Section 5, as presently written, provides for loans directly to the State to be secured, in accordance with section 3, by bonds of the appropriate school district or other local taxing unit. In view of the constitutional provisions of practically all of the States, it seems clear that the States themselves are not authorized to borrow for such purposes. Under the proposed amendment, this difficulty would be avoided by providing that the loans be made directly to "school agencies" which, as defined in the suggested amendment to section 7 which is set forth below, would include school districts and other public agencies authorized to issue tax bonds for the construction of educational facilities. The school agency would have to obtain the approval of the educational authority of the State before submitting its application for a loan.

D. AMENDMENTS TO SECTION 7

(1) Amend subsection (b) to read as follows:

(b) The term 'State educational authority' means the agency designated by the State legislature to administer the provisions of this Act within the State, and includes the custodian designated by the State legislature to receive and account for all funds that may be paid to the State under the authority of this Act and to disburse such funds on requisition of the State educational authority. In the District of Columbia the term 'State educational authority' shall mean the Board of Education, and in American Samoa, Guam, and the Virgin Islands, it shall mean the Governor."

This amendment is intended to clarify the definition of "State educational authority."

(2) Amend subsection (c) by adding the words “and land therefor," immediately following the words "buildings" in line 20, page 5.

(3) Add a new subsection (d) at the end of section 7, as follows:

"(d) The term 'school agency' means any school district, municipality, political subdivision or other public body which is authorized to issue bonds payable from taxes to finance the construction or acquisition of educational facilities in a State." This amendment would define the types of public agencies that could receive loans pursuant to the suggested amendment to section 5.

E. AMENDMENT TO SECTION 8

Amend section 8 by deleting the words "or to prescribe any requirements with respect to" in lines 2 to 3, page 6.

This amendment is intended to make it clear that the RFC would not be prevented from conditioning its loan authorization on any of its usual conditions, such as requirements for public bidding and awarding construction contracts to the lowest bidder, deposit of construction moneys in secured accounts in depositaries, etc. The amendment would not affect the purpose of section 8, i. e., to prevent interference in State educational policy.

In view of the urgency of this request, we have not obtained clearance of this report from the Bureau of the Budget, to which copies are being sent.

Sincerely yours,

HARLEY HISE, Chairman. Senator HUMPHREY. Mr. McGrath, is there anything else you would like to state for the record, any observations other than those that you have prepared in your own official statement?

Mr. MCGRATH. There is nothing other than this, Mr. Senator. If it is appropriate, I would like to endorse the point of view you expressed after Mr. Ewing's statement, that this is a real and pressing problem, and I believe if the people of this country know the facts, they will not consider $150,000,000 an excessive first-year expenditure with which to begin to provide an adequate educational plan for their children in the next 10 years.

It is not appropriate for me to go into the relative importance of various expenditures by the Government, but I would like to say I consider this a very small sum in terms of the investment and what it I will do for the future citizens of America.

Senator HUMPHREY. It appears that way to me, and that is why I was interested in getting these hearings going. Any man with a

family, who moves his children from one place to another, understands what we mean by overcrowding in the schools. I recall about a year and a half ago I took a trip to the west coast and was speaking before some educational groups, and I found that they were working swing shifts out there and, besides that, they were dividing up and in some communities the children only went to school half time.

I know here in the District of Columbia we have schools almost on a 24-hour basis where they just simply cannot take care of the number of children. The real problem, it seems to me, that we have is to get those who seem to plan the economics of the country to be somewhat aware, as I say, of the birth rate. I do not know what we are going to do about this, and it is pertinent to this whole problem of public education.

Mr. McGRATH. Yes.

Senator HUMPHREY. I am one of those who are very happy that we are getting a few new ones into the community. America's population has been getting older and older as the years have gone by. One of the good things that came out of the war was the increase in the birth rate and now we have this sudden influx of youngsters who are now approaching school age.

We have just caught up with that, and we are going to catch up with it even more so in the years to come. As new marriages come along, new homes are established, new jobs obtained, we continue the propagation of the species, as they have been doing since time immemorial.

This is our problem and we have to face up to it. I do not know of any way that we can face up to it and meet it without Federal assistance. There are some areas where the locality can really handle the situation. There are other areas where they simply cannot and, as was pointed out by Mr. Ewing, the real responsibility, it seems to me, of democratic government is not necessarily that of assuring everyone some golden era of security, but rather the brighter era of opportunity, and that is what this project and program is dedicated to. I am very definitely concerned about the hue and cry that goes up at this time in the Congress on economy, and I mention this primarily for the people that are in the back of the room because if we are going to get school construction, you are going to have to fight for it. I have always believed you had to fight for anything that is good. You can get all the bad things by sitting around waiting for them.

Just as 2 or 3 years ago we had the entire American public alerted as to the tragic situation that affected school teachers and their salaries and the inadequacy of the numbers of school teachers, so today we have to alert the American people as to what needs to be done by providing adequate facilities or the plant or the tools for the teachers to do the job. I can remember listening to radio broadcasts on national hook-ups a year and a half or 2 years ago when at the beginning of the broadcast the announcer would say, "America is short 350,000 teachers. Do you know the average salary of the teacher in such and such a State is $1,500?"

Well, very shortly the mothers and the fathers of the children of America said, "This is a disgrace; we have got to do something about it," and they started to do something about it. We actually elevated teachers' salaries, teachers' standards. We still have the problem of recruitment, getting the number of teachers that we need, but I think

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the picture today in the field of professional aspects of education is better than it has been for some time. At least, it shows signs of improvement.

Now, these same mothers and fathers who are very concerned about the inadequacy of school plant have to have the message brought to them that school-plant renovation or rehabilitation and new school construction just will not take place unless there is a cry from the public for it.

It just will not take place, because the economizers are going to try to keep it down, the false economizers. I think it is false economy and I will defend it any place. Therefore, I know that I cannot ask the Commissioner of Education to go out and engage in this sort of activity. I can do it myself. That is my stock in trade, to get people to see a public policy. It is also the stock in trade of the people who are here testifying in most instances, and those who listen to these hearings, and I think something has to be done about it.

Personally, I believe there is great sentiment in the Congress to do a very constructive job in reference to school-plant facilities. People I have talked to and the number of Senators that have been here to testify before the committee indicate that this is a rallying ground for school construction, but that is going to be held off-mark my words-unless there is a request for it from the great rank and file of the American people, for instance, through the PTA organizations and through your local civic clubs and women's clubs and tradeunions, and so on down the line.

It seems to me that that is the first place to look for effective assistance. The facts are crystal clear. We can hold hearings from now until 1960 and the only difference will be that the facts will become more alarming. There is no one who disagrees about the facts as to school construction.

Sometimes I wonder whether the hearing is really essential. I think it is essential only in the sense that we need to hold hearings to hear the public point of view.

But I do not think anyone has disagreed as to the need. There is a disagreement as to whether it is 400,000 classrooms we are short or whether it is 450,000. We all know we are short about 400,000 classrooms.

There is a disagreement as to whether we need $8,000,000,000 to do it or $10,000,000,000. The point is we need money.

The real problem, I would say, is to rally the public sentiment behind a constructive, planned, integrated program that will be projected, let us say, over a period of 10 years.

I think that is what we have to do, and we have to rally that public opinion not on the basis of just meeting immediate needs. The fact is we are about 15 years behind times. Those are the factors that need to be brought up.

We will recess this hearing until 3 o'clock, unless you are notified otherwise.

(Whereupon, at 12 noon, a recess was taken until 3 p. m. of the same day.)

AFTERNOON SESSION

Mr. Alves, we bills. I think

Senator HUMPHREY. The hearing will be in order. were going to hear your testimony relating to the there are five bills that are before the committee. You were here

this morning when Mr. McGrath, the Commissioner of Education, testified.

I would like to have you in the process of your testimony relate each of these five bills that we have before the committee to the set of principles outlined by the Commissioner of Education, principles which he felt to be important in any Federal-State relationship in the school-construction program.

Please go right ahead with any testimony you may have. I want you to keep that in mind when you start out.

STATEMENT OF H. F. ALVES, DIRECTOR, DIVISION OF SCHOOL ADMINISTRATION, OFFICE OF EDUCATION

Mr. ALVES. I shall be glad to do that, and assume it will not be necessary for me to read the principles again. They are before you, are they not?

Senator HUMPHREY. That will not be necessary. We have them in the record, and you can just refer to them informally, if you care to. Mr. ALVES. I shall refer to S. 137 first and address my remarks to its provisions in relation to the principles as stated, numbered 1 through 7.

S. 137 makes no provision for Federal funds for use by States in making surveys and developing State over-all programs. It does make provision for Federal funds for construction to be allocated to States instead of to local school administrative units.

However, in this connection, there is no stated provision in S. 137 which would specify the use of Federal funds in terms of State-wide programs of school construction.

Senator HUMPHREY. Left it strictly to the option of the State agency?

Mr. ALVES. It might well be argued that the States could be expected to do that.

In S. 137, Federal funds are allocated on an objective basis. That is, the total amount of Federal funds divided by the school-age population, 5 to 17, inclusive. That much is objective. It does provide a uniform amount per child population, 5 to 17, inclusive, from Federal funds plus required non-Federal funds in all States. However, it does not provide for variable matching by States according to the financial ability of States.

In this respect it fails to conform with part of principle 3 in that it does not recognize the need for equalization among the States because of varying ability. The Federal participation percentage is on a Statewide rather than on a project basis. It conforms with the principle in that respect.

With reference to provision for special consideration for school facilities because of critical situations, S. 137 carries no stated provision to that effect. Presumably, again, the State might be expected to exercise that privilege in the use of the Federal funds. There is no stipulation.

S. 137 does place the responsibility and authority for the State administration of the act in the State educational agency. It does not provide consultative services to States from the Office of Education, which is not utilized at all in the act. It places responsibility for administration in the State educational authority, which presumably has

full responsibility and authority for expending the Federal funds as it sees fit.

There are not too many stated requirements in S. 137. It does not provide for a State plan or program of school construction. In other words, in terms of actual requirements, it can be said that States do not have to set forth conditions under which Federal funds are to be expended.

Next I should like to refer to S. 1263 and make my comments in the same order. S. 1263 carries no provision for the use of Federal funds by States in making surveys. It should be noted, however, that the Federal agency-namely, the Federal Works Agency, designated in the bill-is empowered to make local investigations in connection with individual project applications. It would have the authority to make determinations as to need for school buildings and as to the ability of districts to provide them.

But I emphasize that it does not provide for the use of Federal funds by the States in making surveys and developing plans.

Funds under the provisions of S. 1263 are allocated to individual local school districts rather than to States. Presumably, it would be conservative to say that there is little likelihood for the use of Federal funds in terms of State-wide plans for school construction. There is no formula for allotting Federal funds to States.

Districts that are financilly able to do so would be required to provide 50 percent of the cost of facilities in a given project.

There is a provision which permits construction of facilities at a 100-percent Federal cost, provided the FWA Administrator determines that the facilities are needed and that the district is unable to pay its share of the cost.

In this case the hundred percent federally constructed buildings would be leased at an annual rental of not less than 2 percent of the cost until the district paid 50 percent of the total cost. I think it should be noted that these provisions would result in a situation where the school district would be indebted to the Federal Government for a maximum of 25 years.

I think the possible implications might readily be seen and visualized as to the effects of that kind of indebtedness on any future over-all State-wide planning.

S. 1263 fails to place responsibility and authority on the State for the administration of the act within the States. Only in one or two minor aspects does it utilize the State authority. It, of course, does not utilize in any capacity the services of the Office of Education.

It does not, in other words, require, as some of the others do, that in each State there be designated a State educational agency with responsibility for administering the school plant program within the State.

Senator HUMPHREY. Would you say that S. 1263 might place a premium, in view of the direct relationship between government and local school districts, upon the failure to consolidate schools? Perhaps I should restate that.

It seems to me if you grant money directly to a school district, you actually take away the incentive for the consolidation or development of a comprehensive State-wide plan for better educational administration.

Mr. ALVES. Whether that would be correct in every instance, of course, is questionable; but I think it would certainly be a fair de