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Program by activities:

1. Assistance to local educational agencies..
2. Assistance for school construction on Federal properties..
3. Payments for technical services..

Total program costs, funded.
Change in selected resources 1.
10 Total obligations.....

77,000

63, 900

25, 112

Financing: 21 Unobligated balance available, start of year. 24 Unobligated balance available, end of year.. 40 New obligational authority (appropriation).

Relation of obligations to expenditures: 71 Total obligations (affecting expenditures). 72 Obligated balance, start of year. 74 Obligated balance, end of year. 90 Expenditures.

--46, 619

28, 019

--28, 019

14,197

-14, 197

12, 022

58, 400

50,078

22, 937

77,000

35, 794 -74,536

63,900

74,536 -91, 436

25, 112

91, 436 -71,548

38, 258

47,000

45,000

1 Selected resources as of June 30 are as follows: Unpaid undelivered orders, 1964, $4,269,000; 1965, $5,019,000; 1966, $5,019,000; 1967, $5,019,000.

FEDERAL AID TO SCHOOLS IN IMPACTED AREAS UNDER PUBLIC LAWS

874 AND 815

areas.

Mr. FOGARTY. Mr. Lillywhite, are you going to justify the destruction of Public Laws 874 and 815?

I feel sorry for you coming up here on a day like this trying to justify this budget. I do not know of any stronger lobby that comes to Congress than the school administrators from these federally impacted

I think they are still strong. They want to meet with me next week. I think the same thing is going to happen this year that has happended before when previous administrations have not requested funding of the full entitlements under the law in these impacted

I thought I would let you know how I feel before you start. Now you go ahead and say what you want to say.

areas,

GENERAL STATEMENT

Mr. LILLYWHITE. Do you wish me to read the statement?
Mr. FOGARTY. We will put it in the record.

Mr. LILLYWHITE. The information, of course, on the way the cuts are to be made and what is to happen is presented in the justification.

Mr. FOGARTY. We will put them in the record, as we usually do at the end of this section of the hearings.

(The prepared statements follows:)

PAYMENTS TO SCHOOL DISTRICTS

STATEMENT BY ASSISTANT COMMISSIONER, DIVISION OF SCHOOL ASSISTANCE IN FED

ERALLY AFFECTED AREAS ON “PAYMENTS TO SCHOOL DISTRICTS, OFFICE OF EDUCATION"

Mr. Chairman and members of the committee, for “Payments to school districts" we are requesting $183,400,000 for 1967, a decrease of $163,600,000 from 1966.

Titles I and III of Public Law 874, as amended, authorize financial assistance for the maintenance and operation of schools in areas where enrollments are increased by Federal activities. Public Law 89–10 extended the temporary provisions of the act through June 30, 1968. The District of Columbia was made eligible for assistance in 1965, and Public Law 89–313 enacted November 1, 1965, reduced eligibility requirements for large city districts from 6 to 3 percent.

Payments usually are made to local school districts. When these districts cannot assume responsibility for educating children living on Federal property, payments are made to other Federal agencies to provide such education.

Our request of $183,400,000 reflects proposals which will be made by the administration to amend titles I and III of the law. These changes are based primarily on the Sanford Research Insititute report, and would make the Federal payments more nearly fit the actual financial burdens imposed on local agencies. The principal amendments are described in the justification. Approximately $24,5000,000 will be needed for section 6, payments to other Federal agencies, and $158,900,000 will be used for grants to eligible applicants. This amount will provide payments to approximately 3,000 districts.

The decrease in entitlements will to some extent be offset by assistance provided to local agencies under the Elementary and Secondary Education Act.

Some minor amendments will be proposed to eliminate inequities and improve administration. No change in total costs is anticipated.

We will be happy to answer any questions you may have.

ASSISTANCE FOR SCHOOL CONSTRUCTION

STATEMENT BY ASSISTANT COMMISSIONER, DIVISION OF SCHOOL ASSISTANCE IN

FEDERALLY AFFECTED AREAS ON “ASSISTANCE FOB SCHOOL CONSTRUCTION, OFFICE OF EDUCATION"

Mr. Chairman and members of the committee, our budget includes an amount of $22.937,000 for “Assistance for school construction” in 1967, a decrease of $27,141,000 from 1966.

Payments are made under Public Law 815 to assist in construction of schools in areas where public school enrollments are increased by Federal activities. Grants are made to local districts under section 5 of the act, and section 10 authorizes the Commissioner to arrange for the construction of schools for children living on Federal property when no local educational agency is able to provide school facilities for such children.

The temporary provisions of the law cover children whose parents either work or reside on Federal property. The decrease in our request is due to the fact that these provisions will expire on June 30, 1966. Our estimate of $22,937,000 is expected to provide funds in full for all eligible school districts and for schools constructed on Federal property under the permanent provisions which include children whose parents work and reside on Federal property. Approximately $12,317,000 will be required for local agencies, about $10 million will be used for construction on Federal properties, and $620,000 is estimated for technical services rendered by the Department of Housing and Urban Development. In total, about 87 projects are expected to be approved, providing about 1,000 classrooms to house approximately 29,000 pupils.

We will be happy to answer any questions you may have.

STANFORD STUDY OF 815 AND 874 PROGRAMS

Mr. LILLYWHITE. The 88th Congress directed the Commissioner to make a study of the extent to which the impact laws, 815 and 874, were meeting the purpose for which they were intended, and appropriated $200,000 to have the study made. The Office felt it was better to have an outside organization not connected with the Office make the study, and contracted with the Stanford Research Institute to make it.

The study was completed and submitted to the Congress on June 30 as directed by the legislation, which said, "and if the laws are to be extended to make recommendations regarding them.”

With the recommendations, the Commissioner made a statement they were not being submitted for immediate action by the Congress last year, but were submitted in accordance with the legislative direction and that the recommendations that would be made to the Congress for 1967 would consider this report, together with the other programs and the recommendations, would reflect on the administration's feeling of how to do the best job for all American education.

It was out of that study, I think primarily, that the administration decided to recommend the reduction in the cost of 874 and not to recommend the continuation of the temporary provisions of 815 which end June 30 of this year.

BUDGET BUREAU REDUCTION Mr. FOGARTY. Who is responsible for this budget, the Commissioner of Education, or the Bureau of the Budget ?

Mr. LILLYWHITE. Well, I think that Mr. Cardwell can answer the question. The Division and the Office developed the estimated requirements for 1967 under the laws as currently in effect, and submitted them to the Department. It is my understanding, Mr. Cardwell, it was the Bureau of the Budget and not the Department that made the recommendations for the reduction.

Mr. FOGARTY. You have lived with this program ever since it has been in effect, since 1950 ?

Mr. LILLYWHITE. Right.

LEGISLATIVE HISTORY

Mr. FOGARTY. The year we enacted this legislation, I remember I spoke against it because it carried an appropriation with the legislation, but it passed by a large majority. I opposed it the second year. Then I became a convert and have been one of the best supporters since. We have gone through this same proposal almost every year since 1950.

Mr. LILLYWHITE. Almost every year.

Mr. FOGARTY. And we have extended this legislation several times, and sometimes by unanimous consent.

Mr. LILLYWHITE. Right.
Mr. FOGARTY. Most of the time by unanimous consent.

Mr. LILLYWHITE. And practically always appropriated the full amount of money.

Mr. FOGARTY. I think we always appropriated what you told us the districts were entitled to.

Mr. LILLYWHITE. Even when we estimated under what was required, appropriations were made later for the full amounts.

ABSORPTION REQUIRED IN LEGISLATIVE PROPOSAL

Mr. CARDWELL. There is one difference between the proposal being made at this time and past proposals to reduce Federal support for impacted areas. That is, the concept of absorption rather than just eligibility. The budget and the proposed legislative change would provide that school districts absorb a greater share of this impact, and this does follow the concept proposed by the Stanford study.

Mr. FOGARTY. Was it 3 percent?
Mr. CARDWELL. Three percent eligibility:

Mr. FOGARTY. You know they are not going to take on more because they cannot support their own school system now in some districts.

Mr. CARDWELL. This is one of the arguments.

Mr. FOGARTY. They tell me that. They have already had a meeting in New England this week, and I assume they will be down here. If we do not provide for this deficit in the committee, they are going to do it in the full House anyway.

THE DEPARTMENT REQUEST

Mr. CARDWELL. I would like to make a point clear.

Even though the Office of Education and the Commissioner did provide an estimate to the Secretary on the basis of the present law and the eligibility factor rather than absorption, the Department did

propose to the Bureau of the Budget that absorption be introduced into this budget. The dollar rate was different. The Office of Education proposed a budget of $271 million. The Department requested a budget of $250.8 million, and the final allowance with a 3-percent absorption factor for those children whose family both live and work on Federal property, and a 6-percent absorption factor for children of families who work on Federal property but live in the community and pay community taxes, produces a final amount of $183 million.

ESTI MATE OF FULL ENTITLEMENT UNDER PRESENT LAW

Mr. FOGARTY. Assuming the present law is going to be extended, how much will it require in both areas to meet the full entitlements?

Mr. CARDWELL. The latest estimates I have, payments to school districts, would be $217 million, and the school construction assistance would be $50 million.

Is that correct? Mr. LILLYWHITE. That is not correct. The appropriation for payments to school districts is $347 million for 1966. This is approximately $40 million short of paying full entitlements.

Mr. CARDWELL. You say it will approach $400 million?
Mr. LILLYWHITE. $416 million is the present estimate for 1967.

STANFORD REPORT

Mr. MICHEL. What did this Stanford report have to say about the immediate Washington area-Virginia and Maryland! Some of us who have had some questions to raise about this program, have leveled a great deal of our criticism at this immediate area.

Mr. LILLYWHITE. It is not easy to pick out from the report application to one area without looking at the context of the entire report. But the study found that some districts are being overpaid.

INTENT OF THE LEGISLATION

In the first place, they interpreted the intent of Congress in passing the legislation as being this: that the Federal payment, when added to the contribution made to the local tax resources by the federally connected families, just equaled what the community got from the nonFederal families. This was the measure they used, and when it did that precisely, then it was meeting the burden. If it fell below that, it was not, and if it went above that, it was making payments more than were necessary.

PAYMENTS TO ARLINGTON COUNTY, VA.

The study had a small sampling of districts in which they made studies in depth. There was not enough time. Actually, we did not get the contract signed until January and it had to be completed and sent in by June 30, but they did do some studies in depth on a few areas, and then they had some information which they had gotten from other studies which they could relate to this which gave them a broader base for so-called field studies, and the rest of it was really

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