Evening star., 1955-02-08
The Recommendations

outside these proposals.
The Recommendations
1. Bond Purchases by the Fed
eral Government.
The first recommendation is
directed at action-effective as
rapidly as school districts can
offer bonds to the public for sale.
recommend that legislation
be enacted authorizing the Fed
eral Government, cooperating
with the several States, to pur-
chase school bonds issued by
local communities which are
handicapped in selling bonds at
a reasonable interest rate. This
proposal is sound educationally
and economically. 1t will help
build schools.
To carry out this proposal, I
recommend that the Congress
authorize the appropriation of
$750 million for use over the next
three years.
2. State School Building Agen-
cieS.
Many school districts cannot
borrow to build schools because
of restrictive debt limits. They
need some other form of financ-
ing. Therefore, the second pro-
posal is designed to facilitate
immediate construction of schools
without local borrowing by the
school district.
To expand school construction.
several States have already
created special Statewide school
building agencies. These can
borrow advantageously. since
they represent the combined
credit of many communities. The
local community under its lease
gets a new school without bor-
rowing.
I now propose the wider adop-
ton of this tested method of
accelerating school construction.
Under this proposal. the Federal
Government would share with
the States in establishing and
maintaining for State school
building agencies an initial re-
serve fund equal to one years
payment on principal and in
tereSt. III gs
The State school building
agency-working in cooperation
with the State educational Off
cials-would issue it's bonds
through the customary invest
ment channels. then build
schools for lease to local school
districts. Rentals would be suffi-
cient to cover the payments on
principal and interest of the
bonds outstanding;a payment to
a supplemental reserve fund; and
a proportionate share of the
administrative expenses of the
State school building agency. In
time, the payments to the reserve
fund would permit repayment of
the initial Federal and State
advances. When all its financial
obligations to the agency are
met. the local school district
takes title to its building.
! recommend that the Congress
authorize the necessary Federal
participation to put this plan into
effect so that State building
agencies may be in a position to
issue bonds in the next three
years which will build Sc billion
worth Of new schools.
8. Grants for School Districts
With Proved Need and Lack of
Local Income.
My first message to the Con-
gress on the state of the Union
stated the view that "the firm
conditions of Federal aid must be
proved need and proved lack of
local income" In my judgment,
any sound program of grants
must adhere to this principle.
Some school districts meet the
conditions. In them the amount
of taxable property and local in
come is so low as to make it i'm
possible for the district either to
repay borrowed money or rent a
satisfactory school building.
I now propose program of
grants-in-aid directed clearly
and specifically at the urgent sit
uations in which the Federal
Government can justifiably share
direct construction costs without
undermining State and local re-
sponsibility. Under this proposal
the Federal Government would
share with the States part of the
cost of building schools in dis
tricts where one of the follow
ing conditions is met: