Table XVI shows the comparative central city-suburban expenditure results. The first two columns show the Northeast and Midwest phenomenon of central cities spending somewhat less than their suburban counties. (Since this table deals with the suburban areas nearest the central cities, it omits the rural portions of metropolitan areas which depressed the suburban expenditure levels in the analysis in part I of the paper.) After equal per pupil distribution of the state assumed local share, the third column shows the new statewide expenditure levels from what were formerly local revenues. Only two of the eight Northeastern and Midwestern cities gain, while only one suburb does. And the rates by which the suburbs exceed the state average are substantially higher there than in the cities. The last two columns show what local expenditures would be, were the new statewide tax rates applied and the revenues retained in the local jurisdiction. TABLE XVI. -LOCALLY RAISED EXPENDITURES PER PUPIL

Local revenues that would be generated if cities and suburbs applied the new rates that resulted from State assumption but retain the revenue raised by those rates.

The foregoing tax expenditure analysis should, we believe, be seen as a warning To those who have uncritically hailed the new cases and proposals that call for state assumption of educational costs by proportional taxes and a reduction of expenditure disparities. Our study suggests, we further believe, some policy recommendations for state action: to devise educational finance plans that will match resources to need by recognizing the higher costs 1) of pupils with learning disadvantages, 2) of areas which have heavier than average fiscal responsibilities and 3) higher than average cost of living levels, and 4) that draw their revenues from tax plans that are characterized by progressive rather than proportional

rates.

TABLE XVII. COMPARISON OF FEDERAL AID PROGRAMS AND STATE AID FOR SCHOOL DISTRICTS IN METROPOLITAN AREAS, 1967

III. IMPLICATIONS FOR FEDERAL REVENUE SHARING PROGRAMS

But while we hope that states will adopt programs in line with the suggestions we have made, we are not sanguine about the possibilities. The record of the states in recognizing the special needs of urban areas or the higher educational requirements of educationally disadvantaged pupil populations is not notewor thy. Indeed, it is the small but important share of educational financing that has been contributed by the federal government that has been the most effective fiscal contribution to equal educational opportunity in American school finance. The contrast among two types of federal aid programs and state aid to education may be seen in Tables XVII and XVIII. In the first we show the differential effects on central city and suburban areas of ESEA I, which is distributed on the basis of a poverty formula, other federal programs which leave considerable discretion to the states in determining the criteria for allocation, and state aid programs. Clearly, Title I is the most responsive; the urban fiscal crisis and state aid the least. (While figures on this table do not include non-metropolitan or rural areas, the pattern there would show equally high Title I and other federal aid payments and greater amounts of state aid in rural areas vis-a-vis cities. Table XVIII shows the effects of the same programs on metropolitan school districts categorized by race. Here again we note that Title I is more responsive to this aspect of educational need than are 'state aid systems. The policy implications. we would suggest, are that revenue sharing must be severely constrained if it is to serve the real needs of education for greater equality of educational opportunity. Title I functions as it does because the formula for distribution has clear re quirements that funds be awarded in relation to the number of children from poor families, and it thus recognizes both the fiscal and educational needs of central city and rural areas. Given the current pattern of educational inequity described in Section I and the ineffectiveness of the most likely results of postSerrano changes for resolving the large city educational finance crisis, we urge a strong component of attempts to recognize educational need in federal educa tional revenue sharing legislation.

TABLE XVIII.-COMPARISON OF FEDERAL AID PROGRAMS AND STATE AID FOR SCHOOL DISTRICTS IN 5 LARGE METROPOLITAN AREAS BASED ON PERCENTAGE OF NONWHITE ENROLLMENT

Such legislation might include a larger proportion of aid being siphone through the Title I formula or through a formula that would permit states t utilize statewide attainment or aptitude test results as a means of focussin resources where the problems are the greatest. Provisions requiring states t move toward the standard that higher local wealth may not permit higher edu cation expenditures would also be appropriate to even out the disparities whic characterize current finance patterns. But any provision for educational revenu sharing which would permit states to distribute federal educational revenue according to the historic patterns of state aid would be disastrous in our eye The existence of the impetus toward change which Serrano, Van Dusartz, an Rodriguez have given are no assurance-as our analysis indicates that ne money will be distributed in order to assure greater equality of educational portunity or greater responsiveness to fiscal need.

Mr. FORD. I just wanted to ask Mr. Selden, have we not seen in history in this field, in some States, Michigan one of them, educators numbers of years back were trapped into the belief that if they could earmark the sales tax for educational purposes, that they could accomplish two things. They could encourage a legislature that was reluctant to pass new taxes, to pass it under the guise of doing something for education, that would make it politically palatable for increasing taxes; second, they thought they were going to get more money for education, by earmarking that sales tax for education, but as a matter of fact, when we studied this a few years ago on an across the country study, with regard to the possibility of changing Michigan's program, we discovered what really happened is that the State legislatures in determining what the total commitment to State education will be always weighted to how much will come from the earmarked tax, and they appropriate accordingly, and the track record indicates that they may not end up with any more money than if it were not earmarked, because the legislature always fights it out with the earmarking, so that it ends up with what-well, let me say, that the study showed that there was no appreciable difference in support attributable to earmarking.

What I am saying, would the gentleman agree that educators have been burned on this earmarking of sales tax in the past, and for that reason, be reluctant to support it in the future?

Mr. SELDEN. Many times. We do not think education should be singled out for this special treatment.

Mr. PUCINSKI. Thank you very much, Mr. Selden, Mr. Megel, for your contribution this morning.

I am very pleased that you had started off this series of hearings, on your case here this morning, certainly it points out the need for legislation in this direction.

It is my hope we can create some agreement in the Committee, and move the bill as quickly as possible.

Mr. SELDEN. Thank you.

Mr. PUCINSKI. Our next witnesses are a panel of attorneys, who have been working on the lawsuits that are now going through the various courts; and they are as follows:

Mrs. Sarah C. Carey, assistance director, Lawyers' Committee for Civil Rights Under Law;

Mr. Terry Hatter, Jr., executive director, Western Center on Law and Poverty, Los Angeles;

Mr. Steve Browning, staff attorney for the Lawyers' Committee, representing Mr. Mark G. Yudof, University of Texas Law School, Austin, Tex.:

Mr. Roger Haydock, Legal Assistance of Ramsey County, St. Paul, Minn.; and

Mr. Harold Ruvoldt, Jr., attorney, Jersey City, N.J.

We are pleased to have you before the committee, because we are aware of the immense importance of the Serrano and related cases, so I am very pleased that you, ladies and gentlemen, are kind enough to be with us today, to brief the committee on the basis of these lawsuits. I myself believe that, in the wake of these legal decisions, this committee cannot delay too long, and that the involvement of the Federal Government in assuming a greater share of financing education now is literally inevitable.

I am anxious to hear your testimony.

Mrs. Carey, I understand you are going to be the coordinator.

Mr. FORD. I ask unanimous consent of the committee that Mrs. Carey's statement, along with the other submitted documents, be submitted for the record. In this way, the witnesses can refer to the various documents in their testimony.

Mr. PUCINSKI. Without objection, so ordered. (The document referred to follows:)

STATEMENT OF SARAH C. CAREY, ASSISTANT DIRECTOR, LAWYERS' COMMITTEE FOR CIVIL RIGHTS UNDER LAW

My name is Sarah Carey; I am the Assistant Director of the Lawyers' Committee for Civil Rights Under Law. I am here today, along with my colleagues on this panel, to discuss the significance of recent state and federal court decisions declaring unconstitutional present state systems for financing public education. You have asked us to: describe the cases that have been decided to date; evaluate the practical significance of the holdings in these cases; enumerate the steps that state legislatures have taken in response to the court rulings; and, finally, suggest the appropriate role of the federal government.

I would like to make a few general comments and then call upon: Terry Hatter, Executive Director of the Western Center on Law and Poverty to discuss the California Supreme Court's decision in Serrano v. Priest; Roger Haydoc of the Ramsey County Legal Assistance Society to discuss the Minnesota federal district court's decision in Van Dusartz v. Hatfield; Stephen Browning of the Lawyers' Committee to discuss the three judge federal court's holding in Rod riguez v. San Antonio Independent School District; and Harold Ruvoldt, Jr., a private practitioner from Jersey City, New Jersey, to discuss the state court deci sion in Robinson v. Cahill.

A. BACKGROUND

The litigation challenging the constitutionality of present systems of schoo finance is premised on the nation's traditional commitment to a free system of public education designed to enable each student to develop to the best of hi ability. Public schools, according to the Jeffersonian concept, were intended to provide the social and economic mobility necessary to prevent class stratification and the entrenchment of an aristocracy.

Today, as the widespread litigation reflects, we have abandoned our traditiona commitment. We do not have a uniform, equitable system of public education Our schools are segregated racially and socially. Poor schools receive fewer an lower quality resources than do rich schools; quite naturally, given this handicap they are unable to overcome the learning problems inherent in disadvantage backgrounds. Because the quality of education is tied to local property wealth the schools reinforce in children the economic stratification of their parents Contrary to the mythology of democracy, our school children are, in effect "tracked" from birth.1

Our public education system is also inflexible, geared almost exclusively t the needs of the "normal" child. Exceptional children are not challenged by th system. Handicapped children are virtually excluded. A recently completed stud in New York State found that one in every 10 children has "some sort of physica mental, or emotional condition that impairs his or her ability to benefit fro the regular school program." Yet the school system has special programs for onl 53% of these children, (Fleishman Comm., p. 1.62). New York is not atypica In a number of jurisdictions, such as Philadelphia, Washington, D.C., and Nev York City, parents have had to resort to lawsuits against school officials to con pel them to provide education for the handicapped. And these are children wit

1 The New York State Commission on the Quality, Cost and Financing of Elementary an Secondary Education, referred to hereafter as the "Fleishman Commission," concluded for example, that a pattern of failure begins early for children of low-income familie particularly those in large cities of the state. These children are more likely to do poor on standardized tests and fail to graduate from high school (or even enter 12th grade than children from higher-income families. Among students who do graduate from hig school, it appears that social class and college attendance are similarly related. The pe centage of high school seniors who submit college applications increases as socio-econom status increases. Students from the highest SES group applied to college at a rate percent greater than students from the lowest SES group. Page 1.46, January 1972.

2 The following table, prepared by Bureau of Education for the Handicapped, USO illustrates the problems of the handicapped nationally :

problems that are relatively easy to assess. When it comes to children from disadvantaged backgrounds whose special learning problems are less easy to categorize than physical or emotional handicaps, almost no special accommodations are made.3

ESTIMATED NUMBER OF HANDICAPPED CHILDREN SERVED AND UNSERVED, 1971-72 (AGED 0 TO 21 YEARS)

Our school system is plagued by many other problems: large numbers of students do not enjoy school; some even find it painful; parents and school boards feel that they no longer govern the schools, they cannot hold them accountable; teachers have received massive salary increases in the past few years but there has been no discernible increase in productivity; and there has been little research/evaluation or innovation in education methodology; no one seems to know "what works" in educating students.

Underlying all of these grievances is a totally irrational, unconstitutional system for financing schools. The vast majority of the states allocate school resources in a manner that bears little or no relationship to the actual costs incurred by

Title I of the Elementary and Secondary Education Act of 1965 does address itself to these problems. But it provides for only 3% of the total national school budget. A few state aid formulas such as New Jersey and Rhode Island take into consideration the number of children from AFDC families in handing out state aid. But most states make no compensation for problems associated with poverty. For example, in 1969 only 8 states had Compensatory education programs and those accounted for roughly 2% of the total school *xpenditures. Similar treatment is accorded non-English speaking children.