TABLE OF CONTENTS *

OPENING STATEMENT OF CHAIRMAN MIKE CASTLE, SUBCOMMITTEE ON EARLY CHILDHOOD, YOUTH AND FAMILIES, U.S. HOUSE OF REPRESENTATIVES *

OPENING STATEMENT OF RANKING MEMBER DALE KILDEE, SUBCOMMITTEE ON EARLY CHILDHOOD, YOUTH AND FAMILIES, U.S. HOUSE OF REPRESENTATIVES *

STATEMENT OF THE HONORABLE EARL POMEROY, REPRESENTATIVE FROM NORTH DAKOTA, U.S. HOUSE OF REPRESENTATIVES *

STATEMENT OF THE HONORABLE LEE TERRY, REPRESENTATIVE FROM NEBRASKA, U.S. HOUSE OF REPRESENTATIVES *

STATEMENT OF THE HONORABLE CHET EDWARDS, REPRESENTATIVE FROM TEXAS, U.S. HOUSE OF REPRESENTATIVES *

STATEMENT OF DR. WAYNE LETT, SUPERINTENDENT, NEWPORT NEWS PUBLIC SCHOOL SYSTEM, NEWPORT NEWS, VIRGINIA *

STATEMENT OF DR. RICHARD J. CARSON, SUPERINTENDENT, NORTH HANOVER TOWNSHIP BOARD OF EDUCATION, MCGUIRE AFB, NEW JERSEY *

STATEMENT OF MR. CHUCK SQUIER, SUPERINTENDENT, SANTEE SCHOOL DISTRICT, NIOBARA, NEBRASKA *

STATEMENT OF MR. DENNIS JARRETT, DIRECTOR OF FINANCE, YORK COUNTY SCHOOL BOARD, YORKTOWN, VIRGINIA *

APPENDIX A -- WRITTEN OPNEING STATEMENT OF CHAIRMAN MIKE CASTLE, SUBCOMMITTEE ON EARLY CHILDHOOD, YOUTH AND FAMILIES, U.S HOUSE OF REPRESENTATIVES *

APPENDIX B -- WRITTEN TESTIMONY OF THE HONORABLE EARL POMEROY, REPRESENTATIVE FROM NORTH DAKOTA, U.S. HOUSE OF REPRESENTATIVES *

APPENDIX C -- WRITTEN TESTIMONY OF THE HONORABLE LEE TERRY, REPRESENTATIVE FROM NEBRASKA, U.S. HOUSE OF REPRESENTATIVES *

APPENDIX D -- WRITTEN TESTIMONY OF THE HONORABLE CHET EDWARDS, REPRESENTATIVE FROM TEXAS, U.S. HOUSE OF REPRESENTATIVES *

   HEARING ON IMPACT AID: KEEPING THE FEDERAL PROMISE

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The Subcommittee met, pursuant to call, at 1:00 p.m., in Room 2261, Rayburn House Office Building, Hon. Mike Castle [Chairman of the Subcommittee] presiding.

Present: Representatives Castle, Roukema, Barrett, DeMint, Kildee, Mink, Scott, Woolsey, Kucinich, and Wu.

Staff Present: Linda Castleman, Office Manager; George Conant, Professional Staff Member; Michael Reynard, Media Assistant; Lynn Selmser, Professional Staff Member; Shane Wright, Legislative Assistant; Marshall Grigsby, Senior Legislative Associate/Education; Alexa Nock, Legislative Associate/ Education; and Roxana Folescu, Staff Assistant/Education.

Chairman Castle. The Subcommittee will come to order.

Chairman Castle. I would like to take this opportunity to welcome everybody to today's hearing on Impact Aid. This has to be one of the most complicated federal education programs. And, yet, its purpose is very basic, to provide support to school districts impacted by a federal presence.

Although Delaware, my state, does not benefit a great deal from Impact Aid, I know a great many school districts depend heavily on Impact Aid for the funds that they need to provide a quality education to their students. As such, I believe it is very important that we give careful consideration to changes to this important program.

Over the years, I have been amazed at the number of amendments to Impact Aid which are considered each year. I am hopeful that during this year's authorization, we can work out a mechanism for preventing the need for the majority of these amendments in future years.

I look forward to receiving testimony from both panels, from the Members who are on the first panel and from the experts who will be on the second panel on the Impact Aid Program.

[The statement of Mr. Castle follows:]

WRITTEN OPNEING STATEMENT OF CHAIRMAN MIKE CASTLE, SUBCOMMITTEE ON EARLY CHILDHOOD, YOUTH AND FAMILIES, U.S HOUSE OF REPRESENTATIVES - SEE APPENDIX A

Chairman. Castle. And I will turn to Mr. Kildee for his comments.

Mr. Kildee. Thank you, Mr. Chairman. I will be brief, and I have to apologize. I have to go to a Page Board meeting. Other children who are in this building I have to take care of immediately. But I wanted to welcome the witnesses today. I am really pleased to participate in this.

I have been one of the great defenders of Impact Aid through the years. Presidents have marched up the Hill very, very often trying to limit or damage Impact Aid. And we have generally made the Presidents march back down the Hill, too, but they keep coming at us. And that is presidents of both parties. Some just do not understand the need of Impact Aid.

The initial Impact Aid Program was signed into law in 1950 by one of our nation's great presidents: Harry S. Truman. He was a great champion of education. He recognized the importance of compensating local school districts affected by a substantial federal presence.

It is various types of presences. And we have various types of Impact Aid. But I really believe that the federal government has to recognize that when it imposes a burden on a school district, that it should pay its share of the cost. And I think that is a legal obligation and a moral obligation. I always look forward to working with those who are defending Impact Aid, and I look forward to the testimony.

I must leave right now--but I have my aide here--to go to a Page Board meeting.

Chairman Castle. Thank you very much, Mr. Kildee. We always appreciate all that you do in this building. And let me thank Mr. Scott for being here as well.

We will turn to our witnesses now. Do any of you have a time problem and have to go first and leave, or anything of that nature? If not, we will probably go in order. Mr. Cunningham is not here.

So we will probably start with Mr. Pomeroy, but we have Mr. Pomeroy, Mr. Terry, and Mr. Edwards here to testify, each for five minutes. The rule on this Subcommittee is that if you go over five minutes, all of your testimony is expunged from the record immediately.

[Laughter.]

Chairman Castle. And they come from back there, and they drag you out into the hall. So hopefully we can live with a five-minute rule as much as possible.

But we do appreciate you being here. We do appreciate you making your statements. We will start with Earl Pomeroy.

Mr. Pomeroy. Thank you, Mr. Chairman. And I will cut to the chase.

At a time when we are looking at expanding federal support for education in a number of different areas, I think it is important we at least pay what we owe as already established. Given the intense local-based nature of school district funding in relying in large part upon local property taxes, it is only appropriate for the federal government to make payments to school districts, when by virtue of its federal ownership of property within a school district that local funding is disrupted. That is the conceptual heart of Impact Aid.

Unfortunately, the federal government over the years has not kept up with what it owes at all. It, in fact, pays something like 50 percent of its authorized level as represented by the last year's fiscal budget.

As you mentioned, Mr. Chairman, the reauthorization does offer an important opportunity to reexamine these funding levels and to reestablish a more appropriate dimension of federal support in light of the displacability of the local school districts to raise us money from other means.

I have, in particular, found a glitch in funding options for local school districts where virtually all of the property is federally held and, therefore, doesn't give rise to local property tax revenue opportunity, but they have construction needs within that school district. I don't think there is a facet of Impact Aid that is as under-funded or is working as poorly as the construction component of Impact Aid.

Previously funding used to be at about the $20 million range. It has now dropped down to $7 million. That is per these Impact Aid schools, a great number of them. Making this matter even worse is that appropriators have taken to earmarking where that $7 million should go.

So last year, for example, even though you had a sizeable number of schools eligible for this funding, about half of the funds were hijacked for a school in Montana and a school in Alaska, not coincidentally linked to prominent appropriators and their relationship to those funds. It simply doesn't leave money for addressing other problems.

I have got two particulars I would cite to you. In Grand Forks, we have a very serious ventilation problem. It would cost $800,000 to address the ventilation needs of this school district. And, yet, the school district for several schools that are Impact Aid-related in light of the air base presence that we have in Grand Forks, the total revenue for the whole school district is $40,000. The only option they have is basically to divert from program dollars, Impact Aid Program dollars, to the construction account.

An even worse example_and this is the absolute worst example of school circumstances that I have personally seen_is presented by the Cannonball Elementary School located on the Standing Rock Indian Reservation in North Dakota. This is a public school but 100 percent reservation property, virtually no local property tax base for this school to consider.

The circumstances are that the children are educated in overly crowded, utterly inadequate circumstances. My visit there left such an impression, such a visceral impression, I thought that a picture in this instance speaks 1,000 words. And so I have got just a couple of minutes of videotape that I would like you to look at.

[Videotape.]

Mr. Pomeroy. That school is slated to get $8,000 to share between 2 facilities, this and one other, in school construction dollars. There are no other dollars available.

I have gone down and met personally with the Secretary of Education. We have really gone across the board. There simply are not other program dollars available. And every day that principal has got to make a school function within those terribly inadequate walls.

And so, along with Congressman Hayworth in the House, we are going to have a bipartisan bill, with Baucus and Hagel coming in on the Senate dealing, in particular, with the construction dimension of the Impact Aid Program. I hope that it can be folded into the ESEA as we go forward. There clearly is not an aspect of Impact Aid that needs attention more than the construction dollars.

Thank you, Mr. Chairman.

[The statement of Mr. Pomeroy follows:]

WRITTEN TESTIMONY OF THE HONORABLE EARL POMEROY, REPRESENTATIVE FROM NORTH DAKOTA, U.S. HOUSE OF REPRESENTATIVES - SEE APPENDIX B

Mr. Pomeroy. I will submit the tape, by the way, for the record.

Chairman Castle. Thank you.

Mr. Pomeroy. This is an abridged version. I have a slightly longer version that will be going into the record.

Chairman Castle. Well, we certainly accept that into the record.

[The attachment to Mr. Pomeroy's statement is a part of the official record and is available through the House Committee on Education and the Workforce:]

Mr. Pomeroy. Thank you.

Chairman Castle. It all makes a very compelling case. And it is interesting to see and always disconcerting when kids needs aren't being correctly adressed.

Next we have Mr. Terry from Nebraska. We are delighted to have him here. Mr. Terry?

Mr. Terry. Thank you, Mr. Chairman.

Education, and particularly Impact Aid, is a priority of mine. I represent an area called Bellevue, Nebraska that is heavily impacted. It is home of Offutt Air Force Base, which houses STRATCOM and the 55th Wing.

We have two school districts that are impacted. And I hear today from other witnesses a strong belief in the importance of the Impact Aid Program. This is truly dollars to the classroom in its purest forms.

Funds are allocated to schools based on a formula. Local schools then decide how to spend the funds for their schools. Today I am going to focus my remarks, however, on the problems with the administration of the Impact Aid Program and legislation I will introduce to address these problems. These are problems I have learned from talking to our superintendents from those two school districts and/or representatives of NAFIS.

Impact Aid is not an education program in the normal sense. It is actually a revenue-sharing or a tax reallocation or, as I call it from a past city council life, in lieu of tax.

Because Impact Aid has suffered within the Department of Education from low priority and sloppy administration, I believe it should be moved. Let me highlight for you some of the problems that I have learned.

The first problem is lack of leadership. A part-time administrator heads the Impact Aid Program at the Department of Education. Only one-fifth of the individual's time is spent on Impact Aid.

The budget is the second problem. When Impact Aid competes for funding with substantive education initiatives, it comes out at the bottom of the priority list.

The President's Fiscal Year 2000 budget recommends cutting Impact Aid $128 million. This recommendation is unconscionable. Once again, Congress will be forced to ride to the rescue through the appropriation process.

Program administration is the next problem, and it can only be described as abysmal. Some school districts are still waiting for Fiscal year 1999 funds, 6 months after they were appropriated last October and 18 months after the Department had most of the data needed to perform the required calculations.

Chronic computer breakdowns, data entry errors, and incorrect calculations often delay processing of Impact Aid grants to schools. GAO has documented for this Committee how Department of Education computer systems often are not compatible with the Treasury Department system that issues the payments or even with other Education Department computers.

One example in Nebraska is Santee or in Santee, Nebraska. It was ruled ineligible for Impact Aid this year because its percentage of qualifying students was too low. The only problem is the Department had entered the student body size as being more than 8,000, rather than the correct number of about 400.

Errors such as this mean the school system must do without while wading through its appeal process and waiting for its funds. They may have to borrow funds and pay interest or, even worse, deplete their general treasuries. This is wrong.

The private National Association of Federally Impacted Schools, NAFIS, makes Impact Aid computations more quickly and accurately than the Department of Education. They successfully do, in a month or two, what the department is then able to do correctly in many more months.

Mr. Chairman, this must change. And what should be changed is the entity that administers the program. That is why I have drafted the Impact Aid Revitalization Act.

My bill does two things. First, it transfers the Impact Aid Program from the Department of Education to the Department of the Treasury. Let us move this program to an agency that is not predisposed against it.

Second, my bill authorizes the Secretary of the Treasury to contract out with the private sector to perform some of the program's operations. Let NAFIS or some other qualified organization perform these functions as long as there is financial accountability.

Mr. Chairman, what more important quality of life issue is there for our military personnel than the quality of their children's schools? Those in our armed forces as well as Native Americans need to know that the federal government is doing right by the school systems that teach their children.

Mr. Chairman, a copy of my bill is attached to the prepared statement. Thank you for your consideration.

[The statement of Mr. Terry follows:]

WRITTEN TESTIMONY OF THE HONORABLE LEE TERRY, REPRESENTATIVE FROM NEBRASKA, U.S. HOUSE OF REPRESENTATIVES - SEE APPENDIX C

Chairman Castle. Thank you very much, Mr. Terry. We appreciate your suggestions, particularly legislation, which will hopefully resolve all of the problems. We will certainly take a look at that.

We will turn now to Mr. Edwards, from Texas, who has been involved with Impact Aid for a number of years.

Mr. Edwards. Mr. Chairman and Members, thank you very much.

I realize I am speaking to Members of this House who have been real leaders in education and all of its many aspects. So I will try to keep that in mind and not submit orally my entire written statement.

I do want to begin by thanking you for what you have done in the past for Impact Aid. I realize to most Americans Impact Aid is unfamiliar as a term. To many, it may sound like a disaster relief program.

To 17 million children, Native Americans, children in military families, and all who go to school with them, this program is the difference between a quality education and inferior education. It is the difference between a hopeful future, a bright future, and perhaps a bleak future.

There are not many Americans who have the chance to have a significant direct impact on the lives of 17 million young Americans, but you do on this Committee. That is why I am grateful to have a chance to testify before you today.

Putting aside my formal statement, which was full of numbers and facts and statistics, what I tried to do this morning was think about Impact Aid from a more personal standpoint, from my experiences as Representative of Fort Hood, which has over 40,000 Army soldiers and their families today.

As I thought about it, recognizing the tremendous choices, difficult choices, we have to make in the context of trying to balance a budget, I couldn't help but think that few in our society should be more deserving of a good education than military children. Why do I say that?

Think about the sacrifices our military children make. First, most of their parents are paid less than they deserve or we would like to pay them.

Too many times, secondly, they live in World War II barracks, often not renovated to today's standards or even health and safety standards.

In school, from the first grade to the 12th grade, just as they have made fast friends, our country asks their families to move, perhaps hundreds, if not thousands, of miles away.

Fourthly, while most children are out today after school playing soccer or baseball with their parents, there are thousands of military children who wish they could be with their parents, their mothers or fathers having been deployed to Bosnia, Haiti, or to other far parts of the globe.

In my district today and yours as well, many high school seniors are already thinking about their high school commencement, the excitement of that moment and having their families there at that great occasion. There are hundreds of high school seniors in my district today that, frankly, aren't thinking so much about that as hoping and praying that their parents will come back home alive and safe from their six-month deployment to Bosnia.

I don't know how we can put a value on the sacrifice made by young high school--a junior, a young girl that I met several months ago, I was with her at Fort Hood when for the first time in two months via teleconferencing, she got to see her mother, who is serving in the U.S. Army in Bosnia. How do you value that?

How do you put a value on the young, 25-year-old, soldier I met on December 15^th, 3 and a half years ago? He was about to be deployed to Bosnia. I was talking to him about my wife about to have our first baby; in fact, was within days of that wonderful, miraculous experience. And I was talking about the beauty of being with my wife the moment she brings our first son into the world.

He basically said: Sir, I missed the birth of my first child because I was in Desert Storm. I will miss the birth of my second child because I will be in Bosnia; and he didn't complain.

It seems to me that we, as Members of Congress, owe it to the children of military families. We owe it to their families to say: If you are going to serve and sacrifice for our country, if you are going to be willing to even put your life on the line for our country, we are going to assure your children of a quality education.

Thank you for your leadership in having made that a possibility in years past.

[The statement of Mr. Edwards follows:]

WRITTEN TESTIMONY OF THE HONORABLE CHET EDWARDS, REPRESENTATIVE FROM TEXAS, U.S. HOUSE OF REPRESENTATIVES - SEE APPENDIX D

Chairman Castle. Well, thank you very much, Mr. Edwards. That is also a compelling statement.

Let me just say that Members of Congress are vitally interested in this subject. We had requests, extra requests, to come in and testify to this panel, but because we have another panel after, we didn't want to go on all day.

Mr. Cunningham obviously is not here. His statement will be accepted in the record if he does not arrive before we finish.

[The statement of Mr. Cunningham follows:]

WRITTEN TESTIMONY OF THE HONORABLE RANDY "DUKE" CUNNINGHAM, REPRESENTATIVE FROM CALIFORNIA, U.S. HOUSE OF REPRESENTATIVES - SEE APPENDIX E

Chairman Castle. Rather than take five minutes apiece, because they are Members, I didn't want to hold them up particularly. I just wanted to look around and see if any of the Members up here had any specific questions they did want to ask.

Marge, yes? I can't tell if you want to ask a question or not. You have got to give me a signal.

Mrs. Roukema. I am sorry. I didn't know that you were looking at me. I was thinking. I will just convey to you what I was thinking and make an observation in terms of the situation in my own District.

Each of you have indicated that your concerns are related to the military complex, and certainly that is important. I see on the next panel McGuire Air Force Base in New Jersey. Someone will be representing them and explaining that There is another component to this which is equally important, and they overlap, really.

In my District, for example, we have the Delaware Water Gap National Park. A huge amount of acreage, almost 33,000 acres, of land was taken for the development of that park from the local constituency. The Sandiston Walpack School System, Consolidated School System, has to deal with that problem.

Now, you say: What problem is it? Well, it is a parallel problem to the point that you have made. And that is when you take that acreage out and it is non-developable and at the same time you overlay it with the needs of the community that are increased because of the huge influx of tourists and the needs on the road system and every other supporting system in the region, then there is something owed back to the community in terms of the Impact Aid and the impact it has on the school system.

Again, I have just got to say a promise is a promise. And when that land was confiscated, the acreage confiscated years ago, a promise was made to the local communities that there would be help and assistance. Now to withdraw it, it seems to me as though the Administration is intent on that, and I don't understand the reason for it.

Now, I heard Congressman Terry's allusion to, or assertion that perhaps removing it to Treasury is the answer. I don't know about that. I will keep an open mind on that, but it is beyond me, and the Chairman knows we have been dealing with this problem year after year. It is like: Haven't we been there, done that, done this year after year?

I don't know why the Department of Education has been consistently so resistive and so negative on this subject. But certainly I stand with you and will do all I can to support the very justifiable claims you have made.

There are claims made on family and children if we really talk about being for children. This is a way that we translate it into real world activities. That is what I really appreciate about your testimony. You were talking about the real world out there.

Thank you very much.

Mr. Edwards. Mrs. Roukema and--

Mrs. Roukema. Yes?

Mr. Edwards. --Mr. Chairman, could I just briefly thank you for pointing out the diversity of people and districts served by this? I think it is reflected in the fact of 111 Members of the bipartisan Impact Aid Coalition. And I am sure we all three had planned from our sixth to our tenth minute of testimony some of the comments that you had said. Thank you for doing--

Mrs. Roukema. I am glad you left something for me to say and contribute to this dialogue. Thank you.

Chairman Castle. Mr. DeMint?

Mr. DeMint. Mr. Chairman, I would just like to speak in favor of us giving serious consideration to Mr. Terry's idea. If we have got money that needs to flow through, and it can be on a formula basis, and does not need to have programs or philosophy attached, there is no reason it needs to be under an agency that cannot pass it through efficiently. And so it sounds like a very efficient idea that would move unhindered dollars back where they are needed.

Mr. Terry. The schools are really dealing with the two-level problem. And the first level is every year an Administration wants to take away the funding. But then what funding is authorized by Congress when it steps in to rescue is usually thwarted.

And that is the second level of problem that we can avert by just moving into a different agency that will issue the check and have an administrative private sector, like maybe NAFIS, that would do it and eliminate that level of problems, at least hopefully.

So I appreciate that, Jim.

Mr. Pomeroy. Mr. Chairman, if I might on that one, the Impact Aid Caucus would be in a position, very much like Congresswoman Roukema said. in terms of open minds still evaluating it, we're not quite sure what we think of it.

I think that the maladministration of the Impact Aid Program is ridiculous, unconscionable, and inexcusable. I am not sure that moving it over to Treasury might raise the prospect that the thing becomes even more of an orphan than it already is, and more ignored as to the administrative attention that it requires.

And so those are some of the things I am wrestling with as one Member looking at the proposal of Mr. Terry. I think it is a very worthwhile addition to this discussion, however, because it points out the limits of frustration that we have as Members with the ridiculous circumstances our school districts find themselves in because the program simply isn't being run very well.

Chairman Castle. Mrs. Mink had a comment, I think.

Mrs. Mink. Thank you very much.

I would like to congratulate the members of the panel for their brilliant testimony, with which I 1,000 percent concur. It is really a disgrace that this important program is every year relegated to an orphan of those Departments, and not enough support is ever given to it.

I have been here in the Congress for a long time. And every Administration treats it the same way. And so while I don't know that Treasury is the appropriate place to move it to, I do think that we need to hammer out our concern about the maladministration of this program and the disintention that it is given.

I don't know. Maybe the DOD is the place to put it. I am not sure that they are ready to handle it either, however. But certainly the educational needs of the children of the military are absolutely essential.

I have 13,000 children living on base in my state. And the cost of education borne by the Impact Aid Program is only about maybe 40 percent. The rest have to be supported by the state through its funding. As a result, there is this constant friction, and the school needs of the military are not attended to.

A new military general was assigned recently. He came to my office for a courtesy call. The most important thing he wanted to discuss was the quality of education of the children that he will be responsible for.

So it is the military that is concerned, the local people that are concerned, and in the end, it is the children that are being sacrificed over this belittling tactic on the part of our Administration.

So I am very proud to be associated with your caucus. And I hope that you can command the attention not only of the Congress, which I am sure we will be, but to also get the Administration to think differently about this program.

Thank you very much, Mr. Chairman.

Chairman Castle. Thank you, Mrs. Mink.

Well, in closing, I would just say that I share the same concerns that you do and that you have heard up here this afternoon. And I would go a little further than that.

We as a Congress have a habit of promising as much as we can to as many people as we possibly can, which is not unusual, I guess, in terms of being elected officials, but I think in education, I think that is a very dangerous practice. I think in Impact Aid, it is a dangerous practice.

We do the same thing with IDEA. We promise to help children with disabilities, and we don't pay anywhere near the 40 percent that we have obliged ourselves to pay. Yet, we continuously go out there and create new programs.

Maybe the time has come for both this Congress and this Administration to sit down and say, ``Hey, look. Let us live up to the obligations which we presently have,'' as opposed to the creation of new programs; and maybe we would benefit to the better.

Maybe we ought to send that video to them, Mr. Pomeroy, and let them look at it as well. We on this Committee should be looking at it as well as the appropriators in terms of what all this does.

So I think you have had a good, beneficial impact today in terms of your testimony. We appreciate you being here and, frankly, would like to stay in touch with you as the year wears on. Maybe we can start to at least address these problems. If we can't solve them all this year, let us at least start moving in the right direction.

Mr. Pomeroy. The Secretary and I have viewed that video, but we still haven't figured out a way to get the construction dollars back. So I really think we are really looking to this Committee for some of the heavy lifting required to find an answer.

Thank you very much.

Chairman Castle. Thank you for the responsibility.

Mr. Edwards. Thank you, Mr. Chairman. Thank the Members.

Chairman Castle. Thank you, all of you.

Chairman Castle. We now have a second panel of Dr. Lett, Dr. Carson, Mr. Jarrett, and Mr. Squier. If they would, the staff will help shift some names around here. We will get everybody set up, and we will continue right down the line because we are going to have some votes here at some point.

The second panel gets high marks for getting in their seats quickly. We appreciate you getting in your seats quickly, and we are ready to proceed.

You, I think, were all here during the first panel. We allow five minutes for your presentation, and then we will ask questions. We will probably ask you questions a little more formally. We will take five minutes each if the Members want that long of a time. We will alternate between sides.

At least one Member here is going to introduce two of you, and another Member may come to introduce one other. So let me turn now to Mr. Scott, who will introduce Dr. Lett and Mr. Jarrett.

Mr. Scott. Thank you, Mr. Chairman.

It is my pleasure to introduce two distinguished members of our panel. One is from my District, and the other is so close he might as well be. Dr. Wayne Lett is Superintendent of Schools in Newport News, Virginia, and he is Vice President of the National Association of Federally Impacted Schools.

Newport News Public School System has over 32,000 students, 25 percent of which are federally impacted. Newport News receives over $2 million a year in Impact Aid.

Dr. Lett has worked with federal Impact Aid since 1969. He is a former President of the Virginia Association of Virginia School Personnel Administrators and has been on the Board of Directors of the National Association of Federally Impacted Schools since 1991. He has received numerous awards, including Administrator of the Year by the Virginia Association of Educational Professionals.

I would also like to welcome Dr. Dennis Jarrett. He is the Director of Finance for York County School System in Virginia. York County School System has over 11,000 students, almost half of which are federally impacted students. York County receives almost $6 million a year in Impact Aid.

Mr. Jarrett has worked with federally impacted school districts since 1984. He is a licensed public accountant and currently serves as the Virginia State Chair for the National Association of Federally Impacted Schools.

Mr. Chairman, the students and schools in Tidewater, Virginia are well-represented by these two gentlemen. And it is a significant issue throughout the Hampton Roads, Virginia area because of the numerous military bases and other federal facilities that we have. I look forward to their testimony.

Chairman Castle. Thank you, Mr. Scott.

We have also Dr. Richard Carson, who is with us, who is the Superintendent of the North Hanover Township Board of Education at the McGuire Air Force Base in New Jersey. Dr. Carson has a Master's degree in educational administration and supervision, a doctorate in educational administration and leadership, and has been employed within the field of education for over 25 years. His experience as Superintendent of the North Hanover Township Board of Education will allow him to provide insightful testimony regarding school districts heavily impacted by a military presence.

And Mr. Chuck Squier is with us, who is the Superintendent of the Santee School District in Niobrara. Pronounced correctly?

Mr. Squier. Village of Santee.

Chairman Castle. Village of Santee. Mr. Squier has served as administrative teacher and coach in the State of Nebraska. Due to his experience working with the school district containing Indian land he will comment on the significance of the Impact Aid Program to such districts. In addition to his position with the Santee School District, he serves as the Executive Director of the Northern Nebraska Native American Consortium.

So we welcome all of you. Unless there is some reason not to, we will just go in order from Dr. Lett to Dr. Jarrett. You each have five minutes.

Mr. Scott. Mr. Chairman, before we start, I know it is not our practice to recognize people in the audience, but if it were our practice, I would hope that we would recognize Ms. Mamie Bakote, who is a member of the Newport News City Council. She is also an adjunct professor at Hampton University. And she is here with many of her students.

Chairman Castle. Okay.

Mr. Scott. I am sure that if we did recognize guests in the audience, that they would have been recognized.

Chairman Castle. Well, it is not in order to recognize people in the audience, but we do recognize you. And we appreciate you being here anyhow. Thank you very much for your interest. We do appreciate that.

With that, we will go to Dr. Lett.

Mr. Lett. Thank you, Mr. Chairman. I certainly would like to thank you and the Members of the Committee for having us here today to talk about this very important topic.

Mr. Lett. What I am going to do is provide a brief overview, if you will, of some of the proposals that have been presented in the reauthorization proposal by both the NAFIS Board of Directors and a Reauthorization Advisory Task Force, which represents all segments of the Impact Aid community.

Congressman Scott mentioned some of the statistics regarding Newport News. Other than Indian lands, Newport News represents just about all other facts of the program. We have military on base, military off base, civilian, and low-rent housing students in our district. Eight thousand, six hundred fifty-seven students in our district are federally connected of the 32,000 students in the Newport News School District.

I would like to mention that the 1994 reforms that Congress approved have worked. Those reforms, other than the things I am going to mention, we felt should stay in the reauthorization that you are going to be dealing with shortly.

I am going to mention five areas: the first, weights; the second, hold harmless; third, privatization; fourth, equalization; and the fifth is the Treasury Department idea.

In the area of weights, the Reauthorization Advisory Task Force as well as NAFIS Board of Directors are recommending that the off-base military be increased from .10 to .25 and civilian dependents from .05 to .10. One of the reasons is the significant loss in revenue that we have where we tax businesses. Businesses provide 40 percent of the taxes for education in our city. We are not able to tax the business or commercial property, obviously, that these parents work on because obviously they work on federal property which is not taxed.

In the hold harmless area, in order to protect the heavily impacted school districts, we want to provide a permanent hold harmless throughout the reauthorization so that no heavily impacted school district would suffer from any change in the law.

In the area of privatization, as the military is looking into privatizing various properties, one change that we are recommending is that any federal property that becomes privatized, rather than that becoming the OB, or the off-base, military student housing, that that be changed from a 1.0 rating to a .75 to recognize the impact that that would have on the local school district.

Equalization is an area that affects three states: Alaska, Kansas, and New Mexico. We think that the equalization provision of the Impact Aid law should be repealed. These states, even though equalization is meant to provide equitable revenue throughout all the school districts in those states.

These schools districts in many cases do not have the advantage of being able to use bonding capacity that other districts have. As a result, they are not able to deal with repair, renovation, and replacing existing facilities, much like you saw on the videotape.

Lastly, moving Impact Aid out of the Department of Education to Treasury, Treasury may not be the appropriate place to move it. We think at this point it is a good idea. It is certainly worth studying and maybe putting in place.

A number of school districts have had trouble receiving the revenue that they are due. It is a simple formula. Forty percent of the school districts, only 40 percent of the school districts, had received their Impact Aid payment by February 1 of this year. Certainly they should have received it in the fall, so that is a concern to us, and that has already been addressed by the previous panel.

Now, please know that this frustration doesn't spill over to this Committee. We want this Committee to retain oversight over the Impact Aid Program.

In closing, I do want to mention that there are 1.4 million federally connected children in 1,700 school districts. However, it is important to realize that the education of 17 million students is actually affected because there are 17 million students overall in these 1,700 school districts. So when you talk about the federal presence in the community, you are talking about 17 million students in this country who have to compete not only in their locality, in their state, and in this country, but across the world, whether it is going to college or jobs. It is very important for all of us.

Again, thank you, Mr. Chairman and the Members of the Committee, for allowing us to testify. Once the panel has completed their testimony, I will be glad to answer any questions you may have.

[The statement of Mr. Lett follows:]

WRITTEN TESTIMONY OF DR. WAYNE LETT, SUPERINTENDENT, NEWPORT NEWS PUBLIC SCHOOL SYSTEM, NEWPORT NEWS, VIRGINIA - SEE APPENDIX F

Chairman Castle. Thank you, Dr. Lett. You must have practiced that right down to five minutes. Wonderful job.

[Laughter.]

Chairman Castle. We will turn next to Dr. Carson.

Mr. Carson. Good afternoon. I, too, would like to thank the Committee for having us here.

Mr. Carson. I am here today basically to speak about Section 8003(f), ``Heavily Impacted.'' Before I do that, I would like to give some background information about the North Hanover Township schools.

We enroll approximately 1,600 students in the pre-K through sixth grades. We are the fourth largest pre-K school in the State of New Jersey. We are the largest in Burlington County, which has 42 school districts.

Four of our five schools are owned by the Department of Education. We are on leased land from the Air Force. Approximately 1,260 students are military dependents. Impact Aid represents 60 percent of our budget. Approximately 20 percent of that 60 is Section 8003(f) funds. North Hanover has 13 trailer parks and homes that range up to the $400,000 bracket. Our community mean income is $38,000.

McGuire Air Force Base houses 5,100 military personnel. Their average deployment is between 90 and 120 days. They serve in 19 different countries. For the past couple of years, they have been deployed two weeks before Christmas. The effect this has on students is unbelievable.

When you have a first grade student coming up to you wrapping her hands around your leg and saying, ``I want my daddy home for Christmas,'' it just eats you and tears you apart. So the quality of life issues here are immense.

Talking about quality of life, the schools support this quality of life in several different ways. There isn't a day that goes by that we are not touched with the family support groups dealing with the concerns of the children.

The availability of housing, we have all mentioned privatization. We are looking at privatization, in fact, where they have made a circle, a radius, and said there is enough housing within one hour of McGuire Air Force Base to house the people. What you are doing here is you are forcing young airmen into local communities. There is no family support for these airmen in local communities as there is on a military installation.

When we talk about Impact Aid, you have heard there are 1.4 million children, including 500,000 military dependents, compared to the 70,000 DOD students. We understand that this is a program in lieu of taxes, and we ask that the Congress recognize the fact--and I am sure they do because they have over the past several years--that we have to support our own and meet our obligations, before we go into other types of programs.

The purpose of Section 8003(f), ``Heavily Impacted,'' is to bring the poorer districts' per-pupil expenditure to comparables when there are insufficient funds from the basic support program, state aid, and local property taxes. In order to become eligible for 8003(f), you have to have more than a 40 percent impaction. The taxpayers have to carry their local fair share. We are spending below our comparables or the state average in per-pupil expenditures.

We talked about payments during the course of this afternoon. We are talking two, three, four years late. If I may, the payments for Fiscal Year 1994 we received in Fiscal Year 1997. For Fiscal Year 1995, we received in Fiscal Year 1997. Fiscal Year 1996 we received in Fiscal Year 1999, Fiscal Year 1997 in Fiscal Year 1998, Fiscal Year 1998 in Fiscal Year 1999. And under the pilot program, we will talk shortly, Fiscal Year 1999 funds we received at the tail end of February.

The pilot program that was instituted and this Committee supported the last appropriation bill, the eligibility for these schools remained the same. The funding methodology was changed. Very truthfully, our district lost money with this. We were willing to do it because we would receive payment faster. This is quite evident as we received Fiscal Year 1999 payments during the Fiscal Year 1999 year, as I said earlier, in February.

What it does for our schools, it allows us to hire teachers, which results in smaller class size. We are all aware of the President's Class Size Reduction Act. What that does, it would give us $15,000 to hire a part-time teacher. In his, or the Administration's cuts, we tend to lose 51 teachers. That is a $2 million cut that, without the budget being changed, will cause us to lose 51 teachers. That is the impact that Section 8003(f) has.

We are able to purchase current textbooks, which increase our scores. We expand our programs. We are unable to wire our buildings and apply current technology. What it does for some of our districts in 8003(f), it removes portable classrooms or trailers. Fort Hood, I think everyone understands that they have 256 trailers or portable classrooms.

We talk about construction funds, construction of libraries. As I said earlier, we have four buildings--I just saw the light--that are owned by the Department of Education. I asked for a library for our fifth-sixth grade building. I was told: No, elementary schools don't need libraries. That is from the Department of Education. So when we are looking at construction, please look at 8007 also.

I will stop now unless somebody wants to give me some time out here.

[The statement of Mr. Carson follows:]

WRITTEN TESTIMONY OF DR. RICHARD CARSON, SUPERINTENDENT, NORTH HANOVER TOWNSHIP BOARD OF EDUCATION, MCGUIRE AFB, NEW JERSEY - SEE APPENDIX G

Chairman Castle. Thank you, Doctor.

We will have questions. So you all will have a chance to reiterate anything you might have missed.

We welcome Mr. Barrett here, who is also from Nebraska. I took the liberty to introduce briefly Mr. Squier before, but we would love to hear more about Mr. Squier from you, sir, if you wish to say something before he commences.

Mr. Barrett. Thank you, Mr. Chairman.

Mr. Squier is an old friend, happens to reside in my Congressional District, and is one of the real experts I think on the issue of Impact Aid, particularly as it applies to Native American children.

Chuck Squier has been in education for a number of years, probably four years presently as Superintendent of the Santee Sioux School District up in northeastern Nebraska. He has served throughout his career at a number of schools as teacher, administrator, coach, has a long, long, illustrious record in that regard and has had the courage and the determination to serve Native Americans in that particular environment, and has done an exceptional job.

As a matter of fact, I can't think of any people, anyone, who is probably better acquainted with the real day-to-day issues as they apply to Impact Aid, other than Chuck Squier.

I am glad he is here. I appreciate his being here. Welcome, Chuck, and we are glad you are here.

And thank you, Mr. Chairman, for allowing me to make this little introduction.

Chairman Castle. Well, I will thank you, Mr. Barrett, and thank you, Mr. Squier, for being here. We are ready to hear from you.

Mr. Squier. I appreciate the opportunity to be here to take some time to let you know how Impact Aid does impact our school. We have 150 Santee Sioux Native American students that we serve on the reservation.

When you say ``Niobrara,'' Congressman Roukema, our neighboring district Niobrara has lost a lot of land to the Corps of Engineers. We do do some sharing of programs and things, and I do have a deep concern for their cause also.

Four years ago I went to a school that was being funded at 60 percent of 70 percent. Go figure that out when you are figuring out budgets, but that is the way it was. Impact Aid was only getting funded at 70 percent. We were only getting 60 percent of that 70 percent. We were supposed to get $790,000. We were getting $360,000.

When you try to run a school, there are certain things that give. Let me tell you what I think one of the impacts the lack of money had on our district. Our reading scores the previous three years in first grade had gone from a grade mean and equivalency of 1.8 to 1.2. Our 8th grade scores had gone from a grade equivalency of 7.4 to 5.9. Our 11th grade scores had gone from a grade equivalency of 10.2 to 9.4. I believe that the lack of funding had a direct impact on the inability to furnish the resources needed to raise our scores.

Our curriculum committee met, which was a group of staff members, parents, and community members. And they said: We need to have multiple copies of reading materials. We need to update our library. We need a student reading management system. They had said all of these things, but we didn't have the money to do it.

About that same time, all of a sudden, Impact Aid was funded differently. We started getting some more money. We started doing some of these things that the curriculum committee said: we trained a reading recovery teacher trainer; we have accelerated reader; we have a Project Read training; we wrote a grant called ``Many Arrows and a Quiver Are Needed so Every Student Can Learn to Read.'' And we leveraged some of the new Impact Aid dollars with some of the grant dollars.

And I said: Well, lack of funds had this impact. So what does having funds impact? Well, let me tell you. Last year 28 percent of our students' parents received a letter from me saying: Congratulations. Your child had increased their reading scores two grade levels or more in one year. Okay? Twenty-eight percent. Fifty percent did at least 1.5 grade levels or more. The balance at least made one grade level. Okay? So dollars do have an impact.

This was based on CTBS tests, which are nationally normed. I won't even say that there is much in the way of racially normed testing in that area, but that is a whole different issue. We know that this was the baseline and this is where we went. So we had some great results out of that one particular program.

Very interesting. One of our classes, remember I said the 8th grade went from 7.4 to 5.9? That eighth grade class as ninth graders grade means equivalency averaged ninth grade reading level. Okay? We had two classes that averaged reading levels: second grade and ninth grade.

So we think that we can do things if we have the money. It is really important that we have the money. I am not going to go into all of the Indian issues that are out there because you are all familiar with them.

I, like most of my colleagues, am willing to put my mouth where the money is. I said that right, I am willing to put my mouth where the money is. If Congress appropriates the money, we will meet the standards that you expect and that our parents expect and that the State of Nebraska expects.

I would like to thank you for your time and attention on this. I would invite any members to come out and visit our lovely school and meet some of the most remarkable students and staff in this country. Let me tell you one thing, if you do come out, I would recommend you not come out when it is raining because our roof still leaks a little. Okay? And don't come out when it is too hot or too cold because our heating and air conditioning don't work quite as well as they should, but come out.

[The statement of Mr. Squier follows:]

WRITTEN TESTIMONY OF MR. CHUCK SQUIER, SUPERINTENDENT, SANTEE SCHOOL DISTRICT, NIOBARA, NEBRASKA - SEE APPENDIX H

Chairman Castle. Well, thank you, Mr. Squier. You get a nice spring day for us, about 70 degrees and dry, and we will be right out there to have a look at it.

And, finally, the cleanup hitter in this illustrious group, Mr. Jarrett.

Mr. Jarrett. Well, Mark McGuire I am not, but I am going to try to get us rolling here.

These three gentlemen here have been talking about the Section 8003 part of the program. I am going to be talking to you about Section 8002. It is another part of the Impact Aid law, and it is the part that deals with federal land. Okay?

At the outset, I want to point out that the Administration's budget that has been sent to Congress has eliminated this program. Okay? So we are starting out from, if I can, home plate, right at the beginning here.

Last year that was the case as well, and we went to the Congress. And the Congress restored those funds. Not only did you restore them, you added $4 million. We are very grateful for that because, frankly, it is the Congress that has kept this program alive in recent years. We are very appreciative of that.

Congresswoman Roukema, I believe--

Mrs. Roukema. Roukema.

Mr. Jarrett. Roukema?

Mrs. Roukema. Roukema.

Mr. Jarrett. Okay. I would like to reiterate something that you said earlier. We, the Section 8002 group, believe there was a promise made to these school districts. We believe that promise is being broken. We look to Congress to correct that.

The school division I represent is York County. We have a student population of 11,400 kids. Fifty-two hundred of those are military or are federally connected. That is roughly 45 percent of our population. So our school district is somewhat unusual in that we received the Section 8003 funds that these gentlemen have been talking about, but we also received the Section 8002 funds.

Approximately 40 percent of the land in York County is owned by the federal government. I will tell you some of the facilities that are in York County: We have the United States Coast Guard Training Station, Yorktown. We have the Naval Weapons Station, Yorktown; Camp Peary Armed Forces Training Facility; Bethel Manor Housing Annex for families stationed at Langley Air Force Base. The Colonial National Historical Park is located in York County. Again, 40 percent of the land is owned by the federal government, it is not on the tax rolls.

The entitlement formula for Section 8002 is really very simple. It is how much, what is the assessed value of the land that the federal government owns, and what is the real estate property tax rate, multiply them out, that is your entitlement under this program.

Unfortunately, there have not been enough funds appropriated to fund this program at 100 percent. In fact, up until 1987, the program was funded at 100 percent. After that time, it had been declining every year to where it is now, in 1999, it is roughly 15 percent.

Now, to put that in perspective for you, if a school division has an entitlement of $500,000, that means they are going to get a payment, I will talk about payments in a couple of minutes, but they will get a payment of roughly $75,000 out of an entitlement of $500,000.

Payments are another issue with this part of the program. Section 8002 payments usually run three to four years in arrears. We are right now getting payments for the 1994-95 school year. So I would reiterate some of the concerns that were voiced earlier about the timing of payments with this program as well.

What the Section 8002 group districts that receive the funds have had to do in recent years is come up with a formula to pro-rate funds, because there are not enough funds appropriated to this program. What we did when we came to Congress in 1994 was to make a change to put a hold harmless in place for school districts.

You approved that, and that program has been working well for us. However, given the fact that it is going to take over $200 million to fully fund this program and we are being realistic and we don't think that amount of money is going to be coming to us, at least not next year and probably not in reauthorization, we feel that we are going to have to put another formula in place for pro rating these funds. The NAFIS proposal that we are going to be sending to you will include that formula.

So we would ask that when you get that, you take a hard look at it. We feel the formula will hold districts harmless that are currently receiving Impact Aid Section 8002 funds and it will also provide funding for school divisions that are newly coming into the program.

That is all of the comments that I have for today. And I would be glad to try to answer any questions that you may have.

[The statement of Mr. Jarrett follows:]

WRITTEN TESTIMONY OF MR. DENNIS JARRETT, DIRECTOR OF FINANCE, YORK COUNTY SCHOOL BOARD, YORKTOWN, VIRGINIA - SEE APPENDIX I

Chairman Castle. Okay. Well, thank you very much, Mr. Jarrett. Thank you all. We will now go to questions for the panel members. I will start it off. We each have five minutes. Hopefully we can go through it all at that point. We may need a little bit of extra time beyond that.

A couple of specific things that I had noted here. Dr. Lett, you said in your testimony that we should eliminate the provision that allows states which have equalized education funding to shift education dollars away from districts receiving federal Impact Aid payments, and you named the three states that were included in that.

How many districts would that affect? Do they agree with this proposal?

Mr. Lett. Alaska and New Mexico agree to the proposal. There are two districts in Kansas, I think that they would like to continue to have the ability to work with their state department. Overall there is no conflict with the idea of doing away with the equalization concept. The only reason Kansas at this point is continuing to work with their state department is because they have a state department that is agreeable to work with them.

There are three states. What happens is the Impact Aid dollars are subtracted from their state revenue dollars. That doesn't take into account in New Mexico, for example, bonding capacity and the ability to raise money for construction.

Chairman Castle. I think you mentioned moving the program to the Department of Treasury--

Mr. Lett. Yes, I did.

Chairman Castle. --in your testimony. Why do you believe Treasury would do a better job than the Department of Education when it comes to administering? Several people here have mentioned Treasury. Why has that been selected as the place to go?

Mr. Lett. Well, one reason is the Department of Education has to coordinate with Treasury in order to handle the payments. So we think that this may take one step out of the process. We are also hopeful that perhaps Treasury wouldn't have as much of a vested interest in dealing with the politics of educational programs. Then once this is approved by Congress, they just forward the payments to the districts.

That is the reason that we mentioned the Treasury Department. Of course, I also mentioned there may be a more appropriate department. But we are willing to try Treasury and see how it works.

Chairman Castle. Okay. I was sort of wondering. It is a semi-guess, I guess, to some degree.

Let me turn to Dr. Carson. This pertains to the payment systems. As a heavily impacted district, have you found the current system of payments which could delay funding for several years, which a couple of you mentioned, by the way, are more of a problem? Do you believe the new system included in last year's appropriation bill to be more effective in getting you payments in a timely manner? In the meantime, what strategies have you used to cope with these delays and the unpredictability of this funding stream? And can you describe some of the strategies employed by your colleagues?

Mr. Carson. Thank you.

The answer to the first one, yes, I do believe the pilot program that was instituted last year did assist us greatly in all of the districts that have been affected who are heavily impacted. The strategies that we have, we have an ongoing list as we look throughout the year to see.

If we don't receive money in January, this is what we do. If we don't receive money in February, this is what we do. And we start cutting back. We just stop purchasing everything. We have a cutoff point where we start laying off people. I mean, we go through a whole gamut of items that we deal with when we stop receiving the money or we don't get it on time.

What we have had to do is we have gone into our reserves to pay, which means the school district was losing interest on money, which means when we go to a property tax, we have to increase the funds there. It just creates a whole number of problems. As you can see, as I mentioned earlier, we were four years, five years behind the time in receiving our Section 8003(f) funds.

Chairman Castle. Some of those statistics are amazing to me.

Let me turn quickly to Mr. Squier. This will have to be my last question. In spite of the fact that you have needs and you have problems and they are weather-related problems, it does sound like you are doing a number of good things based on some of your testimony with the Impact Aid money you are receiving. I suspect this is because of the flexibility inherent in this program. Could you elaborate on that?

We just passed Education Flexibility here. Does this make a good model for other federal education spending?

Mr. Squier. I want to congratulate you for doing that. I think that was a great move, the flex funding bill. I do think it is a good model. Don't get me wrong. I use this as just one item. There are so many other things that we are able to do with the Impact Aid dollars.

You know, we have a technology plan. Right now we have a Web page, that has gotten two national honors, that our advance computer class put together. They are proposing to the board $50,000 for the new computers. Without Impact Aid, we have none of that. When I went there, we had three Mac Classics, and that was the top of the line that we had. We are going to a full-option science system, it is a hands-on science-teaching process.

We have a parent-teacher organization, first time. We had over 110 people at our first parent-teacher conference. And we had a meal. These are funds that we had to come by to do these kinds of things. We have a student council for the first time.

We have girls' athletics. You know, you think that, boy, every school has girls' athletics. Well, it took us funding to get some girls interested. We finally have some of these things. So we hired an industrial tech teacher for the first time since I have been there.

So all of these things, the Impact Aid flexibility, give us the ability to do all of those things. And we chose not to fix the roof but to teach kids. Okay?

Chairman Castle. We will try to remember that when we are being rained on when we go visit you. We appreciate that.

Mr. Scott?

Mr. Scott. Thank you, Mr. Chairman.

Dr. Lett, you advocate an increase in weights for off-base military children and dependents of civilian federal employees. Could you go into a little detail about how you came up with that recommendation and how you arrived at the recommended ratio?

Mr. Lett. Yes, I can, Congressman Scott. First of all, we have 4,195 military off-base students in our school district. We happen to have one complex that has 300 units. All of the units have military personnel. We have had up to 142 students coming off those apartments, that apartment complex. You get the argument: Well, they pay property taxes, don't they? So why should there be any Impact Aid payment?

Well, in this particular apartment complex, we receive $126,000 in property taxes, $17,000 for the B students because they are all Base B, for a total of $143,000 roughly. The local cost for those students is 388,000. This is before you deal with any other state dollars. So the locality is supplementing the cost of these students after you subtract off the property tax and after you subtract off Impact Aid by more than $200,000. This is just one example, of course, all of those students don't live in all of the apartments.

So if you actually use the tax rate applied to the actual apartments that had students in them, it would be even less than that. This gives you a little bit of an example of how all localities throughout this country are having to supplement the education for off-base military as well as off-base civilian.

As far as coming up with an estimated amount, we recognize that military has more of an impact than civilian does. Civilian, that is the reason we recommended .10 to .5 for military, for civilian .05 to .10.

What we did is we put in a recommendation that we felt would be satisfactory to Congress. It still does not recommend what was in the original law, which is .50. What we did was try to come up with a recommendation that we thought was minimal that would satisfy Congress and hopefully when you pass it, it will also satisfy the Administration.

Mr. Scott. Now, you also indicated the situation where federal property is privatized. I think you are talking about things that might happen on base. Could you give an example of why that is an important issue?

Mr. Lett. That is an important issue. Right now we are only addressing one minor part of it. It is an important issue because it appears that the military has been moving more and more families off base housing, and it still has the same effect on the school divisions. They have to provide the teachers and the classrooms, and the property taxes that come in are minimal.

The only part that we are addressing in the reauthorization is where you have federal property as part of a military base that is carved out and turned into private property.

We feel like this is the first one we ought to deal with because it would be the most significant impact because that school district was getting on-base federal dollars in Impact Aid for those particular students. And, all of a sudden, it would be reduced by 90 percent, going from 100 to 10 percent, we are recommending that it be at .75.

We at this point are not ready to come up with a recommendation for other types of privatized housing, which there are many examples throughout the country. We just wanted to start with this one.

Mr. Scott. Thank you.

Mr. Jarrett, your county is a fast-growing county. Can you indicate what significance Impact Aid has on your ability to do school construction?

Mr. Jarrett. Yes, sir, I can. In fact, there was a time when there was a section of the Impact Aid law that did provide for construction. When that was in place, I believe it was in around the '70s--York County actually built two of its schools using those funds.

We have roughly, as I said earlier, 5,200 of our students, out of 11,400, federally connected. So we have actually one school that is located on federal property. It actually is owned by the federal government. We have a lease with them for one dollar for 20 years. We maintain the facility. That school serves 100 percent military families. There are roughly 500 elementary students in that school.

Construction, military construction or funds for military students in our school division, is a very important part and something that has not been funded in years.

Mr. Scott. Thank you, Mr. Chairman.

Chairman Castle. We are discussing whether we missed a vote here or not.

Mrs. Roukema. We were wondering why we haven't voted yet.

Chairman Castle. I am just surprised. I thought that debate was an hour and a half.

Mrs. Roukema. I have been told--

Mrs. Mink. The votes start, and then they rolled over the votes.

Chairman Castle. They rolled the votes? Oh, okay. I didn't know that.

Mrs. Roukema. I didn't know that either.

Chairman Castle. Thank you. As soon as we get away at these meetings, we are worried that we are all missing votes on the floor, something that really--

Mrs. Roukema. That light isn't on up there either, and I wondered if possibly the bell wasn't working.

Chairman Castle. Thank you. Let us go to Mrs. Roukema, then.

Mrs. Roukema. Yes. I am a little surprised by this payment system delay. I am merely going to ask for clarification with the Chairman's question. We have dealt with this a long time, the whole question of Impact Aid. I don't remember the focus being so much on the delay in the payment system in the past. Is it something that we were not able to be aware of or is it something that has become more of a problem in recent years?

I listened very carefully to your comments, but I don't understand what the reason for the delay is and why we can't correct that, either in a legislative way or through the budgeting process. Why has there been no effort to correct the problem through the legislative process or is it something very recent?

The second part to that:--and I know, Mr. Jarrett, you referenced it as well--Is it something that is almost exclusively related to the military component or is it throughout the system? Throughout the system?

Mr. Jarrett. Right.

Mrs. Roukema. I am surprised I just haven't heard of it before with this kind of clarity.

Mr. Carson. I believe there is--and I will speak for the Section 8003(f) part of it.

Mrs. Roukema. Yes.

Mr. Carson. The Department of Education has to receive data, first of all, from the local state. Each state has to submit information to them. Then they have to go to the Center for Educational Statistics.

In that whole process,--I don't know if it is manpower or what happens--it just slows down. We were hearing numerous stories about: Oh, it is a Year 2000 problem with the computer system. But that doesn't help us when we look back.

I look at 1994 and say: How come I am not getting money until '96? I wish I had an answer for you. I just can't answer that.

Mrs. Roukema. Is it something that is multiplied and being compounded in recent years in your experience or has it been ongoing over the years? The reason I am perplexed is there are a lot of payment systems, whether they are HUD payment systems or community development programs, all the way through different components of the federal government, where federal aid is given to local and state communities. And, yet, I haven't heard of this kind of delay.

You are talking about a year or two or three years' delay. That seems--

Ms. Woolsey. Would the gentle woman yield? Would you yield to me a minute with your question? I have a resolution that requires the Department of Education to pay the same plan.

Mrs. Roukema. Is that in statutory language? Because that is really what I am asking here, whether or not statutory change is required here, or if it is something in terms of regulation through the bureaucracy based on your experience.

Ms. Woolsey. Yes.

Mr. Jarrett. Let me first address your first question. The Section 8002 community--

Mrs. Roukema. Yes.

Mr. Jarrett. --has met with the Department of Education regarding the payment procedures and so forth. We are being told there are basically two issues going on. One is getting data back to the department based on the applications. That is the first item.

The second thing is that their computer is antiquated, that it won't handle the system, the payment systems. Now, they are telling us things are changing, but I have to tell you this has been an ongoing problem.

Mrs. Roukema. But, I mean, look, in every one of the programs where we have federal assistance, they have to give the documentation in order to qualify for that federal assistance. So I don't know why it is applying singularly in this case.

Have you completed, Mr. Jarrett?

Mr. Jarrett. Yes, I have.

Mrs. Roukema. I didn't want to interrupt you.

Go ahead, Dr. Carson.

Mr. Carson. We submit information to the Department of Education probably by the end of February for next year's payments. And, really, it takes 18 months to receive a check under even the basic support program. And that is very much a concern on our part because when the Congress and the President signed the bill in October, why should it take February, March, and when they have the information I guess is our concern?

Mrs. Roukema. Yes, Dr. Lett?

Mr. Lett. The other reason that you don't hear about it with other education programs is that in the case of Impact Aid, Impact Aid is not fore-funded. So you are dealing with whatever you approve, it is handled in the same year; whereas, for example, Title I, you approve it, but, yet, the funding doesn't come through until the following year. So, actually, there is plenty of time for the Department of Education to deal with that particular issue.

Impact Aid is one of the few programs that is not fore-funded like that. So there is a short time frame for the Department. We still think it should be done and can be done within that year.

Mrs. Roukema. I would appreciate any way that you think we could either mandate a regulation or statutory change. We would be glad to work with you on that.

Chairman Castle. Thank you very much, Mrs. Roukema.

And we will go to Mrs. Mink.

Mrs. Mink. I think, Mr. Chairman, that all the questions that have been raised here indicate that perhaps we ought to have the Administration here to respond to some of these questions because I am amazed to hear how slow the payments are and just realize now that this program is not forward-funded. I thought all education programs were forward-funded.

Chairman Castle. This one is not. This is one exception, I think.

Mrs. Mink. Maybe that is the one change we need to make immediately. We should make that change immediately. Why should this program not be forward-funded if that is one of the reasons that is given for the delay and the neglect in terms of the payments? I am really very, very surprised to hear this testimony.

Yes, Mr. Lett? Yes?

Mr. Lett. It is authorized. It has never been funded because you would have to come up with an additional year's funds the first time that you do it.

Mrs. Mink. Well, let us do it. We have a surplus, they say.

Mr. Lett. Thank you.

Mrs. Mink. I think that that is a very, very important thing to give the stability to the school districts. The monies that we do finally come up with actually do get allocated to the school districts in time for them to make use of it. I think that is terribly important for the Congress to get with it and correct this problem, Mr. Chairman.

Thank you very much.

Chairman Castle. Thank you very much, Mrs. Mink. We appreciate those comments.

I just was sitting here thinking. You know, we have Social Security recipients_I am going to get to you_for as much as a day late or whatever it may be. You know, we hear from them in our office, and you are sitting here waiting for sometimes months and years for these payments.

I think Ms. Woolsey wants to go ahead now.

[Laughter.]

Ms. Woolsey. I am sorry, Mr. Chairman. I thought you were wrapping up.

Chairman Castle. Oh, no, not at all.

Ms. Woolsey. I just didn't want to be wrapped out because in my District, we have a Coast Guard training center.

I represent the two counties north of the Golden Gate Bridge, Marin and Sonoma Counties. We have the Two Rock Coast Guard Training Center. We have the Point Reyes National Seashore. The school district that is most affected by the federal lands and by the Coast Guard facility just now in March got payment for 1995.

So I do have a resolution, and it does call for forward funding. And it has been signed by the entire Impact Aid Caucus. We just did not get it to the Floor. But the crunch is the funding. It is going to be a year's offered funding.

But schools cannot. They don't know how much they are going to get. They can't budget for the years. They really are upset by this in my district, and they don't want any more parks because of it. I mean, it is really having a terrible impact.

So any help, I agree with the rest. I would like for you to see my resolution, all of you all. I will circulate it. Maybe we can get it moving again. But do you think the Department of the Treasury would make a difference? I mean, will it make a difference if it is a different department or are we going to be in the same situation, Mr. Lett?

Mr. Lett. Right now we are so dissatisfied we will try again. And so that was the reason for that suggestion. I think certainly forward funding would be a solution to the whole problem.

Just taking into account the probability or the possibility that that may not happen because of the cost, we thought moving it to another department may actually speed up the process. That is the reason we suggested that.

Ms. Woolsey. We have another. I am almost finished. Hamilton Air Force Base finally was closed, and it finally has become part of the community, but it took 20 years. It is not an easy thing to go from military to community-owned.

The housing around Hamilton is going to be private now, going back into the community. Well, that will help my school districts, won't it? I mean, I never could think until today, what the impact is going to be on my school district? I thought, Mr. Jarrett, you might--

Mr. Jarrett. Is the land still owned by the federal government?

Ms. Woolsey. No.

Mr. Jarrett. Okay. It is owned by private?

Ms. Woolsey. Turned back to the community.

Mr. Jarrett. Yes. Okay. That, then, would not be eligible for the Section 802 funding because it is off of the federal tax rolls at that point.

Ms. Woolsey. But it will be on normal tax?

Mr. Jarrett. Yes. Then you would receive the regular real estate tax rate. That would come to that.

Ms. Woolsey. All right. That is it. Everybody asked some questions. I need to--

Chairman Castle. Thank you very much, Ms. Woolsey. We appreciate it.

And Mr. Wu has joined us again if he wishes to ask any questions or make any statements.

Mr. Wu. I have no statement or questions to make right now. Thank you.

Chairman Castle. Mr. Scott?

Mr. Scott. Mr. Chairman, we have been accused of trying to solve problems by throwing money at it. Mr. Squier has indicated that when he had money, the accomplishments went up. When he lost the money, they went down. When he got the money back, they went back up again.

I don't know if it is an appropriate question for this hearing, but somewhere along the lines, we want to see what he did with the money when he had it to improve her grade per year accomplishments, two grades in a year, year and a half benefiting. We need to get some more information at another hearing from him.

Chairman Castle. Well, maybe you could take a stab at that now since you are here.

Mr. Scott. He had mentioned athletics and some other things. I suspect that that wasn't how the grades went up so miraculously.

Mr. Squier. We have a curriculum committee. That curriculum committee met, and we looked at all of their given research. How kids learn is no secret. We know how kids learn. There is research, volumes of research, on how children learn.

They were given the research. They decided what models they wanted to use. One of the models was multiple textbooks. We had gone with a basal series. And they changed.

I don't want to get into this whole language business. Okay? But I will say that we have kids reading all kinds of books, this accelerated reader, which is a student management system. If they read so many books, they get to go to Worlds of Fun in Kansas City if they get so many points.

We have a reading recovery teacher trainer. We are the only school in Nebraska north of the interstate that actually has a teacher trainer of reading recovery. Reading recovery is a program that works. We know it works. And so_

Mr. Scott. That is what Wayne Lett has had at Newport News, and it is extremely effective.

Mr. Squier. Yes. And so we have the only teacher in northern Nebraska that can teach teachers to be reading recovery teachers. We have three.

Mr. Scott. There are a couple of things that cost money: teacher training and class size. The smaller the class, the more money it costs. Was class size a part of that formula?

Mr. Squier. Class size has been one of those issues that we are very fortunate in having small classes by not having great numbers of kids. So our classes have been small, just have been small. Our largest class is maybe 18.

Mr. Scott. Eighteen?

Mr. Squier. Eighteen. And I had a teacher complain bitterly because she had 18 students, and she absolutely had to have a teacher aide. Well, we got a teacher aide for her, and education continues. So I think that the fact that you have a research base, you make your decisions on what models you want to go with now.

And our curriculum committee made the decisions. It wasn't something I said, ``You do this. You do this. You do this.''

Mr. Scott. Do you have any evaluation of the various things that you have tried, any formal evaluation, so that if someone wanted to replicate what you did, they would have something to read?

Mr. Squier. Sure. Well, we do a pre-test and a post-test each year. We do a pre-test in the spring with one CTBS instrument, and we do a post-test with another one in the fall or do one in the fall, one in the spring. And so we evaluate.

We started with reading. Now we have expanded it this year to math and science. So we start with a baseline.

Mr. Scott. Well, thank you. Thank you.

Chairman Castle. Let me thank the Members particularly for being here. Let me thank all of you for coming to Washington today and to testify. This is one of these hearings in my mind in which we may have raised more questions than we answered, which is probably good because we have to go to work to try to get some of the answers.

We appreciate your candor in sharing with us some of the concerns which we have, some of the proffered suggestions which you have to try to remedy some of the concerns which we have. We also appreciate some of the members for their contributions and how they think we can improve this as well.

It clearly is an area that in my judgment is not being particularly recognized at a lot of levels, including the Administration level as well as perhaps in Congress. Hopefully, we can take what you have given us and go from there.

[The statement of Ms. Roukema follows:]

WRITTEN STATEMENT OF THE HONORABLE MARGE ROUKEMA, REPRESENTATIVE OF NEW JERSEY, U.S. HOUSE OF REPRESENTATIVES - SEE APPENDIX J

[The statement of Mr. Kucinich follows:]

WRITTEN STATEMENT OF THE HONORABLE DENNIS KUCINICH, REPRESENTATIVE OF OHIO, U.S. HOUSE OF REPRESENTATIVES - SEE APPENDIX K

[The statement of Ms. Kelly follows:]

WRITTEN STATEMENT OF THE HONORABLE SUE KELLY, REPRESENTATIVE OF NEW YORK, U.S. HOUSE OF REPRESENTATIVES - SEE APPENDIX L

[The statement of Mr. Pickett follows:]

WRITTEN STATEMENT OF THE HONORABLE OWEN PICKETT, REPRESENTATIVE OF VIRGINIA, U.S. HOUSE OF REPRESENTATIVES - SEE APPENDIX M

[The statement of the House Impact Aid Coalition follows:]

WRITTEN STATEMENT OF THE HOUSE IMPACT AID COALITION, U.S. HOUSE OF REPRESENTATIVES - SEE APPENDIX N

Chairman Castle. So we do very much appreciate you being here. And, with that, we stand adjourned.

Thank you.

[Whereupon, at 2:31 p.m., the Subcommittee was adjourned.]