I urge you to put your complete support behind the cause of increasing and insuring payment of such funds. If any further information is necessary, please feel free to call on me at any time. DEAR SENATOR MCGOVERN: The 1970-71 Fiscal year for South Dakota School Food Services opened with a new director and a great many challenges presented by the signing of Public Law 91-248 on May 20, 1970. These challenges were greatly increased as month after month went by and funding did not become a reality until January of 1971. President Nixon had challenged all states to see that all needy children were fed a nutritious lunch by Thanksgiving of 1970. This challenge was accepted by South Dakota and more than 30,000 additional children had lunches available to them by Christmas time or shortly thereafter even though many were of the sack lunch type. With apparent excellent funding available from January and on, an increased emphasis was placed on making lunches available to more and more children and stressing that hot foods should be served by the fall of 1971. Again the schools have accepted this challenge. Late in January of 1971 two officials from the Midwest Regional Office in Chicago visited South Dakota asking that fund needs be projected for the balance of the fiscal year. With expanding programs they were informed by the Director that this was impossible. By late March the regional office was much more adamant in its demands and it was agreed that projections would be made but no binding release of funds would be made by South Dakota. I was assured this was understood. The tentative release of funds was discussed with Dr. Barnhart, State Superintendent, and officers of the State Budget Bureau. Shortly after May 1, 1971, however, it was discovered that a greatly increased demand for food services for summer programs was developing. The Chicago Midwest Regional Office was immediately informed. By the end of May reimbursement requests from schools indicated that where in previous years there had been a heavy drop-off in participation during April and especially in May this was not holding true in 1971. Therefore, early April projections were not holding and some of the tentatively released funds would be needed. Letters were immediately sent to Mr. Doyle, the Director of the Midwest Region, with carbons to Mr. Nelson, the Director of Nutrition at Chicago, to Dr. Barnhart, the State Superintendent of Public Instruction, and to the Senate Select Committee on Nutrition and Human Needs. A direct call was made to Mr. Doyle and Mr. Nelson and numerous conversations have been held with Mr. Stauner, Deputy Director of the Chicago office. Although many verbal commitments have been made to alleviate the situations whereby we have on hand hundreds of thousands of dollars in commitments to schools, we are stalemated in our processing until we get direct written confirmation. I am enclosing copies of our last two letters of credits with the irrevocable clause attached to each which gave me the assumption that when funds had been committed unless a formal release was requested the funds would be available. The April 13, 1971, Letter of Credit, indicated the following authorizations for South Dakota : The School Milk allocation has been sufficient due to the uncertainty of the continuation of the program last fall and many schools started late or discontinued the program out of frustration. It was nearly Thanksgiving before we were given the go ahead to the end of the year. We will be able to release more than $40,000 from this fund which will revert to the Federal Government. The Section 4 authorization of $906,998 is the amount authorized to May 18 for payments for each lunch served and ordinarily it has been 4¢ to 5¢ per lunch. With a 50% increase in funds over the previous year and with many school lunch programs experiencing difficulties last fall this rate was set at 10¢ during November and 7¢ during December. The remainder of the year it remained at 5¢ per lunch. To meet May obligations at 5¢ per lunch this fund is $24,000 short. The Section 11 authorization of $1,173,038 was for Special Assistance to Needy Students payments. Initially each needy child listed on a claim received 30¢ per lunch from this fund plus the 5¢ regular reimbursement except for November and December when 10¢ and 7¢ respectively were paid. The Section 11 fund seemed very adequate until April when new guidelines from the Federal Government allowed payments of 48¢ per lunch with an additional 12¢ for each child participating in the school lunch program to be paid from Section 4 funds—if the school financing of lunch programs seemed in dire straits. Demands for these funds increased greatly also the costs of lunches in most schools averaged around 50¢ and the differences between the 35¢ reimbursement for needy children and the 50¢ cost had been borne from other sources until February. Therefore, in February many requests for additional aid came in and many more in April from schools running deficit programs or at low levels. It was at this time that increased pressure was brought to bear by the Federal Government for projections to the end of the year. By this time directors throughout the country were swamping regional offices with letters and telephone calls saying that they would not have enough funds in Section 4 to pay 12¢ for each lunch served if they were going beyond the 30¢ rate for the needy. The USDA relented and passed the "Interim 12¢ Rule" which stated that 5¢ could be paid from Section 4 funds and 7¢ from Section 32 funds. Section 4 funds are directly appropriated for payments for each lunch served regardless of the status of the child and Section 32 funds are funds received from import duties (to the best of my knowledge). Proportionate amounts of these were assigned to the various states. This is a flexible fund which can be transferred to Special Assistance needs beyond funds already authorized for that purpose, to School Breakfast needs if additional funds are required, for non-food assistance if additional funds are needed especially for expanding programs, and for Special Food Services Programs. This new rule greatly enhanced the opportunities for programming but also seriously affected any true projections to the end of the year as many more requests were received in April. A great many commitments were also made for equipment to institute new feeding programs, especially in larger cities, and for increased payments to needy children in schools which had made specific requests stressing inadequate financial resources. These commitments also followed the guidelines. However, on the basis of information available and trying to be honest I had announced in April the possibility of a tentative release of $337,858 amount of Section 11 funds and a need for an additional $2,000 in Section 4 funds, an additional $6,136 needed for Breakfast Program purposes, and an unneeded $35,762 in Special Milk Funds. I indicated no release of the $886,039 in Section 32 funds. On June 4 with no request from the USDA as to financial status at the time a Letter of Credit was received reducing Special Assistance by $337,858 but transferring this amount to Non-Food Assistance which was acceptable to me. However, a like amount of $337,858 was decreased from the $886,039 which was not acceptable under the Letter of Credit irrevocable clause. In a like manner the $104,530 in Special Food Service Funds which we had in April of 1971 and of which funds Mr. Earl Boxa, Assistant Director, projected we would need $22,308 to carry us to June 30 suddenly mushroomed with new programs and it is estimated that we need an additional $20,000 to $30,000 in additional funds to cover June costs. I have submitted a request that the Letter of Credit be revised to the following status to clear up 1971 fiscal year commitments. CF-32 (This includes 288,000 for Interim 12¢ Rule and $279,521 in 96, 700 405, 419 42, 956 40,000 The total requested on a final Letter of Credit is $3,331,596 as compared to an authorization of $3,634,595 on April 13, 1971. However, Federal authority must be granted before certain funds can be transferred to different categories. This means that South Dakota could have spent an additional $302,991 of the original April 13 authorization if the guidelines had been more flexible. I am enclosing copies of Letters of Credit to substantiate the above. I am submitting this to the South Dakota Congressmen and to the State Board of Education. I know the explanation may be complex but I think it should be known that the problems involved with the feeding of 110,000 children, plus commodity programs in eleven counties and the Indian Reservations plus summer camps and child care centers and constantly changing policies are complex. I am hoping South Dakota Congressmen will immediately take action. Sincerely yours, MARTIN SORENSEN, Director, School Food Services Division. Enclosure. U.S. DEPARTMENT OF AGRICULTURE, Subject: Funding of special food service program for fiscal year 1971. Following are the total dollar amounts available to the States indicated for the current fiscal year 1971. There will be no authorization to transfer funds from any other Program to the Special Food Service Program. You must confine expenditures to the amount shown: The Letter of Credit cited above held in your favor by the Federal.Reserve Bank named has been revised to reflect the changes shown below for the programs specified. Under no circumstances shall Form FNS-218, Payment Voucher on Letter Credit, be issued which would result in overdrawing the Amount Cumulatively Authorized Pro74ny program for the current month. If a Payment Voucher is issued in an amouRECEIVER excess of the monthly limitation for the specific program, you will be by EDPUZ sible for such excess amount. Educational Food Services, CERTIFYING OFFRES VALIDATION In accordance with the authorization of the Fiscal Assistant Secretary, Treasury Department, there is hereby authorized for the account and responsibility of the issuing agency a letter of credit: The unpaid balance of this letter of credit will remain available until you are advised in writing by the Treasury Department that this letter has been revoked. OR The unpaid balance of this letter of credit is revoked at the end of each period indicated and the full amount reestablished at the beginning of the following period until you are advised in writing by the Treas ury Department that this letter has been revoked. The amount of this letter of credit is hereby certified to be drawn against, upon presentation to you of Form TUS 5401, Payment Voucher on Letter of Credit, by the official (s) of the recipient organization whose signature(s) appear(s) on the Standard Form 1194, Authorized Signature Card for Payment Vouchers on Letter of Credit, attached hereto or previously or subsequently furnished you through the Treasury Department. The amount of each payment voucher paid by a Federal Reserve Bank or branch to a designated commercial bank for credit to the account of the recipient organization shall constitute payment to the recipient organization by the United States. I certify to the Treasury Department that the payments authorized herein are correct and proper for pay. ment from the appropriations or funds legally committed and available for the purpose, when paid in accordance with the terms and conditions cited above. *Sale Letter of Crellt is irrevocable to the extent the recipient organization bar abli ated funds in mod fulth throunder in exonsting the authorized Petecul Program ir accordance with the grant, contract, or other agreement. |