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Mr. MINOR. The San Diego School District has the second largest enrollment on the Pacific coast. It is located in one of the most rapidly growing metropolitan areas of this Nation. Facts have been presented to prior congressional committees showing how closely related Public Laws 815 and 874 are to approximately 26,000 federally connected pupils within the San Diego city district. No other school district in the Nation feels a greater impact on its enrollment from federally

connected children.

The budget year beginning next July 1, 1963, is extremely critical without contemplation of a loss in revenue. It is doubly urgent that we know before July 1, 1963, that Public Law 874 funds will be available for budgeting.

Facts are herein presented to show:

(1) San Diego has been and continues to be an important military and defense center. Over recent years, approximately one-half the labor force of the city and county of San Diego has been employed directly on military bases or in defense industries. Not only are approximately 50 percent of the total labor force of about 300,000 persons defense workers or service connected, but the immigrant worker families have been young families with a larger number of school-age children than in the normal population.

(2) A close relationship exists between school enrollment and Federal activity. Since Public Laws 815 and 874 were first enacted, between 24 and 43 percent of the eligible ADA (exclusive of junior college and adult classes) of the San Diego School District have been federally connected under the definitions of the laws. During the current year, approximately 27,000 or 23.5 percent of the total 116,119 children are federally connected as defined by law. These children are federally connected to approximately 89 separate Federal properties, plus approximately 272 Navy ships.

(3) The San Diego School District has been one of the fastestgrowing school districts in the Nation. In October 1962 there were 113,876 pupils enrolled in grades K-12, as compared with 37,388 in 1950, and 32,423 in 1940. In 22 years the school enrollment has increased more than threefold.

(4) The close relationship between school enrollment and Federal activity is evident not only in San Diego, but also throughout California. In California alone, more than 400 school districts are eligible to receive Public Law 874 funds. These districts in attendance include over 50 percent of the schoolchildren of the State. Thus, it is readily evident that any action to change the policies or payments under Public Law 874 will affect the education of over half the children of California.

(5) During current times, 970,797 acres, or 35.6 of the land, and countless millions of dollars in installations in San Diego County are federally owned and tax exempt. These properties are within local school districts and traditionally tax exempt locally. Thus the laws are of concern to most of the local school districts in San Diego County and are of critical importance to many.

(6) Local citizens do not object to carrying their fair share of the load and thereby contributing substantially to national defense. However, the local taxpayers face an increasing problem because of a narrow tax base. In San Diego, for example, the school tax dollar of 1962-63 comes from the following sources, approximately:

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The local taxpayers in San Diego, who are already providing over one-half the cost of education, are at the present time supporting their schools on an override tax. The voters of the district proved their willingness to do their part by voting to exceed the maximum legal tax rate and in voting $90 million in bond issues during the last 10 years for school construction.

Four out of every five districts in San Diego County are operating on an override tax rate. The great majority of these are FederalImpact districts. It should also be noted that over 90 percent of the children in California are attending school districts operating on override taxes voted locally. Thus, the willingness of the local citizens to carry their share of the educational burden is being demonstrated dramatically.

It is well to recall once again the purposes stated in the original law and in the report which accompanied it. In Public Law 874 the following statements are found:

SECTION 1. In recognition of the responsibility of the United States for the Impact which certain Federal activities have on the local educational agencies in the areas in which such activities are carried on, the Congress hereby declares it to be the policy of the United States to provide financial assistance (as set forth in the following sections of this Act) for those local educational agenciesupon which the United States has placed financial burdens by reason of the fact that


(2) such agencies provide education for children residing on Federal property; or

(3) such agencies provide education for children whose parents are employed on Federal property;


The committee report accompanying H.R. 7940 (Public Law S74), 81st Congress, 2d session, Report No. 2287, stated clearly the policy and philosophy of the statute as follows:

Section 3 of the bill seeks to compensate school districts in reasonable amounts for the cost of educating children who, because they reside on tax-exempt Federal property or because their parents are employed on such property, do not in effect pay their own way. The underlying philosophy of this section is that the Federal Government, as a property owner, should pay to each local educational agency which furnishes education to children residing on or whose parents are employed on Federal property an amount per child roughly equivalent to the amount per child which other property owners in comparable communities pay toward the cost of educating children. Under this principle, Federal payments to school districts are more closely related to the 'burden imposed' than to the value of the Federal property. The committee believes that this approach will be more equitable both to the Federal Government and to the local school disricts involved.

The method used by the Federal Government to meet the obligation has been clearly developed and consistently supported in the testimony before congressional committees since 1950.

Note several unique elements regarding these statements:

(1) The burden imposed on local school districts by Federal activities was recognized and defined as a continuing and growing problem.

(2) A policy was established by the U.S. Government to provide continuing financial assistance to local school districts for the education of federally connected children whose presence was in the national interest and who were unaccompanied by taxable resources.

(3) The financial assistance was related to the burden imposed and not to value of Federal property or the potential of that property to produce revenue if subjected to property tax by the local agency. These are payment-for-service laws.

(4) The basis of the problem is tax exemption. However, the solution is not in lieu of tax payments but payment for burden imposed. The principle for relieving burden is to pay for service. The method of payment is that the Federal dollar shall follow the federally connected child.

(5) In a broad sense, Public Laws 874 and 815 express the idea that when one governmental agency (in this case the Federal Government) develops a tax-exempt operation within the geographic boundaries of another political subdivision which creates a demand for the services normally provided by the subordinate political subdivision, the operating governmental agency acquires a financial obligation to the degree of its demand for service. Recognition of the meaning of the stated policies is of extreme importance in considering the issues involved. The integrity of the right of the people of local communities of the Nation to control and direct their school program is preserved and protected. The local district educates the children who are there because of a National Government activity and the National Government pays the same amount to the local agency that the local taxpayers pay for children from families with no Federal connection. The principle followed is the same as when the Federal Government draws water or uses power from local agencies through a meter and pays for the metered water or power just as do the citizens of the community. Educational services, of course, are metered by counting federally connected children.

Public Laws 815 and 874 reflect a practical and effective solution to a complex and difficult problem of local school district finance. The funds provided to local districts through these laws were by congressional policy intended as aid to the local taxpayer where federally connected children lived and were being educated. A local school district has only three major sources of income-Federal, State, and local. In California the local source of income is almost exclusively limited to the local tax on secured and unsecured property.

The workers who live on or work on Federal property pay the Statecollected sales and income taxes which go to the general fund of the State and are available for State aid to the public schools. The Public Laws 815 and 874 thus are a practical and necessary means of aiding the local taxpayer and establishing a basic relationship between the

Federal Government and the local districts. These are clearly laws reimbursing local districts for educational service provided to federally connected children. When the children live on private property and their parents work on Federal property or when the children live on Federal property and their parents work on private property, the Federal Government only pays for half the local education cost of the child. This is on the assumption that the child is half a Federal responsibility and half a community responsibility because of what thẹ child and his family are. The family is partly community connected and partly federally connected. The family is partly, because of work or property, contributing to the local community tax base. But no measure was actually developed or proposed to accurately determine the value of each part-it was agreed that basically the family was contributing to the national defense or it would not be federally connected at all.

The measure of obligation of the Federal Government should continue as long as the conditions creating the obligation continue in appreciable extent-the presence of children and the presence of a tax-exempt operation. The basic principle is, "* The basic principle is, "*** the Federal Government will pay for educational service to federally connected children." The method is, "* * *the Federal dollar must follow the federally connected child."

As a matter of fact, this has never been strictly in lieu of tax assistalice. If it were, the San Diego City School District under current assessment practices within the district would receive much more than it presently receives. The suburban districts around San Diego would be receiving more or less than they now receive according to the value of Federal property within their districts. Each acre of Federal, tax-exempt property is within local school districts and traditionally tax exempt locally. It is true that the problem is caused by tax-exempted land. The real problem, however, is the burden of educating children coming into the district unsupported by a tax base to educate them.

Evidence indicates that it would be impossible for many of the affected school districts to continue to finance their school programs if the payments based on these laws are seriously reduced. It is nothing less than astounding that there should ever be a proposal made that the Federal Government withdraw from its obligation to a large number of American school districts; thus limiting their ability to support an educational program; and at the same time call for improved educational programs by pointing out the vital importance of education to our Nation in the world struggle in which we are now engaged. It is even more astounding that the very districts which are at the heart of our national defense program should ever be those singled out for curtailment of critically needed funds.

Enacting the law into permanent form is seriously needed and heartily endorsed. We are now in a position, even though the Federal impact continues to exist, where we cannot plan our educational program and cannot build our budget because we do not know whether or not the Federal Government will pay for service rendered. We must educate the children, but we do not know whether we can continue the present level of education or whether we must cut back the education of all our children-federally connected or not. This is a

position we have faced each biennium since 1950. A continuing law will aid us in long-term planning of our educational program.

As you know, timing of congressional action on these laws is most important due to local 1964 budget preparation. Your early favorable consideration is requested and urged that we may know how to plan for the school year beginning next July 1, 1963.

Senator MORSE. Our next witnesses will be two witnesses on behalf of the Citizens for Educational Freedom, William D. Valente, chairman of Pennsylvania State federation, and Dr. Edwin H. Palmer, Westminster Theological Seminary, Philadelphia.

Gentlemen, we are delighted to have you. Come forward.

Dr. Palmer, you were with us a year ago?

Mr. PALMER. Was I what, sir?

Senator MORSE. You were a witness a year ago, were you not? Mr. PALMER. No, I was not. There were others from CEF a year ago, and maybe a Mr. Glen Andreas.

Senator MORSE. I remember testimony, I mean I remember that the hearing record dealt with your group.

Mr. PALMER. Yes.

Senator MORSE. I want you to know that I am very happy to have you here, and I want you, as witnesses, to proceed as the others

you here, and I want you, as witnesses, to proceed as the others have, in your own way.

I hope you will exercise your rights here. You will have the privilege of filing supplemental statements at the close of the public hearings. I shall keep the record open for 2 weeks, as I announced this morning, for the filing by witnesses of supplemental statements or rebuttal statements that they may wish to file in connection with any part of the record that they would like to comment upon. You may proceed.


Mr. PALMER. Fine. We appreciate that opportunity a great deal, Mr. Chairman.

I am Edwin H. Palmer, and I am dean of students, Westminster Theological Seminary, which is a Presbyterian seminary in Philadelphia.

With me is Mr. William Valente, who is president of the State Federation of Citizens for Educational Freedom.

I myself am a member of the board of trustees of the State organization.

I would like to take the opportunity to submit a supplemental statement, which I would not read at this time, but I would like to simply summarize very briefly in one page some of our thinking.

Senator MORSE. Your full statement will be incorporated in the record and you may proceed to file a supplementary statement or you may proceed to give us a digest or read your full statement. Mr. PALMER. Thank you, sir.

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