'Chairman PERKINS. Thank you.

Mr. QUIE. I just want to extend my compliments to the Congressman. I have no questions.

Mr. MEEDS. I have no questions, and I just want to join in the compliments.

Mrs. CHISHOLM. We are very cognizant of the factors in this bill that we are going to be marking up tomorrow, due to the kind of situation that we find out in that section of Brooklyn, where so many people, specifically children, would not be able to eat, if you did not have this kind of program.

I am very, very grateful for your appearance before this subcommittee this morning.

Chairman PERKINS. Mr. Lehman.

Mr. LEHMAN. No questions. I just want to compliment our colleague.
Mr. HALL. No questions.

Mr. RISENHOOVER. No questions, and the same compliments.
Mr. MILLER. No questions.

Mr. MOTTL. No questions.

Chairman PERKINS. We have several members of the administration with us today, Dr. Richard L. Feltner, Assistant Secretary, U.S. Department of Agriculture; Edward J. Hekman, Administrator, Food and Nutrition Service; John A. Harris, Office of General Counsel; and Mr. Jerry Bolling, Food and Nutrition Service.

STATEMENT OF DR. RICHARD L. FELTNER, ASSISTANT SECRETARY, U.S. DEPARTMENT OF AGRICULTURE, ACCOMPANIED BY EDWARD J. HEKMAN, ADMINISTRATOR, FOOD AND NUTRITION SERVICE; JOHN A. HARRIS, OFFICE OF GENERAL COUNSEL; AND JERRY BOLLING, FOOD AND NUTRITION SERVICE

Dr. FELTNER. Thank you very much, Mr. Chairman. We welcome this opportunity to participate in today's hearing on legislative proposals relating to Federal-State child nutrition programs.

Later on in my testimony, I will touch on some of our concerns that bear on the committee's consideration of the proposals in H.R. 3736. Also, we will follow up shortly with a detailed report on the bill

to you.

Chairman PERKINS. Without objection, your statement will be entered into the record. You can summarize it, or do it any way that you prefer.

[Complete statement follows:]

PREPARED STATEMENT OF RICHARD L. FELTNER, ASSISTANT SECRETARY, U.S. DEPARTMENT OF AGRICULTURE

Mr. Chairman and members of the committee, we welcome the opportunity to participate in today's hearing on legislative proposals relating to Federal-State Child Nutrition Programs.

Later on in my testimony, I will touch on some of our concerns that bear on the committee's consideration of the proposals in H.R. 3736. Also we will follow up shortly with a detailed report on the bill to the committee.

But first I'd like to, if I may, discuss the child nutrition propoal that was contained in President Ford's Budget for fiscal year 1976. The "block grant" ap

proach, recommended in the Budget, would increase Federal assistance to provide adequate nutrition for needy children, and would, at the same time, serve as a means to reduce Federal costs. The proposed legislation-"The Child Food Assistance Act of 1975”—would substitute an annual consolidated child nutrition block grant to States for all the child nutrition programs now in effect, including direct grants to the School Lunch Program; Special Milk; Nonfood Assistance; the Special Supplemental Food Program for Women, Infants, and Children (WIC); and all other related school and non-school feeding programs. The grants to States, provided by a single appropriation, would be sufficient to provide one-third of the daily nutritional needs of poor children on a yearround basis-at considerably less cost than the current child nutrition programs. USDA's budget for these programs would be $2.3 billion in fiscal 1976. The cost of the block grant program for fiscal year 1976 is estimated at $1.7 billion, which would represent a savings of about $600 million for the year. Over the next five years the block grant approach is estimated to produce savings of over $3 billion, as compared to the estimated costs of current programs.

Under the new approach, the States would be responsible for designing a feeding program tailored to provide specifically for the needs of poor children in the State, with considerable latitude in exercising that responsibility to adapt programs to local situations. States would develop plans to provide free food to poor children, utilizing the most appropriate type of meal, or combination of meals, snacks, and/or milk.

Another significant change in the new approach would discontinue the support now given to lunches for non-needy children, under the National School Lunch Program. The States could continue to support non-needy children, if they feel such support should be continued. In that case, however, the support for nonneedy children would have to come from state and local resources. Eliminating Federal subsidies to the non-needy would provide sufficient Federal funds for the States to increase benefits to all needy children.

States would be free to operate programs year-round, during school periods only, or in some combination best suited to local circumstances. Grants could be used for the present "Type A" lunches, for breakfasts, snacks, supplementary milk, a WIC-type program for infants and children, or any other suitable nutritional combination responsive to local needs and preferences. States and local school systems and governments, would, in short, be free to adapt program to local conditions.

Each State would annually develop a plan to feed poor children, publish it for review and comment and send it to the Department. USDA would advise the State if some feature of the plan represented a non-legal use of block-grant funds, but USDA approval of the plan would not be required. Then, at the end of each fiscal year, States would submit a report in the form of a statement of accomplishment, certified by the Governor as to the legality of use of the funds.

Costs of furnishing one-third of the Recommended Dietary Allowance (RDA) would be determined by the Secretary at the beginning of each fiscal year, based on actual costs incurred during the prior year and on other data available to the Secretary. Six months after the beginning of each fiscal year, cost allowances per meal would be escalated, if necessary, based on the "Food Away From Home" component of the Consumer Price Index.

Since a 5 percent upward adjustment was made in meal costs on January 1, 1975, the escalator clause would not apply during Fiscal Year 1976-in accordance with the President's proposal to restrict all escalation to a 5 percent ceiling through June 30, 1976.

Additionally, the bloc-grant program would establish a National Advisory Council Committee to advise the Secretary of Agriculture on program administration, and would require periodic evaluation of the effectiveness of the grants in achieving the elimination of poverty-caused hunger among children.

Turning to the matter of commodities, the bloc-grant proposal would not repeal Section 32 or Section 416 authorities. The Secretary could, at his discretion, continue to purchase non-price supported surplus commodities or to take other actions to achieve farm price objectives, as necessary.

Commodities are currently budgeted for fiscal year 1976. The bloc grant proposal provides that the value of commodities donated to schools would offset a portion of the funds allocated to schools under the bloc grant.

We see the bloc grant proposal as a sound alternative to continued escalation of the present array of child nutrition programs.

Each one, taken by itself serves a worthwhile objective. But taken together, they represent a group of programs, which has grown up in a largely piecemeal, uncoordinated fashion, and which, in many instances, overlap other similar assistance programs. Thus, we advocate that the time is right for you in Congress and we in the Executive Branch to take a close look at the package as a whole, in terms of certain basic questions:

First, given the current growth rate of these programs, what are future cost prospects, unless we're able to set reasonable limits on uncontrolled growth? Second, to what extent are these rapidly escalating Federal costs disproportionately subsidizing those who do not need subsidies while many needy children remain unassisted?

Third, to what extent do these programs overlap and duplicate the benefits available through other assistance programs?

Finally, what are the available options for a system to remedy the failings and direct the assistance to where it is most needed?

President Ford addressed these fundamental issues in his February 3 Budget Message to the Congress. He said. The "tremendous growth of our domestic assistance programs in recent years has, on the whole, been commendable." But then, he pointed out that unless we are able to "rationalize and streamline these programs," the costs would become "insupportably heavy" for American taxpayers to bear.

Similar concerns are reflected in Congressional passage of the Budget Reform Act, under which Congress is establishing machinery to exercise greater control and coordination over Federal spending, The Joint Economic Committee of Congress addressed similar questions in its thorough-going series of studies in public welfare.

Turning first to the question of costs, where are we heading in child nutrition programs? Should the programs continue as they are, given simple extensions of existing legislative authorities-Department budget projections show that in fiscal year 1976, beginning July 1, they would carry Federal costs of $2.3 billion; and that by fiscal year 1980 the costs would escalate to $3 billion, nearly 50 percent above this year's level. Then, the question becomes, where does it end? President Ford pointed out in his budget message that if domestic assistance programs continue growing at the rate they have been over the next two decades, government spending would advance to over half of our national output.

But now let's look at the second and equally important question. Altogether, we estimate that about 700,000 needy children receive no program benefits because the present programs are not available to them. Further, with the exception of the 1.7 million needy children who benefit from the summer feeding program, most needy children are not reached in the summer months. Meanwhile, the federal government contributes 22 cents per lunch to 15 million non-needy children at a cost of about $600 million annually, plus additional amounts to those non-needy who participate in the breakfast and milk programs.

Taking up the third question on program overlap--as part of their studies into public welfare, the Joint Economic Committee requested a survey of food stamp participants, the first such national survey conducted. Conducted by the Chilton Research Associates, the study looked into all kinds of income, including Child Nutrition benefits available to food stamp users. Significantly 38 percent of all the families surveyed had children participating in the school lunch program; 6.6 percent had youngsters getting school breakfasts; 2.4 percent, special food service benefits; and 2.4 percent were getting supplemental food program benefits.

Of all the households surveyed, one-third were receiving benefits from 4 or more Federal assistance programs. These results suggest the desirability of some integration of these activities into a coordinated package of public assistance, that will encourage more equitable sharing of benefits among people who genuinely need them.

The results also suggest that we may well be dividing our Federal and state administrative capabilities among too many narrow categorical programs of limited scope, while some major programs are still falling short of reaching their target audiences.

The aforementioned examples are the kinds of problem areas that might better be resolved, if administrative energies at all levels of government were more sharply focused.

And finally, returning to the fourth question on the available options to remedy these situations-we see the block-grant proposal as the most viable alternative.

Earlier in my testimony, I presented the outline of the Administration's proposed new Child Food Assistance Program. Through a block grant to the states it would provide food to fulfill one-third of the daily Recommended Dietary Allowances for each needy child in the United States on a year-round basis. We want to ensure that the program concentrates food assistance on needy children-those whose more urgent needs merit highest priority. The program also will help to decentralize government operations and share more decision-making power with state government.

We appreciate this opportunity to present the Department's views. Now, Mr. Chairman, we would be happy to answer any questions.

Dr. FELTNER. Would it be possible to go through it. I will touch on some of our concerns that bear on the committee's consideration of the proposals in H.R. 3736, and we will followup shortly with a detailed report on the bill to you.

First I would like to, if I may, discuss briefly the child nutrition. proposal that was contained in President Ford's budget for fiscal year 1976.

The bloc grant approach recommended in the budget, would increase Federal assistance to provide adequate nutrition for needy children, and would, at the same time, serve as a means to reduce Federal costs.

The proposed legislation, the Child Food Assistance Act of 1975, would substitute an annual consolidated child nutrition bloc grant to States for all the child nutrition programs now in effect, including direct grants to the school lunch program; special milk; nonfood assistance; the special supplemental food program for women, infants, and children, and all other related school and nonschool feeding programs.

The grants to States, provided by a single appropriation, would be sufficient to provide one-third of the daily nutritional needs of poor children on a year-round basis, at considerably less cost than the present child nutrition programs.

USDA's budget for these programs would be $2.3 billion in fiscal 1976. The cost of the bloc grant program for fiscal year 1976 is estimated at $1.7 billion, which would represent a savings of about $600 million for the year.

Over the next 5 years, the bloc grant approach is estimated to produce savings of over $3 billion, as compared to the estimated costs of current programs.

Under the new approach, the States would be responsible for designing a feeding program tailored to provide specifically for the needs for poor children in the State with considerable latitude in exercising that responsibility to adapt programs to local situations, and that is an important part of it.

States would develop plans to provide free food for poor children, utilizing the most appropriate type of meal, or combination of meals, snacks, milk, or whatever.

Another significant change in the new approach would discontinue the support now given to lunches for non-needy children under the national school lunch program. The States could continue to support non-needy children, if they feel such support should be continued.

In that case, however, the support for non-needy children would have to come from State and local resources. Eliminating Federal subsidies to the non-needy would provide sufficient Federal funds for the State to increase benefits to all needy children.

The States would be free to operate programs year-round, during school periods only, or in some combination best suited to local circumstances.

Grants could be used for the present type A lunches, for breakfasts, snacks, supplementary milk, WIC-type program for infants and children, or any other suitable nutritional combination responsive to local needs and preferences.

States and local school systems and governments would, in short, be free to adapt programs to local conditions.

Each State would annually develop a plan to feed poor children, publish it for review and comment, and sent it to the Department of Agriculture. USDA would advise the State if some feature of the plan represented a nonlegal use of bloc grant funds, but USDA approval of the plan would not be required.

Then, at the end of each fiscal year, States would submit a report in the form of a statement of accomplishment, certified by the Governor as to the legality of use of the funds.

Costs of furnishing one-third of the recommended dietary allowance (RDA) would be determined by the Secretary at the beginning of each fiscal year, based on actual costs incurred during the prior year and on other data available to the Secretary.

Six months after the beginning of each fiscal year, cost allowances. per meal would be escalated, if necessary, based on the "food away from home" component of the Consumer Price Index.

Since a 5-percent upward adjustment was made in meal costs on January 1, 1975, the escalator clause would not apply during fiscal year 1976.

Additionally, the bloc grant program would establish a national advisory council committee to advise the Secretary of Agriculture on program administration, and would require periodic evaluation of the effectiveness of the grants in achieving the elimination of povertycaused hunger among children.

Turning to the matter of commodities, the bloc grant proposal would not repeal section 32 or section 416 authorities. The Secretary could, at his discretion, continue to purchase non-price-supported surplus commodities or to take other actions to achieve farm price objectives as necessary.

Commodities are currently budgeted for fiscal year 1976. The bloc grant proposal provides that the value of commodities donated to schools would offset a portion of the funds allocated to schools under the bloc grant. We see the bloc grant proposals as a sound alternative to continued escalation of the present array of child nutrition programs.

Each one by itself certainly serves a worthwhile objective. But taken together, they represent a group of programs which have grown up in a largely piecemeal, uncoordinated fashion, and which, in many instances, overlap other similar assistance programs.

Thus, we advocate that the time is right for you in Congress and we in the executive branch to take a close look at the package as a whole in terms of certain basic questions.

First, given the current growth rate of these programs, what are future cost prospects, unless we are able to set reasonable limits on uncontrolled growth?