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The AFT tends to be supportive of the fund consolidation idea. We have misgivings, however, about a feature of the proposal which would allow states and local districts to spend the funds and explain what they did afterward, rather than to submit proposals for approval before spending.

We agree with Education Commissioner, Sidney Marland, that present "paper shuffling" is expensive, but it would be expensive also if Federal funds were used for projects very low on our scale of national educational priorities. Worse yet, loosening up the administration of funds would almost certainly result in the use of these funds to replace money which otherwise would be raised from State and local sources.

It is very hard to prevent that in the present regulations. If you loosen it up, it just opens the wider door to all sorts of abuses.

It is not necessary to swing over to the lack of control implied in a review rather than approval procedure. Even under present regulations large amounts of Federal money have been misused, in some instances in violation of the law and in other instances by spending the money on ill-advised programs. It would not be difficult to reduce the amount of paper shuffling at the national level, at least, by decentralizing the compliance and approval procedures in the way in which I suggested earlier.

Finally, we are not satisfied that the safeguards proposed by HEW Secretary Elliot Richardson and the U.S. Office of Education would result in speeding the process of school integration and compliance with the Civil Rights Act.

Now, leaving the special revenue sharing proposal I would like to comment on the administration's general revenue-sharing proposals. Again we are not clear as to just what they would mean for education. We have been told that since approximately 40 percent of local and State governmental costs go for education, it could be expected that approximately 40 percent of the new money to be generated by revenue sharing would also go for education. We assume also that if pressed, the Administration might possibly agree to a guarantee to this effect.

Since the administration is proposing $5 billion in revenue-sharing funds, this would amount to $2 billion for education over and above the amount for special revenue sharing.

Judging by the record of the previous 3 years of the Nixon administration, the $2 billion would be an astounding burst of generosity; however, judged by the needs of American schools and children, it would be unrealistic parsimony. The President's own national educational finance project, referred to above, recommends a far greater increase—within a relatively short period of_years well over $15 billion. The Urban Task Force, sired by the President in 1969 but never acknowledged, recommended $14 billion for the big cities alone.

Apart from the amount of money involved, what about the principle? In the first place, we fail to see why, if the five categories into which present aid programs would be consolidated is a good plan for dispensing the approximately $3 billion presently involved, why the same scheme would not be a good plan for dispensing the additional $2 billion to go to education. Or for that matter for the additional 15-plus billions that are really needed.

Secondly, we do not think it is proper to take money from one group of citizens and give it to another without having some pretty clear idea as to the use to which the recipients intend to put it. There is a distinction between Federal control and Federal standards. We oppose Federal control in education; Federal standards are a different matter. Federal funds should not be passed out to States to use in ways which American society disapproves. Federal funds should not be used to promote racial segragation, for instance. When Federal funds are given to other levels of government, the receiving agencies should be required to adhere to fair employment standards. They should maintain decent working conditions and proper professional practices as well as other standards of fair employment.

To sum up this statement, in our opinion Congress and the administration must face up to the fact that vastly increased sums of money will be needed to provide a decent school system in this country. As a goal, we should strive to devote about 10 percent of our national income for educational purposes. The Federal Government should increase its share of school support; the percentage or amount of increase will depend upon various factors, such as the ability of other levels of government to maintain equitable tax programs and the quality of education deemed desirable and feasible in the Nation. We estimate that approximately $45 billion additional will be required to maintain a proper school system. The major share of this increase should be borne by the Federal Government and the governments of the States.

Thank you.

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Senator PELL. Thank you, Mr. Selden. I must say I don't think we as individuals, you and I, are in any great disagreement. I think education has now become, however, a code word. For example, law and order is supposed to be a code phrase for, keep blacks in their place, et cetera, et cetera. The code word “education” now means to many people higher taxes. This is a situation we must recognize. I believe there is no more frugal investment of money than in education and yet from the viewpoint of public acceptance all across the length and breadth of our land, such is not the case. One finds that bond issues for education are being turned down all too often. We are in a democracy, and if the majority of people do not agree with you and me, education will suffer. We can't run a government of “Daddy knows best," what we have to do is sell the story of the importance of education, to the people. That it is the most frugal investment, that every dollar spent on it comes back to the country many times over in the quality and level of the education of its citizens, not to mention the increased amount of taxes a citizen with better training and income will pay.

Now you were touching another point here which is very correct, I think, that the dollars that are collected out of the local taxes are really no different than the dollars collected out of the general revenue. But we have the feeling that if Uncle Sam pays it, it is somehow printed at less cost on a cheaper printing press. Unfortunately it is the same printing press at the same cost.

I think the job we face, we in our job and you in your job, as opinion leaders is to try and educate the people to the effect that the larger percent of our GNP should be spent on education but I don't think the people are yet ready for it and this is part of the problem.

Mr. SELDEN. Well, Senator, I think we will certainly do at least our share in educating the people but you are a leader of the people and we are appealing to you to lead the people in the right direction. I have laid out here a rather succinct program. I have not gone into any great rhetoric to try to support it. I don't think you are interested in that. You want to have concrete proposals.

What we have is a concrete proposal. We say that we ought to first accept that goal. Is it reasonable that we spend 10 percent of our national income on education? If that is reasonable, then we have to figure out how to get it. But accepting the goal is the first thing. Once we have done that and we have reached agreement that this is a worthwhile and sensible thing for a democratic society to do, then we can argue about how fast you go toward that goal in any one year.

Senator Pell. I like the approach. I like it as a goal but I think we are going to have to get there using short tacks, small distances at a time. I wish we didn't but I think we will.

Senator Dominick, there is a rollcall vote on the Senate floor and we must go there. Since the next witness is from Colorado, would you like to introduce her now or afterwards?

Senator DOMINICK. Mr. Chairman, I had hoped to be able to ask some questions of Mr. Selden as well as introduce Mrs. Frieder, who I know very well and who is a very eminent member of our State board of education. We do have a vote going on now. As far as I am concerned, I can go over and vote and come back.

Senator Pell. Why don't you do that. Fine.
Senator DOMINICK. I don't want to make it difficult for Mr. Selden.

Senator Pell. Why don't I go right now and then I will come right back.

Senator DOMINICK. Fine. I will ask Mr. Selden some questions. Mr. Selden, I will start out by simply making the statement that I think that revenue sharing is a great idea. So obviously we are not going to be in philosophical agreement to start with.

Mr. SELDEN. Excuse me, Senator, I didn't criticize the idea of revenue sharing. I find it difficult in defining.

Senator DOMINICK. I must have misunderstood your testimony.

Mr. SELDEN. If it means passing out more money from the Federal Government to the local governments, I am for it.

Senator DOMINICK. Would you say that again?

Mr. SELDEN. If it means passing out more money from the Federal Government to the local governments, I am for it.

Senator DOMINICK. Good for you. We are not in disagreement after all then. I think this is very true. I don't really see then what your concern is except that I gather that you are saying that the total amount of money in the educational process isn't in accord with what you think it ought to be.

Mr. SELDEN. Well, revenue sharing is not a very precise term, but I would use if it makes people happy. So far as special revenue sharing, I think you see that we are supportive of the idea. We think there are some things about the proposal that ought to be tightened up and corrected and I believe from my conversations with people in the U.S. Office of Education, they might be willing to do that. So far as general revenue sharing is concerned, however, it doesn't really hold much for us at the present time and the amount proposed by the administration is simply unrealistic in terms of the recommendations of its own task forces.

Senator DOMINICK. Now let's get the record straight here. Are you talking about the educational special revenue sharing or are you talking about the overall amount for general revenue sharing?

Mr. SELDEN. Senator, I thought I made that clear. I am talking about both. I talked first about special revenue sharing. With a few safeguards put into the proposal, I think we could find it acceptable. But general revenue sharing is so vague and there is so relatively little money involved in it that we hardly think it worth talking about.

Senator DOMINICK. Yes, I can see however, that still some of the money out of general revenue sharing, although not specifically designated for education would in fact be used for it.

Mr. SELDEN. About $2 billion, they say.

Senator DOMINICK. So, computing the estimated amounts for special revenue sharing and the general revenue sharing funds, there would be quite an input of additional funds in the educational system.

Mr. SELDEN. There is not additional money involved in the special revenue sharing. There is a $225 million fund as a safety factor because

a there is a provision in the legislation that no State will get any less than it has been getting under the three dozen categorical programs. But thot is not counted as an increase.

Senator DOMINICK. I know that but as we go along it seems to me once you get the idea established, as the gross national product grows, the revenue coming into the Federal Government increases, and you will have more money going into these programs.

Mr. SELDEN. The two ideas are in conflict. We would like to see, fund consolidation, with the improvements we suggested and perhaps some others we have overlooked. If you accept that idea, however, then additional money ought not to be put into any vague general revenue sharing fund. It should apply to the consolidated special revenue sharing.

In other words, if you are going to put $2 billion into education, why bury it in general revenue sharing? Why not devote it directly to education?

Senator DOMINICK. I see what you are driving at. Philosophically speaking, the answer to this would be that State and local governments by and large are not likely, because of community pressures to reduce very much their support of the educational system anyway. So this really would have to be an increase. I know that this is in the realm of theory. I said that.

Mr. SELDEN. It is very practical. I used to teach in Dearborn, Mich. We paid the highest teacher's salaries, had the lowest class size, the best buildings, and the lowest tax rate of any district in Michigan because the entire valuation of the Ford River Rouge Plant was within the confines of the school district. Now if you go statewide and have a 20-mil tax levied statewide on property that is assessed by State equalization programs, monitored by the Treasury Department, you are going to pick up a lot of money that you are not getting at the present time.

The property tax as it is administered now by the various units of local government is certainly inequitable and gives tremendous advantages to those who can shop around for tax benefits or control

governments to their own purposes. Put it on the statewide level

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though, with Federal monitoring, and you have got an entirely different picture. You can't do away with property tax. Besides, there are vast amounts of property owned by corporations just sitting there, as you well know in your State for instance, waiting for future development. That is a way to “hide” capital. If you don't tax it it is inequitable.

Senator DOMINICK. Well, most of the property in our State that isn't taxable I can assure you, is owned by the Federal Government or the State government.

Mr. SELDEN. I am talking about low tax property that is being held for future development.

Senator DOMINICK. We have a State equalization law which is working to some degree. I know that because the assessed valuation of my own property is more than I paid for it. It is supposed to be only 30 percent of the value. It gives me courage in case I ever want to sell but it doesn't do much good otherwise.

Mr. SELDEN. Maybe phase II will take care of that.

Senator DOMINICK. The next thing I wanted to ask is, why do you feel that there is need for Federal monitoring?

Mr. SELDEN. Well, there are two reasons for it. Because of local and State constitutional restrictions on the ability to raise taxes, those units of government cannot generate enough money. The Federal Government will have to come into the picture; and therefore we must be sure that States and localities are not cheating. So this is one reason.

The other reason is that there are gross inequities between States and between districts within States, on a per capita basis. The State of Mississippi makes tremendous effort in terms of its average per capita income and it still has a rather poor school system, not through want of trying but it has a rather poor school system. That State should be assisted as should many of the poorer States. And when you take money from one State and give it to another, you have a right to check on the program.

Senator DOMINICK. I totally agree with you. I changed the formula in title I so the States would be getting credit for tax efforts in their own individual behalf compared to national effort.

Mr. SELDEN. Well, Senator, the formula in title I, as you know, was the result of political compromise and it is a rather relaistic one. I want to complement a person who is not here, but I see his aide: Senator Javits he deserves credit for the work that he did in evolving that formula. New York is one of the wealthier States on a per capita basis and any Federal program that has an equalization program built into it is going to take more out of New York State than comes back in under the program.

I agree with you that the title I formula should have had a factor which takes into account the per capita wealth of the district. It didn't and to that extent it doesn't equalize as much as it should, but it is one of the better equalization formulas in government, nevertheless.

Senator DominICK. Well, that doesn't give me much encouragement for Federal monitoring which I fought long and rather vigorously, as you probably know. It didn't seem to me right for Westchester County, one of the 10 wealthiest counties in the country, to receive more than Selma, Ala., for example, which is one of the 10 poorest counties in the country.

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