of $8,750 or less. A student qualifies for a reduced price meal if the family's income is between 125 percent and 195 percent of the poverty guidelines. For a family of 3, that means an income of $8,750 to $13,110 a year.

(b) Participation.

Illinois, 1979-80 school year

931,910 children participated in the school lunch program, which is mandatory in all Illinois public schools.

507,007 children, or 54.4 percent of all who participate in the school lunch program, received free lunches.

33,992 children, or 3.7 percent, purchased their meals at a reduced price of 20 cents.

390,911 children, or 41.9 percent, purchased their meals for an average cost of 60 cents. (Illinois State Board of Education ("ISBE")).

In February 1981, 43 percent of all food stamp households in Illinois, or 161,902 households, contained a child participating in the free or reduced price School Lunch Program. (Based on USDA estimates.)

58 percent of the children in Illinois who attend a school which participates in the free and reduced price Lunch Program also participate in the Food Stamp Program. (Based on CBÓ estimates.)

Nationwide-November 1980

26.7 million children participated in the school lunch program.

10.3 million children, or 38.5 percent, received free lunches.

1.9 million children, or 7.4 percent, purchased meals at a reduced price.

14.4 million children, or 53.9 percent, purchased meals at an average price of 60 cents. (USDA).

III. EFFECT OF ADMINISTRATION'S PROPOSALS

I. LOWERING GROSS INCOME FOR FOOD STAMP ELIGIBILITY FROM APPROXIMATELY $14,000 TO $11,000 ANNUALLY WILL HAVE THE FOLLOWING EFFECT

Illinois

(a) 48,843 people, or 5.4 percent of all current recipients, would no longer receive food stamps. (USDA estimate).

(b) Since those receiving Social Security, SSI, AABD, and those with earned income are clustered at the higher income levels of the food stamp poor, it is the elderly, the disabled, and the working poor who will bear the disproportionate burden of these cuts. The elderly and the disabled are largely unable to work to make up the lost benefits. Those receiving Social Security or SSI are 34 percent of Illinois' food stamp poor. A family of four earning $12,000 may lose up to a maximum of 19 percent of their total income, under this proposal. The loss of benefits is a disincentive to continued employment for the working poor. The working poor make up at least 25 percent of Illinois' food stamp poor. To quote an editorial from The Chicago Tribune on April 8, 1981:

When the Reagan administration drafted its proposed cuts in federal spending on food stamps and Aid to Families with Dependent Children, it ignored the perennial problem of work disincentives...

So far OMB has admitted error only in regard to the AFDC cuts. But as we have noted above, the work disincentives for food stamp recipients are also substantial. Under the administration's plan, a family of four with a monthly income of $916 a month could get up to $99 a month in food stamps. But a family making just a dollar more each month would get no food stamps at all. Few welfare families would work for an extra dollar if it meant losing $99.

This disincentive, as Mr. Stockman had stubbornly argued, does indeed affect only the working poor. But it is only the working poor who have some prospect of lifting themselves out of welfare. Work disincentives don't affect mothers with small children or disabled recipeints, who aren't likely to work under any circumstances.

...

The administration is trying to remove the obstacles to productive activity by the well-to-do; it should do likewise for the poor.

Nationwide

(c) 1.2 million people will be eliminated from the Food Stamp Program. (USDA).

2. REDUCING FOOD STAMPS TO A HOUSEHOLD WITH A CHILD ATTENDING A SCHOOL WHICH OPERATES A SCHOOL LUNCH PROGRAM WOULD HAVE THE FOLLOWING DIRECT EFFECTS

a. General monetary loss and people affected

(1) In Illinois, 161,902 children, or 47 percent of all people receiving food stamps, would have their benefits automatically reduced. (Based on USDA estimate.) (2) In Illinois, that means a loss of $19,428,240 in food stamp benefits. (Based on USDA estimate.)

(3) Nationwide, 6.8 million children, or 30.6 percent of all food stamp recipients, would have their benefits automatically reduced. (USDA).

(4) If Congress made the $12 monthly reduction automatic for each child eligible to participate, regardless of actual participation, there will be the following inequities:

No exception for those whose religious beliefs preclude their eating school meals (and therefore loss of money);

No exception for those whose medical conditions, such as illness or allergies, preclude their eating school meals (and therefore loss of money);

No exception for those whose parent wishes to make a cheaper meal than the 60 cents automatically deducted (and therefore loss of money).

(5) If Congress made the reduction depend on actual attendance, both school district and food stamp officials in Illinois fear the administrative chaos which will result from counting, reporting, and computing for each child each day.

(6) If the Congress made the reduction depend on parental choice between food stamps and school lunch, and if parents uniformly chose food stamps, the Illinois School Lunch Program would lose $33,888,177 a year. (Based on CBO figures.) (7) Reducing food stamp benefits, where the average in Illinois is $1.41 per person per day, because of school lunch, will deprive Illinois children of food benefits necessary for healthy growth and full educational participation and development necessary to enable them to get a job and be free from public benefit programs.

3. REPEALING certain "teCHNICAL" LEGISLATION SCHEDULED TO GO INTO EFFECT NEXT YEAR WILL HAVE THE FOLLOWING EFFECT

(a) The elderly will suffer from removing the recognition of their current medical expenses.

(b) The working poor, and primarily women, will be discouraged from seeking work by a system which does not recognize the dependent care costs necessary for that work.

(c) An Illinois family of four, now receiving food stamps worth $233, could receive as little as $175 instead, a 25 percent reduction. (IDPA).

(d) Recipient benefits will continue to lag behind actual food costs by 4 to 16 months, at a time when food prices are climbing well over 10 percent annually and when recipient income has increased 17 percent during the last 3 years for which data was available while average U.S. income increased 40 percent during that same period.

4. CUTTING THE FOOD STAMP PROGRAM 20 PERCENT WILL HAVE THE FOLLOWING EFFECT ON RETAIL FOOD SALES AND ON FARMERS

a. Retail Food Sales

(1) Illinois food retailers will lose $4,450,000 in sales per month or $53,400,000 per year from these proposed cuts, in purchases that will not be replaced by sales from other food stamp family income. (Based on USDA estimate.)

Businesses will close, or be severely curtailed. There will be corresponding unemployment. Additional unemployment adds to the food stamp rolls.

(2) Nationwide, food retailers will lose $76,050,000 in sales per month or $912,600,000 per year. (Based on USDA estimate.)

Each 1 percent of unemployment adds 1 to 1.3 million to food stamps and adds $580 million in costs. (CBO).

b. Farmers

(1) Illinois farmers will lose $19,224,000 in sales per year, which will not be replaced by sales from other food stamp family income. (Based on USDA estimate.)

(2) Nationwide, farmers will lose $328,536,000 in sales per year, which will not be replaced by sales from other food stamp family income. (Based on USDA estimate.)

5. THE CURRENT PROPOSAL TO ELIMINATE THE SUBSIDY FOR PAYING STUDENTS AND DECREASING THE SUBSIDY FOR REDUCED PRICE AND FREE STUDENTS WILL HAVE THE FOLLOWING EFFECTS

(a) Based on the number of meals served in the 1979-1980 School Year, the loss for the Illinois School Lunch Program will be:

Amount $36, 048, 167 3,029, 714 1, 759, 101

40,836, 982

(b) Each one-cent increase in the price of school lunch for paying and reduced price students causes a one percent drop-out of paying and reduced price students. (USDA). If large numbers of paying and reduced price students drop out, the "unit cost" of producing each meal rises due to the loss of economy of volume. When the unit price goes up, prices for paying students go up, despite subsidies.

(c) The cost of reduced price lunches is expected to rise from 20 to 60 cents, a 300 percent increase. That means for a family with two children, the annual cost will rise from $72 to $216.

(d) 129,001 paying children and 3,739 reduced price children are expected to drop out of the program. (Based on USDA estimates.)

(e) In Fiscal Year 1980, the Child Nutrition Program brought in $240 to $300 million annually, which went to taxable wages, food purchases, equipment purchases, and supplies purchases. Proposed Fiscal Year 1982 reductions will reduce this income to Illinois by 50 percent. (ISBE).

Nationwide

(a) 6 million paying children and 3 million reduced price children are expected to drop out because of dramatic increases in lunch prices. (CNI).

We hope we have answered your questions. We will be delighted to furnish any further information desired to your office or your committee.

Sincerely,

Statement of JAY WAMSLEY, Legislative Support Center, SPRINGFIELD, ILL.

In Illinois $1.41 is the average Food Stamp bonus per day; i.e., $.47 per person per meal. In Illinois 48,530 persons would be eliminated by setting at 130 percent of poverty level.

34 percent of all Food Stamp households contain at least 1 person on Social Security or Supplemental Security Income.

In Illinois 161,902 households (43 percent) would have to choose between participation in school lunch programs to the $12 reduction in Food Stamps for each child.

Extending the retrospective accounting period to 90 days keeps people from receiving stamps when they need them.

Any change in emergency stamps reduces an essential part of the programability to respond within 3 days.

1 of every 3 Food Stamp dollars go directly to farmers (over $1 billion annually); 0.3 of 1 percent of households have strikers, 0.5 of 1 percent of households have students.

Gross income at 130 percent; Mostly affect elderly and working poor. Maximum eligibility standard for 2 people would be $543.00 per month and average Social

Security retirement benefit is $568.00 per month, this eliminating couples living on Social Security retirement.

1 percent rise in unemployment adds 1 million eligible people.

1 percent rise in cost of food adds $150 million to annual bill.

Average Family income-$3,900.

87 percent of families earn less than poverty level.

Cumulatively, the various proposals could result in an $80 million loss to Illinois and Food Stamp recipients in Illinois.

STATEMENT OF HON. HELEN SATTERTHWAITE, AN ILLINOIS STATE REPRESENTATIVE FOOD STAMP PROGRAM

President Reagan's proposed cutbacks in the Food Stamp program may affect as many as 3 million Americans by removing them from eligibility for benefits under the program. In Illinois, the loss in buying power may be as much as $100 million for the nearly 350,000 households now receiving some level of assistance. As many as 50,000 of these households would no longer be eligible if the proposed reductions were approved. Many of these reductions are not necessary. In 1980 Congress passed a number of amendments to the Food Stamp law which serve to reduce expenditures. These efforts include:

An annual inflation adjustment rather than the old twice-yearly adjustment; a lower limit on net income, from $8,200 for a family of four to $7,450; reducing the allowable level of assets from $1,750 to $1,500 (except for the elderly); increased administration efforts to reduce fraud and error; elimination of some students from those eligible for benefits.

The savings from these items is expected to be at least $750 million annually. Thus, although some adjustments in benefit levels or methods of estimating income may be justified, sweeping reductions in benefits are not called for.

Perhaps the most insensitive proposal would set eligibility limits on gross income rather than net income. This reduction would penalize many for whom food stamps are a crucial family resource. Currently, households having relatively high gross incomes may be eligible because deductions or exemptions allowed for high medical bills, large family size, or high housing expenses reduced available net income. The Reagan proposal would set eligibility on gross income negating the effect of these deductions thus creating undue hardships for large families, families with large medical bills, and for families living in large cities with higher housing costs.

Another proposal we strongly oppose would require families receiving food stamp benefits to count free school lunches in computing their eligibility. Over 40 percent of households receiving food stamp benefits would be affected by this reduction. Besides the obvious difficulties in attempting to implement and monitor this proposal, it ignores the fact that every school lunch is in fact subsidized. This type of cutback would simply serve to reduce the benefits available to provide nutritious meals at home.

The Food Stamp Program has been a valuable asset for improving nutrition for the needy in Illinois. Researchers have found that the food stamp program may be at least partially responsible for large gains made in improving the diets of low-income families over the last three decades. Also they have resulted in closing the gap in food spending between low-income and moderate to high income families to a point where these different types of families now spend, on the average, about the same amount for food consumed at home. Thus, although poor families spend proportionately more of their income on food than moderate or high income families, they are closing the gap in terms of being as well-nourished at least in part because of the buying power embodied in food stamp benefits. WOMEN'S, INFANT'S AND CHILDREN'S PROGRAM FUNDING

Proposals by the Reagan Administration to reduce funding for the Supplemental Food Program for Women, Infants and Children, or WIC for short, will have serious effects on the State's attempt to reduce its still unacceptable high infant mortality rate.

The Administration's proposed WIC program reductions of 30 percent, from $1.07 billion down to $742 million, will severely affect the ability of the Illinois WIC program to reach those in need.

The WIC Program benefits directly individuals who are considered high-risk, as well as providing support for Children and lactating women who also are in need of additional nutritional supplements.

Currently, in Illinois, the WIC Program administered centrally by the Illinois Department of Public Health, is already reducing the client caseload due to previous program reductions affecting Illinois.

Federal USDA assurances last year of additional WIC funds, but which were subsequently withdrawn, has now necessitated the WIC client caseload be reduced from approximately 83,000 down to 75,000 stateside. A net reduction in the overall number of clients served of 12 percent.

What makes this reduction all the more alarming, is that the estimated statewide potential WIC caseload is near the 200,000 level. Thus, any reductions above and beyond those currently in process, will further undermine the effectiveness of the WIC Program in Illinois.

As is well known, proper prenatal care is essential for all women to help ensure a successful pregnancy. An important part of this prenatal care is proper nutrition. With statistics recently issued by the National Center for Health Statistics showing that the City of Chicago has an infant mortality rate one and one-half (12) times the national average, to reduce funding for a program such as WIC which can impact on this human tragedy, it is essential to maintain program funding.

It is, indeed, a hopeful sign that the Senate's recent action in adopting its Budget Resolution, provided for a restoration of most of the Administration's proposed WIC reductions.

STATEMENT OF JOSEPH P. AHEARN, COORDINATOR, BREAD FOR THE WORLD

My name is Joseph P. Ahearn. I live at 2511 Lawndale Drive, Champaign. I am the 21st Congressional District coordinator of Bread for the World. Bread for the World is a Christian citizens' movement whose members seek government policies that address the basic causes of hunger at home and abroad. Our Executive Director is Arthur Simon, the brother of your southern Illinois colleague, Rep. Paul Simon. Our President is Bishop Thomas Gumbleton of Detroit. One of our Board Members is your colleague, Senator Mark Hatfield.

I would like to offer testimony today in regard to the Administration's proposed cuts in the Food Stamp and Child Nutrition programs.

FOOD STAMPS

1. The Administration is proposing to reduce food stamp benefits sharply for families with children eligible for school lunches. Benefits would be cut by about $12 per month for each low income child. This is more than 25 percent of the average monthly per person food stamp benefit, and this would especially hurt single mothers with children who are already among the poorest food stamp recipients. Bread for the World opposes these benefit reductions for the following four

reasons:

(a) Food stamp and school lunch benefits are not duplicative; they do not provide four meals a day.-Food stamp benefits are based on the U.S. Department of Agriculture's (USDA) lowest cost food plan, the Thrifty Food Plan. USDA's recent National Household Food Consumption Survey shows that only about one-sixth of the families spending at the level of the Thrifty Food Plan get the Recommended Daily Allowances for the basic nutrients. Many medical and nutrition authorities have long criticized the Thrifty Food Plan as inadequate. USDA studies confirm that most food stamp households cannot feed their families by spending at the level of the Thrifty Food Plan, and do spend additional funds of their own for food. Food stamps do not provide three meals a day for low-income families (or else poor families would not have to dig deeper into their limited incomes to spend more for food than the Thrifty Food Plan costs.

(b) This provision is very repressive and hurts the poorest of the poor.-Most of those affected will be single mothers with children, who are among the poorest food stamp households. Recipients of Aid to Families with Dependent Children (AFDC) would be especially hard hit. AFDC payments in many States are extremely low. Mississippi provides $1,440 a year in AFDC payments to a mother and three children with no other income. Texas provides $1,680 a year. These families would lose about $36 a month, or about $325 a year in food stamps. (c) The hardship would be even greater due to the impact of other provisions being proposed by the Administration.-Other proposed cuts would also hit these same households. For example, the proposed $1 billion Medicaid reduction will lead