Senator SMITH. Doctor, might I ask you there whether the administration bill doesn't do that very thing in its titles I, II, and III to take care of the different circumstances? Mr. LINDMAN. To some extent, it does, Senator; except that I am under the impression that in order to qualify under title III, they are expected to establish a school building authority under title II, and that was a point that was under discussion when Dr. Carr was testifying. California has developed another approach to the problem. The State has voted bond issues the proceeds of which are used to make loans and grants to local school systems. The plan is peculiarly suited to California's need. The State advances funds to local school systems for needed school construction. The local school district is required to repay the State each year an amount equal to the proceeds of a local 3-mill levy. If the principal and interest is not fully paid after 20 years the balance is forgiven by the State. Thus you have an equalizing principle entering into it. The capacity is in terms of the local school system and not necessarily the entire amount granted by the State. Thus each of California's many rapidly growing local school districts has a capital outlay burden of 3 mills annually in addition to levies required to service local bond issues which are prerequisited to State assistance. In spite of this program California has many double-session schools. Federal aid could be effectively used to increase State funds available for its established loan-grant program. It seems to me again that it would be unfortunate to require or to anticipate the setting up of some peculiar special kind of machinery or special kind of grant program in California duplicating or paralleling what they have already established. It seems to me the best thing to do would be to fit into what they are now doing. In Massachusetts and Washington State funds are used to match local school building funds in accordance with variable matching ratios-a still different approach. Maryland and North Carolina have made substantial State aid available to local school systems for school construction purposes. A review of the facts about State action emphasizes two points: (1) The State school building authority is not the only approach to the problem, nor is it necessarily the best approach; (2) Federal help, to have maximum immediate effect and to minimize administrative delays, must be so designed that it fits into ongoing State programs. At this point, I should like to call your attention to a second appended statement at the end of my written testimony. It is an extract from chapter 6 of a bulletin issued by the United States Office of Education in 1951 entitled "Developing a Satisfactory State Program" dealing of course with the financing of the construction of schools, and I should like to read parts of that to emphasize the general thinking about policies and procedures which were released for the information of the people of this country by the United States Office of Education in 1951. It reads in part: While State loans may assist some districts to meet emergency needs, the least wealthy districts will not be in position, without excessive tax effort, to repay loans which are generous enough to permit the construction of all necessary school plant facilities. If these districts were in position to provide school plant facilities through local financial effort, they would not need State loans except for the slight benefit that might come from lower interest rates or the possibility of exceeding debt limitations. The State program, therefore, must provide grants in proper relation to need and ability although provision may be made in some States for loan-grant funds and for districts to repay a proportion of the amount provided in accordance with their respective abilities. (Extract from Ch. 6 on "developing a satisfactory State program" in its entirety follows:) EXTRACT FROM CHAPTER 6 ON "DEVELOPING A SATISFACTORY STATE PROGRAM" FROM UNITED STATES OFFICE OF EDUCATION BULLETIN, 1951, No. 6 ON STATE PROVISION FOR FINANCING PUBLIC-SCHOOL CAPITAL OUTLAY PROGRAMS "Whether capital outlay is financed from a separate special purpose fund or from a comprehensive foundation program fund is not too important as long as proper balances and relationships are preserved. However, it is important to regard the financing of capital outlay as one essential aspect of the State system for financing education." "While State loans may assist some districts to meet emergency needs, the least wealthy districts will not be in a position, without excessive tax effort, to repay loans which are generous enough to permit the construction of all necessary school plant facilities. If these districts were in position to provide school plant facilities through local financial effort, they would not need State loans except for the slight benefit that might come from lower interest rates or the possibility of exceeding debt limitations. The State program, therefore, must provide grants in proper relation to need and ability although provision may be made in some States for loan-grant funds and for districts to repay a proportion of the amount provided in accordance with their respective abilities." "The evidence seems to indicate clearly that partnership plans of financial support for all phases of the school program are much more satisfactory than plans which provide State funds with the assumption that local districts will make the necessary local effort to provide needed facilities. Furthermore, the partnership approach assures that the school plant program will have a broad base of support and will not depend entirely on the proceeds of local taxes on general property. There is just as much reason for broadening the tax base for school plant programs as for the current expense phases of the school program. "Subjective formulas tend to result in inequities and injustices and are more likely to subject local school systems to undesirable State controls than objective formulas included in the Statutes. The law should incorporate the basic provisions for apportioning funds. It should provide effective measures of need and ability so that all properly organized local school systems will be assured of funds in accordance with their needs." "State bond issues are justified for emergency needs, but such issues should be unnecessary for the continuing support of the long-range requirements. Current revenues should be used to finance a part of the emergency program and all of the long-range program." I include this simply to emphasize again that varying patterns are necessary, and that lending by itself, or expanding borrowing capacity by itself, is not an adequate solution to the problem. With this background, I should like to summarize my comments and suggestions as follows: Title I of S. 968 has an acceptable objective-to establish a ceiling on local school-bond interest rates. However, to be effective such a provision should permit the Federal Government to purchase an entire issue of bonds if necessary. It would, of course, be unfortunate if the going rate for school bonds became 31% percent, because, as we all know, at the present time the vast majority of bonds are sold at interest rates below that. I might say though that I just visited a small community in Tennessee where they had to pay more than 4 percent for their last schoolbond issue, and I am quite convinced that if this kind of a measure were in effect, that probably that school system would have been able to obtain its funds at a somewhat lower interest rate. Titles II and III of S. 968, in my judgment, should be replaced with a grant provision patterned along the lines of school construction grant bills which have been introduced in this Congress. However, and I think this is important, in order to encourage State responsibility and stimulate the development of State school construction programs, including State school building authorities where appropriate, the Federal funds should be available to States for any of the following purposes and this, I think, is different from any bill which the committee has before it at the present time, and I apologize for going afield slightly at this point. The funds should be available for the following purposes: (1) Making grants to local school systems for urgently needed school construction as now provided in most of these bills and title III of S. 968. (2) Making annual apportionments to local school systems to help pay rental obligations due State school building authorities. This will give the State authority approach a real boost, but not an exclusive boost. (3) Paying part of the debt service obligations due on recent school construction bond issues. This will help States that have chosen the State bond issue route to solve their school construction problem. By permitting States to use Federal funds to strengthen existing State plans, and develop plans which are best suited to individual characteristics of the State, faster and more effective results will be obtained. Senator DOUGLAS. Mr. Chairman, may I ask one question? Chairman HILL. Yes, Senator. Senator DOUGLAS. Then, I take, your criticism of title II and title III is that these proposals are inflexible-not flexible? Mr. LINDMAN. You are referring to title II, sir? Senator DOUGLAS. Title II. Mr. LINDMAN. My objection to title II is primarily this: (1) It seems that this is the way to solve the school-building program, and if my understanding of title III is correct, it is a prerequisite for participation in title III. Now, there is some disagreement on that. Senator DOUGLAS. On the latter point, page 22 of the bill provides title III can be granted (a) to settle their obligations to the Commission under title I or (b) to those who have granted facilities from State school agencies under title II. But the entrance to title III is only through titles I and II, namely, where interest rates have been in excess of 3% percent or where it is less than 3% percent could go under State building, but going back to title II, you say it is inflexible in the application Mr. LINDMAN. It is certainly inflexible if it is prerequisite to participate in title III. Senator DOUGLAS. The only exception to that is that if they come under title I. Mr. LINDMAN. As I understand it, on that point there seems to be some question on the actual meaning of the law, and I would defer that to lawyers rather than to myself. The other objection I have to it is that I don't think, in my judgment, it is going to produce $6 billion worth of school construction. That is just my reaction to the proposal, as I visualize it in the light of all this background. Although State and local expenditures for school construction are expected to exceed Federal contributions, it might be desirable to require a matching contribution from State funds (as distinguished from local funds) after a 2-year period. This would place responsibility directly upon the State legislature. I perhaps should amplify at this point that the States are spending some $2 billion a year for school construction, and I assume that they would continue to spend substantially more money than a Federal program would provide. Senator DOUGLAS. You mean States and localities? Mr. LINDMAN. States and localities combined. The question I am touching on here is where the State itself should be required to participate at the State level along with the Federal Government. Title IV of S. 968 seeks to stimulate State leadership in the improvement of school district organization and in the removal of unduly restrictive tax and debt limits. These purposes are commendable. There is, of course, a danger of stimulating distorted emphases in State departments of education by having a relatively large appropriation available for that purpose and not for others, as so often happens within the State departments, when a portion of the program is federally financed. A bill embodying these basic ideas would, in my judgment, contribute effectively to the relief of the present school-housing shortage. A long-term grant program based upon objective allocations of funds to States with a minimum of Federal control for school construction and for debt-service purposes has several advantages: (1) States that have taken constructive action already would not be penalized as so often occurs when a small need program is set up. (2) The Federal assistance would fit into ongoing programs with a minimum of additional administrative machinery. This would make prompt action possible. If the long-term approach is used, and I should explain what I mean by long-term approach, if we should establish a plan which would set forth an annual grant over a period of say 20 years that could be capitalized by the States and used by them for rental payments and debt-service purposes as well as for construction, they would be able to borrow and obtain the necessary funds immediately. But the immediate impact on the Federal budget would be minimized. Furthermore, a long-term program would have the advantage in that the Federal policy would be clarified, thus eliminating_any tendency of States and localities to delay action, hoping for a Federal construction grant. Low interest rates would be obtained by States and localities, since Federal contributions would strengthen the debt-paying capacity of the locality. Federal control is minimized in those situations in which the Federal Government participates, not so much in project approvals, but rather in retiring subsequent financial obligation. I appreciate this opportunity to appear before you, and I hope that these suggestions will be of some interest, or some assistance to you in your deliberations. Thank you. Chairman HILL. You have certainly brought us a very spendid, fine, constructive statement, Doctor. You have been most helpful to this committee. Are there any questions, gentlemen? Senator SMITH. I would like to add this comment. I think the doctor has made a very constructive contribution here, because it is constructively taken, and it points out how the bill might be strengthened. That is our objective, of course. I would like to state on page 6, Doctor, the middle of the page: By permitting States to use Federal funds to strengthen existing State plans, and develop plans which are best suited to the individual characteristic of the State, faster and more effective results will be obtained. That is what I have been trying to think of in my approach to this whole thing, what is the most expeditious way to do this and get at this? Try and help the States go ahead, rather than having one overall national pattern for the whole works. Mr. LINDMAN. Yes, sir. Senator SMITH. I think you have made a very valuable contribution, and I think your suggestions, as far as I am concerned as a member of the committee, will be considered if we do take this bill out as a basis for legislation. Mr. LINDMAN. Thank you, sir. Senator DOUGLAS. I want to commend Dr. Lindman for his suggestions. I think he has done splendidly. There are certain suggestions that he has made which should be taken up. Chairman HILL. Any further suggestions or questions, gentlemen? If not, Doctor, we certainly want to thank you for coming here all the way from Nashville, Tenn., to give us this very fine constructive and statesmanlike presentation. Mr. LINDMAN. Thank you, sir. Chairman HILL. Thank you very much. You are an educational statesman. Capt. Russel C. Bartman. Captain Bartman, you are to be accompanied by John M. Lumley. You are the executive director of the Pennsylvania State School Building Authority in Harrisburg, Pa., and Dr. Lumley is the deputy superintendent of public instruction in the State department of education, Harrisburg, Pa. We are delighted to have both of you gentlemen here. STATEMENT OF RUSSELL C. BARTMAN, EXECUTIVE DIRECTOR, Mr. BARTMAN. I have appeared before this committee, at the invitation of your staff director, to testify on the President's proposals for Federal aid to school construction. Since the implementation of these proposals, as set forth in Senate bill 968, has to do with State schoolbuilding agencies, similar in effect to the authority of which I am the executive director, it is my understanding that the committee de |