Massachusetts, and I bring you the greetings of our school committees and of our Superintendent of Schools, Mr. R. Neville Markum, who joins with me today.

Public Law 874 came into being in 1950 as an act to provide financial assistance for local educational agencies in areas affected by Federal activities. In recognition of the responsibility of the United States for the impact which certain Federal activities have on the local educational agencies in the areas in which such activities are carried on, the Congress declared it to be the policy of the United States to provide financial assistance (as set forth in the following sections of that title) for those local educational agencies upon which the United States has placed financial burdens by reason of the fact that one, the revenues available to such agencies from local sources have been reduced as the result of the acquisition of real property by the United States; or two, such agencies provide education for children residing on Federal property; or three, such agencies provide education for children whose parents are employed on Federal property; or four, there has been a sudden and substantial increase in school attendance as the result of Federal activities. Such recognition, as a matter of philosophy, and the implementation of the Act, as a matter of law, have had significant effects on both Federal and local activities, including but not limited to:

(a) greater freedom by the Federal Government in addressing itself to specific agency needs at various geographical locations, for the efficient administration of government, unencumbered, as it would otherwise be, by employee (parent) concerns for the education of dependents;

(b) greater freedom by the uniformed services in programming the utilization of installations and personnel, particularly personnel transfers, for increased efficiency, mobility, and attack/defense/retaliation capability, unencumbered, as it might otherwise be, by personnel (parent) concerns for the education of dependents.

(c) action by local school distrticts in providing educational programs, personnel, facilities and financial resources to accommodate the needs of Federally connected dependents, which action in most cases was not without a local tax burden, however large or small. Since its approval on September 30, 1950, Public Law 81-874 has been the vehicle for fulfilling Federal responsibility and providing educational services to millions of young Americans, starting with 500,000 students in the first year of implementation and servicing over two million students in fiscal year 1975.

The Act has been challenged by many Administrations. Congress, however, in its wisdom has prevailed. Public Law 874 has been researched, evaluated, and amended by each Congress since its inception. Not less than 44 modifications and amendments to the Act have caused its application to be ever responsive to the changing societal and educational needs of Federally connected student dependents.

The Act has been subjected to the test of scrutiny and the test of time. Its survival has reinforced the validity and integrity of its purpose.

The Act, and the rules and regulations for the application thereof, permits a reimbursement to school districts for local costs incurred by the district for the education of Federally connected dependents and translates into annual dollar entitlements for the support of such educational services, a reasonable equivalence of local tax revenue lost through the acquisition of local property by the Federal Government.

Local property taxes, as the major financial resource for the support of free public education, are levied against commercial as well as residential property. It has been determined on the basis of national studies that approximately 50 percent of all property tax revenue is generated from commercial/industrial properties and the remaining 50 percent is generated from residential properties. The formula for the distribution for such reimbursements to school districts is predicated on a rate factor (dollar/child). Stated briefly, this formula classifies all federally connected students into two major categories:

One, those students who live on federal property and reside with a parent who works on federal property, (A students), and;

Two, those students who either live on Federal property or reside with a parent who works on federal property (B students).

In other words, the reimbursement rate for A students, since such reimbursement is compensation for lost property tax revenue, is composed of two factors:

(al) equal to the loss of commercial/industrial property tax otherwise generated from the employer where the parent works and; (a2) equal to the loss of residential property tax otherwise generated from the property where the parents reside.

It follows that the two elements of the A rate, i.e. al and a2, are nearly equal since the property tax revenue generated from commercial/industrial properties is approximately equal to that generated from residential properties.

Where this is no loss of residential property tax (al) but only loss of employer commercial/industrial property tax revenue (a2), the reimbursement is approximately 50 percent of that for an A student and is called the B rate.

Such reimbursements to local school districts for providing educational services to Federally conected dependents are therefore exclusive of the average income or other mesured means of the affluence of the district; but rather represent the fulfillment of a responsibility for a real loss of real tax dollars generated from real property.

Contrary to the misleading and inaccurate claims by the antagonists of Public Law 874 that impact aid is designed to help the rich get richer, consider the plight of the Town of Shirley, Massachusetts, a typical small suburban community abutting a Federal installation.

The assessed valuation of all real property per school attending children in the Town of Shirley is approximately 25 percent below the average for the state, not an affluent community by any standards.

589.6 acres of land in Shirley was acquired by the Federal Government as part of the Fort Devens complex. This land, devel

oped for commercial or residential use, would yield approximately $130,000 in real property tax revenue at current market valued; estimated at $65,000 commercial and $65,000 residential.

Approximately 160 students, or 19 percent of the total students enrolled in the local school system, are Federally connected dependents whose parents work on Fort Devens.

Annual reimbursement to the Shirley School District for the local cost of providing educational services to Federally connected dependents, in accordance with Public Law 874, amounts to approximately $25,000.

The net school tax rate for the Shirley School District (FY-77 equals $26.28/thousand dollars valuation) is approximately 60 percent higher than the average for all 145 communities in Massachusetts of similar population class (0 - 5000 residents).

Compensation of $25,000 for a loss of $65,000 in employer tax revenue (B student) can hardly be viewed as adequate.

The case for the Shirley, Massachusets School District not only challenges the 'rich get richer' philosophy, but reasonably describes what occurs in most small typical communities in the United States-the poor get poorer at an ever accelerating rate.

Basic changes to Public Law 874 should be to correct the inadequacies through increased appropriations and not increase deprivation through decreased appropriations.

They who would detract from the validity of the program by equating Federal rsponsibility inversely to local property values in a few atypical communities, not reflective of the average impact aid recipient district, compound the distortion by their omissions of all the revenue factors lost to districts servicing Federally connected students, i.e.:

lost is the resident state income tax revenue which proves state aid to local education, in those states where applicable, which loss has to be made up by increased local property taxes;

lost is the sales tax revenue when Federally connected parents, particularly uniformed service personnel living in the local community, do their shopping and purchasing at shopping centers located on Federal installations, which loss must be compensated for, at the local level by local property taxes;

lost are the jobs, and the purchasing power of the related income when local businesses close due to competition from shopping centers of Federal installations servicing military personnel living off post;

lost is the revenue to support public safety programs maintained at nearly 200 percent average cost due to vehicular and pedestrian traffic through town as a result of local Federal activities;

lost is the revenue to support highway and road improvement programs magnified exponentially by excessive deterioration due to vehicular traffic in and out of local Federal installations;

lost is the center of American suburban life-hometown main street-converted into empty blocks and a plywood jungle, the result of unbearable local commercial property taxes, levied and forced as a result of otherwise unsupported, required services;

lost are the free-booting days of World War II so reminiscent of many of us, when pay day or Friday night brought the young

civilian soldiers and sailors into town for evenings of fun and spending, leaving all their money with the rich locals who became richer, and most of all;

lost is the integrity of the propositions of the antagonists to the Act when they blind themselves to, or willfully disregard the realities of the economic impact that Federal installations, of whatever nature, have on the majority of American communities.

Expiration of impact aid, by the Administration or by the Congress, by the single stroke of a pen or by the slow amputation of its vital appendages would place an unconscionable and unbearable local tax burden on the majority of the more than 4,000 eligible school districts.

Consider, for example, the plight of the Ayer School District providing educational services to Federally connected dependents from and/or associated with Fort Devens, Massachusetts. Ayer is a town of under 5,000 population, one of 145 such communities in Massachusetts out of a total of 351 cities and town in the Commonwealth.

Out of 379 school districts, including regional and vocational, the Ayer School District ranks 335th in net local tax revenue per school attending child. Yet, the school district tax rate for fiscal year 1975 was $25.92 per thousand dollars property valuation, nearly 100 percent higher than the average for all other communities of similar size.

The Ayer School District is not unique among the many small towns nationwide providing educational services to Federally connected dependents. What, then, happens to a town, any town, like Ayer, Massachusetts, so heavily taxed, so impacted, if impact aid is expired, in whole or in part?

To provide educational services for the near 2,000 students who live on Fort Devens, the near 300 students whose parents work on Fort Devens, 50 percent of whom are military personnel living off base, and the nearly 1,200 dependents of local residents, would require that the already excessive and inflated local property tax be tripled.

That the Ayer School District, or any district so impacted, could or would absorb such a tax levy is inconceivable.

One hears of alternatives that would make 'payments in lieu of taxes' to a state, county or municipal agency, but such is not a viable alternative since payments are not delivered to the point of service and may in fact never find their way to support educational services of any caliber.

It has been suggested that a Title I program for the educationally deprived, as a categorical program, would better fulfill the responsibility of the Federal Government for providing educational services to Federally connected dependents.

One might as well compare the appropriations for the Department of the Navy to the appropriations for the Department of the Interior, since both are related to activities about water, however large or small such bodies might be.

The real alternative to impact aid support for schools is a declining level of quality education. $10 million in lost impact aid to the various eligible communities in Massachusetts is equivalent to 1,200

teaching stations. $768 million in impact aid nationally is equivalent to 85,000 teaching stations and jobs.

I do not address you as one who would advocate all for the sake of education. That cry has long ceased to be economically feasible. I do, however, address you as one who believes that the principles and foundations of our democratic society, even our Republic, are only as firm and solid as is the ability of our citizenry to practice civil responsibility and to participate as civil servants in the preservation and perpetration of our government.

Chairman PERKINS. That is a good statement.

We will now hear from Mr. Charles Akins, Superintendent, Hardin County Public Schools, Elizabethtown, Kentucky.

Mr. Akins, I am delighted to welcome you here this morning. You are doing a good job in Kentucky. We want to hear what you have to say.

Without objection your prepared statement will be inserted in the record. Summarize it any way you want to.

[The statement of Mr. Akins follows:]