Secondly, there is a higher proportion of nonpublic school enrollment. Third, there is a smaller school age population relative to the total population because of the outmigration of childbearing households, primarily white, over the last decade. Since property is measured in terms of per public school pupil, cities look quite wealthy in terms of property wealth.

We also examined tax rates for education, as shown in figure 2. The central cities are somewhat below the average of our sample districts, while the suburban tax rates for education are quite high. Rural areas, not surprisingly, have the lowest tax rates for education.

Mr. BELL. That is because of the overburden, primarily?
Miss LEVIN. You have anticipated my next point.

The problem with central cities is that while their taxes for education are low, their taxes for other public services are high.

We examined the property taxes paid by central city and suburban areas in the three States-Michigan, California, and Delaware. In each case, except Delaware, the central city has a lower tax rate for education. But when we examined the total tax rate, that for other public services as well as education, we found that in Michigan, the central city has the same total tax rate as the suburban average. In California, the total tax rate is substantially higher in the central cities than in the suburban areas, and in Delaware, the total tax rate for the central city is extremely high compared to the suburban average. This shows the problem in looking only at tax rates for education rather than at total tax rates.

Another problem which very few State formulas recognize is that of differences in income among districts. We find that in many of our districts, property values do not reflect income levels. This is particularly clear when we compare central cities with suburbs. While the property base of central cities is higher than that of the suburbs, their per capita income levels are lower. (See fig. 2.)

Again, the rural areas have the lowest per-capita income on the average which may be one of the reasons why their tax rates are so low. They just do not have the ability to tax themselves at as high a rate as suburbs and central cities.

Another reason why the tax rate may be lower in rural areas, however, is that the cost of education is lower in rural areas than in the urban areas.

We examined the distribution of revenues by source of funding, that is, the governmental level from which the funds came. As I have already noted, local revenues comprise the largest percentage of the total education budget. These revenues are largely derived through the local property tax. Figure 4 shows that central cities are raising the highest proportion of local funds, and that the rural districts are raising the smallest proportion.

With regard to State aid, we find that the central cities get the least amount of State money, while the rural areas are getting the

most.

Mr. BELL. That figure right there, the 55.6-what is that? Is that State aid?

Miss LEVIN. 55.6 percent represents that percentage of the total education budget in suburban districts coming from the State. We find that the suburbs are raising slightly less local funds as a proportion of their total education budget than the central cities.

Mr. BELL. I notice the State aid goes more to the suburbs than to the central cities.

Miss LEVIN. Right. And in percentage terms, you will see that the highest proportion of Federal money goes to the rural areas, and smaller cities next, and then the central cities.

Mr. BELL. This just about adds up to what Dr. Berke was saying a few minutes ago, that the Federal just about makes up that difference between the size of the State contributions in the suburbs and the size of the State contribution to the deprived area.

Miss LEVIN. You can see the differences more clearly in terms of dollars per pupil rather than in percent of the total education budget. The central cities and the slow growth suburbs, as I've already pointed out, are raising a substantial amount of local revenues compared to the other kinds of districts.

When you look at State aid, you will see the differences among districts are not as great in terms of the State dollars distributed.

Finally, with regard to the minor Federal contribution, we find that while rural areas get a higher percentage of Federal funds, the central cities really get the highest amount in dollars per pupil. Federal aid is very minor in terms of the fast growing suburbs.

$900 $1,000 $1,100

$ 200 $300 $ 400 $500 $ 600 $ 700 REVENUES IN DOLLARS PER PUPIL *Delaware, No Carolina, Washington, California, Michigan, New York, Colorado, N Hampshire. (Hawaii excluded.)

Overall, the Federal money clearly is not enough to equalize the differences among the districts in State and local revenues.

Another issue that we examined in our study was who pays for public education-the other side of the disparity coin. We examined the differences in the tax burden of selected income classes for the support of public education.

Figure 6 is a composite picture of the tax burden for all of our States. We have included Hawaii, so that nine States are incorporated in this analysis of the total tax burden paid through both State and local taxes for education.

The lowest income group, earning between $2,000 and $3,000, is paying 9 percent of its income for education through both State and local taxes, while the highest income groups, those earning $15,000 and over, are paying less than 5 percent.

The State tax structure is slightly progressive, largely due to the fact that most of the States in our study, such as California, have a progressive State income tax. This means that the low-income group is paying a somewhat lower percentage of its income for the State share of education than the highest income group pays.

Since most education money comes from the property tax, which is quite regressive, it overwhelms the slightly progressive effect of the State tax structure.

The individual States do vary, though, as you know, in the way in which they tax their citizens. Figure 7 shows the tax burdens for education in each individual State.

PERCENTAGE OF TOTAL INCOME-STATE AND LOCAL

13.0

FIGURE 7

COMBINED STATE/LOCAL TAX BURDEN FOR EDUCATION
BY SELECTED INCOME GROUPS 1968-1969

Delaware, for example, is taxing its lowest income residents at slightly over 4 percent, while New York is taxing its low-income residents at just about 11 percent.

The important thing to notice is the gap between the moderate and the low-income groups in each of the States. In Delaware and Hawaii, there is almost no difference in the proportion of its income each group pays for education, while the gap is quite substantial in States such as New York or Colorado.

When we compare the high-income groups with the others, we find, for example, in California that the moderate-income group is paying slightly less than the high-income group, but the lowest income group has by far the largest share of its income going for the support of education.

Mr. VEYSEY. Mr. Chairman,

Mr. BELL (presiding). Mr. Veysey.

Mr. VEYSPY. It seems to me that at that point in our discussion the other day, when you briefed the California congressional delegation, you made an assumption to the impact of the tax burden through rental payments: is that not correct?

Miss LEVIN. For this analysis we shifted all of the property tax forward to the renter.