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has traditionally been, and should remain, in the hands of the State and local governments. This is a cardinal tenet of the American creed.

(b) The Congress further finds that rapidly increasing costs of education, coupled with dynamic expansion of the school-age population, have placed financial burdens upon the State and local governments beyond the capacity of their traditional tax resources to bear.

(c) It is the purpose of the Congress, in enacting this Act, to make use of the internal revenue machinery of the Federal Government to collect and return to the States for educational purposes, a part of the Federal individual and corporate income taxes paid by their residents. It is further declared to be the purpose of the Congress that no vestige of Federal control shall attach to funds so returned, except the requirements that they be used for educational purposes.

DEFINITIONS

SEC. 3. For purposes of this Act,

(a) The term “Commissioner" means the United States Commissioner of Education, Department of Health, Education, and Welfare. (b) The term "income taxes” means

(1) the taxes on the income of corporations imposed by chapters 1 and 6 of the Internal Revenue Code of 1954;

(2) the tax on the income of individuals imposed by chapter 1 of such Code;

(3) the withholding tax on the income of nonresident aliens and foreign corporations imposed by subchapter A of chapter 3 of such Code; and

(4) the witholding tax on the wages of individuals imposed by chapter 24 of such Code. (c) The term “State” means a State, the Territory of Hawaii, and the District of Columbia.

(d) The term “State educational agency" means, with respect to each State, the State board of education or other agency or officer primarily responsible for State supervision of elementary and secondary schools, or, if there is no such officer or agency, an officer or agency designated by the Governor or by State law.

(e) The term "school-age population" means, with respect to each State, that part of the population of such State which is between the ages of five and seventeen years, both inclusive, as determined by the Commissioner on the basis of data furnished by the Department of Commerce for the most recent year for which satisfactory data with respect to the population of all States between such ages are available.

PAYMENTS TO THE STATES FOR EDUCATIONAL PURPOSES

SEC. 4. (a) Subject to the provisions of section 6(a), the Commissioner shall, on or before December 1, 1959, and on or before December 1 of each succeeding year, pay to each State the amount to which such State is entitled under subsection (b) to be used in the State exclusively for educational purposes. (b) The payment to which each State is entitled under this section is

(1) in the case of the payment due on or before December 1, 1959, an amount which bears the same ratio of 142 per centum of the income taxes collected in the States during the fiscal year beginning July 1, 1958, as the school-age population of all the States;

(2) in the case of the payment due on or before December 1, 1960, an amount which bears the same ratio to 112 per centum of the income taxes collected in the States during the fiscal year beginning July 1, 1958, as the school-age population of such State bears to the school-age population of all the States; and

(3) in the case of the payment due on or before December 1, 1961, and on or before December 1 of each succeeding year, an amount which bears the same ratio to 5 per centum of the income taxes collected in the States during the preceding fiscal year, as the school-age population of such State bears to

the school-age population of all the States. In the event that the total amount appropriated for payments under this section for any fiscal year is less than the total amount authorized to be appropriated for such fiscal year under section 7, the payment to each State for such fiscal year shall be proportionately reduced.

COMPUTATION OF INCOME TAX COLLECTIONS

SEC. 5. (a) The principal revenue officer for each internal revenue district shall report to the Commissioner, in such manner and at such times as the Secretary of the Treasury shall prescribe, such information as is necessary to enable the Commissioner to make payments under section 4.

(b) For purposes of this Act, the amount of income taxes collected in a State during any fiscal year is an amount equal to

(1) the total amount of income taxes collected in the internal revente district or districts in such State during such fiscal year, less

(2) the total amount of credits, refunds, and abatements allowed or paid in such internal revenue district or districts during such fiscal year with respect to overpayments of income taxes.

CERTIFICATIONS AND REPORTS BY THE STATES

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SEC. 6. (a) Notwithstanding the provisions of section 4(a), the Commissioner shall pay to each State for any fiscal year only that portion of the amount to which such State is entitled under section 4(b) as the State educational agency of such State certifies will be used in the State during the fiscal year and succeeding fiscal years exclusively for educational purposes.

(b) The State educational agency of each State shall, on or before September 1, 1960, and on or before September 1 of each succeeding year, report to tho Commissioner

(1) the amount of the yayments received by the State under this Act for the preceding fiscal year, and for all prior fiscal years, which were used in the State during the preceding fiscal year exclusively for educational purposes, and

(2) the amount of the payments received by the State under this Act for the preceding fiscal year, and for all prior fiscal years, which, at the

close of the preceding fiscal year, have not been expended. (c) Each State shall repay to the United States that portion of any payment received by it under this Act which remains unexpended at the close of each fiscal year, unless the State educational agency of the State certifies to the Conmissioner that such portion is being retained, and will be used in such State, exclusively for educational purposes. Each State shall repay to the United States an amount equal to that portion of any payment received by it under this Act which is used for any purpose which is not an educational purpose.

AUTHORIZATION OF APPROPRIATIONS

SEC. 7. For the purpose of making payments under section 4, there is athorized to be appropriated

(1) for the fiscal year beginning July 1, 1959, an amount equal to 14 per centum of the income taxes collected in the States during the fiscal year beginning July 1, 1958;

(2) for the fiscal year beginning July 1, 1960, an amount equal to 3 per centum of the income taxes collected in the States during the fiscal year beginning July 1, 1959; and

(3) for the fiscal year beginning July 1, 1961, and for each succeeding fiscal year, an amount equal to 5 per centum of the income taxes collected in the States during the preceding fiscal year.

(S. 863, 86th Cong., 1st sess.) A BILL To authorize Federal assistance to the States and local communities in financing

an expanded program of school construction so as to eliminate the national shortage of classrooms and in providing increased amunts for teachers' salaries

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SHORT TITLE

SECTION 1. This Act may be cited as the “Education Assistance Act of 1959".

FINDINGS AND PURPOSE OF ACT

SEC. 2. The Congress finds that despite sustained and vigorous efforts by the States and local communities, which have increased current school construction to an unprecedented level and which have increased expenditures for teachers' salaries, there is still a serious national shortage of classrooms and of qualified teachers requiring emergency action on the part of the Federal Government. The limited financial resources available to a number of communities are not adequate to support construction programs of sufficient size to eliminate their classroom shortages. Other communities, in their efforts to apply their potential resources to their needs, are confronted with restrictive debt and tax limits, an inability to borrow the necessary funds at reasonable rates and other obstacles. Practically all communities face the problem of providing compensation to teachers commensurate with the salaries received by persons with comparable education, experience, and responsibilities. While the Congress recognizes that responsibility for providing adequate school facilities and teachers' salaries lies primarily with the States and local communities, the national interest requires that the Federal Government assist State and local governments in solving these pressing problems. It is the purpose of this Act to provide, on a temporary basis, alternative programs for the solution of these varied problems by authorizing (1) payments for school construction to State educational agencies, for assistance on a grant basis to communities where this type of assistance can be most effectively utilized, as determined under priorities established by the States; (2) purchase of bonds issued by communities which are capable of financing their own school construction but cannot obtain such financing from other sources or reasonable terms; (3) credit assistance to State school-financing agencies, to provide schools and related facilities in States in which such agencies exist or may be created; and (4) payments to State educational agencies to be used for teachers' salaries.

TITLE I-PAYMENTS TO STATE EDUCATIONAL AGENCIES FOR SCHOOL

CONSTRUCTION

AUTHORIZATION OF APPROPRIATION

SEC. 101. There are hereby authorized to be appropriated for the fiscal year beginning July 1, 1959, and the four succeeding fiscal years, such amounts, not to exceed $400,000,000 in any fiscal year, as may be necessary for making payments to State educational agencies under this title.

ALLOTMENTS TO STATES

Sec. 102. (a) The allotment of any State for the purposes of this title shall be the sum of the amount allotted to it under subsection (b) and the amount allotted to it under subsection (c), with any adjustment in such sum which results from the application of section 103.

(b) One-half of the funds appropriated for any fiscal year pursuant to section 101 shall be alloted among the States as follows: The Commissioner shall allot to each State an amount which bears the same ratio to the funds being allotted by this subsection as the school-age population of the State bears to the total of the school-age populations of all the States.

(c)(1) The remaining one-half of the funds appropriated for any fiscal year pursuant to section 101 shall be allotted among the States as follows: The Commissioner shall allot to each State an amount which bears the same ratio to the funds being allotted by this subsection as the product of

(A) the school-age population of the State, and

(B) the State's allotment ratio (as determined under paragraph (2)), bears to the sum of the corresponding products for all the States. (2) The “allotment ratio" for any State shall be 1.00 less the product of (A) .55 and (B) the quotient obtained by dividing the income per child of school age for the State by the income per child of school age for the continental United States, except that the allotment ratio for Hawaii and the District of Columbia shall be .50 and for Puerto Rico, Guam, American Samoa, and the Virgin Islands shall be .75. The allotment ratios shall be promulgated by the Commissioner as soon as possible after enactment of this Act, and again between July 1 and September 30 of the year 1961, on the basis of the average of the incomes per child of school age for the States and for the continental United States for the three most recent consecutive years for which satisfactory data are available from the Department of Commerce. The first such promulgation shall be conclusive for each of the three fiscal years in the period beginning July 1, 1959, and ending June 30, 1962, and the second shall be conclusive for each of the two fiscal years in the period beginning July 1, 1962, and ending June 30, 1964.

(3) For the purposes of this title

(A) The term “child of school age” means a member of the population between the ages of five and seventeen, both inclusive.

(B) The term "continental United States" includes Alaska but not the District of Columbia.

(C) The term “income per child of school age" for any State or for the continental United States means the total personal income for the State and the continental United States, respectively, divided by the number of children of school age (in the State and continental United States, respectively).

(d) A State's allotment under this title shall remain available for reservation of funds pursuant to section 105(b) for projects in such State until the end of the second fiscal year following the year for which the allotment is made.

MAINTENANCE OF STATE AND LOCAL SUPPORT FOR SCHOOL FINANCING

SEC. 103. (a) The sum of the amounts allotted to any State under section 102 for any year shall be reduced by the percentage (if any) by which its State school effort index for such year is less than the national school effort index for such year. The total of such reductions shall be reallotted among the remaining States by proportionately increasing the sum of the amounts allotted to them under section 102 for such year. (b) For purposes of subsection (a)

(1) the “State school effort index" for any State for a fiscal year is the quotient obtained by dividing (A) the State's school expenditures per public school child by (B) the income per child of school age for the State; except that the State school effort index shall be deemed to be equal to the national school effort index in the case of (i) Hawaii, Puerto Rico, the Virgin Islands, Guam, American Samoa, and the District of Columbia, and (ii) any State for which the school expenditures per public school child are not less than the school expenditures per public school child for the continental United States;

(2) the “national school effort index” for any fiscal year is the quotient obtained by dividing (A) the school expenditures per public school child for the continental United States by (B) the income per child of school age for the continental United States.

(c)(1) The school expenditures per public school child for any State for purposes of determining its State school effort index for any fiscal year means the quotient obtained by dividing (A) the total expenditures by the State and subdivisions thereof for elementary and secondary education, not including any expenditures made with respect to any school while such school is closed for any period, other than regular vacation periods, during the normal school year, made from current revenue receipts derived from State and local sources in the State, as determined by the Commissioner on the basis of data for the most recent school year for which satisfactory data for the several States are available to him, by (B) the number of children in average daily attendance in public elementary and secondary schools in such State, as determined by the Commissioner for such most recent school year.

(2) The school expenditures per public school child for the continental United States for purposes of determining the national school effort index for any fiscal year means the quotient obtained by dividing (A) the total expenditures by the States and subdivisions thereof for elementary and secondary education made from current revenue receipts derived from State and local sources in the continental United States, as determined by the Commissioner for the same school year as is used under paragraph (1), by (B) the number of children in average daily attendance for such year in public elementary and secondary schools in the continental United States, determined as provided in paragraph (1).

(3) The income per child of school age for the States and for the continental United States shall, for purposes of subsection (b), be determined by the Commissioner on the basis of the incomes per child of school age for the most recent year for which satisfactory data are available from the Department of Commerce.

STATE PLANS

Sec. 104. (a) Any State which desires to accept the benefits of this title shall submit to the Commissioner, through its State educational agency, a State plan which shall

(1) provide that the State educational agency shall be the sole agency for administering the plan;

(2) set forth a program under which funds paid to the State under this title will be expended solely for the school facilities construction projects approved by the State educational agency;

(3).set forth principles for determining the priority of projects in the State for assistance under this title which will assure that first priority will be given to local educational agencies which, upon making an effort commensurate with their economic resources, are unable, solely because of lack of such resources, to finance from the resources available to them the full cost of needed school facilities; the priority principles set forth in accordance with this paragraph shall take into account (A) the financial resources of the several local educational agencies in the State, (B) the efforts which have been and are being made to meet their needs for school facilities out of State and local funds, and (C) the urgency of their needs for school facilities, determined according to conditions of overcrowding or lack of facilities, and the extent to which unsafe and obsolete facilities are

in use;

(4) provide for such fiscal control and fund accounting procedures as may be necessary to assure proper disbursement of and accounting for Federal funds paid to the State under this title;

(5) provide an opportunity for a hearing before the State educational agency to each local educational agency within the State which applies for approval of a construction project under this title;

(6) provide for the establishment of standards on a State level for planning and constructing school facilities; and

(7) provide that the State educational agency will make such reports to the Commissioner, in such form and containing such information, as may be reasonably necessary to enable the Commissioner to perform his duties

under this title. In the case of any State in which a State agency has exclusive responsibility for the financing of the construction of school facilities, the Commissioner may modify or make inapplicable any of the foregoing provisions of this section to the extent he deems such action appropriate in the light of the special governmental or school organization of such State.

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