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announced today, plus the 6 cents on that average basis, we think this estimate of $175 million would be accurate. However, if we were to adopt regulations or policy of 6 cents as a minimum and 40 cents as a minimum, I don't have an estimate of what it would cost. On the 6-cent figure, I would guess that it would probably in the area of $15 to $20 million for a 6-cent minimum only.

We have done some study on the free and reduced price lunches. We estimate that each 5-cent increase in that average rate would increase costs from $65 million to $100 million depending upon participation and depending upon how we could structure some sort of controls. But we really have not been able to understand how we could administer a program, where you permitted States to set the rate of reimbursement at somewhere between 40 and 60 cents, without some sort of guidelines that would have to be fairly rigid.

Mr. Pucinski. I know, but it does seem to me that there must be something wrong with our method of communicating. Now we have your Department here today and you assure us that with the new program you announced today of 40 cents State average and 5 cents across the board at a cost of $135 million, that this would do the job.

I know that we have had previous experiences with your Department where we received assurances that we could do the job and yet we get these reports from the field people who are working with the programs and people who have to need these youngsters and they tell us that they are not going to do the job.

Now it would seem to me that I have to sort of rely to a great extent on the people who are out there in the field. They are trying to administer these programs and it just seems to me that these people tell us that there is going to be some very, very disastrous consequences if this program is moved along the lines you proposed.

Now you say that you have changed your previous guidelines, but I think that the best information that we have is the 6 cents and the 40 cents would be the way to go. Now we are talking about some $40 million if the chairman is correct and perhaps $100 if you are correct, but the money is in section 32. I mean, this is not robbing Peter to pay Paul. The money is there.

Why can't we use it to feed these children?

Mr. Lyng. Mr. Chairman, there is section 32 money. We have traditionally maintained a carryover of $300 million of section 32 money. The Appropriations Committees have done this, and the executive branch has gone along. I think only once has part of the carryover been used.

The original purpose of section 32, as you recall, was to set aside tariff receipts for the removal of surplus commodities that were not under support programs. The purpose in reserving the carryover was for unforeseen crises. I think it would be a mistake to assume—or to consider—that this money is just there; that it does not cost anything to spend it. It is an outlay. It has a very real effect just as whenever the Federal Government spends money. It is just as real. Once spent, the carryover won't be available again.

That is why I think that both the Senate and the House resolutions call for reimbursement of the section 32 account. The actual spending of an additional $100 million of section 32 funds would have the effect of increasing the Federal deficit by $100 million. There is no mystery to that.

On the question of the 6 cents, Mr. Chairman: I think it should be clear to the committee that the 5-cent appropriation allowance is to all children, needy children and nonneedy children alike. Increasing that by 1 cent will have a very small effect, a negligible effect, on the needy children because it moves them from 45 cents to 46 cents.

The major cost and the major effects relate to the large number of children who are not in the needy category. Our reason for not proposing to increase section 4 beyond a nickel is, as I am sure you understand, to try to keep Federal expenditures under some sort of control, under some sort of reasonable balance. We feel that priorities should be given to the feeding of needy children; that there is some real merit to leaving the 5 cents where it is. That is the reason for our proposal.

Mr. PUCINSKI. Well, you are actually right. You take $300 million in section 32 and you don't spend it, it goes back in the Treasury and it is used for some other purpose. So you are absolutely right when you say this money just does not come off a tree.

I am fully sympathetic with the President's problem. I know he is faced with a $35 billion deficit in fiscal 1972, but I am reminded of the testimony before this committee when we addressed ourselves to this problem 5 years ago and at that time the Congress by tremendous vote put the highest priority on feeding these children. So it seems to me that any kind

of retreat from that highest priority is contrary to the intent of this Congress and it does seem to me that this is where the problem is.

Now I presume that if the Congress passes this resolution, that the President will sign it. I know you can't speak for the President, but is there any question that he would sign it?

Mr. LYNG. You are right, I cannot speak to that, Mr. Chairman. I think it should be pointed out that there is no retreat here. The statewide average reimbursements of 5 cents for these programs come very close to the reimbursement rates that we have had in the past. I think only in one year have we ever exceeded this figure, just the most recent year.

Mr. PUCINSKI. But we have never had as massive a program. We have 25 million children that are now participating and we require 21 States to set higher minimum income poverty guideline standards. We have brought these children in and we have told these school administrators that we want every child in this country who needs assistance to be fed.

We have committed ourselves on a national policy that no child in this country will go hungry. Now these school districts are locked up, budgets are locked up, their legislatures won't be meeting again in many instances, and it seems to me on a basis of these telegrams that I have here and the statements that have been given to us that unless you go to the 40-cent minimum instead of average and the 6-cent reimbursement, that they are going to have to either lower the quality of the diet you are giving these youngsters or just not feed x number of youngsters. Nr. PEYSER. Would you yield?

you that

Mr. LYNG. No; that is not accurate. I would call to the committee's attention that the reimbursement rate during the past fiscal year was 31.1 cents. We have announced today that it will average-actually it averages above 40 cents—but it will be a statewide minimum average of that; in some States it will actually be above it, in all probability.

So at the very minimum we are providing an increase per lunch of 8.9 cents. We are providing 50 percent more cash than we were last year in total dollars, from $536 million to $750 million, and this is no retreat. This is a very substantial increase, Mr. Chairman.

I suspect that many of those people that sent those telegrams, if they were aware of our proposal today, would be able to tell they could operate under this program the way we have announced it.

Mr. PUCINSKI. Mr. Peyser.

Mr. Peyser. Excuse me. I just wanted to ask a question of you, Mr. Chairman, for my own understanding.

When we are dealing with average and minimum, which seems to be the question here, would you mind or would the Secretary mind explaining briefly exactly what that means ?

Mr. PUCINSKI. I will take a stab at it and then perhaps if the Secretary wants to elaborate, he can.

Obviously when we say a 40-cent minimum, that is precisely what we mean, that we will give assistance to needy children at no less than 40 cents. If you take the State average—and you may find that this is going to fluctuate in some districts—you may find that they get substantially below the 40 cents at the expense of other districts in their State. So while you are taking care of one, you may be hurting another

Our study shows, and the statement was made before the committee by the chairman, others indicate that 40 cents is the very least rate of assistance that they need if they are going to have an effective program. This is why we are saying that the 40-cent minimum-not it may be higher in some areas, but it can't go below 40 cents.

The Secretary is taking a position of averaging out across the States, which in my judgment would mean that some districts would have less money to work with.

Now, Mr. Secretary. Mr. Lyng. Yes. Just briefly I think the chairman has explained it. The reason for it, Mr. Peyser, is that you have some school districts who have a very few needy children; in many instances their tax base is sufficient; it is not really a major problem for that school district to take care of those needy children.

You have other school districts that are particularly poor, where you have a very high percentage of poor children. We have schools where actually a hundred percent of the children come from homes with a poverty standard. In those school districts you very often have a low tax base; as you know, equalization programs throughout the States are not all that satisfactory. In many cases there are some really grave financial problems in those poor school districts.

Our announcement, and it is traditional—the way we have been operating the program-permits the State department of education to reallocate these funds on the basis of need in school districts; go up as high, under some conditions, as 60 cents, which will substantially pay the full cost of the meals.

one.

We don't let them exceed the cost of the meals so that we are paying virtually 100 percent in some school districts. In others parts of the States are schools that have been able to get along quite well with far less apportionment. This really has not created serious problems. As a matter of fact, it is only in the last few days that this issue has come to my attention of a minimum standard.

Mr. PEYSER. Thank you very much.
Mr. Meeds (presiding). The gentleman from California, Mr. Bell.
Mr. BELL. Thank you, Mr. Chairman.

Mr. Lyng, how many children are you reaching by this present method, the 40 cents and the 5 cents ?

Mr. Lyng. The total figure at the end of the last school year was just about 25 million, Mr. Bell, in total. We were serving 7.3 million needy children free and reduced price lunches.

Mr. Bell. Do you have any figures showing how many needy children you

think there are? Mr. LYNG. We had an estimate from the State departments of education which indicated that the total was 7.8 million. Now there is a discrepancy, we think, in these figures; we do not really believe that if the 7.3 figure is accurate. We don't believe that we have 7.3 million poverty numbers. We think that there has been some reporting of free and reduced price meals served to children who were not truly needy and we have proposed through audits to get at that.

Some schools, for example, which had 50 or 60 percent needy children, just went ahead and classed all their children as needy children. We think there is some lack of accuracy in this, but not a widespread thing.

Mr. BELL. Do you think there are 500,000 needy children that are not being reached by this?

Mr. Lyng. Yes; as a matter of fact, we could estimate that there could be a million to 1.2 million. We have about 18,000 to 20,000 schools in the country that do not have a program. We estimate that in those schools-we have had estimates of 900,000—in some cases as high as 1.2 million needy children.

But we do know that there is a number that we don't have. We think that the program we are now putting into effect will get at that. In the past we have been granting the States a bloc grant; the more meals they served, the lower the reimbursement was per meal.

Under this regulation we are guaranteeing a minimum of 40 cents for every eligible meal no matter how many they serve. We think that it will be a real inducement for the States to go ahead and expand and get at those

Mr. BELL. In other words, what you are really saying is those missing areas, people that you heretofore have not gotten over the 7.3 million, that you have not gotten them because the States have not adequately cooperated or the school organizations; is this correct?

Mr. Lyng. Well, I could not want to say they have not cooperated, Mr. Bell. We have about 85,000 schools in the program. I think the States have done, in most instances, a good job. This is a program that has been growing steadily for years. The movement has been good, but we would like to accelerate it, particularly among the needy children. I think that there have been a number of reasons for it, dollars have been waiting

Mr. BELL. What I am trying to get at, Mr. Lyng, is that the chairman indicated that you have a pool of approximately 3 million which you said was allocated to some other difficulty you might have in deficits as a result of some of your products that were involved, but I am not just sure what that is.

At any rate, if you were to dip in and take some of that, assuming that you could without doing the damage to the economy that you say it might, could you actually reach that 500,000 right now?

Mr. Lyng. I think it would still take some time, Mr. Bell. Many of these schools do not have facilities, but there is no question about it that additional money will help. We think the additional money that we are putting in will move in that direction just about as quickly as it could be done.

Mr. BELL. What is that $300 million that you mentioned that taking $100 million from it would cause difficulty in the economy?

Mr. Lyng. Under the increase in school lunch spending we announced this morning, we are planning to use section 32 and we have the authority to do so. The section 32 is the 30 percent of customs receipts. It is assigned to the Department of Agriculture for use primarily in the elimination of surplus of nonsupported agricultural commodities.

There is about $700 million a year that we receive in that fund. We will be spending about $350 million for commodities, roughly half of it in the purchasing of surplus foods—orange juice, canned peaches, pears, raisins, prunes, from California.

We buy pork. We buy a lot of foods in California, your State and mine. We have a number of commodities that are not price supported and this is the kind of crops that it is used for.

We also bought lots of pork, lots of dehydrated potatoes and so on. But the rest is spent in cash allotments, largely to schools for school lunch programs.

I am not giving you precise figures on that, but if you like, we would submit precise figures for the record.

Now, each year, we have carried over $300 million; it has only been used one time. The purpose of having it carried over for some emergency agricultural problem. As a matter of fact, the records would show that Senator Holland, when he was chairman of the subcommittee for appropriations of the Senate committee, zealously guarded this $300 million, feeling that Agriculture could very likely need it. It is only recently that we have begun to talk about invading that $300 million for something other than agricultural purposes.

We can only do it once. It won't be a carryover if we use it. We start out this year with a billion dollars; we have $700 million of new income and the $300 million carryover. If we use it, then next year we don't have a $300 million carryover, so we will

Mr. BELL. Won't you have some from the next year?

Mr. Lyng. We will have $700 million, but we won't have the carryover, you see. When it was used before, it was replenished by an appropriation or by a reduction in other spending.

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