which a very large number of schools have been built. I can give you the number of them too.

Senator DOUGLAS. Is it true that the constitutionality of the Indiana law, is being questioned on the ground that it is an improper attempt to circumvent the limits upon the State bonding power?

Dr. BROWNELL. I think the technicality that is there-and it has been in other questions--has been in the way in which the law has been enacted. I think you know much better than I do that very frequently when a law is passed, certain provisions in the law may make it inoperative or unconstitutional-you know that. The purpose may not be unconstitutional, but it is a matter of drawing the law in such a way that it does not violate the Constitution.

Senator DOUGLAS. Is it not true that one of the purposes and, perhaps, the predominant purpose, in creating these State authorities, outside the State Departments of Education which, apparently, have bonding capacity, has been-I want to use a neutral verb

Dr. BROWNELL. Yes.

Senator DOUGLAS. Is to avoid or circumvent the limits upon the State bonding capacity imposed by the Constitution of the States? Dr. BROWNELL. I think that the situation in that respect has been to make it possible legally for school districts to provide the necessary, get the necessary, facilities where there is a restriction that otherwise would bar them.

Senator DOUGLAS. That is true on the local level, but is it not also true that the provisions of the four State authorities are to avoid or circumvent the restrictions upon the bonding authority of the States? Dr. BROWNELL. That is true to an extent.

Senator LEHMAN. Dr. Brownell

Dr. BROWNELL. Now, may I just answer his question, please, for just a moment.

These acts, of course, are passed by the legislature, by the people, and when it comes to a limitation which was put in the constitution or has been enacted into law previously, it may be that the legislature recognizes a change in conditions, or it may want to free up the school situation without changing the situation in regard to bonding entirely, so that what it is, as I take it, instead of an attempt to circumvent a situation that may be crystallized in constitutional law is to provide the right kind of, what they think is the right kind of, a legal way for them to accomplish what they want to accomplish.

Senator DOUGLAS. I may be ignorant in such matters, but I had always supposed that constitutional law took precedence over statute law and it was not for the legislature, by statute, to do that which the people of the State through their constitutions had forbidden.

This is an interesting theory of constitutional interpretation which you now advance, that a statute which is intended to avoid or circumvent the limits upon State bonding capacity is justifiable.

Dr. BROWNELL. Mr. Chairman, I wasn't getting into the justifiability of it, because these are acts passed by their own people in their own States, and we are not attempting to say what the States shall do. Senator DOUGLAS. Is it not true that the constitutionality of at least the Indiana act and possibly the Maine act is under very serious question?

Secretary HOBBY. Assistant Secretary Perkins will answer that.

Mr. PERKINS. As the Secretary indicated at the outset of her testimony, she has with her legal experts who are going to give specific testimony.

I will state for the record that constitutionality of the Indiana law has been upheld in the lower courts, and in the upper court the case which was to review the lower courts was not heard because of a technicality, but the upper court has not questioned the constitutionality as determined by the lower courts.

For further details, I believe that the legal experts should answer. Senator LEHMAN. May I ask you about these authorities to which you refer? Are they independent bodies, or are they under the control of the education agency of the State, such as the board of regents in New York.

Dr. BROWNELL. They have been set up in different ways in different States, and it is perfectly possible for them to either use the education group and incorporate it as an agency, or they can set up an independent agency, or they can set up one which is tied in with the education

agency.

The way in which it is done, of course, is a way in which the State wants it to be done.

Senator LEHMAN. If they were set up under the control of the State education agency, wouldn't that be a clear indication that the State had assumed at least a moral responsibility for payment of the bonds? Dr. BROWNELL. Yes; I would assume so.

Senator PURTELL. Mr. Chairman.

Chairman HILL. Senator Purtell.

Senator PURTELL. Isn't it true that Pennsylvania was one of the first States, perhaps, to create a State public school building authority, and is it not true that there is quite a bit expected, and certainly, as indicated by the questioning this morning, the constitutionality of this act was questoned from the start, and in 1949 the State supreme court ruled the act constitutional.

The adjudication of the court dealt with the question of whether the act was a subterfuge to permit the school district to acquire capital assets the cost of which exceeds the 2 percent constitutional debt limitation. That has been acted upon by the State supreme court. Dr. BROWNELL. That's right. That is the reason

Senator DOUGLAS. May I ask the Senator from Connecticut what was the State in which the supreme court

Senator PURTELL. Pennsylvania.

Senator DOUGLAS. Is it true that in Pennsylvania the State authority keeps title to the schools?

Senator PURTELL. That is my understanding.

Senator DOUGLAS. And therefore the case is on a somewhat different basis from where the localities

Senator PURTELL. Well, as a matter of fact, I think that this law has been declared constitutional in Georgia, hasn't it, and in Kentucky as well as Indiana?

Dr. BROWNELL. I think there is no State authority in Kentucky. They have an act which permits local holding companies, but it is not a State agency.

Senator PURTELL. I see.

Senator DOUGLAS. Mr. Brownell, does the questioning suggest the possibility to you that every State which sets up a State building authority in the form that is prescribed in title II of your bill will in all probability go through a long constitutional test to see whether or not there are adequate constitutional powers to justify such action? Secretary HOBBY. Mr. Chairman, may I say at this time that the legal experts who are here are, I think, far better qualified, Senator Douglas, than Dr. Brownell and I to answer this, with an analysis State by State.

If the chairman is willing, I would like to make them available now, or, if you wish to go on with that, come back; I believe we could save Senator Douglas' time, because they are better qualified.

Senator DOUGLAS. Just as you wish.

Chairman HILL. We will let Dr. Brownell go ahead and then come back. There is this fact, though, Dr. Brownell, since we talk about this matter now: there are at least 44 States that do not have any State authority; is that right?

Dr. BROWNELL. There are 4 States that do and 44 States that do not. Chairman HILL. And there would also be a question, too, which we will take up, of the four that do have authority, whether or not these particular authorities could function under title II.

Dr. BROWNELL. That is an appropriate question to raise, certainly. Senator DOUGLAS. I don't want to interfere with Dr. Brownell's presentation, but I wonder if this question would not be appropriate Is it true that in the four States which have tried this method there has been a constitutional test in the courts?

Dr. BROWNELL. Well I think you indicated a constitutional test i Indiana, Pennsylvania, and Maine. You have it in three. I am not sure of the constitutional test in Georgia.

Senator DOUGLAS. So that there has been some litigation on this issue in each of these cases?

Dr. BROWNELL. And that has clarified, I think, the whole situation materially as to whether these can be set up in a constitutional way. I think the court tests are very helpful in that respect.

Senator DOUGLAS. Is it not also true that there are some 20 States which have very severe limitations upon State bonding capacity?

Dr. BROWNELL. I would like to indicate that, because that is just one of the points I want to make in just a moment.

Senator DOUGLAS. You know our thoughts move out in advance of the testimony.

Dr. BROWNELL. That's right, and one of the difficult things that we run into, Senator, is that this is a complex problem, and whenever you start in one part of it, it inevitably intertwines with all the other parts.

Now I have already indicated how the various States are in a position to finance school construction; that is, how the local communities are.

I would like to point out that, in our attempt to find out what were the reasons why the various school districts were unable to move ahead rapidly in connection with their local financing of schools, we found out that one of the obstacles was the inaccessibility to local communities; of the technical information that they needed on planning and financing of schools. It is a problem which is faced, therefore, by

the various State departments of education in trying to assist the local school districts.

A second had to do with the size of the school district, the problem of small school districts; third, the underassessment of property which the Senator just mentioned; a fourth, the restrictive debt limit; and, fifth, the restrictive tax limit.

So I would like to address myself to each one of those for just a

moment.

Senator IVES. Dr. Brownell, you skipped 6 up there.

Dr. BROWNELL. Oh, I couldn't see it. The sixth one is the very important point which has to do with the lack of local financial resources, and so I am very glad you called that to my attention. That is one of the difficulties of not being as tall as I sometimes would like to be.

Senator IVES. We can't see it from here.

Dr. BROWNELL. Let me, if I may, first comment on the problem of the school-bond debt limits. All but two of our States have, by statute or by constitution, limited the amount of borrowing of the school districts.

Now, the States that have limited by constitution are shown here on the map in the dark red or brown coloring. Those that have the limitation by statute are shown in the yellow. Where there is a constitutional and a statutory limit, it is shown with the stripes.

Now, the range, one of the interesting things about the study, is that there is such a vast disagreement among the States as to what is a proper school-bond debt limit. It runs all the way from 2 percent of the taxable valuation up to 1 State where it is 18 percent and 2 where there is no limitation and some as shown here in the gray, where it is possible for them to exceed their debt limits without any particular limitations under certain circumstances.

So you have this range all the way from 2 percent up to 50 percent or no limit, and obviously the States that have the local limitations are much more handcapped in financing than the ones that have larger debt limits.

One of the interesting things is that so many of the States that have the low debt limit are the ones that have the constitutional limiation, which placed great restrictions on their ability to borrow for their capital outlay purposes in building the schools.

Senator DOUGLAS, Dr. Brownell, before you shift the scenery, may I ask you to draw some conclusions from this chart?

Am I correct in reading this map of the United States that virtually every State has either a constitutional debt limit, a statutory debt. limit, or both for school purposes?

Dr. BROWNELL. Yes; all but two. There are two States that have no limitation on the borrowing, either by statute or by constitution. Senator DOUGLAS. And am I further correct that, of the 4 States which have State building authorities, 3 of them-namely, Indiana, Maine, and Georgia-have constitutional limits on the bonding power? Dr. BROWNELL. That is correct.

Senator DOUGLAS. And Pennsylvania has a statutory limit?

Dr. BROWNELL. Correct.

Senator DOUGLAS. Will you identify for the record, either subsequently or now, what the limits are in those four States?

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Dr. BROWNELL. Surely. I have it right here. For Maine there is a 5-percent constitutional debt limit which, by vote however, they may extend to 8 percent.

Georgia is let's see, I guess it must be 9 percent-7 percent for Georgia; Pennsylvania, 7 percent. The other is Indiana, and that state has a two percent constitutional limit with a possibility of special vote to increase it to four percent.

Senator DOUGLAS. Then am I correct that in those 4 States the maximum debt limitation tends to be comparatively low?

Dr. BROWNELL. Correct.

Senator DOUGLAS. And that this is particularly so in the case of Indiana?

Dr. BROWNELL. That's right.

Now, in some of the States they have not only the problem of the restrictive debt limit, but they also have a restrictive tax limit, an overall limitation on the taxes that they can use to pay their debt service, so that the borrowing power is limited on that basis.

There are some 10 States that have tax-limitation restrictions. But again there is no uniformity in the determination of what is a reasonable tax limitation, for it ranges all the way from 2 percent with the possibility by special vote of an 8 percent maximum, up to 50 percent. This is in mills, I should say, instead of percentage. The limit is in mills. There are 38 States that have no limit or exceptions for debt

service.

Senator DOUGLAS. Dr. Brownell, I don't like to ask questionsDr. BROWNELL. That is what I am here for.

Senator DOUGLAS. Pennsylvania is one of the States which has a restriction upon local bond issues?

Dr. BROWNELL. In the limitation in its bonded indebtedness or in its tax? It also has a tax limitation as well as a

Senator DOUGLAS. Would you take up each of those?

Dr. BROWNELL. Yes. This is Nevada, Michigan, South Dakota, Pennsylvania, Utah, Oklahoma, Texas, West Virginia, and Alabama. Senator DOUGLAS. I was trying to get the figures for Pennsylvania. Dr. BROWNELL. Pennsylvania is 35 mills.

Senator PURTELL. Mr. Brownell, what is Alabama? That is the lowest, is it, on the tax limits there?

Dr. BROWNELL. This is the millage which they are permitted under their tax laws. It is, I would judge, about 3 mills, with the possibility by special action up to 8 mills, I would guess.

Chairman HILL. The possibility by what, Dr. Brownell?

Dr. BROWNELL. That break in the bar on the chart represents the additional millage that can be provided by special vote of the people. They can increase their millage.

Now, one of the other problems that the districts run into in attempting to finance their school bonds is the problem of the assessment, because the borrowing power is related to assessment.

As indicated in the previous charts, the constitution or the statute. will limit the amount of borrowings in terms of the percent of the assessed valuation or in terms of the millage tax that may be levied.

And one of the things that has happened has been that while most of the statutes indicate that the assessed valuation is to equal the true valuation of the property, some States have a different provision;