parents who were-taking the same assumption of residence and schooling-were located in the Donohue and Reporters Buildings would not be considered to be eligible to be counted under the program because they are housed in commercial buildings which are occupied temporarily by the Office of Education and taxes are paid on those commercial buidings.

Mr. QUIE. If they are located and do any work, it doesn't make any difference who they are paid by; it is just the location? Mr. STORMER. The location of the property on which they are employed and working.

Mr. QUIE. In other words, if a person lives off, we will say, a national park, and is not working for the Federal government, but for a concession located in the national park then their children would be considered impact children if they were located there on the day of the survey?

Mr. STORMER. If they were employed on the Federal park property constantly.

A further illustration of that might be that there are lumbermen who are employed on Federal property a substantial portion of their time cutting timber, although they are privately employed. They are working on federal property and if they were there during the count date, they would be considered-their children would be considered federally connected, assuming they were working a substantial portion of their time on that Federal property.

Mr. QUIE. That doesn't seem proper to me. Do you have the regulations written now taking care of the Coke driver and so forth? Mr. STORMER. We have not revised regualtions in their most recent form, which would take care of the definition employed on. Mr. QUIE. You have not?

Mr. STORMER. No.

Mr. QUIE. When are you going to do it?

Mr. STORMER. We have instructed our program officers in their reviews to tighten up on the identification of this. We would propose that we will have regulations modifying an interpretation of employed-on and working-on within the year.

Mr. QUIE. Within the year? You are talking about 12 months from now or within this calendar year?

Mr. STORMER. Within this calendar year, hopefully.
Mr. QUIE. Why does it take so long to do that?

Mr. STORMER. Principally it has been a matter of manpower and time, not only with this regulation, but with other regulations applying to the program. Our equalization regulations, our regulations relative to low-rent housing children, with respect to handicapped children, all of which are ones which require debate, discussion and time in order to come out with a result which we believe would be equitable in terms of the statute.

Mr. QUIE. Would you submit a copy of that to this committee before the end of this calendar year?

Mr. STORMER. Yes.

[Note: Testimony on page 62 indicates that this "insert" is not expected until "before the end of this calendar year".]

Chairman PERKINS. Mr. Martin, another task which we asked you to undertake was to analyze the net economic burden caused by the

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

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