"I believe we must recognize that the Federal Government cannot substitute its good intentions for the local understanding of local problems, for local energy in attacking these problems, and for local initiatives in improving the quality of education in America. We must also recognize that state and local authorities need Federal resources if they are to meet their obligations and if they are to use the peculiar advantages of state and local knowledge, responsibility and authority to their fullest potential. Education Revenue Sharing accommodates the federal role in national education to both these realities, and it lays the foundation for a new and more productive Federal-State relationship in this area of vital national concern . . .”

I agree with the President's observation and I am hopeful Congress will respond by following a course of consolidation for existing educational programs as we embark on a new era of experimentation through the proposed National Institute of Education.

We have much to learn about how we teach and it is clear that the Federal Government must serve as a catalyst for educational innovation and experimentation. We must continue to develop categorical programs for new areas of concern and commitment.

As I look ahead at the course of Federal aid to education, I envision alternate eras of categorization and consolidation.

As we move ahead in categorical programs of educational innovation and experimenation, I foresee times when we shall need to consolidate educational concepts thus developed in revenue sharing programs.

The lessons once learned must be applied through flexible mechanisms which respond best to the needs of our elementary and secondary school pupils.

We have learned much in recent years and the lessons of bureaucratic ensnarlments in education programs should not be lost on Congress. We should know that it is a time to move toward consolidation of proven educational programs. Toward this end, I recommend the Education Revenue Sharing Act as a conceptually excellent proposal that is worthy of our careful study.

It is not a perfect bill as now drafted but we should promptly begin to explore its concepts and seek to perfect it.

I hope that Senators will look at the problems in this bill as challenges to be met not as insurmountable obstacles to further consideration.

With this hope, I commend to Senators the Education Revenue Sharing Act. SECTION-BY-SECTION ANALYSIS: EDUCATION REVENUE SHARING ACT OF 1971

SECTION 2. FINDINGS AND PURPOSE

Subsection (a) of section 2 states that the Congress has found current Federal education assistance programs too narrow in scope to meet the Federal government's responsibility to help States meet the costs of education in areas of special national concern.

Subsection (b) of section 2 sets forth the purpose of the bill, which is to replace certain existing Federal education assistance programs with a system of revenue sharing, thereby encouraging innovation in education, providing help to educationally disadvantaged and handicapped children, strengthening vocational and career education, and assuring that children of parents living or working on Federal property receive educational opportunities equal to those given other children.

SECTION 3. AUTHORIZATION OF APPROPRIATIONS AND PLANNING PAYMENTS

Subsection (a) of section 3 authorizes necessary appropriations to fund the revenue sharing program, effective for the fiscal year ending June 30, 1973.

Subsection (b) of section 3 authorizes appropriations to enable the Secretary of HEW to make payments to States during the period January 1, 1972, to June 30, 1972, which will assist the States in planning for transition from the existing system of categorical educational grants to the revenue sharing system provided for in the Act.

SECTION 4. ALLOTMENT AND USE OF SHARED REVENUES

Section 4 prescribes the amounts of revenue to be shared with each State and how such revenue is to be used.

Subsection (a) of section 4 directs the Secretary of HEW to allot to each State, from funds appropriated under section 3(a), 60% of the average per pupil edu

cational expenditure in the U.S. multiplied by the average daily attendance of children in public elementary or secondary schools of such State who resided on Federal property. Such amount may be used for any educational purpose.

Subsection (b) of section 4 sets forth a formula for computing a State's pro rata share of the remaining sums appropriated under section 3(a). A State's formula is derived by adding together the products of three separate multiplications:

(1) 1.0 times the number of school-age children from low-income families in the State;

(2) .6 times the number of children in average daily attendance in the State's public schools who do not live on Federal property but who have a parent who works on Federal property or is on active duty in the uniformed services;

(3) .1 times the number of school-age children in the State.

Subsection (c) of section 4 prescribes how the States may spend shares computed in accordance with subsection (b). That portion derived from the (b) (1) calculation may be used only for meeting the special educational needs of disadvantaged children who reside in areas with high concentrations of low-income families, or who are migratory children of migratory farm workers, or who are neglected or delinquent children being educated directly by the State. That portion derived from the (b) (2) calculation may be used for any educational purpose. That portion derived from the (b) (3) calculation may be used for three purposes: one-sixth for handicapped children, one-third for vocational activities, one-half for materials and services. Section 6, however, permits 30% (or more, under some circumstances) of (b) (3) money to be used for any purpose described in subsection (c) of section 4.

Subsection (d) of section 4 authorizes use of shared revenue for construction of education-oriented facilities.

Subsection (e) of section 4 permits the Secretary to reallot to other States, on a pro rata basis, funds declined by a State or funds not shared with a State by reason of the State's ineligibility to receive them. Such reallotment is at the discretion of the Secretary. Any amount so realloted shall be deemed part of a State's allotment derived from the same provision of subsection (b) which gave rise to the funds in question.

Subsection (f) of section 4 authorizes the Secretary to time the disbursement of allotted funds to the States as he sees fit, bearing in mind the desirability of minimizing delays in the use of disbursed money.

Subsection (g) of section 4 states that the Secretary shall determine average daily attendance, average per pupil expenditure, and numbers of children, using the latest data. Such determinations are final.

SECTION 5. DISTRIBUTION OF SHARED REVENUES WITHIN EACH STATE Subsection (a) of section 5 directs that funds received by the States under section 4(a) be "passed through" to local educational authorities in accordance with the number of children in average daily attendance who resided on Federal property in the school district of such authority.

Subsection (b) of section 5 directs that funds received by the States under section 4(b) (1) be "passed through" to local educational authorities in accordance with the number of children in the district of such authority who are in low-income families. The State may, however, retain any part of such funds which are needed by the State to discharge its duty of directly educating neglected or delinquent children. Moreover, no funds are to be "passed through" to local authorities unless the amount involved is at least $10,000, and all schools in the district provide comparable educational services. If a given district is ineligible to receive funds under this subsection, the State may reallot such funds to other districts. If no district in a State is eligible to receive funds under this subsection, such funds may be reallotted, on a pro rata basis, to other States.

Subsection (c) of Section 5 provides that the remainder of a State's allotment may, in accordance with sections 4 and 6 and the plan developed pursuant to section 8(b), be used by the State agency designated under section 8(a), or given to local educational authorities in accordance with their needs. However, not more than 30% of funds derived from application of the calculation in section 4(b) (2), relating to children with a parent employed on Federal property or in the uniformed services, may be paid to a district not having any such children in average daily attendance. Moreover, when determining needs of local agencies to which funds are given under this subsection, funds paid

to such agencies under subsection (b) of section 5, relating to the educationally disadvantaged, are not to be taken into account.

SECTION 6. TRANSFERS AMONG PURPOSES

Section 6 allows States to use 30% of funds derived from the calculation of 4(b) (3) to be used for any of the purposes described in section 4 (c). The 30% limitation may be exceeded upon a demonstration satisfactory to the Secretary that such action will more effectively achieve the purposes of the Act.

SECTION 7. PARTICIPATION OF NONPUBLIC SCHOOL CHILDREN

Subsection (a) of section 7 directs the State agency designated pursuant to section 8(a) to give children enrolled in nonprofit private schools an opportunity to participate in activities for which funds are made available under paragraph (1), or clause (A), (B), or (C) of paragraph (3), of section 4(c), and to provide that title to and control of funds received under the Act will remain in one or more public agencies.

Subsection (b) of section 7 provides that, if the Secretary determines that a State is unable to comply with subsection (a) of section 7 by reason of State law, he must himself arrange, by contract or otherwise, for private school children to participate as contemplated in subsection (a), and pay for such participation out of funds allotted to the State for such purposes.

SECTION 8. STATE ADMINISTRATION

Section 8 provides for the designation of a State agency which will be the single agency administering the revenue sharing program established by the Act (unless the single agency requirement is waived pursuant to 42 U.S.C. 4214). The designated agency is required to develop annually in consultation with the advisory council appointed under section 9 a plan for the distribution of funds received by it under the Act. Interested persons are to be given time to comment on the plan before its adoption.

SECTION 6. STATE ADVISORY COUNCIL

Section 9 directs the chief executive officer of each State participating in the program under the Act to appoint an advisory council which shall be broadly representative of the State and the public. The section indicates certain areas of experience and competence which shall be represented on the council. The council is to assist the State agency designated pursuant to section 8(a) in the preparation of the plan, to advise it on general policy matters to evaluate activities assisted under the Act, to advise State or local officials on various matters pertaining to the program, and to prepare and submit to the Secretary, at least annually, a report of its activities, recommendations, and evaluations.

SECTION 10. TREATMENT OF FEDERALLY-CONNECTED CHILDREN

Section 10 provides that the State agency designated pursuant to section 8(a) will require that children attending school within the State who reside with a parent on Federal property, who reside with a parent employed on Federal property or who have a parent who is a member of the uniformed services, will receive a public elementary or secondary education on a basis comparable to that provided to other children in the State.

SECTION 11. SPECIAL PAYMENTS BY THE SECRETARY

Section 11 allows the Secretary to reverse up to 10% of the funds appropriated under section 3 (a) to make payments to States to assist them in carrying out activities described in section 4 which are designed to further national policy objectives in the field of education.

SECTION 12. RECOVERY OF FUNDS

Subsection (a) of section 12 authorizes the Secretary, if he determines that a State has failed to comply with the provisions of the Act, to refer the matter to the Attorney General for appropriate civil action, or, after notice and opportunity for hearing, to notify the State that if corrective action is not taken within sixty days, revenues shared with it will be reduced in the same or suc

ceeding fiscal year by an amount equal to the amount of funds which were not expended in accordance with the Act, or to take such other action as may be provided by law.

Subsection (b) of section 12 authorizes the Attorney General to bring civil action in any appropriate district court for any appropriate (including injunctive) relief.

Subsection (c) of section 12 prescribes the court procedure to be followed in the event that a State receives notice under section 12 (a)(2) of reduction in revenues. The State may file a petition for review of the Secretary's action in a court of appeals for the circuit in which it is located, or in the United States Court of Appeals for the District of Columbia. The Secretary must then file in that court a record of the proceeding on which his action was based. The court may affirm, modify, or set aside in whole or in part the action of the Secretary. Upon filing the record with the court, the jurisdiction of the court shall be exclusive and its judgment final save for review by writ of certiorari from the Supreme Court.

SECTION 13. CIVIL RIGHTS

Section 13 states that revenues shared under the Act shall be considered Federal financial assistance within the meaning of title VI of the Civil Rights Act of 1964.

SECTION 14. ADVANCED FUNDING

Section 14 provides that appropriations for carrying out the Act may be included in the appropriation Act for the fiscal year preceding the fiscal year for which they are available for obligation.

SECTION 15. LABOR STANDARDS

Section 15 provides that laborers and mechanics employed in any construction assisted under the Act shall be paid wages at rates not less than those prevailing on similar construction in the locality.

SECTION 16. ANNUAL REPORT

Section 16 provides that the Secretary shall make an annual report to the President and the Congress on the effectiveness of assistance under the Act in meeting the educational needs of children and adults.

SECTION 17. AVAILABILITY OF SHARED REVENUES FOR PAYING NON-FEDERAL SHARE UNDER OTHER PROGRAMS

Section 17 provides that payments made pursuant to the Act shall be available, consistent with the provisions of the Act, for paying the non-federal share of expenditures under other Federal programs.

SECTION 18. RECORDS, AUDITS, AND REPORTS

Section 18 provides that revenues shared with States under the Act shall be properly accounted for as Federal funds in the accounts of such States. Each State is directed to use such fiscal and accounting procedures as may be necessary to assure proper accounting for payments received by it and proper disbursement of such amounts, to provide to the Secretary, on reasonable notice, access to, and the right to examine any books, documents, papers, or records as he may reasonably require, and to make such reports to the Secretary as he may reasonably require.

SECTION 19. INTERSTATE AGREEMENTS

Section 19 provides that the consent of Congress is given to agreements between States when necessary to realize the full benefit of provisions of the Act.

SECTION 20. DEFINITIONS

Section 20 of the Act sets forth the following definition:

(1) The term "adult education" means services or instruction below the college level for individuals (A) who have attained the age of 16, (B) who do not have a certificate of graduation from a school providing secondary education and who have not achieved an equivalent level of education, and (C) who are not currently required to be enrolled in schools.

(2) The term "average per pupil expenditure in the United States" means the aggregate current expenditures of all local educational agencies in the United States for any fiscal year, plus any direct current expenditure by the States in which such agencies are located for the operation of such agencies during such year (without regard to the sources of funds from which either of such expenditures is made), divided by the aggregate number of children in average daily attendance to whom such agencies provided public education during such year.

(3) The term "construction" means the erection, acquisition, alteration, remodeling, or improvement of facilities, including the acquisition of land necessary therefor, and the cost of construction includes the cost of architect's fees. (4) The term "current expenditures" means expenditures for public education, but not including expenditures for community services, capital outlay, and debt services, or any expenditures made from funds allotted under this Act.

(5) The term "elementary school" means a day or residential school which provides elementary education, as determined under State law.

(6) The term "Federal property" means real property which is owned by the United States or is leased by the United States, and which is not subject to taxation by any State or any political subdivision of a State. Such term includes (A) real property held in trust by the United States, (B) for one year beyond the end of the fiscal year in which occurred the sale or transfer thereof by the United States, any property considered prior to such sale or transfer to be Federal property for the purposes of this Act, and (C) any school which is providing flight training to members of the Air Force under contractual arrangements with the Department of the Air Force at an airport which is owned by a State or political subdivision of a State. Such term also includes any interest in Federal property (as defined in the foregoing provisions of this paragraph) under an easement, lease, license, permit, or other arrangement, as well as any improvements of any nature (other than pipelines or utility lines) on such property even though such interests or improvements are subject to taxation by a State or political subdivision of a State. Notwithstanding the foregoing provisions of this paragraph, such term does not include (D) any real property used for a labor supply center, labor home, or labor camp for migratory farmworkers, (E) any real property under the jurisdiction of the Post Office Department and used primarily for the provision of postal services, or (F) any low-rent housing project held under title II of the National Industrial Recovery Act, the Emergency Relief Appropriation Act of 1935, the United States Housing Act of 1937, the Act of June 28, 1940 (Public Law 871 of the Seventy-sixth Congress), or any law amendatory of or supplementary to any of such Acts.

(7) The term "handicapped children" means mentally retarded, hard of hearing, deaf, speech impaired, visually handicapped, seriously emotionally disturbed, crippled, or other health impaired children who by reason thereof require special educational services.

(8) The term "local educational agency" means a public board of education or other public authority legally constituted within a State for either adminis trative control or direction of, or to perform a service function for, public elementary or secondary schools in a city, county, township, school district, or other political subdivision of a State, or such combination of school districts or counties as are recognized in a State as an administrative agency for its public elementary or secondary schools. Such term also includes any other public institution or agency having administrative control and direction of a public elementary or secondary school.

(9) The term "low-income families" shall be defined by the Secretary in accordance with such criteria as he may prescribe, which criteria shall take into account migratory children of migratory agricultural workers, neglected or delinquent children, and such matters as family size and urban-rural differences.

(10) The term "nonprofit", as applied to a school, means a school owned and operated by one or more nonprofit corporations or associations no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private shareholder or individual.

(11) The term "revenue shared" means payments under this Act.

(12) The term "secondary school" means a day or residential school which provides secondary education, as determined under State law, except that it does not include any education provided beyond grade 12.

(13) The term "Secretary" means the Secretary of Health, Education, and Welfare.