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Southern States Seeking Change In Chapter 1 Aid

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Washington--A group of Southern senators is pressing several colleagues to adopt a new formula that would significantly alter the way the federal government distributes $2.68 billion in Chapter 1 education aid for disadvantaged children, less than a month before that aid is scheduled to be disbursed to the states.

The Senators' proposal would add a new variable--state per-capita income divided by the national per-capita income--to the formula now used by the Education Department to determine the size of Chapter 1 basic grants to states.

The addition of that variable would result in a drastic shift in funds from states with a high per-capita income to those with a low per-capita income. Those funds will begin flowing to the states on July 1.

In general, per-capita income in the Southern states--and especially in the Southeastern states--is lower than the national average. Because it is a "zero-sum game," critics of the plan say, adoption of the proposal would ensure that Chapter 1 grants to states such as California, Connecticut, and New York would be reduced while those for Kentucky, Mississippi, and Tennessee would be increased.

Amendment to Senate Bill

Senators Jeremiah Denton, Republican of Alabama and Dale Bumpers, Democrat of Arkansas, may offer the proposal as an amendment to one of a number of bills that are likely to be brought to the Senate floor soon. According to the Senators' aides, the proposal may be attached as an amendment to the Senate bill, recently approved by the Labor and Human Resources Committee, to improve the quality of mathematics and science instruction.

The Senators are hoping that the amendment, which would take effect immediately after the President signed the bill, can become law before Chapter 1 funds for the upcoming school year are allocated, the aides said.

The drafting of the amendment stems, in part, from last year's battle between the states over the distribution of Chapter 1 aid. The fight, which pitted 11 states, Puerto Rico, and the city of Chicago against 12 states and the Education Department in federal court, resulted from Secretary of Education Terrel H. Bell's decision to use poverty data from the 1970 census rather than the 1980 census in order to make the distributions.

Eighteen states that recorded an increase in poor children between 1970 and 1980 would have lost millions of dollars if the 1970 data had been used. Thirty-two states--including most of those in the South--stood to gain by the use of the older data.

The Congress settled the matter last fall by appropriating an additional $148 million, which was used to ensure that all states would receive the maximum amount they would have received using either the 1970 or 1980 data.

Unlike last year's circumstances, there is no doubt that the Education Department will use the 1980 data to determine state allocations this year. Moreover, the Reagan Administration has announced that last year's Chapter 1 "bailout" was a one-time-only event.

Those facts, according to a Washington representative for the state of Florida and several other Southern states, has caused a significant amount of concern in those states that supported Secretary Bell's decision to use the 1970 census data last year.

Alternative Funding Formulas

"It was about this time last year that the Southern states got together and started working on alternative Chapter 1 funding formulas," said the representative, Charles M. Cook. The new formula, he said, was developed in North Carolina's Research Triangle Park.

Under the current formula, Chapter 1 grants to states are determined by calculating the number of children living in poverty in each county in a state, as measured by the latest census. The state then receives a grant totaling 40 percent of the statewide average per-pupil expenditure for each of the children.

The proposed amendment, accord-ing to Mr. Cook, would add a new variable to the existing formula. Under the plan, the Education Department would take the amount of money that each state would have received under the existing formula, then multiply it by the quotient of state per-capita income divided by national per-capita income.

The new "income ratio" variable would be designed to restrict the degree to which a state could "win" or "lose" as a function of its state per-capita income.

According to Mr. Cook, approximately 33 states would stand to gain additional Chapter 1 dollars if the Southern proposal is adopted.

"States with higher per-pupil expenditures also tend to have higher per-capita incomes," Mr. Cook said. "We believe that these states also have a broader tax base--an enhanced ability to raise revenues at the state and local level."

He denied the allegation that the proposal is nothing more than a "money grab" by states looking to overcome the negative effect that the shift from 1970 to 1980 census data will have on their Chapter 1 grants. "That simply isn't true," Mr. Cook said. "Our formula comes closer to getting the money to areas with a higher proportion of disadvantaged children than does the existing one."

According to a recent analysis conducted by the Congressional Research Service, shifts in Chapter 1 allocations to states would be "quite substantial" in the absence of the proposed income-ratio limits.

For example, Puerto Rico's Chapter 1 grant would increase about 220 percent without the income-ratio limit, compared to what it will receive this year if the amendment is not adopted. (In the fiscal year 1981, Puerto Rico received $96 million under the program.)

Percentage Gain

With the limit, the percentage gain for Puerto Rico would be only 35.5 percent, according to the analysis. In any event, it noted, the commonwealth will see a 16.1-percent increase in Chapter 1 funds this year simply from the switch from 1970 to 1980 census data.

New York will experience a 15-percent increase in Chapter 1 funds, from $239 million last year to $281 million this year, as a result of the switch from the old to the new census figures. But if the funding-formula proposal, with income-ratio limits, is adopted, the state will see its percentage gain cut by more than one-half, to 6.4 percent.

"Basically, we don't like this," said Miriam Kazanjian, a spokesman for the New York State Education Department. "First, we don't like the way that they're going about this. The amendment process bypasses deliberation in committee. They want to change the allocation formula for the biggest federal education-aid program without going through hearings or debate.

"Second," she continued, "the formula we have is the result of delicate compromises in 1974 and 1978. If you start tinkering with it now, the whole thing unravels. You'd open up Pandora's box."

Furthermore, Ms. Kazanjian said, educational costs, and therefore per-pupil expenditures, are generally higher in Northern states. Southern states receive fewer Chapter 1 dollars, she said, because the cost of educating children there is lower.

"This is not a program to redistribute income," she said. "This is a program to educate children."

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