(3) Their application is not subject to varied interpretations which are common to current programs;

(4) Do not require comprehensive and detailed State plans; (5) Allow the States to devote the funds to needs as identified by the States;

(6) Eliminate the recordkeeping and the annual reporting which are not basic for State accountability; and

(7) No State should receive less under consolidation and/or revenue sharing than it receives now under the various categorical grants.

Then the third responsibility that I have is to make a statement relative to H.R. 7796.

Following the examination of this legislation, and the interpretation thereof, under the heading "Questions and Answers on Education Revenue Sharing," dated May 20, 1971, I find it difficult to reconcile the two. According to the latter, State plan requirements would be eliminated and other redtape would be reduced. Actually it is both a revenue-sharing bill and a grant consolidation.

Revenue-sharing funds must be spent by the States only for carefully designed programs to meet their needs in the five national purpose areas of the disadvantaged, the handicapped, vocational education, federally affected school districts, and supporting services. The President's budget requests $3 billion for fiscal year 1972, $2.8 billion for existing programs, plus $200 million in new money. In addition, the proposal would provide a significant new source of funds for education; $5 billion would be made available to the States and municipalities in the first year for any purpose, and education representing 41 percent of the current State and local expenditures would be expected to have a major claim on these funds. No State would receive less money than it receives under the present grant system.

I am in hearty accord with those provisions, but these interpretations do not seem to agree with the U.S. Office of Education questions and answers on revenue sharing dated May 20, 1971. I emphasize, they do not seem to agree.

If it is almost impossible for States to meet their own needs in the current categorical programs, would these requirements be met in the five national-purpose programs?

The State educational agencies seem to be somewhat bypassed in that the Governors would designate a single State agency to administer the program and also appoint an advisory council. Would the SEA be responsible to its respective Governor or to the Federal Government?

Fewer State personnel would be involved and State officials could devote more time and attention to technical assistance on the local level. These are desirable advantages of revenue sharing.

In conclusion, I wish to emphasize that it is my opinion that the Federal Government has a concern and should develop general guidelines for the expenditure and utilization of Federal funds which are allocated and forwarded to the States.

There should be reporting and accounting sufficient to determine whether the States and local agencies have used those funds in ac

cordance with the general guidelines, and whether Federal funds have replaced or supplanted State and local moneys. States which have not met the general criteria and guidelines should not receive Federal funds the following year.

The responsibility for administering the program on the State level should rest with the State departments of education which are charged by State law and/or constitution to be responsible for schools and education.

Gentlemen, I thank you for your having me come to this meeting this morning, and I appreciate your attentiveness. Thank you again. Chairman PERKINS. Before Dr. Buchmiller speaks, let me suggest to the witnesses in the next panel, if you care to go down and get a little lunch before you commence, it would accommodate the committee inasmuch as we are going to run through the noon hour, we are not going to take any break.

Dr. Buchmiller, we will now hear you.

STATEMENT OF ARCHIE A. BUCHMILLER, Ph. D., DEPUTY STATE SUPERINTENDENT, WISCONSIN DEPARTMENT OF PUBLIC INSTRUCTION

Dr. BUCHMILLER. Thank you, Mr. Chairman.

May I express my appreciation for your coming to the Midwest, especially at this time of the year. It takes a certain kind of courage, I think, to come in January rather than in June.

I think perhaps, Mr. Chairman, had you come to Wisconsin, we would not have had the early morning snowstorm, but I couldn't guarantee that.

Mr. PERKINS. I just told Congressman Steiger I wanted to come to Wisconsin and put in a good word for the Congressman, if I wouldn't hurt him, he is such a great and outstanding gentleman. Go ahead.

Dr. BUCHMILLER. With your permission, I will skip in and out of the manuscript that I prepared for you. I think it will probably speak for itself.

I am reminded that on April 11, 1965, there did occur an event that changed all of our lives in education, and I think that's a little bit irreversible, in that we cannot go from one transition when we started categorical funding and special needs and Federal priorities and Federal involvement to completely discount what the past has been as we move to the future.

I am convinced, though, Mr. Chairman, that as a result of the State department's experience the past 10 years with the administration of Federal programs there is a new stage, a new age, by which the manpower and this experience can be put to use to develop, to carry out, the mandates of the Congress of the United States.

It might bring us a better result than we are now achieving by complex rules and regulations.

This morning I want to emphasize only two or three points, because you have heard many of them, and I will not deal with the technicalities of H.R. 7796, but there are within that bill some very serious policy considerations. And while I will not speak to property

tax relief and its illusions this morning, except casually, very casually, the fact that Wisconsin has gone from $446 million of operating costs in 1966-67 to $700 million in 1969-70, and $800 million this year, that we have found our expenditures increased by 53 percent and our property taxes by 57 percent in this period, is testimony that something needs to happen if we are to continue to have education survive as we know it.

I am also reminded, to respond to your questions today, that we need flexibility, because even as you heard the testimony this morning and the opinions within the States and sister States, Wisconsin and Minnesota, we would not have the same priorities or the same emphasis.

For example, Wisconsin has put a high priority on the development of special education, as Congressman Steiger well knows from his stint in the legislature there. We have come a longer way in special education than we have in other areas, therefore it would behoove the Congress to allow some interpriority flexibilities as they allocate funds to a State.

The first point, then, this morning-the enactment of legislation such as H.R. 7796 will not create just another Federal program. Mr. Perkins. In Wisconsin, in 1970-71, the impact of these programs involved intimately a duplicated count of 2 million or more children, 124 State employees, and grants of $26 million to our State. I will not run through table I, which you have available to you.

It appears to me that with a shift from the present categorical programs and the way they operate now we need to recognize the need for a transitional period from that mode of operation to a new mode of operation.

The second point-in a more global sense, the financial support for the State agency operations in Wisconsin during the present year provides for approximately 43 percent of all the manpower that State agency employs and 56 percent of the funds. Congressman Quie asked a question, and perhaps I might give a partial answer. Perhaps you have the job, sir, because many of the States have not done their job well in addressing priorities, in defining their programs. But it is a fact of life that State educational agencies, as I know them, and at least in the State of Wisconsin, depend on Federal funds. They do in the State of Wisconsin.

If you will look at table II, for example, it is not apparent that early childhood education is a State priority and yet it ought to be. So I plead for a concern that as you examine the five areas of national priority which you find in H.R. 7796 you add one additional priority to those five areas established, and that priority would be the continued support and strengthening of state educational agencies, until such time as the states have demonstrated that they will meet their responsibilities for leadership and service to local school districts. The transition from categorical grant administration to grant consolidation and revenue sharing must not lose the State level technical capability and educational leadership which these programs have now provided to the States, and I am convinced they would not have been provided to that degree without Federal stimulation. It seems to me, too, sir, that the

philosophy of educational revenue sharing and State leadership and capability must go hand in hand for some time yet in the future. And Mr. Kurzman spoke to that very dramatically in his testimony to you in Washington.

The second point I want to make at this time, as you examine revenue sharing and grants consolidation, is to underscore what I think you are all aware of, what has in my opinion become erroneously considered as an unconstitutional property tax situation because of the Serrano v. Priest decision. I don't think the decision said that at all. The decision said the fiscal system with its high reliance on property taxes. And that, I think, is what the issue is today. What kind of parity and equity do property taxes play in a revenue system to support elementary and secondary education and, second, how do you distribute those funds to school districts according to need. Therein lies a good deal of controversy for legislators to deal with in the future, I'm sure. The property tax is at question. And I might assure you, sir, and Congressman Steiger, that when the eastern district court case of Stovall v. The State of Wisconsin is heard and finished we will know, in fact, whether the constitutional validity of the property tax in Wisconsin is in jeopardy, because that is directed at that issue specifically, which the other two decisions I do not believe have been. Well, all of this is to say that at this time the state of education, the financing of it, is in a state of flux, and these decisions by the supreme court in California, Federal court in Texas, the preliminary opinion in Minnesota, take serious issue with our present fiscal delivery system, which relies primarily on property taxes and results in wide disparities of educational opportunities as a result and as a consequence of wealth. It will mean that the States will have to play stronger financial roles if eventually the Supreme Court upholds these kinds of findings.

The California court also held something, I believe, gentlemen of the committee, that was pretty important, and that is it stated that education was a fundamental and compelling interest of the State. Perhaps we finally have the judiciary redefining the educational responsibility of the States, which perhaps, in some respects, has been neglected by them through all these years.

This opens up some real questions as you examine property tax relief or revenue redistribution or grant consolidation. For example, category A pupils under Public Law 874, the funds are allocated solely on the basis of whether their parents live or work on Federal property. Should this now be the criteria? If the State has the compelling interest to educate these children and if it should distribute its funds to them according to need, on what basis is that need determination then made for Public Law 874 children? I suggest living on Federal property does not create an educational need in and of itself. The State has a responsibility here. So how will that flow of dollars be remodeled?

Secretary Richardson, I'm sure you are aware, probably more aware than I am in the State of Wisconsin reading the out-of-State newspapers, made some comments on or about January 20 concerning something called the Property Tax Relief Act of 1972. I am convinced

that that kind of legislation would be more representative of revenue sharing than the definition we find in H.R. 7796.

Let me just finish up with a few last things. This brings me to a third area of concern for your attention. I believe the 10 percent discretionary set-aside in H.R. 7796 is far too high. We are talking at a far different financial ball game with 10 percent of the money involved here or the 10 percent of title III or some other title like title V. I wonder if it is really inconsistent with the concept of revenue sharing.

Presently the States do not have authority to reallocate a percentage of title I. ESEA funds for unique State circumstances and to concentrate additional funds where educational deprivation and concentration may be the most severe.

Perhaps. Mr. Chairman, it would be a test of our belief in State responsibility to exchange a Federal set-aside for a percentage of reallocable funds under title I, ESEA or some other equal treatment or authority. It seems to me that until we are willing to make a larger commitment in State responsibility in order to provide for unique educational needs our actions do not follow nor do they fulfill our rhetoric or our expectancy.

Well, very briefly, these are some of the policy issues that are on my mind this morning, gentlemen of the committee. I believe administrative reform is possible in our maze of categorical programs. I believe that we do need revenue sharing and that we do need catgorical programs, that they both must exist simultaneously for yet a time in the future, and perhaps if we were to have pure revenue sharing such as the Property Tax Relief Act of 1972 might envision and grants consolidation as this bill might envision, we can let both of them proceed, each on their own course to the future.

Thank you.

Chairman PERKINS. Congressman Quie.

Mr. QUIE. I would like to ask Mr. Casmey to tell us a little bit about Minnesota's court case. You mentioned California and Texas and Mr. Buchmiller mentioned Minnesota in his testimony. Judge Lord has made one statement but it is my understanding he has not made a final decision.

Mr. CASMEY. I think there is a misconception of what took place in Minnesota. Three groups filed suit in Minnesota. Two have been dropped. When the case was first given to Miles Lord there was one hearing and he issued a statement but not a ruling. This is my understanding. Let's see, two were dropped without prejudice, meaning that they can institute the suits if they like. The Minnesota Taxpayers Association did not drop their suit, so the case has not been heard in Minnesota. He just issued a statement, and this. I think, has been corrected in some of the national press, where at first they took this as a ruling. To my knowledge, no ruling has been made, only one hearing and a statement.

Mr. QUIE. Did he indicate in the statement that he was going to make a ruling later on?

Mr. CASMEY. He made a statement to the effect-the legislature, as you know, was in session at that time-he said he would wait to see what the formula was at the end of the legislative session. I have