Secretary Bennett. As of September 30, 1987, the loan volume of the portfolios is as follows:

In the fiscal year 1987 loan asset sales, the Department sold or allowed schools to prepay the following:

For 1988, we plan to sell approximately $500,000,000 in principal value (which may increase or decrease depending on interest rates and sizing of the loan sales pool) from both portfolios. The proceeds from the sale will be returned to the Treasury to repay the outstanding $1.3 billion debt.

The approximate breakout (subject to sizing of the loan pool) by portfolio is:

The Department will not be selling any defaulted loans. However, we are offering institutions in default the opportunity to prepay on defaulted loans (if loans were in default prior to October 1, 1986). The offer will be on a discounted basis depending on the financial condition of the school.

NEW COLLEGE HOUSING AND ACADEMIC FACILITIES LOANS PROGRAM

Mr. Conte. Please include a description of how the new program would operate if we decide to include funding.

Secretary Bennett. Loans would be awarded through the new account, College Housing and Academic Facilities Loans, in the same manner as in fiscal years 1987 and 1988. The Department provides new loans for institutions by borrowing from the Treasury, at an interest rate determined by Treasury. The interest rate is based on the average current yield on outstanding obligations of United

States comparable maturities in the month preceding the month in which the loan note with Treasury is signed. For fiscal year 1987, the rate charged to borrow $60 million was 8.97 percent. Loans were made with schools at the mandated 5.5 percent.

This account is only partially self-financing since the interest rate paid by borrowers is lower than the rate the Department must pay Treasury for funds borrowed to finance the loans. In order to meet the required repayment of interest and principal each year to Treasury, the Department must request an annual appropriation to cover this interest shortfall.

Collections of principal and interest from borrowers are used to repay principal and interest owed to Treasury in accordance with notes issued to secure capital to finance new loans.

Institutions compete for loan capital based on the facilities renovation, reconstruction or housing needs, and the fiscal integrity and financial need of applicant institutions and agencies.

Mr. Conte. I commend you, Mr. Secretary, for hearing the members of this subcommittee when we say libraries are an important educational asset and deserve Federal funding. Your $76 million request is certainly better than the zero you asked for last year. Since the budget documents do not spell out your new proposal to get more disadvantaged students using the library and to measure the effectiveness of library services, please provide a description of how your proposal would work.

Secretary Bennett. Our proposed new program for services to the disadvantaged would be operated by the State library administrative agencies, with funds being distributed to the States on the basis of a formula. Under our proposal, the State agencies could use these funds to support projects or activities designed to enhance educational opportunities for economically disadvantaged or handicapped persons or to encourage them to make greater use of libraries. Each State would decide how best to improve library services for disadvantaged persons, including students, according to its own needs.

For measuring the effectiveness of library services, the Department would support research that could assist in developing criteria to be used to evaluate libraries. We also plan to gather information more systematically on the condition of libraries and library services.

Our proposal also includes a third component designed to expand library resource sharing. Both formula and discretionary grants would be awarded, and both intrastate and interstate networks would be supported.

VOCATIONAL AND ADULT EDUCATION

Mr. Pursell. The President's budget requests just over $1 billion for Vocational and Adult Education programs, a slight increase over FY 1988, but eliminates several categorical programs and consolidates the funding. Why are programs like consumer and homemaking education, bilingual vocational training, and adult education literacy programs being phased out and consolidated?

Secretary Bennett. Our request to eliminate some of the special categorical programs and to increase funding for both the vocational education Basic grant and adult education Grants to States would allow States greater flexibility to use available funds to meet their specific needs. States may use funds from the vocational education Basic grant to support consumer and homemaking education and community-based organizations, and must use funds to serve the limited English proficient. Similarly, States may use their adult education grants to fund literacy programs for the homeless and in the workplace, thus avoiding the need for separate literacy programs to serve these objectives. Our request would maintain level funding for vocational education and provide a 22 percent increase for adult education.

Mr. Pursell. A recent report by the Hudson Institute entitled "Workforce 2000" found that between now and the year 2000, for the first time in history, a majority of new jobs will require a postsecondary education. Is there long-term planning and coordination between the Departments of Education and Labor to prepare the labor force for this requirement?

Secretary Bennett. The Assistant Secretary for Vocational and Adult Education consults with representatives from the Labor Department on a regular basis to coordinate activities. The Department of Education has the lead role, however, in ensuring that American students have the opportunity to enroll in postsecondary education. Our budget request would continue to assist students in obtaining postsecondary training by providing over $16.5 billion in aid to students, almost a six percent increase over the amount available in 1988.

WEDNESDAY, MARCH 30, 1988.

COMPENSATORY EDUCATION FOR THE DISADVANTAGED

WITNESSES

BERYL DORSETT, ASSISTANT SECRETARY FOR ELEMENTARY AND SECONDARY EDUCATION

WILLIAM LOBOSCO, DEPUTY DIRECTOR, COMPENSATORY EDUCATION PROGRAMS, OFFICE OF ELEMENTARY AND SECONDARY EDUCATION JOHN STAEHLE, DIRECTOR, MIGRANT EDUCATION PROGRAMS, OFFICE OF ELEMENTARY AND SECONDARY EDUCATION

WILLIAM D. TYRELL, DEPUTY DIRECTOR, DIVISION OF ASSISTANCE TO STATES, OFFICE OF SPECIAL EDUCATION AND REHABILITATIVE SERVICES

SALLY H. CHRISTENSEN, DIRECTOR, BUDGET SERVICE, OFFICE OF PLANNING, BUDGET AND EVALUATION

THOMAS M. CORWIN, DIRECTOR, DIVISION OF ELEMENTARY, SECONDARY, AND VOCATIONAL ANALYSIS, OFFICE OF PLANNING, BUDGET AND EVALUATION

INTRODUCTION OF WITNESSES

Mr. NATCHER. At this time, we take up the budget request for the fiscal year 1989, Office of Elementary and Secondary Education, and we have before the committee Ms. Dorsett, the Assistant Secretary for Elementary and Secondary Education. Before you give us your statement, tell us who you have with you at the table. Ms. DORSETT. Good morning, Mr. Chairman.

To my immediate right I have Sally Christensen. She is Director of the Budget Service, Office of Planning, Budget and Evaluation. To her right is Thomas Corwin, Director, Division of Elementary, Secondary, and Vocational Analysis, Office of Planning, Budget and Evaluation.

To the far right is William Tyrell, Deputy Director, Division of Assistance to States, Office of Special Education and Rehabilitative Services. To my left, William Lobosco, Deputy Director, Compensatory Education Programs, Office of Elementary and Secondary Education. To my far left is John Staehle, Director, Migrant Education Programs, Office of Elementary and Secondary Education. Mr. NATCHER. Thank you and we will be pleased to hear from

you.

FISCAL YEAR 1989 BUDGET REQUEST

Ms. DORSETT. I am pleased to appear before your committee to discuss the 1989 budget request for Compensatory Education for the Disadvantaged. We are requesting $4,600,000,000, $230,000,000 increase over the 1988 appropriation. This request reflects the Administration's continuing commitment to help States

a

and localities meet the special educational needs of disadvantaged children.

Secretary Bennett has placed the highest priority on programs that benefit the educationally disadvantaged. This activity makes up one of the largest budget items within the Department, accounting for 21 percent of our 1989 budget request, compared to 19 percent of our 1988 appropriation.

As you know, legislation is now pending before Congress that would reauthorize the compensatory education programs currently authorized under Chapter 1 of the Education Consolidation and Improvement Act.

The amounts shown in our budget request indicate how our funds might be distributed. Upon enactment, we may revise the amounts for specific programs within the total request.

Within our 1989 request, we would increase funding for grants to local educational agencies-including providing the first funding since 1981 for concentration grants, the State agency neglected and delinquent program, State administration, and evaluation and technical assistance.

We would fund the State agency migrant and handicapped programs at their 1988 levels. No funds are requested for the high school equivalency and the college assistance migrant programs, because they duplicate services provided by other educational programs at a much lower cost.

I thank you, Mr. Chairman. My colleagues and I would be happy to respond to any questions you might have.

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