Mr. FOUNTAIN. As a matter of fact, the picture you depict describes the school as probably as important as the city government itself.

I have a number of questions. However, I know how busy all of us are, so I will ask you just one or two.

Mr. MCGRATH. May I ask whether you've changed your mind, Mr. Chairman?

Mr. FOUNTAIN. Well, my mind is always open until a new decision has to be made.

I do think you have raised some important questions, and times have changed.

You made a reference to the fact that 90 percent of the financing is completely independent. Is any portion of that 90 percent allocated or appropriated to the school districts by counties or the State? Just how do they get it?

Mr. PERCY. I would like the collected panel we have behind me who really will be able to answer that.

My own experience is that they do have independent tax authority.

Mr. FOUNTAIN. I know some of them do.

Mr. PERCY. Do you know what proportion have?

Mr. STEINHILBER. Mr. Steinhilber from the National School Boards Association. And the answer is when we use the figure 90 percent are fiscally independent that means that they have the power to raise and collect their own taxes. The other 10 percent are those which have to go through counties or cities for them to raise taxes for them, but the 90 percent are fiscally independent to raise-

Mr. FOUNTAIN. They raise their own taxes and distribute their own money?

Mr. PERCY. That's right. And that power comes to them from the State legislature.

Mr. STEINBILBER. That is correct.

Mr. PERCY. So, it is a State function that is decided in Hawaii to keep it themselves and in 49 other States, to delegate 90 percent of it back to the school district itself.

Mr. McGRATH. Mr. Chairman, if I may add a point here. In my own state of New York there are over 700 school districts. Only those of the five big cities are dependent upon the city government for their revenue. Everyone else raises their revenues through the local property tax.

Mr. FOUNTAIN. There is testimony, along with other information we have received, which certainly indicates the diversity of our educational process in America, and in my own home State. North Carolina provides appropriations for running all public schools in the State. We have what is known as a State equalization fund, so that the poor counties get as good teachers and as good an educational setup as do the richer counties. Our counties build the school buildings, although I have noted in recent years that the State has issued bonds and has supplemented the counties so that all areas would have adequate school facilities.

Senator, some of the problems which have been raised from time to time about adding school board members to the ACIR relate to the Commission's size and manageability, to which you made refer

ence, and, more important, to maintaining a voting balance between levels of government. As you know, the towns and some other groups have also sought representation-I think you expressed support for that. In the light of the size and the balance issues, what are your views on including town officials and/or new members as to number?

Mr. PERCY. I would say given the percentage of funds that they control-given the percentage of employees they employ, and the impact that they have on society-that the proportions suggested in the bill are just about proper and right. I haven't heard too much argument against it really.

Mr. FOUNTAIN. When this legislation was first considered, we had a controversy between the House and the Senate conferees over the county membership. One of the reasons was that the County Commissioners' Association was so small that it was felt it was not broadbased enough to warrant as many members as the cities. We finally compromised on three county members. I think the participation of county officials in the Commission's work made it possible for NACO to become better known and a much larger and more important organization with a much broader based membership.

Mr. PERCY. Mr. Chairman, to emphasize how important schools are, I know that very high on the list of reasons people give for deciding where to live is the location of schools.

I can remember in the bottom of the depression after my father's bank failed and we were on the verge he was in bankruptcy. They made the struggle to get out of Chicago because the Chicago schools at that time were just bankrupt. They were in terrible condition and they moved up and went to the North Shore of Chicago. We must have been the poorest family in that rich district for one reason, to get their three children the best education that could be gotten. We have State equalization, but it is that local initiative that causes so many of the suburbs now and surrounding urban areas to really compete and have a high quality school. Then, it attracts industry. In this country, we look at what the quality of education is in that district. That then attracts high quality manufacturers because the executives and the workers want their children to live in an area where the schools are good. So, it has a tremendous effect on the mobility in this country.

Mr. FOUNTAIN. Just one more question and I will yield to my colleagues.

Someone has suggested that school boards and the towns and townships might be added to ACIR by reducing the number of members representing other governmental units. In this way, the size could be maintained at 26. What are your thoughts on that proposal?

Mr. PERCY. I would not feel that that is proper. Again, I say, 26can someone give us the average attendance at each meeting? How many of the 26 members are at each meeting?

Mr. FOUNTAIN. About 15 or 16.

Mr. PERCY. I have lost track.

Mr. FOUNTAIN. About 15 or 16.

Mr. PERCY. About 15 or 16, you see. To deal with the scope of problems we deal with and to have only 15 or 16 members there

when there are so many functions with larger boards than that, where the contribution is necessary to add to it-I wouldn't want to detract from any group that is on there now. That would engage, first, in a political fight that is not needed or necessary and I think we ought to really expand-it will be a far better board being an expanded board.

Mr. FOUNTAIN. One of the big problems we have now with 26 members is maintaining a quorum. Unfortunately the Presidents have not done a good job of getting their Cabinet members to the Commission meetings, which, in turn, would attract the Governors because it would give them contact with top Federal officials.

Mr. PERCY. I would like to comment on that. There are a lot of ways of solving that problem, of course. In the Alliance to Save Energy, I had a problem with that and we just simply put a provision in that if a board member did not attend half of the meetings, they were just automatically dropped.

I can say this: The groups we are considering will probably be there. They have been wanting to be on there so long and have their input, and it will get the others out also, because they won't want to be underrepresented. Right now, there is just no competition for ideas and thoughts and input, and here is such an important element of Government that should be given consideration. There are three members who are going to be there. I can almost guarantee that.

Do you think we can guarantee that?

Mr. STEINHILBER. Yes.

Mr. PERCY. I think so. And I think it is going to cause a quorum to be there because it will have the others come out.

Mr. FOUNTAIN. I am satisified they would be there, too. Going back to the question of balance. Quite often we have trouble getting Members of Congress, as well as the Cabinet officers, to attend meetings. As a consequence, the large attendance of local government members sometimes makes it rather hard to avoid an ACIR recommendation that the Federal Government do more than maybe it ought to do to help local governments in one way or another. That is one of the reasons we have been very concerned about having a good cross-section and proper balance.

Mr. McGrath.

Mr. McGRATH. Mr. Chairman, thank you.

I just want to respond somewhat to the argument regarding representation. I also wish to respond to the same problem we have of keeping a quorum present because of the fact that some Cabinet members don't show up. I would just like to point out that this President, when he was Governor of California, was himself a member of the ACIR and this administration has leaned on the recommendations of the ACIR more than any other administration in recent history. Some of the things that have come out of the ACIR, like general revenue sharing, and the concepts that the President has put forth of New Federalism, have long been proposals of the ACIR. So, I don't think we are going to have a problem, at least in this administration, of getting its Cabinet members or its Republican Congressmen or Senators to attend ACIR meetings. The President of the United States leans very heavily on this particular organization, as he should.

I believe that leaving out school boards-and I support the town bill also-is doing a real injustice to what we call now, New Federalism.

I have no further questions.

Mr. PERCY. Mr. McGrath and Mr. Chairman, I wonder if I could be excused? I would be happy to answer any questions for the record.

Mr. FOUNTAIN. Senator Percy, we appreciate your being here and staying to answer our questions.

Mr. PERCY. Well, I appreciate it very much indeed. Thank you. Mr. FOUNTAIN. Thank you very much.

I might say to the gentlemen from New York that President Reagan has, to a very large extent, encouraged his people to take a careful look at recommendations of the ACIR.

Mr. McGRATH. I might add, sir, that during the last 2 years, all three executive branch officials have either attended or sent official voting alternates to every ACIR meeting since April 1981.

Mr. FOUNTAIN. It is quite interesting, though, that the ACIR recommendation in one phase of the New Federalism is just the reverse of what the President has recommended. The ACIR recommended that the Federal Government take care of all welfare, including food stamps and medicaid, and that the States assume full responsibility for public education. This will be one of fundamental $64 questions this Congress and the State and local governments will have to deal with.

Mr. McGRATH. I think they already are. In my State, the Federal contribution to education represents less than 6 percent of total expenditures.

Mr. FOUNTAIN. Our next witness is Mr. Barton D. Russell, executive director of the National Association of Towns and Townships. Mr. Russell, we are delighted to have you with us, and you may proceed with your statement in any manner that you care to.

STATEMENT OF BARTON D. RUSSELL, EXECUTIVE DIRECTOR, NATIONAL ASSOCIATION OF TOWNS AND TOWNSHIPS

Mr. RUSSELL. Mr. Chairman, Congressman McGrath

Mr. FOUNTAIN. Before you proceed, may I ask you: How are you selected as executive director?

Mr. RUSSELL. I am appointed by the National Association of Towns and Townships board of directors in a manner similar to that of Bernie Hillenbrand, for instance, or Alan Hales.

Mr. FOUNTAIN. I see. Go right ahead.

Mr. RUSSELL. I am the executive director of the National Association of Towns and Townships.

NATAT, as you know, Mr. Chairman, represents local elected officials from over 13,000 smaller jurisdictions across the country. I would like to thank you, Mr. Chairman, on behalf of our board for inviting the association to share its views with the subcommittee as it undertakes what we consider to be a challenging and important task in evaluating the adequancy of ACIR's membership composition.

Before I begin my testimony, Mr. Chairman, please permit me, along with Representative McGrath and Senator Percy, to express

my sincere regrets on your pending retirement. The many years that you have devoted to public service, a good number of them in a leadership with the Committee on Government Operations, will not be forgotten.

Your wisdom, counsel and good nature will be sorely missed. On behalf of the National Association of Towns and Townships, I want to wish you every success in the future.

Mr. FOUNTAIN. Thank you.

Mr. RUSSELL. Mr. Chairman, NATaT has for some time strongly advocated the need for town representation on the Advisory Commission on Intergovernmental Relations. The absence of full representation for the citizens of our Nation's towns is a serious omission that should be remedied. The Commission recognized and responded to this void at its last meeting.

In an unprecedented decision, the Commission voted to support representation on ACIR by town officials. In this regard, the National Association has been and continues to be a strong supporter of the bill introduced by Congressman Bud Brown in 1981.

Representative Brown's bill would add three town officials, as you know, to the ACIR. NATaT would be the nominating organization in that process.

There are a number of reasons why town officials should be afforded the opportunity to have membership on ACIR. I would like to take this opportunity to briefly recount what I consider to be the most important reasons.

Today, the town system of local governments serves 60 million people living in approximately 17,000 jurisdictions. While many towns are still rural or nonmetropolitan in nature, many are developing into communities with demographic characteristics similar to larger urban communities.

Most towns today provide a wide variety of general purpose local government services. Just as county governments vary from State to State, so do townships.

I would like to note that towns have been officially classified by the U.S. Bureau of the Census as general purpose units of local government.

The town form of government, though the Nation's oldest, has ironically been afforded the least amount of representation and consideration by scholars and policymakers both in Washington, in the academic communities and State capitols.

Township officials want to know what they can do to strengthen the intergovernmental system-how they can best address the problems that their rural communities are experiencing today in this time of great social, economic and governmental change. There are many views being expressed in this city and throughout the country about federalism. What roles different levels of government should perform and how they ought to interact. ACIR, in the past two decades, has provided very excellent information, and an ongoing dialog among policymakers participating in predominately urban issues. We think the time has come, however, to expand the Commission's horizons to include increasingly important small town and rural issues.