The modified program was an immediate success. Program operations, which seriously slowed down in the latter half of the 1954-55 school year, almost tripled the second year-annual program expenditures rose from $17 million to $46 million.

The Department has received excellent cooperation in this program-from local school people who wanted their children to have more milk; from State educational agencies which assumed responsibility for the program in addition to their school lunch responsibilities; and from the dairy industry which has been most helpful to both the Department and participating schools.

Striking increases in consumption have been obtained under the modified programs. Three Department studies of the impact of the program in individual school systems show increases ranging from about 50 to over 100 percent in the volume of milk served over and above the milk included in type A or B lunches. We have copies of these studies that we will leave with you. We have also recently reviewed a study made by the University of Illinois which showed that, on a statewide basis, school milk consumption rates doubled between 1953 and 1957.

The program also has enabled more schools to serve milk to children. For example, over 7,000 schools that came into the program in the first year were newly constructed schools or schools that previously had not maintained a milk service for children.

Altogether in 1957, children consumed 3.6 billion half pints of milk under the combined operation of the school lunch and special milk programs-1.8 billion in type A and B school lunches; an additional 1.8 billion under the special milk program. This total of 3.6 billion half pints compares with a consumption of 1.6 billion half pints in 1954 when only the school lunch program was in operation.

The largest part of that increase represents new consumption, as milk became more available in schools and as prices were reduced to stimulate increased sales among children.

The extension of the program to summer camps and child-care institutions has presented a special problem for, unlike schools, camps and institutions generally do not sell milk to children as a separately priced item. Therefore, the school reimbursement system would not apply.

At the time the amendment to extend the special milk program to camps and institutions was pending, members of this subcommittee will recall our mutual concern over reports indicating that some camps and institutions believed the purpose of the pending amendment was to help them pay for the milk they were already serving children. The reports of both the House and Senate committees which accompanied the bills emphasized that the purpose of the program was to increase consumption, not to just subsidize milk already being served. I should like to outline the methods we have used to increase milk consumption in camps, some of the difficulties we have encountered, and the operating method we would like to inaugurate for the 1958 campaign season.

Last year, each camp or institution was assigned a consumption base, representing the amount of milk normally served to children. Reimbursement was then paid for the full cost of additional milk served to children over and above that consumption base. However,

the maximum payment allowed was 3 cents per half pint for all the milk served to children.

The base period for camps was the 1956 camping season; for other institutions, the base period generally was the month preceding the month of application. The consumption base was calculated as the amount of milk served per child per day in order to automatically adjust for changes in attendance or the number of days of operation after the camp or institution entered the program. In camps, particularly, attendance and the length of the camping season varies substantially from year to year.

As the year progressed, we encountered numerous operating difficulties. To learn more about the source of our problems, last fall we conducted a detailed survey in 208 participating camps and institutions about a 7 percent sample. The results of this survey were most revealing to us. We found there are serious inherent difficulties in attempting to operate the program under the historical base approach.

First, most camps and institutions do not keep the kinds of records needed to determine past consumption rates. In over 15 percent of the survey camps and institutions, milk purchase records were not available. Many institutions, particularly camps, did not have accurate attendance records. Most of the camps did not known how much milk adults drank. All of these records are essential in determining per-child consumption rates. And this is a problem we will continue to encounter even with more experience, because we cannot control the kind of records kept until the camp or institution begins to participate in the program.

Second, we found it is difficult to actually find a normal past consumption period, because milk consumption rates vary from month to month, even when calculated on a daily per-child basis. The monthly rate in an orphanage, for example, might be 3 half pints one month and 4 half pints in another month.

Third, we found that many sponsors, once they entered the program, had difficulty in maintaining records so that the increases in milk consumption could be determined. This was especially true for camps, and camps represent our largest institutional outlet.

In camps, the child population changes frequently—at least every 2 weeks and, sometimes, as often as every 3 or 4 days. One group leaves after lunch; another group arrives for dinner. The only accurate attendance measure would be a meal attendance count. City playground programs find it impossible to keep accurate attendance records.

Participation generally is on an informal basis-a child may come and leave the playground several times a day. (This latter situation is also typical of settlement and neighborhood houses.

While our survey did help to emphasize the inherent problems in the historical base approach, it also had its positive side.

First, while institutional outlets are of much smaller scope than the regular school program, the availability of Federal reimbursement payments did enable many camps and institutions to serve more milk to children.

For example, among the camps included in our survey, average daily per child consumption increased slightly more than 40 percent during the 1957 camping season-from 1.5 to 2.1 half pints. We do

not believe that is the full extent of the increase that could be achieved it was the first year of operations and camps did have difficulty with the historical base system.

In addition, the survey showed that sponsors of these institutions do want to serve their children more milk. At the time of application, each camp or institution was required to outline its plan for increasing milk consumption such as a new time of service or larger servings with meals. Over 90 percent of the camps and institutions included in our survey actually put their proposed plan for increasing consumption into effect.

We are proposing, therefore, that a simplified method of operation be inaugurated in time for the 1958 camping season, under an incentive reimbursement system.

We recognize that the potential for increasing consumption is small relative to schools-fewer outlets and fewer children are involved and camps operate for only a few weeks each year. But, our survey demonstrates that Federal assistance does stimulate sponsors to encourage increased milk consumption.

Each participating camp or institution would continue to submit. a plan for increasing consumption and would be provided an incentive payment on each half pint served to children. Thus, because payments would increase as milk service increased, sponsors would have a financial incentive for meeting or exceeding their basic consumption plan. Moreover, it would provide, we believe, greater equity to those camps and institutions that previously had emphasized milk in their food service.

Camps and institutions operate on a relatively fixed food budget and thus the level of the incentive payment would need to be one that would about cover the cost of additional milk served, except, we believe, in those institutions which have never served milk to children. While we would want to explore the matter further, we now believe the incentive payment should be about 2 cents per each half pint served to children.

You will recall that our survey camps increased consumption from a daily average of 1.5 half pints to 2.1 half pints the first year.

If, this summer, that rate could be further expanded to 2.5 half pints, under the 2-cent incentive payment, the camp would receive a total daily payment of 5 cents for each child (2.5 half pints times 2 cents). In return, we would be getting a one-half pint increase in the daily per-child milk consumption rate.

We would not reimburse for milk consumed by adults. For those camps and institutions which could not keep records of adult consumption, we would establish a system for estimating such consumption.

Already we have been told by camps that the program is hard to understand and too complicated to fit the type of food service they operate. Therefore, unless we do make some basic simplifications, we feel many camps and institutions will find the records problem insurmountable and will drop out of the program.

If we continue the present arrangement, our audit problems—arrising out of the difficulty of verifying base consumption records-would steadily increase. Most of these audit exceptions would be small and the cost of auditing and adjusting claims would be excessive in rela

tion to the amounts involved. Moreover, sponsors who became involved with minor exceptions because of recordkeeping problems would be further discouraged from participation.

In addition, we would need to substantially increase our administrative staff in order to provide the supervision required under the historical base approach. If we can simplify the mechanics, we can spend our time encouraging and showing institutions how to increase consumption, rather than showing sponsors how to master some of the arithmetic of the historical base approach.

We feel, too, that with a simplified approach we can make further progress in getting States to assume responsibility for program operations in camps and institutions. Currently, we are administeringthat is the Federal Government through the Food Distribution Division the institutional program in 21 States and Alaska; in 5 additional States, we handle the program in nonpublic or churchsponsored outlets. In line with the expressed intent of this subcommittee, we have vigorously negotiated with States on this matter. Although there may be some situations where State-agency operation is not possible under State statute, such as in church-sponsored outlets, we intend to continue our efforts in this direction.

Mr. ABERNETHY. Thank you, Mr. Davis.

The authorization calls for an expenditure up to $75 million. You are not spending the entire amount? The entire amount has not been required up to now?

Mr. DAVIS. No.

Mr. ABERNETHY. It is running about $68 million?

Mr. DAVIS. This current year yes; sir.

Mr. ABERNETHY. And you anticipate a slight increase during this year?

Mr. DAVIS. The $68 million represents the slight increase for fiscal 1958.

Mr. ABERNETHY. For 1958?

Mr. DAVIS. Yes, which is an increase over the $61 million in fiscal 1957.

Mr. ABERNETHY. So in fiscal 1957 you actually did not find the need or the outlet, proper outlet I should say, for as much as $14 million?

Mr. DAVIS. Yes, sir.

Mr. ABERNETHY. There are 2 or 3 things that have always disturbed me about the program, not as to the objectives, but the mechanics of it. Are you confident that this program is not just picking up the ordinary milk check that the schools would be expending in their school-lunch program?

Mr. DAVIS. No, sir. We do not feel that that is occurring. As we pointed out in the statement in the year before the program began the combined milk served under the school-lunch program, the type A lunch, plus the milk only, the type C, was only 1.6 billion half pints. The total school-lunch program, milk, this past year, 1957, was 1.8, an increase of 200 million half pints.

Mr. ABERNETHY. The program was inaugurated not necessarily in the interests of the children but for the disposal of surplus milk, that is right, isn't it?

Mr. DAVIS. The purpose was to increase consumption of milk by children; yes, sir.

Mr. ABERNETHY. So as to dispose of the surplus?

Mr. DAVIS. Yes.

Mr. ABERNETHY. That was the objective. I don't think there is any argument about that, is there? All right. Do you require that before a school or any other institution authorized under the current law can participate in the school lunch program that they must first serve "X” quantity of milk along with their regular school lunch?

Mr. DAVIS. Yes, sir.

Mr. ABERNETHY. You require that?

Mr. DAVIS. They must serve milk with the school lunch. Let me put it the other way around, we do not reimburse for any milk that is served with the school lunch.

Mr. ABERNETHY. Suppose there is a school which does not serve any milk with its school lunch, has no record of having served milk with the school lunch, then you come along and supply a pint of milk for that lunch under this program-or do you first require them to supply a certain amount of milk under the school-lunch program and then supplement that with supplemental milk?

Mr. DAVIS. We require under the school-lunch program that they serve a complete lunch including milk wherever milk is available.

Mr. ABERNETHY. If it isn't available for that purpose it would not be available for this purpose?

Mr. DAVIS. That is right, sir. I would not say that there could not be isolated instances where there might be some reimbursement for school lunches without milk and at the same time the special milk program be operating, but it would be in an isolated instance and it would be something that once we learned about it we would correct.

Mr. ABERNETHY. All right; now from the standpoint of the disposing of the surplus milk, which was the basis for the inauguration of this program, no one, with all deference to anyone, they were not concerned about children getting milk, the tears were being shed for the surplus of milk. If this program did not exist, would the milk which is being distributed through this program, would it not in the long run be acquired through Commodity Credit purchases? Mr. DAVIS. Yes, sir.

Mr. ABERNETHY. Under the price support program?

Mr. DAVIS. Yes, sir. We feel very definitely that it would. Mr. ABERNETHY. In other words, the cost in the long run would be the same to the Government?

Mr. DAVIS. As a matter of fact the cost could be less to the Government to subsidize the sale through normal channels, locally, of fluid milk than it would be to have to buy the resulting surplus in manufactured dairy products.

Mr. ABERNETHY. Would it not be more desirable to switch this program to be a direct complement of the school lunch program? Mr. DAVIS. We feel that it already is to some extent.

Mr. ABERNETHY. To all intents and purposes it is, except it isn't for the record.

Mr. DAVIS. I might mention this, it has created rather a serious problem in some schools where the reimbursement rate for the school lunch program is down around 21% or 3 cents, and that is for the service of a complete lunch. If they got out of the school lunch