You are therefore correct in comparing $808 million with the FY 1971 appropriation of $894 million, suggesting a $86 million program reduction. There is admittedly such a reduction in New Obligation Authority (NOA). However, due to the late enactment of the FY 1971 appropriation last December, I found it necessary to delay much of the planned expansion of the R&D program, and place $40 million in reserve. We thereby held the OEO program to the $854 million reported in the President's budget last January. More than half of the $40 million reserve has now been released, and possibly more may be. This money is being used substantially to equalize the Fiscal Year 1971 and 1972 Federal funding levels. Thus, while there is a reduction of

$86 million between the two years' appropriations, the lag in the FY 1971 R&D program provides money to eliminate much of the "effective gap" in the two years' funding. To be sure, there are offsetting increases and decreases between one program and another. Specifics are discussed in relation to your other questions, namely those on Local Initiative, Emergency Food and Medical Services, Special Impact, and Rural Loans programs. In addition, the enclosed table provides a comparison of FY 1971 and FY 1972 program funding levels.

2. Community Action Local Initiative Funds The NOA cited in your letter of $368 million and $346 million for FY 1971 and 1972 appeared in the Justification Book published six weeks ago. They represent totals for all Community Action Operations (less Indians), and include Training and Technical Assistance, Senior Opportunities and Services, State Economic Opportunity Offices, and Program Direction costs in addition to Local Initiative. The reduction in Local Initiative NOA is rather from $315 million to $296 million (or $19 million). It is this particular reduction which we originally anticipated would be offset by an increase in local share from 20% to 25%. Such an increase in local share would be consistent with the original intent of the Economic Opportunity Act that OEO funds be used as "seed money" to mobilize other resources to combat poverty. This intent was reaffirmed in the 1967 EOA Amendment in which the minimum non-Federal share requirement was raised by Congress from 10% to 20%. OEO continues to believe that Community Action's continued success depends upon expanding communities' commitments to assisting poor people and to attacking the causes and conditions of poverty at the local level. Many communities are already providing support at or near this 25% level.

Whenever possible, FY 1972 Local Initiative grants will therefore require a 25% non-Federal share. However, we have decided that this requirement should be used to expand local programs, not just to replace Federal dollars. Accordingly, $17 million of the released

FY 1971 reserves will insure maintenance of the present Federal funding contribution in FY 1972, avoid the possible inequities of a rigid 25% sharing requirement, and yet pursue the policy of increased local control and support for community action, both in kind and in cash as available. No specific cash requirement will be imposed.

3. Emergency Food and Medical Services The Emergency Food and Medical Services (EFMS) program was established in the 1967 Amendments as a special effort to provide temporary assistance to meet severe hunger problems. At that time, only about 1,200 of 3,200 U.S. counties participated in Federal Family Feeding programs, reaching 6.9 million people at annual cost of $369 million. Today, these programs are active in all but 10 counties, reaching 13 million people, with a combined FY 1972 budget request of over $2.3 billion. Furthermore, recent reforms in the Food Stamp program will broaden its coverage and alleviate some past operational problems. Thus the Administration now intends to rely more heavily upon Food Stamps to fill gaps which in the past have been the targets of EFMS projects. In addition, the Family Assistance Plan will have greatest effect in precisely those communities with greatest need for food assistance and where EFMS has been a stop-gap measure.

While we ask FY 1972 EFMS funds for only Migrants and Indians, FY 1971 funds have been programmed to maintain a substantial nationwide level of activity through FY 1972 and into FY 1973. This provides adequate time for the Food Stamp reforms to be implemented at the local level. Also, OEO and the Department of Agriculture have taken the initiative in assuring that necessary EFMS functions will continue beyond that time under the latter's Food Stamp authority. Finally, OEO retains EFMS authority to meet conditions of special need not otherwise covered, as they may be determined locally.

In summary, no FY 1972 NOA is being requested for the basic EFMS program because of (a) the growth and increased flexibility in the Food Stamp program, (b) the proposal for FAP, and (c) the ability to continue EFMS activity into FY 1973 through use of prior year funds during transition to other assistance. In addition to retaining emergency authority, we are requesting $3.5 million in FY 1972 for projects serving Migrants and Indians, assuring nutrition assistance to two groups hard to reach through other programs.

4. Special Impact and Economic Development Program The FY 1972 request for NOA for the Special Impact Program is $10.3 million below the FY 1971 level of $36.1 million. On-going projects, however, are not

being cut. The reduction in NOA reflects the fact that on-going projects of the present 36 Community Development Corporations (CDC) will obtain much of their additional investment capital for FY 1972 with prior year funds already in the pipeline. The request for Fiscal Year 1972 is thus adequate to continue the present CDC program, and even permit establishing several new projects. However, it is not expected that the total number of projects will differ substantially from the 36 now in existence.

5. Legal Services The Administration intends to present legislation establishing an independent Legal Services Corporation. The legislation is now being prepared. While I anticipate a proposal to be sent up very shortly, it would not be appropriate for me to comment on the specifics of it until it has been completed. Suffice to say that such legislation will maintain and strengthen a very positive legal services program, and assure its continued integrity.

6. VISTA Reorganization Plan No. 1 of 1971, proposing the merger of several volunteer agencies (including VISTA) into ACTION, does not signify a change in the basic VISTA mission which is clearly mandated in Title VIII of the Economic Opportunity Act. The reorganization is intended to streamline Federally-supported volunteer effort. Consolidation of the array of volunteer programs into ACTION will provide the American volunteer with a broader scope than the alleviation of poverty, and the anti-poverty effort with a wider selection of volunteer skills. The President is requesting an increase of $20 million for ACTION in FY 1972. This additional sum of money will be used in the domestic area, largely for poverty projects. Thus, an expanded anti-poverty volunteer effort should be made possible under the Administration proposal, not a decrease.

7. Rural Loan Program The Administration is phasing out this program beginning in the current fiscal year, primarily because of lack of evidence that these small loans were significantly increasing the incomes of the rural poor. Funds appropriated in FY 1971 are expected to provide for continued servicing of outstanding loans at least through FY 1972. Arrangements for funding the phase-out beyond FY 1972 are now under consideration.

8. & 9. Manpower Revenue Sharing Act and Manpower Training. - The record indicates a mutual interest on the part of the Administration and the Congress in increasing the State and local government role in

planning and operating comprehensive manpower programs. Consolidation of existing EOA and MDTA work and training authorities under the proposed legislation does not intend or anticipate demise of existing programs, but rather their rationalization into comprehensive local programs designed for particular local problems. National categorization and fragmentation of manpower efforts have worked to the contrary.

As an interim measure, prior to passage of new Manpower legislation, OEO and DOL are exploring possible revisions of the delegation agreement for the work and training programs authorized by Title I of the Economic Opportunity Act. We are considering an experimental plan for designating certain selected State and local governments for prime sponsorship of Title IB and IE programs. This would permit them to develop comprehensive plans in conjunction with CAMPS committees and consolidate all existing EOA work and training programs under one prime sponsorship. Such designation would be confined to localities where government and CAA agree to the arrangement.

The Community Action Agencies' record in manpower service delivery will insure them a continuing role in the operation of manpower programs at the local level under Manpower Revenue Sharing or under any revised delegation arrangement which involves State and local governments in manpower programming. Certainly prior to Manpower Revenue Sharing, I anticipate prime sponsorship to continue with CAAs in the majority of cases. However, to place CAAs in a better position to help mayors prepare for their expanded roles in manpower, OEO plans to fund selected CAA's in major urban areas to work with mayors and the CAMPS committees on comprehensive planning and programming.

10. Transfer of CAA's The Administration has proposed that Community Action be administered at the Federal level with such other operational efforts as Model Cities in a new Department of Community Development. The date for such reorganization is of course related to the progress of proposed legislation. Hopefully, it would take place as early as possible to eliminate much of the overlap and duplication of effort among individual programs and provide a more effective approach toward meeting overall community development needs. OEO's experience to date has shown that to eliminate the causes of poverty, not simply alleviate its conditions, healthy development of multiple aspects of a community is required.

The Special Impact Program funded under Title I-D, as well as the following Community Action Programs would be placed in the new department Local Initiative Programs, State Economic Opportunity Offices Programs, Community Action Training and Technical Assistance, and Senior Opportunities and Services. These programs, when transferred,

would remain under their existing statutory authority initially, until new legislation could be enacted that would more appropriately align them with other related programs. Prior to reorganization OEO will continue to support CAAS.

The President's

11. Transfer of CAA funds to "Revenue Sharing" proposals for revenue sharing are an attempt to move decision-making power closer to the people through their directly elected officials. They are thus consistent with Community Actions emphases on local initiative and local control. In fact, revenue sharing represents a logical next step closer to the local community by removing Federal review of, and intervention in a local community's programs and priorities. Elaborate Federal guidelines and monitoring activities have frequently frustrated programming for local needs. Community support and cooperation have furthermore been demonstrated to be essential ingredients of effective community action. January 1, 1973, has been set as the target date for completion of the transition, allowing a full 18 months to smooth the process of transition and allow time for adequate preparation of all the parties involved. Separate legislative action will be proposed subsequent to enactment of the basic Community Development Special Revenue Sharing.

It

Over the past two years OEO has placed particular emphasis upon improving CAA relationships with local governments. This has resulted in a new level of effective cooperation on behalf of the poor. has also strengthened the CAA's position in negotiating with mayors to continue or expand their existing role in outreach, operation of manpower programs, etc. under revenue sharing. Similarly, OEO has under development a greater role for state governments in community action (particularly in rural areas), by increasing general staff capability, providing special program development grants, and expanding the state Special Technical Assistance Program. We anticipate that the SEOO's

and CAAS together will play a significant role in revenue sharing for rural areas. In summary, the capability of CAAs and their broad base of community support will insure a vital role under revenue sharing.

12. Continuing Function of OEO Upon enactment of the President's proposals, OEO would continue in the Executive Office of the President as an independent agency. As such it has three distinct functions affecting anti-poverty policy and programming in the Federal Government. The first is to continue on the cutting edge of social R&D. OEO provides an independent base from which objective near and long-term research, experimentation, demonstration and pilot programs can be carried out across disciplines and functional areas.