SUMMARY OF PUBLIC LAW 874 PROGRAMS AND PROJECTED LOSSES SUPPLIED BY HAROLD FARLEY, IDAHO DEPUTY SUPERINTENDENT OF PUBLIC INSTRUCTION We have thus far painted a picture of the need and benefits of Public Law 874 in order to keep our small rural school districts at least moderately solvent. But what is the effect of the 1966 amendment to P.L. 874? It would require that the districts give up as much of their entitlement as they receive in payment from the forest reserve funds from the sale of timber from the national forest lands within their respective counties. This would be a reasonable suggestion, Mr. Chairman, if the districts were using those forest funds for maintenance and operation. But such is not the case in Idaho, nor I have been informed by colleagues from other Western states, in most other states. The Idaho State Legislature made specific reference to these forest funds in Idaho Session Laws of 1957, Chap 116 (S.B. 101). The legislature directed that the funds each county received from the sale of timber in the national forests be divided between the county road funds and the local school districts, with school districts receiving 30 per cent of the total share. It further specified that the school districts would use these funds for the purchase of school sites, construction of new school buildings and the remodeling of existing buildings. In other words, to be used for capital investment, but not for current educational operations. Yet the 1966 amendment to P.L. 874 would force local districts to subtract from their operating funds monies they have been receiving for construction purposes. What we appear to be talking about, Mr. Chairman, is not P.L. 874 at all, but rather, P.L. 815, the companion measure that provides federal construction assistance to impacted school areas. I shall return to this point in a moment, but first, let me cite the critical situation that now exists as a result of the 1966 amendment. Local school budgets are prepared long in advance of the federal budget. In order to provide needed funds for the 1966-67 school year, local districts prepared their budgets shortly after the first of the year and by mid-April, most budgets had been approved by the trustees and put into effect by July 1 in order to prepare for the September start of the school year. In Congress, however, the second session of the 89th Congress was not notable for its speed. At the time the local districts implemented their 1966-67 school year budgets, Congress had yet to act on any education bill. It was not until late October that a bill was approved and it did not become law until November. By this time, the schools were well into their 1967 fiscal budget and were totally unprepared for the amendment to P.L. 874 when it first came to their attention in mid-December in regional U.S. Office of Education meetings. Our rural districts already had programmed into their meager budgets all the projected P.L. 874 funds they would be entitled to, based on the number of children in their district who were federally-connected. On Dec. 27, 1966, this was first brought to my attention by Mr. Jerry L. Evans, superintendent of the Cascade, Idaho, Public Schools, another small district, flanked on all sides by the Payette National Forest. He had just come from a meeting with the Regional Representative for Public Law 874. Mr. Evans wrote me: I came away both dejected and bewildered. We were told that the new bulletin of regulations requires that monies rereceived from the Federal Forest Fund must be subtracted from the amount of our P.L. 874 entitlement. This is a drastic change and for all practical purposes, eliminates this school district from the P.L. 874 program. The most serious problem involved with this is that this money was budgeted as anticipated revenue and in reality has been pretty well expended by this time in the budget year. I just cannot imagine that the intent of Congress was to cripple the operation of this school district as will surely have to happen. Shortly thereafter, I received many more cries from other superintendents in Idaho. It became obvious that they were in serious trouble and needed quick relief. I next conferred with Mr. B. Alden Lillywhite, Director of School Assistance in Federally Affected Areas for the U.S. Office of Education. He agreed that immediate relief should be provided and that it was not the intent of the U.S. Office of Education to strike at the financial support of the small rural school. With advice from Mr. Lillywhite's office, the language of S. 382 was drafted. S. 382 would amend P.L. 874 to eliminate any deductions from the 1967 fiscal year entitlements of all districts. This should be done, Mr. Chairman in order to avoid penalizing the districts-and the children therein-for a situation that was not of their making. They had no warning of the proposed change; they made their budgets up in good faith, based upon past years and it was Congress that was dilatory in waiting until late Fall to enact the bill. This would provide relief for this year, but what of the future? Let me return to the matter of how the local districts had been using federal timber sales shares in the past. As many of my colleagues from metropolitan areas know, and almost all from rural areas know, getting school bonds approved by the voters is, at best, a difficult task. Add to the natural reluctance of the voters the problem of a limited tax base and you have the situation facing most rural educators. School construction money has been hard to come by and P. L. 815 has been as much of a blessing as P.L. 874. Added to the P.L. 815 funds have been the monies the districts have been getting as their share of the forest timber sales. It is from the school districts' construction nest eggs that we will be subtracting the forest monies. We recognize, Mr. Chairman, that there is certain justice to the argument that no matter how the districts have been using these forest funds, it does amount to a form of double payment. It is more true in relationship to operating funds than to construction monies. I do not think that it was the intent of Congress in the 1966 amendments to P.L. 874 to wipe out the carefully conserved building funds that districts had so painfully accumulated. Accordingly, S. 382 offers a reasonable solution and formula for future years I might point out, Mr. Chairman, that it has the approval of the U.S. Office of Education, and I have also submitted it to our Idaho rural educators who are generally in agreement. After first providing immediate relief for the current fiscal year, S. 382 then proposes that school districts shall apportion all future Federal forest and lieu monies, apart from P.L. 874 and 815, in the same ratio between operating expenses and capital outlay, as the districts apportion their revenue from State and local sources. Then, only that portion of the timber sales money used for actual operating expenses would be deducted from P.L. 874 entitlement and the share allocated to the school construction fund would be unencumbered. For example, a district that budgets 60 per cent of its total revenue from state and local sources for current operating expenses, would be required to deduct 60 per cent of its forest lands revenue from its P.L. 874 entitlement. But it would still be able to retain 40 per cent of those latter funds for future building needs. Thus, S. 382 accomplishes its two objectives. It provides relief to the school districts from the current deficit they find themselves in this fiscal year due to the time lag between their budget preparations and approval of the federal legislation last November. It further leaves the school districts with at least a portion of their badly-needed building construction funds. I respectfully urge the subcommittee, Mr. Chairman, to give quick and favorable consideration to S. 382 since time is growing short and, as the attached letters and included tables show, the situation is most critical. I thank the sub-committee for the opportunity of presenting my views and ask that the record of the hearing include the attached letters from Idaho educators in support of S. 382. Hon. FRANK CHURCH, Washington, D.C. JOINT CLASS "A" SCHOOL DISTRICT NO. 241, IDAHO AND ADAMS COUNTIES, Grangeville, Idaho, January 3, 1966. DEAR SENATOR: The ruling that U.S. Forest Funds received by school districts would be subtracted from 874 funds, if the 874 funds were received as a result of logging activities, seems entirely unfair to school districts in Idaho which have budgeted for these funds and are half way through their fiscal year. We are building a $225,000.00 building at Riggins and have budgeted $76,000.00 of this from U.S. Forest Funds. The Building is about 80% complete. If we lose about |