Mr. WALDIE, Mr. Denney?

Mr. DENNEY. I have no questions.

Mr. WALDIE. Mr. Schadeberg.

Mr. SCHADEBERG. Yes.

On the first page of your testimony, you state: "Section 214 of the act provides funds to be administered by the Department of Commerce," and so forth. And then you said it would authorize Federal participation of 80 percent. Is that correct?

Dr. VENN. Yes, sir.

Mr. SCHADEBERG. What I have in mind here is, who makes the decision as to whether or not the State could afford to foot the bill? Who decides whether or not the State has the funds?

Dr. VENN. The Appalachian Commission makes that decision; approves the project, forwards the plans to us, and we attest to their meeting the provisions of the Vocation Education Act of 1963.

Mr. SCHADEBERG. Are there any guidelines set down on what basis the Commission would make that decision?

Dr. VENN. Those are set by the Appalachian Commission.

Mr. SCHADEBERG. Mr. Chairman, I am wondering whether it would be possible to have a copy of the guidelines in the record at this point? I think it would be good to have it in the record.

I have a question in my mind I believe in regard to education, and I certainly would go for it as one of the major things, but I am interested in seeing to it that one State, which perhaps does not give as much percentage of its own income to schools and for education, should not be given advantage over a State like my own--the State of Wisconsin-which gives 4.25 percent of its income for education. If we could have some sort of chart in the record to indicate on what basis the decision is made, I would appreciate it.

Mr. WALDIE. Can you provide that?

Dr. VENN. Yes; I am sure we can have the Commission do so. Mr. WALDIE. All right, if you can provide that, we will make it part of the record.

(The information follows:)

ALLOCATION AND USE OF SECTION 214 FUNDS

Section 214 was enacted to enable the Appalachian States, local governments, and others in the region to take full advantage of Federal grant-in-aid programs for which they are eligible but could not provide the required matching funds. Section 214 provides that supplemental grants may raise the authorized Federal percentage under existing grant-in-aid programs to a maximum of 80 percent. The degree of supplementation is determined by the applicant's ability to pay and relatively few projects have actually received the maximum of 80 percent. For all projects approved as of March 31, 1967, 214 funds have accounted for an average of approximately 21 percent of project costs and basic Federal grant-inaid funds have provided an average of approximately 39 percent of project costs. Several tables showing the Federal and non-Federal dollar contributions for various types of programs are included with the Federal Cochairman's statement.

Policies and procedures established by the Commission for the Section 214 program are designed to assure that these funds will be used for projects with a demonstrated need for supplemental grants. For example

(1) Each State is required to demonstrate that the financial effort in its Appalachian area does not fall below the average for the two fiscal years preceding the enactment of this legislation. This assures that the States are in compliance with the maintenance of effort requirement of Section 221 of the

Act, and that the need for supplemental assistance in a State does not result from a reduction of the State's normal effort in its Appalachian area;

(2) The Commission allocates Section 214 funds to the States on the basis of the formula, described in Mr. John L. Sweeney's statement to this subcommittee, which takes into account the relative need of the States' Appalachian areas, by assigning the largest relative share to those having the lowest per capita income; and

(3) Each State, in recommending Section 214 supplemental grants, is required to consider, among other criteria, the relative financial resources available to project applicants. The Commission verifies this, in its evaluation of each project proposal, by an analysis of specific financial data which must be submitted as a part of each project application. The required project information is described in Attachment A.

The Commission's resolutions establishing policies and procedures for the Section 214 program have been incorporated in Chapter 214 of its policy document, "The ARC Code."

ATTACHMENT A

REQUIRED PROJECT INFORMATION

1. RELATIONSHIP TO THE STATE APPALACHIAN DEVELOPMENT PLAN

Briefly describe the proposed project and indicate how it serves an area of significant potential for future growth as delineated in the State Appalachian Development Plan. If the proposed project is submitted under one of the exceptions in ARC Resolution No. 97, describe how the project satisfies the policies in that resolution.

2. FUNDING

Describe the sources of state and/or local funds indicated on the ARC Form for the local matching share of eligible project costs and, if there are costs ineligible under the basic Federal program, describe the sources, status and amounts of funding (federal, state or local) for those ineligible costs.

3. DOCUMENTATION OF NEED FOR ARC FINANCIAL ASSISTANCE

A. If the applicant for basic Federal grant-in-aid assistance is a county or municipal government or a unit thereof, or other local governmental body (nonfederal), provide the following:

(1) Identify all financial resources not described in Item 2 (Funding) that legally could be utilized to finance the project such as general obligation bonds, revenue bonds, or other forms of borrowing and explain why these other financial resources are not being used;

(2) If bond funds are involved, describe the type, amount of the authorized issue and the authorized purposes. If the amount of the authorized bond issue exceeds local funding requirements for eligible and ineligible project costs, identify the purpose (s) to which the remainder is to be applied. If the amount of bonds issued or to be issued is less than the amount of the authorization, specify the amount issued or to be issued, and the reason(s) why the amount is less than the authorization.

B. If the applicant is a non-profit private organization, provide the following: (1) An audited financial report of the organization for the latest fiscal year operation. If there was a surplus, an appropriate official of the organization should provide a statement indicating the purpose (s) to which the surplus has been applied or is to be applied.

(2) List the estimated revenues and expenditures for the current fiscal year. If a budgetary surplus is indicated, an appropriate official of the organization should provide a statement explaining the purpose (s) to which the surplus is to be applied.

(3) If the applicant anticipated utilizing funds made available by letters of credit from lending institutions, include a statement which specifies the amount the applicant could reasonably borrow considering service charge requirements, debt service or other costs.

(4) If contributions are to be used in financing the proposed project, list the amount of contributions received to date and the amount anticipated from pledges (pledges should reflect the application of a loss factor in determining the net amount).