Mr. COAD. I know that in relation to another program, in the State of Iowa, as soon as that money became available for indigent people, that the State legislature reduced the State matching amount to equal the dollar and cents, so that the people got just the same amount that they had before the Federal money came in. They had that much less. I just wondered if you had really any balanced judgment to go on with respect to that. Mr. MILLER. We are saying that we think that this is a proper charge to the State, if it is going to supplement the diets of the American schoolchildren. So long as we are operating it as a price-supporting mechanism, this is the proper place for it. If it ceases to be that and is to be placed somewhere else, we think that some other agency should handle it, and the State government should assume that responsibility. Mr. COAD. You assume that they would and that they should. Mr. MILLER. I cannot speak for them. Mr. JOHNSON. There is one question that comes to my mind. You are now making reimbursements on the 4-cent and 3-cent basis. What did you do when the program first started? I remember the first year that it was less. Mr. MILLER. Mr. Davis again can answer that as to what rates we paid at the beginning, and any changes that he can recall. Mr. DAVIS. The rates for the schools have remained the same since the beginning. However, we used a different basis on which to make those payments. In the first year of the program, we used a historical base on the milk consumption the previous year, and then reimbursed above that amount. Mr. JOHNSON. That penalized the schools that were already using the milk, did it not? Mr. DAVIS. Yes, sir. Without going into detail, I think that we can safey say that it was a nightmare from the standpoint of administration and imposed serious problems on the States to the point that it discouraged many localities from coming into the program-witness the fact that when we changed the regulation to the system we now use, the program more than doubled-I think it expanded about 108 percent the next year. Mr. JOHNSON. Do not the school people in the various States devote their time to this program so that it is probably less costly to the Federal Government from the administrative angle than any other farm program? Mr. DAVIS. Certainly it does require a good deal of extra work on the part of the schools and on the part of the States. We feel that they have done a tremendous job with this program—a very enthusiastic job. Mr. JOHNSON. We have it in practically all of the 50 States now, do we not? Mr. DAVIS. At least, for the public schools, it is handled through the State educational authorities. Mr. JOHNSON. And there is no possibility of it being paid out of the school money? Mr. DAVIS. The only administrative expense that comes out of the authorization is for our Federal costs, except that we allow the schools to retain part of the reimbursement to pay for some of their costs within the school for the handling of the milk. But other than thatwhich perhaps pays only for refrigeration and some incidental expenses other than that, the administrative costs are paid out of the State and local funds. Mr. JOHNSON. In setting up the costs for a half pint of milk, are they allowed to figure that in? They get the 4 cents from the Federal Government. Suppose it costs them 5 or 7 cents, and there is the cost of refrigeration and transportation and so forth-they will be allowed to charge 4 cents for that to the child? Mr. DAVIS. That is right. Mr. JOHNSON. That is all. Mr. QUIE. As to your November announcement, in case we provide funds you will rescind your announcement? Mr. MILLER. Yes. Mr. QUIE. The Congress will have to act by March 1 to put this bill into effect, then. How soon will we have to act in order that you might have time to make the new announcement? Mr. MILLER. The announcement says that we would go to the 3.5 and 2.5 cents on March 1. It now looks as if we would have enough money to go until April, at that rate, without making the change. Mr. QUIE. So we would have time to go through the usual procedure to get the bill through? Mr. MILLER. I will let Mr. Davis tell you about that. He is telling me that we would have to change the regulations. Mr. DAVIS. There are some mechanics involved in this, I think, that we would have to be definitely assured of the additional money by around the middle of February in order to notify the States, who in turn notify the schools, and get the matter published in the Federal Register, and so on. I think that would be our deadline. Mr. QUIE. Thank you. Mr. ABERNETHY. Mr. Miller, this program, as I recall, was inaugurated in 1954. Mr. MILLER. Yes, sir. Mr. ABERNETHY. And it was inaugurated at a time when the situation in the dairy industry, so far as the farmers were concerned, was considerably worse than it is now? Mr. ABERNETHY. It was offered as a means of making a contribution toward alleviating that situation, to the end that it would develop increased consumption of milk? Mr. MILLER. Yes. Mr. ABERNETHY. And so when we put the program into effectthat is, when the Department did-the regulations required, as the act contemplated, that this money would be distributed for the purpose of providing for an extra glass of milk-that is true, is it not? Mr. MILLER. In those schools that have a class A program. And those that did not, we would provide for the first glass. That is correct, in those schools. Mr. ABERNETHY. In schools where they did not serve milk with their lunches at the time the program was inaugurated, you have now brought them in by providing funds for the original glass of milk? Mr. MILLER. That is correct. That is 3 cents. Mr. ABERNETHY. So you now have a discrimination which you have created-or we did-or both of us-by picking up the entire check for the milk in those schools that did not have it, whereas the school which did serve milk at the time, you continued to require them to take up the first glass, and we would take up a part of the second? Mr. MILLER. Congressman Abernethy, you recall that in the $110 million school-lunch appropriation, their proportional share of that, some of that was spent for the original glass of milk in the school lunch program. Mr. ABERNETHY. That is for the original glass of milk in schools which already had a school milk program. Then it is in violation of the act, is it not, if it is done that way? Mr. MILLER. I do not know. Mr. ABERNETHY. It was to increase the then current level of consumption of milk, was it not? Mr. MILLER. We think that they were using part of the original $110 million for the purchase of this first pint of milk that they were serving. We know that they were. Now, then, they are going to use this contribution of 4 cents per half pint if they will use the second half pint of milk. So you have your additional second glass. Where there was no school lunch program, we assumed— and properly so that a relatively small quantity of milk is being consumed there anyway, and that if we paid for the first glass of milk in those schools where there were no school lunch programs, that we were getting an additional quantity of milk consumed. Mr. ABERNETHY. I am not offering any criticism whatever as to the manner in which you are administering the program. That is not my purpose. I am saying that there are schools which had a milk program in connection with their school lunch program which now do not participate in this school milk program, unless they serve a second glass of milk. Mr. MILLER. That is probably so. Mr. ABERNETHY. And in the same county and in the same State there are other schools which did not serve the glass of milk, which we are now picking up the check for the first glass of milk. That is a correct statement? Mr. MILLER. Of course, the second ones did not get any school lunch money to buy the milk with. Mr. ABERNETHY. They had a lunch program, but they were not serving the milk. Mr. MILLER. No, they have to serve that first one. Mr. ABERNETHY. You require those schools, and correctly so-I am not criticizing-which were then serving the glass of milk when the program went into effect, to serve the second one out of the special school milk fund, or else they got no money? Mr. MILLER. That is right. Mr. ABERNETHY. In schools where you extended the program, that is, the special school milk program, which had no milk program, you are now picking up for them the cost of the first glass of milk? Mr. MILLER. Yes, sir. Mr. ABERNETHY. Let us say that you have one set of schools that we are treating in one manner, and we have another set of schools that we are treating in another manner. Mr. MILLER. To a certain degree, that is correct. We are attempting to get an increased consumption of milk for the purpose of Mr. ABERNETHY. I realize that. This is not an entrapping question. I am simply wanting to establish for the record that you have a large number of schools which are serving a second glass of milk, in order to meet the requirements of the law, that is, an increased consumption of milk. Mr. MILLER. Yes. Mr. ABERNETHY. And if they serve that second glass of milk, there would not have been a compliance with the objective of the law; that is, to increase the milk consumption? Mr. MILLER. That is correct. Mr. ABERNETHY. Those that were not serving any milk, in order to increase the consumption, you have to give them funds to pick up the first glass of milk? Mr. MILLER. You are correct. Mr. ABERNETHY. I have had some complaints about that. I think every member more or less has had them. Here is a school which was serving milk, which they were doing before they got any of the school milk program. I do not know how the situation can be eliminated, but I personally feel that if we are to continue this program, and particularly if it is to be made a permanent program, that all of the schools ought to be put on the same footing. Mr. MILLER. I would have to agree with you. Mr. ABERNETHY. I think now is the time for us to start to do something about it. Incidentally, there was a farm bill last year affecting one commodity, and another bill affecting another, to which some Members objected. I think some Members opposed the bills on the ground that we were bringing in piecemeal legislation instead of bringing in a bill that would deal with all of agriculture. We started this program with what, $50 million or $40 million? Mr. MILLER. $50 million. Mr. ABERNETHY. And it has now gone up to about 80-some-odd million dollars? Mr. MILLER. It is $81 million. Mr. ABERNETHY. What is the average Federal contribution in dollars toward the school lunch program? Mr. MILLER. What is the average contribution to the school lunch individual? Mr. GARBER. The average is a little over 4 cents per lunch, that is, for food-not just the milk alone, but for food. Mr. ABERNETHY. I understand. It is about 4 cents? Mr. GARBER. Yes, sir. Mr. ABERNETHY. What is the average cost of that lunch—the average value of it? Mr. GARBER. I would say about 25 cents. Mr. ABERNETHY. 25 cents? Mr. GARBER. Yes. Mr. ABERNETHY. So that the States are picking up, or the schools are picking up 21 cents of the 25-cent lunch, and the Federal Government is picking up 4 cents? Mr. LENNARTSON. Correct. There are some food contributions. Mr. ABERNETHY. I said the schools-I mean the students. Mr. GARBER. The students; yes. Mr. ABERNETHY. Or someone other than the Federal Government is picking up 21 cents of the average 25-cent lunch, and the Federal Goverment is picking up 4 cents of it? Mr. GARBER. Yes. Mr. ABERNETHY. Is that right? Mr. LENNARTSON. That is right. Mr. ABERNETHY. What is the cost of the average extra glass of milk running? Mr. GARBER. The Federal contribution? Mr. ABERNETHY. No, no. Mr. GARBER. The average is somewhat over 6 cents that the schools pay for that one-half pint of milk. Mr. ABERNETHY. That is what they pay. What is the average value of it, the sale price of it? How much would they have to pay for it? Mr. GARBER. Six cents per half-pint. Mr. ABERNETHY. That is a 6-cent glass of milk. How much of that is the Federal Government picking up? Mr. GARBER. Our figure is 3.41. Mr. ABERNETHY. 3.41 cents? Mr. GARBER. Say 3.5 cents. Mr. ABERNETHY. And so the students, or those other than the Government, are picking up 2.5 cents? Mr. GARBER. 2.5, that is correct. Mr. ABERNETHY. I do not know whether that means anything or not, but I think there is a tremendous disparity between the quanlity that is being picked up by the Government and the people, in one instance, as related to the other. I think that this record ought to show it. Mr. JENNINGS. I have a question for clarification. Is this 4 cents that is picked up by the Federal Government in the school lunch program per meal-does that include the donation of surplus commodities? Mr. LENNARTSON. No, sir. Mr. GARBER. No, sir, that is cash. That goes into the school lunch program. Mr. MILLER. That is the $110 million broken down. Mr. QUIE. He asked about the value of it. Mr. JENNINGS. Just to make it clear, what value is placed on the commodities that go into the school lunch program? Mr. GARBER. I would place about the same value in commodities, between 4 and 5 cents. That varies from year to year, but the values would be about 4 cents. I believe the cost figure that I have given on the cost of the school lunch was 25 cents. In addition thereto, 4 cents goes into that in cash and 4 cents in commodities, which would make the overall price |