Farmers Home Administration Act of 1961 to make grants to public and quasipublic bodies and non-profit associations for the construction of water and waste disposal facilities in rural areas and under section 306(a)(6) of the same Act to make grants for the preparation of official comprehensive plans for the development of water and sewer systems in rural areas.

SECTION 414-GREAT PLAINS CONSERVATION

Section 414 would prohibit the Secretary of Agriculture from entering into new contracts with producers under the Great Plains Conservation Program after December 31, 1971.

SECTION 415-RESOURCE CONSERVATION AND DEVELOPMENT

Section 415 prohibits assistance for those projects that have not been approved on or prior to December 31, 1971, under section 32e of Title III of the Bankhead-Jones Farm Tenant Act or sections 1-6 of the Soil Conservation Domestic Allotment Act, in a resource conservation and development plan developed in the program for land stabilization and land conservation authorized under sections 31 and 32 of Title III of the Bankhead-Jones Farm Tenant Act.

SECTION 416-EXTENSION SERVICE

Subsection (a) of section 416 provides that no payments to States shall be made for extension work as authorized by the Smith-Lever Act or the Agricultural Marketing Act of 1946 after December 31, 1971. It further provides that no payments shall be made by the Secretary after June 30, 1972 for retirement costs and to the Employees' Compensation Fund for State cooperative extension employees.

Since the District of Columbia is not included in the definition of "State", the effect of section 416 (a) would be to continue the statutory authority to finance the Federal share of the District of Columbia extension program.

Subsection (b) provides that equipment in the possession of the Land-Grant Universities which was purchased from funds made available for extension shall remain the property of the University.

Subsection (c) provides that the authority relating to penalty mail provisions for extension employees is repealed, effective December 31, 1971.

Subsection (d) provides for the retention by cooperative extension employees of coverage under the Injury Compensation Program, the Unemployment Compensation Program, the Federal Retirement Program, the Federal Employees' Group Life Insurance Program and the Federal Employees' Health Benefits program if the State continues an extension program. The State would be required to bear the employer's share of the costs of such programs after July 1, 1972.

SECTION 417-LAND STABILIZATION, CONSERVATION AND EROSION CONTROL Section 417 provides that no agreements under section 203 of the Appalachian Regional Development Act of 1965 would be entered into after Decembr 31, 1971.

SECTION 418-OUTSTANDING OBLIGATIONS

Subsection (a) of section 418 authorized the Secretary of Agriculture to carry out commitments, contracts, and other obligations entered into under programs or activities terminated by sections 410 through 417 and for which funds have been obligated on or before specified termination dates, and provides that in no event shall payments to States for extension work in fiscal year 1972 exceed 50 percent of the appropriations for such purposes.

Subsection (b) authorizes appropriations without fiscal year limitation necessary to carry out part C.

Subsection (c) provides that except for appropriations made pursuant to subsection (b), any funds appropriated for any program or activity terminated by sections 401-417 which would be used to finance operations which would be carried out if such program or activity had not been terminated and are not obligated on the date specified for such termination, shall be transferred to and merged with the funds authorized under section 201.

FACT SHEET-RURAL COMMUNITY DEVELOPMENT REVENUE SHARING ACT OF 1971

The purpose of the proposed Rural Community Development Special Revenue Sharing is to provide more effective assistance for rural community development, by making available funds to the States in a flexible manner.

RURAL DEVELOPMENT SHARING PAYMENTS

The bill authorizes the Secretary of Agriculture to make payments to States from appropriations made for rural development revenue sharing. The amount of payment which each State is entitled to receive is determined by a formula based upon the rural population, rural per capita income, and change in rural population of the State. The payments are made to the States by the Secretary at such intervals and in such installments as he may determine.

Funds available to each State under this program will at least equal funds which have been available to that State under the Federal programs converted to Rural Community Development special revenue sharing.

AUTHORIZED EXPENDITURES

Each State plus Puerto Rico, Virgin Islands, and Guam is entitled to expend its payments for any program or activity which directly benefits the residents of one or more rural areas within the State. Rural areas are defined as counties or similar political subdivisions which either have a population density of less than 100 persons per square mile or are not included within a Standard Metropolitan Statistical Area. Counties eligible for rural special revenue sharing expenditures exceed 2800.

Activities which may be supported with revenue sharing funds include all those conducted under the Federal programs converted to revenue sharing, plus such other activities as the State may designate-including direct financial incentives to private enterprise, agricultural, commercial, and industrial. The limiting factors are that the activities must benefit the State's rural residents as defined in the legislation and be spent according to the State Plan.

Title V regional commissions.

New money

Appalachian Regional Commission.

Economic Development Administration.

Resource conservation and development program..

Education: Cooperative Agricultural Extension Service...

Water and sewer: Rural water and waste disposal facilities grants..

Environment:

Rural environmental assistance program.

Forest service grants--

Great Plains conservation program.

Water bank program..

Tree planting assistance..

Total..

Millions

$179

38

278

227

4

149

42

140

21

11

10

1

1, 100

ADMINISTRATION

Initially, the Secretary of Agriculture will administer Rural Community Development Special Revenue Sharing, but it is contemplated that with the creation of the proposed Department of Community Development, the Department would administer both Rural and Urban Community Development Special Revenue Sharing.

PLANNING REQUIREMENTS

As a condition of receiving funds under the program, each State would be required to prepare and file with the Secretaries of Agriculture and HUD a statewide development plan outlining spending intentions for programs in metropolitan, suburban, smaller city and rural areas alike. The plans would not require Federal approval. The principal purpose is to focus state attention on the inter-relationship of urban and rural community development and encouraging a coordinated planning process within the State. The plans would be

districts throughout the State, composed of elected officials, and an advisory panel consisting of an elected official from each planning district. An alternative consultation process can be suggested by the State.

NO MATCHING REQUIREMENTS

There are no matching requirements for rural revenue sharing payments. Payments received by a State may be used to pay up to 100 percent of the cost of rural development programs and activities. Moreover, the payments may be used to meet matching share requirements of remaining Federal categorical grant programs which contribute to rural development.

NO MAINTENANCE OF EFFORT REQUIREMENTS

The legislation does not include a maintenance of effort requirement. The States are not therefore compelled to use rural revenue sharing payments for programs for which Federal funds incorporated in rural revenue sharing were previously used.

FISCAL CONTROL AND AUDIT

The legislation requires the States to use such accounting procedures and make such reports as the Secretary may require. The legislation also requires the Secretary to audit annually each State that receives funds under the Act and authorizes him to make recommendations concerning future rural development special revenue sharing legislation and programs.

CIVIL RIGHTS

The requirements of title VI of the Civil Rights Act of 1964 which prohibit discrimination in Federally-assisted programs would be made specifically applicable to rural revenue sharing payments.

Rural community development special revenue sharing payments, $1,086,467,106.

Discretionary funds, $13,532,894.

Full year rural community development special revenue sharing fund, $1,100 million.

Wyoming..

Puerto Rico.

Definition

RURAL COMMUNITY DEVELOPMENT REVENUE SHARING

HOLD HARMLESS BASE LINE

Each State's historical average share was calculated by adding together the obligations of the programs converted to Rural Community Development Special Revenue Sharing for that State during the period 1967-70 inclusive and dividing by the sum of obligations for these programs of the States during the same period.

Each State's "Hold Harmless" base line was calculated by multiplying the State's historical average times the obligations expected to be allocated to all of the States in 1971-$908,311,000. This procedure was used because on some programs the obligations to States are for specific projects rather than for support of services, and therefore, in some years certain States received large amounts of funds and in other years their funding is small. To pick any one year as a base line would penalize some States and give other States undue advantage. The averaging effect of the four-year period ameliorates any inequities.

Sources of Data

U.S. Department of Agriculture, Division of Budget and Finance. U.S. Department of Commerce, Division of Budget and Finance, Appalachian Regional Commission, Division of Budget and Finance.

Formula Used

RURAL COMMUNITY REVENUE SHARING ALLOCATION

Of the amounts appropriated for any fiscal year a minimum of eighty percent shall be apportioned by the Secretary of Agriculture among the States. One percent of the amount to be apportioned shall be divided among the States in equal proportion.

Each State shall be entitled to a portion of the remainder of the amount required to be apportioned, and that portion shall be determined as follows:

Each State shall receive an amount equal to fifty percent of the remainder multiplied by a fraction the numerator of which is the rural population of the State at the most recent point in time for which appropriate statistics are available and the denominator of which is the sum of the rural populations of all States at the same point in time;

Each State shall receive an amount equal to twenty-five percent of the remainder multiplied by a fraction the numerator of which is the average of per capita incomes of all the States at the most recent point in time for which appropriate statistics are available less the rural per capita income of the State at the same point in time, such difference to be multiplied by the rural population of the State at the same point in time, and the denominator of which is the sum of the positive differences for each State multiplied by that State's rural population: Provided, however, that if the rural per capita income of a State is greater than the average of per capita incomes of all the States, the differences stated above shall be considered zero; and

Each State shall receive an amount equal to twenty-five percent of the remainder multiplied by a fraction the numerator of which is the percentage change in population of all the States less the percentage change in rural population of the State, such difference to be multiplied by the rural population of the State during the most recent and appropriate time period for which statistics are available, and the denominator of which is the sum of the positive differences for each State multiplied by that State's rural population: Provided, however, that if the percent rate of change of rural population of a State during such period is greater than the percentage rate of change of the populations of all States during the same period, the differences stated above shall be considered zero.

Discretionary Allocations

An amount up to 20 percent of the fund may be allocated at the discretion of the Secretary of Agriculture.

NOTES

All computations and determinations by the Secretary of Agriculture are final and conclusive.

Senator HUMPHREY. Now, as I said earlier, members of the subcommittee would like to make a brief statement and I now want to yield to the ranking minority member, Senator Curtis.

STATEMENT OF HON. CARL T. CURTIS, A U.S. SENATOR FROM THE STATE OF NEBRASKA

Senator CURTIS. Thank you, Mr. Chairman.

I want to welcome our witnesses here. I am sure that they will be able to make a distinct contribution on this, the start of our hearings.