Dr. LUND. That's very true; very true. I, very humanly I guess, feel this way. I am sorry I haven't the complete confidence I would like to have, but I really feel that it is imperative that, for the time being, until we see that revenue sharing works, we review some of these programs Congress has given such high priority.

Chairman PERKINS. Thank you very much, Dr. Lund. You have been very helpful to the committee.

Our next witness is Mr. Edwin Cain, coordinator of Federal programs, State department of education, St. Paul. We are delighted to welcome you here, Mr. Cain.

tee.

STATEMENT OF EDWIN CAIN, COORDINATOR OF FEDERAL PROGRAMS, STATE DEPARTMENT OF EDUCATION

Mr. CAIN. Thank you, Mr. Chairman, and members of the commit

I would like to welcome you, Congressman Perkins and Congressman Steiger to Minnesota, and also Congressman Quie to the northernmost point of his expanded congressional district. I feel that the relationship between Mr. Quie and myself has been legitimized now because I am now one of his constituents in Stillwater, so I feel that I can, with a little better faith, come to his office as frequently as I do.

We do appreciate the efforts of this committee as directed toward the improvement of education in the Nation, and especially for your courtesy in hearing the concerns and opinions of those of us at the State and local levels of education.

The legislation which has resulted from the work of this committee. over the past 12 years or so has literally reshaped the educational process. While State and local governments provide approximately 93 to 95 percent of school costs, nearly all of these resources are directed toward salaries and capital outlay. Very few State and local dollars are left for the programmatic operations of the schools, and virtually nothing for that area known as special needs. When the Federal Government designated funds specifically for program development in critical areas of need, the impact greatly exceeded the level of resources provided for the schools. The 6- or 7-percent Federal aid has greatly increased the amount that the school districts can use in the development of programs and compensatory education. The impact of Federal aid at the State level is even more extraordinary. Services are now available to school districts from the State which were totally impossible 6 years ago. A statewide educational assessment program has been initiated by the Minnesota Department of Education and is closely tied to the State right-to-read effort. An equal educational opportunities section is now making progress on school integration in the cities and a better understandng of minorty problems in the suburban and outstate districts. The poor now have their advocates in key State department positions and the assurance that these moneys will be used to help them overcome their educational disadvantages.

A minimal amount of Federal funds for the education of the handicapped has been coupled with special State funds to offer these chil

dren a chance for success in life, rather than a life of institutional care and dependency. Thousands of young people are being prepared for quality job opportunities through the vocational program at 32 sites throughout this State. Departmental staff are working with school districts in the development of special vocational projects for the poor and the handicapped.

We were appalled at the failure 4 years ago of our school systems to provide an adequate education for Indian children. Dropout rates extended from 65 to 100 percent in both rural and urban schools. No local or State moneys were available to initiate the thrust necessary to remedy the situation. With assistance from the Federal Government, 17 different programs were employed in the development of a comprehensive package directed toward Indian education from preschool through adult.

In 3 years we have seen a dramatic change in the education situation, even though the problems still remain a long way from solution. The dropout rate is now below 50 percent in some schools; more than 3,000 Indian adults participated in the adult education project last year; Indian leaders now hold key positions in both local and State educational agencies, and the number of Indian young people in college has increased from 175 in 1967 to 535 in the fall of 1971.

It is the Federal education allocation which is largely responsible for changing State agencies from regulatory to service-oriented departments. Needs assessment, planning, and evaluation which were functions once considered fringe activities are now being placed in their correct position as the nucleus of educational development. Federal programs are an integral part of each of our five divisions in the State department. Today 600 of the 800 employees in the Minnesota Department of Education receive all or a portion of their salary from Federal resources.

Much criticism has been directed toward the proliferation of Federal programs, the application and reporting procedures, and what is generally labeled "governmental redtape." A consolidation of application and reporting procedures are long overdue: however, planning and preparation are still essential to the successful implementation of sound educational programs. If the reduction of administrative details results in a poorly planned activity, then the product of consolidation is not worth the price.

In the early days of ESEA, the term "seed money" was used to describe Federal funds given to a school district for a limited period of 1 to 3 years. The idea was to initiate change with Federal dollars, with local and State funds picking up the continuation after the Federal grant expired. Demonstration projects were supported under the premise that, if one school district did an outstanding job, other districts would emulate their procedures and replicate their success. Neither of these approaches has accomplished significant change in any district other than the one receiving the initial grant. The current financial crisis confronting the schools across the nation has further decreased the potential of the seed money concept. School districts still apply for demonstration grants with the full knowledge that only the school receiving the grant will benefit. The university

and college lab schools met with equally poor success decades before the passage of ESEA.

With this background, we observe the U.S. Office of Education still attempting to make educational change in this manner. While the U.S. Commissioner assails the "multiplicity of Federal categorical programs," on one hand, he initiates new demonstration programs with the other. The most recent is the national educational renewal centers. Once again, we see the seed money demonstration center approach, this time extended to 5 years. But the key question is this, how will such a program produce any impact on the 1.800 school districts other than the 200 which receive grants?

The demonstration center concept is important and often useful in evaluating the effectiveness of education, but it is not a good mechanism, by itself, to instigate changes in other school districts which are not actually participating in the project.

School districts are no longer able to pick up the costs on shortterm Federal projects. The seed money no longer has fertile soil in which to grow. The financial crisis in education has forced schools to concentrate on their basic existence rather than the quality of their educational programs.

The consolidation of Federal programs is a complex objective requiring extensive cooperation between the Federal, State, and local education agencies. The problem is not entirely administrative. If the educational progress made through categorical grants is to be maintained, great care must be taken in the transition period.

The Division of State Agency Cooperation of the U.S. Office of Education is supporting an eight-State consortium to study consolidation possibilities, to develop a model for implementation within each State, and to determine what form of Federal assistance is necessary to assist in the solution of the current financial crisis. The eight-State program will be administered by the Minnesota Department of Education and represent a cross section of States, all of which have been involved in efforts of grant consolidation. The participating States include California. Washington, Oklahoma, Utah, Minnesota, Delaware, Florida, and Vermont.

The primary impetus for grant consolidation stems from the need for comprehensive planning and development in each local school unit. New legislation must require a valid needs assessment, careful planning based on the needs identified, measurable objectives, and an evaluation of the success in attaining the goals set by the school.

Educational problems must be identified by each local district, not by a Federal or State agency. They have a vital role in assisting school districts, both the Federal and the State agencies, in the process and in providing support for solving local district problems. The existing system encourages schools to let the availability of funds determine their areas of development.

Educational progress requires a thorough procedure for implementing change. There are a number of steps which must proceed in a logical sequence if a program is to succeed. Categorical grants frequently do not provide resources for all of the steps necessary for this change to occur.

An excellent example is observed in the area of staff or teacher preparation. We go to great lengths under title I of ESEA to de

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termine eligible students and target schools; we provide more and better instructional materials and utilize the most modern technology available; however, we do not prepare our teachers to understand the problems of the poor or to learn new approaches in working with these children because money is not available for this purpose. If title I funds are used for training-and this is permitted-it reduces the amount of resources directly available for the students. Administrative efficiency, duplication in reporting, and application procedures and general redtape are the reasons usually heard to justify grant consolidation or revenue sharing. These problems we could handle if existing programs were adequate for current needs, but they are not. The only valid basis for grant consolidation is to provide a better education for the children and youth of our Nation. If schoolmen throughout the Nation believe educational revenue sharing, general aid, block grants, or whatever, will consume less administrative time, they are vastly mistaken. Adequate needs assessment and planning will require much more than the time saved in. the preparation of separate application forms, but the time will be well spent.

These are needs that will be addressed by the eight-State consortium. What can be done in the consolidation of existing categorical programs? What problems will appear at the Federal, State, and local levels when we attempt to implement a model? And perhaps most important, what type of additional legislation will be necessary and most effective in solving the educational problems facing our Nation's schools?

In the first phase of the project, each State will attempt to pull together selected Federal programs administered by the State into a single procedure. Application forms and reporting mechanisms will be consolidated to the degree possible and still maintain the integrity of the program. After the process is developed under phase I, the second phase will consist of a trial run with several local school districts in each of the States. When specific restrictions occur in the feasibility study, an attempt will be made to solve the problem at that point. The study should result in an administrative format which consolidates Federal programs to the extent permitted by the existing laws.

The degree of success or lack of it in phase II will determine to a large degree the primary question of the third phase, that is, what form should new legislation take?

A model legislative approach will be developed in phase II of the project and comparisons in administrative costs will be examined. through simulation exercises.

The 18-month project should result in the following findings:

(1) The extent to which grant consolidation is possible under existing legislation;

(2) Problems which occur when a consolidation plan is implemented in a school district:

(3) The type of legislation needed to insure a maintenance of quality in education which will contribute to the solution of the financial crisis in the Nation's schools.

It is the desire of the eight-State consortium and Dr. Harry Phillips, who is Director of the State Agency Cooperation in the

U.S. Office of Education, that the results of this study be available for this committee as you examine revenue sharing and other potential Federal funding procedures. You can be assured we will support your efforts in every way, and we want to thank you very much for coming to Minnesota today and hearing our testimony.

Thank you.

Chairman PERKINS. Congressman Quie.

Mr. QUIE. When will that study be completed? You say it should be available to our committee.

Mr. CAIN. We are just in the process of negotiating the grant at this time, and so we should be through the first phase within the next few months, looking at existing programs.

I don't believe too many of us are extremely optimistic about the consolidation of existing programs without any changes in the law. This is going to be extremely difficult. There will be some efforts made and I think we will give it the good old college try, but I am not sure how much grant consolidation can be done under the existing legislation.

Mr. QUIE. In other words, when you talk about grant consolidation under existing legislation, that is merely making one application for all the separate grants?

Mr. CAIN. Yes.

Mr. QUIE. So it isn't really consolidation at all?

Mr. CAIN. No. I think we are going to have to look at-
Mr. QUIE. Separate applications applied for at one time?

Mr. CAIN. Right. I think we are going to try to avoid the problem that occurred a couple of years ago when one of the States did this. They had. I think, 24 documents at that time, each an inch thick, in application forms. They consolidated their programs and they only had one application form 24 inches thick. So we are going to try to avoid this sort of thing and really try to condense it. But, really, this is not going to solve the problem. I think most of us are aware of this.

Mr. QUIE. Tell me about your State assessment program. What kind of information are you attempting to find in that State assessment program? We don't find out very much about the accomplishments of the educational effort.

Mr. CAIN. I should defer to one of my colleagues to answer this question, but basically we are looking, we are going to try, first of all, to determine the existing status or the level of educational achievement, primarily in the areas of reading and mathematics, and we are going to be testing in three different grade levels. I believe they are four, seven, and 11, or something of that sort.

Mr. QUIE. Why grade four, because an awful lot has gone wrong by grade four?

Mr. CAIN. No doubt about it. I think a lot of this is determined by the effectiveness of the tests that are available. Many times certainly adequate testing cannot be done before the third grade level in many areas, and I think this is primarily the concern.

Mr. QUIE. But there has been some significant testing done, it seems to me, of substantial value at grade two, that may be the first test of the ability to read.