rently reaches 7,200 families. The Kentucky 4-H program has reached over 18,000 youths regarding nutrition during the past six month period through a program utilizing over 2,000 volunteer leaders. And 4-H Mulligan Stew, a nutrition program carried out over Kentucky Educational Television, reached 53,000 Kentucky fifth graders last year.

The programs and efforts I have mentioned are important in decreasing the number of malnourished children, the number of birth defects due to malnutrition and the rate of mental retardation due to malnutrition. The benefits of these programs are of both a preventative nature and helpful in remedying an existing condition.

Our children are our greatest asset and their present welfare must be of our utmost concern. I feel the long-range benefits of child nutrition programs are far too valuable to be discontinued.

Senator MCGOVERN. Our first witness is the Assistant Secretary of Agriculture for Marketing and Consumer Services, Mr. Feltner. We welcome you to the committee, Mr. Feltner. We are interested in your testimony.

STATEMENT OF RICHARD L. FELTNER, ASSISTANT SECRETARY FOR MARKETING AND CONSUMER SERVICES, U.S. DEPARTMENT OF AGRICULTURE

Mr. FELTNER. Thank you, Mr. Chairman and Senator Dole. We have submitted to you our prepared statement. Rather than read the entire statement, with your permission I would like to highlight it for you at this point, and then move to questions.

We do welcome this opportunity to participate in this hearing today on these various legislative proposals relating to Federal-State child nutrition programs.

The first thing I would like to do is discuss the child nutrition proposal that was contained in President Ford's budget for fiscal year 1976. The block grant approach, as it has become known, would increase Federal assistance to provide adequate nutrition for needy children, including needy infants and would at the same time serve as a means to reduce Federal costs, so there actually are two major factors here: trying to increase the assistance available to those who are truly needy, and also trying to reduce Federal costs.

The proposed legislation, officially known as the Child Food Assistance Act of 1975, would substitute one annual consolidated appropriation for all of the existing child nutrition funding that is now in effect. This proposal to substitute a single program for the current set of child nutrition programs is being made to assure that the States can provide the equivalent of a free meal to every needy child.

Estimates indicate that almost 700,000 needy children receive no program benefits currently because present programs are not available to them.

The administration's proposal would more than double current benefits for needy children by providing substantial increases in reimbursements for meals served for 1 year, rather than just during the school term. It would give the States, in addition, the flexibility of designing a feeding program tailored to the local conditions, either on a statewide basis or local areas within the State.

The USDA's budget for the current child nutrition programs, if these were extended in their present form, would be approximately $2.4 billion in fiscal 1976; in contrast to that, the estimated cost of the

block grant proposal for fiscal 1976 would be approximately $1.7 billion, a savings of almost $700 million for the year. This would amount to savings over the next 5 years of about $4 billion, a very significant amount.

Under this approach, the Secretary would establish annually a national daily reimbursement rate which would cover the projected cost of providing a meal or food which meets one-third of the daily recommended dietary allowance for a child on a year-round basis. For fiscal 1976 this proposal would provide for a national rate of reimbursement of 90 cents for this one-third RDA. This rate is consistent with the Department's estimates of the cost of providing this one-third RDA during that year.

States would be responsible for designing a feeding program tailored to provide specifically for the needs of poor children in the State, with a great amount of latitude available to them in exercising that responsibility to adapt these programs to local conditions. States would develop plans to provide free meals to poor children in schools and institutions, utilizing the most appropriate type of meal or combination of meals or snacks and/or milk, or would provide food directly to needy children not in schools or institutions.

The State each year would receive enough funds to equal the national daily reimbursement rate times the number of needy children certified by the Governor as having been served meals or provided food.

This new approach would discontinue the Federal cash support now given for lunches to nonneedy children. The States could continue, of course, to support nonneedy children if they feel such support should be continued. The support for nonneedy children would have to come from States or local sources or from other Federal sources that could be used for that purpose.

Eliminating Federal subsidies to the nonneedy would provide sufficient Federal funds for States to increase benefits to all needy children. In fact, the difference between the costs of the block grant approach and what we project the present programs would cost is about equivalent to the amount that is now spent in subsidizing meals for nonneedy children.

Senator McGOVERN. What is that figure, roughly?

Mr. FELTNER. Roughly $700 million.

Senator McGOVERN. So the administration's proposal, if it works out the way you plan, would save approximately $700 million from what you project to be the cost of the nutrition programs in fiscal year 1976?

Mr. FELTNER. That is correct. Mr. Chairman.

Again, in the area of flexibility the States could operate year-round programs during school periods only in some combination. They could have, if they wish to continue type A lunch programs. If they could do this, they could have breakfast programs. They could have a WICtype program. They could have a supplemental milk program, or any other suitable nutritional combination of meals that are responsive to the local needs.

A National Advisory Committee would be established to advise the Secretary of Agriculture on program administration and would require periodic evaluation of the effectiveness of the grants to the

States in achieving the elimination of poverty-caused hunger among children, and of course that is what we are all interested in doing. That is what I think the objective of all of us is.

On the matter of commodities, something that annually receives a great deal of discussion, the block grant proposal would not repeal section 32 or section 416 authorities. The Secretary could, at his discretion, continue to purchase non-price-supported surplus commodities or to take other actions to achieve farm price objectives as necessary and donate these commodities to the States, so this could continue under the block grant approach.

In fact, we have budgeted some commodities for fiscal 1976. The block grant proposal we see as a sound alternative to continued escalation of the present array of nutritional programs.

I want to emphasize that we feel in the administration and certainly in the Department of Agriculture that each one of the programs that we have that have been designed by the Congress and implemented, each one of them taken by itself serves a worthwhile objective-no question about that. Taken together, however, they represent a group of programs which has grown up in a largely piecemeal and we feel uncoordinated fashion which in many instances overlap with other assistance programs.

That is why we feel that the time is right for you in the Congress and those of us in the executive branch to take a close look at the package as a whole in terms of certain basic questions.

One of these questions is the growth rate. What are the future cost prospects unless we are able to set some sort of reasonable limits on uncontrolled growth?

The second question is to what extent are these rapidly escalating Federal costs disproportionately subsidizing those who do not need subsidies, while many needy children remain unassisted? I mentioned a moment ago we estimate that there are approximately 700,000 needy children who are not receiving assistance at the present time, while many children who are not defined as needy are receiving subsidized help.

Third, to what extent do these programs overlap and duplicate the benefits available through other assistance programs?

And finally, what are the available options for a system to remedy the failings and direct the assistance to where it is most needed?

On the matter of growth, President Ford addressed all of these fundamental issues actually in his February 3 budget message to the Congress. He said:

Tremendous growth of our domestic assistance programs in recent years have on the whole been commendable.

But when he went ahead and pointed out that unless we are able to rationalize and streamline these programs, the costs would become insupportably heavy for the American taxpayers to bear, and I am sure we are all concerned about that.

Similar concerns, of course, have been reflected in the Congress by the passage of the Budget Reform Act under which the Congress is establishing machinery to exercise greater control in the coordination of Federal spending.

I mentioned four questions. Let me elaborate each of those just briefly, and then I will be closing. The first question of where we are

headed in the child nutrition programs in terms of cost, I mentioned earlier that we project a simple extension of the existing programs would cost approximately $2.4 billion in fiscal 1976. By 1980, these costs would be over $3 billion.

President Ford pointed out in his budget message that if domestic assistance programs, which certainly these programs are, continued to grow at the rate they have been over the past two decades, Government spending would advance to over half of our national output.

The second question: we estimate, as I indicated earlier, that about 700,000 needy children receive no program benefits because present programs are not available to them. With the exception of about 1.7 million needy children who benefit from the summer feeding program, most needy children are not reached in the summer months at all, and again, while all of this is going on, we are continuing to subsidize children who are not classified as needy.

On the question of program overlap, a recent national survey of food stamp recipients was conducted. Some interesting very revealing statistics come out of that. Thirty-eight percent of those families surveyed had children participating in the school lunch program. Nearly 7 percent had youngsters getting school breakfasts. Two-and-a-half percent got special food service benefits, and 212 percent were getting supplemental food programs.

Of these same households surveyed, one-third were receiving benefits from four or more Federal assistance programs. These results I think suggest the desirability of some integration of these activities into a coordinated package of some type of public assistance that will encourage more equitable sharing of benefits among the people who genuinely need them.

The final question that I raised is what are the options? We of course feel that the best option for us to follow at this point is the implementation of the block grant approach. If we do implement the block grant approach, we are aware that we have a summer feeding program that now ends on June 30, 1975. We are prepared to accept the measure that is currently pending in Congress to extend the summer feeding program through the summer. The program is already authorized and funded for a third of the summer, and obviously it would be disruptive to make major changes in midseason.

Finally, just in summarizing we want to insure that the program concentrates food assistance on needy children, those whose more urgent needs merit highest priority. We think that this program will also help to decentralize Government operations and share more decisionmaking power with the States governments.

Thank you, Mr. Chairman. I appreciate this opportunity to go through this with you. We are now ready to answer any questions that you may have.

I have with me here Mr. Ed Hekman who is Administrator of the Food and Nutrition Service and Mr. Jerry Boling, also from the Food and Nutrition Service.

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

Has the administration to date actually proposed legislation to implement the block grant proposal?

Mr. FELTNER. No, sir, The legislation has not actually been sent forward to the Congress.

Senator McGOVERN. No one has introduced such a proposal in either the House or the Senate to your knowledge?

Mr. FELTNER. No, they have not to my knowledge.

Senator MCGOVERN. When do you think that could be anticipated? Mr. FELTNER. We would hope it would be very shortly. I cannot give you an exact date. I am sorry on that. We have spent a great deal of time in the past several weeks conferring with a number of individuals and groups. Senator Talmadge, for example, had asked that we get the advice of our National Advisory Council on Child Nutrition that adrises us on child nutrition programs in the Department. We have done that.

Senator MCGOVERN. I think the problem we are up against if this program is going to be examined in detail-and I certainly hope it will be, and examined very critically-is that we are now at April 22, and the fiscal year expires on June 30. Many of these programs, as you know, will terminate then if we do not have alternative arrangements worked out.

Mr. FELTNER. Yes, that is certainly true.

Senator McGOVERN. Mr. Feltner, when you talk about the adminis tration's block grant proposal reducing the Federal cost of these nutritional programs by $700 million, that is really just another way of saying the Federal Government is going to invest $700 million less in child nutrition, is it not?

Mr. FELTNER. Yes, that is correct. There would be that many fewer dollars actually going into child nutrition.

Senator MCGOVERN. Who is going to pay the price for that? Somebody is going to get hurt if you take $700 million out of what we are now doing for child nutrition. Who is going to get hurt?

Mr. FELTNER. Well, we feel that the amount of money that would be in a sense taken away from the program actually is the money that is now being used to subsidize participants in the various programs who are not defined as needy on an income basis. We feel certainly-and one of the things I want to emphasize is that under the block grants approach, States and local areas are still free to implement any kind of nutritional assistance programs that they wish.

Senator McGOVERN. You mean they can implement any kind of a program that they wish with $700 million less money?

Mr. FELTNER. We would hope that if these are programs that are high priority in their assessment, these funds would be made available on a State and/or local basis.

Senator McGOVERN. As I understand it, under the administration's proposal by providing funds for just the neediest children, aren't you eliminating the middle class from any help under the school lunch program? Wouldn't youngsters from middle-class families be expected to then pay a much higher cost for their lunch?

Now, what percentage increase in lunch costs could be anticipated as far as these students are concerned who henceforth would have to pay the full cost of the lunch?

Mr. FELTNER. Well, first I would point out that if the State and/or local governmental units provide this difference, there need not be any increase in the cost of the lunch because of the action-no increase would be necessitated by the action that we are taking. If the State or local governmental units did not make up any of the deficit, approximately 22 cents per lunch would be the estimated increase in cost.