STATEMENT OF MICHAEL V. HODGE, DIRECTOR, SCHOOL FINANCE REFORM PROJECT, NATIONAL URBAN COALITION Mr. HODGE. Mr. Chairman, I am very grateful for this opportunity to appear today. I would like to begin by describing some of the work of the Urban Coalition. We have some 30 local affiliates in large and small cities across the Nation. In addition, we have been working in the area of school finance reform by providing technical assistance and support to community based organizations that are concerned with these issues. During the past seven years we have been monitoring the effects of school finance reforms that have been initiated at the State and Federal level, particularly trying to assess their impact on minority and urban communities. It is interesting to note that prior to the reform activity reaching its present height, it could be said with a good deal of certainty that we were spending larger amounts of money in this Nation on the education of children from affluent families than we are on children from low income minority and working class families. These problems were particularly acute because of the extremely high unemployment rates. Chairman PERKINS. Would the gentleman yield to me. Let me apologize for being late. If the gentleman would yield just for a few questions. Could all the witnesses give me some idea of how far the States have gone in equalizing their resources in the last few years? I know that a number of States have enacted school finance reform legislation recently. But how many have been formally implemented? Could you give me any idea along that line? States that have enacted school finance reforms in the way of equalizing their resources within the States. Mr. ODDEN. Mr. Chairman, I would like to respond to that question. I would say that in the 1970s you could probably point to about 25 States that have passed major school finance reform legislation. Not all of those pieces of legislation have been funded fully. But, I would say most of those States are in the process of phasing in those reforms, and many States in fact have phased in fully their school finance reforms. They have spent literally billions of dollars on the school finance side. A number of States, I would say, as part of the school finance legislation have also passed major pieces of property tax reform and relief legislation, and that they have made the distribution of educational dollars more equitable within the State, and at the same time they have made major strides in making the property tax more equitable. In addition to the 25 States that have passed new laws in the seventies, you could probably point to up to maybe five or six more States that had fairly decent school finance laws before the current wave of school finance reform began. Chairman PERKINS. Since only 25 States have gone about equalizing within the States, do you feel that thorough equalization can be achieved without Federal assistance? Mr. ODDEN. As a State person I probably should say no. I think the best answer to that is that there are a number of States, I would say probably most States have got the fiscal resources, they have the wherewithal, if they have not already done it, to develop and implement and fund a fairly decent intrastate equalization program. I think one of the major problems that the Federal Government should look at, and Dr. Alexander who presented his testimony first, and I who went second, also mentioned this, is that there are substantial inequalities in educational opportunities among the States. There are expenditure differences of the order of three to one from the highest to the lowest State, and differences in terms of the ability to support educational services in terms of per capita income of two to one across the States. I would suggest that a major Federal role for general aid should concentrate specifically probably firstly on measures of interstate equalization, and have the minor component be the intrastate equalization aspect. Chairman PERKINS. What kind of a role do you see for the Federal Government in helping the States to equalize? Answer this question in terms of a large-scale program, and then in terms of lesser assistance, if you can. Mr. ODDEN. I think again I would say that the biggest factor should be on equalizing between, on interstate equalization, between New Mexico and California, for example. I would add that any kind of program for trying to equalize among the States would have to be implemented and developed with State-by-State cost of education differentials because dollars buy different amounts of educational services in one State as compared with another State. I think there should be a component of any kind of a major massive Federal equalization plan that would make available general aid for States to allocate within the States in an equalizing way, if they met certain kinds of intrastate equalization standards. I would suggest that what appear to be the final regulations for impact aid, the impact aid law, in terms of Section 5(d), are probably fairly decent standards against which one can measure the degree to which there exists equalization within a State. Chairman PERKINS. Do any of you other gentlemen want to comment on the question? Dr. ALEXANDER. I would like to comment. I am Kern Alexander, from the University of Florida. I am also familiar with the Kentucky situation. I am a native of Kentucky, and I think if you are familiar with the method used to finance the public schools in Kentucky, it is probably typical of most States. After the fiscal equalization and the minimum foundation program of that State, you still have about two and a half to one disparity among the school districts' inability to provide an educational program, or revenues available for the children. Chairman PERKINS. Do you see this being done unless Federal assistance is available? Dr. ALEXANDER. No, I do not. I believe the equalization incentive of the courts has subsided to a great extent following Rodriguez. There is still some action in some of the States under their own State constitutions. I don't believe you will move affirmatively towards fiscal equality within the States without some kind of Federal stimulus. Now, with regard to this particular bill, I believe that it does have a genius to it that has not been used before, in that it gives the States the option of pursuing and some incentive and stimulus to pursue the equalization within their own school districts, among their school districts. I would say that without this, and without the Federal Government moving to assist in this way, that we will not see many States moving towards full fiscal neutrality or meeting the expenditure test as you have devised it here. Chairman PERKINS. Thank you very much. I want to compliment you gentlemen for your appearance here this morning. I regret that we have got the Caucus going on. However, these hearings will continue. Mr. Hodge, you have not testified? Mr. HODGE. No, sir. Mr. Chairman, if I might, I would like to just add a footnote to some of the comments that were made, and that is that the 25 or so States that have undergone school finance formula changes have not looked at all of the components of the school finance formula. In large part, this is in some cases due to the fact that many formula changes would require tremendous costs, such as the studies of cost variations within a State, or varying pupil needs. As Allen Odden pointed out earlier, the grants available under Section 842 were very helpful in allowing States to begin to look at some of these problems. However, the appropriation that was available was in fact too modest for States to include that item as well as many others in their study plans. I would at this point just continue with the summarization of my testimony. The problems that I have just mentioned that have not been addressed are basically cost variations within a State as well as variations in the educational needs of pupils. Just to point that out, I would like to indicate that these problems are indeed most great in urban areas. As an example, as the 1977-1978 school year opens, the Philadelphia school system is cutting 3,000 employees from its payroll. Detroit has eliminated a number of its school programs. Toledo, Ohio, they are suffering from a $6.7 million budget deficit, which will force them to close schools between October 13 and January 3. In Washington a number of positions were frozen, teaching positions, because of budget reductions. Most recently, suits have been filed in New York and Cincinnati, Ohio, which challenge the present school finance formulas which do not take into account these variations in cost and pupil needs. These problems, primarily the cost problems, stem from the wealth measures used in most States throughout the Nation, and that is a strict measure of property wealth as an indicator of a district's ability to pay for schools. 97-782 O 77-6 This is particularly an acute problem in urban areas, because a number of other services are financed from the same property tax base. For example, municipal service requirements, such as police protection, fire protection, health care, hospitals, et cetera, are all fiananced from the property tax base, and school districts as a result have to compete against these other revenue demands, and needless to say they compete very poorly. As a result, urban populations and these low income populations who reside there spend greater amounts of their income in support of the municipal and educational service requirements of their municipalities. With these problems in mind, the Urban Coalition undertook a study of the applications for Federal grants to States, studying their developing equalization plans, commonly called 842, as we referred to it today. What we have found is that indeed even though States where these kinds of problems have not begun to be addressed, few of them had made plans to undertake these kinds of studies; that is to say, area cost and pupil need differences. I would add, however, that the intent of the 842 appropriation is a very beneficial one for the States. What we would urge with respect to 842, based on our examination of those applications, is that the Federal Government indeed again appropriate an authorization of this type which will allow States to look at the various cost differences and pupil need differences within their States. Also, where States have aleady developed these indicators, we would urge that the Federal Government go even further by providing States with some kinds of matching grants for implementation of these indicators. I would point out that I agree with the previous speakers on the need for State legislative involvement in the preparation of these equalization plans, and in school finance reform in general. I would add, however, that it is important that we structure citizen involvement in the development of these plans as well. One way of doing that would be for the subcommittee to hold a series of regional hearings or conferences on issues of school finance reform problems, and alternative solutions. In addition to providing the subcommittee with information on the nature of local school finance problems, these conferences or hearings could further be used to elicit from citizens, State legislators, as well as school officials, recommendations for effective Federal involvement. In addition, we would recommend that the committee insure that the equity guidelines that are stipulated in the 842 legislation, if another appropriation is made, are strictly adhered to. Finally, we would recommend that any future legislation require that districts focus their studies on very specific items. These I will name once again. That would be the individual needs of pupils, which includes the needs of economically and the linguistically disadvantaged child, variations in the cost of providing equivalent services for different pupils, and variations in the ability of local education agencies to generate educational revenue from their tax base. Thank you very much, Mr. Chairman. Mr. QUIE. Mr. Long I believe is the last witness. We will hear from you now. STATEMENT OF DAVID LONG, LAWYERS' COMMITTEE FOR CIVIL RIGHTS [The statement of Mr. Long follows:] STATEMENT OF DAVID C. LONG, DIRECTOR, SCHOOL FINANCE REFORM SEPTEMBER 28, 1977 My name is David C. Long. I am a staff attorney at the Lawyers' Committee for Civil Rights Under Law and director of its School Finance Reform Project. I appreciate your invitation to discuss the role that the federal government could play in eliminating the great inequalities in educational opportunities that presently exist among school districts in many states. This nation has long viewed education as necessary to enable children to have an equal chance to succeed in life and to realize their talents. Those who wrote the state constitutions enshrined education as the most important obligation of the state and expressly mandated state legislatures to ensure, in the words of many state constitutions, a "thorough", "efficient", "uniform", "general" or "adequate" free public educational system. These high aspirations for equal educational opportunities were heightened by the Congress which granted to states, on admission to the Union, large amounts of land dedicated to the benefit of the public schools. Congress, throughout the westward |