Dr. WOLFE. Yes.

Mr. FORD. That was stopped though by the court?

Dr. WOLFE. Yes.

Mr. FORD. So at least he anticipated some sort of minimum figure of what would be needed within Detroit by itself and that is the purchase price of the 300 buses. But do you have any idea what it would cost to operate 300 buses per year?

Mr. HATHAWAY. I suppose you would have to take into consideration the fact that you would need drivers. You would need, if you had elementary children--you would need paraprofessional assistants to the drivers on the buses and this would require so much-well, the going rate for busdrivers, the salaries in Detroit, I would suppose, would run somewhere around $7,500 a year, probably $5,500 a year for a paraprofessional, and you would have to take into consideration the pension programs and the maintenance and operation, creation and building of storage areas, and maintenance areas for these buses, the personnel for maintenance, and all of these factors figure in.

The best estimate I can give you, not on the amount, but on the factor that the leasing of equipment would also equal the actual purchase in the operation of it. It would be just as expensive for us to go out and lease equipment year around as it would be for us to acquire our own and operate them.

Mr. FORD. Then it could be as much as $12,000 to $15,000 in real cost. per bus per school year?

Mr. HATHAWAY. I would estimate that that would be a realistic figure, based upon the going salaries in the Detroit area.

Mr. FORD. There is a very real possibility that some portion of that burden might be put on you at this semester break?

Mr. HATHAWAY. Well, of course, I don't know where we would even get buses at the commencement of this year. But there is always a possibility.

Mr. FORD. As title II was originally written, there would not be adjustment because we just counted numbers of children, but in the past few years there has been an adjustment in Michigan, particularly of the title I funds so that the low-income factor of the children as distinguished from the school district, has become one of the three factors in distributing funds, so presumably if you had low-income children move from the city, from that school system to another, those funds would have to go with them if they were sent to you because of their presence in the "within city" school funds.

All of the title I funds, too, because of a presence of fictional but nevertheless statistical children from the low-income or financial standpoint. One of the plans suggested by the panel suggests that if 350,000 children were moved, there could be half of those from Detroit taking their title I money with them.

How much categorical assistance in Detroit is now received from the Federal Government?

Dr. WOLFE. I can't give you the exact amount, but it is very sizable. Mr. FORD. My last estimate was about $33.5 million.

Dr. WOLFE. I was going to say $36 million, $33 million might be the figure. It is very close in there.

Mr. FORD. And the major portion of that is title I money?

Dr. WOLFE. Yes; $15.5 million is the current year's estimate for table I.

Mr. FORD. Plus title II. You don't have very much in the other titles in Detroit any more.

Dr. WOLFE. That is true. I will submit a summary table on all Federal programs for the 1971-72 school year.

Mr. FORD. So we could be talking about close to half of that money being placed in limbo in some fashion if the court went along with the recommendation of the panel.

I have no further questions at this time, Mr. Chairman.
Mr. PUCINSKI. Thank you.

Mr. HATHAWAY. The legislation before us anticipates the establishment of a trust fund, an educational trust fund, which the Treasury would then pay to the local schools the moneys it would be entitled to under this act to help to equalize the payment of expenditures per student.

Now, the question frequently comes up, "If local communities are voting down bond issues at the high rates that they are, what is the rationale for the Federal Government to bail these communities out?"

Now, that is a fine question to be asking in Washington, D.C., on the picturesque shores of the Potomac, but you are down there trying to grapple with this problem, and are faced with a $90 million deficit and faced with, literally, bankruptcy. As an administrator who has to work with this problem or as a member of the board, and perhaps Dr. Wolfe might also want to comment on this, what is your answers to the critics?

Mr. FORD. If you had some helpful fellow at the DSR that says he had a lot of buses that are not being used.

Mr. HATHAWAY. We are faced with the fact that most of the DSR buses are not necessarily equipped according to the State statutes the way buses should be equipped when transporting schoolchildren, so whether or not in all instances we can use city owned equipment for the transportation of children in the elementary grades is a questionable feature. I suppose there is always a practical factor that somebody could suggest that the State allow them to be transported without those safety factors.

Mr. FORD. Dr. Wolfe, what is the present dropout rate in the Detroit school system, as you know it?

Dr. WOLFE. The dropout rate is a very misleading figure that we tried to refine for many, many years. We know that from the time of entry in school at the kindergarten level to the end of school, at the high school level, we would probably show a reduction that gets close to 50 percent in the numbers of children. How many of our children continue their education at another place or how many of them continue later in life is a figure that we can't give because we can't follow the people. We do know that there are sizable adult education schools. Mr. FORD. Do you have any idea of how many people in high school actually finish?

Dr. WOLFE. Detroit's dropout rate in senior high school of approximately 13 percent would indicate that about 87 percent finish, compared with some 94 percent statewide.

Mr. FORD. And the national figure is about 25 to 27 percent?
Dr. WOLFE. Or higher.

3

Mr. FORD. Does this result in you having a substantial expenditure for continuing education, adult education?

Dr. WOLFE. It should, except that for much of our continuing education we have up until recently charged a person who participates in the program. More recently, for the last 4 years, if the person, the adult, is pursuing couses that lead to a diploma, and most will, the cost is picked up by the State.

Mr. FORD. One final stage of it which deals with legislation we already have on the books. I saw some statements to the newspapers coming from some of your staff indicating that there was confusion. over what would happen to the categorical Federal funds now going to the Detroit Board of Education in the event that students now attending in Detroit were assigned to a school district outside of Detroit as a result of a court order and indicating that an inquiry had been. forwarded to the office of education to determine where the money would go, and have you had any response from the Federal Government on what would be done?

Dr. WOLFE. No. Up to this time, as far as I know, the question is simply, "Will the funds follow the child or not?"

Mr. FORD. Are you talking primarily of title I funds?

Dr. WOLFE. Yes.

Mr. FORD. And title II, I suppose, also?

Dr. WOLFE. Any funds there would be a question of qualification on where the child is and whether the funds will follow him or remain. Mr. HATHAWAY. Mr. Chairman, my answer basically is this: When you are talking about the major cities of this country, you will find that the problem of those people that are involved in administration, whether it is direct city administration or the school administration, is they are constantly dealing with tremendous amounts of money required to meet the operation generally. The municipal overburden, I suppose, is the primary reason that electors in the city are constantly turning down school millage, that being the only type of tax they can have an effect upon.

For example, in the city of Detroit it is true that the school district is providing less in the form of revenues; that is, the people are providing less than they are in other sections of the State. However, the Detroit taxpayers are the most burdened in the form of all types of taxes that they must meet, more than any other area in the State of Michigan, so that if you figured out the amount of millage that the taxpayers are paying, you add the 2 percent city tax, the State taxes and the Federal taxes, you would find that nowhere else in the State are any citizens paying the amount of taxes that the Detroit citizens are paying. So the rationale has to be the large cities in this country, because of the way they are decaying, because of the tremendous need to meet the very unique conditions that exists in these large cities. The only way that these needs can be met, particularly as it relates to education, have to be from the Congress and from the State, because the citizens themselves are no longer capable of providing that, nor are they willing to do so. In other words, they are really saying to the legislatures and the Congress, "Our burden is so tremendous that we

feel it totally unfair and unjust that we should be taxed in any additional way to provide educational services."

Mr. PUCINSKI. Could it be also that the rationale can be found in the word "mobility"?

Mr. HATHAWAY. No question about it.

Mr. PUCINSKI. A good portion of your taxpaying, middle-income community has moved out of the city into the sprawling suburbs and to a great extent it has been replaced by a substantially lower income type of family that either is unable financially to make a significant contribution to the tax base or is in a public housing project or some other housing facility that does not pay any tax.

Mr. HATHAWAY. No question about that.

Mr. PUCINSKI. In Chicago we have 135,000 schoolchildren in our system. There is almost 30 percent of the total school population of the public school system in Chicago that are living in public housing units for which the Chicago Housing Authority pays the school board $11.35 a year, in lieu of taxes, for the education of children when it costs us $800 a year to educate that child. So I often wonder whether mobility is not one of the reasons?

People have a right to exercise their freedom of movement. They can move from State to State and they can move from community to community. We don't want to stop that right. We are not trying to infringe in any way on that constitutional right in our republic, but does it follow that because people exercise a Federal right, that certainly the Federal Government would then assume a larger proportion of the cost of social and educational problems that inure in the pursuit of that right?

Mr. HATHAWAY. There is no question of it, Mr. Chairman. In fact, I think the mobility, not only within the parameters of southeastern Michigan is very graphically displayed, but it is also highlighted by the fact that in many of our schools, the mobility rate within the city of Detroit runs anywhere from, I would say, in some 80 schools, as high as 13 percent per year.

In fact, they found that in many areas you find children registering two and three times in different resident schools in a given school year, and higher. Well, my estimate is approximately 120,000 of the 290,000 children that are probably going to school are going without breakfast in their stomachs in the morning.

Children coming from homes where there are split families and the children are being raised by only mothers or uncles or aunts and children coming from areas where they have the high evident infant mortality, the great evident criminal rate, where all of these things, all of these cultural disadvantages and social disadvantages that exist in our major cities are being emphasized for these same children and are doubled and tripled, so that it is incumbent upon either the legislature or the Congress to recognize that these are unique factors in the major cities in the United States. When you add to it the inability to meet and raise revenues, then someone else has to pick up that ball because otherwise our societies are going to pay a terrible price each generation and it is going to escalate.

Mr. PUCINSKI. Well, let me ask you and Dr. Wolfe a very good question. How far are you from declaring bankruptcy in your school system?

Mr. HATHAWAY. As I found out from dealing with the Municipal Finance Commission, and Dr. Wolfe has, I notice, also, and the State board of education, they apparently don't want us to recognize the fact that maybe we are bankrupt and that the simple solution is to continue to give what is apparently education and deliver educational service on an ever-reducing scale to a point to where today we can say we can give what we call survival education for 117 days. When the State says, "You must educate children for 180 days," and we are on a survival scale for 117 days, to all purpose and to all effects we have a bankrupt condition right now.

Mr. PUCINSKI. Under the law, can your school board assume a debt? Can you build up any sort of debt and continue operating within that kind of debt?

Mr. HATHAWAY. No, we must have a balanced budget. But at the same time what has happened up to the present time is they permit us each year to borrow sufficient funds to keep the doors open, but each year that has doubled, that is the amount of money we must borrow. Mr. PUCINSKI. This is the kind of back-door financing that only puts off the financial day of reckoning which must come sooner or later. Mr. HATHAWAY. That is right and the day of reckoning is February 1973.

Mr. PUCINSKI. That is zero day?

Mr. HATHAWAY. Yes, that is zero day.

Mr. PUCINSKI. What happens then? Do you shut down your schools? Mr. HATHAWAY. We shut down the schools and unless there is some. assistance coming from some source outside of the Detroit area, I believe it is incumbent upon us to start planning right now to close the doors and what we will do in the event those doors are closed in February?

Mr. PUCINSKI. You know, I can't understand one thing. The President can decide within 3 minutes to allocate a huge sum of money to the east coast, Pennsylvania, New York, all of the communities hit by the storm Agnes. We recognize this is a disaster and we have to help our fellow citizens, and now it is a question of how fast can a bureaucracy move and apparently the bureaucracy is not moving fast enough. There is a national scandal in the wake of that, but that is another matter, the point I am making is, why is it that we Americans react to a national disaster and yet not see a similar national disaster facing the educational community, and why do we have to wait until the school system shuts down and millions of children walk the streets without an education before somebody starts to come to grips with the problem?

Mr. HATHAWAY. I think, Mr. Chairman, what it amounts to is that in the United States, where we have provided for so long public education and raised the hopes and aspiration of so many millions of people all over the world that have come to these shores and participated in the great democratic experience that has been taking place here for almost 200 years, that in the last 50 years particularly, we