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classrooms in the fall of 1958, with only 4,500 scheduled for completion in 1958-59.

On the other hand, a number of States report a rate of construction which, if continued, would substantially meet their needs.

Shortages of classroom space are known to exist in every State. Moreover, the ability of districts within States to meet the needs for classroom construction varies much more widely than the ability of the States themselves.

For example, recent studies indicate that the range of wealth per pupil between the lowest and highest districts is over 100 to 1, in California, New Jersey, and New York. An earlier study found a similar situation in Illinois. States in which ranges exceed 20 to 1 include Georgia, Indiana, Michigan, and New Hampshire. States with a range of 10 to 1 are Arkansas, Iowa, Pennsylvania, Virginia, Kentucky, and Louisiana. The minimum range found is about 5 to 1. It is recognized, of course, that not all States and districts which are lagging in meeting their construction needs are contributing a maximum of effort in comparison with other States and other districts.

The program of legislation which the Department of Health, Education, and Welfare and the Office of Education now places before the Congress is basically concerned with the problem of identifying and providing Federal financial assistance to those districts within States which require substantial stimulus and help to meet their classroom needs. This program would enable the Federal Government to participate in a maximum of $3 billion worth of public elementary and secondary school construction over the next 5 years. The program has been especially designed to channel Federal assistance to those school districts within States which are in greatest need.

Then I should like to go over and just hit another spot or two in my testimony.

I want to call attention to the fact that in certain Territories and States alternate methods-I am over on page 10 in my testimony now, Mr. Chairman-that in certain Territories and States alternate methods of establishing a reasonable tax effort might be necessary: When States and Territories contain areas within which the State is exclusively responsible for public elementary and secondary school construction, and (2), when States are already contributing substantial financial assistance to local school districts to help them build needed schools. We have taken account of that in our bill. We have provided for that situation, so there will not be any trouble on that. Now, just to conclude, I come to page 14 in my testimony. We have given very careful study to the problems faced by the States and local communities in meeting their needs for public school construction. The data available to us indicate conclusively that there exists a wide range of ability among the States and also among the districts within each_State to meet construction requirements for public elementary and secondary school classrooms. We believe that the program which we have submitted to the Congress provides a feasible means of channeling Federal financial assistance to the neediest districts. We believe that the amount of Federal financial assistance contemplated will stimulate and assist the construction of needed classroom facilities in a very substantial way.

The total obligations of school districts in which the Federal Government can participate, which amounts to $3 billion over the 5-year period, 1959-60 through 1963-64, will be sufficient to construct approximately 75,000 classrooms. And I think that is a very significant number, because that compares with the number of classrooms which administration proposals would have constructed; that is, the previous administration proposals. This is a very substantial bill.

This number amounts to slightly more than the equivalent of 1 year of construction at the present rate.

We believe that the plan which we have proposed will result in the distribution of these 75,000 classrooms, and that is an important feature of our bill, to distribute those classrooms among those districts which are in shortest supply and which have the greatest relative need. You see, with this favorable rate of construction that we have attained, and yet with the big backlog remaining, we have bottlenecks in certain States and districts, and our bill is aimed to break those bottlenecks, so that we can level up the shortage and meet the need. Among the principal advantages of the program which would be authorized by this bill are:

(1) It would encourage the States to examine carefully the classroom needs of every school district and to evaluate these needs in terms of the financial resources to meet them;

(2) It would focus financial assistance upon those districts that are most in need of it;

(3) It would emphasize the responsibility of the States to provide assistance to local school districts for the construction of school housing, while permitting great flexibility in the manner in which State financial resources would be made available for this purpose;

(4) Annual costs can be spread over the life of the obligations of the local school district, so that the impact upon both State and Federal budgets would be moderate in any one year; and

(5) Federal financial assistance for a determinable period to meet an identifiable educational need would not weaken local and State responsibility for providing an adequate system of public education.

And finally, I would like to say, Mr. Chairman, that we have sought to preserve the proper relationship between the Federal Government and the several States in the conduct of the proposed program. We have accomplished this purpose by the utilization of a State plan which preserves to the States primary responsibility in establishing standards and criteria for the identification of needy school districts and for the determination of priorities among such districts.

The Office of Education currently administers a number of enactments by the Congress which demonstrate the effectiveness of the State plan as a means of preserving flexibility of action on the part of the States.

The State plan of the type embodied in the bill exemplifies the best form of partnership between the Federal Government and the States and permits the Federal Government to exercise leadership without domination, and cooperation without_interference.

We certainly appreciate the privilege, and I do, particularly, of making this statement to you, Mr. Chairman. Ánd naturally, I

have only given some highlights of our plan, points that I particularly wanted to emphasize, and taking into account the testimony previously given. And certainly now my colleagues and I would be very pleased to react to any questions you might have.

Senator YARBOROUGH. Mr. Commissioner, what is the maximum amount of money that the Federal Government would expend in any one year under this administration bill?

Mr. DERTHICK. $85 million, Mr. Chairman.

Senator YARBOROUGH. $85 million is the most money it would spend in any one year?

Mr. DERTHICK. Yes, sir.

Senator YARBOROUGH. Then over a 5-year period, the maximum amount would be five times that?

Mr. DERTHICK. Well, it would be a little less than that.

Senator YARBOROUGH. It would be less? But $85 million would be the maximum amount in any one year?

Mr. DERTHICK. Yes, sir. Of course, this money would be paid out over the life of the bond, say 25 years. And $85 million would be the maximum amount paid in any one year.

Senator YARBOROUGH. On a slightly different subject, in your statement you speak of preserving to the State primary responsibility. Mr. DERTHICK. Yes, sir.

Senator YARBOROUGH. Are you familiar with the testimony that has been given earlier in the hearing on this series of bills by a representative of the chief State school officers with respect to the regulations drawn under the National Defense Education Act of 1958?

Mr. DERTHICK. I am not familiar with that testimony, but I am familiar with his point of view, Mr. Chairman.

Senator YARBOROUGH. Here is my question on that: Are these accounting regulations so drawn as to require the purchase of scientific apparatus of peculiar specifications?

Mr. DERTHICK. No, sir. The States themselves set up their standards, and the States themselves draw up their lists. They are asked to do that. But it is on their own responsibility that it is done. And therefore they simply administer the program in accordance with their own standards and their own lists.

Senator YARBOROUGH. But is there anything in the accounting procedure of the United States Commissioner of Education that requires that any specific types of apparatus be provided?

Mr. DERTHICK. No, sir; there is not.

Senator YARBOROUGH. I will be specific as to what I am driving at, Does not your department or another department set standards on military posts? Complaints have been made to me that the specifications are so wrong that there is only one manufacturer of school desks in the United States who can bid on them. As a practical matter, there is such a little range. Have you heard of that complaint? Mr. DERTHICK. Well, I have heard of the general complaint; but let me say that in getting ready to administer this act, we had all the chief State school officers in, in one meeting, and we had a committee in on two different occasions, as we worked out partnership arrangements for laying down guidelines and policies. This very question came up. And we were supported by our general counsel in the point of view that it would not be necessary in order to comply with the terms of this act for us to set those standards. The standards

had to be set, and lists had to be drawn, but it was agreed that the States themselves would do it.

Now, it is true when a State plan comes in, the State plan must indicate that the State has worked out its own standards and has drawn up its own lists, though they may amend the list as many times as they want to, to keep it up to date. But it is done by the State, and the State exercises its own judgment, and the State could change its list. All we are obligated to do is to see to it that the States have standards of procedure; but we do not dictate those standards. We do not suggest those standards. Nor do we indicate changes that ought to be made in those standards.

Senator YARBOROUGH. You do not tell them to throw out some of the specifications?

Mr. DERTHICK. No, sir.

Senator YARBORCUGH. Or to put limitations on them so that only certain types of equipment could fit that specification?

Mr. DERTHICK. Indeed we do not. We have nothing to do with that. We studiously avoid that.

As a matter of fact, generally, Mr. Chairman, it seems to us that in administering this program through State plans which the States devised, we are indeed keeping the control at the State level and not at the Federal level.

Senator YARBOROUGH. Do you think there is any justification, then, for the charge that regulations of the Accounting Office of the Commissioner of Education are so drawn as to dictate to the school distric's in the State as to what kind of equipment they can buy?

Mr. DERTHICK. I feel confident that they are not. I feel very confident.

Senator YARBOROUGH. Now, on the basic subject matter of your statement, I was waiting with interest for an explanation of how the administration bill would work, the analysis of it. And I notice when you reached that point in your prepared statement, you went over to another point. My particular interest is: How will this formula work?

Mr. DERTHICK. I only did that, Mr. Chairman, because in the previous testimony it was discussed rather at length.

Perhaps the simplest manner in which this can be verbalized is through the presentation of a specific example. The example follows: Assume that school district X has been identified in accordance with a State plan approved by the Federal Government as a needy school district. In other words, the State has done that, has identified the needy school district. Assume further that it plans to construct a building costing $500,000; that is, the needy school district. Assume also that the reasonable tax effort index included in the plan approved by the Federal Government shows that in the first year it would be possible for the school district to raise taxes sufficient for paying principal and interest on an additional $250,000 of indebtedness, and assume also that 5.7 percent is the debt service cost. This means that the annual debt service cost on the $250,000 of indebtedness that the school district cannot handle would be $14,250. That is, by exerting a reasonable tax effort, the school district itself would be able to carry the $250,000; but it would lack ability, under this reasonable tax effort, to carry the remaining $250,000, and that would cost $14,250.

The Federal Government would assume $7,125 of this cost, and the remainder would be assumed by the State government. The Federal Government and the State government together, then, would make the necessary State debt service advance to enable the district to do its job after it had exerted the reasonable tax effort. Each year during the life of the bond issue, it would be determined whether or not the proceeds from the reasonable tax effort were such as to make it possible for the needy school district to pay some or all of the debt service underwritten by the Federal and State Governments.

This process would be continued for a period of 10 years beyond the life of the bond issue, and if the reasonable tax effort on the part of the school district produced excess revenues, one-half of these revenues would be applied to the repayment of Federal advances under the bill.

Here is another way of turning the explanation. In the case of school districts unable to finance any of their new school construction needs for their own resources, this is what happens: Let us say when a school district exerts a reasonable tax effort, according to the State's judgment, it does not produce enough to meet any of its obligations. Assume that the State has determined in accordance with its State plan that a reasonable tax effort for school district A to exert is 13 mills on the equalized assessed value of real property taxed by it and that the value of such real property is $1 million, so that the 13 mills would produce revenues of $13,000 per year.

School district A has already incurred indebtedness for school construction, the debt service on which is $13,000 a year. It is levying a tax of 13 mills to meet this debt service. So it does not have any more money. It cannot produce any extra money for new needs.

If this school district has an urgent need for a new school building, the construction of which would cost $500,000, has priority over other school districts applying for aid, and meets all other requirements of the proposed law, it would qualify for a Federal-State debt service commitment to advance the principal and interest on the entire $500,000 in bonds it issues to finance the construction.

This is so because the exertion of its reasonable tax effort of 13 mills would not produce sufficient revenues over and above the revenues required to meet its outstanding debts to meet any of the debt service on the $500,000 it needs for new construction.

However, it must undertake to continue to levy a tax of 13 mills on the equalized assessed value of all real property taxable by it for the life of the bonds and for 10 years thereafter.

So you see, through the State plan, this points the finger at needy school districts; and if, after that district has exerted the reasonable tax effort determined by the State, it cannot produce enough to meet any of its further school building needs, then the State and Federal Government carry the load.

Senator YARBOROUGH. In the statement that you just read, there was a phrase there following "$500,000" that said something about "as compared to other school districts." Can you find that phrase? Mr. DERTHICK. Yes.

Senator YARBOROUGH. Would you read just that clause, that part of the statement?

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