I would also like to point in, in closing, Mr. Chairman, in my portion of the testimony, the concern we have about the current Ford bill. That deals with the combining of SEOG-IY-CY. We would like to point out to you, Mr. Chairman, that we feel that that combination could be detrimental to about 16 States in the union. I have, and would like to submit, a paper that was done by the financial aid officer, R. J. Gibson, at Yale University, for your perusal, and I would like to submit for the record at this point an analysis and submit to you this paper for analysis, and I would like to point out that the States that are going to lose under this combination of IY-CY includes the States of Rhode Island, Maine, Massachusetts, West Virginia, and the State of Washington. I urge you to look closely at this issue in this subcommittee. I want to thank you very much for your kind attention, Mr. Chair man. [The prepared statement of Mr. Irwin and information referred to follows:] DAVID M. IRWIN, EXECUTIVE VICE PRESIDENT, WASHINGTON FRIENDS OF HIGHER Mr. Chairman and Members of the Subcommittee: My name is Dave Irwin. I am Executive Vice President of the State of Washington Friends of Higher Education and Chairman Elect of the State Association Executive Council of the National Association of Independent Colleges and Universities. Therefore, Mr. Chairman, after close consultation on this matter with my associates, the views I am representing today are those of the majority of independent colleges and universities across the nation. The basic message I am bringing to you today is one of support for the various compromise proposals suggested by the higher education association executives. Those parts of the compromises which are especially important to us include a substantial increase in the threshold appropriation in the SEOG program and the establishment of such a threshold for SSIG; increases in the maximum awards for the Basic Grant, SEOG, and SSIG programs, and supporting increases in the authorizations for those three grant programs; a legislative definition of SEOG need to meet 75 percent of a student's cost of attendance minus parental contribution, Basic Grants, and SSIG; and a firm assurance that federal grant assistance will not be reduced in those states or institutions which have developed student grant programs and are, therefore, penalized by the Office of Education formulae. There are other proposals contained in the compromise recommendations, however, these four are the essential parts from the perspective of the State Association Executives Council and from my own state of Washington. Although we believe that it is essential to include these provisions in the legislation which this subcommittee is developing, we are concerned that even if all of the above provisions are included in the Education Amendments of 1980, the regulations which the Office of Education will issue to implement those amendments will obstruct the intent of the Congress. What I am referring Page 2 to are the regulations which OE promulgated last year to allocate campusbased funds among states and institutions throughout the country. And, Mr. Chairman, we are very concerned about what we hear the Office of Education intends to propose for the allocation process for the 1980-81 academic year. Although the regulations which were used last year and those being developed within HEW for next year speak in terms of "equity and consistantly applied standards, techniques, and procedures," the fact of the matter is that the regulations and the process they create are having exactly the opposite effect. The "fair share" funding methodology has already produced swift and major dislocations of funds from campus to campus, sector to sector, and state to state. We are deeply concerned about the shifts among campuses and sectors, and believe that the shifts among states violate the statutory state allocation formula. As an example, Washington's state share of the national appropriations for the three campus-based student aid programs dropped from 2.5 percent in 1978-79 to 2.3 percent in 1979-80, and we estimate it will be a further decrease in 1980-81. That will result in a loss of $2.7 million to students attending institutions within the state of Washington in 1980-81, and if the fair share concept is fully implemented, Washington would lose approximately $4 million. We believe that result is contrary to the intended result of the MISAA legislation enacted just last year. Let me give you some additional examples of the effect of the OE fair share regulations on the state of Washington: With enactment of MISAA last year, Congress increased appropriations for college work-study by 26 percent and for SEOG by 25 percent. If the statutory state allocation formulae had been followed properly by OE, one would assume that the increase for the state of Washington would approximate the national increase. However, under the fair share approach, Washington Page 3 state's increase was only 15.7 percent in CW-S and 10.3 percent for SEOG. These kinds of losses, prompted by the fair share formula, will be most difficult for an institution or a state to absorb. A similar difficulty arises with some of the fair share increases in funding for individual programs. For example, the NDSL fair share for Washington community colleges would increase by 324 percent, in the same year that the community colleges in Washington had the highest default rate among all sectors of the state. So that you do not think I am speaking only as a representative of Washington state and not as a representative of all forty-three of the NAICU State Executives, let me cite the effects of the fair share formula in other regions. In the West, Alaska, California, Colorado, Hawaii, Nevada, Oregon, Utah, Washington, and Wyoming will lose significantly if the formula is allowed to go into effect. In the Eastern region, New Jersey and West Virginia also would suffer significant losses under the fair share allocation process. In the Mid-west, the fair share formula would hurt allocations to Illinois, Ohio and Wisconsin; and in the South, Arkansas would suffer losses. I am certain, Mr. Chairman, that you and other members of the subcommittee have already received correspondence from your constituents about this formula, the effects of which are a national problem. Although I recognize that the Congress does not often legislate formulae for allocating federal funds, this problem cries out for your attention under your strong oversight authority. The Office of Education has proceeded to issue and implement regulations concerning the allocations of over $1 billion in campusbased student aid funds without adequately involving the Congress in the potential effects of that process. Last year at this time, HEW representatives came to congressional staff and explained the process which they had developed and wanted to implement for allocating 1979-80 campus-based funds. Those representatives promised congressional staff that the new procedure would be in effect only for academic year 1979-80 and the full results of that trial year would be evaluated before any further changes would be made in the formulae. This analysis has not ༄ Page 4 yet occurred basically because the Office of Education does not have a viable nationwide data base on which to base any real analysis. However, a notice of proposed rule-making is right now before the Secretary of HEW which would change the process from last year to this year and reduce the amount of conditional guarantee designed to insure that states and institutions maintain the funding level from the previous year. Our major concern is that this new fair share formulae process has been rushed into operation to meet some unknown need by OE bureaucrats, is poorly understood by those same people who must implement the process, and may have long term ramifications on state higher education policies on tuition and fees, on student aid, and on the provision of access and choice to students within each state. We urge you to use your oversight authority to require the Office of Education to develop and test its models and formulae and make these findings public before any step is taken to implement phase 2 of the fair share funding process. This would allow the Congress, higher education institutions, and the states sufficient time to review the immediate and long term effects of the funding process to insure that it adequately reflects congressional intent, that it is in fact equitable, and that it does not penalize those states with policies of open access and educational opportunity. We need to insure that the 1980-81 allocation to states and institutions is held to 100 percent of the conditional guarantee plus some factor for inflation. Mr. Chairman, let me also call the attention of the Subcommittee to another issue which affects not only independent institutions of higher education but |