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passage by the 81st Congress of Public Law 815 and Public Law 874.

Public Law 874 authorizes the payment of funds for the

"maintenance and operation" of public schools in federally affected areas. It is the need for the continuation of this part of the prog

ram that is the critical concern of the school districts which have

depended on it for essential operational support for twenty years.

The principle which was the basis for the creation of this program is a simple one. The law recognizes that when a facility, usually military, is built in an area by the federal government, land on which it is built becomes non-taxable property, as do the buildings

and equipment which constitute the facility. It further recognizes

that when there is a resulting influx of people who require avail

ability of schools for their children there is an impact of need which

must be met by the local educational agency. When this agency is largely dependent upon local government for its operational and maintenance requirements, and local government depends on property

tax revenues as a source for its funds, there is then a sharp dispro

portion between need and availability of support.

Public Law 874 bases payments on two tax-loss factors:

the

residence property in which the family lives, and the establishment

property where a parent works or to which he is assigned. Thus, a

child who resides on federal property and whose parent works on or

is assigned to federal property is considered an "A" category child;

and payment is made to the school district at one-half the national

average of school cost per child.

A child whose family resides off the federal installation and

whose parent works on or is assigned to the federal installation, or

whose family resides on and the parent works off the installation, is designated a "B" category pupil; and payment is made to the school

district at the rate of one-fourth the national average cost per

child (one-half the "A" payment). Thus, the law recognizes the two

" halves of the impact or tax loss and provides for payment accordingly.

Currently, "A" category pupils are paid at 90% of entitlement

and "B" category pupils are presently being paid at only 60% of en

titlement.

These two percentages should be equal.

In the context of the overall situation with respect to the im

pacted area program, certain observations specifically pertinent to

Category "B" can and should be made.

First, although our federally connected parents pay taxes on

the homes they live in, a great many of them live in house trailers;

and these are taxable only as personal property. However, if the

individual chooses not to become a legal citizen of the county, and

most of them do, he pays no tax on personal property.

The point should be made here that even though tax may be paid

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on the residence of the family there is still no tax paid by the installation where he works or to which he is assigned; and the

Impact formula takes that into account as described above. Pay

ment is based on only 50% for children of this family because only

the tax loss on the installation is considered.

Secondly, it seems only reasonable that our government consider

the bargain it is getting under Impact, especially in regard to the military connected child. If a comparison is made between what it

pays to military base schools and the formula amount under the Im

pact program the difference is considerable $1,278.61 on the one hand and $226.20 on the other. If these children now attending our schools were to be picked up and transported to base schools and

buildings, staff, materials and equipment were provided for them

the extra cost would indeed be fantastic.

The Administration is promoting the argument that Category "B"

payments be phased out since "B" children either reside on non

federal land or have parents who are employed on non-federal land

and there is a local tax base to help offset the costs of their education. Unfortunately, that statement shows little concern

for the realities of the situation or the welfare of the school

children who will be most directly affected.

In Cumberland County we have two large military bases

-- Fort

Bragg and Pope Air Force Base.

Were we able to collect taxes on

this property we would have an additional tax base of approximately $325,064,400. With this additional tax base we could undoubtedly

finance our school systems. However, as you gentlemen know, federal

property is not taxable, and it is simply not true that there is a

sufficient local tax base to offset the costs of educating the

children under discussion.

What happens if the Administration's request is granted? For the most part we all lose. The children get a poorer quality of education at a time when there is a crying need for improved educational opportunities. Services have to be cut or eliminated. It is our children who will be the losers. .

But what about the property owner? He loses, too, for inevitably local government will be forced to make up for this loss of revenue,

and this most likely means an increase in property taxes.

This in

crease would come at a time when the taxpayer is already overburdened.

In short, the proposed "phase out" of Category "B" Payments to schools

in federally affected areas means increased taxes and the delivery of

fewer services, and those who will be cheated and hurt the most are

those we should most want to help

schoolchildren. I urge you to

realize the foolishness of this Administration request and act decisively by rejecting this proposed phase out of Category "B"

Payment.

Mr. ROSE. I would like to have Jack Britt come to the microphone and tell you in about two minutes the impact that this could have on us from Cumberland County and then we will ask to be excused.

Mr. BRITT. We appreciate this opportunity to speak to the committee. Impact aid in North Carolina, and especially in Cumberland County, just means so much to the impact to our committee. We have a school system of 37,000 pupils. One third is impacted. We have about 12,500 students that we receive impact aid for. All of these are B category students. Without this, our school system would just be in an uproar. It would affect the salaries of 1900 teachers and maybe the jobs of 200 teachers directly.

If you look at what the Federal government is getting for the education of these children, it is shocking. We have a military installation within our county. The Federal government pays a minimum of $1300 per child for the education of these children.

The B children in our schools, the Federal government pays only $200 per child and we just need this program to continue. If you compare the impact program with other educational programs, you find that—we have one person who administers this $2.5 million program. In other programs you find directors and other administrative personnel. When those Federal dollars finally get to the classroom, they are greatly reduced, but almost one hundred percent of the impact aid money reaches the child in the classroom.

Chairman PERKINS. Thank you very much, Mr. Britt. I can see the reason that you are here with your able representative this morning because of the great need in your area for impacted area funds. In other words, you could not do without these funds.

Mr. BRITT. Absolutely.

Chairman PERKINS. Is there anyone else you want to call, Mr. Rose?

Mr. Rose. Mr. Chairman, I think Jack Britt has very eloquently spoken the same thing all these gentlemen would say. I thank you very sincerely for letting me interrupt your hearing.

Chairman PERKINS. Thank you very much, Congressman Rose.

We will now hear the representative of the Office of Education, Dr. Stormer.

STATEMENT OF WILLIAM STORMER, DIRECTOR, DIVISION OF

SCHOOL ASSISTANCE IN FEDERALLY AFFECTED AREAS, BUREAU OF ELEMENTARY AND SECONDARY EDUCATION, U.S. OF. FICE OF EDUCATION, HEW

Mr. STORMER. Before proceeding with the testimony today, I would like to say that yesterday I discussed with Committee Counsel, Mr. Jennings, a request that the Office of Education_be permitted an opportunity to clarify the record on certain items. For example, we believe that some of the topics discussed yesterday require further explanation. We therefore request permission to provide a statement and comment in writing on selected aspects of testimony offered on the impact aid program by others where we believe it is essential to make the record clear.

Chairman PERKINS. Without objection your statement will be inserted in the record.

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