BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

OF THE

COMMITTEE ON EDUCATION AND

THE WORKFORCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

HEARING HELD IN BLOOMINGTON, MINNESOTA, JUNE 6, 2000

Printed for the use of the Committee on Education

and the Workforce

OPENING STATEMENT OF CHAIRMAN PETE HOEKSTRA, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE *

STATEMENT OF CONGRESSMAN RON KIND, SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, COMMITTEE ON EDUCATION AND THE WORKFORCE *

STATEMENT OF CONGRESSMAN GIL GUTKNECHT, 1^ST DISTRICT OF MINNESOTA, U.S. HOUSE OF REPRESENTATIVES *

STATEMENT OF THE HONORABLE ARNE H. CARLSON, FORMER GOVERNOR OF MINNESOTA AND CURRENT CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER OF AMERICAN EXPRESS FUNDS *

STATEMENT OF MORGAN BROWN, EXECUTIVE DIRECTOR, PARTNERSHIP FOR CHOICE IN EDUCATION, ST. PAUL, MINNESOTA *

STATEMENT OF KEITH DIXON, Ph.D., SUPERINTENDENT, FAIRBAULT SCHOOL DISTRICT, FAIRBAULT, MINNESOTA *

STATEMENT OF BRENT ROBBINS, KIDSFIRST SCHOLARSHIP FUND, MINNEAPOLIS, MINNESOTA *

STATEMENT OF ANGELIQUE ELLIS, PARENT OF RECIPIENT OF KIDSFIRST SCHOLARSHIP, ST. PAUL, MINNESOTA *

STATEMENT OF ERIC MAHMOUD, PRESIDENT, SEED ACADEMY/HARVEST PREPARATORY SCHOOL, MINNEAPOLIS, MINNESOTA *

STATEMENT OF ALICE M. SEAGREN, STATE REPRESENTATIVE, MINNESOTA HOUSE OF REPRESENTATIVES, ST. PAUL, MINNESOTA *

STATEMENT OF KIMBERLY NORTON, PRESIDENT, MINNESOTA PARENT-TEACHER-STUDENT ASSOCIATION AND REPRESENTATIVE OF THE NATIONAL PTA, ROCHESTER, MINNESOTA *

STATEMENTOF JOHN H. SCRIBANTE, ENTREPRENEUR, MINNEAPOLIS, MINNESOTA *

STATEMENT OF LAWRENCE A. WOHL, Ph.D., PROFESSOR OF ECONOMICS AND MANAGEMENT, GUSTAVUS ADOLPHUS COLLEGE, ST. PETER, MINNESOTA *

STATEMENT OF KAREN R. EFFREM, M.D., PLYMOUTH, MINNESOTA *

The Subcommittee met, pursuant to call, at 9:10 a.m., at the Bloomington Education Center, 8900 Portland Avenue, Bloomington, Minnesota, Hon. Peter Hoekstra, Chairman of the Subcommittee, presiding.

Present: Representatives Hoekstra, Schaffer, Tancredo, and Kind.

Also Present: Representative Gutknecht.

Staff Present: Christie Wolfe, Professional Staff Member; Michael Reynard, Media Assistant; Cheryl Johnson, Counsel/Education and Oversight.

Chairman Hoekstra. Good morning. The Subcommittee on Oversight and Investigations will come forward without objection. I ask that the record be held open for 14 days to allow for Member statements, written testimony, and other materials to be submitted for the record. Without objection? No objection, so ordered.

Thank you for being here today. My name is Pete Hoekstra, I'm a Congressman from the 2nd Congressional District in Michigan that borders Lake Michigan. We have Congressman Ron Kind who is a Member of the Subcommittee and represents the 3rd District in western Wisconsin. Congressman Tancredo is also a Member of the Subcommittee. He is a Congressman from Colorado. Congressman Bob Schaffer who is also a Member of the Subcommittee from Colorado will join us later this morning. And we're also joined by a Congressman who is not a member of the Subcommittee but is a Member of the U.S. House and a Representative from the state of Minnesota, Gil Gutknecht.

Thank you for having us in Minnesota. A beautiful day this is.

The Subcommittee has been involved over the last four and a half years in the project, which we call Education at a Crossroads. What that means is that we have spent some time in Washington taking a look at the Department of Education. However, what has been the more interesting part of this process has been going around the country and listening to people at the local level telling us about "what works, and what does not work" in education. They have shared with us the different reforms, the different innovations that have been going on at the state and local level, and have shared their perspectives on federal programs. This is the 23rd hearing, and I believe this is the 21st state that we have been in. We have been in The Bronx, we've been in Chicago, south central LA, Albuquerque, New Mexico, and Tampa, Florida. We have had a good cross-section, I think, of different communities and different states to get an overall perspective of the effectiveness of the federal government in helping states and local communities achieve what I think we all want; a quality education for all of our children.

We came to Minnesota for a couple of reasons. We're very impressed with what this state has been doing in the area of charter schools and also in other areas of promoting school choice with the tax credit. This state has really been a leader in those areas. I believe it was two years ago that Mr. Gutknecht invited Governor Carlson to meet with a group of us in D.C., and at that point in time he shared with us some of the things that were going on in the state of Minnesota. We made a commitment at that time to come to Minnesota and get that all that information on an official hearing record.

I am particularly interested in what is going on in the state of Michigan from a personal standpoint. This is a state that has had tax credits for a period of time. We will have an initiative on the ballot in November dealing with tax credits, as an alternative approach to encouraging school choice, and so I'm very interested to hear what is happening in this state. With that, I will just submit my statement for the record and turn it over to Mr. Kind.

Mr. Kind. Thank you, Mr. Chairman. I too have a more detailed statement that I'll submit for the record, but for the sake of time and since we have most of the panel of witnesses present already, we'll try to move this along, but I'm glad to be around my old stomping ground. I grew up in western Minnesota and I got a law degree from the University of Minnesota.

We've had an "exciting" time, one word to describe it, in the process of reauthorizing the Elementary and Secondary Education Act in Congress during this session, and it has not been without some controversy, as most education policy debates tend to generate when the emotions run high, and we want to do the right thing. That's why I'm very glad to be here, especially with this panel of witnesses that we've assembled and with some of the exciting reforms that are taking place here in the state of Minnesota, many of which were initiated under Governor Carlson's administration. But I too will be especially concentrating on the entire role of private parochial school education when it comes to improving the quality of education for all our children.

I think it's safe to say that there are numerous concerns being raised in regard to public policy as it relates to access to private schools. One that I have is the importance of accountability in our education system. Perhaps some of the witnesses on today's panel will address how we bring accountability into the private parochial school setting without the unconstitutional intrusion of public policy on religious activity, if in fact policy is going in that direction. This is one that has not been sufficiently addressed. But there are also numerous other concerns such as the capacity of private schools to absorb the many students that some policy makers think will have an opportunity to go. For instance what type of accountability or what type of feedback are we getting right now on the performance of the private schools, as to whether they are offering a viable alternative to children in the public education setting? How do we bring more accountability to private schools if there's going to be public funding going into that area? Do they have the capacity to really deal with the number of students that are being discussed, especially if you have more special-education students entering the private school setting?

I know in Wisconsin we have a terrific charter school program. I think charter schools when they were authorized in the last session of Congress received good bipartisan support. A lot of Democrats in the Committee and in Congress are supporting the charter school movement, myself included, since we have many of them that have established a good record in Wisconsin alone. Also, public school choice is something that all of the states have either initiated or are definitely moving in the direction of. So hopefully I think there's going to be some grounds for common agreement as we move forward, Mr. Chairman, to reach some consensus in a bipartisan way. Always keeping the kids first and foremost is our number one priority rather than the minutiae or maybe some of the politics that gets involved in education today.

Thank you. Again I thank the witnesses for coming, and I look forward to your testimony.

Chairman Hoekstra. Mr. Gutknecht, if you want to say anything this morning?

Mr. Gutknecht. Well, I really didn't prepare an address, but I do want to thank you for coming, and I particularly want to thank Governor Carlson for being here.

I think education is one of those issues that every parent cares about. I want to congratulate this Subcommittee, and the Full Committee for what you have done in Washington to begin to return more resources, responsibilities, and authority back to the local school districts and states and most importantly the parents. I think this hearing is one more step in the process of recognizing, (a) the importance of education, and (b) the role that local communities, states, and parents play in the education of all of our youngsters.

So we're delighted to have you here in Minnesota, and I want to thank Governor Carlson for being here.

Chairman Hoekstra. Thank you. Mr. Tancredo?

Mr. Tancredo. No.

Chairman Hoekstra. Good, thanks.

We're going to change the order of the witnesses’ statements and have Governor Carlson go first so that we'll have an opportunity to ask the governor some questions; he has a commitment. Then we will go to the rest of the first panel, if that's all right.

Just for some of my colleagues who may not be as familiar with Governor Carlson, he's currently Chairman of the Board and Chief Executive Officer of American Express Funds. He served as Governor of Minnesota from 1990 and left that position in January of 1999. His was an administration of tax cuts, welfare reform, and what the Wall Street Journal called "Minnesota's Reform in Education, a Model for the Rest of the Country." So we are delighted to have you here.

As I said, I was delighted to have had the opportunity to meet with you in Washington where you outlined the direction and model that you envisioned for the state of Minnesota. So thank you for being here, Governor Carlson.

Mr. Carlson. Thank you very much, Mr. Chairman, and Members of the Committee. This is certainly kind of you. Let me also say that we appreciate the leadership of Mr. Gutknecht. Briefly, the Members of Congress and I pray he will continue in public service.

First of all, I want to commend the Committee for focusing on school choice. I think that alone represents a very, very large step forward. And as Mr. Kind outlined, this debate is going to drive America. We have to start taking a look at what our prime goal is. And I would contend that that prime goal ought to be to maximize opportunity for success for every single child, no "ifs", "ands" or "buts." And if we come from that premise, I think we'll be able to eventually arrive at some sort of consensus.

I would submit that it might be well for the Committee to take a look at two entirely different systems of education that are present in America. The first is higher education. Clearly there isn't any single nation in the entire world, that doesn't try to send at least some of its students to matriculate at an American college or an American university. We are the example of success in education. A large part of the success in the higher education was really driven by the post World War II era with the passage of the GI Bill, the largest voucher bill in the history of this nation. Overnight it democratized access to American higher education. If you go back to the immigrants coming into the United States, their dream always was a willingness to sacrifice so that their children could succeed, but they always measured success in the context of access to higher education. And the only way one can achieve that access is to reform K-through-12 education.

Then we look at the other system, K-through-12, and barely a week goes by that we don't see an article where test scores of American children lag behind our counterparts in Europe, and Asia. We argue time and time again whether or not we're having an apple and apple comparison or an orange and orange. I don't know why we're so obsessed with fruits when we make a comparison, but we are. But suffice it to say you rarely will see an article where America in K-through-12 has reached a level of excellence. As a matter of fact, if there were not a problem in K-through-12, your Committee would not be here this morning.

We are here because we have a problem. We are here because we recognize that the problem is serious, and frankly, we're here because we're concerned about the ability of this nation to actually succeed in K-through-12 education. So that means that we're going to have to make some substantial changes if we're going to allow our children to succeed. When you look at what drives higher education, I would argue that a large part of that success is due to the competition. When we gave choice to our students to compete in higher education, we didn't draw a line and say they could only take this stipend from the federal or state government and only go to a public institution. That stipend did not destroy public education. I think you'd be hard put to bring any college president, from either a public or private institution, before your Committee and have that person say anything other than the fact that he welcomes competition. It allows him to drive his institution toward a targeted goal of excellence. That is precisely what you want. And bear in mind it was our strength in higher education that drove the economic engine and gives us the kind of economy that we enjoy today. All of that is in jeopardy if we choose to do nothing about changing K-through-12 education.

The first argument that always comes up is about who should have choice, and what role the government should play in choice. It's odd when we look at higher education that many of the questions that Mr. Kind raises don't apply to higher education. We say from the official viewpoint of the American government that if we give you a stipend, you can go to the college of your choice. If you want to go to a religious institution and pray 22 and a half hours a day seven days a week, it's quite all right. And then we draw this immense line at age 17 for anybody going to a K-through-12 institution and say we have to have a sharp line of division. We're going to have to reexamine them.

The truth of the matter is that if we want to maximize opportunities for all children, we're going to have to start to blur some of those lines that we conveniently erected. We can't have choice in competition unless you recognize that America always had choice. The only question is, to whom was it available? When you look back through all of American history, particularly in the postindustrial period, you will find that choice is available to America's elite, and secondly, to those religions, particularly the Catholic faith, that wanted to erect schools particularly in the early America. That's what promoted choice in competition. Here we have two candidates for the United States Presidency, both of whom come out of private institutions. We have many who are the beneficiaries of choice, themselves as well as their children; people like the presidents of the United States, the vice-presidents of the United States, Senator Kennedy, Senator Rockefeller, and Jessie Jackson, all were beneficiaries of choice. Sadly they then turn around and want to deny that same choice to others. I have serious problems with that; very serious problems. I want to argue that every single child, and every single family should have access to choice.

The struggle throughout all of American history has always been over the word "opportunity." Both political parties would like the American people to believe that they are the ones who want to maximize opportunity for our young people. That is the American dream. And history has shown us that both political parties have in fact enacted policies that will do that, and both political parties have also tried to enact legislation that would retard that effort.

The only question then is can we agree on school choice? Can we give to that child who wants to succeed the same opportunity that we give to America's elite? That's truly what this debate is about. The "how to", the tax policy, the policies of appropriations, we can all argue about how to. But I do want us to understand that choice has always been a part of American history, and we ought not to seek choice in the context of trying to do harm to the public system. No, we want the public system to succeed. The question is, can the public system succeed and do a better job in an environment of competition than is currently the case? I would argue the answer is yes.

By way of background, go back to January of 1997 in Minnesota. I submitted a plan to the state legislature that called for a whole series of reform, in part resting on some changes in tax policy, but first of all Minnesota had a law that forbid state-wide testing. We truly did not know how our children, or our schools were in fact doing. We, like so many other states, prided ourselves as being the education state. Every single state in America tries to marshal its best and its brightest to take the SATs, and then the outcomes of those allows every governor and every legislator to pat each other on the back and say we have the greatest educational governor, legislators, etcetera. The reality was that in Minnesota we found that by and large we do a good job of comparing those students who are motivated to want higher education, but when we turned over the rock and we did get state-wide testing, what we found out was that roughly one-third of our children could not perform at an acceptable level in reading or math at the 8th grade level. When we got into the urban centers, that number moved well over 50 percent.

I think that opened everybody's eyes to the fact that maybe we should start looking for some changes. And it was a difficult time for the legislature and certainly for our administration to go through the debate on improving our graduation standards, and on providing more control for the local school districts, and the local schools themselves, and involving parents and teachers to work together towards targeted goals, including a system of tax deductions and tax credits designed to make certain that all parents had access to some financial assistance to benefit the educational experience of their children. And we didn't say that it could be used exclusively for one function, i.e. private school worship. We said no, if you want to buy a computer, which is the textbook of yesterday, let's help. If you want to send your child to a summer camp to learn math or Spanish, let's help. If you want to buy a musical instrument or whatever, let's help. The truth of the matter is, its simply good policy to help parents help their children succeed.

We anticipated that roughly 70 percent of parents in sending their children to public schools would utilize of these deductions and credits. But it would also allow, particularly the lower-income families, to be able to send their children to private schools. And that did help out. At last count some 33,000 families in Minnesota took advantage of the tax credit. Now, that's a substantial gain. Just think of the prices we pay for faulty outcomes. Here we're arguing about $1,500 to help somebody succeed, and we argue endlessly about that. But you know what, I can't recall the last time we had a hearing on the prices we pay for faulty outcomes. In the county you're sitting in today we spend over $30,000 to incarcerate one juvenile, and there's barely public debate on that issue. And that has to be true throughout America. Incarceration by and large is more expensive than paying the bill for the most expensive college in the United States.

So anything we can do to assist in the area of prevention is certainly worthwhile, which is what we finally found out after an extended debate where I had a large education bill triggered in special session. What was fascinating when we finally arrived at an agreement is that both political parties truly came together. In this particular instance, the Democratic Party only had to give us a handful of votes to allow the bill to pass in both houses by one vote. You know as well as I do that didn't happen. What happened was a massive revolt, and both political parties, much to their credit, poured into the chambers, recognizing the enormous political risk they were taking to vote yes. It was a fantastic outcome. What has happened since is something that Congress ought to take a hard look at, and that Mr. Kind raised the question of, and rightly so. How do we focus on the word "accountability?"

Prior to 1997 the bulk of the education debate in Minnesota always revolved around the issue of input. How much are we spending per child, how many kids in a classroom, the physical condition of the buildings, etcetera. Always input. And no matter how much money we spent, the input was never enough, judging from the enormous increases that had been given and the statements months later about schools being "broke", etcetera. We know that there isn't enough money on this planet to satisfy the needs. But once that debate shifted to outcomes, it was amazing what happened. Instantly school Superintendents and school leaders started to talk about higher graduation standards, how they were going to meet those expectations, and how they could compete effectively. Test scores suddenly became news. Parents wanted to know how their children were doing, how their school was doing, and why wasn’t it doing better. That's how you build accountability through competition.

The whole dynamic of the debate has substantially changed. Schools want to compete, and schools want to be better. Now you hear school Superintendents say "We're going to beef up our test scores." For the first time in years we are hearing that phrase "summer school." That disappeared from our lexicon. Now there's summer school. Now there's the threat that some students may not graduate because of the graduation standards. What happens? School Superintendents and teachers focus on what extra help to provide to make sure that our seniors graduate. That is precisely what you want. So it would be my hope that what Congress would do more than anything else is to create a climate that will allow states to be able to drive choice and drive competition, and to direct its energies to pushing groups that tend to oppose but have considerable political power, mainly the teachers unions, to begin to recognize that their first obligation is to the children.

Let me just tell you a story in closing. I was born and raised in a part of New York City, The Bronx, where you visited. And as the son of immigrants and living in a community which was basically all children of immigrants, we knew there was a focus on education, but the capacity of the schools to perform I can only best describe as limited. I personally have no recollection of a lot of academic activities going on in school. And I remember when I got a scholarship to the Church School of Connecticut and had to take a placement exam and at that time I didn't know what it was. I had two hours for the word "grammar" section that I never heard of, and two hours for algebra, another word that was as foreign to me as Latin. I was the only student in the history of the church school that sent in two totally blank papers. The truth is, in many of our urban centers, such as Philadelphia, Boston, or New York, even the public school system ingeniously designed escape valves, such as the School for Musical Arts in New York, and the Bronx High School of Science. All were release valves to accommodate the exceptionally bright students. But for the overall general student it was really a downhill cycle.

Three years ago I went back to PS-36 in The Bronx. It's still a small school. It’s still what you can call a dilapidated school, the wooden floors still have those wrinkles, but things have changed. The Principal is a fellow named Watkins. He stands six-seven, and he played on the only basketball team to win both the NIT as well as the NCAA title. He's black, and he's in a community that is now largely minority. Many, many Hispanics who are just coming over have problems adapting not only to urban life but also to difficulties in language. One would think that this school would have faulty outcomes, and yet I was delighted to learn that this school had all sorts of exceptions. Mr. Watkins can hire his faculty. I asked questions like "When does your faculty go home?" and

"When does school close?" And he turned to the woman next to him and she said "I left at 6:30 last night." We're closing schools in Minneapolis around 2:30. If a kid isn't keeping up with his class work, he's tested automatically every single week; every child. If he's not keeping up with his work, he's kept after hours in a remedial class. And it's not unusual to walk by a classroom with one teacher, and three or four children going over the reading, or math or whatever.

In New York they have real budget cuts. And I'm not talking cutting anticipated expenditures; I'm talking cutting real expenditures. Mr. Watkins will never allow computers to be cut. He brings every child in every single morning, because these children have been through a tough night. They’re adjacent to one of the toughest housing projects in New York City. They've seen rape, they've seen murder, they've seen drug deals, they've seen violence, and he calms them down and he gives them a five-minute talk on values. And as he told me, "I'm a religious person but I don't impart my religion, but I do impart my values. And we built this school on the basis of mutual respect, so that when students walk down the hallway, they're quiet, respectful of the fact that others are working, and when they come to this school, this school is safe." When a kid doesn't show up in the morning and he's late, they get a call from Watkins' office, and if the kid doesn't show up period, that family gets a visit from Watkins, and at six or seven o’clock, nobody wants to fuss with him. The result is these children refer to themselves as "Watkins' kids". They test out in the top quartile.

Now, as Lincoln observed of General Grant, "maybe we should take a look" at what Watkins is doing. I asked him if he was fearful of vouchers, or of the competition, since right across the street from him is a parochial school. He went to the window, pointed to it as if it had disappeared, reminded me it was still there, and he asked "Where did you send your kid?" The answer is PS-36 because you couldn't do better.

We have schools here in the urban area. I pointed out Risen Christ School in my written statement. Eric Mahmoud will talk about his very, very successful school. Risen Christ is truly an inner city parochial school. They have 440 students attending kindergarten through the 8th grade. Sixty percent of all students are minorities, 40 percent are African American, and 47 percent of the students are eligible for school lunch, so basically it's an impoverished urban school. It costs $1,235 to go to Risen Christ. The actual cost to educate that child is $4,500. The Minneapolis system spends approximately $11,000. And I don't say that the Minneapolis system is a success, I don't want to get into that. I just want to get the differentials here. But the point is, when the time comes for testing, Risen Christ kids at that school score 19 percent higher on tests in mathematics and 22 percent higher when it comes to reading. It seemed to me that we would want to hear from Risen Christ. What is it that they do with less money to get these kinds of favorable outcomes? Can we impart that to other schools as well?

Let me close on that note if I may. The overall goal again revolves around opportunity. Not one of us in this room is willing to look a child in the eye and say "You will fail," or "I want you to fail." The truth is we want children to succeed. We have the opportunity with the enormous resources that we have available to us to be able to maximize opportunity and access for every single child. The reality is the more choices we lay out for children and for parents, the better it's going to be; more vocational, and technical education, particularly partnerships with business. Go to St. Paul, I can't recall the school at the moment. It is a school that was formed for dropouts, and that school forms a partnership with the dropout. The dropout is motivated and forms a partnership with the teacher. The teacher lays out expectations, and the student performs. Approximately 80 percent of those children go on to some form of higher education. I would much rather engage in a whole wide variety of choices than try to accommodate the needs of a faulty outcome.

Those truly are the choices that are before this Committee, before Congress, and before every political body in America. I pray that we can put aside whatever differences there may be relative to politics and begin to focus entirely on the well being of the child, giving to every child the same opportunities that we want for our own children.

Thank you very much, Mr. Chair.

Chairman Hoekstra. Thank you. I know your time is limited. Do you have to leave at 10 o’clock?

Mr. Carlson. If I may.

Chairman Hoekstra. I'll keep my questions brief.

Do you see the federal government putting in place programs that would encourage choice or allow federal funds to be used by the states in a state-designed program for choice?

Mr. Carlson. Well, the conservative part of me would answer, that I would prefer the block grant approach because it comes with the fewest strings attached, and I think most states would prefer to maximize their flexibility.

The second thing I would say is that if there's some way to change the tax credit to allow for deductions and credits for any valid educational expense, be it at the higher or lower level of education, I think that's best. Families are really struggling for a large part in terms of pre-kindergarten as well as all the systems above kindergarten. The costs of higher education are enormous and well beyond the capacity of a single student to work his way through. So let everything be done in terms of the tax code to open up more in the area of deductions and more in the area of tax credits, and I think we would rake in enormous benefits.

Don't underestimate the strength of the GI Bill. It was a pittance, when you look back on it, that we as a nation put into the GI Bill for the returns that we got. I'd hate to think of what the American economy would have been like in 1960 if it weren't for the GI Bill. Overnight it changed every single college, without exception. Every one of them changed, because of mature, seasoned veterans coming back with diverse backgrounds, from diverse geographies and literally dramatically changed every single institution, at enormous benefit. We have the same potential. There's nothing as exciting as turning out the mind of a child. Boy, do those kids go.

Chairman Hoekstra. What percentage of state education funding is associated with the tax credit? Do you know? Is it 10 percent?

Mr. Carlson. Alice? Give me an idea, Alice.

Ms. Seagren. I don't know if some of our fiscal people are here. We do have one of our tax staff that could probably get that to me.

Mr. Carlson. Out of a $10 billion budget?

Ms. Seagren. It's very small.

Chairman Hoekstra. Mr. Kind?

Mr. Kind. Thank you, Mr. Chair.

Mr. Governor, thank you for your testimony. Correct me if I'm wrong, but in the 1980s on the tax books the State of Minnesota had some form of tax deductions or tax credits. During your administration you took what existed and you expanded those programs for income limits and also the amount of deductions. The question I have for you is how much does this actually empower the low-income families that are at or near or below the poverty level by offering a tax deduction or tax credit when many of these same families are already receiving earned income tax credits? How much of an impact does that have on your options and plans for them to move their students into a private school setting based, for instance, on this offer of a tax credit or tax deduction? Given their fixed and low incomes, it may not amount to a heck of a lot of money for them and make that fiscal choice impractical?

Mr. Carlson. Minnesota prior to our administration had a tax deduction available. We obviously expanded use of it for paying private school tuition. The education tax credit was really built on the working tax credit, and exactly 38,766 families used approximately $14 million this past year. So that's enormous, and not available before.

The beauty of that particular approach is that it avoids the constitutional issue about endless legal debates. And the second strength is that it really democratizes access, because you can work off of the existing working tax credit, and you can build upon it, so you are not inventing a new system. Then the argument revolves around how much you really put in. If I had my druthers, I'd quadruple it, but the Congress can help out in that area. I think that would be absolutely marvelous.

Mr. Kind. My question is how practical is a tax deduction or tax credit program for these low-income families when many of them aren't going to benefit from it, living in poverty conditions as many of them are? There's a direct correlation between the high-need areas and at-risk students and their performance in the school district.

My concern is, you know, we're really not going to see any revolutionary change in the quality of education for all our children until this nation gets serious about eradicating poverty and until we can get to that policy level. I think then you're going to really see some truly transforming effects in performance of all our kids in the country. But just offering a tax credit or tax deduction scheme to families isn’t going to benefit them that much. They don't have the type of disposable income that would be used to move their children to a different school based on the allure of some tax when they aren't receiving the earned income tax credit.

If you move it to an automatically refundable tax, then you're talking private vouchers. I know a lot of people have been shying away from the use of private vouchers, and the terminology of vouchers, but that in reality is really what we're talking about.

But I have another question for you.

Mr. Carlson. Let me just answer one at a time.

Mr. Kind. Sure.

Mr. Carlson. I would take issue with your premise. Let me go back over the education tax credit available to families with incomes below $35,000. Thirty eight thousand of those families took advantage of it. To argue that since it's now "the solution," and we should be better off doing nothing until we totally eradicate poverty, I don't think is a workable solution. The best tool that you can give to any family in terms of working themselves out of poverty is access to a quality education. That's what it's all about. That was the immigrant dream, and that has to be the dream that Congress officially adopts. I hear people today talk about their schools, and talk about impoverished children who have a difficult home life who are blessed with the opportunity of choice. And bear in mind that we allow those choices today to all those who can afford it.

I think it's sad when, correct me if I'm wrong, neither the President nor the Vice-President or any member of the Cabinet or any Member of Congress sends their children to a public school in Washington, D.C. To me that says it right then and there. And I think it's sadder when those people who are the big critics of choice are the same people that turn around and use it for themselves and their children. I think you lead by example.

I'm sorry, I grew up right behind that bridge generation, and I remember when President Roosevelt declared war. He didn't say, "You will go to war, your children will go to war and mine will stay home." When Roosevelt died, his son Jimmy was so deep in the jungles of Asia that he could not be located in time to come back for his own father's funeral.

We had Presidents who led by example not by exception. And as Members of Congress, I would strongly urge you to recognize the fact that you have the ability to take advantage of choice, and now you've got to figure out a way to maximize that advantage for those people that surround you. I would like to see the day come when you're holding a hearing asking the private schools why they can't excel the way the public schools do. Competition will give you the benefit of that excellence.

Chairman Hoekstra. Thank you. Mr. Tancredo?

Mr. Tancredo. Thank you very much. Governor, I just sit here and listen to you and I'm in awe of the leadership that you provide to this state, and I think about how much we need you or a clone of you in other areas.

In Colorado I wrote a tuition tax credit initiative, put it on the ballot in 1998, and it failed for lack of leadership, the kind that you provided this state. I hope that that same concept will come back either through the legislature or through the initiative process again. I'm sure it will.

It is apparent to me that something has happened since the time that the Congress of the United States provided leadership in the area of education, specifically the GI Bill. And what we now see happening is that it provides "follower-ship", it does not provide leadership. It actually responds to and is dragged kicking and screaming all along the line into providing what it can, especially in terms of choice in quality education for all kids. One reason of course is because the teachers union has such an enormous amount of political power, and it is focused often times at the Congressional level. Therefore true reforms are almost always difficult to obtain.

Could you help us with the issue of accountability that Mr. Kind brought to our attention, especially in terms of the tuition tax credit plans that you have developed? I wonder if there are certain requirements? How do you establish the criteria for awarding the credits? Are they dependent upon some sort of achievement levels, or certification process? Can any private school participate in this? What keeps them accountable? Is it just parental control of the process? Could I open up Tancredo Tech tomorrow and participate in the plan?

Mr. Carlson. Thank you very much; you're very, very kind with your comments.

The way the plan was devised to have, and there may be other people here who are more aware of some of the technical answers, money flow to the family and not to the institution. So with the money going to the family, they would then have to work out with the school an arrangement that would allow them to qualify, because the money would come after the fact.

What has happened is a variety of programs have been established where money is actually loaned to the families and then paid, if you will, at the end of the school year with a tax credit. There are substantial ways in which I would hope it can be improved, but it would be no different than taking a deduction for any other allowable purpose. And we ought not to treat people who use education credits or education deductions differently than we treat anybody else. Bear in mind, like any compromise that comes out, you're coming out with an imperfect solution.

If I were going to have a perfect solution, I would prefer to "voucherize" the entire system. But not being able to do that, and trying to avoid a constitutional test, I think the tax credit/tax deduction route is viable, and you as the policy makers have to decide for what purpose? I would argue for a very liberal policy based on legitimate family needs while educating children, available across the board regardless of what level of education it is. I think that would be a good policy for the United States as a whole. How the Revenue Department enforces the usage and the details would be better answered by somebody from that Department. My druthers would be a substantially liberal policy.

Mr. Tancredo. Thank you.

Chairman Hoekstra. Mr. Gutknecht?

Mr. Gutknecht. Mr. Chairman, I don't have any questions.

I do want to thank you, Governor, not only for your message but the way you delivered it. It is a message that we need to hear more of not only in Washington but also around the country. At the end of the day it really is true, having served on Washington Oversight Subcommittees, that one of the great tragedies is we are really cheating too many kids, particularly in our inner cities where we spend an enormous amount of the money.

In Washington, D.C. expenditures are well over $10,000 per pupil, and yet every one of us who makes public policy in Washington, D.C. knows most of those kids are being cheated, and they're being condemned to a second-class education. There's just something fundamentally immoral about that. I would hope that you would continue, and I know you've kept more than busy enough in your new vocation, to speak out on this issue, not only here but also around the country.

I thank you.

Mr. Carlson. Thank you.

Chairman Hoekstra. Thank you very much for being here, I appreciate it.

Mr. Carlson. I wish you the very best, thank you.

Chairman Hoekstra. All right. Let me introduce the rest of the first panel. We have Mr. Morgan Brown who is the Executive Director of Partnership for Choice in Education in St. Paul, Minnesota. Partnership for Choice in Education is a nonprofit organization dedicated to raising public awareness of the benefits of school choice and to helping families use Minnesota's education tax credits and deductions. Prior to joining the partnership Mr. Brown worked for seven years in a variety of policy nonprofit positions, including working as a legislative assistant for Senator Grams, and Congressman Ramstad. He's also a graduate of Carleton College in Northfield, Minnesota.

Governor, I think you've got a lot of fans this morning.

The next person is Dr. Keith Dixon, Superintendent of the Fairbault School District in Fairbault, Minnesota. Dr. Dixon will tell us about how parents use the tax credit in this school district to expand kindergarten opportunities.

We also have Mr. Brent Robbins here today representing the KidsFirst Scholarship Fund in Minneapolis. The KidsFirst Scholarship Fund has provided improved educational opportunities for disadvantaged children in Minnesota. You know, you may have a great funding opportunity by suing the people in Michigan for using your title! The name of the initiative in Michigan is called KidsFirst. Or maybe you've given them your approval to use that.

Mr. Robbins. It’s probably generic anyway.

Chairman Hoekstra. It’s probably generic? All right. Then we have Ms. Ellis. Ms. Ellis is from St. Paul, Minnesota. Her son Dylan received a scholarship from KidsFirst to attend St. Columba School in St. Paul.

Welcome and thank you for being here. I'm assuming that's Dylan sitting behind you there?

Ms. Ellis. Yes.

Chairman Hoekstra. Thank you. Then we have Mr. Eric Mahmoud, President of the Seed Academy/Harvest Preparatory School in Minneapolis. This school is a charter school where the majority of the students are African American. They have seen tremendous test score results through the use of Direct Instruction.

Welcome, good to have you here.

And then as our final witness on Panel I, we have Representative Alice Seagren, a member of the Minnesota House of Representatives. She represents the 41^st District, and/or 41A? You're 41B as well? Really? Wow!

Ms. Seagren. We have a Senate District and the two House Districts.

Chairman Hoekstra. This includes the western half of where we are today, a portion of east Eden Prairie. Representative Seagren is a Chair for the K-through-12 Education Finance Committee.

Welcome.

Mr. Brown, we'll begin with you. We're always a little careful when we've got a Governor here, so if you were wondering what those lights mean, they're lights that go green, yellow, and red. Green means you have five minutes. Yellow means you're running out of time. Red means you're out of time. Typically when we've got a Governor or a former Governor testifying in front of the Subcommittee or a member of the Cabinet or something like that, we don't turn the lights on, we just kind of let them go. It's not too often you tell a Governor "Excuse me, your time is up."

We do that to the Members of the Congress, and so if the rest of the panelists and the Members would kindly watch the lights. I do have a weak gavel, but I probably won't let you go on as long as the Governor went on. And we will submit your total written statement for the record. So thank you for being here.

Chairman Hoekstra. Mr. Brown, we'll begin with you.

Mr. Brown. Thank you, Mr. Chairman. I want to thank you for coming to Minnesota today and giving education reformers in this state a chance to tell you about the successes we've had here.

The organization I work for, Partnership for Choice in Education or PCE is dedicated to expanding education choices for families but also providing practical assistance to parents for the education that already exists in this state. So as a result, we work with parents with what I call the full spectrum of education choice, everything from choices within public school districts, the ability for students to cross district lines to go to another public school in the state, charter schools, nonpublic education including private schools and financial resources such as KidsFirst, and resources for home schooling as well. So we are able to really work with parents with a full spectrum of educational choices.

However, since 1997 when Governor Carlson enacted a groundbreaking educational tax credit deduction law, we have really focused on coordinating the successful implementation of that law with both public agencies and various other nonprofit community organizations. Let me be a little more specific about questions regarding the technical aspects of that law. I'll give a brief background.

The new education tax credit allows all parents, whether they send their kids to public, private or home school, with household incomes of up to $37,500 to claim a refundable credit. It is a refundable credit, which is important with low-income parents for a variety of expenditures, and these include tutoring, after-school and summer academic programs, music lessons, computer hardware and educational software, and fees for transportation, textbooks and instructional materials. Families with incomes up to $33,500 can claim a full $1,000 tax credit per child, up to $2,000 per family. And the $33,500 is gradually phased out to the $37,500 level. That tax credit was new.

In addition, in 1997 Minnesota also expanded an existing education tax deduction, which had been on the books for a while, and that deduction is available to all families regardless of income or whether they itemize their returns. The limits on that are parents can claim a deduction of up to a little over $1600 for children in grades K through 6, and up to $2500 for children in grades 7 through 12. The eligible expenses for the deduction are identical to the credit with one important difference that I will talk about later. Currently you can claim nonpublic school tuition for the deduction but not for the credit under Minnesota law currently.

But anyway, the bottom line for us is that every child in the state stands to benefit from the incentives in this law, and the incentives encourage parents to be more involved in their children's education. Since our organization is focused on helping low-income families in particular use the tax credit, we are already seeing evidence that it has given some parents a greater sense of empowerment in this area.

The initial results for the education credit have been promising, and Governor Carlson went over some of those. In 1998, which is the very first year the credit was available almost 40,000 low-income families, about one out of every five eligible in the whole state, claimed a total of $14 million under the credit. The average amount they claim is about $400, which was twice what we had originally estimated. The stats also showed that it's very popular statewide. Every town in the state had families using this. The early data we have for 1999 returns, which is just being processed, is even more encouraging. With a little more than half of last year's tax returns processed, already over 45,000 families claimed over $15 million worth of credit. So we're already exceeding the stats we had last year. We really feel that opponents for tax credit who originally claimed the economically disadvantaged families wouldn't utilize it or wouldn't be able to come up with the money for educational expenses are being proved wrong.

I'll briefly mention the deductions. Those were very popular in 1998 with about 150,000 families claiming more than $160 million in education expenses. I see the red light, but I'll finish up here quickly. In comparing things to the early numbers of the credit, as Governor Carlson pointed out, no law's perfect. We do see some flaws, and I'll be happy to expand on it today.

A couple of things we would like to see as an organization, is first we'd like to see the credit made more user friendly for lower-income families. That speaks to the issue of disposable income, and you're going to hear from Dr. Dixon regarding a plan to increase the income limit to moderate-income families who can still use help in this area. We really believe that you should allow eligible parents to claim the credit for nonpublic school division. On this last point I want to make clear that the discrepancy between the credit and deduction regarding nonpublic school tuition is solely due to the necessity for political compromise in '97. Governor Carlson's original proposal allowed low-income parents to claim nonpublic school tuition for the credit, and at the last minute there was a necessary compromise to get the bill enacted. But as an organization we really believe it is inherently unfair that low-income parents, for whom the deduction is of little or no use, cannot defray at least some tuition costs, while middle- and upper-income parents can do so. It's a question of equity.

So in closing I encourage you, Mr. Chairman and other Members of the Committee. I know Representative Tancredo is interested in enacting a federal education tax credit. I ask you to insure, as Governor Carlson said, that it is as "liberal as possible," and that it allows parents to spend the dollars returned to them on the widest possible range of educational opportunities. Thank you very much.

Chairman Hoekstra. Thank you. Dr. Dixon.

Dr. Dixon. Good morning, welcome and thank you for being here.

I want to acknowledge Mr. Tancredo. I wish Mr. Schaffer were here. I was born and raised in Colorado, and spent 26 years in the public education system in Fort Collins as an Assistant Superintendent.

I welcome Minnesota Representative Seagren. Usually I am sitting there and you're sitting here.

Ms. Seagren. I notice you're really smiling about that too.

Chairman Hoekstra. Did you want Mr. Schaffer here?

Dr. Dixon. Yes, I'd like to see him here.

Chairman Hoekstra. We'll wait for your testimony until Mr. Schaffer gets here.

Dr. Dixon. How are you?

Mr. Schaffer. It’s nice to see you.

Dr. Dixon. You too. I see you already have the green light on.

Chairman Hoekstra. We'll start back over again.

Dr. Dixon. I'm Superintendent of schools in Fairbault, Minnesota, and first of all I want to say I'm very proud of the public school system. I'm an advocate for public schools, and as the Superintendent I'm going to do everything humanly possible to make sure public schools succeed, and I think we're doing that.

I think one of the movements around the country that's helping us that you'll be familiar with is certainly the "oversight and the quality movement." We're certainly a school district that's established strategic directions, system aims, goals, and measures, and I think one of the things that have helped us in the state has been the "standards movement." It asks for clear measures from us, and school districts and staff are busy now analyzing data and looking at how they can improve teaching within schools. I think that's the essence of what the quality movement is all about.

The other responsibility I think I have, as a Superintendent is to be sure every child gets a quality education, and I do believe in choice. I believe parents need to be involved in an option. That's why some of the options we're talking about today come into discussion. If you look at the tax credit/tax deduction plan, and look at our charter schools as competition, that leads you to one set of answers. You can also look at another form of public choice, and that leads you to another set of conclusions within our school system.

I can talk about two things, and one is the charter schools. I see Steve Dess sitting out here. I think we were the first public school in Minnesota in which the staff voted to become a charter school. We have an elementary school in Faribault that is a charter elementary school today. Also the other side of this is not just choice for parents but choice for staff. We're an example of teachers saying "We want to become a charter elementary," and I can certainly talk more about that.

Today I want to focus on the tax credit and tax deduction system with my few minutes. One of the things we focused on was to say this is not only available to parents, but who's going to provide the services? Public schools can certainly provide options within the community for families, just like parochial schools. And so we took it upon ourselves to say we're going to start using this legislation to provide extra choices for families within the public school system. That's where we started.

The first one was with kindergarten. In our state we fund a half-day-every-day program. And so what we in essence did was say to parents "We're going to offer an all-day option for you; a choice." We had about 60 percent of our families take advantage of that choice within our system. The others do it not because of financial reasons, because it is a choice. They believe a child isn’t developmentally ready for an all-day program or they want their child home with them for part of the day. So as we looked at this option, we named it "Kinderlinks", which is a connection to our half-day program. We have certified staff in that program, so that a child is with a teacher all day long and in essence attends all-day kindergarten in this program.

Now, the one thing I want to focus on, that I think Mr. Kind brought out, is what our biggest challenge was. This was to provide this opportunity for low-income families, and I want to address that specifically. The way it's set up in Minnesota, in order to receive the tax credit you have to buy the service first. Most low-income families cannot pay the $1,000 to even be eligible to get the $1,000 back. So we worked it out with one of our local banks to lend the families the $1,000 at 6 percent simple interest. If they paid it back at the end of the year when their tax return was processed, the interest would be reduced to zero as a motivation to pay off the loan early. That's the way we set up the program.

I think one of the things Governor Carlson talked about, a change in the tax code, we would have loved to have seen because the way it's set up, the money goes directly back to the family. Then the family goes in and pays off the loan. I can tell you, working with banks, that when they first looked at this proposal, they asked, "Why should we do this? It sounds as if we make no money and the risk is very high." And that is the truth in the way it's set up. It would have been much easier for banks if the families signed something that said, "Once you fill out your tax return, the money goes directly back to pay off the loan." But the way we made it work, and in some way in answer to your question, Mr. Kind, is the relationship we have with families. I think we overlook that in schools.

One of the things that address the issues of poverty and working with families of low income is the relationship we have with them and what we can do for them. Frankly, most of these families see all of our bureaucratic systems as foreign. I don't care if it's school systems or social services or what it is. What this allows us to do is work directly with those families. We process the loan application for them; they don't go to the bank. We made it very simple. We work with the bank; we help them fill out a set of worksheets to fill out their tax returns so that they make sure they get them in. We do all the work with families.

One byproduct we're starting to see for the first time is some of these families establishing financial credit that they never had before. If you can take a simple loan of $1,000 and pay it off, you've established financial credit. We're also seeing some of them getting bank accounts where they have these loans. So we're starting to see some byproducts from working with them, not only for their children but also relative to establishing financial credit and stability on a simple thing like $1,000.

In answer to your question I think the key is how we as the institutions work with families themselves. I think that's been our focus. We've been very successful getting our money back. I think we've loaned out over the years we've participated probably $34,000. I believe in two years we've had one family that was a challenge to get the money back from, and frankly the bank decided to split the risk. So that's how it was done.

I'll be glad to answer any questions on charter or this movement.

Chairman Hoekstra. Thank you. Mr. Robbins.

Mr. Robbins. Hi, my name is Brent Robbins. I'm here today representing the KidsFirst Scholarship Fund of Minnesota. I'd like to thank Chairman Hoekstra and other Members of the Subcommittee and Congressman Gutknecht for being here today and listening to us. I'd also like to thank Christine Wolfe of the Subcommittee for her help.

Victor Hugo once wrote "There is nothing so powerful as an idea whose time has come." School choice's time has arrived. In every part of this country, Mr. Chairman, people have decided that their children are being ill served by the current education system and they are opting out. I think Governor Carlson mentioned that international testing confirms parental intuition. Statistics show that American kids do fine in fourth grade testing, or they're a little ahead of their international peers. By 12th grade they're closer to the bottom. That tells me there's something wrong with our education system.

Unfortunately, although there are wonderful and dedicated teachers and "Dr. Dixons", in many school districts the bureaucracy is so large and impersonal it's difficult to implement reform. I think school choice is a partial solution to the problem. Giving parents maximum school choice will not only allow parents to put their children in better schools, but it will also spur the public school system to adopt reforms. It's the two-prong nature of school choice that makes it so powerful. You get each kid being saved and systematic change.

But what I'm here to talk about today is not a purely public system but a very private one, and it's called KidsFirst Scholarship Fund. Ron and Laurie Eibensteiner founded us in 1998. It's funded by local contributions and by a matching grant from Children's Scholarship Fund.

KidsFirst gives scholarships to parents so that their kindergarten-through-eighth-grade children can attend the school of their choice. The fund pays 75 percent of tuition to private schools up to a maximum of $1200 per year. The average child roughly gets about $1100. So $1,000 is quite a bit. It gets you very far along. I don't have these figures exactly but the average tuition, speaking a little out of turn is not really above $3,000 for most of the private schools that our kids are going to, at least the amount they charge the families. Families earning less than 250 percent of the poverty level or an income of $41,125 for a family of four are eligible for a KidsFirst scholarship. To date, KidsFirst has awarded over 1400 scholarships that are guaranteed for four years. The scholarships are awarded by lottery once the basic eligibility criteria are met. In the latest round of scholarship awards, the average income of families was $26,300, and more than half of the kids getting scholarships were minorities.

KidsFirst is a lot more than numbers, though. It's about changed lives through the moral, social, and intellectual influence of a good school. Recently I was responsible for compiling this book Letters from the Heart that I think everyone on the front panel has, and I'll be happy to give to anyone else who would like one. I really urge you to take a look at this book. It contains cards and letters describing a profound impact that good schools have on kids' lives. You'll see it's very clearly. The parents of different nationalities, different religions, and different countries of origin, it really doesn't matter, all want the same thing. They want safety, discipline, good morals, high academic standards, and a loving environment where their child is cared for as a person. Often public schools do that, sometimes they don't. Private schools deliver these benefits to kids at a fraction of the cost.

Now, KidsFirst, a private entity, is doing public good as these letters and drawings show, but 1400 scholarships is a drop in the bucket. I never want to minimize how important they are, but from a Congressman's perspective, this is not making systemic change, at least not yet. I would therefore urge that Representative Seagren and the Members of Congress continue to expand school choice at the federal level. Without a systemic effort, the school choice movement will have a small impact. I think you mentioned, Congressman Hoekstra, the Washington, D.C. children and the efforts to give parents more parental choice. I hope you try that again, and I hope that it becomes law.

In conclusion, I just hope that you look through the book. I'd like to introduce Angelique Ellis and her son Dylan. Dylan is a KidsFirst scholarship recipient page. On page 32 of the book is a letter from Angelique Ellis.

Ms. Ellis. Thank you for having me. I must say that when I initially saw the commercial for KidsFirst Scholarship Fund, I thought it was another scam. To think that there was/is actually a legitimate organization that awards grants to low-income families that want to give their children an education alternative to the traditional public school academic atmosphere was almost too good to be true.

I called to see what the people on the other end were really selling, since most 800 numbers on TV have to do with some psychic something-or-other. To my surprise, the person on the other end of the phone just asked me a few qualifying questions, my demographic information, and that was that. An even bigger surprise was when about a month or so later I actually received the brochure about KidsFirst in the mail. I went to the web site, printed out a list of private schools, the application and instructions, and followed through from there on. In the spring I received notification that my son had received a scholarship in the lottery. I was elated because I knew that not everyone who applied received a scholarship. We were lucky.

I attended private school from the 9th through 12th grades, so I know the difference between a public and private school education. I truly believe my son will be more successful and well rounded in life by learning in an environment that is diverse in culture and academically challenging. KidsFirst Scholarship Fund of Minnesota has allowed my son to get started on that path. I'm so very glad and truly grateful that someone saw that there was a need and has started this wonderful program.

For kindergarten Dylan has been going to St. Columba School. It's a small school in St. Paul with an absolutely wonderful staff. I have multiple sclerosis and have a hard time getting around. They've been very helpful to me when I couldn't make it in for conferences. The principal, Ms. Pappas, actually arranged to have my son's teacher come to my home, despite the fact that they stopped doing that the previous year, without hesitation. Every day that Dylan returns home from school I ask him what he's learned or what he did that day. I'm always pleased that more often than not he's learned some wonderful new piece or pieces of information. Dylan is a sponge when it comes to learning new things. It's my job to do what it takes to channel that into insuring that my little boy becomes a successful, professional, responsible, loving, and well-rounded young man.

I'm on disability and therefore have a limited income. KidsFirst Scholarship Fund has been and is a Godsend. It affords those who might not otherwise be able to do so a chance at obtaining a better-quality and more structured education. Dylan's performed so well in school academically and socially that his enthusiasm for learning has been the icing on the cake. Not only is he learning at a rapid and steady pace, but he also likes and looks forward to each school day. Literally. Thank you.

Thank you very much.

Chairman Hoekstra. Thank you very much. Mr. Mahmoud.

Mr. Mahmoud. Good morning, Mr. Chairman, Members of the Committee. I want to thank you for inviting me to participate on this panel.

I want to say to start off with I'm not necessarily for public schools, charter schools or vouchers. I'm really for effective education for our children. I do think that charter schools and vouchers give parents the options and choice to access effective educational institutions. I'm going to talk a little bit about the background of our school. We'll talk about our instructional approach, since that was the entrance. I'll start off with a quick story.

The story is about a young man named Lorenzo, and there's a movie about this young man, "Lorenzo's Oil." Lorenzo’s Oil is about a family, a husband and wife and their son Lorenzo. When Lorenzo was young, he developed a very debilitating disease, and to make a long story short, doctors from around the world had tried to come up with a cure for this disease but to no avail. Because of the love, and the commitment of a father with no Ph.D. and no medical training, they were able to cure this young man of his disease.

Our children suffer from a debilitating disease that has been brought on by society in general and the neglect of our spirits in particular. About 15 years ago my wife and I recognized that our children were suffering from this debilitating disease, and we decided that either we were going to be part of the problem or part of the solution. We started our school about 15 years ago in our home with ten children, and today we have over 500 children in our program: 350 in our elementary school, and 150 in our preschool.

When we started our elementary school in 1992 we were a private school, and so parents paid about $3,500 to attend our school. One of the things that we were finding, though, was that by second grade we lost a number of our children because they could not continue to pay the cost of tuition. So about two years ago we took advantage of the charter school legislation. We became a charter school so that finances were not an option or bearing for parents, and it's been a tremendous transition for our school.

In 1994, two years after we started our charter school, we began to look around the country for models of successful schools with a whole idea that success leaves clues. Instead of reinventing the wheel, we were finding models that worked, in particular that were dealing with the population of children that we were dealing with, which is primarily poor, African American children. And after looking around the country, we found a model in Houston, Texas, a school called Wesley Elementary School. Wesley is 99 percent African American, 99 percent poor, yet these students perform two and three grade levels above their actual grade. After doing some additional investigation, we found out that they were using an instructional approach called "Direct Instruction."

Since 1995 we've used Direct Instruction in our school, and we've had tremendous success. Our first year after using Direct Instruction our children went from 53 percent in reading on the reading comprehension tests for the California Achievement Test to 85 percent. Our second graders went from 49 percent to 71 percent. Just last year we took the Minnesota basic skills test. Our third and fifth graders, 93 percent of our third and fifth graders scored at or above grade level in reading, so we've had tremendous success using this instructional approach.

We've also used another instructional approach called Core Knowledge, which we use in the area of geography and history. So we've had a lot of success using these particular programs. The opportunity that was afforded to us, using the charter school legislation, made our school accessible to a number of children and families who would not have been able to gain access to our program.

Chairman Hoekstra. Thank you. Ms. Seagren?

Ms. Seagren. Thank you, and before my time starts I do want to recognize some people in the audience.

Superintendent Press from Bloomington West was here, and I think he probably had to go back to work, and I wanted to acknowledge his kindness in arranging for the facility today. I also want to recognize Senator Amber Reishka Young who is in the audience. She is the author of the charter school legislation that came to fruition in 1991, and she unfortunately is retiring this year, but she was kind enough to come. We wanted to make sure that if you had some questions about the original legislation or any of the process, that you could talk with her. And then Steve Dess who is the official experienced person that people go to, and he's the head of the Minnesota Association for Charter Schools. He has a lot to do with helping people get started with charter schools here in Minnesota. So he is also a very good resource for you if you want to talk to him later.

Chairman Hoekstra. Thank you.

Ms. Seagren. Now I will begin my remarks. First of all, thank you for coming to Minnesota and inviting me to testify on the charter school system in our state. Charter schools definitely have become a choice for parents and children in the public school system.

Let me begin by giving you a brief history of charter schools. They started in 1991, and when the program first began, we had a lot of resistance to it, mainly from school districts and teachers unions, saying that this would be the end of public education, as we know it. A lot of fear surrounded the fact that perhaps elitist schools would be started for just the best and brightest kids in our state. Another idea was the charter schools were an attempt to break up the teachers unions. All of these arguments really have not resulted in the end of public education as we know it, but I think what has happened is we've provided a choice not only parents but teachers too.

Today we have 69 charter schools in Minnesota that are either open or approved, and our law has continued to evolve from its original language which capped the growth of charter schools at eight schools. It only allowed eight schools and was probably more restrictive in its conception than laws of other states that have followed. The St. Paul public school district, because of a lot of changes, alone sponsors 12 charter schools.

One of the most problematic areas I think that charter schools address is in regard to facilities. Charters in Minnesota are restricted from owning buildings, so they are paid lease aid to cover the costs of refurbishing and leasing space. Looking to the future, states must begin to ask how to economically house charter school students as they become more permanent. As charters become established in our system, we need to look at longer-term facilities support. Yearly lease payments can end up being more expensive than acquiring and owning a facility if you are looking at a 20 or 30-year time period.

Indeed Mr. Mahmoud has established a charter school, and they have their own facility, but they raise money privately to provide that facility. I believe that Minnesota and other states will soon be discussing when, how, and if that transition from lease aid to building should take place. Perhaps there could be a role for the federal government providing low-interest loans for established charters. But I would be cautious about that. I believe that states can also provide this function.

With that brief background, let me answer the questions that you posed to me in your letter. Parents have been attracted to charter schools because of small classes, the schools’ environments and locations, sometimes dissatisfaction with public schools citing lack of teachers that are interested in the needs of their child, and the chance for more parental involvement. Many parents felt trapped in their public school because they do not have the financial resources to leave the school or lack the advocacy skills to change their child's educational situation from within. Some parents who have good advocacy skills became frustrated with the unresponsiveness of their public school. Thus, charter schools have become a choice with parents and their children.

For teachers, charter schools become a means for satisfying the unmet needs of the children they serve within the public system. Teachers are often constrained by management, or by their unions from taking risks or trying innovative ideas. Sometimes the reason is lack of resources, or lack of time, and more often unwillingness to change the status quo. So charter schools in Minnesota have become in many cases our research and development sites as well as options for parents.

Examples of unique schools in Minnesota, that are the first in the nation, are Metro Deaf School, which uses American Sign Language and has actually provided an opportunity for deaf children to stay within their communities instead of being sent away to a residential facility. The New Visions School is a school that uses a neurophysiological approach to help children solve problems. You really should go visit that school, it's really unique. Harvest Prep, which is their school, uses the Direct Instruction method for at-risk children in conjunction with a residential facility. The residential facility is another innovation of Governor Carlson. So now we have a residential place for students who have family situations that don't offer them stability. And then we have New Country School. It's organized as a cooperative which contracts out all of its services from teachers to its facilities.

While the main push for charters in our state was for more choice, a secondary result of charters is a greater responsiveness by public schools to parents and teachers. Sometimes just the threat of a charter school being created stirs the administration into addressing parent needs. But we have many instances where districts became more inflexible, resistant, and defensive, and can make life positively miserable for charters that start up. But we also have districts like St. Paul who have embraced the idea and who now sponsor 12 of our charters.

Another way parents, teachers, and our whole public school system will benefit is by the dissemination of the successful education methods that have developed out of the charter schools. The use of Direct Instruction, while not entirely new, has seen dramatic increases with at-risk students. More and more districts are adopting this method for their at-risk students because of the results seen at Harvest Prep. The New Visions School has created a Minnesota learning resource center, and currently 15 schools are using parts or their entire neurophysiological model that they have developed. So not only do charters provide some choice and competition, they also provide incubators for ideas that can be transferred back to the public school system.

How can you help charters at the federal level? First, thank you for your interest in charters and for the federal dollars that you have given to get charters off the ground. It takes a tremendous effort to start a school from scratch with no staff, no kids, no building, no supplies, and only a dream. You as Representatives have appropriated money for start-up grants, which is a tremendous help. You've also provided dissemination grants, which allow successful charter schools to share the best practices with intrastate, and interstate charter schools, and you have federally sponsored conferences on charters. And that is wonderful, to be able to take this idea nationwide and to share it with other states, and I would encourage you to continue to do that.

I would say it's more important for the federal government to play a supportive role for states. I believe that education decision-making should be as grass roots as possible. Indeed, we at the state level often are criticized for the top-down role we play, especially when it comes to unfunded mandates. And speaking of unfunded mandates, I want to applaud and encourage you before you spend one more penny at the federal level on educational initiatives that you pay for your special education mandate. I think if you did that, all of you would be heroes in your states, because it's a tremendous expense for us at the state level to pick up those mandates. We want to do it and we do, do it.

So as you grapple with the decisions you will be making, I believe the most important thing you can do is to be a positive voice for parental choice. As you make funding recommendations designed to support that philosophy, keep your funding flexible and as free of paperwork as possible, but expect results. Are students learning? Are they making gains in their academic achievement? Are parents pleased with the environment and the instruction of their children? Are teachers able to do what they believe is necessary to instruct kids? Or do they feel constrained by too many mandates and regulations?

I believe charter schools in Minnesota answered yes to those questions. We have been a leader in choice for many years here in Minnesota with our open enrollment program, postsecondary options, and tax credits and charter schools. I expect we will continue to advance cutting-edge strategies to make our public schools among the best in the nation.

Thank you again for the opportunity to testify.

Chairman Hoekstra. Thank you. Great testimony. I'm glad we came to Minnesota.

Dr. Dixon, are other Superintendents warming up to the idea of tax credits and tax deductions as they see more money flowing into education? What's the experience of your colleagues with those?

Dr. Dixon. Yes, we had a lot of discussion about that. I think the challenge has been trying to find ways to provide these to low-income families in those other communities. We sent out a lot of information. We're now working in association with our local bank to try to figure out ways that other community banks can get involved in the loan program. That seems to have been the biggest barrier so far.

Chairman Hoekstra. Would your colleagues embrace the concept of choice more than they would in Michigan or other states? When you talk to colleagues from other states, you've had more experience with choice, so you're kind of a living model regarding all the bad things that could be said about what happens with choice. Maybe this doesn't occur?

Dr. Dixon. Well, there are always exceptions, but by and large what I see is Superintendents really understand that they could have a dual role, and that's what I've tried to address. One role is to build a strong public school system, but second is to work directly with families.

There's a lot of discussion here that feels like an "either/or" discussion to me. In reality that's not what I'm seeing. When we work with families, we're seeing families pick and choose among a number of options to meet their own individual needs. I can think of a middle school student in Faribault right now that spends part of her day in a Catholic school because her mother wants her to have that piece of experience, spends part of her time at a public middle school, and starts on a girl's high school varsity basketball team. So mixing and matching has become more the norm than one or the other. I have students in charter schools part of the day, part of the day at the University, part of the day being home schooled, and part of the day in our schools.

So what I'm seeing is more of these options as avenues for us to work with families to provide education for their children. I don't see it as "either/or." I see it as part of a total puzzle, and I think most of my colleagues see their role as building that public school system and I know they talk strongly about how they help individual students get the education they want.

Chairman Hoekstra. That's kind of an interesting mixed concept. I guess we haven't heard much about mixing which actually tailors programs for individual students as we've gone around and talked about charters and home schooling.

Dr. Dixon. We did that; we actually have school boards of education embracing these concepts. As Representative Seagren said, we embrace charter schools. We have sponsored two of our own charter schools in Faribault. So I think it is that policy that says we're going to do everything we can to build the public school system, but we're going to work with all children in our community. I feel it is my responsibility, and so I work side by side with the principals of the Catholic schools, and the Lutheran schools.

We're working with a Lutheran group right now to establish a Lutheran High School in the area of Faribault. They have 14 students enrolled for fall because we're working side by side with them.

Chairman Hoekstra. Good, thank you. Mr. Brown.

Mr. Brown. Mr. Chairman, if I could just add something to that. I think another interesting thing is now Minnesota is approaching 20,000 home school students, which is a rapid increase that defies all the stereotypes. It's across the spectrum. Many of those kids attend public schools for certain classes, particularly science classes. They also participate in the extracurricular activities of public schools. You see a lot of mixing and matching at home schools.

Chairman Hoekstra. In our state we have a number of people who are not embracing the home schooled and will not allow them to participate in a selected number of classes, in any of the extracurricular activities, or in the arts or band or choir. So we haven't quite matured to that point yet.

Mr. Kind?

Mr. Kind. Thank you, Mr. Chairman. I've got a couple of questions for Mr. Brown and Mr. Mahmoud. I think I'll just preface this by asking the questions and sit back and allow the gentlemen to respond, or anyone else on the panel that wants to respond.

First, Mr. Brown, we have a situation arising in Wisconsin where there is a private school voucher program being implemented in Milwaukee. Recent studies are indicating that the performance levels of students who are moving into the private school setting, have not reached expectations. Yet the money being diverted for the private school voucher program is coming directly out of the public school system in Milwaukee. So it is a zero sum gain. I was just wondering if monies are being diverted for the private voucher program at the expense of the public school system? We're not seeing performance levels where they should be with the private voucher plan, and it's also impacting the public school system adversely with money being drained from that. I was just wondering if any of the tax credit or tax deduction money being used here in the state of Minnesota is impacting the funding levels of other educational programs?

Mr. Mahmoud, I've been a strong advocate of charter schools, and we have some wonderful ones being implemented right now in the state of Wisconsin. Getting back to the accountability issue, I'd appreciate if you could just speak to how the charter schools are being held accountable here in the state of Minnesota, because I know they are in Wisconsin? That gets me back to the concern I have in regards to public funding involved in the private school setting, especially the parochial school setting. If we're not getting the desired results in the private school setting, what then is going to be our response? Are we going to recommend changes in the private school setting? If I were a private school educator, especially someone in a parochial school setting, I would fear government involvement addressing the impact that public funds are having overall. We don't face the same type of problem when it relates to the charter school system. So maybe you could respond to that briefly.

Mr. Brown can answer my first question.

Mr. Brown. Sure, let me briefly talk about the tax credit particulars. Talking actual dollars, the tax credit this year probably will be in terms of "lost revenue," somewhere in the neighborhood of $15 to $25 million. The amount of the deduction in 1998 in terms of lost revenue was about $10 million. So we're talking about a total of $35 million. You put that up against any billion-dollar public education budget, which in the last cycle of the legislature increased by a billion dollars, and obviously you can see in money terms we're talking about a drop in the bucket. However, I don't believe it's a drop in the bucket when you're talking about the impact on individual families. I think you'd be hard pressed to take the money away from public education schools.

I just had an opportunity to visit Milwaukee last fall, and there are all kinds of achievement studies going on that show quite a bit of achievement in Milwaukee for some of these students. What was most amazing to me, was the grass-roots support among not only parents who send their kids to choice schools, but also among public school parents that say they do see the competition as having a positive impact on the public schools. The recent polls I've seen show that the popularity level of the voucher system is about 60 percent among all parents, not just parents who send their kids to choice schools. In some ways Milwaukee is an interesting model of competition.

Mr. Kind. Just so I understand your answer, you're saying that the $35 million offset that impacts the state budget does not impact the other educational programs?

Mr. Brown. The law was originally set up so that money was specified to come out of the surplus money, and not taken out of the public education budget. We've continued to have a surplus.

Ms. Seagren. Can I just jump in here since I'm Finance Chair? We are responsible for appropriating money, as Mr. Brown said. This year in the second year of the biennium we appropriated a million dollars and then another $171 million. So our public school system certainly is not hurting, because we have a diversion. If you wanted to make that argument, we have a lot of other tax credit and tax deduction programs in the federal and state government that you could also argue take away from public education.

We could discuss whether there should be a mortgage deduction, credit or anything else. There are so many other things that "might take away from education." Maybe we should do away with those if we're so concerned about the impact on education. We have a strong commitment to public education here in Minnesota.

And I would also say that we should be asking the same question of the public school system too. If there are failing sites, what are we doing about them? We have children that are not achieving, and we have great resistance to reconstructing or even talking about it. Certainly you have a valid point that wherever the money goes, we should be sure that children are achieving and there is accountability, both in our public school and private systems. It's a little pittance of money that we spend on the charter schools and the private schools, compared to the money that we spent on public school education, and we still struggle.

We have great resistance with accountability in the public school system and are offered many excuses for not wanting to be accountable. I think Minnesota to its credit is really grappling with that.

Mr. Kind. I think you just led in nicely with your remarks on accountability.

Mr. Mahmoud.

Mr. Mahmoud. Thank you. With the question on the issue of accountability, I'll speak to our charter school.

We have a three-year contract with our sponsor and the State, and it's accountability based on attendance, test scores, and financial management. And I'm pretty sure, I don't think that public schools don’t have that same type of accountability. So I think that charter schools are more accountable than most schools. I think that there were a number of charter schools that have been closed over the last couple of years because they couldn't reach the accountability measures that were set up for them. So I think the issue of accountability is important, and I would like to see that shared amongst all institutions that are receiving public funds.

Mr. Kind. Thank you.

Chairman Hoekstra. Mr. Tancredo.

Mr. Tancredo. Along those lines I just wondered if you could expand on the charter schools that have in fact been closed. You say that they did not meet the expectations of their responsibilities under the contractual arrangement.

Generally speaking, is the fact that you've got charter schools that have closed a good or a bad thing? This question is for anybody.

Mr. Mahmoud. Obviously it's a bad thing for families. I think that it's bad from the standpoint that families have been displaced. I think it's good from the standpoint that when you have institutions that aren't working you're stopping the hemorrhaging before it gets worse. So I think it is good news/bad news.

What I would like to see is more support for schools that are beginning. Maybe instead of three years, you need to look at the schools in a shorter time span so that there's not a negative impact on the children for this three-year period. If the schools are beginning to go in the wrong direction, maybe even more support is needed for those schools so they don't have to close. I think that the answer is good news/bad news, certainly bad news for those parents that are displaced.

Mr. Tancredo. But not for the system. It seems to me that unfortunately, just as you say, in all too many public schools students are not allowed to fail, and the schools may very well not be delivering the goods, so to speak. So those kids are just as disadvantaged, perhaps, as the ones that have been displaced and maybe without the opportunity.

I just wonder also about another issue. All the charter schools that have actually closed have been as a result of not meeting whatever kind of contractual agreement they had with the school districts. Are there other reasons for the closings?

Ms. Seagren. I can speak to that somewhat, and you may want to ask Mr. Dess, who's out in the audience, later on. We just had a very high-profile charter school that closed that I think expanded too rapidly and had some contractual problems that were not caught soon enough. I think that's what Mr. Mahmoud was talking about.

We need to make sure that we have some careful scrutiny by the sponsor. The sponsor needs to certainly be on top of that charter, watching them. To St. Paul's credit, they did say, "No, we're not going to sponsor this charter school anymore unless you can get your act together"; there were some financial things that happened with them.

Charter schools are in their infancy stage, really, and we're a little bit more mature because we've been nine years down this road, but even so we still haven't answered some of the really hard questions that you asked. What happens when a school closes all of a sudden and the kids are displaced and have to go back to public school, and they don't necessarily want to? They love their teachers at the charter school, but things have really fallen apart. Those are the kinds of process questions that we still have to grapple with.

Another question that I alluded to is what do you do with a very successful school like Harvest Prep for example, which has been operating for a number of years? Do we have a continual three-year contract period or do we make them a permanent organization? Do we keep them in a lease-aid box or do we then allow them to purchase a permanent facility?

As this matures we're going to have a lot of other questions, but I like the idea of having a contract with accountability. They have to meet their goals, and if they don't, they are closed.

Mr. Tancredo. That's what's so great about it; accountability in a partially privatized setting like concept, or charter schools. With the public system I would certainly love to have the same accountability, frankly. I would love to have a school board go through exactly what they go through in the charter schools in an analysis of their own public system and say "If you don't get your stuff together here, we will close you down." I would love to have the mirror be turned on them.

I think what is happening in the whole charter school movement gives us great hope. Maybe somebody will see the hypocrisy in having a school board say to a charter school "You're not working so we're going to close you down," but ignore all of the schools that they operate, have total control over and allow it to exist.

Ms. Seagren. I do want to mention that in St. Paul they have a brand new Superintendent who came out of Washington, D.C. She's doing that with her individual sites now and they really have accountability at their site level. They are reconstructing the schools that don't perform, and they've got some clear measures. I think because St. Paul has very strong inner city schools that it is really making a difference and doing some things, but they are living by their word too.

I agree with you that it would be great to have everybody doing that.

Chairman Hoekstra. Thank you. Mr. Schaffer.

Mr. Schaffer. Thank you. Representative Seagren, could you further explain the structure you called an "aid program?" What is the name of that?

Ms. Seagren. We have a "lease aid" program, and we basically help pay for the lease costs for a facility. The charters are not permitted to own a facility because of the temporary nature. Because of the three-year contract periods, we decided that we did not want them owning. They have no resources, and they don't have the kind of levy or authority to be able to build facilities like our public school system.

The lease aid used to be, up until two or three years ago, about $500 per pupil, but with our good economy, lease space is becoming harder and harder to find. There used to be old school buildings in some of our inner city areas. We don't even have old school buildings anymore because there are public schools using them. So we increased the lease aid to about $1500 per pupil. The Department of Children, Family & Learning actually looks over the leases and we have certain criteria that the lease can be used for. They approve the lease and then that's part of their instructional costs.

Mr. Schaffer. Back in Congress there are various proposals on the table by some of our colleagues for finding ways to increase the federal involvement in the incorporation of those charter schools. I'm not sure if I've ever worked with that, so how could the federal government help Minnesota acquire space for charter schools?

Ms. Seagren. I guess I would be cautious of the federal government getting into programs for facilities, whether it's for charter schools or any public school. I think the states are the best ones to handle that situation.

The reason we chose the lease program was because of the temporary nature of charter schools; the three-year contract period. I think most states have a contractual arrangement with their charter schools at this point. If you have the federal government, giving permanent, facilities money to charter schools that may close as some have done, what do you do with the building? What do you do? Who owns that building? Does the charter school own it? Does the sponsor own it? I think you should be cautious with that.

As I said before, as charter schools get established, if we have really well run charter schools that have been in existence for ten years, lease aid is going to be quite an expensive proposition to be pouring money into year after year. So then you start looking at a transition period.

At the federal level I would stick to looking at start-up support for charter schools with the ability for the federal government to play a role in disseminating information, and helping other states examine the best charter school system. I would be a little bit cautious about going into a lot of federal programs for actual capital facilities for charters at this point. You could look at low-interest loans if you have a state that doesn't have a good bond rate. But I guess my reaction would be caution on that.

Mr. Schaffer. Those are all options that are being considered right now. I've got to tell you, however, Members of the Education and the Workforce Committee, House and some on the Appropriations Committee as well, probably within the next few weeks are going to have a big fight in Congress over the school construction proposal, as to whether it's a good idea or not. I didn't think, just as you mentioned, funding for IDEA is a higher priority than having government build school buildings for school districts across the country.

But just thinking out loud here, I'm anxious to hear your thoughts on if the federal government were to put up $600 million for new school construction for charter schools, the intent of many in Congress right now would be to make sure those dollars go directly to schools. In Minnesota they would not be eligible to use those funds. What effect would the presence of a fund like that have on Minnesota's inability to use it right now? It seems to me it might put pressure on established policy, because the funds drive the policy rather than the other way around. That's what concerns me. What do you think about that?

Ms. Seagren. Well, I guess I'd be cautious, if you were going to consider money for facilities for charter schools, to at least make sure that the charter schools were established charters, because at least in our process, we're on a three-year contract period. As I said they could close in three years, and then you still have a facility, and you've sent a lot of federal money to a state to do that. We wouldn't be eligible if we were on the lease aid unless you've got a caveat, and unless there was a discretionary period of time for states to use it.

As far as other public facilities or spending a lot of money on capital facility needs or on states just in general, I know we have a lot of buildings all over the country that need repair. I still feel that states should be responsible for those. We spend a lot of money on facilities, and it's up to the discretion of the schools a lot of times whether they want to spend money on deferred maintenance or whether they want to spend it on programs for kids.

So first before you start looking at those needs, pay for your special education costs, and be careful with your charter schools. I would rather see you help support the charter school movement and spend some dollars helping them get established and sharing what's going on among the states where they are blossoming and doing a lot of good things.

Setting that aside, if you want to look at facility funding for just regular public schools, that's a different issue. If you want to put some charter school money in there, then I think you need to place the condition on it that all charter schools would be locally established for more than three years before allocating federal money for the states. I think it would be kind of a foolish thing to do.

Mr. Schaffer. We've been known to do those types of things.

Chairman Hoekstra. Mr. Gutknecht.

Mr. Gutknecht. Thank you Mr. Chairman, panelists. I don't have any questions, just a real brief comment. Thank you to Dr. Dixon.

I've visited a lot of schools in the Faribault District. In my district I've been to Sight Saving School, to the School for the Deaf and the Lutheran School. The next time hopefully we can go to some other schools in the district. I do want to kind of acknowledge some of the other people who are here. State Senator Pat Paraso is here, State Senator Jan Olson is here, and Representative Barb Sekora is standing way in the back.

I did want to acknowledge that we do have a lot of other Members of the Legislature here, and I just want to, if I could, thank all the people for the testimony. I think this has really been fascinating, not just as a nonmember of this Committee, but as one who's interested in quality education. This is the kind of debate, dialogue, and discussion we need to have, not only here in Bloomington, Minnesota, but also around the country. So I want to thank all of you for this excellent testimony.

Chairman Hoekstra. I think it's one of the reasons that we continue to get Members from the Subcommittee to go to 21 different States, because every time we go somewhere, we hear fascinating testimony. It's so much better hearing it firsthand from the people that are actually dealing with the issues. The three of us are very involved in the whole school construction issue, and we now know that at least in Minnesota it's very problematic. The State has decided to go in a different direction than we thought we might and I don't think we've heard that comment before.

We continue to learn a lot as we hear from people firsthand. The testimony was very, very good and we appreciate it very much. So thank you.

I think with that we will adjourn this Panel and maybe take a 5-minute break and at quarter after 11:00 we'll start with the second panel.

[Recess.]

Chairman Hoekstra. If the second panel will come forth, we'll begin. Let me introduce the panel.

Our first witness is Kim Norton who is the President of the Minnesota Parent-Teacher Association, Rochester, Minnesota. Welcome, thank you for being here.

We have Mr. John Scribante who is the CEO of Innovize in Minneapolis. Innovize is a small, privately held "outsourcing" business. Mr. Scribante worked in the training industry for 2 years after college and has been an entrepreneur since 1991. He's a graduate of Creighton University. Welcome, good to see you.

We have Dr. Lawrence Wohl, who is a Professor of Economics and Management at Gustavus Adolphus College in St. Peter, Minnesota. He was employed by the U. S. General Accounting Office. The GAO is actually going to do an in-depth audit of the Department of Education soon, and he is primary author of the GAO report Transition From School-To-Work: Linking Education and Worksite Training.

And finally, we have Dr. Karen Effrem who is from Plymouth, Minnesota. She is here to address School-To-Work and school-based health clinic issues.

Welcome to all of you. We're going to begin this panel with Ms. Norton.

Ms. Norton. I want to apologize; I will be leaving immediately after my testimony. My son is graduating from high school, and I'm giving the commencement address.

Chairman Hoekstra. Congratulations, I just did the same on Wednesday night. My daughter graduated; I gave the commencement address.

Ms. Norton. I apologize.

Chairman Hoekstra. It is not a problem, thank you.

Ms. Norton. Good morning and thank you for inviting me. My name is Kim Norton and I serve as the President of the Parent-Teacher-Student Association for the State of Minnesota. It's an honor to be able to share the views of our members as well as the members of the National PTA. There are 6.5 million of those at present. We're excited to be able to talk about parent empowerment and school choice.

I'm the mother of four children, all attending public school. As I said, my oldest is in high school, and I have them all the way down to fourth grade, so I keep plenty busy.

The National PTA advocates for all children and for the improvement of public education. To this end we believe that no, one education program can meet the needs of all children. Public school personnel and parents must address the different ways that children learn and how public school systems can provide the best education for all children.

Parent empowerment can and does take many forms in schools and districts across this country. In Minnesota we have parents involved in on-site teams, on advisory boards, in the classroom, and in PTAs. Empowerment varies greatly, but parental satisfaction in the education their children receive seems to increase, as does their level of involvement.

The National PTA has undertaken an effort to increase parental involvement with training programs on school community involvement entitled "Building Successful Partnerships." Through this workshop, important information has been shared with administrators, school boards, teachers, and parents in Minnesota in an effort to make parents true partners in the education of their children. Parental involvement has been proven through years of research to be the most consistent means of improving education in our schools.

The PTA does not equate parent involvement with choice. In Minnesota we are fortunate that many districts allow parents to choose any public school for their children to attend within their district that has openings. Many communities have choice schools, or schools which specialize in a particular discipline like multiple intelligences, arts or math/science, to name just a few. These schools can be schools within a school, magnet schools, choice schools or public charter schools. Under the Minnesota open enrollment statute, which you've heard of before, parents also have the option of enrolling their children in another school district through an exception-to-attendance procedure, and home schooling is an additional option. But simply choosing a school does not empower a parent to be a full participant in their child's education, nor does it guarantee a quality education.

Only when parents are given sufficient information to make informed choices, when all parents are provided free transportation, when the selection process for entry into such programs is fair and open, when all schools meet the same minimal education standards and adhere to State and national regulations, when all schools are held publicly accountable, and when money is not diverted from public education budgets, only then will all children have an opportunity for a quality public education.

Concerns arise when reform efforts sold as choice involve the diverting of public funds to private schools, fail to enforce public accountability programs, and when all schools are not held to the same standards.

These comments I'm making are not meant to be taken for nonsupport of school choice. We do in fact support that, but there are some issues surrounding school choice, which I’d like to see addressed. While recent reform efforts may give parents and students choice in which school they attend, this option often takes students miles away from their neighborhoods, and this makes parental involvement very difficult. This becomes even more crucial when transportation and language barriers are issues for parents. And that is true for many families in Minnesota and across the country. There are also increased costs to districts in the area of transportation when choice reforms are enacted.

Many communities in Minnesota already face considerable financial burdens when their transportation costs for private-school students exceeds the amount supported by educational funding. Other choice programs would obviously pose some similar hardships without additional funding. In Rochester where I'm from, the school district has disaggregated funds. This shows what the impact is, and I'll leave that here for you to look at.

Several proven educational reforms, which the National PTA supports, are class size reduction and staff development. Recent Federal dollars, which have gone into this area as well as State support for these reforms, are paying off. My youngest child attends Harriet Bishop Elementary School in Rochester, and has benefited for the past 3 years from reduced class size and class reduction effort.

Last week I attended a school board meeting where the principal and staff from another elementary school reported significant increases in reading scores due to implementation of a reading program, which followed intense on-site staff development. And they also saw a blip in the second grade, which they attributed to class size reduction efforts. Teachers across the State report positively on class size reduction efforts and would of course like to see this effort sustained and enhanced to cover more grades rather than K through 3 where it has currently started.

Increases in education funding by the Federal Government in the last few years have been welcomed. In particular, the financial support for Title I has been put to good use. I would hope that in this time of prosperity in our country we could increase the support for this type of targeted funding which is so desired by the public and does so much to support the achievement of at-risk students. It is in fact our hope that not only could this be maintained but enhanced with additional funding to improve areas such as increased parental involvement, technology, and staff development. Something that would not require a large financial investment but would have great impact oin parental empowerment and student achievement is the PARENT Act.

PTA members of Minnesota and across the country support the PARENT Act. It would strengthen the involvement of parents in the education of their children by amending provisions in the Elementary and Secondary Education Act. I urge you to support this bill and urge your colleagues to support the legislation that National PTA has been a part of.

I'd like to thank you for the opportunity to speak today on behalf of parents in Minnesota and across the country, and encourage you to continue with efforts that make a real difference for children in all our public schools.

Chairman Hoekstra. Thank you for being here, and have a great night.

Ms. Norton. It should be exciting.

Chairman Hoekstra. Yes, it should be fun. Mr. Scribante.

Mr. Scribante. Thank you. Before my time starts I want to submit two things into the record that I didn't have a chance to submit earlier. If I could read the first sentence of ARTICLE 13 Section 1 of the Minnesota State Constitution quickly, "The stability of a republican form of government, depending mainly on the intelligence of the people, it is the duty of the legislature to establish a general and uniform system of public education."

Chairman Hoekstra. Without objection.

Mr. Scribante. Thank you. And I underlined the word intelligence not "skills." The second is an article from the St. Cloud Times, January 20, 2000 regarding a pallet maker in St. Cloud.

Chairman Hoekstra. Without objection.

Mr. Scribante. Thank you, Committee, Mr. Chairman, for allowing me to go on the record with some of the things that I believe are happening in Minnesota.

We're gathered here this morning at a very interesting time. Fifty-six years ago today, on D-Day, 2500 Allied soldiers died in Normandy fighting fascist Germany for the freedom for Americans to pursue liberty. This offers us a unique perspective on the monumental issue of educational change. We're poised at the beginning of the 21st century, and while the rest of the world is abandoning central labor planning, Minnesota is driving through School-to-Work programs for central control of its economy against the will of its people.

Consider that in just over 200 years this country became the greatest nation on Earth. We've had more Nobel Prize recipients than any other industrialized nation. We've sent men into outer space and brought them back alive, we've pioneered open-heart surgery, and our science and technologies are copied worldwide. Those who accomplished these incredible feats were the product of an education system that emphasized academics, not lifelong job training.

I've been to Eastern Europe, I've seen the life-destroying results of governments trying to plan the economy and control education, and I've spoken to those people who have been subject to their central controls. This is not what America was founded on. And besides, it has been proven not to work. Those of you who have sworn to uphold the United States Constitution will be hard-pressed to support such a system of tyranny.

Today in Minnesota the best interests of children have become secondary to the interests of bureaucrats, unelected nonprofits and economic forecasts. In many districts school children are already being required to choose career clusters by the age of eighth grade. This system is a radical shift toward government central planning.

The world is open-ended, and we do not know what we will learn tomorrow. We can be sure that at any particular time we are overlooking valuable information and opportunities. Our knowledge is incomplete, and our resources are undoubtedly being misdirected.

However, we do have a 225-year proven method for discovering and correcting these errors called capitalism. Entrepreneurs search out instances where resources are being underutilized and redirect them to those that produce profits. Nothing else approaches its power to stimulate discovery. The application of this principle in education should be obvious. Since we don't know today what we may learn tomorrow about educational methods and knowledge, we need entrepreneurship in education, and government is not equipped for the task.

History has proven time and time again that where competition does not exist, mediocrity ensues. Nowhere is this truer than in many of America's public schools. Businessmen and women are being told that they can and should become partners in the education of our children. With tax-funded incentives, subsidies, reimbursements, and free training, how can they resist?

According to the Minnesota School-To-Work publication called Making Connections, page 11, the SCANS report instructs businesses to "look outside your company and change your view of your responsibilities for human resource development. Your old responsibilities were to select the best available applicants and to retain those that you hired. But your new responsibilities must be to improve the way that you organize your work and to develop human resources in your community, your firm, and your nation."

The Minnesota School-To-Work program seeks 100 percent employer compliance, which includes me, and further provides a work-based learning coordinator, equivalent of a social worker, to help me in my responsibilities in complying with this lunacy. Who is running my business anyway? I've got capital at risk. Just leave me out of this mess, please!

This experiment may be attractive in the short run, but businesses will pay in the long run with higher taxes, less-educated people, and the loss of economic freedom. Productive labor is their goal, not an educated populace. This will be the end of a free America.

My company needs entrepreneurial minds and intellectual capital; people who can think, read, and add. I interview many people who are products of Minnesota's schools, and many of them cannot solve simple conversion equations or, to say the least, conduct research. What is wrong with teaching people how to think? I don't need work skills, I need people who can think of great ideas and be willing to put their knowledge to the test.

Why is it that government vigilantly looks for predatory pricing, anticompetitive and monopolistic behavior in the private sector, and yet it is the greatest offender?

In a free-market economy consumers ultimately determine what is produced. What school or government bureaucrat could have predicted 10 years ago how many Internet Webmasters we would need today? From the information I've seen from the Department of Labor's SCANS reports, they're planning on teaching manure spreading, car washing, working the fryer at the diner, and how to take a message off answering machines.

According to Tom Peters, the Management Consultant, 90 percent of the job descriptions today will not exist some 10 years from now. Things are changing. In St. Cloud, according to the article that I submitted, the School-To-Work program has already put a company out of business and severed the arm of a 17-year-old student running a machine on a School-to-Work assignment.

School-to-Work is a dangerous shift in education policy today. It moves public education's mission from transfer of academic knowledge to simply training children for specific jobs. And most tragically, the jobs for which it will train will have little or nothing to do with that child's dreams, goals or ambitions.

The economic goals of education should never be promoted over the virtue and importance of knowledge itself. Our State throughout its system of education worked brilliantly for most all Minnesota youngsters. In 1993 Minnesota legislature repealed 230 education statutes, thus creating a structural vacuum to make way for the new Federal Goals 2000 system already in the works, which left Minnesota without tried and true standards.

No longer are there any course requirements for any child in Minnesota. No longer are there 4 years of English, and 4 years of history, 3 years of math or a year of geography or years of science. Most public schools don't even have a copy of the Declaration of Independence or the Constitution, let alone, mention them.

For over 230 years we've enjoyed the finest freedom and prosperity the world has ever known. Yet Edmund Burke warned us "The eternal price of liberty is vigilance." As a people, we've been asleep at the switch, and now our entire Nation, not just Minnesota, has signed on to this crazy new system of totalitarianism where everyone is under one government's control from cradle to grave.

This system has been tried around the world and across the centuries, but it's radically new for those of us used to freedom. The new system has more to do with fascism than freedom.

Now we need to work to eliminate the entire School-to-Work system while there's still time. Sir Winston Churchill wrote to convince the British to join in the fight against Nazi Germany, "If you will not fight for the right when you can easily win without bloodshed, if you will not fight when your victory will be sure and not too costly, you may come to the moment when you will have to fight with all the odds against you and only a precarious chance of survival. There may be even a worse case. You may have to fight when there is no hope for victory, because it is better to perish than to live as slaves."

Thank you. And I have some points and suggestions if you'd like that.

Chairman Hoekstra. Thank you. Dr. Wohl.

Dr. Wohl. Thank you, Mr. Chairman, Members of the Subcommittee. I feel like an entertainer who has a tough act to follow here. Mr. Scribante and I will probably disagree in large part on a number of issues, and yet I think if we have a chance to discuss it, we might find many points in common.

I would like to talk about School-To-Work programs just generally in Minnesota, as well as around the country. I think I'd like to begin that with a little bit of history because it's impossible to evaluate this program without understanding some of the history. A number of factors contributed to their development in the late 1980s. One was a growing skills gap identified by employers for the most part complaining about the entry-level skills that workers had and those that were needed in the work place. This was increasingly blamed on the Nation's schools for poor preparation.

At the same time the skills gap was receiving more attention, due to the grueling importance of international trade and the large U.S. Trade Deficit with several countries. This provided a second factor. Researchers began to compare the U.S. System of elementary and secondary education to systems in competing countries who were perceived at that time to be doing a better job of preparing their young people for work. The research showed, for example, that Germany and Japan had much stronger links between employers and schools who helped provide their students with powerful incentives to perform well in school in order to get good jobs.

These incentives are frequently missing for most people in the United States, at least for those students not worried about admission to a college or university, because employers rarely care about the grades their prospective employees received in high school. The research also showed that other countries had systems, beginning in the schools, designed to help all of their people prepare for careers, while most resources in the United States focused on preparation for colleges.

The issue before us now is whether School-To-Work programs are effective in better preparing our students for work, and if they are not yet effective, we need to know if they can become more effective. We need to know if having effective School-to-Work programs involves trade-offs with other programs, which I think speaks to Mr. Scribante's point, and if some of these trade-offs are worthwhile.

In the context of School-To-Work programs, diversity in the student population extends beyond academic ability to include student interests, their knowledge, their goals, and their aspirations for careers and life-styles. Considering that, a one-size-fits-all approach is not going to fit very many students very well. To be successful in serving all students, School-to-Work programs need to be multifaceted to meet the needs of different student populations.

The early focus of the modern School-To-Work movement on serving youth not likely to pursue baccalaureate degree was understandable in light of the climate from which the movement emerged. Again, the report of the GAO was focused on the noncollege-bound. That focus has been one of the significant barriers to expansion and widespread acceptance of School-To-Work programs because of the vocational identity School-to-Work programs quickly took on in the eyes of many teachers, administrators, parents, and students.

It was not unusual, however, for nonvocational faculty, counselors and perhaps especially parents to be unenthusiastic or openly hostile to School-To-Work programs when it came to enrolling students from across the curriculum. But if they are offered in place of the traditional college prep courses, there is a perception that students run the risk of being less well prepared for college or of being denied admission for most selective schools.

Well-established relationships between secondary schools and colleges can help overcome some of this rigidity in admission policies if secondary schools can make a convincing case that School-To-Work courses do not sacrifice academic rigor or reduce students' acquisition of basic skills. If in fact School-To-Work credits can live up to that standard, concerns about inadequate preparation will also be taken care of, but it may take longer for perceptions to catch up with reality.

Many programs have been trying hard to design programs to serve all students, and there's now emerging evidence of success in School-To-Work programs. Whether this success has come at the expense of program service to at-risk students or those noncollege-bound students in the middle is yet unknown.

I believe we can and should do a better job of preparing our young people for the world of work that awaits them. I do not see conflict doing so through effective School-To-Work programs for all students and our goal of providing the same students with very high-quality general education.

Achieving the potential for School-to-Work programs will require strong commitment by many parties, and I would suggest that there's a continuing Federal role to be played in helping to make School-to-Work more successful. The Federal Government can continue to provide leadership on this issue, as it has under the School-to-Work Opportunities Act, and it has good reason to do so. Our continued high standard of living in the ever more competitive world economy depends on having a work force that is highly skilled and adaptable to the inevitable changes. Effective School-to-Work programs can help build and maintain that and can help our young people be more vital contributors to the Nation's economy and their own economy at an earlier age.

After 6 years of support and under the School-to-Work Opportunities Act, School-to-Work programs are still relatively new and are still evolving. I think there is also a continuing Federal role in providing States and local school systems with the technical support for the design and implementation of programs. In addition, I would hope to see continued support for programs and independent researchers to do assessment and evaluation of School-to-Work programs. Finally, the Departments of Education and Labor are well positioned to aid in the dissemination of the outcomes of those evaluations.

Mr. Chairman, that concludes my prepared statement, and I will be pleased to respond to questions. I hope I will get a chance to flesh out this a little bit.

Chairman Hoekstra. Thank you. Dr. Effrem

Dr. Effrem. Thank you, Mr. Chairman.

Members of the Committee and Mr. Chairman, welcome to Minnesota. Thank you for holding hearings on these important education issues and for this opportunity to testify. Before my time begins I would also like to just submit one thing for the record in addition to my written testimony, and it is this graphic.

Chairman Hoekstra. Without objection.

Dr. Effrem. As the mother of two beautiful children, a pediatrician, and a taxpayer, I am deeply concerned with many aspects of both education and health care. As I have been studying these issues over the last several years, I have noticed the distinct merger of significant aspects of both.

The ideology, provisions of, and loopholes in several major programs or laws such as Goals 2000, Healthy People 2000, School-to-Work, and Medicaid, among others, have resulted in a massive restructuring and merging of health, education, and labor programs. The schools have become or are becoming one-stop shopping centers for all of these social, medical, educational, and labor services. School-based clinics are the vehicles, and tax dollars, especially through Medicaid, are the funding mechanism. The emphasis in our schools is no longer on the academic liberal arts education required of responsible citizens and a free republic, but rather on the "medicalized" and "psychologized" mixture of attitudes, beliefs, feelings, behaviors, and job skills.

In my written testimony I have detailed the major programs, examples of problems and abuses, and the consequences. Although there are many disturbing consequences, the three worst are as follows:

1. The massive gathering of personal family and medical data from students resulting in profiles and diagnoses of children for disorders that often have more to do with compliance with the mandates of these programs and increased disability funding for the schools than with the medical reality for the child. This is in addition to the tracking of children into careers at far too young an age.

2. The loss of parental control in the education and medical care of their own children to the "It takes a village of government bureaucracies to raise a child" mentality.

3. The back-door implementation of the Clinton health care plan that was overwhelmingly rejected by the American people through its elected representatives.

The data gathering, profiling, and tracking concerns are present in every piece of legislation I have mentioned. One of the many examples I can cite is the Life-Work Plan, which is, in our State, required curriculum for Minnesota's compliance with its Federal Goals 2000 in School-to-Work contracts.

Various State documents say the following about the Life-Work Plan: "A Life-Work Plan is a personal information system, and should cover all areas of the learner's life, take account of behaviors and skills, reflect on the learner's dreams and ideals, include a record of the past as well as plans for both the short-term and long-term future. Beginning at age 14 every student must have a written plan for transition that addresses long- and short-term goals and activities in five areas: Employment, postsecondary education, home living, community participation, and recreation and leisure."

Since when did the government through the schools begin recording and monitoring the dreams, home life, and leisure of its children as part of a permanent record for future employment? Minnesota is also one of five States involved in a pilot project with the Federal Department of Labor to track employment called Occupation Information Network or O*NET. This system contains a list of model worker characteristics. Some of these include moral values, social orientation, and adaptability that are then going to be kept in a Federal Government database for use by potential employers.

As mentioned, school-based clinics are the mechanism for the increased delivery of health and social services in the schools. While no one would disagree that they provide some valuable services such as athletic physicals, for example, their two main areas of function are fraught with controversy and hold the greatest dangers of loss of parental control in the health care of their children, data privacy concerns, and philosophical differences that can have life-altering consequences for the student and the family. These areas are mental and reproductive health services. Often students are referred for these services without parental knowledge or consent. If the parents do find out, they often cannot see the records due to legal constraints, while their insurance is still billed for the services, which affects the parents' coverage limits and the child's future employability and insurability.

The funding mechanism for these clinics is Medicaid programs embedded in the legislation that I have already mentioned. These funds are used for a myriad of reasons often having little to do with medical care. As medical consultant Jean Rowe stated to a school official in a letter who was not using enough funds, she said, "Medicaid dollars have been used from audiometers to minibuses, from a closed-captioned TV for a classroom to an entire computer system, from contracting with substitutes to employment of new special education staff, from expanding existing social education programs to implementing totally new programs. The potential for dollars is limitless." Those are her words.

The list of situations and disorders covered by EPSDT and Medicaid includes Attention Deficit Disorder, which is much in the news lately because of its skyrocketing use of the powerful drug Ritalin, all the way to providing an attendant for a child stressed by riding a bus with a class bully. One wonders about conflicts of interest when the school receives increased funding for every child diagnosed with something, and the manual containing the criteria for these diagnoses contains no category for normal.

It has become apparent to those who would review the records from the Health Care Task Force that school-based clinics are funded by Medicaid or the alternative plan to implement nationalized health care when this failed to be accepted as a whole. It is quite interesting to note that Medicaid costs have increased dramatically since then.

To preserve our freedom and to stop the hemorrhage of taxpayer dollars, programs using Medicaid in the schools must be put on an immediate starvation diet. Laws protecting student privacy and parent autonomy need to have infusions of strength.

There is much to do, but I greatly appreciate your willingness to listen and investigate, and I will be happy to discuss anything further during the question-and-answer time. Thank you very much.

Chairman Hoekstra. Good, thank you.

Mr. Scribante, Dr. Wohl indicated that there would be an opportunity to identify common themes between the two of you. Do you care to explore those?

Dr. Wohl. Certainly one of the things I was referring to is partly a problem of definitions. I think I used the phrase "effective School-to-Work programs" on several occasions, and by that I mean programs that are not simply add-ons or replacements to existing and established curricula.

What I see as effective School-to-Work programs more often than not is preliminarily repetitive rather than content, where you might help a student learn research skills for example, by having them do research. Doing research on careers might be just as effective a way of accomplishing that as having them do research on the Civil War. I don't want our students to graduate without knowing about the Civil War history either, so I don't want this replacing the traditional content. I don't think School-to-Work should be viewed in that way if it's going to be effective. I'm not ready to give up on it just yet.

Chairman Hoekstra. I think some of the concern may be the close link with employers and those types of things. You're referencing the German or the European models. I don't know if you want to respond, Mr. Scribante?

Mr. Scribante. I have a couple of comments on that. One of the common threads is that the goals may be similar. That is to have better-educated people in the workforce in America. However, the mechanism of doing it is what I take issue with. You're essentially in a School-to-Work program.

The way it's being implemented is that you're eliminating all of the choice that we've been talking about. What we keep doing is saying that we need charter schools, we need private education, but yet we have one curriculum. We have one standard that everybody is measured by. From a businessman's perspective if everybody was doing the same thing in America, we’d all come up with the same result.

But it's that spirit of free enterprise and free markets that bring the creativity of how to execute a good idea and produce the best results. You won't get that if you federalize and standardize the way everybody does things no matter what school they go to. So I agree that it's a good premise, but the mechanism I think is fundamentally flawed.

Dr. Wohl. I would actually agree with that. I think the programs need to be developed and implemented at the local level. I agree also in terms of serving students with very different learning styles. Some might gain from having more applied-type learning activities in a traditional classroom-lecture-type approach.

Chairman Hoekstra. Do you see us moving towards a pattern of federally anticipating what jobs are going to be there and then have a correct workforce in place to meet those needs?

Dr. Wohl. Big trouble.

Chairman Hoekstra. Yes, but that's obviously the fear that we sense in Washington.

Mr. Scribante. I’d like to expand on that. The way it's being implemented in Minnesota is that they are standardizing in career clusters. They're starting to predict what needs to happen and having students determine at an early age which direction they're going to go in. There's no category in it for entrepreneur. There's no category for the things that haven't been invented yet. So I do have more suggestions if you'd like to hear them.

Chairman Hoekstra. We're going to go to Mr. Kind, and then Mr. Tancredo will probably ask you for your suggestions.

Mr. Kind. Thank you, Mr. Chairman.

We're coming up on another interesting issue in this year of Congress, and that's the expansion of the H-1B Visa program. We're looking at probably authorizing another 200,000 skilled workers being imported from abroad in order to meet the growth needs in our high-tech industry. So obviously there's a need that isn't being met from our own education system, and that poses a unique challenge in the evolution of the new economy that we have.

Dr. Wohl, I have a question for you. I’m not concerned about the ability of School-to-Work to be able to place a child in a first occupational placement setting. My concern is whether it's going to be sufficient to meet the fourth, fifth, or sixth job opportunity that students are going to face with the new economy. Is the program teaching the lifelong learning skills that are going to be needed to adapt to the changes that are taking place on a global basis and certainly right here in the State of Minnesota?

I'd be interested to hear your comments.

Dr. Wohl. I would be very sympathetic to that viewpoint. I'm often viewed as somewhat of a fish out of water. I teach at a fairly exclusive private four-year liberal arts college, and yet I talk about School-to-Work programs, which are viewed as vocational, and not college programs.

The philosophy in my own department, as we tell students, is we're not trying to prepare you for your entry-level job; we're trying to prepare you for your last job. I think the same philosophy should be used extensively at the lower levels.

Again, given changes in technology, the reports of the Labor Department even 10 years ago were suggesting that young people entered in the workforce were going through six to seven career changes before they retired. So we have to train people to be adaptable and to view education as something that doesn’t stop when they’re done educating themselves. They have to be able to build an appreciation for continued lifelong learning.

I don't think School-to-Work in principle has to interfere with that or be contrary to that in practice. Again, if we ask 14-year-olds to start thinking of a career path, it doesn't mean that they're locked in. I've argued extensively against the German pressure-cooking. Employers don't want to hire 14-year-olds because they haven't made a decision. They're almost certainly going to change. There's some value in doing the research and learning about things, as they exist today, as long as you appreciate that they might not exist tomorrow.

Mr. Kind. Thank you. Thank you, Mr. Chairman.

Chairman Hoekstra. Mr. Tancredo.

Mr. Tancredo. Dr. Wohl, what are the skills that you think are uniquely developed in School-to-Work that in fact are not developed in traditional education?

Dr. Wohl. That's a good question. Again I'm not sure there is any that could not be developed in traditional methods. Rather than a skill would be basic knowledge. I deal with our students at Gustavus where we get the cream-of-the-crop, with high SAT scores, in the top 1 percent of their class.

Mr. Tancredo. Certainly one would hope that the school system has basic knowledge as a major goal from the beginning without ever having heard of School-to-Work. Basic knowledge, I'm all for that.

Dr. Wohl. What I was about to say is we get students who are of the highest caliber at our school. By the time they're seniors and you ask them what they're going to do, they're still lost because they don't know anything about jobs and careers. Unless it's come through family information they've never been exposed to it. So I think this is one thing that the School-to-Work program is not taking away from other content areas

Students as part of the education process can be exposed to and involved in business. A businessperson could come in, and talk about what business is, or an entrepreneur could come in, and talk about an idea he/she developed and where they’re thinking of going with it next. It just helps to give them some frame of reference to make better choices or at least not have a lack of information.

Mr. Tancredo. Let's assume that's the case then. That is an example of an advantage that can be obtained. I still don't really understand why School-to-Work is necessary to actually achieve that. We had career day. I never heard of a thing called School-to-Work. We had mentors. We had people coming into the school all the time. There are all kinds of things that the schools have implemented. I don't know how successfully.

The Federal Government and States spend about $19 million a year in vocational education, and I'm still wondering what kind of results we can see from that. It's just very difficult for me to understand this whole concept surrounding School-to-Work and how it's supposed to differentiate itself from what the schools should be doing.

It seems to me that you go back to the very basic argument that if you really and truly are intent upon preparing a student for a career, what else can you possibly do that would ever be better than actually giving that person a very basic education? It's just hard to see the distinction.

Dr. Wohl. Again I generally agree with you. Part of it is a question of definition.

When you ask do we have School-to-Work, I don't envision some mechanism that replaces everything. I think there's just a more proactive approach to bringing the mentor into the classroom. If you want to call that part of the School-to-Work program, fine. If you want to call it part of the traditional program, that's fine too. But I think getting students to think in terms of why am I learning these things, and how can I apply all of this throughout life to a career, is just a greater appreciation of life in general.

Mr. Tancredo. I don't disagree with that. I just wonder whether or not it is being "sunsetted"? I think there are some instances when we've seen great harm as a result of it.

Mr. Scribante. Thank you. This may be a bit unconventional, but not being an expert on the educational issues, I'll just give it to you from a businessman's perspective. Get rid of all Federal funding for education and leave it to the States and the localities.

There is no provision in the Federal Constitution that deals with education, but there is one in the State Constitution, which refers to intelligence not skills and I've submitted that. It is the obligation of the State to provide intelligent students, not skilled workers. I think from the Constitutional perspective these are issues that need to be considered, and from a funding perspective Minnesota has been running eight consecutive years of surpluses. Applying those funds would be better than applying Federal funds.

Secondly, I would encourage you to allow educational entrepreneurs to come into the market by removing the shackles of standards and uncompetitive funding that is provided to public schools. Allow the private sector that for 200 years has done a fine job producing industrial goods as well as intellectual goods through the software revolution. Apply those same principles to education. I'd certainly ditch the standards on a national basis because you'll eliminate all the innovation needed to succeed in business if you base everything on a common standard. What you're saying is a few people will be able to decide that these are the standards. From a business perspective, if all businesses were working under the same set of rules, there would be no innovation.

Finally, a word of caution. Be careful not to try to standardize a good idea from one school across all the other schools. Once again, there are good schools out there, whether they're public, or whether they're private. As you try to apply those concepts to all, you fall into the problem of eliminating innovation, because it's all about the execution of the idea not the idea itself. And that's dependent on the principals; it's dependent on the teachers. I would recommend getting rid of School-to-Work and bringing in work to school. Bring the businesses into the schools and give the schools the opportunity, and don't put the burden on the businesses to have to change the way things are done to accommodate a bureaucrat's programs. So those were my suggestions.

Chairman Hoekstra. Thank you. Mr. Schaffer.

Mr. Schaffer. Thank you.

Mr. Scribante, I really appreciate you referencing the Minnesota Constitution at the outset, because that seems to me to be the fundamental issue. I think it's great that there's a nice healthy debate about School-to-Work and education versus the strictly intellectual or academic approach to learning. That debate ought to take place 50 different places around the United States, including territories. States ought to be at liberty to decide which direction State legislatures and governments would prefer to go.

I would like to throw out a question to any or all three of the panelists. When we have these debates back in Washington some people would say if Minnesota doesn't want to be part of the School-to-Work program, they don't need to take the money; just say "We don't want it." However, the weakness in that argument is that the Federal Government took it from you in the first place, and if you want your money back, then you have to conform to the rules that people in Washington make in order for you to get your hands on your own money. So from that perspective it's more of a program that's instituted by blackmail than anything else.

My question is, having said all that, were it not for the process of taking cash, sending it to Washington, and giving it back with strings attached, what are the chances that Minnesota would come up with a School-to-Work program on their own?

Dr. Effrem. Congressman Schaffer, first I want to say that Federal education funding in general accounts for about 7 to 10 percent of the funds that we receive in the State of Minnesota. However, it accounts for 85 percent of the regulations that we deal with in the State. And having read a fair amount of the contracts that Minnesota has with the Federal Government, I can't imagine how the State would possibly have come up with such a convoluted, centrally planned idea on its own.

I don't think that we should be starting with career awareness and portfolios of permanent records for future employers in kindergarten. The primary job for kindergartners is to learn to read. We shouldn't be talking about School-to-Work or vocational ideas until high school. But the State program clearly says a Life-Work Plan is to begin in kindergarten, and the program is to encompass all learners. It says that numerous, numerous times through contracts, and is replete through publications like Making Connections. I just can't imagine how it would have come spontaneously.

Mr. Schaffer. There is a perception by some that School-to-Work is somehow voluntary. It is not. Once the State takes the money and sets up a School-to-Work program, it applies to every child in a district or school setting.

Dr. Effrem. During the debate in the legislature opposition to change things to allow our Northstar Standard, which is an academic alternative to Goals 2000 School-to-Work, was constantly raised because if we were to do this other system, we would lose our Federal funding, even though it was only 7 to 10 percent. We took $16 billion, and we spent almost half a billion in the implementation. And it hasn't stopped.

Mr. Schaffer. I could ask questions for another hour.

Chairman Hoekstra. Mr. Gutknecht.

Mr. Gutknecht. Thank you, Mr. Chairman.

I've been listening to the testimony today, and although I don't serve on this Subcommittee, I must tell you when I get calls and letters about School-to-Work, the truth of the matter is, I don't understand it. At least I didn't understand it until today. Now I have a much better understanding not exactly of how this works, but the nature of the beast. It is something that we have to be aware of, and I hope you will have more hearings. Frankly I hope more Members of Congress can have their eyes opened as I have today about some of the problems.

I think we all want students to be ready for work when they graduate from high school, and I think that's something that makes abundant sense to everyone. When those decisions are being made with strict standards set by Washington bureaucrats who don't know what time zone Plymouth, Minnesota is in, then I think we've got a problem.

I want to make sure, though, Mr. Scribante, to get that Churchill quote. I'm a big Churchill fan. I seem to remember it, but I want to make sure that I have it. I will use it somewhere. I won't give you credit!

Chairman Hoekstra. Will you give Churchill credit?

Mr. Gutknecht. Yes. In fact, when he came to the United States it was Churchill that said of the American people, and I paraphrase because I don't have the exact quote in front of me, "You did not cross the oceans, and traverse the mountains to deal with the droughts and pestilence because you were made of sugar candy." The American people are tough. If anything defines the American people, it is that we're ingenious and we find out what works.

Part of the whole laboratory of democracy throughout the 50 States, was the concept that good ideas would percolate up, and that good ideas generally get copied. The problem with a top-down approach to education underscores what has been my concern all along about more Federal control. Any time you start at the top down, you lose the benefits of percolating up.

I have no other questions. I just wanted to make sure I had that quote before I go to Washington.

Mr. Schaffer. Can I claim the rest of this time to give to Mr. Scribante?

Chairman Hoekstra. Yes, you probably wanted to add something?

Mr. Scribante. What I wanted to add is that you talked about this program being voluntary. All of the documents coming out of the School-to-Work program have a statement that says, "Preparing all Minnesotans for tomorrow's careers," and they underline the "all."

This is not a debate. This is not a voluntary program.

Mr. Tancredo. Is that a State document? Does the Federal Government enforce that?

Mr. Scribante. Others could answer that better than I could. I would say if a school wanted to implement the School-to-Work program, more power to them. Just don't mandate that every school has to participate, because then you'll lose the ability to get the best ideas and best education in America. If it doesn't work, it will fail.

Chairman Hoekstra. I was just going to say, it's your time.

Mr. Schaffer. Well, then, okay. Let me ask Mr. Scribante one more question, and it’s just a general one.

With respect to education in general, what does business want to see the United States Congress do in order to help better educate children and promote their individual liberty, while making them more employable?

Mr. Scribante. The best thing my Federal Government could do is to just forget about all the funding. Leave the funding to the local level. Absolutely get the accountability back to the local level. There's no jurisdiction for Federal funding of that nature.

Chairman Hoekstra. Thank you, Mr. Scribante.

Doctor, we're going to follow up with you. I'd like to track this database that Minnesota's developing with the Department of Labor. I find that to be kind of interesting. We've got oversight over the Department of Labor as well as the Department of Education. That is something that we can follow up on.

So if we could have a dialogue over the next couple of days, and get some background, we can know exactly what to look for and where to go. It would be very helpful.

Dr. Effrem. I'd be pleased to do that, although the funding of the grant processes, having tried to plow through the majority of the Elementary and Secondary Education Act, is tabled for now. There's language in there that indicates the performance standards of School-to-Work and the content standards for Goals 2000 are still very, very much present. I do really see that that needs to be examined in the future.

Chairman Hoekstra. You've got at least four Members here today who before the Elementary and Secondary Education Act moves any further, will scrub that language to make sure that we have a sunsetted program. I thought we were saying that the funding was sunsetted, but the mandates are. I find that it's very instructive.

I don't know if you've got the backup data or not, regarding $16 billion of Federal seed money leading to hundreds of millions of dollars of State funding guided by Federal mandates. If you've got some background on that, I'd like to get it.

Dr. Effrem. I'd be happy to supply that.

Chairman Hoekstra. Panel; thank you very much for being here. We've had a great morning in Minnesota. So I appreciate your time and energy spent being here today. With that, the Subcommittee will be adjourned. Thank you.

Whereupon, the Subcommittee was adjourned.