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in Pennsylvania. One would be authorization to purchase the authority's bonds from time to time as necessary to pay our construction bills on projects and in an amount as necessary to provide the program; furthermore, at an equitable interest rate.

The second suggestion would be that the Federal Government subsidize the rent payments to the school districts over a period of years similarly to what the Comonwealth of Pennsylvania is attempting to do presently in our program.

Now, I would be very happy, sir, if I can answer any questions pertaining to the authority program in Pennsylvania, its trials, tribulations, and perhaps successes.

Chairman HILL. How long did you say the authority has been in existence?

Mr. BARTMAN. The authority was activated 7 years ago on the fifth of this month.

Chairman HILL. Well, do you know whether or not anyone from the Pennsylvania authority was called in for consultation in any way? Mr. BARTMAN. I am sure that they were not. Chairman HILL. Not consulted in any way? Mr. BARTMAN. Not to my knowledge.

Chairman HILL. I mean in the writing of S. 968.

Mr. BARTMAN. No, sir.

Chairman HILL. Have you had any letters or correspondence from the Secretary's Office, and when I say "Secretary" I mean of the Department of Health, Education, and Welfare, regarding the proposal?

Mr. BARTMAN. Not to my knowledge, sir.

Chairman HILL. Now, yesterday we had some testimony, Captain, from Mr. Orris G. Judd, New York bond attorney. He made this statement and I quote him :

It is possible for a State agency to construct a building and rent it to a school district for a term of 1 year or less with the privilege of renewing the lease for a series of additional 1-year terms.

Now, from your experience operating the Pennsylvania State authority do you agree with that statement?

Mr. BARTMAN. No, I do not agree with it, sir. In the first place, I am confident that they would never be able to float a long-term bond issue to provide funds to construct the project.

Now, certainly they could rent it from year to year but I do not think that would support the bonds that were used to finance the cost of the project. I am certain that the statement is not correct, from my experi

ence.

Chairman HILL. Let me ask you this. Was the State authority's power to issue bonds tested at all in court for constitutionality?

Mr. BARTMAN. Yes, sir. That was the first thing we had to do. We had to do that before we could sell any of our bonds and that was done by means of a test case which we originated and took through the lower court and the high court finally determined the constitutionality. It was only after that that we were able to sell the bonds as we did.

Chairman HILL. How long did it take to make that test case? Mr. BARTMAN. The test case actually started in the fall of 1948. That was some 6 months after I got there, and the decision of the Supreme Court was handed down in March of the following year, 1949.

There was some 14 months after my appointment before that decision was made.

Chairman HILL. Any questions, gentlemen?

Senator MCNAMARA. I would like to ask: How do you establish the rent?

Mr. BARTMAN. The rent is predicated first, of course, on the interest rate, the period of the amortization and then in accordance with the terms of the bond indenture so as to service the bonds, amortize the bonds and provide a so-called reserve of 20 percent. In other words, the annual rent is always 20 percent in excess of what is necessary to pay interest and amortize the bonds.

The rent is predicated on the cost of each project. The school district pays exactly what it costs the authority. We make no profit on it but it is paid on the basis of the project we have provided for them— not on the basis of schoolrooms or anything like that-the total cost of the project.

Senator MCNAMARA. Does the rent include maintenance?

Mr. BARTMAN. Under our leases the school district is required to maintain and operate and carry the insurance. Under our stipulations and policies and so forth, we do not endeavor to carry the insurance. We do not tell them where to carry it, we simply lay down some broad principles they have to adhere to.

Senator MCNAMARA. Is it annual rent or monthly?

Mr. BARTMAN. Annual rent in advance; payable in advance annually.

Senator MCNAMARA. About how much would the rent be on, say $1 million worth?

Mr. BARTMAN. The annual rent on $1 million at 3 percent including the 20 percent reserve I referred to is approximately $54,000 a year. Senator MCNAMARA. $54,000?

Mr. BARTMAN. It is a little in excess of that, Senator.

Senator MCNAMARA. Thank you.

Chairman HILL. Well, Captain, do you think the proposals that are embodied in this bill S. 968 would be helpful to you in Pennsylvania in your operation?

Mr. BARTMAN. I am sure they would not.

Chairman HILL. Would not. Any questions, gentlemen?

(No response.)

Chairman HILL. Mr. Lumley, do you have anything to add?

Mr. LUMLEY. I do not believe so, sir. I would be happy to answer any questions.

Senator DOUGLAS. Just to be certain: The witness implied the bill would be helpful or not?

Mr. BARTMAN. Would not be.

Chairman HILL. Would not.

Mr. LUMLEY. Would not be.

Chairman HILL. Well, we want to thank you and we certainly appreciate your coming down.

Mr. BARTMAN. Thank you, sir.

(Conclusion of prepared statement of Mr. Bartman is as follows :)

RECOMMENDATIONS

If the Federal Government is to provide some relief to the States and the school districts to alleviate this situation I would recommend consideration to be given to one or more of the following:

(1) An outright grant of funds to the State specifically for school building construction and to be allocated by the State to the school districts on the basis of need.

(2) An outright grant to the State on a matching basis with the provision that the funds for matching could be provided through a State authority bond issue.

(3) Authorize the purchase by the Federal Government of bonds issued by a State school building agency at a reasonable rate of interest. Such bonds should be purchased at not less than par and arrangements provided so that the bond issue could be readily refunded by the State agency and sold to the general public after the projects have been completed, providing the same or a more favorable interest rate could be obtained through such refunding. Any reduction in the interest rate thus obtained should accrue to the benefit of the school districts concerned.

(4) Provide a Federal subsidy, similar to that payable by the Commonwealth of Pennsylvania, on account of the rent paid by the school district.

Chairman HILL. We have now our colleague, Senator Beall, of Maryland. We will be glad to have you say anything you wish.

STATEMENT OF HON. J. GLENN BEALL, A UNITED STATES SENATOR FROM THE STATE OF MARYLAND

Senator BEALL. Thank you, Mr. Chairman. I have a statement from the Governor of the State of Maryland, the Honorable Theodore R. McKeldin, which in general speaks for the bill. I am not going to take the time of the committee by reading it but I would like to ask permission for its insertion in the record.

Chairman HILL. Without objection, the statement will be put in the record.

(Statement referred to is as follows:)

STATEMENT BY GOV. THEODORE R. MCKELDIN OF MARYLAND-ON PRESIDENT EISENHOWER'S PLAN OF FEDERAL CORPORATION WITH THE STATES TO MEET CURRENT NEEDS FOR SCHOOL FACILITIES

The present shortage of school facilities throughout the Nation constitutes an emergency. President Eisenhower recognizes this emergency in his proposals for ways and means in which the Federal Government can cooperate with those States and their school districts which must have Federal assistance to meet the emergency.

It is reassuring to note that Mr. Eisenhower is firm in his understanding that "fundamentally, the remedy lies with the States and their communities" and that the Federal Government is stepping forward "for the purpose of meeting the emergency only ***"

The emergency-while urgent in its nature-is not one of the tragic variety. It is an emergency that we are pleased to meet and anxious to cope with. It is a result of an encouraging, healthy growth which expresses with eloquence the confidence of our people-particularly our young people in the future of the Nation.

Happily, I believe many of our States and their communities-including Maryland with the city of Baltimore and the 23 counties which are our school control units can and will cope with the situation over a reasonable period of years without taking advantage of the proposed Federal aid.

We are, however, faced with the fact that some States, for one reason or another, find themselves at this time unprepared to deal with the rapidly rising need for many additional classrooms.

While I would be opposed to the establishment of any system of permanent or continuing Federal aid to public schools in the Nation as a whole or in any of the

States and their political subdivisions, I recognize the importance and desirability of the types of emergency aid proposed by the President in the current situation. It is essential that our standards of education and public enlightenment be kept high if popular government is to flourish and gather strength amidst the conflict of ideologies which exists in the world today.

Certainly there could be no reasonable objection to Mr. Eisenhower's first proposal-that the Federal Government obtain congressional authority to purchase the bonds of school districts which are unable to borrow school construction money at reasonable interest rates. This proposal would cost the American taxpayers little or nothing.

The second recommendation-for the Federal and State governments to build schools with funds borrowed through customary investment channels and then lease such schools to the local school districts-would be feasible and useful in many areas. The rentals paid by the districts would service the bonds. There is a safeguard for local control in the proposed provision that the school properties would pass to the ownership of the districts when the bonds were paid off.

The President's third proposal is for Federal grants-in-aid to be used with State funds to build schools in districts that have reached their legal bonding limits, would be unable to pay interest and principal on bonds sold to the Federal Government, and would be unable to pay the rent under the second proposal. It is worthy of note that this proposal by the President is limited to a period of 3 years, thereby again stressing the strictly emergency nature of the plan. It should result in States and civil divisions that find themselves in need of such grants-in-aid moving as quickly as possible to so adjust their financial situations as to be able again to stand on their own feet.

The fourth recommendation is for the Federal Government to furnish half of the administrative costs of State programs which are designed to overcome obstacles to local financing or to provide additional State aid to local school districts. As I understand this, it would be for the benefit of those States and their civil divisions which now are handicapped by obsolete restrictions in financing and in State aid. By accomplishing the removal of such unreasonable restrictions it would help to bring an end to the emergency and to the need for Federal aid in many areas.

Again stressing my opposition to any permanent assumption by the Federal Government of responsibility for American public schools, I do find myself in accord with the purposes and proposals of President Eisenhower in meeting the present emergency.

Senator BEALL. As one of the cosponsors of the bill I certainly endorse the statement.

Chairman HILL. Thank you, Senator, and I appreciate your coming.

Mr. Oscar Rose, will you please come forward?

STATEMENT OF OSCAR W. ROSE, SUPERINTENDENT OF SCHOOLS, MIDWEST CITY, OKLA.

Chairman HILL. Mr. Rose, you are superintendent of schools at Midwest City, Okla.?

Mr. ROSE. That is right, Senator.

Chairman HILL. And you have had considerable experience, as I recall it, in administering and operating under the legislation embodied in Public Laws 815 and 874, is that not true?

Mr. ROSE. Yes, sir.

Chairman HILL. We would be happy for you to proceed, Mr. Rose, in your own way.

Mr. ROSE. Naturally, at this stage of the committee hearings, you will find some duplications in my statement of previous statements already made; but I might point out some questions that have not been previously answered.

I am appearing here today as a local superintendent of schools in the hope that the point of view at this level of school administration may be presented for you in your consideration of this measure.

During the past 11 years I have had the administrative responsibility of trying to meet the school facility need of a school district where the pupil load has increased from 125 pupils to more than 9,000 and a faculty of 5 to one of 335 at the present time.

In this, I have experienced a school building emergency which could only have been met even to the degree which it has, by the cooperative help of the Federal Government through grants-in-aid under Public Laws 815, 248, and 731, which succeeded 815. I am aware of the fact that these laws were designed to meet a special emergency resulting from activities of the Federal Government and that this emergency is not under consideration at the present time.

However, I believe that the experience gained and the results obtained in administering this grant-in-aid program for school construction will be helpful in developing legislation to meet a similar but much greater emergency of a general school construction scope.

I develop only about three points I would like to have the committee consider. First, is the speed and results.

A grant-in-aid approach did result in immediate school construction financed by local, State, and Federal funds. I have not stated in what proportion but that information I am sure is available from the agency level. Buildings were occupied by children within a year following such appropriation made by the Congress as authorized under these laws. The results disclosed in the Fourth Annual Report of the Commissioner of Education, June 30, 1954 on the administration of Public Law 815 might be considered the great "success story" of this effort and will prove valuable, I am sure, to this committee in its current undertaking.

We are not launching out on an entirely new and uncharted path and I would seriously recommend that some of the things that we learned then be used in the guiding of any program that might be coming out of this committee.

Now, on the lack of Federal control:

Even though more than a half billion dollars has been provided by the Federal Government under this school-construction program, I know of no claim on the part of the receiving school districts that the Federal Government exercised any control over the educational program of the district. Now, I have certainly not talked to everybody but Senator Hill and some of you gentlemen know I am pretty closely associated with school administrators through every State in the Union both through correspondence and personal contact and there has been no comment at all criticising this program from a Federal-control angle.

Chairman HILL. I think perhaps this is true, that there is no man in the country who has lived more intimately than you with that administering of the provisions of these acts. Is that not about true? Mr. ROSE. Well, that is perhaps true, but

Chairman HILL. Well, you perhaps know as much about those acts as anyone in America.

Mr. ROSE. Well, I would not say that, necessarily; but I simply threw in those points to justify my previous activity, that was a life and death matter as far as the school program for the district I had

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