It may be we ought to give more emphasis in our study, but we approach the thing from, I think, a conservative way, and considered school districts, and States rather than types of programs, but we did say in the legislation, that when the State educational fund is amassed through whatever means of revenue, partly Federal aid, partly State income from the best taxes we can get, when that is done, then that should be passed out to school districts, not on an equal per child basis, but on a basis of educational need.

We know, if anything, we know from our research is that children from economically deprived backgrounds, who are the most difficult to educate, and needs it the most, and that costs more money, and some school systems should receive their funds on the basis of that measure of educational need.

I might say that we are strong supporters of title I, and also the full-funding concept.

We think that title I is the fairest program, that is now on the books, and if you are going to do anything at all, we would advocate that you go up to full funding on title I, and not leave it at its present starvation level.

Mr. QUIE. Let us look at full funding of programs we presently have operating. I am wondering if we will ever fully fund, unless we designate a tax at the Federal level for that particular purpose.

We did that in Minnesota. We earmarked the income tax for education. I do not think we would have done as well for State aid to education if we would not have earmarked the income tax in that

way.

I notice you recommend again in your green booklet here, on the last page, that the States be permitted to levy an educational surcharge tax on income tax. This would require the Ways and Means Committee to come into the picture. I do not share the view, that we ought to go to the Ways and Means Committee, if we are going to help education.

Mr. SELDEN. I think when it comes to States granting tax resources, that it is a Ways and Means proposal. I am only an individual who has written a pamphlet, and the very sections of that pamphlet, which would fall under various committees of Congress for their consideration.

I am not well versed enough to know which one would have which one, but I should think a taxation matter would be before Ways and Means.

Mr. QUIE. Let me ask this last question. Now, we get into the argument, whether there ought to be a value added tax. I think there are a great number of people who consider a sales tax better than a property tax, when we think of the old people who are driven out of their homes because of the property tax.

Mr. SELDEN. I wish I had a dollar for all of the corporations that have been saved by the widows and orphans.

Mr. QUIE. If you could earmark money out of the income tax, would you find that acceptable?

Mr. SELDEN. Well, I would prefer not to. It would be better than the value-added tax. I think of how the Federal Government raises its money for all its purposes is an overall question, not just involving

education, and it should raise its money in the most progressive way consistent with the amount of money which needed to be raised.

Mr. QUIE. I would like to say as a person who has observed the operation of the Federal Government in the educational field, if we depend on just appropriations, without any special tax for educational expenditures, I doubt we will ever come up with the level that your people suggest.

I set the level for my own thinking, so I could have a goal of 25 percent.

This is as a conservative Republican. I doubt we will ever get that, unless we set some tax aside for it, because in my particular area, there are other demands that are very great, such as environment in the past 2 years.

Mr. FORD. Will the gentleman yield?

Mr. SELDEN. Well, I have been through this thing so many times before.

I have made many proposals for spending money on education, because I do not think we can bring about significant improvement on education without paying for it, but politics being what it is, I am getting a little weary.

I remember years ago on trying to get increased appropriations for education in New York City. I suggested the city go for a piggyback tax, a surtax on the State income tax.

Instead, it was chosen to raise the sales tax by then a percent, and I notice today, in this morning's Times, New York City, that New York City is in a crisis, where if a more adaptable and flexible surtax method had been chosen in that instance, I think they would have a lot less problem today, and it is just arguing about rates there, and somewhere a compromise would be found.

Now, there is something to be said for that, there is something to be said for putting a gasoline tax back into the roads, I suppose, but generally speaking, it hurts me to go for the earmarked tax.

Students of government, which I am one in a modest way, realize that tax earmarking, it is just about as bad as giving the sheriff the fees he gets from the fines that are levied. It is an outmoded system of government that can lead to a great deal of harm.

Mr. BELL. Mr. Chairman

Mr. QUIE. The gentleman from California asked me first.

Mr. BELL. I have a statement here on inequity of school financing written by Joel S. Berke and John C. Callahan. On page 28, it shows a diagram, which I think is an example of what I said earlier, of what might result from a State assumption of school costs with equalized taxes and equal distribution in San Francisco.

This is just to give you an example. In 1970, San Francisco spent $709 per pupil. In a statewide plan of taxation, according to this statement, taking the 2.9-percent total State income distributed equal

ly, the result would be an expenditure per pupil of only $435 in San Francisco.

On the other hand, if 2.9 percent were retained in San Francisco, it would increase the per pupil expenditure to $871.

Now, these are just examples.

Mr. SELDEN. I do not find that astonishing. I said I did not think you would find that very palatable, because people that live in San Francisco have more money, and they will pay more taxes.

Mr. BELL. I would like to request of the chairman, unanimous consent that this document be placed in the record.

Mr. PUCINSKI. There being no objection, so ordered.

(The document referred to follows:)

INEQUITIES IN SCHOOL FINANCE: IMPLICATIONS OF THE SCHOOL FINANCE CASES AND PROPOSED FEDERAL REVENUE SHARING PROGRAMS

(By Joel S. Berke, Syracuse University Research Corporation, and John C. Callahan, University of Virginia)

SUMMARY

American educational finance is characterized by inequities both in the way it distributes educational services and in the way it allocates the burdens of paying for these services. In particular, large central cities are among the areas that are consistently denied educational resources in proportion to their need despite higher overall tax effort than in neighboring jurisdictions.

Recent court cases which have invalidated systems of state finance for public education as violations of the 14th Amendment are unlikely to change such inequitable patterns of resource distribution. If states assume the financing of the current local share of educational revenues through broadbased, proportional rather than progressive taxes, cities will pay more for education than they do at present. If states distribute those revenues back to localities in equal per pupil amounts, cities will frequently get less from the state redistribution than they currently spend from local sources. It is entirely possible that revisions in state finance that come in the wake of the new legal doctrines may result in higher taxes and lower or at best no greater educational expenditures for urban education.

We believe, therefore, that any program of federal revenue sharing that is designed to reach the most serious fiscal problems of American public education must be focused on the special fiscal problems of education in large cities and in other areas of relatively low fiscal capacity for raising educational revenues and high incidence of need for costly educational programs.

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

INTRODUCTION

This paper grows out of a series of research efforts that the authors have been engaged in over the past few years, both jointly, individually, and with other colleagues. Most directly, this paper is based upon two current studies, an examination of the legal and fiscal dimensions of inequalities of educational opportunity and an analysis of the 1970 Census data on financial and demographic trends in the largest metropolitan areas of the nation. While the sources of our findings are therefore varied and involve a variety of methodological techniques, the policy implications seem to us to be eminently clear, and may be stated rather simply as follows.

First, American educational finance is characterized by inequities both in the way it distributes educational services and in the way it allocate the burdens of paying for these services. In particular, large central cities are among the areas that are consistently denied educational resources in proportion to their need despite higher overall tax effort than in neighboring jurisdictions. Second, recent court cases which have invalidated systems of state finance for public education as violations of the 14th Amendment are unlikely to change such inequitable patterns of resource distribution. Indeed, it is entirely possible that revisions in state finance that come in the wake of the new legal doctrines may result in higher taxes and lower or at best no greater educational expenditures for urban education. Third, we believe, therefore, that any program of federal revenue sharing that is designed to reach the most serious fiscal problems of American public education must be focussed on the special fiscal problems of education in large cities and in other areas of relatively low fiscal capacity for raising revenues and high incidence of need for costly educational programs.

1. INEQUITIES IN FINANCING THE PUBLIC SCHOOLS

The current approach to financing America's public school is characterized by inequality of educational opportunity and inequity in the distribution of the burden of supporting educational services. This inequality and inequity stems not simply from the fact that there are marked differences in the quality of education among the schools, school districts, states and regions of the nation. Rather, what makes those disparties inequitable is that the students who receive the highest quality education are frequently those from the most advantaged backgrounds while those who come from the most impoverished communities and most disadvantaged social backgrounds often receive no more and frequently far less in the quality of educational services as measured by per pupil expenditures. Further, under our archaic system of distributing the costs of education, we find that communities which are the most hardpressed to raise revenues for public services in general or for education in particular are the same communities which have the highest educational burdens to support, while those communities whose needs for the total package of public services is less or where property tax bases are higher than their neighbors' frequently tax themselves far less yet provide superior educational services.

Interstate and Intrastate Disparities in Educational Expenditures

Let us disentangle the various elements of our argument and document each count of the indictment we have just made. First, the disparities in educational quality as measured by the level of expenditures on education.

Among the states, average expenditures currently range from a high of approximately $1,400 to a low of less than $500. (See Table I). While such statistics appear to be of major current interest, they are really exceedingly difficult to interpret because of the immense variety in the educational finance systems of the fifty states and because state averages by definition mask the range of disparities by averaging out high and low districts. In some states, substantial costs for fringe benefits or for school health services may be borne by some jurisdiction other than the school system and so may not appear in average school expenditure statistics. In some states. all school districts may be spending in a very narrow range of variation while in other states there may be vast disparities among the quality of education within the state, yet the two states may appear quite similar when the average state expenditure is computed.

TABLE 1.-CURRENT EXPENDITURE PER PUPIL IN ADA, PUBLIC ELEMENTARY AND SECONDARY SCHOOLS, BY

1 Includes expenditures for area vocational schools and junior colleges.

Source: National Education Association, Research Division, Estimates of School Statistics. 1961-62. Research Report 1961-R22. Washington, D.C.: the Association, 1961. p. 29, 31. National Education Association, Research Division. Estimates of School Statistics, 1970-71. Research Report 1970-R15. Washington, D.C.: the Association, 1970, p. 37.

A second and somewhat more meaningful look at the disparities in educational offerings in the nation, however, is to examine the range of spending among school districts of each state. (Table II) Table two shows the high and low expenditure districts in the forty-nine states with local school districts. Here we begin to reach a somewhat more meaningful unit of analysis, since there is far greater uniformity of the elements being compared within a given state than between states and also because there is in actuality far more competition among pupils in a given state than there is between pupils from, say, New York and Wyoming. Within a state, the student getting a better education may well be competing in a job market against the student whose school system gives him less effective training, and the inequalities in educational offering become more than an abstract unfairness.