For the Susquehanna Valley flood, as for the devastation caused by the Gulf coast hurricanes, the tornadoes of the Midwest and the ravages caused when the banks of the Mississippi overflow, it is far beyond the capacity of local resources to rebuild the damage done, to rebuild the economy, and to support and reestablish the services needed to restore the life of the community to a state of normalcy. When these disasters occur, an immediate appeal is made for Federal aid and the response comes quickly. No less is now required for the plight of the Philadelphia Public Schools.

The crisis is indisputable. Public education in Philadelphia is a "disaster area" and nothing short of immediate massive Non-Categorical, General Aid will save the situation. Anything less will lead to the further deterioration of urban life, poor education results in inadequate training for employment, producing ever increasing rates of unemployment and an unfavorable climate for business and industrial development. This vicious circle is the nucleus of the syndrome of poverty, disease, sub-standard housing, crime, and rising welfare rolls.

The facts are clear. A combination of shrinking local and State resources, occuring at a time of increasing needs and costs of public education; of local downhill economic trends; of steadily rising costs of building, staffing, and suppling the schools with the means and tools necessary for a modern program of education; and of the additive costs required to teach and to provide auxiliary services to the growing numbers of the poor and disadvantaged; all of this says in resounding terms that the equitable financing of public education in Philadelphia is beyond the capabilities and resources of State and local government. Some of the hard and incontrovertible facts are these:

ECONOMIC FACTORS

The estimated deficit of the School District of Philadelphia for 1972-73 is $51,843,000. This deficit is exclusive of any salary increases.

The major banks of Philadelphia are reluctant to lend money, in anticipation of revenues, to the School District of Philadelphia.

The present administration of the City of Philadelphia is pledged not to increase taxes. Philadelphia is listed in the "Highest taxed category" among the cities of the Nation. High taxes in Philadelphia have caused many industrial and business firms to locate elsewhere.

Repeated appeals to the legislature of the State of Pennsylvania for additional financial support have been unsuccessful.

37.9% of all Public Assistance recipients in Pennsylvania live in Philadelphia. 330,499 persons in Philadelphia receive Public Assistance grants.

Employment and wages of workers covered by the Pennsylvania Unemployment Compensation Law declined from 810,937 in 1953 to 639,422 in 1971. Population in Philadelphia has decreased between 1950 and 1970, from 2.071.605 to 1,950,089-a decrease of 5.9%. This is in sharp contrast to substantial increases during the same period on the surrounding area. Between 1950 and 1970, there has been a middle class exodus to the suburbs together with an almost equal movement into Philadelphia of poor and lower middle class people from other parts of the Country. Thus, Philadelphia is increasingly made to bear the burden of a national problem.

The credit rating of the Philadelphia Public Schools has recently been lowered to BB. This will result in a sharply reduced building program needed to remove 25,000 children from fire trap buildings, to reduce overcrowding, and to modernize facilities needed to accommodate modern programs of education. The credit rating of BB also limits the possibility of securing short term loans to maintain the cash flow for the Operating Budget, in anticipation of State reimbursements.

EDUCATIONAL FACTORS

40 to 45% of all educationally disadvantaged pupils attending public schools in the State of Pennsylvania are enrolled in Philadelphia.

One out of every three school age children in Philadelphia attend nonpublic schools, most Catholic Parochial Schools. This ratio is likely to decrease because of the financial crisis faced by the Archdiocese of Philadelphia in the operation of its schools.

Conservative estimates indicate that it costs from 25 to 33% % more than than the average cost per child to meet the essential educational and auxiliary service needs of disadvantaged children who live in an impoverished environment.

Educational costs in the large urban centers of America have been increasing at the average rate of 15% per year. The projected 1972-73 Operating Budget of the School District of Philadelphia shows a 1.4% increase over 1971–72. Budget reductions resulting in diminished staff, services and programs have taken place at an accelerated rate during the past three fiscal years. Unless a substantial increase in financial support materializes the 1972-73 reductions will cripple the School System, and will place the burden of recovery on generations to come.

Financial band-aids applied annually will not stop the Philadelphia Public School system from slowly bleeding to death. A Nation that can help to restore post-World War II Europe with a Marshall Plan or that, during an earlier period, made it possible for a large section of our Country to flourish through the Tennessee Valley Authority, can and must provide adequate, equitable and continuing non-categorical Federal support of public education in Philadelphia. At present the Philadelphia Public Schools benefit from a large variety of Federal grants, the greatest of these coming from the Elementary and Secondary Education Act of 1965. Federal aid over the last six years has been substantial and in fact has almost been the exclusive source of funding available to compensate for identified basic educational deficiencies among tens of thousands of pupils, has made it possible to develop an extensive Day Care Program, has stimulated the development of enriched programs for pre-school children and children in kindergartens and in the first three grades, has helped to modernize vocational education programs and facilities; and has underwritten the cost of retraining thousands of teachers in the use of new techniques and materials.

Without all of this, the Philadelphia Public Schools would now be in a state of complete collapse.

The problem is that small oases are created, here and there, that provide help and hope to some children and their parents, while the majority of children in the surrounding desert have been waiting and will continue to wait for the fulfillment of their educational needs, unless Federal Non-Categorical, General Aid to Education is provided to the Philadelphia Public Schools.

An indefensible dichotomy has been created because of the application of various forms of Federal categorical aid. In a great number of instances children currently not eligible to benefit from specific program fundings are in as much need of the program and the help it offers as those who are eligible. Yet the School District, because of its starved financial condition, can do nothing but stand by and lament the fact.

During the last six years categorical aid has provided limited though very important support to the Philadelphia Public Schools. Present social and economic conditions in the City of Philadelphia and the limitations of local and State funding make it imperative that Federal Non-Categorical, General Aid be provided in order to maintain the public school system of the Nation's fourth largest city on a continuing, solid basis that will insure an enlightened citizenry fully prepared to make its contribution to the economic, social and political well-being of the local community, the State and the Nation.

Unless immediate Federal Non-Categorical, General Aid is forthcoming, there will be a breakdown of one of the largest public school systems of the Country. Dr. HORNBACK. I would like to make limited comments based on first reading of H.R. 16202 and to raise some issues for clarification which I hope the committee will consider. Under section 102, which is the equalization section and the qualified program section, there is a statement which reads beginning on line 17:

If the State funds are allocated among public elementary and secondary schools under a program based on providing an equal amount of funds for the education of each public school student in the State appropriately adjusted to provide differential amounts of funds for public school students in the State according to criteria prescribed by the Secretary designed to achieve the equalization of educational opportunities of public school students within the State. My question, Mr. Chairman, and the issue I would like to raise is that, nowhere in the bill is equalization of educational opportunities defined. My assumption is that it is strictly related to fiscal equalization, but there is some language elsewhere in the bill which raises the

issues of poverty and other things that it might be addressing itself to other issues, and I would hope that in the consideration of the committee, that this point might be clarified.

On page 5 of the bill under section "B" where the formula is developed for hypothetical property tax revenues, the term "assessed value of all assessable real property" is used, but, again, there is not a definition of assessed real value and from some 25 years of experience in dealing with assessors, and assessed valuation, I know this is a very different thing in different States, different localities, different cities, different areas, and different assessment procedures are used, so I think it would be to the committee's advantage to define what is meant by that term for purposes of this bill.

I would also, before raising any more questions, like to commend the chairman and his associates for the introduction of this bill. I believe very strongly that it is a step in the right direction for help, to our cities.

The issues raised by Mr. Hathaway and Dr. Wolfe, here could be duplicated, as you well know, Mr. Chairman, in Chicago, Portland, Oreg., Philadelphia, and any number of other large cities in the country. The statement I introduced into the record from Philadelphia indicates that they anticipate over a $52 million deficit for the current fiscal year.

Again, on page 12, subsection 6, "persons employed in job finance in whole or in part out of its trust fund established under paragraph 1 will be paid wages which shall not be lower than prevailing rates of pay for persons employed in similar jobs in such States."

If a metropolitan school district is placed in this situation, probably it would not pose any problem because rather typically your metropolitan school districts have salary schedules that are as high or nearly as high as those throughout the State. If the recipients of these funds are in other areas where salary schedules are below the average of their State, they might be placed in the rather embarrassing situation of either having to raise their entire salary schedule to meet these costs, or having a dual salary schedule for people who are paid under the provisions of this act and those paid out of other sources of

revenue.

Another seeming inconsistency in the bill to me, and it may be a matter of my own understanding, but one which I would like to have clarified, is that the general allocation of funds is based on the number of elementary and secondary school children within a state in public schools, but the private school provisions in the bill do not seem to take this into consideration in that allocation.

As I am sure you are aware, sir, there are wide differences in the United States, between States, as to the percentage of public and nonpublic school students, ranging from nearly 40 percent in some States down to below 10 percent in other States.

These very populous States, generally in the Northeast and in the South, if they are to be able to fulfill the provisions of providing the resources to nonpublic institutions as provided in the bill, it would seem to me appropriate that these students should be taken into account in the original allocation of funds under the bill.

Under section "B" page 13, again a matter of definition, "The controls of funds" and this relates to the funds for a private institution, "*** provided under this section and title to property acquired herewith, shall be in a public agency."

"Public agency" here is not defined. Possibly from my biased viewpoint, I would think it would be local educational agency, and I think probably a clear definition would be in order as to what kind of agencies the State should consider to administer these local funds. There is a pattern which the committee might wish to look at which has been in effect in New York for several years in distribution of certain textbooks.

In the requirement that the State be provided with certain information, on page 14, beginning with line 14, which provides for a very extensive reporting program on the part of the local educational agency to the State. This raises a concern from a public school administrator's point of view that there are many districts in the United States today who are not equipped to provide this information.

Very probably, they should be and I would support that contention that they should be. But it is a massive operation and we have some experience with the development of management information systems to support this kind of activity to provide the kind of information if it is to be qualitative that is provided for in this act. So my basic question is, would it be possible for a local educational agency to use funds as provided under this act to establish their system for the kind of information required by the act?

A couple of collateral questions with regard to this. There does not seem to be a limitation on the type of program that monies under this fund can support, yet there are sufficient limitations that would make it improbable at least that a district could commingle these funds with local funds, so my real questions are these:

Could these funds be used for capital outlays? Could they be used for buildings or are they just for operation of programs? That is not clear to me. I think that covers in essence, sir, the comments I had on the bill and, again, I would commend you and Congressman Perkins and people working with you in development of a bill which could, in the long run, bring substantive relief to the extreme crises that the cities face today.

Mr. PUCINSKI. Dr. Hornback, I appreciate your testimony. It is always good to have a witness who comes before the committee and makes some constructive suggestions on how we could clarify the bill. We will have our attorneys look at the questions you have raised and we will of course confer with you further.

Dr. HORNBACK. I will be delighted to be of service at any time I can, sir.

Mr. PUCINSKI. Fine. Mr. Ruth?

Mr. RUTH. No questions other than to commend the witness. I am not prepared to make any statement. I am more interested in what the witness had to say about the bill.

Dr. HORNBACK. If at any time we can, through our organization, be of service to the committee, we stand ready to do so, sir. We are making some fiscal analyses of the bill which we will provide to your staff.

Mr. PUCINSKI. We are counting on the Council of Great City Schools, since you are very close to the problem, and we hope you will give us a study, your analysis of this bill. You have been most helpful this morning because you pinpointed the areas where, honestly, we have to take a hard look at the language and see what it does and what it is intended to do and if it does not meet the test of the school administrators without changing, and I want to thank you very much for being with us.

Dr. HORNBACK. Thank you.

Mr. PUCINSKI. The committee will stand adjourned until tomorrow at 10 o'clock.

(Whereupon, at 11:45 a.m., the subcommittee recessed, to reconvene for further hearing at 10 a.m., Thursday, August 17, 1972.)