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Mr. Chairman, I appreciate this opportunity to appear before you

today representing the Education Commission of the States and the National

Governors' Conference.

As I feel a discussion of the issues pending before

this subcommittee will be more useful than a lengthy monologue, I will make

this prepared statement very brief, and, I hope, concise.

On August 1, 1973, Representative Tom Jensen from Tennessee appeared

before this committee representing ECS and the National Legislative

Conference to address issues manifested in the Elementary and Secondary

Education Act, and the several bills which have been introduced to amend

and modify that legislation. Since that time, the Education Commission of

the States staff with the involvement of a number of governors, state

legislators and other state officials, have devoted further attention to

the development of recommendations for modification of existing Federal

education programs in the elementary and secondary education area.


efforts have been further focused by the Education Subcommittee of the

House Education and Labor Committee reporting a bill which contains a

number of the ideas suggested in Representative Jensen's testimony. A

discussion of school finance must include specific recognition of categorical Federal aid and its impact on state and local governments.

My statement

will be addressed to this relationship and suggest that reform of school

finance systems cannot be carried out properly by the states without modifi

cation of Federal programs.

Mr. Chairman, the primary issue in school finance today is what the

states are doing or are going to do about equalization in the wake of the

Rodriguez decision.

ECS and the Governors' Conference have long taken the

position that increased state aid and involvement in school finance to insure

equality of educational opportunity in elementary and secondary education is

both good educational policy and morally right.

In keeping with this objective,

the National Governors' Conference has gone on to add that state action to

achieve equal educational opportunity must begin immediately, progress

rapidly and have the aggressive leadership of elected officials in state


The Governors believe that while a number of alternative finance

systems are available to the states in this endeavor, states must focus on

one primary objective

the elimination of local wealth as the major

determinant in educational opportunity.

I don't believe anyone fully understands the complexity of the problem

and has adequate information on the diverse finance systems which exist

throughout the 50 states.

We are now in the process of trying to gather

such information and compile it in a manner which will assist governors and

legislators in addressing the issues involved in equalization legislation

and also to assist the Congress and officials of the Executive Branch at the

Federal level in understanding the situation.

The essential point that I would like to make is that Federal aid to

education, whether categorical in character with specific guidelines or


administered with considerable state discretion, must mesh with state school

finance systems in order that Federal assistance does not distort opportunities

and priorities at the state and local level.

This is particularly true where

a state has adopted a school finance system which recognizes the higher costs

of meeting the educational needs of those students who are given special

attention by Federal programs (i.e., the disadvantaged, handicapped, etc.).

This committee has before it several bills addressed specifically to the

need for increased state funding, property tax relief, and equalization.

These include S. 1900 introduced by Senator Javits and S. 1539 introduced by

Chairman Pell.

Both would provide financial incentives to states to reform

school finance systems to bring about a more uniform pattern of expenditures

among local agencies.

Both of these, however, seem to view equalization as

a desirable goal to be achieved through the provision of a new Federal program alongside existing categorical programs rather than the means for developing

a comprehensive and consolidated fiscal relationship between the Federal

government and the states which is responsive to the educational needs of all


As effective equalization legislation is adopted by more and more

states, the ability of local districts with substantial numbers of economi

cally disadvantaged children to finance the education of those children will

be enhanced.

Where state law goes beyond financial equalization to provide

special financial assistance to meet the higher costs of compensatory educa

tion and special education, this fact must be recognized by the Congress in

the way Federal aid is provided. Ultimately, state finance systems which

contain these factors should be the vehicle for most, if not all, Federal

assistance which should, under these circumstances go to the states on an

unrestricted basis.


We are in a period of rapid change.

Within the last two years,

substantial efforts toward increased state funding equalization of educa

tional expenditures have been taken in a number of states.

At this point I

would like to insert into the record a fairly detailed description of how

seven states have achieved or attempted reforms in their education finance

systems (Attachment A). I will not read this material, but would hope that

it be included in the record.

Most other state legislatures will face the

school finance issue in their next sessions.

Because the picture is not

uniform, it is not feasible to consider a total consolidation of existing

programs at the present time, and to be totally realistic, it does not appear

likely that substantial additional Federal money will be forthcoming to

promote increased state funding and equalization.

Reform of school finance systems, nevertheless, is proceeding state by

state and will continue to do so with or without Federal assistance.


can be done by the Congress at this time is to shape existing Federal education

programs for elementary and secondary education to facilitate and assist and

encourage this process.

We would suggest to you that this can be achieved

through a 4-point strategy.

First, existing categorical programs should be

consolidated into functional areas with broader discretion at the state level

and fewer Federal controls.

This is badly needed in all states if we are to

deal with problems rather than simply produce paper. Secondly, the impediments

to reform of state school finance systems which are contained in Federal

programs should be eliminated. Thirdly, total consolidation of Federal aid in

the form of block grants to states should be permitted for those states which

have school finance systems which meet certain minimum standards. Finally,

we should all continue to work together over the next few years to develop


97-457 0 - 73 - pt. 5 - 2

more tangible and accurate information about the true state of school finance

in the country with particular reference to the development of cost and need

indices with a view toward further revision of Federal aid.

To implement

this strategy we make the following specific suggestions:

1. Compensatory education.

Aid for disadvantaged children under Title I

of the Elementary and Secondary Education Act (ESEA) should be continued.


school districts should be free to allocate funds to individual schools on the

basis of low-income families or according to educational needs except that when

a state has a statewide testing program local agencies shall use educational

needs for allocation.

States should be required to submit to the U. S.

Commissioner of Education a state plan acceptable to the Governor and approved

[blocks in formation]

through graduate and continuing education by consolidating parts A to H of the

Vocational Education Amendments of 1963 and the Smith-Hughes Act, and insure

cooperative planning with state higher or post-secondary education by

implementing Title X-13 of the Education Amendments of 1972.

States should

develop a career education plan approved in accordance with state law. Emphasis

should be on articulating and coordinating vocational or occupational education

programs with academic programs as much as possible, including greater emphasis

in academic programs on career development.

3. Exceptional children.

Consolidate Part B of the Education of the

Handicapped Act and the handicapped set-asides from the Vocational Education

Act and from Titles I and III of the Elementary and Secondary Education Act

(ESEA) into a comprehensive program for exceptional children, both the handicapped


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