PUBLIC LAWS 815 AND 874, 81ST CONGRESS (ADMINISTRATION'S PROPOSAL FOR MODIFYING EXISTING LEGISLATION) WEDNESDAY, AUGUST 5, 1959 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON GENERAL EDUCATION OF THE COMMITTEE ON EDUCATION AND LABOR, Washington, D.C. The subcommittee met at 10 a.m., pursuant to recess, in room 429, Old Senate Office Building, Hon. Cleveland M. Bailey (chairman of the subcommittee) presiding. Present: Representatives Bailey, Udall, and Lafore. Mr. BAILEY. The subcommittee will be in order. The committee, when it recessed yesterday, recessed to reconvene today at 10 o'clock for the purpose of hearing additional witnesses on proposals contained in H.R. 7140. We have as our first witness this morning Hon. David King of the State of Utah. Mr. King, will you come forward and further identify yourself to the reporter and proceed with your statement. STATEMENT OF HON. DAVID S. KING, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF UTAH Mr. KING. Thank you, Mr. Chairman. I am David S. King, Congressman from Utah's Second Congressional District. I have a written statement, Mr. Chairman, which I shall present at this time. Mr. Chairman and distinguished members of the committee, I sincerely appreciate this opportunity to give you my views and the views of other officials of my State and its schools on H.R. 7140. Superintendents of the federally impacted school district of Utah have written me their views on the amendments which this bill would make in Public Laws 874 and 815, and they are universally opposed to them. Hon. George D. Clyde, Governor of Utah, and Dr. E. Allen Bateman, State superintendent of public instruction, also are strongly opposed to the amendments which the administration proposes. Undoubtedly you have heard opposition to this bill from federally impacted districts in many States. But I think the Utah opposition to it has special significance for at least two reasons. The first is that Utah has a higher percentage of its working people employed in Federal service, directly and indirectly, than any other State. The impact of Federal enterprises and installations upon the school population certainly is as broad in Utah as in any other State, and perhaps broader. The second is that the generalizations which Hon. Arthur S. Flemming, Secretary of Health, Education, and Welfare, made about tax revenues in his June 9 statement to this committee simply do not apply to Utah. At that time, Mr. Flemming observed that: for the country as a whole, commercial and industrial property accounts for only 27.7 percent of the locally assessed real estate base. For no State does the locally assessed evaluation of all commercial and industrial property reach even 40 percent of the total local real estate assessment, the highest for any State being 37.1 percent This simply is not the case. In Utah, the industrial and commercial properties represent at least 50 percent of the evaluations on which the local school taxes are based. My authorities for this statement are the Governor, the Utah State Tax Commission, and the State superintendent of public instruction. Careful examination of the tax commission records show they actually run more than 50 percent. Mr. Flemming qualified his statement, of course, by adding that: these percentages do not include property within local school districts that is assessed by State governments. Such property has not been included, because the only available figures on State assessments include no breakdown of commercial and industrial property, on the one hand, and residential property, on the other. To Utah, this is the fly in the H.R. 7140 ointment. Without such a breakdown on the State assessments, how can the relationship be tween the industrial and commercial tax revenue and the residential tax revenue be fairly determined? This, in fact, is the weakness in the program, as I see it. It tries to discharge the Federal responsibility for sharing the school costs in the impacted districts with one flat formula, which is applied universally. Yet local conditions and tax procedures vary widely from district to district, and from State to State. In a communication which I received recently from Secretary Flemming, he said the purpose of the amendments he proposed was to make these laws, 815 and 874, conform to what he believed to betheir basic and only defensible justification, the equitable responsibility of the Federal Government to make payments in the nature of in-lieu-of-payments to school districts in which tax-exempt Federal property has resulted in a deprivation of part of the local tax base normally supporting educational services. Yet, in the same communication, he observes: We are of the opinion, nonetheless, in the light of the available data that the 40 percent rate proposal is reasonably consistent with the actual factual situation for the country as a whole and he goes on to add: We do not believe it to be administratively feasible to establish a rate structure in the formulas of these laws which would reflect more precisely the varying proportions of the valuations of different types of property or the varying tax rates assigned such types of property in each of the several States. The Federal responsibility simply cannot be discharged equitably, as the Secretary desires, by the single universal formula which he proposes. And it will not be discharged equitably unless the program reflects the local conditions better than either the present formula or the proposed formula reflect them. The weakness of the Secretary's statistical analysis, as it affects Utah, is described in a letter which I received last week from Dr. E. Allen Bateman, who wrote, in part: In the State of Utah, much of our commercial and industrial property is assessed by the State tax commission and is not locally assessed. However, this property becomes a part of the assessed valuation against which the local school district tax rate is levied. In our State, the commercial and industrial property is fully 50 percent of the total assessed valuation upon which the local school is levied. Mr. Flemming is perfectly right in being concerned over the fact that some States and districts may be receiving more in-lieu money from the Federal Government than their industrial and commercial tax base would entitle them to. But in a revision of the program his division should, I think, also be concerned over the possibility that the Federal responsibility is not being fully discharged in Utah, and perhaps in other States, by the present program. As a minimum, a new program should, I think, embrace a separate formula for each State. After all, this would amount to no more than 50 formulas, and each would reflect accurately and equitably the conditions and taxing practices of that State. I am sure the tax commission of every State would be happy to work with the Department of Health, Education, and Welfare in providing the data with which an accurate formula could be prepared, and in reexamining that data at regular intervals to keep the formula accurate. Measured by its revenues, Utah is not a rich State. But I know it to be richly endowed in the human resource. Its citizens average more years of school than do those of any other State. I think this is one of the factors which has influenced the establishment of important Federal installations and defense industries in Utah. Education is perhaps Utah's proudest tradition. Utah has always done its fair share and more in this field, as its contributions to it would indicate. And it asks no special privileges of this committee. Utahans ask only that you consider very carefully the Utah situation, and the inequitable losses that State would incur in the enactment of this legislation. In the meantime, I stand steadfastly opposed to this bill, because I know it discriminates against my State. I thank you for your kind attention. I ask permission to insert in the record at this point a statement about H.R. 7140 which I received from G. Harold Holt, superintendent of Davis County School District, the largest of the federally impacted districts within my congressional district. Mr. BAILEY. Without objection, the additional data will be accepted for admission into the printed record. (Information referred to follows:) STATEMENT OF SUPERINTENDENT G. HAROLD HOLT, DAVIS COUNTY SCHOOL DISTRICT, FARMINGTON, UTAH Under the declaration of policy in Public Law 874, the Government of the United States acknowledged its responsibility to compensate school districts in reasonable amounts for the cost of educating schoolchildren 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. It has been reported that H.R. 7140, proposed amendments to Public Laws 874 and 815, would reduce substantially Federal allotments to federally impacted districts. It seems that it is assumed that some federally connected students are no longer the financial burden to the school districts they once were. There has been no significant change since 1950 in the Davis County School District or most of the other school districts in Utah to justify a change in policy. The impact is just as great today in the Davis School District as it was in 1951-52 was 37 percent. In 1956-57 it was 40 percent, and in 1958-59 it was 8.77 percent. In 1956-57 to 1957-58 it was 10.91 percent, and in 1958-59 it was 10.99 percent. The ratio of federally connected pupils to the total membership in 1951-52 was 37 percent. In 1956-57 it was 40 percent, and 1958-59 it was 39.16 percent. A comparison of this ratio in other federally impacted Utah school districts is as follows: One of the Public Housing Administration projects in the Davis County district has been demolished. The other two have been sold to tax-exempt municipalities that do not pay in-lieu-of-tax money to the school district. This points up the fact that the more than 600 children living in these housing projects are now a burden and that it all came about as a result of Federal Government activity and policy in disposing of the PHA projects. For 7 years before World War II there was no growth in Davis County School District. The membership was 4,220 in 1933-34 and 4,210 in 1940-41. Beginning with World War II, it gradually rose to 15,729 on May 27, 1959, and according to projections of the State department of education, by 1963 the enrollment will be approximately 26,869. Since 1949 the district has spent $11,952,582 for school facilities. Of this amount, $2,995,711 will have been provided by the Federal Government under Public Law 815. This is more than 25 percent. At the present time the district has 510 classrooms, not all of which are standard, and 74 makeshift rooms. We need 74 more rooms at 30 pupils per room. By 1963 we will need an additional 282 rooms. Four of the largest elementary schools will have some grades on double sessions at the opening of school this fall. There is no winter kindergarten program, and first grades at four schools will be on a half-day basis. The district is bonded to the limit. In assessed valuation per student, Davis district is among the seven lowest districts of the State. The maximum tax effort under the law is being made, but by 1963 the district will fall further behind than ever in classrooms. The proposed amendments, if enacted, would handicap the district in its maintenance and operation budget as well as in the capital outlay budget for school building construction. If H.R. 7140 is passed and becomes effective immediately, it would mean an approximate loss of $100,000 to the Davis district under Public Law 874 in the 1959-60 budget year. The effect would be equally damaging on most Utah districts now receiving assistance. Most of the other Utah districts are also making the maximum financial effort to meet the demands to provide satisfactory facilities, good teachers, and a standard program. All educators accept as a basic need the importance of a sound and adequate national defense program. We also realize the need for curtailing expenditures in some areas in order to contribute to the defense program. But we think it is not sound or wise to do anything that would impair educational standards in any part of the United States to reach this goal. Mr. BAILEY. May I ask the gentleman one or two questions? Speaking now in the field of construction and the proposed changes in Public Law 815, what is the situation in Utah as to the several school districts? What percent of them have exhausted their bonded capacity and what shape would it put them in if this program were curtailed to meet their building provisions? Mr. KING. Mr. Chairman, fortunately we have with us here this morning my esteemed colleague, Dr. Dixon, who has been in education all of his adult life and we have Mr. Metcalf, who is the head of UEA, the Utah Education Association, and although I have some ideas on your question, I would prefer that either one or both of these gentlemen who are experts in this field answer the question, with the chairman's permission. Mr. BAILEY. Thank you. Mr. Udall, do you have any questions? Mr. UDALL. No. I just have a comment and I would like to commend my colleague from Utah for his very pointed and very effective statement. I think he has gotten to the very heart of the matter and that is that the proposed flat formula as set out by the administration is unrealistic. They claim there are inequities in the present system, and we agree there are. It is hard to devise a system that is equitable in this operation, but they attempt to set it up under one flat formula based on a hard and fast in-lieu-of-tax concept, which I do not believe is the basic concept behind this legislation. I do not think it is pure and simple an in-lieu-of-tax proposition, and I am very much interested in your conclusion, and I take it it is your basic conclusion that with regard to your State this new formula would be far more inequitable than the present formula. Is that your basic conclusion? Mr. KING. That is correct. Mr. UDALL. I think that by bringing to our attention, as you have so effectively, the factual situation in your State, the impact of this thing, you have dramatized the point that some of us have been making right along; namely, that the administration proposal, however good the intentions are, is very unrealistic. Mr. KING. I appreciate your comment. Thank you. Mr. LAFORE. I would like to thank Mr. King for his testimony. I am always interested in local and State tax structures and methods of assessment valuation. I note that your statement said that the properties were assessed by the State tax commission, that is, the commercial property, and industrial in most instances, instead of locally. What is the formula for that? What basis do they use for assessing some and not others? Mr. KING. I do not have that at my fingertips, Mr. Lafore. That could be easily obtained. Mr. LAFORE. Let me ask this: The State tax commission only assesses commercial and industrial? Mr. KING. That is right. There are other items that they also assess from the State level. |