GOVERNMENT

Storage

REVIEW OF THE ADMINISTRATION BY THE U.ST 4

y4. vEPARTMENT OF AGRICULTURE OF THE SPECIAL

.04,38/1 MILK AND SCHOOL LUNCH PROGRAMS

M 59//I

HEARING

BEFORE THE

SUBCOMMITTEE ON DAIRY AND POULTRY

OF THE

COMMITTEE ON AGRICULTURE

HOUSE OF REPRESENTATIVES

EIGHTY-NINTH CONGRESS

SECOND SESSION

FEBRUARY 18, 1966

Serial V

Printed for the use of the Committee on Agriculture

•

U.S. GOVERNMENT PRINTING OFFICE

60-858 WASHINGTON: 19'66
•••

COMMITTEE ON AGRICULTURE

HAROLD D. COOLEY, North Carolina, Chairman

W. R. POAGE, Texas, Vice Chairman

E. C. GATHINGS, Arkansas

JOHN L. McMILLAN, South Carolina

THOMAS G. ABERNETHY, Mississippi

WATKINS M. ABBITT, Virginia

PAUL C. JONES, Missouri

HARLAN HAGEN, California

FRANK A. STUBBLEFIELD, Kentucky

GRAHAM PURCELL, Texas

JAMES H. MORRISON, Louisiana

ALEC G. OLSON, Minnesota

SPARK M. MATSUNAGA, Hawaii

MASTON O'NEAL, Georgia

THOMAS S. FOLEY, Washington

JOSEPH Y. RESNICK, New York

LYNN E. STALBAUM, Wisconsin

ELIGIO DE LA GARZA, Texas

JOSEPH P. VIGORITO, Pennsylvanid

JOHN C. MACKIE, Michigan

ROLLAND REDLIN, North Dakota

BERT BANDSTRA, Iowa

STANLEY L. GREIGG, Iowa

CLAIR A. CALLAN, Nebraska

MRS. CHRISTINE S. GALLAGHER, Clerk

HYDE H. MURRAY, Assistant Clerk

JOHN J. HEIMBURGER, General Counsel

FRANCIS M. LEMAY, Staff Consultant

PAUL B. DAGUE, Pennsylvania

PAGE BELCHER, Oklahoma

CHARLES M. TEAGUE, California

ALBERT H. QUIE, Minnesota

MRS. CATHERINE MAY, Washington

RALPH HARVEY, Indiana

PAUL FINDLEY, Illinois

ROBERT DOLE, Kansas

LAURENCE J. BURTON, Utah

'PRENTISS WALKER, Mississippi

GEORGE V. _HANSEN, Idaho

RESIDENT COMMISSIONER

SANTIAGO POLANCO-ABREU, Puerto th

SUBCOMMITTEE ON DAIRY AND POULTRY

HARLAN HAGEN, California, Chairman

WATKINS M. ABBITT, Virginia

JAMES H. MORRISON, Louisiana

ALEC G. OLSON, Minresota

MASTON O'NEAL, Georgia

LYNN E. STALBAUM, Wisconsin

JOSEPH P. VIGORITO, Pennsylvania

II

ALBERT H. QUIE, Minnesota

PAGE BELCHER, Oklahoma

PAUL FINDLEY, Illinois

PRENTISS WALKER, Mississippi

+If
•

App 14

A REVIEW OF THE ADMINISTRATION BY THE U.S.

- 'DEPARTMENT OF AGRICULTURE OF THE SPECIAL

MILK AND SCHOOL LUNCH PROGRAMS

FRIDAY, FEBRUARY 18, 1966

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON DAIRY AND POULTRY OF THE

COMMITTEE ON AGRICULTURE,

Washington, D.C.

The subcommittee met, pursuant to notice, at 2:30 p.m. in room

1302, Longworth House Office Building, Hon. Harlan 

p.m.,

of

California (chairman of the subcommittee) presiding.

Present: Representatives Hagen, Abernethy, Olson, O'Neal, Stal--

baum, Vigorito, Redlin, Quie, and Walker.

Also present: John Heimberger, general counsel; Hyde H. Murray,

assistant clerk; Martha Hannah, staff assistant, and Kitty Bernhardt,

staff assistant.

Mr. HAGEN. The meeting will be in order. I will first recognize

Mr. S. R. Smith, Administrator, Consumer and Marketing Service of

the Department of Agriculture, who has a prepared statement.

You may proceed, Mr. Smith.

STATEMENT OF S. R. SMITH, ADMINISTRATOR, CONSUMER AND

MARKETING SERVICE, U.S. DEPARTMENT OF AGRICULTURE,

ACCOMPANIED BY HOWARD P. DAVIS, DEPUTY ADMINISTRATOR; SAMUEL C. VANNEMAN, ASSISTANT DEPUTY ADMINISTRATOR; AND HERBERT D. ROREX, DIRECTOR OF THE SCHOOL

LUNCH DIVISION

Mr. SMITH. I welcome this opportunity to appear before you to

provide information on the national school lunch program and the

special milk program. Both are administered by the Department of

Agriculture's Consumer and Marketing Service.

The national school lunch program, since it was inaugurated 20

years ago, has grown steadily, until today it is the largest institutional

feeding activity of its kind in the world. The number of lunches

served in schools is about half again larger than the comparable

number served in plants and businesses—and it is double the number

served in hospitals and nursing homes in this country.

A close look at program facts and figures is revealing—especially

so when we compare the stature of the program now to its first year

of operation in 1947.

In this fiscal year 1966, the school lunch program represents a total

annual business of about $1,500 million. That is the estimated total

of the Federal contribution, State and local contributions, and the
2 SPECIAL MILK AND SCHOOL LUNCH PROGRAMS

payments by the children. That figure is seven times the $219

million total in 1947—the first year of program operation following

enactment of the National School Lunch Act in 1946.

Of that total, the Federal contribution accounts for 22 percent this

year—down by about one-third from the 32 percent of Federal contribution in the first year of operation.

This year, 18 million children are taking part—four times the number reached in the first year of operation. More than 36 percent of

children enrolled in school this year are participating. That is more

than double the 17 percent of enrollment reached in the first years

of the program and, this year, over 3 billion meals are being served43/b times the 680 million served in the first year of operation.

Plainly, the national school lunch program has grown to provide

better meals to more children—both in number and relation to the

total potential. The wisdom of Congress in establishing this program,

some 20 years ago, is—in our opinion—emphatically demonstrated by

this summary of the size, scope, and accomplishments of the national

school lunch program today.

Besides this contribution to the health and well-being of our children,

the school lunch program serves another purpose—it provides a good

market for our farmers, food industries, and local businesses. In

fiscal 1963, for example, here is the record of the value of certain

foods that went into school lunches:

Millions

Meats $135.0

Poultry 42. 2

Eggs 15.7

Fruits and vegetables (fresh, canned, frozen, dried) 155. 9

Dairy products 110. 2

Fluid milk 295. 6

Since fiscal year 1963, when a complete study gave us these figures,

the school lunch program has continued to grow steadily—and current

figures are estimated to be even larger than these as the program has

grown since that time. It is significant to note that milk and milk

products have accounted for about 34 cents out of each school lunch

food dollar.

The special milk program has been in operation for the past 12 years,

since its inauguration in 1954. It provides additional milk to children

in schools, child care centers, and institutions.

You will well remember the situation in 1954: Milk production

was more than ample to take care of consumer needs, and markets

could not absorb production. The present milk program came into

being, and was originally financed, to serve more milk to children

as a more desirable alternative than having it go into dairy products

to be purchased by the Government and piled up in warehouses. But

the dairy situation is greatly improved now from what it was in 1954.

All children in the national school lunch program are assured a half

pint of milk with their lunches, and they will continue to receive it.

To meet that requirement, the lunch program takes more than 3 billion

half pints a year—about 2‘ percent of the country's milk supply.

Much of the additional 3 billion half pints of milk used in the milk program is by children already getting a half pint under the lunch

program.

Additional milk will continue to be available to children who want

it, at the regular price, and more parents are in position to pay for it
SPECIAL MILK AND SCHOOL LUNCH PROGRAMS 3

under present and prospective levels of employment and personal

incomes. The funds recommended in the budget, however, will

assure milk for children who don't have access to milk through a

school lunch program, or who are not able to pay for it.

This year's budget recommendations recognize the essential function that the program has come to serve in our school system. They

are also based on the belief that the school lunch program will continue to expand, as our school population continues to expand, and as

the program continues to reach more children within that expanding

potential. And, with milk continuing to be a required part of every

school lunch, the market for milk will continue to grow as the lunch

program continues to grow.

These highlights stand out in better perspective against the following background—first on the lunch program, then on the milk program:

The national school lunch program is a grant-in-aid program to

encourage and assist States to conduct a lunch program for children

attending elementary and secondary schools. The Federal Government acts as a catalyst by providing cash assistance, food assistance,

technical assistance, and nutrition standards—all designed to provide

better nutrition for our children. Children participating in this

program are provided with one-third to one-half of their daily nutritional requirements—including a half pint of milk served with each

lunch.

This program is locally oriented and has been so from the outset.

The decision to participate is a local one. The responsibility for

providing facilities, and the manner in which the program is conducted within the guidelines established by the Federal z4overnment, is likewise a local one. -

The Federal Government contributes to the program in two ways—

cash contributions and food, either purchased specifically for the

program, or surplus foods resulting from the Department's price

support or surplus removal programs. For the past several years,

the Federal contribution has averaged 5 cents per meal-4‘ cents of

which is in terms of cash and one-half cent represented by foods

purchased specifically for the program. In addition, foods were made

available from surplus supplies averaging from 5.9 to 9.4 cents per

meal, depending upon the availability of surplus foods from year to

year. In other words, during the past 5 years, the contribution

from cash and food has varied from 10 to 13.9 cents per meal.

The participating child pays an average of about 27.5 cents per

lunch. Other State and local contributions total approximately

10.5 cents.

The budget recommendation for 1967 would reduce the Federal

appropriated fund contribution by only 1 cent per meal, after allowing

for the anticipated annual growth of the program which in recent

years has been about 6 percent. We anticipate that the surplus foods

and those specifically purchased for the lunch program will continue

to contribute the equivalent of at least some 5 to 6 cents per meal,

or at about the same level that we expect for 1966. In view of continued favorable economic conditions in prospect, the impact of the

1 cent per meal lower Federal contribution should not by itself have

a significant impact in child participation nor impair the noimal

growth of the program.

Outstanding as the school lunch program progress has been over

the years, there has been and continues a significant need to reach
4 SPECIAL MILK AND SCHOOL LUNCH PROGRAMS

more children who cannot afford to pay the price charged. For a

number of years some 10 percent of all children participating have

received free or reduced-price lunches nationally. There are many

more attending schools not providing lunch facilities or residing in

communities of such economic distress that limited financial resources

do not make it possible to provide lunches.

Congress recognized this need when the National School Lunch

Act was amended in 1962. At that time section 11 was added, providing appropriate authority and guidelines to meet the problem.

However, no funds were made available for such purpose until the

current year. With the $2 million provided this year, many States

and local communities are making encouraging progress through a

series of pilot programs.

The difference that a little extra help can make is being demonstrated all across the Nation. In North Carolina, less than 30 percent

of about 3,000 children in one district could buy school lunches when

the cost was 25 to 30 cents—but 75 percent now enjoy lunch each

day at prices of 10 to 15 cents made possible by section 11 funds in

6 schools drawing attendance largely from needy families. Private

schools, too, need help. In La Junta, Colo., in a severely depressed

area, on the day the special assistance program started at Our Lady

of Guadalupe School, 169 of the 170 children ate lunch together for

the first time. The lone absentee was on a special diet that required

food from home.

The budget for 1967 stresses the need for advancing efforts in

expanding the program to additional needy children. An increase of

$4.5 million for a total of $6.5 million is being requested which will

finance lunches for some 290,000 needy children.

The special milk program was launched in 1954 as a method of

diverting surplus milk production to the benefit of children rather

than into the ever-growing dairy products stockpile of the Commodity

Credit Corporation.

The supply-demand situation for dairy products has altered, since

that time, to the point where the Department now finds it necessary

to use the authority of section 709 of the Agricultural Act of 1965

to procure butter for the school lunch program in the open market.

Thus, diversion of milk to avoid adding to surplus inventories is no

longer a compelling objective.

Providing children with additional milk service over and above that

consumed with their complete lunch, and at reduced cost, has been

appropriate under circumstances which have prevailed in the past.

But, in light of the changes which have occurred in the dairy situation,

and in view of the higher level of family income which generally

prevails, the continued Federal subsidy for additional milk consumption takes on quite a different aspect.

We believe there is real merit in continuing a Federal subsidy for

milk to those children not having access to a lunch program, and to

those particularly needy children unable to pay for milk. The

budget provides funds for this purpose.

Federal reimbursement under the milk program will continue in

those schools that have no food service. Those children that are now

paying a few cents per half pint will continue to do so in these schools.

To a large extent, schools of this type are located in the older, lowincome sections of our large metropolitan areas. Those who need

free milk will continue to receive free milk.
SPECIAL MILK AND SCHOOL LUNCH PROGRAMS 5

Federal reimbursement for milk service will also be available to

schools that have a food service but where there is a concentration

of low-income children. In addition to the milk received with the

lunch, these children need the extra nutritional boost that a free

halfpint of milk can supply.

We expect that most schools, after 12 years of the program, will

continue milk service. We expect some decline in participation, but

we do not believe that this decline will significantly affect the milk

supply-demand situation or the acquisitions of dairy products under

the price-support program.

In closing, I want to emphasize that the feeding of children is and

will continue to be of major concern to the Department of Agriculture.

It represents one of our major program interests. This fact was

clearly emphasized by the President, in his budget message, and on

Wednesday in his address to the American Association of School

Administrators in Atlantic City.

In those messages, he has set forth broad plans for future expansion

in the area of child nutrition.

The composite of these endeavors—in which local communities

will continue to play the major role—should eventually provide the

children of this Nation with the nutritional benefits they need and

deserve.

That concludes, Mr. Chairman, my statement.

Mr. HAGEN. Thank you, Mr. Smith.

I should like to introduce the gentlemen who are with you: Mr.

Howard P. Davis, Deputy Administrator, Consumer and Marketing

Service; Mr. Samuel C. Vanneman, Assistant Deputy Administrator,

Consumer and Marketing Service, and Mr. Herbert D. Rorex, Director

of the School Lunch Division, who is the gentleman most directly

involved in the school lunch program.

The reason we are holding these hearings is because several members

of our subcommittee requested that they be held. Also, along with

many other Members of Congress, we have been receiving many

protests about this cut in the budget of the school lunch program and

the school milk program. I know it has been truthfully said there

has been more protest about this budget cut than almost any other

item in the total budget.

The prospects are excellent for the reversal of this policy by the

Appropriations Committee. Of course they have the obligation to

review the budget and act on it, but the authorization for these programs came through this committee, so that we have a responsibility

also. There is legislation offered on this subject, and we will bold

later hearings. Congressman Stalbaum has introduced legislation,

along with other Members, and we will be holding hearings at a later

date. Now with that, as I understand it, we have two separate

problems—the school milk program and the school lunch program—in

the latter of which there is both a shift in appropriation and shift in

direction. In the school lunch program there has been perhaps both

those elements. With that I will turn the members of the subcommittee loose to ask what questions they want to ask of you gentlemen.

Mr. OLSON. It seems to me, Mr. Smith, that it is simply a matter

of judgment as to how this is going to finally affect our programs—

the special milk program and the school lunch program—and of course,

my judgment is that it is going to affect it in an adverse way. We
6 SPECIAL MILK AND SCHOOL LUNCH PROGRAMS

emphasize the value of good nutrition. We all understand that a dog

is caused to run sometimes by a rabbit, and what makes kids eat a

balanced diet might well be forms of inducement provided by programs

like this.

You say first, regarding the school lunch program, that you only

reduce it about 1 cent per meal after allowing for the anticipated

annual growth of the program, which in recent years has been about

6 cents, and you come down a little bit further and say—the two statements, of course, don't jibe.

How much per meal will you feel actually will be cut?

Mr. SMITH. There are two phases—one goes to the appropriated

contribution which has been averaging 5 cents. Now, actually,

that 5 cents is broken down into two parts-4; cents going to the

States in the form of cash and one-half cent for the purchase of commodities especially useful and needed on the school lunch program,

making a total of 5 cents.

The other source of contribution comes from commodities that

we draw from the stocks of the Commodity Credit Corporation

and commodities that we acquire under authority of section 32 on

surplus removal operations. The latter, in terms of cents per meal

contribution, has run generally higher than the direct appropriation

contribution.

In the case of the latter also, the value of the commodity contribution has varied consistently from year to year-1O to 13.9

cents—with the prospect that, as far as fiscal year 1967 is conceernd

as we see it now, the value of the commodity contribution will be

at least equal to or about equal to what we visualize it to be this

year; namely, about 6 cents per meal—between 5 and 6 cents per

meal.

Mr. HAGEN. Off the record.

(Discussion off the record.)

Mr. HAGEN. Mr. Olson, do you want to restate your question?

Mr. OLSON. Mr. Smith, I asked that you explain further what

you feel the actual effect will be as regards the reduction in the Federal

contribution per meal to the school lunch program because of the

cut in the budget?

Mr. SMITH. Congressman Olson, in order to give as clear a picture

as I can in answer to that question, I would like to point out that

the Congress during recent years has made an appropriation available

for the financing of the national school lunch program that averages

out to 5 cents a lunch. Now, 4.5 cents of that 5 cents has been

distributed by formula pursuant to the act to the States for reimbursement on the lunches that were actually served; in other words,

4.5 cents per lunch on an average.

The other half cent of the appropriated 5 cents' average has been

used to purchase commodities which, in turn, are distributed to

schools.

Over and above the appropriated 5 cents per lunch, the program has

received commodities drawn from the supplies of the Commodity

Credit Corporation and supplies which have been acquired through

the purchase of surplus commodities under authority of section 32. In

the latter category, for example, are all commodities such as turkeys; in

the former category, from supplies of Commodity Credit Corporation,

we draw such items as butter, dry milk, cheese when it is available,
SPECIAL MILK AND SCHOOL LUNCH PROGRAMS 7

flour, cornmeal grits, the whole list of commodities which are useful

and helpful items for use in the school lunch program. I have stated

previously that the sum of those two has varied between 10.5 cents—

the 10.5 includes the 5 cents—and 13.9 cents. The 13.9 cents relates to last year, when the volume of commodities we were able to

make available for use on the school lunch program was very substantially augmented because of the large surplus removal program

we had for beef. So that looking into the future, it is our best judgment, our best calculation, that for fiscal year 1967, the contribution

to the school lunch program via the Commodity route will be at least

something between 5 and 6 cents.

Then to that, you would add the average of 4 cents which the budget

provides in the way of cash reimbursement.

Mr. OLSON. May I interrupt right there?

Mr. SMITH. Yes, sir.

Mr. OLSON. I recognize we are dealing with two phases here, two

contributions to the total.

Mr. SMITH. Yes.

Mr. OLSON. For purposes of our discussion, although it is of vast

interest, as your answer has brought out, because the surplus foods

acquired under section 32, and perhaps from CCC, were acquired

for more than half of the Federal contribution, we are not discussing

that at all as regards the recommended reduction in funding; we

are discussing only that 5 cents; is that not correct?

Mr. SMITH. Well, as we see it and as I see it in terms of judging

the Federal contribution to the national school lunch program, we

think that the two are pertinent and one just as pertinent as the other.

Mr. OLSON. Yes, sir.

Then if we should agree on that, may I ask you if that does not

compound the effect of the program by the recommendation that

has been made, because you have just testified that the reduction in 1

fiscal year, because of a lessening of the available commodities or the

commodities in which you exercise the use of section 32 funds, is

down 3.9 cents and you indicate—wait a minute, now. You say

11 cents—at least 2.9 cents. So if you cut the budget funds at the

other end, you are going to double the two. In other words, we

could be led to believe here that, with the surplus situation being

corrected, over half of the Federal contribution would disappear and

we would be left only with the budgeted amount and now you are

working on that.

Mr. SMITH. Sir, if my statement is so interpreted, it was not intended to be interpreted that way. The figures that I have cited

were for the specific purpose to show an illustration on the basis of

actual history that there has been substantial variation in the aggregate Federal contribution to the school lunch program.

Mr. OLSON. And I do not quarrel with that at all.

Mr. SMITH. And then, sir, you see, if I understood you correctly,

you take the year of high, we will say 1965, when the total cash as

well as commodity contribution figures out to about 13.9 cents, and

compare that with what we have projected as probable for fiscal 1967.

I submit, sir, that 1 year of comparison is not or does not give the

whole picture, because among other things, I want to convey that the

nature of this whole operation has been such that you have had as a

matter of fact variation in the aggregate contribution and this is the

60-858-66---2
8 SPECIAL MILK AND SCHOOL LUNCH PROGRAMS

cent we are talking about in terms of appropriated funds is a part of

a variation.

Mr. OLSON. May I submit, though, that I am speaking of effect

and that is why we are here. I did not mean to misconstrue or to

misinterpret. I have no problem understanding what you are saying

and I hope you do not misunderstand what I am saying. Viewing

the problem as it is, we could merely be doubling the reduction in the

program. The only assured contribution we have is the one that the

Bureau has proposed to cut. That is the only sure thing about the

program.

Mr. SMITH. In one sense, sir, I guess I would have to agree with

you, but looking at what the Commodity Credit Corporation has in

the way of stocks and from all projections it can well have, there is a

measure of doubt in my mind as to whether you can go quite that far.

Mr. OLSON. It could happen. Now, let me get on to the original

question I have raised. You anticipate a 1-cent reduction per meal,

allowing for the increased growth in the program.

Mr. SMITH. That is right.

Mr. OLSON. Then you conclude further on down that there will

only be a 1-cent lower Federal contribution.

Mr. SMITH. Compared with what we see as far as this year is concerned, fiscal 1966. There I am undertaking to compare fiscal 1967

with fiscal 1966.

Mr. OLSON. All right.

Now, I do not want to take all the time here, and I certainly do not

want to dwell on one phase because I am sure others have questions

in this area. Let us go then to the special milk program. Here we

are not confused by funds from more than one source. It is simply

an 80-percent reduction period.

Mr. SMITH. That is rlght.

Mr. OLSON. Many programs have come into being because of a

need. In this case, you cite the need on page 7 as the surpluses being

a compelling objective. But I want to submit that there are many

programs that have arisen because of a need and Congress has acted

to meet that need and the programs have proved so desirable that we

have continued them. We are having hearings in the full committee

now, if I may make an analogy, on Food for Freedom. We passed

Food for Peace in the mid-1950's because we had surpluses and the

world needed food. We have come now to the point where we understand that the world still needs food regardless of whether or not we

have surpluses. If we have surplus land and advanced technology

we believe we ought to produce to fill that need. Now, I cannot see

too great a difference in the case of the special milk program. It has

been so successful that we ought to maintain the program, and I feel

that I cannot very well forget this problem while we discuss billions to

provide nourishment for schoolchildren in the world, although I fully

understand that they are hungry—I cannot think of any other program in which we might draw so strict a parallel with a domestic

situation. As I said earlier, if our children do not eat their Wheaties

for breakfast I would like to see that they have a half-pint of milk

available at a midmorning break in school. Now, what response do

you have?

Mr. SMITH. Well, sir, I think I have one. It may be from a different

standpoint, from a different point of view. Overriding considerations
SPECIAL MILK AND SCHOOL LUNCH PROGRAMS 9

as far as these two programs are concerned from a budget standpoint,

we submit are that the basic program from the standpoint of feeding

children and nutrition for children in this county is the national school

lunch program. I think history in close examination of the special

milk program will demonstrate that it has been a supplementary

program. Examination also of the details will show that 82 percent

of the milk consumed in this country by schoolchildren at school is

consumed in schools that provide a school lunch, which represents

about 75 percent of the schools—or children

'

rather.

I think anyone who has gone to a school that has a school lunch

program and also the special milk program has observed for him or

herself that it is as common as not for a youngster to have on his or

her tray not one-half pint milk at lunch with the hot lunch but one or

more; take the strapping young man who is playing football or basketball or something. You will see him go through the line with considerably more than that. Everything over and above the half pint

that is a required part of this hot lunch falls into the category of special milk.

A study made a couple of years ago of the program also shows that

43 percent of all milk consumed in school lunch schools was consumed

at or with the lunch. Thirty-seven percent was consumed by children

at lunch time that did not take advantage of the hot lunch. So what

I am relating, sir, or trying to, in my comments is that we were influenced very substantially by the fact that this is a supplementary

program or has been to the more basic one, the national school lunch

program, and that under present circumstances, to subsidize milk for

- all children raises some real questions 

Mr. STALBAUM. Would you yield there for a question?

Mr. HAGEN. Let him finish his sentence first?

Mr. STALBAUM. OK.

Mr. SMITH. Recognizing that the budget proposal does provide milk

for children who go to schools that do not have a school lunch program

and for the needy children who cannot afford to pay for milk in the

schools that have a school lunch program.

Mr. STALBAUM. My question was this: You say that providing

milk for these children, aside from the school lunch program, without

any basic element of need on their part, poses some real questions. I

think this is about the way you worded your statement.

Mr. SMITH. Yes.

Mr. STALBAUM. Would not the same question hold true for the

school lunch program?

Mr. SMITH. Well, to some extent, possibly. But the big difference

is that we are talking about the contribution that the Federal Government makes toward defraying the total cost of a lunch which, on an

average over the country, is about 50 cents, or maybe a penny, more

or less. But, under the special milk program, you see, the subsidy

rates that have been in effect under that program are: 4 cents for a

half pint of milk for all milk consumed in schools that have a school

lunch program over and above the half pint that goes with the lunch;

3 cents in schools not having a school lunch program, and 2 cents where

milk is not a separately priced item in the school or institution.

The relative contribution on the part of the Federal Government in.

terms of food intake under the two programs, I submit, is quite different. In my statement, for example, I pointed out that 34 cents of
10 SPECIAL MILK AND SCHOOL LUNCH PROGRAMS

that school lunch food dollar went for dairy and dairy products,

which is substantially higher than it is in, we will say, a typical market

basket of food for families.

Mr. STALBAUM. I will come back for some more questions, but I

want to clear this point. I understood your statement to be that the

fact that you were providing milk at virtually no cost to the student

in the school milk program posed some real problems which was your

basis for eliminating the contribution except for needy children. My

question was in that context, that if this is true on the milk program,

except for the difference in values, monetary values

'

why would not

the same problem arise in the school lunch program. In other words—

let me finish the question, or phrase it slightly different.

Why, if you are going to feel that a means test is basic to the school

milk part 

Mr. SMITH. I have not siad anything about the means test, sir.

Mr. STALBAUM. Well, you have it in your statement here.

Mr. SMITH. No; I have not.

Mr. STALBAUM. Well, it is close to it.

If you contend that pailk should be made available under the school

milk program only to those—how do you word it over here?

Mr. SMITH. Two categories.

Mr. STALBAUM. Those particularly needy children unable to pay

for milk.

Mr. SMITH. We say the same thing for lunch.

Mr. STALBAUM. Yes, but you also provide that those who can

afford to pay for it in the schools "and those schools shall continue

to get the subsidy."

Mr. SMITH. But I remind you as far as the school lunch is concerned,

whatever subsidy applies applies toward that half pint of milk that is

a required part of his lunch.

Mr. STALBAUM. You are still evading my question.

Mr. SMITH. No; I am not intending to.

Mr. STALBAUM. I do not want to take your time, but 

Mr. OLSON. Go ahead and finish.

Mr. STALBAUM. The question here is on this matter of needy

children. In your statement, you have not shown me why you come

to this inconsistency of saying that a child in the school that has only

a school milk program shall not get any Federal assistance toward

his pint of milk unless he gets all of it. That is about what it gets

down to as I read this. But a child who is in a school where they have

a school lunch program, regardless of his ability to pay the whole

amount, that school and that child shall continue to get this assistance.

Now, why this inconsistency?

Mr. SMITH. If needed.

Mr. STALBAUM. No, no; because in the school lunch program, you

agree you are cutting the Federal part of the program 1 cent on all of it.

There is no criterion here as to need. My children go to a school

that has a school lunch program. They are paying 35 cents now and

all other things being true, next year they should pay 36 cents, because

there is 1 cent less Federal money involved, but with no regard to

their financial need or their ability to purchase this. But on the

school milk program, you make this as a base. Why this distinction?

Mr. SMITH. I go back, sir, to something I said a little while ago.

I am reflecting a point of view we have in the Department, namely,
SPECIAL MILK AND SCHOOL LUNCH PROGRAMS 11

that the basic feeding program, nutritional program that we have, is

the national school lunch program. I also pointed out earlier that

the special milk program, in fact, has become a supplement to that.

And I think if you construe my remarks made in my opening statement

in light of what I have just said, I do not believe there is an

inconsistency.

Mr. OLSON. May I ask you then if you feel that the supplement

program is a bad program?

Mr. SMITH. No. I do not hesitate in saying no.

Mr. OLSON. Well, if you are going to cut it to the extent proposed,

then the only milk available will be to those that you determine to be

needy or those who buy a hot lunch.

Mr. SMITH. As far as subsidization is concerned in schools that have

a school lunch program that is correct. But in schools that do not,

the program would continue as it has been operating or is operating

at the present time.

Mr. OLSON. SO to follow what Congressman Stalbaum was talking

about, most of the time my children go to school and carry a bag

lunch or carry their bucket lunch with them. Milk is bought for the

other kids. We are not talking about need at all. How much is the

percentage of milk consumed where they do not have to buy a hot

lunch? This program is going to be effectively reduced. You

conclude that it is going to be reduced. In your statement you admit

that the consumption of milk is going to go down.

Mr. SMITH. Right.

Mr. OLSON. Is there any reason that it is going to go down? Are

they drinking too much?

Mr. SMITH. We are merely saying that the level of consumption

obtained to the extent that it is brought about as subsidization across

the board, as it is now, we do not think is justified under the present

circumstances. •

Mr. OLSON. Then I am going to conclude with the statement

that you will never convince me. We have in this Congress and

preceding ones spent millions for education and we continue to

pursue courses and avenues in which we should make this assistance

available without regard to means yet we are going to reverse it in

our special school milk program. It makes so little sense to me and

you have not convinced me, although I appreciate your statement

because you have very clearly slated exactly what both programs do.

We appreciate that and I thank you for the opportunity to discuss

it with you.

Mr. quiE. Mr. Chairman?

Mr. HAGEN. Mr. Quie.

Mr. QUIE. In this last or the present fiscal year, the Congress

appropriated $103 million and you refused to spend $3 million.

What was your reason for that?

Mr. SMITH. Sir, late last fall, all departments were requested to

examine their projected obligations for the current fiscal year because

of the prospect of outlay compared to income as far as the Federal

Government as a whole was concerned. The Department reviewed

various programs that it has and among those that it was concluded

could and should be cut down under the circumstances were the

funds for the special milk program, a cutback of appropriated funds

of $103 to $100 million.
12 SPECIAL MILK AND SCHOOL LUNCH PROGRAMS

QUIE. Now, if the Congress is convinced that we ought to

continue the program at about $103 million but the administration

has only requested $21 million, what would your position be then?

Would you refuse to spend the money?

Mr. SMITH. Sir, I cannot speak for the President and the Bureau

of the Budget.

Mr. QUIE. Can you speak for yourself?

Mr. SMITH. No; because I do not have the authority to do that,

Congressman.

No; I am not trying to evade your question, Congressman Quie.

Mr. QUIE. All right. Then supposing we pass a permanent special

school milk bill, which I would like to see done and evidently Congressman Stalbaurn would, too, since he has introduced such a bill.

My bill (H.R. 12907) proposes $105 million for the coming fiscal year.

If this bill were passed, what would your position before the Appropriations Committee be then?

Mr. SMITH. Well, sir, you are getting ahead of me a little bit on

that one if I can be honest and frank. If this committee holds a

hearing on the bills that have been introduced, I am sure that we

shall be up here to tell you what we think at that time. But I am

not in a position to tell you today.

Mr. QUIE. OK.

Mr. SMITH. It obviously is in conflict with what the President's

budget calls for and I have no choice nor desire to do anything other

than to support what the President has submitted in his budget, sir.

Mr. QUIE. Well, I ust want to understand what you might do in

case we should appropriate more money than you asked for. You

asked that the school districts be reduced to 95 percent of the reimbursed amount which they expected under the original $103 million.

Now I understand there has been another reduction in the reimbursed

amount to 90 percent. Why was this done?

Mr. SMITH. The 95-percent reimbursement, Congressman, was to

stay within the appropriated funds of $103 million. In other words,

if we had not cut back by 5 percent, our best calculations indicates

that we would obligate more than $103 million. So to stay within,

that accounted for the 5.

Mr. QUIE. The 95 matches up with $103 million and the 90 matches

up with $100 million?

Mr. SMITH. Right.

Mr. QUIE. Now, in your statement, you explained pretty well

about the necessity of using money for needy children.

Mr. SMITH. Yes, sir.

Mr. QUIE. You do not need any authorization for that?

Mr. SMITH. Feeding or special milk you are talking about?

Mr. QUIE. You need no authorizing legislation to accomplish what

you want to do for needy children, right?

Mr. SMITH. No. We have been doing that in recent years, Congressman.

Mr. QUIE. You have been doing it?

Mr. SMITH. Yes.

Mr. QUIE. You propose to reach the needy children in no different

way than you have in the past?

Mr. SMITH. Correct.
SPECIAL MILK AND SCHOOL LUNCH PROGRAMS 13

Mr. QUIE. Then what is your reason for this big cut? It cannot

be because you have to reach some needy children, because you have

been doing that anyway.

Mr. SMITH. The basic reason for the cut, Congressman, if I may

restate what I have said, that was arrived at by our collective convictions that under present economic conditions and as it is possible to

project them into the fiscal year that we are talking about, and the

basic improvement in the dairy situation which exists and as best

it can be projected into the fiscal year 1967 will be such that in the

latter case, the pressing need for finding a home for milk or dairy

products is not the same as it has been for a number of years.

And as to the former, namely, the general improvement in personal

incomes, employment and economic activity, parents generally will

be in a better position to pay for the milk which their children consume at school. We would continue to subsidize the milk for children

whose parents cannot afford to pay, but let those who can afford to pay

pay the full price.

Mr. QUIE. Do you expect that some of that same reasoning will

go into your thinking on the veterans and the armed services dairy

programs that do not expire this year but will be coming up next year?

Mr. SMITH. I wish I could answer that question, but that does not

fall in my jurisdiction. If I did, I would be able to tell you.

Mr. QUIE. Does anybody else here know?

Mr. SMITH. No, these are all with me, Congressman.

Mr. QUIE. Well, then, we have considered in the past, of course,

that the special milk program did help the dairy farmer and that it

was an assistance to him in finding a home for his milk. But I would

say I do not believe the majority in this Congress looked at the special

school milk or school lunch program as primarily for the farmer.

There are not that many representatives around here who care that,

much for the dairy farmer. You just count the number of Congressmen now who do not have a dairy famer in their districts, but who

support this program.

I would say the reason we get such a strong vote for this program is

because of the help it gives to children. It gives them a program

where their nutritional level will be higher. And to limit this health

benefit strictly to the needy, to those who cannot afford even to pay

for a lunch, I think is more restrictive than this Congress ever intended.

Mr. SMITH. That is only part of our proposal, Congressman.

Mr. QUIE. I know it is only part of it, but the other part is that

you do not need to—you say the incomes of the American people are

high enough, and that the farmers do not need this price-supporting

mechanism.

Mr. SMITH. No; you are overlooking this category of schools where

they do not have the school lunch service, where our preposal provides

that the program will continue in essentially its present form. So, in

effect, what we are saying is that in all schools, children will have

milk available to them. Now, whether they buy it when they have to

pay the full price themselves or not, that is something. else again.

But as I indicated in my statement, we do not really believe, you

see, that something that has been going for them for 12 years and

has basically taken hold as it has, that it is going to fall through the

cracks.
14 SPECIAL MILK AND SCHOOL LUNCH PROGRAMS

Mr. QUIE. Well, as I have talked to some school people 

Mr. HAGEN. I want to ask something. This milk has been an

absolute gift to the youngsters, then; has it not?

Mr. SMITH. No, Congressman Hagen. We have had three rates

of subsidy. We have subsidized a half pint of milk at the rate of 4

cents in schools that have a school lunch program. Now, in many

schools—to stay with that one for just a moment—that has meant

that children were able to get a half pint of milk for 2 or 3 cents or

as many half pints as they want for 2 or 3 cents extra. In schools

that do not have -school lunch service, we have reimbursed at the

rate of 3 cents a half pint. And where—as in summer camps and

some child care centers where milk is not priced as a separate item,

the subsidy has been 2 cents.

Now, in some areas, in some cities and localities, in the case where

the 4-cent rate applies, they have, through other sources gathered the

funds so that they have been able to make milk available to all

children free.

Mr. STALBAUM. Just to clear that point, though. In many other

schools, they did have to pay a cent or two?

Mr. SMITH. Yes. The latter that I mentioned, I would say, are

probably the exception, although there are quite a number of cases.

Various businessmen's clubs and other organizations such as PTA's,

have made the funds available to defray the added 2 or 3 cents.

The dairy industry has vied, you see, for this as a market, to get

their cartons with their label on it so that their pricing to the schools

has been reflected in somewhat of a reduced mice. So there is a

combination of circumstances which got the milk at a reduced price

to the children.

Mr. QUIE. Well, as I look at the dairy programs, the special school

milk program, and, as it applies in the school lunch program as well,

I am reminded of the "dual-purpose cows" we used to have on the

farm. This program could be called a tripurpose cow. One purpose

is to provide help to the dairy farmer in finding a market for his product, serving as a sort of price assistance to him; another is to increase

the public health standards. I am sure you agree that this definitely

has had that effect on the schoolchildren.

The third one has provided for new consumers or keeps old ones

consuming because they have developed the habit of drinking milk

while they were in school. Therefore, it is not an immediate price

increase for the farmer or help for the farmer, but in the long run, it

- keeps them in the market.

It seems to me you are now trying to make this a specialized animal,

one which has as its main purpose that of reaching the poor kids who

need the milk for nutritional purposes. Even though you mention

in your statement the fact that the other children would probably

continue to be consumers of milk, and since there is at least some milk

going here which may not have gone to that extent if we did not have

the program, it is still of some help to the dairy farmer. But there

is really a basic shift in the program from what it has been in the past,

is that right? Now your emphasis—from what I read in the President's message and from what you have said—now the emphasis is

on needy children.

Mr. SMITH. It constitutes a redirection of the program. But, I

I want to add to your dual- and treble-purpose illustration, I also
SPECIAL MILK AND SCHOOL LUNCH PROGRAMS 15

stated that under present and projected conditions, the dairy picture

looks fairly bright. So that general purpose is not a matter of moment

or anything that is pressing, fully recognizing the origin of this

program. I can recall personally when the Commodity Credit Corporation staff was scurrying around trying to find enough cold storage

space any place in the country in which to put butter, cheese, and

dried milk, whereas now, we are down to negligible inventory and are

out trying to acquire some butter under section 709 in the act of 1965

to provide butter for the school lunch_program.

Mr. QUIE. Well, really, what the question comes to is this: When

the Federal Government begins a program and people begin depending

on it, should they pull the rug out from under them? After a while,

after a number of years, people begin to depend on these programs

and the school people are going to feel the rug is pulled out from under

them at this time. If they had been told in the beginning that this

was just a temporary special program to get them going, perhaps

they would have looked at it differently. But look at any other Federal programs, including education programs; all the time the Federal

Government has increased assistance to them. But this is really a

drastic cut and these people are really going to be under a burden as

to where they are going to secure that money, both for the rest of this

year and for the coming years.

Mr. SMITH. They were under notice because the special milk

program by statute terminates the end of 1967.

Mr. QUIE. We have had a lot of those types of programs. There

is nothing more permanent than a temporary program.

Mr. SMITH. I know, but it is in the law.

Mr. OLSON. In keeping with the statement Congressman Quie has

just made, and relating back to what you pointed out as to the four

different prices that milk is made available at in schools, you emphasized the fact that in some communities, other organizations—fraternal

organizations—have matched the Federal contribution, thereby

making milk in some instances available to the children for nothing.

I remind you that these are fraternal organizations in many cases.

They represent the community and certainly, they have never let

need enter their minds as to whether or not milk was good for kids.

I suggest to you that that is a very striking illustration of the regard

in which the Federal Government is going to be held if it withdraws

and is successful in withdrawing the amount of funds that it is contributing to this program to this extent.

Mr. QUIE. I just would make one statement in finishing. That

is that in the special school milk program and the lunch program, we

do not have a controversial program. Whether a person is a conservative or a liberal, a Democrat or a Republican, or a northern or

a southerner, this is a program he can really support. It is one

Federal involvement program that is really well accepted. We do

not get into the philosophy of government or the philosophy of

education or anything of this nature. I think it is because people

have opened their hearts to what can be done for nutritional standards

for kids. I think they just do not want to get into this business of

trying to determine need.

It may be that administrators will have to use a means test. You

do not like to use the word "means test" but if it is going to be limited

in its new purpose, it seems to me that is exactly what we are going
16 SPECIAL MILK AND SCHOOL LUNCH PROGRAMS

to get into and I can see all the burdens and problems that come up as

a result.

Mr. SMITH. We do not agree with you at all. We do not believe

that at all. If we had had any notion along the line you expressed, I

do not think this proposal would have come into existence.

Mr. QUIE. I hope you will take another look at it and maybe it

won't come into actual existence when you come before the Appropriations Committee.

Mr. SMITH. That is an experience I still have to have, Congressman.

Mr. STALBAUM. Mr. Chairman?

Mr. HA GEN. Mr. Stalbaum.

Mr. STi,LBAUM. On page 7, you say, "We believe there is real merit

in continuing a Federal subsidy for milk to those children not having

access to a lunch program, and to those particulaily needy children

unable to pay for milk."

Now, I used the term "means test" and Congressman Quie has

used it. On what basis do you determine that they are unable to

pay for the milk?

Mr. SMITH. We are talking against a background of 12 years of experience in a milk program and 20 years of experience under the school

lunch program. This is something that has gone on for years. Kids

that have not been able to pay for their lunches have gotten their

lunches without any stigma or embarrassment. Kids who have

needed the milk, could not pay for it or needed the extra milk, have

gotten it. It is done through the school system itself. We say that

that which has been done heretofore will continue to be done, and it

will not require a means test such as you and Congressman Quie have

implied.

Mr. STALBAUM. Let us pursue that a little further. How do they

determine, in the school systems, which children cannot pay for the

milk? Do they just take their word for it?

Mr. SMITH. There are a lot of ways of finding that out. I am told,

you see, it does not require much astuteness on the part of the principal

or the teachers in the school to know whether a youngster is getting

the food that he needs or not. Counsellors, in schools where they have

counsellors, will readily ascertain that. And the more aggressive, we

shall say, humanitarianly inclined school officials know about checking

with the welfare agencies as to what status the parents are in. This is

no mystery.

Mr. STALBAUM. My point here is: Is not this a subtle form of a

means test? It is not right out in the classroom, not out in the open,

but are you not in effect saying that somewhere, in somebody's office, a

counsellor or a principal or a superintendent or a teacher is making a

determination, a means determination?

Mr. SMITH. That is correct.

Mr. STALBAUM. So in effect, this is a means test?

Mr. SMITH. Well, I do not know what you imply by "means test."

Mr. STALBAUM. Well, it is based on need.

Mr. SMITH. I think the important thing is to get food or milk to

the child that needs it.

Mr. STALBAUM. I agree with you. And they all need it.

Mr. SMITH. That is No. 1 No. 2, I think it. is important to get it

to that child without imposing the stigma that might arise, you see,
SPECIAL MILK AND SCHOOL LUNCH PROGRAMS 17

with some selecting out process that becomes obvious to his classmates.

This we believe, to our best knowledge, has been avoided under both

programs.

QUIE. Let me say this 

, Mr. STALBAUM. Of course; it is your question, sir.

Mr. QUIE. I think out of fairness, it should be said you have done

a good job in determining need up to now.

Mr. SMITH. It is meant to be constructive.

Mr. QUIE. If the schools operate the way they do now, I think

they can do it in such a way that there is no stigma on the student.

There is at present more than one way they do this in the local school

district—and it is left to the local school district. But when you cut

this back from $100 million to $21 million, man, what are they going

to do? They are really going to have to tighten this "means test.

I am afraid, if we have this redirection, that the schools are going

to have to get into this means test aspect in order to use the money

to the best advantage.

Mr. HAGEN. In that connection, I notice in the school lunch program statute, section 9 says:

Such meals shall be served without cost or at a reduced cost to children who are

determined by local school authorities to be unable to pay the full cost of the

lunch. No physical segregation of or other discrimination against any child shall

be made by the school because of inability to pay.

I do not think there is equivalent language in the Milk Act.

Mr. SMITH. But we followed the same thing, Congressman Hagen.

Mr. HAGEN. How has this provision been carried out in the schools?

Mr. SMITH. You mean the mechanics of it?

Mr. HAGEN. Yes, the mechanics of it.

Mr. SMITH. I am going to take five and let one of my associates

answer that question.

Mr. DAVIS. Well, as Congressman Quie has just said, the schools

have used various, many ingenious ways of doing this. Many schools

sell lunch tickets on Monday to all of the children and instead of

collecting money from certain children, they were given their tickets

free. They go through the line just like all the rest of the children

during the week, and they turn in a ticket just like the one who has

paid for it.

Mr. HAGEN. At that point, may Linterrupt you?

Mr. DAVIS. Yes, sir.

Mr. HAGEN. This might be a very wealthy school, with a percentage of poor kids in it. Would the school receive extra reimbursement to the extent that it gave these lunches away?

Mr. DAVIS. No, sir, they are expected to provide that out of the

total resources that are available to the school for the lunch program.

It could be reflected in the price that the paying children pay in order

to provide enough funds in that school to provide the free lunches.

In the past, they have gotten just so much for each lunch, whether

it was free or not.

Mr. HAGEN. I see. Under this section 11, "Special assistance,"

in those instances, you have given the schools or the school systems

extra money, right, so that it costs them less, perhaps, to accommodate

more poor children, is that correct?

Mr. DAVIS. Where the schools have qualified under the guidelines

that are stated in section 11, they are eligible for an extra large reim-
18 SPECIAL MILK AND SCHOOL LUNCH PROGRAMS

bursement for every meal served in that school. Where the national

average is, let us say—has been-4.5 cents cash, this school that

qualifies as being especially needy may get up to 15 cents per lunch.

Then they may charge many of the children in that school 10 cents or

15 cents for their lunches, and then maybe have 30 or 40 percent of

them paying absolutely nothing. They could, in effect, get about

10 cents more per lunch than the other school.

Mr. HAGEN. Well, to the extent that these schools had some

wealthy children, they would be subsidized, too, would they not?

Mr. DAVIS. In that case very likely, because they would set a meal

price for paying children that was uniform for all children who could

pay.

Mr. HAGEN. So it is impossible to do exact equity, either under

your new proposal or under the old one as far as segregating the poor

kids from the wealthy kids..

Mr. DAVIS. That is correct.

Mr. HAGEN. Go ahead with what you were saying.

Mr. DAVIS. That just about covers it, I think. The fact that they

do not put free lunch children, let us say, in a certain line or they do

not give them certain, a different sort of meal, a lower cost meal, they

do not in any way differentiate between the free lunch children and

the paying lunch children. In some cases that we have heard of, they

might even give that child the price of the lunch so that he could go

through and pay.

There are many ways in which they have done it and they have

been quite conscious of this need not to embarrass that child. We,

to my knowledge, have had no instances where we have found that

they did have a practice that we would have to go in and tell them

they would have to stop. They have been conscious of it themselves.

Mr. HAGEN. I will yield to you, bat I want to pursue this a little

further.

As I understand it, we have had a problem of dropouts in this program. This contribution per meal, for example, has been a constantly

declining one, has it not?

Mr. DAVIS. No, sir; I believe it has for the past 8 years, or 10

years, remained fairly constant, somewhere between 4 and 5 cents.

In the past few years, it has been closer to 4.5 cents.

Mr. HAGEN. Is it not a fact that many schools have abandoned

the program completely and even to the extent of having lunches,

but foregoing the Federal money because the Federal requirements

are such, matched with the small size of the contribution, that they

could not operate?

Mr. DAVIS. We have had some instances, Mr. Chairman, where

the special milk program has brought this situation about. Mr.

Smith said earlier that in some of these schools, they might well be

getting 4 cents for a half pint of milk and perhaps 3 cents Federal

contribution toward the whole lunch.

We have had some instances where, rather than being required to

provide a high standard meal, they have felt that they were better

off by taking the special milk money and applying that to the lunch

and not receiving any Federal contribution for the lunch at all than

if they had the Federal school lunch contribution but could not use

the special milk to augment it.

I am not sure I am making myself clear, but in the program, they

could get 3 cents for the total meal under school lunch. Out of the
SPECIAL MILK AND SCHOOL LUNCH PROGRAMS 19

program, they could serve a school lunch and get 3 cents for the half

pint of milk and use that as part of the lunch. This has worked to

the detriment of the school lunch program, I think, in certain instances.

This would be the type of school that would not continue to receive

special milk reimbursement under our budget for next year except

as they had needy children in that school.

Mr. SMITH. But in terms of total number of schools, Congressman

Hagen, just reading from a table I have here in front of me, in 1957,

there were 57,261 schools that participated in the national school

lunch program. We estimate that this year, there will be something

like 71,300 schools. So that there has been a steady growth in the

number of schools that have participated in the school lunch program.

Mr. HAGEN. Well, do you not think that the lowering of this contribution 1 cent might not only reduce the increase in the number of

schools, but maybe it might even result in a decrease in the number

of schools participating? Because in many areas, the problem of

school financing is getting very difficult. In California, particularly,

many bond issues are being turned down and there have been cutbacks

in school programs all along the line, because the burden on the local

property taxpayer has become oppressive. The school lunch program

might be one of the first things to go if it becomes too expensive.

Mr. SMITH. If I may be permitted to do so, Congressman Hagen 

Mr. HAGEN. You are cutting out not only the rich kids there but

the poor kids.

Mr. SMITH. If I may, I would like to read just a short statement

here pertaining to your State. This was in the report from this

gentleman's division to me just a few days ago.

Mr. HAGEN. I •think I read that story, but go ahead and read it.

Mr. SMITH. I think it is a very good story. [Reading:]

The McCone Commission report on the Watts situation has prompted

Governor Brown to take up the matter of feeding needy schoolchildren with the

State board of education. State Superintendent Rafferty will call for a State

appropriation to underwrite the cost of. providing free or reduced price, 10-cent

meals, to students in target area schools. Under the proposal, the affected school

district would be eligible to receive 15 cents reimbursement for a reduced price

lunch and 25 cents for a free lunch. Estimates of funds needed range from $15

to $25 million.

Now, this is where a State, you see, is considering stepping in

and 

Mr. HAGEN. I think that is admirable.

Mr. SMITH. Right.

Mr. HAGEN. But what about a nontarget school area, composed of

middle class suburbanites who are having a difficult time with their

property taxes? They might go out of the program. Now, they have

poor kids in there, too. It is fine if they are in a target area school,

but by dropping your contribution, you might counteract the beneficial

action the State of California proposes to take there.

Mr. SMITH. Well, sir, in reviewing the records and history on this

program, it is our best judgment that that just would not take place.

Mr. HAGEN. Now, this matter of gradual increase in the cost,

average cost of the lunch to the children has been with the program

since it started. I want to read a clipping from the Bakersfield

paper. This happens to be in my district. This is from the Bakersfield Californian. The headline is "Guns for Vietnam Perils School

Lunches."
20 SPECIAL MILK AND SCHOOL LUNCH PROGRAMS

President Johnson's proposed $70 million slash in national school lunch program

funds could be a death blow to the school lunch program, one cafeteria director

said. "I just don't know what would happen," said Mrs. Lucia Hulin, cafeteria

director for the 34-school Bakersfield School District. "Either we would have to

go off the type A lunch or close completely, I would think."

Then George Palmer, associate superintendent of Bakersfield city

schools, figures the lunch cost for the Bakersfield elementary child

of 30 cents would be 50 cents if the Government subsidies were

withdrawn. .

I understand you are not withdrawing that?

Mr. SMITH. No. Now, I think there is a lot of misunderstanding,.

Congressman, as to what has been proposed. The reason I try to

point up in my statement the magnitude of what is involved is to

focus attention on what is specifically involved.

Mr. HAGEN. Well, I am afraid that this concentration on target

areas, while good in itself, if it is accompanied by reduction in funds

to nontarget areas, might adversely affect not only wealthy kids

but poor kids.

Mr. QUIE. I wonder if you do not feel that they have the schools

over a barrel. They have built cafeterias in their new buildings now

and they are stuck with them and you can pull out some of the

money, but they will go on with it because they already have those

facilities.

Mr. SMITH. I could not agree with that, Congressman. I. could

not agree with that.

Mr. QUIE. Because otherwise, that is the only thing that is going

to keep them in the business if they are close to that break-even

point.

You see, there is a lesser amount of food coming under the section

32 program. That puts a lot of them in a squeeze and they contact

their Congressman and say: "Isn't there some way you can keep it

coming?"

You cannot keep it coming because there is not a surplus to use

the section 32 funds on, so the Federal contribution is reduced. But

now all they can hope for is that there will be a little more of a surplus

in some other commodity so that they can get a little help out of it

for their program.

Now you say this is cut to 1 cent in the lunch program, and with

that big a cut to the special school milk program, I think they are

going to be forced out of the special school milk program, a good

part of them, and some of the school lunch participants are going

to take a very strong look at whether they ought to continue or not.

Mr. SMITH. Well, sir, I can only try to be charitable and say that

you are entitled to your opinion and judgment and it does not happen

to agree with ours.

Mr. QUIE. I gathered that.

Mr. STALBAUM. Mr. Smith, earlier in your testimony, and I did not

quite get the basis for your figure, you cited a figure of some 82 percent.

Mr. SMITH. Yes.

Mr. STALBAUM. Was that of the schoolchildren participating?

Mr. SMITH. A study was made a couple of years ago by the Economic Research Service of the use of milk in schools, Congressman.

That study showed that 82 percent of the milk consumed in schools

was consumed in schools that served a school lunch.

Mr. STALBAUM. What was the 75 percent figure?
SPECIAL MILK AND SCHOOL LUNCH PROGRAMS 21

Mr. SMITH. Seventy-five percent of the schools have or make a

school lunch available according to that 

Mr. QUIE. That is not right, is it? It is 75 percent of the

children 

Mr. SMITH. I mean schools serving 75 percent of the children.

Mr. QUIE. And 36 percent of the schools, according to your statement.

Mr. SMITH. Thirty-six percent of the children. It is available to 75

percent of the children, but 36 percent of the children are participating.

Mr. QUIE. I see. What percentage of the schools participate?

Mr. SMITH. What is the figure we used?

Mr. VANNEMAN. It is around 70 percent.

Mr. QUIE. Seventy percent of the schools; 75 percent of the kinds

in the country go to schools that have the program and 36 percent of

the children in those schools that have a program participate. Or

do 36 percent of the total kids in the country participate?

Mr. SMITH. Right.

Mr. STALBAUM. Which would be about half of the kids in the

schools.

Mr. SMITH. Right.

Mr. STALBAUM. You made this statement about 36 percent of the

children on page 2, but I did not find any figure over on page 7 as to

how many children participate in a school milk program where there

is not a school lunch program, or how many children benefit from the

school milk program that do not participate in the school lunch

program.

Mr. SMITH. There is a good reason for that. It is not because we

did not want to give it to you. Records have not been kept as far

as the special milk program is concerned on a child number basis.

The program has been entirely geared to reimbursing for milk. So

all our figures are in terms of half pints of milk.

Mr. STALBAUM. Now we are getting to something we can bite into,

anyway. As I understand it, there are really two parts of the school

milk program on the same reimbursement. One is the extra milk

where they have a school lunch program; in other words, everything

after the first half pint is reimbursed under the school milk program, is

that not right?

Mr. SMITH. Right.

Mr. STALBAUM. The other is a reimbursement in those schools.

where there is no school lunch program and they have only the school

milk?

Mr. SMITH. Right.

Mr. STALBAUM. Now, what proportion of that total has gone into

schools where there is a school lunch program, or, putting it the other

way around, of the $100 million, what dollar total went to schools that

did not have a school lunch program at all?

Mr. VANNEMAN. About 10 percent of the money has gone into

schools that do not have a food service at all. Somewhere around 80

percent to schools in the national school lunch program, and the remainder goes into schools that have school lunch programs but are not

federally aided. That is roughly the .way it breaks down.

Mr. STALBAUM. Ten percent goes to schools that have no school

lunch program.

Mr. VANNEMAN. NO food service of any kind.
22 SPECIAL MILK AND SCHOOL LUNCH PROGRAMS

Mr. STALBAUM. And only the school milk?

Mr. VANNEMAN. That is right.

Mr. STALBAUM. All right. If I follow your figures right, you

mentioned that there are 3 billion meals being served under the

school lunch program. How much milk was reimbursed under the

school lunch program and the school milk program?

Mr. SMITH. The total milk in the school lunch program and under

the special milk program is running about 6 billion half pints.

Mr. STALBAUM. So in other words, for simplification here, about

half of it-is reimbursed as part of the school lunch and the other half

is reimbursed on the basis of milk as such.

Mr. SMITH. Right.

Mr. STALBAUM. Now, by dropping your $103 million or $100 million to $21 million, how much milk will not be reimbursed under the

school milk program? I suppose I could run my arithmetic.

It would be 80 million times 3 cents, or $2 4 million; is that correct?

Mr. SMITH. NO.

Mr. DAVIS. About that.

Mr. HAGEN. Would you yield at that point?

Mr. STALBAUM. Surely.

Mr. HAGEN. Now, with an appropriation of only $21 million for

the school milk program, it is also going to have inroads on the school

lunch program; is it not? Because these schools serving lunches in

addition to the 4 or 5 cents they get on the lunch, they have also been

getting an increment for the milk; is that correct?

Mr. SMITH. It is extra milk, Congressman Hagen.

Mr. HAGEN. Oh, I see. You can separate it out—yes.

Mr. SMITH. A requirement of the type A lunch is a half pint of

milk. That is where this first 3 million comes in that he is talking

about.

Mr. HAGEN. It is not out of the school milk program, but out of

the school lunch program?

Mr. SMITH. Right.

Mr. STALBAUM. Under the school lunch program, is it not your

intent that the $21 million program will pay for the full cost of the

milk for needy children?

Mr. SMITH. Roughly half of it.

Mr. STALBAUM. So that actually, projecting this, the reduction in

volume covered, volume of milk covered will be covered more than 80

percent, because the subsidy on that which you are paying will be on

an increased rate over the present rate. Is that not right?

Mr. SMITH. I think the answer is "Yes."

Mr. STALBAUM. So that what you in effect are doing is removing

the Federal contribution on, let us say, 2.5 billion half pints of milk,

just for an easy, round figure. Assuming that you are staying with

the 3 billion in the original school lunch program and you have had

an 80 percent cut here, which on simple arithmetic would be 2.4

billion, so would I be correct in assuming that you are withdrawing

the support on about 2.5 billion half pints of milk?

Mr. SMITH. My specialist says "Yes."

Mr. STALBAUM. I am glad we are getting some agreement.

Mr. DAVIS. At the same time, though, Congressman, we would

fully expect a fair proportion of those 2.5 billion half pints to continue

to be consumed by children who would be paying the full cost of them.
SPECIAL MILK AND SCHOOL LUNCH PROGRAMS 23

Mr. STALBAUM. In other words, I will put it in question form, sir.

The point here is that now these children under the school milk program can probably go back and buy this extra milk at, let us say, 2

cents. After they have had their school lunch, and we shall not

talk about those who have only the school milk program, although I

feel this is the most meritorious area for continuing the program--

but where they have a school lunch, they can now go back and get an

additional half pint of mlik, probably for around 2 cents.

Mr. SMITH. Or pick it up when they go through.

Mr. STALBAUM. All right. Or pick it up when they go through.

Now, when they go through or when they go back, they are going

to have to pay 5 or 6 cents, 6 or 7 cents.

Mr. SMITH. Full price.

Mr. STALBAUM. And your contention is that this will be readily

accepted and there is not any elasticity of demand here whatsoever

and of chancre in pricing, and there will be virtually no reduction in the

price of mil? •

Mr. SMITH. What was that first stipulation you made about

reaction? I did not say anything about that.

Mr. STALBAUM. I will not say reaction. Your statement is, or his

statement is 

Mr. SMITH. My statement said that we expected some falloff in the

consumption of milk.

Mr. STALBAUM. HOW much?

Mr. SMITH. It so happens that the Department analysts have dug

into this rather deeply.

Mr. STALBAUM. I know they have. That is why I asked you the

question.

Mr. SMITH. They estimate that on a $21 million budget, we would

have about a third falloff in the consumption of milk under the school

milk program.

Mr. STALBAUM. Which is a billion half pints.

Mr. SMITH. A third is a billion, or about 500 million pounds.

Mr. STALBAUM. In other words, you believe that this would reduce

the consumption of milk in the schools about a billion half pints?

Mr. SMITH. That is about the best calculation of the analysts that

have dug into it, Congressman.

Mr. QUIE. I understood that it was 3 billion pounds.

Mr. SMITH: 3 billion half pints of milk. That is about half a

billion pounds. •

Mr. STALBAUM. He is talking about the billion and a half in the

school program, and one-third of that would be lost, which would

be 500 million pounds, or a billion half pints.

I do not want to—I make this more as a statement. I do not

want, again, to labor this area of needy children in other areas and

the effect this can have on them. I have long felt, and I am sure had

we asked you a year ago to justify your appropriation, you would

have said that not only does this help reduce the surplus, but it is

good nutritionally for the children. This year, you seem to have

dropped half of your argument of last year.

Mr. SMITH. I am saying that one argument is not needed this year.

Mr. STALBAUM. Which argument is not needed?

Mr. SMITH. In terms of the origin of the program of getting more

milk consumed in behalf of the dairy farmer.
24 SPECIAL MILS AND SCHOOL LUNCH PROGRAMS

Mr. STALBAUM. But you will admit that it is still good for the

children?

Mr. SMITH. Sure, I would say it is good for the children.

Mr. STALBAUM. But you are also willing to say you are going to

chop out one-sixth of what they consume?

Mr. SMITH. I am saying that the parents of the children who can

pay for milk ought to pay for it, and those who cannot ought to get

some help.

Mr. STALBAUM. But you are also saying one-sixth of the milk in

the program will not be drunk?

Mr. SMITH. The best prognostication.

Mr. STALBAUM. But you are also saying they will not.

Mr. SMITH. I did not say that. I do not know how many half

pints a youngster ought to drink when he is at school.

Mr. STALBAUM. You will agree it is good for him to drink it?

Mr. SMITH. I do not know how much milk a youngster ought to

drink, you see, and I do not know that anybody else can tell me so.

But nutritionists say that he ought to have at least a half pint with

his lunch. How many more than that, and you get a nutritional

expert and ask him that question, how much more they ought to

drink, and he can tell you.

Mr. STALBAUM. I will ask him before 'we have the next hearing.

I do not want to labor this further, because I think the other

Congressman and Congressman Quie have well touched on it in

their questions But I cannot leave it without the thought that one

of the things, one of the arguments you have used to solve this program is the fact that getting, in effect, and these are not your words

today, but in effect, as much milk as you could into these children,

was a good thing in the past. You did not limit how much the chili

could buy at this reduced rate in the cafeteria on the basis that it

was bad. You said buy all you want at this reduced price. You

must have come to this assumption on the basis that it was good.

Now, today, you come around to the point of saying that because

it is no longer a surplus item this is not good—in effect. This is the

only conclusion one can get from your argument.

Mr. SMITH. No; I do not think that is my argument, though.

Mr. STALBAUM. It is the only conclusion I can get; I had better

rephrase that.

I have one other question. This is on the operation of the program

at the present time, or maybe one other short series of questions.

Mr. QUIE. Before you go on with this point, could I ask a question?

Mr. STALBAUM. Surely.

Mr. QUIE. That 500 million pounds of milk is $16,200,000. Could

you not give us $16,200,000 more, give that much more to the program

and we could keep some of this milk consumed instead of picking it up

in the support program, or authorizing it to be picked up by food for

peace and sent overseas; as I understand the proposal goes?

Mr. SMITH. What was your calculation of the cost of that?

Mr. QUIE. $16,200,000.

Mr. HAGEN. This is acquisition through the support program?

Mr. QUIE. I multiplied the support price times 500 million pounds.

Mr. SMITH. I shall not concede that the Corporation is going to

acquire that much more because of this. That is a possibility. But

under the projections as far as milk supplies are concerned and the
SPECIAL MILK AND SCHOOL LUNCH PROGRAMS 25

level of income is reflected in the demand for dairy and dairy products,

I personally have serious doubts as to whether that $16 million would

even be approximated.

Mr. QUIE. You will get it in the food-for-peace program instead

iof the Corporation acquiring it and storing it if we pass the authority.

Mr. SMITH. As to what might happen in that area, I shall not

undertake to speculate.

Mr. HAGEN. The farmer gets a smaller percentage of the dollar on

mile bought for manufacturing purposes than he does under the fluid

milk rate, does he not?

Mr. QUIE. The Commodity Credit Corporation purchases it.

Mr. STALBAUM. Plus the fact that it is 

Mr. QUIE. The farmer really gets much more money in its milk

program.

Mr. STALBAUM. Going through school milk, this is all classed as

.class 1 under your pricing orders, and going into storage, it would

be less.

Back to my other question, under the present operation of the

program, do you establish allocations of funds to States or local

districts, or is this on a request basis as they need the money? I do

not mean as they need it, but as they determine—let me follow

this through.

Before I came to Congress, I managed a dairy and I know we

used to get some checks from the local school system for reimbursement for the milk portion of the school milk program. We had the

program through our city. Did the school system in turn then

submit this to the State and they in turn to you, after the totals had

been determined?

Mr. DAVIS. After the milk has been sold, they send in a claim

each month to the State office, and they are then reimbursed for the

milk that has already been sold at the agreed-upon rate.

Mr. STALBAUM. In other words, then, there is no prior allocation

to any areas. As all of these applications would come in from all

over the country, you in effect pay them as a voucher.

Mr. DAVIS. From the technical standpoint, we start out the year

by telling each State, based on their previous year's expenditures,

how much they can count on. Then, as the milk is consumed, they

report to us how much of this total they have already committed,

and we have already provided to them, and as some States spend

less and other States spend more, this is adjusted in Washington.

There is no definite allotment to each State as such.

Mr. STALBAUM. So that if State A were running short on funds, and

State B were running long, the allocation per unit remains the same.

When you make your 5-percent cut, as you did earlier this year, it

applies to all in the country, and when you make your 10 percent, it

applies to all?

Mr. DAVIS. That is the reason for that type of cut, so it affects

everyone equally and anyone has equal opportunity to expand their

program.

Mr. STALBAUM. I have no further questions. I do want to close

with an observation that it seems somewhat incongruous to sit at

a hearing in the morning where we are working on a proposal to

strike out the surplus feature of our law, and this was the original

bill that came before us under Public Law 480, to go into the open
26 SPECIAL MILK AND SCHOOL LUNCH PROGRAMS

market, and then come in in the afternoon and sit in a hearing where

the prime reason for discontinuing the allocation of funds is the basis

that the commodity is no longer in surplus. I cannot help but note

this rather sharply and pointedly, moving from one hearing to another

the same day. I merely want to make that statement in the record.

Mr. HAGEN. Have any school districts suffered an adverse effect by

reason of your failure to spend this $3 million? Do they have commitments which they made before they were aware yt u were not

going to spend this $3 million, or obligations for which they will not

be reimbursed?

Mr. DAVIS. No, sir. They wei e informed far enough ahead of

time. That is the reason why we informed the States in December

that effective February 1 there would be this additional 5 percent,

so that they would have time to inform the schools and the schools

could then adjust their local financing either by putting in mole local

contribution, or effecting economies on the cost of handling the milk,

or in some instances, perhaps, increasing the price to the child slightly.

Mr. HAGEN. I want to ask you a somewhat hypothetical question.

Mr. Whitten, who is chairman of the Appropriations Subcommittee

on Agricultm e, stated yesterday that "We expect to restore funds

for the school lunch, school milk, and certain other programs." He

is the chairman of that subcommittee.

Now, in the event that the subcommittee did—the Congress, we

shall say—did come along with another $103 million appropliation,

or maybe $115 million, and the Budget Bureau says no, would that

answer be final? Does the Budget Bureau determine actually how

much money you spend?

Mr. SMITH. The Budget Bureau acting for the President.

Mr. HAGEN. But the Secretary of Agriculture does not have a free

judgment on this, except to the extent that he can persuade the

President and the Budget Bureau; is that correct?

Mr. SMITH. The Secretary of Agriculture

'

as I understand it, you

see, on matters such as this, is subject to the direction of the President

and the Bureau of the Budget.

Mr. HAGEN. In other words, the Budget Bureau would just refuse

to release the funds; is that correct?

Mr. O'NEAL. Is this the same sort of constitutional question that

the Armed Services Committee has?

Mr. HAGEN. As with the B-70 and so forth.

In other words, even if he wanted to spend the money, he could not

if the Budget Bureau said "No"; is that correct?

Mr. SMITH. The mechanics of it, as I understand it, is when Congress passes an appropriation bill, the Bureau of the Budget makes

allocations to the various departments. It exercises the right and

authority of making allocations to those departments.

Mr. HAGEN. Well, I would like to ask you another question. As a

matter of policy, I think everybody agrees the school lunch program

is a valuable program. Is it not true, if you increase rather than

reduce the amount, if you contributed more in terms of cash, you

would get a bigger participation than you have right now or can

foresee?

Mr. SMITH. I would have to answer that question "Yes," sir,

because studies made of the program indicate that price does have an
SPECIAL MILK AND SCHOOL LUNCH PROGRAMS 27

effect on participation. But this also has to be related over against

what the economic position is of the parents making the contribution.

One of the basic considerations that we are reflecting in the position

that I have presented is that even if the price of the lunch goes up, so

are incomes going up very substantially, and we believe one would

offset the other.

Mr. HAGEN. Of course, the problem is that children from well-to-do

families, they are going to get lunch under any set of circumstances,

if they have to go downtown in their automobile, or something like

that. In order to carry a program Of this kind, you have to have a

broad enough participation to justify building kitchen facilities and so

forth. When you start discriminating between pupils except on a

level of maybe giving some a free ticket or something, you totally

destroy the program.

Mr. SMITH. Sir, I just cannot see where you can go that far in your

reasoning, to say you are going to totally destroy the program, when

you are talking about 1 cent out of an average cost of a lunch of 50

cents.

When the record shows that the average cost of a lunch has been

progressively upward—sure, incomes generally have been upward.

The participation in the program has been upward, childwise as well

as schoolwise.

So that I think as I see it, it is reasonable to conclude that, as I did

in my presentation, that we fully believe the program will continue

to grow and participation will grow.

Because among other things that I have not mentioned or stressed,

this is something that the organizations that sponsor the school program, the school lunch program, both on a national basis and on a

State and local basis, have done a tremendous job on as far as the school

lunch program is concerned.

Mr. HAGEN. I know in some areas in California, for example, the

school lunch program is fairly marginal, because you have to make a

heavy capital investment to begin with in the cafeteria and. kitchen

facilities. To the extent that you reduce the Federal contribution

of the actual lunch itself, you make it even more marginal.

Well, I want to thank you gentlemen for coming here. We shall

hear you again when we hear Mr. Stalbaum's and Mr. Quie's bill.

(Whereupon, at 4:25 p.m., the hearing adjourned.)

0