Serial No. 106-88


Printed for the use of the Committee on Education

and the Workforce































The Subcommittee met, pursuant to notice, at 2:00 p.m., in Room 2175, Rayburn House Office Building, Hon. Michael N. Castle [Chairman of the Subcommittee] presiding.

Present: Representatives Chairman Castle, and Reps. Goodling, Hilleary, Petri, Kildee, Scott, Kucinich, Woolsey, Sanchez, and Wu.

Staff Present: Victor Klatt, Education Policy Coordinator; Dan Lara, Press Secretary; Patrick Lyden, Professional Staff Member; Michael Reynard, Media Assistant; Lynn Selmser, Professional Staff Member; Sally Stroup, Professional Staff Member; Kevin Talley, Staff Director; Holli Traud, Staff Assistant; Shane Wright, Legislative Assistant; June Harris, Minority Education Coordinator; Alex Nock, Minority Legislative Associate, and Roxana Folesca, Minority Staff Assistant.



Chairman Castle. [presiding] Ladies and gentlemen, a quorum being present and my watch at least showing it is two o'clock, the Subcommittee on Early Childhood, Youth and Families will come to order.

We are holding this hearing today to hear testimony on Commodities and the School Lunch Program.

Under Committee Rule 12(b), opening statements are limited to the chairman and ranking minority of the Subcommittee. I would like to introduce him. It is Mr. Dale Kildee of Michigan. This will allow us to hear from our witnesses sooner and to help members keep to their schedules.

Therefore, if other members have statements, they may included in the hearing record.

With that, I ask unanimous consent for the hearing record to remain open for 14 days to allow member statements, witnesses' written testimony, and other material to be submitted for the record. So, you don't have to ask to have your statements made part of the record. They are made part of the record now.

I would like to welcome all of you, and I mean all of you, a lot of people here today, to today's hearing on Commodities and the School Lunch Program and extend a special welcome to the members of the Delaware School of Food Service Association with whom I had a chance to take a picture and to meet for a little bit, as well as our colleagues from the American School Food Service Association who are in attendance today. We appreciate all of you being here.

I would like to begin by talking a little bit about the William F. Goodling Child Nutrition Reauthorization Act of 1998. I was very pleased to have played a major role in the development of this legislation, which made several important improvements to our Nation's child nutrition programs.

I was particularly pleased at language we included in the bill to require a single permanent agreement and a single common claiming procedure in instances where a school operates multiple programs and the same State agency oversees them. I am hopeful that this provision is working and that the paperwork burden on participating schools has been greatly reduced.

In my view, one of the most important provisions of the 1998 law was the expansion of nutritional support for children participating in after-school programs that have an educational or enrichment purpose. I believe after-school care programs can greatly enhance academic achievement and reduce juvenile crime and other problems, if they are well-operated and are more than babysitting programs. As children in such programs spend a greater portion of their time in a school setting, it is certainly appropriate that they be given a snack until such time as they return home for their evening meal.

But today's hearing addresses a new problem with respect to child nutrition, a reduction in commodity support for participating schools in the School Lunch Program. As a result of efforts to fund the Ticket to Work and Work Incentives Improvement Act of 1999, a change was made to the current law requirement that 12 percent of the cost of the School Lunch Program consist of commodities.

This change allows the secretary to count bonus commodities as a part of the 12 percent commodity requirement. Until recently, bonus commodities, those purchased by the Secretary to reduce a surplus in the marketplace, have been in addition to commodities purchased for the School Lunch Program to meet the 12 percent requirement. I am especially interested in learning about the impact of this change on child nutrition programs and the agriculture community.

Finally, before closing, I would like to congratulate, in advance as it turns out, Chairman Bill Goodling on receiving recognition from the American School Food Service Association for his efforts on behalf of child nutrition programs. And I must tell you, he was supposed to receive this before this took place, but because of schedule delays, it will be after this takes place. I have it on good word that award is going to take place.

And I am anxious to hear from our expert panel of witnesses, but at this time, I will yield to the ranking member for any statement he may wish to make.






Mr. Kildee. Thank you, Mr. Chairman, for yielding. And today's topic, H.R. 3614, the Emergency Commodity Distribution Act of 2000, and the loss of commodity assistance schools will begin to experience is important, and I am pleased that you called this hearing today.

I welcome all of you here, particularly those of you from Michigan and particularly Gloria Borden from the Gennessee Intermediate District, my hometown.

I have been involved actually in school nutrition 35 years as a lawmaker, about 24 years here and about 12 years back in Michigan, and then also I taught school for 10 years and started the first School Breakfast Program for one person back at Suffolk Heights.


And I want to thank Mike Castle. He is just one of the great guys in the Congress, and I know he is very concerned with what we address this problem.

Last year's enactment of the Ticket to Work Act marked an important milestone for individuals with disabilities, and key to the many disabled individuals finding and keeping work is the ability to retain their health insurance and their rehabilitation services. This law will go a long ways. Unfortunately, also included as part of this legislation was a provision modifying the calculation of bonus commodities, and hopefully we can remedy this. I am co-sponsor of a bill that will remedy this, so we are anxious to hear what you feel about that, tell us about the Nutrition Program in general.

You are really very, very important people in our Nation. I enjoy talking to you when you arrive here in Washington. I enjoy talking to you when I go back to my district, because you play a very, very important role.

And one of the things that you have been able to do--you are professionals, you touch the people's lives in many ways--you have never forgotten the fact that that person getting the school lunch is an individual with a name, with a need. You never become bureaucrats. You have always been there with a very personal touch to your services.

I have seen that here, and I have seen that back in the district when I go back there. I commend you for that, because it is so easy for any of us to fall into a certain just procedure, a constant repetitive procedure. You don't do that. You look upon that person as a person, an individual with a name and need. I thank you for that.

Yield back the balance of my time.




Chairman Castle. Well, thank you very much, Dale.

We will now go on to the witnesses. And I explained to them a little bit what the procedures are, but because there are so many people here and you are maybe not familiar with committee procedures, I will explain it to all of you.

Each witness will have five minutes. There are little lights there, you can watch if they take their five minutes or more or not. It is green for four, yellow for one, red thereafter. When the witnesses are done, then the members who are here may ask questions generally in the order in which they come in.

This will be for two reasons: We will probably have relatively low attendance today. Unfortunately, because of various scheduling things, we couldn't do this in the morning when we usually can get better attendance at these hearings, and, secondly, this subject matter is not that controversial, which is good, by the way. When you don't want to be here is when everybody is sitting in their chairs looking for red meat on an issue. Then you have some problems.


So, I think you are in fairly good shape, as it turns out.

But, again, we appreciate everybody being here, and now I would like to take the time to introduce those who are going to testify, very briefly, and you never can do complete justice to what they have done and their background, but we want to know who they are.

And the first person to testify will be Ms. Phyllis Griffith, who is the president of the American School Food Service Association and director of Food Services for the Columbus Public Schools in Columbus, Ohio. Ms. Griffith began her child nutrition career in 1966 and has held 10 different offices within the Ohio and American School Food Service Associations, as well as being a member for over 20 years. She will introduce the other individual with her in her testimony, as I understand it.

Ms. Molly Wheeler will be the second witness today. She is the president of the American Commodity Distribution Association and is employed by the Alaska Department of Education & Early Development in Juneau, Alaska. Ms. Wheeler has worked in the USDA Commodity Program in the State of Alaska for 25 years. In addition to being president of the American Commodity Distribution Association, she has been on the board of directors since 1994 and held other offices and becomes perhaps the person that has come from furthest away to testify before this Subcommittee this year, and we appreciate that as well.

And Mr. William Ferriera is president of the Apricot Producers of California, Modesto, California. As president of this association of apricot growers, originally founded in 1961, Mr. Ferriera has been intensely involved with the USDA Commodity Program.

We appreciate all of you being here, and we look forward to your testimony, and we will start with Ms. Griffith, and we will go right across. Ms. Griffith.



Ms. Griffith. Okay. Thank you. Chairman Castle, Congressman Kildee, and other members of the Committee, I am Phyllis Griffith, president of the American School Food Service Association and director of Food Services in Columbus, Ohio Public Schools.

Thank you so much for the opportunity to appear before you today. With me is Nancy Stiles, chairperson of our Public Policy and Legislative Committee, who will be available to help answer questions at the conclusion of the testimony.

We appreciate the tradition, which the committee continues by this hearing, of coordinating your hearing on child nutrition with our Legislative Action Conference. It certainly symbolizes the special relationship that exists between the committee and ASFSA and our shared commitment to child nutrition.

Chairman Castle, before I address the main focus of this hearing, the Emergency Commodity Distribution Act of 2000, H.R. 3614, I would like to extend to you and this committee, our sincere appreciation for the hard work and the excellent results of our recent child nutrition authorization. Working together in a bipartisan effort, the members of this committee enacted a bill of significant importance. Among other positive things included in the William F. Goodling Child Nutrition Reauthorization Act of 1998, is expanded availability of nutritious snacks to children in after school programs. I am happy to report that many, many school districts have added this program and, while I don't have the numbers to share with you at this time, more children are enrolled in safe, productive activities after schools in those dangerous hours of the day. We thank you for your commitment and support in making this happen.

As you mentioned, later today, we will meet with Chairman Goodling and present him with an award of recognition for his years of service on this committee, and we want to wish him well on his retirement.

Chairman Castle, at this time, allow me to turn our attention to Mr. Goodling's bill, our highest priority this year. While this legislation looks like a technical accounting issue, it is not. This legislation will provide $500 million in commodity assistance over the next nine years.

As you know, schools that participate in the National School Lunch Program receive entitlement commodities in addition to cash assistance. Entitlement commodities are an integral aspect of the School Lunch Program, because schools are given great deference in choosing the types and forms of commodities that they want to use in their programs. The commodity entitlement is required by Section 6(c) of the Richard B. Russell National School Lunch Act, and schools currently receive 14.75 cents worth of entitlement commodities per lunch.

In addition to the basic commodity entitlement rate, Section 6(e) of the act requires that at least 12 percent of Federal assistance provided to schools be in the form of commodities purchased by the U.S. Department of Agriculture. This requirement was enacted during the 1994 reauthorization to stop a decline in the level of entitlement commodity assistance. In the late 1970's, entitlement commodities accounted for nearly 20 percent of all Federal assistance, but in 1994, this figure had dropped to just over 12 percent.

This committee, in conjunction with the House Agriculture Committee, was responsible for the 12 percent provision. The report that accompanied the 1994 reauthorization bill stated that entitlement commodity assistance is "an integral part of the School Lunch Program" and should "continue at not less than its current level."

The Ticket to Work and Work Incentives Improvement Act of 1999, Public Law 106-170, amended the School Lunch Act to require USDA to count the value of bonus commodities when it determines whether the 12 percent requirement has been satisfied. Bonus commodities are purchased through USDA's Price Support and Surplus Removal Programs to help farmers and ranchers, and tend not to be center of the plate food items that schools purchase with entitlement funds. Importantly, these commodities are not purchased with funds provided under the National School Lunch Act.

The inclusion of bonus commodities in this calculation is likely to have two important ramifications: First, it is a cut to the School Lunch Program. It is not, as I have heard a number people call it, just an accounting change. The Congressional Budget Office scored this cut at $55 million per year for Fiscal Years 2001 through 2009. This amounts to a cut of over $500 million, and this is a conservative number. This is $500 million that will not be provided to the School Lunch Program. I don't really see how spending less money can be considered anything other than a school lunch budget cut.

The cost of operating school lunch programs continues to increase, and this is $500 million in food that will not be purchased for local school districts. To put this cut in perspective, each year USDA purchases about $620 million of entitlement commodities. Although this cut is spread out over a number of years, it is almost the same as if USDA did not purchase entitlement commodities for an entire year.

In my district alone, the Columbus, Ohio Public Schools, this cut would mean a reduction of $84,000 per year in commodities that we depend upon for our program.

Second, the cut will change the types and forms of commodities that schools receive by shifting bonus commodities to entitlement status. Bonus commodities are often different than the items schools order with entitlement funds, and the types and forms of bonus commodities available to schools depend entirely on agricultural market conditions. Beef and pork might be available one year, and the next year it could be canned salmon and bison. For school food service administrators, this will create an added burden to meal planning.

Over the last several years, USDA,prodded by this Committee, has made significant improvements in the way it purchases and distributes commodities to schools. With your help, we hope that Congress will reverse the cut enacted by Public Law 106-170. And the Emergency Commodity Distribution Act of 2000 would restore the cut enacted, and it would clarify that only entitlement commodities should be counted when calculating whether the act's 12 percent provision has been satisfied. These changes would ensure that schools receive their full value of entitlement commodity assistance. Companion legislation has also been introduced in the Senate in Senate bill 2056.

Thank you for your time, Mr. Chairman. I would be pleased to answer any questions that members of the committee may have.

[The statement of Ms. Griffith follows:]



Chairman Castle. Thank you, Ms. Griffith. We will defer those questions and answers until we have had a chance to hear from all the witnesses.

Next, we will turn to Ms. Wheeler, who will have five minutes.



Ms. Wheeler. Good afternoon, Chairman Castle and members of the Subcommittee. My name is Molly Wheeler, and I am president of the American Commodity Distribution Association.

Thank you for the opportunity to testify about the Emergency Commodity Distribution Act of 2000, H.R. 3614, which ACDA enthusiastically supports.

ACDA is a non-profit professional trade association devoted to the improvement of the U.S. Department of Agriculture's commodity distribution system. ACDA members include State agencies that distribute USDA-purchased commodities, agricultural organizations, industry recipient agencies, and allied organizations. In fact, both the American School Food Service Association and the Apricot Producers of California are ACDA members.

In addition to being ACDA president, I am the commodity distribution agent for the State of Alaska Department of Education & Early Development. In Fiscal Year 1999, Alaska distributed 2.5 million pounds of USDA commodities to programs like the National School Lunch Program.

USDA, through State agencies like mine, distribute nearly 1.6 billion pounds of food annually, most of which goes to schools. Other recipients of USDA-purchased commodities include the Child and Adult Care Food Program, the Summer Food Service Program, the Nutrition Program for the Elderly, the Food Distribution Program on Indian Reservations, and the Emergency Food Assistance Program.

One of the strengths of the Department's commodity distribution system is its ability to move commodities efficiently. This efficiency is largely dependent on the volume, not the dollar value, of product flowing through the system. The more cases of product that move through the system, the more cost effective it is for States to maintain their distribution system.

Regrettably, the costs of operating a commodity distribution system at the State level increase every year, and the volume of product moving through the system has not increased enough to off-set these costs. As a result, States are finding it more and more difficult to provide services that are expected by our customers, which are school districts.

The cut enacted by the Ticket to Work and Work Incentives Improvement Act, Public Law 106-170, will make it increasingly difficult to operate distribution programs at the State level by significantly reducing the volume of commodities that are distributed to schools. It will also jeopardize our ability to efficiently serve other programs that receive USDA commodities.

The Richard B. Russell National School Lunch Act requires that at least 12 percent of all school lunch assistance be in the form of USDA commodities. Public Law 106-170 amended the act to require USDA to include the value of bonus commodities when calculating whether or not the 12 percent requirement had been satisfied. States and schools would argue that these bonus commodities are not necessarily bonus items since they must be calculated towards the 12 percent requirement.

On a per student basis the cut imposed by Public Law 106-170 may appear to be small. However, the overall impact on the commodity distribution system could be disastrous. Estimates indicate that this change could result in a decrease of at least 84 million pounds of commodities in Fiscal Year 2001, which is more than an 8 percent reduction in the total volume of commodities distributed to schools annually. Over 9 years, the total cut enacted by Public Law 106-170 will amount to 760 million pounds of food that will not be distributed to schools. By any measure, this is a significant reduction in volume.

As I mentioned, it is becoming extremely difficult for many States to maintain an effective distribution infrastructure, and problems with volume have made it difficult for some States to find distributors to deliver USDA commodities. There is a couple of examples. If you look at Alaska and Hawaii, we have some pretty unique distribution systems as it is, because of the transportation challenges. In addition to that, if you look at Delaware, Rhode Island, Maine, some of the smaller States, the volume of product that is going through those States is considerably smaller than, say, California or the State of Texas. So, the fact that you are looking at counting these bonus commodities and reducing the amount of volume going to those States is going to be a bigger challenge.

If you look at the States on a larger scale, the State of Pennsylvania, just a couple of weeks ago, had a distributor that decided to drop out of distributing USDA commodities, because the volume simply was not there. In addition to that, the State of Texas had to find another distributor in the western part of the State to handle commodities, because their distributor dropped, as well, which meant that they had school districts in that portion of the State that were required to travel several hundred miles to pick up product from different warehouses.

On another level, in the State of Colorado, they are evaluating whether or not they are going to have to increase their handling fee from I believe it is 39 to 50 cents per case, which is an increase of 25 percent during Fiscal Year 2001.

The cut enacted by Public Law 106-170 is likely to created similar problems in other States, and the reduction in volume will make it more difficult for all States to maintain efficient Statewide distribution systems.

I would like to add, too, that the majority of States throughout the country typically don't receive money from the State legislatures. Basically, they operate their program on a per-case basis that they charge to the recipient agencies, and as I mentioned earlier, the majority of those recipients receiving commodities are school districts. So, if in fact this bill is not amended, the school districts basically are going to end up paying the cost to subsidize that. I think that is an important note to be made.

Of course, the reduction in volume will cause problems for the other programs that receive USDA commodities as well. The efficient distribution of food to these programs depends, in part, on the amount of school lunch product that flows through the commodity distribution system. Of particular concern is disaster feeding. When natural disasters strike, USDA commodities are often diverted from State warehouses or school districts for emergency feeding.

In September, when Hurricane Floyd hit, North Carolina alone distributed 1.1 million pounds of USDA food to displaced North Carolinians. In Fiscal Year 1999, as well, over 13 million pounds of USDA commodities were used for this purpose. I might note here, as well, as you know, over the past several years, unfortunately, there have been more and more disasters throughout this country where there has been more and more of a need for USDA commodities to help supplant that.

The Emergency Commodity Distribution Reform Act would reverse the cut enacted by Public Law 106-170. Furthermore, H.R. 3614 would clarify that only entitlement commodities, which are foods purchased under Section 6(c) of the School Lunch Act, would count towards the 12 percent requirement. On behalf of ACDA and school districts nationwide, I am hopeful that Congress, at the recommendation of this committee, will enact H.R. 3614.

The commodity distribution system has improved significantly over the past 15 years and continues to do so. Continued improvement is necessary for the commodity distribution system to remain viable, and ACDA has been working with the Department of Agriculture and ASFSA to ensure that programs can continue to meet the needs of school district.

The cut enacted by Public Law 106-170 will frustrate, if not negate, the benefit of these efforts. I am hopeful that the members of this committee will be able to support H.R. 3614, which would ensure that the commodity distribution system can continue to be an efficient method of distributing USDA commodities.

Again, Mr. Chairman, I thank you for the opportunity to testify before you in the Subcommittee today. Thank you.

[The statement of Ms. Wheeler follows:]



Chairman Castle. Thank you very much, Ms. Wheeler. We appreciate your testimony, and we will get back to you on the questions and answers also, but for now we will go to Mr. Ferriera--am I pronouncing your name correctly?

Mr. Ferriera. Ferriera, that is correct.

Chairman Castle. We will go to Mr. Ferriera for his testimony.



Mr. Ferriera. Thank you. Good afternoon, Chairman Castle and members of the Subcommittee. I am William Ferriera, president of the Apricot Producers of California. I greatly appreciate the opportunity to speak to you today about Congressman Goodling's bill, the Emergency Commodity Distribution Act of 2000, H.R. 3614. Organized in 1961, the Apricot Producers of California is a non-profit cooperative association for the California apricot growers.

I would like to commend Chairman Castle for holding this hearing, and I believe that he could not have picked a better panel to discuss the important role USDA commodities play in the National School Lunch Program. Indeed, all facets of USDA's commodity distribution system are here today, from the producer, to the State distributing agent, to the ultimate customer, schools. As you can imagine, USDA's commodity distribution system is very important to the agricultural community. It is so important that I have postponed celebrating my 25th wedding anniversary in order to be here today. I just hope that this does not prevent me from having a 26th.


Chairman Castle. Actually, we scheduled this in celebration of your 25th wedding anniversary, in case you didn't realize it.


Mr. Ferriera. Each year, the Department of Agriculture purchases a significant amount of food that is distributed through the commodity distribution system to food assistance programs such as the National School Lunch Program. In Fiscal Year 1999, for example, the Department purchased over 1.6 billion pounds of food. Ensuring the continued existence of the commodity distribution system is important to the agricultural industry for two reasons: First, it is a significant market for our products; second, and importantly, it offers an outlet for products that are purchased through USDA's surplus removal program, so-called bonus commodities.

As Ms. Griffith mentioned, in addition to entitlement commodities, schools receive bonus commodities from USDA. These products are also distributed to other USDA programs, such as the Emergency Food Assistance Program and the Child and Adult Care Food Program. Bonus commodities are products purchased by USDA to help alleviate market surpluses and stabilize prices.

These purchases are of particular importance to the California specialty crop industry. Although there are a number of ways to help manage production levels of crops such as apricots, the weather is perhaps the most important factor, and it is impossible to predict. If conditions are just right, there is very little producers can do to prevent a bumper crop. USDA's bonus purchases are instrumental in stabilizing prices and ensuring that our producers do not go out of business. Importantly, bonus purchases are not a subsidy farmers receive for income. In fact, USDA is very judicious in deciding whether or not a bonus purchase will be made. There are often times when the industry believes a bonus purchase is necessary but the Department does not.

As you know, the Ticket to Work and Work Incentives Improvement Act of 1999, Public Law 106-170, amended the Richard B. Russell National School Lunch Act and changed the way USDA calculates the level of commodity assistance provided to schools. As a result, the Department's purchases will be reduced by 84 million pounds in Fiscal 2001 and 760 million pounds over 9 years. This is a significant cut. Not only does it reduce the amount of food that USDA will purchase, but it threatens the stability of the entire commodity distribution system. Without the commodity distribution system, USDA's ability to provide market support to the agricultural industry is threatened.

The National School Lunch Program is the backbone of the commodity distribution system, and any changes in school lunch commodity purchasing have a ripple effect through the entire system. It is very important to the agricultural industry that the National School Lunch Program remain a viable outlet for USDA commodities. If the program deteriorates to the point where it is too expensive to operate, the entire commodity distribution system will collapse, and USDA will not have an outlet for products when it makes bonus purchases. Without this outlet, I feel that it will become politically impossible for USDA to support the agricultural industry through bonus buys, because it will have no way to dispose of these products.

Congressman Goodling's legislation, H.R. 3614, would reverse the cut enacted by Public Law 106-170, and help protect the stability of the commodity distribution system. I am happy to see the Republican and Democratic leadership of the House Agriculture Committee are original cosponsors of H.R. 3614. And, additionally, two leaders of the Senate Agriculture Committee, Senators Tim Johnson, Democrat, South Dakota, and Larry Craig, Republican, Idaho, introduced the Senate version of this bill, S. 2056.

The support of these members demonstrate how important this issue is to the agricultural community. I urge this Committee to support H.R. 3614 and ensure that the USDA commodity distribution system can continue to meet its dual purpose of supporting American agriculture and providing nutritious food to schools across the country.

Thank you for the opportunity to testify today, and I would be glad to answer any questions.

[The statement of Mr. Ferriera follows:]



Chairman Castle. Well, thank you, Mr. Ferriera.

We appreciate the testimony of all of you. We have now reached the time of answering questions. Nancy Stiles may also answer questions as well.

And each of us will have five minutes, but that includes the questions and the answers, so please try to keep your answers as succinct as possible, because every member up here probably wants to ask multiple questions. If I had to guess, you could be like Chairman Alan Greenspan of the Federal Reserve who takes more than five minutes to answer any question. We are all afraid to interrupt him for fear the stock market will collapse or something.


But we hope in this case we can get some good dialogue going on certain issues, and I will start by yielding myself the first five minutes.

And I want to start with you, Ms. Griffith, if I can. If you can try to put this in human terms for us in Congress, in terms of what these reductions in the program may mean with respect to what is happening in the schools, lunches which are served, whether students would participate, those kinds of issues, something a little more than just the $50 million or so in lost products.

Ms. Griffith. Well, in terms of our school food service operations, we do depend heavily on USDA commodities. One of the ways that we depend upon it is to meet the requirements of the dietary guidelines for Americans, and our commodity assistance helps us to do that. So, if we do not have that dependable level of commodities for our program, it means that our menus change, because we need to reduce the food cost on the menus that we plan. So, the differences in those menus would be evident to our students, in terms of acceptability of the meals.

Chairman Castle. Thank you.

Let me turn to you, Ms. Wheeler. In a way you have already answered the question that I wanted to ask. In your testimony, you mentioned the potential problems in the commodity distribution system. I think you cited a Pennsylvania example of where there was some reluctance to go ahead with the distribution.

Tell us about how that generally works and what problems could happen if indeed the commodity products are reduced.

Ms. Wheeler. Well, for example, the State of Pennsylvania had actually talked to the commodity agent last week. When you have distributors that are no longer willing to handle commodity products--they are handling commercial products as well--if they don't have that volume coming through, then it means that most State agencies have pretty much fixed costs, whether they be commercial warehouses that they are utilizing or State warehouses. So, if the volume of product is no longer there, then that per case price ends up going up. And as I mentioned, it ends up getting passed on to the school district typically.

Chairman Castle. Is this distribution of commodity products a problem in general? Are these commodity products a problem in general, whether or not this cut was made or not made? I mean, is this something that you are dealing with on a regular basis now?

Ms. Wheeler. In terms of volume?

Chairman Castle. Well, no, in terms of different producers saying that "We are not interested in handling this anymore."

Ms. Wheeler. I think that varies, Chairman Castle, from State to State.

Chairman Castle. Different anecdotes depending on where you are from and what happens in that particular State?

Ms. Wheeler. Right.

Chairman Castle. Because I had not heard that--I mean, that is something we need to keep an eye on. Mr. Ferriera, in your testimony, you mention a number of other programs that benefit from USDA purchases of bonus commodities. Will the new commodity requirements under the School Lunch Program impact the availability of products for other feeding programs?

Mr. Ferriera. Without question, because what the bonus system does today, it allows commodities--apricots kind of fall in that, although they are probably not one of the most popular commodities that are out there, there are other commodities in California that are less popular. With a bonus program on those years that we have surpluses in our commodities, it is really the USDA Bonus Program that keeps those processors in business, because in the case of apricots we have our trees in the ground for 25 years. If we have a bumper crop one year, next year we may have no crop. So, we are very inconsistent in our production.

By having the safety valve of the Commodity Program, we are able to keep our producers going through those excess years so they have enough production in the lean years. If all of a sudden the bonus commodities were eliminated the way that now is going to be happening, then we would see many producers of several different commodities being forced out of business.

Chairman Castle. What I think you are basically saying is in addition to feeding children, the Bonus Commodities Program is very important in terms of the regulation of seasonal changes, climatic changes, whatever in production.

Mr. Ferriera. Absolutely. In fact in the case of apricots, Indian reservations are one of the prime recipients of our commodity. If we didn't have the Bonus Program, what would then happen is we would basically see our industry disappear, and those feeding programs would not have those commodities available to it to be able to supply a emergency relief program or a soup kitchen.

Chairman Castle. It is my understanding--and maybe Ms. Griffith or Ms. Stiles could answer this question--that basically what this legislation does is restore this program to where it was before. It is a restoration in terms of having the bonus commodities not count as part of the 12 percent acquisition. Is that more or less your understanding of it too? I want to make sure that we are on the same wavelength on that.

Ms. Griffith. That is true. This cut amounts to about $2 per child per year when you calculate it out, and this Emergency Commodity Distribution Act of 2000 would restore that to the prior level, you are correct.

Ms. Stiles. Yes, I would just like to add to that. I am from a very small school district, so the commodities play a very important role in the food that I put on the plates. And it would have a net effect of 15 percent of my bottom line.

Chairman Castle. Did you want to add to that, Ms. Wheeler? You pulled the microphone over.

Ms. Wheeler. Chairman Castle, yes, I wanted to add a comment that somebody else brought to my attention. In terms of the Emergency Food Assistance Program, which really is not a part of the programs that I mentioned earlier, but a lot of States are handling TFAP commodities anymore where they are dependent on that volume, the combination of those volumes and school district volumes to make distributions to the food banks. So, if those volumes for the school districts are being decreased, it is making it more difficult for them to make equitable distributions to TFAP programs.

Chairman Castle. Okay. Thank you. Thank you all.

We will turn to Mr. Kildee.

Mr. Kildee. Thank you, Mr. Chairman.

This is the 24th year that I have attended a hearing like this, and I always try to get this one point in before I ask any questions: It is that very often people say while the economy is good right now, should we look at the School Lunch Program a different way? But I always remind people that the School Lunch Program was started by Harry S. Truman in the Congress in 1946 not as a welfare program. And I always want to repeat that: Not as a welfare program. I had to get Dave Stockman's attention; didn't effectively get it, because he tried to cut it and make ketchup a vegetable, but it was not a welfare program. It was not a welfare program. It was brought in because during World War II, many men more in those days were being turned down in their physical, because they were not--it was clear that they had not received proper nutrition during those very important years. So, it really was more of a national defense issue that it came into being. It was for the national good that the School Lunch Program came in.

Now, we do help poverty people, thank God we do. I think we have a moral obligation to do that, but it goes beyond that. This is for the health of our country, and I always want to point that out. When Harry Truman did that in 1946 it was because of what we found out during World War II.

And, you know, the $500 million, that is a lot of money, but we could probably just omit an aircraft carrier down in Mississippi and pick up the cost just like that.


Mr. Scott. Now, that air carrier is made for our defense. Nuclear aircraft carriers are made in Newport News, Virginia.

Chairman Castle. If we cut that one out, we would have more money than we know what to do with this program. Cut them both out.

Mr. Kildee. And that is important that we have--I have two sons who are captains in the Army. I certainly want a first-class defense. But I really want to make sure that the people of this country--food and shelter, these are basic things in our society, very basic things. So, we certainly, in our wisdom, can find the dollars here.

And we have a vehicle here. I am co-sponsor of this vehicle, introduced by my very good friend, Bill Goodling, who is really the mother, the father, the brother, the sister of the School Lunch Program. He has been just enormously good on this. And we may find some good congressional ledger domain too to make sure that we do get this done, because if we don't pass this as a separate vehicle, there is an Ag. bill that comes up, and we can find all the necessities for having offsets or not offsets in that Ag. bill.

So, we will use every avenue possible, but I think that we certainly in this committee right here is going to let no avenue be untraveled to achieve this. So, that is just a statement that I like to make every year.


Let me ask you this question: Since bonus commodities vary from year to year just by the nature of the weather and the nature of what was planted and was not planted, how do you think the provisions in H.R. 106-170 will affect some of the meal selection and dietary needs of children benefiting from the School Lunch Program? Obviously, because there is this extra bonus surplus, there are foods that are in surplus and might add a little variety to what you ordinarily get. Could you comment on that too?

Ms. Griffith. Sure. First of all, thank you for your insights into our programs. That is gratifying to hear you those express those sentiments about the program.

The bonus commodities would have and sometimes now do have a real effect on what our menus look like and what is offered to students. We have had, as an example, canned salmon as a bonus commodity. I really had some great difficulty utilizing canned salmon and making it appealing to children. The next year it might be pork and beef, which would be very usable, or fruits and vegetables. But the stability of the kinds of things that are offered year to year depends on the entitlement commodities. The bonus commodities vary a great deal from year to year and may be very usable and in another year may be items that are not very appealing to children.

Mr. Kildee. They do test your ingenuity at times, I presume.

Ms. Griffith. They do, the creativity, ingenuity, and marketing skills.

Mr. Kildee. Okay. Well, I think my time is expired.

Chairman Castle. Thank you, Mr. Kildee. Mr. Petri.

Mr. Petri. Thank you very much, Mr. Chairman, and thank you for having this hearing.

I think I would like to yield, if I could, my time to the Chairman of the Full Committee and the author of H.R. 3614, which I am happy to co-sponsor, Mr. Goodling.

Chairman Castle. Mr. Goodling? Mr. Goodling is preoccupied, as we can all see. Mr. Petri is yielding you his time.

Mr. Goodling. Well, first of all, I want to make sure that Mr. Ferriera understands that I produce apples. I think they happen to be the most beneficial commodity.


Mr. Ferriera. I won't argue that.

Mr. Goodling. We have a little trouble with apricots, because they come too early and the frost isn't gone, and so we lose them pretty regularly.

Well, during the '80s, of course, my major responsibility was to educate my side of the aisle to the fact we are not subsidizing the paying customer; we are subsidizing the programs so that free and reduced meals are available to those who cannot afford a meal. But at that time, there were only two States that required that you feed free and reduced price meals unless you were participating in the National School Lunch Program. The easy way out, of course, was just don't participate in the National School Lunch Program. So, we had numerous battles during the '80s in order to preserve the program.

The Ticket to Work Program, of course, is also very, very important. Unfortunately, when you get down to the close of a session and you are trying to balance the budget and you are trying to get out of town and everything else, appropriators sometimes grab where they think it is easiest to grab, and even though we warned them this was not a good place to grab, they did that. So, our hope is--I am sure Mr. Wu's hope is--hat we can find an offset rather than get into the Ag. appropriations, and we will try to do that. But it will be very, very important that we move pretty quickly, because once this becomes part of the daily routine, it will be very difficult, I think, to change it. And I know very much what commodities mean to the School Lunch Program, having been responsible for one as the superintendent quite a few years.

So, we will do our very best, first of all, to find an offset, and, secondly, to convince the Ag. Committee and all that we are not trying to rob any of their special emergency programs that they have out there.

I happen to have, which will affect everyone, one of the greatest emergencies that may hit us in the fruit business, because the plum pox has already hit Pennsylvania, and the only way to deal with it that we know at the present time, according to the Europeans, is to pull every tree, burn every root. That means every fruit tree, and that also means ornamental trees, as I understand it, growing in lawns, depending on the ornamental tree. And it is going to affect the entire country, because it affects a lot more than apples.

So, we will do our very best, and we will ask you all to continue doing your very best to make sure nutritious meals are there. Don't get too carried away on whether you have exactly the right amount of protein, fat, or whatever. You know, it always amazed me, because what we sent you constantly was fat, fat, fat, and then we are telling you don't serve fat. What were you supposed to do with it?



The one time my cooks even got--when the auditors came, they were hit on the fact that they didn't have enough butter in the cookies. I thought we were supposed to get rid of the butter in the cookies.

So, I think we have come a long way, I think, in commodity distribution and the kind of commodities that you are getting and the timeliness, at least I hope we have. Because when I first came here that is all I ever heard each year when you appeared before us, and of course I knew that. All our turkeys came May the 30th. We were getting out of school June the 1st. What were we going to do with the turkeys?

So, again, thank you for what you do to try to make sure that we have nutritious meals. We will do our best, and you do have some good supporters here when I am gone who have been very much out in front in this nutrition business.

Lynn tells me she quits when I quit, and now you have a good friend in Lynn. I don't know--Sally, are you the heir apparent to take over that? But she has been a good friend of all of yours. And I would say, Marshall, your family has really grown.


In fact, the halls are full, because they can't get inside.

And, again, I yield back my time and Mr. Petri's time.

Chairman Castle. Well, thank you very much, Chairman Goodling.

It is very interesting to hear the historical perspective from Mr. Kildee and Chairman Goodling about their knowledge of this program for those of us who haven't been here as long. I think we are maybe equally as supportive but not as knowledgeable, and we appreciate their great testimony on that.

Next, we will call on Mr. Scott, the defender of all things built in Virginia.


Mr. Scott. Thank you, Mr. Chairman, and we are very proud of our aircraft carriers.


Ms. Griffith, I heard two numbers: One, 15 percent to the bottom line and I thought it was $2 per child per year. Can you explain those numbers?

Ms. Stiles. That was me.

Mr. Scott. Okay.

Ms. Stiles. I am from a very small school district in the northeast, which is typical of many of our schools throughout the country. Our ADP is about 850 a day. When I finish at the end of the year, I have about $11,000 left in my budget. We walk very close to the line. So, if you were to include the bonus commodities as part of our entitlement allotment, I would have to go out and purchase more, and it would have an effect of about 15 percent of that.

Mr. Scott. And what was the $2 per child per year figure?

Ms. Stiles. If you use the bonus commodities as part of the 12 percent. Am I clear? No.

Mr. Scott. No. Are you saying the bonus part would represent 15 percent of your bottom line?

Ms. Stiles. Of my own bottom line.

Mr. Scott. And that amounts to $2 per child per year?

Ms. Stiles. That is correct.

Mr. Scott. Per child per year or per child per week?

Ms. Stiles. Per child per year.

Mr. Scott. Two dollars per child per year is 15 percent of your bottom line? I don't understand this.

Ms. Stiles. The loss is $55 million per year divided by 28 million students; $55 million per year divided by 28 million students. It figures out to about $2 per student each year.

Mr. Scott. Okay. How long has the denial of the bonus been in effect? Has anyone actually seen the effect of it? Has it been in effect long enough for someone to have seen the effect of last year's legislation?

Ms. Griffith. No, it has not.

Mr. Scott. Okay. Ms. Griffith, could you say a word about how important it is for students to have a nutritious meal? Do you have any studies that show what effect it might have on the education of the child?

Ms. Griffith. In terms of breakfast, those studies exist and are ongoing of course. I don't believe I can cite any studies that show the effect of the Lunch Program on learning. From personal experience, I can, however, see it, and anecdotally from teachers and principals there are millions of stories that verify the need for that School Lunch Program. Children who do not have a nutritious meal are absent from school more often, and they are not as attentive in class. They tend to be more disruptive. So, when their focus is on hunger, their focus is not on their studies.

Mr. Scott. Do you have specific studies that show a correlation between good nutrition and the availability of school breakfast and lunch on behavior?

Ms. Griffith. Actually, our focus today is on this commodity bill. I don't believe that I can give you those studies today.

Mr. Scott. Okay. Can anybody else?

That is the only question I had, Mr. Chairman.

Chairman Castle. Do you want to yield to Mr. Goodling?

Mr. Scott. I yield.

Mr. Goodling. I would be very, very cautious using a CBO $2 per people business. I think when you talk about individual meals, you are talking about a darn cite more than what a commodity means. You are shipping a load of turkeys, and that means all the difference in the world to a School Lunch Program. So, I think, basically, when we get into CBO scoring and start dividing those kind of numbers, it is pretty dangerous, because I think, actually, to their program it means a darn cite more than $2 per pupil as far as their overall commodities are concerned.

Mr. Scott. Reclaiming my time, Mr. Chairman, I think we also heard that to replace that loss would cost about 15 percent of the bottom line, and I think that shows the significant effect this bill will have.

Mr. Goodling. That is the important figure.

Chairman Castle. Thank you, Mr. Scott.

And we will go to Ms. Woolsey next .

Ms. Woolsey. I would be willing to let Mr. Petri have--no? All right. Thank you.

First of all, I think we should all acknowledge that Mr. Ferriera?

Mr. Ferriera. Ferriera.

Ms. Woolsey. Is here on his 25th wedding anniversary?

Mr. Ferriera. That is correct, today.

Ms. Woolsey. And that has to mean that you were absent yesterday on Valentine's Day?


Mr. Ferriera. That is correct. Hopefully there are some flowers arriving at my home in California about this time.

Ms. Woolsey. I hope so.


I mean, we are all fighting for this program, but we don't want to have to fight for the rest of your relationship too. Thank you for caring this much.

In response to you, Congressman Scott, Bobby? I am talking to you.


Well, when my children turn their back on me when I am talking to them, I want to see their faces.



Mr. Goodling. If the gentlelady would yield, Valentine's Day was yesterday.

Ms. Woolsey. I know that, but he is here today, and yesterday he couldn't have been in California is what I am assuming. So, two days he has missed.

We have a breakfast program, six pilot programs across the Nation that have been funded in the President's last two budgets that will measure the impact of feeding children, and we will have some results on that when we get finished with that program.

Mr. Scott. Will the gentlelady yield?

Ms. Woolsey. What we know will actually have a bottom line.

Mr. Scott. And I would be shocked if it didn't show that the programs increased education and had a positive effect on behavior, which will be reducing crime. So, I would expect some very good numbers to come out of that.

Ms. Woolsey. Well, I think we will, and we are not just feeding poor kids; we are feeding all kids in elementary schools in districts.

Now, here is my question to all of you besides to this nice gentleman who gave up his anniversary and Valentine's Day to be here with us: What will you give up if these cuts are made, not in dollars but in actual--give us some examples of how many sandwiches or things like that, because people get something concrete a lot better than they understand $2 per child per year. So, if you could just tell me if H.R. 3614 isn't passed, what will you not be able to do?

Ms. Griffith. In my district, I think what I would need to do in that case is change some of the menus to use a less expensive entree, one that may not be as appealing to children or may not be the quality of the product that I really would like to serve to children and would have had had the $84,000 that it means to my district been available.

Ms. Woolsey. Okay. Is it an example of a bologna sandwich versus a peanut butter and jelly or turkey versus meatloaf or what?

Ms. Griffith. Maybe a three-ounce chicken patty versus a two-ounce chicken patty or a _

Ms. Woolsey. Okay. Quantity as well as--

Ms. Griffith. Quantity as well as quality.

Ms. Woolsey. Okay.

Ms. Stiles. Yes, I think as the chairman said, that I might not get my turkeys, that I might get some apricots instead, if it were included in my total allotment. So, therefore, it would greatly affect the center of plate items that I put on, which would require me to go out and buy those and not be able to give my kids the options that I am able to with the commodities that I could presently receive through the entitlement.

Ms. Woolsey. Ms. Wheeler?

Ms. Wheeler. Well, being that I am not a school district, I can't answer the question like they can, but in terms of commodity distributing agencies, as I mentioned earlier in my testimony, we would be looking at increasing the value of the per case charge routed to school districts, which means with some of the examples that Ms. Stiles just provided.

I guess if I had to give you an example, I would say that school district throughout the country have an opportunity to receive processed commodity products. Certainly, those commodity products typically are entitlement items, and this bonus rule would play into that. So, it gives the school districts the ability to purchase end products through processors nationally that perhaps they wouldn't be able to do if this bonus issue continues like it is.

Ms. Woolsey. Thank you.

Mr. Ferriera. I think what you could look to as far as agriculture, you could see a tremendous amount of producers literally going out of business, farmers going out of business, because if USDA is limited on the amount of bonus commodities that they can buy and that gets smaller and smaller, that is the only safety valve that a tremendous amount of commodities have. Apricots, that is how we sell USDA apricots, as a bonus.

A whole bunch more commodities are like that. Some of them are part bonus, part entitlement, but you would see a tremendous amount of producers that when we got in those bumper crop years, they could not sell their crops, their market prices. We have seen in the apple industry what has happened to them in the last couple years. You would see a tremendous number of farmers literally going out of business if the bonus amount of commodities couldn't be continued at least where it is today.

Ms. Woolsey. Thank you.

Thank you very much, Mr. Chairman.

Chairman Castle. Thank you, Ms. Woolsey.

I believe everybody who wants to has had a chance to ask questions, but let me ask the members if there are any questions they didn't have a chance to ask that they would like to follow-up with?

If not, I think we will bring this to closure. Obviously, there is a lot of support for what you have testified for here today, which is to your advantage.

I think it is only fair to say, though--and we were kidding a little bit about the aircraft carriers or whatever--but we all have different things that we have to be concerned about as Members of Congress in terms of expenditures. And everything is competing with something else. It might be health care; it might be defense; it might be another educational component; it could be a natural resource issue, or whatever it may be. It could be trying to resolve the problems of Medicare and Social Security, although they are on a slightly different side of the budget.

But it is never as simple. Even when this committee is 100 percent for it, and the Agriculture Committee is 100 percent for it, and I am not suggesting it is even 100 percent, but when the committee's are for it, it is still not all that simple. So, I would encourage you to marshal your resources to keep pushing as far as this issue is concerned. Please don't anyone tell us we were supportive, if you don't mind. Perhaps for those who are less supportive you might want to figure out and do what you have to do.

But I think both Mr. Kildee and Mr. Goodling made this reference too: This may happen differently than a piece of legislation. It may happen in another piece of legislation, Ag. funding or something of that nature. That often is the way things work in Congress. It doesn't happen as directly as you might think it would happen, but it still happens, and that is the bottom line with which you have to be concerned.

So, I just tell you all those things in closing. There is a lot of good will here. There is a lot of intent to try to help you with all this, and I think it will happen. Around here you never want to turn your back for too long or it could be a bit of a problem.

So, that is where we are. I see Ms. Sanchez is coming up. I don't know if she wishes to ask any questions or not.

Ms. Sanchez. No.

Chairman Castle. Okay. Loretta Sanchez is from California. We appreciate her being here as well.

And let me turn to Mr. Kildee to see if he has any final words.

Mr. Kildee. I want to thank the panel and thank yourself and just again thank God for having Bill Goodling on this Committee. This guy is absolutely superb.


Every child in this country is better off because of Bill Goodling, and I personally am a better person because of Bill Goodling, and I thank him for it.


Chairman Castle. Thank you very much, Mr. Kildee.

I would like to thank Chairman Goodling as well. There have been days here when I heard God invoked in other ways in terms of any one of us.


This is a friendly hearing, but sometimes they are not all that friendly.

And we do, again, congratulate him on the award, which I guess he is still yet to receive. He is going to receive shortly after this. He certainly has been a strong supporter of these programs, which, by the way, have bipartisan support, obviously. And I think that is very helpful for your cause as well.

We thank particularly the witnesses who have come and had to take the time to prepare their testimony and to be here and answer questions. We thank all of you for all of your interest. My friends from Delaware didn't have to come from very far away, but we appreciate them being here as well.

And with that, we stand in adjournment.

[Whereupon, at 3:05 p.m., the Subcommittee was adjourned.]