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T r i t L u i o r t A R Y 

KAN SA S ST ATd UNIV ER SI TY H E A R IN G S

BEFORE THE

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SUBCOMMITTEE ON 

CIV IL AND CONSTITUTIONAL BIGHTS

OF THE

COMMITTEE ON TH E JUDICIA RY

HOUSE OF REPRESENTATIVES

NINETY-FO UR TH CONG RESS

F IR S T SE SS IO N

ON

C IV IL RIG HTS A SP ECTS OF GEN ER AL REVENUE SH AR IN G

OCT OBE R 8 AN D 9, 1975

Ser ial No. 21

4

Pri nte d fo r th e us e of th e Com mitt ee on th e Ju dic ia ry

€2-3Sl

U.S. GOVERNMENT PRIN TING OFFICE 

WASHINGTON : 1975
. ♦

fc. V 

V

I S . ' ^

CO M M IT TEE ON T H E J U D IC IA R Y

P E T E R W. RO DI NO, JR ., Ne w Je rs ey , Chair m an

JA C K B R O O K S, Te xa s

R O B E R T W. K A ST E N M E IE R , W isco ns in 

DON E D W A R D S, Cal if or nia 

W IL L IA M L. H UNGAT E, M iss ou ri 

JO HN CO N YER S, J r.. Mich iga n 

JO SH U A E IL B E R G , Pen nsy lv an ia 

W A L T E R FLO W E R S, Ala ba ma 

JA M E S R. MAN N, So ut h Car ol in a 

P A U L S. SA R B A N E S, M arylan d 

JO HN F. SE IB E R LIN G , Ohio 

GEORGE E. DA N IE LS O N , Cal if or nia 

R O B E R T F. DRIN AN , M as sa ch us etts 

B A R B A R A JO RD AN . Te xa s 

K A Y TH ORNTO N. Ark an sa s 

E L IZ A B E T H IIOLT ZM AN , New Yo rk 

EDW AR D M E Z Y IN SK Y , Iowa 

HER M AN B A D IL LO . New Yo rk 

RO MA NO L. M AZ ZO LI . Ken tu ck y 

EDW ARD W. PA TTI SO N . New Yo rk 

C H R IS T O P H E R J. DO DD . Con ne ct icut 

W IL LIA M J. HUG HES . Ne w Je rs ey 

M AR TI N A. RU SS O, Illin oi s

E a r l C. D u d le y, 

Gar ne r J.

Her be rt

Wil lia m I’ . 

A lan A.

J am e s F.

Mau ri ce A. B ar bo za. C o u nse l

T hom as W. H u t c h is o n, C o u nse l

Arth ur I*. E ndre s, J r., C o u n sel

Da n ie l L. Co h e n, C o u nse l

F r a n k lin G. P o l k, C o u n sel

T h om as E. Moo ney , C o u nse l

Ale xan der B. Co o k, C o u nse l

C o n sta n t in e ,T. Ge k a s, C o u n sel

A la n F. Co f f e y, J r., C o u nse l

K en n et h N. K l e e, C o u nse l

Ray mond V. S m ie tan k a, C ounse l

EDW AR D H UTCH IN SO N . M ichiga n 

RO BER T M cC LORY, Il linoi s 

TOM R A IL SB A C K , Il lin oi s 

C H A R LE S E. W IG G IN S, Califo rn ia 

H AM IL TO N F IS H . J r., Ne w Yor k 

M. C A LD W E L L B U T LE R . V ir gi nia 

W IL LIA M S. CO HEN . Ma ine 

CA R LO S J. M OO RH EA D, Cal if or nia 

JO HN M. ASH BR O O K , Ohio 

H EN RY J. H YD E. Illin oi s 

TH OM AS N. K IN D N ESS, Ohio

>

*

Jr., G en er al C o u n sel

C l in e. S ta ff D ir ecto r

F u c h s, C ounse l

S h a t t u c k, C ounse l

P arker, C ounse l

F alc o, C ounse l

S ub co m m it te e on Civ il an d Const it utio n a l R ig h t s

DON E D W A R D S, Cal if or nia , Ch air ma n

JO HN F. SE IB E R LIN G , Ohio M. C A L D W E L L B U T LE R , V ir gin ia

R O B E R T F . DRIN AN , M as sa ch us et ts TH O M AS N. K IN D N E SS, Oh io

H ERM AN B A D IL LO . New Yo rk

C H R IS T O P H E R J. DO DD , Co nn ec ticu t

A la n A. P ar k e r. C ounse l

J an et M. McNa ir , A ssis ta n t C o u nse l

K ennet h N. K lee, A ss o cia te C o u nse l

(II )
C O N T E X T S

Hearings held on— Tage

• Wednesday, October 8, 1975___________________________________ 1

Thursday, October 9, 1975_____________________________________ 137

Testimony of—

Austin, Sara h Short, vice president, Nation al Urb an Coalitio n_______ 208

Prepared statem en t______________________________________ 242 9 Boykin, Jera ld, Supervisory Auditor, General Accounting Office____ 4

Buggs, Jo hn A., Staff Director, U.S. Commission on Civil Rights___ 137

Dempsey, Rober t N., Chief of the Federal Programs Section, Department of Justic e_____________________________________________ 181

Flemming, Hon. Arthu r S., Chairman, U.S. Commission on Civil

Rights-------------------------------------------------------------------------------- 137

Goldbeck, Arth ur, Assistant Director, General Accounting Office_____ 4

Hair, Albert, Associate Director, General Accounting Office_______ 4

Himmelman, Harold, cooperating attorn ey, Com mittee for Civil

Righ ts U nder Law __________________________________________ 45

Kinkead, Alice, director, Human Resources De par tment of the

League of Women Voters E duca tion F un d______________________ 208

Prep ared statem en t______________________________________ 245

Lowe, Victor L., Director, General Gov ernm ent Division, General

Accounting Office___________________________________________ 4

Prepared sta tem en t_______________________________________ 23

Lyons, James, congressional liaison, U.S. Commission on Civil Rights.. 137 

Morris, William R., director of housing programs, National Association for the A dvancement of Colored People____________________ 81

Prepared statemen t_______________________________________ 81

Parker, John K., Acting Director of the Office of Revenue Sharing_____ 97

Perry, Susan, staff counsel Southern Governm enta l Monitoring

Project________________________________________ ____ _____ _ 208

Prepared statem en t_______________________________________ 236

Schmults, Edw ard C., Under S ecretary of the Treasur y___________ 97

Prepared s tatemen t_______________________________________ 98

Steward, Eddie Mae, president, NAACP, Jacksonville, Fl a________ 208

Prepared s tatemen t_______________________________________ 240

Taylor, William L., director, Center for National Policy Review,

School of Law, Catholic University__________________ 208 A Prepared sta temen t_______________________________________ 231

. Turner, Abigail, Lawyers’ Committee for Civil Righ ts U nde r Law____ 45

Vail, William A., president, New Bern, N.C., NAACP b ran ch________ 81

Williamson, Thomas, senior attorney , General Accounting Office_____ 4

| Additional material—

Badillo, Hon. Herman, statem ent presented during the Revenue Sharing Oversight Hearings of th e Subcommittee on Civil and Co nstitutional Rights, October 9, 1975________________________________ 255

Correspondence relatin g to Montclair case________________________ 57

Excerpt from Comments of the U.S. Commission on Civil Rights on 

the ORS Proposed Nondiscrim ination Regulations (Federal Register,

, July 24, 1975)_________________________________________. . . . i 6~

Fountain , Mrs. Ruth, member, city council, Aurora, Colo., prepared

statem en t_________________________________________________ 264

Pottinger, Stanley, Assistant Attorney General for Civil Rights,

Departm ent of Justice , prepared statemen t____________________ _ 182

Revenue Sharing Pro gram —Minimum Civil Rights Req uire ments___ 138

Rodino, Hon. Peter W., Jr., chairman, House Com mittee on the 

Judiciary , letter da ted December 30, 1974, to Hon. Elmer B. Staats, 

Comptroller General, General Accounting Office_______________ 39

«til)
IV

* I Der Henry, executive director, Chinese for Affirmative Action, letter

dated October 24, 1975, to Hon. Don E d w a rd s------- ----------- -

Flemming. Hon. Arthur S., Chairman, U.S. Commission on Civil 

Rights 'le tte r dated November 15, 1975, to Hon. Don Edward s. ___- 

Perry, Susan, staff counsel, Southern Governmental Monitoring 

Project, letter dated October 23, 1975, to Hon. Don E dw ard s.- -----

Schmults, Edward C., Under Secretary of the Treasury, letter dated

October 28, 1975, to Hon. Herman B a d i l l o . --------- - -- -- -bS

Schmults, Edward C., Under Secretary of the Treasury, letter dated

October 29, 1975, to Hon. Don Edwards----------------------------------- 2 0 8

Page

269

268

I

V

A

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CIVIL RIGHTS ASPECTS OF GENERAL REVENUE 

SHARING

W ED N ESD A Y , OC TO BE R 8, 19 75

H ou se of R ep re se nt at iv es ,

W S ub co mmit te e on Civ il an d C onst it uti onal R ig h ts,

C om m it te e on t h e J udic ia ry ,

AVashington, D.C.

The subcommittee met, pursuant to recess, at 9 :50 a.m. in room 2237, 

Rayburn House Office Building, Hon. I)on Edwards [chairm an of the 

sulicommittee] presiding.

Pre sen t: Representatives Edwards, Seiberling, Drin an, Badillo, 

Dodd, Butler, and Kindness.

Also present : Alan A. P arker, counsel; Ja net M. McNair, assistant 

counsel; and Ray Smietanka and Kenneth N. Klee, associate counsels.

Mr. E dwa rds. The subcommittee will come to order. Today is the 

first of several full days of inquiry which the subcommittee will make 

regarding civil rights enforcement in the general revenue shar ing 

program.

This program has, of course, recently been th rust into the public’s 

attention for two reasons. As most of you know, payments under the 

program are scheduled to end at the end of calendar year 1976, and a 

subcommittee of the House Government Operations Committee is 

currently in the midst of hearings on numerous legislative proposals 

urging its extension.

Additionally, in recent months numerous reports have been released 

which make serious charges that the civil rights enforcement etfort 

under the program is sorely inadequate. Without objection I would like 

A at this time, to officially make a part of the subcommittee files copies

of two of those reports, the report of the U.S. Commission on Civil 

Rights released in February 1975, “the Federal Civil Rights Enfo rcement Effort—1974, Volume IV, To Provide Fiscal Assistance” and 

• the report of the Center for National Policy Review, as released in

July 1975, “Civil Rights Under General Revenue Sharin g”—both of 

which have been made available to the members of the subcommittee.

In September 1973, early in the life of the revenue sharing program, 

this subcommittee held hearings at which the then Director of the 

Office of Revenue Sharing, Mr. Graham W att, made commitments that 

his office’s enforcement of civil rights would indeed bo vigorous.

We hope in these hearings to again hear from the Treasury D epartment and the Office of Revenue Sharing regarding the ir enforcement 

efforts, as wTell as from other groups which have been monitoring revenue sharing civil rights enforcement.

Before introducing the witnesses today, I yield to Mr. Butler.

Mr. B ut le r. Tha nk you, Mr. Chairman.

(1)
2

Today the Subcommittee on Civil and Constitutional Rights continues civil rights oversight hearings on the general revenue sharing 

program.

We have been assured by the chairman that the m inority witnesses 

may he called in a separate full day of hearings.

Part, of the oversight function is to detect compliance with present 

law. During these hearings this subcommittee must ascertain whether 

civil rights enforcement in the area of general revenue sharin g has 

been lax, sufficient, or overzealous.

In particular, attention should be focused on a regulation which I

permits discrimination in clear violation of the statute under the guise 

of making up for past discrimination.

Attention should also be focused on various court decisions which 

have legislated deferral remedies far beyond the scope of the statute 

passed by Congress.

An equally important part of the oversight function is to determine 

the need for new legislation or for amendments of present law. While 

it should be sufficient for lawmakers to insure equality bv the mere 

insertion of nondiscrimination provisions, this subcommittee must 

consider the express prohibition of a regulation which, in striving to 

make up for past discrimination against some people, authorizes an 

unlawful discrimination against many innocent people.

This subcommittee should also consider an express provision indicating tha t negotiation and conciliation rather than confrontation 

and litigation is the preferable remedy in the case of noncompliance 

with the nondiscrimination provisions of the statute.

The irreparable harm to many innocent citizens tha t results from 

deferring or terminating funds far outweighs the compensable loss 

of benefits to a small group of citizens who allege they are being discriminated against.

Mr. Chairman, we must evaluate the civil rights aspects of general 

revenue sharing by remembering tha t the purpose of the program 

is to supply funds to recipient governments with as few strings as 

possible.

The program is not an omnibus civil rights hill which brings all 

States and local programs under the aegis of Federal regulation.

The spending power should not be used to distort the principles z

*,

of federalism on which this country was founded. As President Ford 

said in his message to Congress on April 25, 1975, “There could be 

no more practical reaffirmation of the Federal compact which launched 

this country than to renew the program which has done so much to •

preserve and strengthen that compact—General Revenue Sh ari ng.1

It is my fervent hope t hat all members of this subcommittee will 

direct the course of these hearings toward that end.

Mr. Chairman, T yield back.

Mr. E dwards. The gentleman from Massachusetts, Air. Drinan. has 

done some excellent and thorough work in this area and I yield to him.

Mr. Drixax. I happen also to be a member of the subcommittee to 

which the Chairman referred, Mr. Fou ntain’s subcommittee. We are 

deeply divided over the allocation formula but we are not divided over 

the question of civil rights. The witnesses and the members of the 

committee seem to be agreed that the civil rights provisions must be
3

tightened up and that is why I am intensely interested in the procedures today and tomorrow.

Thank you very much.

Mr. Edwards. Mr. Kindness?

Mr. Kindness. I would just like to welcome our witness this mornin 

and look forward to your testimony. I join in the feeling tha t thei 

is a need for careful review not only of how civil rights are being 

affected on the pa rt of the minorities but how the civil rights of all 

of the citizens m ight be affected bv changes in the provisions of the 

1 General Revenue Sharing Act as it is extended.

I think that is the light in which the Congress must act rath er than 

to attempt to move in the direction of extending tentacles of control 

into every hamlet, township, county, and form of local government.

* Thank you, Mr. Chairman.

I yield back.

Mr. E dwards. The gentleman from New York, Mr. Badillo.

Mr. Badillo. I hope in subsequent days to have a more complete 

statement but at this point what I want to point out to you gentlemen is that my concern is about the indirect but yet very real forms 

of discrimination which take place.

The general revenue sharing program is supposed to be a substitute, 

at least in p art, for the categorical grants. As you know, the categorical 

grants of the Great Society certainly were oriented particularly to 

the poor who happened to be predominantly black, Spanish speaking, 

and elderly in the central cities.

The concern that I have is that in many of these northern cities 

particula rly afte r the categorical gran ts were withdrawn, general 

revenue sharing funds were used particu larly for city agencies which 

are known to discriminate to the largest possible extent against these 

groups.

So the discriminat ion does not take place in a direct way, but by 

funneling the general revenue sharing funds into particular agencies 

which historically have eliminated minority groups, and by withdrawing the categorical gran ts from those m inority groups you find a very 

clear form of discrimination when you put the total package together.

I hope it is this kind of analysis tha t you may have done in your 

A review of the general revenue sharing program. It is not so much the

direct application of the funds. Mr. Chairman. It is the overall result 

in terms of the effect it has upon the minorities and the poor who live

in the central cities of this country.

4 Mr. Edwards. Thank you, Mr. Badillo.

Our witness today is Mr. Victor Lowe, Director of the General 

Government Office of the General Accounting Office. I n November of 

last year the Judicia ry Committee requested the GAO to conduct a 

study into the manner in which the Office of Revenue Sha ring carries 

out its civil rights enforcement responsibilities. Today we will hear 

the findings of that study.

Mr. Lowe, we welcome you and we thank you for coming.

Before you begin, we would appreciate your introducing for us 

those persons who are accompanying you.

ci J3
4

TEST IMONY OF VICTOR LOWE, DIRE CTOR, GEN ERA L GOVERNMENT

DIV ISION, GENERAL ACCOUNTING OFF ICE, ACCOMPANIED BY

ALBERT HAIR , ASSOCIATE DIR ECTOR; THOMAS WIL LIA MSON,

SENIOR ATTORN EY, GAO; AR TH UR GOLDBECK, ASSISTA NT D IRECT OR; AND JERA LD BOYKIN, SUP ERVIS ORY AUD ITOR , GAO

Mr. Lowe. We have Mr. Albert H air, in charge of our work in th e 

area of intergovernmental relations which includes general revenue 

sharing. He is a former city and county manager. To my immediate 

left, Mr. Thomas Williamson, a senior attorney in our Office of Gen- 1

eral Counsel. On my right, Mr. Arthu r Goldbeck, in charge of our 

work in revenue sharing and Mr. Boykin, who was responsible for this 

particula r assignment.

Mr. Butler. Excuse me, Mr. Lowe. The name of the first gentleman ? *

Mr. Lowe. Albert Hair.

Mr. Chairman, before I start, I would like to apologize for the 

length of the statement here this morning but I think in order to respond to the questions th at the committee asked us to respond to, it is 

fa irly lengthy.

We are pleased to appear here before the subcommittee to discuss 

general revenue sharin g which is a 5-year program scheduled to expire 

on December 31, 197(5.

About $6 billion has been distributed annually to 39,000 State and 

local governments since the program started in 1972. Revenue sharing 

is a fundamentally different type of Federal assistance because it allows State and local recipients wide discretion in the use of the funds.

There are provisions in the Revenue Sharing Act, however, which 

do place certain restrictions and prohibitions on the use of the funds.

Section 122 of the act provides th at:

No pe rso n in th e U nited S ta te s sh al l on th e gr ou nd of race, color , nat io nal 

origin, or sex he ex clud ed from par ticip ati on in, be de nied th e be ne fits of, or be 

su bj ec te d to di sc rim in at io n unde r any pro gr am or ac ti vit y fu nd ed in wh ole or in 

p a rt w ith fu nd s mad e avai la ble u nde r (t he a c t) .

The Secretary of the Treasury is responsible for administering the 

program and insuring th at State and local recipients comply with this 

and other provisions.

By letter dated December 30, 1974, the chairman of the House J udiciary Committee asked tha t we assist this subcommittee in evaluating how the Office of Revenue Sharing has discharged its civil rights 

responsibilities.

Our statement addresses the questions raised in his letter and presents our overall views about civil rights under the program.

Our statement summarizes the information which we have gathered 

and wo will submit a more detailed report to the Chairman in about 

GO days.

As of December 31, 1974, ORS had opened 109 civil rights cases,

98 of which were based on complaints received from private citizens, 

national civil righ ts organizations, State and local interest groups, 

legal service groups, and local public officials. The remaining 11 cases 

were opened based on information from the Department of Justice 

on pending litigation, compliance audits bv ORS, and other sources.

The number of complaints being received by ORS is increasing. As
5

of June 30, 1975, ORS had opened an additional 63 cases and expects 

to receive a total of 200 complaints in fiscal year 1976.

The increase is attributable, to some extent, to ORS ’s efforts to provide the general public with information about the program. Two 

of ORS's publications informing citizens about the complaint process 

were distributed to each of the 39,000 recipient governments, to many 

civil rights and civic interest groups, to Members of Congress, and 

to State and Federal agencies. Individuals were sent copies on request.

One document is entitled “General Revenue Sha ring and Civil 

Rights,” dated November 1974, and the other is entitled “Getting In ­

volved: Your Guide to General Revenue Sharin g” dated March 1974.

Mr. Butler. You mentioned in one place tha t there were so many 

complaints and so many cases. Are those interchangeable ?

Mr. Lowe. I think that resulted from 144 complaints.

Mr. B oykin. Some of the cases are based on complaints that came 

in to ORS and some are based on compliance reviews ORS conducted 

and referrals ORS received from the Department of Justice.

Mr. Butler. If the two complaints are centered on the same basic 

problem, then that is one case ?

Mr. Lowe. That is right. Many of the cases have more than one 

complaint.

Mr. Butler. Many of the cases have no complaints also ?

Mr. Lowe. Several of them, yes, sir.

Although the annual number of complaints being received by ORS 

is increasing, the number is very small compared to that received by 

other Federal agencies.

For example, in 1974 the Equal Employment Opp ortunity Commission received about 57,000 complaints. IIE W's Office of Civil Rights 

received over 1,400 complaints covering the assistance granted by three 

of IIEAV s divisions. The Department of Labor's Office of Assistant 

Secretary for Equal Oppo rtunity received about 3,100 civil rights 

complaints.

We categorized the cases opened by ORS as of December 31, 1974, 

both by the type of discrimination charged such as race, national origin, and sex and by the type of activity such as employment, services, 

and facilities in which the alleged discrimination reportedly occurred.

Racial discrimination was alleged in 84 of the 109 cases. About 

one-third of these 84 complaints also alleged discrimination based 

on national origin an d/or sex.

Employment practices were questioned in 80 cases. About oneforth of these 80 cases also involved complaints about services an d/o r 

facilities. Furthermore, in about two-thirds of the 80 cases, the recipients’ police or fire departments, or both departments were the 

subjects of the complaints.

We have attached at the end of this statement more detailed breakdowns of the various discrimination categories.

The ORS complaint process normally involves six stages: Complaint initiation; analysis of prelim inary data: field investigation, 

usually consisting of a financial audit and a civil rights review: ORS's 

decision on the Government’s compliance status; efforts to obtain voluntary compliance from the Government, or resort to involuntary compliance procedures; and case closure.
6

Our review o f t he time involved in pro cessing the 109 cases rev ealed 

ap pa re nt excessive delays and evidence th at the tim e require d to 

process a comp lai nt is incr easing.

For the 43 cases th at had been closed as of Ju ne 30, 1975, the av er ­

age p roc essing tim e was 10 mon ths. These average s do not includ e the 

pro cessing tim e fo r the rem ain ing six cases carried in special status 

by OR S because, fo r example, co urt action m ay ha ve been pe nding .

Tiie sh ortest case was closed in 22 days because the co mp lai nant 

withd rew the cha rge. T he long est case took 29 mo nths to close a nd w as 

based on the first civil rights compla int received by OR S. We ide ntified 

7 closed cases and 50 active cases wh ere a delay of 6 m onths or more 

occ urred in one or more of the m ajor proc ess ing stages.

Mr. Butler. B y delay, do you mean the tim e interv ene d betw’een the 

tim e the file wa s opened and th e case w as resolved ?

Mr. L owe. Yes, sir.

Mr. Butler. S o it would be fa ir to s ay th at if they ha d br ou gh t all 

the ene rgies of th e OR S to hear an d eve ryb ody was wo rki ng on i t and 

inve sti ga tin g an d it took 6 mo nth s to resolve it, you wou ld hav e 

repo rte d a delay of 6 mon ths ?

Mr. Lowe. Six mo nth s in one sta ge an d it could hav e been sev eral 

stages. We identified seven cases where the laps e of tim e occurred in 

one or more of those six stages.

Mr. B utler. Did you make some effort to resolve th is question 

wh eth er the l aps e of time was rea son able or unr eas onable in a par ticular instan ce? Do you have it classified somewhere in yo ur repo rt?

Mr. L owe. W e h ave analyzed each one of those cases and in a re po rt 

we will make to the committee there wi ll he an ap pendix which ou tline s e very one of those cases and wh at happ ened in each case.

So we are do ing that. I do n't th in k we have it in the sta tem ent 

here.

Mr. B utler. Al l rig ht. I tha nk you.

Of the 109 cases opened throug h Dec emb er 31. 1974, 60 were still 

open as o f J un e 30. 1975, inclu din g the 6 which w ere carried in special 

sta tus by OR S. Of the 43 th at were closed cases as of Ju ne 30, 1975, 

11 governm ent s were found to be in non com plia nce w ith se ction 122.

In a no the r 9 cases, OR S fou nd there was no evidence to su pp ort the 

comp lai nants’ alleg atio ns. Ten cases were closed due to la ck o f jur isdi ctio n and three oth ers were closed aft er the comp lainants wi thdrew 

th ei r ch arge s.

In the remaining 10 closed cases OR S mad e no forma l nonco mp liance decision. In 4 of these cases, OR S mo nitore d court proceedings. 

In the othe r six cases, OR S conta cted the rec ipi ent and, bas ed on 

responses by t he gov ern me nts an d/o r f ind ing s of its own in vestigatio ns, 

reco mmended action s t o satisfy section 122 re quireme nts w ith out issu ­

ance o f a noncom plia nce letter.

We h ave atta ch ed a t t he end o f t his sta tem ent a detailed b rea kdow n 

of the dis position of the 109 cases.

In its l etter no tify in g a gov ern me nt of noncom pliance wi th section 

122. O RS sti pu lates wh at actions the government must tak e in orde r 

Io be in com pliance. Most g overn me nts r espond ed by eit he r ta ki ng t he 

nece ssary corrective acti on or by gi ving OR S assu rance th at the 

requested action would be taken.
7

An exam ple of corrective a ction fre quently requeste d by O RS is t he 

im plem entat ion of affirmative action em plo ym ent plans to eliminat e 

discrim inatory employment practic es.

As o f Ju ne 30,1975, ORS ha d fou nd in 17 cases that th e recipie nt was 

in non com plia nce with section 122. In 11 of the 17 cases OR S subsequently d ete rm ine d t hat th e rec ipients ha d achieve d com pliance s tatus 

an d the cases were closed. Fo ur cases were pending act ion by OR S or 

the rec ipient governm ent and the two other cases had been referre d to 

the Dep artm en t of Ju sti ee by O RS .

* Mon ito rin g is norm ally used by OR S to assure th at af te r a case

is closed, the assuranc es pro vid ed by a rec ipien t govern me nt to correc t 

pa st discri mi natio n or avo id fu tu re discrim ina tio n are eventua lly 

tra ns lated int o actions.

v F or example, in cases involvi ng emplo yment discrim ina tio n ORS

typica lly requ ested th at the rec ipien t governm ent subm it qu arterly 

sta tus reports on its affirmative actio n p lan . O RS asked th at the re po rts 

desig nate b y name, race, nationa l ori gin , and sex all p ersons recr uited, 

hired, or pro moted du ring each qu arter by the governm ent's de pa rtments covered by the affirmative action plan.

OR S also asked t hat these r ep or ts include the date of h ire o r pro mo ­

tion and the salar y and job t itle fo r all employees in the De partm ent.

We iden tified seven cases where the files ind ica ted th at OR S would 

monito r the pro gress in i mp lem entin g a g overn me nt's pla ns and pr oj ­

ects pr io r to Ju ne 30, 1975. F or the most pa rt, we foun d conside rable 

delays an d a lack of follow up by O RS in its m on ito rin g efforts. A ctu al 

mon ito rin g throug h Ju ne 30, 1975, consisted o f OR S receiving reports 

fro m fo ur of seven gov ernments. In only one of thes e fo ur cases was 

there evidence th at OR S ha d reviewed the inform ation sub mitted.

In the rem ain ing three cases, there was no evidence th at th e monito ring a ctions had been tak en as of Ju ne 30. For exa mple, in one case 

the governm ent was asked to subm it qu arterly sta tus repo rts begin ­

ni ng in Ja nuar y 1975 on its efforts to eliminate emplo yment dis crimina tio n.

We fou nd no record of submission of the repo rts by the rec ipi ent 

governm ent or evide nce of follow up OR S. In the othe r two cases, 

OR S pla nned to conduct onsite inspectio ns to mon ito r the im pleme ntar* tio n of the corr ective acti ons , bu t we fou nd no evidence in the files

th at the onsite insp ections in either case ha d been con duc ted thro ug h 

Ju ne 30,1975.

OR S requires th at the chief executive officer of each rec ipient gov ­

ern me nt sign a compliance assura nce s tat em ent i nd icating the governme nt's inten tio n to com ply fu lly w ith section 122 an d othe r provisi ons 

of the Revenue Sh aring Act. On Ju ne 16, 1975. OR S established new 

special assurance pro cedures whe reby, in ad ditio n to the sta nd ard 

com plia nce assu rance sta tem en t, a rec ipi ent gover nm ent previously 

foun d in noncompliance mu st subm it evidence th at sim ila r violations 

will not occur in the use of fun ds f or f utur e entitl em ent periods.

As of June 30, OR S told two r ecipie nt gov ernme nts w ith u nres olve d 

section 122 violatio n th at they would be m onitored in acco rdan ce with 

the new special assurance prog ram.

OR S r equ ested t hat both gov ernm en ts:

(1) Ad op t affirmative action pla ns fo r th ei r agencies receiving 

reve nue sh arin g funds du ring fiscal ye ar 1976, and
8

(2) Provide OKS with quarterly status reports on progress in implementing these plans.

Mr. Klef.. This new special assurance program would appear on its 

face to be more stringent than prio r compliance assurance procedures. 

Have you had any evaluation since June 30 that would show that this 

had increased the effectiveness of ORS’s monitoring?

Mr. Goldbeck. That program has so recently gone into effect, we 

have not covered it. There were 14 governments required to send in 

reports for the entitlement period. But we have not had a chance to 

evaluate those because many of the letters just came in. One of them 

just came in within the last couple of days.

Mr. Klee. Does the new procedure on its face appear to be more 

strin gent and likely assure compliance than the previous procedure?

Mr. Goldbeck. It depends on how it is implemented. If the Office 

of Revenue Sharing really makes the government submit something 

that would overcome what had previously been done, it would be more 

stringent. There are some ways it may not achieve what it appears it 

will.

That is, for example, a government may come in with an assurance 

which could thereby avoid the previous contention of discrimination.

Ms. McNair. Mr. Goldbeck, one other question. As I understand 

the way in which the new assurance provision works, if a recipient jurisdiction is able to assure ORS tha t it will not use the new entitlem ent funds in an area similar to the area that has formerly been 

found to be discriminatory, then it can receive the money without 

correcting the past discriminatory activity. Is that your understanding 

of the new procedure ?

Mr. Goldbeck. I don't want to make a positive statement but that 

is mv current understanding.

Mr. Lowe. ORS dismissed 10 cases because of a lack of jurisdiction. 

Six of these were dismissed because ORS decided that revenue sharing 

funds were not used in the areas complained about. In five of these 

six cases ORS either referred the case to another Federal agency, or 

some other Federal agency was already investigating the case.

In the sixth case ORS’s letter advising the complainant to contact 

OEO could not be delivered by the post office.

In three of the other four cases. ORS cited a lack of jurisdiction 

because the discrimination complaint was not based on race, color, 

national origin, or sex which are the areas specified in section 122. 

In these three cases, the complaints were based on age, geographical 

location, and status as an ex-convict. Then, in the 10th case, ORS 

determined that it lacked jurisdiction because the alleged discrimination occurred before passage of the Revenue Sharing Act.

These criteria used by ORS to resolve civil rights complaints are 

derived from many sources, including the U.S. Constitution, the several civil rights laws, Presidential executive orders, court decisions, 

and the Revenue Sharing Act itself.

With the exception of the Revenue Sharing Act these same laws 

and other provisions constitute criteria which also ap ply to the programs of other Federal agencies. A search made of the Department of 

Justice's computerized data bank identified well over 100 laws with 

civil rights provisions.
This proliferation of civil rights provisions has created a complex 

and sometimes confusing situation for administrators, auditors, recipient governments, and others who must deal with them.

Aggregately, these laws, executive orders, court decisions, and other 

criteria, proh ibit discrimination based on such reasons as race, color, 

sex, creed, national origin, age, being handicapped, and political affiliation, but we are not aware of a single law which covers all of these 

prohibitions.

Mr. Klee. Is there an additional category of religion you have 

omitted?

Mr. Lowe. There could very well be.

Mr. Hair. Creed is the word used.

Mr. Lowe. Fo r example the Revenue Sha ring Act prohibits discrimination on the basis of sex, but the 1964 Civil Rights Act does not. 

Furthermore, activities in which discrimination is prohibited include 

public education, housing, public employment, public facilities, contract awards, and many others, but the extent of coverage under a 

given law may be broad or limited.

For example, the Revenue S haring Act prohibits discrimination in 

public employment in any activity funded in whole or part with 

revenue sharing funds but discrimination in public employment is 

prohibited unde r title VI of the Civil Rights Act of 1964 only where 

employment is the primary purpose of the Federal financial assistance 

involved.

Further complexity in civil rights administration and enforcement 

occurs when an agency is authorized under one particu lar law to exercise the powers and functions specified under another law. The Revenue Sharing Act. for example, granted the Secretary of the Treasury 

the option to exercise the powers and functions contained in title VI 

of the Civil Rights Act of 1964 to enforce nondiscrimination.

Some civil rights organizations argue that the Secretary of the 

Treasury has the authority to defer a recipient government's revenue 

sharin g funds on the basis of a probable cause determination of discrimination by the Secretary pending a full administrative hearing 

or a decision by a court.

ORS, on the other hand, believes that it should not defer funds 

before there has been a finding of discrimination as a result of a due 

process administrative or court proceeding.

To gain some insight into how other agencies deal with deferral 

of Federal funds to recipients against which allegations of noncompliance with discrimination provisions are lodged, we talked with 

officials of HE W, LEA A, HUD , the Department of Transportation, 

and the Office of Federal Contract Compliance.

The discussions revealed generally that once the agencies have 

awarded gran ts to recipients, the funds for those grants are not withheld prior to an administrative hearing, the opportunity for a hearing, 

or a decision of the courts. However, various Federal agencies provide 

in their regulations for the deferral, prio r to a formal hearing, of 

grant applications for lack of satisfactory nondiscrimination assurances.
10

We found evidence that ORS had notified or attempted to notify 

the complainants, where appropriate, of the disposition of their grievances in 40 of the 43 closed cases. In the other three cases, notification 

had not been made because of apparent oversight by ORS.

We contacted the complainant or the complainant’s representative 

in 21 of the 43 closed cases. The complainants we contacted were generally dissatisfied with the disposition of their grievances, although 

a few expressed various degrees of satisfaction.

The basic reason for the dissatisfaction by most of the complainants 

was their belief tha t discrimination still existed in the areas com- <

plained about.

Some of the complainants, or their representatives, were also dissatisfied with the way ORS handled their particular cases. Reasons 

the complainants gave for dissatisfaction with ORS’ complaint 9

processing included:

1. ORS’ failure to conduct a thorough investigation.

2. ORS not requiring a formal signed agreement from the Government specifying all actions which would be undertaken to achieve 

compliance and the type of status reports which would be submitted 

periodically.

3. ORS changing its position in a case originally requiring several 

actions by a government to meet compliance and later considering the 

government to be in compliance even though the government said it 

would fulfill only a portion of the requirements.

Mr. Butler. I would like a little help here about whether these 

Federal agencies provide in their regulations for deferral prior to a 

formal hearing. Is there any difference in the legislation between 

those which provide in th eir regulations for deferral prio r to formal 

hearings and those which do not?

Mr. Williamson. The legislation?

Mr. Butler. The statute under which they are operating. In both 

instances are we not proceeding under the same statutory authorization ?

Mr. Williamson. You have to look at it. There are two different 

types of withholding. The statutes uniformly say including the revenue sharing statute and title VI incorporated in it that once the 

entitlement has been OK’d or once the grant has been OK’d, funds 

cannot be then cut off without a due process hearing. But the courts 

have also said tha t the provisions of title VI, which govern most of 

these programs allow holding up an application for funds tha t have 

not yet been g ran ted ; that holding up an application for the grant »

is not a refusal to continue assistance within the meaning of the 

statute. The courts have said that they are still considering whether 

thev will refuse to continue assistance.

Therefore a due process hearing is not required then in that instance.

Mr. Butler. Are these differences in policy made at the administrative level in which the statutory expression is the same?

Mr. Williamson. The statutory expression is the same but the 

courts have interpreted tha t particular statute, title VI, as allowing 

deferral.

Mr. B utler. The court’s opportunity to construe arises for regulations which are different in different agencies. Is that true?

Mr. Williamson. I thin k the regulations now reflect the court 

decisions.
11

Mr. B utler. The court decision came before these regulations which 

provide for deferral.

Mr. Williamson. I don’t know exactly which came first but the 

court decisions are now in line with those regulations.

Mr. Butler. Since you have undertaken in this report today to go 

into this point, would you develop it a little more when your formal 

repo rt comes to us?

Mr. Lowe. Yes, sir.

Mr. Klee. I have a question about the present scope of the remedy 

under title VI. Am I correct tha t section 602 of title VI limits the 

deferral to the program or activity found to be in noncompliance 

and not to all programs or activities within a particular jurisdiction 

found to be in noncompliance?

Mr. Williamson. Tha t is correct.

Mr. Klee. Does the term deferral appear in any of the statutes tha t 

have been promulgated or is it strictly limited to regulations?

Mr. Williamson. I won’t say in any of the statutes. I can't recall 

one.

Mr. Klf.e. Thank you.

Mr. Butler. We have inquired as to whether the complainants were 

satisfied. IIow about the complainees? Do you have any rundown as 

to their reaction to the manner in which ORS handled these?

Mr. Lowe. You mean the recipient government ?

Mr. Butler. Yes.

Mr. Lowe. No, we don't.

Mr. Butler. Do you agree with me tha t that is appropria te to a 

thorough audit ?

Mr. Lowe. I t could be, sir. I think in this case we were sticking specifically to what the committee had asked us to look into.

Mr. Butler. Well, to the extent that I have got the authority, I 

would like this phase of it also developed in your final report. And 

particularly, I would like the view of the recipient governments as to 

the adm inistrative burden or lack of it developed in an effort to determine compliance or lack of it.

Mr. L owe. We can sure t ry to do that. I would think in the same 21 

locations as those 21 complainants that we were able to contact.

Mr. Butler. You are the auditors. You know how to get a representative sampling. I will not be critical of that.

Mr. Lowe. Thank you.

ORS has enhanced cooperation and coordination with civil rights 

and public interest groups by :

1. Particip ating with these groups in meetings around the 

country;

2. Providing the groups with ORS publications; and

3. Encouraging the groups to assist in monitoring compliance 

by recipients.

The extent of coordination and cooperation ORS had received may 

be reflected in the large percentage of cases tha t were opened based 

on complaints received from the civil rights and public interest groups.

For example, of the 144 complainants listed in the 109 civil rights 

cases we reviewed. 52 were national civil rights organizations such as 

the XAACP and the National Organization for Women, and 50 were 

public interest or legal service groups.
12

OKS has had extensive dealings with some Federal agencies, particularly the Department of Justice’s Civil Rights Division and LawEnforcement Assistance Administration, the Department of Housing 

and Urban Development, the Department of Health, Education, and 

Welfare, and the Equal Employment Opportunity Commission. However, we found no evidence that these agencies operated under a 

formal, coordinated program.

ORS had signed cooperative agreements with H EW and the EEOC 

to provide for the exchange of information and to avoid duplication 

of investigative work. ORS’ agreement with HEW also calls for 

further discussion between the two agencies which would result in 

HEW representing ORS in compliance audits.

ORS has obtained from the EEOC employment data which is being 

used in a test program that will compare a government's employment, 

data with labor force statistics. ORS and the EEOC also agreed to 

jointly publish a “Guidebook on Equal Employment for Public Employees” which is expected to be printed in Jan uary 1976.

The publication is to assist employers in complying with civil rights 

provisions of the act. It will also include a section on the nonemployment aspects of the law.

ORS and the Justice Department's Civil Rights Division have entered into a formal agreement which allows ORS and the Division to 

avoid duplicate Federal investigations of State and local governments. 

ORS and the Division were already participating in joint reviews and 

sharin g information in certain cases.

No formal agreement exists between ORS and LEA A, but durin g 

its investigations the LEA A inquires about whether revenue sharing 

funds were used in the area covered by the LEAA grant. W here revenue sharing funds are involved, LEAA provides ORS with information on the cases.

ORS and HUI) have been negotiating a formal agreement which 

would provide for the exchange of information.

The Acting Director of ORS expressed the opinion that most Federal agencies would just as soon administer their own programs because 

they each have their own special interest and program knowledge is 

helpful in discrimination determinations.

He added, however, that because of the limited enforcement powers 

an individual agency may have, the agency seeks to strengthen its 

enforcement potential by uniting its efforts with those of other 

agencies.

Mr. Butler. Going back to the page immediately preceding, talk ­

ing about the guidebook on equal employment for public employees 

to be printed in January 1976, this publication to assist employers to 

comply with employment provisions of the act. Are we referring to 

t he Revenue Sharing Act ?

Mr. Lowe. Yes, sir.

Mr. Butler. Where is the mandate in the statute for the Revenue 

Sharing Office to be spending money educating people as to the civil 

rights provisions relating to compliance with the act, to educate individuals to complain?

I want to know where tha t authority appears in the legislation. 

I have no quarrel with it, but T would like to know where it is.

Mr. Lowe. Mr. Williamson ?

«

►
13

Mr. Williamson. I can’t pick it up right away, Mr. Butler, but I am 

sure there is a provision in there tha t says the secretary will publish 

regulations ami take steps to carry out the statute.

It would presumably come under that.

Mr. Butler. Well, since we are auditing the expenditure of public 

funds, would you agree tha t an appropriate audit would involve 

annotating the source for the expenditure of funds i

Mr. Lowe. Yes.

Mr. Butler. Would you include that in your report ?

Mr. Lowe. Yes.

Mr. Klee. You said the Acting Director of the Oflice of Revenue 

Sharing stated that because of the, limited enforcement powers an 

individual agency may have, the Agency seeks to strengthen its en­ forcement potential by uniting their efforts with those of other 

agencies. Did the Acting Director of the Office of Revenue Sharing state tha t 

the Office of Revenue Sharing has limited enforcement powers?

Mr. Hair. I talked to the Acting Director about that particular portion of the statement. I think he was speaking in general terms. He 

was indicating that his Agency had sought these cooperative agree­ ments and 1 think in this particular case he was not making reference 

to limited enforcement powers, but perhaps staff and other types of communications devices that might be used to exchange information.

Mr. Klee. To p ut this remark in context it would be f air to say he 

was not speaking about the limited power granted to him by the present statute but rath er to the current administrative support he has to 

implement those powers; is tha t correct ?

Mr. Hair. I th ink th at is a reasonable assumption.

We did not probe it that much, but I did not get the impression tha t 

he was complaining about a lack of legal authority although there 

may be some portions of the act he was seeking improvement in.

Mr. Badii ,lo. W as that his own personal opinion ? Did he go out and 

talk to these other agencies to see if they would be willing to enter 

into an agreement or did he just give his opinion?

Mr. Goldbeck. I think he lias talked with some-----

Mr. Badillo. As of December 1974, ORS has signed only one agreement with the Equal Employment Oppo rtunity Commission. What 

others have they signed ?

Mr. Goldbeck. Well, they have agreements with EEOC, IIE W 

and-----

Mr. Badillo. There are many agencies. Did they go and seek out 

these other agencies or is it just as you say here that in his opinion they 

don’t want to cooperate? lia s he been turned down bv the others?

Mr. Goldbeck. They are in the process of negotiating additional 

agreements. l ie did make a point to us also in discussions with him 

that prior to the time th at these agreements were negotiated, there had 

been no real formal cooperative agreements between any Federal 

agencies.

Mr. Badillo. My point is tha t if you have one with EEO C entered 

in December 1974, and since then you have entered one with IIE W. you 

have one with Justice, what is the basis for his opinion that the others 

would just as soon not do it ?

62 -3 31 — 75 ------ ;
14

It seems to me that the evidence indicates that the others would just 

as soon do it if OKS went out and sought to enter into such agreements.

Mr. Goldbeck. These agreements generally provide for exchange 

of information and perhaps doing some investigative work for the 

other agency. What he was concerned with there was tlie actual gra nting of the determination of discrimination to another agency.

In other words, IIUD decided tha t somebody is discriminating in the 

use of revenue sharing. That was where he was drawing the line, 

lie felt tha t each agency because of their own knowledge of their 

program should make tha t final determination.

Mr. B adillo. Obviously each agency would just as soon administer 

its own program. Naturally, but that is not to say th at they would be 

unwilling to work with the Ollice of Revenue Sharing.

All I am trying to bring out is that the fellow’s attitude is that these 

fellows don’t want to work with us, he won't go out and firmly try 

to seek agreements. The attitud e seems to me r ather negative. It seems th at he does not 

really want to go out and affirmatively seek the help of these agencies.

I am not talking about handing over the program to them or the taking 

over of their programs. But I am speaking about getting their cooperation.

Mr. Goldbeck. I think perhaps we ought to give the Office of Revenue Sharing some credit because they are the first Agency that lias 

ever negotiated any formal agreement in this civil rights area. Prior 

to last December, there just were none. For example, HEW did not 

have one with HUD.

Mr. Badillo. It is not such a radical concept that Federal agencies 

should coojierate with each other.

Mr. Goldbeck. That is right,

Mr. Lowe. I will proceed with my statement.

ORS has several mechanisms it uses to aid in the identification of 

recipient governments in which civil rights problems exist even though 

no complaints have been filed against the governments.

Coordination and cooperation with other Federal agencies to exchange information is one of the mechanisms which has caused ORS to 

open civil rights cases. A second one is the establishment of formal agreements between 

ORS and State civil rights agencies. The agreements provide that the 

State agency should notify ORS of cases in which revenue sharing 

funds mav have been used in a discriminatory manner.

As of September 25, 1975, ORS had entered into agreements with

II State agencies. The agreements have not been in existence long 

enough for us to assess their effectiveness.

Mr. Butler. Would you tell us which States those are please ?

Mr. Boykin. Maine,'West Virginia. Illinois, the District of Columbia, Ohio, Connecticut, Maryland. Minnesota, South Dakota, Delaware, 

and Alaska.

Mr. Lowe. Another mechanism u«ed by ORS to check a government’s 

compliance status is the svstem of State and local auditors. In October 

1973. ORS issued an audit guide and standards for revenue sharing 

recipients to assist State and local auditors and public accountants in 

understanding the special requirements for audits of revenue sharing 

funds and to establish audit standards and procedures.
15

In its publication “Genera l Rev enue Sh ar in g and Civ il Ri gh ts" 

da ted Novemb er 1974 OR S sta tes th at its au dit guide is the first of 

any type th at req uires au ditors to rep ort exte nsively on civil rig hts .

Th e gu ide includes a lis t of au dit pro ced ure s whi ch mu st be pe rforme d by audit ors if the au di t is to be accepted in lieu of an OR S 

audit .

OR S ha d received abou t 1,600 a ud it repo rts prep ared by St ate and 

local au ditors and p ublic acc ounta nts throug h December 31.1974. OR S 

officials said th at none of th ese rep orts mentio ned a possible violation 

% of th e nondisc rim ina tion pro vision o f th e act.

It is quite evid ent th at reliance so fa r on the State and local au dit 

system to ide nti fy possible civ il rig hts vio lation s has been ineffective.

In December 1974 OR S began con ducting com plia nce au dits on a

* sam ple basis. The au dit s include f inan cial, civil rig hts, an d oth er complia nce aspects of the gen eral revenue sh arin g p rogra m. As of A pril 22, 

1975, O RS h ad con ducted 22 a ud its an d 12 reviews of w orkpapers prepa red by ind epe ndent pub lic acc ounta nts u nd er it s sam ple a ud it plan.

Fo ur of the 22 a ud its and 1 of the 12 ind ependent public accou nta nt 

reviews disclosed possible civil rig ht s vio lati ons which were r eferred to 

the OR S Civil Ri gh ts Br an ch fo r inv est iga tion. No cases had been 

open ed on th ese gov ernme nts as of Au gust 21,1975.

Mr. K lee. The repo rts have not mentio ned vio lation s of nondiscri mination prov isions. Does th at in and of its elf show th at the a ud iting p rocedu re has been ineffective ?

Mr. Lowe. Well, th at is based on an assum ption th at if you did 

1,600 you would repo rt some thing and I th in k— in a few min utes I 

will ge t to a point in mv sta temen t w herein we have done review w ork 

in 26 local g ove rnm ents throu gh ou t the c ou ntr y which gives you some 

ind ica tio n of the typ e of th in g th at might be mentioned in the au dit 

rep ort.

I t might not be a noncom plia nce case ; it migh t be one. I f you fo llowed the au dit pro ced ures an d you looked at th at , you would call 

attenti on to it.

Mr. K lee. You are no t op erating on the assum ption th at the State 

and local government is innocent of discrim ina tio n unless proven 

oth erw ise ?

Mr. Lowe. No. sir.

Mr. B adillo. H ow ma ny of those who are St ate and local audit ors 

are emp loyed by the St ate an d local gov ernme nts and how many of 

them, if any , were ind epe ndent certified public accountan ts who have

• a license at stake?

Mr. L owe. The au dit guide lines pu t out by the Office of Revenue 

Sh ar ing ind icate th at in o rd er f or an a ud it to be a cceptable to them, it 

has to cov er cert ain thing s.

Mr. Badillo. I un de rst an d. I am a certifie d public accou nta nt my ­

self. I un de rstand tha t. But if I am not writin g a re po rt as a certified 

public acc ounta nt and I sig n my nam e to it, the n if th at repo rt is 

wr ong I can lose my license.

I f I am h ire d by, say, Mr. Beame in New Y ork a nd I am an employee 

and I sig n my repo rt as an employee of t he office o f the com ptrolle r, 

mv license is not invo lved. N either is mv license involv ed if I am writ 

ing a re po rt f or the co mp tro lle r of the State of New York.
16

It makes a difference whether I am working for someone or whether 

I am an independent auditor because then I am going to be reporting 

to mv boss. I would like to know which are the reports of the public 

employees and which ones are the independent accountants?

Air. Lowe. I don't have a breakdown right now but on the next page 

we point out something tha t touches right on that. As of April 22,

1975, ORS conducted 22 audits and 12 reviews of work papers prepared by independent public accountants.

Four of the 22 audits and 1 of the 12 independent public accountant 

reviews exposed possible civil rights violations which were referred 

to the ORS Civil Rights Branch for investigation. The auditor did 

not have to go beyond the normal audit.

He has to, if the audit itself is acceptable to ORS, to make it acceptable to ORS. *

Air. Badillo. I have no problem with that. T have a problem with 

the fellow just working for the State and local official. It is most unlikely tha t he or she would criticize his or her employers.

If they did they might not last very long.

Air. Lowe. I know in New York State the auditor occupies a pretty 

secure position and is really relatively independent of the agency he 

would be auditing. This is the same in a number of other States.

Air. Butler. As a m atter of fact, it is analogous to the position of 

the General Accounting Office, is it not ?

Air. Lowe. In many States that is true. In some it is not.

Air. Badillo. In many of the municipalities, the auditor might be 

just p art of the team.

Air. Lowe. That can be true also.

Air. Badillo. If you can provide it. I would like to get a breakdown 

of those who are independent auditors and those who are auditors 

on municipal and State payrolls.

[GAO later checked with ORS's chief auditor and submitted the 

following information for the record: The chief auditor at ORS told 

us on October 13, 1975, tha t the 1,600 reports could not be readily 

identified because they have been filed alphabetically among the total 

of 4.211 such reports which have been received bv ORS as of September 30, 1975.]

Air. Edwards. Air. Lowe, did the ORS charge these 1,600 auditors 

with the definite responsibility of reporting on civil rights enforcement ?

Air. L owe. No. sir, the charge in effect was that if you perform an 

audit and use the guidelines—the guidelines that they have pub- »

lished—then that audit would be accepted in lieu of an independent 

audit bv ORS. That is the only charge.

In other words, the auditor can stop at the end of a normal financial 

audit he would make and not do these other steps and tha t would not 

be an acceptable audit to ORS.

Air. Edwards. Therefore in its publication. “General Revenue Sharing and Civil Rights, November 1974,” ORS is wrong when it states 

that its audit guide is the first of any type that requires auditors to 

report extensively on civil rights?

Air. Lowe. Alavbe we can explain that a little clearer.

Air. Goldbeck. I think technically that may be a true statement because. their guide does have certain steps in it tha t require an audit 

of that name—of civil rights. Their audit guide also says if tha t audit
17

th at th e ind epe ndent accountin g firm o r the S tat e gover nm ent is doing 

on a local gov ern me nt, if th at is to be accepted by the Office of Revenue Sha ring in lieu of an au dit they m ight do, the y must follow the 

step s in the gu ide.

If an au di to r does not foll ow the steps, then the Office of Revenue 

Sh ar in g w ould no t a ccept the au dit.

Mr. K indness. Mr. Ch airm an , one point . I wonder if we could lie 

pro vid ed wi th t he information late r as to how many of th e 1,600 cases 

involve the ex tra gu ide lines points?

* Pe rh ap s non e of them did but if th at is the case, th at wou ld be 

pe rti ne nt to know.

Mr. Lowe. Yes, sir, Mr. Kindness. We will ana lyze those 1,600 repo rts if we can an d see how th at worked out.

Ms. McNair. You ind ica te th at cases have no t ye t been opened in 

the five au dit situatio ns wh ere possible civil righ ts vio lations were 

noted.

Mr. Lowe. Some cases, yes.

Mr. B utler. Th is goes back to the question I aske d. No cases had 

been opened. Does that mean these, disclosed possible civil righ ts viola ­

tions were noted and ign ore d or th at an inv estig ati on is pro cee din g 

or wh at?

Mr. Boy kin. W ha t it mea ns is th at OR S lias not go tte n aro un d to 

opening cases on these. It does not mean th at the y hav e been ignored . 

If there is some of th at eviden t in the case, I do n't know of it. Bu t 

we are no t say ing that here.

Ms. McNair. W ha t have they done in those five sit ua tio ns ? ,

Mr. Boy kin. Well, we talked to OR S abo ut these inv est iga tio ns. W e 

were told th at one would res ult in a case and would show up on the 

August 31 act ive list, bu t it did no t show up. Bu t they are expe cted 

to show up as O RS an alyz es th em.

Mr. B utler. You are not sugg estin g here th at they are igno rin g 

them? You are suggest ing th at proc ed urally it tak es long er than 

Au gu st 31 t o get aro und to it ?

Mr. Lowe. At the time we pu t th is together, we did no t hav e any 

more in form ation as to the outcome of tho se p ar ticu la r ones.

Mr. Butler. W hat brou gh t you to th e view th at possible civil rig hts 

violation s ha d been disclosed?

Mr. L owe. Th is was the conclus ion reached by OR S as a res ult 

of its re view of these par ticu la r cases.

Mr. Butler. So it is not y ou r view bu t th eir view.

* Mr. Lowe. Yes.

Mr. K lf.e. Of com pla ints filed on and af te r Apr il 22, 1975, have 

cases been ope ned on any of those or is this indic ative of the normal 

delay fo r the comp laint initiated cases as well as the au di t cases?

Mr. Goldbeck. Th eir practic e is to open a case as soon as th e complain t comes in. When it is rece ived fro m outside of th ei r office, the y 

open a comp lai nt. These cases were sit ua tio ns where they in iti at ed 

them intern ally. I think it w ould be fa ir to s ay th at they are still tr y ­

ing to determi ne wh eth er or no t there is sufficient evidence available 

to establish a case.

Mr. K i.ee. W ha t does op ening a case mean? I f a co mplaint comes 

in and a file is opened, they do no t send out th ei r 15 da y lette rs imme diately , do th ey ?

The y put th e case into th e file, co rrect ?
IS

Mr. Goldreck. Right.

Mr. Klee. They put their audit in a different file and tha t is not 

technically a case, is that right ?

Mr. Goldreck. T hat is correct. I think in the case of a complaint, 

they feel they must respond to the complainant. So they have to do 

something.

They immediately establish a case. But in the case of their internal 

audits it may be th at there is no complainant. They may never have 

any external corresponding now involved at all.

Ms. McNair. There appears to be different treatm ent when their *

own special internal audit review is involved-----

Mr. Lowe. The auditors in performing this work red-flagged 

these particular audits and referred them to the ORS civil rights 

branch for investigation to see if there is a case on them. *

Ms. McNair. Doesn't ORS state tha t they are using these 1,600 

audits which have been supposedly performed in accordance with its 

Aud it Guide as part of its civil rights monitoring process?

Mr. Lowe. We indicated we don’t think it is very effective.

Mr. Kindness. Going back to page 4 of your statement that the 

ORS complaint process normally involves six stages. If I understand 

correctly, what lias just been stated in this exchange, the cases we 

are talking about on page 17 are half way throu gh those six stages, 

is that correct ?

Mr. Lowe. They have not really been opened as a case yet.

Mr. Kindness. There is a complaint initia tion in a sense resulting 

from the audit?

Mr. Lowe. Yes, sir, an internal possible case.

Mr. Kindness. There is an analysis of preliminary data or this 

would not have been mentioned here. There is a field investigation 

usually consisting of a financial audit and a civil rights audit review.

Tha t is inherent in the audit. That is three steps through the six stages 

tha t would be parallel to the complaint process.

Tt seems to me we are playing around with words but I would like 

to understand better what the statement means “no cases had been 

opened on these governments as of August 31, 1975.’'

Mr. Lowe. Tha t means there had been no formal cases reported.

This thing had been referred to their civil rights branch for investi- p,

gation at tha t time.

Mr. Kindness. Does it mean that no efforts to obtain voluntary 

compliance from the governments involved have occurred and does 

it mean that no involuntary compliance procedures have been »

initiated?

The final stage of these six steps is closure of the case which does 

not seem very significant. I am having a good bit of difficulty understand ing why that statement is in the testimony.

Mr. Goldreck. We wanted to point out that they only looked at a 

very small number of governments. They came up with some indications of potential discrimination. We are trying to contrast that with 

the 1.600 external reviews made in which they found no violation 

or potential for violation at all.

In other words, we are sort of trying to point out th at there should 

be some likelihood that the 1,600 would have had several cases also.

Mr. Kindness. This is for the purpose of comparing?

Mr. Goldreck. Yes, sir.
19

Mr. K indness. The com par ison is based on the assum ption th at 

dis cri mi natio n docs ex ist, th at it is bou nd to.

Mr. Lowe. I wou ld th in k th at wou ld be tru e, yes, enough so they 

would h ave to open a case a nd do an i nvest iga tio n o f some of the 1,600.

Mr. B utler. T ha t is the presu mp tion of innocence we were ta lk in g 

abo ut before. You mad e no effort to det erm ine really the va lid ity of 

the possible civil rig ht s vio lation s and in these au dits un de r its audit, 

plan , d id you go back and tr y to de term ine w hethe r th ere were possible 

civil righ ts vio lation s th at the y did no t pic k up an d include in this 

never-neve r-land of unope ned cases ?

Mr. Goldbeck. W e did no t look at these cases. Our cut off r ate was 

Decem ber 31. T hey ha d as much evidence in thes e cases as the y do a 

co mp laint coming in fro m an exter nal source.

We th in k the y sho uld hav e tre ated the m the same as a comp laint 

com ing from outside th ei r office. Wh en they first beg an the prog ram 

th ey had trouble k eepin g tra ck of the cases.

Th is prolonged the process.

I th in k the same th in g might happen here if they don’t st art to 

con trol those cases. May be none of them are really discrim ina tio n 

cases but at least they ou ght to have some way of co ntr ollin g thes e 

so they can resolve th at questio n and decide wh eth er or no t there is 

dis crimination.

Mr. Butler. Th ere is alm ost always the nor mal shaked own prob ­

lem, is there not ? Yo ur br ief com me ntary th at no case had been 

ope ned is not intended to ind ica te a lack o f mo tivation on the p ar t of 

the Office of Revenue S ha ring to com ply with the law , is it ?

Mr. Goldbeck. No, sir.

Mr. Badillo. OR S con duc ted an a udit. Th ey took 22 cases and they 

exam ine d those and the y fou nd th at in 4 of them there were possible 

civil rig hts violations , is t hat rig ht ?

Mr. Lowe. Yes.

Mr. Badillo. Th at wo rks out to 18 percen t. Is n't th at a very high 

per centa ge? Doesn 't th at sug ges t th at th ei r sam ple sho uld be larg er 

because tha t is a ve ry high perc ent age ?

Mr. Goldbeck. I agre e. That is also why we feel th at out of th at 

1,600 there must have been at leas t 1.

Air. Badillo. If you have 4 out of 22,18 percen t, th en take 18 pe rce nt 

of 2.200 and see w ha t th at is. W ha t th at sam ple suggests is m aybe the 

whole th in g should be reviewed. In any au dit pro ced ure s an 18 pe rcent vio lation record would be a bell of alarm to revise the whole 

business.

Mr. Lowe. We do n't kno w wh eth er th ei r sam ple was a loaded sam ­

ple. We do n't know. We were using th at to contr ast with the 1,600.

Mr. Badillo. We agree th at with the FB I, if you had 18 percent, 

of the F B I cases opene d fo r no reas on at all, e verybo dy would be very 

concern ed. Simi lar ly, in these cases, 18 percen t, th at seems to be a 

gr ea t cause f or concern.

Mr. K lee. The se 22 au dits co nducted by t he Office of Revenue S har ­

in g are separate fro m the 1,600 State an d local au dits are the y not?

Mr. Lowe. Yes.

Mr. K lee. I f OR S ha d to go out and conduct audit s, did you ask 

them wh eth er they had an y basis to focus in on are as where they 

pa rtic ul ar ly susp ecte d discrim ina tio n based on comp laints th at the y 

ha d and is that why th ey conduc ted these 22 audit s?
20

Mr. Lowe. No. We did not ask them that particular question. Maybe 

we. could do this for the record. In our report or for the record, we 

will furnish information on these pa rticular cases that we are talking 

about, what the final disposition of them was, whether or not they did 

open a case or what.

Mr. Klee. Can you correlate the 22 audits to see if there was evidence 

of discrimination before the cases were opened ?

Mr. Lowe. Yes.

Mr. I)odd. I apologize for arrivin g late. It seems to me from your 

statement that there are serious problems in compliance, stall, revievy, 

just a variety of problems that arise in this particular area. Would it 

be fair to say it is impossible for you or for OKS to make the determination that there is not discrimination occurring in these programs ?

You can't say categorically one way or another, can you ?

Mr. Lowe. No; we can't. We would have one problem doing a review 

of 38.000 State and local governments. That is one reason that they 

made the attempt to rely on audits performed by people other than 

ORS when they published this guideline.

I would think they would have a much greater chance of success in 

the normal financial -type audit tha t most of the people are used to performing on their own anyway. They have extended procedures covering civil rights and compliance with the law.

Mr. Drixax. I wonder if the witnesses would finish and then we go 

through the auditing process ?

Mr. Seiberlixg. There is one clarifying question. I would like to 

ask.

Mr. Drixax. There are several issues that should be brought out and 

counsel and all of us should have the 5 minutes.

Mr. E dwards. We will move along but I will recognize Mr. Seiberling.

Mr. Seiberltxg. On page 16 where you refer to the 1,600 audit reports not mentioning a violation, are you tending to indicate that they 

are not mentioning also possible violations or just not finding violations?

In your reference to ORS audits, you point out that they found 5 

possible violations whereas on page 16 you said none mentioned violations. I want to make sure that we are not talking about apples and 

oranges.

Mr. Lowe. We mean possible violations there.

The effectiveness of the new procedure cannot be assessed until it 

is fully established and implemented. Much of its success when implemented will depend upon the carrying out of the field investigations. 

The A cting Director stated th at he expects to get other Federal agencies to share in conducting these field visits.

The legacy of what is now recognized as discriminatory employment practices appeared evident from the composition of the work 

forces of many of the 26 governments on which we conducted case 

studies in a recent review.

The report we issued to the Congress in July 1975 is entitled “Case 

Studies of Revenue Sharing in 26 Local Governments,'' GGD-75.77. 

A similar review would probably reveal the same results for other 

recipient governments. Although each government was unique, we 

made some broad generalizations:
21

In most of the counties, a higher percentage of females was employed by the county than the percentage of females in the civilian 

labor force. The opposite was true for cities. The cities typically 

had large sanitation, police, and fire protection services which 

employed a high percentage of males. The counties, on the other 

hand, often had large health and hospital, welfare, and social 

service functions which employed a high percentage of females;

Six of the governments had no Spanish-surname or black employees in the ir work force. In these cases, there were no or very 

« few blacks or Spanish-surnamed people living in the jurisdiction.

In most of the governments, the percentage of blacks on the Government’s payroll exceeded or closely approximated the percentage of blacks in the civilian labor force. The opposite was true for 

£ Spanish-surnamed;

Higher percentages of women and minorities were in the governments’ lower level positions, such as clerical or manual labor 

jobs;

Police and fire protection employees were predominantly white 

males, while black males were concentrated in sanitation and service maintenance activities; and

The percentage of black and Spanish-surnamed persons hired 

durin g the year ended June 30, 1974, generally approximated or 

exceeded the percentage these groups represented of the recipient’s 

total work force.

We found substantial evidence th at employment practices, particu ­

larly among larger jurisdictions, have changed and are changing to 

include more minorities and females. Changes are occurring from both 

self-initiated programs and as a result of legal actions.

If you would like I will make a copy of tha t report and any of the 

other 26 supporting reports for your file.

Mr. Edwards. Yes. We appreciate that. Thank you.

Mr. Lowe. In making this observation we did not intend to imply 

tha t civil rights problems faced by local governments and by essentially all American institutions have been solved. It was clear that 

much remained to be done.

Mr. Chairman, before I conclude I would like to make several ob-

* servations about civil rights enforcement by the Federal Government 

and the Office of Revenue Sharing.

Differences exist between the numerous civil rights provisions and 

regulations tha t apply to various Federal programs. As examples the

* Revenue Sharing Act prohibits discrimination in the use of revenue 

sharin g funds on the basis of race, color, national origin, and sex.

The Comprehensive Employment and Trainin g Act of 1973, as 

amended (CETA), also prohibits these four types of discrimination 

but also prohibits discrimination in the use o f CET A funds on the 

basis of creed, age, political affiliation, and belief. The Rehabilitation 

Act of 1973 prohibits discrimination against handicapped individuals.

These differences can confuse the citizen when he or she is attempting to ascertain his or her rights under various Federal programs and 

can complicate the Federal administrator’s efforts to enforce discrimination provisions.

In Jan ury 1975 when we began our review of the Office of Revenue 

Sharing's civil rights enforcement activities, we found tha t ORS had
22

inadequate controls to assure tha t complaints would be processed in a 

timely manner. ORS has recently established new procedures and periodic reports 

which it feels will establish overall control of the complaints when they 

are received and alert the compliance staff of delinquent actions so that 

complaints can be processed faster.

Also ORS plans to increase its current staff of five civil rights specialists by five additional specialists in fiscal year 1976.

Because these changes have not as yet been fully implemented we 

would not assess the effect they will have on complaint processing. *

In our opinion an adequate civil rights enforcement program includes both the investigation and resolution of complaints that are received and the conduct of selected reviews and/or audits to determine 

compliance with prohibitions against discrimination. 4

Last December ORS began conducting compliance audits on a sample basis and is currently developing a computerized analysis of about 

4,500 government's employment data to identify governments in which 

civil rights problems may exist.

With the expected increase in complaints during fiscal year 1976 

and ORS' plans to conduct compliance audits and investigate governments identified bv the computerized analysis, it is obvious that the 

increased civil rights staff of 10 specialists will have a substantial 

amount of work.

During the past 2 ^ years, we have issued five reports to the Congresson the operation of the revenue sharing program. I have attached 

to this statement a list of the five reports and a description of other 

reviews we have in process. This work has led us to certain overall observations which I would like to mention before concluding.

If the Congress wishes to provide financial assistance to State and 

local governments under a program which has as its purpose simply 

giving recipients discretion in the use of the funds provided, then 

general revenue sharing is certainly a way to achieve this objective.

We believe, however, that the act’s requirements tha t the funds be 

used for certain priority expenditures and tha t the recipient must 

comply with certain other expenditure restrictions are not compatible 

with the revenue sharing concept.

Further , as we have previously reported recipients can arrange *

to use revenue sharing funds in wavs required by the act and then 

use their own displaced funds in other areas where the restrictions 

on the use of revenue sharing funds are not observed.

We have recommended tha t most of the expenditure restrictions ■

be eliminated if the program is renewed.

There are. however, two requirements—civil rights and citizen pa rticipation —which we believe should be retained and made more 

effective.

The existing revenue sharing legislation prohibits discrimination in 

any program or activity that is wholly or partially funded with revenue sharing. Because recipient governments can avoid directly using 

the funds in a program or activity where potential discrimination 

problems exist, we suggest tha t any act renewing revenue sharing 

provide that a government receiving revenue s haring could not discriminate in any of its programs or activities regardless of the source 

of funding: and revenue sharing funds could be withheld, after a due
23

process finding of discrimination, pending acceptable plans or actions 

to correct discriminatory practices regardless of whether revenue 

sharing funds were involved.

• The Revenue Sharing Act requires that recipient governments publish their planned and actual uses of revenue sharing funds. When a 

recipient government spends revenue sharing funds for activities th at 

were previously financed, or would have been financed, from other 

revenues, considerable latitude exists for use of funds thus freed.

The impact o f revenue sharing, in this situation, would occur where 

the. freed funds are used, and reports which describe only the uses 

of revenue sharing funds could be misleading.

We have done several studies which show that.

In our September 9. 1975, report to the Congress entitled “Revenue 

Sha ring : An Opportunity for Improved Public Awareness of State 

and Local Government Operations,” we recommended that a government receiving revenue sharing should be required to provide the 

public with:

(1) Comparative financial data on the sources and uses of all of its 

funds showing its overall plan and results of operations: and (2) an 

opportunity to express their views on the government’s plans and 

activities.

These changes would give revenue sharin g a clear threefold objective of: (1) allowing recipient governments to use the funds in areas 

they consider to have the greatest need; (2) increasing public awareness of, and opportunities for citizen participation in, the determination of these needs: and (3) assuring th at every citizen has an equal 

opportunity to benefit from the services provided to fulfill these 

needs.

Mr. Chairman, that concludes my prepared statement. My associates 

and T would be happy to respond to any questions you may have.

[The prepared statement of Mr. Lowe follows :]

Sta tem ent of Victor D. T.owe, D irector. General Government

D iv is io n , U .S . Gen er al Acc oun ting Offic e

We are plea se d to ap pea r be fo re th is Su bc om m itt ee to di sc us s ge ne ral re ve nu e 

sh ar in g, wh ich is a 5- ye ar pro gra m sc he du led to ex pi re on Decem ber 31. 1976. 

Ab ou t $6 bil lio n ha s been dis tr ib ute d an nuall y to 39,000 S ta te an d loca l go ve rn ­

m en ts s in ce th e pr og ra m s ta rt ed in 1972.

Re ve nu e sh ar in g is a fu nda m en ta lly di ff er en t ty pe of Fed era l as si st an ce beca us e it allows S ta te an d loc al re ci pi en ts wide di sc re tion in th e us e of th e fu nd s. 

The re are prov isions in th e Rev en ue Shar in g Act, ho we ver, wh ich do plac e ce rta in re st ri cti ons an d pro hi bi tion s on th e us e of th e fu nd s. Se cti on 122 of th e ac t 

pr ov id es t h a t :

No pe rs on in th e U ni ted S ta te s sh all on th e grou nd of race , color, nat io nal 

or ig in, or sex be exclu de d from part ic ip at io n in, he de nied th e benefits of. or be 

su bj ec te d to di sc rim in at io n under an y pr og ra m o r ac ti vit y fu nd ed in wh ole or 

in p a rt w ith f un ds m ad e a vail able unde r (t he a ct) .

Th e Sec re ta ry of th e T re asu ry is resp on sibl e fo r adm in is te ri ng th e pr og ra m 

an d ensu ri ng th a t S ta te and lo cal re ci pi en ts c om ply w ith th is a nd ot her provisio ns .

Ry le tt e r da te d De cembe r 30. 1974, th e C ha irm an of th e Hou se Ju dic ia ry Comm it te e as ke d th a t we ass is t th is Su bc om mittee in ev al uating ho w th e Office of 

Rev en ue Shar in g ha s dis ch ar ge d its civil ri ghts re sp on sibi lities . Our st at em en t 

ad dre ss es th e qu es tio ns ra is ed in his le tt er an d pre se nts our ov er al l vie ws ab ou t 

civil ri g h ts un de r the pr og ra m. O ur st ate m ent su m m ar iz es th e in fo rm at io n wh ich 

we ha ve ga th er ed an d we will su bm it a mor e det ai le d re port to th e Cha irm an in 

ab out 00 day s.

Hom many and mhat kind of civil rights complaints have been received by ORS

through December 31,191
24

As of December 31, 1974, ORS bad opened 109 civil rights cases, 98 of which 

were based on complaints received from private citizens, national civil rights 

organizatio ns, State and local intere st groups, legal service groups, and local 

public officials. The remaining 11 cases were opened based on information from 

the Department of Justice on pending litigation, compliance a udits by ORS, and 

other sources.

The number of complaints being received by ORS is increasing. As of Jun e 30, 

1975, ORS had opened an additio nal 63 cases and expects to receive a tota l of 

200 complaints in fiscal yea r 1976. The increase is attributable, to some extent, 

to ORS’ efforts to provide the general public with information about the program. 

Two of ORS’ publications informin g citizens about the complaint process were 

distributed to each of the 39,000 recipie nt governments, to many civil rights and 

civic in terest groups, to members of Congress, and to Sta te and Fed eral agencies. 

Individuals were sent copies on request. One document is entitled “General Revenue Sha ring and Civil Rights,” dated November 1974; and the other is entitled 

“Getting Involved : Your Guide to General Revenue Sharing ,” date d March 1974.

Although the annual number of complaints being received by ORS is increasing, the number is very small compared to that received by other Fed eral agencies. For example, in 1974 the Equ al Employment Opportunity Commission received about 57,000 complaints. HEW’s Office of Civil Rights received over 1,400 

complaints covering the assistance granted by three of HEW ’s divisions. The Departm ent of Labor’s Office of A ssistant Secretary for Equal Opportunity received 

about 3,100 civil rights complaints.

We categorized the cases opened by ORS as of December 31, 1974, both by th e 

type of discriminatio n charged such as race, national origin, and sex and by the 

type of a ctivity such a s employment, services, and facilitie s in which the alleged 

discrimination reportedly occurred. Racial discriminaton was alleged in 84 of the 

109 cases. About one-third of these 84 complaints also alleged discrimination 

based on nation al origin an d/or sex.

Employment practices were questioned in 80 cases. About one-fourth of these 

80 cases also involved complaints about services an d/or facilities . Furtherm ore, 

in about two-thirds of the 80 cases, the recipients’ police or fire department, or 

both departments were th e subjects of the complaints.

We have attach ed at the end of this stateme nt more detailed breakdowns of 

the various discrimination categories.

Hou) are the complaints processed and how quickly are they investigated?

The ORS complaint process norm ally involves 6 stag es : complaint initiation; 

analysis of prelim inary data ; field investigation, usua lly consisting of a financial 

audit and a civil rights review: ORS’ decision on the government’s compliance 

stat us ; efforts to obtain voluntary compliance from the government, or resort to 

invo luntary compliance procedures ; and case closure.

Our review of the time involved in processing the 109 cases revealed apparen t 

(excessive) delays an d evidence th at the time required to process a complaint is 

increasing. For the 43 cases that had been closed as of Jun e 30, 1975, the 

average processing time was 10 months. The sixty active cases were already pending an average of 12 months. (The se averages do not include the processing time 

for the remaining 6 cases carried in special sta tus by ORS because, for example, 

court actio n may have been pending.) The shortest case was closed in 22 days 

because the complainant withdrew the charge. The longest case took 29 months 

to close and was based on the first civil righ ts complaint received by ORS. We 

identified 7 closed cases and 50 active cases where a delay of 6 months or 

more occurred in 1 or more of the major processing stages.

What disposition has been made of complaints received through December 31,

1974?

Of the 109 cases opened through December 31, 1974, 66 were still open as of 

Jun e 30. 1975, including the 6 which were carried in special sta tus of ORS. Of 

the 43 th at were closed cases as of Jun e 30, 1975. 11 governments were found 

to be in noncompliance with section 122. In another 9 cases, ORS found there 

was no evidence to support the complaina nts' allegations. Ten cases were closed 

due to lack of jurisdiction and 3 others were closed af ter the complainants 

withdrew th eir charges.

In the remaining 10 closed cases ORS made no form al noncompliance 

decision. In 4 of these cases. ORS monitored court proceedings. In the other 

6 cases, ORS contacted the recip ient and. based on responses by the governments 

an d/or findings of its own investigations, recommended actions to satisfy section 122 requirements w ithout issuance of a noncompliance letter.
We ha ve att ached a t th e en d of th is st ate m en t a det ai le d br ea kd ow n of th e 

disp os iti on o f t h e 109 cases.

Arc fo rm al co mplianc e ag re em en ts en tere d in to w ith re ci pi en t gov er nm en ts

th at ha ve been th e s ub je ct o f co m pl ai nt s? W hat is th e exte n t an d n atu re of O ltS

mon ito ring o f such ag re em en ts?

In its le tt er no tify in g a go ve rn m en t of no nc om plianc e w ith se ct io n 122, OR S 

st ip ula te s w h at ac tion s th e go ve rn m en t m ust ta ke in ord er to be in complian ce. Mos t go ve rn m en ts resp on de d by eit h er ta kin g th e ne ce ss ar y co rr ec tive 

ac tion or by givi ng OR S ass ura nce th a t th e re qu es te d ac tion wou ld be ta ken . An 

ex am ple of c or re ct iv e ac tio n fr eq uen tly re qu es te d by OR S is th e im pl em en ta tion 

of affirm ativ e ac tion em ploy men t pla ns to elim in at e dis cr im in at ory em pl oy m en t 

pr ac tice s.

As of Ju n e 30, 1975, ORS had foun d in 17 ca se s th a t th e re ci pi en t w as in non - 

co mplianc e w ith se ction 122. In 11 of the 17 ca se s ORS su bs eq ue nt ly de te rm in ed 

th a t th e re ci pie nts had ac hi ev ed co mpl ianc e sta tu s and th e ca se s w er e closed . 

F our ca se s w er e pe nd ing ac tion by OR S or th e re ci pie nt gove rn m en t an d th e 

2 ot he r ca se s ha d bee n re fe rr ed to th e D ep ar tm en t of Ju sti ce by OR S.

M on ito ring is us ed by OR S to as su re th a t a fte r a ca se is clo sed, th e as su ra nce s 

prov id ed by a re ci pi en t go ve rn m en t to co rr ec t p ast dis cr im in at io n or av oid 

fu tu re di sc rim in at io n are even tu ally tr an sl ate d in to ac tion s. F or ex am pl e, in 

ca ses in vo lv in g em ploy men t di sc rim in at io n, OR S ty pi ca lly re ques te d th a t the 

re ci pi en t go ve rn m en t su bm it q u art erl y sta tu s re port s on it s af firm at iv e ac tio n 

plan . OR S as ke d th a t th e re port s des ig nat e by na me, race , nati onal or ig in , an d 

sex al l pe rs on s re cr ui te d, hi re d, or prom oted duri ng ea ch q u art er by th e go ve rn ­

m en t’s depart m ents co vered by th e af firm ativ e ac tion plan . OR S al so as ked th a t 

th es e re port s in cl ud e th e date of hir e or pr om otio n an d th e sala ry an d jo b ti tl e 

fo r al l e mploy ee s i n th e dep ar tm en t.

We id en tif ied seven ca ses w her e th e file s in di ca te d th a t OR S wou ld m on ito r 

th e pr og re ss in im plem en tin g a gov er nm en t's plan an d pro je ct s p ri o r to Ju n e 30. 

1975. F or th e m os t p art , we fo un d co ns id er ab le de la ys an d a lack of follo w- up 

by OR S in it s m on itor in g effo rts . A ct ua l m on itori ng th ro ugh Ju n e 30, 1975, 

co ns isted of OR S rece iv ing re port s from 4 of th e 7 go ve rn m en ts. In on ly 1 of 

th es e 4 ca se s w as th er e ev iden ce th a t ORS ha d review ed th e in fo rm at io n 

su bm itt ed .

In th e re m ai nin g 3 cases , th ere w as no ev iden ce th a t th e m on itoring ac tion s 

ha d been t aken a s o f Ju ne 30. F or ex am ple, in on e ca se th e g ov er nm en t w as as ke d 

to su bm it q u art erl y sta tu s re port s be gi nn in g in Ja n u a ry 1975 on it s effo rts 

to elim in at e em ploy men t di sc rim in at io n. W e fo un d no re co rd of su bm ission 

of th e re port s by th e re ci pi en t go ve rn m en t or ev iden ce of follo w- up by OR S. 

In th e oth er 2 ca ses. OR S pl an ned to co nd uc t on -site insp ec tion s to m on itor 

th e im pl em en ta tion of th e co rr ec tive ac tion s, but we foun d no ev id en ce in th e 

files th a t th e on -site in sp ec tion s in eit h er ca se had bee n co nd uc te d th ro ug h 

Ju ne 30, 1975.

OR S re quir es th a t th e ch ie f ex ec ut iv e officer of ea ch re ci pi en t go ve rn m en t 

sig n a co m pl ianc e ass ura nce st ate m ent in dic ati ng th e gov er nm en t’s in te ntion 

to com ply fu lly w ith se ction 122 an d oth er pr ov isio ns of th e Rev en ue Shar in g 

Act. On Ju ne 16, 1975, ORS es ta blish ed new sp ec ia l as su ra nce p ro ce du re s whe reby , 

in ad ditio n to th e st andard co mpl ianc e as su ra nce st at em en t, a re ci pie nt go ve rn ­

men t pr ev io us ly foun d in no nc om plianc e m ust su bm it ev iden ce th a t si m il ar 

vi ol atio ns will not oc cu r in th e us e of fu nds fo r fu tu re e nti tl em ent pe riod s. As of 

Ju ne 30, OR S to ld 2 re ci pi en t go ve rn m en ts w ith un re so lved se ction 122 vi ol at io ns 

th a t th ey wou ld lie mon ito re d in ac co rd an ce w ith th e ne w sp ec ia l ass ura nce 

prog ram. OR S re qu es ted th a t bo th go ve rn m en ts (1) ad op t af firm at iv e ac tion 

pl an s fo r th eir ag en cies re ce iv ing re ve nu e sh ari ng fu nd s duri ng fis cal y ear 1976 

an d (2 ) pr ov id e OR S w ith quart erl y st atu s re port s on pr og re ss in im pl em en ting 

th es e pl an s.

In ho w m any in stan ce s ha ve co m pl ai nt s be en di sm isse d because th ere tea s a

de term in at io n th at re ve nu e sh ar in g fu n d s ha d no t been used in th e act s co mplaine d of? Is th er e ev iden ce th a t suc h di sm is se d co m pl ai nt s ha ve been ce rtifi ed

to ot he r ap pro pr ia te ag en cie s fo r in ve st ig ation ?

OR S di sm isse d 10 ca ses be ca us e of a lack of ju ri sd ic tion. Six of th ese were 

dism issed be ca us e OR S decid ed th a t re ve nu e sh ari ng fu nds wer e not us ed in 

th e are as co m pl aine d ab ou t. In 5 of th es e 6 ca se s OR S eit h er re fe rr ed th e ca se 

to anoth er F edera l agency, or som e oth er Fed er al ag en cy w as alr eady in vest iga ting the ca se. In th e si xth ca se, O RS’ l ett er ad vi si ng t he co m pl ai na nt to co nta ct 

OEO could no t be de liv ered by th e po st office. In 3 of th e oth er 4 ca se s, OR S
ci te d lack of ju ri sd ic tion be ca us e th e di sc rim in at io n co m pl ai nt was no t ba sed on 

ra ce , co lor, nat io na l or ig in, or se x which a re th e are as spe cified in section 122. 

In th es e 3 cases, th e co m pl ai nt s wer e ba sed on age, ge og ra ph ic al loca tio n, an d 

sta tu s as an ex-convict. In th e te n th ca se, OKS de te rm in ed th a t it lac ke d ju ris ­

di ct io n be ca us e th e alle ge d dis cr im in at io n oc cu rred be fore pa ss ag e of th e 

Rev en ue Shar in g Act.

W ha t cr iter ia t ia n O RS fo llow ed in re so lving co m pl ai nt s an d is th e cr iter ia

co ns is te nt w it h th at ap plied by oth er Fed er al agencie s?

T he cri te ri a used h.v OR S to reso lve civil ri ghts co m pl aint s are de rive d fro m 

m an y so ur ce s, in clud ing th e V.S . C on stitut io n, th e se ve ra l civ il ri ghts laws. 

P re si d en ti al Ex ec utiv e Ord er s, court de cis ions, an d th e Rev en ue Sha ring Ac t 

itse lf. W ith th e ex ce ption of th e Rev en ue Sha ring A ct, th es e same laws an d oth er 

pr ov isions co ns titu te cri te ri a which also ap ply to th e pro gr am s of oth er Fed er al 

ag en cies. A se ar ch ma de of th e D epar tm en t of Ju sti ce’s co m pu terize d d ata ba nk 

id en tif ied we ll ov er 100 law s w ith civil ri ghts prov isions .

T hi s pr olife ra tion of civil ri g h ts prov isions has cr ea te d a comp lex , an d some ­

tim es co nfus ing, si tu at io n fo r adm in is tr ato rs , au di to rs , re ci pi en t go ve rnmen ts, 

an d oth er s who mu st de al w ith th em . Agg rega tel y, th es e law s, ex ec ut ive or de rs, 

co urt de cis ions, an d oth er cri te ri a pro hib it dis cr im in at io n ba se d on su ch reas on s 

as race , color , sex , cre ed, nati onal or ig in, age. being ha nd icap pe d, an d po lit ical 

affilia tio n bu t we are no t aw are of a sin gle law which co ve rs al l of th es e pr ohi bi tion s. F or ex am ple, th e Rev en ue Sha ri ng Ac t pro hib its dis cr im in at io n on 

th e bas is of sex, bu t th e 1964 Civil R ig ht s Ac t does no t. F urt her m ore , ac tivitie s 

in which di sc rim in at io n is pr oh ib ited includ e pu blic ed uc at io n, ho us ing, pu blic 

em ploy men t, pu blic fa ci lities , contr act aw ar ds, an d man y ot he rs , bu t th e ex te nt 

of c ov er ag e un de r a giv en l aw may b e br oa d or lim ite d. For ex am ple, th e Re ve nu e 

Shar in g Act pr oh ib its dis cr im in at io n in pu blic e mploy men t in an y ac tivity fu nd ed 

in who le or in p a rt w ith re ve nu e sh ari ng fu nd s bu t di sc rim in at io n in pu blic 

em pl oy men t is pr oh ib ite d unde r T it le VI of th e Civil R ig hts Act of 1964 only 

whe re em ploy men t is th e pri m ar y pu rp os e of th e F ed er al fina nc ial as si st an ce 

invo lved.

F u rt h e r co mplex ity in civil ri g h ts adm in is tr ati on an d en fo rc em en t oc curs 

wh en an ag ency is aut hor iz ed un d er one p art ic u la r la w to ex er ci se th e powe rs 

an d fu nc tion s specified un de r an o th er law . Th e Rev en ue S har in g A ct, fo r exam ple, 

gra nte d th e Sec re ta ry of th e T re asu ry th e op tio n to ex er ci se th e po wers an d 

fu nc tion s co nt ai ne d in T it le VI of th e Civil R ig hts Act of 1964 to en fo rce no ndi sc rim in at io n.

Some civ il right s or ga ni za tion s arg ue th a t th e Sec re ta ry of th e T re asu ry has 

th e au th o ri ty to de fe r a re ci pie nt go ve rn m en t’s re ve nu e sh ari ng fu nd s on th e 

ba sis of a prob ab le ca us e det er m in ati on of di sc rim in at io n by th e Se cr et ar y 

pe nd ing a full ad m in is tr ati ve heari n g o r a decis ion by a co ur t. OR S, on th e ot her 

ha nd , be lie ve s th a t it shou ld no t defe r fu nd s be fore th ere has bee n a fin din g of 

dis cr im in at io n as a re su lt of a due proc ess adm in is tr ati ve or court pro ceeding .

To ga in som e in sigh t in to ho w oth er ag en cies de al w ith d efe rr al of Fed er al 

fu nd s to re ci pi en ts agai nst which al le ga tion s of no nc om plian ce w ith di sc rim in ati on pr ov isions ar e lodged , we ta lk ed w ith officia ls of HEW , LE AA , HU D. th e 

D ep art m ent of T ra nsp ort at io n, and th e Office of Fed er al C ontrac t Co mp liance .

The d iscu ssio ns reve aled gen er al ly th a t onc e th e ag en cies ha ve aw ar de d gra nts 

to a reci pi en t, th e fu nd s fo r th os e g ra nts ar e no t w ith he ld pri or to an ad m in istr ati v e he ar in g, th e op po rtun ity fo r a he ar in g, or a de cis ion of th e co urts. Ho wev er. va ri ou s Fed er al ag en cies pr ov id e in th eir re gula tion s fo r th e def er ra l, 

p ri o r to a fo rm al he ar in g, of g ra n t ap pl ic at io ns fo r la ck of sa ti sf acto ry no ndis cr im in at io n as su ra nc es .

A re co m pl ai na nt s no tified o f th e disp os iti on of th eir gr ieva nc es ?

We fo un d evide nc e th a t OR S had no tified or at te m pte d to not ify th e com ­

p la in an ts of th e disp os iti on of th e ir gr ie va nc es in 40 of th e 43 clo sed cases. In 

th e o th er 3 cases, no tif icatio n had no t bee n mad e be ca us e of appare nt ov er sigh t 

by OR S.

In thos e cases or m atter s whi ch O RS had closed , ha re co m pl ai na nt s been

sa tis fie d th at the prac tic es wh ich fo rm ed th e basis fo r th ei r gr ieva nc es hare or

are being el im in at ed ?

We co nta ct ed th e co m pl ai na nt or th e co m pla in an t’s re pre se nta ti ve in 21 of 

th e 43 clo sed cases . Th e co m pla in an ts we co nt ac te d w er e ge ne ra lly di ss atisfie d 

w ith th e disp os iti on of th eir gr ie va nc es , al th ough a fe w ex pr es se d va riou s 

de gr ee s of sa tisf ac tion. The ba sic re as on fo r th e dis sa ti sf acti on by mos t of th e 

co m pla in an ts was th eir be lie f th a t di sc rim in at io n st il l ex is te d in th e are as 

co m pl aine d ab ou t.
Som e of th e co m pl ai na nt s, or th eir re pre se nta ti ves , w er e also di ss at is fied w ith 

th e wa y OR S han dle d th eir p art ic u la r ca ses. Rea so ns th e co m pla in an ts gav e 

fo r dis sa tisf ac tion w ith ORS’ co m pl ai nt pr oc es sing in clu d ed :

(1 ) OR S fa il u re to co nd uc t a th oro ugh in ve st ig at io n.

(2 ) OR S no t re quir in g a fo rm al sign ed ag re em en t fro m th e gove rn m en t 

sp ec ify ing all ac tion s which wo uld he undert aken to ac hi ev e co mplian ce and th e 

ty pe of st atu s re port s which wo uld he su bm itte d pe riod ical ly .

(3 ) OR S ch an gi ng it s po sitio n in a ca se by origi na lly re quir in g s ev er al act io ns 

by a go ve rn m en t to m ee t co mplianc e and la te r co ns id er in g th e go ve rn m en t to 

be in co mplian ce ev en th ou gh th e go ve rn m en t sa id it wo uld fu lfill on ly a po rt io n 

of t he re qu irem en ts.

E x te n t of co or dina tio n an d co op eration O RS ha s ob ta in ed from it s ef fo rt s to

en co urag e th e ass is ta nce of civil ri ghts or ga ni za tion s, pu bl ic in te re st gr ou ps ,

an d ot he r Fed er al ag en cies to help en su re co mplianc e w it h civi l righ ts.

OR S ha s en ha nc ed co or di na tion an d co op er at ion w ith civil ri ghts an d pu blic 

in te re st grou ps by (1 ) part ic ip ati ng w ith th es e gr ou ps in mee tin gs ar ound th e 

countr y; (2) pr ov id in g th e gr ou ps w ith OR S pub li cati o n s; an d (3) en co ur ag in g 

th e grou ps to ass is t in m on itor in g co mpl ianc e by th e recipien ts.

Th e ex te nt of co ord in at io n an d co op er at io n OR S had received ma y be refle cted 

in th e larg e pe rc en ta ge of ca se s tha t, were opened ba se d on co m pl aint s rece iv ed 

from th e civil ri ghts and pu blic in te re st grou ps . F or ex am ple, of th e 144 compla in ants lis te d in th e 109 civil ri ghts ca se s we review ed , 52 were nati onal 

civil ri gh ts or gan iz at io ns su ch as th e NA AC P an d th e N at io nal O rg an iz at io n fo r 

Wo men an d 50 w er e pu bl ic in te re st or lega l se rv ice grou ps .

ORS ha s ha d ex te ns iv e de al in gs w ith som e Fed era l ag en cie s, p art ic u la rl y th e 

D ep ar tm en t of Ju sti ce's Ci vil R ig ht s Division an d La w Enf or ce m en t A ss is ta nc e 

A dm in is trat io n (L E A A ), th e D ep ar tm en t of H ou sing an d Urb an Dev elop men t 

(I 1U D ), th e D ep art m ent of H ea lth , Edu ca tion , an d W el fa re (I IE W ), and th e 

Equal Empl oy men t O pp ortun ity Co mm iss ion (E E O C ). Ho we ver, we fo un d no 

ev iden ce th a t th es e ag en ci es op er at ed under a fo rm al , co or di na ted pr og ra m .

OR S ha d sign ed co op er at iv e ag re em en ts w ith II EW an d th e EE OC to pr ov id e 

fo r th e ex ch an ge of in fo rm ati on an d to av oi d dup lica tion of in ves tigat iv e work. 

ORS’ ag re em en t w ith II E W also ca lls fo r fu rt h e r di sc us sion be tw ee n th e tw o 

ag en cies which wou ld re su lt in H EW re pre se nting OR S in co mplian ce audit s. 

OR S ha s ob tain ed from th e EE OC em pl oy m en t d ata which is be ing us ed in a 

te st pr og ra m th a t will co m pa re a gov er nm en t's em pl oy men t data w ith labo r 

fo rc e st at is ti cs . OR S and th e EE OC also ag re ed to jo in tl y pu blish a “G uidebo ok 

on Equal Em pl oy men t fo r Pu blic Em ploy ee s" wh ich is ex pe cted to be pri nte d 

in Ja n u ary 1976. The pu bl ic at io n is to assis t em ploy ers in comp lying w ith civ il 

ri ghts pr ov isions of th e ac t. I t will also in cl ud e a se ct io n on th e no ne mploy men t 

as pe ct s of th e law .

OR S an d th e Ju st ic e D ep art m ent's Civil R ig hts D ivision ha ve en te re d in to 

a fo rm al ag re em en t whi ch allows OR S and th e Division to av oid dupl ic at e 

F edera l in ve st ig at io ns of S ta te an d loc al go ve rn m en ts. OR S an d th e Division 

wer e al re ad y p art ic ip ati ng in jo in t re vi ew s an d sh ari ng in fo rm at io n in cert ain 

ca ses.

No fo rm al ag re em en t exis ts be tw ee n OR S and LEAA , but duri ng its in ves tigation s th e LEAA in quir es ab out w het her re ve nu e sh ari ng fu nds w er e us ed in 

th e are a covered by th e LE AA gra nt. W he re re ve nu e sh ari ng fu nds ar e invo lved. 

LE AA prov id es O RS w ith in fo rm at io n on th e cases.

OR S an d HUD ha ve be en ne go tiat in g a fo rm al ag re em en t which wo uld pr ov id e 

fo r th e e xc ha ng e of in fo rm at io n.

The Ac tin g D irec to r of OR S ex pr es se d th a t mo st Fed era l ag en cies wou ld ju st 

as soon ad m in is te r th eir ow n pr og ra m s be ca us e th ey ea ch ha ve th eir ow n sp ec ial 

in te re st s an d pr og ra m kn ow ledg e is he lp fu l in dis cr im in at io n de te rm in at io ns . 

H e ad de d, howe ver, th a t be ca us e of th e lim ited en fo rc em en t po wers an in div id ual 

ag en cy m ay h ave, th e ag en cy s eeks to s tr ength en i ts enf or ce m en t p ote nt ia l by u n it ­

in g its effo rts w ith thos e of o th er agencie s.

W hat ac tio ns ha ve been ta ke n by O RS to sy st em aticall y id en ti fy re ci pi en t

go ve rn m en ts in whi ch ci vi l ri ghts pr ob lems m ay exis t ev en tho ug h no co m pl ai nt s

ha ve been file d ag ai ns t th e go ve rn m en ts? W hat is QA O’s as se ss m en t of th e exte nt

to whi ch such pr ob lems m ay exis t w it hout hari ng come to th e at te ntion o f ORS ?

OR S ha s se ve ra l m ec ha ni sm s it uses to ai d in th e id en tifica tion of re ci pie nt 

go ve rn m en ts in which civil ri ghts pr ob lems exis t ev en th ou gh no co m pl ai nt s 

ha ve b een filed again st th e go ve rnmen ts. C oo rd in at io n and co op er at ion w ith oth er 

F ed er al ag en cies to ex ch an ge in fo rm at io n is on e of th e mec ha ni sm s whi ch has
28

ca us ed €»RS to ope n c ivil ri ghts c ases. A sec ond one is th e e st ab lish m en t of fo rm al 

ag re em en ts b etw een OR S an d S ta te c ivil ri ghts ag en cie s. Th e ag re em en ts pr ov ide 

th a t th e S ta te agency wo uld notify OR S of c as es in which re ve nu e sh ari ng f un ds 

may ha ve bee n use d in a dis cr im in at ory man ne r. As of Se ptem be r 25, 1975, ORS 

had en te re d in to ag re em en ts w ith 11 S ta te ag en cies. The ag re em en ts ha ve no t 

been in ex istenc e lon g enou gh fo r us to as se ss th e ir effecti ve ne ss.

A no th er mecha nism used by OR S to ch eck a go ve rn m en t’s co mplianc e sta tu s 

is th e sy stem of S ta te an d loc al au ditors . In Octo be r 1973, OR S issu ed an “A ud it 

Guide an d S ta ndar ds fo r Rev en ue Sha ring R ec ip ie nt s” to ass is t S ta te an d loc al 

audit ors an d public ac co unta nts in unders ta ndin g th e sp ec ial re qui re m en ts fo r 

audit s of reve nu e sh ar in g fu nds and to e st ab lish au d it st an d ard s and pr oc ed ur es .

In its pu bl ic atio n “G en eral Rev en ue Shar in g an d Civil R ig hts ” dat ed No vemb er 4

1974, ORS st ate s th a t it s au d it g ui de is th e firs t of a ny ty pe t h a t re quir es au dit ors 

to re po rt ex tens ively on civ il ri ghts . The gu ide in cl ud es a li st of au d it pr oc ed ur es 

which m us t be pe rfor m ed by audit ors if th e a u d it is to be ac ce pt ed in lie u of an 

OR S au di t. OR S ha d rec eive d ab ou t 1,600 au d it re port s pre pare d by S ta te an d loc al au di- «

to rs and pu blic ac co unta nts th ro ugh Dec em be r 31, 1974. OR S officia ls sa id th a t 

no ne of th es e re po rt s men tio ne d a vi ol at io n of th e no nd is cr im in at io n prov ision 

of th e ac t. It is qu ite ev id en t th a t re lian ce so fa r on th e S ta te an d loc al audit 

sy stem to id en tify po ssible ci vi l ri ghts vi ol at io ns has been ine ffe ctive.

In Dec em be r 1974, ORS be ga n co nd uc tin g co mplianc e audit s on a sample ba sis.

The audit s includ e fin an cial, ci vi l ri gh ts, and oth er co mpl ianc e as pe ct s of th e 

gen er al re ve nu e sh ar in g pro gr am . As of April 22, 1975, OR S had co nd uc ted 22 

audit s and 12 review s of w ork pa per s pre pa re d by in de pe nd en t pu blic ac co un tan ts unde r it s sample audit plan . Four o f th e 22 audit s an d 1 of th e 12 in de pe nd ­

ent pu bl ic ac co un ta nt re vi ew s dis clo sed po ssible civil ri ghts vi ol at io ns which 

were re fe rr ed to th e OR S Civil R ig hts Bra nc h fo r in ve st ig at io n. No ca se s ha d 

been ope ne d on thes e go ve rn m en ts a s of A ug us t 31, 1975.

The Acting D irec to r of OR S sa id in a re ce nt m ee ting w ith us th a t ORS is 

de ve loping ad di tion al pro ce du re s which wi ll he lp to id en tify go ve rn m en ts in 

wh ich civ il ri ghts p roblem s m ay e xi st. ORS pl an s to m ak e a co mpu terize d an al ysi s 

of th e em ploy men t d ata re por te d by ab ou t 4,500 go ve rn m en ts to th e EEO C. Th e 

anal ysi s wou ld id en tify th e 300 go ve rn m en ts w ith th e gre ate st dis pari ty be tw ee n 

th e nu m be r of m in or itie s an d fe m al es in th e ci vi lian la bo r fo rc e an d th e go ve rn ­

m en ts ’ wor k forces an d th e g re ate st dis pari ti es in th e actu al po sitio n sta tu s of 

m in ori ties a nd fem ales by g ov er nm en t de pa rtm en t.

The eff ec tiv en ess of th e ne w pro ce du re ca nno t be asse ssed until it is fu lly es ­

ta blish ed an d im plem en ted . Muc h of it s succ ess whe n im plem en ted will de pe nd 

up on th e c arr yin g ou t of th e field in ve stig at io ns . The Acti ng D irec to r st at ed th at 

he ex pe ct s to ge t oth er Fed er al ag en cies to sh are in co nd uc ting th es e field vi sits.

The leg ac y of w ha t is now reco gn ized as dis cr im in at ory em ploy men t pr ac tice s 

ap pea re d ev id en t from th e co mpo sitio n of th e w’ork fo rc es of m an y o f th e 26 gover nm en ts on which we co nd uc te d case st udie s in a re ce nt review . Th e re port we 

is su ed to th e Co ng res s in Ju ly 1975 is e ntitled “C ase Stu di es of R ev en ue S ha ring in 

26 Lo cal Gov ernm en ts,” GG D-75-77 . A si m ilar re vi ew wo uld pr ob ab ly re ve al the 

sa m e re su lts fo r ot her re ci pie nt go ve rnmen ts. Alth ou gh ea ch go ve rnmen t was 

un ique , we m ad e som e b ro ad g en er al iz at io ns :

In mos t of th e co un tie s, a hig her pe rc en ta ge of fe m ales w as em plo yed by th e 

co un ty t h an the per ce nt ag e of fe m ales in th e ci vi lian la bo r force. The o pp osite w as 

tr u e f or citie s. Th e ci ties ty pic al ly ha d la rg e sa nit ati on, police, an d fire pr ot ec tion *

se rv ices which em plo yed a high pe rc en ta ge of males. Th e co un tie s, on th e ot her 

ha nd, of te n ha d la rg e hea lth an d ho sp ita l, w el fa re , an d social serv ice fu nc tion s 

which e mploy ed a h igh per ce nt ag e of fem ale s;

Si x of th e go ve rn m en ts had no Spa ni sh -sur na m ed or blac k em plo yees in th eir 

wor k for ce. In th es e cases, th ere w ere no o r ve ry few blac ks or Sp an ish- su rn am ed 

pe op le livi ng in th e ju ri sd ic tion. In mo st of th e go ve rn m en ts, th e pe rc en ta ge of 

bl ac ks on th e go ve rn m en t’s pay ro ll exceeded or clo sely ap pro xim at ed th e perce nt ag e of blac ks in th e ci vi lian la bor for ce. The op po site w as tr u e fo r Sp an ish - 

su rn am ed ;

H ig her pe rc en ta ge s of wo me n an d m in orities w er e in th e go ve rn m en t's lower 

leve l po sitio ns , such a s cler ic al or m an ua l la bor jo bs ;

Po lic e an d fir e pro te ct io n em ploy ee s were pre do m in at el y w hite ma les , w hile 

bl ac k males were co nc en trat ed in sa nit ati on an d se rv ice m ai nt en an ce acti v it ie s; 

an d
29

The percentage of black and Spanish-surnamed persons hired during the year ended Jun e 30, 1974, generally approximated or exceeded the perce ntage these 

groups represented of the rec ipie nt’s total work force. We found sub stantial evidence th at employment practices, par ticula rly among larger jurisdictions, have changed and are changing to include more minorities and females. Changes are occurring from both self-initiated programs and as a result of legal actions. In making this observation, we did not intend to imply th at civil rights problems faced by local governments and by essentially all American institu tions have been solved. It was clea r th at much remained to be 

done. Mr. Chairman, before I conclude I would like to make several observations about civil rights enforcem ent by the Federal Government and the Office of R ev­ enue Sharing. Differences exist between the numerous civil rights provisions and regulations that apply to various Federal programs. As examples, the Rev­ enue Sharing Act prohibits discrimination in the use of revenue sharing funds on the basis of race, color, national origin, and sex. The Comprehensive Employ­ ment and Training Act of 1973, as amended, (CETA ) also prohibits these four types of discriminatio n but also prohibits discrimination in the use of CETA fund s on the basis of creed, age, political affiliation, and belief. The rehabilitation Act of 1973 proh ibits discrimination agans t handicapped individuals. These differences can confuse the citizen when he or she is atte mpting to ascertain his or her righ ts under various Federal programs and can complicate the Fed eral adminis trators’ efforts to enforce discrimination provisions. In January 1975 when we began our review of the Office of Revenue Sha ring ’s civil righ ts enforcement activities, we found th at ORS had inadequate controls to assure that complaints would be processed in a timely manner. ORS has re­ cently established new procedures and periodic repo rts which it feels will estab­ lish overall control of the complaints when they are received and ale rt the com­ pliance staff of delinquent actio ns so th at complaints can be processed faster. Also, ORS plans to increase its current staff of 5 civil rights specialists by 5 a d­ ditio nal specialists in fiscal year 1979. Because these changes have not, as yet, been fully implemented, we could not assess the effect they will have on complaint processing. In our opinion, an ade qua te civil rights enforcement program includes both the investigation and resolution of complain ts th at are received and the con­ duct of selected reviews or aud its to determin e compliance with prohibitions aga inst discrimination . Las t December ORS began conducting compliance aud its on a sample basis and is curren tly developing a computerized analysis of about 4.500 governments’ employment data to identify governments in which civil rights problems may exist. With the expected increase in complaints during fis­ cal year 1976 and ORS’ plan s to conduct compliance audits and investigate gov­ ernm ents identified by the computerized analysis, it is obvious that the increased civil rights staff of 10 specialists will have a sub stantial amount of work. During the past 2% years, we have issued 5 reports to the Congress on the operation of the revenue sh aring program. I have attach ed to this statem ent a list of the 5 repo rts and a description of other review’s we have in progress. This work has led us to certain overall observations w’hich I would like to mention 

before concluding. If the Congress wishes to provide financial assistance to Sta te and local governments under a program which has as its purpose simply giving recipients discretion in the use of the funds provided, then general revenue sharing is certainly a way to achieve this objective. We believe, however, that the act’s requirements th at the funds be used for certain “priority exp end itures” and th at the recipient must comply with certain other expenditure restrictions are not compatible with the revenue sharing concept. Further, as we have previously reported, recipients can arrange to use revenue sha ring funds in ways required by the act and then use their own displaced funds in oth er are as where the restric tions on the use of revenue sha ring funds are not observed. We have recommended that most of the expenditure restric tions be 

eliminate d if the program is renewed. There are. however, tw’o requirem ents—civil rights and citizen par ticipation—- which we believe should be reta ined and made more effective. The existing reven ue sha ring legislation prohibits discrimination in any pro ­ gram or activity that is wholly or partiall y funded with revenue sharing. Be­ cause recip ient governments can avoid directly using the fund s in a program 

62-331—75-----3
30

or activity where potential discrimination problems exist, we suggest tha t any 

act renewing revenue sharing provide tha t a government receiving revenue 

sharing could not discriminate in any of its programs or activities regardless 

of the source of fund ing: and revenue sharing funds could be withheld, afte r 

a due process finding of discrimination, pending acceptable plans or actions 

to correct discriminatory practices regardless of whether revenue sharing 

funds were involved.

The Revenue Sharing Act requires tha t recipient governments publish their 

planned and actual uses of revenue sharing funds. When a recipient government spends revenue sharing funds for activities tha t were previously financed, 

or would have been financed, from other revenues, considerable latitude exists 

for use of funds thus freed. The impact of revenue sharing, in this situation, 

would occur w’here the freed funds are used, and reports which describe only 

the uses of revenue sharing funds could be misleading.

In our September 9, 1975, report to the Congress entitled “Revenue Shariny: An Opportunity for Improved Public Awareness of State and Local Government

Operations,” we recommended that a government receiving revenue sharing 

should be required to provide the public with (1) comparative financial data 

on the sources and uses of all of its funds showing its overall plan and results 

of operations; and (2) an opportunity to express their views on the government’s plans and activities.

These changes would give revenue sharing a clear threefold objective of (1) 

allowing recipient governments to use the funds in areas they consider to have 

the greatest need, (2) increasing public awareness of, and opportunities for 

citizen participation in, the determination of these needs, and (3) assuring tha t 

every citizen has an equal opportunity to benefit from the services provided to 

fulfill these needs.

Mr. Chairman, that concludes my prepared statement. My associates and I 

would be happy to respond to any questions you may have.

TYPES OF DISCRIMINATION CHARGES

Charge Total Percent

Race................ .........................

Race and natio nal or igin____

Race and sex ................ ...........

Race, national origin, and sex

National or igin.........................

National orig in and sex ..........

Sex.............................................

Nonsection 122 charge............

To tal..............................

57 52

12 11

6 6

9 8

6 6

2 2

11 10

6 6

109 *100

i Numbers do not add due to rounding.

TYPES OF ACTIVITIES IN WHICH DISCRIMINATION ALLEGEDLY OCCURRED

Type of activity Total Percent

Employment............................................................................ . . Employment and se rv ic es.................................. "

Employment and facilities____ __________________ ” ”

Employment services and facilities ......................................................................................." "

Employment and contract awards................................................................................................

Employment and awards of revenue sharing money................................................................

Employment services facilities and revenue sharing planning boards....................................

Services............... ............................................................................................................................

Services and facilitie s................................................................................................... ................

Services and contract awards.......................................................................................................

Fa cilities............................................................................................................." * .....................

Revenue sharin g advisory board_________ _______ ______

Other.......... “. ................................................................................................

54

12

6

4 

2 

1 

1

10

7

1

5 

1 

5

50

11

6

4 

2 

1 

1 

9 

6 

1

5 

1 

5

Total..................................................................................................................................... 109 > 100

* Numbers do not add due to rounding.
31

ORS DISPOSITION OF 1973-74 CIVIL RIGHTS CASES 

|As of June 30,1975]

Special

Closed Active status Total

Finding of non co m plia nc e. .............. . .................................

No viola tion..........................................................................

No form al noncompliance decision by OR S........................

Lack of juris diction..................................................................

Complaint withdrawn.

Pending.

11 4 2 17

9 ....................................................... 9

1 1 0 ...................................................... 10

1 0 ...................................................... 10

3 3

............................. 56........................V 60

Total 43 60 6 109

1

 In 4 of these cases, ORS m onitored couTt proceedings. In the other 6 cases, ORS contracted the recipient governments 

and, based on responses by the governments and /or findings of its own investigations, recommended actions to satisfy 

sec. 122 requirements witho ut the issuance of a noncompliance letter.

ATTACHMENT IV

Summa ry of R ev enue Sha ring Rev iews Completed and in I’rocess at

October 8, 1975

ISS UE D REPORTS

Revenue Sharing: Its Use By and Impact on State Governments (B-146285 

dated August 2, 1973) Revenue Sharing: Its Use By and Impac t on Local Governments (B-146285 

dated April 25,1974) Revenue Sharing and Local Government Modernization: A Conference Report 

(GGD-75-60 dated April 17,1975) Case Studies of Revenue Sharing in 26 Local Governments (GGD-75-77 dated 

July 21, 1975) Revenue Sharin g: An Opportunity for Improved Public Awareness of State and Local Government Operations (GGD-76-2 dated September 9, 1975)

REV IEWS IN PROCESS

Ti tle : Review of Tax Data Used in Allocating Revenue Sharing Funds Results to dat e: Current definition of “adjusted taxes,” which are used in formula to allocate revenue sharing funds, does not indicate a local government’s total revenue efforts. Report will probably recommend th at the Congress consider adding other types of local government revenues (such as payments in lieu of taxes, profits transferred from utility operations, and service charges which often are assessed in lieu of taxes) to the adjusted tax figures used to allocate 

revenue sharing.

Report target d at e: October 1975. Ti tle : Review of Compliance Program of the Office of Revenue Sharing Results to date: Report will describe number, quality, and effectiveness of compliance audits completed by the Office of Revenue Sharing, State audit groups, CPA firms, and others. The report will assess the meaningfulness of certain restrictions on the use of the funds and the value of auditing for compliance 

with these restrictions.

Report targ et d at e: December 1975. Title : Review of Civil Rights Enforcement Activities of the Office of Revenue Sharing (Review requested by House Committee on the Judiciary) Results to date: Report will analyze Office of Revenue Sharing’s civil rights enforcement activities showing number, basis, origin, and disposition of cases. The Office of Revenue Sharing’s crite ria and processes will be compared with 

those of other agencies.

Report target date : November 1975. Ti tle : Review of Effects of Revenue Sharing on Certain Townships and 

Counties
32

Results to date : Functions, revenues, and expenditures of many midwestern 

townships have decreased rela tive to other forms of local government. Revenue 

sharing , as a new source of revenue, may have slowed this trend. Many tow nships 

ar e now performing essentially one function such as road rep air or poor relief. 

These single-purpose townships are more like special dis tric ts (which do not 

receive revenue sharing ) tha n like general purpose governments. Report will 

probably present several alte rna tives for the Congress to consider as means of 

determining which governments should be eligible to receive revenue sharing.

Report target d ate : December 1975.

Titl e: Review of Revenue Sharing Funds Received by Indian Tribes.

Results to date: Report will probably recommend that allocation of revenue 

shari ng funds be made based on trib e’s share of Sta te population rather tha n 

its sha re of county’s are a population. Report will show that requirement th at 

tribes use funds in county from which fund s are derived eliminates tribe’s 

ability to use funds for gre ate st needs, and the requirement does not apply to 

othe r’forms of local government. Report will recommend that this requirement 

be elim inated from act.

Report target date : November 1975.

Mr. Edwards. We will be operating under the 5-minute rule and I 

recognize the gentleman from Massachusetts. Mr. Drinan.

Mr. Drinan. This is an interesting report but it does not answer 

several of the questions I have. Of all the Federal programs, I think 

the criticism of this one has been absolutely devastating on the civil 

rights issue. I think it is fair to say that one person took the position 

tha t we need no enforcement.

Until recently that has been the policy. As you people know, there 

has been a coalition of civil rights groups, including the League of 

Women Voters, that has put out a devastating assault upon revenue 

sharing. They concluded that revenue sharing has financed widespread 

discrimination with a multibillion-dollar program in public employment and local services thus what you are proposing gives me some 

trouble.

As you know, the basic problem is fungibilitv. I don’t like the 

word. I use the word in the material here prepared by counsel on nontraceability or invisibility.

The GAO made th is recommendation on page 22 of the testimony 

that the priorities be abolished. I don’t know how they came to that 

or even if they have the right to do that. Tha t is up to Congress and 

they said that Congress intends this to be given in a lump sum for 

the communities to do what they want.

That is not the intent of the act and T am not certain tha t the act 

permits or was intended to permit the local community to reduce their 

taxes and use the Federal money to make up.

In any event, there is no firm recommendation by GAO except to 

wipe out all the categories and somehow on pages 22, 23 and 24, this 

is supposed to resolve the whole thing. T don’t see how this bottom lino 

follows from what you said before.

The fact of the matter is th at unless we have, as the Civil Rights 

Commission recommended 200 or 300 examiners, people going out 

there with an affirmative program, nothing is going to happen.

For example, from my own area, the Boston Fire Department continues to get revenue sharing funds even though they were adjudged to 

lie discriminating by a U.S. district court. Tt was appealed and affirmed. and it is still in litigation and the funding goes on.

There is a clear case where the ORS has been negligent.

Mr. Butler. Will the gentleman yield ?

Mr. Drinan. Y es.
33

Mr. Butler. I am not presuming to pass judgment on whether or 

not they discriminate in Boston.

Mr. Drinan. I assure you they do.

Mr. Butler. Does the Boston Fire Department have revenue sharing 

funds ?

Mr. Drinan. They do, categorically, several million.

Mr. Butler. H ow has the complaint been processed to date ?

Mr. Drinan. I see nothing in the documents that indicates that. I 

have made inquiries but I have inconclusive evidence. All I know is 

they are getting revenue funds. Th at is an example, i t seems to me, 

where funds should have been held up. The OKS has never suspended payment except in the one case where 

they were required to do so by a Fede ral court in Chicago.

In any case, what are you recommending that we do ? I don’t think 

we are going to wash out all the categories or the priorities. I don’t 

think that is the mind of the Congress. As a result you are going to have some categories and you are going 

to have some fungibility problem. I see no data as to how they get 

around that. You say they can always trans fer money from some area 

where there would be discrimination into say the bond indebtedness. 

So what is your recommendation ?

Air. Lowe. Well, Mr. D rinan, based on our studies—we have invested 

a lot of money in studies of revenue sharing, some of i t on our own 

initiative, some of it at the request of various committees on the Hill, 

and this is required bv the Revenue Sharing Act itself, that we make 

studies and report to Congress.

As a result of all of these studies, we have come to a valid conclusion, 

I believe, that the so-called restrictions or priority expenditures are an 

illusion. They are meaningless and the reports purporting to repo rt 

what was expended under those things are also.

Air. Drinan. They are meaningless. I agree.

Air. Lowe. Since they are meaningless, we propose tha t we recognize them as such and do away with them.

Air. Drinan. We can have this federal money go to towns and cities 

and States and it is accounted for. Fran kly it is irresponsible of the Federal Government to throw $39 billion out there in the next five 

years and have absolutely no way of having an accounting.

The documents we get ahead of time and then afte r the spending 

mean nothing.

Air. Lowe. This is the second p art of our recommendation and i t is 

included in this pa rticular report.

Air. Drinan. I have tha t righ t here, sir.

Mr. Lowe. We have several illustrations in there which clearly 

demonstrate that the statements tha t are now made—

Air. Drinan. We all agree on it but if you wipe out all the categories, 

all the priorities, how are you going to have any effective civil r igh ts 

compliance?

Air. Lowe. I think tha t is the g ist of our two propositions.

Air. Drinan. They are not supported by the evidence and they are 

not persuasive to me. Tha t is my problem. Aly time has expired but 

you can finish.

Air. Lowe. One of the propositions is that the S tate of—the S tate or 

local government receiving revenue sharing funds would have, to be in.
34

civil rights compliance in all of its activities whether funded with some 

revenue sharing funds or not.

At tha t stage, the fungibility question becomes moot. I f Congress is 

interested in having people at the local level know what is happening 

in their government and what their expenditures are, I think this 

present procedure is a mistake.

To have a public hearing on how you are going to spend revenue 

shar ing funds, where the revenue sharing fund may constitute 5- or 10- 

percent of the budget, seems to me to be a waste of time. I think the 

citizens ought to be concerned with where 100-percent of the budget is 

going.

The proposition we are making here is, in effect, that this be combined in one statement so the citizens that are in a pa rticular locality 

have some knowledge of what is happening with the total budget, not 

just the ten percent or the 12-percent or the 5-perccnt or so th at lias 

to do with revenue sharing.

I think that is a very valid point to make. I have seen a lot of studies 

of revenue sharing—where first the study recognizes that the so-called 

priority expenditures areas in the law and in the reports are not valid 

and then it adds all those up together and says but look when we add 

those together, there was not any money spent on social services.

What you really have to do is take the total income and the total 

expenditures of tha t particular government and see what happened to 

them. I don't think you can do it just with revenue sharing.

Mr. Hair has had a lot of practical experience in county and local 

government and I wish he would address th at point just a bit.

Mr. H air. I don’t think there is any way th at you can—at least we 

have not discovered it and we would be happy to examine anyone’s 

ideas on it—but I seriously question there being any way th at you can 

get an effective determination by priority categories except if you have 

a list not nearly as long as the act now has.

The accounting records can clearly show—and we are not quarreling with this—tlie accounting records can show tha t the money was 

spent in the police department or the fire department. It is a simple 

designation process. But the actual direction of the funds may be somethin g entirely different. The possibility of this misleading information 

is what has concerned us.

There is talk about how much money was spent in public safety 

and other things and we are convinced tha t these statements quotecl 

and used have absolutely no validity. At least they cannot be proven 

to be valid. The suggestion and the presumption after examining it is 

heavily on the side tha t they are not valid.

I don’t know of anyone who is now still supportin g that the priority 

category expenditures reports have any real validity. The question th at 

you asked, how then will we get at the civil rights question, we believe 

is covered by our general recommendation, that is, in order to qualify 

for receipt of revenue sharing funds and be subject to withholding of 

all or a portion of those funds, a government must be able to stand 

the test tha t it is not discriminating in any of its programs.

The same type of auditing procedures and other procedures that we 

use to trace these moneys in fictitious categories can be used to examine 

them in terms of the total operations of the government.

We think tha t our recommendations in this matter are practical 

and are workable. However, we are not unmindful of the problems of
35

opening up th e c om plain t process to th e e ntire op era tio ns o f all o f the 

local gov ernme nts an d Sta te governm ents th at receive fund s un de r 

gen era l reven ue sh ari ng.

Th ere is littl e que stio n ab ou t t he fact t hat such a pro vision th at we 

are recom mending will r esult, I th ink in a lar ge num ber o f c ompla ints 

an d the gen era l pat te rn of dev elopment th at wou ld pro bably lead to 

most gover nm ent s ha ving to ad op t affirmative actio n hi ring pla ns 

on th e question of discrim ination in emplo ym ent th ro ug ho ut the 

country.

Th is we th in k is prob ab ly good bu t we are no t un mindful th at it 

pr ob ab ly needs con sidera ble guida nce by th e Congress as to est ablishing leg islative stan da rd s as to wh at would qu alify as accepta ble 

pla ns.

We have given the m at te r of congressional leg islative gu ida nce only 

a lit tle consider atio n. T hat is mo stly m y own perso nal opinion. I do n’t 

wa nt to indica te th at as any tilin g co ming ou t of audit .

I am conv inced th at if th e Congres s does agree it will also hav e to 

give some guida nce as to wha t wou ld be acc eptable in ter ms of affirma tive ac tion hirin g plans.

Mr. D rin an. Than k yo u. I am sti ll u npers uaded.

Mr. E dwards. Mr. B ut ler?

Mr. Butler. Th e f irs t ques tion deals with several thing s. How much 

mon ey ha ve we sp ent on s tudy in g revenue sh arin g ?

Mr. L owe. I am no t sure how much the governm ent as a whole has 

spe nt. I t is a very pop ul ar su bje ct thes e d ays fo r s tud y. We ha ve spent 

up wards o f $2 m illion I believe and I can ex plain why.

One of ou r studie s when we sta rte d fin din g out th at these rep orts 

were meaningless involved 250 local g ove rnm ents. T hat is a tr em end ous 

am ou nt of ma npow er requ ire d and the cost of th at job was very 

subs tantial.

You d o two or three o f th ose you are up in th e $2 million ca tegory.

Mr. Butler. I un de rsta nd th at bu t I would like to know. I do not 

wan t to send you off on ano ther study.

Mr. L owe. Yes, sir.

Mr. Butler. But I do wan t to be told then wh at is the sta tus of the 

Bos ton F ire D ep artm en t and wh at has been done.

Mr. B adillo. If the gen tle ma n w ill yield , I can answer th at que stion.

It is in the GAO re po rt on 26 jur isd iction s. It says of the fire depa rtm en t case in Boston, th at the NAACP filed su it alleging a pr ac ­

tice of discri mi natio n in the fire de pa rtm en t ag ains t blacks and 

Sp anish -sp eakin g people.

Th e U.S. distr ict court decided th at the qualifications tes t was discri minato ry and ord ere d its use stopped. I t ordered th at mi norities 

and Sp anish -sp eakin g people were to be incl ude d. At the pre sen t time 

revenu e sha rin g funds are b ein g a lloc ated to the fire d ep artm en t.

Mr. Kindness. W as the action brou gh t un de r the Civil Bi gh ts Ac t 

or unde r the R evenue Sh ar in g A ct ?

Mr. Badillo. Revenue sh ar in g acc ord ing to th is r eport.

Mr. Butler. You a ll have no k nowledg e b eyo nd th is p oin t ?

Mr. L owe. No, sir.

Mr. B utler. W hen th e J us tic e D ep artm en t is he re, we w ill ask the m 

why th ey do not ask fo r t he f urther relie f. W ith refere nce t o the o ther 

asp ect, h ave you mad e a n effort to dete rmine how mu ch of th e revenue 

sh arin g op erating fu nd is now going to com pliance an d how mu ch of 

it is going to civil rig ht s ?
3G

Mr. Lowe. We have not. We will incl ude that in our final rep ort.

Mr. Butler. I am imp ressed with the testim ony 1 h ave heard thu s 

far. I am somewhat cri tical of the civil rig ht s enfo rcement of the OR S 

bu t it has reflected inve ntivenes s. You tell us th at th is is the firs t 

agen cy en terin g into coo perativ e agreem ent s with othe r agen cies to 

exchange inf orma tio n which is sign ificant.

Th ey hav e coopera tive agreem ent s with St ate agencies in orde r to 

help com pliance and this is a new area. Th ey ha ve also develop ed th eir 

own guide lines in this are a which s hou ld imp rove com pliance. Fin al ­

ly, t hey a re u nd ertaking dou bli ng the ir staf f in refe rence to th e enforceme nt of th e civil rig hts area.

W ith th is bac kgrou nd, I th in k th at t he Office o f Revenue Sh ar ing is 

ma kin g a s incere effort to com ply w ith the law and if t he re are s ho rtcomings, it is the fa ul t of Congress and not the agency.

I am som ewh at inte res ted in you r su ggestion t hat the wa y to e nforce 

the civil righ ts provisions is by a req uir em ent th at all pa rtic ip at in g 

localities be absolut ely pu re in orde r to receive any revenu e sh aring 

fund s a t all. Is it yo ur view th at th e law does not p res ently pe rm it the 

imposition o f t his h igh s tand ar d?

Mr. L owe. I do not believe th e law presently perm its the m to hold 

the loca l gov ernment or the S ta te gov ern me nt to an ythi ng e xcept the 

reve nue s ha rin g money.

Mr. Butler. In pa rticul ar, th e prese nt law does not autho riz e the 

wi thho lding o f reven ue sh arin g money oth er th an fro m the pa rticul ar 

functio n to which it is directed . Th e fu ng ibili ty concept has to be 

imple me nte d legislativel y in or de r to ca rry out the sug ges tion you 

make here.

Mr. Lowe. Yes, si r; th at is c orrect.

Mr. Butler. On the same line, on th is re po rt da ted Septe mb er 9, 

“A n op po rtun ity for impro ved public awaren ess of St ate and local 

governm ent o peration s,” I h ave n ot seen a copy o f i t, and th at is prob ­

ably my fault.

But I judg e th at you are read in g into the Revenue Sh ar in g Ac t a 

policy th at , basically, one of th e responsibilitie s an d th e fun ctions of 

the act is to imp rove pub lic awareness or is th at the policy you are 

suggest ing we now imple me nt ?

Mr. Lowe. I think th at in th e act as it is now constitu ted , the p olicy 

is th at there will be impro ved pub lic awa reness insofar as revenue 

sh aring fund s are con cerned. Th e th in g th at bothe rs us is th at t hat is 

sort of meanin gless. For example, in th e back of this re po rt, a nd I will 

fu rn ish th is copy to you, we h ave a ch ar t sho win g a h yp oth etical govern men t’s money going in the po t at the to p an d out at the botto m.

We also hav e a typic al kind of budget th at we are ta lk in g about 

wh ich would show for a town o r a ci ty the total reso urces c oming into 

th at pa rtic ul ar government, no t just reve nue sh aring bu t all of the 

othe r Fe de ral gr an ts whi ch in ma ny cases do n’t show up in a local 

go vernment’s bud get. An d some req uirem ent s which we are sug ges ting here fo r prop er p ub lic ity an d open he arings o n th e whole budget 

system—not ju st on revenue s ha rin g. W e t hi nk t hat it is r at he r meaningless to hav e a he aring on revenu e sharing, sayin g th at it is going 

to be used fo r t he fire d ep artm en t whe n y ou really h ave to look at the 

whole picture to find ou t wha t is happ en ing in the local government.
37

Mr. Butler. This is going beyond the legislation as it presently exists, the policy of the General Accounting Office beyond the original 

intent of the Congress.

Mr. Lowe. Based on our study of the law and how it is actually operating at the present time, we came to the conclusion t hat in these two areas, it is rather meaningless unless we make some changes.

Mr. B utler. I would like to say that with reference to that sugges­ tion and with reference to your earlier suggestion about absolute purity, this is not within the purview of the function of the General Accounting Office. I am satisfied when you tell me that there is somethin g wrong. Until we have an opportunity to digest your report and your objec­ tion, I think it is beyond the function of the General Accounting Office to offer us policy suggestions. I am not critical of your work in this area or what you have done in terms of your research or your auditing. But I do feel that if the Congress is abdicating its authority to you, it did th at before I got here and I would like to enter my protest.

Mr. Edwards. Would you like to respond to that ?

Mr. Lowe. I think our office stays away very studiously from rec­ ommending any kind of a new program or a new activity. But I th ink when we are called upon, or at least when we are required by our broad law or by specific law such as this particular one in revenue shar­ ing to make studies, we feel it is our duty to look at the program or the 

activity to see what the results are. In this case, we thin k tha t Congress certainly intended some things to happen, for example, with these p rior ity categories. When we find th at tha t is not happening, we feel we have a duty to call it to Congress’ attention with our own views, whatever they might be. For example, the Legislative Reorganization Act of 1970, requires GAO, on the request of a committee or at the direction of either House of the Congress or on its own initiative to review and analyze the results of Government programs. I think this is what we are thinking about in this case. These are the results we are looking at, what we think set out to be accomplished 

and what is happening. Th at is really my view on that.

Mr. Edwards. Mr. Badillo?

Mr. Badillo. Thank you, Mr. Chairman. I certainly would agree tha t it is impossible for the GAO to discharge its responsibilities if aside from investigating the matter we assign to them, they would not 

be expected to make recommendations. That does not mean they are going to make the final decision. We will do that in Congress. But the purpose of having them prepare a report is precisely so they can make recommendations based upon the 

information they were able to secure in the reports. So I would hope tha t you would continue to do this in this area as you have been doing in other areas. I want to go back to the Boston Fire Department situation because to me it raises a serious question 

about the whole procedure. Here we have a case which has been decided already by the U.S. district court, by the U.S. court of appeals, and the matter is now pending before the U.S. Supreme Court. Both courts ruled against 

Boston.
38

Now they are still getting revenue sharing funds. At what point in 

these procedures is OKS to make a finding of a violation ? I t seems to 

me that once the district court rules against Boston the funds should 

have stopped right there.

What does the procedure provide for cutting off funds ?

Mr. Williamson. It depends on whether it is in a court or an administrative hearing. It provides for cutting off funds at the end of a 

due process administrative hearing if there is a finding of discrimination or on a court order.

Mr. Badillo. The district court finding-----

Mr. Williamson. They certainly could have cut off the funds after 

the district court ruled against Boston.

Mr. Badillo. Otherwise the jurisdiction could go on violating th e 

law and it might take years to get to the Supreme Court. Then they 

have an argument th at it should be cut off a t the time tha t there is a 

finding of discrimination.

Mr. L owe. Tha t is a question I really can’t answer f or you. I wish 

you would—I suggest you take that up with the revenue sharing 

people.

Mr. B adillo. I just wanted to know what the regulations now provide. In the first section of you r testimony you went into the question 

of complaints. The complaint procedure is fine if there is an end to it, if 

there is some point at which the complaint is acted upon i f it is found 

to be valid.

That is the point you did not touch upon. At what p oint is the complain t found to be valid and is action taken ? With respect to the 1,600 

audits, you mentioned there are something like 39,000 units of local 

government. If you have only received reports from 1,600 units, that 

really works out to less than 5 percent.

Tha t is very inadequate compliance, it seems to me.

Mr. Goldbeck. I am not sure of the exact number, Congressman. 

But a report has to be submitted in the case of revenue sharing only 

where the auditor found some problem. If he did not find a problem, 

the. OKS aud it guide says we do not want a report.

Mr. B adillo. In the 1,600 cases there was a problem?

Mr. Goldbeck. Many of those they sent in automatically.

Mr. Badillo. It says OKS has received 1,600 audit reports prepared 

by State and local auditors and public accountants. Tha t seems to indicate that is all tha t was received.

Mr. Goldbeck. There were other audits that had been done but they 

did not send a copy to OKS.

Mr. Badillo. Can you say there were 39,000 audits prepared ?

Mr. Goldbeck. No, sir. I am sure 39,000 were not prepared. I am sure 

it is substantially greater than the 1.600.

Mr. Badillo. I would like to find out how many of them were prepared. If it is 1.600, that is bad.

Mr. Lowe. There is no way you can tell. The audit regulations put 

out by the Office of Revenue Sh aring only require that an audit report 

be sent in if there is some reason that the auditor feels it ought to be 

sent in. There is no way you can tell how many were not done.

Quite a few of these 1,600 were sent in automatically without any 

particu lar reason for them to be sent in. There is no requirement in 

some places th at audits be conducted. We would not have any way of 

knowing how many were not done.
39

Mr. E dwards. Mr. Kindness?

Mr. Kindness. Thank you, Mr. Chairman. I would like to point out tha t your statement indicates that a letter dated December .30, 1974, from the chairman of the House Judiciary Committee is the basis for this testimony and th at the testimony is stated in response to a series of 

questions. .

Since 1 do not seem to have access to that letter, will you be kind 

enough to provide a copy of that letter ?

Mr. Lowe. Yes, sir.

[A copy of the letter follows:]

Congress of th e United States,

Comm ittee on th e J udiciary,

House of Representatives, 

Washington, D.C., December 30,197$.

Mr. Elmer B. Staats,

Comptroller General,

General Accounting Office,

Washington, D.C.

Dear Mr. Staats : As you know, in September 1973, the Subcommittee on Civil Rights and Constitutional Rights of the House Committee on the Judiciary held a preliminary hearing on the administration of the civil rights provisions of the Revenue Sharing Act (State and Local Fiscal Assistance Act of 1972). With the Act coming up for renewal during the 94tli Congress, the Subcommittee intends to conduct comprehensive hearings into how the Office of Revenue Sharing (ORS) has discharged the civil rights enforcement responsibilities assigned to it under the Act. To assist in the Subcommittee’s evaluation efforts, it would be most helpful if GAO would review and report to the Subcommittee on the activities of ORS in this area. Specifically, the Subcommittee is seeking information on the manner in which ORS has handled civil rights complaints which have come to its attention. This 

would include answering such questions as : 1. How many and what kind of civil rights complaints have been received by 

ORS through December 31, 1974? 2. How are the complaints processed by ORS and how quickly are they 

investigated? 3. What disposition has been made of complaints received through December 31,

1974? . . . 4. Are formal compliance agreements entered into with recipient jurisdictions 

that have been the subject of complaints? 5. What is the extent and nature of ORS’ monitoring of any such agreement?

6. In how many instances have complaints been dismissed because there was a determination tha t revenue sharing funds have not been used in the acts com­ plained of? Is there evidence t ha t such dismissed complaints have been certified to other appropriate agencies for investigation? 7. What crite ria has ORS followed in resolving complaints and is the criteria consistent with tha t applied by other Federal agencies? 8. Are complainants notified of the disposition of their grievances? 9. In those cases or matters which ORS has closed, have complainants been satisfied tha t the practices which formed the basis for their grievances have 

been or are being eliminated? It is my understanding that a basic pa rt of the compliance philosophy of ORS has been to encourage the assistance of civil rights organizations, public interest groups, and other Federal agencies to help insure compliance with the civil rights provisions of the Act. We would be interested in information on the extent of coordination and cooperation ORS has obtained. We are also interested in any actions the agency has taken to identify, on a systematic basis, recipient governments in which civil rights problems may exist even though no complaints have been filed against the governments. Similarly, the Subcommittee is inter­ ested in receiving some assessment of the extent to which such problems may exist without their having come to the attention of ORS. I understand tha t members of the Subcommittee staff have held discussions with GAO representatives and tha t they have agreed that the proposed review would be complimentary to reviews of the civil rights aspects of the Revenue
40

Sharing Program that GAO now has in process. It was also agreed tha t information gathered for the Subcommittee could be used in other GAO studies of the 

OKS compliance system. Considering the Subcommittee’s plans for hearings, I 

would hope that your report to the Subcommittee could be completed by July 

1975. I am confident th at the report will be a very useful document to the Subcomm ittee and the Congress during deliberatio ns on renewal of the revenue 

sha rin g legislation.

Sincerely,

Peter W. Rodino, Jr.,

Chairman.

Mr. K indness. I find that the statement that was made here earlier 

indicated that it is irresponsible for the Federal Government to send 

this money out to local governments and State governments without 

some greater degree of control.

I think for the sake of balance it might be pointed out that on the 

part of Congress it is irresponsible for the Federal Government to be 

draining all this tax money out of these local governmental jurisdictions in the first place. I thin k that is the basic thing tha t seems to be 

overlooked in regard to the general revenue sharing program, as a 

beginning point.

There are those who are seeking, it appears, to make revenue sharing 

the vehicle for extending into every State and local government a 

degree of complete control from the Federal level over the operations 

of local and State government. This is the kind of control that will 

properly be characterized, I think, as Federal totalitarianism. In this 

case it is being done under the guise of a very acceptable cause or purpose, relating to civil rights and citizen participation.

But it is just a begining point for that kind of totalitarianism tha t 

is foreign to our system and I think the record needs a little b it of 

balance on that point.

I want to thank you for your statement here this morning which 

I think, from all I can tell without having had a copy of the letter 

previously, is very responsive to the inquiry requested of the GAO.

I would just like to ask with regard to the recommendation that 

begins on the next to the last page of your statement whether the 

process o f requiring absolute purity, as it has been referred to here 

earlier, in order for a State or a local governmental unit to participate 

in general revenue sharing, in your opinion, can ever work ?

Is not the result of a proposal like th at being worked into the law 

destruction of the revenue sharing program ?

Mr. Lowe, No, I don't thin k so, Mr. Kindness. I think most of the 

governments we are talking about—certainly not some of the smallest 

ones—most of the governments we are talking about already receive a 

large amount of Federal assistance.

As a matter of fact, about 25-percent of expenditures at the State 

and local level are from the Federal Government in one program or 

another. As we alluded in our statement earlier, nearly every one of 

these have some sort of requirement about civil rights. So for practical 

purposes a very large percentage of the governments, the recipient 

governments’ receipts are already involved in the civil rights function.

We think it is just more sensible to apply this thing on a whole 

basis rather than a piece at a time.

If I could point out a report th at we issued here sometime ago on the 

fundamental changes needed in the Federal assistance to State and 

local governments. In this particular report, we talked about there
41

being 975 programs of one kind or another with gran ts for State and 

local governments.

The fact is tha t this particular morass of regulations and programs 

is really something of a problem to State and local recipients. In this 

particular report one suggestion is th at there should be consolidation 

of many similar kinds of programs.

For example, in a followup study we are doing on this thing rig ht 

now, we have found tha t there are about 25 different types of planning 

gran ts administered by 15 different Government agencies.

Now tha t thing is illustrated in this report. Obviously, revenue sharing is the other side of the coin. It is a simple program and the local 

government can do what it wants with it.

These meaningless restrictions and categories should be done away 

with and since the money is fungible, the civil rights restrictions should 

apply to all expenditures of the local governments.

Mr. Edwards. Mr. Seiberling?

Mr. Seiberling. T hank you, Mr. Chairman. I must say I welcome 

the recommendations t hat your office has made, Mr. Lowe.

I think that you would not be doing your job if after going into this 

problem as deeply as you have, you did not give us the benefit of conclusions that you think your studies lead to.

Of course it is up to us to adopt them or not. I am impressed with 

your recommendation, too. It does seem to me tha t it is not effective to 

set priorities for revenue-sharing funds because they are too easily 

evaded. Therefore if we are going to set priorities, they are going to 

have to be for all of the funds expended, as a condition of receiving 

revenue sharing and that would tend to defeat the purpose of revenue 

sharing.

I think you have zeroed in now on two fundamental conditions, civil 

rights and citizen participation, which are basic and which no one can 

quarrel with and which do not conflict with the concept of revenue 

sharing. To that extent, I disagree with what. Mr. Kindness has said. 

I don’t think this is an attempt to dictate anything to local governments beyond what the Constitution itself contemplates.

Now I do have some problems about implementing some of these 

things. I would like to ask you first, however, if you happen to know 

whether among the 1,600 audit reports, did they' include an audit of 

Akron, Ohio.

Mr. Lowe. I can look that up. I don’t know.

Mr. Seiberling. It might be helpful in understanding how the audit 

reports work. Akron was involved in litigation involving discrim ination in the h iring of people on the grounds of race in the police department and more significantly there were no blacks in the fire depa rtment and a lawsuit was brought and the court ordered that they a dmit 

a much larger proportion of black people for a period of time until 

there was balance achieved.

They are in the process of complying with tha t court order. I jus t 

wondered whether tha t is the kind of thing that illustrates how difficult 

it is to assure compliance. As fa r as I know, no revenue-sharing funds 

were used to finance the police department or the fire department. 

Therefore, no occasion would exist under the present regulations as I 

understand them, for an audit to be made.

Am I correct ?
42

Mr. Lowe. Under those circumstances, there would not be any problem with the revenue-sharing program, as such.

Mr. Seiberlino. So tha t could explain if there were an audit why 

no possible violations were noted, because there were no revenue-sharing funds involved. This seems to me to dramatize the point that you 

made that we ought to require compliance across the board rather than 

just limit it to revenue-sharing funds.

As to whether we are going to require absolute purity or something like th at, I think that that is another question ana t hat relates 

to the whole question of how f ar they have to go to show compliance 

in order to avoid jeopardizing the ir revenue sharing funds.

Have you any opinions on t ha t or recommendations on it—on the 

degree ?

Mr. Lowe. No we don’t. It is obvious you cannot change anything 

instantaneously. In the studies we made of those 26 governments, 

there were several cases where it was quite obvious th at the pattern 

in the past in employment had discriminated against blacks or women. 

But the current employment practices were being conducted under 

some sort of a plan to overcome t hat history.

Mr. Seiberlixg. I have a similar problem with respect to the other 

suggestion and that is that the government receiving revenue sharing 

should be required to provide the public with financial data and an 

opportunity to express their views.

As a m atter of fact, the city of Akron publishes in the newspaper 

every year its proposed budget. I suppose the people can come to 

the city council chambers and express their views on the budget.

Do you have any recommendations as to the kind of opportunity 

the public should have to express its views?

Mr. Goldbeck. I believe the type of opportunity we had in mind 

was a public hearing on the published report.

Mr. Seiberlixg. A public hearing. I think that makes a lot of sense. 

Thank you. My time has expired.

Mr. Edwards. Mr. Dodd ?

Mr. Dodd. Thank you, Mr. Chairman. I than k the members of the 

panel. I would like to get into an area tha t is of some concern to me 

and I must compliment the GAO for this. I made a request that they 

do a study fo r one on the degree of the problems arising in discrimination against the handicapped.

As you know, section 504 of the Rehabilitation Act of 1973, if it 

had an enforcement mechanism, could be used to combat revenue 

sharing discrimination against the handicapped.

The ORS did not consider revenue sharing to be Federal financial 

assistance. We have asked your office to comment on whether you 

consider Federal financial assistance to include revenue sharing.

Mr. Williamson. Air. Dodd, it is not entirely free from doubt but 

our opinion is tha t it does include revenue sharing. The legislative 

history of th at p artic ular act makes no mention of revenue sharing but 

the legislative history of the Revenue Sharing Act leads us to believe 

tha t Congress would have intended this sort of thin g to be included 

as Federal financial assistance.

So our opinion is tha t this provision does apply to the revenue 

sharing moneys. However, you should note that that does not mean 

tha t it amends the Revenue Sharing Act to include that as another 

category of discrimination.
43

Comp liance procedures in the Revenue Sh ar ing Ac t would no t be 

av ailab le fo r this and section 504 has no com pliance proced ure s of 

its own. Sec tion 504 wou ld cre ate a pr ivate righ t in a handica pped 

perso n discrim ina ted ag ain st an d th at is about it.

Mr. Dodd. I than k you fo r th at statem ent. I wou ld like to quickly 

get to a cou ple of points, one about the lack of coord ina tion. As I 

un de rstand it, OKS entered into cooperativ e agreem ent s with oth er 

Fe de ra l agencies charg ed wi th enforcement of civil rig hts. Ti tle V I 

agen cies, for example. A s alread y stated O KS cou ld or gan ize a periodic 

review prog ram . At prese nt OR S seems to be slow in th is reg ard. Do 

you kn ow why and do you know of any p lan s to s peed up th is process in 

coopera tion wi th these othe r agencies charg ed with tho se respon sibilities ?

Mr. Goldbeck. I believe we have seen some evidence of th em t ry in g 

to speed up in the recent mo nth s. I th in k th at would be applicab le 

to all of th ei r enforcement efforts. Th ey seem to be p ay ing more atte ntio n to comp lai nt proc essing, th e need to speed up.

Mr. Dodd. A re they doing an yt hi ng specifically th at you can point 

out, in term s of staff, rea llocation of fun ds?

Mr. Goldbeck. Th ey are do ublin g th ei r staff.

Tha t is th e plan for thi s c ur re nt fiscal year. T hey a re also continuing 

to negotiate wi th othe r Fe de ral agencies. In disc ussions wi th them , 

the y have tol d us th at un fo rtu na tely the negotia tio n process is long 

an d there is no preced ent because t hey are in th e busin ess fo r t he first 

time .

Mr. Dodd. Y ou are s atisfied th at the y are moving ahe ad in th is area ?

Mr. Goldbeck. Yes. I th in k in recent mo nth s we hav e noticed 

cha nge s o ccurrin g inclu din g new procedures.

Mr. Dodd. An othe r po int, th e com pliance agreem ent s are oft en 

un writte n at leas t in for ma l fas hio n. I th in k all o f us in C ongress are 

aware of the m ounti ng com pla int s about burea ucrat ic paperw ork , bu t 

it would seem to me th at it wou ld be vita lly im po rtan t in ter ms of ju di ­

cial review to have thes e agreem ents, to h ave some record ra th er t ha n 

to h ave to r ely on oral tes tim ony or recall. Cou ld you com men t on th at 

an d why th is has not been done a nd w hethe r o r n ot it w’ould cause any 

serious problems to have a more for ma l record of these com pliance 

agreem ent s?

Mr. Goldbeck. To my know ledge they do still no t have a d ocumen t 

signed by bo th partie s. However, I th in k the y a re now at least sending 

lette rs t o a gov ern me nt which wo uld outlin e th e steps th at th e OR S 

feels are necessa ry fo r compliance.

In re tu rn the gov ern me nt would send back a lette r sayin g we will 

agree to th at . Th ere s till is no fo rm ally signed docum ent by each p ar ty 

invo lved .

Air. D odd. My tim e ha s expired.

Mr. E dwards. Mr. Klee ?

Mr. K lee. In the inter est of tim e, I do no t intend t o use my full 5 

minutes. I do hav e one point of clarifictaion fo r th e record. W ith rega rd 

to the Bo sto n case that has been referre d to th is m orning by a nu mber 

of m embers, to yo ur k nowledge, did you find any comp lai nt filed wr

ith 

OR S to in iti at e administ rativ e remedies in t he Bo sto n case?

Mr. Goldbeck. You mean using a form al hearing, t hat process?

Mr. K lee. Yes.
44

Mr. Goldbeck. No, we did not.

Mr. K lee. So then really the Office of Revenue Sharing is deficient 

in not having reviewed every single Federal district court or circuit 

court civil rights case to find out it there was any potential violations?

Mr. Goldbeck. 1 believe there was a complaint opened up in tha t 

case but the Office of Revenue Sh aring did not institute proceedings 

to have formal hearings.

They did have a complaint opened in th at case.

Mr. Klee. Since the legal remedy was pursued in the Department 

of Justice by virtue of its authority under secton 122c of the act, a 

suit was filed in court; did it request t hat funds be cut otf as one of 

the remedies in that suit?

Mr. Goldbeck. I am not that familiar with the case.

Mr. Klee. It certainly has t hat power under the act, though. Is that 

your understanding?

Mr. Goldbeck. We could find th at out. The Office of Revenue Sharing will be here this afternoon.

Mr. E dwards. I am not going to use my 5 minutes either, gentlemen. 

I would like to just comment on your suggestion made near the end 

of your statement, Mr. Lowe.

What you are saying basically is that cities and States tha t violate 

Federal law should not get a Fe deral handout ?

Mr. L owe. At least as far as revenue sharing is concerned. We just 

thin k it is very difficult to be just a little bit pregnant.

Mr. Edwards. Thank you very much, gentlemen.

Mr. Seiberling?

Mr. Seiberling. Mr. Lowe, according to the Justice Department, 

one of the reasons for not broadening the act's nondiscrimination provisions to cover all of the recipient's activities is that there has not been 

any substantial evidence t hat jurisdictions have been purposely funnel ing shared revenues into nondiscriminatory programs.

Wha t is your opinion with regard to the adequacy of th at attempted 

justification?

Mr. L owe. That statement may or may not be true. I am not sure 

it really has any significance. I don’t think we ever implied in our 

studies of this thing tha t all of the local governments and the State 

governments receiving revenue sharing were deliberately channeling 

it one way or another.

Early on they tended to channel their revenue sharing funds to 

capital programs rather than getting those funds involved in some 

of their ongoing programs for fear that revenue sharin g might one 

day be stopped and they would be stuck with some programs.

I think tha t has eased off a little bit. I don't really think tha t the 

substance of tha t statement really has any significance on the problem.

Mr. S eiberling. Your position as I understand it is th at you can't 

really tell whether revenue sharing is helping encourage compliance 

with antidiscrimination laws unless you have the whole picture covered 

rath er than simply just those particu lar funds traced in a particular 

program ?

Mr. Lowe. Tha t is correct. In this report we have here tha t we 

issued previously on the reporting requirements, we use an example 

on page 9 of the report of an organization that in 1974 spent $729,000 

of its own funds for a police department.
45

In the following year they spent $400,000 of their own funds and 

$420,000 in their revenue sharing hut there was no change in their 

department. In a report that camo into the Office of Revenue Sharing 

tha t we sent to Congress, it showed that that money was spent for the 

Cheyenne Police Department. Actually it had no effect at all on 

the increase or decrease in police departm ent funds.

Mr. B utler. The Cheyenne Police Department, if that is what we 

are talking about, is this a use of the funds to discriminate?

Mr. Lowe. No, sir; this is in our report just illustrating the fact 

tha t the planned use reports and the actual use reports do not give 

you any indication of what the impact of revenue sharing funds was.

In other words, you might look at that and say it is—it must have 

increased th eir expenditures $400,000, but tha t is not true. They just 

funded it p artially with revenue sharing funds tha t year.

Mr. Edwards. Thank you, Mr. Lowe, and gentlemen.

Our next witness this morning has been a long time friend of the 

subcommittee’s, Harold Himmelman, who is now associated with the 

law firm of Ruckelshaus, Beveridge, Fairb anks, and Diamond. Mr. 

Himmelman was formerly Director of the Revenue Sharing Project 

of the Lawyers’ Committee for Civil Rights Under Law, and he is 

testifying this morning on behalf of the Lawyers’ Committee.

TESTIMONY OF HAROLD HIMMELMAN, COOPERATING ATTORNEY,

LAWYERS’ COMMITTEE FOR CIVIL RIGHTS UNDER LAW, ACCOMPANIED BY ABIGAIL TURNER. L AWYERS’ COMMITTEE FOR CIVIL

RIGHTS UNDER LAW REVENUE SHARING PROJECT

Mr. Himmelman. Mr. Chairman and members of the committee, 

I appreciate the invitation of the House Judiciary Committee on Civil 

and Constitutional Rights to testify on the status of civil rights enforcement under the State and Local Fiscal Assistance Act of 1972, 

commonly known as the Revenue Sharing Act.

I practice law in Washington, D.C., and am a cooperating attorney 

with the Lawyers’ Committee for Civil Rights Under Law, a nonprofit organization formed at the request of President John F. Kennedy in 1963 as a means to involve th e private bar in the protection 

of basic civil rights.

The Lawyers’ Committee engages in considerable litigation against 

discrimination in such areas as education, employment and the provision of municipal services and revenue sharing.

I am the former director of the committee’s revenue sharing project, 

and I continue to be involved in an advisory capacity in several 

enforcement actions designed to prevent revenue sharing from causing 

or perpetuating racial discrimination.

Seated with me is Abigail Turner who is now a staff member with 

the revenue sharing project.

As you know the Treasury Department’s Office of Revenue Sharing 

(ORS) is responsible for administering the State and Local Fiscal 

Assistance Act and for enforcing the nondiscrimination requirements 

in section 122. I will use the Law yers’ Committee experience in filing 

complaints of discrimination with ORS—and litigating those cases 

through its administrative compliance mechanism and the courts—to 

62—331— 73------ i
illustrate what we view as majo r deficiencies in the agency’s civil 

rights enforcement program.

Before doing so 1 want to mention tha t two cases I will discuss— 

Ouachita Parish and Chicago—are still in varying stages of litigation. 

As a result my remarks will be confined to matters tliat are already 

part of the public record. Moreover it should be understood th at some 

of what I say has been contested by either local or Federal officials. 

OUACHITA PAR ISH , LA.

Black citizens of Ouachita Parish, La., represented by the Lawyers' 

Committee, filed an administrative complaint with the Office of Revenue Sharing in April 1974. The complaint charged tha t the parish's 

expenditure of revenue sharing funds was perpetuating racial discrimination in street and drainage ditch construction and maintenance, 

parishwide employment, fire protection, and library and recreation 

programs. Plaintiffs also alleged sex discrimination in the recreation 

program.

I have seen firsthand the conditions in Ouachita Parish, a county 

with approximately 125,000 residents. And I am shocked. The blacks 

living in Ouachita Parish, unlike their white counterparts, often reside 

and travel on streets which are unpaved and potholed.

The ir homes and adjacent property are flooded because of poorly 

maintained or nonexistent drainage ditches. Some have used rowboats to get to and from the ir homes. Residents believe fire damage 

to their homes is sometimes unnecessarily severe because fire 

department personnel do not know the location of streets in black 

neighborhoods.

Opportunities for an improved economic status are denied them 

because of the parish’s discriminatory public employment policies. 

The services of the G. B. Cooley Hospital for Retarded Children for 

a long time were denied to black families.

Materials about black people in public libraries are inadequate. 

And in all of these areas the local government annually spends 

$650,000 in revenue sharing, which primarily benefits the white 

community.

Following an onsite investigation in June 1974, the Office of Revenue Sharing confirmed many of our charges and specifically notified 

the parish government in August 1974 tha t it was out of compliance 

in employment in all parish departments receiving revenue sharing 

funds, in construction and maintenance of streets, and drainage 

ditches, and in matters of assuring nondiscrimination by contractors 

working on projects funded by revenue sharing funds.

ORS further notified the parish tha t it had 60 days to come into 

compliance with the nondiscrimination requirements of the State and 

Local Fiscal Assistance Act and asked for affirmative action plans to 

remedy the discrimination. Inexplicably the ORS refused to investigate adequately certain of our other charges.

Sixty days after the issuance of the noncompliance letter the parish 

filed a routine denial of the charges of discrimination and submitted 

no affirmative action plans as requested. Yet the ORS, despite the 

clear requirements of the law, neither institu ted administrative termination hearings nor referred the matter to the Attorney General for 

appropriate civil action. ORS continued sending revenue sharing 

payments to the parish.
47

Because of this inadequate action, the black citizens filed suit against the OKS in Federal court in Washington in April 1975. They charged tha t the ORS failed to investigate adequately their charges of dis­ crimination and tha t the agency had failed to insist upon adequate remedies for the discrimination it had found. They further asserted tha t a pattern of discriminatory provision of basic services continued unabated in Ouachita Parish with the 

aid of revenue sharing. Incredibly the OKS responded by suddenly finding the parish in compliance with the nondiscrimination requirements of the act on the basis of legally insufficient general pledges from parish of­ ficials to do better. OKS required no written affirmative action plans spelling out specific steps for overcoming discrimination. The parish’s promises and ORS' acceptance of them fail to comply with stand­ ards established by the Federal courts and other Federal civil rights 

enforcement agencies. Although on June 27, Judge John P ra tt of the U.S. District Court for the District of Columbia denied the plaintiff’s motion for emer­ gency relief, he said the case warranted a hearing on the merits. J lie 

parties are now preparing for a trial. Black citizens in Ouachita Parish who have historically been denied equal municipal services at the least have had their rights to equal benefits from revenue sharing unduly delayed because of the posture taken in the case by the Office of Revenue Sharing.

CHICAGO LITIGATION

In September 1973 the Lawyers’ Committee, along with the Center for National Policy Review and the law firm of Kirkland, Ellis & Rowe, represented black police officers in Chicago in filing an ad­ ministrative hearing complaint with the Office of Revenue Sharing. The complaint charged that the police department was spending nearly $70 million of revenue sharing annualy to support discriminatory employment practices. These charges were based on an extensive Law Enforcement Assist­ ance Administration report, a Justice Department suit against the Chicago Police Department which had been filed in Illinois Federal Court in August 1973, as well as private suits brought by minority 

police officers. The administrative complaint asked for an ORS investigation of the allegations and tempo rary suspension of revenue sharing moneys 

that were going to the police department. The ORS investigated our complaint and agreed there was dis­ crimination in the Chicago Police Department. Yet it refused to sus­ pend the funds to Chicago or to take any other enforcement steps. As a result, we filed suit against the Office of Revenue Sharing in 

Washington, D.C., in February 1974. The suit charged ORS with dereliction of its statutory duty to in­ sure tha t revenue sharing funds are spent in a nondiscriminatorv manner and sought a court order requiring ORS to suspend temporarily fu rther payments. The Federal District Court in the District of Columbia in the first ruling of its kind issued a judgment in A pril 1974 that the Office
48

of Revenue Sharing had acted improperly by not activating its administrative compliance procedures.

The court further ruled that ORS possessed authority to suspend 

temporarily the payment of revenue sharin g funds to governments 

which it found to be discriminating.

ORS responded to this order by referring the case to the Justice 

Department and attem pting to wash its hands of the matter. Millions of dollars of revenue sharing moneys continued to pour out 

of the Treasury Department’s coffers to support Chicago's discriminatory employment practices.

Finally in November 1974, after more than a year of litigation, the 

Federal court in Illinois made a formal rulin g that race and sex 

discrimination pervaded the Chicago Police Department.

But still ORS failed to take action and still it planned to forward 

payments. As a result the Washington court in December 1974 finally 

ordered ORS to cut off revenue sharing funds to Chicago. Since 

tha t date and because of its refusal to take appropria te corrective action, Chicago has received no further payments.

In April 1975 a fter a consolidation of the Washington and Illinois 

cases, the court confirmed tha t Chicago’s revenue sharin g funds must 

be withheld until the city remedies its discriminatory employment 

practices.

It emphasized tha t Federal agencies, including ORS must exercise 

affirmative duties to police compliance and prevent constitutionally and 

statu torily proscribed discrimination.

A final order in the case is expected soon.

ORS’s refusal to take action against Chicago and to defer the 

city’s funds from the time it was originally requested to do so in 

1973 through December 1974 meant that Federal moneys in the amount 

of $135 million supported discriminatory employment practices in 

Chicago.

Obviously th is enforcement policy provided little incentive to the 

city to cease its unlawful practices.

BOSTON

ORS’s extreme delays in investigating complaints and pursuing 

administrative remedies are further exemplified by our Boston case. 

On Janu ary 17, 1975 the Lawyers’ Committee along with its Boston 

committee, filed an administrative complaint with the ORS charging 

tha t the Boston Public Works Department was engaging in employment discrimination funded by revenue sharing.

The Treasury Department to date has not even investigated the 

charges of discrimination. Such inaction is in violation of the revenuesharing regulations which call for a prompt investigation of complaints.

Mr. Kindness. When you say the Treasury Department do you 

mean ORS?

Mr. Himmelman. Yes.

Mr. K tndness. In referring to the Boston case, you are referring 

to the. public works department and not the fire department?

Mr. Himmelman. Yes, I am.
49

MONTCLAIR , N .J .

The Montclair case f urther illustrates ORS’s timidity in vigorously -enforcing the act. The Lawyers' Committee in July 1974 representing Operation PU SH and the Montclair branch of the NAACP, filed an administrative complaint with ORS concerning the discriminatory expenditure of revenue-sharing moneys by Montclair's police and fire 

departments. The basis for the complaint was a finding by the New Jersey Division on Civil Rights, Department of Community Affairs on June 19,1975 tha t the town of Montclair was in violation of State laws against discrimination in hiring and promotion within the police and fire departments. The division required Montclair to take specific steps to remedy the discrimination and prescribed certain judicially sanctioned goals and timetables. In August 1974 ORS notified the town that it was not in compliance with the act and gave the town the 60 days provided in the regulations 

to submit an adequate affirmative action plan. But in October during negotiations with the city, ORS capitulated and accepted as adequate the city's general pledges which were far 

from meeting these requirements. Many of the requirements imposed upon Montclair by the State were ignored by ORS. The State case is now before the New Jersey Supreme 

Court on the issue of specific hiring and promotion goals. ORS’s posture in this case in addition to weakening Federal en­ forcement efforts completely undercut the position taken by the courageous State civil rights agency.

BU FF ALO, N .Y .

ORS's refusal to pursue its independent administrative respon­ sibilities is shown in the Buffalo case. In response to an administrative complaint filed against Buffalo charging discriminaton in the police and fire departments. ORS declined to act, arguing that a pending Justice Department suit against the same departments precluded it 

from taking independent administrative action. Nothing in the law prevents ORS from acting simply because Justice is involved; and of course, only ORS has the power to withhold funds. Yet the agency evades its responsibilities and permits revenue sharing funds to continue to flow to a jurisdiction charged with discrimination 

by the U.S. Government as well as private parties.

SU M M ARY

This sad litany of agency inaction and impotency results in Ameri­ can citizens being victimized by the discriminatory expenditure of 

revenue-sharing moneys. In our view th e ORS compliance efforts are distinguished not by their effectiveness but by long delays and legally inadequate negotiated settlements. The agency’s efforts reflect its philosophy tha t its role is to send money under any and all circumstances, tha t it is in a service rather than a supervisory role vis-a-vis 38,000 recipient governments.
50

This philosophy, while acceptable in certain circumstances, is devastating when applied to civil rights obligations in a $6 billion program.

RECOMMENDATIONS

Our experience shows tha t a person suffering from discrimination 

funded by revenue sharing cannot obtain timely redress throug h the 

Treasury Department’s existing administrative procedures. While 

some believe tha t the only remedy is to alter drastically the current 

statutory enforcement mechanism—such as by transferring all enforcement authority over revenue sharing out of the Treasury D epartment and over to the Justice Department—the Lawyers Committee at 

this time offers the following suggestions at a minimum for changing 

the current patte rn:

1. The Treasury Department adheres so tenaciously to the nostrings-attached philosophy of the new federalism tha t it ignores the 

act’s specific promise of equal treatm ent under the law.

Thus a new clear congressional mandate to Treasury is called for in 

which the Congress reasserts its role of defining the antidiscrimination 

obligations of the executive agency. The Congress, for example, should 

clarify ORS's jurisdiction to act regardless of what another Federal 

agency does.

2. To end the interminable delays in ORS compliance actions we 

recommend that the act be amended to include specific time limitations 

between steps in the administrative compliance process.

t

 For example, the Secretary should not be allowed to delay indefinitely the scheduling of an investigation or the determination of noncompliance. And once noncompliance has been determined, the Secretary should be required to notify the recipient jurisdiction within 10 

days and allow’ the jurisdiction 60 days to achieve voluntary 

compliance.

Aft er tha t 60-dav period expires, the Secretary should within 10 

days immediately begin administrative hearings leading to termination of funds, or refer the m atter to the Attorney General for action, 

f ontinuing attempts at reaching a negotiated settlement for months 

on end results in weak agreements and dilutes public confidence in the 

Government’s commitment to equal opportunity.

It is an open invitation to noncomplying jurisdictions to continue 

their unlawful practices with impunity.

3. Pursuant to existing judicial rulings an amendment must be enficted to direct Treasury to suspend revenue sharing funds to a jurisdiction pending the outcome of final administrative or judicial proceedings. This should apply in each case where: (a) Prima facie 

evidence of discrimination has been shown through a comnlaint filed 

with ORS or another Federal agency or through a suit filed with a 

Federal or State court, and (5) the ORS has confirmed the 

discrimination.

Mr. Drinan. On that point could they appeal to the TJ.S. Supreme 

€ ourt ? Ts tha t final judicial proceedings ?

^Ir- Himmelman. As soon as an administrative agency proceeding 

or a district court hearing results in a finding of discrimination, the 

tunds should be terminated.

If the district court finds that a recipient government is not in 

compliance with the Revenue Sharing Act, funds would be suspended.
51

If the appeal res ult ed in an affirmative of the discrim ina tio n finding., 

the fun ds wou ld rem ain suspended. I f the court of appeals rev ers ed 

the findin g of discrim ination the fund s could be released back to the 

jur isd iction . Th is policy ha s long been followe d with success by II E W an d appro ved by the co urts and the courts have now appro ved the policy 

fo r OR S. I t tak es on added im porta nce in view of the O RS’s lo ng 

delay s in han dling com pla ints. W ith ou t a su spension o f fun ds, rev enu e 

sh aring will continue to supp ort discrim ina tory con duc t an d finance 

inequities that have a de va sta tin g effect on th ei r victims. 4. OR S should be req uir ed to compel specific wr itten com plia nce 

agreem ent s fro m governm ents foun d by th at agency, the cou rts, or 

an othe r agency t o be discrim inating before revenue sh arin g fund s are 

mad e a vai lab le to the jur isd iction . These agreem ent s sho uld follo w EEOC, La bo r De pa rtm en t, H E W 

and othe r jud icially sa nct ion ed rem edial plans. W ith ou t such agr eem ent OR S cla ims.o f h av ing succ esfully resolved 

ma ny of the more th an 100 civil rig ht s clai ms it has received are 

pointless and in capable of verification.

CONCLUSION

Our 2-y ear exp erienc e with litigat in g ag ains t discrim ina tio n in 

th e gen eral revenu e sh arin g pr og ram and with obs erving the im pact 

of th at prog ram upon the Na tio n’s com mitment to equal op po rtun ity 

fo r all Am erican s, raises fund am en tal trou bl ing questions.

Congress mu st take a ha rd look at wh eth er th is massive no -st rin gs 

prog ram at lea st as it affects our less ad va ntag ed citiz ens, has served 

ou r society well or not. I f n ot, cha nges must be made and they must 

be made now.

Mr. E dwards. Th an k you, M r. H im me lman.

Can you and Ms. Tur ne r re tu rn at 1 :30 fo r br ief questions?

Mr. H immelman. Yes, we can, sir.

Mr. E dwards. In th at event, we will recess un til 1 :30 this aft ern oo n.

| Where upon, at 12 :30 p.m., the sub com mittee recessed, to reconvene 

at 1 :30 p .m.]

AFTER RECESS

[The sub com mittee reconvened at 1 :40 p.m., lion. Don Ed wa rds ,, 

chair ma n of the subcom mittee, presiding .]

Mr. E dwards. Th e subcom mittee will come to ol der. Mr. Him melma n has com pleted his statem ent. I recognize the gen tlema n from 

Massachusetts, Mr. Dr inan.

Mr. Drin an. Tha nk you, Mr. Ch air man . I commend Mr. Him melman and Ms. T urn er on the work th at they h ave done. Com ing to the 

bottom line firs t, wha t would you recommend as a way by which the 

new bill could rectify some o r a ll of the abuses th at you have ou tlined 

here so force fully ?

Mr. H immelman. Con gressm an, there are two alt ern ati ves it seems 

to us at th is stag e. Th e firs t altern ative is to retain all juris diction 

ove r civil righ ts e nfo rce ment in th e Office of Revenue Sh ar in g bu t to 

wr ite into the law more specific require me nts for the Office to follow 

in i ts f uture act ivities.
02

The second alte rnati ve, an d one tha t I per son ally fav or at this time, is 

to tak e all responsibility fo r civil rig hts enforcement th at is now in 

the Office of Revenue Sh ar in g an d place it in the h ands of the J us tic e 

De pa rtm ent.

As we understand section 122 of the pre sen t law and as it has been 

interp reted by the courts, the Revenue S ha ring Ac t as w rit ten is re ally 

ample to acc omplish the goals of civil rig hts en forcem ent in an Adm inist ratio n or in an agency th at is tr ul y com mitted to civil righ ts enfo rce ­

men t and m ore im po rta ntly pe rh ap s even th an the comm itment, und ersta nd s how to do it.

So while we talk about refo rm in g the law and making it more 

specific, we should po int ou t th at the pre sen t req uir em ents are relativ ely sufficient to mee t m any of th e g oals we seek now in our litig ation 

or a dm inist rativ e proceeding s.

Bu t we are forced to the conclusion af te r spendin g the las t 2 year s 

attempt ing to litiga te our way throug h thes e pro blems th at wi thou t a 

cle are r congres sional definition , we are not going to hav e the kind of 

enf orc em ent th at is req uired.

My per son al view is t hat the re is lit tle room fo r hope th at substan ­

tia lly rev ising th e pre sen t law is going to res ult in str on ge r and more 

effective enfo rcemen t. I base th at o n th e fact th at the Office of Revenue 

Sh ar in g has repeated ly been told by at least two courts wh at its 

au thor ity is, ami 1 am s peaking of th is Chicago case, a nd desp ite being 

advised rep eated ly by the co urts of its ob ligations, i t c ontinues to rea d 

the law co ntrary to th e opin ions of two courts.

I don 't thi nk we should have to go th ro ug h 2 more years o f litig ati on .

Mr. Drin an. If this were tra ns fe rred to the Ju sti ce De partm ent, 

wou ld t hat make O RS unique as a Fe de ral agen cy ?

Mr. H imm elm an. I t wou ld be a novel pro posal. Th e cu rre nt legal 

fra me wo rk is th at in the tr an sf er of Fe deral funds to St ate or local 

gov ernme nts, the ad minist ering agency reta ins responsib ility f or insuring th at fu nd s are used in a no n-dis cri mina tor y fashion.

Th ere are ind epe ndent agencies which m onito r State and local govern men ts such as the EEOC, bu t the cu rre nt law provide s th at the 

De pa rtm en t of L abo r, H EW , HU D or o ther agencies them selves mu st 

mo nitor the t ra ns fe r o f th ei r fund s to S tate an d local g overnm ents .

Th is pro posal would be a novel pro posal and it is based on our feeling th at the centr al ma ndate of the Tr ea su ry De pa rtm en t is nonprogram matic in the sense th at it is n ot an agency which deals with several 

Fe de ral program s of financial a ssistan ce; it does n ot have a civil rig hts 

office o r program s for the poor or fo r the otherw ise dis advantaged as 

do H EW , Labor, and H UD.

So while it would be a novel ap proa ch we t hi nk th ere is some jus tificatio n fo r considering it a t leas t in th is context.

Mr. Drina n. In a sense, it would be the C ong ress g iving up, because 

of t he lawlessness of the people in the Office of Revenue Sh ar ing say ­

ing: We have to tran sf er th is somewhere else because thes e people 

wo n't follow the law.

Mr. H immelman. A t ra ns fe r w ould be based on th at conclusion.

Mr. Drin an. D o yo u th in k there is a ny hope in the regulati on s pr oposed by O RS ?

Mr. H imm elm an. No. Th e reg ula tio ns pro posed by the OR S do 

no thing more—a nd I ha ve stu died them carefull y pa rticul ar ly in lig ht
53

of the litigation we have—those proposals do nothing more than at­ tempt to implement their view of their administrative authority. 1 hose proposed regulations do not provide for deferral, for example, pend­ ing administrative hearings as the courts have said they could do. So while they have attempted to come in with some proposed regula­ tions, no one should be fooled that these represent a toughened enforcement position on their part.

Mr. Drinan. Thank you. My time has expired. I hope there subsequently may be some more.

Mr. Edwards. Your statement was excellent and much appreciated. Did you hear the General Accounting Office recommendation which is generally that funds should be cut off if any jurisdiction is guilty of 

discrimination in any of its activities?

Mr. Himmelman. I am aware of that. I heard parts of their testi­ mony and tha t view is shared widely by most of the groups that have looked carefully at civil rights enforcement under the revenue sharing program. Tha t would also be a somewhat novel proposal. Generally Federal funds have been cut off by courts, for example, only in programs where discrimination is found. There is frankly little precedent for terminating funds or tem­ porarily suspending funds in a nonprogrammatic area. There are 

some cases on that point. However, revenue sharing is a very novel program and there is nothing which prevents the Congress from considering an umbrella provision requiring recipients to be in compliance with civil rights 

requirements in all their activities. It is my view that th at would be appropriate in these circumstances. We are past the day, it seems to me, when we should have technical distinctions between when a government can discriminate and when it can’t. The Constitution and Federal law are clear that State and local governments, as the Federal Government, cannot discriminate 

in any of their practices. If revenue sharing is being used as a subterfuge to avoid certain problems and to permit discrimination to continue, I think it would be a ppropriate to take a look at a government’s total activity and if discrimination is found to determine that that is sufficient to justify 

a cessation of these Federal payments. Otherwise, the revenue sharing program acts as an incentive for governments to be recalcitrant in the face of Justice Department litigation or other enforcement activity. Until you go to the fund remedy and threaten the cutoff of funds, you are not hitting anybody 

where it hurts.

Mr. E dwards. We suggested something like t hat to then Secretary of IIUD, Romney, and suggested that they not allow F HA and VA guaranteed loans in cities that discriminate in housing. He said he would be against it. He said tha t there are many thousands of cities who would just say, “well, we don’t want the FH A loans anyway; we will get by with other financing.” Do you think that would 

happen in revenue sharing?

Mr. Himmelman. I thin k that would happen, if at all, Mr. C hair­ man, only in jurisdictions where the amount of revenue sharing is a drop in the bucket. I cannot believe, for example, tha t Chicago, which has been subjected to litiga tion which has stopped their revenue
54

sha ring funds, would say “we don’t want $75 million a year.” When 

our lawsuit stopped the payment of funds, Chicago said its government would be placed on the brink of financial collapse. I cannot 

believe th at Boston, which receives $9 or $10 million a year, would 

turn its back on that assistance.

I don’t think these governments would take the position “we don’t 

want revenue sharing.” If they did, then we could make those funds 

available to governments where there is not discrimination.

Mr. Edwards. Thank you. Mr. Klee?

Mr. Klee. Thank you, Mr. Chairman. That remedy certainly is 

unique and I am not sure that depriving governments of funds where 

there is discrimination and giving it to those where there is not goes 

toward curing the problem of discrimination.

It seems to me the position you are advocating takes the approach 

of using an elephant gun—an antitank gun to kill a flea. Let us consider a hypothetical. Take the sanitation department of New York 

City.

If a white citizen feels that whites are underemployed in the sanitati on department and tha t condition is due to discrimination, I take 

it he could bring an action under section 122, is that correct ?

Mr. Himmelman. That is correct.

Mr. K lee. If discrimination was found and the city refused to initiate an affirmative action program, all revenue sharing funds to New 

York City should be cut off ?

Mr. H emmelman. The question I was asked was whether the law 

should be amended to provide that tha t remedy be available. I want 

to first say t hat I disagree with your characterization of this problem 

when you talk about using an elephant gun to shoot a flea.

Perhaps you regard some of these problems as being of the same 

order as a flea. We regard them as much more substantial than th at so 

we thin k it is necessary to look a t what kind of remedy is going to be 

effective.

You are trying to inject in this dialog this question of reverse 

discrimination.

Mr. Klee. You are saying one isolated case of discrimination can 

Serve as the basis for cutting off funds of an entire revenue sharing 

program to an entire city of people, innocent people in innocent programs that have not been discriminating.

Mr. Himmelman. We have not advocated th at position in the courts 

in the cases we have brought to date. We have sought to terminate funds 

in the programs where there has been discrimination.

The question has been posed whether we should consider an additional remedy where tha t is necessary because a government is in effect 

shifting funds from one category to another to avoid civil rights 

obligations.

All I am suggesting is th at tha t is an issue that the Congress ought 

to look at. If we take the Chicago case, the city received $75 million 

of funds per year and put three-quarters of it into the police department. We have no hesitancy recommending that all of its revenue 

sharing funds be suspended until tha t discrimination is corrected.

Mr. Klee. I am glad you mentioned tha t case. I will not be able to 

deal with every point, b ut it does seem to me that you have somewhat 

selectively presented the facts. Is it not true in the Chicago case th at
twice in the District Court of the District of Columbia, a request was 

made to order deferral of funds and tha t court would not gra nt such a remedy until there had been an actual finding of discrimination on the 

record ?

Mr. Himmelman. The court said th at the Office of Revenue Sh aring 

had authority as a matter of adminstrative discretion to temporarily suspend funds. It only ordered the Office of Revenue Sharing to do so after there was a finding of actual discrimination after a hearing. The reason that the Court ordered the cessation of funds was because even after a court had ruled, based upon a 10-day hearing, tha t there was discrimination, the ORS still took the position that it could nqt 

and would not terminate funds.

Mr. Klee. The Court in its equitable powers had the authority to order deferral of funds but chose not to do so. On the second point, the Office of Revenue Sharing looked at its statute, which nowhere contains the word “defe rral,” and decided tha t it was not legal for it 

to defer funds; it waited for a court to decide that.

Mr. H immelman. Title VI is incorporated in the Federal Revenue 

Sharing Act.

Mr. Klee. Where in title VI does it contain the word “deferral” ?

Mr. Himmelman. Section G05. The Congress has recognized the 

right of a Federal agency to exercise a deferral policy. In tha t instance it specifically discussed the deferral and it put a time limit on how long that deferral could go on. There is not a law enforcement officer in the Federal bureaucracy who understands title VI who does not know 

that there is a deferral authority in that law. It is the Office of Revenue Sharing's position that it is not even a title VI program. Th at is the argument it has used repeatedly to avoid its responsibilities to follow the dictates of the title VI laws and 

regulations. If you will also review the Justice Departm ent’s regulations, which have the force and effect of law, they do provide for deferral under 

certain circumstances.

Mr. Klee. I would like to broach the subject of reverse discrimination and your notion of what discrimination is. You mentioned in your statement that the failure to include materials about black people in public libraries is evidence of discrimination. I take it tha t you find something under the Constitution or the statute t hat such an omission 

is denying some rights to some people ?

Mr. Himmelman. If libra ry services are supported by Federal funds then a citizen within the jurisdiction is supposed to have an equal opportunity in the receipt and use of those funds. In Ouachita P arish, Da., library services—including an outreach bookmobile program— 

have not been made equally available to all citizens.

Mr. Klee. The books in the library are available. I do want to thank you for candidlv stating th at what you say has been contested 

by local and Federal officials.

Ms. McNair. The first question T have relates to statutory interpreta ­ tion. In describing the administration's proposed revenue sharing extension bill, the Treasury Department has said that the language of the bill is added to section 122 in order to clarify the Secretary's power to require repayment and to withhold all of the future entitlement payments.
56

The suggestion is tha t although those actions are currently authorized under the ORS’ current regulations, those regulations may exceed 

the authority granted under the statute.

In your opinion, does the Secretary already have those powers un ­

der the statute?

Mr. Himmelman. In my opinion absolutely. The curren t section 122, 

the withholding provisions of 123, and the incorporation of the title 

VI remedy combined with the existing ORS regulations gives ORS 

ample authority to withhold payments in the future based on findings 

of discrimination.

Ms. McNair. Xow with respect to the Montclair, New Jersey, case, 

you indicated that the complaint was based on a finding of the State 

human relations department ?

Mr. Himmelman. That is correct.

Ms. McNair. But tha t ORS refused to pursue in the complaint filed 

with it all of the requirements which the State department has imposed. Do you have an opinion as to why ORS refused to vigorously 

pursue all of what the State agency ordered in terms of relief?

Mr. Himmelman. The Office of Revenue Sharing is more concerned, 

in my opinion, about negotiating settlements with recipient governments that it considers to be part of its constituency than about insuring civil rights enforcement which may make these governments 

angry or which may deny them funds.

We have had on the record the exchange of correspondence that 

went back and forth between the Office of Revenue Sharing and Montclair. There were about a dozen remedial steps that the State of New 

Jersey imposed upon Montclair. The Office of Revenue Sha ring in its 

final agreement with Montclair did not agree to eight or nine of those 

steps, many of them significant ones.

I can only conclude tha t the reason tha t the determination was 

made by the Office of Revenue Sharing to close the case was it would 

rather not haggle with the local government over what ORS considers 

to be “fine points.”

I should mention, because it is in your record, that apparently the 

Justice Department also looked at the Montclair situation and suggested to the Office of Revenue Sharing tha t Montclair was in compliance and suggested to the Office of Revenue Sharing tha t they 

simply monitor Montclair’s futu re activity. Well, even i f we assume 

tha t t hat is true, what is of special significance is tha t there is no provision in the ORS agreement with Montclair for periodic specific 

compliance reports which will delineate new hires, job categories and 

minority employment, and so on.

Even if the Offite insists it is monitoring, it has never required Montclair to provide the kind of information which makes monitoring 

meaningful.

Ms. McNair. One of the things you recommend is tha t ORS begin 

to enter into formal single document compliance agreements as most 

other agencies do rather than engage in a series of correspondence 

which they allude to as their compliance agreement.

Now I take it tha t by engaging in this process that leads to difficulties in terms of interpreting what a recipient jurisdiction has actually assured that it will do. Is th at a problem ?

Mr. Himmelmax. There is no question about it. I have and will 

make available to this committee the basic exchange of correspondence
in this Montclair case. The agreement which the Office of Revenue 

Sharing refers to in Montclair consists of a series of lengthy and detailed letter over approximately 9 months.

There has never been a consent agreement written between the Oflice of Revenue Sharing and Montclair. Indeed I would be willing to 

bet th at there is not a single consent decree in any of the files of the 

Office of Revenue Sharing with any of the jurisdictions with whom it 

has supposedly reached agreements.

This policy of the Office of Revenue Sh aring is in sharp distinction 

with every other major Federal agency, whether you talk about E PA , 

the Justice Department, HEW , or any other agency in the Government which reaches settlements.

There is supposed to be an agreement. It is signed by the parties. It is 

in the file, and it is enforceable. The Office of Revenue Sharing refuses to follow this same common sense approach in settling civil 

rights complaints. So i t is impossible for any sensible person to even 

advise you whether any of the resolutions of their 40 or 50 cases which 

they speak about mean anything at all.

There is no agreement. There is nothing you can monitor and there 

is nothing you can really understand unless you interpret month after 

month of general correspondence and try to figure out if all points 

have been covered.

I know from the Montclair case tha t there are at least seven or 

eight major provisions of the State of New Jersey order which were 

never even discussed between ORS and Montclair prior to the supposed 

settlement.

[The Montclair, N.J., document follows:]

Office of the Secretary of the Treasury.

Washington, D.C., November 12,197.'f.

Mr. Harold Himmelman,

Lawyers' Committtec for Civil Rights Under Laic,

Washington, D.C.

Dear Mr. Himmelman : The atta che d lette r to M ayor Bonastia officially closes 

our investig ation of the use of revenue sha ring funds by the City of Montclair.

Thank you for y our intere st and assistance.

Sincerely yours,

Graham W. Watt.

Director, Office of Revenue Sharing.

Lawyers’ Committee for Civil Rtohts Under Law.

Washington, D.C., December 3,197/f.

Be Montclair, N..T.

Mr. Graham Watt,

Director, Office of Revenue Sharing, U.S. Department of the Treasury, Washington, D.C.

Dear Mr. Watt : I am in receipt of your lette r of November 12 advising me 

th at you have officially closed your investigation into the use of revenue sha ring 

by the City of Montclair, New Jersey. This let ter is to reg iste r form ally the 

protest of my clients, Operation PUSH and the Montclair NAACP, to your 

decision.

As you know, in Jun e of this yea r the State of New Jerse y’s Division on Civil 

Rights, after a full due process eviden tiary hearing, made extensive and un ­

controverted findings of racial discriminatio n, past and present, by the Town 

of Montclair in hiring and promotions in its Police and Fire Departm ents. In 

fram ing specific relief for the victims of that discriminatio n, the Sta te adopted 

well-established legal standard s which included cessation of the use of un ­

validated examination s, abandonment of the use of ill-defined inte rview proce-
58

dures, and the establishment of goals and timetables for the actual hiring and 

promotion of minorities. As our briefs to you have shown, the affirmative action 

requirements imposed upon Montclair by the State have the full sanction of 

the federal courts and of other departments of the federal government, including the Justice Department and the Equal Employment Opportunity Commission.

On July 14, 1974, my clients filed a formal complaint with your office on the 

basis of the State’s findings, and charged that Montclair’s revenue sharing payments were supporting discrimination in the Police and Fire Departments. As a 

result of that complaint, you notified Montclair in August, 1974, that you had confirmed the City had in fact been allocating substantial amounts of revenue sharing to the discriminating departments and it was, accordingly, in noncompliance 

with the civil rights requirements of Section 122 of the Revenue Sharing Act.

The principal concern of your office in seeking voluntary compliance under the 

Act has been the adequacy of the examinations utilized by Montclair for hiring 

and promotion in the two departments. However, aside from brief mention in 

your September 16 letter to the Mayor of Montclair of goals and timetables for 

the actual hiring and promotion of minorities, you failed to require the Town 

to meet the provisions of the State of New Jersey’s order, contained in paragraphs 

6 and 11, which explicitly mandated that Montclair set specific goals and timetables to remedy the pervasive effects of past discrimination. Since these State 

requirements are the heart of equal employment enforcement, your decision on 

this aspect of the case is inadequate, measured by standards set by federal courts, 

the Department of Justice and the EEOC. In addition, you have imposed no 

formal requirements with respect to other aspects of the State’s order, such as 

abandonment of existing interview procedures. Finally, you have continuously 

failed to defer the payment of funds to Montclair throughout this period even 

though the Town has repeatedly refused to comply with key aspects of the 

State ’s order and still refuses to do so.

For these reasons we regard your closing of this case at this point as unconscionable. The result specifically is failure adequately to correct Montclair’s 

racially discriminatory practices and generally to undermine hard-won remedies 

which have helped reform illegal employment practices.

For a number of reasons, my clients have tentativelv determined not to challenge your actions in this case through the courts. Rather, they wish to respond 

to the continuing requests of the Senate Subcommittee on Intergovernmental 

Relations and other Congressional officials to be brought up-to-date on the status 

of this matter. Accordingly, I will shortly make available to tha t Subcommittee 

and others the full record. At that time I will be compelled to advise those who 

have asked for our views of the inadequacy of your enforcement efforts.

Very truly yours,

H arold Himm elma x,

Lawyers’ Committee for Civil R ights U nder Law,

Washington, D.G., December 17, 1971/.

Hon. E dmund S. Mus ki e,

V.S. Senate, Old Senate Office Building,

Washington, D.G.

Dear Senator : As you will recall when I testified before your Subcommittee 

on Intergovernmental Relations in June, you asked to be kept apprised of significant developments in cases this office is handling involving discrimination in 

the general revenue sharing program. Tn response, I am enclosing documents in 

three important cases. Although I have chosen to report developments only in 

these cases. I shall bring to your attention at the appropriate time other information—particularly involving Ouachita Parish, Louisiana—which is deeply 

troubling.

I. MONTCLA IR, N .J .

We represent Operation PUSH and the NAACP in a revenue sharing complaint 

against Montclair. Briefly, Montclair was adjudicated by a duly-authorized New 

Jersey State agency (the State Division on Civil Rights), afte r a full due process 

hearing, to be guilty of widespread racial discrimination in its Police and Fire 

Departments. Both receive federal revenue sharing money. The State ordered 

Montclair to undertake a number of specific remedial steps, all of which have 

the full sanction of federal courts and administrative agencies. Soon th ereafter 

my clients filed their formal administrative complaint charging Montclair with 

a violation of the Revenue Sharing Act. In response, ORS found Montclair to 

be in noncorapliance and relied upon the State’s hearings and decision.
59

Despite the determinations by the State and ORS, the record shows that 

Montclair has only agreed to comply with parts of the State ’s order while refu sing to comply with other crucial aspects. For example, the Town will not agree 

to set specific goals and timetables for hiring and promotions in order to correc t the pervasive effects of past discrimination . It made no concrete agreement 

to correct discrimination in the Fire Depa rtment. In fact, at the presen t time 

Mon tclair is atta cking the Sta te's order in an appeal to the New Jersey courts. 

Nonetheless, ORS has accepted wh at is at best partial compliance, has closed 

its inve stigation into this case and continues to forward full revenue sharing 

payments to Montclair. My enclosed December 3, 1974, letter to ORS Director 

Graham Watt and the accompanying record provide a more detailed summary of 

thi s matter .

In short, ORS underm ines State and federal enforcement efforts and fails 

to keep faith with its own responsibilities when it accepts as satisfactorj’ vague, 

general promises of partial remedial action which perm it a recipient to escape 

not only federal but State sanctions. In spite of his statem ent to your Subcommittee in Jun e of this year, that ORS has full autho rity to hold up revenue 

sha ring payments temporarily to rec alc itrant governments who have been adjudicated to be discriminating. Director Watt has continued to fund Montclair 

fully . See Testimony of Graham Watt, Hearings Before the Subcommittee on 

Inte rgovernmental Relations, Revenue Sharing, 93rd Cong., 2nd Sess., Pa rt 1, 

June 4, 1974. (Of course, we have repeatedly take n the position, supported by 

the federal courts, that ORS has autho rity to hold up revenue sharing even 

before hearings are actually held, so long as they are promptly scheduled.) The 

net result of ORS's action in this case is th at federa l funds continue to flow to a 

government recipient which has flatly refused full compliance with an official 

ord er of its Sta te and with the Sta te and Local Fiscal Assistance (“Revenue 

Sha ring ” ) Act.

II . BUFFALO , N.Y .

The attach ed record in the Buffalo revenue sharing case shows th at ORS 

continues erroneously to impose lim itations on its autho rity to act in cases of 

rac ial discrimination. Some months ago the Departm ent of Justice sued Buffalo 

und er Title VII of the Civil Righ ts Act of 1964 and Section 123(b) of the 

Revenue Sharing Act charging it with racial discriminatio n in the Police and 

Fire Departments. Shortly there aft er we assisted the Newr York Civil Liberties 

Union in the filing of a formal adm inistrative complaint before ORS charging 

th at both Buffalo departm ents received revenue sharing funds and w’ere therefore in violation of the Revenue Sharing Act. In response to that complaint, ORS 

has taken the position that simply because the Jus tice Department filed se parate 

litigation aga inst the Buffalo Police and Fire Depa rtments, ORS is “precluded” 

from taking any enforcement action whatsoeve r against Buffalo.

The enclosed let ter from the New York Civil Liberties Union, on which my 

staff assisted, shows the fals ity of ORS’s position. The agency’s avoidance of 

responsibility simply prevents the use of the full measure of fede ral enforcement 

powers aga inst local governments which p ractice discrimination.

II I. CHICAGO, ILL.

As you may know, the City of Chicago has recently been placed und er federal 

court orde r in Illinois, after a due process evidentiary hearing, to cease all acts 

of discrimination in hiring and promotions in the Police Depa rtment. Despite 

the fac t th at approximately 75% of Chicago’s revenue sharing dollars, from 

1972 to the present, have been allocated to th at Depa rtment, ORS has faile d to 

order, or even request th at a court order, cessation of fund ing temporarily until 

the City comes into compliance. The agency’s refusal to utilize a temporary fund 

cut-off seriously weakens federal civil rights enforcement. Accordingly, we have 

filed the enclosed motion and brie f in our litig ation in federal court in Washington which charges ORS with failur e to tak e adequate enforcement steps against 

Chicago. Essentially we argue th at ORS has alway s had ample autho rity temporarily to escrow fund s destined for Chicago and has additional autho rity now. 

We ask that the court order ORS to tak e new steps aga inst Chicago. A hearing 

has been set on the motion for December 18 before Judge John Lewis Smith.

If you have any questions concerning these or related matters, I will be happy 

to respond to them. In the meantime, I will advise you of all pertine nt developments as appropriate .

Very truly yours,

H arold H im m el man.
co

Office of the Secretary ofthe Treasury,

Washington, D.C., January 3,1915.

Hon. Edmund S. Muskie,

U.S. Senate, Washington, D.C.

Dear Senator Musk ie: As you know, I have a copy of Mr. Ilimmelnian's 

letter to you dated December 17, 197-1 in which he makes certain statements 

concerning three cases involving discrimination in the expenditure of general 

revenue sharing funds. I cannot permit the opportunity to pass without rebutting 

Mr. Himinelman’s allegations which, in some instances, are substantially incorrect and misleading.

I. MONTCLAIR, N .J .

The Office of Revenue Sharing is satisfied that our action in the Montclair case 

is the correct one to end discriminatory employment practices in the police and 

fire departments. Mr. Ilimmelman is aware that we are monitoring the Montclair 

situation and will continue to do so to assure ourselves th at the representations 

of the city, set forth in the Mayor’s letter of October 21, 1974 to me, will he fully 

and fairly implemented. Further, it is our judgment that the City of Montclair 

is entitled to its revenue sharing allocation during the period during which the 

city is implementing corrective employment measures in the two departments.

Finally, Mr. Himmelman seems critical of the fact tha t the City of Montclair 

has taken an appeal of the state hearing examiner’s order which ORS relied upon 

for its determination of discrimination. This, of course, the city has a legal 

right to do. I trus t tha t our judicial system never reaches the point where a 

litigant is discouraged from using the courts to seek his full judicial remedies 

because of criticism, adverse comment or other negative reaction. The appeal of 

this case to a higher court by Montclair, in our opinion, has not had any bearing 

on the efficacy of the corrective action being taken.

II. BUFFA LO, N .Y .

It is the position of Mr. Ilimmelman that ORS continues erroneously to impose 

limitations on its authority to act in cases of racial discrimination. It is our position that, since the Justice Department has conducted an investigation, and has 

filed suit against the City of Buffalo under Title VII of the Civil Rights Act of 

1972 and Section 122(c) of the revenue sharing Act, it would be duplicative for 

ORS to take similar actions. Taking parallel action with the Justice Department 

would have adverse consequences to other complainants by using already limited 

ORS manpower resources.

We have been in continuous contact with the Justic e Department since January, 1974 regarding the Buffalo case and have been consulted on each major 

move by Justice regarding the City of Buffalo. For example, ORS audited the 

city in February, 1974 at the request of the Department of Justice and determined 

that general revenue sharing funds were being used in both police and fire 

departments.

The present posture of the Buffalo case as it exists in the Civil Rights Division 

of the Department of Justice and in the U.S. District Court for the Western 

District of New York is that the city filed its answer on December 5, 1974 after 

a request on November 13, 1974 by the plaintiff for admissions and denials.

III . CHICAGO, ILL.

Since Mr. Himinelman’s letter of December 17, the United States District 

Court for the District of Columbia has ordered no furth er payment of revenue 

sharing funds to the City of Chicago. The city has, of course, vigorously protested 

that decision and, as a result, the Secretar.v of the Treasury is now the defendant 

in a suit filed by the City of Chicago in the U.S. Court of Appeals for the 7th 

Circuit. The City of Chicago is seeking, before the 7th Circuit, an order tha t 

would require the Secretary of the Treasury to pay the City of Chicago its 

revenue sharing payment scheduled for J anuary 6. The Office of Revenue Sharing, 

through its representatives in the Department of Justice, is vigorously opposing 

that action.

Please be assured that the matters brought to our attention by Mr. Ilimmelman’s letter of December 17, 1974 have received, and will continue to receive, 

constant and personal attention by the staff of the Office of Revenue Sharing. 

Sincerely,

Graham W. Watt, 

Director, Office of Revenue Sharing.
Office of the Secretaryofthe Treasury,

Washington, D.C., January 9, 1975.

Harold IIimmelman, Esq.,

Lawyers' Committee for Civil Rights Under Law,

Washington, D.C.

Dear Mr. Himmelman: It is inaccurate to state, as you did in your Decem­ ber 3, 1974 letter to me, tliat OKS has “closed” its investigation into the dis­ criminatory employment practices of the Town of Montclair’s Police and Fire Departments. This characterization of our posture in the Montclair case is, 

simply, not true. The terms of our present settlement with Montclair clearly require a con­ tinuing active role for the Office of Revenue Sharing. We shall he carefully monitoring the progress toward elimination of the vestiges of discriminatory employment practices pursuant to the settlement agreement reached between the Town and ORS. As you probably know, the Civil Rights Division of the Department of Justice assisted ORS in reaching our understanding with 

Montclair. In addition to the substantial modification in the Town’s hiring practices, we have required Mayor Bonastia to report to us quarterly as to the progress being made under the affirmative action plan. Should we find that the Town is not faithfully fulfilling the conditions of our settlement agreement or that the steps undertaken to date do not have the intended effect of eradicating and correcting the effect of past discriminatory practices, further action will be considered by 

ORS. “Closing” this case and turning away from the discriminatory practices of Montclair prior to implementation of the settlement agreement would be con­ trary to the established policy of the Office of Revenue Sharing. You can be assured, therefore, that such course of action was never considered and I would hope you would make this point clear when discussing our civil rights enforcement program in the judicial or political forum.

Sincerely yours, Graham W. Watt, 

Director, Office of Revenue Sharing.

Lawyers’ Committee for Civil Rights Under Law,

Washington, D.C., January 22, 1975.

Re Montclair, N.J.

Mr. Graham W. Watt,

Director, Office of Revenue Sharing,

U.S. Department of the Treasury,

Washington, D.C.

Dear Mr. Watt: I am in receipt of your Janu ary 9, 1975, letter in which you object to my having stated in my letter to you of December 3 that your office had “closed’’ its investigation into the discriminatory employment practices of the Town’s Police and Fire Departments. I am frankly puzzled by your criticism because in your letters of November 12. 1974, to Governor Brendon Bryne and to me you announced that you were “officially closing” your investigation of the 

Montclair case. Apparently you believe the imposition of a quarte rly reporting requirement on Montclair constitutes continuing enforcement. This would be true only if the settlement agreement were complete. But that is hardly the case here, and thus “closing” your investigation means cessation of necessary enforcement 

action. In your own lette r of August 6, 1974, to Mayor Bonastia finding the Town of Montclair in violation of Section 122 of the Act, you state tha t in order to come into compliance Montclair must immediately and actively initiate the remedies ordered by the New Jersey S tate Division on Civil Rights in its June 17. 1974, decision against the Town. Yet you have closed your investigation without requiring the entry of a final settlement agreement and without requiring com­ pliance with many of the major aspects of the State’s Order. Specifically: 1. We have yet to see any final written “settlement agreement” between ORS and Montclair which clearly imposes all the terms and conditions you are mon­ itoring to determine Montclair’s compliance with the nondiscrimination requirements of Section 122 of the Act.
2. If y ou do n ot ha ve a final se tt le m en t do cu men t, wh y not ? If you su gg es t th a t 

dozens of le tt ers ov er seve ral m on th s co nst it ute an “a gr ee m en t,” wh y do you re ­

fu se to do w hat ot he r fe de ra l ag en ci es do in se tt li ng ca ses, na mely, re quir e a 

re ci pi en t of fe de ra l fu nd s ch ar ge d w ith di sc rim in at io n to sig n a fin al co ns en t 

ag re em en t which thor ou gh ly and co nc ise ly spells ou t ea ch an d ev er y co nd iti on o f 

th e se ttle m en t?

3. In par agra ph 8 of the O rd er o f t h e N ew J er se y S ta te D ivision on Civil Ri gh ts, 

th e M on tclair Po lic e D ep ar tm en t is re quir ed to di sc on tinu e th e us e of s up er vi so ry 

ev al ua tions in pro motions. B ut now he re in you r “set tl em en t ag re em en t” or yo ur 

ex ch an ge of co rrespo nd en ce w ith M ont cl ai r does th e To wn ex pr es sly ag re e to 

comp ly w ith th is pro visio n. If th e To wn ha s no t ex pr es sly ag re ed to comp ly w ith 

th is req ui re m en t, how do you ju sti fy cl os in g yo ur in ves tigat io n?

4. P ara gra ph 5 of th e S ta te ’s O rd er re quir es th a t C ha rles Lige an d al l oth er 

m in or ity ca nd id ate s who too k a w ri tt en ex am in at io n in No vemb er. 1971. he re ­

co ns id ered fo r ap po intm en t. W hi le I unders ta nd th a t Mr. Li ge has in fa ct bee n 

em plo yed, whe re in th e “set tlem en t agre em en t” or you r ex ch an ge of co rres po nd ­

en ce doe s M on tc la ir ag re e to re co nsi der all oth er m in ori ty ca ndid ate s? If th e 

To wn has no t ex pr es sly ag re ed to comp ly w ith th is re qu irem en t, how do you 

ju st if y clo sin g yo ur i nv es tiga tion ?

5. W he re in th e “s et tlem en t agre em en t” or you r ex ch an ge of co rres po nd en ce 

does M on tc la ir ag re e to comp ly w ith th e S ta te ’s O rd er, a t para gra ph 6. th a t it 

hir e one qu ali fie d m in or ity ap pli cant fo r ev ery one qu ali fie d w hite ap pl ic an t 

until th e to ta l nu m be r of m in ority officers in th e F ir e D ep ar tm en t eq ual s a t le as t 

15 p erso ns ? If th e Tow n ha s no t ex pr es sly ag re ed to com ply w ith th is re qu irem en t, 

ho w do you j u sti fy clos ing y ou r i nve st ig at io n?

6. W he re in th e “s et tlem en t ag re em en t” or yo ur ex ch an ge of co rres po nd en ce 

do es th e To wn ag re e to comp ly w ith th e re qui re m en t in para gra ph 11 of the 

S ta te ’s O rd er th a t one qu ali fie d bl ac k ap pl ic an t be prom oted in th e Po lic e Depart m ent fo r ea ch one qu ali fie d w hite ap plica nt until 50% of it s m in or ity ap ­

plica nts hav e bee n pr om oted ? Tf th e To wn has no t ex pr es sly ag re ed to com ply 

w ith th is re qu irem en t, how do you ju sti fy clo sin g yo ur In ve stig at io n.

7. W he re in th e “s et tlem en t agre em en t” or yo ur ex ch an ge of co rres po nd en ce 

do es t he To wn ag ree, purs uant to p ara gra ph 16 of th e S ta te ’s Order, to p os t cop ies 

of th e S ta te ’s O rd er as re qu ir ed ? If t he T ow n has no t ex pr es sly ag re ed to c omply 

w ith th is r eq ui re m en t, how do you ju sti fy c losin g y our in ves tigat io n?

8. You see m to plac e much em ph as is on yo ur “r ep ort in g” re qu irem en t. W he re 

in your “s et tlem en t ag re em en t” or ex ch an ge of co rrespo nd en ce does M on tclai r 

ex pr es sly ag re e to com ply w ith th e specific re po rtin g re quir em en ts im posed upon 

it in p ara gra phs 12 an d 13 of th e S ta te ’s O rder, na mely, to s ta te t he na m e an d race 

of ea ch candid ate fo r ap po in tm en t an d prom otion, th eir te st scores, an d th e 

na me, ra ce an d reas on s fo r re je ct io n or ac ce pt an ce of all ca ndid ate s? Tf th e 

To wn has not ex pres sly ag re ed to comp ly w ith th es e p art ic u la r re port in g requ irem en ts. ho w do you ju st if y c losin g you r in ve st ig at io n?

Thu s, un le ss you ha ve a nsw er s to th es e ei ght p oints, you r repe nt ed re fe re nc e to 

a “s et tlem en t ag re em en t” en te re d be tw ee n OR S an d th e To wn wh ich you are 

“c ar ef ul ly m on itor in g" to ass ure non di sc rim in at io n is mea ni ng less . In fa ct th er e 

is no lega lly sufficie nt ag re em en t an d you ha ve im po sed no re qu irem en t th a t 

M on tc la ir comply with an y p a rt of th e S ta te ’s O rd er ou tsid e of testin g. In essen ce. yo u ha ve faile d to re quir e co mplianc e w ith yo ur own policy.

In de ed , th e New Je rs ey S ta te D ivision on Civ il R ig ht s an d th e ir at to rn ey s 

ha ve re ce nt ly confi rm ed th a t th e S ta te re gar ds M ontc la ir as in a co nt in ui ng 

sta te of no nc om plian ce .

Fin al ly , contr ary to th e ass ert io ns in yo ur Ja n u a ry 3 le tt e r to Se na to r 

Muskie , we hav e ne ve r su gg ested th a t M on tc la ir does no t ha ve a ri g h t to ap pe al 

fro m th e S ta te ’s Ju ne 17 Order. R ath er, we ha ve simply ta ke n th e sa m e po sit ion 

you took in your le tt ers of A ug us t 6 an d Se ptem be r 16. 1974. to M on tclair 

Mav or B on as tia : th a t th e Tow n’s ri g h t to ap pe al does not pro hib it ORS fro m 

ta kin g appro pri ate ac tio n pe nd in g fin al leg al reso lu tio n of th e case. You. ho wev er. ha ve ag ai n fa ile d to carr y out your own policy. Alth ou gh M on tc la ir ha s 

ev er y ri ght to ap pe al to hig her court s fro m th e S ta te ’s Order, it lia s no ri ght 

to co nt in ue d fe de ra l su bs idies w hi le re fu si ng fu ll co mplian ce w ith th e reve nu e 

sh ari ng l aw an d w ith a va lid S ta te O rd er issued a ft e r full du e pr oc es s he ar in gs .

We believe, th er ef ore , th a t you r “s ett le m ent” an d “closing ” of th e ca se a t th is 

tim e de st ro ys not on ly effecti ve S ta te la w en fo rc em en t but ad equate fe de ra l 

en fo rc em en t as we ll. A pp ar en tly your de sire to appear co nc ilia to ry an d to 

reac h ag re em en ts w ith re ci pie nt s bloc ks yo ur w ill in gn es s to im po se in fa ct
63

the basic conditions of civil rights compliance which the federal government 

has traditionally imposed and which the law requires.

Sincerely yours, H arold H imm elma n.

EXHIB IT A

State of New Jersey Department of Law and Public Safety Division on Civil Rights, Docket Nos. EG13RM—6282 EG13RM—6883

Charles S. Lige and Gilbert II. F rancis, Director, Division of

Civil Righ ts, complainan ts

v.

Town of Montcl air; Mayor and Comm issioners, respondents

fin din gs, determination and order

Appearances: George F. Kugler, Jr., Esq., Attorney General, State of New

Jersey, by: David S. S. Litwin, Esq., Deputy Attorney General, for the Complainants; Bennett, Shepard, Cooper, and Dickson, Esqs., by: Joseph Dickson, 

Jr., Esq., for the respondents.

BY TH E DIRECTOR

A hearing in this matter was held before Juliu s Wildstein, Esq., a Hearing Examiner for the Division on Civil Rights on Janu ary 7 and 8, 1674. On May 16, 1974 the Hearing Examiner tiled a report with the Director containing Recommended Findings of Fact and Conclusions of Law. In accordance with Rule 13:4-13.1 of the Division’s Rules of Practice and Procedure, copies of the Hearing Examiner’s Recommended Findings of Fact and Conclusions of Law were sent to counsel for the respective parties. No objections to the Hearing Examiner’s report have been filed in the Division's 

offices. Having given independent and careful consideration to the entire record in this matter, including the tran script of the hearing and all evidence introduced during the hearing, I concur in the Findings of Fact and Conclusions of Law recommended by the Hearing Examiner with exception to his statement at page nine (9) of the Findings of Fact that the Montclair Fire Department had 89 whites and 3 blacks. The transcript at page 79 reflects that there was a total of 89 officers in the fire department, of whom 86 were white and 3 were black. With the inclusion of the aforestated, I adopt the Hearing Examiner’s Findings of Fact and Conclusions of Law as my own and incorporate by ref­ erence and make the same a part of the Order as though they were set forth in full herein. I find tha t the respondents maintained practices and procedures for the determination of the eligibility of persons for entrance into the police and fire departments and the promotion of persons within the police depart­ ment which have a discriminatory effect oh minority persons in violation of 

N. J.S.A. 10:5-12(a) and 10:5-4. Accordingly, it is on this 17th day of June, 1974 hereby ordered and decreed 

th at: 1. All recruiting, processing, hiring, upgrading and all other terms and con­ ditions of employment shall be maintained and conducted in a manner which does not discriminate nor have the effect of discriminating on the basis of race, creed, color, national origin, ancestry, marital status or sex in violation of the New Jersey Law Against Discrimination N. J.S.A. 10 :5-l et seq.

2. Respondent shall henceforth discontinue use of all written entrance exami­ nations for police and fire departments until such time as the examinations may have been professionally validated, subject to approval by the Division on Civil Rights, at which time they may be used to determine eligibility of applicants. 3. The oral interviews conducted by the Montclair Public Safety Examining Board as a method for recommending the hiring of applicants to the Montclair Police and Fire Departments shall be discontinued until such time as objective standards are developed for determining the crite ria which are relevant to the job performance of police and fire officers. A method of objectively rating these crite ria in a non-discriminatory manner shall also be devised by respondents. Re­ spondents shall submit all proposals concerning review by the Examining Board to the Division on Civil Rights fcr approval before adopting them.
4. In the absence of professionally validated tests and recommendation by 

Examining Board, respondents shall devise a method of selection with nondiscriminatory standards for appointment to the police and fire departments. 

This method of selection shall be subject to the review and approval of the 

Division on Civil Rights and shall be submitted to the Division on Civil Rights 

within sixty (60) days of this Director’s Order. 5. Complainant, Charles Lige, and all other minority candidates who took 

w ritten entrance examinations on or about November 6, 197- shall be reconsidered 

for appointment under the method of selection described in paragraph 4 immediately above and notified in waiting if determined to be qualified.

6. Future appointments to the Montclair Fire Department shall be conducted on 

the following basis: One (1) qualified minority applicant shall be selected for 

every one (1) qualified white applicant until the total number of minority officers 

on the Fire Department equals at least fifteen (15) persons.

Initial selection of minority candidates shall be made from the pool of qualified 

minority applicants which result from the re-evaluation process as set forth 

herein in paragraphs 4 and 5 and shall continue until such pool is exhausted.

7. Respondent shall discontinue all written examinations used in part or in 

whole for purpose of determining the promotability of police officers within the 

Montclair Police Department until such time as the examinations may have been 

professionally validated, subject to approval by the Division, at which time they 

may be used to determine eligibility of applicants.

8. Respondents shall henceforth discontinue the use of supervisory evaluations 

in the Montclair Police Department until objective standards have been developed for determining each of the qualities being evaluated. An objective 

method for rating each of the qualities in a non-discriminatory manner shall 

also be devised and applied to future evaluations. Respondents shall submit all 

proposals concerning futu re evaluations to the Division on Civil Rights for approval prior to adopting them.

9. In the absence of professionally validated tests, officer evaluations, and 

recommended by the Examining Board, respondents shall devise a method of 

selection with non-discriminatory standards for determining the promotability 

of persons in the police department. This method of selection shall be submitted 

to the Division for review and approval within sixty (60) days of this D irector’s 

Order. 10. Respondents shall re-evaluate, within thirty (30) days of Division on Civil 

Rights’ approval of the method of selection devised pursuant to paragraph 9, 

the Black applicants w’ho were denied promotions in 1971.

11. The Black applicants who are deemed qualified by this re-evaluation shall 

be so notified in writing. Future promotions in the Montclair Police Department 

shall be made on the following basis. One qualified Black applicant shall be promoted for every one qualified White 

applicant until 50% of those minority applicants deemed qualified by the reevaluation have been promoted.

12. Reporting: Respondents shall submit to the Division on Civil Rights the 

following information for review at least twenty (20) days prior to any appointment date: (a) Name and race of each candidate for appointment; (b) test 

scores for all candidates if professionally validated tests were used; (c) name, 

race, and reason(s) for rejection and/o r acceptance of all candidates; and (d) 

respondent,s upon request by Division on Civil Rights, shall make available all 

information and material used as the basis for acceptance or rejection of all 

applicants. 13. Respondents shall submit to the Division on Civil Rights within twenty 

(20) days prior to any promotion date, the following information for review: 

(a) Name, rank, and race of each candidate for promotion; (b) test scores for all 

candidates, if professionally validated tests were used; (c) job performance 

evaluations for all candidates; and (d) name and race of each candidate promoted and the rank to which he was promoted.

14. Respondent shall submit to the Division on Civil Rights the results of the 

re-evaluation of the minority applicants who took the November 6, 1971 written 

entrance evaluation for Montclair Police and Fire Departments as provided by 

paragraph 5.

15. Respondent shall submit to the Division the results of the re-evaluation of 

the minority applicants for promotions as provided by paragraph 10.

16. Copies of this Order shall be posted in conspicuous places in the Montclair 

Police and Fire Departments. 17. This Order shall run for a period of five (5) years or until the provisions 

of paragraphs 6 and 11 have been fulfilled, whichever is longer.
65

18. Jurisdiction is hereby retained by the Division on Civil Righ ts to observe 

and require compliance with the terms of this Order and. to issue, if necessary, 

supplemental orders, in accordance with the foregoing provisions.

Vernon N. Potter,

Acting Director, Division on Civil Rights.

Dated Jun e 17,1974.

Sta te of New Jersey, Department of Law & Public Safety, Division on Civil 

Rights, Docket Nos. EG13RM-6282, EG13RM-6833

Charles S. Lige and Gilbert H. Francis, Director of the New J ersey

Division of Civil Rights, complainants

v.

Town of Montclair, Mayor and Commissioners, respondents.

RECOMMENDED FIND IN GS OF FACT AND CON CLUSIONS OF LAW OF HEARING 

EX AM INER JU L IU S WILD STEIN

Appearances: George F. Kugler, Jr., Atto rney General, by: David S. Litwin, 

Deputy Attorney General, for the com plainants; Joseph Dickson, Jr., Esq., for 

the respondents. I. Introduction

Julius Wildstein, Esq., designated from the panel of h earing exam iners by the 

Directo r of the Division on Civil Righ ts in the Departme nt of Law and Public 

Safe ty to conduct a consolidated hearing in the above-entitled ma tte r and to 

recommend findings of f ac t and conclusions of law, pursu ant to the Law’ Against 

Discriminatio n as amended (N.J.S.A. 10 :5 -8 (L )), respectfu lly submits here ­

with his repo rt thereof, following hearings held in this cause on Janu ary 7 and 

8. 1974. A stenographic record of th e h earings was take n, consisting of 388 pages. 

Specific references herein to this record will be indicated by “T” followed by a 

dash and the page number in the transc ript. All underscoring is tha t of the He aring Exam iner.

II . Preliminary Findings of Fact

Upon the verified complaints filed in this cause (Docket Nos. EG13RM-6382 

and EG13RM-6833), the finding of probable cause and the notice of hearing, and 

upon all the evidence adduced upon the aforem entio ned consolidated hearings, the 

following prelim inary fac ts are fo un d:

A. NATUR E OF PROCEEDINGS AND CHARGES

The within proceedings were institute d by Charles Lige, who is black (No. 

63S2), and by Gilbert II. Francis, Directo r of the Division on Civil Righ ts (No. 

6833), by way of separate amended complaints aga inst respondents Town of 

Montclair, Mayor an d Commissioners,1 *3

 bu t consolidated * * *.

The complaints seek to enforce those provisions of the Law’ Against Disc rimination as amended (N.J.S.A. 10:5-1, et seq.), which prohibit racial discrimination 

in employment, and more p articularly , N.J.S.A. 10 :5-4, which pro vid es: “All pe rsons shall have the opportu nity to obtain employment, and to obtain all the accommodations, advanta ges, facilities, and privileges of any place of public accommodation. publicly assiste d housing accommodation, and other real prop erty 

without discrimination because of race, creed, color, national origin, ancestry, age, 

marita l status or sex, su bject only to conditions and limitations applicable al ike to 

all persons. This opportu nity is recognized as and declared to be a civil rig ht.” 

and N.J.S.A. 10:5-1 2(a ) which implements the civil rights established in the 

above-quoted section of the Law in the following language:

“It shall be an unlawful employment practic e . . . (a) For an employer, because of the race, creed, color, national origin, ancestry, and marita l sta tus or 

sex of any individual, or because of th e liability for service in the Armed Forces 

of the United State s, of any individual, to refu se to hire or employ or to bar 

or to discharge from employment such individual or to discriminate again st 

such individual in compensation or in terms, conditions or privileges of employ1

 The original complaint had named indiv idual commissioners as respondents, but the amended complaint deleted those references and referred simply to Mayor and Commis­ sioners, Town of Montclair. The complaint will be accepted as so amended.
66

me nt; provided, however, it sha ll not be an unlawful employment prac tice to 

refu se to accept for employment an applicant who has received a notice of 

indu ction or orders to report for active duty in the armed forces; provided 

fu rthe r th at nothing here in contained shall be construed to bar an employer 

from refusing to accept for employment any person on the basis of sex in those 

certa in circum stances where sex is a bona fide occupational qualification reasonably necessary to the normal operatio n of the particular business or ente rprise.”

The Liy e complaint of December 27, 1971, as amended on August 10, 1973, and 

November 15, 1973, and as joined by the Director, charges th at Lige took the 

firemen’s tes t of the respondent municipality on November 6, 1971, and was 

therea fte r informed that he had failed to meet the minimum requirements. Lige 

alleges that the testing and selection procedures of the Town were unlawfully 

discriminatory. He did not seek damages. T-2 5; T-48? The Liffe complaint, 

as joined in by the Director, fu rthe r charges tha t the November 6, 1971, examination and the selection techniques of the Town had a discriminatory effect on 

black applicants for both police and fire positions.

The Francis complaint, dated Jun e 14, 1972, and amended on March 8, 1973, 

and August 23, 1973, charg es th at the promotional examinations, procedures and 

sta ndards utilized by the respondents’ police and fire departm ents on or about 

December 29, 1971, had a dis parate effect on minority employees and were, 

therefore, illegally discriminatory.

It was stipulated that the only differences between the two complaints was 

th at the Liffe complaint involved appointments and the Francis complaint 

promotions. Both systems are identical, except th at as to promotions, an add ition al step was involved (primarily evaluatio ns by supe riors). T-107. The exams 

for appointment and promotion differ. T-106.

In elab orating on the charges at the commencement of public hearing, the 

deputy atto rney general alleged that the examination had a disp roportionate 

impact on blacks being tested and that there was no necessity for the tests. 

T-4 , 6. 8. He also alleged th at the utilization of oral inte rviews and the unfettered discretion of the director of the two departm ents as to whom to select 

was discriminatory. T-5 to T-6. He stated th at the black population of Montcla ir was 27 percent and the black population of the dep artment was 15 percent. 

T-7. He emphasized that he was not alleging th at any of the respondents had 

evidenced any discriminatory intent, but that the effect of the selection procedures was to illegally dis adv antage minority groups. T -7 to T-9.

Although the respondents did not file any writte n verified answer or any other 

defensive pleading in response to the complaint as they were permitted, but 

not requ ired to do under R.S. 105-16, they nevertheless, durin g the course of 

the hearings, disclaimed any act s of discrimination. The respondents’ atto rney 

argued th at the disparity was caused by the lack of applicants, and stated that 

the only change in the de par tments’ racia l ratios since the time of the filing of the 

original complaint was that one black had lef t and one black probationary member had been added. T-12 to T-16.

B. A SUMM AR Y OP TH E EVIDENCE 

J. Testimony o f Charles S. Liffe

The complainant testified th at in November. 1971, he applied to the respondent 

Town for a position as fireman and there aft er he took a writte n examination 

given by respondents on or about November 6. 1971. When Lige took the Montcla ir test, 80 to 100 people had taken it with him. T-44. A week lat er Lige 

received a letter, exhibit C-l, signed by Chief of Police Reardon, inform ing 

him that the Examining Committee had “determined th at your results of your 

application and exam ination are inadequate for the minimum requirements which 

the committee feels are necessary for the position.” T-17. On November 15, 

1971. Lige went to the office of Chief of Police Jam es Reardon and asked why 

he had failed. Reardon replied only th at Lige had not qualified for the examinatio n. T-18. 19. Lige then filed his complaint in the Division. T-20. He stated 

th at he bad g raduate d from a predominantlv white high school in 1964 in Logan, 

West Virginia. T-28, 49-41. He then attended Bluefield College in West Virginia, fo r one year. T-41-42.

2

 The tra nscri pt of the public hea ring consists of two volumes containing 388 pages. 

Reference to the tra nsc rip t will be made by “T” followed by the page number cited.
67

2. Tes tim ony of Car men Ca pp ad on a

a. Reg ar di ng Lig e co m pl ai nt

The Divi sio n field re pre se nta ti ve testified th a t he had in ves tigat ed th e in sta n t 

ea se s. 1

 He fo un d th a t on e ap pl yi ng to th e po lic e or fire depart m ent (w hi ch are comb ined in the D ep art m ent of Pu bl ic Safe ty ) m us t su bm it a w ri tt en ap plica tion an d ta ke a w ri tt en ex am in at io n, a ft e r which th os e who pa ss ed th e te st are screen ed by th e M on tc la ir Pub lic Saf et y E xa m in in g B oard —w hich in te rv ie w s th os e wh o ha ve pa ss ed th e te st an d m ak es re co m m en da tion s to th e Co mmiss ione r (a ls o re fe rr ed to as D ir ecto r) of th e D epart m ent of Pub lic Saf et y, wh o in tu rn mak es th e final de cis ion re gar din g ap po in tm en t. T-5 2. T he Exa m in in g B oa rd is se lected by th e Com m ission er of Pu blic Saf et y, an elec ted official wh o appoin ts is 

al so ref er re d t o as the d ir ecto r of th e dep ar tm en t. T -54. The re sp on de nt ’s answ er s to th e in te rr ogato ri es , E xhib it C-2, st ate in p a rt th a t th e Nov em ber 6, 1971, ex am in at io n w as scor ed by Dr . E. M. Gl ass cock, C ha irm an of th e E xam in in g Boa rd. Twen ty -n in e of th e fif ty-e ight ta kin g th e ex am pa ssed . F o u r of th os e pa ss in g th e ex am were el im in at ed a fte r in ve st ig at io n by reas on of a po lic e reco rd , fa il u re to m ee t reside nc y re quir em en ts of th e S ta te an d ph ys ic al ha nd ic ap . F o u r w hi te s an d no bl ac ks be ca me eligible fo r ap poin t­ m en t as firemen, an d on e w hite an d no bl ac ks were ap po in te d as policem en. Th e la s t man ap po in te d to th e fire depart m ent pri or to th e te st w as ap po in te d on Octo be r 19, 1970. T es ting has bee n re qu ired sin ce a t le ast No ve mbe r 25, 1952. For ty -o ne of th e pre se nt fir em en were ap po in te d p ri o r to th a t tim e. Cap pa do na testified th a t he in te rv ie w ed Dr. Glas scoc k of th e E xa m in in g B oa rd on Se ptem be r 11, 1972, and he st ate d that, in Nov em be r of 1971, th e W on de rlic ex am in at io n an d th e C al if orn ia Ps yc ho logica l In ve nto ry ha d been used in sc re en ­ ing . See T-60. The la tt e r te st w as adm in is te re d but w as no t us ed to de te rm in e if an ap plica nt pa ss ed or fa ile d ; on th e W on de rlic te st , a minim um score of 17 is ne ed ed to pa ss an d th os e pe rs on s w ith scor es below th e bo tto m 25 pe rc en tile wer e elim in at ed . T-6 0 to T- 63 . E xhib it C- 3 is th e W on de rlic te st it se lf an d E xhib it C-4 is a le tt er which Cap pa do na rece ived fr om Dr. Glas scoc k confirm ing th e ab ov e an d st ati ng th a t he gra des th e exam in at io ns him se lf. T- 61 to T- 62 . No ne of th e qu es tio ns on th e W on de rlic te st dir ec tly co nc ern po lic e or fir e wo rk. G la ss ­ coc k sa id th a t th e W on de rlic te st was no t pro fe ss io na lly va lidat ed . T- 64 , ii. H e st ate d th a t a t th e ora l in te rv ie w he an d m an y oth er mem be rs of th e E xam in in g B oa rd ha d as ke d th os e que st io ns which seem ed re le vant to him . T-67 . No gu id e­ line s ha d bee n giv en to mem be rs of th e E xam in in g Boa rd as to how to arr iv e a t th e ir decis ion . T- 68 . Gl asscoc k ha d to ld C ap pa do na th a t th er e was no co rre­ la ti on betw een th e te st scor es an d hi s re co m m en da tion s. T- 68 . Mr. Sh ep he rd of th e E xa m in in g Boa rd , an A tto rn ey , told Cap pa do na th a t per­ so na lity w as an im port ant fa cto r in ev al uating th os e appea ri ng be fore t he Boa rd . T- 69 . Sh ep he rd sa id th a t th e Boa rd mak es its de cision s ba sed on co nsen su s. T- 72 . E xhib it C- 5 is a li st pr ov id ed by th e re sp on de nt s sh ow ing th a t of th e m en wh o took th e jo in t ex am in at io n on Nov em ber 6, 1971, 40 were w hite an d 19 wer e blac k. Of th os e pa ss ing, 26 wer e w hi te an d th re e were blac k. A fter in te rv ie w s on Dec em be r 11, 1971, tw o bl ac ks an d 13 w hi te s w er e reco mmen de d. One blac k an d six w hi te s were ap po in te d to th e police depart m ent as of Jan u ary 1, 1972. Cap pa do na spok e w ith Dr. Ralph Ro ge rs, a mem be r of th e E xa m in in g B oa rd , on No vemb er 29, 1972, an d he st ate d th a t th e Boa rd ha d received no specific in st ru cti ons as to how to arr iv e a t th eir re co m m en da tion s an d ad de d th a t th eir qu es tion s were aim ed a t ab ility, att it ude, ne rv ou sn es s an d p ri o r att it ude. T-7 4- 75 . E xhib it C- 7 is a li st of po lic em en as of Ju n e 1, 1972. E xhib it C-8 is a li st of fir e­ me n as of April 21, 1972. T he polic e dep art m ent ha d 89 w hi te s an d 15 b la ck s an d th e fire dep ar tm en t ha d 89 w hi te s an d th re e bla ck s. T -7 7 to T- 79 . Th os e fig ures w er e th e sa m e as of Dec em be r 27, 1971— th e dat e of th e fili ng of th e co m pl ai nt . T- 81 , 89. The re w er e th re e ca te go ries of appli cants ; fire , police, an d police fo r fire. App lic an ts in all th re e ca te go ries w er e giv en th e W on de rlic te st. T- 82 . Th e re sp on de nt s sa id th a t th ey did no t kn ow t he ra ce of un su cc es sful ap pl ic an ts . T- 81 . Cap pa do na in ve st ig at ed to asc ert ain th e ra ce of ap pli cants by ta lk in g to th em and su bp oe na ing th e ir p ho ne reco rds. T -8 3 to T- 89 . E xhib it C-9 was co mpiled by him . T- 91 to T- 97 . It sh ow s th a t 19 bl ac ks an d 39 w hi te s were tested . T hre e blac ks (1 6% ) and 26 w hites (6 7% ) pa ss ed . T- 98 , 99. The n, follo wing in ve st ig a-

’ The respondent. Commissioner McLaughlin, later testified that Cappadona's testimony was accurate as to th e selection and promotion procedures. T—324, 325.
6S

tion by the Detective Bureau, two blacks and ten whites were eliminated. T-99. 

One black and 16 whites were interviewed by the Exam ining Board and one 

black and 14 whites were appointed to a position or to the waiting list. T-100, 101. 

Thus, six percent of the black applica nts and 36 percent of the white applicants 

were appointed.

Cappadona continued that Dr. Rogers had told him that th e vote of the Examing Board on applicants was always unanimous. T-110 to T -ll l. No one was 

appointed to the police or fire dep artments after November 6, 1971. T-116. 

ft. Regarding Francis compfaint

Cappadona testified th at the respondents’ promotion procedures were similar 

to appoint procedures and involved written exams with pass-fail grades for 

positions from patrolman up to sergeant but not for lieu tenant and above, and 

also involved interviews by the Examining Board of those passing the exams. 

T-130 to T-132. The Examining Board was also given the evaluation scores on 

job performance assigned by the supervisors of those seeking promotion. T-132. 

The factors considered in the evaluational reports a re : 4 reliability, cooperativeness, job performance, physical condition, potential, ada ptability, conduct, initiative, bearing, dress, application, job knowledge, public relations, volume of work, 

report writing, equipment care and operation, accuracy, practic al judgment, 

ability to follow directions and leadership. The Board made its recommendations 

to the Director of the Departm ent of Public Safety, who in turn made all final 

decisions. T-132. E xhibits C -l l (A), (B) and (C) are the exam inations given on 

September 25, 1971, to captains, lieu tenants and sergeants, respectively. T-135, 

136. Exhibit C-10 are the respondents’ answ ers to interroga tories rela ting to 

the Francis complaint.

As of the date of the exa minations, the Examining Board consisted of Dr. E. M. 

Glasscock, a psychologist, Robert B. Shepard, Jr., an attorney, Lee D. Arning, an 

investment broker, Edward F. Robinson, a college professor, and Ralph Rogers, a 

school principa l; Dr. Rogers is black and the other members are white. T-134. 

The promotional examination is prepared by the Board. Rich ard Pettingill, who 

was dire ctor in 1971, stated to Cappadona on April 8, 1972, that he drew up the 

promotional exams himself from suggestions from subordinates, Essex County 

Police and prior Police Academy exams. T-137. Pettingill said that the tests had 

not been professionally valid ated. T-138. Pettingill wrote out the answers for the 

promotional exam ination questions based on answ ers given by his chief and 

deputy chiefs. T-140. Exh ibit C-12 is the master answer sheet for the essay 

portion of the sergeants exam. T-140. Pettingill took the exam score and service 

record into account in making promotions and considered the opinion of the 

Examining Board, assigning them the following weights: exam, 45% : service 

record, 45% ; and Exam ining Board recommendation and seniority, 10%. T-141. 

Also taken into account was the employee’s “public rela tion s” value, i.e., how he 

presented himself to the public. T-143. The Exam ining Board recommendations 

fell into the following categories : highly recommended, recommended, acceptable, 

and not acceptable. T-14 3,144.

On September 11, 1972, Cappadona interviewed Dr. Glasscock, who was then 

chairman of the Exam ining Board. T-144. Glasscock confirmed th at the promotional exam inations were not professionally validated. T-144. Exh ibit C-13 

is a list of appointments for interviews with the Board for promotional candidates on November 20, 1971, showing that the interviews were scheduled twenty 

minutes apart. T-146. T he Board received ten minutes before the interviews the 

examination scores, the supervisor’s evalu ation scores and the personnel files. 

T-147, 148. Glasscock said th at the Board looked for leadership, ability, initiative 

and good judgment. T-149. Atte nding the interviews by the Board were the 

director, police chief and fire chief. T-151 to T-152.

Cappadon a’s interview with Dr. Rogers on August 8, 1972, brought out the 

fact th at individual Board members gave different weight to the interviews, 

evaluations and exam scores. T-153. Exh ibit C-14 is the working paper which 

Rogers and the Board used during the interviews. T-154 to T-155. It shows the 

examination score, evaluation score and “cumulative" score for each applicant. 

Dr. Rogers averaged together the exam, evaluation and interview scores to get 

one cumulative score upon which he ranked the applicants. T-157 to T-158.

Shepard told Cappadona th at he asked applicants at the interviews how they 

felt about the men working und er them and whethe r they had worked at the 

sergea nt’s desk; personality was am imp ortant factor for him. T-158. Exh ibit

4

 See Ex hibit C-10, atta chm ent e ntitled “Rating Charac teris tics For Eva luation Report.'
69

C-15 is a lis t of the scores in the September 25, 1971, promotional exa m; 

resignatio ns of “B” refer to blacks. T—159. Shepard said that the Board asked 

abo ut education, Interest in the job and “any question that comes to the questioner ’s min d’’ could be asked. T—161. Exhibit C-16 shows the composition of 

the Police Departm ent as of J anuary 1, 1972, and February 1, 1972. T-162 to 164.

Each promotional candidate is eva luated by his superiors on his shift. T-170. 

Thus, the number of men evaluating each subo rdinate would vary. T-173. Each 

supervisor once a year filled out a sep ara te form, atta che d to question 5A of 

Exhib it C-10. T-172. No instructions were given to evaluating officers as to how 

they should evaluate the ir subordinates. T-171, 172. This evaluation system is 

app are ntly no longer in use. T-133. The “av erag ed” ev alua tion scores were given 

to the Board. T-236. Number 3A of Exhibit C-10 shows the scores of the averaged 

evaluation s reports, Exhibit C—7 shows the race of the candidates and Exhibits 

C-14 and C-15 shows their exam and exaluation scores. T-174. Exhib it C-17, 

prepared by Cappadona, shows how the different levels of promotees scored 

in the evaluations repo rt (with “B” representing blacks and slashes refe rring 

to repetitive scores). T—177, 178. Exhibit C—18, also prep ared by Cappadona, 

shows the exam scores by job categories of promotional applicants, with the 

line indicating the cutoff score for consideration of “70”. T-178 to T-181. Exhibit 

C-19, prep ared by Cappadona, is a list of the exam and evaluation scores and 

prom otional results for all applica nts and an indic ation of the race of the 

supervisors making the evaluations. C-19 thus shows that six of the seven 

black candidates for promotion were evaluated solely by white superior officers. 

C-19, and C-20 compiled from oth er exhibits, also show how applicants of 

each race fared at each stage in the promotional procedure as a res ult of the 

September 25, 1971, examination. T-192 to T-202.

Therefore, Exhibits 17, 18, 19 and 20 recapitulate, in easily unde rstandable 

fashion, the data contained on most of the other exhibits. They show that as to 

supervisory evaluatio n scores, the one black lieu tenant scored below the two 

white lieutena nts, the one black sergea nt scored below the six white sergeants, 

and the seven black patrolmen and detectives were rank ed number 7, 15, 20, 23, 

24, 34 and 36 among th e 36 patro lmen and detectives on the police force. (Exhibit 

C-17). On the examination, the thirte en patrolmen and detectives passing were 

all white and the seven black patrolmen and detectives failed togethe r with sixteen whites. See E xhib it C-18. Among sergeants, the one black failed (receiving 

the lowest score), together with four whites, and two whites passed. See E xhibit 

C-18. Among lieutenants, the one black failed (receiving the lowest score), together with the two whites. (Ex hib it C-18). Thus, in the test for sergeants, 

seven blacks took the written test, none (or 0%) passed, none were interviewed 

and none were promoted, while 29 whites took the test, thirteen (or 45%) 

passed, thirteen were interviewed and five (or 17%) were promoted. See Ex hibit 

C-20. In the test for lieutenan t, one black took the test, one was interviewed and 

none were promoted, while six whites took the test, six were interviewed, and 

five (or 83%) were promoted. See E xhibit C-20. For captain, one black took the 

test, one was interviewed and none were promoted, while two whites took the 

test, two were interviewed and two (or 100%) were promoted. See E xhibit C-20. 

Thus, none of the nine black candidates for all promotions were promoted, while 

12 of the 37 white candidates (or 32%) were promoted. Exh ibit C-20.

The composition of the police departm ent as of Jun e 1, 1972, wa s: chief and 

two deputy chiefs, white; captain, 1 black and 8 w hites; lieu tenant, 1 black and 

6 whites; sergeant, 1 black and 7 whites; detective, 5 blacks and 10 whites; and 

patrolmen, 7 blacks and 54 whites, for a total on the force in all positions of 15 

blacks and 89 whites. E xhibit C -7 ; T-79.

The comparison of the fire de partment as of April 21, 1972, w as : chief and five 

deputy chiefs, white; captain, 1 black and 9 whites; lieutena nt, no blacks and 12 

whi tes: firemen. 2 blacks and 59 w hites. Thus, the total fire departm ent breakdown was 86 whites and three blacks. T -9 ; E xhibit C-8.

Cappadona testified that there is no way for an applicant to appe al the results 

of tests or the decision on his application. T-200 to T-202. He stated that Pettingill had told him that p rior to 1971, a different examination was given containing 

gene ral-type questions related to general police knowledge. T-209. From 1969 to 

1971, no promotions were made. T-210. In 1969, three blacks and two whites were 

promoted. T-210, 212. All test papers for promotions were graded anonymously. 

T-220. He sta ted th at “validation” to him refe rred to the establish ment of a 

relatio nship between high tes t scores and high job performance. T-223. Dr. Glasscock said th at the California Psychological Inventory w as adm inistered but given 

no weight because it had not been validate d. T-241 to 243 .
70

At the conclusion of the Sta te’s case, the deputy atto rne y general introduced 

for the record admitted into evidence the following sta tistic s from the 1970 

United States Census: Mon tclair population, 11,985 (27.2%) black, out of 44,055. 

T-253,259. Essex County population, 279,068 (30%) black, out of 929,984. T-259. 

He furth er stated that he had considered calling an expert witness, but had 

determ ined not to do so until the respondents had made some colorable attempt 

to show the job relatedness of the examinations. T232.

•?. Testimony of Theodore McLaughlin

McLaughlin had been a Montclair Town Commissioner since 1964 and Commissioner of Public Safety since May of 1972. T-284. Afte r May, 1972, the departm ent 

needed more men so he placed a newspaper advertisement with rega rd to the 

examination. T-291 to T-292. The advertisement announced the exam ination for 

police and firemen, noting, however, that there was no current openings for the 

fire department. T-292.

He stated that the respondents discontinued use of the Wonderlic test which 

had been given in November, 1971, because “I thought perhaps we could make 

them a little different, a little better with th at thought in mind th at we had to 

be f ai r to the applicants [and to] the people of the Town of Montclair, and the 

best people we could obtain would be assigned or picked for the position.” T-293, 

296. He felt that the Wonderlic test “wasn’t necessarily a fa ir tes t,” T-319 to 

T-320, an d he “did not think much of the test.” T-326. Exh ibit R -l is the form of 

Evaluation Report for the Examining Board which the dep artm ent is now using 

for evaluatio n and they have used it at one evaluation in lat e 1973. T-299 to 

T-304. A physical test has also now been added. T-305.

The new exam inations utilized by the police and fire divisions (Ex hibits 

R-2 an d R-3) were recommended to them by tea chers at M ontclair State College, 

T-314 to T-319, 329-330, and has been given for promotion in 1973, when 40 to 

50 men took it and it was determined th at the cut off score would be 70 since 

that would give the department enough ap plicants. T-335.

McLaughlin stated that Cappadona in his testimony had accu rately described 

the promotion and entrance selection procedures. T-324, 325. Applicants who 

failed the 1971 tes t were not able to have their applications brought before 

the Examining Board. T-306. Recommendations of the Board are unanimous, 

and its decisions are final if concurred in by the Commissioner. T-310. Three 

men have been hired by the fire departm ent since 1970, one of whom (Espy) 

was black. T-310, 311. All three were chosen from a group of 14 whites and 

2 blacks. T-347. He stated th at as Commissioner he had the power to establish 

or dissolve the Exam ining Board and th at its members served at his plea sure; 

the re is no ordinance governing standard s for selection or promotion. T-336 to 

T-339. The police regu lations say th at there is to be a tes t for promotions, 

except to chief. T-341. He was aware of no steps ever having been taken by the 

respondents to recruit black applicants in partic ular. T-349 to T-350. There is 

no form al structure within the departm ent for appeals from any selection or 

promotion decisions. T-355, 356. The ordinance governs how many men may 

be in the department (fire 89, police 105) and is silent as to how many men 

may be in each officer rank category ; 8 the latte r decisions are in the Commissioner’s discretion. T-356 to T-359. From about November 1963 to 1973, 

30 men were appointed to the fire division, he said. (T-362.) aud 62 to the 

police division.

b. Testimony of Gordon W. Scanlon

Scanlon, prese ntly deputy chief of police h as been a police officer for 28 years. 

T-367. Dr. Glasscock had suggested to him th at he go to Montclair State College 

and McLaughlin agreed, and in late December, 1972, he saw Dr. John Seymour, 

chairman of the College Psychology Department, who gave him the newr

examination for the departm ent. T-369 to T-372. He told Dr. Seymour that 

the dep artment wanted a non-discriminatory test. T-383, 384. He had no personal information as to wh ethe r or not th e new’ examination s were discriminatory. 

T-384 to T-385. He stated th at job descriptions are found in Exh ibit HE-1, the 

new rules and regu lations relatin g to promotion. T-372. Those were the first 

amendments to the rules of 1950. T-373 to 380.

B T he re vi se d or di na nc es ap pear to re str ic t th e pe rs on ne l of th e po lic e divisio n to on ly 

one ch ie f an d tw o de pu ty ch ie fs (see sec. 13 -6 ) ; an d in th e fire di visio n, to one ch ief 

(se e sec. 11-8 ).
71

III. Discussion and Application of the Law Against Discrimination to These

Proceedings

A. TH E WR ITTE N EXAM IN ATIO NS FOR HIR IN G ANU PROMOTION

AU parties concede tha t the pivotal issue in this case is whether or not the burden of coming forward with evidence shifted to the respondents a t any time in the proceedings. The respondents state at page 10 of their post-hearing brief tha t the evidence submitted by the complainants was that “blacks did not score 

as well as whites on the test’’ given on November1

 6, 1971, and that no evidence 

was produced by the complainants as to why th at was the case. The respondents argued t hat they were not required to come forward with any evidence justifying the test but that instead the complainants were obligated to produce expert testimonj’ showing tha t the tests were invalid. The deputy attorney general, on the other hand, stated repeatedly throughout the hearing that he had made a conscious decision not to call an expert witness until the respondents made “some colorable attempt” to show the job relatedness of the examination. As a result of their respective legal positions, the complainants produced only evidence as to how the entry level and promotional examinations had dis­ advantaged minority applicants, and the respondents did not make any significant attem pt to factually justify the tests. The evidence as to the way in which the respondents’ hiring and promotion systems were organized and the way in which they had affected the applications of persons of all races, was entirely in agreement and could almost have been stipulated. The Hearing Examiner must, therefore, proceed to make findings of fact and conclusions of law from the 

uncontroverted evidence described supra. Numerous recent cases involving alleged discrimination have dealt with the question as to the effect of statistics showing that minority groups have been disproportionately disadvantaged by any employer practice. Employers are barred under the Law Against Discrimination from refusing to hire or employ, from barring from employment or from discriminating against any individual in the- terms, conditions or privileges of employment because of the race of said persons. N.J.S.A. 10:5-12( a). Additionally, the opportunity to obtain employment without discrimination is declared to be a civil right. N.J.S.A. 10:5-4. Numerous state and federal cases have held that discrimination is committed not only by men with evil motives, but also by those whose pattern of operation has a discrimina­ tory impact on a p articula r class of people—a class which is recognizable by race. 

To prove that this discrimination exists, the courts have considered only objective criteria and the effect of respondents’ practices on minority persons.

Most directly in point is the recent case of Blair v. the Mayor and Council,

Borough of Freehold, et al., 117 N.J. Super. 415 (App. Div. 1971), certif. den. 60 

N.J. 194 (1972). The respondents therein had been found guilty of discrimination as an “employer” by the Division based on the nature of their membership and admissions procedures for entry into the volunteer fire department. One of the Borough’s arguments on appeal was that it could not be found to have violated the Law Against Discrimination in the absence of a showing of illegal intent. The court was unconvinced by tha t argument and upheld the Director’s finding of discrimination on the ground that “the admission procedures established under the various borough ordinances, including the latest, constitute an unlawful employment practice because of the establishment of requirements irrelevant to 

the proper performance of the duties of firemen.” Id. at 417. Despite the court’s 

conclusion that “no overt act of discrimination was established at the hearing,” (Id. at 417) it struck down the employment practices on the ground that “we cannot conceive of any lawful reason for the requirement of a vote of the mem­ bership . . . for admission of a new member thereto. The only rational reason for such a requirement is exclusion. * * * motivated at least in par t by race” 

(Id. at 417). The federal courts have come to the same conclusion in interpreting section 703(a) (1) of Title VII of the Federal Civil Rights Act of 1964, 42 U.S.C.A. 2000- e- 2( a) —the provisions of which are virtually identical to those of the Law 

Against Discrimination. In United States v. Sheet Metal Workers International

Association, 416 F.2d 123 a t 131 (8tli Cir. 1969) ; and Dobbins v. Local 212, 292 

F. Supp. 413 at 448 (S.D. Ohio 1968), for example, the federal courts found that the defendants’ practices, while racially non-discriminatory, had a discrimina­ tory effect in tha t they carried forward the incidents of past discrimination into the present. A clear expression, this policy appears in a case dealing with 

Seniority Rights and Title VII, Local 189, Papermakers and Paperworkers v.
72

United States, 416 F.2d 980 ( 5th Cir. 1969), cert. den. 397 U.S. 919 wherein the 

cou rt stated : (a t pg. 996)

“Section 707(a) allows the Attorney General to enforce the Act only where 

there is a ‘patte rn or practice of resistance to the full enjoyment of any of the 

rights secured by this subcha pter’ and where the pattern or practice ‘is intended 

to den.v the full exercise of the rig hts herein described.’ D efendants contend that 

no such condition existed here. The same point arose in Dobbins. The court rejected it. * * * In reviewing sta tutes, rules or conduct which res ult in the effective denial of equal rights to Negroes or other minority groups, inten tion can 

be infe rred from the operation and effect of the sta tute or rule or from the conduct itself. The conduct of defend ant in the present case ‘by its very nature’ contains the implications of the requ ired intent. Local 357, Intern. Broth, of Team ­

sters, etc. v. National Labor Delations Board, 365 U.S. 667 a t 675, 81 S. Ct. 835, 

6. L. Ed. 2d 11 (1961), citin g Radio Officers' Union, etc. v. National Labor Rela ­

tions Board, 347 U.S. 17, 45, 74 S. Ct. 323, 98 L. Ed. 455 (1954. . . . Thus, the 

Attorney General has a cause of action when the conduct of a labor organization 

in relation to Negroes or other mino rity groups has the effect of creatin g and 

preserving employment opportu nities for whites only. Section 707(a) of the 

Civil Rights Act of 1964. Here, as in Dobbins, the conduct engaged in had raciallydetermined effects. The requ isite intent may be inferred from the fac t that the 

defe ndants persisted in the conduct after its racia l implications had become 

known to them. Section 707(a) demands no more.” Id. 9 See also, e.g., Quarles v. 

Philip Morris, Inc., 279 F. Supp. 505, at 516 (E.D. Va. 1968) ; United States v. 

Bethlehem Steel Corp., 312 F. Supp. 977, 933 (W.D.N.Y. 1970), mod. 46 F. 2 652, 

658-659 ( 2nd Cir. 1971).

The courts have repeatedly said th at in cases involving rac ial discrimination 

charges, “sta tistics often tell much and courts liste n.” Alabama v. United States,

304 F. 2d 583, 586 ( 5th Cir. aff’d. p er curiam 371 U.S. 37 (1962). Again in Jones v. 

Lee Way Motor Freight, Inc. 431 F. 2d 245, 247 (10th Cir. 1970), cert, denied. 

401 U.S. 954 (1971), the Court said :

“In racial discrimination cases, sta tistic s often dem onstrate more than the testimony of many witnesses, and they should be given proper effect by th e courts.”

See also McDonnell Douglas Corporation v. Green, 411 U.S. 792, 93 S. Ct. 1817, 

1825-26 (1973).

These principles apply both where general under-repre sentation of, and hence 

discrimination again st, a protecte d class is alleged, and where a specific employment prac tice is at issue. An example of the form er is United States v. Hayes

International Corp.. 456 F. 2d 112 (5th Cir. 1972), (in action brou ght under Title 

VII of the Civil Rights Act of 1964, 42 U.S.C.A. § 2000e, ct seq., the operative 

provisions of which are much like N.J.S.A. 10:5- 12(a) . The evidence showed tha t 

the defe ndant had many times as many whites as blacks in official and technical 

positions and had overall a minuscule percentage of black employees. The black 

population of the local area was 30 percent. The court, reversing the lower court, 

said :

“These lopsided ratios are not conclusive proof of past or present discriminatory hiring practic es: however, they do present a prima facie case. The onus of 

going forw ard with the evidence and the burden of persuasion is thu s on Hayes.” 

Id. at 120.

The court co ntinue d: “The inference [of discriminatory hiring practices] arises

from the statistics themselves and no other evidence is required to support the

inference. At this stage of the proceedings, it was not necessary for the Attorney 

General to show the availability of skilled Negroes in the community to perform 

the jobs in question because the burden of going forward and showing the lack 

of qualified Negroes was upon Hayes.” Id. (Emphasis added )

In Par kham v. Southwestern Bell Tel. Co., 433 F.2d 421 (8th Cir. 1970), the 

statistics showed a low percentage of black employees, except in menial jobs. The 

court ruled : “We hold as a matt er of law that these statistics . . . established 

a violation of Title VII of the Civil Rights Act of 1964.” Id. at 426. To similar 

effect, see Bing v. Roadway Express, Inc., 444 F.2d 687, 689 (5th Cir. 1970) ; 

United Sta tes v. Ironworkers Local 86, 443 F.2d 544, 551 (9th Cir. 1971).

* Tt is unim p o rt an t w het her on e sp ea ks In te rm s of pr ov in g th e di sc ri m in at ory effe ct of 

co nd uc t, or of cr ea ti ng a pr es um pt io n of in te nti onal di sc rim in at io n up on th e subm iss ion 

of a pr im a fa cie case. Th e co urt s sp ea k bo th wa ys. Co mpare Ga sto n Cou nt y v. Uni te d S ta te s,

395 U.S . 285. 89 S. Ct. 172 0 (1 80 9) : Griffin v. JU ino is, 351 U.S. 12 (1 95 6) : Ho bson v. 

Han se n, 269 F. Supp. 401 (D.C.D .C. 19 65 ). w ith U ni te d Sta te s v. Je ffer so n C ou nt y Boa rd

o f Edu ca tio n, 372 F. 2d 836 , 88 7- 88 8, (5 th Cir. 19 66 ). In ei th er si tu ati on, th e th eo ry 

lead s to a find ing of di sc rim in at io n un le ss re sp on de nts su bm it ve ry su bst anti al ju st if ic ation s fo r th e c ontinuat io n o f th e p a tt e rn an d p ra ct ic es .
73

The la tter reasoning recently culm inate d in the landmark case of Griggs v. 

Duke Power Vo., 401 U.S. 424, 91 S. Ct. 849 (1971), wherein the United States 

Supreme Court gave great weight to the purpose behind the statute which “was 

to achieve equality of employment opportunities and to remove bar riers tha t 

form erly operated to favor white employees.” (Id. 430) The cou rt held: (at 

Id. 430,431,432)

. . Under the Act, practices, procedures or tests neutr al on their face, and 

even neutral in terms of in tent, can not be maintained if they operate to ‘freeze’ 

the sta tus quo of prior discrim inatory employment practices. . . . What is required by Congress is the removal of artificial, arbitra ry and unnecessary barrie rs to employment when the barriers operate invidiously to discrim inate on 

the basis of racial or other imperm issible classification. . . . Congress has now 

require d th at the posture of the job seeker be taken into account. . . . The Act 

proscribe s not overt discrimination but also practices that are fa ir in form, but 

discrim inatory in operation. . . . [O]ood intent or absence of discriminatory inten t does not redeem employment procedures or testin g mechanisms that operate as ‘built-in- headwinds’ for minor ity groups and are unre lated to measuring

job capability. . . . [CJongress directed the thrus t of the Act to the consequences

of employment practices, not simply the motivation.” Id. (Emphasis added ) 

The Griggs case also clearly estab lished the sole sta ndard und er which an 

employer may justify practices which have a discriminatory effect. The employer has the “burden of showing,” according to the Supreme Court, “that any 

given requirement has a manifest rela tionship to the employment in question.” 

(Id. 432) “The touchstone is business necessity.” Id. 431 It is not enough tha t 

the practice is “useful” or even th at there is a business purpose or reason for 

it. There must be an overriding, legitim ate business purpose which is necessary 

and essential for the safe and efficient operation of the business. Local 18U,

United Papermakers and Paperworkers v. United States, supra at 989; Local 53

v. Volger, 407 F. 2d 1047 (5th Cir. 1969) ; Robinson v. Lorrilard Corporation,

444 F.2d 791, 796-798 (4th Cir. 1971).

The New Jers ey Supreme Court, has addressed itse lf to the definition of a 

prima facie case in Jackson v. Concord Company, 54 N.J. 113 a t 119 (1969). The 

cou rt ther ein st at ed :

“Although the burden of persuasion by a preponderance of the evidence rests 

with the complainant throughout, when such [dilatory or evasive] conduct appears, a stron g case is made out, and a respondent has a heavy tas k to justify his 

action s. The effort of these respondents was indeed feeble and utterly unconvincing.” Id. at 119.

See also Booker v. Board of Education, 45 N.J. 161 (1965) ; Hobson v. Hansen,

269 F. Supp. 401, 429, (D.D.C. 1967) ; Morean v. Board of E ducation o f Montclair,

42 N.J. 237, 240 (1965).’

The Equal Employment Opp ortunity Commission, the adm inistrative agency 

vested with power to enforce Title VII, has promulgated certain “Guidelines on 

Employee Selection Procedures,” 29 C.F.R. § 1607 (1970). Noting that “in many 

instanc es persons are using tests as the basis for employment decisions without 

evidence that they are valid predictors of employee job perform ance” and that such 

tests often “[yield] lower scores for classes protected by Title VII.” the Commission determined quasi-legislatively th at : “any tes t which adversely affects 

hiring, promotion, tra nsfer or any other employment or membership opportun ity of classes protected by Title VII, constitu tes discrimination unless: (a) 

the test has been validated and evidences a high degree of utility as hereinafter 

described, and (b) the person giving or acting upon the results of the par ticular 

test can demonstrate that alt ern ati ve suitable hiring, tra nsfer or promotion 

procedures are unavoidable fo r his use.” 29 C.F.R. § 1607.3.

The evidence of the tes t’s validity should consist of “empirical data demonstratin g th at the test is predictive of or significantly correla ted with important 

elements of work behavior which comprise or are relevant to the job . . .” Id. at 

§ 1607.4(c). The empirical evidence of validity must be based on studies employing generally accepted procedures for determining criterion-related validity, such 

as described in “Stand ards for Educational and Psychological Tests Manual” and 

must be accompanied by sufficient evidence from job analysis to show the 

relevance of the content. Id. at $ 1607.5(a). The resu lts of the validation study 

must also include graphical and sta tis tic al respresentations of the relationships

7

 The principles discussed above at pages 19 e t seq. have sometimes been referred to as 

the “effect test” for measuring whether or not discrimination exists. The stan dard Is now 

well established and has been often applied to allegedly discriminatory employment 

exam inations.
74

between the test and the crit eria, together with average scores for all tests and 

criteria reported for all relev ant subgroups. Id. at § 1607.6. Subsequent sections 

define acceptable modes of validation.

In Griggs v. Duke Power Co., supra., the court found these regu lations to he 

wholly consisten t with the legislative purpose behind the enactment of Title VII 

and held th at the statute forbids the use of any tests or sta ndard s “unless they 

are demonstrably a reasonable mea sure of job performance.” (401 U.S. at 436). 

It also sta ted that “Congress h as placed on the employer the burden of showing 

th at any given requirement must have a man ifest relationship to the employment 

in question.” (401 U.S. at 432). In th at case, one of the tests at issue and held 

invalid was the Wonderlic, which the court, in language applicable to the present 

case, held was adopted “without meaningful study of [its] relationship to 

job-performance ability,” (Id. 431) but rather “on the company’s judgment 

that [it] generally would improve the overall quality of the work force.” (Id. 

431). The court pointed out (401 U.S. at 433) th at it was not dissuade d by the 

provision in Title VII, Section 703(h) authorizing “any professionally developed 

ability test that is not “designed, inten ded or used to discrim inate because 

of race . . .” The Law Against Discriminatio n contains no such exception for 

any type of testing.

The cou rt in Griggs found th at whites had fared better on the tests than 

blacks and th at that such “consequence would app ear to be directly traceable 

to race.” (Id. 430) In making th at finding, the court, in footnote 6, refe rred to 

several E.E.O.C. decisions which concluded that the two tests in question, one 

of which was the Wonderlic test, resulte d in fewer high tes t results for blacks 

tha n for whites. Decision of E.E.O.C., C.C.H. Empl. Prac. Guide, 1fl7,304.53 

(Dec. 2, 1966) ; Decision of E.E.O.C. 70-552, C.C.H. Empl. Prac. Guide, H6139 

(Fe bru ary 19,1970). The latter case c ites several studies in support of its general 

finding on test results from the Wonderlic and Bennett tests in question. (See 

“Race, Employment, Tests and Equal Opportunity,” Industrial Management,

March, 1966; Barrett, “Gray Area s in Black and White Testing,” Ilarv. Bus.

Rev., January-F ebr uary, 1968, p. 92; note “Legal Implications of the Use of 

Standardized Ability Tests in Employment and Education,” 68 Colum. L. Rev.,

p. 692-744, (1968).

It has alread y been pointed out supra th at the courts have held that a 

convincing statistical demonstration of discrimination shifts the burden of 

justify ing the employment practices which cause the discriminatory effect. 

This is, in fact, particularly app rop riate where form al tests are at issue. The 

matt er was considered with some explicitn ess in Chance v. Board, of Examiners,

458 F. 2d 1167 (2nd Cir. 1972). The evidence showed that whites passed a 

cer tain tes t for promotion to supervisory positions with New York City schools at 

a rate one-and-a half times th at of blacks and Puerto Ricans and that the City 

had fewe r minority supervisors than other large cities. The cou rt held th at 

the burden of proving the test to be job-related shifted squarely to th e respondents 

(the respondents did, in fact, present expert testimony, aft er which the plaintiffs 

presented their own expert testim ony). The court reasoned:

“We furth er believe th at once a prima facie case of discrimination was made, 

it was app ropriate **** to shift to the Board a heavy burden of justifying its 

contested exam inations by at lea st dem onstratin g that they were job related. 

Fir st, since the Board is specifically charged with the responsibility of designing 

these exam inations, it certain ly is in the better position to dem onstrate their 

validity. . . . Second, once discrimination has been found, it would be anomalous 

at best if a public employer could stand back and require racial minorities to 

prove th at its employment tests were inadequa te at a time when this nation is 

demanding th at private employers in the same situ ation come forw ard and 

affirmatively demonstrate the validity of such tests. Id. at 1176.” (Cita tions 

omitted)

See also Western Addition Com mun ity Organisation v. Alioto, 340 F. Supp. 

1351 (N.D. Cal. 1972), wherein the court stated : “[W]here the hiring practice of a public agency (even though the agency does not intend to discriminate again st minority groups) actua lly produces a situatio n in which the 

perce ntage of minority group persons employed is grossly and disproportionately less than the percentage o f min ority group persons in the general population, 

such effect alone **** does render the method of selection sufficiently suspect to 

make a prim a facie case of unc ons titu tionality and shi fts to the public agency 

the burden of ju stifying the use of generalized hiring tests by dem onstratin g tha t 

there is a reasonably necessary connection between the qua litie s tested in the 

exam ination and the actual requirem ents of the job to be performed.” Id. a t 1352.
75

In Castro v. Bcechcr, 334 F.Supp. 930 (D.Mass.1971), the court noted tha t 65 percent of the whites passed a certain entrance test, as opposed to 25 percent of blacks and 10 percent of Spauish-surnauied persons. On appeal, 495 F. 2d 725 (9th Civ.1972) the appellate court observed : “In the absence of a satisfactory justification, the district court found th at the examinations given from 1968 through 1970 were not ‘significantly related to the capacity of applicants to be trained for or to perform a policeman’s job.’ The court noted the absence of validation studies relating the examinations to the policeman’s job, a comment fully consistent with our own view of the justifica­ tion made necessary by th e prima facie showing." 459 F. 2d at 735-36.

See also Gregory v. Litton Systems, Inc., 316 F.Supp. 401 (C.D.Cal. 1970), modified, 472 F.2d 631 (9th Cir. 1972) ; Arrington v. Mass. Bay Transp. Authority, 306 

F. Supp. 1355, 1358 (D.Mass. 1969) ; Pennsylvania v. O'Neill, 348 F. Supp. 1084, 

1103 (E.D.Pa. 1972), modified, 473 F. 2d 1029 ( 3rd Cir. 1973) ; and Carter v. 

Gallagher, 452 F. 2d 315, 326 (8th Cir. 1972). The public policy behind the Law Against Discrimination is at least as strong as that of Title VII and is to be accorded a liberal construction. See, e.g., 

Jackson v. Concord Co., supra; Passaic Daily News v. Blair, 63 N.J. 474 (1973) ; 

and N.J. Builders, Owners and Managers Association v. Blair, 60 N.J. 330, 335 

(1972). It cannot be seriously argued tha t the same standards adopted in the cases discussed above are not to be applied in the instant case. The evidence must therefore be reviewed in light of the notion that if the examinations administered by the respondents have a discriminatory impact on minorities, then they are violative of the Law Against Discrimination unless evidence sub­ mitted by the respondents is found to have established the job relatedness and necessity for the examinations. The uncontroverted evidence as to the operation of the examinations adminis­ ter ed by the respondents to both initial applicants and candidates for promotion in the Police and Fire Divisions shows that the tests disproportionately dis­ advantaged the black men who were tested. As can be easily calculated from the numerical test results discussed in detail supra, 67 percent of the whites who took the entrance level examination passed it. while only 16 percent of the blacks who took that examination received a passing score. Thus, whites passed the entrance level examination at more than four times the rate of blacks. In 

very large measure, because of the exam (failure of which precluded a new applicant from any fur the r consideration), 36 percent of the white applicants and 6 percent of the black applicants (or one-sixth as many as the whites) were 

approved for hiring. The promotional examination operated in a similar manner. Forty-five i>ercent of the whites applying for promotion to sergeant were successful on the examina­ tion while none of the blacks were. None of the blacks were promoted to any position while promotions went to whites applying for sergeant at the rate of 17 percent of them, for lieutenant at the rate of 83 percent and to captain at the rate of 100 percent. Thus, 32 percent of the whites applying for promotions in all categories were appointed while none of the blacks were. Therefore, while whites did fail the test, their rate of failure was significantly lower than that of the blacks taking the respective tests, and it must be said that blacks fared significantly worse than did their white counterparts. This disproportionately higher failure rate of the minority applicants becomes more significant when we observe that black representation in both the Police and Fire Divisions is lower than that of the black population of the area. As of June 1, 1972, 14 percent of the men in the entire Police Division were black, none of the deputy chiefs or the chief were black, 12.5 percent of the captains were black, 16.7 percent of the lieutenants were black and 14.3 percent of the sergeants were black. At the same time, the Fire Division consisted of a total of 3.4 percent blacks. Yet the black population of Montclair was 27.2 percent (or 1.8 times the percentage of blacks in the Police Division and 9 times the percent­ age of blacks in the Fire Division) and the black population of Essex County 

was 30 percent. This is not to say tha t any “racial imbalance” in the Department would con­ stitute a showing of discrimination. But when the under-representation of blacks in the Department is taken together with the administration of invalidated tests which have been demonstrated to have a disproportionately negative effect on blacks, then a prima facie showing of discrimination has been made out and burden shifts to the respondents to come forward with evidence showing the job relatedness of the test. Failing such a showing by the respondents, a finding of discrimination would have to be made. To do otherwise would be to sanction
7G

the use of tests which have no proven use other tha n the sta tistically higher 

exclusion of minority applicants.

The respondents did not offer any significant evidence to factually establish 

the job relatedness of the exam inations. Quite the contrary, the respondents 

have contended throughout that they are not required to come forward with any 

evidence until a fte r the complainants have affirmatively dem onstrated the invalidity of the tests. Several respondent witnesses testified that none of the exams 

had ever been validated in any fashion. In fact, there is reason to believe that 

even the respondents have not been overly impressed with the exams. The present 

commissioner testified that the exam s have since been discontinued because it 

“wasn’t necessarily a f air te st.’’* 8

According to Cappadona, Dr. Glasscock testified that there was no corre lation 

between exam resu lts and his recommendations as an Examining Board member. 

It is uncontroverted that the Wonderlic test, used for initial appointments, does 

not contain questions which direc tly concern police or fire work, and that the 

promotional exam was drawn up by Director l’ettingill who drew his questions 

from suggestions of subordinates, the Essex County Police and prior police 

academy exams. The examinations are not graded by any professionals. The tests 

are utilized somewhat haphazardly as evidenced by the fact that the California 

Psychological Inventory was simply administered but was not utilized in any 

way. It cannot be said that the respondents have demonstrated in any way that 

the Wonderlic and the promotional exam inations are necessary for successful 

job performance or that there is any correlation between one’s efficacy as a police 

or fireman and high grades on the exams. To the contrary, 41 of the present 

firemen were appointed prior to the commencement of testing in November, 1952, 

and there is no evidence that those individuals are perfo rming inad equa tely 

because they were not subjected to the tests in quest ion ; and the chief and 

deputy chiefs are not required to tak e the promotional exam ination. Given the 

prima facie showing that the exams had the effect of discriminating aga inst 

blacks, the H earing Examiner cann ot ««o sponte and without supp orting evidence 

negate each of the possible nondiscriminatory explanations for the discriminatory 

results, and he must, therefore, conclude that the adm inistratio n of the tests in 

question in the context of th is case was violativ e of th e Law Against Discrimination.*

B. TH E INT ERVIE W AND SELECTION PROCESSES

Recent cases have spoken to the legality of procedures such as those which 

the complain ants contend are sim ilar to the selection procedures utilized by the 

respondents in hiring new firemen and policemen and in promoting present 

officers.

In Rowe v. General Motors Corp., 457 F.2d 348 (5th Cir. 1972), the evidence 

showed that a lower percentage of black cand idate s f or promotion were promoted 

tha n of white candidates. The recommendation of the employee’s foreman was 

of pivotal importance and almost all of the foremen were white. Based on these 

facts, the court held this promotional system to be violative of Title VII and 

sta ted tha t among its defective aspects were the following :

(i) The foreman ’s recommendation is the indispensab le single most important factor in the promotion process.

(ii) Foremen are given no written instructions pertain ing to the qualifications necessary for promotion. (They are given nothing in writing telling them 

what to look for in making their recomm endations.)

8

 No ev iden ce w as pr es en te d by an y p a rty as to th e n atu re or op er at io n of th e ex am in ation pre se nt ly ut iliz ed by th e re sp on de nts an d, th er ef or e, it is im po ssible fo r th e H ea ring

E xam in er to arr iv e a t an y co nc lusion s re gar din g it , al th ou gh it can be sa id th a t th e new

te st ha s not been pro fe ss io na lly va lidat ed . Ho wev er, in de te rm in in g how th e fin al or de ring

he re in will ad dre ss it se lf to th e ne w st a tu s quo, th e dir ec to r sh ou ld ta ke in to ac co un t

how th e pri or ex am in at io ns in issu e he re in ha ve di sa dva nt ag ed m in ori ty ap pli ca nts an d

ho w th e eff ect of p ri or dis cr im in at io n ha s inf lue nced th e pr es en t.

8

 R es po nd en ts co nt en d th a t th ere wer e not sufficie nt op en ings fo r th e co m pl ai na nt to 

ha ve bee n ap po in te d to th e F ir e Div isio n even if he ha d pa ss ed th e W on de rlic te st . How 

ev er, th ey sta te a t pa ge 8 of th eir br ie f th a t th e te st wa s given “to re cru it ap pli ca nts fo r 

bo th th e po lic e an d fire depar tm en ts .’’ Be ca us e th e co m pl ai na nt fa iled th e te st , he wa s 

re je ct ed an d de nied an opport unity to be in te rv ie w ed an d co ns idered fo r a po sitio n. Obviou sly th e to wn co nd uc ted th e te st to hav e a w ai ti ng li st of qu alified ap pli ca nts to fill 

fu tu re va ca nc ies. Thu s, th e re sp on de nts vi ol at ed th e sta tu te by de ny ing th e co m pl ai na nt 

th e “o pport unity to ob ta in em ploy men t on nond is cr im in at or y te rm s. See N..T.S.A. 10: 5- 4. 

Eve n if th e co m pla in an t Llg e had not had st andin g to ch alleng e th e te st in g, th e di re ct or 

did in his par al le l co m pl aint s. See N.J.S.A . 10 : 5 -1 3 ; B la ir v. M ay or an d Co un cil, Bo roug h

of Fre eh old, s up ra .
(iii) Those standards which were determined to he controlling are vague and 

subjective.

* * * * • • •

(v) There are no safeguards in the procedure designed to avert discriminatory practices. Id. at 358-59.

In Hester v. Southern Railway Co., 349 F.Supp. 812 (N.D.Ga. 1972), the 

Title VII complaint charged discrimination in hiring for the position of data typist. The hiring process consisted mainly of a battery of tests and an inter­ view by one Melton. Whites cleared the entire hiring process at a rate three times tha t of blacks. The court noted that those applicants given negative evalua­ tions by Melton were not hired, while 95 percent of those he recommended were employed. The court stated that the purpose of the interview, according, to Melton: “was to gather information about the applicant’s background, family situation, access to transportation, work habits and personality. . . . It does not appear from the evidence that Melton had any written or formal guidelines from defendant as to how to score the interview and the court deduces that this stage of the hiring process was entirely subjective.” Id. at 815.10

Thus, since Melton “was given no formal guidelines, standards, or instruc­ tions by defendant, and there were no safeguards to avert discriminatory practices” (Id. at 818), the use of this interview system was enjoined. Citing similar considerations, including the fact tha t in the promotional system at issue, supervisors were given no written instructions or guidelines as to the standards to be used in evaluating their subordinates for promotion and that therefore “the supervisor’s subjective evaluation of the employee’s ability is an important factor in his advancement and an individual supervisor could, if he were so inclined, exercise racial discrimination in his selection of candidates for 

promotion,” the court in Baxter v. Savannah Sugar Refining Corp., 350 F.Supp. 

139. 145 (S.D.Ga. 1972), issued a comparable judgment. As is set out in greater detail in the Summary of the Evidence, supra, those 

applicants for entry level positions in the respondent department appear before the Examining Board for an oral interview only if they pass the written exam­ ination. The Examining Board consists of five citizens who are selected by the Commission of Public Safety. They conduct a 15 or 20 minute interview of the applicants, with the director, police chief and fire chief present. The Board receives no instructions as to how to question or evaluate applicants. The Board then makes recommendations to the director who in turn makes the final deci­ sions. Ten minutes before the interviews, the Board receives the examina­ tion scores. All of the recommendations of the Board are unanimous. Glasscock told Cappadona that there was no correlation between his recommendations and the test scores. He stated tha t he asked those questions of applicants which seemed relevant. Fellow Board member Shepherd told Cappadona that “per­ sonality” was an important factor in evaluating applicants. Rogers told Cappa­ dona that the questions during the oral interview were aimed at ability, attitu de, nervousness and prior attitude. Glasscock told Cappadona that the Board looked for leadership, ability, initiative and good judgment. Shepherd told Cappadona that the Board asked applicants about education, interest in the job and “any 

question that comes to the questioner’s mind.” The same selection process was utilized with regard to promotions. However, in addition, the Board had before it evaluation scores on job performance which had been given by the applicants’ prior supervisors. The applicants were evalu­ ated by the supervisors on their shifts, which would vary for each applicant. Suj>ervisors were given no instructions as to how to do the evaluation. The aver­ aged evaluation scores of the various supervisors were then given to the Board. The factors measured on the evaluation reports were reliability, cooperativeness, job performance, physical condition, potential adaptability, conduct initiative, dress, application, job knowledge, public relations, volume of work, report writing, equipment care and operation, accuracy, ability to follow directions and leader­ ship. Also taken into account was the employee’s “public relations” value, i.e.. how he presented himself to the public. Different members of the Board assigned different weights to the various factors (i.e., exam, interview, evaluation score) in arriving at their recommendations. No procedure existed to appeal the recom­ mendations of the Board or the decisions of the director. There was no written

10 The Court also noted th at the te sts were no t professionally validated.
78

sta n d a rd to gu ide th e dir ec to r in liis selecti on , an d th e nu m ber of men to occupy 

ea ch ra nk was se t by th e dir ec to r in his di sc re tion (s ubje ct to bu dg et 

app ro p ri ati o n s) .

The re sp on de nt s em ph as ize in th eir b ri ef th a t th e only ev iden ce pr es en te d as to 

th e re su lt of th e or al in te rv ie w s an d th e dis cr et io nar y selection by th e d ir ecto r 

was th a t on e bla ck ha d bee n in te rv ie w ed fo r an en tr y lev el po sitio n an d th a t he 

had been a pp ointed . Ho we ver, in a dd itio n, it s ho ul d be no ted th a t tw o ot he r blac ks 

were interviewed , as sho wn in E xhib it C-2 0, fo r ca pta in an d lieu te nan t an d th a t 

n eit her of the m had bee n ap po in te d to hi gh er ra nks ou t of 9 blac k ap plica nts fo r 

prom otion. At the same tim e, ho we ve r, 21 w hites we re in te rv ie w ed fo r pr om otion 

an d 12 of them we re ap po in te d to hi gh er ra nk . Thu s, it is co rr ec t to ob serve th a t 

only th re e blacks wen t th ro ugh th e in te rv ie w pr oc ed ur e, but th is was th e ca se 

be ca us e no ot he r bla ck s had su cc es sful ly pa ss ed th e ex am in at io n an d su cc es sfully 

pr og re ss ed as fa r in th e se lectio n proc es s as th e ora l in te rv ie w . In fa ct , as di scu ss ed in II I. A sup ra, th e blac ks ha d fa re d pro po rtio na te ly ba dly on th e ex am inat io n be ca use of th e dis cr im in at ory op er at io n of th es e te st s. And th e to ta l nu m ­

be r of in it ia l ap po in tm en ts and prom otio ns fo r blac ks were sign ifi ca ntly below 

that, fo r whites on a pe rc en ta ge ba sis , as disc us se d above. Th e in te rv ie w an d 

d ir ecto r selec tio n pr ac tice s m ust be ex am in ed in th e li ght of th is ov er al l dis cr im inat ory im pa ct of th e enti re se lectio n process. More over, th e proc es s it se lf ca n be 

ex am in ed to de term in e w het her or no t it is dis cr im in at ory on it s fac e. As th e 

App ellate Di vis ion st ate d in up ho ldin g th e D iv isio n's find ing of th e ille ga lity of 

th e Fre eh ol d Volun tee r F ir e D epart m ent’s m em be rshi p an d a dm ission p ro ce du re s : 

(B la ir v. May or and, Council of Bor ou gh of Fre eh old, supr a. (117 N.J. Su per, a t 

417 ) :

“O ur re ad in g of th e re co rd sa tisf ie s us th a t no ov er t act of dis cr im in at io n w ith 

re sp ec t to ei th er Je w s or bl ac ks was es ta bl is he d a t th e hea ri ng below. Thi s in 

it se lf doe s no t es ta bl ish th e la ck of di sc rim in at io n. . . . It is our conclus ion th a t 

th e ad mission pr oc ed ur es es ta bl is hed un de r th e var io us bo roug h or dina nc es , in ­

clud in g th e la te st , co nst it ute an unl aw fu l em pl oy men t pra ct ic e be ca use of th e 

es ta bl is hm en t of re quir em en ts ir re le vant to th e pr op er pe rf or m an ce of th e du ties 

of f ireme n. We ca nn ot c on ceive of an y law fu l reas on fo r th e re qu irem en t of a vo te 

of th e mem be rship of a volu nte er fire dep ar tm en t fo r ad mission of a new mem be r 

th er et o. The only ra ti onal re as on fo r such a re qui re m en t is ex clus ion. . . .” Id . a t 

117 N .J. Su per. 417.

In th e co nt ex t of th e sh ow in g in th is ca se of th e dis cr im in at ory effect up on 

bl ac ks of th e ov erall selection pr oc es s (a s ev iden ce d by th eir dis pr op or tion at el y 

poo r sh ow ing in ob tain in g pr om ot io n an d h ir in g ), th e ex ce ssive su bj ec tivi ty an d 

va gu en es s inv olv ed in th e ora l in te rv ie w an d in som e as pe ct s of th e selecti on 

proc ess, re nd er s thos e pr oc ed ur es vio la tive of th e Law A gai nst Discr im in atio n. 

In in it ia l hirin g, th e Exam in in g B oar d’s to ta l lack of i nst ru ct io ns as to t he s ta n d ­

ard s by wh ich they m us t que st io n an d ev al uate inte rv ie wee s, re nd er s th eir de lib ­

era ti ons high ly su bjec tiv e. T h at su bj ec tivi ty is ag gra vat ed by th e fa ct th a t no ne 

of th e B oa rd mem bers are fire or polic e pr of es sion als. It allows each of th e me mbe rs to them selves fo rm ula te th e weig ht wh ich they will giv e to th e var io us fa cto rs be fo re the m. Th e var yin g indice s of “ ch ara cte r” an d “p er so nal ity” wh ich th e 

di ff er en t mem be rs em plo y in th e ir ev al ua tio ns de fy pr ec ise de fin ition . Con side ra ­

ti on of fa ct or s such as “n er vo us ne ss ” an d “a tt it u d e ” in vi te ab use.

In pr om otion, th es e same pr oc ed ur es are re pe at ed w ith th e ad di tion of w ri tte n ev al ua tion s by su pe rio rs'—which pl ay a m aj or role in th e B oar d’s reco mm en da tion s. Su pe rior officers a re giv en no st andard s as to how to mak e th e ir 

eval uations of su bo rd in at es an d thos e ev al uat io ns are mad e by var yin g nu m be rs 

of su per io rs fo r ea ch ap plica nt fo r pro moti on . The as pe ct s of pe rfor m an ce to be 

m ea su re d by th e su per vis or eval uations are high ly im pr ec ise an d su bj ec tive in 

natu re . An d th e sco res of vari ous nu mbe rs of su per io rs w er e “a ver ag ed ” be fo re 

th ey w er e giv en to th e E xam in in g Bo ard. Th us , if an ap plica nt fo r prom otion ha d 

rece iv ed high ev al ua tive sc or es fro m all bu t one of his su pe rv isor s, th e score 

give n him by th e one dis se nting su pe rv isor cou ld sign ifi ca ntly lo wer his “av er ­

ag ed ” to ta l ev al ua tion scor e to well below th a t of anoth er ap pl ic an t, or could 

pre se nt to th e Boa rd an in accura te or inco mplete pic tu re of th e op ini on s of th e 

su pe ri or s. An ov erwhe lm ing m ajo ri ty of th e eval uating officers were w hi te an d 

six of th e sev en bla ck ca ndid ate s fo r prom otion were ev al uate d solely by w hite 

su pe rior s. Gen erall y, as se t out in de ta il, su pr a, th e blac k ca ndi dat es fo r prom otion w er e ra nk ed lo wer th an w hite ca nd id at es on th e ev al uat io ns. See E xhib it 

C-17.

By th e same toke n, th e di re ct or , in mak in g hi s ap po in tm en ts an d pr om otions , 

has no bi nd in g gu id el in es as to w hat fa ct ors he is to co ns id er and w hat w ei gh ts
79

he is to give them. He can. in fact, ignore the recommendations of the Board or even dissolve the Board. l ie also has the power to determine how many promo­ tions should be made.11 The only formal strictures inq>osed upon him (aside from budget appropriations) are that he cannot alte r himself the total number of men in the department set by ordinance and by departmental regulation and tha t he must give some kind of examination. Thus, the director has a virtually un­ trammelled discretion in hiring and promotion. The above-mentioned aspects of the selection process, when considered together with the statistics showing their discriminatory impact and the under-utilization of blacks in the department, provide no safeguards designed to avert discrimina­ tory practices. In addition, the respondents have not come forward with sufficient proof to establish the necessity for these particular procedures or their correla­ tion with job performance. It appears tha t these requirements are not relevant to the performance of the duties of firemen and policemen. They must, there­ fore, be found to be violative of the Law Against Discrimination.

IV. Recommended Findings of Fact and Conclusions of Law

Upon all the evidence including exhibits received in this hearing and after an opportunity to observe the demeanor of the witnesses, and in exercise of his au­ thority, the Hearing Examiner, upon due consideration of all of the evidence and the law and the credibility and demeanor of the witnesses, hereby recommends the following findings of fact and conclusions of law. 1. The respondents, Mayor and Commissioners, Town of Montclair, and in particula r the Commissioner of Public Safety, are ultimately responsible for the employment practices of the Montclair Department of Public Safety, are “em­ ployers” within the meaning of N.J.S.A. 10:5-5(e), and are subject to the provi­ sions of the Law Against Discrimination, N.J.S.A. 10:5-1 et scq. 2. The respondents on or about November 12, 1971, denied the complainant Charles Lige because of his race an equal opportunity to be approved for the Montclair Fire Division waiting list and for possible ultimate employment in said division by excluding him on the basis of his examination score on the Wonderlic test, which examination is, in the context of this case, discriminatory in viola­ tion of N.J.S.A. 10:5-4 and 5-12(a ). 3. The respondents’ utilization on or about November 6, 1971, of the Wonderlic examination for appointment to the Fire and Police Divisions of the Montclair Department of Public Safety had a disparate and unlawfully discriminatory effect on minority applicants and constitutes an unlawful employment practice in violation of N.J.S.A. 10:5-4 and 5-12(a). 4. The respondent’s utilization on or about December 29, 1971, of their written promotional examination for promotion of members of the Fire and Police Divi­ sions of the Montclair Department of Public Safety had a disparate and unlaw­ fully discriminatory effect on minority applicants and constitutes an unlawful employment practice in violation of N.J.S.A. 10:5-4 a nd 5-12(a ). 5. The respondents’ utilization on or about November 6, 1971, of an entirely subjective oral interview by the Examining Board and the granting of absolute discretion to the director of the Montclair Department of Public Safety in his selection of applicants for initial appointments to the department, all without adequate standards to protect against discrimination and without relationship to proper job performance, constitutes an unlawful employment practice in violation of N.J.S.A. 10:5—4 and 5-T2(a). 6. The respondents’ (and in particular the Commissioner of Public Safety) utilization on or about December 29, 1971, of an entirely subjective oral inter­ view by the Examining Board and of entirely subjective evaluation by super­ visors and the granting of absolute discretion to the director of the Montclair Department of Public Safety in his promotion of officers in the department, all without adequate standards to protect against discrimination and without rela­ tionship to proper job performance, constitutes an unlawful employment practice in violation of N.J.S.A. 10:5-4 a nd5 -12 (a). 7. As to relief, I find that no out-of-pocket or other damages have been claimed 

or proven. 8. It is further recommended that the Director of the Division on Civil Rights enter and serve an appropriate order pursuant to the provisions of N.J.S.A. 10:5-17 to effectuate the purposes of the Law Against Discrimination in the light of this report. Such an order could include a requirement that the respondents

11 With certain exceptions noted in Footnote 3C supra.
80

cease and desist from the use of any examination which has not been pro per ly 

professionally validated and from the use of supervisory evaluations, oral int erviews and absolute discretion by the dire ctor of the dep artm ent w ithout effective 

standard s and protections aga inst racial discrimination . Such an order could 

also provide for the respondents to tak e app rop riate affirmative action to minimize the possible futur e effects of practices which have in the past resulted in 

racial discrimination.

Itespectfully submitted,

J U T IU S W lL D S T E IN ,

Hearing Examiner. Dated May 16, 1974.

Mr. Edwards. We want to move along as fast as we can. Mr. Drinan ? «

Mr. Drinan. The witness is so valuable. Pursuant to our conversation before, do you have some suggestions that you would want to give 

for the record about H.R. 8329 introduced by me and others? I would 

welcome them and I think it would be valuable. *

The nondiscrimination provision, section 122, and it goes on for 

several pages—I want to th ank you and thank Ms. Turner for coming.

Mr. Himmelman. Do you want me to respond to tha t briefly ?

Mr. Drinan. Briefly, if you would.

Mr. Himmelman. There are two or three things tha t any amendment which retains enforcement authority in the Office of Revenue 

Sharing should contain. First, it should be clear not tha t the Governor of a State, but tha t local officials are responsible for securing 

enforcement.

The current law and regulations provide for the Governor to have 

oversight and the Governors generally just defer to the local officials.

I suggest you amend the act to provide that local officials are 

responsible.

Second, it seems to me it has got to be very clear tha t any combination of an administrative finding or a court finding of discrimination 

is sufficient to trigg er a temporary cessation of funds until the offending jurisdiction comes into compliance.

Finally I think it should be very clear tha t the Office of Revenue 

Sharing, because it holds the funds in its hands, must act in every 

case regardless of whether the Justice Department acts or not.

I very much disagree with the memorandum of understanding that 

has been reached between the Justice Department and the Office of 

Revenue Sharing which in effect says that if the one agency is oper- •

ating, the other will not because there may be confusion.

Unless the funding agency, in this case ORS, is acting in every case 

and holding the remedy of a fund termination over the head of an 

offending jurisdiction, you lose the power of the revenue sharing civil *

rights mechanism. I think you should require that the Office of Revenue 

Sharing consider withholding funds in every case in which there is 

evidence of discrimination regardless of what another agency of the 

Government may be doing.

Mr. Klee. Before we proceed to the next witness, I would like th e 

record to show that section 122(b) of the statute incorporates title VI 

of the Civil Rights Act of 1964 and th at 42 U.S.C. section 2000(d) (6) 

makes clear tha t 42 I .S.C. section 2000(d) (5)—which Mr. Ilimmelman referred to as section 605—is the elementary and secondary education section of the act of 1966 and not part of title VI of the Civil 

Rights Act of 1964.

Mr. Edwards. Do you want to comment on that ?
Mr. H imm elm an. No. I would have to look at a ll those num bers.

Mr. E dwards. Th an k you very much .

Our next witn ess is William R. Mo rris, director of housing program s, Na tio na l Asso ciation for the Advan cem ent o f Col ored People, 

an d he is accomp anied by W illiam A. Va il, presiden t of the New 

Be rn. N.C., N AAC P branc h.

Mr. M orr is is in charge of the N AAC P general reven ue s ha rin g pr ogr am a nd h andle s compla ints f rom NA AC P branch es before the Office 

of Reven ue Sh aring .

App ea ring with Mr. M orris is William A. V ail. AVe are most anxious 

to hear fro m Mr. Vail because he has firstha nd kn owledge of this a rea. 

H is NA AC P ch ap ter has filed a civil rig hts case with the Office of 

Revenue Sh ar in g—a case which I un de rst an d was officially closed by 

th e office on May 20 of thi s yea r.

Mr. Morr is, Air. Vail, we welcome you both and we s incerely than k 

you both fo r tra ve lin g some distan ce to ap pe ar befo re us tod ay. 1 ou 

may proceed.

TESTIMONY OF WILLIAM R. MORRIS, DIRECTOR OF HOUSING PROGRAMS, NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF

COLORED PEOPLE, ACCOMPANIED BY WILLIAM A. VAIL, PRESIDENT OF THE NEW BERN, N.C., NAACP BRANCH

Mr. Morris. Th an k you, M r. C hairm an.

Mr. E dwards. W ith ou t objection your f ull s tatem ent w ill be m ade a 

part of the reco rd.

[The prepa red statem ent of Mr. Morris f ollows :]

Stateme nt of W illia m R. Morris, Director of H ou sing P rograms for th e

Nation al A ssociation for th e Advancem ent of Colored P eople

Unless major corrective surgery is quickly perform ed on this radical new 

Federal prog ram of general revenue sharing, there is a strong likelihood that 

history will record its performance as a crippling influence on black progress 

tow ard racial equality and opportunity. Whether intended or not, this new federalism experiment is adversely affecting the manner and rate by which racial 

minorities are able to achieve equal sta tus with the white majority in the political, social, economic and legal arenas of American life. After nearly a decade of civil diso rders in racial ghettos across the Nation, 

the Federal Government undertook a massive funding of social programs. It is 

appropriate th at we pause now to thou ghtfully review the impact of this change 

in Federal spending policy on black Americans. How has the rela xation of Federal control over the expenditure of billions of 

dollars within a relatively short span of time affected the righ ts and oppo rtunities of racial minorities? Can blacks look with any gre ate r confidence to State and 

local governments to receive equal benefit from the services an d facilities provided 

with revenue sharing funds? Does the black experience with this first in the series 

of “New Federalism" programs dem onstrate a need for new and different stra tegies w ithin the civil rights movement? Contrasted to the civil rights laws enacted during the 1960’s, the Sta te and 

local fiscal assistance act became law of the land in October 1972, with litt le 

awa reness or concern by most of the nation’s 24 million black citizens.

Busily preoccupied with the “gre at society” programs spawned in the Lyndon B. Johnson era. blacks paid only scan t a tten tion to this revolutionary change 

in the way Uncle Sam retu rned public dollars to Sta te and local governments— 

to do with larg ely as they pleased. This historic shift in government policy was 

bound to affect tlie lives and opportunities of most blacks in the country.
82

TH E PROGRA M

Pub lic La w 92-5 12, as gen er al re ve nu e sh ari ng is officially kn ow n, was en ac te d 

a ft e r leng th y de ba te b y th e C on gress. According to p rovisio ns of th a t ac t. ap pro xi ­

m at el y $30.2 billi on will be dis tr ib ute d to mo re th an 38,000 unit s of S ta te an d 

loc al go ve rn m en ts ov er a 5- ye ar pe rio d. Exc ep t fo r a few re st ri ct io ns, th e re ci pi ­

ent go ve rn m en ts are fr ee to use th e mon ey ac co rd in g to th eir in di vid ual ne eds.

To adm in is te r th e pr og ra m , th e Sec re ta ry of th e T re as ury es ta blish ed an office 

of re ve nu e sh ar in g an d ch ar ge d it w ith im plem en tin g th e st atu te .

In th e 3 ye ar s of it s ex is te nc e th is pr og ra m lia s develop ed a po werful blo ck 

of su pport er s— fro m loc al off icia ls wh o receive an d spe nd th e fu nd s to pol itic al «

co ns er va tive s wh o seek to re aw ak en re su rg in g ideologie s of “S ta te s ri ghts ” an d 

“lo ca l home ru le ”—code w or ds fo r bla ck op pressio n.

Alth ou gh th e pr og ra m re le as ed no fres h mo ney fro m W as hi ng ton, as pr om ised 

by Pre si dent Nix on, th e m ay or’s of tro ub led ci ties —inc lu ding th e blac k m ay or ’s— 

jum i»ed on th e ba nd wag on to su pport rene wal of th e pr og ra m whe n it ex pi re s in »

Decem be r, 1976.

Rev en ue sh ar in g fu nd s ca n be us ed fo r op er at in g an d m ai nt en an ce or ca pi ta l 

ex pe nd itur es . Sta te s ma y use th eir fund s w ithou t ca te go rica l re st rict io n, bu t 

loc al unit s of go ve rn m en t are l im ited to e ig ht ca te go ries wh ich a r e : P ub lic s afe ty r

en vi ro nm en ta l pr otec tio n, pu blic tr an sp ort ati on, hea lth, re cr ea tion , libr ar ie s, 

social se rv ices fo r th e po or or ag ed , an d fin an cia l adm in is trat io n. All units of 

go ve rn m en ts are re qu ired by th e ac t to comp ly w ith Fe de ra l no n- di sc rim in atio n 

laws.

Sinc e Co ng ress fe lt th a t pu bl ic v iews sh ou ld lie co nsidere d, al l re ci pi en t go ve rn ­

m en ts m us t file two re port s annuall y w ith th e office of reve nu e sh ar in g. One, th e 

“p la nn ed us e re port ” in di ca te s th e an ticip ate d us e of reve nu e sh ar in g fund s. The 

sec ond, an “a ct ual us e re port ” is supp osed to show how th e fu nd s were being 

sp en t. Roth re po rts m us t be pri nte d in th e loc al pr es s to info rm th e c itize ns . Th e 

in fo rm at io n pu bl ishe d fo r pu bl ic co ns um ption, ho we ver, is of li tt le pr ac tica l use 

to per so ns se ek ing t o tr ace t he actu al us es of the se fun ds .

A th ir d of all fu nd s go au to m ati call y to S ta te go ve rnmen ts, w ith mi nim al co ntr ols ov er th eir use. Th e oth er tw o-thi rd s is dis tr ib ute d am on g som e 38,000 loc al 

go ve rn m en ts to spe nd, as th ey decid e, w ith in th e loosely defin ed ca tego rie s.

PR OB LE MS AH EA D

As tim e dr aw s nea r fo r det er m in in g th e fu tu re of ge ne ra l re ve nu e sh ar in g, it 

becom es es se nt ia l th a t th e nati on's bla ck lead er sh ip more fu lly as se ss th e politica l, eco nomic an d social im pa ct of th e pr og ra m on civ il ri ghts ob jec tiv es. Up 

unti l now blac ks ha ve been nea tl y exclu de d fro m an y pra cti cal invo lvem en t in 

th e e xt en si ve r es ea rc h wh ich has been c on du cte d.

W ith th e us e of Fed er al fu nd s, sin ce the p ro gr am s ince ption. De sig ne d to mea sure th e pr og ra m s eff ec tiv en ess, mos t stud ie s ha ve foc used mos tly on al lo ca tion 

fo rm ul as , th e de gr ee of pu blic par tici pa tion , an d how fu nd s are being sp en t. The *

N at io na l Scien ce Fou nd at io n en co ur ag ed an d fund ed a m ajo ri ty o f th es e re se ar ch 

effo rts . Gen erally th es e pro je ct s ha ve bee n co nd uc ted by re se arc hers an d academ ic ia ns who ap pe ar to be co nc erne d mo re w ith pr ov ing-ou t pe t hy im theses 

an d in es ta bl is hi ng th eir own trac k- re co rd , th an in sh ed di ng som e light on th e 

his to ri cal prob lems of rac ia l m in or itie s an d the poor. «

On e of th e few re st ri ct io ns w ri tt en into th e law re quires no n- di sc rim in atio n 

in th e sp en di ng an d us e of re ve nu e sh ar in g fu nd s. It is th e en fo rc em en t of th es e 

re quir em en ts which ha s gener at ed uni ve rs al cr itic ism by civil ri ghts org an iz atio ns . Ove r th e pa st yea r co ng ressiona l lead er s, in flue nt ia l ne w sp ap er s an d oth er 

in st it uti ons, ha ve in cr ea sing ly focused on th e gla ri ng wea kn es se s in civ il ri ghts 

en fo rc em en t by th e office of re ve nu e sh ar in g.

In th e fiscal yea r 1975 th is office as sign ed on ly five pro fe ss io na ls to full- tim e 

civ il ri g h ts co mplian ce du ties — th e la rg es t st af f as sign ed to th is fu nc tio n sin ce 

th e pro gra m ’s be ginn ing. A re ce nt stud y by th e G ov er nm en t’s Gen er al Accou nti ng 

Office rec om men de d th a t th e anti-d is cr im in at io n la w s he broa de ne d to ap ply to 

al l of th e ac ti vit ie s an d pr og ra m s of r ec ip ie nt gov er nm en ts, no t ju st thos e di re ctly 

re ce iv ing re ve nu e sh ar in g m one y.

In th e sp ri ng of 1975 Pre si den t Fo rd su bm itte d hi s adm in is tr ati on’s pr og ra m 

to Co ng res s. It ca lle d fo r re ne wing th e pr og ra m fo r six more ye ar s, with a pr ice 

ta g of $40 billion . As mig ht be ex pe cted , on ly co sm eti c ch an ge s in civ il righ ts 

en fo rc em en t were soug ht.

W ith a nat io nal ele ction du e in 1976. now is th e op po rtun e tim e in wh ich to 

ex ac t co m m itm en ts from pre si denti al an d co ng re ss iona l ca nd id at es . Ho we ver,
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th is tim e ar ound it co uld be a m is ta ke fo r blac ks to ex pe ct th e w hite li ber al es ta blish m en t to ta ke th e lead in orc hest ra ti ng th e el im in at io n of ra ci al in eq ui ­ ti es in reve nu e sh ar in g, sin ce th e eco nomy , in flat io n an d en ergy prob lems loom as more pr es sing issu es am on g th e nat io n s el ec to ra te . Blacks th er ef ore sh ou ld begin to pr ep ar e th em se lv es now to m ak e re ve nu e sh ari ng a pr io rity issu e in th e 

up co ming pre si den tial ele ctions . The h eart o f th e pr ob lem is b oth po litics an d race . It fa ll s be tw ee n th e st re ngth of th e black vo te an d th e cl im at e of nati onal ra ci al op inion in wh ich we sh ou ld 

fo cu s pu blic att en ti o n—an d th us our civil ri ghts st ra te gy. It ap pea rs to be 

tim ely th a t we c on si de r a re ne w al of th e co al itio n st ra te gy, to re en fo rc e th e com­ mo n co nc erns ov er de lic ienc ies in civil ri ghts w ith citize n invo lvem en t in re ve nu e sh ar in g. Such an ap pro ac h could qu ickl y sw ell th e ra nks of thos e wor ki ng fo r 

so cial prog ress. The co m pt ro ller genera l’s re por t al so po in te d out th a t citize n invo lv em en t in mos t loc al go ve rn m en t’s bu dg et ar y pr oc es se s did not ch an ge , bu t re m aine d a t th e 

sa m e low lev el which ex is te d pri or to re ve nu e sh ar in g.

W H O B E N E F IT S ?

Usin g th e styl e of s ta ti sti c a l in te rp re te rs , we sh ou ld ta ke a mo me nt to ex am in e 1974 ce ns us d a ta on th e so ci al an d econ om ic sta tu s of th e bla ck po pu latio n, to ob ta in a bett er u nders ta ndin g of th e cri ti cal ne ed to es ta blish nat io nal sp en di ng pri ori ti es in th e us e of re ve nu e sh ari ng fu nd s. By al l st an d ard s of hu man eq ui ty a fixed pe rc en ta ge of th es e fu nds sh ou ld he ea rm ark ed to im prov e op po rtun itie s fo r Amer ica’s blac ks , who se ra te of un em pl oy men t is curr entl y do ub le th a t of whites. M an da te d expen dit ure s are al so re qui re d to he lp eq ua liz e th e blac k fa m il y’s med ia n an n u al income of $7,80 0 w ith th e $13,400 fig ure now ea rn ed by whites. Ther e are 7.5 mill ion blacks, ov er 30 %, ea rn in g les s th an th e go ve rn ­ m ent’s po ve rty lin e of $5,038 fo r a fa m ily of fo u r; w hi le 39.8 pe rc en t of all blac k yo ut h re m ain w ithout jobs . It com es as no su rp ri se th en th a t blac k ho us eh olds re pre se nt 40 pe rc en t of all food st am p re ci pi en ts , or th a t m or ta lity lev els co n­ ti nue tc ’•emain hi gher fo r blac ks th an fo r w h it e s; or th a t bla ck in m at es compri se 42 p er ce nt o f loc al ja il p op ulations . Th e an al ys is of sp en di ng p att ern s by S ta te an d loc al go ve rn m en ts re ve al th a t mos t of th eir re ve nu e sh ari n g ex pe nditure s fa ll iil to but a few ca tego rie s. F if ty - ni ne p er ce nt o f t he to ta l fu nds we re e xp en de d in th e 1975 fisc al yea r on ed uc at io n, pu blic sa fe ty , an d pu blic tr ansp ort ati on. Funds sp en t by ci ties were mor e co nc en ­ tr ate d , w ith nea rl y one and on e-ha lf billi on dollar s be ing sp en t in one year on 

pu blic sa fe ty—so phis tica te d police w ea po nr y an d th e like. Sta te s al lo ca te d on ly si x pe rc en t of th e ir fu nds fo r social se rv ices fo r th e po or or aged, while th e ci ties ex pe nd ed a mea sly one pe rc en t of th eir fu nd s fo r th es e pu rpos es. Fou r pe rc en t of c ity fu nd s was sp en t on as so rted he al th serv ices. Com­ m un ity de ve lopm en t an d ho us ing fo r th e po or ac co un te d fo r an in sign ific an t on e per ce nt of th e co mb ined ex pe nditur es by S ta te a nd loca l go ve rnmen ts. Ove rall, S ta te s pe nd in g stro ng ly su ppor te d ra ci al ly -s eg re ga te d ed uc at io n. Som e tw o- th irds of th e S ta te ’s f un ds we re used to su bs idize oper at in g a nd m ai nt en an ce co sts of schools . Th e pri ori ti es of c ity an d co un ty go ve rn m en ts w ere focu sed mor e 

on law a nd or der an d th e pr ot ec tion of p ro pe rty. Reg ar dl es s of typ e or size of re ci pi en t go ve rn m en t, th e op po rtunity to use fu nd s to im prov e hu m an an d so cial ne ed s of th e po or w as su bst anti all y igno red. T he po lit ic al wi nd is blow ing to w ar d th os e se rv ices which ha ve tr adit io nall y be en fu nd ed at th e S ta te an d loc al level, ra th e r th an fo r th e socia l an d econom ic pro ­ gr am s pr ev io us ly undert aken with ca te go rica l F edera l gra nts . It is re as on ab le to be lie ve th a t go ve rn m en ts which ha ve di sc rim in at ed in th eir em ploy men t a nd c ontr acti ng in th e pa st , will co nt in ue t h e ir p ra ct ic es w ith re ve nu e 

sh ar in g fu nd s—un less Fed er al ru le s are vigo ro us ly ap pl ie d. Th e la w om its an y re qu irem en t fo r fu nds to be sp en f to m ee t ne ed s of th e poor, or to co rr ec t th e 

effects o f pa st di sc rim in at io n. Ther e is a w id es pr ea d be lie f th a t elec ted officia ls sp en d th eir fu nds to g ra n t fa vo re d tr eatm ent to pol itic al su pp or te rs , an d on pro je ct s th a t be ne fit m ai nly th e w hi te middle-class fo r su ch th in gs as boa t m ar in as, te nnis co ur ts , fo ot ba ll stad iu m s, ta x re du ct io ns th a t benefit slu m la ndl or ds (a m ajo ri ty of bl ac ks re n t th eir ho us in g) , an d fo r m un ic ip al se rv ices to ra ci al ly -e xc lu si ve new su bd iv isio ns . L it tl e is be ing do ne w ith reve nu e sh ari ng fu nds to redu ce th e de ca y an d dete ri ora tion of in ner ci ty ne ighb or ho od s or fo r co m m un ity re de ve lo pm en t to hel p th e un de r-pr iv ile ge d im pr ov e th e quali ty of th eir lif e and en vi ro nm en t.
84

CIVIL BIGHTS ACTIVITIES NOTED

Fo r the first time in our Nation's history, a single Federal agency, through 

th e revenue sharing act, has civil righ ts enforcement autho rity w ithin every Sta te 

and local government’s jurisdic tion. The law vested power in the Secretary of 

the Treasury to bring drastic changes in long-standing discriminatory prac tices 

of Sta te and local governments by providing the legal tools needed to h alt funded 

prog rams t ha t discriminate a gainst blacks. T he S ecretary may also requ ire offending governments to adopt affirmative action programs th at correct for past discrim ination, as a condition to contin ue receiving funds. We know, however, th at 

acts of gre at political courage will be required to secure such laudable results.

The law made it easy for recip ient governments to sub stitute revenue sha ring •

fun ds for the ir own in specific programs and then to assign their own funds to 

oj>erations more likely to be vulnerable to discrimination. This loophole has made 

it almost impossible for the u ntrained citizen to trac e F ede ral money into projects 

which benefit from the tra nsferring of funds.

Most complaints to date have involved s maller towns and counties where physi- *

cal evidence of discrimination is relatively easy to verify. The lack of equal 

benefit from public facilities such as streets, sewers and recreation is frequently 

the object of complaints by blacks.

The law says no jobs, services or facilities provided with these funds may be 

denied anyone on the basis of race, color, national origin or sex. These requirements extend to all contractors, suppliers and quasi-governmental bodies who receive revenue sh aring funds from a unit of government.

As of June, 1975, less th at 150 complaints charging racial bias have been 

handled by the Office of Revenue Sharing. Of these only 18 had been resolved.

The national clearing house on revenue sharing which was estab lished in 

November 1973, is a non-profit organization th at serves as a non-governmental 

focal point for information about revenut sharing. A survey of State s, announced 

by them in May, 1974. revealed that of 24 responding, not one S tate required their 

local governments to file statements of compliance with their Sta te’s civil rights 

regulations.

The biases of laws which create deprivations for min orities often lead to the 

mis-ap plication or to violations of law. This results in a type of legal discrimination often encountered in local revenue sharing programs. Bias may be shown by 

public officials who prac tice partiality in applying the law with out violating its 

let ter. Deficiencies exist in providing minorities w ith information and other services of the sort usually offered by State and local governments.

The purchasing power of blacks has been seriously eroded in recent years due 

to inflation ary pressures and economic recession. Economic discrimination may 

be defined as any activity or lack thereof which prevents minority group meml>ers from having the same opportunity as whites to earn a living or to receive 

equal material benefits. Since equal access to the economy provides gre ater opportunities for political power and social equality, this form of bias requires a 

much closer scrutiny than heretofore.

Another form of bias to be found in local communities is social discrimination. *

This has the greates t influence on the personality development of blacks. The 

tendency of persons of the majority group to regard persons of a minority group 

as inferior or dangerous manifests attitudes in obvious or subtle ways and is often 

reflected in spending decisions.

Like most other Americans, blacks initiall y failed to gra sp the importance of r

reve nue sharing in their every day life. Even today a majority of the Nation's 

popu lation simply does not understand how it works or who it is expected to 

benefit. Minorities have yet to realize the many forms of racial discrimination 

th at could be eliminated or greatly reduced through more skillful manipulation 

of th e program’s civil rights requirements.

Gra ham Watt, the Office of Revenue Sharing ’s first director, spoke to the school 

of public affairs a t the University of Minnesota on November 14. 1973, only a few 

months after the first checks had been sent out. He enun ciated the administratio n’s line on what they wanted the public to believe about this program. He 

said. “We resist atte mpts to subvert the concept of general fiscal supp ort by 

special intere st groups eager to use the leverage inhe rent in general revenue sh aring to achieve their own goals. . . . Citizen partici pation in government is being 

improved qua ntitatively and qualitatively. . . . In countless cities, counties and 

towns througho ut the natio n, public hearings, citizen advisory committees, community-wide information programs, citizen surveys and sim ilar mechanisms are 

being applied to th e revenue sha ring decision-makng”.
S5

In th e classic ex aggeration by Government burea ucrats he told his audience th at 

“citiz ens and civil rights groups who need to do so may turn to us. The Office of 

Revenue Sharing and other agencies in the Federal Government are fully prepare d, when necessary, to insure local and Sta te compliance with the non-discrimin atio n requirements of the law”.

With substan tially more experience to validate his views, Wayn e Clark of the 

Sou thern Regional Council's reven ue sharing monitoring project, wrote in a 

lette r to the New York Times on August 24, 1975, “Revenue s haring has not only 

fail ed to encourage public participation, it had served as a ba rri er to community 

involvement. Discrimination again st non-whites and women is widespread”.

His criticism w’ent on to say : “. . . local officials who violate anti-discrimination provisions of the law do so with impunity. Categorical programs th at 

reve nue s haring replaced have their own deficiencies. Nonetheless, they did place 

tax dollars in areas where the gre atest need exists and provided an economic 

and political base for powerless groups. Revenue sharing has had the opposite 

effect. It has not only offered few opportunities for non-whites, women, or the 

poor to increase the ir influence on local governments, but has increased the 

economic and political power of tradition al ruling circles”. Mr. Clark urged 

the Congress to subs tantially alter the program or end it.

In a joint report released in A ugust, 1975, four natio nal orga nizations charged 

th at revenue sharing funds are financing large-scale discrimination in State and 

local public employment and services. The National Urban Coalition, the League 

of Women Voters Education Fund, the Center for Community Change and the 

Center for National Policy Review, found patte rns of job discrimination by 

public employers, including inf erior pay to women and minorities.

Using figures compiled by the U.S. Equal Employment Opportunity Commission, the groups found that fire dep artm ents around the Nation were 95 percent 

white and male ; police forces were 91 percent white. Blacks in Sta te and local 

government jobs showed a median ann ual salary of $7,361 compared to $8,844 

for whites.

The belief is widespread among civil rights groups th at revenue sharing is 

being used to maintain public system s which discriminate in employment and 

provides gre ate r benefits to well-to-do communities tha n it does to poorer area s.

CO MM UN ITY INVO LVE MEN T AND ACTION

Soon after revenue sharing went into operation, the NAACP embarked upon 

a major program to inform and motivate its 1,700 branches and State conferences. It published comprehensive guidelines in April. 1973, describing methods 

for spotting discrimination in local revenue sharing expenditures. The handbook 

spelled out complaint procedures and strategies to help branches mobilize commun ity intere st and to press for equal benefits in the program.

This effort appeared to spark a new wave of intere st among community 

leaders. It resulted in the larg est volume of rac ial complaints filed by any one 

organiza tion in the Nation. Elected officials in city after city soon found themselves confronted by residents seeking a gre ate r voice in how the funds were 

spent. Blacks appeared at budget hearin gs to question their local officials. In 

some insta nces coalitions were formed to demand better services for the poor, 

and to insist upon affirmative action programs th at compensated for past inequities in city jobs and services. Seemingly, the civil rights movement had 

found a new issue of major consequence to rally around.

Mobile, Alabama, was forced to establish form al communications with black 

leaders and to consult with them on proposed projects. Ninety years of black 

exclusion in the volunteer fire dep artm ent of Dover, Delaware, was ended when 

the local NAACP filed a complain t opposing the allocation of revenue sharing 

fun ds to the fire departmen t. Two blacks now serve as firemen for the first time 

in the his tory of D elaware’s capital city.

A historic precedent for citie s was established in Peoria, Illinois, when, as 

a res ult of pressure from the NAACP branch, the city executed an agreement 

to increase black employment in the city ’s work force to 15 percent over a twoyear period. The Justice Department’s Community Relations Service helped to 

negotiate the document. Lorain, Ohio, became the second city to adopt such 

an agreement, following demands from a coalition of community groups.

Auburn, Alabama’s mayor was forced to stop a private white academy from 

using the town’s football stad ium after the NAACP filed a complaint when it 

discovered that paint used to redecorate the locker rooms was purchased with, 

reve nue sha ring money.
86

A co un ty ja il was de se gr eg at ed an d blac k de pu ties lii red fo r th e fi rs t tim e in 

Ne w Be rn, N or th Car olin a, an d a long -dela ye d an d ne ed ed park im pr ov em en t 

in th e blac k p a rt of th e town re su lted from a co m pl ai nt file d by th e br an ch 

pre si dent de sp ite in tim id at io n from ci ty officials.

The se ca se s a re cite d to il lu str ate how or ga ni ze d co mmun ity ac tion , whe n 

focu se d on th e reve nu e sh ar in g pro gr am , mig ht se rv e to ac ce le ra te blac k pr og re ss 

to w ar d ra ci al eq ua lity . W ere th e F edera l Gov ernm en t stro ng ly co m m itt ed to 

guara nte ein g th at dis cr im in at io n do es no t oc cu r in th is pr og ra m, th e pre di ct ab le 

re su lt could be of m aj or co ns eq ue nc e to th e ac hiev em en t of f ull ri ghts fo r blac ks 

in all f ac et s of A merican s oc iety.

RAYS OF HOPE?

a

The ca pac ity of th e p ri vate se ct or to co lle ct in fo rm at io n an d m on itor loca l 

ex pe rien ce s w ith reve nu e sh ari ng is se ve re ly ha mpe re d by th e lack of fu nd s.

The re fo re , co ns id er in g th e leng th of tim e th e pr og ra m ha s been in op er at io n, 

li tt le in fo rm at io n ex is ts beyo nd go ve rn m en t fin anced re se ar ch to m ak e an im ­

p art ia l det er m in at io n of how pro du ct iv e loc al pr og ra m s ha ve been in ad va nc in g •

ra cia l eq ua lity .

N ev er thel es s, sc at te re d in st an ce s a re now comi ng to pu blic att en ti o n which 

pr ov id e a m ea su re of en co ur ag em en t to thos e who believe th e sh if t from cat ego ric al g ra n t fu nd in g is no t all ha d. Som e ex am pl es are de sc ribe d below to 

p la n t th e seed of po ss ib ili tie s which co uld ex is t in th e reve nu e sh ari ng pro gr am 

an d, if pu rs ue d on a la rg er an d co or di na te d scale by all unit s of go ve rnmen t, 

could , in th e near fu tu re , bec ome an im port ant fa ct or in ac hiev ing th e N at io n’s 

so cial ob jectives .

Th e ci ty of W ichi ta, K an sa s, has in sti tu te d an eq ua l opport unity/a ff irm at iv e 

ac tion pr og ra m to pre ve nt th e po ss ib ility of pu rc ha si ng goo ds or se rv ices fr om 

city ve nd or s wh o di sc rim in at e.

In Ch ica go , reve nu e sh ari ng p ay m en ts am ou nt in g to ,$19.2 million ea ch q u art er 

w er e ha lted , by a Fed er al co urt or de r, be ca us e of di sc rim in at ory pe rs on ne l pra ctic es in th e cit y's police de par tm en t. R ath er th an los e it s fu nd s, th e cit y ’s p ow er ­

ful m ay or ac ce pt ed a plan to em ploy an d prom ote blac k policemen.

La ke Cou nty, In dia na, wh ich su rr ounds th e pre do m in an tly blac k ci ty of Gary, 

w as or de re d to carr y ou t an af firm ativ e pr og ra m to hir e 30 pe rc en t m in or ity 

co ntr acto rs on a .$5 million ju ve nile det en tion ce nt er , an d to remov e bo nd ing 

li m itat io ns which pr ev en ted them from bi dd ing on th e pr oj ec t.

The S ta te of Michiga n pla ce d it s al lo ca tion of o ve r $200 million in it s te ac her s 

re ti re m ent fu nd . Sin ce th e fu nd be ne fited a se gr eg ated sch ool sy stem in F ern ­

da le, a su bu rb of D etro it, th e .S tate fa ce s a cut-of f of al l it s fu nds un le ss th e 

offend ing s choo l s ys tem c ha ng es it s pra ct ic es .

The J ust ic e D ep ar tm en t ob tain ed a co ns en t de cree re quir in g Tal la has se e, F lo rid a. to ad op t a go al of hi ri ng qu alifi ed blac ks fo r ev ery ty pe of ci ty jo b in pr opo rtio n to th e nu m be r of bla ck s in th e cit y’s civi lia n la bor for ce.

On th eir own in it ia ti ve som e go ve rn m en ts are ex pe nd ing fu nds to a tt ack po or 

ho us ing. Cha pe l Hill, Nor th C ar ol in a, an d Sea ttle, W as hi ng to n, es ta bl is he d 

ho us in g tr u st fu nd s to re habil it ate ho us in g an d to ba ck -up lo an s fo r low -in come *

people.

Th e S ta te of U ta h ap pr opri at ed $4 million to pr ov ide $4,000 g ra n ts fo r ow ne rs 

wh o re p air an d re nt th eir ho me s to th e po or fo r a t le as t five ye ar s.

Dallas. Tex as , an d Orang e Cou nty, C al ifor ni a, fu nd ed fa ir ho us in g ope ra tion s 

w ith th eir money . In Eu gene, Oregon , an d Co lorado Sp ring s Co lorado , fu nds *

w er e bu dg eted to pa y re nt su pp le m en ts to elde rly an d po or citiz en s.

Re co gn izi ng th ere is th e ne ed fo r som e se lf-e xa m in at io n by a br oa d cro sssection of blac k lead er sh ip , a ca ll fo r ac tion ne ed s to be so un de d w ithout fu rth e r de lay . So fa r too li tt le att enti on is be ing pa id to w hat ev er unta pp ed pot en ­

ti al th e G en eral Rev en ue Shar in g pro gra m po ssesses to bring ab out a sw ee ping 

ch an ge in th e ra cis t pr ac tice s of our so ciety as th ey re la te to th e se nsi tive issu es 

of school se gr eg atio n, ho us in g in te gra ti on an d p ari ty in em ploy men t.

Re ce nt ce ns us dat a confi rm th a t th e se ve nt ies is we ll on its way to becomi ng 

a de ca de of ra cia l retrog re ss io n. Shar ply redu ce d earn in gs by blac ks , bro ught on 

by th e eco nomic squ eeze, an d ac co m pa nied by th e ge ne ra l re du ct io n in Gov ernm en t fu nd s to he lp th e poo r, is se rv ing, if le ft un ch ec ke d, to nu llif y m an y of th e 

ci vi l ri ghts ga in s acco mplish ed duri ng th e 1900’s.

I t is es se nt ia l to th e ca us e th a t civi l ri ghts st ra te g is ts de velop a counte ra tta ck in g pr og ra m to ex pl oi t more fu ll y th e ra cia l be ne fit s in re ve nu e sh ar in g.

Since it is al m os t cer ta in th e pr og ra m will be ar ound in some fo rm fo r yea rs to
87

come, blacks must move quick ly to acquire a better under standing of the program —to learn the secrets of its innerworkings—to energize the flicker ing ligh t 

of opportunity at the end of this Fede ral rainbow.

REFLECTIONS ON PUBLIC POLICY

This new federa lism progra m must be viewed as the product of extremely complex forces. It contai ns fina ncia l, political and social dimensions which shi ft the centers of decision-making from the Fede ral Govern ment. It also reflects a resurgence of the tra dition al middle-clas s American antagonism towards blacks and the poor. Wh ile some of the anti-poor and anti-blac k backlash began to emerge as early as 1968, many attit udes were hardened in concrete with the 

change over to revenue sh aring. It must be remembered tha t the advent of the revenue sha ring program was accompanied by the large- scale impoundment of Federal funds for social pro­ grams and sharp cutbac ks in categ orica l gran ts that helped inner cities, and 

with the termin ation of neighborhood development projects and housing subsidies f or the low-income. The new federa lism was ushered in with much rhetoric about returning government to the people; about stren gthen ing the capa cities of city halls to deal with local problems. In reality the new feder alism is a gia nt step backward from the efforts of the late lflGO’s to devise urgently needed nati ona l urban poli­ cies. Fur the r it suggests th at it is better to deal with national problems 

through thousands of uncoordinated local governments. We continue to be plagued with too much local government fragm entation and prejud ices, particu larl y within metropolitan area s. The economies of scale and the expansion of opportunities for black s and the poor can best be cap­ tured through the consolidation and reorganizat ion of metropolitan structures. 

This is another one o f the minuses for revenue shar ing. It has frozen the struc ­

ture of local governments for the foreseeable futu re. Were we to assume an optim istic posture about the program there are three sets of policies which must be worked out—in a coordinated way. They would embrace a form of general revenue sharing, block gran ts to furt her overall na­ tional priorities, and categ orica l gran ts to meet specific needs of the disad van­ taged. A furt her p ossibility, which should not be overlooked, is to reduce the one- third share of the funds which now go to Sta te governments, and channel those 

funds to the cities. The neglect of our citie s, in terms of their own urgent needs, and in the bene­ fits they provide to their metropolitan areas, compounds the problems of decay and deterioration and results in the increased segrega tion of schools, housing, 

and society in gen eral. The black experience with gener al revenue sha ring —if any lesson has been learned—should make it clear tha t the Fede ral Governm ent cannot simply throw out billion s of dollars to Sta te and local governments with no strings attached— 

not if the rights and opportunities of all Amer icans are to be made secure and 

equal.

Mr. Morris. The written statement that we are presenting is not 

intended to be a full response to this particula r hearing. It is an article 

that was prepared for publication. I wish to submit it for the record.

I am going to make summary remarks and then defer to Mr. Vail to 

describe to you their experience in their local community. First, the 

XAACP is on record in general opposition to the concept of general 

revenue sharing itself. Some of my recommendations are based upon 

the recognition tha t if we must have general revenue sharing, there 

are certain recommendations we are making.

It has been our experience in working with XAA CP branches 

througho ut the United States over the past 3 years, th at the program 

itself has had an adverse effect upon the rate of progress toward the 

achievement of full and equal rights in this country for black and 

other minorities.

We are faced with the position of having to deal with thousands of 

local governments, rather than a central government, in terms of
8S

civil rights enforcement and in providing equal opportunity in the 

use of Federal funds.

The private sector including the NAACP. I am convinced, does not 

have the capacity to monitor how these local governments are expending these funds in complying with nondiscrimination requirements.

I would observe th at when this act was passed most blacks in the 

Nation did not pay much attention to it, or were not generally aware 

of the provisions of general revenue sharing, and how it might affect 

their lives and opportunities and the benefits they may be entitled to 

under the program.

The program lacks minimum standards to assure public participa ­

tion and the chance to influence spending decisions of local governments. The planned and actual use reports are of very little value; 

even the ORS has admitted they have difficulty in being able to trace 

and track the flow of revenue funds as it goes into local government 

budgets.

So that has not been an effective means of providing information 

to the public so they can intelligently respond and participate in the 

local decisionmaking process.

We have been deeplv concerned with the large amount of research, 

which has been federally funded, to look into general revenue sharing, 

with the lack of black and other minority input in the research to see 

what the impact has been. This has been generally lacking in the research activities being carried out.

We are also convinced t ha t the ORS does not possess the capacity 

to assure the nondiscriminatory use of these funds in all of the many 

local governments throughout the country. As it perhaps has been 

observed, the ir staff of five is totally inadequate to carry out the provisions of the act. That includes their lack of capacity to follow up 

afte r investigations are completed and agreements made at the local 

level. We have often had to wait a period of 6 months or more before 

investigations are concluded and some kind of findings or recommendations are made.

The spending patterns of local governments clearly indicate to us 

tha t a very small amount of the funds are being spent for the benefit 

of disadvantaged people in the country, and almost none is expended 

to correct the imbalance of past discrimination.

We have one instance in Las Vegas, Nev., where funds were used to 

correct such an imbalance in streets and streetlights. Th is is very rare. 

Most of the dollars are going to capital expenditures for one-time 

projects, and generally to support police and fire department services. 

We note from the survey th at, in fiscal 1974, $1.5 billion was spent nationally on that particular item, while less than 1 percent of the funds 

were spent for social services to the poor and the aged.

Recipient governments are continuing their racial discrimination 

practices in the hiring and promotion policies that they have been 

following. The funds which have been freed up through general revenue sharing has been a problem. O ur local people have not found it 

possible to track funds and find just where the dollars are being freed 

up in their budgets and revenue sharin g funds substituted for other 

purposes.

The NAACP has been responsible for at least half of all of the 

racial discrimination complaints tha t have been filed. As of last June, 

the total amounted to 150 throughout the country.
*

89

One of our first complaints was the one Mr. Vail will describe in 

New Bern. N.C. In Dover, Del., we were able to overturn a 90-year practice of excluding blacks from the volunteer fire department. In 

Auburn, Ala., a private white academy had been utilizing the town’s football stadium. Revenue sharing funds provided money to paint a 

part of the football stadium. We were successful in getting the Office 

of Revenue Sharing to have this practice discontinued. The academy 

has stopped using the stadium. There are a number of other cases which I won t try to identify now 

for the sake of time. B ut I would share with you, in concluding, some recommendations we would like to place before you. We believe there 

should be increased aid given to cities and small towns based upon need, such as poverty, the crime rate, and other deteriorating conditions. We suggest that the one-third allocation now going to State governments could and should be reduced. A portion of those funds could be 

committed to regional structures where there are councils of government or regional clearinghouses. A priority in the implementation of areawide plans is very importa nt, especially where public service employment can be created 

on a metropolitanwide basis. In many cities, 40 to 50 percent of the land itself is not on the tax 

rolls of the local government. Revenue sharing funds should be used 

for the support of areawide transportation systems and fair share 

housing plans, so minorities could more easily reach places of employment throughout metropolitan areas, and for other community development activities. I would suggest that State funds should be required to be spent primarily for the benefit of nonmetropolitan area-development, where 

housing and jobs and other services are needed in our rural areas. 

There should be a priority established fo r the spending of State funds.

Public participation in the general revenue sharing program should 

require public hearings. There should be a clearer identification of 

general revenue sharing funds in local government budgets and 

what it is actually spent for. There should be a requirement for State 

and local advisory committees to be created, and with some procedure to permit citizens to help select the representation that will serve on 

these advisory committees. We recommend tha t funding be authorized to provide administrative, technical, and legal assistance to these committees so they can 

respond and effectively participate in the decisionmaking process.

We believe there should be a stiffer requirement for large cities and 

in regional structures that may be receiving general revenue sharing 

funds; whereby smaller governments tha t do not receive much of the 

funds—the same kind of requirement would not be needed.

In the nondiscrimination provisions, we believe there should be a 

requirement for compliance by local governments in all of th eir operations, rather than in just the use of general revenue sharing funds; as 

a condition to qualify for GRS funds. The committee may wish to consider the provision of authority to 

issue cease and desist'orders where discrimination is found in recipient 

government operations; and perhaps the establishment of an independent board or commission which would be responsible for assuring
90

nondisc rim ina tio n and citizen pa rti cipa tio n req uirem ent s i n the use of 

revenue sha rin g fun ds.

We believe there sho uld be a dr astic increase in the civil rig hts 

enforc em ent and com pliance staff. We are sug gesting tha t some where 

betw een 150 to 200 person s wou ld be the m inim um t h at should be considere d if the Fe de ral Gover nm ent is going t o assure and gu aran tee 

civ il rig hts pro tection s an d equal benefit in the ex pend itu re of fund s 

at the local level.

We suggest your co nside ration o f a utho riz ing th e paym ent o f f ina ncial dam ages to be pa id throug h legal actions, and fo r class discrim ina tio n suits where local gov ernme nts are fou nd gu ilt y of such pr ac ­

tices. Pe rhap s a pro vision fo r free legal aid , if act ion s are brou gh t bv 

low-income or dis advantaged people who could no t affo rd to br ing 

such actions on the ir own.

On spe nding p rio rit ies , we feel the fund s sho uld be directed t ow ard 

fulfilling national pr iorit ies wi th gen era l catego ries f or th e way f un ds 

sho uld be spen t. Pr io rities sho uld be gea red, at th is time , to job pr oducin g enterp rises, to th e assurance of social serv ices to low-income 

an d dis advanta ged persons, and to enc ourage me tro polita nw ide pr ogram s and servic es—es pecially to imp rov e access to job op po rtu nitie s 

and fo r business and com mercial developments th at would produc e 

jobs.

Also a majo r objective should be to reduce to a minim um wh at we 

con sider to be loca l pre jud ice s, and uncoord ina ted local governm ent 

spendin g witho ut re ga rd to reg ion al or natio nal need s and pri orities.

There needs t o be established a pr io rity spendin g c ate gory fo r pr ogram s which help local gov ernme nts to impro ve th ei r local ta x base, 

such as re tu rn ing no n-tax -produ cin g prop ertie s to local tax rolls, and 

su pp or tin g economic developments th at produc e a gr ea ter numb er of 

jobs and increased spen ding pow er wi thin me tro po litan areas.

On lon g-range fu nd in g, it is my view th at th roug ho ut t he coun try 

it is very difficult fo r local gover nm ent s to plan ahe ad in terms of p ro ­

viding needed huma n an d social services. Most of the dollars they 

decide to spend are on one-tim e capit al expenditu res in th ei r are a, 

ra th er th an becoming involved in lon g-term fund ed pro gra ms whi ch 

they are un certa in will continue fro m ye ar to yea r. We feel some 

fu rt her con sidera tion need s to be give n to this approach prov idi ng 

there is an annu al review and overs igh t au th or ity wr itten into the 

legislation.

I would like to yie ld at this point and ask Mr. Vail to sha re with 

you some of h is experiences. Th is was the first or second formal compl aint filed w ith the Office of Revenue Sh ar in g in the cou ntrv, in 1973.

Mr. Vail?

Mr. E dwards. M r. Va il, do you hav e a printed sta tem ent here?

Mr. Vail. My sta teme nt is mostly ri ght out of my mind .

Mr. E dwards. Proc eed.

Mr. Vail. T ha nk you, mem bers of the Ju di ci ar y Com mittee, and I 

am ha pp y to be here toda y to let you know what" is "oiim on in our 

par t o f th e cou ntry.

My name is Willi am A. Va il, president of the New Bern ch ap ter 

of the NA AC P. T have been pre sid ent of th at branch for about 10 

or 12 y ears . I live in the county of Craven, the c ity of New Bern . We 

hav e a populat ion of 62,554 with 37 perce nt being black and wi thin 

th e cit y of New Be rn about 14,660 wi th abo ut 38 pre cent bein g black.
91

I filed these complaints because the city of New Bern got funds 

from the Office of Revenue Sharing for the building of a park and 

recreation center at Parro t Park. The reason 1 will say a park is 

because they really had in mind to build a park and recreation center 

at Parro t Park. But this pa rticular park was in an all-white high class 

neighborhood out of reach for blacks. I will say, of most of the poor, 

lower income people and the blacks. So we had—I filed a complaint 

throu gh the Office of Revenue Sharing. They came down ana performed an investigation and they found at the time that the city of 

New Bern had not spent any funds at this p articula r time.

I wrote the Office of Revenue Sharing another formal complaint. 

As soon as they spent a dime, I wanted this case to go through. 1 knew 

it was a discriminatory practice tha t the city of New Bern had been 

using for years and they are still using.

Mr. Klee. How was the park inaccessible? Was it a-long distance 

away ?

Mr. Vail. A long distance away and in an all-white neighborhood.

Anyway they came down and negotiated with the city authorities 

and the city authorities decided then th at they would build two centers 

because—they really had promised us 15 to 20 years ago that they 

were always going to do something to our park when some money 

was available.

Every time money would become available they would never think 

about it. I have been to a board meeting and still was not successful in 

getting anything. One of my main complaints perta ining to the parks 

is the drainage system in the parks. After they decided to build two 

centers, they were supposed to fix our drainage within the parks and 

upgrade other facilities that had run down for the lack of maintenance 

in black neighborhoods.

We are still suffering with water, flooding in our park—D. E. H enderson, while they put in maybe a $45,000 to $50,000 drainage system 

in their pa rk—Parrot P ark with large pipes and everything. We have 

been trying to get somebody to really look into that and see if we can’t 

get equal facilities as far as recreation is concerned.

The city w’as using revenue sh aring funds for their fire department. 

Well, at that time they did not have any blacks in the New Bern City 

Fire Department.

In fact the city of New Bern doesn’t have blacks in any prestige type 

jobs, no administrative type jobs in city government which puts them 

in noncompliance of most any Federal program that comes up. But we 

had something to happen last year or year before last, the city had 

engaged in removing 13 fire alarm boxes out of an all-black community, 

placing them in a newly annexed community—Colony Estates, and 

even out of the city limits.

I took this complaint forward to the city authorities and they met 

with the fire marshal of the city. They engaged in meetings and at this 

particu lar board of aldermen’s meeting they brought out tha t these 

boxes never existed, that these were imaginary boxes.

Have you ever heard of an imaginary fire box? Well, anyway, that, 

is what they said it was. I hanpen to be an electrician and have worked 

in this tvpe of work for over 30 years.

I used to work for the citv of New Bern and had to keep up these 

same fire alarm boxes. Bv these boxes being taken out of black communities, there have been two deaths because of people not being able
92

to find ways of sending in fire alarms. Telephones are scarce in this 

particular section and maybe if you could get a rundown on damage 

by fire at Craven Terrace housing project with the housing authority, 

there happens to be a housing project pretty close, Cravel Terrace 

housing project, they have had more fire damages there since these 

boxes have been removed than at any other time.

Tha t facility is created by the government, run by the city. Tha t 

means the government loses money every time one of their apartments 

burns. I have gone so far as to prove to you that these fire alarm boxes 

did exist and I am hoping that somebody will be able to do something 

about it.

I have collected pictures and here is one of the boxes and this was 

back in 1935 or 1936 and it shows a clear picture of the fire alarm 

boxes. This is one of the boxes tha t they said did not exist, and an 

imaginary fire alarm box.

I have statements here from citizens that have lived in these neighborhoods for over 50 years and been paying city taxes, that verify 

and gave me signed statements that these boxes exist.

I wrote to the Governor of our State about these fire alarm boxes.

Mr. Edwards. Is there a connection between revenue sharing and 

these fire boxes ? If so, I did not quite catch it.

Mr. Vail. Yes. Let me straighten this point out. The city of New 

Bern received revenue sharing money which they used in the city 

fire department. After it was discovered tha t these fire alarm boxes 

were missing, these fire alarm boxes could be replaced since you allow 

city and local government officials top priority on such things as public 

safety.

I think tha t was one of the main reasons I filed this complaint 

because lives were being lost. I have two statements here from two 

different ladies. I won’t try to read them, but if you want copies, I 

will furn ish you with copies.

These are people that happened to be living in the neighborhood 

where there was a life lost. Also I will give you a copy of residents 

tha t have lived in this particular community tha t have made statements that those fire alarm boxes did exist. '

Every one of these fire alarm boxes came out of a predominantly 

black neighborhood and they were placed into a newly annexed area, 

Colony Estates, an out of town neighborhood taking care of industries like Stanley Tools, Inc. and a newly developed area, Colony 

Estates, where they have housing where the rent is $200 a month and 

more.

That area is called Colony Estates. Quite a few people t ha t live in 

this development have said I wish they would take these fire alarm 

boxes back and put them where they came from.

Are there any questions that any of you would like to ask pertaining 

to these fire alarm boxes or statements th at I have made ? I f not, I wifi 

continue.

Employment discrimination in the city of New Bern, we don’t have 

any blacks in administrative offices operated by the city in the city of 

New Bern, nor on the county of Craven. We have a courthouse. No 

blacks work in the county courthouse. No blacks work in the city hall 

with prestige type jobs. Of course, we have a few blacks in the police 

department and tha t seems to be the only department within the city
93

tha t comes anywhere near within compliance of receiving Federal 

funds, not only revenue sharing but any kind of Federal funds.

I think i t is in the law t ha t as far as equal employment opportunity 

not being enforced-----

Mr. Butler. Mr. Chairman?

Mr. Edwards. Yes, Mr. Butler?

Mr. Butler. Funds went to the fire department, revenue sharing 

funds ?

Mr. Vail. Yes.

Mr. Butler. Prior to your complaint, there were no blades employed in the fire department?

Mr. Vail. No.

Mr. Butler. Are there blacks in the fire department now?

Mr. Vail. Yes. We have two blacks in the fire department and 

two in the sheriff’s department. The Office of Revenue Sharing so far as negotiating and getting the people to halfway do something, 

they have been pretty successful. But it has kind of been like—people say years ago our President Johnson said he had a way he could kind of twist Congressmen and 

Senators arms into getting what he wanted done fo r the good of the country. Well, I th ink there has been a little bit too much arm twisting in enforcement of some of these law’s, putting pressure on the Office of Revenue Sharing—refer to newspaper clipping dated September 19, 

1973—to keep them from going through with these complaints. For instance when I first took out these complaints—I will get 

around to another thin g because this is a pretty hot issue and maybe 

you might hear about it later on. Anyway, the Office of Revenue 

Sharing has not been able to really enforce the laws because of intim­ idatio n by representatives of Congress I have been intimidated in ap­ pearing before these different boards, city board of aldermen and the 

recreation commission, 12-member board—9 wdiites, 3 blacks.

Mr. B utler. You did wind up with two parks, did you not ?

Mr. Vail. We already had two parks. The improvements—we needed 

and a center.

Mr. Butler. As a result of your complaints ?

Mr. Vail. We found out—we w’ound up with two recreation centers 

but the parks tha t the centers are located on, the parks tha t the 

recreation centers are located on, Parro t Park in a predominantly white neighborhood was a wooded area that they had to pu t bulldozers in there to clear it off. They have created a ball field, drainage system, lighting and everything where in the black park, we already had 

a lighted ballfield, and some facilities in the park.

We did not have the buildings.

Mr. Butler. You got the buildings?

Mr. Vail. We have got the buildings under construction.

Mr. Butler. And you got the building as a result of-----

Mr. Vail. As a result of the revenue sharing negotiation.

Mr. Butler. Were there any revenue sharing funds at the courthouse ?

Mr. Vail. In the jail.

Mr. Butler. As a result of th at, the employment of blacks changed?

Mr. Vail. Yes.

62-331— 75------ 7
94

Mr. Butler. The revenue sharing funds went into your fire department, your police department. Anywhere else?

Mr. Vail. I don’t know.

Mr. Butler. When did you make the Revenue Sharing Office aware 

of your dissatisfaction with respect to the fire alarm boxes?

Mr. Vail. That was last year.

Mr. Butler. You do not know what disposition was made of that 

one?

Mr. Vail. We never heard about that other than it had not been 

resolved. I got a letter from the Governor of the State and he said 

tha t that was a local matter, th at that would have to be straightened 

out with local government.

Mr. B utler. I wanted to be aware of exactly what you are saying. 

It sounds to me like you have gotten pretty good help.

Mr. Morris. The original complaints were filed with the Office of 

Revenue Sharing in June 1973. Last year, in 1974, the city chose 

to remove the fire alarm boxes primarily in the black community. Mr. 

Vail has confirmed that tha t is where they were taken from.

Some were reinstalled in predominantly white areas and outside 

the city. Since these boxes have been removed there have been how 

many deaths of blacks and citizens tha t have not been able to get 

quick fire service ?

Mr. B utler. I am trying to find out where it is in the procedural 

process.

Mr. Morris. That has not been resolved.

Mr. Butler. Thank you very much.

Mr. Vail. Being president of the local branch of the NAACP and 

you all having a law pertaining to harassment and intimidation, I 

wrote the ORS about the type of intimidation—the way the city 

(rents me in these different meetings.

T have had intimidations bv city authorities, the city attorney, and 

I have also had quite a bit of intimidation bv members of the recreation commission. I want to let you know just how the city is set up. 

The city attorney is a paid man who gets about $25,000 or $30,000 a 

year plus $50 for every meeting and he is in charge of delinquent tax 

foreclosures and like that.

lie has an office way off from the courthouse and they foreclosed on 

more black property than white. They must have made a law that 

maybe a fter a couple of years or 2 years tha t they can foreclose on 

black property at anytime. It seems as if every time I would go to a 

meeting I would get a letter from the city attorney where I have lived 

in the city and 1 have worked in the city hall where the tax office is 

located from 1957 to 1961 and I do know people that flier tax has been 

behind 15 and 20 years and you never hear their names called.

But I got a piece of paper from the city attorney’s office which he 

had written down in parenthesis this is an updated account'which has 

not been paid since November 1973.

This is 1975. Let's take action on this. Now this happened one dav 

afte r I go to a meeting fighting about these fireboxes and all. This 

type of intimidation bv a city attorney and city authorities I feel 

that it should he stopped.

You don't find many people really who are going to try to fight 

discrimination. The city and local government and State and Federal
95

Governments. If this committee would put more teeth in not only the 

Office of Revenue Sharing but any other Federal agency, give them 

teeth in enforcing the law some of these complaints would never be 

filed. All laws are good but if you don’t have a police department to 

enforce them they are not worth 2 cents. I appreciate talking with you 

all and I think th at should wind up everything. Are there any 

questions ?

Mr. Edwards. Mr. Drinan ?

Mr. Drinan. No questions.

Mr. Edwards. Mr. B utler ?

Mr. Butler. No questions.

Mr. Edwards. Mr. Dodd?

Mr. Dodd. No questions.

Mr. Edwards. Ms. McNair ?

Ms. McNair. Have you had an ORS case that has been closed?

Mr. Vail. No cases have been closed.

Ms. McNair. I have a record of a May 20 letter from ORS to New 

Bern stating th at your case was closed on that date, that the city was 

in compliance and tha t it was in fact adequately dealing with your 

complaint rega rding the parks, employment, and so forth.

Now, one of the commitments made by the city as I understand it, 

was tha t afte r they got tha t first noncompliance letter, they were 

going to undertake a maintenance program to clean the canals around 

your park, around the park in the predominantly black neighborhood.

What I want to know is whether or not as a result of that, case being 

closed on May 20 you have any more open d irty canals that had been 

alleged to be snake infested.

Have they cleaned those canals as they promised ?

Mr. Vail. I am glad you asked that question. It had slipped my 

mind tha t I had gotten a Tetter from them tha t they had closed out 

this particula r th ing. I had written HUD that the city of New Bern 

was in noncompliance and tha t they hadn’t lived up to th eir commitment to ORS in cleaning these snake-infested canals and upgraded or 

built miniparks in black neighborhoods. The city of New Bern was 

at th at time try ing to get a release of funds for a community development block grant, where citizens felt this location of project was a conflict of interest for Mayor Thiva. Some more arm twisting. ORS 

turned the city loose so th at it could get this community development 

block gran t approved. Our park still floods, our church and school 

yards still flood over though the city constructed another water tank 

with ORS funds at a cost of $250,000. Thas was unnecessary in west 

New Bern where most of these funds are spent in high-class neighborhoods.

The snake-infested canals are still there. The canals have not been 

cleaned.

Ms. McNair. On the construction of the recreation centers, is tha t 

going along? Was the commitment tha t there be simultaneous construction?

Mr. Vail. They kept a crew working all year on the all-white park 

until T wrote back to the Office of Revenue Sharing again to let them 

be aware.
96

Ms. McNair. But is it not the ease that, with respect to that recreation center construction and with respect to that canal cleaning, your 

case is closed ?

Mr. Vail. It is closed but the work has not been done. Not only the 

canals have not been cleaned, in the parks, but the drainage problem 

and the updating of many parks—there were no miniparks put into the 

whole black community.

We only have one minipark and it consists of two swings, two 

seesaws and one basketball goal. They bus our kids to the white 

community for our kids to play an hour and then they bring them 

back to day care centers and their neighborhood.

Mr. Edwards. Mr. Klee ?

Mr. Klf.e. Mr. Morris, I would like to get on the record the position 

of the NAACP with respect to the “making up for past discrimination" regulation of ORS; in specific 31 CFR section 51.3 2(a)(4), 

which states that recipient governments shall not be prohibited by 

this section from taking any action to ameliorate an imbalance of services provided to any geographic area within its jurisdiction if the 

j)urjx)se of such action is to overcome prior discriminatory practices 

or usage.

This is to he read in the context of the statute which provides that 

no person on the grounds of race shall be excluded from participation 

in or be denied the benefits of or subjected to discrimination under 

any program funded by revenue sharin g funds.

Is it your position that a program to remove the effects of past discrimination can actively favor a minority group to the extent of 

excluding a nonminority group from the benefits of the program?

Mr. Morris. I f its purpose is to correct past practices tha t existed 

because of discrimination?

Mr. Klee. Your position would be to support the legal point of the 

ORS with respect to a camp that was set up for Indian children and 

excluded children of all other racial groups. You would think that a 

program like tha t insofar as it discriminated against young white 

children who had never discriminated against anybody in their lifetime, you think that, is permissible?

Tha t program conies within the meaning of the statute?

Mr. Morris. I am not familiar with the case you are speaking of, 

the Indian situation there. But I would have some concern if the 

use of these funds were used to su pport a program th at would exclude 

anyone because of their race or national origin.

I am not familiar with the case you are citing.

Mr. Klee. Take it as hypothetical. If a town wanted to set up a 

camp to redress prior discrimination and they provided only one racial 

group could attend that camp, do you think that the regulation goes 

as far as to allow that ?

Mr. Morris. I s this an Indian reservation you are referring to?

Mr. Klee. Make it any hypothetical you want.

Mr. Morris. On a hypothetical case I would not believe tha t the 

program should exclude anyone because of their race in the process 

of correcting for imbalance or past practices of discrimination. It 

should not exclude or be limited to persons of just one pa rticu lar racial 

background.
97

Mr. Klee. So you think that the statute, with its general language 

about no person being discriminated against, limits the past discrimination regulation tha t I cited; you support that.

Mr. Morris. Yes.

Mr. Butler. Basically I have the impression that given the. choice 

you would prefer tha t we not have a general revenue sharing program, 

correct ?

Mr. Morris. Correct.

Mr. Edwards. Mr. Morris, Mr. Vail, thank you very much.

Our final witness is Under Secretary of the Treasury, Edward C. 

Schmults.

Mr. Schmults was formerly General Counsel of the Department of 

(he Treasury and is intimately acquainted with the revenue sharing 

program. Accompanying Mr. Schmults is Mr. Joh n K. Parker, Acting 

Director of the Office of Revenue Sharing. Until recently, Mr. Parker 

held the position of Deputy Director of the Office of Revenue Sharing.

Gentlemen, we thank you for coming and you may proceed with 

your statement.

TESTIMONY OF EDWARD C. SCHMULTS, UNDER SECRETARY OF THE

TREASURY, ACCOMPANIED BY JOHN K. PARKER, ACTING DIRECTOR OF THE OFFICE OF REVENUE SHARING

Mr. Schmults. Than k you, Mr. Chairman.

Mr. Edwards. Mr. Butler?

Mr. Butler. I welcome the gentleman from the Treasury Dep artment. General revenue sharing has been a welcome addition to our 

grants-in-aid. This program has done a good job in performing the 

basic tasks set out for it by Congress. Returning responsibilities to 

elective officials of general purpose State and local governments; helping to put fiscal resources where need is, and providing assistance free 

of the redtape and bureaucracy associated with categorical grants.

Because I view revenue sharin g as a basically successful program, 

I support the administration’s efforts to renew it. Our States and localities need to know now about the future of this program so that 

they can rationally plan their fiscal year 1977 budgets.

Despite the overall effectiveness of the program in doing what it 

was intended to do, it is wholly appropriate that the Congress continue to examine its operation in the light of experience. No Federal 

activity, especially one so important and costly as this one, should 

escape careful, regular scrutiny; therefore, this hearing today can 

serve a very useful purpose.

It has always been clear that Congress and the administration intended tha t the State and Local Fiscal Assistance Act not serve as a 

means by which to avoid Federal nondiscrimination standards. The 

nondiscrimination provisions of the act are clear and generally 

adequate.

It is my judgment that the Treasury Department has been conscientious and innovative in try ing to deal with the massive job of assuring nondiscrimination in a program involving 39,000 jurisdictions.

It has sought to utilize existing Federal and State resources, info rmational efforts among recipients and citizens, as well as its own small
98

staff, in meeting its responsibilities. As more experience is gained, it is 

likely tha t this well-conceived plan will prove increasingly effective. I am especially grateful tha t another large Federal bureaucracy has not been erected in the Office of Revenue Sharing. This would not only contradict the essential thru st of the program but would be an 

additional burden on the taxpayer. We have learned in the past tha t additional bureaucracy does not necessarily guarantee better protection of individual rights, and presents certain dangers to those rights. I am hopeful tha t today this subcommittee can explore with the representatives of the Treasury ways of improving upon revenue sha r­ ing civil rights compliance within the broad outlines of the current 

approach.

Mr. Schmults. Thank you for those remarks, Mr. Butler. We are 

delighted to hear them.

Mr. Edwards. Without objection the entire statement will be included in the record. We would appreciate it if you could summarize 

your statement, Mr. Schmults. [The prepared statement of Mr. Schmults follows:]

Stateme nt of E dward C. Sch m ul ts , Under Secretary of th e Treasury

Mr. Chairman and Members of the Subcommittee, I am pleased to be here today to testify about the civil rights implications of the General Revenue Sharing program. I recognize the importance of these hearings. The requirement tha t there be no discrimination in the use of shared revenues is of central im­ portance to the success of this new type of Federal inter-governmental assist­ ance. It is absolutely essential tha t Federal funds supplied through revenue sharing are not used to support any program or activity that discriminates 

against any of our citizens. I am familiar with at least some of the issues which these hearings will ad­ dress. I have been closely concerned with the revenue sharing program for over a year now. In a recent Departmental reorganization, my office, tha t of Under Secretary of the Treasury, was assigned general responsibility over the Office of Revenue Sharing. I also served as chairman of an inter-agency task force which reviewed the revenue sharing program and made recommendations concerning its renewal. The nondiscrimination requirement underlying revenue sharing is clearly and definitely stated in the Act tha t authorized the program. Section 122 of the State and Local Fiscal Assistance Act of 1972 provides tha t there shall be no discrimination on the grounds of race, color, national origin or sex in any pro­ gram or activity funded in whole or part with shared revenues. The specific prohibition against sex discrimination is one th at was not included in the pro­ tections provided in prior Federal programs. The revenue sharing act then outlines the steps that can be taken by the Secretary of the Treasury and the Attorney General in assuring compliance with the nondiscrimination provision. The Administration’s review’ of the revenue sharing program led us to propose one important change in the nondiscrimination provision of the present statute. II.R. 6558, the Administration’s renewal bill specifically sets forth the remedies available to the Secretary of the Treasury to assure tha t shared revenues are 

not used to support discriminatory activity. The proposed renewal statute specifies tha t where discrimination is found the Secretary of the Treasury will have the option of withholding the entire amount of a recipient’s entitlement or of limiting the withholding to those funds directly involved in the discriminatory program. The Secretary is also specifically authorized (1) to terminate the eligibility of a jurisdiction to receive future payments and (2) to require repayment by a jurisdiction of revenue sharing funds exi>ended in a discriminatory program. Two ends would be accomplished by these changes. First, it is arguable that the present statute, through references to Title VI of the Civil Rights Act of 1964. limits withholding and termination to the local program for which there has been a finding of noncompliance. It can also be argued that since Title VI
99

doe s no t auth ori ze re pa ym en t, th e exis ting GR S sta tu te wou ld not per m it th is 

ei th er . As a re su lt, pre se nt re ven ue sh ari ng re gu la tion s, by au th ori zin g th es e 

remed ies , m ig ht be sa id to ex ce ed w hat is per m it te d und er th e pre se nt law . 

The ch an ge prop os ed wo uld ex pl ic itly au th ori ze bo th ac tio ns . O ur pri m ary go al 

he re is to el im in at e po ssible co nf us io n an d co un te rp ro du ct iv e litiga tion .

Th e second en d th a t wo uld be se rv ed by th e prop os ed am en dm en ts wo uld l»e 

th e es ta bl is hm en t of a mor e fle xib le, us ab le too l fo r en fo rc em en t. In ca se s whe re 

it is ap pro pri ate to w ith ho ld on ly p a rt of a ju ri sd ic ti o n ’s en titlem en t, su ch ac tion 

lessen s th e un ne ce ss ar y har m ca use d to ci tize ns be ne fit ing fr om fu nds not 

utili ze d in a dis cr im in at ory m an ner . I t sh ou ld be no ted th a t th e Sec re ta ry could 

w ith ho ld all sh ar ed re ve nu es go ing to a ju ri sd ic tion shou ld th er e be an y do ub t 

t

ab ou t which po rtio n of th e enti tl em ent was be ing us ed in vi ol atio n of th e ac t.

Thi s sa nct io n could also be ap pl ie d w he re re ci pi en ts pu rp os ely re dir ect re ve nu e 

sh ari ng fu nd s in re la tion to th eir ow n re ve nu es in ord er to av oid comp lia nce.

To en fo rc e th e nondis cr im in at io n re qui re m en t of th e reve nu e sh ari ng st atu te , 

th e Office of Rev en ue S har in g h as develop ed a civil ri ghts co mpl ianc e pr og ra m 

» in whi ch in te rn al re so ur ce s are buttre ss ed th ro ugh a sy stem of co op er at iv e

ar ra ngem ents w ith oth er F edera l co mplian ce ag en cies, w ith S ta te hu m an ri ghts 

agencie s, an d w ith S ta te au d it offices. T hi s ap pr oac h has fo ur gen er al ben efits. 

F ir st , it en ab le s OR S to su pp le m en t it s ow n ca pab ilitie s w ith re so ur ce s prov ided 

by co mplianc e ag en cies w ith si m il ar in te re st s an d ov er la pp in g pro gr am resp on ­

sibi lities . Secondly, it c ontr ib ute s to th e c oo rd in at io n of e xis ting civil ri ghts com ­

plia nc e p ro gr am s. T hi rd ly , it p ro vi de s a bett er m ea ns o f d ea ling w ith th e en ormou s 

ju ri sd ic ti onal an d fu nc tional sco pe of re ve nu e sh ar in g. Fin al ly , by utilizi ng S ta te 

an d loc al re so ur ce s to th e exte nt feas ible, it reaffir ms th e ba sic th ru st of th e 

re ve nu e sh ari ng pr og ra m.

Th e T re asu ry D ep ar tm en t an d th e Office of Rev en ue S har in g do no t plan to 

re linq ui sh th e ult im ate re sp onsi bility fo r ass uri ng no ndis cr im in at ory us e of 

sh ar ed reve nu es . W hile we a re uti li zin g re so ur ce s m ad e av ai la ble by ot he rs , we 

feel th a t we h av e th e re sp onsi bility to m on itor the effectiven es s of the co op er ative 

ef fo rts th a t oth er ag en cies a re m ak in g in our be ha lf. F urt her m ore , we belie ve 

th a t we m us t re ta in th e re sp onsi bility of m ak in g fin al det er m in at io ns in re ve nu e 

sh ari ng co mpl ianc e ca ses. To co mpletely sh if t co mplianc e re sp on sibi lity to 

anoth er ag en cy wo uld in su la te us from co ntro ve rsy. We do no t believe, ho we ver, 

th a t su ch a co ur se of ac tion wou ld pr om ote effective en fo rc em en t of th e no ndis cr im in at io n re quir em en t of th e re ve nu e sh ari n g st atu te . O th er F ed er al 

ag en cies to whi ch re sp on sibi lity fo r re ve nu e sh ari ng civi l ri ghts m att ers m ig ht 

be tr an sf err ed , su ch as th e Ju sti ce D ep ar tm en t or th e Equ al Empl oy men t Opport unit y Co mm ission , ha ve th e ir ha nds fu ll w ith th eir ow n pro gr am s an d 

ca seload s. Ju st ic e, fu rt her m ore , is or ga ni ze d to de al w ith civi l ri ghts prob lems 

th ro ug h litigat io n, ra th e r th an th e adm in is tr ati ve proc ess. Both elem en ts are 

clea rly im port ant p art s of a to ta l F ed era l civ il ri g h ts st ra te gy.

Th e nu m be r an d n atu re of re ci pie nts an d th e de gr ee to which fu nds are 

sp re ad am on g S ta te an d loca l fu nct io nal acti vit ie s m ak e civil ri ghts en fo rc em en t under reve nu e sh ar in g a so m ew hat un iq ue undert akin g—a n under ta kin g 

th a t is di ff er en t from m os t pro gra m co nc erns of oth er co mpl ianc e agencie s. 

Fin al ly , if th e Office of Rev en ue S har in g w er e no t to co nt in ue to ha ve re sp on ­

sibi lity fo r civil ri ghts det er m in at io n, th er e wou ld st il l be ne ed fo r ex te ns iv e 

co or di na tion be tw ee n who mev er w er e to as su m e su ch re sp on sibi lity an d OR S 

in it s ro le of ad m in is te ri ng and au dit in g th e under ly in g re ve nu e sh ari ng 

j pr og ra m.

Des pite our ef fo rts to m ak e us e of ex is ting out si de civ il ri ghts co mplian ce 

re so ur ce s w he re ap pro pri at e, we rec og nize th a t pri m ary re sp on sibi lity st ill 

re st s w ith ou r sm all OR S staf f. The Office of Rev en ue Shar in g has an au th ori ze d 

st af f of 108 fo r Fis ca l Yea r 1970. As of th e pre se nt , we ha ve ab ou t 90 fu ll tim e 

em plo yees. Ther e a re th ir ty po si tion s in th e Com plian ce Divisi on . In th e civ il 

ri ghts ar ea , th e effo rts of five OR S civil ri ghts sp ec ia list s (a nu m be r wh ich 

wi ll be in cr ea si ng to te n duri ng FY 1976) are su pp le m en te d by th os e of fif tee n 

Com plian ce Divisi on audit ors an d si x la w ye rs fr om th e Office of Chief Co uns el. 

F u rt h er, th e In te rg ove rn m en ta l R el at io ns Divisi on w ith ni ne pr of es si on al s an d 

th e Pub lic Affai rs M an ag er pl ay an im port an t ro le in in fo rm in g re ci pi en t gov ­

er nm en ts of th eir civ il ri ghts re sp on sibi lities an d ci tize ns of th e ir righ ts.

Th ose invo lved in OR S civi l ri g h ts ef fo rts ha ve m an y re sp on sibi lities . F or 

ex am ple, th ey m us t re act to co m pl aint s, ass is t w ith court cases, de al w ith pr ob ­

lem si tu ati ons br ou gh t to ligh t th ro ugh in fo rm at io n gen er at ed outs id e of ORS, 

sp otch ec k on an d im prov e th e oper at io n of var io us co op er at iv e re la tion sh ip s,
100

and continue to publicize the nond iscrimination requirements of the program. As 

pa rt of its responsibilities, the civil rights branch of the ORS Compliance Division 

had conducted 51 field reviews and 13 reviews of investigations by o ther Federal 

agencies a s of mid-September, 1975. Our civil righ ts caseload is a substantial one 

and there is a significant backlog. As of September 30, 1975, ORS had received 177 

civil rights cases, of which 49 had been resolved. This 177 was pa rt of a total of 

around 630 compliance cases of all sorts.

We have believed for some time th at the efficiency of our complaint resolution 

process could be improved, and we have been working hard to do so. The addition 

of more civil rights compliance officers to the staff is one imp ortant step in this 

direction. Furth er, we have developed an improved case workload control system 

to help keep track of the sta tus of various cases and let us know which ones 

need priority attention. This system also gives us the capability to analyze our 

caseload from the standi>oint of more efficient utilization of staff.

Other improvements in procedures which ORS is making a re reorganization of 

its staf f; greater formalization of working pro ced ures; better record kee ping; 

and improvement of the violation determ ination let ter which goes to a recipient 

government found not to be in compliance.

Besides a ctin g on complaints, the Office of Revenue Sharing has long been aw are 

of the need to develop better means of identifying insta nces of discrimination. 

ORS is currently in the process of developing the capacity to utilize statistics 

on employment derived from the EEO-4 forms and from Census labor force data 

to identify potentia l employment discrimination. Of course, one key element 

of ORS’s various cooperative agreements is to identify situations where there 

may be discrimination.

The Office of Revenue Sharing h as signed formal cooperative agreements with 

the Equal Employment Opportunity Commission, the Dep artm ent of Justice, 

and the Department of Hea lth, Education, and Welfare. Efforts are being made 

to nego tiate an agreement with the Departm ent of Housing and Urban Development. Proc edural implementation of the EEOC agreement is being worked 

out. The EEOC has alre ady issued instruc tion s to its regional offices about new 

procedures. The HEW agreement will soon be fully implemented a t the field level.

At this stage in the process, the cooperative agreements ORS has entered provide for the exchange of compliance information, the coordination of investigations and negotiations, and joint enforcement action. It is quite possible that in 

the future there will be a complete substitutio n of investigative effort on a caseby-case basis and agreement to mutually rely on the subsequent fac t finding 

needed to m ake compliance determination s.

Cooperative agreem ents have alread y yielded several important ben efits:

Access to EEOC complaint info rmation by auditors working under ORS State 

aud it agre em ents;

Exchange of ORS 15-day i nit ial notification letters and HEW Title VI compliance inform ati on;

Nineteen civil rights reviews either have been conducted join tly with Justice 

or conducted for ORS by Justice.

The Office of Revenue Sharing is also utilizing Sta te human rights agencies as 

a source of compliance information and investig ative and monitoring support. 

Ten agre ements have been signed with Sta te “706 agencies.” These are State 

State law before proceeding itself. EEOC also gives finding by “706 agencies” 

“sub stan tial weight” in its own deliberatio ns. ORS has established working relationships with two State human rig hts agencies th at have not been certified by 

the EEOC.

The ORS—State human rights agency agreements generally provide for the 

exchange of compliance information, and for cooperation and coordination in 

investigating complaints and monitoring compliance. The Office of Revenue 

Sharing gives “sub stan tial weig ht” to the findings of EEOC certified State 

agencies but is reta inin g respo nsibility for making its own final determination in 

compliance cases.

The Adm inistration is awa re th at some Sta te human rights agencies have 

limitations in the ir capacity to help with revenue sha ring civil rights enforcement. Yet we believe th at grea ter results can be achieved thro ugh cooperative 

action tha n through completely independent and uncoordinated efforts. Fur ther, 

there is the possibility that coordination with ORS will give these agencies—as 

well as ORS—grea ter ab ility to successfully resolve discrimination issues.

There have alre ady been seve ral insta nces where inve stiga tions by State human rights agencies have been pa rt of the basis for an ORS determination of
101

noncompliance. ORS, on its par t, supplies copies of “15-day let ter s” informin g recip ients of allegations of discriminatory conduct, to the Sta te agency con­ cerned. ORS h as also supported Sta te agency efforts to obtain information from 

local governments. A third element in ORS’s efforts to supplement its own compliance resources with those alre ady in place, is its system of agreeme nts with Sta te audit age n­ cies. Forty-three State s are covered by agreements th at involve the audit ing of fortv S tate governments and approximately 15,000 local governments. Approxi­ mately 50 percent of all GRS allocatio ns are covered by these agreements. Under most ORS-State aud it agency agreements, Sta te aud it offices assume responsibility for auditin g the use of shared revenues by Sta te and local agencies. Often, also included is a review of the work of Independ ent Public A uditors em­ ployed by localities. Essentially the State audit ors expan d the ir own audit s to include General Revenue Sharing funds and to incorporate the standard s of the ORS Audit Guide and Stan dards for Revenue Sharing Recipients. The degree of 

coverage of State, local, and independent Public Auditor audits varies from one 

agreement to another. On the local level abo ut 32 percent of fund s and 30 percent of recipients na tio n­ wide are aud ited by Indepen dent Public Auditors. The work of some of these is reviewed by cooperating State agencies. Many Indepen dent Public Auditors also 

utilize the ORS Au dit Guide. •

One p art of the ORS Audit Guide is a checklist of civil righ ts questions which the au ditor is to cover. Reports of au dit s which have detected noncompliance w ith various standard s of the Audit Guide are sent to ORS for review by the audit 

staff of th e Compliance Division. While the potential of the audit system as a means of detecting civil rig hts viola tions is evident, to date it has been of limited success in serving this func­ tion. We hope to be able to improve its ability to do so. Nevertheless, the existin g audit system perform s well in carrying out its oth er functions. It app ears to be the best way ava ilab le to assure th at the basic legal and financial requ irem ents of the State and Local Fiscal Assistance Act are observed. ORS auditors also compliment the efforts of the civil rig hts compliance staff by providing necessary information on the placement of shared revenue bjT recip ients and by ass isting 

in on-site investigations. There is one final aspect of the Office of Revenue Sharing strategy to combat discriminatory use of shared fund s which should not be overlooked. This is the diligent effort by ORS’s Intergovernmen tal Relations and Public Affairs Divisions to inform the 39,000 recip ient jurisdiction s of their civil rights responsibilities, and to inform citiz ens of the ir rights under the Act. This role is important since m any recipien ts otherwise would have limited contact with the Fed era l gov­ ernm ent and little in ter est in national civil rig hts standa rds. I would like to list some of the major efforts ORS has made to this en d: Bi-monthly publication of the Reve-news newsletter, the las t three issues of which have includ ed major civil rights articles. (Distr ibu ted to Congress, media, intere st groups and associations.) Letters accompanying entitlemen t checks during Entitle ment 5 all contained civil rights info rma tion for recipients. (Distributed to all recipient gove rnments. ) Distribu tion of 160,000 copies of the pamphlet “Getting Involved” containing imp ortant civil rig hts material. (Distribu ted to recipien ts with populations over 5,000, organization s and associations, media.) Publication of the pamphlet “General Revenue Sharing and Civil Rights”. (Dis­ trib uted to all recipients, to organiz ations and associations, at conferences.) Development with EEOC of a guidebook for recipien ts to use to elim inate dis­ crimination. (In the process of development.) Participation by ORS staff in panel groups and as speakers at around thirt y human rights oriented gatherings between May, 1973 and July, 1975. Partici pation by ORS in in tra state training project meetings, with public officials and organization s, where civil rights lias been an imp ortant aspect of 

the program. Letters notifying all local governments in States where agreements have been signed by ORS with Sta te human rights agencies. Partici pation by ORS as an exh ibitor at conventions of civil rights groups. News releases and fact shee ts noting civil rights issues. Development of a network of contacts among officials, citizen groups, interest groups a nd others at both the Sta te and local levels to help publicize civil rig hts information and answ er inquiries.
102

We wo uld no t claim th a t al l go ve rn m en ts ha ve been fu lly ap pra is ed of GRS 

no nd is cr im in at io n re quir em en ts an d al l in di vi du al s of th eir ri ghts und er th e 

GRS Act. We wo uld , ho wev er, m ai nta in th a t giv en th e en or m ity of th e ta sk an d 

av ai la ble resou rces, we ha ve m ad e a ser io us a tt em pt to do so.

I ha ve t ri ed to de sc ribe s om e of th e w ay s i n which t he Office of Re ve nu e Sha ri ng 

has so ug ht to carr y out it s civi l ri ghts resp on sibi lities . We are aw ar e th a t th er e 

is ne ed fo r im pr ov em en t in som e as pe ct s of our co mplianc e pr og ram. We ha ve , 

fo r som e tim e, been w or ki ng to de velop w ay s to st re ngth en our efforts . We 

ha ve loo ked in to th e cr itic is m s an d ad vice off ere d by a wide ra nge of so urc es : 

th e re port s of th e U ni te d S ta te s Co mm iss ion on Civil R ig hts ; re port s of an d 

in te rv ie w s w ith th e G en er al Acc ou nting Office; N at io nal Scien ce F oundation —s po ns ored stu d ie s; th e re port s of th e N at io nal Clear in gh ou se on Re ve nu e 

S h ari n g ; th e U rb an Lea gu e’s re vie w ; hea ri ngs be fore th is an d ot he r Co ng ression al co m m itte es ; co nta ct w ith th e Ju st ic e D ep ar tm en t, Equa l Em ploy men t Op ­

port unit y Co mm iss ion an d F edera l gra nt agencie s; co nf er en ce s w ith an d co rr esp on de nc e from civ il ri g h ts g ro u p s; an d co mmen ts rece ived on prop os ed re gula ­

tion s. In ad di tion to th es e out si de source s, civil ri ghts co mplianc e wa s a su bj ec t 

co ns id er ed la st year b y a T re asu ry D ep ar tm en t m an ag em en t st ud y team in a m an ­

ag em en t re port on OR S fu rn is hed to you . We are cu rr entl y co mpleti ng anoth er 

in te rn al st ud y w ith th e pri m ary pu rp os e of id en tify in g fu rt h e r im pr ov em en ts in 

our co mplianc e sy ste m. We will m ak e th is report* av ai la bl e to th e Su bc om mittee 

as soon as i t is comp let ed.

We a re ad dr es sing a nu m ber of se riou s civ il ri ghts issu es. We will undert ake 

th e op er at io nal im pr ov em en ts th a t I ci te d ea rl ie r. OR S will soon be get ting 

some of th e ad ditio nal st aff th a t it ba dly needs. In not in g th is , I do no t m ea n to 

im ply th a t we are go ing to be ab le to sa ti sf y all th e cr itic is m s th a t ha ve be en 

ra is ed abou t th e re ve nu e sh ari n g civ il ri ghts effort. F or ex am ple, th er e are som e 

cri ti cs who wo uld like to hav e OR S it se lf clo sely m on itor th e ac tivi ties of al l 

39.00 0 re ci pi en t go ve rn m en ts. Thi s wo uld ta k e a huge, ne w co mp lia nc e ap p ara ­

tu s. I t wo uld mea n a sign ific an t in tr usi on in to th e da y- to -d ay op er at io n of ev ery 

S ta te a nd lo ca l g ov er nm en t in Ameri ca.

On e analy st ha s est im at ed th a t it wou ld ta ke 7,800 audit ors to co nd uc t an 

annual audit of ev ery re ci pi en t. W het he r a Co ng res s, wh ich gra nte d only five 

of th e tw en ty-six ad dit io nal OR S co mplianc e po sition s re qu es te d by th e P re si ­

den t fo r Fis ca l Yea r 1975 and ele ve n ou t of tw en ty -o ne po sition s re qu es ted fo r 

Fis ca l Yea r 1976, wo uld be w ill ing to co mm it th e re so ur ce s th a t wo uld be 

re quir ed to carr y ou t su ch a pro gr am is open to qu es tio n. I t is our own vie w th at 

th e co op er ative arr angem ents th a t I pr ev io us ly de sc ribe d will go a long wa y 

in ac co mplishing a s im il ar r es ult.

An issu e clo sel y re la te d to w het her a su bst anti all y g re ate r Fed er al m on itor ­

in g ef fo rt is ne ed ed is th e qu es tio n w het her th e non di sc rim in at io n pr ov isions of 

th e re ve nu e sh ar in g sta tu te sh ou ld ap ply to all re so ur ce s of a re ci pi en t ju ris ­

diction. At th e ba sis of th is re co mmen da tio n is th e ar gum ent th a t all mon ey, 

in cl ud in g sh ar ed reve nu es , is fu ng ib le an d th a t eff ec ts of th e uses of sh ar ed 

re ve nu es ma y be dive rse. W hi le th is ar gum en t is no t un re as on ab le , if shou ld be 

no te d th a t money de rive d fro m oth er Fed era l pro gra m s also re leas es oth er re ­

so ur ce s a t th e S ta te an d lo ca l lev el fo r us e a t th e di sc re tion of th e re cipien t.

It is cle ar th a t th e Co ng ress in en ac ting th e S ta te an d Lo cal Fi sc al Ass istanc e 

Ac t int en de d th a t it s no nd is cr im in at io n provi sion ap pl y on ly t o p ro gr am s or a cti vitie s fu nd ed in wh ole or p a rt w ith re ve nu e sh ari ng m oney. W he re it was intend ed 

th a t in dir ec t im pa ct be ac co un te d fo r. as in th e ca se of th e re st ri ct io n ag ai nst 

us in g reve nu e sh ari ng to m ee t th e m at ch in g re qu irem en ts of oth er Fed er al pro ­

gr am s, th is was specifically sta te d in th e st atu te . In M att hew s rs . Massel! a 

Fed er al Cou rt sa id th a t anoth er us e lim itat io n, th a t es ta blish in g local pri ority 

ex pen diture ca tego rie s, did not ap ply to le gi tim at el y free d- up loc al fu nd s. W hile 

m ak in g such a ru lin g, th e court di sa llo wed an ac co un ting m an ip ula tion desig ne d 

to ci rc um ve nt th e Act.

In co ns id er in g th e issu e of w het her Secti on 122 shou ld be ex tend ed to in clud e 

all a re ci pie nt’s reso ur ce s, on e shou ld no te th a t th ere has be en no su gg estio n by 

an y co m m en ta to rs th a t S ta te s an d co mm un iti es ha ve be en al lo ca ting th eir re ve ­

nu e sh ari ng fu nd s to acti vit ie s w ith lim ited civil ri ghts im pl ic at io ns to av oid 

re sp on di ng to t he GR S no nd is cr im in at io n s ta ndard s.

If th e no nd is cr im in at io n pr ov ision of th e re ve nu e sh ari ng ac t were to ap ply 

to al l re so ur ce s of a ju ri sd ic ti on. Co ng res s sh ou ld mak e an ex plici t decis ion to d o 

so in fu ll aw ar en es s of th e im pl ic at io ns it has fo r th e G en er al Re ve nu e Sha ring 

pr og ra m an d th e ne ed fo r a la rg e Fed er al co mplianc e appara tu s. To igno re th e
103

latter would make such a change a hollow gesture. Revenue sharing was designed to provide generalized no-strings Federal assistance to State and local govern­ ments. While a major concern was that the funds made available not go to sup­ port discriminatory activity the program was not enacted primarily as a civil rights initiative. There are Federal, State and local statutes and there are.civil rights agencies at all levels of government whose main task is to eradicate 

discrimination. Revenue sharing does further Federal civil rights efforts. Ih e program con­ tributes to the general civil rights goals of the Federal government by making Federal standards applicable to many additional jurisdictions and areas of gov­ ernmental activity. While awareness of these national standards may largely be brought about through informational efforts rather than Federal mandate, it is conveyed just the same. Further, the civil rights efforts of other Federal agencies, such as the Equal Employment Opportunity Commission, and the efforts of State human rights agencies are being strengthened through exchanges of information with ORS and through the sanctions that are available if shared revenues are found to be involved in a program tha t they are investigating. Finally, evidence appears in the NSF-supported study, “Civil Rights Under General Revenue Sharing’’ and the most recent report of the National Clearing­ house on Revenue Sharing that some governments have used their GRS entitle­ ments to redress the impacts of past discrimination. There are two other important ways, aside from its compliance efforts, in which the General Revenue Sharing program has benefited minorities and the underprivileged. We think tha t decisions about the use of GRS entitlements as well as concern that funds not support discriminatory activity have lead to greater involvement in community affairs at the State and local levels by civil rights organizations. About one-half of the revenue sharing civil rights com­ pliance cases have been initiated by organizations. The publicity and public par­ ticipation requirements of the Act have focused attention on revenue sharing spending decisions. They have enabled citizen groups to get a better perspective on the political processes in their communities and on where to “weigh-in” with 

their views. Secondly, the Administration is confident tha t revenue sharing funds them­ selves are of much greater benefit to the poor and minorites than may appear a t first glance. We know that low income S tates and urban centers receive larger than average per capita GRS allocations. States spend large portions of their GRS funds on education. Social concerns are addressed by some capital expendi­ tures reported by recipient governments. Expenditures made in functional areas such as transportation, health, or environment often benefit the poor and the aged. Finally, the presence of revenue sharing money frees up State and local resources for programs to meet human needs. In conclusion, the Administration feels tha t revenue sharing furthers the goal of assuring equal treatment for all our citizens. We think we have been innova­ tive in our responses to the important task that I have outlined. We need a larger civil rights staff at the Office of Revenue Sharing. We need to utilize that staff more effectively. We must continue our efforts to derive g reater assistance from the cooperative arrangements we have with other agencies. There have been short­ comings during the first three years of the revenue sharing program, but we are confident th at these will be overcome and that General Revenue Sharing can do a better job in attaining our National civil rights goals.

Mr. Schmults- Thank you, Mr. Chairman. I would be happy to summarize my statement. The full text, I understand will appear in 

the record. Fir st of all, I thin k the requirement tha t there be no discrimina­ tion in the use of general revenue sharing funds is of central im­ portance to the success of this new type of Federal intergovernmental assistance. It is absolutely essential that Federal funds supplied throu gh revenue shar ing are not used to support any program or activity tha t discriminates against any of our citizens. Let there be 

no doubt that we share this common goal. With respect to my own participation. I have been involved with the revenue sharing program for over, a year now. In a recent de part­ mental reorganization, my office, th at of the Under Secretary7

 of the
104

Treasury, was assigned general responsibility for the Office of Revenue Sharing. I also served as a chairman of an interagency task force 

which reviewed the revenue sharing program for the President and 

made recommendations as to its renewal. These have been incorporated in the administration's bill introduced in the House and the 

Senate.

We believe that the nondiscrimination requirement underlying revenue sharing is clearly and definitely stated in section 122 of the State 

and Local Fiscal Assistance Act of 1972. It provides that there can 

be no discrimination on the grounds of race, color, national origin, or 

sex in any program or activity founded in whole or in part with shared 

revenue.

The specific prohibition against sex discrimination was one tha t 

was not included in prior Federal statutes. We think the provision is 

a good, strong provision. Notwithstanding that, we have proposed an 

important change and improvement in th at section. We urge that the 

law clearly set forth the remedies available to the Secretary of the 

Treasury so th at he may better assure tha t shared revenues are not 

used to support discriminatory activity.

The additions we have recommended would make clear tha t the 

Secretary has the authority to withhold all revenue sharing funds 

allocated to a jurisdiction or to limit the withholding only to those 

funds directly involved in a discriminatory program. Second, the 

Secretary would be specifically authorized to terminate the eligibility 

of a jurisdiction to receive iuture payments and he could require 

repayment by the jurisdiction of revenue sharing funds expended in a 

discriminatory program.

Two ends are served by these changes. First, we thin k it is arguable 

that we may have authority under the present statu te only to withhold funds used in a specific discriminatory program. Therefore, our 

present regulations might be broader than the existing law.

Second, we think tha t bv giving the Secretary some additional discretion in this area, he will be able to forge a more flexible, usable 

remedy. Where funds are going to a jurisdiction and there is any 

doubt as to which portion of those funds are going to a program that 

discriminates or if the Secretary believes that the local jurisdiction is 

manipulating its reporting or its accounting procedures, he could 

withhold all funds.

We think this is a strengthening of the present statute. To enforce 

the civil rights----- -

Mr. Butler. Let me be sure that I am following you on that par ­

ticular one. Let us consider New Bern. We have grants, one of which 

went to recreational purposes and the other of which went to the fire 

department.

Is it your view that under the existing legislation tha t if there were 

discrimination in the fire department but no suggestion of discrimination in the use of recreational funds, that only the funds for the fire 

departm ent could be withheld ?

Mr. Schmultr. That is correct.

Mr. Butler. If there is discrimination in the fire department, you 

can take the recreational money away as well, is that correct ?

Mr. Schmults. No, sir. Where you could identify only so many dollars going to the fire department and other dollars going to the recre-
105

ation de pa rtm en t and th at were cle ar and could be est abl ished, we 

would pre sum abl y, in the norm al course, only wi thh old the fund s go ­

ing to the fire de pa rtm en t. But where it was un cle ar wh at po rtion 

was going to th e fire d ep artm en t o r where we felt t he local officials were 

ac tin g in bad fa ith or were se tting up a fac ade or tryi ng to fool us, 

the S ecret ary w ould have t he pow er t o wi thho ld all funds. T hat would 

be to avoid an argu men t th at only so ma ny dolla rs are go ing to th e 

discrim ina tory pr og ram an d others cla im ing “no,” it is rea lly more. 

I f we were no t su re we would have th e power to withh old all.

Mr. Butler. B ut th e pow er to wi thho ld would b e c onditioned on a 

findin g of some so rt ?

Mr. Schm ults. Thi s assum es a findin g of dis cri mina tio n aft er t he 

local juris diction ha s had its “d ay in co urt.” I am assuming th at we 

have gone th ro ug h th e ad minist rativ e process or throug h a cou rt.

Mr. Butler. W ith referenc e to th e specific fund s involved you wo uld 

fu rthe r hav e a fin ding th at you would no t inv ade an othe r prog ram 

un til you found t hat the fu nds were not traceab le ?

Mr. Schm ults. T hat would be the Se cretary’s d ete rm ina tion.

Mr. Butler. Th en you wou ld fu rt her str en gthe n the office by giving the pow er to req uir e a rep ayme nt.

Mr. Schm ults. Th at is corr ect.

Air. Butler. You wou ld have to go th ro ug h th e procedura l ste ps in 

deter mi nin g the d isc rim ina tion.

Mr. Schm ults. Yes. As to repayme nt, we do n't belie ve we have th at 

powe r now.

Mr. Butler. Th at is with ou t prece dent, is it not ?

Mr. Schm ults. T can’t th in k o f an y precede nts.

Mr. Butler. Th e purpose then would have to be lim ited to th at 

pa rtic ul ar rep ayme nt. I t would hav e to be only of the f unds invo lved 

in t hat par tic ul ar proje ct, is th at cor rec t?

Mr. Schmults. T hat is correct. W ith res pec t to a preced ent, the 

Revenue Sh ar in g Ac t its elf whe re you h ave a viola tio n of the pr io rity 

ex pe nd itu re catego ries , there can be a repa ym ent of 110 perce nt of 

fund s spe nt in viola tio n of that requir em ent. So there i9 an analo gous 

preced ent.

Co ntinuin g wi th my sum ma ry, to enforce the nondisc rim ina tio n 

provision of the rev enu e sh arin g law, the Office of Revenue Sh ar in g 

has developed a civil rig ht s com plia nce prog ram in which internal 

resources are buttress ed th ro ug h a system of coo per ative ar ra ng ements w ith o ther F ed eral compliance agencies. Th ere also a re ar ra ng eme nts with St ate hu man rig ht s agencies and wi th State au di ting 

agencies. Th is ap proa ch has four ge neral benefits. I t enables the Office 

of Revenue Sh ar in g to supplem ent its own cap abi lities. It contr ibu tes 

to the existing c ivil righ ts compliance prog rams th roug ho ut the Fed ­

era l Governme nt. It. provid es a be tetr mea ns of d ealin g with th e e no rmous jur isdictio na l and functional scope o f revenu e shari ng. Fi na lly, 

by ut ilizing St ate and local resources, to the exten t feasible, it re af ­

firms the basic th ru st of the revenue sh arin g progra m.

Now des pite these coo per ative activ ities, we recognize th at we h ave 

at the Tr easu ry Dep artm en t and th e Office of Rev enu e Sha ring th e 

pr incipa l res ponsibi lity to enforce the an tid isc rim ination provisions 

of th e law.
106

We have an authorized staff now of 108 people. At present we have about 90 full-time employees. In the civil rights area, it is true we have five full-time civil rights specialists. I suppose in response to the criticism I should say only five. But I would like to note that this is a number tha t is going to be increased to 10 in fiscal 1976. Also you should be aware tha t these civil rights specialists are supple­ mented by 15 compliance division auditors, and by six lawyers in the Office of the Chief Counsel. In addition, our Intergovernmental Eo­ lations Division with nine professionals and a public affairs manager, play an important role in informing recipient governments of their 4

civil rights responsibilities and our citizens of their rights. It is true tha t we have a backlog of compliance cases which is. sub­ stantial. As of September 30, 1975, we had received 177 civil rights cases of which 49 have been resolved. Now this is p art of a total of 

about 630 compliance cases of all sorts.

Mr. Klee. Perhaps you could place this in perspective with the 

backlog of other agencies involved in the civil rights area, howr

 does 

this compare?

Mr. Schmults. I take very little comfort in saying tha t our own 

backlog is smaller and we are doing a good job and other people are doing 'worse. We believe the backlog is heavy in other agencies. These cases are difficult to come to grips with. We have to send people out. We have to coordinate with the other government agencies and gov­ ernment moves ponderously. There arc backlogs in other agencies but I certainly don’t want to cite the heavy backlogs in other agencies as 

saying we don't want to do anything about ours.

Mr. K lee. I understand.

Mr. E dwards. Let’s see if we can move along. We have had a request from the members th at there be no interruptions until the statement is finished and then we will proceed under the 5-minute rule.

Mr. Sotimults. I believe we can improve our complaint resolution process. We are going to be adding more civil rights complaints offi­ cers. We have developed an improved case workload control system. Thi s will enable us to better control the priority of our cases and to analyze them. Other improvements we are making are reorganization of staff, greater formalization of working procedures, development of a manual so all of our employees will know more precisely what they •

have to do and when, better" recordkeeping and improvement of the violation determination letter which goes to a recipient government 

found not to be in compliance. Eeturning for a minute to the cooperative agreements, OES has -j

signed them with the Equal Employment Opportunity Commission, the Department of Justice, the Department of HEW. These agree­ ments provide for the exchange of compliance information, the coor­ dina tion of investigatiops and negotiations, and joint enforcement 

action. Cooperative agreements have already yielded important benefits: They have permitted access to the EEOC information by auditors; we have exchanged some of our complaint notification material with HEW ; 19 civil rights reviews have been conducted either jointly by 

OE S and Justice or by Justice for OES. Agreements that we have with State human rights or 706 agencies also provide for the exchange of compliance information and for coop-
107

eration and coordination in investigating complaints and in monitoring compliance. A third element of our cooperative effort is tha t OKS has agree­ ments with State audit agencies. We have 43 States now covered by agreements th at involve the auditing of 40 State governments and ap­ proximately 15,000 local governments. Approximately 50 percent of all General Revenue Sharing allocations are covered by these agreements. One final aspect of our effort at ORS to combat discriminatory use of shared revenues is a very important function which our Intergov­ ernmental Relations and Public Affairs Divisions ha ve-rthat is to in­ form the 39,000 recipient jurisdictions of their civil rights responsi­ bilities and to inform all of our citizens of their rights under the Revenue Sharing Act. What are some of the things we have done in this respect? Well, ORS publishes bimonthly a “Reve-news” newsletter. Letters accom­ panying the entitlement checks during Entitlement Period 5—all contained civil rights information for all recipient governments. We distributed 160,000 copies of a pamphlet called “Getting Involved.’’ A pamphlet entitled “General Revenue Sharing and Civil Rights’’ was widely distributed and received a lot of compliments. We are develop­ ing with EEOC a guidebook for recipients to use to eliminate discrim­ ination in employment and in the provision of services by local gov­ ernments, a very important area. Our staff has participa ted in panel groups and human rights symposia around the country. We have par­ ticipated as an exhibitor in conventions of civil rights groups. We issue news releases and fact sheets concerning civil rights. We have a network of contacts. Among officials, citizen groups, interest groups and others. Thus, we have done a lot in the area of informing people. We are well aware of the need to improve our operations. We have reviewed all of the studies of the public interest groups, the National Science Foundation, the Urban League, th e N AACP and others from 

whom you have heard today. We are trying to identify areas where we can improve our efforts. One important question addressed in my written statement that I want to mention is whether the nondiscrimination provisions of the revenue sharing statu te should apply to all resources of a recipient 

jurisdiction. It is our view at the Treasury Department tha t Congress clearly intended in enacting the present law th at only programs or activities funded in whole or in part with revenue sharing money are to be looked at in enforcing the civil rights provisions of the statute. We have some support here in a court case as well. In t hat connection I would like to note tha t there has been no suggestion in any of the studies that I have read that any of the State or local governments are arb itrar­ ily assigning moneys to uses to avoid the impact of the civil rights provisions of the law. Indeed the studies that I have read have tended to point this out. They have said that they can find no evidence of this.

I think tha t is an important thing to keep in mind. It is our view tha t if Congress wishes to make an explicit decision to have all of the activities of all 39.000 State and local governments, all their programs, covered by a Federal civil rights effort with a
108

new bureaucracy to go out and look into these things, Congress 

should do so in a specific separate statute and address it tha t way. One of the reasons for our conclusion is there is a considerable Fed­ eral effort now underway to address these problems. e have EE()( , HEW, HUD, the Department of Justice, all of whom have thousands of investigators in the aggregate who are seeking to eradicate dis­ crimination. I t seems to us unnecessary to change the revenue sharing 

statute in response to this criticism. There are some other ways in which general revenue sharing has benefited the minorities and the underprivileged. It has led to greater involvement in local community affairs and in the local budget proc­ ess by public interest groups, civil rights organizations and others. I was delighted to see Mr. Morris' statement on this point. He has a full page or more in his statement clearly showing what the NAACP has done in this area. I think tha t is a marvelous thing. Last week I was up in Rochester speaking to a seminar on revenue sharing spon­ sored by the local chapter of the urban league. These activities should 

be encouraged and we applaud them. Second, revenue sharing has really been of much greater benefit to the poor and minorities, than it may seem. People cite the small figure going to programs for the poor and the aged in the use reports tha t come in. But it is important to note tha t more money goes to poorer States than richer States. For example Mississippi, if I recall correctly, got in 1972 about $39 per capita. California got $28 per capita. We looked at Chicago, Cleveland, New A ork, and Los Angeles, and found they all get much more revenue sharing fund per capita 

than do their suburbs. States spend a large proportion of the ir money on education. Other expenditures made in the functional such as transportation, health or environment often benefit the poor or the aged. Last, revenue sh ar­ ing money frees up other State and local resources tha t in large part 

go to ongoing programs to meet human needs. In conclusion, the administration feels tha t revenue sharing furthers the goal of assuring equal treatment for all our citizens. We think we have been innovative in our responses to the important task th at I have outlined. We need a larger civil rights staff at the Office of Revenue Sharing. We need to utilize tha t staff more effectively. We must con­ tinue our efforts to derive greater assistance from the cooperative arrangem ents we have with other agencies. There have been short­ comings during the first 3 years of the revenue sharin g program, but we are confident th at these will be overcome and that general rev­ enue sharing can do a better job in attaining our national civil rights 

goals.

Mr. Edwards. Thank you.

Mr. Drinan ?

Mr. Drinan. Thank you, Mr. Chairman. Mr. Secretary, we have heard pretty much what you are saying 2 years ago and we have fol­ lowed this program intentionally. It is good to have faith in Federal 

agencies but what is the evidence ? Similar promises were made and nothing has transpired. You have heard or read the testimony today and it is very dismal. On what evidence should we go along with what you are suggesting?
109

Mr. Schmults. I think the New Bern example is an excellent case 

in point fo r the question th at you raise. Let’s take New Bern.

Mr. Drinan. It is my time-----

Mr. Schmults. The civil rights issues in New Bern might not have been addressed without revenue sharing. The local community did make the park improvements at the same time. Through general revenue sharin g there was a commitment to take the first vacancy in the fire department and hire a black fireman. There was an agree­ ment for an affirmative action program in the fire department. I would submit that revenue sharing has introduced Federal civil rights rules and requirements to levels of government tha t have been untouched by these requirements in the past because they don t receive any other Federal assistance. I think there can be major improvements made in civil rights through general revenue sharing and we have to do better. I don't t hink it can be done all at once but progress is there.

Mr. Drinan. Wha t do you think of the recommendation made, here by thoughtful people who know the background th at the record of the ORS has been so disastrous and it has demonstrated such a lack of commitment that they want the whole thin g transferred to 

the Justice D epartment?

Mr. Sciimults. Fir st of all, I don't think the record has been dismal. We acknowledge th at there is room for improvement. A ou have to remember that we have been in business only a short period of time. There was much to be done. We are trying to address these problems. Secondly I would not be in favor of tr ansferring responsibility to the Department of Justice. It would fractionate responsibility for general revenue sharing. Justice has its hands full with its own programs and responsibilities. I think the way to go is the present program to coordi­ nate with the Justice Department and other Federal and State 

agencies to achieve a common goal.

Mr. Drinan. There are 62 school systems that IIE W considers to be in violation of desegregation standards. There is some evidence tha t in a lot of those there is revenue sharin g funds from the State 

level. What, if anything, has ORS done ?

Mr. Sciimults. While the list that you cite may be that long, there is only one public school district and two private institutions which do not receive revenue shar ing funds for which there have been final determinations for final withholding purposes. While tha t list you cite looks like a final, final determination, it is my understanding that it is really an interim step in HEM s compliance efforts.

Mr. Drinan. Do you have any explanation for the very devastating GAO report th at we received this morning? It showed tha t five com­ plaints were filed in Jan uar y 1975, and to date not even the first steps 

of investigation have been taken ?

Mr. Schmults. I can't comment on the detail in the GAO report because I did not hear it. But I glanced at their statement and did not think it was devastating. I was encouraged by parts of it tha t said, for example, that most governments do seem to respond and comply when alerted by the Office of Revenue Sh aring about discriminatory 

practices.

62-3 31— 75 •s
110

As to the five cases, we are unsure about wha t cases the GA O is 

talking ab out. I t is very difficult to respo nd to th at precisely. We shou ld 

be happ y to do so fo r the reco rd.

[The inf ormation referre d to f ollows:]

Offic e of R ev en ue S h a k in g, D ep artm en t of t h e T re asu ry

STA TU S OF SELECTED CIV IL R IG H TS COM PL IA NCE CA SE S

On October 8, 1975, during hearing s before the Subcommittee on Civil Rights 

and Constitutional Rights, House Judic iary Committee, Congressmen Robert F. 

Drinan and Joh n F. Seiberling asked about the sta tus of five ORS Civil Rights 

cases. The cases appeared on a Septem ber 13, 1975, computer listing of activ e 

cases without a current sta tus indic ated.

Following is a b rief status report on eac h:

Evanston, Illin ois: ORS closed out thi s case in early September after being 

advised by EEOC that negotiations with the city through LEAA ha d been successful in seeking compliance.

State of Mississippi: On April 2, 1975, ORS was informed that discrimination 

suits were pending with the Justice Departm ent. Possible revenue sha ring violations were reviewed and action deferre d to Justice.

Vermilion County, Illinois: The case was dismissed by the District Court on 

May 2, 1975.

Lincoln, Nebraska: Case is presently in Civil Rights Branch of ORS for 

analysis.

Albuquerque, New Mexico: Case based on EEOC Le tte r of Determination received by ORS on August 27, 1975. Civil Rights Branch is review ing case of possible issuance of a 60-day lette r based on EEOC’s determination.

Mr. Drina n. On pag e 10 yo u ta lk abo ut local gover nm ent s enfor cing civil rig hts. Then you say th at if we get a lar ge com pliance ap ­

pa ratus, it wou ld mean a sig nif ica nt intru sio n into the day-t o-d ay 

opera tio n of every State and local gov ern me nt in America.

Do you th in k th at any ratio na l, reasonable enforc em ent of civil 

rig hts can be an int rusio n int o the life of Am erican s?

Mr. Schm ults. Well, the form of the enforcement pr og ram is the 

key. The intru sio n I am speak ing of here is big brother in W ash ing ton 

looking over yo ur shoulde r.

Mr. Drin an . J ust answer the question, then. Th is is civil rig hts . It 

is no t big broth er. You have said th at you don’t want to have this— 

chat it would lie a n intrus ion . We as members of the legisla ture have 

to have a ratio na l, reasonable ap proa ch where the rig hts of minoriti es 

are pro tec ted .

The evidence is overw helming th at the Office of Revenue Sh aring 

has done a very poor job, prob ably worse th an any other agency, and 

you say oh, this wou ld be an intrus ion .

Well, I am ask ing you to ex pl ai n: W ha t is an intru sio n? If somebody comes to p rotec t m y civil rig hts, I never say he is an intru de r.

Mr. Schm ult s. We have confidence th at m ost State an d local gover nment officials when inf orm ed of th ei r obligations un de r the revenue 

sh arin g an tid isc rim ination pro vision s will seek to live up to those 

provisions. Local officials ou gh t to redres s pro blems wo rki ng with 

th eir St ate officials an d wi th the Fe de ral Government to enforce the 

provisions.

Mr. Drin an . Tha t is ag ains t all of the evidence ava ilab le to those 

who stu dy mu nicipal governm ent. Discrim inati on on the basis of race 

and sex is predom inan t at the local level.

Mr. Schm ults. Bu t it is changing . I th ink th at you h ave to look and 

see what is h appenin g. I would suggest tha t some o f th e old tr ut hs may
I ll

be chang ing . We th in k we have evidence th at ma ny sta te and local 

officials wa nt to do th ei r best to live up to the req uir em ents of the 

reve nue sh aring law.

Mr. D rin an. Can you claim any credit fo rt heO R S ?

Mr. Schmults. Ye s; th ro ug h the education al effort that I m entioned 

in my statem ent. For lit er al ly thou sand s an d tho usands of government’s, revenue sh ar in g is the only Fe de ral pr og ram th at touc hes 

them . . . . . . .

They are bei ng made aw are of th ei r civil righ ts responsibilities 

thro ug h this program . I th in k t hat is a ve ry u seful thing .

Mr. E dwards. Mr. B utler.

Mr. Butler. I) o you have any plan s to ex pa nd t his edu cat ion al aspect of yo ur p rogram ?

Mr. Schm ults. I wo uld let Jo hn Park er res pond, bu t we certa inly 

do.

Mr. P arker. Yes, sir. We have the d ra ft joi nt E E O C : OR S ha nd ­

book th at we provide d th e com mittee. We tr ust th at with the comments we will be receivi ng from o the rs outside th e Go vernm ent as well 

as w ith in t ha t it will be v ery us eful as a tool, no t j ust to the O RS b ut to 

EEOC a nd ot he r F ed er al agencies in he lping to com munica te to State 

and local governm ent officials on civi l rig ht s com pliance.

Ve ry often we are told th at they he ar only about how to do the 

wr ong thing, t hat is, w ha t is wrong with wha t someone else may have 

done. E EO C an d OR S will p urs ue thi s very ha rd a nd w ork to make it 

useful. W e a re wo rki ng, of course, w ith th e conference a ctivities of t he 

civil righ ts group s as well as the St ate an d local interest gro ups to be 

sure we are comm unica tin g and he ar in g fro m the m in th ei r own 

confe rences.

We will be rev ising the “Civil Ri gh ts and General Revenue Shar ­

in g” booklet fo r wi de r distr ibution. We will also be rev ising the 

“G ettin g Invo lve d’’ boo klet and we will be mak ing wide distr ibution 

of those. Th ere a re ot he r activ ities b ut I t hi nk t h at illus tra tes at least 

the k ind of acti vit y.

Mr. Butler. W ith refere nce to the coopera tive agreem ents, do you 

hav e any pla ns to exp an d th ose?

Mr. Sciim ult s. Yes, we do. We plan or hop e to be able to sign 

sim ila r agr eem ents wi th the De pa rtm en t of La bo r and the Office of 

Co ntract Com plia nce an d other agencies. We see them being he lpful 

to us an d o ur being h elpful to them.

Mr. Butler. Th is is ra th er a new program . Do y ou find th at these 

are go ing to be useful in you r civil righ ts complia nce ?

M r. Schm ults. W he n tak en in isolation —an d th at is*w hat people 

tend to do here , they say the coo perativ e agree me nts do n't work, th at 

we rely too much on com pla ints, th at the St at e au di tin g prog ram 

isn't effective fo r civ il rig hts com pliance—bu t I th in k wh at is impo rtan t to note is th at coo perativ e agr eem ents are being sign ed and 

over tim e will mak e an im po rta nt co ntr ibu tion. Th ere are bu rea ucrat ic 

pro blems in the Gover nment . Burea ucrac ies do no t move fas t. I t is a 

fact of life th at it ta ke s time to acqu ain t oth ers in other organiz ati ons 

wi th your pro gram , to improve coop erative efforts.

We see rea l benefits bei ng achieved over time thr ou gh these cooperativ e arr angeme nts tak en in c onjun ction with the ar ra y of other th ings 

th at we are d oin g to enforc e the civ il r ight s provisions.
112

Mr. Buti.er. We had mention of the New Bern situation and also 

the city of Boston. Would you like to comment—or did you hear the 

testimony this morning—Mr. Drinan has a way of asking questions 

and then leaving but he asked us several times about why the revenue 

sharing funds were not withheld from the Boston fire department.

Would you comment on that ?

Mr. P arker. The Boston fire department was for some time the object of a suit by the Department of Justice. It is my understanding that 

their investigation preceded even the passage of the Revenue Sharing 

Act.

We were aware of tha t suit and I understand that the court has 

entered a consent decree in that case and that the fire department will 

he, required to follow i t; thus, 1 trust the discrimination problems they 

had are resolved.

Mr. Butler. It is the view of your department that satisfactory compliance has been arranged or you have prospective compliance you are 

satisfied with at the moment. Is that a fa ir statement ?

Mr. P arker. Yes, sir. I know Mr. Ilimmelman mentioned the idea 

that we should investigate every case in the country regardless of any 

other actions that are going on. On the other side of tha t coin is the 

limited resources we have had and always, to some degree, shall have. I 

believe that it would be a poor use of resources to try to duplicate what 

the Justice Department Civil Rights Division is doing.

I have great confidence in their ability to enforce the law. We have 

worked very closely with them and sometimes it has taken both their 

Division and our office to get speedy action. The opinion of our legal 

counsel, however, is that there is not. a requirement, and I suppose the 

administrative judgment is th at it is not a good use of resources, to 

duplicate what is already being done on behalf of the Federal Government through an effective mechanism.

Mr. Butler. With reference to the New Bern fire alarm boxes, have 

you had a chance since that testimony to check into that ?

Mr. Schmults. Our understanding is that the complaint on the 

fire alarm boxes was filed in late March or early April of this past 

year and a clarifying letter was received just this past August. This is 

in a very early stage of resolution.

Mr. Butler. The August is August 1975 ?

Mr. Schmults. Yes.

Mr. Edwards. Proceed.

Mr. Butler. It is still in the unclosed category ?

Mr. Schmults. Yes, sir.

Mr. EdwaIids. Mr. Badillo?

Mr. Badillo. This morning I read from the report tha t indicated 

that in fact the Boston case is on appeal to the U.S. Supreme Court. 

The district court, ruled against the fire department. The court of appeals, the U.S. court of appeals, ruled against the fire department. Aly 

question is why have not the funds been cut off?

There, was a ruling of the U.S. district court.

Mr. P arker. I understand tha t you will be hearing from representatives from the Justice Department. They might he able to tell 

you more of the details of the case.

Mr. Badillo. I am not asking you the legal questions. I am asking 

you questions that go toward your responsibility. I want to know at
113

what point will the Office of Revenue Sha ring cut oft' funds. Have you 

made a policy decision about that ?

Mr. Parker. The point at which funds would be cut off as I understand the question, sir, is on the determination of a Federal court or an 

administrative law judge that funds should be cut off.

Mr. Badillo. When the court of original jurisdiction makes a 

decision ?

Mr. Parker. Tha t is right.

Mr. Badillo. That would be the district court. Do you have those 

procedures in writing ?

What I am getting a t is that apparently the way it worked in the 

Boston case is t hat the Office of Revenue Sharing has taken the position tha t until the case is ultimately decided by the U.S. Supreme 

Court you would not do anything. It seems to me that when the court 

makes a final decision, that is the original court, not the U.S. Supreme 

Court, tha t ORS should act to terminate funds.

Mr. P arker. The regulations on civil rights which we put out for 

comment this summer and which I trust will soon be put out in final 

form in the Federal Register provide specifically that in such a case 

as you are talking about, that the Treasury Department may convene 

administrative hearings for the purpose of cutting off funds.

Right now it is a matter of difference of opinion among counsel as to 

exactly what it takes, when the court itself has not determined to cut 

off funds.

Mr. Badillo. When you have a finding by a Federal court, which 

the Justice Department has gotten in litigation, it seems to me you 

don't have to have another inquiry to find out whether this is valid. The 

court’s decision should l>e binding. That regulation should be amended 

to provide tha t a ruling by the court should constitute sufficient action 

to cut off the funds.

Mr. Schmults. It may be that the jurisdiction comes into compliance by living up to the consent decree.

Mr. Badillo. Your present regulations do not clearly specify at 

which point in this whole process the office is going to take action.

I would like to get your reaction to an amendment to your regulations which would provide tha t where there is a ruling by a U.S. 

district court, funds are cut off at that point.

Mr. Schmults. Well, I think the point that I made earlier is we 

would not want to do tha t as flatly as you have said because there 

might be a consent decree entered into with which the jurisdiction 

would comply. If there is a continuing violation we would expect to 

cut off funds.

Mr. Badillo. A final order by a court is a final order. It is binding 

everywhere else until it is reversed. I don't understand this situation. 

T don't understand how a final o rder of the court is not binding on a 

F ederal agency.

I have not heard of regulations in any agency th at say th at a final 

order by the court is not binding on tha t agency.

Mr. Parker. The court did not order or determine that funds should 

be cut off.

Mr. Badillo. The issue was discrimination. The court found tha t 

there was a violation of the civil rights law. Th is was a finding after 

a trial. When you have tha t finding, it seems to me you should cut
114

off. Obviously the court is not going to order you to cut off the 

funds in all cases. But if you have the finding of discrimination and 

you have it certified to your office t hat tha t was the finding of the 

court you should he able to take action.

Mr. Butler. If the gentleman would yield ?

Mr. Badillo. Certainly.

Mr. Butler. As I read section 122(c), the Attorney General has 

tha t very authority and having failed to do that in this instance I 

am not at all sure tha t the position of the Office of Revenue Sharing 

is not appropriate.

It is the Attorney General who is charged with enforcing.

Mr. B adillo. There was no consent decree. It is on appeal to the 

U.S. Supreme Court.

AI r. Schmults. We will have to look at that.

Mr. Badillo. There was an extensive period of time there when 

there was no consent decree. Maybe you have one now.

It is mv understanding tha t you want to have the Congress make 

clear and you are in favor of cutting off funds when a locality is 

not in compliance.

Mr. Schmults. Where a case is referred to the Attorney General, 

to the Department of Justice, and he elects to enforce the antidiscrimination provisions or tries to stop the discriminatory practice 

through a court case, the selection of the remedies would he in the first 

instance for the Attorney General to decide and last, of course, for the 

court. Naturally, we would hopfe to he heard on this point.

It would not he true in every case tha t it would he felt that the 

most appropriate remedy would he to cut off revenue sharing funds. 

I would not he in favor of a flat rule where that worked automatically.

Mr. Badillo. You are saving that if I bring a complaint against 

someone in New York and T chose to go the route of the Justice 

Department tha t therefore in fact, the Office of Revenue Sharing 

stens out of the situation.

When there is a finding hv the district court, if T win a case, you 

are on judicial notice that discrimination took place. Whatever concurrent authority might exist in the Justice Department does not 

exculpate you from taking immediate action.

Mr. Schmults. We would certainly not like to step out of the picture. We would work with the Justice Department and he heard on the 

remedies to he asked for-----

Mr. Badii.lo. Yes, but-----

Mr. Schmults. I think there would be cases where termination 

of funds might not he the appropriate remedy. The jurisdiction 

could sign a consent decree and we would want the funds to continue 

to flow in that case. The jurisdiction would be coming into compliance. We have achieved what we wanted.

Mr. B adillo. That is a different story. If there is a consent decree, 

that is different. I f there is a finding of the district court determining 

that there has been a violation, that is the point at which you should 

take action.

It has nothing to do with consent decrees.

Mr. Schmults. I understand what you are saying.

Mr. Badtllo. I thank you. I think you understand hut do you agree 

with me? [Laughter.]
115

Mr. Sciimults. There are many cases where 1 would agree with 

you. There are other cases-----

Mr. Badillo. In other words, you don t want to comply with the 

Federal district court. .

Mr. S ciimults. If it addresses revenue sharing, I would think the 

answer to your question would be yes.

Mr. Edwards. Mr. Dodd ?

Mr. Dodd. If a consent decree is entered into then it becomes a moot 

question, but if someone appeals a district court decision, that can 

be construed as a disagreement by the losing party. At that point 

I am quite unclear as to your response to Air. Badillo’s question.

Do you feel that once a losing p arty at a district court level appeals 

a decision where the district court has found tha t jurisdiction to be 

in violation of the provisions of the statute, do you feel tha t revenue 

sharing should be cut off for tha t particu lar program in that community ?

Mr. Sciimults. I would think that we would, in many cases, let it 

run through the appeal process. If we are moving into another 

entitlement period we have a further assurance procedure where we 

would not, based on tha t court finding, put out any more money.

Mr. Dodd. Doesn’t it seem to make a mockery of the whole thing?

I would not be worried about the violations if I were a mayor 

because appeals procedures can go on for years. Why worry? Let the 

program proceed and have my local counsel file the necessary petitions 

in court to appeal the case but continue the practice.

There does not seem to be any teeth in it.

Mr. Sciimults. Where the court has addressed the revenue-sharing 

problem, the Secretary may withhold payment of entitlement funds 

to a recipient government pending the entry of an affirmative action 

plan order. This assumes tha t a violation of the nondiscrimination 

provisions of the revenue-sharing law was alleged in a complaint 

before the court and the court finds that the recipient government has 

violated those provisions.

Where we have specific revenue sharing findings of discrimination 

by a district court even before the case ran throu gh the appellate 

process, our regulations-would make it clear tha t the Secretary may 

withhold funds.

Mr. Dodd. May but not shall. Do you think there should be a shall ?

Air. Sciimults. There might be cases where you would not want 

to do that, where the harm caused to citizens in the community by 

withholding funds while the judicial process was running would be 

greater than the benefits obtained.

Air. Dodd. Could you cite to me a harm tha t could be any greater 

than the denial of fundamental rights to a group of people or an 

individual ?

Air. Sciimults. Aleasured that way discrimination against one individual is an extreme harm which is to be deplored. The example I am 

talking about would be where you are funding a hospital or a community center and the benefits were widely enjoyed by patients or 

persons coming into that hospital or center.

It might be tha t if there is a finding by a district court that there 

was discrimination in employment by a hospital of one employee, 

that you would elect not to withhold funds while the court process
116

was running. To do so would hurt the hospital, its patients, and the 

community. That is why we would be against a flat rule. We are not 

minimizing the harm of discrimination to one individual.

Mr. Butler. This discretion to cut off funds is a continuing one.

If you negotiate with the locality and you are satisfied, then you can 

work with them. But if they are abusing the process, you have the 

discretion to cut them off at that moment.

Mr. Schmults. At tha t moment we would go to an administrative 

hearing or refer the case to the Department of Justice for a court ,

case so the community has its day in court.

Mr. Butler. But you do not waive tha t righ t by indulging the 

community in its effort to comply.

Mr. Schmults. Our desire is not to penalize people but to achieve -

compliance. Where we feel there is a good faith effort by the community to correct the discriminatory practice, we will work with 

them in achieving that goal.

Mr. Doon. Let me quote to you, Mr. Schmults, a section 504 of the 

Rehabilitation Act of 1973. It says:

No ot he rw is e qu ali fie d ha nd ic ap pe d in di vi du al in th e U nited S ta te s as defin ed 

in section 6 sh al l sol ely by re as on of hi s han di ca p be ex clud ed fro m par ticip ati on 

in. he de ni ed th e benefits of, or he su bj ec ted to d is cr im in at io n un de r an y pr og ra m 

or a ct iv it y re ce iv ing Fed er al fina nc ial as sistan ce .

Do you consider revenue sharing to be Federal financial assistance?

Mr. Schmults. Our lawyers have advised us th at laws with similar 

references do not apply to revenue sharing. Revenue sharing is basically an “entitlement program” and the “Federal financial assistance*’ 

refers to a grant or application type program.

That is the legal advice we have received. Another example is the 

Hatch Act which we l>elieve doesn’t apply to all State and local 

employees whose activities are funded with revenue sharing funds.

If that sort of “Federal assistance” requirement applied to 

revenue sharing-----

Mr. Dodd. Isn’t that splitting hairs? Obviously revenue sharing is 

in layman's language Federal financial assistance. You are talking 

about $40 billion.

Mr. Schmults. You can say splitting hairs but when Congress 

enacted this law, it spoke very clearly about restrictions, for example, 

about antidiscrimination. The program was billed as a “no strings” 

generalized assistance.

Where Congress intended a string or a restriction to be attached 

to revenue sharing, we think the restriction is specified in the law.

If there is a desire to include tha t sort of provision, then Congress 

should consider doing it in the renewal legislation.

Mr. Dodd. Would you comment on whether or not you think that 

it ought to be included since the handicapped are being discriminated in a variety of ways, not the least of which is hiring practices 

in local jurisdictions. Should we include or consider as a violation 

of basic rights under revenue sharing a prohibition against discriminating on the basis of handicapped status ?

Mr. Schmults. Well, first of all, I agree there should not be any 

discrimination against the handicapped. As to whether or not we 

want to include a provision in our bill, we would want to talk to the 

Department of Justice about t ha t and see how broadly the provision
117

lias been applied in other areas. There might he merit, hut I would 

want to think about that. We are concerned about attaching additional strings—although I don’t want to put the law you refer to in the category of a mere ‘“string.” There are tremendous hosts of things that people would like to do with revenue sharing. My own view would be discrimination against the handicapped ought to enjoy a high prior ity on tha t list 

of things. We are obviously concerned about not burdening State and local governments with too many requirements tha t will change the nature of the program. When you are talkin g about discrimination you are in a different category. I would be receptive to that, myself.

Mr. Edwards. Mr. Seiberling?

Mr. Seiberling. Father Drinan asked you about five complaints . tha t were filed in Jan uary where the first steps of investigation al­ legedly have not yet been taken. I understand you were not sure which ones those would be. We have a list which was furnished by ORS tha t indicates tha t these are complaints with respect to the city of Lincoln, Nebr.. Evanston, Ill., Albuquerque, X. Mex., the State of Mississippi, and Vermilion County, 111. Does that help you any in 

answering the question ?

Mr. Sciimults. And your question is, what is taking so long?

Mr. Seiberling. 'Why the delay ?

Mr. Sciimults. There are over 600 compliance cases of all sorts and 

to address the question of why one is taking longer than another is difficult to answer. We would be happy to provide answers for the cases you have mentioned, what is th e status, and why it is 

taking so long.

Mr. Seiberling. There is no status indicated in this report. My question is, why are they not even being investigated ? Is it because 

you don’t have enough staff to handle them or what ?

Mr. Sciimults. Certainly in part because we don't have enough 

staff. There is no question about that.

Mr. Seiberling. When do you expect to add these five additional 

people ? Will they help expedite any of these cases ?

Mr. Sciimults. We freely admit we don't have enough staff. I 

would like to add for the record without cutting into your time, sir, if I may, Mr. Chairman, a brief note here tha t on last April 30—let 

me go back a little further. For fiscal 1975 we asked the Congress for 26 additional compliance people for the revenue sharing. We asked our Appropriations Com­ mittees. We got five. The next year, fiscal 1976, we asked for the 21 more compliance people. We got a total of 13 for the entire Office of 

Revenue Sharing and put 11 into compliance. I went up to both Appropriations Committees' hearings especially 

to make a plea for more people in the compliance area. I have the record in the Senate, for example, April 30. 1975. I said tha t we were seeking to develop cooperative programs with other governmental agencies who have civil rights resources and with State 

human rights agencies and State audit agencies. I urge d:

To achieve compliance in tha t cooperative way. we simply must have a credible compliance program ourselves. I urge you and your committee to look very hard at our request in that area. We are asking for 21 new positions there. I can assure you tha t they are very important to us and the administration.
118

So you see we are on record th at we would like to have more people 

in our compliance area.

Mr. Edwards. You got some but you did not put any of them in 

civil rights, did you ?

Mr. Schmults. Of the 11 people we are putting into compliance,

5 are going to be civil rights specialists, doubling our number from 

5 to 10. There will be two additional clerical people as well. The 

emphasis recently has been to put more people in the compliance area.

Initially, we were concerned about getting out the checks and

the financial auditing. The emphasis is changing. <

Mr. Seiberling. Thank you. I must say that I think we could be of 

help to you in getting appropriations increased. Tha t is one of the 

values of having this kind of a hearing.

I am not trying to pin any blame on anybody. I am trying to find *

out what the problems are so we can move ahead on them.

1 on place great emphasis on the fact tha t you are working with 

State human rights agencies. What do you plan to do in the case of 

agencies tha t are very weak or nonexistent, because they are nonexistent in a lot of States?

What substitutes or alternatives do you plan to follow ?

Mr. Schmults. Well, we are hoping to increase our use of State 

agencies both in the investigative phase-----

Mr. Seiberling. My question is-----

Mr. Schmults. Where they are weak, we think tha t the very fact 

that we are dealing with them will strengthen those agencies. When 

the State agencies go into local communities and these communities 

know tha t an investigation may result in a revenue sharing 

penalty in effect or a further investigation, this will strengthen the 

agencies' enforcement efforts.

We think the exchange of information—when we advise a State 

agency when we have learned from other sources tha t there may be 

discrimination in a community—will help strengthen the agency.

Mr. Seiberling. "What about the States where there are not any 

agencies ?

Mr. Schmults. Well we will have to use other elements of our civil 

rights compliance efforts there. We have no plans ourselves to prod 

States in creating agencies. We think tha t this is a local matter t

that the State governments ought to address.

Mr. Seiberling. I)o you intend to beef up your program in the 

States that don't have agencies, by reiving on your audit programs?

Mr. Sc iimults. We certainly do. In States where we feel the audit J

is not adequate, where we feel there is no State agency that can do a 

good job, yes, that would be an area where we would come in and 

tend to put more of our resources at work.

Mr. S eiberling. You think that but does the ORS have any plan to 

do that?

Mr. Schmults. Yes.

Mr. Seiberling. You also sav you are going to rely on State auditing systems. Do you have any plans to spot check the adequacy of these 

State auditing systems ?

Mr. Schmults. We do that now.

Mr. Seiberling. We had a report tha t there were 1,600 audits and 

only one of them indicated any possible civil rights violations. I am
119

wondering, in view of that fact and in view of the fact tha t there have been indications through the GAO audit and so forth that that is a much greater percentage of possible civil rights violations, how do 

you explain the discrepancy ? Do you feel this indicates tha t these audits are ineffective and if so, 

what do you plan to do about it ?

Mr. Schmults. We thin k the audits are effective for what they are designed to do primarily and that is a financial audit on where the money is going. They have not to date been terribly effective in deterr mining civil rights violations. I thin k the number you cited is correct. But I don’t think that is a fai r indication of where we hope 

to go here.

Mr. Seiberling. It is not a fair indication of where I hope to go 

’ but what do you plan to do about it? . . . .

Mr. Schmults. This audit information is helpful to our civil rights staff. We hope to educate the auditors and give them more civil rights questions to review at the State audit level to improve their civil 

rights review. .

Mr. Setberling. Do you plan to continue to use the. audit guide despite the fact th at l>oth the ILS. Commission on Civil Rights and the Justic e Department have found it to be grossly inadequate with respect to civil rights compliance auditing and if not, what do you plan to do 

about it ?

Mr. Parker. The audit guide will be revised as soon as we have new regulations out. I will also reflect action EEO C is taking in con­ junction with us. EEO C is instructing its field offices to respond to auditors and give them information on charges they may have in the 

field, in their district and regional offices.

Mr. Edwards. Mr. Klee.

Mr. Klee. Thank you, Mr. Chairman. Mr. Schmults. we have earlier referred to the “making up for past discrim ination" regulation i.e. 31 CFR section 52.32(b) (4). I tried to elicit from another witness how this corresponds to the provision in section 122(a) that no person shall be denied the benefits of any revenue sharin g program. I came across in the literature a statement of ORS legal counsel that a pro­ gram setting up an Indian camp whereby only Ind ian children could 

k attend would be a program legal within this “making up for past discrimination” regulation. To the extent this type of a camp excluded whites, blacks and other children, does that violate the statutory provisions that no person 

r shall be denied the benefits or excluded from a revenue sharing

program ?

Mr. Sciimults. It has been our advice that to use revenue sharing funds to address past discrimination practices is a legal use of that 

money.

Mr. Klee. There are two ways to my understanding that affirmative action can lie done. One, you can have programs where you go out and actively seek to recruit minority employees. That does not hurt whites. It still leaves open the ultimate employment decision that if you have two equally qualified people neither one is going to be given a 

preference. The program you have approved under the regulation seems to run counter to the express language in section 122(a), that no person shall 

be excluded from any program.
120

Air. Sciimvlts. It is difficult to talk about these things in the 

abst met.

But I think that where you have had discrimination in the past 

against Indian children and they have not been permitted to go to a 

school, a program can be designed that is entirely legal which puts 

revenue sharing funds into a school in such a manner that will primarily benefit Indian children and redress the past discrimination.

Mr. Klee. In 10 years, will the white child who has not been allowed 

to go to the camp have an action because he has been discriminated 

against in 1975.

Mi-. P arker. We are very concerned about Indians and I think all of 

you know this is a complex area because of the different treaties with 

many of the tribes and nations.

If we converted that hypothetical case to any other ethnic, racial, 

or sexual group, I believe the answer we would give to your question 

is that we may not have separate-but-equal. I f it requires, for example, 

paving only streets in the minority portion of the community a year 

or two in order to bring them up to the level whites have enjoyed for 

many years, the courts have specifically said that that is a permissible 

use.

I believe that, while it is hard to deal with hypothetical cases, there 

have been cases in the courts recently where this has been done.

Air. Klee. I would like to ask a question in the area of the burden 

of proof or the presumptions th at are being put forth. Is it your position that a State or local government should be presumed not to discriminate until shown otherwise and/or, do von think that the burden 

should be, on the other foot, if there is a complaint made, that the State 

should have the burden of proving it is nondiscriminating in order to 

avoid its funds being cut off ?

Air. Sciimvlts. The Director of the Office of Revenue Sharing in the 

first instance would make a determination that there has been discrimination. Then it would go to the next step. I f we could not work out 

through the process of negotiation, the case would go to an administrative proceeding, or it would go to a court.

Presumably, you would have to show discrimination.

Air. Klee. In other words, the State would not be put in the position 

of having to rebut it. It would have to be proven by the person ?

Air. Schmults. While I am a lawyer, we are now getting into an 

area where you can have patterns and employment statistics and other 

things. Perhaps the burdens can shift back and forth depending on the 

case.

Air. Klee. I am glad you brought up the questions of statistics because my next question deals with tha t area. Some of the circuits have 

taken the position that a mere racial imbalance or an imbalance on the 

basis of gender in employment is grounds for in ferring discrimination.

In other circuits that is not the legal position. W hat is your position 

with regard to that? Do you think that merely because there is. for 

example, to use the gentleman from Connecticut's reference, a lack of 

handicapped people in the fire department in proportion to their representation in the population, that they have been discriminated 

against ?

Air. Sciimvlts. I have found in the past that quite frankly answering hypothetical questions like this without a full knowledge of the 

facts is a very hazardous process to go through.
121

But let me assure you that revenue sharin g intends to follow the 

requirements of the law. When the law is not settled, maybe we would 

push to the resolution by a higher court. It is very difficult to respond 

to hypothetical questions in this area.

I think the answer might vary as you got into the facts.

Mr. Klee. In the fourth circuit where bare statistics are evidence of 

discrimination, you could come down one way but in the third circuit 

you could come down another way.

Mr. Sciimults. There ought to be one standard applicable to everybody throughout the country.

We ought to push for a determination of that standa rd by the highest tribunal in tha t case.

Mr. Edwards. Ms. McNair?

Ms. McNair. I just have a few questions. The first one deals with 

staffing. One of the facts tha t appears in vour statement is that, civil 

rights complaints amount to approximately one-third of the compliance complaints tha t you receive.

Mv question is why haven't you devoted one-third of the compliance staff to civil rights specialists ?

Mr. Parker. In fiscal year 1976 which we are in and I think addressing, we will have 13 persons working exclusively in civil rights.

Ms. McNair. So we won't have 10, we will have 13.

Mr. Parker. Three clerical staff will be assigned.

Ms. McNair. In terms of investigators though you will have 10. 

Does that bring the compliance staff up to one-third to reflect at least 

the complaint rate ?

Air. Parker. We will have 41 total staff in compliance; 13 will be 

exclusively on civil rights. I will have to check the ratio of professionals in the audit and the compliance side.

Ms. McNair. Could you furnish us with information on the ratio 

of civil rights versus other types of complaints and on staff proport ions working on these various complaints ?

Mr. Parker. Certainly.

[The information referred to follows:]

OFFICE OF REVENUE SHARING , DEPARTMENT OF THE TR EA SU RY -C UR RE NT AND PROJECTED STAFF WORKLOAD

OF COMPLIANCE DI VISION (AS OF SEPT. 30, 1975)

Activ ity

Civil rig hts A udit

Pro fessional st aff.................................................................................................................................

Active cases..........................................................................................................................................

Per pro fe ssio nal........ ....................................................................... .......................................

Closed cases.................................................................................. ......................................................

Per profes sio na l.................................................................. .......................................................

Proje cte d profes sio na l................................................................ ......................................................

Ac tiv e cases each........................................................................................................ ...............

Closed cases each.......................................................................................................................

5.0 13 .0

145.0 12 7.0

29 .0 9 .8

49 .0 248.0

9 .8 19.1

10 .0 16.0

14 .5 8 .0

4.9 15.0

Ms. McNair. With respect to reliance on OKS non-civil-rights personnel, I would like to know how OKS can justify continuing to rely on 

its own program auditors when they themselves are developing a significant backlog with respect to other types of compliance complaints? 

Don't you find that there is something inapp ropriate about t ha t kind 

of continued reliance when the workload for these other personnel is 

increasing?
122

Mr. Parker. I agree very much with Mr. Schmults that any kind 

of backlog is disconcerting and disagreeable to us. We would like to 

reduce it by getting remedial action, not by hiding it.

Ms. McNair. I am concerned about the civil rights backlog and the 

effect of the other backlog on the civil rights enforcement.

Mr. Parker. We have to expect our employees to do everything they 

can to bring about compliance with the act. Under our staffing circumstances, we will have to continue to expect our auditors to help in 

civil rights. I do not mean tha t they can do it all.

Ms. McNair. In the proposed nondiscrimination regulations, OKS 

suggests t hat it ought to be able to—not th at it ought to but tha t it 

ought to be able to withhold payments afte r a finding of a Federal 

District Court, but that there has to be a specific allegation of a violation of the Revenue Sharing Act and a finding in fact that that act has 

lieen violated. Why do the proposed regulations read as such when 

in fact in the Chicago case, in the case where ORS was ordered to 

defer by the D.C. district court, that order was based on a Chicago 

court finding of a violation of 42 U.S.C. 1981 and title V II and not 

in violation of the Revenue Sharing Act.

Mr. Parker. To answer your question specifically, we have discussed 

this question intensively with the counsel and the Treasury Dep artment and tha t was the advice th at we received as to what should 

be required.

Ms. McNair. Irrespective of the fact that in the only case where you 

have deferred funds, and been ordered to defer funds, that order does 

not have a finding of a specific violation of the Revenue Sharing Act?

Mr. Parker. Were there other such cases, we would withhold under 

whichever terms this court ordered. The proposed regulations deal 

with instances where the court makes no order regarding the funds.

Ms. McNair. Were there an order such as the Boston order you 

would defer funds? Your regulations don’t reflect it?

Mr. Schmults. We thought our regulations filled a gap in our 

existing regulations. By having a specific regulation on this point, it 

would in a sense force complainants and the courts to address the revenue sharing issue.

Ms. McNair. Because those regulations are supposedly filling the 

gap reflected as a result of the Chicago case, I would assume that you 

would pursue drafting regulations tha t reflect the Chicago litigation.

Mr. Schmults. The nongap, if you will, in the great majority of 

cases, we would think that the complaints and the court opinions would 

address the revenue-sharing statute. Hence there would lie an order 

telling us to do something with revenue-sharing funds, eithe r to terminate or withhold or order repayment or do something else.

Ms. McNair. But the Chicago court did not order you to terminate 

or withhold and therefore you took the position, I assume, tha t the 

D.C. district court then had to order you to defer. You must have a 

court order requiring you to defer payments before you defer, is that 

correct ?

Mr. Schmults. Or an order of an administrative tribunal.

Mr. P arker. Maybe I missed the point there, but in Chicago, under 

the new regulations, had the court made no order, the Secretary would 

still have the au thority to withhold funds.

Ms. McNair. Had there not been an order ?
123

Mr. Parker. Had there not been an order but had everything else 

been the same. We asked to amend revenue sharing into tha t court 

case.

Ms. McNair. They did amend but there was not a finding with respect to tha t allegation.

Mr. Edwards. Mr. Badillo ?

Mr. Badillo. Do you agree with the recommendation of the Comptroller General tha t in order to avoid the nontraceability problems that 

the nondiscrimination prohibition should apply to all activities of the 

recipient government.

Mr. Sciimults. No, sir, we do not agree with th at report. That is addressed in my statement on page 10. We> have our reasons set forth 

there why we don't thin k that proposal is appropriate with respect to 

revenue sharing. F irs t of all now—1 can go through the answer, if you 

want, Mr, Badillo, but it is there.

We say the statute now provides very clearly alxmt penalties only 

for a program or activity funded in whole or in pa rt with shared revenues. We also note that in most of the independent studies—all of the 

studies tha t I have seen, no one has suggested tha t local governments 

are arbitrarily assigning moneys or setting up some charade to avoid 

the. impact of the civil rights provisions of the law.

If Congress wants to make the explicit decision tha t every State 

and local program should receive a Federal civil rights scrutiny on 

an ongoing basis, it tought to do so in a separate statute, in part because we think there are a number of other agencies now, EEOC, the 

Department of Justice, IIEW. and others, that have specific civil 

rights responsibilities and thousands of investigators to go out and 

look at various State and local programs.

In a sense such a congressional decision would be redundant.

Mr. Edwards. Also if you make your audit requirements strict enough 

and include that, tha t will be helpful, too. They apparently are not 

strict enough now.

Mr. Sciimults. T think tha t would be helpful, Mr. Chairman.

Mr. Edwards. I hope I did not understand you right, Mr. Secretary, when you answered Ms. McNair by intim ating almost explicitly 

tha t in the event a district court were to make a finding, th at the funds 

were used in a discriminatory manner, tha t th at would not necessarily 

trig ger any action at all but th at the court would have to make a finding and direct you to take action such as withholding funds before you 

would withhold funds.

You have never withheld funds except when one court said you must 

withhold funds, is that correct ?

Mr. Sciimults. Th at is correct.

Mr. E dwards. I thought from what you said earlier that there was 

a change in the wind. You are recommending in your regulations and 

to the Government Operations Committee tha t a thre at will hang 

over some cities, that you might withhold funds one day?

Mr. Schmults. I think the answer to that is yes, but we maintain the 

position th at that should be only after a due process hearing, either an 

administrative proceeding or a court hearing.

Mr. E dwards. Yes, but that is the situation now. You have the right 

to do it now but you don't.

Mr. Sciimults. AYe have done so only in one case.
124

Mr. fjdwaros. Mr. Seiberling? I

Mr. S eiberling. Mr. Chairman, thank you. I think there is a basic 

inconsistency in your position with respect to not making this general 

revenue sharing law apply to all programs of the Government which 

is a recipient of revenue sharing and the position that you do not want 

to have this enforcement program transferred to the Justice Department or some other department.

You say you don’t have the staff and Justice and the EEO C have 

thousands of people enforcing the nondiscrimination laws. The prob- <

lem we are faced with and the Congress is faced with is that the only 

place in the history where minorities have l>cen able to get proper redress is on the national level in many cases because they are a minority 

in local governments and they would be ignored for all time unless they 

could somehow have a Federal level placed in th eir favor.

Now, general revenue sharing does a complete end run on that unless 

we have effective civil rights enforcement. It seems to me th at you 

are going to have to take the position th at either you are going to enforce the thing with respect to civil rights requirements with respect 

to all programs that are funded by a government receiving revenue 

sharing funds or that you are going to turn it over to somebody who 

will.

I don’t see how you can get around the fact that the GAO brought 

out that it is too easy to evade the very general and vague restrictions 

we placed as to the categories the general retenue sharing funds could 

be used for. T would like you to comment on that general dilemma we 

are faced with.

I don’t detect in your statement really any recognition of tha t being 

the problem.

Mr. Schmults. It is our position that with respect to all programs 

funded in whole or in pa rt with revenue sharin g funds we ought to 

enforce the civil rights requirements. Th at’s what Congress told us 

to do.

Mr. Seiberling. We are faced with changing the law.

Mr. Schmults. What the GAO would have Congress do—is if 

revenue sharing funds go into a fire department in New Bern th at revenue sharing compliance officers would look at every local program 

there, whether or not they receive revenue sharing funds. The argument advanced is funds are fungible. When you drop a Federal dollar 

in a local budget, a little bit goes to every local program. In our system 

of financial accountability where you have a unita ry monetary sys- -»

tern, there is some displacement effect—a freeing up other local funds.

This is true of any other Federal aid program, a categorical g rant or 

a block grant .

I don’t think “fungibility” is a good argument for concluding that 

we ought to set up a new and massive compliance effort in the Office 

of Revenue Sharing.

Mr. Seiberling. Why not turn it over to the people who already 

have th at responsibility and let you stick to the accounting end of it?

Mr. Schmults. Nobody else has the responsibility to look into every 

local program. There are others charged as we are with enforcing nondiscrimination in their specific programs. Revenue sharing extends 

to all governments. Fo r example, there is no limitation on employees 

as with the law governing EEOC.
125

There is no authority to review every State and local program in 

any other Federal agency. This would require a new’ law by Congress 

to have F ederal compliance officers go out and review every State and 

local program on an ongoing basis.

Mr. Seiberling. How do you get around the fact tha t the money 

can be siphoned around in order to minimize the necessity of 

compliance?

Mr. Sciimults. The civil rights study groups and the reports that 

I have read have found no evidence of what you just said. That is a 

point I want to emphasize. At the Treasury Department and the Office 

of Revenue Sharing, we have seen that locally elected officials are not 

doing this.

Mr. Seiberling. OK.

Mr. Dodd. Can we submit written questions ?

Mr. E dwards. We have another hearing tomorrow morning at 

9 :30. Mr. Parker and Mr. Secretary, thank you very much.

This hearing stands in recess until tomorrow morning, Thursday, 

October 9,1975, at 9:30 a.m.

Thank you, gentlemen.

[Whereupon, at 4:10 p.m., the subcommittee adjourned, to reconvene at 9 :30 a.m., Thursday, October 9,1975.]

[The following material was provided for the record:]

The Under Secretary of the Treasury,

Washington, D.C., September 29,1915.

Hon. Don E dwards,

Chairman, Subcommittee on Civil and Constit utional Rights,

Committee on the Judiciary, House of Representatives,

Washington, D.C.

Dear Mr. Chairman: This is in response to your lette r of September 11, 1975 

to Secretary Simon, which ixised several questions for use by the Subcommittee 

on Civil and Constitutional Rights of the House Committee on the Jud iciary regarding the Office of Revenue Sha ring ’s civil righ ts enforcement efforts. Our 

responses to your questions are set forth below.

1. Question. How many civil rights complaints have been received by the Office 

of Revenue Sharing since Ja nuary 1,1975?

a. Please describe each such complaint, the jurisdictio n involved, and the 

curre nt sta tus of each complaint.

b. Please provide with your response a copy of the most recent Compliance Control Report, detailing the status of all complaints received by the Office of Revenue Sharing.

Answer. Since Janu ary 1, 1975, sixty-nine civil rights complaints have been 

received by the Office of Revenue Sharing. Please see Attachment A, titled “The 

Chronology of Active Cases” for the specifics of each case. The most recent Compliance Control Report is set forth in Attachment B. [Attach men t B is reta ined in 

Subcommittee files.]

2. Question. How many civil righ ts compliance officers are currently employed 

by the Office of Revenue Sharing?

Answer. There are five civil rights officers cu rren tly employed by the Office of 

Revenue Sharing. An additional five positions have been allocated exclusively to 

civil rights compliance for fiscal year 1976, which will bring the tota l lo 10 positions devoted fully to civil rights.

3. Question. Do each of the civil rights compliance officers employed by the 

Office of Revenue Sharing devote full-time to civil rights enforcement? If not, 

how many a re full-time and how many are part-time?

Answer. Each of the civil rights compliance officers devotes full-time to civil 

rights enforcem ent. Additionally, other ORS personnel make importa nt contributions to ass uring civil rights compliance, including the Compliance Division's 

au dit staff, consisting of 15 professionals, the Office of the Chief Counsel with 6 

lawyers, and the Office of the Director. Fur ther, the Intergovernm ental Relations Division with 9 professional positions and the Public Affairs Manager play 

62 -3 31 — 75-------9
126

an im port ant rol e in in fo rm in g re ci pi en t go ve rn m en ts of th eir an ti-d is cr im in atio n resjions ibilitie s, as we ll as c itizen s of th eir rig hts.

( ’(in sisten t with th e ph ilo soph y of th e reve nu e sh ar in g pr og ra m , th e Office of 

Re ve nu e Sha ring su pp le m en ts its own lim ited st aff w ith reso ur ce s al re ad y exis ting th ro ug h ag re em en ts w ith th e Ju st ic e D ep ar tm en t, th e Equa l Em ploy men t 

Op iMirtu uity Co mm ission , th e D ep ar tm en t of H ea lth , Edu ca tion , an d W elfare, 

S ta te h um an ri ghts age nc ies, an d S ta te a udit offices.

4. Q ue sti on . In how man y ca se s ha ve yo u mad e an in itia l de te rm in at io n of non - 

co mplian ce ? Pl ea se pr ov ide th e na me an d sta tu s of each ca se, th e dat e on wh ich 

th e co mplaint wa s tiled, an d th e d ate on which th e det er m in at io n le tt er was sent.

An swer. An in itia l det er m in at io n of no nc om plian ce w ith th e Re venu e Sha ring 

Act ha s bee n ma de in si xty ca ses. Tw en ty -thr ee det er m in at io ns were fo r viol atio n of th e no nd iscr im in at io n prov isions of th e Act. See A ttac hm en t C fo r th e 

addit io nal in fo rm at io n requ es ted.

5. Q ue sti on . In how man y civ il ri ghts ca se s has th e Office of Re ve nu e Sha ring 

in st it ute d ad m in is tr ati ve proc ee ding s fo r th e purjMise of det er m in in g viol atio ns 

and w ith ho ld in g fu nd s? P le ase de sc ribe each such pr oc ee di ng an d its curr en t 

st atu s.

Answe r. Once th e D irec to r of OR S mak es an c«r pa rt e de te rm in at io n of nonco mp lia nce. we co ns id er all su bs eq ue nt ac tion s to en fo rc e th e no nd iscr im in at io n 

pr ov isions of th e Act as adm in is tr ati ve proc ee ding s with re gar d to th at re ci pi en t 

go ve rnmen t. Th e aim of th is proc ess is whe ne ve r po ssible to ac hiev e a se tt le ­

m en t le ad in g to rem ed ial ac tion th a t wo uld am el io ra te th e eff ects of th e dis ­

cr im in at or y pr ac tice s w ithout re so rt to pro tr ac te d litiga tion . We ha ve no t to da te 

in it ia te d an y adm in is tr ati ve hea ri ngs fo r th e pu rp os e of det er m in in g 

vi ol at io ns an d w ith ho ld in g fu nd s. As of to da y all of th e civ il righ ts ca se s in 

which a de te rm in at io n of no nc om plianc e has been mad e are pr es en tly in the 

ne go tiat io n stag e, ha ve bee n se ttle d on th e ba sis th a t effecti ve remed ial ac tio n 

wo uld be take n to ov erc om e th e di sc rim in at or y pr ac tice s or ha ve been re fe rred 

to th e Atto rn ey Gen er al fo r civil ac tio n, p urs uant to Se cti on 1 2 2 (b )( 1 ) of th e 

Act.

(5. Qu estio n. IIo w man y ca se s ha s th e Office of Re ve nu e Sha ring re fe rr ed to 

th e A tto rn ey Gen eral, purs u an t to th e pr ov isions of Se cti on 122 of t he Ac t?

Pl ea se de sc ribe ea ch su ch cas e, th e ci rc um stan ce s le ad in g to th e re fe rr al 

an d th e st atu s o f e ac h ca se.

An sw er. Th e Office of Re ve nu e Shar in g has re fe rr ed ca ses purs uant to Sec ­

tio n 1 2 2 (b )( 1 ) of th e Act ag ain st th e Ci ty of Ch ica go an d th e S ta te of 

Mich igan to th e Atto rn ey Gen eral with a reco m men da tio n th a t civ il ac tion be 

in st it ute d. I will su m m ar iz e each ca se as br ie fly as po ssible be ginn ing w ith the 

Chica go case.

As a re su lt of an LE AA in ve stig at io n, th e Ju st ic e D ep ar tm en t filed a su it in 

th e I ’nite d Sta te s D is tr ic t Cou rt fo r th e N or th er n D is tr ic t of Illino is in Au ­

gu st. 1973 ag ai nst Ch ica go fo r alleged em ploy men t di sc rim in at io n by th e City's 

Po lic e Dep ar tm en t. In Se ptem be r. 1973. th e Office of Re ve nu e Sha ri ng received 

a ci tize n' s co m pl aint al le gi ng es se nt ia lly th e same fa cts re ga rd in g th e dis ­

cr im in at ory em ploy men t an d pr om otiona l pr ac tice s as cite d in th e Ju st ic e Depart m ent co mplaint. Th e citize n wa s R en au lt Ro bin son, a Chica go po lic em an 

an d a pl ai nt iff in a pr ev io us ly tiled su it ag ai nst Chica go. Mr Rob inso n's info rm al 

adm in is tr ati ve co m pl aint so ug ht ac tion by th e Office of Rev en ue Sha ring to end 

di sc rim in at io n by Chica go 's Po lic e D ep ar tm en t, in cl ud in g th e im m ed ia te 

te rm in at io n of reve nu e sh ari ng pa ym en ts to th e City. W he n OR S de clined to 

defe r fu nd s pri or to th e City ha vi ng an op po rtuni ty to de fend it se lf ag ai nst th e 

al le ga tions of di sc rim in at io n. Mr. Ro bin son su ed OR S in th e U.S. D is tr ic t 

C ou rt fo r th e D is tr ic t of Co lumbia in F eb ru ar y. 1974.

At th e re qu es t of th e Civil R ig ht s Di vis ion in No vemb er. 1973, al l ORS ef fo rts 

to see k a vo lu nt ar y se ttle m en t w ith Ch ica go we re co or di na te d w ith th e Ju st ic e 

D ep ar tm en t at to rn eys li ti gati ng th e ca se again st the City. The Office of Re ve nu e 

S har in g was fu rt h er ad vi se d th at eit h er an in de pe nd en t OR S ne go tia tio n with 

th e Ci ty or th e in it ia ti on of a fo rm al adm in is tr ati ve hea ri ng c ould je opa rd iz e th e 

or der ly prog ress o f t he pen di ng li tigat io n.

W hen effo rts to re ac h a se ttle m en t were un su cc es sful . OR S re fe rred th e case 

to th e Atto rn ey G en er al in May. 1974, an d hi s co m pl ai nt was pr om ptly am en de d 

to in cl ud e an al le ga tion th a t th e Ci ty ha d vi ol ated Se ction 122 of the Re ve nu e 

Shar in g Act.

By vir tu e o f an ord er o f th e U.S. D is tr ic t Cou rt fo r th e D is tr ic t of Co lum bia in 

De cemb er. 1974, th a t was aff irm ed by th e D is tr ic t Cou rt in Ch ica go in April 1975.
a s of Octo be r 6, 1975 appr oxi m at el y 76 mill ion dollar s in re ve nu e sh ar in g pa ymen ts will ha ve bee n w ithhe ld fro m th e Ci ty ba sed on th e ju dic ia l ru ling th a t th e 

Po lic e D ep ar tm en t was guil ty of em ploy men t di sc rim in at io n. A lin al de cision is 

ex pe ct ed in th e Ch ica go c as e in the n ext fe w m on ths.

In F ebru ary 1975, OK S reco mmen de d to th e A ttorn ey G en er al th a t civil su it 

be in st it ute d ag ain st, th e S ta te of Michiga n fo r vi ol at io n of Se cti on 122 of th e 

Act, Th e Office of Rev en ue Sha ri ng's ac tion was ba se d on a det er m in at io n th a t 

th e S ta te was pr ov id in g fina nc ial as si st ance witli re ve nu e sh ari ng fu nds to th e 

F er ndal e Sch ool D is tr ic t wh ich ha d been foun d to be ill eg ally dis cr im in ati ng 

again st m in or ity st udents an d te ac her s in an H. E.W . adm in is tr ati ve pr oc ee di ng 

th a t was affirm ed by th e F edera l Co urts. Sp ecifically , OKS det er m in ed th a t th e 

pa ym en t of re ve nu e sh ari ng fu nd s by th e S ta te to th e Pub lic Sch ool Empl oy ee s 

R et ir em ent Sy ste m on beh al f of Fer nd al e Sch ool D is tr ic t em ploy ees was th e ty pe 

of as si st an ce an d su pport of a ra ci al ly dis cr im in at ory pr ogra m th a t is pr ohib ited 

by th e Act.

At th e tim e of th e re fe rr al, th e Ju st ic e D ep ar tm en t w as se ek in g an ac ce pt ab le 

de se gr eg atio n pla n p urs uant to Title 11 of th e Ele m en ta ry an d Se co nd ary E ducation Amen dm en ts of 1974 from th e Fer ndale Sch ool D is tric t. When th e School 

D is tr ic t fa ile d to ta ke an ac ce pt ab le offer, su it was tiled in th e U.S. Dist ric t. 

C ou rt fo r th e E ast ern D is tr ic t of Mich iga n in Ma y, 1975. again st th e F ern dale 

Sch ool D is tr ic t an d th e S ta te of Mich iga n fo r viol atio n of T itle II . th e Rev en ue 

S har in g Act an d th e F ourt eenth Amen dm en t of th e U.S. Con stitut io n. The ca se is 

pe nd in g as o f this tim e.

7. Qu estion . Ho w m an y ca se s are curr entl y pe nd in g w he re co m pl ai nt s hav e 

been rece ived but no det er m in at io n of no nc om plian ce or co mplianc e has yet 

been m ad e?

Answe r. Our la te st re port da te d A ug us t 31. 1975, in dic at es th er e were 198 

ca se s in th e pe nd ing stag e, o f w hic h 129 a re ci vil ri ght s cases.

<S. Q ue sti on . H as th e Office of Re ve nu e Shar in g de velop ed st an d ard s on th e 

ba si s of w hic h it d et er m in es t he a pp ro pr ia te ne ss of a n A ttorn ey Gen eral re fe rr al?

An sw er. Th e de cis ion w het her to re fe r a ca se to th e A tto rn ey Gen er al is 

de pe nd en t on th e pra cti cali ti es an d th e ci rc um st an ce s of ea ch case. F or ex ­

am ple. in th e tw o ca se s alr eady re fe rr ed th e Ju st ic e D ep ar tm en t ha d co nd uc ted 

an in ve st ig at io n an d w as pr oc ee ding ac co rdingly. Princi pal ly fo r th is re as on 

re fe rr al was de em ed appro pri at e. W he n fu tu re civ il ri ghts ca se s m atu re to th e 

po in t th a t th e OR S D ir ec to r is re qui re d to ex er ci se th e en fo rc em en t op tio ns pro ­

vide d in Se cti on 12 2( h) of th e Act, a de cis ion on th e pro pr ie ty of re fe rr al wi ll 

be mad e in light of such st an d ard s as th e ex te ns iv en es s of th e in ve st ig at io n requ ired , th e pri or invo lv em en t of th e Ju sti ce D ep ar tm en t, an d w het her a ci vi l 

su it is appro pri ate du e to th e pr es en ce of un iq ue or im port ant leg al issu es. The 

re fe rr al de cis ion will of te n be mad e a ft e r co ns ul ting th e A ss is ta nt A ttorn ey 

G en er al f or C ivil Rights.

9. Q ue sti on . In how man y ca ses has th e Office of Rev en ue Sha ri ng w ith he ld 

pay m en ts from a re ci pi en t ju ri sd ic tion as a re su lt of a civ il ri ghts vio la tion 

or c om pl ai nt ?

Pl ea se de scrib e each su ch in st an ce an d th e ci rc um st an ce s lead in g to th e w it hho ld in g or d ef er ra l of fun ds .

An sw er. Th e Ch ica go ca se is th e only one in wh ich pa ym en ts ha ve been w it hhe ld as a re su lt of a civ il ri ghts vi ol atio n or co mplaint.

10. Qu estion . Pl ea se pr ov id e us with a cop y of yo ur mos t re ce nt d ra ff of th e 

eq ua l em ploy men t oppor tu ni ty an d go ve rn m en t se rv ices an ti-b ia s guid el in es 

wh ich th e Office of Rev en ue Shar in g is curr entl y de ve loping jo in tly w ith th e 

Equ al Employ men t O pportuni ty Co mm ission .

Ans wer. Th e EE OC an d th e Office of Re ve nu e S hari ng ha ve rece ived fo r 

re vi ew a 148 pa ge d ra ft m an usc ript from a pri vate consu lt an t firm under co ntr a c t to th e Office of Rev en ue Sh ar in g. It is in te nd ed th a t th e m an usc ript u lt im at el y will re su lt in a ha nd bo ok pr ov id in g he lpfu l an d pra cti cal gu id an ce to 

S ta te an d loc al go ve rn m en t officials. The wor k is to be dis tinguis hed fr om 

“g ui de line s'’ wh ich ha ve leg al an d re gula to ry sig nific an ce. The d ra ft re m ai ns 

th e pr ope rt y of th e consu lt ant an d has no t been ac ce pted by eit h er EE OC or 

ORS. A copy is fu rn is hed to th e Su bc om m itt ee fo r in fo rm at io n pu rp os es on ly as 

A ttac hm en t D an d w ith th e under st andin g th a t th e m an usc ri pt is a d ra ft an d 

su bj ec t to ch an ge by eit h er ag en cy . Th e d ra ft does no t re pre se nt a t th is tim e 

th e official vie ws of OR S or EEOC . Ple as e no te th a t ch an ge s are anti cip ate d 

du e to th e commen ts OR S will so lic it from pr om in en t civil ri ghts org aniz ati ons 

an d oth er in te re st grou ps. [A ttac hm en t D is re ta in ed in th e Su bc om m ittee files.]
128

11. Que sti on . Sin ce it s sign in g of th e co or di na tion ag re em en t w ith th e Equ al 

Em pl oy m en t O pp or tu ni ty Co mm iss ion in th e fa ll of la st ye ar , has tlie Office of 

R ev en ue Shar in g co nd uc ted a sy st em at ic review of EE O—4 fo rm s of re ci pi en t 

ju ri sd ic ti ons fo r th e pu rp os e of lo ca ting em ploy men t di sc rim in at io n. I f so, 

how man y form s ha ve been revi ew ed as p a rt of th e process, an d how m an y 

in st an ce s of di sc rim in at io n o r pote ntial di sc rim in at io n ha ve been lo ca ted? W he n 

will a co m pl et e st ati st ic al an aly si s of thos e fo rm s be av ai la ble an d w hat ac tion 

are yo u pl an ni ng to ta ke again st re ci pie nt go ve rn m en ts iden tif ied as vi ola to rs ?

Ans wer. Th e Office of Rev en ue Sha ri ng has ob tain ed co m pu te r ta pe reco rd s 

of d ata co lle cte d via th e EEO -4 f or m fo r th e yea r 1973. By mea ns of com pu terize d 

pr oc es sing pr oc ed ur es , th os e GRS re ci pie nt ju ri sd ic ti ons wh o su bm itte d EE O—4 

fo rm s in 1973 we re iden tif ied . Com pu ter as si st ed metho ds fo r id en tify in g p att ern s 

of em pl oy men t di sc rim in at io n are un de r de ve lopm en t. The co m pu te r sy stem is 

de sign ed to ut iliz e th e st ati st ic s on th e em ploy men t sta tu s fo r fe m al e and 

m in or ity gr ou ps re por te d on th e EE O—4 fo rm s in co nj un ct io n w ith labo r force 

d a ta ori gin at in g fro m th e 1970 Ce nsus to co mpa re an d m ea su re dis pari ti es in 

w or k- fo rc e re pr es en ta tion. *

To ac co mplish ne ce ss ar y te st in g an d val id at in g of metho do logy an d co m pu te r 

pr oc ed ur es , th e EE O-4 d ata fo r 000 re ci pi en t ju ri sd ic ti ons w ithin six st ate s 

hav e been process ed. Th e ult im ate se t of pr oc ed ur es to be us ed in id en tifica tion 

of pote nti al di sc rim in at io n ca ndid ate s w ill evolve fro m cu rr en t ev al uations 

ba se d on th e above sample. The em ploy men t d ata fo r fe m al es an d m in or itie s 

of a ll GR S reci pi en t ju ri sd ic ti ons re qu ired to file EEO —4 fo rm s annual ly (a ppro xim at el y 4.400 ) will be an al yz ed on th e ba sis of se lected in dic at ors fo r id en tify in g 

si tu ati ons whe re dis cr im in at ory pr ac tice s m ay ex ist. T his is ex pe cted to be 

co mplete d by mi d-No vemb er fo llo wing sa ti sf acto ry eval uation of prop os ed m et hodolo gy an d aft er OR S has pro per ly val id at ed te ch ni qu es and is as su re d of d ata 

av ai la bility, ad eq ua cy a nd cu rr en cy . In st ances of pote nti al di sc rim in at io n re su lt ­

in g from co m pu te r an al ysi s w ill he in co rp ora te d in to th e w or kl oa d of th e ORS 

Com plianc e Divisi on fo r revi ew’, in ves tigat io n an d appro pri ate ac tio n.

12. Q ue sti on . W hat re co m m en da tion s hav e be en mad e fo r im pr ov em en t of th e 

Office of Re ve nu e Shari ng’s civil ri ghts co mplianc e proc esses as a re su lt of th e 

pas t m on th 's i n te rn al review of th e Office of Rev en ue Shar in g in it ia te d by Und er 

S ecre ta ry E dw ar d C. Sch m ul ts ? Ple as e pr ov id e co pie s of la st y ear’s T re asu ry 

review .

An sw er. Th e fin al re port on th e in te rn al re vi ew has not yet been dra ft ed .

The re port in cl ud in g it s re co m m en da tion s will be fo rw ar ded to you as soo n as 

it ca n be comp let ed. The re port ba sed on la st y ear’s T re asu ry D ep ar tm en t 

m an ag em en t review’ is A ttac hm en t E to th is le tt er. [A ttac hm en t E is re ta in ed 

in th e Su bc om mitt ee files.]

13. Qu estio n. It has com e to our att enti on th a t th e Office of Re ve nu e Sha ring 

ma y be im plem en tin g new ass ura nce pr oc ed ur es fo r ju ri sd ic ti ons w he re civ il 

ri ghts prob lems ex ist. Ple as e de sc ribe th is ne w pr oc ed ur e an d th e m an ner in 

which ju ri sd ic tions are ch osen fo r it s ap pl ic at io n. W hy ha ve th e ne w au gm en te d 

ass ura nce pr oc ed ur es no t be en includ ed in th e ne w prop os ed re gu la tion s?

An sw er, th e ORS ’s re gula ti ons ha ve alw’ay s re qui re d re ci pie nt go ve rn m en ts <

to pr ov id e th e Sec re ta ry w ith an ass ura nce th a t all pro gra m s an d ac tivitie s 

fu nd ed in wh ole or in p a rt w it h re ve nu e sh ari ng fu nd s will be co nd uc ted in 

co mpl ianc e w ith Se cti on 122 of th e Ac t pri or to ea ch en ti tl em ent perio d. Thi s 

co nd iti on to rece iv ing re ve nu e sh ar in g fu nds had been se t fo rt h in Se cti on 

51 .32(c) of th e or ig in al re gula tions (31 CFR P a rt 51 ), an d it has been includ ed i

in a mo re de ta iled form in Se ctio n 51.55 of th e re ce nt ly am en de d civ il ri ghts 

re gu la tion s.

The as su ra nce pr oc ed ur e h as been revi se d fo r all re ci pi en ts fo r which th ere 

is a vi ol at io n det er m in at io n le tt e r outs ta ndin g a t th e tim e of th e first pa ym en t 

of an en titlem en t pe rio d. Sub je ct go ve rn m en ts are re quir ed to su bm it mo re 

det ai le d as su ra nce s of co m pl ianc e th an are re quir ed of oth er go ve rnmen ts. Th e 

adm in is tr ati ve pr oc ed ur es and st andard s fo r th e au gm en te d as su ra nc es are 

det ai le d in ORS Tec hn ical M em or an du m No. 75—4. (S ee A ttac hm en t F ).

14. Q ue sti on . On w hat bas is doe s th e Office of Rev en ue Sha ri ng ju st if y its 

re fu sa l to in st it ute adm in is tr ati v e te rm in at io n pr oc ee di ng s co nc ur re nt ly w ith 

an y Ju st ic e re fe rr al th a t is mad e, or an y court su it alr eady in pr og re ss?

An sw er. It is no t th e ORS’s policy to fla tly ru le ou t in sti tu ti n g an adm in is tr ative h ea ri ng co ncu rr en t w ith a civil ac tion by th e J ust ic e D ep ar tm en t fo r viol atio n 

of th e Rev en ue S har in g Act. In fa ct , th e re ce ntly am en de d civil ri ghts re gula ­

tion s specifically pr ov id ed in Se ction 51 .59( d) (31 CFR Pt. 51) th a t an ad m in is ­

tr a ti v e a ct io n may be in it ia te d even th ou gh t’ c Atto rn ey Gen er al has c om me nced 

ci vi l ac tion un der Se cti on 12 2( c) of th e Ac t w he ne ve r th e Se cr et ar y, a ft e r
129

consulting with the Attorney General, believes that this is appropriate to insure 

compliance.

The ORS’s policy is to refrain from exercising this authority when the 

administrative hearing would only involve the same set of facts and legal issues 

as the civil action initiated by the Justic e Department. This situation prevailed 

in the Buffalo case, for example, where the citizen’s administrative complaint 

filed with ORS alleged the same violations of the Act as the complaint filed in 

the U.S. District Court by the Justice Department. In these circumstances, 

instituting a concurrent administrative proceeding was deemed to be an unnecessary duplicative effort. Should a case arise where ORS has made a 

determination of noncompliance on issues that differ from a civil action initiated 

by the Justice Department, the Attorney General will be consulted as to propriety 

of instituting a concurrent administrative hearing on the divergent issues.

35. Question. Why has the Office of Revenue Sharing not taken any action to 

initiate hearings and withhold state funds from all school systems that have 

been identified by the Department of Health, Education, and Welfare and 

Federal courts as being in violation of school desegregation standards?

Answer. The Office of Revenue Sharing has referred to the Justice Department 

and litigation is currently in progress with respect to the use of general revenue 

sharing funds by th e State of Michigan to benefit the Ferndale (Michigan) City 

School District, the only public school system currently identified by the Department of Health, Education, and Welfare as being determined to be in violation 

of school desegregation standards for final termination purposes after completion of procedures under Title VI of the Civil Rights Act of 1964. Two institutions 

of higher education so identified are both private sectarian schools that have 

not been funded with revenue sharing funds.

The Department of Health, Education, and Welfare informs us that all 62 

school systems listed on its most current cumulative “Status of Title VI Compliance Inter-Agency Report” are considered by them to be in violation of their 

school desegregation standards. However, only the one mentioned above is 

finally determined to be in violation for final termination purposes.

I am looking forw ard to testifying before the Subcommittee on the important 

issues involved in the Office of Revenue Sharing’s civil rights enforcement program. Please advise me if I can be of furthe r assistance.

Sincerely yours,

Edward C. Schmults.

Enclosures.

Atta chm ent A : T he Chronology of Active Cases

“The Chronology of Active Cases” divides all cases into two groups: Civil 

Rights and Audit Branches. Each case includes the following d at a:

Date Received by ORS (file number) State

Account Number------------- *Name of Recipient Government*

Current Status

Blank means no status determination has been made, pre 35 day letter. 15 day

letter out indicates that the investigation of allegations has begun.

Analysis indicates the government’s reply is being analyzed.

Heady for Review means that analysis shows a need for a field audit and/or 

civil rights review.

Field Review Scheduled.

Field Review Completed.

Letters of Noncompliance means formal notice of noncompliance, usually 

requiring action in 60 days or less.

Flan for Resolution indicates tha t the recipient government and ORS have 

informally agreed on a plan to close the case.

The problem areas are listed to the right of each case. Note that only active 

cases appear on this list.

Thus

01-09-75 (00001) Indiana 

35 2 045 005 *Gary City*

Current Status: Analysis.

Employment: Nat. Origin, 

which translates t o :

ORS received, on January 9. 1975, an allegation of discrimination in public 

employment on the basis of national origin against the city of Gary, Indiana. It 

is the first case a gainst Gary (file 00001). A 15 day letter has been sent to the 

Mayor of Gary and ORS has received a reply. That reply is currently under 

analysis.
CH RO N O LO GY- LI ST OF AC TIVE CA SE S: CIV IL RIG HTS

State and recipient

Date, account, and case numbers government Curren t status Basis of complain t

Jan .

Jan.

Jan.

Jan .

Jan .

Jan.

Jan.

Jan.

Jan .

Jan.

Jan.

Jan.

Feb.

Feb.

9.1975 (00001), 15-2 -045-005.......... Indiana: Gary Ci ty ................Ana lys is........................ Emplo yments national

origin.

10, 1975 (00002), 28-2 -055 -007 ........ Nebr aska: Lincoln City ................................................ Employment and services:

race.

10, 1975 (00001), 48-2 -014 -008 ____ Washington: Westport Tow n. 15-day letter o u t .... Employm ent: sex.

21, 1975 (00001), 14-2 -01-027.......... Illi no is: Evanston City....................................... ....... Employmen t: race.

21.1 975 (00001), 14-2-000-00 0........ Louisiana: Earth Town.......... Letters of noncompliance.

22, 1975 (00001), 32-2 -001 -001 ____ New Mexico: Albuquerque Ci ty ................................... Employmen t: sex.

22.1975 (00001), 41-1 -042-042........ South Caro lina: Spar tanburg Review co m plet ed ... Employ ment: sex.

County.

20.1 975 (00001), 25........................... Mississippi: State of Missis- ................................ Fac ilities : race.

sippi.

27.1 975 (00001), 14-1 -092-092........ Illinoi s: Vermilion Coun ty......... ................................. Emp loyme nt: race;

facilitie s: sex.

27.1 975 (00001), 33- 2-06 0-01 4........ New Yo rk: New Rochelle 15-day letter o u t .... Emp loyme nt: race.

City.

28.1975 (00001), 26- 1-09 5-09 5........ Missouri: St. Louis Count y.

29, 1975 (00002), 22- 2-01 3-00 1____ Massachusetts: Boston C ity .

6, 1975 (00001), 05-2 -01 9-027......... Cali fornia: Los Angeles C it y.

6.19 75 (00001), 44 -...........................Te xa s: State of Tex as............ Letters of nonnoncompliance.

An aly sis___________ Fa cili tie s: sex.

15-day letter o u t .... Employme nt: race.

An aly sis ......................Ser vic es: national origin.

Employm ent: race, sex, 

national origin.

Feb. 18,1975 (00001), 23-2 -078 008___Mich igan: Owosso Cit y_____ Ready for revie w____ Employmen t: sex.

Feb. 20, 1975 (00001), 33-2-00 8-00 1...... New Yo rk: Elmira Ci ty ____ An aly sis____________ Employme nt: sex.

Feb. 21,1 975 (00001), 25-2 -02 2-001..... Mis siss ippi: Grenada C it y .. . Review co mpleted ... Employment and services:

race.

21, 1975 (000 01), 50-2-030 -00 1..... Wisconsin: Kenosha C it y .. . 15-day letter out ____ Employm ent: race.

27, 1975 (000 01), 39 -2- 0-3 -0 28 __ Pennsylvania Yealon Bor- 15-day letter ou t____ Service s and fac ilities :

ough. race.

24, 1975 (00001), 25-2-012 00 2........ Missis sip pi: Pachula To wn . An aly sis ..................... Fac ilitie s: sex.

3.1 975 (0 0001), 31-3-003 -01 0.........New Jer sey : W illiam sb oro............. ........................... Employment: race.

Towns hip.

1.1975 (00001), 14 2 068- 016____ Illino is: Waggoner V illa g e.. An al ys is_____ _____ Employment: race.

14.1 975 (00001), 15-2 -0 49- 000... . Indi ana : India napolis Cit y. An alys is...................... Employment: race.

14,19 75(00 002), 14 1-241 -0 4 1 .. .. Tex as: Wichita Coun ty................................................ Employment: race.

20 1975 (00001), 14 200 2 001___ Illi no is: Cairo City An al ys is...................... Employment: race.

24 ,19 75(00 001), 14- 2-2 43-004 ___ Texas : Wichita Falls C it y .. . A n a ly s is .. ................. Employment and serv ­

ices : race.

21, 1975 (000 01), 23-2-062 0 0 4 ... . Michig an: Detroit Cit y. ............. .................................Emp loyment: race.

21,19 75(00 001), 14-1 003 00 3___ Washington: Benton Cou nty. An al ys is.....................Employment: race, sex.

24.1 975 (00001), 04-2-014 0 0 4 ... . Ark ans as: West Memphis An al ys is.....................Emp loymen t: race.

City.

27 1975 (0 0001), 04 2-026-001 _ . . . Ark ans as: Hot S prin gs Cit y. An al ys is.....................Employme nt: race.

27 1975 (00001), 22- 2-0 12-001 ___ Massachusetts: Brockton ......................................... Employment: national

City. origin.

Minnesota: Ramsey Cou nty ....................................... Employment: race.

Missis sip pi: Ethel Town A n a ly s is .. ........ ....... Services : race.

Alabama: Childersburg 15-day letter out........ Employment and servTown. ices : race.

Mar. 31, 1975 (0000 1), 3-1 2-0 32^)0 1.... North Car olin a: Durham An alysis..................... Employment: race, sex .

City.

1975 (00 001), 44-1-111 -0 0 1 .. .. Tex as: Crockett C it y ................................................... Fa cili ties: race.

Feb.

Feb.

Feb.

Mar.

Mar.

Mar.

Mar.

Mar.

Mar.

Mar.

Mar.

Mar.

Mar.

Mar.

Mar.

Mar.

Mar.

27, 1975 (00 001), 24-1-062 0 6 2 ... .

27, 1975 (00001), 25-2 001-001 . . .

28, 1975(00001), 01-1 0 6 1-0 0 2 ....

Mar.

Apr.

Apr.

Apr.

Apr .

Apr.

Apr.

Apr.

Apr.

May

May

May

May

May

May

May

May

May

3.19 75 (00001), 07-3 -00 2-016_____ Co nn ec tic ut : New ington 15-day letter o u t .... Employm ent: race, sex.

Town.

3, 197 5(00 002), 44-2 -15 2-002.......... Texa s: Lubbo ck City...................................................... Employ ment: race.

4, 1975 (00001), 07- 3-0 02-001 ......... Conn ecticut: East Hartford Ana ly sis...................... Employ ment: race,

Town. national origin.

14.19 75 (00001), 07-3 002 011........Co nnecticut: Glastonbury An alysis....................... Employment: race, sex ;

Town. services: race, sex;

contracts: race.

11, 1975 (05001), 32-1-001 -00 1___ New Mexico: Bernalillo An alysis...................... Emplo ymen ts: national

County. origin.

21, 1975 (00001), 4 -2 017-024...... Washington: Tuk wila Ci ty ............................................. Employ ment: sex.

28, 1975 (00001), 47- 2-0 04-001 ___ Vi rgi nia : Front Royal Tow n.......................................... Services : race.

30, 1975 (00001), 44- 1-0 00-113 ........T ex as : Houston Coun ty.......... Ready for revie w___ Employ ment: race;

facilities : sex.

14.1 975 (00001), 04- 2-0 47- 009____ Ar ka ns as : Osceola City.......... Ana ly sis..................... Employment: race.

15.1 975 (00 001), 44-2—011—002 ____Tex as : Elgin C it y ........................................................... Facili tie s: sex.

19, 1975 (000 01), 04-1- 047 -04 7........ Ark ansa s: Miss issip pi An aly sis .................... Employment: race.

County.

19, 1975 (00001), 04-2- 047-0 01........Arka ns as : Blyth eville C it y.. An al ys is ...................... Employ ment: race.

22, 1975 (00001), 18- 2-0 56-014 ........ Kentu cky : Lou isvil le City .. . An aly si s. .................... Employment: race.

27. 197 5 (00001), 25- 2-0 13- 001........ Mi ssiss ipp i: West Point C ity. An alysis..................... .. Facili tie s: sex.

27,197 5 (00001), 41 . .. S o u th Caro lina: State o f ...................................... Ser vic es: race.

27,1 975 (00001), 49 1 031 031____ West Vir gin ia: Monongalia 15-day letter o u t .... Employment: race.

County.

29,19 75 (00 00 1), 2 5-2 -07 5-0 01........ Miss iss ipp i: Vi cks burg C ity . An alysis...................... Employment: race.
131

CHRONOLOGY—LIST OF ACTIVE CASES: CIVIL RIG HTS-C ontinu ed

State and recipient

Date, account, and case numbers government Current status Basis of complaint

May 29, 1975 (00001), 34-1 -0 66-0 66.... 

May 30, 1975 (00001), 34-2-014-003........

June 2, 1975 (00001), 10-2-029-009.........

June 5, 1975 (00001), 26-2-095-049........

June 5, 1975 (00002), 44-2-101-008 . . . .

June 6, 1975 (00002), 10-1-011-011-------

June 9, 1975 (00001), 04-2-070-0 02.........

June 12, 1975 (00001), 07-3 -0 02-0 24....

North Carolina: Northa mpton County.

North Carolina: Claremont

Town.

Florida: Tampa City .............Analysis.

Mis souri: Hillsdale Villag e. ..................

Texas: Houston C it y ...........Analysis.

Flo rida: Collier County..........................

Arkansas: El Dorado City...............

June 13, 1975 (00001), 41-1 -0 07-0 07....

June 16, 1975 (00001), 44-2 -2 21-0 01.... 

June 17, 1975 (00001), 22-2 -0 07-0 02....

June 20. 1975 (00001), 10-1 -0 04-0 04.... 

June 25,1975 (00001), 09-2 -0 66-0 02.... 

July 7, 1975 (00002), 07-1..........................

July 10, 1975 (00001), 05 -2-007-009........

Aug. 18, 1975 (00001), 10-2 -0 28-0 04....

Connecticut; Wethersfield Analysis. 

Town.

South Carolina: Beaufort Analysis 

County.

Texas: Abilene City...........................

Massachusetts: Holyoke Analysis. 

City.

Flo rida: Bradford County......................

West Virginia: Huntington An aly sis .. 

City.

Connecticut: State of Con- ..............

necticu t

California: Richmond City.....................

F lo rida:‘ Sebring C ity...........Analysis.

Facilities: sex.

Services: race.

Employment: race, sex. 

Employment: race. 

Employm ent: race, sex. 

Employment: Sex. 

Employment and services.’ 

race.

Employm ent: race. 

Employm ent: race.

Facilities: race. 

Employm ent: race, nation al origin. 

Employm ent: race. 

Employm ent: race.

. Employment: race.

Employment: race. 

Facilities: race, sex.

ATTACHMENT C

IN IT IA L DETERMINATIONS OF NONCOMPLIANCE

Recipient Status Opened Determination sent

Prichard, Ala....................

Contra Costa. C alif .'.. .. 

Santa Clara County, Calif.

San Jose, Calif.1_______

Oakland, Ca lif.'.................

Torrington, C onn............

Waterbury, Conn.'............

Dover, D e l........................

Miami Fla.'......................

Wewahitchka, Fla______

Gretna, Fla........................

Seminole, Fla ...................

Alton, I II .'. .. . ..................

Centralia, III.*...................

Chicago, III.'......................

Leyden, III.........................

Pembroke, III ...................

Limestone II I...................

Palatine, III.......................

Bond County, II I. '............

Lake County, In d.'...........

Ottawa County, K a n s.. ..

Johnson County, Ky____

Pike County, Ky...............

Todd County, Ky..............

Morgan County, Ky____

Edmondson County, K y..

Ouachita, La.*...................

Bogalusa, La.'...................

Bladensburg, Md.'...........

State of Michigan'............

Lower Sioux, Minn ...........

Anniston, Mo....................

Montclair, N.J.'................

Charleston, N.Y................

Craven County, N.C.'____

New Bern, N.C.'...............

Turtle Mountain, N. Dak. 

Wagoner County, O kla .. .

Carbondale, Pa.................

Scranton, Pa.....................

Fulton County, Pa............

Ponca, Okla.......................

Dimock, S. Dak................

Letter, noncompliance

Review com pleted___

Closed.............. . ..........

Letter, noncompliance

___ do ............. . .........

Closed.................... .

Letter, noncompliance

Closed..........................

Review schedule d....

Closed..........................

____do...........................

........do...........................

____do ..........................

Plan for resolution___

Litigation ......................

Closed................ .........

____do...........................

____do ...........................

___ do...........................

d o ........................

Letter, noncompliance

Closed..........................

___ d o .........................

Oct. 11, 1973..............

Aug. 22, 1974............

Dec. 6, 1973...............

Aug. 19, 1974............

July 1, 1974............. .

Apr. 9, 1974...............

Apr. 18, 1974............

Sept. 5, 1973 ..........

July 23, 1974 ............

Feb. 7, 1974...............

Closed............................

........d o ......................... .

........do............................

____do ............................

Letrer, noncompliance

Closed............................

Litig ation .......................

Admin istrative hearing

Closed............................

____do............................

Letter, noncompliance.

Closed............................

___ do ............................

Review com pleted____

Closed............................

Analysis.........................

Letter, noncompliance.

........do............................

Closed............................

____do............................

Nov. 20, 1974______

Feb. 6, 1973...............

Apr. 4, 1973...............

Sept. 17, 1973............

Feb. 17, 1974.............

Aug. 9,19 74 ...............

July 23, 1974 ....... ..

Feb. 7,19 74 ...............

Oct. 30, 1973 ..........

Dec. 18, 1973.............

Oct. 30, 1973......... ..

May 8, 1974.............

December 1973..........

Dec. 3, 1973...............

Oct. 21,1974..............

Apr. 30, 1974.............

Nov. 16, 1973______

Feb. 26, 1974............

Oct. 18, 1974 ............

May 13,1974.............

Aug. 26, 1974______

Apr. 24, 1974.............

December 1973..........

November 1974.........

July 29, 1975..............

Aug. 1,1974

Sept. 9. 1974. 

Aug. 5, 1975. 

Oct. 21, 1974. 

Aue. 6,1975. 

July 31, 1974. 

Mar. 7, 1974. 

Nov. 11, 1974. 

Nov. 16, 1973. 

July 17, 1974. 

May 1, 1974. 

Aug. 13, 1974. 

Nov. 20, 1974. 

Aug. 25, 1974. 

July 30, 1974. 

Apr. 9, 1974. 

July 1, 1974. 

Jan. 21, 1975. 

July 23, 1974. 

July 22, 1974. 

Aug. 20, 1974. 

Dec. 30, 1974. 

Mar. 21, 1974. 

May 8, 1974. 

Aug. 30, 1974. 

May 20, 1974. 

Apr. 30, 1974. 

Oct. 21, 1974. 

Aug. 23, 1974. 

Mar. 25, 1975. 

Aug. 27, 1974. 

Nov. 14, 1974. 

Aug. 27, 1974. 

Aug. 26, 1974. 

Aug. 6, 1974. 

Dec. 27, 1974. 

June 11, 1974. 

June 18,1974. 

Aug. 27,1974. 

Dec. 30, 1974. 

Sept. 15, 1975. 

July 29, 1975. 

Jan. 22, 1975. 

Dec. 23, 1974. 

May 20, 1974.

/
132

ATTACHMENT C—Continued

IN IT IA L DETERMINATIONS OF NONCOMPLIANCE—Continued

Recipient Status Opened Determination sent

Worthing, S. Dak..........

Rosebud Sioux, S. Dak.

Beaumont, Te x.*.........

Breckenridge, Tex.*__

East Tawakoni, Tex__

Henderson, Tex............

Normangee, Tex_____

Am arillo, Tex.*_______

San Antonio, Tex..........

Gatesville, Tex.*______

Waller County, T e x .. ..

Holland, Tex..................

Powhatan County, Pa ..

Virginia Beach, Va___

Pine Bluffs, W yo ..........

Laram ie, Wyo________

Closed........................

........do...........................

........do...........................

........do...........................

........do...........................

........do...........................

........do...........................

Letter, noncompliance.

Closed............... . .........

____do...........................

____do...........................

____do...........................

____do...........................

____do...........................

Nov. 26 ,1973...........'

Feb? if . 1974.'.'

June 1973____ ____

July 1973....................

Oct 30, 1973..............

Mar. 4, 1974...............

Ap ril 1974..................

June 11, 1974............

Letter, noncompliance. Feb. 28, 1974.............

Apr. 15, 1974. 

Nov. 20, 1974. 

Jan. 4, 1974. 

May 1974.

July 9, 1974. 

July 26, 1974. 

May 24, 1974. 

July 9, 1975. 

Apr. 29, 1974. 

June 10, 1974. 

Sept. 10, 1974. 

July 26, 1974. 

July 25, 1974. 

Nov. 5, 1974. 

May 5, 1974. 

Do.

* Civil rights discrim ination case.

Atta c h m en t F : T ec h n ic a l Mem or an du m on Ass urances

TECH N IC A L MEM OR ANDU M : NO. 7 5 - 4

When Cancelled Jane 16, 1975.

Subject: Assurance Requirement for Recipient Governments.

Section 51.10(b) of the regulations requires the chief executive officer of 

each recipient government to execute certain assurances, to the satisfaction 

of the Director in order to qualify for payment of funds for each entitlement 

period. This technical memorandum sets forth in detail the procedure for determining the type of assurance tha t is necessary, the effect of an inadequate 

assurance, and the procedure for processing assurances for purposes of making 

or not making payments.

The following rules govern the assurance requirement:

1. No recipient government will be paid for any entitlement period if the Director has not been assured to his satisfaction at the time of payment th at the recipient government has the intention and capability to comply with the restrictions 

and prohibitions of the Act and regulations with respect to the forthcoming entitlement period funds.

2. Final acceptance of an assurance will be evidenced only by the act of 

payment.

3. A recipient government is “paid” when, pursuant to the definition of that 

word in TM 73-1, the recipient government’s “... check is deposited in the mail. 

A check is deposited in the mail when it is bagged for mailing and nothing 

further remains to be done except pickup by the Postal Service trucks.”

4. Any recipient government for which there is an unresolved violation determination lette r outstanding prior to the first payment of an entitlement 

period will not be paid until a satisfactory assurance responsive to the violation determination letter has been received.

5. An assurance is responsive to a violation determination letter when evidence 

is presented to the Director’s satisfaction that the forthcoming entitlement period 

funds will be used in a manner which will not result in a violation th at is similar 

to the violation that resulted from the use of previously received funds.

G. No assurance is finally accepted until the first payment of an entitlement 

period is made to the particular recipient government. However, a recipient government may be given interim notice at any point in time prior to payment that 

its assurance at that specific time is acceptable. If a violation determination 

letter is sent to a recipient government between the interim acceptance and
133

payment, that recipien t government must provide additional assurance evidence 

which is acceptable to the D irector before it can be paid. 7. Once a recipien t government has been paid for the first qu arter of any entitlem ent period the acceptance is final for th at entitlemen t period un less: (a) Evidence of an inte ntional misreprese ntation by the chief executive 

officer satisfies the Director th at the ass urance should be ne ga ted; or (&) A recipie nt government which has made a special assurance does not subsequently commit the funds to the agencies or programs which were the subjects of th at assu ranc e. In that case, additional assu rances will be requ ired concerning the other agencies or programs which actually will receive the funds before fu rth er paym ents for the applicable entitlement 

period will be made. Absent these two situ ations the recipient government will be paid unless funds are with held purs uant to a n actio n other tha n requiring special assu rances for the entire entitlem ent period, and violation determination letters issued after the initial paymen t will not affect the adequacy of the assurance. Such subse­ quent violation determination lett ers, if unresolved prior to the mailing of the Planned Use Rep orts for the nex t beginning entitlemen t period, will require a responsive assura nce acceptable to the Dire ctor in orde r for the recipient government to receive payment for t ha t entitlement period. 8. A recipient government which has had its first quart er paym ent delayed for reasons not relating to an assurance requirement, and which receives a violation dete rmin ation lette r after the oth er recip ient governments have been paid (but before it has been paid ) will be required to execute an assu ranc e to the satisfac­ tion of the Director that is responsive to th at violation determination letter 

before it is paid. 9. A recipient government for which there is not an unresolved violation deter­ mination lette r outstanding at the tim e of mailing the PURs (or on May 15, 1975, for the 6th En titlem ent Period) will only be required to execute the sta ndard assuranc e contained on the PUR by signature of the chief executive officer. If a violation determ ination lette r is subsequently issued aga inst such a recipien t government prior to the first qu arter payment, a responsive assurance will be required before paymen t for the applicable entitlement period can be made. A recip ient government for which there is an outstanding unresolved violation let ­ ter at the time of mailing the PURs (or on May 15, 1975, for the 6th Entitlement Period) will be required to execute, through its chief executive officer, the a ssu r­ ance on the PUR and submit additional assuranc es and evidence to the Directo r 

which a re responsive to the violation determ ination letter. 10. Any recipient government which has had an assurance, oth er than the standard assurance on the PUR, rejected by th e Director will be given notice and opportunity for hea ring concerning the sufficiency of the Directo r’s rejection.

ACTION

Manager, Compliance

1. At the time the PURs are mailed the Compliance Manager shall submit lett ers to the Director which will notify those recipien t governments, which have been issued a violation dete rmination letter that is unresolved at that time, that the Director must have specific assura nces and rela ted evidence before paymen t can be made. The Compliance Manager will prepare additional let ter s of th is type for the Directo r's signature for all recipient governments which are subsequently issued a viola tion dete rmination lette r up to the time of payment for those gov­ ernments. All specialized assurance lett ers will include a carbon copy for the 

Manager of Systems and Operations. 2. Prepar e a le tte r to each Governor with in whose Sta te a special assurance letter will be sent to a recipient government und er paragraph 1. These lett ers will request the Governor's review and comment on the additional evidence required and on the reliability of th e assurance of the jurisdiction, enclosing a copy of the 

letter to the affected jurisdiction.
134

3. As Planned Use Reports are received from the affected jurisdictions, enter 

on the acceptance card provided by Systems and Operations for th is purpose, the 

notatio n “Accepted Subject to Director, Office of Revenue Sharing letter dated

------------------- .” Upon entering of such notation, ins ert a copy in the compliance

folder for that jurisdiction a nd mail the card.

4. As responses are received to the Director’s letters, review the response and 

provide through the Deputy Dire ctor to the Director, recommendations as to 

furth er action together with a lette r reply to the jurisdic tion. Letters rejec ting a 

special assurance will sta te the reasons therefore, additional evidence required, 

and notice of opportunity for a hearing on the sufficiency of the rejection. All 

replies are to be reviewed by the Chief Counsel p rior to submittal.

5. By COB each Friday, provide the Dire ctor and Deputy Director a list of 

affected ju risdictions including a notation indicating the date of th e jurisdictio n’s 

response and the date of Director’s acceptance of the assurance, if accepted. 

Provide a copy of this list to the Chief Counsel and the Managers of Systems 

and Operations, Intergovern men tal Relations, and Public Affairs.

6. Notify the Manager of System s and O perations when each affected recipient 

government has submitted a specialized assuranc e to the satisfaction of the Director. Atta ch to th is notice a copy of the Director's acceptance le tte r to the recipient 

government. With respect to recipient governments which are issued an acceptance let ter after the scheduled paym ent date, the Compliance Manager will include with such notice an adjustment work sheet.

Manager, Systems and Operations

Do not issue an unqualified acceptance card based on a completed PUR for any 

jurisdiction for which there is an o utstand ing specialized assu ranc e requirement. 

Instead, provide a copy of the Planned Use Report to Manager. Compliance, together with an acceptance card so tha t he may make the appropriate notation on 

the card and mail it.

2. Include and retain all jurisdicti ons required to execute a special assurance 

in a “No Pay ” status for the applicable entitlement period until notified by the 

Manager, Compliance th at the recipient government’s special assurances have 

been accepted by the Director. Upon receipt of such notification (accompanied 

with the Director’s acceptance lette r), enter the government as eligible for payment for the applicable entitlement period provided all oth er applicable requirements (such as reporting) hav e been met.

3. Process those recipient governments for paym ent p urs uant to TM 75-3 which 

are authorized payment as a result of an adjustment work sheet initiate d by 

Manager, Compliance.

Chief Counsel

1. On request of the Compliance Manager ass ist in the preparation of the 

special assuranc e letters.

2. Review and comment on each proposed acceptance or rejection of special 

assu rances when made to the Director by the Compliance Manager as outlined 

above.

3. Review all reply letters to recipient governments which accept or rejec t a 

special assurance.

4. Represent the Dire ctor a t all hearings which are instituted as a result of the 

reje ction of a special assuranc e.

Gra ha m W. Watt, 

Director, Office o f Revenue Sharing.
135

TECHNICA L MEM ORANDUM Z NO. 7 5- 7

Se pt em ber 23 ,19 75.

S u b je c t: Pos t V io latio n L ett er Pro ce du re s.

T hi s Tec hn ic al M em or an du m se ts fo rt h th e pro ce dure s to be fol low ed a ft e r 

th e pe riod of tim e pro vid ed in th e vi ol at io n dete rm in ati on le tt er has ex pire d.

I. Co mp lia nc e M an ag er

W ithin 15 w or ki ng days fr om th e end of th e pe riod of tim e giv en th e affected 

re ci pi en t go ve rn m en t in th e vi ol at io n dete rm in ati on le tt er, th e Co mp lia nc e Man ­

ager s ha ll ta ke one o f t he a ct io ns se t f ort h in p ara gra phs 1 o r 2. 1. Pro vi de th e D ir ecto r w ith a re co m m en da tion fo r fu rth e r ac tion on th e c as e 

alon g w ith on e of th e fo llo w in g le tt ers to th e re ci pie nt govern m ents c hie f ex ec utive officer— (a ) A le tt e r advis in g th e ju ri sd ic ti on th a t it is no t in non-compli ance, o r; 

(ft) A le tt er advis in g th e ju ri sd ic ti o n th a t it s pr op os ed ac tion pla n is 

ac ce pt ab le an d th a t it s no n-co mplianc e will be co ns id er ed to be re so lv ed

su bj ec t to co mpletion of sp ecified a ct io ns by specified d at es , o r ; (c ) A le tt er advis in g th e ju ri sd ic ti on th a t a specified num be r of day s 

ex tens io n ar e gra nte d in or der to ac co m plish spe cific re m ai nin g step s which 

wi ll res olve th e j u ri sd ic ti o n 's no n-compli ance. 2. Pro vi de th e D ir ecto r w ith a re co m m en da tion th a t th e ca se be re fe rr ed to 

(1 ) th e .Ju sti ce D epart m ent fo r appro pri ate civ il ac tion o r (2 ) th e Chief C ou nsel 

fo r adm in is tr ati ve h ea ring . The Co mp lia nc e M an ag er sh al l pr ov id e co pie s of al l re co m m en da tio ns an d 

appro pri ate lett ers t o th e C hi ef C ounse l.

11. C hi ef Co un sel

1. The Chief Co un sel sh all pr ov id e th e D ir ec to r w ith re co m men da tio ns co nce rn in g an y ac tion pr op os ed by th e Co mplianc e M an ag er p u rs u an t to p ara g ra p h s 

1 o r 2 above. 2. W ith re sp ec t to an y ca se th a t is fo rw ar ded by th e D irec to r to th e C hi ef 

Cou nsel fo r adm in is tr ati v e he ar in gs , th e Chi ef Co un sel sh al l pre par e an ad m in ­ is tr a ti v e he ar in g co m pla in t fo r th e si g n atu re of th e D ir ecto r w ith in 10 w or ki ng 

da ys of th e re fe rr al . 3. Th e co nd uc t of an adm in is tr ati ve heari ng in sti tu te d by th e D irec to r sh all 

be go ve rn ed by th e re quir em en ts an d tim e pe riod s se t fo rt h in S ubpart F of th e 

re gu la tion s.

J o h n K. P ar ke r,

A ct in g Dire cto r,

Office of R ev en ue Sh ar in g.
Pre-15 day 15 day out 

(O (2 )

A LL DISC RIMIN AT ION

Ana lysis

Ready tor 

review

Review

scheduled

Review

completed

Noncomp liance letter Plan tor resolution Resolved

(3 ) (4 ) (5 ) (6 ) (7 ) (8 )

Total

Fiscal year 1976:

Less than 1 month ...

1 to 2 months............

Fiscal year 1975:

2 to 3 months............

3 to 4 months............

4 to 5 months............

5 to 6 months............

6 to 7 months............

7 to 8 months............

8 to 11 months..........

11 to 14 months........

Fiscal year 1974:

14 to 20 months ........

20 to 26 months........

Fisc al year 1973: Over 26 

To ta l......................

2

5 

6. 

4

6

4 '

1

3

2

1

2

3

2

1

6 2

37 13

6 ......................................................

5 ......................................................

3 .................... .................................

9 ......................................................

3 1 ...........................

2 ......................................................

7 ................................................

3 .......................... 1

2 .......................... 1

1 ......................................................

41 1 2

Note: The above table refle cts ADP data on com pliance case s as of Sep t. 12, 1975. The diffe rences between th is data and the Aug . 31, 1975 master list summ ary are because of 

the inclus ion of 57 Davis- Bac on case s as part of the Ci vil Rig hts Branch case lis ting . That

1

1

1

2

11

7

1

1

3 ....................

1 1

3 1

3 1

1

23 11 3

3

17

15

9.

45

2

11

11

10

16

8

10

15

M

39

?1

10

adju stment chan ges the civ il rights total for activ e case s from 191 to 134. Note that the 

table of Sept. 12 includes only 45 of the 49 current ly resolved civ il rights cases.

177
CIVIL RIGHTS ASPECTS OF GENERAL REVENUE

SHARING

THURSDAY, OCTOBER 9, 1975

H ouse of Representatives,

Subcommittee on Civil and Constitutional Rights,

Committee on tiie J udiciary,

~\V ash ing ton, D.C .

The sub com mittee met. pu rsua nt to recess, at 9 :30 a.m. in room 2237, 

Ra yb urn House Office B uilding , H on. Don Ed wards [chairm an o f t he 

subcom mittee] pre sid ing .

Pr es en t: Re presentat ives Ed wards , Drin an , Badillo, Butler, and 

Kin dness.

Also presen t: Ja net M. McN air, assis tan t counsel, and Ke nn eth N. 

Klee, asso ciate counsel.

Mr. E dwards. The subcom mittee will come to order.

We resume at th is time ou r inqu iry re ga rd in g civil righ ts en forcement un de r the prog ram of gen eral reve nue sharing. On ye ste rday 

we received tes tim ony from the Dep artm en t of the Tr easu ry concern ­

ing its civil righ ts enf orc em ent pro gra m. We also heard fro m othe r 

witnesses w ho outl ine d numerous deficiencies in that pro gra m.

Th is morning we will open ou r he arings by welcoming the Hon or ­

able A rt hur S. E lem ming, C ha irm an o f the U nited S tates Comm issio n 

on Civil Rights.

In Fe br ua ry of 1975 the Com mission released a repo rt on the 

rev enue-sh aring p rogram whi ch raised num erous criticism s rega rd ing 

the ma nner in w hich the Office of Reven ue S ha ring is fu llfilling its civil 

rig hts responsibilitie s. We welcome Dr. Flem ming to da y to prese nt us 

with t he findings a nd recom menda tion s made in that report.

Th an k you fo r accep ting ou r invitat ion, Dr. Fle mm ing . You may 

proceed with y ou r testimony .

TESTIMONY OF HON. AR TH UR S. FLE MM ING , CHAIRMAN. U.S.

COMMISSION ON CIVIL RIGH TS. ACCOMPANIED BY JOHN BUGGS,

STA FF DIRECT OR, AND JAME S LYONS, CONGRESSIONAL LIA ISO N

Mr. F lem min g. Mr. Ch air man , mem bers o f the subcommittee. T am 

A rthu r S. Fle mm ing . Ch air man of the U.S. Commission on Civil 

Rights. W ith me th is morning are Jo hn A. Buggs , Sta ff Dire ctor of 

the Commission, and Jim Lyons , of ou r Con gressional Lia ison U ni t.

On beha lf of the Commission. I would like to th an k you for th is 

op po rtu nity to discuss the civil rig ht s im pli catio ns of the general 

re venue -sh ari ng prog ra m.

The Commission h as l ong been c oncerne d with the civil righ ts i m pl ications o f t he g enera l rev enue-sh aring p rogram . In a Ju ne 1971 sta te ­

ment the Com mission ind icated th at reve nue sh arin g prese nts bo th 

(1 37)
13S

po tential benefits and po ten tial risks to the Fe deral Gover nm ent 's 

obligation to discha rge its constitu tional ma ndate to insure th at ra ­

cial or eth nic discr imina tion not occ ur in the exp en dit ure o r enjoyment 

of Federal fun ds, and the Go vernme nt’s obligation to ca rry forw ard 

a bro ad natio nal policy for sec uring economic an d social justice for 

all Am erican s wit hout rega rd to race, color, national ori gin , religion, 

or sex.

Follo wing enactme nt of the St ate and Local Fiscal Ass istance Act 

of 1972, the Commission has att em pted to mo nit or and evalu ate its 

civil righ ts imp act. In addit ion to n umerou s stu die s pe rta inin g to the 

gen era l social an d economic con dition s of minoriti es and women, the 

Com mis sion th is yea r published two r eports which ex clusively focus on 

reve nue sh ar in g: An eva lua tion of the civil rig hts enforcement effort 

of the Office o f Revenue Sh ar in g (O RS ) en titled “T o Pr ov ide Fisc al 

Assistan ce,” Volume IV : The Fe deral Civ il Righ ts Enforceme nt 

Ef fort— 1974, an d anoth er stu dy e ntitled “M aking Civil Ri gh ts Sense 

( )ut of Revenue Sh ar ing D ollar s.”

Moreover, the Commission has analy zed an d commented upo n the 

Dep artm en t of Treasury's pro posals to mo dify the reg ula tio ns conce rning nondisc rim ina tion in rev enue-sh ari ng program s and also the 

Office to Manag ement and Bu dg et's dra ft bill to exte nd the St ate and 

Loc al Fis cal Assistance A ct.

At this tim e I would like to sub mit for the record these Com mission repo rts and documents since they pro vid e the basis fo r much of 

my testimony today.

[The documents re ferre d to fo llo w:]

R ev en ue S harin g P rogram— M in im u m Civ il R ig h t s R eq u ir em en ts

INTRO DUCTION

The a do pt io n of a ge ne ral re ve nu e sh ari ng p ro gr am may well af fe ct th e m an ne r 

in which th e Fed er al Gov ernm en t carr ie s ou t a nu m be r of it s fu nc tion s. It is im ­

per at iv e, ho wev er, th a t th e pr og ra m no t in te rf ere w ith th e ab ility of th e Gover nm en t ad eq uat el y to fulfill tw o m ajo r an d clo sely re la te d resp on sibi lities . Th e 

firs t is th e re sp on sibi lity to e nf or ce t he m an dat e of the C on stitut io n th a t ra ci al or 

et hnic d is cr im in at io n no t oc cu r in th e expen diture an d th e en jo ym en t of Fed er al 

fu nd s. The second is th e re sp on sibi lity to carr y fo rw ar d th e br oa d nat io nal policy 

of se cu ring econ om ic an d socia l ju st ic e fo r al l m in or itie s, an d fo r th e dis ad va nta ged g en er ally. Re ve nu e sh ari ng pre se nt s bo th pote nti al be ne fit s and pot en tial ri sk s to th e 

Fed era l G ov er nm en t's ob lig atio n to dis ch ar ge th es e resp on sibi lities . T his memora ndum pre se nts an ou tlin e of m in im al mec ha nism s ne ce ss ar y to ass ure th a t 

C onst itutional re qu irem en ts an d br oa d na tiona l policy ob jectives are eff ectiv ely 

im plem en ted in a ny g en er al re ve nu e sh ari n g pro gr am .

1. APP LIC ATION OF A CIVIL RIG HT S REMEDY TO TH E REVENUE SHAR ING PROGRAM

T itle VI of th e Civ il R ig ht s Ac t of 1904 pr ov id es th a t no pe rson is to be su bje ct ed t o dis cr im in at io n un de r an y pro gra m o r ac ti vit y re ce iv ing Fed er al fin ancia l 

as si st an ce . In as m uc h as ge ne ra l re ve nu e sh ari ng is one fo rm of F ed er al fina nc ial 

as si st an ce , th e no nd iscr im in at io n re qui re m en t of T it le VI ap pl ie s to an y pr og ra m 

or act iv ity a ss is te d by gen er al re ve nu e sh ari ng fun ds .1

’ S. 68 0 (“Gen eral Revenue Shar in g Ac t of 1071” ) (S enat or Bak er ) pr ov ides th a t no pe rson sh al l he su bj ec t to dis cr im in at io n on th e gr ou nd of ra ce , color , or nat io nal origin In an y ac ti vit y as si st ed by ge ne ra l re ve nu e sh ari ng fu nd s. I t pr ov ides sa nct io ns fo r non- co mplianc e. In clud in g re fe rr al h.v th e S ec re ta ry of th e T re asu ry to th e A ttor ney Gen eral w ith re co m m en da tion fo r commen ce men t of a" civil ac tion , an d th e sa nc tio ns -—in clud in g fu nd cut-o ff— prov ided fo r in ti tl e V I of th e Ci vil Rig ht s Ac t of 1964. S. 241 (‘‘Sta te an d Local Gov er nm en t M od er ni za tion Ac t of 19 71 ” ) (S enat or Hum ph re y) an d S. 1770 (“In te rg ov er nm en ta l Re ve nu e Ac t of 1971” ) (S enat or Mu skie) co nt ai n sim i­ la r pr ov isio ns ; th e la tt e r bill wo uld also em po we r an y pe rson ad ve rsel y affecte d by dis ­ cr im in at io n in vi ol at io n of th is pr ov isio n to br in g a civil ac tion to ob ta in re lief ag ai nst 

su ch dis cr im in at io n.
One of th e pr in ci pal sa nc tion s av ail able to en fo rc e T it le VI co ns ists of ad ­

m in is trat iv e pr oc ee di ng s le ad in g to a cu t-o ff of F edera l fund s. One key que st io n 

i s : W ha t pr og ra m s or ac ti vit ie s unde r a gen er al re ve nu e sh ari ng pro gr am wo uld 

be su bj ec t to th e no nd is cr im in at io n re quir em en t an d, th er ef ore , also su bje ct to 

th e s an ction of f und cut-off?

If th e Fed er al G ov er nm en t is to ha ve an effecti ve an d pra ct ic al mec ha nism to 

co mba t di sc rim in at io n in S ta te and loc al acti vit ie s fu nd ed unde r th e Fed era l 

reve nu e sh ar in g pr og ra m , it is ne ce ss ar y th a t earm ark in g of th e fu nds be m ad e 

m an da to ry so th a t th e sa nc tion of fu nd te rm in ati on ca n att ach solel y to th os e 

pr og ra m s "or a ct iv it ie s fo r which re ve nu e sh ari ng fu nds are des ig na te d. 2

Co mm ing lin g of r ev en ue sh ari ng funds w ith th e gen er al fu nds of a S ta te wou ld 

mak e im po ssi ble a “t ra cin g ” of Fed er al fu nds to specific pro gr am s or ac tivitie s. 

If , th er ef or e, th e no nd is cr im in at io n re quir em en t w er e to a pp ly to an y pro gr am or 

ac tivity fin an ce d by t he c om ming led fu nds—as it m ust if tlie re qu irem en t is n ot to 

be re nd er ed a null it y—th en it wo uld have to ap pl y to all fu nds ex pe nd ed by tlie 

St at e. W hile applica tion of th e Fed er al no nd is cr im in at io n re quir em en t to al l 

Sta te and local pro gr am s or a ct iv it ie s wou ld ha ve tlie be ne fic ial eff ect of p ro vi di ng 

su bst anti al F edera l le ver ag e to w ar d el im in ati ng dis cr im in at io n on th e p a rt of 

th es e go ve rn m en ta l bo dies, tli e sa nc tion of cutt in g off al l reve nu e sh ari ng fu nds 

from a S ta te in th e ca se of di sc rim in at io n in a sing le pro gr am or ac ti vit y pro bab ly wo uld lie too d ra sti c fo r pra cti cal use.

2. OTHE R FEDERAL REM EDIES FOR NONCOM PLIANCE W IT H NO ND ISC RIM INA TIO N 

REQU IRE ME NT S

Re ve nu e sh ari ng re pre se nts an im p o rt an t ne w fo rm of Fed er al as si st ance to 

S ta te an d loc al go ve rn m en ts. It has fa r- re achin g ra m ifi ca tio ns . Thu s, it is of 

ex trem e im po rtan ce th a t th e no nd is cr im in at io n pr ov isio n be one which has th e 

max im um ca pab ility of pr od uc in g co mplian ce . Yet, ex pe rien ce w ith T it le VI 

en fo rc em en t lias dem onst ra te d th a t th e fu nd te rm in ati on sa nc tion has of te n 

prov en to lie too in flex ib le to be eff ectiv e. W he n th is fa cto r is ad de d to th e p re ­

vio usly men tio ne d pr ob le m s invo lved in ap pl yi ng tlie fu nd cut-o ff mec ha nism to 

re ve nu e sh ari ng gra nts , it bec omes cle ar th a t it is ne ce ss ar y to es ta blish a co mpr eh en sive an d fle xible ra nge of remed ies, to be us ed on a selective ba sis .

a. L itig ati on b y th e A tt o rn ey G ene ral

We believe th a t as in th e ca se of T it le VI . li tigat io n by th e A tto rn ey Gen er al 

is a us ef ul su pp le m en t to th e sa nc tio n of fu nd cut-off. As th e Comm ission po in te d 

ou t in its Octo be r 1970 re por t, “T he Fed era l Ci vil R ig ht s Enf or ce m en t E ff ort ” : 

Rec ipie nts wou ld kn ow th a t no t on ly wou ld Fed er al fu nds be cu t off fo r 

no nc om plian ce but li tigat io n co uld be bro ug ht to br in g ab ou t co mplian ce . 

Thu s, de fia nc e of no nd is cr im in at io n re qui re m en ts , ev en a t th e co st of losing 

Fed er al fu nd s, wou ld be an act of fu ti li ty , (a t 726)

As th e Co mm iss ion al so po inted ou t, ho wev er, it is un de si ra bl e to re ly on 

litigat io n as a su b sti tu te for, ra th e r th an a su pport to, fu nd te rm in ati on 

pr oc ed ur es .3

b. Cease and d es ist or de r a uth ori ty

A no th er us ef ul en fo rc em en t mec ha nism wo uld be th a t of em po w er in g th e 

Sec re ta ry of th e T re asu ry to issu e ju dic ia ll y en fo rc ea bl e or der s dir ec ting a 

S ta te or loc al go ve rn m en t to cease an d des is t from spe cific dis cr im in at ory p ra ctices. Pr ov ision sh ou ld be mad e fo r th e ju dic ia l im po sitio n of sa nc tion s fo r nonco mplian ce w ith th e c ea se a nd d es is t or de r, in cl ud in g civi l an d cr im in al pe nal ties . 

Ce ase an d de si st ord er auth ori ty wo uld ha ve th e be ne fit of offerin g an effective 

an d spee dy remed y sh ort of th e dra st ic on e of fu nd cut-off.

c. Cr im inal pen al ties

A th ir d sa nct io n in ad ditio n to fu nd cu t-o ff wou ld be a pr ov ision m ak in g 

S ta te or loc al officia ls guilty of de libe ra te acts of dis cr im in at io n liab le to cri m ­

in al pe na lti es . U nd er th is sanc tio n, go ve rn m en t officia ls wo uld be on no tice th a t 

ac ts of di sc rim in at io n wou ld re su lt no t on ly in ac tion again st th e S ta te but also 

ag ain st thos e in div id ual officia ls wh o a re resp on sib le.

2

 W hile no t refle cted in th e la ng ua ge of S. 680 . th e W hi te Ho us e ha s in di ca te d th a t it 

fa vo rs a re qu irem en t th a t al l ge ne ra l re ve nu e sh ari ng fu nds be ea rm ar ke d by th e S ta te s 

to spec ific us es.

3

 As no ted abo ve, S. 680, S. 241, an d S. 177 0. al l au th ori ze th e sa nc tion of fu nd te rm ina tion fo r fa ilure to comp ly w ith no nd is cr im in at io n re qu irem en ts .
140

d. Private civil suit

Priva te individuals subjected to discriminatio n should be empowered to initia te litig ation in Federal District Court for appropriate relief,4

 including recovery of treble damages, for inte ntio nal noncompliance with Fed eral nondiscrim ination requirements. To effectuate this remedy, which would arise after 

adm inistrative remedies had been exhausted, Title VI adm inistrativ e procedures 

should be improved so as to yield a reasoned determination on the issue of 

alleged discrimination within a brie f period (no more tha n 60 day s). In this 

way, the judicial remedy could be pursued with a minimum of confusion and 

delay.

3. STRENGTHE NIN G TH E EN TIRE FEDERAL CIVIL RIGH TS ENF ORC EMENT EFFORT

In “The Federal Civil Rights Enforcement Effort” report, the Commission 

examined the civil rights enforcement activities of some 40 Federal depa rtments 

and agencies in a wide range of subject areas, such as employment, housing, 

the operation of fede rally assisted program s, and regulated indu strie s. In vir ­

tually all cases, the Commission found the level of civil rights enforcem ent 

seriously deficient and made a number of recommendations, including recommendations for centralized direction and coordination of civil rig hts enforcement 

in the newly formed Council on Domestic Affairs and Office of Management 

and Budget.

In May 1971 the Commission, in a report, “The Fed eral Civil Rights Enforcement Effort—Seven Months La ter” concluded th at the Federal response to its 

ear lier report had been, with a few exceptions, one of ten tative first steps toward string ent civil rights enforcement combined with promises to do better in 

the future . It found that major inadequacies in the Federal effort remained and 

th at even the implementation of rather basic proposals for improving agency 

performance has been characterized by inordin ate delays.

If the Commission’s recommendations were implemented and Federal program s were in fact operated on a nondiscriminatory basis then the present 

patte rns of racial and ethnic exclusion and the inequitable distributio n of Federal benefits would be dramatica lly reduced. The enforcement of present laws, 

executive orders and adm inistrative policies would brin g about a basic change 

in prac tices rela ted to race in communities throughout the Nation. They would, 

in fact, dra stically alt er the way the “system ” operates, assurin g gre ater racia l 

justice in the communities into which revenue sharing fund s would flow.

Vigorous enforcement of nondiscriminatio n requirements concerning revenue 

sharing, alone, will not be sufficient. There is large-scale disenchantment, particularly among minority group members, concerning the will and capacity of 

government to serve the ir needs and a loss of faith that the “system” can work 

for them. We can move them tow ard a renewal of that faith if the full range 

of protections contained in existing civil rights laws are fully enforced and the 

rights of minority citizens are guaranteed in fact as well as in legal theory. 

Therefore, we continue to believe the recommendations contained in the Commission’s report should he implemented as soon as possible.

4. ASSURIN G EQUAL EMPLOYMENT OPPORTUN ITY BY STATE AND LOCAL GOVERNMENTS

fl. Amending title VII to cover State and local government employment

The Commission previously has urged amendment of Title VIT of the Civil 

Rights Act of 1964 to remove the exemption accorded Sta te and local government 

employment. In its report, “Fo r All the People . . . By All the People,” the 

Commission examined equal opportu nity in public employment throughou t the 

country—north as well as so uth—and reported widespread discriminatio n against 

minority group members in State, city, and subu rban government employment.

The report pointed out that Sta te and local government employees make many 

policy and adm inistra tive decisions which have a significant effect on the lives 

of the citizens within the jurisdiction. The repo rt (at page 131) observed:

If these decisions are to be responsive to the needs and desires of the 

people, then it is essential th at those making them be truly represen tative 

of all segments of the population.

.

4

 As no ted abo ve. S. 1770 em po wers an y pe rson ad ve rs el y affec ted by di sc rim in at io n in 

vi ol at io n of t his prov isi on to br in g a civil ac tion to obta in re lief a gai nst su ch di sc rim in at io n.
141

Sinc e reve nu e sh ari ng wou ld serv e to in cr ea se th e re sp on sibi lity of su ch gover nm en t, pri or en ac tm en t of eff ectiv e eq ua l em pl oy m en t oppo rt un ity co ntrol s is 

im pe ra tive .

F or th e sa m e reas on , re ven ue sh ari ng s ho ul d no t oc cu r until effecti ve T it le VII 

en fo rc em en t m ac hi ne ry h as been prov id ed , by givi ng to th e Equ al Em pl oy m en t 

O pp or tu ni ty Co mm iss ion th e au th ori ty , in ca se of viol atio n, to issu e ju dic ia ll y 

en fo rc ea bl e c ea se and d es is t or de rs.

b. Affir m at iv e ac tio n by S ta te an d local gov er nm en ts

In it s stud y of pu bl ic em ploy men t, th e Co mm iss ion foun d th a t th e p att ern s of 

dis cr im in at ory jo b d is tr ib uti on of te n re su lted from p ast pra ct ic es of dis cri m in ation in hi ri ng an d job as sign m en t. F or th es e p att ern s to be el im in at ed w ill r equir e 

+ more th an ad op tion of a neutr al policy of no nd is cr im in at io n. S ta te an d loc al

go ve rn m en ts also m ust undert ake af firm ativ e pro gr am s of re cr uitm en t, tr ain in g, 

an d pr om otion of m in or ity em plo yees. Su ch affirm ativ e ac tion is no les s vit al to 

se cu ring eq ua l em pl oy men t in S ta te an d loc al go ve rn m en t th an it is in th e ca se 

of Fed er al ag en cies an d Fed er al contr acto rs—whe re af firm ativ e ac tio n al re ady 

» is re qu ired by law . Given th e less en ing of oth er ki nd s of Fed er al co nt ro ls in

co nn ec tio n w ith re ve nu e sh ari ng fu nd s, it is im pe ra tive th a t S ta te an d loc al 

go ve rnmen ts, un der re vi ew by an appro pri ate ag en cy su ch as th e Equ al Em ploy ­

m en t O pp or tu ni ty Co mmiss ion or th e Office of Fed er al C on trac t Co mp lia nce, be 

re qu ired to undert ake pla ns of eq ua l em ploy men t opp or tu ni ty af firm ativ e ac tio n. 

Su ch affir mative ac tion pla ns sh ou ld in cl ud e go als an d tim et ab le s fo r th eir 

implementation .®

5. T H E CIV IL B IG H TS B ESPO N SIB IL IT Y OF ST ATE S AN D LO CA LITIES

Fed er al civ il ri ghts re qu irem en ts, no m att er how co mpreh en siv e, are un like ly 

to pr ov e suffi cie nt to pro vi de th e lev el of pro te ct io n th a t is ne ce ss ar y to en su re 

th a t th e re ve nu e sh ari ng fu nd s are exi> ende d in a no ndis cr im in at ory m an ne r. 

Fur th er m or e, S ta te s and lo ca lities m us t be re qui re d to dem onst ra te th a t they , 

as re ci pi en ts of la rg e unre st ri cte d am oun ts of F edera l money , ca n pr ov id e th e 

type o f p ro le ct io n which wi ll en su re th e ba sic civil ri ghts o f al l th eir citiz en s.

C ur re nt ly , few S ta te s ca n su st ain th is bu rd en . The m aj ori ty of lo ca lities and 

mor e th an a do zen S ta te s ha ve no la w s co m pa ra bl e to th e F edera l civi l ri ghts 

ac ts an d. in fa ct , th e civil ri ghts la w s of thos e S ta te s an d lo ca lities th a t ha ve 

en ac te d th em are se ve re ly w an ting in te rm s of cov erag e, av ai la bl e sa nc tion s, an d 

level of en fo rc em en t ac tivity. In man y ca ses, moreo ve r, S ta te s an d lo ca lities 

no t only ha ve fa iled to pr ov id e adeq uat e civil ri ghts pr ot ec tion , but ha ve been 

resp on sib le fo r mu ch of th e ra ci al di sc rim in at io n th a t has oc cu rre d. T his Commiss ion an d oth er Fed era l ag en cies, such as th e D ep ar tm en ts of Ju st ic e, HEW , 

La bo r, an d A gr ic ultur e, ha ve do cu men ted gros s ab us es of th e ri g h ts of m in ori ty 

gr ou p citiz en s by S ta te a nd lo ca l g ov er nm en ta l ag en cies.

Th us , a mer e ass ura nce fro m a go ve rn or , may or , or co un ty official th a t th e 

ri ghts of m in or itie s will be pr ot ec te d will no t suffice. S ta te s an d th eir su bdivision s mus t, a t a minim um , en ac t la w s an d ord in an ce s which pr ov id e fo r th eir 

citize ns th e sa m e leve l of pro te ct io n offered by F edera l st atu te s, ex ec ut iv e 

* or de rs, co ur t de cis ions , an d ex ec ut iv e policy pr on ou nc em en ts. Th e law s m us t

co ve r s uch are as as :

Hou sin g. Th e la w m us t re quir e th a t al l ho us in g be offere d on a no ndi sc rim in at or y bas is t o ci tize ns of a ll ra ce s and et hn ic ba ck gr ou nd s an d th a t 

th e po lic ies of th e ju ri sd ic tion be ge ar ed so as no t to pre ven t m in ori ty gr ou p 

ci tize ns f ro m l iv in g w ithin th e juri sd ic ti on o r w ithin a ny p a rt o f th e ju ri sd ic ­

tio n.

Th e adm in is tr ato n of S ta te an d loc al pr og ra m s. Th e S ta te or lo ca lity 

m us t as su re th a t al l fu nd s which it di sp er se s are used fr ee fro m dis cri m in atio n an d a re in fa ct dis trib ute d on a ra ci al ly an d et hn ic al ly eq uitab le ba sis. 

This la st re qu ir em en t, which is ess en tial ly th e sa m e as th a t pr ov id ed in 

T itle VI of th e Civil R ig ht s Ac t of 19(14. wou ld ap ply to such S ta te an d loca l 

pr og ra m s as ed uc at io n, w elfa re , hea lt h ca re , em ploy men t serv ices, hi gh w ay 

an d re cr ea tion fa cil it y co ns truc tion , an d econ om ic de ve lopm en t lo an s an d 

gr an ts .

La ws also are ne ce ss ar y in th e are as of pu bl ic ac co mmod ati on s, pu bl ic fa cil ities an d vo ting ri ghts . The se laws m ust not on ly be bro ad in co ve rage but also

5

 With respect to sanctions for noncompliance with affirmative action requirements, see 

section 2 above.

02-331— 75----- 10
142

m ust p ro vi de fo r effecti ve e nfor ce men t. It is ab so lu te ly ne ce ss ary th a t an e nf or ce ­

m en t ag en cy be es ta bl is he d ha ving th e i»ower no t only to in ves tigat e co m pl ai nt s 

and issu e op inions, but also to co nd uc t in ves tigat io ns on it s ow n in it ia ti ves , hold 

he ar in gs , issu e su bp oe na s an d ce ase an d des is t or de rs , see k co urt en fo rc em en t 

o f its or de rs , in it ia te and in te rv en e in li tiga tion, lev el civil pen al ties , an d ord er 

th e w ith ho ld ing, w he re ne ce ssary, of S ta te an d m un ic ip al fu nds fr om pr og ra m s 

whe re di sc rim in at io n is foun d.

Th ese ag en cies must, be fu lly st af fe d w ith tr ain ed, co mpe tent pe rson ne l. Th ey 

m us t no t be su sc ep tib le to do mination by loca l pol itic al fa ct io ns , but ra th er, 

sh ou ld be pe rm an en t, in de pe nd en t ag en cies who se mem be rs are ap po in te d fo r 

st ag ge re d te rm s of office. The se ag en cies co uld be in p a rt fu nd ed by th e Fed er al 

Gov ernm en t, an d per hap s giv en a qua si -F ed er al st atu s, su ch as th a t of th e S ta te 

em ploy men t service s. Fur th er m ore , officia ls in al l S ta te an d loca l ag en cies 

sh ou ld be mad e to unders ta nd th a t it is th eir re sp on sibi lity , su bje ct to remov al 

from office by ag ency direc to rs , to en su re th a t th eir pro gr am s are not di sc rim inato ry in o pe ra tion o r e ffect.

Thi s ex pa nd ed , an d in m an y ca ses new, ef fo rt by S ta te s and lo ca lities is 

no t in te nd ed to su ppla nt Fed er al civ il ri ghts ac tivitie s, but ra th e r to su pp le m en t 

them . Once th e S ta te s an d th eir m un ic ip al itie s pr ov e th eir effecti ve ne ss in th is 

are a, th e Fed er al ag en cies wi ll be ab le to li m it th eir ef fo rts to a m on itor in g an d 

sjKJt-cliecking fu nc tion . U nt il th a t tim e, ho wev er, th e st af fs of th e tw o en fo rc em en t sy stem s shou ld work to ge th er so as to pre ven t du pl ic at io n of ef fo rt an d 

to en su re max im um uti li zati on of in fo rm at io n.9

6. T H E “ ST AT E PLA N ” REQ UIR EM EN T

As anoth er co nd iti on of elig ib ility fo r part ic ip ati on in re ve nu e sh ar in g, th e 

S ta te an d it s po litica l su bd iv isio ns sh ou ld be re qui re d to su bm it a “S ta te P la n ,” 

th e pu rp os e of which wou ld be to as su re th a t th e S ta te is re al is tica lly fa ci ng 

up to th e pr ob lems it has an d th a t re ve nu e sh ari n g fu nds will be used in way s 

th a t will b ett er en ab le th e S ta te to mee t an d ov erc om e th es e prob lem s.

Th e “S ta te P la n ” sh ou ld, a t a minim um , co nt ai n th e follo wing ele m ents :

a. A ra nk or der o f pr ob lems faci ng t he S ta te and its po lit ic al subd ivisi on s. Thi s 

an al ys is wou ld be su pp or te d by d ata an d re port s pre par ed by th e re le van t local 

ag en cie s. Pr ob le m s wo uld includ e thos e in th e a re as of hu m an reso urce s, n a tu ra l 

reso urce s, econ om ic dev elopment., an d bth er gen er al go ve rn m en tal concern s, bu t 

wou ld be brok en do wn in to spec ifics. Thu s, in th e are a of he al th ca re , th e pl an 

wou ld re la te to spe cific prob lem s in th e S ta te an d it s va riou s ju ri sd ic tions , such 

as p re n ata l ca re , car e fo r th e aged, ho sp ital se rv ices , ins uffic ien t med ical p ersonn el, or insu ffi cie nt fu nds to prov ide fo r th e n utr it io nal ne ed s of it s citiz en s.

b. In a si m il arl y deta iled fash ion, th e S ta te an d it s ju ri sd ic ti ons wo uld be 

re qu ir ed to se t fo rt h w h at ac tion s th ey ha ve ta ken in th e p ast to cop e w ith 

ea ch of th e prob lems th ey id en tify . Thi s analy si s wo uld be bo th in te rm s of 

fina nc ial an d m an po w er res ou rc es allo ca ted.

c. A st ate m ent of how S ta te an d loc al re ve nu e is be ing ap po rtione d in th e 

co ming fiscal yea r an d ho w th is ap po rtio nm en t of fu nd s is ca lc ul at ed to ov er ­

come th e prob lems wo uld be given. In additio n. Sta te s an d lo ca lities wo uld 

det ai l how th ey anti cip ate d us in g th e Federa l re ve nu e sh ari ng fu nds which 

th ey a re to rec eiv e.

d. A long -ran ge an aly si s of th e m att ers se t fo rt h in po in ts a. b, an d c wo uld 

be de tailed . Thi s se ct ion will re quir e offic ials d ra ft in g th e pla n to spell out th e 

br oad es t as pe ct s of th e prob lems. Thi s re qui re m en t refle cts th e fa ct th a t 

effecti ve ac tion to w ar d so cial ch an ge re qu ires lon g te rm plan ni ng .

The S ta te Pla n wou ld be su bm itte d fo r re vi ew an d ap pr ov al to th e Office of 

M an ag em en t an d Bud ge t, which wo uld ex er ci se it s revi ew in g fu nc tion in co nju nct io n w ith F edera l dep ar tm en ts hav in g m ajo r pr og ra m re sp on sibi lities re8

 T he civ il ri ghts en fo rc em en t ca pa bi lities of a S ta te or loca l go ve rn m en t do not ex ist 

in a va cu um : th ey are closely tied to th e ov er al l level of proficie ncy of th e go ve rn men t. 

S. 241 co nta in s a re qu irem en t th at, in ord er to qu al if y du ri ng th e sec ond an d su bs eq ue nt 

yea rs of ge ne ra l re ve nu e sh ari ng. S ta te s m us t pre pa re a m as te r pl an an d tim et ab le fo r 

m od er ni zi ng an d re vi ta lizi ng S ta te an d lo ca l go ve rn m en ts. Thi s could he an im port ant 

co ntr ib ution to st re ngth en in g th e civil ri ghts ca pab ilitie s of Sta te an d loc al go ve rn m en ts. 

I t also is an im port ant el em en t in im pr ov in g th e ca pac ity of S ta te an d loca l go ve rn m en t 

effective ly to ca rr y out th e pla nnin g fu nct io ns di sc us se d in th e follo wing section.
la ting to th e p lans . N at io na l policy cri te ri a fo r s uch revi ew s sh ou ld l,e es ta blish ed 

by th e Cou nc il of D om estic Affa irs . One of t he m ajo r co nc erns in th e r ev iew proc ess shou ld be w heth er a pla n ta aes in to ac co un t th e spec ial ne ed s of m in or ity grou p mem be rs an d th e econ om icall y di sa dv an ta ge d. Thu s, it wo uld be un ac ce pt ab le if a S ta te or pol itic al su bd iv isio n overl oo ked th e healt h ne ed s of it s po or citiz en s w hile de vo tin g co nsi der ab le re ­ sources to d ev elop ing a hi gh w ay sys tem wh ich , by it s natu re a nd lo ca tio n, se rv ices only th e more afflu en t se ct io ns of th e po pu latio n. In tli e pas t, some S ta te s an d lo ca lities ha ve part ic ip ate d in Fed er al pr og ra m s on a se lectiv e ba sis, of te n re ­ fu sing to p art ic ip ate in social w el fa re pr og ra m s su ch as pu blic ho us in g or food as si st an ce w hi le ac ce pt in g F edera l mo ney fo r su burb an w ate r an d se wag e fa ci lities or re cre at io nal fa ci li ti es th a t serv e only th e affluent. Rev en ue sh ari ng 

shou ld no t be allo wed to su pport th es e in se ns itiv e policies. Furt he rm ore , th e S ta te Pla n sh ou ld be resp on siv e to im port ant Fed era l po lic ies su ch as th e ra cia l an d et hnic de se gr eg at io n of schools an d th e el im in a­ tio n of ra ci al and econo mic po la ri za tion in m et ro po lita n ar ea s. The pro gra m ­ ing of S ta te s and lo ca lities sh ou ld be re qui re d to refle ct th es e F ed er al p ri o ri ­ tie s It m us t be m ad e cl ea r th a t F ed er al fund s, w he th er from re ve nu e sh ari n g or ca te gor ic al gra nts , ca nn ot be us ed to ai d in schemes wh ich tend to dis cri m i­ nat e ag ai nst , is ol at e, im po ve ris h, or per petu ate second clas s ci tize ns hi p fo r an y 

ra ci al or et hnic g roup .

7. DISTRIBU TIO N OF FUN DS ACCORDING TO NEED

a. D is tr ib ut io n am on g th e Sta te s D is tr ib uti on of ge ne ra l re ve nu e sh ari ng fu nds shou ld be de te rm in ed on th e ba sis of in dic ato rs of need, su ch as th e re la tive w ea lth of th e Sta te , m ea su re d by av er ag e pe rs on al incom e, an d th e nu m be r of th e S ta te 's po pu lation who are “d is ad va nta ge d in div id uals '’ as defin ed in th e U.S. D ep ar tm en t of Lab or M an ­

po wer Pro gr am .7

Th e pr es en t F edera l sy ste m of ca te go rica l g ra n ts is, in it s ev er y str u ctu re , resp on siv e to su ch de m onst ra te d do mes tic ne ed s as these. Given th e sh ort age of Fed er al , Sta te , an d loc al go ve rn m en t fu nds in re la tion to th e de m an ds mad e up on them , if we a re ad eq ua te ly to se rv e th e ne ed s of our man y ci tize ns wh o are tr ap ped in po ve rty, we ca nnot af fo rd to dis tr ib u te an y larg e am oun t of Fed er al re ve nu e w ithout re fe re nc e to su ch fu ndam en ta l dete rm in an ts of ne ed . In it s on go ing st ud y of ra cia l an d econ om ic pol ar iz at io n in m et ro polita n ar ea s, th e Comm ission* ha s seen how lack of ad eq uat e fisc al re so ur ce s has co n­ tr ib ute d to an acc el er at in g econ om ic an d ra cia l se para ti on in th es e ar eas. Th e lack of fu nds to fin an ce ad equate pu bl ic se rv ices ca us es thos e who ca n, to flee th e in ner cities , an d a t th e sa m e tim e ca us es man y su bu rb an ju ri sd ic ti ons to us e zo ning an d oth er de vice s to ex clud e tli e po or, who ar e mo st in ne ed of pu blic service s. It also is such fa cto rs as th es e th a t mak e th e S ta te Pla n, descr ilie d in Se cti on 6, a ne ce ss ary “civil ri g h ts ” pr ot ec tion . For th es e re as on s, th e dis tr ib uti on of th e ge ner al pu rp os e re ve nu e sh ari ng fu nd s shou ld refle ct a nati onal co m m itm en t to th e sp ec ial pr ob lems of th e poor an d of our urb an ar ea s, w he re tli e po or and th e dis ad van ta ged are hea vi ly 

co nc en trat ed .8

b. D istr ib ut io n w it hin Sta te s

A re qui re m en t th a t S ta te s “p as s th ro ugh” a pr op or tio n of ge ne ra l re ve nue sh ar in g fu nd s to lo ca l ju ri sd ic ti ons is an im port ant sa fe guar d in ass uri ng th a t tlie citie s rece ive th eir fa ir sh are of re ve nu e sh ari ng fund s. F or th e re as on s st at ed in ou r disc us sion of “D is tr ib uti on Am on g th e S ta te s” we be lie ve th a t

7

 T he te rm is defin ed to in clu d e: An y po or pe rson wh o doe s not ha ve su itab le em pl oy ­ men t an d wh o is eit h er (1 ) a sch oo l dro p o u t: (2 ) a mem ber of a m in o ri ty : (.31 und er 22 ye ar s of ag e : (41 ov er 45 ye ar s of age: (51 ha nd ic ap pe d. U.S . D ep ar tm en t of Lab or. "C oo pe rativ e Are a M an po wer P la nnin g Sys te m ,” Su pp le m en t No. 1, Dec. 14, 197 0, a t 10, 

n. 2.

8

 S. 680, S. 241 , an d S. 1770 al l pr ov id e th a t ea ch S ta te ’s sh ar e in ge ne ra l re ve nu e sh ar in g fu nd s is a fu nct io n of (a l to ta l po pu la tion of th e S ta te an d (b l th e S ta te ’s “ta x effort” — th e am ount of re ve nu e it ra is es in re la ti on to th e to ta l pe rs on al inc om e ea rn ed 

by re si den ts o f th e Sta te .
144

such a requ irem ent should reflect the same criteria of need as recommended in 

th at Section of th is memorandum.'1

March 17, 1975.

Mr. Graham W. Watt,

Director, Office of Revenue Sharing, Department of the Treasury,

Washington, D.C.

Dear Mr. Watt: The following comments pertain to the Department of the 

Tre asu ry’s proposed amendm ents to section 51.32 (f) of the regulations contain ed in Par t 51 of Subtitle B of Title 31, Code of Federal Regulations, which 

became effective April 5, 1973. The proposed amendments concern the Dep artmen t’s enforcement of the non-discrimination provision contained in Section ♦

122 (a) of the Sta te and Local F iscal Assistance Act of 1972.

As you know, the Commission recently released Volume IV of the Federal 

Civil Righ ts Enforcement Effort—1974, “To provide Fiscal Assistance." This 

report and Making Civil Rig hts Sense Out of Revenue Sharing Dollars form the 

basis for our comments here. *

We have concluded in “To Provide Fiscal Assistance” that OR S’ civil rights 

compliance program has been fundam enta lly inadequate. Abundant evidence 

indicate s that discrimination in the employment practices and in the delivery 

of benefits of State and local government programs is far-reaching, often 

extending to activities funded by general revenue sharing. Nonetheless. ORS 

has one of the most poorly staffed and funded civil righ ts compliance programs 

in the Federal Government. Moreover, ORS has not take n the few ac tions possible 

with in the con straints of its resources which would have made its civil rights ’ 

compliance effort maxim ally effective.

As the following specific comments make clear, the Commission does not 

believe that the proposed amendments to section 51.32 ( f ) are adequate to 

insu re effective enforcement of the prohibitio n a gainst discrimination in programs 

partial ly or completely funded by revenue sharing money. The Commission, 

therefore, urges that the proposed amen dments not be adopted but rather be 

revised furth er in accordance with our comments and criticisms.

A copy of both reports are enclosed along with our comments. If you wish 

to clar ify any ma tter in our comments or the reports, please call Bud Blakey 

(254-6626).

Sincerely,

J ohn A. Buggs,

Sta ff Director.

OBJECTION TO PROPOSED REGULATION SECTION 51.3 2 (F ) (1 )

Section 122(b) of the State and Local Fiscal Assistance Act provides the 

Secretary of the Treasury with the legal autho rity necessary to effectuate 

compliance with the non-discrimination provision contained in Section 122(a) 

of the Act. Section 122(b) reads in p a rt:

the Secretary is authorized (1) to refer the ma tter to the Attorney General ■

with a recommendation that an app rop riate civil action be insti tuted: (2) 

to exercise the powers and func tions provided by Title VI of the Civil 

Rights Act of 19G4 (42 U.S.C. 2000d) ; or (3) to take such other action as 

may be provided by law.

Section 51 .32 (f)(1) of the curre nt regu lation mirrors the act and provides in •

pertinent pa rt that

the Secretary is authorized: (i) To refe r the ma tter to the Attorney 

General of the United States with a recommendation that an appropriate 

civil action be ins tituted; (ii) to exercise the powers and functions and 

the adm inistrative remedies provided by Title VI of the Civil Righ ts Act 

of 19(54 (42 U.S.C. 2000d) ; or (iii) to take such other action as may be 

authorized by law.

8

 S. 680. S. 241, an d S. 177 0 all re qu ire th e S ta te s to “p as s th ro ugh" a ce rt ai n pr op or tion 

of fu nds to lo ca l go ve rn m en ts. The y al l per m it each S ta te , ac ti ng in co nj un ct io n w ith its 

loca l go ve rn m en ts, to de te rm in e th e ba sis fo r al lo ca tion am on g th e loca l go ve rn m en ts— 

whi ch ba sis co uld refle ct th e re la tive ne ed of th e re sp ec tiv e loca l go ve rn men ts.

Abs en t su ch sp ec ial ag re em en t. S. 680 an d S. 241 pr ov ide th a t th e sh ar e of each loc al 

go ve rn m en t is to be th e same as it s re la tive co nt ri but io n to ov er al l S ta te re ve nu es . S. 1770 

us es a mo re comp lex dis tr ib ution fo rm ul a, which makes th e sh are a fu nct io n of eac h 

go ver nm en t’s co ntr ib ution to S ta te reve nu es , it s po pu la tion size, an d it s sh are of poor 

pe rs on s (t ho se w it h income s of l es s th an $3 ,000 ) an d of pe rson s re gula rl y re ce iv in g public 

as sistan ce .
The Commission objects to the proposed regu lation 51.32 (f)(1) because it 

eliminate s reference to the Secre tary’s authority to "tak e such other action as may lie provided by law” to secu re compliance with section 122 (a) of the act. This omission is inexcusable. The proposed regulations like the current regulations must reflect the full range of autho rity provided to the Secretary by the Act. Ju st as an execu tive officer cann ot appro priate powers th at were not delegated to him or h er by Congress, neither can an executive officer abandon 

those powers which Congress has seen tit to delegate.

OBJECTION TO PROPOSED REGULATION S SECTION 51.3 2 (F) (1 ) (II)

(ii) To initiate an administrative hearing pursu ant to the powers and func tions provided by Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d). An order of an adminis trative law judge to withhold temporarily, to repay, or to forfeit entitlement funds, will not become effective unti l: (A) There has been an express finding on the record, after notice and opportunity for hearing of a failu re by the recip ient government to comply 

with a requirement of this section. (B) At least 10 days have elapsed from the date of the order of the adm inistrative law judge. During this period, additio nal efforts will be made to assist the recip ient government in complying with the regulation and 

in takin g appropriate corrective action. (C) Thirty days have elapsed af te r the Secretary has filed with the Com­ mittee on Government Operations of the House of Represe ntatives and the Committee on Fina nce of the Senate a full written rep ort of the circum­ stances and the grounds for such action. The time limitations of subparagraphs (B) and (C) can run concurrently. (D) The Secretary has notified the recip ient government tha t, in addi­ tion to whateve r sanctions have been imposed by the administrative law judge, the Office of Revenue Sha ring will withhold paymen t of all entitle­ ment fund s until such time as the recipient government complies with the 

order of the adm inistra tive law iudge. Fu rth er, the amount of the forfeitur e or repa yment of entitlement funds, if any, will be limited to the program or activity in which the noncom­ pliance has been found. Such fund s shall be collected by a downward adjus t­ ment to future entitlem ent paymen ts and will be deposited in the general fund of the Trea sury. If th e Secreta ry determines that adjustment to future entitle ment payments is impracticable, he may refer the matt er to the A ttor­ ney General for appropriate civil action to require repa yment of such amount 

to th e United States. The Commission objects to the proposed regu lation section 51 .32(f)( 1)(H ) because it contains no provision for the Secretary to exercise his Title VI au ­ thority to temporarily withhold or defe r revenue sha ring payments itending completion of the adm inistrative hea ring procedures specified und er Title VI. The Commission views the absence of provisions for fund deferra l in this section of the proposed regulation as especially grievous given the fact that a Federal court has alre ady repudiated the position taken by ORS officials that they lack the sta tut ory authority to defer funds prior to completing the administrative procedures specified in Title VI. One of the cen tral issues in the case of Robinso n v. Sch ult z concerned the 

autho rity of the Secretary to defe r revenue sharing payments. Plaintiffs in the case sought to have ORS defer fu rth er revenue sharing paym ents to the City of Chicago after the ORS, through its own investigation, found evidence of discrimination within the Chicago Police Depa rtment, the principa l recip ient agency of the city’s revenue sha ring allocation. In supp ort of the ir position, plaintiffs cited legal precedent for the deferral of Federal assistance prior to completion of Title VI administrative proceedings. The Dire ctor of the ORS re­ sponded th at he was not authorized by law to defe r fund s and th at revenue sharing differed from other programs of financial assistance where deferral by Federal agencies had been approved by the courts. On April 4, 1974, the court ruled in favor of the plaintiff’s claim and declared th at “Section 122(b) (2) of the Sta te and Local Fiscal Assistance Act, 31 U.S.C. § 1242(b) (2), confers upon the Secretary of the Tre asu ry the power to defe r paym ent of federal revenue sha ring funds pursu ant to a formal adm inistra-
tive he ar in g as prov ided by T it le VI of th e Civ il Rig ht s Act of 1904, 42 U.S.C. 

§ 2 00 0d- l.” 1

The fa ct th a t th e prop osed re gula tions igno re th e au th o ri ty of th e Se cr et ar y 

to def er fu nd s is mad e all-th e- m or e in ex pl icab le by tlie fa ct th a t th e D irec to r 

of ORS in th e Ro binson pr oc ee di ng ci te d th e ex is ting re gul at io ns as pro sc ribing defe rr al . Now th a t th e sta tu to ry auth ori ty of th e Sec re ta ry to de fe r fu nd s 

ha s been affirm ed th ro ug h fe der al ad ju di ca tion, th e Office of Re ve nu e Sha ring 

be ar s a re sp on sibi lit y to en ac t re gula tions which pr ov id e fo r th e ex ercise of 

th a t po we r. The im po rtan ce of th e po wer to def er reve nu e sh ari n g fu nds pri or to completio n of th e T itle VI adm in is tr ati ve pr oc ed ur es ca nn ot lie ov erem ph as ized . Th e 

defe rr al po wer ha s bee n us ed by oth er Fed er al ag en cies to ef fe ct ua te tim ely 

co mplianc e w ith no nd iscr im in at io n sta tu te s an d to pr ev en t th e fu rt h er ex pe nd itu re of fe der al mo nie s in vio la tion of thos e st atu te s. In th is re ga rd , it is esp ecially no tew or th y th a t th e A ss is ta nt Atto rn ey G en er al of th e U ni ted Sta te s for 

Civ il R ig ht s su gg ested th a t th e OR S mo dify it s re gula tions to pr ov id e fo r the 

ex er ci se of th e def er ra l po we r. On March 30, 1973. Mr. I’o tt in ger w ro te to ORS: 

A pr ov ision in Secti on 5 1 .3 2 (f )( 1 ) allo win g th e Sec re ta ry to in it ia te 

en fo rc em en t proc ee ding s in ca se of th re ate ned no nc om plian ce , as well as 

past or pr es en t no nc om plian ce , may be he lpfu l. Such a pr ov ision is st andard 

in T it le VI regu la tio ns . A pr ov isio n per m itting defe rr al of pa ym en ts pe nd ­

in g a he ar in g such as th a t ex er ci se d by ag en cies unde r T it le VI. ma y be ap ­

pro pri at e. Such a defe rr al ne ed no t co nst it ute a fo rf eit ure , an d ma y be 

m ad e su bj ec t to th e ty pe of lim it ati ons im po sed on th e Com miss ione r of 

E du ca tion un de r T it le V I 42 U .S.C . 2000d-5.2

We co nc ur w ith th e A ss is ta nt A tto rn ey G en er al ’s su gg es tio n th a t th e re gu la ­

tion s sh ou ld pr ov ide fo r th e in it ia ti on of en fo rc em en t proc ee ding s “in case of 

th re ate ned noncom plian ce, as we ll as past or pre se nt no nc om pl ianc e.'’

Fin al ly , th e Comm ission be lie ve s th a t Secti on 51 .3 2( f) (1 ) (i i) shou ld specify 

th e ki nd s of ev iden ce of no nc om plianc e (in ad ditio n to th e ev iden ce pro vide d 

fo r by th e un du ly re st ri cti ve se t of ci rc um st an ce s ou tlin ed in th e pr op os ed Sectio n 5 1 .3 2 (f )( 2 )) wh ich w a rr a n t th e S ecr et ar y's us e of T itle VI en fo rcem en t po we rs. Ev iden ce of dis cr im in at io n in a pro gr am p art ia ll y or comp letely 

fu nd ed by re ve nu e sh ar in g mo ney as de m on st ra te d by an y of th e follo wing 

sh ou ld tr ig ger im m ed ia te d efe rr al an d in it ia ti on of adm in is tr ati ve proc eeding s 

by th e Sec re ta ry .

A fin ding of no nc om plian ce ba se d upon an in ve st ig at io n by th e D ep ar tm en t 

of th e T re as ury .

A fin din g of dis cr im in at io n ba se d up on an in ves tigat io n or ad m in is tr ati ve 

he ar in g by a ny o th er F ed er al a gency.

A la w su it filed by th e D epar tm en t of Ju st ic e alle gi ng di sc rim in at io n.

A fin ding by st ate co ur t or hu m an ri ghts comm iss ion of di sc rim in at io n.

A la w su it filed by a pri vate p a rt y which se ts fo rt h a pr im a fa ci e case of 

di sc rim in at io n.

OBJE CTI ON TO PRO POSED RE GI ’L AT IO N SE CT IO N 5 1 . 3 2 ( F ) ( 2 )

(2) The Sec re ta ry m ay im m ed ia te ly def er th e pa ym en t of en titlem en t fu nd s 

to a re ci pi en t go ve rn m en t pe nd in g th e entr y of an affirm ativ e ac tion or de r by 

a F edera l co urt.

Th e Co mm iss ion ur ge s OR S to re vis e th e la ng ua ge of t his prop osed ru le so th at 

it re ad s: “T he Sec re ta ry sh al l (r a th e r th an “m ay ") im med iately def er th e pa ym en t o f en ti tl em en t fu nd s . . .” As we ha ve ar gu ed elsewh ere, tli e F if th Am endm en t of th e C on stitut io n cl ea rly pr os cr ib es Fed er al su pport of di sc rim in at io n. 

The re fo re , Fed er al officials mus t, w he re re as on ab le p er so ns w ould ag re e th a t nondis cr im in at io n pr ov isions wo uld m os t lik ely be vi ol ated if th e fu nds were pr ovide d. d ec lin e to alloc at e such fu nds unti l th e m att er of n on co mplianc e is resolv ed. 

(S ee T he Fed er al Civil R ig hts Enfo rc em en t E ff ort — liil.’i, Vol. IV. To Pr ov ide

F is ca l Ass is ta nc e 88 (F ebru ary 1975 ).

1

 Rob inso n v. S h u lt z, O rd er of Apr. 4. 197 4. C.A. No. 74 -24S (D .D .C .).

2

 le t t e r from J. Sta nl ey Pott in ger . A ss is ta nt A ttor ne v Gen er al , Civ il R ig hts Div isio n to Mr. G ra ham W. W at t, Direc to r, Office of Re venu e Sha ring , Mar. 30, 1973.
147

OBJECTION TO PROPOSED REG ULATION SEC TIO N 5 1 3 2 (F ) (2 ) (I) AN D (I I)

(i ) A viol atio n of (h e no nd is cr im in at io n prov ision of th is Se cti on of th e Ac t 

(S ec tio n 122) was alle ge d in th e co m pl ai nt be fore th e c o u rt ; (i i) Th e co urt finds th a t th e re ci pie nt go ve rn m en t ha s vi ol ated th e no ndis cr im in at io n pr ov isio n of th is Se ction of th e A c t; Ther e is li tt le per su as iv e reas on to re quir e th a t a vi ol at io n of Se cti on 122 of th e S ta te an d Lo ca l Fis ca l A ss ista nc e Act of 1972 (h ere aft er Re ve nu e S h ar­ in g Act) be allege d in a co m pl aint be fo re th e co ur t. If a vi ol atio n of som e o th er civ il ri ghts law is allege d wh ich , if tr ue, wo uld al so const it ute a vi ol atio n of th e Re ve nu e Sha ring Act, th en def er ra l wo uld be appro pri ate whe n th e Sec re ta ry de te rm in es th a t ge ner al re ve nu e sh ari ng (G R S) fu nds were us ed in th e pro gr am or act iv ity un de r qu es tio n. An audit wo uld re ad ily re ve al w het her GR S fu nds are inv olv ed. The co nd uc t of an au d it ne ed no t aw ait th e fin al ou tco me of co urt pro ce ed ings. F u rt h er, if an audit sh ow s th a t GR S fu nds ha ve been o r are be ing 

sp en t in th e su bje ct pro gra m or ac tivity, d efe rr al ac tion ne ed no t be po stpo ne d 

unti l ex pr es s fin ding s of a Fed er al court are iss ue d.

OBJE CTIO N TO PROPOSED REG ULA TION SEC TIO N 5 1 .3 2 (F ) (2 ) (I II )

(i ii ) The qu es tion of defe rr al has not been co ns id er ed by th e co ur t. We ob jec t to th is p a rt of th e pr op os ed ru le wh ich wo uld ci rc um sc rib e O RS' s auth ori ty to defe r fu nds wh en th e qu es tion of defe rr al is ra is ed in co ur t, ex ce pt whe n th e co urt ex pr es sly or de rs OR S to def er fu nd s. Ma ny ci rc um st an ce s co uld ari se in c ourt pr oc ee di ng s in which OR S co uld i>oint as ca us e, ho wev er u nre as on­ ab le, fo r re fu si ng to defe r fund s. D ef en dan ts could vir tu all y ra is e th e is su e in or der to a vo id th e remed y. In su it s to which ORS is no t a par ty , th e co urt co uld ho ld th a t d efe rr al is appro pri ate or re qu ired , bu t could no t ord er OR S to defe r fu nd s. In su its to which OR S is a part y, th e co urt co uld co ns id er defe rr al an appro pri at e remed y but de cid e to leav e ac tion to ORS’s di sc re tion . In th es e and ot her in stan ce s, OR S co uld re fu se to defe r fu nd s solel y on th e gr ou nd s th a t th e qu es tio n was c on side re d by th e co ur t, de sp ite pre fe re nc es ex pr es se d by th e co urt .

OBJ ECTIO N TO PROPOSED REG ULA TION SEC TIO N 5 1 .3 2 ( F ) ( 3 )

Th e Co mm iss ion ob je ct s to pr op os ed re gu la tion Se cti on 5 1 .3 2 (f )( 3 ). T he 

Se cti on is as fo ll ow s: (3 ) N ot hing in th es e re gu la tion s is in te nd ed to pr ec lu de th e U ni te d S ta te s, in a civil ac tion in it ia te d by th e A tto rn ey G en er al of th e U nited S ta te s purs u an t to Se cti on 12 2( c) of th e Act, from se ek in g or a co urt fro m gra nti ng an ord er to re qu ire th e re pay m en t of fu nd s pr ev io us ly pa id und er th is Act, or ord er in g th a t th e pa ym en t of fu nds un de r th is Act lie te rm in ate d or de fe rr ed . In ad ditio n, th e Sec re ta ry may in it ia te th e pr oc ed ur e prov id ed fo r in para gra ph ( f ) ( 1 ) (i i) of th is Secti on again st a re ci pi en t go ve rn m en t which has bee n mad e as a def en d­ a n t in such a civil ac tion if it is th e S ecr et ar y's ju dg m en t, a ft e r consu ltat io n w ith th e A tto rn ey G en er al , th a t an adm in is tr ati v e w ith ho ld in g of en ti tl em ent 

fu nds is an ap p ro p ri ate m ea su re to ensu re co mplianc e w ith th is Se cti on . In it s no tic e of pr op os ed ru les, OR S st ate s th a t th e pu rp os e of th is subpar agra ph is t o : * * * m ak e cl ea r th a t if th e A ttorn ey G en er al has in it ia te d a civil ac tion ag ain st a re ci pi en t go ve rn m en t under Se cti on 12 2( c) of th e Re ve nu e S har in g Ac t, it is no t re qui re d th a t th e S ecre ta ry (o f th e T re asu ry ) al so in it ia te an 

ad m in is tr ati ve en fo rc em en t ac tio n. Th e Co mm iss ion obje ct s to th e prop os ed re gula tion Se cti on be ca us e it m ak es th e im m ed ia te d efe rr al of fu nd s a dis cr et io nar y m att er when th e rec ipien t, go ve rn m en t has b een na med as a def en dan t in a civil ac tion filed by th e A tto rn ey G en eral p u rs u an t to Se ction 12 2( c) of th e Act. T he Co mm ission lielieves th a t im m ed ia te defe rr al sh ou ld lie im po sed wh en th ere is leg al ev iden ce of no nc om pl i­ ance. R ath er th an pr ov id in g a ju st if ic at io n fo r co ntinui ng reve nu e sh ari ng p ay ­

men ts, th e fa ct th a t th e A tto rn ey Gen er al has file d su it un de r th e Act on ly 

un de rsco re s th e ne ed fo r im m ed ia te def er ra l.
U.S. Commission on Civil Rights Comments on OMB Draft Bill Extending

th e State and Local F iscal Assistance Act of 1972

The U.S. Commission on Civil Rights provides these comments to the Office of 

Management and Budget in response to its request of March 3, 1975. The Commission h as long been concerned with the civil righ ts implications of the general 

revenue sharing program because of its impact on minority group persons. In 

a Jun e 1971 stateme nt the Commission indicated th at revenue sha ring presents 

both poten tial benefits and potential risks to the Federal government’s obligation 

to discharge its constitutional m andate to ensure tha t racial or ethnic discrimination not occur in the expenditure or enjoyment of Federal funds, and th at the 

government car ry forw ard a broad national policy for securing economic and 

social justice for all Americans witho ut rega rd to race, color, national origin, 

religion or sex.

Since th at time the Commission has engaged in several imp ortant studies with 

respect to the general social and economic conditions of minorities and women, 

specifically Black Americans, Mexican Americans, Puerto Ricans. Asian Americans and Native Americans. We have also recently concluded an evaluation of 

the Civil Rights Enforcement Effort of th e Office of Revenue Sharing (ORS)—"To 

Provide Fiscal Assistance” and Making Civil Rights Sense Out Of R evenue Sharing Dollars. T he views a nd comments offered here are based in larg e measure on 

those two reports and our extensive background and research in this area.

We have set out, where appropriate, rele vant portions of the statute or proposed statu tor y changes. In cases where the Commission recommends an amendment or suggests possible language, we have provided you with our ration ale.

SE CT IO N 1 0 4 . RE CO MMEN DATION FOR A M ENDM EN T

The U.S. Commission on Civil Rights believes th at the prohibitio n aga inst use 

of revenue sharing funds to obtain gra nts under federal matching fund programs should be eliminated. The Commission und erstands that the administration study group estab lished to review the Sta te and Local Fiscal Assistance 

Act for th e P resident also recommended elimination of this restriction. The Commission’s position is based upon its recognition of the fac t that matching funds, 

IKitentially ava ilab le from general reven ue sharing, may be the only source of 

funding available to poorer local communities. We furth er believe that the 

Section 104 restriction should be elim inated because it has been used by some 

officials as an excuse for refusing to fund social programs supported at least 

in part by Federal aid th at car ries a match ing fund requirement. Finally, 

the Commission’s recommendation takes into account the fact th at the current 

prohibition aga inst indirect use of revenue sharing fund s to meet matching 

requirements is virtually enforceable.

SE CT IO N 1 0 5 . COM M EN T ON PROPOSED AM END M EN T

The magnitude of the State and Local Fiscal Assistance Act—one of the largest 

single programs of federal domestic assistance—demands th at Congress and 

the Executive Branch faithfully exercise the ir governmental oversight responsibilities. The need for a thorough review of the act which can only be accomplished thro ugh the process of legislation and appropriation is underscored by 

the curre nt sta te of the national economy and the experimental sta tus of the 

act. Therefore, provision should be made for a time ly and comprehensive review of the ar tist ’s implementation.

SE CT IO N 1 0 8 ( h ) ( 6 ) ( B ) . CO M M EN TS ON PROPOSED A M END M EN TS AN D A N A LY SIS

Beginning with the entitlement period th at begins July 1, 1976. the maximum con strain t shall increase at a ra te of 6 percentage points per entitlement period until it reaches 175 percent.

The Commission agrees with the proposed amendment which would raise the 

ceiling on reven ue sharing allocations for counties and local governmental units 

in 6 pe r centum yearly increments from 145% to 175% of the per capita entitle ­

ment of all local governments in a State.

We tak e stro ng exception, however, with the statem ent in the analysis that 

increasing the entitleme nt ceiling from 145% to 175% will remedy the effects of 

“any underenumeration of the population th at may have occurred in the 1970 

census.” Research conducted for the ORS indicates th at the adverse effect of 

census underen ume ratio n would be reduced but by no m eans e ntirely eliminated
149

by removing the 145% limitation? (See the Commission's recommendation regarding the problem of census unde renumeration under Section 109).

SECTION 1 0 8 (b ) (6 ) (B ). RECOMMEN DATION FOR AN ADDITIONAL AM EN DM ENT

The Commission believes that Section 108(b) (6) (B) should be amended 

furth er to elim inate the 20% floor on per cap ita revenue sha ring paymen ts on 

a phased schedule sim ilar to that proposed in regard to the ceiling. Elim ination 

of the minimum per capita payment provision would tra nsfer money from a 

number of governmental units th at perform few consequential function s to other 

governments th at have demonstrably gre ater responsibilities and need.

SEC TION 1 0 8 (D )( 1 ). COMMENT ON PROPOSED AMENDM ENT

Units of local government.—The term “unit of local government” means . . . 

the recognized governing body of an Indian trib e or Alaskan native village 

which performs sub stantial governmental functions (.) as certified to the

Secretary by the Secretary of the Interior, or, in the case of Sta te affiliated

tribes, the Governor of the State in which the tribe or village is located.

The Commission recognizes the potential difficulty in making a dete rmination 

of whether or not “the recognized governing body of an Indian trib e or Alaskan 

native village perform s sub stantial governmental functions.” Nevertheless, the 

Commission disa grees with the proposed amendment which would dele gate responsibility for thi s determination to Sta te Governors in the case of Sta te 

affiliated tribes. The proposed amendment would not clarify the sta ndard of 

“sub stan tial governmental function s”, but rather would only increase the likelihood of its inconsistent application.

SECTION 1 0 8 ( D ) ( 1 ) . RECOMMENDATION FOR ADDITIONA L AMENDM ENTS

Amendments should be sought to clar ify two other areas of ambiguity inherent 

in Section 108(d) (1) . These amendments would provide 1) that trib al members 

living off their reservation but in the county areas in which the ir tribe is located 

are to be counted in dete rmining the Indian t rib e’s alloc ation; and 2) th at trib al 

governments located some distance from an Indian reservation are eligible 

recipients if they perform sub stantial governmental functions.

SECTION 1 0 9 ( A ) ( 7 ) ( B ) . RECOMMEN DATION FOR AN ADDITIONAL AM ENDMENT

Under the proposed extension of the act, many governments would continue to 

be deprived of t heir rightf ul entitlem ent because of the problem of census und erenum eratio n. For th is reason, we recommend the inclusion of an additional clause 

to this section which w’ould require the Secretary of the Treasury to use the 

Census Burea u’s nation al estimates of population undercount to correct for 

known deficiencies in census data.

SECTION 1 2 1 ( a ) . COMMENT ON PROPOSED AMENDMENT

Reports on Use of Fund s.—Each Sta te government and unit of local 

government which receives fund s under sub title A shall, after the close of 

each entitlement period, subm it a repo rt to the Secretary (settin g forth 

the amounts and purposes for which funds received during such period have 

been spent or o bligated) on th e use o f the funds received during such period.

Such repo rts shall be in such form and detail and shall be submitted at such 

time as the Secretary may prescribe.

The Commission believes that this amendment may be ineffective. Governments need not spend the funds received under a given entitlem ent during the 

actual entitlemen t period. Under the proposed amendment, a government could 

simply repo rt th at it had not used the funds received during the entitlement 

period. Th at government would not be required to repo rt how it used the funds in 

the following entitlement period since the proposed amendment only requires 

reporting on “the use of the funds received during such (the entitlement) 

period". Therefore, in lieu of the proposed phrase “on the use of funds received 

during such period,” the Commission would recommend the altern ative phrase 

“on the use of funds spent d urin g th at period .”

1

 Reese C. Wilson and E. Francis Bowditch, Jr. , General Revenue Sharing Data Stud y, 4 vols., prepared for the Office of Revenue Sharing (Menlo Park, Ca lif .: Stanford Research Institute, and Cambridge, Mass.: Technology Management, August 1974).
150

SE CT IO N 12 1 (A ) AND IB ,. RE CO MMEN DA TION FOR ADD ITIO NA L A M END M EN TS

The Co mm ission belie ves th a t th e ac t sh ou ld pr ov id e som e gu id an ce on th e 

n atu re of in fo rm at io n OR S obt ai ns fro m re ve nu e sh ar in g re ci pi en ts. The Co mmiss ion th er ef ore r ecom me nd s t h a t Se ction 121(a ) an d (b ) be a men de d to re quir e 

sta te a nd loc al go ve rn m en ts to re port th e im pa ct of prop osed an d actu al ex pe nd itu re s on va riou s po pu latio n su bg ro up s, in cl ud in g m in or itie s an d wo men, bo th as 

em ploy ees in an d be ne fic iarie s o f the fun de d pr oj ec ts.

Fin al ly , Se cti on 121 shou ld be am en de d to re quir e go ve rn m en ts re ce iv ing re ve ­

nu e sh ari ng fu nd s to ma ke a vai la ble f or p ub lic insp ec tio n, in ad di tion to th e o th er 

re por ts re qu ired by ORS, de ta iled em pl oy men t d ata cross-c lassi fie d by ra ce an d 

sex co ve rin g a ll pos iti on s in the gov er nm en ta l un it.

SE CT IO N 1 2 2 ( a ) . RE CO MMEN DATION FOR A M END M EN T

The d ra ft bill prop os es no ch an ge s in Se cti on 122 (a ) of th e S ta te and Lo cal 

Fis ca l A ss istanc e Ac t of 1972. T hat section st ate s :

No pe rson in th e United S ta te s sh al l on th e gr ou nd s of race , color , nati onal 

or ig in, or sex be ex clu de d fro m part ic ip ati on in. be de nied th e be ne fits of, 

or be su bj ec te d to dis cr im in at io n unde r an y pr og ra m or act iv ity fu nd ed in 

who le o r in p a rt w ith fu nd s mad e avai la ble unde r Sub title A.2

A se riou s prob lem ra is ed by th e co ve ra ge of th is pr oh ib itio n ag ai nst dis cr im inat io n is th a t it m ay no t ex tend to th e fu ll ra nge of pro gra m s or ac ti vit ie s mad e 

po ssible by th e Act. S ta te an d loca l go ve rn m en ts are gra nte d wide di sc re tion 

in bo w th ey ca n use ge ne ra l reve nu e sh ari ng fu nd s, allo win g th os e go ve rn m en ts 

to choose thos e pr og ra m s or ac ti vit ie s to be fu nd ed w ith ge ne ra l re ve nu e sh ari ng 

mon ies an d th os e to be fu nd ed by oth er so ur ce s. The us e of G RS fu nd s fo r a p arti cu la r ex pen diture ca n fr ee S ta te an d loc al fu nd s fo r oth er uses. Thi s ty pe of 

al lo ca tion en ab les a S ta te or local go ve rn m en t to use its ow n fu nd s fo r ac ti vit ie s 

which mig ht ha ve a dis cr im in at or y im pa ct,3 such as ho us ing an d hea lth car e 

pr og ra m s, an d re se rv e GR S fu nd s fo r less co nt ro ve rs ia l ac tivitie s or pr og ra m s 

su ch as traffic sa fe ty an d po llu tio n ab at em en t. Th us, be ca us e of th is fu ngib ilitv 

of ge ne ra l re ve nu e sh ar in g fund s. S ta te an d loc al go ve rn m en ts ma y us e th em in 

su ch a w ay a s to av oid comp lia nc e w ith Se ction 122(a ).

The Com pt ro ller G en eral ha s ex pr es se d a si m il ar co ncern . H e no ted t h a t :

. . . re qu irem en ts of th e Act ap pl ic ab le to dir ec t uses of th e fu nd s 

appare ntl y ca n be av oide d eit her by (1 ) bu dg etin g re ve nu e sh ar in g fu nds in 

a m an ne r wh ich wi ll redu ce pote nti al co mplianc e prob lems or (2 ) dis pl ac ­

ing fu nd in g source s. It is clea r th a t a vari ety of re st ri ct io ns can be impo sed 

and en fo rced on th e direc t uses mad e of reve nu e sh ar in g. How ev er, un less 

id en tica l re qui re m en ts are imposed on all or a m ajo r pa rt, of a re ci pie nt 's 

oth er reve nu es , th e ac tu al effectiven ess of such re st ri ct io ns is do ub tful.4

T his Co mm iss ion believes th at un de r th e Ac t th er e is a Fed er al re sp on sibi lity 

to en su re th a t ge ne ra l reve nu e sh ar in g fu nds a re no t used to fr ee fu nd s fo r pr ogr am s or acti vit ie s wh ich are vi ol at iv e of th e in te nt of th e nond is cr im in at io n 

pr ov ision. 5 It ap pe ar s, howe ver, th a t it is no t po ssible fo r th e D ep ar tm en t of th e 

T re asu ry to ex ec ut e th is resp on sibi lity fu lly as it is alm os t im po ssible to tr ac e 

th e im pa ct of al l GRS fu nd s on a re ci pi en t ju ri sd ic tion. The Office of Rev en ue 

Shar in g re p o rt e d :

I t became re ad il y appare nt . . . th a t it was im po ssible as a pra ct ic al m atte r to tr ace “fr ee d- up ” fund s, es pe ci ally a ft e r th e first yea r of fu nd in g.

2

 “ Funds mad e av ai la ble un de r Subtitle A” ar e ge ne ra l reve nu e sh ari ng fu nd s.

3

 F or ex am ple, th e Ae t would pr oh ib it th e us e of en titlem en ts fo r th e co ns truct io n of 

a hi gh way In a dis cr im in at ory fa sh ion, e.g., a hi gh way Im prop erly ro ut ed th ro ugh a 

m in ori ty co mmun ity , which would cause co ns id er ab le dis ru ption an d fr ag m en ta ti on of 

th a t co m m un ity an d which by co ns id erin g en gi ne er in g an d desig n st andard s an d socio ­

econom ic fa cto rs co uld be de m on stra te d to ha ve been ro ut ed els ew he re. Non ethe less, th e 

pl an ned hi gh way sy stem wo uld typi ca lly invo lve nu m er ou s se par ate an d d is ti nct pro je ct s 

(t he F ed er al Aid H ig hw ay Act. as am ended (22 U.S.C. § 1 0 1 (a )) def ine s a pr oj ec t as “a n 

under ta kin g to const ru ct a part ic u la r po rtio n of a high way . . . A S ta te m ig ht tr y to 

av oid conflic t w ith th e S ta te an d Local Fisca l A ss ista nc e Act ’s pro sc ri pt io n of di sc ri m inat io n in th e us e of GR S fu nds by us in g no nr ev en ue sh ari ng fu nd s fo r th a t po rt io n of th e 

ro ad ro ute d th ro ugh th e m in ority co mmun ity an d re ve nu e sh ari ng fu nds fo r less contr over si al po rtio ns .

4

 Sta te m en t of E lm er B. S ta ats . Com pt ro ller G en er al of th e U ni te d Sta te s, in H ea ri ng s on

Rev en ue Sha ring Bef or e th e Su bc om m. on In te rg ove rn m en ta l Relation* of th e Sen at e

Com m, on G ov er nm en t Op eration* . 93d Con g. 2d Bess., pt. 1. a t 607 (19 741.

B F.S Co mm iss ion on Civil Rig ht s. Th e Fe de ral Ci vil Righ t* En forc em en t. E ffort — 137.J, 

vol. IV , To Pro vide F isca l Ass is ta nc e 97 (F ebru ar y 19 75 ).
151

Much of th e im po ss ib ility is du e to in flat io n an d to a re du ct io n in th e fu nding of o th er Fed er al pro gram s.* We believ e th a t th e m os t appro pri ate so lu tion wo uld be fo r th e legi slat io n re ne w in g th e ge ne ra l re ve nu e sh ari ng pr og ra m to ref lec t reco gn iti on of th e fung i- bilit.v of mon ey by pla ci ng th e enti re bu dg et s of re ci pi en t go ve rn m en ts under th e pro hi bi tion again st dis cr im in at io n. The re fo re , we reco mmen d th e follo wing la n­ gu ag e be su bst it ute d fo r th e cu rr en t Se ction 122(a ) of th e A c t: No perso n in th e U ni te d S ta te s sh al l on th e g ro unds of race, color, nat io nal origin, or sex be ex clud ed from part ic ip ati on in, be de nied th e be ne fits of, or be su bj ec ted to dis cr im in at io n under an y pr ogra m or ac tivity fu nd ed in who le or in p art by any re ci pi en t of fu nds mad e av ail able by Subtitle A.

SE CT IO N 1 2 2 ( B ) . C O M M EN T ON PROPOSED A M EN D M EN TS AN D RE CO MM EN DE D 

ALT ER NATI VE A M END M EN TS

Se cti on 12 2( b) of th e Act se ts fo rt h th e re sp on sibi lities an d auth ori ty of th e Sec re ta ry t o en fo rc e Se ctio n 122(a ). Th e d ra ft bil l prop os es th a t th e in troduct io n 

to th is Se cti on r ea d : A ut ho ri ty of t he Sec re ta ry .— W he ne ve r th e S ecre ta ry has reas on to b eli eve th a t a Sta te go ve rnmen t, or unit of loca l go ve rn m en t ha s fa iled to comp ly w ith su bs ec tio n (a ) o r an ap pl ic ab le re gu la tion , he sh al l no tif y th e Gov­ ern or of th e S ta te (o r in th e case of a u n it of loca l go ve rn m en t, th e Gov­ ern or of th e S ta te in which su ch u n it is lo ca te d) of su ch no nc om plian ce an d sh al l re qu es t th e G ov er no r to se cu re co mplian ce . If w ith in a re as on ab le pe riod of tim e a fte r su ch re qu es t, th e S ecre ta ry co nc lude s th a t th e Gov­ ern or ha s fa il ed or re fu se s to se cu re co mplianc e, th e Sec re ta ry is 

au th or iz ed . . . . T his in trod uc tion like th e in tr odu ct io n to th e cu rr en t Se ction 122(b )* 7 is ve ry 

wea k. It do es no t re qu ir e th e Sec re ta ry of th e T re asu ry to ta ke ac tio n if com­ pl ia nc e ca nn ot be ac hiev ed , but me rely auth ori ze s th e Sec re ta ry to do so. It is va gu e, per m itting ac tio n on ly if co mplian ce is no t ac hi ev ed “w ithin a re as on ab le 

pe riod o f ti m e. ” V ol un ta ry ac tion is no t suf ficien t. To il lu str ate , we no te a m ajo r in st an ce in which co mplian ce w ith Se cti on 122 (a ) w as no t ac hi ev ed an d th e Sec re ta ry of th e T re as ury did no t volu nta ri ly ta ke ac tion again st th e no nc om plying re ci pi ­ en t. In th is ca se, a F ed er al d is tr ic t court fo un d dis cr im in at io n in cert ain em ­ ploy m en t pr ac tice s of th e Ch icag o Po lic e D ep ar tm en t.8 * whic h w as rece iv ing ge nera l re ve nu e sh ar in g f un ds . It see me d cle ar from th e c o u rt ’s finding s th a t ge ner al re ve nu e fu nd s were be ing sjient in viol atio n of Se cti on 122(a ), bu t th e D epart ­ men t of th e T re as ury co nt in ue d to pr ov id e fu nd s to th e City of Chica go. The F ed er al d is tr ic t co urt in th e D is tr ic t of Colum bia ult im ate ly or de re d th e De­ par tm en t to de fe r funding.® To en su re th a t th e D ep ar tm en t of th e T re as ury ac ts to ob ta in co mplian ce w ith Se cti on 122(a ), Se cti on 12 2( b) sh ou ld be revi se d to re qu ir e th e Sec re ta ry to ta k e ac tion in th e ev en t of no nc om plian ce . Mo reo ver, it is e ss en tial th a t a tim e lim it b e se t fo r S ecre ta ri al ac tion f ol lowing a re qu es t fo r complian ce . W it hout tim e lim its th ere is a tend en cy to neg otiat e inde fin ite ly, es pe cially w ith re calc it ra n t re ci pie nts wh o ha ve no t st ate d a re fu sa l to come in to co mplian ce , but also ha ve no t ta ken ad eq uat e ac tion to co rr ec t non- complian ce . In de ed , pro tr acte d ne go tiat io ns fo r co mpl ianc e a re chara cte ri st ic of 

Fed er al ag en cy civil ri ghts pr og ra m s. 10 Th e re gu la tions im pl em en ting th e S ta te 

an d Lo cal Fi sc al Ass istanc e Act lim it th e tim e fo r se cu ri ng co mplianc e to GO 

da ys .11 If is. th er ef ore , reco mmen de d th a t th e ph ra se , “si xty day s” be su bst it ute d fo r th e phra se “r ea so na bl e pe riod of tim e” in Se cti on 122( b) . Th us , to e ns ur e th a t th e in tr oduct io n to Se ctio n 12 2( b) is bo th m an da to ry an d 

specific , i t sh ou ld b e w or de d :

» A ttac hm en t 1 to le tt e r fro m G ra ha m W. W at t. D irec to r. Office of Re venu e Sha ring . D ep ar tm en t of th e T re as ur y, to Jo hn A. Bu ggs, St af f D irec to r, U.S . Co mm iss ion on Civ il

R ig ht s, Ja n. 20. 1975.

7

 T he on ly ch an ge prop os ed in th e d ra ft hi ll from th e curr ent in tr oduction to Se ction 72 2( b) Is th a t In th e fi rs t se nt en ce th e prop osed se ction us es th e te rm “ ha s re as on to be lie ve .’’ while the c urr ent se ct io n us es th e te rm “d et er m in es ." "U nit ed S ta te s v. Ci ty of Ch ica go , Civ. No. 73 C 208 0, 8 E PD P ara . 978 5 (N.D. Ill. Nov. 7. 197 4) (I nte ri m O rd er ). * R ob inson v. Sh ul tz , Civ. No. 74—248 . (D.D.C . Dec. 19 74 ) (I nte ri m O rd er ).

’♦See, fo r ex am ple, Th e Fed er al Ci vil R ig hts E nf or ce m en t E ffort — 19 7} , Vol. III. To

Ens ur e Edu ca tio na l O pp or tu ni ty (J an u ary 19 75 ).

» 31 C.F .R. § 51.3 2(f ).
Aut ho rity of t he Sec re ta ry .— W he ne ve r th e Sec re ta ry has reas on to believe 

th a t a S ta te go ve rn m en t or unit of loca l go ve rn m en t has fa iled to com ply 

w ith su bs ec tio n (a ) o r an ap pl ic ab le re gu la tion , he sh al l not ify th e Govern or of th e S ta te (o r in th e ca se of a un it of loc al go ve rnmen t, th e Govern or of th e S ta te in w hi ch su ch unit is lo ca te d) of su ch no nc om plian ce an d 

sh al l requ es t th e Gov er no r to se cu re co mp lia nc e. If w ithi n si xt y da ys aft e r 

su ch requ es t, th e Sec re ta ry co nc lude s th a t th e Gov erno r ha s fa iled or refu se s to secu re co mplianc e, th e Sec re ta ry is re qu ired . . . .

The cu rr en t Se cti on 12 2( b) of th e Act goe s on to enum er at e th e ac tion s th e 

Sec re ta ry may ta ke i f co mplianc e is no t ac hiev ed . Th e Sec re ta ry is au th or iz ed :

(1 ) to re fe r th e m att er to th e Atto rn ey Gen eral w ith a reco mmen da tio n 

th a t an ap pro pri ate civi l ac tio n be in sti tu te d ; (2 ) to ex er ci se th e po wers 

an d fu nc tio ns pr ov id ed by T itle VI of th e Civ il R ig ht s Act of 1964 ( 42 U.S.C. 

2000d ) ; or (3 ) to ta ke su ch oth er ac tion as may be prov ided by law .

In th e d ra ft bill, th e po wers of th e Sec re ta ry in th e ev en t of no nc om plian ce ha ve 

been even mo re clo sel y en um er at ed . F or th e mo st part , th is en um er at io n could 

se rv e a us ef ul pu rpos e. F o r ex am ple, para gra ph 1 2 2 (b )( 2 ) of th e d ra ft bill 

which wo uld a uth or iz e th e S ec re ta ry

(2 ) to de fe r or w ith ho ld pa ym en t of en titlem en t fu nds w ith re sp ec t to 

su ch S ta te g ov ernm en t or unit of lo cal go ve rnmen t,

(i ) upon hi s det er m in at io n on th e reco rd , a ft e r no tic e an d op po rtun ity 

fo r he ar in g, th a t such S ta te go ve rn m en t or unit of loc al go ve rnmen t ha s 

fa iled to c omply w ith su bs ec tio n (a ) or an ap plic ab le re gu la tion : or

(i i) upo n hi s co nc lusio n th a t a Fed er al co urt or Fed er al ad m in is tr ati ve 

tr ib unal ha s foun d on th e reco rd , aft e r no tic e an d opp or tu ni ty fo r he ar in g, 

fa ct s wh ich dem onst ra te th a t a S ta te g ov ernm en t or unit of lo cal go ve rnmen t 

has fa iled to com ply w ith su bs ec tio n (a ) or an ap pl ic ab le re gu latio n.

The Office of Re ve nu e S har in g has been re lu cta nt to ex er ci se it s auth ori ty to 

de fe r fu nd s. Th e prop osed para g ra p h 1 2 2 (b )( 2 ) wo uld m ak e cl ea r th a t such a'fi 

au th o ri ty ex is ts an d wo uld be an im port an t am en dm en t to th e S ta te an d Local 

Fis ca l Assistanc e Act. We wo uld urge , ho wev er, th a t defe rr al of fu nd s be m an ­

da to ry . whe ne ve r a F ed er al co urt or Fed er al adm in is tr ati ve tr ib unal lia s mad e a 

fo rm al fin din g o f n on co mplian ce .

Mo reo ver, in de sc ribi ng th e Sec re ta ry 's po wer to def er fu nd s, th e d ra ft bill 

do es n ot st ate t h a t def er ra l sh ou ld ta ke plac e whe ne ve r it is cl ea r th a t a reci pi en t 

go ve rn m en t is in no nc om plianc e w ith Secti on 122(a ). as fo r ex am ple if a D epart ­

m en t of th e T re as ury in ves tigat iv e fin ding has reve aled no nc om plian ce, th e DeL

p art in ent of Ju st ic e has filed a la w su it alle gi ng di sc rim in at io n by a ge ne ral 

re ve nu e sh ar in g re ci pi en t, a S ta te co urt or hu m an ri ghts co mm iss ion ha s ma de 

a fin ding of di sc rim in at io n by a re ve nu e sh ari ng re ci pi en t, or a bri ef filed in a 

p ri vate su it se ts fo rt h a pr inia fa ci e ca se of di sc rim in at io n by a recipien t. WV> 

believe th a t th e Sec re ta ry curr entl y has th e ob lig ation to def er fu nd in g in such 

in stan ce s. Thi s shou ld lie m ad e cl ea r in th e revise d Ac t be ca us e it is lik ely th a t 

th e fa il ure to fu lly art ic u la te th is ob lig ation in th e am en de d Ac t wo uld be in te rpr et ed a s a lim itat io n on t he S ecre ta ry ’s powe rs.

In ad di tion , we ta ke is su e w ith th e remov al of specific re fe re nc e to Title VI 

fro m th e auth ori ty of th e Sec re ta ry of tlx1

 T re as ury . The ad m in is tr ati on’s 

An alyx ix, w hic h ac co mpa nies t he d ra ft bill, in di ca te s th a t th e rem ov al of ref eren ce 

to T itle VI wo uld he mad e be ca us e “C on gress di d no t in te nd ge ne ra l reve nu e 

sh ari ng to be a Title V I pro gr am pe r se.” Th e ar gum en t pre se nt ed in th e Analy&iit

is th a t “T itle VI de al s w ith th e pa ym en t of fin an cial as si st an ce by way of 

gra nt, loan, or c ontr ac t oth er th an a co nt ra ct of i nsu ra nc e or gu ar an te e. Re ve nu e 

sh ari ng pa ym en ts ar e no t w ithin an y of th es e ca te go ries .” ><

W e stro ng ly disa gr ee . Our vie w would ap pea r to be co rr ob or at ed by Fed er al 

ag en cy T it le V I re gu la tion s. The se reg ul atio ns , wh ich are s im il ar f or mo st Fed er al ’ 

ag en cies an d ha ve bee n ap pr ov ed by th e Pre si den t, defin e th e term “Fed er al 

fin an cial as si st ance” ve ry br oa dl y. F or ex am pl e, H EW ’s T itle VI re gu la tion s 

s ta te :

Th e te rm “F ed er al fina nc ial ass is ta nce ’’ in cl ud es (1 ) gra nts an d loan s 

of Fed er al fu nd s, (2 ) th e g ra n t or d on atio n of F ed era l pr op er ty an d in te re st s 

in pr op er ty (3 ) th e deta il of Fed er al pe rson ne l. (4 ) th e sa le an d le as e ofi. 

an d th e pe rm ission to use (on oth er th an a ca su al or tr an si en t basi s) , F eder al pr op er ty or an y in te re st in such pro per ty w ithou t co ns id er at io n or a t'a 

no minal co ns id er at ion, or a t a co ns id er at io n wh ich is redu ce d fo r th e p u rpose of as si st in g th e re ci pi en t, or in reco gn iti on of th e pu blic in te re st to ,b4 

se rv ed by such sa le o r le as e to th e reci pi en t, an d (5 ) any Fed er al ag reem en t.
153

arrangement or other contract which has as one of its purposes the provision

• of assistance. [Emphasis adde d.] 12

It would appear tha t the general revenue sharing program is a Federal “arrangement . . . which has as one of its purposes the provision of assistance” 

and would thus be a program of Federal financial assistance within the meaning 

of Title VI.

ORS also argues that general revenue sharing is not a Title VI program 

because

States and units of local government are automatically eligible for revenue 

sharing funds pursuant to Section 102 of the Act. There are no applications 

for State or local governments to fill out to the satisfaction of the Treasury 

Department in order to qualify for general revenue sharing funds.

This is not strictly speaking correct. Section 123 of the Act set forth a number 

of prequalification requirements.13 Before receiving revenue sharing funds, State 

and local governments must establish to the satisfaction of the Secretary tha t 

they will comply with those requirements. Moreover, it is noted that there are 

other Federal assistance programs in which recipient eligibility is determined 

by law and not by Federal review of recipient applications. Federal agency Title 

VI regulations make clear that these programs are covered by Title VI.14

At first glance, the removal of reference to Title VI in Section 122(b) might 

appear to be insignificant since the enumeration of the specific powers of the 

Secretary in the dra ft bill gives the Secretary essentially the same powers as 

those given by the State and Local Fiscal Assistance Act.13 Indeed, the enumeration serves to clarify the Secretary’s powers. Under the current Act these powers 

are largely given by implication only, as for example, by reference to the powers 

and functions of Title VI.

Nonetheless, it is our belief tha t the removal of reference to Title VI could 

be very detrimental to the enforcement of Section 122(a). We anticipate tha t 

such an omission would confirm the Office of Revenue Sharing's posture tha t 

its mandate to ensure compliance with the nondiscrimination provision does 

not require the same stringent enforcement as is required under Title VI. The 

Office of Revenue Sharing has frequently attempted to explain its failure to 

rigorously enforce the nondiscrimination provision by arguing tha t general 

revenue sharing is not a Title VI program. For example, as of late 1974 the Office 

of Revenue Sharing had not conducted any full-scale preaward and postaward 

civil rights compliance reviews unrelated to the receipt of complaints of discrimination and did not plan the systematic conduct of such reviews at any time 

in the near future. ORS apparently viewed tha t it would be inapplicable for 

these elements to be included in its program. It stated :

“Pre-award and post-award” compliance reviews are terms clearly belonging to Title VI grant agencies . . . the logic of these concepts has no application to General Revenue Sharing and is, in our judgment, a concept tha t 

attaches to the Title VI categorical grant programs.1*

The Commission believes that Title VI standards are entirely applicable to the 

general revenue sharing program. Although the State and Local Fiscal Assistance Act transferred much of the responsibility for expending these Federal 

funds from the Federal Government to States and local governments, this Commission believes that there is every indication that the Federal Government 

intended to retain full responsibility for ensuring civil rights compliance in 

the expenditure of these funds. We note tha t President Nixon, a proponent of 

the current general revenue sharing program stated :

The revenue sharing proposals I send to the Congress will include the

safeguards against discrimination that accompany all other Federal funds

allocated to the States. Neither the President nor the Congress nor the

12 45 C.F .R. § 80.1 3(f ). See also D ep ar tm en t of H ou sing an d U rb an Dev elop men t T itle 

VI re gu la tion s. 24 C.F .R. § 1.2 (e ).

13 F or ex am ple. S ta te an d lo ca l go ve rn m en ts m us t es ta bl is h to th e sa tisf ac ti on of th e 

Sec re ta ry th a t th ey will us e ge ne ra l re ve nu e sh ar in g fu nds w ithin a re as on ab le pe rio d of 

tim e, expend reve nu e sh ari n g fu nd s in ac co rd an ce w ith th eir own laws an d pr oc ed ur es , 

an d use fisc al an d audit in g pr oc ed ur es co nf or m in g to g ui de line s es ta bl ishe d by th e Sec re ta ry .

14 S uch pr og ra m s In clud e N at io nal F ore st Re ve nu e Shar in g (se e 7 C.F.R . § 15, App en ­

dix A) an d W ild lif e Re fuge Re venu e S har in g (se e 43 C.F.R. § 17, App en dix A).

15 U nd er bo th th e cu rr e n t Act an d th e d ra ft bill, th e Sec re ta ry is au th or iz ed , in th e 

ev en t of fa il ure to ac hiev e complianc e, to re fe r th e m a tt e r to th e A ttor ney G en er al fo r 

civil ac tion , de fe r th e pay m en t of enti tl em ent fu nd s, te rm in ate th e pa ym en ts of su ch 

fu nd s, or o rd er th eir re pa ym en t.

16 A ttac hm en t 2 to 197 5 W att l ett er, su pr a no te.
154

co ns cien ce of the N ation ca n per m it mo ney which come s fro m all of 

th e people to be us ed in a w ay which dis cr im in at es again st some of th e 

people .. . . [I ta li cs ad de d. ] *’

I t is im pe ra tive th a t th e legi slat io n rene wing th e gen er al re ve nu e sh ar in g pr ogr am m ak e cle ar th a t in th e en fo rc em en t of th e no nd is cr im in at io n pr ov ision th e 

Fed er al Gov ernm en t m us t a t a minim um up ho ld th e st an d ard s re qu ired by 

T itle VI. We, th er ef or e, reco mmen d th a t an y am en dm en t of Se ction 12 2(h) of 

th e Act co nt in ue to prov ide th e Sec re ta ry of th e T re as ury w ith th e auth ori za tion 

“to ex er ci se th e po wers an d fu nct io ns pr ov id ed by T it le VI of th e Civil R ig ht s 

Ac t of 1964."

SECTION 12 2. RECOMMENDATIONS FOR ADDITIONAL AMENDM ENTS ♦

The re are se ve ra l ad ditio ns whi ch we prop os e fo r th e d ra ft hill in ord er to 

st re ngt hen civ il right s en fo rc em en t un de r gen er al reve nu e sh ar in g. Th e Commi ssion fo un d th at th e co mplianc e pr og ra m of th e Office of Rev en ue Sha ring ha s 

been fun da m en ta lly in ad eq ua te .18 T he Com mi ssion re port ed t h a t : e

A bu nd an t ev iden ce in dic at es th a t dis cr im in at io n in th e em ploy men t pra ctice s an d in th e de liv ery of be ne fit s of S ta te an d loca l go ve rn m en t pr og ra m s 

is fa r- re ac hi ng , of te n ex te nd in g to act iv itie s fu nd ed by ge ne ra l reve nu e 

sh ar in g. No ne thele ss, OR S has one of th e mos t poorl y st af fe d an d fu nd ed 

civil ri ghts c om plian ce pro gra m s in th e Fed er al Gov ernm en t. More over, ORS 

ha s no t ta ken th e few ac tions po ssibl e w ithi n th e const ra in ts of its re ­

so ur ce s which wo uld ha ve m ad e it s civil ri ghts co mplianc e ef fo rt m ax im ally 

effecti ve .19

To remed y th is pro blem , we reco mmen d a m ar ked re st ru ctu ri ng of th e civ il 

ri ghts co mplianc e pr og ra m under gen er al reve nu e sh ar in g. Th e d ra ft bil l shou ld 

re quir e th e Sec re ta ry to de le ga te to oth er ag en cies such du ties as dat a an al ys is, 

co m pl ai nt in ve stig at io n, co mpl ianc e rev iews , an d ne go tiat io ns , mak in g cl ea r 

th a t th e Sec re ta ry of th e T re asu ry wi ll re ta in re sp on sibi lity fo r dra ft in g re gu la ­

tion s an d g uide lin es , an d ta kin g en fo rc em en t ac tio n.

To im plem en t th is ex pa nd ed pro gr am , th e Pre si den t sh ou ld re ques t from Con ­

gr es s fo r fiscal yea r 1976 an appro pri at io n of $7.5 mill ion to be us ed to prov ide 

a t le as t 300 ad di tiona l po sition s fo r th e civ il ri ghts co mplianc e pr og ra m und er 

ge ne ra l re ve nu e sh ar in g. The d ra ft bil l sh ou ld dir ec t the D ep ar tm en t of Ju stic e to ta ke th e lead in th e im m ed ia te de ve lopm en t of st andard s fo r a Go vernmen t-w ide civil right s co mplianc e pr og ra m unde r ge ne ra l re ve nu e sh ar in g. In 

part ic ula r, D OJ shou ld be re quir ed to review fo r ap pr ov al al l D ep ar tm en t of 

T re as ury civ il ri ghts re gu la tion s an d gu idel ines an d en su re th a t th ey set ap pr opri ate st an d ard s fo r th e co nd uc t of d ata co lle cti on , affirm ativ e ac tio n, comp lian ce rev iews , an d co m pl aint in ve st ig at io ns . DOJ sh ou ld also ov ersee th e de lega ­

tio n by OR S of its civ il ri ghts m on itor in g fu nc tion to oth er Fed er al agencie s, 

en su ri ng th a t de lega tio n of re sp on sibi lity is mad e by su bj ec t a re a : fo r exam ple, 

polic e dep ar tm en ts to th e La w Enf or ce m en t A ss ista nc e A dm in is trat io n of th e 

D ep ar tm en t of J us tic e, a nd hea lth pro gr am s to th e D ep ar tm en t of H ea lth , Edu ca ­

tio n, an d W elfa re . Th e ad ditio nal po sitio ns rec om men de d shou ld be allo ca ted „

am on g su ch ag en cies in or der to p ro vi de th e st af f ne ce ss ar y fo r th e as su m pt io n of 

th es e ad ditio nal resp on sibi lit ies.

Fin al ly , th e Comm ission reco gn izes th a t even if all of its re co mmen da tio ns 

co nc er ni ng th e en fo rc em en t of no n- di sc rim in at io n re qu irem en ts were inco rpora te d in to th e pro po sed ex tens io n of th e ac t. th er e st ill mig ht oc cu r ca ses of ille- „

gal di sc rim in at io n which wo uld es ca pe Fed er al de tect io n an d re ctificatio n. For 

th is reas on , th e Comm ission re it era te s th e reco m men da tio n it mad e five yea rs 

ago , na mely, th a t pri vate in div id ual s su bj ec ted to dis cr im in at io n shou ld be 

em po wered by th e ac t to in it ia te litigati on in Fed er al D is tr ic t Cou rt fo r ap pr op ri ate re lief , incl ud in g reco ve ry of tr eb le da mag es, fo r in te ntional no nc om plian ce 

w ith F edera l no nd iscr im in at io n re qu irem en ts. Thi s remed y wo uld be av ai la ble 

to th e vi ct im s of dis cr im in at io n who ha ve ex hau st ed av ai la bl e adm in is tr ati ve 

remed ies b ut w ho s ti ll h av e not o bt ai ned le ga l relie f.

17 Office of th e Fed er al Reg iste r, N ati onal Ar ch ives an d Re co rds Se rvice. Gen eral Se rv ­

ices A dm in is tr at io n. Pu blic Pap er s of th e P re si de nt . Richa rd Nix on , 197 1, Ann ua l Message 

to th e Co ng ress o n th e S ta te of t he U nion . Ja n . 22, 197 1, 50, 54 (1 97 2).

” T o Pro vide F isc al Ass is ta nc e, su pr a no te.

« Id . a t i.
SECTION 123(H ) (5 ) (D ). COMMENT ON PROPOSED AMENDMENT AND RECOMMENDED 

ALTERNATIVE AMENDM ENT

notw it hst andin g pa ra gr ap h U ). pr ov id e no tic e an d op po rt unity to th e re si ­

de nt s so th at th ey m ay giv e reco mmen da tio n* an d vi ew s on th e pr op os ed

ex pe nd iture s of all fu nd * mad e av ai la bl e un de r su btitle .4 in a pu blic he ar in g

or in suc h ot he r m an ne r a s th e se cr et ary m ay pr es cr ibe by re gu latio n ; The Co mm iss ion be lie ve s th a t th e am en dm en t re quir in g S ta te an d loc al gov­ er nm en ts to ho ld pu blic hea ri ng on prop os ed ex pen di tu re s or to see k th e vie w of local re si den ts in some oth er m an ner pr es cr ibed by th e T re asu ry re pre se nts an im pr ov em en t in th e ac t. The Co mm iss ion believes, ho we ve r, th at th e am en d­ men t could he st re ngth en ed an d it s eff ec tiv en ess in cr ea se d by ad ditio n of th e follo wing un de rlin ed p h ra se: “n otw ithst an din g para gra ph (4 ), pr ov id e no tic e an d op po rtun ity to th e re si den ts so th a t th ey ma y giv e re co m m en da tio ns an d 

vie ws on an on go ing basis th ro ug ho ut the de cision -m ak in g pro cess on th e pro ­

po sed ex pe ndi tu re s of all fu nd s m ad e av ai la ble unde r su btitle A in pu blic h ear­ ings or in such oth er m an ne r as th e Sec re ta ry may pr es cr ib e by re gu la tion

Mr. F lem min g. Some of the Com mission ’s concern with reve nue 

sh aring rel ate t o the equity of the present allo cation formu la and the 

m atter of census und erc ounts. Today, however. I will focus my te stimony on the presen t stat ut or y requirement ag ain st discrim ina tio n 

and its en forcem ent.

REQ U IR E M E N T OF N O N D IS CR IM IN A TIO N IN RE VEN UE SH A RIN G

Section 112(a ) of the St ate and Local Fiscal Assistan ce Ac t pr ovid es :

No pe rso n in th e T’ni te d S ta te s sh al l on th e gr ou nd s of race , color, nat io nal or ig in, or sex be ex clud ed fro m part ic ip ati on in. be de nied th e be ne fit s of, or be su bj ec t to dis cr im in at io n und er an y pr og ra m or act iv ity fu nd ed in who le or 

in p art w ith fu nd s m ad e av ai la bl e unde r (t h is a c t).

Th is cle ar an d unequivocal proh ibi tio n again st dis crimination in 

prog ram s or a cti vit ies fun ded un de r the g ene ral revenue sh arin g pr ogram reflects the legal and moral res ponsibility of the Fe de ral G ov ernment to insure equal op po rtu nity to all citizens. A ft er 3 y ea rs an d the disbursa l of billions of rev enu e-shar ing do llar s, however, it is ab un da ntly clea r t ha t the Federal Gov ernment has 

failed to effectively enfo rce section 112 (a) of the State and Local 

Fiscal Assistance Act and to the reb y fulfill its constitu tional ob lig ations.

D IS C R IM IN A T IO N IN PR OG RA MS AN D ACT IV IT IE S FU ND ED BY 

GE NE RA L RE VEN UE SH ARIN G

Tn t he re po rt “T o Provide Fisca l Assistanc e,” the Com mission conclud ed :

A bu nd an t ev iden ce in di ca te s th a t di sc rim in at io n in th e em ploy men t pra ct ic es an d de liv er y of be ne fit s of S ta te and loca l go ve rn m en ts is fa r reac hi ng , of te n 

ex te nd in g to p ro gra m s fu nd ed b y gen er al reve nu e sh ar in g.

Th e C ommission 's co nclusion has been verified subsequently thro ug h 

the research of othe r gov ern me nta l and priva te agencies th at have 

examined revenue sh aring funded program s and activ itie s in a nu mber of S tate an d local jur isd iction s.

The stu dy “Eq ual Opp or tu ni ty Un de r Gen eral Revenue Sh ar in g" 

pub lish ed un de r the sponsorship of the League o f Women Vo ter s E ducation Fu nd , th e National 1 rba n Coalit ion, the C ent er for Comm unity
156

Change, and the Center for National Policy Review; the report “Civil 

Rights Under General Revenue Sharing” prepared by the Center for 

National Policy Review under a National Science Foundation gra nt; 

and “the Case Studies of Revenue Sh aring in 26 Local Governments” 

prepared by the Comptroller General of the United States, all document widespread discrimination in programs funded by revenue sharing in direct violation of section 122(a).

ENFORCEMENT OF THE NONDISCRIM INATION REQUIREMENT *

Federal responsibility for insuring compliance with section 122(a) 

of the State and Local Fiscal Assistance Act is shared by the Dep artment of the Treasury and the Justice Department.

Although the Justice Department is authorized to bring suits to 4

enforce section 122, responsibility for the administrative enforcement of the nondiscrimination provision resides with the Treasury 

Department.

Rased upon the extensive analysis set out in “To Provide Fiscal Assistance,” the Commission concluded tha t administrative enforcement of the nondiscrimination requirement by the Department of the 

Treasury was negligible and ineffective.

The Department of the Treasury's administrative enforcement obligations with respect to section 122 fall into three main categories.

The act requires the Secretary of the Treasury to :

1. Prescribe such regulations as may be necessary or appropriate 

to carry out the provisions of the act.

2. Determine the compliance status of recipient governments with 

the act.

3. Secure voluntary compliance or impose sanctions to remedy violations of the nondiscrimination provision.

REGULATIONS

The importance of comprehensive and intelligible regulations, especially in the area of nondiscrimination, cannot be overemphasized.

As the Assistant Attorney General for Civil Rights noted:

Only when State and local agencies know what is expected of them, when they »

have a thorough understanding of what the Federal laws and the Constitution 

require, can they carry out the ir prop er role in the Federal system.

Lack of understanding appears especially prevalent among ORS’ 

smaller recipients. More than half of the 39,000 recipients of GRS num- «■

her 1,000 or fewer in population, and 80 percent of all GRS recipients

have populations of 2,500 or less.

It stands to reason tha t many of these smaller recipients in particular do not possess civil rig hts expertise because they may have had 

little or no previous Federal program experience and thus lack a functional knowledge of title VI of the Civil Rights Act of 1964 which 

prohibits discrimination in access to and provision of federally funded 

services.

Despite the obvious need for comprehensive and explicit regulations, 

the Commission found tha t;

The portion of ORS’ regulation relating to civil righ ts does not set forth in an 

adequate manner what is requ ired by ORS and recipient governm ents to insure 

nondiscrimination under the act.
157

While time does not permit a full critique of the regulations, a few 

of their more glaring shortcomings should be mentioned.

The regulations currently in effect do not provide detailed examples 

of what constitutes prohibited discrimination. They provide no meaningful guidance in the areas of employment or sex discrimination. 

While the Department’s latest set of proposed regulations published 

in the July 24, 1975, Federal Register offer greater guidance than in 

these areas, they, too, are inadequate. *

For example, the proposed regulations do not require conformity to 

EEO C's detailed guidelines on employment selection procedures. 

Likewise, while the proposed regulations state t ha t recipients are expected to conduct a self-evaluation of their employment procedures, 

they neither set out nor cite OFCC’s guidelines on self-evaluation 

which would assist recipients in complying with the Department’s 

expectations.

More fundamentally, the proposed guidelines do not require local 

governments to develop an affirmative action plan in conjunction with 

their self-evaluation to overcome the effects of past discrimination.

The latest proposed regulations contain more information on sex 

discrimination than the currently operative regulations. Nevertheless, 

they focus exclusively on sex discrimination in employment and fail 

to provide recipients with needed information as to how they can insure nondiscrimination on the basis of sex in the provision of services.

Finally neither the current nor the latest proposed regulations set 

out time limits for the accomplishment of each stage of enforcement 

activity. The absence of specified time limits generates uncertainty 

among recipients, protracts the enforcement process, and most importantly, denies the victim of prohibited discrimination the assurance of timely relief.

DET ERM IN ATIO N OF COM PL IA NCE STAT E'S

In ‘‘To Provide Fiscal Assistance*’ the Commission concluded th at 

ORS procedures for assuring itself of compliance by its recipients 

have been deficient. We found that in the first 20 months of ORS’ 

existence, compliance status with respect to the nondiscrimination provision of section 122 was determined largely on the basis of assurances, 

one-time compliance visits to about 100 recipients receiving the largest 

GRS payments, and complaint processing.

Concerning each of the prim ary means ORS relied upon to determine compliance, the Commission further noted:

The assu rances consist merely of a form statement signed by th e re cipients t ha t 

th at th ere will be compliance with the act. The questions asked on the compliance 

visits were superficial, rela ting prim arily to recip ients ’ capabilities for achieving 

compliance rather than the extent of compliance with the no ndiscrimination provision. For many months ORS made no special effort to inform the public how 

or where to file complaints a nd as of October 1974, ORS had received only 93 civil 

rig hts complaints. Although complaint volume is a poor indicator of civil righ ts 

compliance, ORS has cited the low volume of complaints a s evidence of compliance.

Moreover, ORS has been slow to resolve the complaints it receives and ORS 

app ears to have been willing to consider complaints as resolved without sufficient 

evidence tha t the violations uncovered have been corrected.

At the time of our study we found tha t ORS had not conducted a 

full-scale compliance review unrelated to a discrimination complaint

62 -3 31 — 7 • l i
15S

even though such reviews are one of the most effective means of determining the compliance status of jurisdictions under the act.

To date the Justice Department has conducted 26 compliance reviews of revenue sharin g recipients under the Attorney General's 

independent authority and 18 other reviews at the request of the Office of Revenue Sharing. To the best of our knowledge, however, ORS 

civil rights compliance staff has yet to conduct a single independent 

compliance review.

Rather than establish a vigorous independent compliance investigation program, the Office of Revenue Sharing has stressed its inten- ,

tion to rely prim arily on existing information resources to determine 

the compliance status of jurisdictions under the act.

Before discussing ORS’ use of existing information resources in its 

compliance program, I would like to briefly restate the Commission’s 4

basic position on this important subject,

As this committee knows, the Commission has consistently advocated and supported cooperation between governmental agencies 

charged with civil rights responsibilities to minimize confusion and 

duplication of efforts and to maximize enforcement effectiveness.

We fully recognize th at cooperation does not just happen and that 

it requires careful planning and administrative initiative. Most importantly, the Commission maintains tha t establishment of a cooperative 

enforcement program does not relieve an individual agency of the 

responsibility to effectively carry out its statutory obligations.

To determine the compliance status of S tate and local governments 

with the act, the Office of Revenue Sharing has made some effort to 

tap three existing sources of information :

(1) Audits of recipient governments made pursua nt to the ac t;

(2) State human rights agencies, and

(3) Other Federal agencies responsible for securing compliance with Title 

VI and Title VII of the Civil Rights Act of 1964. Careful ana lysis of ORS’ use of these information sources reveals a number 

of deficiencies—deficiencies which prevent the Secretary from adequately assessing the compliance sta tus of jurisdictio ns with the nondiscrimination requirement of the act.

AUDIT S

The State and Local Fiscal Assistance Act authorizes the Secretary 

of the Treasury to accept State audits of revenue sharing expenditures 

if he determines that, the audits and the procedures used in their preparation are sufficiently reliable to determine compliance with all re-- 

quirements of the act.

In October 1973 ORS published its A udit Guide and Standards for 

Revenue Sharing Recipients which contains seven questions pertaining to civil rights compliance. Our analysis of the Audit Guide 

revealed that it was inadequate for telling auditors, most of whom 

have not been train ed to detect the manifold forms of race and sex 

discrimination, how to make a meaningful determination of civil righ ts 

compliance.

Moreover, the Aud it Guide is inadequate for any systematic determination of possible noncompliance. Auditors are not directed to collect and review racial and ethnic data by sex of employees or the eligi-
159

ble and actual beneficiary population for programs and activities 

funded with GRS funds. Aside from the specific coverage of siting or 

facilities which is itself limited only to instances where siting is ob\ 1- 

ously discriminatory in effect, no specific inquiry is designed to deteimine actual compliance.

The inadequacy of the Audit Guide is only one of the defects in. 

ORS’ audit system. ORS permits the recipients’ chief executive officers, where audits disclose no instance of possible noncompliance, the 

option of either forwarding to ORS a copy of the audit report or 

signing and forwarding a statement tha t the audit has been completed and that it disclosed no instances of noncompliance.

Further, although ORS envisions a review of State audits from 

time to time as necessary to insure quality, such a control system has 

not been implemented to date.

STATE HU MA N RIGHTS AGENCIES

Subsequent to publication of “To Provide Fiscal Assistance,” ORS 

signed several agreements with State human rights agencies for the 

exchange of information relevant to discrimination in revenue-sharing 

programs.

While the Commission wholeheartedly supports such cooperation, 

we have no reason to challenge the finding of the National Center for 

Policy Reviews that little can be expected from the present ORS agreements in the way of realistic nondiscrimination enforcement.

Indeed the Center’s analysis of the negotiated agreements, ORS’ 

standards for selecting cooperating agencies, and the often limited 

statutory authority and resources of state human rights agencies pa rallels the information gathered by the Commission.

F eder al A g en cie s

DEPARTMENT OF JUS TIC E

Late last month the Office of Revenue Sharin g and the Civil Rights 

Division of the Justice Department signed a memorandum of understanding regarding coordination in the enforcement of the nondiscrimination provision of the State and Local Fiscal Assistance Act.

Although Commission staff has not completed an evaluation, a cursory examination reveals several apparent shortcomings. The agreement does not fully articu late:

1. W hat constitutes compliance with the act so that there is a uniform standard for State and local governments.

2. Standards for investigation so that in the event that ORS finds it 

necessary to refer a case to DO J for civil action, DO J will be able to 

rely upon the ORS investigation.

3. The circumstances which will lead ORS to refer to DO J the case 

of a noncomplying recipient instead of proceeding with administrative 

enforcement action.

After our detailed analysis of the memorandum of understanding 

has been completed, we will be ha ppy to provide a copv to this subcommittee.
160

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION

On October 11,1974, ORS and the Equal Employment Opportunity 

Commission entered into an agreement to establish a joint working 

relationship designed to enable both agencies to resolve complaints of 

employment discrimination against public employers and their contract ors.

The agreement provides the followin g:

EEOC’ will, upon request, furnish ORS any information obtained 

by EEOC pursuant to section 709(c) of the Civil Rights Act of 1964, 

as amended. EEOC will routinely furnish copies of letters of determination and 

■decisions involving employers in revenue-sharing activities to ORS. 4

Upon receipt of a letter of determination or a decision indicating 

tha t EEOC has found probable cause to believe that discrimination exists in a GRS-funded activity, the Director of ORS will proceed to 

seek to secure compliance, in accordance with OR S’ regulations.

In Jan uary of this year ORS and EEOC entered into a supplementarv agreement to conduct a broad scale analysis of EEOC data to detect potential violations of the act.

While the Commission believes that both agencies should be commended for the considerable efforts necessary to achieve these agreements, we must note a fundamental deficiency in the agreements—the 

absence of specific compliance and enforcement standards.

Title V I Agencies

Although a number of Federal agencies have civil rights responsibilities pursuant to title V I which parallel those of ORS, to date ORS 

has entered into a cooperative agreement with only one—the Department of Health, Education, and Welfare.

This agreement is deficient in that it does not address such fu ndamental issues as standards fo r compliance, scope and frequency of compliance reviews and methodology for complaint investigation. As a 

final comment on this subject, t would like to note th at until the cooperative agreements between ORS and other Federal agencies specifically address these fundamental issues, they cannot guarantee a re- *

duction in duplicative activity and a corresponding waste of tax dollars. and at the same time an effective enforcement of the civil rights 

protection provided by law.

EN FO RCEM EN T OF T IIE N O N D IS C R IM IN A TIO N REQ U IR EM EN T

The Secretary of the Treasury’s authority to enforce the nondiscrimination requirement of the State and Local Fiscal Assistance Act 

is set out in section 122(b) with which this subcommittee is familiar.

At the outset two points should be noted about section 122(b). First, 

Ibis section provides the Secretary with broad authority to enforce 

the nondiscrimination requirement, and second, it confers upon the 

Secretary broad discretion as to the manner in which the available 

enforcement powers shall be used. To date there is considerable evidence tha t this discretion has not been exercised so as to effectively 

obtain compliance with the act.
161

Th e Ro binson v. Shultz and the Un ite d States v. Ci ty of Chica go

litig at io n exem plifies OK S’ fa ilu re to exercise its discre tion and 

effectively enforc e the law. I would like to resta te the chronolo gy 

of e ven ts in th is case and at the same tim e note how the que stionable 

exercise o f dis cre tion a t c ritica l sta ges of t his case may be in dic ative of 

the Dep ar tm en t’s general enforceme nt appro ach.

In Septe mb er 1973, Rena ult Robinson , a black Chicag o police officer, 

th e Af ro-A me ric an Pa tro lm an 's Lea gue , and the NAACP filed a 

comp laint with the De pa rtm ent of th e Treas ur y all eging th at the 

Chica go Police De partm ent which received substan tia l rev enu e-shar ­

in g fund s—a pp rox im ate ly $70 mi llio n du ring calen dar ye ar 1973— 

was gu ilty of rac ially discrim inatory em ployment and pro mo tion 

policies an d practices.

Th e comp laint incl ude d reference to a recent Law En forcem en t 

Assistan ce Adm inist ratio n inv est iga tiv e find ings of employment dis ­

crim ina tio n in the Chicago Police De partm ent. Th e comp laint asked 

th e Secre tar y to conduct his own inv estig ati on to withh old fu ture 

rev enue-sh ari ng paymen ts. Rec ords in the case show th at OK S did 

conduct a civil rig hts inv est iga tio n follow ing r eceip t of the comp laint 

in October 1973 which revealed evidence of d isc rim ina tio n wi thin t he 

police de partm ent.

Despite O RS’ inves tigative find ings, the Se cre tar y did not officially 

determine the city of Chicago to be i n noncomp liance nor d id he n oti fy 

the Go ver nor of the ap pa rent violatio n.

In F eb ru ar y 1974, Mr. Robinso n, pla int iff, su ed the Se cre tar y of the 

Treasur y to compel ad ministrativ e enforcement of section 122. As a 

resu lt of the suit the U.S. Dist ric t Court for the D istric t o f Columbia 

rul ed in Apr il th at the Se cre tar y is un de r a no ndisc ret ion ary du ty to 

follow t he pro ced ures of section 122(b) of the act.

Bas ed upon ORS’ own inv est iga tiv e findin g of discrim ina tio n in 

the Chicago Police De partm ent, the cou rt ord ere d the Se cre tar y to 

no tif y the Gover nor of Ill inois of the Se cre tar y's determ ination of 

noncompliance.

It is notew ort hy th at a court orde r was nece ssary to compel the 

Se cretary to tak e the first step in the ad minist rativ e enforc ement 

process—notification of noncom plia nce —even tho ug h the Dep ar tmen t’s own inv est iga tion rev ealed non com pliance alm ost 6 mo nths 

previously.

Pu rs ua nt to the co urt's orde r, th e Secre tar y notified the Governor 

of I llino is and the m ayo r o f Chicago of his deter mi natio n of nonc ompliance. The city in tu rn denied th e cha rge s of dis criminatio n.

On May 29, 1974, the Secre tar y took the second step in the enforcement pro ces s: TTe determ ine d th at vo lunta ry com pliance could not 

be neg otiated and refer red the charg es to the Atto rney Gen eral pursu an t to section 12 2( b) (1 ). Tw o aspe cts of this act ion deserve 

comment.

Fir st , th e Se cre tar y’s de ter minati on th at vo luntary com pliance 

could no t be achieved was ma de in a tim ely mann er. T he D ep artm en t's 

regu latio ns pr ov id e:

If with in a reasonable tim e, no t to exceed 60 days, the Governor 

fai ls, o r refuses to secure com plia nce , t he Se cre tar y is au th or iz ed :
162

First. To refer the matter to the Attorney General of the United 

States with a recommendation that an appropriate civil action be 

institu ted ;

Second. To exercise the powers and functions and the administrative 

remedies provided by title VI of the Civil Rights Act of 1964; or to 

take such other action as may be authorized by law.

The Secretary’s timely action in the Chicago case contrasts sharply 

with a number of other instances where the Secretary has continued 

compliance negotiations without further enforcement action for up 

to 6 months afte r formal notification of noncompliance.

It may be significant that ORS ’ enforcement of the Chicago matter 

was the subject of a private suit whereas this has not been the case 

in most of the instances of protracted negotiations. Nevertheless, the 

Commission believes tha t compliance negotiations beyond 60 days 

violate the spirit if not the letter of the Department's regulations, and 

seriously erode the prohibition against discrimination.

The second significant aspect of the Secretary’s May 29 action concerns his election of enforcement procedures. While referral of the 

charge to the Attorney General temporarily fulfilled the Secretary’s 

statutory obligations, it nevertheless failed to provide those persons 

who complained of discrimination with immediate relief or any assurance that the Federal Government's next revenue sharing payment to 

the city would not be used to perpetuate further discrimination.

The ORS has taken the second step of enforcement in only two 

instances, Chicago and the State of Michigan, and in neither case has 

it elected to exercise its title VI authority to provide immediate relief 

through fund deferral.

As a result of the Secretary’s May 29 refusal, the United States, in 

an action already pending in Federal court, sought and obtained leave 

to amend its complaint which charged racial discrimination in the 

Chicago Police Department under civil rights statutes to include 

allegations th at the same conduct violated section 122(a).

Because the Justice Department did not seek injunctive relief with 

regard to the alleged revenue-sharing violation, ORS proceeded with 

its Ju lv payment to the city—a payment of approximately $17 million.

In November 1974, the Federal court in Chicago found that the city’s 

policies and practices with respect to the employment of patrol officers 

and the promotion of sergeants were racially and sexually discriminatory.

Despite this finding and despite the absence of a remedial court 

order agreed to by the city, ORS maintained that it had fulfilled its 

enforcement obligations and that it lacked authority to defer future 

revenue-sharing payments to the city.

To block the ORS from making a revenue-sharing payment of approximately $14 million to Chicago in January, Mr. Robinson and the 

other plaintiffs once again sought in the District of Columbia Federal 

Court an order directing the tem porary withholding of revenue-sharing pavments to the city. On December 1ft, 1974, request was granted, 

and U.S. District Court for the D istrict of Columbia enjoined the Secretary from making furth er payments until the “city of Chicago is subject. to a final order" and has formallv assured the Secretary tha t “it 

will comply to all respects with said order.”

The court further enjoined future revenue-sharing payments until 

the Secretary has “monitored the actual compliance of the city of Chicago with said final order and filed a report with this court which shows
163

tha t the city has taken adequate steps to comply with nondiscrimination requirements and what such steps are. T his order was subsequently reaffirmed this year. . . . The point of the Robinson litigation is clear: The Secretary has 

both the statu tory auth ority and the constitutional duty to withhold revenue-sharing payments to prevent prohibited discrimination. This 

point appears, however, to have been lost in the Department s latest 

set of proposed regulations relating to enforcement of section 122. The regulations, contrary to the court's April 1974 opinion, do not 

provide for deferral of revenue-sharing payments during a given 

entitlement period, pending an administrative hearing. Further, even where a Federal court has found discrimination in a 

GRS funded program, the regulations permit—not require—deferral of entitlement funds pending entry—not acceptance—of an affirmative 

action order only if : One. A violation o f the nondiscrimination provision of this support 

of the act, section 122 was alleged in the complaint before the court; Two. The court finds tha t the recipient government has violated the 

nondiscrimination provision of this subpart of the act; and Three. The question of withholding has not been resolved by the 

court. The latest proposed regulations do contain an enlarged section on assurances which ostensibly provide a means of dealing with jurisdic­ tions that are determined to be in noncompliance. According to ORS, 

this section together with ORS technical memorandum 75-4—which does not have the force of regulation or law—provides tha t once a jurisdiction is found in noncompliance, they will not be able to receive 

funds in the next entitlement period until they assure the Director 

of ORS : That the forthcoming entitlement period funds will be used in a 

manner which will not result in a violation t hat is similar to the violation tha t resulted from the use of previously received funds. The limitations and loopholes in this approach are obvious. At best, 

ORS could only defer funds of the next entitlement period. F unds to 

be disbursed durin g the entitlement period in which the noncompliance 

was determined could not be withheld. More significantly, the proposed approach does not guarantee that 

the noncompliance will be remedied before the funds for a future entitlement are approved. A jurisdiction with outstanding noncom­ pliance in one program —its police or fire department, for example— 

miffht propose to use future funds in another program area.

Tn doing so, the jurisdiction could honestly claim to have assured 

ORS that expenditure of the funds would not result in a violation th at 

is similar to the previous violation. As one person noted, this new approach merely compels jurisdictions to change horses on the merrv-goround of discrimination.

The Commission conclusions and recommendations:

It is clear that the current statutory prohibition against discrimination in the use of revenue-sharing funds and the enforcement of this 

law by the executive branch has been ineffective. The Commission believes, therefore, that as Congress takes up proposals to extend the 

revenue-sharing program it should consider additional legislation in 

the area of nondiscrimination. To this end, the Commission offers a 

number of recommendations:
164

One. Con gress shou ld expand the proh ibi tio n ag ain st discrim ina tio n 

to co ver all prog ram s a nd acti vitie s o f a reci pie nt juris dic tio n.

Th e Co mptrolle r Gen eral of th e Un ite d States an d nume rou s civil 

righ ts grou ps have testified to th e need fo r such exp ans ion to overcome the pro blem of fu ng ib ili ty ; th at is, tra cing the use an d actua l 

effect of rev enue-sh ari ng money. Ab sen t such an exp ans ion , ne ith er 

Congress no r the Am erican peo ple can be sure th at rev enue-sh aring 

money is no t bein g used to subsidize race, na tio na l origi n, an d sex 

discr imina tio n.

Two. Congress sho uld amend th e law to req uir e th e de ferral or 

wi thho lding of revenue sh aring fund s to preven t th ei r use in a dis ­

crim inator y prog ram or activity.

Our rec ommenda tion in th is m at te r follows a series of Supre me 

Co urt decisions beginn ing w ith B olli ng v. Sh ar pe which hold th at the 

power an d resources of the Fe de ra l Go vernm ent can not be used to 

su pp or t unconstituti onal activities .

Th is recommendation is consistent wi th the Ro bin so n case. The 

Commission mainta ins th at the refere nce to title V I in th e cu rre nt 

St ate and Loc al Fis cal Assistance Ac t pro vid es th e Se cretary of the 

Treas ur y wi th th e au thor ity to de fer paym ent or rev enue-sh aring 

fund s in the case of actual or t hrea tene d non com pliance wi th t he act.

Because t he Secretary ha s not exercised this dis creti on ary autho rity, 

the law sho uld be am ended to prov ide f or m an da tory d eferral.

Thr ee. Congress should pro vid e a pr ivate ri ght of legal act ion in ­

clu din g an aw ard of att orney fees to enforce the proh ibition ag ain st 

dis crimination.

Th e Com mission main tai ns th at th e Fe de ral Go vernm ent is responsible fo r insu rin g th at its revenu es do no t subsidize discrim ination. Nevertheless we believe th at an agg rieved indiv idu al must have 

an op po rtun ity to secure rel ief in tho se instances whe re the Go ver nment fail s to ca rry o ut its obligation s.

We f urther no te th at statute s which include a provisio n fo r the p ayme nt of legal fees have sti mula ted effective ad minist rativ e enforc eme nt of va rio us Federa l laws.

Th e C yommission recognizes th at these leg islative reco mm end atio ns 

would be imp lem ented in the no nd isc rim ina tio n section of H .R . 8329, 

a bill pro posed by Re prese nta tive Drina n of th is subcommittee. Our 

staff is cu rren tly pr ep ar ing an analy sis o f the no ndisc rim ina tio n sectio n o f this bill fo r th e Comm issio n’s con sidera tion.

As soon as t hi s ana lysis is co mplete d, I would like to subm it it to the 

subc omm ittee .

Mr. E dwards. Th an k you. Mr. Fle mm ing . I t will be received.

Mr. F lem min g. Th an k you.

[See pa ge 269 for inf orma tio n referre d to.]

Mr. E dwards. Mr. Drin an ?

Mr Drin an. T ha nk y ou very much, Mr. Ch air ma n, and th an k you. 

Mr. Flem ming. Be ing p erso nal fo r a mom ent, you saved the very best 

of yo ur rec om menda tion s fo r the las t. I commend you on yo ur sta tement. It is one of the best we have had in these pro ceeding s.

Th ere are several things on w hich I wa nt to elab ora te, but one fu nd ame nta l que stio n is, it seems to me, do yo u th in k th at the Con gress in ­

ten ded the Office of Revenue Sh ar in g to have dif fer ent obl iga tions at 

all un de r the Civil Ri gh ts Act th an an y othe r agency th at we have 

cre ate d ?
165

Mr. Flemming. We do not think tha t Congress intended tha t it 

should work out that way.

Mr. Drinan. Does the Commission believe tha t the limitations presently found in title V I, which go directly only to the funded activity, 

impose, by implication, a restriction against our broadening the revenue sharing provisions to all activities (

Mr. F lemming. No.

Mr. Drinan. Thank you.

Do you have any thoughts about the automatic deferral a fter 60 days 

of negotiation ?

That is one of the points in my bill on which apparently the Commission has difficulty. You see, Doctor, we are so interested in everything the Commission states tha t I read your first version. You raise 

a question here about my bill, II.R. 8329; namely, the effect of this provision for mandatory deferral of revenue sharing.

I give you the opportunity to elaborate on whatever misgivings you 

might have.

Mr. Flemming. First of all I would not want to suggest tha t the 

Commission as a commission has misgivings. Some of the issues are 

subissues tha t are raised in this pa rticular provision in your bill, have 

not actually been discussed by the full Commission.

I try to make sure tha t when I app ear before a committee tha t I am 

presenting the views of the full Commission.

It is clear tha t our Commission, on the basis of previous reports, 

dix^s sup port mandatory deferral of revenue sharing funds pending 

an administrative hearing to determine whether they are being used 

in a discriminatory program or activity thereby preventing the use 

of Federal revenue sharin g funds in support of such program or 

activity.

The kind of questions we would want to take a look at are: One, 

whether general revenue sharing funds should be withheld for 120 

days pending start of a hearing for discriminatory violations in programs or activities not funded by general revenue sharing.

Second, whether there is a constitutional issue or whether a Federal 

court would uphold mandatory automatic deferral absent a showing 

that discrimination was present in all programs and activities subject 

to the deferral. Pending the completion of the analysis of those issues 

and one or two others, the Commission believes tha t deferral should 

be mandatory only when the noncompliance occurs in a revenue s haring program.

That is as far as we have gone up to the present time. Back in 1971 

when the Commission first looked into this, it said the sanction of cutting off all revenue sharing funds from a State in the case of discrimination in a single program or activity probably would be too drastic.

But I do not submit tha t as a position of the present Commission 

because we have not had the opportunity of addressing ourselves to 

it. We will do it as a commission. We will report back to you.

Mr. Drinan. I know that the Commission submitted comments on 

the ORS proposed nondiscrimination regulations which I think they 

put forth in .Tune or July . Have you heard back from them as to any 

inclusion of the recommendations or any possible discussion?

Mr. F lemming. We have not.

Mr. Drinan. As you know, the ORS suggested 2 years ago, and 

keeps suggesting, that it has complaint oriented enforcement proc-
166

esses. Would you elaborate a bit more on that than is contained in your 

paper or is contained in the two studies ?

Mr. F lemming. This is an issue th at confronts us every time we get 

into oversight investigations and consideration of oversight reports. 

Our feeling is this: That we are not dealing with an eithe r/or type of 

situation.

We are dealing with a both/and type of situation. When citizens file 

complaints those complaints should be considered, should be processed 

and should be processed expeditiously and vigorously.

But in addition to that nothing should stand in the way of taking 

an overall look at how a particular jurisdiction is dealing with the 

issue of nondiscrimination, whether we are talking about fair housing, 

employment, or in this case, whether we are talking about general 

revenue sharing.

I am out of sympathy with those who try to say this is an eith er/or 

issue. Both types of activity have got to be carried forward and carried 

forward vigorously.

Mr. Drinan. I have included religion as the basis of discrimination 

in my bill. That is not contained, as T recall, in title VI, but it is contained in several Federal civil rights statutes. Would you or would 

the Commission have any thoughts on that ?

Mr. F lemming. We would favor the inclusion of religion.

Mr. Drinan. Thank you very much.

My time has expired.

Mr. E dwards. The gentleman from New York. Air. Badillo.

Mr. B adillo. Dr. Flemming, T want to commend you for your statement and you and the Commission for the two reports that you have 

issued. I hope that every Member of Congress has read them because 

the recommendations are very important. I hope, too. tha t the Treasury Department has read them. Has there been any action taken by the 

Treasury Department on the recommendations that you made in either 

one of the two reports ?

Mr. F lemming. In my direct testimony we did note a certain amount 

of activity following the issuance of our reports. But as you recall, we 

do not feel that the steps that have been taken are adequate.

Air. Badillo. They have not taken any action either on the comments 

tha t you made to the proposed regulations ?

Air. Flemming. As far as we know, they have not. There has been 

no contact with us on those matters.

Mr. B adillo. Overall, if you had the authority to pass upon the proposed regulations, would you reject them as being adequate ?

Air. F lemming. In their present fo rm ; yes.

Air. Badillo. I want to clarify recommendation No. 2 that you make 

tha t the law should be amended to provide for mandatory deferral. 

Exactly at what point would the mandatory deferral take place?

Air. F lemming. Air. Lyons?

Air. Lyons. Tha t would follow a finding of noncompliance. Fol ­

lowing that, a period in which it was further determined that the 

jurisdiction would not voluntarily come into compliance, for instance, 

of 60 days tha t the current regulations provide as a general guide.

Air. Badillo. Who would do the finding of noncompliance? AVe had 

testimony yesterday about the Boston case where there actually was a 

district court decision that Boston was in violation of the law.
167

Th en th at was app ealed to t he co ur t of appeal s a nd the a pp eals h ave 

held . T her e was an appea l in th e S uprem e C ourt. Th e Office of Revenue 

Sh ar in g felt th at the y were no t n ece ssa rily b ound by a co urt decision.

Mr. Drina n. Th e U.S . Suprem e Co urt den ied review in Ju ne of 

th is yea r, so it is final.

Mr. Badillo. I am only po in tin g out th at it can ha pp en th at the 

appeal process may tak e several yea rs. A t wh at p oint shou ld we m andate in the law t hat the re sh ould be a final d ete rm ina tio n?

Mr. F lem min g. I t is a very i nterestin g question. I assum e t hat wh at 

lies b ack of yo ur question is the question of wh eth er or not it sho uld 

be ma ndate d, let's say. af te r a findin g by a U.S. Distri ct Co urt.

He re you hav e to weig h the righ ts th at people hav e to appeal 

un de r------

Mr. Badillo. Ord inarily whe n you hav e a finding, th at findin g 

sta nd s un til a rev ersal, if ever. AVhat we are ta lk in g about here is 

th at yea rs can interv ene a nd a lmost any lawy er can d efe r a m atter for 

several yea rs.

Mr. F lem min g. Our objectiv e and your o bjective is the same, namely, 

to get th is imp lem ented as quickl y as possible. I wou ld lik e t o th ink a 

lit tle bit about th at pa rti cu la r q ues tion and su pp ly an answer. I would 

like our ge neral counsel to ta ke a look at this.

Mr. Badillo. The p roposed regu lat ions m erely say that in th e event 

there is a co urt decision th at th en th e OR S will review th e whole 

m atter and th ey may take action.

Th e pro posed reg ula tions do n’t even bind the Office of Revenue 

Sh ar in g when the re is a co urt decision.

Mr. F lem min g. We took issue w ith th at p art of t he reg ula tio n. I will 

insert at th is po int in the record ou r com men t on th at specific regu lation.

[The m ate ria l refer red to fo llo ws:]

E xcerpt From Comments of the U.S. Commiss ion on Civil Righ ts on the

ORS P roposed Nondiscrimin ation Regulations (S ee Federal Register of

J uly 24, 1975)

K. Procedure for effecting compliance

Section 51.59 of the proposal sets out ORS’ procedures for effecting compliance. 

Our principal objections to this proposal ar e: (1) it makes no provision for 

deferra l of fund ing in connection with adm inistrative enforcement of the nondiscrimination requirement of th e Act. although a Federal court h as affirmed this 

power;*0

 (2) the provision for deferral in connection with court proceedings 

makes defer ral discretion ary rather tha n mandatory and autom atic; and (3) 

unw arranted limitations are imposed on the exercise of this defer ral power. This 

Commission has previously detailed these and other objections for the Office of 

Revenue Sharing.’1

 Because we adhere to them after reconsidering section 51.59 

in conjunction with the other amendments proposed in July 1975,32 we incorpor ate by reference in this submission a copy of our earlier comments, which are 

enclosed as Atta chment E, and again invite your attention to them.33

3,1 R obins on v. Shu ltz, Ord er of A pril 14, 197 4, C.A. No. 72 -2 48 (D .D .C .).

31 L et te r fro m Jo hn A. Buggs . Staff D irec to r, U.S. Co mmiss ion on Ci vil R ig ht s, to 

G ra ha m W. W att , Direc to r, Office of Re ve nu e Sha ring , D ep ar tm en t of th e T re as ur y, 

Mar. 17, 1975.

32 The in vit ati on to co mment on th e re gula tion prop osed in Ju ly 197 5 su gg es te d such 

re co nsi der at io n of th e po rt io n co nta in in g pr oc ed ur e fo r effecting co mplianc e. 40 Fed. Reg.

30974 (J uly 24,1 975).

33 The firs t am on g ou r ob je ct io ns of M ar ch 197 5. th a t th e th en -p ro po se d section 

5 1 .3 2 (f )( 1 ) om itte d th e phra se “t o ta ke su ch oth er ac tion as m ay be au th or iz ed by la w ” 

from th e list in g of th e po we rs of th e Sec re ta ry fo r de al in g w it h no nc om plianc e, ap pe ar s 

to ha ve been ac te d up on . See se ct io n 5 1 .5 9 (a )( 3 ) of th e pre se nt pr op os al. The re m ai nd er 

of o ur obj ec tion s ar e st il l pe rt in en t.
168

Attachment E

March 17, 1975.

Mr. Graham W. Watt,

Director, Office of Revenue Sharing, Department of the Treasury,

Washington, D.C.

Dear Mr. Watt: The following comments pertain to the Departm ent of the 

Treasur y's proposed amendments to section 51.32(f) of the regulations contained in Par t 51 of Subtitle B of Title 31, Code of Federal Regulations, which 

became effective April 5, 1973. The proposed amendments concern the Dep artment's enforcement of the non-discrimination provision contained in Section 

122 (a) of the State and Local Fiscal Assistance Act of 1972.

As you know, the Commission recently released Volume IV of the Federal 

Civil Rights Enforcement Effort—1974, “To Provide Fiscal Assistance.” This 

rep ort and “Making Civil Rig hts Sense Out of Revenue Sharing Dollars” form 

the basis for our comments here.

We have concluded in “To Provide Fiscal Assistance” th at ORS’s civil righ ts 

compliance program has been fund ame ntally inadequate. Abundant evidence 

indicates that discrimination in the employment practices and in the delivery 

of benefits of State and local government programs is far-reaching, often extending to activities funded by general revenue sharing. Nonetheless, ORS has one 

of the most poorly staffed and funded civil rights compliance programs in the 

Federal Government. Moreover, ORS has not taken the few a ctions possible within 

the cons traints of its resources which would have made its civil r igh ts compliance 

effort maximally effective.

As the following specific comments make clear, the Commission does not believe 

th at the proposed amendm ents to section 51.32(f) are adequate to insu re effective 

enforcem ent of the prohibition against discriminatio n in programs partially or 

completely funded by revenue sha ring money. The Commission, therefore, urges 

th at the proposed amendments not he adopted but rather be revised furth er in 

accordance with our comments an d criticisms.

A copy of both reports are enclosed along with our comments. If you wish to 

clarify any ma tte r in our comments or the repo rts, please call Bud Blakey 

(254-6620).

Sincerely,

John A. Buggs,

Staff Director.

OBJECTION TO PROPOSED REGULATION SECTION 5 1 .3 2 (f) (1 )

Section 122(b) of the Sta te and Local Fiscal Assistance Act provides the 

Secretary of the Treasury with the legal autho rity necessary to effectuate 

compliance with the non-discrim ination provision contained in Section 122(a) 

of the Act. Section 122(b) reads in par t: the Secretary is authorized (1) to 

refer the ma tter to the Attorney General with a recommendation that an appropriat e civil action he insti tuted; (2) to exercise the powers and functions 

provided by Title VI of the Civil Righ ts Act of 1964 (42 U.S.C. 2000d) ; or (3) 

to take such other action as may be provided by law.

Section 51.32(f) (1) of the curre nt regulation mirrors the act and provides in 

pertinent pa rt that the Secretary is authorized: (i) To refer the ma tter to the 

Attorney General of the United States with a recommendation th at an appropriat e civil action be insti tuted; (ii) to exercise the powers and functions and 

the adm inistra tive remedies provided by T itle VI of the Civil Rights Act of 1964 

(42 U.S.C. 2000d) ; or (iii) to take such other action as may be autho rized by law.

The Commission objects to the proposed regulation 51.32 (f)(1) because it 

elim inates reference to the Secreta ry's authority to “take such other action as 

may l»e provided by law” to secure compliance with Section 122(a) of the act. 

This omission is inexcusable. The proposed regulations like the curre nt regulations must reflect the full range of autho rity provided to the Secretary by the 

Act. Just, as an executive officer cann ot app ropriate powers th at were not delegated to him or her by Congress, nei the r can an executive officer abandon those 

powers which Congress has seen fit to delegate.

OBJE CTION TO PROPOSED REGULATIO N SECTION 5 1 .3 2 (f) (1 ) (IB

(ii) To ini tia te an adm inistrative hearing pursu ant to the powers and functions provided by Title VI of the Civil Righ ts Act of 1964 (42 U.S.C. 2000d). An 

order of an adm inistrative law judg e to withhold temporarily, to repay, or to 

forfe it entitlement funds, will not become effective unti l:
(A) There has been an express finding on tlie record, af ter notice and opportunity for hearing of a failu re by the recipient government to comply with a

requirement of this section. (B) At least 10 days have elapsed from tlie date of the order of the adminis­ tra tiv e law judge. During this jieriod, add itional efforts will be made to assis t the recipient government in complying with this regulation and in taking appropriat e corrective action. (C) Thirty days have elapsed after the Secretary has filed witli the Committee on Government Operations of the House of Representatives and the Committee on Finance of the Senate a full writte n report of the circumstances and the grounds for such action. The time lim itations of sub paragraph s (B) and (C) 

can run concurrently. (D) Tlie Secretary has notified the recipient government tha t, in addition to whatever sanctions have been imposed by the administrative law judge, the Office of Revenue Sha ring will withhold payment of all entitlement fund s until such time as tlie recipient government complies with tlie orde r of the adm ini strative law judge. Further, tlie amount of the forfeiture or repayment of entitlement funds, if 

any, will lie lim ited to the program or activity in which the noncompliance lias been found. Such fund s sha ll be collected by a downward adjustment to fu ture entitlement paym ents and will be deposited in the general fund of tlie Tre asury. If the Secretary determines th at adjus tment to future entitlem ent payments is impracticable, lie may ref er the ma tte r to the Attorney General for app ropriate civil action to requ ire repa yment of such amount to the United States. The Commission objects to the proposed regulation section 51.32(f) (1) (ii ) because it conta ins no provision for the Secretary to exercise his Title VI 

autho rity to temporarily withhold or defer revenue sharing payments pending completion of the administrative hearing procedures specified under Title VI. Tlie Commission views tlie absence of provisions for fund deferral in this section of the proposed regulation as especially grievous given the fact that a Fed era l court has alread y repudiated tlie position taken by ORS officials that they lack the sta tutory autho rity to defer funds prior to completing the administrativ e procedures specified in Title VI. One of the cen tral issues in the case of Robinson v. Sch ultz concerned the 

autho rity of tlie Secretary to defer reven ue sharing payments. Plaintiffs in the case sought to have ORS defer furth er reven ue sha ring paym ents to the City of Chicago after the ORS. thro ugh its own investiga tion, found evidence of dis­ crim ination within the Chicago Police Departm ent, th e principa l recipient agency of the city’s revenue sha ring allocation. In support of their position, plaintiffs cited legal precedent for the def erral of Fed eral assistance prior to completion of Title VI adm inistrative proceedings. The Dire ctor of the ORS responded th at he was not authorized by law to defer funds and th at revenue sharing differed from other programs of financial assistance where defer ral by Federal agencies

had been approved by the courts. On April 4, 1974, tlie court ruled in favor of the plaintiff's claim and declared that “Section 122(b) (2) of tlie State and Local Fiscal Assistance Act, 31 U.S.C. § 1242(b) (2), confers upon the Secretary of the Tre asury the power to defer payment of fede ral revenue sharing funds pursu ant to a formal administrative hearing as provided by Title VI of the Civil Righ ts Act of 1964, 42 U.S.C. 

§ 20 00d-l.” 1

The fac t that the proposed regu lations ignore the autho rity of the Secretary to defe r funds is made all-tlie-more inexplicable by the fact th at the Directo r of ORS in the Robinson proceeding cited the existing regulations as proscribing deferra l. Now th at the sta tutory autho rity of the Secretary to defer funds has been affirmed through federa l adjudica tion, the Office of Revenue Sharing bears a responsibility to enac t regulations which provide for the exercise of th at power. The importance of the power to defe r revenue sharing funds prior to comple­ tion of the Title VI adm inistrative procedures cann ot be overemphasized. The deferral power has been used by other Federal agencies to effectuate timely compliance with nond iscrimination sta tutes and to prevent the furth er expendi­ ture of federal monies in violatio n of those statutes. In thi s regard, it is especially notew orthy th at the Assistant Attorney General of the United States for Civil Rights suggested th at the ORS modify its regu lations to provide for the exercise of the deferral power. On March 30, 1973, Mr. Pottin ger wrote to OR S:

1

 Ro binson v. Sc hu lty , Order of April 4,1974, C.A. No. 74-24 8 (D.D.C .l.
170

“A prov isi on in Se cti on 51 .3 2( f) (1 ) al lo w in g th e Sec re ta ry to in it ia te e nf or ce ­

m en t proc ee ding s in ca se of th re ate ned no nc om plian ce , as we ll as past or pre se nt 

no nc om plian ce. ma y be he lpfu l. Su ch a pr ov ision is sta n d ard in Title VI re gula ­

tio ns . A prov isi on per m it ti ng d efe rr al of p ay m en ts p en di ng a hea ri ng suc h as th a t 

ex ercise d by ag en cies under T it le VI, may be ap pro pri at e. Su ch a d efe rr al ne ed 

no t const itute a fo rf eit ure , an d ma y be m ad e su bje ct to tli e type of lim it ati ons 

im po sed on th e Co mmiss ione r of E duc at io n unde r T it le VI 42 U.S.C. 2000 d-5.” 2

We co nc ur w ith th e A ss is ta nt A tto rn ey G en er al 's su gg es tio n th a t th e re gula ­

tion s shou ld pr ov id e fo r th e in it ia ti on of en fo rc em en t proc ee ding s “in ca se of 

th re at en ed no nc om plian ce, as w ell as pas t or pre se nt n on co mpl ianc e.”

Fin al ly , th e Co mm iss ion belie ves th a t Se ction 51 .3 2( f) (1 ) (i i) sh ou ld sp ec ify 

th e ki nd s of ev iden ce of no nc om pl ianc e (in ad di tion to th e ev iden ce pr ov id ed 

fo r by th e un du ly re st ri cti ve s et o f ci rc um st an ce s ou tlin ed in th e prop osed Se ctio n 

51 .3 2( f) (2 )) which w a rr a n t th e Sec re ta ry ’s us e of T itle VI en fo rc em en t po wers. 

Ev iden ce of di sc rim in at io n in a pr og ra m part ia ll y or co mplete ly fu nd ed by 

re ve nu e sh ar in g money as de m onst ra te d by an y of th e follo wing shou ld tr ig ger 

im m ed ia te def er ra l an d in it ia ti on of a dm in is tr ati ve proc ee ding s by th e Sec re ta ry .

* a fin din g of no nc om plianc e ba se d up on an in ves tigat io n by th e D epar tm en t 

of th e T re as ury .

* a fin din g of di sc rim in at io n ba se d up on an in ves tiga tion or adm in is tr ati ve 

heari ng b y an y oth er F edera l agency.

* a la w su it filed by th e D epar tm en t of Ju st ic e alle gi ng di sc rim in at io n.

* a fin din g by sta te court or hu m an ri ghts co mm iss ion of di sc rim in at io n.

* a la w su it file d by a pri v ate p art y which se ts fo rt h a pr im a fa ci e ca se of 

di sc rim in at io n.

OBJECTION TO PROPOSED REGULATIO N SECTION 5 1 .3 2 (F )( 2 )

(2 ) Th e Sec re ta ry may im m ed ia te ly def er th e pa ym en t of en titlem en t fu nds 

to a re ci pi en t go ve rn m en t pe nd ing th e entr y of an af firm ativ e ac tio n ord er by a 

Fed er al co ur t.

The Co mm ission ur ge s OR S to re vi se th e la ng ua ge o f th is prop osed ru le so th a t 

it re ad s: “T he Sec re ta ry sh al l (r a th e r th an 'm ay ') im m ed ia te ly de fe r th e pay ­

m en t of en titlem en t fu nd s. . . .” As we ha ve a rg ued else whe re , th e F if th Amen dm en t of th e C on stitut io n cl ea rly pr os cr ib es Fed er al su pport of di sc rim in at io n. 

The re fo re , F ed er al officia ls mus t, w he re re as on ab le pe rs on s wo uld ag re e th a t 

no nd is cr im in at io n pr ov isio ns wo uld mos t lik ely be vi ol ated if th e fu nds w er e 

pr ov ided , de cline to all oca te such fu nds unti l th e m att er of no nc om plian ce is 

reso lved . (See The Fed er al Civi l R ig hts Enf or ce m en t E ff ort — 19 H, Vol. IV. To

Pro vi de F isc al A ss is ta nc e S8 (F eb ru ary 19 75 ).)

OBJECTION TO PROPOSED REGULATIO N SECTION 51.3 2 (F ) (2 ) (I ) & (I I)

(i ) a vi ol atio n of th e non di sc rim in at io n prov ision of th is Secti on or th e Ac t 

(S ec tion 122) was a lle ge d in th e co m pl aint b efor e th e c o u rt:

(i i) th e co ur t finds th a t th e re ci pi en t go ve rn m en t has vi ol ated th e no ndis cr im in at io n pr ov ision of th is Se cti on of th e A c t;

Ther e is li tt le pe rs ua sive reas on to re quir e th a t a vi ol at io n of Se cti on 122 

of th e S ta te an d Local Fi sc al A ss ista nc e Ac t of 1972 (h ere aft er Re ve nu e Shar in g 

A ct ) be all eg ed in a co m pl ai nt be fore th e co ur t. If a vi ol at io n of som e oth er civil 

ri g h ts law is all eg ed which , if true , wo uld also co nst it ute a vi ol atio n of th e 

Rev en ue Sha ring Act. th en d efe rr al wo uld be appro pri ate wh en th e Sec re ta ry 

de te rm in es th a t ge ne ra l re ve nu e sh ar in g (G RS) fu nd s w er e used in the pr og ra m 

or ac ti vit y un de r qu estio n. An audit wo uld re ad ily reve al w het her GRS fu nds 

a re invo lved. Th e co nd uc t of an audit , need no t aw ait th e final ou tco me of co urt 

proc ee ding s. F urt her, if an au d it show s th a t GR S fu nd s ha ve been or are being 

sp en t in th e su bj ec t pr og ra m or ac tivity, def er ra l ac tion need no t be po stpo ne d 

until ex pr es s fin din gs of a F edera l court a re iss ue d.

OBJE CTION TO PROPOSED REGULATION SECTION 51.3 2 ( F) (2 ) (I II )

(i ii ) The qu es tio n of d efe rr al ha s no t bee n co ns idered by th e co ur t.

We ob ject to th is p a rt of th e prop osed ru le wh ich wo uld ci rc um sc rib e ORS ’s 

au th o ri ty to de fe r fu nds whe n th e qu es tio n of defe rr al is ra is ed in co ur t, ex ce pt

* t r o m J ; S ta nle y P ott ln g er. A ssi st ant A ttorn ey Gen eral. Ci vil Rig ht s Divisi on

to Mr. G ra ha m W. W at t, D irec to r, Office of Re ve nu e Sha ring , M arch 30, 1973.
171

whe n th e co ur t ex pr es sly ord ers OKS to defe r fu nd s. M an y ci rc um st an ce s could ari se in co ur t pr oc ee di ng s to whi ch OR S co uld po in t as ca us e, ho wev er un re as on­ ab le, fo r re fu si ng to defe r fu nd s. D ef en dan ts co uld vir tu all y ra is e th e issu e in o rd er to av oid th e remed y. In su it s to which OKS is no t a part y, th e co urt could ho ld th a t def er ra l is appro pri ate or re qu ired , but co uld no t ord er OKS to def er fu nd s. In su it s to which OK S is a par ty , th e co urt co uld co ns id er def er ra l an ap p ro p ri ate remed v but de cide to leav e ac tion to ORS's di sc re tion . In th es e an d oth er in st an ce s, OR S could re fu se to def er fu nds sol ely on th e gr ou nd s th a t th e qu es tion was co ns id er ed by th e co ur t, de sp ite pr ef er en ce s ex pr es se d by th e co ur t. 

OBJ EC TI ON TO PR OP OS ED RE GU LA TION SE CT IO N 5 1 . 3 2 ( F ) ( 3 )

Th e Co mm iss ion ob je ct s to pr op os ed re gu la tion Se cti on 51 .3 2( f) (3 ). Th e Sectio n is as f oll ow s: (3 ) N ot hi ng in th es e re gula ti ons is in te nded to pr ec lu de th e U ni te d Sta te s, in a civil ac tion in it ia te d by t h e A tto rn ey G en er al of th e U ni te d S ta te s pu rs u an t to Se ction 12 2( c) of th e Ac t, fr om se ek in g or a co urt from g ra nti ng an ord er to re quir e th e re pa ym en t of fu nds pr ev io us ly pai d under th is Act, or ord er in g th a t th e pa ym en t of fu nd s under th is Ac t be te rm in ate d or def er re d. In ad di tion , th e S ecr et ar y may in it ia te th e pro ce du re pr ov id ed fo r in para gra ph ( f )(1 ) (i i) of th is Se cti on again st a re ci pie nt go ve rn m en t which ha s been na m ed as a de fe nd ­ a n t in s uc h a civil ac tion if i t is th e Sec re ta ry ’s ju dg m en t, a ft e r co nsu ltat io n w ith th e A ttor ne y Gen eral, th a t an adm in is tr ati ve w ithh ol di ng o f en ti tl em en t fu nds is an a ppro pri ate m ea su re to e nsu re co mpl ianc e w ith th is Se cti on . In it s no tic e of prop os ed ru le s, OKS st ate s th a t th e pu rp os e of th is su bpara ­ gr ap h is t o : , . . m ak e cle ar th a t if (lie A ttor ney G en er al has in it ia te d a civi l ac tion again st a re ci pi en t go ve rn m en t und er Se cti on 12 2(c) of th e Re venu e S har­ ing Act. it is no t re qu ired th a t th e Sec re ta ry (o f th e T re asu ry ) also in it ia te an 

ad m in is tr ati v e enf or ce m en t ac tion . The Co mm ission ob je ct s to th e prop os ed re gu la tion Se ctio n be ca us e it mak es th e im m ed ia te d efe rr al of f unds a dis cr et io nar y m att er whe n th e re ci pi en t go ve rn ­ men t ha s been na med as a defe ndant in a civ il ac tion filed by th e Atto rn ey Gen­ era l p urs uant to Se ction 12 2( c) of th e Act. The Co mm iss ion be lie ve s th a t im ­ m ed ia te d efe rr al sh ou ld be impo se d wh en th ere is leg al ev iden ce o f no nc om plian ce . R ath er th an pr ov id in g a ju st if ic at io n fo r co nt in ui ng re ve nu e sh ari ng pa ym en ts, th e fa ct th a t th e A tto rn ey G en er al has file d su it un de r th e Ac t on ly un de rs co re s 

th e nee d fo r im m ed ia te d efe rr al.

Mr. Badillo. The question is what is a final determination which would mandate the Federal funds? No. 1, is it when there is a separate case brought in the court and No. 2, is it when a case is brought for review in the administrative agency? You have the question of time. In some of the cases brought to our attention it was indicated tha t some cases had been pending for 29 months. You can prolong these 

matters simply by not taking up the case. There are legal matters, especially in criminal trials. We are now getting to the point where we mandate certain district attorneys to try cases within 60 days or dismiss the case because we have found tha t 

they have kept defendants in jail for a year or more. We agree with your recommendation, but what specific statements would you make in terms of a final determination and when it should 

be binding?

Dr. F lemming. We will supply that.

Mr. E dwards. Your additional information. Mr. Flemming, will be 

made a part of the record.

[See p. 269.]

Mr. Butler?

Mr. Butler. Thank you, Mr. Chairman. Mr. Secretary, I am sorry to be late here but I had read your testi­ mony, your unexpurgated edition, so I did not feel too neglected. I did get the benefit of Mr. Drinan’s questioning. Heretofore he lias asked a question and left before we could get the answer. I don’t think 

I missed too much there.
172

I think I am p retty well aware of vonr positions. There are only 

two or three areas that concern us. It is the responsibility of your 

Commission to ferret out discrimination wherever it exists and suggest th e most ap propriate way to eliminate it.

Certainly you have been true to tha t. But in your efforts to suggest 

tha t we expand the prohibition against discrimination to cover all 

programs and activities, do you also consider the cost factors that 

might be involved in terms of auditing this to assure compliance?

The thing tha t concerns me is there are not resources enough to 

reaud it every activity of every local government. We are going to »

wind up, in effect, discriminating on those ones we zero in on and 

whether they are in compliance or noncompliance, if they are subject 

to careful review, it is a pretty expensive procedure. I wonder if you 

would explore that aspect of it. *

Mr. F eemming. Conugressman Butler, I am happy to respond to 

that. I feel that as a nation we are at a point now where we are operating under many potentially effective laws in the civil rights area passed 

by the Congress, and many decisions rendered by the courts in the same 

area. W e are being put to the test of whether or not we can implement I

constitutional provisions, laws passed by the Congress, and decisions 

rendered by the courts in such a manner as to convince minorities and 

women that rhetoric can be translated into action.

I appreciate the fact tha t recommendations we make from time to 

time, as a result of our oversight responsibility, do raise difficult 

problems in the field of administration, including the question of cost.

But personally, I feel th at as a nation, we have got to make it clear 

to members of minority groups tha t we are going to give the enforcement of the constitutional rights of our people the highest priority.

I do not believe that we should fail to implement a program that 

we know would have a good chance of getting results as far as today’s 

minorities and older persons are concerned because of the administrative difficulties involved o r because of the cost involved.

I think, we should always be conscious of the question of cost and 

as we consider, let’s say, two or three alternative approaches. If we 

feel that we can achieve our goal by takin g approach A which will cost 

less than B and C, we should recommend course A, but only if we are 

convinced th at course A will achieve the objective and not 10 or 15 ,

years from now. We are just completing an oversight report on the implementation of title \ I which we will be publishing and sending to 

the President and the Congress w ithin a period of the next 6 weeks 

or so. ,

Ao we have worked on tha t report, I have become very much aware 

of the fact that, from an administrative point of view, we are not as 

committed as we should be to enforcing the rights of today’s members 

of minority groups and women. So I recognize the validity of your 

point but I still feel that there is not anything tha t this Government 

does that should be given a higher p riority than demonstrating to our 

people that a constitutional provision is something more than a piece 

of paper.
173

Mr. Butler. It is fair to say that really you have not explored 

that aspect of it? You don't consider th at really your responsibility?

Mr. Flemming. We try to act—when we make recommendations 

of an administrative natu re or of a legislative nature, we try to 

act in a responsible manner. As I say, we often have before us 

two or three proposals and if we are convinced tha t one proposal will 

do the job and maybe cost less than the others we will recommend 

the one that costs less provided we are convinced that it will do the job.

Mr. Butler. Apropos to your basic suggestion tha t prohibition 

against discrimination should cover all programs, would you expand 

that to all Federal programs other than revenue sharing programs?

Why stop at revenue sharing? Why not take every cent? Why not 

extend it to highways or food stamps ?

Mr. F lemming. Our basic position is t hat Federal funds should not 

be used for purposes of discrim inating and denying constitutional 

rights. I am willing-----

Mr. Butler. I sympathize with that.

Mr. F leming. I am perfectly willing to take that basic principle 

and say it should be applied to all programs. As a Federal Government we should not stand by and permit Federal funds to be used for 

the purpose of perpetuating discriminatory practices.

The cost factor is relevant to this discussion. I f the law if left as it 

is, the tracin g of these funds is a costly operation. Whereas, if the 

Congress says to the States and local governments, look, if you are 

practicing discrimination in the operation of the State government or 

local government in connection with any programs financed with Fed ­

eral funds then you come under the jurisdiction of the enforcement 

provisions of the general revenue sharing it could cost less from the 

standpoint of administrative expenditures.

Mr. Butler. Mv time has expired.

Mr. E dwards. The committee will recess at this time for 10 minutes. 

We, have a vote.

[Voting recess.]

Mr. E dwards. The subcommittee will come to order. I recognize Ms. 

McNair.

Ms. McNair. Chairman Flemming, one of the things of course th at 

ORS has pointed out to us continually is t hat they have entered cooperation agreements with the Justice Department, E EOC, and HEW . 

One of the Commission’s recommendations goes far beyond tha t sort 

of coordination agreement and in fact suggests that ORS should delegate its enforcement responsibilities, at least investigatory responsibilities, to other ongoing agencies, tha t ORS should retain simply the 

policymaking kind of role.

Is th at the Commission’s position to date ?

Mr. Flemming. Yes, and considering the present law, we feel tha t 

Treasury could step up its enforcement activity by utilizing that kind 

of an approach. In other words, they would delegate authority to act 

to the other departments in such matters as making investigations, 

subject of course to thei r policy determinations and also clearly sub62 -3 31 — 7! 12
174

ject to possible audit on their part to determine whether or not the 

agencies to which they delegated auth ority are really conforming to 

their policies.

Ms. McNair. One of the suggestions that we have been hearing is 

tha t possibly, if we are going to leave the policymaking role still with 

the Treasury, we should consider, because Treasury has been so bankrupt in their enforcement role, that we ought to consider a total transferal to the Justice Department.

Has the Commission made any assessment with respect to that type 

of recommendation and in making that sort of assessment, have you 

considered whether Justice has been vigorous in assuming its current 

responsibilities under section 122 ?

Mr. F lemmino. As I indicated in response to another question, the 

Commission right now is in the middle of developing an oversight 

report on title VI. The issue of where responsibility for coordination 

and direction of title V I enforcement should be placed is an issue tha t 

is being considered by the Commission. We are considering various 

alternatives. We will reach a conclusion as to the alternative tha t we 

prefer in our report. As I indicated tha t report will probably be tran smitted to the President and the Congress within a period of the next G 

weeks.

Relating this to general revenue sharing, I am pretty sure I reflect 

the views of my colleagues on the Commission when I say we think 

tha t it makes good sense to pin responsibility for coordination and 

direction of all aspects of title VI, including general revenue sharing, 

at one point in the Government. At this time I am not in a position 

to present the Commission's view as to where we think responsibility 

should be fixed.

But we are going to make a definite recommendation on that in our 

title VI record report.

Ms. McNair. That will be a coordination recommendation ?

Mr. F lemming. I used the word coordination and direction. There is 

some dispute as to whether or not the Executive order Justice is operating under at the present time in connection with title VI gives them 

authority beyond coordination to the point where they could and should 

direct other departments and agencies to take certain steps.

We feel tha t probably the existing Executive order does provide 

Justice with authority beyond that of coordination. But we are not 

going to get effective implementation of title VI and general revenue 

sharing in our judgment, unless responsibility for direction is fixed at 

one point in the Government.

Ms. McNair. Thank you. Dr. Flemming.

Mr. E dwards. The gentleman from Ohio, Mr. Kindness.

Mr. Kindness. Thank you, Mr. Chairman.

Mr. Secretary, the references to constitutional obligations with respect to the expenditure of revenue sharing funds are interesting to 

me because I am not exactly sure tha t I understand the way in which 

those words are meant in your testimony. I would appreciate it if you 

would elucidate on this question.

It occurs to me and to many people today tha t there may very well 

lie discrimination in the tax structure under which these revenues are 

raised, out of which revenue sh aring funds are provided to local and 

State governments. It is a kind of de facto discrimination tha t may 

exist.
175

Has the Commission ever looked into that aspect of discrimination 

in the revenue sharin g program then at all ?

Mr. Flemming. No, we have not.

Mr. Kindness. That has not really been a part of the charge of the 

Commission up to this point ?

Mr. Flemming. That is correct.

Mr. Kindness. But with respect to the constitutional obligations— 

I threw tha t other one in so you would have a little time to prepare.

Mr. F lemming. I think 1 know what you are referring to there and 

I would be glad to get back to that part of your question.

Mr. Kindness. In the absence of statutory provisions such as the 

nondiscrimination provisions in the revenue sharing law, would there 

be in your view a duty on the part of the Federal Government to enforce constitutional rights of individuals through revenue sharing 

or a program such as that, or any other Federal grant program?

Mr. F lemming. I have identified the portion of my testimony which 

I think deals with the issue tha t you have raised. 1 would be very glad 

to amplify it.

It is in connection with our discussion of the Chicago case. On 

page 18 we make this comment:

Th e po int of th e Ro bins on liti gati on is d e a r. T he Sec re ta ry has bo th th e 

st atu to ry au th o ri ty an d th e co nst it uti onal duty to w ith ho ld re ve nu e sh ari ng 

pa ym en ts to pr ev en t pr ohib ited di sc rim in at io n. T hi s poin t ap pea rs , ho wev er, to 

ha ve been lo st in th e depart m ent’s la te st se t of prop os ed re gula tion s re la ti ng to 

en fo rc em en t of the 122.

Th e re gu la tion s, contr ary to th e co u rt ’s April 1974 op inion do not pr ov id e fo r 

def er ra l of reve nu e sh ari ng pa ym en ts duri ng a give n en ti tl em ent pe rio d, pen di ng 

an a dm in is tr ati ve h ea ring .

There is reference to the constitutional duty, but another part of 

the testimony refers to what I believe is a basic principle, namely th at 

the Federal Government has the constitutional obligation to make sure 

that Federal funds are not used for the purpose of denying persons 

their rights under the Constitution.

Mr. Kindness. That was my understanding of your statement earlier and I wondered if we could refine that point a little bit. That is 

far different from the recommendation or the effect of the recommendation of providing by statute that there must be purity in all programs involving Federal funds in order for general revenue sharing 

funds not to be deferred, to use the general revenue sharing program 

as the means for, in effect, an overall civil rights act. Would you care 

to comment on the difference there?

The Chicago case, it seems to me, refers to a situation in which it 

was found that general revenue sharing moneys were used in a discriminatory manner directly thus giving a clear statutory basis for 

the decision.

The constitutional aspect of it was thrown in, I think, sort of g ratuitously and I have not developed an understanding of how that ties 

directly in the absence of statutory provisions. But if we went beyond 

that with revenue sharin g being expanded, so to speak, as a means 

for enforcement of civil rights, would there be that constitutional duty 

without the statutory provisions?

I take it there would not be. At least there would be no reason to 

expand the statute if th at were the case.

Mr. F lemming. Well, let's start with the assumption, of course, that 

State and local government officials, like Federal officials, have the 

obligation to protect the constitutional rights of the persons within 

their respective jurisdictions.
17G

Then let’s move from there to the question of a presumption relative to unconstitutional activities on the part of State and local governments when it comes to protecting these rights.

You are re ferring specifically to our first recommendation that Congress should expand the prohibition against discrimination to cover 

all programs and activities of a recipient jurisdiction.

Congress having decided to take Federal revenues and distribute 

them to the States and local governments could—with the understanding that State and local governments can use these funds in any 

way they so desire, could very well, it seems to us, take the position 

tha t if the State or local jurisdiction is following discriminatory 

practices, this would raise a question as to whether or not revenue 

sharing funds were being used in such a manner as to support discrimination.

Wo pointed out tha t the Comptroller General of the United States 

as well as civil rights groups have suggested the need for such an expansion to overcome the problem of fungibilitv, that is tracing the use 

and actual effect of revenue sharing moneys.

Having determined that the State and local jurisdictions are receiving general revenue sharing funds which they can distribute in any 

way they want, when you come to enforcing the law, how do you then 

identify areas where the revenue sharing funds are actually being 

used ?

Tha t is one of the questions raised by Congressman Drina n’s amendment concerning which I indicated to him tha t the Commission was 

giving consideration. I indicated tha t afte r giving it further consideration, we would like to supplement our comments for the record.

I have no difficulty, in view of the nature of the general revenue 

sharing, with concluding that if there is discrimination being practiced within a State or local government, that the State or local government should be subject to having its use of the general revenue 

sharin g funds questioned and looked at.

Mr. Kindness. My time has expired. Maybe my question was not 

very clear. Perha ps I will have an opportunity to try again.

Mr. Edwards. The time of the gentleman has expired.

We have another witness this morning, so I will respectfully suggest we move along as best we can.

Mr. Klee?

Mr. Klee. Thank you, Mr. Chairman.

Earlier, the gentleman from New York raised the problem and 

advocated tha t the Office of Revenue Sharing should mandatorily 

defer funds upon the finding by a Federal district court of discrimination.

Chairman Flemming, presumably the Federal district court in its 

equitable powers chose not to impose the remedy of deferral.

Presumably the plaintiffs in the case did not ask for tha t remedy 

and it again was not given. Essentially we have a situation where a 

court, and the plaintiffs in its wisdom have not sought a method of relief. Yet the program being advocated and the remedy you are advocating is on a finding of discrimination, the Office of Revenue Shar-
177

ing be mandated without safeguards of its own administrative hearing, mandated to defer funds. '

Mr. Drinan. Will the gentleman yield? This involves the Boston

ease. The plaintiffs did not ask for that relief because the Government 

said that it would dispute them on relief. They wanted to prove tha t there was discrimination. I don't think you can generalize tha t the failure to request deferral did not indicate a wish or an intent to do so or the possibility tha t the judge would 

order it. . .

The case involved the State civil service commission. I don’t think 

you can generalize from this instance.

Mr. Klee. Could you comment?

Mr. F lemming. 1 am not personally familiar with the Boston case. 

If you would like to have me comment furt her on th e Boston case—• 

if you would like that, I will be glad to do so for the record.

Mr. K lee. If the court does not impose the relief and if a plaintiff 

does not request it, why should the Office of Revenue Sharing be man­ dated to do it without the procedural safeguards in an administrative 

context ?

Mr. F lemming. Well-----

Mr. Klee. If you would like to submit it for the record, fine.

Mr. Flemming [continuing]. The “if ” parts of tha t question are 

parts I would like to take a look at before responding to the latter p art 

of vour question.

Air. Badillo. When you answer th at question, the basic point is, at 

what point can there be a finding which ends the review process? In other words, is that it, or then do we go to another hearing ? T hat is the 

real issue.

Mr. F lemming. I agree with the Congressman. In other words, when 

we have a finding of fact that there is discrimination, then where do we go from there as far as our procedures are concerned? Tha t is really—again, I go back to the fact that that is the basic issue that the 

Commission is addressing itself to.

Mr. K lee. I have one other question. Should the Office of Revenue Sharing have the discretion to take into account the costs and benefits involved in determining whether to defer funds? The example I am thinking of is where we have one isolated incidence of discrimination 

and where the damage from deferring funds can be immense. I posed a hypothetical yesterday of an employment suit brought against a sanitation department in New York City for discriminatory •employment, and the consequences of tha t under the proposed legis­ lation *is that all funds to New York City in the revenue sharing program would be deferred. Do you feel tha t discretion at some point should be placed in the 

judge to enable him to say that the deferral-----

Mr. Flemming. You pose the question and say there is one case of 

discrimination. I assume th at you feel tha t th at is not accompanied by 

a pattern of discrimination.

Mr. Klee. Well, even if there is a pattern, should someone balance 

the cost and harms involved? Should the impact on a city be taken into 

account in deciding whether to terminate funds?
178

Mr. F lemming. In my judgment, that discretion should not be there 

because I think such discretion could be used for the purpose of undermining the constitutional rights of the individuals involved.

I recognize that you have raised a very basic issue as far as sanctions 

are concerned. It is involved in title VI. as i t is in other laws. I t is 

included in the Older Americans Act.

The question is whether or not Government should step in and deny 

certain benefits io persons because of the failure of officeholders to 

live up to constitutional provisions. Some suggest tha t the penalty 

ought to be applied to the officials involved.

As far as the Civil Rights Commission is concerned, it has consistently supported the kind of sanctions that are in title VI. That is really 

the kind of sanctions we are talking about at the present time.

I recognize the validity of the argument tha t this may result in innocent parties being hurt as a result of the application of such a sanction. 

My judgment, is that if the parties involved came to the place where 

they concluded th at the Federal Government really meant business 

and that it was going to hold up funds or withdraw funds until the 

situation had been corrected, not very many people would suffer as a 

result of that because the various officeholders would get into line and 

would realize that the Government really meant business.

Mr. Klee. That is the chance tha t is taken.

Mr. Chairman, my time has expired. I have no further questions.

Mr. E dwards. Are there further questions of these witnesses?

Mr. Drinan, Mr. Chairman, may I suggest that counsel is posing a 

false dilemma ? To go back to the Boston case, if those charged with 

discrimination had followed the District Court and had given the 

relief requested, they could have appealed. They might have been 

vindicated and nothing would have been lost. The white firefighters 

would have been reinstated to their positions if tha t was necessary.

I thin k he is posing a false dilemma: tha t either the city comes to a 

screeching ha lt or we enforce the law.

Mr. F lemming. T hat applies to the whole title VI philosophy and I 

certainly agree with you that they can go ahead and comply and then 

if they feel that they are the victims of an u nfa ir decision, appeal.

Air. Drinan. In the Commission’s opinion, has the Department of 

Justice adequately fulfilled its responsibilities under the nondiscrimination clause of the Revenue Sharing Act?

Mr. Flemming. We do not believe tha t it has.

Air. Drinan. Has the Commission made any assessment of the 

Department’s coordination efforts with ORS pursuant to Executive 

Order No. 11764?

Air. F lemming. I will supply the answer to that question for the 

record.

Air. Drinan. Thank you very much.

I yield back to the Chairman.

Air. E dwards. Yes.

Gentlemen, I do not really think the problem of fungibility has 

been documented for this committee. I do know that it is a real problem, 

but perhaps for the record, some specific examples of where this has 

taken place to the detriment of the program could be supplied.
179

That wou ld be a pp recia ted .

Mr. F lemming. Th e Co mptrolle r G eneral's repo rt addresses its elf to 

somo ex ten t to th at.

Mr. E dwards. In too general a way to s up po rt s uch a drastic rem edy 

as is suggested in yo ur No. 1 rec om me ndation and by the ( omptr oller Gen eral. That is a most string en t rem edy and ra th er difficult 

to enact in a leg islati ve body.

Mr. F lem ming. A s 1 un de rst an d it, Mr. Ch airm an , you wou ld like 

to have us supply an y ad ditio na l in-dep th evidence po intin g to the

♦ difficulties th at have been enc ountered?

Mr. E dwards. Ye s; evidence th at involves the docto rin g of books 

an d it involves pe rh ap s dishones ty in th e mu nic ipa lities , a for m of 

deception, any way . We have no t ha d har d evidence to the effect t hat 

‘ th is is taki ng place. In most of the juris dictions th at mem bers of th is subcom mittee 

kno w abo ut, revenue sh ar in g money is allocate d publicly and every 

nickel o f i t is p oin ted o ut by local governm ent as go ing to a p ar ticu la r 

plac e.

Mr. Butler. Mr. Ch air man ?

Mr. E dwards. Yes.

Mr. Butler. W hen you supply th at inform ation, w ould you s up ply 

me a copy ?

Mr. F lemming. We will be ha pp y to. Do you wan t any ad ditio na l 

inform ation on the constituti onal issue or leg al pro ble m th at is involved in thi s also?

Mr. E dwards. I hav e n o pro blem with th at.

Mr. F lem ming. So wha t you are askin g us is, if we have, or if we 

have access to, specific cases where th is issue has re all y c omplic ated the 

enforcem ent of the act? We can all th in k of hy po theti cal situatio ns.

Mr. E dwards. Per ha ps the Ge neral Ac countin g Office, Dr . Fl em ­

ming, has some examples. Otherwis e, they wou ld no t have m ade th at 

recom mendatio n.

Mr. F lemming. W e will be ha pp y to go to th e Ge ner al Ac cou nting 

Office. W e would be very ha pp y to pr obe the m at te r s till fu rthe r fro m 

the sta nd po int of the use of our own resources.

Mr. E dwards. I am not suggest ing a major pr ojec t bu t it wou ld be 

► he lpfu l if we could fin d one or t wo examples of where th is h as tak en

place.

Mr. Kin dness?

Mr. K indness. One othe r th in g con cerns me, Mr. Fle mm ing . Le t

• me pre fac e my question by sayin g th at theoretic all y, based on th e 

philo sophy that, h as been expressed here, a c ou rt might reach the conclusion th at a local gov ern me nta l un it could be forced to tak e reve nue 

sh arin g moneys even thou gh i t i nitia lly refu sed them and the n enforce 

th e statutor y pro vis ion s with respec t to nondisc rim ina tion.

I am wo ndering—my question is in t he o pin ion of the c onjm ission, 

can the rejection of revenue s ha rin g fund s be c onsidered as a discrim ­

in ator y act in its elf so as to then give rise to th at decision of a court, 

th at dis cri mi natio n w ar ra nt s the requir em ent th at they accept general 

revenu e sha rin g f unds?

Mr. F lemming. I would not th in k th at th at wo uld o r sho uld au tomatically follow. I can th in k of ma ny reasons wh y juris dicti on s wi th
180

which I am familiar would reject revenue sharing funds. They might 

reject them, for example, as a matter of principle.

Mr. Kindness. Let's say there was a finding by a court, or administratively there was a finding, tha t discrimination or a desire to continue a form of discrimination was the motivating factor of the local 

government.

Under those circumstances, would it be the opinion of the commission tha t revenue sharing funds could be enforced on the local 

government ?

Mr. F lemming. I don’t see anything in the law that could force 

revenue sharin g funds on a State or a local jurisdiction. If a State 

or local jurisdiction says as a matter of policy we are not going to 

accept revenue sharing funds, I don’t see any power in the Federal 

Government tha t would permit the Federal Government to say you 

have got to take them.

Mr. Kindness. Simply-----

Mr. F lemming. The law certainly is not worded that way at the 

present time as I recall it. Although I have not looked at the list, I 

suspect there are some situations where jurisdictions have in effect 

said we are not going to take the funds.

Tha t is something we can look into. Tha t is a question of fact. I 

don t know whether tha t has come up in the hearings or not. Again 

I can’t conceive of any way under which the Federal Government 

could force a State or a local jurisdiction to take Federal money.

Air. Kindness. Thank you.

Mr. Edwards. Mr. Badillo?

Mr. Badillo. I just want to make sure that we understand the 

chairman’s question because the problem of fungibility as you know 

is that certain funds get so involved with others tha t they cannot be 

distinguished. That is where the term comes from.

The difficulty is in working on a budget. You can know that revenue 

sharing funds are coming and might well allocate them to a par ­

ticular activity where it can document that there is no discrimination 

and steer it away from those activities where there is.

Therefore, you can’t really prove a case. The only case you can 

prove is that the locality, even though when it comes to general 

revenue sharing funds, it is discrim inating in certain areas, and it 

really could have taken the funds and put them in t ha t place as well 

as in another one.

Once you put the money into the general budget account of a municipality, it is undistinguishable. You can’t say th at the $200 received 

yesterday which are included in the $100,000 payroll today, went to 

just th at department where there is no discrimination.

Once it goes into the bank account, it is undistinguishable from any 

other moneys. Therefore, it would be a difficult case to prove affirmatively because the very definition of fungibility is that once it goes into 

the same—once the water goes into the river, it flows along with all 

the other water.

Mr. Flemming. I feel you have identified the issue very clearly, 

and of course, it was this concern that led the Commission to make 

the recommendation that it made. But as I understand it, the c hairman is asking us if we have any evidence that would point to the conclusion tha t in jurisdictions A, B, or C, this had actually happened.
181

I think the suggestion that it is n ot going to be easy to identify evidence of that kind of action is a sound one. I still recognize the importance of trying to see if we have such evidence.

Mr. Edwards. Since the subject has come up again. I certainly understand what Mr. Badillo refers to. He is a CPA and would know 

what fungibility is much better than I. The mere term infers tha t there 

is something going on at the local government tha t is not aboveboard.

Mr. Badillo. Not necessarily, Mr. Chairman. It is not necessarily 

illegal.

Mr. E dwards. I didn’t say illegal. I said not aboveboard. Certainly 

it is devious, and there are implications of deviousness—tha t local governments are taking money and using the funds for certain purposes, 

and are not stopping their discrimination, continuing their discrimination and still using the revenue fu nds; taking funds from here and 

putting them here.

It is clear to all of us what it consists of. The CPA would not have 

a great deal of difficulty in auditing a municipality and say you have 

obviously done this.

Mr. Badillo. We can show there is discrimination. We can also show 

tha t it would be a remarkable coincidence if in all these cases, the general revenue sharing funds did not go into areas of discrimination.

If we can show th at there exists discrimination, we can by implication conclude tha t this was steered away from the dangerous area. But 

it is not something you can easily document.

It will have to be based on the circumstance tha t there exists 

discrimination.

Mr. E dwards. We will hold the record open. We would like to move 

on. We thank you, gentlemen, for your splendid testimony here today. 

You have been very helpful.

Our second witness this morning is Mr. Robert Dempsey. Chief of 

the Federal Programs Section of the Department of Justice. Under the 

terms of section 122 o f the Revenue Sharing Act, the Department of 

Justice is also to play a significant role in the enforcement o f the act's 

antibias provisions.

We hope to hear from Mr. Dempsey regarding the Department's 

effort in fulfilling tha t responsibility.

Mr. Dempsey, we thank you for coming, and we look forward to 

receiving your testimony. You may proceed as you so desire.

TESTIMONY OF ROBERT N. DEMPSEY, CHIEF OF THE FEDERAL

PROGRAMS SECTION, DEPARTMENT OF JUSTICE, CIVIL RIGHTS

DIVISION

Mr. Dempsey. T hank you very much, Mr. Chairman and members 

of the committee. It is a personal privilege and a pleasure for me to 

appear before this subcommittee Today. It is the first opportunity I 

have ever had to testify before a congressional body, and indeed, it is 

only the second time I have been in a committee hearing room.

Mr. Pottinger has asked me to express his regret at not being able to 

appear here today before the committee to give his personal testimony, 

but he was unexpectedly called out of town on a matter of business, 

and he asked me to substitute for him.

Mr. Pottinger's statement is quite brief and self-explanatory, and 

simply explains the Attorney General's statutory responsibility under
182

the General Revenue Sh arin g Act to the subcommittee. With the permission of the chairman and members of the committee, I ask tha t 

Mr. Pottinger's written statement he made a part of the record and in 

addition ask that the Dep artment’s written response to the chairman’s 

series of questions sent to the Attorney on September 10 be made a 

part of the record because I think they assist in supplementing Mr. 

Pottinger's statement.

Mi1

. Edwards. Without objection, the questions and answers and the 

testimony will be included in the record. *

[The documents referred to follow:]

Statement of Stanley Pottinger, Assista nt Attorney General for Civil

Right s, Department of J ustice

Mr. C ha irm an an d m em be rs o f th e su bc om mittee , I am plea se d to ap pe ar be fore 

yo u to da y to disc us s th e fe der al im pl em en ta tion of se ct ion 122 of th e S ta te an d 

Loc al Fis ca l ik ss istanc e Act, po pu la rly kn ow n as th e G en er al Re ve nu e Shar in g 

Act.

As yo u know , se ct io n 122 pr oh ib its dis cr im in at io n on th e ba sis of race , color , 

nati o n al origin or se x in an y pr og ra m fu nd ed w ith re ve nu e sh ar in g monies. Sinc e 

re ven ue sh ar in g fu nds a re di sp er se d pe riod ic al ly to ap pr ox im at el y 39,000 sta te 

an d loc al go ve rnmen ts, th e re ve nu e sh ari ng non di sc rim in at io n prov ision has a 

un iq ue ly broa d sw ee p; pr op er ly im plem en ted, it ca n co ntr ib ute sig nific an tly 

to th e el im in at io n of d is cr im in at io n in our na tion .

It is part ic ula rl y appro pri ate to c on side r th e c ivil ri g h ts as pe ct s of t h e G en er al 

Rev en ue Sha ri ng Act a t th is tim e be ca us e th e Pre si den t has su bm itte d a Bill 

to th e Hou se an d Sen at e (I I.R . 65 58; S. 1625 ) to rene w th e Act f or an addit io nal 

five an d th re e q u art ers ye ar s.

The J u sti ce D epar tm en t has an im port ant sta tu to ry ro le u nder t he A ct. Se cti on 

122 ve sts th e A tto rn ey G en er al w ith au th o ri ty co ncu rr en t to th a t of th e Se creta ry to en fo rc e th e sta tu to ry pr oh ib itio n again st di sc rim in at io n. The fu nc tion of 

th e A ttor ne y Gen eral, ho wev er, is no t defin ed by sta tu te alo ne . Exe cu tive O rd er 

11764 also im pa cts on th e re la tionsh ip be tw ee n th e Ju sti ce a nd T re as ury D epart ­

m en ts in en fo rc ing Se ction 122. The O rd er au th ori ze s th e A tto rn ey Gen er al to 

co or di na te th e fe dera l im pl em en ta tion of T itle VI of th e Civ il R ig ht s Ac t of 1964 

(42 U.S.C. 2000d ct s c q .) . T itle VI pro hib its dis cr im in at io n in al l fe de ra lly 

ass is te d pr og ra m s (e.g ., ca te go rica l g ra n t pr ogra m s) oth er th an re ve nu e sh ar in g.

In my view’ th e re ve nu e sh ari ng pro gr am is co ve red by th e Exe cu tive O rd er 

sinc e th e pu rp os e of th e O rd er is to en su re th e co ns is te nt an d eff ectiv e im plem en ta tion of civil ri ghts law by fe de ra l ag en cies.

F or th es e reas on s, I we lco me th e opport unity to di sc us s w ith you th e Ju st ic e 

D epart m ent’s en fo rc em en t of Se cti on 122 an d th e sa li ent lega l an d policy issu es 

pr es en te d by th e curr ent Act an d th e ad m in is tr ati on’s prop os ed re ne w al legisla- «

tion as they re la te t o civil ri ghts en fo rc em en t.

Mr. Cha irm an . I wou ld be ha pp y to resp on d to an y qu es tion s you an d th e 

m em be rs of th e su bc om m itt ee may ha ve .

Department of J ustic e,

W as hi ng to n, D.C., Sep te m be r 30, 1975. *

li o n . Don Edwards,

Uha irm an , Su bc om m itte e on Ci vil an d C on stitutional R ig hts , Com mitt ee on th e

Ju dic ia ry , Hou se of R ep re se nt at iv es , W as hi ng to n, D.C.

Dear Mr. Chairma n : A ttac he d is th e D ep ar tm en t's re sp on se to th e qu es tion s

se t fo rt h in your le tt er to th e A ttor ne y G en eral of Se ptem be r 25 re la tive to th e 

D epart m ent’s en fo rc em en t pr og ra m of th e ci vi l ri ghts pr ov isions of th e S ta te 

an d Lo ca l Fisca l A ss ista nc e Act of 1972, 31 U.S .C. 1242, et seq.

If th ere is an y fu rth e r in fo rm at io n th e Su bc om mitt ee wo uld lik e from th e

D ep ar tm en t, pl ea se ad vi se .

Sinc erely ,

Micha el M . Uhlma nn .

Que sti on 1: H ow m any ca ses alleging di sc rim in at io n ha s th e Office of Rev en ue

Sha ri ng r ef er re d to your office purs uant to Se ct io n 122?

Thre e ca se s: United S ta te s v. C ity o f Chicago {P ol ic e) , C.A. No. 73C -2080

(N .D. Il l.) ; United S ta te s v. Sc ho ol D is tr ic t o f the C ity o f Fer nd ale, Michiga n,

et al., C.A. No. 75-70958 (E .D . M ichiga n) ; an d M on tc lair, New Je rs ey .

(a ) Pl ea se d escribe ea ch su ch case.
183

United Sta tes v. City of Chicago (Police), C.A. No. 7302080 (N.D. Ill.)

A su it was brought again st the Chicago Police D epa rtment on August 14, 1973

alleging discrimination in its employment prac tices w ith rega rd to testing, hiring, 

promotions and assignment which were based on race, sex. an d national origin. A 

revenue sharing alleg ation was added in August 1974. Trial was completed in 

Jun e 1975 and the Court has it und er consideration.

United Sta tes v. School D istrict of the City of Ferndale, Michigan, et al., C.A. No. 

75-70958 (E.D. Michigan)

The complaint in the above c ase concerns alleged racial segregation of the elementary schools in the City of Fern dale , Michigan. Count Two of the Complaint 

is the pa rt concerning reven ue sha ring funds. It was based upon a referral to 

this Departm ent from the Director of the Office of Revenue Sharing. Count Two 

alleges that the Sta te of Michigan has used a sub stantial portion of its revenue 

sha ring fu nds to support the State’s public school employees’ retire ment system, in 

which Fernda le school system employees participate. The complain t asserts that 

this use of revenue sha ring funds involves the State’s R etireme nt System in the 

supp ort of a racially discrim inatory program in violation of Section 122(a) of the 

Revenue Sh aring Act a nd requests appropriate relief including the possible retu rn 

of moneys used to supp ort the alleged racially discrim inatory program in 

Fern dale.

Montclair, New Jerse y

The Director of the Office of Revenue Sharing referred this matt er to the 

Civil Rights Division so th at an app ropriate civil actio n could be institu ted to 

enjoin expenditure of revenue sha ring fund s pending adminis trative enforcement proceedings by th e Office of Revenue Sharing. Non-compliance by Montclair 

was based upon an order by the New Jersey Division on Civil Rights th at the 

City discontinue the case of certain un validate d police and fire employment examinations a nd adopt certain hiring ratio s.

The Office of Revenue Sha ring gave the Mayor of Mon tclair 60 days to come 

into compliance. However before the 60 day period would be up, a check of 

approximately $50,000 would be sent to Montclair. The Office of Revenue Sharing wanted the Department of Justice to enjoin the use of th at amount of the 

$50,000 obligated for use in the Police and Fire Departm ents.

(b) Wh at action did the Justice D epartment take in each case?

1. United Sta tes v. City of Chicago: In thi s case, in resi>onse to the refer ral 

from the Office of Revenue Sharing, the complain t was amended to include a 

revenue sharing count.

2. United Sta tes v. School District of F erndale: The Dep artm ent brought suit 

aga inst the school district.

3. Montclair, New Je rs ey : T he Civil Righ ts Division investig ated the facts of 

the Montclair case and found th at the City was in compliance with the New 

Jers ey order. Thus, it did not appea r th at we could sustain a n injunction aga inst 

the city. Accordingly, we referred the ma tte r back to the Office of Revenue 

Sharing to monitor Montclair to insure that they remained in compliance with 

the New Jersey order.

(c) Wha t is the current status o f each case?

1. I nited Sta tes v. City of Chicago: The case is before the cou rt for decision.

2. United Sta tes v. Ferndale School Distric t: The case is in the discovery 

stage.

3. Montclair, New Je rs ey : Referre d back to ORS for monitoring and furth er 

proceedings as necessary.

Question 2: Hoiv many civil actions has the Jus tice D epartment brought where

violations of the antidiscrimination provisions of the Revenue Sharing Act have

been alleged? Please list the cases.

There have been eight civil actions prosecuted by the Civil Righ ts Division in 

which violations of th e a ntidiscrim ination provisions of the Revenue S haring Act 

have been alleged, viz: United Sta tes v. Jefferson County Alabama, et al., C.A. No. 

75-P-O6665 (N.D. Ala.) ; United Sta tes v. City of Socorro, New Mexico, C.A. No. 

74-624 (D.N.M.) ; United Sta tes v. School District of the City of Ferndale, Michigan, et al., C.A. No. 75-70958 (E.D. Mich.) ; United Sta tes v. City of Tallahassee,

Florida, TLA No. 74—209 (N.D. Fla.) ; United Sta tes v. City of Milwaukee, R7Mconsin, C.A. L.A. No. 74 -0 48 0 (E.D. Wis.) ; United Sta tes v. City of Memphis,

Tennessee, C.A. No. C-74-286 (W.D. Tenn.) ; United Sta tes v. City of Buffalo,
1S4

New York, C.A. No. 1973-414 (Police Department) ; United Sta tes v. City of Bu ffalo, New York, C.A. No. 1974-193 (W.D.N.Y.) (Fire Dep artm ent) ; and United

Sta tes v. City of Chicago {Police), C.A. No. 73C-2080 (N.D. Ill.).

(a) How much of these cases were ongoing litig ation where the complaints 

were subsequently amended to reflect revenue sharing allegations? Please list any

such cases. Two cases were ongoing and amended to include revenue sha ring allegati ons:

United Sta tes v. City of Chicago {Police), C.A. No. 73C-2080 (N.D. Ill.) ; and 

United Sta tes v. City of Buffalo, New York, C.A. No. 1973-414 (Police 

Depar tment).

(b) How m any of these cases were filed as a result o f a referral to the Department by the Office o f R evenue Sharing? Please list the cases. . . *

None. However, in United States v. City of Chicago {Police), C.A. No. 73C-20S0 

(N.D. Ill.) and United Sta tes v. School District of the City of Ferndale, Michigan,

et al., C.A. No. 75-70938 (E.D. Mich.) the Office of Revenue Sharing made statutory refer rals to the Departm ent subse quen t to the commencement of local proceedings by the Department. *

(c) How many of these cases were “pattern and practice” cases? Please list

the cases. All of the cases listed in the answer to question 2 are “pa ttern and practic e” 

cases, ex ce pt United States v. City of Socorro, New Mexico, C.A. No. 74-624 

(D.N.M.).

(d) How many of these cases were filed on the basis of information obtained

during a Justice Department compliance review? Please list the cases.

One case was filed as the result of a compliance review—United Sta tes v. City

of Tallahassee, Florida, C.A. No. TCA—74-209 (N.D. Fla.).

Question 3: H as consideration been given to including in your revenue sharing

related law suits a request that the court order temporary escroxc of fur ther revenue sharing payments to the violating government, such as in cases where a te mporary restraining order on fur the r hiring is imposed in employment cases to

prevent furth er harm through biased practices until the ease is resolved? If this

has not been considered, do you see any legal and practical merit to this

approach? This proced ure has not been followed in cases brought by the Attorney General 

alleging violations of the civil righ ts provisions of the General Revenue Sharing 

Act. Ordinarily, an interlocutory decree aga inst a government for apparen t violatio n of section 122(a) would enjoin the prima facie discriminatory acts pending a trial on the merits thereby making the withholding of funds unnecessary.

Under circumstances where the expenditure of revenue sharing funds d urin g the 

pendency of the action would make adequate relie f impossible to achieve {c.g.,

discrim inatory site selection for construction) a preliminary injunction which 

m ig ht issu e could suspend th e pr oj ec t ther eb y su sp en ding the use of re ve nu e 

sharing monies for the project.

Question ?/: Docs the Department have a regular compliance review procedure

for carrying out its enforcement responsibilities under the Act?

Yes. i

(a ) Describe any such compliance rev iew procedures.

The Fed eral Programs Section of the Civil Rights Division conducts periodic 

routine review’s of revenue sha ring recipients. Sites for review are selected based 

upon analysis of objective cri ter ia {e.g., population statistic s, public employment profiles, residential segregation, allocation of revenue sharing funds) to- 1

getlier with input from Division and Community Relations Service personnel 

fam iliar with conditions in geographic locales, the U.S. Atto rney ’s Office and, 

more recently, public inte rest organizations.

Once a site for a routine review’ has been selected, a letter is sent from the 

Section to the chief executive officer of the municipa lity advising of our inten ­

tion to conduct the review, the proposed timetable for the review, and the s tatutory autho rity of the Attorney General under the General Revenue Sharing Act.

We also suggest that the chief executive might wish to a ppoint a liaison to facilita te the review and minimize disruption of normal business ro utine; and we 

ask that a line item budget be a vailable for review showing th e specific areas in 

which reven ue sha ring monies have been obligated or allocated. On-site inter-
186

COMPLAINTS ALLEGING DISCRIMINATION UNDER THE REVENUE SHARING ACT

Origin of complaint Nature of complaint Department action Curren t status

1. Alamance County,

N.C.

2. Bay St. Louis, Miss.

3. Beverly Hills, Calif..

4. Bowling Green, Ky..

Discrimination in use of revenue-sharing 

funds.

.do .

Request for more 

specific information 

from complainant.

Referred to ORS..........

Discrimination in organization of revenue 

sharing funded senior citize ns' center. 

Discrimination in city employment in ja il

facilities.

.do .

As of Sept. 22. 1975 

in analysis.

As o f Aug. 31, 1975, 

30-letter sent.

Under investigation by 

ORS and Department of Justice.

5. Charleston, S.C.......... Discrimination in city employment.

6. Colquitt County, Ga..

7. Contra Costa County,

Calif.

8. Coral Gables, F la ....

9. Crittenden County,

Ark.

10. Dade County, F la .. ..

11. Denver, Colo_______

12. Folkston, Ga..............

13. Gibsland, La.............

14. Jacksonville, Fla____

15. Do........................

16. Lake County, In d ....

17. Lake County, O hio ...

18. Mammoth Springs,

Ark.

19. New Orleans, La.

Discrimination in use of revenue-sharing 

funds.

Complaint that blacks underrepresented on 

ju ry panels/discrimination in location of 

proposed ja il.

Women not included in decisions regarding 

allocation of revenue-sharing funds.

Denial of minority particip ation in decisionmaking regarding revenue-sharing programs.

Discrimination by county school board in 

letting contracts.

Discrimination in use of revenue sharing by 

fire department.

Discrimination in provision of sewer and 

water services.

Misuse of revenue-sharing funds in purchase of firetruck.

Discrimination in use of revenue-sharing 

funds in recreation services.

Discrimination in use of revenue-sharing 

funds.

Discrimination in city council's refusal to 

allocate revenue-sharing funds for 

coroner’s morgue and admin istrativ e 

facilities.

Discrimination in use of revenue-sharing 

funds.

------do................................................................

Referred to ORS/under 

investigation by 

public accommodation and 

facilities.

Became part of general Under review, 

compliance review 

of city.

Under investigation___ Under investigation.

Referred to ORS. As of Aug. 31, 1975, 

review completed. 

Under in ve stigation.... Under investigation.

Referred to ORS. 

LEAA, Department 

of Labor and HUD.

Referred to ORS.........

As of Aug. 31, 1975, in 

analysis by ORS.

As of Aug. 31, 1975, 

review scheduled.

Became part of general Under investigation, 

compliance review.

Referred to ORS............Closed.

-do............................ Under investigation.

-do............................ ORS investigation.

-do............................As of Aug. 31,1975, letter of noncompliance.

.do.

do.

Discrimination in letting contracts for 

Super Dome.

20. Osceola, A rk ..

21. Pachuta, Miss.

Discrimination in programs funded through 

revenue sharing.

Tennis and basketball courts bu ilt with 

revenue-sharing funds closed in evening 

when blacks used them.

Discrimination in use of revenue-sharing 

funds.

Complainant dismissed from his job with 

private employer.

Advised complainant 

that Department 

found no revenue 

funds allocated in 

construction of 

Super Dome.

Referred or ORS.........

As of Aug. 31, 1975, 

review completed. 

As of Sept. 22,1975 , 

under investigation.

Closed.

None.

22. Pompano Beach, Fla . Discrimination in use of revenue-sharing Became part of general

funds. compliance review.

23. Portland, Maine.........Complainant dismissed from his job with Letter to complainant

advising Department 

has no authority to

investigate.

24. Portland, Oreg...........Discrimination in operations of public pa rks.. Referred to ORS and

Department of 

Interior.

25. Racine and Kenosha, Discrimination in employm ent by police General compliance

Wis. and fire departments. review conducted.

As of Aug. 31,1975, 

in analysis.

Tennis and basketball 

courts reopened.

Under investigation. 

Closed.

Under investigation.

26. Rolling Fork, Miss— City's refusal to permit blacks access to Referred to ORS_ 

municipal records.

27. San Carols Apache Misuse of revenue-sharing funds..............................do.................

Reservation, Ariz.

28. Sandersville, G a .. ..

Under review/awaiting 

city’s implementation 

of affirma tive action 

plan.

City now allows 

access—Closed.

Under investigation.

29. San Jose, Calif.........

30. St. Petersburg, Fl a..

31. Stuttgart, Ark ............

Allegation sewers not provided to black 

citizens.

Discrimination in city employm ent and in 

use of revenue-sharing and LEAA funds. 

Misuse of revenue-sharing funds....................

Discrimination in use of revenue-sharing 

funds.

Under in ve stig at ion. ... Do.

Referred to ORS and LEAA investigating. 

LEAA.

Request to complainant Under review, 

for specific informa ­

tion for response.

Referred to ORS______As of Sept. 22,1975,

under investigation.
Question 6: How many staff members does the Department have who work

exc lusi vely on civil rights enforcem ent under revenue sharing? How many sta ff

members engage in such a cti vit y on a part-time basis? The Civil Righ ts Division has no personnel exclusively assigned to or engaged in civil rights enforcement of the General Revenue Sharing Act. Within the Fed ­ eral Programs Section of the D ivision seven in-service attorn eys and two resea rch analy sts have partic ipated in work rela ted to revenue sha ring compliance 

reviews. Question 7: Within the Federal Programs Section, does the Department have a Revenue Sharing section or unit? If not, has the Departm ent ever had such a

revenue sharing unit? No. The Section has not had a formally constituted ‘'reve nue sharing u nit” es­ tablish ed by the Division, alth oug h an informal unit was ope rationa l a t one time 

with a senior line a ttorne y acting in a supervisory capacity. Question 8: Is there any arrangem ent for regular or periodic meetings between the Departm ent and the Office of Revenue Sharing on civil righ ts enforcement under the Act? If not, has the Departm ent ever atte mpted to bring about such an

arran geme nt ? The re are no regular meetings between Justic e and ORS personnel although in­ dividual meetings and conferences are held on a periodic basis as the need 

arises. Question 9: Does the Dep artment consider the Office of Rev enu e Sharing to be

a Title V I agency within the te rms of Exe cutive Order 1176}? Technically, no; practically, yes. The Order expressly applies only to federal agencies adm inistering programs of assistance covered by Tit le VI of the Civil 

Rig hts Act of 1964, 42 U.S.C. 2000d, et seq. While we recognize that Treasury 

does not consider the Office of Revenue Sharing to be a Title VI agency as such, we believe th at it is clearly w ithin the sp irit of Executive O rder 11764 to have ORS be subject to its provisions. The underlying purpose of the Order was to vest in the Attorney General cen tral autho rity for coordinating the implementation of fed era l civil righ ts responsibilities atta che d to federa l financial assistance. In larg e pa rt section 122 of the General Revenue Sharing Act simply tracks the language of Title V I; the remedia l provisions of Title VI ar e incorporated by reference in section 122(b) of the Ac t; general revenue s haring funds may he uti­ lized in programs and activitie s und er categ orical gran t programs covered ex­ pressly by Title V I; the Atto rney General exercises concurrent authority with the Secretary in enforcing section 122(a). All of the foregoing fac tors suggest the prop riety of construing the Ord er to cover the operation s of the Office of Revenue Sharing. It is our un derstan ding tha t Treasury shares this view. Question 10: Wha t types of civil righ ts enforcem ent assistance and oversight, involving the Office of Rev enu e Sharing, has the Justice Departm ent achieved

under E xec utive Order 1176} ? The Department has been responsive to the requests of ORS for assistance in conducting certain compliance reviews. The Departme nt has also provided as­ sistance to ORS w ith respe ct to the proposed rulem aking and renewal legislation. However, no review of the ORS civil rights enforcement prog ram has been undertaken by the D epartment und er Executive Ord er 11764. Question. 11: Are there any draft Title VI regulation which the Department is considering for issuance pursuant to Exe cutive Order 1176}? I f so, please include in your response a copy of such dra ft regulations. Although the Division has und er consideration a comprehensive set of Attor­ ney General draft regu lations under the Exec utive Order, it would be inappro­ priate to provide a copy of the regulations to the Subcommittee prio r to Depart­ mental clearance. Generally, the regulations cover the following ite m s: Title VI guidelines, public dissemination of Title VI information, data collection, proce­ dures to determine compliance, complaint procedures, employment practices covered by Title VI, equal opp ortu nity plans, compliance responsibilities of sta te agencies in operating continuing programs, methods of resolving noncompliance, coordination among fede ral agencies and the Depa rtment, interagency coopera­ tion and delegations of Title VI responsibilities, and fede ral agency staffing re­ quirements. If approved, the regu lations will be published in the Federal Register as proposed rulemaking. Question 12: What types of civil rights coordination efforts have taken place between the Department and the Office of Revenue Sharing?

See answ ers to questions 4(b) and 10.
18S

a. Please provide a copy of the proposed coordination agreement between Jus ­

tice and the Office of Revenue Sharing. Why has this proposed agreement been

pending and unsigned for more th an 18 mo nth st

A copy of the Memorandum of Und erstanding between the Civil Righ ts Division and the Office of Revenue Sharing is attache d. Initially, the Compliance 

Division within ORS expressed the desire to establish a functional relationship 

with Jus tice on an ad hoc basis before execu ting a form al memorandum. Subsequently, most of the procedural components of the Memorandum became operational thereby, in our view, elim inating any urgency with respe ct to a formally 

executed document.

b. Hav e the two agencies agreed upon what constitutes compliance so that

there is a uniform standard for compliance for recipient jurisdictions?

No. Dete rminations of compliance depend upon the facts of each case. Uniform 

standard s should, of course, be applied by Treasury and Jus tice in remedying 

identifiable discrim ination.

c. Have the two agencies agreed upon standards which will lead to the Office

of Revenue Sharing’s referral o f a case to the Justice Department?

No. The special facts of each case will determine whether a matt er should he 

handled through the adm inistrative or judicia l route. The Memorandum of Understanding specifies notification o f proposed law’ su its or administrative hearings 

thus laying the basis for consultation, if appropriate.

Question 18: Because of the high degree of fun gib ility of revenue sharing

dollars and the case with which recipient jurisdictions can allocate such dollars

to nondiscriminating activities and use ”freed -up” fun ds for discriminating activities, Elm er Staats, the Comptroller General of the United States, has suggested that all activities of a recipient, not just ’’fun ded” activities, be subject

to review for purposes of compliance with laics against discrimination. Wha t is

the Justic e Department's opinion regarding this proposal?

We do not favor the proposal of the Comptroller General on policy and pra ctical grounds.

Mr. Staa ts’ proposal would clothe the fede ral government—for the first time—• 

with au tho rity to enforce the constitutio nal requ irement of nondiscrim ination 

in all the activities of governmental units receiving revenue sha ring fund s by 

way of adm inistrative fund cutoff and civil inju nctive proceedings by the Attorney General. This extraord inary extension of the federal jurisdicti on over the 

operations of sta te and local governments is based on the reasonable contention 

that revenue sharing monies are fungible. Yet the same argument may be made 

with respect to federal gran ts-in -aid to sta te and local governments despite the 

legal restriction s placed on the use of such grants. The infusion of f ederal money 

into s tate and local governments under any fede ral assistance p rogram may serve 

to free local fund s for other uses. Under Title VI of the Civil Rights Act of 

1964, 42 U.S.C. 2000d et scq., however, Congress determined tha t, at least with 

respect to invoking adm inistrative sanc tions for noncompliance, a fede ral agency's jurisdiction was limited to the program or pa rt thereof in which the noncompliance was found (42 U.S.C. 2000d-l). Section 122(b) auth orizes the 

Secretary to exercise the powers and functions of Title VI in dealing with unyielding noncompliance and his jurisdicti on is, accordingly, limited to the program or pa rt thereof in w hich the noncompliance is found. We see no compelling 

reason und er the revenue sha rin g legislation to abandon the lim itations esta blished under Title VI for exercising fede ral jurisdic tion. The ava ilab le evidence 

indicates th at recipient governments do not place reven ue sha rin g funds in 

“safe ” programs (i.c., those withou t civil rights dimensions) and funnel only 

local monies into municipal programs more susceptible to civil rights problems.

Secondly, with respect to employment discrimination, Congress has determined 

in the Equal Employment Opportunity Amendments of 1972 to Title VII of the 

Civil Rights Act of 1964, 42 U.S.C. 2000e et seq. th at the focal point for fede ral 

enforcem ent of Title VII with respect to nonfederal public agencies shall be 

vested in the Equal Employment Opp ortunity Commission and the Departm ent 

of Justice . It may be open to question whether the federa l enforcement effort 

with respect to eliminating employment discrim ination in public agencies is wrell serve d by diffusing responsibility through the expanded coverage contemplated 

by Mr. Staats with the possible attend an t problems of overlap and inconsistent 

imple mentation. Possible overlap would often include services since local services are frequently recipients of gran t-in-aid programs (e.g., health, welfare) and thu s fall with in the primary respo nsibility of federal agencies enforcing
186

COMPLAINTS ALLEGING DISCRIMINATION UNDER THE REVENUE SHARING ACT

Origin of complaint Nature of complaint Department action Current status

1. Alamance County, Discrimination in use of revenue-sharing

N.C. funds.

2. Bay St. Louis, Miss.............do...............................................................

3. Beverly Hills, C a lif... Discrimination in organization of revenue

sharing funded senior citizens' center.

4. Bowling Green, K y .. . Discrimination in city employment in ja il

facilities.

5. Charleston, S.C.......... Discrimination in city employment-.............

6. Colquitt County, Ga_. Discrimination in use of revenue-sharing

funds.

7. Contra Costa County, Complaint that blacks underrepresented on

Calif. ju ry panels/discrimination in location of

proposed ja il.

8. Coral Gables. F la .... Women not included in decisions regarding

allocation of revenue-sharing funds.

9. Crittenden County, Denial of minority participation in decisionArk. making regarding revenue-sharing programs.

10. Dade County, F la .. .. Discrimination by county school board in

letting contracts.

11. Denver, Colo............ .. Discrimination in use of revenue sharing by

fire department.

12. Folkston, Ga............. Discrimination in provision of sewer and

water services.

13. Gibsland, La............... Misuse of revenue-sharing funds in purchase of firetruck.

14. Jacksonville, Fla-------Discrimination in use of revenue-sharing

funds in recreation services.

15. Do............. .........Discrimination in use of revenue-sharing

funds.

16. Lake County, In d .... Discrimination in city council’s refusal to

allocate revenue-sharing funds for 

coroner’s morgue and adm inistrative 

facilitie s.

Request for more 

specific information 

from complainant.

Referred to ORS............

........ do.............................

Referred to ORS/under 

investigation by 

public accommodation and 

facilities.

Became part of general 

compliance review 

of city.

Under investigation___

Referred to ORS............

Under in ve stigation....

Under investigation.

As of Sept. 22.1975 

in analysis.

As of Aug. 31. 1975, 

30-letter sent.

Under investigation by 

ORS and Department of Justice.

Under review.

Under investigation.

As of Aug. 31, 1975, 

review completed.

Under investigation.

Referred to ORS. As of Aug. 31, 1975, in 

LEAA, Department analysis by ORS. 

of Labor and HUD.

Referred to ORS........... As of Aug. 31, 1975,

review scheduled.

u o o u ii io p o u v i g e n e ra l UIIU GI 111V C o 11&u 11U11.

compliance review.

Referred to ORS............. Closed.

—..d o .................. ......... Under investigation.

. .. .d o ............................ ORS investigation.

- - - d o ............................As of Aug. 31,1975, le tter of noncompliance.

17.

18. 

19.

Lake County, O hio ... Discrimination in use of revenue-sharing 

funds.

Mammoth Springs...............do.....................

Ark.

New Orleans, La____Discrimination in letting contracts for

Super Dome.

20.

21.

22.

23.

24.

25.

Osceola, A rk ...............Discrimination in programs funded through

revenue sharing.

Pachuta, Miss............ Tennis and basketball courts bu ilt with

revenue-sharing funds closed in evening 

when blacks used them.

Pompano Beach, Fla . Discrimination in use of revenue-sharing 

funds.

Portland, Maine.........Complainant dismissed from his job with

private employer.

Portland, Oreg...........Discrimination in operations of public parks..

Racine and Kenosha, Discrimination in employment by police 

Wis. and fire departments.

.........do...........................

........ do............................

Advised complainant 

that Department 

found no revenue 

funds allocated in 

construction of 

Super Dome.

Referred or ORS............

None...............................

As of Aug. 31, 1975, 

review completed. 

As of Sept. 22,1975, 

under investigation.

Closed.

26. Rolling Fork, Miss__

27. San Carols Apache

Reservation, Ariz.

28. Sandersville, Ga.........

29. San Jose, C alif...........

30. St. Petersburg, F la .. .

City’s refusal to permit blacks access to 

municipal records.

Misuse of revenue-sharing fun ds.....................

Allegation sewers not provided to black 

citizens.

Discrimination in city employment and in 

use of revenue-sharing and LEAA funds.

Misuse of revenue-sharing funds ..................

31. Stuttgart, A rk ............ Discrimination in use of revenue-sharing 

funds.

Became part o, general 

compliance review.

Letter to complainant 

advising Department 

has no authority to 

investigate.

Referred to ORS and 

Department of 

Interior.

General compliance 

review conducted.

Referred to ORS............

____do.............................

Under in ve st ig at ion. ...

Referred to ORS and 

LEAA.

Request to complainant 

for specific info rmation for response.

Referred to ORS............

As of Aug. 31, 1975, 

in analysis.

Tennis and basketball 

courts reopened.

Under investigation. 

Closed.

Under investigation.

Under review/awaiting 

city's implementation 

of affirmative action 

plan.

City now allows 

access—Closed.

Under investigation.

Do.

LEAA investigating. 

Under review.

As of Sept. 22,1975, 

under investigation.
Que sti on 6: ll o w m an y sta ff mem be rs does th e D ep art m en t ha ve wh o wor k

ex cl us iv el y on civil ri gh ts en fo rc em en t un de r re ve nu e sh ar in g? H ow m an y st aff

m em be rs e ng ag e in such a cti vit y on a p ar t-tim e basis?

The Civil R ig ht s D ivision lia s no pe rson ne l ex clus ively as si gn ed to or en ga ge d 

in civi l ri ghts en fo rc em en t of th e Gen eral Rev en ue Shar in g Ac t. W ithi n th e F ed ­

e ra l Pro gra m s Se cti on of t he Division seven in-servi ce a tt o rn ey s and tw o re se ar ch 

analy st s ha ve part ic ip ate d in work re la te d to re ve nu e sh ari n g co mpl ianc e 

review s. Que stio n 7: W it hin th e Fed er al Pr og ra ms Se ctio n, does th e D ep art m en t ha ve

a R ev en ue Sh ar in g se ction or u n it f I f no t, ha s th e D ep art m en t ev er ha d su ch a

re ve nu e sh ar in g u n it f No. The Se cti on has not had a fo rm ally co nst it ute d “r ev en ue sh ari ng unit " es ­

ta bli sh ed by th e Di visio n, although an in fo rm al u n it was opera ti onal a t one tim e 

w ith a se ni or li ne a tt orn ey a cti ng in a supe rv isor y ca pa ci ty . Que stio n 8: Is th er e any ar ra ng em en t fo r r eg ul ar or pe riod ic m ee tin gs be tw ee n

th e D ep art m en t an d th e Office of Rev en ue Sha ri ng on ci vi l ri ghts en fo rc em en t

un de r the A c tf I f not, ha s th e D ep ar tm en t ev er attem pte d to bring ab ou t suc h an

ar ra ng em en t f Ther e are no re gula r m ee ting s be tw ee n Ju sti ce a nd OR S pe rs on ne l alth ou gh in ­

di vi dua l m ee tin gs an d co nf er en ce s are he ld on a pe riod ic ba sis as th e ne ed 

ar is es . Que sti on 9: Do es th e D ep art m en t co ns ider th e Office o f Rev en ue Shari ng to be

a T it le V I ag ency w it hin th e te rm s of E xe cuti ve Or der 11764? Tec hn ically, no; pra ct ic al ly , yes. Th e O rd er ex pr es sly ap pl ie s on ly to fe de ra l 

ag en cies ad m in is te ri ng pro gra m s of as si st ance co ve red by T it le VI of th e Civil 

R ig hts Ac t of 1964, 42 U.S.C. 2000d, et seq. W hile we reco gn ize th a t Tre as ury 

do es no t co ns id er th e Office of Re ve nu e Shar in g to be a T it le VI agen cy as such, 

we be lie ve th a t it is c le ar ly w ithin t he sp ir it of E xe cu tive O rd er 11764 to h av e OR S 

be su bj ec t to it s prov isions . The und er ly in g pu rp os e o f th e O rd er w as to ve st 

in th e A tto rn ey G en eral centr al auth ori ty fo r co ord in at in g th e im pl em en ta tion of 

fe dera l civi l ri ghts re sp ons ib ilitie s att ached to fe der al fina nc ia l as si stan ce . In 

la rg e p a rt section 122 of th e Gen eral Rev en ue Shar in g Act simply tr acks th e 

la ng ua ge of T itle V I ; th e re m ed ia l pr ov isions of T itle VI a re in co rp or at ed by 

re fe re nce i n section 12 2( b) of t h e A ct ; ge ne ra l re ve nu e sh ari ng fu nds may be u ti ­

liz ed in pr og ra m s and acti vit ie s under ca te go rica l g ra n t pro gr am s co vered ex ­

pr es sly by T it le V I ; th e A ttor ney Gen er al ex er ci se s con cu rr en t au th ori ty w ith 

th e Sec re ta ry in en fo rc in g se ct ion 122(a ). All of t he fore go ing fa cto rs s ug ge st th e 

pr opr ie ty of co ns trui ng th e O rd er to co ve r th e oper at io ns of th e Office of R ev en ue 

Sha ring . It is o ur u nders ta ndin g t h a t T re asu ry s hare s th is v iew .

Q ue stio n 10: W hat ty pes of civi l ri ghts en fo rc em en t as si st an ce an d ov er sigh t,

in vo lv in g th e Office of Rev en ue Sh ar in g, ha s th e Just ic e D ep ar tm en t ac hiev ed

un der E xecuti ve O rder 11764? The D ep ar tm en t ha s been re sp on sive to th e re ques ts of OR S fo r as si st an ce in 

co nd uc ting cert ain co mpl ianc e review s. Th e D ep art m ent has al so prov ided as ­

si st an ce to OR S w ith re sp ec t to th e proi>osed ru le m ak in g an d re ne w al legi slatio n. 

How ev er, no review of th e ORS civ il ri ghts en fo rc em en t pro gr am ha s been un ­

dert aken by t he D ep ar tm en t under E xe cu tive O rd er 11764. Question. 11: Are th er e any dra ft T itle V I re gu la tion which th e D ep ar tm en t

is co ns idering fo r issuan ce pur su ant to E xecuti ve Order 11 76 4f I f so, plea se inclu de in yo ur r espo nse a copy o f suc h dra ft r eg ul atio ns . Alth ou gh th e Divisi on has under co ns id er at io n a co mpr eh en sive se t of A tt orney G en er al d ra ft re gula tions und er th e Exec ut iv e O rd er, it wo uld be in ap pro ­

p ri ate to pr ov ide a copy of th e re gu la tion s to th e Su bc om m itt ee pri or to D epart ­

m en ta l clea ra nc e. Gen erally , th e re gu la tions co ve r th e fo llo wing it e m s: T it le VI 

gu idelines , pu blic di ss em in at io n of Title VI in fo rm at io n, d ata collection , procedur es to de te rm in e co mplian ce , co m pl ai nt pr oc ed ur es , em pl oy men t pra ct ic es 

co ve red by T it le VI, eq ua l oppor tu ni ty pl an s, co mplianc e re sp on sibi lities of st ate 

ag en cies in op er at in g co nt in uin g pr og ra m s, metho ds of re so lving no nc om plian ce, 

co or di na tion am on g fe de ra l ag en cies an d th e D ep ar tm en t, in te ra ge nc y co op eration an d de lega tio ns of T it le VI resp on sibi lities , an d fe der al ag ency sta ffi ng re ­

qu irem en ts. If ap prov ed , th e re gula tions will be pu bl ishe d in th e F ed er al Reg iste r as propo sed ru lem ak in g. Que sti on 12: W hat ty pes o f civi l ri ghts co or di na tio n ef fo rt s ha ve ta ken pla ce

be tw een the Dep ar tm en t an d th e O ffice of R ev en ue Sh ar in g?

See a ns w er s to q ue stio ns 4 (b ) an d 10.
190

unti l th e Ci ty was mad e su bj ec t to a dual co urt ord er iu United, S ta te s v. City of

Chicago, C.A. No. 73 C 2080 (N .D. Il l.) an d Tre as ury de term in ed th a t th e Ci ty 

def en dan ts ha d eff ectiv ely im plem en ted the te rm s of th e or de r. The co urt in 

C ity of Ch icago ha d, on Nov em ber 7. 1974. he ld th a t cert ain em ploy men t pra ctice s of th e Ch ica go Po lic e D ep art m ent w er e pr im a fa ci e ra ci al ly an d se xu al ly 

di sc rim in at ory an d pre lim in ar ily en jo in ed th e City from co nt in ui ng such pra ctic es . Rob inso n v. Shult z was tr an sf err ed to th e N or th er n D is tr ic t fo r Ill in ois 

on Jan u ary 16, 1975 an d was co ns ol id at ed w ith City of Chicago as Rob inso n v. 

Simon , C.A. No. 75 C 79 (N.D. Il l. ). On Apr il 21, 1975 th e co urt in Ro bin son 

de nied th e C ity’s mo tio n to mod ify th e D is tr ic t of Co lum bia court ’s ord er of 

De cembe r 18 on th e ba sis th at th e City ha d no t remed ied th e dis cr im in at io n 

fo un d to be p re se nt by th e co ur t in its fin ding s o f No vemb er 7. 1974.

Que sti on 15: In ligh t of th e ex te nsi ve an d well-d oc um en ted natu re of se.r dis ­

cr im in at io n i n th e em ploy m en t pr ac tice s of m an y st ate an d loca l ag en cie s wh ich

are m aj or re ve nu e sh ar ing recipien ts, ho w m an y of yo ur em pl oy m en t cases ha ve

includ ed se x bia s alleg ations t H av e th er e been an y cases bas ed pri m ari ly on

se x bias al lega tio ns ? W hy ha ve se x bia s allega tio ns rece ived a se co nd ar y tr ea tm en t in th e pa st, and w ill mor e attenti on be gi ve n to th is are a in th e fu tu re ?

Se ve ntee n em ploy men t ca ses ha ve in cl ud ed sex bias alle ga tion s. Fiv e of thos e 

ca se s w er e ba se d ex clus ively on sex dis cr im in at io n. Th e Civil R ig hts Divisi on is 

pr es en tly en ga ge d in a review of it s sex di sc rim in at io n en fo rc em en t pr og ra m 

w ith a view tow ard det er m in in g w heth er it .should be ex pa nd ed .

Mem or an du m of U nd er st an di ng Bet w een t h e Offi ce of Rev en ue S h a r in g,

D ep artm en t of t h e T re as ur y an d Civ il R ig h t s D iv is io n , Depa rtm en t of

J u st ic e R eg ar din g Coo rd inat ion in t h e E nf or ce men t of t h e No n d is c r im inati on P ro vi sion of Sec tion 122 of t h e Sta te an d L ocal F is cal Assi sta n c e

Act of 1972

The Office of Re ve nu e Sha ri ng (O R S ), D ep ar tm en t of th e T re asu ry , an d th e 

Civil R ig ht s Division (C R D ), D epart m ent of Ju st ic e, ag re e to th e follo wing 

co or di na tion pr oc ed ur es in ord er to av oid inco ns istenc y an d du pl ic at io n of eff ort , 

in im pl em en tin g th eir co nc urr en t re sp ons ib ilitie s under Secti on 122 of th e S ta te 

an d Lo cal F is ca l A ssistanc e Act o f 1972, 31 U.S.C. 1242.

l. c it iz en com pl ain ts an d com pl ain t in vest ig ati ons

OR S an d CR D ag re e to ex ch an ge co m pl ai nt s wh ich allege vio la tion s of the 

Act on a tim el y ba sis. Th e ba sic pu rp os e of th e ex ch an ge is in fo rm at io nal an d 

ord in ar ily re sp on sibi lity fo r ac ting on th e co m pl aint sh al l lie w ith th e recipien t. 

W he re OR S or CR D is al re ad y acti ng on th e su bs ta nc e of th e co m pl ai nt (e.g.,

field in ves tiga tion or c on ta ct w ith su bj ec t pu blic ag en cy )— eit her th ro ugh rece ip t 

of a p ri or co m pl ai nt or a s th e re su lt o f a ro uti ne i nv es tiga tion or ot he rw is e— th a t 

D ep ar tm en t sh al l co ntin ue to ex er ci se ju ri sd ic ti on ov er th e m at te r, bu t wi ll per iod ically a dv is e th e o th er D ep ar tm en t of d ev elo pm en ts. Und er s uc h circ um stan ce s, 

OR S an d CR D w ill co ns ul t as to th e pro pe r di sp os itio n of th e m att er onc e the 

in ve st ig at io n is co mp let ed.

W he re a co m pl ai nt is se nt to bo th OR S an d CRD. th e m att er of ju ri sd ic tion 

will be de cid ed by them on th e ba si s of fa ct ors in cl ud in g avail abil it y of re ­

sour ce s, pre se nta ti on of un ique le ga l and fa ctu al issu es (inc lu di ng patt ern s 

an d pr ac tice s of dis cr im in at io n), an d al le ga tions of specific ty pe s of 

di sc rim in at io n.

2. ROUTINE COM PLIANC E REVIEW’S

OR S an d CR D ag re e to no tify ea ch oth er of sc he du led civ il ri ghts co mp lia nc e 

revi ew s co nd uc ted unde r th eir re sp ec tive st atu to ry au th o ri ty purs u an t to the 

A ct ; such ex ch an ge of in fo rm at io n sh al l be ex te nd ed to full in ve st ig at io ns 

co nd uc ted by th e CR D un de r T itle V II of th e Civil R ig ht s Act of 1964, 42 U.S.C. 

2000e, et seq. (a s am en de d by th e Equ al Em ploy men t O pp or tu ni ty Act of 1972 

[ru b . L 92 -2 61 1) . W he re OR S or CR D has al re ady sche du led a pu blic agency 

fo r re vi ew th e oth er D ep ar tm en t wi ll re fr ain from inde pe nd en t ac tio n (exc ep t 

fo r ro utine fina nc ia l audit s by OR S as p a rt of it s pro gr am m at ic co mp lia nc e 

re vi ew s) .

W he re an ORS in ve st ig at io n in di ca te s a po ssible p att ern or pra cti ce of em ­

ploy men t dis cr im in at io n or pre se nts un iq ue lega l iss ue s. ORS will notifv the 

CRD.
191

It is un de rstood by th e p art ie s to th is ag re em en t th a t ag en cies foun d in 

co mplianc e by OR S und er Se ctio n 122 or by CR D und er T it le V II in di vi du al ly , 

sh all be info rm ed th a t su ch fin ding of co mplianc e by th e in div id ual ag en cy 

sh all no t pr ec lu de a re vi ew or in ve st ig at io n and a fin din g of ca us e un de r a lt e rnat iv e st atu te s un less purs ued in th e m an ner in di ca te d under oth er specific pr ovisio ns o f t his a gr ee m en t.

3. GENERAL

a. At th e w ri tt en re ques t of CR D an d su bj ec t to th e avail abil it y of man po wer, 

OR S will sche du le fo r fina nc ia l audit th os e pu blic ag en cies de sign at ed by CR D 

fo r co m pl aint in ve st ig at io n or co mplianc e review w he re a det ai le d an al ysi s

(

 of how re ve nu e sh ari ng fu nd s are us ed is ne ce ss ar y. OR S will fu rn is h copie s of

pl an ne d an d actu al us e re port s of re ci pie nt s re qu es te d by th e CR D. OR S an d 

CR D will pr ov id e acce ss to th e ir re sp ec tive tiles an d re co rd s pert in ent to th e ir 

jo in t re sp on sibi lities unde r th e Act. I t is un de rs to od th a t th es e reco rd s an d 

files are to be ex am in ed and wi ll be ke pt co nf id en tia l by ea ch D ep ar tm en t under

► th e te rm s an d co nd iti on s th a t ap pl y to th e em ploy ees of ea ch ag en cy .

b. W he re an in ve st ig at io n co nd uc ted by CR D in dic at es civil ri ghts viol atio ns 

pro hi bi te d by Section 122 of th e Ac t as we ll as T itle VII, su ch vi ol atio n sh al l be 

se t fo rt h in no tic e le tt ers to no nc om plying re ci pi en ts an d reso lved by co ns en t 

or de rs. A co py of su ch no tic e le tt ers s ha ll be fo rw ar ded t o ORS.

c. E xis ting civil ac tion s bro ught again st pu blic em ploy ers und er Title V II 

sh al l be am en de d, w he re appro pri ate an d in th e di sc re tion of th e ('R D. to 

incl ud e an al le ga tion of a vi ol at io n of Se ction 122 (a ) of th e Act an d its im plem en ting re gu la tion s. OR S, if re qu es ted, may ass is t th e CR D on a ca se by 

ca se ba sis in att em pti ng to reso lve th es e su it s by co ns en t decre e.

d. Eac h D ep ar tm en t sh al l in fo rm th e oth er of prop os ed ju dic ia l or ad m in ­

is tr ati v e ac tion under th e Ac t. In in st an ce s whe re jo in t in ve st ig at io ns were 

in it ia te d pri or to th is ag re em en t or whe re OR S an d CR D purs ue jo in t in ves tiga tion s un de r Secti on 122 and T it le V II —L ett ers of D et er m in at io n an d Notice 

L ett ers if ca us e is fo un d wi ll be co or di na te d w ith th e pu blic be ing in fo rm ed 

t h a t : (i ) effo rts at re so lu tion a re th e jo in t ef fo rts of OR S an d C RD : (i i) re so lu ­

tio n will be in th e form of a court or der (c on se nt or adju dic ate d) to era dic ate 

bo th Se cti on 122 an d T it le V II vio la tions; an d (i ii ) bo th ag en cies will ha ve 

re sp on sibi lity for m on itor in g comp lia nce.

T his Mem oran du m of U nder st andng sh al l co nt in ue in eff ect u n ti l th e Depart m ents de te rm in e th a t th is Mem oran du m, or a se ct io n th er eo f, shou ld be 

am en de d or t er m in at ed .

J oh n K. P arker.

Acting Director,

Office of Revenue Sharing,

Department of the Treasury.

J. Stanle y P ottinger.

Assistant Attorney General.

Civil Rights Division,

k Department of Justice.

Mr. Dempsf.y. T wonder if T may be permitted a few extemporaneous 

remarks primarily based on my presence yesterday at tbe testimony 

of Under Secretary Schmults.

With the permission of tbe chairman and tbe members of tbe committee, I would like to avert to tbe message of President Nixon on 

February 4, 1971. which accompanied tbe administration’s revenue 

sharing bill presented to both Houses. The President said in part in 

tha t message:

In my st ate of th e I ’nion me ssag e, I em ph as ized th a t th es e re ve nu e sh ari ng 

pr op os als wo uld incl ud e th e sa fe guar ds again st dis cr im in at io n th a t ac co mpa ny 

all oth er Fed er al fu nds al lo ca te d to th e Sta te s.

The le gi slatio n I am reco mmen ding , pr ov id es th es e sa fe guar ds.

Then be sets fo rth tbe specific provision of section 122(a). Tie follows by saying:
192

The Sec re ta ry of th e T re as ury wo uld be em po wered to en fo rc e th is prov ision. 

If lie foun d a vi ol atio n an d w as un ab le to ga in volu nta ry complian ce , he could 

th en ca ll on th e A tto rn ey Gen eral to s eek appro pri at e re lief in th e Fed er al co urt s 

or he cou ld in sti tu te a dm in is tr ati ve p ro ce ed ings und er t it le V I of t he Ci vil R ig ht s 

Act o f BX>4 le ad in g to a cu tof f o f Fed er al f un ds .

The Fed era l Gov ernm en t ha s a we ll-defin ed m or al an d co nst it uti onal ob lig ation to in su re fa ir ness fo r ev ery citiz en whe ne ve r Fed er al ta x dollar s a re sp en t. 

U nd er th is legi slat io n, th e F ed er al Gov er nm en t wo uld co nt in ue to m ee t th a t re ­

sp on sibilit y.

Well, it is 4 years from that date, and we are meeting here today to 

consider whether the executive branch of the Federal Government 

has in fact met tha t moral and constitutional responsibility. The committee has before it a number of very intelligent and informed documents assessing the Federal implementation of the General Revenue 

Sharing Act civil rights provisions.

I refer most specifically to the report of the Civil Rights Commis- 

■sion. the report of the National Science Foundation, the Comptroller 

General's report, and several others. They all come to the basic conclusion that the Federal implementation of the civil rights provisions of 

general revenue sharing is deficient in many important respect.

Yesterday, Under Secretary Schmults acknowledged certain deficiencies with respect to the operations of the Department of the 

Treasury with respect to implementing its statutory obligations.

It seems to me this was the only sensible course to take. But I think 

we should go beyond simply acknowledging what the existing facts 

are and ascertain why they are as they are and what we ought to do in 

order to remedy the current problems with respect to implementing 

these responsibilities.

I would like to advert very briefly to what Chairman Flemming 

said in his testimony before the subcommittee. He said it is not sufficient for a Federal agency to be complaint oriented. Tha t is not the 

best way to implement civil rights responsibilities. An agency must 

have an ongoing compliance program which includes self-generated 

routine compliance reviews so tha t it can intelligently and adequately 

monitor title VI compliance with the Federal assistance programs it 

monitors.

I think that is correct. But what are we talking about? What are 

these critical reports focusing on? They are focusing on an agency 

that has at present five civil rights compliance officers attempting to 

enforce a multibillion-dollar program having approximately 38,000 

recipients.

Secretary Schmults said Treasury is about to add five additional 

people, and they will use some auditors, perhaps with training, to 

assist in the title VI implementation effort. Now, it seems to me unrealistic to expect the Department of the Treasury to undertake routine compliance reviews of any of its recipients, plus undertaking 

appropriate investigation of the variety of complaints it receives with 

the kind of staffing it now has.

I am fully cognizant of the interest in maintaining appropriate 

limits to Federal agency budget, but at the same time it seems to me— 

and I could not agree with Chairman Flemming more—tha t civil 

rights must have the highest priority with respect to assessing where 

Federal monies should be expended.
193

I would not say that all of the problems we are faced with today 

relate specifically to understaffing. Tha t is perhaps too easy to say. 

Federal agencies often make that complaint. But I do think there is a 

certain logic to the conclusion th at 10 people cannot do the job.

Ten people and perhaps twenty people cannot. It seems to me we 

have to look at the program and say what can Treasury do with what 

staffing it has and assess it on that basis. I would like to further mention that the Department of Justice fully supports the Department of 

Trea sury’s view with respect to its deferral authority and with respect 

to the views it takes as to withholding Federal funds in the context 

of ongoing litigation.

I think these are some of the most important issues that we can discuss today. I hope we will get into these very serious policy issues, 

the relationship of title VI with section 122 and the differences between 

these statutes, and the reasons for different remedies in revenue sharing 

and title VI.

With that, I apologize for this lengthy statement, but I hope we will 

be able to get into these areas, Mr. Chairman.

Air. Edwards. Thank you, Mr. Dempsey.

Air. Drinan ?

Air. Drinan. Thank you, Air. Chairman and Mr. Dempsey. I took 

notes of the statement we don’t have. Are you speaking for the administration when you say that civil rights have to take top priority? 

Are you speaking for Air. Pottinger or Air. Levy ? Can we quote you as 

being binding on them.

Air. Dempsey. I am speaking for myself.

Air. Drinan. You are not speaking for the Department of Justice? 

They sent someone who can’t speak for the D epartm ent of Justice?

Air. Dempsey. We have to face the facts-----

Air. Drinan. We have a lot of things to do. I have three other hearings that I should be at.

Air. Butler. Alaybe if you let the gentleman answer the question we 

can move on.

Air. Drinan. We want to know what the Department of Justice 

is going to do about title VI and the nondiscrimination section. Have 

you talked with Air. Potting er or others? Is this binding on them? 

Can we use this as testimony ?

Air. Dempsey. Look, Congressman Drinan, Air. Schmults said yesterday tha t they were u nder severe staffing constraints and that the 

recommendations for increments with respect to their civil rights 

provisions were not granted by the Congress.

I am not in a position to say that the requests of the executive— 

of the Department of Treasury were insufficient. O f course not. What 

I am saying is that those requests have not been granted in full.

Secondarily, I am saying tha t we have to analyze what the Dep artment of the Treasury is doing with the staffing, the human resources it 

has. That is all I am saying. We should look at programmatic deficiencies in th at context. This is also true with respect to the Department of 

Justice.

Air. Drinan. I Iow many people at the Department of Justice work 

full time on enforcing civil rights in revenue sharing ?

Air. Dempsey. We have no one working full time.
194

Mr. Drix ax. No one fu ll time at all ?

Mr. D empsey. No one work ing fu ll time.

Mr. Drix ax. H ow many people did you have o rig inall y ?

Mr. Dempsey. We never had any one working fu ll time. However, a 

major par t of our res ponsibility goes into revenue sharing. I sho uld 

also say th at th e Em plo ym ent S ection of the Civil Righ ts Division has 

brought a n um ber o f cases in whi ch reven ue sh aring counts have been 

inc lud ed in th ese cases.

The Edu ca tio n S ection w ould also be in volved in the revenue sh arin g 

effo rt where revenue sha rin g moneys are ex pended in educational pr ogra ms. T his would be t ru e of an y othe r section w ith in the C ivil Ri gh ts 

Divisio n; so while the princ ipa l focus fo r conducting com plia nce review s p ur su an t to th e A tto rne y Ge ne ral’s indepe ndent a utho rity u nder 

section 122 is assigned at the present time w ith in the Fe de ral prog ram 

section , othe r sections of the Civil Ri gh ts D ivision have those res ponsibilit ies as they come up in th ei r ongoing lit igation respon sibilities.

Mr. Drix ax. Th e Justice Dep artm en t has othe r obligations, too. 

Und er Executive Or der 11764, the Ju sti ce Dep artm en t has been assigned the top coo rdination and lea dersh ip role. W ha t, if an ything , 

have you done pu rsua nt to th at ma ndate wi th rega rd to revenue 

sh aring ?

Mr. Dempsey. Con gressman Drina n, Assis tan t At torney Gener al 

Po tti ng er, an d Gr aham W at t, th e for me r Direc tor of the Office of 

Revenue Sh aring, had some disc ussion some tim e ago with resp ect to 

the appli catio n of the Ex ecu tive o rd er to t he revenue sh aring p rog ram .

Mr. Drix ax. li as an ything else ha ppened?

Mr. Dempsey. I f I may, I wou ld like to finish. T he Office of Revenue 

Sh ar ing too k th e view t hat the Ex ecuti ve order d id not cove r th e rev ­

enue sh aring prog ram because revenu e s ha rin g was not a title V I pr ogram and tlie Execu tive orde r spoke specifica lly only to coo rdination 

with resp ect to t itle VI o f the 1964 Civil Righ ts A ct.

More rec ently—as our answer to one of th e questions t he committee 

has asked ind icates—more rec ent ly, th e Dep artm en t of Tr ea su ry has 

tak en the view th at the Execu tive orde r does in fact cover the gene ral 

revenue sh arin g pro gra m. We h ave written to t he De pa rtm ent of the 

Tr easu ry and have said th at giv en th at sit ua tio n we wa nt to exercise 

an overs igh t responsibility with respec t to how the Dep artm en t of 

Treas ur y is co nducting its civil r ig ht s prog ram .

So, in response , we should say th at the Dep artm en t of Ju sti ce has 

not hither to exercised a n ov ers ight res ponsibility with respect to rev ­

enue sha rin g a lth ou gh we have col lab ora ted ve ry closely w ith th e O RS 

in pr ov iding guidance, ass isting in renewal legislation, loaning OR S 

Civ il Ri gh ts Div ision pers onnel fo r th e per for ma nce of compliance 

reviews, an d the like.

Now th at it is cle ar wh at t he Ex ecuti ve order cove rs, we will be ex ercis ing those oversi gh t re spo nsibilities.

Mr. Drix ax. W ho will be exercisin g them if no one works full tim e 

on them ?

Who is in cha rge ?

Mr. Dempsey. Le t me pu t it th is way. We have conducted 44 complianc e reviews pu rsua nt to the Atto rney Ge ne ral’s au tho rity. Ob viously . a su bs tantial am ount of tim e wi thin ou r section is devoted to 

en for cin g the At torney Ge neral ’s role. I can not tell you th at every
195

attorney or certain attorneys will be working full time on revenue 

sharin g—we have other litigation responsibilities and coordinating 

responsibilities under the Executive order.

Mr. Drixax. Mr. Chairman, my time has expired. I hope tha t there 

will be an opportunity for another round.

Mr. Edwards. Yes; there will be.

The committee will recess for 10 minutes for a vote on the floor. 

[Voting recess.]

Mr. Edwards. The subcommittee will come to order. I recognize 

Mr. Butler.

Mr. Butler. Thank you, Mr. Chairman. I would appreciate very 

much if you would tell us about the Boston case. Tell us where it is 

and why—first, do you know anything about the Boston case?

Mr. Dempsey. That case is being handled by the Employment Section of the Civil Rights Division. There is a revenue sharing count as I 

understand it, in that action. I think the matter—there has been a decision at the district court level and at the appellate court level and I 

think certiorari has been denied by the Supreme Court.

At no level in th at litigation have stay orders been entered holding 

up remedying the discrimination. I cannot speak to the specifics of that 

case.

Mr. Butler. I thank you very much. I hope if anybody else asks 

you about it, you will plead ignorance.

T have no serious quarrels with your testimony. I do think I want 

to clarify in my own mind the line th at Mr. Drinan was takin g with 

reference to the extent to which you are speaking for the Department.

I guess your answer to t hat is that you had not cleared your testimony one way or the other with the Department because you did not 

consider it was necessary.

Mr. Dempsey. I am appearing here at the specific request of this 

committee. Mr. Potting er was also to appear on behalf of the Attorney 

General. I have talked with Mr. Pott inge r with respect to the testimony I am to give here today in answer to some of the questions that 

the committee had and t ha t we responded to in written form and any 

other questions the committee may ask.

In my own mind, and I am sure this is Mr. Pottinger's view, th at 

anything I say here today, unless I qualify it otherwise, would represent the position of the Department of Justice.

Mr. Butler. That satisfies me. Basically the view I got from von was 

it is a little bit unfa ir to be critical of the Office of Revenue Sharing if 

they have only got an extra five people with this large a responsibility.

Mr. Dempsey. Absolutely.

Mr. Butler. If they are fallin g short of what some people consider 

its responsibility, it is an appropriations and staffing problem and not 

principally a problem of legislation.

Mr. Dempsey. That is correct.

Mr. E dwards. You have indicated in response to the subcommittee’s 

questions tha t the Justice Department has received 31 complaints 

alleging discrimination under the Revenue Sharing Act.

Some of the cases the Justice Department is still investigating. 

Others have been referred to ORS. On w hat basis does the Justice Departm ent determine whether a complaint should be investigated by 

itself or by ORS ?
196

Air. Dempsey. Congressman, we have undertaken to refer complaints 

on the following bases: One, when the complaint we receive has concurrently been received by the Office of Revenue Sharing. Two, where 

the complaint raises not only civil rights allegations—allegations of 

civil rights violations but also alleges programmatic violations.

Three, under certain circumstances we have referred complaints to 

the Office of Revenue Sharing because of budgetary constraints which 

would have impeded us from implementing appropriate investigation 

of such complaints.

Four, our principal focus thus far has not been complaint investigation but rather to undertake a systematic evaluation of revenue 

sharing programs based upon certain objective criteria which we use 

to select certain sites for routine compliance reviews.

Air. Edwards. I believe you said earlier that you have no full time 

professional personnel assigned to revenue sharing enforcement; is 

that correct ?

Air. Dempsey. That is correct.

Air. Edwards. How much has the level of employees working full 

time on revenue sharing decreased over the past year? AAThat did you 

have a year ago or 2 years ago in this area ?

Air. Dempsey. To the best of my recollection, I think over a year ago 

we may have had a total strength of about 20 attorneys. A t the present 

time we have 9 or 10 attorneys in the section.

AVe were over strength at th at time and we now have an authorized 

strength of 15 attorneys. In addition, however, we have a coordination 

staff whose principal responsibility—they are not attorneys but they 

are professionals—is to act as liaison with title AT offices in the various 

gra nt agencies.

Now th at the authority for oversight of the revenue sharing program has been clarified through agreement between Treasury and the 

Justice Department, it would seem to me an appropriate function of 

our coordinators would be to institute such oversight functions rathe r 

than our attorneys who are principally litigation oriented.

Air. Edwards. Does your section plan to seek more personnel ?

Air. Dempsey. Now that we are under strength, we have been interviewing attorneys from time to time and I feel we will come up to 

our authorized strength at the a ppro priate time.

Air. Edwards. lia s the Justice Department made any efforts to 

advise the public of its rights under the antibias provisions of the 

Revenue Sharing Act and of the D epartment’s enforcement responsibilities?

Air. Dempsey. AATell, we do, of course—we have participated in and 

have attended a few conventions. AAre have provided a publication that 

publishes revenue sharing news with information with respect to the 

Department of Justice’s program in implementing the Attorney General’s independent responsibilities.

AAre have more recently been contacting public interest groups, the 

Lawyers Committee, the Southern Regional Conference and so on. to 

expand upon and build upon our contacts with other people so tha t 

people do know the Attorney General is implementing his responsibility.

I think, however, of course more could be done but at the same time 

it has not been a principal responsibility of the Attorney General to
197

publicize his role under any of the other titles of the 1964 Civil Rights 

Act a nd/ or other civil rights legislation. I think there is nothing wrong with it and we try to do what we can. 

Mr. Edwards. Except tha t there has generally been a rather dedicated enforcement effort made in various areas covered by the 1964 act.

Mr. Dempsey. Well, I thin k th at is so but I think if the implication 

is that there is not a similar dedication with respect to the General Revenue Sharing Act, it would be an incorrect implication. Much of the work that we have done thus far indicates that what problems exist, at least in the areas we have looked into, exist in the area of employment discrimination. We already have an employment section whose principal responsibility—sole responsibility is to un­ dertake enforcement of title VI I of the 1964 Civil Rights Act. There is no reason for us to duplicate the responsibilities of other sections of the Civil Rights Division for example, to simply go around to various sites and uncover the same sort of problem th at our employment section would uncover. The principal focus of our efforts has been to attempt to see whether there is discrimination in the provision of municipal services in areas which are not otherwise covered by Federal civil rights law and not 

otherwise handled by other sections of the division. Thus far we have found minimal evidence to indicate tha t there is service discrimination. Now this is not to say, however, that it does not exist. It may be because our site selection criteria are at fault. We currently review whether such criteria are adequate to give us sufficient exposure to various sites in which there may be services discrimination. I thin k the fact tha t you have not seen a great many suits in this area is not due to the fact that we have not been attempting 

to vigorously enforce this provision. It seems to make no sense to me to duplicate the effort of the division 

in another area.

Mr. E dwards. Thank you.

Mr. D rinan?

Mr. Drinan. Tha nk you, Air. Chairman. I wonder how you would react to the proposition or suggestion made by some people tlie whole civil righ ts enforcement responsibility under 

revenue sharin g should be transferred to Justice?

Mr. Dempsey. The Department would not find that an appropriate 

transf er of responsibility. It seems to us that the statute makes it very clear tha t the principal responsibility under the present act lies with the agency tha t has responsibility to administer the totality of the 

act.We view the Attorney General’s function as merely supplemental to 

tha t of the Secretary of the Treasury. There is no reason why the Treasury cannot mount a sufficient effort given additional resources, a reasonable effort to implement the Secretary’s responsibility. I do not think it is a solution to simply say th at based upon certain evidence th at because a sufficient amount has not been done by one agency, the only solution is tran sfer it to 

another agency. My own view and, I think, tha t of the Department would be tha t the best thing that can be done is for the Department of Justice and the Department of Treasury to collaborate closely to see to it tha t
198

both agencies implement th is civil rights responsibility the best way 

they can, given their resources.

Mr. Drinan. On another point that keeps coming up, the Office 

of Revenue Sharing seems to suggest tha t vigorous efforts by them 

are necessary because first local officials are receptive to compliance.

They suggest th at more cannot be done as it would be inconsistent 

with the unique nature of the revenue-sharing program. Would you 

give the views of the Department on that ?

Mr. Dempsey. Well, with respect to the latter question on the uniqueness of the program, it is a unique program because it was to be and is 

now a thrust of the so-called new federalism program of expending 

Federal moneys with minimum strings attached.

I don't think President Nixon believed and I certainly don't think 

the Department of Justice or for that matter the Department of Treasury believes that that relieves the executive branch of any responsibility to firmly and efficiently enforce the civil rights responsibilities 

which are a part of that act.

Mr. Drinan. Except that for some years, there was that ambiguity 

tha t now has been clarified. Tha t Justice does have the same supervisory role over revenue sharing as over the other programs.

Mr. Dempsey. But we are dealing with two different questions. The 

first question is how has Justice—or how have Justice and Treasury 

implemented their independent responsibilities? The second question 

is what has Justice done to implement its coordination responsibility 

over Treasury?

With respect to the first, it seems to me tha t the Congress appropriately is considering how effective Justice and Treasury are in implementing this responsibility. T don't think that Undersecretary 

Schmults’ testimony yesterday indicated that there was any lessening of a responsibility with respect to civil rights oversight and investigative complaints reviews because of the unique nature of the 

program.

T think mv views and the views of the Department of Justice are 

consistent with his views on that. As far as the ambiguity about 

the coordination responsibility, there was not any ambiguity. There 

was basic disagreement. Tt was a judgment tha t I made at the time— 

of course, T am subject to criticism for it. perhaps—is that if we did not 

have a coordination responsibility, under the executive order we could, 

nonetheless, be responsive to the Department of Treasury in the manner we have been. We have been there to assist them as they saw fit to 

use us. But in terms of weighing in with vet one more report on evaluating how the Department of the Treasury was implementing its 

responsibility, that seemed to me to be a duplication of effort since it 

already has been done bv other Federal agencies and private authors.

Our best effort, I felt, could be made in implementing the Attorney General’s independent responsibility. Now it seems to me that 

since the reports are in, that Treasury itself is reevaluating its position and evaluating the quality and quantity of its enforcement at 

this stage.

The Department of Justice has a significant role to play and it is 

one we intend to plav. On October 8. Mr. Pottinger wrote to Mr. 

Schmults indicating his pleasure that Treasury now was in accord 

with the Department of Justice’s view with respect to our oversight
199

responsibility. Accordingly, Mr. Pottinger requested tha t we collaborate closely in effecting changes as they may be required and expressed his own concern tha t it would to important for both D epart­ ments to maintain consistent standards of implementation so tha t the Federal Government would speak with one voice in terms of implementing compliance responsibilities.

Mr. Drinan. On that question of the consistent standards of compliance, it is my understanding that for some 18 months the Depart­ ment has been preparing appropria te investigatory standards under 

title VI. Is there any date when they might be available ?

Mr. Dempsey. Congressman Drinan, these proposed standards have 

been under review for some time and Air. Pottinger is going to submit them to the Attorney General in a few weeks. I wonder if I might 

explain the delay with respect to implementing those standards. They are very complete and they assume a role for the Attorney General not only with respect to revenue sharing but also with respect to 

title VI. The basic question these standards address is whether the Attorney General has a directorial responsibility under the Executive order or something less, something one would call a coordination responsibility. 

Chairman Flemming said he thought tha t the Executive order gave the Attorney General the greater authority and that it was his view 

tha t it was essential for the Federal Government to have one focal point in which direction for title V I enforcement could be vested or lie. Without question, I can say that the Department of Justice agrees with that view. The point is where should tha t central direction logi­ cally lie? This is a long way around responding to your question, but we are not only considering the proposed standards, but what they imply which is a considerable amount. That is one of the reasons we have taken a great deal of time to deliberate. But 1 think we will have a conclusion with respect to those 

deliberations in a very short time.

Mr. Drinan. Thank you very much. My time has expired.

Air. Edwards. Air. Badillo.

Air. Badillo. You testified t hat the Justice Department has an employment section and an education section. Why hasn ’t the Justice De­ partm ent set up a revenue sharing section, in view of the fact tha t there are 39,000 jurisdictions and many billions of dollars involved?

Air. Dempsey. Tha t is an entirely appropriate question and at the 

risk of repeating something I said I believe during your absence. Con­ gressman, what we have found in the course of our routine compli­ ance reviews is that the problems which appear to exist in the main 

appear to be employment problems. Of course this is common knowledge that there is substantial employment discrimination for a variety of reasons. But we have an employment section and we do not want to duplicate the efforts of th at section. The division has certain priority standards by which we seek 

t o m a x i m i ze-----

Air. Badillo. How many compliance reviews have you made? Isn’t 

it something like 30 ?

Air. Dempsey. We made 44.

Air. Badillo. I don't think that that is a valid sample on which to 

base such a fundamental decision.
200

Mr. Dempsey. Wliat we are trying to do, as I say, our focus principally is the determination whether there is services discrimination 

with respect to the operations of municipal recipients.

Thus far the evidence would indicate tha t there is not any as to— 

or very little—as to those jurisdictions we have looked at. This may be 

a problem not of whether services discrimination exists in municipal 

operation, but our selection criteria.

W e are reevaluating those criteria and we are going to try to move 

into other areas to determine what level of discrimination exists. It 

seems to me at that point, if there is significant discrimination disclosed through our reviews, then we ought to augment our resources.

Mr. Badillo. The point is tha t your sample of 44 out of 39,000 is 

a very small sample.

Mr. Dempsey. The compliance reviews were based on a much larger 

sample. We evaluate the residential segregation of an area, the employment profile, the history of discrimination in the area, and in formation we gather from other sections in the division.

Mr. Badillo. Are you evaluating in New York City ?

Mr. Dempsey. No. we have not.

Mr. Badillo. Then is a great deal of revenue-sharing money spent 

in tha t city alone. That city should certainly 1x5 included in any Justice 

review. You have made the decision tha t you do not need a revenue 

sharing section based on your 44 compliance reviews. That is a very 

small sample on which to make such a judgment. It is okay to blame 

Treasury and say they only have five civil rights investigators. However, I really do not thin k that the Justice Department has made an 

evaluation of what its own needs are and of what its staff requirements 

should be in order to gear up for this very serious enforcement 

responsibility.

Mr. Dempsey. Well. I would not want to leave you with the impression tha t we have made a judgment on this matter.

Mr. Badillo. Are you still reviewing?

Mr. Dempsey. We are still reviewing. We want to evaluate the selection criteria we have been using.

Mr. Badillo. When you reach a final conclusion, would you re port 

that conclusion to the subcommittee so that we can then decide whether 

you are staffing up adequately in order to comply with the requirements of the law?

Bending that, in view of the fact that you have no full time attorneys 

working in this area, would you support an amendment to the law 

enabling private individuals to bring their own actions under the civil 

rights provisions of the Revenue Sharing Act ?

As you know, that was one of the recommendations of the Commission on Civil Rights and it is also a provision included in Fathe r 

Drinan’s bill.

Mr. Dempsey. Well, under title V I of the 1964 Civil Rights Act, the 

right of private action has been acknowledged bv the courts.

I see under those circumstances no reason why private individuals 

could not bring actions under section 122.

Mr. Badillo. If you agree then tha t private individuals should have 

that righ t, wouldn’t it be appropriate to simply make sure by amending the Revenue Sharing Act? In that way, there would be no question.
Mr. Edwards. If the gentleman will yield, I think that we should 

also consider adding the provision that attorney fees will be available. 

Mr. B adillo. Exactly, yes. Would you support Mr. Dempsey?

Mr. Dempsey. W ith respect to tha t particu lar question, I have not 

discussed tha t with Mr. Potting er but it certainly—I see no reason 

why private individuals should not be accorded tha t right under general revenue sharing which the courts have tradition ally recognized 

under title VI.

Mr. Badillo. Would you get us an answer specifically as to whether 

or not the Department will support tha t ?

Mr. Dempsey. Yes.

[Subsequent to the hearing the following letter was received for the 

record:]

U.S . Depa rtme nt of J us tice, 

W as hi ng to n, D.C., Oc tob er 2'/, 1975.

H on . Don E dwards,

Cha irm an , Su bc om m itte e on Civ il an d C on st itutional Rig hts , Hou se Ju dic ia ry

Com mitt ee , Hou se of R ep re se nt at iv es , W as hi ng to n, D.C.

Dear Congre ssm an E dwards : T hi s is in resp on se to yo ur le tt er of Octo be r 17, 

1975, re qu es ting a resp on se by to day to que stio ns po sed duri ng my testim on y on 

Oc tobe r 9. 1975 be fore y our Su bc om mitt ee .

Th e qu es tion s co nc ern prop os ed am en dm en ts to th e Gen eral Rev en ue Sha ring 

Act which wo uld (a ) am en d th e Act to pr ov id e a p ri vate ri ght of a ct io n ag ai nst 

“any S ta te go ve rn m en t or u n it of loca l go ve rn m en t, o r again st a ny officer th er eo f 

* * and (b ) prov ide, w ith re sp ec t to su ch su its, fo r th e aw ar d, und er ce rt ai n 

circ um stan ce s, of “r ea so na bl e att o rn ey fees as p a rt of th e co sts.”

As to ex plic itl y pr ov id ing a p ri v ate ri ght of ac tio n, we are unaw ar e of th e 

ne ed fo r su ch a prov ision. T her e have bee n se ve ra l pri vate su it s br ou gh t to dat e 

again st go ve rn m en tal enti ti es to en fo rc e th e pr ov is io ns of th e Ac t an d, non e, to 

ou r know led ge, has bee n dism isse d fo r w an t of a ju ri sd ic ti onal prov isi on . Ac cording ly, in th e ab senc e of a dem onst ra te d need fo r su ch a prov ision, we wo uld be 

oppo sed to su ch a n am en dm en t.

As to th e att orn eys’ fees pr ov ision, you m ay he aw are th a t C ha irm an Ro din o, 

by le tt er of Octo be r 1, 1975, re qu es te d th is D ep art m ent's view s on som e ei gh t 

bills, ea ch of which invo lves am en di ng one or mor e ex is ting st atu te s to pr ov id e 

fo r an aw ard of att orn eys’ f ee s in di ffer in g ca se s an d circ um stan ce s. The D epart ­

men t is no w pr ep ar in g it s resp on se to C ha irm an Rod ino's re qu es t, an d an y comjn e n ts on th is as pe ct of H.R . 8329 sh ou ld aw ait th a t respon se.

Sinc erely,

J. Sta nley P ottinge r, A ss is ta n t A ttorn ey Ge neral , Civi l R ig hts Divi sio n.

B y: R obert N. Dem ps ey , Ch ief , Fed er al Pro gr am s Se cti on .

Mr. B adillo. You say that you have reviewed the proposed regulations of ORS and that you cooperated with ORS in dra ftin g them ?

Mr. Dempsey. We have given them our views with respect to the 

regulations.

Mr. Badillo. Do you agree with the specific regulations which allow 

the Treasury Department to make its own independent determination 

as to whether there was or was not discrimination, even after a final 

order of a Eederal district court ?

Mr. D empsey. The position that the Department took in that with 

respect to tha t particular regulation was as follows: It is our view 

tha t the utilization of fund terminations in the context of ongoing 

litigation, particularly litigation brought by the Attorney General, is 

not necessary to vindicate the rights of individuals who may be victimized by the alleged discrimination. In response to one of the questions 

of the committee, we simply said that where the Attorney General is 

already bringing an action, tha t it would be appropriate to handle 

the entire matter within the context of the litigation.
202

We saw no concurrent responsibility on the part of the Secretary 

of the Treasury to institute-----

Mr. Badillo. I know my time has expired but that is not the question.

If you happen to find, based on an action brought by an individual, 

that there is a violation of the law, isn’t there a responsibility to insure 

that tha t violation ceases ?

Mr. Dempsey. Of course. But under certain circumstances where the 

court has entered an interlocutory decree-----

Mr. Badillo. I am talking about a final order.

Mr. Dempsey. Once there is a final order with respect to a matter, i

there would be no reason to withhold Federal assistance at that time 

because the final order would enjoin the discrimination which is the 

subject matter-----

Mr. Badillo. The matter can be appealed for years. It could go all 

the wav up to the U.S. Supreme Court. In the meantime the jurisdiction continues to receive funds even though there has been a final 

decision bv the district court.

Mr. Dempsey. Well, it seems to me that while there may be appeals 

taken, there is another question and that is whether stays are entered 

with respect to Hie decree of the district court. It seems to me if the 

district court refuses to enter a stay with respect to its injunctive order, 

then the remedial provisions of tha t injunctive order are carried out 

during the appellate process. There would be—under no circumstances would there be a reason for 

the Treasury to withhold funds. If a stay is not entered, it would indicate tha t the question is sufficiently close that the district court felt 

that the matter should be decided by the court of appeals.

Under those circumstances, it would seem to me appro priate for the 

Department of Treasury to stand back and see how the court of appeals 

would decide the issue.

Mr. E dwards. The time of the gentleman has expired. The gentleman will have another opportunity.

Mr. Kindness?

Mr. Kindness. I apologize for being out of the room part of the 

time. There are too many things happening this morning. T would like 

to go into now one particular area a little bit and that is the comparison th at is made between title VI and the ORS actions in enforcement ,

under the general revenue sharing program.

This comparison has been made rather constantly in these hearings.

Would you care to indicate any wav in which you would distinguish 

between the enforcement powers that exist under title AT as compared to revenue sharing programs?

Mr. Dempsey. Yes. Title VI is drawn more narrowly than section 

122. Specificallv title VI covers only discrimination on the basis of 

race, color, and national origin. Section 122 adds sex discrimination.

Bv regulations, the Department of the Treasury has construed section 

122 to cover employment discrimination. Section 604 of title AT excludes employment discrimination from coverage except under sections where the primary objective of the Federal assistance is to 

provide employment and. by regulation, where it can be said that 

employment discrimination has an adverse effect upon the beneficiaries.

It is at least a question whether—and I think a question for the
203

Congress in its renewal legislation—as to whether employment discrimination should be covered under section 122. Treasury has concluded that it is covered. The Department of J us ­

tice agrees with this view, specifically we agree because, among other reasons, in 1972, Congress amended title A ll under the Equal Employment Opportunity Act to cover public employment. These are developments since the passage of title VI in 1964. Und er 

these circumstances I think employment is approp riately covered. It is a question tha t I think deserves some consideration because 

t title VI now does not cover employment discrimination. Tha t is another question. Should it ? I see no reason why title VI coverage and relief should be more 

limited than under the General Revenue Sharing Act. Now with re- 

■ spect to relief, gettin g away for a moment from coverage, Treasury has taken the position that under General Revenue Sharing, Treasury not only has the righ t to terminate or refuse to grant or continue 

assistance, but the statute gives Treasury authority to require (1) re­ payment of funds used in a discriminatory manner, and (2) to with­ hold all revenue sharing funds in future entitlement periods if the 

noncomplying recipient does not come into compliance. Those are fairly weighty tools to use. Under title VI. termination 

or refusal to grant are the only sanctions authorized. To my knowledge title V I, if I am correct and I think I am, title V I 

does not authorize repayment and it certainly does not authorize withholding more funds than in the program in which the discrimination was found to exist.

Mr. Kindness. So that in a very real sense section 122 of the Revenue 

Sharing Act is much broader already than title VI because it does include employment and because the deferral mechanism and other mechanisms are pretty weighty and are available under section 122 ?

Mr. Dempsey. That is right.

Mr. Kindness. I have no furth er questions, Mr. Chairman.

Mr. Edwards. Ms. McNair?

Ms. McNair. Thank you, Mr. Chairman. On the issue of deferral, in responding to the subcommittee's questions, the Justice Department stated that it believed that the Treasury , Department does have the authority to defer funds pending the out­ come of administrative proceedings but tha t “It is clear that the exercise of such authority is within the administrative discretion of 

the Secretary.”

- Based on the Department’s extensive coordination experience with

other title VI agencies, in its opinion, is there any reason why Treasury should not exercise that discretion in view of the fact tha t other title 

VI agencies have so exercised it ? Is there any distinguishing feature with respect to the Treasury Department or the revenue-sharing program that would justify 1 reasury’s not exercising that discretion ?

Mr. Dempsey. At the risk of boring you. I wonder if I might give 

you a fa irly extended answer because that is a very central question.

It is a question that is at the heart of the Robinson v. Schultz case 

and one which you have discussed in previous testimony. I would like 

to start with title VI and then answer your question because it seems
204

to me that is the starting point, when we analyze what Treasury can 

and cannot do.

Ms. McNair. We are agreed on what it can do. I really want a 

departmental opinion with respect to the appropriateness of Treasury's refusal to exercise an authority which we agree tha t it has.

Mr. Dempsey. In the context of litigation where the Attorney General has brought a suit let’s sav under 122, in our view the Secretary 

has no further role to play with respect to implementing responsibilities under 122.

Ms. McNair. Let's take it out of the context of litigation for the 

moment.

Mr. K indness. Would the lady yield for just a moment? Since this 

answer may be rather extensive, might I ask if you will cover this 

aspect of it while you are speaking? Is there any point at which the 

rights of the majority ought to be considered ?

Mr. Dempsey. You mean the beneficiaries ?

Mr. Kindness. Yes.

Mr. Dempsey. Absolutely. The Treasury Department has recognized 

that, it does have deferral authority. I think sometimes there is a mixture of words here. I think they call it withholding. We use the term 

deferral in the context of maintaining the status quo.

It is not a sanction. I t is not interim relief. It is ex parte action on 

the part, of an administrative agency to hold the line until a formal 

administrative hearing can he held. It is particularly useful in a situation where you have noncontinuing assistance where an application 

has been made for such assistance.

If you have evidence that there is discrimination you defer action 

on the application until you can determine whether there is discrimination or not pursuant to a hearing and so on. But Treasury does not 

have that kind of a program.

It has what we would call a continuing assistance program. Now 

one can play around with whether it is or it is not a continuing assistance program and I have done that myself, but it is very clear tha t 

Treasury, in terms of the expectations of recipients to receive certain 

fluids at certain times of the year throughout the period of the auth orization of the statute—that certain actions are taken on the basis of 

these authorizations—these expectations and that are continuing Federal programs.

There are Attorney General guidelines for the implementation of 

title A I that spell out specifically that with respect to continuing 

assistance programs it is generally inapprop riate to exercise a deferral 

function. And we think the logic o f those guidelines is equally applicable to the revenue-sharing program.

One of the points made in the guidelines is that during the continuation of this assistance, the discrimination can be eradicated.

Ms. McNair. But Treasury itself does acknowledge that entitlement 

periods are in fact blocks of time which divide revenue-sharing payments. At the beginning of these periods, assurances must he provided 

and unless those assurances are given, then there is a withholding of 

the next entitlement payments under the State and Local Fiscal Assistance Act, That clearly indicates that this is not a “continuing 

program.’’
205

Mr. Dempsey. I used the term deferral because it is used in title V I 

and it makes it easier for me conceptually. You are absolutely correct. 

We think t hat really meets the concern or the interests th at we bad at 

the time the A ssistant Attorney General wrote to Mr. W att in March 

1973, recommending the possibility of deferral.

Treasury in a recent technical memorandum published in June 1975, 

acknowledges the fact tha t where there is an initial determ ination 

made that there has been discrimination, where there is discrimination 

in a certain program which the recipient intends to use future entitleI ment payments, then those entitlement payments will not be made until

satisfactory assurances are provided.

In our view that is a correct analysis of the Secretary’s authority. 

In answer to your question, yes, they do have deferral authority and 

secondly, I think they have interpreted correctly the circumstances 

under which they can exercise that authority.

Should they exercise the authority? That depends upon the individual fact circumstances. Mr. Kindness has asked should the interests of the majority be considered. Let us say you have a situation 

as follows:

Let us assume in the city of Chicago we are not dealing with the 

police department. Let's deal with something more attractive in the 

sense of social import such as a $50-inillion expenditure to set up drug 

and rehabilitation centers, mental health care clinics, programs of 

this kind.

Would we actually want to defer fund ing those programs on the 

basis of an allegation of employment discrimination in the operation 

of those programs ?

Not employment discrimination, that has an impact upon the beneficiaries, but simply plain old employment discrimination. Under circumstances like that, the Secretary should have discretion as to whether 

he is going to exercise deferral or not.

We have to keep in mind deferral is not a sanction. It is simply an 

attempt to, where approp riate, maintain the status quo.

Mr. Edwards. Mr. Klee ?

Mr. Klee. Thank you, Mr. Chairman. I think the last point made 

is an important one. The general approach of the DO J and the Trea sury and the administration is where a civil rights violation is found, 

action should be taken to remedy tha t violation but not to punish 

the people in the jurisdiction.

Mr. Dempsey. That is right. You will find that throughout the legis- 

„ lative history of title VI. The floor leaders discussed the utilization

of fund termination and the great sensitivity it held.

Mr. K i.ee. I would like to probe fife area of the definition of discrimination. The point has been made that regulations have not been 

promulgated so that State and local governments and citizens residing 

1 herein so that citizens can determine whether funds have been spent 

in a discriminatory manner.

Should the facts—the effect of those funds on various minority communities be taken into account ? Assume we are looking at street repair 

and streets in the minority community are more in need of repair 

than in another part of town but funds are disbursed on an equal 

basis to the minority and the majority community.

Do you think that that action is discriminatory ?

Mr. Dempsey. Well, let me answer it this way.

6 2 -3 3 1— 75 ------ 14
206

It could very well be discriminatory. The point of departure is to 

analyze whether there has been discrimination in providing paving 

to the minority community. If there has been discrimination, then 

the first obligation of the city is to remedy that discrimination.

That may well mean expending all of the revenue-sharing moneys 

or for that m atter local moneys to remedy the street paving job.

Mr. Klee. Let’s assume we have a rare city tha t can prove there was 

no paving discrimination, tha t the problem was due to vandalism or 

whatever on the streets. Then is the equal amount of money being 

disbursed discriminatory ? I

Mr. Dempsey. Say we have street paving or gutters and sidewalks 

or whatever are funded through special assessments. Frequently the 

minority community is economically deprived. They can only obtain 

certain municipal services through the agreement to pay these special 

assessments and they don’t have the money to do that.

Mr. Klee. I don't mean to cut you off but my questions are limited.

Let's take the case of rat control. I f the city expends an equal amount 

of money to control rats and other pests in the majority and the minority community but it so happens that the need is greater in the minority 

community, is that expenditure discriminatory under the Revenue 

Sharing Act?

Should we focus on the action taken in expenditures or on the effect 

in the community ? Does the statute mandate in your view?

Mr. Dempsey. Well, it seems to me t hat if municipal services have 

an effect of denying a certain portion of the populace equitable 

services of course there is discrimination under section 122.

Mr. Ki.ee. Well I suppose that states the administration position.

I would like now to focus attention if T might on the so-called making 

up for past discrimination regulation tha t has been promulgated 

and the extent to which it seems to override the statute in certain cases.

The statute says tha t no person shall be excluded from any program 

or denied the benefits of any program where there are general revenuesharing funds. A regulation implies that in cases to make up for past 

discrimination, the statute does not apply or that certain racial groups 

can be excluded or denied benefits. Ts it your view tha t where that regulation is applied in such a 

manner that it is an unlawful regulation ?

Mr. Dempsey. Well, T don’t know whether T would agree with you 

on the characterization of Treasury’s proposal—proposed regulations—or the actual regulations. Perhaps if you will give me a moment.

Mr. K i.ee. Let me give you an example. There is an Indian camp 

set up for Indian use and other racial groups were denied the opportunity to attend that camp. This*seems to me to be clearly in violation 

of the statute which says that no person—including people that are 

not minorities—shall be excluded from or denied benefits of a program.

Yet the “making up for past discrimination'' was deemed bv counsel 

at ORS to supersede the statute. T was wondering what the Dep artment’s position was on tha t regulation in that particular context.

Mr. Df.mpsf.y. Frankly I would want to give that some consideration,

Mr. K1 ee. That is a difficult problem. I want to respond to you by I

saying th is :
207

The courts have long recognized that affirmative action which may mean taking race into consideration because of past discrimination is appropriate and may be required and has been sanctioned by the 

courts for years and years.

Mr. Klee. Where it is benign, but not to deny the opportunity for somebody else to come in and on merit be particip ating in the program.

Mr. E dwards. The time of the gentleman has expired. All time has expired. We must recess now and we will resume at 1:30. Me would like to keep you here longer, Mr. Dempsey, but we must move along. 

I We appreciate your contribution very much.

Mr. Dempsey. Thank you very much, Mr. Chairman. I appreciate the 

opportunity of being here today.

Mr. Edwards. We stand in recess until 1:30. [Whereupon, at 12:45 p.m., the subcommittee adjourned, to reconvene at 1 :30 p.m.]

after recess

[Whereupon, at 2:15 p.m., the subcommittee reconvened, the Hon­ orable Don Edwards, chairman of the subcommittee, presiding.]

Mr. Edwards. The subcommittee will come to order. I recognize the gentleman from Massachusetts, Mr. Drinan.

Mr. Drinan. Mr. Chairman, I move tha t the Subcommittee on Civil and Constitutional Rights permit coverage of this hearing, in whole or in part, by television broadcast, radio broadcast, and still photog­ raphy, or by any of such methods of coverage pursuant to committee 

rule V.

Mr. Edwards. Without objection, the motion is agreed to. This afternoon certainly promises to be a most enlightening and informative session in this our inquiry into the civil rights aspect of general revenue sharing. We have appearing before us a most distinguished panel of individuals who have intimate knowledge of civil rights enforcement in revenue sharing, at both the national and 

local level. Appearing on our panel this afternoon are three individuals who represent groups which are sponsors of the national revenue sharing project—a project which has engaged in extensive monitoring of the 

program at the local level. Those individuals are Ms. Alice Kinkead, representing the League of Women Voters, Ms. Sarah Austin, representing the National Urban Coalition, and Mr. 'William L. Taylor, representing the Center for National Policy Review of the Catholic University Law School. The other distinguished members of this afternoon’s panel are Ms. Susan Perry, who is staff counsel for the Southern Regional Council in Atlanta. Accompanying Ms. Perrv is Ms. Eddie Mae Steward, who is president of the local NAACP in Jacksonville, Fla. Ms. Steward has had firsthand experience as a civil rights com­ plainant before the Office of Revenue Sharing and T especially want to extend to her my personal gratitude for traveling such a long 

distance to tell us her story. T thank you all for coming and ask that each of you now present a brief statement regarding your experiences and views in this area, after which we will open up the session for questions.

You may proceed.
208

TESTIMONY OF A PANEL CONSISTING OF WILLIAM L. TAYLOR, 

DIRECTOR, CENTER FOR NATIONAL POLICY REV IEW , SCHOOL 

OF LAW, CATHOLIC UNIVE RSITY; SUSAN PERRY, STAFF COUNSEL, SOUTHERN GOVERNMENTAL MONITORING PROJECT, SOUTHERN REGIONAL COUNCIL, ATLANTA, GA.; EDDIE MAE STEWARD, 

PRESIDENT, NAACP, JACKSONVILLE, FLA .; SARAH SHORT 

AUSTIN. VICE PRESIDENT, NATIONAL URBAN COALITION; ALICE 

KINKEAD. DIRECTOR, HUMAN RESOURCES DEPARTMENT OF 

THE LEAGUE OF WOMEN VOTERS EDUCATION FUND 

M r. T aylor. Th an k you .

Mr. Cha irm an an d mem be rs of t he su bcom mittee, mv name is W il ­

liam L. Tay lo r, an d 1 am di re ct or of th e Cen ter fo r Natio na l Po lic y 

Re view , a leg al rese arch an d ad vo cacy gr ou p affili ate d w ith th e 

Cat ho lic Uni ve rs ity Law S cho ol.

The ce nter is one of fo ur or ga ni za tio ns wh ich jo in tly sp on sor th e 

nat io nal revenu e sh ar in g pr oj ec t— an intens ive ef fo rt to m on ito r 

th e op er at io n of ge ne ral reve nu e sh ar in g in co mmun ities th ro ug ho ut 

th e N at io n an d to ga ge th e im pa ct of th e law on m in or iti es an d po or 

peop le.

Am on g th e ce nt er 's re sp on sibi lit ie s ar e co nt in ui ng ov ersigh t of th e 

Fed er al Gov ernm en t's a dm in is tr at io n o f revenue sh ar in g, p ar ticu la rl y 

th e civil rights p rovision s of th e law , an d leg al re pr es en ta tion o f tho se 

se ek ing ad m in is trat iv e re dr es s fo r vi ol atio ns of th e law .

Rec en tly we comp leted a su bs ta nt ia l re po rt fo r th e N at io na l Science 

Foundat io n on civ il ri ghts un der ge ne ral reve nu e sh ar in g. The 

subc om mittee ha s been fu rn is hed cop ies of th is re po rt an d ce rtai nl y 

may repr od uc e an y po rtio ns th a t it deem s re le va nt an d useful to 

co mplete th e rec ord of th is hea ring .

Mr. E dwards. We ha ve copie s of th a t re port , M r. Tay lo r, an d it 

ha s been ma de, w itho ut ob jection, a p art of the su bc om mittee file.

Mr. T aylor. T han k you . 1 do ha ve a pre par ed stat em en t wh ich I 

wi ll tr y to ab brev iate.

As yo u kno w, civ il ri ghts or ga ni za tion s ha ve bee n concern ed fo r 

seve ral ye ar s th at the gu ar an te e of equa l pr otec tio n of th e law s will 

no t l>e m aint aine d un de r g en er al revenue sh ar in g or un de r o th er m easur es th at ha ve as th eir st at ed pu rpos e, an inc rease in “local co nt ro l" 

ov er soci al welfare pr og ra m s.

W hat ev er one ma y th in k ab ou t “lo cal co nt ro l" as a th eo ry , black 

pe op le an d ot he r m in or iti es ha ve speci al reason to kno w th at in pra ctic e th ey ar e th e victim s un der an y pr og ra m th at is locally co ntro lle d 

w ithout effe ctiv e Fe de ra l sa fe gu ar ds .

T his con cer n doe s no t me an th at civil rights gr ou ps are in love 

w ith th e de taile d ad m in is tr at iv e re gu la tio ns an d pl ai n old re dt ap e 

th at ha ve m ar re d some aspe cts of ca tego ric al pr og ra m s. We ha ve 

co nc ern , as you do, ab ou t th e speedy an d efficient de liv er y of servic es 

to citiz en s.

But the re is a b asic d is tinc tion to lx1 m ade b etw een th e m yr ia d s tr in gs 

th at ha ve been at ta ch ed to som e Fe de ra l pr og ra m s an d re qu ire m en ts 

of c ivil righ ts . The ri ght to be trea te d fa ir ly an d w ith ou t di sc rim in ation b ased on race, sex, or ot her in vidiou s co ns id er atio ns in pr og ra m s
209

made possible by Government funds is not simply an administrative 

requirement or string. It is a fundamental ground rule having to do with the integrity of 

the processes of government. Indeed, I believe tha t national guarantees 

of civil rights fall into the same category as ‘‘one man, one vote”— 

they are rules imposed from above on States and local governments, 

not for the purpose of making them weak or dependent but to assist 

them in becoming strong enough to be vital parts of a functional Federal system. Certainly Congress in enacting the State and Local Fiscal Assistance 

Act of 1972 recognized tha t assuring equal treatment under law was a fundamental responsibility that must remain in the hands of the 

Federal Government even when the mechanisms for allocating Federal 

assistance were being altered substantially. The requirement-of nondiscrimination, as you know, was mandated 

in section 122 of the act and specific responsibilities to enforce the 

law and to correct violations were given to the Department of the 

Treasury and the Department of Justice. The enactment of section 122 also constituted implicit recognition 

by Congress that, contrary to the views held by some people, the duties 

of the Federal Government are not satisfied simply by defining the 

light to equal treatment and providing a means for private redress 

in Federal courts. Where the denial of righ ts has been pervasive, as it has in almost every governmental function affecting black citizens and members of 

other minority groups, private lawsuits can make only a small dent in 

remedying the problem. What is required, and what is contemplated bv title VI of the Civil Hights Act of 1964, section 122 and other provisions of law, is 

full use of the powers of Federal agencies assisted by Federal funds.

Rut any reassurance tha t civil righ ts groups may have derived 

from the inclusion of specific antidiscrimination provisions in the 

revenue-sharing law has been dissolved by actual experience with the 

way the law has been administered. Three years have elapsed since enactment of the law, a sufficient 

period to make judgments alxmt the manner in which it is being administered by the Department of Treasury and its Office of Revenue 

Sharing. It has become clear to us from our own investigations and from 

studies conducted by oth ers : 1. That there is pervasive discrimination in programs and activities 

assisted by revenue-sharing funds. 2. That the Office of Revenue Sharing, the agency chiefly responsible 

for securing compliance with the law, has failed to take effective steps 

to prevent or remedy discrimination. I would like to touch briefly on two areas where problems of dis­ crimination commonly arise under the revenue-sharing law—discrim­ ination in the employment practices of State and local governments 

and discrimination in local services provided with Federal assistance.

It has been clear for many years that racial discrimination in State 

and local employment is a violation of the equal protection clause of 

the 14th amendment. But it was not until 1972 tha t Congress provided a remedy for such discrimination by amending title V II of the
210

Civil Rights Act of 1964 and by including section 122 in the State and 

Local Fiscal Assistance Act.

In light of this, we were not surprised to discover that in the great 

bulk of 33 jurisdictions examined bv our project—mainly medium 

and large cities—there were wide gaps in the percent of minorities 

and women in the work force and the percent employed in particu lar 

departments and agencies of Government and often in the city as a 

whole.

In one large southern city, New Orleans, with a 50-percent minority 

population, the fire departm ent which received revenue-sharing funds 

had fewer than 3 percent minorities. In a border city. Louisville, with 

a 24-percent minority population, the health department which received revenue-sharing funds employed only 7 percent minorities.

And there were several cities with departments which employed 

few minorities or women not only in professional or managerial positions, but ewn in blue collar and secretarial positions where minorities 

were employed elsewhere in the city. There is evidence, also, as others 

will testify, tha t similar disparities exist in employment in State 

agencies.

The basic finding of the GAO study reinforce those which we 

reached independently. These disparities reflected in the GAO report 

and our study are a reflection of various State and local practices that 

fail to conform to the requirements of Federal civil rights law—the 

use of tests for hiring and promotion that exclude minorities and 

tha t are not job related, the failure to adopt affirmative techniques for 

recruiting minorities and women, and the persistence of instances of 

overt, discrimination.

Even if we assume that most States and local governments are 

willing to cooperate in bring ing their employment practices into compliance with the law. a major effort by the Federal Government is 

clearly required.

And, with State and local government constituting the most rapidly expanding field of job opportunity in our national economy over 

recent years, it is also clear that such an effort by the Federal Government is crucial to the goal of minorities to overcome the barriers posed 

by past discrimination and to become full and productive participants 

in American society.

Similarly, the requirement that governmental services and facilities 

be furnished equally and without discrimination on the basis of race 

or other invidious considerations is an area where legal remedies have 

emerged onlv recently.

It. was not until 1972 that a Federal court, of appeals, in the case 

of Hawkins v. Town o f Shaw. held tha t under the 14th amendment 

a reinedv must be provided when services such as street lighting or 

paving are clearly inferior in black neighborhoods to those provided 

in white neighborhoods.

Afore than one-third of the complaints pending at the. Office of 

Revenue Sharing concern disparities in services, and among them are 

several where the allegations are of blatant discrimination of the type 

found in Shaw.

In several of these cases including Amarillo. Tex.: Bogalusa. La. 

and Ouachita Parish, La., ORS has found substance to the allega-
211

tions, but the cases either remain pending or the agency has accepted 

the most general pledges tha t the discrimination will be remedied.

In the medium sized and larger cities of the South and North where 

our monitoring project was conducted, discrimination in services was 

not as blatant as that found in Shaw or in several other small southern communities, but people in minority and ghetto neighborhoods 

expressed strong feelings th at they were not receiving equal services.

In these situations, adequate implementation of the civil rights provisions of the revenue-sharing law demands careful investigation to 

determine whether discrimination exists and the development of objective standards of measuring governmental services.

Yet few investigations have taken place and, although we have been 

told tha t the Office of Revenue Sh arin g is prep aring a guidebook on 

municipal services, it has not yet issued or even developed objective 

standards bv which the equity of services subsidized by revenue sharing can be gaged.

Thus as matters now stand, increasing Federal resources are being 

applied through revenue sharing and other Federal laws to assist 

local governmental services, while the inaction of the ORS permits 

these sums to be used in ways which violate the Constitution and laws 

and thwart the national goal of providing a suitable living environment for every American citizen.

One may sympathize with the problems facing an agency charged 

by law with preventing discrimination in some 39,000 State and local 

governments not only in the activities I have described but in other 

areas as well, such as in the employment practices of private contractors 

utilizing revenue-sharing funds for construction projects.

But the fact tha t the task is one of great magnitude provides no 

excuse for the inaction and lethargy that has marked ORS ’s performance in carrying out the duties placed upon the agency by 

Congress.

In the first place, the opportunity to create a climate encouraging 

compliance with the law has been lost by the public utterances of 

high officials of the Department of the Treasury. Repeatedly, they have 

described revenue sharing as a program free of strings, different in 

its administration in almost every respect from programs of categorical aid.

Civil rights requirements have occasionally been mentioned, but 

they have been treated as secondary matters, with no suggestion that 

the Treasury Department was prepared to make vigorous use of its 

enforcement authority to remedy violations.

With these signals emanating from the top. it is little wonder that 

few State and local governments have been impelled to examine their 

past practices and to take corrective action where needed.

Second, the Office of Revenue Sharing has studiously ignored the 

teaching of experience under earlier civil rights laws th at the key to 

success in performing a major enforcement task is to establish good 

compliance machinery and to demonstrate a willingness to impose 

sanctions on those who violate the law.

During the 1960’s, the Department of H ealth, Education, and Welfare was able to bring about successful integration of public schools 

in many districts in the South by making it clear that it woidd withhold funds from districts that did not submit acceptable plans.
212

Once ITEW had employed this remedy in a number of cases, other 

districts began to come into compliance without awaiting the imposition of a sanction. Pa rticularly important in this process was the decision of IIEW to defer new funding to a district upon a finding of probable noncompliance even in advance of completion of all the steps of 

the complex administrative process leading to fund termination.

But ORS, as you know, refused to consider the use of deferral as a 

remedy on grounds tha t its program was ‘“different” and it has persisted in this refusal even af ter having been told bv a Federal district 

court tha t it had legal authority to defer funds subject to the adoption 

of appropriate regulations.

In fact, ORS has deferred revenue-sharing funds only once and 

then only when specifically ordered Io do so by a Federal court because judicial findings had been made tha t the city of Chicago had 

practiced racial discrimination it its police department which received 

large sums of revenue-sharing money.

Belatedly last spring ORS came forward with proposed regulations providing for deferral of funds in the most limited circumstances—where a Federal court makes a finding of discrimination and 

finds revenue-sharing funds implicated.

These regulations do not provide for deferral on the basis of the 

agency’s own finding of discrimination or on the basis of findings of 

other agencies—a stej) ORS is clearly authorized to take under the 

Chicago decision.

Indeed, the regulations actually seek to cut back on the legally adjudicated duty to defer whenever findings of discrimination have 

been made by a court of competent jurisdiction.

ORS is saying to victims of discrimination in these regulations 

tha t “even though you have proved discrimination in a court and 

even though we know tha t revenue-sharing funds are involved, we 

will not defer unless you or others had the foresight to make revenue 

sharing a formal part of the court proceedings.”

In other words, in the great majority of cases where discrimination 

has been found, ORS would not apply a deferral remedy and would 

be content to let the funds flow while discrimination remains 

uncorrected.

And, apart from the one case where Treasury deferred funds when 

directed to do so by a court, the agency has taken formal enforcement action in only one other instance—a simple referral to the Departm ent of Justice of a highly publicized violation in Ferndale, 

Mich.

Beyond this shocking repudiation of its own authority to employ 

sanctions to deal with violations of the law, the agency has until now 

refused to initiate its own compliance reviews or investigations, a 

technique now generally regarded as indispensable to uncovering 

patterns or practices of discrimination.

Instead, ORS has relied almost entirely on the receipt of complaints and, lacking administrative controls that would assure expeditious handling, some matters have pended for a year or more 

without redress.

Based on experience, a person who files a complaint today might 

expect 5 months to elapse before ORS even determines whether a violation has taken place. Assuming ORS does find noncompliance a
213

furthe r wait of more tha n 7 months occurs before some 1 esolution of

the m atter is reached. .

Tha t is 12 months from the filing of the complaint to some sort ot 

resolution. Tha t does not include the time taken for enfoicement 

because they have never invoked enforcement proceedings. So, you 

can add 5 months or so to that. Further, as the U.S. Civil Rights Commission and others have 

reported, even the few successes that ORS has claimed through settlements are suspect because in several instances the agency has settled 

for less than full compliance with the law. Third, while excusing inadequate performance on the grounds 

tha t its staff is very small and simultaneously arguing tha t a large 

staff would not comport with the philosophy of revenue sharing, ORS 

has failed to take steps which would enlist the energies of other approp riate agencies, Federal and State, in remedying discrimination.

For example, in 1973, O RS seemingly acceded to the suggestion of 

civil righ ts groups that it could alleviate its burden of investigation 

through arrangements with other agencies such as IIEW, DOT, and 

HUD, to monitor compliance in their areas of special expertise, by 

providing in its regulations for such cooperation agreements.

But only in the last few months has ORS included agreements with 

three Federal agencies—EEOC , Justice, and HEW . And sadly, the 

agreements amount to little more than provision for an exchange of 

information, and their utility is severely hampered by O RS’s refusal 

to make binding delegations of authority that would oblige them to 

accept the findings of these agencies.

I have in mv testimony some fu rther discussion about State agencies where again the agreements have little meaning. ORS also said 

it was going to discover civil rights violations through State fiscal 

audits. As you remember, that approach was highly touted by the 

Office of Revenue Sharing when appearing before this subcommittee

2 years ago. That has turned out to be a complete bust since almost nothing of 

value concerning discrimination has been uncovered. Yesterday. OKS 

witnesses said they were going to try to correct t hat process more than

3 years a fter it had been initiated and proved to be a failure.

Even if the Office of Revenue Sharing took f ar more seriously than 

it does its responsibility to enforce civil rights laws, serious problems 

of equal treatment under law would remain.

Several months ago, spokesmen for the Ford administration told 

a New York Times reporte r that in their view, the urban crisis was 

over and tha t measures that might arguably have been required in 

the 1960’s were no longer needed.

But in the same story, Government statistics revealed the growing 

disparity between family income in the central cities and in the suburbs of our Nation’s large metropolitan areas.

And while some minority families have gained sufficient mobility 

to find suitable housing outside ghetto areas, the racial as well as 

economic disparities between central cities and suburbs continue to 

grow.

Revenue sharing, I submit, reinforces this continuing and growing 

urban apartheid by providing “no strings” funding that permits relatively affluent white suburbs to meet their public service needs with-
214

out contributing anything to the solution of major social and economic 

problems that alllict the metropolitan area as a whole.

When such a suburban community uses revenue sharin g funds to 

upgrade parks, roads, schools or other services t hat may already be 

superior to those available in central cities they are obligated under 

current law to assure th at the services are distributed equally within 

the community. «

But tha t may be of no help to a minority family tha t is effectively 

barred by zoning practices from residence in the community in the 

first place.

Prior to the advent of revenue sharing, a number of efforts still in 

the. embryonic stage were being made under categorical programs to 

induce some degree of cooperation among local jurisdictions in metropolitan areas, for example, by promoting the concept of “fair share” 

housing throughout the area, which would also give minorities and 

lower income people better access to jobs and public services outside 

ghetto areas.

It does not require much empirical study to conclude that once funding is available that provides neither requirements nor incentives to 

metropolitan cooperation, these fledgling efforts to induce some sense 

of responsibility will wither and die.

That. I believe, is what is happening and what will continue to happen if revenue sharing is continued and expanded in its present form.

In short, Mr. Chairman, it is not an exaggeration to say that under 

revenue sharing civil rights enforcement has become a disaster area, 

reinforcing our worst apprehensions that this new form of allocating 

resources and authority would become a vehicle for dissolving hardwon Federal protections against discrimination.

1 et 1 do not think that conflict is inevitable between measures to 

expand the resources of States and local governments so that their 

energies will be more fully utilized in meeting pressing domestic problems and steps to assure that basic national policies, such as equal protection under the law, are fully enforced.

If these objectives are to be reconciled, however, it is clear to us tha t 

fundamental reform of the State and Local Assistance Act is required.

In the civil rights area it has now become clear that if there is to be 

any hope of fair and vigorous enforcement, the Congress will have to 

direct the executive branch to take the steps it has persistently refused 

to take over the past 3 years.

These include mandated timetables for completion of the investigative and enforcement processes to eliminate the interminable delays 

that have plagued the prog ram; a specification of the enforcement 

steps to be utilized where voluntary compliance efforts fail, including 

the temporary deferral of funds on court or agency findings of discrimination; a requirement tha t settlement agreements be reduced to 

writing and be periodically monitored to do away with the vague 

promises to “do right” tha t ORS takes such pride in negotiating; mandated agreements with other Federal agencies to share the burden of 

investigation, with provision that the findings of these agencies shall 

be accepted as the basis for enforcement action.

In addition, it seems to me t hat minimum steps to arrest the trend 

toward urban apartheid would include an application to general revenue sharing of the provisions for regional cooperation now attached
215

to categorical programs and the establishment of new financial incentives to induce suburban governments to stop fencing out minorities and the poor and begin doing their share to solve the critical social 

problems that afflict the Nation’s cities. A harder problem is whether even if Congress makes the civil rights mandate more specific it should continue to entrust implementation of that mandate to the Department of the Treasury. It has become sadly apparent that Treasury officials, unlike their counterparts in other agencies administering grant programs, view themselves largely as an accounting unit with no policy mission and almost no responsibility 

to assure any result other than sound fiscal administration. Civil rights enforcement is regarded as an unwarranted interference 

with the perceived mission of keeping the dollars flowing. This may lie an institutional attitude so ingrained th at it will not be materially altered even by stronger direction from Congress. Thus, I believe that Congress may wish to consider whether civil rights may be better protected by a tran sfer of enforcement functions to an agency such as the Department of Justice that has the needed expertise and that would regard the responsibility as consistent with its major 

objective. Mr. Chairman, we are in the midst of a period in which the resolve of this Nation to honor the commitments it has made in the Constitu­ tion to treat all citizens equally under the law is again being severely 

tested. As important as any other question we face during this period of testing is whether the Congress of the United States is prepared to assure th at general revenue sharing—the largest domestic grant pro­ gram we have—is administered in a manner tha t acknowledges the right of blacks and other minorities to equal protection of the laws. It has not been so administered during the past 3 years, but we hope and believe tha t Congress will act to set these matters right. I apologize for taking more time th an allowed in reading my state­ ment. The gist of it is tha t civil rights enforcement is a disaster area and it does require the intervention of Congress to correct this.

Mr. Drinax. It was agreed that we would hear all the members of the panel and then have questions. I f tha t is agreeable, we will proceed to the next person who is from the Southern Governmental Monitoring 

Project, Ms. Susan Perry. If you will, seek to limit yourself to what was agreed to by the committee as the optimum time.

Ms. Perry. Good afternoon. Mr. Chairman. My name is Susan Perry. 

As staff counsel to the Southern Governmental Monitoring Project, I have been asked to testify before vour committee th is afternoon.

Mr. Drinax. I neglected to introduce your companion, Ms. Eddie 

Mae Steward, president of the Jacksonville, Fla., NAACP branch.

Ms. Perry. As you know section 122(a) of the General Revenue 

Sharing Act prohibits discrimination based on race, color, national origin, or sex in all programs or services receiving entitlement funds. Not until J uly 24.1975. did the Office of Revenue Sharing finally dra ft proposed regulations which define employment or sex discrimination. However, our experience in investigating the uses of GRS funds and discrimination in the South forces us to conclude tha t the act and proposed rules on civil rights requirements must be amended.
216

Over the past 2 yearS, our project has employed researchers in about 

60 southern communities to investigate, among other issues, the extent 

of discrimination in GRS funded programs. The entire repo rt detailing all of our findings on discrimination will be published next 

month. My remarks today will h ighlight some of our major findings.

Investigation has consistently revealed the inadequacy of ORS’ antidiscrimination enforcement under the present statutory and administrative scheme. A primary congressional purpose for enacting revenue sharing legislation was to promote greater flexibility in the use 

of Federal funds at the local level.

But this policy may have created an inherent conflict with effective 

civil rights enforcement—particu larly in the South where Federal 

intervention has historically been a decisive factor in antidiscrimination compliance.

Southern Governmental Monitoring Project investigations support 

the charge tha t ORS has been unconscionably derelict in performing 

its administrative enforcement duties mandated by the statute. As a 

result of the discriminatory conduct of recipient governments coupled 

with the lack of effective enforcement by ORS, black and poor southerners continue to be denied equal access to critical programs and services sponsored by jurisdictions receiving revenue sharing funds.

Employment patterns of a substantial percentage of jurisdictions 

and local agencies surveyed reflect a continuing bias against hiring 

traditionally excluded groups in programs receiving revenue sharing 

funds.

Southern Governmental Monitoring Project surveys disclose that 

women and minorities were significantly underrepresented in public 

employment, particularly in the public safety departments of many 

communities. This underrepresentation was the basis fo r citizens filing 

noncompliance complaints with ORS in several survey locations.

Let me pause at this point and commend the staff of this subcommittee which I think lias done an outstanding job in appropriately 

making sure th at a disproportionate number of the panelists here are 

women and also black women.

Unfortunately, we cannot say the same for the panel hearing this 

testimony. But hopefully, this situation is improving.

Mr. Drinan. It is not inappropriate.

Ms. Perry. I n Jacksonville, Fla., where blacks constitute 26.5 percent of the tota l population but representation in the office of the 

sheriff amounted to no black women on the force, black men 5 percent, 

white women 2 percent, and white men 93 percent, the local chapter of 

the N AACP filed a complaint with ORS alleging blatant employment 

discrimination against women and blacks.

Ms. Eddie Mae Steward, the president of that group, is here with 

me this afternoon to discuss the Jacksonville complaint.

City officials in another SGM P monitoring site. New Bern, N.C., 

were charged with alleged discrim ination in the allocation of revenue 

shar ing funds used to construct two recreational centers which would 

have the effect of perpetuating a discriminatory pattern of dual 

service.

As a result of this complaint, evidence revealed th at the town also 

maintained a lily-white fire department despite a black population of 

8,968. ORS ordered New Bern to develop an affirmative action plan
217

that would make the all-white fire department reflective of the minority 

population. Our SGMP investigator in Spartanburg , S.C., interviewed feminists who charged that city with discriminatory hiring, firing, promotion, and compensation. A review of the disposition of the Spa rtanbu rg complaint demonstrates the inadequacy of ORS procedures for the 

speedy resolution of allegations of discrimination. Four months af ter an ORS program audit in December 1974 turned up evidence of probable civil rights violations. ORS s only enforce­ ment activity consisted of sending a notification of noncompliance to 

the city. In May 1975, a SG MP staff person contacted the ORS Compliance Manager who candidly admitted th at the initial findings of the audito r had never been turn ed over to the civil rights unit because there was 

no standard agency procedure requiring such reporting. Compliance Manager Murphy gave assurances th at this “bug in the system” would be corrected. Yet, nearly 1 year after the ORS com­ pliance mechanism was triggered, the Spa rtan burg complaint has 

grown stale in the ORS investigative stages. I would like to update the committee by adding that on August 6, a letter was received in our office tha t indicated within 5 to 6 weeks, an investigation by ORS would proceed. As of October 1, no investigation has commenced in that city. In Spartanburg and other communities, affirmative action plans have been drafted to satisfy compliance requirements. Because these reluctantly prepared employment plans are not self-executing, the documents amount to mere paper commitments in the absence of rigorous enforcement by outside agencies to compel compliance. Failure of enforcement agencies to effectively monitor private con­ tractor employment can have a detrim ental impact on women and minorities seeking employment in the skilled construction trades. In Asheville and Buncombe County, N.C., and in many other survey locations, government officials diverted major portions of revenue sharing dollars into what Asheville’s chief finance officer described as 

“highly visible, one-time capital outlays.” Under the existing revenue sh aring statute and section 51.51 of the proposed nondiscrimination regulations, discrimination by private 

contractors receiving entitlement funds is prohibited. In communities like Asheville, where the prevailing wage rate is low and the recession has produced a reservoir of cheap labor, rigorous compliance has taken on added significance for women and minorities. However, overlapping agency jurisdiction in enforcing minimum wage rate standards and minority and female enrollment in apprentice­ ship programs creates convenient loopholes for contractor's interested 

in evading compliance. North Carolina contractor regulation is provided under a confusing, bifurcated system of State and Federal regulation. Despite Federal law requiring recipient governments to monitor weekly wage reports filed by contractors, the Asheville mayor thou ght that the city’s com­ pliance obligations consisted of inserting a clause in municipal agree­ ments which indicated tha t the contract was subject to Davis-Bacon 

requirements.
218

The Wage and Hour Division of the U.S. Department of Labor 

receives no direct reports unless an alleged violation occurs and an 

investigation is requested by an aggrieved party.

Similarly, this lack of effective enforcement can encourage North 

Carolina constructors to engage in deceptive apprenticeship programs 

to avoid paying legal, minimum wages to those classes of persons intended to benefit from affirmative action policies.

The Department of Labor has delegated apprentice program 

registration to the State. As of August 19,1975.143 Buncombe County 

apprentice programs were registered listing 38 minority apprentices I

enrolled in approved programs.

No minority apprentices were enrolled in the 10 programs specifically designated as having affirmative action recruitment plans.

A sham apprenticeship registration can allow contractors to hire 

women and minority workers at substandard wages without finishing 

the necessary skills training.

By maintaining an appearance of minimal compliance on paper, 

local contractors may succeed in bypassing the State and Federal 

enforcement mechanisms.

In updating our information, we found out that a number of sham 

apprenticeship programs have been deregistered by the State, but 

none of these programs were deregistered for discrimination violations.

Based on this information, we are convinced that unless periodic compliance reviews are mandated by law and carried out by a diligent 

enforcement agency, contractors in violation of affirmative action 

requirements will remain undetected.

In the time remaining, I would like to list some of our major recommendations for the committee.

Citizens’ access to compliance information should be explicitly 

provided. Evidence indicates tha t a large number of recipient governments are probably in violation of antidiscrimination requirements, 

but relatively few complaints are filed with ORS.

Not many citizen interviews by SGMP researchers had sophisticated knowledge of revenue sharing and the program’s requirements.

In Raleigh, N.C., for example, black members of the GRS funded 

police and fire departments filed more than a dozen complaints with 

the EEOC. These complaints have been stalled in EEO C proceedings ,

for about 1 year. Igno rant of their rights under revenue sharing 

laws, complainants have ignored the ORS route to pursue their discrimination charges.

As EEO C’s workload becomes increasingly unwieldy and as discrimination complaints remain unresolved, revenue sharing civil rights 

procedures could become an effective method for policing a significant 

number of employment discrimination cases.

Accordingly, we urge more effective procedures to insure citizen’s 

accessibility to GRS funding and compliance information as well as 

available nondiscrimination remedies.

Revenue sharing legislation should be amended to include a permissible expense category to pay fo r the development of affirmative action 

programs.

ORS has determined tha t the funding of affirmative action programs must be treated as an operating expense rather than a capital
219

expenditure. This means tha t revenue sharing money can now be 

used for affirmative action programs only in those program areas 

eligible for revenue sharing funds under the present “prio rity ’ ope rating expenditure categories, such as public safety or environmental 

protection. To aid local governments in th eir compliance efforts, an additional 

expense category to fund affirmative action must be enacted.

In light of the Supreme Court decision in the Alaska Pipeline case, 

a private right of action must be accompanied by an authorization to 

award legal fees ag ainst noncomplying governments.

Limitation in enforcement agency manpower requires that private 

suits be recognized as a remedy against discrimination. Because the 

Supreme Court has refused to invade what it considers the “legislature’s province bv redistributing litigation costs,’’ legislation must 

be enacted which would explicitly authorize the courts to award 

attorneys’ fees to successful litigants.

Revenue sharing funds of the noncomplying recipient governments 

could be the source of these fees.

An effective and efficient enforcement scheme must extend civil 

rights coverage to all programs and activities of a recipient government. Revenue shar ing funds often pay for municipal services tha t 

otherwise would have been financed from the general local budget.

Local funds which are freed up by revenue sharing may in turn be 

allocated in such a way as to avoid civil rights requirements. SGMP's 

Xew Orleans investigation encountered a potential example of this 

shifting of accounts: In that city, officials frankly stated tha t for 

accounting purposes, they were attempting to place GRS funds not in 

such slightly integrated departments as the police, but in “safe” dep artments such as sanitation—“safe” because bette r integrated.

Furthermore, some local governments still make very little effort to 

document their uses of GRS funds. In Alachua County, Fla., our 

SGMP investigators found no reliable financial data on uses of GRS 

funds.

County officials claimed that a high percentage of GRS funds went, 

to social services, but when confronted with a request to document this 

claim, they admitted that there was indeed no way to do so.

We reiterate the recommendation for jurisdiction wide coverage 

which was made by E lmer Staats. Comptroller General of the I nited 

States, in recent testimony before a Senate subcommittee, and which we 

included in our formal comments on the proposed GRS antidiscrim ination regulations.

After certain findings have been made, the regulatory scheme should 

provide for automatic suspension of entitlement funds.

After a determination by Federal enforcement agents of probable 

discrimination and failure to secure voluntary compliance, revenue 

sharing funds to recipient governments should be withheld, pending 

further investigation and complete compliance.

Similarly, a procedure for mandatory deferral of payments of noncomplying recipients, made prior to suits alleging violations of section 

122. would immediately shift the burden of accelerating enforcement 

proceedings to local governments, and would give them a financial 

interest in the speedy resolution of complaints.
220

In di vi du als filing emplo ym ent discrim ina tio n comp lai nts must be 

shield ed fro m retalia tory dismissal and othe r rep ris als . Th e prese nt 

enforceme nt str uc tur e offers no prote ction to em ployees who c omplain 

about job dis crimination. SG M P inv estig ato rs in Xew Bern, X.C., 

uncove red evidence th at in s ma ll communities w here the p olitical st ru ctu re is closely tied wi th local business, black citizen s who com plain 

abo ut governm ental discrim ination fear job repr isals fro m white 

emp loyers.

Ant iret al ia tion pro vision s mu st be dr af te d to pr otec t publicly employed comp lainants fro m th re at s of job term ina tio n. Xon -civil-se rvan t co mp lainants can be p rotec ted somew hat b y e na cti ng a re quireme nt 

th at the e nfo rce me nt agency m aintain strict confid entia lity of sources 

of discrim ina tio n informa tio n.

OILS should con tinu e its statutor y res ponsibilities on sub stantive 

reve nue sh aring m atters , but c ivil rig ht s enforcement sho uld be severed 

fro m OR S and t ra ns fe rred to t he Civil Ri gh ts Division of th e D ep ar tme nt of Jus tice.

Ev en if all of the necessary enforcement modifications are enacted , 

th e five O RS com pliance s taff members exclusively assi gne d “to m onitor th e nondis crimination r equir em ents in a gra nt p ro gram ru nn ing to 

more t ha n 38,000 jurisdictions ” cannot be effective.

Ove rla pp ing agency r esponsibilities pro duce confusion and pro life ration of civil rig hts enforc ement in vario us Fe de ral departm ents. An 

exa mple of this conflict in agency juris diction was provide d by the 

Ju stice De partm ent official who c andid ly tol d us th at his De pa rtm ent 

tak es a ha nd s off ap pro ach to discri mi natio n comp laints which hav e 

been pre vio usly filed w ith ORS unless th at a gency requests assistance.

OR S ha s a sim ila r policy fo r com pla ints th at reach the Ju sti ce D epa rtm en t first.

Fr om the po int of view of prospectiv e comp lai nants , the res ultin g 

enforc em ent agen cy sh op ping —at least fo r those who lea rn about this 

pe cu lia r inform al arrang em en t between the Ju stice De pa rtm en t and 

ORS— like the old shell gam e, means being lucky eno ugh to select an 

effective enforcement p rogram .

Because the Tr ea su ry De pa rtm en t is not equ ipp ed by trad iti on or 

tr ai nin g to enforce civil rights req uir em ents, we recommend th at all 

res ponsibi lity for civil righ ts enforcement, oth er th an rou tin e in fo rmation ga thering and dissem ina tion, be removed en tir ely from OR S 

and tra ns fe rred to the Civil Ri gh ts Division of the J us tic e D epartme nt.

We also recom mend th at the Ju sti ce Dep artm en t receive ad dit ion al 

fund s fo r staff and inve stiga tio n expenses to ca rry out this resp onsibility.

Tha nk you verv much, M r. Ch airma n.

Mr. E dwards. We will now h ea r from Ms. E dd ie Mae Stew ard .

Mr. K indn ess. Are we re serving questions fo r later ?

Mr. E dwards. I do no t kno w th at we are going to ge t a chance fo r 

questions.

Mr. K indness. There are so ma ny conc lusions in th is testim ony , I 

th in k t he rec ord should be cla rified.

Mr. E dwards. Wh at wo uld yo u like to do ?

Mr. K indness. I will wa it un til late r if the record may include the 

questions.

Mr. E dwards. We will do th e best we can.

Ms. Ste wa rd?
221

Ms. Steward. Mr. Chairman and members of the subcommittee, 

please allow me to say that it is my proud pleasure to be afforded this 

noble opportunity to speak before you this afternoon on what I believe 

to be one of the most crucial issues facing black and poor Americans 

today, the use of revenue sharing funds in local communities.

My oral presentation will attempt to summarize several key points 

as addressed in my written statement. One is the complaint and the 

application of revenue sharin g funds in Jacksonville, Fla., involving 

two areas: Employment, primarily in the office of the sheriff* and a 

division of the tire departm ent; and two, the application of revenue 

sharing funds as it relates to recreational facilities.

U N E M PL O Y M E N T

The statistical breakdown of the sheriff’s office was provided in the 

written statement. This data was provided by the office of the sheriff. 

Therefore, the s tatistical validity can be and has been documented in 

the Florida Advisory Committee of the U.S. Civil Rights Commission.

This data indicates t ha t the office of the sheriff lias and is continuing to discriminate against blacks and women. The one highest ranking 

position held by a black person is that of chief, and lie is charged with 

the responsibility of police-community relations and more specifically 

police-community relations in the black community.

I hasten to point out here that the duties of the black chief is d ifferent from white chiefs in that chiefs are usually assigned to zones 

tha t cover a large portion of the city and has under his supervision 

those uniformed patrolmen assigned to his zone.

This places him in a decisionmaking role that directly relates to the 

problems involving people. The decision to place th e first black chief 

in the position of chief of the police-community relations was viewed 

as a compromising one and one with no auth ority or control.

Further, it was felt that this position could have been held by a 

person of lesser rank. We have documented cases where blacks have 

passed a written test, but were screened out in other areas that had 

no bearing on one's ability to function on the job as a policeman.

Furthermore, the office of the sheriff has taken a negative attitude 

toward the development of an affirmative action program t hat would 

set forth measurable timetables for minorities and women.

A black woman—and I wish to update my written statement—a 

black woman just completed the police academy training 1 week ago 

and is now the first black female in the city of Jacksonville's Office of 

the Sheriff Filiform Division.

The agility test requirement gave rise to discriminatory complaint 

filed with the office of EEO C by a group of white women. This was 

excluded as a part of the entrance requirement a few days ago.

The rescue division of th e fire department hired the first black medical technician recently and according to my information, this, too. is 

another critical area in tha t several complaints are constantly being 

filed with our office by black citizens alleging tha t white rescue workers 

have refused to provide service to them where an auto accident is 

involved.

Sometimes there are no visible injuries. More specifically, on 

this past Monday, a complaint was filed with our office that a 10-yearold bov was hit by a car while ridin g a bicycle and because he was 

62-331— 75------15
222

sitting on the curb a t the time the rescue workers arrived, they refused 

to take him to the hospital and told the mother that she would have 

to transport him.

The mother transported him and he was hospitalized with a concussion. They have refused to assist black people onto stretchers and 

bystanders have provided this service.

On the complaint of recreation, the city of Jacksonville is a large 

area covering 840 square miles. Revenue sharing funds have been used 

to develop and upgrade recreational facilities tha t are inaccessible to 

blacks and poor white communities.

In one instance, several million dollars were allocated to construct 

a recreational site 20 miles from the inner city. Moreover, it is located 

near the beaches area in an upper middle class white community.

We spent several months looking at the trend of revenue sharing 

funds in Jacksonville, Thus, in J uly 1975, the mayor vetoed a controversial bill th at would have repurchased a golf course th at was sold in 

1900 by the city when black citizens won a civil rights case against the 

city.

A group of citizens were told by the mayor tha t lie would support 

the repurchase. However, he later vetoed the bill. This property is 

approximately 130 acres and sits on the north ern end of the city and 

is in a predominantly black area.

In 1960, when this golf course was sold, this same area was white. 

The repurchase would have cost $288,000 in cash. The mayor said 

that during these inflationary times, the city could not afford the 

purchase.

Private access road to an industrial complex in Jacksonville: The 

city council learned tha t the administration had overspent in this 

area by more than $37,000. Funds have been used to build such things 

as lx>at ramps, tennis courts, softball complexes, and other equipment, 

all in white areas while minor lighting, basketball courts, some fencing, 

and other minor innovations were made in black and poor white areas.

As of this day, there is not a park in the black community that was 

comparable to the white areas before the new renovations took place. 

Several parks are sitting idle in the black communities tha t were closed 

in 1900 when the court ordered these public facilities integrated, and is 

in a rundown state because of the city's failure to provide adequate 

upkeep.

Millions of dollars are being spent on new sewerlines, but much of 

this work is being done in the downtown area and in all-white areas. 

Where sewer work is being done in poor communities, it is necessary 

to do so in order to accommodate construction and/o r renovations of 

sewer treatment plants.

This, Mr. Chairman, concludes my oral presentation.

Mr. Edwards. Than k you very much.

Now, we will hear from Ms. Sarah Austin.

Ms. Austin. Mr. Chairman, my name is Sarah Austin, vice president of the National Urban Coalition, and field director of our local 

coalition division which has monitored the effects of general revenue 

sharing over the past 2 years in the 10 coalition cities of Pittsfield, 

Wilmington, Bridgeport, Detroit, St. Paul, Oakland, Minneapolis, 

Pasadena, Racine, and Baltimore.

I therefore welcome this opportunity to address you on an issue 

of such concern to those whom I represent. For in this time of urban
223

fiscal uncertainty, the quality and even the fabric of urban life is 

greatly dependent upon the priorities you define here.

The steering committee of the National Urban Coalition in its fall 

meeting last week engaged in a long and intensive debate on general 

revenue sharing.

Our board concluded t hat it would only support an amended general revenue sharing program which particula rly focuses on two of the 

present inequities in the way the law operates in regard to minorities.

One is the inadequate need formula which fails to take into account 

the disproportionate burden of cities which have a high percentage 

of poor unemployed and underemployed minorities. And a second is a 

weak and sometimes nonexistent enforcement of civil rights guarantees in the allocation of general revenue sharing funds.

Not everyone will be able to bring lawsuits to assure that jurisdictions do not discriminate in hiring and promotion with the use of 

Federal funds. Not everyone will be able to go to court and seek to 

make certain tha t some of the general revenue sharing funds are not 

used to abate water and sewer taxes while ignoring the social needs 

of the poor as in the Atlanta case.

We are opposed to the notion tha t a seriously understaffed Office 

of Revenue Sharing can do the kind of monitoring that is required 

in the face of the widespread tendency to see these funds as “magic 

money” left on a stump, miraculously exempt from the supposedly 

well-established principle th at all tax dollars must be subject to equal 

citizenship requirements.

It ought to be possible, at one and the same time, to give to hardpressed cities the fiscal relief they deserve without having to junk the 

Constitution in the process.

Another time around it would be our hope tha t our St. Paul Coalition 

would not have to spend endless hours and energy attem pting to make 

sure tha t Federal funds going to the local police department would 

finally result in the hiring of one black policeman.

It is in order to give you the benefit of our experiences in these 

cities tha t I would like to mention the results of the joint GRS 

monitoring project the National Urban Coalition sponsored in conjunction with its local affiliates and the other members of this panel.

Our basic and most instructive finding was tha t in this time of 

unacceptably high national unemployment, GRS funds are actively 

“financing widespread discrimination in public employment and local 

services.”

Moreover, in spite of the specific legislative provisions against discriminatory hiring practices written into the State and Local Fiscal 

Assistance Act—sections 122(a) and 51.41—our study has found a 

“nationwide pattern of underrepresentation of minorities and women” 

in State and local governmental agencies and programs.

The T reasury Department’s Office of General Revenue Sharing has 

documented statistics which indicate tha t most cities are using their 

GRS funds for police and fire protection. It is, therefore, all the more 

significant that our GRS monitoring project has found systematic 

discrimination in hiring practices in these very agencies.

For example, among firefighters, 95 percent of employees are white 

and male, while only 3 percent are black, and 1.3 percent female. 

Police force statistics are equally instructive. Ninety-one percent of 

the force is white and male, 6.3 percent is black and 12 percent female.
224

In the area of salaries and job classification, women and minorities 

suffered the same type of systematic relegation to lower level positions 

and payments.

The recent Bureau of Labor Statistics September figure on the 

national unemployment rate of black males and of black women is 

12.1 percent, while the national rate is 8.3 percent. This represents a 

tragic demonstration of the accuracy of our findings.

It is instructive to cite here an example of what our local coalition 

monitors have discovered. The example of St. Paul, Minn., is most 

revealing of the negligence of the Office of Revenue Sharing in the 1

area of equal employment. For, although this city received in fiscal 

year 1974 over $51£ million in revenue-sharing funds, and spent 

over $5 million of these dollars for public safety, only 4 percent of 

the total fire and police force are black.

When this was brought to the attention of ORS by our local coalition 

in St. Paul, the administrative remedy of fund deferral was refused.

The consensus of the coalition is th at the civil rights aspects of 

GRS encompass broader consideration than affirmative action alone.

Other categories are equally important in their impact on urban 

residents and minorities.

Of prime significance is the fact that with population an im portant 

factor in allocating ORS funds, jurisdictions reaching the 145 percent 

ceiling lost a full per capita share for every person not counted in 

the census figures. Despite the general acknowledgement that blacks 

are significantly underoounted, the Office of Revenue Sharing has not 

made allowances in data to compensate for such omissions.

In fact, in 1973, the Census Bureau estimated they missed 1,880,000 

blacks in the 1970 census count. This is four times the undercount for 

whites. And, while there is no ‘‘acknowledged” census undercount 

rate for Spanish surnames, it is widely recognized that the American 

Latino community is consistently underrepresented in the census.

This, areas with large concentrations of blacks and Latinos are 

losing important amounts of GRS funds, and, no administrative 

remedy is yet in sight. I think I can speak on behalf of our constituents 

on this matter.

In conclusion, we feel a reordering of the priorities of general revenue sharing is clearly needed. We would suggest tha t the Subcommit- i

tee on Civil and Constitutional Rights seriously consider correcting 

the inequities which mitigate against the needs of 70 percent of our 

population; that, is those people living in urban areas, who rely on 

your help to devise effective and equitable solutions to the problems *

they face.

I thank you for the opportunity to appear before this subcommittee. Mr. Chairman, 1 think it was less than 10 minutes.

Mr. E dwards. You did very well. Thank you.

Ms. Alice Kinkead ?

Ms. Kinkead. Air. Chairman and members of the subcommittee, my 

name is Alice Kinkead and I am director of the Human Resources 

Department of the League of Women Voters Education Fund. The 

I/'ague of Women Voters is a nationwide organization representing 

over 1,300 constituent leagues and 140,000 members.

On behalf of the league, I thank you for inviting me to testify on 

the civil rights aspects of general revenue sharing. Pablo Eisenberg,
225

director of the Center for Community Change, who is not testifying 

here today, asked me to convey to you his organization’s full enforcement of the league’s testimony.

Two years ago, the League of Women Voters Education Fund 

joined with three other national organizations, the Center for Community Change, th e Center for National Policy Review, and the National Urban Coalition, in establishing the national revenue sharing project.

Its objective has been to assess the impact of the General Revenue 

Sharing A ct’s reallocation of authority and resources upon the needs 

of less advantaged citizens and upon efforts to assure t hat minorities 

and women receive equal treatment.

Beginning in November 1973, the project undertook a massive monitorin g effort on local, State, and Federal levels. Approximately 53 local 

and 6 State affiliates of the project's sponsoring organizations were 

involved in monitoring the implementation of general revenue sharing.

The league conducted the State-level monitoring in six St ate s: California, Iowa, Massachusetts, Michigan, Tennessee, and Texas. One 

hundred and twenty league members, trained and supervised by professional staff, used a monitoring instrument developed with the help 

of the Jo int Center for Urban Affairs of Harvard-M IT.

These fieldworkers conducted over 300 interviews with elected officials, department heads, media representatives, and community o rganization leaders in the six States. Monitors also collected extensive 

demographic information, relevant studies, reports, newspaper clippings, and budget documents to help them evaluate the performance 

of the States in a dministering GRS funds.

The gathered data, monitors’ evaluations, and interviews were then 

assembled for comprehensive analysis by the League of Women Voters 

Education Fund national project staff.

The findings have now’ been published in a volume titled “General 

Revenue Sharing and the States”—the first major report to be made on 

the States’ compliance with the GRS law and regulations, as they 

spent over $1 billion of th e GRS funds exported to them from W ashington between October 20,1972, and June 30,1974.

Because much has already been researched and reported about local 

government’s performance and so remarkably li ttle about the States’— 

although $1 in every $3 of GRS money passes through their hands—I 

wish to give you a somewhat detailed “report card ” on the six States 

studied.

Aly facts are drawn from the repo rt just mentioned. Aly focus is on 

civil righ ts noncompliance, specifically in employment,

Afonitors found some gaps in State compliance, both with the spiri t 

of the law and the letter of the regulations. While the ir findings do 

not necessarily indicate a tota l lack of concern about civil rights, they 

do point to some serious sins of omission in enforcement.

Confusion about, or lack o f commitment to, the civil rights requirements of the law appeared to be the norm in the six monitored States. 

The questions boil down th is way: Can the Federal Government “pass 

thro ugh”, along with the money, its responsibility for seeing that F ederal dollars are spent in a nondiscriminatory way—a responsibility 

mandated by more than this single law ?
226

Is it reasonable to assume that States will police themselves? Who is 

ultimately responsible for enforcing section 122? Is section 122, in fact, 

enforceable?

The State and Local Fiscal Assistance Act directs the Department 

of the Treasury to insure enforcement of the provision of section 122. 

Treasury issued regulations to this end: By default, enforcement of 

State compliance with section 122 fell to the States themselves. How 

are they executing this added responsibility ?

The answer is, not very well, even when the will exists—and it does 

not always. States, stuck with assigning a fox to watch the chicken 

coop, usually left the job to an existing State compliance agency. And 

those agencies have had three problems: No power, no money—which 

means no staff—and no help from the Feds.

The task has been a huge postscript added to the job description of 

agencies often already underfunded and overburdened. The level of 

civil rights enforcement has varied from State to State as these factors 

came into play.

The Governor’s Office of Equ al Employment Opportunity in Texas, 

now eager to take a forward step, is strapped by a yearly budget of 

$25,000, a staff of 18 partly borrowed from the Governor's budget, and 

a lack of authority. It cannot issue cease-and-desist orders, initiate 

court action, or impose fines for violations.

This office has only two options: To ask the attorney general to file 

suit against agencies th at refuse to file affirmative action plans, or to 

ask the Governor to cut off agency funds. Neither is currently a likely 

recourse given the lack of aggressive support provided to the Office of 

Equal Employment O pportunity to date.

Texas is not the only State where civil rights agencies are understaffed, underfunded, and underpowered. The Iowa Civil Rights Commission prim arily uses conciliation to resolve complaints. It can issue 

cease-and-desist orders, but rare ly does. Court action is not an effective 

option, because the commission has no subpena power.

Moreover, it is hard to identify discrimination problems in Iowa, 

since the Commission treats this kind of information as confidential. 

Monitors were told that there had been discrimination complaints filed 

against the State, but in the last 3 years, none have reached the hearing 

stage of resolution.

A review of summarized State employment data shows that Iowa 

lias problems in employment practices tha t may warrant a charge of 

discrimination on the basis of sex and possibly on the basis of race as 

well.

For example, the average male salary is $2,T50 more th an the average female salary. White men earn an average yearly salary tha t is 

$2,770 more than white women; whites average close to $1,000 more 

per year than blacks.

There are additional disparities in terms of earning power. While 

35.1 percent of the total number of males earn less than $8,000. 75.6 

percent of the total number of females fall into this category. Similarly, 65.5 percent of the total number of blacks earn less than $8,000, 

with 51.3 percent of the total number of whites in the same category.

As of June 1974, no revenue-sharing money was reported as having 

gone directly into the State agencies covered by these statistics; none-
theless, it is clear tha t the $32 million allocated to education supplanted 

an almost identical amount of money from the general fund.

One must conclude, then, that in truth, revenue-sharing dollars 

found the ir way into numerous State agencies which continue to discriminate in employment. Even assuming vigorous civil rights enforcement, the fungibility factor makes real compliance an illusion—short 

of 100 percent nondiscrimination in all State employment.

California's Fair Employment Practices Division, charged with 

eliminating discrimination in housing and employment, is another 

example. I t is typically understaffed, as well as limited in legal enforcement authority. The division’s 5 affirmative action program staff 

and 25 consultants work simultaneously on over 75 investigations, with 

an active yearly caseload of nearly 3,700. Its chief executive claimed 

only a 30-percent success rate in resolving discrimination complaints.

No doubt understaffing can account for at least p art of the high percentage of unresolved complaints, but the lack of enforcement power 

is also to blame.

On the other hand, the Massachusetts Commission Against Discrimination and the Michigan Civil Rights Commission appear to 

have the power to deal with discrimination problems. They both 

negotiate, hold hearings, and can initia te court action, though final 

court orders must be enforced by the court.

Unfortunately, although the power is there, the staff is not. The 

Massachusetts Commission appears to have the more serious staff 

problem. According to its chairperson, it employs 60 but needs 300.

Tennessee’s Human Development Commission has neither adequate 

staff nor sufficient enforcement powers. It investigates, conciliates, and 

gives technical assistance with its limited staff of five, but its only 

power is the endorsement of the Governor.

Governor Dunn seemed to have both the commitment and the power 

to eliminate discrimination, but progress has been slow. In Janu ary

1972, he established an affirmative action program. As of December

1973, two State agencies still had no minority employees.

More than two-thirds of the 34 agencies included in the 1973 Consolidated Affirmative Action Report have minority employment that 

deviates by more than 5 percent from the 1970 minority population.

Even more relevant are the 24 of the 34 reporting agencies which 

deviate more than 5 percent from the total minority percentage in 

State government. Corrections, mental health, and social services tradi ­

tionally have preponderances of minorities, usually in low-paying, 

unskilled jobs. In 1973 over 50 percent of the minority persons employed by the Tennessee government were in these three agencies.

Some revenue-sharing dollars were spent bv two of these three. It 

seems to the league th at ORS has been remiss in its responsibility by 

failing to take a close look at the more detailed EEO 4 forms which 

would document what appears to be discrimination.

This criticism is particularly relevant in light of the fact that the 

Transporta tion Department, with a 90-percent white male work force, 

received nearly one-third of the State's revenue-sharing dollars.

If impotent agencies make State enforcement a lot less than it should 

be. the Office of Revenue S haring’s supine attitude about its job of 

policing the police makes us wonder if they think section 122 is just 

one more piece of congressional rhetoric.
228

On February 1, 1975, the Texas League of Women Voters wrote a 

complaint alleging noncompliance with civil rights provisions of the 

general revenue-sharing law to the U.S. Attorney General. A letter was 

also sent to Graham Watt, the Director of the Office of Revenue Sh aring, to notify him of the probable violation and to request that he use 

his authority to disallow the continued misuse of general revenuesharing funds by the State of Texas. Both letters were accompanied by 

extensive and full evidence to support the allegation of noncompliance.

Texas monitors had obtained data from the recently created Gov- (

ernor’s Office of Equal Employment Opportunity which showed tha t 

women, black and ethnic minorities are underrepresented in Texas 

State employment and occupy a disproportionate share of the lowskilled, low-paying jobs.

The data, collected and analyzed by the EEO, in part to meet requirements of the Federal Equal Employment Opportunity Act of 

1972. included employees from all State agencies.

Blacks, both male and female, held only 7.7 percent of the 70,976 

jobs included in the Governor’s EE O study, while they make up 12.7 

percent of the total State population according to the 1970 census. 

Spanish-surnamed individuals, comprising 18.5 percent of the population, held only 11.1 percent of the jobs.

As salary levels increased, minority percentages decreased. In the 

$16,000 to $24,999 range, 96.4 percent of the jobs were held by white 

non-Spanish-surnamed persons; 2.5 percent were held by Spanishsurnamed persons and 0.5 percent by blacks.

Women constituted 41.3 percent of the State’s employees, but held 

very few of the h igh-paying jobs. The majority, 57.4 percent, earned 

less than $6,000; only 10.6 percent of the jobs at or above the $16,000 

level were held bv women.

The record within the specific agencies that got State GRS funds 

is no better and in some instances is much worse. Employment data 

for the 42 agencies, commissions, and courts receiving GRS funds 

shows that black employees in 1973 earned an average of $5,585, a wage 

level far below the average of $7,797 for white non-Spanish-surnamed 

persons.

In these agencies 79.9 percent of the black employees, 68.2 percent 

of the Spanish-surnamed and 29.8 percent of the women earned $6,000 <

or less. Of those earning $16,000 or more, only 5.1 percent were Spanishsurnamed. 0.8 percent were black and 12 percent were female.

The Department of Justice began a full investigation of Texas 

State employment, practices in October 1974, after getting numerous »

complaints of discriminatory practices from individuals in Texas and 

from Federal level agencies as well.

On April 17, 1975, fully 2 ^ months a fter the complaint was made 

public, the Office of Revenue Sharing sent a letter of inquiry to the 

Governor explaining the natu re of the league’s charge of discrimination and requesting an explanation within 30 days.

The Governor requested and was granted a 90-day extension. Meanwhile the State of Texas continues to enjoy the uninhibited flow of 

GRS funds. Documentarv evidence of employment discrimination has 

been on file with the Federal Equal Employment. Opportunity Office 

since 1973 and it is therefore available to the Office of Revenue Sharing. Furthermore the evidence accompanied the February 4. 1975, 

letter from the Texas League of Women Voters to Graham W att.
229

The Office of Revenue Sharing has had more th an ample cause to initia te its own investigation into the probable misuse of general rev­ enue-sharing funds and to play its mandated role of either obtaining 

compliance or term inating GRS funds to the State. An ORS official stated on August 5, 1975 that the use of admin­ istrative proceedings against the State of Texas has not been ruled out as a means of obtaining compliance, but for the present ORS is work­ ing with the Department of Justice and is hopeful that the matter will be resolved without a suit. So far State officials have not responded to the Texas league about its complaint. The pace of action by the Office of Revenue S haring and the lack of any reaction at the State level call into question whether account­ ability has any real meaning in the general revenue-sharing program. Redress for the employment discrimination of the magnitude discussed here, if left to a private court suit, could involve several years and 

costs running into tens of thousands of dollars. The citizens of Texas should not be forced to choose between ac­ cepting the State’s continued employment discrimination or spending very large sums of time and money to pursue the m atter in court. Events to date have made a mockery of power to the people and cit­ izen accountability in Texas. I t can only be hoped tha t Justice Depart­ ment action or a late awakening to responsibility on the part of the Texas government alters this current abuse of the law and the people. The situation in Michigan is different. Here the ORS has played 

a somewhat more active role. The Michigan controversy stems from the 1972 termination of Fed­ eral financial assistance to the Ferndale School D istrict for its refusal to desegregate the Gra nt Elementary School, as required by title VI 

of the Civil Rights Act of 1964. This action, the first of its kind in a northern school district, took place only afte r the Department of Health, Education, and Welfare used every resource to get voluntary compliance with the law. The full procedure, which took over 4 years from the initiation of the action in 1968 to final termination in 1972, was upheld by the Sixth (’ircuit Court of Appeals in 1973. By refusing to hear the case the U.S. 

Supreme Court endorsed the circuit court opinion.

k ORS says tha t Michigan used its general revenue-sharing funds for the State retirement system for public school teachers which is of direct value to the Fern dale School District, hence the action violated the antidiscrimination provisions of the general revenue-sharing law.

* On November 4, 1974, the State of Michigan was advised by the Office of Revenue Sharing of the probable violation and requested a remedy 

or adequate defense of this expenditure within 60 days. None was presented. Governor Milliken in a letter to ORS, dated Jan uary 30, 1975, argued that the funds do not directly benefit the Ferndale School District and that no violation of the law had occurred. The Office of Revenue S haring chose not to pursue the matter under their own auspices, an action which could, and according to many civil rights advocates does, require the deferral of future revenue sharing 

payments to Michigan. Instead it has asked the Department of Justic e to take corrective action. The Department of Justice notified the Ferndale School Dis­ tric t in a November 14, 1974, letter that it was not in compliance with
230

title V I an d has since req ues ted a writ ten plan of actio n th at will 

deseg reg ate th e Gra nt School.

No co ns titutiona lly acc eptable pl an has been for thc om ing . Consequently the Ju stice De pa rtm en t filed su it on May 24, 1975, a ga inst the 

di strict an d includ ed the St ate of M ich iga n as a de fend an t i n the s uit 

at the req uest of ORS.

Me anw hile the Gra nt School in Fe rn da le con tinu es as an all-black 

facilit y an d OR S money continues to flow into th e St ate coffers.

W hile th e Fe rnd ale case slowly gr inds it way th ro ug h th e courts, 

with small evidence of concern fo r the maxim th at jus tice defer red 

is jus tice den ied, the Michigan Dep artm en t of C ivil Rig ht s ha s tak en 

one sig nif ica nt action. On S eptem ber 30, 1974, the de pa rtm en t’s executiv e director issued a me mo ran dum th at sets fo rth “Reco mm end atio ns 

fo r Ac tio n T o Ins ur e Eq ual O pp or tu ni ty in F ed eral Revenue S ha ring .”

These r eco mm end atio ns inc lud e th e issuance of a nondisc rim ina tio n 

policy sta tem ent, an executive or de r specifica lly ad dressin g nondiscri minati on pro vision s of general revenue sharing, imple me nta tio n 

of a review an d mon ito rin g prog ram, the del ega tion of enf orcement 

au th or ity to th e de pa rtm en t of civ il rig hts, an d pe rhap s most impo rtan tly , th e ap pr op riation of a po rtion of th e St at e’s GR S funds 

to im ple me nt a nd ca rry out these prog ram s.

Clearly th e dev elopment of th is prog ram is in part a resp onse to 

the L W V’s mo nit ori ng efforts.

Whil e the wor k of the league in M ich iga n an d Texas must be commended, th e am ount of vo lun tee r tim e at the St at e level an d the pr ofess ional tim e and money th at we nt in to th e effo rt at th e natio nal 

pro ject level mu st not b e o verlooked. Positive res ult s are ind eed s ati sfying , bu t the effort c anno t be repeate d in eac h of the 50 State s and 

38.000 local juris dic tio ns rec eiv ing GR S fun ds.

The v oluntee r tim e an d financial and pro fessional resources involv ed 

in ba ck ing up such an effort would be enormous. Ye t with ou t these 

citizen efforts and absent some com mitment on the part of Federal 

agencies respon sible fo r en forcing the law, GR S fu nd in g of dis criminati on by St ate governme nts is bui lt into th e p rogra m.

In conclus ion, evidence shows th at wi thou t Fe de ral level enforceme nt of civ il righ ts pro vision s, St ate governm ent s know ing ly or u nknow ing ly pe rpetua te th e ex istin g pa tter n of discrim ina tio n, par ­

tic ularly in State employmen t.

Th ere must be a Fe de ral level com mitment to th e era dicatio n of 

racial, eth nic , and sex discrim ination. I f general rev enue sh aring is 

renewed, spec ifications mus t be writ ten int o th e law, an d th e reg ulatio ns carefu lly designe d to ca rry o ut th at com mitment.

Re lying on the good will an d int entio ns of St ate governm ent officials will no t suffice, no r ca n we be conte nt w ith th e deleg ati on of civil 

rig ht s enforceme nt of Fe de ral law to St ate human rights agencies 

or civil righ ts commissions. Such St ate agencies are ty pi ca lly un de rstaffed an d lac king in au th or ity to gi ve fu ll red res s in d isc rim ina tio n 

cases. The ir cooperatio n sho uld be soli cite d, bu t no t as an accompanime nt to a s tron g F edera l level enfo rce me nt effort.

In light of the abysma l civ il righ ts enfor ceme nt rec ord over the 

pa st 3 years, Con gress should no t end orse rene wal of th e prog ram 

unle ss th at renewal conta ins m aj or changes in th e civil righ ts pro vi-
231

sions of the act coupled with the insistent congressional pressure foi 

effective administration. Thank you, Mr. Chairman. [The prepared statements of the panel members follow:]

Statement of William L. Taylor, Director, Center for National I’olicy

Review, School of Law, Catholic University

Mr. Chairman and members of the subcommittee, my name is William L. Taylor, and I am Dir ector of the Center for National Policy Review, a legal research and advocacy group affiliated with the Catholic University Law School. The Center is one of fou r organizations which jointly sponsor the National Revenue Sharing Pro ject—an intensive effort to mon itor the operation of gen­ eral revenue sharing in communities throug hou t the nation and to gauge the impact of the law on min orities and poor people. Among the Center’s respon­ sibilitie s are continuing oversig ht of the Feder al government's adm inistration of revenue sharing, particu larly the civil rights provisions of the law, and legal representatio n of those seeking adm inistrative redress for violations of the law. Rece ntly we completed a substan tia l rep ort for the National Science Founda­ tion on Civil Rights Under General Revenue Sharing. The subcom mittee lias been furnish ed copies of th is rei>ort and certainly may reproduce any portions th at it deems rele van t and useful to complete the record of this hearing. We appreciate the timelin ess of these hearing s and the opportunity to present 

testimony. As you know, civil rights orga nizations have been concerned for several yea rs th at the gua ran tee of equ al protection of the law s will not be maintained und er general revenue sha ring or under other measures that have as the ir stated pur­ pose, an increase in “local con trol” over social welfare programs. "Whatever one may think about “local con trol” as a theory, black people and other minorities have special reaso n to know t hat in p ractice th ey are the victim s u nde r any pro­ gram th at is locally controlled with out effective federal safeguards. This con­ cern does not mean th at civil rights groups are in love with the detailed adm in­ ist rativ e regulations and pla in old red tape th at have marred some aspects of cate gorical programs. We hav e concern, as you do, about the speedy and efficient delivery of services to citizen s. Bu t there is a basic distinction to be made between the myriad strings th at have been attach ed to some fed era l prog rams and requirem ents of civil righ ts. The right to be tre ate d fairl y and withou t discrim ination based on race, sex or oth er invidious consideration s in programs made possible by government fun ds is not simply an admi nis trativ e requirement or string. It is a fundamental ground rule having to do with the integr ity of the processes of government. Indeed, I believe that national guara nte es of civil rights fall into the same category as “one-man, one-vote”—they are rules imposed from above on states and local governments, not for the purpose of making them weak or depend ent b ut to assist them in becoming s tron g enough to be vital pa rts of a functional federal system. Certainly Congress in ena cting the State and Local Fiscal Assistance Act of 1972 recognized th at a ssu ring equal tre atm ent u nder law was a fund amental responsi­ bility th at must remain in the hands of the Federal government even when the mechanisms for allo cating fed era l assistance were being altere d substantially. The requirement of nondiscrim ination, as you know, was m andated in Section 122 of the Act and specific responsibilities to enforce the law and to correct viola ­ tions were given to the De partm ent of the Tre asu ry and the Departme nt of 

Justice. The enac tment of Section 122 also constituted implicit recognition by Congress that, con trary to the views held by some people, the duties of the federal govern­ ment are not satisfied simply by defining the right to equal treatm ent and pro­ viding a means for private redress in federal courts. Where the denial of rights has been pervasive, as it has in alm ost every governmental fun ction affecting black citizens and members of oth er mino rity groups, private law suits can make only a small dent in remedying the problem. W hat is required, and w hat is contemplated by Title VI of the Civil Rig hts Act of 19G4, Section 122 and other provisions of law. is full use of the powers of federal agencies assisted by federal funds. But any reassura nce th at civil rights groups may have derived from the inclu­ sion of specific antidiscrim ination provisions in the revenue sh aring law ha s been dissolved by actu al experience with the way the law has been administered. Three years have elapsed since enac tmen t of the law, a sufficient period to make
232

ju dgm en ts ab out th e m an ner in w hi ch it is be ing adm in is te re d by th e D ep ar tm en t of T re asu ry an d it s Office of Rev en ue Sha ring . I t has become cle ar to us 

fr om our ow n in ve stig at io ns an d from st udie s co nd uc ted by oth er s 1) th a t th er e 

is pe rv as iv e di sc rim in at io n in pro gra m s an d ac tivitie s ass is te d by re ve nu e sh aring fu nd s and 2) th a t th e Office of Rev en ue Sh ar in g, th e ag en cy chief ly re sp on sible fo r se cu ri ng co mp lia nce w ith th e law , has fa iled to ta ke effecti ve step s to 

pre ven t or rem ed y di sc rim in at io n.

TH E PREVALENCE OF DISCRIM INA TIO N

I wou ld like to touc h briefly on tw o are as w he re prob lems of di sc rim in at io n 

comm only ari se und er th e re ve nu e sh ari n g la w —d is cr im in at io n in th e emplo y- l

m en t pra ct ic es of s ta te a nd loc al go ve rn m en ts a nd di sc rim in at io n in loca l se rv ice s 

pr ov id ed w ith fe de ra l as sistan ce .

I t has been cl ea r fo r man y year s th a t ra ci al di sc rim in at io n in sta te an d local 

em pl oy men t is a vi ol at io n of t h e eq ual pro te ct io n cl au se of th e 14tl i Amen dm en t.

B ut it w-as not unti l 1972 th a t Con gr es s pr ov id ed a remed y fo r su ch dis cr im in a- *

tion by am en di ng T itle V II of th e Civil R ig ht s Act of 1964 an d by in cl ud in g Section 122 in th e S ta te an d Lo ca l F is cal A ss ista nc e Act. In li ght of th is , we we re 

no t su rp ri se d to disc ov er th a t in the g re a t b ul k of 33 ju ri sd ic ti ons ex am in ed by ou r 

pro je ct —m ai nl y med ium an d la rg e ci ti es —t here w er e wide ga ps in th e per ce nt 

of m in or itie s and wo men in th e w ork fo rc e an d th e per ce nt em ploy ed in p art ic ula r dep ar tm en ts an d ag en cies of go ve rn m en t an d of ten in th e city as a whole. In 

on e la rg e so uth er n city w ith a 50 p er ce nt m in ority po pu lation , th e ti re depart ­

m en t which rece ived reve nu e sh ari n g f und s had fe w er t h an 3 per c en t m in or iti es .

In a bo rd er cit y, w ith a 24 per ce nt m in or ity po pu latio n, th e healt h dep ar tm en t 

which rece iv ed reve nu e sh ari ng fu nd s em ploy ed only 7% m in or itie s. An d th er e 

w er e se ve ra l ci ties w ith depart m ents which em ploy ed fe w m in ori ties o r wo me n 

no t on ly in pr of es sion al or m anageri al po sitio ns , but ev en in bl ue co llar an d 

se cre ta ri al po sition s w he re m in ori ties were em ploy ed el se whe re in th e city.

Ther e is ev iden ce als o, as oth ers w ill te st if y, th a t si m il ar d is pari ti es exis t in 

em pl oy men t in st ate agencie s.

A st ud y of 26 lo ca l go ve rn m en ts co nd uc te d by th e Com pt ro ller of th e Cur renc y 

does in dic ate that, in a few ju ri sd ic ti ons— m ai nl y la rg e ci ties —s om e pr og re ss ha d 

been m ad e in re ce nt yea rs in re du ci ng ve ry wi de ra cia l dis par itie s. B ut th e ba sic 

fin ding s of t he GAO stud y re in fo rc e th ose which we re ac he d in de pe nd en tly . Th ese 

dis pari ti es refle cted in th e GAO re port and our st ud y are a refle ction of va riou s 

sta te an d lo ca l pr ac tice s th a t fa il to c on fo rm to t h e re quir em en ts of fe der al civ il 

ri ghts law’—th e us e of te st s fo r h ir in g an d pr om otion th a t ex clud e m in or itie s 

an d th a t are n ot j ob r el at ed , th e fa il u re to a dopt affirm ativ e te ch ni qu es f o r re cru iting m in ori ties an d women, an d th e per si st en ce of in st an ce s of over t di sc rim in atio n. Eve n if we as su m e th a t m os t sta te s an d lo ca l go ve rn m en ts are will ing to 

co op er at e in br in gi ng th eir em pl oy m en t pr ac tice s in to co mpl ianc e w ith th e law . a 

m ajo r effo rt, by th e fe de ra l gov er nm en t is cl ea rly re qu ired . And, w ith st ate an d 

lo ca l go ve rn m en t em ploy men t const it uti ng th e mos t ra pid ly ex pan din g field of 

jo b op port unity in our nati onal ec on om y ov er re ce nt ye ar s, it is al so cle ar th a t m

su ch an ef fo rt by th e fe der al go ve rn m en t is cr uci al to th e go al of m in or itie s to 

ov erco me th e b arr ie rs j>osed by past, dis cr im in at io n an d to become fu ll an d pro ­

du ct iv e p art ic ip an ts i n American s oc iety.

Sim ilar ly , th e re qu irem en t th a t go ve rn m en ta l se rv ices an d fa cil it ie s be fu rni sh ed eq ua lly an d w itho ut dis cr im in at io n on th e ba sis of ra ce o r o th er invidiou s •

co ns id er at io ns is a n are a w he re lega l re m ed ie s ha ve e merge d only re ce nt ly . It was 

no t unti l 1972 th a t a fe de ra l court of ap pe al s, in th e ca se of H aw kin s v. To wn of 

Sh aw , he ld th a t under th e 14th A m en dm en t a remed y m ust be prov id ed wh en 

se n- ices su ch as str eet li ghting or pav in g are clea rly in fe ri or in blac k ne ig hb or ­

ho od s to th ose prov id ed in w hite ne ighb or ho od s. Mo re th an on e- th ird of th e 

co m pl ai nt s pe nd in g a t th e Office of Rev en ue S har in g co nc ern dis pari ti es in se rv ­

ices, an d am on g them are se ve ra l w her e th e a lleg at io ns a re a b la ta n t dis cr im in ation o f t he typ e foun d in Sh aw . Tn se ver al o f th es e ca ses in cl ud in g A mar ill o. T ex as,

Bog alus a, Loui si an a an d O uac hita P ari sh . Lou isia na . OR S has fo un d su bs ta nc e 

to th e al le ga tion s, but th e ca se s eit h e r re m ai n pe nd ing or th e ag en cy has ac ­

ce pted th e m os t ge ne ra l pled ge s th a t th e dis cr im in at io n w ill be rem ed ied.

In th e med ium siz ed an d la rg er ci ties of th e So uth an d N orth w he re our mon ito ri ng p ro je ct w as co nd uc ted, dis cr im in at io n in se rv ices w as not as b la ta n t as 

th a t foun d in Shaw ’ or in se ve ra l o th er sm all so uth er n co mm un iti es , b u t people 

in m in or ity and gh et to ne ighb or ho od s ex pr es se d st ro ng fe el in gs th a t th ey we re
233

not receiving equal services. In these situations, adequa te impleme ntation of the civil rights provisions of the revenue sharing law demands carefu l investigation to determine whether discrim ination exists and the development of objective sta ndard s o f m easuring governm ental services. Yet few investigations have take n place and, although we have been told th at the Office of Revenue Sha ring Is pre­ parin g a "guidebook” on municipal services, it has no t yet issued or even developed objective s tan dards by which the equity of services subsidized by revenue sharing can be gauged. Thus as ma tte rs now stan d, increasing fede ral resources are being applied throug h revenue sha ring and oth er federal laws to assist local govern­ mental services, while the inaction of the ORS permits these sums to be used in ways which may violate the Con stitution and laws and thwart the n atio nal goal of providing "a suitable living environ men t” for every American citizen.

TII E PERVASIVE DEFAULT OF ORS

One may sympathize with the problem s facing an agency charged by law with 

preventing discrimination in some 39,(XX) sta te and local governments not only 

in the activities I have described but in other are as as well, such as in the em­ ployment practices of private contractors utilizing revenue sha ring fund s for con­ stru ctio n projects. But the fac t th at the task is one of gre at magnitude provides no excuse for the inaction and lethargy th at has marked ORS’ performance in 

carrying o ut the d utie s placed upon the agency by Congress. In the first place, the opportu nity to create a clim ate encouraging compliance with the law has been lost by the public utterance s of high officials of the Depa rt­ ment of Treasury. Rei>eatedly, they have described reven ue sha ring a s a program ‘•free of str ing s”, different in its adm inistration in almo st every respe ct from programs of categ orical aid. Civil rights requirem ents have occasionally been mentioned, but they have been tre ated as secondary matters, with no suggestion th at the Tre asu ry Departm ent was prepared to make vigorous use of its en­ forcem ent autho rity to remedy violations. With these signals emana ting from the top, it is little wonder th at few sta te and local governments have been im­ pelled to exam ine their p ast practices and to take corre ctive action where needed. Secondly, the Office of Revenue Sha ring has studiously ignored the teaching of experience under earlier civil rig hts laws th at the key to success in perform ­ ing a major enforcement task is to esta blish good compliance mach inery and to dem onstrate a willingness to impose sanctions on those who violate the law. Dur- ng the 1960s, the Departm ent of Health, Education and Welfare was able to bring about successful inte gration of public schools in m any districts in the South by m aking c lear that it would withhold funds from dis tricts th at did not submit acceptable plans. Once HEW had employed this remedy in a number of cases, oth er districts began to come into compliance withou t awaitin g the imposition of a sanction. Particular ly imp ortant in this process was the decision of HEW to defer new fund ing to a dis trict upon a finding of probable noncompliance even in advance of completion of all the steps of the complex adm inistrative process 

leading to fund term ination. But ORS refused to consider the use of deferra l as a remedy on grounds that its program was “different” and it has persisted in this refusa l even after hav­ ing been told by a fede ral distr ict cou rt that it had legal autho rity to defer fund s subject to the adoption of app rop riate regulations. In fact, ORS has de­ ferred revenue sharing funds only once an d then only when specifically ordered to do so by a federal court because judicial findings had been made tha t the City of Chicago had prac ticed racial discrim ination in its police dep artment which re­ ceived larg e sums of revenue sharin g money. Belatedly las t sprin g ORS came for­ ward with proposed regulations providing for de ferral of funds in the most limited circu mstances—where a federal court makes a finding of discrimination and finds reven ue sha ring funds implicated. These regu lations do not provide for de­ fer ral on th e basis of the agency’s own findings of discrimination (or on the basis of findings of oth er agencies), a step ORS is clearly authorized to tak e under the Chicago decision. Indeed, the regu lations actually seek to cut hack on the legally adjudicated duty to defe r whenever findings of discrim ination have been made by a court of competent jurisdiction. ORS is saying to victim s of discrimi­ nation in these regu lations that “even though you have proved discrim ination in a court and even though we know th at revenue sha ring funds are involved, we will not defer unless you or others had the foresight to make revenue sha ring a formal part of the court proceedings.” In other words in the grea t majority of cases where discrimination has been found, ORS would not apply a deferral
remedy and would be content to let the funds flow while discrimination remains

uncorrected. , , . . . And, ap art from the one ease where Treasury defe rred funds when directed to do so by a court, the agency has taken formal enforcement action in only one oth er instance—a simple referral to the Departm ent of Justice of a highly publicized violation in Fern dale, Michigan. Beyond this shocking repudiatio n of its own autho rity to employ sanctions to deal with violations of the law, the agency has until now refused to ini tia te its own compliance reviews or investigations, in a technique now generally rega rded as indispensab le to uncovering patterns or prac tices of discrimination. Instead, ORS has relied also entirely on the receipt of complaints and, lacking admin­ ist rativ e controls that would asu re expeditious handling, some matter s have pended for years or more withou t redress. Based on experience, a person who files a complaint today may expect five months to elapse before ORS even deter­ mines whether a violation has taken place. Assuming ORS does find noncom­ pliance a furth er wait of more than seven months occurs before some resolution of the ma tter is reached. Fu rth er, as the U.S. Civil R ights Commission and others have reported, even the few successes that ORS has claimed through settleme nts are suspect because in seve ral instances the agency has settled for less tha n full 

compliance with the law. Thirdly , while excusing inad equate performance on grounds th at its staff is very small and simultaneously arguing that a large staff would not comport with the philosophy of revenue sharing . ORS has failed to take steps which would enlist the energies of o ther a pprop riate agencies, fede ral and state, in remedying discrimination . For example, in 1973, ORS seemingly acceded to the suggestion of civil rig hts groups that it could alle viate its burden of inve stiga tion through ar ­ rangements with other agencies, such as HEW, DOT a nd HUD, to monitor com­ pliance in the ir a reas of special expertise, by providing in its regu lations for such cooperation agreements. Bu t only in the las t few months has ORS included agree­ ments with three federal agencies—EEOC, Jus tice and HEW. And sadly the agreements amount to little more tha n provision for an exchange of information, and their utility is severely hampere d by ORS’s re fusal to make binding delega­ tions of authority that would oblige them to accept the findings of these agencies. If ORS has been leth argic in its dealings with other federal agencies, it has been almost totally derelict in establishing useful rela tion s with sta te and local hum an rights agencies. The State and Local Fiscal Assistance Act is one of the few laws t ha t provides a role for governors in resolving complaints of civil rights violations, and ORS has sta ted th at it wan ts to enlist the help of states and localities in securing civil rights compliance. Yet we found in our monitoring project th at only 52 perce nt of local human rights officials had any accurate idea of how revenue sharing money was being used in the ir communities and only one or two had been given any review responsibility for the use of general revenue sha ring funds. In other surveys commissioned by the National Science Founda­ tion, it was found th at 70 to 80 per cent of the local officials interviewed stated they had received no communication from the Fed eral government or their sta te on civil righ ts requirements and that many gave no considera tion to equal opportunity standar ds in allocating funds. ORS has recently entered into agreements with several sta te human rights agencies for the exchange of info rmation and for the conduct of state investiga­ tions to which ORS will give “subst antial weight.” But these agreements have been concluded without regard to whether sta te agencies have the resources to carry them out and without regard to the legal and practic al limitations on state agency autho rity to prevent discrimination in public employment and services— lim itations often more stringen t tha n those the state agency faces in dealing with priva te discrimination. Fu rth er, the approach of detecting civil rights violations through sta te fiscal adults, so highly touted by th e then d irec tor of ORS when he appeare d before this subcommittee two years ago, has tu rne d out to be a complete bust, since almost nothing of value concerning discrimination ha s been uncovered. In short, ORS has faile d to esta blish relatio nships with sta te human righ ts agencies or other state units which have produced, or even promise to produce, a stron g cooperative effort to enforce civil rig hts requirements.

OTH ER IS SU E S A FFEC TIN G M IN O R IT IE S AN D T H E POOR

Even if the Office of Revenue Sha ring took fa r more seriously than it does its responsibility to enforce civil rights laws, serious problems of equal treatm ent under law would remain. Several months ago, spokesmen for the For d Adminis-
tra tio n told a New York Times rep ort er th at in their view, the urban crisis was 

over and th at measures th at migh t argu ably have been requ ired in the 60s were 

no longer needed. But in the same story, government statistics revealed the growing economic disp arity between family income in the cen tral cities and in the 

subu rbs of our nation’s large metropolitan area s. And while some minority families have gained sufficient mobility to find suitable housing outside ghetto areas, 

the rac ial as well as economic dis parities between cen tral cities and suburbs 

continue to grow. Revenue sharing, I submit, reinforces this continuing and growing urb an aiwirtheid by providing “no string s’’ fund ing th at perm its relatively 

affluent white suburbs to meet their public service needs withou t contributing 

any thing to the solution of ma jor social and economic problems th at afflict the 

metropolitan are a as a whole.

When such a suburban community uses revenue sha ring funds to upgrade 

parks, roads, schools or other services (tha t may alre ady be superio r to those 

available in central cities) they are obligated under the curre nt law to assure 

th at the sendees are d istributed equally within the community. But that may be 

of no help to a minority family th at is effectively barred by zoning practices from 

residence in the community in the first place.

Prior to the advent of reven ue sharing , a number of efforts still in the 

embryonic stage were being made und er cate gorical programs to induce some 

degree of cooperation among local jurisdictions in metropolitan areas, e.g., by 

promoting the concept of “fair sha re” housing through out the area, which would 

also give minorities and lower income people b etter access to jobs and public services outside ghetto areas. It does not require much empirical stud y to conclude 

th at once funding is available that provides neither requirements nor incentives 

to metropolitan cooperation, these fledgling efforts to induce some sense of responsibility will wither and die. That, I believe, is what is happening and what will 

contin ue to happen if revenue sha ring is continued and expanded in its present 

form.

RECOMM ENDATIONS AND CON CLUSION

In short, Mr. Chairman, it is not an exaggeration to say th at und er revenue 

sha ring civil rights enforcement has become a dis aster area, reinforcing o ur worst 

apprehensions t ha t this form of allocating resources and autho rity would become 

a vehicle for dissolving hard won fe deral protections again st discrimination. Yet 

I do not think that conflict is inevitable between measures to expand the 

resources of states and local governments so tha t their energies will be more fully 

utilized in meeting pressing domestic problems and steps to ass ure that basic 

national policies, such as equal protectio n under the law, are fully enforced.

If these objectives are to be reconciled, however, it is clear to us th at fundamental reform of the State and Local Fiscal Assistance Act is required. In the 

civil rig hts are a it has now become clea r th at if the re is to be any hope of fair 

and vigorous enforcement, the Congress will have to dire ct the Execu tive branch 

to tak e the steps it has persistently refused to take over the past thre e years. 

These include mandated timetables for completion of the investig ative and enforcement processes to eliminate the interminable delays th at have plagued the 

pro gra m; a specification of the enforcement steps to be utilized where voluntary 

compliance efforts fail, including the temp orary deferral of fund s on court or 

agency findings of dis crimination : a requirement th at settlement agreements be 

reduced to writing and be periodically monitored to do away with the vague 

promises to “do right” that ORS takes such pride in negotia tin g; mandated agreements with oth er federal agencies to s hare the burden of investigation, with provision th at the findings of these agencies shall be accepted as the basis for 

enforcem ent action.

In addition, it seems to me th at minimum steps to arrest the trend toward 

urb an apart heid would include an application to general revenue sha ring of the 

provisions for regional cooperation now atta che d to categ orical programs and 

the esta blishment of new financial incentives to induce suburban governments to 

stop fencing out minorities and the poor and begin doing their shar e to solve the 

critical social problems th at afflict th e nation’s cities.

A harder problem is whether even if Congress makes the civil rights mandate 

more specific it should continue to e ntrust implementation of tha t mandate to the 

Dep artm ent of Trea sury. It has become sadly appar ent th at Tre asu ry officials, 

unlike their cou nterparts in oth er agencies adm inistering gra nt programs, view 

themselves largely as an accounting unit with no policy mission and almost no 

responsibility to assure any result oth er tha n sound fiscal adm inistration. Civil
236

rights enforcement is rega rded as unwarranted interference with the perceived 

mission of keeping the dollars flowing.

This may be an in stitution al attit ud e so ingrained th at it will not be materially 

altere d even by stronger direction from Congress. Thus, I believe th at Congress 

may wish to consider whethe r civil rights may be better protected by a tra nsfer 

of enforcement functions to an agency such a s the Department of Justice tha t has 

the needed expertise and th at would reg ard the responsbility as consistent with 

its major objective.

Mr. Chairman, we are in the mid st of a period in which the resolve of this 

nation to honor the comm itments it has made in the Constitu tion to trea t all 

citizens equally under the law is a gain being severely tested . As im portant as any 

other question we face during thi s period of testing is whethe r the Congress of 

the United States is prepared to a ssu re th at general revenue s haring—the larg est 

domestic gra nt program we have—is adm inistere d in a manner th at acknowledges 

the rig ht of blacks and other minorities to equal protection of the laws. It has not 

been so administered dur ing the past three years, but we hope and believe th at 

Congress will act to set these m att ers right.

Prepared Statement of Susan P erry, Southern Governmental Monitoring

Project, Southern Regional Council, Atlanta, Ga.

Good afternoon, Mr. Chairman. My name is Susan Perry . As staff counsel to th e 

Southern Governmental Monitoring Project, I have been asked to testify before 

your committee this aftern oon.

As you know, § 122 (a ) of th e general revenue sharing ac t1 prohibits discrimination based on race, color, nat ion al orgin, or sex in all programs or services receiving entitlemen t funds. Not until July 24, 1975, did the Office of Revenue 

Sha ring (ORS) finally dr af t proposed regu lations 2 which define employment or 

sex discrimination. However, our experience in investigating the uses of GRS 

fund s and discrimination in the South forces us to conclude th at the Act and 

proposed rules on civil rights requirem ents must be amended.

Over the past two years, our project has employed researchers in about 60 

southern communities to investigate , among other issues, the extent of discrimination in GRS funded programs. The e ntire report detailing all of our findings on 

discrimination will lie published next month. My rem arks today will highlight 

some of our major findings.

investigation has consistently revealed th e inadequacy of ors’ antidiscrimination ENFORCEME NT UNDER TH E PRESENT STATUTORY AND ADMINIS TRATIVE SCHEME

A pr imary congressional purpose for enacting revenue sha ring legislation was 

to promote greater flexibility in the use of federa l funds at the local level.3 But 

this policy may have created an inherent conflict with effective civil rights enforcement—par ticularly in the South where fede ral intervention h as historically 

been a decisive factor in anti-discrim ination compliance.

SGMP investiga tions support the charge th at ORS has been unconscionably 

derelic t in performing its administrative enforcement duties man dated by the 

statute. As a res ult of the discrim inatory conduct of recipient governments 

coupled w ith th e lack of effective enforcem ent by ORS, black and poor southerners 

continue to be denied equal access to critical programs and services sponsored by 

jurisdictions receiving revenue sha ring funds.

EM PLOY ME NT PAT TER NS OF A SU BS TA NT IAL PERCENTAGE OF JU RISD ICTION S AND LOCAL

AGENCIES SURVEYED REFLECT A CO NT INU ING BIA S AGAIN ST HIR IN G TRADITIONALLY

EXCLUDED GROUPS IN PROGRAMS RECEIVING REVENUE SHAR ING FUN DS

SGMP surveys disclose th at women and minorities were significantly und errepresen ted in public employm ent, par ticula rly in the public saf ety departm ents 

of many communities. This und erre pre sen tation was the basis for citizens filing 

non-compliance com plaints with ORS in several survey locations.

In Jacksonville, Florida, whe re blacks con stituted 26.5 percen t of the total 

population but represe ntation in the Office of the Sheriff amounted to no black 

women on the force, black men 5 percent, white women 2 percent, and white men

1

 St at e and Local F isc al Assis tan ce A ct of 1972.

3

 40 Fe de ral Register 30974.

3

 See H.R. Rep. No. 1018, 92d Cong., 2d Sess., pt. 1, a t 9, 11 (19 72).
237

93 percent,4 5* the local chapter of the NAACP filed a complaint with ORS alleging 

blatant employment discrimination against women and blacks. Ms. Eddie Mae 

Steward, the President of tha t group is here with me this afternoon to discuss 

the Jacksonville complaint.

City officials in another SGMP monitoring site, New Bern, North Carolina, 

were charged with alleged discrimination in the allocation of revenue sharing 

funds used to construct two recreational centers which would have the effect 

of perpetuating a discriminatory pattern of dual service. As a result of this 

complaint, evidence revealed tha t the town also maintained a lily white fire 

department despite a black population of 8,968. ORS ordered New Bern to 

develop an affirmative action plan that would make the all-white fire department 

reflective of the minority population.

Our SGMP investigator in Spartanburg, South Carolina interviewed feminists 

who charged the city with discriminatory hiring, firing, promotion and 

compensation.

A review of the disposition of the Spartanburg complaint demonstrates the 

inadequacy of ORS procedures for the speedy resolution of allegations of discrimination. Four months a fte r an ORS program audit in December, 1974, turned 

up evidence of probable civil rights violations, ORS’ only enforcement activity 

consisted of sending a notification of non-compliance to the city. In May, 1975, a 

SGMP staff person contacted the ORS Compliance Manager who candidly admitted that the initial findings of the auditor had never been turned over to the 

civil rights unit because there was no standard agency procedure requiring such 

reporting. Compliance Manager Murphy gave assurances tha t this “bug in the 

system’’ would be corrected. Yet nearly one year after the ORS compliance 

mechanism was triggered, the Spartanburg complaint has grown stale in the ORS 

investigative stages.

In Spartanburg and other communities, affirmative action plans have been 

drafted to satisfy compliance requirements. Because these reluctantly prepared 

employment plans are not self-executing, the documents amount to mere paper 

commitments in the absence of rigorous enforcement by outside agencies to 

compel compliance.

FAILU RE OF ENF ORC EMENT AGENC IES TO EFF ECT IVELY MONITOR CONTRACTOR EMP LOY ­

ME NT CAN HAV E A DETRIME NTA L IMPACT ON WOM EN AND MINO RITIE S SEEKING

EMPLO YMENT IN THE SKILL ED CONSTRUCTION TRADES

In Asheville and Buncombe County, North Carolina, and in many other survey 

locations, government officials diverted major portions of revenue sharing dollars 

into what Asheville’s Chief Finance Officer described as “highly visible, one time 

capital outlays.” B Under the existing revenue sharing statute and § 51.51 of the 

proposed non-discrimination regulations, discrimination by private contractors 

receiving entitlement funds is prohibited. In communities like Asheville where the 

prevailing wage rat e is low and the recession has produced a reservoir of cheap 

labor, rigorous compliance take on added significance for women and minorities. 

However, overlapping agency jurisdiction in enforcing minimum wage rate stand ­

ards and minority and female enrollment in apprenticeship programs creates convenient loopholes for contractors interested in evading compliance.

North Carolina contractor regulation is provided under a confusing bifurcated 

system of state and federal regulation. Despite federal law0 requiring recipient 

governments to monitor weekly wage reports filed by contractors, the Asheville 

mayor thought, tha t the city’s compliance obligations consisted of inserting a 

clause in municipal agreements which indicated that the contract was subject 

to Davis-Bacon requirements.7 The Wage and Hour Division of the U.S. Department of Labor receives no direct report unless an alleged violation occurs and 

an investigation is requested by an aggrieved party.

Similarly, this lack of effective enforcement can encourage North Carolina 

contractors to engage in deceptive apprenticeship programs to avoid paying legal, 

minimum wages to those classes of persons intended to benefit from affirmative 

action policies. The Department of Labor has delegated apprentice program 

registration to the State. As of August 19, 1975, 143 Buncombe County apprentice programs were registered listing 38 minority apprentices enrolled in ap4

 “ Tow ar d Pol ic e/ C om m un ity Deten te in Ja ck so nville ,” a re p o rt of th e Flo rida Adv iso ry 

Com mitt ee on Civ il R ig hts pr ep ar ed fo r th e Co mmiss ion, Ju n e 19 75, a t 10.

5

 I nte rv ie w by SG MP in vesti g ato r Tom Sul liva n, su m m er 1975.

8

 29 Code o f Fed er al R eg ula tion § 3.3.

7

 I nte rv ie w w ith M ay or R ic hard Wood by Tom Sul liva n.

62 -3 31 — 75-------16
238

proved programs. No minority apprentices were enrolled in the 10 programs 

specifically designated as having afiirmative action recruitment plans? A sham 

apprenticeship registration can allow contractors to hire women and minority 

workers at substandard wages without furnishing the necessary skills training. 

By maintaining an appearance of minimal compliance on paper, local contractors 

may succeed in by-passing the state and federal enforcement mechanisms.

Section 51.53(c) obligates recipient governments “to conduct a continuing program of self-evaluation” in order to identify policies and practices which have 

“the effect of denying equal employment opportunities to minority individuals 

or women.” Recipient governments are notified in § 51.53(b) tha t ORS also 

“intends to schedule compliance reviews by giving priority to jurisdictions which 

show a significant disparity between the percentage of minority persons in the 

work force and the percentage of minority persons employed in applicable programs.” However, we are convinced t hat unless periodic compliance reviews are 

mandated by law and carried out by a diligent enforcement agency, contractors 

in violation of affirmative action requirements will remain undetected.

In the time remaining I would like to list some of our major recommendations 

for the committee.

CITIZE NS ’ ACCESS TO COM PLIA NCE INF ORMA TIO N SHOULD BE EX PLICITL Y PROVIDED

Evidence indicates that a large number of recipient governments are probably 

in violation of anti-discrimination requirements, but relatively few complaints 

are filed with ORS. Not many citizens interviewed by SGMP researchers had 

sophisticated knowledge of revenue sharing and the program’s requirements.

In Raleigh, North Carolina, for example, black members of the GRS funded 

police and fire departments filed more than a dozen complaints with the EEOC. 

These complaints have been stalled in EEOC proceedings for about one year. 

Ignorant of their rights under revenue sharing laws, complainants have ignored 

the ORS route to pursue their discrimination charges.

As EEOC’s work load becomes increasingly unwieldy and as discrimination 

complaints remain unresolved, revenue sharing civil rights procedures could 

become an effective method for policing a significant number of employment 

discrimination cases. Accordingly, we urge more effective procedures to insure 

citizens’ accessibility to GRS funding and compliance information as well as 

available non-discrimination remedies.

REVENUE SHAR ING LEG ISLA TION SHOULD BE AMENDED TO INC LUD E A PERM ISS IBL E

EX PENSE CATEGORY TO PAY FOR TH E DEVELOPMENT OF AFFIR MA TIV E ACTION

PROGRAMS

ORS lias determined that the funding of affirmative action programs must be 

treated as an operating expense ra ther than a capital expenditure.® This means 

that revenue sharing money can now he used for affirmative action programs only 

in those program areas eligible for revenue sharing funds under the present 

“priority” operating expenditure categories, such as public safety or environmental protection. To aid local governments in their compliance efforts, an additional expense category to fund affirmative action must he enacted.

IN LI GH T OF TH E SUPREME COURT DECISION IN TH E ALASK A PI PE LI NE CASE,8 *10 A PRIVATE

RIGH T OF ACTION MU ST BE ACCOMP ANIE D BY AN AUTHO RIZATION TO AWARD LEGAL

FEES AGAIN ST NON-COM PLYING GOVERNME NTS

Limitation in enforcement agency manpower requires tha t private suits be 

recognized as a remedy against discrimination. Because the Supreme Court has 

refused to invade what it considers the “legislature’s province by redistricting 

litigation costs,” legislation must be enacted which would explicitly authorize 

the courts to award attorneys’ fees to successful litigants.11 Revenue sharing 

funds of the non-complying recipient governments could be the source for these 

fees.

8

 See lette r from Ms. Mignon Hard en. Assistant Director, Apprenticeship Division, North Carolina Department of Labor, to Tom Sullivan, d ated August 19, 1975.

0

 See memorandum on affirmative action from Robert T. Murphy, ORS Compliance 

Manager, Augu st 1, 1975. 10 See Alye ska Pipeline Service Co. v. Wilderness Society. 43 TJ.S.L.W. 4561 (May 12. 

1975).

m Id. a t 4571.
AN EFFECTIVE AND EF FICI EN T ENF ORC EME NT SC HE ME MU ST EXTEND CIVIL RIGH TS 

COVERAGE TO ALL PROGRAMS AND AC TIV ITIES OF A RE CIPIEN T GOVERNMENT

Revenue sharing funds often pay for municipal services tha t otherwise would 

have been financed from the general local budget. Local funds which are freed 

up by revenue sharing may in turn be allocated in such a way as to avoid civil rights requirements. SGMP’s New Orleans investigation encountered a i>otential 

example for this shifting of accounts : in that city, officials frankly stated t hat for 

accounting purposes, they were attempting to place GRS funds not in such 

slightly integrated departments as the police, but in “safe" departm ents such as 

sanitation—“safe” because better integrated. Furthermore, some local governments still make very littl e effort to document 

their uses of GRS funds. In Alachua County, Florida, our SGMP investigators 

found no reliable financial data on uses of GRS funds. County officials claimed 

that a high percentage of GRS funds went to social services, but when confronted 

with a request to document this claim, they admitted that there was indeed no 

way to do so. We reite rate the recommendation for jurisdiction-wide coverage which was 

made by Elmer Staats, Comptroller General of the United States, in recent testimony before a Senate subcommittee,12 and which we included in our formal 

comments on the proposed ORS anti-discrimination regulations.

AFTER CERTAIN FIND INGS HAVE BEEN MADE, TH E REGULATORY SC HE ME SHOULD PROVIDE 

FOR AUTOM ATIC SU SP EN SION OF EN TITL EM EN T FU ND S

After a determination by Federal enforcement agents of probable discrimination and failure to secure voluntary compliance, revenue sharing funds to recipi­ ent governments should be withheld, pending further investigation and complete 

compliance. Similarly, a procedure for mandatory deferral of payments of noncomplying recipients, made prior to suits alleging violations of § 122. would 

immediately shift the burden of accelerating enforcement proceedings to local 

governments, and would give them a financial interest in the si>eedy resolution 

of complaints.

IND IVIDUALS FILI NG EM PLOY ME NT DIS CR IMINA TIO N COMPLAINT S MU ST BE SHIE LDED 

FROM RETALIATORY DISM ISSA L AND OTH ER REPRISALS

The present enforcement structure offers no protection to employees who 

complain about job discrimination. SGMP investigators in New Bern, North 

Carolina, uncovered evidence tha t in small communities where the political structure is closely tied with local business, black citizens who complain about 

governmental discrimination fear job reprisals from white employers. Antiretaliation provisions must be drafted to protect publicly employed complainants 

from threats of job termination. Non-civil-servant complainants can be protected 

somewhat by enacting a requirement th at the enforcement agency maintain strict 

confidentiality of sources of discrimination information.

ORS SHO ULD CONTINU E IT S STATUTORY RE SP ON SIBILITIES ON SUB STANTIV E REVENUE

SH AR ING MATTERS , BUT CIV IL RIGH TS ENF ORC EMENT SHOULD BE SEVERED FROM ORS

AND TRANSFERRED TO TH E CIV IL RIGH TS DIV ISIO N OF TH E DEPART MEN T OF JU ST IC E

Even if all of the necessary enforcement modifications are enacted, the five 

ORS compliance staff members exclusively assigned “to monitor the non-discrimination requirements in a grant program running to more than 38,000 jur isdictions” 13 cannot be effective. Overlapping agency responsibilities produce confusion and proliferation of 

civil rights enforcement in various federal departments. An example of this conflict in agency jurisdiction was provided by the Justic e Department official who candidly told us that his department takes a “hands off” approach to discrimination complaints which have been previously filed with ORS unless tha t agency requests assistance. ORS has a similar policy for complaints tha t reach the 

Justice Department first. From the point of view of prospective complainants, 

the resulting enforcement agency shopping (at least for those who learn about

12 See statement of Elmer Sta ats , Comptroller General of the United States, before the Subcommittee on Intergov ernm ental Relations on Government Operations, and accompanving GAO report, Case Studies of Revenue Sharing in 26 Local Governments, Jul y 23. 

1975. 13 “ Revenue and Rights,” New York Times, August 10, 1975.
240

this peculiar informal arra nge ment between the Justice Department and ORS), 

like the old shell game, means being lucky enough to select an effective enforcement program.

Because the Treasury Dep artm ent is not equipped by tradition or training to 

enforce civil righ ts requirements, we recommend th at all respo nsibility for civil 

rights enforcement, other tha n routine information gathering a nd dissemination, 

be removed entirely from ORS and transferre d to the Civil R ights Division of the 

Jus tice Department. We also recommend that the Jus tice Department receive 

additional funds for staff and investigation expenses to car ry out this 

responsibility.

Statement of Eddie Mae Steward, President, NAACP, Jacksonville, Florida

Good afternoon, Mr. Chairman.

On July 20, 1975, as P resident of th e Jacksonville bran ch of the NAACP, I filed 

a complaint with the Office of Revenue Sharing aga inst the city of Jacksonville, 

alleging discrimination in public employment in the police and fire departments, 

and ineq uities in the establish ment and maintenance of recreation al facilities. 

Before I begin to discuss these alleg ation s, I would like to provide some background info rmation to explain the events th at led up to my filing that charge 

aga inst the city.

The political climate in Jacksonville, which is located in northern Florida on 

the Atlantic coast, has been described as more sim ilar to conservative south 

Georgia tha n to oth er sections of Florida.

In 1967, a referendum extended Jack sonv ille’s city limits to tak e in most of 

Duval County and a large white population. This dilu ted the voting power of 

blacks. We represented 47.7% of the population within the old city boundaries, as 

opposed to 2(5.6% of the tota l population (about one-half million) und er the new 

boun daries?

Tn size, the consolidated government is one of the la rgest mun icipa lities in the 

country, mea suring 840 sq uare miles- 2 345*1 I might add th at in a city of this size i t is 

not difficult to locate public fac ilities in remote are as which are totally inaccessible to poor, black inner-city residents.

Police salaries have been one of the chief uses of GRS money in Jacksonville. 

But blacks and women have serio us problems with discrimination in Jack sonville’s police services.

Until 1968 the Jacksonville police departm ent was segregated, and “nig ra” officers, as they were called, were posted in an all-black sub station? Traditionally 

these men were not empowered to ar re st whites for any reason? Prior to consolidation there were no uniformed black deputies under the county sheriff, and 

no blacks were members of the Fr aterna l Order of Police.

There are two personnel categories, sworn and civilian, in the Office of the 

Sheriff (OS ), which is now the police departm ent for the entire consolidated 

government. The sworn force is composed of uniformed officers, detectives and 

supp ort staff. The a dministrative, records and county correctio nal staffs represent 

the civil component.

Tn Jan uary. 1969. one y ear af ter consolidation, 39 officers or 6.4% of the 609- 

member sworn staff were black? Seven of these black s were in supervisory positions. but no black women were on the force? By July , 1974, the OS had a tota l of 

1,290 employees; 92% or 1,184 were white? The racial breakdown on the OS 

sworn staff, which had now increased to 848 persons, was as follows: 786 (93%) 

white men : 19 (2%3) white women : and 43 (5%) black men? T here still was not 

one black woman on the sworn staff, altho ugh black women were overrepresented 

in the lower-paying civilian positions? Of the 442 civilian employees, 252 or 52% 

were white men, and 127 or 29% were white women?0 Only 41 or 9 perc ent of these 

staff persons were black men and 22 or 5 p ercent were black women?1

1

 “Toward Police/Community Detente in Jacksonville,” a report of the Florida Advisory 

Committee on Civil Rights prepared for the Commission, June, 1975. at 3 ; here inafter The 

Report.

2

 “D ata Jacksonville. Florida,” published by the Research Departm ent of the Jacksonville Area Chamber of Commerce, October, 1974. 3

 The Report a t 5. 4

 Td.

5

 Td. at 10. « Td.

i Td.

s Td.

0

 Id. a t 11. ln Td. a t 10. 11 Td. a t 11.
The racial composition of the OS staff had serious implications for black 

residents of the city. On March 12, 1974, the Jackson ville NAACP and other 

plain tiffs filed a class action lawsuit to protect the constitutiona l rights of blacks. 

Top city officials such as Sheriff Dale Carsen and Mayor Hans Tanzler as well 

as 22 individual Jack sonville policemen were named as defendan ts. The alle gations aga inst these defend ants included misconduct, abuse of authority, and use 

of excessive force and bruta lity . This case is still in litiga tion.

Meanwhile, other agencies had also focused attention on the OS. In September, 

1974, th e OS ins titu ted a n agility test for prospective police academy ca nd idates; 

this test replaced a height requirement.12 The Equal Employment Opportunity 

Commission brought proceedings against the OS and ordered the t est elim inate d 

as a crite rion for selection.13 The OS, which was also ordered to hire 41.4% 

women in all job categories, is appealing this ruling.14 There are also allegations 

th at 3 women were recently denied acceptance into the Police Reserves, which 

does not receive Federal funds.15 However, the Reserves do use the Police 

Academy, which is federa lly funded, and I suspect ano ther law suit may be in 

the making.

In June, 1975, the Flo rida Advisory Committee to the United States Commission on Civil Rights prepared a report of its study of police/comm unity relations in Jacksonville. The Committee made several specific findings with regard 

to OS staffing. Evidence reve aled th at “blacks and women comprise disproportionately small perc entages of the OS sworn force and are und erre presented in 

high er officer ranks in the OS.” 14 The Committee also found “techniques currently used for rec ruiting minorities and women are ineffectual.” 17 Staffing patterns, according to the Committee, indicate th at “police recruit screening and 

hiring practices and tests for promoting tend to disc riminate again st minorities 

and women.” 18 The Committee also found th at although Jacksonville has received more tha n $3 millio n in gra nts und er the Omnibus Crime Control and 

Safe Stre ets Act, the OS, which adm inisters the funds, has not met the hiring, 

promotion and staffing r equirem ents of the legislation.1

’ Until a bona fide affirmative action plan for hir ing and promoting minorities is implemented, the Committee recommended th at the Civil R ights officer of the Law Enforcement Assistance Adm inistration with hold furth er funds from the OS.20 City officials were 

quick to respond to the Committee’s findings and recommendations. Newspaper 

reports quoted Police Services Director John Riley Smith as statin g th at the 

OS would not be coerced in to hiring persons who are not qualified. 21 City Councilman Joh n Goode, a former chief in the OS and the chairman of the Council’s 

public safety and jud iciary committee, was also interviewed about thi s report. 

Goode told one rep orter th at he had “seen no evidence of discrimination,” and 

objected to any attempts to withhold LEAA fund s because of hiring practices.22

Goode was also quoted as sa yi ng : “It looks like they are using federal tax money 

in a coercive manner.” 23

Now I would like to give the Committee some background information on 

revenue sharing in Jacksonville. Until consolidation in 1968, Jacksonville had 

not sought federal funding. Many believe, as I do, that the city 's foot-dragging 

was an attempt to avoid the civil rights req uiremen ts often tied to federal grants. 

However, revenue sha ring has provided (including accured intere st) approximately $36 million to the city, at an average of $10 million per year. The 

bulk of the revenue sharing fu nds were used for two purposes : sewers and police 

and fire sala ries.24 According to City Auditor Gene McCleod, over $15.5 million 

in revenue sharing money was spent on police and fire salaries. 25

w “Police Agility Test U nfair to Women,” Jacksonville Journal, June 16, 1975.

»

3

 Id.

“ Id. 15 Interview by SGMP int ern Nancy Ebe with Nancy Webman, Jacksonville Jou rna l 

reporter, summer, 1975. 18 The Report a t 51.

« Id. 18 Id. at 52.

Id. at 55. 28 Id. a t 56. 21 G. Sense, “R ights Unit Asks Sheriff Funds Cutoff,” Florida Times-Union. July 10, 1975.

22 “Advisory Group’s Police Stud y Labeled ‘Un-American’,” Flo rida Times-Union, Jul y 11, 

1975. 23 Id.

24 “City of Jacksonville, Flor ida Financial Summary, 1974-75,” published by the Inf or­ mation Service Division, Dep artm ent of Central Services, city of Jacksonville, Jan uary, 

1975.

25 Interview with Nancy Ebe, summer, 1975.
242

Revenue Sharing money was also used to pay for another controversial project. 

In 1973, Mayor Hans Tanzler requested the City Council to allocate $3 million 

for recreation. This proposal included, among other allocations, $700,000 for the 

construction of a senior citizens’ center, $200,000 for facilities at Tree Hill, 

$425,000 for swimming pools, $120,000 for tennis courts, and $1 million for 

Katheryn Abby Hanna park. 2* Council members of the agriculture, recreation 

and public affairs committees criticized the recommendations as “political" 

and stated tha t they didn’t “meet longstanding needs.” 27 Furthermore, the 

Jacksonville Area Planning Board staff recommended against funding the 

senior citizens center and Tree Hill.28

I was one of the members of a delegation of various civic and religious groups, 

representing the black and low income citizens, that met with the Mayor to 

request a reduction in the $3 million recreation proposal. We told the Mayor 

tha t recreation was still a luxury for people whose vital needs had not been 

met. We urged that at least $1 million of the revenue sharing money be allocated for social services. Nevertheless, the city appropriated over $43,000 of 

revenue sharing monies for work on Hanna and Arlington Parks as well as 

other recreation allocations. The black community is particularly enraged over 

the City Council’s approval of expenditures for these two parks, which are both 

located in the upper-middle-class Southside area, a beach community tha t is 

totally inaccessible to poor blacks. The Mayor and Council had an opportunity 

to improve the recreational deficiencies in the poor black section of Northwest 

Jacksonville by purchasing the Brentwood Golf Course, which could have served 

as a recreational complex in that area. Despite campaign pledges to the contrary , Mayor Tanzler vetoed the purchase of the Brentwood facility.

Because we believe that revenue sharing dollars are being spent in a discriminatory manner, we filed a complaint with ORS. We alleged that the GRSfunded recreation projects will not aid the cultural development of all citizens— 

especially blacks and poor whites, since the recreation sites are more than 20 

miles from the core or inner city where most poor whites and black citizens live. 

Further, these sites are not accessible to those persons who cannot afford private 

transportation, since no public transportation is available to get there.

We pointed out tha t the ORS, which also received revenue sharing funds, has 

consistently and blatantly discriminated against women and blacks. We sent 

ORS a copy of the Advisory Committee report referred to earlier.

In the three months since that complaint was filed, ORS has not, to my knowledge, taken any action. Gentlemen, I have only one comment to make on ORS’s 

enforcement system: how much evidence of discrimination does this agency 

need before it will take affirmative steps to enforce the civil rights laws in 

this country.

Statement of Sarah Short Aus tin, Vice President, National Urban

Coalition

Mr. Chairma n: My name is Sarah Austin, vice president of the National 

Urban Coalition, and field director of our local coalition division, which has monitored the effects of general revenue sharing over the past two years in the ten 

coalition cities of Pittsfield, Wilmington. Bridgeport, Detroit, St. Paul, Oakland, 

Minneapolis, Pasadena, Racine and Baltimore. Therefore, I welcome, this 

opportunity to address you on an issue of such concern and relevance to those 

whom I represent. For in this time of our urban fiscal uncertainty, the quality 

and even the fabric of urban life is greatly dependent upon the priorities you 

define here.

The steering committee of the National Urban Coalition in its fall meeting 

last week engaged in a long and intensive debate on general revenue sharing. Our 

board concluded th at it would only support an amended general revenue sharing 

program which particularly focuses on two of the present inequities in the way 

the law operates in regard to minorities. One is the inadequate need formula 

which fails to take into account the disproportionate burden of cities which 

have a high percentage of poor unemployed and under employed minorities. And 

a second is a weak and sometimes non-existent enforcement of civil rights 

guarantees in the allocation of general revenue sharing funds.

26 “Mayor ’s P ar k Package Rapp ed by Committee,” Times-Union, May 1,1973.

27 Id .

* I d .
243

Not everyone will be able to bring law suits to assure tha t jurisdictions do 

not discriminate in hiring and promotion with the use of federal funds. Not everyone will be able to go to court and seek to make certain tha t some of the 

general revenue sharing funds are not used to abate water and sewer taxes while 

ignoring the social needs of the poor as in the Atlanta case. We are opposed to the notion tha t a seriously understaffed Office of Revenue Sharing can do the kind of monitoring that is required in the face of the wide­ spread tendency to see these funds as “magic money’’ left on a stump, miracu­ lously exempt from the supposedly well established principle tha t all tax dollars must be subject to equal citizenship requirements. It ought to be possible, at one and the same time, to give to hard-pressed cities the fiscal relief they deserve without having to junk the Constitution 

in the process. Another time around, it would be our hope th at our St. Paul coalition would not have to spend endless hours and energy attempting to make sure tha t federal funds going to the local police departm ent would finally result in the 

hiring of one black policeman. It is in order to give you the benefit of our experiences in these cities that I would like to mention * the results of the joint GRS monitoring project the National Urban Coalition sponsored in conjunction with its local affiliates and the other members of this panel. Our basic and most instructive finding was tha t in this time of unacceptably high national unemployment, GRS funds are actively “financing widespread discrimination in public employment and local services.” Moreover, in spite of the specific legislative provisions against discriminatory 

hiring practices written into The State and Local Fiscal Assistance Act (Sec. 

122 [a] and [51.41]), our study has found a “nationwide pattern of under­ representation of minorities and women” in state and local governmental 

agencies and programs. The Treasury Department’s office of general revenue sharing has documented statistics which indicate that most cities are using their GRS funds for police and fire protection. It is, therefore, all the more significant tha t our GRS moni­ toring project has found systematic discrimination in hiring practices in these very agencies. For example, among firefighters, 95% of employees are white and male, while only 3% are black, and 1.3% female. Police force statistics are equally instructive. 91% of the force is white and male, 6.3% is black and 12% female.1

In the area of salaries and job classification, women and minorities suffered the same type of systematic relegation to lower level positions and payments.

The recent Bureau of Labor statistics September figure on the national unemployment rate of black males and of black women is 12.1%, while the national 

rate is 8.3%. This presents a tragic demonstration of the accuracy of our findings. It is instructive to cite here some examples of what our local coalition monitors have discovered. For instance, in Pittsfield. Massachusetts, according to the latest actual use report, the greatest segment of GRS money was spent in the area of public safety. Yet, of the 102 policemen on the force, only one is black. There are no black firemen. It is clear tha t the office of revenue sharing has failed to in­ form Pittsfield officials of the affirmative action obligation which are part and parcel of the revenue sharing legislation. The record of Baltimore, Maryland is only slightly better. Of the $33 million received this last fiscal year in revenue sharing funds, ninety percent went to public safety. However, while blacks and minorities make up 46% of the Baltimore population, they represent only 14% of those employed in the public safety areas of police and fire protection. Finally, the example of St. Paul, Minnesota is most revealing of the negligence of the office of revenue sharing in the area of equal opportunity employment. For, al­ though this city received in fiscal year ’74, over five and one half million dollars in revenue sharing funds, and spent over five million of these dollars for public safety, only 4 percent of the total fire and police force are black. When this was brought to the attention of ORS by our local coalition in St. Paul, the adminis­ trative remedy of fund deferral was refused. Thus, the dual conclusion of our 

study. Equal Opportunity Under General Revenue Sharing, that recipient governments have been only minimally informed of their civil rights obligation under GRS, and that the office of revenue sharing has only rarely enforced these obli­ gations through deferral funds is provided drama tic proof by these examples. M. Carl Holman, president of the National Urban Coalition, testified before

1

 Equal Employment Opp ortunity Commission: Minorities and Women in Sta te and

Local Government, 1973, vol. 1, as cited in Equal Opportunity Under General Revenue

Sharing, August, 1975, p. 7, table 1.
244

the House Subcommittee on Intergovernm enta l Relations in June, 1974. At that 

time, he sta ted t ha t altho ugh the GRS concept promised badly needed assistance 

to the fiscally depressed cities, the deficiencies of the program have “made the 

phrase ‘retu rning the power to the people’ a mockery for the poor, m inorities and 

the working class residents of our cities.” This stateme nt, is, unfortunately , 

equally tru e one y ear l ater for only a small fraction of revenue sha ring monies 

fund social service programs in the cities and thus penalizes the minorities and 

the poor w’ho are dependent on thes e services.

In our local coalition city of Pasadena, California, GRS funds, particu larly 

af ter the first year, have for the most part been put into the general operating 

budget. About one-half of first year funds went for public safety (police) with 

the rem aind er distributed among the other seven operatin g and maintenance 

categories of spending. From the total GRS funds received by the city of Pasadena, $2,240,258, only $45.858—4.1%—was allocated for social services.

Br idge po rt: GRS funds went into the general budget and no plans were made 

for their use. This use of funds made prop erty tax reduction possible. Of $8,- 

362,931 in GRS funds, Brid geport allocated $188,703 (4.2%) for human needs.

Detro it: Detroit has received approximately $90 million in revenue sharing 

per iyear. Yet this is a small portion of the total city revenues and has been useful only in holding the line again st inflation. In addition, a report prepared for 

the city of New Detroit, Inc., reveals th at Detroit is being badly hurt by cutbacks in Federal categorical funds. GRS receipts are not sufficient to cover the 

cuts—and are not being used for th at purpose anyway.

Minneapolis: According to ac tual use reports, Minneapolis has spent its GRS 

fund s for a number of programs and categories, prim arily operatin g and main ­

tenance expenses. Social services received over $1 million of the first $5 million 

allocation, but the city’s social services departm ent which supposedly received 

these fun ds was unfam iliar with the mechanics of GRS. Apparently, the funds 

were pu t into the general budget and used to supplement normal revenues and 

offset inflation. Tlie city policy seemed to favor combining GRS funds with 

overall city revenue.

These examples highlight the broad conseusus among NUC and its local 

affiliates th at the civil rights aspe cts of GRS encompass broader considerations 

tha n affirmative action alone. Fo ur other categ ories are equally imp orta nt in 

the ir impact on urba n residents and minorities. Of prime significance is the fact 

th at with population an important factor in allocatin g GRS funds, jurisdictions 

reaching the 145% ceiling lose a full per cap ita sha re for every person not 

counted in the census figures. Despite the general acknowledgem ent that blacks 

are significantly undercounted, the office of revenue sha ring has not made allowances in data to compensate for such omissions. In fact, in 1973, the Census 

Bureau estim ated they missed 1,8SO,000 blacks in the 1970 census count. This 

is four times the undercount for whites? And, while there is no “acknowledged” 

census undercount rate for Spanish surnames, it is widely recognized th at the 

American Latin o community is consistently under represented in ihe census. 

Thus, are as w ith large concentrations of blacks and Latinos are losing important 

amounts of GRS funds, and, no a dministrative remedy is yet in sight.

Secondly, the 145% ceiling mitigates aga inst urban are as and minorities in 

a very clea r way. To cite a few exam ples: (A) Because of the 145% ceiling, 

Wilmington, Delaw are will receive only 65% of th e funds to which it is en tit led; 

(B) Baltimore has also been penalized by the 145% ceiling on local entitlem ents. 

Thus the city receives $27 millio n rather tha n $36 million in GRS funds per 

ye ar ; and (C) in Detroit, the 145% alloc ation limit means th at the city will 

lose $34 million in GRS funds over its 5 ye ar participation.

In 1974, states were receiving roughly one third of the GRS funds, with the 

oth er two thirds parcelled out to thou sand s of counties, cities and smaller juris ­

dictions and sub-jurisdictions. Some States and some of the wea lthier smaller 

jurisd iction s were running surpluses while many citie s were battling deficits. 

While the recession may have changed this picture somewhat for the calendar 

year 1975, it seems to us th at some better means of achieving equity should he 

considered.

Thirdly , it is now commonplace to acknowledge th at GRS fund s have tended 

to replace and not to supplement the categorical gra nt programs as originally 

intended. In fact, many of these special categorical programs have been cut

8

 U.S. Department of Commerce. 1973. “Census Bureau Report on 1970 Census Coverage”, in Commerce News, April 25, 1975.
245

back or even eliminated upon the advent of general revenue sharing. According to repo rted use data collected by the office of general revenue sharing for 

fiscal 1974, only about 7% of GRS funds go to social services. The way this 

discriminates against minorities has been clearly illust rated in the recently 

published study “General Revenue Sharing in 97 Cities in Southern California.” 

Researche rs from the University of Califo rnia, Riverside, found that “cities 

with large black populations benefited more from categ orical gra nts than from 

reve nue sharing .” 3 This historical fac t must be taken into considera tion when 

revie wing not only the form ula but the adm inistrative process of general revenue sha ring in the future.

Lastly, the lack of accounta bility has freed local officials from the sometimes 

unp opu lar necessity of funding programs which specifically benefit disadvantaged 

segments of the population. Our local coalition in Bridgeport, Connecticut has 

repo rted t ha t the local civil service commission has no affirmative actio n program 

and th at since GRS fund s are included in the general budgeta ry process these 

funds are totally lost from any accountability . The charter revision commission, 

a city appointed commission, is curren tly studying general budgeta ry reform, 

in order to c orrect this abuse. On August 20 of this year, Mr. Holman state d, “the 

purpose of revenue sharing was supposed to bring the government closer to the 

people, but instead it h as become a means to pass money from fede ral bu reaucrats 

to local bureau crats.” We suggest th at in your review of the GRS process you 

incorporate adm inistrative reforms which will protec t th e integrity of GRS funds.

In conclusion, we feel a reordering of the prioritie s of genera l revenue sharing 

is clea rly needed. We would suggest th at the Subcommittee on Civil and Constitut ion al Righ ts seriously consider correcting the inequities which mitigate 

against the needs of 70 per cent of our population ; t ha t is those people living in 

urban areas, who rely on y our help to devise effective and equitable solutions to 

the problems they face.

I tha nk you fo r this opportunity to ap pea r before th e committee.

Statement of Alice K inkead, Director, Huma n R esources D epartment of th e

League of Women Voters E ducation F und

Mr. Chairm an and members of th e Com mittee:

My name is Alice Kinkead and I am Dire ctor of the Hum an Resources Departm ent of the League of Women Voters Education Fund. The League of Women 

Voters is a nationwide organiz ation representing over 1300 cons tituent Leagues 

and 140.000 members. On beh alf of the League, I tha nk you for inviting me to 

testify on the civil righ ts aspe cts of general revenue sharing. Pablo Eisenberg, 

Dire ctor of the Center for Community Change, who is not test ifying here today, 

has asked me to convey to you his organization’s full endorseme nt of the League’s 

testim ony.

Two ye ars ago, the League of Women Voters Education Fund joined w ith three 

other national organizations, the Center for Community Change, the Center for 

National Policy Review, and the National Urban Coalition, in establishing the 

National Revenue Sharing Project. Its objective has been to assess the impact 

of the General Revenue Sharing Act’s reallocation of autho rity and resources 

upon the needs of less advantage d citizens and upon efforts to assure that 

min orities and women receive equal trea tme nt.

Reginning in November 1973, the Project undertook a massive monitoring 

effort on local, sta te and federal levels. Approximately 53 local and six sta te 

affiliates of the Project’s sponsoring organizations were involved in monitoring 

the implementation of general revenue sharing.

The T.eague conducted the state-level monitoring in six st ate s: California, 

Iowa, Massachusetts, Michigan, Tennessee, and Texas. One hundred twenty 

League members, trained and supervised by professional staff, used a monitoring 

ins trume nt developed with the help of the Joi nt Center for Urban Affairs of 

Harvard-M IT. These field workers conducted over 300 interviews with elected 

officials, dep artment heads, media represen tatives, and community organization leaders in the six states. Monitors also collected extensive demographic 

information, rele van t studies, reports , newspaper clippings, and budget docu3

 “ The Effec ts of Gen eral Rev en ue S hari ng on Ninety- se ve n Citi es in So ut he rn Ca lifo rn ia .” in Ge ne ra l Rev en ue Sh ar in fl. re se arc h utili za ti on pr oj ec t, vol. II , N at io na l Scien ce 

Foundat io n. Se ptem be r, 197 5, p. 81 -9 6.

62- 33 1— 75------ 17
ments to help them evaluate the performance of the states in adm inistering 

GRS funds. The gath ered data, mon itors’ evalu ations, and interviews were 

then assembled for comprehensive analysis by the League of Woman Voters 

Education Fund natio nal Project staff.

The findings have now been published in a volume titled General Revenue 

Sha ring and the States—the first major report to be made on the state’s compliance with GRS law and regulations, as they spent over one billion dollars 

of the GRS funds exported to them from Washington between October 20, 1972, 

and June 30, 1974.

Because much has already been researched and reported about local governments’ performance and so remarkably litt le about the sta tes ’—although one 

dollar in every thre e of GRS money passes through the ir hands—I wish to give 

you a somewhat detailed “report ca rd ’’ on the six sta tes studied. My facts are 

draw n from the repo rt ju st mentioned. My focus is on civil rights compliance, 

specifically in employment.

Monitors found some gaps in state compliance, both with the spirit of the 

law and the lette r of the regulations. While the ir findings do not necessarily 

indicate a tota l lack of concern about civil rights, they do point to some serious 

sins of omission in enforcement.

Confusion about, or lack of commitment to. the civil rights requirements of 

the law appeare d to be the norm in the six monitored state s. The questions boil 

down this w ay : Can the federal government “pass through,” along with the 

money, its responsibility for seeing th at fede ral dollars are spen t in a nondiscrim inatory way—a responsibility manda ted by more tha n this single law? Is 

it reasonable to assume that sta tes will police themselves? Who i# ultim ately 

responsible for enforcing Section 122? Is Section 122, in fact, enforceable?

ONE PROBLEM : IMPO TE NT ENF ORC EMENT AGENC IES

The Sta te and Local Fiscal Assistance Act directs the Dep artm ent of the 

Tre asury to ensure enforcem ent of the provision of Section 122. Treasury issued 

regulations to this en d: by default, enforcement of sta te compliance with Section 122 fell to the states themselves. How are they execu ting this added 

responsibility?

The a nsw er is, not very well, even when the will exis ts—and i t doesn't always. 

State s, stuc k with assigning a fox to watch the chicken coop, usually left the 

job to an exis ting state compliance agency. And those agencies have had three 

problems: no power, no money—which means no staff—and no help from the 

feds. The task has been a huge postscript added to the job description of agencies often alre ady underfunded and overburdened. The level to civil rights 

enforcement ha s varied from sta te to stat e as these fa ctors came into play.

IN TEXAS

The Governor's Office of Equal Employment Opportunity in Texas, now eager 

to take a forward step, is strapped by a yearly budget of 25,000, a staff of 

eighteen partly borrowed from the Governor’s budget, and a lack of auth ority. 

It cann ot issue cease-and-desist orders, initiate court action, or impose fines 

for violations. This office has only two optio ns: to ask the attorn ey general to 

lile suit against agencies that refuse to file affirmative action plans, or to ask 

the Governor to cut off agency funds. Neither is currently a likely recourse 

given the lack of aggressive support provided to the Office of Equal Employment 

Opportunity to date.

IN IOWA

Texas isn t the only sta te where civil rights agencies are understaffed, underfunded, and underpowered. The Iowa Civil Rights Commission primarily uses 

conciliation to resolve complaints. It can issue cease-and-desist orders, hut 

rarely does. Court action is not an effective option, because the commission 

has no subpoena power.

Moreover, it is hard to identify discriminatio n problem s in Iowa, since the 

commission trea ts this kind of information as confidential. Monitors were told 

th at there had been discrimination complaints filed a gains t the state, but in the 

las t thre e yea rs none have reached the hearing s tage of resolution. A review of 

.summarized state employment data shows that Iowa has problems in employment 

practices that may wa rra nt a charge of discrimination on the basis of sex and 

possibly on the basis of race as well. For example, the average male salary is
$2,750 more tha n the average female salary. White men earn an average sala ry 

th at is $2,770 more than white women; whites average close to $1,000 more per 

year than blacks. *

There are additional dis par itie s in term s of earning power. \\ lnle 3o.l% or the total number of males earn less tha n $8,000, 75.6% of the tota l number of fema les fall into this category. Similarly, 65.5% of the total number of blacks earn less tha n $8,000, with 51.3% of the total number of whites in the same 

category. As of June 1974 no revenue sha ring money was repo rted as having gone directly into the sta te agencies covered by these sta tis tic s; nonetheless, it is cleai th at $32 million allocated to education supp lanted an almost identical amount of money from the General Fund . One must conclude, then, th at in tru th revenue sha ring dollars found the ir way into numerous sta te agencies which continue to discrim inate in employment. Even assuming vigorous civil rights enforcement, 

the fungibility factor makes rea l compliance an illusion—short of 100% nondiscrim ination in all sta te employment.

IN CAL IFORNIA

California’s Fa ir Employment Practic es Division, charged with eliminating 

discrimination in housing and employment, is ano ther example. It is typically understaffed, as well as limited in legal enforcement author ity. The Division's five affirmative action program staff and twenty-five con sultants work simul­ taneously on over 75 investigations, with an active yearly case load of nearly 3,700. It s chief executive claimed only a 30% success rate in resolving discrimination complaints. No doubt understaffing can account for at lea st pa rt of the high percentage 

of unresolved complaints, but the lack of enforcement power is also to blame.

IN MA SS AC HU SE TT S AND MICHIGA N

On the oth er hand, the Massach usetts Commission Against Discrimination 

and the Michigan Civil Rights Commission app ear to have the power to deal with discrimination problems. They both negotiate, hold hearings, and can ini­ tia te court action, though final cou rt orders must be enforced by the court. Unfortunately , althou gh the power is there, the staff is not. The Massachu setts Commission appears to have the more serious staff problem. According to its 

chairperson, it employs 60 but needs 300.

IN T EN NE SS EE

Tennessee’s Human Development Commission has neither ade qua te staff 

nor sufficient enforcement powers. It investigates, conciliates, and gives tech­ nical assistance with its limited staff of five, but its only power is the endorse­ ment of the Governor. Governor Dunn seemed to have both the commitment and the power to eliminate discrimination, but progress has been slow. In Janu ary 1972 he established an affirm ative actio n program. As of December 

1973 two sta te agencies still had no mino rity employees. More than two-thirds of the 34 agencies included in the 1973 Consolidated Affirmative Action Report have minority employment th at devia tes by more tha n 5% from the 1970 minority population. Even more rele van t are the 24 of the 34 reporting agencies which 

deviate more than 5% from the total mino rity percentage in sta te government. Corrections, mental health, and social services tradition ally have preponder­ ances of minorities, usually in low-paying, unskilled jobs. In 1973 over 50% of the minority persons employed by the Tennessee government were in these three agencies. Some Revenue Sharing dollars were spen t by two of these three. It seems to the League th at ORS has been remiss in its responsibility by failing to take a close look at the more detailed EEO4 forms which would document what appears to be discriminatio n. This criticism is particularly 

releva nt in light of the fac t th at the Tra nsp ortation Departm ent, with a 90% white male work force, received nearly one-third of the state’s revenue sharing 

dollars.

ANOTH ER PROBLEM : FEDERAL FOOT-DRAGGING

Tf impotent agencies make sta te enforcement a lot less than it should be, the 

Office of Revenue Sharing ’s supine att itu de about its job of policing the police makes us wonder if they thin k Section 122 is ju st one more piece of congressional 

rhetoric.
248

IX TEXAS

On Feb rua ry 1, 1975 the Tex as League of Women Voters wrote a complaint 

alleging noncompliance with civil rights provisions of the general revenue sharing law to the U.S. A ttorney General. A lette r was also sent to Graham Wa tt, 

then director of the Office of Revenue Sharing, to notify him of the probable 

violation and to request th at he use his autho rity to disallow the continued 

misu se of GRS funds by the state of Texas. Both letters were accompanied by 

extensive and full evidence to supp ort the allegation of noncompliance.

Texas monitors had obtained data from the recently created governor’s Office 

of Equal Employment Opportunity (EEO) which showed th at women, blacks 

and ethnic minorities are underre presented in Texas sta te employment and 

occupy a disproportionate share of the low-skilled, low-paying jobs. The data, 

collected and analyzed by the EEO, in pa rt to meet requirements of the federal 

Equal Employment Opportunity Act of 1972, included employees from all sta te 

agencies.

Blacks, both male and female, held only 7.7% of the 70,976 jobs included 

in the governor’s EEO study, while they make up 12.7% of th e total sta te population according to the 1970 census. Spanish-surnamed individuals, comprising 

18.5% of the population, held only 11.1% of the jobs. As sala ry levels increased minority percentages decreased. In the $16,000 to $24,999 range, 

96.4% of the jobs were held by white non-Spanisli-surnamed perso ns; 2.5% 

were held by Spanish-surnamed persons and 0.5% by blacks. Women constitu ted 

41.3% of the sta te’s employees, but held very few of the high paying jobs. 

The majority (57.4%) earn ed less tha n $6,000; only 10.6% of the jobs at or 

above the $16,000 level were held by women.

The record within the specific agencies that got sta te GRS fund s is no better, 

and in some in stanc es is much worse. Employment d ata for the forty-two agencies, 

commissions and courts receiving GRS funds shows th at black employees in 

1973 earn ed an average of $5,585, a wage level fa r below the average of $7,797 

for white non-Spanish-surnamed persons. In these agencies, 79.9% of the black 

employees, 68.2% of the Spanish-surnamed, and 29.8% of the women earn ed 

$6,000 or less. Of those earning $16,000 or more, only 5.1% were Span ish-surnamed, 0.8% were black and 12% were female.

The Departm ent of Jus tice began a full investigation of Texas sta te employment practices in October 1974. af ter getting numerous complaints of 

discriminatory practices from individuals in Texas and from federal level 

agencies as well.

On April 17, 1975, fully two and one-half months after the complaint was 

made public, the Office of Revenue Sharing sent a lette r of inquiry to the govern or explaining the natur e of the League’s charge of discrimination and requesting an explanation within thirty days.

The governor requested and was granted a ninety day extension. Meanwhile, the sta te of Texas continues to enjoy the unin hibited flow of GRS 

funds. Documentary evidence of employment discriminatio n has been on file 

with the federal Equal Employment Opp ortunity Commission since 1973 and 

is therefore available to the Office of Revenue Sharing. Furthermore, the 

evidence accompanied the Febru ary 4, 1975 lette r from the Texas League 

of Women Voters to Graham Watt.

The Office of Revenue Sha ring has ha d more tha n ample cause to initiate its own 

investigation into the probable misuse of general revenue sha ring funds and to 

play its mandated role of eit her obtaining compliance or terminating GRS fun ds to 

the s tate. An ORS official stated on August 5. 1975 t ha t the use of ad ministrative 

proceedings against the s tate of Texas has not been ruled out as a means of ob tain ­

ing compliance, but for the present ORS is working with the Departm ent of 

Jus tice and is hopeful th at th e matt er will be resolved withou t a suit. So far state 

officials have no t responded to th e Texas League about, its complaint.

The pace of action by the Office of Revenue Sharing and the lack of any 

reaction at the sta te level call into question whether acco untabilitv has any real 

mean ing in the GRS program. Redress for the employment discrimination of the 

magnitude discussed here, if lef t to a private court suit, could involve several 

yea rs and costs runn ing into tens of thousand s of dollars. The citizens of Texas 

should not be forced to choose between accepting the state’s continued employment discrimination or spending very large sums of time and money to pursue the
249

matter in court. Events to da te hav e made a mockery of “power to the people” 

and citizen accountability in Texa s. It can only be hoped th at Just ice Department 

actio n or a late awak ening to responsibility on the pa rt of the Texas government alters this cu rrent abuse of the law and the people.

IN MICHIGAN

The situ ation in Michigan is different. Here the OHS has played a somewhat 

more a ctive role. The Michigan controversy stem s from the 1972 te rmination of federal financial 

assista nce to the Fernda le School District for its refusa l to desegregate the 

Grant Elem enta ry School, as required by Title VI of the Civil Rights Act of 

1964. This action, the first of its kind in a nor thern school distric t, took place 

only a fte r the Dep artm ent of Health , Education and Welfare used every resource 

to get volu ntary compliance with the law. The full procedure, which took over 

fou r yea rs from the initiatio n of the action in 196S to final term ination in 1972, 

was upheld by the S ixth Circuit Court of Appeals in 1973. By refusing to hear the 

case th e U.S. Supreme Court endorsed th e circu it co urt opinion.

ORS says th at Michigan used its GRS funds for the sta te retirem ent system 

for public school teac hers which is of direct value to the Fernda le School 

D is tric t; hence the action violated the antidiscrimination provisions of the 

GRS law. On November 14, 1974, th e State of Michigan was advised by the Office 

of Revenue Sharing of the probable violation a nd requested a remedy or a deq uate 

defense of this expenditure within sixty days. None was presen ted; Governor 

Milliken, in a letter to ORS dated Jan uary 30, 1975, argued th at the fund s do 

not directly benefit the Fernd ale School District and th at no violation of the 

law had occurred.

The Office of Revenue Sha ring chose not to pursue the matter under its own 

auspices, an actio n which could, and according to many civil rights advocates 

does, requ ire the defer ral of future revenue sharing paym ents to Michigan. Instea d, it has asked the Depar tment of Jus tice to take correctiv e action. The Departm ent of J ustice notified the Ferndale School D istrict in a November 14, 1974 

lette r that it was not in compliance with Title VI and has since requested a 

writte n plan of action th at will desegregate the Grant School. No constitutionally acceptable plan has been forthcoming. Consequently the Justice Depar tment filed sui t on May 24, 1975, against the dis trict and included the Sta te of 

Michigan as a defend ant in th e s uit at the request of ORS.

Meanwhile the Grant School in Fernda le continues as an all-black facility 

and ORS money continues to flow into th e state coffers.

While the Fernda le case slowly grinds its way through the courts, with small 

evidence of concern for the maxim that jus tice deferre d is justice denied, the 

Michigan Department of Civil Rights has taken one significant action. On 

Septem ber 30, 1974 the De partm ent’s Exec utive Director issued a memorandum 

th at sets forth “Recommendations For Action to Ins ure Equal Opportunity in 

Fed eral Revenue Sha ring .” These recom mendations include the issuance of a 

nondiscriminatio n policy statem ent, an execu tive orde r specifically addressing 

nondiscriminatio n provisions of general reven ue sharing, implementation of a 

review and monitoring program, the delegation of enforcement autho rity to 

the Dep artm ent of Civil Rig hts and, perhaps most importantly, the app rop riation of a portion of the state’s GRS fund s to implement and carry out these programs. Clearly, the development of this prog ram is in pa rt a response to the 

LWV’s monitoring efforts.

We are unalterably comm itted to the principle th at good government require s 

a vigilan t citizenry—indeed, thi s commitment is the very base of o ur existence— 

but we question the viability of a program whose sole enforcement premises 

are citizen monitoring and the courts.

While the work of the League in Michigan and Texas must be commended, 

the amount of voluntee r time at the sta te level and the professional time and 

money th at went into the effo rt at the national project level must not be overlooked. Positive results are indeed satisfying, but the effort cannot be repe ated 

in each of the 50 state and 38,000 local jurisdicti ons receiving GRS funds. The 

volunteer time and financial and professional resources involved in backing up 

such an effort would be enormous. Vet withou t these citizen efforts and abse nt 

some commitm ent on the par t of federal agencies responsible for enforcing the 

law, GRS funding of discrim ination by sta te governments is built into the 

program.
250

In conclusion, evidence shows that without federal level enforcement of civil 

rights provisions, sta te governments knowingly or unknowingly perpetu ate the exis ting pattern of discriminatio n, partic ula rly in sta te employment. There 

must he a federal level commitment to the eradic ation of racial, ethnic, and sex 

discrimination. If General Revenue Sharing is renewed, specifications must be 

writte n into the law. and the regulations carefully designed to carry out th at 

commitm ent. Relying on the good will and intentions of sta te government officials will not suffice. Nor can we be content with the delegation of civil rights enforcement of federal law to sta te human rights agencies or civil rights commissions: such sta te agencies are typically understaffed and lacking in a uth ority 

to give full redress in discrimination cases. Their cooperation should be solicited, 

hut only as an accompaniment to a strong federal level enforcement effort.

In light of the abysmal civil rights enforcement record over the past Ihree 

years. Congress should not endorse renewal of the program unless that renewal 

contains major changes in the civil righ ts provisions of the Act coupled with 

ins iste nt congressional pressure for effective administration.

Mr. Edwards. Without objection, all of the statements in full will 

be entered into the record.

I yield to the gentleman from Massachusetts.

Mr. Drixax. The five papers were excellent. This will be beneficial 

to the entire committee. 1 wonder about the recommendation that, since 

the ORS has been so dismal, the Justice Department should receive 

this mandate.

I concede that the Treasury does not think first about civil rights. 

Perhaps they think about collecting money in the IRS and giving it 

out in the ORS. But I wonder if we should leap from tha t by giving 

it to Justice. We heard this morning that there is not a single full-time 

professional at work at the J ustice Department.

I think there was a recommendation that 300 people should be working at the professional level in civil rights enforcement at ORS. Is 

there any evidence to indicate tha t the Justice Department carry 

throu gh such a mandate ?

Mr. Taylor. I don’t want to be put in the position of being a defender of the Department of Ju stice ’9 record on civil rights because I 

have lieen a critic for so long. We are trying to balance the relative 

capacity and will of the two agencies to do the job.

Even in the limited area of revenue sharing where the Department 

of Justice has a subsidiary role, they have done a better job than the 

ORS.

Justic e at least has seven cases in the court in which they have alleged revenue sharing as a part of the violation. That is p art of 23 

Justice public employment cases all told. As you know, the Office of 

Revenue Sharing has one enforcement action, and that was taken in 

the suit we brought when the court told them they had to do it.

The Justice Department has 35 investigations tha t it has initiated.

Mr. Drixax. Suppose the Congress had put this in HUD or in 

IIE W? If it were in HUI), would your reasoning be the same?

Mr. Taylor. Wh at I am saying is that I have long been an advocate 

tha t the agency that receives the funding should have principal responsibility for enforcement. The recommendation tha t I am making 

and that others have made is not one that we would like to see generalized as to title VI as a whole.

At least HUD and a t least HEW. both of which have deficient civil 

rights records these days, have some social mission which includes a 

responsiveness to the needs of low income and poor people and minorities in this country.
251

Treasury insistently says th at it does not have such a mission, th at 

it views itself as being outside the scope of title VI types of responsibilities, that its program is so different from all the other programs 

tha t this 5-year funding is a seamless web, and you can't break into it 

at any point.

1 am saying reluctantly we reached the conclusion at this point tha t 

even with a stronger mandate, the agency is not likely to do the job. 

If you are saying is the Justice Department the only agency that 

might be able to carry out this kind of responsibility with respect to 

general revenue sha ring if it were continued, I would not say that it is 

the only agency.

But there is at least in these times a degree of professionalism in that 

Department as to most of its matters, a degree of commitment to getting things done on time. I would have a lot more hope tha t results 

would be accomplished by a tran sfer than if the situation were to be 

left as it is now even with a stronger mandate.

Ms. P erry. I was also one of the panelists tha t made that same recommendation. May I make a few comments on tha t ?

Mr. Drixax. Yes. I t almost sounds like a recommendation made out 

of desperation. I am exploring this. I am inclined to think that we 

should go to another agency or create ORS as a separate agency ou tside of the Treasury, if that is necessary. Yes ?

Ms. P erry. The comment I wanted to make is th at what all of these 

groups are saying is tha t we are looking for an effective and efficient 

remedy for civil rig hts enforcement. Now, we believe tha t if you compare the relative records of both the ORS and Justice Departments, 

whatever deficiencies the Justice Department has on their civil rights 

enforcement activities, they come out ahead of ORS. We are simply 

saying, put the enforcement where there is some demonstrable expartise and commitment in this area.

That is all we are saying. I don't want to be in the position of trying 

to defend the Justice Department’s record at this point.

Mr. Drixax. In all of the studies tha t have been done including the 

league and all, did the possibility ever arise of transferring ORS out of 

the Treasury into HDD or H EW or a separate agency?

Ms. P erry. We have not examined that point.

Mr. Taylor. In talking about this problem, we have considered 

various kinds of solutions. For example, I would think that a sensible 

scheme of enforcement with respect to employment matters, discrimination in State and local employment might include giving cease and 

desist authority to the Equal Emplovment Oppo rtunity Commission 

and then saying that when the EEO C determines that a violation 

exists, that new funds should be withheld, new appointments should be 

withheld or deferred until there was evidence that tha t violation was 

being corrected.

You could establish a similar scheme of enforcement with a new or 

existing agency with respect to public services discrimination. One 

of the reasons I have not made tha t recommendation is I am aware of 

the fact that Congress gave a good deal of consideration to cease and 

desist powers for EEO C a couple of years ago and did not see fit to 

grant those powers.

T can think of a number of enforcement schemes that would work 

but the one that I have proposed is in some respects tempered by what 

we deem to be the practicalities of the situation.
252

Mr. D rin an. Th an k you.

Mr. E dwards. Mr. K indn ess ?

Mr. K indn ess. Tha nk yo u, Mr. Ch air ma n. I would like to present a 

gene ral question to the panel. We appreciat e yo ur testim ony today. 

Th ere are some conclusions sta ted in several of the sta tem ents abo ut 

the aby smal civil rig hts enfor ceme nt rec ord over th e pa st 3 y ears.

These are ra th er stro ng statem ents. I realize t hat in a he aring such 

as th is th ere is an atte m pt to make a rec ord w ith as s tro ng a state me nt 

as possible. Bu t 1 wou ld like t o h ave an y thou gh ts th at y ou wou ld c are 

to expre ss abo ut the lack of com parisons in any of these statem ents 

sugg estin g e xac tly how mu ch failu re th ere is on the part of othe r F ed ­

eral agencies th at are concerned wi th civ il rig hts. We hav e ha d some 

in the questio n and ans wer period here.

I g ain ed the impressio n th at y ou were say ing , Mr. Ta ylor, th at the 

ORS has done just a te rrib le job. But in some deg ree th at is tru e in 

ot he r are as.

The elim ina tio n of disc rim ina tio n is no t so me thing th at has occurred 

as a r esult o f actions of oth er F ed eral agencies either. Th e focus seems 

to be on the Office o f Rev enu e Sh ar in g at these he arings bu t let’s ex ­

pa nd th at a little bit.

W ha t is really better ?

Mr. T aylor. I would have to concede, Mr. Kindness, th at this im ­

portan t means of se cur ing equa l op po rtu nitie s, the use of Fed eral fu nd s 

to assure th at th ose wh o a re supposed ly to be the beneficiaries of F ed ­

eral fund s are indeed the beneficiaries ha s falle n into a p eri od of g reat 

disuse.

Th e pr oblems are no t confined to the Office of Revenue Sha rin g. T he y 

exist in the De partm ent of HUD, H E W , the y exist in a numb er of 

agencie s which have sim ila r mandates. Bu t it is a har d business to be 

say ing —to be comp aring these rec ords of failu re.

Th ey are all pr etty bad these days. Th e dif ferenti ati on th at I was 

making—and I sta y wi th my sta tem ent—I th in k these words I have 

used are deeply felt fee lings and we hav e been at th is fo r 3 yea rs, 

knockin g at the door of the Office of Rev enue Sh aring, tryi ng to 

represen t clie nts, tryin g to help people and being fr us trat ed at one 

tu rn af te r ano ther.

Th e rea l difference is th at the people at OR S don’t ackn owledge a 

civil righ ts r esponsibility to any real degree. They say o ur progra m is 

dif fer ent an d we h ope n ever to h ave to utilize th is f un d cutoff remedy 

at all.

Th ey do n’t even concede the necessity of sayin g that th ey will utilize 

it so th at peop le will come into com pliance. Ot he r agencies have not 

gone qu ite th at far. Th ey ha ve not genera lly renou nce d and ab and one d 

the sa nct ion th at Congres s ga ve them in th e law .

I th in k tha t is reall y th e difference.

Ms. Steward. My sta temen t de alt with these specific problems of 

revenu e s ha rin g a nd the p rob lem s we ha ve en cou ntered in Jack son ville. 

We could have also prov ide d you wi th docum ent ation of failu re of 

othe r agen cies to re spond or to enforce th e powers th at hav e been pr ovid ed the m by Congress.

I do th in k it is ju st a pro ble m wi th the Office o f Rev enue Sh aring . 

In ma ny instanc es we d o ge t a resp onse fro m EEO C a nd the De pa rt-
253

men t of H EW , at least we have gotten a w rit ten response even th ou gh 

(he response may say th at “W e will no t make an investigatio n into 

yo ur com plain t at thi s time.” Th e differences wi th th e OR S is th at our co mp laint was filed in Ju ly 

1975, and as of th is d ate we have no t receiv ed a resp onse ack nowle dging 

rec eip t of th at co mp lai nt.

Mr. K indness. Migh t I ask Mr. Ta ylor, th is repo rt, “Civil Ri gh ts 

Und er General Revenue Sha ring ,” of the Ce nte r fo r Na tional Policy 

Rev iew of the law school, ind ica tes t hat it was i n part fund ed by the 

Na tio na l Science F ou nd at io n gr an t numb er A PR 75 —13993. Would you 

ex plain how t ha t gr an t w as o bta ine d ?

Mr. T aylor. It was ob tai ned in resp onse to a solic ita tio n—an in ­

vi tatio n to sub mit pro posal s. Th e Na tio nal Science Fo un da tio n de ­

cid ed to inv est iga te some eig ht or nine a rea s of th e imple me nta tio n of 

ge ne ral revenue sh aring i nc luding civil righ ts.

We received an announcem ent along, I assume, with tho usands of 

others that NSF w as cond uctin g this inv est iga tio n an d did we want to 

subm it a bid. We did. I do n't know how ma ny comp eting pro posals 

there were. I unders too d there were rea lly on ly one o r two.

So I am no t sure th at it was a gr ea t aw ard when we received the 

gr an t. Bu t t hat is th e proce ss we we nt th roug h.

Mr. K indness. Ms. Ki nk ea d—and this can be ge neral ly appli ed to 

the panel because I believe there are some other places in which the 

sam e so rt of sta tem ents wer e mad e—compar isons wer e made in yo ur 

sta teme nt on pag e 6 and elsewhe re betw een the minor ity e mp loy me nt 

an d publi c emplo yment com pared to the gen era l popu lat ion .

Wou ld you car e to com ment on wh at th at ra tio is—w hethe r th at 

ra tio is the correct one to use in making such e valua tio ns or w hethe r the 

ra tio ou gh t to be the ra tio of mino rity per son s in the area of pub lic 

em plo ym ent as c ompar ed to m inority p ersons in the to tal work force?

W or k forc e ra th er t ha n general po pu lat ion is w ha t I am ge tting at.

Ms. Kink ead . We based our analy sis of the E E O 4 for m da ta this 

way because th is is w hat the courts, I believe, have ad mitted as p rim a 

facie evidence of a possible vio lation.

Mr. K indness. Does the Leagu e of Wo men Vo ters su pp ort use of 

th at ra tio r at he r tha n the p op ulati on of working age?

Ms. K inkead. I wou ld say th at I th in k you find, pa rtic ul ar ly in 

tim es such as now when there is very high une mploy ment, t hat m any 

of th e people who h ave lost job s first and who are now une mployed are 

mino rities and women.

If you are ta lk in g abo ut th e wo rk force, I th in k th at pro bably 

would mean—if you are only using those worki ng in ce rta in agencies 

as a rep res entat ive grou p, I th in k yo u probably would get an inaccura te 

com par ison.

Mr. K indn ess. T hose who a re unemployed a nd still se eki ng employme nt a re a p ar t of the wo rk force ?

Ms. K inkead. T he D ep ar tm en t of La bo r has a statistic of e rror in 

which they say th at by omissio n, there are now very high num ber s of 

people who are une mploy ed, loo kin g fo r work th at are no t coun ted. 

These ten d t o be m ino rities an d women.

Mr. K indn ess. My time has expired.

Mr. E dwards. Mr. B ad illo ?
254

Mr. Badillo. Thank you, Mr. Chairman. I want to compliment all of 

you for having provided us with this information which is most approp riate since yesterday the Under Secretary could not find the kinds 

of examples tha t you have provided us with today.

I would now like to supplement what you have provided. I have been 

conducting my own governmental monitoring project in New York 

City.

Mr. Chairman, I would like to present some facts with respect to 

New York City which I think should be included in the report and 

which will point out th at what has been reported here today does not 

merely apply to parts of the South. It applies to the no rthern cities— 

New York City as well.

In the city of New York for the fiscal year beginning July 1, 1973, 

through .June 30. 1974, the city received $268 million in general revenue sharing funds, the entire sum was applied to defray the expenses of 

the police, fire, and sanitation departments.

In fiscal 1975 the city received $259,680,000 of which $140,447,000 

was put into the police department, $69 million into the fire department, and $51 million into the sanitation department.

Once again, police, fire, and sanitation. The same th ing happened 

in fiscal 1976 when the city received $263 million. Mr. Chairman, New 

York City’s population is approximately 25 percent black and 15 percent Puerto Rican and Spanish. Employment patterns, if fair, should 

result in a reasonable allocation or representation of these minorities 

on the payrolls of the local agencies.

This is not the case. As of October 6,1975, this week, the New York 

City Police Department consisted of 27,000 members. But only 2.072 or 

7.5 percent were black and only 802 or 2 percent—2.9 percent—were 

Puerto Rican or Spanish. I could not obtain such statistics on employment of women, but I am sure they are comparable.

In the fire department, a 9.295-employee organization, there is difficulty counting the number of city employees. Of this number, 500 or 

5.4 percent were black, and 84, or .9 percent were Spanish. F or sanitation, 10.000 employees, I could obtain no data about the specific number of black employees on the payroll but they did employ 200 Puerto 

Ricans and the State estimates tha t the minority employment of 

blacks ami Puerto Ricans in these agencies is between 2 and 3 percent.

Therefore these statistics indicate that during the past period of 3 

years. New York City received $790,980,000: all of which was spent 

for operational expenses of departments in a city where with approximately a 40-percent minority population, the departments themselves 

had a combined total of less than 10 percent minority employment.

4 he three departments together employ in excess of 46.000 people 

and of tha t only few are members of minority groups. It is impossible 

to look at these statistics and believe that New York City is making a 

good effort to comply with the civil rights requirements of the General 

Revenue Sharing Act.

To the best of my knowledge, ORS has made no investigation of 

the employment practices of New York City and is presently contemplating no such investigation. The same is true of the Justice Department. It is clear. Mr. Chairman, from this single but significant illustratio n of the expenditure of general revenue sharing funds by the city 

of New York that the civil rights provisions of the Revenue Sharing
255

Act are not being enforced and that amendments to the existing law to 

mandate enforcement are required. I would like to ask unanimous consent to insert my full statement 

in the record.

Mr. Drixan. Without objection it is submitted.

[The statement of Congressman Badillo follows:]

Statement of Hon. Herman Badillo During ti ie Revenue Sharing Oversight

Hearings of th e Subcommittee on Civil and Const itutiona l Righ ts of the

House Comm ittee on th e J udiciary—October 9, 1975

Mr. C h air m an : Y es te rd ay , w he n U nd er Sec re ta ry E dw ar d C. Sch m ul ts was te st if yin g be fo re th is su bc om m itt ee , se ve ra l mem be rs ex pr es se d co nc ern ab ou t ORS 's fa il u re to de man d th e im pl em en ta tion of fa ir em pl oy men t pr ac tice s. If my mem ory se rv es me co rr ec tly, Mr . Sc hm ul ts w as qu er ie d ab out th e po ss ibili ty th a t cert ain ci ties an d lo ca lities may elec t to us e th eir sh are of th e fu nds to fina nc e th e op er at io ns of pro gra m s th a t follo we d dis cr im in at ory hir in g pr ac tice s. Th e U nd er Sec re ta ry resp on de d th a t he kn ew of no such in st an ce . U nfo rt unat el y, 

I am in a p os itio n to doc um en t j u st su ch a ca se. F or th e fis cal year be ginn in g Ju ly 1, 1973 to Ju ne 30, 1974, Ne w Yo rk Ci ty rece iv ed $268 mill ion in G en er al Rev en ue Shar in g fu nd s. The enti re sum, in tot o,

w as a pp lied to d efr ay th e e xp en se s of the poli ce, fire , an d sa n it ati o n d ep ar tm en ts . F or fiscal 1975 th e City rece iv ed $259,680,000. of which $140,487,0 00 w as ad de d to th e po lic e depart m ent’s bu dg et, $68,036,000 sp en t on th e fir e dep ar tm en t, an d $51,157,000 on th e sa nit ati on dep ar tm en t. The 1976 en ti tl em ent ca me to $263.3 millio n. D es pi te th e C ity’s gr ow ing so cial prob lems, once agai n th e mo ney was us ed fo r th e oper at io nal ex pe ns es of th e uni fo rm ed serv ices. $154.6 mill ion w as earm ark ed fo r th e po lice, $66.8 fo r th e fire, and $41.9 fo r th e sa nit ati on 

dep ar tm en t. Mr. C ha irm an . Ne w Yo rk C ity's po pu la tion is ap pro xim at el y 25 pe rc en t Black an d 15 per ce nt Hispa ni c. Em pl oy m en t patt ern s, if fa ir , sh ou ld re su lt in re as on ­ ab le re pre se nta ti on of th es e m in ori ties on th e pay ro lls of lo ca l ag en cie s. This is no t th e case. As of Octo be r 6, 1975, th e Ne w York City Po lic e D ep ar tm en t con­ si st ed of 27,00 0 me mbers. Tw o th ousa nd an d seve nty-tw o, or 7.5 pe rc en t, were B la c k ; 802, or 2.9 pe rc en t, w er e Hispa ni c. I co uld obt ai n no sta ti st ic s on th e 

num be r of w om en officers. The F ir e D epar tm en t had 9000 to 9500 em ploy ees. Of th is nu m be r 500, or ab ou t 

5.4 pe rc en t, wer e Black an d 84, or .9 pe rc en t, wer e Hispa ni c. The S anit ati on D ep ar tm en t had a 10,000 mem be r wor kf or ce . I co uld ob tain no d ata co nc er ni ng Blac k em ploy ee s on it s pa yr ol l, but w as in fo rm ed th a t it di d em plo y 200 Hispa ni cs . In fo rm al ly , th e sta te es ti m ate s th at m in ori ty em ploy men t 

in t his a ge nc y is be tw ee n 2 a nd 3 pe rc en t. The se st ati st ic s ir re fu ta bly in dic ate th a t duri ng a pe riod of th re e ye ar s, New Yo rk City rece iv ed a to ta l of $790,980,000 do llar s, al l of which w as sp en t fo r th e op er at io nal ex pe ns es of depart m ents th at, in a ci ty w ith appro xim at el y 40 p er­ ce nt m in or ity po pu la tion ha d a combine d to ta l of les s th an 10 pe rc en t m in or ity em plo ym en t! T he th re e d epart m ents am on g them emplo y in ex ce ss of 46 ,000 in divi du al s of w hom on ly 3,574 w er e mem be rs o f m in ority g ro up s ! It is simpl y im po ssible to loo k a t th es e sta ti st ic s an d be lie ve th a t New Yo rk City is m ak in g a go od -faith ef fo rt to comp ly w ith th e civil ri g h ts re qu irem en ts of th e G en er al Rev en ue S har in g st atu te s. Yet, to th e be st of my kn ow led ge no in ve st ig at io n of th e C ity's em pl oy m en t pr ac tice s is being co nd uc te d— th ere a re no outs ta ndin g co m pl ai nt s again st th e City pe nd ing, an d no ne are co nt em pl at ed . I t is cle ar from th is sing le but sign ific an t il lu st ra ti on of th e ap pl ic at io n of G en er al Rev en ue Shar in g fu nds by th e Ci ty of Ne w Yo rk th a t th e civ il ri ghts pr ov isio ns of th e Rev en ue S hari ng Ac t are no t be ing en fo rc ed an d th a t am en dm en ts to the e xi st in g la w to m andate enf or ce m en t are req ui re d. As a sta rt , ho we ve r, I wou ld spec ifica lly reco mmen d th a t th is Su bc om mitt ee , a ft e r co mpl etin g th is se ri es of he ar in gs, co ns id er an am en dm en t to th e G en er al Re ve nu e Shar in g Act th a t wou ld re quir e th a t an y re gula tions pro m ul ga te d by th e T re asu ry D ep ar tm en t to en fo rc e th e no n- di sc rim in at io n pr ov isio ns of th e Act be su bm itte d to th e Ju d ic ia ry Com mitt ee and to th e Con gr es s as a wh ole , pri or to th eir e na ct m en t, an d th a t Co ng ress be give n th e ri g h t to di sa pp ro ve su ch 

re gu la tion s.
256

Ms. Perry. I think it is important to point out tha t in certain departments where you attempted to obtain statistics tha t there were 

no statistics available. 1 think tha t is very indicative of the priorities 

as far as women go in a number of jurisdictions tha t all of us have 

spoken about this afternoon.

Certainly in New York City, those of us in the South always look 

toward—in terms of leadership in certain areas, we would thin k tha t 

these statistics would be available.

Mr. Badillo. We know tha t the police department up until recently 

'would not hire women. As a matter of fact, they would not even hire 

men if they were under 5 feet, 8 inches. You can be certain that in the 

past year or so there has not been any significant increase in the number of women in the police department.

Mr. Taylor. I might comment briefly. I think the statistics tha t you 

have cited for New York City, which is my original home, are very 

similar to the statistics th at we see in many other jurisdictions.

If you change the norm of comparison t hat Mr. Kindness suggests 

from population to the work force, you would see a lesser disparity 

but not in most places significantly lesser. There would still be a wide 

gap between actual representation in most departments and agencies 

and actual representation in the work force as a whole. What I would 

suspect it reflects in New York City as well as other places is the 

continued use of various kinds of tests tha t have not been validated 

and tha t very well may violate the law as declared by the Supreme 

Court in Griggs v. Dulce Power Company and in the Albemarle Paper

case hist term.

On requirements such as the one Mrs. Stewart referred to as an 

agility test, the use of—the LEAA said 2 years ago tha t height 

requirements and similar tests had to be validated. You had to prove 

they were related to the requirement of the job or you could not use 

them.

Manv jurisdictions still have those requirements and have n ot Validated them. I t is not a matter of bad faith in many cases but the failure 

to deal with practices tha t really exclude minorities.

Mr. Drtxan. Counsel ?

Ms. McNair. Mr. Taylor, in line with the suggestion that, possibly 

Congress ought to consider a transfer of authority to Justice, one of 

the things tha t concerns me is that ORS or Treasury would still have 

the sole and ultimate power to terminate funds or withhold funds. 

Presumably unde r some sort of transfer scheme Justice would only 

go before an administrative law judge who is representing the Treasure Department to request such a withholding or deferral.

In view of that, don’t you thin k that such a scheme constitutes 

continued reliance on the primary offender?

Mr. Taylor. T don’t know that there is an alternative to tha t in the 

general proposal I am putting forward. I don’t know vou can put in 

the Attorney General the actual power to terminate funds tha t are 

administered bv another department. I would say that as you indicate, the Treasury Department would have the continued authority 

to make the adiudicative determination as to whether funds were 

actually to be deferred or to be terminated. But my feeling is tha t they 

will perform bette r in an adjudicative role than when they are given 

the responsibility to investigate and move these cases forward.
In othe r wo rds the problem s th at we have had, fo r example, with 

ot he r a gencies hav e no t been th at when you ge t to the point of ac tual ly d ef er ring the funds th ey mak e t he w ron g decisions. I t is th at they 

ref use eve r to get to th at point.

So th at is the problem th at we are tryin g to addre ss in suggesting 

th at the investiga tio n and the respon sib ility fo r presen tin g cases 

on a timely basis be given to th e Dep ar tm en t of Justic e.

Mr. Badillo. Because of th is pro ble m of th e a utho rity to issue fun ds 

remaining in the Treasury Dep artm en t, in my prep ared sta tem ent I 

have sug gested th at one of the th in gs we might do is to req uir e th at 

th is com mittee and the Congress have the au th or ity to review the 

propose d reg ulati on s of the Tre as ur y Dep artm en t with respec t to the 

distrib ution o f reven ue- sha ring funds.

If we can r eview the regula tio ns, we c an assu re th at the reg ula tio ns 

ma ndate a ce rta in type of action. We ins ure that the reg ulati on s man ­

da te a tim e wi thin which a fina l de ter mination can be mad e. Th is 

au th or ity I have fou nd to be very useful in o ur S ma ll Business C ommittee. Mr. But le r serves on th at com mittee wi th me.

We h ave h ad the illus tra tio n th is ye ar where we have in effect sen t 

th e prop osed regula tions back to th e Sm all Bus iness A dm inist ratio n by 

tu rn in g them down in the committee. T he A dm inist ratio n did no t w ant 

to run the risk t hat we would be a ble to h ave the m rejected in the full 

Congress. Th ey got the hi nt an d they went back and changed the 

reg ula tions.

Th is power of re viewin g regulati on s is th e m ost im po rta nt overs igh t 

pow er because we can convey a message very cle arl y to the A dm in istratio n in situati on s where i t ha s re fused to tak e action.

Ms. McNair. I have one other question. Ge neral ly I have been concerned about those peop le who do n’t file com pla ints, those who don’t 

know th at revenu e sh aring exis ts, who do n’t know th at they have 

righ ts un de r th e R evenue S ha ring Act.

I want to ask Ms. Stew ard w hethe r, in he r o pin ion, the avera ge ci tizen in Jacksonv ille knows about th e rev enue-sh ari ng prog ram?

One of th e things we he ard yeste rday fro m Und er Se cre tar y 

Schm ults w as a list of all the public relati ons pamp hlets and m ate ria ls 

sen t out fro m Treasury. Some tim e ago the Atto rney Gener al sugges ted to Tr ea su ry th at the y shou ld req uir e the po sting of notices 

at sites where rev enu e-shar ing fund s were being exp end ed, posters 

descr ibing the fun ding process, the antib ias pro vision s an d describing 

how to file com plaints .

Tr ea su ry told us in S ept em ber 1973 that the y we re not in th e bu siness 

of prod uc ing posters. I would like to know fro m you wh eth er you 

th in k th at sort of thing would be he lpf ul, wh eth er or not you think 

the ORS’ public inf orma tio n prog ram has been successfu l, at least in 

Jacksonv ille ?

Ms. S teward. O f course n ot. In 1973 there was some a tte mpt by c iti ­

zens g roup s to delve into th e wh ole b usiness o f revenue sh arin g in terms 

of its fu nd in g mechanism an d how the moneys flowed from the Fede ral 

Gover nment throug h the States and into the mu nic ipa liti es. It. has 

take n us—those of us who are suppose d to have some expertise in local 

governm ent—it has ta ken us ap prox im ately 2 years to even run down 

where rev enue-sh aring fun ds were even used in the local commun ity.
258

No t only th at even toda y we sti ll have not been able to determ ine 

exactly where a total of $36 million has been sp ent an d that includes the 

acc rued inter est in Jacksonv ille, Fl a. We wer e o nly abl e to d ocum ent 

af te r some leng thly persisten ce on ou r part some areas th at we were 

keenly intere ste d in an d wer e kee nly a wa re of t he f ac t th at the re had 

been some dis crimination such as in the are as of emplo yment and expe nd itu res of revenue-sh aring moneys in are as o f recre ation.

I am conv inced th at the avera ge citizen is not aw are of revenuesh aring moneys. It is ju st an othe r for m of fun ds th at come into the 

cit y of Jackso nville. Th ey hav e no con cep tua l idea as to the kin d of 

inp ut citizen s can have or ou gh t to have.

Rev enue sh aring m oneys ha ve been c au gh t up in the o ver all bu rea ucracies of the c ity and fo r the most par t in the city of Jac kso nville , if 

the citizen s had inpu t as we d id in 1973 o r att em pted to p rov ide i np ut 

th at recomm end ing th at $1 m illion be used fo r social services, it is not 

left to the citiz ens and the loca l governments un de r th e statute do not 

have to listen to citize ns i np ut anyh ow.

Those of us who are a wa re of that s tatu tory requirem ent ha ve li ttl e 

fa ith in g oin g to the local officials a nd re questin g such f un ds f or othe r 

kin ds of g enera l social serv ices needs. It seems to me th at th at is one 

of the failu res of the statute in th at it has not require d citizen inpu t 

as such or any pos itive citize n control into how the se fund s are 

disb ursed.

Mr. D rin an. Counsel ?

Mr. K lee. In o rder to sa fegu ard the guara nte e of t he 5 -minute rule 

I yiel d to th e gentlem an fro m Ohio.

Mr. D rin an. Mr. K ind ness?

Air. K indn ess. I n Ms. P err y ’s s tat em ent on page 4 there is a re fe rence t o the ma yor of A sheville, N.C . Cou ld you help us fo r the record 

to id en tif y th e na ture of th e may or’s job the re? Is th at a pa rt- tim e 

ma yo r an d is the ma yor the executive or is there a cit y ma nager?

Ms. P erry. Congressm an Kindness, I don ’t have all of th at inform atio n available with me this afternoo n bu t I w ould ind ica te to you t hat 

in the re po rt t ha t was filed by the investiga tor who was in Asheville, 

N.C., it w as i ndica ted th at th e ma yor had an affiliation wi th a local law 

firm.

It was no t cle ar wh eth er or not th at affiliation was to tally severed 

at the tim e he took res ponsibi lity as ma yor in Ash eville. It is my 

un de rstand ing th at he is t he chief executive officer in th at town.

Mr. K indness. They do n't ha ve a city m anager?

Ms. P erry. I don't th in k so. I can check th at fac t fo r you and give 

th at inform ation to you lat er.

Mr. K indness. I would ap prec iate it because obviously if th e m ayo r 

as in man y citie s is the cere monial head and the presiden t of the 

council, th at wou ld not nec essarily—w ha t wou ld be pe rtin en t would 

be wha t the actual executive hea d th ou gh t to be th e case.

In the Leagu e of Women Vo ters’ stat em ent, Ms. Ki nkead, you are 

re fe rrin g to the Michi gan situ atio n in which revenu e sh aring funds 

were pla ced in the Teach ers Re tirem en t Sys tem Fu nd . I am a lit tle 

curiou s as to what the alternatives in practic al ter ms wou ld be in a 

case lik e th at , Le t's assum e as I sug ges t mu st be the case th at the 

tea chers ret ire me nt sys tem was un de rfu nd ed in Mich iga n and the 

alternatives mi gh t have been th at either retir ed tea chers pensions 

wou ld be cut off or red uced or th at fu ture tea chers would have no 

pension s o r redu ced pensions.
259

I am curious as to whether there is an implication there in this testimony tha t tha t sort of thin g should occur and tha t the rights or privileges of tha t larg er grouping of people need necessanH be adversely affected in order to satisfy this statement ? . .

Ms. Kinkead. I do not have the facts of the furthe r implication of who is involved in the pension fund or whether or not it was under­ funded at the time. I only know that after looking at tha t very care­ fully, tha t the Justice Department decided to sue and tha t the Office of Revenue Sharing requested that the State of Michigan be included

as a defendant in that suit. .

So I would assume that they felt that there was sufficient ground.

Mr. Kindness. Th at was not the case in which either the Justice Department or the ORS either requested or acted to defer reienue 

sharing funds; is th at correct?

Ms. Kinkead. Xo ; they did not defer the funds.

Air. Kindness. Wopld you suggest that that was an improper action

or lack of action? . .

Ms. K inkead. Yes. It would seem to me that if they are in violation of law and if there has been a finding of discrimination, the funds 

should be deferred.

Mr. Kindness. Xo matter who is harmed by it ?

Ms. Kinkead. We don’t know whether or not you are saying what would happen in the case if we don’t know whether or not that retirement fund is in jeopardy. . ,

Mr. Kindness. It is a little hard to make th at answer, isn t i t .

Ms. Kinkead. It is, but you have to consider the fungibility problem involved with revenue sharin g—that in most instances—we are not talking about a general fund here. If revenue sharing funds were deferred, we also then have to assume that they would not—that the State would not make up the difference, but if they had no revenue sharing funds to begin with, tha t possibly they would not put money 

into the plan.

Mr. Kindness. We are speaking about the formation or the basis for action in tha t case. I don’t understand how you would make the teachers retirement fund pure after that. How do you relieve it of 

the burden of discrimination ?

Ms. Kinkead. They are not challenging discrimination as I under­ stand it of the pension fund itself, but of the fact tha t it did deal with and directly affects the school system and the problem of discrimination as found in the school district there.

They failed to desegregate.

Mr. Kindness. Are you alleging that the operation of the teachers 

retirement system was discriminatory?

Ms. Kinkead. I am not saying that. Tha t, as I understand it, was not the finding of the Justic e Department, which was simply tha t bv putting money into the teachers pension fund it did directly affect 

and benefit the school district which was in violation.

Mr. Kindness. And therefore the retirement fun d might be adverse­ ly affected by cutting off future funds and that would be a desirable 

result ?

Ms. Kinkead. I don't feel—I don't follow that logic. Maybe I should 

defer to a lawyer. I don't understand tha t part of the question.

Mr. Kindness. My time is up. If there are others who want to 

question, that is fine.
260

Mr. Drinan. We will let Mr. Klee proceed now.

Mr. Klee. Again I would like to defer to the Member u ntil he is 

through.

Mr. Drinan. By unanimous consent we yield him an additional 2 

minutes.

Mr. K indness. Mr. Chairman, I would insist on my time under the 

rules.

Mr. Drinan. An additional 5 minutes. I am sorry.

Mr. Taylor. To the extent th at this is not contributing to any parliamentary situation, may I have an opportunity to comment on that?

Mr. Drinan. The witness is recognized.

Mr. T aylor. The basic facts as I understand it in Ferndale are tha t 

the State did designate the money for educational purposes in a way <

tha t funds were a ttributable to particular school districts including 

the Ferndale School District. As Ms. Kinkead said, the education 

funds to the Ferndale School District had been terminated in 1972 

because the district failed to comply with the requirements of title VI.

If the funds continued to be made available, these funds could be 

used to replace funds that have already been terminated. That I think 

is a very unacceptable situation, unacceptable under the law. As I 

understand your question, you say, won't some people get h urt i f the 

funds are cut off ?

I would say that there is a very simple alternative to that and that 

is compliance with the law. The argument or the question tha t you are 

raising was raised about title VI from the very inception. Aren’t we 

going to be seeing welfare funds or education funds cut off to people 

who really need those funds ?

The experience has been under the law tha t very few States have 

been willing to forgo these funds. They have come into compliance 

with the law when they have seen what the alternatives are. In those 

cases where they are not willing to come into compliance, legal redress 

is available through the courts which should have been used a long 

time ago in this case, so to bring them into compliance and then the 

funds become available. The deferred funds are not terminated or 

withdrawn from the State forever. They become available when the 

district comes into compliance with the law.

Mr. Kindness. Just to clarify tha t there is a difference of opinion ’

here, such totalitarianism from the Federal level is not well received in 

all local government jurisdictions; and where the burden falls as 

harshly as what is suggested in this case, there could be quite a harsh 

reaction to it. I think what is suggested on my part as a more reason- ’

able approach is that we should not direct all sorts of criticism at the 

OKS, if they do not in every case cut off or defer funds, or criticize the 

Department of Justice, if they do not in all cases request OKS to cut 

off' or defer funds under the revenue-sharing program.

Mr. Taylor. I would say our objection is that —not that they don't 

do it in all cases but that they have not done it at all.

I have been familiar with the Ferndale situation for some time. I 

think if we had a chance to discuss the facts of tha t situation, you 

might see th at what was done by the Ferndale School D istrict was the 

most deliberate kind of segregation of students, the kind we were 

familiar with in many southern school systems years ago. Those children are suffering under a situation where they have been deliberately 

segregated and isolated in the schools.
261

I think it is the responsibility o f the Federal Government not only 

under title VI or section 122 but under the Constitution of the 1 nited States, the 14th amendment, the fifth amendment, to make sure t hat 

tha t kind of discrimination ceases. Tha t is why we are in that unfortu nate situation today.

Mr. Kindness. I would hope you would agree, however, t ha t the 

burden ought not to fall unfairly upon innocent people either.

Mr. Taylor. I would agree with that and I think it need not fall on 

innocent people so long as measures are taken to correct discrimination 

which has persisted for many years.

Ms. P erry. I would like to a‘dd one comment-----

Mr. K indness. I am sorry. There is one other point I would like to 

make. If we have more time, I would lie happy. Mr. Taylor, on page 10 of your testimony there is reference to the Office of Revenue Sharing only recently getting into agreements with H EW and DOT and H l D, EEO C, and Justice. The testimony before the subcommittee yesterday indicated t hat really, the Office of Revenue Sharing has been the pioneer in these interagency agreements. Although recent, would you care to comment on whether this trend appears to be a favorable one and tha t given time for these relation­ ships to develop beyond the mere exchange of information, this might be an effective tool for coordinating the civil rights enforcement 

activities ?

Mr. T aylor. In the right hands it could be effective. I am happy to 

hear you say tha t because it was our groups that suggested in the hearings on regulations that this technique be adopted because we were convinced tha t the ORS was not going to get sufficient staff to 

do the job. The real problem, apart from the fact tha t it took them 2V> years to get around to concluding these agreements, is tha t basically they 

are the agreements for sharing information. The key element in an agreement of this kind has to be a delegation of authority so that when HEW finds that a district has discriminated, we won’t find ORS saying thank you for the information and now 

we will get around to investigating ourselves. These can be pioneer workable agreements if the findings are made by the other agencies and are a predicate for action where it is needed.

Mr. Kindness. Thank you.

Mr. Drinan. I have one question tha t anyone can answer if he or she 

wishes. I quote from Ms. Alice Kinkead's document on the old ques­ tion of fungibility. She says on page 5 even assuming vigorous civil rights enforcement, the fungibility factors make real compliance an 

illusion. That has been my unfortunate conclusion up to now. I wonder if any or all of you would want to react to that? In my bill I have pro­ vided for certain categories without being too rigid and have indicated tha t real accounting procedures should be kept so that the money is 

not nontraceable.

Mr. T aylor. We would su pport both the provision in your bill and 

tha t recommended by the GAO study that the requirement of nondis­ crimination be extended to all the activities of a jurisdiction that receives revenue-sharing funds. We would also strongly support better accounting and reporting provisions tha t would require a jurisdiction really to report not only

6 2- 33 1— 75-------18
262

on the supposed uses of the funds but on the net impact of those uses 

on its budget. Both of those would be useful additions to the law.

It is difficult to get at where the money is really going but if you 

have this type of general aid, some effort has to be made to inform the 

Secretary of the Treasury and the Congress of the United States.

Congress is supporting a 5-year, $7 billion law enforcement program 

on top of the LEAA, if you are to believe these planned use reports 

because they say 25 percent of the money is going for enforcement, 

police and enforcement activities.

One needs to get under those figures and find out where this money 

is really going.

If i t is a $7 billion program and tha t is what Congress feels is the 

wise collective judgment of all the State and local officials, that may 

be fine. But at least you ought to know about it.

Ms. Steward. I would like to say that I would agree. I agree with 

your proposal. It has been very difficult and it is going to continue to 

be difficult to trace revenue-sharing funds.

In addition to that, I strongly recommend that there be some written 

proposal tha t Congress can deal with in terms of citizens input. We 

are talking about positive kinds of input into how these funds are 

going to be distributed. We have found tha t the planned use report 

is very different from the actual use report when we actually determine where those funds go.

It is obviously a wide area of disparity there. It needs some correction.

Mr. Drinan. My bill creates a citizen advisory committee and it 

provides certain funding for a staff person for citizen participation. 

Having been encouraged by all the responses to that, let me ask one 

other question. In Sarah Austin's document on page 10, it is not 

commonplace to acknowledge that general revenue sharing funds have 

tended to replace funds as expended. If we did, we can say that you 

must have a maintenance of effort and you may not use the general 

revenue sharing funds to defer taxes.

Would some or all of von want to comment? Should we go back to 

what Ms. Austin says is the original intent; namely, th at general revenue sharing funds would supplement categorical gran ts and not replace them ?

Ms. Austin. That is why our national board voted for general revenue sharing in the beginning. Some of the mayors on our board felt 

the same way. They were surprised to find out they were not only not 

getting categorical funds but fewer funds.

There is a wide variation in the interpretation of human services. 

I think some people are building roads and calling them human services, and tha t is open to a lot of interpretation. One of the biggest 

advantages of our involvement in this project has been providing the 

citizens of local communities more information about programs.

It is literally impossible for local groups—we don’t have the same 

kind of machinery that the bureaucracies have to track things. Much 

of the general revenue sharing money went into the general operating 

budget. It is difficult to track this.

There is really no way to track this. All of our constituents are very 

much concerned about this. As I indicated before, because of the
263

makeup of the national urban coalition and its local coalitions, the 

board had this heated discussion last week to decide whether they 

could support revenue sharing. They said they could only support it if certain amendments were 

made.

Mr. Drinan. In my bill, I say th at with certain exceptions, at least 

10 percent must go to the elderly and 10 percent to the poor.

Ms. Austin. If citizens are organized, they can have influence on 

decisionmaking. It is only where people like us go out and organize 

them, it places the burden of proof on the citizens. In one city, they 

were able to go back to the mayor and insist tha t 10 percent of those 

funds be spent for human services.

Mr. Drinan. Tha t applies only to the local level. One-third goes to 

the State.

Ms. Austin. We also have problems with that.

Mr. Drinan. My time has probably expired.

Mr. Klee. At the request of the chairman and in light of the late 

hour, I will pose just one question in this area. I notice th at in most 

of you r testimony, statistics seem to be a basis for inferring discrimination without any showing of intent.

I know that there is case law to support tha t in many of the circuits. 

I th ink some of the circuits are not yet decided on this issue. In light of 

the fact tha t this is a general program, do you feel t ha t the statute 

as opposed to regulations or even departmental policy should specify 

the degree to which a statistic should be taken into account in implication of discrimination in a program ?

Ms. Austin. Just before we turn this over to the lawyer. I would like 

to say that some of us are very suspicious of statistics. We have had 

unfortunate experiences with them. It depends on who is using them. 

The reason we tried to give our case some live examples was tha t the 

people with whom we work warned us about statistics.

Mr. Taylor. I would say that you should not write—my recommendation would be tha t you not write into the statute anything concerning the utilization of statistics.

One of the great contributions I thin k tha t has been made, for 

example, by the Civil Rights Act of 1964 is tha t it states a reasonably 

broad mandate in setting out the substantive area of the law where 

discrimination is to be handled.

It is l eft to the agency and the courts to determine how best that 

mandate is to be interpreted. I think th at for example in the area tha t 

you refer to, employment discrimination and the use of statistics, the 

courts have made a significant contribution by taking the mandate 

given by Congress and interpreting that.

Mr. Klee. Before we adjo urn, I think I would be remiss if I did not 

compliment you on your fine report for citing the example of the 

Indian Youth Center we have heard so much about. Thank you.

Ms. Perry. In terms of your remarks concerning the necessity to 

show intent, I think the courts have taken a very practical approach 

on the inten t question in employment discrimination. I think that 

they have said basically that intent does not matter.

It is really whether or not there is a disparate impact on the affected 

groups, minorities and women. I think th at intent which is a subjective 

quality is a very, very difficult standard of proof to adhere to.
264

I thin k that T also have some problems with statistics, particularly 

in the South with rural areas which are always undercounted.

I would not recommend that statistics—a requirement for the degree 

of statistical proof be inserted into any regulation. I would point out 

that, it is not intent tha t is the critical factor. It is the impact.

Mr. Klee. The statistics provide a presumption of discrimination 

that the State has the opportunity to rebut under the 14th amendment, 

because if it can rebut it and there is no discrimination, then there is no 

violation.

In all of your experience in civil rights, are you familiar with any 

case in which a State has ever been able to rebut tha t presumption once 

it has been placed upon it ?

Do any of the witnesses have anv familiarity with a case like that?

Mr.T aylor. I am not familiar with any employment case in which a 

statistical presumption has been rebutted. It well may be in some situations that that burden has been sustained. I can’t point you to a specific 

case. But I think certainly in employment, an employer has ample 

opportunity to show tha t the statistical disparities are not due to 

discriminatory practices. I’m not sure whether there are jury cases 

where a presumption has been rebutted. In schools there really isn't 

any such presumption.

In voting, of course, the Congress has made a statutory presumption 

in the Voting Rights Act of 1965. Th at is an irrebuttable presumption 

in most cases.

Mr. K lee. This one seems to be fairly close to that, too.

Thank you, Mr. Chairman.

Mr. Drinan. Mr. Kindness ?

Ladies and gentlemen, I want to thank you once again. The meeting 

is adjourned.

[Whereupon, at 4:35 p.m., the subcommittee adjourned, subject to 

call of the Chair.]

[The following statement was submitted for the record:]

P repared Sta tem ent of Mrs. R u t ii F o u n ta in B efor e T iie H ous e J udi ci ar y

S ubcom m it te e on Civ il R ig h t s Com pl ia n ce for F edera l R ev en ue S harin g

Mr. C ha irm an an d mem be rs of th e co mmittee , my na m e is R uth Fou nta in , an d 

I am a m em be r of the City Co un cil of A ur or a, Colo., pr es en tly se rv in g my sec ond 

te rm o f office. I am a s ch oo lte ac he r by prof ession .

A ur or a is a su bu rb of m et ro polita n Den ve r an d his to ri ca lly was an d is a re si ­

denti al co mm un ity su pp or te d pri nci pal ly by th e m il it ary in sta ll ati ons of Fi tz - 

sim on s G en er al Ar my H os pi ta l, Low ry A ir Fo rc e Ba se, Bu ck ley A ir N at io na l 

G ua rd B as e an d the Rocky M ou nt ai n Arsen al.

P ri o r to 19(55 the po pu latio n w as les s th an 50,000 people, co ns is ting of m ilitar y 

pe rs on ne l fo r th e mos t p a rt an d ci vilia ns , th e v a st m ajo ri ty of wh ich , we re 

em ploy ed in th e Ci ty an d Cou nty of Den ve r. No t more th an a dozen fa m ili es 

liv ed in th e City who, by le gi sl at iv e de fin iti on , wou ld he clas sif ied as m in or iti es .

By 1970 whe n A uro ra ’s po pu la tion had re ac he d 70.000 people, th e im pa ct 

of the mo ve in to A ur or a by m in or ity gr ou ps became ap par en t. The se were chiefly 

Black fa m ilie s in th e m il it ar y, and ve ry tr an sie n t in nat ure . T her e was then , 

an d st il l is to da y, an ex ce pt io na lly sm all Ch ican o po pu lation in A ur or a.

Since 1970 we ha ve grow n to an est im at ed po pu la tion of 130.000. an d st ill 

be ing pri m ari ly a re si den tial su bu rb , we ha ve ex pe rie nc ed a ph en om en al influ x 

of m in ori ty gr ou ps in bo th re nta l and home ow ne rs hi p oc cu pancy. Pro port io natel y, mor e m in or itie s ar e now livi ng in A ur or a and no t wor ki ng i n A ur or a, th an 

th er e w er e in 1970. Thi s i s due, we be lie ve , to th e follo wing fa ct ors :
265

1. The ease and availability of welfare benefits in Adams County as opposed 

to Denver.

2. The busing of school children in Denver. 3. A continued pattern of migration to the suburbs from the core city of 

minority groups because of the availability of new and better housing.

In terms of percent of total population, it is now estimated that Aurora now 

exceeds Denver in minority population and as an employer, Aurora has not 

been able to immediately reflect or absorb into employment this rapid impact 

of minorities now living in Aurora.

We have now, however, made what we believe to be significant efforts to 

realistically deal with the problem by the following measure s:

1. Established a Human Relations Commission in 19(58.

2. Implemented an Affirmative Action Program in 1973.

3. Employed a minority relations consultant in both the school system and the 

City government. 4. Employed Dr. Fletcher to validate entrance and promotional tests, both 

physical and academic, fo r employment in the Aurora Police and Fire Departments.

5. Actively pursued a recruiting program to advise minority groups, living 

both in and out of the City of employment opportunities in Aurora.

6. Establishment of committees on military bases to assure compliance with 

E.E.O.C. guidelines.

7. Creation of a Housing Authority.

Despite our efforts, Aurora now finds itself involved in three (3) law suits, 

all alleging discriminatory practices in employment procedures, none of which 

are based on race or ethnic background, but in each case based upon sex and the 

failu re of three Caucasian females to pass a physical agility test for entrance 

into our Police Academy.

While Aurora has actively sought a judicial determination of the issues 

invloved, it has a t the same time had an L.E.A.A. grant abated, which had been 

approved, and have been advised by representatives of the Office of Civil Rights 

Compliance tha t unless we rewrite our Affirmative Action Program and drop 

completely our physical agility requirements for employment in the Aurora 

Police Department—no L.E.A.A. funds would be approved and, in addition, if 

necessary, no Federal Revenue Sharing Funds would be forthcoming for Aurora.

At the same time, these representatives of O.C.R.C. were equally emphatic 

that there was no known physical agility tests which they would approve tha t 

would comply with E.E.O.C. guidelines nor would they permit L.E.A.A. funds to 

be expended to attempt to develop such a validated test.

The simple and uncontroverted result is tha t the Federal Government has 

legislated requirements for which they have no criteria or any demonstrable 

way of compliance with those guidelines and by the device of withholding Federal Funds, coerces the local government into submission, which results in an 

employee force based upon a quota system rath er than on ability, merit, efficiency or realistic use of these same withheld federal funds.

What Aurora asks this Committee simply to do is to require the federal 

agency that invokes the E.E.O.C. guidelines as the basis for withholding of 

funds, to be able to provide the local community with validated tests and 

acceptable standards to comply with their own requirements. Further, tha t the 

federal agency stop enforcing impossible guidelines requirements on the basis 

of complaints filed after the fact and the inevitable stopping of federal funds 

and sta rt an effective program of acceptable standards to follow before this 

point of no return is reached.

Thank you for this opportunity to api>ear before you today.

A P P E N D I X

Chinese for Affirmative Action (CAA),

San Francisco, Calif., October 24, 1975.

Congressman Don Edwards,

Chairman, Subcommittee on Civil and Constitutional Rights, House Judiciary

Committee, Room 2240, Rayburn House Office Building, Washington, D.C.

Dear Congressman Edwards : As a community-based civil rights organization 

located in San Francisco, Chinese for Affirmative Action is very interested in 

the recent hearings conducted by your subcommittee on Civil and Constitutional

Rights reviewing civil rights efforts under general revenue sharing. Unfortunately, we received your notice of the hearing too late to allow our participation. 

Hopefully, this lette r will summarize some of our concerns.

Although the City of San Francisco conducted the required public hearings on 

the revenue sharing program, it was our feeling th at many community organizations and residents were not aware of the provisions and requirements for general 

revenue sharing. The Chinese community, specifically, and San Franciscans in 

general, had very little input to the process prior to the publication of recommendations. Regardless of community needs, much of San Francisco’s revenue 

sharing funds were spent to resolve Departmental budget deficits.

City officials in San Francisco have a historic practice of using the dilapidated 

and overcrowded conditions of Chinatown to strengthen their pleas for funds to 

San Francisco. Yet, in the distribution process on the local level, Chinatown is 

always placed low in priority for fundings when compared with the City as a 

whole and with other neighborhoods in San Francisco. This was once again the 

situation with revenue sharing funds. Of more than $26 million allotted to San 

Francisco, only a little more than one percent was recommended for improvements 

in Chinatown, although the Chinese population in San Francisco is over 65,000, 

of a total of 6S0,000.

Upon notification of appropriations, a large proportion of revenue sharing 

funds was almost immediately set aside for the oi>erating budgets of city departments. Unfortunately, many of these departments were and are in violation of 

the civil rights requirements of revenue sharing legislation. Here are a few 

examples as they relate to the Chinese community in San Francisco:

1. The San Francisco Police Department has had a history of discrimination 

in hiring practices against minorities in the form of non-job related physical 

requirements and biased exams. 'Today, there are five (5) Chinese officers on a 

force of 2000, a disappointing .2% in a City with 10% Chinese. Although it has 

been two years since Judge Peckham of the Federal District Court ordered the 

department to correct its discriminatory practices, constant delays and financial 

cutbacks by the S.F. Board of Supervisors have not increased the number of 

Chinese officers on the force. (Two Chinese cadets are currently training in the 

Folice Academy.)

2. The San Francisco Courts have only two part-time court interpreters who 

speak Chinese. When the interpreters are unavailable, non-English speaking 

persons must have their court appearances delayed until the interpreters are 

free.

3. Persons who only speak Chinese cannot get emergency ambulance services 

because none of the dispatchers at the ambulance switchboard speak Chinese; 

nor do any of the medical stewards.

4. Non-English speaking persons do not have equal access to Police services 

because the S.F.P.D. does not have Chinese bilingual dispatchers either.

5. Although thousands of tourists and residents tramp through the streets of 

Chinatown daily, no provisions are made by the Departm ent of Public Works to 

increase street cleaning in Chinatown.

Through these situations which we have encountered in the revenue sharing 

experience, ,we strongly feel that members of the Chinese community have been 

discriminated against by the City of San Francisco in: 1) access to services, 

(267)
2) disproportionately low allocations for community-based programs, and 3) 

hiring policies. Chinese for Affirmative Action strongly suggests tha t any new legislation tha t 

is being considered to extend the general revenue sharing program include stricter 

requirements for civil rights, more thorough investigations of complaints, and speedier use of enforcement procedures. Local officials should not be allowed to 

almost freely administer millions of dollars without taking the responsibility 

of protecting the rights of all its residents.

Sincerely, Henry Der, 

Execu tive Director.

Southern Governmental Monitoring Project,

Atlanta, Ga., October 23, 1975.

Hon. Don Edwards,

Committee on the Judiciary,

House of Representatives,

Washington, D.C.

Dear Chairman Edwards : This is in response to your letter of October 17, 

1975. In reference to the information requested about Asheville, North Carolina, 

I have verified that this city employs both a mayor and city manager. However, 

it is quite clear from those interviewed that Mayor Richard Wood is much more than a ceremonial head and president of the Asheville City Council. Mayor Wood 

and the City Council actively participate in the management of the city. All 

decisions involving the local government, whether great or small, are made at 

the executive level by the ma yor; his influence permeates every aspect of city 

government activity. I hope this information will be helpful to the Committee. Please contact me 

if I may be of furth er service. Thank you for the opportunity to appear before 

the Committee.

Very truly yours,

, Susan Perry,

Sta ff Counsel.

The Under Secretaryof the Treasury,

Washington, D.C., October 29, 1975.

The Honorable Don E dwards,

Chairman, Subcommittee on Civil and Constitutional Rights, Committee on the

Judiciary, U.S. House of Representatives, Washington, D.C.

Dear Chairman Edwards : Attached is a copy of a letter I am sending to

Congressman Badillo regarding the discrimination case involving the Boston 

Eire Department about which he asked during my recent testimony before your 

Subcommittee. If there are no objections, and the deadline for printing the 

n*cord of the hearings has not yet passed. I would appreciate it if you would 

make my lette r part of the hearing record.

Sincerely yours,

Edward C. Schmults.

The Under Secretary of the Treasury,

Washington, D.C., October 28, 1975.

The Honorable Herman Badillo.

Subcommittee on Civil and Constitutional Rights, Committee on the Judiciary,

U.S. House of Representatives, Washington, D.C.

Dear Mr. Badillo : After my testimony before the Subcommittee on Civil and

Constitutional Rights. I asked the Office of Revenue Sharing to provide a summary of the facts of the discrimination case involving the Boston Fire Department which you asked me about at the hearings. I would like to report to you 

on the matter as we understand it.

We are advised by the Department of Justice that there were actually two 

cases alleging discrimination in the Boston Fire Department. The first case 

was brought in late 1972 by the Boston Chapter of the NAACP and by Black 

and Spanish-surnamed individuals as a group. The Justic e Department subsequently filed its action on January 24, 1973. With the consent of all parties 

the Court consolidated the two actions.
269

No allegation based upon revenue sha ring was included because the revenue sha ring Act had only recently been adopted and the Justice Departm ent had received no information indicating th at reven ue sha ring funds were being used by the Boston Fire Dep artm ent. Boston's first two revenue sha ring checks were dated December 11, 1972, and Janu ary 8, 1973. In March of 1974, however, ORS advised the Justice Department th at audit information obtained by its aud itors indicated that General Revenue Sharing fund s had been appropriated for the Boston Fire Departm ent. Bj- th at time, the law suit had been tried and the District Court had rendered its decision (on Feb rua ry 8, 1974). As a resu lt, the Jus tice Department decided not to amend its suit at th at point to include 

a reven ue sharing violation count. The U.S. District Court in Boston hand ed down its decree on Feb rua ry 8, 1974. The decree enjoin ed the City of Boston and the Massachusetts Division of Civil Service from engag ing in any practic e or act which “has the purpose or effect of” discrim inating against any applicant or potential applicant for employment with the Boston Fire Departme nt or other fire departm ents subject 

to Massachusetts civil service law. The Court specifically cited certain hiring practices and certification pro­ cedures and the validity of wr itten examinations given for the purpose of de­ term ining qualification for the selection of firefighters. The City of Boston was enjoin ed from requestin g certificates of appo intments for perm anent positions on the Fire Dep artm ent unless the City dem onstrated it had conta cted organi­ zations in the Black and Spanish-surnamed communities and high schools and jun ior colleges with substan tia l Black and Spanish-surnam ed enrollments to provide them with inform atio n regarding openings. Info rma tion was to be furnished rega rding qualification s and selection procedures, rates of pay, hou rs of work, and the time, place a nd method of applying fo r vacancies. Subsequently, the Commonwealth of Massach usetts appealed the case and on September 18, 1974, the U.S. Court of Appeals, Fi rst Circuit, affirmed the 

decision of the District Court. Certiorari was denied on application to the Supreme Court for reconsideration of the matter. Au interim consent decree was 

entered on April 17,1975. We have received no indication from the Jus tice Dep artm ent of any lack of compliance by the Boston Fire Departme nt with the decree of the Court. Inas­ much as the goal of the Office of Revenue Sharing is to seek compliance with all applicable laws and regulations regarding nondiscrimination in the use of Gen­ era l Revenue Sharing fund s, a decree of a cou rt there on and consent by parties involved is normally sufficient present evidence of the inte ntion to comply, and the withholding of revenue sharing fun ds would not seem app ropriate or nec­ essary. The Office of Revenue Sharing civil rights compliance staff has been following the situation to ass ure th at the City of Boston remains in compliance. ORS will take any fu rth er actio ns necessary should problem s arise. I am asking by sep ara te lette r to Cha irman Edw ards that, if you and the oth er members of the Subcommittee do not object, this let ter be inserted into 

the hea ring record. If you have any fu rth er questions about the Boston case or any other ma tte r relating to the reven ue shari ng program, I would be more tha n happy to assis t you.

Sincerely yours,

Edward C. Schmults.

U.S. Commission on Civil Rights, 

Washington, D.C. November 15,1915.

Hon. Don E dwards,

Chairman, Subcommittee on Civil and Constitutional Rig hts, 406 House Office

Building Annex , Washington, D.C.

Dear Mr. Chairman : Enclosed you will find the addition al information which 

I agree d to provide durin g my testimony before you r Subcommittee on the revenue sharing program. I regret the delay in tra nsmi tting these ma terials and hope th at they are responsive and helpful to the Subcommittee. Atta chment No. 1 is an ana lysis of the cooperatio n agreement recently entered into by the Departm ent of Jus tice and the Office of Revenue Sharing. The Com­ mission’s staff analysis of the nond iscrimination and related provisions of H.R. 8329 is labeled Attachmen t No. 2. Attachmen t No. 3 consists of the General Counsel’s analysis of when def erral should be triggered in relatio nship to a Federal District cou rt finding of discrimination. Attach ment No. 4 addresses
270

the appropriateness of deferra l and initiation of adm inistrative proceedings by 

ORS subse quen t to a court finding of discriminatio n when the plaintiffs in the 

discrimination suit have not sought such deferral nor has the cou rt granted it.

In response to Representative Drina n's inquiry, I have determined through 

consultation with staff that the Commission has not made an in-depth assessment of the Jus tice Department’s Executive Order 11764 coordination and 

oversight activity with respect to the Office of Revenue Sharing. The Commission noted in the report The Federal Civil Rights Enforcement Effort—1974. 

Volume IV, To Provide Fiscal Assistance that as of Jun e 1975, the Departm ent 

of Justice had reached no formal conclusion as to whether the Office of Revenue 

Sharing was covered by Title VI of the Civil Righ ts Act of 1964 and thus by 

Executive Order 11764. Although a forthcoming Commission report on Title 

VI enforcement briefly reviews the compliance activity of the Departme nt of 

Jus tice with regard to revenue sharing, it is our understand ing t hat the Department’s activities were undertaken pu rsu ant to obligations set out in the State 

and Local Fiscal Assistance Act of 1971 rathe r than in fulfillment of Executive 

Order 11764.

The final are a of information concerns your request for add itional examples 

which dem onstrate the “fungihility” problem and the need for making the antibias prohibition apply to all activities of a jurisdiction. Commission staff have 

reviewed our files and have found no examples of this problem which have not 

already been presented to your Subcommittee. The absence of additio nal examples undoubtedly reflects the hitherto inad equate enforcement of the current 

nond iscrimination provision.

If you or oth er members of the Subcommittee have any questions about the 

enclosed materials, please have Ms. McNair get in touch with Bud Blakey or 

Jim Lyons.

Sincerely,

Arthu r S. Flem min g,

Chairman.

Evaluation of th e Memorandum of Understanding Between th e Office of

Revenue Shar ing, Department of the Treasury and th e Civil Rights

Division, Department of J ustice Regarding Coordination in th e E nforcement of th e Nondiscrimin ation P rovision of Section 122 of th e State

and Local F iscal Assistance Act of 1972

atta chm ent no. i

A Memorandum of Understa nding Between the Office of Revenue Sharing and 

the Civil Rights Division Regarding Coordination in the Enforcement of the 

Nondiscrimination Provision of Section 122 of the State and Local Fiscal Assista nce Act of 1972 1 2 was signed in lat e September of 1975.’ The stated purpose 

of the Memorandum of Understan ding was to establish “coord ination procedures in order to avoid inconsistency and duplication of effort.” 3

 The two 

agencies agreed th at the reason th at the Memorandum was necessary was that 

the Office of Revenue Sharing (ORS) and the Civil Rights Division (CRD) 

have concurrent responsibilities for assuring compliance with Section 122? The 

Commission supports the signing of this Memorandum. Indeed, the need for an 

agreement between the Department of Justice is discussed in the Commission’s

1 31 U.S .C. § 124 2 (S up p. III . 19 73 ).

2

 Mem oran du m of U nder st an din g Betwee n th e Office of Re ve nu e Sha ring , D ep ar tm en t of 

th e T re as ury , and th e Civ il R ig hts Div isio n, D ep ar tm en t of Ju st ic e, R eg ar di ng Coo rd ination in th e E nf or ce m en t of th e N on di sc rim in at io n Pro vi si on of Se ction 122 of th e Sta te 

an d Lo ca l F is ca l Ass ista nc e A ct of 197 2, sig ne d by J. Sta nle y P ott in ger . A ss is ta nt A tt orney Gen er al. Ci vil Rig ht s Di visio n, D ep ar tm en t of Ju st ic e, Se pt. 25, 197 5, an d Jo hn K. 

Par ker . A ct in g Direc to r, Office of Re ve nu e Shar in g, D ep ar tm en t of th e T re as ury , Se pt. 23, 

1975 [h ere in aft er re fe rr ed to as M em oran du m of U nder st an din g].

3

 Jfl.

*Id .
271

report, The Federal Civil Rig hts Enforcement Effo rt—1974, Vol. IV, To Provide 

Fisc al Assistance.5 * After a careful review of the Memorandum, however, it is 

apparen t th at it conta ins two m ajo r deficiencies.

1. Purpose and Scope

The Memorandum of Und erstanding estab lishes coordination procedures pur ­ sua nt to the Office of Revenue Sharing and Civil Rights Division responsibilities under Section 122 of the Sta te and Local Fiscal Assistance Act of 1972.* The Memorandum of Understanding does not re fer to the need fo r interaction between 

the two agencies under Executive Order 11764.7

 The Executive order directs 

the Attorney General to coordin ate Fed era l agency enforcement of Title VI of the Civil Righ ts Act of 1964 and to prescribe standard s and procedures for implementation of Title VI. This Commission holds that Section 122 of the Sta te and Local Fiscal Assistan ce Act places on the Office of Revenue Sharing all the responsibilities which Title VI places on each Federal agency dispensing 

Federal assistance.8

 We under stand, too, that the Department of Justice considers th at for all practic al purposes the Office of Revenue Sha ring is a Title VI agency within the meaning of Executive Order 11764. G eneral Revenue sharing funds are used in a wide var iety of programs or activities. They can be used in programs or activities already receiving Fed eral assistance from ano ther agency and thus in programs or act ivities subject to the provisions of Title VI. It is a matter of interagency interest that consistent sta ndard s of compliance are applied to avoid conflicting determinations or resolutions. In order to establish procedures to minimize such conflict, the Memorandum of Understanding should have made clear that the Office of Revenue Sharing will comply with the Attorney General’s Directions und er the Executive ord er.9

2. Coverage

The Memorandum of Understan ding addresses such ma tters as responsibility for han dling complaints, notificatio n of scheduled civil rights reviews, and sharing compliance information. The procedures outlined in the Memorandum are de­ signed to avoid such problems as duplicative investiga tion of a single complaint and disruptive involvement by one agency in the investigations and reviews of the other agency. In short, the Memorandum addresses the mechanical aspects of 

coordination between th e two agencies. Nonetheless, the procedures do not address all the are as necessary to realize the Memorandum ’s stated purpose to “avoid inconsistency and duplication of 

effort” 10 between the two agencies. The two agencies have not agreed in the Memorandum to apply the same sta ndard s of compliance to general revenue sharing recipients. Nor have they agreed to procedures including time frames, for Federal compliance activity. Moreover, there is nothing in the agreement which binds the two agencies to an acceptan ce of each others’ investigative findings

5 U.S . Co mmiss ion on Ci vil R ig hts , The Fe de ra l Civil R ig hts E nfo rc em en t E ffort— 1.974, 

Yo l. IV , To Pro vi de Fisca l A ss is ta nce 11 4- 11 9 (1 97 5) [h ere in aft er re fe rr ed to as To Pro ­

vi de Fisc al A ss is ta nce ].

k

8

 T h at Act pr ov ides th a t in th e ev ent of no nc om plianc e, th e Sec re ta ry of th e T re as ur y is au th or iz ed to te rm in ate fu ndin g or re fe r th e m a tt e r to th e A ttorn ey Gen eral fo r civ il ac tion . 31 U.S.C. 5 12 42 (c ) (S up p. I ll, 19 73 ). The A ttor ne y Gen eral may also br ing a civ il su it again st a re ci pie nt of gen er al re ve nu e sh ari n g fu nd s if th ere is “ reas on to believe th a t a S ta te go ve rn m en t or u n it of lo ca l go ve rn m en t is en ga ged in a p att ern or pra ct ic e in vio la tion of th e A ct ’s pr oh ib itio n of di sc ri m in at io n.” 31 U.S.C. § 12 42 (b ) (Sup p. I l l, 197 3). As a re su lt of these au th or itie s, both ag en cies may conduct com plianc e reviews 

an d in ves tigat e co m pl ai nt s again st re ve nu e sh ari ng r ec ip ie nt s.

7

 Exec. Ord er. No. 117 64, “N on di sc rim in at io n in Fed er al ly A ss iste d Pro gra m s, ” 3A 

C.F.R . 124 (S up p. 19 75 ).

8

 To Pro vi de Fisca l A ss is ta nce , su pr a no te 5.

9

 I t sh ou ld be no ted, ho we ver, th a t a se riou s wea kn es s of th e A ttorn ey G en er al ’s exec u­ tio n of duties unde r Exe cu tive O rd er 117 64 is th a t no st an d ard s ha ve bee n iss ue d by th e A ttor ne y G en er al pu rs u an t to th e E xe cu tive o rd er . T hi s prob lem is disc us se d in th e Co mm issi on ’s fo rthc om in g re port The Fed er al Civil R ig hts E nfo rc em en t E ffort— 1S T] , Yol. V I,

To E xt en d Fe de ra l Fin an ci al A ss is ta nce (in pre ss ).

10 S ee p. 1 supra.
272

and determinations of recipients’ compliance status. In sum, it contains nothing 

to prevent the two agencies from providing conflicting instructions to general 

revenue sharing recipients and nothing to guard against the need for one agency 

to replicate the other agency’s compliance activity because of dissatisfaction 

with the quality of that activity.

ATTA CHM ENT NO. 2

Staff Analysis of the Nondiscrimination and Related Provisions of H.R. 8320

Section 122(a) of the State and Local Fiscal Assistance Act of 1971

This section provides:

No person in the United States shall on the ground of race, color, national 

origin, or sex be excluded from participation in, be denied the benefits of, or be 

subjected to discrimination under any program or activity funded in whole or in 

part with funds made available under subtitle A.

Section 122(a) of H.R. 8329

This section adds “religion” to the currently forbidden forms of discrimination, 

and expands application of the nondiscrimination provision to all programs and 

activities of governments receiving revenue sharing funds.

Comments on Section 122(a) of H.R. 8329

The inclusion of “religion” is a positive modification of the nondiscrimination 

provision. Application of the nondiscrimination provision to all programs and 

activities of revenue sharing recipients appears necessary to insure tha t revenue 

sharing money does not indirectly subsidize discrimination. This modification 

accords with a recommendation of this Commission, of the Comptroller General 

of the United States, and of numerous civil rights organizations.

Section 122(b) of the State and Local Fiscal Assistance Act of 1971

This section requires the Secretary of the Treasury to notify the Governor and 

request the Governor to secure compliance “whenever the Secretary determines 

tha t a (recipient government) has failed to comply” with the nondiscrimination 

provision. The section further provides:

If within a reasonable period of time the Governor fails or refuses to secure 

compliance, the Secretary is authorized (1) to refer the matter to the Attorney 

General with a recommendation tha t an appropriate civil action be i nstitu ted : 

(2) to exercise the powers and functions provided by Title VI of the Civil Rights 

Act of 1964 ( 42 U.S.C. 2000d) ; or (3) to take such other action as may be provided by law.

Section 122(b) of II.R. 8329

In place of the present broad statu tory delegation of enforcement authority, 

this section of the bill sets out a well-articulated and less discretionary enforcement scheme.

Subsection 122(b) (1) requires the Secretary of the Treasury to notify the Governor and request the Governor to secure compliance “whenever the Secretary 

has reason to believe” that a recipient government is not in compliance with 

the nondiscrimination provision. Subsection 122(b) (5) of the bill st ates:

. . . ‘reason to believe’ shall include, but not be limited to :

(A) a finding of discrimination by a Federal or State court or administrative agency;

(B) a determination of noncompliance made by Federal investigators 

acting pursuant to cooperation agreements under subsection (d) ;

(C) the filing of a lawsuit by the Attorney General alleging discrimina* 

tio n; or

(D) a determination by the Secretary that a State governor or unit of local 

government has violated section 122(a).

Subsection 122(b) (1) of the bill also specifies tha t the “terms and conditions” 

of voluntary compliance “shall be reduced to a written agreement approved by 

the Governor, the affected unit of local government, if applicable, the Secretary, 

and the Attorney General of the United States, and shall not become effective 

until 30 days after publication of such agreement in the Federal Register.”

If 60 days after the Secretary’s notice the Governor fails or refuses to secure 

compliance, subsection 122(b) (2) of the bill requires the Secretary to temporarily withhold further payments of revenue sharing funds to the noncomply-
273

ing government. The temporary withholding of funds is regulated by specified 

procedures which are meant to insure due process to affected governments and 

to advance the stages of enforcement action.

Under subsection 122(b) (3), a government whose funds are temporarily withheld can at any time request a hearing which the Secretary is required to conduct 

within 30 days of the request. The period of temporary fund withholding cannot 

extend beyond 120 days or 30 days after the conclusion of a requested hearing, 

whichever is longer. P rior to the expiration of the temporary withholding period 

(the longer of 120 days without a hearing or 30 days following conclusion of a 

requested hearing), the Secretary is required to make an express finding of the 

government’s compliance status.

If the Secretary finds that the government is in compliance with the nondiscrimination provision, payment of the withheld funds shall resume.

If the Secretary makes a finding of noncompliance, the Secretary is required 

by subsection 122(b) (3) to continue withholding payments and to:

(A) refer the matter to the Attorney General with a recommendation 

that an appropriate civil action be instituted ;

(B) exercise the powers and functions provided by Title VI of the Civil 

Rights Act of 1964, including termination and repayment of fu nd s; or

(C) take such other action is may be provided by law.

Subsection 122(h)(2 ) furthe r provides for the resumption of payment of 

withheld funds following a finding of noncompliance if

(A) such State government or unit of local government enters into a 

compliance agreement approved by the Secretary and the Attorney General 

of the United States (which agreement shall not become effective for purposes of such resumption until 60 days after publication in the Federal 

Register) ; or

(B) such State government or unit of local government complies fully 

with the final order or judgment of a Federal court, if that order or judgment covers all the matters raised by the Secretary in the notice issued . . .

Finally, subsection 122(b) (4) provides tha t the Secretary’s compliance determination is subject to review by the appropriate U.S. Court of Appeals upon 

petition by any government or individual who is aggrieved by the Secretary’s 

determination.

Comments on Section 122(b) of II.It. 8329

Now tha t the State and Local Fiscal Assistance Act has been in effect for 

nearly four years, there is a substantial body of evidence tha t the Secretary of 

the Treasury has not effectively exercised the statu tory authority to enforce 

the nondiscrimination provision of the Act. In general, therefore, the substitution 

of mandatory enforcement procedures for discretionary enforcement authority 

represents a necessary and positive legislative change.

The provision requiring the temporary withholding of revenue sharing funds 

in an instance of presumptive noncompliance pending adm inistrative proceedings 

is particularly positive in that it would help insure fulfillment of the Constitutional mandate that discrimination not occur in the expenditure and enjoyment 

of federal funds. This provision implements a recommendation made by this 

Commission after a careful review of the Treasury Department’s enforcement 

record. We further believe tha t the court decisions in the Robinson v. Schultz and 

U.S. v. City of Chicago litigation demonstrate both the need for and the utility 

of such a provision.

Simultaneous expansion of the nondiscrimination provision to cover all programs and activities of revenue sharing recipients and provision for mandatory 

withholding in all instances of presumptive noncompliance could give rise to 

practical and legal problems. In 1971, the Commission noted tha t the fund cut-off 

sanction might in some instances be “too drastic for practical use,” and we 

therefore advocated the establishment of a “comprehensive and flexible range 

of remedies to be used on a selective basis.”

For the sake of clarity, it is appropriate to resta te the Commission’s position 

on the matter of expanded coverage of the nondiscrimination provision and also 

on the matter of mandatory deferral. The Commission believes that expansion 

of the nondiscrimination provision to cover all programs and activities of revenue sharing recipients is necessitated by the wide latitude of permissive uses of 

revenue sharing funds and the problem of “fungihility” which has been attested 

to by the Comptroller General of the United States and numerous civil rights 

organizations. Likewise, the Commission believes tha t federal funds must be 

withheld when there is prima facie evidence that they will be used to directly
274

perpetuate unconstitutional discrimination. The Commission has not, however, 

taken a position on whether there should he a mandatory withholding of revenue 

sharing funds when there is prima facie evidence of discrimination in a program 

or activity tha t is not directly funded by revenue sharing money.

H.R. 8329 does provide for mandatory withholding of funds in all instances 

of noncompliance w ith the expanded nondiscrimination provision. If, therefore, 

H.R. 8329 were enacted and if its provisions were stringently enforced, the 

revenue sharing program would become a powerful instrum ent for eliminating 

discrimination.

Section 122(c) of the State and Local Fiscal Assistance Act of 1911

This section pertaining to the enforcement authority of the Attorney General 

states in p art : . . . the Attorney General may bring a civil action in any appropriate United States district court for such relief as may be appropriate, 

including injunctive relief.

Section 122(c) of H.R. 8329

In setting forth the enforcement au thority of the Attorney General, this section specifies some of the “appropriate” kinds of relief which a court may grant. 

It states in p art : . . . the Attorney General may bring a civil action in an appropriate United States district court. Such court may grant as relief any temporary restraining order, preliminary or permanent injunction, or other order, 

including the termination or repayment of funds available under this Act. 

Comments on Section 122(c) of H.R. 8329

Specification of some kinds of relief which the courts may grant serves to 

clarify Congressional intent and to strengthen the statu tory basis for judicial 

relief.

Section 122(d), (e), and (f) of H.R. 8329

Section 122 of H.R. 8329 contains three additional subsections pertaining to the 

enforcement of the nondiscrimination provision.

Subsection (d) requires the Secretary of the Treasury to prepare draft cooperation agreements “with each Federal agency which exercises review over the civil 

rights activities and compliance of State governments and units of local government” within 30 days of enactment of the law. The subsection provides tha t 

the cooperation agreements must be published in the Federal Register subject 

to a thirty-day public comment period, and shall be finalized within 30 days of 

the close of the public comment period. The subsection further specifies th at:

The agreements shall describe the cooperative efforts to be undertaken (including the sharing of civil rights enforcement personnel and resources) to secure compliance with this section, and shall provide for the immediate notification 

of the Secretary by the Attorney General of any actions instituted under section 

122(c) or under any other Federal civil rights statute or regulations issued 

thereunder.

The current State and Local Fiscal Assistance Act does not mandate such 

cooperative agreements.

Subsection (e) requires the Secretary of the Treasury “in consultation with 

the Attorney General” to issue regulations requiring recipient governments 

to submit whatever information may be required to determine compliance with 

the nondiscrimination section of the act. This subsection supplements the current 

statutory provision of Section 142 (which would be retained in H.R. 8329) that 

“The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the provisions of this title .”

Subsection (f) provides for the authorization of such funds as may be necessary 

to carry out the purposes of the nondiscrimination section. The current State 

and local Fiscal Assistance Act does not specifically authorize funds for this 

purpose.

Comments on Section 122(d), (e), and (f) of H.R. 8329

The additional three subsections should help to strengthen the enforcement 

of the nondiscrimination provision.

Section 125 of H.R. 8329

This section of the bill entitled “Private Remedies” contains two provisions 

which have no parallel in the current State and Local Fiscal Assistance Act. 

Subsection (a) mandates specific time limits for the administrative processing
275

of citizen complaints alleging violations of tlie act. Subsection (b) gra nts all 

persons the right to insti tute civil action to enforce the provisions of tiie act. 

Comments on Section 125 of II.R . 8329

This new section augmen ts the enforcement provisions set out in Section 122. 

The establishment of manda tory time limits for the adminis trative processing 

of citizen complaints should promote governmental responsiveness and effective 

enforcement of all provisions of the act. Establishment of a private right of 

legal actio n fulfills a recommendation of this Commission. In making this 

recommendation, we no ted:

The Commission ma intain s th at the Feder al Government is responsible for 

ensuring that its revenues do not subsidize discrimination. Nevertheless, we 

believe that an aggrieved individ ual must have an opp ortunity to secure relief 

in those insta nces where the government fail s to carry out its obligations. We 

furth er note th at sta tutes which include a provision for the payment of legal 

fees hav e stim ulated effective administrative enforcem ent of various Fed eral 

l^tvS.

A TTA C H M EN T NO . 3

This nation's policy again st racial discrimination is clear and unequivocal. 

The 14th Amendment forbids state action which denies any person "equal protection of the law.” Although the 14th Amendment applies to the States, the 

Fi fth Amendment operationally extends the proh ibition again st discrimination 

to fed era l action. 1

Ena ctm ent of the Civil Rights Act of 1964 provided the Federal Government 

with a mechanism by which it could effectively car ry out its Fifth Amendment 

obligations. Title VI of the Civil Rights Act of 1964 (1) proh ibits discrimination 

on the basis of race, color, or national origin in any program or activ ity receiving 

fed era l financial assistanc e ; (2) auth orizes and directs all fed era l agencies which 

provide such assistance to enfo rce the prohibition again st dis crimination; and 

(3) empowers the agencies to terminate financial assistance to effect compliance 

with the Act.2

The Fed eral courts have repeated ly emphasized the Constitutional and statutory duty of federa l agencies to prevent discrim ination in the programs they 

fund.

. . . recent cases indicate th at both Title VI and the Fi fth Amendment impose 

upon Fed eral officials not only the duty to ref rain from partici pating in discriminating practices, but the affirmative duty to police the operations of and 

preven t such discrim ination by Sta te or local agencies fund ed by them. NAACP,

Western Region v. Brennan, 360 F. Supp. 1006, at 1012 (D.C. D.C. 1973).3

In these cases def end ants can not in their discretion permit furth er advances 

of Feder al assistance in violation of the statute, but hav e a duty to accomplish 

the purpose of the statute through adm inistrative enforcem ent proceeding or by 

other legal means. Adams v. Richardson, 351 Supp. 636 at 641 (D.C. D.C. 1972).

The government’s obligation to prevent discriminatio n in fede rally funded pro ­

grams was reiter ate d in a recent court decision which specifically involved the 

Office of Revenue Sharing. Subsequent to a Federal District Court finding of 

racia l discrimination in the Chicago Police Departme nt which received sub ­

stan tia l revenue shar ing funds, the U. S. District Court for the District of Columbia ordered the Secretary of the Tre asury to withhold future revenue sha ring 

paymen ts to the city. Another Fed eral cou rt subsequently reviewed and upheld 

the propriety of this order noting :

Where recipients of Fe deral fund s have engaged in unlawful discrimination , 

cou rts have been quick to req uire th at Federal agencies refra in from participating in the discrim inatory practices, and exercise affirm ative duties to police 

compliance and preven t const itutional and sta tutorily prescribed discrimination.

( U.S. v. City of Chicago, 9 E.P.D. 7429 at 7437).

In accordance with contemporary judicia l decisions, the Commission believes 

th at a Fed eral District court finding of discrim ination in any program or activity 

receiving federa l financial assista nce obligates the funding agency to immedi1

 See Bolling v. Sharpe, 347 U.S. 497 (1954) ; Simpkins v. Moses H. Cone Memorial

Hospital, 323 F. 2d 959 (4th Cir. 1963), cert, denied, 376 U.S. 93S (1964). 2

 42 U.S.C. 2000d.

3

 See also. Oautreaux v. Romney, 448 F. 2d 731 (2nd Cir. 1971) ; Hicks v. Weaver, 302 F. 

Supp. 619 (E.D. La., 1969) ; United States v. Frazier, 297 F. Supp. 319 (N.D. Ala. 1968).
276

ate ly de fe r fu rt her assis tan ce and to in st itut e ad m inistrative enf orceme nt pro ­

ceedings. Ou r pos itio n in thi s m at te r ta ke s into account the due pro cess rig hts 

of recip ien ts of fede ral assis tan ce as well as the Co nstitutiona l an d stat ut or y 

obligations of the Fe deral Gover nm ent to pr ev en t dis cri mi natio n.

A recipien t of fede ral financ ial as sistan ce who se fund s ar e de ferre d because 

of a Fe de ral Distric t Co urt finding of dis crim ination has the ri ght to conte st 

th at finding. Th e process of ju di ci al app eal, how ever, does not al te r or postpon e 

th e fede ral funding agency’s ob lig ati on to enf orc e th e Co nstitutiona l and st atu ­

tor y pr oh ibi tio n against discrim ina tio n. To pe rm it a fede ral agency to continue 

fin ancia l assis tan ce durin g th e of ten pr ot ra ct ed cours e of appeals litigation 

wou ld dr as tic ally erode th e citiz en s’ gu ar an tee of no nd isc rim inato ry trea tm en t. 

Th e fact th at de fe rral of financ ial as sistan ce is accompanied by ad m inistrative 

proceedings an d the fact th at ad m in istrat iv e pro ceedings are the mselves sub jec t 

to judicial review insures th at due pro ces s is acc ord ed to the rec ipi ents of fede ral 

aid whose fund s a re wi thheld.

, ATTA CHM ENT NO. 4

The Comm ission believes th at it is ap pr op riate for the Office of Rev enu e Sh ar ­

ing to de fer fund s and to in itia te ad m in istrat iv e proceedings when a fede ral 

court finds dis crim ina tio n in a prog ram or ac tiv ity sup ported by rev enue s ha rin g 

money despite th e fact th at plaintiff s in th e discrim ina tio n su it have no t sou ght 

such de fe rral nor ha s the co urt orde red it. Th e Office of Revenue Sh aring has a 

Co ns titutiona l an d stat ut or y oblig ati on to insu re nondisc rim ina tio n in the program s and ac tiv iti es it fun ds. Th is obligation is ind epe nde nt of th e legal rig hts 

of ind ividua l cit ize ns an d th e respon sib ilitie s of othe r fede ral agen cies. The 

fa ilu re of a th ird pa rty to seek specific relie f o r th e ina ction of a co ur t i n fashion ­

ing a specific rem edy in no way reliev es ORS of its duty to ac t ag ai ns t dis ­

crim inati on wh en a recip ien t of ORS fu nd s has been found gu ilty of the same.

o