Mr. Jordan? Mr. JORDAN. I addressed the issue in my formal paper. At this moment, after hearing the discussion, I would try to point out one of the problems. Dr. Ginsburg talked about the special education legislation, Public Law 94-142, and the fact that some of the States currently are now integrating that program into their equalization program. As the Public Law 94-142 legislation evolves when full service levels are reached; the way that I read the statute, at that time the issue of integration of the funds or the supplanting provision, you could integrate the funds theoretically into the State aid program. The difference, though, when one looks at Title I is that very few of the States, in essence, have a State funded program for compensatory education, and so the problem is not as severe, even though I understand that Commissioner Riles may have recently addressed that issue in testimony. The problem is not severe in all States, but in some States it is very severe. The point is the different state of evolution of the States. As they try to identify what they perceive to be educational needs, the concept of compensatory education has not moved as rapidly as an identified need as, say, special education legislation has at the State level. So the Federal activities, as I stated earlier, need to be looked at very carefully so that they integrate and support rather than conflict with the State efforts. Mr. JENNINGS. Mr. Cross? Mr. CROSS. Thank you. From Dr. Quindry's statement and what we know about the fiscal health of the Federal Government, with budget deficits ranging from $45 billion to $60-billion-or-so a year, who is in a better position to be able to pay for equalization, the States or the Federal Government? Dr. QUINDRY. I think most emphasis should be placed on the States. I think the States should equalize within their States, and then if the Federal government does anything, they should encourage that, but also their major emphasis should be on equalizing interstate. Mr. CROSS. Let me pursue that a little. Some of us were on a trip to Alaska last month looking at Indian education. We discovered that the State of Alaska pays teachers a beginning salary of $18,000 to $19,000 a year. I suspect that is double what teachers are paid in a number of Southern States. Therefore, there is a legitimate reason to have a disparity in cost between the States, that affects fuel and construction cost as well. The cost of importing lumber to build a school in some of those places in Alaska is atrocious. A school for 30 or 40 children may cost over $2 million to build. To what extent and how do you design an interstate equalization formula that takes into account those legitimate differences in expenses, and how do you measure that? Dr. QUINDRY. Of course, that is another weakness of our interstate data we have. We do not have a good index of the differences in cost of living from State to State. If we had that, then, of course, these data could be adjusted by the differences in cost of living, which would sort of work, then, on the cost of living, which would be level in each State. But we don't have that data. Mr. CROSS. Cost-of-living data doesn't even exist for most large cities, just a handful. Dr. QUINDRY. Yes, and that is one of the problems, and until we get that, we can't do a good job of adjusting. We could do it arbitrarily and probably do it better than nothing, but being accurate we can't. Mr. CROSS. Let's talk about within the States a little. Keeping to Alaska as an example, the cost of food, the cost of services and fuel, etc. is much less in Anchorage than it is in Barrow. Therefore, if you adopt an expenditure disparity and use only that as the one index of whether or not a good education is being provided, is that really fair? Dr. QUINDRY. Of course, on the cost side, the same as the cost-ofliving side, that is the cost of providing the education through furnishing the buildings and supplies, and the school is the same problem. We don't have data on cost in various areas. Mr. CROSS. Let me address this to Dr. Ginsburg. Your study only talks about fiscal disparity. I am bothered by two things about the study. One is the questions I raised with Dr. Quindry was about legitimate within-State disparities. Secondly, is the fact you talk only about disparity and not about fiscal_neutrality. Let's take Minnesota, for example, a State, which your chart shows has actually had increases in expenditure disparities since 1970, even though Minnesota has gone through a major equalization reform which has increased State contributions to something like 70 to 75 percent. Did you look at Minnesota in terms of fiscal neutrality? We did a study, which is available, which outlines in more detail an analysis of our results. Let me note some of the relevant findings from that study. We have looked at the distribution of per-pupil expenditures within States according to the ability of the district to finance education as measured by property wealth per pupil. What we find is that there has been over all, some improvement with respect to reducing inequalities in relation to fiscal capacity. In the case of Minnesota, that was not the case. In fact, between 1970 and 1975, low wealth districts showed a slight decrease in terms of their per-pupil expenditures in relation to the State average. But there was some improvement in about half the States in the country. In the other half, there was no appreciable improvement or there was some decline. We will be happy to make the full study available to you. Mr. CROSS. Do you have something that would be a summary of that data, much as Table 1 in your statement, that we could have for the hearing record? Dr. GINSBURG. Sure. Table II, p. 13 of "School Finance Reform in the Seventies: Achievements and Failures," Interim Report, Sept. 28, 1977. [See Appendix 1.] 265 Let me also note in terms of the cost question, which is a very difficult one to deal with, a study which is underway for the National Institute for Education by Killalea Associates, who also participated in our study. This study will be providing estimates of education cost differentials, both across States and within States for, I believe, 1970. We will be happy, for the record, to submit information on that study as well. Mr. CROSS. When will that be completed? Dr. GINSBURG. I am not certain. Mr. CROSS. Mr. Doyle of NIE is, sitting in the audience, would you care to respond? Mr. DENIS DOYLE (National Institute of Education). It is a 2-phase study, and the first phase will be completed this month, and the second phase will begin on completion of the first. We will have a report for you November 1. Mr. CROSS. Of this year? Mr. DOYLE. Yes. Mr. CROSS. If we might, could we have a description of that study for insertion in the hearing record? We have talked about cost estimates, and a couple of statements talk about cost estimates of H.R. 1138, and Mr. Jordan says $30 billion, and Mr. Berke hints at 27, although you don't say it is the cost estimate for this bill. I wonder if we could have, Mr. Jordan-I assume you have costed this out for CRS. Mr. JORDAN. Two or three responses: One is that CBO is the agency which does the formal cost estimate. This was a crude estimate, as I stated in the paper. Assuming public and nonpublic elementary and secondary school children, and assuming a level of funding, and sitting down in a casual manner as one can do with a pad rather than a computer, arriving at rough cost estimates. Mr. CROSS. Could we have the casual estimate for the hearing record? Mr. JORDAN. The casual estimate is contained in the formal paper. Mr. CROSS. But not year-by-year? Mr. JORDAN. Not year-by-year; no. Yes, we can include that; right. [The information requested follows:] This memo is presented in response to a request made during the Hearings of the House Subcommittee on Elementary, Secondary and Vocational Education on September 29, 1977. As stated in the oral testimony, responsibility for the preparation of fiscal estimates resides with the Congressional Budget Office rather than the Congressional Research Service. With reference to Title I of the proposed legislation, the base amount of $100 per pupil is to be reduced by the amount that an LEA's nonFederal per pupil expenditure exceeds 115 percent of the State average per pupil expenditure. Single source data required for the preparation of this projection are not currently available; States do not even have the information in immediately available form. As stated in the oral testimony, fiscal projections for Title II of the proposed legislation can only be developed on the basis of two assumptions and must be accompanied by a very restrictive caveat. The first assumption is that the technical wording of the finally enacted statute CRS-2 and the regulations would permit States to participate in the program even though their current school financing programs might be very inequitable; their opportunity to participate would be based on the "statement of intent" as outlined in the State plan. The second assumption is that, given the first assumption, all States would seek to participate in the legislation. (The likelihood of this happening is open to question for the State school finance program would have to meet Federal criteria.) The caveat is that virtually no State with the possible exception of Hawaii, could presently qualify under the 10 percent disparity in expenditure restriction in the proposed statute, and States would in all likelihood be cautious in committing themselves to a level of fiscal equalization beyond that found in such States as Florida and New Mexico. Recognizing the previously stated limitations and the minimal possibility that States would participate in Title II of the proposed legislation, fiscal projections for Title II must be viewed as maximum potential entitlement rather than as cost estimates. The maximum potential entitlement for the first year would be approximately $10 billion, for the second year $15 billion, for the third year $20 billion, for the fourth year $25 billion, and for each succeeding year $30 billion. K. Forbis Jordan Mr. CROSS. Fine; thank you. I think another issue Mr. JENNINGS. That cost estimate has to be understood in the context of the bill, I believe. Yesterday, the testimony was that no State would qualify under a 10-percent disparity provision, which is a requirement for receiving the grants under the second title bill, grants going from $600 to $200. Therefore, no State presently qualifies, and you cannot consider that to be the present cost, so it would just be the first title of the bill which would be a natural cost factor. The second title of the bill is dependent upon which States meet the requirements of the Act. So you can't just multiply the number of dollars times the number of children. It has to be the number of children in the States which meet the requirement of the Act. Mr. JORDAN. My understanding of the second title is that the State would present a plan as to how it would move toward |