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opportunity and freedom in every field, including most of all his intellectual and spiritual growth.

What I hope to do today is not to discuss theories but facts. I think the facts will show that I am not exaggerating when I say our system of universal education is in danger and I believe our experience in Michigan is illustrative of the present critical situation. I repeat this statement even though I think we in Michigan have a right to be proud of the efforts our State has made in public education. In the past 8 years, the school population of Michigan has increased by 42 percent, while our overall population has increased only 24 per- ; cent. In this period, we have built 26,514 classrooms and raised teachers' salaries from an average of $3,536 to an average of $5,300, so that Michigan now stands sixth among the States in teachers' salaries. The total State cost for primary and secondary education is now 214 times greater than it was 8 years ago. Despite great expansion, our standards of education have improved; we offer more science and mathematics, a greater diversity of subjects, and the quality of our teaching has been greatly raised.

In an effort to assist the local districts in financing additional school construction, we have developed a unique school bond loan program.

This program in effect pledges the full faith and credit of the State in support of local bond issues, thereby insuring a lower interest rate. This not only lowers the cost of financing, but permits some districts to build schools which they could not otherwise finance.

We have worked hard in Michigan to provide our children with the kind of education they should have. Approximately one-third of our State budget is devoted to education.

Mr. Chairman and Senator Yarborough, I would like just for illustration to refer you to the auditor general's chart, here. This shows our total State expenditures. We have a complicated system of several funds. Out of the general fund you will see the largest block. The second one down is entitled education, $666-odd million. In addition to that, you will find over on the right hand side a school aid fund. And here we have $235-odd million. This means that we have a total of about $400 million going to education out of our total expenditures of just a little over a billion dollars.

This breaks down about $100 million, which is going to our colleges and universities, and the other $300 million go directly to the local schools from the State.

Senator YARBOROUGH. Governor Williams, may I ask you a question there on a slightly different point? That puts about 40 percent of your

State revenues in support of education? Governor WILLIAMS. That is correct, sir.

Senator YARBOROUGH. Of the other 60 percent, could you tell me offhand what percent goes for highways?

The reason I ask that is that in my own State of Texas, out of our local tax dollar we spend about 40 cents for schools, 40 cents for highways, and the other 20 cents for every other function of government.

Governor WILLIAMS. Well, right above the chart on school aid funds is another fund, entitled "Highway Fund," and this shows expenditures of $241 million by the State. Of course, in our State we have the local governments combining, also, but this is the amount from the State revenues.

Senator YARBOROUGH. The State would be roughly a fourth?
Governor WILLIAMS. Roughly a quarter.

Senator McNAMARA. While we have this pause, we want to welcome Congressman Bailey here, who is a great friend of education. We are very happy to have him here with us

today. Representative BAILEY. Thank you, Mr. Chairman.

Mr. Chairman, if I may be permitted, I will say I came over not to ask questions, but to listen. I am chairman of the Subcommittee on Education in the House, and I came over to get some information.

Senator McNAMARA. We are glad that you are here, and we hope you get some information, and we will welcome your asking questions at any time, and I am sure Governor Williams will be glad to have you interrupt if you see fit.

Is that right, Governor?

Governor WILLIAMS. That is certainly true, Mr. McNamara, and I want to express my appreciation for this opportunity. I am sorry I did not have the opportunity to appear before the House, so I will direct some of my remarks to you.

The point, of course, that we were making is that the State of Michigan has made a particular effort, as I am sure most States have, to meet their educational problems. And I have just indicated that between higher education and the kindergarten to high school, we expend about 40 percent of our State funds in education, about 30 percent going to the schools and 10 percent to the colleges.

Representative BAILEY. Now, might I ask there, Governor: Do you do that in the nature of a State aid fund or teachers' salaries? Do you make any direct grant for distribution to the several school districts in the State for construction purposes ?

Governor WILLIAMS. All of our money goes to operations. They are entitled to take a small percentage of it out for maintenance and building, but the schools are so hard up for operations that actually they use all of it for operations.

I might give you some more specific data on that. We find that in 1956 and 1957 the per-pupil cost or investment was about $316 for operations, of which the local communities gave $146 and the State $164. But since our State does not contribute directly as such for construction, the ratio is not quite as it seems there.

We gave specifically $337 million. The local communities, however, raised $211 million for operations and $250 million for construction. So you see that when you add construction in the local communities are making a tremendous effort.

And I might point out that construction is a particularly important part for us these days, because our population, our school population, is growing so tremendously. It is growing about twice as fast as our overall population.

Representative BAILEY. I might say, Governor, that I have been in Michigan on two or three occasions, in the Detroit area, and you really have a problem there.

Governor WILLIAMS. Yes, sir. I will come in just a moment to one of our problems in connection with that, and I am glad you had a firsthand opportunity to see that despite all of our efforts we still have severe problems. And I would pinpoint it by saying this:

Despite all of these efforts, we have hardly started to meet our problem. We have a shortage of nearly 11,000 classrooms in Michigan, and as a result we have more pupils on half time than we have ever had before. And in the areas you visited, this is perhaps their most acute situation.

Moreover, this number of classrooms would meet the need of only our present school population. In the next 6 years, our school popula

6 tion will increase by another 33 percent, requiring a further number of 20,544 new classrooms, and over 8,000 more to replace obsolescent buildings.

If we were able to finance construction in the future at the same rate we have been doing in the recent past, we might have some hope—not of eliminating the backlog of nearly 11,000 classrooms—but of at least keeping current with increasing needs. However, school construction, as you know, is financed basically from our property tax, and these taxes have risen enormously. Our property taxes cannot increase in the future in a degree sufficient to finance the new construction which is required. In many areas of our State, we have reached a practical ceiling

And I would like to interject here, if I may, that recently I had a meeting with the mayors of communities all over the State of Michigan, and they share with the schools this property tax. And they point out that the competition for the property tax is so bad that they are looking for additional revenues. So you can see what the pressure is on the schools to get the money that they need.

Under these circumstances, the burden of financing school construction would shift from the localities to the State government. There is already a trend in this direction in Michigan and in the United States.

Representative BAILEY. May I interrupt at that point?

As I recall, there were two or three districts that I visited personally in the area I mentioned in which the school rate of levy was approximately $54 and something per $1,000 of assessed valuation. That is an indication that you are doing everything within the legal limits that can be done to meet the situation.

Governor WILLIAMS. You must be pretty near Congressman Rabaut's district when you are talking about that, because some of these so-called bedroom districts, particularly, had to, a good number of them, levy more than 30 mills. This is a very severe hardship.

Senator McNAMARA. I want the record to show at this point that we are glad to have Congressman Rabaut with us, also, certainly one of the great friends of education in the House.

Governor WILLIAMS. At the end of a 6-year period, school construction costs—without attempting to wipe out the backlog—will be over $200 million annually. We will, of course, need additional teachers to staff these classrooms, and without any increase in their salarieswhich must be increased—the State will have the burden of an additional $50 million annually. Thus we would have a total additional annual cost in 1964 of $250 million.

This $250 million annual cost would be a next-to-impossible burden for our State to assume. We would have to nearly double our sales tax, already at 3 percent, just to keep pace with the 2,032,064 students for which we will then have to provide.

This, of course, would have to be on a pay-as-you-go basis. We might not be on a pay-as-you-go basis. But even then, since this increase is so regular, we would hardly be able to stagger this over a period of time without at least adding 1 cent or maybe even 2 cents to our sales tax, if we were to meet it in that way. And, of course, this kind of an addition would be particularly onerous, too. And I am using the sales tax here, because this is the method Michigan uses to get the State contribution for the schools, principally.

Although we can anticipate increasing revenues at existing rates, increased salaries and building costs as well as new needed educational services will undoubtedly absorb much of these higher receipts.

Practically speaking, the States are virtually at the end of their financial ropes. They cannot deal with the backlog and they are losing ground in the struggle to keep up with the increasing school population. By and large, the tax base of the States is too narrow and too limited to provide the great sums of money which are required. Moreover, as our population grows and our society becomes more complex, the States must also meet expanding needs in other fields—more and better roads, highways, hospitals, housing, and other essential services. They face an impossible situation.

There is one further very important reason why even those States which might be in a position to find substantial additional funds for education practically have difficulty to do so. That reason relates to the ceiling which realistically exists on taxes because of the lower tax rates which obtain in other States. Even though some States may have the capacity to pay more in an economic sense, if taxes in these States rise too high above those of other States, there are other important by-product effects. From a purely political point of view, industry is likely to talk about migrating and exert pressures to prevent necessary tax increases. While some States are going to be more zealous than others to progress, because of internal resistance there are certain tolerances beyond which it is difficult to go.

All of us are concerned about the need for raising the level of education in America--and we must raise it-yet the facts show that in Michigan, which I am sure is in no worse a position than many other States, the very framework of our educational system is in jeopardy.

As a Nation we have not been facing the facts; we have either been talking empty dreams when we speak of raising the general level of education, or we have been blinding ourselves to the fact that we are going to end up having better education, if at all, for only the few, or,

in any case, a lower standard of education than we have provided in the past for the many. This is an intolerable situation.

We will not get education by pious exhortation; we will only get it if we get the necessary funds, and much of these funds realistically can only come from the Federal Government.

There are compelling reasons why it is essential for the Federal Government to assume a large part of the financial burden of public education. There is not only a national interest in having a welleducated citizenry—a necessity urged by every political and educational leader in the country-but there are indisputable financial reasons why the States cannot do the job by themselves.

As the Rockefeller Report on Education states:

It is a stark fact that there are educational problems gravely affecting the national interest which may be soluble only through Federal action.

Only the Federal Government has the financial resources to meet the large-scale need for funds for education. It collects three-fourths of all taxes; because it taks such a large portion of tax revenue, it precludes the States from taxation that they might otherwise impose; and, finally, it can raise money more economically than the States.

We, in the States, are well aware of the size of the national debt, but where the Federal debt rose less than 10 percent from 1948 to 1956, a period of 8 years, local and State debt has risen 182 percent in the same period. Where 35 of the 51 States and Territories have found it necessary to raise taxes this year, the Federal Government does not propose to raise taxes at all.

These facts, together with my observations on our experience in Michigan, demonstrate that in a realistic sense only the Federal Government can meet the problem of assuring the educational heritage of the children of America.

Representative BAILEY. Governor Williams, might I inquire at this time: Do you have the data with you on how many school districts in the State of Michigan have exhausted their bonding capacity for meeting the need for new classrooms?

Governor WILLIAMS. This is a good question, Congressman, and I will answer it in this way. Our State has a very high ceiling on that. It goes up to 13 mills. And I think in most States the ceiling is much lower. So naturally you would expect to find many fewer school districts having reached that level.

Representative BAILEY. My State of West Virginia has a ceiling of 5.

Governor WILLIAMS. Yes. Well, ours is 13, and I think I am right, Mr. Leu, that we have about 20 to 30 that have reached that limit of 13 mills.

Senator McNAMARA. Governor, in that connection, have you had some recent experience with bond issues being submitted to the voters and being turned down for additional school buildings, or not?

Governor WILLIAMS. Our deputy superintendent tells me that we are losing one of every four, but prior to this time we had a much better ratio of success. In fact, they were going over very well, indeed.

Senator McNAMARA. And the fact that we have a comparatively high ceiling does not mean too much, since the voters are more and more reacting unfavorably to the issuance of additional bonds for school buildings.

Governor WILLIAMS. The property taxes are certainly getting just out of this world.

Representative BAILEY. To what extent has the tight money situation raised the interest rates on your bonds?

Governor WILLIAMS. This has been particularly noticeable for a good many years. There was a time when a good many of our communities were unable to finance at all, and then we passed a constitutional amendment which permitted the State to put practically its full resources and credit behind the local issues, and this tended to readjust, partially, the interest rates and bring them down. But it is true that this high rate of interest has played havoc with school financing.

Senator Y ARBOROUGH. Governor Williams, I am forced to leave, because I am going to testify before another Senate committee for the

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