and the State agencies are now taking steps to further improve operations. The provision of adequate time periods for inspecting and requesting property is a dominant factor in the success of the donation program. Efforts to speed up the total Federal property disposal process have at times resulted in procedures which retarded the donation program. We are pleased to report that agreements have been reached which provide adequate donation screening time for nonreported property and which minimize the conflict with activities of special interest to the Department of Defense. These improvements came about as a result of a request by the former chairman of this subcommittee that the Bureau of the Budget make a study of this matter, see appendix 4, p. 134. At the present time, the Department is very greatly concerned about the proposal to dispose of Department of Defense property under the exchange sales provisions of section 201 (c) of the act, see p. 77. Under this proposal, 69 categories of property would be set aside for sale, with the receipts from such sales deposited in special accounts for purchasing replacement items. Under this proposal, a large amount of property greatly needed by health, education, and civil defense agencies would be sold for a relatively small cash return. Items such as office machines, machine tools, and vehicles would no longer be available to the donation program. We are convinced that the continued use of such items by eligible institutions and the Federal agencies will return a far greater public benefit. Because of these considerations, we are pleased that the subcommittee is investigating this proposal. I would like to supplement this somewhat by indicating that in our judgment it would be pennywise and pound foolish to dispose of property in the manner proposed by the Department of Defense in this particular section. The value in the education and health and civil defense fields, and most notably in the educational field, is very apparent from the figures we have submitted and from more information we can furnish in which the committee might be interested. With the number of institutions which are benefiting, with the problems institutions are having in meeting some of their costs, with the problems of local taxation in the sense of difficulty of financing educational needs in particular, to dispose of the property under section 201(c) in these categories, the 69 listed, by sale, in order to realize a certain amount of cash, in comparison to disposing of it for these worthwhile purposes, would be pennywise and pound foolish in our judgment. We feel most strongly about it. LEGISLATIVE PROPOSALS The Department is supporting proposals to permit a limited extension of eligibility in the field of education. These proposals are designed to eliminate inequities in the present program and to take into account recent program developments. EDUCATIONAL TELEVISION STATIONS Under the present law, schools, school systems, colleges, and universities are eligible to receive surplus property, and such property is available for use in television stations owned and operated by these groups. With the growth of television as a teaching medium, educational television stations are being established which are not a part of a school or school system. It is recommended that the law be amended to provide eligibility for any tax-supported or nonprofit and tax-exempt educational television stations providing approved or accredited educational programs. PUBLIC LIBRARIES Under the present law, libraries operated by schools, school systems, colleges, and universities are eligible to receive donations of property while libraries not operated by these institutions but open to the public are not eligible. Since public libraries are in a very real sense an adjunct to the schools, as well as highly useful facilities for adult education, it is recommended that the law be amended to provide eligibility for them to receive donations of surplus property. SCHOOLS FOR THE PHYSICALLY HANDICAPPED AND SCHOOLS FOR THE MENTALLY RETARDED There are many special schools for the physically handicapped and the mentally retarded which cannot meet the academic standards required of the normal elementary and secondary schools. While it is recognized that such schools provide valuable educational and training programs, many of them cannot be found eligible under the present law. It is recommended that the law be amended to provide eligibility for schools of this type which meet generally accepted criteria for the specialized training and educational programs which they provide. I might say by way of supplementing this particular category, our program in the field of mentally retarded and physically handicapped is expanding with a great deal of additional emphasis placed on it. There are some problems unique to the particular field which make it difficult for financing, and this type of assistance is well warranted, both from the human standpoint of the individuals involved who are being offered the opportunity in the particular types of schools, as well as to the community because of the rehabilitation prospects for the individuals who are eligible to attend these types of schools. EDUCATIONAL ACTIVITIES OF SPECIAL INTEREST TO THE DEPARTMENT OF DEFENSE The Department has submitted a favorable report on a Department of Defense proposal to amend section 203 (j) (2) of the act, see appendix 5, p. 141. This proposal would continue the authority of the Secretary of Defense to give special consideration to schools conducting approved military training programs and to the Civil Air Patrol. His authority to designate other groups would be rescinded, and the four groups previously designated (Boy Scouts, Boys Clubs of America, Girl Scouts, Camp Fire Girls) would in the future be served by the Department and the State surplus property agencies in the same manner as other eligibles and without priority. OTHER LEGISLATION Bills have been introduced in the Congress which would extend eligibility for donations to many additional groups. It is proposed to extend eligibility to such diverse groups as public recreation agencies, public welfare agencies, volunteer firefighting organizations, orphanages, municipalities, fish and wildlife management activities, and others. The Department does not question the many worthy purposes served by the groups seeking eligibility. The Department has, however, submitted adverse reports on all proposals to extend eligibility to groups outside the fields of health, education, and civil defense, for the following reasons: (a) The volume of usable surplus property becoming available is not sufficient to meet the needs of present eligibles, and any substantial increase in the number of eligible groups would disperse the available property over such a wide area as to make the benefit to any one group very minimal. (b) Competition among many eligibles for common-use items. in short supply would also bring demands for a priorities system which would create overwhelming administrative problems and increased administrative costs. (c) Broadening the program beyond the fields of health, education, and civil defense would pose extreme problems of equity in determining which of the many worthy groups should be admitted. (d) The current national emphasis on health, education, and defense justifies the continued preference of present eligibles to receive surplus property. RELATIONSHIP TO OTHER DISPOSAL PROGRAMS In any evaluation of the surplus property donation program administered by this Department, it should be noted that there are additional avenues for transferring Federal property to other than Federal agencies. All of these transfer programs take precedence over donations for health, education, and civil defense. As noted in our comments on legislative proposals, surplus personal property under the control of the Department of Defense which is determined by the Secretary of Defense to be usable and necessary for educational activities which are of special interest to the armed services, may be donated directly for such activities. This provision has been broadly interpreted to include not only military schools and academies, but also Boy Scouts, Girl Scouts, Camp Fire Girls, Boys Clubs of America, and, most recently, the American National Red Cross. Also, under broad statutory authority for cooperative activities, and working in conjunction with the General Services Administration, the Department of Agriculture makes transfers of excess Federal property to State forest fire protection agencies and to soil conservation districts. Under similar authority, the Department of Interior makes transfers of excess property to State highway departments. All of these types of transfer take precedence over transfers for health, education, and civil defense, since this property may be withdrawn as excess prior to becoming surplus. Such transfers are reported and credited as Federal utilization. In addition, excess Federal property is acquired by the Agency for International Development and allocated to foreign projects which In addition to the statement, Mr. Chairman, there is attached a Mr. MONAGAN. That table will be made a part of the record as an DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE Personal property made available for distribution to public health and educational Mr. MONAGAN. Thank you, Mr. Secretary, for a very helpful statement. I gather from what you say that your feeling is that the program is operating reasonably well and it is performing a useful function but there are certain particulars in which you think it could be improved; is that a fair statement of your position? Mr. NESTINGEN. I think it is a fair statement. Yes, I do. Mr. MONAGAN. With reference to section 201(c) and the exchange sale proposal, as I understand it, the theory of that is that the Defense Department in effect would be able to dispose of existing property for cash and then acquire other similar property using the proceeds of sale but in practice is it your information that this actually works out in this way? Mr. NESTINGEN. That is apparently the rationale of the Department of Defense. May I say that with the property the Federal Government has and the volume that it does-and I have had some chance to see this at a local level of Government as a former mayorthat property which would be disposed of in that way would draw literally a minimal amount in the way of cash by way of sale. The amount credited to the Department of Defense would be fractional for the actual value of the property in the usable sense of the word and while some cash would be received, programs that are very worthwhile would be seriously hurt. The value to the taxpayer in the overall sense of the word is many times over in putting that property to use under the current program as compared to trying to realize a few cents in cash. Mr. MONAGAN. Who would be the people who would acquire this property, if you have an opinion or information on that? Mr. NESTINGEN. I am not well informed in this respect, but my suspicion is that it would be on a bid basis and private businessmen would be able to get the property, recondition it and sell it at a very comfortable margin of profit. Mr. MONAGAN. Secondhand dealers? Mr. NESTINGEN. I assume so. That would be the local source but the reconditioning and selling would be at a good profit to themselves. That is all fair to them but it is not as economical to the taxpayer to handle this property in this way. Mr. MONAGAN. In essence, you would be balancing the secondhand dealers against the current donees of the donable program, is that so? Mr. NESTINGEN. That sums it up in my judgment. Mr. MONAGAN. That really is the question that is raised here as between education, health, and charitable institutions who are presently benefiting by the program and these people who would resell, without any criticism of them, merely as providing a foundation of your opinion for us to go on Mr. NESTINGEN. That sums it up in my judgment. Mr. MONAGAN. With reference to the additional donees, of course, as you know, we have bills covering all sorts of different possible additional donees. As I get your testimony, you feel that an unrestricted increase would dilute the value of the program to those who are the beneficiaries at the present time? Mr. NESTINGEN. That is right. There are two points that I think might be made by general category. One is the three main programsthe program of health, education, and civil defense-which are all |