approached again and again and told, "If you don't vote and swallow an education bill that is unsatisfactory to you, you lose your impacted area funds." The impacted area funds have one virtue and you can be just as cyinical about it as you want to be and educators can laugh and joke all they please but it has one priceless virtue and that is that the money can be used where the real need lies.

The formula may be faulty. But those districts that have it can use it for their pressing needs, and that is the virtue of it and I see nothing to be cynical about.

I wish the money we are pouring into Federal aid could have the restrictions removed. I would be willing to see impacted area money abolished if this money took its place, and went to the districts so they were able to use them for their own most pressing needs to furnish education for youth.

I take exception to the remark about cyncism. There is cynicism on the other side. That is not personal or directed to you Mr. Secretary.

ADMINISTRATION PROPOSAL FOR AMENDMENT OF LAW

Mr. KELLY. A statement might be made in the clarification of the administration's position. While you can debate a number of points on this issue, for example, the timing of the reduction and the amounts involved, the basic problem of inequity in distribution of funds was recognized by the Congress. They asked that a study be made to determine what is the Federal impact on education when a Federal installation is put into a community.

This study was undertaken by the Stanford Research Institute. They came to the conclusion that one thing that we do under impacted area aid now which should be modified is that we require all of the school districts in the United States whose federally connected pupils represent less than 3 percent of the students enrolled to educate them at their own expense with no Federal assistance.

But those school districts that have more than 3 percent of their children federally connected, the Federal Government pays assistance to that community for all of the federally connected children. What we are proposing to the Congress is that all of the school districts in the United States should be required to make the same contribution-to educate at their own expense all federally connected children comprising up to 6 percent of total enrollment. Federal aid would be only for those federally connected children above the 6 percent limit.

The second major identification of the study was that the amount of money being paid to some school districts was considerably in excess of the cost of educating the children. This is because under the law the amounts of entitlement are computed in some instances on the basis of statewide per pupil costs and in other instances on the basis of national average per pupil cost of education, even though the actual cost of educating children in that community was not that great.

The administration proposal also recognizes that where the child's parents both reside and work on a Federal military reservation, they do create an impact. There is also a problem where the Federal family works on the military reservation but does not reside there. These are the basic elements which are being considered as well as the questions of timing and the level of eligibility. It seems to me

all three of these elements do stand on a very logical basis and they are based on a study which the Congress asked be made because it had some reservations as to the equity of the formula under existing law.

CHANGE REQUESTED BY DEPARTMENT

Senator PASTORE. Has your department asked for a change consonant with the report?

Mr. KELLY. Yes, sir.

Senator PASTORE. Has it been sent up?

Mr. COHEN. It came up yesterday with the President's message. Senator PASTORE. There you are. You are getting the cart before the horse. I think you have to do something about this. When an installation comes in, it brings in dollars, too. It is not only an advantage; there is a great disadvantage, too.

I don't think it ought to go on forever. I think in some cases they are more worthy than in other cases. I think the law should be looked at, amended, and modified. All I am saying is, if it comes too abruptly, they are not going to need it. You could create chaos in some of these districts. All I am saying is that the law ought to be changed, debated, and once we have changed the basic law then the appropriation ought to be consonant with the authorization, but you are not doing that.

Mr. KELLY. For 1967 we are.

Senator PASTORE. This cut down is predicated upon the hope that the changes will take place. That is why I say you are getting the cart before the horse. Your estimate is not consonant with the authorization now on the statute books.

Senator COTTON. The aid to education bill which contains title I was before the Congress last year. Did any of you gentlemen, before any committee, suggest that it would be likely that impacted area funds would be cut in half or cut at all?

Mr. COHEN. We have been saying, not only last year but since 1961, that there should be changes in the impacted area aid legislation, and we did propose, on several occasions, legislative changes in the program. The substantive legislation committees each time deferred consideration of our proposals, and it was because of our proposals that last year they did put in the legislation a request for a study and for us to make recommendations on the grounds that have been enumerated here.

Senator COTTON. Recommendations for amending the law-not recommendations for cutbacks in the law prior to changes by the Congress in the law. Those suggestions went to the question of the formula and the fairness and the equity as between districts and between States and between various recipients, but here is an overall cut, aggregate cut of approximately one-half. That is not a mere matter of change and adjustment, but it is a matter of reduction.

LEGISLATION PROPOSED

Mr. KELLY. After having established a new formula along the lines that I discussed, we priced out the formula and arrived at the figures before you. In other words, our estimate assumes that the proposed Tation will be enacted.

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If only this amount were appropriated and if no legislation were enacted to change the formula, then the law would require that you prorate the distribution of these funds against full entitlement. But that is not our recommendation to Congress.

Senator COTTON. Under the rules appropriation estimates are to fund laws, not the desires of the Budget Bureau.

Mr. COHEN. I did, 2 years ago, conduct extensive seminars with the superintendents of schools of these school districts. We went over all of these problems and I can say as a result of those discussions there was agreement that there was some need for legislative amendments to change the program.

I think if we get these gentlemen in the room just as we are talking today, they will all agree there are some changes to be made to eradicate inequities and to make some other changes. There will be some differences in degree, but about two years ago we did arrive at a position of agreeing to a reduction which as I recall it, was of order $50 million or $60 million. We came back to the substantive committees and talked about the proposed changes and they deferred action on them in the light of these broader recommendations.

So, there has been this very extensive consideration, and I am rather under the impression that in both the House and the Senate there was some agreement, although it wasn't specific, that something ought to be done.

Senator COTTON. But the Congress has enacted none of these changes to which you allude.

Senator PASTORE. I would hope, if the legislative proposals are up here, the pertinent committees would consider them, hold hearings, and come up with a result. I think it is very bad procedure to do it through the appropriations bill which should be accomplish by legislation. I think you ought to be given a hearing at which the legislation would be studied and discussed.

This is in the reverse way; this is in anticipation. This looks good in the overall budget but I don't think you are deluding yourself for 1 minute that you did not think the Congress would put the money back.

NO CYNICISM EVIDENCED BY COLORADO SCHOOL ADMINISTRATORS

Senator ALLOTT. I would like to address myself to the Secretary on the remark made about cynicism. I am sure he did not make that remark without some justification on his own part. On the other hand, I know many of these school superintendents and county commissioners in Colorado. Some of them are very close personal friends and have been over a number of years.

I must say that I have never noted among those people any cynicism with respect to impacted area funds. I would not argue against a restudy of the formulas. I believe this might serve a useful purpose.

I also want to make clear when I spoke of the situation at the Air Force Academy I am not speaking of the Widefield district which is not on Government land. This is a new area which has been developed in the last 10 or 15 years adjacent, or nearly adjacent, to Fort Carson. Frankly, I am not advocating a phaseout and I want to make my position clear. I am not advocating a phaseout of any program of this sort until such time as we can assure ourselves that we are not damaging these people.

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Senator Cotton has put his finger on it, which is, these are the only funds that can go to the blood and bones and the muscle of our school districts. Your title I funds do not do it. They are additional funds.

FUNDS TO ALLOW FULL ENTITLEMENT URGED

Now, I would like to correct what I am told by one of the staff that there might have been a misimpression about my other statement. I understand that there is a present deficiency for the present year of some $44 million. The statement that I want to make with respect to my position is that I intend to support the reinstatement of all funds necessary to bring the present program up to sufficiency and I intend to support with all I can the full implementation of the law at the level that it has been supported in the past for the 1967 budget, just so there will be no mistake on the record about my own position.

If you had seen and if you had talked with these people who had searched every way they could possibly figure to finance their school districts--and I have talked with several member of several districtsyou would realize, I think, that you face a real problem. But, like Senator Pastore, I think you realize pretty well that Congress may well put all of these funds back.

Senator HILL. Mr. Secretary.

EFFECT OF PROPOSED CHANGE ON ALASKA

Senator BARTLETT. I am quite interested in this program. At the outset I wanted to say that I am not playing any of the torments, many of the torments which have racked the Senator from New Hampshire. I have been for this program from the beginning out of sheer necessity, because, frankly, I do not know how Alaska would have gotten along without it. I think since 1951 that for both acts we received something like $60 million.

May I ask how this proposed change would affect Alaska?

Mr. CARDWELL. Alaska would be entitled in impacted area aid under the present formula to about $11 or $12 million. Under the proposed budget, with modifications in the legislation, this would drop to about $8.1 million.

Senator BARTLETT. Personally, I regret having had to vote for any Federal aid to education. I wish it were not necessary. I wish the local school districts could take care of it, all elements of this, and the local colleges and universities.

Obviously, they cannot do so and obviously the people of the Nation as a whole have to make a contribution to this.

But what happens where you place a great military installation adjacent to a small community? The children must be educated from the military base and this is happening in many areas, of course.

The State of Alaska has done its best in the field of education. I am sure. The percentage of the tax revenues in Alaska that are dedicated to education is close to 50 percent, was over 50 percent for a time, and I don't see any probability that a phaseout is possible in this program unless there is some kind of a substitution for a long while to come. I agree with the Senators from New Hampshire and Colorado in relation to that.

$60 million that Alaska received under this program have been 't essential because during the time the program came into

effect, changes came from territorial status to statehood, with all of its extra money demand upon the people of that area and as the discussion has gone on here, I had thought, Mr. Secretary, if worst came to worst, I might have to ask you to come up one day and testify in favor of a bill, which I might or might not introduce, providing that the status of statehood be terminated and we be changed into not a territory as we were but a colony so that we would have an exclusively Federal contribution to our governmental upkeep.

Senator PASTORE. That would be foreign aid.

CYNICAL ATTITUDE OF EDUCATORS

Senator BARTLETT. I would like to ask you, Mr. Secretary-because your remark interested me very, very much-Why is it that educators have a very cynical attitude regarding the program?

Mr. GARDNER. I think the reasons have been quite well expressed in Mr. Kelly's earlier statement.

First, as the Stanford research study shows, there is in many areas exaggeration of the extent of Federal impact.

Secondly, there is an inequity in the way school districts are treated-those whose Federal children represent less than 3 percent of enrollment have to pay the full cost of education.

Third, the way in which the school districts use per pupil costs, using a State or National average, often permit a school district to again exaggerate the amount of aid that it should receive.

Senator BARTLETT. Is it your suggestion that in the proposal now being made these mechanical imperfections would be corrected and the amounts of money will go to the several States to which they are perhaps justly entitled?

Mr. GARDNER. Yes, sir.

Senator BARTLETT. I must disagree with that, because I think you are going to whack Alaska some $3 million.

Senator ALLOTT. You are lucky.

Senator BARTLETT. I say this very deliberately not because of the $3 million item particularly, although the burden of furnishing that $3 million will be transferred to the State and local school district and it would be a tremendous one, but it seems to me there and I am sure everyone else who has spoken here is in the same situation at home, in his home State-I don't know in Alaska, for example, of any situation where there could be a lesser amount usefully employed.

STUDIES BY PRIVATE CONCERNS

The other day, Mr. Secretary, I asked Secretary Udall a question and I would like to put it to you despite the fact that Mr. Kelly told us that the study had been made at the direction of Congress. But I am becoming more and more intrigued in that Government goes to private concerns to make studies although the expertise with respect to a certain subject may reside within Government itself.

I have in mind a few years ago an agency, a bureau, where one department hired one of these private outfits, and it cost $40,000 to make a small study to inquire into this particular study, when another bureau in the same department had the most skilled people in the world who could have been dedeicated to the job of making the study, and