[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
RELATED AGENCIES APPROPRIATIONS FOR 2016
_______________________________________________________________________
HEARINGS
BEFORE A
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
____________
SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG
ADMINISTRATION, AND RELATED AGENCIES
ROBERT B. ADERHOLT, Alabama, Chairman
KEVIN YODER, Kansas
THOMAS J. ROONEY, Florida
DAVID G. VALADAO, California
ANDY HARRIS, Maryland
DAVID YOUNG, Iowa
STEVEN M. PALAZZO, Mississippi
SAM FARR, California
ROSA L. DeLAURO, Connecticut
SANFORD D. BISHOP, Jr., Georgia
CHELLIE PINGREE, Maine
NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full
Committee, and Mrs. Lowey, as Ranking Minority Member of the Full
Committee, are authorized to sit as Members of all Subcommittees.
Tom O'Brien, Pam Miller, Andrew Cooper,
and Elizabeth King,
Staff Assistants
____________
PART 5A
Page
USDA Food, Nutrition, and Consumer Services............. 1
USDA Rural Development.................................. 291
USDA Farm and Foreign Agricultural Service.............. 703
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
___________
Printed for the use of the Committee on Appropriations
U.S. GOVERNMENT PUBLISHING OFFICE
97-958 WASHINGTON : 2016
COMMITTEE ON APPROPRIATIONS
HAROLD ROGERS, Kentucky, Chairman
RODNEY P. FRELINGHUYSEN, New Jersey
ROBERT B. ADERHOLT, Alabama
KAY GRANGER, Texas
MICHAEL K. SIMPSON, Idaho
JOHN ABNEY CULBERSON, Texas
ANDER CRENSHAW, Florida
JOHN R. CARTER, Texas
KEN CALVERT, California
TOM COLE, Oklahoma
MARIO DIAZ-BALART, Florida
CHARLES W. DENT, Pennsylvania
TOM GRAVES, Georgia
KEVIN YODER, Kansas
STEVE WOMACK, Arkansas
JEFF FORTENBERRY, Nebraska
THOMAS J. ROONEY, Florida
CHARLES J. FLEISCHMANN, Tennessee
JAIME HERRERA BEUTLER, Washington
DAVID P. JOYCE, Ohio
DAVID G. VALADAO, California
ANDY HARRIS, Maryland
MARTHA ROBY, Alabama
MARK E. AMODEI, Nevada
CHRIS STEWART, Utah
E. SCOTT RIGELL, Virginia
DAVID W. JOLLY, Florida
DAVID YOUNG, Iowa
EVAN H. JENKINS, West Virginia
STEVEN M. PALAZZO, Mississippi
NITA M. LOWEY, New York
MARCY KAPTUR, Ohio
PETER J. VISCLOSKY, Indiana
JOSE E. SERRANO, New York
ROSA L. DeLAURO, Connecticut
DAVID E. PRICE, North Carolina
LUCILLE ROYBAL-ALLARD, California
SAM FARR, California
CHAKA FATTAH, Pennsylvania
SANFORD D. BISHOP, Jr., Georgia
BARBARA LEE, California
MICHAEL M. HONDA, California
BETTY McCOLLUM, Minnesota
STEVE ISRAEL, New York
TIM RYAN, Ohio
C.A.DUTCHRUPPERSBERGER,Maryland
DEBBIE WASSERMAN SCHULTZ, Florida
HENRY CUELLAR, Texas
CHELLIE PINGREE, Maine
MIKE QUIGLEY, Illinois
DEREK KILMER, Washington
William E. Smith, Clerk and Staff Director
(ii)
W I T N E S S E S
__________
Page
Page
Bice, Donald..................................................... 1
Concannon, Kevin................................................. 1
Dolcini, Val..................................................... 703
Hernandez, Tony.................................................. 291
Karsting, Phil................................................... 703
Mensah, Lisa..................................................... 291
Rowe, Audrey..................................................... 1
Salerno, Lillian................................................. 291
Schneider, Jasper................................................ 291
Scuse, M. T...................................................... 703
Tagtow, Angela................................................... 1
Willis, Brandon.................................................. 703
Young, Michael.................................................291, 703
AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
RELATED AGENCIES APPROPRIATIONS FOR 2016
----------
Tuesday, March 17, 2015.
USDA FOOD, NUTRITION, AND CONSUMER SERVICES
WITNESSES
KEVIN CONCANNON, UNDER SECRETARY, FOOD, NUTRITION, AND CONSUMER
SERVICES
AUDREY ROWE, ADMINISTRATOR, FOOD AND NUTRITION SERVICE
ANGELA TAGTOW, DIRECTOR, CENTER FOR NUTRITION POLICY AND PROMOTION
DONALD BICE, ASSOCIATE DIRECTOR, OFFICE OF BUDGET AND PROGRAM ANALYSIS
Introduction of Witnesses
Mr. Aderholt. Good morning. The Subcommittee will come to
order, and I want to welcome everyone to the hearing this
morning as we examine USDA's Food, Nutrition, and Consumer
Services mission area.
Our witnesses today are Under Secretary Kevin Concannon,
and he is joined by Ms. Audrey Rowe, Administrator of the Food
and Nutrition Service--good to have you here; Ms. Angela
Tagtow, which is your first time, I think, here before the
Subcommittee, and good to have you today in your role as the
Executive Director of the Center for Nutrition Policy and
Promotion; and Mr. Donald Bice, who is Associate Director,
Office of Budget and Program Analysis. And glad to have you
here today.
Opening Statement--Mr. Aderholt
USDA's nutrition programs account for 75 percent of the
total resources from the Agriculture Appropriations Bill. Your
request for fiscal year 2016 is approximately $112.4 billion.
That is a $2.1 billion increase from the fiscal year 2015
enacted level. The Supplemental Nutrition Assistance Program,
which is commonly known as SNAP, is USDA's largest program,
serving more than 46 million people per month with a requested
program level of $83.7 billion.
For Child Nutrition Programs, the President's budget
projects that total funding needs will approach $21.6 billion
in fiscal year 2016--a $2.2 billion increase since fiscal year
2014. The Special Supplemental Nutrition Program for Women,
Infants, and Children, which of course is commonly known as
WIC, accounts for the single largest discretionary program in
the bill. The budget proposed level funding for WIC at $6.6
billion to meet the estimated 8.5 million participants each
month.
I mention that as we have worked through the fiscal year
2016 process, there are three goals for this Subcommittee:
Number 1, improving the management of the agencies and programs
that are within our purview; targeting funds to the most
important programs and their functions; and number 3, promoting
U.S. agriculture, free and fair markets, and safe food and
medicines.
Without a doubt, the Federal nutrition programs meet the
second goal as they play a key role to combat hunger and to
provide millions of Americans with the food and the nutrition
that they need on a daily basis. USDA's nutrition programs meet
the third goal as they help provide those in need with
nutritious foods that are provided by America's farmers and
ranchers. However, I do believe more can be done to meet the
first goal by improving the oversight and management of FNS
programs and spending.
For example, this Administration has been incapable of
providing Congress with any suggestions on how to curb spending
within the nutrition programs. SNAP participation has declined
slightly, yet the President's budget will not allow those
savings to be realized. Instead, the Administration takes those
savings and increases spending on programs States are not
currently using or that have little to no proof of success.
The President's budget proposes cuts to the crop insurance
program, and Secretary Vilsack said in an interview that this
proposal was a way to help keep projected Farm Bill savings on
track. But in case the Administration missed it, Farm Bill
nutrition savings are not materializing as projected, either,
so where in this budget is a proposal to ensure the nutrition
savings stay on track? All of these examples demonstrate a
missed opportunity to show some evidence of fiscal restraint.
I will acknowledge, as I did last year, that I appreciate
the Department using realistic participation rates in
submitting the request for WIC funding. WIC has maintained a
fairly high level of bipartisan support, and we must ensure
sufficient oversight at the Federal level. Eligibility for the
program has expanded, and that should be reviewed. States need
to be monitored more carefully in their efforts to manage these
programs, and instances of fraud must be prevented.
Since becoming Chairman of this Subcommittee, I have fought
on numerous occasions for flexibility and common sense within
the school meal programs. And make no mistake about it, I want
to ensure students receive healthy and nutritious meals. And I
believe we can do that, though, without bombarding schools with
costly and overly burdensome regulations.
Reducing childhood obesity rates is going to take time. It
is not something that happens overnight, and quite honestly,
takes more than a couple of years. And while most of us would
agree that the Administration's end goal is correct, I think
sometimes the timeline can be inflexible and unrealistic.
I was pleased to work with my colleagues over the last
Congress to include a provision in the fiscal year 2015 Omnibus
that allows States to grant schools exemptions from the current
whole grain requirements, and I think most States will take
advantage of this common-sense flexibility.
I think more should be done to help schools, which is why I
am a cosponsor of the bill introduced by Representative Noem
that will give schools greater control in operating their
school meals program. The child nutrition program expires this
fall, and I hope that the Administration will continue to be at
the table and work with the Republican Congress to find
reasonable solutions to the challenges schools are facing.
And finally, I want to stress the importance of the
rulemaking to make sure the final 2015 Dietary Guidelines for
Americans are strictly focused on dietary and nutrient
recommendations. The most current science must be used and the
statutory directive must be followed, and this goes beyond just
sustainability and statements on meat consumption.
While I appreciate the Secretary's comments that he
understands his role and he knows he has to follow the law, and
Commissioner Hamburg from the FDA made similar comments when
she was here just a couple of weeks ago, the message needs to
be clear throughout the entire Administration.
But again, we thank you for being here for your time to
testify and for the work that you do on a daily basis in your
respective offices. I want to at this time recognize the
Ranking Member, Congressman Farr, for any comments that he may
have.
Opening Statement--Mr. Farr
Mr. Farr. Thank you very much, Mr. Chairman.
Thank you very much for your service to our Government, and
it probably is one of the most important programs that the
United States Government can do. It is the feeding of people in
this country who are in need of not only food but in need of
healthy food.
And I think that the interesting politics of it has really
been driven by the fact that parents are now insisting that
schools serve healthy foods. When I was growing up and on the
Education Committee in California, nobody ever asked us what
they were feeding kids in schools. There was some discussion in
the 1980s about maybe too many soda machines in schools, but
really nobody was doing anything about it. And just what a
difference a decade or two makes because we've really turned
that around. And I am really pleased with what you have done.
I would like to hear in your comments, and reflecting on
what the Chairman said about these concerns about regulations.
First of all, the schools are going to be full of regulations
whether we like it or not. If we do not make them at the
Federal level, they will make them at the State and local
level. There are too many issues with laws now that schools
cannot escape regulations even in what you feed, particularly
with the food safety issue--not the food and nutrition issue,
food safety issue.
So the regulations are there. The question is, are those
regulations driving the Program to try to get nutritious food
in the schools? I would be very interested in hearing your
comments about your program on Team Up, the initiative that you
are going to go nationwide with. You have built up these
regional pilots last year, and I would like to hear more about
that and the success you have had, and perhaps even in the
Chairman's district.
Also, I think that nutrition--and SNAP is a huge program in
this country, and very much needed. I would be interested in
hearing how effective you are in converting all that to the EBT
technology. I know you are doing that with the WIC program and
the other programs. I really do think that this sort of credit
card system is a lot better than the old food stamp system,
certainly more reliable and more accountable, so tell us about
the success you have made in that.
And then I think on the budget, Mr. Chairman, it would be
interesting to see what the Budget Committee does because they
have not really asked for much more money. Frankly, the big
programs are not asking for more. It is more the reserve fund
that they need. Perhaps you could talk to why that reserve fund
needs the amount of revenue that you ask for. I look forward to
your testimony.
Mr. Aderholt. Thank you, Mr. Farr.
And Mr. Concannon, again thank you for being here. Without
objection, your entire written testimony will be included in
the record. And I would like to at this point recognize you for
your statement, and then we will proceed on with the questions.
Opening Statement--Mr. Concannon
Mr. Concannon. Good morning, Mr. Chair, Members of the
Committee. Over the last 50 years, Federal nutrition programs
have dramatically reduced hunger and malnutrition in the
poorest areas of the United States. But much work remains.
Low-income families still struggle with food insecurity and
its effects--poor health, children's performance problems at
school. And diet-related disease drives healthcare costs. Our
request fully supports the major programs to promote food
security and healthy diets for all Americans.
First, SNAP: As the economy recovers, SNAP participation
drops. Forty States have seen reductions since 2013. But the
effects of the downturn linger, with long-term unemployment
still at a historic high and underemployment a reality for too
many. SNAP continues to respond as designed to serve still
struggling families, even as it responds as designed with lower
participation as the economy grows.
We are reenergizing the SNAP employment and training
programs to connect participants directly to existing jobs and
the strongest services. This week we will award Farm Bill
grants to test and evaluate innovative strategies to increase
work, and we must make E&T more available.
In a weak economy, States seek waivers to remove only the
participation time limit, not the work requirement for able-
bodied childless adults. As the economy improves, fewer States
qualify for these waivers, and SNAP participants lose
eligibility under the time limit. This budget proposes an
additional $25 million in the employment and training programs
for these participants, reflecting our commitment to the value
of work.
SNAP is also advancing our goal to improve diets with
better access to farmers' markets, evidence-based healthy
eating strategies, and incentives for healthy purchases through
the Food Insecurity Nutrition Incentive Program.
In child nutrition, over 93 percent of schools are now
certified as meeting updated, science-based meal standards.
Change can be a challenge, and we have offered flexibility when
needed. But we have observed great progress and positive
responses from school administrators, teachers, nurses, and
most importantly, students and parents.
I have heard it firsthand, and a recent Pew Charitable
Trust poll found over 70 percent of parents favor national
nutrition standards for school meals and snacks. Now is not the
time to turn back. Some of you have heard from current School
Nutrition Association (SNA) leaders and others opposed to
change. But 19 past SNA presidents and 450 former admirals and
generals have urged Congress not to reverse the progress
underway. We must stand strong, along with America's health and
nutrition associations, to benefit current and future
generations.
We are improving access to meals through the Community
Eligibility Provision, which helps schools in high poverty
areas offer meals at no direct cost to students, yet preserves
the program's shared cost approach. More than 2,000 districts
across the country now serve 6.3 million children through this
provision.
Yet there is still a hunger gap when school is out, so
summer feeding remains a priority. This budget fully funds
summer meals programs and invests in the successful summer
Electronic Benefits Transfer (EBT) for children projects.
Helping children get a healthy start in life is the goal of
WIC and its science-based standards. This budget funds WIC to
serve all eligible persons who qualify and seek benefits.
Turning to the Dietary guidelines for Americans, HHS and
USDA will develop the 2015 guidelines, drawing on the
independent Dietary Guidelines Advisory Committee's report and
input from the public. Let me correct two pieces of
misinformation that have been out there.
First, the Committee did not propose to eliminate lean meat
from a healthy diet. The recommended meat intake in the 2015
advisory report is the same as in the 2010 guidelines. And
second, the Committee's work on sustainable healthy eating was
separate from its primary focus on diet and health, and did not
drive recommendations on meat consumption.
I invite your constituents to comment through a public
meeting or at dietaryguidelines.gov. The guidelines will both
reflect strong science and practical guidance to improve diets
and health. And I should mention, in response to requests from
Congress, this morning we are posting an extension for the
comment period for the dietary guidelines.
On an overarching basis, we are most strongly committed to
program integrity. SNAP error rates are at record lows. We are
improving procedures to punish retail fraud, along with new
tools for States to fight recipient fraud. The new Office of
Child Nutrition Integrity will take a multi-faceted approach to
reduce errors in school meals. We will confront error and
violations head-on to protect and strengthen all of these
programs.
I look forward to your questions.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
DIETARY GUIDELINES
Mr. Aderholt. Thank you, Mr. Concannon. And certainly we
appreciate the news about the 30 additional days to accept
comments. That will be very helpful. As I mentioned, we had
mentioned that in a hearing with the Secretary, and he was
favorable to that, and of course wanted to speak with the
Secretary of Health and Human Services. And we are glad that
that was able to be accomplished.
As you know, the Dietary Guidelines recommended by the
Advisory Committee has drawn some criticism. That is, I think,
a proven fact. Both the Secretary of Agriculture Vilsack and
the FDA Commissioner Hamburg testified before this
Subcommittee, and I pressed them to remember the law must be
followed on all accounts and relevant science must be
considered.
Secretary Vilsack's comments to the Subcommittee and also
in the hearing would imply that he has somewhat distanced
himself from some of the Advisory Committee's recommendations.
The Secretary is quick to point out that he does not have the
latitude to opine about various issues, and he knows he has to
color within the lines. I think those were his words.
However, based upon your testimony, it does not seem like
you and the Secretary may be on the same page. Your testimony
seems to defend the report by mentioning it states that the
quantity of meat to consume in the 2015 advisory report is the
same as what is mentioned in the 2010 Dietary Guidelines. If
that is true, then why did the Advisory Committee not simply
restate the 2010 Dietary Guidelines without the extraneous
commentary not directly related to the statutory mandate?
Mr. Concannon. Mr. Chairman, as I mentioned, in the last
few days meeting with Members of Congress, the role of the
Dietary Guidelines Advisory Committee is set out under charter
authorized by law. And they are required to look at the prior,
the 2010 Dietary Guidelines, and raise a series of questions in
terms of new science that may have occurred in the five-year
interval.
Their recommendations, as I mention in my testimony, about
the amount of meat consumed is basically the same, is the very
same as the 2010 Dietary Guidelines. And it is important to
note as well that the Dietary Guideline Advisory Committee, the
scientific report, is Part A. Part B will be the policy
document that is developed by Federal staff from the Department
of Health and Human Services and the USDA.
And that staff will also consider comments from the public
as well as comments from industry. But I think it is important
to note that the process that was followed by this Dietary
Guidelines Advisory Committee was the most transparent in the
history of that process.
All of the hearings were broadcasted. Almost a thousand
people weighed in on each of them. All of the reports--there
are a thousand pages of scientific reports that were posted on
the web. And at the end of the day, I am confident that the
document that will be produced at the end of the year will
reflect the core of science, the strongest science available.
And it will not be subject to what I describe as a one-off
over here, one-off over there, what the American public is
faced with when you read magazines and newspapers that
recommend you do this or do that in terms of diet. This is
going to be the core of science. I am confident that that is
what will be published at the end of the day. I am confident
that that is the commitment from both Federal agencies.
Mr. Aderholt. Is there any research or evidence that you
have seen that demonstrates the impact that the 2010 Dietary
Guidelines have had on Americans, whether it has been a
positive effect or a negative effect?
Mr. Concannon. I have not seen the specific, and perhaps
Director Tagtow can speak to that even more directly. We rely
upon the 2010 Guidelines and incorporate them into--for
example, since the last Dietary Guidelines, we developed what
is now known as the MyPlate document and the SuperTracker that
is relied upon by millions of people across the country online,
where it informs their own diets.
But I cannot directly do a cause and effect between the
2010 Guidelines and the eating practices of Americans. It is
advice. I will say this much, that the Center for Nutrition
Policy and Promotion devised a tool back in 1995 referred to as
the Healthy-Eating Index.
If Americans 100 percent of the time adhered to the
recommendations, they would receive a score of 100. Americans
of all income levels actually earn a score of 57. So we do not
do so well. And low-income people have even more challenges,
obviously affected by where they live and the choices they
have.
But we are certainly out there promoting adherence to those
dietary guidelines in the form of the SuperTracker, MyPlate. I
see that icon when I visit schools across the country or food
banks and health clinics. But I cannot speak to something that
would directly point to the 2010 Guidelines and say, these
elements alone have had an effect.
Mr. Aderholt. Well, I know they are updated every five
years, as you mentioned. But I guess my question is, is there a
way that we could know that the previous guidelines have helped
to improve Americans' diet?
So Ms. Tagtow, do you want to comment on that?
Ms. Tagtow. Sure. Thank you, Mr. Chairman. One thing I
would like to reflect on is the graphic that appears on my
written testimony on page 3. This demonstrates dietary intakes
as compared to current consumption of Americans. And as we see,
we are really falling short on recommendations of intakes of
fruit, vegetables, whole grains, dairy food groups, seafoods,
nuts, and soy.
And towards the bottom of that graphic, you will see that
we really exceed consumption in areas of things such as refined
grains, solid fats, and added sugars, as well as specific
nutrients such as sodium and saturated fat, as well as that
subgroup of meat, poultry, and eggs.
Within that graphic, you will see the center line
designates the gold standard of the Dietary Guidelines for
Americans. But this also represents a pattern that we are
trying to achieve, in which we are looking at shifts towards
the top half of those bars and shifts at the bottom half of
those bars in order to meet a healthier dietary pattern.
As Under Secretary Concannon mentioned, we have the
Healthy-Eating Index, which is a measurement of diet quality
across all Americans. And we are seeing gradual shifts in the
Healthy-Eating Index, which is a research-based demonstration
of dietary quality in America. Today we are averaging about 58
on that scale of 100, which does represent lots of areas for
improvement in dietary patterns for Americans.
We also look at chronic disease rates across the country,
and that is a proxy for measuring the overall health of the
American population--things such as cardiovascular disease; of
course, we are looking at overweight and obesity, as well as
other diet-related chronic diseases.
We are very interested at the preliminary findings that are
coming out on the rate of childhood obesity. And we are seeing
right now a leveling off of that rate, which could indeed be an
impact of many factors that affect children's access to healthy
food.
There are a variety of ways of measuring this, and like the
Under Secretary said, there is not a mechanism to draw that
direct cause and effect between the impact that the Dietary
Guidelines for Americans has on diet-related chronic disease.
But it is, in fact, a proxy for measuring that.
Mr. Aderholt. We could probably spend another hour on this.
My time is up.
Mr. Farr.
CHILD NUTRITION PROGRAMS
Mr. Farr. Thank you, Mr. Chairman.
Just for Members' information, the history of this is--I
have been on this Committee a long time, and many years ago the
most number one asked question by both sides of the aisle was,
what are we doing to fight child obesity in our schools and in
the country?
And then we passed the healthcare bill, and the bottom line
of that was that if we are really going to bring down costs of
healthcare in America, we have got to start with growing
healthier people. And it has got to be by what we eat.
I have experienced the fast food explosion in my lifetime.
I graduated from college in 1963. The first McDonald's was in
our area in California, in Salinas, in 1965, and then after
that, the explosion. And I remember that it even was not until
the 1980s that, frankly, all these different franchises got
everywhere. And everybody was into fast food, and people were
just eating all their meals out of that, and without much
direction as to the quality and quantity and impact.
So this obesity issue, and I have struggled with it my own
self, is really a problem. And I wish that people had been able
to teach me at a younger age just how to be more selective in
what we eat. And so I appreciate it. And the guidelines are
guidelines.
I mean, we have a big book here in Congress on our office
guidelines. It sits on every chief of staff's desk. I do not
know if any of the members have ever read them, but I would
hate to have them reviewed to see if we really follow these
guidelines because I think a lot of them are not enforceable
law. They are just guidelines.
But I know what the Chairman is concerned about because you
are getting push-back by a lot of people that do not want kids
to throw away this food. That isn't something new. But I would
like you to talk a little bit about what you are doing on Team
Up with schools to allow the schools to learn best management
practices so that you can achieve the Healthy, Hunger-Free Kids
goals. And are you going to continue it?
Mr. Concannon. Thank you for the question. I am, as I
mentioned in my testimony, very confident in the progress that
is being made in American schools. Nearly 100,000 public,
private, and parochial schools participate in the Heathy,
Hunger-Free Kids Act, the National School Lunch Program, and
most of them as well participate in the breakfast program.
And I see it as I visit schools. Ms. Rowe visits schools as
well. We purposely, when we go out to a State, try to eat with
kids, either breakfast or lunch. I have done so in a number of
States over the last five to six weeks and before. And
particularly with younger children, younger children that are
being gradually introduced to this--high school kids are a
challenge in every household, or many households in the
country.
But certainly younger kids, elementary, middle school kids,
these healthier meals, 93 percent of schools are meeting them.
And as was mentioned just in the Dietary Guidelines, they
represent basically a healthier meal.
There are three studies that I am mindful of--a Harvard
School of Public Health study; a University of Connecticut
study released just within the last couple of weeks has shown
that food that is wasted in the school meals program is
actually reduced from before these new meal standards came into
being.
And by the way, anybody who is familiar with schools will
know that plate waste or food waste has always been a
challenge. There is not anything new there. The question is,
are we doing a better job in managing that? And I believe we
are.
And for schools that are struggling with that, we point out
to them strategies that they can employ--share tables, for
example, where a child, if you do not want to eat that pear,
you may put it on a share table. Another child may take that.
Or the school can turn that over to a food bank if it so
chooses.
There are ways to manage that. We are also using behavioral
economic science. We have a major contract with Cornell
University where they are offering free consultation to schools
right across the country on such basic things as the lighting
in a school cafeteria, how food is presented, how foods are
named.
And we also require and say to schools across the country,
make sure in school meals, instead of pre-plating the tray,
that you hand the tray to a child and encourage him or her to
make a choice. And it is like the rest of us. I compare it to
my undergraduate days. The courses I elected I enjoyed a lot
more than those that I was required to take. And children as
well we say, offer versus serve. Give kids a choice. And we are
succeeding in that regard.
Mr. Farr. But you are also teaching other school districts,
the ones that are having difficulties?
Mr. Concannon. Yes, we are. I am sorry. I did not----
Mr. Farr. And that might alleviate the questions that the
Chairman has had about people coming to him from school
districts saying, there is too much plate waste because kids do
not like it, and we do not like the regulation.
Mr. Concannon. We had great success through the University
of Mississippi, the National School Food Service Management
Institute, with something called Team Up that was piloted in
the Southeastern States. It is now, we have announced recently,
across the country.
There will be 700 such units of pairing up schools that are
successful with schools that are challenged, part of that 7
percent that are still struggling. We say, do not take our
advice in that regard. Let us connect you up with a school that
has succeeded in this regard.
Mr. Farr. My time is expired. Thank you.
Mr. Aderholt. Mr. Young.
Mr. Young. Thank you, Mr. Chairman, and thank you folks for
coming by. Ms. Tagtow, I know you have an Iowa background. You
went to the University of Northern Iowa and Iowa State
University.
Ms. Tagtow. That is correct.
Mr. Young. If those two teams meet up in the NCAA
tournament, I am wondering if you want to share with us--no,
you do not have to. [Laughter].
Ms. Tagtow. May the best team win.
SMART SNACKS IN SCHOOLS
Mr. Young. That is right. I recently met with
representatives of the Iowa School Nutrition Association and
heard their concerns about some of the school nutrition rules
the USDA has implemented. These are people who want to provide
healthy foods to students, especially those who qualify for
free and reduced lunches.
But these rules, they say, are restrictive, that some
middle and high school students are buying unhealthy snacks and
lunches--we all know this--from local gas stations or fast food
restaurants. This is the very opposite effect of what the
school lunch program is intended to do.
I would like to focus my questions on the Smart Snacks in
School rule. It does not make sense that a food item that has
been sold a la carte on Monday can only be sold one more day of
the week off the a la carte menu. Why did the USDA limit the
number of reimbursable healthy food options that can be served
at any one time as an a la carte item?
Mr. Concannon. I believe I can answer that, Congressman.
The meal requirements in terms of both calories and sodium, as
an example, other elements, other nutrients in the food, are
averaged over the course of the week. So it is possible during
a Monday you could serve a particular food item as an entree or
part of the main meal that would exceed, if you were allowed to
serve it every day, exceed either the calorie limits or the
sodium or the sugar requirements.
That is why that limitation on either they may sell an item
as an a la carte meal item on the day it is served as the main
meal or the next day. But you cannot serve it over the course
of the week because you could envision in some schools where,
let's say on a Monday you are serving French fries, perfectly
acceptable, but then you start serving French fries as an item
every day of the week. You have destroyed the very purpose of
putting limits on it. That is why there is a limit on it.
COMMUNITY ELIGIBILITY PROVISION
Mr. Young. Thank you. The USDA's Community Eligibility
Provision became nationally available this year. You state in
your testimony that this provision ``simplifies operations and
helps schools and districts with high poverty rates offer all
students meals at no direct cost.''
Being a new member of the Subcommittee, can you please give
us a brief description of how this program works and how it
simplifies operations? And how does the program offer all
students meals at no direct cost?
Mr. Concannon. No direct cost to the student. I should
qualify that. But I am happy to speak to that. As I mentioned
in my testimony, more than 6 million American students this
year--because this academic year is the first year the program
has been available in all 50 States; it was authorized by the
Healthy, Hunger-Free Kids Act, gradually introduced in 10
States, and all States this year.
Six and a half million children are in schools receiving
it. They must be high poverty areas. Typically, they have to be
both at least 40 percent receiving free meals, but also another
provision important to Congress is the family income in those
households must be vetted or verified by a county or, in the
case of Iowa--I worked in Lincoln, Iowa--the State Department
of Human Services would have to verify the family income. That
was an expectation, what we refer to often as direct
certification.
And then the school must maintain its commitment, its
financial commitment. Typically, the program works best, that
is, for schools that have in the range of 60 percent; even
though they qualify at 40 percent, typically it allows the
school, when they apply the formula, the Federal formula, it
allows the school to serve all children breakfast and lunch
without charging individual students.
And the savings comes in the Administration because most
school meals programs have at the end of the line a cashier,
somebody who either checks the PIN number for the child or
determines you are a free child, you are a child with a
subsidized meal, or you are a so-called paying or fully paid
child.
And this eliminates that, allows that staff to be
redeployed to encouraging kids to pick healthier meals. It
simplifies the Administration. And more than half of the
schools that were eligible across the country adopted it this
year, and I would expect next year even more, because in
virtually every one of those schools--I have been to many of
them, visited many of them--they are reporting increased
enrollment in breakfast and in lunch.
Mr. Young. Thank you. I guess my time is up. Thank you, Mr.
Chairman. Thank you.
Mr. Aderholt. Mr. Bishop.
SNAP ADMINISTRATION IN GEORGIA
Mr. Bishop. Thank you very much, and let me welcome the
panel.
Let me start off, Mr. Concannon and Ms. Rowe, to just state
publicly that I wanted, on behalf of the State of Georgia, to
personally thank you for your continued support and vigilance
in working with our State to resolve the longstanding issues
that we have had with respect to administration of the SNAP
program.
Can you briefly give us an update on where we are today?
Because in the past we have had severe logjams in both the
application and recertification process, which has been a major
focus of both our State SNAP administrations as well as FNS. So
if you could give us an update on what is happening on this
front, I would appreciate it, and tell us what is left to do as
we move along to try to get this finally resolved.
Mr. Concannon. I can start, and I can turn to Ms. Rowe. But
as you note, Georgia has had some real issues in the SNAP
program unlike, for example, school meals; Georgia is a leader
in that regard. It has done a great job in the school-based
programs but had many, many issues on the SNAP program as well,
particularly around timeliness of applications when people are
struggling and they turn to the State agency for help. And
these are unacceptable delays in responding to people.
Mr. Bishop. Delays.
Mr. Concannon. So we have been very focused on working with
the State, our Southeast regional office, which is the Federal
office located in Atlanta, working very directly with them,
with the State. The State is making progress, I am pleased to
say.
But we still have remaining issues around--they have call
centers, as many States have turned to call centers to process
calls and inquiries. And we are not satisfied yet with what
Georgia has been able to do in terms of improving the
responsiveness and timeliness of the call centers related to
SNAP.
Do you want to add anything?
Ms. Rowe. No. I just want to echo the Under Secretary's
comment, that we are working and we have seen improvement. And
as he said, the call center, we continue to work with them to
find ways to improve access to the call center, timeliness,
talk time, wait time, and access so that individuals who are
trying to find information can easily find that information.
Mr. Bishop. I understand they have done more now direct
transfer of the cases to actual workers as opposed to utilizing
solely the call centers. So they are actually utilizing the
call centers much less.
Ms. Rowe. Yes. And that has helped a great deal in terms of
the way in which they have streamlined that process.
WIC ELECTRONIC BENEFIT TRANSFER (EBT)
Mr. Bishop. Well, thank you so much for your help.
Let me move to WIC and the Electronic Benefit Transfer
(EBT) program. According to the budget, 81 State WIC agencies
were involved in some phase of implementing the EBT program,
whether planning, developing the program, implementing the
program; 14 States have successfully implemented the program;
41 agencies are currently in the planning phase; 27 State
agencies are currently implementing EBT.
But all of those do not include the State of Georgia. Can
you tell us how many State agencies have not begun the process
of initiating the EBT for WIC? What are the circumstances
surrounding why various State agencies have not begun to engage
in the EBT process? And in the State of Georgia's case, is this
a result of our past challenges or in the Administration of the
WIC program?
Mr. Concannon. Congressman, I would expect that in the case
of Georgia, it is a reflection of the fact that the State has
had major challenges that we identified in the management of
the WIC program, the core WIC program as it exists.
The intent of Congress, as you may recall, is to have all
States across the country in the Electronic Benefit Transfer
program by 2020, and so we are gradually ramping up to that. We
had at least one year where there were no funds appropriated to
States to allow them to proceed further. So there is a certain
funnel effect here of only so many States can be moving along
through the queue at any one time.
So the fact that a particular State is behind other States
in that regard I would not view as a source of alarm. I think
there are only so many States that are going to be able to----
Mr. Bishop. Let me interrupt you for a second. Is it not
correct that the EBT process is supposed to have several
benefits, particularly cutting down on fraud activity
throughout the system? And if so, why would this not be a
priority for every State agency in the Nation? It has had
success among the Native American territories in implementing
EBT. Other than size, are there any specific issues that have
led to their active participation as opposed to other States?
Mr. Concannon. Georgia has indicated to us they are going
to meet the 2020 deadline. So they are going to meet the
Federal requirement that all States be in by 2020. But in fact,
we had to work very directly with the State around particularly
vendor issues in the WIC program we identified. We had some
issues out in California, and then we had issues in Louisiana
and Georgia, several States, North Carolina.
And so we wanted the States to address those to our
satisfaction, and they have done so. But I think it is also a
matter of what other challenges does the State have. But they
have indicated to us their intent is they are going to meet the
2020 deadline.
Mr. Bishop. Thank you very much.
Mr. Aderholt. Mr. Valadao.
DIETARY GUIDELINES
Mr. Valadao. Thank you, Chairman. Thank you, all of you,
for taking some time out for us today.
I wanted to follow up on the Chairman's question about the
Dietary Guidelines. In a recent Wall Street Journal interview,
while discussing sustainability and the Dietary Guidelines,
Secretary Vilsack stated, ``I read the actual law, and what I
read was that our job ultimately is to formulate dietary and
nutrition guidelines. And I emphasize dietary and nutrition
because that is what the law says, and I think it is my
responsibility to follow the law.''
Do you agree with the Secretary that sustainability is
outside the statutory scope of Dietary Guidelines? And in your
view, is the Dietary Guidelines Advisory Committee the proper
group to analyze the environmental sustainability of
agriculture production systems?
Mr. Concannon. Let me start and then I am going to turn to
Angie. Let me say that just the question of sustainability--the
way the Dietary Guidelines operates is it begins by looking
back at the 2010 Guidelines, and then that independent
scientific Committee raises what is called a series of
questions. These are questions that should be reviewed and
tested.
The Committee raised over 80 questions to the staff. There
was a single question on sustainability. So I think,
unfortunately, this is one of these things that I suspect
members may be even subjected to at times, where the media
jumps on something that may look like it is a little out of
sort and overplays it, makes it look much larger than it really
is.
At the end of the day, at the end of this calendar year, I
am confident that the document, the report, that will be
submitted by the two Secretaries will reflect just the core
science that is required for food-based recommendations of
public health interest. That is the charge to the Committee.
Ms. Tagtow. Correct. Mr. Congressman, just to reiterate the
mandate of the National Nutrition Monitoring and Related
Research Act, we are charged with developing a document that is
based on nutritional and dietary information only. That is our
commitment. That is our charge. And it should be based on that
preponderance or that large body of science as well as medical
knowledge. We take that charge very seriously.
The Dietary Guidelines for Americans, as the Under
Secretary mentioned, provide those food-based recommendations
that help prevent disease and promote health specifically for
people of ages 2 years and older. When the Dietary Guidelines
Advisory Committee addressed sustainability, it could have
been--now, I am not speaking on behalf of the Committee, mind
you--but it could have been based on their reflection on the
2010 Dietary Guidelines for Americans that did address
sustainable agriculture as a strategy to help ensure Americans
have access to nutritious food now and in the future.
However, as the Under Secretary did mention, their primary
focus was spent on that scientific evaluation of the literature
regarding diet and health. And 99 percent of the questions that
they asked to review the literature were based on diet and
health information.
Mr. Concannon. And I should also point out or add to that
that the recommendations, for example, around meat or other
food items were not influenced by the question of
sustainability. So again, that is part of----
DAIRY IN WIC FOOD PACKAGE
Mr. Valadao. Thank you. In representing one of the largest
dairy districts, or the largest dairy district, in the country
and actually being a dairy farmer myself, this question is
important to me.
A change in the WIC-approved food list will no longer allow
2 percent milk for children between the ages of 2 and 5 unless
it is prescribed for underweight participants or other special
circumstances. WIC participants must now choose between 1
percent and skim milk for children in that age group.
Many WIC program participants, especially in rural
communities like mine, shop in stores that are not traditional
grocery stores. Therefore, they have limited milk options
available to them. Have there been any reports to the agency
that WIC participants are unable to purchase required milk
products in their area due to a shortage of the desired product
or, obviously, limited supply or even shelf space?
Mr. Concannon. To your question, it has not come to my
attention at my level. Let me just point out that there are
45,000 approved WIC stores in the United States, and those
45,000 stores must stock the approved Dietary Guidelines-
recommended fat levels, fat contents, in milk.
As I am sure you are aware, in the school-based programs as
well as in child care, the 1 percent requirement is the maximum
as well as for flavored milks, which we support as long as they
are skim milk. So we are very strong supporters of milk. It is
a requirement for meals, and we are champions for it. But we
limit the fat content.
Mr. Valadao. My time is expired. Thank you. Thanks,
Chairman.
Mr. Aderholt. Ms. Pingree.
SNAP EMPLOYMENT AND TRAINING
Ms. Pingree. Thank you, Mr. Chair. So much to discuss
today. Thank you for being here. Thank you for your panel, your
articulate answers to everything, and certainly to Under
Secretary Concannon. As I am sure I have told my colleagues
before, we had a chance to work together in Maine, and it is
always a pleasure to see you.
Just a little bit about the SNAP work requirements, which
is a new issue in my home State. Like a lot of States, and you,
I think, brought this up in your earlier testimony, a lot of
States were accepting the waiver on the three-month rule on
working 20 hours. I do not have to explain it to you.
But Maine has chosen to no longer do that. I think it was
very clear to people during the recession that it was hard to
find a job. It was very difficult to meet the requirement. Now,
as the economy improves a little, States are starting to say,
well, we do not need to have the waiver.
Of course, that does not mean that for everybody who is
covered by this, it is simple to find a job or to meet that
requirement. My understanding is in three months, so starting
next month, there will be somewhere around 6,000-plus people
who are no longer eligible to collect SNAP benefits. They are
childless adults. They are in a difficult position, and not all
of them can find a job in my State. And I am sure that is true
of many others.
I want to get your take on that in a variety of ways. What
do you think will happen in 2016 when many other larger States
start to do this? Do you have a sense of how many people are
going to lose benefits?
And I know in my State, one of the concerns is food banks,
homeless shelters, all the other places, community kitchens,
where people have gone to meet these requirements. It seems
like this is going to place a big burden on them because there
is just no guarantee, once you kick people off the program,
that a job appears and that they have any other financial
resources to support themselves.
Mr. Concannon. Well, as I mention in my testimony, happily,
the recession is over for tens of millions of Americans. But
unfortunately, it is not over for tens of millions of other
Americans, and we see that in the profile of people on SNAP. We
have among the highest rate of people receiving SNAP who are
actively working, who are actively in the workforce, but they
are getting minimum wage or they are getting part-time work
even though they would like more hours.
To your question, four or five States have elected to not
seek or not continue with the waiver, Maine being one of them.
And other States in the next year or so, it is estimated,
because of their unemployment rates improving will no longer be
eligible for it.
And the broad estimate nationally is approximately a
million persons across the U.S. will no longer be eligible, and
at last estimate, about 60,000 veterans who will be affected by
that will no longer be eligible for the SNAP program.
That is why in this budget we are seeking additional funds
in employment and training. That is not a magical answer that
is going to resolve this for all of these folks, by any means.
What is really needed is more job opportunities in the economy.
But we believe very strongly in the employment and training
program, the potential it has to better connect people to the
workforce. So later this week the Secretary is going to be
announcing the Farm Bill, the $200 million in grants for
employment and training that the Farm Bill has authorized. And
some 34 States submitted 40-something applications.
We are granting 10 of those; that is what we have the
funding for. But we are also going to work with the remaining
24 States to say, what else can we work with you--for example,
in places like Maine--to connect, for example, Goodwill
Industries or programs like the food banks that can do basic
kind of training? Again, it does not overcome the weaknesses in
the general economy, but it does help some people get better
connected to the workforce.
But we are concerned about that, those million persons that
are likely to be facing big challenges in the next year or so.
Now, that time limit that will no longer be waivable, in
effect, even existing, those same individuals are required to
register for work. If they are offered a job, they are required
to take it. If employment and training is offered to them, they
must avail themselves of that.
And we are going to work additionally hard with States to
engage more of them because, frankly, some States do a terrific
job on this front, and there are other States that go through
the motions, so to speak, but really do not do much on this
front.
And we think if the households of individuals in those
States would no longer be eligible for SNAP because there is
not an employment and training program available to them, then
the State needs to do more in that regard.
PHOTO IDS IN SNAP
Ms. Pingree. Well, thank you. Thank you very much for your
concern on this. I am out of time, but let me just slip in one
quick question.
I know you work really hard on fraud, and you can just give
me a yes or no answer because this is a much discussed and
controversial topic. But do you think the photo ID is actually
effective in reducing fraud in the SNAP program?
Mr. Concannon. No, I do not.
Ms. Pingree. Thanks. I yield back, or I finish. Thanks.
Mr. Aderholt. Mr. Yoder.
ELIGIBILITY FOR PARTICIPATION IN WIC
Mr. Yoder. Thank you, Mr. Chairman. Welcome to the
Committee. Thanks for your testimony today, and thank you for
your work on behalf of our country and efforts to create good
nutritional opportunities for all of our young people and folks
across the country.
One of our obligations on this Committee is to work with
Federal agencies to ensure that we are rooting out inconsistent
application of law, and fraudulent payments. Throughout every
agency there are mistakes made, and so we certainly know that
these things happen.
But we want to make sure they are as minimal as possible
and that we are making sure those dollars go to the people who
need them. Right? That is what we all want. If we are going to
spend Federal dollars, they must get to the hungry children or
the people that benefit from these programs.
And there have been some concerns raised related to the
proper application of programs both under WIC and in the SNAP
program. I just wanted to ask a few questions about those in
particular.
I guess first of all, what percentage of babies born in the
United States are on the WIC program today? That is zero to 1.
Mr. Concannon. Infants. For close to a decade, the
percentage of births in the United States that qualify for the
WIC program have hovered right at 50 percent. And currently it
is between 51 and 52 percent of all the births. It has been so
going back to 2005.
Mr. Yoder. And my understanding is there are four criteria
in order to be eligible for benefits under WIC--either
categorical, residential, income, or nutritional risk. Would
that be roughly----
Mr. Concannon. Income first and foremost. The statute says
185 percent of the Federal poverty level and/or if a State
elects to have a higher income eligibility level, for example
for its Medicaid program typically. And 38 States across the
country actually have set income eligibility for pregnant women
at a higher rate. I know this is true in the States that I
oversaw for eligibility.
So if the Medicaid eligibility level, for example, for a
pregnant woman is higher than 185, then that infant born to
that household will----
WIC PROGRAM INTEGRITY
Mr. Yoder. Well, I know you are familiar with the 2013 GAO
report that discussed concerns regarding eligibility
determination, the process for WIC applicants to the point of
enrollment. Some concerns cited in that GAO report were
inconsistent criteria allowing applicants access into the
program. Additionally, the report cited a lack of income data
for approximately 7 percent of all WIC participants.
My understanding is USDA subsequently issued a guidance
memo reiterating recommendations for States in how to define
these things, but they continue to allow discretion to States
in many of these areas. And so, can you comment on the progress
the USDA and State agencies have made in addressing
specifically the concerns in the 2013 GAO report?
And in order to make additional progress, could the State
or local agencies use additional tools in order to execute more
consistently in upholding the integrity of the program and
ensuring those with economic and nutritional risks receive the
benefits, those who need them the most?
Mr. Concannon. Thank you. Based on actually some issues
that came to our attention out in the State of California,
actually, several years ago, I am pleased to say that
California has addressed them consistently. But subsequent to
that, we introduced the practice of management evaluations
annually in all WIC programs across the country--the State
programs, the tribal. There are 90 between States and tribal
organizations.
And that is how, frankly, we identified some issues in
Georgia and Louisiana and South Carolina--or perhaps it was
North Carolina; it was one of the Carolinas--that require us to
take a more active role with the State agencies that are
managing, for reasons you cited and that were cited in that
report. Because we want the program to be very strongly managed
as well.
And I think, from my point of view, the program has, on the
clinical side, on the side of getting nutrition education and
getting the benefits to the household, been, I think, an
example, a model. But we have also pushed for stronger
management controls----
Mr. Yoder. Well, I appreciate the efforts you are making.
Would you be able to maybe give a report to this Committee in
direct response to the GAO concerns regarding more folks being
eligible than maybe should be in overpayments, particularly
those concerns raised in that report and how some of your
directives have fixed that, or areas that still need
improvement and how we could help?
Mr. Concannon. Yes, indeed.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
LOW INCOME HOME ENERGY AND SNAP
Mr. Yoder. My other question concerns the SNAP program. And
if you will recall, in the Farm Bill there were many changes
being made to farm programs, food programs, et cetera. But one
area that Congress wanted to address was what was called by
many an abusive practice, in which 16 States gave $1 of low
income heating assistance in order to make folks categorically
eligible for SNAP programs.
It certainly was not the intent of how those programs were
to work, and it certainly is not a way to ensure that people
who need the resources, those folks who need the food stamps
the most, get them.
And so I guess I would be interested to know--Congress then
required a $20 threshold. Has that been successful? How many
States are still gaming the system, as some would say, and
using the LIHEAP program to make their citizens more eligible
than citizens, maybe, in Kansas or other States that are not
abusing that practice?
Mr. Concannon. Yes. The reference that you are referring
to, Congressman, refers to the LIHEAP, the Low-Income Home
Energy Assistance Program. And when a household across the U.S.
qualifies for that program, it does not necessarily make them
eligible for the SNAP program, but it increases the benefit
because they are now subject to something called a standard
utility allowance.
And there were 17 States, actually, that were actually
using that provision. Congress, as you mentioned, set a
requirement, said States must spend at least $20 for such
households to qualify for that. Twelve States have actually
appropriated that $20, or $21. Five States have ceased using
that provision.
But these are State choices. That is in the statute. And as
soon as that law was passed, we notified States right across
the country and said, Congress is now particularly concerned
about this practice. It says if you are going to use it, you
must spend at least $20.
Mr. Yoder. I appreciate your answer. My time is expired. Do
you just have a number? Do you know? The estimate was $8.55
billion over 10 years. Since 12 States are continuing to engage
in the practice, do you know what the number is now?
Mr. Concannon. I do not, but we can provide it.
Mr. Yoder. If you would let us know if those estimates
worked and if they assumed some States would continue to work
the system and how that all played out. Appreciate it. Thank
you very much. Thank you, Mr. Chairman.
[The information follows:]
The figure Congressman Yoder cited was developed by the
Congressional Budget Office (CBO), and USDA does not have all
of the detailed assumptions that CBO used in preparing that
estimate. USDA is working on its own analysis of this Farm Bill
provision to support implementing regulations. The Department
would be happy to share with the Subcommittee a copy of that
esimate when it is complete, but it may not be fully comparable
in the total dollar amount to the CBO estimate for a variety of
reasons, including differences in budget baseline projections.
Mr. Aderholt. Ms. DeLauro.
WIC FUNDING AND PARTICIPATION
Ms. DeLauro. Thank you very much, Mr. Chairman. I have been
running back and forth, so I apologize. I see Dr. Harris here
as well. Welcome to all of you.
Mr. Under Secretary, Administrator Rowe, Executive Director
Tagtow, welcome to you. Congratulations. We actually had the
opportunity, Mr. Secretary, to talk about some of these
nutrition issues at the FAO meeting in Rome near the end of
last year. A great, great effort held in a worldwide nutrition
effort. And it is about the safety net worldwide.
But what was fascinating to me and what struck me was how
our programs have stood as examples to other Nations--the food
stamp program, the WIC program, all of our nutrition programs.
And these countries are now trying to organize in some way.
Visited the FAO with Director-General Graziano da Silva. He
was previously--I found this interesting as well--he was
appointed the food security minister for the country of Brazil.
Would that we would have a food security minister. And that is
what you all represent here today, so we are grateful for that.
And they want to eradicate hunger.
But what I truly do want to do is I just want to make a
quote here and then I am going to ask my questions because I
think one of the most fascinating things is what Pope Francis
said with regard at that conference about the issue of hunger.
``Nowadays much talk of rights, frequently neglecting
duties. Perhaps we have paid little heed. We pay little heed to
those who are hungry. It is painful to see that the struggle
against hunger and malnutrition is hindered by market
priorities, the primacy of profit, which have reduced
foodstuffs to a commodity like any other, subject to
speculation also of a financial nature.''
``And while we speak of new rights, the hungry remain at
the street corner and ask to be recognized as citizens to
receive a healthy diet. We ask for dignity and not for charity.
If we believe in the principle of the unity of the human
family, based on the common paternity of God the Creator and in
the fraternity of human beings, no form of political or
economic pressure that exploits the availability of foodstuffs
can be considered acceptable.''
Cheers for Pope Francis, words that I believe that we
should all heed.
With regard to the WIC program, let me ask you a couple
questions, Mr. Secretary: How cuts to the WIC would impact core
program components and the outcomes that are achieved by the
program? Are there barriers getting in the way of eligible
families applying for WIC or participating in the program? Is
there anything that we can do to make sure that needy families
have access to the critical nutrition assistance that WIC
provides?
Mr. Concannon. Let me say thank you for questions around
WIC. It is one of the most important public health nutrition
programs deployed in the country. In response to an earlier
question, for now nearly a decade almost half, if not slightly
more than half, the births in the United States depend upon it.
The Centers for Disease Control and Prevention (CDC) recently
pointed to WIC as one of the major contributing factors in
seeing a reduction for the first time in overweight young
children in 18 or 19 States.
I am pleased to report that the President's budget request
will fund all folks who are eligible for the WIC program. And
right now, our estimate is that WIC is serving about 85 percent
of all of the eligible infants in the United States.
WIC is operated across the country by a variety of, in some
cases, State agency or county agency, but a variety of other
health consortia as well. And they are completely dedicated to
really reaching out and engaging parents, especially, and very
young children.
So the budget proposes that. There is one element in the
budget that I think Mr. Farr asked me about as well. In WIC we
ask for a contingency fund because as we discovered during the
sequestration period a year or so back, we ran into worries
about would we have sufficient resources to keep programs going
if there was this sequestration.
Ms. DeLauro. Is it a cost-saving program?
Mr. Concannon. It definitely is a cost-saving program. Two
estimates--one, it is estimated to save $1.74 in the first few
months in Medicaid alone; and then over time, a longer period
of time, for every dollar in WIC, it is estimated to save
between $2.50 to $3 in healthcare costs that do not have to be
made.
Ms. DeLauro. Thank you, Mr. Secretary. My time is expired.
Mr. Aderholt. Dr. Harris.
SNAP DIETARY RESTRICTIONS
Dr. Harris. Thank you very much. Thank you, Mr. Chairman.
Thank you very much for coming before the Committee.
I have a couple questions. First of all, I have a question
just to follow-up on the WIC program and the SNAP program. SNAP
has much less restriction on what can be purchased. Just from a
dietary improvement point of view, why do we not restrict it
much more along the lines of WIC? Would that be beneficial, in
your opinion?
Mr. Concannon. That question has been raised and it is an
understandable one.
Dr. Harris. I know. Dr. Roe and I cosponsored a bill in the
last Congress that in fact would begin to move SNAP toward WIC
guidelines, again, looking for--what is good for women and
children is actually good for all of us.
Mr. Concannon. Well, WIC, as you know, and you would know
professionally as well----
Dr. Harris. I have a bunch of questions, so it is just a
simple question. Do you think it would be beneficial to move
SNAP guidelines toward WIC guidelines?
Mr. Concannon. Toward? I think it would be challenging to
do so, but we can certainly consider it.
Dr. Harris. Would it be beneficial? Okay. Is it beneficial?
Your role is to figure out what is good for the American
people. So I take it----
Mr. Concannon. If everybody ate healthier, we would all be
better off.
DIETARY GUIDELINES CHANGES
Dr. Harris. Thank you very much. Now, let me ask you a
little bit about some of these because I have been through--if
you are in medicine long enough, you have been through cycles.
Thirty years ago, margarine very good, butter very bad. Well,
now it is exactly the opposite. Eggs very bad; now they are
okay.
Salt very bad; now you actually have these large reviews,
including the Graudal review in the American Journal of
Hypertension, the PURE study in the New England Journal, that
suggest that in some people, low sodium actually is not good
because it has only a marginal benefit in reducing blood
pressure, but it has a significant benefit, including a 7
percent increase in triglycerides, a 3 percent increase in
cholesterol or a couple of percent increase in cholesterol.
So given that, why no asterisks in the guidelines that came
out, the advisory committee guidelines, to suggest that this is
in fact growing very controversial in the scientific literature
as to who is benefitted by low sodium intake, and in fact, some
people could be harmed by a low sodium intake? Does that worry
you, that we make kind of global statements that actually could
be placing some people at risk?
Mr. Concannon. No. I would say----
IMPROPER PAYMENTS IN SCHOOL MEALS PROGRAMS
Dr. Harris. No, thanks. I appreciate it. We will move on to
the next one. It worries me because I was taught in medical
school everybody is different, and what we do with these
guidelines is presume everybody is the same and that everybody
would benefit from a certain intervention, or that there is no
controversy when in fact it exists.
Let me just talk a little bit about the National School
Lunch Program and School Breakfast Program. According to the
report--I guess it is the USDA's own report--they say that the
lunch program has improper payment rates of $1.75 billion, the
School Breakfast Program $923 million. Now, even in Washington,
that is a lot of money. It is $2.7 billion.
What is USDA doing to bring this rate down to much more
rational levels for the American taxpayer? Look, if someone
needs a school lunch, school breakfast, that is fine. But how
do I explain to my taxpayers that we are spending $2.7 billion
in overpayments? Is somebody watching the shop?
Mr. Concannon. It is a challenge. It is a challenge in the
school meals program. There are two aspects of it. One is
underreported household income, and the other is on the meal
claiming side of it. I should point out to folks that when a
meal is served to a child, if that child, for example, does not
take the half pint of milk, the whole meal is considered to
have been an improper payment.
We do not do that in other program areas. You could say,
well, maybe that represents 15 percent of the meal, and since
15 percent of the meal was not provided, maybe we ought to
really discount it at that level. But do not count the whole
meal----
Dr. Harris. Well, of that $2.7 billion, how much is because
someone did not take the whole meal?
Mr. Concannon. A significant portion.
Dr. Harris. A significant----
Mr. Concannon. Roughly half of it.
Dr. Harris. Roughly half. So what are we doing to deal with
that?
Mr. Concannon. Well, we work with school agencies across
the country to encourage the folks, who are often the cashiers
or the staff, to encourage children to----
Dr. Harris. To do it. Okay.
Mr. Concannon [continuing]. Take all of the components.
SODIUM TARGETS IN SCHOOL LUNCH
Dr. Harris. Let's move on. The Target 2, Target 3, Target
1--the whole school program, my understanding--and this is a
followup on the sodium question--the bottom line is they
achieved Target 1. Target 2 and Target 3 are going to be very
difficult without flexibility in the sodium levels.
And, because I kind of searched the literature, I am not
sure there is really any good literature that in children,
reducing sodium intake actually is proven to be beneficial, not
harmful--again, because we know in adults it can increase
triglycerides if you are normotensive. Most children are
normotensive. Therefore, I would conclude that most children
might have a harm, not a benefit.
Is this taken into account when we go into Target 2 and
Target 3 levels?
Mr. Concannon. Yes. I think there has been a lot of
misinformation about the sodium levels in the school meals
program. We had somebody here in the District that came into
town here within the last few weeks suggesting that the school
meals program is urging a level of 1500 milligrams in sodium.
Not the case.
Even Target 2 is based on what is referred to as the upper
tolerable limit. And even then, these students, these young
people, will be consuming more than is recommended by the
Dietary Guidelines. So it is very reasonable. It is doable. And
even the Institute of Medicine, when it made the
recommendations to us, said, implement this over a 10-year
period because there is so much sodium in all of our diets.
Dr. Harris. Thank you, Mr. Chairman.
SCHOOL MEAL STANDARDS IMPLEMENTATION
Mr. Aderholt. Thank you, Dr. Harris.
Let me talk a little bit about school meals as well. Of
course, I mentioned in my opening remarks and talked about my
interest, given that the school nutritionists in my district
have talked to me. Of course, other Members of Congress have
talked to me and, of course, expressed their concern about the
USDA rules and the difficulties they face.
Like you, I have spent a good bit of time and have an
opportunity, at least, to visit schools in my district and the
school lunchrooms in particular, and was contacted, as I
mentioned earlier, by Evelyn Hicks, who is a school
nutritionist in my district.
The common narrative that it seems that we hear is that the
USDA's approach to their concern seems to center on a lack of
effort or competence on their part. They believe that USDA
thinks that they are under-motivated or they lack the skill to
implement these one-size-fits-all rules that do actually come
out of Washington.
Let me say that that is not the case, based on what I have
seen from visiting these school cafeterias. The people that
work there, they are very dedicated to their job. They want to
see their kids get healthy lunches and the healthiest plate
they can serve.
The school nutrition professionals feel that the weight of
their responsibility is to care for these kids and provide what
many of them think is maybe the only meal that they really get
for the day. Do you think it is a lack of effort and competence
by the school nutritionist? Or do you believe that perhaps
there are some claims of overly prescriptive rules that has
some merit that come down to these school professionals?
Mr. Concannon. First of all, let me be really clear. It is
absolutely not a lack of effort. We have great respect for the
people who work, the so-called lunch ladies, the lunch men, the
people who work in the school nutrition programs. They are very
committed to it. They are the first line of defense from the
public health point of view in terms of encouraging kids.
So I do not see it that way. And I am sure the Food and
Nutrition Service folks who are out in the field do not convey
that attitude to folks in schools. The facts are, 93 percent of
schools across the country are meeting these standards. So we
know that takes effort. They were the first major changes in
meal requirements in more than an decade. And so I know it took
a lot of effort on the part of people.
And I would also point out that for the remaining 6 or 7
percent of the schools that are not meeting the standards, we
have not punished a single school. We have not said, we are
going to pay you less. We have not said, you are on our hit
list. You are on our probation list. We have said, how can we
work? How can we help you?
Either through training, technical assistance--the National
Food Service Management Institute at the University of
Mississippi is doing yeoman's work across the country, working
through schools. Just recently, based on experience in the
Southeastern part of the U.S., we announced the across-the-
country Team Up for Success. Team a school similarly sized that
is meeting the program requirements with a similarly sized
school.
Many of these challenges are, frankly, in the smaller
schools, where literally that school food person may be the
chief cook and bottle washer. They may have to purchase food,
plan the menus, oversee the day, and they may have old
equipment, if any equipment at all or much equipment.
So they have a lot of challenges. We recognize that. We are
very committed to work with them. The standards that were
developed were based on achievable standards. They were not
devised by somebody who is out of touch with what can be done
in American schools.
And as I said, what motivates us is both we have hungry
children across the U.S. and we have an obesity problem. And I
believe the way we have deployed the program, the fact that 93
percent of schools in just the third year are meeting it, to me
shows that people are trying and that they are being respected.
We have not given up on those 6 or 7 percent that are still
struggling with it. We are always open to hear from schools to
say, what can we do differently?
Mr. Aderholt. You mentioned that 93 percent meet the
standards. So 7 percent do not. Which schools have you visited
in that 6 and 7 percent?
Mr. Concannon. I have not visited many schools that are not
meeting that standard. Most of the schools that I get out to
are either in high poverty areas or schools, for example, in
the last year that are participating in the Community
Eligibility Provision.
But when I go out to States or meet with State school food
service--I was recently in the State of Utah, a State that is a
very rural State, major parts of it. I was with a brand-new
superintendent of schools who had come from Ogden, Utah, a city
that has a lot of impoverishment. And he was, even though a new
superintendent, based on his experience as a regional
superintendent, fully committed to the program.
So we are doing it successfully. We do not need exemptions.
We do not need waivers. This is working, so I know it can work.
Mr. Aderholt. Have you had a chance to meet with any of the
schools that have dropped out of the program?
Mr. Concannon. No, I have not.
Mr. Aderholt. Well, would you be willing come to my
district or someone on the panel, some of these schools that
are having a problem, and----
Mr. Concannon. I would really appreciate the opportunity to
come. Definitely.
Mr. Aderholt. Okay. Thank you.
Mr. Farr.
PROGRAM ACCESS IN RURAL AREAS
Mr. Farr. Thank you very much, Mr. Chairman.
I am sorry that Congressman Harris left because I think he
started into an issue that I do not think our Committee has
really spent much time looking at. You have heard today a lot
about questioning the guidelines, particularly the guidelines
with dietary stuff. But we have never questioned the
regulations.
And some of these regulations that we have adopted in our
best interests have really come to be problematic. One of those
regulations was not in the food nutrition bill, but it was in
the 1996 welfare reform law, which said that you will reimburse
on a three-month time basis recipients who are able-bodied,
working age adults without dependents. But they only get three
months.
Nobody ever thought the people that might fall into that
category are called veterans, unable to find work. And now they
get cut off, and there are going to be some 60,000 veterans who
are going to be forced off of the SNAP program unless they meet
the work requirements or are participating in a training
program.
I think that is going to be a real crisis for our country
because everybody here in Congress talks about wanting to help
the vets and leave none behind, and we do have these programs
that do help them, including programs on how to feed them,
except the regulations do not allow them to stay in the
program.
Regarding community eligibility provisions, another program
issue that he just mentioned is the cost that this report
indicates about kids who are financially not eligible to
receive a free and reduced meal but do. Those classrooms and
lunchrooms that you have been in and I have been in and ask
them who is passing, it is impossible to measure that by
looking at the financial statements of the parents.
Some States have thrown up their hands and just said, feed
them all. We will pick up the difference. And teachers will
tell you, look. Some of these kids coming to school, their
parents are--even some of them are very wealthy, but they are
still dysfunctional parents in the fact that they do not give
meals to their children before they come to school in the
morning.
They are not eligible then to be in that School Breakfast
Program or that lunch program unless they pay, and they do not
give them any money to pay for it. So what happens is the
schools just kind of say, well, feed the kid. Err on the side
of the child.
And yet our regulations then ding that school for having
violated Federal law. I think that we ought to begin getting
some feedback from you as to where these regulations, whether
it is veterans or children, just do not make sense. Because
what will happen is they will get into these reports now, which
is all over the news, about how much the Federal Government is
putting out money that is in error. This is then, to the
taxpayers, wasteful.
But then when you ask them, well, did you know this money
went to a kid to feed a child some lunch because he did not
have his money in his pocket, I think most people would say,
feed the child. So I would hope that maybe we can come back
with--if you are going to talk about guidelines, let's talk
about some of our in-law regulations.
Let me follow also up on a question that I think Mr.
Valadao asked. And is my concern, speaking of vets, really a
concern that I brought up in the veterans committee about how
our Federal services are very poorly administered in rural
areas, particularly for veterans. Usually you can qualify for
all these veterans benefits, but you have to go miles and miles
away to get a counselor for Post-Traumatic Stress Disorder
(PTSD).
And you mentioned that there are all these WIC-certified
vendors. But how much of them are really in rural areas? He
represents and I represent some towns that are really small.
They do not have any grocery store. They have probably half a
grocery store, and probably a liquor store in California, too.
But that is where you are going to find food.
Now, they may actually have some farmers--not close, but in
the region, a farmers market. What are we doing to make sure
that--because you brought it up about the WIC benefits and the
SNAP benefits, that all these things could go on a benefit card
or an EBT card and give waivers to areas that are really rural,
that just do not have to carry that supply that you were
talking about?
Mr. Concannon. Well, you raise, I think, a very important
point. I think that people in rural areas across the U.S. have
additional burdens in terms of access. And we see it. For
example, in the summertime when school is out, those wonderful
yellow buses that we depend upon across the U.S. do not
operate.
And very poor children--I saw it in the State of Iowa when
I was out there within the last year looking at summer feeding
programs. In a rural area, it is very hard for those kids to
get to a central site. And yet they may be just as poor as a
child who is in a more urban or more metropolitan area.
That is the beauty, that is the benefit, of the electronic
benefit summer feeding program that we have piloted, and the
President's budget, this budget, requests funds for summer EBT
for both urban students as well as rural.
But rural, there are challenges in terms of both access to
jobs--I have seen it again in States that I lived in, my native
State and adoptive States--where rural areas are losing
population, and there are not the same kind of job
opportunities. And farming is becoming more of a capital-
intensive, less labor-intensive profession. And there just are
not the same kind of opportunities. So I think we have to be
sensitive.
Mr. Farr. And should we give those EBT cards, then, in
rural areas by zip code so those stores do not have to have the
stocking requirements?
Mr. Concannon. We would really want the stocking
requirements for the WIC stores. Now, the beauty of WIC EBT
cards is when a WIC household turns to a store. And if they do
not have one of the items that that mom and her infant or young
child is authorized for, she retains that benefit on her card.
Whereas the States that rely on an 8\1/2\ by 11 sheet of
paper like this often, when they go to the store and one of the
items is not there, it is referred to as a partial redemption.
If you are low-income person and you got a ride in to the CVS
or to whatever the store might be, it may not be easy for you
to get a ride in two or three days later for the item that the
store did not have.
So as a general rule, we are concerned with partial
redemptions. We like the electronic card because it provides
portability as well as it makes sure that the benefit, the full
benefit, is provided to the clients.
PROGRAM ACCESS
Mr. Farr. Well, I think what the gist of all the
conversations and questions have been here, whether we start
off with the Chairman's remarks about guidelines or what I have
raised and I think Dr. Harris raised about regulations. It
would really be helpful to us if we are really trying to meet
the goals of these programs that the Department inform us in
Congress how our regulations do not allow us to meet those
goals in really rural areas.
It seems to me, for our veterans that we are trying to help
in any way but because the Welfare Reform Act does not allow
them eligibility longer than 3 months without training for the
SNAP program, you ought to come back here and tell us what
works and what doesn't so that we can make these laws more
practical, more common-sense. And I am sure there are waivers
allowed, and maybe we ought to use those or let the people know
that there are waivers out there.
Mr. Concannon. That is why I sort of--well, when I hear one
size fits all, we actually try to size programs to States or
communities. And for example, I know the Chairman asked at a
meeting earlier this week how many waivers we had granted, for
example, around the whole grains requirements in the school
meals.
The earlier waiver was for whole grain pastas. Some schools
were having trouble finding lasagna noodles or spaghetti
noodles that were acceptable. And we had between 2200 or so
requests for waiver. We granted 1900. Congress last year
expanded that for whole grain-rich other products, and that
practice is in place right now. I do not have the numbers of
places that have availed themselves, but I am told a number of
States are planning to avail themselves of that waiver.
So waivers are a way of supporting and tailoring the
ability of programs to respond to people. But sometimes we have
limits in the law or the Federal regulations that are difficult
to change quickly.
Mr. Farr. Well, where you have those limits, can you bring
us back a list of where you would like to see some waivers or
some exceptions?
Mr. Concannon. I would be happy to do so.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Aderholt. Dr. Harris.
DIETARY GUIDELINES ADVISORY COMMITTEE
Dr. Harris. Thank you very much.
Let me just follow up a little bit about the Dietary
Guidelines Advisory Committee. My understanding is that once
they issue their report, which was issued, they are supposed to
be disbanded.
But now I understand that members of the committee have
held discussions regarding their scientific report findings.
One has been held February 25th at Harvard. Another professor
is speaking in the Hall of States here in Washington tomorrow.
I am curious whether or not these are supported by Federal
dollars, these events that are being held.
Mr. Concannon. No, they are not.
SCHOOL MEAL STANDARDS IMPLEMENTATION
Dr. Harris. Good. Because that would be a little worrisome,
if you are supposed to disband something but it keeps on
spending dollars.
Let me just follow up with the whole grain because again, I
think the gentleman from California is absolutely right. We
create these rules and then we require waivers. And his point
actually about--I had not even thought about that, about the
low-fat milk, but it is right. If you walk into some stores in
some neighborhoods, in fact probably a lot of neighborhoods,
you may or may not find 1 percent milk or skim milk on the
shelves.
Mr. Concannon. You will find it in WIC stores.
Dr. Harris. I understand that. But let's pretend they sell
out of the 1 percent milk that day. And I know no one has ever
gone to a store before a snowstorm, for instance, and not seen
milk on the shelves. And I get that.
But the idea that it is all or none, or I have got to come
to the Federal Government for a waiver--and the whole grain is
a good example. Look, I do most of the family shopping now. You
cannot buy everything whole grain. You can look for it, but
sometimes it is just not available.
So with regards to the whole grain standard, I take it that
the idea is let's go full forward into the all whole grains
standard with allowing waivers instead of saying, okay. It is
probably more reasonable to say, look, if we are halfway there,
that is good. Go back to the half standard, 50 percent standard
for whole grain. Is that, I take it, the direction you are
going?
Mr. Concannon. That would be unfortunate, to go backwards.
There is no need to do so. Remember, that standard holds over
the course of the week that is grain-rich. And----
Dr. Harris. Sure. Let me ask you a question. Let me follow
up with a question because if I had a SNAP benefit, I could go
buy regular grains, or I do not have to buy whole grains. So on
the one hand, the Department says, it is okay, using the
taxpayer-funded dollars to buy regular grains and we will
actually pay for it in that circumstance. But we will not do it
in another circumstance. Where is the logic behind that?
Mr. Concannon. There are different laws that have been
passed by this Congress that govern those programs.
Dr. Harris. And the law says that you have to go to the all
whole grain? Is that what the law says? Am I missing something
here?
Mr. Concannon. The law and the Federal regulations ask us
to follow the Dietary Guidelines, and the----
Dr. Harris. Excuse me. You said law and Federal
regulations. They are different. A law and a regulation is
different. Is it in the statute that we have to go to 100
percent whole grains? Is that statutory or is that a
regulation?
Mr. Concannon. It is a regulation.
Dr. Harris. Because you understand the difference.
Mr. Concannon. Yes.
Dr. Harris. I understand the difference because I make one
and you make the other. So I just have to ask you, do you have
the flexibility to draw that back a little bit, given the
difficulty that we have heard that some locations have in going
to 100 percent whole grain?
Mr. Concannon. I think it has already been done.
Dr. Harris. Not through waivers. Do you have the ability to
rein back in the standard? Because my understanding, the
standard----
Mr. Concannon. Whole grain-rich, by the way. It is not 100
percent whole grain.
Dr. Harris. Okay. Okay.
Mr. Concannon. It is only 50 percent.
Dr. Harris. Of the 2012 standards, half of the grains are
whole grain-rich. Now it is all the grains are whole grain-
rich. Right? But there are two 50 percents because before 2012,
50 percent of the grains had to be whole grain-rich. Right?
Mr. Concannon. Correct.
Dr. Harris. And let me clear it up once and for all. That
is not statutory?
Mr. Concannon. That is regulation.
Dr. Harris. Correct. And the same regulation, I assume,
maybe could be done for other places where we allow non-whole
grain-rich foods to be purchased, like the SNAP program.
Mr. Concannon. The program does not have that.
Dr. Harris. So under the SNAP program statute, you could
not require a certain percent of the grains to be whole grain-
rich?
Mr. Concannon. Correct. We are not allowed by statute.
Dr. Harris. Specifically?
Mr. Concannon. Specifically.
Dr. Harris. So we might just have to correct that. Thank
you very much, and thank you very much, Mr. Chairman, for the
additional time.
Mr. Aderholt. Ms. Pingree.
HEALTHIER FOODS IN SCHOOLS
Ms. Pingree. Thank you, Mr. Chair.
To add my own perspective in on this, I want to thank you
for your articulate answers. I feel like you understand the
complications of this issue, and I have great respect for my
colleagues here and the questions they are asking. And clearly
it is a very controversial issue about these school lunch
standards.
But I just want to commend the Department for being
vigilant on this, for sticking with what is perceived as a much
healthier school lunch for our kids. And just to editorialize a
little here, you are asked to reflect on, as you said, the last
five years and improved science. And I think that you are
appropriately doing that.
But to look at the other side of it, this is exactly what
is happening in the marketplace. And that may not be science-
driven, but the fact is that fast food chains today are looking
for healthier foods and McDonald's is suffering because they
cannot figure out how to get the things that the consumer wants
to buy.
Every retail grocery store today has enhanced the amount of
locally grown food in the vegetable section and sustainable and
organic--people at all economic levels are choosing to buy
this. And certainly what you are seeing happening in the fast
food chains is a reflection of what parents want their kids to
go eat.
My favorite statistic is that nine out of ten parents who
choose to buy baby food buy organic. Now, you can debate until
the end of Earth whether that is healthier for their kids or
not. But it is a perception on the part of the parent that they
want a healthier start for their kids.
I know we can argue this. I have school lunch advocates as
well who have talked about the difficulty of implementing these
standards. But the idea that we would provide for school
lunches and not incorporate latest scientific guidelines as
well as what the public is looking for--more whole grain food,
more fruits and vegetables--it seems to me like you are
following the logic. You are following what people want. And I
greatly appreciate that and recognize what a complicated
struggle it is.
So I am going to stop editorializing there and just ask you
one other quick question. I have certainly seen in my own
school lunch programs the great interest in bringing back more
healthy food, more locally grown produce. That is just what
parents are asking for today.
And many school districts, in spite of the fact that it is
a struggle to balance the budget around getting more healthy
food, they are really turning to doing more and more of that. I
know the Department just announced another round of grants for
kitchen equipment; Maine has benefitted from, I think, $76,000.
And these are not gadgets and things. This is just very
simple equipment because so many schools got out of the
business, in a sense, of cooking healthy food for our kids and
cooking school lunches. And I think many parents are shocked
today to walk into a school cafeteria and realize there is no
cooking facility.
The great interest in doing that has required some funding
to get them back in that place, and it makes it much easier for
them to create some of these foods in a healthy way. We have
incredibly creative school nutrition and school food service
people who really want to do this and often do not have a
knife, do not have a refrigerator, do not have the basic tools.
So just a little bit more about what the Department is
doing and how we can continue to enhance that?
Mr. Concannon. On several fronts, I would say we are
encouraging something through a national initiative called Farm
to School. We are encouraging more local purchasing, but also
schools to grow foods even if it is in raised beds, not for
industrial-sized production, as they call it, but to connect
children to where food comes from, healthy eating, less
processed food.
But to your question on equipment, the President's budget
seeks additional funds for equipment. But it is a very small
fraction of the need that exists out there. Some five years ago
we announced $100 million in equipment grants to schools.
Within a three-month period, we had $600 million in requests
from schools.
So the need is great out there, and it is especially so as
we have moved to healthier foods--more fruits and vegetables
that require cooling equipment, or school food service folks
will say, the hot meals should be hot. The cool meals should be
cool. You have to have that equipment.
And I am pleased to say you will be hard-pressed to find
deep fryers in American schools because they have moved away
from it. You can still get French fries, but they are baked.
They are healthier for the students.
So efforts that can be made to help schools with capital
equipment are sorely needed. They make a difference. I have
been in a number of small--even I recall a school in New
Hampshire, a very old school building that was probably a
hundred years old, that they insisted on bringing me downstairs
to show me the automatic dishwasher that had made such a
difference to them.
Because literally, in some of these small schools, that
school food service person is responsible for menus,
preparation, serving, and cleanup.
Ms. Pingree. Thank you very much. Thank you, Mr. Chair.
SCHOOL MEAL STANDARDS IMPLEMENTATION
Mr. Aderholt. Thank you, Ms. Pingree.
I think Ms. Pingree makes a good point about the choices.
And the bottom line is here that good people can disagree on
this issue. But I think the difference in--talking about the
McDonald's and offering the healthier variety of stuff, they
want to--we have that choice, what we want to do.
I think what is frustrating to so many is the heavy hand of
the government that comes down and says, this is what you have
to do. And that is where I think the disconnect is. I mean, I
go into stores and I try to look for the low-fat and the baked
and things like that.
But I have that choice and I have that--and I think that is
what is, I think, frustrating to so many Americans is that the
regulations and burden has just come to a level where there is
just a lot of frustration out there. And like I said, good
people can disagree on that.
But let me ask you about the whole grain issue. When we had
talked yesterday, I alluded to it. And I certainly appreciate
the Department providing the waivers that we were able to
include in the omnibus preparation bills that gave that greater
flexibility.
But what that did, it allowed these schools to exempt from
the current whole grain requirements. Do you have the number of
actual--how many States have indicated they will be
implementing this waiver process?
Mr. Concannon. I do not have it. We will provide that to
you. But the last word that I received, I think there were 22
or 24 that were considering offering it. Does that sound right,
that number? Yes. People are nodding behind me, yes.
Mr. Aderholt. How many? Do you have a number?
Ms. Rowe. It is about 22 or 23. We will get back with the
specifics.
Mr. Aderholt. Yes. In that, early indications are in that.
And so whether it is 22 or 25 or 28, whatever the number is, we
are talking about half the States are struggling in some way
through meeting the guidelines. And so I think that should be
something that should be noted, that you have almost half the
States that are requesting this, and you know, from that
aspect.
The final regulation went into effect on July 12th--I mean
July 2012. So why is the Department just now offering the
intensive training and technical systems to schools? The
process, you know, perhaps should have began 3 years ago before
the schools started experiencing these decreased lunch
participations and the increased waste and cost. So, let me get
your comments on that.
Mr. Concannon. Let me--let me comment on that. We had been
offering training well before the law went into effect. I
should point out when you referenced declines in meal
participation, the declines in lunch participation started in
2008, so long before the new law took in--came into effect,
fewer students were eating meals at American schools. So, we
can't ascribe all the challenges around participation to the
National School Lunch Program. I should point out on breakfast,
by the way, there are now 14 million American students that
have breakfast each day. In 2009, there were 10,300,000. So we
are making major progress in increased participation.
And this year, I believe we have turned the corner in terms
of school lunch participation, particularly aided by the
Community Eligibility Provision that was referenced earlier.
When I go out to schools, more kids of all income levels
because they do not have to determine, are you free, are you
reduced price, or are you a fully paid--it gets rid of that
strata of different income levels.
So we are making progress. A lot of training has been
provided, but by no means is that just this year. We keep
listening. We keep saying, what else can we do? We have been
running webinars. We have been offering consultation to
schools. I mentioned the consultation we have with the
behavioral economists up at Cornell. The National School Food
Service Management Institute down in Mississippi has only been
in existence for about five years. So it is doing great work,
yeoman's work around the country.
So there is much, much, much--so I think that is the
problem with a hearing like this. You make one comment and it
gets summarized as though, that is the whole nine yards. No. It
is effort on an ongoing basis on many, many levels. As I
mentioned earlier, our full goal is to make this work and not
to punish schools, to encourage kids to consume the food.
The studies that have been done--Harvard, University of
Connecticut, University of North Carolina at Chapel Hill--all
show it is working. There is less food waste. Kids are doing
better on fruits and vegetables. I am committed to do this on
behalf of the country. And we all should be because we have a
national public health challenge with kids whose lives are
going to be compromised because they are so overweight because
of eating too much junk food over time.
Mr. Aderholt. Thank you. And if you could get that number
of the States for the record, I would appreciate it.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Farr.
INCENTIVES TO STATES
Mr. Farr. I hope when you get that number it will also be
by school districts because that is a much more accurate than
just States. We have 1200 school districts in California, from
one-room schools to humongous school districts.
It is very interesting, today's questioning, because I feel
half of the Committee is talking about how do we improve our
sticks and the other half of the Committee wants to know how
can we offer more carrots. And since this is an agriculture
Committee, I am going to stick with the carrots.
You talked about Team Up. And it hit me--we are going to
give $25 million to bolster State employment and training
efforts to single adults without dependents. We are going to
give $9 million to streamline the application process. And the
list goes on and on on what we are doling out to the States.
You use the carrot that if the States will come in and put
some money on the table, put some law on the table, then you
will come in and help them and partner with this? How many of
these--throughout this whole USDA budget, and I think that the
VA budget, which I also cover, there is an awful lot of giving
without any asking. And frankly, it is a very conservative
term, when you think about it, that you help those who help
themselves.
We ought to help the States that are beginning to show that
they want to help themselves. Give them the incentive or
prioritize it. There are national associations of everything,
and there are all the cities and all the counties and all the
States have their associations. And they all talk about best
practices.
So all of these things where people and children and others
are falling through the cracks because the States or local
governments will not ante up, I find in my State that when
everybody else gives up, then the cities go out, and
overwhelmingly all these taxpayers, they do not want any taxes
raised, but they will vote for every bond you put in front of
them for every school district, for the fire department, for
the water districts. We pass many of those things, and in most
cases it requires a two-thirds vote on the ballot, very
difficult to pass.
So I do not find that the taxpayers are so against paying
for things if they know what they are going to get. And I think
that those States that have put up some money to start
addressing some of these issues ought to get more assistance to
help those who want to help.
Now, I do not think you can just drop everybody and leave
them on the street. Obviously, there are some folks that do not
care about that. But that is where you ought to use the stick.
Mr. Concannon. We try to nudge States that are not
performing so well. At times we have to come down hard on them.
But our goal is basically to assist at the direct level, the
consumer ultimately. And State leadership varies, frankly. The
culture and the values at the top of the State agencies make a
difference.
I often say this. People ask me. My career was in State
government. When they say, what is the difference? Now you are
on the Federal side, I often say, where you live makes a
difference even though it is the same Federal law. But whether
that law is embraced, whether it is fully exploited in the best
sense of the term exploited or availed, to the State makes a
difference.
And States that reach out, try to do the best they can to
support the citizens of their State, we try to be supportive
with them. And I think the Food and Nutrition Service--I can
say this again as almost a 30-year State commissioner--has a
reputation among Federal agencies of being a good partner with
States, of being supportive and not coming down with a hammer
needlessly.
But there are opportunities that we have, for example in
the employment and training area. I mentioned in my testimony
earlier the $200 million that is going out in the grants
authorized by the Farm Bill. But there is an existing core
employment and training program that eight or nine States,
California being one of them, takes a fuller advantage of
because the State appropriates funds or counties appropriate
funds.
We have other States, even States that are very poor
States, that do not do much of anything with the program. And
after these grants are announced later this week in the 10
States that won the competition, we are going to work with the
remaining 24 States to say, what else can you do in your
respective State to work with a private industry with not-for-
profit groups like Goodwill or like the community action
agencies or like food banks that often now are running training
programs for low-income people. Because we think it is
important to connect people in that regard.
Mr. Farr. I appreciate that, particularly with your
background as a State administrator. You talked about the EBT,
the debit card in California, and we really messed that up. And
you got in there and straightened them out, and they were very
excited about coming on board and doing it right.
Mr. Concannon. They are there now, happily.
Mr. Aderholt. Ms. Pingree.
HEALTHIER FOODS IN SCHOOLS
Ms. Pingree. Thank you. I know we are wrapping up here so I
will not go on for too long again. I know we are not done with
the conversation on the School Lunch Program. I am sure this
will be much discussed before this Congress finishes this
session.
But again, I just want to appreciate the vigilance you have
shown. And I was grateful that you brought up the impact that
school gardens have. I have visited so many schools in Maine
where, as you said, even if it is a tiny little plot with a few
carrots, it means that when you sit down with those
kindergartners, every time they eat a carrot they think that
was the one they grew, or they have a different kind of
relationship.
I have been in middle schools where the kids were proudly
eating sauteed kale because it came from their own garden, and
they had a whole different sense about it, and then often took
that knowledge home to their parents and said, hey, can we not
try some of this stuff at home?
So it sounds like a small thing, but I think it has had a
huge impact and continues to. And the Department's support for
that is very important. And of course, there is never enough.
There are always more schools applying for the grants available
to enhance that. So I just want to put in a little plug for
that.
And I think it was Dr. Harris who mentioned one of the
concerns that schools have raised about the changes that are
being made is availability. And I just wanted to throw in my
two cents, the fact that school lunch programs are a huge
purchaser in this country, so one of the things you do is you
have an impact on availability.
Not to invoke McDonald's again, but the fact that they are
changing one of their practices to possibly have antibiotic-
free chicken, a lot has been written about the fact that that
will have a huge impact on the poultry industry because they
have so many big suppliers who will say, okay, how do we meet
the needs of our customers. So we'll say, how do we meet the
needs of our biggest customer?
And I cannot remember the specifics, but shortly after some
of these guidelines were announced, I remember reading about
companies trying to produce a whole-grain flour that looked
more similar to flours that kids were used to. So as long as
that stays within the healthy guidelines and it does not make
the transition so tough, that is also another benefit in moving
our whole population into food products that would not happen
otherwise.
And whether it happens in the Department of Defense, new
research goes on that we all benefit from, or frankly, in the
nutrition guidelines there, schools have a huge impact on that.
And availability will change as the demand is seen. And when
there is a purchaser for a product, American companies
manufacture it.
Mr. Concannon. I have great confidence. And we have seen it
in the reformulation of products sold in vending machines in
schools that American manufacturers are reformulating to meet
the lower sugar or sodium guidelines. So I, too, am confident
that industry can respond to this.
What industry has said to us is they want predictability.
They do not want uncertainty. So that is why I react as I do to
suggestions that would drive a big hole in what is, I think, a
coherent set of recommendations that actually are working, for
the most part, and where they are not, we are not punishing
people. We are saying, how can we bring you up to speed here?
Ms. Pingree. Well, thank you. And thank you, Mr. Chair.
Mr. Aderholt. Thank you. Thank you, Mr. Under Secretary,
for being here. Ms. Rowe, thank you. Ms. Tagtow, thank you. And
Mr. Bice, sorry we did not have a lot of questions for you
today, but we will try to catch you next time.
Thanks for being here, and the hearing is adjourned.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Wednesday, March 18, 2015.
USDA RURAL DEVELOPMENT
WITNESSES
LISA MENSAH, UNDER SECRETARY FOR RURAL DEVELOPMENT
LILLIAN SALERNO, ADMINISTRATOR, RURAL BUSINESS-COOPERATIVE SERVICE
TONY HERNANDEZ, ADMINISTRATOR, RURAL HOUSING SERVICE
JASPER SCHNEIDER, ACTING ADMINISTRATOR, RURAL UTILITIES SERVICE
MICHAEL YOUNG, BUDGET OFFICER, U.S. DEPARTMENT OF AGRICULTURE
Introduction of Witnesses
Mr. Aderholt. Well, good morning. The subcommittee will
come to order. And thank you all for joining us today and for
being here for the USDA's fiscal year 2016 budget request for
Rural Development.
And I would like to welcome Ms. Lisa Mensah, Under
Secretary, Rural Development; Ms. Lillian Salerno,
Administrator of Rural Business-Cooperative Service; Mr. Tony
Hernandez, Administrator of Rural Housing Service----
Mr. Hernandez. Thank you, sir.
Mr. Aderholt [continuing]. Mr. Jasper Schneider, Acting
Administrator of the Rural Utilities Service; and, also, Mike
Young with USDA as Budget Director.
So, first of all, Ms. Mensah, let me say congratulations to
you on your confirmation as Under Secretary of Rural
Development. It was a pleasure meeting you a few weeks ago and
having a chance to make your acquaintance. I look forward to
learning more about your approach to rural development, and, of
course, your unique background will, I think, bring a lot to
it.
Mr. Schneider, I would also like to thank you for your
service as Acting Administrator for Rural Utilities Service.
This, I know, is not easy for you and your family, but I
believe I can speak for this Subcommittee when we say that we
appreciate your public service and for filling that need in
your agency.
Mr. Schneider. Thank you.
Opening Statement--Mr. Aderholt
Mr. Aderholt. The budget request proposes $2.6 billion for
Rural Development for fiscal year 2016. This is an increase of
$200 million above the fiscal year 2015 enacted level.
Unfortunately, there are many questionable increases in the
budget request, but it also includes some decreases that may
have been rejected many times in the past.
I believe that everyone here probably knows that we are
operating in a very constrained funding environment. In 2011,
the President and Congress agreed upon statutory spending caps.
At this time, we are bound by the law. The many increases
proposed for Rural Development ignore the reality of that
agreement and our present fiscal situation.
Of course, we are going to do the best we can to address
the highest priorities within the Subcommittee's jurisdiction.
We need your help today to identify them. But please be aware
that any increases most likely will have to be offset by
decreases in some other account or some other program.
Today, we will discuss the proposed reductions for the
Mutual and Self-Help Housing Program, the Business and Industry
Loan Program, the Circuit Rider program, the unspecified
efficiencies in Rural Development operations.
Three notable increases are of a new pilot program and
initiative. One is the rural child poverty pilot. The budget
request includes not a lot of justification for that, but we
will discuss that in a few minutes. Another is the Healthy Food
Financing Initiative. Research has shown similar initiatives
are ineffective. It has been rejected by Congress several times
in the past, but, again, we will discuss that in a little more
detail. And then third is the Rural Corps Pilot Program. And
this seems to me what Rural Development should be doing every
day.
Given the budget situation, perhaps we should be getting
back to just the basics. We probably should not be trying out
new things, particularly when we have to work so hard just to
ensure there is sufficient funding to meet the basic needs of
rural housing for America, also for our rural water, business
development, electricity, and telecommunications systems.
So I look forward the each of your testimony here today and
to questions that we may propose as we move forward. And, at
this time, I would like to recognize the distinguished Ranking
Member, Mr. Farr, for any opening remarks that he may have.
Opening Statement--Mr. Farr
Mr. Farr. Well, thank you very much, Mr. Chairman.
I think this hearing is very important because the U.S.
Department of Agriculture is--and this hearing is the only
hearing that will be held in Congress on rural poverty by any
Committee. You have that responsibility. It was given to you
since Lincoln was President, when he really just realized that
the U.S. Department of Agriculture had to be sort of the home
ec department for America as we moved west and taught people
how to live in rural areas. And since then, you have had the
responsibility for housing, water, electricity, things that the
Chairman talked about.
What I am very shocked about, Mr. Chairman, is sort of this
attitude that, if it is new, we are not going to fund it. I
mean, let's really talk about this stuff.
Republicans have been very adamant about, you know, running
cost-effective government; you ought to run like a business.
Every lobbyist that comes in representing business tells me how
they want a partnership with government.
So I don't know how we are going to run this government if
we are just going to cut, squeeze, and trim and do it kind of
without reason, just because it is a new idea. All of the ideas
I read in here are how to make things work better. We have all
these silos, and they need to be coordinated.
I think this idea of a Rural Corps is really interesting,
but maybe I would like to hear how we can partnership with
AmeriCorps and other kinds of corps that are out there that
might get a better bang for the buck for every one of them.
I would like to know--I would love to see the list of those
300-and-some-odd counties that are the poverty counties in
America. How many of those are in Republican districts?
We have to start being honest about the discussion in this
Committee. If we are going to mark up this bill, the
President--we have always just sort of danced around the edges,
and yet you announce that this isn't going to be reality;
reality is going to be those budget numbers that come out of
the budget. Well, then let's talk about reality. Let's talk
about the consequences if these programs aren't funded.
So I look forward--if we are going to deal with poverty in
America and we are really going to try to take a bite at it--
and what the Secretary told us is, look, these same poor
counties, these 300-and--it is my notes here--the 385 counties
or so that the Census Bureau says every--353 of the persistent-
poverty counties in the United States--``persistent,'' been
there for decades. Nothing we have done at the local level,
private sector, or government sector has been able to get these
counties out of poverty. They have some real interesting idea
on how to do it. And it is about investment in rural America.
This is the program that is going to do it.
So if we are really serious about government being a
partner in this, then let's listen to these ideas. And, yeah,
you know, pull them apart, but don't reject them because it is
just a new idea.
Thank you.
Mr. Aderholt. Thank you, Mr. Farr.
Also, we are honored to have the chairman of the
Appropriations Committee here with us, Mr. Rogers. And I would
like to yield to him for any opening remarks that he would like
to make.
Opening Statement--Mr. Rogers
Mr. Rogers. Thank you, Mr. Chairman. Thank you for allowing
me this courtesy.
And welcome, ladies and gentlemen, to the committee.
I want to start off this morning thanking Rural Development
for all of your efforts in the country and especially in my
region. We have a wonderful working relationship with Tom Fern
in the Kentucky State Office for Rural Development.
Under Secretary Mensah and Administrator Hernandez, I
appreciate your visits to my area and the time you have spent,
all told, in Eastern Kentucky.
I especially want to thank you for your proposal to
maintain level funding in the single-family direct loan
program. Over the last several years, USDA has proposed to
dramatically reduce the program, which helps the poorest in
rural America achieve the dream of owning a home. While it does
require greater staff resources than other Federal programs, it
continues to be one of our most successful programs.
As most of you on the panel are aware, in my district alone
we have lost over 9,000 coal-mining jobs in the last 2 or 3
years. To help address that horrible problem, Governor Steve
Beshear and I have collaborated to form a group called Shaping
Our Appalachian Region, SOAR. From the beginning of the
bipartisan SOAR initiative, USDA's Rural Development has
stepped up to the plate and served as a major partner, which
gave us a big boost. I truly appreciate your engagement with
SOAR, and I look forward to working with you as we strive to
strengthen and grow the economy almost from scratch in that
region.
While I do appreciate your partnership, I do find some
aspects of the budget request somewhat troubling. For the last
several years, USDA has proposed substantial reductions in the
Mutual and Self-Help Housing Program, and Congress has rejected
those requests. This year, USDA has once again requested an
almost $18 million cut to that program. As you know, the Mutual
and Self-Help Housing Program provides low-income families with
a way to build their own homes. This year, the 50,000th family
will have utilized that program to complete their homes--
50,000. I can provide numerous examples of families that have
turned their lives around in my district alone. After
witnessing firsthand the results of that program, I look
forward to hearing from you today about why you feel these cuts
are necessary. This is a sweat-equity program that works.
Another disappointment in the President's budget request is
the $162 million reduction in Business and Industry Loan
Authorization. This program guarantees loans for rural
businesses, which allows private lenders to provide more
affordable financing for businesses in rural areas. This
program opens doors for the creation of new jobs through new
company development and small-business expansion, and is more
important than ever in my region because of the struggling
economy. Rural areas need more, not less, of this type of
program to encourage small businesses to expand and create more
jobs. I hope you can shed some light on your intentions in
reducing that loan authorization.
I thank all of you for being here today. It may not have
been a voluntary showing-up, but we appreciate your being here.
We take seriously our role in overseeing the budget policies of
USDA Rural Development, and I appreciate your continued
engagement with us.
Mr. Chairman, I yield back.
Mr. Aderholt. Thank you, Mr. Chairman.
Ms. Mensah, we will now invite you to give your opening
statement. Your full statement will be a part of the record, so
anything you would like to summarize or go into detail, however
you see fit, please do so. And then we will proceed with the
questioning.
So, Ms. Mensah.
Opening Statement--Ms. Mensah
Ms. Mensah. Thank you, Chairman Aderholt. And thank you,
Chairman Rogers, Ranking Member Farr. Thank you for the
opportunity to present the President's 2016 budget for the
Department of Agriculture's Rural Development mission area.
As the leader of the only Federal department with the
primary responsibility of serving rural communities, this
budget is particularly important to me and the people we serve
through the USDA's Rural Development division. The vitality of
rural America is critical to ensuring the strength of our whole
economy, the affordability of our food, the independence of our
energy supply, and the vibrancy of small communities. And our
budget promotes this vitality by investing in housing,
businesses, and critical infrastructure.
Let me start with our rural housing programs. This budget
proposes a total budget authority of more than $1 billion,
which supports a program level of approximately $28 billion in
loans and loan guarantees, grants, and technical assistance.
Through mortgage financing and refinancing as well as rental
subsidies, we will continue to make affordable housing and
community-facilities financing available.
With one of America's best mortgages for low-income
families, our goal in 2016 is to provide more than 170,000
rural residents the assistance needed to become homeowners by
making available nearly $25 billion in loans. This includes
$900 million in direct loans to ensure that very low- and low-
income potential rural borrowers with the ability to repay are
provided with access to mortgage financing at good rates and
terms.
Without these rural housing programs, it is possible that
many rural residents could face living in substandard housing
or without a home and dependent on many other costly subsidies.
For rural communities to thrive, residents need good jobs
and businesses need access to capital. Our business programs,
as you have already mentioned, and services, in partnership
with other public and private stakeholders, not only promote
rural business employment opportunities, but they drive local
investment while enabling rural competition in the global
economy.
This administration's fiscal year 2016 budget requests $1.7
billion, and we estimate that this level of support for loans
and grants will assist thousands of businesses and create or
retain approximately 32,000 jobs.
In addition, the budget includes a request for $20 million
in budget authority to implement a new pilot project designed
to help fight child poverty in rural areas, where one in four
children are currently living in poverty. This is the highest
rate of rural child poverty since 1986, and our pilot attempts
to address this rate.
Rural America's vitality is also dependent upon access to
reliable and affordable utilities. And through our utilities
programs, our agency has funded basic infrastructure services
for over 80 years. Today, we provide funding to deliver
reliable and affordable electric service to power our homes,
farms, ranches, and businesses; reliable broadband to offer
access to the digital economy; and clean, safe drinking water
to help healthy rural communities grow and prosper.
The budget proposal supports $690 million in
telecommunications loans and $6 billion in electric loans.
Increases in the broadband loan and grant program and in the
distance learning and telemedicine program will continue to
fund advanced telecommunications technologies to provide
learning and healthcare opportunities for rural residents.
The budget also includes about $1 billion to provide direct
water and waste disposal loans. And it increases funding for
Emergency Community Water Assistance Grants to support
emergency projects' needs in drought-stricken areas and ensure
that emergency funds are available throughout the year.
I have seen these investments in water, in power, in
telecommunications, in businesses and housing. I started my
travel as Under Secretary in Alabama and Mississippi, and in
these and other States, what I have seen is truly careful
partnerships. These Rural Development resources provide
partnerships with banks, with States, and with nonprofits to
help rural communities thrive.
I am also very clear that, in addition to loans and grants,
Rural Development has a very precious resource in our people.
With staff members located throughout the Nation in a network
of over 400 offices, Rural Development has the knowledge base
and the people to provide small towns and cash-strapped
communities with more than just financial support.
The President's budget lays the foundation for our work on
behalf of rural America, and I look forward to working with you
over the coming months to ensure the continued support for
Rural Development's programs and initiatives that build
opportunity.
Before I close, I would like to thank the members of this
Committee for your continued support of our Rural Development
programs and for our current fiscal year 2015 budget in
particular. Your commitment to our agency, your words today,
your commitment to what you have expressed is appreciated by
me, by our Rural Development employees, and the people we
serve.
So I thank you, and I am happy to answer any questions.
Mr. Aderholt. Thank you, Ms. Mensah, for your testimony.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Aderholt. And we will begin the questions. I would like
to begin--I want to turn it over to Chairman Rogers, and I will
recognize him to begin with.
HOUSING REPAIR GRANTS AND SELF-HELP HOUSING
Mr. Rogers. Thank you, Mr. Chairman, for that nice
courtesy.
Last year at the ag hearing, we discussed the proposed cuts
to rural housing programs. Today, I would like to discuss the
Section 504 Housing Repair Grants and the Mutual and Self-Help
Housing Program.
In my district, the Section 504 Housing Repair Grants have
helped numerous low-income elderly constituents stay in their
homes. The Mutual and Self-Help Housing Program has made
homeownership an option for several low-income families that
are willing to contribute sweat equity.
One constituent is in my mind that--she has taken advantage
of the Self-Help program, a single woman with a son. She wanted
a safe environment for her son. She worked nights and weekends
to build their own home. And now that she has moved in, her son
is doing much better in school. They have a nice home which
they can call their own. Without the Self-Help Housing Program
that allowed her to contribute her own sweat equity, she would
not have been able to afford that new home.
Those are victories. In that woman's and her son's life,
this is a major accomplishment. To us, it may seem only a
statistic, but there is a lot of power and soul in those
statistics around the country.
Based on your budget justification in 2014, a total of 868
families were assisted through this program. In 2015, it is
estimated that a total of 1,100 families are expected to
benefit. With the proposed cut in funding in the 2016 budget,
the Self-Help Housing is estimated to serve only about 600
rural families. With the demonstrated success of that program,
why does the Department insist on proposing cuts to the Mutual
and Self-Help Housing Program? Help me out.
Ms. Mensah. Thank you, Chairman Rogers.
I want to just agree with you about the power and soul in
the stats and the families that they represent. I spent my
career really working on asset-building, particularly in rural
areas. And I deeply believe in the housing programs that we
provide, are able to provide. And I know that these resources
are precious. So you have a team here that believes deeply in
homeownership and believes it is possible in rural areas and
believes it is possible for low-income families such as the one
you mentioned.
Our proposal of $10 million, consistent with last year, is
a proposal we hope will absolutely continue this program. I am
going to let Administrator Hernandez give some additional
detail, though, on what we believe will be possible in fiscal
year 2016.
Mr. Hernandez. Thank you.
Mr. Chairman, I am very excited and proud to be part of a
team that helps change people's lives. And, as you stated, Mr.
Chairman, Self-Help is a major tool to improve people's lives.
Housing, as you know, is a conduit to family, neighborhood, and
community. So any way we can enhance people's opportunity to
improve their lives, we do it through the tool of Self-Help.
So we think Self-Help is very successful. We want to
support that program. At the same time, we are trying to
improve how we do the program and also all our housing programs
so we can reduce the time it takes our staff to do it so we can
get more things done.
So part of our commitment to Self-Help Housing is to
continue the funding at $10 million, but what we are also doing
is improving how we do underwriting to reduce the time it takes
for our staff. Because right now it is very manual, sir, to do
all the underwriting we do in the Self-Help program as well as
502 Direct.
So we put some major emphasis this year, sir, to improve
the processing of underwriting, going out and doing outreach.
We are now partnering more with nonprofits. And, sir, as you
have indicated before, in Kentucky alone, we have a great
company called Kentucky Highlands--one of the best. They are
doing Self-Help homes that are energy-efficient. They are
changing people's lives, not just building homes.
So what we are trying to do is find out how we can do it
better, not just do more dollars, but how we do it better. Last
year, there was a--almost every year, there is a carryover. We
have some nonprofits that families fall out, they don't build
their homes. And so last year we had approximately about $12
million carry over that nonprofits weren't able to use.
So we have a carryover. So we are trying to be very good
stewards of the dollars, use the money from a carryover,
because, as you know, it is a 2-year program. And so, in that
2-year program, some people come in, some people go out. So we
are trying to manage our partnership with these nonprofits to
make sure they come in with the amount of dollars. So every
year we do a survey to try to understand who is going to be
coming in, who will come out, and sometimes our surveys are not
correct.
So we expect there to be a carryover again this year, sir.
We will use that money to build more homes. But our strong
commitment is to change people's lives--our big effort to try
and make sure we celebrate the 50,000 homes. These are more
than just houses. And as a community developer, we always look
at housing as the conduit first, because that is how you change
people's lives and give them assets.
So we are so committed to this program, so we are looking
for more and more ways. And to that, we are partnering with
great customers like Kentucky Highlands to help us do it
better. So they are actually testing some automation for us so
we will do a better job, sir.
Mr. Rogers. Well, I thank you for that.
And you are right about Kentucky Highlands. It is an
amazing company that has provided hundreds of jobs through its
investment procedures. And now the homes that they are
building, it is an amazing story, and I wish we could spread
the news more broadly. But it is a great program that you have
been especially helpful with. Would not have happened without
you, and we appreciate it.
Let me ask you quickly about the Section 504 program--504
provides assistance to the neediest elderly rural families for
essential repairs and home improvements that allow them to live
independently. What can you say about it?
SECTION 504 PROGRAM
Ms. Mensah. Again, I am going to ask Administrator
Hernandez to say more specifically. But I will say, I saw some
of this work in your State, and I met with Kentucky Highlands
and some of the other partners.
Mr. Rogers. Right.
Ms. Mensah. And we do see this as critical, and we are not
letting down our guard on this work.
Mr. Rogers. Good.
Mr. Hernandez. Thank you, Mr. Chairman.
The Home Repair Program is a great way to continue having
an asset. So we are trying to find ways to enhance that, the
success of that program.
It is a very manual-intensive program, sir. So, in order to
improve our performance and build on the success that we have,
we are actually trying to partner more with nonprofits.
As you know, over the last few years, we have lost a number
of staff. Our staff used to do the outreach to find the
customers and then to underwrite the loan and then provide the
support to get them there. With the reduction of staff over the
last number of years, it provides a great opportunity. That
opportunity is, how do you do work differently and better to
try to get more people into the program? So we are trying that.
We are trying to find a new way in partnering with nonprofits
to do better outreach, to find better ways to do this.
So our support will still be strong. As a matter of fact,
Kentucky is probably the best-performing State when it comes to
Home Repair. As a matter of fact, I am getting ready to go to
Kentucky and recognize Tom Fern and his staff because they are
one of the few States that used all their dollars in both grant
and loan.
Now, let me be real honest. The grant money goes very fast,
very fast. It is the loan money that takes a while to do. Some
of our seniors do not want to take a loan out on their home,
and so we have to spend lots of time educating them that it is
only a 1 percent loan, it is a great opportunity, you get to
stay in your house. But we have some customers who do not want
the loan, so we have to find a way, working with the
nonprofits, to educate better so they will be willing to take
that additional risk to stay in their home with a loan.
So we are going to be working harder and, we think, smarter
with this new technology that we are doing for automated
underwriting, sir.
PARTNERSHIP WITH OTHER ORGANIZATIONS
Mr. Rogers. Well, you are doing a great job, and I
appreciate it.
You know, the many programs that are available for rural
communities that you oversee are a valuable asset, to say the
very least. The StrikeForce initiative that you have seen fit
to include my region in, the Community Facilities Program,
numerous housing programs, business lending programs--they are
all playing a very important part in the success of our SOAR
initiative back there. In fact, it is a critical building
block. We could not be where we are without you.
It is a bipartisan effort, as I have said, between the
Governor and myself to try to uplift a region that has been
absolutely hammered by coal layoffs. We have 9,000 people who
had an economic disaster in their life in the past couple of
years, out of a job, trying to find a way to make a living for
a small family, or move out. And these programs are a lifeline.
We appreciate the work that you are doing and look forward
to seeing you down there again.
Mr. Hernandez. Thank you, sir.
Mr. Rogers. Thank you, Mr. Chairman.
Mr. Aderholt. Mr. Farr.
POVERTY IN AMERICA
Mr. Farr. Thank you very much, Mr. Chairman.
And thank you very much, Chairman Rogers, for pointing out
the vitality of these programs. I know in your State and
district there is a lot of rural poverty, and I am really
pleased that you are a Chair of this Committee that understands
that, because so many people don't understand rural poverty.
And when we picked out these counties that were most
impoverished that the Census Bureau pointed out year after
year, I think, of the 353, 85 percent of them are in rural
areas, don't have urban cities. So this is really a rural-
America problem.
And it is one that it will not self-correct. There is no
way you can--I mean, my personal story is that, when I got out
of college, I went in the Peace Corps. I thought I was going to
be a high school biology teacher; that was my goal.
And I lived in a very poor barrio in Latin America. I
really got into the culture of poverty, when people don't know
how to read and write, they don't have any skill sets. They
don't even know how to understand things. They don't even know
how to get on a bus because they can't read which bus they
need. They have no idea how to count money. They don't know
whether to give the bus driver a $1 bill or a $10 bill and
certainly don't know whether they get the right change. They
are taken advantage of all the time. They have to learn all
kinds of incredible coping skills so that you never know that
they are sort of ignorant.
And it really hit me: Why I am doing this for a Third World
country when I--we had a book out at that time called ``The
Other America'' by Michael Harrington that said, you know,
there is poverty in the United States, and here is what it is.
And I thought, ``I have to go home.'' Presidents Johnson and
Kennedy had just started the war on poverty in the United
States, and that just changed my life. I got into politics
because of it.
And what I learned about it is that it is all about--it is
the way we try to raise our children. It is all about
empowerment, teaching empowerment, how do you empower yourself
to solve a problem. Obviously, education is so key to it.
So we can't passively approach poverty in America. We have
to aggressively approach it. And that is going to be
government, because there is no way in the private sector--
there is no money to be made. These people are poor, they don't
have any money to spend. And there is only so much, sort of,
church and humanitarian assistance that can be done, and they
don't do these things like housing and infrastructure
development for communications.
And if we are going to save rural America, as the Secretary
has told us, we have to put in that infrastructure. Kids are
not staying there because they can't even get on the Internet.
Well, who is going to get us on the Internet? It has to be this
government lending program.
So it really is about empowerment. And what I appreciate
about Secretary Vilsack--and maybe it is because he is from the
rural State of Iowa and has understood this as a mayor and
local government person, about this poverty in America and how
to invest in it and now really using all of government, whole
of government, not just USDA and these siloed programs that you
are administering, but, really, let's pull in all of it.
So I hope that, as we discuss this budget, because these
are new ideas, really ideas to finally make something work so
that these counties won't consistently be--every time a census
is taken, every 10 years, nothing has changed.
And Chairman Rogers pointed out how successful this
Kentucky Highlands program has been. Those are the things
that--and I am sure that couldn't exist without the government
partnerships.
So I hope that we will really use this opportunity in
Congress to for the first time really turn that, what they call
the tipping point on poverty in America, to be able to really
put together all of the essential credentials which you all
understand.
So tell us, you know--I mean, if we are going to cut these
programs, let's talk about it. If we are going to invest in
them, let's make sure they work right.
And one of the questions I have is, you want to do this
Rural Corps, which sounds like a way of getting experts to go
in there and do it as kind of a SWAT team of everybody who
understands something can really help the rural area. Why not
concentrate on whatever poverty programs, AmeriCorps, all kinds
of other corps that we have working there, rather than create a
new one?
RURAL CORPS
Ms. Mensah. Thank you, Ranking Member Farr, for your
question and really a visionary statement. It is wonderful to
speak to Members of Congress who have a heart and a passion for
change and moving rural communities forward.
Rural Corps, which I will soon ask Ms. Salerno to speak to,
is one of our bold ideas for how we invest in adding more to
our workforce, bringing in new talent.
Many Americans have been moved by experience like you spoke
to in Peace Corps. They have been moved by their experiences in
the military. They understand that coming in and working to
support alongside other experienced professionals can be a
powerful, motivating experience for both.
And our hope in this pilot is to, with a modest increase,
bring more resources to bear to aid our workforce.
And, Administrator Salerno, can you say a little bit more
about how we have envisioned our Rural Corps?
Ms. Salerno. Yes. Thank you.
And thank you, again, Congressman Farr, for your commitment
to rural poverty, which is so important to the work that we do.
And Rural Corps is just that, a corps. I mean, it is that
same kind of, you know--why do we have the Peace Corps? I mean,
it is that same thing, but looking internally--but looking
internally for those rural areas.
That is where we are suffering. We have communities in the
rural parts of this country, especially in the South, where we
have no mayors, we have no town managers, we have no expertise.
We need folks in these communities, or these persistent-poverty
counties, that have a commitment to that area that can navigate
the Federal system.
Mr. Farr. So do you recruit government employees to be on
this Rural Corps, or are these volunteers with professional
experience?
Ms. Salerno. We are looking at the opportunity to work
exactly with folks that already do Volunteer In Service To
America (VISTA). So the Corporation for Community Service is
one of the operations we are looking at.
So the idea is to use our dollars to make sure those folks
come in and get trained on all of our programs. But that will
be through the Corporation for Community Service and VISTA-type
volunteers.
Mr. Farr. Okay.
RURAL CHILD POVERTY
Mr. Aderholt. Let me talk a little bit about the rural
child poverty pilot I mentioned in my opening statement.
The budget proposes $20 million in new funding for a new
demonstration project on rural child poverty. The budget
documents state that the project, and I will quote, ``support
innovative strategies to combat rural child poverty through
better coordination of current Federal programs designed to
help poor kids and families provide critical coordination and
outreach work and conduct an evaluation to determine if the
program should have broader implications.''
I think it is hard to imagine that we would provide 20
million in Federal dollars to coordinate other Federal dollars.
What USDA programs that would help poor kids and families need
to be better coordinated?
Ms. Mensah. Thank you, Congressman, for your question.
This pilot stems from our deep commitment to doing
something against the intractable and painful problem of child
poverty. And we are inspired by work like our StrikeForce work,
where we were able to bring other members of the Federal family
and work across our own silos.
But the core idea of this is--we are in a pilot. We want to
measure and experiment. But the core idea is that we want to
find partners in rural areas, not only our Federal partners but
partners like Kentucky Highlands, intermediaries there who
could be a source of technical assistance to the work that
needs to happen.
So our view is that the budget amount allows us money for
some grants and technical assistance to support efforts that
are locally based.
Mr. Aderholt. Are there other Federal programs that are
targeted toward poor kids that need to be coordinated with USDA
programs?
Ms. Mensah. Chairman, I think we all are aware that there
are many. One thing we believe is that often our programs are
delivered by program, not to a person or a family. And so the
same person needs support from many different pieces of the
Federal Government, thus, you know, support from an Earned
Income Tax Credit and support from a nutrition program.
So, yes, we do believe that the coordination could make a
dent deeper in child poverty.
Mr. Aderholt. What kind of innovative strategies would you,
you know, pursue in this and to support with doing something
like this?
Ms. Mensah. You know, all of this is still part of the
pilot thinking. I think we would be happy to give your staff a
longer briefing on this. This is still under thought.
But I can say, as someone who was a grant-maker for 13
years in the Rural Poverty and Resources Program at the Ford
Foundation, that much of the innovation rests locally with the
intermediaries and the partners that are there. And they are
often starved for better partners. And my own hope is that some
of the innovation that we will discover in this pilot is
already with us in those partners.
FEDERAL PROGRAMS COORDINATION
Mr. Aderholt. I understand that tomorrow the Food and
Nutrition Service will announce the creation of a Rural Child
Poverty Nutrition Center, and it will be based at the
University of Kentucky.
How is Rural Development coordinating with other USDA
agencies, such as the Food and Nutrition Service, on rural
poverty issues?
Ms. Mensah. Chairman, I don't have a specific answer for
you today on that collaboration. I was at the University of
Kentucky just a few weeks ago. I am excited to hear about this,
but I would have to get back to you for more detail about that
new center.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Aderholt. Okay.
Mr. Rogers. By the way, the campus at U.K. is pretty vacant
right now.
Ms. Mensah. So we might be able to fit. Okay. Good. I am
glad.
RURAL BUSINESS SERVICE REORGANIZATION
Mr. Aderholt. It is my understanding that yesterday we
found out that Rural Business-Cooperative Service is planning
to reorganize. This was a little bit of a surprise to us,
particularly because the committee has been concerned that
USDA's compliance with reprogramming requirements included in
the Agricultural Appropriations Act have been a concern to the
subcommittee for quite some time.
Is Rural Development planning to reorganize?
Ms. Mensah. Thank you, Congressman. And since we have the
Administrator here, I will let her give you more of a picture.
What I can say is that I am excited about the many new
titles that the Farm Bill gave us to invest in things like
rural energy in a deeper way. And those programs reside in our
Rural Business, so we have a responsibility. We take seriously
our role to administer these programs in a strong way.
And I will ask Ms. Salerno to say more.
Ms. Salerno. Thank you.
Thank you, Mr. Chairman.
We are always looking, as stewards of the Federal dollar,
at ways to better serve our customers and move our organization
forward. With the new moneys awarded through the Farm Bill, we
have been having very preliminary discussions about ways to
make sure that we deliver our services more efficiently.
As part of this, we have had discussions, internal
discussions, that were reported in a column yesterday. At this
time, we are partnering with our stakeholders, we are looking
for opportunities to leverage our dollars.
At no time have we come away from our commitment to
cooperatives, which was outlined in the story incorrectly. We
believe that the cooperative programs and the development
programs, our Rural Cooperatives Development Grants (RCDG) that
we have around the country, our, you know, Value-Added Producer
Grants, which are cooperative-based--we have cooperatives that
work on the entire food hub system that we talked about at last
year's hearing. We do a cooperative magazine. This just shows
our commitment to cooperatives.
We are in the very early stages of looking at the
provisions of the Farm Bill that we can make sure that we are
on top of and that we can deliver effectively. We absolutely
know about our obligation to report to you any kind of
movement. When I have the chance to sit down with my Under
Secretary and give her this information, we will come in front
of you and brief you.
Mr. Aderholt. Okay. So you are planning to inform the
Committee of your plans before you move forward on this?
Ms. Salerno. Absolutely.
Ms. Mensah. Absolutely.
Mr. Aderholt. Okay.
Ms. Pingree.
Ms. Pingree. I am going to let Mr. Bishop go ahead of me.
Mr. Aderholt. Okay.
Mr. Bishop.
RURAL AMERICA PERSISTENT POVERTY
Mr. Bishop. Thank you very much.
I thank the gentle lady for yielding.
And I thank the chairman and the big chairman and Mr. Farr
for their comments, particularly with regard to poverty and
persistent poverty.
Like Mr. Farr, my genesis in politics has really been moved
by the war on poverty and civil rights. And, of course, I view
what I do now as a ministry of public service. And I couldn't
help but be touched and reminded of the, actually, 488 counties
that are in America with persistent poverty, where 20 percent
of the population has lived below the poverty level for the
last 30 years. And, interestingly enough, 139 of those counties
are represented by Democrats, 331 of those counties are
represented by Republicans, and 18 are split between the 2
parties.
Congressman James Clyburn of South Carolina, the Sixth
District, did an article last year entitled, ``Developing the
Will and the Way to Address Persistent Poverty in America,''
and it was published in the Harvard Law Journal on Legislation.
And it was a followup to a provision that was put in the
Recovery Act dealing with the rural development provisions of
it, which was called the 10-20-30 program, where 10 percent of
resources for rural development were targeted in the
Reinvestment Act to those counties where 20 percent of folks
have lived in poverty for the last 30 years.
This is a very, very simple formula that is not necessarily
flat number-driven but emphasizes the importance of addressing
those persistent-poverty needs. And, of course, it won't matter
what the actual number is as long as whatever the allocation
is--and as we are grappling with these budget problems now, if
we take 10 percent of whatever the number is and allocate it to
those 20 percent population areas that have been in poverty for
30 years, we can begin to make a difference.
But I really congratulate Secretary Vilsack for StrikeForce
and for all of the efforts in trying to bring prosperity and a
livable life to rural America.
But I am glad that the big Chairman is here, Mr. Rogers,
because I think that, together, on a bipartisan basis, we
really need to find a way for each one of our 12 appropriations
bills to be targeted so that all of the people in America can
benefit and that our persistent-poverty counties will be able
to be made whole.
If each one of our 12 bills just followed that simple 10-
20-30 formula, regardless of what the actual number is, we
would begin to address this issue of poverty and opportunity
for everyone in America.
And it should never matter what the ZIP Code is that a
youngster grows up in. That youngster should have the same
opportunity as any youngster anywhere in the world to realize
his or her full potential.
And so I don't have a question, and I congratulate you for
what you do, and I certainly am supportive. But I would like to
urge our colleagues to really seriously look, on a bipartisan
basis, at this simple formula, 10-20-30. And it is elaborated
on in the Harvard Law Journal. I think it was published May the
5th of last year. But I think it would really serve a really
positive, constructive blueprint for what we do in the Congress
in the context of developing a balanced budget.
Mr. Aderholt. Dr. Harris.
BROADBANK PROGRAM
Dr. Harris. Thank you very much.
A couple of questions.
One is just something that was brought to my attention by
someone in the district. It is about the rural broadband
service, and there are rumors that it may be ending as early as
June of this year. Is that true, or is it going to continue
through this fiscal year and into the next?
Ms. Mensah. Congressman Harris, are you speaking about the
ARRA broadband programs that were part of the American Recovery
Act that are a part----
Dr. Harris. Well, you know, you got me. It is just the
``RUS program for broadband.'' Because I know in your budget
for next year, you still have----
Ms. Mensah. We are not getting out of the broadband
business.
Dr. Harris. That is what I thought.
Ms. Mensah. We believe it deeply and----
RURAL DEFINITION
Dr. Harris. Thank you very much. That is what I thought. I
was a little curious about that.
I understand you are reviewing the process by which a State
will determine if an area is rural in character for the purpose
of the Rural Housing Service. Is that true? Is that a process
that is undergoing in the Department?
Ms. Mensah. This is an important question about rural and
character as it relates to our housing programs. And I will ask
Administrator Hernandez to briefly say where we are in that
process.
Mr. Hernandez. Thank you.
Mr. Congressman, what we are trying to do is make sure we
have a process that actually uses the three variables, which
are population, lack of access to capital, and rural in
character. Those are the three variables we work with.
What we are trying to do is make sure that we have a
protocol with communication standardization, so we educate
folks on how we do it, how we announce it to make sure
stakeholders can participate and have input how those
designations are made.
So what we have done for this year, we have suspended
rural-in-character determinations until we establish a standard
protocol for how we can get that done. That will begin in
September 2015. We will begin that again.
Dr. Harris. So when will the new process be announced or
the new protocol? September?
Mr. Hernandez. The goal is to have it by September 2015.
SINGLE FAMILY HOUSING GUARANTEED DIRECT ENDORSEMENT
Dr. Harris. By September. Okay.
And I saw the budget includes a proposal to allow for
direct endorsement lenders, I guess for the first time. Will
there actually be a cost to implement, or is there potentially
a budget savings for direct endorsement?
Mr. Hernandez. Long term, there are savings, Mr.
Congressman, but first it takes some investment to do the
automation. Right now, we don't have the automation, the
technology to even accept the feedback from our lenders. This
is a fee per loan, up to about $25 per loan. But to do that, we
have to install new hardware, new software so we can be with
the rest of the industry, who charges a fee every time you
process.
And the nice thing about that, Congressman, is those
dollars are only used for automation enhancements. That is what
we are trying to do, is be closer to our customers and provide
better service.
RURAL INFRASTRUCTURE OPPORTUNITY
Dr. Harris. Okay. Thank you.
The Rural Infrastructure Opportunity Fund, I know it was
announced last year in July. Just a question about it: Can you
give us an update? Is anyone else besides CoBank investing in
it? Because the initial was $10 billion. Are there any other
investors in the last 9 months?
Ms. Mensah. Thank you for signaling that. That was an
important event for us last summer, and we are pleased with
this.
At this point, I am not aware of other investors. I would
be happy to come back to your staff and give you updates.
RURAL CORPS
Dr. Harris. Okay, maybe on some of the projects. That is
great.
The Rural Corps--I know we talked a little bit about Rural
Corps, and I am not sure I quite understand it yet. Is it going
to be that your staff are going to train, the AmeriCorps VISTA
volunteers to go into these communities, or is your staff going
into the communities, or some hybrid of this? I am not sure I
understand how that is going to function.
Ms. Mensah. We are still at the pilot level----
Dr. Harris. Okay.
Ms. Mensah [continuing]. So this is still under discussion.
But we have reached out to the Corporation for National
Service, and we think they are a good model for working with
us. And in that model, it is that new staff come in and work
with our existing staff.
We have staff that are so talented. In Kentucky, I was with
staffers who have been there for 40 years. It is powerful. So
those staff could be augmented, you know, with Corps members.
Dr. Harris. So will the funding come through USDA, not
through the AmeriCorps?
Ms. Mensah. Yes. Funding, we are asking for that.
Dr. Harris. And how much funding is required in this budget
for that?
Ms. Mensah. Mr. Young, would you give me that number again
for----
Dr. Harris. Because I also noticed your travel and
transportation line item went up also. Is that partially due to
this, that you are anticipating your staff traveling more to
these districts?
Ms. Mensah. We are going to give you----
Dr. Harris. Can you give us that?
Ms. Mensah. The number is $6 million.
Dr. Harris. Okay. And that is outside of the travel and
transportation? Or is that travel and transportation increase
because of this or it is all wrapped in?
Ms. Mensah. From what I understand, part of the number is
for increased travel. And that is because we imagine Corps
members traveling with our----
Dr. Harris. Sure, going to the districts.
Ms. Mensah. Yes.
INFRASTRUCTURE COORDINATION
Dr. Harris. Finally, the USDA and the EPA, you know, both
run low-interest loans to rural communities for water and waste
infrastructure. I know because we have a lot of communities in
my district that take part in it.
You know, the E&W Subcommittee met, heard a lot of
testimony about the difficulties with EPA and doing the
paperwork, getting it processed. I, honestly, hear some of the
same about USDA in the district.
First of all, do you coordinate with EPA on these? And is
the process dissimilar? Do these communities have to go
through, you know, parallel but different processes, different
applications, things like that? Are you making it easy?
Ms. Mensah. I am so proud of our water programs. And I want
Administrator Schneider to speak. We think we are excellent at
doing the deep work to bring water to rural communities.
Acting Administrator.
Mr. Schneider. Thank you, Congressman.
Our water programs serve such a vital role to rural America
in getting resources out to update their systems. I, prior to
my acting role, was the State director in North Dakota, a very
rural State, for the past 5 years and worked with communities
of oftentimes just a couple hundred people in upgrading their
clay pipe that was deteriorating.
We certainly coordinate with EPA as it relates to how they
are a regulatory agency, but it doesn't impact how we function
in delivering these important resources, both in the form of
loans and grants, to rural communities all over the country.
Dr. Harris. Well, thank you. And, again, I would just ask
you to make it as user-friendly as possible.
And thank you very much, Mr. Chairman. I yield back.
Mr. Aderholt. Ms. Pingree.
LOCAL FOOD SYSTEMS FUNDING
Ms. Pingree. Thank you, Mr. Chair.
Thank you to everyone on the panel for being here today.
And, Madame Under Secretary, thank you for the work you
have done previously and for taking on this work in public
service. We really appreciate it.
And I want to echo my colleagues in being grateful for the
conversations that have gone on about rural poverty and the
importance of that and your commitment and everyone there for
helping to make really vital and important changes.
I am lucky enough to represent Maine, and most people don't
think about rural poverty in New England or even on the East
Coast. We tend to think of these as other States' issues, but
Maine, in fact, is one of the most rural States in the Nation.
And we have struggled quite a bit in the last two decades with
the loss of manufacturing jobs, in the last 50 years with the
downturn in agriculture, and a whole variety of things that
have hit us hard in many, many ways. We still have a lot of
communities that struggle.
One of the bright spots for us, which I know I have talked
to some of you about before, has been the real resurgence in
opportunities in agriculture. Small farmers, family farms,
farms that were about to go out of business are finding a way
back into business or being taken over by younger family
members and that has been a great economic opportunity for us.
We are one of the few States where the average age of our
farmers isn't going up and where we have new farms coming under
cultivation and great new opportunities with farm-to-table
restaurants and farmers' markets and many of the things that
the USDA has been very helpful in supporting. So many programs
that are in Rural Development--Value-Added Producer Grants,
business and industry loans, rural micro-enterprise assistance
programs--these are all extremely critical to us.
And while I know your mission around broadband and
wastewater and rural housing has been vital to our State and so
many other people are discussing that today, I just want to
talk a little bit about your commitment to those things. How do
you see local food systems fitting into the mission of Rural
Development? Are you thinking about new proposals or how to
keep the funding in these other programs?
Many of these things are new, and you are looking into new
ideas. I want to reinforce the importance of all these things
along with broadband and wastewater and other things that are
critical to us and hear your perspective on it a little.
LOCAL FOOD SYSTEMS
Ms. Mensah. Thank you, Congresswoman Pingree. It is a
delight to be here. And, as you know, early in my career, I was
at the Ford Foundation, where, in your State, Coastal
Enterprises was one of my teachers.
Ms. Pingree. Oh, great.
Ms. Mensah. And even 25 years ago, they had already made
investments in some of the businesses that we are now seeing
flourish.
I really appreciate your point about one of the bright
spots is a resurgence in local food systems. And it is probably
coming back to rural issues in 2015 for me. It is one of the
things that I see so distinct about this portfolio, that we can
do water, we can do housing, but we can also invest in value-
added production and food systems, which is a bright spot. It
does allow us to talk freshly about agriculture and healthy
food, and it allows us to think freshly.
So I am excited to lead a mission area that does bring--
this is in our core values, it is in our key priorities. Thank
you for signaling this. This will continue to be--we see this
as just having such double impacts, both in the way we eat as
Americans, our sense of health and local foods, but also the
way it revitalizes new opportunities, new ways to bring income.
And it is not only in your State. We have heard about it
throughout the country.
So you have our commitment that this remains a value. And
happy to say more specific things if you are interested.
Ms. Pingree. Well, if there are any programs you are
particularly interested in or----
Ms. Mensah. Can I ask Administrator Salerno to just say a
little bit more about our work----
Ms. Salerno. Thank you.
Ms. Mensah [continuing]. On value-added production and
producer grants?
Ms. Salerno. Thank you.
And I guess I need to thank many of you that helped us with
the Farm Bill moneys, because that is where that money comes
from for the Value-Added Producer Grants.
And just, I think Maine has got such a great example. I
know about this project because--I haven't been there, but my
staff was so excited about it. It is Tide Mill Organics in
Edmunds Township, a $49,000 Value-Added Producer Grant to
increase production of organic poultry. And it is just such a
good example. I mean, it created jobs. It is, you know, keeping
everything local.
And we just have many, many examples of that Value-Added
Producer Grant where--not just the job creation but also the
excitement about agriculture that we need so desperately in
these rural communities to help stop the out-migration.
And the Value-Added Producer Grant, we, you know, again
thank you for the moneys. And we have been very deliberate in
our rulemaking process and hope to have awards out by the end
of this fiscal year.
Ms. Pingree. Great. Well, thank you very much for
mentioning Tide Mill. We are particularly proud of that, as we
are of many of our farms. It is a dairy farm and a poultry
producer. And some of your colleagues have heard me hound them
relentlessly about how they are building a slaughterhouse for
poultry. They need a USDA inspector. So we are trying to make
sure that when that opens and the last nail is hammered in that
they are also able to operate. So USDA is very important to us
in that way, too.
Ms. Mensah. And if there is time, we could also signal our
Healthy Food Financing Initiative, which I also think is a very
creative and strong program to bring, again, this connection of
food and local production to places that can use that food. I
am particularly impressed, again, with the use of development
finance organizations like Coastal, like others, who can be the
financing hubs to make this happen. Because it takes money to
invest in these food systems, too. So I am particularly pleased
about both of these programs.
Ms. Pingree. Well, thank you. I am out of time, but thanks
also for mentioning CEI. They have been there for 25 years, and
an important part of a public-private partnership.
So I yield back. Thank you, Mr. Chair.
Mr. Aderholt. Okay.
Mr. Young.
RURAL CORPS REQUEST
Mr. Young of Iowa. Thank you, Mr. Chairman.
And thank you all for coming before us today. It is great
to see you. Thank you for the good work that you do.
I want to dig into the Rural Corps pilot program you are
talking about. You say you need about 20 additional staff to do
this? Is that what I understand?
Ms. Mensah. Congressman, that is the proposal for the
pilot.
Mr. Young of Iowa. Okay.
Ms. Mensah. Yeah.
Mr. Young of Iowa. So will you need to hire new staff, or
do you have staff from within that you would send out? You talk
about working with the Corporation for National and Community
Service. You are borrowing staff? How is this all going to
work?
Ms. Mensah. I think what we need to do is come back to you
and your staff and paint a bigger picture of this. Because I
think this is a pilot, and what I can speak to today--but I
will ask my staff, and happy to come back to you--but what I
can speak to today is that this was really an augmentation of
our current work with some additional support from Corps
members. And it really was the way we want to give our staff a
way of doing their work in rural areas, in rural areas of high
poverty, give them a surge.
Mr. Young of Iowa. Uh-huh.
If this is going to go forward, I would ask that whoever
this mobile corps is, this Rural Corps, they have some kind of
understanding of rural life and rural America, maybe a rural
background for understanding.
You talk about 10 areas of need out there, from my
understanding, 10 high-need areas to do this. Where are those
areas, and what is your criteria for determining those?
Ms. Mensah. Again, I can't speak to the 10 at this moment,
but I will be happy to----
Mr. Young of Iowa. We will meet again.
Ms. Mensah. I would be happy to----
Mr. Young of Iowa. Okay. We will follow up on that.
Ms. Mensah. I would be happy to follow up.
OIG RECOMMENDATIONS
Mr. Young of Iowa. Thank you.
Rural Housing Service. A July 2014 OIG report recommended
that the Centralized Servicing Center strengthen its oversight
controls and do a better job of recovering overpayment to
borrowers.
What is the RHS doing right now to implement those
recommendations? What improvements have you seen in recovering
those payments?
Ms. Mensah. Thanks for giving us a chance to talk about our
oversight.
You know, one thing--and I am going to ask Administrator
Hernandez to speak to this, but we take the OIG report
seriously, and we take seriously our obligations to manage this
portfolio.
The first trip I made was to our St. Louis offices, where
our CSC resides. You know, this is such a critical function,
and it is partly what you have allowed us to invest in by our
upgrades, computer systems that have made it easier for us to
track.
But I will ask Administrator Hernandez to say a little bit
more about our oversight role and the improvements that we have
made.
Mr. Hernandez. Great.
Thank you, Mr. Congressman.
What we are trying to do, very effectively right now, we
have addressed all the findings that the OIG has. We have
implemented and improved the way we did our process for each of
those findings. The goal is to continue to reduce the amount of
overpayment.
Part of that is we have some proposals trying to make sure
we do that better. On the multifamily side, we have a proposal
trying to make sure we have something called the new-hire
database, trying to make sure we have better tools to better
identify if there is somebody that should not be in the
program. That is on the multifamily side.
On the single-family side, we are actually enhancing, I
think, our automation part there so we can do things faster,
more accurately.
So not only have we addressed all the OIG findings, we are
reducing the loss of dollars and making sure that people who
are eligible for the program get to be in the program and those
who are not are not.
WATER AND WASTE BACKLOG
Mr. Young of Iowa. Well, when you address these and you
recoup those, it gives us more confidence, not just in this
program but across the Federal Government. It just gives us
better confidence in these programs.
The backlog for the Rural Water and Waste Disposal Loan
Program has decreased from $3.2 billion in 2013 to $2.4 billion
in 2015, to $398 million right now is my understanding.
How do you explain the drop from $3.2 billion to what it is
now? Do you think that what it is now is an accurate reflection
of the need for rural water infrastructure and waste needs?
Ms. Mensah. Thank you for pointing out some of our success
in rural water. And I will ask Acting Administrator Schneider
to speak specifically to that progress in reducing our backlog
in water.
Mr. Schneider. Thank you, Congressman.
We have had substantial reductions in our backlog. As to
the reason why, you know, I have worked in USDA water programs
as State director and now as Acting Administrator for the past
5\1/2\ years. We went through a couple of tough years in
Federal service with staff reductions. Lost employees with 30,
40 years, in some cases, of experience.
And so, thankfully, we have had good budgets the last year
or two, where we have been able to hire new staff, coordinate
trainings, do better outreach, better packaging of our deals.
And so all of that, Congressman, has contributed to us
substantially reducing our backlog.
But the underlying theme here is that there is great need
in rural America for these important resources, for loans and
grants to upgrade our water system so communities have access
to safe, reliable drinking water. And we are committed to
getting the job done.
Mr. Young of Iowa. Thank you, Mr. Chairman.
Mr. Aderholt. Mr. Yoder.
BROADBAND PROGRAM
Mr. Yoder. Thank you, Mr. Chairman.
Thank you for your testimony today. Welcome to the
committee. We appreciate your service to our country.
In our conversations this morning about all of your great
work to try to help end rural poverty and support
infrastructure and resources to folks in my State, in Kansas,
and all across the country, one concern that I am sure you are
aware of has been raised related to the failure rates on some
of the loan programs that exist in your various departments.
One that received some headlines in recent weeks was the
Broadband Treasury Loan program that had essentially been
reported in the President's budget to have a 116 percent
default rate, which really doesn't even make sense, how you
would have over a 100 percent default rate. But I understand
the default rate is still pretty high, and I understand there
are some other programs that have high default rates.
And I guess I would like to know, on that program, for
example, what percent of these loans are in default? How much
in taxpayer dollars do we end up losing because of those
defaults in that program, for example? And if there are other
programs that you have concerns about that have a high default
rate and what we are doing to make smarter loans and shore up
those liabilities?
I will note that many banks have just a 2 to 3 percent
default rate. And so when we are talking, you know, 20, 30
percent in some of these programs, it is very concerning to me
and taxpayers, because we want to make sure when we are
spending money--and we are good stewards of our taxpayer
dollars here in this Committee--we are getting the most bang
for our buck and we are not losing the hard-earned tax dollars
of the American people.
Thank you.
Ms. Mensah. Thank you, Congressman.
And we share the goal of running a strong Rural Development
portfolio. My opening remarks to this Committee but also to my
staff have been that I believe we should be striving to be the
best rural development finance organization in the country. And
so we take seriously the need to steward taxpayer dollars and
to continue, frankly, low default and write-off rates, which we
have.
The reported 116 percent default rate in our broadband
program was an error. That is an error number. And I am happy
to give your staff more of the detail on how that error came
around.
But I want to say, before asking Administrator Schneider to
say a little bit more about our broadband program, I want to
say particularly that this is such a strong program. It is
administered extremely well, providing broadband services in
places that the private sector by itself has not been able to
get to.
I was in McKee, Kentucky, and not only did I see fiberoptic
cable laid in an absolutely difficult part of the country for
private folks to reach, but I really saw why we are there. And
the Chairman of the Peoples Telecommunications Institution said
such a powerful thing. He said, ``It is not just about
broadband. It is about our children. Because by putting this
broadband in place in areas like McKee, Kentucky, we are giving
jobs a chance to come here, and we are giving our children a
chance to stay.'' Everybody who has a teenager knows, you know,
if we can't get on the Internet with real service, we won't--
you know, we can't even do our distance learning.
So I am very pleased with this program. And a better
explanation of where we think the risk is in these programs is
our subsidy rate, which is about 20 percent. But even then, I
think we have had tremendous success already. This is a well-
stewarded program in broadband.
And since you have asked about it, I do want to allow
Acting Administrator Schneider to say a few more words about
our broadband program.
Mr. Schneider. Thank you.
Congressman, as the Under Secretary stated, we are
committed to meeting the needs of this critical 21st-century
infrastructure, deploying high-speed broadband Internet. I
think, singlehandedly, it is the biggest game-changer for rural
America that addresses so many of the issues that we are all
concerned about.
I have been to Kansas in this capacity, sir, and Kansas has
some of the best rural telecoms in the country. And we partner
with the private sector in deploying these public resources,
partnering with them to build out their networks to unserved
and underserved areas in rural America.
And I think when you look at the bigger picture of what we
do in broadband, since 2009 we have committed resources to over
500 projects across rural America, to the tune of about $5.8
billion. And so that is a tremendous investment in building out
these networks across rural America.
DEFAULT RATES
Mr. Yoder. If we might, before our time runs out, I still
haven't had my question answered, though. My question is, what
is the default rate in the program?
Estimates in the 2016 budget will be just under a 70
percent default rate. Why is there such a high default rate?
Whether it is 116 percent or 70 percent, what is causing this?
And I just want to know what we can do----
Ms. Mensah. Yeah.
Mr. Yoder [continuing]. To fix it to ensure we are being
better stewards of the taxpayer dollars.
Ms. Mensah. Congressman----
Mr. Yoder. I certainly get the value of the program. What I
am concerned about is why so many of these loans are going into
default. And I would like to know what the cost is to
taxpayers.
And then could you tell us what other programs have higher-
than-normal default rates and what we are doing to fix that
problem specifically?
Ms. Mensah. The specific answer to the default question is
more detailed. I do not think that is accurate, and I would
like to be able to give your staff a deeper briefing. When you
mix late payments and write-offs together, you get a higher
number.
So let me come back to you with more, but I do not believe
that is accurate, and I do not believe we are going to cost the
taxpayer at extreme levels at all. I think this is very well
run. Of the 500 projects, we haven't written off any of those.
So let us come back to you with that.
Other programs with high defaults, again, I don't think of
any of our programs as having high defaults.
Mr. Yoder. Well, I guess it is a question of whether a 70
percent default rate, if that is the accurate number, is a high
default rate. I would think most people would say it would be.
We are talking about billions of taxpayer dollars. And I
think talking about how the program is a good program really, I
think, takes us off the subject of what we are concerned about
in this Committee, which is making sure that we are spending
our dollars wisely. And all of us on both sides of the aisle
want to ensure that every program we have, gets the highest
bang for our buck.
And these default rates are very concerning, whether it is
70 percent, or I think some of your folks have come back and
said really it is only about 20 percent or 25 percent. There is
a program that has rural apartment complexes that has a similar
default rate and they are only going to recover 40 cents on
every dollar loaned.
I just really think when you come before the Committee, we
need to know to what extent these defaults are occurring. Are
these numbers all accurate that are in the President's budget?
What is this costing taxpayers? And we need to know what folks
are doing in your department to ensure that we are shoring
these up. Why is this happening, and how can we fix it?
Ms. Mensah. It is fair. And I will come back to you. Those
aren't correct numbers. We have mixed late payments and
defaults.
Mr. Yoder. But----
Ms. Mensah. And we will come back.
Mr. Yoder [continuing]. These numbers come from your
department.
Ms. Mensah. Well, those are the numbers that were reported
in the press.
Mr. Yoder. In the budget, in the President's budget, from
your department.
Ms. Mensah. And I have said they are in error.
[The information follows:]
Each year the President's budget submission includes the
Federal Credit Supplement. The broadbrand loan default rate
reflects late payments, the majority of which are expected to
be recovered, as well as long term defaults. The broadband loan
default rate published in this year's Federal Credit Supplement
is based on an outdated methodology that overstated late
payment amounts. USDA is working closely with OMB to revise the
methodology.
Mr. Yoder. Okay. Thank you.
Thank you, Mr. Chairman.
RENTAL ASSISTANCE PROGRAM
Mr. Aderholt. Yep.
Let me also ask about rental assistance programs. For 2
years in a row, USDA has proposed significant changes to the
rental assistance program. I understand the goal is to provide
stability for the program, greater flexibility for the Rural
Housing Service to manage. But the changes include, among
others, a $50 minimum rent and allowing partial funding of
contracts to track with continuing resolutions.
Can you summarize the proposals and give the justification
for these?
Ms. Mensah. Thank you for asking about rental assistance. I
am going to turn it over because I will ask Administrator
Hernandez to summarize the proposals that we are doing.
Let me just assure you, though, that we are not sitting and
watching rental assistance without taking action. We are using
every opportunity we can. And that is why we are asking you for
some help in doing this, because we want to be in the rental
business. We want to preserve the stock of affordable rental
housing in rural America.
Mr. Hernandez. Thank you, Mr. Chairman.
The rental assistance program is really designed in the
proposals we have to work as a package. The goal is to have
programmatic changes as well as management flexibility changes.
To that, we are trying to make sure we have not only the
right amount of subsidy dollars but the right contracts, how we
initiate contracts. One of the proposals we have is to do what
we call strategic priority renewals. What happens is, right
now, by law, it is first-come, first-served. So what we are
trying to do is make sure where is the most rural, where is the
most persistent poverty, less renewals. But by law right now,
we have to renew whoever comes in whenever they come in. That
is probably not the right way to do it, sir, so that is why we
are trying to get that changed.
The next one is getting shorter-term contracts. One of the
things that happens sometimes, we have a continuing resolution
or if there is a budget or government shutdown, that means we
have to pay up for a full year even though we only have 3
months' money, because that is what the law says. We are asking
for some flexibility and management tools to manage it better.
On the minimum rent, what we are trying to do is make sure
that everybody contributes to the success and the
sustainability of this program. We have residents who--as a
matter of fact, our estimates show that there are only about
36,000 residents that can afford to make a minimum payment of
$25. We think everybody contributes to the success of this
program, and that is why we are asking for that fee.
And the last one we are trying to do is use what we call
the new-hire database to improve the integrity of the program.
Right now, by law, we do not have access to this new tool that
helps verify income to make sure more people are eligible for
the program and to find those that are not. And so this is
building on the success of HHS, so we are trying to use that
type of database, but we don't have statutory authority.
With your help, we think we can improve the programmatic as
well as the management tools to be more flexible to meet the
needs of our customers.
Mr. Aderholt. You mentioned the $25 fee, but there is a $50
minimum in this proposal, right?
Mr. Hernandez. It allows us to go up to $50. What we are
proposing to do is charge only $25. And the reason we do that,
so if things change, we don't have to come back and----
Mr. Aderholt. So if they can't pay the $50, then----
Mr. Hernandez. So we think the fee can be up to $50.
Mr. Aderholt. Right.
Mr. Hernandez. But we will probably only ask for $25, is
what we are going to ask for.
Mr. Aderholt. How many tenants, do you estimate, are in
this position?
Mr. Hernandez. About 36,000 people, sir.
Mr. Aderholt. How do these proposals compare with the
authorities available to the Department of Housing and Urban
Development and Veterans Affairs?
Mr. Hernandez. Right. Housing and Urban Development has
this authority. We do not have the authority. So we are trying
to mirror a similar authority for effective use of identifying
who is eligible for the program.
Mr. Aderholt. The budget proposes to allow Rural Housing
Services to charge a fee for lenders to access the agency's
home guarantee systems. How much do you think is going to be
generated by this fee?
Mr. Hernandez. It is a great program, sir. In order to
provide better service for our lenders, the lenders keep
asking, can you be more automated, can you come to the 21st
century? And we say, we would love to, but we need to have a
revenue stream, dedicated revenue stream, to have automation
enhancements. So the goal of this up-to-$50 fee per loan closed
will be used to implement automation.
Now, to do that, we have to begin collecting the dollars.
So, over the next few years, I think it is--the first year is
about $2.4 million we will use. After that, it goes to $5
million, because we have to make the enhancements. So it will
be an ongoing charge to continue to provide better service
through the lenders.
The lender community is accustomed to this. Fannie Mae does
this. Freddie Mac does this. That is how the industry works to
improve technology.
Mr. Aderholt. So do you know how much will be generated by
this fee?
Mr. Hernandez. I don't have it right now, but I can get
back to you exactly what it is.
[The information follows:]
Information Technology (IT) system enhancements will need
to be made to complete the prerequisite projects (broker access
and system integration). This process is expected to take up to
two years. Therefore, it is expected that a fee of less than
$50 will generate $3.9 million beginning in fiscal year 2018
and each year thereafter. This fee will provide sufficient
support for maintaining the enhanced IT system and broker
access.
Mr. Aderholt. Okay.
WATER AND WASTE BACKLOG COMMUNITIES
And then, just quickly, ask you about the backlog in rural
water applications.
How many communities on USDA's wait list for water and
waste disposal grants are there out there?
Ms. Mensah. Mr. Schneider, do we have that?
We might have to get back to you on it.
Mr. Aderholt. Okay.
Ms. Mensah. A precise list of communities that are on a
wait list, that is a--you know, so many of our offices are in
the water business 365 days a year, so they are continually out
working with their communities, you know, sometimes.
Mr. Aderholt. Okay.
Ms. Mensah. But I will be happy to come back.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Aderholt. Yeah. Okay. Thank you.
Mr. Farr.
Mr. Farr. I would be very appreciative if you could also
recommend to the Committee if these rural caps that we put on
programs are problematic in trying to address the problems in
these rural counties.
I know in my area we protect all our agricultural land by
making people live in cities. They work in the fields, they
process the produce in sheds, which are on the urban interface.
So the city size is much bigger than the rural cap, and,
therefore, they are not eligible for some of these programs. We
have in the past gotten waivers, but the waiver process, I
think, broke down.
So I wonder how many programs do have those caps on them
that need to be relooked at or given a reason for adjusting for
these urban interface, where we are not trying to, you know,
cover ag lands.
You know, my frustration with our Committee schedule is
that we have so many Members, and certainly I have been one of
them, that come in here and ask the standard questions of the
panel and then leave.
And I hope that in response to Mr. Yoder's question on
default rate, which is a very important question----
Ms. Mensah. Yes, it is.
CONDITIONAL CASH TRANSFERS
Mr. Farr [continuing]. That you will put it in some kind of
context. Because if you just answer his question, it doesn't
put it in any contextual.
Put it in the context of what student loan default rates
are in his State. Put it in context of the military families
that are defaulting because of payday lending and all of these
scammers that are trying to--that DOD is very upset about, that
literally sit at the gates of military bases and wait for
soldiers to leave and then give them these incredibly high-
percentage loans that they can't pay back. And, I mean, put it
in context of cost overruns with the military. Put it in
context of the contractors who rip us off in defense contracts
to the millions and billions of dollars.
If we are going to deal with the fact that people in
poverty just don't have the skill sets--I mean, we have to
prove you are poor in this country. This is just so--the
nutrition program was here yesterday. You have to go out and
census the parents to find out if they are poor. You ask them
questions about, what are your capital assets? They don't even
know what those words mean. They don't have bank accounts. They
don't keep track of things like that. And then you wonder why
they default on payments?
Our children are defaulting on payments, on student loans
and things like that. So, yeah, poverty has its problems, and
if default is one of them, let's try to make sure that we put
it in context with everything else before we just attack the
program because of it. Frankly, I have found that these
tertiary lenders, the emergency lenders that government
operates in rural areas for business, that, frankly, their
default rate is no different than that of banks.
So what I wanted to ask you, I am--and, Mr. Chairman, I am
glad you asked these questions about some of these new ideas,
because I reckon, back in 2004, when I was on this Committee,
President Bush proposed a similar program to what we are
talking about here today, totally untried, for foreign
countries called the Millennium Challenge Account. And he said,
why don't we just find out where the poorest countries are in
the world, and we entered into this comprehensive way of trying
to build the infrastructure to do this, untested. Outside of
the State Department, outside of USAID, outside of the
Department of Defense, outside of any other agency, set up an
independent commission to run this program.
And guess what Congress did? They gave him a billion
dollars. He wanted $4 billion. We gave him a billion to start--
untested. That still exists today. And the problem is that they
never did the things that we have the panelists here doing, who
understand what the infrastructure of these countries were and
really knew how to have dialogue with people to empower them.
So it has become sort of a slush fund for ambassadors to be
able to get bridges built and infrastructure for big trade
agreements. It is not putting water in poor homes or schools or
sanitary districts in poor areas.
So, I mean, before we say, well, this is untested,
remember, Congress is willing, depending on who is making the
ask, to throw a billion dollars at a problem without any
questions. These people are asking for, you know, millions of
dollars, not billions.
One of the things I am interested in, because you seem to
be moving in that direction, is that the developing world has
made a lot of effort in what they call conditional cash
transfers. Are you familiar with what those are, CCTs?
Ms. Mensah. I am, not from my USDA work but from my work at
the Ford Foundation and Aspen----
Mr. Farr. Do you think we ought to----
PAY FOR PERFORMANCE
Ms. Mensah [continuing]. Where you actually pay for
performance.
Mr. Farr. Yeah, you pay for performance.
Essentially, Mexico sort of came up with the idea how to
address poverty in Mexico, that it was too overwhelming and we
have to give incentives to the people who can receive, sort of,
welfare, that with that welfare came a responsibility: learn to
read and write, keep your children in school. We will pay you
to stay in school.
I think Chile really perfected it and went to the adult
population, and if you were poor adults, went in and made sure
your housing conditions were okay and accessible and things
like that.
But the country that has really put the word on the map has
been Brazil, where they brought almost 4 million people out of
poverty and into the middle class. And that is why the
Brazilian economy--they attribute that to why it just soared.
It is kind of stuck right now, but, you know, right before the
last couple years, they were a model for the world.
And I wondered whether we--and you are kind of doing that
in a different way by not having to enter a contract. But,
essentially, as I understand it, you assess the need of the
individual, whether it be, oh, we need infrastructure for
broadband, which might be more than the individual. The
individual may need housing, may need to keep their kids in
school, may need health care and all these things. And so you
find that unmet need, and you kind of make a contractual
relationship: We will work with you and we will give you some
benefits if you learn to read and write.
Have we thought about doing that here in America?
Ms. Mensah. Well, Congressman, you are speaking of
experience that is dear to my heart and that speaks directly to
consumers. I do believe there are other agencies which have
looked at this. I know there is certainly work in the
philanthropic sector.
Let me answer this in a slightly different way, because I
have worked in both places. My Aspen work was largely on the
work of how to bring consumers forward and empower the
individual. This work of Rural Development is the necessary
complement, because you can advance people and ask them to
partake of what is here, but they must be attached to a system
that also works.
And part of why I am so excited about leading this, being
the Under Secretary, is the systemic work that we are able to
invest in. So advancing Americans out of rural poverty will
take both. It will take advances on the consumer side, but it
will take the systemic investments that this division has power
to make.
These dollars are precious----
Mr. Farr. Yeah.
Ms. Mensah [continuing]. And what you are speaking to is
really 80 years of legendary investments. We are ahead of other
countries, although we are--and I believe that we will inspire
others by the kind of work we do in our utilities, in our
housing and our businesses.
What I am excited about is, when that Millennium Challenge
Fund finds its real work, it will be around housing and water
and broadband and business. There is no way to avoid this kind
of development. And that is the development that you give us
the resources to do. You give it to us every day, and we wake
up and get to invest in these with the partners.
What I am particularly pleased about is that most of our
dollars are used in partnership. It is not just a solo act of
the Federal Government. And that is just a powerful opportunity
in government.
Mr. Farr. Well, my time is up, but can we get a list of the
counties that are those impoverished counties and, perhaps, if
you can, a partnership list where you can? Because that is the
kind of thing that really starts Members thinking. They say,
oh, this is part of my district, my State.
Ms. Mensah. Very good point. I will be happy to work with
your staff, with Congressman Bishop, who raised the point----
Mr. Farr. It puts a face on these programs----
Ms. Mensah. It does.
Mr. Farr [continuing]. As the chairman indicated.
Ms. Mensah. Yes.
Mr. Farr. I mean, he knows rural poverty in Kentucky.
Ms. Mensah. Yes, he does. And this is why I am excited to
have our 400 field offices. We are in these counties. You know,
this is not an agency which just sits at the Whitten Building.
It is an agency in rural America. And I am so----
Mr. Farr. Well, it would be wonderful if we had a goal, if
this Congress could have a goal to have a vision that within a
decade we could eliminate rural poverty in America. Then we
wouldn't have at least the consistent 353 counties.
And, by the way, Mr. Clyburn has 488 counties, a 135-county
difference. Can we figure out why he has more counties?
Ms. Mensah. We will work on the county list.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Farr. But wouldn't it be wonderful if we could in a
decade commit that the persistently--every 10 years, when we
measure this in our census, it is the same counties that are
there. They haven't made any movement. Wouldn't it be great to
come back and say we have wiped off that list?
Ms. Mensah. I love your vision for that. And I think so
much of the work we do is committed to that vision of seeing
change in rural America, seeing change for the better.
Mr. Farr. Thank you. Thank you for your service.
Mr. Aderholt. The gentleman from Iowa.
BROADBAND PROGRAM
Mr. Young of Iowa. Thank you, Mr. Chairman.
Mr. Schneider, I want to talk about the Rural Broadband
Program, the original one that was in the Farm Bill, not this
last one but the one before that. I want to make sure that we
are getting the maximized bang for our buck and want to make
sure that--are we loaning funds to entities who are going into
areas where there is already service or there is a private
company already in the works providing there?
Because I know, early on, there were some issues regarding
that, and I want to know where it is now, if you are
birddogging that. We want to make sure that we are not using
taxpayer dollars to compete with people's hard-earned capital--
or investors' capital that they are putting out there. You can
maximize efficiency, really, just getting the broadband out
there in different places for different uses for folks.
What metrics do you use when you are giving those loans to
entities that, in the end, you are going to have a population
that is going to subscribe to it and use it?
Mr. Schneider. Thank you, Congressman.
You know, we are in the business of providing essential
infrastructure to rural America, 21st-century infrastructure
being broadband.
Every loan or grant that we do to a rural telecom to
provide this service is underwritten specifically for that
particular application. And so we look at things like the
rurality, we look at eligibility, we look at the service area
and, most importantly, look at the ability to repay that loan.
And so we look at what are the existing subscribers, what are
the new subscribers that will come on board.
And so, you know, to your question of is there overlap, you
know, with so many different competing technologies, yes,
overlap exists. I mean, you can't go anywhere, most parts of
the country, with a cell phone and not have some connectivity,
right?
And so we take first and foremost being, you know, good
stewards of the taxpayer dollars. We want these loans repaid.
We want to empower these communities. And so we are not going
to lend to a telecom if there is already staunch competition,
because that impacts the underwriting and their ability to
repay.
And within our broadband division, we have separate risk-
analysis divisions, we have separate accounting that looks at
all of this for preservation of the portfolio in deploying
these precious resources.
Mr. Young of Iowa. Thank you for that.
Also, I look forward to learning more about the Rural
Corps. I am intrigued but not quite sold. But I want to learn
more, and this is part of the educational effort.
So I want to thank you all for coming today.
And thank you, Mr. Chairman.
Mr. Aderholt. All right.
Well, thank you all for being here--and I think we have had
a good hearing today--and for all your service. And we look
forward to following up as we continue on. And all the best to
you at Rural Development.
Thank you very much.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Thursday, March 19, 2015.
USDA FARM AND FOREIGN AGRICULTURAL SERVICES
WITNESSES
MICHAEL T. SCUSE, UNDER SECRETARY, FARM AND FOREIGN AGRICULTURAL
SERVICE
BRANDON WILLIS, ADMINISTRATOR, RISK MANAGEMENT AGENCY
VAL DOLCINI, ADMINISTRATOR, FARM SERVICE AGENCY
PHIL KARSTING, ADMINISTRATOR, FOREIGN AGRICULTURAL SERVICE
MICHAEL YOUNG, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE
Introduction of Witnesses
Mr. Aderholt. Good morning. The Subcommittee will come to
order. I now want to welcome everybody to the hearing today. It
is good to have all of you here before our Subcommittee.
Of course, the primary goal of our hearing this morning is
to examine the fiscal year 2016 budget submission from the Farm
and Foreign Agricultural Services mission area and its
respective agencies.
Today we are joined by Mr. Michael Scuse, the Under
Secretary for Farm and Foreign Agricultural Services mission
area; Mr. Val Dolcini, Administrator of the Farm Service
Agency; Mr. Phil Karsting, Administrator of the Foreign
Agricultural Service; and Mr. Brandon Willis, Administrator of
the Risk Management Agency. And we have back the USDA's Budget
Director, Mr. Mike Young. So welcome, everybody, for being
here.
Opening Statement--Mr. Aderholt
To begin with, Mr. Under Secretary, you and your team, I
want to congratulate you on your timely implementation of the
2014 Farm Bill programs to date. While a handful of critical
programs are in the process of being implemented, the agency
before us today has generally stayed on schedule and
implemented the new 2014 Farm Bill as planned. So we do want to
commend you for that.
During the hearing today, we will have an opportunity to
discuss everybody from RMA's risk management duties and FSA's
production-related programs to FAS's focus on promoting
America's productive agricultural capacity in the international
markets and the in-kind food aid from U.S. producers.
As I have mentioned in previous hearings, there are three
goals that we have for this Subcommittee that we are looking at
as we move through the 2016 appropriations process. The first
goal would be improving the management of the agencies and
programs that are within our purview. The goal is to enhance
accountability and spending of the taxpayers' dollars through
improved agency governance process and internal controls, and
ensuring transparent decisionmaking.
The Inspector General, Inspector General Fong, testified a
few weeks ago before the Subcommittee, and in her testimony
that day she mentioned that USDA has challenges with overseeing
information technology security and performance, and agreed
that the agency needs to strengthen its internal controls.
While she did not specifically mention MIDAS, the fact that
the OIG and the GAO are both studying this investment is an
indication of potential problems. During the hearing we will
delve a little bit into that situation and the unfortunate
circumstances surrounding that, and how USDA might avoid such
mistakes as you proceed in the future.
The second goal is to target funds to the most important
programs and functions. There are a wide range of programs in
our bills, and I want to be sure that we make wise decisions in
allocating the funding. We should continue to invest in
programs that prove effective and have broad support. This will
include examining the administration's proposals to shift more
of USDA's popular in-kind food aid programs into cash programs.
My concern, and I know many members of this Subcommittee
have the same concern, is that these cash programs already
exist, to the tune of about $3 billion that is somewhere across
the Federal Government. Implementing these changes would be
duplicative.
We must also ask what is wrong with using American taxpayer
dollars to buy American food and to send it overseas on
American ships and feed those in need. In order to fund any new
program or initiative, we must reduce or eliminate funding for
lower priorities as well as those programs that are less
effective and that are also duplicative.
The third goal is to promote U.S. agriculture, free and
fair markets, and safe food and medicines. The United States
has one of the most highly productive food and agriculture
sectors of the entire world, and the U.S. Government plays a
unique role in ensuring this sector's vitality.
For instance, we support a vibrant rural economy by
investing in infrastructure, such as farming operating or
ownership programs. We set the ground rules to ensure efficient
trading of agriculture commodities. And we promote a free and
fair international trade regime that allows U.S. commodities
and products to be sold in pretty much all the four corners of
the world.
Agricultural exports play a crucial role in the U.S.
economy, supporting more than one million jobs and record
levels of exports for our farmers and ranchers valued at over
$152 billion for just fiscal year 2014 alone. We need to be
mindful of the intricate trade system if we are to maintain the
reputation that we have accumulated over the years as a trading
partner, acting quicker to resolve issues on the rail lines and
at all ports of entry.
The President's fiscal year 2016 budget proposal for the
Farm and Foreign Agricultural Service mission area includes a
request for approximately $3.47 billion in discretionary funds,
including the discretionary resources for loan subsidies to
cover the cost of $6.4 billion in farm loans. This compares to
$3.4 billion that was appropriated in the fiscal year 2015
Omnibus Bill.
While all of us on the Subcommittee are proponents of
efficiencies, many of us here are not convinced that FSA has
fully developed these plans and the savings associated with the
proposals. On its face, a net decrease of $58 million across
the mission area, or 1.6 percent below the fiscal year 2015,
would be commendable in light of the ever-growing debt crisis
that we are facing in this Nation.
Such savings would be especially impressive when compared
to the proposed increases in most other USDA programs. There is
some skepticism of the proposed funding decreases yet again.
I am especially concerned about the major changes proposed
to the crop insurance program. Farmers have endured an
estimated 43 percent decline in net farm income over the last
two years. They are experiencing tough economic times with
sharply lower crop prices and a number of natural disasters.
There are a number of uncertain economic factors in the
future, yet USDA is proposing to reduce crop insurance by $16
billion, a reduction of over 17 percent, and it is making it
increasingly difficult for producers to secure funding. I join
my colleague, Congressman Mike Conaway of Texas, who is
currently the chair of the Agriculture Committee on
authorizing, in requesting that we not adversely change the
rules of the Farm Bill. And I certainly do not want to do so
through the appropriations process.
Lastly, I have to bring into question the timing of yet
another authorizing proposal, Public Law 480, Title II, the
Food for Peace grants, that would allow up to 25 percent of
emergency funds to be used for cash assistance when the
recently-passed 2014 Farm Bill purposely chose not to make such
a change in the program.
Today and in the months ahead, we must analyze the request
and the focus on allocating the funding using the goals that I
have outlined to be the most effective, highest priority
programs that we focus on.
In closing, I would like to express my belief that most
American taxpayers believe that sensible farm policies are a
wise investment in our Nation's health and the future of
American-grown food, fiber, and feed. Prudent investments we
make in farm programs in the upcoming fiscal year will benefit
all Americans, from the farmers and ranchers in the field to
the consumers in the United States and literally around the
world.
So with that, let me ask our Ranking Member, Mr. Farr from
California, if he has any opening remarks that he would like to
make.
Opening Remarks--Mr. Farr
Mr. Farr. Well, thank you very much, Mr. Chairman. I have
some opening remarks. I am not sure you are going to like them
because they are contrary to yours. I think your remarks are
right on in a lot of issues, but I do not see that we are
following through.
We are going to discuss this budget here, and the Chairman
just told you that we are going to cut, squeeze, and trim, but
we are not going to have a public hearing that I know of, and I
hope maybe you can change that, Mr. Chairman, after we make
those cuts so that you can understand what the real effect, the
transparent effect, of those cuts are on our program.
I do think that it is important that we make things cost-
effective. But then you attack the cash assistance program,
which is exactly that. It is cost-effective. You get a better
bang for the buck. Remember, this whole idea of American food
aid that we give with taxpayer money here is called Food for
Peace. It is not just about getting food abroad and buying and
distributing. It is about using American culture, cultural
values, that people will appreciate the fact that we do this.
And part of that is starting to support the local economy.
In Sub-Saharan Africa, there is no infrastructure. We
cannot just keep having people migrate hundreds and hundreds of
miles because it is just a desert. There is no water. There is
no ability to grow crops. It is all barter trading. There is no
ability to do any banking--I mean, all the necessary businesses
of agriculture. If you want to have a sustainable society, you
have got to invest in that infrastructure.
Just buying food in Iowa and sending it to Africa is not
the way to work people out of poverty. So I think that these
programs like the cash assistance are good, cost-effective
programs. And I hope if the remarks are that you want to target
funding that is most cost-effective, that you are not going to
be cutting this program.
So I appreciate it. I share your concerns about crop
insurance, but I also like the fact that they are moving crop
insurance into specialty crops. Historically, the crop
insurance program has just covered the commodities, which are
about five crops--wheat, corn, beans, rice, and cotton.
And all the rest of agriculture, and particularly in the
California agriculture--which is mostly specialty crops, what
we call specialty crops; that is all the stuff that goes into
salads, which we grow, and everything that is not in the
commodities program--they have never had crop insurance because
it has been difficult. Our growers grow a different crop every
three months.
If you say, where are the actuarials of when you grew this
crop last year at this time, how much did you produce and can
you document that and can you create this chain of economic
evidence that can be then insured? No, I did not grow those
crops last year. In fact, I did not even grow those crops last
month. Because we change so much. We grow a hundred different
varieties of crops.
And so the only way we have been able to get any help with
crop insurance has been essentially when the President declares
a natural disaster, and then our disaster monies allow us to
get bailout. That is not a way to run it. That would be a heck
of a way--if you did not have fire insurance and your house
burns down, and you have to wait for the President to declare a
disaster in order to get some money.
So I do think that the movement towards specialty crops--
and I would like to hear more about it--but I think that is
really important, not at the expense of the commodity crops,
either. So I do share your concerns with that, but not at the
expense of moving in the new direction.
So I hope that we will be able to have a hearing here once
the numbers are given and the decisions are made, essentially
in the back room, about what is going to be cut, and that we
can find out exactly from the Secretaries as to what that cut
is going to mean in terms of implementation. Because we will
find out that a lot of that hits our own districts.
So thank you all for your public service, and I look
forward to your comments.
Mr. Aderholt. Thank you, Mr. Farr.
As you may have heard, the bells have rung, and we have
actually a vote on the floor. But what I think I would like to
do is go ahead and let you give your opening statement, and
then after that we will go vote and then come back for the
questions.
But of course, your entire written statement will be
included in the record without objection. And so let me go
ahead and turn to you now, and then, like I said, at the
conclusion we will temporarily adjourn and then come back for
the questioning. So the floor is yours.
Opening Statement--Mr. Scuse
Mr. Scuse. Thank you. Mr. Chairman, Ranking Member, I would
like to thank you and all the members of the subcommittee for
being here today. I am pleased to be here to present the 2016
budget and program proposals for the Farm and Foreign
Agricultural Services.
Accompanying me today, as you have already pointed out, is
Brandon Willis, Administrator of the Risk Management Agency;
Phil Karsting, the Administrator for the Foreign Agricultural
Service; Val Dolcini, Administrator of the Farm Service Agency;
and Michael Young, Director of the Department's Office of
Budget and Program Analysis.
Mr. Chairman, we appreciate the challenges of today's
budget environment and the need to reduce the Federal deficit.
Our budget proposals strive to streamline our operation,
improve efficiency, and reduce administrative cost where
possible.
On February 7, 2014, the 2014 Farm Bill was signed into
law, and our mission area has made significant progress with
its implementation during the last year as you, Mr. Chairman,
have pointed out. The bulk of this effort has fallen to the
Farm Service Agency and Risk Management Agency.
For FSA, key actions include restarting the livestock
disaster assistance programs, whose authorizations under the
2008 Farm Bill had expired. FSA also rolled out several
important new safety net programs such as the agricultural risk
coverage, the price loss coverage, and the margin protection
program. For RMA, key actions include implementing supplemental
coverage option, stacked income protection, and whole farm
revenue protection.
Our mission area continues to implement the 2014 Farm Bill
initiatives, and we are committed to maintaining the strength
of the farm safety net.
Turning first to the Farm Service Agency, FSA provides
producers with a broad range of services, including direct
loans and loan guarantees, income support payments, and
conservation programs. FSA is striving to be a gateway for
farmers and ranchers to access a broad range of agricultural
resources, and has developed a program service delivery model
to focus on improving customer service and streamlining program
delivery.
The budget request for FSA salaries and expenses is about
$1.5 billion, a decrease of $12 million from the 2015 level.
The reduction reflects the completion of the MIDAS development
activities and the transition of this important initiative to
an operations and maintenance environment.
The request also reflects several modest increases to,
among other things, expand our customer-facing Web presence,
expand our outreach to new and beginning farmers and ranchers,
and provide assistance to help our returning veterans to
transition into agriculture.
For farm loans, the budget proposes a program level of $6.4
billion, the same as the 2015 level. This request reflects the
ongoing credit needs of farmers, with an emphasis on beginning
and socially disadvantaged farmers.
For the 2015 crop year, the Risk Management Agency, through
the Federal Crop Insurance Corporation, is expected to provide
about $108 billion of insurance protection. For the salaries
and expenses of RMA, the budget requests $77 million, an
increase of $2 million over the 2015 level. This increase will
allow RMA to expand its compliance efforts and address the
recommendations of the Office of Inspector General pertaining
to improper payments.
In addition, the budget includes two proposals related to
crop insurance, to reduce the premium subsidies to farmers
purchasing coverage providing revenue protection for upward
price movements and at harvest time, and a second to reform
prevented plant coverage.
For the salaries and expenses of the Foreign Agricultural
Service, the budget provides $192 million, about $10 million
more than 2015. The increase is necessary to meet our
commitments towards embassy security, international support
service, and pay costs for locally employed staff.
For trade expansion and promotion activities, the budget
includes $200 million for Market Access Program, $34.5 million
for Foreign Market Development, $10 million for the Emerging
Markets Program, and $9 million for the Technical Assistance
for Specialty Crops.
For international food aid, the budget includes $192
million for McGovern-Dole, $135 million for Food for Progress,
and $20 million for local and regional procurement. Local and
regional procurement, as authorized by the 2014 Farm Bill, will
complement our existing food aid programs and will provide cost
savings and speed delivery times during emergency situations.
For Public Law 480, Title II, the budget provides $1.4 billion.
Mr. Chairman, this concludes my statement. I want to thank
you for the opportunity to present our 2016 budget and program
proposals. The Administrators and I would be pleased to answer
any questions that you and other members of the committee may
have. Again, Mr. Chairman, thank you.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Aderholt. Thank you, Mr. Under Secretary. And as I
noted earlier, the vote is called. So what we will do is we
will take a temporary recess for votes. So we will be back in
probably about 20 minutes or so. So relax and enjoy your time
here in the Agriculture Subcommittee hearing room.
Mr. Scuse. Thank you, Mr. Chairman.
FARM SERVICE AGENCY BUDGET REQUEST
Mr. Aderholt. The Subcommittee will reconvene. Thank you
for your patience there as we went to cast our vote. So
hopefully we will have a block of time here before the next
votes, but I think we will be able to go through the
questioning process. And I will begin.
I want to talk about the Farm Service Agency and the 2016
budget request. FSA has proposed budget requests in recent
years that some would say would not pass the credibility test.
Last year the agency proposed closing 250 county offices and
eliminating 815 non-Federal staff to achieve savings during the
first year of the new Farm Bill. This year the agency is
proposing to find nearly $39 million in savings and operating
expenses after several years where the Department claimed that
they have found over $1 billion in efficiency.
After years of looking at these efficiencies, it is
intriguing that there is still that much in savings that can be
achieved. Also notice that there are not targeted areas of
efficiencies, rather, a reduction in spending to nearly all
major spending categories except for employee benefits and GSA
rental payments. This is apparent when you look at pages 24 and
25 of the agency's budget request.
In looking at the request on equipment, you are projecting
to go from spending $10.9 million in fiscal year 2014 to $4.5
million in fiscal year 2015 to down to just $114,000 in fiscal
year 2016. I just want to ask you if you could explain, talk a
little bit about how you have arrived at that level of savings.
Mr. Scuse. Well, Congressman, we continue to look at, over
a period of time, ways that we can make the cuts in the right
areas to get the savings. We know that this is a very difficult
budget environment and has been for quite some time. We have
tried to do our very best to make sure that we are spending
taxpayers' money as appropriately as possible and making the
cuts in the areas that we believe we can make them without
hurting the performance of the great office staff that we have.
You mentioned the equipment purchases. If you look at what
we have been able to do over the last couple of years, we have
been able to make the equipment purchases necessary to
modernize our offices over the last couple of years with the
funding that we have had available.
That is one of the reasons why we are not going to need a
great deal of money for fiscal year 2016 because of what we
have been able to do the last couple of years on those
purchases, especially for our county offices, many of which had
some outdated equipment.
So again, we are continuing, as we go forward, to look for
additional efficiencies. I think that if you look at the one
budget reduction number, that it does pertain to Modernize and
Innovate the Delivery of Agricultural Systems (MIDAS). Now the
cost of that is not for building a system but for the system's
maintenance. So there is a reduction in our overall cost for
the MIDAS program as well.
Mr. Aderholt. Do you really believe that you can achieve
this level of savings from operating expenses and still fulfill
the mission of the agency and implement the Farm Bill programs?
Mr. Scuse. Yes, sir, I do. And let me point out that we
have been able to this year achieve things that I think for the
most part many people thought were unimaginable. We have been
able to sign up over 500,000 contracts for the livestock
disaster programs. We have been able to do the cotton
transition program.
We have been able to sign up the dairy farmers for the
Margin Protection Program (MPP). We have been able to take and
do the base and yields reallocations for the farmers and
ranchers across this country. Also, we have been able to do
Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC)
signup. We have been able to accomplish all of this at the same
time with the staff that we have and with the system that we
have now in place.
And we have been able to accomplish that for two reasons--
one, because I personally believe that I have got the greatest
Federal workforce there is in my county offices; and two,
because of the modernization that has taken place in the Farm
Service Agency. When you put those two things together, we have
been able to accomplish things that, in the past, we would not
have been able to do.
FOOD AID REFORMS
Mr. Aderholt. USDA vocally supports changing the structure
of its own food aid programs, including the McGovern-Dole Food
for Education program, the Food for Peace program, and the Food
for Progress program, handing our vouchers, supplying cash
directly to food aid recipients overseas, and buying food from
foreign countries, instead of what has traditionally been used,
of using American taxpayer dollars to buy American food, send
it overseas on American flagged ships.
And recent farewell remarks by the former USAID
Administrator highlighted a new deal that is outside the
proposed President's budget that has been struck over this past
year between American shippers and nongovernmental
organizations, USDA, and USAID. Supposedly these stakeholders
have reached a consensus to ``reform'' this program. We have
not yet seen the details of this proposal.
As I have stated in the Subcommittee report in fiscal year
2015, transforming the Food for Peace program into a cash
program would be duplicative of other programs and counter to
the reforms that Congress has made through the 2014 Farm Bill.
Can you briefly, as my time is very limited, talk about the
role that USDA has played in negotiating this deal with the
shippers and the NGOS, and in the spirit of transparency,
provide us with some of the details for the proposal?
Mr. Scuse. The deal has not been fully negotiated yet. The
deal, from my understanding, is in fact still in the works. And
let me point out there still is a very large percentage of U.S.
products that will be purchased here from our American farmers
and ranchers and shipped. So it is not like we are asking for
100 percent of all food to be done through local and regional
procurement.
But there is a reason for that to be done. There are times
when, because of emergencies, we need to get products to these
people as quickly as possible to head off starvation because of
whatever, some weather-related disaster or others. So not all
of our products are going to be monetized or done for local and
regional procurement. There is still a large percentage of our
products that will come from the United States.
Mr. Aderholt. All right. Mr. Farr.
LOCAL AND REGIONAL PROCUREMENT
Mr. Farr. Yes. Thank you very much. I would like to follow
up on the Chairman's questions. This came about, the local
procurement, out of the Farm Bill. It was put in the Farm Bill
and it authorized you to spend $80 million. What I am surprised
at is that you are spending so little, and this proposal is
only about $20 million of the $80 million that the Farm Bill
authorized.
Why limit it to that? I just tell you, Mr. Chairman, from
my experience of being a Peace Corps volunteer and going to
markets--I went to Lalibela market in Ethiopia. And what they
were selling there was all this food that we had shipped from
the United States.
Now, when you ask people, how did it get into the
marketplace. I have got pictures of it, all the USAID food and
U.S. bagged wheat and so on. In fact, it was interesting that
the cans and other things that had been sent in that said
USAID, they had cut up and made into little stoves that they
were selling. It was an ingenious utilitarian use to them to
somebody who thought it was a waste throwing these things away.
But you are not going to develop empowerment. And that is
what they are doing. They are selling it to empower their
needs. I mean, talk about an ultimate welfare program. Buying
food in America, shipping it all the way over to these
countries that we are concerned about when high incidence of
poverty, and expecting them to work themselves out of poverty
by getting a handout? Huh-uh.
That is why you try to stimulate the ability to use some of
this money, and it has proven to be cost-effective. And I would
like you to comment on that, on why you are not spending more
money and why it is cost-effective.
Mr. Karsting. Congressman, if I could talk about that just
a little bit. I think our goal at USDA is to find a way to
honor the productivity and humanity of American agriculture
through these sorts of programs, but also find a way to make
them more efficient.
And I should start by saying that the authority granted in
the Farm Bill for local and regional purchase, we are extremely
glad to have that. And the President's budget includes a $20
million recommendation to get that started. Our rules for that
will largely mirror what we did under a pilot program
previously. And we are very excited about the opportunity to
make that work very well in conjunction with our McGovern-Dole
Food for Education program, which I know is incredibly
important to this Subcommittee.
So we are trying to find the right balance between creating
programs that are efficient but still recognize the
productivity and humanity of American producers. We have done
that in three ways--as you mentioned, the Local and Regional
Food Aid Procurement (LRP) authority, the $20 million that we
have included in there; there is an additional definition that
would give us a little more flexibility in the McGovern-Dole
program; and then, of course, the Public Law 480 authority to
use up to 25 percent for local and regional purchase.
A lot of that Public Law 480 happens in environments where
there are disasters or where there is an acute food need. And
so sometimes it is just an efficiency consideration. We have
food prepositioned around the globe, but it would be wonderful
for USAID to have that authority, when they need it, to be able
to use local and regional purchase.
So that is our thinking on it. We want to maximize the LRP
authority that we have to achieve these development goals that
you have identified.
COST EFFECTIVENESS
Mr. Farr. The Chair has talked about the need for cost-
effectiveness. Do you think that this local and regional
procurement is cost-effective?
Mr. Karsting. We will do everything to make sure that it is
cost-effective. What excites me about the local and regional
procurement, we have McGovern-Dole Food for Education program
in a variety of very poor countries. And the whole goal there--
--
Mr. Farr. That was to allow kids to stay in school and
things like that and to have some nutrition?
Mr. Karsting. Allow kids to stay in school, make them
better learners, and also to eventually turn those programs
over to host country governments so that our commitment there
is not indefinite, that we can create some support locally. And
one of the ways you can do that is to begin to involve local
suppliers and local parents and get their buy-in for it. So
that is the nexus between the LRP and the McGovern-Dole program
that is really exciting and one that we want to build on.
Mr. Farr. Is there any particular country that has really
begun to put skin in the game, so to speak?
Mr. Karsting. Bangladesh, for instance. I think they have
committed $49 million a year. And we are in the process of, in
a few years, being able to transition Food for Education
programs there. There are others that we could get you.
But it is hard work, as you know as a Peace Corps
volunteer, to create an environment where you can have markets.
But that is our goal, is to make sure that we do have future
markets for local producers as well as American producers.
Mr. Farr. Yes. Interesting. I had the flour sacks that came
with USAID and U.S. logos all over them. And I had my neighbor,
who was a seamstress, make me shirts. And then when they did
the laundry in the stream, they would work like mad to wash the
label out because they thought it was embarrassing that an
American would be walking around with these rags. I thought
they were really cool shirts. I could trade them for Madras
shirts back home. So anyway, it is an interesting cultural
comment. Thank you.
Mr. Aderholt. Mr. Young.
AGRICULTURAL EXPORTS AND INFRASTRUCTURE
Mr. Young of Iowa. Thank you, Mr. Chairman. Thank you for
appearing before the committee today.
As you know we have record levels of agriculture exports
these days. It is a good thing. You have a great role in trade
and marketing of our products. While we focus a lot on trade,
it seems like sometimes we lack a plan to get to market at
times.
Iowa Public Radio, the other day, said that the rail
situation in the Upper Midwest in 2014 cost farmers $570
million. We have some port disruptions, which sometimes are out
of our control, I know. But it seems like we react to these
circumstances rather than have a proactive plan.
I know you are busy implementing the farm program and your
statutory obligations. But my concern is that we lack a
fundamental road map. It may not just be the USDA, but in
conjunction with other agencies and departments as well. But we
need to have a road map.
With that said, how is the Department looking long term at
all aspects of U.S. agriculture--from transportation and
infrastructure to export strategies--that will benefit
America's producers? How is the USDA providing that leadership
so we are not reacting to those disruptions we see in the Upper
Midwest or at our ports?
Mr. Scuse. Thank you, Congressman. We have a very limited
role in the infrastructure here in the United States, be it the
rail system or the locks on a river system. But it is one, as
you have just pointed out, that has a tremendous, and in some
cases negative, impact on agriculture and the prices that our
producers receive.
For example, in North Dakota this past summer the producers
up there for a bushel of corn were receiving $1.20 less for
their corn than I could in the State of Delaware simply because
of the lack of rail transportation. It is no secret that our
infrastructure here in the United States has needed the funding
to make the changes and the improvements necessary.
Our lock system on our rivers, we are very fortunate that
we have not had up to this point in time massive failures on
the river systems because the lock system is at such an age. If
you look at the rail system, the issues that you pointed out
this past year with the lack of adequate rail cars to transport
grain.
Now, you ask about USDA's involvement. I personally have
made the phone calls to the Department of Transportation when
we have had instances where we have not been able to get
adequate rail cars to move goods. A good example was earlier
this year, where we had contracts between U.S. companies and
companies in Mexico, and we could not get the rail cars. I have
made those calls there. We have pointed out the issue with the
rail situation in the Northern part of the United States and
the lack of rail cars and facilities to move goods.
So it is a major concern for the farmers and ranchers of
this country that we do not have the infrastructure to move
agricultural commodities from one point in the United States to
another. And again, it is of concern, and it has caused in some
cases financial harm to our producers.
PRICE LOSS COVERAGE AND AGRICULTURAL RISK COVERAGE
Mr. Young of Iowa. I realize it is not your responsibility
or problem alone. Congress does have a role in this as well. I
do reflect that; I do know that.
The Farm Bill reshaped the structure of commodity programs,
and farmers now choose to enroll in the price loss coverage or
agricultural risk coverage. I hear a lot from farmers--I have a
pretty rural district--saying I do not understand this program.
How do I get educated on this?
What are you doing to make sure that they do understand
this? Who are you working with, and how are you reaching out to
them?
Mr. Scuse. A very good question because we understood that
this was going to be probably the most complex Farm Bill that
had then been passed. We made a commitment early on to do as
much outreach and education as we possibly could. We have
contracted with the different universities to provide the
tools, online tools for our farmers and ranchers to be able to
go online to plug in the data from their own farms to help them
make the decision.
We have worked with cooperative extension to have grower
meetings throughout the United States. We have literally had
hundreds of meetings throughout the United States, in all the
different States. In fact, I said hundreds, and Val just
pointed out to me it was not hundreds. It has been over 5,000
meetings that we have had throughout the United States to help
educate our producers on these programs and what they mean for
them.
The decisions that they make are extremely important
because they are binding. Once you make a decision, it is for
the life of the Farm Bill. So that is why we have gone to great
lengths to educate our producers about these programs.
Mr. Young of Iowa. Thank you, Mr. Chairman. I would ask
that we have a meeting later and talk about enrollment and what
that looks like so far. So thank you very much.
Mr. Scuse. Sure. Be more than glad to.
Mr. Young of Iowa. Great.
Mr. Aderholt. Ms. Pingree.
AQUACULTURE INDUSTRY
Ms. Pingree. Thank you, Mr. Chair. Thank you, everybody,
for being here today and for your testimony.
I just have a couple of questions that hopefully I can get
through before we run out of time. The first one is about
aquaculture. I am very fortunate to represent Maine, and I
think everyone knows Maine for its seafood and its lobster, and
that is just hard to beat.
But I want to talk a little bit about the aquaculture
industry. We have 90 companies who operate about 180
aquaculture farms that employ 600 people. This winter we hosted
the first aquaculture conference and expo for the whole
Northeast, and it is just easy to see lots and lots of people
want to get into the business.
But here is the question, and it is for the Farm Service
Agency. You took the step of expanding coverage for rope-raised
mussels under Noninsured Crop Disaster Assistance Program, and
we have hopes that oysters might be added next. Aquaculture is,
as I said, growing rapidly, and we need to make sure that the
infrastructure keeps pace. Facilities like walk-in coolers can
make a huge difference for people raising shellfish by
extending the window for them to be able to sell their product.
I know it seems odd on the Agriculture Appropriations
Committee to talk about aquaculture. Most people are surprised
that this is really under our purview. But really, many of the
issues are the same. They have to have a cold chain. They have
to have transportation and distribution networks. There is a
lot more interest in the local product. So there are
opportunities, but also challenges, and many that have not
really been helped out before.
What we are interested in is seeing if FSA can expand the
definition of crop under the Farm Storage Facility Loan Program
to include shellfish and seaweed. Or are there other programs
that FSA knows about that could apply to some of the people who
are now concerned about this infrastructure issue?
Mr. Dolcini. Thank you for the opportunity to respond,
Congresswoman. FSA, as you probably know, is very engaged in
the State of Maine on the issue of aquaculture and what we can
do to support Maine's aquaculture industry and greater New
England aquaculture opportunities.
The farm storage facility loan is a relatively new offering
that we have at FSA, and we would certainly be interested in
working with your staff to better define that so that it can be
made available to a broader number of potential loan
recipients.
The micro loan program has been a wonderful success all
across the Nation and throughout New England; we have made
about 11,000 micro loans now. The Farm Bill increased the
amount of money we could loan under that program to $50,000,
which I think is really right in the wheelhouse of a lot of
aquaculture operations throughout New England.
The new Noninsured Crop Disaster Assistance Program (NAP)
program, which was also improved in the Farm Bill, increases
yield coverage to 65 percent and increases market price
coverage up to 100 percent. That is also essentially free to
underserved farmers; we will waive the service fee and allow
them to enroll in the program.
We are also now working, between our farm loan program
function and our farm program function, to make sure that we
are doing a little bit of cross-pollinating. So if somebody
comes in for a micro loan, we can check a box, automatically
enroll them in NAP so that they get coverage----
Ms. Pingree. Great.
Mr. Dolcini [continuing]. For what they are looking to
sell. So we are doing a lot of really important things, I
think, to support local and regional food systems around the
Nation. And with regard to aquaculture, we are working hard
with you.
WHOLE FARM REVENUE PROGRAM
Ms. Pingree. Great. Well, we will look forward to following
up with you about that possibility, and thank you for that.
I just want to ask an insurance question, Administrator
Willis. Thank you for coming to Maine and speaking when the
National Farmers Union was up there. Hopefully you got a chance
to eat some lobster or shellfish, which is good any time of
year.
But I want to see if I can ask you a couple questions about
the inclusion of the Whole Farm Revenue program, which I know
you and I have talked about a little bit already. I do not
think I have to explain that that has been a great opportunity
to really change the way crop insurance is administered.
Certainly for New England type of farmers and many other
farmers around the State, being able to look at a whole crop,
not just an individual commodity, when people do not
necessarily grow 12 acres of beans, they have a little bit of
this and a little bit of that, it has been great.
But we were a little concerned to hear from one of our
major crop insurance agents in New England, who said he decided
not to offer Whole Farm Revenue coverage for the 2015 growing
season. He was very helpful in explaining all of this to us,
and he has been a long-time crop insurance agent; I think he
has been in the business for three decades.
And so for him to decide he was not going to sell it was a
pretty big deal. But basically, the way it came down is he said
he did not think he could sell Whole Farm Revenue to farmers
because he was not sure that the underwriting guidelines would
be able to accommodate products who sold their product direct-
to-consumer rather than wholesale.
If those farmers experienced a loss and had to file to
claim, he was worried they would risk not receiving a payout
because of the burdensome recordkeeping requirements that do
not fit the realities of farmers who sell through farmers
markets, Community Supported Agriculture (CSA), or direct-to-
consumer.
Do you see that as a problem right now, and that there is a
of skewing towards wholesale, not direct-to-consumer? At the
end of this year, could you provide us with data showing us the
breakdown of the Whole Farm Revenue policy and how they are
selling their product and looking ahead to next year? Could we
look at ways of tweaking or improving the program?
Because certainly for a lot of farmers, this is their
market opportunity, and we do not want to create a program and
then really not have it be useful. And I realize I am just
about out of time, so if we have to take some of it offline, I
am happy to do that. But I am sure everyone is just riveted to
know what the answer is, so please, give us----
Mr. Willis. Yes. One of the reasons that we are so excited
about the whole farm program is because it presents the
opportunity to provide a safety net for farmers who previously
have not had one, for people who felt left out of crop
insurance. It levels the playing field.
So what we did when we rolled it out this year is all 10 of
our regional offices all across the country have been
extensively engaged with farmers, with farm groups, with crop
insurance companies in the regions, helping them understand it.
Throughout that process we have come to understand better what
they like about it and maybe some barriers that we need to talk
about in the future. I myself travel to different places and
talk to people.
What our plan to address this issue is early this summer to
have a discussion with the farmers, with the farm groups, with
these same individuals and find out what worked and where we
need to make some changes because we do want this to work for
as many people as we possibly can.
So you have my commitment that this summer we will have
that discussion. We will look at these, see if there are some
common-sense solutions that balance the need for good
recordkeeping with a safety net that works. And we will
continue to try to move things forward on whole farm so it is a
safety net that works for farmers in your area as well as all
across the Nation.
Ms. Pingree. Great. Thank you very much. I will look
forward to working with you on that.
Thank you, Mr. Chairman.
Mr. Aderholt. Dr. Harris.
SIGNUP DEADLINE EXTENSIONS
Dr. Harris. Thank you very much.
Let me just start with a question that is important in my
district, which I brought up with Secretary Vilsack a couple
weeks ago when he was here, and that is the Farm Service Agency
and the problems that we are having in my district with access
to it because of limited hours.
And the Secretary said he would get back to me, and assured
me that they are taking care of the issue. But in light of that
problem, would the FSA consider extending some of the signup
deadlines to ensure that farmers have the opportunity, given
the fact that access is limited in some areas? I have 12
counties in my district. Agriculture is important in every
single one of them. So it is an important question.
Mr. Scuse. Being from Delaware----
Dr. Harris. We hope you spend a little time across the
border.
Mr. Scuse. I do. I spend a great deal of time with my
neighbors on the Eastern Shore. Now, what we have done as the
deadlines have approached, we have taken a good look at what
signup and what participation is. I will use the dairy program,
the MPP program, as an example.
We were not getting the participation that we had
anticipated. So we extended the signup for that program, not
just once but twice. And then in between those signups we
actually sent a card out to all the dairy producers urging them
to go in and sign up for the program.
What we recently have done is for the acreage and the base
reallocations, that deadline was going to come up the end of
February. We extended that deadline to March 31st.
Dr. Harris. Well, thank you.
Mr. Scuse. So we look at those on a case-by-case basis
because again, we want to make sure that the producers have an
opportunity.
AGREEMENTS FOR GEOGRAPHICAL INDICATIONS
Dr. Harris. Thank you. And I do, too. Let me just ask you,
one of the issues, especially with the milk producers, is this
idea of the agreements for the geographical indications. And it
limits our ability to export. And you understand the issue.
But I am not sure that it is understood everywhere in the
world where these issues come up. So what is the FSA doing to
remedy what I will call the information gap, the fact that as
these negotiations go between the E.U. and other countries on
these trade agreements, that those other countries are aware of
our position on this issue and fighting for us to be able to
maintain our exports?
Mr. Scuse. I personally was in Central American countries
when they were negotiating or getting ready to adopt their
agreement with the E.U., and pointed out to them what may
happen if they ultimately approved those agreements with the
European Union. The European Union, unfortunately, got them to
agree to over 400 geographical indicators.
The agreement that was just done with Canada, our neighbor
to the North, I think they agreed to over 100 geographical
indicators. But we are pointing out to other governments that
are negotiating with the European Union the consequences of
agreeing to these geographical indicators.
Dr. Harris. So you are working on it, I take it, then, it
includes working with the embassy staff to make sure that this
is high on their priorities?
Mr. Scuse. Embassy staff. And we also have a very dedicated
staff throughout the world. We have 95 international offices
covering 167 countries, with a great staff that work with those
governments to point out some of the issues while they are
working on trade agreements.
So we do what we can. But unfortunately, sometimes they go
ahead and adopt the trade agreements in spite of what the
consequences may or may not be.
IN-KIND FOOD AID AND SHIPPING
Dr. Harris. As long as we are fighting for our farmers and
their ability to export fairly, that is fine.
Now, I will just close with a question about the food aid
program, the in-kind food aid. As you know because you have got
big ports in the State you are in also, you have agriculture in
ports in Delaware. We have them in Maryland.
Mr. Scuse. Yes, sir.
Dr. Harris. One of the intersections of those is the food
aid program, which up until now has been American products
shipped through American ports on American ships. So you would
get it all the way down the line.
Now I understand that up to 25 percent of this could be
just money, which does not go through the port of Baltimore. It
is not grown by our farmers. Should this not be an economic
stimulus issue at this point? Our shipping trade has not
recovered fully. Our farmers are suffering from low prices, as
you know, relatively low prices, in my district corn and
soybeans.
Why would we want at this time to not ship American
products on American ships through American ports when we are
providing food aid to foreign countries?
Mr. Scuse. Well, there is still a large percentage of the
products that will be shipped, U.S. products on U.S. ships, to
foreign countries that our producers, our farmers and ranchers,
produce.
But there are instances where it does make sense to do it
through monetization or through local and regional
procurements, for a couple reasons--number one, the speed that
you can get food assistance there in emergency situations;
number two, it allows you to take the funds from those projects
and start building an agricultural sector so hopefully they
will not be as dependent on food from us or other countries
going forward. But it will help to build an agricultural
sector.
Dr. Harris. But those are not emergencies. The Department
of Agriculture is not a welfare agency. It is not a farm
welfare agency. It is there to help American farmers. That does
not help American farmers. Thank you very much. I yield back.
FARM SERVICE AGENCY WORKLOAD ANALYSIS
Mr. Aderholt. Mr. Valadao.
Mr. Valadao. Thank you, Chairman. Appreciate you taking
some time for us today.
The fiscal year 2015 Agriculture Appropriations Act
commissioned two independent studies for the USDA. The first
was related to the Farm Service Agency's proposed office
closures and reduction in staff for fiscal year 2015 after FSA
conducts a workload of its new requirements under the Farm
Bill. The second would assist USDA in completing the overdue
report required by law related to the new under secretary of
trade and foreign agricultural affairs in establishing the new
position required by the 2014 Farm Bill.
My question will be two-part. First, related to the FSA, a
review of workload analysis, can you tell me when this analysis
required by the fiscal year 2015 Appropriations Act will be
completed? And have you even begun the process? Has FSA
complied with the moratorium on office closures on the fiscal
year 2015 Appropriations Act?
Mr. Dolcini. I will answer that question, Mr. Valadao. The
answer to the second part of your question is no. There are no
plans to close offices at the Farm Service Agency.
To the first part of the question, we have contracted with
the Deloitte consulting firm to perform a workload analysis
that should be complete by the end of the summer, per the Farm
Bill requirements. That then will be turned over to the
National Academy for Public Administration for their analysis.
UNDER SECRETARY FOR TRADE AND FOREIGN AGRICULTURAL AFFAIRS
Mr. Valadao. And secondly, related to the establishment of
Under Secretary for Trade and Foreign Agricultural Affairs, can
you assure me that your mission area will cooperate with
completing this third party study? And has USDA completed its
own study required by law related to the new under secretary?
Mr. Scuse. Congressman, the Chief Economist's Office has
entered into a contract with the National Academy of Public
Administration to conduct the required study. The study, I
believe, is due in September. And I believe the first meeting
of that is to occur today. So we have every intention of
complying.
I just want everyone to understand that this is a very
complex issue. It is not easy just to create another Under
Secretary because of all of the other agencies that are
impacted by this. So it is going to take a great deal of work.
And again, that is why the Chief Economist's Office has made
the contract, to look at what is going to be required to create
the Under Secretary for Trade.
IMPROPER PAYMENTS
Mr. Valadao. In June 2013, the GAO released a report
entitled, ``Farm Programs: USDA Needs to Do More to Prevent
Improper Payments to Deceased Individuals.'' In the 2013
report, GAO made a number of recommendations as to how the Farm
Service Agency and the Risk Management Agency can avoid
payments to the deceased.
Just this week GAO issued a government-wide report on
improper payments, an issue of great concern to this Committee
regardless of the program. We have not spoken to the GAO yet,
but their report said, and I quote, ``As of March 2015, USDA
reported that it is still working to address the
recommendations.''
Can you tell the Subcommittee what you have done over the
nearly two years since this report came out and why it has not
been resolved?
Mr. Dolcini. Mr. Valadao, I can speak for the Farm Service
Agency and the efforts that we have undertaken to ensure that
both program and payment integrity is first and foremost on our
list.
We work with the Social Security Administration to cross-
reference from their death master file payments that we are
making, in addition to adhering to the Improper Payments
Improvement Act and related legislation. In fiscal year 2014 we
made approximately 4 million payments around the country, 1,300
of which were deemed to be improperly made to deceased
individuals.
So while we may have a legal obligation to pay an estate or
to pay a trust after an individual has passed away, we are
really doing a lot of good work, I think, and cross-checking on
a monthly basis through our network of 2,100 county offices
around the Nation to ensure that we are paying the right
people.
Mr. Valadao. Yes. That is something that we struggled with
just this past week in my district. A constituent got a letter
from the VA that said he had passed away. And as he read the
letter, he was not sure, but he was pretty confident he had
not. [Laughter].
Mr. Valadao. But it is something that we address. Hopefully
we are paying attention to make sure that we are sending those
payments to the folks that are alive and need it. So thank you.
FOOD AID REFORM
Mr. Aderholt. Thank you, Mr. Valadao.
Let me go back to the issue that I had left with, and we
were talking about the food aid reform. And I asked you to
provide some of the details about the proposal, and you
mentioned that it was still being negotiated. Let me tell you
the details we have heard about, and if you could just confirm
if this is along the lines.
It would be a payoff of $95 million to the shipping
industry taken from money used for the food aid program, an
additional $340 million over 10 years added to the deficit, and
a 45 percent reduction in the amount of food purchased in the
U.S. and shipped on American ships.
Mr. Karsting. Mr. Chairman, that is not a part of the
President's budget, and we are constrained in terms of our
ability to talk about things that are part of the President's
budget. Those negotiations, I do not have a great deal of
inside, firsthand knowledge of what those conversations are all
about.
Mr. Aderholt. Well, I want to point out that there is
already a multi-million-dollar USAID program that allows for
flexibility to provide cash overseas, local and regional
purchases, and development programs called international
disaster assistance.
On the other hand, the USDA's international food aid
programs involve American farmers, ranchers, and shippers, as
has already been pointed out here by Dr. Harris, carrying them
on American rivers, streams, and roads. You put them and load
them up on American ships, transport them halfway around the
world to people that are in need. And the package that they get
says, ``From the American people.''
There is already flexibility across the U.S. government to
provide cash or commodities when it is needed. For example, in
Jordan, cash-based assistance through the international
disaster assistance program is being used to help the Syrian
refugees cope with the war in their country while not
disrupting the delicate internal balance that exists with our
key U.S. allies. But in places like Ethiopia and Djibouti, home
of the only U.S. military installations in Africa, these
governments request American in-kind food aid to be used.
The proposed changes are slowly removing the American
farmer from a rich, 60-year tradition and surrendering the
USDA's role in this crucial program. These changes appear
duplicative and wasteful. They are not reforms. In fact, in
your testimony you highlight that for every $1 billion of
agricultural exports, it generates $1.22 billion in economic
activity and supports 8,000 American jobs.
What I would like to ask you about is if you could explain
how these changes will affect not only the structure of this
program but will also affect the support of the American people
who touch the food on the daily basis.
Mr. Scuse. Mr. Chairman, I think that it is extremely
important that we provide the assistance to those individuals
in those countries that need help, and we have to use several
different tools in order to accomplish that objective. Whether
we are going to agree on the proper tools to use at which time?
Probably not.
But we need to have different tools in order to take care
of those individuals in areas of the world that need help,
whether it be emergency assistance in a very short period of
time or a longer assistance because of a war situation, or
assistance to help them in some manner that would help them
build their agriculture sector.
So there are many different ways to use food assistance to
help people throughout the world. And again, we may not agree
on the right way, but I think we will agree that there is a
need throughout the world to help those that are in need.
Mr. Aderholt. Well, as I say, I understand what the theory
is here. And in certain instances where there are emergencies
and where you need to get something fast and quick, this is not
a good alternative that we are talking about here.
But again, I point out there is a multi-billion-dollar
USAID program that allows that flexibility already in place.
And what my concern is is taking money from this already
existing program that has proved so successful in the past, and
I think Americans feel very strongly about this being a good
program.
And again, most Americans, I believe, want to help people.
But a lot of times they are concerned that the money that is
sent overseas does not always get to the intended person. On
the other hand, when you send food over there, it is a little
bit different scenario.
So I just want to point that out again. I do not disagree
that there instances where you have to have emergency aid, and
it has to be done quickly, and you do not have time to ship
something to another country. But my point is, that has already
been in place.
My concern is that removing American support from this
program will reduce overall funding and the amount of people
that can be fed on the long haul because I am afraid a lot of
these--like I said, this has been a very successful program in
the past, and I think that we need to be very careful in how we
cut out--even though it is only 25 percent, I think we need to
be very careful.
CROP INSURANCE
Let me just quickly talk about crop insurance cuts. As I
said in my opening statement, I am very concerned about the
cuts to crop insurance that is proposed in the fiscal year 2016
budget. President Obama signed the 2014 Farm Bill into law one
year ago, and already the Administration is proposing more cuts
that will negatively impact America's farmers.
In a DTN news article, you supported the cuts as a way to
help keep the projected Farm Bill savings on track. How would
you propose to keep the Farm Bill savings on track in other
programs such as nutrition since these savings are not
materializing as predicted?
Mr. Scuse. I cannot answer the last part of that question
because that is not under me. But I can tell you that what we
have proposed for the crop insurance program, the prevented
plant provision, there is a disincentive now to go in to
attempt to plant a second crop.
This will eliminate, we believe, that disincentive and will
allow more producers to plant a second crop for the harvest
price option because the majority of farmers who are taking the
harvest price option, there is a greater likelihood of a larger
payout for those producers if there is a disaster versus the
traditional price option.
What we are asking for is for those producers to pay a bit
higher premium because of the opportunity that may present
itself that there will be a larger payout. So we are just
asking them to pay a little bit higher percentage of the
premium because of that potential.
Mr. Aderholt. Well, I just want to note that I think that
if the administration wants to ensure the Farm Bill savings,
that they are fully achieved in the farm programs, then
proposals should be offered to ensure savings in other programs
that are achieved as well.
With that, I will turn it over next to Mr. Farr. Mr. Farr.
FOOD AID REFORMS
Mr. Farr. Thank you very much, Mr. Chairman.
I am a little confused as we get to marking up our
appropriations bill. I am just a little sick and tired of
hearing rhetoric around here that if we give aid to farmers and
we give aid to veterans and we give aid to senior citizens,
those are benefits. But if we give aid to single moms trying to
pay for rent and food, that is welfare. Welfare is bad.
Benefits are good.
I just looked up the definition of welfare. It is the state
of doing well, especially in respect to good fortune,
happiness, and well-being. It seems to me that all these
programs are welfare. And we have got to start being smart
about it.
Mr. Chairman, to protect a program because it aids our
farmers when the intent of the program is to aid people who are
in other countries suffering food shortage and starvation and
we know that in modern times that sending a whole bunch of
American commodities to countries that do not even eat those
commodities in their cultural food chain, that this is not
great.
Remember the intent of the program, and remember that it
was in the Farm Bill that was authorized, so let's try to use
this money--a little bit, not all of it, just a small portion
of it. And I have been critical of how little the President
wants to use.
I think if we are going to have a foreign food aid program,
then the intent of it is to work people out of poverty. It is
not going to happen by just satisfying the needs of farmers who
grow commodity crops. I do not think any of them have to depend
on this food program to be successful. After all, they have
commodity payments.
So the concept here that you outlined was ``let's be cost-
effective.'' This is a program that is cost-effective, is
authorized in the Farm Bill, and they are trying to implement
it. And they are going to measure whether it is more cost-
effective.
In an emergency, when people have moved and all of a sudden
you have got to feed them, how do you expect to say,--``oh, we
have got to wait for the shipment. The American wheat has not
arrived, so I am sorry that you in a disaster and you are
starving to death, but you have got to wait for the shipment.''
Come on. We have got to be practical about this. Things are
broken that we have got to fix. And I think that if we cut that
type of spending out, we are doing a great disservice. This was
a big debate, a bipartisan debate on the floor last year, and
there were just a few votes' difference between really
authorizing a much bigger expenditure than the Farm Bill
authorized. So that is my comment.
CROP INSURANCE CONSERVATION COMPLIANCE
Then I want to ask you a question, following up on Ms.
Pingree, about the crop insurance. We are excited that you are
moving into the specialty crops. But here is what my producers
are increasingly concerned about, that you are relying
exclusively on existing guidance documents for compliance that
have been built up over the years of interaction with Title I
producers, the commodity crops, and in so doing, ignore the
business structures of the fruit and vegetable industry.
Many growers grow dozens of crops on their land, and after
growing those crops are in business with dozens of different
entities to the market to ship and to otherwise aggregate those
crops.
So as you administer compliance, will you do so with
flexibility and a fresh set of eyes? I think that is what Ms.
Pingree was asking. Because if you do not, you are really going
to dissuade the specialty crop growers from purchasing crop
insurance.
So are you looking at those nuances and making sure that
the people you want to buy this insurance are going to be able
to get it for the purposes that I outline?
Mr. Willis. Yes, sir. After the Farm Bill was passed,
people have talked about crop insurance as the cornerstone or
the safety net, the linchpin, the centerpiece. The reality is
it can only serve as those if it is a policy that works for the
producers and works based upon how they run their farming
operation, however that is.
We have made some strides that you have alluded to earlier.
The whole farm program is one step in that direction that
allows us to offer crop insurance for producers who we may not
have enough information, historical, for a specific crop.
Another thing that we have, and we work with such as
Western Growers in California, is a process that allows private
submissions, private crop insurance products to come before the
crop insurance board. This is a way that allows crop insurance,
I think, to stay on top of the safety net needs of farmers and
ranchers.
The Farm Bill actually provided some latitude and some
encouragement for fruit and vegetables through that private
process. So we are continuing to work that direction. We do
understand that we want this to be a safety net that works for
all regions, crops, and different types of growing conditions.
Mr. Farr. And you have all the conservation requirements
now in the Food Safety Act to comply with, which the commodity
crops do not necessarily have, because all of those crops are
not eaten raw.
Mr. Willis. The Farm Bill did attach conservation
compliance to crop insurance. Since around 1985, it has been
with most Farm Service Agency and Natural Resources
Conservation Service programs. The last year we have been
working quite a bit, quite extensively, with different farm
groups and farmers trying to educate them on those
requirements.
The first thing they need to do is come in and sign a form
that says they will be in conservation compliance. We actually
tried to make that as easy as we could. We simplified one of
the forms especially for specialty crop producers who do not
need to answer all the questions in the previous form.
So we are doing our best to make conservation compliance
work for specialty crop producers in your region as well.
Mr. Aderholt. Ms. DeLauro.
CROP, INSURANCE
Ms. DeLauro. Thank you, Mr. Chairman. Just a very quick
followup on the crop insurance. I would just point to two GAO
reports that came out, one in February, one in March. GAO
continues to believe that RMA can and should do more to monitor
and report on crop insurance costs in high-risk areas where
government costs were found to be substantially higher in March
2015. Congress should consider reducing premium subsidies for
the highest income participants in written comments. USDA said
it had no comments on the draft report.
I am not going to belabor this. I am going to submit a
series of questions on crop insurance, which include the
following.
What is the error rates for payments made through the crop
insurance program? Do you expect the reforms to reduce producer
enrollment in the program or the companies that offer crop
insurance policies? Who receives crop insurance premium
subsidies?
Percentage of crop insurance premium subsidies. What
percentage went to the largest 1 percent of agribusinesses? Can
you discuss USDA's projection for the cost of crop insurance in
2015 based on weather and the agricultural economy. What is the
percentage of premiums paid compared to administrative costs?
I am not asking you to respond to that, but I want it there
because I think one needs to have a real, tough examination of
this program to see where the dollars are going and to whom
they are going as part of a social safety net for farmers. I am
there, but this whole bill is a social safety net for farmers
when you begin to equate it with what happens on the other side
of nutrition and other programs.
TRADE PROMOTION
Let me move to a couple trade questions quickly. When the
Secretary was here, I expressed concern that the Washington
Post determined that the net effect of the Trans-Pacific
Partnership (TPP) on American jobs was actually zero. USDA'S
own analysis determined this trade agreement would not alter
U.S. gross domestic product at all.
If recent history is any indication, we have only to look
back at 2012 and Korea. Two years after it took effect, U.S.
exports to Korea declined. Growing trade deficits with the
country resulted in between 60- and 70,000 U.S. jobs lost.
In your testimony you mentioned that, ``FAS is working with
Congress to support the passage of the trade promotion
authority.'' Right now the Administration is pursuing fast-
track promotion authority that limits debate and amendment for
an expansive, multilateral trade agreement, the TPP. What
exactly is and has been FAS's role in these negotiations?
Let me give you my second question so that you can answer
it all at once. And this is about Korea, as I said, 2012. Meat
exports to Korea have significantly declined rather than
increased, as proponents of the agreement suggested would occur
when it was enacted.
One analysis: Compared with the exports that would have
been achieved at the average monthly level prior to the
agreement, meat producers lost $42 million in poultry, pork,
and beef exports to Korea in the first 22 months of the
agreement.
What is the overall trade balance with Korean agriculture
since the U.S.-Korea free trade agreement was enacted in 2012?
Where is the data derived from? And if you can provide by
agriculture sector and you can get details on the trade balance
with Korea and Colombia since those two free trade agreements
went into effect.
What is the Foreign Agricultural Service analysis of the
impact of TPP and TTIP on the U.S. trade balance in
agricultural products? And I am going to ask you to provide the
information to us per sector, per country involved in the
negotiations, as well as the projected impact these agreements
will have on U.S. jobs.
Mr. Karsting. Congresswoman, we will be glad to get you as
much of that information as we possibly can. On the Korea beef
number that you mentioned there, and I am drawing from memory
here, but I think the anomalies in those numbers were that just
prior to the agreement, Korea had to depopulate a whole bunch
of its herds. And so their indigenous production went way down.
So it is better to compare the post-Korea number with about
a 2009 or 2010 number because I think in 2011 they had to
depopulate a whole bunch of their herds. And so there were some
unusual anomalies in their local systems there. So I would just
throw that out there as one explanation that I recall from
memory.
Ms. DeLauro. I just want to--and we can talk about whether
it goes into the record. I asked, and this is not my
information. This is from USDA, International Trade
Administration, and U.S. Census Bureau information. And I will
give you this. California, ag exports lag. Ag imports surge. Ag
trade balance suffers. North Carolina, net exports of vegetable
products fall. Texas, overall ag imports surge, ag exports
fall. This is all detail.
And they are not my numbers. I do not make them up. They
come from all of you. They come, as I say, International Trade
Administration, the U.S. Census Bureau. Washington State, net
exports of vegetable products fall. Oregon, exports lag behind.
Ag balance suffers. Nebraska, ag exports surge, ag exports
fall, ag balance suffers.
Very detailed. Very, very detailed information. This is
Mississippi, Minnesota, Illinois, down the line, Delaware, data
that comes from the organizations that compile this effort to
take a look at what is happening with these free trade
agreements and our ag imports, exports.
All we talk about are exports. No one deals in the reality
of imports and what that is doing to agriculture, what it is
doing to manufacturing, or anywhere else. And I read your
testimony, and God is in His heaven. All is right with the
world. And this trade agreement with 12 countries is going to
make a big difference than those that we have had, bilateral or
whether we have had two countries.
How do you justify, in the face of all the data that you
produce, that this Trans-Pacific Partnership agreement is going
to increase agriculture products around the globe and be good
for American farmers and American families? How do you justify
it?
Mr. Karsting. I would say, first of all, when you look at
the picture, we are going to have 9 billion people on this
planet by 2050, and there are going to be rules of the road of
trade written somewhere. We need to be engaged in that process
of writing those rules.
Ms. DeLauro. Do not talk to me about China. Do not talk to
me about China because if you wanted to deal with China in the
rules of the road, then this agreement would have a currency
chapter that deals with currency manipulation because quite
frankly, that is the biggest issue that is on the table in
losing jobs and depressing wages.
So do not go down that road as every agency that comes
before us, as the Secretary when he came before us, talked
about China writing the rules of the road. Yes, we should be
involved. We all support trade. Do not put us in a basket that
says you are a Luddite or you do not understand.
But the current practice in our trade agreements have been
nothing but a detriment to American workers, American
manufacturers, and yes, I would say to American farmers. The
data is yours. It is not mine. I do not make it up. So let's
come up with a new trade paradigm that ensures that American
workers, American farmers, come out the winners and can
participate in the global market on that basis.
Thank you, Mr. Chairman.
Mr. Aderholt. Thank you. Thank you. I hate to cut that off,
but I did want to get one last question.
Well, I think, if you will look at my record, I have not
been----
Ms. DeLauro. I am not saying----
Mr. Aderholt. There have been some trade agreements that I
have had some very large concerns with as well. So every time I
see a trade agreement, I am not always on board, either. So I
understand there are concerns.
And we could probably do a hearing on food aid reform. But
I would like to reiterate, in my opening statement, I do not
propose that in any way that our international food programs
need to be cut. And I only highlight the cash assistance
programs that already exist in the whole of the government, and
that the programs under this Subcommittee have broad support.
Let me just act quickly. We have got another series of
votes that will put us past the noon hour, and I assume that
you all would probably go on and have some other things you
would enjoy doing for the rest of the afternoon.
Mr. Scuse. Not that we are not having fun here, Mr.
Chairman. [Laughter].
AVIAN INFLUENZA
Mr. Aderholt. I understand. But let me just ask one quick
question about the Highly Pathogenic Avian Influenza (AI) that
was first reported in the beginnings of the year in the back
yard flocks in the Pacific Northwest.
Today we are seeing that more new cases are popping up,
including commercial flocks around the country. This is a
troubling development that could severely hurt the growth and
surplus in U.S. agricultural exports that we have experienced
over the past few years, especially since several nations have
imposed import bans on our poultry products on a nationwide
basis rather than on a local or State level. There is no threat
to public health or to the Nation's food supply either
domestically or globally.
My question: What is FAS doing to ensure that other nations
do not impose bans on poultry products, or at the very least
limit the geographical scope of the ban? And I will address
this to Mr. Karsting.
Mr. Karsting. We are actively working at post in a lot of
countries to make sure that bans are applied geographically and
not country-wide. I think we have 11 nations that have proposed
bans country-wide, and 37 have gone, I think because we have
laid the groundwork to make sure people understand the
scientific basis, to apply them on a more regionalized basis.
So we continue to do that. Every time our people at post,
our attaches, talk to their host countries, that is the message
they deliver. When this happened years ago, there was a much
more detrimental impact on our poultry exports. So I think we
can suggest that there has been some improvement here.
Mr. Scuse. In 2004, Mr. Chairman, when I was Secretary for
the State of Delaware, we experienced a case of low-path AI.
Thirty days later, so did the State of Maryland. With that we
had, I believe at that time, 37 countries that did out-and-out
bans on all products from the United States.
Because of the work that has been done by the Animal and
Plant Health Inspection Service (APHIS), the work that has been
done by our FAS team, the work that has been done by the U.S.
Trade Representative (USTR), we have come a long way since
2004. Yes, unfortunately, there are countries that are still
banning products from all the United States. But I think it
says a lot on the work that we have all been doing together to
educate countries about bans, working with the World
Organization for Animal Health (OIE), and what is right and
what is wrong when countries do experience the cases of avian
influenza.
It is unfortunate that it has spread from the West Coast
now to the Central Flyway and into the commercial flocks. But I
do know that APHIS is working very, very hard to try to contain
this and do as much education and outreach as possible along
with our FAS staff.
Mr. Aderholt. Thank you. Well, certainly you know it is a
concern, especially for those of us that do represent areas
with high poultry production.
Mr. Scuse. Yes. Being from the State of Delaware, I take it
quite seriously.
Mr. Aderholt. Right. Sure. And of course, Maryland as well.
But again, thank you for your presence here this morning,
and we look forward to following up as we continue to work on
our fiscal year 2016 budget, the request that we are looking
at, of course, in the appropriations process as it moves
forward.
So thank you, and the hearing is adjourned.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]