anything that knowingly will harm the nutrition of children from any income strata in this country. We recognize the necessity for good nutrition for a number of reasons, and we want to see that all children, those in school and those not in school, have adequate nutrition. There should be no question on that.

I think the difference of opinion comes in terms of how we are going to do it and who is going to pay for it. We are suggesting that it is a Federal obligation to see that those who are needy have adequate nutrition. We argue very strongly that it is a Federal responsibility to see that this is done. We are proposing a program here which we feel would do even much more than is being done now in order to take care of these needy children.

We also feel, however, that beyond those who are defined as needy, there are adequate resources, either family resources or State and local resources, or a combination of these resources, to enable children from these families to have adequate nutrition, and that they should not have to rely on the Federal Government to subsidize nutrition for those children.

Senator McGOVERN. The trouble with that is it draws in a very arbitrary standard. You chop that off at $1,500 for a family of four. That means a family which comes in with an income of $5,000 or $6,000 gets no help from any source; that it is cut off completely from any kind of Federal assistance.

I think, No. 1, that is not only going to result in a very sharp dropout rate in the number of children participating which obviously means a nutritional loss; I also suspect-I am not accusing you of this but I suspect that some of the people who thought up this idea had in mind that if we could eliminate the middle class from participation in this program, we would also eliminate much of the support for the program and make it more vulnerable to those who have never really believed in the school lunch program in the first place. I say I do not attribute that to you, but I am very skeptical of some of the people who are designing these proposals, because they have said very frankly that they do not want to see the Department heavily involved in feeding programs of this kind.

I hope the committee will take that into consideration when we evaluate these alternative possibilities. We have always had strong support across the United States for our school lunch program, primarily because of the nutritional value of it. It has never been viewed as a welfare program. It has been viewed as an important part of our educational and child development programs, and I hate to see it depart from that concept.

Senator Dole?

Senator DOLE. I just want to make one observation.

As I remember, in our Budget Committee hearings, we learned that in many cases the States are much better off from the standpoint of fiscal soundness, than the Federal Government.

I do not quarrel with what the Chairman says, but I want to keep pointing out that there is a limit. All we have is debt as far as the Federal Government is concerned. We may have total sympathy for every program and want to double it, treble it, quadruple it; but you also must consider at the same time where the economy is going and what is going to happen, not just to the middle class but to the poor

and to everyone involved. I think that was one thing our Budget Committee is going to take a further look at.

There continues to be the growth on the Federal side and not a shirking, but a shrinking of participation, where possible, by States, and I can understand that. We are thinking down the road next year. Maybe the States ought to pick up, not maybe this program, but some of the other programs, a little heavier burden.

Mr. FELTNER. It is only a natural reaction, Mr. Dole, that a State. if it feels the Federal Government will pay it, it is not about to do it itself. I think that is a natural reaction.

Senator DOLE. Well, you can bring it down right to the local level. If you can go out and advocate a program that does not cost anything you are more apt to be successful than if you advocate one that may cost something.

Mr. FELTNER. Right.

Senator MCGOVERN. Mr. Feltner, just one final question on another matter since it is within your division there at Agriculture.

The Secretary said before this committee that he was going to give us a food stamp study by April 1. I think that was on a motion by you, Senator Dole, that that study be made. April 1 has come and gone. Do you have any idea when we are going to see that study?

Mr. FELTNER. I cannot give you an exact date, Mr. Chairman, as to when it will be actually submitted to the Congress. We have completed most of our work on the study. It is currently being examined in other agencies of the administration, and we are anxiously looking forward to submitting that proposal to you. I think you will find in the report recommendations for change. I think you will find it will be a very useful report.

Senator DOLE. You might tell the Secretary to spend less time figuring out why we ought to veto the Farm bill and more time on the food stamp study.

Mr. FELTNER. I might just comment here that we promised to have it out of the Department by April 1, and we did. We beat that deadline by several days.

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

Mr. FELTNER. Thank you.

[Responses of Mr. Feltner to questions submitted by Senator McGovern, subsequent to the hearing of April 22, 1975]

Question. What is your outlook for agricultural productivity in fiscal year 1976 thru 1978?

Answer. the outlook for the agricultural sector of the economy in fiscal year 1976 thru 1978 appears to be excellent. The USDA program advocating freedom from acreage controls coupled with an expected reasonable rate of return will go a long way toward assuring plentiful supplies of agricultural commodities for both domestic and foreign demand.

Question. A March report of the Economic Research Service indicates: "Substantial economics of scale exist in the procurement between the smallest and largest school systems. . . . Given the size of food purchases involved, a potential exists for saving the Nation's schools several hundred million dollars by more effective procurement practices". In essence, the medium size school district pays 7.2 percent more than larger school districts or USDA for an equivalent basket of food.

A. What are your views on USDA's ability to influence these savings? Answer. We can provide leadership in this area and help school-systems to purchase food more efficiently. The report indicated it is the smaller school systems those with less than 10,000 students that need assistance. We have

launched a program to expand cooperative food buying among several school districts and, where practical, on a Statewide basis. There are a number of cooperative food buying programs now in existence, in Michigan, Florida, Kansas, and Washington State to list a few. School districts are reporting savings that range from 5 percent to 20 percent by purchasing cooperatively with other districts. The campaign by Food & Nutrition Service to encourage more group purchasing of food by schools is well underway and the outlook is promising. Question. Would you consider an expansion of the commodity distribution program to result in a lower overall program cost? If so, to what extent?

Answer. We do not believe it would be wise to expand the commodity program, nor to increase the per lunch assistance in commodities beyond the present escalator. It is doubtful there would be much, if any savings. This level of assistance will go from 10 cents per meal in FY 1975 to 11 cents in 1976. Moreover, additional levels of commodity assistance could be disruptive to the price structure of basic foodstuffs on the open market and could put too much strain on the refrigerated and dry storage spaces in the schools.

Question. Within current commodity distribution levels: Should emphasis be placed on the support of small and medium size school districts?

Answer. We believe such a distinction is unnecessary. The smaller districts can purchase as cheaply as the larger districts if they combine their orders with other districts. Cooperative buying encourages more efficient operation. As a school superintendent in Kansas stated "Cooperative purchasing requires more efficiency on the part of the cafeteria employees because they must plan the meals in advance and place their orders in advance. This advance planning is causing more efficiency in food purchasing, food usage and labor assignments." Question. The goal of the National School Lunch Act, which this committee has always supported is "to protect the health of the nation's school children." Does your block grant proposal change this thrust, basically, so that it would read "to protect the health of some of our nation's school children?"

Answer. No, the basic concept of the comprehensive child food assistance program would be based on policies to decentralize authority to the States, simplify grants-in-aid, permit State and local agencies and citizens to design local programs responsive to local needs, and charge the Federal taxpayer only for helping those who need help without paying for assistance for those who don't need subsidies. A shift in Federal emphasis to the needy would not require the States to stop support of non-needy children, if they feel this to be of sufficient high priority (in terms of total State priorities and resources) to be continued. States would be free to subsidize non-poor children through school lunches, etc., either from local non-Federal tax revenues, or from Federal General Revenue Sharing Grants to States.

Question. What has happened in the lunch program to make you want to so drastically change its nature and scope?

Answer. The lunch program is representative of what has occurred in much of the Federal government domestic assistance programs. The multiplicity of Child Nutrition legislation has resulted in an exceedingly complex system of overlapping programs that make poor use of the taxpayer dollar by providing unneeded subsidies.

Question. What consultation have you done with PTA's or health professionals, or teachers, in reshaping the lunch program.

Answer. The urgent need to control increasing costs and program proliferation has limited the time available to allow participation by local people in the actual structuring of the Block Grant. However, block grant was developed and proposed in response to the need to reduce administrative complexity and overlapping programs at the Federal, state, and local levels. Local officials are affected most by the accompanying red tape. Their concerns have been expressed and duly noted. Block grant is a way to reduce the administration burden imposed by the current program.

Question. What community inupt have you had? I ask this because from all I hear our Child Nutrition programs are a huge success, and if anything, need to be expanded, not cut back?

Answer. As I have stated, the long history of community concern with the excessive administrative burden imposed by the current Child Nutrition programs was a prime consideration in proposing block grant. The proposed Child Food Assistance Act is not intended to cut back programs. It is offered as a better alternative to help poor children obtain adequate nutrition in a more costeffective way.

Question. What are your views on the participation by non-needy children? Answer. There could be little significant change in participation by non-needy children should State and local authorities at their option choose to continue subsidies for paid meals. They will have sufficient latitude to tailor this individual program to meet local community needs.

Question. Do you consider their participation to have a significant economicimpact on program costs?

Answer. As indicated in the Comprehensive Study of the school lunch program, their participation apparently does have an effect on the economics of program costs. However as pointed out in the answer to the previous question, there could be little significant change in overall participation of non-needy children under the proposed block grant approach.

Question. Isn't it true that the paying student has been economically and politically, the backbone of the lunch program in the past?

Answer. Although this was probably true in the past, it is not necessarily so today, the Federal share of program funding has been steadily increasing from 23.9% of total program funding in 1969 to approximately 43% in 1974. While the amount contributed by paying student has declined from 52.3% to 34.9%. With regard to political support, paying students and their parents will be able to make their views known to their state legislative bodies, who would be more knowledgeable of, and sensitive to local needs and conditions.

Question. What would you recommend to a local school district which is trying to break even in its lunch program, after you withdraw all support for middleincome children?

Answer. I would recommend the local school district maximize participation. for as many children as possible by instituting the most desirable and acceptable program based upon local needs. As indicated in the Comprehensive Study per meal costs are directly affected by increases or decreases in program participation. I would also recommend that a concentrated effort be made to assure that a fair share of local non-Federal tax revenues or Federal General Revenue Sharing Grants be channeled for use in the program.

Question. All I can assume is that, over just a few years, these children will drop out of the program entirely?

Answer. The assumption that all of the paying children will discontinue participation is not valid. If an attractive program is offered which maximizes participation and adequate State and local tax support is provided, we believe that a viable program for paying children as well as for needy children is not only possible but probable.

Question. The Department's recent "Comprehensive Study of Child Nutrition Programs" compared four alternatives against the present school lunch program. One alternative, the "Poverty Program," considered federal reimbursement for Free Meals Only. It seems to me that this is the present block grant proposal. As you must know, your own report showed this approach to be the most costly, per meal, of any of the alternatives studied. Why then would you now proposethe costliest way to feed all schoolchildren a nutritious meal?

Answer. The Comprehensive Study includes hypothetical assumptions based upon definite sets of circumstances. That is if certain happening were held constant then we could predict the outcome to be reflected by other influences. The assumption in the study considered a drop in participation by paying children if the price were increased. Under the block grant approach, we do not believe that such an increase is necessarily expected. Increased State and local support for the program would alter the conclusion furnished in the Comprehensive Study. Question. Also, of all alternatives studied by USDA, feeding just low incomechildren is found the least effective in reaching nutritionally needy. In the past year has the Department obtained additional evidence on the nutritional status of schoolchildren which will invalidate last year's report? If so, can you explain the significance of this information? If not, how can you offer an alternative determined to be the least efficient, both economically and nutritionally?

Answer. During the past year, the Department has obtained additional data pertaining to the nutritional status of school children. This information was contained in the Preliminary Findings of the First Health and Nutrition Examination Survey, United States, 1971-1972: released by DHEW January. 1974. This study was designed to assess the nutritional status of the U.S. population; therefore, the effect of food assistance programs cannot be identified. Some of the preliminary data indicate that the income group below the poverty level is more in need of food than the income group above poverty level, as demonstrated in this table which I will insert for the record.

PERCENT OF PERSONS AGED 12 TO 17 YEARS WITH LOW BIOCHEMICAL VALUES 1-ACCORDING TO INCOME LEVELS 2

Low biochemical values. The low points are used to indicate the prevalence for groups who are more likely to be at risk of developing nutritional deficiency diseases.

2 Income levels. Income status was determined by the poverty income ratio. Poverty statistics were based on the poverty index developed by the Social Security Administration in 1964.

Question. Mr. Feltner. A March report from USDA's Economic Research Service indicates that substantial economics of scale exist in the procurement between the smallest and largest school systems, and that when USDA purchases commodities and donates them to schools, the small and medium size school districts save millions of dollars. Yet, you propose to eliminate the commodity donation program. I'm curious, in light of your own study, what can be gained from such a move?

Answer. Due to the phasing out of the Food Distribution Program to needy families the purchasing, testing and administrative support apparatus has concentrated on the commodities to school program. An estimated 10 million dollars per year could be saved by making cash in lieu of commodities available to all schools. Small schools could use their cash to purchase cooperatively with other districts. Cash in lieu of commodities has been operating in Kansas during the current year. A recent trip report indicates the school personnel are unanimous in their preference of cash over commodities. USDA has implemented a promis-ing program to expand cooperative purchasing by the schools for their food service operations.

Question. In light of the facts contained in this commodity study, would you consider an expansion of the commodity distribution program, considering your study shows this would lower overall program costs?

Answer. We do not believe it would be wise to increase the level of commodity support for schools at this time. As you know, there is an annual CPI escalator on the per meal support. Assistance will increase from 10 cents per lunch in FY 1975 to as much as 11.25 cents per lunch in FY 1976. Additional levels of commodity assistance could disrupt the market price structure of these basic foods. Larger shipments of donated food to schools could seriously overburden the refrigerator and the dry storage space of these schools.

Question. What do you consider the most prevalent cause of nutritional deficiency in the nation? Is it primarily due to a lack of "food buying power" or is it caused by poor selection of available foodstuffs?

Answer. For the most part nutritional deficiency in the United States can be directly attributed to the poor selection of available foodstuffs. The general availability of the Food Stamp and Child Nutrition Programs has eliminated lack of buying power as a main cause of inadequate diets for most Americans. Question. Studies indicate that, year to year, a large proportion of the poor are not "poor" the following year. This change of status from "poor" to "nonpoor" is not merely at the margin of a "Poverty Index" of 1. In fact the shift is about one "Poverty Index" unit for a large percent of the families.

Answer. According to the Bureau of the Census, there are indeed indications of low-income population movements to above the poverty level each year. But there are also indications that an equal proportion of the population moves below the poverty level and that the shifts offset each other. The Census Bureau cautions that their population income reports are based on a sample of approximately 50,000 households and that low-income data to large sampling errors. The Census Bureau has no data to verify the statement concerning a shift of "one poverty unit for a large percent of the families."

Question. Would you expect similar findings from a survey of free lunch participants?

Answer. It is reasonable to assume that there is some movement from "poor” to "nonpoor" status among school children, but the Department has never studied such a shift. Program statistics show, however, that there have been increasing