ing and the span of a man's working years testify to this fact. Education has an enormous job to perform in merely maintaining the preseent accumulated capital of economic knowledge and skill. Every day of a professionally or technically trained worker reduces the capital unless it is currently replaced.❜

National defense is another area of the general welfare that is directly affected by the quality of the educational program. At present there is a rejection rate of 12 percent because of educational deficiency while during World War II it is estimated that more than a third of a million men were diverted from the direct war effort because of the lack of educational opportunities.

We are also aware that national defense is directly affected by the educational program. The Research division of the National Education Association has found that the 15 States having a rejection rate above the national average spend less than the national average per child on education.

I might mention in that connection that when there is a high rejection rate in one State, the Government, nautrally must go to the States where they have a high literacy rate to take care of the additional people. So it would seem that it is to the interest of all of us to have equal educational opportunities.

This is a dramatic and extreme illustration of the effect of the lack of educational opportunity. Wolfe in American Resources of Specialized Talent has pointed out another serious effect. He reports that. probably fewer than one-fourth of our bright students actually complete an education that would permit them to fill the technical and scientific posts important to national defense.

Our public-school system has been created in response to the American dream that every individual must be given the opportunity to develop his talents to the utmost and that our form of popular government will succeed in direct ratio to the availability of this opportunity. The attempt to provide universal education is without parallel, and it is only during the past 25 years that we have begun to achieve our goal.

Again, I should like to interpolate here that as we are more effective in our educational program we increase rather than decrease the diversity of our problem and our education, and that makes it imperative that we have increased support.

You may be familiar with the fact that in the average elementary grade there is an ability-level range of at least 6 years. What I think is not generally known, and what is very important in the light of some criticism today of our isolating the gifted and giving them the best, is that within each individual there is a range of trait ability comparable to the range within a single grade. That means we cannot just pull off the gifted and put them in one school, even if we would ignore the matter of the social adjustment factor, but that we must develop their abilities in terms of the traits of an individual. In other words, we must have individualized instruction and education all the way along the line.

Today certain social and economic events are seriously affecting this desirable program. Indeed many people are suggesting that the United States should abandon this great dream and adopt the

Educational policies commission, National Education Association, Education and Economic Well-Being in American Democracy, Washington, D. C., the association, 1940.

European system of education with its emphasis on full opportunity for the selected few.

I am sure I need not debate in this group the lack of wisdom in such a program.

It is indicated that, while the problems are not entirely monetary, lack of money is a major element; we find that communities that are able and willing to provide adequate support for the schools are usually of high quality and the needs of all of the children are met. However, many communities are unable to adequately meet the needs of the schools.

Support of public education in the past has been chiefly by means of a property tax. However, in our present economy the property tax is progressively becoming a poorer measure of taxpaying ability. Today national income depends more on economic activity than it does on fixed property.

Dr. R. L. Johns, head of the Department of Educational Administration of the University of Florida, recently reported that the only sources of our national income which are increasing or remaining constant in proportion to the total income are compensation of employees and corporate profits. These 2 sources of income accounted for 82 percent of the national income in 1956 and probably will account for a somewhat higher percentage this year. Dr. Johns went on to indicate that some tax other than the property tax must, therefore, be called upon to help finance education.

We might interpolate here that the assessment ratios are of such great inequality that even the property tax is becoming an ineffective way, even if it were a justified one.

The gross national product is at least a rough indicator of the ability of the American economy to support the various activities undertaken in the country. In 1956, 3 percent of the product was expended upon public education. In this same year, total tax collections were equal to 22.1 percent of the gross national product. Revenues for the public school constituted, therefore, 10.3 percent of total tax collections.

However, when State and local tax collections are considered, it is found that in this same year school revenues formed approximately 54 ercent of all local tax collections and 39.9 percent of State collections. The amount expended upon public education by the Federal Government has never equaled so much as 1 percent of its tax revenue. In 1954, it was 0.3 percent.

It is clear from a consideration of the source of taxable wealth in our economy and from these figures on the relative importance of education as a subject for expenditure of public funds at the various governmental levels that the financial crisis in American education is not due to the inability of our economy to carry the load. The crisis is clearly due to defects in the mechanism for taxing wealth produced by our national economy.

The testimony which will be filed with each of you carries some figures there. I will omit this right now because I am sure you will want to read that very carefully, and they are much more understandable when read than when listened to.

(The figures referred to will be found in the prepared statement or Dr. Corey, following Miss Stout's testimony.)

Miss STOUT. The limitations of State and local taxing powers in supporting public education are clearly shown by two facts. The first is the great variation to be found among the States in the ratio of taxable wealth to children to be educated.

For example, personal income payments per pupil enrolled in public schools in 1956-57 varied from $17,432 in Delaware to $3,754 in Mississippi. The national average of $10,049 was exceeded by more than a thousand dollars by 13 States; whereas 20 States failed to reach it by more than $2,000.

The result is that educational facilities are unequal among the effort of many of the poorer States to improve their status. South Dakota is 34th among the States in income payments per child; but it is first in the percentage of the total income payments made in the State that is spent for public education. Nevertheless, it is 17th in the amount spent per pupil for the current costs of education, which is less than three-fourths as much as the top State.

On the other hand, the top State, New York, is 29th in effortthe percentage of its income payments that is spent on public education. It is able to be in first place in per pupil expenditures because it is in second place in income payments per student.

Here testimony gives additional illustration that States, including Texas, which derives many millions of dollars from severance taxes which are ultimately paid by consumers in other States. In Kansas, we purchase Texas oil which has a severance tax on it, while we sit on the largest oil well in the world whose pipeline is piped out to the Great Lakes States. Pennsylvania is severance tax free. Pennsylvania uses it as a cheaper fuel than it can mine its own coal.

So we see a lot of inequities among the States in their tax structure. Thus, when we examine our taxing system closely, we have the anomalous situation in which the rich States indirectly receive Federal aid and the poor States receive none, because the poor States, as a whole, do not possess any inonopolies by which they can place their taxes on the people of other States.

The conclusion is inescapable that if American education is to be sustained it is necessary that there be a radical change in the manner of providing financial support for public education. If American education is to be improved, this change becomes imperative.

Obviously, the Federal Government is the only governmental unit that can fairly tax the wealth of our economy for the adequate support of public education. All of the evidence indicates that this support must be of significant proportion.

Granting that State finance structures can be perfected and strengthened and that local tax revenues will increase with the expanding economy, there will still be in the next 10 years a gap of from $5 billion to $7 billion per year in imperative school costs which can be met only by Federal support.

I believe this statement is in terms of giving the same kind of education which we are giving today. We in education are convinced that many of the critics are right, that we should be doing a better job, and that that would cost more. However, the Russian satellites were also shocking to our complacency; we would like to think this blunt statement is shocking. We have come to the point either in our accelerated life where we must educate for the generation ahead and not for just today, or we perish.

This is a national problem and the wealth of the Nation should be utilized as fairly and scentifically as possible to meet it. This can be done only through substantial Federal participation in the financial support of public elementary and secondary education as proposed in the Murray-Metcalf bills.

In addition, there must be support of higher education through grants for scholarships, fellowships, and assistance to the States in establishing programs for improvement of instruction and strengthening other services at the State level.

The National Education Association believes that the Congress of the United States should enact legislation that will meet the long-range needs of American education as well as those of the present.

We recommend the immediate consideration by the committee of H. R. 10763, introduced by Mr. Metcalf of Montana, which provides the substantial support for public education which we believe to be imperative.

The bill proposes to allot to the States for distribution to local school districts an amount equal to $25 per school-age child for the school year 1958-59 and for this amount to be increased to $50 in 1959-60, to $75 the following year, and to $100 in 1961-62 and thereafter. The total allocation would be approximately $1.1 billion in 1958-59, increasing to approximately $4.5 billion in 1961-62. The States would be permitted to expend the funds for three purposes: (a) salaries of public schoolteachers, (b) basic instructional equipment, and (c) construction of school facilities.

I should like to point out that I was curious as to what effect it would have on the percentage of the gross national product that would be spent for public education. So we dug up those figures yesterday.

We find that in the projected figures for 1961-62, probably we should be spending about 3.6 of the gross national product for education. If this $4,400,000 were added to that expenditure for public schools, it would increase the percentage of the gross national product to only 4.5 percent. In other words, less than 1 percent. And the 4.5 percent, I think we must keep in mind, is contrasted with the 12 percent or more now being spent by Russia to do only half the job, because in America we educate the people to live as well as to produce. The bill is designed to strengthen State and local control of education: therefore, the expenditure of funds within the general categories would be determined by the States in light of their particular needs with one restriction. This restriction provides that threefourths of the funds distributed by the States for teachers salaries must be allocated to local school districts on the basis of teachers employed. The balance of one-fourth may be distributed in accordance with any formula established by the State.

The enactment of this bill would make available the productivity of the Nation as a base for the support of our public schools. It would provide that great major breakthrough that will guarantee the necessary improvement of our public-school system.

Consideration must be given to two bills: H. R. 10381, introduced by Mr. Elliott, chairman of this subcommittee, and H. R. 10278, introduced by Mr. Kearns as the administration bill.

Perhaps our discussion will bring that out later.

The provisions of these bills are not identical, although, in general, they cover the same general areas: scholarships and fellowships for

higher education, assistance to States for specific programs such as guidance and testing, science, mathematics, and foreign-language programs, and other special programs.

We recommend that the committee give consideration to these bills for their immediate effect on education in the United States, particularly as it relates to higher education and the identification of potential leaders.

It must be emphasized, however, that the provisions of these bills in no way reduce the need for H. R. 10763. Actually, to be effective, the adoption of the provisions of H. R. 10381 and H. R. 10278 will make more apparent the need for the substantial aid to States and local districts provided in H. R. 10763. Our schools must meet the need for increased expenditures for buildings, teachers, and equipment if they are to educate properly the young people that should benefit from a scholarship or fellowship program.

When considering the provisions of thees bills, we would recommend that the committee give serious consideration to these general principles:

1. Requirements for matching funds by the State and local district should be kept at a minimum because of the limitation of tax income at these levels.

2. All educational programs should be channeled through the established State agency with Federal control limited to fiscal accounting. 3. Subsidies for teachers salaries should not be limited to a specific

area.

I hope to have an opportunity to expand on that later.

The upgrading of teachers could be better accomplished through a program similar to the summer school and extension education provisions of H. R. 10381.

4. Federal scholarships and fellowships should be made available to capable high-school graduates who would otherwise find it financially difficult to attend college.

In conclusion, may we call the attention of the committee to another important consideration, and that is the present discussion on antirecession measures.

The American people will and should question the Congress authorizing the construction of roads, post offices, buildings, and other public works while the school building needs of the boys and girls are ignored.

We can think of no better program as an antirecession measure, and at the same time as improving education, than to include school construction in this program.

I am most grateful for the opportunity of appearing before you and I thank you for letting me make my presentation in place of Dr. Corey.

Mr. ELLIOTT. We thank you, Dr. Stout.

I have a few questions that I would like to ask you. First, with regard to my bill, 10381 and its scholarship provisions, do you feel that a scholarship program, such as we envision in this bill, or in the administration bill, should be undertaken at this time by this Nation of

ours?

Miss STOUT. It would seem to us that it is important-yes-that it would supplement the bill which we are presenting; that it is essential as an immediate measure.