The Treasury funds, as you know, require a larger range of match than in our regular program areas. That is, the ratio is $3 in non-Federal moneys for $1 in Federal money.

And we have allocated those, as our presentation indicates, I think, in a fashion in which they can be most appropriately used; that is, among larger institutions and organizations which can accommodate this kind of a match.

For example, the allocations are primarily among opera companies. $3.5 million there. Among music programs and orchestras, $7 million there. And in the theater area, $4 million there.

So that we plan a maximum use of these Federal dollars to stimulate non-Federal support for the arts without causing hardships to smaller organizations less able to match.

FELLOWSHIPS

There is an emphasis in our budget this year, Senator, on individual help to artists, especially in the literature and visual arts programs, where the ratio of applications to grant is at a very low point. Seven percent of today's applicants in the literature program receive awards, and only 3 percent in the visual arts area.

We are trying to adjust those ratios so that there is a more balanced program and a better opportunity for individual artists in those two areas.

For example, composers who apply are accommodated at almost 15 percent of the applications that we receive; 15 percent of those are granted, as compared with the 3 percent in the visual arts

area.

Choreographers at a comparative rate of 20 percent, and up to jazz musicians, for example, whose rate of accommodation is about 43 percent.

We have also, I think, in order to make a balanced program, a major emphasis on institutional development in theater and in music. And I would like to repeat what I said in a way last year to this committee that the growth of the arts has been dramatically assisted by the National Endowment over the years, and we have seen, for example, in theater the number of theaters grow from 15 when this program started, to 70 today.

That is the large professional resident theater company. And orchestras are more than double in number. Dance companies have increased more than tenfold.

I think it is due in large measure to the catalyst role of the Endowment stimulating non-Federal support.

We estimate that less than 10 percent of the total budgetary needs of the arts are met by our own program. But it has a profound impact and it is having, I think, an increasing impact on the development of the arts in our country.

OPERA-MUSICAL THEATER

I would like to highlight the new program for opera and musical theater.

Musical theater is a uniquely American art form and we need to find a new life for it in combination with and in relation to operatic music.

We need new innovations.

I would like to point out, Senator, that today's finest theater so very often originates in theaters outside of the one-time center of New York and Broadway.

That certainly is true of a great company like the emerging Alaska Repertory Theatre, which has just received, as you know, a challenge grant from the Endowment.

That kind of innovation, that kind of imaginative use of the arts is what we would like to see in the new opera, musical theater program: Innovation, imagination, a fresh flowering of those arts that pertain to music in this area.

Senator STEVENS. Let me interrupt you, if I may. I am sure you know the National Endowment for the Arts has always had substantial support from this committee. This year, however, we have a very difficult problem.

I think you need to give us some answers so that we can respond to our colleagues, in the event we take this budget to the floor as it is presented. It is one of the few items that shows an increase in a very austere budget. All of the other items in our budget have a reduction, it seems, except the Endowment for the Arts and Humanities, and the Smithsonian.

Would you tell us just from a general point of view, is spending in these areas any less inflationary than spending for energy development or natural resource management?

ECONOMIC STIMULUS

Mr. BIDDLE. I think, Senator, that the moneys that are invested in the arts are rather unique Federal dollars because they return themselves many times over.

I could demonstrate that to you by saying that in our total budget here, we are presenting a Federal investment of some $145 million, excluding administration.

That is $144 million. Excuse me. We would estimate in the very most conservative way that that would bring a return of two to three times over the Federal investment.

Senator STEVENS. We have a situation in this committee where we deal with the Oregon and California grant lands, the Forest Service lands, and the BLM lands. They actually bring into the Federal Treasury somewhere between 20 and 50 times the amount of money that we allow those agencies to spend in taking care of those resources.

They have been cut substantially. The roads in the Forest Service areas that are productive have been cut. It has been recommended to us now for the first time in almost 25 years that visitors to national parks be charged $2 a day, $5 a head on buses that we have previously provided free. We provided those buses so that we wouldn't have cars in the national parks. Now they are going to charge $5 a day for getting on buses.

All I am saying to you is that in this rather arid oasis of money, the only green sprouts coming up seem to be yours and the Smithsonian and the Humanities.

I am suggesting to you that you find some justification to demonstrate need in terms of your budgeted policies for fiscal year 1980.

For instance, could you tell us, why did you cut back challenge grants and use regular matching grants instead?

DECREASE IN CHALLENGE GRANTS

Mr. BIDDLE. That was the administration's decision, which we agreed with, Senator, that we would emphasize the programmatic area rather than the challenge grant area this time in that regard. Senator STEVENS. Why was that? Did you ask that of OMB? Mr. BIDDLE. It was a decision that we mutually reached.

Senator STEVENS. Would you give us the history of this decision for the committee? A table showing your original request to OMB and how it was modified might be appropriate.

Mr. BIDDLE. I would be glad to do that, Senator. [The information follows:]

HISTORY OF DECISION

The Endowment and the Office of Management and Budget agreed that, in the face of the three percent increase in the budget recommended by OMB, the Endowment would prefer to have more funding available in the Treasury account to supplement program activities. As a consequence, the figures displayed below represent our initial request to OMB and modifications of that request which eventually were presented to the Congress as a part of President Carter's budget for fiscal year 1980.

Senator STEVENS. Tell me, if you agree to it, what is the philosophy behind using Treasury grants instead of challenge grants? challenge grants, as I understand, do not flow from the Treasury until the challenge has been matched.

Mr. BIDDLE. The challenge grant money is available to the grantee, depending on the receipt of certification that a certain amount has been met of the challenge grant.

Senator STEVENS. That's what I said. If you say you are going to give them $100,000 out of $400,000, they have to tell you that they have $300,000 before they get the $100,000. Isn't that right?

Mr. BIDDLE. Senator, they have to have the $100,000 before the Federal money is released. Federal money is released as private money comes in.

Senator STEVENS. That is not the way you handle Treasury grants; is it?

Mr. BIDDLE. The Treasury grant money is released on a one-forone basis.

Senator STEVENS. Where is the stimulus to the arts economy to go back and get half as much money from the private sector?

THE DIFFERENCE BETWEEN TREASURY AND CHALLENGE

Mr. BIDDLE. The Treasury procedure is a little bit different than our challenge grant requirements. The challenge grant requirements are for new money. That is, you must have money that you didn't have before in order to make the challenge grant requirements fulfilled.

The Treasury grants which have been going on for some time; a dollar in Federal money is released when it is certified that another dollar in non-Federal money is received.

Senator STEVENS. Money they already had?

Mr. BIDDLE. It has to be a front dollar.

Senator STEVENS. Can you use money that you already have on hand?

Mr. BIDDLE. The dollar in new money from the grantee and the dollar matching from the Federal Government must be matched again. That may be matched in a variety of ways. That does not require the brand new money that is necessary for the challenge program.

Senator STEVENS. Are you saying you have the same amount of money being devoted to the arts no matter whether you use Treasury money or challenge grant money, in the end?

It is my understanding that you can end up with one-fourth less

money.

Mr. BIDDLE. It is more difficult to meet the challenge grant requirement. But the same general philosophy of a one-to-three match is involved.

I think I should point out, Senator, that the challenge grant is more of a one-time grant. And the Treasury funding can go from one year to another, depending on whether the organization is eligible for a second year.

Senator STEVENS. A Treasury grant is more of a sustained grant? Mr. BIDDLE. That is correct.

Senator STEVENS. Why do we go backwards then? Why did we go that way in the first place? In prior years, we have moved toward the challenge grant concept; the idea of increasing support with new money and expanding to each community and demanding additional support there in order to continue giving Federal money.

Mr. BIDDLE. I think that has worked extraordinarily successfully, too, Senator, and I am so grateful for your support of that whole concept.

Senator STEVENS. Why is OMB moving you backwards?

Mr. BIDDLE. It was felt that the challenge grants apply so often. to the larger institutions, to the institution that can make that commitment in terms of the three new dollars to match the one dollar, and that some of the more struggling organizations need more help.

In our regular program

Senator STEVENS. You told me you ended up with the same amount of dollars, ultimately, in non-Federal dollars.

Mr. BIDDLE. It is the same philosophy, Senator, but it isn't the new money that is involved in the Treasury.

Senator STEVENS. Is it true you end up with the same amount of dollars under either procedure from non-Federal sources, if you use Federal money.

Mr. BIDDLE. Yes, Senator, that's true. But in the challenge grant, the money has to be new-found money. It has to be in addition to regular contributions.

So it is a more difficult match to make and it often applies to the larger institution that is able to make that kind of a commitment. I think the Treasury fund, while requiring a three-for-one match, is more flexible, more adaptable, and a better arrangement for ongoing program use than is the Challenge Grant, which is a special kind of grant for a special purpose.

NON-FEDERAL SUPPORT

Senator STEVENS. My colleagues are here and I don't want to monopolize this. Let me ask a couple more questions.

Can you give us a statement showing the amount of new support from State and private sources during the period that we have, in fact, provided new money from the Federal Government?

Mr. BIDDLE. In the challenge grant field?

Senator STEVENS. Overall. When I first met your predecessor, she was supporting a request for $4 million. That was in 1970. You are supporting a request for $154 million of Federal money.

Now all I want to know is if in that period of time where Federal money has gone up to $150 million, have the States and the private sector come in with new money also?

Mr. BIDDLE. Yes, I should point out, Senator, that in 1966, State legislatures were supplying or were providing about $4 million for support of the arts among the 50 States and the five territories involved in our legislation.

Today, that figure is very close to $80 million. And interestingly enough, it has gone up almost $82 to $9 million in the past year, which is often called the year of proposition 13, originating, as you know, in California.

But the States are meeting the challenge of restricted budgets, restricted fundings in a very enlightened manner. Certainly, in your own State of Alaska, I believe the per capita expenditure for the arts from your State government is the second highest in the country.

And we have a new program with respect to State donations of funds that would enable us to recognize that kind of contribution by State governments.

It is very encouraging what the States are doing, and I think that is at the basis, in part, of what we are trying to do at the national level.

That is, to set an example to keep things going.

Senator STEVENS. I am not sure I am communicating. We are going to defend, or at least I intend to defend this request. We are going to face some real onslaughts from people who say, why, with no roads in the forest, why, with no additional funds for fish and wildlife, why, with a reduction of the funds, why do you come in with an increase here?