To be sure, there are many other good and sound reasons for Federal support of public education. Senator Randolph has given a complete statement of reasons here this morning for which I, on behalf of the teachers of West Virginia, want to thank him. Reasons have been presented by the National Education Association and many others who have testified before this committee. We do not minimize a single one of the reasons offered. We simply add this new point of view. We believe the reasoning behind it, although not fully developed, to be sound and just.

In the light of this new concept and the supporting facts, the West Virginia Education Association makes an especially strong appeal to this committee and to the Senate and the Congress of the United States to give serious consideration to the passage of a program of Federal support for public education. We fully endorse the principles set out in S. 2 which has been introduced by the Honorable James E. Murray and cosponsored by both of our own U.S. Senators, the Honorable Jennings Randolph and the Honorable Robert C. Byrd, as well as many other illustrious Senators from other States.

We thank you for the privilege of testifying on this great issue that faces this country of ours.

I shall be glad to answer any questions.

Senator YARBOROUGH. Thank you, Mr. Reeder, for this very stimulating statement. Without objection, the four exhibits attached thereto will be made a part of the record at this point.

(The material referred to follows:)

EXHIBIT I

EXHIBIT II

Where West Virginia school money came from (1948-59)

1 "Taxes Levied," annual publication of State tax commissioner.

2 Foundation program computations by board of school finance.

Biennial report of State superintendent of Schools; "Analysis of Receipts and Expenditures," department of finance and administration.

4 Reduced amount due to State reserve fund ordered by board of public works. 'From estimates in budget document prepared for 1958 legislature.

EXHIBIT III

SCHOOL REVENUE PER PUPIL, 1957-58: EXPENDITURE-POTENTIAL

The average State provides 50 percent more money per pupil than does West Virginia for current operating expenses of schools.

Potential in West Virginia (aggregate of counties):

Levies not voted (1958-

Better schools amendment special levy potential_‒‒‒

$4.05 27.27

All classes of property moved up to 50 percent of appraisal (1958):
Regular levy__

Special levy

6. 37 3.18

Amendment special levy_.

3. 18

Total potential per pupil__

44. 05

With all property up to 50 percent of appraised value, with all present and new special levy potential voted, West Virginia would still be below the national average by $61.94 in school revenue per pupil.

EXHIBIT IV

WEST VIRGINIA CONTRIBUTES MUCH TO NATION'S WEALTH-IS LOW IN PERSONAL INCOME, LOWER IN SCHOOL EXPENDITURES

THE ADDED VALUE CONCEPT

West Virginia has a large number of school-age children per 1,000 adults, ranking eighth among the States.

West Virginia exerts above-average effort to support schools, ranking 18th in percent of personal income payments devoted to schools.

West Virginia ranks 38th in per capita income, partially due to the high percentage of school-age children in the total population.

However, many persons have felt that West Virginia's ability to finance public services is not completely reflected when referring to personal income alone. West Virginia has an abundance of natural wealth-has contributed greatly to the basic wealth of the Nation.

When we compare the per capita value of the various States' additions to the basic wealth of the Nation, West Virginia ranks 15th (see attached table).

39997-59-27

The following basic factors were considered:

1. Value added by manufacture.

2. Value of mineral product.

3. Cash receipts from farm marketings.

4. Value of catch of fisheries.

It was recognized that other factors were involved in a gross national product— services, transportation, banking, communication. However, all of these are based on the prime factors of food, raw materials, and the products derived therefrom.

The added value concept outlined above was new enough, the comparisons different enough, that validation by experienced students of finance and economy was deemed advisable.

Dr. Walter Heller and Dr. Alek A. Rozental of the University of Minnesota were asked to make an exploratory study of alternatives to income payments as an index of West Virginia's fiscal capacity (with special reference to the support of public education).

In the report of the study of the problem, Dr. Heller lists several types of indexes developed over a period of years, and gives advantages and disadvantages of each, including the income payments series most often used. Among the limitations of this series, the following were mentioned:

1. Differences among the States in age distribution of population;

2. Does not embrace all of the goods and services produced by the State; 3. Measures only those incomes that have been received by individuals residing in the State and does not include income that accrues to corporations and that has not been paid out to individuals;

4. In the case of West Virginia, the value of product from resources located in West Virginia but owned by nonresidents will be assigned to other States.

An example given by Mr. Reeder, executive secretary of the West Virginia Education Association, is cited: Although the volume of coal mined in West Virginia in 1956 was 10 million tons more than in 1952, the level of employment in the mines and wages (personal income) paid miners in the State declined sharply. The additional money received was credited elsewhere.

On

Dr. Heller states: "In the light of these considerations, the preference of 'absentee-ownership' States for the net product over the income-payments approach to the measurement of fiscal capacity emerges as more than whimsy. one hand, it shares the strong points of the income-payments index in that (1) it is based on income (product), the best indicator of the ability to support public services; (2) it provides a ‘unitary' index that avoids double counting and, being naturally additive, eliminates arbitrary selection of series and weights; (3) it is, at least in principle, a current index reflecting changing economic capacity from year to year. On the other hand, it overcomes two major weaknesses of the income-payments index by (1) including the product of legal entities as well as of real persons, and (2) measuring the product at its origin rather than at its destination."

The most serious question raised concerning the WCEA added-value concept arose over a selective series such as those included under basic industries *** one might exclude all industries except mining and thereby improve West Virginia's ranking even more. It was suggested that the value of the product of finance, transportation, real estate, services, etc., be included. All figures should be on a value-added basis.

Dr. Heller proposed a way to obtain an approximation of corporate profits accrued through business activity within a State. The results appear in the attached tables. West Virginia ranks 16th in corporate profits accruing to business activity within the State, on a per capita basis.

In the absence of available data, Dr. Heller proposes an involved method to allocate the so-called gross national product developed by the Office of Business Economics, U.S. Department of Commerce, to the various States. study is planned for this series.

To sum up West Virginia's rank in selected indexes:

Thirty-eighth in payments to individuals.

Fifteenth in per capita value added to basic wealth of the Nation.
Sixteenth in per capita corporate profits.

Further

Yet in public school expenditure per pupil, West Virginia ranks 41st.