Federal aid in fiscal year 1967. The program recommended for fiscal year 1967 would reduce this amount to $29,427.

In other words, under the proposed reduction, the six counties that have heretofore qualified in West Virginia would be entitled to a little less than 13 percent of the allocation which they had expected to receive in fiscal year 1967.

So, Mr. Chairman, I trust when the subcommittee marks up the bill it will restore this proposed reduction so that we will have full entitlement for fiscal 1967. This reduction would be particularly harmful to these counties in my State, a State which is just emerging from a difficult economic situation. It is going to be particularly harmful to reduce the Federal assistance which has been extended to those school districts where enrollment has been swollen by the presence of children of Federal employees.

REDUCTION BY BUDGET BUREAU

Senator HILL. Senator Bartlett?

Senator BARTLETT. I will not be as provincial as Senator Byrd— that is, for about 20 seconds.

I notice here that Texas is going to take a tremendous reduction, from $18 to $8 million.

Senator BYRD. That is less of a reduction percentagewise than we are taking in West Virginia.

Senator BARTLETT. California goes down from $52 to $27 million. Let me ask you this, if I may. Are these figures for these two laws in the same amounts as were recommended to the Budget Bureau by HEW or did the Budget Bureau put HEW on the operating table and make certain excisions?

Mr. LILLYWHITE. We have made various types of estimates. I am going to ask the Department representative to comment on that.

Mr. CARDWELL. You will find, if you examine the record, there is a difference in the amount of money the Department requested for this program and the amount that appears in the budget.

However, it is more of a monetary difference than it is as to meaning or value. The Department did concur in and did actually propose a shift in the basic contract program, for this program in 1967. Following the receipt of the Stanford Research Institute report, we called for a greater absorption on the part of local school districts in an effort to make the program more equitable and to remove some of the factors that the Stanford report criticized.

Senator BARTLETT. Last year some of us galloped wildly over to the Senate floor-for some there was no need to gallop because they were there already-to vote for these educational bills of one kind or another and we were glad to do so, but as far as I can recall in performing these useful public-spirited acts we never were told that as a sequel the following year these efforts to reduce appropriations under these two laws would be made.

Was there any hint of this last year?

STANFORD RESEARCH INSTITUTE STUDY

Mr. LILLYWHITE. Senator Bartlett, I am not prepared to say there was any hint made. I think probably not. I think maybe the reasons for the reductions came about mainly because of the action the Congress took in 1964 in the passage of Public Law 88-665. You directed the Commissioner of Education to make a study of the operation of Public Laws 815 and 874 and, if they are to be extended, to submit the report of the study together with recommendations to the Congress by June 30, 1965.

You appropriated $200,000 for that study. We contracted with the Stanford Research Institute to make the study. Not being enacted until October, it took a little time to get it underway. The study began in January 1965. It was submitted to us around June 1. The Commissioner's comments on the report along with the report were submitted to Congress on June 30 last year.

Among other things the report found that some districts were paid more than was necessary to compensate them for burdens imposed by Federal activities. This they interpreted to be the purpose of Public Law 874. They found that overpayments were more frequent where there were certain alternative rates of payment used, so they recommended the elimination of these two alternative rates of payment.

RECOMMENDED ABSORPTION PROVISION

On the question of absorption, we have never had an absorption provision in the law. If a district met the 3-percent requirement for eligibility, it got paid for all of the children in the district. If it did not meet it, it got no payment.

Suppose a district needed 500 federally connected children to meet the 3-percent eligibility and the district had 501 such children. It would get paid for 501. But if it had 499 such children, it would not get paid for 1 of them. The report said this was inequitable, that all districts that are eligible and ineligible should start at the same threshold and get paid for the children above that amount, so the Department has recommended on the basis of that finding an absorption provision.

Senator BARTLETT. What does that mean?

Mr. LILLYWHITE. An absorption provision is simply this: A school district would be required to educate without any Federal payment a number of federally connected children equal to a certain percentage of the children in the school district.

Senator HILL. You would have to have legislative amendments? Mr. LILLYWHITE. That is right.

PAYMENTS TO LOCAL SCHOOL DISTRICTS

Senator BARTLETT. Going back to the problem that the Senator from West Virginia presented earlier today, what are these States going to do whose legislatures are out of session when the next school year starts, if these recommendations were to be adopted?

Mr. LILLYWHITE. The payments under Public Law 874, Senator, go to local school districts. It seems quite clear from title I, Public Law 874, that the purpose of the law is to compensate local educational agencies for the burdens imposed on them and compensate them to the extent of the loss in local revenue.

This budget submission was made and there was enough in the submission to the Congress explaining what the amendments would be before most local educational agencies make up their budgets and have them approved for 1967.

Senator BARTLETT. I take it as a matter of fact, although I could be wrong, that these local school districts in the majority of cases-perhaps nearly all-are not going to have the financial resources locally available. If this recommendation were to become a fact, they would have to turn to the State governments for the last recourse. Would you agree with that?

Mr. LILLYWHITE. Some of them obviously will have greater reductions than others. In a great many of them, I don't think there is any need whatever to turn to the State government. It is a matter of increasing local taxation.

Senator BARTLETT. Some of the local districts are taxed to the hilt now. You have answered yes and no to my question. Some of them can and some cannot.

Mr. LILLYWHITE. I would say most of them need not turn to the States at all. It is primarily a matter of local financing. You have a special problem in your so-called Alaska No. 1 project which is operated not by a local school district but by your State board of educations as a local educational agency. I think for that reason it may loom important to you but it is the only one in the Nation where this is true.

Senator BARTLETT. It does.

Mr. LILLYWHITE. Hawaii is one and so is the District of Columbia. Senator BARTLETT. Some States, perhaps all States, I thought would get so much more money from title I, so really these losses here would be substantially irrelevant.

SITUATION IN ALASKA RE TITLE I ALLOTMENTS

Are you in a position to inform me what the situation would be in Alaska with title I allotments? Would this more than compensate for the losses we are going to suffer here?

Mr. LILLYWHITE. The title I allotment to Alaska for the school districts that get Public Law 874 money in Alaska is $1,797,000. The loss in Public Law 874 funds in Alaska would be from $11.9 to $8.1 or $3.8 million.

Senator BARTLETT. There would be a loss in Alaska.

Mr. LILLYWHITE. There would be.

Mr. CARDWELL. There would be a loss in New Hampshire and I believe we talked about a gain in West Virginia and Alabama.

FLEXIBILITY IN USE OF PUBLIC LAW 874 FUNDS

Senator COTTON. I do not want to open up what we discussed the other day other than to observe that the earmarked funds under title I in the strict sense of the word cannot be considered a replacement under

Public Law 874. We refer to the latter generally as the so-called impacted funds. As far as I have been able to ascertain, these are the only Federal payments in the school districts that can be used for whatever purpose a particular district finds to be their most pressing need, while the funds that go in under title I are earmarked for certain purposes, many of which are new activities and would necessitate more local taxation and States aid than some other means of replacing the needed operating costs.

Is that not a fair statement?

Mr. LILLYWHITE. I think that is a fair statement.

Once the Public Law 874 money is received by a district, it is deposited in the general operating fund and it may be used for any purpose that State and local operating funds may be used. Most of the other programs are special purpose programs.

This is the decision of the administration as to the best means, the best use of the available resources for the education of all American children, the best way to use the money that is available.

Senator COTTON. That is a decision of the administration. We are not all compelled to agree with that.

Senator HILL. Are there any other questions?

USE OF ELEMENTARY AND SECONDARY EDUCATION ACT FUNDS

Let me ask you this: Is it true that under the Basic Elementary and Secondary Education Act those local funds cannot be supplanted? Is that true?

Mr. LILLYWHITE. I can speak to it to some extent. I only deal with the impact act but it is my understanding that title I of the Elementary and Secondary Education Act is for special educational services for educationally deprived children and its funds are to be used for those kind of services that will help eliminate the educational deprivation.

Senator HILL. Is there anything you would like to add, sir?

Mr. CARDWELL. I think what he has said is essentially correct, but these funds will indeed strengthen individual schools and schools that make up school districts because we think they will be-and we think it will be particularly true in a State such as West Virginia where there are almost countless numbers of individual projects-developed by the individual school district, while having as their primary purpose improvement of children who are deprived. However, at the same time, this will strengthen the entire school, make it a better school, improve the quality of the teaching, improve the ratio of students to teachers, all of the things that extend to improve a school. We cannot, on the other hand, disagree with you when you say they are earmarked funds. They are allotted and they will be allotted specifically on a project basis. The data that we have given you this morning as to amounts of money offsetting, represent entitlements, amounts to which the State would be entitled if it claims it by coming forth with projects and programs and individual proposals.

Senator HILL. Thank you very much. We appreciate your testimony. It is always most helpful.

We now have the defense educational activities.

Senator BYRD. May I ask a question before we get into this?
Senator HILL. Certainly.

REVISION OF POLICY UNDER TITLE VI OF CIVIL RIGHTS ACT

Senator BYRD. Last week, I received a mimeographed notice from the U.S. Commissioner of Education saying that the Office of Education was revising its statement of policy relating to school desegregation plans under title VI of the Civil Rights Act of 1964. I have received a copy of the statement of policy and I have not had an opportunity to examine it carefully. I want to ask this question: Is the purpose of this statement of policy, or any proposed revision in plans, calculated to move school districts toward any degree of racial balance in the schools?

Mr. KARSH. Senator, I can answer you in this sense. One of the prime positions that is in the guidelines that you are making reference to, of course, is a child's freedom of choice in attendance at school. This same principle is included again in the revised guidelines. So, essentially there is no change in that approach to school segregation. Senator BYRD. So the students would still have freedom of choice? Mr. KARSH. That is correct.

Senator BYRD. I represent a border State and we have had no serious problem as a result of the Supreme Court decision in 1954. Generally speaking, our people have moved in the direction of implementing that decision, reluctantly perhaps, but, nevertheless, they attempted to abide by the law.

I am not disposed to go beyond what that decision requires or beyond what the Civil Rights Act of 1964 requires. I am for upholding the law even though I may be against a law; I am for abiding by the law, whatever the law is as long as that is the law. But I am against any bureaucratic efforts to push the school districts one centimeter beyond what the 1954 Supreme Court ruling requires and what the 1964 Civil Rights Act requires.

I saw nowhere in the decision or in the Civil Rights Act of 1964 any language that would indicate that there had to be any degree of racial balance. I saw nothing outlawing racial imbalance, and I just want to make sure, and I think Congress should be sure, that title VI is not going to be used as a blackjack to force school districts to move in the direction of bussing to achieve racial balance. So long as those school districts are abiding by the law, they are not discriminating on the basis of race or color in their assignments of schoolchildren to the schools.

I want to make sure that this newly enunciated policy here is not an attempt on the part of the Office of Education to move in that direction without legal sanction, beyond what is required by the Supreme Court or on the part of the Congress by statute.

DEPARTMENT GUIDELINES

Mr. KARSH. I can assure you that the Office of Education and the Department guidelines would certainly be within the confines of the appropriate legal statutes that are on the books.

In general, if I give you briefly what the guidelines will require— and I am reading now from the brief of the revised guidelines they will require substantial achievements and the free choice desegregation plans. They will require significant progress in desegregation of teachers and staff. They will require progress in closing of small in