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2.

Existing legislation, with accelerated funding, provides the authority with which to pursue full educational opportunity for the handicapped.

Therefore, if Senate Bill 1669 is to be enacted into law,

We suggest the following amendments:

A.

The formula for determining the handicapped's
share should be reconstituted to provide a
guarantee of at least a $300 million level of
funding or present earmarkings under Title I, Title
III, and the Vocational Education Act are to
be steadfastly maintained.

B.

The definition of handicapped children must be
broadened to include the child with specific
learning disability. Public Law 91-230 set up
a model program for these children and it is
our hope that Senate Bill 1669 would extend this
spirit.

Mr. Chairman, the Council for Exceptional Children is

pleased to have had the opportunity to assist the Subcommittee

in its endeavors.

EDUCATION REVENUE SHARING ACT OF 1971

WEDNESDAY, NOVEMBER 3, 1971

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

Washington, D.C. The subcommittee met at 2:30 p.m., pursuant to recess, in room 4232, New Senate Office Building, Senator Claiborne Pell, (chairman of the subcommittee) presiding.

Present: Senators Pell and Dominick.

Staff members present: Stephen J. Wexler, counsel; Richard D. Smith, associate counsel; and Roy H. Millenson, minority professional staff member.

Senator PELL. The Subcommittee on Education will come to order for this third day of hearings on special revenue sharing, a measure supported by the administration. We want to give their bill every consideration.

The first witness today is Mr. David Selden, president of the American Federation of Teachers with whom this committee has had a long and friendly relationship. Mr. Selden, will you introduce your associate.

Mr. SELDEN. Yes. With me today is Carl Magel, our legislative director.

Senator Pell. You have a statement here which is not too long. Would you care to read it in full or would you like to insert it in the record and give a summary?

Mr. SELDEN. I would like to read it in full. Usually I don't do that but I would like to this time.

Senator Pell. Please proceed as you wish.

STATEMENT OF DAVID SELDEN, PRESIDENT, AMERICAN FEDERATION OF TEACHERS, AFL-CIO, ACCOMPANIED BY CARL MAGEL, LEGISLATIVE DIRECTOR

Mr. SELDEN. On October 5, 1971, I testified before the U.S. Senate Select Committee on Equal Educational Opportunity. The committee, as you know, is headed by Senator Walter F. Mondale. I made the point that there could be no equality of educational opportunity unless our Nation is willing to devote approximately twice as much money to schools as it does at present. I further suggested that it was not unreasonable to devote 10 percent of our gross national income to the education of the young. At the present time, we are using just under 6 percent for that purpose. Since our gross national

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income last year was $795 billion, 10 percent would be $79.5 billion, as compared with the approximately $35 billion we now spend.

In the next few paragraphs, I detail how we arrived at that figure and I also point out that there is support for it now from the President's own educational finance project and almost everybody who has looked into the question of financial needs of education has come up with very close to the same figure.

In my testimony to Senator Mondale, I suggested a general strategy for financing education. Our remarks about revenue sharing have to be considered in this context:

1. Each State would establish a State education fund to be supported

A 20-mil property tax based on State property assessing procedures audited by the U.S. Treasury Department.

This is necessary, Senator, as you know, because of the Serana decision and also the recent decision in Minnesota. It seems that locally levied property taxes levied for education are unconstitutional. We have known for some time that they are not desirable as a means for supporting education.

Therefore, the best way to equalize within a State is to go to a statewide property tax if you are going to have any property tax at all. I don't think we can get along without the property tax.

2. The State fund would be supported by a permissive education surtax on the Federal income tax. The State wouldn't have to use it unless it wanted to. The surtax would be paid to the Treasury Department by the taxpayer along with his U.S. income tax bill. The Treasury Department would then refund such revenue to the State educational fund.

3. These two sources of income-property tax plus surtax-would be supplemented by other State tax sources. Federal aid would then be added to the State educational fund and any equalization factor would be built into the formula by requiring that the Federal Government bring the fund up to an equivalent of $1,600 per year per child, which we have ascertained to be the minimum average cost, considering all types of education, to give adequate education to all children.

States would be required to present to the United States Office of Education a plan for distribution of educational funds to local districts in accordance with the educational needs of the district. Educational need would be determined by means of a sociological index which would take into account such factors as per capita income, student mobility, student involvement in court proceedings, and other factors.

Local districts would be required to certify acceptable plans to their State agencies, with copies to the U.S. Office of Education, describing programs for intensive education of hard-to-educate children. That is, there would have to be plans that would have to be submitted in advance to the State department, with copies to the U.S. Office in advance. If the U.S. Office wished to intervene, it could. But this would not require pre-approval of all plans by the U.S. Government not would it go over to the loose operation of reviewing years after the event.

Local districts would be required to comply with Federal laws and court decisions relating to integration and civil rights.

A question then arises: How will the Federal Government participate in the national educational effort?

We have studied the proposal of the administration in regard to "revenue sharing.” Before commenting on these proposals in detail, I wish to make the observation that the effect of these proposals has been detrimental to many school systems—even disastrous to some. Instead of conferring with leaders of Congress or interested organizations; instead of following the excellent recommendations of past educational task forces; the President dumped his so-called revenue sharing proposals into the public domain with the maximum possible publicity. It appeared to many Governors and State legislators that the President was offering "free money.” The effect was to inhibit State effort. After all, why should a Governor or a State legislature accept the political liability of raising more money if the Federal Government is willing to give it to them with no strings attached?

The costs of education due to inflation and increased enrollments have continued to rise meanwhile, but in most cases State support has not risen proportionally. Since local tax resources are already near the saturation point, many school systems have been forced to cut back. Thousands of teaching positions have been cut from budgets, and some school systems have been forced to shut down or drastically curtail their school year. Revenue sharing is one of those terms, like "love," that carry with

" them all sorts of pleasant associations, but which are extremely difficult to define.

The original proposal by Economist Walter Heller meant simply that the Federal Government would return a fixed percentage of its income to the States. The States would use this money to supplant the more regressive property and sales taxes on which most of them rely. In order to make the arithmetic work out so that the total amount of governmental expenditure is not reduced, Federal taxes would have to be greatly increased.

Obviously, there are two sides to revenue sharing: raising the money and passing it out. The administration proposal does nothing at all about how the money would be raised and it is extremely vague about the method of passing it out.

In most present forms of Federal assistance-title I of the Elementary and Secondary Education Act, for instance-the formula for distributing Federal aid includes an “equalization factor.” That is, poorer districts receive more aid per capita than the wealthy ones. Equalization factors in aid programs, whether Federal aid programs to States or State aid programs to local communities, have been the subject of legislative jockeying for many decades. There is nothing in the administration proposals that I have seen which comes to grips with the equalization problem.

So far as education is concerned, the administration is proposing "special revenue sharing and general revenue sharing." Special revenue sharing is really fund or grant consolidation. And I understand that the administration might even be willing to accept that term if we don't like the term, revenue sharing. Anyway, special revenue sharing calls for combining about three dozen present categorical aid programs into five broad block grants. The only provision for "equalization” so far as I can determine lies in the concept that each state will continue to receive in total educational aid no less than it now receives. Since some of the present programs, Title I for instance have an equalization factor built in, equalization would apparent be continued.

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