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STATEMENT OF ERICK L. LINDMAN, PR
ADMINISTRATION, GEORGE PEABODY COI
NASHVILLE, TENN.

Mr. LINDMAN. If it is all right with the c read my written testimony, of which I am and I drafted 1 or 2 points to emphasize c me to be important.

It is my understanding that the Depar and Welfare has presented a detailed se 968 to this committee. In order to a and conserve the time of the committer a brief analysis of the principles un some consideration to the problem of tion from the State point of view.

S. 968 is, in a very real sense, a reflect a conviction of the administr to help alleviate the school housing action should not be limited to s The bill, S. 968, contemplates t new agencies, that State supre those new agencies, that the Fe tions extending over a 32-yea administrative machinery w period in the United States legislation with complex ad sidered in this light.

Proponents of S. 968 pr in school construction at v Realism compels us to as S. 968 places the burder with such assistance as tion, particularly with one familiar with the l and the uneven dist question the soundne tax and then expect struction to occur. The main purp

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wholesale condemnation authorities have played e States. However, in my ot generate $6 billion in school easons indicated, will choose to ns by other methods. FurtherJurden upon the local property tax matic results anticipated by propo

with the school housing shortage for on are beginning to emerge. These actions

a local financing have been effected in some and more realistic assessing of taxable property. s include school district reorganization, increases ve reassessment of property in New York State by Sing agency along with a constitutional change which State school buile State equalized valuation shall be used in computing that State. Increases in debt limits have been enacted in ms is expected to release borrowing power in many comand other States have made some progress in bringing tricts of the programs contemplated in title IV of S. 968 would all to the good and it is assumed that federally financed or a diverse further action in this direction. That, too, of course, is tional sche, we know enough about the limitations of the property and the unequal distribution of wealth among local school systems

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with assurance that substantial outside help will be needed to sent school housing needs. this point I would like to call your attention to a chart appended the close of my testimony. This chart was prepared by the research on of the University of Illinois. It shows the distribution of

Growing power among the school systems in that State.

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The valuations are based upon a State-equalized valuation. That is, they have used the corrections which the State taxing authority said should be applied to local valuations. And even after doing that, you get some idea of the tremendous range in capacity to finance school construction in that State. I merely say this to emphasize the fact that some kind of outside aid is going to be necessary if we are going to meet the problem.

(2) Many States have provided State help to local school systems for capital outlay purposes and debt service purposes. In other words, there is a relatively small annual payment being made to all the school systems in Alabama, and that annual payment is used primarily to service debts of local school systems.

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Mr. LINDMAN. (3) In some States there is grave doubt that constitutional debt limits imposed upon the State and upon local school districts can be legally avoided by the creation of a State school building authority. Experience in Pennsylvania, Maine, and Georgia indicates that litigation will delay the effectivenss of State school building authorities and that their ultimate approval by the courts is not assured.

(4) The creation of a State school building authority separate from the State department of education leads to a dual administrative arrangement at the State level. While coordination of these two agencies may be achieved, there is always a danger of jurisdictional conflict and duplication of administrative redtape-a danger not to be regarded lightly in developing a long-term partnership program for school construction.

I might add that there are some conflicts that may occur with respect to the operation and maintenance of the building. If one agency owns the building and is responsible for its maintenance, and another agency operates the building, I think you can see the possibilities for difficulties of assigning the proper responsibilities to the respective agencies.

These objections are not intended to be a wholesale condemnation of State school building authorities. Such authorities have played and will continue to play a role in some States. However, in my judgment, the enactment of S. 968 will not generate $6 billion in school construction. Many States, for the reasons indicated, will choose to attack their school building problems by other methods. Furthermore, placing virtually the entire burden upon the local property tax is not likely to produce the dramatic results anticipated by proponents of S. 968.

States have been struggling with the school housing shortage for years; patterns of State action are beginning to emerge. These actions are of two general types:

(1) Basic reforms in local financing have been effected in some States. These reforms include school district reorganization, increases in legal debt limits and more realistic assessing of taxable property. The comprehensive reassessment of property in New York State by the State assessing agency along with a constitutional change which provides that the State equalized valuation shall be used in computing legal debt limits, is expected to release borrowing power in many communities of that State. Increases in debt limits have been enacted in some States and other States have made some progress in bringing property assessments up to date.

This is all to the good and it is assumed that federally financed administrative programs contemplated in title IV of S. 968 would stimulate further action in this direction. That, too, of course, is good.

However, we know enough about the limitations of the property tax and the unequal distribution of wealth among local school systems to say with assurance that substantial outside help will be needed to meet present school housing needs.

At this point I would like to call your attention to a chart appended at the close of my testimony. This chart was prepared by the research division of the University of Illinois. It shows the distribution of borrowing power among the school systems in that State.

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The valuations are based upon a State-equalized valuation. That is, they have used the corrections which the State taxing authority said should be applied to local valuations. And even after doing that, you get some idea of the tremendous range in capacity to finance school construction in that State. I merely say this to emphasize the fact that some kind of outside aid is going to be necessary if we are going to meet the problem.

(2) Many States have provided State help to local school systems for capital outlay purposes and debt service purposes. In other words, there is a relatively small annual payment being made to all the school systems in Alabama, and that annual payment is used primarily to service debts of local school systems.

I emphasize that because with this debt service aid flowing from the State, the local communities were in position to borrow more than they would have otherwise have been able to borrow, and the immediate impact upon State finances was not great.

Chairman HILL. Those loans went almost entirely into new school buildings; isn't that right?

Mr. LINDMAN. That is right.

Returning to my statement: Beginning in 1939 State aid for capital outlay and debt service purposes was made available as an annual apportionment to all school systems in Alabama. The annual apportionment is computed on an equalization basis and may be used by the local school system for school construction purposes or it may be capitalized and used for debt service purposes. The only difficulties with this plan are: (1) the backlog of need is abnormally great, as it is in most States at the present time, and (2) the State has had insufficient funds to make an adequate annual apportionment.

In Florida the essential elements of the Alabama plan were further perfected. There, a constitutional amendment earmarked the State car license tax for servicing school bond issues. This released borrowing capacity so that funds for immediate needs could be obtained at low interest rates.

Apropos of Senator Douglas' inquiry, Florida has been getting very low interest rates, because of their arrangement for pledging constitutionally a tax for school debt service.

Senator DOUGLAS. Do you remember what the rate has been?
Mr. LINDMAN. I can't give you the figure.

Chairman HILL. Will you supply that for the record, Doctor?

Mr. LINDMAN. Yes; I will include that in the previous memorandum. In these two States, the most helpful action which the Federal Government could take would be to make available an annual allotment from Federal funds which could be used along with State funds to increase the annual apportionment to local school systems for capital outlay and debt service purposes.

Throughout the next points, I am trying to emphasize the fact that States have proceeded differently and if Federal action is to be fast and effective, it must fit into ongoing State efforts.

The most effective way to assist Georgia and Pennsylvania which have State school building authorities, is to provide some Federal funds to help pay rental obligations in the less wealthy school districts. At present some State aid is provided for this purpose. An increase in funds available for this purpose would provide an effective immediate boost to the school construction program in these States, these two States.

Senator DOUGLAS. Do I understand, Dr. Lindman, since you mentioned only Georgia and Pennsylvania, that you regard Indiana and Maine laws as being presently inoperative?

Mr. LINDMAN. I perhaps should include Maine. I was just unfamiliar with the recent development there.

I think the same would apply to Maine and Indiana, sir. Again, I am emphasizing that if the Federal assistance can flow into the pattern which the State has already established, it will be fast, effective, and will not establish a Federal pattern of uniformity with the controls implied by such an approach.

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