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about the general effect of this language on our State and the more specific effect on the schools of our home county of Okaloosa.

I do appreciate very much your courtesy in hearing me this morning.

Chairman PERKINS. We will hear Mr. Sullivan's testimony and then I will have a question for both of you.

Mr. SIKES. Very good.

Chairman PERKINS. We will lay the foundation for the Commissioner who is going to follow you gentlemen.

Go ahead, Mr. Sullivan.

Mr. SULLIVAN. In Okaloosa County we presently have 26,200 students. Of those 26,200 students approximately 13,000 are affected by impact legislation. The problem that we have had in the past 8 to 10 years of providing a quality education program for these youngtsers on a year-to-year basis has been a matter of proration from year to year and a problem without fiscal planning. I would urge and recommend to you

that you strike the language in 5(d)3 because of the lack of an equalization formula in Florida that is equitable to each county.

For instance, at the present time under our existing equalization formula there is a 17-percent variable with the cost of living index in the current formula. There is also a maximum millage that we are allowed to levy in each county in Florida of 8 mills. We have to participate in the State program with 6 mills leaving another variable of 2 mills from county to county to county that would further create, I think, an inequitability in the equalization formula.

Another factor that we have in an adjoining county, that county collects oil royalties that are not being considered as the Congressman stated.

The fourth point I would like to make concerning the inadequate equalization formula in Florida is that we have not had this funding program in effect for 2 years. It is not at all stable at this time. What we need in Okaloosa County is some stability with Public Law 874 whereby we can plan from year to year to year for an educational program for these youngsters.

Chairman PERKINS. Let me thank you for your statement. Mr. Sikes, I will not go into many questions since we want the Commissioner to follow you gentlemen this morning about this equalization provision. I don't know what his explanation will be but I myself believe that the way the Office of Education is interpreting this amendment it will be prejudicial against poorer counties. I note that the Office of Education tells us that Okaloosa County is about at the bottom 5 percent in expenditures in Florida so it is one of the poorer counties, as I take it, within the State of Florida.

It would help us if you, Superintendent Sullivan, could document this for us and indicate exactly how much you would lose in impact aid due to this amendment. Are you going to receive any increase in State funds? Would you want to expand on that just a little?

Mr. SULLIVAN. Yes, sir, I will be happy to respond to that question. We would lose approximately $2.8 million with the equalization formula that we now have in Florida.

Chairman PERKINS. And on State funds

Mr. SULLIVAN. No, sir. We will not get any additional funds from the State. This past year we were prorated at 3 percent because of the

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economic conditions in the State of Florida. Every county in the State was prorated at 3 percent of the current level of the funding for this year so the point was well taken a minute ago. What we are doing in Florida, we are equalizing downward rather than upward so far as our funding is concerned.

Chairman PERKINS. I see your point. I hope the committee will get this straightened out.

Mr. Hall, do you have any questions at this time?
Mr. HALL. No questions, Mr. Chairman.
Chairman PERKINS. Counsel.

Mr. JENNINGS. What is the total budget for the district? You said you would lose

Mr. SULLIVAN. Our total budget for this year is $19 million.
Mr. JENNINGS. How much have you been receiving from impact aid?

Mr. SULLIVAN. We have been receiving from impact aid approximately 2.6 to 2.9.

Mr. JENNINGS. Does the Florida plan equalize all local expenditures? Is it designed to do that?

Mr. SULLIVAN. Equalize all! No, sir.

Mr. JENNINGS. Under the terms of this new amendment to Public Law 874 the State could only take into account that proportion of local expenditures which are equalized by the State so the $2.8 million is very high.

Mr. SULLIVAN. That is correct, sir, at this time but it has been our experience from year to year to year as we have experienced new language under provisions of Public Law 874 and it might not happen in this case. For the past 8 years Okaloosa County has been losing money, not gaining any dollars at all. We still have the students but the pro rata section-section 6–is funded 100 percent. The 25-percent factor under the Dirksen amendment affecting the bill, they are funded 100 percent.

We are funded at 90 percent of our A's and we were funded about 68 percent of our B's. The new language in the law will result in our being funded at about 60 percent, 50 percent and 40 percent. So it appears that each time new language—and this is why I am saying that we are very apprehensive about the equalization language. There are a lot of relatively unknown factors from year to year that could create a variable in Okaloosa County planning for 26,000 students and it appears that each and every time, as I stated before, that we have new language in the law it results in a loss of funds for Okaloosa County that we have no way of replacing.

Mr. JENNINGS. I would like to point out that part of the problem you refer to is not a problem with the authorizing language but rather à problem with the appropriations process., Mr. SULLIVAN. That is right. Mr. JENNINGS. Where the appropriations have not been adequate. Mr. SULLIVAN. That is correct. Mr. JENNINGS. Are you saying this year you have lost $2.8 million? Mr. SULLIVAN. No, sir. If the State law is passedMr. JENNINGS. And if the Commissioner certifies Florida. Mr. SULLIVAN. If the Commissioner certifies Florida as being eligible, then it would result in a loss of $2.8 million.

Mr. JENNINGS. Thank you, Mr. Chairman.

58-348-75-11

Chairman PERKINS. Any further questions?
Mr. Cross.
Mr. Cross. No questions.

Chairman PERKINS. Let me ask you, Mr. Sullivan, would it be your suggestion to the committee that we postpone all the new amendments that were enacted last year for at least 1 year until we are able to explore and probe deep in order to ascertain the true effects of those amendments and how they affected the impacted school districts throughout the country?

Mr. SULLIVAN. Absolutely. I would concur in that 100 percent. I would think a year's moratorium would be wise and give each superintendent from affected districts like ours an opportunity to give input as to the problems that we currently have with

Chairman PERKINS. Presently with the law as it is written now you will not have time and no one will know the aftereffects unless we do postpone.

Mr. SULLIVAN. Absolutely. That is correct.

Chairman PERKINS. We have a bill to that effect and I certainly hope that we can pass it.

Mr. SULLIVAN. I appreciate your help.
Chairman PERKINS. Mr. Blouin, any questions?
Mr. BLOUIN. No.
Chairman PERKINS. Mr. Goodling, any questions?
Mr. GOODLING. No.

Chairman PERKINS. Well, let me thank you distinguished witnesses this morning and especially you, Congressman Sikes, for calling this problem to our attention. We are now

going to see what Commissioner Bell has to say. Mr. SIKES. Thank you very much, Mr. Chairman. We appreciate the opportunity.

Chairman PERKINS. We hope the Commissioner will agree to the postponement of these amendments.

Come around, Commissioner Bell.

Commissioner Bell, identify yourself for the record and proceed accordingly. Identify the gentlemen who appear with you; I know several of them. I have been around here a long time.

STATEMENT OF HON. TERREL H. BELL, COMMISSIONER OF EDU

CATION, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, ACCOMPANIED BY CHARLES M. COOKE, JR., DEPUTY ASSISTANT SECRETARY FOR LEGISLATION (EDUCATION), DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE; ALBERT L. ALFORD, ASSISTANT COMMISSIONER FOR LEGISLATION, OFFICE OF EDUCATION; AND WILLIAM STORMER, ACTING DIRECTOR, DIVISION OF SCHOOL ASSISTANCE IN FEDERALLY AFFECTED AREAS, BUREAU OF SCHOOL SYSTEMS, OFFICE OF EDUCATION

Dr. BELL. Mr. Chairman, we are pleased to be before this committee again. I would like to commend and ad lib that we appreciate the great influence upon American education that this committee has

had through the years and that the chairman has had. It is a pleasure to be before you even when I don't always agree on various issues and there may be two or three that we may not agree on this morning, Mr. Chairman.

I am pleased to introduce Mr. Charlie Cooke, Deputy Assistant Secretary for Legislation in our Department; Mr. Bill Stormer, who is the Acting Director of the Division that administers impact aid; and then Dr. Al Alford, who is Assistant Commissioner for Legislation.

I have a very brief statement, Mr. Chairman, and I will read it for the record, if that is all right. It is only three pages.

Chairman PERKINS. You may proceed.

Dr. BELL. We appreciate the opportunity to present our response to some of the concerns raised by your committee members since we last testified on the subject on February 27. I would also like to comment on your related proposal to delay implementation of some of the impact aid provisions of Public Law 93–380.

In our previous testimony we discussed in some detail the number of additional steps required to determine local education agency payments, including the complications of some four "hold harmless" provisions. I feel that during that hearing and subsequently there has been considerable misunderstanding about our ability to administer the new impact aid program and I would like to clear up that misapprehension.

The least accurate impact aid data is that which relates to low-rent housing and the new handicapped category. As you know, we have never required the submission of such data, and since payments have never been made for low-rent housing pupils there has been no incentive for school districts to collect that data if they qualified on the basis of other pupils. However, low-rent data have been submitted to us on a voluntary basis by many school districts. In addition, we have obtained low-rent housing pupil data collected by the impacted area aid school group through a special survey. In our estimates, we have used the higher of either our figures or those provided by IAASG which is the impact aid organization.

The IAASG survey also collected estimates of the number of possible "extra payment” handicapped children which we have used. We think the handicapped item is so small in magnitude that any variation in these counts will not have an appreciable effect on the school districts involved.

We have gathered all of the other data from our official files which would, of course, be subject to change based on applications filed January 31 of next year for fiscal year 1976. Overall we feel the estimates (based upon 1975 data projected to 1976) will have a reasonable relationship to actual payments, though not quite the accuracy we would have on the old program data which has been processed for many years. We have provided you with estimates for each school district based on this data.

I might say parenthetically that the items transmitted and an explanation of the data are included in a memo that has been provided to the committee staff yesterday and copies are available for the committee.

I would like to point out that our actual payments for fiscal year 1976 will depend not upon these or any other estimates but actual data submitted by school districts. Therefore, I want to emphasize once more that we fully expect to be able to administer the new impact aid provisions. Any interpretation to the contrary we would suggest is erroneous.

At present we expect to send to school districts in September forms which will require the necessary new data for handicapped children and public housing children. We will program our computer to handle this data and should be able to calculate exact school district allotments starting in February or March. As final payments do not normally occur until the early part of the fiscal year following the year of appropriations, we will have accurate data months before final payments are made.

With reference to H.R. 5181, your proposal to delay the effective date of certain amendments to the impact aid legislation, we do not believe it would provide any appreciable relief for the administrative problems we face. If anything, it may make our administrative problems worse as it actually retains those parts of Public Law 93–380 which are or will be causing us the most problems. For instance, H.R. 5181 would fund both low-rent housing and the extra payment for handicapped children of military personnel. These are the two data bases we believe require further refinement.

It would also implement "hold harmless” provisions which are another source of complication in the new law. While it would delay implementation of the tier system of payment and the variable payment rates, we believe there are equity advantages to the variable rates. If we are going to have to ultimately implement the tier system, we would prefer to do it now, since we have already begun to take the necessary steps to make these provisions effective.

My colleagues and I will be happy to respond to questions and will be most pleased, of course, to respond to further discussion on the matter raised by the Congressman from Okaloosa County in Florida. [The memorandum referred to follows:]

APRIL 14, 1975. Memorandum from: Acting Director, Division of School Assistance in Federally

Affected Areas. To: Staff Assistants,

House Education and Labor Committee,

Subcommittee on Elementary, Secondary, and Vocational Education. Subject : SAFA Data.

Copies of the following materials were delivered April 7.

A. P.L. 81-874 1976 Estimates Based on Fiscal Year 1975 Application Data and Impact Aid Group Data on Public Housing and Handicapped Payments. (ADA, Entitlements, Payments, and Hold-harmless Items Reported by School District) (Three or four Volumes, 2963 pages).

B. P.L. 81-874 1976 Estimates Based on Fiscal Year 1975 Application Data and Impact Aid Group Data on Public Housing and Handicapped (School District Summaries by Congressional District) (1 Volume, 232 pages).

C. P.L. 81-874 Fiscal Year 1974 Data and 1976 Estimates based on Fiscal Year 1975 Application Data and Impact Aid Group Data on Public Housing and Handicapped (Entitlements and Payments Fiscal Year 1974; Fiscal Year 1976 Present Law and Fiscal Year 1976–P.L. 93-380) (1 Volume, 226 pages).

D. P.L. 81-874 1976 Estimates Based on Fiscal Year 1975 Application Data and Impact Aid Group Data on Public Housing and Handicapped Payments (State Totals for ADA, Entitlement, 3 Tiers Sum Tiers #1 and 2, Hold-harmless Pro-visions, and Sum Tiers #1 and 2 plus highest Hold-harmless) (8 pages).

Comments on the data submitted follow:

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