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Mr. QUIE. In effect there is no state-the Federal government does not reimburse the state, but the state can take into consideration the P.L. 874 expenditures when they provide their local support to the schools. I use New Mexico as an example.

Mr. STORMER. New Mexico is heavily populated with Indian personnel and the state is attempting to support, through their equalization formula, the educational costs for both Indian and nonIndian and, as a result of payments under 874, they are charging back those payments as local receipts in their determination of the amount of state aid which will be provided to the local school district.

Mr. QUIE. So we have a mixed bag then depending on whether the state has an equalization formula or not. We have some equitability with regard to Indians. I think we need to take that into consideration.

Under equalization how many states do come under that equalization option?

Mr. STORMER. At the present time we believe there are four states. There are four states we know are charging back.

Mr. QUIE. Four states qualify?

Mr. STORMER. No, I am not saying four states qualify. There are four states considering 874 payments in their computation of state aid that we know of. You well recognize that those are New Mexico, Kansas, North Dakota and Maine.

We have had a request from Alaska to evaluate their state equalization program to see whether or not it might qualify under the regulations for equalization.

There are probably another half dozen states which are currently considering 874 payments as local resources in computing state aid.

At the present time we don't know whether they qualify or do not qualify. We have written six states and requested data on their state and local resources in order to commence an evaluation of their state aid programs to see whether or not they would qualify under the fiscal disparity test, which is the only test which is final at the present time. However, it does not really become effective until after July 1st. It becomes effective in 1978 due to Public Law 94-482. The effective date was set at July 1, 1977.

The wealth neutrality test or criteria have been proposed under the rules at the present time and apparently should hit the Federal Register as a final rule hopefully within the next 30 to 60 days. No one has been determined to have a program designed to equalize expenditures which is acceptable to the commissioner, as yet.

Mr. QUIE. Would you say the four you referred to are grandfathered in at the present time?

Mr. STORMER. They are grandfathered in at the present time. The indications are that under the two sets of criteria, probably two states will meet the criteria and two states will not.

Mr. QUIE. Have any been turned down specifically as yet?

Mr. QUIE. Mr. Pressler asked me to ask you how many districts have submitted requests under the pinpoint disaster provision and how many are located in South Dakota.

Mr. STORMER. May I supply that for the record?

Mr. QUIE. Yes.

[The information follows:]

As of June 23, 1977, 33 pinpoint disaster applications for assistance under P.L. 874 have been received and one under P.L. 815. Several school districts have filed more than one application. Of the 399 applications under P.L. 874, one is from Wessington School District, Wessington County, South Dakota.

Mr. QUIE. Mr. Martin stated under Part B there are 55 percent of the LEAS that would have to increase their taxes less than 5 percent. 21 percent would only have to increase between 5 and 10 percent and 8 percent would have to increase by over 25 percent. That leaves 16 percent between 10 and 25.

I need to ask you, Mr. Stormer, this, because I need to know what the characteristics are of the 8 percent who would have to increase their taxes more than 25 percent. I know you can't give that to me right now by giving me the characteristics of 8 percent of the LEAS, so you can submit it for the record.

Mr. QUIE. When we think of school districts with an enormous increase in property tax, we tend to think of "A" districts.

Mr. STORMER. I thought you were addressing that question to Mr. Martin. I am sorry.

Mr. QUIE. Mr. Martin could give us a survey of what he has looked at perhaps. Give me an idea of what those eight percent are like. What their characteristics are, so we on the committee can get a mental picture of them.

Mr. STORMER. We will supply that.

[Information retained in Subcommittee files:]

Mr. QUIE. Of the current appropriation, how much goes to public housing children?

Mr. STORMER. Approximately $70 million.

Mr. QUIE. Can you give us a breakdown?

Mr. STORMER. We can give you a district by district breakdown of the estimated entitlements as of July, 1976.

[Information requested retained in Subcommittee files:]

Mr. QUIE. Also I mentioned a chart showing the amount of "B" money going to Fairfax, Montgomery, Arlington, Alexandria and Prince Georges County. If you can give us that and project what the payment will be in the coming year.

Mr. STORMER. That will be part of this chart which we are going to modify.

Mr. QUIE. How much money is being spent to implement giving extra payments to districts that have handicapped children under 3(A)(ii) and 3(B)(ii)?

Mr. STORMER. By states?

Mr. QUIE. I just want the total. I would really like to know how much goes to civilians, how much to military and how much to Indians. I would like to see that breakdown.

Mr. STORMER. In 1976, $13,381,400 went to handicapped military children of which $4,460,466 was the extra payment and $3,461,800 went to handicapped Indian children of which $1,153,933 was the extra payment. Those are the only two that are applicable under 874. the Military A and the Military B, and the Indian A's. There are no civilians receiving such payments. (See Appendix 3, Exhibit

Mr. QUIE. Then the answer to that one is zero.

In 1974 there were some pretty significant amendments as both of you have indicated that included phasing out payments for the out of State B civilian children. Has that provision been fully implemented or do we still have some time?

Mr. STORMER. We have some time to run. The HH-C expires in '78. We can report to you the numbers of children who are out of state by districts and the payments that are made to these districts are 90 percent of the preceding year's payments when they qualify under HH-C and then it phases down 90 of 90 of 90 and then in '78 it terminates.

Mr. QUIE. We have one more year.

Mr. STORMER. We have 1978 to go.

Mr. QUIE. Could you give us a picture on that? I want to see how far that has gone. I want to find out if we are up against a cliff or will have a big protest when '78 comes in.

How many of the Section 6 schools are there?

Mr. STORMER. There are 26 Section 6 schools distributed around the country.

Mr. QUIE. Can you tell us where they are then and how long they have been in existence?

Mr. STORMER. Yes, we can provide that.

[The information follows: (Also see June 23rd hearing for further information.)]

In 1976, a little over 100,000 out-of-State B children were claimed by applicant school districts for possible eligibility under Hold Harmless C. Several hundred school districts qualified for payments under HH-C in 1976 for a total of $17 million. (The total would have been greater if HH-D had not been funded.) Of this total, $10.5 million went to the District of Columbia and surrounding counties as indicated by the table of data on the D.C Metropolitan area that was inserted earlier in the testimony. The table also contains estimates for 1977 and 1978 which show how such payments decrease each year. For the D.C. area, HH-C payments are estimated to total $7.9 million in 1977 and $5.2 million in 1978.

Present Section 6 arrangements and the dates they were established under Section 6 are:

Alabama, Craig Air Force Base (AF), 1954; Alabama Maxwell Air Force Base (AF) 1963; Alabama, Fort Mc Clellan (Army), 1963; Alabama, Fort Rucker (Army), 1963; Delaware, Dover Air Force Base (LEA), 1959; Georgia, Fort Benning (Army), 19521; Georgia, Fort Stewart (Army), 1963; Georgia, Robins Air Force Base (AF), 1963; Kentucky, Fort Knox (Army), 19521;Kentucky, Fort Campbell (Army), 19521; Louisiana, England Air Force Base (AF), 1963; Massachusetts, Laurence C. Hanscom Field (AF - Elem. - LEA), 1959; Massachusetts, Laurence C. Hanscom Field (AF - H.S. LEA), 1959; New York, U.S. Military Academy West Point (Army), 19521; New York, Coast Guard Base, Governors Island (Trans.), 1952; North Carolina, Fort Bragg (Army), 19521; North Carolina, Marine Corps Base Camp Lejeune (Navy), 19521; Oregon, Crater Lake National Park (LEA), 1962; Pennsylvania, Erie Coast Guard Station (LEA), 1962; South Carolina, Marine Corps Air Station, Beaufort (Navy), 1961; South Carolina, Myrtle Beach Air Force Base (AF), 1962; South Carolina, Fort Jackson, (Army), 1962; Virginia, Quantico Marine Corps Schs. (Navy), 19521; Virginia, Dahlgren Naval Weapons Lab (Navy), 19521; Puerto Rico, Antilles Cons. Schs. (Navy), 19521.

Mr. QUIE. What is the possibility they could be taken over by a local public agency?

Mr. STORMER. There is a likelihood in a number of instances that this could occur. It requires, due to the Quantico amendment, a joint agreement between the Office of Education, the Department of

1 Established by the military prior to passage of P.L. 81-874.

Defense, the military branch, the local educational and State educational agencies to phase down or transfer these operations to the local education agencies. There have been transfers occurring periodically during the past and there are transfers which probably could occur in the future, depending for one thing upon the conditions of whether or not the local educational agency has facilities within which to handle the children or whether facilities on base might be used to handle them.

An illustration of this is in 1969 the Fort Belvoir installation was a Section 6 operation. In 1969 the Fairfax County School District accepted responsibility for these children and received payments for them under Section 3.

Mr. QUIE. I have a question on P.L. 815. Could you indicate how many of those requests would qualify and the number you can fund under P.L. 815?

Mr. STORMER. In terms of the 1977 appropriation?

Mr. QUIE. That is right. This past year.

Mr. STORMER. We can give you an idea on that. [The information follows:]

There are presently 8 project requests in Group II of the Section 10 priority listing. Group II applications are those in which the local education agency operating the federally owned school facilities has assured the Commissioner of Education that it would accept ownership of them once the agreed upon improvement and rehabilitation work is completed.

FY 1977 funds appropriated for Section 10 have been expended for projects in Group I which are those applications requesting major repairs necesary for the safety of school children or to prevent further deterioration of existing school facilitites. The balance of Section 10 funds now available is not sufficient to fund the first project in Group II on the priority list.

These Group II projects are:

Fort Belvoir, VA 77-C-FED-2A27; Elmendorf Air Force Base, AK 77-C-FED-3; Parker Dam, CA 77-C-FED-12; Edwards Air Force Base, CA 77-C-FED-8; Plattsburgh Air Force Base, NY 77-C-FED-7; Mather Air Force Base, CA 77-C-FED-3; Fort Hood, TX 77-C-FED-3; Fort Lewis, WA 77-C-FED-5.

Mr. QUIE. How many districts are getting payments under Section 4? I understand there is a substantial increase in children.

Mr. STORMER. I am informed we have one this year and one last year. We will identify those for you.

[The information follows:]

There are no provisions for paying Section 4 entitlements in payment tiers 1 and 2. Thus, 100 percent of SEction 4 entitlement remains to be paid in payment tier 3. Funds available in the 1976 appropriation permitted payment of 6 percent of entitlements that remained to be paid in payment tier 3. The 1977 appropriation permitted payments to be made in payment tiers 1 and 2 only. Thus, no payments can be made for Section 4 entitlements in 1977.

There was only one eligible application under Section 4 in 1976. That was from the York County Public Schools, Yorktown, Virginia. Their Section 4 entitlement is $4,26,244.14 of which only 6 percent or $25,574,64 can be paid.

The Papillion Public Schools, Papillion, Nebraska, applied for assistance under Section 4 in 1977. When they were advised that no payments could be made for Section 4 entitlements, they withdrew their Section 4 claim and amended their application to include the increase in children under Section 3 (for lesser entitlement) for payment thrugh payment tier 2.

Mr. QUIE. Let me go back to Indians again. We have got JohnsonO'Malley which comes out of BIA and we have the Indian Education Act, administered by OE and P.L. 874 administered by OE, not to mention other sources of money, but those three can dovetail by population and by the responsibility for which we are going to use the money.

Johnson-O'Malley is supplemental and they are phasing out the basics for the supplemental entirely and P.L. 874 is for basic entirely.

Have you worked with the directors of the other two programs at all to try to work out some kind of coordination between them? I am talking more about policy rather than coordination with the present law. We would like to change the law so it fits the Indian childrens' needs more.

Mr. STORMER. We have worked with the other units both within our own office and within BIA. We met in Pierre, South Dakota, with BIA representatives from Washington, as well as from several states represented in that area to see what could be done to improve the coordination between our payments and in that particular instance, JOM. We are running into the problem that JOM is in its second of a three-year phase-out of basic support. There was discussion as to how to consider the state local and 874 revenues and develop a formula whereby considerations could be given to providing JOM money for the shortfall that might occur between the use of state, local and 874, and that necessity to provide a basic level of education for the Indian children.

Secondly, I should mention that I will be discussing this problem of Indian education before subcommittee staff members either later this week or following the Thursday session next week. We will discuss our relationships under 874 with BIA and with our own staff and the problem of Indian education.

Mr. QUIE. Has anything been written up of those previous meetings that you had?

Mr. STORMER. I have strictly a draft at this point in time of the formula by which BIA was going to evaluate the resources and the basic level that was necessary to-the resources which were necessary to meet the basic level of education. I have not seen the final draft.

Mr. QUIE. Will that be available by the Thursday meeting? Mr. STORMER. I will inquire. If it is available, I will have it with me, if only in draft form.

Mr. QUIE. I am not asking you to develop a policy yourself, because that will have to go through OMB and so forth and by that time we will have passed the legislation. I would like to get your assistance in drafting.

Thank you very much.

Mr. JENNINGS. I notice you have two types of analyses in the second part of your report. One is the dollar impact of different changes in payment and eligiblity provisions and the other concerns the effect of different changes in impact aid as regards property tax increases in school districts. Do I understand correctly that your statistics on the changes in eligibility and payment rates are based upon an analysis of all impact aid school districts, from the information available in their applications, but that your statistics based on the types of property tax increases which would come about are only based upon a sample of 1600 school districts?

Mr. MARTIN. That is true.

Mr. JENNINGS. With the sample of 1600 school districts, according to the Office of Education, more than fifty percent of all the impact

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