the more vital because so far during this current school year we States just have not been receiving Government commodities at the same rate as they were received last school year.

During a hearing of the Subcommittee of Agricultural Research and General Legislation chaired by Senator James B. Allen last July 1972, the USDA assured the committees that they had budgeted ample funds to provide 7 cents worth of commodities per lunch and that they had taken into consideration the projected growth of the lunch program, breakfast program, and the Special Food Service Program for Children.

At this point in time, the supply of Government donated commodities is fully 33 percent below the amount furnished when compared to the same period a year ago. I refer you to attachment No. 1 for details. Also, attachment No. 2 shows figures for five other States. Time did not permit gathering up-to-date figures for all States.

For Iowa's figures we used the same procedure for computing this value of commodities for both periods. Without going into detail I point out that prices have risen on some foods during this current school year which often results in a higher dollar figure but a smaller quantity of food received.

Since daily participation has increased this school year, the few commodities we have received have had to be spread even thinner. Obviously, the growth factor has not been provided for.

The school year is one-half completed; we have started the second

semester.

It is getting late in the school year to provide adequate time for the USDA to go through bidding procedures, deliver commodities to the States, and for States to distribute these comodities to schools in time to be of maximum benefit to programs during the present school year.

Commodities delivered late in the school year may have to be carried over during summer months. Storing commodities during summer months results in increased storage costs. Also, when commodities are either not delivered or delivered too late for use during the present school year, foods must be purchased which results in cash outgo and lower cash balances.

Attachment No. 3 shows the relative condition of school lunch cash balances in Iowa. I call your attention to the fact that cash balances on December 31, 1972, are lower. There are fewer cash balances above 2 months, the number of districts having 1-month's cash balances is about the same, the number below 1-month's cash balance decreased but the number showing a deficit balance sharply increased from 2.37 percent to 13.31 percent.

A year ago the Iowa Legislature passed certain measures limiting public school district spending. To make a long detailed legal explanation very short, I can say that for most school districts the well has run dry. We can no longer expect or hope that school district funds will bail out the lunch fund at the end of the school year if the lunch program fails to make ends meet.

Food costs are up. Higher food costs, far fewer Government commodities, more cash outgo, lower cash balances, and increased lunch prices to children form a destructive pattern in child feeding programs. May I present one more set of figures pertaining to Iowa:

1 Some labor costs are paid from school district general funds and later repaid by the lunch fund.
Note: The value of Government commodities is not included.

Federal and State reimbursement in Iowa presently is:
Type A lunch-8.36 cents.

Free lunch-8.36+41.81=50.17 cents.

Reduced-price lunch-8.36+20.91 29.27 cents.

Schools cannot break even financially when serving free lunches that cost 59.77 cents to prepare and serve (without commodities) and receive only 50.17 cents reimbursement. These Government commodities are sorely needed.

In the opinion of many who work in child feeding, the USDA should either furnish the commodities as budgeted or distribute any unexpended funds to schools on a performance basis. This should be done before the current school year ends.

It must be remembered that child feeding programs deal in pennies. Mr. Chairman, our child feeding programs cannot absorb the loss of 1, 2, or 3 cents per lunch.

Thank you for the privilege of testifying before your committee today. I will be happy to respond to your questions.

(The attachments to Mr. Carpenter's statement follow :)

GOVERNMENT COMMODITIES RECEIVED IN IOWA !

[1971-72 school year: $7,510,777; USDA figure of 7 cents equals lowa's figure of 9.78 cents commodities per lunch; 5.46 cents per lunch)

1 Commodity values per unit in lowa are based on local wholesale prices.

Note: Summary for lowa: 1971-72-9.78 cents per lunch; July 1, 1972, through Jan. 31, 1973, only 5.46 cents per lunch. GOVERNMENT COMMODITIES RECEIVED BY 5 STATES

NUMBER OF MONTH'S CASH BALANCE ON HAND IN IOWA'S SCHOOL LUNCH PROGRAMS

Summary: Effective Dec. 31, 1972, 62 percent of Iowa's public school districts had a cash balance in their lunch fund equal to less than 1-month's operating costs. 13.31 percent showed a deficit balance.

Senator HUMPHREY. All right. We will ask Mr. Freeman to come forward. Mr. Healy has been kind enough to defer to you.

Mr. Freeman and Mr. Branch.

Mr. Branch, are you testifying separately?
Mr. BRANCH. Yes, sir, but I will be very brief.

STATEMENT OF MARK H. FREEMAN, DIRECTOR, LEAGUE OF NEW COMMUNITY DEVELOPERS

Mr. FREEMAN. My name is Mark Freeman, and I am the executive director of the League of New Community Developers. With me today is Mr. Eugene Branch, one of the developers of the new town of Shenadoah in Georgia.

The league was founded in 1972 in response to a growing need for a single organization to bring together the expertise of the Nation's new town developers-public and private.

Members are involved in new communities within cities, in new urban satellites, smaller urban centers, and in bringing new economic life and vitality to rural areas. Our members participate, for the most part, under title VII of the 1970 Housing Act. Title VII offers a loan guarantee assistance program to new communities which meet rigorous standards for integrating physicial social and economic considerations. We have always viewed the Rural Development Act as being a direct complement to the new communities section in the 1970 Housing Act. We also view title IX of the 1970 Agricultural Act and the national growth portion of title VII of the 1970 Housing Act as being mutually reenforcing.

We have supported actively the Rural Development Act and we see its implementation as being critical if any type of systematic rural devleopment is to take place in this country.

We therefore view with apprehension the cutbacks in the categorical grant programs because we see the provision of water, sewer, electricity, and telephone service as being essential to any overall development effort.

Mr. Eugene Branch, chairman of our Rural Development Committee of the league, is going to talk very briefly about the impact his new community can have in promoting growth in the rural area in which it is located.

(The prepared statement of Mr. Freeman is as follows:)

Mr. FREEMAN. Chairman Talmadge and distinguished Senators. My name is Mark Freeman, and I am the executive director of the

League of New Community Developers. With me today is Mr. Eugene Branch, one of the developers of the new town of Shenandoah in Georgia.

The league was founded in 1972 in response to a growing need for a single organization to bring together the expertise of the Nation's new town developers-public and private. Members are involved in new communities within cities, in new urban satellites, small urban centers, and in bringing new economic life and vitality to rural areas. Our members participate, for the most part, under title VII of the 1970 Housing Act. Title VII offers a loan guarantee assistance program to new communities which meet rigorous standards for integrating physical, social, and economic considerations.

It is a real pleasure to represent the league before this committee, and I want to take this opportunity to commend you for the passage of the Rural Development Act of 1972. We congratulate you for having the vision to draft this significant piece of legislation, and for having the leadership to carry it through to final enactment. This act was passed by an overwhelming vote in both Houses, and it clearly sets forth the intent of Congress to devise a pattern of balanced growth for this country; and, especially, to bring the benefits of good jobs and modern community living to rural areas. This act directly complements and strengthens title VII.

Without setting up a new bureaucracy, this act selects the special agricultural programs that are keyed to economic development, and then directs the agencies of Government on how to assist private industry to invest both capital and know-how into development projects. These investments can save some of our declining areas, revitalize smaller cities and towns, provide jobs within a planned framework, and they can make it possible for people to settle down to a full life in a safe and pleasant environment.

But the Rural Development Act deals in specifics as well as general policy. As new town developers, we are particularly interested in the industrial and business loans and grants; in the provisions of the community facilities program and in the guaranteed housing loan program. The league welcomed the provisions for financing water supply and waste disposal systems through expanded loan and grant authority. We were encouraged to see that the act would take the lid off the size of loans for these essential community facilities, that it would double the amount of money for water and waste disposal planning grants, and that it would triple the amount of money for construction grants.

We were under the impression that the Department of Agriculture was gearing up to implement these new directives; and are astonished to find that instead of moving forward, the administration has suddenly slammed on the brakes.

Congress authorized $150 million for water and waste disposal grants for fiscal year 1972-73; yet, the program stopped on the first of January when only one-fifth (or approximately $30 million) of that money had been put to work in planning and building water and waste disposal facilities where they are so desperately needed.

So far as I know, none of our league members have been directly affected by the termination of this program, but we feel discouraged and pessimistic about moving forward with bold new plans that may

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require governmental assistance in order to provide the most basic community facilities.

We also note that the President's budget for 1973-74 transfers the loan program for sewers and waste disposal from the Farmers Home Administration in USDA to the Environmental Protection Agency. We have no objection to this administrative change, but would like assurance that EPA actually does have the authority to make loans for collecter sewerlines. A new community sewer system must be a complete system, and a partial loan is just as inadequate as no loan at all.

We are also disturbed to find that the Farmers Home Administration housing loan program has come to a standstill with the cancellation of grants and interest subsidies for low- and moderate-income families. This program will be sorely missed in the development of any new community that intends to provide for an all-income range in its population mix.

Finally, we regret that rural electric and rural telephone loans must now be financed at 5-percent interest. If allowed to stand, this radical change in the cost of financing loans may spell the difference between having or not having electric power; and, by the same token, it might spell the difference between having and not having a particular new community come into being.

The 1968 and 1970 housing acts created a new system within the Federal Government to inspire and assist the development of planned, livable new communities. The developer members of the league are moving ahead to make cost and engineering studies according to HUD guidelines, and 15 of our members have been certified by HUD for loan guarantees and/or grant assistance. Many of these 15 are clearly in rural areas as defined under the Rural Development Act. To effectively carry out the new communities program will require governmentwide support and strong leadership at the State and local level. Cutbacks in the time-tested and long-accepted programs can only leave us with a feeling of apprehension about the future of new communities.

STATEMENT OF EUGENE BRANCH, GENERAL MANAGER, SCOTT HUDGENS CO., ATLANTA, GA., AND CHAIRMAN, RURAL DEVELOPMENT COMMITTEE LEAGUE OF NEW COMMUNITY DEVELOPERS

Mr. BRANCH. Senator Humphrey, the members of the League of New Community Developers are very excited about the Rural Development Act. In fact, both Mr. Freeman and I attended the hearing in Tifton, Ga., called by Senator Talmadge, and are looking toward the full implementation and strong administration of that act.

I wanted to make one point. In light of impoundment of funds and cutbacks in programs, we will experience added difficulty in carrying out both the New Communities Act and the Rural Development Act. Moreover, we would particularly like to see a rather strong coordination between the Department of Agriculture and HUD in the administration of those acts.

The new community I am involved with is located in Georgia about 23 miles south of the Atlanta airport, about 35 miles south of downtown Atlanta. Ultimately it will have a population of 70,000 people;