programs, we will not be able to delve into the matter of general aid except to urge the subcommittee to give it utmost consideration.

Turning to the categorical programs, it should be stated at the outset that NSBA supports the objectives and national priorities which are being recognized in existing law. However, there are serious administrative problems and costs in approach which bear the need for close reexamination by the subcommittee. Regardless of whether we speak of the State plan programs or the direct Federal to local grant programs, local school districts find that they are over-regulated at the Federal level, unable to stay abreast with the hundreds of Federal programs, and must invest tremendous amounts of risk capital just to make applications for funds. Ironically, it is the smallest and poorest districts that have the least access to the Federal system, even though they may be preferred targets for the Federal dollar.

By way of example, the Emergency School Aid Act embraces over 40 pages of regulations in the Federal Register, with many more pages of complex guidelines and forms. One big city school district advised us that it took their professional in this area 3 weeks just to understand the general program design. Another big city advised us that their application and anticipated program management costs would exceed the amount of actual program money for which they were making an application. A de facto school district was originally denied an application, which they spent nearly an entire school year developing, because the racial balance of their teaching staff was outside the prescribed radio by one to two teachers per school. In another case, an application was denied because a de facto district preferred to rotate all children to integrated project schools-hence exposing all students to an integrated experience-rather than reassigning just a few students. Apart from overregulation, there are, in addition to the basic grant program, six separate emergency school aid categories, requiring separate applications, and in several instances requiring separate community advisory councils. From the standpoint of the school board and the superintendent, particularly in light of the relatively small amount of money involved and the broad scope of mandatory responsibilities which are associated with the management of a school system, most school districts, on purely administrative grounds, simply cannot-or wish they had not become involved with the emergency school aid program.

ARE THERE BETTER MEANS OF DELIVERING FEDERAL AID?

In multiplying the admittedly gross example of the emergency school aid program across the more than 200 Federal programs for which school districts are eligible for assistance, it is our opinion that much of the administrative cost, delays, constrictions, and inequities associated with the management of existing programs can be eliminated through a program consolidation, which at the same time protects the overall Federal priority of the categories.

DO ANY OF THE PENDING BILLS PROMISE TO BE THE BEST MECHANISM FOR IMPLEMENTING A PROGRAM CONSOLIDATION?

In this regard, we do not believe that the administration's Better Schools Act is such a program. While we do not wish to burden the subcommittee with an analysis of a bill which the administration is

no longer pursuing, a few general comments thereupon may be useful as guidance in the drafting of other program consolidation legislation. NSBA opposed that bill for six major reasons.

First, the proposed funding level for the program was $515.1 million or 16 percent under the 1972 levels of the various programs which the Better Schools Act would replace. (Note: Although the authorization and appropriations processes are separate legislative items, the administration is on record through such formal actions as the Department of Health, Education, and Welfare budget request, testimony, and summaries which accompanied introductions of the bill in Congress in urging a funding level which is totally unacceptable.) Second, the Better Schools Act would have totally eliminated Public Law 874 categories 3b and 303c (public housing). With respect to category 3b, it has long been our view that by amending the formula, rather than by eliminating the program, fair recompense could be paid to hundreds of poorer districts, in addition to merely remedying the inequities of overpaying a few wealthy districts. Similarly, with respect to public housing, funding inequities should be remedied by formula amendment, not through the elimination of the program. In addition, some confusion has arisen, at least in the administration, concerning the purpose of the public housing program. The purpose of the program is not to compensate for "educational need"title I of the Elementary and Secondary Education Act does that. Rather, it is to provide fiscal assistance for school districts to the extent that their tax rolls have been reduced by a federally sponsored activity (that is, Federal incentives for State and city governments to erect taxexempt public housing units).

Third, from the standpoint of local control of education, the Better Schools Act's provisions with regard to ESEA title I and Public Law 874 category "3a" were objectionable to the extent that they opened the door for greater State administration of local programs. With respect to ESEA title I, although the basic local program presumably would continue to operate as it currently does-that is, under a State plan, the State may also use its funds for making local grants. Our concern is that the State, in so doing, might then be in a position to force, or at least to coerce, local units to conform to its program designs. With respect to impact aid, the Better School Act contains a statewide comparability requirement for federally connected children. We contend that in so encouraging the equalization of school finance, the provision goes too far in that it equates equalization with the full State funding of education—or at least with State control over school district expenditure rates. More specifically, the receipt of Impact Aid funds, which are more in the nature of reimbursements rather than a Federal gratuity, would be paid by the price of full State fundingand in turn by the loss of local control over funding determinations. It negates the "power equalization" model which, through State assistance, would result in each school district in the State, at any given effort rate, having the fiscal basis to make the same per pupil expenditure rate as any other district which chooses to tax itself at that effort level.

Fourth, the Better Schools Act did not speak to the question of limiting State regulation over programs which would ultimately be operated at the local level. From the standpoint of the local school

board, it does not matter whether the problems of redtape, grantsmanship, and loss of local program discretion is imposed by the State or the Federal bureaucracy. In this regard, local bureaucratic problems could be greatly reduced if the funds were distributed throughout the State on a formula basis with each local unit having full-but accountablediscretion to determine how funds should be spent.

Fifth, the Better Schools Act did not grant local school boards the right of meaningful participation in the development of State plans or in the development of criteria for the use of funds at the local level. It merely provided "interested persons" with the right to "comment" upon State plans. In a similar vein, the bill did not grant local school boards the right to appeal to the Department of Health, Education, and Welfare State decisions with regard to fund allocation or regulatory requirements. Considering that local school boards are units of government-which ultimately bear the legal responsibility for public education, the failure to guarantee them these rights of participation and appeal is a grave shortcoming in terms of effective management, intergovernmental coordination, and the so-called "new federalism."

Sixth, the extent of consolidation provided for by the Better Schools Act does not go far enough. By only embracing the large State plan programs, the greatest bureaucratic inefficiencies, that is, those surrounding the dozens of small Federal to local grant programs, remain unresolved.

In addition to these six specific objections to the Better Schools Act, the overall design of the program was such that it may have resulted in an abdication of the Federal education priority. The reason is that it consolidated programs for the purposes of the Federal appropriations process, as distinguished from the laudable purpose of consolidating the allocation of funds to the States. That is, for the purposes of the appropriations process, Congress would have been presented with a total funding level which may not have reflected the categorical identity of the program elements comprising the consolidation. If that loss of national program identity occurred, each program area may very well have been left to compete with other education interests for an inadequate total level of funds at the State level, rather than to compete for a larger share of the Federal budget. In other words, those seeking greater funds for the education of the handicapped, for example, may be told that increased funding is really a priority question to be determined by each particular State educational agency from a given level of Federal funds and that is not a question of increased Federal funding. In essence, we believe that while the States should have some power to transfer funds among the categories, that the Congress, as a starting-off point, should estimate the dollar need of each Federal priority program which the consolidation will fund, rather than setting a global figure as the education share of the Federal budget.

Although the Better Schools Act does not specifically provide for regionalization, the administration has stated that the Federal role in the education programs should be operated through a regionalized bureaucracy. But, it would appear that regionalization is inconsistent with consolidation on two grounds. First, it inserts a layer of Federal bureaucracy between the field and the Commissioner of Education, in whose office program decisions must ultimately be made. As a corol

lary, to the extent that decisions are not centralized in the Commissioner's office, confusion is bound to arise as each region develops its own way of doing business. Secondly, direct information flow from the field to the Congress, the top Federal administrators, and the national education community will be impeded if the Commissioner's office cannot be called upon to directly account for the actual management of programs.

CONCLUSION

In conclusion, we have found that the cost of intrastate and interstate equalization of per pupil expenditures to the 90th percentile per pupil expenditure rate, coupled with the rising cost of educational services and the need to provide local property tax relief to select groups of people would involve additional expenditures of $32 billion. In addition, the special needs of handicapped and educationally disadvantaged children would require $11 billion over what the Federal Government is currently providing. Based on the capacity of State and local governments to tax themselves, the Federal Government would have to absorb 40 percent of the cost of education if provision is to be made for the general and special needs of education. As the Federal role expands, increased care must be taken to insure that the programs are designed in a manner which will maximize school district access to the Federal level, with low administrative costs, and with minimal bureaucratic control. To achieve this end for the categorical programs, we urge a consolidation of existing programs. But unlike the administration's Better Schools Act, the total Federal education priority must be maintained and the respective interests of State and local units in the governance of education protected.

Mr. Chairman, members of the subcommittee, on behalf of the National School Board Association, I wish to thank you for this opportunity to present our views.

Senator PELL. Thank you very much, indeed. I wonder if Mr. Steinhilber would care to give any testimony? Maybe he would care to have it inserted in the record and comment from it without reading it.

Mr. STEINHILBER. I would like to have it inserted in the record. [The statement referred to follows:]