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some cases a court may declare an existing system unacceptable, direct the legislature to make changes, and then step out of the picture. If that were the case, how would one know when full and complete compliance was achieved? Answer. If a court has directed a legislature to make changes, the assumption is that if the changes made are not in accordance with court direction that the case would be soon back in the courts because the original plaintiffs would undoubtedly request injunctive relief. Doubtless, a legislature is well aware that this compliance is necessary will attempt to come close enough to the court's ruling that it would not again create another period of litigation and possibly even a more difficult ruling from the courts.

Question. 10. On page 5 you suggest that as an alternative to OE's plan that a definition be developed which is consistent with recent court decisions. Since there are any number of decisions and they are not uniform in their findings, which of those decisions would you select and how would you find them?

Answer. The Office of Education's definition would have to be fairly close to the one provided because the decisions may vary but the essential facts remain consistent with the point made in the Supreme Court case that the current method of financing education was equalized. The definition provided above is a difficult one and intentionally so because the federal government's position should be one of supporting equality. But irrespective of the Office of Education definition, any state in which there has been a final determination by the courts that that state's constitution, the exception should not be applicable.

Mr. FORD. Thank you very much, gentlemen.

I know from past contact that this committee has had with you and the organization that you represent that we expect to see a good deal of you in the weeks to come.

I think you can tell from the exchange between the members of the committee and the Commissioner this morning that we will need the input of local school representatives, like the members of your organization and need them very badly.

Time is running out on us. There is just no one here in Washington who knows enough about the way this program functions throughout the country to make the hard decisions without a good deal of assistance from you. And also from the State offices.

I look forward to hearing, as a member of the committee, on behalf of the committee, from you. I really think that anything you can offer that will be of assistance to us will be appreciated.

Mr. ELDRED. Thank you, Mr. Chairman. You are most kind.

Dr. FISH. Thank you.

Mr. FORD. I am going to answer a quorum now.

I will be back later.

CA recess was taken.)

Mrs. CHISHOLM. I presume that the other members will be coming back soon. We will get started. People have appointments and planes to catch and other things to do.

We are going to ask the deputy chancellor of the board of education of New York City to take the witness stand.

We welcome you here and I ask you to proceed at this point. [Prepared statement of Bernard R. Gifford follows:]


As the representative of the Chancellor of the School District of the City of New York, I am honored to have been invited to speak to this Subcommittee of the

House Committee on Education and Labor on a subject of great concern to New York City and other Urban School Districts throughout the nation.

While it is true that Impact Aid received by the City has been only about $4 million in a total budget of $2.5 billion, or one tenth of one percent of the total budget for the education of 1,100,000 pupils, the following should be noted:

(1) Approximately 60 percent of the total budget for education is supported from local tax sources. In FY 75 the total assessed valuation in the City, including taxable and tax-exempt properties, is $61.5 billion of which 64 percent is taxable and 36 percent tax-exempt (Table 1). Federal tax exempt property is valued at $1.5 billion which comprises 7 percent of all tax-exempt properties— $910.4 million for federally-aided public housing and $578.5 million in government property. If this federal property had been subject to taxation, the City would have had additional tax revenue of $109.4 million-$66.9 million from public housing and $42.5 million from government property (Table 2). As you are aware, the intent of Impact Aid has been to aid school districts having this kind of loss in financial resources. However, $4 million in Impact Aid is a poor substitute for $109.4 million additional tax revenues. This problem plagues not only New York City but also other cities throughout the nation.

(2) We have identified approximately 56,000 public in Average Daily Attendance who reside in federally-aided public housing. Moreover, many of these same children are receiving assistance under the Aid to Dependent Children program and are educationally as well as economically disadvantaged. The special needs of these pupils for supplementary health, food, guidance and remediation programs impose an excessive burden on the limited financial resources of urban school districts. But, in many of our cities, education must compete with other municipal agencies for access to the tax dollar. If adequately funded, Impact Aid should be the vehicle for relieving the increasing cost of education for public housing pupils, which is currently supported by the local tax levy dollar.

(3) In recent years, no funds were appropriated for Impact Aid to public housing pupils presumably because ESEA Title I provided supplementary aid for compensatory programs for the economically and educationally disadvantaged. As a result of the changes in the Education Amendments of 1974, we face the following situation.

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1 Based on 85 percent save harmless of fiscal year 1974-75 funds.

As indicated above, an increase of $5.4 million in Impact Aid does not begin to offset the loss of $23.5 million in ESEA Title I funds. At best the public housing Impact Aid monies restore only the level of allocation for ESEA Title I Part C for FY 1974.

(4) The inclusion of public housing pupils as a basis for establishing eligibility for Impact Aid increased the number of eligible school districts throughout the nation. However, the failure to fund public housing pupils combined with an increase in the number of eligible school districts has had the effect of reducing the amount of Impact Aid to all districts for the other types of eligible pupils. Thus, instead of an increase in the size of the pie, the net effect has been to decrease the size of the slice.

(5) In FY '76, as indicated previously, New York City and other cities in the nation are confronted with a significant decline in ESEA funds under the provisions of PL 93-380, which is further aggravated by the Administration's proposal to eliminate the funding to all Impact Aid districts in which such aid represents less than 5 percent of the operating budget.

It is evident that the Honorable Jacob Javits was supported in his efforts to secure the funding of public housing pupils to replace the elimination of ESEA Title I Part C-concentration grants. Regrettably, the Impact Aid legislation provides for an entitlement level of only 25 percent in the first tier of funds; the se ond payment cycle excludes any funds for housing pupils and the likelihood of any funding in the third payment cycle hinges on the amount to be appropriated in excess of the current $656 million level. If housing pupils were fully funded at least on the 45 percent level, New York City would receive approximately $30.2 million; at a payment rate of only 25 percent in tier I, the amount is approximately $7.5 million. In effect, this represents a loss of $22.7 million to a City beset with a budgetary crisis.

(6) Due to increased costs resulting from the current inflation, failure to increase the appropriation level above the $656 million included in the supplemental appropriation law (PL 93-554) will result in a serious reduction in the buying power of our Impact Aid.

In view of all of the above, we respectfully recommend the following actions for your consideration and support:

(1) Support full funding of Impact Aid for public housing pupils in FY '76. 12 Increase the appropriation for Impact Aid over the $656 million funding level for FY '75 to compensate for public housing pupils.

3 Reject the President's proposal to eliminate Impact Aid for all districts in which such aid represents less than 5 percent of the operating budget.

+ Raise the entitlement level for funding public housing pupils.

15) Extend the privilege of counting handicapped pupils of military families as one-and-a-half times a regular child when computing Impact Aid to include al eligible handicapped pupils. The higher costs of special education programs are aciated with the type of handicap to be serviced not with the type of family membership. Therefore, in the interest of equity, all federally connecte? hipped pupils should be counted as one-and-a-half times a regular child.

On behalf of the Chancellor of the City of New York, I wish to express my appreciation for this opportunity to share with you these concerns and urge your strong support to implement the recommendations presented herein.


YEARS 1971 TO 1975

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YEARS 1971-75

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Mr. GIFFORD. First of all, I want to thank you for extending your invitation. This is my first opportunity to testify before a House Subcommittee on Education and I consider it an honor and even more of an honor to testify before my own Congressperson.

As the representative of the chancellor of the school district of the City of New York, I would probably be giving a different perspective than those people that immediately preceded me because of the very special problems that New York is faced with and the very special problems that most of our cities are faced with vis-a-vis impact aid.

During the current year, we received approximately $4 million in impact aid out of a total budget of $2.5 billion, or something less than one-tenth of 1 percent of our total budget.

But there are some important factors despite the limited size of the money that we presently get for impact aid and even the limited. amount of money that we are talking about receiving in the future.

I think it is important that it should be noted by this committee and other people involved in impact aid note the magnitude of the taxexempt property that exists in large cities.

For example, in New York City, our tax base, our real estate tax base, has a total assessment of some $61.5 billion.

However, only 64 percent of this taxable and 36 percent of it is nontaxable.

In other words in terms of tax-exempt property, we have a total of $22 billion of tax-exempt property in New York City. Approximately $910 million of this housing is due to the existence of public housing projects $578 million due to U.S. Government property, or a total property of $1.5 billion.

If this property were taxed-if we received our regular real estate tax for this in New York City-we would receive an additional tax revenue of $109 million, $66.9 million from public housing and $42.5 million from Government property.

I think it is very, very important that we emphasize this fact. Due to the existence of Government property in New York City and due to the existence of public housing in New York City, we are losing $109 million in real estate taxes from these two real estate types.

As you are aware, the intent of the impact aid has been to aid districts having this kind of loss in financial resources.

A little over $4 million dollars in aid is a very, very poor substitute when one realizes that we are talking about a loss of $109 million. This problem plagues not only New York City but other large cities faced with a similar situation.

Let me make a couple of other points. We have identified approximately 56.000 pupils in average daily attendance who reside in federally aided public housing. Many of these same children are receiving assistance under the aid of dependent children program and are educationally as well as economically disadvantaged.

The special needs of these pupils for supplementary health, food, and guidance, and remediation programs impose an excessive burden on the limited financial resources of all urban school districts.

Here again the aid formula fails to take this into account. Although we understand that money is to be geared toward educationally disadvantaged children, the amount of money we are talking aboutgiven the 56,000 pupils in average daily attendance-is far too low to serve the needs of all these chlidren.

For example, if one takes into account that we now spend something over $2000 per student and we multiply it by the 56,000 students in average daily attendance, it turns out that we are spending $115 million for these children living in public housing projects.

We are now receiving $4 million in impact aid.

We are receiving less than 3 percent of the cost to educate these

children from impact aid.

The result of impact aid, I think, also has to be looked at in terms of other cutbacks that are being contemplated by the Federal Government as exhibited in the President's recent budget submission.

The President's recent budget submission, for instance, shows an estimated aid for title 1, part A, for New York City, of some $111 million.

In 1973-74, we received $154 million in part A funds.

In 1974-75, we received $131 million.

So we are talking about a net loss of $20 million just in part A funds over a 2-year period.

When we talk about part C funds, we are talking about a net loss of $3.5 million.

In 1973-74, we had $72 million in part C money. This fiscal year, $316 million.

The President's budget calls for elimination of C funds for the next fiscal year.

What I guess I am really trying to get across is that one has to look at impact aid not as an isolated source of funds for a large city like New York but one also has to look at it in the context of other funding cuts that are now being contemplated.

The amount of aid called for in the new impact aid amendments of $1.5 million for public housing students in New York City would not come close to offsetting the significant decreases that we are talking about vis-a-vis title 1, part A and part C moneys.

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