Federal debt service commitment with respect to so much of such obligations as do not exceed the amount of such capital grant shall be to pay the full annual debt service thereon.

(b) A State may, after the tenth year following the year in which obligations with respect to which a Federal debt service commitment has been made are retired, require repayment, with or without interest, of all or any portion of the amounts paid by the State pursuant to its debt service commitment and not already repaid, but only to the extent the local educational agency is able to do so through the exercise of the reasonable tax effort determined for it pursuant to the State plan and use of other resources available to it for payment of debts incurred for construction of school facilities.

STATES EXCLUSIVELY RESPONSIBLE FOR SCHOOL CONSTRUCTION FINANCING

SEC. 9. If exclusive responsibility for the financing of the construction of school facilities in any State, or in any portion of a State, has been assumed by the State, the Commissioner may, to the extent he deems such action necessary to achieve the purposes of this Act, modify or make inapplicable to such State or portion thereof, as the case may be, any of the provisions of this Act which he determines to be inappropriate by reason of the absence of a local educational agency or agencies responsible for such financing.

PAYMENT OF FEDERAL ADVANCES

SEC. 10. The Commissioner shall from time to time pay in advance or otherwise, to such agency or person or persons as may be designated in the request of a State agency pursuant to section 7 with respect to any obligations, the Federal advances for each year under the Federal debt service commitment under this Act with respect to such obligations. Such advances for any year shall be reduced by the amount, if any, which the local educational agency issuing such obligations has applied, as provided in section 7(a) (4), to the annual debt service payments due in such year.

FAILURE OF LOCAL EDUCATIONAL AGENCY TO EXERT REASONABLE TAX EFFORT

SEC. 11. If any local educational agency with respect to whose obligations a Federal debt service commitment under this Act has been made fails, during any period prior to the end of the tenth year after the year in which such obligations are retired, to exert the reasonable tax effort determined for it under the State plan, such agency shall be obligated to repay to the United States the additional amount it would have applied toward payment of the annual debt service on such obligations or toward repayment of the Federal advances (plus interest) as provided in section 7(a) (4), as the case may be, had such agency exerted such a tax effort.

ABANDONMENT OF PROJECTS

SEC. 12. If any project financed by obligations with respect to which a Federal debt service commitment has been made under this Act, is abandoned or is not completed within a reasonable period, determined under regulations of the commissioner, after such obligations have been sold, the United States shall be entitled to recover from the State in which such project is located or from the local educational agency issuing such obligations, or both, the amount of the advances which the United States made with respect to such obligations or such lesser amount as may be reasonable under the circumstances (as determined by agreement of the parties or by action brought in the Federal district cour for the district in which such project is located).

LABOR STANDARDS

SEC. 13. (a) The Commissioner shall not make any commitment under this Act with respect to obligations to finance the construction of any school facilities project, except upon adequate assurance that all laborers and mechanics employed by contractors or subcontractors in the performance of work on such project will be paid wages at rates not less than those prevailing on similar construction in the locality as determined by the Secretary of Labor in accordance with the Davis-Bacon Act, as amended (40 U.S.C. 276a-276a-5), and will receive compensation at a rate not less than one and one-half times the basic rate of pay for all hours worked in any workweek in excess of eight hours in any workday of forty hours in the workweek, as the case may be.

(b) The Secretary of Labor shall have, with respect to the labor standards specified in subsection (a) of this section, the authority and functions set forth in Reorganization Plan Numbered 14 of 1950 (15 F.R. 3176; 64 Stat. 1267), and section 2 of the Act of June 13, 1934, as amended (40 U.S.C. 276c).

ADMINISTRATIVE PROVISIONS

SEC. 14. (a) The Commissioner, in addition to other powers conferred by this Act, shall have power to agree to modifications of Federal debt service commitments made under this Act and of obligations with respect to which such commitments have been made and to pay, compromise, waive, or release any right, title, claim, lien, or demand, however arising or acquired under this Act; except that nothing in this subsection shall be construed to affect the power of the Attorney General in the conduct of litigation arising under this Act.

(b) Financial transactions of the Commissioner in making Federal debt service commitments, and payments with respect thereto, pursuant to this Act, and vouchers approved by the Commissioner in connection with such financial transactions, shall be final and conclusive upon all officers of the Government; except that all such transactions shall be subject to audit by the General Accounting Office at such times and in such manner as the Comptroller General may by regulation prescribe.

SUITS AGAINST THE UNITED STATES

SEC. 15. Any holder of obligations with respect to which a Federal debt service commitment has been made under this act may bring suit against the United States to enforce any duty of the Commissioner under this Act or any undertaking of the Commissioner pursuant to a commitment under this Act. In any action arising under this Act to which the United States is a party, the district courts of the United States shall have jurisdiction, without regard to the amounts involved. Such action shall be brought in the district court of the United States for the judicial district in which the plaintiff, or any of the plaintiffs if there are more than one, resides, or has his principal place of business or, if he does not have his principal place of business within any such judicial district, in the District Court of the United States for the District of Columbia.

SEC. 16. For purposes of this Act

DEFINITIONS

(a) The term "Commissioner" means the (United States) Commissioner of Education.

(b) The term "State" includes Hawaii, Puerto Rico, Guam, and the Virgin Islands.

(c) The term "State educational agency" means the State board of education or other agency or officer primarily responsible for the State supervision of public elementary or secondary schools, or (if different) the officer or agency primarily responsible for State construction or supervision of construction of such schools, whichever may be designated by the Governor or by State law.

(d) The term "local educational agency" means a board of education or other legally constituted local school authority having administrative control and direction of public education in a city, county, township, school district, or political subdivision in a State. If a separate local public authority has responsibility for the provision or maintenance of school facilities for any local educational agency or the financing of the construction thereof, such term inIcludes such other authority.

(e) The term "debt service" means the aggregate amount required to pay the interest on and principal of each issue of obligations.

(f) The term "annual debt service" means the aggregate amount required to pay the interest on and principal of each issue of obligations becoming due in each successive twelve-month period, designated in accordance with regulations of the Commissioner.

(g) The term "school facilities" includes classrooms and related facilities for public elementary or secondary education; initial equipment, machinery, and utilities necessary or appropriate for school purposes; and interests in land (including site, grading, and improvement) on which such facilities are constructed. Such term does not include athletic stadiums, or structures or facilities intended primarily for events, such as athletic exhibitions, contests, or games, for which admission is to be charged to the general public.

(h) The terms "construct", "constructing", and "construction" include the preparation of drawings and specifications for school facilities; erecting, building, acquiring, altering, remodeling, improving, or extending school facilities; and the inspection and supervision of the construction of school facilities.

(i) The term "obligations" means any bonds, notes, interim certificates, debentures, certificates of indebtedness, or other evidence of indebtedness.

WITHHOLDING OF FUNDS AND JUDICIAL REVIEW

SEC. 17. (a) Whenever the Commissioner, after reasonable notice and opportunity for hearing to the State educational agency, finds that—

(1) The State plan approved under section 6 has been so changed that it no longer complies with the requirements of such section; or

(2) in the administration of the plan there is a failure to comply substantially with any such requirement;

the Commissioner shall notify such State agency that no further Federal debt service commitments will be made under this Act with respect to obligations to finance the construction of school facilities projects in the State (or, in his discretion, that further commitments will not be made for projects in the State affected by such failure), until he is satisfied that there will no longer be any such failure. Until he is so satisfied the Commissioner shall make no further Federal debt service commitments with respect to projects in such State under this Act (or shall limit commitments to projects with respect to which there is no such failure).

(b) (1) If any State is dissatisfied with the Commissioner's action under subsection (a) of this section, such State may appeal to the United States court of appeals for the circuit in which such State is located. The summons and notice of appeal may be served at any place in the United States.

(2) The findings of fact by the Commissioner, unless substantially contrary to the weight of the evidence, shall be conclusive; but the court, for good cause shown, may remand the case to the Commissioner to take further evidence, and the Commissioner may thereupon make new or modified findings of fact and may modify his previous action. Such new or modified findings of fact shall likewise be conclusive unless substantially contrary to the weight of the evidence.

(3) The court shall have jurisdiction to affirm the action of the Commissioner or to set it aside, in whole or in part. The judgment of the court shall be subject to review by the Supreme Court of the United States upon certiorari or certification as provided in title 28, United States Code, section 1254.

UTILIZATION OF OTHER AGENCIES

SEC. 18. In administering the provisions of this Act, the Commissioner is authorized to utilize the services and facilities of any agency of the Federal Government, in accordance with agreements between the Secretary of Health, Education, and Welfare and the head thereof. Payment for such services and facilities shall be made in advance or by way of reimbursement, as may be agreed upon by the Secrtary and the head of the agency concerned.

DELEGATION OF COMMISSIONER'S FUNCTIONS

SEC. 19. The Commissioner is authorized to delegate any of his functions under this Act, except the making of regulations, to any officer or employee of the Office of Education.

APPROPRIATION FOR ADMINISTRATION

SEC. 20. There are hereby authorized to be appropriated for each fiscal year such sums as may be necessary for administration of this Act.

Senator HILL. Now you may proceed, sir, in your own way.
Secretary FLEMMING. Thank you.

Mr. Chairman and members of the committee, first I want to say I am very happy to have the opportunity of appearing before the committee and I certainly look forward to working with the members of the committee on this and other matters of mutual interest.

I am very happy this morning to have the opportunity of testifying on what is certainly one of the most serious problems facing our Nation-the shortage of adequate public elementary and secondary school classrooms.

The administration's proposals for dealing with this problem are embodied in S. 1016. The bill is part of a twofold program which also includes, in S. 1017, measures to assist institutions of higher education to accelerate construction of academic and residential facilities. Taken together, both bills would help make possible, within the next 5 years, total construction in the amount of $5 billion at an ultimate cost to the Federal Government of approximately $212 billion. S. 1016, the administration's proposal for public elementary and secondary classroom construction, does three things:

(1) It recognizes a pressing need for additional classrooms. (2) It recognizes that emergency Federal assistance is required to help meet the need.

(3) It would provide substantial Federal assistance where it is most needed, in a manner consistent with sound fiscal policies.

On three previous occasions the executive branch has submitted plans to the Congress designed to make it possible for the Federal Government to help alleviate the shortage of adequate public elementary and secondary classrooms. None of these plans was approved by the Congress.

This new plan, it seems to me, should enlist the support of all who recognize that there is a serious classroom shortage and who believe that the time has come for the Federal Government to act.

I appreciate the fact that other plans are being considered by this committee. These plans, however, would unbalance the Federal Government's budget for 1960. The executive branch, therefore, cannot support them. We cannot support them because we believe that deficit spending on the part of the Federal Government under existing conditions would set into motion forces that would lead to serious inflationary pressures. Such pressures would undermine our educational system as well as other aspects of our national life. Inflation makes school construction far more costly, it robs already underpaid teachers of a purchasing power they desperately need, and it destroys the integrity of teacher retirement systems that are already woefully inadequate.

Consequently we urge that careful consideration be given to the administration plan-a plan which will not require Federal deficit spending but will make a substantial contribution to providing the Nation with needed classrooms. We will not have these classrooms if we continue to talk about the problem but remain on dead center as far as action is concerned.

Here is a brief outline of the way in which the plan would operate: (1) The Federal Government would undertake to assist in construction programs totaling $3 billion over a period of 5 years, at the rate of $600 million a year. Assuming that States and local governments take full advantage of the plan, it would result in the construction of about 75,000 classrooms which, in all probability, would not otherwise be constructed.

(2) The $600 million a year would be distributed among the States on the basis of public school enrollment, income per school-age child,

and the effort exerted by each State for public elementary and secondary education in relation to national average expenditures for such education.

(3) Each State would be invited to submit to the Federal Government its own plan for identifying needy school districts and for determining what would constitute a reasonable tax effort on the part of these districts.

Upon receiving such a plan, the Federal Government would declare the State eligible for participation in the program. The Federal Government would not substitute its own judgment for the State's judgment as to the best way of determining need and establishing a measure of reasonable tax effort. Nor would the Federal Government participate in any way in the administration of these State plans.

The States in developing and operating such plans would presumably take full advantage of the experience that many States have had in establishing procedures for the equalization of State support for school purposes, and the experience that Michigan and California have had, for example, in providing school construction assistance to needy districts which meet a State-established reasonable tax effort. (4) Next, a needy school district that was making a reasonable tax effort for school construction but that could not finance a bond issue for a new building, would apply through the State for Federal-State assistance in meeting its debt service charges, namely the payment of principal and interest.

(5) The Federal Government would pay half of the debt service charges on the total cost of the new building, after having been assured that the State would either make available half of the cost of the building, or would advance half of the debt service charges.

(6) If the reasonable tax effort on the part of the local school district should produce excess revenues in any one year, these excess revenues would be applied to the debt service charges for that year.

(7) Once the bonds had been retired, the local school district would be required to maintain its reasonable tax effort for an additional 10 years and to apply any excess revenues as partial repayments of the advances made by the Federal and State Governments.

This plan would lead to the following results:

(1) It would enable the States to turn the spotlight on local school districts that are not making a reasonable tax effort in behalf of school construction.

This conceivably could result in leaders in these communities conducting successful crusades for adequate expenditures for school construction. I just do not believe that we have reached the point where the Federal Government should make funds available to communities that are able to take care of their educational needs but are unwilling to do so. If the time comes when we find it necessary to follow such a policy, we will be on the verge of admitting that local communities cannot handle their educational programs, and that the time has come for the Federal Government to assume what we have traditionally regarded as a State and local responsibility.

(2) It would provide 75,000 classrooms in local school districts that are most in need of help. If the Federal Government steps in and helps to break this bottleneck, State and local communities should be able to deal with whatever shortage problem may still exist.