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other day about a State, I think it was New York, that compared the difference in per capita funds of a school district with a low tax base with a school district that had a high tax base. If the money is distributed even-steven, it would not compensate for the differences in the education children are presently receiving, would it?

Mr. LILLYWHITE. I think the chief State school officers anticipate, if I might say, the California court decision which goes to the problem of which you spoke, and I think they favor the evening out of the ability to finance education between the poor and the rich districts, and I think they would use Federal funds to help do that.

Senator Pell. Do you think, for example, the State school board in New York would give more money to the Harlem schools than they would the Scarsdale schools, bearing in mind the political makeup of the State?

Mr. LILLYWHITE. I think that is difficult to answer.
Senator Pell. Excuse me, Jr. Lillywhite. You know the answer.
Mr. LILLYWHITE. I think in some cases they would.
Senator Pell. You believe the principal State school office in
Albany would even these inequities out between Scarsdale and
Harlem? You say that with the experience you have behind you as
an educator and a deputy commissioner?

Mr. LILLYWHITE. Some of these programs, the larger districts have got additional money, and that is because they have the ability to get that money, they have the expertise in preparing the applications, and the poorer districts don't get the money.

Senator PELL. But if you distributed it even-stephen, you reinforce those inequities.

Mr. LILLYWHITE. I think there is a considerable change in the complexion of the States in their desire to get their capabilities to the point where they can redirect education the way it ought to be, particularly planning and evaluation and a change in direction as a result of their findings, and I think you will find a great deal of change in the attitudes of the States toward these matters.

Senator Pell. I would hope this was true, and I respect your views in that regard. I would hope these funds would be distributed according to need, not according to where the tax base is, or where the political support was.

Mr. LILLYWHITE. We suggested in block grants that there be some guidelines inserted to prevent the allocation of these funds to more politically expedient purposes at any given time and to guarantee that they could be focused on the areas to which they were directed.

Senator PELL. Very well. Thank you very much, Mr. Lillywhite. You were very good to give us this testimony.

Mr. LILLYWHITE. Thank you.

(The prepared statement of B. Alden Lillywhite follows:)

PREPARED STATEMENT OF B. ALDEN LILLYWHITE, ASSISTANT TO THE EXECUTIVE

SECRETARY OF THE COUNCIL OF CHIEF STATE SCHOOL OFFICERS

EDUCATIONAL SPECIAL REVENUE SHARING 1

Mr. Chairman and members of the Subcommittee-my name is B. Alden Lillywhite and I am an 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, submitted to the Congress by the Administration early in 1971. In presenting this testimony, we do not intend to discuss the details of the proposal. Rather, we felt it was more appropriate to raise some of the major policy questions.

The Council and its individual members have been vitally concerned with legislation authorizing federal funds for education authorized during the past 10 years and have supported it. However, the number of categorical aid programs have multiplied since the passage of the National Defense Education Act in 1958, until there are now a very large number of different programs for elementary and secondary education authorizing funds for specific purposes, each having rigid guidelines and requiring separate applications and reports which make it extremely difficult for most districts to make most efficient use of the federal assistance that is available. For these and other reasons, the chief state school officers welcomed the statement made by Secretary Richardson in his speech to that group at their annual meeting in Miami Beach in 1970 when he suggested that a more viable approach to federal aid might be to consolidate into one legislative act all education programs that lend financial support in operating and maintaining the current educational efforts for elementary and secondary schools which would emphasize block grants to the states with broad discretionary powers to use federal funds in five major areas. He suggested further that states could be asked to submit a comprehensive plan on how they would allocate federal monies in each of the five broad areas and the money would flow by block grant through the state and, according to its plan, to the local school districts.

The Council officially commended Secretary Richardson for this thoughtful analysis, recommended that he attempt to implement the positions he described, and pledged its support of those efforts. The members of the Council strongly favor the concept of S. 1669 which is based on the block grant approach of providing federal funds for education with considerable discretion left to the states to decide just how the funds should be used in each of the major blocks or areas to meet the different conditions that exist in the different states.

The need is urgent to reduce the number of separate narrow purpose programs that now exist with the accompanying paper work which results. It makes good sense to let each state decide the specific ways in which the federal funds should be spent since they are responsible for administering the state and local funds for educational purposes which constitute on the average more than 90% of all funds spent for public elementary and secondary education programs. In the opinion of the Council, this is the most viable way to make significant progress in making the improvements urgently needed in education.

The Council also is convinced that the federal share should be at least 25% of the costs for elementary and secondary education if we are to provide the kinds of programs that will make it possible for each child to reach his full potential. A strictly categorical aid program involving this volume of federal funds would in our opinion be unmanageable. It would not be difficult to manage under the block grant or more general grant approach. At the same time it is recognized that it may be necessary to have some categorical aids to meet special problems or to further national priorities.

1 Testimony presented by B. Alden Lillywhite of the Council of Chief State School Officers to the Subcommittee on Education of the Senate Committee on Labor and Public Welfare, October 28, 1971.

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Specifically then, the Council favors the approach in the Special Educational Revenue Sharing Bill submitted to Congress by the Administration which proposed to condense many of the existing categorical aid authorizations into five major educational areas as follows: (1) Compensatory Education ; (2) Federally Impacted Areas; (3) Vocational Education ; (4) Programs for the Handicapped : and (5) Support Services. This proposal gives the states the additional discretionary authority to transfer of up to 30% of the funds from any of the five categories, except compensatory education and the money for the "A" type children in the impacted area program, to any of the other categories where greater need existed.

The Council generally favors the earmarking of federal funds for a small number of broad educational areas of major national concern as is proposed in S. 1669 with provisions that federal funds supplement rather than supplant state and local funds. We also favor a reasonable maintenance of effort provisions to assure that the states and local educational agencies at least continue their existing levels of support for educational programs. We also favor establishing in the legislative authorization guidelines for each major area sufficiently specific to assure that the federal funds would be directed to the areas of activity for which they were authorized. This type of legislative safeguard would support the state educational agencies in resisting the pressures that arise to use the federal funds for something which might be considered by some to be politically more urgent at any given time.

S. 1669 requires that a state plan be prepared for use of the funds in each of the major areas and that there be wide participation by representatives of the va rious groups in the state in developing the plan. The Council favors this type of provision but also feels that there should be a specific requirement for educational planning by the state educational agency as the most viable way of achieving the most efficient use of the federal funds and in redirecting education to achieve objectives stated in the yearly plan. Equally important is the necessity for requiring states and local educational agencies to be held accountable to the general public and to the federal administering agency for results. Finally, we believe there should be a requirement for evaluation of the activities undertaken under the federal grant programs and redirection of program thrusts and activities as indicated by the findings.

This type of concept for administering federal assistance requires strengthening the capacities of state educational agencies in the important areas of planning for and management of educational activities and in particular the leadership functions of state educational agencies. Much could be said about the kinds of activities that need to be undertaken to strengthen the capabilities of state and local educational agencies to adequately plan, manage, evaluate and redirect educational programs, but that is not the purpose of this statement. Suffice to say that these are the areas to which the Council and we believe most of the states are giving greatly increased attention. Finally, it is essential that sufficient administrative funds be made available to state education agencies to achieve these goals and that sufficient program funds be made available to the states to administer the block grants. Such funds were made available under the categorical aid programs.

A final and most important point is that states are unanimous in their belief that federal funds for education should be allocated to and administered by state educational agencies who by law are responsible for administering the educational program in the states.

S. 1669 incorporates some of these major provisions considered by the Council to be desirable but does not include others. It also includes some proposals that are opposed by the Council and its individual members. Finally, it includes some provision which may be of lesser significance but which, if changed, would in our opinion improve the bill.

Perhaps the most undesirable feature is the requirement that the funds were to be allocated to the Governor's office and that he designate a single state agency to administer the educational programs to be financed with these funds. He also is required to appoint an advisory council with broad representation from the groups to be served and with broad powers to guide the disbursement of these federal funds.

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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 $48.8 billion of which about $16.4 billion will be from state funds and $32.0 billion from local funds. State agencies also administer a major portion of the federal funds appropriated for education.

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 under Special Revenue Sharing, which constitutes about 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 $48 billion of state and local education funds and those other federal aid programs not covered in 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 proposal, the answer inevitably was that there was little question but that the Governor would designate the state education agency as the administering agency. If this is the case the question logically follows as to why go through the motion of sending the funds through the Governor's office. The objective of keeping the Governor's office informed of the amount and timing of allocations could be accomplished by simply informing that office when the funds were apportioned. 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, 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 request for the categorical grant program covered under the proposal for the year 1971, a total of $2.8 billion plus $200 million of new funds. Specifically, the formula would have allocated 51% of the funds to Compensatory Education, 14% to Impact Aid, 12% to Vocational Education, 6% for the Handicapped and 17% 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% of the authorization for all categorical aids, the amount the authorizing committees felt was needed for these purposes. In addition, 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 formula for initial allocation as noted above can be altered by any state for any block except compensatory education and part “A” of impact aid by 30%. 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 would have re ved ler 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.

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One of the major objections to the 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 block grant proposal are about twice the amount of the appropriation this change has the effect of reducing the authorizations for this program by about one-half. The Council feels this would be a most serious mistake.

As finally submitted, S. 1669 did not include a maintenance of effort 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 or evaluation and no funds were specifically earmarked for state administration, although it seems to have been intended that these funds were authorized under the fifth block "support services."

One other aspect of the provisions deserves 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 where a school district earned entitlement on 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, the Council favors consolidation of the large number of categorical aid authorizations into a much smaller number of blocks of funds with each block focused on a major educational problem as is authorized by S. 1669 which would include the desirable provisions and eliminate the undesirable provision discussed in this testimony.

Thank you.

Senator PELL. Our next witnesses represent the National School Boards Association : Mr. F. E. “Bud” Phillips, vice president, August W. Steinhilber, and Michael A. Resnick.

It is a rather long statement. As you know, we are trying to hold the statements down to 5, 10, or 15 minutes. Would you like to digest it?

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STATEMENT OF F. E. "BUD” PHILLIPS, FIRST VICE PRESIDENT;

AUGUST W. STEINHILBER, DIRECTOR OF FEDERAL AND CON-
GRESSIONAL RELATIONS; AND MICHAEL A. RESNICK, LEGISLA-
TIVE SPECIALIST, A PANEL REPRESENTING THE NATIONAL
SCHOOL BOARDS ASSOCIATION

Mr. PHILLIPS. I will try to summarize it the best I can. Mr. Chairman, my name is F. E. “Bud” Phillips, first vice president of the National School Boards Association. I am accompanied by August W. Steinhilber, director of Federal and congressional relations of the association; and Michael A. Resnick who is Mr. Steinhilber's legislative specialist. They will both be available to assist in answering your questions.

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