FEDERAL GRANTS TO STATES FOR ELEMENTARY AND SECONDARY SCHOOLS TUESDAY, FEBRUARY 17, 1959 U.S. SENATE, SUBCOMMITTEE ON EDUCATION OF THE Washington, D.C. The subcommittee met, pursuant to call, at 10: 15 a.m., in room 4232, New Senate Office Building, Senator Lister Hill (chairman of the full committee) presiding pro tempore. Present: Senators Hill (presiding pro tempore), McNamara, Cooper, Case, and Javits. Also present: Senators Morse, Clark, and Williams of New Jersey, members of the committee. Committee staff members present: Stewart E. McClure, chief clerk; William G. Reidy, Frederick R. Blackwell, and Raymond Hurley, professional staff members. Senator HILL. The subcommittee will kindly come to order. Mr. Secretary, as you know, this is the Subcommittee on Education of the full committee. It was a matter of great regret to Senator Murray that he could not be here this morning. He is the chairman of the subcommittee. It is a matter of great regret to me that I am going to have to leave in a few minutes. I might say frankly that there are 33 Alabama mayors in the city this morning on a very portant and pressing matter, and I am going to have to join them. I believe this is your first appearance before a subcommittee of this committee. im STATEMENTS OF HON. ARTHUR S. FLEMMING, SECRETARY OF Secretary FLEMMING. That is correct. Senator HILL. I want you to know that we are very happy to have you and Assistant Secretary Richardson and Commissioner Derthick and the other members of your staff here this morning. We welcome you here. We assure you it will always be a pleasure to have you here. Secretary FLEMMING. Thank you very much. Senator HILL. The administration bill, S. 1016, will be printed at this point: t (S. 1016 follows:) [S. 1016, 86th Cong., 1st sess.] A BILL To authorize a five-year program of assistance to school districts in meeting the debt service on loans for construction of urgently needed elementary or secondary public school facilities, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "School Construction Assistance Act of 1959". ASSURANCE AGAINST FEDERAL INTERFERENCE IN SCHOOLS SEC. 2. In the administration of this Act, no department, agency, officer, or employee of the United States shall exercise any direction, supervision, or control over the personnel, curriculum, or program of instruction of any school or school system. AUTHORIZATION OF APPROPRIATIONS SEC. 3. For the purpose of assisting school districts in financing the construction of urgently needed school facilities which they cannot, through exercise of a reasonable tax effort, finance from their own resources, there are hereby authorized to be appropriated for each fiscal year, beginning with the fiscal year ending June 30, 1960, such sums as may be necessary to make the payments provided in this Act. ALLOCATIONS SEC. 4. (a) (1) For each fiscal year during the five-year period beginning July 1, 1959, and ending June 30, 1964, such amounts, not to exceed $600,000,000, as may be specified for such year by appropriation or other law shall be allocated by the Commissioner among the States on the basis of the income per child of school age, the number of public school children, and the effort for school purposes of the respective States. Subject to the provisions of section 5, such allocations shall be made as follows: The Commissioner shall allocate to each State for each fiscal year an amount which bears the same ratio to the total to be allocated among all States as the product of (A) the number of public school children in the State (determined as provided in section 5 (c) (1) for such fiscal year), and (B) the State's allocation ratio (as determined under subsection (b)). bears to the sum of the corresponding products for all the States. (2) A State's allocation pursuant to paragraph (1) shall remain available until the end of the fiscal year following the year for which the allocation is made for Federal debt service commitments pursuant to section 7 with respect to obligations, to finance the construction of school facilities projects in such State, totaling the amount of such allocation. Such a commitment with respect to any obligations shall commit the Commissioner to make advances for payment of onehalf the annual debt service on such obligations. Such obligations may be for the purpose of financing all or a portion of the construction of school facilities projects. The latest maturity date of obligations (in any issue) with respect to which a Federal debt service commitment is made under this Act may not be less than twenty years and not more than thirty years from the earliest date of any of such obligations and the first payment of principal thereon shall be due not later than the end of the third year following such earliest date. (b) For purposes of this Act (1) The "allocation ratio" for any State shall be 1 less the product of (A) 0.50 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 (A) the allocation ratio shall in no case be less than 0.25 or more than 0.75, and (B) the allocation ratio for Hawaii shall be 0.50, and for Puerto Rico, Guam, and the Virgin Islands shall be 0.75. (2) (A) The allocation 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 purposes of this Act for each of the fiscal years in the period be ginning July 1, 1959, and ending June 30, 1962, and the second for each of the fiscal years in the period beginning July 1, 1962, and ending June 30, 1964. (B) Promulgations made before satisfactory data are available from the Department of Commerce for a full year on the per capita income of Alaska shall prescribe an allocation ratio for Alaska of 0.75 and, for purposes of such promulgations, Alaska shall not be included as part of the "continental United States". Promulgations made thereafter but before per capita income data for Alaska for a full three-year period are available from the Department of Commerce shall be based on satisfactory data available therefrom for Alaska for such one full year or, when such data are available for a two-year period, for such two years. (3) The term "child of school age" means a member of the population between the ages of five and seventeen, both inclusive. (4) The term "continental United States" does not include the District of Columbia. (5) 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). MAINTENANCE OF STATE AND LOCAL SUPPORT FOR SCHOOL FINANCING SEC. 5. (a) The allocation of any State under section 4 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 reallocated among the remaining States by proportionately increasing their allocations under section 4 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, and Guam, (ii) Alaska, but only for years for which it is, under subsection (c)(4), not included in the "continental United States", and (iii) 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 or secondary education made from funds derived from State or 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 or 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 or secondary education made from funds derived from State or 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 or 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. (4) The term "continental United States" shall not include Alaska for purposes of determinations made under this section before satisfactory data are available from the Department of Commerce for a full year on the per capita income of Alaska. STATE PLANS SEC. 6. Federal debt service commitments may be made under this Act with respect to obligations to finance the construction of school facilities in any State only if such State has submitted, and had approved under this section, a State plan. The Commissioner shall approve a State plan for purposes of this Act if such plan (a) provides that the State educational agency shall be the sole agency for administering the plan; (b) provides that a local educational agency will be eligible for a Federal debt service commitment under this Act with respect to any obligations only if: (1) such obligations are for financing, in whole or in part, the construction of school facilities needed to relieve or prevent overcrowding double shifts, or unhealthful or hazardous conditions, (2) such agency undertakes to exert the reasonable tax effort, determined for it under the plan, in financing its school construction needs, (3) such agency will be unable, after exertion of such reasonable tax effort, and full utilization of other resources (whether from Federal, State, or local sources) available to it for financing its school construction needs and not taken into account for purposes of section 8(a), to pay the annual debt service on such obligations and other outstanding obligations of such agency for financing school construction; (c) sets forth standards and procedures for determining the tax effort which each local educational agency applying for a Federal debt service commitment under this Act will be required, in order to be eligible, to exert in financing its school construction needs, which standards and procedures will assure that the tax effort so determined will be a reasonable one in the light of the resources actually or potentially subject to taxation by such agency, the relative local and State shares in financing school construction, and the tax effort exerted and the methods of financing used by other local educational agencies in the State; (d) sets forth standards and procedures for determining the order of priority for projects under the plan in case the allocation of the State for any year under this Act is not adequate to permit the making, during the period for which such allocation is available, of all Federal debt service commitments requested by local educational agencies in the States; which standards and procedures shall assure (1) that the highest priority will be given to local educational agencies which are least able, solely because of lack of economic resources, to finance from the resources available to them the full cost of the school facilities needed to relieve or prevent overcrowding, double shifts, or unhealthful or hazardous conditions, and (2) that in other respects the order of priority will be based on relative need for financial aid in the construction of such school facilities and the relative urgency of the need for such facilities; (e) provides for affording to every applicant whose application to be included in a State request under section 7 for a Federal debt service commitment is denied, an opportunity for a hearing before the State educational agency; (f) provides for the establishment of standards on a State level for planning and construction school facilities; (g) provides that the State educational agency will make such reports to the Commissioner, in such form and containing such information, as are reasonably necessary to enable the Commissioner to perform his duties under this Act. COMMITMENTS SEC. 7. (a) In the case of each project for the construction of school facilities for a local educational agency to be financed by obligations for which the State educational agency requests a Federal debt service commitment under this Act, the State educational agency shall include in its request (1) a description of the school facilities project with respect to which the request is made and its estimate of the cost of construction of such project; (2) the amount of the obligations which are to be covered by the commitment; (3) a certification (A) that it has determined, in accordance with the standards and procedures in the State plan approved under section 6, that the local educational agency is eligible for such commitment with respect to such obligations and such project is entitled to priority over other projects within the State; (B) that such project is consistent with any applicable State redistricting plans or policies and is in accord with applicable State construction laws and standards; (C) if any portion of the cost of construction of such project is not to be met from the proceeds of such obligations, that the financing of such portion has been arranged; (4) assurance, satisfactory to the Commissioner (A) that the local educational agency will take appropriate steps, including a public offering of the obligations, to secure the most favorable rate of interest and other terms for such obligations; (B) that the local educational agency will, during each year in which such obligations are outstanding and for ten years thereafter, exert the reasonable tax effort, determined for it pursuant to the State plan, for financing its school construction needs, will certify to the Commissioner the amount of the revenues thereby produced, and will apply any surplus in such revenues to payment of the debt service on the obligations covered by such commitment or, after such obligations have been retired, will apply one-half of the surplus in such revenues to repayment of the Federal advances made under such commitment, plus interest on such advances, from the date the last one of such obligations (in an issue thereof) is retired, at the rate determined by the Secretary of the Treasury, with the other one-half of such surplus in such revenues being applied to repayment of the State debt service advances if and to the extent required by the State pursuant to section 8(b). For purposes of this subparagraph (i) the existence and amount of any surplus in revenues produced by exercise of a reasonable tax effort shall be determined by adding to the revenues produced by the exercise of the reasonable tax effort any other resources available to the local educational agency for payments on account of debts incurred for construction of school facilities subtracting from the sum thereby obtained any payments made on account of debts incurred for such purpose, by the local educational agency before the request for the Federal debt service commitment here involved was filed by the State educational agency, and further subtracting therefrom any payments made on account of debts incurred for such purpose by the local educational agency after such filing but approved by the State educational agency upon a finding that the school facilities project for which such debts were incurred is needed to relieve or prevent overcrowding, double shifts, or unhealthful or hazardous conditions, and (ii) the rate of interest determined by the Secretary of the Treasury with respect to advances on any obligations shall be determined by him after taking into account the current average market yields on outstanding marketable obligations of the United States having maturities comparable to the period in which such advances are expected to be repaid. (b) If the Commissioner finds that the request of a State educational agency for a Federal debt service commitment with respect to any obligations meets the requirements of subsection (a) and that the amount of such obligations does not exceed the amount remaining in the State's allocation or allocations available for the purpose, the Commissioner shall, subject to the provisions of section 8, make the Federal debt service commitment requested with respect to the obligations specified. STATE DEBT SERVICE COMMITMENTS SEC. 8. (a) No Federal debt service commitment may be made with respect to any obligations for financing, in whole or in part, the construction of a school facilities project unless the State makes an equally binding commitment to pay one-half of the debt service on such obligations; except that the State may make a capital grant to cover part of the cost of such construction, in which case the |