schools. Also, the bill provides that, where it is necessary to initially divide a State's share of the total apportionment between public and private schools, the division should be based upon a participation factor. This was the method authorized in H.R. 13016, 86th Congress.

The bill provides that funds shall be apportioned among the States on the basis of the number of lunches served in each State in the preceding year, with the lower income States receiving relatively more per meal than average or aboveaverage-income States. This is accomplished by applying a value of 5 to each lunch served in average or above-average-income States and a higher value (up to 9) in below-average-income States. At any appropriation level, therefore, the minimum rate assigned to any State would be the rate assigned to the averageincome State. The minimum rate in any year would depend upon the amount made available for apportionment to the States in that year.

The bill provides for considerable administrative flexibility in developing the new program for especially needy schools. However, the percentage of free meals served to needy children would be one of the principal criteria for selecting the schools to receive such assistance.

The Bureau of the Budget advises that the enactment of this proposed legislation would be in accord with the President's program.

Sincerely yours,

ORVILLE L. FREEMAN, Secretary.

EXPLANATION OF THE BILL

This bill amends the National School Lunch Act in two principal respects: (1) It revises the method by which cash assistance funds are apportioned among the States and (2) it provides for a new appropriation authority in order to give additional assistance to especially needy schools. Most of these schools are located in economically depressed urban and rural areas.

The following is an explanation of each section of the bill:

Section 1: This section amends the appropriation authority in section 3 of the act. It adds a new authority to provide an additional annual appropriation to be used to help especially needy schools.

Section 2: This section revises the formula prescribed in section 4 of the act for the apportionment of cash assistance funds among the States.

The act now provides that the apportionment shall be based upon the number of school-age children in each State and the State's need for assistance as measured by its per capita income. This bill recognizes that the percentage of schoolchildren actually participating in the programs varies considerably from State to State.

The bill provides that the number of lunches meeting the minimum requirements of what is now referred to as the "type A" lunch, served in each State during the preceding year, shall be a basis for the apportionment of funds, rather than the number of school-age children residing in each State. The milk-only or "type C" lunch is excluded in counting the number of lunches served. Relative need is taken into account by applying a value of 5 to each lunch served in those States with average or above-average per capita incomes and by increasing that value (up to a maximum of 9) for States with a per capita income below the national average.

For the fiscal year 1962, a transition period is provided. In that year, one-half of the funds made available for apportionment would be apportioned on the basis of the method now in effect and one-half of the amount would be apportioned under the new method proposed in this bill.

Section 3: This section amends section 5 of the act to provide for the same method of apportioning funds made available for nonfood (equipment) assistance as is provided in this bill for cash food assistance. (Congress has not appropriated funds for nonfood assistance since 1946-47).

Section 4: This section revises the method outlined in section 10 of the act for dividing the State's share of the cash assistance funds between public and private schools, when such a division is necessary because State statutes prevent the State agency from disbursing funds to private schools. The bill provides that the division shall be made on the basis of the number of type A lunches served in each type of school in the preceding year, resulting in the same average per meal rate in both public and private schools.

Section 5: This section amends section 11 of the act which is concerned with miscellaneous requirements and definitions. Section 11 is redesignated as section 12 and the definitions are revised and enlarged to add to the clarity of the act. Section 6: This section adds a new provision to the act. It authorizes the Secretary of Agriculture to establish the terms and conditions under which additional assistance is to be provided to needy schools. Although the language provides considerable latitude to the Secretary in determining the schools eligible for such assistance, it is intended that the percentage of lunches served free to needy children should be one of the principal criteria.

STATEMENT OF HOWARD P. DAVIS, DEPUTY DIRECTOR, FOOD DISTRIBUTION DIVISION, AGRICULTURAL MARKETING SERVICE, DEPARTMENT OF AGRICULTURE

Mr. DAVIS. I am Howard P. Davis, Deputy Director of the Food Distribution Division, Agricultural Marketing Service, U.S. Department of Agriculture.

Our Division has the responsibility for administering the school lunch program among some other food distribution programs.

Mr. Chairman, I have a statement which I would like to make to the committee. I could read it or submit it in the interests of time, whichever you would prefer.

Mr. BAILEY. I would suggest that it be offered now for inclusion in the record in its entirety, and you take whatever time you need to touch the high points of your proposal.

(Mr. Davis' statement follows:)

STATEMENT OF HOWARD P. DAVIS, DEPUTY DIRECTOR, FOOD DISTRIBUTION DIVISION, AGRICULTURAL MARKETING SERVICE

We are pleased to appear again before this subcommittee to discuss changes in the National School Lunch Act. The changes proposed in the bill now under consideration meet with the approval of the Department.

At a hearing in August of last year before this subcommittee, we presented a detailed description of the origin and progress of the national school lunch program, together with a review of the principal feature of the enabling legislation. With that background, we feel we can begin today with a brief review of the current status of the program. (Also, in table I, selected program statistics are shown for 1946-47-the first year of operations under the act and for 1960-61.) Last year, 13.5 million children were participating in the program. This represents about 32 percent of the children enrolled in elementary and secondary schools. Almost 2.3 billion lunches were served to these children and 1 out of 10 of these lunches were served free or at reduced prices to children who could not afford to pay the full price of the lunch.

The total cost of the program last year was in excess of $1 billion. The Federal contribution-in cash and commodity food assistance-totaled $225 million. The remainder of the cost was financed by State and local sources, including the payments children made for their lunches.

The amount of Federal cash and commodity food assistance will be larger this year than in 1960-61. I should like to outline for you the amounts and sources of this assistance:

Appropriation:

Cash food assistance.

Fiscal year
1961-62
(millions)

$98.6

With respect to the additional $10 million made available for section 6 commodity purchases, the Congress authorized that up to $22 million can be used to inaugurate a program of special assistance to "needy schools which because of poor local economic conditions (1) have not been operating a school lunch program or (2) have been serving free or at substantially reduced prices at least 20 percent of the lunches to children."

The bill before this subcommittee is primarily concerned with a new formula for apportioning cash food assistance funds among the States and territories and with the addition of a new section to the National School Lunch Act which would authorize a program of special assistance for especially needy schools. Also involved is a new method of dividing a State's share of the total cash assistance funds between public and private schools in any State where State law is such as to make it necessary for the U.S. Department of Agriculture to administer the lunch program in private schools.

Federal cash assistance funds are used to help participating schools make local purchase of food for the lunch program,

Basically, the bill before this subcommittee is a modification of the two billssponsored by Chairman Bailey and Congressman Brademas-on which hearings were held last August. Following those hearings, Chairman Bailey requested the technical assistance of the Department in drafting a bill for the subcommittee which would accomplish the following:

1. Base the allocation formula on the rate of participation;

2. Provide for a minimum reimbursement rate for all States;

3. Set up a "need formula";

4. Revise the method of dividing funds between public and private schools; and 5. Add a new section or title providing for an additional authorization to assist those districts where, because of depressed economic conditions, it was necessary to serve an unusually large number of free lunches or where the price of the lunch is greatly reduced.

We felt the bill, as drafted for the subcommittee, was in line with the President's school lunch recommendations contained in his farm message to the Congress. It was subsequently submitted to the subcommittee with the approval of the Department and with advice from the Bureau of the Budget that the proposed legislation was in accord with the President's program. The Department did, however, recommend that a 1-year transition period be provided in order to assist in an orderly change between the old and new method of apportioning cash assistance funds. This provision is included in the bill now being considered. The National School Lunch Act now prescribes the formula under which these cash assistance funds shall be apportioned among the States and territories. The formula involves two factors: (1) The school-age population in each State (a measure of the maximum potential size of the program) and (2) the relationship of each State's per capita income to national per capita income (a measure of the relative need of the various States for Federal assistance). The act provides that States shall use these funds to reimburse participating schools on the basis of the number of lunches served. The maximum allowable payment of 9 cents for a type A lunch has been established by Department regulation. In 1961-62, it is estimated that the national average Federal cash assistance rate will be 4.2 cents.

Because the program has grown faster in some States than in others, in actual practice the average per-meal rates of cash assistance any State is able to provide to its participating schools tends to be related more to the rate of program growth than to need, as measured by the per capita income of a State. Thus, a higher income State with below average participation may be able to provide its schools with a higher average per-meal payment than can a lower income State with above average participation. The first column of table II illustrates the effect of the current formula. States are ranked by income, from the highest to the lowest, together with the probable average per-meal rates of assistance that can be provided to schools by the various States this school year.

Likewise, the act now provides that when a State's share of the cash assistance funds must be divided between the public and private schools, such a division be based upon the relative number of children attending school in each type of school within the State. Here, too, variations in the rate of school lunch growth can result in differences within a State in the average rate of payment than can be provided to public schools by the State and to private schools by the Department. (This is a problem, of course, only in those States where it is necessary for the Department to administer the program in private schools.)

The bill before the subcommittee would take differences in the rate of program growth into account by introducing the factor of participation into the apportionment formula. The cash assistance funds would be apportioned among the States on the basis of the number of type A lunches served in each State in the preceding year, with below-average income States receiving relatively more assistance per meal than average or above-average income States.

In the proposed formula, the lower income States would be provided with a larger per meal allowance by applying a value of 5 to each lunch served in average or above-average income States and a higher value (up to a maximum of 9) in below-average income States. In table II there is shown the resulting per meal payments that would have been provided for 1962 under a total cash assistance fund of $98.6 million, $118.6 million, and $139.9 million. (Table III shows the same data in dollar amounts.)

As table II illustrates, the minimum rate assigned to any State under the proposed formula is the rate assigned to the average income State. Also, the minimum rate in any year would depend upon the amount of funds made available by the Congress for apportionment to the States in that year. In 1961-62referring again to table II-the minimum rate would be 3.5 cents at $98.6 million, 4.2 cents at $118.6 million, and 5 cents at $139.9 million.

The same factor of participation as measured by the number of type A meals served in the preceding year-would be used to divide funds between public and private schools within a State whenever such a division is necessary. This would result in the same average per meal rates of assistance for public and private schools, in those States in which the program in private schools, because of State law, is directly administered by the U.S. Department of Agriculture.

We have, as previously indicated, provided for a 1-year transition from the old to the new apportionment formula. For the first year, half of the cash assistance funds would be apportioned under the old formula and half under the new method. For the second year, the new formula would be fully effective. Table IV shows the possible apportionments to States under the current and proposed formula during the transition period.

One additional technical change is provided in the bill. Currently, the income factor is measured by the per capita income figures for the latest year that can be certified by the Department of Commerce. This bill provides that a 3-year moving average of per capita shall be used in the apportionment formula, using the latest 3 years available from Commerce. This change will help eliminate abrupt year-to-year changes that now may occur in a State's share of the available funds and, thus, help in the more orderly development of the program.

We feel that these changes are desirable in order to correct inequities that have developed, since 1947, in the application of the present apportionment formula. Currently, those States which have been most successful in extending the program to more schools and to more children have found themselves in the position of having to spread available cash funds thinner and thinner as the number of type A lunches steadily increased. This necessarily has served to impede further development of the program. We believe the proposed formula will provide an equitable basis for the division of the amount of cash assistance funds that the Congress annually will make available under the regular appropriation process. The new section of the bill would authorize a specific annual appropriation under the act to provide special assistance to especially needy schools. This, of course, was one of the provisions originally requested by the subcommittee. We believe, also, that it would be a valuable addition to the enabling legislation.

We have become increasingly aware of the need to make some special provisions for those communities and those children that are least able to take advantage of the school lunch program. Under this bill, considerable administrative flexibility would be provided to the Department in developing the new program. We feel this is necessary. Also, we will gain considerable experience this year in administering the $2 million commodity fund that has been provided by the Congress for this purpose in the Department's 1961-62 appropriation bill.

Finally, the Department recommends a further addition to the bill in order to extend the school lunch program to American Samoa. Such an extension was recommended by the study mission to Eastern (American) Samoa, which was established pursuant to Senate Resolution 330, 86th Congress.

Almost 7,000 children are enrolled in elementary and secondary public and private schools in American Samoa. Development of the lunch program there may be slow and any rapid progress will probably depend upon the provision of

more adequate school facilities. Nonetheless, a beginning could be planned once Federal assistance was available.

Because of the absence of a participation record, special provision would need to be made for an allotment of funds to American Samoa under the proposed bill. It is recommended that for each of the 5 fiscal years following the revision in the formula, an initial reserve of up to $25,000 be established for American Samoa. Thereafter, American Samoa would receive funds based upon actual participation. We are prepared to submit to the subcommittee language for an appropriate change in the language of the bill to accomplish this recommendation.

We appreciate the opportunity to make this statement and will be glad to answer any questions you may have.

TABLE I.-Selected program statistics, fiscal years 1947 and 1961