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?
Dr. GINSBURG. Let me speak to the last question first.

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.]

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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
426-5860

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

equalization at the 10 percent disparity level-and the caveat that I have in the paper would also prevail on any other information which might be provided, and that is-assuming that all States made a public policy choice to select the option of Title II, and then assuming that they had the capacity, the good will, and the fiscal resources, and assuming the States were able to retain the power bloc to move toward the plan which they accepted.

One can come the other way and point out the disparity which currently exists, as I did, by selecting the two States that probably have the lowest level of disparity at the moment, Florida and New Mexico. If one recognizes the problems which exist in those States, one can also logically come to the position that the 10 percent disparity may be an unattainable goal.

Mr. CROSS. It would be a reasonable bill under that circumstance. Mr. Jordan, while I have you, let me pursue something you said earlier. You said the handicapped education does allow commingling and supplanting; is that correct?

Mr. JORDAN. It is my understanding from reading the legislation, after the full service level is reached, then an integration would be permissible, provided the plan that is submitted by the State to the commissioner would meet with approval. The language is somewhat fluid as to exact criteria that would be used to make that determination.

Mr. CROSS. First, it is going to take several billion dollars to implement that. I think some of the cost estimates are in the vicinity of $6 billion to $7 billion when the bill was being considered. What is going to happen in the meantime? What is the effect of the increased funding going to do to equalization until it reaches full funding, particularly in places like Florida, where there is a weighting factor in the State aid formula, and I suspect Florida is not alone in that regard.

Mr. JORDAN. Until they reach the level of full service, why the program, in essence, has some disequalizing factors built into it. It still remains to be seen, though, the manner in which the State plan will address the issue of allocation of resources within the State because, in the first two years, a portion of the funds is all that has to flow through, and the report isn't in yet, in essence, as to what the States will do, nor what they will be permitted to do, in the implementation of the legislation.

Mr. CROSS. Turning to another subject, impact aid, we have talked about the 5(d)(2) provision today but not in detail. From your experience, Mr. Jordan, as an expert witness, what do you think of the regulations that have been published as final and as proposed in terms of how strict or how loose they might be with regard to States being able to meet those disparity and neutrality standards?

Mr. JORDAN. My observation would somewhat concur with what Dr. Ginsburg mentioned earlier, in that there will be a relatively small number of States which will be able to meet either of the standards, either the disparity standard or the weallth neutrality standard.

I have done some very limited work on this in connection with some other activities in trying to identify what the problems might be with even making the computation, and the real issue is a