Mr. PEYSER. May I hold onto you for 1 minute? I have to get something clarified in my mind.

Mr. PERKINS. Absolutely.

Mr. PEYSER. We were talking about the difference between your proposal, which was an estimated $175 million, and the administration's move now that is adding $135 million, I think, to the program, so there is roughly a $40 million. Now I want to be sure in my own mind, what steps does your program take within that scope of the $40 million to make this dramatic difference?

Mr. PERKINS. What I have suggested is that we adopt for the regular school lunch program the reimbursement rate of 6 cents instead of 5 cents. That is the discrepancy which you have in mind. Mr. PEYSER. And that difference in your opinion then would make the difference a success or failure in the total program?

Mr. PERKINS. That is correct.

Mr. PEYSER. All right. I appreciate that.

Mr. PUCINSKI. Thank you very much, Mr. Perkins. I hope you will be able to stay with us for the testimony of Secretary Lyng, who is

next.

Mr. PERKINS. I am going to my office, but if you run out of a quorum, let me know.

I have Mr. Lyng's statement here. I glanced at a couple of paragraphs. I don't know what I did with it.

Mr. PUCINSKI. Mr. Secretary, if you would like to have your associates join with you at the table, it is perfectly agreeable.

I see you are accompanied by Mr. Edward J. Hekman, Administrator: Mr. Phil Olsson, Deputy Assistant Secretary; and Miss Isabelle M. Kelley, Assistant Deputy Administrator, Food and Nutrition. Service.

It is a distinct pleasure to have you before us again. We have been discussing this program a good deal of the time and I know that you certainly are a longtime friend of this program. I sympathize with the problems that you have, but I don't think that anyone has ever questioned or would ever want to question your own personal sincerity and desire in trying to do the best you can with this program.

I think that over the years you have established an enviable reputation for your concern of the successful operation of the program. As Mr. Bell said, surely the program has substantially increased in the last few years, thanks in a great measure to your planned leadership. So we are very pleased to have you here. We are anxious to hear your

statement.

STATEMENT OF RICHARD LYNG, ASSISTANT SECRETARY, U.S. DEPARTMENT OF AGRICULTURE, ACCOMPANIED BY PHIL OLSSON, DEPUTY ASSISTANT SECRETARY; EDWARD J. HEKMAN, ADMINISTRATOR; AND ISABELLE M. KELLEY, ASSISTANT DEPUTY ADMINISTRATOR, FOOD AND NUTRITION SERVICE

Mr. LYNG. Thank you, Mr. Chairman.

Mr. Chairman, members of the committee, it is a pleasure to appear before this committee today and to have an opportunity to comment

upon USDA's child nutrition program, and particularly upon the national school lunch program.

This morning the Department of Agriculture announced that decisions have been completed on new school lunch regulations and that they would be published in the Federal Register within a few days.

It will interest the committee to know that the final regulations will be considerably different than those published for comment on August 13. We have given considerable study to the large volume of comments received. We have considered comments from school administrators, teachers, school lunch administrators and from a large number of members of the Senate and House of Representatives, including members of this committee.

In our final regulations we have also given consideration to the action of the Senate on last Friday. The final regulations will provide for the following major program changes:

1. The 50 States and the District of Columbia will be guaranteed a statewide average reimbursement rate of 40 cents for each free and reduced price lunch-10 cents above the 30-cent guarantee in our August 13 proposals.

2. Federal reimbursement for needy children will be limited to free and reduced price lunches to children from families with income at or below the mandatory income eligibility standard specified in the National School Lunch Act. The 1972 standard is $3,940 for a family of four.

3. Increased flexibility is provided in the method of distributing special section 32 funds to give added assurances to States that they will be able to promptly process and pay reimbursement claims from schools.

The estimated cost of these announced revisions will depend upon actual program growth in 1972. We now estimate that these additional costs will be about $135 million. This will increase Federal school lunch cash assistance payments from $536 million in 1971 to about $750 million in 1972.

We believe, Mr. Chairman, that these revisions will meet the concerns expressed by both the States and the Congress that needy children have access to a free and reduced price lunch in 1972. With a minimum statewide average of 40 cents in Federal section 11 funds for every free and reduced price lunch served to poverty level children, the State will be able to vary payments to especially needy schools. There is no change in the maximum payment permitted to especially needy schools. It remains at 60 cents.

We also believe, Mr. Chairman, that this revision is in line with the National School Lunch Act's direction that priority be assigned to the neediest children.

The proposed 5-cent minimum statewide average reimbursement rate under section 4 remains unchanged in the final regulations.

In view of these actions by the Department, we do not believe that the passage of House Joint Resolution 889 or Senate Joint Resolution 157 is now necessary. If, however, the committee believes that the passage of such a resolution is still desirable, we suggest the language and intent of the resolution should at least be clarified.

First, we are opposed to the provision of Senate Joint Resolution 157 with respect to section 4 reimbursement rates. The language of that portion of the resolution directs that a minimum reimbursement rate of 6 cents be established. With the new guaranteed average payment of 40 cents for free and reduced price lunches under section 11, we do not believe it is necessary to increase section 4 rates for the more affluent schools or for nonneedy children.

Both House Joint Resolution 889 and Senate Joint Resolution 157 concern the establishment of maximum rates of reimbursement for free and reduced price lunches served to needy children. It amends the National School Lunch Act to provide that the maximum per-meal rate of section 11 assistance shall not be less than 40 cents and that a higher maximum rate shall be established for especially needy schools. We assume, first, that this amendment is not intended to contravene the overall limitation in section 11 that Federal reimbursement payments shall not exceed the operating costs of a school's lunch program. This should be clarified because, as presently worded, we find it confusing.

Our new regulations will guarantee the States an average section 11 payment of 40 cents for free and reduced price lunches to needy children. States could use these Federal payments to pay more than 40 cents to especially needy schools-up to a maximum of 60 cents in a combined section 4 and section 11 payment-and less than 40 cents to the more affluent schools. Thus, the 40-cent average payment we are guaranteeing the State is not inconsistent with House Joint Resolution 889's provisions with respect to the maximum section 11 rates of assistance to be established.

Thus, Mr. Chairman, I respect that we believe our final 1972 school lunch regulations will meet the concern about needy children and passage of a joint resolution is not necessary.

Our revised regulations, which will add another $135 million to Federal school lunch funding in 1972, is another in the series of actions we have taken to strengthen and expand Federal food programs.

Since the fiscal year 1968 we have more than doubled Federal support for child feeding programs. In 1972 we will be providing more than $1.2 billion in Federal support. In the fiscal year 1968 that support totaled $500 million.

Most of that increase in Federal support has been concentrated on special assistance to help schools serve free and reduced price lunches to needy children. Since 1968 there has been more than a hundred fold increase in section 11 assistance-from just under $5 million in 1968 to the well over $500 million that will be provided in 1972.

In the last 2 years alone Federal cash assistance payments under section 4 and section 11 have increased from $300 million in fiscal 1970 to about $750 million for 1972. In addition, schools will be receiving an additional 7 cents in commodity assistance for each lunch served in 1972.

Were we to include our family feeding programs, total Federal support for food programs has increased from $894 million in fiscal 1968 to about $4 billion in fiscal 1972. We believe it is important to remember that needy children benefit both from our child nutrition and our family feeding programs. We have moved to improve the diets of needy children on two fronts-while in school and while they are at home.

We believe, Mr. Chairman, that this record of increased Federal support does demonstrate our commitment to effective and expanded Federal food programs.

Thank you.

Mr. PUCINSKI. Well, thank you very much, Mr. Secretary.

Now there is no question that the statistics that you have cited on page 5 of your statement are an impressive record and I am very pleased that working together we have been able to address ourselves to a problem that 5 years ago was a national disgrace and a national scandal.

You recall that all of this drive for increased expenditures for needy children came as a result of shocking revelations all over the country, that a tremendous number of children in this country were going to sleep hungry and were underfed. I am delighted that the administration has responded to that problem, but now it seems to me that with the announcement that you make today and the position that the administration is taking at this time, you really are going backward and you are somewhat undoing the very excellent start that we have made toward dealing with the problem of hungry children in this country, and this is what disturbs us.

What disturbs us is not the fine record that we have written over the 5 years, but the fact that this record is now being very seriously jeopardized. As the chairman of our committee said a moment ago, and as these telegrams indicate before me here, we can be brought to a very serious standstill.

Now I am sure that neither the President nor anyone in his administration wants to turn the clock back to the days when this Nation was aroused to the point that it was because of the fact that we had so many unfed children. I really don't understand if indeed the statement made by the chairman that we need $175 million more to meet the provisions of the legislation before us, and I believe that you have put a price tag of $135 million on your action today, we are only $40 million apart. Why can't we then find that additional $40 million? If we are talking about some grandiose figures, some pie-in-the-sky figure, I can see what the problem is. But we are only talking about $40 million if the figures cited by the chairman are correct to carry out the provisions of the legislation before us.

It seems to me that that is what we are talking about today.

Now I do have telegrams here which indicate that using the 40-cent State average as against the 40-cent floor proposed in this legislation will make a significant difference in many States. I am also told that the 6 cents continues to be needed even though you say it is going to be a 7-cent increase of commodities.

So the one thing though that disturbs me about your proposed legislation, coming from a big city like Chicago, on page 2 in paragraph 2 you say that the 1972 standard is $3,940 for a family of four. Now that may be true in Appalachia, it may be true in Arkansas, it may be true perhaps in the pulpwood forests of Alabama and Georgia. But I don't think it is true in a city like Chicago or New Orleans or Cleveland or Los Angeles.

Now why are we using this uniform standard figure for the whole country? I was under the impression that the National School Lunch

77-945-72-3

Act gave the Secretary authority to use more realistic figures by reason

or areas.

Mr. LYNG. No, Mr. Chairman. The National School Lunch Act, as amended in 1970, says that the Secretary shall as of July 1 of each year prescribe the poverty level, and the Secretary has done this after consultation with the Census Bureau and the Bureau of Labor Statistics and the other governmental agencies, and there is a national standard.

The law said that this would be a minimum and that minority should be given to the serving of the neediest of children. This is the basis for action. As a matter of fact, in the State of Illinois I understand that the State itself has adopted the figure of $3,940 as the eligible figure for the entire State.

Mr. PUCINSKI. But I have a feeling though that if you apply the $3,940 figure to the lunch program as a cutoff point for needy children, we are going to be faced with a real crisis in our communities.

Mr. LYNG. I don't think so. There will be no change in your community, Mr. Chairman, if I understand correctly. There are some communities that have adopted higher figures and if I might take a moment and explain our rationale in putting this provision in, there are some communities that have gone as high as $7,500 in their definition of income for a needy family, a family of four.

We feel that in those areas where there is a need to go higher, slightly higher, that there is nothing to preclude the local districts from permitting schoolchildren to share in reduced price lunches. They simply don't share in Federal reimbursement. In view of the amount of money that we are adding to the States allocations, we believe that those communities where incomes are higher should be better able than they were in the past-to afford assist students who would be above the minimums. Actually, Mr. Chairman, last year there were 8 percent or less of the total children receiving free and reduced price lunches were in families with incomes above the poverty level of $3,720.

Mr. PUCINSKI. Well, you are suggesting then that the 40-cent State average will not have as adverse an effect as we feel in insisting that we have a 40-cent floor?

Mr. LYNG. No. As a matter of fact, we think it will work out quite. well. We see grave administrative problems in trying to administer a program with a 40-cent floor. It would be immediately necessary for us to somehow define-in rather rigid terms-criteria to be used in approving applications of increments above the floor.

We now have some definitions for the use of maximum allowances and we know some of the difficulties involved in that, Mr. Chairman. The cost of establishing minimum reimbursements, would be, we think, a great deal more than-with all respect to the chairman-a good deal more than he thinks it would.

Mr. PUCINSKI. Going to a 40-cent floor and a 6-cent reimbursement, what do you think it would run?

Mr. LYNG. If the 6-cent reimbursement were on the same basis as our proposal for 40 cents on an average, the 6-cent statewide average, it would cost in the vicinity of $40 million. So, if the chairman's figure of $175 million, was the $135 million required for our regulations, as