funds if Congress attempts to increase funding for this purpose. Such a position would almost guarantee that local school districts again would not know their FY 1974 impact aid funding levels until very late in that school year. I believe this method of funding a major federal program to education to be grossly inadequate.

The potential decrease in federal impact aid to be actually received by Fairfax County during FY 1974 would necessarily have to be offset by major decreases in expenditures and/or major increases in local support to education. Thus, the School Board's advertised budget for next fiscal year, now in publication, anticipates a potential cash deficit of $11 million as a result of loss of impact aid. To meet this potential deficit, the School Board has requested the Fairfax County Board of Supervisors to establish an $11 million contingency fund.

In summary, if the FY 1972 level of funding for impact aid is not restored, and assuming that the President's FY 1973 and FY 1974 budget requests become the actual funding criteria, Fairfax County will lose a total of $19 million in impact aid entitlement during these two fiscal years, with additional severe losses thereafter.

I believe that impact aid legislation is well conceived. Failure by the Congress to continue enabling legislation, adequately funded in a timely manner to recognize this federal responsibility to local jurisdictions, would, in my view, be a travesty of justice. To maintain an enlightened educational program, local school districts have little alternative but to raise property taxes, as unpalatable as that would be to an already overburdened citizenry. In Fairfax County. Virginia, a property tax increase of up to 44 on the local FY 1974 real estate tax rate (a 10% increase) could be the result of your failure to act.

I urge your approval of legislation to extend PL 81-874 for the full five-year period, adequately financed by subsequent (and timely) appropiration bills. Thank you for this opportunity to express my views on this important subject.

STATEMENT OF LAWRENCE J. HAUGE. ASSISTANT TO THE SUPEPINTENDENT, Clover PARK SCHOOL DISTRICT, PIERCE COUNTY, WASHINGTON

I am Lawrence J. Hauge. Assistant to the Superintendent for Clover Park School District, Pierce County, Washington, and Chairman of Region 10 of the Association of Impact Area Schools encompassing 351 Federally impacted school districts in the states of Washington, Oregon, Idaho and Alaska.

It is a privilege to appear before your Committee to testify in behalf of Public Law 874.

As valuable as most Federal assistance programs are to the support of education in the common schools, much more vital to a school district's basic operation is Public Law 874 providing operational assistance to Federally impacted districts.

Clover Park School District, located in a prime Federal impact area, has received such Federal impact funds for 32 years. Within or adjacent to the district are Fort Lewis, McChord Air Force Base, United States Veterans Hospital at American Lake, Madigan General Hospital and United States Penitentiary on McNeil Island.

School enrollment is 13,900 pupils in kindergarten through grade twelve of which 7.146 (51%) are Federally connected-3582 living on Federal property and 3564 living off Federal property with a parent employed on Federal property.

The district is primarily suburban, residential area with little industry. About one half the district lies within Fort Lewis and McChord Air Force Base and is not taxable. As a result, the district's per pupil valuation for tax purposes is less than half the statewide average for first-class districts. Therefore, in spite of consistent support from the district's voters (they have only turned down one special levy in 32 years), there is no way the district can maintain a comparable program with its neighbors without additional help. That the district enjoys a good reputation for basic academic excellence is in large part due to Federal assistance received over the years beginning in 1941 and continuing since then. Two of the most pressing problems common to most Federally impacted districts are: (1) Low valuation per pupil for tax purposes; and (2) An unusually high turnover of students.

As with Clover Park, hundreds of other districts throughout the four state region I represent here today are dependent upon the 3b provisions of Public Law 874 (a parent works on Federal property, but does not live on Federal property) for the two basic reasons cited.

For every Montgomery County, which detractors of impact aid love to citehowever wrong they may be, there are 100 Richland School Districts; and for every Prince Georges County there are 100 more North Kitsap School Districts. The Richland School District in the southeastern corner of the State of Washington is a creature of the Atomic Age. The major factor in the economic life of the City of Richland is the Atomic Energy Commission and its various contractors. Although the school district is no longer directly linked to the AEC, the parents of most of its 7081 pupils reside there because of the Commission's activities. As a result, financial support of the schools rests heavily upon PL 874 monies.

Of the 473 square miles in Richland School District, approximately 322 square miles (75%) are Federal reservation. Within the remaining 25% of non-reservation area, over one-fourth is tax exempt because of governmental regulations. In spite of the fact 75% of the Richland School District is on Federal reservation there are only 23 Category 3a students (parents living and working on Federal property), whereas there are 3679 Category 3b students-better than 50% of the student enrollment. It doesn't take much imagination to perceive the effect the demise of Section 3b payments will have on this community if the reeommendations of the Administration are followed.

I have with me, Mr. Chairman, a letter from Richland School Superintendent Robert Iller which will document the problems I have described. I request that this letter be included in the record with my testimony. Furthermore, I ask you to consider the examples of North Kitsap School District and Central Kitsap School District in the Puget Sound region of Washington State.

Last Friday, newspapers in our area announced, "Bangor will be First Trident Base." The next day the headline read. "Bangor Braces for New Injection of Jobs, Money." What the headline should have said, of course, was, Jobs, Money and Kids."

The Northwest is honored and pleased to be selected for the location of this new submarine installation-virtually adjacent to the Puget Sound Navy Yard in Bremerton. And, the Northwest is happy for the five-year construction program related to it which will employ some 7000 workers by 1975–76. While local business men are elated with the new project, the school superintendents of North and Central Kitsap School Districts, where the greatest student impact will be felt, are understandably concerned. Already faced with critical 3b cutbacks in Public Law 874, they are wondering what the future will mean if Congress acquiesces to Administration wishes to eliminate Section 3b students from future Public Law 874 considerations.

A boost to the local economy of this magnitude is most welcome, but the building which would otherwise significantly raise the assessed valuation for property tax purposes-the source of funding for Washington schools, is on non-taxed property. The homes or mobile home courts to be built for the new construction workers and ultimately the civilian workers will in no way cover the cost of housing and educating the influx of children.

Additionally, of course, the high pupil turnover rate will force upward the cost per pupil.

I could cite dozens more examples of where school districts are caught in a bind because of circumstances related to Federal activity beyond their control. Districts such as Oak Harbor, Bremerton, South Kitsap. Franklin Pierce, Bethel are only names to members of this committee, but each has a problem virtually as great as those cited above and similar to districts in your own constituency.

Public Law 874 is the only source of Federal funds that keeps impacted districts on a par with others in the state.

This program of support is so well established, so well administered, and allows such flexibility to local boards in meeting local needs, that we respectfully ask Congress to consider giving Public Law 874 an extended life. Without a significant multi-year extension, the continual uneasiness besetting districts such as ours results in serious questions of program stability.

We say, emphatically, the basic provisions of the law are excellent. We earnestly request that the law be extended principally in its present form.

STATEMENT OF DR. WILLIAM F. DUNCAN, SUPERVISING PRINCIPAL, HIGHLAND FALLS CENTRAL SCHOOL, NEW YORK

IMPACT

The simplest path to understanding the impact of the United States Military Academy at West Point on the Highland Falls Central School District is to look at the map on the facing page. The shaded portion represents the 1700 acres left on the tax roll out of the 21,000 acres total land area of the district. Very little of the 1,700 acres is vacant land so that the possibility of community expansion is slight at best. Approximately 7,000 persons reside in this area and the school district currently has an enrollment of 1.524 students in grades K-12.

The loss of land has left the school district with a very narrow tax base. Whereas the average True Value per resident student in school districts throughout New York State is $36,200, the true value per resident student in Highland Falls is only $20,293. So limited is this tax base that employing a single additional teacher causes the local tax rate to increase by $1 per thousand dollars of assessed valuation.

THE "A" AND THE "B" STUDENT

At the present time there are 208 section 3a students attending Highland Falls High School and 450 section 3b students in the district. An analysis of the financial data for the 3a students reveals at once that they cost the district money. Indeed, part of this cost is inherent in the method used to determine the rate of payment for each student. That is to say, the rate is based on one-half the average cost of educating a student two years ago. Furthermore, in our district we are educating only the high school students from West Point because there is a Section 6 elementary school maintained on the Post. It has long been recognized that it is more expensive to educate a high school student than it is to educate an elementary student, but the payment rate does not recognize this difference. The present funding method of paying only 90% of entitlement for 3a students unless their number is 25% or more of a district's population works an additional hardship on Highland Falls because there is no way that our 3a student population can reach the 25% figure since we only receive the high school students. At the same time they represent 30% of our high school population and their number remains fairly constant. Moreover, part of the payment is made in the school year in which the cost is incurred and part in the next.

Perhaps a comparison between what is received for our 3a students and what we would receive if they were actually paying the cost of their education would serve to illustrate the point best.

The tuition rate used here is obtained through a formula developed by the New York State Education Department, based on the actual costs of educating a high school student exclusive of State Aid.

It is obvious at once that there is a difference of $90,000 between the actual cost as represented by the tuition based figures and the amount receivable under PL-874. Moreover, the entire amount on the tuition basis would be collectable in the year in which the students attended the school. To this date the balance of the

pro-rated entitlement for the 3a students for the 1971-72 school year has not been received by the district.

While there is more than adequate justification for the 3b students in terms of the burden created by the Federal Government, it is of more than passing interest to consider the funds received for the 3b's in light of the above information on the 3a students.

It is clear that the amount receivable for the 3b students in Highland Falls would just barely make up the difference between the cost of educating the 3a students and the funds received for them.

THE CONTINUING BURDEN

Certainly nothing is going to change with respect to the impact of the U.S. Military Academy on our school district. Any reductions in our income would place us in an untenable situation. For a moment let us consider what would happen if the oft-attempted move to eliminate the "B" category students were to succeed. The $100,000 scheduled to be received this year, which is now in dispute, would have to be made up in local money in next year's budget. In addition, another $100.000 would have to be made up in local money in next year's budget to fill in the vacuum created by the loss of the 3b money. Thus, in a single year, $200,000 more would have to be raised in local taxes before any consideration is given to the normal budget increases. Permit me to use as an example, my own home which is a 4 bedroom home built on a lot which measures 80 feet by 100 feet and is assessed at $11,000. The local tax rate would go up $16 per thousand and my own school taxes would jump $176 before the increases in salaries, retirement, Social Security, supplies, transportation, debt service and maintenance are figured.

During the past four years we have done many things to effect economies, despite the fact that we now have 200 more students than we had then. We have eliminated the following positions: 1 Guidance Counselor: 6 Teachers: 1 District Head Custodian: 1 Stenographer: All Teacher Aides. We have also phased Latin out of the curriculum and dropped Home Economics.

As we look ahead, the options open to us if the financial squeeze intensifies are not good. There is no way that we can convince our local citizenry to accept and support school tax increases amounting to several hundred dollars in one fell swoop. At the same time we must continue to provide the children with an education that will enable them to become productive, reasoning citizens in an increasingly complex society.

For years our citizens have been asking us this question, "Why should I pay more school taxes just so as to give a free education to children whose parents pay nothing in local taxes and little if anything in State taxes?" This has always been difficult to answer satisfactorily, particularly to a person who adds, "Yes, and they took my house away from me, too!"

Unless PL-874 is continued in its present form this question will be unanswerable.

I would like to take this opportunity to thank the Committee for permitting me to come before them and present this material. I trust that it will be helpful in your deliberations.

STATEMENT OF DR. HOMER O. ELSEROAD, SUPERINTENDENT OF SCHOOLS

MONTGOMERY COUNTY, MD.

My name is Homer O. Elseroad. I am Superintendent of Schools, Montgomery County, Maryland.

I am pleased to testify today in support of H.R. 69, a bill to extend Impact Aid for five years beyond June 30, 1973.

I. HISTORY

The problem of insuring access for federally connected children to free public education dates back to 1841 when the Supreme Judicial Court of Massachusetts in an advisory opinion noted that certain residents of federal reservations were not entitled to the benefits of the common schools for their children in the towns in which the federal lands were situated.

The history of the varied treatment of federally connected children is traced from 1841 through the depression of the 1930's by Jesse Burkhead in his book, Public School Finance, (Syracuse Syracuse University Press, 1964).

In 1937, the unsettled educational plight of federally connected children received national recognition by the President's Advisory Committee on Education which urged appropriations adequate to give the affected children the right to an education free from tuitional costs to the individual and comparable in quality, so far as possible, to the public schools maintained by the states. Burkhead concludes ". . . Thus, the question of responsibility for providing elementary and secondary education for federally connected children may be said to have mounted to national proportions as a repercussion of the govern mental adjustments in the depression and then, more emphatically, the larger changes that preceded United States military engagements in World War II." In 1940, Congress passed the Lanham Act which authorized the Federal Works Administrator to pay annual sums in lieu of taxes to any state or political subdivision with respect to real property, the basis for these payments being that federal property cannot be taxed by state and local government. The Lanham Act was extended and amended until 1947 when a continuing need for federal aid in support of federally connected children was recognized. "The continuing peacetime requisite was for measures to meet needs that were already visible before World War II and which, in many cases, had not been touched by the Lanham Act-that is, to make public schools accessible to children living on tax-exempt federal properties, often outside any school district."

In 1947, ". . . half a dozen identical bills were introduced proposing to authorize the Office of Education to administer a permanent, enlarged program for children residing on federal property for which no real property taxes or tax equivalents were paid." From 1947-1949 year-to-year extensions of the Lanham Act were passed by Congress until comprehensive legislation could be passed.

In 1949, the Chairman of the House Committee on Education and Labor anpointed two subcommittees which issued a 149 page joint report in early 1950 with a recommendation for action. "The subcommittees were convinced that federal government activities imposed severe financial burdens on a considerable number of school systems-burdens so severe that in many cases, children were deprived of minimum educational opportunities. . . . Conceived in peacetime as a long-term adjustment of intergovernmental relations." federal aid for federally connected children became urgent with the advent of the Korean War in June of 1950. The Congress passed P.L. 815 on September 15 which was signed by the President on September 23, 1950. P.L. 874 was passed on September 20 and signed on September 30, 1950.

II. JUSTIFICATION

The program of federal aid for federally connected pupils is based on two facts. First, parents are attracted to federal employment and expect their childern to be educated in local public schools; and second, federal property is exempt from state and local taxes. When a family buys a residence in a community and works on federal property, the education of the federal worker's children falls on the school system of residence. This is a financial burden to the local school district.

How does the school system raise the revenue to provide school services for federally connected children? Mainly through the property tax.