improve nutrition of low income people. A medical report sent around the nation by the Field Foundation in 1967 quoted physicians saying, "we saw children in significant numbers who were hungry and sick, children for whom hunger is a daily fact of life, and sickness in many forms, an inevitability. They were hungry, weak, apathetic. Their lives are being shortened. They are visibly and predictably losing their health, their energy, their spirits. They are suffering from hunger and disease, and directly or indirectly, they are dying from them-which is exactly what 'starvation' means."

Ten years later, the Field Foundation again sent doctors to the country's worst areas of poverty. Their findings in 1977 were that:

there are far fewer grossly malnourished people in this country today than there were ten years ago. Malnutrition has become a subtler problem. In the Mississippi Delta, in the coal fields of Appalachia and in coastal South Carolinawhere visitors ten years ago could quickly see large numbers of stunted, apathetic children with swollen stomachs and the dull eyes and poorly healing wounds characteristic of malnutrition-such children are not to be seen in such number. This change does not appear to be due to an overall improvement in living standards or to a decrease in joblessness in those areas. In fact, the facts of life for Americans living in poverty remain as dark or darker than they were ten years ago. But in the area of food there is a difference. The food stamp program, the nutritional component of Head Start, school lunch and breakfast programs, and to a lesser extent the women-infant-children (WIC) feeding programs have made the difference. It is important to remember, as changes are made in the Food Stamp Program, the reason for the Program's inception as stated in the Food Stamp Act of 1964: "To effectuate the policy of Congress and the purposes of this Act, a Food Stamp Program which will permit those households with low incomes to receive a greater share of the nation's food abundances, is herein authorized." Bear in mind that it is our duty to feed the hungry and share our "nation's food abundances".

NCSSA RECOMMENDATIONS ON FOOD STAMP PROGRAM

(Number do not indicate priority order)

1. Elimination of outreach.-The present requirements make outreach cost inefficient. It consumes too many resources. It is ineffective. Most of the individuals reached in this way do not want benefits. Individuals desiring to apply for food stamps are aware already. Going out in the community brings in few people, and those would have come in anyway. When individuals in community outside staff aid with outreach, individuals referred to agency are often ineligible, adding to staff work required.

2. Cash out program.-Giving cash instead of food stamps is an oft-discussed issue. Pilot projects are now in place, and we suggest looking at those results before this is considered.

3. Purchase price.-Do not return to Purchase Price Requirement. That increases administration and fraud potential. It was difficult for recipients to get entire purchase requirement, causing partial purchases with increased administration. 4. Raise standard deduction level of elderly and disabled recipients, defined in present program as "specified" households, and completely eliminate medical deductions. This would eliminate administrative time required to verify medical expenses and would increase benefit levels for most elderly and disabled recipients who are unable to work.

5. The "voluntary quit" provisions should be equally applied to certified households as well as applicants.-At present, in certified households, individuals in those households may enter and leave employment without penalty. This should apply to all individuals in households subject to work registration requirements.

6. Eliminate the separate household roomer and boarder policy.-Current provisions allow misrepresentation of existing household situations. This would be returned to pre-1977 Food Stamp Act conditions.

7. With quality control, a distinction should be made between client error and agency error.-Client error is beyond the worker's control. In determining errors, staff should be charged with errors in areas over which they have responsibility. It is unfair and demoralizing to staff to be held responsible for errors for which client is responsible rather than agency.

8. Do away with management and evaluation.-Presently this is merely a policing action or audit. To be effective, results should be shared so that administration can be improved. This should be combined with Quality Control and/or USDA/FNS, thus eliminating duplicative policing, thus reducing upper level administrative

costs.

9. Work registration for AFDC and food stamp recipients should be the same.-In the AFDC program, the mother must register for work when there is no child under the age of six. We suggest that the Food Stamp Program also use the age of six instead of the present twelve. Failure to comply with work registration requirements should result in immediate disqualification of the entire household. With the ten day adverse action notification, client has ample opportunity to correct failure to register for work or show adequate good cause. An individual's subjectivity to work registration requirements should be based on available hours of work (and such potential income counted).

10. Standardize reserve policies for AFDC and food stamps.—It is confusing for workers and clients to have two different reserve policies to work with, and can

cause agency errors.

11. The expedited case policy should be eliminated.-Without adequate verification, clients are able to receive food stamps to which they may not be entitled. Emergency situation can be taken care of by prompt action including adequate verification.

12. Residence of more permanent nature.—A permanent residence should be required, similar to other programs. There should be an "intent to remain" determined. Presently, an individual could move from state to state, or county to county, be living in cars, tents, etc.

13. Where fraud is involved, the entire household should be disqualified instead of only the individual committing fraud.-Determining the percent of food stamps for an individual apart from the household involves administrative time and is not an adequate percent of penalty. Mandatory recovery of the fraud over-issuance should be possible, such as withholding food stamps, similar to provisions available in AFDC. Also, when an AFDC mother is removed from the AFDC payment for failure to comply with child support requirements, the food stamp allotment should not be increased due to the reduced AFDC income since this results in no penalty. No overpayments being withheld from any assistance payment should be excluded as income. Look at entire household instead of just individual when ANY penalty is to be imposed.

14. The_School Lunch Program should not be counted as income against food stamps. Food stamp benefits would be too low to provide adequate nutrition for growing children. In addition, the administration required to implement this would cost more than the savings, while doing nutritional damage to children.

15. The requirement for an appointment prior to the home visit should be eliminated. Since home visits are made only when the worker feels the strong need to verify, a prior appointment makes it possible for the situation not to be valid. 16. Eliminate change report form.-Most of these returned are inadequate for completing the required change. This adds to administrative time required. The change report form is a luxury form. With today's economy and needed cut backs this needs to be a form placed to rest. The clients and the workers prefer phone calls from the client about change. We are then able to learn all that has changed and ask for verification if needed. Also we are able to make the change to the case sooner than if we received written information, had to write to the client, or try several phone calls to locate. Agencies are able to take immediate action, therefore saving money to the program.

17. Eliminate client permission for verification, collateral visits.-When the application has been signed, authority has been given to verify any information therein. Obtaining permission can also cause administrative delays.

18. Student eligibility changes.-Students who live in a dormitory should be automatically eliminated. Taxpayers are critical of students who can afford to live in a dorm receiving food stamps.

19. Congressman Jeffords' amendment.-Although on its face, the amendment appears to be simple and straight-forward, it poses significant administrative problems and new costs for state and federal administrators. For example, when individuals become eligible to receive food stamps, it may not be clear whether their income will exceed the "exempt amount". For any individual that becomes liable under this provision, the county would have to generate a "W-2" type written statement no later than January 31 of the succeeding calendar year, informing the individual of the value of the food stamp coupons received during the preceding calendar year and outlining the individual's liability. The "W-2" reporting requirement would become the responsibility of state and local food stamp administrators. Generating these reports will be both administratively complex and costly.

20. Data is not being collected to determine the need for proposing three different standard utility schedules.-We must oppose more than one standard utility schedule. Three different schedules would increase the potential for making errors.

STATEMENT OF Anne Sapp, THE CHILDREN'S FOUNDATION

The Food Stamp Act of 1977, authorized by this Committee, has done exactly what Congress intended. It has served the truly needy, and it has served them well. Recent allegations that this program is full of fat and that it is symtomatic of federal spending gone wild have, we believe, no basis in fact. And the assertion that expenditures for food stamps can be cut by $2 billion without compromising the program's ability to serve as a “social safety net" for the "truly needy” is equally

untrue.

The Food Stamp Program is the most successful assistance program in history. It is the only program which consistently reaches both the poorest people in the most isolated regions and low-income and unemployed workers. At best the proposed cuts will seriously compromise the program's ability to perform both these functions. They may indeed cripple the program's usefulness for the very people who need it most.

The Regional offices of the The Children's Foundation serve 15 states in the South and the West. Recently we undertook a county-by-county analysis of participation rates in the 1027 counties served by our Southern and Western offices. Our analysis shows that the dramatic increase in participation that occurred in the first year after EPR in no way indicates a program gone wild. This increase was caused by the removal of a barrier to participation which had kept almost 50 percent of the eligible population from receiving stamps.

In other words, the major reason for high increases in participation after EPR was low participation prior to its implementation. Several southern counties illustrate the point:

In Dare County, North Carolina, food stamp participation increased by 100 percent following EPR. But prior to EPR only 20 percent of the poor population (178 people) were receiving food stamps.

In Webster county, Mississippi, where only 1 in 4 eligible people received food stamps in October, 1978, participation increased by 90 percent. In nearby Washington County, however, where slightly more than half the eligibles already received stamps, the rate of increase was 44 percent less than half that of Webster County. Our analysis also indicates that where participation increased significantly in the second year after EPR, those increases were directly related to dramatic increaes in unemployment.

In Webster County, Mississippi, unemployment increased from 4.2 percent in July, 1979 to 10.9 percent in July, 1980. Food stamp participation increased by 35 percent during that same period.

In Onslow County, North Carolina, where food stamp partipation has increased by almost 200 percent from July, 1978 to July, 1980, unemployment has increased from 4.8 percent in July of 1978 to 6.8 percent in July of 1979 to 9.8 percent in 1980. In Dougherty County, Georgia, 63 percent of the poor population received food stamps prior to EPR, and food stamp participation increased by only 16 percent in the first EPR year. During the year from July, 1979 to July, 1980 unemployment increased by almost 2 percent-and food stamp participation jumped by 20 percent. In neighboring Early County, however, where unemployment had dropped from 7.3 percent in July, 1979 to 5.6 percent in July, 1980, participation increases were minimal.

Available evidence in no way substantiates the allegation that the Food Stamp Program is a haven for cheats and chiselers, or that spending is out of control. All evidence shows that it is accomplishing what no other program is: delivering truly needed assistance to the most isolated areas of this country.

We of The Children's Foundation urge this Committee not to be stampeded by the myth of the food stamp Cadillac or promises that the proposed cuts would not affect the truly needy. In fact, the impact of these proposed cuts on the truly needy would be devastating. Two of the cuts in particular would be particularly catastrophic. Reducing food stamp allotments by the value of available school lunch subsidies (the Helms amendment)

In theory, this change seems logical. In practice, it would be disastrous. This proposal is not only targeted specifically on the poorest of the poor, it is targeted on the most helpless and vulnerable poor people in this country-children. There is no southern state in which a mother with 2 school age children can receive more than $195 a month in AFDC payments. The maximum grant ranges from $118 in Alabama to $195 in Florida. The average grant for a family of 3 in the 8 southern states is $153.50. Hundreds of thousands of women must make this meagre grant stretch to pay for rent, lights, gas, water, transportation, clothing, soap, toothpaste, toilet paper, laundry and-in Mississippi-all medical costs for the parents. In most southern states, the food stamp allotment received by these households is at least

equal to the cash assistance they receive. In Mississippi, Tennessee, Alabama and South Carolina, it is larger. These families do not supplement their food stamps with cash-they can't. And they do not receive "duplicated benefits." If a mother in North Carolina has 2 school age children who eat lunch at school 5 days a week, food stamp benefits still provide her only $2.50 (or 83 cents a person per meal) to feed her family 2 meals a day.

This cut does not only affect AFDC recipients, however. It effectively removes program benefits from the realm of the working poor. Mrs. Mae Helen Johnson of Atlanta, Georgia is a case in point. She is estranged from her unemployed husband. She has 6 children, one of whom is deaf and must attend a special school. She works part-time in the kitchen of the Atlanta School for the Deaf, trying to stay off welfare. She has 4 children in school and her sister keeps the two younger ones part of the day, since Ms. Johnson cannot afford child care. She earns $217. They receive $296 in food stamps. After this proposed change they would receive only $248 in food stamps.

Retrospective income accounting

This proposed change will have a devastating effect on the working poor. Proponents blithely argue that this provision will close the door of the Food Stamp Program to a specific kind of program abuser-the person with high annual income who has no income at the time of application. In reality this proposal will place an enormous burden on the recently unemployed, depriving them of assistance at the time when they are most desperate. For example:

In Georgia: A woman with 1 child who was earning $3.98 an hour as a buffer at the UniRoyal plant in Dublin before the plant closed would have to wait 4 weeks to become eligible for food stamps. During that month she would have zero cash income while waiting for her unemployment benefits to start.

In Mississippi: A paint-and-body worker with 2 children earning $4.00 an hour at the Superior Coach plant in Kosciusko before he was laid off would have to wait 30 days from the date of lay-off to become eligible for food stamps.

In North Carolina: A fixer at the Burlington plant in Rocky Mount who was earning $5.25 an hour before the plant closed and who has 3 children would have to wait 4 weeks to become eligible for food stamps.

In Kentucky: An assembly-line worker with 4 children who was working at the Ford plant in Louisville and earning $7.91 an hour before he was laid off would have to wait 4 weeks from the date of lay-off to become eligible for food stamps. Families like these would be ineligible for a full month even though they were without any income or opportunity to work.

The case of Mrs. Corinne Hines, from Dublin, Georgia, illustrates the impact this particular cut would have on low-income people. Until last year, Mrs. Hines, who is the sole support of 3 school-age children, worked at the UniRoyal plant in Dublin earning $3.81 an hour. She was ineligible for food stamps. The plant closed last year, laying off 700 workers, and Mrs. Hines immediately applied and was certified for food stamps. Mrs. Hines has been unable to find work since that time-she has visited the Employment Service weekly, applied for jobs at each of the 5 plants in Dublin, at every nursing home and hospital in the county, and at every store in town. This change would have made Mrs. Hines ineligible for stamps for one month after her lay-off; it would mean that she would have had to wait 4 months for her food stamp allotment to reflect that her only income is unemployment; it would mean that once her unemployment ran out she would have had to wait another month for her allotment to reflect her lack of income. For Mrs. Hines, already laboring under the burden of being jobless in a small Georgia town, this cut would add the intolerable stress of being unable to feed her family.

It does not seem reasonable to destroy the effectiveness of a program because of the very fact that it has been successful. Neither is it reasonable to provide fewer benefits because there is more need for them. It is, however, certain that these particular cutbacks in the Food Stamp Program would bring hunger back to some of the neediest people in this country.

STATEMENT OF RICHARD LYNG, DEPUTY SECRETARY OF AGRICULTURE, USDA

Mr. Chairman and Members of the Committee, I am Richard Lyng, Deputy Secretary of the Department of Agriculture. I am pleased to be before you today to discuss reauthorization of the food stamp program and commodity distribution programs. I particularly want to share with you our proposals to improve the operations of the food stamp program.

I appreciate the support that this Committee has extended to these nutritional assistance programs in the past.

THE PRESIDENT'S ECONOMIC RECOVERY PROGRAM

The proposals that I will discuss with you today must be examined as a part of the President's comprehensive Program for Economic Recovery. That plan consisted of four major components: (1) a substantial reduction in the growth of Federal expenditures; (2) a significant reduction in Federal taxes; (3) prudent relief of Federal regulatory burdens; and (4) a monetary policy on the part of the independent Federal Reserve System that is consistent with these policies.

The actions we will discuss today address most immediately the first point of the President's plan-decreasing the growth of Federal spending. The rapid and excessive increase in Federal expenditures has disrupted our economy, resulted in both unemployment and high inflation, decreased productivity, and discouraged investments. In the past two years the Consumer Price Index for all items went up over 24 percent. Unemployment rose from nearly 6 percent to over 7 percent. Borrowing to finance the growing Federal deficits has hurt sustained economic growth. A vicious circle has been created whereby sluggish economic growth and rising unemployment leads to additional budget spending, higher budget deficits, and still less growth.

Efforts to control Federal spending and balance the budget have been thwarted by economic_recessions as external economic forces reversed planned policy of Congress and the Executive Branch. Economic recovery can only be achieved by restraining the growth of Federal spending.

I think it is very important to stress that an improved economy under the President's Program for Economic Recovery will directly equate to a reduced need for program benefits. Food stamp allotments are based on the level of food prices in the retail markets and the rate of unemployment affects the number of program participants. Every increase of 1 percent in the price of food adds $150 million to the cost of the program. Every increase of 1 percent in the unemployment rate adds 1.25 million participants, adding $557 million to issued benefits each year. Improving economic conditions will result in a concurrent reduction in program costs. In fact, our budget request for fiscal year 1982 is reduced $380 million from the prior Administration's estimate, reflecting our overall program for reducing unemploy

ment.

Mr. Chairman, the average American will be greatly benefited by the President's economic program. As was pointed out in the President's fiscal year 1982 budget revisions, current double digit inflation can be cut in half by 1986. Reduced tax burdens and increased private saving will result in productive investment. The economy will revive, showing a steady and sustained year to year growth. We expect high unemployment rates will be reduced, and to see the creation of some 13 million new jobs by 1986. The bottom line effect of reducing Federal spending is an improved living standard for all Americans.

GROWTH IN THE FOOD STAMP PROGRAM

The growth of the food stamp program is a good case study in examining the overall growth in Federal expenditures. Chart 1 displays the total Federal and State share of administrative costs of the program during the last 10 years. In fiscal year 1971, total program costs were $1.6 billion, representing bonus stamps of $1.5 billion. In fiscal year 1981, we expect costs to exceed $11.4 billion with bonus costs of about $10.3 billion.

In real dollars, the program has grown from $1.6 billion to $5.0 billion for a total of $3.4 billion, representing an average annual increase of about 12 percent. During the last decade the total Federal budget outlays have grown from $197 billion in fiscal year 1970 to $580 billion in fiscal year 1980, an average annual increase of over 11 percent; corrected for inflation this represents a growth of about 3 percent annually. Therefore, in real terms, the food stamp program budget has grown much faster than the overall budget, four times as fast even after adjusting for inflation. It is important to keep in mind that economic conditions characterized by recession and increasing inflation have strongly influenced the current program's costs and number of participants, as well as significant program changes I will review shortly. In fiscal year 1971, the program was benefiting an average of 9.4 million persons. Preliminary data on current participation shows an average of nearly 23 million persons monthly.

BACKGROUND

Another very important factor in the growth of the program has been the rapidly changing program coverage brought about by extensive legislative changes over the last decade. Chart 2 highlights economic and participation changes in the past