Page Two linkage as reflected in the compromise proposal's BEOG and SEOG provisions. To move into the 1980's without this built-in balance would in our judgement effectively frustrate our goals of enhancing quality. For state systems which emphasize quality, such as New York's, the absence of such a linkage between SEOG and BEOG would be a disaster. New York has been in the vanguard of those states responding to past federal initiatives to encourage a balanced approach to the problem of student access and student choice, while maintaining priority focus upon academic excellence. We lead the nation in student assistance. In academic year 1978-1979, our State Tuition Assistance Program provided in excess of 260 million dollars to undergraduates in all sectors of New York's system. We achieved this leadership position largely in response to the challenge placed before all states by the Congress. Your distinguished Subcommittee helped fashion that challenge. We are proud of the role of the senior Senator from New York in that development. The fact that there has been such an affirmative response from our State's legislative and executive branches is not unrelated to efforts made by you, Mr. Chairman, and Senator Javits to build in incentives for state effort. But, Mr. Chairman, there is too often a dichotomy between Congressional intent and Federal implementation. A flagrant example of such a dichotomy is represented by the regulations imposed by the Office of Education with respect to the distribution of campus-based student assistance. What was intended by the Congress to be an incentive to the states is being applied to states like New York as a disincentive. The formula from which OE determines institutional need for SEOG and other campus-based assistance subtracts 100 percent of state grant assistance and 50 percent of institutionally-provided assistance from the total amount which would Page Three otherwise be made available. Thus, the formula substantially penalizes those states and institutions which have best responded to the intent of Congress to provide incentives. A word about institutional assistance. Higher education jargon refers to it as "unfunded student aid." It is more aptly described as a "Robin Hood tax." The bulk of this institutional money is the movement of tuition revenue from higher income students to lower income students. As a tax, it is highly progressive. It is hardly an institutional policy that could be followed without significant social commitment. It requires a high level of intestinal fortitude on the part of campus trustees and chief administrators. This Robin Hood money is essential to maintaining institutions in the independent sector that are as intergrated and similar in income profile of students as those in the government sector. It enables us to bridge the invidious barrier of economic circumstance in extending choice to needy students. But, the Office of Education does not reward such pursuit of sound and humane public policy. It penalizes it. Fifty cents of every Robin Hood dollar we strain to raise for needy students is counted against us in the apportionment of federal campus-based student assistance. Every penny of state effort is counted against us. Mr. Chairman, we find these distortions of Congressional intent to be intolerable. For that reason, in cooperation with other states and associations, we strongly urge that the bill reported to the Senate contain specific language which would prohibit the Office of Education from continuation of disincentives and penalties because of state and institutional student aid efforts. All direct state aid for students and all need based-institutional aid for students should be specifically exempt from penalty in the distribution of federal campus-based student assistance. Page Four Lest you consider us unduly paranoid in this plea, you should know the response of OE to our success in obtaining inclusion of what we and the Congressional sponsors thought was such a provision in H. R. 5192 just a few weeks ago. The reaction of the Office of Education was simply to declare that the formulae now in use do not penalize states and institutions which provide student assistance. OE officials have said they intend to proceed next year with an even more regressive formula. Mr. Chairman, we ask you to tell OE in no uncertain terms that the Congress does not find acceptable the issuance of regulations such as those used last year to discount state and institutional student assistance. Not only would such a firm expression help relieve the present intolerable condition, it should be most helpful in guiding the leadership of the new Department of Education on the subject of Congressional intent. Like many others across this country, higher education in New York is deeply concerned about the new federal Department of Education. Nothing would go further in allaying the fear of those who do not welcome a federal education ministry than Congressional action to assure that state and local effort is encouraged. Senator PELL. Thank you very much, Mr. Paley and Mr. Irwin. Mr. Irwin, I know you had some concern, and you did, too, Mr. Paley, with the so called fair share formula. I think, Mr. Irwin, you felt some States were benefiting unduly, others were not. Could you submit for the record your view of which States are benefiting unfairly and which are not? Mr. IRWIN. Well, we have a listing on the fair share formula, and I could run through the list, Mr. Chairman. Senator PELL. It is not in the testimony you submitted. Mr. IRWIN. I gave you some information. Senator PELL. You gave me some names here. Mr. IRWIN. Yes, and I would just want to refer to those. Senator PELL. You have those that are disadvantaged. Mr. IRWIN. I was pointing out that the States that were particu larly being agrieved under the fair share formula, Mr. Chairman, were, in the West, Alaska, California, Colorado Senator PELL. I have that list. That is right here. Mr. IRWIN. Right. Senator PELL. Maybe what you could do is submit to us, for the record, a table showing your view as to how they benefit or not. Mr. IRWIN. I certainly will, Mr. Chairman. Senator PELL. I know I have a very simple rule of thumb that if my State gets half of 1 percent of any national allotment, that is about fair, because we have half of 1 percent of the people. Mr. IRWIN. That is correct. Senator PELL. And I think you might relate that rather simple formula to the fair share formula and see how you come out. Senator STAFFORD. That same percentile pleases the people of Vermont, too. [Laughter.] Mr. IRWIN. Mr. Chairman, in the State of Washington, we look at about 2.6 to 2.9 percent of appropriations on the campus-based, and ours is falling. Senator PELL. What is your proportion of the population? Mr. IRWIN. Well, we are a high access State in higher education. We are second in the country as far as access to higher education. Senator PELL. No. What is your population? Mr. IRWIN. Our population is about 4 million. Senator PELL. Four million. Then you are doing better than the average. Mr. IRWIN. We have been consistently. Senator PELL. Yes. So you should not be complaining in Washing ton. Mr. IRWIN. Well, we are looking at the full implementation of fair share. Senator PELL. I appreciate your objectivity and concern for the national well-being, but if it was adjusted, you would lose. Do you have any thought as to what the formula you would like to see should look like? Mr. IRWIN. Well, right now we would talk about the possibility, if we could persuade the Office of Education rather than start implementing fair share. Last year what the Office of Education did was they gave everybody 100-percent guarantee, conditional guarantee. So they held everybody harmless for 100 percent of the funds that they had received the previous year and distributed the rest of the appropriations based on this fair share formula. We would encourage the Office of Education to do that again this year. However, the Office of Education is talking about implementing or phasing in fair share. What they are planning on doing this year or at least conversation is that they going to only conditionally guarantee 90 percent of the funds and distribute the rest of them through the fair share mechanism. Our concern, Mr. Chairman, is the fact that we have an opportunity to take this whole fair share concept, keep it in place, and have an opportunity to study it and get some analysis on it rather than just move ahead and implement it. We are afraid that it is going to be a disaster if it is fully implemented, and of course, the figures that I have given you today are full implementation of the program of fair share. We are afraid of the program until we have a chance to analyze it. So all we are trying to do is ask the Office of Education to slow down and really study the information and study this program to see if this is a good distribution process. And they seem a little reluctant to want to do that. Senator PELL. Mr. Paley, if, for some reason we do not increase the supplemental educational opportunity grant figure, what would that do to the half-cost compromise? Would the whole thing fall apart, then, do you think? Mr. PALEY. Yes; that is absolutely imperative to our maintaining support for the compromise. Without the SEOG increase it is no longer a compromise, and as I mentioned previously, Mr. Chairman, I really believe that what we are doing here by building in the SEOG movement along with the movement of BEOG to a point the h and we wer men es to PA where the half-cost becomes 60 percent, it is a very balanced approach, and it is a very, very sensitive instrument. If we were to remove the SEOG provisions to this, as Chancellor Eggers mentioned before, it would impose a severe disincentive for families to be able to select independent institutions. Senator PELL. My recollection is in the last go-around on the Senate floor, every trigger was knocked out. Mr. PALEY. Yes, I understand that. In this particular case, the triggering mechanism, you know, the control of it remains with appropriations. If you all decide you do not want to move this, the triggers do not take effect. Senator PELL. But another point here, too, I think is that this whole so-called half-cost compromise might be pie in the sky because it involves the expenditure of more funds than are presently programed, and I do not see any indication of that coming to be. Mr. PALEY. I heard what Dr. Coor mentioned before with respect to cost here. There are other factors than cost which I have not heard mentioned in these hearings heretofore-I may have missed some of them-with respect to the general increase in inflation and movement of income by families in this country they are going to remove an awful lot of people from eligibility for various programs, and you will have, along with the decline in the higher education population, a probability of some substantial savings. Well, the impact in costs which I think most of the people are looking at is completely the negative side of this thing. We do have opportunity to obtain some savings here. And incidentally, with respect to SEOG being a component of this, for those States which have high proportions of independent sector enrollments, while their efforts may be extraordinary on behalf of students, their overall outlays for institutions are such that they are able to reduce their State effort and capture savings at the State level. Senator PELL. Thank you very much. Senator Stafford? Senator STAFFORD. I have no questions, Mr. Chairman. Senator JAVITS. I just have one question of Mr. Paley, who is an old friend. What can we do to give a greater incentive for these State programs dealing with scholarships, et cetera, which with Senator Pell's and Senator Stafford's and other help we got started with? Mr. PALEY. Well, Senator, as one of the architects of the whole concept of incentives, I think that you would be one of the first to realize the need to exclude the agency, in this case OE, or as our junior Senator refers to it as "the thing," from control and tampering with the intent of the Congress. I do not think it was your intent to impose upon the States disincentives. It was because of your sponsorship, because of Senator Bell's commitment to this thing that our Governors and our State legislatures invested enormous effort in this, and we are now leading the country in State effort on tuition assistance, and we are getting our head knocked off for it by OE. Senator PELL. Thank you very much indeed, gentlemen. |