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UNITED STATES DEPARTMENT OF AGRICULTURE
Food and Nutrition Service

Statement of Eric M. Bost, Under Secretary
Food, Nutrition, and Consumer Services
Before the Subcommittee on Agriculture, Rural Development,
Food and Drug Administration and Related Agencies

March 10, 2005

Thank you, Mr. Chairman, and members of the subcommittee for this opportunity to present the Administrationís fiscal year 2006 budget request for USDAís Food, Nutrition, and Consumer Services (FNCS).

I would like to begin my testimony by introducing the members of the FNCS leadership team joining me at the table this morning. Accompanying me are Kate Coler, Deputy Under Secretary for Food, Nutrition, and Consumer Services; Roberto Salazar, Administrator of the Food and Nutrition Service (FNS); Dr. Eric Hentges, Executive Director of the Center for Nutrition Policy and Promotion (CNPP); and Dennis Kaplan, Deputy Director for Budget from USDAís Office of Budget and Program Analysis (OBPA).

I am here today to discuss with you the Presidentís budget request that demonstrates the Administrationís unwavering commitment to our Nationís 15 nutrition assistance programs Ė programs that ensure a nutrition safety net for the Nationís children, elderly and low-income households. I am proud of our accomplishments and proud to work for the President who provides clear and continued support for these programs that protect our children, elderly and low-income households from hunger; improve their nutritional intake; and help to prevent the health risks associated with poor nutrition and physical inactivity.

Three principles have continuously guided our administration of these programs:

1) promoting access and awareness of the programs so that all eligible persons can make informed decisions about whether to participate with dignity and respect;
 
2) addressing the growing epidemic of obesity, with its staggering implications for both National health care costs and individual quality of life; and
 
3) enhancing the integrity with which our programs are administered. For these programs to be successful, our stewardship of public resources needs to inspire the trust and confidence of the American people.

The Presidentís budget for fiscal year 2006 requests a record level of $59 billion dollars in new budget authority to administer these vital programs. We will continue our efforts to improve the publicís awareness of our programs and to, wherever possible, simplify our administrative processes. By doing so, we can better ensure all eligible persons have open and informed access to the nutrition assistance programs. Many potentially eligible individuals do not take advantage of our programsí benefits and assistance. Clearly, we have more work to do to reach those who are eligible for our programs.

Our 15 programs provide nutrition assistance, including both access to healthy food and nutrition education and promotion to support and encourage a healthy lifestyle. With this nutrition mission in mind, and the Center for Nutrition Policy and Promotionís (CNPP) focus on providing the Food Guidance System that is the basis of nutrition promotion for the nutrition assistance programs as well as for the broader population, we play a critical role in the integrated Federal response to the growing public health threat posed by overweight and obesity.

Finally, we will strive to enhance the efficiency and accuracy with which our programs are delivered. In fiscal year 2003, the most recent year for which data is available, we have once again achieved a record level of Food Stamp payment accuracy with a combined payment error rate of only 6.64 percent. This is the fifth consecutive year of improvement, lowering the error rate by over 4 percentage points and making it the lowest rate in the history of the program. We will maintain our efforts with State partners toward continued improvement in the payment error rate. While I am confident that the coming year will bring more good news about the administration of the Food Stamp Program, we do have concerns that the Farm Billís provisions governing sanctions and incentives may diminish Statesí determination to maintain this progress. We will also continue efforts to address the issue of proper certification in the school meals programs in a manner that improves the accuracy of this process without imposing barriers to the participation of eligible children. We will also begin new analytical work under this budget request to better assess the accuracy of eligibility determinations in the Child and Adult Care Food Program.

Hard work of USDA staff, of the Congress, and of our State and local program partners has accomplished many things, but important work remains to be done. This budget request provides critical support for this work. I would like to review the highlights of the request and the improvements in performance and results it is designed to support.

Program Access

At its most basic level, ensuring program access must begin with making certain that sufficient resources are provided to these programs so all who are eligible and in need can have ready access to benefits. The Presidentís fiscal year 2006 budget requests funds to support record levels of participation in the Food Stamp Program and the WIC Program. The Administrationís strong commitment to adequately fund these critical programs acknowledges the inherent difficulties in anticipating future demand for program services, and provides for contingency funding should program costs exceed our estimates.

For the Food Stamp Program, the budget continues the $3 billion contingency reserve appropriated in fiscal year 2005 but also offers, as an alternative, a proposal for indefinite budget authority for program benefits. This authority would be an efficient way to ensure benefits are funded as economic circumstances change. In WIC, the contingency reserve appropriated in fiscal year 2005 would be replenished to the $125 million level and would be available to the program should participation or food costs exceed the levels anticipated in the budget.

Adequate program funding, however, is not enough to ensure access to program services for those who need them. The design of our programs must not create barriers that prevent eligible people in need of service from accessing our programs. We have recently implemented legislative changes brought about by the Farm Bill that expanded eligibility and simplified program rules to improve access to the Food Stamp Program and have worked diligently to encourage our State partners to take advantage of the new options. We remain committed to the fundamental principles of improving program delivery and ensuring access of eligible people who wish to participate in our programs as we move forward with the implementation of program changes enacted as part of the reauthorization of the Child Nutrition and WIC Programs last year.

Combating the Epidemic Overweight and Obesity

The statistics surrounding our National epidemic of overweight and obesity are staggering. Nearly 365,000 deaths a year are related to poor diet and physical inactivity; poor diet and inactivity are the second leading cause of preventable death after smoking. Obesity is costing Americans $123 billion in healthcare costs each year. About 60 million American adults are obese; and, if this trend continues, this number will rise to 69 million by 2010; 64 percent of adults aged 20-74 are either overweight or obese.

Overweight, obesity and physical inactivity are major risk factors for chronic diseases such as diabetes, cardiovascular disease and cancer each of which undermines the quality of life, leads to premature death, and contributes to the costs I just mentioned. Diabetes has increased by 49 percent in the past 10 years, reflecting strong correlation with obesity; 18 million people have diabetes, and it is increasingly diagnosed in children and adolescents; 1 in 3 persons born in 2000 will develop diabetes if there is no change in current health habits. Between 1971 and 2000, womenís daily intake of calories rose by 22 percent, while men increased their daily intake by 7 percent. Recent trends among children are alarming as well. In the past 20 years, the percentage of children who are overweight has doubled and the percentage of adolescents who are overweight has more than tripled. If we do not stem this tide, this may be the first generation of children that will not have a longer life expectancy than their parents.

The Federal nutrition assistance programs can play a critical role in combating this epidemic by providing not just access to healthful food, but also promoting better health through nutrition education and promotion of physical activity. These FNS program services, along with the work of the CNPP to improve the diets of all Americans, are a key component of the Presidentís HealthierUS initiative. I believe the American public is served well by USDAís continual contributions to addressing the critical nutrition- and health-related issues facing us today. The CNPP continues to have an integral role in the development and promotion of updated dietary guidance and nutrition education. The Dietary Guidelines for Americans (Guidelines), published jointly every 5 years by the USDA and the U.S. Department of Human Services (HHS), is the cornerstone of Federal nutrition policy, allowing the Federal Government to speak with one voice. With the latest edition of the Guidelines released January 12, 2005, we have provided the American public with updated science-based advice that promotes health and helps to reduce the risk of major chronic diseasesóincluding addressing obesity through diet and physical activity. For the first time the two Departments created a consumer brochure and released it along with the Guidelines to help consumers make smart choices from every food group, find a balance between food and physical activity and get the most nutrition out of their calories.

While the Guidelines will continue to serve the American public as a representation of science-based Federal nutrition policy, USDA is completing its work on a comprehensive Food Guidance System, replacing the Food Guide Pyramid, which will serve Americans well by translating the principles of the Guidelines and interpreting them into healthful food choices. This new comprehensive Food Guidance System, due to be released later this spring, will provide a framework that the American public can use for selecting the types and amounts of foods they need for a nutritionally adequate diet. With the release and targeted promotion of both the Guidelines and the USDAís Food Guidance System, I believe the American public will be motivated to make more healthful food choicesóand thus reduce the trends related to overweight and obesity and other nutrition-related adverse outcomes. Both the Guidelines and the new Food Guidance System will be widely and consistently promoted across the nutrition assistance programs through the Eat Smart. Play Hard.ô campaign, and within programs through Team Nutrition, WIC nutrition education, and Food Stamp Program nutrition education.

Enhancing Program Integrity and Delivery

With this budget request, we are asking the Nation to entrust us with over $59 billion of public resources. We are keenly aware of the immense responsibility this represents. To maintain the high level of public trust that we have earned as good stewards of the resources we manage, we will continue our ongoing commitment to program integrity as an essential part of our mission to help the vulnerable people these programs are intended to serve.

This is not a new commitment. As I noted earlier, in fiscal year 2003, the most recent year for which data is available, the Food Stamp Program achieved a record high payment accuracy rate of 93.4 percent. We have also been working to develop strategies to improve the accuracy of eligibility determinations in our school meals programs Ė an issue of mutual concern to all those that care about these programs. The Federal administrative resources provided for in this budget will allow us to advance our close work with our State and local program partners on both of these essential integrity initiatives Ė continuing both our successes in the Food Stamp Program and our intensified efforts in school meals.

In the remainder of my remarks, Iíd like to touch on several key issues:

Food Stamp Program

The Presidentís budget anticipates serving a monthly average of 29.1 million persons in fiscal year 2006, an increase of 2.6 million over our projections of the current fiscal year. Our $40.7 billion request fully funds this level of service.

While the Presidentís budget anticipates continuing improvement in the Nationís economy, Food Stamp Program participation traditionally continues to rise for some time after the aggregate employment begins to improve. We have made a concerted effort over the last three years to raise awareness of the benefits of program participation and encourage those who are eligible, especially working families, senior citizens, and legal immigrants, to apply. In the past 6 months we have provided 16 grant awards of approximately $2 million to community and faith-based organizations to test innovative food stamp outreach strategies to underserved, eligible individuals and families. While these efforts have brought more people into the program, many eligibles remain who could be participating but are not. We continue to aggressively promote the message that Food Stamps Make America Stronger, in the sense that the program puts healthy food on the tables of low-income families and has a positive impact on local economies. Particular attention has been focused on those legal immigrants who had their eligibility restored by the Farm Bill, the elderly, and working families.

While we seek to encourage all who are eligible and in need to participate in the program, we also need to ensure access to the program is administered in an equitable manner across all States. The budget contains a proposal to eliminate categorical Food Stamp eligibility for Temporary Assistance for Needy Families (TANF) participants who receive only TANF services including, for example, an informational and not cash benefits among persons with income above the normal food stamp threshold. This proposal, with partial implementation in FY 2006, is expected to impact 161,000 persons and reduce benefits by $57 million. When fully implemented in FY 2007, this change is estimated to affect approximately 312,000 individuals and save $113 million annually. The Presidentís proposal restores equity among participants and ensures that Food Stamp benefits go to individuals with the most need while retaining categorical eligibility for the much larger number of recipients who receive cash assistance through TANF, SSI and General Assistance.

The Budget also requests a continuation of a policy included in last yearís Appropriations to exclude special military pay received by members of the armed forces serving in combat zones when determining food stamp benefits for their families back home.

Over the next year, we will also be working with the Congress to consider renaming the Food Stamp Program to better reflect its purpose of providing nutrition assistance and promoting health among low-income families. No additional funding is being requested to support the name change.

Also included in the budget is a proposal to add the Food Stamp Program to the list of programs for which States may access the National Database of New Hires. Access to this National repository of employment and unemployment insurance data will enhance Statesí ability to quickly and accurately make eligibility and benefit level determinations, improving program integrity. This proposal has modest administrative costs associated with it, but is expected to produce a net program savings of $2 million annually beginning in fiscal year 2007.

To ensure the adequacy of resources available to the program, and as an alternative to the traditional contingency reserve, we have proposed indefinite authority for program benefits and payments to States and other non-Federal entities.

Child Nutrition Programs

The Presidentís budget requests $12.4 billion to support the service of appealing, nutritious meals to children in public and private schools and child care facilities through the Child Nutrition Programs in fiscal year 2006. In the National School Lunch Program, we anticipate serving almost 30 million children per day in fiscal year 2006, for a total of more than 5 billion meals served during the fiscal year. Similarly, the School Breakfast Program will serve approximately 9.6 million children each school day for a total of more than 1.6 billion meals. The request for budget authority is an increase of $634 million from levels appropriated in fiscal year 2005. In fiscal year 2006, FNS will implement program changes and new activities resulting from the 2004 reauthorization of these programs. These include efforts to promote fruit and vegetable consumption, including the newly authorized Fruit and Vegetable Program, and our continuing efforts to promote healthy behaviors through support for implementation of local wellness policies. To complement the agencyís efforts, we have created the HealthierUS Schools Challenge to encourage communities to improve the foods offered at school and other aspects of a healthy school nutrition environment and to recognize schools that have made those improvements.

WIC

In fiscal year 2006, the Presidentís budget request of $5.51 billion anticipates supporting critical services to a record monthly average participation of 8.5 million women, infants and children through the Special Supplemental Nutrition Program for Women, Infants and Children (WIC). This is an increase of 300,000 participants per month from anticipated fiscal year 2005 participation levels. The $125 million contingency reserve, appropriated in fiscal year 2003 and reestablished in fiscal year 2005, remains available to the program should participation or food costs exceed our projections. We currently anticipate using a small portion of the reserve in fiscal year 2005; the Presidentís budget replenishes the reserve to the $125 million level.

The budget also reflects the Administrationís commitment to work with its State partners to manage program costs to ensure future access to this critical program for all who are eligible and seek its services. We propose to cap the level of Nutrition Services and Administration (NSA) funding at 25 percent of the total level grants to States. We also are renewing our commitment to continue the long successful partnership with our State partners to contain food package cost growth through sharing of best practices and providing technical assistance in the implementation of food cost containment strategies. New funding of $3 million is requested in the budget to explore and develop new food cost containment strategies.

Commodity Supplemental Food Program

The Commodity Supplemental Food Program (CSFP) serves elderly persons and pregnant and post-partum women, infants and children. The budget requests $106.8 million for this program, the same level appropriated, after rescission, in fiscal year 2005. With level funding, we anticipate a reduction in participation of approximately 44 thousand persons.

We face difficult challenges and decisions with regard to discretionary budget resources. The Department will pursue all means to minimize the impact of straight-line funding for the program. However, we have chosen to seek level funding for this program for a several reasons. First, CSFP is not available in all States. Second, it is only available at a limited number of sites within those participating States. Finally, a Program Assessment Rating Tool (PART) analysis revealed a number of program weaknesses and concluded that the program is unable to demonstrate results for its target population. We believe our limited resources are best focused on those programs that are universally available to serve these needy populations.

The Emergency Food Assistance Program (TEFAP)

TEFAP plays a critical supporting role for the Nationís food banks. This support takes the form of both commodities for distribution and administrative funding for Statesí commodity storage and distribution costs. Much of this funding flows from the States to the faith-based organizations, the cornerstone of the food bank community. The Presidentís budget requests the fully authorized level of $140 million to support the purchase of commodities for TEFAP. Additional food resources become available through the donation of surplus commodities from USDAís market support activities. State administrative costs, critical support to the food bank community, are funded at $50 million in the Presidentís request.

Nutrition Programs Administration

We are requesting $140.8 million in our Nutrition Programs Administration account, which reflects an increase of $2 million in our Federal administrative funding. This account supports Federal management and oversight of a portfolio of program resources totaling $59 billion, over 60 percent of the USDA budget. This modest increase will partially offset the personnel-related costs. As in past years, we will be carefully managing our administrative resources seeking cost savings to maintain our high performance at this funding level.

While we understand the difficult budgetary circumstances the Federal Government now faces, FNCS must address the serious challenge posed by the impending retirement of close to 30 percent of its workforce over the next five years. I have begun that process by improving the management of human capital planning processes, strengthening services provided to employees, and implementing programs designed to improve the efficiency, diversity, and competency of the work force. With just nominal increases for basic program administration in most years, FNCS has reduced its Federal staffing levels significantly over time. We have compensated for these changes by working smarter Ė re-examining our processes, building strong partnerships with the State and local entities which administer our programs, and taking advantage of technological innovations. We are extremely proud of what we have accomplished and continue to seek new ways to meet the challenges before us.

Mr. Chairman, I appreciate the opportunity to present to you this record level budget and what it means for the millions of Americans that count on us for nutrition assistance. I would be happy to answer any questions you may have.


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