I mean when I talk about the arbitrary capricious rulings of bureaucrats when they are given powers without adequate checks:upon the exercise of those powers. I am for checking the Veterans' Administration in this sort of arbitrary power.

Mr. Chairman, I think this is one of the most gross examples of arbitrary power that I have encountered since I have been in the Senate, and I am ready, as far as I am concerned, to vote on the basis of the record that has already been made by the Veterans' Administration over on the House side in respect to this matter. Take, for example, the land-grant college in my own State. I am advised by the president of that institution that if we followed the Veterans' Administration ruling in this matter, it would amount to taking away from that institution $85,000 a year.

Dr. ADAMS. That is right, sir.

Senator MORSE. I cannot find a single word in the act passed by Congress that would support what I think is an uncalled for ruling on the part of the Veterans' Administration. If I had a freshman in my law school, when I was teaching law, who could not read any better than that, I would flunk him out.

Senator HILL. I think, since Dr. Adams is here and Dr. Lunden, we had better make the complete record.

Senator MORSE. I will hear the record. I am always ready to recognize a miracle. If anybody in the Veterans' Administration can find language in the act that my eyes cannot detect that will show the congressional intent that they claim is there, I will be the first to reverse myself. But I have studied this record too carefully to have any fear about whether or not they can find the language. It just is not there.

Senator HILL. Doctor, have you anything else you would like to add?

Dr. ADAMS. I would like to add simply, Mr. Chairman and gentlemen, the further point that in connection with Senator Morse's remarks, there is an essential element of principle here which is ever so much more important than the funds themselves. It has been said in the testimony on the House side that the cost of this measure will be $10,000,000 to straighten it up for past deductions, and will cost about $2,000,000 a year currently.

Our own figures on these costs have led to the conclusion that on the highest possible basis that the past cost would not exceed six and a quarter millions, and probably the current not more than one and a quarter millions.

That, however, is not the point. The point is that this country has become great on the basis that Federal interference with education shall not be tolerated. Here we have a classical example of what happens when Federal relationships with educational institutions lead to the determination of educational policy in those institutions, for in no clearer way can you affect the policies of an institution than by interfering with its source of support, and therefore we base our case on the fact that this ruling, this arbitrary ruling, is an unwarranted interference with education both in the light of the record and as a matter of principle.

Senator HILL. Thank you, Doctor. Are there any further questions, Senator?

Senator MORSE. No further questions.

Senator HILL. Doctor, your complete prepared statement will be placed in the record at this point.

(The prepared statement of Dr. Adams follows:)

STATEMENT OF Dr. Arthur S. ADAMS, PRESIDENT OF THE UNIVERSITY OF NEW HAMPSHIRE AND PRESIDENT OF THE ASSOCIATION OF LAND-GRANT COLLEGES AND UNIVERSITIES

Mr. Chairman and members of the committee, I am Arthur S. Adams, president of the University of New Hampshire, and I speak in behalf of the Association of Land-Grant Colleges and Universities, of which organization I am the president. This association includes 53 State colleges and universities established under the Morrill Act of 1862. Its member institutions have enrolled about one-fourth of the total students in 4-year institutions of higher education in this country. Accompanying me is Dr. Laurence Lunden, comptroller of the University of Minnesota, and chairman of a joint committee of business officers of our association and the National Association of State Universities. We appear, at the authorization and request of our institutions, to urge your favorable consideration of House bill 7057 and of Senate bill 2909. As introduced the bills were identical. The House made a minor change in the first section and added a second section specifically authorizing the Veterans' Administration to make the adjustment directed in the first section, and we respectfully request the bill be considered in the form passed by the House.

The association has authorized and requested us to appeal to the Congress for relief from what we believe is an arbitrary and inequitable ruling by the Veterans' Administration, requiring the deduction, in estimating cost of teaching personnel and supplies under the veteran education program, of certain annual appropriations identified as Morrill-Nelson and Bankhead-Jones funds, made under acts whose titles and texts all state that they are for the "further endowment and maintenance" of land-grant institutions. The bills in question have this effect, and also prohibit the Administrator from requiring the deduction of State funds and nonpublic funds, an authority which he has asserted in decision 812.

The American Council on Education, the National Association of State Universities, the department of higher education of the National Education Association, the Advisory Committee to the Administrator of Veterans' Affairs, and the Federal Security Agency, which administers these funds, all have supported our position.

Decision to appeal to the Congress for relief was taken reluctantly, and after all other means of securing an equitable solution were exhausted.

Constant efforts were made over a year's period by individual institutions and educational groups to convince the Administrator that the regulation was wrong in principle, harmful in practice, and contrary to the intent of the Congress. The Administrator was advised by his Solicitor that he might legally rule either way: That is, change the regulation or not change it. He has declined to act.

It is the position of the Administrator that his interpretations of the law and of the facts, and regulations issued by the Administrator, are not reviewable by the courts or by any other body, except, of course, the Congress. This places the Veterans' Administration in the position of being the final judge of the legality of its actions, the intent of the Congress, and the equity of its actions, short of an appeal to the Congress.

Appreciative of the seriousness with which higher educational institutions view this particular matter, the Administrator agreed to, and has, submitted the matter without recommendation either affirmatively or negatively.

The history of this controversy is extensively documented in a statement made by Senator Tobey in introducing Senate bill 2909 along with several other Senators. I am informed it has been inserted into the record.

I will review the situation briefly.

In the passage of Public Law 268, Seventy-ninth Congress, first session, it was recognized that a blanket statement authorizing payment only of customary tuition fees for veterans attending college under the provisions of the act would seriously discriminate against publicly supported institutions, which normally charge little or no tuition. Hence, the act provided that for public institutions whose customary tuition charges were insufficient or inadequate compensation to carry on the veterans' educational program, the Administrator of Veterans' Affairs might contract to pay on a "fair and reasonable" basis for such education, but not to exceed the estimated cost of teaching personnel and supplies.

Obviously, this provision does not cover all the cost of educating veterans, since it eliminates entirely such important items as expenditures for administration, maintenance of plant, and expansion of plant. It had two obvious merits: First, it provided a relatively clear and simple formula applicable to a wide variety of institutions which might differ in their interpretation of what costs are essential to instruction. Second, it might be considered a rough approximation of what Gen. Omar N. Bradley, in his testimony, called "the additional cost by reason of the educational provisions of the Readjustment Act." The Veterans' Administration had asked the Congress to include for possible deduction in estimating the amount of compensation to be paid, the amount of private or public funds available to educational institutions from sources other than the Veterans' Administration. That proposal was rejected by the Congress.

When the act went into effect, it became necessary for each publicly supported institution, in the midst of all-out efforts to provide for greatly increased enrollment, to negotiate a contract with the Veterans' Administration for compensation in lieu of tuition. Regional agents of the Veterans' Administration were charged with the responsibility of negotiating such contracts. Some, following the manifest intent of the law, approved rates which did not take into account any institutional income under the Morrill-Nelson and Bankhead-Jones Acts, which appropriate sums to the States for the endowment of land-grant institutions. Others, acting on advice from the contract office of the Veterans' Administration, negotiated rates based on the deduction of the income from these acts. College administrators, eager to provide full educational opportunity for the returning veterans, harried by other duties, generally accepted the results of contract negotiations with their regional Veterans' Administration offices. They had confidence that obvious inequities could be corrected by later discussion with those in charge of the veterans' program.

This confused situation was brought to light late in 1948 by the General Accounting Office, and at that time claims were filed against those institutions which had not deducted Morrill-Nelson and Bankhead-Jones funds in estimating their teaching costs.

On April 22, 1949, 31⁄4 years after the passage of Public Law 268, the Administrator of Veterans' Affairs for the first time issued a decision that the deduction requirement was legal.

The extended discussions with the Veterans' Administration to which I have referred, followed.

We seek, in the first place, to remedy an inequity. We feel the colleges have done a good job in discharging the large responsibilities devolving upon them from the educational provisions of the GI bill. Every dollar available to the institutions has been made to count in providing a dollar's worth of educational opportunity. We submit that to be short-changed in this way is unfair and

inequitable.

But more significantly, we press this matter because we believe the action of the Administrator in this case is one which attacks the very integrity of education because it violates the fundamental educational principle of independence from Government control. If administrative officers of the Government can take arbitrary action against the interests of the colleges when those interests were thought to be adequately safeguarded in the law, the future of cooperative efforts between Government and higher education for the betterment of the young men and women of America will be dark indeed.

The legislation now before you provides a remedy from the inequity resulting from the decision to require the deduction of Morrill-Nelson and Bankhead-Jones funds in calculating costs in the veterans' education program. It preserves the integrity of funds specifically appropriated by the Congress for the endowment of land-grant colleges and universities. It provides authority for relieving some colleges of demands now being made for restitution of Morrill-Nelson and Bankhead-Jones funds already spent in the interest of the veterans' education program as well as reimbursing others for losses incurred by reason of the deduction of such funds. Finally, and of the greatest possible importance, it reaffirms the principle that education shall be free of Government control. This principle is stated clearly in the GI bill of rights but, as I have said, the agency administering the bill asserts that it is the final judge of whether it properly interprets this and other provisions of the law.

This, Mr. Chairman, is the general background. Since previous discussion has centered on certain points, our further testimony will center on them. We believe the committee will be the best judge of all the facts, and that no one should misrepresent any of them. The points we will cover are as follows:

1. Was the authority to require deduction of funds specifically requested of and rejected by the Congress?

2. Was it the intention of the Congress to provide for payment of the cost of veterans' education in institutions with low customary fees, to the extent of the cost of teaching personnel and supplies?

3. Would inclusion of these funds in estimating teaching costs for veterans' education result in a duplication of Federal payments for this purpose?

4. Do these funds have an endowment character, as specifically expressed in the title and text of each act, and by definition?

5. Are they State funds, if used for the purposes of the Morrill Act as amended? What significance does this have in view of the stated intention of witnesses of the Veterans' Administration and the General Accounting Office not to require the deduction of State and private funds in estimating costs?

Question. Did the Congress reject the authority requested by the Administrator of Veterans' Affairs to require, in his discretion, deduction of Federal and other funds whether from public or private sources?

Answer. Your committee has been told in testimony on April 4 both that the Congress did not reject such a request and that it rejected an entirely different proposition.

Administrator's decision No. 812 of the Veterans' Administration, prepared by the Solicitor and approved by the Administrator, is printed on pages 1340-1342 of the House hearings, and contains a summary of the legislative history of H. R. 3749, first session, Seventy-ninth Congress, which later became Public Law 268, first session, Seventy-ninth Congress.

* * *

was

This summary, which has been checked independently with the bills and reports themselves, states that H. R. 3119 (later reported as H. R. 3749) “* * * presented by this Administration (VA) to the Committee on World War II Veterans' Legislation and this proposed measure was introduced on the same day in the House as H. R. 3119 by Mr. Rankin, chairman of the committee. Such bill provided for authority in the Administrator to readjust payments to institutions furnishing education or training 'in consideration of increased or decreased enrollment and available contributions to meet such costs whether from public or private sources.' When this proposed legislation, following consideration in committee, was passed by the House on July 18, 1945 (H. R. 3749), the original provision, as referred to in the foregoing had been eliminated, and the bill, H. R. 3749, Seventy-ninth Congress, as the same passed the House, did not include, as had been proposed by this Administration, any direction for or reference to consideration of contributions from other sources, public or private, in relation to costs from which proper charges were to be calculated against the Veterans Administration for education or training. Such elimination of the provision directing that Federal contributions from other laws be taken into account in the determination of costs cannot be considered in any sense as an oversight but, to the contrary, as a rejection by the House when it passed H. R. 3749 of the suggestion that Federal contributions were to be considered in the manner as originally proposed.'

The summary then goes on to show that the Senate did include the authority requested by the Administrator, but that the provision was eliminated in conference committee. A careful checking of the testimony given before the Senate committee shows that educational organization representatives did not discuss this proposition, since it had been eliminated in the House, and that while it was proposed by the Solicitor of the Veterans' Administration, Mr. E. E. Odom, and accepted by the Senate committee, there was no discussion in the testimony of the effect or implications of this particular portion of the language.

The Solicitor of the Veterans' Administration says further in decision No. 812, commenting on final passage of the bill without the requested provision:

"From the legislative history * * * it is manifest that in the consideration of the legislation here involved, the Congress did have before it the question of contributions of Federal or private funds to institutions being taken into account in the determination of costs upon which charges for the education or training were to be based, and in the final enactment of the law the original proposal to that effect was eliminated."

* *

He says further that neither the conference report nor statement of managers on the part of the House "* contains reference indicating any purpose or intention in the bill, as agreed to, leaving to administrative regulation the question of public or private contributions to institutions being a consideration in the nonacceptance of the original proposal to that effect."

In fairness to the Solicitor of the Veterans' Administration, it may be said that he goes on to argue that despite this rejection, the Administrator's powers to

establish "fair and reasonable" compensation carry with them the power to require the deduction of any funds entering into cost calculations.

Question. Was it the intention of the Congress to provide for payment of the cost of veterans' education in institutions with low customary fees, to the extent of the cost of teaching personnel and supplies?

Answer. We believe that this was the clear intention of the Congress, as indicated by a study of its legislative history.

This point does not seem to be at issue, however, since Mr. W. L. Ellis of the General Accounting Office said in his testimony before the House Committee considering this bill that "Congress has said under its wise and beneficent policy 'We will educate the veterans and we will pay all the cost of teaching the veterans:""; and in his testimony before this Committee said in response to a question, that the Federal government assumes "the cost of teaching personnel and supplies. Dr. H. V. Stirling of the Veterans' Administration also made a similar statement.

It should be noted, however, that even full payment of the "cost of teaching personnel and supplies" excludes many costs which are essential to teaching, and as will be shown below do not by any means accomplish the stated objective of educating the veterans and paying all the cost of teaching the veterans.

Question. Would inclusion of Morrill-Nelson and Bankhead-Jones funds in estimating teaching costs for veterans education result in a duplication of Federal payments for this purpose?

Answer. We are firmly convinced that it would not.

The case to the contrary is based on the theory that since Morrill-Nelson and Bankhead-Jones funds are of Federal origin, and are used preponderantly at most institutions to pay teachers salaries, the funds thus expended do not constitute a "cost" to the institution which can properly be used in estimating teaching costs.

This case has a superficial plausibility. It should be examined in the light of the normal sources of support of the teaching program of our institutions prior to World War II; the intent of the Congress in providing Morrill-Nelson and Bankhead-Jones funds and in enacting the GI bill; and the actual situation of the institutions under the GI bill.

Since the college year 1947-48 has been mentioned in previous testimony, it will be used for comparative purposes with the college year 1938–39, a normal prewar year.

Ever since 1890, funds provided by Acts supplementary to the original Morrill Act have been used for "instruction and facilities for instruction" by land-grant institutions. The last of the Acts in question was passed in 1935. Therefore, in 1938-39 the Federal funds going to land-grant institutions under these acts totaled approximately $5,000,000. This is the same amount that went to these institutions under these acts in 1947-48, after the passage of the GI bill. In 1937-38 the States, private gifts, and student fees also provided funds for teaching purposes at land-grant institutions. All these funds-State, Federal, fees, and private gifts-went into support of the normal instructional program of the institutions. There were no veterans enrolled under the GI bill at that time The procedure of arriving at an estimate of costs of teaching personnel and supplies as a basis for compensation under the veterans' program involves the addition of teaching salaries in one column, and of credit hours taken by students in the other. This is done for all teachers and for the credit hours of all students, veteran and nonveteran. The resulting figures are divided, and an estimated cost per credit hour arrived at. To this is added 15 percent, to cover teaching supplies and the cost of what are called related teaching personnel who assist in classroom and laboratory work.

Under the Veterans' Administration regulation, the salaries of teachers paid out of funds of Federal origin are excluded in the addition of salaries to determine the total teaching expenditure, while the credit hours taught by these teachers are included. The result is not a true cost estimate, since salaries paid from MorrillNelson and Bankhead-Jones funds, which were part of the normal institutional budget long before World War II and the GI bill, are excluded.

We submit that the acts of the Congress providing Morrill-Nelson and Bankhead-Jones funds were part of the normal instructional budget before World War II; that they were not appropriated for the veterans' programs; and that the veterans' program is a distinct and separate program involving an intent to pay the cost of teaching personnel and supplies of veteran students. No duplication is possible in such a case.

The only practicable method of administering the veterans' program was and is to pay the customary tuition fees or the estimated teaching personnel and