Senator COOPER. Through two conditions; one, that the local school district makes what is termed the maximum tax effort; and second, that the State assumes half the cost of any debt service charge? Secretary FLEMMING. That is right.

Senator COOPER. Under those conditions, if there should be any debt, the Federal Government would pay half.

Secretary FLEMMING. That is right. In other words, if the tax rates represent a reasonable effort, and if they do not yield enough, then the Federal and State Government assume a 50-50 responsibility.

Senator COOPER. Now I would like to return to questions that the Chairman raised. In any of these school bills that we have got before us-I think you have run into some problems of constitutional difficulty, and some questions that would require the action of the State and even the local school districts. I am not too concerned about that; but the States really need and the school districts need help. You have to assume that they will take whatever constitutional and legislative action is necessary to secure help. I know in my State, for example, school districts are permitted to establish corporations or agencies which then can issue bonds and can receive revenues and retire the bonds and when that is done the buildings then become the property of the school district.

But there is a question connected with this that I would like to ask you about. I will refer to point 7 in your statement, the requirement that local school districts would be required to maintain reasonable tax effort for an additional 10 years. I raise this question. The reasonable tax effort in many cases would be the decision of the school district to issue bonds and to levey taxes as a result of issuance of those bonds. Once the bonds are paid, I think you would have a situation where legally the school district could not continue to levy a tax upon bonds which have been retired. I do not know how you would meet that situation. I am sure that, for example, in my Stateand I think it would be applicable in other States where taxes have been levied to meet the issuance of a particular bond, and the bond issue is then retired, you could not continue to levy taxes to meet a nonexistent bond issue.

I know this provision is designed to secure repayment to the Federal Government of advances; but I do not think that you would get any repayment.

Secretary FLEMMING. Senator Cooper, I think you have raised a very relevant question there. Frankly, it is one that I would like to look into. You have stated very well the objective of the provision. I simply had in mind the fact that if the conditions changed in the school district so that it could make some repayments over the period of 10 years, it would be an equitable thing to do; but the legal question that you raised is a real one. I would like to look into that, and, Mr. Chairman and members of the committee, I would like to have the opportunity of filing a statement on that particular point, because I would not want to react to it just off the cuff.

Senator MCNAMARA. Without objection from the subcommittee, we will be glad to have such a statement.

(The statement referred to was later submitted for the record, as follows:)

AUTHORITY OF LOCAL EDUCATIONAL AGENCIES TO LEVY TAXES AFTER SCHOOL CONSTRUCTION BONDS ARE RETIRED

This statement is addressed to the question, asked at the February 17 hearing of the subcommittee on the proposed school construction legislation, whether, pursuant to the administration bill's requirement that local educational agencies receiving assistance continue to exert a reasonable tax effort for 10 years after the bonds, issued to finance its construction needs, are retired, a local educational agency could legally levy taxes in order to repay the Federal advances made in connection with those bonds.

Since any Federal (and State) debt service payments made while the bonds are outstanding, are in the nature of advances or loans repayable during the 10-year period following the retirement of the bonds out of any surplus revenues produced by exertion of the reasonable tax effort, they constitute obligations or debts of the local school districts owed to the Federal (and State) governments. As such, their repayment would justify tax levies in like manner as the school construction bonds themselves. We know of no constitutional or other impediment to the continued levy of a reasonable tax effort to repay these advances, assuming the school district was constitutionally able to levy taxes to repay the bonds in the first instance.

Senator COOPER. I have two other questions I would like to ask, and then I will defer to Senator Clark.

Your bill deals only with school construction. I would like to ask you first, upon the facts which you have, if this bill meets present school construction needs in the United States, assuming that the objectives of the bill were to be made effective.

Secretary FLEMMING. Senator Cooper, I think it is a little difficult to make a flat statement in response to your question. As I indicated in my statement, we feel that this would result in the construction of about 75,000 classrooms. We feel that this would make a very real dent in the shortage that exists at the present time and the prospective shortage.

As you know, at the present time we estimate that the shortage is around 140,000 classrooms; 75,000 additional classrooms would, as I have indicated, make a real dent in that shortage. Our belief is that State and local initiative will take care of the rest of the shortage over a period of approximately 5 years. But I think that this is a situation that you just have to keep reviewing on a year-to-year basis. And what we think is the case now may be flying in the face of the facts a year from now, and if so, I think that we should be back and state that. I think we should come back and state that every frankly. But let me get at it this way. As you know, total construction has been running around 68,000 to 70,000 classrooms a year for the last 2 years, anyhow. I think the average for the last 2 years is about 70,000. If you project that over a period of 5 years, that would give you 350,000 classrooms, without any intervention on the part of the Federal Government.

It is estimated that the maximum need over this 5-year period is about 430,000. That need would take care of the requirements growing out of increased school-age population and would also take care of the requirements growing out of the fact that buildings are becoming obsolete from time to time.

Well, you take the 430,000 and subtract from it the 350,000, and you have got about 80,000, which is roughly the number of classrooms

that would be constructed, we believe, under our proposal. But that assumes that the rate of construction will continue as it has continued for the last 2 years. And I am not at all sure that it will continue at that rate, because I know that many school districts have incurred heavy indebtedness in order to do what they have done up to the present time.

Of course, those school districts would become eligible under our plan, because they would have exerted a reasonable tax effort, and if they need to go further, they could get assistance under our plan. But maybe they have taken care of their needs and do not need to go any further. But they are in that average total of 70,000 a year.

So it is altogether possible that the rate will not continue at the rate that has been maintained for the last 2 years. But we do feel that if the Federal Government moves in and deals with the problem in the districts that need the help, in the districts that are expending a reasonable tax effort and cannot be expected to do anything more, we will have broken the bottleneck on this shortage situation, and that whatever else needs to be done in order to eliminate the shortage might very well be done by States and particularly local school districts that could not be classified as needy school districts; in other words, school districts that can do it if they make up their minds to do it. So adding it all up, and considering all of these factors, we feel that this program would break the bottleneck, would make a substantial contribution to the reduction of the shortage, and on the basis of our present evidence we think the remainder of this shortage would be picked up by the local school districts and the States.

On the latter point, we may be wrong. If we are wrong, we would be back admitting it and suggesting some additional assistance in order to deal with the situation adequately.

Senator COOPER. One other question: The study that has been made about the deficiencies in our educational system-and certainly there have been many in the last 2 years-deals not only with the need for classrooms, but deals with the need for better teachers. And a raise in salaries is one of the ways to secure better teachers. It is not the only way, but it is one way. Bills before us deal with this, and, of course, your bill does not in any way. I wonder, again, if you have obligated or taken from the school districts all they can do with the maximum tax effort, then what is left to increase teachers' salaries; which in my view is more important than schoolroom construction, important as that is. I would rather spend this money, if we are going to spend it, on teachers, than even upon schoolroom construction.

Secretary FLEMMING. Senator Cooper, you have touched on a point that is of very real concern to me; because as one who has been in the educational field, I have some very definite convictions as to the inadequacy of the salaries that are paid at all levels, the elementary and secondary level and also the level of higher education.

First of all-and I would like to make just a few comments on it, because I appreciate that you have raised a very basic and fundamental issue-first of all, I would like to call attention to the fact that the reasonable tax effort that we talk about here is a reasonable tax effort for construction only. It is not a reasonable tax effort for educational purposes generally, but a reasonable tax effort for construction only.

Here are some of the affirmative steps that it seems to me the Federal Government can take in order to help correct this serious situation of underpaid teachers.

First of all, those of us who occupy public office I feel can in season and out of season call attention to the fact that under present conditions we cannot hope to attract and retain A1 men and women in the teaching profession.

In the second place, I believe that we can do a great deal by working with public and private groups to obtain agreement on what constitutes a fair and adequate salary structure for teachers. We have really, taking the Nation as a whole, done a pretty poor job of setting what might be called a reasonable standard of performance when it comes to the payment of teachers. We are all in agreement on the fact, I think, that they are underpaid, but we have not succeeded in getting substantial agreement on what constitutes an adequate payment. And I think that the Federal Government can take the initiative and work with public and private groups in order to obtain agreement on that.

In the third place, it seems to me that we can, as a Federal Government, turn the spotlight on those communities that have come to grips with this problem and are paying fair and adequate salaries. In other words, they are entitled to fair and adequate publicity, and they are not getting it to the extent that they should at the present time.

In the fourth place, it seems to me that we can provide financial help for the construction of classrooms for school districts that are already making a reasonable tax effort in the construction area. That is all I am talking about here. And in this manner we can release funds for salaries that would otherwise have to be invested in building. Again, I want to stress the fact that our plan calls for a reasonable tax effort in the construction area only.

I feel that in this manner and also through other devices we can launch a movement that will result in higher salaries in many school districts. And once this movement gains momentum, other school districts will be forced to join it. We know that the demand for Al teachers is in excess of the supply. The school district that does not increase its salaries will find itself in a position where it just cannot recruit satisfactory teachers.

I believe, looking at our total picture, that the Federal Government should exhaust all efforts along this line before it gives serious consideration to making grants for salaries for teachers. And I feel that this is true for the following reasons: First, once the Federal Government moves in this direction, it will tend to stifle local initiative, because local school districts will no longer feel that it is necessary to go the second mile in order to deal effectively with what is peculiarly a local responsibility.

Second, once the Federal Government moves in this direction, it will be compelled to continue such support on an indefinite basis. When the local school district becomes dependent on this kind of support, it will never willingly, of course, give it up.

And finally, it seems to me that once the Federal Government moves in this direction, it will be faced, right or wrong, but it will be faced, with insistent demands to the effect that if it is going to make a major

1

investment in our public school system of this kind on an indefinite basis, it must, in fairness to the taxpayer, insist on these school systems adhering to certain educational standards. The Federal Government may be able to resist such demands, but if it should find itself unable to do so, it would be clear that as a Nation we would be starting the process of moving away from local administration of our school system to Federal administration of that system.

And as I see it, if we can concentrate on giving assistance in the construction area-and I feel this way, Senator, not only about elementary and secondary, but also about higher education-we can put the local school district in a position where it can use funds for salary purposes that otherwise it would be forced to use for school construction purposes, even though it was already making a reasonable effort in the school construction area.

In other words, it may be making a reasonable effort in the school construction area, but it still may not be making a reasonable effort in terms of the total educational program, or being specific about it, in terms of salaries for the teachers.

I think there is more potential in the local school district in terms of increasing salaries for teachers than we have taken advantage of up to the present time.

Senator COOPER. I will just close by saying again that I think we owe the Secretary a debt for bringing for us a plan that has a great deal of merit, one which we should seriously consider. I do think we should question whether or not it meets the real needs of our educational system. And I do differ with you at this point.

At the beginning you said we had to place our program for education in the framework of our budget. I know everybody has some plan, some interest, which they can take outside the budget. And I will say frankly that education is the one thing that I would take outside the budget.

I do not see how we can long defer meeting the needs of our educational system. But I do thank you for your very constructive presentation.

Secretary FLEMMING. Senator, on that particular point, I certainly recognize and respect your position as well as the position of many of your colleagues. As I see it, however, the fiscal situation becomes a fact of life that we are confronting at the present time, and in the light of that fiscal situation, it seems to me that this does provide us with common ground-our plan-on which we could get action. And the thing that impresses me is that we have been on dead center, in this whole area now, for about 4 years. And if we could find some common ground and get some action, I feel that we would be making a constructive contribution to dealing with what I agree with you is one of our really serious national problems.

Senator MCNAMARA. Senator Clark, as one who is struggling with these things at the municipal level, I assume you have some questions at this point.

Senator CLARK. Mr. Chairman, thank you. As you know, I am not a member of the subcommittee, but I have a letter from Senator Murray, the chairman of the subcommittee, who unfortunately could not be here this morning, asking me, as a personal favor to him, to participate in these hearings and to develop the Secretary's testimony.