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presence of federally connected children in local school districts. The results of this survey, as I read it, were based upon reviewing approximately 1600 school districts.

Now, for the record, could you tell us whether you believe that these results are valid for all 4500 receiving impact aid, since you only made the survey on 1600?

Mr. MARTIN. Mr. Chairman, no, we do not think it can be projected to the total 4500. We selected these from 16 states because they were the states where we could get comparable data and where we could do the analysis, but it is not a projectable result.

Chairman PERKINS. In a nutshell, could you tell us exactly how you believe the impact aid law should be amended in order to provide for the most equitable type of a program?

Mr. MARTIN. Along those lines, Mr. Chairman, we did analysis using several different assumptions. We included that information in the report for the committee's consideration in determining whether or not it should amend the impact aid program. If you would like, I can have Mr. Harrison, our Operations Research Analyst, give you some information on what were those assumptions and what were the results of those assumptions.

Chairman PERKINS. You mentioned in your statement-and I believe it is important to reiterate this fact for the record—that your report is based upon the effects of the previous law prior to the amendments of 1974? Is that correct?

Mr. MARTIN. It is based on the law prior to the amendments of 1974, that is correct.

Mr. HEFTEL. Mr. Stormer, when the Administration let it be known that it would like to eliminate impact aid and that it was reflecting an attempt by prior presidents to unsuccessfully eliminate impact aid, what was the communication between your office, your personnel, and the Administration prior to those statements?

Mr. STORMER. I don't know exactly how to answer your question. There was little dialogue. The position has been expressed periodically by various administrations. Yes, we recognize there are some reforms

Mr. HEFTEL. I am not concerned about the need for reform, amendment, realignment. I am talking about the basic premise of impact aid. The theory that those school districts who educate children, where property taxes are not available to the district because of the Federal government being tax-free, that is the basic philosophy we are talking about. In terms of that philosophy, has there been dialogue between you and today's administration concerning their opinion about impact aid?

Mr. STORMER. There has not been extensive dialogue between our office and the current administration. We are engaged in a series of meetings at the present time to which we have been invited to attend and express our viewpoint with respect to impact aid.

Mr. HEFTEL. Do you philosophically support the theory that the Federal government must have a system of compensation to school districts where they have Federal installations, but do not have tax revenues, and therefore must have Federal substitutes for education of the students brought to the district as a result?

Mr. STORMER. I would support that philosophy.

Mr. HEFTEL. Is there any question in your department that the need for this is understood well enough to communicate it to the Administration?

Mr. STORMER. Yes, I believe the Administration currently recognizes that there is a need, particularly with the A category children. I think there is question in the minds of a number of people with respect to the total B classification, but I think there are reservations there in certain categories.

Mr. HEFTEL. There are two other approaches that perhaps should also be discussed and that is the theory of evaluating what would be the property taxes if the Federal government were paying these taxes. So we at least know what it is that impact aid costs in relation to what would have been the normal property taxes in the United States to the separate districts, counties or states in terms of property taxes based upon the evaluation of the property and then applying the local tax rate to it. Certainly it would seem to me that that is the minimum that the Federal government would expect to be paying as a result of the fact that it is tax-free in those locales.

Mr. STORMER. There has been some dialogue on this proposal. One of the considerations or one of the portions of that dialogue is, to subsidize the communities for the loss of taxes, as a result of the valuation of existing Federal property, might cause this program to be extremely inflated over what it currently is.

Mr. HEFTEL. Are you saying if the government was paying the normal property taxes in the United States for the installations it owns that it would be more than impact aid costs?

Mr. STORMER. That is what I am trying to say by a substantial margin.

Years ago, when some of the Federal property was taken for military installations, those properties were rural, isolated and as the years have progressed some of those properties today are extremely valuable, compared to adjacent properties which are being used for residential, industrial and commercial uses.

Mr. HEFTEL. The reason this becomes critical is that there is an impression that somehow impact aid is an improper expenditure, that somehow it is an imposition of expense upon the federal government that is not fair and equitable. We have to get to the philosophy underlying the reason for it and we have to come up with a premise that the public and the present administration and any administration will understand. Certainly the lack of dialogue between the administration and your department would indicate that they are just parroting that which they have heard as a place to cut costs without any philosophical understanding of why it exists in the first place.

Another question: Has it occurred to your department and the administration in your discussions that all of the local municipalities could pass non-resident tuition fees to all students who attend school, and wherever you have a Federal employee who is not a resident of that district there would be a tuition fee?

Mr. STORMER. There would not be an impact aid payment possible to the school district if that should occur. Also let me backtrack a little bit. Many of the school districts which are served by this program have been so served over a period of roughly 25 to 27 years

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and during this period the school districts did in their receipt of impact aid both under construction, as well as maintenance and operation, provide assurances to the Federal government that they would, for example, receive assistance for school construction and therefore would provide free public education to these Federallyconnected children for a period of not less than 20 years from the receipt of this assistance.

What I am illustrating is that in terms of today, we have had on a few occasions a school district saying, “No, we will not accept the burden of educating these Federally connected children” and we have had to say, “But you did in the past and you provided the Federal government assurances that you would continue to do so,” and therefore the threat of imposing a tuition upon these children ha been withdrawn.

Mr. HEFTEL. Could we ask of you at least two things?

First, in a reasonable period of time, a delineation of the reasonable appraised value of all of the affected Federal lands and Federal installations in the fifty states—which I am sure you must have in some form—then an application of the local tax rate to that appraised value, so that we can determine what the Federal Government would be paying in normal, local taxes if there were no impact aid as an excuse for not paying those taxes.

Do we have a basis of comparison to find out whether the Federal government is paying excessively for its tax-free status, or whether in fact it is a bargain on a dollar basis and an absolute must for school systems where these children go to school and the systems would otherwise not have the impact aid funds.

Secondly, could you tell us how you as the administrator and responsible head of the program can suggest to the Congress a system of determination of aid which does not result in a statement by you which is an indictment before you start of your own program, and which occurs on basically the first page of your statement where you say:

“As a result, what was a complex law was made even more complex and confusing

Confusion indicates we don't know what we are doing. Administration, education, HEW and the Congress all combined were confused; we don't know what we are doing. .. to both applicants and administrators.”

That is an indictment when you say it is confusing to you and to those who use it. It is understandable impact aid is always suspect because those who need it and head it as you do tell us it is confusing

Now, we need a proposal from you to tell us how to administer this program so that you don't indict it by calling it confusing in the first paragraph of your statement to us because that is all people are going to remember. It must be a waste of money because if it is confusing, how can you understand what you are spending and what you are doing?

If we could have those two things from you, we could then go from there in, first, letting the people and the government understand that it may or may not be spending excessive funds through impact aid and that, secondly, you have come up with a proposal for administering this program which you do not think is confusing, so that you don't indict it before you start when you testify before us.

Mr. STORMER. May I respond to the first one? as I indicated, the present Administration is undertaking evaluation and studies of the program in its present form and the consideration of possible modifictaions to that program.

As a part of these studies, I am generally aware, there will be some consideration as to a sampling of the valuation of Federal properties versus current tax rates, but I would hesitate to say to you we could provide you this information, particularly within a reasonable period of time, because there are roughly some 29,000 pieces of property owned by the Federal government throughout the United States and they comprise a portion of many school districts all of whom have varying tax rates to support public education.

In its total, we could probably offer a sampling for illustration purposes, but I doubt we could accomplish what you have requested.

Mr. HEFTEL. I don't mind a representative sample which you say is valid, but if you come in with a sample which you say is not valid, it is worthless. If you can't develop a valid sample or determine the total economic value of the federal installations, then apply an average of all local rates, or apply them item by item, I would have confidence that the Congress could do this, but certainly we must find out who can do it. If you can't, tell us and we will have to assume the responsibility.

No Administration, including President Carter's Administration, can evalute impact aid without these critical sources of information from which to make judgments, because you are telling us they were making judgments before they talked to you. You are telling us you are now talking with them but they still sound like they are making judgments and it seems like we must have the responsibility of making sure that when judgments are expressed by the Administration and the President of the United States, it is based upon available knowledge which has not been put together, for whatever reason.

Mr. STORMER. I am not even sure that within our own department we could put together a selective sample which would indeed be attested to as being wholly valid in terms of projecting that kind of appraisal over the total 29,000. This may be and is one of the considerations that was underlying the proposal of determining the Federal burden versus the economic benefits that was referenced in the '74 amendments, and the study of a study was prepared to identify models which could be examined with respect to whether there was a benefit or a burden in school districts as a result of Federal activity.

To the best of my knowledge, that proposal of a study which took, I guess 18 months, 24 months even, to get the proposal prepared-I don't believe there was any action taken on it-

Mr. HEFTEL. Excuse me. I am going to turn the chair over to my esteemed colleague who has been on this committee for some 20 years and knows far more than I, but I do know we are still hearing about compromises in which we will phase out over three to five years this so-called unnecessary and unfair impact aid program. That kind of dialogue and that kind of news reporting has got to stop. We have got to find out if we know what we are talking about and somebody has to be responsible for knowing what they are talking about. There is a reason for impact aid. We have got to find out what it is. If we can't get it from you, you who head the program, we have to find out within the Congress how to do it.

Right now we are being told this program is not one that is fair to the American people; that it is not equitable; that it should be phased out, and none of that is supported by the facts, I think that as I hear the presentations today, as I am told it is confusing by the people who head it, I am disturbed and I realize initiative is going to have to be taken somewhere, whether it is with you, the Administration or the Congress. But impact aid is there for a reason. It must be expressed to the American people and the Administration and certainly what I have read and heard today does not give me great feelings of confidence about where we are going with impact aid.

I thank you very much for your time.

Mr. CORRADA. Mr. Chairman, I have a meeting I have to attend. Would Mr. Quie yield for one question?

Mr. QUIE. I will give you one question.

Mr. CORRADA. On Thursday, Mr. Stormer, there will be some witnesses here testifying on the very alarming situation in Puerto Rico. I am speaking of the horrible conditions which exist and have existed in a Section 6 school at Fort Buchanan. The conditions which pupils and teachers have had to endure over the years warrant attention.

The students, children of Federal officials in Puerto Rico working, like Veterans Administration, FBI, etcetera, are supposed to get an education comparable to that of the District. Something has to be done about this problem. It is not my purpose to rehash what you already know. We don't need another study. I am asking for your support and cooperation over the coming months when we have the structures that have been in the halls of Congress, getting in an appropriation bill direction to build these portable structures which will cost $360,000 are set up without any complications.

On this aspect I would welcome your assistance to solve that very serious problem there.

Mr. STORMER. We will attempt to do that, assuming the appropriation is passed and there is the money available which is at this time earmarked for that purpose.

Mr. QUIE. I have been involved in studying Indian education, which is now under the jurisdiction of this committee. Do you feel there is anything unique about Indians, comparing it with impact aid for other students under the Federal government?

Mr. STORMER. In terms of the educational offerings that are provided to the Indian?

Mr. QUIE. In terms of Federal responsibility.

Mr. STORMER. Federal responsibility certainly in the sense that in many instances the children reside on tax-exempt lands which in many instances comprise a substantial portion, if not the majority of the land that is within the school district. As a consequence, there is no resource to support the educational opportunities offered these children except those resources that are available from the

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