the disaster requirements, monies are being reprogrammed to fund eligible applications. Subsequently, the Office will request a supplemental appropriation to replace funds used where it is believed that they must be

restored.

Under P.L. 815, Section 16, the requirements for disaster aid, to date, have been met from the P.L. 815 appropriations but school construction

assistance authorized under other sections of the Act has remained unfunded. The Division of School Assistance has initiated requests to replenish funds for the sections of the Act from which disaster assistance has been obtained.

Question: What recommendations do you have for improving this "pinpoint" disaster program?

Answer: Under Section 16 of P.L. 815, we would recommend that the law
be changed to provide pinpoint disaster assistance in the form of a
grant, as in the case of major disaster assistance and in order to be
comparable to P.L. 874, Section 7. Generally, both programs of pin-
point and major disaster assistance, should operate under the same rules
and regulations. Similarly, disaster aid authorized under P.L. 815 and
P.L. 874 should be comparable. In addition, we would recommend that the
minimum eligibility requirement under each law, that is, the lesser of a
loss of $1,000 or one half of one percent of current operating expenses,
should be increased to a figure more in line with today's conditions.

Question:

Should every conceivable disaster be spelled out, or is it better to leave this law to the discretion of the Commissioner?

Answer: We do not believe that every conceivable disaster need be spelled out. The wording on the definition of what constitutes a disaster is

adequate in both P.L. 815 and P.L. 874. We have no problem with this aspect of the laws.

Question: in your understanding, what types of disasters would qualify

for "pinpoint" relief?

Answer: Any catastrophe resulting in destruction or serious damages to

public elementary or secondary school facilities and not caused by

negligence or malicious action would qualify for pinpoint disaster assistance.

Question: Are you aware that it is usually impossible for a school district to buy any type of insurance against mine subsidence in coal mining

areas?

Answer: We are aware that it is usually impossible for a school district to buy insurance against mine subsidence damage. Where this situation prevails, the requirement for full valuation insurance coverage to include losses as a result of mine subsidence is waived.

Mr. QUIE. What has coal mine subsidence to do with this? Mr. SIMON. It will have to do with testimony we will have a little later on this morning with regard to Mr. Stormer's testimony.

I might take just one minute from my colleague from South Dakota to say there is a very real problem in coal mining areas with the mine sinking and then you end up with a school districtand these tend to be poor areas-all of a sudden you have a school that can't be used, a school that has no ability, financial ability, to build a new school.

What the Federal government now provides is a five-year loan that they could never repay, so we have some very severe problems in a relatively small number of schools right now across the Nation, but that number could grow in the years ahead and I think we should face up to the problem.

Mr. QUIE. It isn't a question of the school falling into the mine; it is a question of the tax base that is going down.

Mr. SIMON. It is the school that is falling into the mine. In other words, there is a huge crack in the school and the architects and safety people say you can't use the school any more. They haven't a lot of money and can't replace the school.

Mr. PRESSLER. I would like to present Dr. Donald Mueller, a longtime South Dakota resident, and Superintendent of the Douglas School District representing Ellsworth Air Force Base. He has been with the Douglas schools for 16 years. I would also like to recognize Merlin Stromer, who serves as Vice President for the Board of Education of Douglas School. He ranches near Ellsworth Air Force Base and is here today also. I am very proud to present Dr. Mueller who will tell the great problems that are occurring at the Douglas School District near the Air Base.

Chairman Perkins. Without objection, your prepared statement will be inserted in the record.

[The prepared statement of Dr. Mueller follows:]