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EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET,

Washington, D.C., February 24, 1959. Hon. LISTER HILL, Chairman, Committee on Labor and Public Welfare, U.S. Senate, Washington, D.C.

MY DEAR MR. CHAIRMAN : This is in reply to your letter of January 20, 1959, requesting the views of the Bureau of the Budget on S. 2, a bill to provide financial assistance for the support of public schools by appropriating funds to the States to be used for constructing school facilities and for teachers' salaries.

S. 2 would authorize the appropriation for fiscal year 1959, and for succeeding fiscal years, of amounts equal to the product of the estimated school-age population of all the States and $25 for fiscal year 1960, $50 for 1961, $75 for 1962, and $100 for each succeeding year. This calculation would yield about $1.1 billion in 1960, $2.1 billion in 1961, $3.3 billion in 1962, $4.6 billion in 1963, and gradually increasing amounts each fiscal year thereafter. These amounts would be allotted among the States on the basis of their relative school-age populations, modified by a State's school effort index, and would be used to assist local school districts in constructing school facilities and compensating teachers.

With regard to Federal assistance for public elementary and secondary school construction, this administration has submitted for consideration of the Congress recommendations which are embodied in S. 1016, now before your committee. This proposal is based on the belief that the primary responsibility for the support of our educational system rests with the States and local communities and that, therefore, in the provision of school facilities the Federal Government should assist only school districts that have an urgent need for additional facilities and are now unable to finance that need by their own efforts. It is designed also to stimulate increased State support for school construction.

The instant bill differs fundamentally from the administration proposal in that it would provide permanent and large-scale Federal support both for school construction and for salaries of teachers in public elementary and secondary schools and would not encourage increased State financial assistance. We do not believe it necessary or desirable for the Federal Government to assume the responsibility for providing a substantial and permanent share of the cost of public education.

Therefore, the enactment of S. 2 would not be in accord with the program of the President, and the Bureau of the Budget recommends favorable consideration of S. 1016. Sincerely yours,

PHILLIP S. HUGHES, Assistant Director for Legislative Reference.

EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET,

Washington, D.C., February 24, 1959. Hon. LISTER HILL, Chairman, Committee on Labor and Public Welfare, U.S. Senate, Washington, D.C.

MY DEAR MR. CHAIRMAN: This is in reply to your letters of January 14 and February 4, 1959, requesting the views of the Bureau of the Budget on S. 8, a bill to authorize an emergency 2-year program of Federal financial assistance in school construction to the States, and S. 877, a bill to authorize a 4-year program of Federal assistance to States and communities to enable them to increase public elementary and secondary school construction.

S. 8 would authorize the appropriation of not to exceed $1 billion each year for 2 years for grants to States for the construction of public elementary and secondary school facilities. S. 877 is almost identical with the administration's recommendation for school construction assistance of 2 years ago which was considered in the 1st session of the 85th Congress as S. 889. It would authorize a 4year program of (1) grants totaling $1.3 billion, (2) Federal purchase of local school bonds, aggregating $750 million in principal amount, which cannot be marketed at a reasonable rate of interest, (3) Federal credit assistance to State school-financing agencies for which $150 million for initial advances would be authorized, and (4) $20 million in grants for the administration of State programs to increase school construction.

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Since introduction of the earlier administration proposal, the Congress has enacted the National Defense Education Act of 1958. Additionally, this administration recently submitted for consideration of the Congress revised recommendations for Federal assistance for public elementary and secondary school construction. We believe that this proposal, embodied in S. 1016, which is before your committee, now represents the most effective method, consistent with objectives which the administration deems essential to the well-being of the Nation, of providing Federal aid to school districts most in need of financial assistance.

Therefore, we recommend against enactment of S. 8 and S. 877 and recommend favorable consideration of S. 1016. Sincerely yours,

PHILLIP S. HUGHES, Assistant Director for Legislative Reference.

EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET,

Washington, D.C., February 27, 1959. Hon. LISTER HILL, Chairman, Committee on Labor and Public Welfare, U.S. Senate, Washington, D.C.

MY DEAR MR. CHAIRMAN: This is in reply to your letter of January 26, 1959, requesting the views of the Bureau of the Budget on S. 631, a bill to authorize assistance to States for the financial support of public elementary and secondary schools.

This bill would authorize the appropriation of $500 million annually for grants to the States to be used by local educational agencies for public elementary and secondary education. State matching would not be required.

As you know, the administration has submitted for consideration of the Congress recommendations for Federal assistance for elementary and secondary school construction which are embodied in S. 1016, now before your committee. This proposal is based on the principles that a Federal program of aid for elementary and secondary education should be temporary, should be designed to assist only school districts that have urgent needs they cannot meet by their own financial efforts, and should require matching State financial participation. S. 631, because it would authorize permanent and general support for elementary and secondary education and would not encourage greater State assistance, differs fundamentally from the administration proposal.

We believe that s. 1016 represents the most effective method, consistent with objectives which the administration deems essential to the well-being of the Nation, of providing Federal aid to school districts most in need of financial assistance. Therefore, the Bureau of the Budget recommends against enactment of S. 631 and recommends favorable consideration of S. 1016. Sincerely yours,

PHILLIP S. HUGHES, Assistant Director for Legislative Reference.

EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET,

Washington, D.C., February 24, 1959. Hon. LISTER HILL, Chairman, Committee on Labor and Public Welfare, U.S. Senate, Washington, D.C.

MY DEAR MR. CHAIRMAN: Th is in reply to your letter of Febr 4, 1959, requesting the views of the Bureau of the Budget on S. 863, a bill to authorize Federal assistance to the States and local communities in financing an expanded program of school construction so as to eliminate the national shortage of classrooms and in providing increased amounts for teachers' salaries.

This bill would authorize a 5-year program of financial assistance for construction of public elementary and secondary schools and for increasing salaries of public schoolteachers. For school construction S. 863 would provide for (1) grants totaling $2 billion; (2) Federal purchase of local school bonds, aggregating $750 million in principal amount, which cannot be marketed at a reasonable rate of interest; and (3) Federal credit assistance to State school-financing agencies for which $150 milliou for initial advauces would be authorized. Grants totaling $ 700 million would be authorized for teachers' salaries.

This administration recently submitted for consideration of the Congress recommendations for Federal assistance for public elementary and secondary school construction. We believe that this proposal, embodied in S. 1016, which is now before your committee, represents the most effective method, consistent with objectives which the administration deems essential to the well-being of the Nation, of providing Federal aid to school districts most in need of financial assistance.

With regard to grants to the States for general supplementation of teachers' salaries, we believe that this area of support of education is, and should remain, a State and local responsibility. Although S. 863 would authorize only temporary Federal aid for teachers' salaries, an undertaking of this kind, unlike construction assistance which is of a nonrecurring nature, might well become a permanent Federal involvement, leading to a diminution of State and local initiative and an increased and undesirable reliance upon the Federal Government for the support of public education.

For the above reasons the Bureau of the Budget strongly recommends against favorable consideration of S. 863 and instead favors enactment of S. 1016. Sincerely yours,

PHILLIP S. HUGHES, Assistant Director for Legislative Reference.

DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE,

March 16, 1959. Hon. LISTER HILL, Chuirman, Committee on Labor and Public Welfare, U.S. Senate, Washington, D.C.

DEAR MR. CHAIRMAN: This letter is in response to your requests of January 14, January 20, January 26, and February 4, 1959, for reports, respectively on S. 8, a bill to authorize an emergency 2-year program of Federal financial assistance in school construction to the States, S. 2, a bill to provide financial assistance for the support of public schools by appropriating funds to the States to be used for constructing school facilities and for teachers' salaries, S. 631, a bill to authorize assistance to States for the financial support of public elementary and secondary schools, S. 803, a bill to authorize Federal assistance to the States and local communities in financing an expanded program of school construction so as to eliminate the national shortage of classrooms and in providing increased amounts for teachers' salaries, and S. 877, a bill to authorize a 4-year program of Federal assistance to States and communities to enable them to increase public elementary and secondary school construction.

Although the provisions of the instant bills greatly differ, each of them would require large Federal appropriations—and several would require large State appropriations of matching funds-during the next few years to assist States in constructing public school facilities. Three of these bills, S. 2, S. 631, and S. 877, would authorize Federal financial assistance to underwrite the general costs of public elementary and secondary education in every State.

S. 2 would authorize the appropriation for the fiscal year beginning July 1, 1959, and for succeeding fiscal years, of amounts equal to the product of the estimated number of the school-age population for all the States as of such year and $25 for the first fiscal year, $50 for the second, $75 for the third, and $100 for the fiscal year beginning July 1, 1962, and each fiscal year thereafter. Subject only to having its allotment reduced for any year in which a State's school-effort index is less than a national school-effort index, a State could use its allotment of Federal funds to construct public elementary and secondary schools, pay the salaries of public elementary and secondary schoolteachers, or both, without submitting a State plan for the utilization of the Federal funds and with no assurance that Federal funds would not be used to replace State or local funds diverted to less important educational purposes or to purposes other than education.

S. 6 would authorize the appropriation of $1 billion for each 2 succeeding fiscal years, beginning July 1, 1959, for allotment to the States on the basis of relative school-age population for the construction of public elementary and secondary school facilities. To qualify for such aid, a State would be required to certify, among other things, that during each of the fiscal years, State and local funds equal to the amount of the Federal allotment, and in excess of the average of State and local school construction expenditures for the 3 previous years, would be spent for public elementary and secondary school construction.

S. 631 would authorize the appropriation of $500 million for the fiscal year beginning July 1, 1959, and such amounts as Congress may determine for each succeeding fiscal year, to be allotted to the States on the basis of relative numbers of school-age population and added to the public school funds of the States for the support of public elementary and secondary education. The bill provides for the proportionate reduction of a State's allotment in any year (but not including the first 3 years) in which the State school-effort index falls below the national school-effort index. After the close of each fiscal year the State educational agency would be required to report to the Commissioner of Education regarding the distribution and utilization of Federal funds. The Commissioner, in turn would report to the Congress and make recommendations concerning the program in the following fiscal year.

S. 863 would authorize for 5 successive fiscal years beginning July 1, 1959 : (1) The appropriation of amounts not to exceed $400 million in any fiscal year for grants to the States for the purpose of paying one-half the cost of constructing public elementary and secondary school buildings in accordance with an approved State plan; (2) the appropriation of amounts not to exceed $750 million, in aggregate, for the purchase of the obligations of local public educational agencies issued for school construction which such agencies are otherwise unable to market upon reasonable terms and at the favorable rates of interest provided by the bill; (3) the appropriation of an amount not to exceed an aggregate of $150 million, to provide initial Federal advances to basic reserve funds of Federal-State reserve funds established to help assure payment of obligations issued by State school-financing agencies for the purpose of constructing public elementary and secondary schools; and (4) the appropriation of amounts not to exceed $100 million for the first fiscal year, $150 million for the second, $200 million for the third, and $250 million for each of the 2 succeeding fiscal years, for grants to the States for the purpose of assisting local school districts to pay the salaries of public elementary and secondary schoolteachers, in accordance with an approved State plan giving priority for assistance to financially needy districts.

S. 877 would authorize for the fiscal year beginning July 1, 1959, and the 3 succeeding fiscal years: (1) the appropriation of amounts, not to exceed $325 million in any fiscal year, for grants to the States for the construction of public elementary and secondary school facilities in accordance with an approved State plan; (2) the appropriation of amounts not to exceed an aggregate of $750 million, for the purchase of the school construction obligations of local educational agencies which are unable to market such obligations upon as favorable terms as would be provided by the bill; (3) the appropriation of amounts, not to exceed an aggregate of $150 million, to provide initial Federal advances to reserve funds established by State school-financing agencies to help assure payment of obligations issued by such agencies for the construction of public school facilities for the use of local educational agencies; and (4) the appropriation of $5 million, $7 million, $5 million, and $3 million, respectively, for each fiscal year for Federal grants to the States for the administration of State programs to increase the rate of school construction.

As you know, the President recommended in 1955, and again in both 1956 and 1957, that the Congress authorize a program of Federal assistance to the States and local communities for the construction of public elementary and secondary school facilities. These recommendations, which were included in the legislative program of this Department for those years, were aimed at helping the States and local communities to overcome the backlog of school housing needs more quickly than they would be able to do without Federal assistance. The Congress, however, failed to authorize such a program. Although States and communities continue to build classrooms at a rate sufficient to accommodate increased enrollments and to reduce slowly the accumulated classroom needs, the classroom shortage is still a serious one in many—and particularly in the financially needy-districts. Accordingly, this Department has submitted to the Congress a proposal for a 5-year emergency Federal program to assist States and financially needy local school districts to construct needed elementary and sec

ondary school facilities. This proposal is embodied in the provisions of S. 1016, now pending before your committee.

S. 1016 would authorize the Commissioner of Education over a period of 5 years beginning July 1, 1959, to allocate among the States on the basis of a formula reflecting relative income per school-age ebild, and school-financing effort-an amount not to exceed $600 million in each of the 5 years which would be the principal amount of local school construction bonds subject to StateFederal debt service commitments. In each participating State, the State and the Federal Government, on a 50-50 basis, would advance, each year over the 20-30-year life of the obligations subject to the commitments, the amount required by needy school districts to pay principal and interest charges.

To participate in this program, a State, in accordance with a state plan, would determine priorities among needy school districts for assistance in building classrooms to eliminate overcrowding, double shifts, or unhealthful or hazardous conditions, and would establish a reasonable tax effort for local educational agencies to exert in meeting their construction needs. The districts that qualify for assistance would be required to exert this effort each year for the life of their construction bonds and for 10 years thereafter. If at any time during the 20-30-year life of the construction bonds the tax resources of a community should increase or its other financial burdens diminish to such an extent that they become able to pay part or all of the debt service charges in a given year, Federal-State advances would be reduced proportionately or discontinued for that year. In the 10-year period following retirement of the bonds, the district would apply half of any excess revenues produced by exerting its reasonable tax effort to the repayment, with interest, of Federal advances previously made. Any Federal advances or interest which a district is unable to repay in this manner would be forgiven at the end of the 10-year period.

In our judgment, the program which would be authorized by S. 1016 would be of substantial assistance in helping States and local communities to overcome, within the next 5 years, the accumulated school housing needs which, in the absence of such assistance, will impair the educational opportunities of millions of children for many years to come. Moreover, the proposed program would have significant advantages over those which would be authorized by S. 2, S. 8, S. 631, S. 863, or by S. 877.

Among the principal advantages of the program which would be authorized by S. 1016 are : (1) It would encourage the States to examine carefully the classroom needs of every school district and to evaluate those 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 schoolhousing, while permitting great flexibility in the manner in which State financial resources would be made available for this purpose; (4) annual costs could be spread over the life of the local district's school construction obligations, so that the impact on both State and Federal budgets would be slight 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.

For these reasons, we believe that S. 1016 would authorize a program of Federal financial assistance for States and local communities in the construction of public elementary and secondary school facilities which would be preferable to that which would be authorized by either S. 2, S. 8, S. 631, S. 863, or S.,877.

With the exception of S. 8 and S. 877, the instant bills would also authorize Federal assist“nce to the States for the payment of salaries of public elementary anil secondary school teachers; S. 2 and S. 631 (the latter bill includes teachers' salaries) would make such assistance a permanent feature of educational finance; while S. 863 would limit the assistance to a 5-year period. In our judgment, the nature of these Federal payments would be such that, once commenced, they could not be terminated after 5 years. This Department believes that, in general, the salaries of teachers are too low to attract a sufficient number of the most able young people to the teaching profession. In our judgment, teachers' salaries should be raised-perhaps doubled—to more nearly reflect the importance of the teacher in our national life. However, we have fundamental reservations with respect to the provisions of these bills.

Teachers' salaries constitute a major portion of the cost of education in every State, and we are not persuaded that it is in the best interest of education for the Federal Government at this time to assume responsibility for providing a substantial and permanent share of the cost of public education in every State.

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