Governors, State legislators, and school finance experts, all attesting to the wide disparities in educational expenditures existing among school districts throughout the States and to the resulting repercus

sions of the recent court decisions.

Now we want to hear from people who are involved on a daily basis in our elementary and secondary schools, the school board members, the administrators, the students, the teachers and the parents. We want to hear directly from them what they perceive our educational and financial needs to be.

I personally have come to the conclusion that our schools are facing the gravest financial prospects they have ever faced in our Nation's history.

In fact, hundreds of school districts throughout the country are fast approaching bankruptcy. Education recently came to a complete halt for 54,000 students in Dayton, Ohio, when the board of education declared itself bankrupt and padlocked its 69 public school buildings, not to reopen until a mill levy was passed.

Chicago confronted with a budget deficit of well over $30 million has begun to lay off guidance counselors and substitute teachers and has made plans to eliminate all music, art and physical education classes.

Philadelphia recently dropped some 600 classroom teachers and called a halt to school construction even though 30,000 children attend school in recognized "firetraps." Nashville, Tenn. shortened its schoolday to 5 hours. Hartford, Conn. increased its class size by five pupils per class. Other school districts have gone to double, even triple sessions and used teacher aides as substitute teachers.

The long-awaited breathing period predicted when the era of growing enrollments began to slow has not materialized because inflation. and increased operating expenses have absorbed the additional revenue. For example, New York City's public school enrollment rose 16 percent during the last 10 years, while school spending zoomed 217 percent.

To compound the current fiscal dilemma, present methods of financing schools neither produce enough money nor distribute this money equally. And these twin evils have led to the recent court actions. For instance, in Illinois the Central Stickney School District in Chicago's suburbs, composed entirely of the Clearing Industrial District, has a per-pupil assessed valuation of $222,542, but few pupils. Next door the South Stickney School District, where most of the Clearing Industrial District workers live, has a per-pupil valuation of only $17,024. The results are predictably devastating: tax rates are twice as high in South Stickney as in the neighboring school district, but spending on education is only half as much.

Millions of citizens throughout the country bear this double burden of high tax rates and poor education being made available to their children. This tragedy can probably best be seen in our large cities with their declining tax bases and increasing numbers of disadvantaged students. In Chicago, for instance, the tax rate for all services including education has increased by 44 percent within the last 5 years. And yet the quality of education offered in the public schools is widely regarded as far below that of many of our suburban schools.

The objective of the hearings which we are resuming today is to find some means to assure a quality education to every child, regardless of where he lives, and to secure a more equitable tax system for education by reducing the property tax burden borne by the citizens of this country.

For almost 2 years now I have been advocating a one-third partnership by the Federal Government in education with the States and local governments paying for the remaining two-thirds. My purpose is to achieve a national foundation of $1,200 to be spent on the education of each and every elementary and secondary student in the country.

We now have a variety of bills before the subcommittee which share this goal, my own National Partnership in Education Act, Congressman William Ford's Quality School Assistance Act, several bills introduced by Chairman Perkins, and also the Public and Private Education Assistance Act recently introduced by Chairman Perkins and myself. This latter bill, H.R. 16202, sets up a trust fund in the Federal Treasury for the purpose of equalizing and increasing education expenditures in the States.

It is my hope that these hearings will assist the subcommittee in sharpening its perceptions of the issues in school finance so that we can have swift action to avert the impending fiscal crisis endangering our schools.

It is also our hope to hold these hearings and report, or at least, urge the committee to take action on that part of the bills that now are before our committee and the Ways and Means Committee, which affect the jurisdiction of this committee; namely, H.R. 16202. It will be my hope we can work out some agreement with Congressman Mills so that we can handle the bulk of the testimony on the educational trust fund while Congressman Mills proceeds to hold hearings on the tax credit for parents of children who attend private schools. I believe that H.R. 16202 does offer us a very workable meaningful formula and approach to equalize the increasing costs and expenditures of local communities in education.

So we are very pleased to have as our first witness this morning in these important hearings, and they may very well be the most important hearings of this Congress because of the crises that are facing the Nation's schools, we are very pleased to have with us this morning James A. Hathaway, chairman of the Board of Education of the City of Detroit.

I believe that Dr. Charles Wolfe, superintendent of schools of Detroit, is with Mr. Hathaway; and, as I understand it, Dr. Jack Hornback, executive vice president, Council of Great City Schools, will be testifying later in the morning.

So, Mr. Hathaway and Dr. Wolfe, we are most pleased to have you here. I know that the other members of the committee, particularly Mr. Ford, are anxious to meet with you and they will be here very shortly.

In order to expedite the hearings and enable you to catch your plane, why don't you proceed in any manner you wish at this particular time.

STATEMENT OF JAMES A. HATHAWAY, CHAIRMAN, BOARD OF EDUCATION, DETROIT, MICH., ACCOMPANIED BY CHARLES WOLFE, SUPERINTENDENT OF SCHOOLS

Mr. HATHAWAY. Mr. Chairman and members of the committee, I am James A. Hathaway, president of the Detroit Board of Education. I am also a member of the executive committee of the Council of the Great City Schools. I am accompanied today by Dr. Charles J. Wolfe, general superintendent of the Detroit public schools, who is on my immediate right. It is a pleasure to have this opportunity to testify on H.R. 16202, the Public and Private Education Assistance Act of 1972.

I would like to point out, I suppose, this morning the tremendous financial crunch that exists in the city of Detroit as it relates to the education of its children. We have an estimated budget of approximately $295 million, but only $171 million in revenues to operate with during the present school year. The fiscal impasse of the Detroit public schools can be described as not unlike the dilemma facing a large number of other public schools in major cities.

The tragedy of considering a reduced program for the education of pupils in a land of plenty is an indictment that should be placed not on a single school district, but on society as a whole.

Devising a balanced budget for the 1972-73 period under the present circumstances requires cutting the guts right out of the school system. You cannot make millions of dollars in reductions without removing people and their services to children. Approximately 85 percent of the school budget is for people's services. Schools are a people business. Where else can you make large reductions in school costs except by cutting educational services?

The bleak fiscal estimates which I described represent a breakdown in the government of education at all levels, local, State and National, regardless of the errors of the past situation being only corrected by direct action of the educators, the Congress, the legislature and the administration. The needs for quality education will not go away and the prospects for a complete new system of financing schools may be the answer.

The timeliness of these hearings on a major approach to provide dollars for the general funds of hard-pressed school districts throughout the Nation cannot be questioned. This is particularly true in the school district of the city of Detroit because only last Tuesday, August 8, the voters of our community for the second time in 3 months refused to renew or increase tax millage which would have provided $60 million essential to the maintenance of the reduced educational program that has been in effect for more than 2 years. This millage defeat leaves us with available revenues to provide not more than 117 days of school for the 1972-73 school year.

The Detroit public school system is the fourth largest in the Nation with 290,000 pupils. The school district embraces an area of 138 square miles and is served by 240 elementary schools, 85 secondary schools, and 28 special and vocational schools. The budget necessary to maintain a minimum program in the Detroit schools for 1972-73 is estimated at $295 million. The total available revenues from all sources for the general fund are $209 million. The State will provide 53 per

cent of that revenue program. In brief, we are facing the opening of school with a $90 million deficit.

The financial crisis of the Detroit public schools has been building over a period of years and can be directly attributed to a cumulative 10-year revenue loss of more than $91 million because of a series of annual reductions in the State equalized valuation. Only for the last 2 years has the State equalized valuation returned to the level of 1960-61. The electorate's rejection of the millage proposal on August 8, will result in local revenues only at the level of 1968-69.

The impact of a sweeping court-ordered restructuring of this school district for the purposes of desegregation, along with the pending appeals, the possible elimination of the property tax as a basic source of revenue resulting from the Milliken-Kelley case, and the possibility of massive Federal assistance to provide quality education in school districts educating large numbers of pupils from low socioeconomic families, while highly speculative, casts an additional cloud of uncertainty as to the future of education in Detroit.

The Detroit public schools were completely reorganized under a decentralization order, mandated by the State legislature, on January 1, 1971. No provision was made by the legislature to finance an estimated annual requirement of $4 million to finance the full operation of the eight regions.

The Federal district court, on December 3, 1970, ordered the implementation of the "Magnet school plan" to improve integration in the Detroit public schools. The estimated annual cost of this plan, $1.5 million, has also been without benefit of additional grants.

Within the enrollment of the Detroit public schools are found 40 percent of the title I disadvantaged pupils of the State of Michigan, 65 percent of the minority group pupils of the State, and 13 percent of the special education pupils of the State. The high cost of educating these pupils is only partially offset by special State and Federal grants. The ability to meet maintenance of effort requirements to continue Federal grants could be in jeopardy if pupil services are further reduced to effect budget savings.

Under the direction of the board of education the general superintendent and staff have placed heavy emphasis on the necessity of curtailing expenditures during the past 2 years. Special restrictions on all controllable expenditures allow outlays only for those items essential to provide minimum pupil services. These limitations provide only minor budget savings in the face of the total deficit.

Personnel salaries are the largest item in the budget. School personnel, with few exceptions, are under negotiated contracts that appear to require the payment of a full-year's salary. The teachers' salary schedule now in effect is based on the average salary of seven of the neighboring districts. It is not the highest schedule in the area. In 1970-71, Detroit's average teacher salary was $11,475, while the average of all Michigan districts, including rural, was $11,046. The number of professionals per 1,000 pupils is 42. Among 49 metropolitan districts Detroit ranked 36th in this respect.

The fiscal impasse of the Detroit public schools described above is not unlike the dilemma facing a number of other major school systems in Michigan and the Nation. The tragedy of considering a reduced program for the education of pupils in a land of plenty is an indictment that should be placed not on a single school district, but

rather on society as a whole. The failure of the financial structure to provide adequate funds to support the schools should not be suffered by today's pupils.

Any representative of the Detroit public schools appearing before this committee would be less than realistic and grateful if he did not compliment and thank the committee for the tremendous educational enactments that have produced so many dollars for the compensatory education programs now operative in Detroit. These programs, of course, are categorical programs, but they are effectively serving boys and girls in our city that need the services provided under the many enactments. The programs supported by legislation now in effect have made possible the only research and innovations that have demonstrated that dollars do make a difference in educational achievement. At another time the Detroit public schools reported to the General Subcommittee on Education the effectiveness of a number of ESEA title I programs.

These programs continue but, without the addition of large increases in general fund revenues, it is questionable whether such gains can be maintained or whether the present level of education for all pupils must fall back. While complimenting this committee on the authorization legislation, we would mention regretfully that the appropriations to carry out the intent of the legislation have not kept pace. Indeed, it has been reported that the levels of appropriations approved last week for Labor-HEW-OEO may experience a presidential veto.

Limited by our very cursory review of H.R. 16202 and the time constraints in preparing this statement, we will comment only on the general philosophy of the legislation in those areas that we feel might be strengthened.

The proposal, as we interpret it, is an approach to revenue sharing that would permit equalization among school districts within a given State when the State becomes the prime contributor to a statewide funding program. This approach represents a philosophy that has long been supported in a number of schools of educational finance. It also represents a partial answer to the legal questions raised in such cases as Serrano-Priest, Rodriquez-San Antonio, and the MillikenKelley case in Michigan.

We would point out that in Michigan in the November election the electors will have an opportunity to vote on a constitutional amendment that proposes the abolition of the property tax as the main source of school support. Assuming the passage of this constitutional amendment or an affirmative ruling in the Milliken-Kelley case, the State would, indeed, become the prime source of revenue for all local educational agencies in Michigan.

The exceptions to this rule would be provided through statutory amendments that could provide for certain educational programs, such as special education, area vocational education, intermediate district programs, and the community colleges. Also possible would be a permissive 6-mill local levy at the discretion of the electors of each individual local educational agency. The proposal does make possible Federal funds up to 30 percent of the total non-Federal funds. This provision is highly desirable and, hopefully, would increase in such a way that the total dollars available per pupil would increase as the State participation goes upward.