Obligations of Federal funds by month, August 1959 to March 1967 STATE FUNDS OBLIGATED ON APPALACHIAN HIGHWAY PROGRAM, MAR. 9, 1965, TO APR. 24, 1967 1 Does not include funds obligated on section of corridor T; not eligible for construction with Appalachian funds. Section 202 authorizes $41 million for grants for the construction and equipment of multi-county demonstration health facilities and $28 million for the operation of such facilities. Grants are limited to 80 percent of project cost. Grants for 100 percent of operation costs may be made during the first two years a project is in operation and for 50 percent of such costs for the following three years. The Congress has appropriated $20.8 million for construction and equipment and $2.7 million for operating grants. S. 602 authorizes an additional $70 million for this program. This program was authorized in recognition of the unique problems of providing health services in many areas of Appalachia, and because adequate health facilities are fundamental to the attraction of private investment. It was to demonstrate new techniques for the delivery of adequate health services to selected areas of Appalachia. To achieve this objective, the Commission found that an appraisal of the health services in the Region and the relation of this program to them was needed. To get such an appraisal, the Commission established, in August, 1965, a Health Advisory Committee composed of experts in the health field to prepare an evaluation of the health needs and facilities in Appalachia and to recommend criteria for project preparation and selection. The Committee is a good cross section of the medical community representing private physicians, medical schools, public health departments, private philanthropy, public health agencies, and hospital administration. A small staff is supported by the Public Health Service, the Office of Economic Opportunity, and a grant under Section 302. In January, 1966, the Committee recommended, and the Commission adopted, criteria and guidelines for 202 projects aimed at providing comprehensive health services for all residents of a project's service area. The Committee has emphasized three elements-regional service, comprehensive care, and demonstration of new health service techniques. Projects must include health education, personal preventive services, diagnostic and therapeutic services, rehabilitative services, community-wide environmental health services, and provision for continuing care of persons to encourage the development of a continuing relationship between a patient, his physician and other health service personnel. S. 602 provides for several changes in Section 202. These stem from the findings and recommendations of the Health Committee. The amendments provide that funds may be used in the provision of comprehensive health services for the training of personnel, for initial operating funds for the centers, for operating deficits, including the cost of attracting, training and retaining medical personnel, and for construction. Funds could be used for the acquisition of facilities in order to provide an integrated system of health services, for the support of the Commission's Health Advisory Committee, and for the planning and evaluation of projects. The House Committee Report on the 1965 Bill indicated that operating grants be limited to projects constructed with the assistance of 202 funds. It is the Commission's judgment that this restriction should be eliminated, as provided in the Senate Bill, to permit operating deficit grants for an existing hospital or other health facility which is a component of a multi-county demonstration health project, including a component facility constructed under Title I of the Public Works and Economic Development Act. This is in keeping with the philosophy of providing comprehensive health service in a project area rather than simply building and operating a single facility. S. 602 contains language to confirm that construction costs can be funded entirely from Section 202 funds, or from a combination of 202 grants and grants from other programs such as the Hill-Burton program and the Mental Retardation Facilities and Community Mental Health programs, and will be made in accordance with the applicable provisions of the Hill-Burton Act, and the Mental Retardation Facilities and Community Mental Health Centers Construction Act of 1963 and other acts. Grants for operations may cover up to 100 percent of costs not reimbursed from other sources, for the first two years of operation, and up to 50 percent for the following three years of operation. We are recommending that Federal contributions to operating costs be charged against individual components of a demonstration project. Thus, some units in a given demonstration project could receive grants at 100 percent, while other elements are supported at 50 percent or are no longer eligible for contributions. In the development of 202 projects, it has been clearly understood that grants for operation are for operating deficits rather than total operating cost. The Commission has not allocated Section 202 funds among the states because of a general view among the states that these funds should be used to demonstrate the utility of regional health facilities wherever they might be located. We are appraising proposals as they are submitted. The first demonstration project prepared in accordance with the Health Committee's recommendations was submitted to the Commission recently by the State of North Carolina. The proposed project would serve three predominantly rural counties with a population of approximately 135,000 people. More than one-third of the families in the service area have annual incomes of less than $3,000. Other projects in Ohio, South Carolina, West Virginia and Kentucky are in advanced stages of development. Formal proposals are expected from those states in the near future. The Health Committee and its staff, as well as the U.S. Public Health Service, are actively assisting in the development of these proposals. These projects are being formulated and will be administered by boards which represent a cross section of the population to be served including doctors, hos pital administration, consumers, public officials and others. Such boards are designed to insure the coordination of all health facilities in the area and to provide private physicians with a significant voice in the project. Section 203-Land stabilization, conservation, and erosion control Authorization Public Law 89-4-- Appropriation 1966 Appropriation 1967 Total appropriation Allocation to States Authorization S. 602 New authorization $17, 000, 000 7, 000, 000 3, 000, 000 10, 000, 000 10, 000, 000 19, 000, 000 19, 000, 000 Budget request fiscal year 1968, Section 203-Appalachian land stabilization program 3, 000, 000 Section 203 authorizes $17 million for the Secretary of Agriculture to enter into contracts of up to ten years in duration with land holders for conservation practices. These practices are accomplished with Federal cost sharing of not to exceed 80 percent of cost. The program is administered through the Agricultural Stabilization and Conservation Service with the technical assistance of the Soil Conservation Service. A total of $11.5 million was appropriated for FY 1966 and FY 1967. S. 602 authorizes $19 million for FY 1968 and FY 1969. The administrative structure of the program is patterned on the Agriculture Conservation Program. Its focus is somewhat different. The Appalachian Regional Commission, by Resolution 47, established the policy of requiring the participating states to develop state plans for the use of these funds designating target areas and practices to achieve the desired conservation programs. Such plans are developed by a committee which generally includes the state member of the Appalachian Regional Commission and representatives of the Agricultural Stabilization and Conservation Service, the Farmers Home Administration, the Extension Service and the Forest Service. The Appalachian Act. both in its preamble and in Section 224, directs that funds appropriated under its authority be concentrated in areas with significant potential for future growth. The plans developed by the 12 Appalachain States to guide the investment of Section 203 funds have been guided by this directive in that every state has limited the program to selected areas in order to enhance agricultural potential, capitalize on other public investments such as small watershed projects and Corps of Engineers reservoirs, to enhance recreational opportunities, or to serve the potential of an urban area through the protection of its watershed. In most of the states the program areas are defined by counties. However, some plans concentrate 203 funds on small watershed project areas or even smaller areas for watershed protection. The following chart indicates the number of counties eligible for 203 funds under the 1966 state plans: Thus, of the 373 counties in Appalachia, only 136 were designated by the states for the 203 program. In many cases the program was further limited within counties to specific watersheds. The plans describe the practices to be undertaken, the cost sharing ratios to be applied, establish the criteria for the selection of project areas, identify the areas selected and allocate funds to them. $7 million was appropriated for this program in FY 1966. After administrative costs were deducted by the Department of Agriculture, $6,375,000 was available for contracts. $6,202,512 was obligated on contracts. Because of a smaller appropriation for FY 1967, most states have reduced the eligible program areas. The statute provides that a single landowner or operator may not receive assistance for practices on more than fifty acres. Be regulation, the cost sharing has generally been limited to a maximum of $50 per acre. The implementation of this program has been marked by an effort to accommodate two basic directives which in some instances are contradictory. Both the House and Senate Committee Reports in 1965 emphasize that this assistance should go to "needy" farmers. At the same time, there is statutory insistence on investment in areas with potential for growth. Our experience with this program indicates that off-site benefits may well be a better guide to the development and selection of projects than the financial circumstances of the land holder involved. If the renovation and the production of a given watershed is desirable from the standpoint of protecting a municipal water supply or improving the recreational potential of an area, these subjects should control the allocation of Section 203 funds without regard for the financial circumstances of the cooperating land holders. Of course, where Section 203 funds are used exclusively to enhance the potential of an agricultural operator, an examination of his financial capacity is perfectly legitimate and we would hope to continue the emphasis on financial need in such circumstances. The Land Stabilization Program, which has been implemented effectively by the Department of Agriculture, should be appraised by this Committee in light of this apparent conflict. The experience of the Commission would indicate that the conflict can be resolved in the administration of the program by grants in some project areas on the basis of development potential and in others with a view toward enhancing the agricultural potential of low income farmers. S. 602 makes no change in this section other than to extend the authorization. The Senate Report does recognize the needy farmer problems and suggests that a more flexible program should be permitted. It is definitely the policy of the Commission to integrate the 203 program into the State Investment Plans which encompass all Appalachian Act investments to the maximum extent possible. To this end, most of the states are assigning a man to the task of relating the 203 program to the overall use of Appalachian Act funds. Section 204 of the Act authorized $5 million for the purpose of technical assistance to timber development organizations and for loans to such institutions for initial operation. One million dollars was appropriated in fiscal year 1966. There was no appropriation for this purpose in fiscal year 1967. S.602 authorizes $4 million. Before implementing this section, the Commission, in collaboration with the U.S. Forest Service, contracted with Macdonald Associates, Inc., a timber management consultant, to investigate the feasibility of establishing timber development organizations within the limitations of Section 204. The results of this study suggested that timber development organizations as envisioned when |