and to everyone involved. I think that was one thing our Budget Committee is going to take a further look at.

There continues to be the growth on the Federal side and not a shirking, but a shrinking of participation, where possible, by States, and I can understand that. We are thinking down the road next year. Maybe the States ought to pick up, not maybe this program, but some of the other programs, a little heavier burden.

Mr. FELTNER. It is only a natural reaction, Mr. Dole, that a State, if it feels the Federal Government will pay it, it is not about to do it itself. I think that is a natural reaction.

Senator DOLE. Well, you can bring it down right to the local level. If you can go out and advocate a program that does not cost anything you are more apt to be successful than if you advocate one that may cost something.

Mr. FELTNER. Right.

Senator McGOVERN. Mr. Feltner, just one final question on another matter since it is within your division there at Agriculture.

The Secretary said before this committee that he was going to give us a food stamp study by April 1. I think that was on a motion by you, Senator Dole, that that study be made. April 1 has come and gone. Do you have any idea when we are going to see that study?

Mr. FELTNER. I cannot give you an exact date, Mr. Chairman, as to when it will be actually submitted to the Congress. We have completed most of our work on the study. It is currently being examined in other agencies of the administration, and we are anxiously looking forward to submitting that proposal to you. I think you will find in the report recommendations for change. I think you will find it will be a very useful report.

Senator DOLE. You might tell the Secretary to spend less time figuring out why we ought to veto the Farm bill and more time on the food stamp study.

Mr. FELTNER. I might just comment here that we promised to have it out of the Department by April 1, and we did. We beat that deadline by several days.

Senator McGOVERN. Thank you very much, Mr. Feltner.

Mr. FELTNER. Thank you.

[Responses of Mr. Feltner to questions submitted by Senator McGovern, subsequent to the hearing of April 22, 1975]

Question. What is your outlook for agricultural productivity in fiscal year 1976 thru 1978?

Answer, the outlook for the agricultural sector of the economy in fiscal year 1976 thru 1978 appears to be excellent. The USDA program advocating freedom from acreage controls coupled with an expected reasonable rate of return will go a long way toward assuring plentiful supplies of agricultural commodities for both domestic and foreign demand.

Question. A March report of the Economic Research Service indicates: "Substantial economics of scale exist in the procurement between the smallest and largest school systems. . . . Given the size of food purchases involved, a potential exists for saving the Nation's schools several hundred million dollars by more effective procurement practices". In essence, the medium size school district pays 7.2 percent more than larger school districts or USDA for an equivalent basket of food.

A. What are your views on USDA's ability to influence these savings? Answer. We can provide leadership in this area and help school-systems to purchase food more efficiently. The report indicated it is the smaller school systems those with less than 10,000 students that need assistance. We have

launched a program to expand cooperative food buying among several school districts and, where practical, on a Statewide basis. There are a number of cooperative food buying programs now in existence, in Michigan, Florida, Kansas, and Washington State to list a few. School districts are reporting savings that range from 5 percent to 20 percent by purchasing cooperatively with other districts. The campaign by Food & Nutrition Service to encourage more group purchasing of food by schools is well underway and the outlook is promising. Question. Would you consider an expansion of the commodity distribution program to result in a lower overall program cost? If so, to what extent?

Answer. We do not believe it would be wise to expand the commodity program, nor to increase the per lunch assistance in commodities beyond the present escalator. It is doubtful there would be much, if any savings. This level of assistance will go from 10 cents per meal in FY 1975 to 11 cents in 1976. Moreover, additional levels of commodity assistance could be disruptive to the price structure of basic foodstuffs on the open market and could put too much strain on the refrigerated and dry storage spaces in the schools.

Question. Within current commodity distribution levels: Should emphasis be placed on the support of small and medium size school districts?

Answer. We believe such a distinction is unnecessary. The smaller districts can purchase as cheaply as the larger districts if they combine their orders with other districts. Cooperative buying encourages more efficient operation. As a school superintendent in Kansas stated “Cooperative purchasing requires more efficiency on the part of the cafeteria employees because they must plan the meals in advance and place their orders in advance. This advance planning is causing more efficiency in food purchasing, food usage and labor assignments." Question. The goal of the National School Lunch Act, which this committee has always supported is "to protect the health of the nation's school children.” Does your block grant proposal change this thrust, basically, so that it would read "to protect the health of some of our nation's school children?"

Answer. No, the basic concept of the comprehensive child food assistance program would be based on policies to decentralize authority to the States, simplify grants-in-aid, permit State and local agencies and citizens to design local programs responsive to local needs, and charge the Federal taxpayer only for helping those who need help without paying for assistance for those who don't need subsidies. A shift in Federal emphasis to the needy would not require the States to stop support of non-needy children, if they feel this to be of sufficient high priority (in terms of total State priorities and resources) to be continued. States would be free to subsidize non-poor children through school lunches, etc., either from local non-Federal tax revenues, or from Federal General Revenue Sharing Grants to States.

Question. What has happened in the lunch program to make you want to so drastically change its nature and scope?

Answer. The lunch program is representative of what has occurred in much of the Federal government domestic assistance programs. The multiplicity of Child Nutrition legislation has resulted in an exceedingly complex system of overlapping programs that make poor use of the taxpayer dollar by providing unneeded subsidies.

Question. What consultation have you done with PTA's or health professionals, or teachers, in reshaping the lunch program.

Answer. The urgent need to control increasing costs and program proliferation has limited the time available to allow participation by local people in the actual structuring of the Block Grant. However, block grant was developed and proposed in response to the need to reduce administrative complexity and overlapping programs at the Federal, state, and local levels. Local officials are affected most by the accompanying red tape. Their concerns have been expressed and duly noted. Block grant is a way to reduce the administration burden imposed by the current program.

Question. What community inupt have you had? I ask this because from all I hear our Child Nutrition programs are a huge success, and if anything, need to be expanded, not cut back?

Answer. As I have stated, the long history of community concern with the excessive administrative burden imposed by the current Child Nutrition programs was a prime consideration in proposing block grant. The proposed Child Food Assistance Act is not intended to cut back programs. It is offered as a betfer alternative to help poor children obtain adequate nutrition in a more costeffective way.

Question. What are your views on the participation by non-needy children? Answer. There could be little significant change in participation by non-needy children should State and local authorities at their option choose to continue subsidies for paid meals. They will have sufficient latitude to tailor this individual program to meet local community needs.

Question. Do you consider their participation to have a significant economie impact on program costs?

Answer. As indicated in the Comprehensive Study of the school lunch program, their participation apparently does have an effect on the economics of program costs. However as pointed out in the answer to the previous question, there could be little significant change in overali participation of non-needy children under the proposed block grant approach.

Question. Isn't it true that the paying student has been economically and politically, the backbone of the lunch program in the past?

Answer. Although this was probably true in the past, it is not necessarily so today, the Federal share of program funding has been steadily increasing from 23.9% of total program funding in 1969 to approximately 43% in 1974. While the amount contributed by paying student has declined from 52.3% to 34.9%. With regard to political support, paying students and their parents will be able to make their views known to their state legislative bodies, who would be more knowledgeable of, and sensitive to local needs and conditions.

Question. What would you recommend to a local school district which is trying to break even in its lunch program, after you withdraw all support for middleincome children?

Answer. I would recommend the local school district maximize participation for as many children as possible by instituting the most desirable and acceptable program based upon local needs. As indicated in the Comprehensive Study per meal costs are directly affected by increases or decreases in program participation. I would also recommend that a concentrated effort be made to assure that a fair share of local non-Federal tax revenues or Federal General Revenue Sharing Grants be channeled for use in the program.

Question. All I can assume is that, over just a few years, these children will drop out of the program entirely?

Answer. The assumption that all of the paying children will discontinue participation is not valid. If an attractive program is offered which maximizes participation and adequate State and local tax support is provided, we believe that a viable program for paying children as well as for needy children is not only possible but probable.

Question. The Department's recent "Comprehensive Study of Child Nutrition Programs" compared four alternatives against the present school lunch program. One alternative, the "Poverty Program," considered federal reimbursement for Free Meals Only. It seems to me that this is the present block grant proposal. As you must know, your own report showed this approach to be the most costly. per meal, of any of the alternatives studied. Why then would you now propose the costliest way to feed all schoolchildren a nutritious meal?

Answer. The Comprehensive Study includes hypothetical assumptions based upon definite sets of circumstances. That is if certain happening were held constant then we could predict the outcome to be reflected by other influences. The assumption in the study considered a drop in participation by paying children if the price were increased. Under the block grant approach, we do not believe that such an increase is necessarily expected. Increased State and local support for the program would alter the conclusion furnished in the Comprehensive Study. Question. Also, of all alternatives studied by USDA, feeding just low income children is found the least effective in reaching nutritionally needy. In the past year has the Department obtained additional evidence on the nutritional status of schoolchildren which will invalidate last year's report? If so, can you explain the significance of this information? If not, how can you offer an alternative determined to be the least efficient, both economically and nutritionally?

Answer. During the past year, the Department has obtained additional cata pertaining to the nutritional status of school children. This information was contained in the Preliminary Findings of the First Health and Nutrition Eramination Survey, United States, 1971-1972: released by DHEW January. 1974. This study was designed to assess the nutritional status of the U.S. population; therefore, the effect of food assistance programs cannot be identified. Some of the preliminary data indicate that the income group below the poverty level is more in need of food than the income group above poverty level, as demonstrated in this table which I will insert for the record.

PERCENT OF PERSONS AGED 12 TO 17 YEARS WITH LOW BIOCHEMICAL VALUES 1-ACCORDING TO INCOME LEVELS?

Low biochemical values. The low points are used to indicate the prevalence for groups who are more likely to be at risk of developing nutritional deficiency diseases.

2 Income levels. Income status was determined by the poverty income ratio. Poverty statistics were based on the poverty index developed by the Social Security Administration in 1964.

Question. Mr. Feltner. A March report from USDA's Economic Research Service indicates that substantial economics of scale exist in the procurement between the smallest and largest school systems, and that when USDA purchases commodities and donates them to schools, the small and medium size school districts save millions of dollars. Yet, you propose to eliminate the commodity donation program. I'm curious, in light of your own study, what can be gained from such a move?

Answer. Due to the phasing out of the Food Distribution Program to needy families the purchasing, testing and administrative support apparatus has concentrated on the commodities to school program. An estimated 10 million dollars. per year could be saved by making cash in lieu of commodities available to all schools. Small schools could use their cash to purchase cooperatively with other districts. Cash in lieu of commodities has been operating in Kansas during the current year. A recent trip report indicates the school personnel are unanimous in their preference of cash over commodities. USDA has implemented a promis-ing program to expand cooperative purchasing by the schools for their food service operations.

Question. In light of the facts contained in this commodity study, would you consider an expansion of the commodity distribution program, considering your study shows this would lower overall program costs?

Answer. We do not believe it would be wise to increase the level of commodity support for schools at this time. As you know, there is an annual CPI escalator on the per meal support. Assistance will increase from 10 cents per lunch in FY 1975 to as much as 11.25 cents per lunch in FY 1976. Additional levels of commodity assistance could disrupt the market price structure of these basic foods. Larger shipments of donated food to schools could seriously overburden the refrigerator and the dry storage space of these schools.

Question. What do you consider the most prevalent cause of nutritional deficiency in the nation? Is it primarily due to a lack of "food buying power" or is it caused by poor selection of available foodstuffs?

Answer. For the most part nutritional deficiency in the United States can be directly attributed to the poor selection of available foodstuffs. The general availability of the Food Stamp and Child Nutrition Programs has eliminated lack of buying power as a main cause of inadequate diets for most Americans. Question. Studies indicate that, year to year, a large proportion of the poor are not "poor" the following year. This change of status from “poor" to "nonpoor" is not merely at the margin of a "Poverty Index" of 1. In fact the shift is about one "Poverty Index" unit for a large percent of the families.

Answer. According to the Bureau of the Census, there are indeed indications of low-income population movements to above the poverty level each year. But there are also indications that an equal proportion of the population moves below the poverty level and that the shifts offset each other. The Census Bureau cautions that their population income reports are based on a sample of approximately 50,000 households and that low-income data to large sampling errors. The Census Bureau has no data to verify the statement concerning a shift of "one poverty unit for a large percent of the families."

Question. Would you expect similar findings from a survey of free lunch participants?

Answer. It is reasonable to assume that there is some movement from "poor” to "nonpoor" status among school children, but the Department has never studied such a shift. Program statistics show, however, that there have been increasing

numbers of needy children participating in free and reduced-price lunches—from 3.9 million in 1969 to an estimated 10 million in 1975.

Question. The Department's Free Lunch program is based on an economie need. In your opinion: What proportion of "nutritionally needy" children are from households excluded from participation?

Answer. USDA's National School Lunch Program is not considered a "free lunch program." It is available to all children in participating schools. Those children who are eligible to receive free and reduced-price lunches may receive them. However, children from nonpoor families are expected to pay. These paid lunches are also subsidized by the program in the form of cash and donated food. Current average Federal subsidization for paid lunches is 11.75 cents in cash and 10 cents in donated food. The Department has no currently conclusive information on the number of nonpoor "nutritionally needy" children. A few carefully designed studies have been conducted in the past to measure the impact of food programs on the nutritional status of participating children. In addition, a 1965–66 USDA study covering 7,500 nationally represented households showed that 13 percent of households with $5,000 annual income or above had poor diets (less than two-thirds of the RDA for all seven nutrients). A New York State study of 573 students at higher income levels reported that 26 percent were nutritionally needy, while 36 percent of the 167 economically needy children were found to be nutritionally needy.

Question. Since studies indicate nutritional problems in school age children who are ecomically non-needy: How will termination of their assistance in the block grant contributed to the goal of the National School, Lunch Act-"to protect the health of all the nation's school children"?

Answer. It need not be expected that the block grant would have any effect upon the participation of non-needy children. It is expected that under the block grant, States and local agencies will have the latitude to design local programs responsive to local needs. Such programs established by local citizens would command the necessary priority for local non-Federal tax revenues to continue to meet the needs of non-poor children.

Question. Participation in the "free lunch" section of N.S.L.P. greatly exceeds other areas. Will you give us your opinion on how this interacts with nutrition objectives and program economics?

Answer. Beginning in 1962 with enactment of P.L. 87-823, the Congress. through the addition of Section 11 of the National School Lunch Act, recognized the need for Federal assistance in the funding of free lunches for needy children. The Congress has continued to emphasize this need and has greatly strengthened this facet of the program by providing administrative direction and increased funding. Such emphasis has resulted in a tremendous growth in the number of needy children being reached with free lunches.

Question. What are your views on the health and nutrition of U.S. school children and how will the new block grant concept improve the health and nutrition of all the nation's school children?

Answer. Some studies have indicated that the incidence of nutritional need is related to economic need. However, this is, at best, an imperfect relationship. Obesity and dental caries are the most common nutrition related problems among American school children. These disorders result from poor nutrient balance rather than inadequate dietary intake and affect large numbers of non-needy as well as needy children. Since the Type A lunch provides a balanced meal on a routine bases, it probably has some affect in combating the temptation for children to indulge in foods high in sugars and fats.

The block grant concept does not restrict the availability of a school food service program to non-needy children. Indeed, some form of school feeding program would probably be the most practical vehicle, in many cases, for providing nutritional assistance for needy children under the block grant. Non-needy children could eat the same meals as the needy children, if they paid the full price or if State and local governments desired to subsidize the program. For example, the State of Hawaii provides a substantial contribution to the current school Junch program. This enables non-needy Hawaii youngsters to purchase a school lunch at a price far below its actual cost.

The block grant concept establishes priorities. Since needy children are unable to afford a balanced lunch on a routine bases, it takes care of them first. As a matter of fact, the block grant would provide more assistance to needy children than the current nutrition programs combined. Since non-needy children are able