Mr. RICHARDSON. Of course, if the school district had

Mr. BAILEY. You are going to cripple their efforts to keep up with schools.

Mr. RICHARDSON. The school district would presume to have had to build more schools after the program is over. So if they did have to do that and, consequently, they had to meet principal and interest on other schools outside of this program altogether, then there would be no excess revenue available to repay the United States. In fact, we expect that this will be the normal situation and that only in a few situations will there be any repayment to the United States.

Mr. BAILEY. Let us go just a little bit further. We listed the valuation of property on which they were voting bonds at $20 million. During the course of that 25 years it is possible that the assessed valuation of that school district might quadruple in the 25 years. So you would be freezing, you would be freezing one-half of the bonding capacity of $80 million assessed valuation rather than the $20 million and the Government would get more money back than they put into the original bond issue.

Mr. RICHARDSON. No; the Federal Government, there would only need to be paid to the Federal Government the amount which could be paid over and above claims on local revenue for school construction purposes. That is to say the Federal Government would get only the amount over and above the amount necessary for those claims up to the required tax effort. In other words, if the State of West Virginia said that a reasonable tax effort for the support of school construction, to take an arbitrary figure, 15 mills, and the community came in in the first place because they could not build a new school without raising their tax levy to 20 mills, in that case the community would continue to tax itself at 15 mills, the United States and the State government would pay the entire amount due on the school district bonds. In other words, it would pay the whole equivalent of 5 mills on the tax base. After 25 years all we would say is that the community should continue to tax itself at 15 mills. If 15 mills is not necessary to meet all the obligations due then on schools constructed in the meantime, we would say that any difference between the amount necessary for the obligations then outstanding and 15 mills would be paid to the United States. So that if in 1985 they can carry the debt service on all their then outstanding bonds with 12 mills of taxation, we say under this proposal the United States would get half of the difference; that is, the amount proposed by tax levy of 3 mills.

Mr. BAILEY. Let me interpose a thought right at that point.

Suppose that they have an outstanding bond issue now for $200,000, which will mature in 1970. Would that district be permitted to rebond itself for the amount of $200,000? Would the Government allow them to set up

Mr. RICHARDSON. Yes. We would have nothing to say about the school district bonding itself for additional school buildings as they need them over the period of the next 25 years.

Mr. BAILEY. Now, go back and clear up another point for me, if you can. The gentlemen from New Jersey, both of them, have been talking about legal impediments. In my State of West Virginia we have a State sinking fund to meet, which is a funding commission that has to approve all bond issues. Would not it take some kind of legislative

action by the State Legislature of West Virginia, otherwise your county proposing to take advantage of this legislation, would not they run into difficulty and failure to get approval of the State sinking fund commission on those bonds before they are issued?

Mr. RICHARDSON. I do not know, Mr. Chairman, whether this would require legislation or not. We visualize that the bond would be issued in the formal way and be marketed with the benefit of what is in effect a Federal-State guarantee of the entire amount due on the bond.

Mr. BAILEY. Now wait a minute. Would it force them to lay a levy or go through the formality of laying a levy in excess of the constitutional limitation to get a clearance from the State sinking fund commission? How would they go about that?

Mr. RICHARDSON. I do not know, Mr. Chairman. I think I would have to look into that.

Mr. BAILEY. There is a legal impediment.

Mr. RICHARDSON. I think the program, it is fair to say, would require legislation, probably, in almost every State but that is true of every school construction proposal that has heretofore been considered.

Mr. THOMPSON. That requirement would not exist in as many instances in a direct grant program to the States as it does here. Where you have the moneys going through the States without involving each municipality, a great many of which have either gone up to or exceeded. the limit of their legal indebtedness.

Mr. RICHARDSON. Let me say, first, that all the proposals that have been considered at any time that involve allocations of money to needy school districts would require State legislation. The extent that the money would be distributed in a different way than it would be distributed under the State's existing equalization plans for the aid of school districts. So that in that respect this legislation is not different from other legislation. It does differ to the extent that a school district which is up against a debt ceiling would in order presumably to be able to issue bonds, have to take advantage of a local authority or a State authority. Of course, a great many school districts do do that. Mr. FRELINGHUYSEN. Mr. Chairman, I would like to get back to this question of what is an effective Federal program. The criticism that has been leveled at the proposal we are discussing this morning has been that it is too small to be effective in effect, and that we should have a direct-grant approach such as the administration has previously recommended. I would just like to say that as a sponsor of previous legislation I have nothing essentially against a Federal matching program with direct grants involved. It would be a way of getting it done. I am saying we do not have to confine ourselves just to that approach. What I am wondering is whether if we envisage the Federal role as one of stimulating and supplementing and encouraging communities to do the job themselves, whether if we had a grant approach we would not have to have a matching program. The major alternative to the bill we are considering today is the Thompson-Metcalf bill, which has no matching requirement at all. I wonder if the Commissioner would like to comment on that aspect of it and perhaps comment on why there is not any direct-grant approach in the proposal we have here today. Is it because we do not envisage any necessity or we think there are reasons against a Federal grant program that have led us to develop this debt service approach?

Mr. DERTHICK. Mr. Chairman and Mr. Frelinghuysen, as Assistant Secretary Richardson has said, in this bill there is no great difference in the effects we expect than in the previous bills by the administration except there is a great deal more flexibility in this bill, and makes it much more adaptable, we think, to the needs in the several States, as to matching; I cannot quite conceive of a program that would have the needed stimulation that did not require matching. It seems to me that this program is a partnership program on the part of the States and the local communities and the Federal Government. I do not know whether I am getting all the way to your question or not. Would you

Mr. FRELINGHUYSEN. I think we are probably saying the same thing.

Mr. DERTHICK. Yes.

Mr. FRELINGHUYSEN. And that is that this will produce the same results, approximately, as previously envisaged in other recommendations which did involve direct purchase of bonds and a direct Federal matching. But it will not involve as much money. We might just as well accept that. But it does not make it less effective, is that not really what we are saying?

Mr. DERTHICK. May I ask Dr. Flynt to

Mr. THOMPSON., How can you ultimately, despite the fine word "stimulation"-what we are after, however we get them, by stimulation or otherwise, is classrooms.

Mr. DERTHICK. Yes.

Mr. THOMPSON. And classrooms cost money. This does not call for as much money as the previous programs which you have abandoned. How can you build as many classooms with this as you could under the bill which my colleagues abandoned last year?

Mr. FRELINGHUYSEN. If the Federal Government were building them, of course, it would not result in the building of any classrooms. The Federal Government is not itself building them.

Mr. THOMPSON. That is right. Essentially that is the heart of this thing. You are not going to build as many classrooms with this as you would with the other program which you abandoned. I do not know how long you are going to have this bill before you abandon it. But I think we can wait awhile and you will change again.

Mr. DERTHICK. I have something I want to say on that point, Mr. Chairman. But my colleague here, Dr. Flynt, is very anxious to make

a comment.

Mr. BAILEY. The Chair recognizes Dr. Flynt.

Mr. FLYNT. The question of stimulus was raised by Mr. Thompson. I think there are two ways that this program stimulates. First, it requires State matching; second, it requires a reasonable tax effort on the part of the local district.

Mr. THOMPSON. What difference is that between

Mr. FLYNT. A very great difference.

Mr. THOMPSON. Between that stimulation and your previous proposal?

Mr. FLYNT. I would like to say on the third, please, that the amount of money that the Federal Government ultimately would spend here, over $2 billion is a rather considerable sum of money; that if it stimulated $3 billion worth of construction in a period of 5 years, 75,000

classrooms would get built which Dr. Derthick previously said is approximately the number would have been constructed under previous programs. We cannot say how this 75,000 would be distributed over enrollment replacement or backlog.

Mr. THOMPSON. How many classrooms in your opinion would the administration's 1957 bill have caused to be constructed? Do you remember the testimony on that point?

Mr. DERTHICK. Dr. Conrad, Mr. Chairman, could give us some help on that.

Mr. CONRAD. I do not remember the exact amount of money involved: $300 million.

Mr. DERTHICK. $300 million for 4 years. This is $300 million for 5 years.

Mr. RICHARDSON. $325 million.

Mr. DERTHICK. $300 million for 4 years. This is $300 million for 5 years.

Mr. CONRAD. The $325 million for 4 years would be $1,000,200,000. The $300 million for 5 years is $1,500 million and obviously is better than

Mr. THOMPSON. Assuming it all gets put out.

Mr. FLYNT. They participate to the full extent. That assumption has to be made, Mr. Thompson, in all bills that have been proposed. This stimulated $600 million a year of actual construction for 5 years, you get 75,000 classrooms built. That is a rather considerable number in relation to the total need and if spread over. Our stress in this bill has been to focus it on the needs of the districts which require it. We do not know whether they will be used per se to support classrooms to meet expanded enrollment, replacement, or backlog. It will be distributed over all those categories and we cannot say, as Commissioner Derthick and Secretary Flemming have previously stated, whether this will bridge the gap or not. That is not exactly what it is aimed at. It is aimed, like Mr. Frelinghuysen's questioning indicates, at the identification of the districts that require greatest help. It would be very fortunate if the 75,000 classroom rate could be continued but there is no guarantee that it will. But if we spread 75,000 actual classrooms built in the 5-year period over the needier school districts, it is very clear there will be a balance brought into this picture that certainly is not there now.

Mr. DERTHICK. Mr. Chairman, I think Mr. Thompson's question, along with Mr. Frelinghuysen's is going to help us pinpoint this issue. Mr. Richardson just figured out here that the previous administration bill would produce 65,000 classrooms against this bill of 75,000 classrooms. I think that if we take a look at the number of classrooms constructed in the past 2 years and if we look at the map and see where those classrooms are constructed, if we had this kind of bill for the last 2 years we would raise very materially the rate of classroom construction.

Mr. FRELINGHUYSEN. I Wonder in all this effort to envision what the Federal role should be we should place so much on the number of classrooms which are going to be built under the program anyway. It is somewhat problematical. It depends on the response at the local and State levels whether this will stimulate as many as 75,000 classrooms but it seems to me it will perform a very valuable function if it fills in the weak spots and encourages more school construction in areas which

previously have been lagging for specific reasons, most of them economic. And I think that is far more important in developing a reasonable Federal program than whether we are spending only $3 billion as compared to a total of $11 billion. The total of $11 billion may or may not be a good thing. But I think for one reason or another Congress is more likely to look at a lower figure with favor than they will look at a higher figure. It seems to me if we can qualify the Federal role and I am not saying there is anything wrong with Federal grants, if we can qualify the Federal role so as to aim it at the areas of greatest need we are more likely to get a response to solve a problem than if we just spread billions of dollars a year over the 49 States.

Mr. DERTHICK. Mr. Chairman, may I give a very simple, almost such a simple illustration that I apologize for it, but to illustrate this point that Mr. Frelinghuysen is driving at all the time and which is the essential feature of our bill, as a local school superintendent we took great pride in the record that our school system achieved in giving to the community funds or the United Fund or the Community Chest, or whatever it happened to be called at the time. Now, in our earlier years we had about 50 schools in our system and each faculty was organized and when the first reports came in some schools just went over the top and others were way down low. The first campaign went through and we were not too proud of our record. The next year we began to concentrate on our weak points. The strong points took care of themselves. When we concentrated on our weak points then the record of the school system went way up sky high. That is just in simple terms what this bill is designed to do. To take care of the weak places. We have a remarkable record of schoolhouse construction for many points of view and yet we have this great backlog. To take these school districts where but very little progress is being made and giving them a big shot in the arm and putting these 75,000 classrooms at those points is going to make a vast difference. When you think of 75,000 classrooms we always have to think in terms of more than 2 million children. So it is a very significant program. Any program that reaches 2 mililon children is bound to be significant. Mr. THOMPSON. Splendid example.

Mr. DERTHICK. Perhaps, Mr. Chairman, I should proceed with my statement with the assurance that we are glad to be interrupted at any time.

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 district 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 10 to 1 range 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.