Senator ALLEN. I am talking about the bonus. Senator ALLEN. In other words, the cash would be Mr. BRYANT. I am talking about the fiscal year 1975. Mr. BRYANT. Correct. Senator ALLEN. And how much cash would be involved? Mr. BRYANT. About 40 percent over and beyond that would be cash. So you are talking about $60 million cash. Senator ALLEN. In other words, the total value of the food stamps, then, would be around $200 million? Mr. BRYANT. I think by the end of fiscal year 1975 we will reach that point. For instance, the cost of living adjustment that was made in January, if projected to an annual basis, would increase the program by about $25 million. Senator ALLEN. Going into the same matter I did there with Mr. McGrew, what is the sales tax rate there? Mr. BRYANT. Three cents, except in metro Atlanta, where there is an additional 1 cent which must be returned to the county to support the metropolitan transportation requirements. Senator ALLEN. So that it would be generating over $4 million on the bonus alone, then, in sales tax? Mr. BRYANT. By the end of 1975, yes. Senator ALLEN. $4 million. What about Georgia's participation in the overhead of those programs, what would that run? Mr. BRYANT. We have had our hands full in meeting the matching requirements for the certification cost of a program of this magnitude. In a recent projection that we made, the cost is about one-third Federal and one-third State and one-third county. Senator ALLEN. One-third of what? Mr. BRYANT. The total cost of the program. Senator ALLEN. What would that be? Mr. BRYANT. Operating on the present scale it would be a little over $2 million for each echelon of Government. (Federal, State, and county.) Senator ALLEN. In other words, you are really getting about $4 million in sales tax generated by this bonus. And your outlay for all overhead is only about $2 million? Mr. BRYANT. No, sir. For the State and counties the outlay would be well over $4 million. For instance Senator ALLEN. The States $2 million and counties $2 million and the Federal Government $2 million? Mr. BRYANT. It is because the State does not have the funds we have had to ask the counties to pay this. Senator ALLEN. Actually taking the Georgia State and political subdivisions then, and then treating the sales tax as coming into the State and local coffers, it would be about a stand-off, then, would it not, under the present situation? Mr. BRYANT. Right. On the other hand, it is very difficult to break with tradition. Sales taxes generally, even if they are not earmarked, are used for other purposes, and it is very difficult to get back in and get a part of it. As a matter of fact, our State budget was lower this year because of the energy crunch than it was a year ago; it was a reduced budget. Senator ALLEN. I understood-if I am wrong correct me-I understood that you were recommending that the Federal Government take over all of this overhead. Mr. BRYANT. No; we are recommending that the Federal Government participate on a matching basis, that is, on the same basis for all expenses. Senator ALLEN. In other words Mr. BRYANT. 62.5 across the board. Senator ALLEN. In other words, not just on selected items? Senator ALLEN. And you are satisfied with the 62.5 figure in the bill? Mr. BRYANT. Right. We would like to see more. But our recommendation is that the funds be provided across the board, the same as in other programs. Senator ALLEN. Is it a public policy of the State of Georgia to put as many-seek out and put on the food stamp rolls, so to speak, eligibility rolls, all Georgians who are eligible to receive food stamps? Mr. BRYANT. We have an effective outreach program, yes sir. Senator ALLEN. And how many people are involved in seeking out people to go on food stamps? Mr. BRYANT. I can't state this specifically, because we use the Department and the Family and Children Services' Volunteer Corps, and also through the other agencies such as the Red Cross Volunteers. And there is a concerted effort; for instance, in the greater Atlanta area here are approximately 30 agencies that participate in the outreach program. Senator ALLEN. As you add people, would the overhead go up in direct proportion to the increased number on food stamps, or would it go up as a larger rate or a lesser rate? Mr. BRYANT. I think that in Georgia, once we could obtain some Federal assistance to meet this administrative requirement, that we would reach a point where it would level off. We have been terribly understaffed in Georgia in this respect compared to other States. Senator ALLEN. If you add them, though, obviously it is going to increase the cost. But will it increase it greater than in direct proportion to the increase in numbers, or will it be at a lower rate than the direct increase in proportion? Mr. BRYANT. I think it would stabilize. I don't think it would increase in greater proportion, no sir. Senator ALLEN. For instance, if for each dollar that went out it took 5 cents in overhead that may be way off base-then if $2 went out it would go up 10 cents, is that right, it would just go up in direct proportion, you feel? Mr. BRYANT. That is correct. It wouldn't escalate. From a State staff point of view, I think as it went up the percentage of requirements probably would go down. Senator ALLEN. Thank you very much. Senator Dole? Senator DOLE. No questions. Senator ALLEN. It has been suggested that Mr. Steven Minter, Mr. Thomas H. Kilcoyne and Mr. Pat Kelly might come up and testify consecutively, and then have one series of questioning of them. Gentlemen, we appreciate your coming before the subcommittee to give us the benefit of your reviews and your expertise in this field. And we appreciate the fact that in the interest of conserving time agreed to testify as a panel. So we would ask you to proceed in such manner as you see fit. Mr. Minter, I suppose you will start off. STATEMENT OF STEVEN A. MINTER, COMMISSIONER, MASSACHUSETTS DEPARTMENT OF PUBLIC WELFARE, BOSTON, MASS. Mr. MINTER. Mr. Chairman, I am Steven A. Minter, commissioner of the Massachusetts Department of Public Welfare. And I appear here today on behalf of the State of Massachusetts. And I am also the vice chairman of the National Council of State Public Welfare Administrators, and appear on behalf of the National Council. We are here to urge this committee to approve Senate bill 2871. The bill, which may not appear on its face to be a major piece of legislation, is vital to the maintenance of adequate food supplement programs throughout the Nation. Section 4 of the bill authorizes the Secretary of Agriculture to reimburse State agencies for 62.5 percent of administrative costs of the food stamp program. Administrative costs include as you well know by now, eligible recipients, issuance, control and accounting for the food coupons, storage and protection of the coupons, outreach, and fair hearings. At the present time, USDA provides 66.5 percent reimbursement of selected costs associated with the food stamp program; the twothirds reimbursement is available for the determination of nonpublic assistance eligibility, for quality control, the appeals process, outreach, and sundry items such as travel, postage, and printing. The remaining costs must be borne totally by the States, and these include the cost of determining eligibility and certifying public assistance recipients, plus the costs connected to distribution and issuance. In short, the States pay 100 percent of the cost of the program's most expensive elements. What this means in my own State of Massachusetts is that the Federal Government pays 23 percent of the administrative costs of the food stamp program this year, while the States pays 77 percent. On the average, the States finance 72 percent of the administrative costs of the program. Now that the Congress, in Public Law 93-86, enacted on August 10 of last year, terminated the commodity distribution program as of July 1, 1974, and has mandated a nationwide food stamp program, the National Council of State Public Welfare Administrators believes it is appropriate for the Congress to recognize the necessity of increasing Federal financial participation in the administrative costs of the program. The States and the Federal Government share a commitment to provide the best and most extensive program possible to improve the nutrition levels of America's low-income citizens. But we believe that the States' ability to perate such a program is directly related to the availability of State and local moneys since the States must bear more than 70 percent of ad ministrative costs. Realistically, limited funds result in a limited program, which is not what the Congress has directed in Public Law 93-86. Expansion of the food stamp program places an added burden on the States, and we have yet to see any "revenue sharing" scheme in this area. The Commonwealth of Massachusetts happens to be a good illustration of the impact of the changeover from a mixed food stamp and commodity distribution program to a food stamp program only. Of the State's 351 cities and towns, we operate a food stamp program currently in only 36 communities. The commodity distribution program in Massachusetts has been one of the Nation's largest. In fiscal year 1974, with 37 communities involved, administrative expenses in the food stamp program are costing Massachusetts $587,144, while the Federal Government pays $178,503 toward the total cost. In fiscal year 1975, when we will operate the food stamp program statewide, the cost to Massachusetts for administrative costs will be $3.5 million, and the Department of Agriculture will contribute $1 million, unless the present reimbursement formula is changed. I don't think I have to tell you that the addition of $3 million to any State budget is no small item. Any costs projected for the coming year are in all probability quite low. It is especially difficult, in the midst of rising unemployment and continuing inflationary pressure, to estimate how many Americans will be turning to the food stamp program. The program is a logical recourse for low-income families trying to cope with evermounting food budgets; the price of food increased 20 percent nationally from February 1973 to February 1974. The administration noted in its fiscal year 1975 budget recommendations that higher eligibility standards and a higher bonus will have a profound impact on the food stamp program. The Agriculture Department estimates that 14.2 million Americans will be participating in the program at the end of the current fiscal year, and 15.8 million will be taking part 1 year later. An increase of this magnitude may have a staggering effect on the States' administrative expenditures. Each new family represents a certifying cost plus a twicemonthly transaction expense which, in Massachusetts, amounts to $1.06 per transaction. The Congress and the Federal Government set the boundaries of the food stamp program; the States cannot in fairness be expected to bear the fiscal consequences without added Federal help. The council recommends that your committee carry forward the intent of Congress, as expressed in the Agricultural and Consumer Protection Act of 1973, by increasing the Federal financial participation in administrative costs of the food stamp program as embodied in S. 2871. 32-911-74- -9 The council also endorses the provision in section 1 of the bill, which would permit the Secretary of Agriculture to continue commodity purchases for certain programs after July 1, 1974. This authority is essential to protect the commodity assistance now received by institutions such as schools, prisons, and mental hospitals, the food distributed in supplemental feeding programs for mothers and children, for certain day care centers, and in disaster relief programs. Mr. Chairman, I would delay any other comments until the others have had their opportunity to testify. Senator ALLEN. Thank you very much. You have given us a very fine analytical statement on the situation in Massachusetts. And I will ask a few questions later. But first we will hear from Mr. Kilcoyne, please. STATEMENT OF THOMAS H. KILCOYNE, DEPUTY COMMISSIONER, DIVISION OF INCOME MAINTENANCE, NEW YORK DEPARTMENT OF SOCIAL SERVICES, NEW YORK, N.Y. Mr. KILCOYNE. Thank you, Mr. Chairman. I am here on behalf of Commissioner Abe Lavine of the New York State Department of Social Services. The food stamp program in New York State is administered by our division of income maintenance. Mr. Pat Kelly and I have direct responsibility for the food stamp program. Mr. Chairman and members of the Senate Agriculture Committee. We are very pleased to have this opportunity to testify at this hearing in support of Senate bill 2871 as it would amend section 15 of the Food Stamp Act of 1964. The food stamp program became fully operational in New York City and the remaining 57 counties throughout the State in September 1970. In 1970-71, approximately 1 million persons in our State were beneficiaries of the program. In the calendar year 1973 this participation rate was approximately 1,250,000 persons. The administrative costs to institute this program statewide in 1970-71 amounted to $5 million. That figure covered all administrative costs for each of the 57 local departments of social services, the city of New York and New York State staff. Our State government, in its efforts to institute and assure the program's success, guaranteed by State law that all local administrative costs would be 100 percent reimbursable by New York State. In the Federal fiscal year 1973-July 1972-June 1973-the total identifiable administrative costs submitted by local departments for State reimbursement amounted to over $14 million. This indicates a critical increase of 280 percent in statewide administrative expenses during the 2-year period. We forecast that administrative expenses of program operation will be in excess of $25 million for Federal fiscal year 1975. At the present rate of reimbursement, we can expect to receive approximately $3,250,000 or 13 percent of these anticipated administrative costs of $25 million from the U.S. Department of Agriculture for Federal fiscal year 1975, with another |