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SPECIAL ANALYSES




BUDGET OFTHE UNITED STATES

FISCAL YEAR

SPECIAL ANALYSES




BUDGET OFTHE UNITED STATES

FISCAL YEAR

FOREWORD
This volume of Special Analyses, Budget of the United States, 1969,
contains facts and figures on special aspects of the President's budgetary recommendations transmitted in The Budget of the United States
Government, 1969. Thirteen special analyses are included, of which
six (A through F) are reprints of analyses already printed in the
budget document.

GENERAL NOTES
1. All years referred to are fiscal years, unless otherwise noted.
2. Detail in the tables, text, and charts of this volume may not
add to the totals because of rounding.

For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.G. 20402 - Price 70 cents




TABLE OF CONTENTS
Page
5
14
24
__
34
55
70
77
94
115
135
155
175
183

A. Comparison of new and old budget concepts
B. Federal transactions in the national income and product accounts
C. Public enterprises, trust funds, agency borrowing, and investment
D. Investment, operating, and other budget outlays
E. Federal credit programs
_
F. Civilian employment in the executive branch
_
G. Federal activities in public works
H. Federal education, training, and related programs
I. Federal health programs
J. Federal research, development, and related programs
K. Federal aid to State and local governments
_-_
L. Principal Federal statistical programs
M. Foreign currency availabilities and uses




3




SPECIAL ANALYSIS A
COMPARISON OF NEW AND OLD BUDGET CONCEPTS

This analysis provides a comparison of the budget totals under
the new concept used in this budget with two older concepts used
heretofore.1 It also presents, as a transitional matter, a full table based
upon the old concept of the "administrative budget." It continues
the presentation of a gross table on the flow of funds, as a supplementary measure of Federal financial data.
T H E NEW CONCEPT OF THE BUDGET

In this budget, a unified comprehensive summary budget statement
is utilized to present the total financial plan for the Government, along
the lines recommended by the President's Commission on Budget
Concepts in its report of October 10, 1967. The basic principles are
that the budget encompasses all programs of the Federal Government
and its agencies, with the outlay and deficit divided between the
expenditure account and loan account, and with proprietary receipts
offset against outlays, regardless of the funding structure at any
particular time. Payments between funds are eliminated from the
totals, as is conventional in statements that consolidate data for
a number of funds. These principles are explained on pages 48 to 50 of
this document.
The financial plan also includes appropriate attention to congressional action on the budget, a comprehensive statement of the Federal
debt with a distinction between that which is internal and that which
is held by the public, and a redefinition of participation certificates in
loans to be a part of the debt rather than a sale of assets.
Two of the fundamental recommendations of the Commission could
not be adopted in this budget because, as the Commission report
indicates, more time is required to provide an appropriate accounting
basis for the data. These relate to the use of the accrual basis, instead
of the cash basis, for the presentation of receipts and expenditures,
and the identification of subsidies on loans (including the capitalization of the interest subsidies at the time the loan is disbursed).
OLD MEASURES OF THE BUDGET

The administrative budget.—While the budget documents have for
many years covered all of the types of funds administered by the
Government, certain funds were totaled separately from others to
form the "administrative budget." This administrative budget
covered receipts and expenditures of the Federal funds—that is, funds
owned by the Government. It excluded funds held in trust by the
Federal Government. In the case of public enterprise funds, mtratTransactions in the Federal sector of the national income and product accounts, another measure of Government finances, are set forth and explained in Special Analysis B.




THE BUDGET FOR FISCAL YEAR 1 9 6 9

governmental funds, and reimbursements which by law are mingled
with appropriations, the administrative budget offset receipts against
expenditures; otherwise, it presented receipts and expenditures gross,
except for refunds.
While the administrative budget was not coextensive with either
the finances requiring annual action or the expenditures subject to
legislative and administrative control, it was often the focus of
attention as the principal financial plan for the Government. Actually,
it always included a number of appropriations and funds in which
money becomes available each year without new action by the executive or legislative branches, the most important being interest on the
public debt. Similarly, it excluded a few items on which annual
action is required, but which are in the nature of trust funds.
Consolidated cash statement—The consolidated cash statement
sought to reflect the transactions between the Government and the
public. It was "consolidated" in the sense that it included both Federal
funds and the trust funds. It was "cash" in the sense that its totals
were basically on a checks-paid basis, as distinguished from the
checks-issued basis used in the administrative budget.
Since the trust funds, particularly those derived from taxes and
social insurance premiums, have become of greater importance, the
consolidated cash statement took on a greater significance in the
presentation of Federal finances, and in permitting analysis of the
relationship between Federal finances and the remainder of the
economy. This statement followed the same rules as the administrative budget with respect to grossing and netting; most trust funds
were reported gross, but a few, designated as trust revolving funds,
were included on the basis of the net excess of expenditures over
receipts. The consolidated cash statement also included among
Government-sponsored enterprises two privately owned groups—the
Federal home loan banks and the Federal land banks—which at one
time were mixed ownership in nature.
ELEMENTS OF DIFFERENCE

Table A-l presents "bridges" between the measures of receipts
and expenditures used in this budget and the older measures of the
administrative budget and the consolidated cash statement. Table
A-2 makes a similar presentation for the measures of borrowing and
other financing presented in this budget, as compared with the
changes in the net borrowing by Federal funds, related to the administrative budget, and the net borrowing from the public, related to the
consolidated cash statement.




SPECIAL ANALYSES
Table A-1. RELATION OF BUDGET TOTALS TO OLDER MEASURES
(In billions of dollars)
Description

Reconciliation to
administrative budget
1967
1969
1968
actual estimate estimate

RECEIPTS
Unified, comprehensive budget totals
155.8
149.6
Additions or deductions (—), differences
in:
Coverage (adjusted for intragovernmentals x ):
-37.0 -38.9
Trust funds
D.C. municipal funds
Grossing of proprietary receipts:
2.8
To be continued in fund structure
2.1
.4
ProDosed for netting in new funds
Interfund and intragovernmental transactions:
Employee payments for retirement
-1.3
-1.2
Employe^ payments of Government
for social security
.5
.5
Social security annuitants' payments
for supplementary medical insurance
.4
.8
Definition of receipts: Seigniorage
118.6
Total, receipts under older concepts. 115.9

Reconciliation to
1967
actual

1969
1968
estimate stimate

149.6

155.8

178.1

.3

.4

.4

2.0

4.5
.4

4.1

4.2

-1.4

-1.2

-1.3

-1.4

.6

.5

.5

.6

.2

c
*

135.6

153.6

-.6
*
158.9

-.8
*
181.1

178.1

-43.9

OUTLAYS (FORMERLY EXPENDITURES)
Unified, comprehensive budget totals
Additions or deductions (—), differences
in:
Coverage (adjusted for intragovernmentals *):
Trust funds
D.C. municipal funds
Privatelv owned institutions
Grossing of proprietary receipts:
To be continued in fund structure
Proposed for netting in new funds
Interfund and intragovernmental transactions
Timing:
Debt issued in lieu of checks:
International lending agencies.
Other program payments
Interest
Other interest accruals, checks outstanding, and clearing accounts. _.
Deposit fund liabilities
Definition of cash, monetary assets
Definition of borrowing:
Sales of participation certificates, net.
Increase in balances held for buyers of
participation certificates
Sales of Defense family housing mortgages, net
Totals, outlays under older concepts

158.4

175.6

186.1

158.4

175.6

186.1

-30.9

-35.1

-36.6

*
.3
-3.9

*
.3
1.6

.4
2.8

-.1
2.8
.4
— 7

.1

2.1

2.0

4.5
.4

4.1

4.2

-.8

-.8

-1.2

-1.4

-1.6

*
-.7

*
-.6

*
-.6

-.4

-.4

-3.4

-2.3

-.2

-.6

-.4

-.7

.7
-1.1
.1

-3.5

-4.7

-3.1

-2.6

.1

.3

.3

.1

.1

.1

.1

.1

.1

125.7

137.2

147.4

155.1

176.0

188.7

"Less than $50 million.
1
The adjustments for coverage take account of the change in the intragovernmental transactions
caused by inclusion or exclusion of funds which have transactions with the Federal funds.




8

THE BUDGET FOR FISCAL YEAR 1969

Significant differences are as follows:
Coverage.—Trust funds must be subtracted from the new budget
totals in moving toward the administrative budget concept. The
District of Columbia municipal funds, and certain transactions of
Government sponsored, but privately owned corporations (Federal
land banks and Federal home loan banks), for which the U.S. Treasurer acts as fiscal agent, must be added to the new budget to move
toward the consolidated cash statement.
Grossing of proprietary receipts from the public.—The new budget
offsets against expenditures the proprietary receipts from the public,
both in the Federal funds and the trust funds, regardless of fund
structure. The older budget concepts permitted such offsets only in
accordance with the fund structure—that is, when the receipts are
deposited in public enterprise funds, trust revolving funds, etc. The
proposals to create new public enterprise funds such as for the Rural
Electrification Administration and the power marketing agencies of
the Department of the Interior, have no effect on the totals under the
new concept; under both of the older concepts, however, the adoption
of such proposed legislation would reduce the receipts and expenditures
from thfe levels which would otherwise prevail.
Interfund and intragovernmental transactions.—Under each concept,
payments between funds covered by that concept are netted out to
avoid duplication. However, there are differences in the application
of this principle. The Government's payments into the social security
trust funds, representing \\z contributions as employer of military
personnel and covered civilian personnel, are treated as an intragovernmental transaction in the new budget, just as the Government's
payments into the civil service and foreign service retirement and disability funds are treated there and in the consolidated cash statement.
On the other hand, the new budget does not treat as an intragovernmental payment the employee's share of retirement or social security,
which is collected by payroll deductions. Nor does the new budget
treat as an intragovernmental transaction the monthly payments for
supplementary medical insurance which are collected from social
security or other annuitants through deductions from their annuity
checks. The older consolidated cash statement had given intragovernmental treatment to such deductions. The new concept does not
diminish the recorded expenditures in payment of earnings or
annuities because of the payroll deduction metnod of making collection
from the payees.
Timing.—The new budget follows closely the checks-issued principle
of the conventional accounts, and therefore differs from the old administrative budget only in one minor regard with respect to timing.
In accordance with the recommendations of the President's Commission on Budget Concepts, payments to international lending organizations are recognized in the new budget only when the cash is
actually paid out, whereas the administrative budget recognized the
expenditure at the time that the public debt figures were increased
through the issuance of notes to these organizations.




9

SPECIAL ANALYSES
Table A-2. RELATION OF FINANCING TOTALS TO OLDER MEASURES
(In billions of dollars)

Description

Reconciliatio: i to
administrative 1>udget
1967
actual

Reconciliation to

1969
1968
estimate estimate

1967
actual

1968
1969
estimate estimate

FINANCING
Unified comprehensive budget deficit
Additions of deductions ( - ) to borrowing, differences in:
Coverage:
Trust funds _
_
Borrowings from D.C. government
Privately owned institutions.
Timing
Definition of cash, monetary assets
Definition of borrowing
Net change in borrowing
Additions or deductions ( - ) to other financing, differences in:
Coverage:
Trust funds
Other
_
Timing
Definition of cash, monetary assets
Definition of borrowing
Definition of receipts..
__
Net change in other financing
Deficit under older concepts

8.8

19.8

8.0

8.8

19.8

8.0

6.5

4.3

7.1

-.6

*

.1

—. o

*
*
2.8
-.6

-3.3

-2.2

i

-.3
-3.4

-.4
-4.6

-.7
-3.0

-3.9
-.6
.5
-2.5

2.5

-.7

3.5

-7.4

-2.3

.1

-.4

-.4

.2

.7
.1
-.4
-.3

*
*
-.4

-.4

—. L

1.6
f.

-.3
.1
-.8

.3
-.4

.3
-.2

*

*

*

-1.4

-.5

.3

.1

-.4

-.4

9.9

18.6

11.8

1.5

17.2

7.6

*Less than $50 million.

Several adjustments are necessary, however, to move from the new
budget toward the old consolidated cash statement, since the latter
was on a checks-paid basis. The exclusion of deposit funds from the
coverage of the new budget is a reconciling item; the exclusion is made
because deposit funds generally represent a timing adjustment with
respect to transactions of other funds; the most common uses of deposit funds are to account temporarily for receipts before they are
earned, and to account temporarily for certain expenditures after the
check in payment of the liability has been drawn but pending final
settlement. Such funds are also used to account for moneys deposited
with the Government as banker.
Definition of cash and monetary assets.—The United States drawing
rights in the International Monetary Fund (which represent a part
of the Government's equity in the fund) are now treated like cash.
Hence, the exercise of those drawing rights, under which cash is
moved from the IMF to the U.S. Treasury, no longer affects receipts,
expenditures, borrowing, or redemption of borrowing. Also, the exchange of notes for cash in connection with subscriptions to the IMF
do not affect the new budget totals. In the older concepts, certain
transactions with the IMF affected the totals.



10

THE BUDGET FOR FISCAL YEAR 1969

Definition of receipts.—Seigniorage, representing the difference
between the face value and the intrinsic value of coins manufactured,
increases the Government's cash without an increase in liabilities and
has therefore been a receipt in the administrative budget. It has been
excluded from the consolidated cash statement of receipts because it
did not come from the public. The new budget similarly excludes
seigniorage.
Definition of borrowing.—Both of the older concepts treated the
sale of certificates of participation in loans as the sale of an asset,
and therefore as a receipt offsetting expenditures in the public enterprise funds concerned. However, the portion of the loan repayments
received by the Government and retained for the certificate holders
until maturing of the certificates was accounted for in a trust fund.
On recommendations of the President's Commission, such sales are
now treated as borrowing. Under these circumstances, the repayments
on loans collected by the Government are appropriately deposited
into Federal funds. The new budget also treats Defense family
housing mortgages as a form of borrowing.
Borrowing.—Several of the factors named above also affect the
figures on borrowing. The reconciliation of debt oustanding under the
three concepts is as follows (in billions of dollars):
1967
actual

1968
estimate

1969
estimate

Public debt issued by the Treasury
326,221 347.031 358,908
Agency debt issued by authorized agencies (TVA, FHA, etc.), other
than participation certificates and trust fund issuances
910
1,099
1,333
Portion of above debt held by Federal funds ( - ) 1 . . . .
-2,736 -3,637 - 4 , 2 7 0
Total net debt outstanding, administrative budget concept....

324,394 344,493 355,971

Participation certificates issued to public
_._
6,119
9,504
11,737
Defense family housing mortgages outstanding
_
2,034
1,954
1,871
Agency debt issued by trust funds to public...
_
7,821
10,617
12,033
1
Public and agency debt held by trust funds ( - )
- -67,881 -73,630 -81,376
Public debt held by the IMF and international lending organizations

(-)

-3,328 -2.937 -2,237

Total net debt outstanding, unified comprehensive budget concept
_._
_. 269,160 290.000 298.000
Participation certificates and defense family housing above.._
—8,153 —11,458 — 13,608
Debt issued in lieu of checks other than to IMF and international
lending organizations ( - )
-13.321 -13.916 -14,466
Debt issued to public by Federal land banks and Federal home loan
banks
_
8,239
8,119
10,979
Public and agency debt held by Federal land banks and Federal home
loan banks ( - )
_
_._
-3,851 -2,100 -2,100
Debt issued for IMF drawings, net of Exchange Stabilization Fund
holdings
_
_
_.
828
828
828
Debt issued by trust revolving funds, not included in consolidated
cash computations ( - )
_
_.
-93
-91
^104
Public debt held by trust revolving funds not included in consolidated
cash computations..
11
12
13
Debt issued by the District of Columbia Armory Board
20
20
20
Public and agency debt held by District of Columbia agencies.
—65
—70
—73
Total net debt outstanding, consolidated cash concept
1

252,773 271,344 279,489

After adjusting for reclassification of participation sales trust fund.

Financing other than borrowing.—The remaining adjustments in
table A-l that do not affect borrowing (except for those which are
self-balancing within table A-l) generally affect either the cash accounts



11

SPECIAL ANALYSES

or the liabilities related to the cash accounts. One item in this group is
the accumulation of trust fund balances, which, in conventional administrative budget terms, represent a change in liabilities. In both the
consolidated and comprehensive budget concepts, trust fund balances,
like the Federal fund balances, are merely a reservation within the
total balances on the books of the Treasury that result from the
cumulative surplus or deficit.
T H E "ADMINISTRATIVE

BUDGET"

Table A-3 presents, according to customary classifications, the
administrative budget as derived from the adjustments set forth in
the preceding tables.
Table A-3. THE "ADMINISTRATIVE B U D G E T " (in millions of dollars)
Description

1968

1967

1969

RECEIPTS BY SOURCE

Individual income taxes. __
Corporation income taxes.
Excise taxes
Estate and gift taxes
Customs.._
__
Miscellaneous receipts
Interfund transactions
Total, administrative budget receipts..

61,526
33,971
9,278
2,978
1,901
6,87 >
-682

67,700
31,300
9,509
3,100
2,000
5,644
-678

80,900
34,300
9,908
3,400
2,070
5,669
-660

115,849

118,575

135,587

250
87
28

285
95
32
4,808
6,520
856
73,930

296
101
33
4,900
7,220
910

EXPENDITURES BY AGENCY

Legislative Branch
The Judiciary
Executive Office of the President
Funds appropriated to the President.
Department of Agriculture
Department of Commerce
Department of Defense—Military
Department of Defense—Civil
Department of Health, Education, and Welfare. __
Department of Housing and Urban Development.
Department of the Interior
Department of Justice
Department of Labor
Post Office Department
Department of State
Department of Transportation
Treasury Department
Atomic Energy Commission
General Services Administration
National Aeronautics and Space Administration..
Veterans Administration
_
Other independent agencies
Allowances for:
Civilian and military pay increase
Contingencies
Interfund transactions.
Total, administrative budget expenditures.
Excess over receipts (-f) or expenditures (—)




4,141

5,741
757
67,664
1,343
10,794
493

1,516

409
512

1,141
414
1,467

1,401

13,156
495

1,542
443
713
1,087

76,881
1,371
14,515
1,249
1,717
504

712
767
431

2,264

421
1,570
15,493
2,333

675
5,426
6,197
543

648

673

4,805
6,325
804

4,575
6,818

-682

100
-678

-660

125,718

137,182

147,363

-9,869

-18,607

-11,776

14,538

2,093
16,440
2,546

1,322

1,600
350

12

THE BUDGET FOR FISCAL YEAR

1969

As in the case of the basic tables of the budget, the amounts shown
include transactions under both existing and proposed legislation.
The receipts, therefore, include the expected income from the proposed
income tax surcharge, as well as lesser amounts from other tax proposals. The expenditures include those to be financed from Federal
funds under the President's legislative program, as well as those
recommended under existing legislation, and its renewal or extension.
FLOW OF GOVERNMENT-ADMINISTERED

FUNDS

In recent years there has been presented in the special analyses
of the budget, a consolidated statement of Government-administered
funds on a gross basis. This statement presents the flow of moneys
between the Federal Government and the public. It has been on a
checks-issued basis and its coverage has been substantially the same
as the new concept. It excludes borrowing and repayment thereof.
The Commission recommended that the compilation of such gross
figures be continued as supplementary information. Table A-4 prer
sents such a statement.
Table A-4. GROSS FLOW OF GOVERNMENT-ADMINISTERED
(In millions of dollars)
Description

RECEIPTS BY SOURCE
Individual income taxes
Corporation income taxes
_
Employment taxes
Unemployment insurance
Premiums for insurance and retirement.
_.
Excise taxes
_
_.
Estate and gift taxes
__
Customs
__
Other receipts from the public:
General and special funds
Public enterprise funds
Trust funds (excluding trust revolving funds)
Trust revolving funds
Reimbursements to appropriations and other funds.
Total receipts from the public
PAYMENTS BY FUNCTION
National defense
International affairs and finance
Space research and technology
Agriculture and agricultural resources
Natural resources
Commerce and transportation
Housing and community development
Health, labor, and welfare...
__
Education
Veterans benefits and services
Interest
General government
Allowances for:
Civilian and military pay increase
Contingencies
Total payments to the public
Excess of payments (—)




1967
actual

61,526
33.971
27,823
3,652
1,853
13,719
2,978
1,901

1968

67,700

31,300

29,730
3,660
2,049
13,848

FUNDS
1969

80,900
34,300
34,154
3,594
2.275

3,100
2,000

14,671
3,400
2,070

5,280
14,812
1,836
9,549
2,450

4,838
14,755

5,070
16,542

181,350

188,971

2,291
13,238
2,630
215.135

74,245
6,032
5,439
18,859
3,920
12,953
4,313
39,017
4,186
7,937
10,561
2,709

80,389
6,334
4,812
20,184
4,1%
14,234
6,370
45,311
4,702
8,195
11,147
2,803

83,979
6,635
4,589
22,075
4,308
15,285
5,897
50,419
4,879
8,405
11,655
3,015

10
0
208,775

1,600
350
223.090
-7,954

190,173
-8,823

2,035
11,481
2,475

13

SPECIAL ANALYSES

It differs from the unified comprehensive budget, only with respect
to grossing and netting and the distribution here of the nonfunctional
adjustments shown elsewhere. Its deficits are the same. The items
which are here grossed may be summarized as follows (in millions of
dollars):
1968
estimate

1967
actual

Receipts conventionally offset against expenditures:

Receipts of public enterprise funds (table C-1)
_
Receipts of trust revolving funds (table C-5)
Reimbursements to appropriations and other funds:
Department of Defense
Other agencies
Other receipts offset against expenditures in the new budget (table
12)

1969
estimate

14,812
9,549

14,755
11,481

16,542
13,238

2,249
200

2,278
197

2,432
198

4,948

4,430

4,617

31,758

Total

33,141

37,027

Table A-4 is not fully comparable to similar information presented
in recent budgets (table B-9 in the 1968 budget), because of the following conceptual changes that were set forth earlier in this analysis:
• Definition,of borrowing (sale of participation certificates);
e Definition of cash and monetary assets (IMF);
• Timing of payments to international lending organizations;
• Government payments as employer for social security.
COMPARISON OF RESULTS

Table A-5 summarizes receipts, expenditures, and deficits under the
new concept, the old administrative budget, the consolidated cash
statement, and the flow of funds statement included above.
Table A-5. COMPARISON OF RESULTS UNDER FOUR CONCEPTS
(In millions of dollars)
Description

Unified, comprehensive budget:
Receipts
Expenditures and net lending

T967

_

__

Flow of Government-administered funds:
Receipts from the public
Payments to the public




_

__-

118,575
137,182

135,587
147.363

18,607

11,776

158,823
175,981

181,146
188,725

1,546

17,157

7,579

181,350
190,173

__

7,954

153,596
155,142

m

19,805

9,869

"Consolidated cash" statement:
Receipts..
Expenditures (including lending)

178,108
186,062

115,849
125,718

Excess of expenditures.

155,830
175,635

8,823

The "administrative budget":
Receipts
Expenditures (including lending)

Excess of payments

1969

149,591
158,414

Budget deficit

Excess of expenditures

1968

188,971
208,775

215,135
223,090

8,823

19,805

7,954

SPECIAL ANALYSIS B
FEDERAL TRANSACTIONS IN THE NATIONAL INCOME AND PRODUCT
ACCOUNTS

The budget is designed to serve many purposes:
• It represents a proposed allocation oj resources to serve national
objectives, between the private and public sectors, and within
the public sector;
• It is an economic document which embodies the taxing and spending policies of the Government for promoting high employment,
price stability, growth of the national economy, and maintainance
of the Nation's balance of payments;
• It sets forth the President's requests to Congress for appropriation
action on existing or new programs, and changes in tax legislation;
• It is a report to the Congress and the people on how the Government
has spent the funds entrusted to it in past years.
No single budget concept can completely satisfy all purposes. The
budget is designed to provide a unified picture of the Federal Government's finances, while other series—such as the Federal sector of the
national income accounts (NIA)—focus on specific areas of concern
for various other purposes.
In past years, the budget document included a special analysis
which concentrated on explaining the relationship among the three
most widely used measures of Federal financial transactions: (1) the
administrative budget, (2) consolidated cash statement (receipts
from and payments to the public), and (3) the Federal sector of
the national income accounts. In accordance with the recommendations
of the President's Commission on Budget Concepts, neither the administrative budget nor the consolidated cash will be utilized as major
measures of Federal finances. The relationship between the new budget
and these two older concepts is discussed in detail in Special Analysis A.
The budget document and related Treasury reports provide detailed
information on the finances of the Federal Government. The national
income accounts of the United States are the most widely used
measures of aggregate economic activity in the country. This analysis
is designed to exjSain the relationships of the budget to the Federal
sector of the national income accounts, and to present the budget
estimates in national income terms.
This analysis is divided into three major sections: (1) the size and
trends of major components in the Federal sector; (2) the relationship
between the Federal sector and the budget; and (3) definitions of the
major categories of the Federal sector.
TRENDS IN FEDERAL SECTOR RECEIPTS AND EXPENDITURES

Total expenditures in the Federal sector accounts budget are estimated to rise by $13.9 billion between fiscal 1968 and 1969, receipts by
$21.4 billion. As a consequence, the Federal sector deficit will decline
by $7.5 billion, from $10 billion in 1968 to $2.5 billion in 1969.
14



SPECIAL ANALYSES

15

Trends in Federal sector receipts.—Rising levels of economic activity expand the Nation's tax base and provide increased sources of
Federal revenues. Between 1952 and 1967, Federal sector receipts more
than doubled despite major decreases in tax rates and liberalization of
tax provisions. Receipts in the national income accounts increased from
$65.1 billion in fiscal 1952 to $147.6 billion in 1967. Part of this
growth, however, has resulted from increases in social security tax
rates and wage ceilings. Consequently, Federal receipts have kept pace
with the growth in the economy.
Two major factors account for most of the changes in Federal sector
receipts in 1969:
(1) The level of economic activity,—Personal tax and nontax receipts
consist mainly of income taxes and tend to increase as personal income
rises. Since income tax rates are progressive, there is a larger than proportional increase in these receipts as more people enter the higher
income brackets. Corporate profits taxes, which are closely related to
corporate profits, are also influenced by the level of economic activity
and the profitability of business corporations. Since business taxes consist mainly of excise taxes on certain goods and services, such as
tobacco, alcohol, automobiles, and telephones, they depend largely on
the level of purchases of these items. Social insurance contributions
expand with the growth in employment and earnings.
(2) Changes in tax rates.—The 1969 budget recommends a 10%
income tax surcharge on individuals and corporations. In addition,
contributions for social insurance in fiscal 1969 will be affected by
recent legislation which increased the ceiling on wages subject to
social security taxes from $6,600 to $7,800 beginning January 1, 1968,
and which raised the combined employer and employee tax rate from
8.8% to 9.6% effective January 1, 1969.
Trends in Federal sector expenditures.—The $13.9 billion rise in
Federal sector expenditures in 1969 compares with increases of $16
billion in 1968 and $23.2 billion in 1967. The upsurge in defense purchases, starting with the large-scale commitments of American troops
in Vietnam, is expected to continue in the year ahead, but at a much
reduced rate. Federal sector expenditures, like receipts, have grown
significantly over the past 15 years. The demands of a growing population, an expanding economy, and an unsettled world have resulted in
new and expanded Federal programs to meet these needs. Nevertheless,
despite a doubling of Federal sector expenditures from 1952 to 1967,
about the same proportion of the gross national product was devoted
to Federal programs in 1967 as prevailed 15 years previously. This
year, Federal sector expenditures will account for 20.9% of the GNP,
slightly lower than the 21.1% accounted for 15 years ago.
Significant shifts, however, have occurred among the several categories of expenditures, reflecting world conditions, domestic problems,
and basic Government policy. As chart B-l indicates, the largest
proportion of Federal outlays is for national defense purchases of goods




16

THE

BUDGET

FOR

FISCAL YEAR

1969

and services, which increased rapidly early in the 1950's due primarily
to the requirements of the Korean war. Since that time defense spending as a percent of the total declined to a low point of 7.5% in 1965, and
has risen somewhat since as a result of the conflict in Vietnam; they
are expected to reach 9.1% of GNP this year, compared with 13.6%
in 1953.
F e d e r a l Sector Expenditures

Major Categories as a Percent of Total

Percent

100-

Defense Purchases

20-

1949
Fiscal Years




1954

1959

1964

1969

17

SPECIAL ANALYSES

Aside from space, nondefense spending for goods and services has
been a very staole proportion of total expenditures. Nondefense purchases have been subject to especially heavy economy efforts recently
in order to mitigate inflationary pressures. Expenditures for space
exploration have grown rapidly in recent years, rising from $401
million in 1960 to a high of $5.9 billion in 1966; they have declined
somewhat since then, and are expected to total $4.6 billion in 1969.
Grants-in-aid reflect Federal efforts to assist State and local governments in meeting pressing domestic needs. Most of the items included
in the grants-in-aid category in the Federal sector accounts are also
included in the discussion of Federal aids in Special Analysis K of this
budget. Table B-l shows both grants and domestic transfer payments—broken into several major groupings—for the past 10 years.
Table B-1. GRANTS-IN-AID AND DOMESTIC TRANSFER PAYMENTS
(In billion, of dollars)
Irants-in-aid
Fiscal year

I960 .
1961
1962
1963
1964
1965
1966
1967
1968
1969

Domestic transfer payments

Public
assistance

Highways

All other

Retirement and
disability

Unemployment
insurance

2.1
2.2
2.4
2.7
2.9
3.3
3.5
4.2
5.2
5.8

2.9
2.6
18
3.0
3.6
4.0
3.9
4.0
4.3
4.3

1.9
2.1
2.4
2.6
3.3
3.6
5.3
7.2
8.5
9.9

16.5
18.1
20.1
21.9
23.1
24.3
28.1
29.7
32.5
36.4

2.6
4.0
3.5
2.9
2.8
2.4
2.0
2.0
2.4
2.4

_...
_..

Hospital
and supplemental
medical
insurance

3.2
4.8
5.5

All other

1-5
5
5
.6
1.4
.6
1 7
2.8
3.3
3.6

Domestic transfer payments (which are mainly pensions, unemployment benefits, and veterans benefits) account for the second largest
share of total Federal expenditures—an estimated 25.9% in 1969. During the late 1950's there was a rapid decline in expenditures for the
GI bill but recent legislation is providing benefits for veterans who
were ineligible under the earlier programs, while social security benefits under both retirement and health programs have expanded rapidly
in recent years. A significant part of the war on poverty is in the form
of transfer payments. In general, the growth of these programs has
been the result of efforts to meet the needs of the poor, sick, and
elderly—an obligation that our Nation cannot afford to shirk.
Table B-2 shows Federal expenditures as a percent of total GNP,
for alternate years, since 1952. These expenditures have been remarkably stable as a portion of our Nation's economy.

300-700 0—68




2

18

THE BUDGET FOR FISCAL YEAR

1969

Table B-2. FEDERAL SECTOR NIA EXPENDITURES AS A PERCENT OF GNP
Purchases
Fiscal year

Total
expenditures

Defense

NASA

1952
1954
1956
1958
I960.
1962
1964
1966
1968
Excluding Vietnam:
1966
1968

19.6
20.5
17.0
18.9
18.4
19.6
19.1
18.4
20.9

12.4
12.6
9.6
10.2
9.1
9.3
8.3
7.6
9.1

17.5
17.9

6.8
6.4

Domestic
transfer Grantsin-aid
payments

Nondefense
Other

0
0.1
.2
.7
.8
.6

,5
,7
,7
.6
.7

2.5
2.9
3.1
4.0
4.2
4.6
4.5
4.4
5.3

.8
.6

.6
7

4.4
5.3

1.4
2-1

(^
i)
i)

All
other

0.7
.8
.8
1.1
1.4
1.4
1.6
1.8
2.2

2.5
2.1
2.1
2.2
2.2
2.4
2.3
2.2
2.1

1.8
2.2

2.2
2.1

i Less than 0.05%.

RELATIONSHIP OF THE BUDGET TO THE FEDERAL SECTOR OF THE
NATIONAL INCOME ACCOUNTS

The national income accounts depict the Nation's current production, income, and spending in separate major categories which are
designed to aid understanding of the operations of the economy and
to facilitate useful economic analysis. These accounts attempt to
include all current income and production activities and do not measure transactions—such as loans—which represent an exchange of
assets rather than income or production. Loan transactions have a
significant economic impact, affecting both income and output, but
they are best analyzed as part of monetary rather than fiscal policy.
Special Analysis E (Federal credit programs) and the means of financing statement (p. 61 of the budget) are both designed to facilitate a
study of the monetary policy implications of the budget.
Budget outlays are divided into two major segments—the expenditure account and the loan account. All transactions included in the
loan account are excluded from the Federal sector, so this discussion
will focus exclusively on how the Federal budget expenditure account
relates to the Federal sector account.
Table B-3 shows the major differences between the receipt-expenditure account in the budget and the Federal sector estimates. These
differences are explained in the following paragraphs.
Employee retirement—The Civil Service and Foreign Service retirement programs are financed by employer and employee contributions.
Retirement benefits under these programs are recorded as expenditures in the budget and as transfer payments in the Federal sector




19

SPECIAL ANALYSES

Table B-3. RELATIONSHIP OF THE RECEIPT-EXPENDITURE ACCOUNT
TO THE FEDERAL SECTOR NIA (in billion* of dollars)
1967
actual

1968

1969

RECEIPTS
149.6

155.8

178.1

1.7
1.1
-4.8

1.9
1.2
2.2

2.0
1.2
1.1

147.6

161.1

182.5

Total budget expenditures (excludes net lending)._.

153.2

169.9

182.8

Employer share, employee retirement (grossing)..
Other netting and grossing
Defense timing adjustment
Lending in the expenditure account
Dollar expenditures to finance agricultural exports
Other

1.7
1.1
-.4
-1.4
-.8
1.6

1.9
1.2
.3
-1.7
-.7
.2

2.0
1.2
.4
-2.1
-.5
1.1

155.1

171.1

185.0

Total budget receipts

_._

Employer share, employee retirement (grossing)..
Other netting and grossing...
...
Adjustment to accruals
Other.
._
Federal sector, NIA receipts

0)

EXPENDITURES

Federal sector, NIA expenditures
1

Less than $50 million.

accounts. The contributions of Government agencies, as employers,
to these retirement trust funds are deducted from total budget expenditures since these contributions represent intragovernmental
transactions. However, the NIA accounts consider Government payments for employee retirement to be part of the compensation paid
to Government employees who, in turn, make their trust fund contributions. Therefore, the Federal sector accounts include the Government's contributions to employee retirement funds in both receipts
and expenditures. Likewise, Federal payments on behalf of its employees to the old-age and survivors disability insurance programs
are included in Federal sector receipts and expenditures. These adjustments affect total receipts and expenditures equally and thus do
not alter the budget surplus or deficit.
Other netting and grossing.—The budget normally counts as receipts only income from taxation or revenues due to the exercise of
governmental power to compel. Money received in the course of business type transactions, therefore, are normally shown as offsets against
expenditures. For instance, receipts from two major insurance programs operated by the Veterans Administration (National Service
Life Insurance and United States Government Life Insurance) are




20

THE BUDGET FOR FISCAL YEAR 1969

netted against expenditures in the budget since these programs are
voluntary, business-type activities. However, in the NIA the receipts
are treated in the same way as receipts from compulsory Government
insurance programs. This adjustment also has no impact on the
budget surplus or deficit.
Timing adjustments.—At the present time the budget counts receipts
when the cash is collected, and most expenditures when the checks are
issued to pay the bills. In the NIA receipts are counted when the income is earned or when the transaction giving rise to the receipt, occurs,
even though the cash may be received at a later point. Accrued expenditures record outlays when the production or work takes place
rather than wben the payment is made. This permits changes in receipts and expenditures to more accurately reflect the impact of the
Government on the economy. Since the accrual concept is followed in
the national income accounts receipts, they differ from budget receipts
by the amount of estimated accruals wnich are not collected in the
time period covered.
Defense purchases are recorded in the Federal sector at the time of
delivery of goods instead of when they are paid for; work in process
on fixed-price contracts is counted as change in business inventories.
Both the budget and the Federal sector record public debt interest
when it accrues.
Lending.—The loan account in the budget includes only those
domestic credit transactions where there are definite requirements for
full repayment of the loans, plus all foreign loans made on commercial
terms. Those credit programs which do not meet these requirements
are included in the expenditure account. The Federal sector, however,
excludes not only all lending transactions included in the loan account,
but also some credit programs included as expenditures in the budget—such as foreign loans in AID and tobacco and foreign loans in the
Commodity Credit Corporation (CCC). Certain credit transactions
in the expenditure account—like most CCC nonrecourse commodity
loans—are treated as purchases of goods under the national income
accounts concept.
Dollar expenditures to finance agricultural exports.—The Commodity
Credit Corporation facilitates the export of agricultural products
by acquiring the foreign currencies used to pay for such commodities.
This expenditure of dollars is included in the budget but excluded
from the Federal sector on the ground that it is an exchange of financial
assets: dollars for foreign currencies. When the foreign currencies
thus acquired are spent, they are then counted as Federal sector
expenditures.
Other.—This category includes some of miscellaneous adjustments
largely for certain specialized aspects of the national income accounts




SPECIAL ANALYSES

21

such as purchases and sale of land, which are included in the budget
but not in the national income accounts. Certain nondefense timing
adjustments are included here because of the difficulty in separating
them from other adjustment categories included herein. It also includes adjustments for the expenditure of foreign currency acquired
as described in the paragraph above.
MAJOR CATEGORIES OP THE FEDERAL SECTOR OP THE NATIONAL
INCOME ACCOUNTS

Federal sector receipts.—Federal receipts on a national income
basis largely reflect the tax payments or liabilities of individuals
and of corporations and other businesses arising out of incomes earned.
They also include other tax and nontax receipts. These receipts are
classified into the following four categories: (1) personal tax and
nontax receipts, (2) corporate profits tax accruals, (3) indirect business
tax and nontax accruals, and (4) receipts from contributions for
social insurance.
1. Personal tax and nontax receipts consist mostly of individual income taxes, estate and gift taxes, fines, fees, and donations.
2. Corporate profits tax accruals comprise the Federal tax liability
incurred and accrued on corporate earnings during the specified year
or period. While the budget treats Federal Reserve payments of earnings to the Treasury as miscellaneous receipts, these are included in the
corporate profit tax category in the Federal sector.
3. Indirect business tax and nontax accruals consist primarily of
excise taxes, customs duties, and Federal receipts from rents and
royalties.
4. Contributions for social insurance are composed chiefly of payroll
taxes for retirement, disability, hospital, and unemployment insurance,
plus employer and employee contributions to retirement funds of
Federal Government employees and premiums for federally operated
veterans and medical insurance programs.
Table B-^4 shows the adjusted receipts and expenditures after
reclassification into the national income accounts categories.




22

THE BUDGET FOR FISCAL YEAR

1969

Table B-4. FEDERAL RECEIPTS AND EXPENDITURES IN THE NATIONAL
INCOME ACCOUNTS (in billions of dollars)
Description

1967
actual

1968
estimate

1969
estimate

64.6
31.4
15.9
35.7

71.0
34.3
17.1
38.7

83.8
37.2
18.1
43.4

147.6

161.1

182.5

84.5
(67.6)
(16.9)
39.8
(37.7)
(2.1)
15.4
10.1
5.3

92.8
(74.4)
(18.4)
44.9
(43.0)
(1.9)
18.0
10.7
4.6

99.4
(78.8)
(20.6)
49.9
(47.9)
(2.0)
20.0
11.2
4.5

155.1

171.1

185.0

-7.5

-10.0

-2.5

RECEIPTS, NATIONAL INCOME BASIS
Personal tax and nontax receipts
Corporate profits tax accruals
Indirect business tax and nontax accruals
Contributions for social insurance

_

Total receipts, national income basis
EXPENDITURES, NATIONAL INCOME BASIS
Purchases of goods and services.—
_
Defense
_._
_
Nondefense
Transfer payments
Domestic ("to persons")
_
_
Foreign
___
_
Grants-in-aid to State and local governments
Net interest paid
_
Subsidies less current surplus of Government enterprises
Total expenditures, national income basis
Surplus ( + ) or deficit (—), national income basis

_._

Federal sector expenditures.—Federal expenditures on a national
income basis represent either purchases of goods and services or
outlays which directly affect current levels of income. These expenditures are classified in the following five categories: (1) purchases of
goods and services, (2) transfer payments, (3) grants-in-aid to State
and local governments, (4) net interest paid, and (5) subsidies less
current surplus of Government enterprises. The definitions of the
categories have been developed by the Department of Commerce so
that they are consistent with the framework of accounts used to cover
all sectors of the Nation's economic activity.
1. Purchases of goods and services measure the value of the Nation's
output (i.e., gross national product) bought directly by the Federal
Government. Thus, Federal expenditures for goods and services
represent the value of output taken by the FederaF Government itself.
These purchases include the pay of active military and civilian
employees of the Federal Government, employer contributions for
retirement, insurance, and other benefits for Federal employees;
deliveries of equipment and supplies for defense and other programs;
construction put in place for the Government; payments on research
and development contracts with corporations and on similar agree-




SPECIAL ANALYSES

23

ments with private nonprofit institutions; expenditures for the purchase of commodities to be donated to schools or similar institutions;
and, generally, the administrative expenses of Government programs.
Federal purchases, in turn, are classified in two major subcategories—defense and nondefense. The defense category includes purchases for those activities classified under the defense function 01 the
budget. Purchases for all other types of activities are classified as
nondefense.
2. Transfer payments consist of expenditures by the Federal Government for which no current services have been rendered. Examples of
transfer payments are: veterans compensation, pensions, and benefits;
retired pay to Federal civilian or military personnel; unemployment
benefits; old-age, survivors, disability, health, and supplemental
medical insurance; and nonrepayable outlays for scholarships and
fellowships.
Although transfer payments do not directly enter gross national
product as a Federal Government component, they are a part of personal income and are counted as part of national output when respent
by the recipients.
3. Grants-in-aid to State and local governments, for purposes of the
national income accounts, are Federal payments (other than for interest on the public debt) to State and local governments, including
State and local educational institutions. like transfer payments and
net interest paid, Federal grants-in-aid are counted in the GNP
when spent by recipients—in this case, as purchases by State and
local governments or as consumption expenditures of individuals
receiving State or local transfer payments.
4. Net interest paid consists of the interest outlays to residents
(including State and local governments) minus the interest received
from them.
5. Subsidies less current surplus of Government enterprises consists
of two elements which are consolidated for statistical reasons: (a)
subsidy payments to resident businesses and (b) the "current surplus"
or "deficit" of Government enterprises.
(a) A subsidy is a monetary grant to a private business. By definition, therefore, subsidies are made only to businesses organized for
profitmaking purposes (including farms). Examples of subsidies are
Government payments to farmers for land retirement, payments to
air carriers, and the operating differential subsidy of the Maritime
Administration.
(b) Government enterprise is the term applied to those functions
of the Government (usually appearing in the budget as public enterprise revolving funds) for which operating costs are to a great extent
covered by the sale of goods and services to the public, as distinguished
from those being financed by tax receipts. Government enterprises
conduct operations which are of a business-type nature. The difference
between their sales and current operating expenses constitutes the
surplus or deficit of Government enterprises. Tne Post Office and the
Tennessee Valley Authority are two of the largest enterprises.




SPECIAL ANALYSIS C
PUBLIC ENTERPRISES, TRUST FUNDS, AGENCY BORROWING, AND
INVESTMENT

This analysis presents selected information on the financing and
operations of the public enterprise funds and the trust funds. Additional tables in this special analysis relating to agency borrowing and
to agency investments in U.S. securities are an integral part of the
computation of the changes in debt in table 9 (in part 2 of the budget).
PUBLIC ENTERPRISE FUNDS

The public enterprise funds are federally owned funds which carry
on a cycle of operations, primarily with the public, organized usually
on a business-type basis. Some of them are incorporated enterprises;
others are unincorporated. Their outlays have been included, on a
net basis, in the budgets and financial reports on Federal funds for
many years. The general fund usually supplies them with capital; the
provision of such capital, its return, and any dividends given to the
general fund are not counted in the budget totals as expenditures,
net lending or receipts.
Outlays and receipts.—Gross outlays of public enterprise funds are
estimated to be $30.5 billion in 1969, and their receipts will be $22.8
billion (table C-l), resulting in net outlays of $7.7 billion. The Commodity Credit Corporation and the postal fund together account for
slightly more than half of the outlays. The figures exclude the effects
of proposed legislation to create new funds for certain activities now
funded directly by general fund appropriations. The receipts do not
include the proceeds of borrowing (either through participation certificates or otherwise), nor do the expenditures include the repayment
of borrowing.
The outlays in table C-l include certain interfund payments
to the general fund, principally for interest (see table 12). The receipts
shown in table C-l are generally from the public; but they include
some transactions from within the Government—notably, the sales
of Commodity Credit Corporation inventories and services to appropriations for special activities, and the short-term loans and repayments resulting from the line of credit extended to the Federal
National Mortgage Association secondary market operations fund.
The sales of Tennessee Valley Authority power to Government
agencies, payments by all agencies to the Post Office for postal services, and interest paia to certain funds on their investments are other
examples of such intragovernmental receipts included in table C - l .
24




25

SPECIAL ANALYSES
Table C-1.

GROSS OUTLAYS AND APPLICABLE RECEIPTS OF
PUBLIC ENTERPRISE FUNDS (in millions of dollars)
Gross outlays

Description

1967
actual

Funds appropriated to the President:
Economic assistance
Other
.
Department of Agriculture:
Commodity Credit Corporation *
Farmers Home Administration
Federal Crop Insurance Corporation
Department of Commerce
_
Department of Defense:
Military
_
Civil (Panama Canal Company)
Department of Health, Education, and
Welfare
Department of Housing and Urban Development:
College housing loan fund
Urban renewal fund
Low-rent public housing fund
Federal National Mortgage Association.
Federal Housing Administration
Other
Department of the Interior
Department of Labor
Post Office Department
Department of Transportation
Treasury Department
General Services Administration
Veterans Administration
Other independent offices:
Export-Import Bank of Washington...
Farm Credit Administration
Federal Home Loan Bank Board:
Federal Savings and Loan Insurance
Corporation
Other_._
.-.--Small Business Administration
Tennessee Valley Authority
United States Information Agency
Total..

_

Receipts from the public
Receipts from other accounts.

Applicable receipts

1967
actual

1968

1969

1,137
210

1,074
400

1,186
231

76
320

85
362

108
84

8,682
1,367
28
243

7,758
1,672
56
213

8,090
1,757
47
213

6,764
1,385
35
255

4,876
1,771
41
229

5,233
1,759
46
238

29
131

20
148

27
154

30
144

18
153

13
156

18

64

83

15

10

14

460
991
416

454
973
505
4,350
930
280
123
306
6,919
27
2

821

890
1,760
7

461
1,176
560
2,965
1,047
354
113
356
7,342
32
177
*
1,035
1,928
4

101
546
148
2,385
957
18
51
282
5,326
20
1
*
606
1,271
16

121
473
205
3,368
972
28
56
310
5,832
23
2
*
674
1,188
12

134
465
240
2,658
1,029
33
61
360
6,575
23
179
*
733
1,362
13

3,015
944
262
116
279
6,468
23
1

•

1.707
3

430
479
3
28.385

1968

1969

406
416
7
262
22
17
19
21
556
283
383
413
586
377
420
436
1
3
*
*
30,061 30,509 21,694 22,049 22,792
19
24
557
529
1

(14,812; (14,755; (16,542)
( 6,882; ( 7,294; ( 6.250)

*Less than $500 thousand.
1
Includes advances from foreign assistance and special export programs of $1,509 million in 1967,
$1,198 million in 1968. and $1,448 million in 1969.

Capital and borrowing.—Capital requirements of the public enterprise funds are usually supplied through budget authority (either
appropriations or some other form of such authority) from the general
fund. While most public enterprise funds are operated to be selfsustaining over a period of years, the largest—the Commodity Credit




26

THE BUDGET FOR FISCAL YEAR 1969

Corporation—has incurred substantial losses in most years. Appropriations have been made regularly to make up for the loss in this iund,
the postal deficit, and other losses in a few smaller funds. Contract
authorizations have also been provided for the Commodity Credit
Corporation and for the urban renewal fund of the Department of
Housing and Urban Development. Authorizations to spend debt
receipts are used, especially for credit programs. Table C-2 reflects
all such new obligational authority.
The return of capital shown here includes the writeoff of unused
authority, the return of capital and transfer of dividends to the general
fund of the Treasury, net transfers to other accounts, and the repayment of borrowing that is not renewable.
The effect of these capital transactions, together with outlays
and receipts, upon the public enterprise fund group may be summarized as follows (in millions of dollars):
Balances, start of year:
Cash and balances in Treasury
U.S. securities
Undrawn authorizations:
Contract authorizations
Authority to borrow from Treasury
Authority to borrow from the public
Additional amounts becoming available:
Budget authority
Applicable receipts

1967
8,926
2,394

1968
10,823
2,836

1969
11,768
4.016

3,815
_. 22,508
779

3,006
25,844
1,264

3,994
25,509
1,601

12,289
21,694

11,998
22,049

11,817
22,792

72,405

77,821

81,496

28,385
248

30,061
875

30,509
1,209

10,823
2,836

11,768
4,016

12,702
4,939

3,006
25,844
1,264

3,994
25,509
1,601

3,644
27,394
1,100

72,405

77,821

81,496

Total available
Application of funds:
Expenditures and loan disbursements
Return of capital and authority, net of transfers in
Balances, end of year:
Cash and balances in Treasury
U.S. securities_____
Undrawn authorizations:
Contract authorizations
Authority to borrow from Treasury
Authority to borrow from the public
Total application and balances

_

Where the new obligational authority consists of authorizations to
expend public debt receipts or appropriations to provide capital,
rather than to make up deficits or finance losses, it is customary for
the amounts thereof to become interest bearing when used or when
credited to the fund.
Upon the creation of new revolving funds, to finance programs
previously financed otherwise, capital may also be provided by the
transfer of assets, including appropriation balances, into the new
fund. Liabilities and obligations are taken over, also.
Minor adjustments in capital occasionally include other transfers
to or from appropriations when authorized by law, and the transfer
of real or personal property into or out of a fund.




27

SPECIAL ANALYSES
Table C-2. BUDGET AUTHORITY AND OF CAPITAL OF PUBLIC
ENTERPRISE FUNDS (in millions of dollars)
Budget authority

Return of capital* (net
of transfer* ia)

Description
1967
actual

Funds appropriated to the President:
920
Economic assistance
Other
75
Department of Agriculture:
Commodity Credit Corporation
2,785
Farmers Home Administration
671
Department of Commerce
Department of Defense—Military
Department of Defense—Civil (Panama
Canal Company)
Department of Health, Education, and
316
Welfare
Department of Housing and Urban Development:
College housing loan fund
602
Urban renewal fund.
740
Federal National Mortgage Association _ 1,366
Low-rent housing fund _
_ __
269
292
Other
Department of the Interior
73
Department of Labor
Post Office Department
1,215
Department of Transportation
Treasury Department
General Services Administration
260
Veterans Administration
Other independent offices:
779
Export-Import Rflnk
13
Federal Home Loan Bank Board
851
Small Business Administration
1,064
Tennessee Valley Authority
_
Total

12,289

1968
1969
estimate estimate

1967
actual

1968
1969
estimate estimate

824
34

1,280
4

34
-133

226

2,423
750

3,362
425

-13

18

20

12

5
1

2

28

(i)

29
1

10

124

105

1,924
850
1,237
2 305
333

648
1,250
1,730
358
303
41
43
920

55
1,174
13
1

-1

177
*
6

3

*

185
*
4

3

994
*

10
2

40

851

527

*
*
17

865

608

50

50

50

153
61

152
50

62

115
62

62

11,998

11,817

248

875

1,209

*
199

32
*

3

"Less than $500 thousand.
1
In addition, the $400 million balance of the foreign military sales fund was transferred from
Funds appropriated to the President to the Treasury Department in 1968, for liquidation.
2
Includes $6 million appropriation made in 1968 for 1967.

Balances available.—The balances of public enterprise funds are
shown in table C-3. They are there divided between the balances
which are accounted for as assets of the funds, and the undrawn
authorizations to obtain capital from the Treasury, to borrow, or
(in two cases) to contract in excess of their cash availability.
In most cases, a large part of the balances are obligated or reserved—
to pay loan commitments, purchase and construction contracts, or
other obligations entered into but on which the other party has not
yet required or earned the money. The balances include inactive
"standby" authority for loans to the Federal Deposit Insurance Corporation, the home loan banks, and the Federal Savings and Loan
Insurance Corporation.




28

THE

BUDGET FOR FISCAL YEAR 1 9 6 9

Table C-3. BALANCES OF PUBLIC ENTERPRISE F U N D S (in millions off dollars)
Cash balances in Treasury
and U.S. securities as of
June 30

Description

Total

1967
actual

1968
estimate

1968

1969

2,978
440

2,786
40

2,960
8

199
250

246

64
891
37
32
19

50
1,434
22
47
37

50
1,723
22
72
35

4,403
131

3,940
261

23

19

21

10

10

316

385

87
1,270
112
163
1,241
22
309
581
5
*
*
1,342

1,620
120
666
1,331
18
313
667
18
401
*
1,800

87
2,159
154
1,019
1,442
8
360
820
18
372
*
2,003

1,109
3,606
1,500
5,719
1,295
14

2,685
3,606
1,496
5,796
1,322
3

116
161

358
165

366
173

1969

420

1967
actual
Funds appropriated to the President:
Economic assistance
Other
Department of Agriculture:
Commodity Credit Corporation
Farmers Home Administration
Federal Crop Insurance Corporation
Department of Commerce
Department of Defense—Military
Department of Defense—Civil (Panama
Canal Company)
Department of Health, Education, and
Welfare
Department of Housing and Urban Development:
College housing loan fund
Urban renewal fund
Low-rent public housing fund
Federal National Mortgage Association..
Other
.
Department of the Interior
Department of Labor
Post Office Department
Department of Transportation
Treasury Department
General Services Administration
Veterans Administration
Other independent offices:
Export-Import Bank
Farm Credit Administration
Loans to Federal Deposit Insurance
Corporation
Federal Home Loan Bank Board:
Loans to Federal home loan banks
Federal Savings and Loan Insurance
Corporation
Other
Small Business Administration
Tennessee Valley Authority
United States Information Agency

Undrawn authorizations
as of June 30

135
4,417
171

1
0

2,978
3,606
1,500
6,477
1,165

2,529
3
709
104
6

196

85

6,000

6,000

5,985

3,000

3,000

1,000
2,130
2
891
95
6

1
1

3,000
1,733
1
975
77
5

1
5

1,000

1,000

750
13
330
1,233
1

750
8
50
1,105
*

750
6
95
3

12,999 15,508 17,641 30,774 31,374 32,138

*Less than $500 thousand.

TRUST FUNDS

The trust funds are administered in a fiduciary capacity by the
Government. They are not included in the administrative budget
totals, and transactions between the general fund and the trust funds
are conducted "at arm's length7'—that is, payments between them are
reported as expenditures and receipts of the funds involved.
Outlays and receipts.—Trust fund outlays are estimated to be
$47.2 billion in 1969, with receipts of $54.6 billion, as shown in
table C-4. The transactions of the Federal old-age and survivors
insurance fund are far larger than any other one fund.



SPECIAL

Table C-A.

29

ANALYSES

O U T L A Y S A N D RECEIPTS O F T R U S T F U N D S
(In millions of dollars)
Outlays

Receipts

Description
1967
actual

1969
1968
estimate estimate

Funds to which receipts are appropriated:
Federal old-age and survivors insurance
trust fund
__ _
Federal disability insurance trust f u n d . .
Health insurance trust funds
Unemployment trust fund
Railroad retirement accounts
Federal employees retirement funds
Highway trust fund
Advances, foreign military sales
Veterans life insurance funds
Other trust funds (nonrevolving)
Trust revolving funds (table C-5)

19.842
2.071
3.411
2.868
1.429
2.091
3.973
1,070
970
407
1.143

21.650
2.268
5.064
3.163
1.415
2.133
4.219
1.125
638
602
2,310

Subtotal
Interfund transactions

39.275
-686
38,589

Total

1967
actual

1968
1969
estimate estimate

24.567
2.617
5.770
3.088
1.376
2.262
4.203
1.330
559
426
990

23.371
2.332
4.373
4.072
1.611
3.105
4.455
1.078
736
277

24,005
2,838
5,751
4,119
1.629
3.452
4.379
1.150
752
380

27.188
3.655
6.827
4.095
1.791
3.638
4.805
1.400
744
416

44.587
-641

47.189
-720

45.411
-686

48.455
-641

54,559
-720

43.946

46.469

44,725

47.814

53.839

When trust funds are consolidated with Federal funds, as in the
unified comprehensive budget, appropriate deductions must be made
for expenditures and receipts between the two groups of funds. The
unified comprehensive budget also offsets some of tne above receipts
against expenditures.
The trust funds include a small group of trust revolving funds (see
table C-5) which, like the public enterprise funds, are stated on a
net basis in figures used elsewhere in the budget. The group includes
the Federal Deposit Insurance Corporation, the three mixed-ownership
enterprises, and several other business-type activities.
Table C-5.

T R A N S A C T I O N S O F T R U S T REVOLVING F U N D S
(In millions of dollars)
Applicable receipts

Gross outlays
Description
1967
actual
Federal intermediate credit banks
Banks for cooperatives
Federal National Mortgage Association...
Civil Service Commission (employees' life
insurance and health benefits)
Federal Deposit Insurance Corporation
All other trust revolving funds
Total trust revolving funds
Receipts from the public
Receipts from other accounts




1969
1968
estimate estimate

1967
actual

1969
1968
estimate estimate

7,161
1,898
1,288

8,531
2,186
2,616

9,693
2,474
1,351

6,692
1,703
481

8,067
1,944
667

9,214
2,238
761

604
19
62

960
14
65

1,209
18
115

692
258
62

1,045
275
64

1,300
292
65

11,031

14,370

14,860

9,887

12,061

13,870

(9,549) (11,481) (13,238)
(632)
(580)
(338)

30

THE BUDGET FOR FISCAL YEAR 1969

Balances available.—Trust fund balances, both open book balances
with the Treasury and investments in U.S. securities are shown in
table C-6. These balances are reserved to cany out the purposes of
the trusts.
Table C-6.

T R U S T F U N D BALANCES (in millions of dollars)
As of June 30

Description

1966
actual

1967

1968

1969
estimate

Federal old-age and survivors insurance trust fund..
Federal disability insurance trust fund
Health insurance trust funds..
_
Unemployment trust fund
Railroad retirement accounts
Federal employees retirement funds
Highway trust fund...
Advances, foreign military sales
Veterans life insurance funds
Other trust funds:
Nonrevolving
Revolving

19,872
1,686
851
9,300
4,181
16,795
244
754
7,061

23,401
1,948
1,813
10,504
4,363
17,811
725
762
6,827

25,756
2,518
2,500
11,460
4,577
19,130
885
787
6,942

28,377
3,556
3,557
12,467
4,991
20,507
1,487
857
7,126

815
4,102

684
4,428

461
4,773

450
5,099

Subtotal
Agency debt issuances of trust funds held by other
trust funds (—)

65,661

73,267

79,789

88.475

-646

-550

-450

72,621

79,239

88,025

65,661

Total.

Note.—The balances shown here cover the amounts on deposit with
U.S. securities held. In addition, certain funds have authority to obligate in
moneys, and to borrow from the public. The reconciliation is as follows:
1966
1967
Balance available on an authorization basis
78,801
89,444
Unfinanced contract authorizations:
Highway trust fund
-8,801
-9,267
Advances, foreign military sales
-1,974 -2,376
Other
_
-8
-12
Undrawn authorizations to borrow:
Federal National Mortgage Association
-813 -3,934
Banks for Cooperatives
-1,267 -1,073
Federal Intermediate Credit Banks
-661
-380
Unappropriated receipts:
Available as needed, on an indefinite basis
41
37
Available for appropriation by Congress:
Soldiers* Home
108
107
Highway trust fund
...
235
721
Agency debt issuances of trust funds held by other
trust funds.._
-646
Balance available on a cash basis

65,661

72,621

Treasury, and the
advance of receiving
1968
95,146

1969
102,990

-10,049
-2,576
-12

-10,548
-2,496
-2

-2,508
—878
-349

-2,049
-648
-393

25

26

108
882

108
1,487

-550

-450

79,239

88,025

The trust fund balances are affected by the transactions as follows
(in millions of dollars):
1967
65,661
44,725
824

1968
72,621
47,814
2,750

1969
79,239
53,839
1,416

Total available

111,210

123,185

134,494

Outlays
Balances, end of year

38,589
72,621

43,946
79,239

46,469
88,025

111,210

123,185

134,494

Balances, start of year...
Receipts
Agency debt issuances (other than to other trust funds)

Total application and balances




_

SPECIAL ANALYSES

31

BORROWING

Agency debt—The Tennessee Valley Authority has authority to
borrow $1,750 million from the public. The Federal Housing Administration has an indefinite authorization to issue short-term
debentures in connection with its settlements. The three mixedownership trust revolving funds all have authority to issue their own
debt instruments. A few funds in liquidation are retiring earlier debt
issuances.
Agency borrowing also takes the form of the sale of participation
certificates in which buyers are purchasing a share in a pool of
Government-owned loans (see Special Analysis E).
Some Government enterprise debt is guaranteed by the Treasury;
some is not formally guaranteed.
Some agency debt is issued to other enterprises or trust funds, rather
than to the public, and in some cases another fund may purchase or
sell agency debt on the market. Table C-7 separates the agency debt
on the basis of net issuances and holdings, as between the public and
the Government-administered funds.
Relation to Treasury borrowing.—The Treasury borrowing, often
called the "public debt," includes both borrowing from the public
and the issuance of debt instruments to trust funds and other Government-administered funds with balances available to invest.
In a number of cases, Government enterprises obtain capital by
borrowing from the Treasury, which is usually directed by the law to
use the proceeds of public debt receipts (that is, its borrowing) to
supply the funds to the enterprise. The enterprise borrowing that takes
this form is included in the capital section of the balance sheets in the
budget appendix, and is not included in the phrase "agency debt"
as used herein.




32

THE BUDGET FOR FISCAL YEAR 1969
Table C-7.

AGENCY DEBT ISSUANCES, NET (in millions of dollars)
End 1969.
estimate
outstanding

Transactions
Description
1968

1967
actual

Borrowing from the public:
By public enterprise funds:
Agriculture: Farmers Home Administration *
Health, Education, and Welfare:
Office of Education *
Public Health Service 1
Housing and Urban Development:
Federal Housing Administration 2
Public facility loans l
College housing loans !
Housing for the elderly1
Federal National Mortgage Association l
Treasury: Federal Farm Mortgage Corporation 2.
Veterans Administration *
Export-Import Bank *
Federal Home Loan Bank Board:
Home Owners Loan Corporation 2_
Board revolving fund
Small Business Administration l
Tennessee Valley Authority
By trust funds:
Federal National Mortgage Association
Banks for cooperatives
Federal intermediate credit banks
By general fund appropriation: Defense family
housing
Total, borrowing from the public.

1969

419

456

70

68
10

67
56

57
54
935
40
359
•

190

419
467

1.065
138
10

68
54

338
46
713
*
341
608

538
164
1,692

86
2,324
*

121
779

456
865

293
130

143
130

2
-57
170

7
729
715

360
219
273

1,843
240
714

690
236
490

6,162
1,547
4,324

-83

1,872

5

-77

1,893
3,637

3,596

6,293

3,805

26,902

181

219

130

530

30

32
5

-16
24
181

-1
26

Borrowing from other funds:

By public enterprise funds:
Agriculture: Farmers Home Administration 1_.
Health, Education, and Welfare:
Office of Education *
Public Health Service *
Housing and Urban Development:
Federal Housing Administration2-._
Public facility loans *
College housing loans 1
Housing for the elderly *
Federal National Mortgage Association L . .
Veterans Administration *
-Small Business Administration *
Tennessee Valley Authority
By trust funds:
Federal National Mortgage Association
Banks for cooperatives.._
__.
Federal intermediate credit banks

224
78
157
2

450
-28
196

62
5

450
20

-3
24
149
20

197

351

249

178
44

73
74
780
39
772
504
303

-100

450

102
-2
100

Total, borrowing from other funds.

-242
1,155

3,594

Total, agency debt issuances 3

7,448

30,495

Note.—Excludes borrowing from the general fund. Negative figures represent net retirement of
debt.
"Less than $500 thousand.
1
Certificates of participation in loans.
2
Guaranteed by the Treasury (except for a small part of the HOLC obligations).
3
In addition, debt of the D.C. Armory Board is guaranteed by Treasury: 1967 actual. $0; 1968
estimate. $0; 1969 estimate. $0; outstanding, end of 1969. estimate. $20.




33

SPECIAL ANALYSES

INVESTMENTS IN U.S.

SECUKITIES

The investment transactions of federally administered funds in the
securities issued by the Government and its agencies are shown in
table O 8 .
Table C-8. AGENCY INVESTMENTS IN U.S. SECURITIES (in millions of dollars)
Transactions
Description

1968
estimate

1967
actual

1969
estimate

End 1969.
estimate
outstanding

Investment in public debt (issued by Treasury):

By public enterprise funds:
Agriculture: Farmers Home Administration. _ _
Commerce: Maritime Administration
Housing and Urban Development:
Federal Housing Administration
Public Housing Administration
Federal National Mortgage Association
Export-Import Bank
Federal Savings and Loan Insurance Corporation
Veterans Administration
By trust funds:
Federal old-age and survivors insurance trust
fund
__
Federal disability insurance trust fund
Federal supplementary medical insurance trust
fund
Federal hospital insurance trust fund
Unemployment trust fund
_
Railroad retirement accounts_ _ «_
Federal employees' funds..
Highway trust fund
Veterans life insurance funds
Federal Deposit Insurance Corporation
Bank for cooperatives
Federal intermediate credit banks
All other
__ _
_
Total, investments in public debt

1

250
1

57
-8
84
82

7

250
13

91
-13
528
-82

106
7
349

749
7

212
54

396
60

397
60

2.521
362

3,438
226

1,934
323

2,372
858

25,652
2,870

479
406
778
62

-143
862
770
-21
1,134

-19
1,070
917
254
1,279

186

285

-32

57
265
-1
8
49

110
273
*
11
45

317
3,124
11,718
4,364
20,285
1,193
6,726
4,120
45

6,840

6,654

8,382

85,573

-3
-12
-24

1
-51

-3

73

775
484
-492
238
i

964

128
166

Investment in agency debt:

By public enterprise funds:
Public Housing Administration
Federal Housing Administration
Federal National Mortgage Association
By trust funds:
Federal National Mortgage Association
Veterans Administration
._
Federal hospital insurance trust fund
__
Federal old-age and survivors insurance trust fund.
Federal disability insurance trust fund
Unemployment trust fund
Civil service retirement and disability fund
Railroad retirement accounts

*
260
92
304
70
379
304
111

58

75

392

248
240
173
248
240

159
159
84
159
159

92
711
469
636
710
510

Total, investments in agency debt*

1,479

1,155

792

3,594

Total, agency investments in U.S. securities..

8,319

7,810

9,173

89,167

Note.—Negative figures represent net reduction of investments.
•Less than $500 thousand.
1
Excludes purchases of securities of the privately-owned Federal land banks and Federal home
loan banks. Such purchases are treated as a part of net lending to private enterprises.

300-700 0—68
3



SPECIAL ANALYSIS D
INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS

The United States, unlike some other governments, includes in its
budget those outlays which are for "capital" or investment-type
activities on the same basis as other or "current" activities and costs.
Nevertheless, for a complete understanding of budget programs and
levels, it is useful to recognize a distinction between those outlays
which yield benefits over a period of years and those providing benefits largely in the year in which they are made. Special Analysis D
presents the budget data in a manner that makes this distinction,
covering both Federal funds and trust funds.
In dividing budget outlays (i.e., including the expenditure account
and the loan account) according to their character, two basi^ breakdowns are used:
First.—Investment-type outlays are considered to be (1) those which
add to the financial or physical assets of the Federal Government or
add to State, local, and private assets and (2) those which are for
"intangible" investments or developmental purposes, such as education, training, health, and research and development. All other outlays are considered as mainly for current operations; they are divided
among current expenses for aids and special services, retirement and
social insurance benefits, and other services and current operating
expenses. (In addition, some outlays which cannot be properly categorized are left "unclassified.")
Second.—In each category, outlays for national defense purposes are
reported separately from those for all other, i.e., civil programs; this
separation highlights both (1) the difficulty of definition—e.g., whether
to treat military outlays such as procurement of "hardware" as additions to assets—and (2) the basic difference in nature between most
military and civil programs.
The combination of Federal funds and trust funds in tables D - l and
D-2, in accordance with the new budget concepts used throughout
the 1969 budget, inflates certain of the figures because payments
between Government funds and accounts have the effect—over the
long run—of causing certain outlays to be counted twice; therefore,
a deduction is made at the end of the table to remove the double
counting for interfund and intragovernmental transactions. A second
deduction is required under the new concept for receipts from the
public which are business-type or market-oriented in character, and
which are therefore applied against expenditures.
Summary.—Excluding outlays for national defense, $31.4 billion
of estimated outlays in 1969 are for activities which will directly or
indirectly promote future gains in productivity and economic growth.




34

35

SPECIAL ANALYSES

CIVIL INVESTMENT AND DEVELOPMENTAL OUTLAYS (in billions of dollars)
Description

Additions to Federal assets:
Loans and other financial investments
Physical assets:
Major commodity inventories
Other
Additions to State, local, and private assets
Developmental outlays:
Education, training, and health
_
Research and development:
National Aeronautics and Space Administration
Other
Other developmental outlays
_

1964

1967

1968

1969

6.2

8.1

5.4

-.4
3.0
5.1

-1.2
3.2
5.7

-.9
3.1
6.6

.1
3.1
6.9

1.6

6.2

7.9

8.8

3.7
1.4
.1

5.1
1.9
.2

4.6
2.2
.3

4.5
2.4
.3

16.2

Total

1.5

27.3

31.9

31.4

Additions to Federal civil assets are estimated at $8.6 billion in
1969. This includes $5.4 billion in loans and financial investments
for housing, farming, small business, and other purposes. I t also
includes $3.2 billion for physical assets of various types—such as
civil public works, major equipment, and commodity inventories.
Another $6.9 billion of budget outlays in 1969 will help finance
additions to State, local, and private assets such as highways, hospitals, schools, conservation projects, and a variety of public facilities.
Developmental outlays for civil purposes are estimated at $16
billion in 1969, compared with $13.5 billion in 1967 and $6.8 billion
in 1964. Thus, the 1969 budget continues a trend begun several
years ago toward emphasizing investment in human resources
and scientific research and development. No less important than
investment in physical assets, this type of investment helps promote
the long-run growth of the Nation by expanding knowledge, enhancing
occupational skills, increasing productivity, and encouraging technological development. Outlays for civil education, training, and health
programs will be $8.8 billion in 1969. Another $6.9 billion will be
for scientific research and development (including $4.5 billion for
space programs), representing a major source of funds for all such
activities undertaken in the United States.
OUTLAYS OF AN INVESTMENT NATURE

Outlays of an investment nature are divided into three categories:
(1) additions to Federal assets; (2) additions to State, local, and private
assets; and (3) developmental outlays.
Additions to Federal assets.—This category comprises additions
to both financial and physical assets of the Federal Government.
The financial assets consist mainly of direct loans—for example,
loans to finance private housing construction and encourage homeownership, to help small businesses, to finance college dormitory construction, to aid farm ownership and operation, to finance rural electric
and telephone systems, and to promote economic development abroad.
All Federal financial assets are covered, both loans and other financial



36

THE BUDGET FOR FISCAL YEAR 1969

investments which have been classified under the new budget concept
in the expenditure account as well as loans in the loan account. (The
specific distinction between the two types of loans is presented and
discussed in Special Analysis E.) Other financial investments include
the capital provided for certain international organizations and for
supersonic aircraft development.
Additions to physical assets include expenditures for public works,
such as dam construction, flood control projects, and Federal power
systems. They also include changes in major commodity inventories
and outlays for major equipment (including military equipment) and
for the acquisition and improvement of real property and other physical assets.
Table EM. SUMMARY OF INVESTMENT, OPERATING, AND OTHER
BUDGET OUTLAYS (in millions of dollars)
1967
actual

1968
estimate

1969
estimate

INVESTMENT-TYPE OUTLAYS
Additions to Federal assets:
Civil:
Loans and other financial investments.
Physical assets:
Major commodity inventories
Other
National defense
Additions to State, local, and private assets:
Civil
_
National defense
Developmental outlays:
Civil
National defense

8,062

5,398

-1.230
3.173
21,993

-859
3.094
23,743

52
3.102
24,242

5,721

6,649

6,905
12

13,456
8,923

14,950
9,063

15,951
9,702

27,325
30,927

31,896
32,817

31,408
33,956

23,156

Subtotal, investment-type outlays:
Civil
National defense

6,207

24,148
1,737
33,430

25.301
2,006
37,783

13,524
4,208

39,030

14,497
4,606
43,427

15,349
4,779
45,478

657

573

663

100

1,600
350

CURRENT OUTLAYS
Current expenses for aid? and special services:

Civil

National defense.._
_.
Retirement and social insurance benefits—civil. _
Other services and current operating expenses:
Civil:
Interest....
Other
_
National defense

1,841

29,048

UNCLASSIFIED ITEMS
Payments to other funds
_
Allowances:
Civilian and military pay increase
Contingencies
Undistributed intragovernmental payments:
Government contribution for employee retirement (—)
Interest received by trust funds (—)
Interfund and intragovernmental transactions (—)
Applicable receipts from the public (—)
Total budget outlays.




-1,735
-2,268
-2,585
-4,713

-1,913
-2.639
-2.863
-4,181

-2,007
-3.017
—3,217

158,414

175,635

186,062

-4,375

SPECIAL ANALYSES

37

Additions to State, local, and private assets.—Federal outlays under
this heading add to State, local, and private assets. Grants-in-aid
which augment the physical assets of State and local governments are
primarily for the construction of highways (mainly through the highway trust fund), hospitals, airports, waste-treatment works, watershed
protection projects, schools in federally affected areas, and public
facilities under regional economic development programs for depressed
regions.
Outlays which increase the value of privately owned assets are
largely for the conservation and improvement of private farmland and
water, for grants for construction of private nonprofit hospitals and
other health facilities, and for construction subsidies to the merchant
fleet.
Developmental outlays.—Federal outlays of this type are principally
for research and development, education and health, and other programs which increase the Nation's fund of knowledge and technical
skills and improve the physical vigor of the population. The total of
Federal outlays shown in this category does not fully reflect the
Government's contribution to the productivity of the economy, since
it excludes loans and additions to physical assets, as well as certain
other programs which further this end. The latter are classified in
accordance with their principal purpose; thus, veterans educational
benefits are listed as veterans aids rather than as developmental
outlays. Similarly, the training of military personnel or other Government personnel is treated as an operating expense and not as part of
the Government's education and training programs.
OUTLAYS OF A CURRENT NATURE

Outlays of a current nature are divided into the following categories: (1) current expenses for aids and special services, (2) retirement and social insurance benefits, and (3) other services and current
operating expenses.
Current outlays for aids and special services.—Outlays classified
under this heading provide aids or special services to certain groups—
mainly in the year in which the outlays are made. In addition to
such items as realized losses of the Commodity Credit Corporation on
its farm programs, maritime operating subsidies, veterans pensions,
and grants to foreign nations for economic and military assistance,
this category includes (1) administrative and other operating expenses
attributable to investment-type programs which benefit specific
groups, and (2) the costs of maintaining the physical assets related
to those programs.
Only part of the Federal Government's aid to special groups is
reflected in this classification, which is limited by definition to current expenses. For example, subsidies for the construction of private
merchant ships are classified as additions to private assets. Similarly,
outlays for which the Federal Government receives assets or collateral
(as the acquisition of farm commodities by the Commodity Credit
Corporation) are treated as additions to Federal assets. Many indirect
Government aids are excluded from this classification either because




38

THE BUDGET FOR FISCAL YEAR 1969

they are not reflected in outlays or cannot be readily measured.
Examples of such indirect benefits include low interest rates on some
loans and certain preferential tax treatments.
Although outlays in this category essentially provide a direct aid
or special service yielding immediate benefits, some of the items
included contribute indirectly to the Nation's future development.
Among these are grants for slum clearance and urban renewal.
Retirement and social insurance benefits,—This category applies
only to trust funds. It covers benefit programs which (1) are financed
from special taxes or contributions and (2) provide insurance against
the loss of income due to unemployment, retirement, disability, or
death. It does not include outlays for Government employees' health
and life insurance expenditures which are in the form of premium
payments to approved companies.
Other services and current operating outlays.—The outlays reported
under this heading support a wide range of activities. They consist
mainly of: pay and subsistence of military personnel; repair, maintenance, and operation of physical assets of the national military
establishment and general purpose public buildings; conduct of
foreign affairs; tax collection; payment of interest on the national
debt; and operation and administration of other direct Federal
programs not elsewhere classified.
UNCLASSIFIED

Certain transactions cannot be properly classified into any of the
categories described above. The major examples of such transactions
include special allowances for (1) the second stage of the pay increase
enacted in 1967 for Government personnel and (2) unforeseen contingencies. They also include transactions which occur entirely within
Government accounts and which therefore do not result in any flow
of funds between the public and the Government. In addition, under
the new budget concept, receipts from the public arising from marketoriented or business-type activities of the Government are applied
against outlays to highlight the net impact of the budget.
RELATIONSHIP TO CAPITAL BUDGET

The U.S. Government does not produce a capital budget in the
sense of a long-range program for the acquisition of assets, with
separate financing of capital outlays. Some foreign governments and
some State and local governments fund a portion of their capital
expenditures by separate borrowing and exclude most or all such
expenditures from their computation of budget totals, except for
annual charges to amortize these capital outlays over a number of
years.
While not a precise measure of the difference between capital and
current items, this analysis does provide useful general magnitudes.
However, it does not make any allowance for depreciation and obsolescence on existing physical assets, anticipated losses on loan programs,
or profit or loss on sales of assets at figures different from their book
value, although agencies record such allowances for transactions only



39

SPECIAL ANALYSES

where the data will serve program and management needs, as in the
case of the public enterprise funds. As a result, it is not possible to
determine directly from this analysis the net addition to the value of
federally owned assets.
Recoverability of outlays.—In general, Government outlays for
assets are not expected to be recovered by specific revenues. However, most loans, investment in commodity inventories, the construction of powerplants, and outlays for range and forest improvements
on public domain and national forest lands are offset in whole or
in part by receipts to the Treasury through repayments and sales,
specific charges, or recoveries. Where activities are carried on through
revolving funds, such as in the case of most loan programs, receipts
are credited directly against disbursements and only the difference is
included in the total of outlays in the budget and in this analysis.
All other receipts from the public arising from market-oriented or
business-type activities of the Government are offset against total
outlays.
Whether recovered by specific revenues or not, investment and
developmental outlays for both physical and human capital add
to the wealth and income of the Nation and, by helping to expand the
tax base, augment the Government's potential future revenues.
However, this analysis does not attempt to measure the degree of
recoverability of developmental outlays, the potential gain in public
revenues which will be forthcoming from them, nor the duration of
future benefits and their discounted present value.
Table D-2. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)
Description

1967
actual

1969

1968

Investment-Type Outlays
ADDITIONS TO FEDERAL ASSETS
Loans:
Civil:
To domestic private borrowers:
Department of Agriculture:
Commodity Credit Corporation: Price support and related programs
Rural Electrification Administration
Farmers Home Administration:
Emergency credit revolving fund
_
Agricultural credit insurance
Rural housing insurance
__.
Direct loans
_
__
__
Trust funds
Department of Commerce:
Industrial development loans and guarantees
Other
_
Department of Health, Education, and Welfare:
Office of Education:
Higher educational activities
Higher education facilities loans fund._ _
_
Other
_
_
_
_
Public Health Service




-600
22
3

17
5
28
7

-546
30
6

4
-18
42
1
4
*

-29
-79
-24
3
6
-4

-9
-14
-3
2
1
-2

23
-9

29
-8

3
6
-7

4
1
7
14
2
33

75
20
5
43

73
27
5
45

40

THE BUDGET FOR FISCAL YEAR 1969

Table I>2. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)—Continued
Description

1968
estimate

1967
actual

1969
estimate

Investment-Type Outlays—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Loans—Continued
Civil—Continued
To domestic private borrowers—Continued
Department of Health, Education, and Welfare—Con.
Social Security Administration:
Federal old-age and survivors insurance trust fundFederal disability insurance trust fund
Other trust funds
Other
Department of Housing and Urban Development:
Renewal and housing assistance:
College housing loans.
Housing for the elderly or handicapped
Other
Mortgage credit:
Federal Housing Administration fund
Federal National Mortgage Association:
Management and liquidating functions
Special assistance functions
Participation sales fund
__
Secondary market operations trust fund
Other
__-Department of Labor: Unemployment trust fund
Veterans Administration:
Veterans direct loans
_
Loan guarantee revolving fund
__.
National service life insurance trust fund
United States Government life insurance trust fund. _ _
Other...
Civil Service Commission (trust fund) __
Farm Credit Administration:
Banks for cooperatives trust fund
Federal intermediate credit banks trust fund
Federal Home Loan Bank Board..
Railroad Retirement Board (trust fund)
Small Business Administration:
Disaster loan fund
Business loan and investment fund
Other agencies
Total, to domestic private borrowers, civil
To State and local governments:
Department of Commerce: Economic development
Department of Health, Education, and Welfare:
Higher educational activities
Other
Department of Housing and Urban Development:
Renewal and housing assistance:
Urban renewal fund
College housing loans.
Other.
Metropolitan development:
Public facility loans
Other




14
1
7
4
1
5
3

4

13
6
7
7
5

12
4
8
9
1
7

1
7

6
2

41
2
19
0
17
4
81
3
4
14
1

37
6
69
3
2,012
2

52
40
1
-179
63
4
-1
-114

5
3
27
1
13
3
8
2
4
14
1

6
6
26
4
5
5
-2
5

8
2
21
8
-15
-85
5
-114

13
9
48
7
44
14
1

29
4
50
0
-8

28
3
53
3
-20
-114

-6
7
4
4
5

3
6
78
20

-13
14
1
5

3,534

5,077

1,845

7

24

30

3
8
59

18
4
1
5

10
5
1
8

58
19
9
1
1

1
14
7
20

1
2
11
4
-15

5
6
7

4
1
-3

50
-6

-114
-74
-15
4
16
1
98
1
9
13
1

41

SPECIAL ANALYSES

Table D-2. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)—Continued
Description

1968
estimate

1967
actual

1969
estimate

Investment-Type Outlays—Continued

ADDITIONS TO FEDERAL ASSETS—Continued
Loans—Continued

Civil—Continued
To State and local governments—Continued
General Services Administration:
General Services Administration credit sales
Other
Loans to District of Columbia
Other agencies

2
-4
20
21

-44
-2
17
19

-40
-1
64
12

Total, to State and local governments, civil

473

411

416

1,147

1,041

1,163

153

428

716

675

Total, to foreign borrowers, civil

1,840

2,184

2,518

Total, loans, civil

5,847

7,673

4,778

-3

-2

-4

-20

6
11

-20

17

-3

-22

14

5,844

7,651

4,792

61

To foreign borrowers:
Funds appropriated to the President: Economic assistance. _
Department of Agriculture: Commodity Credit Corporation : Credit sales, Public Law 480
Export-Import Bank of Washington

National defense:
To domestic private borrowers: other agencies

540

To foreign borrowers:
Funds appropriated to the President: Military assistance.._
Other agencies._ _
Total, to foreign borrowers, national defense
Total, loans, national defense
Total, loans

680

Other financial investments—civil:
Investments in quasi-public institutions, trust funds, and international institutions:
Funds appropriated to the President:
Economic assistance
_
Inter-American Development Bank
International Development Association
Other
.--.
Department of Housing and Urban Development: Federal
National Mortgage Association
Department of Transportation: Civil supersonic aircraft
Other agencies
_

54

44

54
106
10

88
125
10

120
80
10

145
-17

20
100
-8

28
351
-12

Total, investments in quasi-public institutions, trust funds
and international institutions

360

389

620

30
70

27
94

27
80

26

43

46

Public works—sites and direct construction:
Civil:
Department of Agriculture:
Forest protection and utilization
Forest roads and trails
Other 1
1
Includes both Federal funds and trust funds.



42

THE BUDGET FOR FISCAL YEAR 1969

Table D-2. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)—Continued
Description

1968
estimate

1967
actual

1969
estimate

Investment-Type Outlays—Continued

ADDITIONS TO FEDERAL ASSETS—Continued
Public works—sites and direct construction—Continued
Civil—Continued
Department of Defense—Civil:
Corps of Engineers:
Construction, general.
_ __ _ _
Flood control, Mississippi River and tributaries
Trust funds
__
Other 1
Department of Health, Education, and Welfare: Public
Health Service and other 1
Department of the Interior:
Bureau of Indian Affairs:
Construction
Other
National Park Service:
Parkway and road construction
Other 1
Bureau of Reclamation:
Construction and rehabilitation
Upper Colorado River storage project

974

942

854

60
23

55
26

46
23

10

23

21

46

68

91

41
16

38
20

35
20

32
20

32
22

34
17

182
44

165
40

179
30

104
2
40

113
2
37

115
1
35

43

42

88

29
62
*
239
289
60
183
122

34
79
3
214
160
59
249
114

70
102
9
172
76
66
263
103

2,752

2,706

2,607

1,601
130

1,623
161

1,538
245

Total, public works, national defense

1,731

1,784

1,783

Total, public works, sites and direct construction _____

4,483

4,489

4,391

Major commodity inventories:
Civil:
Department of Agriculture: Commodity Credit Corporation.
Department of the Interior: Helium fund
__

-1,253
23

-884
26

31
21

-1,230

-859

52

9

12

8

_ _ -1,221

-847

60

Of-VlAV 1

c

Bonneville Power Administration:
Construction
Other 1
Other .
Post Office Department—
_-_
Department of Transportation:
Coast Guard: Acquisition, construction, and improvements.
Federal Aviation Administration
Other
General Services Administration: Public buildings
National Aeronautics and Space Administration
Veterans Administration: Hospitals and other
Tennessee Valley Authority
Other agencies
Total, public works, civil ___
National defense:
Department of Defense—Military
Atomic Energy Commission

.

_

_ _
__ _

--

_ _

Total, major commodity inventories, civil.
National defense: Other agencies
Total, major commodity inventories.,

__

•Less than $500 thousand,
Includes both Federal funds and trust funds.

1




__

__ __

43

SPECIAL ANALYSES

Table D-2. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)—Continued
1968
estimate

1967
actual

Description

1969
estimate

Investment-Type Outlays—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Major equipment:
Civil:
Post Office Department
Department of Transportation:
Coast Guard
Other
. _ .
.
Other agencies.
_

55

127

118

72
1
36

66
*
38

65
4
31

163

231

218

19,498
152

21,295
150

21,785

_

19,650

21,445

21,950

___

19,813

21,675

22,168

. _ _

54
149

57
48

120

40

41

79

42
-8
-19

34
-29
5

34
-21
6

258

157

277

606

524

488

864

680

765

30,144

34,038

32,796

127
12

219

19
54
11
29

60
27
24

ffi
50
34
28

20
40
12

99

138

26

69

136
39
61

207
22
60

142
19
57

_
_

Total, major equipment, civil
National defense:
Department of Defense—Military l
Atomic Energy Commission
Total, major equipment, national defense
Total, major equipment._
Other physical assets—acquisition and improvement:
Civil:
Department of Agriculture 1
Department of Housing and Urban Development
Department of the Interior:
Land and water conservation _ _
__ _
Other
Veterans Administration
Other agenciesl
Total, other physical assets, civil

_ .
__

National defense: Atomic Energy Commission
Total, other physical assets—Acquisition and improvement
- - ___
___ ____
Total, additions to Federal assets
ADDITIONS TO STATE, LOCAL, AND PRIVATE
ASSETS
State and local assets:
Civil:
Funds appropriated to the President:
Annalachian resional redevelopment programs
Public works acceleration _
Department of Agriculture:
Watershed protection
Rural water and waste disposal grants._
__
Utner
Department of Commerce: Economic development:
Development facilities and other
_ _ __ __
Appalachian development highway system.
_ .__.__
Department of Defense —Civil: Corps of Engineers
-_
Department of Health, Education, and Welfare:
Office of Education:
Hierher educational activities
School assistance in federally affected areas
Vocational education
"Less than $500 thousand,
1
Includes both Federal funds and trust funds,



165

60

44

THE BUDGET FOR FISCAL YEAR 1969

Table D-2. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)—Continued
Description

1967

1969
stimate

1968

Investment-Type Outlays—Continued

ADDITIONS TO STATE, LOCAL, AND PRIVATE
ASSETS—Continued
State and local assets—Continued

Civil—Continued
Department of Health, Education, and Welfare—Continued
Public Health Service:
Hospital construction activities
Construction of health educational facilities
Community mental health resources support
Other education and health
Department of Housing and Urban Development:
Renewal and housing assistance: Grants for neighborhood
facilities
Metropolitan development:
Open space land programs
Grants for basic water and sewer facilities
Urban mass transportation.
Other metropolitan development
Department of the Interior:
Land and water conservation
Construction grants for waste treatment works and other _
Other
Department of Transportation:
Federal Aviation Administration
Federal Highway Administration:
Highway trust fund
Forest highways
State and community highway safety programs
Other 1 .
Other agencies l
Total, State and local assets, civil _
National defense: Other agencies l
Total, State and local assets
Private assets—civil:
Department of Agriculture:
Soil conservation
Agricultural stabilization and conservation
Other 1
:
Department of Commerce: Merchant ships
Department of Health, Education, and Welfare:
Office of Education: Higher educational activities
Public Health Service:
Construction of health educational facilities
Hospital construction activities
.-..-Grants for construction of health research facilities.
Other education and health
National Science Foundation
Other agencies
Total, private assets, civil.
*Lcss than $500 thousand.
1
Includes both Federal funds and trust funds.




19
6
41

22
85
9
64

104
63
25
48

95
65
25
26

15

91
21
4
26

32

60
90
96

60
130
144
3

56

74
154
28

112
16

73
58

,171

3,951
28
1
II
*

4,191
26
2
4

4,797

5,630

10

10

4,807

5,640

5,952

141
420
-7
82

144
440
-4
86

143
416
-4
71

58

89

61

112
37
13

58
2

25
104
37
17
60
21

25
117
37
22
52
25

924

1,019

96
6

70
6
27
5,939
1
2

45

SPECIAL ANALYSES

Table D-2. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)—Continued
Description

1968

1967

1969

Investment-Type Outlays—Continued
ADDITIONS TO STATE, LOCAL, AND PRIVATE
ASSETS—Continued
Private assets—Continued
National defense: Atomic Energy Commission trust fund
Total, private assets
Total, additions to State, local, and private assets
DEVELOPMENTAL OUTLAYS
Education, training, and health:
Civil:
Funds appropriated to the President:
Economic opportunity program
Appalachian regional development
Department of Agriculture: Extension service J
Department of Health, Education, and Welfare:
Office of Education:
Elementary and secondary educational activities
School assistance in federally affected areas
Higher educational activities
Vocational education
Libraries and community services
_.
Defense educational activities
Educational improvement for the handicapped
._
Education professions development activities _
Salaries and expenses
Other
Public Health ServiceComprehensive health planning and services
National Institutes of Health
Mental health research and services
Indian health activities
Health manpower education and utilization
Chronic diseases
.
Community health services
Air pollution
___
•
_
Communicable diseases
Community mental health resources support
Other1....
-Social and Rehabilitation Service:
Grants to States for public assistance and medical
assistance
„_Grants for rehabilitation services and facilities
Grants for maternal and child health and welfare
Rehabilitation research and training
Social services demonstrations training and projects
Other
Other 1
Department of the Interior:
Bureau of Indian Affairs: Education and welfare
Other
Department of Labor: Manpower Administration:
Manpower development and training
Other
*Less than $500 thousand.
1
Includes both Federal funds and trust funds.




925

1,020

967

5,732

6,660

6,918

838

1,066
1

1,236
1

"93

90

97

,423
341
422
188
78
182
34

1,408
385
550
187
120
8

,266
400
250
166
33
202
24

38
53

55
57
45
77

72
73
122
79
47
57
43
29
35
15
192

110
90
95
90
90
17
52
27
27
25
157

J73
207

1,761

179
31

214
40

24
23

34
40

,121
364
249
42
30
43
69

96
8

95
13

121
13

275
27

444
31

430
32

61

93
73
1
60
65
14
22
*
211

298

46

THE BUDGET FOR FISCAL YEAR 1969

Table D-2. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)—Continued
Description

1967
actual

1968
estimate

1969
estimate

Investment-Type Outlays—Continued

DEVELOPMENTAL OUTLAYS-Continued
Education, training, and health—Continued
Civil—Continued
National Science Foundation
Other agencies x

136
42
6,163

145
56

159
71

7,849

8,751

1
8

1
7

18

6,181

7,866

8,769

35
9

53
10

58
10

137
56
38
22

141
58
39
22

146
62
42
21

26
38

27
41

66

25
44
84

91

795
16
94

841
24
120

908
53
116

21
15
10

21
22
11

25
34

32
30
15
72

34
34
30
95

36
35
40
106

46
23
17
,131
44
209
61

44
27
44
,641
45
240
73

40
31
60
,496
48
257
91

Total, research and development, civil

7,057

6,819

6,885

National defense:
Department of Defense—Military:
Military personnel
Operation and maintenance
Procurement
Research, development, test, and evaluation
Other
1
Includes both Federal funds and trust funds.

325
44
110
7,160
10

328
50
95
7,200
11

325
2
45
,800
12

Total, education, training, and health, civil
National defense: Atomic Energy Commission
Total, education, training, and health
Research and development:
Civil:
Funds appropriated to the President:
Economic opportunity program
Other
Department of Agriculture:
Agricultural Research Service
Cooperative State Research Service
Forest Service
Other 1
Department of Commerce:
National Bureau of Standards.
Other
Department of Health, Education, and Welfare:
Office of Education: Research, training, and other
Public Health Service:
National Institutes of Health
Air pollution
___
Other
Social and Rehabilitation Service:
Rehabilitation research and training
Other
Other
Department of the Interior:
Geological Survey
Bureau of Mines 1
Federal Water Pollution Control Administration
Other 1
Department of Transportation:
Federal Aviation Administration
Federal Highway Administration: Highway trust fund
Other transportation 1
National Aeronautics and Space Administration l
Veterans Administration
National Science Foundation
Other agencies 1




47

SPECIAL ANALYSES

Table D-2. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)—Continued
Description

1968

1967

1969
estimate

Investment-Type Outlays—Continued
DEVELOPMENTAL OUTLAYS—Continued
Research and development—Continued
National defense—Continued
Atomic Energy Commission

1, 256

1,500

8 905

9,046

9,684

15 962

15,865

16,569

26
22
22

28
29
31

31
31
46

50
36
41

54
43
54

60
45
61

40

44

41

236

Total, research and development, national defense

1,362

282

315

22 ,379

24,014

25,653

145
7
21

175
8
25

178
8
26

132
87

140
86

144
87

33

25
3,398
64
-1
13

i

Total, research and development
Engineering and natural resource surveys—civil:
Department of Commerce
Department of Defense—Civil
_
Department of Housing and Urban Development
Department of the Interior:
Geological Survey 1 _ _
_
National Park Service
1
Other
Other agencies 1
Total, engineering and natural resource surveys
Total, developmental outlays

__

Current Outlays
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES
Agriculture—civil:
Department of Agriculture:
Consumer and Marketing Service:
Removal of surplus agricultural commodities. _ _
Other!
Foreign Agricultural Service
_
Agricultural Stabilization and Conservation Service:
Expenses
Sugar Act
Other!
Commodity Credit Corporation and special export programs:
Transfer to supplemental stockpile _
Price support, and related programs _ _ _ _ __
National Wool Act
_
. _
Other
1
Rural Electrification Administration
Farmers Home Administration:
Salaries and expenses
_
Direct loans and other 1
_____
Other
-- - - Farm Credit Administration:
Federal Intermediate Credit Banks trust fund___
Other 1
Other agencies
Total, agriculture
*Less than $500 thousand.
Includes both Federal funds and trust funds.

1




*

3,760
35

-9
12

1

*
1
3,313

63
-2
13

52
-60
62

59
88

58
3
77

-11
1

-36
-8

-54
-2

7

5

4

A,269

4,040

3,918

48

THE BUDGET FOR FISCAL YEAR 1969

Table D-2. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)—Continued
Description

1968

1967

1969

Current Outlays—Continued

CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
Business:

Civil:
Department of Commerce:
Patent office
Maritime Administration:
Ship operating subsidies and other
Federal ship mortgage insurance escrow trust fund
Other 1
Department of Defense—Civil:
Corps of Engineers—Operation and maintenance
Other
.
.
Post Office Department
Department of Transportation:
Coast Guard: Navigation aids and other *
Federal Aviation Administration: Operations
Other 1
Civil Aeronautics Board: Payments to air carriers
Small Business Administration:
Business loan and investment fund _ _ __ _
Other
Other agencies l
Total, business, civil

_

Labor—civil:
Department of Health, Education, and Welfare: Work incentive activities
Department of Labor:
Unemployment trust fund
_
Other
Other agencies
Total, labor

182
18
62

207
47
88

211

115
-21

140
-21

150
-20

474

298

-94

308

298

358

513
2
62

554
20
58

597
7
54

66

47

36

16
27

22
24

16
20

1,860

1,819

1,538

-102

22

146

1,841

1,684

11

86

584
20

620
31

664

12

15

41
34

677

824

370
-4
257
-3

Total, business

41

616

National defense: Funds appropriated to the President:
Expansion of defense production __ _ _

38

1,758

_

36

500
17
280
14

700
69

-126
-24

-149
-43
c

-214
-25

1

19

-201
3

-389

-380

259

236

557

75
86

Homeowners and tenants—civil:

Department of Housing and Urban Development:
Renewal and housing assistance:
Urban renewal._ __ _
_
College housing loans __ _
Low-rent public housing program
Other
Mortgage credit:
Federal Housing Administration
Secondary market operations trust fund
Other
.. _
Federal Home Loan Bank Board
Other agencies
Total, homeowners and tenants
1

Includes both Federal funds and trust funds.




-

\k
2

335
16

49

SPECIAL ANALYSES

Table D-2. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)—Continued
Description

1967
actual

1968

1969
estimate

Current Outlays—Continued
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
Veterans—civil:
Department of Health, Education, and Welfare: Payments
for military service credits
Veterans Administration:
Compensation and pensions
Readjustment benefits
Medical care_
General operating expenses
National Service Life Insurance trust fund
United States Government Life Insurance trust fund
Veterans reopened insurance fund
Veterans special term insurance fund
Other*...
Other agencies 1

105

105

105

4,302
292
1,272
176
671
84
-34
-30
34
38

4,606
518
1,336
190
509
75
-35
-30
21
40

4,654
618
1,413
199
576
83
-35
-32
33
41

6,910

7,336

7,654

1,102
112

1,104
108

1,118
110

917

462

322

381
-104
36

425
-144
42

442
-110
42

2,445

1,999

1,924

National defense:
Funds appropriated to the President:
Military assistance
Advances, military assistance trust fund
Department of Defense—Military: Construction.
Other agencies

873
1,070

570
1,125
20

519
1,330
25
-14

Total, international aids, national defense.

1,943

1,715

1,860

Total, international aids

4,388

3,714

3,784

53
598

45
722
3

36
6%
3

114
208

102
178
220

102
238
246

Total, veterans.
International aids:

Civil:
Funds appropriated to the President:
Foreign economic assistance l
_
Peace Corps l
Department of Agriculture: Commodity Credit Corporation and special export programs:
Credit sales, Public Law 480
Commodities disposed of and other costs incurred in connection with donations abroad and other
Export-Import Bank of Washington..
Other agencies
_
Total, international aids, civil.

Other aids and special services—civil:

Funds appropriated to the President:
Disaster relief
-_Economic opportunity program l . .
Appalachian regional development.
Department of Agriculture:
Special milk program
Food stamp program
_.
School lunch program
Department of Health, Education, and Welfare:
Public Health Service:
Hospitals and medical care
_
—
Other
* Less than $500 thousand.
i Includes both Federal funds and trust funds.
300-700
 0


66
35

50

THE BUDGET FOR FISCAL YEAR 1969

Table I>2. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)—Continued
Description

1967
actual

1968
estimate

1969
estimate

Current Outlays—Continued
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
Other aids and special services—civil—Continued
Department of Health, Education, and Welfare—Continued
Social and Rehabilitation Service:
Grants to States for public assistance and maintenance
payments
Coordination and development of programs for the aging..
Assistance to refugees in the United States
Demonstration projects and training
Work incentive activities
Other-....
--.-"--.
Social Security Administration:
Payment to trust funds for health insurance for the aged_.
Payment for special benefits for the aged
Federal supplementary medical insurance trust fund
Federal hospital insurance trust fund
Federal old-age and survivors insurance trust fund
Federal disability insurance trust fund
Other1
Department of Housing and Urban Development: Model
cities programs and other
Department of the Interior:
Bureau of Indian Affairs and other l _. _
In 1 ian tribal fun^s (trust)
Post Office Department
Department of Transportation:
Federal Highway Administration:
Landscaping, scenic enhancement, and beautification
Other1
Other1
Other agencies 1
Total, other aids and special services, civil.
Total, current expenses for aids and special services

3,002
7
27

3,436
13
29

8

4
9

950

,280

135
89
333
9*
19

139
83
452
112
29

,360
226
164
94
443
129
35

35

66

303

74
174
557

140
605

99
119
634

22
4
3

73
14
8
86

78
20
11
104

6,797

8,041

8,886

24,999

25,885

27,309

664
2,508
18,886
1,861
1,257

1,473
3,369
20,742
2,118
1,328

1,656
3,865
23,711
2,521
1,392

25,176

29,030

33,145

2,072

2,455

2,451

2,963
26
34
558
33
31

RETIREMENT AND SOCIAL INSURANCE BENEFITS
Insurance benefits —civil:
Department of Health, Education, and Welfare:
Federal supplementary medical insurance trust fund.
Federal hospital insurance trust fund
Federal old-age and survivors insurance trust fund...
Federal disability insurance trust fund
Railroad Retirement Board (trust fund)
Total, insurance benefits _
Unemployment benefits—civil: Department of Labor: Unemployment trust fund
"Less than $500 thousand.
1
Includes both Federal funds and trust funds.




51

SPECIAL ANALYSES

Table D-2. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)—Continued
Description

1967
actual

1968

estimate

1969
estimate

Current Outlays—Continued
RETIREMENT AND SOCIAL INSURANCE BENEFITS—Con.
Other retirement and social insurance benefits—civil:

Civil Service Commission: Civil Service retirement and disability trust fund
Other trust funds

1,789
11

1,932
12

2,174
13

Total, other retirement and social insurance benefits

1,800

1,944

2,187

29,048

33,430

37,783

192

195

175

63

88

98

36
27
52
45
283
-119
41

42
31
61
53
301
-172
41

32
35
64
56

622

641

661

18,923
151
101
*

19,720
152
119
*

22,221
158

Total, repair, maintenance and operation of physical
assets, national defense
_

19,175

19,991

22,508

Total, repair, maintenance and operation of physical
assets

19,797

20,631

23,169

87

94

101

80

86

87

11

90

102

29
4

32
4

32

48

51

52

Total, retirement and social insurance benefits

OTHER SERVICES AND CURRENT OPERATING
EXPENSES
Repair, maintenance and operation of physical assets (excluding
special services):

Civil:
Department of Agriculture: Forest Service
..
Department of Defense—Civil: Corps of Engineers and
other
Department of the Interior:
Bureau of Land Management_ _ _
National Park Service __ _
_.
Bureau of Reclamation
Other *
General Services Administration: Public buildings
Tennessee Valley Authority
Other agencies *___
Total, repair, maintenance and operation of physical
assets, civil
•_
_._
National defense:
Department of Defense—Military:
Operation and maintenance
Family housing _ _ _ _ _ _ _ _ _ _
Atomic Energy Commission
Other agencies

___

_

Regulation and control—civil:

The Judiciary
_
Department of Agriculture:
Agricultural Research Service
Consumer and Marketing Service:
Protective, marketing, and regulatory programs
Expenses and refunds, inspection and grading of farm
Droducts trust fund
Other 1
Department of Health, Education, and Welfare:
Food and Drug Administration and other
- - *Less than $500 thousand.
1
Includes both Federal funds and trust funds.




309
-147

38

129
*

5

52

THE BUDGET FOR FISCAL YEAR 1969

Table D-2. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)—Continued
Description

1968

1967
actual

1969

Current Outlays—Continued

OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Regulation and control—civil—Continued
Department of Justice:
Legal activities and general administration
Federal Bureau of Investigation
__ ._
Immigration and Naturalization Service_
1
Bureau of Prisons
Proposed legislation for control of crime
Department of Labor: Wage and labor standards and other
Department of Transportation:
Coast Guard
__ _ _
Federal Aviation Administration
Other
-._
._._
Federal Deposit Insurance Corporation trust fund
Interstate Commerce Commission.
_
National Labor Relations Board
1
Other agencies
-_

Other direct Federal programs:
Legislative branch 1
Department of Commerce:
Environmental Science Services Administration
Other
1

Includes both Federal funds and trust funds.




138

145

160

850

939

2

4

53

201
108
49

211
118
47

220
124
47

7

3

21
165
14

200
171
26

11
180
20

572

__

44
52
6
-274
24
35

782

657

49

54

58

34
79
52
662
35

36
82
53
688
33

46
89
61
760
32

5

5

5

915

951

1,052

176

199

206

112
12

108
9

114
9

36

44
_

Other operation and administration:
Civil:
International activities:
Department of Justice: Alien property trust fund
Department of State:
Administration of foreign affairs 1.
_
International organizations and conferences l
Educational exchange *
Other 1
Foreign Claims Settlement Commission: War claims trust
fund and other
United States Information Agency
_
__
Other agencies l

Total, Federal financial activities

-239
27
30

37
48
5
-261
24
32

787

Federal financial activities:
Legislative branch: General Accounting Office
Treasury Department:
Bureau of Accounts
__
Bureau of Customs
Bureau of the Public Debt
Internal Revenue Service
Other
Other agencies l

88
206
86
61
33
37

31

Total, regulation and control, _ _ _

Total, international activities

81
195
82
58
10
35

77
185
80
55

53

SPECIAL ANALYSES

Table D-2. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)—Continued
Description

1968
estimate

1967
actual

1969
estimate

Current Outlays—Continued
OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Oth&r ODfer&tion sind dflinifftistr&tion—~-Cf}fitinuf*il

Civil—Continued
Other direct Federal programs—Continued
Department of Defense—Civil
Treasury Department: Bureau of Accounts1
General Services Administration 1
Civil Service Commission:
Salaries and expenses and other.. _ _ _ _
Civil Service retirement and disability trust fund.
Employees life insurance fund trust fund
Employees health benefits fund trust fund
Other agencies 1
______
Total, other direct Federal programs.,.

60
49
126

_

Retirement, unemployment, and accident compensation for
Federal employees:
Department of Labor:
Unemployment compensation for Federal employees
and ex-servicemen
Employees compensation claims and expenses
Department of Transportation: Coast Guard: Retired pay.
Civil Service Commission: Special payments and annuities.
Other agencies

36
189
-63
-21
63

190
-68
-25
69

705

767

40

Total, other operation and administration, civil

92

56
44
113
7

53
54
114
8

295

311

322

45

48

73
54

72

27
59

29
65

58
21

81
21

29
67
81
22

326

367

383

3.116

3.180

19,462
33
265
78

__

91

2,800

_ _
_
_
_

79
57
45
111
4

71
47

_

Total, shared revenues and grants-in-aid

National defense:
Department of Defense—Military:
Military personnel
Operation and maintenance
Family housing
__ _ _
Civil defense
1
Other
Selective Service System
Other agencies 1

18
176
-69
-19
50

43

Total, retirement, unemployment, and accident compensation for Federal employees__
Shared revenues and grants-in-aid:
Department of Agriculture: Forest Service.. _
Department of the Interior:
Bureau of Land Management
_ _
Other
-_
_
. _
Treasury Department:
Bureau of Customs
Internal Revenue Service. _
District of Columbia: Federal payment
Other agencies

61
6
166

691

.

65
8
110

22.445

62

-64
58
22

Total, other operation and administration, national
defense
.

19,855

23,436

22,970

Total, other operation and administration
1

- -

21,472
30
290
69
1,491
61
22

22,654

26,552

26.150

Includes both Federal funds and trust funds.




60
302
61
12
64
26

54

THE BUDGET FOR FISCAL YEAR 1969

Table D-2. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(In millions of dollars)—Continued
Description

1967

1968

1969

13.391

14. 350

15,200

120

134

___ _._

13

13

137
*

___ _

133

147

149

. -

13.524

14 497

15.349

56.762

62 530

65.606

657

573

663

100

1.600
350

_ _ _ _ -6.589
-4.713

- 7 415
- 4 .181

-8.240
-4.375

158.414

175.635

186.062

Current Outlays-Continued
OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Interest:

On the public debt
Other interest:
On refunds:
Treasury Department
General Services Administration
On uninvested funds: Treasury Department
Total, other interest
Total, interest
Total, other services and current operating expenses

12

UNCLASSIFIED
Payments to other funds 1__
Allowances for:
Civilian and military pay increase
Contingencies
Undistributed:
Interfund and intragovernmental payments _
Applicable receipts from the public. _ _ _ _ _ _.
Total, budget outlays

*Less than $500 thousand.
Includes both Federal funds and trust funds.

1




SPECIAL ANALYSIS E
FEDERAL CREDIT PROGRAMS
INTRODUCTION

Federal credit aids—direct loans and insurance or guarantees of
private loans—play a major role in Government programs for:
(a) improvement of housing and encouragement of homeownership;
(b) development of agricultural and other natural resources; (c)
assistance to economic development and military preparedness
abroad; (d) promotion of business, especially exports, transportation,
and small business generally; (e) redevelopment of communities and
regions; and (f) aid to higher education.
Federal Credit Programs
New Commitments

$BiIlions
50

/

40

f

^
—
—

•—

—

Gua rantees and Insu ance
i.I.I.I..

.....

-SO

20[ )irect Lo ans — Expenditure Accou

-

-

10-

-

i r

m
01958

1959

I960

Fiscal Years

1961

10

Direct Loans— Loan A ccount

1962

1963

1964

1965

1966

1967

1968

1969

Estimate

Over the past decade the overall level of Federal credit assistance
has doubled, a rate of increase comparable to the rise in the gross
national product. During the same period many existing programs
have been broadened and new programs initiated to meet emerging
needs. On the other hand, other programs established for temporaiy
reasons in earlier years are liquidating their operations as outstanding
55



56

THE BUDGET FOR FISCAL YEAR 1969

loans are repaid or privately refinanced. Moreover, as private investors
accumulate experience with ongoing programs, they often refinance
outstanding Federal loans or directly finance the new credit requirements of borrowers.
Federal credit programs help borrowers to help themselves. In
several programs, the credit aids are part of a package of Federal
assistance. Such a package sometimes also includes, for example,
grants to provide necessary public facilities for depressed areas;
grants for work-training, education, and other types of community
action to help combat poverty; technical aids to help underdeveloped
countries plan and construct basic transportation systems; or management advice to help rural residents plan, develop and operate their
farms economically and productively.
SCOPE OF SPECIAL ANALYSIS

This analysis (a) summarizes the 1967-1969 trends in Federal credit
programs, (b) indicates the relationship between the credit programs
and the overall budget totals, and (c) discusses certain subsidy aspects
of credit programs.
The 1969 analysis includes for the first time information on the level
and trends of all Federal credit programs. It comprises not only those
operated by wholly owned Government agencies, but also those
administered by mixed-ownership corporations and trust funds. Both
currently active programs and programs in process of liquidation are
included.
The principal disbursements and repayments of most, but not all of
the direct Federal loans covered by this analysis are included in the
loan account; the specific appropriation accounts which finance these
programs are separately identified in Part 5. In addition, in line with
the recommendations of the President's Commission on Budget
Concepts, two specific types of direct loan programs, accounting for
about 15% of new commitments, are reflected in the expenditure
account; these programs comprise (a) foreign loans made largely on
noncommercial terms, and (b) other loans where the terms of the loan
contract make repayment in certain respects contingent rather than
mandatory.
As in previous years, the analysis includes both direct Federal loans
and Federal guarantees and insurance of loans made by private lenders.
It excludes all borrowing operations of Federal agencies, whether from
the Treasury or the public. Pursuant to the recommendations of the
Commission on Budget Concepts, sales of certificates of participation
in loans by the Export-Import Bank and by the Federal National
Mortgage Association as trustee for several agencies are treated as
borrowing. Sales and retirements of such certificates are shown in
table E-6, but the transactions otherwise are excluded from the
analysis.




SPECIAL ANALYSES

57

In addition, contrary to the practice followed in previous years,
the analysis is confined to loans made and repayable in dollars and,
therefore, excludes significant amounts of loans, mainly some of those
made by the Agency for International Development, which are repayable in foreign currencies.1 This exclusion facilitates reconciliation
with other budget totals.
The 1969 analysis covers credit programs administered by nine
departments and 10 other agencies. The estimates for 1968 and 1969
include credit aid authorized by legislation enacted during the past
year.2
The analysis also reflects the impact on credit programs of proposed
legislation (a) authorizing a new export expansion program by the
Export-Import Bank; (b) broadening Federal assistance for existing
programs of student loan insurance; (c) revising the formulas governing interest rates on college housing and academic facility loans;
(d) authorizing a flexible ceiling for interest rates on insured or
guaranteed housing loans; (e) accelerating the transfer of the secondary
market operations of the Federal National Mortgage Association
to private ownership; (f) creating two new cooperative banks for
rural electric and telephone loans; (g) authorizing federally insured
loans to Indians; and (h) extending authority to make credit sales
of military equipment.
NEW COMMITMENTS

New commitments are the best single measure of the short-run
trends in most Federal credit programs. They also give the best
advance indication of trends in the financing impact of these programs,
since changes in the level of new commitments usually precede corresponding changes in the volume of loans disbursed by either public
agencies or private lenders and in the purchase of goods and services
by the ultimate borrowers.
In this analysis, commitments are defined as approvals by Federal
agencies of direct loans or of insurance or guarantees of private loans.
They are shown on a gross basis, including administrative reservations, commitments which do not later result in actual credit extensions, and the unguaranteed portions of loans partially covered by
Federal guarantees.
1
2

Data on loans repayable in foreign currency is contained in table M-6 in Special Analysis M.
See summary on pp. 527-528 for further details.




58

THE BUDGET FOR FISCAL YEAR

1969

Table E-1. NEW COMMITMENTS FOR FEDERAL CREDIT PROGRAMS
CLASSIFIED BY T Y P E OF ASSISTANCE AND ACCOUNT (in millions of dollars)
1967 actual
Agency or program

Direct
loans

Guaranteed

1968 estimate
Direct

insured
loans

Guaranteed
insured
loans

1969 estimate
Direct
loans

Guaranteed
and
insured
loans

EXPENDITURE ACCOUNT
Funds appropriated to the President:
Military assistance
Economic assistance
A
Department of Agriculture: Commodity
Credit Corporation
_
Department of Health, Education, and
Welfare....
Other programs

65
1.W0

289
59

72
996

190
315

61
1,459

235
303

1,417

166

2,112

354

2,180

400

220
7
514

Total, expenditure account.

248
7

236
7
3,422

859

3,955

938

LOAN ACCOUNT
Office of Economic Opportunity
Department of Agriculture:
Commodity Credit Corporation
Rural Electrification Administration
Farmers Home Administration
Department of Commerce:
Economic Development Administration.
Maritime Administration
Department of Health, Education, and
and Welfare
Department of Housing and Urban Development:
Federal National Mortgage Association..
Federal Housing Administration
Public housing loans...
College housing loans
_
Urban renewal loans
Housing for the elderly loans
Public facility loans
Department of the Interior
General Services Administration
„
Veterans Administration:
Housing loans and guarantees
Insurance policy loans
District of Columbia
Export-Import Bank
Farm Credit Administration:
Banks for cooperatives
Federal intermediate credit banks
Federal Home Loan Bank Board
Small Business Administration
Other agencies or programs
Purchase of obligations of federally sponsored enterprises.

32

29

18

277
472
505

161
470

870
9
166

75

822

458

817

220
470
435

7
104

72

7
140

86

209
2,436
676
23
300

157
9,991
443

3,874
667
52
200

177
84
30
24
39

777

211

....

85
50
29

529

2,831

2,661

1,160

161
77

12,657
985

869

132
96

157
1,651
415
67
300
214

165

14,238
1,265
886

85
40

6
45

17

539
155
119

4,005

592
165

2,111

1,446

2,101
8,349

1,815
6,999
66
357
28
850

476

12
429

17

144
2,440

4.350

2,076

2,370
9,481

318
12

459
12

365
8

Total loan account.„

18,903

24,408

Grand total

21,802

25,346




SPECIAL ANALYSES

59

Direct loans.—New commitments of $23.8 billion for direct loans in
1969 are unchanged from the revised estimates for 1968, but roughly
$2 billion higher than the actual commitments made in 1967. Over the
2-year period, the largest increases are anticipated in short-term credit
provided by the Federal intermediate credit banks and the Banks for
Cooperatives in the loan account, and in commodity loans and longterm export sales credit by the Commodity Credit Corporation in the
expenditure account. These three credit aids alone account for well
over half of the direct loan commitments projected for 1969. On the
other hand, mortgage purchase commitments by the Federal National
Mortgage Association tor the account of the Government are expected
to be sharply lower, because legislation is proposed both to lift the
statutory ceiling on interest rates, encouragmg broader private credit
extension, and to transfer the secondary market operations to private
ownership.
Guarantees and insurance.—New commitments of $16.9 billion in
1967 for guarantees and insurance of private loans were at the lowest
level since 1961. This was primarily attributable to the sharp decline
in housing construction—aggravated by the unattractiveness of
investment in federally insured or guaranteed loans at the fixed
statutory ceilings on mterest rates.
Total commitments, however, are expected to reach a record level
of $25.3 billion in 1969. Increases in commitments for mortgage
insurance by the Federal Housing Administration ($4.2 billion), and
in housing loan guarantees by the Veterans Administration ($1.5
billion) account for the great bulk of the estimated expansion. Other
substantial increases are anticipated in guarantees of foreign loans
by the Export-Import Bank ($0.9 billion) and in low-rent housing
loans underwritten in the public housing program ($0.8 billion).
Disbursements and repayments.—Gross disbursements for direct loans
have the most immediate impact on the budget. In long-established
programs, or in programs involving short-term loans, however, the
cash outflow required for such disbursements usually is largely or
wholly offset by repayments on the outstanding portfolio of loans.
This is true for most of the credit extensions by the Federal intermediate credit banks, the banks for cooperatives, the Farmers Home
Administration and the Commodity Credit Corporation, as well as
for the interim financing of public housing and urban renewal projects.
On the other hand, long-term loans, such as those to finance construction of college housing and academic facilities or rural electrification and telephone systems, as well as purchases of mortgages to
help finance residential housing, have a major net impact on the
budget, since repayments usually fall short of new loans. This is
expecially true for rapidly expanding programs, such as the ExportImport Bank. Moreover, while in some previous years substantial
sales of outstanding loans have augmented repayments, the current
outlook is for sales of only $0.2 billion in 1968 and 1969.
Federal guarantees and insurance of private loans ordinarily have
only minor and indirect budget consequences. Principal disbursements
of Federal funds normally occur only when the borrower defaults, or




60

THE BUDGET FOR FISCAL YEAR 19 69

in a few programs when holders of such insured loans exercise their
repurchase options.

1962

1963

1964

1965

1966

1967

1968

1969

Estimate

In accordance with the recommendations of the Commission on
Budget Concepts, both the budget as a whole and this analysis
segregate and treat separately net lending—the excess of principal
disbursements over collections of all credit programs in the loan
account. The gross data on disbursements are also adjusted to reflect
writeoffs, losses, and recoveries. As a result, the net lending in any
year equals the change between the loans outstanding in the loan
account at the beginning of the year and the total outstanding at the
year end.
The same principles are followed in deriving the gross and net loan
expenditures for credit programs in the expenditure account. As a
result, the net loan disbursements for all credit programs in the loan
account and for most of the credit programs in the expenditure account are identical with the outlays shown as "loans" in 1 the "additions to Federal assets" category in Special Analysis D. The only
exceptions are for those programs in the expenditure account not
financed through revolving funds, where repayments are individually
recorded in miscellaneous receipts, rather than netted against expenditures. Omission of these repayments in Special Analysis D causes the
total of "additions to assets" in that analysis to exceed the net loan
disbursements in this analysis by $467 million, $177 million, and $223
million in 1967, 1968 and 1969, respectively.
1

See table D-2 on pp. 498-500.




61

SPECIAL ANALYSES

Table E-2. DISBURSEMENTS AND REPAYMENTS FOR FEDERAL CREDIT
PROGRAMS CLASSIFIED BY TYPE OF ACCOUNT (in millions of dollars)
1968 estimate

1967 actual

1969 estimate

Agency or program
Disbursements

Repayments

Disbursements

Repayments

Disbursements

43
1,169

43
66

34
1,064

54
84

6
1,191

1,376

2,085

2.072

1,458.

2,140

222

238

14

*
416
12

8

109
14

238
11
5

2,030
*
151
14

2,823

2,622

3,416

1,720

3,591

2.288

32

8

29

12

18

15

277
412
1,231

15
180
1,188

161
470
1,426

190
192

220
550

1,526

1,352

196
190
1.358

34

4
9

58

5
8

72

7
8

Repayments

EXPENDITURE ACCOUNT
Funds appropriated to the President:
Military assistance *__
Economic assistance
Department of Agriculture: Commodity
Credit Corporation
_
Department of Health, Education, and
Welfare
Treasury Department 1
Other programs
_._
...
Total, expenditure account.

94

LOAN ACCOUNT
Office of Economic Opportunity...
Department of Agriculture:
Commodity Credit Corporation
Rural Electrification Administration
Farmers Home Administration.
Department of Commerce:
Economic Development Administration.
Maritime Administration
Department of Health, Education, and
Welfare
Department of Housing and Urban Development:
Federal National Mortgage Association.
Federal Housing Administration
Public housing loans
_
__.
College housing loans
__
_.
Urban renewal loans
Housing for the elderly loans.
Public facility loans
_
Department of the Interior
General Services Administration
Veterans Administration:
Housing loans and guarantees
Insurance policy loans
District of Columbia.
Export-Import Bank
Farm Credit Administration:
Banks for cooperatives.
Federal intermediate credit banks
Federal Home Loan Bank Board
Small Business Administration
Other agencies or programs
Purchase of obligations of federally sponsored enterprises
_.

73

87

405

3.513

29
543

495
594
200
34
453
1
4
4
46

1,669

658
220
350
470
90
45
26
537
155
55
645

225
97
39
929

600
165

1,167

252
85
36
627

238
101
43
1.005

1,815
6,999
53
280
45

1,622
6,520
9
212
33

2,101
8,349
12
410
17

1,852
7,849
20
2%
20

2.370
9,481

2.132
8.948
20
320
16

1,766
662
154
391
607
78
59
28
38
522

146
55

641
144
1
3
3
40

405
220
295
475

100
54

16

108
1,680

421
12

564
292
235
38
444
2
4
4

41

882

850

Total, loan account-

17,787

20,869

15,091

20,372

17.106

Grand total

20,610

24,285

16,811

23,963

19.394

•Less than $500 thousand.
. . . . .
1 All 1969 transactions of the Foreign military sales fund are shown in a Treasury liquidation
account.




62

THE BUDGET FOR FISCAL YEAR 1969

Over the 1957-66 decade, net lending for all Federal programs
in the loan account ranged from a high of $3.8 billion in 1966 to
a low in 1963 when repayments exceeded new loan disbursements by
$0.1 billion. The actual net lending in 1967 and the net lending now
estimated for 1968 is at record levels, $5.2 billion and $5.8 billion,
respectively. A sharp cutback to $3.3 billion is now forecast for 1969.
This reflects predominantly the $1.8 billion reduction in net mortgage
purchases by the Federal National Mortgage Association.
Loan disbursements in the expenditure account also are expected
to substantially exceed repayments—by $1.7 billion in 1968 and $1.3
billion in 1969. This is partly because most loans for foreign economic
assistance permit deferment of principal repayments during the early
years.
OUTSTANDING DIRECT AND GUARANTEED LOANS

The best index of the level of Federal credit programs over a period
of years is pro\ided by the total outstanding direct and guaranteed
loans. By the close of 1969, these will amount to $156.9 billion in the
loan account and an additional $19.4 billion in the expenditure account—or a gross total of $176.2 billion.
Outstanding direct loans in the loan account (including loans
pooled as collateral for certificates of participation) will rise by an
estimated $9 billion over the 2-year period—almost half of this
because of the $4.1 billion increase in the total FNMA portfolio.
Other major increases are estimated for the Export-Import Bank
($1.4 billion) and the Federal intermediate credit banks ($1 billion),
as well as in college housing loans, VA housing loans, and REA loans.
An additional $3 billion rise is anticipated between 1967 and 1969
in the direct loan portfolios in the expenditure account. Most of this
occurs in foreign assistance credits of the Agency for International
Development, long-term export sales credit by the Commodity Credit
Corporation, and repayable capital contributions to student loan
funds by the Department of Health, Education, and Welfare.
Outstanding guaranteed and insured loans in both accounts will
rise from a total of $99.5 billion at the end of 1967 to $117.1 billion
in 1969. Housing loans insured by the Federal Housing Administration or guaranteed by the Veterans Administration or in the low-rent
public housing program account for two-thirds of this increase. Other
major increases are expected in loans insured by the Farmers Home
Administration ($1.6 billion), the Export-Import Bank ($0.9 billion),
the Commodity Credit Corporation ($0.7 billion), and the urban
renewal program ($0.7 billion).
The amounts shown include both the guaranteed and unguaranteed
portion of outstanding loans in order to give a more complete picture
of the economic impact of these programs and to tie in better with
banking statistics. Thus, they do not indicate the estimated contingent
liability of the Federal Government. The major program for which
the contingent liability differs materially from the principal amount
of the loans is the veterans loan guarantee program; by the end of
1969, the Government's liability will be $17.6 billion lower than the
amount of guaranteed loans outstanding under that program.




SPECIAL

63

ANALYSES

Table E-3. O U T S T A N D I N G DIRECT LOANS, A N D GUARANTEED A N D I N S U R E D LOANS FOR FEDERAL CREDIT P R O G R A M S CLASSIFIED B Y
T Y P E OF ACCOUNT (in miffions of dollar,)
1968 estimate

1967 actual
Agency or program

1969 est innate

Direct
loans

Guaranteed
and
insured
loans

Direct
loans

Guaranteed
and
insured
loans

Direct
loans

43
6,074

218
237

23
7.055

388
552

6
8.152

235
854

1,085

1,021

1.698

1.375

1,808

1.775

463

Guaranteed
and
nsured
loans

EXPENDITURE ACCOUNT
Funds appropriated to the President:
Military assistance 1
Economic assistance.
__ _
Department of Agriculture: Commodity
Credit Corporation
Department of Health, Education, and
Welfare
Treasury Department 1
Other programs
_._
Total, expenditure account.

959
4,686

l,f%
4.577

1,434
4.461

184

177

168

13,031

LOAN ACCOUNT
Office of Economic Opportunity
Department of Agriculture:
Commodity Credit Corporation
Rural Electrification Administration
Farmers Home Administration
Department of Commerce:
Economic Development Administration.
Maritime Administration
Department of Health, Education, and
Welfare
Department of Housing and Urban Development:
Federal National Mortgage Association..
Federal Housing Administration
Public housing loans
.
Collese housing loans
Urban renewal loans
Housing for the elderly loans
Public facility loans
____.,
Department of the Interior _ _ .
General Services Administration
Veterans Administration:
Housing loans and guarantees
Insurance policy loans
District of Columbia
_
Export-Import Bank
Farm Credit Administration:
Federal intermediate credit banks
Federal Home Loan Bank Board
Small Business Administration
Other agencies or programs
Purchase of obligations of federally sponsored enterprises

1,476
=====

14.727

2.315

16.030

3,327

70

87

90

294
4,506
2,229

1,636

265
4.785
2.129

2.505

288
5.146
2.123

3.260

191
101

11
562

244
93

17
669

309
85

26
796

236

476

320

641

164
7.403
635
68
2.606
286
225
269
170
174
2,203
756

54," 197"
5.772
1.921

12

31.537

2.515
814

1.790

4.868

1,302
3,547
149
1,373
88

355
232

1,551
4,047
141
1,486
85

56.538
6.394
2,271

16
45

11,527
812
73
3.180
335
412
360
203
87

33.203

2.878
878

1.904

5,543

60,361
7.299
2.609

25
25
35.151

261

197

180
4,151

10.421
699
88
2,923
304
314
310
192
128

515
203

1,790
4,580
121
1,588

81

2.727

703
188

882

882

Total, loan account

34.026

98.024

39.804 104.756

43.070 113.811

Grand total

47.057

99.500

54,531 107.071

59.100 117.138

t AH 1969 transactions of the Foreign military sales fund are shown in a Treasury liquidating
account.




64

THE BUDGET FOR FISCAL YEAR 1969
INTEREST RATES AND MATURITIES

Two of the major ways in which Federal credit programs help
achieve program objectives are by providing more favorable interest
rates or maturities than many "borrowers can obtain from other
sources. Table E-4 summarizes the current range of interest rates
charged by the various major credit programs on direct loans (or prevailing on insured or guaranteed loans) and the customary maturities
for both direct and insured and guaranteed loans. These terms are
on newly committed loans by currently active programs, and do not
necessarily correspond to those on outstanding loans, or on loans
covered by commitments made in earlier years.
Interest rates charged on direct loans vary both among the various
Federal credit agencies and sometimes among the various types of
loans made by a single agency. Many of the differences in rates
reflect mainly differences in the cost of providing the loan (including
the cost of borrowing the necessary funds), of administering the
several types of loans and of incurring the varying degrees of risk of
probable loss. In many cases, the rate charged is governed by
statutory limits or formulas. Frequently, these are intended to
assure loans at rates below those prevailing in the private market or
below the cost to the Government, in order to provide special assistance to particular groups of borrowers as a method of accomplishing
Federal program objectives. In some cases, the rates charged reflect
mainly Government borrowing costs in earlier periods, rather than
current market yields of Government obligations.
Interest rates charged on insured and guaranteed loans tend to
correspond more closely to market rates of interest on comparable
loans by private lenders—allowing for the reduction or removal of
the normal private credit risk^ In a few cases, however, interest rates
on insured loans are set below the market rate and a secondary
market is provided to assure the willingness of the private lender to
originate the loans. The Federal Housing Administration, for example,
was authorized in the Housing Act of 1961 to insure certain types of
loans to finance moderate-income housing at rates well below those
prevailing in the private market (currently 3%), and the Federal
National Mortgage Association purchases all of such mortgages. In
other cases, the Federal agency pays part of the interest costs necessary
to obtain private financing, for example, for insured student loans
made by private lenders under the Higher Education Act of 1965.
Maturities, both on direct and on insured or guaranteed loans,
often are substantially more liberal than on private loans of similar
types. Private lenders are often limited by law or supervisory policy
to shorter maturities. When a Federal agency insures or guarantees
the loans, however, these limitations customarily do not apply.
Lenders can, safely, extend their loan maturities and borrowers can
take advantage of lower periodic installments to acquire assets
yielding income or tangible benefits over a long period of years.




65

SPECIAL ANALYSES

Table E-4. INTEREST RATES AND MATURITIES FOR MAJOR ACTIVE
CREDIT PROGRAMS CLASSIFIED BY AGENCY OR PROGRAM, DECEMBER 1967
Direct loans

Guaranteed and
insured loans

Agency or program
Interest
rate
(percent)

Maturity
(years)

Interest Maturity
rate
(years)
(percent)

EXPENDITURE ACCOUNT
Funds appropriated to the President:
Military assistance
Economic assistance
Department of Agriculture: Commodity Credit Corpora
tion
Department of Health, Education, and Welfare

0-6
3H
0-5H

3-10
5-40

6-7^

4-10
5-25

33-40

1-11

LOAN ACCOUNT
Office of Economic Opportunity
Department of Agriculture:
Commodity Credit Corporation
Rural Electrification Administration
Farmers Home Administration
Department of Commerce:
Economic Development Administration.
Maritime Administration
Department of Health, Education, and Welfare
Department of Housing and Urban Development:
Federal National Mortgage Association
Federal Housing Administration
Public housing loans
College housing loans
Urban renewal loans
Housing for the elderly loans
Public facility loans
Department of the Interior: (Reclamation loans)
General Services Administrati on
Veterans Administration:
Housing loans and guarantees
Insurance policy loans
__
District of Columbia
_
Export-Import Bank
Farm Credit Administration:
Banks for cooperatives
Federal intermediate credit banks
Federal Home Loan Bank Board
Small Business Administration
_

15-30

__.

4-7
2
3-5
__.

K-5
35
1-50

4-6^

6
3-6

5-40
9-25
0-40

6-8
6
6

5-10
25

3-6

20-40

3-6
__.

2H5

O-3J4

25-40
20-40
0-40
40-50
0-34
30-50
10-40
22-50

6

JHO

1-30

4-6%
4
0-5H
6

3

7-30

4K-6
_..

4-7K
35H

1/4-20
1-20
1-7
1-25
1-30

7-30
6-10

4-7

3-8

1-30

1

When commodity loan is repaid by forfeiting collateral, no interest is charged.
2 On student loans, maturities begin when student leaves school and exclude periods of military
or3 Peace Corps service.
In addition, property improvement loans are insured for 4-5% discount per year (equivalent to
over 8% simple interest), and with maturities of 6 months to 7 years.
« Indefinite.

Unlike most other programs, Government outlays on credit programs are largely or wholly repayable with interest, so that the
ultimate net cost is normally low. Some programs are fully selfsupporting; in most others, income from interest payments or insurance and guarantee fees covers most of the current expenses,
and sometimes provides reserves for future losses. But a substantial
number of loan programs contain an element of subsidy, e.g., by
300-7000—68

5




66

THE BUDGET FOR FISCAL YEAR 1969

lending at more favorable interest rates than the cost of money to the
Government and/or at rates inadequate to defray the administrative
expenses of the program or to establish an adequate reserve for
probable future losses.
The Commission on Budget Concepts has recommended:
(a) "That the full amount of the interest subsidy on loans compared
to Treasury- borrowing costs be reflected and specifically disclosed in
the expenditure account of the budget, and furthermore, that it be
measured on a capitalized basis at the time the loans are made"; and
(b) "That effective measures be developed to reflect (in the expenditure rather than the loan account of the budget) the further
subsidy involved in the fact that Federal loans have a larger element
of risk than Treasury borrowing. This should be done by creation of
allowances for losses and making appropriate credits to those allowances and charges to expense as new loans are extended."
As the Commission recognized, these recommendations will require
extensive further study and consultation to develop the information
and methods necessary to place them in force. While it is not possible
in this budget to present reliable data on the amounts of "subsidy"
involved, a preliminary review indicates that of the roughly $20 billion in new commitments for loans estimated for the fiscal year 1968
by loan programs in the loan account, three-fourths are being made
at interest rates of 5% or higher. However, the great bulk of the
estimated new commitments of $3.4 billion in direct loan commitments by programs in the expenditure account are made at lower
rates of interest and/or with terms which give the borrower considerably greater option on the timing and extent of interest and/or
principal payments.
GOVERNMENT-SPONSORED CREDIT PROGRAMS

Three major groups of Government-sponsored, privately owned
institutions administer credit programs. The operations of the Federal
land banks and of the Federal home loan banks are not reflected in
the budget totals, but detailed schedules and explanatory statements
are printed as annexed budgets in Part I I I of the Appendix. The
operations of the Federal Reserve banks have no direct effect on
Table E-5. OUTSTANDING LOANS FOR MAJOR GOVERNMENT-SPONSORED
CREDIT PROGRAMS (in millions of dollars)
Outstanding at end of—

Agency
1966
actual

Farm Credit Administration: Federal land banks
Federal Home Loan Bank Board: Federal home loan
banks
Federal Reserve, Board of Governors: Federal
Reserve banks
__
.
Total




1967
actual

1968
estimate

1969
estimate

4,725

5,304

6,069

6,860

6,783

4,302

4,600

5,600

530

204

12,038

9,810

0)

67

SPECIAL ANALYSES

budget totals, but payments of excess Federal Reserve profits are
regularly made to the Treasury and these will continue to be treated
as budget receipts in line with the recommendations of the Commission
on Budget Concepts.
The Federal land banks anticipate a continued rapid expansion,
amounting to $2.1 billion over the 3-year period, in outstanding loans
made through the nearly 700 Federal land bank associations. The Federal home loan banks, after the rapid repayment of advances during
1967, now expect a net expansion of $1.3 billion in outstanding advances over the next 2 years. Outstanding discounts, advances, and
acceptances of the Federal Reserve banks declined by $0.3 billion
during 1967.
CERTIFICATES OF PARTICIPATION IN FEDERAL LOANS

For several years the Export-Import Bank and the Federal National
Mortgage Association, as trustee for five departments and agencies,
have been pooling blocks of direct loans and selling certificates of
participation in such pools. Receipts from these sales not only have
provided private financing for the specific programs involved, but
also under previous budget concepts have been treated as offsets to
budget expenditvires, comparable to the proceeds from direct sales
of individual loans.
Table E-6. SALES AND RETIREMENTS OF CERTIFICATES OF PARTICIPATION IN FEDERAL LOANS (in millions of dollars)
1967 actual
Agency or program

Department of Agriculture: Farmers Home
Administration _
_
Department of Health, Education, and
Welfare:
Office of Education
Public Health Service
Department of Housing and Urban Development:
Federal National Mortgage Association..
College housing loans
Housing for the elderly loans
Public facility loans
Veterans Administration
Small Business Administration
Subtotal, trusts administered by
FNMA
.._
..
Export-Import Bank
Total

Sales

1968 estimate

Retirements

Sales

600

Sales

Retirements

500

675

100

Retirements

1969 estimate

180

140
13
2
82
213

100
15
49

61
70

605
1,385
60
80
765
315

61
70

1,205
500
65
80
600
200

2,900
1,329

18C
550

4,000
1,300

180
435

3,150
850

630
242

4,229

730

5,300

615

4,000

872

740
600

49

80
260
520

In this budget, in accordance with the recommendations of the
Commission on Budget Concepts, sales of participations are treated
as means of financing the loan portfolio, i.e., agency borrowing, rather
than sale of assets. Table E-6 summarizes the trends in sales and
retirements for the six departments and agencies involved.



68
SUMMARY

THE BUDGET FOR FISCAL YEAR

1969

OF LEGISLATION AUTHORIZING NEW
FEDERAL CREDIT PROGRAMS

AND

BROADENED

The following summary lists all legislation authorizing new Federal
credit programs or revising existing programs in major respects
enacted during the last session of Congress. It excludes simple extensions in expiring laws and increases in funds for continuing programs.
I. Department of State—Agency for International Development and
Department of Defense
A. Foreign Assistance Act of 1967—Public Law 90-137
(1) Revises interest rates for Development Loan Fund and Alliance
for Progress loans, and criteria for DLF loans; (2) revises standards
for investment guarantees and basis for determining interest rates,
(3) transfers the military sales fund at the end of the fiscal year 1968
from the Department of Defense to the Treasury Department to
discharge outstanding liabilities and obligations arising out of previous
credit sales agreements; and (4) limits guaranteed military sales credit
extended in 1968 and terminates authorities for sales and guarantees
as of June 30, 1968.
II. District of Columbia
A. District of Columbia Federal Payment Authorization and
Borrowing Authority Act of 1967—Public Law 90-120
Provides broader and more flexible formula to govern Federal loan
authorization to the D.C. General Fund (capital outlay).
B. Amendments to the Act of June 12, 1960—Public Law 90-84
Forgives half of outstanding debt on the Dulles Interceptor sewer
line.
III. Farm Credit Administration
Amendments to the Federal Farm Loan Act and the Farm Credit
Act of 1933—Public Law 90-204.
Removes statutory interest ceiling on loans made by Federal land
banks and banks for cooperatives, and makes related adjustments in
other interest rates.
IV. Small Business Administration and Office of Economic Opportunity
A. Small Business Act Amendments of 1967 and Small Business
Investment Act Amendments of 1967—Public Law 90-104
(1) Increases maximum maturity of business loans for construction
purposes to 15 years, and (2) liberalizes authority to purchase debentures of small business investment companies and establishes new
interest formula on such debentures.
B. Economic Opportunity Amendments of 1967—Public Law
90-222
Revises standards for SBA loans to provide employment and
investment incentives to small businesses in areas with high proportions of unemployed or low-income individuals or businesses owned
by low-income individuals.




SPECIAL ANALYSES

69

V. Appalachian Regional Commission
A. Appalachian Regional Development Act Amendments of
1967—Public Law 90-103
Authorizes grants and loans with flexible interest and repayment
requirements for expenses of planning and obtaining insured loans
for low and moderate income housing construction in growth areas
of Appalachian region.




SPECIAL ANALYSIS F
CIVILIAN EMPLOYMENT IN THE EXECUTIVE BRANCH

Recent substantial increases in civilian employment in the executive
branch are attributable chiefly to support for Vietnam operations
and to a large increase in mail volume. Because of the expected near
stabilization of Vietnam defense requirements, the rise in civilian
employees in fiscal 1969 is estimated to be substantially less than
in 1968.
FULL-TIME PERMANENT CIVILIAN EMPLOYMENT

Full-time permanent civilian employment is estimated to reach
2,687,500 by the end of 1969. Nearly one-half of these employees
will work in the Defense Department, another one-fifth in the Post
Office, and about 6% in the Veterans Administration. Thus, these
three agencies account for nearly three-quarters of all permanent
full-time employment in the executive branch.
Table F-l outlines the estimated changes in civilian permanent
full-time employment between 1968 and 1969. Of the total anticipated
increase of 46,000, over 39% is for the Post Office to service a 3.8%
increase in mail volume and a further substantial rise in the number
of mailing addresses. Another 6%, or 3,000 employees, is for the
Department of Defense to support operations in Vietnam.
The remaining increase is for providing a larger number of public
services to a growing population and expanding economy. Ten agencies
account for the bulk of these added employees:
(1) The Treasury Department, up 3,500, as the Internal Revenue
Service will require an additional 2,700 persons to stay abreast of 112
million tax returns, up 3 million in 1969, and the Bureau of Customs
expects a 7% increase in formal cargo entries.
(2) The Department of Health, Education, and Welfare, up 3,400,
mainly because the number of claims processed for old-age and survivors insurance is expected to rise, and bills and claims received
under the supplementary medical insurance plan are expected to
increase by 3 million.
(3) The Department of the Interior, up 2,400, chiefly for teachers
to educate Indians on reservations, for personnel to continue building
and to operate new power facilities initiated in prior years, for work
on water pollution control (including the staffing of new laboratories),
and for accommodating a 9% increase in visitors to the National
Parks.
(4) The Department of Transportation, up 1,900, largely for additional workload in the Federal Aviation Administration associated
with increased aviation activity, illustrated by a 15% increase in
lajidings and takeoffs at airports with FAA towers.
(5) The Veterans Administration, up 1,900, primarily to enlarge
and improve hospital services and give better medical care.




70

71

SPECIAL ANALYSES

Table F-1. SUMMARY OF FULL-TIME PERMANENT EMPLOYMENT IN THE
EXECUTIVE BRANCH
As of June
Agency

Department of Defense, Military and military
assistance
Post Office Department
Subtotal.
Department of Agriculture
Department of Commerce
Department of Defense, Civil
Department of Health, Education, and Welfare..
Department of Housing and Urban Development.
Department of the Interior
Department of Justice
Department of Labor
Department of State
Agency for International Development
Peace Corps
Department of Transportation
Treasury Department
Atomic Energy Commission
General Services Administration
National Aeronautics and Space Administration..
Veterans Administration
Other agencies:
Selective Service System
Small Business Administration
Tennessee Valley Authority
The Panama C a n a l . . . .
United States Information Agency
Miscellaneous agencies 1
Subtotal.

1967
actual

1

1969
estimate

1,193,657
528,254

1,220,500 1,223,500
550,600
568,400

1,721,911

1,771,100 1,791,900

3,000
17,800
20,800

9,461
26,849
16,713

1,240
55,187
81,591
7,013
37,117
33.726
150,225

85,800
26,200
32,200
105,400
14,800
61,100
33,650
9,700
26,900
17,600
1,400
57,700
82,000
7,150
38,300
32,400
152,100

86,300
27,000
32,600
108,800
16,200
63,500
34,200
10,700
27,000
18,100
1,600
59,600
85,500
7,300
39,700
32,600
154,000

500
800
400
3,400
1,400
2,400
550
1,000
100
500
200
1,900
3,500
150
1,400
200
1,900

7,085
4,142
11,903
14,571
1U 686
32,204

7,200
4,300
12,350
14,950
11,650
33,550

6,900
4,700
12,700
15,000
11,700
35,100

-300
400
350
50
50
1,550

850,140

868,400

890,800

22,400

4,800

2,400

2,687,500

45,600

85,723
25,900
31,980
97,792
14,250
60,606
33,176

Allowance for contingencies-

Total

1968
estimate

Increase,
1969
over
1968

2,572,051

Excludes member-employees of the Soldiers' Home.

(6) The Department of Housing and Urban Development, up
1,400, mainly covering an anticipated growth of 100,000 FHA mortgage insurance applications, and the new or expanded activities in the
Model Cities, Public Housing, and Urban Renewal programs.
(7) The General Services Administration, up 1,400, mostly to
handle the increased volume of supplies required for support of mihtary
operations in Southeast Asia, and for the operation and maintenance
of 3 million square feet of new Federal buildings, construction of
which will have been completed.
(8) The Labor Department, up 1,000, to administer an expanded
Federal manpower program including full cost on-the-job training for
the disadvantaged, short-term employability training, and support for
State and local manpower program planning.
(9) The Commerce Department, up 800, largely for (a) a larger
number of overseas commercial exhibitions in 1969 which are expected



72

THE BUDGET FOR FISCAL YEAR 1 9 6 9

to boost sales of American products abroad, (b) a significant increase
in weather observations and improved weather forecasting capability,
and (c) a 4% increase in the disposition of patent applications.
(10) The Justice Department, up 550, mainly for crime control and
civil rights activities of the FBI and the Department's attorneys, and
for the expected 7 million additional inspections by the Immigration
and Naturalization Service.
TOTAL FEDERAL PERSONNEL

Employees in permanent full-time positions account for nearly
90% of total civilian employment in the executive branch. The
remainder consists of part-time and intermittent workers, employed
largely in projects of a special, temporary, or seasonal nature.
Total Federal Government employment also includes military
personnel in the executive branch and employment in the legislative
and judicial branches.
As of June
1967

1968

1969

Civilian employment in the executive branch:l
Permanent full-time
Other than permanent full-time 2
Military personnel:
Department of Defense
Reimbursable details to other agencies
Department of Transportation (Coast Guard)

^tual
estimate estimate
2,572,051 2,641,900 2,687,500
305,276
289,800
299,200

Total executive branch personnel

6,290,378 6,458,897 6,502,695

Legislative and judicial personnel..Total

3,374,436 <3,487,510 3,474,589
2,075
2,366
2,931
36,540
37,321
38,475

34,291
6,324,669

1
2

Excludes member-employee* of the Soldiers' Home.
Excludes summer workers under the President's Youth Opportunity Campaign and various
merchant seamen on vessels under Federal shipping contracts.

GEOGRAPHICAL DISTRIBUTION OF EMPLOYMENT

Table F-2 presents data on the geographical distribution of Federal
employment. Most Federal employees—over 81%—work in the
various States. Less than 11% are located in the Washington, D.,C.
metropolitan area (including nearby Maryland and Virginia). Another
8% are in foreign countries and in U.S. territories and possessions.
PERSONNEL COMPENSATION AND BENEFITS

Estimates of the Federal payroll and related costs are shown in
table F-3. Direct compensation includes regular pay, Sunday pay,
and special pay for overtime, holiday, and standby time; differentials
for nightwork and overseas duty, flight and hazardous duty, etc.
Related personnel benefits include the Government's share of Federal
retirement and old-age, survivors', and disability insurance costs;
employees' life insurance, health insurance and benefits, and similar
payments; they also include cost-of-living and quarters allowances,
uniform allowances (when paid in cash), and, in the case of the
military personnel, they also include allowances for subsistence,
reenlistment bonuses, and certain other cash payments.




73

SPECIAL ANALYSES

Table F-2. FEDERAL CIVILIAN EMPLOYMENT BY GEOGRAPHICAL
LOCATION (as of June 1967)
Location
Washington, D.C., metropolitan
area
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma

Total 1

2 308,712
62,066
14,834
24,864
16,502
306,351
41,380
18,315
4,232
65,051
75,701
26,859
7,717
113,761
39,813
17,933
21,746
35,784
28,664
16,955
3
59,684
66,445
53,623
29,738
19,822
63,822
9,682
15,515

7.814
4,596
66,091
25,399

185,521
36,617
7,576
100,148
55,598

Total 1

Location

Oregon
_
Pennsylvania
Rhode Island
South Carolina
South Dakota.
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Undistributed

22,806

143,588
14,924
29,665
9,267
40,388

144,191
41,412
3,454

3 81,162
55,764

12,663
^_

Total United States
Outside United States:
Territories and possessions
Foreign countries
Total
outside
United
States
U.S. citizens
Foreign nationals

24,299
4,658

-7,714
2,675,458

35,728
200,432
236,160
(58,510)
s (177,650)

Total employment
Legislative and judicial

2,911,618
-34,291

Total employment executive branch
Other than full-time permanent.

2,877,327
-305,276

Total full-time permanent
employment, executive
branch

2,572,051

1
2
3

Distribution by State is partially estimated.
Includes employees of the executive branch and of the legislative and judicial branches.
Excludes employment within the Washington. D.C., metropolitan area, which includes the
District of Columbia, and the adjacent counties and cities in Maryland and Virginia.
4
Includes various merchant seamen on vessels under Federal shipping contracts who are distributed by State of residence and member-employees of the Soldiers' Home.
5
Excludes 120,383 foreign nationals working for Department of Defense under contract agreements, or other arrangements with foreign governments which provide for the furnishing of personal
services,

The obligations to be incurred for civilian personnel compensation
and benefits in 1969 are estimated at $25 billion.
Some of the personnel are employed by trust funds (such as old-age
and survivors insurance) and some are employed by public enterprise
funds (such as the Post Office). The cost of these employees, included
in Table F-3, amounts to $7 billion.
Government pay scales for "blue collar" workers have for many
years been subject to administrative adjustment to correspond to
local prevailing rates in private industry. As wages in private industry
advanced, Federal compensation for such workers also increased.
Pay for most other Federal workers has been set by statute. In



74

THE

BUDGET FOR FISCAL YEAR

1969

December 1967, the Congress enacted pay legislation which authorizes
the President, without additional congressional approval, to set
salary rates consistent with the standards set forth in the 1962 Salary
Reform Act.
Table F-3. ESTIMATED PERSONNEL COMPENSATION A N D BENEFITS
(In millions of dollars)
Description

1969»

Total...

___

1968

20,600
1,700

22,300
1,850

23,150
1,900

22,300

Total civilian personnel costs:
Direct compensation
Personnel benefits

1967

24,150

25,050

11,750
3,500

13,050
3,900

13,500
4,000

15,250

16,950

17,500

MEMORANDUM
Total military personnel costs: 2
Direct compensation
Personnel benefits
Total

1
Excludes 1969 budget allowance of $1,600 million for military and civilian pay increases, to be
effective July 1, 1968, under present law.
2
Excludes Reserve components.

This legislation is designed to achieve, in three steps, comparability
with private industry salary levels by July 1969.
The first step was effective retroactively to October 1967 and provided an increase of 6% for postal employees and an average increase
of 4.5% for all others. The second step, which is to be effective in
July 1968, provides a 5% increase for postal employees, and an increase
for all others equal to one-half of the difference then existing between
Government salaries and comparable private salaries for the same type
of occupation. The third and final step will achieve full comparability
in July 1969. The compensation figures in table F-3 reflect the first
step in the series.
For 3 successive years, 1965-67, there has been no significant Government-wide change in the average grade of Classification Act
employees. Apart from legislative changes in pay scales, average
compensation for 1967 showed only a slight increase from 1966. This
was due mostly to merited within-grade salary advancements and
necessary reclassifi cations of new positions in certain agencies.
TRENDS IN NUMBERS OF EMPLOYEES AND WORKLOAD

The continued growth in population, in national income, and in
economic activity, coupled with an increasing concern for the welfare
of the poor and the elderly, has brought about a sharp rise in the
volume of public services the Government is called upon to render.
In 1969, for example, the participants in the food stamp program will
rise 8%; establishments with Federal meat inspectors will increase
by 78%; the number of pieces of mail delivered by the Post Office will
be up 3.8% to 85 billion; the number of small business loans are expected to increase by 21%; complaint applications concerning monopolistic and unfair trade practices are projected to rise by 7%; air



SPECIAL ANALYSES

75

carrier rate and fare cases will rise by 16%; the number of radio and
television stations regulated by the Federal Communications Commission will be up 5%; a 93% increase is expected in electric rate filings to
the Federal Power Commission; the number of law enforcement
investigations and cases completed by the Department of Justice is
expected to rise by 5%; there will be a 20% increase in outlays by
Federal manpower programs, mostly aimed at the disadvantaged in
both urban and rural areas; the number of applications for motor
carrier operating authority is expected to increase by 8%; a 7.5%
increase is projected in unfair labor practice cases; and beneficiaries
of the Social Security system will increase by 4%. The increase in
staff needed to carry out the new programs and to accommodate the
increasing demands for existing Government services has been estimated on the assumption that existing work methods can be improved
with a resulting increase in productivity.
Government Civilian Employment
Millions of Employees

14-

12

10-

1942

1945

1950

End of Fiscal Year

A historical comparison of total Federal civilian employment in the
executive branch (including temporary and part-time employment)
with employment by State and local governments and U.S. population
for 1942-69 is shown in table F-4.



76

THE BUDGET FOR FISCAL YEAR 1969

Table F-4. GOVERNMENT EMPLOYMENT AND POPULATION, 1942-69
Government employment

Federal
Total
Federal emState and All govern- Federal as
ployment
executive local governmental
percent of
United
per 1,000
ments
units
all governbranch1
States
(thousands) (thousands) (thousands) mental units (thousands) population

Year

1942
1943
1944
1945
1946
1947
1948_
19-»9
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967

Population

-

2

2,272
3,274
3,304
3,787
2,666
2,082
2,044
2,075
1,934
2,456
2,574
2,532
2,382
2,371
2.372
2,391
2,355
2,355

2,371
2,407
2,485
3
2,490
3
2,469

-

1968 (estimated) f
1969 (estimated)*

2,496
2,664
2,877
2,932
2,987

3,310
3,184
3,092
3,104
3,305
3,568
3,776
3,906
4,078
4,031
4,134
4,282
4,552
4.728
5.064
5,380
5,630
5,806
6,073
6,295
6,533
6,834
7,236
7,700
8,320
8,898

5,582
6,458
6,396
6,891
5,971
5,650
5, £20
5,981
6,012
6,487
6,708
6,814
6,934
7,099
7,436
7,771
7,985
8,161
8,444
8,702
9,018
9,324
9,705
10,196
10.984
11.775

40.7
50.7
51.7
55.0
44.6
36.8
35.1
34.7
32.2
37.9
38.4
37.2
34.4
33.4
31.9
30.8
29.5
28.9
28.1
27.7
27.6
26.7
25.4
24.5
24.2
24.4
23.8
23.0

135.361
137,250
138,916
140,468
141,936
144.698
147.208
149,767
152,271
154.878
157,553
160,184
163,026
165,931
168,903
171,984
174.882
177,830
180,684
183,756
186,656
189,417
192,120
194,592
196,920
199,118

16.8
23.9
23.8
27.0
18.8
14.4
13.9
13.9
12.7
15.9
16.3
15.8
14.6
14.3
14.0
13.9
13.5
13.2
13.1
13.1
13.3
13.1
12.9
12.8
13.5
14.4
14.6
14.7

1
Covers total end-of-year employment in full-time permanent, temporary, part-time, and
intermittent positions except for summer workers under the President's Youth Opportunity
Campaign; member employees of the Soldiers' Home; and various merchant seamen on vessels under Federal shipping contracts:
1967
1968
1969
actual
estimate
estimate
Youth Opportunity Campaign
82,923
83,000
83,000
Merchant seamen
7,464
6,500
6,400
Member-employees of the Soldiers' Home
250
250
260
2
Includes piece-rate census workers employed for the decennial census.
3
Excludes 7,411 project employees in 1963 and 406 project employees in 1964 for the public
works acceleration program.
* An official projection of population and of State and local government employment for
1968 and 1969 is not available. The percentages and ratios shown for these years are consistent
with a range of reasonable estimates based on recent trends in population and State and local
employment.




SPECIAL ANALYSIS G
FEDERAL ACTIVITIES IN PUBLIC WORKS

To aid in understanding the nature and magnitude of Federal
activities affecting public works, this analysis brings together information on new authority and budget outlays relating to Federal construction and federally aided State and local public works. The
analysis also includes, as a separate tabulation, information on major
Federal programs affecting construction by private cooperatives and
nonprofit groups. Other Federal programs which affect the level of
private construction, such as Federal procurement, leases, loans,
loan guarantees, and tax concessions, are not included in this analysis.
The trend of Federal expenditures for grants and direct Federal
civil and defense construction is shown in the accompanying chart.
Table G-1 indicates total budget outlays for public works, including
net lending, over a 10-year period.
Total outlays for public works are estimated at $10.4 billion in
1969, 52% higher than in 1960. The higher level in recent years reflects
the growing need for highways, schools, public buildings, research
facilities, and other structures to carry on various governmental
functions. Increases in 1968 and 1969, however, have been held to a
minimum by slowing down on certain construction programs in order
to reduce the deficit and lessen inflationary pressures on the economy.
Actions taken include reductions in 1968 under the cutback of controllable programs enacted by the Congress and a temporary postponement of new construction contracts. As a result of these actions
and further reductions recommended for 1969, new obligational
Table G-1. FEDERAL EXPENDITURES AND NET LENDING FOR PUBLIC
WORKS, FISCAL YEARS 1960-69 (in millions of dollars)

From Federal funds and trust funds
Year

1960
1961
1962_
1963
1964
1965
1966
1967
1968 estimate
1969 estimate

Total
Federal
outlays

6,846
6,823
6,938
7,196
8,346
8,886
9,428
9,572
10,281
10,404

Direct 1 rederal construction
Grants
Total

3,463
3,758
3,693
3,704
4,019
4,152
4,693
4,483
4,489
4,391

Civil

1,643
1,878
2,085
2,321
2,691
2,800
3,014
2,752
2,706
2,607

Net
lending

Defense

,820
,880
,608
,383
,328
,352
,679
,731
,784
,783

156
149
207
190
142
167
289
359
319
308

3,226
2,915
3,037
3,302
4,186
4,567
4,446
4,730
5,473
5,706

Note,—In this and the following tables, nonconstruction costs are excluded; proposed legislation
is included for the years 1968 and 1969. Details may not add because of rounding. Net lending in
years prior to 1967 does not reflect those repayments deposited to miscellaneous receipts, which
for 1967 and later years are netted against disbursements.




77

78

THE BUDGET FOR FISCAL YEAR 19 69

Federal Expenditures for Public Works Other than Loans
$ Billions

7.0-

{

D

6.0

Defense g
CMI

C

5.7

Grant

5.5

5.0 -

4.7

4.0 -

3.0-

2.8

2.7

2.6

2.0

i.o-

I960

1961

1962

1963

1964 1965

1966

1967

Fiscal Years

1968 1969
Estimate

authority and loan authority recommended for civil public works have
been reduced by $1.5 billion to $8.7 billion in 1969.
As indicated in the accompanying chart, expenditures for direct
Federal civil construction are estimated to decline in 1969; however,
the estimated level is 59% higher than in 1960. Expenditures for
defense construction have varied over the 10-year period and will
be slightly lower in 1969 than in 1960. Grants for public works will
continue to increase in 1969 and are 77% higher than in 1960.
DIRECT FEDERAL PUBLIC WORKS

Projects built and owned by the Federal Government are termed
direct Federal works. The category includes defense and space installations; complex multiple-purpose water resource projects providing flood control, navigation, water supply, and power; research
facilities; public buildings; air navigation facilities; and other structures. Budget expenditures for direct works generally measure the
value of the work put in place and ultimately reflect the Federal cost
of the projects.
Table G-2 provides information according to whether the direct
works are for civil purposes or for national defense, by major agency.
In 1969, approximately 60% of the expenditures for direct Federal
public works will be for civil programs. The largest civil programs are




79

SPECIAL ANALYSES

those of the Corps of Engineers, Bureau of Reclamation, Bonneville
Power Administration, and Tennessee Valley Authority for water resources development and related power and transmission facilities.
Other major direct Federal construction is undertaken by the General Services Administration, the Forest Service, the National Park
Service, and the National Aeronautics and Space Administration.
Table G-2. DIRECT FEDERAL PUBLIC WORKS: EXPENDITURES AND 1969
NEW OBLIGATIONAL AUTHORITY BY AGENCY (in millions of dollars)
From Federal funds and trust funds
IExpenditures
1967

Civil public works:
Forest Service
Corps of Engineers—Civil __
__ __
Public Health Service
Social Security Administration (trust funds)
Bureau of Indian Affairs
National Park Service
Bureau of Reclamation. _
Bonneville Power Administration
Post Office Department
Coast Guard
Federal Aviation Administration
General Services Administration
National Aeronautics and Space Administration._ _
Veterans Administration _ _ _
. . .
Tennessee Valley Authority.__ _
__
Other .

1968

1969

New
obligational
authority, 1969
estimate

112

137

123

139

1,057
36
1
56

1,022
47
8
58
54

923
48
26
55
51

894
30
26
52
13

52
231

210

215

202

106
43
29
62

115
42
34
79

116
88
70
102

114
130
52
71

239

214

172

61

289
60
183
196

160
59
249
218

76
66
263
213

45
34
28
87

2,752

2,706

2,607

1,978

447
523
550
80
1
130

786
Ml
568
90
2
161

604
356
438
134
6
245

691
372
278

Subtotal, national defense public works

1,731

1,784

1,783

1,773

Total, direct Federal public works

4,483

4,489

4,391

3,752

Subtotal, civil public works
National defense public works:
Army
__ __
Navy__ _
Air Force
Interservice activities
Civil defense centers and shelters
Atomic Ehergy Commission

._

79

353

A region or community is affected by direct Federal construction
both during the period of construction and over the longer period of
use of the completed structure. During the construction period, depending upon the characteristics of the project and area involved, part
of the construction workers, equipment, and supplies will be drawn
from the immediate area and part from more distant areas. After
completion of the project, the community and the Nation benefit
from the services provided by the project. Low-cost electricity,
transportation, water for irrigation and for domestic consumption,




80

THE BUDGET FOR FISCAL YEAR 1969

recreation, and other purposes are examples of the direct benefits
provided by some Federal projects. In other instances, the community
benefits indirectly as in the case of military bases, laboratories, and
veterans hospitals.
GRANTS AND NET LENDING FOR PUBLIC WORKS

Federal expenditures for grants and lending in support of construction by State and local governments are summarized by agency
in table G-3. The Federal expenditures are generally advances or
reimbursements paid to State and local governments for specific construction projects. Most of the grants are contingent on the availability
of the State and local share of project costs. The Federal contribution
varies by program and may be expressed as a fixed percentage of the
total cost of the project or as a variable ratio depending on such factors as population and relative financial ability of the States.
Table G-3. GRANTS AND NET LENDING FOR PUBLIC WORKS: OUTLAYS

AND 1969 NEW AUTHORITY, BY AGENCY (in millions of dollars)
From Federal funds and trust funds
Expenditures and net lending
1967

Grants to State and local governments:
Appalachian regional development programs
Public works acceleration
Soil Conservation Service
Farmers Home Administration
Economic development assistance (Commerce)
Corps of Engineers—Civil
_
_ .
Office of Education
Public Health Service
Department of Housing and Urban Development..
Office of Territories
Federal Water Pollution Control Administration. _.
Federal Aviation Administration
Federal Highway Administration
Other civil
Subtotal, civil grants
Department of Defense
Total, grants
Lending to State and local governments:
Department of Agriculture
_
Economic development assistance (Commerce)
Office of Education
Department of Housing and Urban Development..
Bureau of Reclamation
District of Columbia
Other
Repayments...
__
__
Total, net lending




19
73
20
60
12
259

118

1968

1969

NOA
and LA
1969
estimate

219

197

79

69

37

31
99
26
310

39
138
69
239

32
170
69
124

127
12

219

188

191

18
8
85
64
3,988
1

169
14
112
58
4,192
19

m
26
154
73
4,177
35

334
17
237
70
4,626
80

4,725
5

5,467
6

5,698
8

6,184
6

4,730

5,473

5,706

6,190

8
8
32
442
17

4
25
25
465
14

2
31
30
440
8

34
40
402
4

16

67

3
-172

6
-235

4
-274

-3

359

319

508

588

1\

2

104
6

SPECIAL ANALYSES

81

For example, the Federal Government's share of the cost of the
41,000 miles of highways comprising the Interstate Highway System
is 90%. The system is now more than three-fifths completed. For most
of the remaining highway grant programs, the Federal share is 50%,
although for special programs, such as Appalachian development
highways, the Federal share may be larger.
On the other hand, allocations to States for waste treatment facilities
are made on the basis of population and per capita income. The
Federal share of the cost of individual waste treatment plants may
range from 30% to 55% of project costs.
Certain types of public works built by State or local governments
are eligible for Federal loans on favorable terms. Most of these are
in support of income-producing facilities which might otherwise be
unable to provide low-cost public services such as water and sewer
developments, public housing, and urban rehabilitation, including
mass transportation. For example, the Department of Housing and
Urban Development helps State and local governments provide
housing for students and faculty in higher educational institutions
by providing loans for up to 50 years at 3% per annum interest.
When loans are not otherwise available on reasonable terms, the
Department of Housing and Urban Development provides loans to
State and local governments for the construction of public facilities
for up to 40 years at an interest rate }4% to XA% above the average
rate on all interest-bearing obligations forming part of the Federal
debt.
CIVIL PUBLIC WORKS

Although the information on civil public works compiled in this
analysis encompasses Federal expenditures for direct Federal construction and for grants as well as net lending to State and local
governments in support of construction, only the direct works are
subject to complete Federal control from project initiation to completion. Additional information on planning and programing direct
Federal works is provided in the following sections on new and continuing work, planning and surveys, and on the authorized reserve
of direct Federal projects.
New and continuing work.—Direct Federal construction projects
often require a number of years from start to completion. The more
complex water control developments may require 10 yaars or more to
complete. For projects underway in 1969, table G-4 indicates the total
cost, the progress through the budget year, and the estimated expenditures after 1969 to complete the projects. The rate of completion during
and after 1969 is contingent not only on new obligational authority
recommended for 1969, but also, in the case of water resource developments, on appropriations in future years. Over the years, the estimates
may also be modified to take account of changes in construction costs.
Table G-4 distinguishes expenditures for projects started in prior
years, new projects for which new obligational authority is recommended for 1969, and projects to be started after 1969 for which advance planning is provided in 1969. It is estimated that construction
started or funded before 1969 will result in the expenditure of $2.4

300-700 O—68




6

82

THE BUDGET FOR FISCAL YEAR 1969

Table G-4. ESTIMATED COST OF 1969 DIRECT FEDERAL CIVIL PUBLIC
WORKS BY CONTINUING AND NEW WORK (in millions of dollars)
From Federal funds and trust funds
Total

ExpendiP

cost

Continuing work:
Corps of Engineers—Civil
Tennessee Valley Authority _
Bureau of Reclamation _ _ _
General Services Administration
Bonneville Power Administration
Forest Service
Federal Aviation Administration
National Aeronautics and Space Administration. __
Veterans Administration .
Bureau of Indian Affairs
National Park Service
Post Office Department
Coast Guard
_
Public Health Service
Social Security Administration (trust funds)
Other

Total, new projects and features
Advance planning:
General Services Administration *
Corps of Engineers—Civil
Post Office J_
Public Health Service
_ _ __
Bureau of Land Management
National Park Service
Coast Guard
Veterans Administration
National Aeronautics and Space Administration
Bureau of Reclamation _ _ _
Other

12,837
1,196
6,970
729
634
340
254
1,817
401

6,740
343
4,022
330
181
203
79
1,702
207

896
262
213
151
110
102
72
70
62

5,201
592
2,735
249
343
35
102
46
132

681

396

51

1,155
125
78
154
64
1,317

51
31
32
81
11
855

48
40
39
34
26
182

1,056
54
7
39
27
280

15,264

2,358

11,129

30
30
28

39
19
51
17
109

*

9
7
5
5
4
4
3

*
*
1

2

37

98
13
90

1
*
17

97
12
72

15

166

622

160
63
51
14
5
18

100
24

21

38
19
32

69
49
79

23
34
121
5
85
27
42
29

39

21
9
5

234

2

80
23
38
26

__

1
2
2

20
19
5
3
2

4
7

1

2
2

8
*
14
2
4

11
4
14

5
3
4

1
1
7

4
*
4

350

Total, advance planning




plete

tures

803

New projects and features in 1969:
Federal Aviation Administration
Coast Guard
Post Office
Forest Service
Public Health Service
.
._
Corps of Engineers—Civil
Office of Economic Opportunity
Bonneville Power Administration
Bureau of Indian Affairs
_____
_______
National Aeronautics and Space Administration. __
Veterans Administration
Southwestern Power Administration
Tennessee Valley Authority __
Bureau of Reclamation. _____ _ _ _ _ _ _
Other

"Less than $500 thousand.
1
Includes some site costs.

Required

28,750

Total, continuing work

Total, direct civil public works.

1969

1969

140

84

126

29,904

15,419

2,607

11,876

SPECIAL ANALYSES

83

billion in 1969, and an additional $11.1 billion in later years. Expenditures for these ongoing projects represent more than 90% of the total
expenditures for direct civil public works construction in 1969.
Because of the restrictive budget policy for 1969, the number of new
projects or features recommended for starting has been held to a
minimum. New obligational authority is recommended for the Corps
of Engineers to begin construction or undertake land acquisition for
10 projects, and for the Bureau of Reclamation to initiate one project.
The Post Office Department will start three new postal public buildings
in 1969. Some other new projects or features will be started by the
Federal Aviation Administration, the Coast Guard, and the Forest
Service; and the Smithsonian Institution will begin construction of
the Joseph H. Hirshhorn Museum in Washington, D.C. On all new
projects, expenditures are estimated to be $166 million in 1969, and
the total cost of these projects is estimated at $803 million.
Consistent with actions taken during the current fiscal year to hold
down or reduce the level of construction expenditures, new projects
such as those of the Corps of Engineers, Bureau of Reclamation, and
General Services Administration which had been planned for starting
in the 1968 budget, or added by the Congress, are now planned to
be initiated over the 2-year period, 1968 and 1969. In table G-4,
expenditures on new projects to be funded from 1968 appropriations are
reflected under continuing work rather than as new projects and features. The latter category is confined to those new projects and features
for which new obligational authority is recommended for 1969.
Public works planning and surveys.—Expenditures for preliminary
planning, surveys, and general investigations are not included in the
definition of public works used in this analysis and are therefore not
reflected in the summary tables. Such studies precede construction of
some types of public works and help to assure economic design of
facilities. Comprehensive river basin planning requires coordinated
long-range economic, hydrologic, and land-use projections prior to
undertaking individual water resource projects.
As these general studies indicate a need, advance planning of the
specific projects begins and, in some instances, sites must be acquired.
Expenditures for advance planning of such projects are shown in
table G-4.
In addition, the Department of Housing and Urban Development
wiD disburse $4 million in 1969 to State and local government
agencies to facilitate advance planning of their public works.
Authorized reserve of civil public works.—In addition to the projects
underway, agencies whose programs regularly include construction
of public works generally maintain a reserve of authorized projects.
Projects included in the reserve require only detailed planning and
appropriations for starting. The reserve provides a basis for the selection of projects to fulfill program needs and budgetary policy. Table
G-5 indicates the size and status of planning of the authorized reserve.




84

THE BUDGET FOR FISCAL YEAR

1969

Table G-5. RESERVE OF PRESENTLY AUTHORIZED PROJECTS AND
PROGRAMS FOR UNDERTAKING AFTER 1969 (in billions of dollars)
Cost of authorizec reserve

Agency

Corps of Engineers—Civil
Forest Service.
Tennessee Valley Authority
Bonneville Power Administration
__
General Services Administration.
Bureau of Land Management
Federal Aviation AdministrationBureau of Reclamation,
Post Office
Public Health Service
Veterans Administration
Other agencies
_
Total „

Estimated
total
Federal
cost

7.1
1.2
.8
.8
.6
.5
.4
.3
.3
.2
.2

Status of plans as of
June 30, 1969

Status of plans as of
June 30, 1968
Contract
could
be let

In
process

Not
started

1.3
.2

3.2
1.0

2.6

2.6
.2

.2

.5

.3

.1
.1

.3

*
*

.3

*

.1
.1
.3
.2
.1
.1

12.7

1.9

5.5

*

.8
.2
.4
.3
.2

Contract
could
be let

.4
*

Not
started

2.2
1.0
.2

2.4

.1
.1

.7
.1
.4
.2
.2

.1
*
.2
.1
.1
.1

.1
.1
.2

5.4

In
process

4.1

4.1

.4

.1
.2

4.6

"Less than $50 million,

Civil public works by function.—Table G-8 classifies public works
activities according to the major functional categories used in the
budget, with details shown for the agencies and type of program
included under each heading.
The largest civil works expenditures are reported for the commerce
and transportation and the natural resources functions. Of the total
$4.9 billion to be spent in 1969 in the commerce and transportation
function, grants for highways and airports predominate, although
air navigational facilities and post office improvements are also
important segments. In contrast, direct works related to water resources development are the major component of the total $2.1 billion
in the natural resources function. Additional information on the types
of facilities included in water resources developments is provided in
table G-6.
Within the remaining functional categories, a number of programs,
responsive to the more urgent needs of our increasingly urban society,
show larger expenditure estimates for 1969 than for 1968. Grants for
urban transportation improvements and neighborhood facilities are
examples in the housing and community development function. Grants
for rural water and sewer systems in the agriculture function also
increase in 1969 over 1968.
The Veterans Administration will continue its program to replace
obsolete facilities and to expand the veterans hospital system. A new
hospital will be started in San Antonio, Tex., and planning will begin
for a replacement hospital in San Francisco, Calif.
In the general government function, the General Services Administration will spend $172 million in 1969 compared with $214 million
in 1968. Only the most pressing requirements for the acquisition of
sites and planning of new buildings will be met in 1969. Projects
started in earlier years will be continued.



85

SPECIAL ANALYSES
Table G-6. BUDGET OUTLAYS FOR WATER RESOURCES AND
RELATED DEVELOPMENTS (in millions of dollars)
Type and agency

1967

Flood control works:
Corps Cf Epgfap»$—Civil
*
Grants
Bureau of Reclamation
Soil Conservation Service (mostly grants)
International Boundary and Water Commission
Tennessee Valley Authority

1968

1969

332.2
12.1
10.0
66.8
1.3
4.8

398.4
25.7
13.6
70.1
1.9
10.7

332.5
69.1
5.4
60.6
2.8
11.7

Total, flood control works .
Beach erosion control: Corps of Engineers—Civil

427.2
1.3

520.4
3.2

482.1
1.1

Irrigation and water conservation works:
Bureau of Reclamation _
Loan and grant program
_ _ __
Soil Conservation Service (mostly grants) Bureau of Indian Affairs

___

155.5
16.8
14.7
11.5

118.6
14.2
12.0
8.5

109.3
7.5
9.8
4.5

._

198.5

153.3

131.1

272.3
.7

261.2
3.2
.1

216.1
8.5

273.0

264.5

224.6

338.3
25.3
8.1
31.6

334.1
38.5
8.8
25.5

320.6
50.2
7.9
9.7

Total multiolc-DurDose facilities
Thermal-electric powerplants: Tennessee Valley Authority

403.3
65.0

406.9
126.4

388.4
170.8

Power transmission facilities:
Tennessee Valley Authority
Bureau of Reclamation
Bonneville Power Administration
Southwestern Power Administration.__

63.0
31.5
105.8
3.4

65.8
35.7
114.6
4.2

60.9
35.2
116.2
5.2

203.7

220.3

217.5

.1
84.7
11.1
8.4

.1
111.8
27.0
4.1

.9
154.2
33.8
14.5

6.0
24.0

90.0
16.0

130.0
19.0

134.3

249.0

352.4

1,706.3

1,944.0

1,968.0

_

Total, irrigation works
Navigation facilities:
Corps of Engineers—Civil, „ , . .
„
Saint Lawrence Seaway Development Corporation
Tennessee Valley Authority
Total* navigation facilities

Multiple-purpose dams and reservoirs with hydroelectric power
facilities:
Corps of Engineers—Civil
_
__
Bureau of Reclamation.
_
International Boundary and Water Commission

Tennessee Valley Authority

_

_ _ __

Total, power transmission facilities
Water supply and waste disposal facilities:
International Boundary and Water Commission
Federal Water Pollution Control Administration (grants)
Farmers Home Administration (grants)
Bureau of Reclamation Department of Housing and Urban Development:
Grants
Net lending
Total, water supply and waste disposal
Total, water resources and related developments
*Less than $50 thousand.




__
_

86

THE BUDGET FOR FISCAL YEAR 1969

Budget Outlays
Wafer Resources and Related Developments

$ Billion
2.0 —

Total

Flood Control and Bi:och Erosion

1

„ 1
I960

1961

1
1962

1
1963

1

1
1964

1965

1966

1

1967

1968

1
1969

Estimate

Fiscal Years

NATIONAL DEFENSE PUBLIC WORKS

Department of Defense—Military.—In support of the national defense, $1.4 billion in new obligational authority is recommended for 1969
to strengthen and modernize facilities of the Armed Services. The
programs will provide for the initial design and deployment of the
Sentinel antiballistic missile system, additional pilot training facilities,
shipyard modernization, and other program requirements to permit
mission accomplishment, both at home and overseas.
Atomic Energy Commission.—In fiscal year 1969, the Atomic Energy
Commission will begin construction on the 200 billion electron volt
proton accelerator. Work will be continued on the $285 million of
facilities required to produce nuclear warheads for the Sentinel and
other advanced weapons systems, and on other facilities for reactor
and weapons development and for research in the physical sciences.
AID TO COOPERATIVES AND NONPROFIT GROUPS

Some private nonprofit groups carry on activities of a public service
character, such as the pro vision of educational and health services and
the conduct of research, which are similar to programs conducted by
State and local governments. Federal assistance programs sometimes
provide support both to State and local governments and to the private
nonprofit institutions providing similar services. Federal expenditures
in aid of construction undertaken by these non-government institutions
are shown in table G-7, but are not included in the total public works
expenditures reported in this analysis.



87

SPECIAL ANALYSES

Table G-7. FEDERAL OUTLAYS FOR CONSTRUCTION BY COOPERATIVES AND NONPROFIT GROUPS (not i n c l u d e d i n public works)
( b Bullions of dollars)
Program

1967
actual

Expenditures:
Federal construction:
Howard University
Gallaudet College....
Grants:
Hospital construction
Health professions educational facilities.
Health research facilities
Higher education facilities

1968

1969

3
1

3
1

104
25
37

117
25
37
61
550

-193

470
158
40
-207

133
47
-207

659

720

767

1
*
112
8
37
58
412
176
48

Rural electrification and telephones
College housing
Higher education facilities
Repayments
Total, expenditures and net lending- .
*Less than $500 thousand.

Table G-8. FEDERAL ACTIVITIES IN PUBLIC WORKS

(in millions of dollars)

By major function and agency
NEW OBLIGATIONAL
AUTHORITY AND
LOAN AUTHORITY

EXPENDITURES
AND
NET LENDING

Function, organization, unit* and program
1967
actual

1968
estimate

4.5

3.4

1969
estimate

1967
actual

1968
1969
estimate estimate

CIVIL PUBLIC WORKS
International Affairs and Finance

Department of State:
State Department and Foreign Service
buildings
_ _ _
_
Cultural and Technical Interchange
Center, Hawaii (grant)
United States Information Agency:
Radio facilities and special international exhibitions
Total, international affairs and
finance.
- _
_

*

4.8

6.5

.5

.5

20.4

16.3

13.7

6.5

.2
4.8

24.0

9.6

27.4

*

27.0

21.7

20.7

85.0

37.8

45.0

288.6

160.0

75.5

Space Research and Technology
National Aeronautics and Space Administration: Research and space flight facilities




88

THE BUDGET FOR FISCAL YEAR 1969
Table G-8. FEDERAL ACTIVITIES IN PUBLIC WORKS-Continued
(In millions of dollars)
By major function and agency
NEW OBLIGATIONAL
AUTHORITY AND
LOAN AUTHORITY
1967

1968

1969

EXPENDITURES
AND
NET LENDING
1967

1968

1969
estimate

CIVIL PUBLIC WORKS—Continued
Agriculture and Agricultural Resources
Department of Agriculture:
Laboratories, research facilities, and
Library l
Grants for research facilities
Soil Conservation Service: Resource
conservation and development:
Loans
Grants
Farmers Home Administration:
Rural renewal loans
Grants for rural housing
Grants for rural water and sewer
systems
Total, agriculture and agricultural resources

11.2
.4

4.9
1.3

1.0
2.7

11.5
.7

26.3
1.3

29.1
2.7

.5
1.0

1.5

.9

.5
1.1

1.0
1.5

.9

1.0
3.0

1.3
3.5

1.3
5.0

1.1
8.6

1.8
3.8

1.4
5.0

26.0

30.0

27.2

11.1

27.0

33.8

43.1

42.5

38.1

34.6

62.7

72.8

1.4
71.6
5.5

1.1
75.2
.9

.7
36.3
.8

1.4
71.8
6.7

1.1
77.2
1.2

.7
68.5
1.0

156.8

186.4

139.4

112.4

136.7

122.8

875.7 1,034.3
23.0
18.5
12.1
69.1

996.3
26.0
25.7

900.4
23.0
69.1

Natural Resources
Department of Agriculture:
Soil Conservation Service: Flood prevention and watershed protection:
Direct work
Grants
Loans _
Forest Service: Roads and research, recreational and protective facilities *
Department of Defense—Civil: Corps of
Engineers—Civil:
Flood control, navigation, and multiplepurpose projects with power
Trust funds
Grants
Department of the Interior:
Bureau of Land Management: Roads
and other facilities
Bureau of Indian Affairs: Irrigation
works, roads, and schools
Geological Survey: Laboratory
Bureau of Mines:
Laboratories and demonstraticn plants..
Anthracite mine drainage: Grants
Office of Coal Research: Demonstration plants
Bureau of Commercial Fisheries:
Facilities
Grants—




1,013.2 1,000.5
20.8
25.9
25.7
12.1
13.0

14.5

14.3

20.4

13.6

15.4

75.1

63.8

52.3

56.3
.3

57.5
*

55.1

1.4

1.2

.5
.2

1.5
.1

.2
.2

4.5

5.6

7.5

4.3

4.5

8.0

1.2
.2

1.7
.4

1.6
.4

1.4
.2

1.2
.4

89

SPECIAL ANALYSES
Table G-8. FEDERAL ACTIVITIES IN PUBLIC WORKS-Continued
(In millions of dollars)
By major function and agency

Function, organization, unit, and program

NEW OBLIGATIONAL
AUTHORITY AND
LOAN AUTHORITY
1967
actual

1968

1969

EXPENDITURES
AND
NET LENDING
1967
actual

1968
1969
stimate stimate

CIVIL PUBLIC WORKS—Continued
Natural Resources—Continued
Department of the Interior—Continued
Bureau of Sport Fisheries and Wildlife:
Facilities
Grants
National Park Service: Parkways, roads,
buildings, and utilities1
Bureau of Reclamation:
Irrigation and multiple-purpose projects with power1
Loans, small irrigation projects
Repayments
Grants, small irrigation projects
Power transmission facilities:
Bonneville Power Administrationl
Southwestern Power Administration..
Federal Water Pollution Control Administration:
Buildings and facilities
Grants
Department of State:
International Boundary and Water
Commission: Water resources projects and Chamizal settlement
Facilities for International Pacific Halibut Commission (grant)
Tennessee Valley Authority: Power, water
, '<
resources, and chemical facilities
Total, natural resources

9.5
2.5

5.5
2.2

2.0
2.1

7.8
.1

10.0
1.8

4.9
1.6

56.3

52.1

13.4

52.1

54.0

51.0

241.4
12.9
-.1

221.8
14.7
-.8
.1

202.1
4.3
-.8

230.7
16.7
j

214.6
7.5
-.8

j

210.5
14.1
-.8
.1

108.6
4.0

110.7
5.0

114.1
5.3

105.8
3.4

114.6
4.2

116.2
5.2

5.3
162.9

214.6

236.6

1.9
84.7

1.9
111.8

.6
154.2

9.9

12.4

5.8

15.6

15.2

11.8

.2

.2

248.9

263.1

,044.6

39.7

3,039.7 2,075.8

27.6

182.9

,827.4 2,047.3 2,129.7 2,095.9

Commerce and Transportation
Funds appropriated to the President:
Appalachian Regional Development
Programs: Grants for highways, education, and health facilities
Public works acceleration:
Grants
Direct Federal work
Department of Commerce:
Economic development assistance:
Appalachian highways: Grants
Development facilities grants
Development facilities loans
Repayments
Participation in U.S. expositions: 1967
Alaska Centennial, building
Environmental Science Services Administration: Structures
Bureau of Standards: Buildings
Maritime Administration: Library and
other improvements




111.5

127.2

197.0
19.4
1.7

100.0

202.6
25.5

153.0
22.0

169.5
33.5

39.9
19.6
7.8
-1.0

219.1

12.0
1.1

99.4
24.9
-1.1

137.9

.3
5.8

1.1
1.5

30.8
-1.3

4.0
*
1.4

1.1
.2

.7
11.6
.1

90

THE

BUDGET FOR FISCAL YEAR

1969

Table G-8. FEDERAL ACTIVITIES IN PUBLIC WORKS-Continued
(In millions of dollars)
By major function and agency
NEW OBLIGATIONAL
AUTHORITY AND
LOAN AUTHORITY

EXPENDITURES
AND
NET LENDING

Function, organization, unit, and program
1967
actual

1968

1969

1967
actual

1968

1969
estimate

CIVIL PUBLIC WORKS—Continued
Commerce and TransportationContinued
Department of Defense—Civil: Panama
Canal Company: Canal and harbor improvements and bridges
Department of the Interior: Bureau of
Mines: Appalachian mining restoration
grants
Post Office Department: Post offices, improvements and alterations
Department of Transportation:
Coast Guard: Shore facilities and navigation aids
Federal Aviation Administration:
Air traffic control, navigation, and research facilities
Dulles and National Airports
Federal-aid airport program: Grants.
Federal Highway Administration:
Woodrow Wilson Bridge
Federal-aid highways and other trust
funds: Grants
Forest and public land highways:
Grants
Chamizal Memorial Highway: Grant_
Alaskan highway assistance grant
St. Lawrence Seaway Development
Corporation: Alterations
Total, commerce and transportation.

4.1

2.5

10.4

12.4

.4

16.9

91.9

130.3

43.2

42.4

87.5

30.4

40.8

51.8

28.9

33.8

70.2

27.9

50.0
.2

60.0
2.4

74.8
4.6

71.0

66.0

70.0
1.0
70.0

99.0
3.2
73.0

4,386.9 4,929.8

4,621.9

64.1

58.0

.3

45.3

4.0
5.0

4,191.3 4,171.2
,951.1
37.3

13.1

4,910.5 5,488.4 5,349.9

4,295.8

1.0

5.4

3.2

4.0

8.5

4,689.8 4,919.5

Housing and Community
Development
Department of Housing and Urban Development:
Urban transportation grants
Public facility loans
Repayments
Grants for water and sewer facilities
Grants for neighborhood facilities
Metropolitan development incentive
grants
Advance planning, non-Federal public
works:
Loans
Repayments
Liquidating programs: Repayments
Low-rent public housing:
Loans
Repayments
*




98.8
79.7

95.0
79.5

133.5
79.9

100.0
17.0

165.0
30.0

150.0
40.0

11.7

58.7
-2.8
5.7
.8

64.3
45.0
-3.6
90.0
15.0

107.5
54.0
-4.3
130.0
32.0
3.0

10.0
14.1
-6.2

154.1
-143.6

7.1

3.6

-8.5
-.5

-8.5
-.4

220.0
-200.1

220.0
-235.1

91

SPECIAL ANALYSES

Table G-S. FEDERAL ACTIVITIES IN PUBLIC WORKS—Continued
(In millions of dollars)
By major function and agency

Function, organization, unit, and program

NEW OBLIGATIONAL
AUTHORITY AND
LOAN AUTHORITY

1967

1968

1969

EXPENDITURES
AND
NET LENDING

1967

1968

1969

CIVIL PUBLIC WORKS—Continued
Housing and Community
Development— Conti n ued
Grant to Washington Metropolitan Area
Transit Authority
Federal Home Loan Bank Board:
Headquarters
National Capital Transportation Agency:
Land acquisition and construction
District of Columbia:
Grant for Dulles interceptor sewer
Loans
Repayments

43.6
-1.8

79.2
-2.0

Total, housing and community development

359.5

1.0

13.2

18.0

5.2

55.1

1.5

22
.

2.0

103.7
-2.6

21.4
-1.8

11.2
15.6
-2.0

.8
67.2
-2.6

446.7

569.6

113.8

261.7

386.7

10.5

95
.

50
.

10.5

95
.

50
.

31
.

12
.

.
1

.
6

33
.

51
.

18.3
2.3
14.7
149.0
2.0

11.2
1.2
16.9
.2
126.0
1.5

12.5
1.3
16.1
.2
114.4

24.5
.9
10.2
.2
91.3
1.6

24.7
3.1
19.3
.2
104.2
1.6

24.2
3.7
19.7
.2
95.4
1.6

39.7
115.3

28.6
51.0
146.2

15.0
61.1

4.0
20.6

24.5
25.0
63.4

1.3
24.6
64.8

91
.

Health, Labor, and Welfare
Office of Economic Opportunity: Job
Corps centers and related facilities
Department of Health, Education, and
Welfare:
Food and Drug Administration: Buildings
Public Health Service:
Federal research facilities and National Library of Medicine
Saint Elizabeths Hospital: Buildings..
Indian health facilities 1__
Grants for Indian health facilities
Grants for public hospitals
Grants for health research facilities. __
Community health service facilities,
grants
Grants for mental health centers
Grants for health educational facilities.
Social and Rehabilitation Service:
Grants for mental retardation facilities.
Social Security Administration: Buildings and district offices (trust funds) _.
Total, health, labor, and welfare

2.0

6.0
14
.

82
.

26.1

14
.

82
.

26.1

356.3

401.6

257.6

165.8

286.9

273.6

10.0
42.3

10 0
12.3

10.0
4.1

8.0
38.6

9.0
21.8

11.7
18.8

Education
Department of Health, Education, and
Welfare:
Office of Education:
Schools in federally affected areas:
At Federal installations
Grants
..-




92

THE BUDGET FOR FISCAL YEAR 1969
Table G-3. FEDERAL ACTIVITIES IN PUBLIC WORKS-Continued
(In millions of dollars)
By major function and agency

Function, organization, unit, and program

NEW OBLIGATIONAL
AUTHORITY AND
LOAN AUTHORITY
1967
1968
1969
actual estimate estimate

EXPENDITURES
AND
NET LENDING
1967
actual

1968

32.3
-.1
135.5
60.6
23.9

25.4
-.1
206.6
60.0
21.6

142.1

1969

CIVIL PUBLIC WORKS—Continued
Education—Continued
Department of Health, Education, and
Welfare —Continued
Office of Education—Continued
Higher education facilities:
Loans
Repayments
Grants
Vocational schools (grants)
Libraries (grants)
Model secondary school for the deaf
Department of Housing and Urban Development:
College housing loans
Repayments
National Science Foundation: Research
facilities
Smithsonian Institution:
John F. Kennedy Center for Performing
Arts
Museums
Total, education.

30.4
-.5

120.0

40.0

40.0

360.6
60.6
40.0

315.0
60.6
27.2
.3

52.5
58.0
9.2
.4

330.0 1,045.0

321.8

215.0
-15.8

192.5
-18.6

162.2
-20.8

13.6

5.6

8.0

12.4

11.5

11.5

3.9

2.3

16.1

1.8
3.5

8.0
3.0

11.0
7.4

981.0 1,518.3

520.0

515.6

540.6

452.0

3.8
3.6

6.6
.3

1.6
.7

1.9
.1

4.8
3.6

3.5
1.0

52.1
.3

52.6
.4

33 3
.4

60.0
.3

58.0
.4

65.7
.4

4.0

4.0

4.0

.1
*

2.4
1.1

3.0
.3

63.8

63.9

62.3

70.3

73.8

7.2

6.7
2.3

57.0
21.1
.1

Veterans Benefits and Services
Deoartment of Defense—Civil:
Army: Cemeteries
Soldiers' Home (trust fund)
Veterans Administration:
Hospital and domiciliary facilities
Research facilities
Construction of State nursing homes,
grants
Corregidor-Bataan Memorial
Total, veterans benefits and services-

40.0

General Government
Legislative Branch:
Architect of the Capitol: Buildings and
James Madison Library
Government Printing Office: Annex
Department of Defense—Civil:
Army: Power and water systems
Ryukyu Islands: Loans
Canal Zone Government: Improvements
Department of the Interior:
Office of Territories: Public facilities in
Samoa, Guam, and the Trust Territory of the Pacific Islands:
Grants
Loans




.9

2.8
2.5

7.
-.3

1.4

3.6

.4

4.4

.4
3.8

4.3

7.0
.3

10.4
4.4

17.0
5.7

7.9
2.6

13.8
5.4

25.6
4.5

93

SPECIAL ANALYSES
Table G-^. FEDERAL ACTIVITIES IN PUBLIC W O R K S - C o n t i n u e d
(In millions of dollars)
By major function and agency

Function, organization, unit, and program

NEW OBLIGATIONAL
AUTHORITY AND
LOAN AUTHORITY

EXPENDITURES
AND
NET LENDING

1967
1968
1969
1967
1968
1969
actual estimate estimate actual estimate estimate
CIVIL PUBLIC WORKS—Continued
General Government—Continued
Department of Justice:
Immigration and Naturalization Service:
Border facilities..
Federal Prison System: Prison facilities
Grants for correctional and enforcement
facilities
Treasury Department:
Bureau of Customs: Border facilities
Bureau of Engraving and Printing: Air
conditioning
Bureau of the Mint: Philadelphia Mint.
Secret Service: Training facilities
General Services Administration: Construction of public buildings, sites and
planning
Central Intelligence Agency: Headquarters.

7.6

9.0

5.6

11.3

.2

.2

12.6

.4

.5

.2

.2

2.0
11.9

1.1
12.7

.5
8.3
.8

1.0
199.6

134.2

60.8

239.3
1.4

214.3
.2

171.7

208.6

Total, general government
Total, civil public works

*

*

153.7

102.1

285.2

268.2

243.2

__ ._ 10,057.1 10,256.1 8,749.9 7,635.9 8.491.6 8,613.7

NATIONAL DEFENSE PUBLIC
WORKS
Department of Defense—Military:
Interservice activities:
Construction, Defense agencies
Loran stations _ _
Family housing..
._ _ __
Civil Defense:
Grants for shelters
Emergency centers and shelters
Army:
Construction
Construction, Army Reserve
Construction, Army National Guard
(includes grants).
Navy:
Construction
Construction, Naval Reserve
Air Force:
Construction
Construction, Air Force Reserve
Construction, Air National Guard

9.1

24.0

13.0
1.8
65.2

7.0
5.0
78.0

110.0

2.4

4.0
0.9

4.0
1.9

4.7
6.0

373.8
3.0

688.3
3.0

447.2
*

780.0
2.0

594.0
4.0

3.0

2.7

.7

6.0

9.0

266.9
5.4

487.6
5.0

367.5
5.0

519.1
3.5

170.0
7.0

350.1
6.0

401.5
3.6
9.4

401.2
3.9
9.5

266.0
4.3
8.3

536.9
5.3
8.2

554.0
5.0
9.0

425.0
4.0
9.0

77.0
3.6
154.4

30.4

4.9

4.5

402.5

48.7

Total, Department of Defense1.103.4 1,526.6 1,426.7 1,605.7 1.628.8 1,545.8
Military
245.0
353.0
130.4
161.0
128.3
213.1
Atomic Energy Commission: Facilities
Total, national defense public works 1,231.7 1.739.7 1,779.6 1,736.0 1,789.8 1,790.8
ToUl, civil and defense public
works: Federal hinds and trust
11,288.8 11.995.8 10.529.5 9,572.0 10.281.4 10.404.5
funds
* Less than $50 thousand.
Includes small amounts from trust funds.

1




SPECIAL ANALYSIS H
FEDERAL EDUCATION, TRAINING, AND RELATED PROGRAMS

Overview.—The 1969 Federal budget provides outlays of $11.6
billion for education, training, and related programs compared with
$10.8 billion in 1968 and $5.2 billion in 1965, the fiscal year just
preceding initiation of new programs under the historic Elementary
and Secondary and Higher Education Acts of 1965. This amount
totals 6.2% of total Federal expenditures and lending in 1969, compared with 3.9% for 1965.
The following table summarizes the principal categories to which
Federal funds are allocated over the period 1965-69:
FEDERAL OUTLAYS FOR EDUCATION, TRAINING, AND RELATED
PROGRAMS BY CATEGORY
(in billions of dollars)
Category
Preschool, elementary, and secondary. _ _ _ _
Higher education
Vocational education, work training
Training of Federal Government personnel
Other
Total

1965

1966

1967

1968

1969

0.8
2.0
.6
1.4
.4

1.8
2.4
1.0
1.5
.6

2.5
3.3
1.2
1.5
.7

2.6
3.9
1.7
1.7
.9

2.8
4.2
1.9
1.7
1.0

5.2

7.3

9.2

10.8

11.6

Of the $6.4 billion increase during the 5-year period, $2 billion is
for elementary and secondary education, $2.2 billion for higher
education, and $1.3 billion for vocational education and work training
programs. These three categories account for 86% of the total 5-year
increase.
Compared with 1968, the budget for 1969 provides increased outlays
totaling $1 billion and decreases of one-quarter of a billion dollars,
a net increase of $817 million. The principal changes are as follows:
• Preschool, elementary, and secondary education includes increases
for education of American Indians (Interior); "Follow Through"
for Head Start and other preschool children in the early elementary grades (OEO); operation of schools for American dependents
overseas (Defense); payments to schools in areas affected by Federal activities, additional instructional programs for the physically
and mentally handicapped and children from low-income families,
and expansion of teacher training (HEW). These increases, totaling $201 million, are offset by a reduction in supplementary grants
for school books and equipment (HEW) of $82 million.
94




SPECIAL ANALYSES

95

• Higher education includes expansion of student assistance through
grants, insured loans, work-study opportunities and health professions training (HEW) and GI bill benefits (VA); and medical
and military research grants (HEW and Defense) which total
$316 million. These are offset in part by decreases in grants and
loans for academic and housing facilities (HEW and HUD) totaling $104 million.
• Vocational education and work-training provides for increases in
training activities under the comprehensive employment programs (OEO) and vocational rehabilitation services and training
(HEW) of $212 million.
Coverage of this special analysis.—This analysis includes all programs classified in the budget functional category for education, which
is largely in the nature of support of activities m educational institutions as such. It also includes other programs classified under different functional categories which use education, research, or formal
training as means for accomplishing their primary objectives. For
example, included are programs which involve on-the-job training
activities, conduct of research at universities, national libraries and
library aid programs, military, professional, and occupational training with transfer value to the civilian economy, and Federal programs
which provide educational services for foreign nations through grants
or exchange of persons.
The analysis does not include privately financed insured loans for
college and vocational education students (although it does include
Federal advances to establish loan funds and Federal interest payments on such loans). These loans will total an estimated $641 million
in 1969, compared with $476 million in 1968. Other activities excluded
are basic recruit training of military personnel and other strictly military training; scientific research conducted outside of academic institutions, or carried on in university-managed centers under Federal
contracts; the school lunch and special milk programs; university
service contracts, for example, for operating mental health centers;
and many in-service training programs for Federal civilian employees.
The amounts reported in this analysis include some programs also
covered in other special analyses. For example, both this analysis and
Special Analysis I, Federal Expenditures for Medical and Health
Related Programs, include funds for health related training and
research programs of health agencies conducted at universities approximating $1.2 billion in 1969. That portion of expenditures for
research in academic institutions reflected in Special Analysis J,
Federal Research, Development, and Related Programs, is largely
included in this analysis also. The overlap between these two analyses
is approximately $1.6 billion in 1969.
Relationship of Federal funds for education, training, and related
activities to Office of Education national estimates.—The tabulation of
Federal funds in this analysis and Office of Education reports of
expenditures by U.S. educational institutions are not prepared on




96

THE BUDGET FOR FISCAL YEAR

1969

comparable bases. Many of the elements in this analysis do not flow
through educational institutions and hence would not appear in the
Office of Education data. These include expenditures for federally
operated schools for training of military personnel, on-the-job and
similar training activities carried on outside of schools or colleges,
Federal student assistance paid to individuals and partially spent
by them on subsistence, education in other countries, and for the
Smithsonian Institution and national libraries. On the other hand,
the Office of Education reports include amounts for some major
programs which are omitted from this special analysis, such as funds
for school lunches and school milk, and funds for research and development in university-managed, off-campus research centers.
If the estimates in this special analysis are adjusted to correspond
with those of the Office of Education, the Federal contribution to
financing of the Nation's educational institutions would be about 13%.
The following table summarizes these adjustments (dollars in
billions):
1968

1967

Federal education, training, and related activities
Less estimated amount not paid to institutions
Plus estimated Federal payments to educational institutions
not included in this analysis
Total, Federal expenditures in educational institutions
Office of Education estimate of expenditures by educational
institutions 1
__
Percent Federal
_

1969

$9.2
4.1

$10.8
5.0

1.1

1.1

6.2

6.8

7.4

48.5

51.9

55.5

13

13

13

$11.6
5.4
1.2

1
Source: "Projections of Educational Statistics to 1976-77," Office of Education, OE-10030-67,
table No. 35.

Federal funds for education, training, and related programs

by level or type of aid.—The distribution of the total new obligational and lending authority and expenditures for the programs in
this special analysis by level or type of assistance is presented in
table H - l .




97

SPECIAL ANALYSES

Table H-1. FEDERAL FUNDS FOR EDUCATION, TRAINING, AND RELATED
PROGRAMS BY LEVEL OR TYPE (in millions of dollars)
New Obligational and
Lending Authority

Outlays

Level or type of aid
1967
actual
1. Preschool, elementary, and secondary:
(a) Current operations
(b) Facilities and equip ment __ __
(c) Teacher training

1968
1969
estimate estimate

1967
actual

1968
1969
estimate estimate

2,172
382
141

2,376
401
145

2,559
269
192

2,014
339
128

2,104
397
140

2,295
333
163

2,695

2,922

3,020

2,481

2,641

2,791

315

370

451

208

292

363

544
381
868

610
408
817

705
476
296

397
363
379

630
401
560

698
452
462

1,405
113

1,492
129

1,602
161

1,248
59

1.301
125

1,421
\77

3,626

3,826

3,691

2,654

3.309

3,573

1,494

1,631

1,980

1,230

1.682

1,898

122

127

178

97

117

136

1,436
94
338
390

1,562
110
341
415

1,592
125
388
509

1,394
91
276
332

1,558
109
284
415

1,596
125
309
497

10,195

10,934

11,483

8,555

10,115

10,925

235
504

235
383

251
526

224
439

239
399

240
405

Total, credit programs

739

618

777

663

638

645

Total, Federal outlays

10,934

11,552

9,218

10,753

11,570

Subtotal

_

2. Higher education:
(a) Institutional support
(b) Student support:
Undergraduate
Graduate and professional- __
(c) Facilities and equip ment
(d) Research, except educational
research
(e) Other
Subtotal
3. Vocational education, work training,
and other adult or continuing education
4. Educational research, curriculum development, etc_
_
5. Training of Federal Government personnel:
(a) Military personnel_. _ _.
(b) Civilian personnel
6. International educational activities
7. Other
Total, excluding credit programs
CREDIT PROGRAMS
8. Higher education:
(a) Student support
(b) Facilities and equipment

12,260

Note: Lending authority figures in fiscal years 1967, 1968. and 1969 are adjusted to eliminate
the authority from sale of participation certificates in pools of college housing and academic facility
loans which are not applied to current program.

300-700
7
 O—G8


98

THE BUDGET FOR FISCAL YEAR

1969

Preschool, elementary, and secondary.—The second largest category
of support for education, totaling $2.8 billion in 1969, or 24% of the
total Federal outlay tabulated in this analysis, is aid for preschool,
elementary, and secondary education. Both the current operations
expenditures and those for facilities and equipment included in this
amount represent about 7.4% of total national expenditures for these
purposes in U.S. elementary and secondary schools. Note, however,
that the Federal percentage would be somewhat increased if vocational
education grants to local school districts were included in the above
Federal estimates.
These funds are concentrated on aiding disadvantaged children,
particularly children from low-income families, but also the physically
and mentally handicapped, migrants, children from non-Englishspeaking homes, children in State institutions, and American Indians.
The section of this analysis on Federal education funds for the poor
provides additional comments on such programs.
Other aids for elementary and secondary education, all administered
by the Office of Education, will include $311 million for supplementary
grants for school services, equipment, books, and counseling programs,
and $416 million for schools where enrollments are affected by Federal
activities. In addition, increased emphasis will be placed on teacher
training for elementary and secondary education primarily under
authority of the Education Professions Development Act of 1967 which
broadened and expanded previous laws establishing teacher fellowships and institute programs. These activities are detailed in the
following table:
ELEMENTARY AND SECONDARY TEACHER TRAINING
Teachers trained
(in thousands)
1967

Office of Education:
Full-year training
Short-term training
Teacher Corps

1969

1968

8
37
2

9
34
2

11
52
4

47

46

67

Office of Economic Opportunity: Head Start teacher training

39

49

50

National Science Foundation: Institutes

34

33

32

120

127

149

._
___
.

Subtotal

Total




—

SPECIAL ANALYSES

99

Higher education.—Expenditures and net lending in 1969 for support
of higher education will amount to $4.2 billion or 36% of the total
funds included in this analysis; and an increase of 7% over 1968. These
outlays represent about 21% of expenditures which are estimated for
all U.S. colleges and universities in 1969.
As table H - l shows, the 1969 increase in Federal funds for higher
education goes principally to support students, institutions, and
research. Outlays for facilities and equipment will decline in 1969,
reflecting the budget policy to limit or defer construction.
Expenditures for institutional support in 1969 will total $363 million.
HEW and NSF provide the major portion of these funds which are
awarded in large part in connection with fellowship and training
grants. The Public Health Service makes grants to schools preparing
professional health manpower to help meet increased costs and upgrade curricula. NIH and NIMH funds are increasingly made available for general research support to supplement research project
grants.
Federal funds support students at the undergraduate, graduate,
and professional levels through (1) fellowships for graduate study;
(2) research contracts and grants at institutions of higher education
which support thousands of research assistants, principally graduate
students; and (3) grants, work-study, and loan opportunities. Table
H-2 presents estimates of the number of individuals assisted, other
than for training of elementary and secondary teachers, by agency
and nature of aid. Support of college students under GI bill benefits
is growing significantly as veterans return and further increases may
be expected in 1970. In 1969, three quarters of a million college
students, an increase of 190 thousand over 1968, will receive insured
loans from private sources for which Federal interest payments are
made. Training of health manpower under PHS programs will increase
in 1969.




Table H-2. ESTIMATED NUMBER OF INDIVIDUALS ASSISTED IN FULL-TIME GRADUATE AND UNDERGRADUATE
STUDY (other than for elementary/secondary teacher training) (in thousands)

Agency

1967

DeDartment of Defense
Department of the Interior
Department of Commerce
Atomic Energy Commission
Department of Housing and Urban Development
Department of Health, Education, and Welfare:
Office of Education:
Grants __
Direct loans
Insured loans
Public Health Service
Social and Rehabilitation Service
National Science Foundation
National Aeronautics and Space Administration
Justice Department
Veterans Administration
Total
1

.

1968

1969

1967

0.1

1969

.5
.1

.5
.3

.6
.3

19.4

23.3
57.6
14.3
9.4
.8
.3
6.4

66.2
14.3
9.4
,8
.1
7.9

102.0

112.6

128.1

3.3

3.4

1968

1969

10.2
3.4

29.1

52.4
14.5
8.9
.8
.3
5.8

9.8

1967

0.1
1.5

_

7.3

7.7

8.0

5.0

5.0

1.7

1.7

446.8
394.0
330.0
38.9

488.6
405.0
560.0
58.3

511.6
408.0
750.0
68.6

377.1

_

422.3

469.3

1,589.4

1,936.0

2,209.3

5.4

25.4

Involves some duplication because a number of students are assisted under more than one program.




1968

9.7
0.1

_

Other 1

Research assistantships

Ifellowships
anc 1 traineeships

25.9

27.1

SPECIAL ANALYSES

101

The following table shows Federal outlays for the principal college
construction aid programs.
PRINCIPAL FEDERAL AIDS FOR CONSTRUCTION OF HIGHER EDUCATION FACILITIES, EXPENDITURES AND NET LENDING
(In millions of dollars)
1967

Undergraduate and graduate academic facility grants (Office of Education)
Academic facility loans (Office of Education)
__.
College housing loans (Housing and Urban Development)
Medical and health education facilities (Public Health Service)
Health research facilities (Public Health Service)
Science research facilities (National Science Foundation)
All other programs
i
Total, grants and loans

1968

1969

219
81
358
29
32
58
41

324
66
333
88
32
60
56

227
79
326
90
32
52
61

818

959

867

University based research, exclusive of research in the education
process, totaling $1.4 billion in 1969, is financed by a number of
agencies to assist in meeting their mission objectives. It includes
medical and health related research under the Public Health Service
($0.5 billion), research related to military requirements under the
Department of Defense ($0.1 billion), research in the physical and
biomedical sciences under the Atomic Energy Commission ($0.1
billion), space-related research under the National Aeronautics and
Space Administration ($0.1 billion), and research in all fields of science
under the National Science Foundation ($0.2 billion). These programs
are discussed in greater detail in Special Analysis J, Federal Research,
Development, and Related Programs.
Vocational education, work-training, and other adult or continuing
education.—The third largest category, totaling $1.9 billion in 1969
or 16% of the total, includes a wide variety of programs providing
occupational or work experience and training, basic or continuing
education.
The major portion of the expenditures in this category relates to
programs which provide structured training or general work experience to persons no longer in the formal educational system. These
programs, administered by the Departments of Labor, Interior,
Health, Education, and Welfare, the Veterans Administration, and the
Office of Economic Opportunity, are designed to reach those out of
school who are untrained or whose skills have become outdated by a
fast-changing technology, or those who suffer the effects of social and
economic discrimination.
In 1969, 281,000 individuals will be provided on-the-job training
through the Manpower Development and Training Act (MDTA), the
Work Incentive Program for welfare recipients, veterans programs,
and funds made avauable to the Department of Labor by the Office
of Economic Opportunity.




102

THE BUDGET FOR FISCAL YEAR 1969

Institutional training will be provided 170,000 individuals through
the MDTA, Opportunities Industrialization Centers, and the Work
Incentive Program.
In other training programs, the Job Corps will provide job skills,
basic education, and other remedial services to about 98,000 youths
and another 63,000 individuals will receive part-time skill upgrading
and short-term employability training through the MDTA.
Many more individuals will be served through work experience
programs which are designed to develop work habits and provide job
experience leading to training and eventual participation in the regular
labor force. About 121,000 disadyantaged youth and adults will be
provided opportunities to engage in meaningful employment in useful
community services. Another 469,000 disadyantaged youth will be
provided opportunities for community service employment during
the school year or in the summer to acquire the income needed to
continue their education. Most of this activity is funded through the
Economic Opportunity Act, but is administered by the Department
of Labor.
Large numbers of disadvantaged youth and adults will acquire job
skills and experience through the Concentrated Employment Program
and the Special Impact Program. These programs are designed to concentrate a wide range of resources and services, including the programs
discussed above, in selected areas of high unemployment.
Vocational education programs administered by the Office of
Education will serve an estimated 8.6 million high school and out-ofschool students. In addition, 411,000 adults will be provided basic
literacy training through the Office of Education's adult literacy
program.
PARTICIPANTS IN SELECTED VOCATIONAL AND TRAINING PROGRAMS
(In thousands)
Category and program

1968

1967

1969

Structured training:

On the job
I nstitu tional
Job Corps
New careers
MDTA part-time and employability training.
Indian manpower activities

11

186
129
98
10
57
13

281
170
98
13
63
14

454
216

310
126

469
121

6,900
293

7,500
319

8,600
411

125
134
99
14

General work experience:

Youth school and summer work
Community work experience
Classroom education:

Vocational education
Adult basic education




SPECIAL ANALYSES

103

Education research and curriculum development.—Expenditures, principally by the Office of Education and the National Science Foundation, support a broad range of efforts to improve education through
experiments, development, and demonstrations. Included is support
for (1) educational laboratories which bring together the resources of
institutions of higher education, States, private enterprise, and the
talents of scholars, experts, artists, and other specialists to design and
demonstrate improved curricula and methods of instruction for use
in the Nation's classrooms; (2) research and development centers
which concentrate on such specific questions as education of the disadvantaged, individualized instruction, early childhood learning,
teacher education, and strengthening institutions of higher education;
and (3) project grants which are awarded to institutions for improvement of school curricula and inquiries into education and its effects.
In 1969, stress will be placed on prototype programs for improved
instruction, especially for children from low-income, migrant, or nonEnglish-speaking families. One of the prototypes will be a model
school using the District of Columbia. A variety of research projects
will involve joint efforts with the National Science Foundation, the
National Institutes of Health, the Department of Housing and Urban
Development, the Department of Labor, and the Office of Economic
Opportunity.
Training of Federal Government personnel.—The estimated Federal
outlay for this category is $1.7 billion in 1969, or 15% of the total
Federal funds for education, training, and related activities. Nearly
all of this is for technical and professional training of military personnel
in skills which are transferable to civilian use. It is estimated that the
Department of Defense will provide training for more than 800,000
military personnel in 1969, about the same as in 1968, and for about
25,000 civilians. Department of Defense programs include the service
academies, professional training, ROTC scholarships, and special
training in technical skills. Other agencies will support full time or
part time training for about 57,000 employees.
International educational activities.—This category includes activities of the Federal Government which support the education of foreign
nationals either in this country or in their own country. Important
programs are: Aid to or through American schools abroad under
Economic Assistance Program (AID), Peace Corps teaching abroad,
foreign language training and area studies, expenditures for the Center
for Cultural and Technical Interchange between East and West, and
educational exchange activities under the auspices of the Department
of State.
Federal education funds for the poor.—The Federal Government has continued to increase its support of programs to ensure
equality of educational opportunity among all children regardless of
family income or social background. The major landmarks in this




104

THE BUDGET FOR FISCAL YEAR 1069

direction were the passage of the Economic Opportunity Act of 1964
and the Elementary and Secondary and Higher Education Acts of
1965.
It is estimated that expenditures for Government programs with
special focus on elementary, secondary, and higher education for the
poor total $2.5 billion in 1969, compared with $2.1 billion in 1967.
The principal programs and the participants in each are described
in the paragraphs and table which follow:
• For preschool and early elementary education, $345 million is
provided in the Office of Economic Opportunity. About $90
million will be spent for 8-week summer Head Start programs for
3- to 6ryear-olds about to enter school, and about $230 million on
a comprehensive, year-round child development program for 3- to
6-year-olds. In order to continue the small but significant gains
a child makes in Head Start or other pre-school programs, $25
million is provided for Head Start Follow Through which will
concentrate on experimentation with new techniques and curricula
in the early elementary grades.
• Elementary and secondary programs are predominantly supported
through Title I of the Elementary and Secondary Education Act
which distributes $1,073 million for education of children from
low-income families through programs designed by the local districts. This Office of Education program is supplemented by
Office of Economic Opportunity support for remedial and tutorial
activities and by Upward Bound which provides $35 million for
an intensive summer education program to prepare poor high
school students for college. In addition, the Teacher Corps provides $22 million to train beginning teachers for service in poor
urban and rural schools under the supervision of an experienced
teacher. In 1969, $12 million will be spent for a new program to
experiment with means of preventing students from dropping out
of school and $153 million for expanded Federal education programs for American Indian children.
• Higher education Federal student aid programs for lower income
students include:
—$129 million for equal opportunity grants to students from
a low-income family who are admitted to college;
—$146 million for work-study opportunities for poor students
attending college; and
—$180 million for loans to students who need such assistance in
order to pursue their courses of study.




105

SPECIAL ANALYSES

SCHOOL AND COLLEGE STUDENTS AIDED BY FEDERAL PROGRAMS
ESPECIALLY FOR LOWER INCOME GROUPS
(In thousand*)
1967
actual

Elementary and secondary education:
Title I (HEW)
Head Start ( 0 E 0 ) .
Follow Through (OEO)
Upward Bound (OEO)
Dropout prevention (HEW)
Remedial tutorial (OEO) _ _ _ _
American Indians (Interior)

9,000
680

1968
estimate

1969
estimate

23

9,500
652
9
24

39
58

36
59

9,500
652
79
30
46
43
61

9,800

10,280

10,425

227
220
394

276
212
405

284
228
408

Subtotal.

841

893

920

Total.. __

10,641

11,173

11,345

Subtotal
Higher Education:
Equal Opportunity Grants (HEW)_
Work Study programs (HEW)
Student loans (HEW)..,

Note:—Involves some duplication because a number of students are assisted under more than one
program.

Trend in Federal funds for education, training, and related

activities.—A longer perspective on Federal funds for education,
training, and related activities may be seen in the table below. For
the years prior to 1965 the figures are based on unpublished Office
of Education tabulations, supplemented by the Bureau of the Budget,
which are approximately comparable with new obligational authority for the years 1965-69. The table data also permit comparison,
for the larger components of Federal funds in this analysis, with the
major "functional" classifications of Federal programs used in the
President's budget.
Obligations
Category
1959 1960 1961 1962 1963 1964

New obligational and
lending authority
1965 1966 1967 1968 1969

0.8 0.9 1.1 1.4 1.3 1.5 2.4 4.3 4.9
' 'Education" function (700)
Military technical and professional train.8 .8 .9 1.0 1.0 1.2 1.4 1.4 1.4
ing (051)
2.8
"Health, labor, welfare" function (650) _
1.4 1.3 1.4 1.9 2.0 [1.8 2.3 1.8
All other
11.6 1.6

5.1 5A
1.6 1.6
3.1 3.4
1.8 2.2

Total education, training, and re2.9 3.1 3.3 3.8 4.2 4.7 7.2 9.610.9 11.6 12.3
lated programs
Note: Lending authority figures in fiscal years 1967. 1968, and 1969 are adjusted to eliminate
the authority from sale of participation certificates in pools of college housing and academic facility
loans which are not applied to current program.




106

THE BUDGET FOR FISCAL YEAR 1969

In the decade since 1959, total Federal funds for education increased
fourfold. As the table illustrates, the most dramatic increase in Federal funds—from $0.8 billion in 1959 to $5.1 billion in 1969—is for
programs that have education as their primary purpose which are
included in the "education" functional classification in the Federal
Budget. This function includes the Office of Education in the Department of Health, Education, and Welfare, the National Science Foundation, the College Housing program of the Department of Housing and
Urban Development, education programs for American Indians conducted through the Department of the Interior, the Smithsonian
Institution, the National Foundation on the Arts and the Humanities,
and the Library of Congress.
Equally significant is the increase in the "health, labor, welfare"
function—from $1.8 billion to $3.4 billion between 1965 and 1969.
This reflects the extent to which educational institutions and educational activities have been essential to the Government's thrusts into
manpower training, health research and services, and the attack on
poverty. "All other" Government programs exhibit an increase,
primarily due to the recent expansion in education benefits for returning veterans. The military technical and professional programs
are not changing appreciably.

Federal funds for education, training, and related programs

by agency.—Ten cabinet departments and more than 15 other
agencies report education, training, and related programs as an integral
part of their mission, although only six departments and four agencies
administer education programs totaling $250 million or more per
annum. Table H-3 identifies these agencies and the major programs
included in this analysis.
Of the $11.6 billion estimated outlays on education, training, and
related programs in 1969, $4.8 billion or 4 1 % will be made by the
Department of Health, Education, and Welfare. Within this Department, $3.3 billion or nearly three-fourths of the total HEW funds
will be administered by the Office of Education. The Public Health
Service, including the National Institutes of Health and the National
Institute of Mental Health, will administer about $1.1 billion. Over
the 3-year period from 1967 to 1969, HEW expenditures for educationrelated programs show an increase of 23%.
The Department of Defense is the second largest Federal contributor
to education with estimated outlays in 1969 of $2 billion. Most of
these outlays are for military technical and professional training and
the increase of $100 million over 1968 is largely associated with
requirements of the present international situation.
The Office of Economic Opportunity ranks third among Federal
agencies in expenditures for education, training, and related activities.
In 1969 these expenditures will amount to $1.3 billion, an increase of
20% over 1968 and 59% over 1967. All of these expenditures are
directed at the poor, and include Head Start, Job Corps, and youth
and adult work experience and training programs.




SPECIAL ANALYSES

107

In total, the Department of Health, Education, and Welfare, the
Department of Defense, and the Office of Economic Opportunityaccount for $8.1 billion or 70% of the 1969 total Federal outlays for
education, training, and related programs. The balance of $3.5 billion
is accounted for in other agencies covering a wide range of activities:
• The Department of Housing and Urban Development plays a
large role in providing direct long-term loans for financing college
housing and related facilities for faculty and students, including
student nurses and hospital interns.
• The National Science Foundation provides funds for basic research and education in the sciences.
• The Veterans Administration supports the education of recent
veterans, disabled veterans, children of totally disabled or deceased veterans, and training in medicine and dentistry.
• The Department of Labor finances programs for occupational
training and manpower research.
• The Department of Interior provides elementary, secondary, and
college level education and vocational training for Indians and
Alaskan natives.
• The Agency for International Development finances both formal
and informal education and training of individuals from developing countries.
• The National Foundation on the Arts and Humanities will be
playing an increasingly important role in education and training
in the arts and humanities.




Table H-3. FEDERAL FUNDS FOR EDUCATION, TRAINING, AND RELATED PROGRAMS, BY DEPARTMENT AND PROGRAM
(In millions of dollars)

Depa

Functional
code

NEW OBLIGATIONAL AND
LENDING AUTHORITY
1967
actual

Department of Health, Education, and Welfare:
Office of Education:
Elementary and secondary education:
Education of children from low-income families and projects to prevent dropouts - Supplementary services
Schoolbooks and strengthening State educational agencies
Educational planning and evaluation
Aid to federally impacted school districts:
Operation
Construction
_
School equipment, guidance, and testing
National Teacher Corps
Civil rights and other
Education of the handicapped
Aid for undergraduates and graduate college students:
Equal opportunity grants and insured loan interest payments
Work-study
Teacher Training:
Training of elementary and secondary teachers
Training of college teachers
Higher education academic facilities; graduate and undergraduate
International education
Other aids to higher education institutions, including aid to developing colleges
Expansion and improvement of vocational education
Grants for libraries and community services:
Public libraries
Higher education libraries
Other libraries and community service assistance
Education research and development



1968
estimate

1969
estimate

OUTLAYS
1967
actual

701
701
701
701

1,053
135
132

1,191
209
134

1,238

1,057

189

81
14

75

121

701
701
701
701
701
701

416
53
108
11
8
5

416
23
106
14
10
18

396
15
39
31
15
37

702
702

152
134

190
140

704
704
702
702
702
704

87
84
540
17
67
303

88
89
476
16
71
297

99
322

704
704
704
704

75
25
8
91

62
25
19
93

44
25
20
150

1968
estimate

1969
estimate

1,070
155
123

1,089
157
88
6

400
47
92

13
9
1

341
31
113
13
10
13

384
31
66
22
13
31

215
140

58
106

160
132

227
146

132
102
113
23

76
54
219
13
43
253

85
86
324
18
70
287

107
90
227
15
67
286

56
8
5

55
25
15

53
25
20
104

71

Other aids to education, including salaries and expenses of Office of Education

704

34

38

46

27

39

45

3,538

3,725

3,486

2,804

3.253

3.299

702-704

21

29

28

17

25

28

651
651
651
651
651

160
97
684
168
61

203
130
730
207
72

85
136
722
207
73

29
101
583
123
31

88
102
645
113
38

90
136
655
160
50

1,170

1,342

1,223

867

986

1,091

651
653
659

31
14
60

36
22
63

49
18
78

18
14
54

31
22
60

41
18
75

659

80

135

207

67

108

160

185

256

352

153

221

294

4

13
20
11

8

7
4

9
20
8

Total, Office of Education _
Special institutions, including American Printing House for the Blind, Gallaudet
College, Howard University
Public Health Service:
Construction of medical schools and other health education facilities
Health professions training
National Institutes of Health
National Institute of Mental Health
Other Public Health Service
Total, Public Health Service
Social and Rehabilitation Service:
Maternal and child welfare grants
_
Public assistance grants to States and assistance to refugees
Research and training
Rehabilitation services and training

_

Total, Social and Rehabilitation Service
Other Health, Education, and Welfare:
Educational broadcasting facilities
_
Public broadcasting program
Higher Education for International Understanding
fEducation and training by Social Security Administration for vocational rehabilitation
Total, Department of Health, Education, and Welfare
f Trust fund.




704
704
702

3

654

18

12

12

18

12

12

4.935

5.368

5.145

3,867

4,508

4,761

Table H-3. FEDERAL FUNDS FOR EDUCATION, TRAINING, AND RELATED PROGRAMS,
BY DEPARTMENT AND PROGRAM (in millions of dollars)-Continued

Department, agency, and program

Functional
code

NEW OBLIGATIONAL AND
LENDING AUTHORITY
1967
actual

1968
estimate

1969
estimate

OUTLAYS

1967
actual

1968
estimate

1969
estimate

Department of Defense:

Support of overseas schools for dependents
Research grants and contracts with educational institutions
Professional, technical, and related training:
Military personnel, including service academies
Civilian personnel
Civil defense research and training
Department of Defense-Civil:
Canal Zone Government, contributions to schools, including capital outlay.
Ryukyu Islands administration: Schools
Corps of Engineers: Research and training

051
051

84
262

94
239

112
294

63
253

74
238

99
274

051
051
051

1,428
5
13

1,553
7
13

1,583
8
8

1,386
5
13

1,549
6
13

1,587
8
10

910
910
401

10
6
1

11
11
2

11
12
2

13
6
1

13
11
2

1,809

1,929

2,030

1,740

1,905

2,004

349
92
184
197
11
26
5
95

340
100
264
146
3
17
3
185

380
115
275
204
1
21
4
362

295
85
268
125
13
22
5
2

310
99
286
192
5
19
3
163

345
108
275
198
2
20
4
342

98
5

1,057

1,362

84
1

1,076

1,293

Total, Department of Defense.
Office of Economic Opportunity (funds appropriated to the President):
Community Action program:
Head Start
Adult training, remedial education, research, etc
Job Corps—Urban and rural centers
School and summer youth programs
Work Experience—Adult training, including remedial education
Migrant education
VISTA—Training of volunteers
Comprehensive employment programs
Total, Office of Economic Opportunity.




655
655
655
655
655
655
655
655

13
11
2

National Science Foundation:
Basic research and specialized research facilities. _
Grants for institutional science programs.
___
Science education
_
Other science activities...

_

244
66
131

209
49
118

59

39

43

52

495

500

415

456

480

13

15

16

13

15

16

364
54

436
64

612
74

287
52

509
64

612
74

431

515

702

352

588

702

652
652

392
13

386
14

413
16

275
14

444
13

430
15

652

3

3

3

3

3

3

408

__

403

432

292

460

449

400

29

30

31

29

30

30

401
704
652
401
409

56
118
2
21
1

41
129
2
23
1

32
155
2
23
1

41
112
1
18
*

38
114
1
21
1

35
153
2
23
1

910
404

8
5

9
6

10
6

7
5

9
6

11
6

239

239

260

212

220

260

703
703
703

227
88
123

229
82
126

703

42

58

480

800
803
804

Total, National Science Foundation
Veterans Administration:
Compensation and pensions: Subsistence allowances for veterans in vocational
rehabilitation
_
_
_
_
_.__
Readjustment benefits: Aid under War Orphans' Educational Assistance Act, Veterans' Readjustment Benefits Act, and vocational rehabilitation for disabled
veterans
.
_
_____
_ _
Training of medical personnel engaged in VA medical activities
Total, Veterans Administration.
Department of Labor:
Manpower Development and Training Act: Institutional and on-the-jbb training. __
Apprenticeship, area redevelopment, and research activities
_
fDepartment of Labor: Grants to States for school counseling and testing by employment service
Total, Department of Labor
Department of the Interior:
Shared revenue payments to States and counties under miscellaneous permanent
appropriations, largely mineral leasing and grant lands (estimated proportion for
school support)
Bureau of Indian Affairs:
School construction, alteration, repairs, and maintenance
_
Indian education and related programs
Bureau of Mines: Health and safety training
Water and saline water research, including assistance to States and research
Geological survey research and training
Administration of territories, including Samoa and Trust Territory of the Pacific,
prorated portion for schools
_
All other, Department of the Interior
Total, Department of the Interior
"Less than $500 thousand.



fTrust fund.

226
71
115

230
78
120

Table H-3. FEDERAL FUNDS FOR EDUCATION, TRAINING, AND RELATED PROGRAMS,
BY DEPARTMENT AND PROGRAM (in millions of dollars)—Continued

Functional
code

Economic Assistance (Agency for International Development)

OUTLAYS

NEW OBLIGATIONAL AND
LENDING AUTHORITY
1968

1967

1969

1968

1967

1969

152

205

204

240

143

145

171

355

12

10

13

11

7

7

355
355

57
93

57
97

60
101

54
93

57
90

63
101

402

23

24

26

23

24

25

355

3

3

4

3

8

6

188

191

204

183

186

202

058

100

100

106

103

105

107

058
058

7
6

7
5

8
6

7
6

7
5

8
6

113

112

120

117

118

120

251

133

115

129

141

136

129

153

47

45

49

49

46

47

153

6

5

5

7

6

5

Department of Agriculture:

Agricultural research service: Training and research, including foreign currency
program
Cooperative State research service: Payments to State agriculture experiment stations for research.
__
.
.
_____
Federal extension service for cooperative extension work
Forest Service: Largely payments of shared revenues to States and counties for
schools
Other, including National Agricultural Library
Total, Department of Agriculture
Atomic Energy Commission:

Research, including conduct and facilities
Graduate and professional training and related support for higher education
Other
___
.
_
_
Total, Atomic Energy Commission
National Aeronautics and Space Administration: Research and training
Department of State:

Mutual educational and cultural activities: Largely American and foreign student,
teacher, professor, specialist, and leader exchange programs
Educational and cultural affairs: Center for Cultural and Technical Interchange
Between East and West




Salaries and expenses: Foreign Service Institute, grants to oversea schools, etc
fEducational Exchange Trust Fund

151
150

8
*

8

8
*

8
*

8
*

62

Total, Department of State

8
*

59

63

64

61

61

39
38
3
32

28
42
42
3
52

27
50
28
2
30

11
41
38
2
40

28
40
41
2
51

Military Assistance: Training of military and civilian personnel administered by Department of Defense from funds appropriated to the President __ __
Peace Corps: Training activities
Legislative Branch: Library of Congress
fLibrary of Congress, gift and trust fund income accounts
Smithsonian Institution. _.
_
__
__
fSmithsonian Institution: trust fund

057
152
704
704
704

27
42
31
3
32

n

704

2

2

3

2

2

3

Department of Transportation:
U.S. Coast Guard, principally Coast Guard Academy, education of uniformed personnel and overseas dependents _
_
Federal Highway Administration
Federal Aviation Administration: Principally training of civilian Federal personnel..
fFederal Highway Administration: Research and development
All other Department of Transportation, including high-speed grant research and
other research

502
503
501
503

16
2
16
2

18
3
18
2

15
5
19
2

16
15
2

17
5
18
2

\7
6
19
2

503

1

1

1

1

1

1

43

42

34

43

44

5
*
13

6
1
10

7
1
8

6
*
4

7
*
12

7
1
15

19

18

16

10

20

23

704

11

12

22

9

14

21

704

1

1

2

1

1

2

908

9

11

16

7

11

13

553

1

6

10

*

2

7

37

Total, Department of Transportation

„

Department of Commerce:
Maritime Administration: State schools and other maritime training
Scientific and technological research
«Other research and State assistance
_

_

502
506
506

Total, Department of Commerce
National Foundation on the Arts and Humanities
-tNational Foundation on the Arts and Humanities; fund for private contributions
Department of Justice: Vocational training in Federal prison industries and training in
law enforcement
_
_ - ___
Department of Housing and Urban Development: Grants for training in community
development, city planning, and transportation management
"Less than $500 thousand.




fTrust fund.

Table H-3. FEDERAL FUNDS FOR EDUCATION, TRAINING, AND RELATED PROGRAMS,
BY DEPARTMENT AND PROGRAM (in millions of dollars)—Continued

Functional
code

United States Information Agency: Information center and library activities, Foreign
Service Institute, etc
. __
General Services Administration: National Archives services, presidential library
activities, and national historical publications grants
Tennessee Valley Authority: Mainly in-lieu-of-tax payments and cooperative research..
Legislative Branch: Government Printing Office: Distribution to depository libraries...
U.S. Arms Control and Disarmament Agency: Research
Small Business Administration: Training

NEW OBLIGATIONAL AND
LENDING AUTHORITY
1968
estimate

1967
actual

1969
estimate

OUTLAYS
1968
estimate

1967
actual

1969
estimate

153

8

7

7

7

7

7

905

4

4

5

4

4

5

401
910
151
506

2
2
1
1

2
2
1
I

2
2
1
1

2
2
1
1

2
2
1
1

2
2
1
1

10.195

10,934

11.483

8.555

10.115

10.925

702
651
702

203
33
192

159
43
192

163
46
192

81
33
181

66
43
189

79
46
182

702
702

10
301

224

13
363

10
358

7
333

12
326

Total, credit programs

739

618

777

663

638

645

Total, Federal outlays

10,934

11.552

12,260

9.218

10.753

11.570

Total, excluding credit programs
CREDIT PROGRAMS
Department of Health, Education, and Welfare:
Academic facilities
_
Student loans to health personnel
-National Defense Educational Act: Student loans
_
Insured student loan advances
Department of Housing and Urban Development: College housing loans

.

Note: Lending authority figures in fiscal years 1967, 1968, and 1969 are adjusted to eliminate the authority from sale of participation certificates in pools of college
housing and academic facility loans which are not applied to current program.
*Less than $500 thousand.
fTrust fund.




SPECIAL ANALYSIS I
FEDERAL HEALTH PROGRAMS*

Federal expenditures for medical and health related activities will
rise to $15.6 billion in 1969, 8.3% of Federal expenditures for all
purposes. Comparable figures for 1967 and 1968, respectively, are
$10.8 billion and 6.8%, and $13.9 billion and 7.9%. This rise reflects
trends in Federal programs as well as a shift in the relative shares of
health expenditures borne by the Federal Government, State and local
governments, and by private sources. In 1965, with national expenditures for health near $39 billion, Federal expenditures represented
approximately 12% of the total (State and local governments, 13%,
and private sources, 75%). On the basis of preliminary data, total
spending for health purposes in 1967 has reached a level of $47 billion
with Federal expenditures representing 23% of the total, State and
local, 12%, and private sources, dropping to 65%.
The marked increase in the Federal share of national health expenditures is primarily attributable to its increasing role in paying
for medical care services. In 1965 the Federal Government spent $3
billion or 9% of the total national bill of $35 billion for medical care
services.1 In 1967 reflecting the initial impact of Medicare and Medicaid the Federal Government spent $7.8 billion or 18% of the $42
billion spent by the Nation for medical care services. The Federal
share may exceed 20% in 1969.
Table 1-1 shows the distribution of Federal health expenditures by
functional category. While the increase in Federal financing for health
services is striking, it should be noted that all categories show increasing Federal support over the 3-year period, 1967-1969.
Development of health resources.—Federal programs aimed at
enlarging the health resources of the Nation include biomedical research,
health manpower development, medical and health facility construction programs and efforts directed toward improving the organization
and delivery of health services. These programs will account for $3.2
billion or 20% of total Federal health expenditures in 1969.
Health research.—Federal expenditures for biomedical research will
rise to $1,513 million in 1969, an increase of $69 million over 1968.
It is estimated that the 1969 Federal obligations will represent
65% of the national effort with industry supplying an additional 25%
and the remaining 10% being financed by foundations and voluntary
health agencies.
Of the Federal biomedical research expenditures, about 61% will
support the efforts of educational institutions and nonprofit organizations, 25% will be utilized for direct Federal research activities, and
14% will support research conducted by private industry and others.




116

THE

BUDGET FOR FISCAL YEAR

1969

Table 1-1. FEDERAL E X P E N D I T U R E S FOR MEDICAL A N D H E A L T H RELATED ACTIVITIES BY CATEGORY (in millions of dollars)
1969

1967

1968

2,431

2,816

3,163

1,364
594
391
82

1,444
732
481
159

1,513
782
642
226

Provision of hospital and medical services, total

7,831

10,382

11,693

Direct Federal hospital and medical services
Hospital and medical services, indirect

2,552
5,279

2,684
7,698

2,783
8,910

540

682

700

386
37
117

500
50
132

491
51
158

10,802

13,880

15,556

Development of health resources, total
Health research
Training and education
Construction of hospitals and health facilities
Improving the organization and delivery of health services

Prevention and control of health problems, total
Disease prevention and control
Environmental controlConsumer protection
Total expenditures and net lending from Federal and
trust funds

As in the past, the Federal organizations with the major responsibility for medical and health related research will be the National
Institutes of Health and the National Institute of Mental Health
in the Department of Health, Education, and Welfare. Through the
programs of the Institutes, the Federal Government provides support
for the conduct of research, research training, the development of
research facilities and other resources, and the dissemination and
employment of new knowledge.
The primary mechanism for the support of research and development by NIH and NIMH continues to be the research project grant.
In total, about 15,000 project grants will be supported in eacho f the
3 years. However, increasingly, these two organizations are pursuing
larger collaborative research projects. For these purposes the contract
is usually employed. In 1969 greater emphasis will be given to such
projects as the artificial heart and kidney, organ transplants, vaccine
ana drug development, and fertility control.
Relatively, the largest increase in 1969 for research and development
activities in HEW is for the air pollution program. A level of $59
million is provided of which $43 million will be for technology to control pollutants such as sulfur oxides from fossil fuels and emissions
from auto exhausts. The remainder of the funds are spent primarily
for determining the health and economic effects of air pollution.
In addition to the efforts of HEW, significant biomedical research
activities are carried on under the auspices of the National Aeronautics and Space Administration, the Atomic Energy Commission,
the Defense Department, and the Veterans Administration. While
this research is directed to the primary missions of these individual
agencies, the contributions have widespread application to health
and medical problems of all.




117

SPECIAL ANALYSES

Table 1-2 provides a first attempt in this Special Analysis to classify
Federal health research expenditures between "basic science" and
"targeted research and development." In addition, estimates of targeted research and development are classified by selected program
areas. As this tabulation represents the initial attempt at this classification, the figures should only be viewed as indicators of trends.
Table 1-2.—FEDERAL EXPENDITURES FOR RESEARCH
1967
actual

Basic science. _
Targeted research and development

__.

1. Neoplasms
2. Heart and circulatory system
_ _
3. Mental health
4. Neurological diseases and blindness
5. Air pollution and other environmental research
6. All other
Research facilities construction
Research* total

- _

(in millions of dollars)
1968
estimate

1969
estimate

322
971

326
1.051

346
1,099

147
126
35
90
27
547
71

155
136
35
93
37
595
67

155
139
38
97
59
611
68

1.364

1.444

1.513

Training and education,—Growing levels of biomedical knowledge'
increased demands for health services, and an expanding population
continue to reinforce the need for more personnel trained in the
health professions. Federal programs that are designed to help meet
these national needs include: student loans and scholarship funds,
financial aid for the construction of schools in the health professions,
financial support for innovations and experiments in medical education, and training and education activities in conjunction with
the medical programs of the Veterans Administration, the Public
Health Service, and the Defense Department.
Through the efforts of these programs it is estimated that 318,000
students will receive training in 1969, supported by expenditures of
$691 million. As shown in table 1-3, 29,700 physicians, dentists, and
nurses graduating in 1969 and 15,765 paramedical trainees and other
students graduating or otherwise completing their training will have
received financial assistance from these programs. Additional physicians, nurses, and dentists in training have been included in the "all
other" category.
Enlargement of the health education system will be supported by
$90 million of Federal expenditures in 1969, an increase of $61 million
over the 1967 level. As a result of these and previous expenditures,
the spaces for first-year students will be increased as shown in table
1-4.
In addition to the support provided for expansion of the medical
education system and aid to students in the traditional medical professions, the Federal Government will support innovative efforts to
improve curricula and develop new categories of ancillary health
personnel. Revisions to expiring legislation will be proposed to increase
and accelerate the output of health manpower.
The major support for students in the health professions is provided
by grants from HEW, but further support of medical education and
training will be provided as a byproduct of the direct medical care



118

THE BUDGET FOR FISCAL YEAR

1969

Table 1-3. FEDERALLY AIDED TRAINING AND EDUCATION
Numbers1
(in thousands)

Expenditures
(in millions of dollars)

1967
Degree or certificate training:
Research training
Physician training
Completing training
Dentist training
Completing training
Nurse training
Completing training
Other health professions training.
Completing training
Paramedical training
Completing training
All other training
TotaL
1

1968

1969

1967

1968

1969

28.0
18.7
4.8
16.1
5.4
42.8
17.0
11.6
4.3
3.7
10.3
144.7

29.6
18.4
5.7
17.5
5.6
47.4
18.4
14.5
5.9
4.0
9.9
186.4
317.8

265.7

169
42
15

171
53
17

172
57
19

29"

"37

36"

57

79

"io"

"19"

25

236

269

"302"

26.3
15.3
4.5
14.1
4.9
26.6
13.8
8.2
3.6
4.2
12.3
125.0

54
6

65
4

61
9

219.7

Numbers in any given year may reflect the impact of expenditures in prior years.

Table 1-4. FEDERALLY AIDED HEALTH PROFESSIONS SCHOOL
CONSTRUCTION
First year spaces added *

Expenditures
(in millions of dollars)
1967

Medical schools
Dental schools
Other health professions schools
Nursing schools
Allied health professionals schools..
Total

1968

1969

18
5
2
4

55
16
6
10
1

57
16
6
10
1

29

88

1967

1968

1969

315
260
(2)
790

350
40
()
1,230

520
270
(2)
790
(3)

90

2

1
Numbers in any given year may reflect the impact of expenditures in prior years.
2 Not available.
3 Spaces will be added after 1969.

service activities of other Federal agencies. For example, in 1969, an
estimated 66,000 medical and paramedical personnel will be trained
or continue their education as part of the ongoing medical service
program of the Veterans Administration.
Construction of health facilities.—In 1969, $428 million of Federal
expenditures will support the construction or modernization of
community hospitals and other health facilities and $214 will be
spent for the construction of hospitals and health facilities required for
the medical service and health activities of Federal agencies.
Support for the expansion and modernization of non-Federal health
facilities is provided primarily through the Hill-Burton program, and
the Community Mental Health Centers Act. Since the enactment of
the Hill-Burton legislation in 1946, 427,000 beds have been constructed



119

SPECIAL ANALYSES

or modernized as a result of funds made available under the program.
In 1969 alone, health facilities providing approximately 31,000 beds
will be constructed or modernized with the support of Hill-Burton
funds. By the end of 1968, 367 community mental health centers will
have been constructed with Federal financial aid since the enactment
of the authorizing legislation in 1963. An estimated 110 additional
centers will come into being as a result of this program in 1969. Table
1-5 shows facility construction trends over the last 3 years. The rising
levels of support for nursing home or long-term care facilities construction and modernization reflect two program trends. The first
of these trends is the increasing level of demand for specialized nursing
home care, as an alternative to hospital care, which is brought about
in part by the Medicare program support for extended medical care
treatment provided in nursing homes. The second significant program
trend is the development of a continuum of medical care facilities,
ranging from intensive care to nursing home facilities.
Additional support for the construction of non-Federal health facilities is provided by grant and loan programs administered by the Small
Business Administration, the Department of Commerce and the
Department of Housing and Urban Development. The programs
of the Small Business Administration and the Department of Commerce primarily support the construction of health care facilities.
The activities of the Department of Housing and Urban Development support the construction of essential public facilities, including
grants for the construction of basic water and sewer facilities which
will contribute to the improved health of a community.
Table 1-5.—HOSPITAL AND HEALTH FACILITY CONSTRUCTION
Numbers 1
(in thousands)

Expenditures
(in thousands of dollars)
1967
Federally supported construction of
hospitals and other facilities:
General hospitals
Long-term care facilities
Sewer and sanitation facilities
Other
Federal hospitals and health facilities:
Hospitals
Nursing homes
Other facilities
Total expenditures

__

1968

1969

1967

1968

1969

140
46
49
33

162
51
124
28

152
63
176
37

20.6
9.8

18.5
11.6

19.7
11.8

105
2
15

81
7
28

160
1
53

3.6
.6

2.2
2.0

5.0
.4

390

481

642

1
Numbers in any given year may reflect the impact of expenditures in prior years, and include beds
added, modernized, and replaced.




120

THE BUDGET FOR FISCAL YEAR 1969

Organization and delivery.—A recent report by the Department of
Health, Education, and Welfare noted that the total national expenditures for personal health care in fiscal 1967 reached $40 billion.
Per capita, this represents an increase over 1966, of 7% in current
dollars. "In constant dollars however there was relatively no increase
in per capita expenditures indicating that nearly all of the increases
in personal health care expenditures was due to the rise in medical
care prices." 2 These facts are confirmed by the Consumer Price
Index for the 12-month period ending June 1967, which shows that the
medical care component rose by 7.3% (more than 2J^ times the 2.7%
increase for all items in the index).
These trends in rising demand for health services and increasing
prices are of national concern. The recent report of the National Advisory Commission on Health Manpower calls for major efforts to
meet these challenges through more efficient utilization and coordination of health resources. The Federal Government has responded to
these needs by establishing several programs that are designed to
improve the organization and delivery of health services. In 1969,
Federal expenditures for these purposes will rise to $226 million, 42%
above 1968 and 175% over 1967. Of the 1969 expenditures, 93% is
estimated for programs in the Department of Health, Education, and
Welfare. Most of the programs toward which these efforts are directed
have been initiated in the Public Health Service which will spend an
estimated $191 million in 1969 primarily through the programs
discussed below.
Federal grants under the Partnership for Health program will be
increased by $9 million in 1969, to a level of $15 million, to help State
and local governments initiate health planning units and expand
those that already exist. These Federal grants will help create and
support health planning units in virtually every State. Planning
activities include ascertaining health levels, taking inventory of
health resources, and determining additional resource requirements
such as facilities, equipment, and manpower. In addition, these health
planning units, in cooperation with the medical profession, will
assess the distribution and use of health resources and evaluate the
effect utilization of health services has on the health status of their
populations.
The Regional Medical Program^ initiated in 1966, will spend $18
million in 1968 and will complete the initial planning phase for 54
regions of which 30 will move to operational phases. Expenditures
of $40 million in 1969 will support new and continued planning
and are expected to result in operational programs covering the total
population of the United States. This program has established cooperative arrangements between the medical profession and medical
institutions in specific regions to make available to patients the latest
advances in diagnosis and treatment of heart disease, cancer, stroke,
and related diseases. In 1969, new emphasis will be directed towards
implementing and operating under these arrangements and in focusing
these voluntary professional arrangements toward efficient use of
manpower and facilities.
2 Department of Health, Education, and Welfare, Social Security Administration, Research and
Statistics Note No, 21, Nov. 20, 1967, "Personal health care" is more limited than "Medical care
services" and excludes general public health activities and expenditures by philanthropic agencies,




121

SPECIAL ANALYSES

In the past, the Public Health Service conducted or, through grants
and contracts, helped finance research in the organization, financing,
and utilization of health services through a variety of programs and organizational units. The 1969 budget reflects the first full year focusing
of these efforts under the proposed National Center for Health Services Research and Development. Expenditures for the Center—estimated at $18 million in 1969—will be directed toward studies and experimental projects aimed at containing the rise in medical prices and
improving the utilization of health resources. These will include
demonstration models in delivery of comprehensive health services,
use of health auxiliaries, and group medical practice.
Expenditures and activities classified under "Provision of Hospital and Medical Services" will also contribute towards improvement in the organization and delivery of health care. The Medicare
and Medicaid programs, under authority enacted in 1967, will
experiment with innovative reimbursement plans aimed at increasing incentives for more efficient medical practices. The OEO neighborhood health centers and the maternity and child centers created
by the Children's Bureau will also experiment with new and improved
methods of delivering health care, including the use of nonprof essional
and paramedical personnel.
Expenditures for organization and delivery are classified in table
1-6. Analytic studies, planning, and demonstration activities are
common to all these programs, although in varying proportions.
As analytic studies of systems models are developed and planning
techniques can be fitted to regional and local needs, increasing
expenditures are expected to be centered on demonstrations.
Table 1-6. FEDERAL EXPENDITURES FOR IMPROVING THE ORGANIZATION AND DELIVERY OF HEALTH SERVICES (in millions of dollars)
1967
actual

1968
estimate

1969
estimate

___

18
17
47

35
23
101

46
45
135

Total expenditures

82

159

226

Analytic studies
Planning __
Demonstrations

Provision of services.—The category, "Provision of Hospital and
Medical Services" includes (1) payments to or on behalf of individuals
for hospital and medical care in non-Federal facilities and by private
physicians, and (2) the expenses of health care facilities operated
directly by the Federal Government. The major Federal programs
which provide payments for health care are: health insurance for the
aged (Medicare), medical assistance for the needy (Medicaid), maternal and child health programs, Office of Economic Opportunity health
programs, and the Federal employees health benefits program. The
direct care activities consist primarily of those health programs conducted by the Department of Defense, the Veterans Administration
and the Department of Health, Education, and Welfare for their
beneficiaries in Federal facilities. These agencies, however, also expend




122

THE

BUDGET FOR FISCAL YEAR

1969

substantial amounts to provide care for their beneficiaries under
contract in non-Federal facilities. (See table 1-7.)
In 1969, approximately two-thirds of the total Federal health budget
will be expended to provide hospital and medical services to large
segments of the American population. A total of $11.7 billion will
be for these purposes, an increase of $1.3 billion over 1968 expenditures. The provision of services has been the fastest growing area of
health expenditures in the Federal budget over the past few years,
increasing 13% in 1969 over 1968 and almost 50% over 1967. These
programs, discussed below, are estimated to account for 20% of the
total national expenditures for personal health care from all sources.
Table 1-7. PROVISION O F H O S P I T A L AND MEDICAL SERVICES
Expenditures
(In millions of doll ars)
1967

Provision of hospital and medical
services, indirect
_
__ .
Inpatients treated
Clinic and physician visits
Total
1
2

_

2,552

2,684
1,822

1,890

862

893

5,279

7,698
5,235
2,463

6,059
2,851

7,831

10,382

1968

2,150
61 ,688

7, 718
65, 040

7, 751
66, 064

i4 ,816
(2 )

M, 992
(2 )

15,

1969

8,910

3,854
1,425

1967

2,783

817

Inpatients treated
Clinic and physician visits

1969

1,735

Provision of direct Federal hospital
and medical services
_

1968

Numbers treated
(in thousands)

11,693

110

Incomplete reporting.
Not available.

Medicare.—The aged, prior to Medicare, faced the twin spectres of
reduced income and high frequency of expensive illness. The Nation's
response to the health problems of the aged was a health insurance
program for virtually all persons 65 and over, covering 90 days of
hospital care, posthospital care in extended care facilities and services
provided by home health agencies, as well as physicians' services.
The hospital insurance program is financed by an employer-employee payroll tax for persons covered by the social security and railroad retirement systems and by general fund payments for hospital
services rendered to eligible aged persons not insured by either of
these systems. The 1967 amendments increased the combined employer-employee payroll tax from 1% to 1.2% effective January 1,
1968. In 1969, an estimated 19.6 million persons will be eligible to
receive the protection provided by the hospital insurance program.
(The only significant population group not covered by the hospital
insurance program are the retired Federal employees and their dependents who are eligible for the Federal employee health benefits
program.) In 1969, total expenditures for hospitalization of the aged
will exceed $3.9 billion, an increase of $500 million over 1968, reflecting anticipated increases in hospital charges and in admissions
to hospitals and extended care facilities. An estimated 4.6 million
aged will receive these services in 1969.



SPECIAL ANALYSES

123

In addition to the hospital insurance program, Medicare made
available, on a voluntary basis, a supplementary medical insurance
plan covering mainly physician charges. In 1969, approximately
18.6 million persons, almost 95% of the aged, will be enrolled in the
supplementary plan. The program is financed by monthly premiums
($3 currently and $4 effective April 1, 1968) by each enrollee matched
equally by the Federal Government. In 1969, an estimated 7.6 million
persons will benefit through payments of $1.8 billion from the Supplementary Medical Insurance trust fund compared to 7.5 million
persons and $1.6 billion in 1968. The increase of $211 million over
1968 expenditures results from an estimated 5% increase in physicians'
charges, greater utilization of physicians' services by the aged and
expanded benefits resulting from the 1967 amendments to the Social
Security Act. In 1969, Medicare will account for 80% of all Federal
health expenditures for the aged.
Medicaid.—Federal matching payments which defray 50% to 83%
of State medical assistance payments on behalf of the poor and
medically indigent will total $1.8 billion in 1968 with 43 States and
jurisdictions participating in the Medicaid program. Total expenditures, including State and local funds, are estimated at $3.4 billion
in 1968. In 1969, total Federal, State, and local medical assistance
expenditures are estimated at $4.2 billion, of which Federal grant
payments are estimated at $2.1 billion, $360 million more than 1968.
By the end of 1969, 48 States and jurisdictions are expected to be
in the Medicaid program.
Increased Medicaid costs in 1969 are attributable to an anticipated
rise in medical prices which is expected to account for about a third of
the increase over the 1968 level. In addition, the number of individuals receiving Medicaid services will increase from 7.3 million in
1968 to 8.5 million in 1969.
The 1967 Social Security Amendments limit Federal Medicaid
matching payments on behalf of the medically indigent to persons
whose income does not exceed by more than one-third the State
welfare payments under Aid to Families with Dependent Children.
For States already in the program, the limitation does not become
fully effective until January 1970, but is immediately effective for
new States entering the Medicaid program.
OEO and Children's Bureau health programs.—In contrast to the
overarching Federal financing mechanisms provided through the Medicare and Medicaid programs, the Children's Bureau and OEO health
programs have focused their efforts on sponsoring medical resources
which provide comprehensive medical services mainly for mothers
and children and young adults living in low income areas. In 1969,
about 50% of Children's Bureau health expenditures will be devoted
to further development of comprehensive neighborhood health,
maternity and infant care, and child health centers.
Health expenditures by OEO will increase from about $111 million
in 1967 to $154 million in 1969 primarily through expansion of neighborhood health centers which will account for about 60% of OEO's
health expenditures. By the end of 1967, 41 comprehensive centers




124

THE BUDGET FOR FISCAL YEAR 1969

had been approved and at present 13 are in operation. All 41 will be
operating by the end of 1968. The remaining OEO health expenditures
cover health care services provided to children enrolled in its Head
Start Program, to Job Corps enrollees, and to VISTA volunteers.
In 1969 the Children's Bureau will spend $170 million for health
care for mothers and children, $29 million more than in 1968. The
major portion of this increase will be aimed at health services to reduce
the incidence of mental retardation, birth defects, and infant mortality,
and to prevent or correct handicapping conditions among children.
A recent HEW report on maternal and child health programs indicated that dramatic reductions in infant mortality and handicapping conditions among children could take place through sharply
focused efforts.3 Accordingly, the 1969 budget requests $55 million—
$25 million more than in 1968—for 54 maternity and infant care
centers and family planning clinics strategically located in low income
areas. To prevent and correct chronic illnesses in school and preschool
children, the budget for 1969 requests $42 million—$5 million more
than in 1968—to financfe 59 comprehensive children and youth
health care centers. Almost 2 million children in low income areas are
eligible to receive preventive and corrective health treatment in these
centers. Another approach authorized by the 1967 amendments adds
$15 million to the crippled children's program to step up health
screening activities which locate and treat handicapping illnesses in
young children.
Financing health benefits for Federal employees.—Health benefits
are provided to more than 2.7 million Federal civilian employees
and their 5.8 million dependents under insurance programs managed
by the Civil Service Commission. A similar program provides benefits
for retired employees and their dependents. These payments are made
from trust revolving funds utilizing the premium deposits of the
agencies and their employees. The Government's contribution amounts
to $233 million in 1967, $251 million in 1968, and $257 million in 1969.
Providing medical care directly to Federal beneficiaries.—With the
expansion of hospital and medical care programs financed through
Federal funds, particularly for the aged and indigent, the share of
total Federal expenditures allocated for the direct provision of health
care in Federal facilities has declined from 40% in 1963 to 18% in
1969. In spite of the major shift in the proportions, this category
remains a major program element, with expenditures totaling $2.8
billion in 1969, an increase of 3.6% over 1968.
The three agencies primarily concerned with direct provisions of
health care, the Department of Defense, Veterans Administration,
and the Department of Health, Education, and Welfare, operate
542 hospitals containing 188 thousand beds, over 11% of all hospital
3 Department of Health, Education, and Welfare, Office of the Assistant Secretary for Program
Coordination, "Maternal and Child Health Care Programs," October 1966.




SPECIAL ANALYSES

125

beds in the United States. Together, these agencies expend over 98%
of the funds in this category.
The Department of Defense, with 311 hospitals and 63,000 beds,
will make medical care available to over 9 million servicemen, their
dependents, and retired military personnel and their dependents.
With the enactment of legislation in 1967 broadening the use of
community medical facilities for dependents and retired military
personnel, expenditures by the Department of Defense for care
provided in community hospitals and by private physicians will
almost double, increasing from $106 million in 1967 to an estimated
$200 million in 1969. In total, expenditures for care provided in both
military medical facilities and community facilities will increase
by $46 million in 1969 over 1968 to a total of $1,536 million.
To accomplish the medical care mission of the Veterans Administration, that agency will maintain and operate 166 hospitals containing
110,000 beds, 63 nursing home care units with 4,000 beds, 18 domiciliary/restoration care facilities, and 203 outpatient clinics—constituting one of the largest medical care systems in the world. The
agency provides care to veterans with service-connected disabilities
and veterans with non-service-connected illness to the extent that beds
are available and the veteran certifies his inability to pay for care in
private facilities. In 1969 the VA will treat 767,000 patients in 110,000
beds, an increase of over 2% from 1967. In additipn, outpatient
medical visits are expected to increase from 5.4 million in 1967 to
5.6 million in 1969. Expenditures are estimated to rise from $1.2
billion in 1967 to $1.3 billion in 1969.
Other persons eligible for care in the 65 hospitals and a variety of
outpatient clinics operated by HEW include 400,000 American Indians and natives of Alaska, and about 500,000 seamen, Federal employees injured on the job, narcotic addicts, and persons committed
or voluntarily presenting themselves for mental treatment in St.
Elizabeths Hospital in Washington, D.C. Under recent legislation,
Federal employees and their families stationed in remote locations
where private health care facilities are unavailable may utilize hospitals of the Public Health Service on a reimbursable basis. In 1969,
HEW will expend approximately $117 million to provide direct care
for these groups, an increase of 7% over 1968.
Family planning.—As pointed out by HEW's program analysis,
"Maternal and child health care programs," voluntary family planning programs, by matching births with the spacing and number of
children desired by parents, could significantly reduce infant mortality at a comparatively low cost. Out of the funds included, for provision of health services, Federal expenditures for family planning
in this country are expected to double in 1969 to a total of $73.8
million. Almost all of the increase is in services and counseling, which
rises from $25.2 million in 1968 to $60.6 million in 1969, largely
through a major expansion in family planning services provided by
Children's Bureau and OEO programs. These funds can provide
family planning services to about two-thirds of a universe of 5 million
women which a recent report to HEW on family planning 4 identifies
4
Oscar Harkavy, "Implementing DHEW policy on family planning and population," September
1967, p. 3.




126

THE BUDGET FOR FISCAL YEAR 1969
Table 1-8. ESTIMATED FEDERAL EXPENDITURES FOR FAMILY
PLANNING (in millions of dollars)
1967

Domestic:
Total services and counseling

1968

1969

18.1

__

Total expenditures (domestic)
International: Services, research and training (primarily AID)

13.2

10.8
.4

12.8
.4

36.4

73.8

1.1

HEW
Other

11.2

28.1

__

41.0
15.0
4.6

9.6
.4

Total research and training

14.2
7.0
4.0

10.0

Other

60.6

4.1
2.2

HEW
0E0

25.2

11.8

__. .__

14.3

23.4

as needing assistance in obtaining such services. Research and training in the family planning field increases by about 18% in 1969 to a
total of $13.2 million. Virtually all of the $2 million increase is due
to expanded research activities by PHS. The 1969 increase of $9.1
million in international family planning mainly reflects further expansion of AID activities.
Table 1-9. ESTIMATED HEALTH CARE EXPENDITURES BY POPULATION
AND INCOME GROUPS (in millions of dollars)
1967

Total, all recipients.
aged (65 and over)
_.
other adults (19-64)
children and youth (0-18).
Indigent, total*
aged (65 and over)
other adults (19-64)
children and youth (0-18) _
Non-indigent, total
aged (65 and over)
other adults (19-64)
children and youth (0-18).
1

1968

1969

7,831

10,382

11,693

4,379
2,535
917

6,310
2,893
1,179

7,125
3,174
1,394

3,178

4,100

4,749

1,968
850
360

2,560
1,012
528

2,872
1,194
683

4,653

6,282

2AU
1,685
557

3,750
1,881
651

6,944
4,253
1,980
7\\

Indigency as defined by OEO poverty guidelines.

Distribution of health expenditures by age groups and economic status.—

Table 1-9 estimates the Federal expenditures only for the hospital




SPECIAL ANALYSES

127

and medical services category as distributed among three major age
groups and between indigent and nonindigent persons. Funds expended
for categories relating to the development of health resources and for
the prevention and control of health problems are designed to serve
the entire Nation and are not normally allocable by population group
or income.
The age distribution in table 1-9 indicates that the largest health
expenditure increase in percentage terms will be for children and youth,
rising 17% in 1969 from $1.2 to $1.4 billion. In absolute terms, however, the largest increase will be for the aged, rising from $6.3 billion in
1968 to $7.1 billion in 1969. The distribution of expenditures between
indigent and nonindigent indicates that 40% of Federal expenditures
for the provision of hospital and medical services will aid the poor.
In 1969, $4.7 billion will be spent to provide or finance health care
services for the needy, an increase of $634 million over 1968 and a 49%
increase over 1967.
The aged.—Of the total 1969 expenditures for the provision of health
services both directly in Federal facilities and indirectly through Federal payments for care, approximately 61% or $7.1 billion, will be on
behalf of the aged. This is an increase of $805 million or 13% over 1968.
While the proportion of the Nation's aged who are in the indigent
category is expected to decline from 39% in 1967 to 34% in 1969
(partly because of the increased cash benefits provided in the 1967
Social Security Amendments), the amounts expended for the indigent
aged will rise by $900 million over 1967 largely due to increases in
medical costs and greater utilization of services.
Medicare—the major health program for the aged—seeks to remove
barriers to receipt of hospital and physician services. During the
first year of the program, utilization of hospital services increased by
about 20% over the pre-Medicare level. Physician services to the
elderly have also shown some increases, as have use of extended
medical care in nursing homes and home health services providing posthospital care. Medicare also seeks to ease the burden of
medical costs upon the aged and their families. In 1966, the year
immediately preceding Medicare, just under 70% of all hospital and
medical services for the aged were financed from private sources—
mainly the aged themselves or their families. In 1967, the first year of
Medicare, 70% of these costs were borne by public sources, Federal,
State, and local. It is estimated that Medicare's share of all public and
private medical care expenditures for the aged will rise from 40% in
1967 to almost 50% in 1969.
In addition to Medicare, Medicaid payments for the aged are estimated at $864 million in 1968 and $936 million in 1969. Although the
aged constitute only about 35% of all Medicaid recipients, they
account for over 44% of all payments, reflecting the higher cost of
treating illness affecting older people, especially the high cost of
recuperative care in skilled nursing homes.
An additional $339 million will be spent by the VA and the DOD
to provide medical care for aged veterans and retired military personnel and their spouses, mainly in hospitals and clinics operated by those agencies. This is an increase of $14 million over 1968
expenditures.



128

THE BUDGET FOR FISCAL YEAR 1969

Children.—Health care service expenditures for children are expected
to be $1.4 billion in 1969, an increase of $215 million over the 1968
level. Of the 1969 increase, $136 million is attributable to Medicaid
expansion, and $33 million to infant care, early casefinding and followup treatment in the Children's Bureau and OEO health programs.
These three programs account for over half the total Federal expenditures for children. The DOD dependent medical care program provides
almost all of the remaining funds. About 75% of the 1969 increase
will be for services to needy children. Between 1967 and 1969 expenditures for indigent children are estimated to rise by 90%, or $323 million.
The increases for children and youth reflect the very considerable
unmet health needs in this category. To help meet these needs, legislation will be proposed for a child health program to provide, over the
next 5 years, for families unable to afford it—access to health services
from prenatal care of the mother through the child's first year.
Other adults.—The 1969 expenditures of $3.2 billion for other adults
consist mainly of programs serving persons entitled to care in Federal
installations. These programs pay for health care rendered to veterans,
servicemen and Federal employees, as well as eligible spouses. A total
of $2.2 billion is expended for these groups, representing 68% of
the total spent for nonaged adults. Federal Medicaid payments for
needy adults will be $475 million in 1969, representing 15% of total
expenditures for adults. Other Federal programs spending more than
$40 million in 1969 for health care for adults are OEO's neighborhood
health centers, the Vocational Rehabilitation program, and the
maternal health programs of the Children's Bureau. These programs,
plus payments by Medicaid, and approximately $500 million of the
health care funds expended by the Veterans Administration, comprise
the $1.2 billion which will be spent in 1969 to provide hospital and
medical care to needy adults.
Prevention

and control of health

problems.—Programs

de-

signed to prevent and control health problems will increase to $700
million, as compared to $682 million in 1968 and $540 million in 1967.
Table 1-10. FEDERAL EXPENDITURES FOR THE PREVENTION AND
CONTROL OF HEALTH PROBLEMS (in millions of dollars)
1967

Disease prevention and control
Environmental control 1 _ _
Consumer protection__
Total, prevention and control of health problems

1968

1969

386
37
117

_

500
50
132

491
51
158

540

682

700

1
Excludes expenditures for air pollution and other environmental research which are included in
the medical and health-related research category. Table 1-2, $27 million in 1967, $37 million in 1968,
and $59 million in 1969.

Disease prevention and control.—Under the Partnership for Health
program, $76 million, an increase of $16 million over 1968, will be
made available for block formula grants to provide financial support
to States for establishment and maintenance of public health services



129

SPECIAL ANALYSES

developed and executed in a manner consistent with the State comprehensive health plan. In addition, $89 million will be made available for project grants to nonprofit organizations and institutions
and State and local health agencies to meet health needs of limited
geographic scope (such as rat control programs), or of specialized
regional or national significance. The disease prevention and control
programs in other countries supported by the Agency for International Development will be continued in 1969.
In addition, expenditures of $60 million will ensure that the national
capability to deal with outbreaks of communicable diseases will be
maintained. Another $30 million will support research and community demonstration efforts to upgrade our ability to deal with
long-term chronic debilitating diseases such as emphysema, chronic
bronchitis, and arthritis.
Environmental control.—In the last few years the quality of the
environment has taken on increased importance. This can be demonstrated in terms of anticipated national expenditures from all sources
for air pollution control equipment which will more than double
between 1967 and 1969; rising from $325 million to $700 million in
1969.5 Unless steps are taken to control the amount of pollution discharged into the air, by 1980 the sulfur and nitrogen oxides emitted
are estimated to increase by one-third over present levels. Without
the controls put on 1968 automobiles and all later models, the hydrocarbons and carbon monoxide emitted to the atmosphere are estimated
to increase by about 50% during this same 12-year period. As table
I—11 illustrates, the auto emissions removed by control devices, while
increasing, are still not sufficient to create a downward turn in auto
emissions released to the atmosphere. As older cars are replaced, the
full impact of controls being installed on post-1967 automobiles can
be expected to cause a decline in the level of auto exhaust pollutants.
Table 1-11. SELECTED AUTO EMISSIONS KEPT OUT OF THE AIR *
(In millions of tons per year)

Auto emissions released to the atmosphere:
Hydrocarbons
Carbon monoxide
Auto emissions removed by control devices:
Hydrocarbons
Carbon monoxide

1968

1967

1966

1969

10
62

11
65

11
66

11
67

1
*

2
1

3
6

4
11

* Less than 500 thousand tons.
1 Unpublished data furnished by the National Center for Air Pollution Control, HEW.

Controlling pollution is both a social and scientific problem. The Air
Quality Act of 1967 provides the national framework designed to obtain
clean air for all severely polluted areas in the country. The initiative
is left with the States to set enforceable air quality standards consistent with recommendations of the Secretary of HEW. Provision
is made for standard-setting by the Secretary for nationally desig6

Unpublished data furnished by the National Center for Air Pollution Control, HEW.

300-700
0
 0—68


130

THE BUDGET FOR FISCAL YEAR 1969

nated air quality control regions in the absence of appropriate State
action.
The development of devices and techniques to prevent and control
air pollution is a difficult scientific problem. Devices developed to
accomplish this task must be practical and economical to avoid a
serious disruption of the economy, especially in the fuel and power
generating industries. To find such economically feasible control technology is the objective of a $68 million research program to be
undertaken in 1968 and 1969.
On May 26, 1966, the President issued an executive order directing
Federal agencies to take the lead in air pollution by abating the
pollution from their own facilities. Implementation of the 5-year
plans developed as a result of this executive order will begin in 1969.
Expenditures of $21.6 million will fund 89 projects in 1969 which will
eliminate the more serious air pollution problems at Federal facilities.
Another environmental problem is the disposal of solid wastes
such as trash, garbage, and industrial processing wastes. Increased
research is supported to develop ways of greatly reducing the amount
of such wastes produced, using wastes as resources rather than discarding them, and disposing of the remaining wastes in the most
efficient and healthful manner. Legislation extending the solid waste
program will be proposed.
Consumer protection.—Consumer protection is also an important
part of the prevention and control of health problems. The Department of Agriculture will substantially increase its activities in 1969
to assure the wholesomeness of meat and poultry meat products
shipped in interstate commerce. The Food and Drug Administration's consumer protection activities will be strengthened, including
its National Center for Drug Analysis which is designed to ensure
the purity, potency, and effectiveness of the Nation's drug supply.
Eventually the results from this activity should provide more reliable
data on the equivalency of similar drugs. In addition, the Clinical
Laboratories Improvement Act of 1967 provides for developing and
enforcing standards for the quality and accuracy of performance of
the estimated 1,000 diagnostic laboratories transacting business in
interstate commerce.
Legislation will be proposed to ensure the quality and wholesomeness of fish, assure the safety of our community water supplies,
protect against hazardous radiation from electronic equipment, and
strengthen FDA's capacity to ensure safe and adequate medical
devices.




SPECIAL ANALYSES

131

EXPENDITURES FOR H E A L T H ACTIVITIES BY AGENCY

The following tables distribute the health-related expenditures of
Federal agencies by the functions used in this analysis. Based on
their major purposes, most of these agencies are assigned in the
budget document to functions other than Health. The tables, therefore, also indicate the budget document functional code. Breaking
out the health activities of these agencies, functionally assigned elsewhere in the budget document, accounts for the $15.6 billion reported
in this analysis for "health" compared to the $10.7 billion reported in
the budget document. Furthermore, this analysis incorporates a more
detailed breakdown within "health" than is used in the budget document. Expenditures for health within each appropriation account are
assigned to the various functional components used in this analysis.
Finally, expenditures reported in this analysis cannot be added to
those reported in other special analyses such as Education; in some
cases the same expenditure is reflected in both analyses.




Table 1-12. FEDERAL EXPENDITURES AND NET LENDING FOR MEDICAL AND HEALTH-RELATED ACTIVITIES BY AGENCY,
1967 (in millions of dollars)

Department of Health, Education, and Welfare
Public Health Service:
NIH
NIMH
_
_
Other
Food and Drug Administration
Social and Rehabilitation Service
Social Security Administration
Other
DeDartment of Defense
Veterans Administration
._ __ Department of State
Agency for International Development
Atomic Energy Commission
___
_
Department of Agriculture
_
_
National Aeronautics and Space Administration
Department of Housing and Urban Development
National Science Foundation
_
Civil Service Commission
Office of Economic Opportunity
Department of Commerce _
_
_
Department of Labor
Other agencies .
Agency contributions to employee health benefit funds
Total expenditures for health, 1967




_--

651
651
651
651
(51,654
651
701
051
804
151
152
058
355
251
553
703
906
655
507
652

Health
research

Training
and education

Construction

tion and
delivery

996.0

Functional
code

414.9

220.7

65.0

114.8

773.0
69.0
117.0
10.0
27.0

163.2
90.3
133.4
.8
19.0

.9
218.1
.6
1.1

4.4
19.6
34.9
6.1

77.8
47.1
1.5
(1.5)
98.6
37.4
84.9

8.2
80.3
52.4
13.7
(10.4)

49.7
56.9
.8

48.4

1.3
8.8
(8.8)

hospital
and
medical

hospital
and
medical

4,784.6

286.8

8.5
106.0

18.7

.3

1,370.2
3,395.7

1,226.1
1,181.5
1.8
(1.7)

106.0
37.2
.3

6.8
36.6
103.0

2.9
31.0
.6

11.6

1,363.7

593.6

391.0

27.5

12.1
2.7
196.8

2,551.7

5,279.3

_81.9

Total

1.5
29.9
184.5
46.7

15.1
1.1
.2
4.0

control of
health
problems

6,882.8

942.1
218.5
812.6
58.3
1,423.7
3,395.7
24.2
32.5
19.3 1,559.2
1,376.4
136.9
110.0
(93.3) (115.7)
99.3
140.9
103.5
84.9
55.2
15.1
36.6
103.0
4.0
45.1
1.8
64.8
18.4
196.8

539.8 10,801.0

Table 1-13. FEDERAL EXPENDITURES AND NET LENDING FOR MEDICAL AND HEALTH-RELATED ACTIVITIES BY AGENCY,
1968 (in millions of dollars)
Direct
Functional

Training
and edu-

Construc-

tion and

Preven-

Department of Health, Education, and Welfare
Public Health Service:
NIH
NIMH
...
Other
Food and Drug Administration
Social and Rehabilitation Service
Social Security Administration.
___
Other
Department of Defense
Veterans Administration.
Department of State _
_
..
Agency for International Development
Atomic Energy Commission
Department of Agriculture
National Aeronautics and Space Administration
Department of Housing and Urban Development
National Science Foundation
Civil Service Commission
Office of Economic Opportunity
Department of Commerce
__ _
Department of Labor
Other agencies
Agency contributions to employee health benefit funds
Total expenditures for health, 1968




1.056.0
651
651
651
651
651654
651
701
051
- _ 804
151
152
058
_ _
355
751
553
703
906
655
507
_ 65?
-

_

539.8

811.0
70.3
130.9
10.8
33.0

165.3
99.5
238.9
.9
23.2

86.6
47.5
1.2
(1.2)
99.5
36.9
96.1

12.0
91.0
60.3
14.0
(10.6)

248.3

243.6
3.3
1.4
26.1
58.0
.5

123.7

hospital

hospital

control of

medical

Health

medical

problems

144.0

109.2

23.9
55.7
53.1

9.5
99.4

11.3

.3

2,008.2
5,064.3

2.0
9.5
(9.5)

1.305.1
1,235.5
4.9
(4.8)

175.0
38.5
.3

7,106.1

389.6

33.6

3.3
40.8
111.0

25.2
.8

18.1

1.443.6

731.8

481.0

6.3
29.4
158.8

9,593.0

2.0
35.6
253.3
50.4
20.9

14.0
1.0
.3
4.5

Total

12.1
3.2
210.6

2,684.1

7,697.6

1,002.2
270.7
1,052.7
65.4
2,098.3
5,064.3
39.4
27.4
20.3 1,704.1
1,441.8
164.3
133.9
013.7) (139.8)
100.2
152.9
116.0
96.1
127.0
14.0
40.8
111.0
7.3
39.9
2.3
75.5
19.5
210.6
681.6 13,878.5

Table 1-14. FEDERAL EXPENDITURES AND NET LENDING FOR MEDICAL AND HEALTH-RELATED ACTIVITIES BY AGENCY,
1969 (in million* of dollars)
Direct

Department of Health, Education, and Welfare
Public Health Service:
NIH
.
NIMH.
Other
Food and Drug Administration.
_
Social and Rehabilitation Service Social Security Administration
Other
Department of Defense
_
- Veterans Administration
Department of State _
_
Agency for International Development
Atomic Energy Commission
Department of Agriculture
-National Aeronautics and Space Administration
Department of Housing and Urban Development
National Science Foundation
Civil Service Commission
Office of Economic Opportunity..
Department of Commerce
_
Department of Labor
Other agencies
Agency contributions to employee health benefit funds
Total expenditures for health, 1969




Indirect

Preven-

hospital
and
medical
services

hospital
and
medical
services

control of
health
problems

-

--

-

651
651
651
651
651(54
651
701
051
804
151
152
058
355
251
553
703
906
655
507
652

and edu-

Construction

tion and
delivery

1,088.0

tional

566.0

261.2

211.4

116.7

822.0
72.0
143.9
11.2
38.9

166.4
102.3
252.2
1.0
29.1

44.1
64.7
82.0

10.8
105.6

20.6

.3

2,419.2
5,784.9

2.0
11.0

1,335.6
1,291.1
8.4
(8.3)

200.1
38.9
.3

Health

92.7
53.2
1.5
(1.5)
104.2
43.9
110.2

15.0
92.6
81.1
15.5
(11.8)

251.7
5.1
4.4
104.1
63.5
.2

176.4

8,242.7

12.7
3.9
216.2

2.782.8

8,909.6

700.4 15,556.0

1.3

7.1
29.9

1,513.0

782.1

642.4

1.9
39.4
246.0
51.4
6.2

31.0

01.0)

38.6

40.8
154.0
25.3
.9

372.3 10,858.3
1,034.5
289.2
1,119.8
68.7
2,518.7
5,784.9
42.4
27.4
21.2 1,846.3
1,529.8
177.7
140.8
(118.9) (151.5)
104.9
185.7
Ml. 8
110.2
177.7
13.5
40.8
154.0
8.2
40.9
2.6
91.8
21.7
216.2

13.5
1.1
.3
4.4

Total

225.7

SPECIAL ANALYSIS J
FEDERAL RESEARCH, DEVELOPMENT, AND RELATED PROGRAMS

This analysis identifies Federal funds for the conduct of research,
development, and facilities related to both activities. It also provides
information on several fields, such as the marine sciences, which are
of broad national interest, involving the programs of many departments and agencies. The range of programs summarized in this
analysis reflects the continuing importance of research and development both to advancing the objectives of the Federal Government
and to furthering the economic and social welfare of the Nation as a
whole.
Total Federal obligations for research and development, including
facilities, will increase from $16.9 billion in 1968 to $17.8 billion in 1969.
Major increases of $0.6 billion for Defense, $0.4 billion for the Atomic
Energy Commission, and $0.3 billion for all other agencies are offset
by a decrease of $0.4 billion for the National Aeronautics and Space
Administration, reflecting a decline in requirements for the manned
lunar landing program. Total expenditures will increase from $16.5
billion to $17.3 billion.1
Research and development programs of the Federal Government
are planned and executed primarily to support the missions of individual agencies. The level and content of Federal research and development therefore depends, in large measure, on such criteria as
the extent to which the Federal Government has assumed responsibility for problems of national concern and their urgency; the feasibility of a scientific and technological attack on these problems; and
the availability of skilled manpower and other resources. The application of these criteria is clearly evident in the scope and size of
research and development related to national defense, space exploration, atomic energy, and public health. But it is also reflected in newer
areas of Federal concern such as education of the disadvantaged,
poverty, transportation, urban development, and crime prevention
where research and development programs are coming into existence
or increasing significantly in scale.
Science and technology create opportunities and generate problems
which do not fit neatly into the existing structure of government.
Therefore, means must be found to provide an overview of interrelated research and development programs in order to foster coordination, minimize duplication, and to work toward fulfilling broader
overall Federal responsibilities and national goals in science and technology. This is exemplified in such fields as marine science and atmospheric research.
The Office of Science and Technology, in the Executive Office of
the President and headed by the President's Science Adviser, is the
major specific instrument of the President for the oversight and evaluation of research and development. Related to the work of this Office
are the President's Science Advisory Committee and the Federal Coun1

Obligations and expenditures in this analysis include trust funds.




135

136

THE BUDGET FOR FISCAL YEAR 1969

cil for Science and Technology, both also headed by the President's
Science Adviser.
Finally, the Bureau of the Budget reviews all research and development in the course of considering, on behalf of the President, agency
program and financial requirements. While this review focuses on
research and development largely in the context of agency mission
needs, the Bureau, in cooperation with the Office of Science and
Technology and other c oordinating bodies, also examines those aspects
of research and development which cross agency lines.
Research.—The Federal Government finances research not only to
advance specific agency missions but also to support generally the
progress of the Nation's social and economic welfare. Of particular
importance to the latter objective is the support of basic research,
especially that conducted in colleges arid universities and related
research organizations.
Total Federal obligations for the conduct of research—both basic
and applied—will increase from an estimated $5.5 billion in 1968 to
$6 billion in 1969. Expenditures will increase from $5.2 billion in 1968
to $5.7 billion in 1969.
Obligations for Research
JBillions

7-

6-

5-




137

SPECIAL ANALYSES

Table J-1. OBLIGATIONS AND EXPENDITURES FOR THE CONDUCT OF
RESEARCH 1 (in millions of dollars)
Obligations

Department or agency

Expenditures

1967
Department of Defense—Military
National Aeronautics and Space Administration
Health, Education, and Welfare
Atomic Energy Commission
National Science Foundation
Agriculture
Interior
Commerce
Transportation
Veterans Administration
Smithsonian Institution
Housing and Urban Development
Office of Economic Opportunity
Justice
All other
Total

1968

1969

1967

1968

1,584

1,397

1,633

1,492

1,470

1,560

1,388
1,137
397
245
248
147
52
45
44
15
8
12
1
35

1,550
1,204

1,587
1,320

1,440

1,578
1,153

414

439
289
273

1,414
1,046
414
240

259

46
16
18
14
3
38

5,358

5,492

262
252
163
63

52

974
397
207
245

1969

439
257

130

154

53
32
43

54
50
44

13
4

46

9
1
45

15
8
13
2

266
170
56
64
47
18
13
16
4

50

54

6,002

5,086

5,235

5,695

178
62
62

49
21
21
16

6

1
In this table and tables J 2 and J 3 "obligations" and "expenditures" for AEC are both ac—
—
crued costs which approximate obligations ana expenditures for analysis purposes. "Obligations"
for Defense are "budget plan" amounts which approximate obligations, Detail in all tables may not
add to totals due to rounding,

The major dollar increases for research in 1969 are in the programs of
the Departments of Defense and Health, Education, and Welfare,
chiefly for health. Among other agencies, small but significant increases
are to be noted for the National Science Foundation, the Departments of Interior, Transportation, Housing and Urban Development,
and Justice and the Office of Economic Opportunity. These latter
increases reflect in part the growing concern for applying research
to national "civilian" problems.
Development—The Federal Government finances development to
design, fabricate, test, and evaluate prototypes of materials, devices,
systems, or processes to accomplish specific agency missions. These
include prototypes of complex devices such as military weapons, space
vehicles, and nuclear reactors and of "systems" for such purposes as
missile defense and communications.
Total obligations for the conduct of development are estimated to
increase slightly, from $10.8 billion in 1968 to $11 billion in 1969.
Expenditures will increase from $10.6 billion to $10.9 billion.
The major change in 1969 is a reduction in the development funds of
NASA reflecting the progress of the Apollo manned lunar landing
program beyond the most costly phases of development. Other programs of development will increase in 1969, chiefly those of the
Department of Defense and of AEC for nuclear weapons development.




138

THE BUDGET FOR FISCAL YEAR

1969

Obligations for Development
SBilliom

12-

10 —

1959

I960

1961

1962 1963

1964 1965

1966 1967

1968 1969

Fiscal Y M I *

Estimate

Table J-2. OBLIGATIONS AND EXPENDITURES FOR THE CONDUCT OF
DEVELOPMENT (in millions of dollars)
()bligations

Department or agency

E xpenditures

1967

Department of Defense—Military,.
National Aeronautics and Space Administration.
Health, Education, and Welfare.
Atomic Energy Commission
Agriculture.. .
Interior, .
Commerce.
Transportation
Veterans Administration
Housing and Urban Development
Office of Economic Opportunity
Justice
.
All other
Total.

1968

1969

1967

1968

1969

6,138

6.419

6,813

6,107

6.164

6,624

3,503
54
859
8
30
21
51
1
3
35

2,738
142
1,062
8
48
23
62
1
23
42
12
36

3,690
47
859
8
22
14

22

3.165
72
948
8
47
25
64
1
5
40
7
25

2
22

3.224
65
948
9
41
21
55
1
4
39
4
24

2.917
86
1,062
9
49
23
56
1
7
42
7
29

10,727

10,826

11.010

10,852

10,599

10.910

Research and development facilities.—Total

5

!

obligations for research

and development facilities will increase from an estimated $587 million
in 1968 to $754 million in 1969. Expenditures will decrease from $681
million to $665 million, chiefly reflecting completion of NASA manned
lunar landing: facilities.



139

SPECIAL ANALYSES

The substantial increase in obligations in 1969 is largely attributable
to the AEC for financing construction of three major research facilities,
including further funding of the 200-Bev proton accelerator. Most of
this increase reflects a deferral of obligations from 1968.
Table J-3. OBLIGATIONS AND EXPENDITURES FOR RESEARCH AND
DEVELOPMENT FACILITIES (in millions of dollars)
Obligations

Department or agency
1967
Department of Def ense—Military
National Aeronautics and Space Administration.
Health, Education, and Welfare
Atomic Energy Commission
National Science Foundation
Agriculture
___

Interior
Commerce
Transportation
Veterans Administration
Smithsonian Institution

All other
Total _
1

_.

1968

Expenditures
1969

1967

1968

1969

87

98

71

74

84

97

121
74
223
69
13
32
6
10
3
0)

103
53
169
71
23
45
8
13
3
C1)

45
49
459
52
20
29
4
24

295
68
210
70
18
17
14
9
3

167
69
206
71
30
30
8
12
2
O

80
71
244
64
38
41
4
20
5
1
1

638

587

681

665

0)
754

0)
778

Less than $500 thousand.

Further description of the research and development programs of
the individual departments and agencies is included at the end of
this analysis.
SELECTED GOVERNMENT-WIDE SCIENTIFIC ACTIVITIES OF THE
FEDERAL GOVERNMENT

The following section summarizes overall Federal funding of several
selected scientific activities which are supported by a number of
agencies. These activities are significant not only to the advancement
of individual agency missions but also to the support of broad national
needs in science and technology.
In these and other areas of science the Office of Science and Technology and the Bureau of the Budget seek to coordinate the efforts of
the Federal agencies involved. Assistance is provided by the President's
Science Advisory Committee and the Federal Council for Science and
Technology and in the case of the marine sciences, by the National
Council on Marine Resources and Engineering Developments
ACADEMIC RESEARCH

Continuing attention has been given in the preparation of the 1969
budget to the total support of research by the Federal Government in
colleges and universities.
In 1969 total Federal obligations for research grants and contracts in
academic institutions will approximate $1.6 billion, an increase of 13%
over the $1.4 billion estimated for 1968. This contrasts with an increase
of 2% from 1967 to 1968.



140

THE BUDGET FOR FISCAL YEAR 1969

Academic science receives special attention in the budget process
because of the predominant role which researchers in institutions of
higher education play in the performance of basic research that
provides the foundation for the general advancement of the Nation's
science and technology. Moreover, academic research is essential to
the training of scientists and engineers for the future manpower
demands of the country.
The Federal Government provides about three-quarters of all sponsored research funds spent by colleges and universities. Their ability
to carry forward effective educational programs in science is directly
affected by the volume and distribution of Federal research grants
and contracts. For most Federal agencies—except the National Science
Foundation—the level of their academic research support is largely
determined by the need for research to carry out their mission
requirements. This can result in significant changes from year to year
in the financing of academic research by "mission" agencies. Hence,
the importance of the overview which is maintained of the flow of
Federal funds to colleges aijd universities and of relating the level
of academic research support from the NSF to that of the mission
agencies.
The overall importance of academic institutions as a national asset
in science was given further, specific recognition by the President in
September 1965 when he directed that all agencies administer their
research funds in such a manner as to strengthen institutions of
higher education and to assist in increasing the number of such institutions capable of performing research of high quality.
ATMOSPHERIC SCIENCES

The atmospheric sciences are concerned with the physical and
chemical properties, composition, behavior and processes of the
planetary atmospheres of the solar system. The atmospheric sciences
encompass: meteorology—the physics and chemistry of the earth's
atmosphere, including studies of such phenomena as general circulation, precipitation processes, turbulence, diffusion, and atmospheresurface interactions; aeronomy—the physics and chemistry of the
earth's upper atmosphere, including studies of such phenomena as
airglow, aurora, magnetic fields and radiation belts; and planetary
atmospheres—studies of extraterrestrial atmospheres.
A major part (40%) of the funding for atmospheric sciences research
continues to be for space flight programs of NASA: the Nimbus
program (Nimbus D, E, and F launches scheduled for 1970, 1971, and
1973 respectively) and the Mariner Mars 1969 unmanned planetary
program. Exclusive of space flight programs, funding for atmospheric
sciences will increase in 1969 after periods of level funding in 1966 and
1967 and a slight decrease in 1968.
There are no major increases in any particular research area although
a continued modest expansion is planned for weather modification
research by the Environmental Science Services Administration in
the areas of precipitation modification and hail suppression, and by the




141

SPECIAL ANALYSES

Department of Agriculture in the area of lightning suppression. The
Department of Health, Education, and Welfare will increase its
research on air pollution, and will seek to improve air pollution
forecast methodology directed toward making 24 to 36 hour forecasts
for specific urban areas.
Table J-4. OBLIGATIONS OF FEDERAL AGENCIES FOR ATMOSPHERIC
SCIENCES BY FUNCTIONAL AREA (in millions of dollars)
Functional . r e .
Meteorology:
Departments of:
Agriculture
Commerce __
Defense
Health, Education, and Welfare

1967

1968

1
11

1969

Interior.
Transportation
Atomic Energy Commission
National Aeronautics and Space Administration
National Science Foundation
Total, meteorology
Aeronomy:
Departments of:
Commerce
__
_
Defense
National Aeronautics and Space Administration National Science Foundation

21

25

3
4
1
5
41
16

5
6
1
6
57
16

6
6
1
6
51
17

108

.

2
17

23
_

1
14

127

129

Planetary atmospheres:
National Aeronautics and Space Administration
National Science Foundation
Total, planetary atmospheres
Total, atmospheric sciences

4

5

30
5
9

31
4
10

52

Total, aeronomy

3
35
4
10

48

50

47
1

61
1

30
1

48

62

31

208

237

210

ENVIRONMENTAL QUALITY

Increased attention is being given to the review and evaluation of
the total Federal effort related to control and abatement of pollution.
The ongoing Federal effort in 10 agencies involves approximately
$250 million for research, development, and demonstration work
relating to the control of pollution. In April 1967 a Committee on
Environmenta] Quality was established by the Federal Council for
Science and Technology. The Office of Science and Technology, with
the assistance of this Committee, will give additional attention to
balance and priorities in scientific and technical aspects of Federal
programs. Also advice will be provided by a continuing Panel on the
Environment which is being established by the President's Science
Advisory Committee.




142

THE BUDGET FOR FISCAL YEAR 1969
MARINE SCIENCE AND TECHNOLOGY

The Marine Resources and Engineering Development Act of 1966
established broad national objectives for marine science and technology. Advice and assistance in policy planning and coordination is
provided by the National Council on Marine Resources and Engineering Development. The 1969 budget takes into account the
Council's views and recommendations as to areas deserving special
emphasis.
Eleven agencies are engaged in marine science and technology,
pursuing such goals as national security, international cooperation,
development and exploitation of food, mineral and energy resources,
improved transportation, and greater understanding of the marine
environment.
The major increase in 1969 is in programs of the Navy for the Deep
Submergence Systems Project, for deep ocean technology, and for
ocean exploration, mapping, and charting for defense purposes.
Other important increases are in the Coast Guard for a cutter equipped
for subpolar oceanographic research and for development of buoy
technology to collect oceanographic and environmental data; in
the Coast Guard and Department of Interior for the control of
pollution from oil and other wastes; and in the Department of Interior
for extension of the technology for extracting fish protein concentrate.
Additional funds are also planned for oceanograpnic research, principally by Navy and the National Science Foundation. Finally, funds
are included in 1969 to initiate plans for launching, with other nations,
exploration of the ocean depths.
The Commission on Marine Science, Engineering and Resources,
also established by the 1966 Act, is reviewing all aspects of marine
science in order to recommend an overall plan for a national oceanographic program and an appropriate Government organizational plan.
The Commission's report to the President, via the Council, and to the
Congress is scheduled for submission by January 1969.
Table J-5. PROGRAM PLAN OF FEDERAL AGENCIES FOR MARINE SCIENCE
AND T E C H N O L O G Y ^ (in millions of dollars)
1967

Department or agency

Departments of:
Commerce
Defense
Health, Education, and Welfare
_
Interior
State
Transportation _
Agency for International Development
Atomic Energy Commission __
.
National Aeronautics and Space Administration
National Science Foundation
Smithsonian Institution.. .
Total

_

_

1969

1968

35
278

6
74

5
8

. _ _

38
298

8
64

__

38
257
5
11

8
76

2
11

3
13
2
38

5
33
3
12

2

2

2
41
2

438

448

516

1
The figures in this table and table J-6 are not comparable to those shown for marine science
and technology last year because, of changes in definition.
2
Less than $500 thousand,




143

SPECIAL ANALYSES

Table J-6. PROGRAM PLAN FOR MARINE SCIENCE AND TECHNOLOGY
BY FUNCTIONAL AREA (in millions of dollars)
Functional area

1967

1968

1969

Research and development:
Research
Development

98
111

123
127

140
142

SubtotaL___

210

250

281

69

22

17

18
14
2

30
15
4

48
18
3

104

72

86

104
20
1

102
23
2

121
26
2

Subtotal

124

126

149

Total

438

448

516

Investment:
Ships
.
Major equipment
Shore facilities
Other
Subtotal,.
Operations:
Surveys .
Services
Other

-

__.

_

MEDICAL RESEARCH

Federal expenditures for medical and health related research will
be $1,513 million in 1969 as compared to $1,444 million in 1968. This
is an expansion of about 5%.
The primary support of medical research in the Nation will continue to be from the Federal Government, accounting for about 65%
of the national effort.
The main supporter of medical research in the Federal Government
is the Department of Health, Education, and Welfare. The National
Institutes of Health and the National Institute of Mental Health
together account for over 50% of the Federal program. The emphasis
of both agencies continues to be to support a broad spectrum of
research in the life sciences through project grants. However, emphasis is increasingly on collaborative, contract research in pursuit
of specific objectives including artificial organs, tissue transplantation,
vaccine development, fertility control, and drug development.
Aside from these Institutes the 1969 budget provides significant
increases for research and development in air pollution control technology, such as the removal of sulfur oxides; research and development
on new methods for the delivery of health care; and the life sciences
aspects of the Nation's space and atomic energy programs.




144

THE BUDGET FOR FISCAL YEAR 1969

Table J-7. EXPENDITURES OF FEDERAL AGENCIES FOR MEDICAL AND
HEALTH-RELATED RESEARCH (in millions of dollars)
Department or agency

Department of Health, Education, and Welfare:
Public Health Service
(National Institutes of Health)
(National Institute of Mental Health)
(Other Public Health Service)
Other
Total, Department of Health, Education, and Welfare
Department of Defense
Atomic Energy Commission
Department of Agriculture
National Aeronautics and Space Administration
National Science Foundation
Veterans Administration
Other
Total, medical and health-related research
Total, conduct of research
Total, research facilities

1967
actual

1968
estimate

1969
estimate

959
(773)
(W)
0.7)

1,010
(811)
(70)
(129)
46

1,032
(822)
(72)
(138)
56

996
78
99
37
85
15
47
7

1,056
87
99
37
%
14
48
7

1C
.
93
104
44
110
14
53
7

1,364
(1.293)
(71)

1,513
1,444
(1.377) (1.445)
(68)
(67)

Further discussion of medical and health related research may be
found in Special Analysis I, Federal Health Programs.
SPACE PROGRAMS

New obligational authority for the total Federal space program is
estimated at $6.6 billion in 1969, an increase of $45 million over 1968.
Expenditures increase $76 million in 1969. The major increase in new
obligational authority and expenditures is in the Department of Defense programs, largely for development of the orbiting laboratory
(MOL). The decrease in funds for the National Aeronautics and Space
Administration reflects declining requirements for the manned lunar
landing, offset in part by increases for the Apollo Applications program.
Except for the operational satellite programs of the Department of
Commerce, amounts for all space programs are classified as research
and development for purposes of this special analysis.
All funds of the National Aeronautics and Space Administration
are included in the amounts shown, with the exception of amounts
specifically identified with aircraft technology. About 55% of 1969
expenditures will be devoted to the achievement of a manned lunar
landing within this decade. The Apollo Applications program of
extended manned flight will account for $422 million of 1969 expenditures. The balance of the NASA funds provide for continuing unmanned space exploration with satellites and probes, development of
space applications, and a continuing program of studies and supporting research.




145

SPECIAL ANALYSES

The estimates for the Department of Defense include the projects
in the Department's astronautics budget activity and certain amounts
in other budget activities which contribute to the space effort, such as
missile development, range operations, and various supporting research,
development, and operating costs. The amounts shown include funds
for the MOL, the communications, navigation, and nuclear detection
satellite programs, the Titan III space booster, and for supporting
research and development.
For the Atomic Energy Commission, the table includes amounts for
nuclear rocket propulsion technology and nuclear power sources for
space applications, including production of isotopic fuels, and amounts
for aerospace safety. The amounts shown for Commerce are primarily
those related to the establishment and operation of a satellite system
to observe meteorological conditions. The Interior and Agriculture
funds support research on remote sensing of earth resources. The
amounts for the National Science Foundation are for research in
astronomy using rockets and satellite-borne observation instruments.
Table J-8. NEW OBLIGATIONAL AUTHORITY AND EXPENDITURES FOR
F E D E R A L SPACE PROGRAMS (in millions of dollars)

Department or agency

1967
actual

National Aeronautics and Space Administration 1___ _
Department of Defense.
Atomic Energy Commission
Department of Commerce: Environmental
Science Services Administration
Department of the Interior: U.S. Geological Survey
Department of Agriculture: Agricultural
Research Service. _
National Science Foundation __
Total

Expenditures

New obligational
authority

1969
1968
estimate estimate

1967
actual

1969
1968
estimate estimate

4.862
1,664
184

4.466
1,930
150

4,239
2,216
154

5,337
1,673
184

4,692
1,870
151

4,455
2,180
151

29

31

30

39

33

34

3

2

4

3

2

4

2

1
2

2

6,601

6,646

7,237

3
6,745

(1)

(2)
6,750

1
2
6,826

1

Excludes aircraft technology.
- Less than $500 thousand.
WATER RESEARCH

The Ten-Year Program Report of the Committee on Water Resources Research of the Federal Council for Science and Technologycontinues to serve as the basic planning guide for all Federal agencies.
Research will increase by $7 million in 1969. A continuing program
in water pollution research is aimed at devising improved waste treatment processes. Desalting research will continue to emphasize studies
of distillation and membrane processes leading to lower cost techniques. There will be an expansion of studies designed to provide
relevant information for improved planning and management of
water supplies.

300-700 O—68



146

THE BUDGET FOR FISCAL YEAR

1969

Table J-9. OBLIGATIONS OF FEDERAL AGENCIES FOR WATER RESEARCH
(In millions of dollars)
1967

Department or agency

Departments of:
Agriculture
Defense
Health, Education, and Welfare
Interior
__
Atomic Energy Commission.
National Science Foundation
Other

1968

1969

Total

20
7
1
101
2
2
3

21
8
2
104
3
2
3

114

_ _

19
6
1
83
2
1
2

136

143

PROGRAMS OF AGENCIES WITH MAJOR RESEARCH AND DEVELOPMENT
ACTIVITIES
DEPARTMENT OF DEFENSE

MILITARY

The programs of the Department of Defense include research in subjects relevant to national security; exploratory, advanced, and engineering development of new systems and components; and development
and improvement of weapon systems approved for introduction into the
operational forces. The principal amounts for these purposes and for
the operation of research and testing facilities of the Department are
carried, in the budget under appropriations entitled, "Research,
development, test, and evaluation." Certain supporting amounts are
provided in the military personnel, procurement, operations and
maintenance, civil defense, military construction, and special foreign
currency program appropriations, as indicated in table J-10. The
budget plan presents a summary of amounts programed for research
and development.
The total 1969 budget plan for research and development increases
by $602 million—or about 8%—over the 1968 level. Major items contributing to these increases are a higher level of support for research,
heightened tempo of development of the Sentinel antiballistic missile
system, larger requirements for the orbiting laboratory, design of the
airborne warning and control system (AWACS) for air defense, and
development of new weapon systems for tactical warfare applications
such as the VSX antisubmarine aircraft and several new tactical
missiles.
For research, budget plan estimates in 1969 are $1,633 million, an
increase of $236 million over 1968 levels, more than offsetting a decrease of $187 million from 1967 to 1968. This total covers both basic
and applied research and includes appropriate projects from the Department of Defense research, exploratory development, and advanced
development categories. Support of basic or phenomena-oriented
research rises $35 million over the 1967 level, the intervening 1968
amount being lower than both, due to reductions in longevity funding




147

SPECIAL ANALYSES

of contracts. Support of established academic research centers and
the encouragement of new university centers developing competence
relevant to defense is included here, as well as efforts in Government
laboratories and with industry. Applications-oriented research and the
pursuit of new technology amount to $1,313 million, an increase of
$62 million over 1968. The growth is spread over a wide variety of
scientific disciplines and technologies directly supporting advances in
weapon systems.
Development programs, including support of test and evaluation
facilities, will reach a level of $6,813 million in 1969, an increase of
$394 million over the 1968 amount. Growth in such major programs
as the Sentinel antiballistic missile system, the orbiting laboratory,
new tactical fighter aircraft, and improved tactical missile systems
more than compensates for decreases in systems such as the C-5A
transport aircraft and several versions of the F - l 11 aircraft. Strategic
retaliatory systems such as Minuteman and Poseidon continue to
receive a large portion of development resources, as do the many
tactical weapons and supporting hardware under development for
application in Vietnam. Construction of research and development
facilities will decline $27 million from 1968 to 1969 reflecting overall
military construction priorities.
Table J-10.

DEPARTMENT OF DEFENSE—MILITARY- RESEARCH AND
DEVELOPMENT C millions of dollars)
m
Purpose and budget title

Conduct of research and development:
Research, development, test, and evaluation:
Military sciences
Aircraft and related equipment
Missiles and related equipment
Military astronautics and related equipment—
Ships, small craft, and related equipment
Ordnance, combat vehicles, and related equipmentOther equipment
Programwide management and support
Emergency fund
Total, research, development, test, and evaluation; budget
plan
Military personnel
Procurement
Operations and maintenance
Civil Defense
Special foreign currency program

1967
actual

618
1,199
2,456

961
288
357
985
425

1968
estimate

563
1,230

2,492
1,064
317
331

956
437
24

1969
estimate

659
1,024
2,544
1,299
418
340
1,109
512

125

7,289
308
92
22
10
1

7,415

7,722

7,816

8.445

87

98

71

Total, research and development, budget plan.

7,809

7,914

8,516

Total expenditures

7,672

7,718

8.280

Total, conduct of research and development, budget plan..
Research and development facilities:
Military construction, budget plan




_

306
62

26
7

8,031
301
64
32
7
11

148

THE BUDGET FOR FISCAL YEAR 1969
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

The total budget plan for NASA in 1969 is $4.4 billion, a decrease
of about $280 million from the 1968 plan, primarily because of declining requirements for the manned lunar landing program.
Funds planned for research programs will increase from 1968 to
1969, while those for development will decrease. This continues the
change in emphasis within the space program from the development
of a basic flight capability toward use of that capability for research
purposes.
Funds for facilities decreased in 1968 and will remain at about the
1968 level in 1969. These funds will provide modifications to launch
pads and tracking facilities for forthcoming deep space and manned
lunar landing operations.
In table J - l l , "Basic research" activities include unmanned space
flight programs in physics, astronomy, biological sciences, and planetary and interplanetary exploration. Funds for technology programs
which directly support these basic research activities and for the
development and preparation of basic research experiments carried
on manned spac« flights are also included in this category. The
increases will provide for experiments to be flown in the Apollo
applications program and for spacecraft to investigate Mars in 1971
and 1973.
Table J—11.

NATIONAL AERONAUTICS A N D SPACE A D M I N I S T R A T I O N RESEARCH A N D DEVELOPMENT (in million of dollars)
Program and type of activity

Conduct of research:
Basic scientific research in space:
Spacecraft, instrumentation, conduct of experiments, and
supporting costs
Procurement of launch vehicles for basic research purposes. _
Other basic research in space science and technology

1967
actual

1968
estimate

1969
estimate

436
40
122

494
45
110

575
45
130

598
683
53

649
787
50

750
782

1,334

1,486

1,587

3,349
78
57

3,000
60
65

2,550
121
67

3,483

3,125

2,738

4
46
40

26
11

25
20

Total, research and development, budget plan

4,908

4,649

4,370

Total, obligations

5,012

4,818

4,370

Total, expenditures

5,426

4,805

4,575

Subtotal, basic research
Other research
Procure ment of launch vehicles for other research purposes
Total, conduct of research, budget plan
Conduct of development:
Manned space flight and supporting development
Development of launch vehicles for research purposes
Other development
Total, conduct of development, budget plan
Research and development facilities:
Facility grants to colleges and universities
Manned space flight supporting facilities
Other research and development facilities




55

SPECIAL ANALYSES

149

The "other research" category includes activities conducted to
provide advanced technology for new space vehicles and aircraft.
Funds required for the recently completed Surveyor and Lunar
Orbiter programs, which provided data needed for the design and
operation of manned lunar landing systems, are decreasing. This
decrease is offset by increases in funcung for applications of space
technology to earth resources surveys and for aeronautical research
to provide technology for new civil and military aircraft.
The "development" category includes the development and operation of manned space flight systems, except for the scientific experiments discussed above. Development of launch vehicles for all purposes
including research is also in this category.
ATOMIC ENERGY COMMISSION

Operating funds of the AEC for the conduct of research and development will total $1.5 billion in 1969. Obligations for research and development-related construction and purchases of equipment are estimated
at $459 million and expenditures at $244 million.
The $1.5 billion budgeted for conduct of research and development
in 1969 represents an increase of nearly $140 million, or 10%, over
1968. Two-thirds of this increase will occur in the weapons program,
largely for development of warheads for the Sentinel antiballistic
missile system and other advanced weapons systems. All other
Commission research and development efforts will increase by an
average of about 5% in 1969.
The Atomic Energy Commission's research programs will increase
from an estimated $414 million in 1968 to about $439 million in 1969.
Nearly 75% of this increase is for research in the physical and biomedical sciences, with the remainder attributable to an increased
applied research effort in the weapons program.
A 6% increase is planned in 1969 in the physical research program,
which includes research in high, medium and low energy physics; in
controlled thermonuclear reactions; and in those aspects of chemistry,
metallurgy, and mathematics of particular importance to nuclear
science and technology.
The development funds of the Commission are used primarily to
design and test improved nuclear weapons, to develop improved
nuclear reactors, and to develop peaceful uses of radioisotopes and
nuclear explosives. Increased weapons development work will account
for slightly more than three-fourths of the increase from $948 million
in 1968 to $1,062 million in 1969 in these development programs.
The reactor development program includes efforts to develop improved types of nuclear power reactors, compact nuclear electric power
sources for space and terrestrial applications, and reactors for space and
naval propulsion. Continued emphasis will be placed on development
of a fast breeder reactor, which is expected to produce more fissionable
fuel than it consumes in the process of producing power.
Obligations for research and development facuities are estimated to
increase by $290 million in 1969, due to the deferral from 1968 to 1969
of more than $180 million in obligations. Expenditures will increase by
about $38 million, largely for the same reason.




150

THE BUDGET FOR FISCAL YEAR 1969

The Atomic Energy Commission plans to begin construction in
1969 of the 200-Bev proton accelerator. This project, for which definitive design was authorized in the 1968 budget, will have a total design
and construction cost of about $250 million excluding supporting
research equipment. The 1969 budget provides $25 million for initiation of construction.
The 1969 budget also provides an additional $26 million for continuation of construction of the Los Alamos Meson Physics Facility, a
medium energy physics facility which is expected to produce a proton
beam of extremely high intensity.
The 1969 budget further includes $35 million to continue construction of the Fast Flux Text Facility, a test reactor capable of producing
a large quantity of high energy neutrons in a controlled environment
for testing fuel and other reactor materials and components for the
high priority fast breeder reactor program. The total estimated capital
cost of this facility is $88 million.
Table J-12. ATOMIC ENERGY COMMISSION—RESEARCH AND
DEVELOPMENT (in millions of dollars)

Program

Conduct of research and
development

1967

1968

1969

actual

Production technology for fissionable materials
Development of weapons
Reactor development
Physical research
Biology and medicine
Other research and development
Total, expenditures. _

Research and development facilities
1967
actual

1968

1969

23
419
455
253
86
20

23
478
482
265
88
26

26
570
510
280
92
22

3
54
58
84
9
2

55
68
73
7
1

2
63
88
82
7
2

1,256

1,362

1,500

210

206

244

2

DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE

Obligations by the Department of Health, Education, and Welfare
for research and development, including facilities, will increase by
$181 million to a level of $1,511 million in 1969. This increase is
primarily in the programs of the Public Health Service.
Obligations for research and development of the Public Health
Service will be $1,272 million in 1969 as compared to $1,169 million
in 1968. About 85% of the PHS obligations are made through the
National Institutes of Health and the National Institute of Mental
Health. As in the past the primary mechanism of support will be the
project grant. Increasingly, however, NIH and NIMH are supplementing research project support at academic institutions—particularly medical schools—with broader grants for general research
support or core research resources and facilities. The trend of recent
years to devote more research funds for more organized and targeted
research will be continued. Programs in artificial organ transplant,
vaccine and drug development, and fertility control will be stressed.
Relatively the largest program increase in the Public Health Service
will be for air pollution. Under the newly enacted Air Quality Act of



SPECIAL ANALYSES

151

1967, research and development on the removal of sulfur, nitrogen,
and other impurities from fossil fuels, control of auto exhausts, and
other air pollution control technology will be expanded. Generally
industry, rather than universities, will conduct this work. Finally an
increasing amount of research effort will be devoted to improving
the methods of delivering health care.
Obligations of the Office of Education for research and development
will increase from $87 million in 1968 to $145 million in 1969. The
Office supports a broad range of efforts to improve education through
experiments, development, a-nd demonstrations. Included is support
for (1) educational laboratories which bring together the resources of
institutions of higher education, States, private enterprise, and the
talents of scholars, experts, artists, and other specialists to design
and demonstrate improved curricula and methods of instruction;
(2) research and development centers which concentrate on such
specific questions as education of the disadvantaged, individualized
instruction, early childhood learning, and teacher education; and (3)
project grants which are awarded to institutions for improvement of
school curricula and studies of education and its effects. In 1969, stress
will be placed on prototype programs for improved instruction
especially for children from low income, migrant, or non-Englishspeaking families. A variety of research projects will involve joint
efforts with the National Science Foundation, the National Institutes
of Health, the Department of Housing and Urban Development,
the Department of Labor, and the Office of Economic Opportunity.
Other, smaller research programs are supported by the Social and
Rehabilitation Service, the Food and Drug Administration, and the
Social Security Administration.
NATIONAL SCIENCE FOUNDATION

The National Science Foundation supports basic research in all fields
of science, primarily through grants to colleges and universities. In
addition, support is provided for applied research and development
activities authorized by the National Sea Grant College and Program
Act of 1966.
Total obligations of the Foundation for the conduct of research are
estimated at $289 million in 1969 compared with $262 million in 1968.
In 1969, approximately 4,000 research project grants will be awarded
to an estimated 450 academic institutions. Through these grants and
the national research centers, national research programs, and the
sea grant program, the Foundation will continue to give emphasis
to programs in oceanography, atmospheric sciences, chemistry and
the social sciences—fields of growing national interest. Additional
fundamental knowledge is required in these fields if significant
progress is to be made on some of the critical problems facing society
in such areas as air and water pollution abatement, weather modification, urban redevelopment, and exploitation of marine resources.
A significant increase is provided for the support of basic research in
physics. A major portion of the increase will permit the Foundation to
assume support of critically important basic research activities, principally in nuclear and elementary particle physics, previously supported by the Department of Defense. Funds are also included for the




152

THE BUDGET FOR FISCAL YEAR

1969

continued development of the 150-inch stellar telescope for the Cerro
Tololo Inter-American Observatory in Chile.
The above increases are partially offset by a decrease in new commitments for research facilities.
DEPARTMENT OF AGRICULTURE

Obligations of the Department of Agriculture for research and
development, including facilities, will increase from an estimated
$284 million in 1968 to $301 million in 1969. Expenditures will increase
from $298 million to $312 million.
There are no marked changes in the nature of the research and
development programs of the Department in 1969. The 1969 Budget
provides for strengthening agricultural research in a number of areas
including the staffing of several new and expanded laboratories and
watershed research centers, research on short staple cotton and
mechanical classing methods for cotton. Also provided for in 1969 is
an expansion in the use of foreign currencies for market development research and agricultural and forestry research.
Research will also be expanded under the economic research program in the areas of farm financial management and soil and water
conservation. Commitments by State experiment stations under the
Hatch Act and for cooperative forestry research will also rise.
DEPARTMENT OF THE INTERIOR

Obligations for the research and development programs of the
Department of the Interior to improve conservation and the practical
use of the Nation's natural resources will remain about level: $255
million in 1968 and $254 million in 1969. For the conduct of research
and development, obligations will increase from $210 million to $226
million; but tor facilities there will be a decrease from $45 million to
$29 million. Research and development programs of the Department
are conducted by the Geological Survey, the Bureau of Mines, the
Offices of Coal Research, Saline Water, Water Resources Research,
the Fish and Wildlife Service, the Federal Water Pollution Control
Administration, the Bureau of Reclamation, and the Bonneville
Power Administration.
Emphasis is given in 1969 to identification of new resources of
minerals, particularly heavy metals in short supply, studies relating to
discovery and recovery of deep-lying mineral deposits, and the
appraisal and evaluation of the Nation's water resources. Further
efforts are planned to develop the technology for producing low-cost
fish protein concentrate.
Research will increase on water pollution and its effect on water
uses and wildlife. Other research is continued on the energy potentials
and marketing of coal, weather modification and water supply augmentation, and particularly on the development of low-cost methods
for economically producing water from sea or brackish waters for
industrial and municipal purposes.
A new program will be started in fiscal year 1969 to develop a more
efficient technology for underground mining and tunneling.




SPECIAL ANALYSES

153

DEPARTMENT OF TRANSPORTATION

Obligations of the Department of Transportation for research and
development, including facilities, will total $148 million in 1969, an
increase of $19 million over 1968. Expenditures will total $140 million
in 1969, $22 million more than 1968.
Within the Department the largest increase is in the programs of
the Coast Guard. The obligations of the Coast Guard for the conduct
of research and development will increase from $9 million in 1968 to
$17 million in 1969. Major elements of this increase are research on
the control of pollution by oil or other wastes and the development of
buoy technology to collect oceanographic and environmental data.
The obligations of the Coast Guard for research and development
facilities show a major increase, from $1 million in 1968 to $14 million
in 1969 largely for a new oceanographic cutter.
Under the Office of the Secretary studies will be pursued on improved traffic flows and rail passenger and freight demands in the
Northeast Corridor and on coordination among various modes of
transportation.
Research and development in the Federal Aviation Administration
will continue at about the same program level, with obligations of $47
million in 1969. The research and development activities of the FAA
include air traffic control; navigation; aviation weather; aircraft
safety; and aviation medicine. The supersonic aircraft program is not
included in this analysis.
The Federal Railroad Administration will obligate $19 million in
1969 for research and development, a decrease of $4 million below
1968. Expenditures will, however, increase from $17 million in 1968
to $23 million in 1969. The obligations drop in 1969 is a result largely
of completion of initial funding of the New York to Boston phase of
the Northeast Corridor demonstration program.
The Federal Railroad Administration will also expand in 1969 its
support of research on a linear induction propulsion system and the
development of tracked air cushion vehicles.
The Federal Highway Administration research and development
program will increase from $42 million in 1968 to $45 million in 1969.
The increase in 1969 largely reflects further emphasis on making
automotive travel safer.
DEPARTMENT OF COMMERCE

The Department of Commerce will obligate $90 million for research
and development in 1969, a decrease of $6 million from 1968, principally reflecting a reduction in facilities. Expenditures in 1969 will
total $82 million, slightly below 1968.
The Environmental Science Services Administration will increase
its research on severe storms, weather modification, air-sea interaction,
and electromagnetic spectrum utilization. Increased research on
environmental forecasting and data gathering systems will support the
World Weather program. Expanded efforts will be made to develop
satellite sensors for use with horizontal sounding balloons in order to
obtain improved weather observations.
The National Bureau of Standards will strengthen its research on
the properties of matter and materials, physical measurements, automatic data processing, and building technology. Intensified research



154

THE BUDGET FOR FISCAL YEAR 1969

on the flammability of fabrics will support future development of
flammability standards.
The Economic Development Administration will conduct research
aimed at determining the causes of unemployment and economic
distress and formulating solutions. Studies will be undertaken to develop a general body of knowledge concerning regional economic
development.
OTHER AGENCIES

Among other agencies, a number of programs also show significant
increases.
The Veterans Administration will continue to expand research in
medical and prosthetic fields of particular interest to the agency's
medical care mission.
Increases for the Smithsonian Institution mainly reflect expansion
of archeological and biological research financed under its foreign
currency program. Greater emphasis will also be given to astrophysics,
ecology, and marine and tropical biology utilizing the Smithsonian's
unique research resources.
The Department of Housing and Urban Development will increase
its research on metropolitan and urban development stressing such
areas as land use, community development, urban administration,
and reducing housing costs.
The Department of Justice will expand its support of research on
the causes of crime and the effectiveness of various techniques for rehabilitating offenders. This increase is attributable to the proposed
expansion of programs under the Law Enforcement Assistance Act
and the enactment of the Safe Streets and Crime Control Act.
HISTORICAL SUMMARY

Table J-13 below gives historical data on total research and development expenditures by major agency.
Table J-13. EXPENDITURES FOR RESEARCH AND DEVELOPMENT,!
1954-69 (in millions of dollars)
Fiscal year

1954 . _ . . _ . .
1955
1956
1957
1958
1959
1960
_
1961 _._:_.:
1962
1963
1964
. . _ _
1965
1966
1967
1968
1969
_ _ _ _ _ _
1
2
3

Department of
Defense 8

2,487
2,630
2,639
3,371
3,664
4,183
5,654
6,618
6,812
6,849
7,517
6,728
6,735
7,680
7,727
8,292

NASA 3

AEC

90
74
71
76
89

383
385
474
657
804

145

877
986

401
744
1,257
2,552
4,171
5,093
5,933
5,426
4,805
4,575

.111
,284
,3V>
,505
,520
,462
,466
,568
,744

D/HEW

63
70
86
144
180

4
9
15
31
33

253

51

324
374
512
632
793
738
879
1,090
1,180
1,310

58
77
105
142
190
192
225
278

Including research and development facilities.
Includes civil functions.
National Advisory Committee for Aeronautics prior to 1958.




NSF

311
321

Other

121
140
161
183
220

293
315
356
403
478
519
604
768
775

924
1,028

Total

3,148
3,308
3,446
4.462
4,990
5,803
7,738
9,278
10,373
11,988
14,694
14,875
16,002
16,715
16,515
17,270

SPECIAL ANALYSIS K
FEDERAL AID TO STATE AND LOCAL GOVERNMENTS

In recent years, the Nation has witnessed a significant growth in the
scope of cooperative governmental efforts to solve national problems.
In 1969, the scale of Federal grant programs is estimated to exceed
$20 billion. By sharing these sizable resources, the Federal Government is encouraging vital national goals to be pursued jointly by
Federal, State, and local units. Special emphasis is being given to areas
which have an important influence on the life of every individual such
as education, health, welfare, and urban development.
These jointly administered programs:
• Make it possible to pursue broad national objectives in a way
which recognizes the diversity of local conditions and needs;
• Spread creative innovation in public services from one jurisdiction
to another; and
• Preserve a more equitable and responsive total tax system—by
relieving some of the pressure on overburdened State and local
tax sources.
Federal Aid to State and Local Governments
Federal Fund and Trust Fund

1958

1959

Expenditures

1960

Fiscal Years




1961

1962

1963

1964

1965

1966

1967

1968

1969

Estimate

155

156

THE BUDGET FOR FISCAL YEAR 1969
HIGHLIGHTS FOR FISCAL YEAR

1969

The emphasis of Federal-aid programs has shifted from time to
time in response to changing conditions. For 1969:
• Total Federal grants to State and local governments are estimated
to increase by $1.9 billion over 1968, to $20.3 billion.1 This represents more than a threefold increase in the short span of only a
decade, and is nearly 52% greater than the rise in total Federal
expenditures for domestic purposes over the same period.
• Public assistance and highways continue to be the largest grant
programs. Together, they constitute about half of total Federal
aid payments.
• The fastest growing grants are those to advance the war on poverty,
to provide decent medical care for the needy, to improve the facilities and services in our urban centers, and to upgrade the elementary and secondary educational opportunities available to children
of low-income families. Between 1965 and 1969, grants administered by the Office of Economic Opportunity will show an increase
of $1.3 billion, and those for the new elementary arid secondary
education program will rise by $1.4 billion. During the 1967-69
period alone expenditures for Medicaid will grow some $949
million, and those for housing and community development will
rise $1 billion.
» Total aids for metropolitan or urban areas have risen from $4
billion in 1961 to an estimated $12 billion in 1969. Thus, Federal aids benefiting urban areas have grown by about $8 billion,
or nearly 205% in less than a decade. (Included in these amounts
are grants to States which subsequently benefit urban areas.
This topic is discussed in greater detail on pp. 165-167.)
• Federal loans will provide net assistance of more than $525 million
in 1969 after deducting repayments and other receipts, slightly
less than in 1968.
GROWTH AND DEVELOPMENT OF FEDERAL GRANTS

The birth of Federal aid to State and local governments actually
predates the Constitution. Under the Articles of Confederation in 1785,
Congress provided grants of Federal land to support education in the
Northwest Territory. This policy was reaffirmed in the Northwest
Ordinance of 1787—the same year that the historic Convention
adopted the Constitution of the United States. Land continued to be
the predominant form of Federal aid for a number of years thereafter.
There was a brief, but interesting, interlude in this pattern in 1837.
In that year the Federal Government distributed surplus funds totaling more than $28 million among the States on the basis of congressional representation. The funds were technically "deposits," but no
repayment was ever demanded. Moreover, no restriction was placed
on the use of the money.
Minimum requirements were first introduced in the Federal-aid
structure in the MorriU Act of 1862 (which provided land for the




157

SPECIAL ANALYSES

support of higher education). These requirements included a definition of objectives, State matching, and Vreport on the use of funds.
The federal system evolved gradually over the ensuing half century.
The early years of the 20th century saw aid extended for agriculture, highways, and limited social welfare programs. However, it
was not until the crisis of the thirties that Federal aid reached any
significant scale. At that time a broad array of welfare, housing, and
economic security programs was inaugurated. The post-World War II
period witnessed a further expansion of health and housing programs
and a significantly augmented highway construction effort.
Not until the 1960's did the Nation experience a comparable
expansion of new joint governmental initiatives. Recently, significant
steps have been taken to help finance health services and medical care
for the indigent, to launch a concerted attack on poverty, to rejuvenate blighted neighborhoods in our cities, to broaden educational
opportunities, and to develop economically depressed regions of the
Nation.

Factors underlying

growth

in Federal aids.—Increasing

population along with rapid urbanization have led to greater demands for the services traditionally provided by State and local
governments—such as education, health, community facilities, and
transportation. Rapid economic change and rising affluence have
given rise to the demand for new and better services, and stimulated
programs to safeguard individual economic security. While the major
burden for providing such public services rests directly upon the
more than 80,000 State and local governmental jurisdictions, the
Federal Government also plays a vital role. It provides assistance both
by giving direct financial aid to State and local governments and by
fostering a sound and growing economy, which concomitantly enlarges State and local tax bases.
Federal-aid programs by function.—The foregoing factors,
coupled with the changing nature of State and local program needs,
have altered substantially the focus of Federal aids at several junctures in the past two decades. These changes can be traced in the
accompanying table.

Table K-l. PERCENTAGE DISTRIBUTION OF FEDERAL AIDS TO STATE
AND LOCAL GOVERNMENTS BY FUNCTION
Function
Agriculture and agricultural resources
Natural resources .
Commerce and transportation
Housing and community development...
Health, labor, and welfare. >
Education.
Other
Total




1950
actual

1955
actual

I960
actual

1965
actual

1969
estimate

5
2
21
1
69
2

7
3
19
4
57
8
2

3
3
43
4
41
5
1

5
3
40
5
40
6
1

3
3
24
9
48
12
1

100

100

100

100

100

158

THE BUDGET FOR FISCAL YEAR 1969

The Federal-Aid Highway Act of 1956 significantly modified the
pattern of aid to State and local governments which had prevailed in
the preceding decade. By 1960, with the infusion of more than $2}{
billion in additional funds for highway grants, commerce and transportation programs moved to a dominant position in Federal assistance
activities.
In more recent years, both the nature and number of aid programs
have changed appreciably. In the last 5 years, the Congress enacted
several programs which are aimed primarily at broadening the scope
of individual opportunity and development. The cumulative effect of
these programs has been to place the principal emphasis of Federal
aid once again on health, labor, and welfare activities—as well as
to give added impetus to education and housing and community
development efforts. In 1969, these programs will account for 69%
of total estimated aid payments.
TYPES OF FEDERAL AID

In this analysis, Federal aid is defined as the flow of resources in
support of State and local governmental functions which serve a
national purpose. For the most part, this aid is then synonymous
with grants of money to governmental bodies. However, in a few cases,
it also covers resources channeled to quasi-governmental and private,
nonprofit institutions where the use is primarily to provide new, or
to augment existing, governmental services. (Examples include a number of community action programs to combat poverty, and aid for
the construction of private, nonprofit hospitals and colleges.) In a
similar vein, there are a few "nonmoney" aids, basically the provision of excess food for welfare recipients. The rationale is a simple
one: The Federal Government can provide $1 million worth of food
or $1 million to buy food. In either case, it constitutes $1 million
of welfare assistance. Finally, this analysis excludes certain research
and development contracts as being payment for services rendered
the Federal Government, rather than aid. to the State college or university doing the research under carefully defined research objectives.
Direct assistance.—The principal forms of direct assistance to
States and localities are grants, shared revenues, and loans.
In 1969, Federal grants are estimated to reach $20.0 billion, and
shared revenues will account for an additional $249 million. Thus,
grants will account for 98.8% of the total Federal aid in 1969.
There are basically two kinds of grants—formula and project grants.
Formula grants are those in which, by law or administrative regulation, sums of money are allocated among States or their subdivisions
according to specific measures of program need—such as population,
per capita income, or the like. Project grants, on the other hand, are
allotted in response to specific applications, presenting particular
proposals for which assistance is requested. (Project grants, and their
rapid growth, are discussed in greater detail on p. 164.)
Shared revenues are mainly receipts from the sale or lease of Government assets. The revenues generally come from the sale of natural
resources and are shared with the jurisdiction in which the incomeproducing asset is located. Frequently, the funds are restricted in use
to programs such as education or highways.



159

SPECIAL ANALYSES

Federal loans to State and local governments have to be repaid, and
are therefore of a fundamentally different nature than other forms of
direct aid. In 1969, net outlays for loans to State and local governments is estimated to exceed $525 million. (For more detailed information on lending programs, see table K - l l on p. 174.)
The functional distribution of the several kinds of aid is shown in
the accompanying table K-2.
Table K-2. TYPES OF FEDERAL AID BY FUNCTION, 1969 (in millions of doUars)
Federal aid
Function
Grants

General government

32.5
5.3
644.0
476.2
4,806.0
1,812.5
9,744.3
2,398.2
14.8
114.2

Total

20,048.0

National defense
International affairs and finance
Agriculture and agricultural resources
Natural resources
Commerce and transportation
Housing and community development. _
Health, labor, and welfare
Education
Veterans benefits and services

^

Shared
revenues

Total

108.6

32.5
5.3
644.0
617.0
4,806.0
1,812.5
9,744.3
2,398.2
14.8
222.8

249.4

20,297.3

140.8

Net
outlays
for loans

70.0
6.7
29.5
105.8
309.1
4.5
525.6

Indirect assistance.—Apart from direct Federal aid, many other
Federal activities which are not included in this analysis affect the
finances of State and local governments. For example, there are a
number of assistance programs for which expenditure information
cannot be obtained readily, such as State and local participation in
Federal employee training programs, technical assistance and advice
provided by a host of Federal agencies, and a number of related services. Similarly, States and localities have first call on obtaining (at
relatively nominal costs) land and equipment of the Federal Government which is declared surplus to Federal needs.
State and local governments also receive special beneficial treatment through the tax system. For example, tne interest cost savings
to these units of government which result from exempting interest
on State and local bonds from Federal income taxes have been estimated at between $1 billion and $2 billion. Similarly, since taxpayers
may deduct certain State and local taxes from Federal taxable income,
a portion of State and local taxes is offset by a reduction in the taxpayers' Federal liability. In 1967 the value of this deduction in terms
of tax savings to individuals was approximately $4.7 billion. It should
also be noted that the Federal credit for payment of State inheritance
and estate taxes has definitely encouraged States to make more
effective use of this resource at a revenue cost to the Federal Treasury
currently estimated at some $300 million.
SIGNIFICANT FEATURES OF THE 1969 AID PROGRAM

This section focuses only on the 1969 aid program and some of its
more significant features.
Major program changes for 1969.—In 1969, total expenditures
under existing and proposed programs for financial assistance to State



160

THE BUDGET FOR FISCAL YEAR 1969

and local governments are estimated to be $1.9 billion more than for
1968 and $5 billion more than the actual total for 1967.
The major increases in Federal expenditures for grants cover a
number of important programs.
• Health, labor, and welfare grants will rise an estimated $970
million as the Medicaid program continues to build up momentum.
• Grants for housing and community development are up by an
estimated $628 million, or 53%, over 1968 as the Model Cities
program reaches the action stage for the first time and as other
programs to assist in solving urban problems are intensified.
Decreases in expenditures in 1969 are expected to occur in grants for
equipment, books, and guidance counseling ($81 million), and higher
education activities ($73 million)—as older grants are replaced by
programs better suited to current educational needs, and as less
essential construction of facilities is postponed.
Federal-aid programs by agency.—In 1969 the Department of
Health, Education, and Welfare will spend approximately $9.4 billion
through its grant programs—about 46% of total Federal aid. Another
22% or $4.4 billion will be accounted for by the Department of Transportation. The Office of Economic Opportunity and the Departments of
Agriculture and Housing and Urban Development will finance an
additional 22% of Federal-aid programs. The detailed table at the end
of this analysis lists the various programs of Federal aid to State and
local governments by function, type of aid, agency, and major program
group.
Table K-3. FEDERAL GRANTS BY AGENCY (in millions of dollars)
Agency
Executive Office of the President
Funds appropriated to the President:
Economic opportunity programs
Other (primarily public works acceleration and disaster relief).
Department of Agriculture
Department of Commerce
Department of Defense:
Military
Civil.
Department of Health, Education, and Welfare. ._
Department of Housing and Urban DevelopmentDepartment of the Interior
Department of Justice
Department of Labor
Department of State. _
Department of Transportation
Treasury Department
Civil Service Commission
Veterans Administration
Other independent agencies
National Capital region 1
Total expenditures for Federal aid.

1967
actual

1968
estimate

1969
estimate

0.4

0.3

1,050.4
74.6
989.6
79.8

1,272.0
195.9
1,227.5
115.3

1,426.0
267.6
1,346.8
156.2

26.4
14.5
7,182.0
707.7
274.7
2.6
559.6
6.6
4,092.5
86.8

27.1
28.2
8,776.2
1,103.0
374.4
16.1
629.0
6.1
4,371.0
93.7

9.9
23.4
58.0

13.4
30.8
82.0

32.5
71.6
9,395.4
1,713.5
471.7"
50.6
669.3
5.5
4,417.0
96.1
12.0
14.8
51.7
99.0

15,239.5

18,362.3

20,297.3

*Less than $500 thousand.
1
Includes federal payments to the District of Columbia of the following amounts: 1967, $58.0
million; 1968. $70.0 million; 1969, $80.2 million.




161

SPECIAL ANALYSES
IMPACT OF FEDERAL GRANTS

The term "fiscal federalism" has taken on new currency in the
past few years.2 Increasing attention has been focused on the financial
problems of State and local governments and the response of the
Federal Government to help meet their burgeoning needs.

Federal aid in relation to Federal and State-local outlays.—

The rapid increase in Federal aid to State and local governments has
become an increasingly important factor in the finances of all levels
of government. Federal aid as a proportion of Federal expenditures
has nearly doubled in the past decade—rising from 6.1% of the
total in 1958 to an estimated 10.8% in 1968. In terms of domestic
programs, 21.8% of Federal expenditures will take the form of aids
to State and local governments in 1968. Because of strenuous efforts
on their own behalf, the relative increase in the impact of Federal
aid has not been quite as marked for the recipient State and local
governments as it has been for the Federal Government. Nevertheless,
Federal aid has risen as a proportion of State and local revenues,
moving from 12% in 1958 to an estimated 17% in 1967.
Table K-4. FEDERAL-AID EXPENDITURES IN RELATION TO TOTAL
FEDERAL EXPENDITURES AND TO STATE-LOCAL REVENUE
Federal aid
As a percent of—
Amount
(millions)

1958
1959
1960
1961
1962
1963
1964
1965
1966
1967-—1968 estimate
1969 estimate

$4,935
6,669
7,040
7,112
7,893
8,634
10,141
10,904
12.960
15,240
18,362
20,296

Total Federal

6.1
7.4
7.8
7.4
7.5
7.7
8.6
9.3
9.9
9.9
10.8
11.1

Domestic
Federal
expenditures

State-local
1

14.6
16.6
17.2
15.7
16.4
16.4
18.2
18.8
20.3
20.7
21.8
21.6

12.0
14.6
13.8
13.2
13.5
13.7
14.8
14.8
15.6
16.9

1
2

Excluding expenditures for national defense, space, and international affairs and finance.
Based on compilations published by Governments Division, Bureau of the Census. Excludes
State-local revenue from publicly operated utilities, liquor stores, and insurance trust systems.
3
Not available.
2
Space doesi not permit a full treatment of this subject. The forthcoming report by the Advisory
Commission oin Intergovernmental Relations, entitled "Fiscal Balance in the American Federal
____„.
System," discusses many of the more significant issues.

300-700
11
 0—68


162

THE BUDGET FOR FI&CAL YEAR 1 9 6 9

Matching requirements.—The
pattern of State and local
spending is influenced to some extent by Federal grants. This influence
is exercised mainly through requiring the recipient to match Federalaid funds with their own resources. The matching, or cost-sharing
requirements are of two kinds: variable matching, which takes account
of the differing abilities of States to support aided functions, and
fixed ratio matching under which each is required to share in the same
proportion of program cost.
In 1966, State and local governments had to provide a minimum
of between $5 billion to $5% billion of their own funds to receive the $13
billion of Federal grants. This means that, on the average, the recipients must raise $1 for every $2 forthcoming from the Federal Government. This ratio varies by major function, ranging from one-fourth
of total program costs in a number of areas to one-half in natural
resources. However, State and local government matching funds
account for only about 7% to 8% of general expenditure out of their
own revenue sources. The largest grant programs, public assistance
and highways, similarly account for the largest share of total required
matching funds.
In 1969, required matching funds will rise to an estimated range of
$Sy2 billion to $9% billion, nearly $3 to $5 billion more than in 1966.
Division of responsibility among governments.—For the past
decade or so, a remarkable stability exists in the proportionate
share of public services provided by Federal, State, and local units
of government. Federal grants, and grants from States to local
governments, have contributed to this stability by matching resources
with program need. From the turn of the century until the end of
World War II local government expenditures declined relative to
those of the States. However, the resurgence of such State and local
functions as education and highways, significantly aided by intergovernmental grants, helped to restore States and localities to a
position of predominance. Now, about two-thirds of total civilian
expenditures by all governmental units are made by State and local
governments, with the latter alone accounting for about 44%.
Table K-5. DIRECT SPENDING FOR GENERAL DOMESTIC1 PROGRAMSPERCENTAGE DISTRIBUTION
Fiscal year

1966
1965
1960
1955
1950
1944
1936
1902

Federal

33
34
36
3
8
4
6
6
0
4
9
2
8

State

24
23
22
2
1
1
9
1
2
1
5
9

Local

44
43
42
4
1
3
5
28
36
62

Total

100
100
100
10
0
10
0
10
0
10
0
10
0

Note.—Expenditures in the form of intergovernmental transfers are shown by the level of government that spends the funds, rather than by the level that provides grants for public services.
This is done in order to indicate direct spending by the three levels of government and to avoid
"double counting."
1
Direct general expenditures, excluding those for defense, space, and international programs.
Excludes trust funds and Government-operated enterprises.
Source: Tabulations of the Governments Division, Bureau of the Census.




163

SPECIAL ANALYSES
ADMINISTRATION OF FEDERAL-AID PROGRAMS

The effective administration of Federal-aid programs,
important, has received increasing attention recently.
phasis has been placed on the means of coordinating
number of aid programs and on measures to enhance
mental cooperation.

Administrative

while always
Special emthe growing
intergovern-

costs of Federal aids.—The major focus of this

analysis is to show the resources transferred from the Federal Government to State and local governments to help them meet their public
responsibilities. For this reason, the Federal cost of administering
grant programs has been excluded from the amounts shown.
Nevertheless, it is helpful to know how much these programs cost
to administer. On the basis of a recent survey done in the Bureau of
the Budget, Federal administrative costs were found to constitute 2%
of aids provided to State and local governments—about the same
proportion as prevailed 10 years ago. The costs ranged from 0.2%
for public assistance to 4% for public housing programs. The variation
in cost among programs is principally attributable to the nature of
the grant. Many project grants, such as urban renewal and public
housing, require more time and attention than formula grants (like
public assistance) where most of the administrative costs are incurred
locally.
Table K-6 arrays the administrative costs as a * percentage of
Federal aid provided for 3 years (1956, 1966, and 1969). The sharp
declines in these costs for urban renewal and public housing reflect
the rapid growth of the grant outlays, with a relatively stable cost
of administration.
Table K-6. ADMINISTRATIVE EXPENSES AS A PERCENTAGE OF
SELECTED FEDERAL-AID EXPENDITURES1
Program

Highways
Public assistance (including medical aid)_
Employment security programs
Low-rent public housing
Urban renewal
Vocational rehabilitation
Office of Education grants
Hospital construction
Economic opportunity programs
Average of above (including prorated indirect expenses) _
Average of above (excluding indirect expenses)

1956
actual

1.7
.1
2.3
11.3
23.3
3.0

1966
actual

1.2
.2
3.4

4.0
3.2
.9
.7
.5
.6

1969

1.5
.2
3.4
3.8
2.0
.2
.9
.4
.1

1.2

1
This tabulation follows the general approach outlined in an earlier study done by I. M. Labovitz
of the Library of Congress, entitled "Federal Expenditures Associated with the Administration of
Program of Grants-in-Aid to State and Local Governments," Legislative Reference Service, Apr. 17,
1957. The administrative costs are taken from a sample of grants representing 80% to 85% of total
Federal aid for the years covered. Administrative costs generally cover salaries, expenses, travel,
and related expenses of the organizational unit directly administering the grant. Certain indirect
overhead costs were also added to the direct costs incurred, including the costs of collecting, accounting
for, and auditing the use of the aid moneys. The amounts shown for 1956 are those listed in the study
by the Library of Congress.
2 Not available.




164

THE BUDGET FOR FISCAL YEAR 1 9 6 9

Growth in number of aid programs.—The number as well as
the magnitude of Federal-aid programs has grown in response to the
increasing array of problems faced by State and local governments
which are also of significant national concern.
While not strictly comparable to the concept of aid used in this
analysis, the Legislative Reference Service of the Library of Congress
has tabulated the number of aid programs in effect during a recent
3-year period. In early 1964, the number of major assistance programs
was 116. Two years later the number of programs had grown to
162. In many cases, a given program has within it several different
grant authorizations. The total number of such authorizations rose
from 239 in 1964 to 399 in 1966.
Table K-7. NUMBER OF AID AUTHORIZATIONS IN EFFECT AT
SPECIFIED DATES
Functional category
National defense
Agriculture and agricultural resources
Natural resources
Commerce and transportation
Housing and community development
Health, labor, and welfare
Education
Veterans benefits and services
General government
Total number of authorizations
Total number of major programs. __

Apr. !,
1964

1
1
1
2
33
23
1
7
94
37
1
1
1
29
3
(116)

Jan. 4,
1965

1
1
1
2
4
1
2
5
23
14
1
42
3
1
2
23
8
(135)

Jan. 10,
1966

11
15
54
37
32

153
82
3

12

399

(162)

Source: Labovitz, I. M., "Number of Authorizations for Federal Assistance to State and Local
Governments Under Laws in Force at Selected Dates During 1964-66" (Library of Congress),
July 5, 1966.

On an agency basis, the largest number of programs—more than
45% of total authorizations—is administered by the Department of
Health, Education, and Welfare.
The Departments of Agriculture, Interior, and Housing and Urban
Development combined account for an additional 25%.
Three-fifths or 226 of the 399 grants-in-aid authorizations in effect
at the end of 1966 were of the project variety. This compared with
126 or 53% of such programs in 1964. Thus, project grants represent
a sizable share of the total, and the proportion is gradually increasing.
The growth in project grants can be attributed to the increasing
complexity of the problems which confront the Nation. Localities
are encouraged to experiment and demonstrate ideas and methods
that allow for the development of workable solutions based on the
uniqueness of each community's needs and resources. At the same
time Congress, in legislating new grant programs, specifies that an
executive ageney examine proposals made by an applicant for efficacy
and soundness before committing Federal funds.
The need for project grants also reflects the fact that certain types
of grants, such as urban renewal, place great stress on local initiative
and local sensing of needs—factors that do not lend themselves to
simple accommodation in a formula.




SPECIAL ANALYSES

165

Measures to coordinate Federal-aid programs.—While easing
State and local financial problems, the sharp growth of aid programs
has focused attention on the need for coordination and improvement
in their administration.
Several steps are being taken in a continuing program to improve
the administration of grant programs and to facilitate harmonious and
effective intergovernmental relations:
• High-level liaison with State and local governments is being
provided through the Vice President of the United States and the
Executive Office of the President. In 1967, trips to 40 State
capitals were made by teams of officials from the Federal grant
agencies for the express purpose of resolving problems associated
with grant administration.
• Processing time required for the review of grant applications is
being reduced by 50% as directed by the President for a number
of grant programs (including water and sewer grants). The
President also has directed that reduction techniques developed
for these programs be applied to the grant programs of other
agencies.
• The Bureau of the Budget is forming an Operational Coordination
Staff to focus on problems of grant-in-aid administration and
intergovernmental relations.
• Under new procedures, State and local chief executives will have
the opportunity to comment on draft Federal regulations affecting
their programs.
• The coordination of Federal aids in metropolitan areas of the
United States has been improved by giving metropolitan or
regional planning agencies the opportunity to review and comment
on applications for federally aided development projects which
vitally affect metropolitan growth and development.
Efforts to refine the grant as an instrument of cooperative intergovernmental action are clearly worthwile. Grants have served
national, State, and local purposes well in the past and offer even
more promise for the future. These joint Government programs have
proven effective by—combining available resources, specifying certain minimum standards of performance, and decentralizing their
actual administration.
AIDS TO URBAN AREAS AND REGIONS

Increasing attention has been focused recently on three cross-cutting
issues concerning Federal aids:
(1) The amount of these aids which assist metropolitan or urban
areas in meeting their pressing needs;
(2) The geographical distribution of Federal aids; and
(3) The extent to which aids compensate for low income.
Aids to urban areas.—In 1969, approximately $12 billion of the
$20 billion of total Federal aids will be spent in standard metropolitan
statistical areas (SMSA's) to help fill the growing gap between their
needs and resources. This represents an increase of about $8 billion
or nearly 205% over the amount of aid provided to these urban
areas in 1961. The amount will have increased almost $3 billion in the
short span of only 3 years.



166

THE BUDGET FOR FISCAL YEAR 1969

Standard metropolitan statistical areas (SMSA's) were chosen as g
the definition of "urban" for the figures in this section, since SMSA's
are generally combinations of entire counties; and counties, in turn,
are the smallest geographical unit for which information on Federal
aids is generally available. These areas cover the bulk of the urban
population and display the urban phenomena which place heavy
pressure on public service requirements: high population density and
rapid population growth. Nevertheless, the amounts shown still only
represent approximations based on the best information readily
available.
The table below shows the major sources of urban aid, by function
and program, for selected years.
Table K-8. FEDERAL-AID EXPENDITURES IN URBAN AREAS
(In millions of dollars) *
Function and program

1961
actual

National defense (civil defense and National Guard centers).
Agriculture and agricultural resources
Natural resources
Commerce and transportation:

10
155
54
1,398

Highways
Economic development
Airports
Other
Housing and community development:
Public housing
Water and sewer facilities
Urban renewal
.
Model cities
Urban transportation
National Capital region
Other.
Health, labor, and welfare:
Office of Economic Opportunity
School lunch, special milk, food stamp
Hospital construction
Community health
Public assistance (including medical care)
Vocational rehabilitation
Employment security and manpower training
Other

36
1
105

_.
_.

2,154
\7
35
12

2,336
84
40
3

184
3

253
72
525

__.

25
2

38
58
42

_

788
225
74

120
2,2%
74
527
100

218
135
98

135
945

313
76
326
3,119
137
624
248

222
5
28
3

179
112
163
44
8

180
105
175
91
44

3,893

8,908

11,912

Other functions...
Total aids to urban areas_

26
342
211

279

131
48
33
,170
37
303
21

1969

21
242
115

106

Education:

Elementary and secondary
Higher education
Vocational education
Other

1967
actual

Excludes loans and repayable advances.

The major increases in Federal grants for urban areas occur in
housing and community development, education, and programs to
improve the welfare of our disadvantaged citizens.
The emphasis in this analysis is on those programs which provide
financial assistance to urban communities to help them meet their




SPECIAL

167

ANALYSES

public service needs. It includes grants made to States which subsequently benefit metropolitan areas.
There are a number of other Federal programs which have an important bearing on urban development including direct Federal
construction and various loan (and loan insurance) activities. No
attempt has been made to add up all the various forms of funds to
reach an overall total. However, the Department of Housing and
Urban Development estimates that the total Federal financial commitment for urban social and community development aids could be
considered to exceed $37 billion in 1969—more than twice the level in
1961. The Department's figures indicate the magnitude of Federal
financial involvement in communities of 2,500 population or over, as
measured by obligations or commitments—including loans insured or
guaranteed.
While the tabulations are not fully comparable, the estimates of
the Department of Housing and Urban Development do serve to put
in perspective the possible dimensions of urban-area expenditures not
covered by this analysis.
Regional

distribution

of Federal aids.—The

distribution of

Federal aids on a regional basis ranges from a high of more than $3.1
billion in the Southeast to a low of $504 million m the Rocky Mountain area. However, when account is taken of population differences,
the Rocky Mountain area ranks highest with grant payments per
capita reaching nearly $108 while the Great Lakes and Mideast
regions are lowest with $47 and $52 per capita, respectively. Population density and per capita income are the two major factors which
account for this wide variation.
Table K-9. REGIONAL DISTRIBUTION OF FEDERAL AID, FISCAL YEAR 1966
Total
(in millions
of dollars)

Region

New England
Mideast
Great Lakes
Plains
Southeast
Southwest
Rocky Mountain
Far West
United States

_
_

Per capita

Percent of
State and
local government general
revenue

684.2
2,147.8
1,832.7
1,112.2
3,125.2
1,160.5
504.0
2,006.8

60.85
51.59
47.31
69.81
73.29
73.31
107.69
79.52

14.4
11.5
11.9
16.3
21.3
19.2
21.5
14.6

M2,960.1

66.14

15.6

1
Includes $386.8 million for Puerto Rico, the Virgin Islands, and other adjustments.
Sources: "Annual Report of the Secretary of the Treasury," and "Governmental Finances in
1965^-66," Bureau of the Census. This report provides additional information concerning State
distribution of Federal grants.

Population density is inversely related to the level of per capita
aids. The population density of the Rocky Mountain area is the
lowest of the regions, while per capita aids are highest. At the other
end of the scale, per capita aids are lowest in the Great Lakes and
Mideast where population density is the greatest. This inverse relationship stems primarily from aids for highway construction and other



168

THE BUDGET FOR FISCAL YEAR 196$

grants where program needs are not a direct function of population
density.
Per capita aid is also inversely related to per capita income. There
are two reasons for this relationship. First, some grant programs, such
as grants for hospital construction, require lower matching by the
relatively poorer States. Second, certain grant programs, such as
those for public assistance and elementary and secondary education,
are designed as aids to the disadvantaged and, hence, tend to flow
to States having individuals with lower incomes.
Equalization of Federal grants.—It is the latter tendency which
reflects the growing impact of fiscal equalization provisions common
to several recent grant programs. These provisions are designed to
help States with relatively meager resources to participate more
effectively in many jointly financed programs.
In a recent study by the Bureau of the Budget, the overall impact
of Federal grants was found to demonstrate definite equalizing effects.3
Many programs contain explicit equalization provisions in which
the Feaeral share varies inversely with income. However, equalization
is also attributable to several new grant programs in which caseload
rather than an explicit fiscal capacity equalization factor (per capita
income) is used as the method of allocating funds. Title I of the
Elementary and Secondary Education Act is designed to aid children
of low-income families to obtain a decent education. This program
has a built-in equalization effect of significant dimensions because
it distributes funds to school districts on the basis of the number of
school-age children from families with incomes below $2,000 and the
number of children from families receiving welfare aid to families with
dependent children. Highway grants reduce somewhat the overall
tendency toward equalization because they are large in absolute
amount and are not necessarily related to income or fiscal capacity.
OUTLOOK

Federal grants have been a vital and growing force through which
the various units of the federal system have cooperated to meet
ever-changing and ever more pressing national problems. The need
to refine this system and continue its vitality—the need to keep it
responsive to the people and to maintain the relative balance of power
among the governmental units—demands constant attention. There
are a number of changes now pending before the Congress or being
introduced this year directed at this* objective.
Improved timing of funds for education.—There has been a growing
consensus that Federal grants for education are being made too late
in the year to be used most effectively. At the State and local level,
budget planning for education usually begins early in the spring.
Yet, the amount of Federal aid—an increasingly important source
of funds—is often not known until September or October; or even as
late as January or February—when the school year has already begun.
3 "Equalization Effect of Federal Grants: Fiscal Year 1966," Fiscal Analysis Staff, Bureau of the
Budget, June 1967. Excluding Alaska and Hawaii, which are special cases, the correlation coefficient
for the relationship between State per capita grants and per capita income was —0.301 in 1966,
indicating the presence of equalization.




SPECIAL ANALYSES

The problem has been particularly acute for elementary and secondary
education and for assistance to students in higher education.
To facilitate State and local planning, and to encourage more
effective use of Federal-aid funds, a new funding schedule is being
proposed for these two important education categories mentioned
above. Under legislation already enacted, funds are being sought this
spring for the school year beginning next September. At the same
time, the budget for 1969 proposes an advance appropriation for the
school year beginning September, 1969. This approach will permit
more effective local planning and utilization of Federal grant funds.
Legislation will be proposed to permit similar advance financing of
grant and loan assistance to college students.
Pooling funds for related grants.—The proposed Joint Funding
Simplification Act of 1967 (H.R. 12631) would facilitate the pooling
of related grant funds in support of a single, comprehensive project.
Moreover, this approach would simplify the administration of grants
considerably without compromising any of the substantive requirements in the law such as basic eligibility criteria, matching requirements, and related substantive matters.
The following kinds of administrative improvements could be
accomplished under the proposed legislation: (1) combined project
applications, approvals, accounting and audits; (2) a single project
manager or lead agency to supervise the administration of aids on
behalf of all participating Federal agencies, and (3) more uniform
technical and administrative requirements.
Under such an approach, for example, a jointly funded Neighborhood Center might draw on the combined resources of nearly a dozen
grant programs now administered by four Federal agencies. The experience gained under this approach could point the way for a number
of possible consolidations of related grants.
Consolidation and increased flexibility of student aids for higher
education.—Legislation is being proposed this year to combine
two categorical programs for student aid in the higher education
field. Funds for National Defense Student Loans and the College
Work-Study program would be consolidated in a single package and
institutions would be given authority to move some portion of the
funds among these two programs and Equal Opportunity Grants—
mirroring the practice of many college campuses in considering these
assistance programs as an integral unit of student aid.
Manpower for public service.—Legislation to aid State and local
governments in the attraction and training of competent manpower
is now pending before the Congress. The ability to provide essential
services in the 1970's hinges in significant measure on the ability of
these governments to attract the competent personnel required to
meet the needs of both today and the future.
As intergovernmental fiscal and program relationships grow in
volume and complexity, continuing emphasis will be given to enhancing the competence of all the partners in the federal system, and
to improving the operation of the system itself.




170

THE BUDGET FOR FISCAL YEAR 1969

Table K-10. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS *
(Expenditures in millions of dollars)
r

Agency and program

National defense:
Executive Office of the President: Office of Emergency
Planning—Federal contributions to State and local
planning _
Department of Defense—Military:
Civil defense shelters and financial assistance
Construction of Army National Guard centers

unc-

1969
estimate

1968

1967

code

059

0.4

0.3

*

051
051

25.7

.7

25.1
2.0

29.5
3.0

26.8

27.4

32.5

153

6.6

5.8

5.3

351
352
352
354

278.4
11.1
8.6
1.1

420.8
27.0
3.8
1.5

444.3
33.8
5.0
.9

355
355

2.3
54.9
89.4

2.1
56.1
86.2

1.9
62.4
93.9

355
355

1.8
.3

1.8
.2

1.8
.1

448.0

599.4

644.0

71.8

77.2

68.5

18.8

18.4

18.3

42.9

44.6

47.7

12.1

25.7

69.1

2.4

2.5

2.5

99.0

139.8

190.9

1.0
.9

.9
1.0

1.0
1.1

.1

.1

.7
5.8

.7
7.9
U

.8
9.3
3.3

21.2
48.4

22.4
50.0

22.5
50.2

Total, national defense
International affairs and finance:

Department of State: East-West Cultural and Technical
Interchange Center
__
Agriculture and agricultural resources:

Department of Agriculture:
Commodity Credit Corporation and Consumer and
Marketing Service: Removal of surplus agricultural
commodities and value of commodities donated
Rural water and waste disposal facilities
Rural housing for domestic farm labor
Resource conservation and development
Agricultural Research Service: Grants for basic
scientific research
._._._
Agricultural experiment stations
Cooperative agricultural extension service
Payments to States, territories, and possessions, Consumer and Marketing Service
Commodity Credit Corporation: Grants for research. _
Total, agriculture and agricultural resources
Natural resources:

Department of Agriculture:
Watershed protection and flood prevention
401
Grants for forest protection, utilization, and basic
scientific research _
402
National forest and grassland funds; payments to
States and counties (shared revenue)
402
Department of Defense—Civil: Corps of Engineers:
Payment to California, flood coniroi
401
Payments to States, Food Control Act of 1954 (shared
401
revenue)
Department of the Interior:
Water pollution control
_
401
Payments to States and counties from grazing receipts,
grasslands, and sales of public lands (shared
401
revenue)
401
Bureau of Indian Affairs: Resources management
Bureau of Reclamation:
Grants
401
Payments to Arizona, Nevada, and Klamath restoration area (shared revenue)
401
Office of Water Resources Research
401
Office of Saline Water
401
Payments from grant lands: Oregon, California, and
Coos and Douglas Counties (shared revenue)
402
Mineral Leasing Act payments (shared revenue)
403
See footnotes at end of table.




171

SPECIAL ANALYSES

Table K-10. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS i—Con.
(Expenditures in millions of dollars)
1967

Agency and program

1968

1969

code

Natural resources—Continued

Department of the Interior—Continued
Bureau of Mines:
Mine drainage and solid waste disposal
Aid for commercial fisheries
Payment to Alaska from Pribilof Island fund (shared
revenue)
Fish and wildlife restoration and management
Wildlife refuge fund and grasslands payments (shared
revenue)
Land and water conservation grants
Preservation of historic properties
Department of State: Pacific Halibut Commission
Federal Power Commission: Payments to States (shared
revenue)
Tennessee Valley Authority: Payments in lieu of taxes
(shared revenue)
Water Resources Council

403
404

0.2
2.7

0.1
5.6

0.2
5.9

404
404

.3
22.5

.3
25.4

.1
31.6

404
405
405
404

1.2
22.2

1.0
56.3
.3
.2

1.1
74.5
.7
.2

.1

.1

11.9
1.6

13.1
2.4

14.8
2.7

387.7

497.9

617.0

507

19.4

12.0

502
506
507
507

.4
1.2
19.8
58.8

.4
5.1
109.8
139.5

503
503
503
503
503

37.3
24.3
.8
3,965.9

501

64.1

401
401
401

Total, natural resourcesCommerce and transportation:

Funds appropriated to the President: Public works
acceleration
Department of Commerce:
State marine schools
Office of State Technical Services
Economic development assistance
Appalachian development
Department of Transportation:
Chamizal Memorial Highway
Forest and public lands highways
Highway beautification
Highway safety
'_
Federal-aid highways (trust fund)
Federal Aviation Administration: Federal-aid airport
program—-

5.4
(2)
79.7
81.2
26.2 2 70.0
4,206.1 4,187.4
1.0

4,192.2

Total, commerce and transportation-

.4
5.2
150.6
232.8

58.0

73.0

4,637.8 4,806.0

Housing and community development:

Funds appropriated to the President: Alaska mortgage
indemnity grants
Department of Housing and Urban Development:
Alaska housing
Low-income housing
Low-rent public housing program
Urban planning grants
Open space land and urban beautification__
_._
Grants for basic water and sewer facilities
Grants for neighborhood facilities
Model city grants
Urban renewal
Urban transportation assistance
Metropolitan development incentive grants
Other aids for urban renewal and community facilities
See footnotes at end of table.




551
551
552
552
553
553
553
553
553
553
553
553
553

26
.
2.3
245.6
21.8
19.1
5.7
.8
370.4
42.1

1.8
283.5
31.0
60.0
90.0
15.0
22.4
500.0
98.3
10
.

1.0
3.8
337.9
46.0
60.0
130.0
32.0
241.6
700.0
150.0
3.0
8.2

172

THE BUDGET FOR FISCAL YEAR 1969

Table K-10. FEDERAL AID TO STATE A N D LOCAL GOVERNMENTS»—Con.
(Expenditures in millions of dollars)
1967

Agency and program

Housing and community development—Continued
National Capital region:
Federal payments to District of Columbia
Washington Metropolitan Area Transit Authority.
Dulles sewer project

555
555

Total, health, labor, and welfare.
See footnotes at end of table.




58.0

555
768.3

Total, housing and community development.
Health, labor, and welfare:
Funds appropriated to the President:
Disaster relief
Office of Economic Opportunity:
Community action programs:
Head Start..
Local initiative
Other
Work and training programs:
School year and summer.
Comprehensive employment
Special impact
Work experience program
Department of Agriculture:
Special milk and school lunch
Food stamp
Department of Health, Education, and Welfare:
Hospital construction
(Portion to private, nonprofit institutions)
Health manpower
Comprehensive health planning and services
Regional medical programs
National Institutes of Health
Mental health
Health services
Disease prevention and environmental health
Maternal and child welfare
Public assistance:
Medical assistance
Work incentives (training and child care)
Income maintenance paymentsSocial services for welfare recipients
Juvenile delinquency
Vocational rehabilitation
Mental retardation
Administration on Aging
Department of Labor:
Manpower development and training activities
Grants to States for administration of employment
security programs (trust fund)
Development of labor mobility
Equal Opportunity Commission

1968

1969

:ode

70.0
1.0
11.2

80.2
18.0
.8

1,185.2 1,812.5

69
5

52.6

44.5

34.8

655
655
655

287.3
220.6
154.2

293.5
301.4
179.6

294.0
314.0
196.4

655
655
655

129.6
141.1

172.9
207.3

156.6
406.8

655

117.6

15.4
101.9

21.9
36.2

659
659

302.1
106.0

319.0
168.8

344.8
223.5

651
651
651
651
651
651
651
651
651
651

204.9
(91.3)
31.6

217.8
(104.2)
130.3
72.0
13.7
1.6

212.0

651
652
653
653
659

1,173.0

3.0
1.6
11.0
19.0

89.2
178.7

2,610.1
392.0

49.6
65.9
76.6
214.1

(95.4)
172.4
110.0
34.6
1.6

57.4
17.1
19.4
248.7

1,761.0 2,121.6

13.9 113.8
2,976.0 2,960.9
460.2 589.3
20.0
280.1

341.0

~~T.\

16.1

22.1

60.2

58.2

535.8
1.8
.1

567.0

609.3

1.8
.8

1.8

659
659
659

185.5
______

652
652
652
652

6,973.8

8.7

.9

8,774.1 9,744.3

173

SPECIAL ANALYSES

Table K-10. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS i-Con.
(Expenditures in millions of dollars)
Agency and program

F"unc-

1967

1968

1969

code

Education:

Department of Health, Education, and Welfare:
Assistance to schools in federally affected areas
Elementary and secondary educational activities
Higher education activities (including land-grant
colleges)
Vocational education.
Arts and humanities educational activities
Grants for library services and construction
Training teachers of the handicapped
Community services and National Teacher Corps
Civil rights educational activities
Teaching of the blind and deaf
Educational television facilities
Education professions development
__
Department of the Interior: Bureau of Indian Affairs:
Education and welfare services..
_
__
National Foundation on the Arts and Humanities

701
701

417.4
1,364.4

341.2
1,473.0

381.9
1,404.4

702
704
704
704
704
704
704
704
704

187.4
232.8
.4
57.4
*
7.0
3.3
1.0
7.9

247.0
255.1
.5
84.8
12.0
10.0
4.7
1.2
6.7

174.2
249.8
.3
94.8
21.5
11.5
7.0
1.3
8.2
7.5

10.8

11.4

704

14.3

14.8
21.0

2,461.9

2,398.2

8.8
.1
1.1

9.3
2.4
1.7

10.0
3.0
1.8

9.9

Total, education

8.9

2,298.7

704
704

13.4

14.8

Veterans benefits and services:

Veterans Administration:
Aid to State homes
Grants for construction of State nursing homes
Administrative expenses

804
804
805

Total, veterans benefits and services
General government:

Civil Service Commission: Intergovernmental personnel
assistance
Funds appropriated to the President: Transitional grants
to Alaska
Department of the Interior:
Grants to territories
__ .
Internal revenue collections, Virgin Islands (shared
revenue)
Department of Justice:
Law enforcement assistance:
Education and training
_ .
Other
_____
_.
Crime nrevention and control
Treasury Department:
Tax collections for Puerto Rico (shared revenue)
Bureau of Customs: Refunds, transfers and expenses
of operation, Puerto Rico and the Virgin Islands
(trust fund shared revenue)
General Services Administration: Hospital facilities in
the District of Columbia
President's Crime Commissions
American Revolution Bicentennial Commission
Total, general government
Total, _rants-in-aid and shared revenue

12.0

906

910

*

910

25.9

37.0

51.4

910

11.1

12.4

12.5

908
908

1.6
1.1

2.7
4.0
9.4

5.6
8.1
36.9

910

59.3

65.0

67.0

904

27.5

28.7

29.1

905
908
910

.8

*
*
.1

.2

159.4

222.8

908

127.3
15,239.5

18,362.3 20,297.3

* Less than $500 thousand.
1 Grants-in-aid unless otherwise specified. Excludes loans which are shown separately in table K.-I I
2 Reflects proposed transfer of forest and public lands highways to the Highway trust fund.




174

THE BUDGET FOR FISCAL YEAR

1969

Table K-11. FEDERAL LOANS TO STATE AND LOCAL GOVERNMENTS
Net outlay*

Disbursements
Agency and program

1967
actual

1968
estimate

1969
estimate

1967
actual

84.0

80.0

75.0

83.0

77.0

70.0

Natural resources: Reclamation loans

16.8

14.1

7.5

16.7

13.3

6.7

Commerce and transportation: Economic
development

38.0

24.9

7.8

6.8

23.8

29.5

4.1
154.1
58.7
14.2
601.3

3.0
220.0
45.0
7.1
453.2

6.4
220.0
54.0
3.6
455.2

3.5
10.5
55.9
7.9
58.3
-.2

2.4
19.9
41.4
-1.4
.9
-.2

-.8
-15.1
49.7
-4.9
11.9
-.2

52.2

55.2

108.3

19.0

16.2

65.2

884.6

783.5

847.5

154.9

79.2

105.8

38.2
58.5

148.5
15.0

150.9
18.8

37.8
58.4

148.1
14.9

149.9
17.8

215.0

192.5

162.2

191.1

173.9

141.4

311.7

356.0

331.9

295.3

336.9

309.1

.2

.4

.2

.4

5.0

5.4

4.5

5.0

5.4

4.5

5.2

5.8

4.5

5.2

5.8

4.5

1,310.1 1,264.3 1,297.2

561.9

536.0

525.6

1968
1969
estimate estimate

Agriculture and agricultural resources:

Soil and water loans

Housing and community development:

Department of Housing and Urban Development:
Community disposal loans
Low-rent public housing program
Public facility loans
Public works planning advances
Urban renewal fund
Urban transit fund
District of Columbia: Capital outlays
and operations
Total, housing and community development
___:.
Education:

Department of Health, Education, and
Welfare:
Higher education activities
.
Other
Department of Housing and Urban Development: College housing
Total, education
General government:

Department of Defense—Civil: Corps
of Engineers: Construction of power
systems, Ryukyu Islands
Department of the Interior: Administration of territories
Total, general government
Total




SPECIAL ANALYSIS L
PRINCIPAL FEDERAL STATISTICAL PROGRAMS

Principal statistical programs of the Federal Government in the
1969 budget are summarized in this analysis. The general year-to-year
level of statistical activities of the various agencies is reflected in the
amounts shown for current statistical programs. Recommendations
in 1969 for current statistics total $133.7 million. Periodic statistics,
as distinguished from current, are characteristically derived from
census-type surveys taken once or twice a decade, and amounts
fluctuate widely from year to year depending upon the nature and
periodicity of the activities. Recommendations for the periodic programs for 1969 aggregate $24.7 million.
Objectives of these programs are to provide accurate, comprehensive, and timely information on the functioning of the economy and
welfare of the people, both for Government decisions and for private
and general public use. The functions of collecting, processing, and
analyzing current general-purpose statistical information are often
closely related to other agency objectives. To indicate the interrelationships of the statistical programs carried out by different agencies
and to aid in evaluating the Government's overall statistical system,
the significant components of current Federal statistical activity are
brought together and classified by broad subject areas in this special
analysis. These areas and the amounts involved for the current program are summarized in table L-l. Information by agencies for both
current and periodic programs is shown in table L-2.
Current statistical programs covered by this analysis represent the
entire programs of some agencies but only that portion of the programs of other agencies constituting general-purpose statistical
activity.
When adjustments are made because of reorganization of statistical
units or activities they are carried back to both the current and
previous years so that all 3 years covered by the special analysis are
on a comparable basis.
A brief description of the major program changes is shown below
by broad subject areas. The agencies which contribute to each subject
area are shown in table L-l. Adjustments made for additional amounts
required for increased pay costs and for savings resulting from increased
productivity are not itemized in descriptive statements but are
reflected in the totals.




175

176

THE BUDGET FOR FISCAL YEAR 1969

Table L-t. OBLIGATIONS FOR PRINCIPAL CURRENT STATISTICAL
PROGRAMS, BY BROAD SUBJECT AREAS (in millions of dollars)
Program

Labor statistics (Departments of Agriculture, Interior, and
Labor; National Science Foundation) _
Demographic and social statistics (Departments of Agriculture,
Commerce, and Health, Education, and Welfare; National
Science Foundation; Office of Economic Opportunity)
Prices and price indexes (Departments of Agriculture, Commerce, and Labor)
Production and distribution statistics (Departments of Agriculture, Commerce, Defense, Interior, and Transportation; Civil
Aeronautics Board; Interstate Commerce Commission)
Construction and housing statistics (Departments of Commerce
and Housing and Urban Development; Federal Home Loan

Bank Board)

1967
actual

1968

1969

Total, principal current programs

26.9

29.3

32.9

40.5

46.6

6.3

6.9

7.7

31.0

31.5

33.5

2.9

_._

National income and business financial accounts (Departments of
Agriculture, Commerce, and Treasury; Federal Trade Commission; Securities and Exchange Commission)

26.9

3.5

5.1

10.3

11.0

11.5

120.2

133.7

110.2

LABOR STATISTICS

Manpower and employment data.—Funds are requested to strengthen
the research program conducted and sponsored by the Office of Manpower Research in the Manpower Administration, Department of
Labor ($900,000). First priority in the development of research projects under title I of the Manpower Development and Training Act
is being given to those which can assist in attacking unemployment in
urban slums.
A requested increase of $120,000 is included in the 1969 budget for
the Economic Research Service, Department of Agriculture, to
measure and study labor-mechanization adjustments in agriculture.
This study would cover the problems of reduction of farm labor required per unit of output with technological advances that increase
productive capacity of farms, the larger capital resources needed to
support the smaller labor component, and improvement of training
and skills so that earnings of workers in agriculture can be made more
comparable with those in off-farm employment.
Wages and industrial relations.—Funds are recommended to inaugurate a semiannual survey of general changes in wage rates and benefits
in nonmanufacturing industries, comparable to the existing series for
manufacturing ($200,000). This information will round out the data
needed to relate the magnitude of wage and fringe benefit changes to
changes in productivity and prices. It will also be used in studying
problems of labor demand and supply among industries.




177

SPECIAL ANALYSES

Table L-2. OBLIGATIONS FOR PRINCIPAL STATISTICAL PROGRAMS, BY
AGENCY (in millions of dollars)
Agency

1967
actual

1968
estimate

1969
estimate

CURRENT PROGRAMS
Department of Agriculture:
Economic Research Service: Statistical activities
Statistical Reporting Service
Department of Commerce:
Bureau of the Census
Office of Business Economics
Department of Defense: Corps of Engineers: Domestic shipping
statistics
Department of Health, Education, and Welfare:
National Center for Educational Statistics
National Center for Health Statistics
Social Security Administration: Statistical and research
activities
Social and Rehabilitation Service: Statistical and research
activities
Department of Housing and Urban Development: Statistical
activities
Department of the Interior: Bureau of Mines: Mineral statistics.
Department of Labor:
Bureau of Employment Security: Statistical activities
Bureau of Labor Statistics
Manpower Administration, Office of Manpower Research:
Statistical activities
Department of Transportation: National transportation statistics
Treasury Department: Internal Revenue Service: Statistical
reporting
Civil Aeronautics Board: Statistical and research activities
Federal Home Loan Bank Board: Statistical activities
Federal Trade Commission: Financial statistics
Interstate Commerce Commission: Reports and statistics
National Science Foundation: Statistics and special analyses
Office of Economic Opportunity: Statistical and research activities
Securities and Exchange Commission: Operational and business
statistics
__
___
_
Total, current programs

3.8
13.7

3.9
14.2

4.7
14.7

16.4
2.8

17.1
2.9

18.2
3.3

1.1

1.1

1.1

2.1
8.2

2.4
8.3

2.9
9.5

10.0

14.8

16.8

1.8

2.0

2.2

.4
2.6

.5
2.6

1.3
2.5

3.2
20.6

3.3
21.0

3.5
22.7

4.0

4.0

4.9

.4

.7

1.8

5.8
.6
.6
.4
1.1
4.4

6.2
.7
.7
.4
1.1
4.5

6.2
.8
.8
.4
1.1
4.9

5.9

7.4

9.0

.3

.3

.4

110.2

120.2

133.7

1.9
3.0
1.3
2.8
1.9

.4
7.5
1.0
7.6
4.0

6.9
.3
17.5

12.5

20.5

24.7

122.7

140.7

158.4

PERIODIC PROGRAMS
Department of Commerce: Bureau of Census:
1964 Census of Agriculture
1967 economic censuses
1967 Census of Governments.
Preparation for 19th decennial censuses.
Modernization of computing equipment
Department of Agriculture: Statistical Reporting Service: Computer purchase and related costs
Department of Health, Education, and Welfare: National Center
for Health Statistics: Computer purchase and related costs
Total, periodic programs
Total, principal statistical programs




.5
1.1

178

THE BUDGET FOR FISCAL YEAR 1969
DEMOGRAPHIC AND SOCIAL STATISTICS

Population statistics.—No increase is requested for this area since
principal emphasis on population statistics during 1969 will be in
connection with the 19th decennial census covered below under Periodic Programs. Work will continue on development of intercensal
estimates of population and income for small areas based on use of
administrative records. Consultation with and provision of technical
assistance to States in making local population estimates will be expanded out of existing funds.
Health and vital statistics.—An increase of $1.2 million is requested
for the National Center for Health Statistics. This increase would be
used primarily for initiating a study of family planning and the problems related to population growth and change, for consultative services
to State vital statistics agencies and the training of their personnel, and
for studies of methodology to obtain data on birth and death rates in
geographic areas as small as census tracts. In addition, the increased
funds would be used to extend the study of patients discharged from
hospitals, with emphasis on collecting data which could be of value in
promoting the effectiveness of hospital care ($85,000) and to obtain
more comprehensive data on health manpower in order to design
programs or provide assistance in expanding the supply of this category
of workers ($100,000).
The family planning and population growth study ($450,000) is
designed as part of a continuing survey to be conducted on a 2-year
cycle to examine family planning and the economic problems of
population growth and change. Services to State vital statistics
agencies ($380,000) include the establishment of an Applied Statistics
Training Institute to increase the quantity and quality of health
statisticians and thereby improving and increasing the quality and
coverage of State and local health data. Funds ($225,000) are also
proposed for methodological studies required to produce birth and
death rates for census tracts.
Educational statistics.—The 1969 budget recommends an increase
of $440,000 for the National Center for Educational Statistics. These
funds are for the purpose of conducting methodological studies to
improve the accuracy, timeliness, and coverage of widely needed
educational data. Special surveys will also be conducted in areas
that have been neglected: the scope and effectiveness of informal
education; adequacy of school library facilities in secondary schools;
facilities for, dimensions and effectiveness of, adult education; and
tracing careers in higher education in terms of majors taken and grades
achieved.
Social security statistics.—An increase of $2 million is recommended
for the statistical and research activities of the Social Security Administration. The major part of this increase would cover staff costs for
additional work on the basic new program of health insurance,
expanded retirement benefits, and new applications of computer
technology.
In the health insurance area, the current Medicare survey provides
data on use of services and accruing liabilities. This continuing survey
would be supplemented by special studies to provide information on
gaps in covered services and to gather information not otherwise
available through the regular reporting system. The proposed increase



SPECIAL ANALYSES

179

would also cover the costs of processing and analyzing the data collected in the "before" and "after" Medicare study designed to evaluate the health insurance program and a study of hospital accounting
in connection with Medicare.
The survey of disabled adults would be continued as scheduled.
This is a three-part survey which collected information from households in 1967 and will cover persons in institutions in 1968. Funds
proposed for 1969 would provide for the third part of the survey which
would provide data on individuals in nursing homes and extended
care facilities. Each part of the survey would be supplemented by
mail followup of families and representative payees.
Funds are included in the 1969 budget for fieldwork on the retirement history survey. This is a longitudinal survey which would follow
persons in the 58-62 age group for a period of 10 to 12 years to evaluate
the changing needs of those who are retired or about to retire.
The proposed increase would also permit work to continue on a
number of analytical and research studies on special subjects such as
income-maintenance programs, lifetime earnings, alternative measures
of program adequacy, and social security in other countries.
Welfare statistics.—A net increase of $163,000 is recommended for
this area. Although the level is not substantially changed a number of
new studies will be undertaken, replacing those that have been completed. Major studies in 1969 will focus on determining the costs,
benefits, and effectiveness of major public welfare and related programs. Interest will be centered on the evaluation of ongoing programs
as well as the collection of essential information for future program
development. Among the programs and areas of concern to be covered
are: alternative forms of day care, particularly family-type care with
built-in child development provisions; increasing the potential employability of AFDC mothers; use of subprofessionals and volunteer
staff; and an evaluation of family planning services.
Other studies will focus on evaluation of employment and training,
histories of a national sample of Department of Labor referrals
(AFDC), determining the effectiveness of employment incentives—as
used by various welfare departments—and the provision of social
services to encourage employment. There will be an increased emphasis
on studies to determine the relative cost and merits of alternative
approaches to providing necessary services for the aged, and on an
assessment of public welfare agency programs for the prevention and
reduction of births out of wedlock in the AFDC caseload. Considerable
emphasis will also be given to studies of various approaches—particularly neighborhood service centers—for delivery of social services.
Plans also call for the development of increasingly analytical
reports on the utilization of medical care for adult welfare recipients
and the medically indigent. Studies relating to children and youth will
include a national sample survey to secure demographic and social
data, an evaluation of federally aided State and local programs providing family planning services, a study of county trends in infant
mortality, and the development of procedures for classifying small
areas in regard to level of living. Reporting statistics covering juvenile
courts are to be extended and amplified.
Economic opportunity.—This area includes basic research and statistics on poverty and evaluation of antipoverty programs. An
increase of $1.6 million is requested for 1969 for the Office of Economic



180

THE BUDGET FOR FISCAL YEAR 1969

Opportunity. These funds will be devoted primarily to expanded
evaluation activity, particularly of the effectiveness of the manpower
and community action programs. Work will continue in 1969 at
about the same level as in 1968 on basic research concerning the nature,
causes, prevention, and alleviation of poverty.
The 1969 budget recommends an increase of $592,000 for the Economic Research Service, Department of Agriculture, to assemble,
coordinate, and analyze data from primary and secondary sources
that will serve as indicators of changes in the rural economy. Major
kinds of information needed for this purpose on a current basis include
changes in population, migration, employment, incomes, and public
facilities. The information would be used to guide programs for
development in rural areas and to appraise the need for new programs
or policies.
PRICES AND PRICE INDEXES

The 1969 budget requests funds for a stepped-up program in three
aspects of price data compiled by the Bureau of Labor Statistics. First,
$300,000 is included to extend to additional industries the series of
wholesale price indexes presented on an industry sector basis consistent with input-output. Second, $100,000 is requested to place the
wholesale price index on a more realistic basis by collecting actual
transaction prices for major commodities whose transaction prices
deviated from those quoted or listed in wholesale markets. Finally,
there is an additional $120,000 to initiate work on obtaining price
data for commodities in U.S. import and export trade.
The 1969 budget includes a proposal for additional research by the
Statistical Reporting Service, Department of Agriculture, on the effect
of shifts in the relation between producers and processors on prices
received by farmers, and further development of the data transmission
and processing system of the Service.
PRODUCTION AND DISTRIBUTION

An increase of $325,000 is requested for the Bureau of the Census
to undertake new activities in this area. The present monthly reporting of manufacturers' inventories would be expanded to include inventories held by manufacturers at their nonmanufacturing locations,
such as central offices, warehouses, and sales branches, and would
also contain a more complete defense-nondefense break in the sales,
orders, and inventories data ($150,000).
Additional funds requested would also expand the collection of
statistics on service trades receipts to several important services
not now covered. These include certain services (law firms, architectural and engineering service firms, and travel agencies) covered
for the first time in the 1967 Census of Business, and, to the extent
they are now under the social security system, other types such as
medical, private educational, and accounting services ($175,000).
There are persistent demands for still further improvements in
the content, accuracy, and timeliness of statistics pertaining to the
production, inventory, and marketing of agricultural commodities. In
order to assure that the responsibility of the Federal Government for
this information is met in the most efficient, economical way, the




SPECIAL ANALYSES

181

Department of Agriculture, through its Statistical Reporting Service,
will conduct a comprehensive review and appraisal of the crop and
livestock estimates program of the Service, the contribution of
other Federal data-gathering activities to that program, and the
role of related State activities. The review, for which $150,000 is
requested, will be carried out with the close collaboration of the
Bureau of the Budget.
An increase of $1.1 million is proposed in 1969 for the statistical work
of the Department of Transportation. These funds would be used
to determine transportation information needs, exploration of problems of data collection, processing, and analysis, and for pilot projects
in the use of data for program planning purposes.
CONSTRUCTION AND HOUSING STATISTICS

A total of $525,000 is recommended for improvement of the construction value-in-place series produced by the Bureau of the Census.
These improvements are in three segments of construction. The first
involves placing residential construction upon an actual monthly
progress reporting basis instead of the present reliance upon estimating
from generalized construction patterns ($250,000). In this way actual
progress would be recorded rather than using an insensitive pattern
which does not reflect unusual weather conditions or shortages in labor
or materials.
Secondly, the present nonresidential sampling frame would be
studied and assessed. Expansion in sample size would be instituted
where necessary to reduce overall sampling error and to provide significant data for additional construction types ($200,000).
Thirdly, State and local construction, representing a primary component of the public sector, would be placed on a monthly progress
reporting basis ($75,000). This would replace the present unsatisfactory system of quarterly surveys which delays monthly reports and
depends upon interpolation for individual months during the quarter.
The budget also includes an increase for the statistical work of the
Department of Housing and Urban Development. New surveys would
be undertaken to determine the rates at which new rental units are
absorbed by the market ($150,000), to study the effect of new housing
on the existing supply by collecting information on the successive
units that change hands when a new unit is occupied ($100,000), and
to determine the size preferences among prospective occupants of new
housing developments ($50,000).
Funds are requested for a quarterly survey of residential mortgage
lending by savings and loan associations, commercial and mutual
savings banks, and insurance and mortgage companies ($200,000).
This would permit, for the first time, a comprehensive collection of
data on the gross and net flows of mortgage funds and the volume of
loan commitments.
A series of three studies dealing with the effects of taxes and tax
policies would be instituted ($350,000): the impact of property taxes
on slum properties, the effect of tax incentives on urban renewal in
those States that have granted tax concessions for this purpose, and
the extent to which tax considerations influence builders' decisions
to build multifamily residential structures.




182

THE BUDGET FOR FISCAL YEAR 1969
NATIONAL INCOME AND BUSINESS FINANCIAL ACCOUNTS

Economic accounts.—With the additional $370,000 requested for the
Office of Business Economics for 1969, estimates of gross national
product produced in each industry would be developed on a quarterly
basis; the existing plant and equipment survey would be expanded to
(1) include industries not now covered, and (2) to provide separate
information on expenditures for plant and expenditures for equipment;
and the OBE quarterly econometric model would be further developed
to improve its ability to forecast economic activity as well as to test
the economic impact of alternative policies. Also included are funds
for rental of a larger computer.
Financial statistics.—An addition of $110,000 is provided for the
Securities and Exchange Commission to increase the scope and
detail of information on capital markets, including liquid assets held
by nonfinancial institutions and private placements and retirements
of corporate securities, and on operations of financial institutions in
credit markets.
PERIODIC PROGRAMS

Preparation for 19th decennial censuses.—An increase of $10 million is
requested for preparatory work in connection with the 19th decennial
censuses. Of this amount, $7 million is for the Census of Population,
Unemployment, and Housing, and $3 million for the Census of
Agriculture.
During 1969, work on the Census of Population, Unemployment,
and Housing involves completion of the dress rehearsal program;
updating the national residential mailing list; development of tabulation and processing specifications; further research in field methodology
for hard-to-enumerate areas; completion of a major portion of the
geographic preparatory work; preparation of primary computer
programs; preparation of data collection materials; and development
of selected address coding guides for the place-of-work inquiry.
The Census of Agriculture involves a complete count of the number
of farms, the characteristics of farms and farm operations, uses of
agricultural land, production and sales of farm products, farm credit
and debt, and principal cash expenditures. During 1969, preparatory
work includes developing specifications and basic operating plans,
reviewing the content of report forms with concerned individuals and
organizations in the light of problems encountered in the past, preparing mailing lists, and writing and testing electronic computer programs.
Economic censuses and Census of Governments.—The bulk of the data
collected in these censuses, covering the year 1967, will be tabulated
in 1969. The publication program will also be started. Expenditures
during 1969 will be at a reduced level from 1968.




SPECIAL ANALYSIS M
FOREIGN CURRENCY AVAILABILITIES AND USES

Many agencies of the Government are engaged in activities throughout the world which involve payments in foreign currencies. From some
of its activities, particularly the sale of surplus agricultural commodities on concessional terms, the Government acquires foreign currencies
without spending dollars. This analysis presents summary data on
these foreign currency availabilities and uses.
Most currencies accrue to the credit of the United States because of
past or current international agreements that deal primarily with (1)
sales of commodities (usually surplus agricultural commodities) to
foreign purchasers for local currencies, or (2) loans of dollars or foreign
currencies which may be repaid in the currency of the borrower.
Currencies also become available in much smaller amounts under
other kinds of international agreements and from the normal operations of the U.S. Government abroad. With respect to these sources,
sales of commodities for foreign currency will be phased out over the
next few years.
The use of a large part of the foreign currencies owned by the
United States is committed by the terms of the international agreements under which they are received. Some must be used on a loan or
grant basis for mutually beneficial purposes in the country; these are
called "country-use" currencies. Currencies available for the purposes
of U.S. agencies are called "U.S. use" currencies.
Management of U.S. use currencies.—The Federal Government has
established procedures to ensure the maximum use of the foreign
currencies which are available for U.S. purposes. Efficient use of these
currencies is important not only as a matter of sound financial management but because of the need to improve the balance-of-payments
position of the United States.
It is useful for both administrative and analytical purposes to divide
U.S. use foreign currencies into two categories:
Excess currencies are the currencies of countries for which the
Treasury Department determines (after reviewing the availabilities
and prospective uses) that the supply is great enough to more than
cover our requirements for the next 2 years. For 1968, the excess currency countries are: Burma, Ceylon, Congo (Kinshasa), Guinea,
India, Israel, Pakistan, Poland, Tunisia, United Arab Republic
(Egypt), and Yugoslavia. All but Congo (Kinshasa) are expected to
remain excess currency countries in 1969.
To make effective use of excess foreign currencies, separate appropriations for "special foreign currency programs" have been provided
for several years. These appropriations finance programs which may
include projects of lower priority than those financed through regular
appropriations. The use of these appropriations results in an expenditure being reported for the using agency and a receipt for the Commodity Credit Corporation or other fund which acquired the currency.



183

184

THE BUDGET FOR FISCAL YEAR 1969

In addition, payments from regular appropriations may also be made
in excess foreign currencies, and agencies are encouraged to substitute
the use of such currencies for dollars.
Nonexcess currencies are those of all countries not designated as
"excess." In many of these countries, our supply of currencies is far
below our needs, and it is necessary to purchase currencies commercially to meet our requirements. In some of these countries, however, the supply of currencies available for U.S. programs is above
our immediate needs, but not by a great enough amount for the
country to be declared an excess currency country. Special efforts
are made to use these "near-excess" currencies, rather than U.S.
dollars, wherever possible. It is not appropriate, however, to seek
additional uses for such currencies, and they are not available for use
under the special appropriations. The "near-excess" countries currently are: Bolivia, Ghana, Indonesia, Morocco, and Sudan.
Total availabilities of foreign currencies owned by or in the custody
of the United States are as follows:
Table M-l. CASH AVAILABILITY OF FOREIGN CURRENCIES
(In millions of dollar equivalents)
1967
actual

Currencies owned by the United States:
For U.S. uses:
Excess currencies
Nonexcess currencies
Subtotal, for U.S. uses
For country uses.
Amounts unfunded in Treasury accounts
Total
Currencies held in trust

1968
estimate

1969
estimate

1,534
377

1,638
529

1,779
430

1,911
1,664

2,167
1,329

2,209
1,074

-52

-78

-88

3,523

3,418

3,195

140

161

16?

Need for foreign currencies.—As indicated in table M-2, the need
for foreign currencies in U.S. operations often does not correspond
to their availability on a country-by-country basis. Although the
United States will have over $2 billion available for U.S. programs,
less than $500 million will be in nonexcess currencies. We must,
therefore, purchase over $2.2 billion of currencies to meet our total
requirements. (These figures are based on projections of future collections and requirements; foreign currency transactions are subject
to more fluctuation and are, generally, less predictable than U.S.
dollar transactions.) In nonexcess currency countries a strong effort
is made in the negotiation of commodity sales agreements to obtain
the maximum amount possible for U.S. uses. Despite this, in the
normal course of its worldwide operations, the Government must
purchase large amounts of many currencies while at the same time it
is accumulating large inconvertible balances for others.




185

SPECIAL ANALYSES
Table M-2. FOREIGN CURRENCIES AVAILABLE TO MEET
U.S. REQUIREMENTS, 1969 (in millions of dollar equivalents)

Estimated
supply
for 1969

Country

Excess currencies:
Burma
_
Ceylon
_ _
Guinea
India
Israel.
_
Pakistan
Poland
Tunisia
United Arab Republic (Egypt)
Yugoslavia
Total, excess currencies
Nonexcess currencies:
Bolivia 1
Canada
France
- _
Germany, Federal Republic of
Ghana !
Indonesia l
Italy
Japan
Korea
Morocco 1
Philippines
Spain
_
Sudan *
Thailand
United Kingdom
Vietnam
Other countries
Total, nonexcess currencies. _
Total

.

__

_

1969 estimated requirements (expenditures)

RequireAmounts ments for
available commerfor use
cial
after 1969 purchase
in 1969

Other
than
special
programs

Special
programs

15.0
10.3
4.1
803.0
46.4
168.4
464.8
18.6
166.7
81.9

1.2
.7
3.0
11.9
8.5
8.4
3.9
1.1
1.4
2.6

0.6
1.9
.3
28.4
16.1
8.9
6.6
1.8
4.8
11.8

13.2
7.7
.8
762.7
21.8
151.1
454.3
15.7
160.5
67.5

1,779.2

42.7

81.2

1,655.3

8.7
6.4
3.1
8.6
1.4
5.0
1.9
44.6
12.4
16.8
6.3
14.7
1.3
8.5
4.0
90.4
195.6

17.9
94.6
130.2
894.6
1.4
.3
74.6
258.0
64.7
10.3
84.9
41.5
1.1
126.7
80.1
368.0
374.9

429.7
2,208.9

9.2
88.2
127.2
886.2

.1
.2
.1
.2
.1

4.6
22.0
6.5

.2
(2)

.2

72.9
235.5
52.3
78.6
27.0

.7

4.9

118.2
76.7
277.6
184.9

2,623.8

2.2

38.2

2,234.5

2,666.5

83.4

1,693.5

2,234.5

.6

1
Currently designated as "near-excess" currency countries, but this designation may not be
effective in 1969.
2
Less than $50 thousand.

300-700 0—68
12



186

THE BUDGET FOR FISCAL YEAR 1969

U.S. uses offoreign currencies.—Table M-3 summarizes transactions
of U.S. use foreign currencies. Disbursing officers are required to use
foreign currencies owned by the Government, if they are available,
before purchasing such currencies commercially with U.S. dollars.
Table M-3. SUMMARY OF FOREIGN CURRENCY TRANSACTIONS, U.S. USES
(In millions of dollar equivalents)
1967
actual
Cash balances brought forward:
Excess currencies
Nonexcess currencies
Subtotal, cash balances brought forward.. _

Total availabilities
Expenditures (deduct):
Foreign currency expenditure authorizations
With dollar credits t o Foreign assistance programs (special letters of credit)
Miscellaneous receipts of the general fund
Commodity Credit Corporation, Agriculture
Other
Deposits for replacement currencies
_
Subtotal, expenditures 1 ... _
Adjustments due to changes in exchange rates
Cash balances carried forward

1969
estimate

1,221
61
__.

Collections:
Public Law 480 sales
Foreign assistance programs (including special letters of credit) _
Interest on public deposits
Other nonloan collections
_
._
Loan repayments (principal and interest):
Public Law 480 loans...
Foreign assistance loans (including Development Loan
Fund)
Subtotal, collections .
Net transfer to country use

1968
estimate

1,387
43

1,528
34

1,282

1,430

1,562

138
110
25
52

230
122
23
60

137
110
23
52

117

143

162

178

159

163

620
9

737

647

1,911

2,167

2,209

10

10

12

108
170
156
16
*

119
152
300
24

105
114
241
44

460
-21

605

516

1.430

1,562

1,693

•Less than $500 thousand.
1
Excludes sales of country-use currencies, subject to later replacement, as follows: 1967, $27
million; 1968, $10 million; and 1969. $2 million.




187

SPECIAL ANALYSES

Recommendations for special foreign currency program appropriations
1969.—Most U.S. uses of foreign currencies are covered by unrestricted dollar appropriations. Table M-4 shows the separate appropriations for special foreign currency programs, which are limited
to the use of excess foreign currencies.
Table M-4. SPECIAL FOREIGN CURRENCY PROGRAM A P P R O P R I A T I O N S NEW OBLIGATIONAL AUTHORITY (in thousands of dollar equivalents)
1967
enacted
Library of Congress: Collection and distribution of library
materials
Department of Agriculture: Agricultural Research Service:
Salaries and expenses
Department of Commerce:
International activities: Salaries and expenses
Environmental Science Services Administration: Research and
development
National Bureau of Standards: Research and technical services.
Department of Defense: Special foreign currency program
Department of Health, Education, and Welfare:
Office of Education: Educational research and training
Public Health Service: Scientific activities overseas
Social and Rehabilitation Service: Research and training..
Department of the Interior: Bureau of Commercial Fisheries:
Management and investigations of resources
Department of Labor: Bureau of International Labor Affairs:
Special foreign currency program
Department of State:
Administration of Foreign Affairs:
Acquisition, operation, and maintenance of buildings abroad.
Overseas schools program
Educational Exchange: English language teaching program in
Poland
Smithsonian Institution: Museum programs and related research.
United States Information Agency:
Salaries and expenses
Special international exhibitions

Total.

1968
estimate

1969

2,076

2,003

2,440

4,500

8,500

12,700

200

200

200

500
500
7,348
1,000
10,000
4,500

750
500

15,000
5,000

500
500
12,800
4,000
30,000

500

100

75

75

7,500
100
360

6,250

5,025

3,050
700

2,316

2,316

2,300
6,000

10,941
350

8,604
387

9,340
428

51,056

48,460

92,918

Foreign currency expenditure authorizations.—The 1968 Foreign
Assistance and Related Agencies Appropriation Act authorized the
expenditure of $6 million in excess currencies for assistance to American schools and hospitals abroad. The 1969 budget recommends $3.1
million for American schools and hospitals in Poland and the United
Arab Republic (Egypt). In addition, excess currencies are made
available under permanent authorizations for emergency relief assistance and for the purchase of goods and services in Afghanistan (using
Pakistan rupees) and Nepal (using Indian rupees). Some unexpended
balances of prior foreign currency expenditure authorizations remain
for Defense family housing. Table M-5 summarizes all transactions
under foreign currency authorizations for U.S. uses which do not
require charges to dollar appropriations.




188

THE BUDGET FOR FISCAL YEAR 1969

Table M-5. SUMMARY OF FOREIGN CURRENCY AUTHORIZATIONS FOR
U.S. USES (in thousands of dollar equivalents)
1967
actual

New authorizations to spend foreign currency receipts:
Funds appropriated to the President:
Emergency relief
Assistance to third countries
American schools and hospitals abroad
Department of State

1968
estimate

1969

3,407
3,997
1,000
731

14,986

12,100

2,629
6,355

Expenditures:
Funds appropriated to the President:
Emergency relief
Assistance to third countries
American schools and hospitals abroad.
Department of Defense
Department of State

1,000
8,000
3,100

9,135

Total authorizations.

1,000
8,000
5,986

1,374
7,208
500
490

7,685
3,000
500

9,572

12,426

407
745

Total expenditures _

10,136

1,241

Country tises.—A far larger amount of foreign currency is used
outside of the appropriations process, as summarized in table M - 6 .
These consist of loans and grants in the host country for common
defense and economic development.
Table M-6. SUMMARY OF FOREIGN CURRENCY TRANSACTIONSCOUNTRY USES (in millions of dollar equivalents)
1967
actual

1968
estimate

1969
estimate

1,008

780

675

Collections:
Public Law 480 sales
Foreign assistance program

657
8

545
4

395
4

Subtotal, collections
Net transfer to U.S. uses (deduct)

665
9

549

399

1,664

1,329

1,074

Outlays (deduct):
Public Law 480 country loans and grants
Public Law 480 loans to private enterprise
Other foreign assistance programs

852
35
8

624
24
6

444
23
5

Subtotal, outlays
Adjustments due to changes in exchange rates

895
11

654
*

472

780

675

602

Balances brought forward

_ ___

Total availabilities

Balances carried forward
•Less than $500 thousand.




_

_ _

SPECIAL

189

ANALYSES

Trust funds.—As a result of international agreements, the United
States receives and spends foreign currencies for the benefit of the
other country. These currencies are held in trust funds by the
Treasury. Table M-7 summarizes foreign currency trust fund activity.
Table M-7. S U M M A R Y OF FOREIGN CURRENCY T R U S T F U N D S
(In millions of dollar equivalents)
1967
actual

1969
estimate

33

_

_

105

161

161

105

109

47

_

114

92
-1

Expenditures (deduct) :
Advances from foreign governments
Adjustments due to changes in exchange rates

56

140

Total availabilities

47

107

Balances brought forward
Mew authorizations to spend foreign currency—permanent:
Advances from foreign governments

Balances carried forward

1968
estimate

56

52

Loans.—As a result of various loan programs, the United States
has outstanding loans of over $5 billion equivalent repayable in
foreign currency. Over $3 billion of this is in excess currencies. The
loan repayments and interest are available for U.S. uses.
Table M—8. BALANCES OF OUTSTANDING LOANS REPAYABLE IN FOREIGN CURRENCIES A S OF JUNE 30, 1967 (in millions of dollar equivalents)
Excess currency countries:
Burma. _
_
Ceylon _
__
India
_ _
Israel
_ __
Pakistan
Tunisia
United Arab Republic (Egypt)
Yugoslavia
Total, excess currencies. _




37
14
1,838

276
562
67
...

360
291

__ 3,445

Nonexcess currency countries:
Brazil
_
. . . .
China (Taiwan) __
Greece
Japan
Morocco
Spain
Turkey
Other

101
156
124
102
209
770
387
751

Total, nonexcess currencies

2,050

Total .

5,495

_




INDEX
Administrative budget:
Debt outstanding, relation of, to consolidated
cash statement and unified budget, 10
Expenditures by agency, summary, 11
Explanation of, 5-6
Financing, relation of, to consolidated cash
statement and unified budget, 9
Receipts, by source, summary, 11
Relation of, to unified budget and consolidated cash statement, 7
Results under, compared with consolidated
cash statement, unified budget and flow
of Government-administered funds, 13
Agricultural resources, dollar expenditures to
finance exports, 20
Agriculture, Department of, research and development, 152
Aid to State and local governments:
Administrative expenses as a percentage of
Federal aid expenditures, 163
Analysis, 155-174
Authorizations in effect, by functional category, at specified dates, 164
Expenditures:
By agency, 170-174
In relation to total Federal expenditures
and to State-local revenue, 161
Grants, by agency, 160
Payments in urban areas, by program,
165-167
Percentage distribution, by function, 195069,157
Percentage distribution, direct spending for
domestic program, by Federal, State, and
local governments, 162
Regional distribution, fiscal year 1967, 167168
Types of Federal aid, by function, 159
Air pollution, 128-130
Assets, monetary, definition of, 9
Atmospheric sciences research and development,
obligations of agencies by functional area,

140-141

Atomic Energy Commission, research and development, 149-150
B
Balances, public enterprise funds, 27-28
Balances, trust funds, June 30,1966-69, 30
Borrowing, definition of, 10
Borrowing by Government enterprises, 31-32
Budget authority, public enterprise funds, 27
Budget concepts, comparison of old and new,
Budget outlays:
Education, training, and related programs, 94
Investment, operating, and other, analysis,
34-54



Budget outlays—Continued
Public enterprise funds, by agency, 24-25
Trust funds, 28, 29

Cash, definition of, 9
Census, 19th Decennial, 182
Census, economic, 182
Census of governments, 182
Children, disadvantaged, education of, 104-105
Commerce, Department of, research and
development, 153-154
Comparison of results, old and new budget
concepts, 13
Compensation, Federal personnel, 72-74
Consolidated cash statement:
Debt outstanding, relation of, to administrative budget and unified budget, 10
Explanation of, 6
Financing, relation of, to administrative
budget and unified budget, 9
Relation of, to unified budget and administrative budget, 7
Results under, compared with administrative
budget, unified budget, and flow of Government-administered funds, 13
Construction:
By cooperative and nonprofit groups, Federal
outlays for, 86-87
Education facilities, 102
Federal and federally financed, 77-93
Health facilities, 117-119
Research and development facilities, 138-139
Statistics, 181
Credit programs, Federal:
Analysis, 55-69
Disbursements and repayments, by type
of account, 59-62
New commitments, by type and agency or
program, 57-58
Summary of legislation, 68-69

Debt issuances, by Government enterprises,
31-32
Debt outstanding, 10
Defense, Department of—Military, research
and development, 146-147
Defense, national, public works, expenditures,
net lending, LA and NOA, by major function
and agency, 93
Demographic statistics programs, 178-180
Development, scientific, obligations and expenditures for, by agency, 138
Domestic transfer payments, 1960-69. 18

Economic activity, level of, 15
Economic opportunity statistics, 179-180
191

192

T H E BUDGET FOR FISCAL YEAR

Education and training programs:
Aid to students, graduate and undergraduate,
by agency and type of aid, 101
Analysis, 94-114
Expenditures and NOA:
By department and program, 108-114
By level or type, 98
Disadvantaged children, 104-105
Health manpower, 117-118
Outlays by category, 94
Education statistics, 179
Employment, Federal civilian:
Analysis, 70-76
By geographical location, 72-73
Compensation and benefits, 72-74
In relation to population and other Government employment, 1942-68, 75-76
Retirement, 18
Summary, full-time permanent, as of June
1966-68, 70-72
Totals, 72
Trends in workload and numbers, 74-75
Environmental science, research and development, discussion, 141
Expenditures:
Administrative budget, by agency, summary,
Aid to State and local governments, by
agency, 170-174
Education, training, and related programs:
By department and program, 108—114
By level or type, 98
Higher education facilities, 102
Health and related programs:
By category, 116
By functional program and agency, 131-134
National income accounts, Federal sector:
Discussion, 21-23
Percent of GNP, 18
Relation of, unified budget to, 17-20
Trends, 14-17
Public works:
1959-68, 77
By agency and program, 78-80
By major function and agency, 87-93
Relation of, in administrative budget, consolidated cash statement, and unified
budget, 7
Research and development, by agency, 195469, 154
Family planning services, 125-126
Federal aid programs, see under Aid
Financing, relation of new and old budget
concepts, 9
Flow of Government-administered funds, 12-13
Foreign currencies:
Availabilities and uses, analysis, 183-189
Available to meet U.S. requirements, 185
Balances outstanding, loans repayable in, 189
Cash availability of, 1966-68, 184
Special program appropriations—NOA, 187
Summary of authorizations, U.S. uses, 188
Summary of transactions, country uses, 188




1969

Foreign currencies—Continued
Summary of transactions, U.S. uses, 186
Trust funds, summary, 189

Government-administered funds, purchases of
U.S. securities, 33
Government civilian employment, Federal,
State and local, in relation to population,
1942-68, 75-76
Government enterprises, borrowing by, 31-32
Grants, public works, by agency, 80-81
Grants-in-aid, 1960-69, 18
Grossing of proprietary receipts from the
public, 8
Health, Education, and Welfare, Department
of, research and development, 150-151
Health and related programs:
Air pollution, 128-130
Analysis, 115-134
Expenditures and net lending:
By category, 116
By functional program, 131-134
By population and age group, 126
Facilities construction, 117-119
Family planning, 125-126
Federally aided training and education, 115118
Hospital and medical services, provision of,
121-128
Organization and delivery of health services,
120-121
Prevention and control of health problems,

128-130

Research, expenditures for, 115-117, 143-144
Statistics, 178
Hospitals:
Construction, 119
Services, 122
Housing statistics, 181
I
Interest rates and maturities, 64-66
Interior, Department of the, research and development, 152
Intragovernmentai and interfund transactions,
1958-69, totals, 8
Investment, operating, and other budget outlays, analysis, 34-54
Investment in U.S. securities, Governmentadministered funds, 33

Labor statistics programs, 176
Loan authority, education, training, and related
programs, by level or type, 98
Loan authority, public works, by major function and agency, 87-93
Loans, balances outstanding, repayable in
foreign currency, 189
Loans, direct and guaranteed, 62-63
Loans, see also Credit programs

INDEX
M
Marine science and technology, program plan,
by agency and functional area, 142-143
Monetary assets, definition of, 9

N
National Aeronautics and Space Administration, research and development, 147-148
National defense, public works, 86
National economic accounts, 182
National income accounts, Federal sector:
Discussion, 14-23
Expenditures as a percent of GNP, 18
Receipts and expenditures, by category,
20-23
Relation of, to unified budget, 17-20
Trends and size of major components, 14-17
National Science Foundation, research, 151-152
Net lending:
Education, training, and related programs,
higher education facilities, 102
Health and related programs, by functional
program and agency, 131-134
Public works, by major function, agency or
program, 80, 87-93
Netting and grossing, national income accounts,
Federal sector, 19
New obligational authority:
Education, training, and related programs:
By department and program, 108-114
By level and type, 98
Public works:
By agency and program, 78-80
By major function and agency, 87-93
Special foreign currency programs, 187

Participation certificates, 5
Participation sales, Federal credit programs,
discussion, 67
Payments to the public, totals, 12
Pollution, air and water, 128-130, 141
Poor, education of, 104-105
Population statistics, 178
Poverty program statistics, 179-180
President's Commission on Budget Concepts, 5
Price indexes, 180
Production and distribution statistics, 180
Proprietary receipts, grossing, under new budget
concept, 8
Public enterprise funds:
Analysis, 24-33
Balances. 27-28
Budget authority, by agency, 27
Gross outlays and applicable receipts, by.
agency, table, 24-25
Public works:
Analysis, 77-93
Civil, by major function and agency, 87-93
Construction by cooperative and nonprofit
groups, outlays for, 86-87
Defense, by major function and agency, 86,93




193

Public works—Continued
Direct, estimated cost for continuing new
work, 82
Direct, expenditures and NOA, by agency
and program, 78-80
Expenditures and net lending, 1959-68, 77
Grants and net lending, by agency and
program, 80-81
Reserve of authorized projects and programs,
84
Water resources and related developments,
outlays for, 85
Purchases of U.S. securities by Governmentadministered funds, 33
R
Receipts:
Administrative budget, by source, summary,
Definition of, 10
From the public, totals, 12
National income accounts, Federal sector,
14-17,20-21
Public enterprise funds, by agency, 24-25
Relation of, in administrative budget, consolidated cash statement, and unified
budget, 7
Trust funds, 28-29
Repayments, major credit programs, 59-62
Research and development:
Academic, 139-140
Analysis, 135-154
Atmospheric sciences, 140-141
Atomic Energy Commission, 149-150
Defense, Department of—Military, 146-147
Environmental quality, 141
Expenditures and obligations, by agency,
1954-69, 137, 154
Facilities for, by agency, 138-139
Health, expenditures for, by program, 115117
Marine sciences and technology, 142-143
Medical and health-related, 115-117,143-144
National Aeronautics and Space Administration, 147-148
Pollution, 141
Space programs, 144-145
Water resources, 145-146

Securities, U.S., purchases of, by Governmentadministered funds, 33
Seigniorage, 10
Social security statistics, 178
Social statistics programs,* 178-180
Space programs, expenditures and NOA, by
agency, 144-145
State and local governments, aid to, see under
Aid
Statistical programs:
Analysis, 175-182
Obligations for, by broad subject areas, 176
Obligations for, current and periodic, by
agency, 177
Student aid programs, 1956-67,101

194

THE BUDGET FOR FISCAL YEAR

Unified budget—Continued
Relation of, to administrative budget and
consolidated cash statement, 7
Relation of, to national income accounts,
Federal sector, 17-20
Results under, compared with administrative budget, consolidated cash statement,
and flow of Government-administered
funds, 13
Timing under new and old budget concepts, 8
Urban areas, Federal-aid payments in, by
program, 165-167

Taxes, changes in rates, 15
Teacher training, elementary and secondary, 99
Training, see Education and training programs
Transfer payments, domestic 1960-69, 18
Transportation, Department of, research and
development, 153
Trust funds:
Analysis, 28-29
Foreign currency, summary, 189
Outlays by fund, 28-29
Receipts, 28-29
Revolving, transactions of, 29

V
Vocational education, 103

U
Unified budget:
Debt outstanding, relation of, to consolidated
cash statement and administrative budget,
10
Explanation of, 5
Financing, relation of, to the administrative
budget and the consolidated cash statement, 9




1969

W
Wage statistics, 176
Water research, obligations, by agencies,
145-146
Water resources and related developments,
expenditures for, 85
Welfare statistics, 179

o





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