(10)

(11)

$13.81

$20.71

$34.52

28,720, 930

11, 440, 175

20.77

13.75

34 52

1,473

1. 1602172

227

263

Arkan

This formula a of administrative plan calls for the ment (75 percent basis of populatio certain Federal ta

On the first bas the ratio which th population of the receive an allotme tions from all so within that State

CHAPTER IX. ALTERNATIVE FORMULAS

CONTENTS

A. Basis for claim for aid:

1. Determination of need.

2. Tax "effort" as a factor.

3. School expenditures as a factor.
4. Weighting of factors.

5. Statistical summary.

B. Basis for distribution of aid,

e purpose of this chapter is to suggest alternative formulas for buting Federal school construction aid, but limiting such aid to s which are "needy." Additional criteria are then suggested would impose the further condition that the "needy" States at least an average tax effort on their own behalf, and make at the average proportionate expenditure for school purposes. The us criteria are presented on a statistical basis in a manner such one may work out alternatives which will accept or reject only a on of the criteria.

A. BASIS FOR CLAIM FOR AID

1. DETERMINATION OF NEED

most widely accepted criterion for determining relative financial ity of States-and likewise need-is the per capita income payreceived in each. The Department of Commerce currently les such data which are available on a calendar-year basis rh 1953.

d is a relative concept. For example, we in the United States all agree that a particular State in the Union is a "needy" one, at same State would be considered very wealthy in the eyes of eds of millions of foreign observers. It would seem then for us he simplest and perhaps most accurate method for determining States are "needy" would be to eliminate all States whose per income payments are above the average. It might even be if the average income for a period of years rather than a single ere taken. However, if the average per capita income payments United States for the 1 fiscal year 1953 are taken (i. e., $1,676) owing States would fall into the category of "less than average" uld be accepted as the (or at least one) criterion for determining r or not they should receive special Federal aid. There are 30 ates: Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Iowa, Kansas, Kentucky, Louisiana, Maine, Minnesota, Mis, Missouri, Nebraska, New Hampshire, New Mexico, North a, North Dakota, Oklahoma, South Carolina, South Dakota, see, Texas, Utah, Vermont, Virginia, West Virginia, and

ng.

payments are reported by the Department of Commerce on a calendar year basis; however, for comparison in this chapter income payments for fiscal year 1953 were estimated by averaging ments for calendar years 1952 and 1953.

There is a considerable range of variance within these 30 States. even though each is below average. Thus one State is less than half the national average, while another is just a few dollars less than the average. It might therefore be desirable in determining the amount of aid to make allocations in direct relationship to the degree by which each State fell below the average. This could be worked out. But for our purposes here it will be sufficient to divide the States roughly into three groups with weights of 1, 2, and 3 given, the weight depending on how far the particular State was below average. In such case, the States in the lowest group (Alabama, Arkansas, Georgia. Kentucky, Louisiana, Mississippi, North Carolina, South Carolina. Tennessee, and West Virginia) would get a weight of 3, the States in the middle group (Florida, Idaho, Maine, New Mexico, North Dakota. Oklahoma, South Dakota, Texas, Vermont and Virginia) would get a weight of 2, while the States in the third group (Arizona, Colorado. Iowa, Kansas, Minnesota, Missouri, Nebraska, New Hampshire, Utah, and Wyoming) would get a weight of 1.

2. TAX "EFFORT" AS A FACTOR

It can be argued that even though a State may be one in the lower ranges of per capita income payments, no Federal aid should be granted unless the State is making at least an average effort to finance its own activities. This suggests that Federal aid could first be made to depend on the State being below average in per capita income and at least average in the percentage of per capita income being taken in State and local taxes. Thus, even though a State has below-average per capita income, and perhaps even above-average school expendi tures, Federal aid could be denied on the ground that the State has taxable capacity which is not being used.

One of the difficulties about comparative tax burdens as a criterion is that there are no annual current official overall data on tax collec tions for the States and their local governments. The Bureau of the Census does have ready data on annual collections by the State governments themselves, but not for their local units. However recently the Bureau of the Census has released figures on State and estimated local tax collections for fiscal year 1953. These were used in the writing of the following paragraph.

It appears that of the 30 States with per capita incomes below the fiscal year 1953 national average, 22 of them took an above-average percentage of that per capita income in fiscal 1953 taxes. However, eight States with less-than-average per capita income had a tax burden (or made a tax effort) less than average. The eight States which fell below this average are Alabama, Kentucky, Missouri, Nebraska, Tennessee, Texas, Virginia, and West Virginia. Respectively, they ranked 35th, 39th, 45th, 31st, 33d, 37th, 42d, 36th in tax burden. If it is insisted that all "needy" States, in order to qualify for aid, should be at least average in tax burden, then these eight States would be disqualified, unless some weighting factors should be

introduced.

Objection may be raised to comparing tax effort based on the percentage of income payments taken by taxes. The principal ground for such objection is that tax capacity declines faster than income. In other words, the fact that a State with high per capita income can