[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]