conditions and are planning comprehensive State-wide school-facilities programs. These State efforts should be facilitated and encouraged and above all should not be thwarted by Federal programs based on direct Federal dealings and agreements with local school districts. While most States have made some studies of these problems as related to school-plant needs, there is urgent need for more systematic and comprehensive studies in all States. The provisions of pending bills for allocating Federal funds to States for their use in developing sound school-plant programs are timely and consistent with efforts to determine permanent school centers in relation to sound local school units.

What is urgently needed is a program of Federal aid for school housing which will provide the needed funds and assure that they are used for school construction without imposing on the States undesirable controls. The States must be encouraged to plan the type of buildings most suited to their needs and to locate such buildings at permanent centers as determined in accordance with criteria or standards established by the States themselves. The function of the Federal agency is to assist States in their efforts to develop such criteria and to plan and carry out a comprehensive program of school construction that will meet their urgent needs and at the same time facilitate, rather than hinder, needed school-district reorganization.

I have not directed my remarks toward any of the bills now being considered by this committee, but I should like to restate and reemphasize for the committee in somewhat greater detail the principles referred to by the Federal Security Administrator which we believe should be embodied in any legislation providing Federal assistance to the States for school housing construction. Briefly then we believe sound Federal policy would require

1. That Federal funds be made available to assist States in making surveys necessary for the development of their respective long-range State-wide school plant programs.

2. That Federal funds for the construction of school plant facilities be allocated to the respective States, rather than to individual schools or school systems, and that these funds be made available to State educational agencies for use in their respective States in accordance with their State plans.

3. That these funds be allocated on the basis of an objective formula which would provide

(a) that there be available for school construction in all States a uniform amount of money (Federal and non-Federal) per school-age population, 5 to 17, inclusive;

(b) that the ratio of non-Federal to Federal participation in financing the program be based on the ability of the States as measured by "income payments"; and

(c) That the Federal-participation percentage be calculated on a Statewide basis, rather than project by project.

4. That the Federal Government recognize a special obligation to give immediate emergency assistance in meeting critical school plant needs occasioned by Federal Government activities; and that for 1 year only, the Federal grants-in-aid for this purpose proportionate to the Federal responsibility, be allocated on a project basis after a determination by the commissioner in cooperation with the State agency, the school districts or districts, and the Federal agency in

volved; and that any critical project be determined to the extent feasible as an integral part of the State's over-all program of school construction.

5. The responsibility and authority for administering the program within the States be assigned to the States; that Federal relations thereto be carried on through the Office of Education, Federal Security Agency; that the Commissioner of Education be assigned the responsibility for reviewing and approving State qualifying plans for the use of Federal funds within the respective States; and that he be given the responsibility for providing consultative services to State educational agencies to assist them in

(a) Setting up over-all State plans for participating in the Federal assistance program;

(b) Making studies to determine the need for and the location, type, and size of facilities; and

(c) Developing State standards and regulations for the educational planning, constructing, and equipping of individual projects.

6. That each State designate a single State educational agency to be responsible for administering the school plant program within the State and that Federal funds be made available from the State allotment only for projects for which the locations and drawings and specifications have been approved by such agency.

7. That the State educational agency develop an approved State plan which sets forth

(a) The manner in which the State proposes to determine its needs for school plant facilities and the priority of construction projects; (b) The method to be used in determining the relative needs of different areas lacking adequate school plant facilities with consideration for those areas with relatively low financial resources and especially for those areas overburdened with enrollments resulting from war and defense programs and other Federal activities;

(c) Standards for the location, planning, construction, and acquisition of public school plant facilities;

(d) The method of distributing State and Federal funds for providing public school plant facilities; and

(e) Functions and responsibilities to be delegated to local units. Let me close by expressing the hope that this committee will develop and report for favorable action by the Senate school housing legislation embodying the principles I have just enumerated. If the committee has any questions on the provisions of any of the pending bills in relation to these principles, I shall be glad to have Mr. H. F. Ålves, who is the Director of the Division of School Administration of the Office of Education, and who is here this morning, to answer them. Senator HUMPHREY. Thank you very much, Mr. McGrath. We are very grateful to you, particularly for the presentation of what you consider to be the essential standards that should be incorporated into any Federal legislation that may be considered by this committee or by the Congress. I think that is particularly important.

Mr. McGRATH. We feel so, Mr. Senator.

Senator HUMPHREY. I definitely do, and I thoroughly concur in your sentiments in reference to the relationship between the Federal and the State agency, rather than trying to bypass it and going down into the local school districts.

To interrupt a moment, I have a letter that was directed to me as the chairman of this subcommittee from the chairman of the Com

mittee on Public Works, Senator Dennis Chavez, of New Mexico, and I want to incorporate this letter in the record.

Senator Chavez points out the particular critical needs in some 500 school districts in the United States which were badly hit by governmental activities and feels they should be looked into first of all by our subcommittee, but only as a part of the general pattern.

I think we have had almost conclusive evidence before this committee that there is a great and critical need in some of these select school districts that have just been flooded with a school population with complete inadequacy of facilities. I am sure that is your feeling, is it not, Mr. McGrath?

Mr. McGRATH. Yes; it is, indeed. We are more interested, of course, in setting up a permanent basis for schoolhouse construction here, but we recognize there are some districts that are meeting a real emergency, and several of the bills, as you know, provide for emergency aid in the coming fiscal period, and we approve of that provision. Senator HUMPHREY. We will incorporate into the record that letter of Senator Chavez at this point.

(The letter referred to is as follows:)

Hon. HUBERT H. HUMPHREY,

UNITED STATES SENATE, COMMITTEE ON PUBLIC WORKS, Washington, D. C., June 7, 1949.

Chairman, Subcommittee on Construction of Educational Facilities,

Senate Office Building, Washington, D. C.

DEAR SENATOR HUMPHREY: I am glad to learn the Committee on Labor and Public Welfare is now delving into the impact of the war on the 100,000 school districts, with particular reference to those districts overburdened by governmental activities.

I am pleased to add my endorsement to the purpose of Senate bill 1263, by Mr. Butler. The Senate Committee on Public Works has similar bills before it, but I understood that proper jurisdiction rests with the Committee on Labor and Public Welfare.

I think there are approximately 500 school districts in the United States which were badly hit by governmental activities which should be looked into by your subcommittee. I have five such districts in New Mexico which I feel are up against a real problem, and which only governmental leadership can solve. There

is sound basis in the sentiment where governmental activity suddenly forces upon the school districts an abnormal number of pupils. There must be schoolrooms available for these American leaders of tomorrow.

I should like to name the districts in New Mexico. which are affected, and show you just how it came about. The five are Pojoaque, Espanola, Alamogordo, East Picacho No. 21, and Mesilla Park. It has been estimated that $500,000 is needed to properly accommodate the students in these districts.

The

The Guided Missiles Program at the famous White Sands in southern New Mexico-one of the more specialized defense weapons experimental area-has sorely crowded schools at Alamogordo, East Picacho, and Mesilla Park. Atomic Energy Commission at Los Alamos, the heart of our atomic energy program, has crowded the schools at Pojoaque and Espanola.

At Alamogordo the school enrollment has increased from an enrollment of 1,251 students to 2,000. The district has built 15 classrooms in the last 5 years, but it needs another 15 to give the students only minimum space. The Alamogordo district has spent $150,000 on buildings and it is now near the limit of indebtedness. A recent survey by the Federal Works Agency showed that Alamogordo needs another $350,000 for buildings, yet the district can spend only $50,000 more before reaching the ceiling of bonded indebtedness.

At East Picacho the enrollment has increased from 823 students to 1,320. I understand that 400 of these students can be attributed directly to the Guided Missiles Program. In connection with the Guided Missiles Program, the Mesilla Park community has been expanded by new residents and another four classrooms are needed there at a cost of $45,000. Yet I am informed that Mesilla Park can raise only $10,000 of the cost.

The Espanola school district needs $38,600 to build 12 classrooms yet another 13 are needed to take care of the increased enrollment as a result of the Los Alamos activity nearby. The Espanola enrollment has increased from 632 pupils to 1,400 and nearly all of these are attributed to the Los Alamos Atomic Energy Program. Espanola can raise only about $24,000 for the buildings needed, but a reasonable estimate of cost is $141,000.

Pojoaque, which is at the foot of the hill on which Los Alamos is located and a few miles from Espanola, shows an increased enrollment from 190 students to 425 since the Atomic Energy Commission program has been operated. The district school officials tell me they need seven additional classrooms at an estimated cost of $60,000, but this small and rather poor district can raise only $5,000 for the cost. Where the land is taxed and the rate is approaching the ceiling, along with the top of the legal bonded indebtedness, the districts are faced with doing without or obtaining outside aid.

I think we will agree that such situations as these in the United States merits the thorough consideration of the Senate and the Congress. That is truly an exceptional situation in which the Government, to a very large extent, is responsible.

With reference to Senate bills 287 and 137, in my opinion, I think that Congress should be very deliberate before embarking upon such a large program at this time.

It is my considered opinion that most school districts are either satisfactorily financed, in view of all other factors today, or could properly be brought into such relationship through reassessment of many undervalued lands and antiquated tax scales. For example, within a few short miles of Washington, D. C., there is a very large apartment development, said to be one of the largest in the world, where the monthly rent is about $100 for an apartment and yet, I understand, the land on which it is situated is still on the tax rolls on the 1939 fiscal characteristics of farm land and is valued by the acre at a ridiculous figure. You can readily see that school district could indeed be a well financed one if the local officials would assume their obligated duty.

I have long stood for Federal aid to schools, and my views remain unchanged along with the years. However, I also want to be realistic about this problem, and the economy movement now under way in the Senate seems likely to block large-scale expenditures at this time.

I think your subcommittee could well make a real case out of the districts hit by governmental activities and probably Congress would accept such a program. It was my hope as chairman of Public Works to hold hearings on bills similar to S. 1263, but while such a program represented one of construction it was more nearly aid to schools and thus rested with the Committee on Labor and Public Welfare.

I am glad to see that your subcommittee is going to go into the whole matter of the school districts needs and the need for Federal participation. But I hope that the subcommittee and the full committee will recognize the pressing need of the 500 districts which I have mentioned.

It was my hope that I could appear personally before your subcommittee to add my support to the bill by Senator Butler, but the demands of my own committee and membership on the Appropriation Committee, as well as office duties, command my full attention at this time.

Sincerely,

DENNIS CHAVEZ, Chairman, Committee on Public Works.

Senator HUMPHREY. We will incorporate into the record the report of the Reconstruction Finance Corporation, which report was presented to the committee as of June 6, 1947. This report deals with S. 137, the only bill before the committee which would affect the Reconstruction Finance Corporation.

(The report referred to is as follows:)

Hon. ELBERT D. THOMAS,

RECONSTRUCTION FINANCE CORPORATION,
Washington, June 6, 1949.

Chairman, Committee on Labor and Public Welfare,

United States Senate, Washington, D. C.

DEAR SENATOR THOMAS: This is in response to your request for our comments on S. 137, a bill to authorize the making of grants and loans to the States to assist in providing adequate public elementary and secondary school facilities.

The bill would authorize the Reconstruction Finance Corporation to make grants totaling $300,000,000 and loans totaling $300,000,000 to the States, including the District of Columbia, the Territories and possessions, in order to assist them in providing adequate facilities in their public elementary and secondary school systems.

The basic questions of national policy with respect to Federal aids to education and the form which such assistance should take seem to us to be matters for determination by the Congress, and we express no opinion thereon. However, we have given careful study to the technical phases of S. 137, and we wish to recommend several amendments which we believe would improve the bill and would facilitate operations thereunder. These suggested amendments are set forth below.

A. AMENDMENTS TO SECTION 3 (A)

(1) Amend the first sentence of section 3 (a) to read as follows: "Loans under this Act shall be for such period of time, not in excess of twenty years, and on such terms as the Reconstruction Finance Corporation may determine, and shall bear interest at a rate of 3 percent per annum.

This amendment would expressly authorize the RFC to condition its loan authorization on such terms as may be necessary and appropriate in the particular case. Such authority seems to us essential for the proper administration of the lending program proposed in the bill.

The amendment also provides for an interest rate of 3 percent instead of 22 percent as is presently provided in the bill. A 21⁄2-percent interest rate would be insufficient to cover the cost of money to the RFC and the expenses of administration including reasonable reserves for losses. We think that the interest rate should be sufficient to cover the costs of the lending program, particularly since half of the funds authorized under the bill would be paid in the form of grants. Moreover, a 3-percent rate would not be so far out of line with the usual rate of 4 percent paid on other types of public-agency loans made by the RFC, and would be more consistent with the rate on similar loans obtained through private financial institutions.

The elimination of the words "to States" in line 22, page 2, is necessary to conform to the suggested amendment to section 5 which is described below. (2) Amend the second sentence of section 3 (a) to read as follows: "Each loan to a school agency shall be secured by bonds of such agency, which bonds shall be payable from taxes."

This amendment would conform the language of section 3 (a) with the amendment to section 5, described below, and would make it clear that the bonds securing the loans are to be payable from taxes.

B. AMENDMENT TO SECTION 4 (A)

Amend the language beginning with the words "the Corporation" in line 20, page 3, to read as follows: "the Corporation is authorized, within the limitations prescribed by section 3, to allot to such State the amount to which such State is entitled pursuant to this Act as assistance in providing such facility. Any such funds allotted to a State shall be paid to the State only on the requisition of the State educational authority."

Under the present language of section 4 (a), it would seem that RFC is required to disburse the grant funds as soon as the allotment is made. The proposed amendment would permit such funds to be paid to the States as they are needed for construction purposes. We think that this amendment is desirable in the

interests of sound administration of the grant program.

C. AMENDMENTS TO SECTION 5

(1) Strike out the words "the Board of Directors of" in lines 8 to 9, page 4. The purpose of this amendment is to make it clear that the mathematical determination required by the first sentence of section 5 need not be made by the directors themselves.

(2) Strike out the third sentence of section 5 and amend the second sentence to read as follows: "Upon application for a loan to provide an educational facility submitted by any school agency to the Reconstruction Finance Corporation, which application shall have been approved by the educational authority of the State, the Corporation is authorized, in confromity with section 3, to loan to such school agency an amount within the limits of the allotment remaining available to such State."