LIBERALIZED 1966 PROVISIONS Mr. FLOOD. What is the situation with regard to the 1966 funds? How much are you going to be short of having enough to pay 100 percent of whatever entitlements there are? Mr. LILLYWHITE. Our estimate as of now is approximately $41 million short, and I will tell you the reasons. After the appropriation was made last year, Congress enacted Public Law 89-313. It was not signed until after Congress adjourned November 1. It eliminated the 6-percent eligibility requirement for the so-called large city districts and reduced it to 3 percent, the same as all other districts. Many of the large cities are now making surveys it takes quite a bit of doing to know how many federally connected children you have and which category they belong to and to prove it. We have only three applications in the Office. We have made a round-up by telephone through our field staffs to try to find out which districts thought they would be eligible so we could come to a judgment as to how much this amendment would cost. We estimated there will be approximately 18 large cities which would be eligible when the Congress asked us about it, when the authorizing legislation was under consideration. We now estimate 18 to 20 districts eligible at a cost of $18 to $20 million. We turn out to be right in some districts, wrong in others, with approximately $20 million. PRORATION OF ENTITLEMENT DURING 1966 Mr. FLOOD. Have you started the wheels grinding for a supplemental? Mr. LILLYWHITE. It is my understanding that it is not the intention of the administration to submit a supplemental. If there is a recommendation to reduce this cost by a very substantial amount for next year, then maybe you can just as well begin now. We intend to submit to all applicant school districts by bulletin just as soon as we can come to this final judgment, the notification that we don't have enough money in the appropriation to pay full entitlement; that entitlement will have to be prorated so they will have time to make the adjustments in their budgets to get along without this money. ASSISTANCE FOR SCHOOL CONSTRUCTION Mr. FLOOD. That is fair enough. Now, on the business of school construction; the appropriation for 1966 is $50,078,000, and the request for that is $22,937,000. That is a reduction of $27,141,000, is that correct? Mr. LILLYWHITE. That is correct. EXPIRATION OF TEMPORARY PUBLIC LAW 815 PROVISIONS The temporary provisions under the construction law, 815, terminate this June 30th. The proposal here to reduce the cost is not to recommend their extension. Mr. FLOOD. June 30, 1966? Mr. LILLYWHITE. June 30, 1966. The proposal here is not to recommend them for extension. This will reduce the cost to the $22,937,000 figure. EXPIRATION OF TEMPORARY 815 PROVISIONS Mr. FLOOD. Why were these provisions extended last year for 874 and not for 815? Mr. LILLYWHITE. I do not know that I can answer that specifically. It was in connection with 89-10, which was an amendment to 874. Title I of 89-10 is now title II of 874 and the extension was put in there. Mr. FOGARTY. It was a compromise reached by the administrators in these impacted areas. They agreed construction wasn't as important as operation and maintenance. Mr. FLOOD. Are you asking for an extension of the temporary provisions of 815? Mr. LILLYWHITE. The proposal is not to ask for an extension and leave it only for the children living on Federal property which will be the $22 million figure. FULL ENTITLEMENTS UNDER PERMANENT PROVISIONS Mr. FLOOD. Will they get full entitlements under the permanent provisions? Mr. LILLYWHITE. Do you mean 815? Mr. FLOOD. Yes. Mr. LILLYWHITE. It is our estimate they will get full entitlements. It is quite a jump in making estimates. Where you have some $388 million in entitlements this year and over $400 million next year, and then to put in three major amendments that cut the thing down to $183 million, then we may be off a little bit one way or the other, but it is our best judgment that this would pay entitlements in full to the districts that will become eligible for the children for whom they are eligible for payments. Mr. FOGARTY. This is only for children whose parents are living on Federal property? Mr. LILLYWHITE. On 815, that is correct. COST OF 815 AND 874 COMPARED TO FEDERAL OPERATION OF SCHOOLS Mr. FOGARTY. I thought it was brought out in debate in years gone by that if we went to this sort of program it would cost the Government more in the end to build these schools and maintain them and educate these children than it would under these temporary provisions that Congress has been extending since 1950. I don't remember the details of the argument, but the argument was raised on the floor and the majority of the Congress apparently agreed with it. They didn't agree with the administration at that time and I hope they don't agree with the administration this time. Mr. LILLYWHITE. I think, Mr. Fogarty, perhaps the assumption is this: If it is a large school district, say 30,000 children, and they have a thousand "A" category children, they would have to absorb 300 of them without any Federal payment and they may say "Educate the children yourselves." Mr. FOGARTY. Some school districts said just that. Mr. LILLYWHITE. That is right. We have 52 Federal operations for two or three different reasons, some because of State law and some because the education was not suitable, because it was not integrated education; so we have 54 Federal operations now. Mr. FOGARTY. Is there anything else you want to say? Increase: For payments to other Federal agencies to maintain schools on Federal property.. Decrease: For assistance to local educational agencies in the maintenance and operation of schools... Total net change requested.. EXPLANATION OF CHANGES $347, 000, 000 183, 400, 000 -163, 600, 000 2,500,000 -166, 100, 000 -163, 600, 000 Payments to other Federal agencies will increase because of a greater number of eligible children and a higher per pupil cost. Payments to local educational agencies will decrease due to proposed amendments to the law which will base grants on per pupil costs in comparable school districts in the same State and require districts to absorb the cost of education for a number of Federal children representing a minimal portion of total enrollment. Payments to school districts, Office of Education Grants, subsidies, and contributions: 1966 estimate.. 1967 estimate_ Decrease JUSTIFICATION OF ESTIMATE $347, 000, 000 183,400,000 -163, 600, 000 Titles I and III of Public Law 874, as amended, provide for financial assistance for the maintenance and operation of schools in areas where enrollments are increased by Federal activities. The Elementary and Secondary Education Act of 1965 extended the temporary provisions of the act through June 30, 1968. The major provisions of this "impacted areas" legislation authorize payments to local school districts which provide free public education to children who live on Federal property with a parent employed on Federal property (sec. 3(a)) and to children who either live on Federal property or live with a parent employed on Federal property, but not both (sec. 3 (b)). In addition, section 6 requires the Commissioner of Education to make arrangements for the education of children who live on Federal property in those areas where the local educational agency is unable under State law or for other reasons to provide them with suitable free public education. Under the present provisions of the act, a school district is entitled to payments under sections 3(a) and 3(b) for all of its federally connected children if such children constitute at least 10 in number, and at least 3 percent of its total number of children in average daily attendance. For section 3(a) children, the district is paid at a rate per child which is equal to 100 percent of the highest of either the local contribution rate per child, or one-half of the national average per pupil cost, or one-half of the State average per pupil cost, for the second preceding year. For section 3(b) children, a district is paid at 50 percent of these same three alternative minimum rates. Under section 6, Federal funds pay the full cost per child. The requested amount of $183,400,000 reflects proposals which will be made by the Administration to amend titles I and III of Public Law 874, effective for fiscal year 1967. These amendments are based on the Stanford Research Institute report, and will make the Federal payment more nearly fit the actual financial burdens imposed by Federal activities on local educational agencies. In addi tion, the decrease will to some extent be offset by assistance provided to local agencies under the Elementary and Secondary Educational Act. The principal amendments will: (1) Eliminate one-half the national average and one-half the State average per pupil costs as alternative minimum rates of payment per child under sections 3(a) and 3(b): (2) Require school districts to absorb that number of section 3(a) children which is equivalent to 3 percent of the district's total number of children in average daily attendance, and that number of section 3(b) children which is equivalent to 6 percent of the district's total number of children in average daily attendance; (3) Eliminate from the definition of "Federal property" those properties which are outleased by the Federal Government, and on which taxes are paid: Other minor amendments would eliminate inequities and improve administration. Some of these will increase costs slightly, others will result in small decreases in costs. In total, the increases are expected to just about offset the decreases. The 1967 request of $183,400,000 will provide payments to about 3,000 local school districts based on approximately 1.5 million federally connected children. Table I shows the basis of eligibility, the number of federally connected children, and the rates of payment per child for fiscal years 1966 and 1967. Table II summarizes the estimated distribution, by State, of funds required for fiscal year 1965, of funds appropirated for 1966, and of funds requested for 1967. |