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EDUCATION REVENUE SHARING ACT OF 1971

THURSDAY, OCTOBER 28, 1971

U.S. SENATE,
SUBCOMMITTEE ON EDUCATION OF THE
COMMITTEE ON LABOR AND PUBLIC WELFARE,

Washington, D.C.
The subcommittee met at 10 a.m., pursuant to recess, in room 4200,
New Senate Office Building, Senator Claiborne Pell (chairman)
presiding.

Present: Senator Pell.
Staff members present: Stephen J. Wexler, subcommittee counsel,
Richard D. Smith, subcommittee associate counsel, and Roy Millen-
son, minority professional staff member.

Senator Pell. The Subcommittee on Education will come to order.

The first witness today is Mr. B. Alden Lillywhite, representing Byron Hansford, executive secretary, Council of Chief State School Officers. We welcome you to the subcommittee.

STATEMENT OF B. ALDEN LILLYWHITE, ON BEHALF OF BYRON
HANSFORD, EXECUTIVE SECRETARY, COUNCIL OF CHIEF STATE
SCHOOL OFFICERS

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Mr. LILLYWHITE. Thank you, Mr. Chairman.

My name is B. Alden Lillywhite, and I am assistant to the executive secretary of the Council of Chief State School Officers. As you probably are aware, the council is composed of the chief State school officers (State commissioners of education or State superintendents of public instruction) in each of the 50 States and in the six territories. The council appreciates this opportunity to express its views to this subcommittee on the educational revenue sharing proposal, S. 1669.

In presenting this testimony, we do not intend to discuss the details of the proposal but only to raise major policy questions.

I have given Mr. Wexler several copies of the statement and have briefed one copy down for reading purposes, which will take a shorter period of time because of some things that I think need not be read.

Senator Pell. I thank you very much.

Mr. LILLYWHITE. I don't feel I can summarize this because it is interwoven, so I will proceed, if that is satisfactory.

Senator PELL. Please proceed. Mr. LILLYWHITE. The council and its individual members have been vitally concerned with legislation authorizing Federal funds for education during the past 10 years. However, the number of categorical aid programs have multiplied since passage of the National Defense

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Every State in the Union provides funds from State revenues to be distributed to local educational agencies to aid in financing public educational programs. Likewise, each of the States has by law created a State educational agency (a department of education or a department of public instruction) and has given this agency overall authority and responsibility for administering the program of public education in the State.

Also, 49 of the 50 States have created a board of education, whose members are broadly representative of various interests in the State, to set policies for State administration of the public educational programs. In 1972 these State educational agencies will administer an estimated total of $18.8 billion of which about $16.4 billion will be from State funds and $32 billion from local funds.

State agencies also administer a major portion of Federal funds now appropriated for education not covered under the revenue sharing proposal.

Under these circumstances it is not difficult to imagine the confusion that would result if under the educational revenue-sharing bill a Governor designated a State agency other than the State educational agency to administer, either through local educational agencies or through some other local agencies, the $3-plus billion of Federal funds for elementary and secondary education it provides, which constitutes only 7 or 8 percent on the average of the States' expenditure for public elementary and secondary education, while at the same time the State educational agencies were responsible for administering the $18 billion of State and local education funds, and those other Federal aid programs not covered under the revenue sharing.

Even more chaos might result if the Governor designated the existing State educational agency to administer the special revenue-sharing funds under the advice, policies and recommendations from the newly created advisory council while the same State agency was responsible for administering the States' funds for education under policies set by the State board of education.

When this question was raised with Office of Education officials supporting the revenue-sharing proposal, the answer inevitably was that the Governor would in all probability designate the State education agency as the administering agency.

If this is true, the question logically follows as to why go through the motions of sending the funds through the Governor's office. The objectives of keeping the Governor's office advised of the amount and timing of allocations could be accomplished by simply informing that office of the amount and the date of allocations.

This would seem to be a more direct way of accomplishing the desired purpose.

Another major question for the chief State school officers is the formula for allocating the funds to each State and for each of the major blocks of funds and the flow-through to local educational agencies.

Without going into detail, the administration explained that a formula was devised which would give each State and each of the five major areas about the same amount as the actual budget for fiscal year 1971 for the categorical aid programs covered under the propoasl, a total of 2.8 billion, plus $200 million new funds.

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Specifically, the formula would have allocated 51 percent of the funds to compensatory education, 14 percent to impact aid, 12 percent to vocational education, 6 percent for the handicapped and 17 percent for support services. This type of allocation may be as good as could have been expected at the beginning of the program. However, it raises several questions: the appropriations now are less than 50 percent of the authorizations for all categorical aids, the amount the authorizing committees felt was needed for these purposes.

Some programs receive appropriations near their full authorizations, while others receive a much lower percentage. It seems appropriate to ask whether the formula should have allocated funds on appropriations for each program for a specific year, or on authorization, or on some other basis.

Furthermore, this allocation formula as noted above can be altered by any State for any of the five blocks except compensatory education and part A of impact aid by a total of 30 percent.

Finally, the formula was such that a hold-harmless baseline was included to assure that no State received less under the revenue sharing proposal than it would have received under the categorical aid programs. Each State's hold-harmless baseline was calculated by adding together the obligations expected to be allocated in 1971 for programs converted to education revenue sharing. The assurance that this baseline would be met was not incorporated into the legislation, but was given by the President in his message on special revenue sharing.

Another major objection to this bill results from the operation of this formula. It is our understanding that the amount derived from application of the formula is the new authorization for each block grant since existing categorical aid with their present authorizations will be repealed. Since existing authorization for the programs covered under the revenue-sharing proposals are about twice the amount of the appropriations, this change has the effect of reducing the authorizations for this program by one-half. The council feels this to be a most serious mistake. As finally submitted, S. 1669 did not include a maintenance of effort

a provision nor a requirement that the funds supplement rather than supplant State and local funds. Neither did it include guidelines for administering the funds in each major area, although these probably could have been included in the regulations.

There was no requirement for accountability and no funds were earmarked for State administration.

One other aspect of the provisions deserve comment. The administration sent to the Congress an impact aid reform bill during 1970, which substantially changed the formula currently in effect in that the act reduced the amount that would be needed for the program and decreased the number of districts eligible for assistance. The educational revenue sharing bill presents a different kind of formula for impact aid and permits States to consider entitlement for B category children as block grant money, to be allocated in any amount considered desirable to other districts so long as they are eligible for impact aid funds.

The point we would like to emphasize is that if the formula in the impact aid bill needs changing, it should be changed, and not authorize a situation to exist where a school district earned entitlement on

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account of B category children in its schools and counted on those funds in its annual budget but had no assurance it would actually receive the funds, because they might be given to another impact aid district.

To summarize, then, the Council favors consolidation of the present large number of categorical aid authorizations into a much smaller number of block grants with each block focused on a major educational problem.

It also favors inclusion in any such proposal the desirable provisions and exclusion of the undesirable provisions discussed in this testimony.

Mr. Chairman, that concludes the statement. If there are any questions, I will attempt to answer them.

Senator PELL. Thank you very much.
In general, then, your organization favors this bill?

Mr. LILLYWHITE. I think in general we favor the concept of the reduction of categorical aid into major blocks.

Senator PELL. If you were on this subcommittee would you vote for or against the bill?

Mr. LILLYWHITE. The Council has not taken a specific position on this bill. They probably will in the forthcoming meeting, because their last meeting was held when this was still in the development stage, and all they had available at that time was the proposals which the officials thought would be in it, and they did take a strong position then. I just don't know, and I can't speak for the exact position they will take, but if they favored the revenue sharing proposal, they would certainly have strong opposition to the two or three proposals, the one that sends the money through the Governor's office, and the one that sets up a competing organization to the State boards of education, the one that limits the authorizations from what they are now to what they would be under this proposal, and the several other proposals that I have discussed.

Senator Pell. Would you give a personal view? Would you vote for or against the bill?

Mr. LILLYWHITE. I am sorry, I can't answer that, because I am just one of the representatives in the office, and I don't know what Council members would do, or what position they will take at this forthcoming meeting.

Senator PELL. As I interpret your testimony, what you are saying is that you are for all those provisions that preserve or enlarge the authority of the chief State school officers, and oppose all those provisions which denigrate or circumvent that authority.

Mr. LILLYWHITE. Well, that is generally correct. The chief State school officers, naturally, would want the authority

, granted to them to administer programs because they already administer 90 percent of the funds for elementary and secondard education.

Senator PELL. Isn't this testimony on the rather narrow basis of the self-interest of your own group?

Mr. LILLYWHITE. I am sorry? I didn't hear.

Senator PELL. Isn't your testimony directed toward the narrow basis of the self-interest of your own group?

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Mr. LILLYWHITE. Well, the council would not object to block grants focusing funds on major categories.

Senator Pell. As long as it went through the chief State school officers.

Mr. LILLYWHITE. That is correct.

Senator Pell. I want the record to show quite clearly that I appreciate your testimony. In general, the thrust of it is that anything that preserves or enlarges the authority of chief State school officers you support, and anything else you oppose, and that is about the main thrust of the testimony. Would that be correct?

Mr. LILLYWHITE. In general, yes; but I think it might be said this way: By law, they are now responsible for administering the educational program in each State, and if there are other agencies set up on a competing basis to administer a different—one set of Federal grants they would be responsible for administering another set of grants, and great confusion would result, and their authority would be eroded in trying to do the job for State and local funds.

Senator PELL. But the objective of this whole bill and all our work here is not the preservation of the authority of the chief State school officers. It is the education of the children.

What major educational objectives would you organize block grants around?

Mr. LILLYWHITE. Well, I think it is difficult here to state the specific objectives of each State, but one thing I did emphasize is that the State educational agencies themselves recognize that their own capabilities need strengthening for planning, for setting objectives, and for devising the procedures to reach those objectives, and I think they are working on it.

Senator PELL. But surely, you who speak for the chief State officers, must have some idea of the objectives. What would they be built around?

Mr. LILLYWHITE. Well, to speak generally-
Senator PELL. Are you an educator by background?

Mr. LILLYWHITE. Yes. I was just down at the Office of Education up to a year ago as the Associate Commissioner of Elementary and Secondary Education.

Senator PELL. Right. What educational objectives would you think would be best served by this type of block grants?

How would the children be better served ?

Mr. LILLYWHITE. I think the principal reason for the blocks rather than the narrow-purpose categorical aids is the leeway it gives for each State to adjust within major guidelines the funds that are available for compensatory education, for handicapped, for vocational education, to develop career education.

Now, there is little leeway to adjust to the individual conditions in each State with the extremely large number of narrow-purpose guidelines.

It is difficult to make that adjustment, and as you know, there is a great deal of paperwork involved with the large number of specific programs.

Senator PELL. How would you handle the question of the present inequities between the school districts? I saw a newspaper article the

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