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SPECIAL ANALYSES




BUDGETOFTHE UNITED STATES

FISCALYEAR

I

SPECIAL ANALYSES




BUDGET OFTHE UNITED STATES

FISCAL YEAR

FOREWORD
This volume of Special Analyses contains facts and figures on various
features of the President's budgetary recommendations transmitted in
The Budget of the United States Government, 1970, The purpose of this
volume is to present special analytical information about significant
aspects of Government activities. This complements the detailed
financial and program information which is contained in the Budget
Appendix.
Part 1 supplements the usual budget data with analyses and tabulations pertaining to Government finances and operations as a whole,
or relating to specific ways in which Government finances affect the
economy.
Part 2 provides special information on Government outlays in five
social program areas—education, manpower, health, income security,
and crime reduction.
Part 3 discusses and presents data on other special aspects of the
Government's activities—aid to State and local governments, public
works, and research and development.
Part 4 provides a new look at the budgets of a number of the larger
agencies, classified by the program categories used for analyses and
decisions in theplanning-programing-budgeting system of each agency.
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.

U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON: 1969
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 • Price $1.50




TABLE OF CONTENTS
Page

PART 1. ECONOMIC AND FINANCIAL ANALYSES

_

_
_

A. Federal transactions in the national income accounts
B. Funds in the budget. _
C. Agency borrowing and investments
D. Investment, operating, and other budget outlays
E. Federal credit programs
F. Principal Federal statistical programs
G. Unobligated glances of budget authority available in 1970
H. Foreign currency availabilities and uses
I. Civilian employment in the executive branch
PART 2. FEDERAL SOCIAL PROGRAMS
J. Federal education programs
K. Federal manpower programs
L. Federal health programs
M. Federal income security programs
N. Federal programs for the reduction of crime

7
19
27
31
54
70
78
94
101
Ill
113
134
148
174
188

PART 3. SPECIAL ASPECTS OF FEDERAL PROGRAMS

199

0 . Federal aid to State and local governments
P. Federal public works activities
Q. Federal research, development, and related programs

201
220
239

PART 4. ANALYTIC PROGRAM STRUCTURE

251

R. Selected agency budgets by program categories




5

253

3




PART 1

ECONOMIC AND FINANCIAL
ANALYSES




INTRODUCTION
Part 1 supplements the usual budget data with analyses and
tabulations pertaining to Government finances afid operations as a
whole, or relating to specific ways in which Government finances
affect the economy. These special analyses encompass those designated
A through I.
Special Analysis A presents the Federal budget estimates in terms
of the national income accounts. It is designed to explain the relationships of the unified budget totals of the Federal Government to the
national income accounts, which constitute the most widely used
measure of aggregate economic activity in the United States.
Special Analysis B classifies budget information by the groups of
funds (Federal and Trust) which comprise the budget. It also presents
aggregate data on the gross receipts and outlays of all funds.
Special Analysis C presents information: (a) on the debt of Government agencies, other than agency borrowing from the Treasury for
Government capital; and (b) on the investments of Government
agencies in U.S. securities. Its tables thus provide detail in support
of lines on Table 9 of the Budget relating to agency debt and investments.
Special Analysis D analyzes budget outlays in terms of the duration
and nature of the benefits derived, distinguishing those of an investment or developmental type from those which primarily yield current
benefits. Apart from this analysis and the distribution between the
loan account and the expenditure account, the U.S. budget, unlike
that of some other governments, includes outlays which are for
"capital" or investment type activities in the same accounts in which
"current" activities and costs are shown.
Special Analysis E covers Federal credit aids—direct loans and
insurance or guarantee of private loans. It includes all transactions in
the loan account, and also the credit transactions which are in the
expenditure account.
Special Analysis F reflects the year-to-year level of activity under
the principal programs of the Federal Government for collecting
current statistics, and current spending for periodic statistics obtained
in census-type surveys usually conducted every 5 or 10 years.
Special Analysis G responds to section 204 of the Revenue and
Expenditure Control Act of 1968, which calls for a special study and
report to be made concerning possible rescission of balances of budget
authority which will remain available for obligation or commitment
after June 30, 1969.
Special Analysis H presents information on foreign currencies
acquired by the U.S. Government without spending dollars—particularly from the sale of surplus agricultural commodities—and the
use of these currencies.
Special Analysis I deals with the levels of civilian employment in
the Executive Branch. It also contains figures on total Federal personnel (including military personnel).




SPECIAL ANALYSIS A
FEDERAL TRANSACTIONS IN THE NATIONAL INCOME ACCOUNTS

The budget is designed to serve many purposes:
• It represents a proposed allocation of resources to serve national
objectives, between the private ana public sectors, and within
the public sector;
• It is an economic document which embodies the taxing and spending policies of the Government for promoting growth of the national economy, high employment, price stability, and strengthening of the Nation's balance of payments position;
• 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
concept used in the budget document and related Treasury reports is
designed to provide complete, detailed information on the finances of
the Federal Government. For those concerned with aggregate economic
activity in the country, however, the national income accounts (NIA)
of the United States are the most widely used measures—and interest
is focused heavily on the Federal sector of these accounts.
This analysis is designed to explain the relationships of the budget
to the Federal sector of the national income accounts, and to present
the budget estimates in national income terms. It 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 of the NIA are estimated to
rise by $12.3 billion between fiscal years 1969 and 1970, and receipts
by $12.3 billion. As a consequence, the Federal sector surplus will
remain unchanged.
Trends in Federal sector receipts.—Rising levels of economic
activity expand the Nation's tax base and provide increased Federal
revenues. Over the past 15 years, Federal sector receipts have risen
140% while the gross national product (GNP) rose 129%. Receipts
in the national income accounts are expected to rise 26% from 1968
to 1970, reaching a total of $202.3 billion. The pace of this increase has
been affected by tax rate changes over these years and most recently
by the temporary income tax surcharge enacted in 1968 and the increase in social security taxes effective January 1969. On balance,
however, the growth rate in revenues has been roughly equal to the
growth rate in the economy.




7

8

THE BUDGET FOR FISCAL YEAR 1970

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.
Since indirect business taxes consist mainly of excise taxes on certain
goods and services, such as tobacco, alcohol, automobiles, and telephones, they normally change with changes in the level of purchases
of these items. Social insurance contributions expand with the growth
in employment and earnings.
Changes in tax rates.—The estimates of Federal sector receipts for
fiscal year 1969 reflect the tax rate changes contained in the Revenue
and Expenditure Control Act of 1968. That act provided for a surcharge of 7K% on individual income tax liabilities for calendar year
1968 and 5% for calendar year 1969 and for a surcharge of 10% on
corporate tax liabilities in calendar year 1968 and 5% in calendar year
1969. In addition, the act delayed and rescheduled the reduction in
the excise taxes on automobiles and telephone services which had been
scheduled by law to decline on April 1, 1968.
Contributions to social insurance in fiscal year 1969 reflect the
impact of the 1967 Amendments to the Social Security Act. The
ceiling on wages subject to old-age, survivors, disability, and hospital insurance taxes was raised from $6,600 to $7,800 beginning
January 1, 1968, and the combined employee-employer tax rate was
raised from 8.8% to 9.6% effective January 1, 1969.
The estimated Federal sector receipts in fiscal year 1970 reflect
$9 billion from the proposed extension of the income tax surcharges,
which would result in the following rates on calendar year liabilities.
SURCHARGE RATES
Calendar year

1968 Actual....
1969 Proposed..
1970 Proposed..

Individual Corporate
income
profits
tax
tax
liabilities liabilities

10%fo
10
5

The estimates of Federal sector receipts also reflect proposals to
(1) extend the present excise tax rates on automobiles and telephone
services, with an estimated yield of $0.5 billion in 1970, and (2) increase social security taxes, effective January 1, 1970, by increasing
the taxable wage ceiling from $7,800 to $9,000 and the combined
employer-employee tax rate from 9.6% to 10.4%. This should result
in an additional $1.7 billion in Federal sector receipts in fiscal year
1970. An additional $0.4 billion of revenue is expected from proposed
transportation user charges.

Trends in Federal sector expenditures.—The estimated $12.3
billion rise in Federal sector expenditures in 1970 compares with
increases of $14.9 billion in 1969 and $18.0 billion in 1968. The upsurge of defense purchases, starting with the large-scale commit


9

SPECIAL ANALYSES

ments of American troops in Vietnam, is expected to level off. Tot.nl
Federal sector expenditures were equal to 21.1% of total GNP 15
years ago, while last year they were almost the same propcrti m—
21.0%. However, the composition has shifted significantly. Federal
defense purchases have declined from 13.6% of GNP in 1953 to 11.6%
last year and are expected to comprise 8.6% in 1970. In contrast,
domestic transfer payments and grants-in-aid—the increases in
which go largely to raise standards of living of retired or poor people
and assist in solving urgent social problems such as inadequate
health and education and urban decay—have nearly doubled as a
percent of GNP, rising from 3.4% in 1953 to 7.2% last year and are
expected to total 7.9% in 1970.
Federal Sector Expenditures

Major Categories as a Percent of Total

Percent

100-

A l l Other

Grants in A i d

80-

Domestic Transfers

60-

40-

Defense Purchases

20-

1955
Fiscal Years




I960

1965

1970
Estimate

10

THE BUDGET FOR FISCAL YEAR 1970

As shown in the accompanying chart, there was a large-scale expansion of spending on space research starting around 1960 and reaching
a peak in 1966; the program continues to be funded at a high level
($3.9 billion in 1970) but has dropped relative to the total, as substantial increases have occurred for special Vietnam support and social
insurance and other social programs. Other nondefense purchases
have been quite steady as a percent of the total. This includes the
general cost of operating the Government, the cost of direct delivery
of services—such as much of our health research programs, the FBI,
air and sea safety programs, flood control and navigation projects,
and veterans hospitals—and the cost of administering grants and
transfer payments.
Table A-l shows grants and domestic transfer payments—broken
into several major groupings—over the period 1960 to 1970. Grantsin-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 O of this budget.
Table A-1. GRANTS-IN-AID AND DOMESTIC TRANSFER PAYMENTS
(in billions of dollars)
Grants-in-aid
Fiscal

Public
(including
Medicaid)

1960
1961
1962
1963
1964
1965
1966
1967
1968
1969 est_.._
1970 est.._.

2.1
2.2
2.4
2.7
2.9
3.3
3.5
4.2
5.6
6.6
7.8

Highways

2.9
2.6
2.8
3.0
3.6
4.0
3.9
4.0
4.1
4.1
4.7

Domestic 'ransfer payments

All
other

1.9
2.1
2.4
2.6
3.3
3.6
5.3
6.6
7.7
8.9
10.5

Retirement and
disability

13.1
14.4
16.4
18.0
19.1
20.2
23.9
25.3
27.9
31.8
35.1

Hospital
Veterans
and sup- Insurance
Unemand
ployment plementary
benefits
medical
benefits
insurance

2.7
4.2
3.6
3.1
2.9
2.5
2.1
2.1
2.2
2.4
2.5

3.2
5.1
5.9
6.5

4.4
4.6
4.6
4.7
4.6
4.7
4.7
5.3
5.6
6.0
6.2

All
other

0.3
.4
.5
.5
.6
.8
1.1
1.3
1.6
1.9
2.5

Domestic transfer payments (which are mainly pensions, unemployment benefits, hospital and medical benefits, and veterans benefits)
account for the second largest share of total Federal sector expenditures—an estimated 26.5% in 1970. The expansion of social security
benefits plus the enactment of hospital and supplementary medical
insurance are major factors in expanding transfer payments in recent
years. The 1970 estimate includes proposed legislation for a major
expansion in social security benefit payments, while the upswing in
veterans benefits reflects the recent enactment of compensation and
educational benefits for veterans since the Korean war. Unemployment
insurance benefit payments continue at a relatively low rate—even
with rising benefit payments per unemployed recipient—because of the
low rate of unemployment in recent years. A considerable part of the




11

SPECIAL ANALYSES

war on poverty and other efforts to aid poor people and resolve domestic social problems appears in the "all other" categories of both
grants and transfers.
Table A-2 shows Federal sector expenditures as a percent of total
GNP for selected years since 1940 and every year since 1960. It clearly
shows fluctuations resulting from the reaction of the Federal Government to various major international crisis situations; it also shows the
expanding commitment of the Federal Government to cope with
domestic social problems, mainly through grants and domestic
transfer payments.
Table A-2. FEDERAL SECTOR EXPENDITURES AS A PERCENT OF GNP
Purchases
Total
expenditures

Fiscal year

Defense

Nondefense
NASA

1940
1943
1946
1949
1952
1955
1958
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969 estimate

_

9.6
43.3
27.5
15.2
19.6
17.8
18.9
18.4
19.3
19.6
19.4
19.1
18.1
18.4
20.1
21.0
21.0

1.5
39.6
19.4
4.8
12.4
10.2
10.2
9.1
9.2
9.3
8.8
8.3
7.5
7.6
8.8
9.2
8.9

0)
0)
0)
0)
P)
0)
0)

0.1
.1
.2
.6
.7
.8
.8
.7
.7
.5

Domestic
transfer Grantsin-aid
payments

All
other

Other
4.1
1.2
.5
27
.4
.4
.3
.5
6
7
6
7
6
.6
5
7
.9

1.4
.7
3.5
3.1
2.5
3.2
4.0
4.2
4.7
4.6
4.6
4.5
4.3
4.4
4.9
5.2
5.4

0.9
.5
.4
.8
.7
.8
.1
.4
4
4
5
6
7
.8
.9
2.1
2.2

1.8
1.3
3.7
3.9
2.5
2.2
2.2
2.2
2.4
2.4
2.3
2.3
2.3
2.2
2.3
2.1
2.0

1 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 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. 494 of the budget document) 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




12

THE BUDGET FOR FISCAL YEAR 1970

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 A-3 shows the major differences between the budget and the
Federa1 sector estimates. These differences are explained in the following paragraphs.
Table A-3. RELATIONSHIP OF THE BUDGET TO THE FEDERAL SECTOR, NIA
(in billions of dollars)
Description

1968
actual

RECEIPTS

1969
estimate

1970
estimate

_

153.7

186.1

198.7

Employer share, employee retirement (grossing) _
Other netting and grossing
Adjustment to accruals
Other
_

1.9
1.1
4.6
-.2

2.1
1.4
.5
-.1

2.2
1.3
.2
-.1

190.0

202.3

183.7

195.3
-.9
2.2

.9

-1.4
2.1
1.4
1.8
-1.1
-.4
1.1

1.3
1.8
-1.0
-.3
1.2

172.4

187.3

199.6

Total budget receipts

Federal sector, NIA receipts
EXPENDITURES
Total budget outlays
Loan account
__
_
Employer share, employee retirement (grossing).
Other netting and grossing
Defense timing adjustment
Lending in the expenditure account
Dollar expenditures to finance agricultural exports
Other
Federal sector, NIA expenditures

-6.0
1.9
1.1
-2.1
-1.6
-.7

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
accounts. The contributions of Government agencies, as employers,
to these retirement tjrust 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, contributions by the Government
on behalf of its employees who are covered by the old-age, survivors,
disability, and health insurance programs are included in Federal
sector receipts and expenditures. These adjustments affect total
receipts and expenditures equally and thus do not alter either the
budget or Federal sector surplus or deficit.




SPECIAL ANALYSES

13

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 payment. 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
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 either
surplus or deficit.
Timing adjustments.—The budget records receipts at the time the
cash is collected regardless of when the income was earned; expenditures (except interest) are generally recorded at the time the checks
are issued. The NIA attempts to record most receipts in the time
period in which the income is earned rather than when taxes are
actually paid. For instance, corporate profits taxes in the NIA are
recorded as taxes when the profits are earned (accrued) regardless of
when the cash is received by the Treasury.
The principal timing adjustment on the expenditures side is for
defense purchases. Procurement items (such as ships or airplanes) are
recorded in the Federal sector as defense purchases at the time of
delivery to the Federal Government rather than when they are
fabricated or when they are paid for; work in process is counted as
part of private business inventories until the articles are completed
and delivered to the Government. 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. 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 tite budget—
such as foreign loans of the Agency for International Development,
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 ^_ 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.




14

THE BUDGET FOR FISCAL YEAR 1970

Other.—This category includes some miscellaneous adjustments
largely for certain specialized aspects of the national income accounts
such as purchase 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. It also includes adjustments
for the expenditure of foreign currency acquired as described in the
preceding paragraph.
MAJOR CATEGORIES OF THE FEDERAL SECTOR OF THE NATIONAL
INCOME ACCOUNTS

Federal sector receipt.—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. 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
incomes 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 A-^4 shows the adjusted receipts and expenditures after
reclassification into the national income accounts categories.




15

SPECIAL ANALYSES

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

1968
actual

1969
estimate

1970
estimate

RECEIPTS

Personal tax and nontax receipts
Corporate profits tax accruals
Indirect business tax and nontax accruals _
Contributions for social insurance
Total receipts..

71.6
34.5
17.1
37.9

88.6
39.3
18.1
44.0

94.0
40.2
19.2
48.9

161.1

190.0

202.3

95.6
(75.8)
(19.8)
44.5
(42.4)
(2.1)
17.4
10.8
4.1

101.5
(79.9)
(21.6)
50.1
(48.0)
(2.1)
19.6
12.0
4.1

105.6
(82.2)
(23.4)
54.9
(52.8)
(2.1)
23.0
12.2
3.9

172.4

187.3

-11.3

+2.7

EXPENDITURES
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
Surplus ( + ) or deficit ( - )

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.
1. Purchases oj 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 Federal 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 agreements 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 national defense function in the budget. Purchases for all other types of activities are
classified as nondefense.



16

THE BUDGET FOR FISCAL YEAR 1970

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. Neither the budget total nor the NIA include interest payments from one budgetary fund or account to another. However, the
interest function in the budget does include such payments; they are
deducted in a lump sum in arriving at the budget total. Therefore,
the NIA interest figures are considerably lower than the interest
function of the budget.
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 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. The Post Office and the
Tennessee Valley Authority are two of the largest enterprises.
The following tables (A-5 and A-6) show additional historical data
to provide the reader with a better perspective of transactions in the
Federal sector.




17

SPECIAL ANALYSES

Table A-5. FEDERAL SECTOR OF THE NATIONAL INCOME ACCOUNTS,
1940-1969 (in billions of dollars)
Federal sector of the national income and product accounts
Expenditures
Gross
national
product

Fiscal year

As a percent of G N P

Excess of
of which, receipts(+)
purchases or expend-

Receipts

Total
Federal

Federal
purchases

tures

and
services

Total
and
services

1940
1941
1942
1943
1944___

95.0
109.4
139.2
177.5
201.9

7.6
12.1
19.6
28.9
43.1

9.1
13.4
33.6
76.8
91.3

5.3
9.6
29.9
72.3
85.6

-1.5
-1.3
-14.0
-47.9
-48.1

9.6
12.3
24.2
43.3
45.2

5.5
8.8
21.5
40.8
42.4

1945
1946
1947
1948....
1949

216.8
201.6
219.8
243.5
260.0

43.0
38.4
42.7
43.6
40.0

98 2
55.5
29.5
30.9
39.6

89.7
40.1
13.0
13.2
19.3

-55.2
-17.1

45.3
27.5
13.4
12.7
15.2

41.4
19.9
5.9
5.4
7.4

42.0
60.8
65.1
69.3
65.8

42.4
44.6
66.1
75.8
74.2

19.0
25.1
46.6
56.1
53.2

-.5
+16.2

_.

263.3
310.5
337.2
358.9
362.1

16.1
14.4
19.6
21.1
20.5

7.2
8.1
13.8
15.6
14.7

_.

378.6
409.4
431.3
440.3
469.1

67.2
75.8
80.7
77.9
85.4

67.3
69.8
76.0
83.1
90.9

43.9
45.2
47.7
50.7
54.7

17.8
17.0
17.6
18.9
19.4

11.6
11.0
11.1
11.5
11.7

1960
1961
1962
1963
1964

495.2
506.5
542.1
573.4
612.2

94.8
95.3
104.2
110.2
115.5

91.3
98.0
106.4
111.4
116.9

52.7
55.5
60.9
63.4
65.7

Hi

18.4
19.3
19.6
19.4
19.1

10.6
11.0
11.2
11.1
10.7

1965
1966
1967
1968
1969 estimate.

654.2
720.7
766.5
822.6
893.0

120.5
133.0
147.7
161.1
190.0

118.5
131.9
154.4
172.4
187.3

64.4
71.7
84.9
95.6
101.5

+2.0
+1.0

18.1
18.3
20.1
21.0
21.0

9.8
9.9
11.1
11.6
11.4

1950
1951
1952
1953
1954.
1955
1956
1957...
1958
1959

_

340-700 O—69



2

+13.2
+12.7
+.4

-1.0
-6.5
-8.5
-.1

+6.0

3?
-5.5
-2.1
-1.2
-1.3

-6.9
-11.3

+2.7

Table A-6. FEDERAL TRANSACTIONS IN THE NATIONAL INCOME ACCOUNTS, 1953-70 ( fiscal

years, in billions of dollars) *
Estii mate

Actual
Description
1959

1960

1961

1962

1963

1964

1965

1966

1967

1968

1969

1970

38.2
21.5
11.9
13.8

42.5
22.3
13.2
16.7

43.6
20.3
13.3
18.1

47.3
22.9
14.2
19.9

49.6
23.5
15.0
22.1

50.7
25.7
15.6
23.5

51.3
27.7
16.9
24.6

57.6
31.2
15.7
28.5

64.5
31.4
16.0
35.8

71.6
34.5
17.1
37.9

88.6
39.3
18.1
44.0

94.0
40.2
19.2
48.9

85.4

94.8

95.3

104.2

110.2

115.5 120.5 133.0

147.7

161.1

RECEIPTS, NATIONAL INCOME BASIS

Personal tax and nontax
__
Corporate profits tax accruals
Indirect business tax and nontax accruals
Contributions for social insurance
Total receipts, national income basis

_

~——-

190.0 202.3

EXPENDITURES, NATIONAL INCOME BASIS

Purchases of goods and services
- _
Defense
Nondefense.
_
Transfer payments
Grants-in-aid to State and local governments. .
Net interest paid
.
Subsidies less current surplus of Government enterprises.
Total expenditures, national income basis
Excess of receipts ( + ) or expenditures (—), national income basis.
1

54.7 52.7 55.5 60.9 63.4 65.7 64.4 71.7 84.9 95.6 101.5 105.6
(46.4) (45.0) (46.7) (50.5) (50.4) (50.9) (48.9) (54.4) (67.7) (75.8) (79.9) (82.2)
(B.0) (14.7) (15.5) (17.3) (17.2) (19.8) (21.6) (23.4)
(8.9)
(8.3)
28.5 29.5 30.5 34.2 39.4 44.5 50.1 54.9
25.6
21.6 &
8.4
6.9
9.8
6.2
7.6
10.9 12.7 14.8 17.4 19.6 23.0
6.8
7.5
6.8
8.1
5.9
6.8
8.5
9.9
9.0
7.0
10.8 12.0 12.2
3.6
3.2
3.8
2.4
3.8
4.1
4.1
4.5
5.3
2.3
3.9
4.1
90.9
-5.5

98.0

106.4

111.4

116.9

118.5

+3.5 -2.7

-2.1

-1.2

-1.4

+2.0 +1.0

91.3

131.9

154.4

172.4

-6.7 -11.3

187.3

199.6

+2.7 +2.7

A reproduction of table 18 of the Budget.
Source.—Actual data for 1959—68 are based on the estimates prepared by the Department of Commerce. Data for 1969 and 1970 are based on estimates by the Bureau
of the Budget in cooperation with the Department of Commerce.




SPECIAL ANALYSIS B
FUNDS IN THE BUDGET

This analysis classifies budget information by the groups of funds
which comprise the budget. It also presents information on the gross
receipts and expenditures of all funds in the aggregate.
BREAKDOWN OF TOTALS, BY FUND GROUPS

Table B-l shows the breakdown of total budget receipts and outlays between the Federal funds and the trust funds. The two groups
together, after deducting for transactions that flow between them,
make up the budget totals.
Table B-l. BUDGET RECEIPTS AND OUTLAYS, BY F U N D GROUP
(in millions ©f dollars)
Description

1968
actual

1969
estimate

1970
estimate

RECEIPTS

Federal funds:
Total in fund accounts _
Interfund transactions
_
Proprietary receipts from the public

118,119
-651
-2,745

58,693

-7,496

-7,881

186,092

198,686
= = = = =

151,532
-725
-2,647

158,375
-713
-2,939

143,105

148,160

154,722

43,640
-459
-1,653

45,218
-497
-1 f 684

50.558
-519
-1,608

41,529

43,037

48,431

-5,771

-7,496

-7,881

178,862

Total budget receipts

52,390

146,501
-651
-2,745

Intragovernmental transactions

60,820
-519
-1,608

44,724

__

54,571
-497
-1,684

153,676

Receipts, trust funds

_

147,874

46,836
-459
-1,653

__

141,198

-5,771

Trust funds:
Total in fund accounts
Interfund transactions
_
Proprietary receipts from the public

151,526
-713
-2,939

114,723

Receipts, Federal funds

144,570
-725
-2,647

183,701

195,272

-25,187

2,391

3,414

OUTLAYS

Federal funds:
Total in fund accounts
Interfund transactions
Proprietary receipts from the public
Outlays, Federal funds

__

Trust funds:
Total in fund accounts
Interfund transactions
Proprietary receipts from the public
Outlays, trust funds

_

_

_

Intragovernmental transactions
Total budget outlays
Budget surplus or deficit (—)




_..

19

20

THE BUDGET FOR FISCAL YEAR

1970

FEDERAL FUNDS

The Federal funds are those which the Government administers
as owner (as distinguished from those administered in a trustee or
fiduciary capacity). There are four subgroups of Federal funds—the
general fund, special funds, public enterprise funds, and intragovernmental revolving and management funds.
Receipts and outlays.—The receipts of the general and special funds
in 1970 are estimated at $148 billion, as presented in table B-2.
Outlays of all the Federal funds, are estimated at $155 billion,
distributed as shown. The proprietary receipts of the general fund
and special funds, the interfund receipts, and the receipts of the public
enterprise funds and the intragovernmental funds, have all been offset
in arriving at the outlays for each agency.
Table B-2. FEDERAL F U N D RECEIPTS AND OUTLAYS
(in millions of dollars)
Description

1968
actual

1969
estimate

1970
estimate

RECEIPTS BY SOURCE

Individual income taxes
Corporation income taxes
Excise taxes
Estate and gift taxes
Customs duties
Miscellaneous receipts

_

OUTLAYS BY AGENCY
Legislative Branch
The Judiciary
__
Executive Office of the President
Funds appropriated to the President:
Economic assistance
Economic opportunity
Other
Agriculture
_____
Commerce
Defense—Military
Defense—Civil _
_ __ ._
Health, Education, and Welfare
Housing and Urban Development __ _ __
Interior _
_
Justice
_
_
_____
_
Labor
_
Post Office
_
__ _
State
-__
Transportation
_
Treasury
Atomic Energy Commission
General Services Administration
__
National Aeronautics and Space Administration
Veterans Administration,
Other independent agencies
Allowances for:
Civilian and military pay increase
Contingencies
Total outlays Federal funds
Excess of outlays (—)

90,400
37,900
10,737
3,400
2,300
3,137

141,198

147,874

255
90

297
102

28
__

84,400
38,100
10,325
3,200
2,300
2,873

114,723

Total receipts Federal funds

68,726
28,665
9,700
3,051
2,038
2,543

33

302
114
34

1,844
1,887
1,128
7,310
810
77,380
1,294
13,049
2,255
237

1,925
1,914
1,252
7,654
873
77,795
1,231
15,447
2,092
478

412

___

516
729
929
420

1,575
14,703
2,466
412
4,722
6,897
2,199

2,058
16,320
2,451
453
4,247
7,500
1,341

430
642
1,080

__

1,861
1,989
1,263
7,025
1,135
78,477
1,247
17,421
2,726

501
714
805
552
419
2,122
17,009
2,571

401
3,947
7,434
1,502

100
143.105
-28,382

2,800
350

148,160
-6,962

154,722
-6,848

Note.—Excludes special receipts resulting from the conversion of mixed-ownership enterprises to
trivate corporations in 1969, $294 million. Also excludes, from outlays, transfers to trust funds as
ollows: 1968, $78 million; 1969, $74 million.




21

SPECIAL ANALYSES

Obligations.—The obligations (net) for Federal funds are estimated
at $161 billion for 1970, as set forth in table B-3. These transactions
largely flow from the budget authority of $158 billion for the year,
although in part the obligations were authorized by prior years'
budget authority.
Table B-3. OBLIGATIONS INCURRED, NET, IN FEDERAL F U N D S
(in millions of dollars)
1968
actual

1969
estimate

1970
estimate

BY AGENCY
Legislative Branch
The Judiciary
Executive Office of the President
Funds appropriated to the President.
Agriculture
Commerce
Defense—Military
Defense—Civil
Health, Education, and Welfare
Housing and Urban Development
Interior
Justice—
_-.
Labor
Post Office
StateTransportation
Treasury
Atomic Energy Commission
General Services Administration
National Aeronautics and Space Administration.
Veterans Administration
Other independent agencies
Allowances for:
Civilian and military pay increase
Contingencies

Total.

145,521

291
103
32
5,063
8,540
1,026
79,722
1,323
16,326
1,593
681
544
709
1,057
417
2,145
16,303
2,899
401
4,255
7,596
2,064

314
114
34
5,732
7,425
1,147
80,712
1,303
17,715
3,715
529
818
982
750
416
2,037
17,016
2,495
369
3,875
7,500
2,363

10
5

261
92
29
4,769
7,441
934
76,141
1,336
14,630
3,441
341
436
662
1,131
,
395
1,533
14,683
2,443
364
4,518
6,934
3,005

2,800
500

153,242

160.662

Balances of prior authority.—Table B-4 shows the balances of
budget authority carried forward at the end of each fiscal vear. To
the extent that valid Government obligations have been incurred
and remain unpaid, amounts sufficient to pay them may be carried
over into the next year. Unobligated balances may be carried forward
in accordance with specific provisions of law, usually in order to
permit completion of projects as completed at the time the appropriations were first made, but also to provide funding for activities
of a continuing nature (such as business-type enterprises) or for
standby emergency purposes (such as backup for insurance of the
Federal Deposit Insurance Corporation).




22

THE

BUDGET FOR FISCAL YEAR

1970

Table B-4. FEDERAL F U N D BALANCES OF B U D G E T A U T H O R I T Y
(in millions of dollars)
Start 1968

End 1968

End 1969

End 1970

Description
Obligated

Unobligated

Obligated

Unobligated

Obligated

Unobligated

Unobligated

Obligated

BY AGENCY
Funds appropriated to the
President:
International Financial Institutions
1,004
Military Assistance
1,714
Economic Assistance
3,789
Office of Economic Opportunity
1,140
Other
345
Agriculture
5,438
Commerce
974
Defense—Military
32,069
Defense—Civil
290
Health, Education & Welfare. _ 6,358
Housing & Urban Development
6,360
Interior
837
Labor
.
463
Transportation
732
Treasury
100
Atomic Energy Commission. __ 1,138
National
Aeronautics and
Space Administration
1,820
Veterans Administration
680
4
Civil Service Commission
Export-Import Bank of the
2,367
United States.
Federal Deposit Insurance
Corporation
Federal Home Loan Bank
Board....
3
0
Railroad Retirement Board
Other
2,188
Allowance for contingencies
Total.

69,839

6,447 1,226
26 1,371
860 3,684

6,427 1,591
5 1,459
689 3,247

6,633
5
390

6 982
8 1,018
112 645
111 563
2,684 5,556 2,611 6,458 2,038
203
220 1,087
251 1,240
15,097 30,875 14,805 32,809 11,564
155
236 331
233 423
506
906 7,766
960 8,606

6,633
5
1,468
621
3,364
6
1,207
578 - 1 8 0
6,864 2,102
117
1,252

U

35,045 10,935
48
479
376
8,819

10,508 7,568 12,562 7,050 13,495
262
437 924
461 1,127
341
310 466
331 446
547
668 686
796 1,090
7
84
11 101
7
56
319 1,115
385 1,563
117
312 1,614
380 1,622
1,662 699 1,984 797 1,506
4
3
4
2,996 2,687 3,638 2,387

8, 07612,139
1,155 207
623 345
156
1,005
2
91
1,486

3,000

3,000

1,550
861 1,538
4
4,585

1,026

3,749

3,000
3.000
3,468
3,053

3,697

3
3

4,033

17 4,447

2,289 "2^592

2,493
50

1,923

2,693 1,459
200

54,988 77,410

49,090

83,30144,986

6
1

54,095 72,043

PUBLIC ENTERPRISE FUNDS

The public enterprise funds are a subgroup of Federal funds, and data
thereon are included on a net basis in tables B-2 through B-4. The
public enterprise funds carry on a cycle of business-type operations,
primarily with the public, on behalf of the Government. Some are
incorporated enterprises; others are unincorporated. The general fund
usually supplies them with capital, although in a few cases they may
borrow from the public.
Receipts and outlays,—Receipts of public enterprise funds are estimated at $23,988 million in 1970, and gross outlays are planned to total
$30,145 million (table B-5), resulting in net outlays of $6,157 million.
The Commodity Credit Corporation and the postal fund are the
largest enterprises, together accounting for slightly over haK of the
business of this subgroup of funds.




23

SPECIAL ANALYSES
Table B-5. PUBLIC ENTERPRISE FUND TRANSACTIONS
(in millions of dollars)
Applicable receipts
Description

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

.

-_

Receipts from the public
Receipts from other accounts

1968
actual

Gross outlayi

1969
estimate

1970
estimate

104
191

114
247

138
299

1.000
243

1.090
430

1.003
396

4.395
1,730

4.370
2,247

5,011
3,355

7.705
1,838

8.349
2,063

8.077
3.085

40
238

48
217

49
218

55
199

49
191

50
189

16
162
24

13
166
24

14
172
29

10
148
98

43
163
124

34
176
123

122
339
175

118
403
215

145
646
252

411
777
465

405
1,133
541

371
1.551
702

231
930
362

255
948
1,162

558
996
379

580
816
1,131

358
903
1,454

169
922
958

51
268

55
316

58
345

117
265

117
312

110
341

1968
actual

1969
estimate

1970
estimate

5,714
22
1
*
659

6,460
24
2
1
717

7.178
24
2
2
1.117

6,794
25
1
*
822

7,389
182
2
1
963

7,730
201
2
1
969

963
13

1,730
97

1.694
4

1,753
6

1.895
4

1,834
4

405
18
296
414
1

363
21
381
431
*

408
21
395
479

139
24
570
551
1

55
21
437
607

411
709

17,884

21,145

23,988

26,545

29,280

30,145

8

21

(14,209) (18,182) (20.949)
(3.675) (2,963) (3,039)

• L e s s t h a n $500 t h o u s a n d .
1
Includes advances from foreign assistance and special export programs of $1,198 million in
$830 million in 1969, and $1,017 million in 1970.

1968,

TRUST FUNDS

The trust funds are administered in a fiduciary capacity by the
Government. They include one subgroup, trust revolving funds, which,
like the public enterprise funds, carry on a businesslike cycle of operations and are normally stated on a net basis (outlays less receipts).
Receipts and outlays.—Trust fund receipts are estimated at $59
billion in 1970, with outlays planned at $48 billion, as shown in
table B-6. The transactions of the Federal old age and survivors'
insurance fund are far larger than any other trust fund.



24

THE BUDGET FOR FISCAL YEAR 1970

Table B-6. OUTLAYS AND RECEIPTS OF TRUST FUNDS (in millions of dollars)
Receipts

Outlays
Description

1968

1970

1969

1970

1968

1969

24,641

27.138

23,641

27,842

32,385

2,605
6,222
2,959

2.902
6.851
3.097

2,800
5,256
3,788

3,759
7,278
3.772

4,358
7,331
4,092

1,492

1.587

1,476

1.567

1,637

1,767
3,958
1,040
705
357
-528

2.590
4.815
930
747
327
-426

3,449
4,427
961
741
298

3.791
4.530
978
748
306

4,006
5,036
952
759
263

43,640
Subtotal
-459
Interfund transactions
Proprietary receipts from the public. -1,653

45,218
-497
-1.684

50.558
-519
-1,608

46,836
-459
-1,653

54.571
-497
-1,684

60,820
-519
-1,608

41,529

43,037

48,431

44,724

52,390

58,693

Funds to which receipts are appropriated:
Federal old-age and survivors insurance trust fund
21.510
Federal disability insurance trust
fund2,163
Health insurance trust funds
5.332
2.632
Unemployment trust fund
Railroad employees retirement
1.338
funds
Federal employees retirement
2.631
funds
Highway trust fund
4,171
1,015
Advances, foreign military sales. _
457
Veterans life insurance funds
306
Other trust funds (nonrevolving) _
2,085
Trust revolving funds (table B-7) __

Total

Note.—Excludes special trust fund receipts resulting from the conversion of mixed-ownership
enterprises to private corporations in 1969, $10,509 million. Also excludes transfers received by the
Federal National Mortgage Association from Federal fund accounts, net, as follows: 1968, $78 million;
1969, $74 million.

The activities of the trust revolving fund subgroup are shown in
table B-7. Several of these, representing mixed-ownership corporations, were eliminated from the scope of this fund group, when the
enterprises became privately owned during the current fiscal year.
Table B-7. TRUST REVOLVING FUND TRANSACTIONS (in millions of dollars)
Gross outlays

Applicable receipts
Description

1968

1969

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

7,334

Total trust revolving funds. .
Receipts from the public
Receipts from other accounts




1,787.
639

1968

1969

7,707

3,389
111

1970

3,119
979

1,935

311

2,536

1970
•

306
1,229

939

1,217

1,373

878

1,082

295

339

358

36

36

35

83

88

91

70

78

132

11,077

6,127

1,822

13,162

5,599

1,396

(10,557)
(520)

(5,565)
(562)

(1,235)
(586)

25

SPECIAL ANALYSES

Balances of trust funds.—The balances of the trust funds are disclosed in table B-8. The amounts include both open book balances
with Treasury and investments in U.S. securities. Part of the balances
is obligated, part is unobligated. The balances on an authorization
basis exceed the cash balances because for a few accounts budget
authority is not the same as receipts; these differences are listed in
the note appended to the table.
Table B-8. T R U S T FUND BALANCES (in millions of dollars)
As of June 30
Description
1969
estimate

1967
actual

1968
actual

Federal old-age and survivors insurance trust fundFederal 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

23,417
1,950
1,814
10,512
4,363
17,808
725
762
6,827
4,809

25,548
2,587
4,209
11,618
4,551
18,625
982
709
7,111
2,698

28,749
3,741
5,834
12,400
4,655
20,648
1,553
647
7,155
2,290

32,697
4,797
5,991
13,126
4,706
22,065
1,725
669
7,167
4,991

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

72,987

78,638

87,672

97,934

-647

-561

72,340

78,077

87,672

97,934

Total

1970
estimate

Note.—The balances shown here cover the amounts on deposit with Treasury, and the U.S. securities held. In addition, certain funds have authority to obligate in adv ance of receiving moneys, and
to borrow from the public. The reconciliation is as follows:
1970
1967
1969
1968
99,582 110,908
89,497
96,447
Balance available on an authorization basis
Unfinanced trust fundHighway contract authorizations:
—9,267 - 9 , 9 4 5 - 1 1 , 2 6 5 - 1 2 , 6 3 2
-150
-100
Right-of-way revolving fund-2,019
-1,817
Advances, foreign military sales
—2,376 —2,187
Other
Undrawn authorizations to borrow:
Federal National Mortgage Association
Banks for Cooperatives
Federal Intermediate Credit Banks
Unappropriated receipts:
Available as needed, on an indefinite basis
Available for appropriation by Congress:
Soldiers' Home permanent fund
Highway trust fund
Agency debt issuances of trust funds held by other
trust funds

Balance available on a cash basis

-11

-22

—4,252
—1,076
-380

—2,862
—973
-2,970

24

64

17

17

107
721

108
978

109
1,353

110
1,498

87,672

97,934

—647

-561

72,340

78,077

FLOW OF GOVERNMENT-ADMINISTERED FUNDS

Although the main budget figures offset certain receipts in arriving
at the outlays, it is possible to reconstruct the data to reflect the gross
receipts and outlays, without offsets. Table B-9 presents such a
statement. It differs from the unified, comprehensive budget only
with respect to grossing and netting, and the distribution here of the
nonfunctional adjustments to outlays shown in other tables. Its
deficits are the same as the unified, comprehensive budget deficits.



26

THE BUDGET FOR FISCAL YEAR 1970

The items which are grossed here, but treated as offsets elsewhere,
are as follows (in millions of dollars):
1969
estimate

1968
actual

Receipts regularly offset in individual accounts:
Receipts of public enterprise funds (table B-5)
Receipts of trust revolving funds (table B-7)
Reimbursements to other appropriations and funds:
Department of Defense
__
Other agencies
Receipts offset for the budget by agency and function (table 12)
Total

Table B-9.

1970
cstimate

14,209 18,182 20,949
10,557 5,565 1,235
2,118
1,304
4,674

2,257
1,351
4,590

2,308
702
4,810

32,860 31,944 30,008

GROSS

FLOW OF GOVERNMENT-ADMINISTERED
(in millions of dollars)
Description

1968
actual

1969
estimate

FUNDS

1970
estimate

RECEIPTS BY SOURCE
Individual income taxes
_
_
Corporation income taxes
Social insurance taxes and contributions:
Employment taxes and contributions
Unemployment insurance
Contributions for other insurance and retirement. _.
Excise taxes
Estate and gift taxes
_
_
Customs duties
_
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

68,726
28,665

84,500
38,100

90,400
37,900

29,224
3,346
2,051
14,079
3,051
2,038

34,842
3,300
2,366
14,800
3,200
2,300

39,863
3,575
2,431
15,700
3,400
2,300

5,470
14,209
1,703
10,557
3,422

5,531
18,182
1,743
5,565
3,608

6,259
20,949
1,668
1,235
3,010

186,535

218,036

228,694

84,160
8,416
4,726
17,207
3,872
14,244
6,418
7,308
44,665
8,294
9,487
2,928

84,896
8,835
4,264
12,533
4,055
15,036
5,650
7,367
50,371
8,951
10,316
3,273

85,634
9,064
3,961
9,191
4,211

PAYMENTS BY FUNCTION
National defense
_
_
International affairs and finance
Space research and technology
Agriculture and agricultural resources..
Natural resources
Commerce and transportation
Community development and housing.
Education and manpower.
Health and welfare
Veterans benefits and services
Interest
General government
Allowances for:
Civilian and military pay increase. __
Contingencies
Total payments to the public
Excess of receipts or payments (—)_

16,713
5,765
8,088
56,014
9,375
10,509
3,607

10
0

2,800
350

211,722

215,645

225,280

-25,187

2,391

3,414

Note.—Excludes special receipts in 1969 resulting from the conversion of mixed-ownership enterprises to private corporations.




SPECIAL ANALYSIS C
AGENCY BORROWING AND INVESTMENTS

This analysis presents information on the debt of Government
agencies, other than to the Treasury for Government capital, and on
the investments of Government agencies in U.S. securities.
AGENCY BORROWING

Some Government agencies have been authorized by various laws to
issue their own debt instruments, to the public or to other agencies
and funds. Such agency borrowing, along with borrowing by the
Treasury, constitutes the Federal debt as the term is used in the summary tables of the budget. Since the disbursement of such borrowed
money is a part of budget outlays, the authorizations to borrow constitute budget authority. The repayment of agency borrowing, like the
Treasury's repayment of the public debt, is not counted as a budget
outlay.
The net borrowing through agency debt issuances (other than to the
Treasury) is set forth in table C-l. The issuances shown there include
debentures, revenue bonds, participation certificates, and housing
mortgages issued or assumed—all of which are debt instruments.
Some agency debt is formally guaranteed by the Treasury; some is
not.
The 1969 column reflects the special reductions in agency debt outstanding that resulted from the conversion of three types of mixedownership enterprises to wholly-private ownership. In September 1968,
responsibility for $6,036 million of borrowing by the Federal National
Mortgage Association, heretofore included in the "Federal debt," was
assumed by the private owners of the Association, and therefore is
included in this table as a reduction of Federal debt (i.e., conversion
to private debt). In December 1968, decreases of $3,581 million of
borrowing by the Federal Intermediate Credit Banks and $L,444
million of borrowing by the Banks for Cooperatives were similarly
accomplished, so far as the "Federal debt" is concerned, through
conversion of the banks to private ownership.
For 1970, agency debt repayments will exceed their borrowing.
The principal scheduled borrowing will be the issuance of $250 million
of debt by the Tennessee Valley Authority.
INVESTMENTS IN U.S. SECURITIES

Trust funds, and some public enterprise funds, accumulate cash in
excess of current requirements, but the sums are needed for possible
future claims and demands. Such temporary excesses of cash are
usually invested in public debt or agency debt securities, and such
investments are "cashed" as the money is later needed for disbursement. Table C-2 shows the amounts thus invested and disinvested.



28

THE BUDGET FOR FISCAL YEAR 1970
Table C-1. AGENCY DEBT (in millions of dollars)
Increase or decrease ( —)
Description
1968
actual

1969

1970
estimate

Outstanding
nd 1970
estimate

Borrowing from the public:

By public enterprise funds:
Agriculture: Farmers Home Administration l
Defense: Homeowners Assistance Fund
Health, Education, and Welfare:
Office of Education *
Public Health Service !
Housing and Urban Development:
Federal Housing Administration 2
Public facility loans l
__.
College housing loans l
Housing for the elderly *
_
__.
Government National Mortgage Association V
Treasury: Federal Farm Mortgage Corporation 2.
Veterans Administration *
Export-Import Bank 3
Federal Home Loan Bank Board:
Home Owners Loan Corporation 2
Board revolving fund
Small Business Administration 1
_
Tennessee Valley Authority
By trust funds:
Federal National Mortgage Association *
Banks for cooperatives *
Federal intermediate credit banks 4
By general fund appropriation:
Defense: Family housing
_
Transportation: Coast Guard housing
Total borrowing from the public.

332

-58
16

-217
6

485
23

53
9

-5

5

-1

1

117
8

58
51

66
-13
444

635
38

56
5
30
2

594

105
1,540

35
-72
*
107
558

-111
*
-84
-224

1,271
*
1.428
2.904

325
110

-216
210

229
250

528
985

1,729
105
605

-5,308
-1,175
-3,723

-71

-82

-79

1,520
3

4,955

-9,218

-590

11,592

193

89

-51

403

32
6

17
1

-10
-1

76
7

-2
29
365
22

-3
11
130
5
107
73
46

-4
-7
-75
-3
-61
-42
-26

69
51
589
24
482

225
*

337
407
5

75

6

Borrowing from other funds:

By public enterprise funds:
Agriculture: Farmers Home Administration L..
Health, Education, and Welfare:
Office of Education *_
Public Health Service 1
Housing and Urban Development:
Federal Housing Administration 2_
__
, Public facility loans *
College housing loans *
Housing for the elderly *
Government National Mortgage Association *
Veterans Administration *__
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 other funds.
Total agency debt issuances

190
193
35
-2

331
207

79
53

-189

-579
—54
-55

-14

-14

-14

243

991

-226

-293

2,483

5,945

-9,445

-883

14,073

*Less than $500 thousand.
Certificates of participation in loans.
Guaranteed by the Treasury except for a small part of the HOLC debt.
Includes certificates of participation in loans as follows: 1968, $19 million; 1969, —$337 million;
1970. - $ 4 7 4 million; outstanding at end of 1970. $1,372 million.
transactions for 1969 include transfer of debt from mixed-ownership enterprise to privately
owned corporation.
1
2
3




29

SPECIAL ANALYSES
Table C-2. AGENCY INVESTMENTS IN U S. SECURITIES (in millions <>f
Increase or decrease ( - ) in
Description

dollars)

Holdings
end 1970
estimate

1969
estimate

1970
estimate

4

3

7

18

137
-10
422

156
-3
346
50
*

169

1,012

-98
3
3

757
53
3

172
59

311
62

400
58

2,611
422

1.381
516

3.346
1.209

5.367
1.193

31,457
4.608

159
939
801
224
2.181
575
-63
305
-57
-137
1
-747

57
423
823
122
1,505
171
87
323

498
2.621
12.686
4,442
22,227
1.725
6,756
4,469

2

49

_.

-197
67
1.023
-35
669
257
174
258
11
28
19
-542

_

4.329

9.661

10,615

96,413

-6
-2
41
93

-6
-3
-107
-4

-6
-4
-8

70
76
166
89

113
20
203
75
123
203
170

108
-42
134
-30
-172
4
-72
1

-75

405
70
640
65
230
510
160
1
2

1968
actual

Investment in public debt (issued by Treasury):

By public enterprise funds:
Commerce: Maritime Administration
Housing and Urban Development:
Federal Housing Administration
Public Housing Administration
Government National Mortgage Association __
Federal Insurance Administration _
Metropolitan Development
Export-Import Bank
Federal Savings and Loan Insurance Corporation
. . . ._
_
Veterans Administration .
By trust funds:
Federal old-age and survivars 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
1
Banks for cooperatives
Federal intermediate credit banks 1
All other
By the Exchange Stabilization Fund
Total investments in public debt

-82

Investment in agency debt:

By public enterprise funds:
Agriculture: Commodity Credit Corporation
Federal Housing Administration
Government National Mortgage Association
Federal Savings and Loan Insurance Corporation.
By trust funds:
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
Bureau of Indian Affairs
ComDtroller of the Currencv
Banks for cooDeratives
Federal intermediate credit banks
By the Exchange Stabilization Fund
_
Total investments in agency debt
Total agency investments in U.S. securities

-50
-100
-50

2
-3
9
-50

-11
-25

991

-226

-293

2,483

5,320

9,436

10,323

98,896

*Less t h a n $500 t h o u s a n d .
i Transactions for 1969 include transfer of i n v e s t m e n t s from mixed-ownership e r t c r r r i s e to priv a t e l y owned corporation.




30

THE BUDGET FOR FISCAL YEAR 1970

The conversion of mixed-ownership enterprises in 1969, mentioned
above, also reduced by relatively small amounts the investments of
Government agencies in Federal debt, since the investments in securities of such enterprises become loans to prrvt _:, enterprises at the
moment of conversion. These amounts were $105 million in the case
of the Federal Intermediate Credit Banks, and $46 million in the case
of the Banks for Cooperatives.
For 1970, as in many recent years, the largest net investments are
expected to be those of the trust funds established by the Social
Security Act as amended.




SPECIAL ANALYSIS D
INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS

Apart from the distinction between loan account and expenditure
account outlays, the United States budget includes outlays for
"capital" or investment-type activities on the same basis as "current"
activities and costs. Nevertheless, for a complete understanding of
budget programs and levels, it is useful to differentiate between those
outlays which yield benefits over a period of years and those which
provide benefits largely in the year in which they are made. Special
Analysis D presents the budget data in a manner that makes this
distinction.
In dividing budget outlays according to their character, two basic
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 civil programs; this separation
highlights the basic difference in nature between most military and
civil programs.
Federal funds and trust funds are combined in tables D-l and D-2,
in accordance with the budget concepts adopted in the 1969 budget and
continued in the 1970 budget. This approach inflates certain of the
figures because payments between Government funds and accounts
do not affect the flow of funds to the public; therefore, deductions are
made in the appropriate categories to remove interfund and intragovernmental transactions in order to derive total outlays. A deduction is also required, under the unified budget concept, for receipts
from the public which are business-type or market-oriented in character, and which are applied against outlays. This deduction is made
as a lump-sum adjustment.
Summary.—Excluding outlays for national defense, $30.0 billion
of estimated outlays in 1970 are for investment-type activities. These
programs which directly or indirectly promote future gains in productivity and economic growth account for more than 25% of all nondefense budget outlays.
Additions to Federal civil assets are estimated at $5.1 billion in 1970,
including $1.8 billion in loans and financial investments for housing,
rural electrification, and foreign economic assistance and $3.3 billion
for physical assets of which $2.6 billion is for civil public works.



31

32

THE BUDGET FOR FISCAL YEAR 19 70

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

1964
actual

1968
actual

1969

1970

Additions to Federal assets:

Additions to State, local, and private assets. _
Developmental outlays:

Education, training, and health
Research and development
Other developmental outlays
Total

1.5

8.5

2.9

1.8

2.7
-0.4
0.3
5.1

2.5
-0.9
0.4
6.4

2.4
0.4
0.5
6.7

2.6
0.2
0.5
7.8

1.6
5.1
0.1

8.1
6.7
0.2

9.1
6.4
0.2

10.4
6.4
0.2

16.2

Loans and other financial investments
Physical assets:
Public works
Major commodity inventories
Major equipment and other physical assets

31.9

28.6

30.0

Another $7.8 billion of budget outlays in 1970 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 $17.1
billion in 1970, more than double the level of $6.8 billion in 1964.
Thus, the 1970 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 programs for education, training, and health will be
$10.4 billion in 1970. Another $6.4 billion will be for scientific research
and development, 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 finance rural electric and telephone systems, and to promote economic development aboard. Federal financial assets include
both loans and other financial investments which are classified 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 outlays for public works,
such as dam construction, flood control projects, and Federal power



33

SPECIAL ANALYSES

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 E H . SUMMARY OF INVESTMENT, OPERATING, AND OTHER
BUDGET OUTLAYS (in milllions of dollars)
Outlays
1968
actual

1969
estimate

1970
estimate

INVESTMENT-TYPE OUTLAYS
Additions to Federal assets:
Civil:
Loans and other financial investments
Physical assets:
Public works
Major commodity inventories
Major equipment and other physical assets. _
National defense
Additions to State, local, and private assets:
Civil
National defense
Developmental outlays:
Civil
National defense
Subtotal, investment-type outlays:
Civil
National defense

8,493

2,854

1,804

2,460
-915
380
25,628

2,408
405
548
27,045

2,555
239
543
26,083

6,439

6,683
14

7,768
15

15,004
9,457

15,664
9,366

17,070
9,592

31,861
35,096

28,561
36,425

29,979
35,689

22,082
1,641
33,433

23,732
1,599
38,074

26,226
1,431
41,753

14,703
-646
-2,674

16,137
-716
-3,000

4,453
45,015

4,791
44,222

16,948
-694
-3,558
5,096
45,719

71,351
46,656

79,018
45,822

85,771
47,150

30

30

29

-1,896
-4,234

100
-2,105
-4,150

2,800
350
-2,187
-4,310

178,862

183,701

195,272

CURRENT OUTLAYS
Current expenses for aids and special services:
Civil
National defense
Retirement and social insurance benefits—civil
Other services and current operating expenses:
Civil:
Interest
Interest on Government capital in enterprises (—)_
Interest received by trust funds (—)
Other
National defense
Subtotal, current outlays:
Civil
National defense

UNCLASSIFIED ITEMS
Payments to other funds
Allowances:
Civilian and military pay increases
Contingencies.
Government contributions for employee retirement (—)_
Proprietary receipts from the public (—) J
Total budget outlays.
1

Excludes loan repayments deposited in miscellaneous receipts and offset in the loan and expenditure accounts as follows:
1968

Loan repayments offset in the loan account
Repayments offset in the expenditure account



—275
—162

1969

1970

—259 —262
—181 —237

34

THE BUDGET FOR FISCAL YEAR 1970

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.
Certain other programs which further this end 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 expenses 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
they are not reflected in outlays or cannot be readily measured.



SPECIAL ANALYSES

35

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 third stage of the pay increase
enacted in 1967 for Government personnel and (2) unforeseen contingencies.
Interfund and intragovernmental receipts arise as a result of
transactions between Government agencies or funds. These transactions occur entirely within Government accounts and are deducted
from outlays to avoid double counting. In order to provide a measure
of outlays by character, most interfund and intragovernmental
receipts have been deducted from the appropriate character categories. Thus, for example, interest received by the social security and
other trust funds is deducted from the Interest category in order to
derive a measure of interest outlays affecting the public.
Government agency contributions for employee retirement, which
help to finance retirement benefits are deducted as a lump sum unclassified amount. In addition, proprietary receipts from the public,
arising from market-oriented or business-type activities of the Government, are unclassified and offset against total 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



36

THE BUDGET FOR FISCAL YEAR

1970

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. Agencies record such allowances for transactions only 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.
RecoverabUity 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 businesstype 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)
1968
actual

Description

1969
estimate

1970
estimate

Investment-Type Outlays

ADDITIONS TO FEDERAL ASSETS
Loans:

Loan account—civil:
To domestic and private borrowers:
Department of Agriculture:
Commodity Credit Corporation:
Storage facilities loans
Export credit sales
Rural Electrification Administration
Farmers Home Administration:
Direct loans
Rural housing insurance
Emergency credit revolving fund
Agricultural credit insurance
Other 1
See footnotes at end of table.




44
36
291
_
_ __

58
67
338

8
3
366

-32
63
15
15
-2

—69
-94
-28
-109
-3

-287
-1
-12
-30
1

37

SPECIAL ANALYSES

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

1968
actual

1969
estimate

1970
estimate

Investment-Type Outlays—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Loans—Continued

Loan account—civil—Continued
To domestic and private borrowers—Continued
Department of Commerce:
Economic development assistance: Industrial development loans and guarantees
Maritime Administration
Department of Health, Education, and Welfare:
Office of Education:
Higher education facilities loans and other
Social Security Administration:
Federal old-age and survivors insurance trust fund__.
Federal disability insurance trust fund
Federal hospital insurance trust fund
Utner
Department of Housing and Urban Development:
Renewal and housing assistance:
Rehabilitation loans
_
Housing for the elderly or handicapped
College housing
_
__
Mortgage credit:
Community disposal operations fund
Federal housing administration fund
Government National Mortgage Association:
Special assistance functions
Management and liquidating functions
Participation sales
Secondary market operations trust fund
Department of Labor: Unemployment trust fund
Veterans Administration:
Loan guarantee revolving fund
Veterans direct loans
National service life insurance fund
_
United States Government life insurance fund
Other
Civil Service Commission: Retirement and disability trust
fund
Farm Credit Administration (trust fund):
Banks for cooperatives
Federal intermediate credit banks
Railroad Retirement Board (trust fund)
Small Business Administration:
Business loan and investment fund
Disaster loan fund
Other agencies
.
Total to domestic and private borrowers
To State and local governments:
Department of Agriculture: Farmers Home Administration and other
Department of Commerce: Industrial development loans
and guarantees
Department of Health, Education, and Welfare: Office
of Education:
Higher education facilities loans and other
See footnotes at end of table.




26
-12

28
-9

35
-8

86

63

55

-114
-74
-15
A
J

A

15
81
132

25

71

69
101

44
81

59

*
73

-6
77

496
103

431
-397

572
364
114
1,938
-114

-293

177

205
53
-29
-86
5

225
75
46
-2
5

481

-595

161
406
-64

210
-250
-50

112

-17

-166
78
51
-3
6

64
14

1
30

-45
-1
*

4,812

676

355

83

76

23

26

22

52

18

32

33

38

THE BUDGET FOR FISCAL YEAR 1970

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

1968

1969

1970

Investment-Type Outlays—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Loans—Continued

Loan account—civil—Continued
To State and local governments—Continued
Department of Housing and Urban Development:
Renewal and housing assistance:
Urban renewal fund
Low-rent public housing
College housing
Metropolitan development: Public facility loans and
other _
__
Department of Transportation:
Federal Highway Administration: Right-of-way trust
fund
Urban Mass Transportation Administration
District of Columbia: Capital outlay loans
Other agencies

-39
10
143

82
10
110

-31
5
87

45

47

28

21
16

3
32
8

50
4
56
7

323

423

315

907

291

247

6,042

1,390

917

-10

-3

6,032

1,386

916

863

-106

-807
1

29
18
119
*

22
19
142
4

27
4
121
13

1,028

81

-641

9

19

8

1,005

1,087

993

280

452

420

Total to foreign borrowers

1,285

1,540

1,413

Total loan repayments deposited in miscellaneous
receipt accounts _

-162

-181

-197

Total expenditure account—civil

2,160

1,459

582

Total to State and local governments
To foreign borrowers: Export-Import Bank
Total, loan account—civil
Loan account—national defense: To domestic and private
borrowers: Other agencies
Total loan account
Expenditure account—civil:
To domestic and private borrowers:
Department of Agriculture:
Commodity Credit Corporation: Price support loans. _ _
Farmers Home Administration
Department of Health, Education, and Welfare:
National Institutes of Health:
Health manpower
Other
Office of Education: Higher education facilities loans...
Other agencies
_
Total to domestic and private borrowers
To State and local governments: Other agencies
To foreign borrowers:
Funds appropriated to the President: Economic assistanceDepartment of Agriculture: Commodity Credit Corporation: Public Law 480 credit sales

See footnotes at end of table.




__

-1

39

SPECIAL ANALYSES

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

1969

1968

1970

Investment-Type Outlays—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Loans—Continued

Expenditure account—national defense:
To domestic and private borrowers: Other agencies
To foreign borrowers: Funds appropriated to the President:
Military assistance
_

-1

-1

-24

-10

Total loan repayments deposited in miscellaneous receipt accounts

_*

91
-40

-26

-11

50

Total expenditure account

2,135

1,448

633

Total loans

6,167

2,834

1,549

61
130
10

80
50
10

110
90
16

Total expenditure account—national defense

Other financial investments—civil:

Investments in quasi-public institutions, trust funds, and international institutions:
Funds appropriated to the President:
Inter-American Development Bank
International Development Association.__
Asian Development Bank
_Department of Housing and Urban Development: Secondary
market operations (trust fund)
__
Department of Labor
Department of Transportation: Civil supersonic aircraft
development
_ _ _
Farm Credit Administration:
Short-term credit investment fund
_ Banks for cooperatives investment fund
Total investments in quasi-public institutions, trust
funds and interntional institutions

-164
-3
100
*
-7

-4
126

-4
93

-65
-28

291

5

305

25
93

21
99

18
100

19

18

13

904
51
23
16

756
44
21
23

795
46
18
22

12
28

25
37

23
58

Public works—sites and direct construction:

Civil:
Department of Agriculture:
Forest Service:
Recreation and research facilities
Roads and trails
Other1
Department of Defense—Civil:
Corps of Engineers:
Construction, general
Flood control, Mississippi River and tributaries
Construction, local funds (trust fund)
Other1
Department of Health, Education, and Welfare:
Indian health facilities _ _ _ _
Other1
_.__
See footnotes at end of table.




40

THE BUDGET FOR FISCAL YEAR 1970

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

1968

1969

1970

Investment-Type Outlays—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Public works—sites and direct construction—Continued

Civil—Continued
Department of the Interior:
Bureau of Indian Affairs:
Construction: Schools and other
Road construction
National Park Service:
Parkway and road construction
Other1
. Bureau of Reclamation:
Construction and rehabilitation
Upper Colorado River storage project

31
15

33
22

40
20

25
14

29
13

26
17

170
37
4
144
30
47

166
35

176
27
9

107
31
55

103
40

26
60
*
179
126
49
232
96

60
135
2
172
70
56
279
89

58
144
*
180
60
85
322
69

2,460

2,408

2,555

1,280
61
4

1,501
155
3

1,361
135
I

167

206

294

Total public works, national defense

1,513

1,866

1,792

Total public works, sites and direct construction

3,972

4,274

4,347

-945
30

379
26

217
23

-915

405

239

National defense:
Funds appropriated to the President: Expansion of defense
production
Other agencies

53
28

184
28

70
27

Total major commodity inventories, national defense

81

212

97

-834

618'

336

_

OtV»«r 1

Bonneville Power Administration1
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:
Military construction
Family housing
Other
Atomic Energy Commission

_.

Major commodity inventories:
Civil:
Department of Agriculture: Commodity Credit Corporation. _
Department of the Interior: Helium fund
Total major commodity inventories, civil

Total major commodity inventories
See footnotes at end of table.




85

41

SPECIAL ANALYSES

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

1968

1969

1970

Investment-Type Outlays—Continued
ADDITIONS TO FEDERAL ASSETS—Continued
Major equipment:

Civil:
Department of Commerce:
Environmental science services administration: Satellite
operations and other
Other
Post Office Department
Department of Transportation: Coast Guard
Other agencies

29
6
118
89
15

25
5
146
65
18

31
3
156
50
16

257

259

256

23,274
161

24,311
170

23,435
188

Total major equipment, national defense

23,435

24,481

23,624

Total major equipment

23,693

24,740

23,879

50

54

52

14

114

115

46
23

13

107
24
17

115
25
10

-23
2
-3

-25
2
-3

-25
2
-7

123

289

287

National defense:
Department of Defense—Military: Family housing
Atomic Energy Commission

*
634

31
470

21
500

Total other physical assets, national defense

634

501

521

Total other physical assets—acquisition and improvement..

757

790

808

36,046

33,260

31,224

Total major equipment, civil
National defense:
Department of Defense—Military: Procurement.
Atomic Energy Commission

Other physical assets—acquisition and improvement:

Civil:
Department of Agriculture: Reforestation and range improvements and other
Department of Housing and Urban Development: Mortgage
credit and other
Department of the Interior:
Land and water conservation
Management of lands and resources
Other1
General Services Administration:
Sale of fixed assets—surplus property credit sales
Real property activities
_
_
Other agencies *
Total other physical assets, civil

Total additions to Federal assets
See footnotes at end of table.




42

THE BUDGET FOR FISCAL YEAR

1970

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

1968
actual

1969
estimate

1970
estimate

Investment-Type Outlays—Continued
ADDITIONS TQ STATE, LOCAL, AND PRIVATE
ASSETS

State and local assets:
Civil:
Funds appropriated to the President:
Appalachian regional development
Public works acceleration
Department of Agriculture:
Watershed improvement and flood protection
Rural water and waste disposal grants
Other
Department of Commerce: Economic development facilities
and other
Department of Defense—Civil: Corps of Engineers
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration:
Mental health
Hospital construction
Other
National Institutes of Health: Construction of health
educational, research, and library facilities
Office of Education:
School assistance in federally affected areas
Higher education facilities grants
Other
Social and Rehabilitation Service
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 transportation
Other
Department of the Interior:
Construction grants for waste treatment works
Land and water conservation
Administration of territories and other
Department of Transportation:
Federal Aviation Administration: Airways and airports._.
Federal Highway Administration:
Highway trust fund
Forest highwaysl
State and community highway safety programsx
Other 1
Urban Mass Transportation Administration
Intergovernmental agencies: Federal contribution, Washington Metropolitan Area Transit
Other agencies
Total State and local assets, civil.

91
5

195
7

237

54

29
3

72
34
3

61
38
1

102
15

138
25

155
13

20
112

33
100
*

126
1

68

85

111

29

See foo

end of table.




39

178
32
*

219

32

241
27

36

55

29

21

33
44
59

100

60
130

118
51
10

147
71
35

152
107
31

75

87

240

4,100
30
4
7

3,870
29
55

4,485
• 29
95

2
14

16
6

59
4

5,348

5,572

6,676

13

14

5,584

6,691

National defense: Department of Defense—Military.
Total State and local assets

25

49

5,359

15
127

16
128

43

SPECIAL ANALYSES

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

1968
actual

1969
estimate

1970
estimate

Investment-Type Outlays—Continued
ADDITIONS TO STATE, LOCAL, AND PRIVATE
ASSETS—Continued
Private assets:
Civil:
Funds appropriated to the President: Appalachian regional
development programs
Department of Agriculture:
Soil conservation
Agricultural stabilization and conservation

14

19

32

159
433
9
103

165
403

171
326
14

12

52

136
16
39

122
27
47

147
40
64

115

105

126

4

10

57
12

53
16

19
48
18

1,091

1,111

1,092

*

1

*

Total private assets

1,092

1,112

1,092

Total additions to State, local, and private assets

6,451

6,696

7,783

*
1,400
90

10
1,438
97

9
1,514
101

19

n

11
12

35
9

82

102

114

42
63
24
41

37
146
51
38

13
182
93

Department of Commerce: Ship construction
Department of Defense—Civil: Corps of Engineers: Columbia River flood control
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration:
Hospital construction
Mental health and other
_
National Institutes of Health __ _
Office of Education: Higher education facilities grants and
other
___
Other
National Science Foundation _ _
Other agencies
_
Total private assets, civil
National defense:
Atomic Energy Commission (trust fund)

87

87

OTHER DEVELOPMENTAL EXPENDITURES
Education, training, and health:
Civil:
Funds appropriated to the President:
Appalachian regional development programs
Economic opportunity program
Department of Agriculture: Extension service
Department of Health, Education, and Welfare:
Consumer protection and environmental health services:
Air pollution and environmental control
Health Services and Mental Health Administration:
Mental health
. __.
Health services research and development
Comprehensive health planning and services
Regional medical programs
Communicable diseases
Indian health services
Chronic diseases
-- Other1
National Institutes of Health:
National Heart Institute
National Institute of Neurological Diseases and Stroke.
National Institute of General Medical Sciences
Health manpower
Other
Seefo
nd of table.



82
44
25

89
31
17

24
119
64
31
86

26
106
47
71
97

23
96
5
14
25
111
65
116

113

44

THE BUDGET FOR FISCAL YEAR 1970

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

1968
actual

1969
estimate

1970
estimate

Investment-Type Outlays—Continued
OTHER DEVELOPMENTAL EXPENDITURES—Continued
Education, training, and health—Continued

Civil—Continued
Department of Health, Education, and Welfare—Continued
Office of Education:
Elementary and secondary education
School assistance in federally affected areas
Education professions development
Higher education student aid and other
Vocational education
Libraries and community services
Education for the handicapped
Salaries and expenses..__^
Defense educational activities
Other
Social and Rehabilitation Service:
Medical and public assistance
Social services and administration
Crants for rehabilitation services and facilities
Rehabilitation research and training
Other
Other*
Department of Housing and Urban Development:
College housing fund: Interest subsidies and other.
Other
Department of the Interior:
Bureau of Indian Affairs: Education and welfare
Federal Water Pollution Control Administration
Department of Labor: Manpower Administration:
Manpower development and training
Other
National Science Foundation
Other agencies1
Total education, training, and health, civil
National Defense: Atomic Energy Commission and other
Total education, training, and health

1,417
471
338
249
HI
33
38
197
35

1,826

1,362
371
35
486
236
99

51
41
43
68

1,446
401
162
485
255

136
60
42
53
89

280
29
33
36

2,385
31
367
31
42
47

2,971
35
487
32
56
69

13
_*

76
3

58
6

109
13

117
12

146
13

357
37

134
62

432
41
144
77

510
41
152
85

8,067

9,038

10,425

17

19

19

8,084

9,056

10,444

40
11

42
12

40
15

151
56
35
24

147
59
41
19

153
62
43
18

24
23
21

24
26
21

28
29
22

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 i
Department of Commerce:
Environmental Science Services Administration.
National Bureau of Standards
Other
See footnotes at end of table.




45

SPECIAL ANALYSES

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

1969
estimate

1968
actual

1970
estimate

Investment-Type Outlays—Continued
OTHER DEVELOPMENTAL EXPENDITURES—Continued
Research and development—Continued

Civil—Continued
Department of Health. Education, and Welfare:
Consumer Protection and Environmental Health Services:
Air pollution control
_
Environmental control _
Other
. .
_
._
Health Services and Mental Health Administration:
Mental health
Health services research and development
Other
National Institutes of Health
Office of Education: Research and training and other
Social and Rehabilitation Service:
Rehabilitation research and training
Other
Social Security Administration
Department of the Interior:
Geological Survey
Bureau of Mines: Development of mineral resources and
other 1
Bureau of Commercial Fisheries
Office of Saline Water: Saline water conversion
Federal Water Pollution Control Administration
Other 1 . . .
Post Office Department..
Department of Transportation:
Coast Guard
Federal Aviation Administration
Federal Highway Administration
Federal Railroad Administration. _ _ __
Urban Mass Transportation Administration
Uther
National Aeronautics and Space Administration
_
Veterans Administration
National Science Foundation ^
Other agencies1
_

20
15
26

Total research and develoDment
See footnotes at end of table.




89

94

8
41
784
82

17
44
705
72

42
43

788

25
14
5

28
17
8

29
18
8

35

36

40

33

35

93

28

31

34
33

25
17
38

23
30
43

29
33
42

14

16

26

13
48

19
50

31
12

43
26
19

27
51
55
24
42

•2

o

4,176
48

3.890
59

248
57

271
69

293
94

6,732

6,389

6,403

295
9
7,747
20
1,369

332
26
7,545
8
1,436

332
7,805
8
1,429

9,440

9,347

9,573

16,171

15,736

15,977

4,590
45

Total research and development, civil

Total research and development, national defense. _

41
27
20

89

Ail..

National defense:
Department of Defense—Military:
Military personnel _
Procurement
_
_
_
Research, development, test, and evaluation
Other
_
Atomic Energy Commission..
_

33
19
25

1

46

THE BUDGET FOR FISCAL YEAR 1970

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

1969
estimate

1968
actual

1970
estimate

Investment-Type Outlays—Continued

OTHER DEVELOPMENTAL EXPENDITURES—Continued
Engineering and natural resources surveys—civil:
Department of Agriculture
_
_
_ _
Department of Defense—Civil: Corps of Engineers__
Department of Housing and Urban Development: Metropolitan development
Department of the Interior:
Geological Survey
Federal Water Pollution Control Administration
Other 1
Other agencies1
_ _ ^ _
.
Interfund and intragovernmental transactions (—)

28
24

27

28

40

46

48

50

50

21
34

22
44

22
38

33

27
-1

237

241

25,030

26,662

66,957

64,986

65,668

175
52
25

_

30
-1

24,460

Total developmental outlays

23
-1
205

Total engineering and natural resources surveys

Total investment-type outlays..

25
28

292
54
27

383
55
31

Current Outlays
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES
Agriculture—civil:

Department of Agriculture:
Consumer and Marketing Service:
Removal of surplus agricultural commodities
Other 1
Foreign Agricultural Service
Agricultural Stabilization and Conservation Service:
C

K M .

ougar 1
Other Act
Commodity Credit Corporation:
Price support and related programs
_
National Wool Act
Bartered materials for supplemental stockpile
Other
Federal Crop Insurance Corporation
Farmers Home Administration1
Other 1
Farm Credit Administration 1
__
Other agencies
- Interfund and intragovernmental transactions (—)
Total agriculture

-

-- -

_

Business:
Civil:
Department of Commerce:
Bureau of the Census
Patent Office
- - -- --Maritime Administration:
ShiD oDeratins subsidies
Other
Other 1
T
Department of Defense—Civil:
Corps of Engineers—Civil: Operation and maintenance... _
The Panama Canal
See footnotes at end of table.



96

84

96

140

145

149

3,201
72
26
*
26
29

3,304
65
2
1
12
105

3,679
59

54
-45
11
-5

59
-23
10
-6

3,845

4,142

4,666

20
38

25
43

21
46

200
8

196
6

57

59

234
8
71

126
-28

154
-24

164
-19

*
12
128
61

12

47

SPECIAL ANALYSES

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

1969

1968

1970

Current Outlays—Continued
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
Business—Continued

Civil—Continued
Post Office Department
Department of Transportation:
Coast Guard: Navigation aids and other 1
Federal Aviation Administration: Operations and other. _ _
Other 1
.
Civil Aeronautics Board: Payments to air carriers
Small Business Administration:
Business loan and investment fund _
Other
___
_._
___
Other agencies.
Interfund and intragovernmental transactions (—)
Total business, civil
National defense: Funds appropriated to the President
Total business

310

79

-378

354

360

376

564
20
55

643
8
48

702
9
41

78

56

51

28

24

23

7
-13

17
-15

27
-19

1,825

1,677

1,357

1

1

*

1,826

1,678

1,357

67

95

632

695

Labor—civil:

Department of Health, Education, and Welfare: Work incentive
activities
_
_
Department of Labor:
Manpower Administration:
Unemployment trust fund
__
_.
Utner
Other
Other agencies
Total labor
Homeowners and tenants—civil:

Funds appropriated to the President
Department of Housing and Urban Development:
Renewal and housing assistance:
Low-rent public housing
_.
Other ___.
___
Mortgage credit:
Rent supplement program
_
Homeownership and rental housing assistance
Federal Housing Administration fund
_ _
Secondary market operations (trust fund)
Other _ .
Federal Insurance Administration
Other
Federal Home Loan Bank Board
Interfund and intragovernmental transactions (—)
Total homeowners and tenants
See footnotes at end of table.




596
i

5

A
*f

i

I

22

25

14

18

635

747

842

*

*

*

280
U

325
16

451
14

1
-189
-41
-47

11
3
-238
-29
9

28
62
-268

*

-49
5

21

-269

-323

-384

-12

-59

-266

-328

25

26

24
i

-52

48

THE BUDGET FOR FISCAL YEAR 1970

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

1969
estimate

1968
actual

1970
estimate

Current Outlays—Continued
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
Veterans—civil:
Department of Defense—Civil
Department of Health, Education, and Welfare: Payment for
military service credits
__
Veterans Administration:
Compensation and pensions
Readjustment benefits
Medical care
__
General operating expenses
Veterans reopened insurance fund
Veterans special term insurance fund
National service life insurance trust fund
United States Government life insurance trust fund
Other 1 ..
Other agencies
Interfund and intragovernmental transactions (—)
Total veterans.
International aids:
Civil:
Funds appropriated to the President:
Economic assistance *
Peace Corps 1
—
Department of Agriculture: Commodity Credit Corporation:
Public Law 480 donations of agricultural commodities and
other-..
-Export-Import Bank: Net interest, fees, and other expensesOther agencies *
Total international aids, civilNational defense: Funds appropriated to the President: Military assistanceJ
Total international aids.
Welfare aids—civil:
Funds appropriated to the President: Disaster relief
Department of Agriculture:
Special milk program
Child nutrition programs
Food stamp program
_-_
Department of Health, Education, and Welfare: Social and
Rehabilitation Service:
Maintenance payments and public assistance
Assistance to refugees in the United States
Social services and administration
Maternal and child health and welfare
Development of programs for the aging
Other
See footnotes at end of table




23

24

25

105

210

105

4,605
462

4,823
630
1,458
207

4,917
739

-35
-33

-35
-35

1,361
188
-35
-30

1,525
223

45

13
-128

11
-234

616
83
47
15
-130

7,140

7,767

8,094

921
111

995
106

967
110

-117
33

924

584
-125
42

-107
44

1,871

1,602

1,522

1,640

1,599

1,430

3,511

3,201

2,952

32

30

30

104
217
185

104
246
273

15
367
338

3,492
32

3,319
42
560
226
19
29

3,638
56

500
72
4

1
202
12
20

581
81

508

694

239
28
35

49

SPECIAL ANALYSES

Table D-2. INVESTMENT, OPERATING, AND OTHER BUDGET OUTLAYS
(in millions of dollars)—Continued
Description
Current Outlays—Continued
CURRENT EXPENSES FOR AIDS AND SPECIAL
SERVICES—Continued
Welfare aids—civil—Continued
Department of the Interior: Bureau of Indian Affairs: Education and welfare services...
Total welfare aids
Other aids and special services—civil:
Funds appropriated to the President:
Appalachian regional development programs—
Economic Opportunity program * > _
Department of Commerce:
Bureau of the Census: 19th decennial census and other *
Economic development assistance
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration:
Mental health
Patient care and special health services
Other i
Social and Rehabilitation Service: Work incentive activitiesSocial Security Administration:
Payment to trust funds for health insurance for the aged_
Payment for special benefits for the aged
Federal old-age and survivors insurance trust fund
Federal disability insurance trust fund
_
Federal hospital insurance trust fund
Federal supplementary medical insurance trust fund
Other
Other 1
Department of Housing and Urban Development:
Renewal and housing assistance: Urban renewal fund and
other
__
Model Cities programs
Other
_
Department of the Interior:
Bureau of Indian Affairs:
Resources management _
Indian tribal funds (trust funds)
Other 1
Other
.-Post Office Department
_
Department of Transportation:
Federal Highway Administration:
Landscaping, scenic enhancement, and beautification!
Highway trust fund
Other 1
Other
Other agencies *
. Interfund and intragovernmental transactions (—)
Total other aids and special services—civil
Total current expenses for aids and special services
See footnotes at end of table.

 O—69340-700


1969
estimate

1968
actual

1970
estimate

25

27

41

4,320

4,873

5,481

4
426

4
430

5
425

11
28

20
41

143
42

26
63
22

35
68
26
23

35

1,733
226
458
131
101
180

1,545
364
494
142

36

40

51

492

665

954

6
20

76
30

541
37

47
116
12

52
130
20

104
15

1
591

2
633

2
664

40
42
13

49
60
15

43
73

907
446
110
78
141
*

68
24
68

101
205
*

56

7
64

11
68

17
21
71

-1,040

-2,077

-1,997

'2,711

3,251

4,315

23,723

25,331

27,657

50

THE BUDGET FOR FISCAL YEAR 1970

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

1968
actual

1969

1970

20,737
2,088
3,736
1,390
76
1,387

23,711
2,434
4,367
1,567
96
1,527

26,136
2,724
4,940
1,598
93
1,572

29,414

33,702

37,063

2,054

2,210

2,290

1,954
12

2,158
15
-11

2,385
16
-1

1,966

2,162

2,400

33,433

38,074

41,753

218

209

193

Current Outlays—Continued
RETIREMENT AND SOCIAL INSURANCE BENEFITS
Insurance benefits—civil:

Department of Health, Education, and Welfare:
Federal old-age and survivors insurance trust fund
Federal disability insurance trust fund
Federal hospital insurance trust fund
Federal supplementary medical insurance trust fund
Department of Labor: Unemployment trust fund
Railroad Retirement Board (trust fund)

_.

Total insurance benefits
Unemployment benefits—civil: Department of Labor: Unem-

ployment trust fund
Other retirement and social insurance benefits—civil:

Civil Service Commission: Civil service retirement and disability fund
Other trust funds
Interfund and intragovernmental transactions (—)
Total other retirement and social insurance benefits
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 Management1
_
National Park Service *
Bureau of Reclamation
_
_
Other.—.. —
-; — ---.
General Services Administration: Public buildings
Tennessee Valley Authority
_
Other agencies 1
_

92

95

110

34
71
49
40
309
-128
33

37
77
66
42
322
-137
59

29
81
71
45
339
-132
58

Total repair, maintenance, and operation of physical assets,
civil
_

77
1

78
6

74
9

22,062
160
148
*

21,800
179
134

__.

20,535
154
115
*

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

20,803

22,370

22,113

21,520

23,138

22,907

National defense:
Department of Defense—Military:
Operation and maintenance.__
Family housing
Atomic Energy Commission
General Services Administration

_

Total repair, maintenance, and operation of physical
assets
See footnotes at end of table.




_

51

SPECIAL ANALYSES

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

1968
actual

1969
estimate

1970
estimate

Current Outlays— Continued

OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Contiuued
Regulation and control—civil:
The Judiciary
Department of Agriculture:
Agricultural ReseardtService L . . ^
Consumer and Marketing Service l
Other
Department of Health, Education, and Welfare:
Food and drug control..
Air pollution control..
Other
Department of Justice:
Legal activities and general administration
Federal Bureau of Investigation
_
Immigration and Naturalization Service
Bureau of Prisons *
._.
Law Enforcement Assistance Administration
_
Bureau of Narcotics and Dangerous Drugs.
Department of Labor
_
_
Department of Transportation:
Federal Aviation Administration
_.
Other 1
Treasury Department:
Secret Service
Other i
_
Federal Deposit Insurance Corporation
Interstate Commerce Commission
National Labor Relations Board
Other agencies 1
Total regulation and control.

93

104

116

83
72
4

85
99
5

84
121
6

44
12
3

43
23
2

50
28
2

81
191
82
50
3
30

88
216
90
52
19
17
32

94
218
93
62
165
21
34

41
20

47
23

51
25

18
15
-260
24
32
111
71
5

22
12
-303
25
35
123
82
6

27
14
-322
25
37
132
1,084

207
115
45
2
173
22
564

213
124
40
2
178
14
51
7

214
137
34
2
181
8
56
7

53

60

63

38
85
58
696
34
5
97
6

46
90
57
759
33
6
1,051

45
98
61
806
38
6
1,118

Other operation and administration:

Civil:
International activities:
Department of State:
Administration of foreign affairs 1
International organizations and conferences*
Educational exchange *
Other
United States Information Agency x
Other agencies..
-Total international activities.
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
Total Federal financial activities .
See footnotes at end of table.




52

THE BUDGET FOR FISCAL YEAR 1970

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

1969

1968

1970

Current Outlays—Continued
OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Other operation and administration—Continued
Civil—Continued
Other direct Federal programs:
Legislative branch 1
Executive Office of the President. _ _
Department of Commerce:
Environmental Science Services Administration *
National Bureau of Standards
Department of Defense—Civil
Department of the Interior
Treasury Department: Bureau of Accounts and other J
General Services Administration1
Civil Service Commission:
Salaries and expenses and other *
_ _
Civil service retirement and disability trust fund: Refunds and death benefits
.
Employees'health benefits trust fund
_
Employees' life insurance trust fund
Other agencies *
Interfund and intragovernmental transaction (—)

188
24

Total shared revenues and grants-in-aid
Total other operation and administration, civil
Seefo

nd of table.




107
13
64

40

42

185
-26
-33
9
*

190
-10
-127
11
*

-135
13
*

752

766

713

107

111

116

62
48

58
52

55
56

113

45

7
131

189

-10

11

344

353

45

53

55

71
36
29

77
42
31

80
44
30

32

35

39

66
_

115

8

337

-

114

7

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
Office of Territories
Bureau of Sport Fisheries and Wildlife and other
Treasury Department:
Bureau of Customs 1
Internal Revenue Service
District of Columbia: Federal payment
Other agencies

100
9
60
43
61
142

36

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

219
29

96
10
66
39
59
99

Total other direct Federal programs

218
28

73

75

64
21

96
22

112
24

364

430

459

2,985

3,162

3,219

53

SPECIAL ANALYSES

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

Description

1969
estimate

1970
estimate

Current Outlays—Continued

OTHER SERVICES AND CURRENT OPERATING
EXPENSES—Continued
Other operation and administration—Continued

National defense:
Department of Defense—Military:
Military personnel
Operation and maintenance
Family housing
Civil defense
__
Other 1
Selective Service System
Other agencies *
Interfund and intragovernmental transactions (—)

21,659
32
279
84
2.097
57
9
-7

23,333
44
284
64
-1.945
70
9
-7

23,832
41
290
58
-692
70
13
-7

Total operation and administration, national defense

24,212

21,852

23,606

Total other operation and administration

27,197

25,013

26,825

14,573

16,000

16,800

120
10

126
11

137
11

130

137

148

14,703

16,137

16,948

-646
-2,674

-716
-3,000

-694
-3,558

---

11,383

12,421

12,696

Total, other services and current operating expenses.

60,851

61,434

63.511

118,007

124,840

132,922

30

30

29

-1,896
-4,234

100
-2,105
-4,150

2,800
350
-2,187
-4,310

178.862

183,701

195,272

Interest:

On the public debtOther interest:
On refunds: Treasury Department
__
On uninvested funds: Treasury Department.
Total other interest.
Subtotal interest
Interfund and intragovernmental transactions (—):
Interest on Government capital in enterprises
Interest received by trust funds
_
Total interest

_

Total current outlays
UNCLASSIFIED
Payments to other funds 1
Allowances for:
Civilian and military pay increases
__.
Contingencies..
Government contributions for employee retirement (—).
Proprietary receipts from the public (—) 2
Total budget outlays.

•Less than $500 thousand.
Includes both Federal funds and trust funds.
Excludes loan repayments deposited in miscellaneous receipts and offset in the loan and expenditure accounts as follows:
1968
1969
1970
Loan repayments offset in the loan account
—275
—259
—262
Repayments offset in the expenditure account..
—162
—181
—237
1
2




SPECIAL ANALYSIS E
FEDERAL CREDIT PROGRAMS
INTRODUCTION

Federal credit aids—direct loans and insurance or guarantees of
private loans—continue to 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

Direct Loans—Expenditure Account

1959

I960

1961

Fiscal Years

1962

1963

1964

1965

1966

1967

1968

1969

1970

Estimate

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.
From 1961 through 1968 the overall level of Federal credit assistance
steadily rose at a rate comparable to the rise in the gross national
product. This reflected both broadening of many existing programs
and initiation of new programs to meet emerging needs.



54

SPECIAL ANALYSES

55

Simultaneously, other programs established for temporary reasons
in earlier years have been liquidating their operations as outstanding
loans are repaid or privately refinanced. Moreover, as certain programs demonstrated their ability to finance needed credit operations
on a self-supporting basis, private investors have often refinanced
outstanding Federal loans or directly financed the new credit requirements of borrowers.
During the current fiscal year, the Secondary Market Operations
Trust Fund of the Federal National Mortgage Association, the
Federal intermediate credit banks and the banks for cooperatives
have been converted from mixed-ownership to wholly private enterprises. As a result, only part of their operations in 1969 and none in
1970 are included in the budget. Tables E-l, E-2, and E-3 reflect in
total and detail the impact of this shift from public to private status.
The increasing emphasis on private financing is also causing major
changes in the package of credit assistance made available in recent
years. These changes would be extended still further by proposed legislation. Instead of relying primarily on direct loans with their major
immediate budgetary impact, Federal agencies are encouraging greater
private financing by undertaking to guarantee or insure such private
funds against loss, to pay a large enough share of the interest cost
to enable eligible borrowers to qualify for the loans or to combine
the two approaches. Examples of this approach in existing programs,
include: (a) federally insured loans and interest subsidies for college
students; (b) insured loans and supplementary interest payments to
finance housing for moderate and low income families in both urban
and rural areas; and (c) payment of a portion of the interest on privately financed loans for college housing and academic facilities. Other
current proposals to apply this approach to Federal aid for other
groups are mentioned later in this analysis and in Special Analysis O
on "Federal Aid to State and Local Governments".1
SCOPE OF SPECIAL ANALYSIS

This analysis: (a) summarizes the 1968-70 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 1970 analysis includes 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. 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 direct loan commitments in 1968, 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.
Disbursements, repayments and net outlays for each appropriation
and fund account which finance these programs are listed in a table in
i See pp. 204-205. 214.




56

THE BUDGET FOR FISCAL YEAR 1970

the Appendix.1 In the case of programs in the loan account, net
lending is also separately identified, for each applicable account, in
Part 4 of the budget.
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.
In addition, contrary to the practice followed last year, the analysis
covers both loans made and repayable in dollars and loans made in
dollars but repayable either in dollars or foreign currencies. The analysis continues to exclude all loans which are both made and repayable in
foreign currency. This exclusion facilitates reconciliation with other
budget totals.2
The 1970 analysis covers credit programs administered by 10 departments and 13 other agencies. The estimates for 1969 and 1970
include credit aid authorized by legislation enacted during the past
year. Such legislation, summarized in the last section of this analysis,3
authorized an unusually large number of important changes in Federal
credit programs. Many of the changes either shift Federal lending
institutions to private ownership, as previously mentioned, or substitute federally supported private financing for direct Federal loans.
The analysis also reflects the impact on credit programs of proposed
legislation: (a) establishing new insurance programs for farm operating loans and loans to cooperatives by the Farmers Home Administration, as well as insured loans using interest subsidies on taxable
bonds for water and sewer facilities; and (b) authorizing Federal
guarantees of annual debt service on bonds issued by the Washington
Metropolitan Area Transit Authority to finance the Federal share
of the cost of mass transit in the national capital area. Credit assistance
would also be provided in unspecified amounts under other proposals:
(c) to help local communities finance increased airport capacity;
(d) to authorize loan guarantees and interest subsidies for the fiscal
years 1970-71 to help finance construction of waste treatment works;
(e) to authorize loan guarantees and interest subsidies for the fiscal
years 1971-75 to help finance modernization and construction of
medical facilities; and (f) to establish an urban development bank.
NEW COMMITMENTS

New commitments are the best single measure of the short-run
trends in most Federal credit programs. They also often give the
best advance indication of trends in the financing impact of these
programs, since changes in the level of new commitments frequently
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 exten1 See Appendix, pp. 1097-1100.
2
Data on loans repayable in foreign currency (including both loans made in dollars and loans
made in foreign currency) are contained in table H-8 in Special Analysis H.
3 See
pp. 67-69.



57

SPECIAL ANALYSES

sions, and the unguaranteed portions of loans partially covered by
Federal guarantees.
Table E l . NEW COMMITMENTS FOR FEDERAL CREDIT PROGRAMS
CLASSIFIED BY TYPE OF ASSISTANCE AND ACCOUNT
(in millions of

dollars)

1968 actual
Agency or program
Direct

1969 estimate

Guaranteed

Direct

Direct

insured
loans

insured
loans
EXPENDITURE

Guaranteed

1970 estimate
Guaranteed
insured
loans

ACCOUNT

Funds appropriated to the President:
Military assistance
Economic assistance .
Department of Agriculture: Commodity
Credit Corporation
Department of Health, Education, and
WelfareOther programs
Total, expenditure account

296
111

216

250
1,388

100
200

2,410

2,573

511

2,087

510

235
8

228
13

74
1,084

3,811

190
100

290

3,887

195
28

727

3,948

810

LOAN ACCOUNT

Funds appropriated to the President:
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:
Renewal and Housing Assistance
Metropolitan Development
Federal Housing Administration
Government National Mortgage Association
Federal National Mortgage Association. _
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

27

15

19

195
470
495

257
470
445

236
470
140

803

993

2,403

64

5
127

65

9
120

107

14
143

153

436

12

641

14

794

766
50
637

1,300
13,495

708
40
421

2,112
50
16,752

809
50
218

3,124
100
21,425

500

705

2,500

5
49

1,887
782
15
25

10

17
25

14

523
133
133
2,390

4,213

4,948

2,511

197
136
132
> 2,347

314
12

979
3,119
32
286
50

579
16

282
68

798
99

1,701
2,662
24
23
433
132
112
2,526
1,818
7,407
17
449
10

3,829
1,226

2,597

1,193

Total, loan account

21,362

21,600

12,787

28,504

5,973

38,959

Grand total



25,173

21,891

16,674

29,232

9,920

39,769

58

THE BUDGET FOR FISCAL YEAR 1970

Direct loans.—New commitments for direct loans drop from $25.2
billion in 1968 to $16.7 billion in 1969 and $9.9 billion in 1970. The
bulk of the 2-year drop is accounted for by conversion of the three
major groups of Federal agencies to private ownership, removing
their commitments ($11.9 billion in 1968).
Other major reductions arise from cessation of purchases of nonFederal securities ($1.2 billion), and replacement of GNMA mortgage
purchase programs with private financing ($1 billion).
Guarantees and insurance.—In contrast to the trend for direct loans
new commitments for guarantees and insurance of private loans are
expected to rise rapidly from $21.9 billion in 1968 to $29.2 billion in
1969 and $39.8 billion in 1970. This is primarily attributable to:
(a) the initial impact of the 10-year housing program on housing construction, particularly construction financed by Federally-insured or
guaranteed loans; (b) relaxation of inflexible statutory ceilings on
interest rates; and (c) the government-wide emphasis on shifting from
direct loans to private financing.
The specific agencies responsible for the bulk of the anticipated
increase in guarantee and insurance commitments over the 2-year
period are the Federal Housing Administration ($7.9 billion), the
Government National Mortgage Association ($2.5 billion), Renewal
and Housing Assistance programs ($1.8 billion), the Farmers Home
Administration ($1.6 billion), the Export-Import Bank ($1.4 billion),
and the Veterans Administration ($1.1 billion).
Overlapping commitments.—Total estimated new commitments of
$49.7 billion in 1970 include several cases where two or more types of
Federal assistance are provided for the same borrower or on the same
property or project at different stages in the financing process, for
example, commitments by the Government National Mortgage Association for purchase of mortgages insured or guaranteed by other
Federal agencies. In addition, in several programs the same authority
is used both to make direct loans and to guarantee or insure private
loans, for example, by the Commodity Credit Corporation, the
Farmers Home Administration, and the urban renewal and lowrent public housing programs of the Department of Housing and
Urban Development. In the latter cases, the guarantee commitments
are usually estimated on the basis of past experience.
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 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, can have a major net impact on the
budget, since repayments often fall short of new loans.



SPECIAL ANALYSES

59

$ Billions

Federal Loan Account
20-

15-

10-

Net Lending

-2.5(959

I960

1961 1962 1963 1964 1965 1966 1967 1968 1969 1970

Fiscal Years

Estimate

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
in a few programs when holders of such insured loans exercise their
repurchase options.
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 usually 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 the totals for the credit programs in the expenditure
account are identical with the outlays shown as "loans" in the "additions to Federal assets" category in Special Analysis D.1 For those
loan programs in the expenditure account not financed through
revolving funds, repayments are separately recorded in miscellaneous
receipts, rather than netted against expenditures for each program.
1

See Table D-2 on pp. 36-39.




60

THE BUDGET FOR FISCAL YEAR

1970

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

1970 estimate

1969 estimate

Dis- Repayburse- ments
ments

Disbursements

Repayments

Disbursements

Repayments

44
1,036

68
80

25
1,119

36
162

138
1,030

87
109

2,379

1,236

2,541

2,194

2,051

2,438

174
2
7

1
109
13

204

3,642

1,507

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
Other programs
Total, expenditure account

3,8

159
23

*
120
14

2,450

10

*
46
13

3,401

2,768

LOAN ACCOUNT
Funds appropriated to the President:
Office of Economic Opportunity
27
Department of Agriculture:
Commodity Credit Corporation
195
Rural Electrification Administration
495
Farmers Home Administration
1.570
Department of Commerce:
Economic Development Administration.
62
Maritime Administration
-3
Department of Health, Education, and
110
Welfare
Department of Housing and Urban Development:
872
Renewal and Housing Assistance
49
Metropolitan Development
583
Federal Housing Administration
Government National Mortgage Asso1,134
ciation
Federal National Mortgage Association. _ 2,217
22
Department of the Interior
23
General Services Administration
Veterans Administration:
388
Housing loans and guarantees
132
Insurance policy loans
60
District of Columbia
1,646
Export-Import Bank
Farm Credit Administration:
1,818
Banks for cooperatives
7,407
Federal intermediate credit banks
5
Federal Home Loan Bank Board
406
Small Business Administration
10
Other agencies or programs
Purchase of obligations of federally spon1,193
sored enterprises

10

14

13

18

13

115
204
1,432

257
528
1,629

132

236
555
2,706

225
189
3,016

9
8

65

14
9

107

20

662
5
266

1,227
34
157

970
6
85

717
72

579

544

16
25

6
17

137
136
100
1,638

226
81
44

190
1,860

103
530
4
524

1,058

52
339

199

1,316

279
4
22

249
18

6

25

15

130
84
39
739

460
133

1,659
7,011
9
231
17

75

159
85
43

1,730

1,440

979
3,119
32
277
19

767
3,355
\7
293
16

274
71

1,390

XI
320
13

954

1,125

Total, loan account

20,422

14,389

12,478

11,092

8,113

7,197

Grand total

24,064

15,897

16,376

13,542

11,514

9,965




SPECIAL ANALYSES

61

Over the 1959-68 period, gross disbursements for all Federal programs in the loan account rose from $7.9 billion to $20.4 billion. Net
lending ranged from a low in 1963—when repayments exceeded new
loan disbursements by $0.1 billion—to peaks of $5.1 billion in 1967
and $6 billion in 1968.
In contrast, in 1968-70 sharp reductions in the budgetary impact of
these programs will occur. By 1970, gross disbursements will drop to
an estimated $8.1 billion—only 40% of the 1968 level. Almost all of
this decline results from the conversion to private ownership of three
major groups of lending agencies, which disbursed $11.4 billion in
loans during 1968.
Similarly, net lending is expected to drop to $1.4 billion in 1969 and
$0.9 billion in 1970. Roughly half ($2.5 billion) of this $5.1 billion
decrease over the 2-year period stems from the conversions to private
ownership. Other sharp cutbacks will occur in the Government National Mortgage Association ($0.9 billion), Export-Import Bank
($0.7 billion), Farmers Home Administration ($0.4 billion), the
Veterans Administration ($0.3 billion), and the Small Business
Administration ($0.2 billion). In all of these cases, major sales of
existing assets to private lenders and/or shifts to federally insured
private loans are largely or wholly responsible for the reduced budgetary impact.
Net loan outlays in the expenditure account will also fall sharply
from $2.1 billion in 1968 to $1.4 billion in 1969 and $0.6 billion in 1970.
This is almost entirely the result of a complete reversal in operations
of the Commodity Credit Corporation from net outlays of $1.1 billion
in 1968 to an anticipated excess of repayments of $0.4 billion in 1970.
Loan disbursements for the foreign economic assistance programs of
the Agency for International Development will remain relatively
unchanged at about $1 billion each year. This is partly because most
of such loans permit deferment of principal repayments during several
early years.
OUTSTANDING DIRECT AND GUARANTEED LOANS

The best index of the level of Federal credit programs over a period
of years is provided by the total outstanding direct and guaranteed
loans. By the close of 1970, these will amount to $168.3 billion in the
loan account and an additional $22.2 billion in the expenditure
account—or a gross total of $190.6 billion.




62

THE BUDGET FOR FISCAL YEAR 1970

Table E-3. OUTSTANDING DIRECT LOANS, AND GUARANTEED AND INSURED LOANS FOR FEDERAL CREDIT PROGRAMS CLASSIFIED BY
TYPE OF ACCOUNT (in millions of dollars)
1968 actual
Agency or program

Direct

Guaranteed

1969 estimate

Direct

Guaranteed

1970 estimate

Direct

insured
loans

insured
loans

Guaranteed
and
insured
loans

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
Other programs
Total, expenditure account

19
8,919

251
338

8
9,798

380
546

2,227

923

2,574

1,435

1,132
4,580
173
17,052

1,336
4.534
170
1,512

18,421

59
10,630
2,188

565
743
1,945

1,495
4,414
178
2,361

18,965

3,253

LOAN ACCOUNT
Funds appropriated to the President:
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:
Renewal and housing assistance.._ _ __
Metropolitan development
__
Federal Housing Administration
Government National Mortgage Association
Federal National Mortgage Association.
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
Obligations
of
federally
sponsored
enterprises

87

88

94

374
4.797
2.371

2,339

499
5,135
2,144

3,350

510
5,501
1,837

5,507

244
89

13
649

295
81

19
716

382
73

30
803

266

762

365

1,401

457

2,179

3.529 8,482
329
688 58,634

3,925
370
761

9,619
50
64,144

4,182
398
833

11,520
150
72,853

3,758
6,624
183
172

4,360

500

4,385

3,000

195
182

20
49

205
189

25
49

2,762
853 34,487
234
5,349
3,059

2,673
907
290
5,596

36,156

160
1,533
68

143
1,487
122

2,461
804
202
5,059
1,457
3,940
145
1,549
63

16
49
33.369
1.600

441
206

797
201

4,278

1.267
274

955

Total, loan account

40,143 106,559

29,359 118,413

30,266 138,092

Grand total

57,195 108,071

47,779 120,774

49,231 141,344




SPECIAL ANALYSES

63

Outstanding direct loans in the loan account will fall by an estimated $10.8 billion during the current fiscal year to $29.4 billion on
June 30, 1969. A small net increase of $0.9 billion is expected during
1970. Loans totaling $12 billion held by the three major groups of
lending agencies which converted to private ownership during 1969
are included in the 1968 totals, but not in those for 1969 and 1970.
In addition, investments of several Federal agencies in obligations of
the Federal land banks and the Federal home loan banks totaling
almost $1 billion on June 30, 1968, are being liquidated during 1909.
Apart from the removal of these loans from the totals shown, a net
increase of $3.1 billion, in loans in the loan account is expected over
a 2-year period. Significant increases include the Rural Electrification
Administration ($0.7 billion), the Renewal and Housing Assistance programs—mainly college housing loans—($0.7 billion), the Government
National Mortgage Association ($0.6 billion), the Export-Import
Bank ($0.5 billion), and the Veterans Administration ($0.3 billion).
Loans held by the Farmers Home Administration fall by $0.5 billion.
Outstanding loans in the expenditure account will rise by $1.4
billion in 1969 and $0.5 billion in 1970. An increase of $1.7 billion in
the portfolio of foreign economic assistance loans made by the Agency
for International Development is the most substantial change projected for the 2-year period.
Outstanding guaranteed and insured loans for both accounts are
expected to rise by an estimated $12.7 billion in 1969 and by a record
$20.6 billion during 1970. The net increase in the portfolio of the
Federal Housing Administration ($14.2 billion) accounts for almost
half of the 1968-70 rise. Other major increases are anticipated by the
Farmers Home Administration ($3.2 billion), Renewal and Housing
Assistance programs and the Government National Mortgage Association (each $3 billion) the Veterans Administration ($2.8 billion), and
the Export-Import Bank ($2.7 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. The estimated contingent liability of the Federal
Government by the end of 1970 will be $20.9 billion less than the
$141.3 billion principal amount of the loans guaranteed and insured.
Most of this difference is accounted for by the veterans loan guarantee
program, where the Government's liability will be $18.2 billion lower
than the amount of guaranteed loans outstanding.
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.



64

THE BUDGET FOR FISCAL YEAR 1970

Table E-4. INTEREST RATES AND MATURITIES FOR MAJOR ACTIVE
CREDIT PROGRAMS CLASSIFIED BY AGENCY OR PROGRAM,
DECEMBER 1968
Direct loans
Agency or program

Guaranteed and
insured loans

Interest
rate
(percent)

Maturity
(years)

Interest
rate
(percent)

Maturity
(years)

6-6'/ 2
2-53/4

5-10
5-40

7-8
6-7i/ 2

1-7
5-25

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

1-40 13i/2-6
2 20

VH

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:
Renewal and Housing Assistance
Metropolitan Development
Federal Housing Administration
Government National Mortgage Association
Department of the Interior
General Services Administration._
Veterans Administration:
Housing loans and guarantees
Insurance policy loans
District of Columbia
Export-Import Bank
Federal Home Loan Bank Board
Small Business Administration
_.

4/s

1-30

4-7
1-63/4

1-50

4-63/4

5-40

43/4-5'/4

12-40

6V2-7V2
6
3-7

3-10
25

21/2-6

3-55/g
43/4-5
3-6%
3-63/4
0-6
3-0/2
4-7'/2
0-5%
6

4-7.2
3-554

1
When commodity loan is repaid by forfeiting collateral,
lower interest is charged during initial grace period.
2
On student loans, maturities begin when student leaves
or 3 Peace Corps service.
In addition, property improvement loans are insured for
effective annual rate of 8.8 % to 10.6 %), and with maturities
4
Indefinite.

"'/HO

3.6-3.8
1-40
1-40
0-50
8-30
7-30
(4)
l%-20
1-25
1-30

1/4-40
"V-40

5-6

5-15

4-63/4

7-30

1/2-20

"1-30

no interest is charged. On export loans
school and exclude periods of military
4 ^ % to 5 ^ % discount per year (or an
of 6 months to 7 years.

Interest rates charged on direct loans vary both among the numerous Federal credit agencies and sometimes among the types of loans
made by a single agency. Some of the differences in rates reflect
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




SPECIAL ANALYSES

65

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 borrowers 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. Numerous changes in the statutory
provisions governing interest rates have provided greater administrative flexibility to adjust rates to correspond with the changing conditions of the private credit market.
In a few cases, interest rates paid by the borrowers 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 (currently 3%),
well below those prevailing in the private market and the Government
National Mortgage Association has been purchasing all of such mortgages.
In other cases, the Federal agency pays part of the interest cost
necessary to obtain private financing. For example, loans made by
the Commodity Credit Corporation at 3%% interest to farmers are
pooled and sold to investors with a CCC guarantee at market rates
of interest—6% in December 1968. Similarly, the Farmers Home
Administration sells direct loans (on an insured basis) to private
investors at discounts sufficient to assure market yields to the purchasers. And, under 1968 legislation, instead of large continuing commitments for GNMA purchases, in 1970 contracts will be made for
Federal payments to reduce to as low as 1% the interest costs on
private borrowing of homeowners and landlords providing moderate
income housing.
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 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 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 recommended:
(a) "That the full amount of the interest subsidy on loans compared
to Treasury borrowing costs be reflected and specifically disclosed in

340-700 O—69



5

66

THE BUDGET FOR FISCAL YEAR 1970

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."
The Commission recognized and experience has proved that extensive further study and consultation would be necessary to develop
the information and methods necessary to place these recommendations in force. In the interim, as this analysis indicates, many changes
have been occurring in the level and type of direct lending activity
in the loan account. Three major groups of self-supporting credit
agencies have converted to private ownership. Other major direct
loan programs are being shifted to insured loans. To help accomplish
this shift, several programs under recently enacted legislation have
made explicit provision for interest supplements to be separately provided in order to reduce the costs to low or moderate income borrowers
while maintaining gross interest rates high enough to be attractive to
private lenders. The net effect of several of these programs will be to
transfer most or all of the interest subsidies on future loans to the
expenditure account without requiring special accounting provisions
to transfer between accounts. This approach permits a considerable
expansion in insured loans, both under existing and proposed legislation, while at the same time adding to the current costs the necessary
amounts of interest subsidies.
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.
GOVERNMENT-SPONSORED CREDIT PROGRAMS

Six major groups of Government-sponsored privately owned institutions administer credit programs. The programs of these institutions are neither included in the budget totals nor subject to budgetary
control. Detailed schedules and explanatory statements of five of these
groups and of the Board of Governors of the Federal Reserve System
are printed as annexed budgets in Part III of the Appendix. The operations of the Federal Reserve banks have no direct effect on budget
totals, but payments of excess Federal Reserve profits are regularly
made to the Treasury and become budget receipts.




67

SPECIAL ANALYSES

Table E-5. OUTSTANDING LOANS FOR MAJOR GOVERNMENT-SPONSORED
CREDIT PROGRAMS (in millions of dollars)
Outstanding at end of—
Agency
1967
actual

Department of Housing and Urban Development:
Federal National Mortgage Association.
Farm Credit Administration:
Banks for cooperatives
Federal intermediate credit banks
Federal land banks
____
Federal Home Loan Bank Board: Federal home
loan banks
Federal Reserve, Board of Governors: Federal reserve banks. _

1

M,592

16,624

8,122

9,772

M.298
13,544

M,457
13,940
5,973

1,669
4,413
6,519

1,884
4,942
7,165

4,889

5,800

7,300

26,523

31,063

5,304

1969

4,302
204

23,322

1970

439

19,244

Total

2

{968
actual

During mixed-ownership status.
Estimates are not available.

Three of the six groups of credit agencies have been converted to
private ownership pursuant to legislation enacted by the last Congress.
All three of them, as well as the Federal land banks and the Federal
home loan banks, have been expanding their programs in recent
years and anticipate continuing growth through 1970. If the outstanding loans of the newly converted private agencies at the close
of 1968 are used as a base, the five groups of agencies (excluding the
Federal Reserve banks) anticipate a net increase of $8.2 billion in
their outstanding portfolios during the 2-year period ending June 30,
197a
SUMMARY

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.
1

I. Agency for International Development, and Export-Import Bank
A. Foreign Assistance Act of 1968—Public Law 90-554
Revises interest rates for development loans and standards for
guarantees of investments in financial institutions.
B. Amendments to Export-Import Bank Act of 1945—Public
Law 90-267
Prescribes more specific standards for recipients and purposes of
Export-Import Bank loans.
C. Additional authority for Export-Import Bank—Public Law
90-390




68

THE BUDGET FOR FISCAL YEAR 1970

Broadens lending criteria to provide more flexibility in assisting
U.S. balance of payments.
D. Foreign Military Sales Act—Public Law 90-629
(1) Authorizes President to make direct credit sales of defense
articles abroad, and to guarantee political and credit risks of private
financing on a partial reserve basis; and (2) prohibits Export-Import
Bank from financing future sales of such articles to less developed
countries.
II. Department of Agriculture
A. Amendments to Consolidated Farmers Home Administration
Act of 1961—Public Law 90-488
(1) Broadens lending authority to include loans for enterprises to
supplement farm income and for farm conversion to recreation; and
(2) establishes a flexible interest formula.
III. Department of Commerce
A. Amendment to Merchant Marine Act of 1936—Public Law
90-341
Provides flexible maximum interest rates on insured ship mortgage
loans.
IV. Department of Health, Education, and Welfare
A. District of Columbia Medical Facilities Construction Act of
1968—Public Law 90-457
Authorizes long-term, low-interest loans to help finance construction and modernization of D.C. medical facilities.
B. Health Manpower Act of 1968—Public Law 90-490
Revises maximum amounts and repayment terms on student loans.
C. Amendments to higher education legislation—Public Laws
90-460 and 90-575
(1) Modifies insured student loan programs by: (a) authorizing
Federal guarantees to cover 80% of losses on loans insured by nonFederal agencies, (b) revising terms of Federal advances to such
agencies, (c) eliminating interest subsidies on insured loans during
repayment period, (d) increasing size of individual loans, (e) providing more flexible interest rate and administrative cost allowances,
and (f) liberalizing repayment deferments; (2) liberalizes administrative expense reimbursement and teacher cancellation provisions on
NDEA student loans; and (3) authorizes annual interest grants to
reduce cost of borrowing from non-Federal sources for academic
facility construction.
D. Vocational Education Amendments of. 1968—Public Law
90-576
Authorizes debt service grants to reduce borrowing costs from nonFederal sources for construction of residential vocational schools and
dormitories.
V. Departments of Housing and Urban Development and Agriculture
and Veterans Administration
A. Amendments to veterans and housing laws—Public Law
90-301




SPECIAL ANALYSES

69

Provides more flexibility temporarily in maximum interest rates on
federally guaranteed or insured housing loans.
B. Housing and Urban Development Act of 1968—Public Law
90-448
(1) Authorizes Federal payments to cover bulk of interest on private loans financing homeownership or rental housing for lower income
families; (2) revises existing insurance programs by: (a) relaxing underwriting standards for older, declining urban neighborhoods, and (b)
creating a Special Risk Insurance Fund for high risks arising from
environmental conditions or the credit background of the mortgagor;
(3) provides FHA insurance for loans for: (a) purchase of fee simple
title from lessors, (b) supplemental improvements, (c) seasonal housing, and (d) nonprofit hospitals; (4) authorizes interest-fre3 loans to
nonprofit sponsors for planning low-income housing; (5) establishes
new guarantee program for obligations issued to finance new community land development; (6) provides for conversion to private
ownership of Secondary Market Operations of FNMA; (7) authorizes
Federal guarantees of mortgage-backed securities issued by private
financial institutions, including FNMA; (8) authorizes the Secretary of
Agriculture to make housing loans with interest down to 1% to lowincome families and to advance funds on liberal terms for housing for
rural trainees and for mutual and self-help housing; and (9) authorizes debt service grants to reduce interest costs of colleges using nonFederal financing for housing and related facilities.
VI. Department of the Interior
A. Guam Development Fund Act of 1968—Public Law 90-601
Authorizes federally financed loans and loan guarantees for private
economic development in Guam.
VII. Department of Justice
Omnibus Crime Control and Safe Streets Act of 1968—Public
Law 90-351
Provides student loans for education related to law enforcement or
preparing for employment in law enforcement.
VIII. Department of Transportation
A. Federal-Aid Highway Act of 1968—Public Law 90-495
Authorizes non-interest-bearing advances to States to permit
early acquisition of rights-of-way and related relocation costs.
IX. Farm Credit Administration
Amendments to Federal Farm Loan Act and Farm Credit
Act—Public Law 90-582
Authorizes conversion to private ownership of Federal intermediate
credit banks and banks for cooperatives.




SPECIAL ANALYSIS F
PRINCIPAL FEDERAL STATISTICAL PROGRAMS

Principal statistical programs of the Federal Government in the 1970
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 1970 for
current statistics total $146.3 million. Periodic statistics, as distinguished from current, are characteristically derived from censustype 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 1970
aggregate $149.2 million, nearly all of which represents the cost of
taking the 19th decennial census.
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 F - l . Information by agencies for both
current and periodic programs is shown in table F-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, or new fields are covered, figures 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. With increased resources
devoted to crime statistics, this area is covered for the first time in
this analysis as one of the principal Federal statistical programs.
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 F - 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.
LABOR STATISTICS

Work will continue on two projects initiated in 1969—the development of current estimates of job opportunities in about 30 major
areas in conjunction with the collection of labor turnover statistics,
70



71

SPECIAL ANALYSES
Table F-l. OBLIGATIONS FOR PRINCIPAL CURRENT STATISTICAL
PROGRAMS, BY BROAD SUBJECT AREAS (in millions of dollars)
Program

Labor statistics (Department of Agriculture, Interior, and Labor;
National Science Foundation)
Demographic and social statistics (Departments of Agriculture,
Commerce, Health, Education, and Welfare, and Justice; 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)
National income and business financial accounts (Departments
of Agriculture, Commerce, and Treasury; Federal Trade Commission; Securities and Exchange Commission)
_

Total, principal current programs

1968

1969

1970

27.1

28.2

29.0

39.3

46.4

57.7

6.6

7.0

7.4

31.7

33.2

35.1

3.5

4.3

4.7

10.1

11.9

12.4

118.3

131.0

146.3

and a detailed survey of employment problems in the slum areas of
six large cities. For 1970, the BLS is requesting an additional $200
thousand to develop new measures of persons experiencing employment
problems. The funds would be used for additional tabulation and
analysis of information already collected on the current population
survey, together with the addition of supplementary questions on the
CPS to help identify the groups of persons for whom manpower
development programs are designed. The proposal should provide
administrators with better estimates of the numbers and conditions
of persons their programs are designed to assist.
DEMOGRAPHIC AND SOCIAL STATISTICS

Population statistics.—The 1970 budget requests no increase in the
current statistical program for this area since the principal emphasis
on population statistics during 1970 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 administrative records. Consultation with and provision of technical assistance by the Bureau of the
Census to States in making local population estimates will be expanded
out of existing funds.
Health and vital statistics.—An increase of $1.8 million is proposed
for the National Center for Health Statistics. The largest individual
item requested ($505 thousand) is for professional and technical assistance to State and local areas, including support of an institute for
training of personnel in health and vital statistics.




72

THE BUDGET FOR FISCAL YEAR

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

1968
actual

1969
estimate

1970
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
.- v ~ "
Department of the Interior: Bureau of Mines: Mineral statistics.
Department of Justice: Crime 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; institutional investors study
Total, current programs

3.5

3.4
14.2

14.8

3.7
15.1

17.1
2.9

18.1
3.1

18.7
3.3

1.1

1.1

1.1

2.9
7.9

3.4
8.0

5.0
9.8

15.7

18.8

20.4

.7

.9

1.0

.5
2.6
.7

.7
2.6
3.0

.9
2.7
7.1

3.3
21.0

3.6
22.0

3.6
22.9

4.0
.6

4.0
1.5

4.0
2.9

5.4
.7
.9
.4
1.1

6.5
.8

6.5
.8
1.0
.4

6.4

1.0
.4
1.1
4.8
6.6

1.1
4.8
8.6

.3

.7

.9

118.3

131.0

146.3

.4
7.1
.8

7.9
.6

3.5

18.7

.2
144.9

4.5

PERIODIC PROGRAMS
Department of Commerce: Bureau of Census:
1964 census of agriculture
1967 economic censuses
1967 census of governments
Preparation for 1972 census of governments
Preparation for 19th decennial censuses
Modernization of computing equipment
Department of Labor: Bureau of Labor Statistics: Revision of CPI
Total, periodic programs
Total, principal statistical programs _




6.6
4.0

.6

18.9

27.2

149.2

137.2

158.2

295.5

SPECIAL ANALYSES

73

Provision of small area data through coding and processing detailed
address information on vital records for approximately 25 of the large
metropolitan areas would utilize $341 thousand of the increase. A total
of $250 thousand is for the development of a statistical system for
obtaining information on family planning clinics and services; the
proposed funding will be used to establish an interim system for collecting and disseminating information in this area and to develop a
fully operational national system to supplant data collection programs
currently being utilized by a number of Federal agencies and organizations.
Other projects for which increases are requested include: The
development of a standard package health survey that can be conducted locally ($185 thousand); development and testing of plans and
procedures for the new cycle of the Health Examination Survey ($150
thousand); provision of a comprehensive program for the collection
and dissemination of data on health facilities and health manpower
($280 thousand); an experimental program of developing and testing
the possibility of making synthetic State estimates of disability and
use of medical care ($95 thousand).
Educational statistics.—An increase of $1.6 million is requested for
the 1970 budget of the National Center for Educational Statistics in
the Office of Education. This expansion is needed to improve the timeliness of educational statistics, to eliminate significant gaps in basic
educational information, and to provide data relevant to emerging
educational objectives.
A significant portion of the additional funds requested will be used
to reduce the timelag between collection and publication of current
statistical data that are heavily relied upon throughout the educational community.
New surveys to be undertaken include: Survey of nursery-kindergarten enrollment, expanded to include socioeconomic characteristics
of students, and to permit regional and national estimates; a survey
of elementary and secondary school facilities and equipment in both
public and nonpublic schools, to shed light on the adequacy, suitability, and distribution of school resources; a survey on the characteristics and career objectives of college students to facilitate manpower planning for educational personnel; measurement of the
relationship between the kind and amount of vocational education
and adult life patterns, including income level, occupation, and
community involvement; a survey of the field of educational television with a view to collecting much needed data on the extent of
use, facilities now existing or needed, and subject matter offered.
Additional emphasis will be placed on new and revised handbooks
and manuals of standard educational terminology, definitions, and
recordkeeping practices. These serve as the foundation of a comprehensive system of educational information for use in the management
and operation of local school systems.
Social security statistics.—An increase of $1.6 million is recommended for 1970 for the statistical and research activities of the Social
Security Administration. The major part of this increase would cover
contractual costs related to evaluation studies of officially approved
incentive reimbursement experiments for medical care as authorized
under section 402 of the Social Security Amendments of 1967.



74

THE BUDGET FOR FISCAL YEAR 1970

The current Medicare survey continues to obtain, from a sample of
households, timely information on the use of services and accruing
liabilities under the Medicare program. Two recent supplements to
the survey will provide information on the demographic and economic
characteristics of all persons aged 65 and over. The proposed increase
would also cover increased costs in the collection and processing of
data.
The survey of disabled adults would be continued as scheduled.
This is a three-part survey which collected information from households in 1967 and from persons in institutions in 1968. The third phase
will be a foliowup with a subsample of the study population to examine
changes in disability and income support status since early 1966.
Funds are included in the 1970 budget for data processing and
preparation of tabulations for the first stage of the retirement history
survey. This is a longitudinal survey which will follow persons in the
58 to 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. Fieldwork on the
first stage is being undertaken in 1969.
Other analyses and research continue on special subjects such as
income-maintenance programs, lifetime earnings, alternative measures
of program adequacy, and social security in other countries.
Welfare statistics.—This analysis includes only the activities of the
statistical center in the Social and Rehabilitation Service. This area
will continue in 1970 at about the same level as in 1969. A small
increase of $100 thousand is requested to permit several new studies,
including: A pilot study to determine, by mail questionnaire to AFDC
mothers, the conditions and facilities required, such as day care, that
would permit them to work; the development of tabulation plans
covering backgrounds, treatments received, and payments to clients
served by Vocational Rehabilitation.
Economic opportunity.—This area includes basic research and
statistics on poverty and evaluation of antipoverty programs. An
increase of $2 million in 1970 is requested for the Office of Economic
Opportunity. The major part of the increase ($1.5 million) is to extend
the evaluation of Community Action programs to include a study
of what kinds of Federal, State, or local programs have the greatest
impact on poverty reduction; this study would concentrate on establishing the relationships among social indicators and inputs from different
kinds of government programs on one hand, and economic progress
or poverty reduction on the other.
Other projects under consideration by OEO are evaluations of an
income maintenance program, a "Federal employer as last resort"
program, family allowances, as well as continuing programs such as
Vista and Legal Services.
Also included is a request for $175 thousand by the Economic Research Service of the Department of Agriculture to begin the development of rural economic indicators. The initial emphasis will be on assembling annual series of demographic and social statistics that describe county changes in population, employment, income, output,
and other socio-economic factors. Supporting analytical economic
framework will be strengthened to provide improved bases for assessing regional variations in the growth potential of present resources
and for methodological improvements.



SPECIAL ANALYSES

75

Crime statistics.—This activity is being included in Principal Statistical Programs for the first time in recognition of increased emphasis
through the establishment of a National Criminal Statistics Center in
the Law Enforcement Assistance Administration of the Department
of Justice. Also covered are the statistical activities of the Federal
Bureau of Investigation, the Bureau of Prisons, the Bureau of Narcotics and Dangerous Drugs, and that part of the Social and Rehabilitation Service dealing with juvenile crime.
An increase of $4.1 million is recommended in the 1970 budget for
the Criminal Statistics Center, of which $2.4 million will be used for
grants to States to improve their statistics on crime and the judicial
and correctional processes. The remainder of the increase will be used
by the Center to improve existing data and to fill in some of the existing statistical gaps in this area, and to begin the development of a
comprehensive, coordinated, and comparative body of statistics in
this field.
PRICES AND PRICE INDEXES

With two exceptions, work in the price area will remain at the same
level in 1970 as in 1969.
Funds are requested for the Bureau of Labor Statistics to initiate
the decennial comprehensive revision of the Consumer Price Index
(see Periodic Programs below). Increased funds in the amount of
$200 thousand are requested for the Bureau of the Census to place its
annual price index for single family homes on a quarterly basis, to
provide indexes annually for the four geographic areas, and to begin
the development of a price index for multifamily dwellings. Many reviews of the Federal statistical program have pointed out the weaknesses of construction price data now being used and the request for
1970 is another step in the development of a comprehensive set of
indexes for various types of construction.
PRODUCTION AND DISTRIBUTION

An increase of $169 thousand is requested for the Bureau of the Census to extend the present monthly series on manufacturers' inventories
to include inventories held by manufacturing companies at their
nonmanufacturing locations, such as central offices, sales branches,
and warehouses.
The budget for the Statistical Reporting Service, Department of
Agriculture, includes $140 thousand for initiation of probability surveys to improve the accuracy of the quarterly farm grain stocks estimates. Funds are also requested for two lines of research in statistical
techniques and methodology—$32 thousand to study and develop the
optimum combination of samples of geographic areas and lists of farms
in crop and livestock estimating work, and $40 thousand to explore the
potentiality of using remote sensing (observations from satellites or
aircraft) as a source of measures of land acreage in different agricultural uses.
CONSTRUCTION AND HOUSING STATISTICS

Increased funds in the amount of $250 thousand are requested for
the Bureau of the Census for improvement of the construction valuein-place series, particularly the private nonresidential construction



76

THE BUDGET FOR FISCAL YEAR 1970

segment. These funds would be used to expand the sampling frame
where necessary in order to reduce sampling error, to provide separate
data for stores and office buildings, and to place hotels, motels, and
dormitories on an actual progress-reporting basis. This is another step
in a long-term plan to measure current construction activity as accurately as is required for the many purposes for which this series is used.
The budget also includes a net increase of $175 thousand for the
statistical work of the Department of Housing and Urban Development. A large part of the new statistical activity would be financed
with funds, if again available, that were used for projects now completed or only require lesser amounts in 1970 than in 1969. A new survey would be undertaken to determine the rates at which new rental
housing is absorbed by the market ($150 thousand). Another survey
in a series planned on a periodic basis of once every 2 or 3 years would
be conducted to determine the income levels and other characteristics
of families obtaining new rental and sales housing ($250 thousand).
It is expected that the mortgage flow and forward loan commitment
series begun in 1969 will be in full operation during 1970. This will
require a small addition of $30 thousand. Work will be continued in
1970 at a reduced level on the development and testing of a survey
that can be used by localities to obtain data on housing conditions;
the major part of this work will be accomplished in 1969. Other activities will continue at the same rate in 1970 as in 1969.
NATIONAL INCOME AND BUSINESS FINANCIAL ACCOUNTS

Economic accounts.—During 1970 the estimates by the Office of
Business Economics, of gross national product by industry, which are
presently provided annually, would be put on a quarterly basis, mainly
for industries which show large cyclical swings. The budget request
for this work is $76 thousand. In addition, the Office of Business
Economics plans to strengthen the plant and equipment survey by:
(a) expanding its coverage to include the service-type industries and
nonprofit institutions; and (b) to obtain from all industries a separation
of their investment activity as between plant and equipment. A total
of $100 thousand is requested for these improvements.
Financial statistics.—The Securities and Exchange Commission in
1970, will step up the pace of work on its special study of the Impact
of Institutional Investors on Securities Markets. Initiated in the latter
part of 1969, through a supplemental funding of about $250 thousand,
the SEC will perform additional fieldwork and complete the analysis
and presentation of results. An increase of $200 thousand is requested
for the 1970 phase of this study.
PERIODIC PROGRAMS

Taking the 19th decennial censuses.—The major cost of the 19th
decennial censuses will be incurred during 1970. Increased funds in
the amount of $144 million are requested for this purpose, of which
$136 million is for the Census of Population, Unemployment, and
Housing and $8 million is for the Census of Agriculture, including
irrigation and drainage.




SPECIAL ANALYSES

77

The Census of Population, Unemployment, and Housing will provide for complete counts of the population and housing units. Data
from a sample of households will provide statistics regarding significant
demographic characteristics and housing conditions. The basic enumeration method will be mail-out/mail-back with followup, although
the traditional enumerator canvass will be used for about 35 to 40% of
the population.
Funds requested for the 19th decennial census also includes $750
thousand for preparatory work in connection with sample surveys in
the poverty areas of major cities to follow the census and to collect information regarding unemployment, underemployment, and nonparticipation in the labor force.
The Census of Agriculture will provide a complete count of the
number of farms, the characteristics of farms and farm operations, use
of agricultural land, production and sales of farm products, farm credit
and debt, and principal cash expenditures. A mail-out/mail-back
procedure will be used to collect the data.
The 1970 work includes completion of preparatory work for the
censuses, collection of the data, and the beginning of data processing.
Census of governments.—Funds in the amount of $200 thousand are
requested to begin preparatory work in connection with the 1972
Census of Governments.
Revision of Consumer Price Index.—Funds are requested ($600 thousand) to initiate the decennial comprehensive revision of the Consumer
Price Index. The funds requested for 1970 will provide for the developmental work needed in view of major changes contemplated in concepts, coverage, and technical procedures. A consumer expenditure
survey will be undertaken in 1972 and 1973 and the 5-year program will
culminate with the issuance of revised CPI indexes in January of 1975.




SPECIAL ANALYSIS G
UNOBLIGATED BALANCES OF BUDGET AUTHORITY AVAILABLE
IN 1970

This analysis presents the results of a study of unobligated balances
expected to be available for obligation or commitment after June 30,
1969. The study was made in response to the provisions of section 204
of the Revenue and Expenditure Control Act of 1968 (Public Law
90-364), which requires that:
• A special study and analysis be made of 1969 unobligated balances that are expected to remain available in 1970;
• A report on this study and analysis be made to the Congress
when the 1970 budget is transmitted; and
• The report include specific recommendations for rescission of
not less than $8 billion of such balances.
This analysis constitutes the report called for in Public Law 90-364.
Possible rescissions in the required amount are specified at the conclusion of the report; however, they are not reflected in the 1970
budget schedules because the President does not favor such lescissions.
Table G-l summarizes the data considered in this study. Two
major features should be noted:
First, only unobligated balances of Federal funds were considered.
Similar balances in trust funds were excluded, since they represent
mainly receipts which are firmly committed for a specified use in the
future.
Second, small balances, defined as under $20 million in any account,
were excluded. Of the 1,063 presentations of Federal fund appropriations and other accounts in the 1970 Budget Appendix, there are 96
that show unobligated balances of $20 million or more at the end of
1969, amounting in total to $48,674 million. The remaining 967
schedules include those with unobligated balances under $20 million,
which amount to a total of $416 million.
Table G-l. SUMMARY OF UNOBLIGATED BALANCES ESTIMATED
TO BE AVAILABLE IN 1970 (in millions of dollars)
End of 1969 estimate

Total unobligated balances shown in 1970 budget schedules.
Deduct trust fund balances

139,238
90,148

Total Federal fund balances
Deduct Federal fund balances of less than $20 million.

49,090
416

Total Federal fund unobligated balances considered in study (accounts of
$20 million or more)

Department of Defense—Military
Civilian agencies

78



48,674

11,481
37, 193

SPECIAL ANALYSES

79

OHAKACTERISTICS OF UNOBLIGATED BALANCES

Balances of budget authority—both obligated and unobligated—
are a natural outgrowth of the Federal budget system, in which outlays can only occur subsequent to the enactment of appropriations or
other forms of budget authority. In the case of most Government
accounts, the timelag between appropriations of budget authority,
obligations of funds, and related outlays is relatively short, and appropriations not obligated by the end of the fiscal year expire. However, in other cases, such as major procurement and construction
programs, obligations and outlays may occur over a period of years
after the budget authority is granted, and balances are carried forward
until the authority is obligated and spent. In still others, authority is
provided for possible emergencies, and is hoped not to be actually
needed; if such authority is not needed nor used, it is carried forward
as part of the balances year after year.
To the extent that unobligated balances affect program levels and
anticipated outlays for a given fiscal year, they must be considered in
executive formulation and congressional action on requests for new
budget authority. Nevertheless, it should be noted that they do not
represent cash on hand and therefore, if canceled or rescinded, there is
no return of cash to the Treasury.
Nature of unobligated balances.—There are several major reasons
for the large unobligated balances in the Federal budget. For purposes
of this analysis, the Federal fund balances (covering accounts with
balances of $20 million or more), are classified in the categories set
forth below (see table G-2). These categories are not mutually exclusive
since an individual item might justifiably be placed in more than
one category, but they do serve to illustrate the basic characteristics
of these balances.
Guarantee and insurance programs.—The Federal Government
provides guarantees and insurance in certain areas, notably in housing
and banking activities. In these kinds of programs, appropriations or
other budget authority have been provided as contingency backup
against claims. To the extent such authority is not used, the amounts
are carried forward as unobligated balances. Of the $48.7 billion
Federal fund balances estimated to remain unobligated at the end of
1969, $21.6 billion (45%) fall into this category.
A significant portion of this amount is basically standby authority
which is hoped not to be used in the foreseeable future—for example:
• $6,633 million is available for investment in the International
Bank for Reconstruction and Development and other international financial institutions, if these institutions make a "call"
upon member nations for more paid-in capital;
• $3,000 million is available for investment in the Federal Deposit
Insurance Corporation;
• $2,250 million is available for investment in the Federal National
Mortgage Association; and




80

THE BUDGET FOR FISCAL YEAR 1970

Table G-2. NATURE OF UNOBLIGATED BALANCES OF FEDERAL FUNDS»
(in millions of dollars)
Category and agency

End of 1969 estimate

21,586

Guarantee and insurance programs

International financial institutions
International Bank for Reconstruction and Development (5,715).
Inter-American Development Bank (818).
Asian Development Bank (100).
Department of Housing and Urban Development
Government National Mortgage Association:
Loans to Federal National M rtgage Association (2,250).
Participation Sales Fund (871).
Public housing (1,272).
Federal Housing Administration fund (1,228).
Flood and riot insurance operations (538).
Urban renewal loans (299).
Federal Home Loan Bank Board (1,000 for investment in banks; plus 750
backup authority and 2,275 reserves in Federal savings and loan insurance fund)
Federal Deposit Insurance Corporation
Other

6,633

6,458

4,025
3,000
1,470

11,366

Full funding policy

Department of Defense—Military
Procurement (8,683).
Military construction (1,090).
Research, development, test, and evaluation (781).
Civilian agencies

10,554

812
11,208

Loan programs

Department of Housing and Urban Development
Government National Mortgage Association: Special assistance and management and liquidating functions (2,318).
College housing (2,618).
Public facility loans (292).
Housing for the elderly (72).
Export-Import Bank
Department of Agriculture
Farmers Home Administration (1,136).
Rural Electrification Administration (28).
Veterans Administration
Other

5,300

2,387
1,164
686
1,671

4,514

Other

Department of Housing and Urban DevelopmentDepartment of Defense—Military
Department of Agriculture
Tennessee Valley Authority
Department of Health, Education, and Welfare. _
Department of Transportation
Other
Total.
1

Covers accounts with balances of $20 million or more.




1,704
903
300
461
237
417
492
48,674

SPECIAL ANALYSES

81

• $1,750 million is available for investment in Federal home loan
banks, and as backup for Federal savings and loan insurance.
For the domestic financial institutions listed above, Federal investment funds are held available for use if funds are ever needed for the
protection of insured deposits or for loans in a financial emergency.
Some reserves against losses which are counted as unobligated balances in this category derive from fees, premiums, and other types of
collections obtained from the protected groups themselves. Such
reserves are essentially akin to funds held in trust. Significant items
in this group include $2,275 million in fees and premiums collected
from insured savings and loan institutions, and $1,228 million for
Federal housing insurance.
Most of the remaining balances in this category are in the Department of Housing and Urban Development, which has an estimated
$2,980 million in balances representing backup for various kinds of
programs. Of this amount, $1,571 million is backup for guaranteed
private loans in the low-rent public housing and urban renewal programs, and $538 million is available for prompt payment to insurance
companies of reinsurance claims in flood indemnity and riot damage
cases. The Department also has $871 million for payment to holders
of participation certificates as they mature.
Full funding policy.—Except for a few programs (mainly water
resources), the Federal budget system provides for full funding; i.e.,
appropriating budget authority for the entire cost of a major procurement program or a construction project at the time it is started. Of
the $48.7 billion Federal fund balances estimated to remain unobligated at the end of 1969, $11.4 billion (23%) is attributable to the
full funding policy. This includes most of the balances of the Department of Defense ($10,554 million), and $812 million in civilian agencies
for construction of ships, buildings and facilities, and roads and trails.
Full funding has the effect of setting a limit on the size of the specific
program or project. Since this approach discloses to Congress the
estimated full cost involved before the work actually begins, decisions
can be made with a greater awareness of the amounts the Government is committing itself to spend. Full funding also provides the
executive branch with more flexibility in programing work if economic
or other conditions change, and in making more efficient use of
resources in the conduct of the work.
On the other hand, full funding places larger unobligated balances
in the hands of the executive branch than would otherwise exist. This
has the effect of making it unnecessary for the Congress to review
program funding in these cases each year. However, the Congress can,
if it so desires, examine the progress in each fully funded project
annually, and take positive action to reaffirm or revise earlier decisions
if the situation has changed since the funding was provided.
Under the full funding concept, it should also be recognized that
funds may be committed to a given purpose, even though legally
unobligated. For example, in the Department of Defense, funds are
committed when the contracting organizations are directed to proceed
with procurement—that is, before invitations to bid are issued. Thus,

340-700 O—69


82

THE BUDGET FOR FISCAL YEAR 1970

funds are clearly earmarked for specific projects when contractors are
asked to bid. This avoids having bidders go to the expense of responding to an invitation to bid only to find that no contract can be awarded
due to unavailability of funds. This practice of earmarking funds is
an important aspect of the Department of Defense's system for program and financial controls, and provides assurance to the business
community that contracts will be awarded when an acceptable bid
is developed.
Loan programs.—Another sizable category of unobligated balances
relates primarily to the financing of loan programs. Approximately
23% of the unobligated Federal fund balances estimated to be carried
over into 1970—$11.2 billion—is in loan programs.
These programs generally are financed through revolving or business-type funds, which are established to carry on a cycle of operations, mainly with the public. Most of these funds are expected to
be self-sustaining over a period of years. Their capital requirements
are supplied through budget authority. As they generate receipts from
their own operations, they pay interest or return unneeded capital. Balances of the revolving funds usually consist of the assets of
the funds, or of undrawn authorizations to borrow from the Treasury
or on their own.
Almost half of the unobligated balances in this category ($5,300
million), is in the Department of Housing and Urban Development,
largely for the special assistance and management and liquidating
functions of the Government National Mortgage Association ($2,318
million) and the college housing program ($2,618 million).
Many of the programs in the Department of Housing and Urban
Development require budget authority on a long-leadtime basis
in order to provide assurance to the potential borrower or contractor
that adequate financing will be available for the total cost involved.
The requirements for these programs are complex, and considerable
time and money is required on the part of the applicant to develop
a project to the stage where the Government can enter into a firm
legal obligation. To deal with this problem, a reservation system has
been worked out under which the Government sets aside sufficient
financing at the time it is convinced that the applicant can develop
a project that will meet requirements. These reservations are converted
into legal obligations when an acceptable application is submitted and
approved. The amounts so reserved are counted as unobligated until
the final agreement or legally binding contract is actually consummated.
In the absence of this reservation system, most applicants would be
unwilling to spend the time and money needed to develop applications, and projects needed to accomplish Federal objectives would
not be started. On the other hand, if the Government negotiated
with applicants in the absence of fund availability, the Congress and
the executive branch could be faced with demands for additional
appropriations from applicants who felt the Government had made a
moral commitment to finance the projects once it encouraged their




SPECIAL ANALYSES

83

development. The reservation system, therefore, protects applicants
against wasted effort and enables the Government to attain its objectives more effectively and to improve its control over the amount of
outlays to which it is committed.
The Farmers Home Administration and the Veterans' Administration also carry sizable, although considerably smaller, unobligated
balances for housing loan programs, totaling $1,822 million at the end
of 1969. Another loan revolving fund program with a substantial
unobligated balance is the Export-Import Bank ($2,387 million).
Other.—Of the remaining $4.5 billion (9%) of unobligated balances estimated to be carried forward into 1970, $903 million is in the
Department of Defense industrial fund operations. These balances
are characteristic of industrial fund activity—they are attributable
mainly to the timelag that occurs between receipt of a work order by
the fund, and completion of the work required under the order. The
Department of Housing and Urban Development has $1,704 million
in this category, representing primarily urban renewal grant authority
which is reserved for obligation when acceptable applications are developed. Another $1,907 million represents scattered balances which
are largely in programs involving both direct construction and construction grants. These include road, highway safety, and aviation
programs of the Department of Transportation; public buildings
management; and hospital and health facilities construction. Also
included are the balances carried under the program for removal of
surplus agricultural commodities, and the uncommitted authority of
the Tennessee Valley Authority to issue bonds for its power program,
estimated at $461 million at the end of 1969.

Unobligated Federal fund balances, by agency and type.—

Given the general characteristics of unobligated balances, it is predictable that most of the unobligated Federal fund balances of civilian
agencies would occur where there are large lending or insurance activities, and would tend to be financed in the form of authorizations to
expend from debt receipts or revolving funds, rather than through
regular appropriations. Table G-3 summarizes these balances by
agency and shows the types of financing involved.
As the table indicates, almost one-fourth of the total unobligated
Federal fund balances are in the Department of Defense. The Departments of Defense and Housing and Urban Development together
represent over one-half of the total.




84

THE BUDGET FOR FISCAL YEAR 1970

Table G-3. SUMMARY OF UNOBLIGATED BALANCES OF FEDERAL FUNDS
ESTIMATED TO BE AVAILABLE IN 1970, BY AGENCY AND TYPE*
(in millions of dollars)
Agency and type of authority

End of
1969
estimate

Percent
of
total

Percent of
civilian
total

Agency
Department of Defense—Military
Civilian agencies
Department of Housing and Urban Development.
International financial institutions
Federal Home Loan Bank Board
Export-Import Bank
Federal Deposit Insurance Corporation
Veterans Administration
Department of Agriculture
Other

23.6
(76.4)
27.6
13.6
8.3
4.9
6.2
4.1
8.6

36.2
17.8
10.8
6.4
8.1
4.1
5.4
11.2

48,674

100.0

100.0

(13,687)
10,554
3,133
23,425
2,232
(9,330)
927
8,403

(28.1)
21.7
6.4

48,674

Total.

11,481
(37,193)
13,462
6,633
4,025
2,387
3,000
1,527
1,991
4,168

100.0

3.1

Type of authority

Appropriations
Department of Defense—Military
Civilian agencies
Authorizations to expend from debt receipts (all civilian) _
Contract authorizations (all civilian)
Revolving and management funds
Department of Defense—Military
Civilian agencies..
Total.
1

48.1

4.6
(19.2)
1.9
17.3

8.4
63.0
6.0
22.6
100.0

Covers accounts with balances of $20 million or more.

Balances of appropriations comprise 28% of the total unobligated
balances, most of them for the Department of Defense. The remaining
balances in Defense (2% of the total) are financed through revolving
and management funds. For the civilian agencies, about 6% of the
total balances are in appropriations, while 70% is financed through
authorizations to expend from debt receipts, contract authorizations,
or revolving and management funds.
ANALYSIS

OF

ESTIMATED REQUIREMENTS FOR FEDERAL FUNDS
UNOBLIGATED BALANCES IN 1970

Summary.—An analysis has been made of the estimated requirements in 1970 for the Federal fund unobligated balances which will
remain available in that year. This analysis reflects an appraisal of
the operations and plans of the agencies for obligating some or all
of their balances in 1970, consideration of the characteristics of the
balances as described above, and the possibilities and effects of rescinding the balances in 1970. The resulting evaluation is briefly
summarized in table G-4.




85

SPECIAL ANALYSES

Table G-4. REQUIREMENTS FOR UNOBLIGATED BALANCES OF FEDERAL
FUNDS IN 19701 (in million* of dollars)
Description

Planned for obligation in 1970
Department of Defense—Military
Civilian agencies_
_
Not planned for obligation in 1970, but held for others (e.g., reserves against
2
losses in guarantee and insurance programs)
Not planned for obligation in 1970 and available for recission if statutes are
changed (e.g., revising the basis for providing backup in various insurance
and guarantee programs) 2
_
Not planned for obligation in 1970 and available for recission if administrative
practices are changed (e.g., departing from the full funding policy)
Department of Defense
Civilian agencies.,_
_
Not planned for obligation in 1970 and available for recission under present
statutes and practices 2___
_
TotaL
1

End of 1969 estimate

16,927

9,481
7,446
4,940
16,420
2,913

2,000
913
7,474
48,674

Covers accounts with balances of $20 million or more.

2 InvnlvM nnlv civilian mrenrie*

Planned for obligation in 1970.—Based on the budget proposals
for 1970, $16.9 billion (almost 35%) of the $48.7 billion unobligated
Federal fund balances is estimated to be obligated in 1970 for various
programs. Assuming no major changes in the budgeted levels, if some
or all of these balances were rescinded, a like amount of budget authority would have to be proposed for 1970 to keep the programs on
schedule.
For the Department of Defense, an estimated $9,481 million of the
balances will be obligated, largely for procurement. Furthermore,
practically all of the remaining $2,000 million balances will be earmarked or committed to use for specific programs or projects. These
balances, as noted earlier, arise almost entirely from the Defense practice of fully funding major weapons systems and construction projects.
For the civilian agencies, $7,446 million is estimated to be obligated
in 1970. Of this total, $2,750 million is for programs of the Department
of Housing and Urban Development. For the most part, these represent amounts reserved but unobligated on June 30, 1969, which are
expected to be converted to obligations in 1970.
Other Federal fund balances as of June 30, 1969 which are estimated
to be obligated in 1970 are detailed in table G-5, showing the agency
involved and the programs for which the funds will be used.
Held for others.—An estimated $4.9 billion (10%) of the unobligated Federal fund balances are held for others. They consist primarily
of reserves against losses in guarantee and insurance programs derived
from fees, premiums and other receipts collected from the group
served by the program and held for them for possible later use or
distribution. These balances closely resemble those of trust funds.
The breakdown of this total is reflected in table G-6.




86

THE BUDGET FOR FISCAL YEAR 1970

Table G-5. UNOBLIGATED FEDERAL FUND BALANCES PLANNED FOR
OBLIGATION IN 1970' (in millions of dollars)
Agency and program

End of 1969 estimate

9,481

Department of Defense—Military

Procurement
Military construction
Research, development, test, and evaluation.
Revolving and management funds

6,833
940
781
927
2,750

Department of Housing and Urban Development

Urban renewal programs
Government National Mortgage Association: Special assistance functions..
College housing loans
Model cities programs
Other

1,467
640
167
121
355
1,361
720

Export-Import Bank: Loan program
Department of Agriculture

Farmers Home loan and credit insurance programs _
Rural Electrification—loan program
Small Business Administration: Loan program
Department of Labor: Advances to State Employment Services pending tax
collections
Department of Health, Education, and Welfare: Mainly hospital construction..
Agency for International Development: Economic assistance program
Department of Transportation: Largely for highway safety and aviation
programs
General Services Administration: Public buildings construction and management
Veterans Administration: Mainly housing loan programsDepartment of Defense—Civil: Construction program
Tennessee Valley Authority: Power program
Commerce: Merchant ship construction
Other
Total.

692
28
498
341
284
271

222
148
146
124
122
102
357
16,927

i Covers accounts with balances of $20 million or more.

Available for rescission if statutes are changed.—An estimated
$16.4 billion (34%) of unobligated balances in Federal funds is in
this category. Most of these could be rescinded by converting from
definite to indefinite authority the backup or emergency financing of
various guarantee or insurance programs. This would not change the
nature of the Government's contingent liability, and would not
reduce the actual availability of funds if they were needed for obligation. However, it would eliminate the balances from the unobligated
total because the amounts available would no longer be specifically
stated and therefore could not be counted. For the most part, these
balances represent standby borrowing authority not expected to be
obligated in the foreseeable future.
Conversion rather than outright rescission would be necessary to
continue the programs, but entails some lessening of control over
potential program levels in the unlikely event the authority is needed
at some time in the future. Some period of concern in the private
markets could occur, mainly because of the uncertainty surrounding
changes in traditional procedures. There would probably be particular
sensitivity to changes in the standby authority for the international
financial institutions, and agreement between the Treasury Department and the institutions would be required.



87

SPECIAL ANALYSES
Table G-6.

UNOBLIGATED FEDERAL FUND BALANCES
OTHERS i (in millions of dollars)
Agency

Department of Housing and Urban Development
Government National Mortgage Association (participation sales fund—
collections to be used for payment to holders of participation certificates,
871; special assistance and management and liquidating functions, 150).
Federal Housing Administration fund—insurance fees and premiums collected from homeowners
Federal Insurance Administration—accumulated premiums in insurance fund.
Federal Home Loan Bank Board (Federal Savings and Loan Insurance Corporation insurance reserves—fees and premiums collected from insured
institutions)
Veterans Administration (premiums and interest in reopened and special
term insurance programs)
Agency for International Development (Foreign investment guarantee fund—
fees, sales of assets, etc.)
District of Columbia—loans for capital outlay
Department of Transportation—amounts required for supersonic aircraft
development program
Department of Agriculture (Federal crop insurance premiums)
Total.
1

HELD

FOR

End of 1969 estimate

2,063
1,021
1,004
38

2,275
352
108
65
55
22

4,940

Covers accounts with balances of $20 million or more.

The Department of Housing and Urban Development has $4,134
million in this category. Of this total, $2,250 million is available to
make loans to the Federal National Mortgage Association if it should
be unable to continue borrowing on tbe private market. This standby
authority represents 30% of the $7,500 million of such private borrowings expected at the end of 1969. Another $1,384 million is borrowing authority that backs up loan commitments to localities for urban
renewal and public housing. Most of these commitments are never
disbursed, because localities are able to obtain private financing as
long as the Federal commitment is outstanding. The unobligated
balance represents 19% of the expected outstanding loan commitments
which are undisbursed and not covered by obligations. The remaining
$500 million is available to pay reinsurance claims in the civil disorder
and flood insurance programs, which are just starting in 1969.
In the Federal Deposit Insurance Corporation, the $3,000 million
in unobligated balances, plus retained earnings that will approximate
$3,900 million on June 30, 1969, are held to provide coverage for
failures in insured banks which, as of June 30, 1968, have insured
deposits of $272 billion.
The Federal Home Loan Bank Board shows $1,750 million of unobligated balances in this category, of which $1,000 million is available
as backup for Federal Home Loan Bank borrowings, which are expected to total $5 billion at the end of 1969. The remaining $750
million is available to the Federal Savings and Loan Insurance
Corporation if the $2,275 million of reserves accumulated from
premiums should be exhausted. These reserves and borrowing authority together represent 2.2% of the total amounts insured.




THE BUDGET FOR FISCAL YEAR 1970

In the case of the Tennessee Valley Authority, while rescission
technically is possible, projects already underway would require
borrowings of all but $100 million of the balances involved. Furthermore, rescinding action would later require legislation for new borrowing authority to meet the growing power needs of the area served.
Table G-7 provides a summation of the amounts in this category.
Table G-7. UNOBLIGATED FEDERAL FUND BALANCES WHERE RESCISSION REQUIRES CHANGE IN STATUTES1 (in millions of dollars)
Agency

End of 1969 estimate

6,633

International financial institutions

International Bank for Reconstruction and Development (assuming one
dollar callable for every dollar of debt, the maximum estimated requirement through 1970 would be $4.3 billion)
Inter-American Development Bank
Asian Development Bank

5,715
818
100

Department of Housing and Urban Development

Public housing (backup for private guaranteed loans)
Urban renewal loans (backup for private guaranteed loans)
Government National Mortgage Association loans to Federal National
Mortgage Association (standby authority for emergency capital investments)
Flood insurance (assurance of payment of reinsurance claims to insurance companies)
Riot or civil disorder insurance (assurance of payment of reinsurance
claims)

1,202
182
2,250
250
250

Federal Deposit Insurance Corporation (standby authority for insured bank
deposits)
_.

3,000
1,750

Federal Home Loan Bank Board

Investment in Federal home loan banks (standby authority for emergency capital investments)
Federal Savings and Loan Insurance Corporation (backup for insurance
reserves)
Veterans Administration (backup for outstanding loan guarantees)
Tennessee Valley Authority (uncommitted authority for power bond issues) _.
Farm Credit Administration

4,134

1,000
750
451
339
113

Investment in banks for cooperatives (standby authority for emergency
capital investments)
Investment in Federal intermediate credit banks (standby authority for
emergency capital investments)
Total.
1

16,420

Covers accounts with balances of $20 million or more.

Available for rescission if administrative

practices are

changed.—Of the estimated $2.9 billion (6%) of unobligated Federal
fund balances not planned for obligation in 1970 which fall in this
category, $2,096 million arises from the full funding policy of the
Department of Defense and the public buildings construction program
of the General Services Administration; $445 million from the reservation system used for programs of the Department of Housing and
Urban Development; and $372 million from other administrative
practices that could be changed. (See table G-8.)




89

SPECIAL ANALYSES

A change in full funding practices for the activities in this category
would permit rescission of $2,096 million of these unobligated balances
in 1970, but would require later restoration unless the program levels
were altered. For example, the rescission of $2,000 million of unobligated balances in the Department of Defense would mean that items
normally contracted for late in the procurement cycle would no longer
be funded. Large items of equipment, such as ships, submarines,
aircraft, and large missile systems could not be made militarily
operational until funds were restored to complete the projects. Budget
authority would have to be made available in 1971 to meet the time
schedule within which these systems are to have operational capability,
or there would be a deferral of program objectives.
Elimination of the reservation system would permit rescission of
$445 million of balances, principally in the Government National
Mortgage Association special assistance program, and the urban
renewal and college housing programs. However, builders, financial
institutions, localities, and others would probably interpret rescission
to mean that funds would not be available for planned projects and,
therefore, refuse to participate in these programs. In turn, this would
make it more difficult to achieve the desired Federal objectives.
Table OS. UNOBLIGATED FEDERAL FUND BALANCES WHERE RESCISSION REQUIRES CHANGE IN PRACTICES* (in millions of dollars)
Type of practice and agency
Change in full funding practices
_
Department of Defense—Military (mainly procurement and military construction)
General Services Administration (public buildings)
Elimination of reservation system
_
Department of Housing and Urban Development:
Government National Mortgage Association: Special assistance functions
(reservations to be converted to obligations after 1970)
Urban renewal grants (outstanding reservations on June 30, 1969 which
will not convert to obligations until after 1970)
College housing (reservations not converted to obligations in 1970)
Public facility loans (reservations not converted to obligations in 1970)__
Housing for the elderlj (reservations not converted to obligations in 1970).
e elderly
Other.
Department of Housing and Urban Development (change accounting definition in FHA fund)
District of Columbia (change definition and administrative actions in general fund appropriation for capital outlay loans)
Small Business Administration (maintain nominal balance in disaster fund)
Other (Department of Justice and Veterans Administration)

TotaL
1

End of 1969 estimate

2,096
2,000
96

445
175
152
102
14
2

372
134

176
52
10
2,913

Covers accounts with balances of $20 million or more.

Available for rescission under present statutes and prac-

tices.—An appraisal of agency program plans, as reflected in the 1970
budget, indicates that the remaining $7.5 billion (15%) of unobligated




90

THE BUDGET FOR FISCAL YEAR

1970

Federal fund balances could be rescinded without requiring changes in
basic statutes or current administrative practices, if the Congress
wishes to take such action. Table G-9 summarizes these data.
Table G-9. UNOBLIGATED FEDERAL FUND BALANCES AVAILABLE FOR
RESCISSION^ (in millions of dollars)
Agency and account

Department of Housing and Urban Development (after allowing for needed
obligations or reservations in 1970)
College housing loans
Government National Mortgage Association: Special assistance functionsPublic facility loans

End of 1969 estimate

3,936
2,349

1,353
234
1,249

Department of Agriculture

Farmers Home Administration (after providing for adequate funding for
1970)
Section 32 balances
Forest roads and trails

639
300
310
1,026
574

Export-Import Bank (after allowing for needed obligations in 1970)
Veterans Administration (after allowing for needed obligations in 1970) _
Direct loan revolving fund
Hospital construction

553
21

Department of Transportation
Highway safety
Forest and public lands highways_
Urban mass transportation

150
32
55

Department of Health, Education, and Welfare (Higher education facility
loans)
Farm Credit Administration (after estimating needs for standby authority
for emergency investment in banks for cooperatives and Federal intermediate credit banks once Federal capital is retired)
Banks for cooperatives
Federal intermediate credit banks
Department of the Interior (National Park and Indians parkways and roads).
Department of Commerce (Economic Development Administration revolving
fund)
Total.
1

237

153
147
98
49
94
58

7,474

Covers accounts with balances of $20 million or more.

In the Department of Housing and Urban Development this
analysis indicates that $3,936 million is available for rescission under
present statutes and administrative practices. For example, the college
housing program has available balances of $2,618 million; after
deducting $167 million to be obligated in 1970, and $102 million being
used for administrative reservations which will mature into obligations
after 1970, the balance ($2,349 million) could be considered for rescission. A similar analysis of the Government National Mortgage Association balances yields, as a potential candidate for rescission, an amount
of $1,353 million in the special assistance program; and the $234 million
in the public facility loan program is another possibility.




SPECIAL ANALYSES

91

This analysis also indicates that $1,249 million is available for
rescission in the Department of Agriculture without changing existing
statutes or practices. This includes $300 million for the removal of
surplus agricultural commodities (section 32) which probably should
not be considered for rescission in order to continue the policy of
providing reserve funds to meet contingencies. There is also an
unobligated balance of $310 million for forest roads and trails. Rescission in this case, however, would have the effect of removing some
administrative flexibility that is helpful in dealing with changes in
economic conditions. Balances of $639 million in the direct loan and
the rural housing loan accounts of the Farmers Home Administration
are potential candidates for rescission. However, a balance of $121
million should be retained for the rural housing loan account to leave
a small margin to provide for needs in subsequent years. Rescission of
the remaining $518 million, however, may require additional budget
authority to continue these programs in future years.
Of the $2,387 million of unobligated balances in the Export-Import
Bank, $1,361 million is needed to cover the gap between receipts and
obligations estimated for 1970. The residual balance of $1,026 million is not planned for use in 1970 and thus could be considered for
rescission. However, this would reduce operational flexibility and will
require new budget authority in subsequent years.
In the Veterans Administration, $574 million, of unobligated
balances could be rescinded without changing existing statutes or
practices. Of that total, $553 million in the direct housing loan program
is not required to support the program level reflected in the 1970
budget, and if considered for rescission, probably would not require
equivalent funding before 1971. On the other hand, the remaining
$21 million for hospital construction might best be held to provide
flexibility in coping with changes in local project requirements.
Another potential candidate is the $153 million of the balances held
in the higher education facility loan account of the Department of
Health, Education, and Welfare. These are unused due to a change in
financing for this program; instead of direct loans, new interest
subsidy grants will permit use of private financing. Thus, these balances could be rescinded without altering the 1970 program level and,
under the budget proposals, would not require equivalent future
financing.
This analysis identifies other possibilities with respect to the remaining balances. In the Department of Transportation, for example,
rescission of the $237 million balances would have no 1970 program
impact; the slower-than-anticipated pace of the new highway safety
program accounts for the largest part of those balances. Similarly,
rescission of the $147 million balances in the Farm Credit Administration also would not affect the 1970 program, but is held primarily
to meet emergency requirements. While the parkways and roads
item in the Department of the Interior reflects balances that could
be rescinded, those balances provide leeway in dealing with changing
economic conditions related to construction work. Rescission action
on the balance in the Economic Development Administration revolving fund would have no program impact; however, this fund is used
to pay interest costs to Treasury.




92

THE BUDGET FOR FISCAL YEAR 1970
RECOMMENDED APPROACH T O RESCINDING $8
UNOBLIGATED BALANCES

B I L L I O N OF

Various overall approaches to an $8 billion rescission of unobligated
balances suggest themselves from the foregoing study. For example,
a decision by the Congress to depart completely from full funding
in Federal fund accounts would yield rescissions of over $11 billion,
including elimination of most Department of Defense balances. However, full funding has many important advantages, and full departure
from that concept is not suggested as a desirable course. If such action
were taken, approximately $9 billion of the budget authority so rescinded would have to be replaced in 1970 to maintain planned program activities. Only $2 billion of these balances are not expected to
be obligated in 1970.
Similarly, a decision to change the laws so as to convert all standby
balances in these accounts to indefinite authority would produce
rescissions well over the statutory $8 billion, but involves substituting
one form of authority for another and entails problems and disadvantages, as described earlier. Other alternatives are, of course, possible—
both general and selective.
This study suggests, first, that consideration of rescissions should
not include certain of the balances in Federal fund accounts. These
are (a) balances planned for obligation in 1970 which, if rescinded,
would require 1970 budget authority instead (unless program plans—
particularly for Defense—were greatly altered); and (b) balances not
planned for obligation in 1970, but held for others. The effect of
excluding these balances from the base for reduction (accounts with
balances of $20 million or more) is as follows:
Total estimated unobligated balances in Federal funds
Less:
Federal fund balances planned for obligation in 1970
Federal fund balances not planned for obligation in 1970, but held for others
Revised base

$ millions
48,674
16,927
4,940
26,807

Thus, in effect, the remaining balances must be reduced by approximately 30% if an $8 billion rescission is to be accomplished.
The study further suggests that if $8 billion of balances are to be
rescinded, they should be selected as follows:
• First, from the $7.5 biUion of Federal fund balances which
are not planned for obligation in 1970 and for which rescission
would not involve changing laws or traditional administrative
practices. Selections from this category should be made to the
extent possible without affecting or causing undue difficulty
in working toward program objectives.
• Second, from other Federal fund balances where changes in
practices are required but the amounts available are not planned
for obligation in 1970. Selections from this category should be
made (a) to the extent necessary to reach a total of not less than
$8 billion; and (b) so as to provide for a rescission of Department
of Defense balances in an amount proportionate to its share
(23.6%) of the total unobligated balances of Federal funds as of
June 30, 1969.




93

SPECIAL ANALYSES

Based on an evaluation of these categories of balances, a reasonable
approach to legislation for an $8 billion rescission is reflected in table
G-10.
Table G-10. A REASONABLE APPROACH TO RESCISSION OF $8 BILLION
OF UNOBLIGATED BALANCES' (in millions of dollars)
Agency and account

End of 1969 estimate

From balances where changes are not required:

Department of Housing and Urban Development
College housing loans
Government National Mortgage Association: Special assistance functions.
Public facility loans
Export-Import Bank:
Export-Import Bank fund
Veterans Administration:
Direct loan revolving fund
Department of Agriculture:
Farmers Home Administration
Direct loan account
Rural housing direct loan account

3,936
2,349

1,353
234
1,026
553
518
268
250

Department of Health, Education, and Welfare:
Higher education facilities loan fund

153

From balances where rescission requires change in practices:

Department of Defense—Military...
Procurement (mainly from full funding requirements beyond 1970)
Military construction (mainly from full funding requirements beyond
1970)
—
Total.
1

2,000
1,850
150
8,186

Covers accounts with balances of $20 million or more.

For the civilian agencies, the Federal fund balances which offer
the best prospects for rescission are in loan programs. The amounts
involved take account of funding requirements estimated for 1970
and do not affect the reservation system used in the Department of
Housing and Urban Development programs or other customary
financing procedures. In other civilian agencies, the balances suggested for rescission would not require changes in present statutes and
practices, the action would not affect the 1970 program, and the
need for equivalent financing later either is not anticipated or can be
held for future consideration.
With respect to the Department of Defense balances proposed for
consideration, here too there would be no impact on the 1970 program.
However, there would be a need for some change in present practices
with respect to the full funding concept. In this case, the Department
of Defense has a total of $10.6 billion in unobligated Federal fund
balances as a result of the practice of fully funding the military
construction, procurement, and research and development activities.
Of this total, all but $2 billion will be obligated by the end of 1970.
This $2 billion is now planned to be used for procuring large weapons
systems through contracts that are made at later stages of completion
and for military construction projects. Though not needed in 1970
under present Defense plans, equivalent authority would be required
in 1971 in order to complete the projects underway and to make the
weapons systems operational.



SPECIAL ANALYSIS H
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
international agreements that deal primarily with (1) sales of 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. With respect to these sources, sales of commodities for foreign currencies will be phased out over the next few
years. 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.
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 purposes beneficial to the foreign 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 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 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 1969, the excess currency countries
are: Burma, Ceylon, Guinea, India, Israel, Morocco, Pakistan, Poland,
Tunisia, United Arab Republic (Egypt), and Yugoslavia. All are
expected to remain excess currency countries in 1970.
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 excess currencies are used to pay the costs of
these programs. Thus, reports show an expenditure of appropriated
dollars for the using agency and a corresponding receipt for the
94




95

SPECIAL ANALYSES

Commodity Credit Corporation or other fund which originally acquired
the currency. In addition, local payments in excess currency countries
from regular appropriations are generally made in foreign currencies,
and agencies are encouraged to substitute the use of such currencies for
dollars whenever possible.
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, whenever
possible. It is not appropriate, however, to seek additional uses for
such currencies, and they are not available for use under the special
foreign currency appropriations. The "near-excess" countries currently
are: Bolivia, Ghana, Indonesia, and Sudan.
Table H - l shows total availabilities of foreign currencies owned
by or in the custody of the United States.
Table H-1. CASH AVAILABILITY OF FOREIGN CURRENCIES
(in millions of dollar equivalents)
Type of availability

1968
actual

Currencies owned by the United States:
For U.S. uses:
Excess currencies
Nonexcess currencies

1970
estimate

1,658
418

__

1,945
363

2,191
1,151
-52

2,308
856
-110

3,370

Total cash availability

1,796
395

2,076
1,372
-78

Subtotal for U.S. uses
For country uses
Amounts unfunded in Treasury accounts

Currencies held in trust

1969
estimate

3.289

3,054

143

147

138

Need for foreign currencies.—As indicated in table H-2, the need
for foreign currencies in U.S. operations often does not correspond to
their availability on a country-by-country basis. Although in 1970
the United States will have over $2.3 billion available for U.S. programs, only $363 million will be in nonexcess currencies. We must,
therefore, purchase over $2 billion of currencies to meet our total
requirements. (These figures are based on estimates 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 of others.



96

THE BUDGET FOR FISCAL YEAR 1970
Table H-2. FOREIGN CURRENCIES AVAILABLE TO MEET U.S.
REQUIREMENTS (in millions of dollar equivalents)

Estimated
supply
for 1970

Country

Excess currencies:
Burma
Ceylon
Guinea
India
Israel
Morocco
Pakistan
Poland
Tunisia
United Arab Republic (Egypt)
Yugoslavia

Nonexcess currencies:
Bolivia 1
Canada
France
Germany, Federal Republic of _
Ghana 1
Indonesia 1
Italy
Japan
Korea
Philippines
Spain
Sudan 1
Thailand
Turkey
United Kingdom
Vietnam
_

Total nonexcess currencies.
Total

Other
than
special
programs

Special
programs

0.6

25.0
182.5
82.2

0.5
.4
.1
11.5
17.5
8.1
3.6
2.2
2.8
1.2
4.4

19.8
5.3
1.6
9.0
6.3
2.0
2.6
9.4

1,945.4

Total excess currencies

Other countries

15.7

1970 estimated requirements (expenditures)

52.3

58.3

6.5
5.9
1.6
6.6
1.7
4.5
1.9

6.8
102.9
40.5
944.5
.8
2.5
62.7
246.6

6.5
7.3
912.5
27.6
31.9
200.3
453.9

24.1
13.2
6.7
15.8

.5
7.5
38.9
4.1

1.3
.4

RequireAmounts ments for
available commercial purfor use
after 1970 chase in
1970

14.6
4.8
6.8
881.2
4.8
22.2
187.7

445.4
20.2
178.7

68.4
1,834.8

0.3
97.0
38.9
938.1

84.1

60.8
244.4
71.0

99.0
38.6

92.3
23.0

1.5
151.3

1.0
143.8

22.0

9.3
1.0

29.6

35.6
187.6

362.7

2,588.3

2,308.1

2,640.6

15.7

102.3
307.1
157.4

1.0

50.8

2,277.4

59.3

1,885.4

2,277.4

105.6
342.7
328.6

"'Less than $50 thousand.
Currently designated as "near-excess" currency countries.

1

U.S. uses of foreign currencies.—Table H-3 summarizes transactions in 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.




97

SPECIAL ANALYSES

Table H-3. SUMMARY OF FOREIGN CURRENCY TRANSACTIONS, U . S . USES
(in millions of dollar equivalents)
Nature of transaction

1968
actual

Cash balances brought forward:
Excess currencies
Nonexcess currencies

1969
estimate

1970
estimate

1,387
43

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)

1,685
46

1,430

Subtotal, cash balances brought forward

1,551
57
1,608

1,731

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
Adjustments due to changes in exchange rates
Cash balances carried forward

._

65

130
24
40

115
24
34

119

158

183

176

146

156

583

577

2,076

Total availabilities

85

82
24
41

612
34

Subtotal, collections
Net transfer from country use

170

2,191

2,308

8

10

11

77
158
216
3

125
144
206
5

110
121
179
2

*

*

*

461
-7

460

423

1,608

1,731

1,885

"Less than $500 thousand.

Special foreign currency program appropriations requests for
1970.—Most U.S. uses of foreign currencies are covered by dollar
appropriations. Table H-4 lists separate appropriations for special
foreign currency programs which are limited to payments in excess
foreign currencies.

340-700 O—69



7

98

THE BUDGET FOR FISCAL YEAR 1970

Table H-4. SPECIAL FOREIGN CURRENCY PROGRAM APPROPRIATIONS
(in thousands of dollars)
Appropriation title

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: Research and training
Office of Social and Rehabilitation Service: Research and training__

National Institutes of Health: Scientific activities overseas
Department of the Interior:
Bureau of Commercial Fisheries: Management and investigation of resources
Office of the Secretary: Salaries and expenses
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
National Science Foundation: Scientific activities
Smithsonian Institution: Museum programs and related research..
United States Information Agency:
Salaries and expenses
Special international exhibitions
Total budget authority.

1968
enacted

1969

1970

1,626

2,143

1,907

8,500

4,500

8,287

200

200

200

750
500
11,200

500
500

500

1,000

4,000

5,000
15,000

5,000
15,000

5,000
15,322

100

15

15
25

5,025

3,050

2,316

2,316

2,186
3,000
4,500

8,604
387

9,250
428

11,100

59,283

43,902

56,042

75

Foreign currency expenditure authorizations.—The 1969 For-

eign Assistance and Related Agencies Appropriation Act authorized the
expenditure of $5.1 million in excess currencies for assistance to
American schools and hospitals abroad without charge to a dollar
appropriation. The 1970 budget recommends $1.7 million for the
American University of Cairo. In addition, excess currencies are made
available under permanent authorizations for emergency relief assistance and for the purchase of goods and services in Nepal (using
Pakistan and Indian rupees). Some unexpended balances of prior
foreign currency expenditure authorizations remain for Defense family
housing. Table H-5 summarizes all transactions under foreign currency
authorizations for U.S. uses which do not require charges to dollar
appropriations.




SPECIAL

99

ANALYSES

Table H-5. S U M M A R Y OF FOREIGN CURRENCY AUTHORIZATIONS FOR
U . S . USES, WITHOUT CHARGE TO A P P R O P R I A T I O N S
(in thousands of dollar equivalents)
Description

1968
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

1969

1970

2,000
7,218
5,986
618

13,202

8,969

1,440
5,185

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
6,269
1,700

15,822

Total authorizations

600
7,502
5,100

1,000
6,983
2,050
110

1,000
7,027
3,000
110

10,143

11,137

467
130
519
7,741

Total expenditures

Country uses.—A far larger amount of foreign currency is used outside of the appropriations process for country uses, as summarized
in table H-6. This consists of loans and grants in the host country
for common defense and economic development.
Table H-6. S U M M A R Y OF FOREIGN CURRENCY TRANSACTIONS,
COUNTRY U S E S (in millions of dollar equivalents)
1968
actual

1969
estimate

1970
estimate

779

697

494

621
6

448
6

356
6

627
34

454

362

1,372

1,151

856

Outlays (deduct):
Public Law 480 country loans and grants.- _
Other foreign assistance programs

682
7

651
6

480
6

Subtotal, outlays
Adjustments due to changes in exchange rates

689
14

657

486

Balances carried forward

697

494

370

Balances brought forward
Collections:
Public Law 480 sales
Foreign assistance program

_ __

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




_ _

__ _..

__

100

THE BUDGET FOR FISCAL YEAR

1970

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 H-7 summarizes foreign currency trust fund activity.
Table H-7. SUMMARY OF FOREIGN CURRENCY TRUST FUNDS
TRANSACTIONS
(in millions of dollar equivalents)
1968
actual

Balance brought forward
New authorizations to spend foreign currency—permanent:
Advances from foreign governments

1969
estimate

1970
estimate

47

Balances carried forward

87

147

138

91
-5
__

100

143

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

51

96

Total availabilities

47

96

96

47

51

42

Loans.—As a result of various loan programs, the United States has
outstanding loans of almost $6 billion equivalent repayable in foreign
currency. Nearly $4 billion of this is in excess currencies. The loan
repayments and interest are available for U.S. uses.
Table H-8. BALANCES OF OUTSTANDING LOANS REPAYABLE IN FOREIGN
CURRENCIES AS OF JUNE 30, 1968 (in millions of dollar equivalents)
Excess currency countries:
Burma
Ceylon...
Congo (Kinshasha)
Guinea
India
Israel
Pakistan
Tunisia
United Arab Republic (Egypt)
Yugoslavia

38
14
7
1
2,144
255
622
81
355
300

Nonexcess currency countries:
China (Taiwan)
Greece
Japan
Morocco
Spain
Turkey
Other
Total nonexcess currencies
Total

Total excess currencies




3,817

162
122
101
214
217
393
876
2,085
T902

SPECIAL ANALYSIS I
CIVILIAN EMPLOYMENT IN THE EXECUTIVE BRANCH

Civilian employment in the executive branch is expected to rise
in the year ending June 30, 1970, as a result of added workloads
reflected in the 1970 budget recommendations. As a matter of policy,
the executive agencies were generally instructed to absorb—through
greater productivity improvements, continuation of service curtailments, or otherwise—the employment reductions taking place in 1969.
These reductions, in the main, are the result of personnel appointment limitations provided in section 201 of the Revenue and Expenditure Control Act of 1968 (Public Law 90-364), discussed below.
Thus, the estimates of June 1970 employment carried in this
analysis reflect the changing functions and workloads that are expected to be added in 1970, less the productivity and efficiency improvements which could normally be anticipated for that year. Since
the Public Law 90-364 appointment restrictions, even with the
statutory exemptions already granted, would prevent the employment
of such additional personnel, the 1970 estimates assume the repeal of
section 201 of that law.
In addition, a major portion of the reductions in overseas civilian
employment, directed by the President in January 1968 as part of
his program to correct the balance in our international payments, is
reflected in the tables of this analysis.
FULL-TIME

PERMANENT CIVILIAN

EMPLOYMENT

Nearly one-half of all Federal civilian employees work in the Department of Defense, over one-fifth in the Post Office, and 6% in the
Veterans Administration. Thus, these three agencies account for about
three-quarters of all permanent full-time employment in the executive
branch.
Between June 1968 and June 1969, full-time permanent civilian
employment in the executive branch is estimated to decline by 22,000
to a total of 2,650,000. The decrease is primarily due to the statutory restrictions on. appointments imposed by section 201 of the Revenue and Expenditure Control Act of 1968 (Public Law 90-364).
This provision limits hiring by executive agencies to no more than three
positions for every four vacancies occurring after June 30, 1968, until
full-time permanent employment for the executive branch as a whole
reaches the June 30, 1966, level.
The law, as originally enacted, exempted only employees appointed
bj the President with the advice and consent of the Senate, intermittent employees, persons serving without compensation, and 70,000
disadvantaged youth employed during the summer. Congress later
enacted legislation exempting additional employees from the hiring
restrictions of Public Law 90-364. This applied to positions in the
affected agencies on November 30, 1968, in the following numbers:



101

102

T H E BUDGET FOR FISCAL YEAR

Post Office Department
Veterans Administration
Department of Defense for Southeast Asia
Department of Transportation for FAA air traffic control system
Department of Justice for the FBI
Tennessee Valley Authority for power programs
Total....

-

-

1970

-._

524,141
147,634
70,310
31,327
16,160
7,615
797,187

Table 1-1 shows by agency the numbers of civilian permanent
full-time employees at the end of 1968, 1969, and 1970. The estimated
total of full-time employment for the end of 1970 represents only a
6,000 increase over the employment level for 1969 as estimated in last
year's budget. This is due primarily to the fact that employment increases over the 1969 level were limited either to n ew programs or to
increasing workloads occurring in 1970 and do not recapture the decreases resulting from the operation of Public Law 90-364. Of the
total anticipated increase of nearly 43,000 from 1969 to 1970, over
11,000 is to permit the Post Office Department a 2% increase in work
force to service a 3.1% increase in mail volume.
The remaining increase is needed to provide a larger number of
public services to a growing population and expanding economy.
Eight agencies account for the bulk of this increase in employment:
(1) The Department of Agriculture, up 3,400, largely to service an
increase of over 100% in the rural housing loan program for low and
moderate income families—as part of the 10-year national housing
program enacted in 1968—and for increases in the food assistance
and meat and poultry inspection programs.
(2) The Department of Health, Education, and Welfare, up 4,100,
primarily to handle a projected 6.5% increase in overall workload of
the Social Security Administration in such areas as processing claims,
maintaining earnings records, and changing beneficiary status. Increases are also expected for health programs such as direct health
care and disease prevention and control.
(3) The Department of Housing and Urban Development, up
2,000, primarily in the Federal Housing Administration to process a
33% increase in mortgage insurance applications, reflecting the
impact of the new 10-year national housing program. Increases are
also planned to administer the 150 community projects under the
Model Cities program.
(4) The Department of the Interior, up 1,300, mainly for operation
of new power facilities built with funds provided in earlier years,
expansion of water pollution control, education of Indians in Federal
schools, and the operation of eight new national park areas.
(5) The Department of Justice, up 1,000, primarily for increased
Federal law enforcement activities and for assistance to State and local
law enforcement efforts under the Crime Control and Safe Streets
Act of 1968.
(6) The Department of Transportation, up 5,000, principally in the
Federal Aviation Administration to operate new facilities and to service a 10% increase in landings and takeoffs at airports with FAA
towers.
(7) The Department of the Treasury, up 4,900, mainly for rising
workloads in Internal Revenue Service operations due to a 2.3%




103

SPECIAL ANALYSES

increase in the number of tax returns and a 9.4% increase in the
number of tax returns audited.
(8) The Veterans Administration, up 4,700, to handle a 15%
increase in outpatients, provide new medical services, increase the
number of health personnel trained in Veterans Administration
facilities, and activate new hospitals.
Table 1-1. SUMMARY OF FULL-TIME PERMANENT EMPLOYMENT IN THE
EXECUTIVE BRANCH
As of June
Agency

,256,068
549,623

1,235,648
564,501

1,235,000
575,700

-648
11,199

1,800,149

1,810,700

10,551

85,397
26,197
32,062
106,834
14,983
61,186
34,424
9,786
25,785
58,027
82,132
7,169
37,454
32,471
151,023

83,000
25,350
31,310
102,581
14,772
59,580
35,600
9,564
25,068
60,405
80,200
7,037
36,850
31,745
147,634

86,400
26,000
31,364
106,700
16,800
60,900
36,600
9,700
24,600
65,400
85,100
7,300
38,100
31,500
152,300

3,400
650

17,569
3,106
7,000
4,377
12,009
14,940
11,283
32,166

16,600
2,891
6,700

-700
9

12,436
14,782
10,983
31,224

15,900
2,900
6,950
4,200
12,600
15,200
11,000
32,794

850,562

880,308

29,746

2,500

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 Sttae.
Department of Transportation
Treasury Department
Atomic Energy Commission
General Services Administration
National Aeronautics and Space Administration..
Veterans Administration
Other agencies:
Agency for International Development
Office of Economic Opportunity
Selective Service System
Small Business Administration
Tennessee Valley Authority
The Panama Canal
United States Information Agency. _
Miscellaneous Agencies 2

1970
estimate

867,380

Subtotal 1

1969
estimate

,805,691

Department of Defense, Military and military assistance 1
Post Office Department

Subtotal.

2,500

2,693,508

42,797

4,250

Allowance for contingencies .
1

Total .

Change,
1969-70

1968
actual

2,673,071

2,650,711

54
4,119
2,028
1,320
1,000
136
-468
4,995
4,900
263
1,250
-245
4,666

250
-50
164
418

U
1,570

1
Each year includes 42,000 Army and Air Force National Guard civilian technicians who were
converted by law to Federal employment status as of Jan. 1, 1969.
2
Excludes member-employees of the Soldiers' Home.

TOTAL FEDERAL PERSONNEL

Employees in permanent full-time positions account for over 85%
of total civilian employment in the executive branch. The remainder
consists of temporary, part-time, and intermittent workers, employed
largely in projects of a special, temporary, or seasonal nature.



104

THE BUDGET FOR FISCAL YEAR

1970

Total Federal Government employment also includes Armed Services personnel in the executive branch and employment in the
legislative and judicial branches.
As of June
Civilian employment in the executive branch:*

Full-time permanent2
Other than full-time permanent3
Armed Services personnel:
Department of Defense
Reimbursable details to other agencies
Department of Transportation (Coast Guard)

1968
actual

1969
estimate

1970
estimate

2,673,071 2,650,711 2,693,508
320,322
334,289 < 338,492

Legislative and judicial personnel

3,452,438
2,662
37,788

6,576,922 6,509,221

Total executive branch personnel

3,545,465 3,484,337
1,964
2,663
36,100
37,221

6,524,888

35,236

Total

6,612,158

1
2
3

Excludes member-employees of the Soldiers' Home.
Includes in each year 42,000 civilian technicians in the Army and Air Force National Guard.
Excludes summer workers under the President's Youth Opportunity Campaign and merchant
seamen on vessels under Federal shipping contracts.
4
Excludes 134,000 temporary, part-time, and intermittent employees for the 19th decennial census.

PERSONNEL COMPENSATION AND BENEFITS

Estimates of the Federal payroll and related costs are shown in
table 1-2.
Table 1-2. ESTIMATED PERSONNEL COMPENSATION AND BENEFITS
(in millions of dollars)
Description

1968

Total

Total armed forces personnel costs:
Direct compensation
Personnel benefits

Total

24,350
1,950

25,050
2,050

24,550

26,300

27,100

13,550
3,750

_

1970 1

22,700
1,850

Total civilian personnel costs:
Direct compensation
Personnel benefits

1969 •

14,900
3,700

15,200
3,800

17,300

18,600

19,000

2

_

. . . .

1
Excludes 1970 budget allowance of $2,800 million for military and civilian pay increases, to be
effective July 1969 under Public Laws 90-206 and 90-207.
2
Excludes Reserve components.




SPECIAL ANALYSES

105

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.
The obligations to be incurred for civilian personnel compensation
and benefits in 1970 are estimated at $27 billion.
Some of the personnel are paid from trust funds (such as old-age
and survivors insurance), and compensation of others is from public
enterprise funds (such as the Post Office). The cost of these employees,
included in table 1-2, amounts to over $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, Feueral compensation for such workers also increased.
Pay for most other Federal workers has been set by statute. In
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.
This legislation is designed to achieve, in three steps, comparability
with private industry salary levels by July 1969.
The first step was effective by law 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 was effective in
July 1968, provided a 5% increase for postal employees, and an increase for all others equal to one-half of the amounts by which their
rates fell short of salaries for similar work levels in private enterprise, or
3%, whichever was greater. The third and final step will adjust
Federal rates, effective July 1969, to full comparability with 1968
private enterprise rates.
The compensation figures in table 1-2 reflect the first and second
steps in the series. An overall allowance of $2.8 billion is carried in
the budget for 1970 to cover the third step.
The 1967 legislation also established the Commission on Executive,
Legislative, and Judicial Salaries, whose findings have been reported
to the President. The President's recommendations on such salary
levels are included in the 1970 budget. In addition to other objectives,
the recommendations will permit comparability increases in the higher
career grades where salary movement is now obstructed by the law's
requirement that no career salary rates may exceed that of executives
in level V, which is $28,000 per year.
For four successive years, 1965-68, there has been no significant
Government-wide change in the average grade of General Schedule
employees. The average grade was 7.4 for 1965 and 1968, and 7.3 for
1966 and 1967.




106

THE

BUDGET FOR FISCAL YEAR

1970

GEOGRAPHICAL DISTRIBUTION OF EMPLOYMENT

Table 1-3 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). Almost
8% are in foreign countries and in U.S. territories and possessions.
Table 1-3. FEDERAL CIVILIAN EMPLOYMENT BY GEOGRAPHICAL
LOCATION (as of June 1968)
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
1
2
3

Total
employment *

2 329,879
60,260
12,941
27,131
16,471
329,998
43,474
19,025
4,458
70,963
80,431
28,492
7,881
119,002
42,657
17,592
22,623
37,689
30,940
16,886
» 58,096
68,174
54,805
29,770
21,224
69,729
10,612
15,897
8,516

4,551
70,648
27,061
188,948
37,743
7,358
101,241
57,783

Location

Total
employment

24,684
145,134

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

15,497
30,780
9,327

43,187
152,920
42,205

3,415
3 92,609

61,758
13,200
25,056
5,002
4
35,244
-61,827

Undistributed
Summer youth.__
Total United States
Outside United States:
Territories and possessions
Foreign countries
Total outside United States...
U.S. citizens
Foreign nationals
Total employment
Legislative and judicial
Total executive branch
Distributed as follows:
Full-time permanent
Temporary, part time, and
intermittent

l

2.789,140
36,542
202,947
239,489

5

(58,714)
(180,775)

3,028,629
-35.236
2,993,393

(2,673,071)
(320,322)

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 42,000 Army and Air Force National Guard civilian technicians for which State distribution is not yet available, less 6756 merchant seamen on vessels under Federal shipping contracts and
member-employees of the Soldier's Home.
5 Excludes 119,062 foreign nationals working for Department of Defense under contract agreements, or other arrangements with foreign governments which provide for the furnishing of personal
services.




SPECIAL ANALYSES

107

TRENDS IN NUMBERS OF EMPLOYEES AND WORKLOAD

An increasing population and a steadily expanding economy,
heightened concern for those segments of the populace which have
not participated fully in the Nation's prosperity, and an emphasis
on seeking solutions to pressing national problems have combined to
stimulate a rise in the volume of public services provided by the
Government. In 1970, for example:
• Participants in the food stamp program will rise 9%.
• Equal employment opportunity complaint cases are projected to
increase by 25%.
• Narcotics and dangerous drugs investigations are expected to
increase by 10%.
• Visitors to national parks will increase by 8%.
• The number of persons arriving in the country will increase by
6% and formal cargo entries will increase by 7%.
• There will be a 26% increase in power reactors requiring inspections.
• A 4% increase will occur in the number of broadcast stations
regulated by the Federal Communications Commission.
• There will be a 29% increase in participants in occupational and
basic education training programs for unemployed and underemployed workers.
• An 8% increase is projected in unfair labor practice cases.
• The number of persons served by the Federal Medicaid program
will increase by 7%.
• Loans under the housing rehabilitation loan program will increase
by over 200%.
• Establishments with Federal meat inspectors will increase by
over 2%, while the volume of poultry inspected will rise by 11%.
• The farm operating loan program will increase by 40%.
These are but a few of the many workload increases in Government
services for 1970. The related manpower increases are held down by
a rise in productivity rates.
POPULATION AND GOVERNMENT EMPLOYMENT COMPARISONS

The following chart on Government Civilian Employment shows
the ratio of Federal to State and local civilian employment.



108

THE BUDGET FOR FISCAL YEAR 19 70

Government Civilian Employment
Millions of Employees

14 —

10 —

(77S)

1942

1945

End of Fiscal Year

1950

1955

I960

1965

M970
Estimate

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 1942-70 is shown in table 1-4.




109

SPECIAL ANALYSES

Table 1-4. GOVERNMENT EMPLOYMENT AND POPULATION, 1942-70
Government employment
Year

Population

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

1942 1943
1944
1945
1946
1947
1948
1949. _
1950
1951
1952
1953
._
1954
1955
1956
1957
1958
. .
1959
. . .
I960
1961
...
1962
1963
1964
1965
1966
1967
1968
1969 (estimated) *.__
Adjusted for National Guard technicians ^

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
2,371
2,407
2,485
3
2,490
3
2,469
2,496
2,664
2,877
2,951
2,943

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
9,437

5,582
6,458
6,396
6,891
5,971
5,650
5,820
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
12,388

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
23.1

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
201,166

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
14.7
14.5

1970 (estimated) * 6 _.

2,985
2,990

23.3
22.8

14.7
14.5

Adjusted for National Guard technicians ^

3,032

23.1

14.7

1
Covers total end-of-year employment in full-time permanent, temporary, part-time, and inter"
mittent positions except for summer workers under the President's Youth Opportunity Campaign!
member-employees of the Soldiers' Home; merchant seamen on vessels under Federal shipping
contracts; and civilian technicians in the Army and Air Force National Guard.
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
4
An official projection of population and of State and local government employment for 1969
and 1970 is not available. The percentages shown for these years are consistent with a range of reasonable estimates based on recent trenas in population and State and local governments.
* On Jan. 1, 1969, 42,000 civilian technicians of the Army and Air Force National Guard
converted by law from State to Federal employment status.
• 1970 estimate excludes 134,000 temporary, part-time, and intermittent employees for the 19th
decennial census.







PART 2

FEDERAL SOCIAL PROGRAMS




111

INTRODUCTION
Part 2 presents special information on Government outlays in five
social program areas—education, manpower, health, income security,
and crime reduction. It includes the special analyses designated J
through N.
The figures used in these analyses differ from the data on the somewhat similarly titled categories of the functional classification used
in Part 3 of the Budget and elsewhere. In the functional classification,
each activity is categorized according to its major purpose; thus all
the military spending of the Department of Defense falls into the functional category, National defense. In these special analyses, however,
all spending for education, health, etc., is included, even if the activity
has a different primary purpose. Thus the tabulations here are more
comprehensive with regard to these particular types of social programs.
Tne Government's commitment of resources to these purposes is
evidenced by the totals for 1970 budget outlays in the various analyses
(in millions of dollars):
Civilian
agencies

Special analysis:
J. Education
K. Manpower
L. Health
M. Income security
N. Reduction of crime
Deduction for duplications included above
Totals

Depart,
ment of
Defense

All
agencies

8,804
2,819
16,269
45.842
868
-2,162

675
2,008
2,725

9,802
3,494
18,277
48,567
868
-2,162

72,440

6,406

78,846

Some activities of the Government serve more than one social
purpose; for example, loans and grants for the education of nurses
may be considered as a part of both the Federal education programs
and the Federal health programs. About $1,374 million for 1970 is
included in both the health and education categories for this and other
rograms which help train medical personnel. Thus, in adding the
ve categories to a total, a deduction must be made to avoid double
counting.
The Government's resources also go into other social programs that
are not explicitly covered by a special analysis in this volume. One of
the larger areas not included here is community development and
housing, which is presented as a functional category in Part 3 of the
Budget.

E

112




SPECIAL ANALYSIS J
FEDERAL EDUCATION PROGRAMS 1
PART I—OVERVIEW

Outlays for Federal programs in education are estimated at $9.8
billion for 1970, an increase of $759 million over 1969. Education
outlays represent 5% of all Federal budget outlays. The 1970 total is
an increase of $7.8 billion over 1960. Table J - l summarizes the trend
in Federal outlays for the decade.
Table J-1. FEDERAL OUTLAYS FOR EDUCATION (1960-70) (in billions of dollars)
Outlays

Estimate

Actual

Category
1960

Aid to education
.9
Other educational activities. _. 1.2

2.0

Total.

1961 1962 1963 1964

1965

1966

1967

1968

9
1.2

16
2.1

?9
2.8

44
3.1

50 4.8
3.8 4.2

1 1 1 ? 1^
1.3 1.6 1.8

2.1 2.4 2.8 3.1 3.6 5.7

7.5 8.8

1969

9.0

1970

53
4.5

9.8

Federal education programs might be described as serving two main
purposes. The first, reflected in the " aid to education" line of the table,
is to support education per se. This includes activities classified in the
1970 budget as "education," particularly the programs of the Office of
Education (OE) and the National Science Foundation, Head Start
and Follow Through under OEO, college housing loans, and educa1
Note on coverage.—This analysis brings together all Federal programs involving some 400 education and related activities. For the purposes of this analysis, education is defined as an activity involving a student-teacher relationship primarily for the transmission of organized knowledge, as distinguished from the transmission of occupational skills. It includes the provision of services to the
community with the goal of expanding individual opportunities for: (1) professional or career advancement; (2) civic involvement; and (3) a more meaningful and satisfying life. Thus, in addition
to the traditional levels of formal education (elementary, secondary, and higher), this analysis includes
adult and continuing education as well as activities which are closely related to education—for
example, the support of research and development at institutions of higher education.
This analysis does not, however, include scientific research conducted outside of academic institutions (other than that in laboratories and other science projects of the National Science Foundation
and Smithsonian Institution). Also, it does not include scientific research conducted in universitymanaged centers under Federal contracts. Finally, it excludes the school lunch and special milk
programs, university service contracts—for example, to operate mental health centers—and many
inservice training programs for Federal civilian employees.
Previously, this analysis combined manpower training with education. However, for the 1970
budget, Federal outlays for manpower programs are described separately in the Special Analysis
K. The only overlap between the two is the Neighborhood Youth Corps "in-school" financial assistance which helps to prevent students near the compulsory school attendance age from dropping out.
The overlap is estimated at $62 million in 1970 compared with $62 million in 1969 and $79 million in
1968.
Both this analysis and Special Analysis L, Federal Health Programs, include funds for healthrelated training and research activities of health agencies conducted at universities. These outlays
approximate $1,374 million in 1970 compared with $1,222 million in 1969 and $1,143 million in
1968. In addition, outlays for research in academic institutions reflected in Special Analysis Q,
Federal Research. Development, and Related Programs, are included in this analysis. The overlap
between these two analyses is estimated at $1,519 million in 1970, compared with an overlap of
$1,414 million in 1969 and $(,456 million in 1968.

113
340-700 O—69



S

114

THE BUDGET FOR FISCAL YEAR 1970

tion of American Indians. Of the $6.7 billion increase in Federal
education programs since 1964, $4.0 billion or 60% is for these aids to
education.
The second purpose of Federal education programs is to draw upon
the resources of educational institutions as a means for advancing
knowledge and achieving other national objectives. Accordingly, the
1970 budget classifies these programs, summarized in the "other
educational activities" line of table J - l , under other major budget
functions—for example, "health/' "veterans benefits and services/'
or "national defense." Included are such diverse educational activities
as support of research at universities to extend medical knowledge,
GI benefits which help returning servicemen attend school or college,
training of manpower to improve delivery of health services, and
professional training of military officers. These activities account for
40% of the growth in Federal education programs since 1964.
FEDERAL EDUCATION GOALS

During the period 1964-70 the Federal Government has pursued
these two educational goals:
• An opportunity for the best education which the Nation can offer
each individual, suited to his abilities, and interests and without regard to his family income, race, or place of residence.
• An improvement in the quality of education through experimentation with new materials and methods, new ways of using and
training personnel, and new organizations designed to ensure
regeneration and renewal of the Nation's schools and colleges.
Activities which are addressed to the first objective include grants
to improve education of the poor and the handicapped, to expand
college facilities, and to provide financial assistance particularly for
college students from low income families. GI benefits and social
security payments for certain college students also contribute to the
achievement of this goal. Federal activities promoting the second
objective have brought about an expansion of experimental, demonstration and faculty training programs. The 1970 outlays for these objectives total $4.9 billion, one-half of education outlays; they account
for 65% of the total increase in Federal outlays for education over
the past 6 years. Included are funds for (in billions of dollars):
Education of children from low-income families, Head Start, and Follow Through
College student assistance through grants, work study, and loan support
College academic and housing facilities
Experimental and demonstration projects, faculty training, and exemplary school services
GI benefits
Social Security (student benefits)
Vocational education
Education of American Indians and of handicapped children _
T H E 1970

$1.5
.6
.6
.5
.6
.5
.3
.3

BUDGET

The 1970 budget provides for a continued strengthening of programs
to meet Federal goals in education. The highest priority is given




115

SPECIAL ANALYSES

programs for the disadvantage^ Significant increases in outlays
for education in 1970, compared to those in 1969, are (in millions of
dollars):
Education of children from low-income families
Head Start and Follow Through
_
__
_
School and college education of American Indians
Vocational education
__
Teacher training
College student assistance
_
_
NIH graduate training in medical professions and health research construction
DOD training of military personnel and education of overseas dependents
GI benefits.._
_
_
Social Security (student benefits)
.._
Academic research, all agencies
_
__
_
_

$86
33
32
13
30
77
72
46
73
30
95

_

___
_
_

The budget proposes reductions in grants for school and college
eqiipment. It recommends a reduction, based on legislation to be
proposed, of grants to schools in areas affected by Federal activities
(but outlays would not reflect this change due to the proposed reduction until 1971). The budget also proposes greater use of the private
sector of the economy for loan capital through use of Federal interest
subsidies and loan guarantees. An estimated $550 million in non-Federal
funds will be loaned for college classrooms, dormitories and other
facilities. In addition, an estimated $794 million (an increase of $153
million over 1969) will be loaned by financial institutions to about 924
thousand college students.
The distribution of Federal education outlays by educational level
is summarized in table J-2 for 1964 and for the 1968-70 period. Additional details on the composition of each level are provided in Part II
of this analysis.
Table J-2. FEDERAL OUTLAYS FOR EDUCATION B Y LEVEL
(in millions of dollars)
Outlays
Educational level

1964

1968
actual

1969
estimate

3,052
4,651

Actual

Elementary and secondary
Higher
..
Adult and continuing
Training of public employees
Foreign
Other
Total




Percent

546
1,742

17
56

3,228
4,363

108

3

306

309
169
246

10
5
8

402
242
223

3.121

100

8,764

9,043

1970
Estimate Percent

3,358
5,030

34
51

336

357

4

457
290
257

494
292
271

5
3
3

9,802

100

116

THE

RELATIONSHIP

OF

BUDGET FOR FISCAL YEAR

1970

FEDERAL FUNDS FOR EDUCATION
EDUCATION NATIONAL ESTIMATES

TO

OFFICE

OF

The tabulatioD of Federal funds in this analysis and Office of Education reports of expenditures by U.S. educational institutions differ in
two respects:
• This analysis includes Federal assistance which does not flow
through educational institutions—for example, expenditures in
federally operated schools for training of military personnel, the
Smithsonian Institution and national libraries, and the support
of performing art groups by the National Endowment for the
Arts.
• Office of Education reports include amounts for some programs
which are omitted from this analysis—such as funds for school
lunch and school milk, and 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 the
Nation's educational institutions would be about 14% of the total
costs of financing those institutions. The following table summarizes
these adjustments:
Table J-3. FEDERAL OUTLAYS FOR EDUCATIONAL

INSTITUTIONS

(in billions of dollars)
1968
actual
Federal outlays for education and related activities
Less estimated amount not paid to institutions
Plus estimated Federal payments to institutions not included
in this analysis
Total Federal outlays in educational institutions
Office of Education estimate of expenditures by educational institutions
__
Percent Federal

1969
estimate

8.8

1970
estimate

1.2
8.0
54.6
15

9.8
2.6

1.3

2.0

9.0
2.4

1.4

7.9

8.6

58.5

62.1

14

14

FEDERAL SUPPORT OF EDUCATION BY AGENCY

Table J-4 provides a summary of total Federal outlays for education
by administering agency. The Department of Health, Education, and
Welfare (HEW) accounts for the largest share, 58%, with the Office of
Education alone accounting for 39% in 1970. In 1964, HEW's share
was 30% and that of the Office of Education 21%. The largest
increases for 1970 as compared with 1969 are in HEW, the Veterans
Administration and the Department of Defense.




117

SPECIAL ANALYSES
Table J-4. FEDERAL OUTLAYS FOR EDUCATION BY AGENCY
(in millions of dollars)
Outlays
Agency

1968
actual

1970
1969
estimate estimate

Percent

Office of Economic Opportunity
______
Agriculture
_
___
Defense.Health. Education, and Welfare:
Office of Education
Health Services and Mental Health Administration and
National Institutes of Health
Social Security Administration
Other

574
176
808

475
188
924

494
194
998

5
2
10

3.620

3.471

3.866

39

986

1.038
461
132

1.173
491
155

12

Subtotal, HEW
Interior
Housing and Urban Development
National Science Foundation
Veterans Administration
Other i

(5.100) (5.102) (5.685)
195
210
237
234
290
292
500
449
480
727
498
644
733
666
728

(58)

Total Federal outlays

382
120

8.764

9.043

9.802

5
2

2
5
7
7

100

1
Includes Commerce, Justice, State, Transportation, AEC, NASA, National Foundation on the
Arts and the Humanities, Small Business Administration, Smithsonian Institution, TV A, USIA, GPO
and Library of Congress.

PART II—FEDERAL OUTLAYS FOR EDUCATION BY LEVEL
PRESCHOOL, ELEMENTARY, AND SECONDARY EDUCATION

The principal effort of the Federal Government in preschool, elementary and secondary education in the last 5 years has been to bring
about a greater equalization of opportunities for all children. Federal
outlays have risen most sharply for grants to schools where there are
concentrations of children from low-income families and for education
of the physically and mentally handicapped. The second major area
of Federal responsibility is the fostering of innovations essential to
improve our educational system. This is accomplished through research and experimental programs and support for teacher education.
Vocational education is an area of historic Federal concern where
new legislation has expanded and redirected the Federal role as well
as that of the States. The Government has special responsibilities,
also, for education of American Indians, children of American personnel serving in foreign nations, and public school children whose
parents reside or are employed on tax-exempt Federal property.
In 1970, outlays for preschool, elementary and secondary education will amount to $3,358 million. This represents 8% of the estimated
national expenditures on elementary and secondary education in public and nonpublic schools.




118

THE

BUDGET FOR FISCAL YEAR

1970

Table J-5. FEDERAL S U P P O R T OF ELEMENTARY A N D SECONDARY
EDUCATION B Y SUBLEVEL A N D T Y P E OF S U P P O R T (in millions of dollars)
Budget
authority
1970
estimate

Sublevel and type of support

Outlays
1968
actual

1969

1970
estimate

3,370

3,228

3,052

3,358

Preschool
Elementary and secondary
Vocational education
Other

342
2,746

393
2,592

300
2,525

185
58

m

320
2,779
191
69

Current operations
Facilities and equipment
Student support
Teacher training
Educational research

2,844
50

2,694
155
166
155
58

54
,509
148
167
171
57

2,740
156
176
209
77

Total preschool, elementary and secondary

216
65

180
216

"I

79

Table J-5 displays Federal outlays by sublevel and type of support.
Table J-10 details the most significant individual Federal activities
by administering agency.
Education of the disadvantaged.—One-half of the total preschool,
elementary, and secondary outlay is for education of the disadvantaged—the poor and the handicapped.
Education is generally believed to bear a strong relationship with
poverty as is illustrated by the fact that only 9% of high school graduates from the lowest income quartile are in the top quartile of
achievement. Since 1965 several measures have been initiated to cope
with this problem:
• Head Start, operated by the Office of Economic Opportunity,
provides preschool eduoation, nutrition, health and related services for children from poverty families designed to raise achievement to normal levels and to increase chances for success in
school.
• Title I of the Elementary and Secondary Education Act, administered by the Office of Education, provides grants to about
15,300 school districts for expanding and improving services in
schools enrolling large numbers oi children from low-income
families. Each local public school agency makes changes in the
curriculum, and greater use of teacher aides; employs specialists
in reading, speech, music, and guidance; expands hot lunch or
breakfast programs; or offers other services.
• Follow Through, funded through the Office of Economic Opportunity and administered by the Office of Education, is designed
to extend gains made under Head Start and other preschool programs into the early grades. About 308 schools are experimenting
with several different models of school curriculum and services.
Each project is carefully evaluated in order to determine which
models show the greatest promise for a solid basic education for
poor children which will enable them to keep abreast of other
pupils.



SPECIAL

119

ANALYSES

• Grants are made by the Office of Education for prevention of
dropouts and for education of children who come from nonEnglish-speaking homes. Such grants, initiated in 1969, will be used
to experiment and demonstrate new ways of attacking these
difficult education problems.
Several other elementary and secondary programs also give special
priority to problems of education of the poor. The Teacher Corps,
which provides for inservice training of able college graduates who
plan to enter teaching, is oriented entirely to service in schools in
urban and rural poverty areas. Approximately one-half of the training and retraining of teachers under the Education Professions Development Act will be for teachers in such schools. Under new amendments, Federal aid for vocational education will provide a heavier
portion of funding for children from low-income areas.
Federal attention is addressed, through Office of Education grants,
to a second educationally disadyantaged group—those children who
suffer mental or physical handicaps which impair learning ability.
For these approximately 5 million children costly services are usually
necessary, including teachers with special training, a small number of
children in each class, extra materials and equipment. About threefourths of the Federal expenditures are for teacher training and research and experimentation to develop, evaluate, and disseminate
better techniques for education of these children. The Federal Government's support for handicapped children is supplemented by earmarks
in several programs, such as "Title I " discussed above and vocational
education, below, for special services to the handicapped. The total
Federal outlay for all assistance to education of the handicapped will
approximate $155 million in 1970.
Table J-6. N U M B E R O F CHILDREN ENROLLED IN P R O G R A M S FOR T H E
DISADVANTAGED (in thousands)
Federal program

Education of children from low-income families
Special classes for the mentally and physically handicapped
Head Start:
Full year
Summer
Parent and Child Centers
Follow Through classes
Dropout prevention projects and classes for children from nonEnglish-speaking homes
_
_

1968
actual

1969
estimate

1970
estimate

9,000
24

9,000
182

9,000
182

218
477
4

218
477
4
31

235
477
4

10

35

15

64

Developing and transmitting innovations.—Federal support of educational research, experimentation, demonstration projects, and teacher
education will continue to expand in 1970 as it has for several years.
The Federal Government is a major source of funds for support of
this function.
Under the Bureau of Research in the Office of Education all phases
of research and development are supported through grants and
contracts with institutions of higher education, States, and other
agencies. The National Science Foundation makes grants for development of science and mathematics curricula for use in the schools.



120

THE BUDGET FOR FISCAL YEAR

1970

Federal assistance is also provided to strengthen teaching resources.
The Office of Education, the National Science Foundation and the
Office of Economic Opportunity award grants and contracts to colleges, universities and other educational agencies for training and
retraining of teachers. Such training helps to disseminate the results
of research and to upgrade the quality of teaching and administration.
The number trained in these programs is shown in table J-7.
Table J-7.

NUMBER OF TEACHERS IN TRAINING OR RETRAINING
Federal program

Office of Education:
Education Professions Development Act:
Short-term
Full-year graduate fellowships
Short-term trainees under grants to States.
Teachers of the handicapped:
Short-term
Full-year graduate fellowships
Civil Rights Educational assistance:
Short-term
Teacher Corps members in service
Subtotal, Office of Education
Office of Economic Opportunity: Head Start:
Short-term training
National Science Foundation: Short-term
Total, teachers in training.

1968
actual

1969
estimate

1970
estimate

23,010
3,941

26,580
5,145
9,000

30,300
5,240
9,000

8,938
4,331

11,184
5,306

11,184
5,173

8,468
1,873

8,468
1,979

12,410
2,389

50,561

67,662

75,696

50,000
44,915

50,000
41,613

50,000
41,996

145,476

159,275

167,692

In addition to these direct Federal grants and contracts, it is estimated that local schools will use a substantial portion of other Federal
grants—such as those for education of children from low-income
families and vocational education—to carry out in-service training.
Those efforts are estimated to reach as many as 280,000 teachers
during 1970.
Vocational education.—The Vocational Education Amendments of
1968 authorize a wide-ranging modification of Federal and State
responsibilities in this area which the Federal Government has supported since 1917. The new law erases old categories of training for
specific occupational areas in recognition of the need to fit training
to the actual job market demand in each geographic region of the Nation. It seeks to bring local business and labor expertise together with
the schools in order to plan more effective courses. It provides, also,
that 25% of the basic grants to States for vocational education must be
set aside for students from low-income families and the handicapped.
In addition, the 1968 amendments authorize several new programs
including the following which are proposed for funding in the 1970
budget:
• Grants for cooperative school-employer programs in which
students will spend part of their time as employees in business
or industry and part in school.




SPECIAL

121

ANALYSES

• Grants to States, local schools, or other public and private
agencies for projects to test and demonstrate the best vocational
techniques.
• Development of new curricular materials.
The Department of Labor administers Neighborhood Youth Corps
in-school grants, funded through the Office of Economic Opportunity,
which enable schools to establish work and study programs. Payments
from this program help financially needy youths to remain in school.
Table J-8.

NUMBER OF SECONDARY SCHOOL S T U D E N T S IN
VOCATIONAL EDUCATION (in thousands)
Vocational program

Occupational education:
Basic grants to States
Cooperative school employer programs
Exemplary vocational projects

1968
actual

1969
estimate

1970
estimate

4,150
98
45

2,775

Subtotal, occupational
Homemaking and consumer education

3,300

3.300

4,293

2,000

2,000

2,000

2,775

Special Federal responsibilities.—The Department of Defense and
the Department of State finance schools for the dependents of American military and civilian personnel stationed abroad, primarily in
Europe.
The Office of Education makes grants to public schools which
enroll children whose parents reside or work on tax-exempt Federal
property. These so-called "impacted areas" grants have expanded
to a general subsidy for many districts where there is no Federal
property. Payments are estimated at $456 million in 1970 to about
4,600 school districts which enroll 40% of all the students in public
schools in the Nation. The budget is based on legislation which will be
proposed adjusting the entitlements more closely to the actual financial burden experienced by local districts. This will reduce the level
of Federal grants in those cases where the Federal property on which
parents work is located outside the school district; it would change
very little the payments in those cases where parents both live and
work on Federal property.
The Department of the Interior provides Federal schools for the
education of American Indian children who do not have access to
free public education opportunities, makes payments to States and
local public school districts where tax exempt Indian-owned lands are
located, and operates schools for children in the Trust Territories,
Guam, and Samoa.
Table J-9. NUMBER OF CHILDREN PARTICIPATING IN SPECIAL FEDERAL
P R O G R A M S (in thousands)
Program

Enrolled in overseas dependents schools
Federally "connected" children in "impacted area" schools
Enrolled in Department of the Interior Indian schools
Enrolled in Trust Territory, Guam, and Samoan schools




1968
actual
166
2,564
56
53

1969
estimate
191
2,688
58
56

1970
estimate
197
2,688
60
61

122

THE BUDGET FOR FISCAL YEAR 1970

Table J-10. FEDERAL SUPPORT OF ELEMENTARY/SECONDARY EDUCATION BY AGENCY AND PROGRAM (in millions of dollars)

Agency and program

Office of Economic Opportunity:
Headstart
Follow Through
Neighborhood Youth Corps in school
Other_
_
Defense:
Education of overseas dependents
Health, Education, and Welfare:
Office of Education:
Assistance to children from low-income families.
Education of the handicapped
Dropout prevention and bilingual education
Teacher Corps
Aid to federally impacted areas
Supplementary services
Books, equipment, and counseling
Teacher training fellowships and institutes
Vocational education grants
Educational research
Social Security (student benefits)__
Other HEW programs
Interior:
Indian education
Other-__.
_
National Science Foundation:
Science education
Other Federal agencies
Total

Budget
authority
1970
estimate

Outlays
1968
actual

1970
estimate

1969

338
60
62
30

393
3
79
61

299
17
62
59

317
32
62
44

162

83

126

151

,226
66
34
31
315
173
84
105
1%
54
98
51

1,049
41

1,021

.108
71
17
24

130
47

16
506

161
176

59
4
19

406
158
169
71
173
38

456

174

92
25

139
101
188
54
98
44

112
41

122
44

136
47

42
46

49
33

50
38

52
42

3,370

3,228

3,052

3,358

58

185
38
76
68

HIGHER EDUCATION

Federal interest in higher education goes back to the Morrill Act of
1862 which created the land-grant colleges. After World War II, support of academic research became the main thrust of the Federal
effort. In the last several years, attention has shifted to programs
which attempt both to equalize and expand higher educational
opportunities for all individuals primarily through student financial
assistance and aid for construction of college academic and housing
facilities. Special priority has been given to the problems of students
from low-income backgrounds and to expansion of medical education.
In addition, funds are provided to meet other needs in higher education, such as teacher training and institutions with limited resources.
Federal outlays for higher education will amount to $5,030 million
in 1970. This is 51% of total Federal outlays for education and an
increase of 8% over 1969. These outlays constitute about 23%
of the estimated total expenditures for U.S. colleges and universities
in 1970.
Table J—11 presents Federal outlays for higher education for 1968,
1969, and 1970 by type of support and academic level. Table J-16




123

SPECIAL ANALYSES

lists the principal individual Federal activities and administering
agencies.
Table J—11. FEDERAL S U P P O R T OF H I G H E R EDUCATION BY SUBLEVEL
A N D T Y P E O F S U P P O R T (in million* of dollars)

Sublevcl and type of support

Budget
authority
1970
estimate

Outlays
1968
actual

1970
estimate

1969

4,821

4,363

4,651

5,030

2-year institutions
Other undergraduate
Graduate and professional
Other

353
1,618
2,732
118

493
1,477
2,350
43

530
1,545
2,460
115

617
1,681
2,627
105

Student support
Institutional support:
Current operations
Facilities and equipment- _.
Teacher training
Educational research
Academic research1

1,960

1,455

1,753

1,935

651
530
93

429
954
76

468
911

538
934
92

31
1,556

16
1,434

Total, higher education

91
24

1,404

31
1,499

1
Excludes academic research classified under education research in this analysis, estimated at
$20 million in 1970, compared with $10 million in 1969 and $22 million in 1968.

Student aid.—In 1970, $1.9 billion will be spent for aid to students.
Tables J-14 and J-15 indicate the number of students in institutions
of higher education receiving various types of aid and the Federal
agencies providing such assistance. The Department of Health, Education, and Welfare, especially the Office of Education, provides the
largest amount of student support, with outlays of $1,217 million in
1970.
About 46% of all high school graduates enter college within 5 years
of graduation, but the distribution of these students differs significantly by socioeconomic status. Approximately 95% of graduates in
the highest achievement and socioeconomic levels go on to college
while only 50% of graduates with the same achievement level but
from the lowest socioeconomic level enter college.
In order to help alleviate this situation and increase the number of
capable low-income students entering college, several student aid programs have been initiated:
• Educational Opportunity Grants which provide annual assistance
up to $1,000 for students of exceptional financial need.
• Direct ("NDEA") loans for needy students, providing that some
or all of the repayments may be canceled for those who enter
teaching.
• Work-study grants for students to earn a portion of their college
expenses through employment opportunities.
Under each of these programs, administered by OE, grants or advances are paid to colleges and universities which select individual
students on the basis of need. The Insured Student Loan program




124

THE BUDGET FOR FISCAL YEAR 1970

provides interest subsidies on loans made to students from private
sources, and is available to students from all income levels. Over 2
million grants and loans will be made under all of these Office of Education programs in 1970.
The Veterans Administration continues to support a growing
number of students, mainly through benefits provided by the GI bill
and 627,000 students will be aided in 1970. Outlays of $392 million
will be provided in 1970 under provisions of the Social Security Act
to students who are the children, under age 22, of retired, deceased
or disabled beneficiaries.
Table J-12 illustrates the family income distribution of college
students receiving aid from Federal and institutional sources. Almost
all students from the lowest income quartile were aided in 1966-67
and these students received the largest individual amounts of assistance.
About 264,000 graduate, professional, and postdoctoral students
will receive support in 1970. It is estimated that 122,000 returning
servicemen will be enrolled in graduate programs with the assistance of
Veterans Administration benefits. About 98,000 students in the health
and paramedical professions will be assisted through HEW health
programs. These programs consist of fellowships and traineeships
for graduate students studying for careers in health research and of
scholarships and loans to students training for the health service
professions.
Table J-12. NUMBER OF UNDERGRADUATE STUDENTS RECEIVING
STUDENT AID, AND AVERAGE AMOUNT PER RECIPIENT, BY MAJOR
PROGRAM AND STUDENT FAMILY INCOME QUARTILE: 1966-67 (number
of students in thousands; average amount of aid in dollars)
Highest family
income quartile
Student aid program

Lowest family
income quartile

Number
of students

Average
amount
of aid

Number
of students

Average
amount
of aid

Total, all family
income quartiles
AverNumage
ber
of stu- amount
of aid
dents

State and private aid administered by institutions
- - _- Federally supported student aid:
Work-study
Educational opportunity grants
Veterans benefits
Student loans, NDEA
Guaranteed loans

83

$169

231

$628

660

$400

13
4
32
63
159

462
250
990
635
874

97
56
20
125
65

1,052
589
990
552
800

184
134
157
376
430

826
433
990
588
837

All student aid programs—estimated
students, unduplicated. . . . -

274

847

285

1,477

1,171

1,035

Total full-time undergraduate students
in U.S. institutions

1,940

302

4,058

14

94

29

Percent undergraduates receiving aid

Source: Adapted from tables 10, A-18 and A-21. Students and buildings. Office of Education'
Planning Document 68-2, May 1968.




125

SPECIAL ANALYSES

Institutional support.—Federal outlays for institutional support will
amount to $1.5 billion in 1970 with $538 million for current operations and $934 million for facilities and equipment.
Table J-13. FEDERAL OUTLAYS FOR COLLEGE AND
FACILITIES (in millions of dollars)
Federal program

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 (National Institutes of
Health)
__
Science research facilities (National Science Foundation)
Postsecondary technical (OE), and all other programs
Total Federal grants and loans

1968

UNIVERSITY

1969

1970

355
101
289

277
94
286

325
84
226

61
58
90

89
56
109

125
53
121

954

911

934

Current operations includes cost-of-education allowances paid
to institutions of higher education as a part of fellowship and
traineeship grants in the natural and health sciences made under the
National Science Foundation and HEW. It also includes grants to
institutions made by HEW for training of students in the health
professions and rehabilitation services. In addition, grants are made
by the Office of Education for improvement of colleges which are not
in the mainstream of quality academic institutions, for land-grant
colleges, and for college libraries. Finally, the Department of Defense
supports college ROTC activities.
Grants and loans are provided by OE and HUD for construction
of college and university classrooms, laboratories, libraries, and dormitories. Part of the financing is being shifted from direct Federal loans
to Federal interest subsidies on loans made to colleges by the private
market. In 1970, the Office of Education will support approximately
$250 million in loans for new construction through interest subsidy
payments. College housing loans will total $300 million, the same as
1969.
Grants are also made by NIH for construction of health facilities
at medical, dental, nursing, and other health professions schools and
by the National Science Foundation for construction of university
science facilities and the renovation of graduate laboratory space.




Table J-14. UNDERGRADUATE STUDENT SUPPORT 1
(Outlays in millions of dollars; number of awards in thousands)
Total outlays
1968
actual
Total
2-year institutions
Other undergraduate
Defense.
Health, Education, and Welfare:
Office of Education
Health Services and Mental Health
Administration and NIH
Social Security Administration
Veterans Administration
Other
1
2
3

Work-sttidy

Loans

Grants
1969
estimate

1970
estimate

1,062

1,269

360
1,094

298
764

357
912

20

12

14

462

530

243

259

309

19
306
323
5

239
368
425
5

25
392
482
5

8
341
3
454
4

10
381
3
601
3

12
413
3
627
3

349

349

344

293
928

56
293

56
293

56
289

1,188

349

349

344

1,093

1,221

172
692

243
850

839

2 1,066

1968
actual

15

390

1970
estimate

1970
estimate

864

375
1,004

18

1969
estimate

1969
estimate

1968
actual

1,379

1969
estimate

1970
estimate

1,059

1,300

1,454

245
814

307
993

17

1968
actual

2

25

27

2

33

Involves some duplication because students may be assisted under more than one program.
Includes insured loans: 474 thousand in 1968; 690 thousand in 1969; and 850 thousand in 1970.
Total number of individual students aided which differs from the average number of veterans in training during the year used in other references in the 1970 Budget
Note.— Number of awards is based on outlays and may not be consistent with data based on budget authority in other parts of the budget.




Table J-15. GRADUATE STUDENT SUPPORT 1 (excludes graduate support for elementary and secondary teachers shown on p. 120)
(Outlays in millions of dollars; number of awards in thousands)
Total outlays

Fellowships, traineeships and
other grants

Sublevel and agency
1968
actual

Total
Graduate and professional
Post-doctoral

_

_

Health, Education, and Welfare:
Office of Education
Health Services and Mental Health Administration and N1H.
Other
—
_
Veterans Administration
National Science Foundation
Other 3
-

1970
estimate

396

—

1969
estimate

452

481

315
81

366
86

49
183
8
118
22
16

50
198
8
154
25
15

1968
actual

1969
estimate

1970
estimate

213

250

264

395
86

203
10

236
14

54
207
9
174
25
13

29
81
3
4
85
9
6

29
88
3
4
118
8
5

Loans

1969
estimate

1970
estimate

106

126

133

251
13

106

126

133

30
98
3
4
122
8
4

M06

2 126

M33

1968
actual

* Number of awards may involve some duplication because students may be assisted under more than one program.
3
Includes insured loans: 41 thousand in 1968; 60 thousand in 1969; and 74 thousand in 1970.
* Includes AEC, NASA. DOT. HUD. and DOD.
* Total number of individual students aided which differs from the average number of veterans in training during the year used in other references in the 1970 Budget.
Note.—Number of awards is based on outlays and may not be consistent with data based on budget authority in other parts of the budget.




128

THE BUDGET FOR FISCAL YEAR 1970

Teacher training.—In 1970, $92 million will be spent for the training of college and university personnel. The principal program, graduate fellowships under title IV of the National Defense Education
Act, assists persons preparing for careers as college or university
teachers. About 3,650 fellowships will be awarded in 1970 to new
graduate students and in total 10,900 graduate fellows will be aided.
In addition, fellowships and institutes are provided under the
Education Professions Development Act for the preparation of
teachers, administrators or educational specialists. This program is
designed to help assure well-prspared educational personnel for junior
colleges, technical institutes, and liberal arts colleges. Funds will be
used to develop training models for new careers in higher education
and to devise and experiment with innovative training techniques.
About 4,400 individuals will participate in the program in 1970.
Educational research.—Outlays of $31 million in 1970 will support
research and experimental projects. The National Science Foundation
supports programs to upgrade science curricula and facilitate the use
of computers in colleges. The Office of Education will fund research on
future trends in higher education.
Academic research.—Federal support of academic research will
amount to $1.5 billion in 1970. This represents about two-thirds of
the total research and development work performed by universities.
Such research is funded by agencies to assist them in achieving their
mission objectives and includes medical, health and welfare research
under HEW ($0.6 billion), research related to military requirements
under the Department of Defense ($0.3 billion), and research in all
fields of science under the National Science Foundation ($0.3 billion).
These outlays are of mutual benefit to institutions—by strengthening
their courses of graduate study—and to the people of the Nation—
whose health, security and amenities of daily life are dependent on
the results of this research. Federal support of academic research is
discussed also in Special Analysis Q, Federal Research, Development
and Related Programs.




129

SPECIAL ANALYSES

Table J-16. FEDERAL SUPPORT OF HIGHER EDUCATION BY AGENCY
A N D PROGRAM (in millions of dollars)
Budget
authority
1970
estimate

Agency and program

Defense:
Academic research __
Other

1968

1969

1970

274
87

Total, Health, Education, and Welfare
Housing and Urban Development:
College housing. _
_
Other
_.
.
Veterans Administration:
Readjustment benefits
__
Other
National Science Foundation.
Other programs
Total, Higher Education

9

__
. .

._

334

360

103
112
182
27
456
61
209

128
137
186
49
378
75
186

134
148
164
119
420
71
225

1,150

1,139

1,281

615
449
149
61
392
210

571
275
61
50
305
133

519
347
89
54
368
148

578
379
125
56
392
171

2,545

2,664

2,982

65
3

Other Health, Education, and Welfare:
Academic research—health sciences __
Fellowships and traineeships—health professions...
NIH facilities construction
Social and rehabilitation research and training
Social Security (student benefits)
Other

310

2,935

Total, Office of Education

275
85

176
154
162
64
161
61
281

_ __

252
82

1,059

Health, Education, and Welfare:
Office of Education:
Student aid:
Educational opportunity grants
Work-study.
NDEA loans
Insured loans
Facilities—grants and loans
Graduate fellowships for teaching
Other OE programs

235
75

361

Total, Department of Defense


34CP7OO O—69


Outlays

289
1

286
2

226
3

587
74

387
54

584
73

375
420

333
444

515
64

4,820

4,363

361
425

381
421

4,651

5,030

130

THE

BUDGET FOR FISCAL YEAR 1 9 7 0

ADULT AND CONTINUING

EDUCATION

Education is a lifetime pursuit. For those adults who are not participating in the formal educational process, opportunities must be
provided in order that they may expand their horizons, increase
employment capabilities and play a fuller role in the community.
Table J-17 summarizes Federal outlays on adult and continuing
education by sublevel and type of support. Table J-18 lists the
larger Federal programs by administering agency.
Table J-17. FEDERAL SUPPORT OF ADULT AND CONTINUING EDUCATION BY SUBLEVEL AND TYPE OF SUPPORT (in millions of dollars)
Budget
authority
1970
estimate

Sublevel and type of support

Total

1968

1969

1970

354

Adult basic _ _
Extension
__
Public library services Other continuing education
Current operations
Facilities and equipment
Support of individuals

Outlays

•_

_
_

_

306

336

357

74
216
52
12

51
184
64
7

63
201
64
9

67
211
65
14

271
15
68

221
33
52

245
32
60

261
32
64

The Smith-Lever Act of 1914 authorizes the Department of Agriculture to support instruction in agriculture, home economics and related subjects through land-grant college extension activities. Extension education was further authorized by the Agricultural Marketing
Act of 1946. Greater efforts are being made to reach low-income
people under these cooperative Federal-State-county activities.
The Office of Education, with an outlay of $44 million in 1970,
will support adult basic education classes enrolling over 500,000 men
and women, largely from low-income areas. These programs enable
the enrollees to overcome English language limitations, and prepare
them for occupational training leading to more profitable employment.
OE also makes grants for public libraries, State institutional libraries,
interlibrary networks, library services for the handicapped and
educational broadcasting.
The Veterans Administration has a sizable interest in the area of
adult and continuing education as part of its readjustment benefits
program. Veterans and the children, widows and wives of deceased
or seriously disabled veterans are given direct support to obtain such
education. In 1970 about 182,000 individuals will receive benefits.
OEO supports basic education for the poor. The emphasis is on
the development of innovative methods of teaching for large scale
use by school systems and others.




131

SPECIAL ANALYSES

Other adult education programs are operated by the Departments
of Defense, Interior (Bureau of Indian Affairs), Justice (Bureau of
Prisons), and Transportation (Coast Guard), the Library of Congress
and the Government Printing Office.
Table J-18. FEDERAL SUPPORT OF ADULT AND CONTINUING EDUCATION BY AGENCY AND PROGRAM (in millions of dollars)

Agency and program

Outlays
1968
actual

1969

1970

101

90

97

101

50
50
11

29
62
7

40
62
9

44
63
13

24

22

23

23

63
55

52
44

59
46

63
50

354

Agriculture: Cooperative extension service.
Health, Education, and Welfare—Office of Education:
Adult basic education
Library services
EducationalTV
Office of Economic Opportunity: Adult basic education
Veterans Administration:
Readjustment benefits
Other
-_._
__.
Total

Budget
authority
1970
estimate

306

336

357

TRAINING OF PUBLIC EMPLOYEES

The Federal Government supports efforts to assist public employees
to increase their professional skills. This analysis includes the significant Federal programs designed to provide graduate and professional
education for public employees at educational institutions. Inservice
and on-tbe-job training are excluded since they do not involve educational institutions.
Table J-19 presents data on Federal outlays for professional and
technical education of Federal civilian and military employees and
Federal support for training State and local employees. In 1970, over
32,000 Federal civilian, 311,000 State and local, and 132,000 military
personnel received some type of graduate and professional training at
institutions of higher education. The military services account for the
major part of this effort ($432 million or 88% in 1970), for which they
utilize institutions of higher education as well as their own educational
facilities, such as the military academies and other armed forces
colleges. Training of civilian employees of the Federal Government,
as well as State and local employees, is supported by the various
branches of the armed forces, the Foreign Service Institute in the
Department of State, the law enforcement training program of the
Department of Justice, and public health and rehabilitation manpower
activities of HEW.




132

THE BUDGET FOR FISCAL YEAR

1970

Table J-19. FEDERAL SUPPORT OF TECHNICAL AND PROFESSIONAL
TRAINING OF PUBLIC EMPLOYEES BY SUBLEVEL AND AGENCY (in
millions of dollars)
Budget
authority
1970
estimate

Sublevel and agency

Federal civilian:
Defense
State
Other

1970
estimate

6
6
9

7
7
9

7
7
10

21

23

24

1
11
0

10
10
3

22
10
6

43

12

23

38

369

411

432

493

___

7
7
10

425

State and local:
Justice
HEW
Other

Total

1969
estimate

22
12
9

_

Total, Federal civilian

Federal military:
Defense, total military

1968
actual

24

.

Total, State and local

Outlays

402

457

494

FOREIGN EDUCATION

The Federal Government supports foreign students attending
colleges and universities in the United States and provides assistance
to educational institutions in foreign countries. The principal agencies
involved are the Agency for International Development (AID), the
Peace Corps and the Department of State. The AID educational
program provides technical and financial assistance to developing
countries to upgrade and expand their systems of education. About
1,200 experts are engaged in about 50 countries through university
contracts or working directly with ministries of education. Various
grants and loans will assist 164 foreign colleges in 1970. The Peace
Corps will provide for the training of U.S. volunteers for service
abroad and the support of 4,635 volunteer teachers in developing
nations. The Department of State conducts a program of sports,
educational and cultural exchange which, in 1970, will involve 1,114
U.S. citizens and almost 5,000 foreign nationals. Other agencies with
foreign educational programs are the National Aeronautics and Space
Administration and the U.S. Information Agency.




133

SPECIAL ANALYSES

Table J-20. FEDERAL SUPPORT OF FOREIGN EDUCATION BY AGENCY
(in millions of dollars)
Budget
authority
1970
estimate

Agency

Outlays
1968
actual

1969
estimate

1970
estimate

Total

_

262
43
33
22

140
44
42
16

190
40
37
23

200
39
31
22

360

AID
Peace Corps
State _ _ _ _ _ _ _
Other

242

290

292

OTHER FEDERAL SUPPORT FOR EDUCATION

This category of Federal educational outlays includes a number of
Federal activities that do not fall conveniently into any of the other
levels of education such as some activities of the Library of Congress
and the National Agricultural Library; the educational activities of
the Smithsonian Institution and the Small Business Administration;
and $61 million for research supported by the National Science
Foundation outside academic institutions.




SPECIAL ANALYSIS K
FEDERAL MANPOWER PROGRAMS
COVERAGE AND SCOPE OF THIS ANALYSIS

Almost all public and private sector activities have some effect on
the work force. A limited grouping of programs, described in this new
special analysis, influence directly the supply, quality, or demand for
manpower, by increasing the skills and employment opportunities of
persons who are in the work force, or who desire to be in the work force
but are unprepared. Programs serving this objective provide either
skill training, direct employment, or job placement assistance.
The programs included in this analysis generally: (1) are delivered
outside the normal educational institutions and process; (2) provide
services for periods of less than 1 year; (3) provide skill training and
job opportunities in nonprofessional jobs; and (4) are targeted to the
disadvantaged sector of our population. The analysis includes all
programs classified as Manpower training in the functional code.
In addition it includes programs from other functional classifications
such as Health, National Defense, and Veterans. It excludes programs
which are part of the normal educational process, and which are
covered by the special analysis on education.
1970

PROGRAM OVERVIEW

The Federal budget provides $3.5 billion in 1970 for manpower
programs, as compared to $3.0 billion in 1969 and $735 million in 1964.
This almost five-fold rise reflects the increasing emphasis on manpower programs as a method for increasing the employability of
the disadvantaged—"poor persons who do not have suitable employment and who are either (1) school dropouts, (2) under 22 years of
age, (3) 45 years of age or over, (4) handicapped, or (5) subject to
special obstacles to employment." 1
The following table summarizes the programs to which Federal
funds have been allocated, 1964 and 1968-70:
1
Categories of people given preference for participation in manpower programs administered by
the Department of Labor.

134




135

SPECIAL ANALYSES

Table K-1. FEDERAL OUTLAYS A N D INDIVIDUALS SERVED BY PROGRAM
(dollars in millions, individuals in thousands)
Outlays
Program

1964

1968

s served

I

1969

1970

1964

1968

1969

c

Job Opportunities in the Business Sector (JOBS).__
Concentrated Employment Program (CEP)
Work Incentive Program (WIN)
Vocational Rehabilitation
MDTA Institutional and OJT
training
_
Job Corps _
Neighborhood Youth Corps
(NYC) 2
U.S. Employment Service (ES) _
Other programs

181
40

Subtotal
Civilian skill training—Defense.
Grand total

1970
est.

4

121

239

16

80

160

71

163
90
369

193
163
509

54
179

335

105
130
415

115
175
505

78

272

290

790

65

70

70

538

490

490

21

242

220

230

403 2,038 2,441 2,864
570
595
630
332

278

1,522

1,800

2,035

735 2,608

278

1,522

1,800

2,035

84

281

98

321

338

330

318

277

283

336

321

321

312
395

341
421

378
448

3,036

3,494

(3)

Of the $458 million increase in 1970 over 1969, 25% is for the
Job Opportunities in the Business Sector (JOBS) program, and 53%
is for comprehensive programs—the Concentrated Employment Program (CEP), the Work Incentive Program (WIN), and the Vocational
Rehabilitation program.
The budget for 1970 provides increases of:
• $118 million for the JOBS program to fund a total of 140,000
on-the-job training slots, a 100% increase over the 1969 level;
• $30 million in CEP in order to serve a total of 115,000 individuals;
• $73 million for WIN. Work and training opportunities will be
provided for 175,000 welfare recipients and day care for 146,000
children.
• $140 million for Vocational Rehabilitation for disabled persons.
• $37 million for the U.S. Employment Service to provide for
State salary increases, to strengthen its services in rural areas,
and to initiate an experimental Job Bank program in 25 cities.
Of the 235,000 increase in individuals served in 1970, 80,000 or about
one-third is due to JOBS; and WIN and Vocational Rehabilitation,
together, account for 135,000 or 57%.
MAJOR PROGRAM APPROACHES

For purposes of this section of the analysis, each program has been
classified as part of one of seven major program approaches. Some
programs could be classified under only one approach; others, having
multiple techniques, are split among several of the approach classifications.




136

THE BUDGET FOR FISCAL YEAR

1970

In the early 1960's, the national concern was over unemployment
resulting from technological change. Thus, major outlays for institutional training rose from 2% in 1962 to 28% of the total in 1966. In
the middle 1960's, as the economy improved and aggregate levels of
unemployment declined, it became apparent that the socially and
culturally disadvantaged were not profiting from the overall prosperity; manpower programs then were increasingly shifted to serve
the disadvantaged. Work support programs were developed, especially
for youth and welfare recipients, rising from zero in 1964 to 22% of the
total in 1968. Increasing emphasis was given to training conducted
on-the-job or through comprehensive programs—OJT will rise from
2% of total outlays in 1966 to 13% in 1970. Rehabilitation will rise
from 9% of the total in 1966 to 16% in 1970. Job placement and
civilian skill training in the Department of Defense, although growing
absolutely, have declined from 82% of the total in 1961 to 31% in 1970.
[GRAPH Kl

HISTORICAL GRAPH ON OUTLAYS 1961-1970
BY APPROACH]

Federal Outlays for Manpower Activities

1961

1962

Fi$eal Years

1963

1964

1965

1966

1967

$ Billio

1968

1969

1970

Estimate

Institutional vocational training.—Institutional training provides prevocational or vocational skill instruction in a classroom
setting and some programs offer supportive services such as remedial
education, health, child care, and counseling.
Outlays for institutional training will rise from $626 million in
1968 to $756 million in 1970, but will drop from 24% to 2 1 % as
a proportion of total manpower outlays, reflecting the growth of other
programs.



137

SPECIAL ANALYSES
Table K-2. INSTITUTIONAL TRAINING PROGRAM LEVELS
(dollar amounts in millions, individuals in thousands)
Outlays

Program
1968

MDTA Institutional Training
Job Corps.
-WIN and CEP
. ._
Other . _
__
Total__

_
_.

1969

1970

Budget
authority
1970

1968

1969

1970

254
318
30
24

268
277
112
24

260
283
171
42

239
280
199
51

147
65
19
27

160
70
80
35

160
70
90
45

626

681

756

769

258

345

365

In terms of people served, the largest of these programs is the Institutional Training Program conducted under authority of the Manpower Development and Training Act. This program offers full-time
classroom training, supportive services, and training allowances. A
major recent development in this program has been initiation of
MDTA skill centers. Fifty-five skill centers, to better serve the needs
of the disadvantaged, offer a wide range of services, in addition to
training, such as intensive counseling, testing, and remedial education.
The Job Corps was begun in 1965. In 1970, 113 residential centers
will provide training and supportive services to help school dropouts
become employable. These youths are provided intensive services
such as work experience, basic education, and vocational training,
and also special supervision and counseling, health care, special
placement efforts, and provision of food, clothing, and living quarters.
In 1970, the Job Corps has assigned priority for the continued
development of five new inner-city centers which offer a combined
residential and nonresidential program in conjunction with the local
school system and responsive to the local job market.
Other major institutional programs include portions of the CEP
and WIN programs, and training programs for Indians and prisoners
operated by the Departments of Interior and Justice, respectively.
On-the-job training (OJT).—OJT programs reimburse employers
for the cost incurred in hiring and training unskilled workers. This reimbursement may cover job training costs, and also the cost of remedial
education, other necessary services, and an allowance for the employee's lower initial productivity.
These programs represent a growing proportion of the total Federal
manpower effort. OJT programs have risen from $44 million, in 1966
to $452 million in 1970, or from 2% to 13% of total manpower outlays.




138

T H E BUDGET FOR FISCAL YEAR 1 9 7 0
Table K-3. ON T H E J O B TRAINING PROGRAM LEVELS
(dollar amounts in millions, enrollees thousands)
Outlays
Program

JOBS
MDTA Regular OJT
XT
r*
1
New Careers1
Industry Incentive
Other
Total
1

1968
actual

. .
_ _

1969
est.

1970
est.

Budget
authority
1970
est.

Individuals served
1968
actual

1969
est.

1970
est.

4
67
24
6
12

121
70
35
12
63

239
70
38
14
91

420
66
47
20
97

16
125
12
3
26

80
130
15
5
55

160
130
20
10
50

113

301

452

650

182

285

370

Includes estimated portion of CEP funding for New Careers.

The largest and the fastest growing OJT program is Job Opportunities in the Business Sector (JOBS), a joint Federal-private enterprise effort initiated in fiscal year 1968 to employ and train the hardcore disadvantaged in the 50 largest cities. The National Alliance of
Businessmen (NAB) solicits job pledges from private employers. The
Department of Labor, through both the Concentrated Employment Program (CEP) and the U.S. Employment Service, recruits
disadvantaged workers for job openings. Under authority of both
MDTA and the Economic Opportunity Act, the Federal Government
underwrites the extra cost of employment and training. In 1970,
140,000 jobs under reimbursement contract are planned at an estimated cost of $3,000 each, for a total of 252,000 jobs under contract
since the program was initiated. In addition, because of NAB encouragement, many employers will hire the disadvantaged at no cost to
the Government.
Another OJT program is conducted under authority of the MDTA.
This program is less costly since it reimburses employers only for extra
training costs, but reaches on the average somewhat less disadvantaged persons than JOBS. Reflecting the emphasis on serving the
more disadvantaged, through JOBS, this program will be continued
at the 1969 level.
The New Careers program provides training opportunities for the
poor in sub-professional public sector jobs with "career ladders." The
program also seeks to restructure job standards.
A new experimental program to foster industry training of unskilled
workers is the Industry Incentive (Special Impact) program administered by the Department of Labor. In 1970, this program, with outlays
of $14 million, will provide monetary incentives for the location of
plants in ghettos and reimburse employers who hire and train the
disadvantaged for employment in such plants.




139

SPECIAL ANALYSES

Disability rehabilitation.—The
disability rehabilitation programs seek to restore to a productive life people who become disabled.
These programs provide a comprehensive range of training and services, with heavy emphasis on medical care, counseling, and guidance.
These are supplementary to income and services received by the disabled from family income, workmen's compensation, and disability
and medical insurance. As a result, average costs are low as compared
to other manpower programs—about $1,300 per person in 1970.
Outlays for rehabilitation programs rise from $304 million in 1968
to $547 million in 1970, or from 12% to 16% of the total manpower
effort.
Table K-4. REHABILITATION PROGRAM LEVELS
(dollar amounts in millions, enrollees in thousands)
Outlays

Program
1968
actual

Vocational rehabilitation
Veterans vocational rehabilitation
Total

1969
est.

1970
est.

Budget
authority
1970
est.

Indiv iduals served
1968
est.

1969
est.

1970
est.

281
23

369
31

509
38

564
38

335
9

415
15

505
15

304

400

547

602

344

430

520

Rehabilitation services are provided almost entirely through a single
program—the Federal-State Vocational Rehabilitation Program. In
1970, Federal outlays will total $509 million. The funds go primarily
to State rehabilitation agencies which determine client needs and
purchase services on a case-by-case basis. In 1970, enrollment does
not increase as rapidly as outlays, because part of the outlay increase
covers a rise in the Federal share of Vocational Rehabilitation costs
from 75% in 1969 to 80% in 1970, and because average costs will
increase, in part reflecting efforts directed to the more difficult cases.
It is estimated that as a result of this program 265,000 persons will be
restored to productive lives in 1970.
Work support.—Work support programs create temporary jobs,
usually in the public sector, for which wage payments are financed by
the Federal Government. The jobs terminate when the wage subsidies
end. These programs are designed to serve two objectives: (a) to
provide the unemployed and underemployed with useful work skills
and work habits; and (b) to offer enrollees an opportunity to earn a
livelihood through socially useful employment.
The average cost per person served by these programs is $650.
Of this, 73% is in the form of wages paid to participants, resulting
directly in useful, productive work by persons who normally would
be unemployed and hence nonproductive.
Outlays for work support programs rose from zero in 1964 to $576
million in 1968, but will decline to $552 million in 1970. The recent
decline is primarily due to decreasing outlays for the Work Experience
Program, which will be completely phased out in 1970 and replaced
by WIN.




140

T H E BUDGET FOR FISCAL YEAR 1 9 7 0
Table K-5. WORK SUPPORT PROGRAM LEVELS
(dollar amounts in millions, enrollees in thousands)
Outlays
Program
1968
actual

NYC school and summerl
NYC out of school
Operation Mainstream
WIN and CEP
Other
Total .
1

1969
est.

1970
est.

Budget
authority
1970
est.

Individuals served

1968
est.

1969
est.

1970
est.

193
143
31
25
184

185
136
38
97
121

185
136
38
118
75

188
134
42
134
76

413
125
13
22
165

375
115
15
125
110

375
115
15
170
105

576

577

552

574

738

740

780

Persons served by both school and summer programs are counted only once.

The major work support programs are the Neighborhood Youth
Corps in-school and summer programs. In 1970, outlays for these programs will total $185 million, for 375 thousand enrollees. These
and related programs offer part-time work during the school year
and full-time work during the summer to needy high school-age
students. Unlike other programs which focus on remedial services for
those who have left school, these programs are preventative—to keep
youth in school to obtain a high school education.
The Neighborhood Youth Corps out-oj-school program offers work
experience and related services primarily to poor unemployed youths.
This, the largest manpower program offering full-time employment,
will enroll 115 thousand youths and young adults in 1970 at a total
cost of $136 million, providing opportunities to earn a wage and
acquire work habits and knowledge.
Operation Mainstream, operated by the Department of Labor under
delegation from OEO, focuses on older workers primarily in rural areas
where employment opportunities are scarce. The emphasis is on
provision of employment, rather than remedial services.
Both WIN and CEP provide significant amounts of work support
as part of their comprehensive array of program services.
Job placement assistance.—There are a number of programs to
promote a smoothly operating labor market by overcoming barriers
created by workers' lack of knowledge, inability of employers to find
qualified workers, and discrimination. The primary tools of these programs are developing and disseminating information concerning employer and employee needs, and counseling and testing of jobseekers.
This often requires "outreach" to find unemployed people, as well as
job development and job restructuring efforts with employers. Federal outlays for this approach will rise from $361 million in 1968 to
$465 million in 1970.




141

SPECIAL ANALYSES
Table K-6. JOB PLACEMENT ASSISTANCE PROGRAM LEVELS
(dollar amounts in millions)
Outlays
Program

U.S. Employment Service
Equal Employment Opportunity Commission
Project Transition
Project 100,000
Other_ _
__
Total

1968
actual

1969
est.

1970
est.

Budget
authority
1970
estimate

312
6
8
15
20

341
9
16
23
20

378
15
18
27
27

378
16
18
27
28

361

409

465

467

The United States Employment Service, operated by the States in
cooperation with the Department of Labor, accounts for 8 1 % of 1970
outlays in this category. The USES, with 2,000 local offices and 40,000
employees, provides not only placement services for the general work
force, but also special efforts for placing the disadvantaged. Up to
12 million persons are expected to receive ES services in 1970. In
1970, the ES will strengthen its services for rural residents, improve
its data systems for internal management, and experiment with job
banks and.other computerized placement techniques.
In 1970, outlays by the Equal Employment Opportunity Commission
will increase by $6 million over 1969 to $15 million. The Commission
attempts to reduce barriers to employment for minority groups and
others by investigating and conciliating complaints. Legislation is
being recommended to strengthen the Commission's efforts by granting it cease and desist authority.
Project Transition, operated by the Department of Defense,
provides counseling, testing, limited skill training, and job placement
assistance to servicemen prior to discharge. The Defense Department
will spend about $18 million on this program in 1970 for about 170,000
servicemen. Another Department of Defense program, Project 100,000,
will reduce military entrance standards for about 92,000 disadvantaged
youth in 1970, about the same number as in 1969. After enlistment,
these youth will receive necessary remedial health, education, and
training services to bring them to military standards at an added cost
of about $27 million. 1
In 1970, 71 Veteran s Assistance Centers will assist about two
hundred thousand returning servicemen, especially the educationally
disadvantaged, to obtain both their veteran's benefits and manpower
training and employment. Also in 1970, the Bureau of Indian Affairs
will directly assist about 10,000 Indians to move to cities and towns
to obtain employment.
Program direction, support, and research.—The effectiveness of
individual programs depends on overall administration, research
and demonstration, and effective delivery of services at the local level.




142

THE BUDGET FOR FISCAL YEAR 1970

Outlays for these purposes were $58 million in 1968 and are estimated
to be $73 million in 1969 and $92 million in 1970.
Several programs conduct experimental and demonstration projects
to examine manpower problems and solutions. The largest is the
MDTA Experimental and Demonstration Program at $19 million in
1970. Among experiments continued in 1970 is a labor mobility
program which helps workers to move from areas with job shortages
to areas with job vacancies.

Civilian Skill Training—Defense.—Skill training by the Depart-

ment of Defense for the armed services is included in this analysis
because of its importance as a major training vehicle for many men
and women who later enter the civilian labor force. It is one of the
major post-school sources of training in the United States providing
skills applicable to civilian work for such occupations as repairmen,
mechanics, and technicians.
In 1970, outlays for this purpose will rise to $630 million, as compared to $332 million in 1964. This expansion reflects increased force
levels due to Vietnam. About 900,000 servicemen will complete
courses in civilian-related subjects in 1970. The skills and work experience gained are a derivative benefit obtained from costs incurred for
national security purposes.
COORDINATION AND DELIVERY SYSTEMS

To improve the delivery of the programs discussed above, several
recent steps have been taken:
• In 1967 the Cooperative Area Manpower Planning System
(CAMPS) was initiated to engage Federal, State, and local government agencies, and private enterprise, in the coordination and
planning of manpower programs.
• Local program operation and coordination can be improved by
training and other technical assistance to the staff of the community agencies operating manpower programs. Starting in 1970,
amendments to the MDT Act will provide budget authority of
$14 million for technical assistance.
• Labor market information, including national occupational trends,
local labor market studies, and specific data on local job opportunities, is of great assistance in manpower planning and execution. MDTA budget authority for such data services will rise
from $2 million in 1969 to $14 million in 1970.
• Beginning in 1969, most Department of Labor administered manpower services will be funded through single sponsors as required
by the Comprehensive Work and Training Program provision of the
Economic Opportunity Act. In most cases sponsors will be Community Action Agencies (CAA's), which will coordinate the
delivery of all services.
Another method of improving delivery is through Comprehensive
Target Programs which offer a wide range of coordinated services
targeted either to particular groups or to specific areas. The Vocational
Rehabilitation program has been discussed. Two other delivery systems
have been instituted recently—the Concentrated Employment Program
(CEP) in 1967 and the Work Incentive Program (WIN) in 1968. In



143

SPECIAL ANALYSES

total, outlays for these three programs will account for $865 million
in 1970, or 25% of the manpower effort, up from $352 million and
13% in 1968 (see table K - l ) .
WIN provides work, training, child-care and related services to
public assistance recipients. Employable welfare recipients will be referred directly to jobs. Those who are not job-ready will be offered
training, basic education, and work experience, to prepare them for
employment. For the most severely disadvantaged, special protected
work projects will be provided. In 1970, an estimated 175,000 public
assistance recipients will be enrolled. Other manpower programs will
enroll an estimated additional 400,000 welfare recipients.
The Concentrated Employment Program coordinates the delivery
of individual manpower services such as counseling, training, and
remedial education, for maximum impact in limited geographic areas
of severe unemployment. In 1970, CEP will provide manpower services
in 82 urban and rural neighborhoods. In addition to the 115,000
people enrolled directly by CEP, about 50,000 will be referred to
JOBS and other programs.
By 1970, it is expected that the Model Cities program, another
major effort to achieve maximum impact through targeted and coordinated services, will be operational in 150 cities. This program is
expected to make major contributions to manpower objectives by
integrating the total delivery of social services in the demonstration
areas. No estimates are now available of the amount of manpower
services which may be funded by the Model Cities program.
INDICATORS OF THE LEVEL OF EFFORT

Table K-7. INDIVIDUALS AND MAN-YEARS BY MAJOR APPROACH
(in thousands)
Individuals served
Approach

On-the-Job Training
Institutional training
Disability rehabilitation
Work Support:
School
_
Post-school
Total.

_._

1968
est.

Man-years
1968
est.

1970
est.

182
258
344

.
__

...

1970
est.

1970
Average
duration
(months)
est.

.

._

__

370
365
520

6.3
5.3
12.9

53
114
389

205
170
560

531
207

475
305

3.4
5.1

241
127

180
140

1,522

2,035

924

1,255

In 1970, the largest number of individuals served will be in work
support programs—780,000 or 38% of new participants. Institutional
and OJT training programs will serve the next largest number—
735,000 or 36%, and rehabilitation will serve 520,000 or 25% of new
participants.
The number of man-years of services provided is a common measure
of the level of effort, for all programs because average duration of




144

THE BUDGET FOR FISCAL YEAR

1970

enrollment in manpower programs varies. It is usually less than one
year (with the exception of rehabilitation programs) and thus the
number of new participants exceeds man-years of effort. This is
especially notable in work support programs, due to the short length
of stay in summer programs. Compared to new enrollees the relative
effort of the programs in 1970 as measured in man-years is quite
different—rehabilitation serving 45%; institutional and OJT training,
30%; and work support, 25%.
TABLE K-8. 1970 PARTICIPANT AND MAN-YEAR UNIT COST i

Approach

Man-year
cost ett.

On-the-job training
Institutional training
Disability rehabilitation
Work support:
In-school
Post-school
1

Participant
cost est.

Estimated distribution of
participant cost by percent
Allowances

Education and
training

10
31

76
35
68

2
16

13
33

$2,500
4,750
1.200

$1,300
2,100
1,300

14
34

1,550
2,300

450
1.000

85
51

32

Other

Includes State and local cost sharing.

Unit costs are greatest for institutional training, both on participant and man-year bases. However, a higher proportion (31%) of these
costs are allotted to skill training than in any other approach. The
man-year cost is affected by Job Corps and CEP which provide
intensive supportive services.
The OJT approach has a low unit cost because employers bear a
part of the costs of training and pay the enrollee's wage. These unit
costs are growing, however, as the JOBS program shares with employers the relatively higher costs incurred in hiring and training the
more disadvantaged.
Man-year costs for disability rehabilitation are low because the
large proportion of nonpoor enrollees reduces the need for allowances
and because a substantial part of the time individuals are enrolled
occurs during periods of evaluation and followup when few supportive
services are provided. Moreover, all rehabilitation costs are not reflected in Federal and State outlays since insurance and workmen's
compensation cover some of the subsistence and medical costs. Unlike
other approaches, rehabilitation participant costs are higher than
man-year costs because the average duration exceeds 1 year.
Man-year costs for work support programs are relatively high
because the allowances provided are wage payments, and 73% of
costs are for enrollee allowances. The costs would be higher still were
it not for the fact that the NYC Summer and School programs provide for only part-year and part-time work. Per participant costs,
however, are the lowest of all programs because of the participants'
short length of stay.




145

SPECIAL ANALYSES
PEOPLE SERVED

According to recent estimates * there were in 1968 about 11 million
chronically poor teenagers and adults for whom manpower programs
might provide an escape from poverty. Of these,
• Approximately 4.5 million, or about two-fifths of the total, were
nonwhite, Mexican-Americans, or Puerto Ricans;
• More than one-half were women;
• About 4 million were youth under 21;
• Some 3 million lived in urban slums; and
• Several million others lived in depressed rural regions.
The actual universe could be much larger since many millions
earn little more than the " poverty" standard and are vulnerable to
skill obsolescence and unemployment, and since many move into
and out of poverty each year.
The role of manpower programs in serving the disadvantaged
is illustrated in the table below which compares the estimated characteristics of manpower program participants, the general labor force,
and the adult poverty population.
Table K-9. ESTIMATED CHARACTERISTICS OF GENERAL LABOR FORCE,
ADULT POVERTY POPULATION, AND MANPOWER PROGRAM PARTICIPANTS—(in percent)
Total U.S.
work force
Characteristics

Aged 21 or less
Aged 55 or more
Male
.
....
Less than high school education _
8th grade education or less
Poor
...
Welfare recipients

Nonwhite

Poverty
population

1967

1966

(age 16-64),
civilian, noninstitutional

(age 16-64).
civilian, noninstitutional

14
14
63

22
20
39

339
3

19
11
1
11

()
100
15
35

Manpower
programs,
individuals
served 1968
(age 14 and
above) 1

64
4
57
80
11
86
23
44

1

Agency data are not always comparable and all of the entries are estimates.
2 Not available.
3 For work force age 18-64.

About 11 % of the general labor force was poor, as compared to 86%
of manpower program participants; about 39% of the general labor
force did not have a high school diploma, compared to 80% of manpower program participants; and while about 1% of the general labor
force was on welfare, 23% of the manpower program enrollees were
welfare recipients.
Manpower programs focus heavily on nonwhites (44%) who often
have special employment problems; on youth (64%) for whom employment is a more appropriate solution for poverty than income
maintenance; on welfare recipients (23%) for whom special employ 1

Interagency Manpower Planning Task Force, chaired by the Department of Labor.

340-700 O—69




10

146

THE BUDGET FOR FISCAL YEAR 1970

ment efforts are deemed appropriate; and on the educationally disadvantaged (80%). In contrast, manpower programs reach older
Americans, for whom employment is often less appropriate than
income security, much less than their proportion in the poverty
universe.
As indicated in table K-10 below, the characteristics of participants
vary among major program approaches.
Table K-10. ESTIMATED CHARACTERISTICS OF ENROLLEES BY
APPROACH IN 1968—(in percent)
Poor

Approach

Less
than
high
school

Nonwhite

21 or
younger

Male

Weifare
recipient

Total

_

53
80
68

50
68
58

41
63
23

30
57
22

68
62
56

8
19
12

98
99

98
80

50
52

100
55

56
50

28
45

86

OJT
Institutional
Rehabilitation __
Work support:
In-school
Post school

80

44

64

57

23

The work support programs focus on the most disadvantaged
groups and provide a source of income for those who have no immediate prospects for regular jobs. On the other hand, rehabilitation
clients are the least disadvantaged socially, because the criterion for
entry relates primarily to physical and mental handicaps. In 1968,
OJT enrollees were similar to rehabilitation clients because the OJT
programs reached those most job ready. In 1970, this distribution is
expected to change largely because of the growth of the JOBS program
and its effort to reach the "hard core" disadvantaged.
FEDERAL FUNDS FOR MANPOWER BY AGENCY

As shown in table K - l l below, six Departments and Agencies
administer significant amounts of funds for manpower activities in
1970. Four agencies—Labor, Defense, HEW, and OEO—account for
almost 95% of all manpower funds. In recent years, the Department
of Labor, through the Manpower Administration, has had primary
responsibility for coordinating and administering manpower programs.
Although only 29% of the funds for manpower programs are appropriated directly to the Labor Department in 1970, $740 million will be
transferred to Labor under a delegation order from the Office of
Economic Opportunity. This delegation permits such programs as
New Careers and Mainstream to be administered in conjunction with
those of the Labor Department. New programs such as JOBS and
CEP have relied on the authority and funding of both agencies. In
addition, the new WIN program will transfer $102 million for training
from HEW to Labor. In 1970 Labor administers about 50% of the
total effort.




147

SPECIAL ANALYSES

K-11. FEDERAL FUNDS FOR MANPOWER, BY AGENCY
[In millions of dollars]
Outlays
Agency

Office of Economic
Opportunity
Defense-Health, Education,
and Welfare
Interior
Labor
Veterans
Administration
Other 1
Total

1961
actual

1964
actual

298
54
6

1966
actual

1967
actual

1968
actual

332

176
314

571
396

800
507

885
593

971
634

992
675

1,046
675

84
9

99
13

173
13

219
17

292
21

459
23

681
41

130 796

436

575

603

714

809

935

739
45
1,112

H
1

14
1

17
25

19
53

29
74

65
75

79
91

79
95

520 735

1,053

1,770

2,218

2.608

3,036

3,494

3,791

M
1

1969
estimate

Budget
authority
1970
estimate

1965
actual

1970
estimate

1
Includes Departments of Agriculture, HUD and Justice, Equal Employment Opportunity Commission, and all Federal agencies hiring under the Youth Opportunity Campaign and the Stay-inSchool Program.




SPECIAL ANALYSIS L
FEDERAL HEALTH PROGRAMS *

Federal outlays for health are estimated to rise to $18.3 billion in
1970 equal to 9% of all Federal outlays. Comparable figures for 1969
and 1968 are $16.3 billion and 9% and $14.1 billion and 8%.
Federal health outlays will represent a growing share of national
expenditures for health in 1970—continuing a trend which began in
1967—due to the assumption of Federal financial responsibility for a
significant portion of the health care needs of the aged and the poor.
In 1966 Federal funds accounted for 13% of the $42 billion total
national expenditures for health, State and local funds, 13% and
private expenditures, 74%. In 1968, national expenditures for health
rose to $53 billion of which Federal funds financed 24%, State and
local remained at 13% and private sources dropped to 63%. It is
estimated that in 1970 the Federal share of total national health
outlays will approach 30%.
The new Federal health care programs have not merely resulted in
a shift of the financial burden from State and local governments and
private sources to the Federal Government. Since the initiation of the
major health financing programs, a broader spectrum of services are
being utilized nore often by a larger number of persons.
Table L-1. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED
ACTIVITIES BY CATEGORY (in millions of dollars)
1968
actual

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

Total outlays from Federal and trust funds

__
_

3,496

1,476
841
595
145

1,639
932
728
197

10,764

Provision of hospital and medical services, total

3,057

1,547
687
470
100

Health research
Training and education
Construction of hospitals and health facilities
Improving the organization and delivery of health services

Disease prevention and control
Environmental control
Consumer protection

1970
estimate

2,803

Development of health resources, total

Prevention and control of health problems, total

1969
estimate

12,518

13,977

2,738
8,025

2,896
9,622

2,996
10,981

565

741

804

386
54
125

506
83
151

522
102
180

14,132

16,316

18,277

1
This analysis summarizes the medical and health related expenditures of the Federal Government.
It includes activities classified in the "Health and Welfare" function as well as health programs
which are undertaken and classified as part of another function such as "National Defense," "Education and Manpower", or "Veterans Benefits and Services."

148



SPECIAL ANALYSES

149

The new emphasis of Federal outlays in the health care sector has
resulted in a fundamental shift in the distribution of the Federal
health dollar. As indicated in the historical table L-17, in 1960, 63%
of the Federal health dollar was devoted to medical research and to
health care for direct Federal beneficiaries such as veterans and members of the Armed Forces and their dependents. Only 13% was spent
on personal health services for the general population. In 1970 outlays
which help finance health services will rise to 60% of Federal health
outlays. Although health service financing programs have been
the fastest growing segment of the Federal health effort, other Federal
health programs have kept pace with the growing needs of the Nation.
Table L-l shows the distribution of Federal health outlays by functional category for the years 1968-70.
DEVELOPMENT OF HEALTH RESOURCES

Federal programs aimed at enlarging the health resources of the
Nation include health research, health manpower training and
education, construction of medical and health facilities and efforts
directed toward improving the organization and delivery of health
services. The combined outlays for these programs will rise to almost
$3.5 billion in 1970.
Health research.—Federal expenditures for health research wil
rise to $1,639 million in 1970, an increase of $163 million over 1969.
The Federal Government currently provides approximately 65% of
all funds for health research with about 25% coming from industry and
the remaining 10% contributed by foundations and voluntary health
agencies.
The Nation's medical schools, universities, and other nonprofit
institutions will receive approximately three-fifths of total Federal
outlays for the conduct of health research in 1970. Federal laboratories
and clinics will accoujit for one-quarter of Federal expenditures for
health research, with the remainder supporting research conducted
by private industry and others.
Some 13 Federal agencies support or conduct health research, with
the Department of Health, Education, and Welfare accounting for
71% of the total Federal expenditures for this activity. Other agencies
contributing in a major way to health research through activities of
particular importance to the agency's mission include the National
Aeronautics and Space Administration, the Atomic Energy Commission, the Department of Defense, and the Veterans Administration
(see table L-20).
The National Institutes of Health and the National Institute of
Mental Health, the principal operating agencies in the area of health
research, account for over 62% of the Federal total for such expendi-




150

THE BUDGET FOR FISCAL YEAR 1970

tures. Approximately 12,800 project grants will be funded by NIH
and NIMH in 1970, amounting to $728 million. In addition to grant
support, the laboratories and clinics of NIH and NIMH represent
the largest single complex in the world for the conduct of health
research. Major "targeted" research programs have been initiated to
construct artificial heart-assist and heart-replacement devices, to
build an improved artificial kidney, to develop vaccines against
pneumonia and cholera, to find drugs effective against cancers of
various types and to find improved means of regulating human fertility.
In the period from 1947 to 1968, NIH and NIMH outlays for
health research amounted to approximately $6.6 billion, with 60%
of this amount spent in the period 1964-68.
The result of these expenditures has been to increase knowledge in
all fields related to health and to improve the quality of medical
education and medical care. One noteworthy advance of recent
years directly attributable to Federal support is the development
of a vaccine to protect against German measles, or rubella. The
importance of this vaccine is illustrated by the statistics of the last
rubella epidemic in the United States, 1963-65: 30,000 fetal deaths
and the birth of 20,000 deformed children.
Two of the principal older areas of health research activity are
cancer and cardiovascular (heart and circulatory system) disease.
In 1966, about 300,000 people in the United States died of cancer;
917,000 were treated for the disease at a cost estimated at over $1.4
billion. More than 1 million people died of cardiovascular diseases in
this country in 1966 while 3.4 million people were disabled to some
degree with treatment costs estimated at over $4.2 billion.
To reduce deaths and to develop methods of prevention and improve treatment of these diseases, Federal outlays for selected "targeted" efforts in 1970 will total $171 million for cancer research and
$153 million for cardiovascular research. Other areas of health research receiving significant Federal support are research programs in
mental health, neurological diseases and blindness, and in the effects
and control of air pollution and other environmental factors (see table
L-2).
As a result of advances in cancer research, certain types of cancer
can now be cured; thelifespan of leukemic children undergoing drug
therapy is 12 times longer than it was a generation ago. Progress
in studies of the heart and circulatory system in man have already
led to better treatment for heart attack victims. Other recent health
research advances receiving significant Federal support are exemplified by programs as diverse as the clinical testing of the first drug
showing effectiveness against Parkinson's disease and in the systematic unraveling of the cause of dental caries through dental
research.




151

SPECIAL ANALYSES

Table L-2. FEDERAL OUTLAYS FOR HEALTH RESEARCH (in millions of dollars)
1968

Basic and targeted research
Selected targeted research:
Cancer research
__
Cardiovascular research
Mental health research
Neurological diseases and blindness research
Air pollution and environmental researchJ
Research facilities construction

1,482

1.417

(181)
(158)
(46)
(113)
(63)
65
1.547

Research, total
1

1969

(155)
(140)
(52)
(95)
(76)
59
1.476

1970

1.564
(171)
(153)

SSt
7
1,639

HEW only. Estimates for other agencies not available.

Training and education.—With the increase in demand for medical, dental, and other health services, the need for a great many more
highly trained health professional and auxiliary personnel has become
urgent. The Nation's medical, dental and other health professions
schools have a total current enrollment of about 241,000 students. The
number graduating each year is far short of current and projected
needs for these personnel.
In order to overcome health manpower shortages, the Federal Government has undertaken programs to help construct and support institutions training these personnel; to support students in the health
professions through scholarships and loans; and to expand possibilities
for such training through the use of its own extensive hospital and
research facilities. In 1970, the Federal Government will spend $932
million for these purposes (see table L-20). Expenditures of S812
million will provide training for an estimated 305,000 students and
trainees in the health professions (see table L-3).
Table L-3. FEDERALLY AIDED HEALTH TRAINING AND EDUCATION
Numbers
(in thousands]

Outlays
(in millions of dollars)
1969

1968

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

_.

1970

1968

106
82

120
112

118
133

15

24

33

53

57

56

58

71

80

8

9

10

305

359

381

13.7
26.2
4.3
9.5
2.3
38.9
16.2
14.5
5.3
6.7
19.8
79.4

626

752

812

236.8

1969

1970

14.3
31.5
4.8
10.5
2.4
45.0
18.6
18.8
6.4
9.2
25.3
117.5

13.5
27.1
3.4
9.6
2.1
42.6
16.6
19.5
6.9
9.7
27.6
126.1

304.3

304.7

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




152

THE BUDGET FOR FISCAL YEAR 1970

Outlays for the development of research manpower through fellowship awards to students and training grant awards to teaching institutions will amount to approximately $118 million in 1970 and will aid
an estimated 13,500 medical and research personnel in their degree
training.
Outlays of $121 million in 1970 will also support the construction of
an estimated 768 additional first-year places in the Nation's new and
existing health professions schools (an increase of 3 % in the total
number) and the construction of approximately 570 additional firstyear places in nursing schools (see table L-4).
Approximately one-half of the total of Federal expenditures for
health education in 1970 is administered by the Bureau of Health
Manpower of the National Institutes of Health, principally in the
form of grants to institutions, and about one-quarter of the total is
expended by the Department of Defense and the Veterans Administration, principally in providing for the training of manpower for the
health care needs of service personnel, dependents, and veterans.
Table L-4. FEDERALLY AIDED HEALTH PROFESSIONS SCHOOL
CONSTRUCTION
(in millions of dollars)
1968

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

1969

1970

43
9
1
8
*

60
15
3
11
*

81
19
4
17
*

61

89

1968

1969

1970

121

450
200
164
1,336
337

279
114
94
1,235
400

439
180
149
570

"Less than $500 thousand.
Numbers reflect the impact of obligations in given years.

1

Construction of health care facilities.—In 1970, Federal out-

lays of $323 million will support the construction and modernization
of community hospitals and other health care facilities, an increase of
$60 million over 1969. In addition $201 million will be spent for
the construction of hospitals and health facilities by VA, DOD, and
HEW, which operate about 174,000 inpatient beds and national networks of ambulatory care facilities for their own beneficiaries.
Support for construction of community-operated health facilities is
provided primarily through the Hill-Burton Hospital Construction
program. From the enactment of the Hill-Burton legislation in 1946
through June 30, 1968, 413,797 beds have been approved for construction or modernization at a total cost of over $10 billion, of which $3.1
billion represents the Federal share. In 1969 and 1970, it is estimated
that an additional 51,000 new or modernized beds will be approved
for construction.
Through the efforts of the Hill-Burton program, severe national
shortages of hospital beds have been virtually eliminated. The table
below summarizes the achievements of the program.



153

SPECIAL ANALYSES

Table L-5. HILL-BURTON PROJECTS APPROVED, COMPLETED, AND IN
OPERATION, JULY 1, 1947-JUNE 30, 1968
Total projects approved

Type of facility

Total
General hospitals
Long-term care
Mental hospitals
Tuberculosis hospitals. _
Diagnostic or treatment centers
Rehabilitation facilities
Public health centers
State health labs

Cost (millions)

Beds
or
(projects)

Total

Federal
share

413,797

$10,048

$3,108

7,446
1,178
247
75
482
327
244
49

2,246
395
78
27
158
107
85
12

305,310
80,021
21,042
7,424
(927)
(454)
(1,189)
(38)

Projects completed and in
operation
Cost (millions)

Beds
or
(projects)

Total

333,518

$7,486

$2,376

5,657
759
221
74
314
231
190
41

1,759
252
74
27
108
78
69
9

250,923
55,371
19,850
7,374
(738)
(360)
(1,084)
(34)

Federal
share

In 1967, the President established a National Advisory Commission
on Health Facilities to review present and future health facilities requirements and to propose new program directions for meeting them.
The report of the Commission, issued in December 1968, recognized
the inherent and integral relationship between the system for providing
health services and the types of facilities required and formulated a
concept of an interdependent, comprehensive health care system
which would assure to "every citizen . . . ready access to quality
health care" and "continuity of health care services."1
Legislative proposals to continue Federal support programs for construction of health facilities upon the termination of the Hill-Burton
program at the end of 1970 will be based upon the principles and concepts set forth by the President's Commission. The legislation will
propose a system of loan guarantees and interest subsidies which will
emphasize efforts to modernize urban hospitals. Revenue to finance
repayment of the loans will be generated through patient payments
and third-party (Medicare, Medicaid, private insurance, etc.) reimbursements. The legislation will also propose project grants for facilities
emphasizing improved and innovative methods of providing health
care.
While Hill-Burton is the largest Federal health care facility construction program, other Federal programs also provide funds for this
activity:
1

Report of the National Advisory Commission on Health Facilities, December 1968, p. 7.




154

THE BUDGET FOR FISCAL YEAR 1970

(a) Medicare and Medicaid provide an allowance for depreciation
of facilities and equipment in their payments to hospitals and other
health care institutions.
(b) HUD programs provide mortgage insurance for the construction of hospitals, nursing homes and group practice facilities. HUD
also provides loans to smaller communities to construct essential
public facilities, including hospitals, and provides grants to construct
multipurpose neighborhood facilities which commonly include a
health component.
(c) HEW provides grants to construct community mental health
centers. This program has assisted in the construction of 251 centers
from 1965 to 1968. An estimated 172 additional centers will be
authorized in 1969 and 1970.
(d) OEO supports the development, including necessary construction, of neighborhood health centers.
(e) The SB A provides loans to profitmaking health care institutions.
(f) Commerce's Economic Development Administration provides
grants to communities to construct public facilities—including health
facilities—to enhance opportunities for new permanent employment.
(g) A new program of project grants and low-interest loans for
health facilities construction in the District of Columbia will provide
$15 million in 1970 for obligations to assist in modernizing community
hospitals and constructing skilled nursing homes or extended care
facilities.
Related to efforts to improve the effectiveness of the Nation's
medical care delivery system are direct programs of the Federal
Government to construct health facilities for its own beneficiaries
which are innovative and experimental in design and aim at reducing
hospital operating costs, while increasing operating efficiency. For
example, the Department of Defense is proceeding with plans to
develop a "new generation of hospitals—hospitals so automated that
labor costs can be cut drastically and routine services transferred from
the overworked doctor and nurse to the sophisticated machine." 1
Similarly, the Veterans Administration has made extensive efforts
to design hospitals which can serve the changing requirements of its
beneficiaries and are adaptable to changing medical technology.
Over the period 1948 through 1968, Federal expenditures for
health facility construction accounted for approximately 15% of
total national expenditures for construction of health facilities.
Table L-6 shows health facility construction trends over the
period 1968-70.
1
Address by the Honorable Clark M. Clifford at the National Security Industrial Association,
Sept. 26. 1968.




SPECIAL

155

ANALYSES

Table L-6. HOSPITAL A N D HEALTH FACILITY CONSTRUCTION
Outlays
(in millions of dollars)
1968
Federally supported construction of
hospitals and other facilities:
General hospitals
Long-term care facilites
Community mental health centers
Sewer and sanitation facilities
Other
Federal hospitals and health facilities:
Hospitals
Nursing homes
Other facilities
Total outlays

1969

Numbers
of beds or (projects)

1970

138
75

168
71

173
74

12
80
60

25
140
25

44
156
78

70
5
30

105
2
59

144
1
58

470

595

l

1968

1969

1970

15.906
8.495

17.053
10.000

15,224
9.128

728

(62)

2.607
1.709

(86)

8.486
662

(86)

3.671

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

Organization and delivery of health services.—As a parallel

measure to expanding health resources, the Government has initiated
several programs which would extend the capacity of existing health
resources through improved organization and utilization (see table
L-y-7). Outlays to continue this focus in 1970 will amount to $197
million primarily through the following programs:
The Partnership for Health program will spend $21 million in 1970,
an increase of $7 million over 1969, to assist States, regions, and local
communities to plan on a continuing basis for comprehensive health
services. By 1970, comprehensive health planning agencies will be
established in each of the 50 States and four territories. The program
will be further stimulated through the requirement, new in 1970, that
each State provide financial support for planning equal to 25% of its
formula allocation. In addition, support will be continued for 93 areawide health planning groups and funds will be available for the initial
development of 20 new organizations. Through the efforts of these
State and regional planning agencies, attention will be directed
toward: (1) measuring the health status of the population in the
planning area; (2) describing and assessing available manpower and
facility resources and their relationship to each other; (3) determining
requirements for health services not now provided; and (4) projecting
future trends and assigning priorities to guide health systems development.
These grants also support 22 institutions which provide both longand short-term training of health planners in such areas as basic
concepts of health, planning theories and techniques, and urban
sociology.
The planning approach to the health care delivery system, which
emphasizes matching health needs with health resources, has as its
corollary an approach which emphasizes the prompt delivery of
existing and new medical knowledge and technology. Through linkage
of medical schools and research centers, community hospitals and



156

THE BUDGET FOR FISCAL YEAR 1970

health practitioners, the Regional Medical Program will continue
planning and operational activities to communicate and make available the latest advances in the diagnosis and treatment of heart,
cancer, stroke, and related diseases. By the end of 1969, 45 regional
programs will have moved from planning to operational status and
another five operational programs will be funded in 1970.
An estimated 50,000 medical professionals will receive advanced
education and training in 1970 to keep them abreast of research
findings and technical developments. RMP expenditures in 1970 to
improve the organization and delivery of health services will be $85
million, an increase of $34 million over 1969.
Table L-7. FEDERAL OUTLAYS FOR IMPROVING THE ORGANIZATION
AND DELIVERY OF HEALTH SERVICES (in millions of dollars)
1968
actual

Analytic studies
Planning
Demonstrations
Total expenditures

1970

1969

32
35
33

36
49
60

51
43
103

100

145

197

The National Center for Health Services Research and Development
will spend $37 million in 1970, its second year of operation, an increase
of $12 million over 1969. Through research grants and contracts the
Center will focus on selected priority areas. These include (1) defining
the essential elements related to costs of health services, (2) study of
means to improve health services to the disadvantaged, (3) developing
reliable criteria for assessing effectiveness of health programs, (4)
improved methodology for community health services planning and
organization, and (5) basic factors in functions, design, and operation
of community health facilities.
A basic strategy of the Center in 1970 will be to draw upon the
multidisciplinary resources of university and hospital-based health
services research centers. It is proposed to develop and establish
common goals with leading health services/research oriented health
care institutions to enable rapid assimilation of proven new techniques
and procedures into ongoing health service operations.
Under the authority of the 1967 Social Security amendments, HEW
is conducting experiments with new approaches to reimbursing
hospitals and physicians under Medicare, Medicaid, and Maternal
and Child Health programs to seek ways of encouraging greater
efficiency and reducing costs while maintaining the quality of care.
Several studies have been initiated including experiments designed:
(1) to test the efficiency and reduced cost potential of a prepaid
group practice as compared to fee-for-service care; (2) to create
improved conditions for greater hospital administrative efficiency
through more uniform accounting procedures; and (3) to help stimulate better hospital financial management and planning through
joint hospital-third party financial planning. Legislation will be
proposed to permit the Secretary of HEW to install new reimbursement methods as experiments with new approaches demonstrate
their effectiveness.



SPECIAL

157

ANALYSES

PROVISION OF HOSPITAL AND MEDICAL SERVICES

This category includes: (1) payments for hospital and medical
care in non-Federal facilities and to private physicians; and (2) the
costs in 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. These agencies also expend substantial
amounts to provide care for their beneficiaries under contract in nonFederal facilities.
Outlays for these programs, discussed below, are estimated at $14
billion, 76% of all Federal health outlays in 1970. Because of the
rapid expansion of Medicare and Medicaid, this category remains
the fastest growing area of Federal health outlays (see table L-8).
Table L-8. PROVISION OF HOSPITAL AND MEDICAL SERVICES
Outlays
(in millions of dollars)
1968

Inpatients treated
Clinic and physician visits
Payments for hospital and medical
services
Inpatients treated
Clinic and physician visits
Total

1970

2,738

2,896

1,905
833

2,031
864

2,095
901

8,025

9,622
6,598
3,024

7,666
3,316

12,518

1969

2,240
65,971

2,297
68,969

2,331
71,361

6,803

7,345

7,686

O

(0

10,981

5,530
2,496

1968

2,996

10,764

Provision of direct Federal hospital
and medical services.__

1969

Numbers treated
(in thousands)

13,977

O

1970

i Not available.

Payments

for hospital and medical service.—Medicare.—

Total health care outlays on behalf of over 20 million aged persons
covered under Medicare's hospital insurance program and over 19
million under its supplementary medical insurance program are expected to rise $630 million to $6.9 billion in 1970.
In the hospital insurance portion of the program, rising medical
prices, more persons served, and increased utilization of services are
responsible for a program expenditure increase to $5.0 billion, $473
million more than 1969. Enrollment in the hospital insurance program
is expected to rise by an average 300,000 in 1970 over the 1969 level
of 19.8 million aged, persons while the number of persons actually
receiving services will increase from 4.1 million in 1969 to 4.2 million
in 1970.



158

THE BUDGET FOR FISCAL YEAR 1970

The hospital insurance program also includes care provided in
skilled nursing home (extended care) facilities. Approximately one
out of every 12 hospital patients also receives care in an extended care
facility. In 1970, admissions to extended care facilities will exceed
500,000 and outlays will approximate $400 million, an increase of
about 30,000 admissions and $39 million over 1969.
The voluntary supplementary medical insurance portion of the
Medicare program, which covers physician services and other outpatient costs, will expend $1.8 billion in 1970 to pay for services to 8.5
million persons, an increase of 300,000 persons over 1969. Enrollees in
the program pay a monthly premium, which is matched by Federal
contributions. The current monthly charge of $4 will continue in effect
through 1970.
The decision to hold the monthly premium level is one result of continuing and increased administrative efforts to limit the rise in
Medicare costs. Each fiscal intermediary in the program is developing
physician profiles that will improve ability to assure that payments
made to physicians are reasonable. Experiments in developing new
methods of reimbursement that will provide incentives to physicians,
hospitals and nursing homes to become more efficient are now being
developed as another means of attacking the problem. Further administrative controls and legislation will be proposed to strengthen
these efforts to limit Medicare costs.
Medicare outlays for the aged represent approximately 79% of
total Federal health outlays for the aged and about half of all medical costs incurred by persons 65 and over. While the aged have shown a
significant increase in utilization of hospital and physician services
since the advent of Medicare, the major impact of the program has
been to shift the cost of medical services from the aged and their
families to society as a whole. The major items of medical care costs
still borne by an average aged person, aside from the monthly premium
payments, are out-of-hospital drugs and costs represented by the deductible and coinsurance features of the program.
The disabled, like the aged, have low incomes and high medical
costs. Accordingly, legislation will be proposed, effective in 1971, to
extend Medicare protection to the 2 million totally disabled persons
who will be receiving cash benefits through the Railroad Retirement
or Social Security programs.
Medicaid.—On the basis of State estimates, total Federal, State,
and local medical assistance payments on behalf of the needy are
expected to rise from $4.6 billion in 1969 to $5.8 billion in 1970^ The
Federal share of these payments will increase from $2.4 billion in 1969
to $3 billion in 1970. This 25% increase in medical payments over
1969 reflects an anticipated expansion of the Medicaid program to all
54 States and jurisdictions by the end of 1970. Services will be provided to about 10.2 million needy persons compared with 9.5 million
in 1969. The continued rise in medical prices, especially for hospital
and nursing home care, also contribute to the Medicaid cost increase.
Greater utilization of services and an accelerated trend away from
negotiated welfare rates of payments to physicians and hospitals in
favor of customary fees and full costs account for most of the remaining increase in Medicaid costs.
Included within these estimates is the impact of the 1967 Social
Security Amendments which limit Federal payments on behalf of the



SPECIAL ANALYSES

159

medically needy to persons whose effective income is no more than
one-third higher than the highest payment made by the State to
families in the Aid to Families with Dependent Children program.
In 1965, the last fiscal year prior to Medicaid, total Federal, State,
and local medical assistance payments under the older provisions of
the Social Security Act were $1.4 billion. In 1966, total medical payments were $1.9 billion, of which 62% were made under the new
Medicaid program. By 1970, when virtually all payments are expected
to be made under Medicaid, total medical assistance payments are
expected to rise to $5.8 billion, an increase of about 300% over 1966.
While some of this increase reflects the vigorous rise in medical prices,
it mainly represents a basic improvement under Medicaid in the
scope, availability, and accessibility of necessary medical services for
needy people, especially women and children and the aged. In many
States, the poor under Medicaid are now able to go to physicians and
hospitals of their own choice and in 1970, free choice must prevail in
all States. With many physicians under Medicaid now being reimbursed their customary fees, more are finding it possible to move their
offices into or near poverty areas to better meet the health needs of
the poor. In some States, Medicaid has enabled prepaid group practice
plans to include the poor within their membership. Medicaid reimbursement of other federally supported health programs, especially
neighborhood health centers sponsored by OEO and Children's
Bureau, has made improved health services available in poverty
areas.
Approximately 62% of Federal Medicaid payments go to eight
States, reflecting their more liberal income eligibility standards and
wider scope of available health services. These States, however, account for only about a third of the Nation's poor, an indication that
a substantial unmet need for medical assistance by the poor continues
to exist in other areas.
Of the groups covered by Medicaid, the aged poor with their higher
than average bills account for about $1.4 billion, or 46% of all Federal
Medicaid payments though they represent only about 32% of the total
served under the program. Mothers and children representing about
55% of all persons served under Medicaid account for about $1.0
billion, or 34% of Federal Medicaid payments. As the States transfer
more of the needy aged from skilled nursing homes into less expensive
intermediate care facilities under the terms of the 1967 Social Security
Amendments, the very high costs associated with nursing home care
for this group should be reduced. In addition about $560 million in
Federal Medicaid payments will assist the blind and the disabled
who represent about 13% of those receiving Medicaid services in
1970. This amount represents about 19% of all Federal Medicaid
payments.
Children's Bureau and OEO,—Where Medicaid's primary emphasis
is the elimination of financial barriers to medical care for the poor,
Children's Bureau and OEO concentrate on bringing health services
into areas where health resources are not available or are insufficient
to meet the health needs of the poor.
In 1970, Children's Bureau expenditures will increase by $23
million, to a total of $216 million. Of this total, about $31 million will
be for family planning services and research projects, $13 million more



160

THE

BUDGET FOR FISCAL YEAR

1970

than in 1969. About 1.3 million needy women are expected to receive
family planning services in Children's Bureau projects in 1970. One
of the primary aims of these projects—the reduction of infant mortality—is being achieved. During the entire decade 1955-65, infant
mortality declined by only 5%. In the period 1964 through 1967, the
rate declined from 24.7 per 1,000 to 22.1, a reduction of about 10%.
This decline has been pronounced in cities where Children's Bureau
maternity and infant care health center projects have been active, as
illustrated by the following table.
Table L-9. SELECTED INFANT MORTALITY RATES i
Infant rnortality rate per 1, 000 live
births
1964
Nationwide _
Major cities with maternity and infant care projects:
Baltimore
Chicago
_____
District of Columbia..
_ _
_
Houston
__
__
New York City
1
2

1965

24.8

__

231.0
2
30.4
34.5
28.4
226.9

1966

1967

24.7

2

23.7

22.1

28.4
33.3
34.7
25.0
25.7

28.0
32.5
35.3
2
26.4
24.9

26.8
29.4
32.6
22.1
23.9

Years shown are calendar years.
Indicates year projects began operation.

The remainder of the 1970 increase will be used to expand early
casefinding and treatment for about a half million handicapped
children and continuing the present array of 111 neighborhood health
center projects.
OEO expenditures for comprehensive neighborhood health centers
are expected to increase from about $52 million in 1969 to $72 million
in 1970. In 1969, OEO funded 48 comprehensive family health centers,
of which 34 were operational in 1969, and the remainder are expected
to be in full operation by 1970. Some 750,000 people are expected
to be served by these centers in 1970, about 250,000 more than in 1969.
(A more complete discussion of health centers may be found under
"Special Impact Programs" below.)
Federal Employees Health Benefit Program (FEHB): Civilian Federal
employees and retired employees and their families are offered a choice
of five different types of health insurance plans including group practice
plans, with the Federal Government contributing a fixed amount per
participant but not more than 50% of the premium. While premiums
have increased since 1961, the per capita Federal payment has remained relatively constant so that the proportion of Federal payments
to total premiums has declined from 39% in 1961 to 33% in 1969.
During the same period, Federal payments increased from $120 million
to $249 million, and employee contributions rose from $197 million
to $498 million reflecting in part the growth in participants from 1.8
million in 1961 to 2.6 million in 1969. In 1970, 2.8vmillion active employees and annuitants are expected to participate in the program, and
Federal premium payments will be $260 million. In addition to the
increase in participants, the rise in program costs is attributable to




SPECIAL ANALYSES

161

increasing medical prices and greater utilization of health services by
FEHB participants. With respect to utilization, there is some tentative
evidence which suggests broad variations in the per-capita utilization
under the various plans. Further study of these variations may offer
valuable insights to help improve the organization and delivery of
health care.
Providing medical care directly to Federal beneficiaries.—
The share of total Federal outlays allocated to the provision of health
care directly in Federal facilities has declined from 49% in 1960 to
16% in 1970. The decline results not from a reduction in the absolute
dollars expended for care in Federal facilities, but rather from the
major expansion of the hospital and medical care programs financed
through Federal funds, particularly for the aged and indigent. In spite
of the significant shift in the proportions, direct Federal care remains a
major program element with outlays totaling $2,996 million in 1970,
an increase of $100 million over 1969.
The three agencies primarily concerned with direct provision of
health care, the Department of Defense, Veterans Administration,
and the Department of Health, Education, and Welfare, operate 525
hospitals containing 174,000 beds, and national networks of
ambulatory care facilities.
To achieve its medical care mission, the VA will maintain and
operate 167 hospitals, 63 nursing home care units, 34 domiciliary/
restoration care facilities, and 203 outpatient clinics—constituting
one of the largest medical care systems in the world. In 1970 VA will
treat 775,000 patients in 105,414 operating beds, or an average of
7.35 patients treated per bed. This represents a 7% increase over the
1968 experience when 762,426 patients were treated in 112,394 beds
with an average of 6.79 patients treated per bed. In addition, outpatient medical visits are expected to increase from 5.5 million in
1968 to 6.3 million in 1970. Total outlays over the 3-year period for
care of beneficiaries in VA facilities and under contract in community
facilities will rise from $1.3 billion to $1.4 billion.
The Department of Defense, with 293 hospitals and 55,000 beds,
will make medical care available to over 9.5 million servicemen, their
dependents, and retired military personnel and their dependents. In
1970, the military services will expend $1,477 million to provide care
for these groups in military facilities.
The military services also contract for use of community medical
facilities for dependents and retired military personnel. In 1970
outlays for this portion of the program will be $210 million. In total,
expenditures for care provided in both military medical facilities and
community facilities will increase $73 million in 1970 over 1969.
Groups eligible for care in the 65 hospitals and outpatient clinics
operated by HEW include over 400,000 American Indians and natives
of Alaska and about 420,000 seamen, Federal employees injured on
the job, narcotic addicts, and persons committed or voluntarily
presenting themselves for treatment in St. Elizabeths Hospital in
Washington, D.C. In 1970 $120 million will be spent to improve
further the health conditions of the Indian population. Safe water and
sewerage facilities for approximately 7,100 new or modernized Indian
homes will be provided in 1970, double the number provided in 1969.
340-700 O—69



11

162

THE BUDGET FOR FISCAL YEAR 1 9 7 0

Table L-10. ESTIMATED HEALTH CARE OUTLAYS BY POPULATION AND
INCOME GROUPS (in millions of dollars)
1968

1969

1970

7,831

10,764

12,518

13,977

4,379
2,535
917

6,619
2,783
1,362

7,765
3,105
1,648

8,677
3,392
1,907

3,178

4,122

Aged (65 and over)
Other adults (19-64)
Children and youth (0-18)

1,968
850
360

2,654
804
664

3,153
979
866

3,586
1,149
1,056

Nonindigent, total __

4,653

6,642

7,520

,186

Aged (65 and over)
Other adults (19-64)
Children and youth (0-18)

2,411

3,965
1,979

4,612
2,126
782

5,091
2,243
852

1967

Total, all recipients _
Aged (65 and over)
Other adults (19-64)
Children and youth (0-18)
Indigent, total *

1

1,685
577

5,791

Indigency as defined by OEO poverty guidelines.

Distribution of health care outlays by age groups and
economic status.—Table L-10 estimates the Federal outlays only
for the "provision of hospital 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 L-10 indicates that the largest health
expenditure increase in percentage terms will be for children and youth,
rising 15.7% in 1970 from $1.6 to $1.9 billion. In absolute terms, however, the largest increase will be for the aged, rising from $7.8 billion in
1969 to $8.7 billion in 1970. The distribution of expenditures between
indigent and nonindigent indicates that 4 1 % of Federal expenditures
for the provision of hospital and medical services will aid the poor.
In 1970, $5.8 billion will be spent to provide or finance health care
services for the needy, an increase of $793 million over 1969 and an 82%
increase over 1967.
The aged.—Of the total 1970 expenditures for the provision of health
services both directly in Federal facilities and indirectly through Federal payments for care, approximately 62% or $8.7 billion, will be on
behalf of the aged. This is an increase of $912 million or 12% over
1969.
The amounts expended for the indigent aged will rise by $433
million to total $3.6 billion in 1970, due to increases in cost and greater
utilization of services.
Most of the aged are covered by Medicare and Medicaid which are
discussed above. These two programs account for 95% of all Federal
health outlays for the aged.
An additional $376 million will be spent by the VA and the DOD
to provide medical care for aged veterans and retired military per-




SPECIAL ANALYSES

163

sonnel and their spouses, mainly in hospitals and clinics operated
by those agencies. This is an increase of $36 million over 1969
expenditures.
Children.—Health care service expenditures for children are expected
to be $1.9 billion in 1970, an increase of $259 million over the 1969
level, of which $201 million is attributable to Medicaid expansion.
The DOD dependent medical care program provides almost all of the
remaining funds.
Nearly 75% of the 1970 increase will be for services to needy children. Between 1969 and 1970 expenditures for indigent children are
estimated to rise by 22%, or $190 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, effective in 1971, for a child health program to provide, for families unable
to afford it, access to health services from prenatal care of the mother
through the child's first year. The legislation will also provide
within the next decade protection to all children against the cost of
catastrophic illness.
Other adults.—The 1970 expenditures of $3.4 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 $2.4 billion is expended for these groups, representing 71% of
the total spent for nonaged adults. Federal Medicaid payments for
needy adults will be $569 million in 1970, representing 17% of total
expenditures for adults. Other Federal programs spending more than
$45 million in 1970 for health care for adults are OEO's neighborhood
health centers, the Vocational Kehabilitation program, and the
maternal health programs of the Children's Bureau. These programs,
plus payments by Medicaid, and approximately $415 million of the
health care funds expended by the Veterans Administration, comprise
the $1 billion which will be spent in 1970 to provide hospital and
medical care to needy adults.
PREVENTION AND CONTROL OF HEALTH PROBLEMS

Significant savings in terms of human life and economic productivity, the conservation of our limited health resources, and the avoidance of needless pain and suffering have been achieved in recent years
by increased efforts to prevent and control health problems. In the
case of red measles alone, the immunization effort from 1963 through
1968 has saved an estimated 973 lives, 55,000 hospital days, and 32
million school days. Over 9.7 million acute cases of measles have been
prevented as well as 3,000 accompanying cases of mental retardation.
Total efforts to prevent and control health problems will be continued in 1970 with total outlays of $804 million. Some of the activ-




164

THE BUDGET FOR FISCAL YEAR

1970

ities classified under the two previous categories—Development of
Health Resources and Provision of Health Services—could also be
included in Prevention and Control of Health Problems (e.g., portions
of: health research, manpower training, planning of health services,
and family planning). However, because of the difficulty of separating
prevention activities from medical treatment activities in such programs, only those programs which in their totality are directed
toward prevention and control are included in this category. Within
HEW alone, for instance, research directed toward air pollution and
environmental control and consumer protection will total more than
$115 million in 1970. These funds are included in the Health Resources
category above.
Table L-ll. FEDERAL OUTLAYS FOR THE PREVENTION A N D CONTROL
OF HEALTH PROBLEMS (in millions of dollars)
1968
Disease prevention and control
Environmental control
Consumer protection
Total, prevention and control of health problems

1969

1970

386
54
125

506
83
151

522
102
180

565

741

804

Disease prevention.—One of the most important new disease
prevention initiatives will be an immunization program against German measles, financed by a supplemental appropriation of $10 million
in 1969 and estimated outlays of $19 million in 1970. The innoculation of 70,000,000 children over the next 5 years will help to eradicate
an illness which has caused thousands of birth defects each year.
A large percentage of State and local expenditures for health is
directed toward the prevention and control of health problems. Much
of the Federal support of these activities is provided through the
Partnership for Health program with total outlays of $156 million
in 1970. In addition to the German measles immunization program,
a major effort will involve rat control projects which aim both at
alleviating urban sanitation problems and providing training and
employment for ghetto residents.
Additional outlays of $17 million will support continuing efforts to
prevent chronic illnesses, particularly those related to smoking and
malnutrition. Expenditures of $21 million will also ensure that the
national capability to deal with outbreaks of communicable diseases
will be maintained. The disease prevention and control programs in
other countries supported by the Agency for International Development will be continued in 1970, although at a slightly reduced level.
Table L-12 shows the impact of prevention and control programs
for selected diseases over the past decade. Reported cases of these
diseases have dropped dramatically between 1960 and 1967 despite
a 10 % increase in the Nation's population.




SPECIAL

165

ANALYSES

TableL-12. REPORTED CASES OF SELECTED DISEASES 1
I960
Red measles
Polio
Whooping cough
Rheumatic fever, acute
Typhoid

1964

441,703
3,190
14,809
9,022
816

458,083
122
13,005
7,491
501

1967
62,705
41
9,718
3,985
396

i HEW, Morbidity and Mortality. Annual Supplement, Summary. 1967.

Environmental
control—Recent years have seen a dramatic
increase in efforts to identify and control those conditions in our
environment which cause or contribute significantly to ill health.
Federal outlays for these activities will rise to $102 million in 1970—
an increase of 89% over 1968, providing for control efforts in air
pollution, solid wastes, radiation hazards, occupational health, public
water supplies, and environmental sanitation.
The increase in air pollution control outlays in 1970 of $5 million
to $32 million will provide support and guidance for State standard
setting in 70 Air Quality Control Regions throughout the country containing 75% of the urban population. In 1970 an additional $22
million will be obligated for the abatement of air pollution from
Federal facilities in the second year of a 5-year program to bring
Federal facilities into compliance with local air quality standards.
This abatement plus that resulting from the enforcement of the State
standards will result in a very significant reduction in the estimated
$10 billion of damage caused by air pollution each year. This major
attack on air pollution in 1970 has been preceded by a 150% increase
in State and local expenditures on, air pollution control since 1965.
Likewise, 45 States now have air pollution statutes compared with only
17 States prior to 1963.
Federal research will seek to provide the scientific basis for air
quality standards and to develop more effective equipment to control
air pollution. A number of processes for controlling sulfur oxides will
be evaluated in prototype in 1970 prior to their being recommended
for widespread use.
Emphasis will continue to be given to research and control activities
related to pollutants from automobiles which account for approximately 60% of all air pollution. With the increasing number of automobiles on the road, hydrocarbon and carbon monoxide emissions
would be expected to increase 50% by 1980 if left uncontrolled.
As table L-13 illustrates, controls required by Federal regulations on
1968 model cars and new controls required on 1970 and 1971 model
cars will prevent an increasing amount of these pollutants from ever
being emitted to the air. By 1970 the total amount of these pollutants
emitted will take a downward turn, and as older cars without controls
are replaced, the improvement in the air quality will be much greater.




166

THE BUDGET FOR FISCAL YEAR

1970

Table L-13. AUTOMOBILE EMISSION CONTROL» (in millions of tons per year)
1966

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

1
(2)

1967

2
1

1968

1969

1970

3
6

4
))

5
)8

1971

7
25

Hydrocarbons

10

11

11

11

10

10

Carbon monoxide

62

65

66

67

66

59

1 Unpublished data furnished by the National Center for Air Pollution Control, HEW.
2
Less than 500 thousand tons.

However, these controls alone will not be sufficient to achieve the
low level of auto emissions believed necessary for health protection
in our urban areas. Consequently, HEW will accelerate its research
in 1970 to develop even more effective control techniques to reduce
emissions from motor vehicles.
The control of hazardous radiation from electronic products such as
television sets and microwave ovens will be undertaken for the first
full year in 1970 under the Radiation Control for Health and Safety
Act of 1968. In addition, research and State planning grants for
solid wastes will be continued in an effort to improve the quality of
the environment by developing and encouraging the use of more
advanced techniques of solid waste management.
In the area of occupational health, increased efforts will be made to
quantify more accurately the relationship between lung cancer and
exposure to radiation in uranium mining. Research will also continue
on the control of pneumoconiosis or "black lung" among coal miners.
Consumer protection.—Programs to protect the consumer from
illness and injury resulting from hazardous drugs, foods, pesticides,
and household products will expend $180 million in 1970. Special
emphasis will be placed on the safety,of oral contraceptives and therapeutic equivalency of chemically similar drugs, as well as on better
surveillance of manufacturing practices and a better review of the
efficacy of drugs already on the market. In addition, pesticide hazards,
dangerous cosmetics, the safety and efficacy of new drugs, and the
inspection of meat and poultry as well as other foods will also receive
close attention.
Accidents from all causes now fill more than half of the Nation's
hospital beds. Efforts will be continued to discover and control the
behaviorial and environmental factors contributing to these accidents.
SPECIAL IMPACT PROGRAMS

Family planning.—Funds available for family planning, to meet
our domestic needs and to assist other nations in their efforts, are
expected to increase from $116 million in 1969 to $143 million in
1970. Family planning funds available for expenditure in this country




167

SPECIAL ANALYSES

will increase by $24 million to $89 million in 1970. Of this total, $22
million is for research and training activities. Services will increase from
$47 million in 1969 to $67 million in 1970. About 3.5 million women
are expected to receive family planning services in 1970, compared to
1.7 million in 1969 and 1.0 million in 1968.
Table L-14. ESTIMATED OBLIGATIONS FOR FAMILY PLANNING
SERVICES, RESEARCH, AND TRAINING (in millions of dollars)
1968
Health, Education, and Welfare:
Childrens Bureau
_
Medicaid and public assistance
National Institutes of Health
Health Services and Mental Health Administration
Food and Drug Administration
Office of Education

6.5

1970

Agency for International Development
Department of State.

.
__ __.

Total estimated family planning obligations

__

31.5
17.0
13.6
2.4
1.1
3.5

47.3

69.1

13.0
4.7

15.0
4.8

42.7

Total, domestic

18.5
13.0
10.1
1.7
.8
3.2

9.6
4.0

Office of Economic Opportunity
Department of Defense

9.5
8.5
1.2
.7
2.8
29.2

__

Total, Health, Education, and Welfare

Total international.__

1969

65.0

88.9

34.6
.7

49.7
1.3

50.0
4.1

35.1

51.0

54.1

78.0

116.0

143.0

Domestically the bulk of family planning funds will be spent by
HEW, with obligations rising from $47 million in 1969 to about $69
million in 1970. Of this $22 million increase, Medicaid and public
assistance will account for about $4 million, Children's Bureau
about $13 million, and NIH about $3.5 million. State Department,
and AID are expected to make available about $54 million in 1970
compared to $51 million in 1969 for international family planning
activities, both through contributions to international organizations
and in direct aid to 25 foreign governments.
Special target groups.—Included within the Federal programs
treated in this analysis are funds for certain groups suffering from
illnesses that require specialized or expensive treatment (the mentally
retarded, alcoholics, and drug addicts), and special groups for which
the Federal Government provides most or all the funds for health
care. The table below indicates amounts available for health care for
these groups including research, training, and construction costs
directly associated with the provision of health services.




168

THE BUDGET FOR FISCAL YEAR 1970

Table L-15. ESTIMATED FEDERAL OBLIGATIONS FOR SPECIAL TARGET
GROUPS (in millions of dollars)
1968
Mentally retarded
Alcoholics
Drug addicts
Migrants
Indians
Cuban refugees

83.2
10.8
17.5
81
.
104.1
42
.

1969

106.4
14.9
19.0
81
.
121.8
55
.

1970

109.0
23.5
28.5
12.9
120.9
7.3

Federally supported health centers.—Since 1963, when legislation provided the Children's Bureau and NIMH with authority to
make grants to establish maternity and infant care and community
mental health centers, there has been a steady increase in the number
of federally supported health centers. Most centers now in existence
provide care only to specific groups such as mothers and their infants,
children and youth, and the mentally ill or retarded. Only centers
sponsored by OEO and the Partnership for Health program centers
provide comprehensive care to all persons living in the poverty neighborhoods they serve.
While each agency supporting health centers (OEO, Children's
Bureau, NIMH, and Partnership for Health) must meet certain
specific objectives contained in their authorizing legislation, all are
concerned with bringing into low income areas health resources—
clinics, physicians, and health workers—that either are nonexistent,
are in short supply or are not readily accessible. In addition to making
the benefits of modern health technology available, the health centers
seek a systematic, comprehensive, continuous, and personal approach
to the delivery of medical care. They are also concerned with making
more effective and efficient use of scarce health resources. Many are
interested in the training and employment of community workers
and the participation of the poor in the planning and operation of the
centers.
In 1970, 754 health centers will be funded wholly or in part with
$245 million in Federal grants, an increase of 132 centers and $52
million over 1969. About 2.4 million persons will be served at these
centers. The majority of centers are for the treatment of mental
illness and will receive grants from the National Institute of Mental
Health amounting to $75 million in 1970, an increase of $30 million
over 1969, to support 556 centers serving some 860,000 persons. About
40% of the mental health centers are located in poverty areas.
Children's Bureau will fund 113 centers in 1970 providing care to
some 250,000 needy mothers and their infants and to 400,000 needy
children and youths at a cost of nearly $86 million in Federal funds.
The existing 48 OEO neighborhood health centers and the 20 Partnership for Health projects provide comprehensive care to almost 600,000
people in poverty areas. In 1970, OEO expects to spend about $72




SPECIAL

169

ANALYSES

million on its existing centers and on new experimental centers in rural
and Model City areas, while Partnership centers will increase to 25 at a
total cost of $12.8 million. Together the OEO and Partnership centers
will serve about 900,000 needy persons in 1970.
Some of the reimbursements from Medicaid for services rendered
by health centers to Medicaid-eligible individuals will be used for
new projects in areas where additional health services are needed.
TableL-16. FEDERALLY FUNDED HEALTH CENTERS
1968

1970

$119.7
502
300
1,125

Total Federal outlays (millions)
Number of centers funded
Number of centers in poverty areas
Number of persons served in year (thousands)

1969

$191.5
622
352
1,742

$245.1
754
415
2,400

HISTORICAL RESUME

Table L - l classifies Federal health outlays for the years 1968
through 1970. The following table L-17 distributes Federal health
outlays by function for the period 1960 through 1967. The data for
1960 is not strictly comparable, representing " funds provided" rather
than outlays.
Table L-17. FEDERAL OUTLAYS FOR MEDICAL A N D HEALTH-RELATED
ACTIVITIES BY CATEGORY (in millions of dollars)
19601
Development of health resources, total
_ _ 1,016.9
Health research.
_ _509.5
Training and education
217.4
Construction of hospitals
and health facilities
290.0
Improving the organization and delivery of
health services 2 _ _ _ _ _
Provision of hospital and
medical services, total__ 2,164.8
Direct Federal hospital
and medical services_,__
1,701.3
Hospital and medical services, indirect
463.5
Prevention and control of
health problems, total._.
325.6
Total outlays from
Federal and trust
funds. _ _

3,507.3

1963

1964

1965

1966

1967

1,528.9
892.1
256.5

1,806.1
1,069.2
298.4

1,806.9
1,040.1
316.9

1,955.7
1,167.3
410.4

2,430.2
1,363.7
593.6

380.3

438.5

449.9

378.0

391.0
81.9

2,783.0

2,904.4

2,935.8

3,520.8

7,831.0

1,877.3

1,971.4

2,022.0

2,199.0

2,551.7

905.7

933.0

913.8

1,321.8

5,279.3

346.1

392.8

417.6

451.0

539.8

4,658.0

5,103.3

5,160.3

5,927.5

10,801.0

1
Report of the Committee on Government Operations, U.S. Senate; "Coordination of Federal
A gencies" programs in biomedical research and in other scientihc areas," report No. 142, Mar. 30.
g1961.
''61.
Ol.
2
Not tabulated in 1960-66 as a separate subcategory.




170

THE BUDGET FOR FISCAL YEAR 1970
RELATION OF HEALTH ANALYSIS TO H E W

TABULATIONS

The Department of Health, Education, and Welfare publishes
Social Welfare Expenditures including historical tables on Public and
Private Expenditures for health and medical care. The most recent
tabulation appeared in the December 1968 issue of the Social Security
Bulletin. It is this tabulation which is used to provide the data on
total national health expenditures. However, in the HEW tabulation
Federal health outlays are currently almost $1 billion lower than the
outlays tallied in this special Health Analysis. Essentially the difference reflects the exclusion in the HEW tabulation of outlays for:
medical training and education; Federal agency contributions to
employee health benefit funds; Federal expenditures primarily by AID
for health programs in foreign countries; and expenditures by the
Department of Agriculture for meat and poultry inspection. Were
these outlays included in the HEW tabulation, they would both
increase the Federal and the total national outlays as well as the share
that Federal outlays are of the total.
EXPENDITURES FOR HEALTH ACTIVITIES BY AGENCY

The following tables distribute the health-related expenditures of
Federal agencies by the categories used in this analysis. Based on
their major purposes, these agencies, excluding HEW, are assigned in
Part 3 of 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 $18.3
billion reported in this analysis for "health" compared to the $13
billion reported in Part 3 of 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. Other Special Analyses, such as those on
Research and Development, Education, and Manpower Development,
also seek to assemble all Federal outlays in their area. They therefore
will include, where pertinent, the same outlays which are tabulated
in this Health Analysis.




Table L-18. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED ACTIVITIES BY AGENCY, 1968
(in millions of dollars)

Department of Health, Education, and Welfare
Health Services and Mental Health Administration
National Institutes of Health
Consumer Protection and Environmental Health Service
Social Security Administration
Social and Rehabilitation Service
_ __
Other
Department of Defense
Veterans Administration
Department of Housing and Urban Development
Department of Agriculture
Agency for International Development
Office of Economic Opportunity
National Aeronautics and Space Administration
Atomic Energy Commission _
Civil Service Commission
Department of Labor
Department of State. _ _
National Science Foundation
Department of Commerce
Other agencies
Agency contributions to employee health benefit funds
Total outlays for health, 1968




Health

Training
and edu-

medical
services

119.5
119.2

9.6

.5

21.6

22.9

.5

6.6

.3

86.4
46.3

108.2

63.0

26.8
48.3
80.4

2.4
2.6

2.3

10.4

8.0

5.0

103.3
99.7

.7

651-3

051
804
550
350
152
551
251
058
906
604
151
605
507

Federal
hospital

86.6
79.1
.9

464.1
113.4
316.9

651
651

Organization and

280.1
272.8
6.1

1,142.7
96.6
956.6
68.0

651
651

Construc-

Federal
hospital
medical
services

Functional

37.0

.3
21.9
.6

29.3
4.9
3.5

1,348.2
1,225.0

7,398.2
30.9
5,332.3
2,028.6
7.8
171.9
54.6

19.9

103.5

.4

3.1

1.0
.1

2.5
686.6

469.8

20.6
112.1
71.1

2.1
17.3

9,814.3
957.4
1,284.9
151.1
5,332.3
2,080.5
7.8
1,761.5
1,439.6
83.0
149.1
116.7
103.5
103.3
100.4
40.7
46.6
26.1
25.4

24.5

22.5

1,546.5

323.1
245.4
4.4
73.0

Total

3.9

3.2

6.2

40.7
14.0
.3

tion and
control of
health
problems

99.8

3.8
238.4

19.3

78.8
238.4

2,738.2

8,025.4

565.0

14,131.5

Table L-19. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED ACTIVITIES BY AGENCY, 1969
(in millions of dollars)

Department of Health, Education, and Welfare
Health Services and Mental Health Administration
National Institutes of Health
Consumer Protection and Environmental Health Service
Social Security Administration
Social and Rehabilitation Service
Other
Department of Defense
Veterans Administration
Department of Housing and Urban Development
Department of Agriculture
Agency for International Development
Office of Economic Opportunity
National Aeronautics and Space Administration
Atomic Energy Commission
Civil Service Commission
Department of Labor
Department of State
National Science Foundation
Department of Commerce
Other agencies
Agency contributions to employee health benefit funds
. ___
Total outlays for health, 1969




651
651
651
651
651-3
051
804
550
350
152
551
251
058
906
604
151
605
507

Direct

Training

Indirect

Preven-

and
medical
services

Func-

and
medical
services

health
problems

1,040.8
105.4
823.9
88.8

572.9
129.4
404.8
11.0

292.5
279.3
11.3
.4

127.1
115.7
1.9

127.2
126.9

22.6

26.5

1.4

9.5

.3

95.9
52.8

130.9
78.8

59.2
54.7
139.5

2.7
2.0

40.5
4.6

8.6

12.4

9.6

iTT .4
99.8
.3
22.4
.7
7.4
1,476.4

1,430.0
1,291.7
20.0

.7
33.1
4.6
4.2

.3

6.9

594.9

6,221.9
2,661.3
8.6
183.9
69.1

413.5
317.3
5.0
85.4
5.4
21.1
141.2
123.4

134.5

144.9

1.0
.1

40.7
15.0
.3

2.3
18.4

25.5

3.4

7.0
29.2

840.9

8,925.4
34.8

4.3
248.8

21.0

2,895.6

9,622.1

740.9

Total

11,499.3
1,108.8
1,246.9
185.6
6,221.9
2,727.0
8.6
1,921.2
1,549.8
141.6
181.7
178.7
134.5
111.4
100.5
40.7
51.7
27.2
26.6
7.7
94.4
248.8
16,315.8

Table L-20. FEDERAL OUTLAYS FOR MEDICAL AND HEALTH-RELATED ACTIVITIES BY AGENCY, 1970
(in millions of dollars)
Functional

Training
and edu-

Construe-

Organization and

Federal
hospital

Federal
hospital

tion and
control of

medical
services

Health

medical
services

problems

Total

L.,|LL

Department of Health, Education, and Welfare _
Health Services and Mental Health Administration _ _
National Institutes of Health
Consumer Protection and Environmental Health Service
Social Security Administration
Social and Rehabilitation Service
Other
Department of Defense
Veterans Administration
Department of Housing and Urban Development
Department of Agriculture
Agency for International Development
Office of Economic Opportunity
National Aeronautics and Space Administration
Atomic Energy Commission
_
Civil Service Commission
Department of Labor
Department of State
National Science Foundation
Department of Commerce
Other agencies
-_
Agency contributions to employee health benefit funds
Total outlays for health, 1970




651
651
651
651
651-3
051
804
550
350
152
551
251
058
906
604
151
605
507

1,169.2
95.9
949.6
100.6

648.3
125.4
480.7
10.9

372.5
353.9
9.5
5.2

179.3
166.5
2.8

131.6
131.3

23.1

29.8

3.8

10.1

.3

104.3
65.5

132.3
95.4

63.0
81.8
155.8

42.9
6.6

3.0
.4

7.7

12.9

110.7
104.0
.4

6.6
3.5

1,476.8
1,340.7

10,225.7
39.3
6,850.9
3,327.9
9.2
209.8
71.2

464.6
338.1
6.2
103.0
16.9
21.5
163.7
108.5

18.5
152.9

.6

24.8
.7
10.4

35.4
5.0
5.0
.1
2.2

9.1
32.3

1,639.5

932.0

727.6

.1

3.8

1.0
.1

41.2
15.8
.3

2.7
21.1

27.5
196.7

4.9
259.6

21.4

2.996.2

10,981.3

803.6

13,191.2
1,250.4
1,448.8
219.7
6,850.9
3,411.9
9.2
2,007.7
1,657.6
156.2
206.6
160.8
156.4
110.7
104.6
41.2
55.3
30.5
29.8
9.9
98.6
259.6
18,276.8

SPECIAL ANALYSIS M
FEDERAL INCOME SECURITY PROGRAMS

Overview.—This analysis covers those Federal programs designed
to give individuals and families greater financial security through the
replacement of lost incomes or by supplementing inadequate incomes. Income replacement programs help restore income to workers and their
families if their wages are interrupted because of disability, death,
unemployment, or retirement. Income support programs help those
who are unable to earn the income needed for minimum living requirements.
Payments under income security programs are determined according to prior earnings, contributions, need, or other entitlement, as
distinct from payment for current services performed, and may be
provided in cash or in the form of goods and services. This analysis
deals primarily with Federal outlays for cash benefits but includes
some information on benefits in kind and tax expenditures.
Outlays for cash benefit programs totaled $40 billion in 1968 (an
amount equivalent to about 5% of the Gross National Product) and
Table M-1. FEDERAL OUTLAYS FOR INCOME SECURITY PROGRAMS
PROVIDING CASH BENEFITS, BY PROGRAM CATEGORY
1970
estimate

1964
actual

1968
actual

1969
estimate

$17,293

$24,786

$28,284

$29,469

2,460
3,197
2,195
612

4,129
2,524
2,516
639

4,684
2,709
2,660
662

5,201
2,818
2,796
684
1,519

21,899

25,757

34,594

38,999

42,487

2,088
1,558
7

2,753
1,773
37

3,144
2,087
37

3,434
2,174
48

3,863
2,242
62
-87

3,653

4,563

5,268

5,656

6,080

Total outlays, cash benefit programs (millions) 1

25,552

30,320

39,862

44,655

48,567

Proportion of total Federal budget outlays (percent)

26

26

22

24

25

1961
actual
Federal outlays, cash benefit programs
(millions):*
Income replacement programs:
Social security and railroad retirement
$13,110
Federal employee retirement systems
_
_ _
1,679
4,439
Unemployment insurance programs..
Veterans compensation
2,069
Other programs
602
Proposed legislation
Subtotal, income replacement
Income support programs:
Public assistance
Veterans pensions
Other programs
Proposed legislation
Subtotal, income support

1

_

Includes benefit payments and administrative expenses.




174

SPECIAL ANALYSES

175

are expected to increase to almost $49 billion in 1970 (see table
M-l). The bulk of cash benefits (about 86%) is paid for income
replacement (social security and railroad retirement alone account for
62%). Total outlays for cash benefit programs have comprised about
one-fourth of Federal outlays for all purposes since 1961, the proportion ranging from 22% to 26%. Proposed social security legislation
will increase social security benefits by $1.6 billion and railroad
retirement benefits by $19 million in 1970. A $100 million reduction
in outlays will result from proposed legislation for veterans compensation.
Income replacement programs.—The income replacement programs administered by the Federal Government provide protection
against loss of earnings due to retirement, disability, death of the
breadwinner, and unemployment. Of the total 1970 outlays of $42.5
billion expected for these programs, $36.5 billion will be from accounts
funded in part by employer and/or employee contributions. The remaining $6.0 billion are primarily for the retirement systems of the
uniformed services and veterans disability compensation and are paid
entirely from general revenues (see table M-2).
As the data in tables M-3 through M-6 indicate, the largest share
(about 56%) of income replacement expenditures benefit about
18 million retirees, assuring them a degree of financial independence
at retirement age. The 1970 expenditures represent an increase of
69% over 1964. The next largest portion of these outlays (35%)
goes to survivors and to the disabled. Unemployment benefits aid 5.3
million persons, but total outlays are only 6% of all income replacement expenditures since the unemployed, in comparison with other
groups, are recipients for shorter periods of time.
Retirement benefits.—Social security is the largest federally administered income replacement program. Its outlays, which will total $27.9
billion in 1970, include $18.1 billion for retirement benefits. About 90%
of the Nation's labor force is in employment covered by this program.
Social security pays benefits to 74% of all aged persons, excluding
about 1 million under other mutually exclusive retirement systems,
about 1.2 million who are eligible for OASI but are earning money in
excess of the earnings limitation, and about 1 million who are not
otherwise covered.
Social security retirement outlays in 1970 reflect an increase of about
70% since 1964. This increase is explained by: (1) an increase of 3.3
million beneficiaries since 1964, resulting primarily from normal program
growth; (2) an addition to the rolls of about 700,000 people over age 72
and not previously insured; (3) higher average benefit levels for recent
retirees; and (4) benefit increases authorized in 1965 and 1967, amounting to 7% and 13%.
The regular social security retirement benefit is based on the average
of a lifetime of covered earnings, with a monthly minimum of $55
and a maximum of $218. The proposed legislation would increase all
benefits other than the minimum by 10% and raise the minimum to
$80.
Retirement benefits for railroad retirees will increase from $762
million in 1964 to $1,082 million in 1970, an increase of 42%. This



176

THE BUDGET FOR FISCAL YEAR 1970

Table M-2. INCOME REPLACEMENT PROGRAMS: BENEFIT OUTLAYS
AND BENEFICIARIES, BY PROGRAM
Benefit outlays
(millions)
Program

1968
actual

1969
est.

Number of beneficiaries
(thousands)
1970

1968

1970

1969

Income replacement programs:
Social Security:

OASI
DI

_

Railroad Retirement
Federal employee retirement systems:
Military
Civil Service...
Coast Guard
Foreign Service
PHS officers
Judiciary
ESSA officers.
Special annuities (CSC)
Unemployment insurance (including compensation for Federal employees and ex-servicemen)
Railroad unemployment
Employees compensation
Veterans programs:
Disability and dependents indemnity compensation
Life insurance (Federal funds).
Life insurance (trust funds) __
Other benefits.
Proposed legislation
Total, income replacement
programs
__.

$20,737 $23,711 $24,636
2,434
2,624
2,088
1,527
1,553
1,388

21,863
2,258
1,039

22,597
2,441
1,045

23,254
2,600
1,050

2,095
1,957
48
11
6
4
1
1

,441
,158
52
13
7
4
1
1

2,720
2,384
56
15
10
4
1
1

624
866
13
2
1
1

695
904
14
2
1
1

760
943
14
2
1
1

t

t

t

2,181
76
82

2,321
97
85

2,406
93
87

4,555
296
27

5,220
174
28

5,220
170
28

2,471
29
427
82

2,610
33
443
81

2,741
36
457
84
1,519

2,369
28
410
252

2,385
32
427
266

2,393
35
440
278

33,684

38,019

41,427 134,605

136,233

137,190

1

t Less than 500.
1
Totals include duplication due to program overlap. Estimated unique totals are 31 million, 32
million, and 33 million.

program is closely tied in with the social security system, providing
a higher benefit but taxing the railroad worker at a higher rate. In
addition, there is a supplementary pension, provided on a noncontributory basis, related only to length of service in excess of 25 years.
Railroad retirement benefits are computed on a basis which combines length of service and average lifetime earnings and, in any case,
provide a minimum of 110% of the corresponding social security
benefit. About 60,000 beneficiaries were paid under a minimum
guarantee in 1968. The average railroad retirement benefit in 1968
for retired workers was $170 a month, compared to $98.60 for social
security retirees. In 1970 the maximum monthly benefit for a retiree
living alone will be $296 for 33 years of service (excluding supplemental pension). This compares with a maximum of $218 under
social security regardless of length of service.




177

SPECIAL ANALYSES
Table M-3. RETIREMENT BENEFITS: BENEFIT OUTLAYS,
BENEFICIARIES, AND AVERAGE PAYMENTS, BY PROGRAM
Benefit outlays
(millions)

Program

1968
actual

1969
est.

1970
est.

Number of beneficiaries (thousands)
1968
actual

1969
est.

1970
est.

Retirement benefits:
Social Security
$15,208 $17,247 $18,064 16,047 16,464 16,849
(OASI)
666
669
664
Railroad Retirement _
969 1,065 1,082
Federal employee retirement systems:
1,707 2,005 2,244
559
Military
499
613
451
1,285 1,418 1,566
432
Civil Service
470
41
10
Coast Guard
48
10
11
45
1
10
1
2
Foreign Service
13
11
1
1
1
6
10
PHS officers
7
3
3
Judiciary._.
3
t
t
t
ESSA officers.....
1
1
1
Special annuities
1
1
1
(CSC)
1
1
1
VA retired officers
pay
t
t
t
2
2
2
Total,
retirement benefits. 19,233 21,805 23,034 17,660318,153 318,611

Average monthly
payments l

1968
actual

1969
est.

1970
est.

$79
121

$87
133

$89
136

285
248
338
609
592
2
()
730

300
262
356
679
607

306
278
358
677
739

71

73

74

220

226

227

787

t Less than 500.
1
Payments per beneficiary, may differ from payments per retiree.
2 Not available.
8
Totals include duplication due to program overlap. Estimated unique totals are 17 million,
17 million, and 18 million.

Out of total benefit outlays of $2.4 billion, the civil service retirement system will pay $1.6 billion in 1970 in retirement benefits to
470,000 retirees. The military retirement system, with total 1970
outlays of $2.7 billion, will pay $2.2 billion to 613,000 retirees. The
outlays from these two programs have increased in the last 6 years,
growing by 100% and 125%, respectively. The factors behind these
recent increases are: (1) the number of retired beneficiaries is greater
than before; (2) these recent retirees enter the beneficiary rolls with
higher average benefits, reflecting higher earnings in recent years;
and (3) legislation which authorized automatic cost-of-living increases
for civil service and military beneficiaries.
Benefits for retirees are computed differently under these two
retirement systems for public employees. The civil service system
combines length of service with average salary for the 5 highest consecutive years, but with a limitation on the maximum benefit equal to
80% of the highest-five average salary. The military system normally
combines length of service with the basic pay at time of retirement to
produce a benefit having a maximum of 75% of terminal basic pay.
The average social security retiree receives about 25% of his
covered wages at the time of retirement. This ratio is much lower than
that for the civil service or military retiree. However, for social security
beneficiaries drawing the minimum benefit, the corresponding ratio
340-700 O—69-




-12

178

THE BUDGET FOR FISCAL YEAR 1970

is relatively high. The minimum benefit is essentially an income support payment designed to help meet a need of persons who are
presumed to be poor at the time of retirement.
The retirement systems for the other uniformed services (those for
the Coast Guard and for the officers corps of the Public Health Service
and the Environmental Science Services Administration) are similar
to the military system. They will benefit about 12,000 retirees in 1970
with $59 million in outlays. Two other retirement systems (serving
the Foreign Service and the Judiciary) and the special annuities for
Canal Zone construction woikers will pay $17 million in 1970 to
about 3,000 recipients.
Disability benefits.—Social security disability benefits will be paid
to 2.6 million beneficiaries in 1970, an increase of almost 75% over the
1.5 million beneficiaries in 1964. Outlays will have increased from
$1.2 billion to $2.6 billion, an increase of over 100%. Established in
1957 with 150,000 beneficiaries in that year, about 750,000 beneficiaries
are added each year while terminations are less than 600,000, due
mainly to mortality and to the transfer of disability retirees to the
regular retirement rolls upon reaching age 65. The disability insurance
program has been continually liberalized by reducing the prognosis in
disability determination to 1 year of total disability (adding about
30,000 cases), and by liberalizing the insurance status for young disabled workers (adding about 22,000). Legislation is proposed to reduce
the waiting period to 3 months and to eliminate the prognosis of permanent disability entirely.
The disability benefit formula is computed on the same basis as the
regular social security retirement benefit. The average disability benefit ($112, compared to an average of $99 for the regular retired
worker) is higher because the disabled worker's earnings history does
not extend as far back as the retiree's and reflects to a greater extent
the current level of wages.
The average monthly disability benefit for railroad retirement was
$148 for total disability. This average is lower than the regular retirement annuity because this system factors years of service into the
benefit formula. An occupational disability benefit is provided for
persons under age 65 if they have had 20 years or more of service.
Since the retirement annuity formula is based in part on length of
service, disability annuity beneficiaries are not transferred to the
regular age annuity after reaching 65.
The railroad retirement system also provides a temporary disability
insurance system for railroad employees unable to work because of
sickness or injury. Financed entirely by employer contributions, the
benefits average about $10 a day. The average weekly benefit had
not risen significantly since 1959 because of the statutory ceiling on
daily benefits. On July 1, 1968, the ceiling was raised from $10.20
to $12.70 a day.
Veterans disability compensation, paid to those with disabilities
related to military service, is graduated according to the degree of
disability, based upon a concept of the average earnings loss a worker
would experience for a given disability. Between 1968 and 1970,
average monthly payments will climb by 12% from $81 to $91,
largely reflecting legislation liberalizing basic rates. For totally



179

SPECIAL ANALYSES

Table M-4. DISABILITY BENEFITS: BENEFIT OUTLAYS, BENEFICIARIES
AND AVERAGE PAYMENTS, BY PROGRAM
Benefit outlays
(millions)

Program

1968

1969

1970

Disability benefits:
Social Security ( D I ) . $2,088 $2,434 $2,624
Railroad Retirement
(permanent disa78
bility)
77
73
Railroad unemployment (temporary
43
disability)
34
44
Federal employee retirement systems:
Military
466
380
426
463
Civil Service
380
419
8
Coast Guard
7
8
1
Foreign Service
1
1
Employees compen56
sation
__
52
54
Veterans programs:
Disability compensation
1,954 2,084 2,209
Life i n s u r a n c e
3
(Federal funds).
3
3
Life i n s u r a n c e
21
22
20
(trust funds)
8
8
8
Other benefits
Total, disability
benefits

5,000

5,579

5,981

Number of beneficiaries
(thousands)

Average monthly
payments l

1968

1969

1970

2,258

2,441

2,600

$77

$83

$84

42

40

39

144

160

167

88

92

90

119
174
3

129
182
3

139
190
3

1968

2

51

1969
est.

2

1970
est.

63

266
182
208
750

275
192
216
750

280
?03
212
750

t

t

t

13

14

14

332

321

337

2,004

2,015

2,020

81

86

91

5

5

5

38
2

39
1

40
1

H 7 4 6 M,961 *5,141

t Less than 500.
1
Payments per beneficiary, may differ from payments per disability case.
2
Average weekly payments.
3
Not available.
4
Totals include duplication due to program overlap. Estimated unique totals are about 3 million
for each year.

disabled veterans, there has been a 33% increase from $300 to $400 a
month in the basic rate of compensation.
Other programs providing disability benefits include compensation
for certain Federal and military employees under the Federal Employees Compensation Act and the disability provisions of the Federal
employee retirement systems. Total outlays for these other disability
benefits in 1970 will be $994 million.
Survivors benefits.—Survivors of deceased workers receiving social
security benefits are estimated to number 6.4 million in 1970 (see
table M-5), of which about 60% will be widows and widowers and
40% children. (Parents comprised less than 0.1 million.) In 1964,
survivor beneficiaries totaled 4.45 million.
Liberalizations increased the rolls in 1965 by reducing the minimum
age of entitlement for widows without children from 62 to 60, adding
130,000 cases to the rolls, and by raising the maximum age for children attending school from 18 to 21, adding about 300,000 cases to
the rolls. In 1967, disabled widows and widowers became entitled to
reduced benefits at age 50, adding another 60,000 cases.



180

THE BUDGET FOR FISCAL YEAR

1970

Table M-5. SURVIVORS BENEFITS: BENEFIT OUTLAYS, BENEFICIARIES,
AND AVERAGE PAYMENTS, BY PROGRAM

Program

Benefit outlays
(millions)
1968

1969

Number of beneficiaries
(thousands)

1970

1968

7,230

8,263

8,440

1969

1970

1968

1969

5,816
340

6,133
352

6,405
358

$79
85

$88
91

$85
92

6
260

Survivors benefits:
Social Security
(OASI)
$5,529 $6,464 $6,572
394
Railroad Retirement _
347
385
Federal employee retirement systems:
10
Military
10
8
355
Civil Service
321
291
Coast Guard
*
*
*
1
Foreign Service
1
1
*
PHS officers
*
*
1
Judiciary
1
1
*
*
ESSA officers
*
Special annuities
*
(CSC)
1
1
employees compensation
32
31
31
Veterans programs:
Dependents indemnity compensation532
526
517
Life insurance
(Federal fundJ) _
33
26
30
Life insurance
(trust funds)
435
407
422
Other benefits
74
72
71
Total, survivors
benefits

Average monthly
payments 1

7
271

8
283

t
t
t
t

107
93
71
250
157
327

108
99
77
278
151

109
104
83
278
153

t

91

108

112

t
t
t
t

1970

t
14

14

14

183

186

188

365

369

373

118

119

119

23

27

30

372
250
3

t
t
t
t
t
t

388
265

400
277

7,446 3 7,826 38,148

* Less than $0.5 million.
f Less than 500.
1
Payments per beneficiary, may differ from payments per surviving family.
2
Not available.
3
Totals include duplication due to program overlap. Estimated unique totals are 6 million, 7
million, and 7 million.

Survivor benefits under social security are usually more liberal than
they are in other public retirement systems. Widows' benefits are
equal to 82}£% of the amount that the deceased worker or retiree
would receive in retirement benefits. Children receive 75% of the
retirement annuity for each child within the family maximum, a
ceiling determined by the worker's primary benefit amount.
By comparison, a civil service employee's widow receives 55% of
the annuity the employee had earned at the time of his death, and
children receive 40%; a retired civil servant's having such benefits
for his family are contingent upon his having opted for a reduced
retirement annuity. It is only when the retirement annuity is sufficiently higher than social security that civil service survivor annuities
exceed social security survivor benefits. No survivor benefits are paid
under civil service unless the employee has had 5 years of service.
By comparison, survivor benefits may be paid under social security




181

SPECIAL ANALYSES

with as little as V/2 years of covered service, or even less in the case
of servicemen killed in action. In 1970, the Civil Service Commission
will pay $355 million to 283,000 survivors, including about 60,000
children.
Railroad retirement survivor benefits are awarded on the same
basis as social security, and persons may be insured under both programs. In 1970, 358,000 survivors will be paid $394 million in benefits.
Survivors of servicemen, and veterans who died as a direct result of
injuries received in military service, are eligible for monthly dependency and indemnity compensation and the earlier program of "death
compensation" payments from the Veterans Administration. In 1970,
373,000 survivors will receive $532 million in VA payments, at an
average monthly payment of $119. Another $74 million will be paid
to veterans' survivors in 1970 for veterans burial benefits.
A total of 5.6 million families have $37.4 billion in life insurance
protection under six major programs administered by the Veterans
Administration. In 1970, the Veterans Administration will be paying
a total of $468 million in claim benefits and dividends to 430,000
survivor beneficiaries.
Unemployment benefits.—The primary source of benefits for the
unemployed is the Federal-State unemployment insurance trust fund
administered by the Department of Labor. About 75% of all employment is now covered by this program. In 1970 benefits are expected to
total $2.3 billion, and another $116 million will be paid to Federal
employees and ex-servicemen from general revenues. The average
number of unemployed beneficiaries in any given week is estimated to
be 1.2 million. The average weekly benefit is expected to be $43.70,
or about 33% of the average weekly wage.
Unemployment benefits of $50 million in 1970 are estimated for
railroad employees.
Table M-6. UNEMPLOYMENT BENEFITS: BENEFIT OUTLAYS,
BENEFICIARIES, AND AVERAGE PAYMENTS, BY PROGRAM
Benefit outlays
(millions)

Program

1968

1969

1970

Number of beneficiaries
(thousands) l
1968

1969

1970

Unemployment benefits:
Workers insured under State laws
$2,074 $2,210 $2,290 4,336 5,000 5,000
Federal employees
and ex-servicemen _ 107
116
220
220
219
111
Railroad unemployment
42
50
92
90
233
52
Total, unemployment
benefits.

2,223 2,373 2,456 4,788

1

Number of "first claims" paid.
2 Not available.




5,312

5,310

Average weekly
payments
1968

1969

1970

$40

$42

$44

44

45

46

50

62

(2)

182

THE BUDGET FOR FISCAL YEAR

1970

Income support programs.—The two major programs which
base benefits on current need are public assistance and veterans pensions.
Table M-7. INCOME SUPPORT PROGRAMS: BENEFIT OUTLAYS, RECIPIENTS, AND AVERAGE PAYMENTS, BY PROGRAM AND RECIPIENT
GROUP

Program and
recipient group

Recipients (thousands)

Benefit outlays
(millions)
1968

1969

1970

Income support programs:
Public
assistance
(Federal share):
Old age assistance. _ $ U 3 7 $1,204 $1,308
Aid to the blind. __
54
59
52
Aid to the permanently and totally disabled____
434
367
499
Aid to families
with dependent
children
1,395 1,731 1,847

Average monthly
payments 1

1968

1969

1970

1968
ctua

1969

2,055

2,099
83

2,084
84

$69
90

$71
91

$76
96

715

785

80

83

87

6,146

6,965

40

44

48

91
62

94
64

94
64

1970

82
646
5,349

Total, public
assistance
(Federal
share) 2
3,052 3,320 3,719 8,132
Total (State and
local share) __ (1,996) (2,467) (3,286)
VA pensions:
Veterans
Survivors

3

9,058 39,955

1,272
779

1,286
850

1,293
905

1,170
1,049

1,146
1,106

1,143
1,170

Total, VA pensions
2,051

2,135

2,198

2,219

2,252

2,313

25

37

49

36

47

62

9

7

9
-87

21

22

22

Total, income support programs. __ 5,137

5,499

Assistance to refugees
General assistance to
Indians
Prorjosed legislation

5,888 10,408 11,379 12,352

1
Total payments, including State and local contributions where applicable.
2 Categorical financial data are obligations and do not add to total because of collections and adjustments.
3
Includes recipients of emergency assistance not itemized above.

Public assistance, administered by the States and financed in part by
Federal matching grants, aids the needy who are aged, blind, disabled,
or have dependent children, with payments based on individual needs
as determined by State eligibility and needs standards. The average
monthly number of total recipients in 1970 is expected to be about 10
million, or almost one-half of the Nation's estimated 22 million poor
people. Partial coverage of the poor population reflects the categorical
nature of the program and, in some States, low needs standards.



183

SPECIAL ANALYSES

Federally aided public assistance is not available to a family, regardless of income, if headed by a male who is neither aged nor disabled
unless he is unemployed (according to State definition). However,
in only 22 States is assistance available to families with unemployed
fathers, and in no State is Federal aid available for such families with
no dependent children.
The payment levels vary considerably among categories and from
State to State (see table M-8).
Table M-8. AVERAGE MONTHLY PAYMENT LEVELS FOR PUBLIC
ASSISTANCE, BY CATEGORY
July 1968 payment levels
(per recipient)
Public assistance category

Old age assistance..
__.
Aid to the blind
Aid to the permanently and totally disabled
Aid to families with dependent children

National
average

Average
in lowest
State

Average
in highest
State

$68.40
91.45
81.80
42.15

$36.00
45.35
44.45
8.50

$107.00
138.85
128.85
71.00

Except for a few high-payment States, average levels are considerably
below the poverty line.1 The aged, the blind, and the disabled generally fare somewhat better than do families with dependent children,
in part due to the special needs required by their age and/or disabilities. Low-public assistance payment levels are a result of: (1)
inadequate State needs standards; and (2) the inability of some States
to pay benefits that meet their own standards. There is a growing
concern that welfare reform is needed, as evidenced by the President's
appointment of a Commission on Income Maintenance Programs and
by an increasing activity in income maintenance research and demonstration projects. The Commission expects to report early in 1970.
However, income maintenance reform is complex, and particularly so
in the case of public assistance because changes at the Federal level
must take into account the budgetary and administrative problems
that result in each State.
The other large income support program provides pensions to
veterans and to veterans' survivors. Eligibility requires the establishment of need as determined by a declaration of income (after certain
exceptions) and an appraisal of net worth. A veteran must also be
disabled to be eligible.
In 1970, outlays for VA pensions will total $2.2 billion and will
benefit 1.1 million veterans and a like number of survivors. The
average monthly payment will be $94, up from $91 in 1968 (see table
M-7). The increase reflects legislation increasing and restructuring
pension rates to more closely match each recipient's income needs.
Other income support programs provide cash assistance and other
services to Cuban refugees and to needy American Indians. Benefits
will amount to $58 million in 1970.
* The SSA/OEO poverty line is a level of income necessary to meet certain basic living requirements. The level varies with family size and with urban versus rural location. For example, in
1967 the poverty index for a rural couple (headed by a male ever age 65) was $115 monthly, while
that for an urban family of four was $280 per month.




184

THE BUDGET FOR FISCAL YEAR 1970

A number of Federal programs, such as Medicaid, food stamps, and
public housing, provide benefits in kind based on current need. These
programs are discussed later in a section on "Benefits in Kind."
Program interrelationships.—The programs discussed above were
developed at different times in the Nation's history in order to fill gaps
in coverage and serve various groups of people. Although there have
been attempts to forge a single national policy or program (for example, the Social Security Act of 1935, which provided, in a single package, aid for the poor and protection against income loss due to retirement, disability, death or unemployment) the extent to which programs interact by design varies considerably. An idea of this range
is offered by the retirement tests applied to the earnings of retirees
under different systems:
• Civil service retirement has no limitation on the amount that
may be earned in non-civil-service employment while receiving
civil service retirement benefits;
• Social security permits earnings of up to $1,680 a year without
a reduction in benefits. For the amount of earnings between $1,680
and $2,880 in any employment, the social security benefit is reduced by 50% of those earnings; for the amount of earnings over
$2,880, social security benefits are reduced by 100%. Legislation
is recommended to increase the maximum reduction-free earnings
to $1,800;
• Railroad retirees may earn, postretirement income in any employment other than that covered under the railroad retirement act or
that in which the retiree was last engaged. Of those now receiving
railroad retirement, more than 33% are also social security
beneficiaries;
• Military retirement pay for a regular officer is reduced when he is
employed by the Federal Government;
• Neither civil service nor military retirement benefits are coordinated with OASDI. Consequently, 40% of all civil service retirees receive social security benefits also, and 35% of this group
receive the minimum.
Some programs serve as supplements to each other. Many social
security beneficiaries with low incomes, for example, have their
benefits supplemented by old age assistance and veterans pensions.
• In 1966, 48.6% of the 2.1 million old age assistance recipients
were also receiving social security. This amounted to 7.1% of all
social security beneficiaries; likewise
• 892,000 veterans, or 78% of all veterans receiving non-serviceconnected pensions, were receiving social security benefits.
Another example of designed program supplementation is offered
by the social security disability insurance policy of permitting concurrent benefits with workmen's compensation if the combined benefits
do not exceed 80% of average monthly earnings.
There are, of course, some gaps in income security program coverage
and, on the other hand, some unnecessary duplication of benefits. It
is expected that the President's Commission on Income Maintenance
Programs will address itself to these problems.




185

SPECIAL ANALYSES

Benefits in kind.—The Federal programs discussed so far provide
cash benefits which the recipient is free to use as he chooses. However,
there are other programs which provide "benefits in kind"; that is,
goods or services are provided for the recipients in lieu of cash assistance, either directly by the Government or indirectly by transactions
with third parties. This analysis does not examine all of the programs
that might fall within this section. However, some important examples
are discussed (see table M-9).
An example of a program for health care which is, to a large extent,
a direct alternative to cash assistance is the State administered
Medicaid program (Grants to States for Medical Assistance). State
medical assistance payments are matched by Federal payments for
certain eligible individuals, including recipients of public assistance and
others who are determined by the States to be financially unable to
pay all or a part of their medical bills. In 1970 Federal outlays of
$3.0 billion will be needed to match total State payments of $5.8
billion on behalf of 10.2 million needy patients.
The Department of Agriculture administers several programs which
provide food to individuals or enhance their ability to purchase it. The
distribution of surplus commodities to families, schools, and institutions will cost $725 million in 1970 and will improve the diets of 29
million people. The child nutrition programs, formerly known as the
school lunch program, make it possible for schoolchildren to have
better diets at lower costs. Outlays will total $367 million in 1970.
The food stamp program, which enables poor families to buy more
food by increasing their food purchasing power, has grown considerably
in recent years, from $30 million in 1964 outlays to $338 million in
1970. Almost 4 million people will benefit from this program by the
end of 1970.
Table M-9. BENEFITS IN KIND: OUTLAYS AND RECIPIENTS FOR
SELECTED PROGRAMS
Recipients (thousands)

Outlays (millions)
Type of benefit and program

Health care:
Medicaid (Federal outlays)
Medicaid (Total Federal, State, and
local payments).
Food and nutrition:
Food stamps
Child nutrition
__
Special milk
Removal of surplus commodities
Housing:
Public housing
Rent supplements
1
2
3
4

1968
actual

1969

1970
est.

$1,806

$2,384

$2,971

3,686

4,612

5,797

187
217
104
385

273
246
104
598

338
367
15

3 290
2

3335
14

M56
30

Includes benefits and administrative expenses.
Total number of individuals benefited.
Benefits only.
Number of households (number of individuals not available).




2

725

1968
actual

8,600

1969

1970
est.

9,500

10,200

2,488 3,630
18,800 19,400
17,000 17,500
25,500 26,000

3,950
22,300

2,600

2,800
M9

29,000

3,200
M5

186

THE BUDGET FOR FISCAL YEAR 1970

Other examples of Federal benefits in kind are available in the
area of housing. Federal funds ($456 million in 1970) are provided to
local public agencies to enable them to acquire and operate public
housing units for low-income families, and the rent supplement program will subsidize the rents of 45,000 poor families with $28 million.
This discussion is intended to be illustrative and does not cover all
of the relevant programs. However, the significance of such benefits is
shown by the fact that the illustrative programs by themselves
involve 1970 Federal outlays totaling $4.9 billion, or about 10% of the
total outlays for cash assistance.
Tax expenditures.—Another way to improve an individual's level
of living is to reduce the income taxes, through credits and exemptions,
that he would otherwise have to pay. No attempt is made in this
analysis to thoroughly examine the Federal income tax structure, but
some examples are provided of revenues foregone, or tax expenditures,
which are clearly related to an income security objective.
Additional personal exemptions, retirement income credits, and the
exclusion of social security benefits from taxable income constitute an
important group of benefits for the elderly. It is estimated that such
benefits will cost $3.0 billion in 1970. Other examples of tax expenditures serving an income security purpose are offered by the exclusion
of unemployment insurance benefits, workmen's compensation benefits, and sick pay from taxable income. These exclusions will cost $630
million in 1970 in revenues foregone.
Tax expenditures benefit large numbers of people. In 1966, 8.3
million additional age exemptions were claimed; 4.5 million were on
taxable returns. The retirement income credit was claimed on 1.7 million taxable returns in that year.
Income security benefits—State, local, and private.—State
and local governments, in addition to their participation in Federal
programs, also fund and operate a number of programs by themselves.
The most important of these are:
• State and local government retirement systems, which made payments of $2.4 billion in 1968.
• General assistance, an adjunct to the public assistance program,
which paid $340 million in 1968 to 760,000 needy recipients.
• Workmen's compensation programs, which helped disabled
workers with $2.3 billion in cash and health benefits in, 1968.
A large volume of income security payments are also made by private organizations. Most of this activity involves privately operated
insurance and pension funds. A much smaller amount of cash and in
kind benefits is provided by private charitable institutions.
Federal cash benefit programs by agency.—The Department of
Health, Education, and Welfare administers cash benefit programs
with 1970 outlays of 33.3 billion. Most of the remaining $15.3 billion of
total 1970 outlays for these programs is located in the budgets of
five agencies: the Veterans Administration, the Departments of
Labor and Defense, the Civil Service Commission, and the Railroad
Retirement Board. Six other Federal agencies administer programs
with 1970 outlays of less than $100 million.
A listing of cash benefit programs by Department and Agency is
provided in table M-10.



187

SPECIAL ANALYSES

Table M-10. FEDERAL OUTLAYS FOR INCOME SECURITY PROGRAMS
PROVIDING CASH BENEFITS, BY DEPARTMENT AND PROGRAM
7

unctional
code

Department, agency and program

657
657
652
652
651
657

.

Public assistance
Assistance to refugees
PHS officers retirement
Proposed legislation
Total, Health, Education, and Welfare

Veterans Administration:
Veterans disability and dependents indemnity
compensation
801-5
807-5
Veterans pensions .
805
Life insurance (Federal funds)
Life insurance (trust funds)
__ 805

Other benefits
Proposed legislation

803
] 805 •
801-

1964

1968

1969

14,868
1,321
2.753
30
3

21,184
2,200
3,144
26
6

24,172
2,570
3,434
39
7

25.132
2.769
3.863
51
10
2
1.519

18.975

Department of Health. Education, and Welfare:
Social security:
OASI

DI

Outlays (in millions of dollars) l

26,560

30,222

33.344

2,195
1,773
36
451

2,516
2,087
31
436

60

84

2,660
2,174
35
453
83

2.796
2,242
38
467
86

1970

-106

l-J

4,515

Department of Labor:
Unemployment insurance (including compen$a-J 609
|
tion for Federal employees and ex-servicemen) .1 652
Railroad unemployment
652
Employees compensation. _

5,154

5,405

5.523

3,054
143

2,442
82
88

2,606
103
91

2,718
100
93

3,262

Total, Veterans Administration

2,612

2,800

2,911

609

| 906

Total, Labor
Department of Defense: Military retirement

051

1,212

2,098

2,444

2,725

Civil Service Commission:
Civil Service retirement
Special annuities

652
652

1.198
2

1,960
1

2,162
1

2,389
1

1.200

1,961

2,163

2,390

1.104

1,402

1,542

1,568
19

1,104

1,402

1,542

1,587

4
1

4
1

4
1

Total, Civil Service Commission
Railroad Retirement Board:
Railroad retirement
_
Proposed legislation

657
657

Total, Railroad Retirement Board
Judiciary: Judges retirement and judicial survivors'
trust fund.
1
Department of Commerce: ESSA officers retirementDepartment of the Interior: General assistance to
Indians.
Department of State: Foreign Service retirementDepartment of Transportation: Coast Guard
retirement
Total, Federal outlays
1
2

652
902
506
652

7
7

11
11

9
13

11
15

502

34

48

52

56

30,320

39,862

44,655

48.567

609

Includes benefit payments and administrative expenses.
This total includes: OASI, $1,500 million; DI. $100 million; public assistance. - $ 8 1 million.




SPECIAL ANALYSIS N
FEDERAL PROGRAMS FOR THE REDUCTION

O ^

Two basic responsibilities of government are to maintain public
order and administer justice. Increasing crime threatens the maintenance of order and challenges our system of justice. The Federal
program against crime is designed to identify the underlying causes of
criminal behavior, gain a better understanding of the magnitude and
nature of the crime problem, and prevent and reduce crime through
effective law enforcement, public education, and rehabilitation of
criminals and juvenile delinquents. The objective of the program is to
reverse the trend of rising crime so that the economic loss and loss
of human resources associated with crime are substantially reduced, and the fear of criminal abuse or exploitation in our communities
is alleviated. In order to move toward this objective the Federal Government will continue to improve the Federal criminal justice system.
Also, recognizing that State and local governments have the heaviest
burdens and widest responsibilities for law enforcement and the administration of justice, the Federal Government will provide greatly
increased direct assistance to States and localities to help stimulate a
total national response to the problem of crime.
ACCOMPLISHMENTS OF THE PAST 4 YEARS

The past 4 years have been a period of extraordinary progress in
laying a foundation for more effective law enforcement and administration of justice. Among the major milestones and accomplishments
have been:
• Establishment of the President's Commission on Law Enforcement and the Administration of Justice on July 23, 1965. The
Commission undertook a thorough examination of the adequacy of
the Nation's law enforcement and criminal justice system and
issued a report in February 1967 with major findings and recommendations which have influenced and are continuing to influence
the direction of programs to combat crime.
• The successful implementation and completion of a demonstration law enforcement assistance program, for which Congress
appropriated a total of $22 million. This 3-year program (1966-68)
provided police, State courts, and correctional agencies with
training assistance and encouraged experimentation with new
methods and techniques applicable to law enforcement.
• A new law enforcement assistance program established under
the Crime Control and Safe Streets Act of 1968, with appropriations of $63 million provided in 1969 and $300 million
budgeted in 1970, which will support comprehensive law enforcement planning by States and localities and provide grants to
States for improvements in all areas of law enforcement and
criminal justice activities.
• Enactment of the Juvenile Delinquency Prevention and Control
Act of 1968 which authorizes an expanded Federal effort to assist
188



189

SPECIAL ANALYSES

•

•
•

•
•

States and local communities in developing effective approaches
to the prevention and control of juvenile delinquency.
The Narcotic Addict Rehabilitation Act of 1966, and the Alcoholic and Narcotic Addict Rehabilitation Amendments of 1968,
which will increase community based preventive services and
treatment of conditions which may lead to crime.
Establishment of the National Commission on Reform of Federal Criminal Laws which will propose a major revision of the
Federal criminal code.
Strengthening of enforcement programs through the reorganization and consolidation of Federal narcotics and drug abuse
enforcement activities, the implementation of new techniques for
combating organized crime, and the development of a National
Crime Information Center which makes available to State and
local enforcement authorities a computerized index of information
on criminals and stolen property.
Establishment of a Federal Judicial Center which will support
the Federal Judiciary th )ugh programs of training, research,
and analysis of administr; ive operations.
Enactment of other laws representing major advances in law
enforcement and criminal justice including (1) extensive new
gun controls; (2) stiff criminal penalties for loan sharking, obstructing criminal investigations, inciting riots, and for sale or possession
of LSD and other dangerous drugs; (3) authorization for the
Bureau of Prisons to assist States and local governments in the
improvement of their correctional systems; (4) authorization for
Federal prisoners to work at paid employment in communities;
(5) major reforms in the administration of military justice; and
(6) establishment of a professional corps of Federal magistrates
to handle initial criminal proceedings and try a wide range of
minor criminal cases.

Table N-1. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
AGENCY i (in thousands of dollars)
Outlays

Agency
1968
actual

The Judiciary2
Funds appropriated to the President: Office of Economic Opportunity
Department of Agriculture.
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 Transportation
Treasury Department
Veterans Administration
Other agencies
_
Total Federal outlays
1
2

1969
estimate

38,000

43,000

48,000

6,759
3,314
28,750
2,621
19,050
312,603
2,745
23,457
7,412
82,499
1,444
1,989

6,102
3,336
38,898
450
20,921
377,747
4,419
26,034
9,787
96.724
9,510
1,957

1,474
3,494
50,258
600
24,015
567,683
3,900
29,632
12,703
108,454
10,190
7,795

530,643

638,885

868,198

Does not include Department of Defense or nondomestic outlays for crime reduction.
Outlays estimated by the Bureau of the Budget.




1970
estimate

190

THE BUDGET FOR FISCAL YEAR 1970
1970

BUDGET HIGHLIGHTS

The 1970 budget will include outlays of $868 million for crime
reduction programs, an increase of 36% over 1969 and 64% over
1968. Substantial increases will occur in all program activities as a
result of major new program authorizations provided during the past
year, and the high priority accorded the need to increase law enforcement
assistance to States and localities, and improve essential Federal
crime prevention and enforcement functions.
Law enforcement assistance.-fclhe Omnibus Crime Control and Safe
Streets Act of 1968, Title I, established the Law Enforcement Assistance Administration and the National Institute of Law Enforcement
and Criminal Justice within the Department of Justice. The programs
of these new institutions will encourage State and local governments
to evaluate their law enforcement problems, prepare and keep updated
comprehensive law enforcement plans, improve present law enforcement, and develop new methods of preventing, detecting, and reducing
crime. Law enforcement and criminal justice agencies in the States and
localities will benefit through planning and action grants, programs
of academic assistance, and the research and statistical programs of
the Institute. Appropriations of $296.6 million are being requested in
1970 for these programs and outlays will exceed $196 million, an
increase of $172 million over 1969.
Organized crime.—Almost $36 million of outlays in 1970 will support
the Federal effort against organized crime. Special "strike forces"
consisting of teams of attorneys and investigators from key Federal
agencies will move against organized crime in metropolitan areas.
Strike forces will be operating in nine American cities in 1969 and in
an additional four cities in 1970.
Law enforcement training.—To insure the highest quality of Federal
law enforcement personnel, $1.2 million will be budgeted in 1970 for
the planning and design of a consolidated Federal law enforcement
training center at Beltsville, Md. The Center will provide 13 participating Federal investigative and police agencies with modern facilities
for both basic and advanced law enforcement training. The planned
facility will consist of classrooms, firing ranges, specialized training
areas and equipment, and dormitories capable of accommodating 750
resident students. Also, building construction will start in 1969 on a
new FBI National Academy that will greatly expand the FBI's
capacity for training State and local law enforcement personnel.
Crime prevention.—Increased emphasis will be placed on reaching
at an early stage, individuals who may be helped to a way of life less
subject to pressures toward criminality. Federal efforts in this direction will include the implementation of the Juvenile Delinquency
Prevention and Control Act of 1968, further development of community services under the Alcoholic and Narcotic Addict Rehabilitation
Amendments of 1968, expanded treatment programs under the
Narcotic Addict Rehabilitation Act of 1966, improved education for
neglected and delinquent children in institutions under the 1966
amendments to the Elementary and Secondary Education Act, as
well as several other related Federal programs. Outlays for crime
prevention programs will be $47 million in 1970, an increase of 57%
over 1968.



191

SPECIAL ANALYSES
Table N-2. FEDERAL OUTLAYS

FOR THE REDUCTION OF CRIME BY

MAJOR PROGRAM AND SELECTED ACTIVITY» (in thousands of dollars)
Outlays
Major program and selected activity

1968
actual

1969
estimate

1970
estimate

Assessment of crime:

784
2,429

Total

2,981
4,377

6,729
8,153

3,213

Statistics on criminal justice
Research and information

7,358

14,882

964~

286

Reform of criminal laws.

Services for prevention of crime:
Development of community resources for crime preventionAlcoholic and addict rehabilitation
Public education
_
__

2^634

14,605
21,964
3,075

21,766
20,866
4,297

29,825

39,644

46,929

117,610

139,297

152,583

156,963
11,918
22,691

165,668
13,182
31,682

172,706
15,203
35,858

309,182

349,829

376,350

33,926
11,782

52,441
15,421

153,107
21,432

45,708

67,862

174,539

20,808
20,102
14,701

24,679
21,747
15,158

30,390
23,409
30,967

55,611

61,584

84,766

61,865
8,968
12,736
2,732

67,637
10,478
16,243
3,374

72,080
15,395
17,811
39,275

86,301

Total

12,388
15,346
2,091

97,732

144,561

517

13,912

23,537

530,643

638,885

868,198

Federal criminal law enforcement:

General Federal enforcement _ _ _
Enforcement in support of Federal systems (e.g., tax,
postal, customs, and immigration enforcement)
Federal police activities..
Special enforcement against organized crime
Total

_

Law enforcement assistance:

Support of State and local law enforcement
Support of Federal law enforcement

_.

Total
Administration of criminal justice:

Conduct of criminal prosecutions
Operation of Federal court systems 2
Other supporting programs _
Total

.__

Rehabilitation of offenders:

Operation of correctional institutions
Probation, parole, and community treatment
Inmate education and trainins
Other rehabilitation programs
Total
Planning and coordination of crime reduction programs
Total Federal outlays
1
2

Does not include Department of Defense or nondomestic outlays for crime reduction.
Includes judicial and executive branch courts; outlays estimated by the Bureau of the Budget.

CRIME REDUCTION PROGRAM BY ACTIVITIES

The budget outlays reported under this special analysis cover all
domestic Federal programs directly related to or closely associated
with crime reduction, except outlays associated with programs of the



192

THE BUDGET FOR FISCAL YEAR 1970

Defense Department.1 The analysis includes certain, programs of the
judiciary even though the basic function of the judiciary is to assure
the administration of justice rather than to reduce crime. It excludes
general social programs (even though such programs may indirectly
reduce crime) unless they are clearly within the context of crime
reduction or prevention (e.g., vocational training of prisoners; treatment of juvenile delinquents). Also, the analysis does not include
background investigations for employment, administrative inspections, guarding functions, or investigations primarily of a regulatory
nature which may in rare cases result in the application, of criminal
sanctions. Where activities involve both civil and criminal proceedings (e.g., operation of courts) an allocation, of outlays to the criminal
function has been, estimated by the Bureau of the Budget.
Assessment of crime.—Assessment of crime includes the various
government activities designed to produce meaningful current information on crime, criminals, and the criminal justice system. Specific
projects include scientific research, data collection, statistical analyses,
and dissemination of project results. To date, most assessment activities have been conducted directly by Federal agencies. However,
Federal resources will be increasingly utilized to support State and
local assessment programs.
• The Department of Justice (FBI) maintains a nationwide system
of reported crime data, and publishes this information periodically. The recently established Law Enforcement Assistance
Administration will begin operation of a National Center for
Criminal Justice Statistics in 1969, encourage State statistical
activities, and have aggregate crime assessment outlays of about
$10 million in 1970.
• Significant basic and developmental research is conducted by the
Center for Studies of Crime and Delinquency in the Department
of Health, Education, and Welfare.
• Other selected assessment activities include studies of drug
addiction and alcoholism, crime impact on small business, urban
transportation crime, correctional methods, and the special studies
of the Joint Commission on Correctional Manpower and Training.
Reform of criminal laws.—Criminal law reform includes government
efforts to improve the effectiveness of the Nation's criminal laws and
assure that they accurately reflect the values and standards of our
society.
• Drafting and presenting many of the Federal Government's
criminal legislative proposals is a principal Department of Justice
activity. The Department is undertaking a major revision of our
narcotic and drug laws this year.
• The National Commission on Reform of Federal Criminal Laws
will continue to develop a proposed revision of the entire Federal
criminal code.
• Approximately $2 million of 1970 outlays are expected to aid
State and local planning and research activities connected with
law reform.
• The Military Justice Act of 1968, effective August 1, 1969, provides for increased participation of military judges and counsel
in courts-martial, for deferral of sentence pending appellate re1
Although outlays of the Defense Department are not reported, descriptions of certain Defense
Department programs are included.




SPECIAL ANALYSES

193

view, and for improved appellate procedures. Also, the Manual for
Courts-Martial has been revised to reflect significant court decisions and incorporate many of the improvements in the administration of military justice developed over the last 18 years.
Services for prevention of crime.—Crime prevention includes government efforts to preclude, limit or render less probable the commission
of criminal acts. Included are certain programs of public education,
community treatment, clinical rehabilitation, as well as programs to
improve police-community relations.
• The Department of Health, Education, and Welfare will support
52 projects in 1970 for community-based delinquency prevention
services and 17 projects demonstrating improved techniques for
preventing and controlling delinquency. Also, the Department
will provide intensified education of delinquent children in
institutions.
• In 1970, the Veterans Administration will treat over 10,000
patients in its alcoholic rehabilitation program, and HEW will be
active in improving treatment methods and facilities for narcotic
and drug addicts, with increased emphasis on care in the community. Total outlays for narcotic addict rehabilitation will
decrease in 1970 due to the completion in 1969 of a demonstration
narcotic addict rehabilitation project in the Office of Economic
Opportunity. Several agencies will conduct or support courses
for the training of professional prevention personnel.
• National public education campaigns are conducted which
may involve school curriculum development and law observance
projects. Areas of recent national interest include conservation,
addiction, and auto theft.
• The Department of Justice, HEW, and the Office of Economic
Opportunity will conduct projects to improve police-community
relations.
Federal criminal law enforcement.—Law enforcement involves direct
Federal Government efforts to effectively detect, identify, and apprehend violators of criminal laws. Specific projects include criminal
investigations, policing of certain Federal areas, and managing special
concerted activities against organized crime. The conduct of enforcement activities typically requires substantial interagency, intergovernmental, and international coordination and cooperation.
• Major activities relate to enforcement in support of internal
revenue, postal, customs, immigration, and selective service laws,
and to investigations of interstate thefts. Outlays for all Federal
enforcement activities are expected to approximate $376 million
in 1970. Increased enforcement attention will be given to consumer protection, firearms, and pollution control violations.
• Special concerted activities are directed toward disrupting and
eliminating organized crime operations. 1970 outlays for fighting
organized crime will approximate $36 million, an increase of
13% over 1969 and 58% over 1968.
• Federal police activities are conducted in certain areas in the
National Park system, Indian reservations and other Federal
areas. Agencies with principal responsibilities are the Interior,
Defense, and Treasury Departments.
340-700 0—69



13

194

THE BUDGET FOR FISCAL YEAR 1970

• In response to the problem of civil disorders, a Directorate for
Civil Disturbance Planning and Operations has been established
in the Department of the Army. The Directorate is the Defense
Department's principal agency for coordination and planning
with respect to control of civil disorders. The Department of
Justice has governmentwide responsibilities for coordinating Federal activities related to the control of civil disorders.
Law enforcement assistance.—Assistance includes Federal efforts to
support and improve Federal, State and local law enforcement. Specific
projects include development of detection techniques, in-service
training programs and facilities, and supporting laboratory and information services.
• The new Law Enforcement Assistance Administration will provide grant-in-aid assistance to upgrade all components of State
and local law enforcement. The greater profession alization of law
enforcement personnel will be a high priority.
• Several Federal agencies now sponsor or support law enforcement
training activities. The Bureau of Narcotics and Dangerous
Drugs scheduled training for 11,000 officials during 1969, and 110
persons are currently enrolled in OEO Job Corps police training.
The FBI trains 200 State and local officials annually at the FBI
National Academy and will increase its capability to provide
police training in the field for State and local law enforcement
agencies which request it. Also, in 1969 an estimated 15,000
qualified veterans are scheduled to receive on-the-job police training under a new Veterans Administration program.
• The Law Enforcement Assistance Administration through its
National Institute of Law Enforcement and Criminal Justice will
develop and demonstrate new techniques, devices, and systems
for the improvement of law enforcement.
• An academic assistance program of the Law Enforcement
Assistance Administration will help law enforcement and criminal
justice personnel earn college degrees, and Office of Education
programs will prepare persons to function as paraprofessional or
supportive personnel in the law enforcement field.
• The Army's Provost Marshal General provides planning teams
upon request of civilian police departments to assist in preparing
comprehensive civil disturbance plans including provisions for
coordination of National Guard and Federal Armed Forces
support. Agencies of the Defense Department operate training
programs in civil disturbance and riot control techniques. The
Defense Department participates actively in programs to assist
localities in recruitment of police officers, and nationwide recruitment under these programs thus far exceeds 1,000. The
Army's "Project Transition" provides Army personnel with
educational opportunities leading to careers in civil law enforcement.
Administration of criminal justice.—This category includes the preparation and prosecution of criminal cases, operation of court systems,
trial of cases, provision of adequate defense, and related and supporting activities. Principal outlays involve salaries and administrative
expenses.




SPECIAL ANALYSES

195

• During 1968 there were 30,714 criminal cases commenced in the
U.S. District Courts compared with 30,534 in 1967. The District
Courts terminated 29,492 criminal cases in 1968 and more than
25,000 offenders were convicted and sentenced. Appeals in criminal cases increased 26%, from 1,665 in 1967 to 2,098 in 1968.
Increases in criminal case filings are anticipated in 1969 and 1970.
• Legal representation will continue to be provided Federal criminal defendants who cannot otherwise afford to retain counsel.
Outlays for this purpose will exceed $3 million in 1970.
• A newly established Federal Judicial Center is expected to focus
attention on improvement of Federal courts in 1969 and beyond.
• Action grants by the Law Enforcement Assistance Administration will be used to improve State and local court administration
programs.
Rehabilitation of offenders.—These programs include government
custody and rehabilitation of criminal offenders. Specific projects
include the supervision and operation of correctional institutions,
inmate and offender treatment and training programs, research involving these activities, and supportive functions. Outlays in this area
primarily support direct Federal activities. However, Federal technical assistance for State and local institutions, personnel and systems
is also planned.
• Increased attention in 1970 will be given to the administration of
parole, probation and pardon proceedings, inmate education and
vocational training, construction and expansion of specialized
correctional facilities, and related research and support activities.
Special program attention also will be given to youthful offenders.
Various community treatment efforts will be conducted, including a demonstration utilizing Teacher Corps and VISTA workers.
• Vocational training activities for inmates will involve outlays of
$12 million in 1970. The 1968 amendments to the Vocational
Rehabilitation Act will expand vocational training opportunities
for persons with prison or delinquency records.
• The Labor Department will conduct an employment fidelity
bonding project for ex-offenders, and the Office of Education will
provide library services to 175,000 inmates in approximately
300 penal and correctional institutions across the Nation.
• Legislation has recently been enacted which provides a uniform
statutory basis for the administration of military correctional
facilities. This includes authority for the Secretary of the Navy
to establish a parole system, a power previously held only by the
Secretaries of the Army and Air Force. The Army will operate
a major new type of correctional facility at Fort Riley, Kans.,
for retraining military offenders. Surveys of offenders processed
through the retraining correctional institutions of the Air Force
have indicated very high rates of rehabilitation.
• Other rehabilitation programs in the Department of Justice will
provide greatly increased technical and financial assistance for
the correctional systems of the States and localities.
Planning and coordination oj crime reduction programs.—Included
in this program are Federal support of State and local planning
and coordination of crime reduction activities, and Federal coordination of Federal enforcement activities internally and with respect to
international enforcement bodies.



196

THE BUDGET FOR FISCAL YEAR 1970

• Law Enforcement Assistance Administration outlays of over
$20 million in 1970 will support comprehensive law enforcement
planning by States and localities.
• Approximately 35 grants to plan coordinated juvenile delinquency
prevention and control programs will be made by the Department
of Health, Education, and Welfare in 1969, with the total reaching
about 47 in 1970.
• The Model Cities program of the Department of Housing and
Urban Development will include planning for the reduction of
crime and delinquency although there is presently no designation
of the amount of funds to be used for crime reduction planning.
Crime reduction planning under Model Cities will be closely
coordinated with planning under the law enforcement assistance
and juvenile delinquency prevention programs.
Table N-3.

FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
MAJOR PROGRAM AND AGENCY i (in thousands of dollars)
Outlays
Major program and agency

1968

1969

1970
ttimate

Assessment of crime:

1,780
1,133
300

Reform of criminal laws:

Department of Justice
National Commission on Reform of Federal Criminal Laws
Total.._

1,926
12,756
200

7,358

14,882

120
166

729
235

2,344
290

286

Total

1,920
5,042
396

3,213

Department of Health, Education, and Welfare
Department of Justice
Other agencies

964

2,634

Services for prevention of crime:

4,715

17,545
2,150
1,861
174
1,100
1,444
213

25,096
50

1,942
3,873
1,276
2,394
298

650
30,502
300
2,194
9,208
700
3,074
301

29,825

Office of Economic Opportunity
Department of Health, Education, and Welfare
Department of Housing and Urban Development
Department of the Interior
Department of Justice
Department of Labor
_
Veterans Administration
_.
Other agencies

39,644

46,929

3,314
14,796
179,300
22,688
7,375
81,226
483

3,336
15,899
200,929
25,076
9,536
94,691
362

3,494
17,907
209,201
28,558
12,618
104,404
168

309,182

349,829

376,350

5,338

Total
Federal criminal law enforcement:

Department of Agriculture
Department of the Interior
Department of Justice
Post Office Department
Department of Transportation
Treasury Department
Other agencies
Total
1

___

___

_

_.__

__

Does not include Department of Defense or nondomestic outlays for crime reduction.




197

SPECIAL ANALYSES

Table N-3. FEDERAL OUTLAYS FOR THE REDUCTION OF CRIME BY
MAJOR PROGRAM AND AGENCY * (in thousands of dollars)—Continued
Outlays
Major program and agency

1968
actual

1969
estimate

1970
estimate

Law enforcement assistance:

Office of Economic Opportunity
Department of Health, Education, and Welfare.
Department of the Interior
Department of Justice
Post Office Department
Treasury Department
Atomic Energy Commission
General Services Administration
Veterans Administration
Other agencies
Total.

10
4

581
2,656
1,452
51,992
901
1,656
262
1,150
7,116
96

640
2,606
1,724
150,476
1,016
3,596
270
7,020
7,116
75

45,708

67,862

174,539

31,385
545
22,846
835

35,725
714
24,844
301

40,000
879
43,586
301

55,611

61,584

84,766

6,615
324
7,352
393
69,972
1,645

7,275
606
8,644
712
77,352
3,143

8,000
184
13,549
1,096
118,532
3,200

86,301

97,732

144,561

70
243
204

582
12,986
208
136

1,675
21,580
211
71

517

13,912

23,537

530,643

638,885

868,198

189
2,073
1,252
38,988
713
888
252
1,213

Administration of Criminal Justice:

The Judiciary 2
Department of the Interior
Department of Justice
Other agencies
TotaL

Rehabilitation of Offenders:

The Judiciary 2
Office of Economic Opportunity
Department of Health, Education, and Welfare.
Department of the Interior
Department of Justice
Department of Labor
Total.

Planning and coordination of crime reduction programs:

Department of Health, Education, and Welfare
Department of Justice
Treasury Department
Other agencies
Total.
Total Federal outlays.
1
2

Does not include Department of Defense or nondomestic outlays for crime reduction.
Outlays estimated by the Bureau of the Budget,




ANALYSIS OF BUDGET AUTHORITY AND OUTLAYS BY AGENCY (in thousands of dollars)—Continued
Account and functional code

1968
enacted

1969
estimate

1970
estimate

Increase or
decrease (—)

Explanation

EXECUTIVE OFFICE OF THE PRESIDENT
COMPENSATION OF THE PRESIDENT
Federal Funds
General and special funds:
Compensation of the President_903 NOA
Exp.

The President receives a salary of $100 thousand and an expense
allowance of $50 thousand annually.

150
150

150
150

150
150

3,009
2,821

3,229
3,126

3,630
3,625

401
499

This office provides the President with staff assistance and
administrative services.

1,500
801

1,500
1,350

1,500
1,500

150

The President uses this appropriation for staff assistance on
special problems.

708
605

823
820

918
900

95
80

These funds provide for care, maintenance, and operation of the
Executive Mansion.

THE WHITE HOUSE OFFICE
Federal

Funds

General and special funds:
Salaries and expenses

903 NOA
Exp.

SPECIAL PROJECTS
Federal

Funds

General and special funds:
Special projects

903 NOA
Exp.

EXECUTIVE MANSION
Federal

Funds

General and special funds:
Operating expenses
903 NOA
Exp.




PART 3

SPECIAL ASPECTS OF FEDERAL
PROGRAMS




199

INTRODUCTION
Part 3 discusses and presents data on special aspects of the Government's activities. It groups three special analyses, those designated O
through Q.
Special Analysis 0 summarizes Federal grants to State and local
governments as well as loans and indirect assistance. It traces the
development of Federal aids over time and relates them to the finances
of both the Federal Government and State and local governments.
This analysis also provides a profile of Federal grants by region, and
that portion benefiting metropolitan areas.
Special Analysis P brings together information on Federal construction and federally aided State and local public works. It also includes
information on major Federal programs affecting construction by
private cooperatives and nonprofit groups.
Special Analysis Q identifies Federal programs for the conduct of
research and development, and for facilities related to such activities.
In addition, it provides information on Government-wide activities
in the marine and space sciences.
200




SPECIAL ANALYSIS O
FEDERAL AID TO STATE AND LOCAL GOVERNMENTS

Most of the Nation's domestic public services are provided through
a cooperative intergovernmental system, which weaves together the
efforts of the National Government, the 50 States, and more than
80,000 units of local government. The Federal Government's chief
role in this system is to provide the critical margin of resources and
leadership in matters of nationwide concern.
Federal financial aid to State and local governments, reaching an
estimated $25 billion in 1970, has undergone a period of unprecedented growth in the course of a decade. Nevertheless, States and
their constituent local units of government traditionally raise from
their own resources 4-5 times the amount of Federal aid, thus maintaining their independence and adding to the total of public services
available to their citizens.
By tradition and preference, most domestic public services are
actually performed at the level of government closest to the intended
beneficiary, regardless of which level finances them. Including grants,
States in 1967 administered 25% of civilian domestic services—
mainly highways, higher education, and welfare; local governments
provided 43%—predominantly elementary and secondary education;
and the Federal Government provided 32%—primarily postal
services, agriculture, and natural resource programs.
Federal aid supports this decentralized system by:
• Helping to provide the resources required by a growing, urbanized Nation of more than 200 million people;
• Relying on a revenue system which grows faster than the economy
and raises revenue according to ability to pay—thus reducing
pressures on State and local tax sources; and
• Providing stimulus and encouragement for innovation, improvement, and meeting national standards in essential programs.




201

202

THE

BUDGET FOR FISCAL YEAR 1 9 7 0

Federal Aid to State and Local Governments

$ Billions

25-

20Community Development.
and Housing

15-

10-

I960

1961

1962

1963

1964

1965

1966

1967

1968

Fiscal Years

J969

1970

•- ,
estimate

HIGHLIGHTS OF THE 1970

AID PROGRAM

The decade ending in 1970 will have witnessed a period of intergovernmental action unparalleled in the history of this country. From
1960 to 1970, Federal aid will have reached a cumulative total of
more than $135 billion, roughly half again as much as the cumulative
amount provided from 1900 to 1960. In 1970:
• Total Federal aid to State and local governments is estimated
to be $25 billion, $4.2 billion more than in 1969, and more than
triple the amount in 1960. This is 73% faster than the rise in
total Federal outlays for domestic purposes over the same decade.
• The fastest growing programs are those to provide decent medical
care for the needy, to improve public facilities and services in our
urban centers, and to upgrade the elementary and secondary
educational opportunities available to children of low-income
families. Combined, they are estimated to increase by approximately $7 billion between 1960 and 1970.• Total aids for metropolitan or urban areas have risen from $5.6
billion in 1964 to an estimated $16.7 billion in 1970. Thus, Federal aids benefiting urban areas have grown by about $11.1
billion, nearly tripling in only 6 years. (Included in these amounts
are grants to States which subsequently benefit urban areas.
This topic is discussed in greater detail on pp. 211-212.)




SPECIAL ANALYSES

203

• Federal credit programs will place increasing reliance on private
financing, while providing net Government assistance of more
than $320 million after deduction of repayments and other
receipts; and
• New approaches will include: (1) a proposed new Urban Development Bank, to help meet the rapidly growing capital needs of the
Nation's urban areas; (2) new or recently approved financing
methods for water and sewer lines in rural areas, construction of
waste treatment facilities, and college housing and academic
facilities; and (3) a number of other new departures discussed
on page 214.
SIGNIFICANT FEATURES OF THE 1970 AID PROGRAM

While the preceding section is designed as a broad overview, this
portion of the analysis provides more detailed insights into the aid
program for 1970.
Direct assistance.—The principal forms of direct financial assistance to States and localities are grants, shared revenues, and loans.
In 1970, Federal grants are estimated to reach $24.7 billion, and
shared revenues will account for an additional $0.3 billion. Thus,
grants will account for 99% of the total Federal aid in 1970. In
addition, loans will provide some $323 million in net assistance in
1970, not including the lending activity which is being encouraged
in the private sector with Federal subsidies.
In total, Federal aid amounts to approximately 18% of State and
local revenues—relieving them, in part, of the need for larger and
more frequent tax increases, or increased borrowing requirements. In
terms of direct cash flow, about seven-eighths of the total goes to the
States, with the balance going to local jurisdictions. However, the
State channels much of this Federal grant money into metropolitan
areas, as discussed later in this analysis.
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 benefits through
the tax system. For example, the 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 $1.8
billion in 1968. 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 Federal revenue cost of $300 million.
Similarly, since taxpayers may deduct local property taxes from
Federal taxable income, a portion of State and local taxes is offset




204

THE BUDGET FOR FISCAL YEAR 1970

by a reduction in the taxpayers' Federal liability. In 1968, the value
oi this deduction in terms of tax savings to individuals was approximately $1.8 billion. Finally, other State and local taxes can be deducted from Federal tax liability. These deductions amount to an
additioral $2.8 billion—with nearly half accounted for by personal
income taxes.
Major program changes for 1970.—In 1970, total outlays under
existing and proposed programs for direct Federal aid to State and
local governments are estimated to be $4.2 billion more than for 1969
and $6.4 billion more than the actual total for 1968.
The major increases in Federal expenditures for grants cover a
number of important programs.
• Health and welfare grants will rise an estimated $1.6 billion,
as the Medicaid program is used more often, serves more
people, and as additional States join in the program.
• Community development and housing outlays will exceed those
in 1969 by almost $900 million, as the concentrated community
development activities of Model Cities and Community Action
Agencies build up momentum, and urban renewal and public
housing are increased to meet the needs of the cities.
• Education programs continue to rise, but at a slower rate than
in earlier years, in part due to greater reliance on private credit
markets.
• Commerce and transportation programs will increase by an
estimated $896 million over 1969, as the highway program takes
on more of an urban emphasis.
Decreases are expected in 1970 for such grants as school aid for
federally impacted areas (down $206 million in budget authority),
formula grants to States for school equipment and the like, and
higher education construction—as more of the latter activity will be
undertaken privately with the encouragement of Federal incentive
payments.
Federal-aid programs by agency.—In 1970 the Department of
Health, Education, and Welfare will spend approximately $12.3
billion through its aid programs—about 49% of total Federal aid.
Another 20%, or $5.1 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 21% 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.
Revised financing techniques.—In 1969 and 1970, a new financing approach will be used or proposed for a number of Federally-aided
loan programs—mainly for construction. Instead of making a direct
Federal loan or grant, even greater reliance than in the past will bo,
placed on private markets for the initial capital. The Federal Govern-




205

SPECIAL ANALYSES

Table 0-1. FEDERAL-AID EXPENDITURES BY AGENCY (in millions of dollars)
Agency

Executive Office of the President
Funds appropriated to the President:
Economic opportunity programs
Other (primarily Appalachia)
Department of Agriculture
Department of Commerce
Department of Defense:
Military
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
Department of Transportation
Treasury Department
Veterans Administration
National Capital region x
Other
Total outlays for Federal aid

1968

1969

1970

.2

.2

1,422.9
134.1
1,223.2
118.0

1,360.1
260.5
1,592.5
162.3

1,327.2
303.7
1,839.6
179.0

27.3
17.5

29.6
27.5

32.4
15.2
12,262.6
2,214.0

9,261.5
932.8
350.5
5.9
611.2

5.9
4,272.2
98.3
12.9
77.0
27.9

10,421.4
1,283.2

452.3
26.3
649.1

504.3
179.9
711.0

5.5

5.6

4,266.5
108.4
21.3
113.2
33.0

5,102.6
114.1
21.0
171.7

45.4

18,599.3 20,812.8 25,029.2

•Less than $500 thousand.
1
Includes Federal payments to the District of Columbia in the following amounts: 1968, $64
million; 1969, $96 million; 1970. $112 million.

ment will encourage the private sector to make such loans by subsidizing the interest cost to bring it down to a level which provides
greater benefits to the loan recipient; and/or guaranteeing either the
entire obligation, or that portion of the principal and interest for
which the interest is subject to Federal income taxation. This type of
credit mechanism considerably reduces the impact on the Federal
budget because: (a) the full value of the loan is financed privately, in
most instances; (b) the Federal share of amortization costs comes due
over a period of years rather than all at once; and (c) in many cases,
the interest received by the investor is subject to Federal income taxation—which reduces the net cost for the Federal budget (after adjustment for revenues) as compared to financing in the tax-exempt
market.
This debt service approach is similar to one used in the public
housing program for a number of years. Legislation enacted in 1968
provided authority for this purpose for both the college housing and
academic facility programs. Proposed legislation in 1970 would extend
the use of this device to include (a) water ^nd sewer lines in rural
areas; (b) construction of waste treatment works; (c) hospital construction; and (d) construction of mass transportation facilities in the
National Capital area.
In some instances the regular grant or loan program will continue
in existence and the interest subsidy approach will be used as a
supplement.




206

THE BUDGET FOR FISCAL YEAR 1970
GROWTH AND DEVELOPMENT OF FEDERAL AIDS

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 1787—
the same year that the historic convention adopted the Constitution
of the United States.
The early years of the 20th century saw aid extended for agriculture, highways, and limited social welfare programs. However,
it was not until the economic crisis of the Thirties that Federal aid
reached any significant scale—exceeding $1 billion for the first time.
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 greatly augmented highway
construction effort.
Recently, landmark programs have been undertaken on behalf of
the poor and their blighted urban environments.
Legacy of the sixties.—Beginning in the early years of the 1960's,
the Nation undertook a concerted response to the needs of the poor
and to the challenges of human investment which technology and
urbanization thrust upon governmental—particularly urban—institutions. These challenges are mirrored in the substance of social
legislation enacted in the last 6 years:
• The Elementary and Secondary Education Act of 1965, to provide
a better education for children of low-income families.
• The establishment of the Department of Housing and Urban
Development to coordinate the Federal effort in our urban
centers, and a significant surge in funds for community development.
• The passage of the Economic Opportunity Act—to purge poverty
and to engage the energies and ideas of the local community in
solving their own problems through the launching of 1,000
Community Action Agencies.
• The enactment of the Model Cities program, in which 150 cities
are concentrating Federal, State, local and private resources in the
solution of social and physical problems of large neighborhoods.
• The enactment of Medicaid and the expansion of public assistance to provide health care, services, and cash assistance to
those Americans who have been left far behind in the country's
general economic advance.
• The mounting of a national mapower program, through the Manpower Development and Training Act and several Economic
Opportunity programs—combining the efforts of the business
community and the public sector to provide training and job
opportunities.




207

SPECIAL ANALYSES

• The enactment in the Federal Aid Highway Act of 1968 providing
significant improvements in urban highway transportation and an
expanded relocation assistance program for people and businesses
displaced by highways.
The basic thrust of these programs reflects the growing priority
being given to human resource development. Moreover, each of these
endeavors is a grant—involving Federal aid and State and local
administration. For example, dramatic increases in Federal aids are
estimated to occur between 1964 and 1970 in the following important
areas of domestic concern:
• Health and welfare grants will rise some $6.3 billion—or
168%, mainly for public assistance benefits and Medicaid;
• Education and manpower will increase by an estimated 364%,
or nearly $3.5 billion; and
• Community development and housing outlays are expected to grow
by some $2.3 billion, or 546%.
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 0-2. PERCENTAGE DISTRIBUTION OF FEDERAL AIDS TO STATE
AND LOCAL GOVERNMENTS BY FUNCTION
Function

Agriculture and agricultural resources
Natural resources
Commerce and transportation
Community development and housing. _
Education and manpower
Health and welfare
Other
Total
1

1950
actual

5
2
21

1955
actual

I960
actual

1965
actual

1970
estimate

11
60
1

8
3
19
3
14
51
2

4
2
43
3
10
37
1

5
2
40
5
10
36
2

4
3
22
11
18
40
2

100

100

100

100

100

C1)

Lest than 0.5%.

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—moving commerce and transportation programs
to a dominant position in Federal assistance activities by 1960.
The cumulative effect of the tremendous increases in human investment grants in the 1960-70 period will be to place the principal
emphasis of Federal aid once again on health and welfare activities—
as well as to give added impetus to education and manpower, and
community development and housing efforts. In 1970, these programs
will account for 69% of total estimated aid payments.




208

THE BUDGET FOR FISCAL YEAR 1970

Measures to coordinate Federal aid programs.—While easing
State and local financial problems, the rapid growth of aid programs
has heightened the need for improved coordination to insure effective
and efficient public services at the local level.
This realization stimulated the following generic approaches to
improving the administration of aid programs:
• Broader, multifunctional approaches—to meld programs together
at the local level as in Model Cities, Community Action Agencies,
Neighborhood Centers, and Concentrated Employment Programs.
• Consolidation of existing grant categories—as in the Partnership
for Health programs and the recently enacted vocational education program.
• Improvements in funding arrangements—as in "advance" funding
for education (to allow more time for planning), and the proposed
Joint-Funding Simplification Act.
• Utilization of Regional Councils of Federal agencies in the field
to coordinate Federal programs at the point of impact.
• Passage of new legislation (such as the Intergovernmental Cooperation Act—which improves the flow of information between elected
officials at the Federal and State levels, simplifies accounting
requirements for Federal grants, relaxes impediments of grant
legislation to reorganization at the State level, and provides a
number of other improvements; and a new educational grant
program to increase the supply of trained public servants at all
levels of government).
IMPACT OF FEDERAL AID

The striking ascent in Federal aid in the decade covering 1960-70
has affected the budgets of both the Federal Government and Stete
and local governments in a profound manner. Nevertheless, £the
performance of civilian domestic public services is now, more than ever
before in recent history, the responsibility of State and local governments. The impact of Federal aid varies from region to region, and has
shown a growing trend toward compensating for the meager resources
in lower income areas—a phenomenon known as "equalization."^

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 outlays has
nearly doubled in the past decade—rising from 8% of the total in
1960 to an estimated 13% in 1970. In terms of civilian domestic
programs, 24% of Federal expenditures will take the form of aids
to State and local governments in 1970. 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 govern-




209

SPECIAL ANALYSES

ments as it has been for the Federal Government. Nevertheless,
Federal aid has risen as a proportion of State and local revenues,
moving from 15% in 1959 to an estimated 18% in 1969.
Table 0-3. FEDERAL-AID OUTLAYS IN RELATION TO TOTAL FEDERAL
OUTLAYS AND TO STATE-LOCAL REVENUE
Federal aid
As a percent of—
Amount
(millions)

1958
1959
1960
1961
1962. _
1963__ _
1964
1965
1966
1967
1968
1969 estimate
1970 estimate

______

_ __

$4,935
6,669
7,040
7,112
7,893
8,634
10,141
10,904
12,960
15,240
18,599
20,813
25,029

Total Federal
outlays

6.1
7.4
7.8
7.4
7.5
7.7
8.6
9.3
9.9
9.9
10.4
11.3
12.8

Domestic
Federal
outlays l

14.6
16.6
17.2
15.7
16.4
16.4
18.2
18.8
20.3
20.7
20.9
22.0
23.6

State-local
revenue 2

12.0
14.6
13.8
13.2
13.5
13.7
14.8
14.8
15.7
16.7
3
17.8
M7.9

1
Excluding expenditures for defense, space, and international programs. Excludes trust funds and
Government-operated enterprises.
2
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
Estimate.
* Not available.

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 its own resources. The matching, or cost-sharing
requirements are of two kinds: variable matching, which takes account
of the differing abilities of recipients 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
$5 billion to $5}_ billion of their own funds to receive the $13 billion
of Federal grants spent in that year. This means that, on the average,
the recipients must raise $1 for every $2 forthcoming from the Federal
Government. However, State and local government matching funds
account for only about 10% to 14% 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.

340-700 0—69-

-14




210

THE BUDGET FOR FISCAL YEAR 1970

In 1970, required matching funds will rise to an estimated range
of $10 billion to $13 billion, nearly $5 to $8 billion more than in 1966.
Division of administrative
responsibility
among governmerits.—For the past decade or so, a remarkable stability has existed
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. The resurgence of State and
local spending for education and highways following World War II,
significantly aided by intergovernmental grants, helped to restore
States and localities to a position of predominance. Counting grants
as spending by the recipients, more than two-thirds of total civilian
expenditures by all governmental units are made by State and local
governments—with the latter alone accounting for about 43%.
Table 0-4. DIRECT SPENDING FOR GENERAL DOMESTIC PROGRAMSPERCENTAGE DISTRIBUTION i
Fiscal year

1967
1965
1960
1955
1950
1944
1936
1902

Federal

32
34
36
38
4
6
60
4
9
28

State

25
23
22
21
1
9
1
2
1
5
9

Local

43
43
42
41
3
5
28
3
6
62

Total

100
100
100
100
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.

Regional distribution of Federal aids.—The distribution of
Federal aids on a regional basis ranges from a high of more than
$3.6 billion in the Southeast to a low of $535 million in the RockyMountain area. However, when account is taken of population differences, the Rocky Mountain area ranks highest with grant payments
per capita reaching nearly $112.33 while the Great Lakes and Mideast
regions are lowest with $53.61 and $63.40 per capita, respectively.
Population density and per capita income are the two major factors
which account for this wide variation.
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 grants where
program needs are not a direct function of population density.




211

SPECIAL ANALYSES
Table 0-5.-REGIONAL DISTRIBUTION OF FEDERAL AID, 1967
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

822.5
2.641.1
2,101.3
1.207.1
3.629.6
1.379.9
534.8
2.426.2

72.63
63.40
53.61
75.50
83.74
86.16
112.33
94.90

15.7
12.5
12.7
16.3
22.2
20.9
21.5
16.1

15.239.5

77.02

16.7

.
_

.
1

1

Includes $497 million for Puerto Rico, the Virgin Islands, and other adjustments.
Sources: "Annual Report of the Secretary of the Treasury," and "Governmental Finances in
1966^-67," Bureau of the Census. These reports provide additional information concerning State
distribution of Federal grants.

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 proportionately more individuals with lower incomes.
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. Federal aids are mildly equalizing,* being inversely related
to per capita income. This equalizing tendency increased slightly
between 1966 and 1967—the latest year for which data are available
for State and local governments.
FEDERAL AID AND THE CITIES

Federal aid has shifted to meet the geographical requirements of
the Nation's people as well as to cope with their program needs.
Aids to urban areas.—While Federal Government assistance has
been responsive to changing program needs, it has also been sensitive
to the shifts in the geographical location of the American people.
The country today is more than simply an "urban" society; it is a
metropolitan complex—growing in relatively dense clusters of people
and problems. Today, about two-thirds of the population lives in
1
Excluding Alaska and Hawaii, which are special cases of low population and high Federal impact,
the correlation between per capita grants and per capita income in 1966 was —0.301. This equalizing
effect increased slightly in 1967 with the correlation coefficient still negative and slightly larger
(-0.338).
Without highways, the extent of equalization is increased—with the negative correlation moving
from —0.467 in 1966 to —0.489 in 1967. One of the most effective grants in terms of allocating funds
inversely to income is title I of the Elementary and Secondary Education Act, with more than half
of the variation in these grants among the States explained by variations in per capita income. (The
simple correlation coefficient* were —0.702 in 1966 and —0.744 in 1967.)




212

THE BUDGET FOR FISCAL YEAR 1970

over 230 metropolitan areas. More than 80% of the population growth
between 1960 and 1966 occurred in the metropolitan complexes. To
cope with the present urban challenges—described by many as approaching crisis proportions, increasing amounts of Federal aids are
being channeled into these metropolitan centers. In 1964 an estimated
$5.6 billion—or 55% of total Federal grants was spent in such areas.
By 1970, about $16.7 billion is expected to be provided for aid in
metropolitan areas:
• $11.1 billion, or 198%, more than in 1964;
• $12.8 billion more than, or four times, the amount provided in
1961.
Standard metropolitan statistical areas (SMSA's) were chosen as
the definition of "urban" for the figures in this section, since SMSA's
are generally combinations of entire counties, which in turn, are
the smallest geographical units 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 on the facing page shows the major sources of urban aid,
by function and program, for selected years.
The major increases in Federal grants for urban areas occur in
community development and housing, 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
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
is about $38 billion in 1970—compared to $21 billion in 1964.
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.
OUTLOOK

While helping to meet the vastly expanded needs of the country,
the rapid increase in numbers and scale of Federal aid programs has
made their management complicated and their effective coordination
very complex. A number of steps have been taken, and others recommended, to remedy these problems.



213

SPECIAL ANALYSES

Table 0-6. FEDERAL-AID OUTLAYS IN URBAN AREAS (in millions of dollars)
1961
actual

Function and program

National defense
Agriculture and agricultural resources:

1964
actual

1968
actual

1970
estimate

Economic development
Highways
Airports
Urban mass transportation
Other

25

31

231
40
18

211
97
170

379
135
242

158
,948
36

78
2,245
60
59
6

146
2,504
72
159
123

1
7

Natural resources
Commerce and transportation:

28

1,398
36

Donation of surplus commodities
Other

10
128
27
54

___

421
356
212
29
1
55

379
701
341
84
480
125

222
5
28
303

274
14
29
344
64
7

304
1,314
225
179
543
443
109

279
1,290
213
183
599
572
146

131
48

168
66

4
29

8
48

1,170
18
37
3

1,590
34
61
20

269
89
15
153
42
86
27
3,989
83
112
102

383
97
58
220
120
132
103
5,564
99
204
112

2
5

38
9
2

4
77
6
38

126
172
32
51

3,893

5,588

12,234

16,656

Community development and housing:

Community action program
Urban renewal
Public housing
Water and sewer facilities
Model Cities
Other__.

__

106
105

159
136
36

Education and manpower:

Head Start and Follow Through
Elementary and secondary
Higher education
Vocational education
Employment security administration
Manpower activities
Other

__.

Health and welfare:

Child nutrition, special milk and food stamp. _
Hospital construction
Regional medical program
Mental health
Comprehensive health planning and services _
Health educational facilities
Health manpower
Public assistance
Maternal, child health and welfare
Vocational rehabilitation
Other
General government:

Law enforcement
National Capital region
Other
Other functions
Total, aids to urban areas.

Administrative improvements.—The many attempts to improve

the grant mechanism have already been summarized in an earlier section. The recently enacted Intergovernmental Cooperation Act, in
addition to improving the operation of the federal system, is important
for its symbolic value—pointing in law to the essential place that cooperation plays in the effective functioning of the entire system. The
Public Service Education Act passed last year as part of the Higher
Education Amendments of 1968 also sets the stage for an increased
supply of manpower for improving the quality of public services at all
levels of government. Finally, an attempt will be made this year administratively to simplify the funding in such programs as juvenile delin


214

THE BUDGET FOR FISCAL YEAR 1970

quency and efforts to combat poverty—all involving the need for the
effective integration of multiple fund sources at the local level.
This approach could be usefully expanded to cover many more grant
activities. The Joint Funding Simplification Act proposed last year
was intended to accomplish this aim. However, it failed of passage at
the end of the congressional session and should be enacted this year.
New programs in 1970.—A series of new programs is being proposed or will go into effect for the first time this year.
The proposed Urban Development Bank represents a major step
forward in implementing modern concepts of creative federalism. I t
will create an institution which brings together the resources and
expertise of all levels of government and of private enterprise to meet
the needs of our growing urban areas. Funds raised primarily by
issuing federally guaranteed bonds to the public will provide lowinterest, long-term financing for public facilities. The difference
between the interest received from borrowers and the cost of money
to the Urban Development Bank will be met by special payments
by the Federal Government. The cost of this support to the Federal
Government will be minor relative to the large increase in funds
made available to the cities. In addition to financial aid, the Bank
will provide technical assistance in financial and other borrowing
matters.
Other important new ventures this year include:
• New grants to local public housing authorities to help them
assure that tenants receive essential services—including child
care, counseling, and job training;
• Increased encouragement of local efforts to plan urban development so that housing, jobs, transportation, and other public
services are reasonably related to each other, through areawide
and new community development grants;
• Federal guarantees to encourage development of New Communities, under legislation passed in 1968;
• A substantial revamping of the vocational education program, to
better serve the needs of the disadvantaged and to match training
with needed job skills;
• A proposed new program of comprehensive health care for expectant mothers from low-income families and their children
through the first year of life;
• The proposed Intergovernmental Manpower Act will provide
greater training opportunities and experience for personnel at the
State and local level; and
• The shift in financing to greater reliance on private financing in
a number of credit programs, as discussed on pages 204-205.




215

SPECIAL ANALYSES

Table 0-7. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS 1
(expenditures in millions of dollars)
Agency and program

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

uncional
:ode

1968
actual

1969
estimate

1970
estimate

059

.2

.2

051
051
058

26.3
1.0
5.3

22.9
6.7
5.7

23.1
9.3
9.6

32.8

35.5

42.0

5.6

5.2

5.3
.2

5.6

5.2

5.6

351
352
352
352
354
355

405.1
29.4

601.5
34.5

1.1
2.1
1.1

4.2
1.8
14.1

728.5
38.2
4.0
5.7

355
355
355

9.4
57.1
74.3

8.3
59.8
80.7

8.8
60.9
83.1

355

1.7

1.6

1.6

581.3

806.5

968.8
—

88.7

110.1

101.0

18.8

19.0

18.7

44.6

53.0

55.3

15.0

24.8

12.6

2.5

2.7

2.6

132.5

178.3

188.5

Total, national defenseInternational affairs and finance:

Department of State:
East-West Cultural and Technical Interchange Center. 151
International Center, Washington, D.C_ _
151
Total, international affairs and finance.
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
Mutual and self-help housing
Rural housing for domestic farm labor
Resource conservation and development
_
Consumer protective programs
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
Total, agriculture and agricultural resources.

4.1

33.9

Natural resources:

Department of Agriculture:
401
Watershed protection and flood prevention
Grants for forest protection, utilization, and basic
402
scientific research._
National forest and grassland funds; payments to
402
States and counties (shared revenue)
Department of Defense—Civil: Corps of Engineers:
401
Payment to California, flood control
Payments to States, Food Control Act of 1954
401
(shared revenue)
«.
Department of the Interior:
401
Water pollution control
Payments to States and counties from grazing receipts,
grasslands, and sales of public lands (shared
401
revenue)
Bureau of Reclamation:
401
Grants
Payments to Arizona, Nevada, and Klamath reclama401
tion area (shared revenue)
-

2.2

2.3

2.6

.1
.7

.7

.7

"Less than $500 thousand.
,
. .
., n .
i Grants-in-aid unless otherwise specified. Excludes loans which are shown separately in table O-8
on page 219.




216

THE BUDGET FOR FISCAL YEAR 1970

Table 0-7. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS *
(expenditures in millions of dollars)—Continued
Agency and program

unc
ional
:ode

1968
actual

1969
estimate

1970
estimate

Natural resources—Continued

Department of the Interior—Continued
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
Mine drainage and solid waste disposal
403
Aid for commercial fisheries
404
Payment to Alaska from Pribilof Island fund (shared
404
revenue)
404
Fish and wildlife restoration and management
Wildlife refuge fund and grasslands payments (shared
404
revenue)
Outdoor recreational areas (Land and Water Conser405
vation Fund)
405
Preservation of historic properties
404
Department of State: Pacific Halibut Commission
Federal Power Commission: Payments to States (shared
401
revenue)
Tennessee Valley Authority: Payments in lieu of taxes
401
(shared revenue)
401
Water Resources Council

.2

.5

22.0
45.8
*
5.3

26.1

24.8
50.2

.3
31.7

.3
35.0

.1
34.5

1.4

3.3

2.0

51.0
.2
.2

70.9
.1
.2

107.2
.8

.1

.1

.1

13.1
2.0

14.5
2.6

16.6
2.6

478.2

596.4

628.4

507
507

5.0
98.3

7.0
224.7

274.8

502
506

.4
3.6

.4
4.9

.4
5.1

506
507

.4
113.6

.5
156.4

.3
173.2

503
507

65.5
1.0

3.0
1.1

5.0
1.3

3.0
40.9
47.8
54.8
3,886.6
146.2
86.6

4.0
40.6
41.8

Total, natural resources _

45.8
*
6.4

7.0

Commerce and transportation:

Funds appropriated to the President:
Public works acceleration
Appalachian development
Department of Commerce:
State marine schools
Office of State Technical Services
National Bureau of Standards: Research on fire prevention through improvement of housing construction
Economic development assistance
Department of Housing and Urban Development:
Mass transportation (research and planning)
Department of the Interior: Resources management
Department of Transportation:
Chamizal Memorial Highway
Forest and public lands highways
Highway beautification
Highway safety
Federal-aid highways (trust fund)
Urban mass transportation facilities
Federal-aid airport program
Airports planning and development 2
Other

503
503
503
503
503
503
501
501
503

36.0
38.9
4.1
,117.5
74.7

97.0
4,507.3
171.5

90.0
150.0

1.0

.6

.5

4,560.0

4,664.5

5,562.8

551

526.4

501.9

474.3

551
552
552

1.6
474.8
33.3

68.9
650.0
55.0

533.9
935.0
60.0

Total, commerce and transportation
Community development and housing:

Funds appropriated to the President:
Office of Economic Opportunity: Community Action
programs
Department of Housing and Urban Development:
Model city grants
Urban renewal
Open space land and urban beautification

*Less than $500 thousand.
. .
,
1 • .. LI r* a
1 Grants-in-aid unless otherwise specified. Excludes loans which are shown separately in table O-8
on
2 Funds for the new program will be requested upon enactment of proposed legislation which also
provides for user charges.
P




217

SPECIAL ANALYSES

Table 0-7. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS *
(expenditures in millions of dollars)—Continued
Agency and program

uncIonal
:ode

1968
actual

1969
estimate

1970
estimate

Community development and housing—Continued

Department of Housing and Urban Development—Con.
Metropolitan development incentive grants._
_.
Grants for basic water and sewer facilities
Grants for neighborhood facilities
Advance acquisition of land
Urban planning grants,..
_
Urban information and technical assistance
Community development training programs
Low-rent public housing program
_
Low-income housing demonstration
Alaska housing

553
553
553
553
554
554
554
555
555
555

604
601

25.2

.5
39.5

282.9
.4

3.5
329.0
.2
1,782.2

2,680.8

516.6
379.9

542.0
316.2

503.8
349.1

1.7

2.5
5.0
454.0
.1
1.0

2.5

602
601
601
601
601
601
601
602
602
603
607
609
609
609
609
604

1,454.5
(1,049.0)
472.3

604

7.9
16.0
6.1
387.4
(114.2)

1,361.1
(1,023.0)
366.5
24.4

19.0
9.1
305.5
(98.8)
242.5
.4

,452.3
,108.0)

405.8
26.5
24.2
9.4
354.5

85.3

(113.9)
261.1
.2
107.9
2.0
5.2
61.9
155.3

39.4

45.0

80.1

609
609
609

571.8
5.6
*

604.1
8.4
*

630.8
14.6
*

609
609

12.2
1.8

14.6
1.7

20.3
2.0

4,228.9

4,090.3

4,469.5

653

30.8

28.8

28.9

653
653

318.0
171.7

347.2
256.6

379.1
316.6

651
651

253.1
(136.0

227.7
(121.7

276.0
(147.4)

Total, education and manpower

Health and welfare:
Funds appropriated to the President:'Disaster relief—
Department of Agriculture:
Child nutrition programs and special milk
Food stamp
Department of Health, Education, and Welfare:
Hospital construction
(Portion to private, nonprofit institutions)

100.0
32.0

1,393.7

Total, community development and housing _
Education and manpower:
Funds appropriated to the President: OfHce of Economic
Opportunity:
Work and training programs
_.
Head Start and Follow Through
_
Department of Housing and Urban Development: College housing
Department of Health, Education, and Welfare:
Elementary and secondary education
(Portion for educationally deprived children)
Assistance to schools in federally affected areas
Education of the handicapped
_
Teachers Corps
Civil rights education
Higher education activities
(Portion to private institutions)
Vocational education
Arts and humanities educational activities
Libraries and community services
_.
Special institutions for the blind and deaf
Educational television facilities
Education professions development
_.
Work incentive activities
Department of Labor:
Manpower development and training activities
Grants to States for administration of employment
security programs (trust fund)
Equal Employment Opportunity Commission
Smithsonian Institution.
Department of Interior: Bureau of Indian Affairs:
Education and welfare services
National Foundation on the Arts and Humanities

3.0
130.0
36.0
1.0
45.0

44.4
4.6

255.2
.9
93.1
1.2
6.7

101.9
1.3
7.2
34.0

"Less than $500 thousand.
, .
,, ^ o
* Granti-in-aid unless otherwise specified. Excludes loans which are shown separately in table O-8
on page 219.




218

THE BUDGET FOR FISCAL YEAR

1970

Table O-7. FEDERAL AID TO STATE AND LOCAL GOVERNMENTS1
(expenditures in millions of dollars)—Continued
Functional
code

Agency and program

1968

1969

1970

Health and welfare—Continued

Department of Health Education, and Welfare—Con.
Health manpower
Comprehensive health planning and services
Regional medical programs
Construction of health educational facilities
Mental health
_.
Health services
Consumers protection and environmental health
Dental health care
__ __
Indian health services and facilities.
Patient care and health services _
Hospital facilities in the District of Columbia
Maternal and child health
Public assistance:
Medical assistance
Income maintenance payments
Social services for welfare recipients
Child welfare
Juvenile delinquency
Vocational rehabilitation
__
Mental retardation
Administration on Aging
___
__
Total, health and welfare

651
651
651
651
651
651
651
651
651
651
651
651

33.3
86.7
21.0
107.1
191.8
36.4
16.2

651
652
652
653
653
653
653
653

.1
1.2

77.8
160.4
46.6
127.5
231.0
44.4
28.7
.8
1.4
1.2

152.4

178.7

128.4
173.6
83.5
165.6
275.2
36.8
30.0
4.4
1.1
1.2
.7
203.8

1,805.8
3,051.7
461.1
54.5

2,384.3
3,319.6
590.9
53.8
1.1
369.4
6.2
11.9

2,971.0
3,719.0
729.0
43.0
6.4
509.3
22.4
15.9

280.7
6.7
7,080.5

_

8,495.8

10,120.9

Veterans benefits and services:

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

9.1
1.9
1.9

13.7
4.0
3.5

14.3
3.2
3.6

12.9

21.3

21.0

Q10

31.8

54.7

50.5

910

12.4

12.6

13.2

908
908

2.2
3.7

3.9
22.4

15.4
164.5

910

66.2

73.0

75.0

904

32.1

35.4

39.1

909
909
909

64.0
1.6
11.4

96.0
16.0
1.1

112.4
59.3

225.3

315.2

529.4

804
804
804

Total, veterans benefits and services
General government:

Department of the Interior:
Grants to territories
Internal revenue collections, Virgin Islands (sharec
revenue)
__ _
Department of Justice: Law enforcement assistance:
Education and training
__ _
Crime prevention 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 share revenue)
National Capital region:
Federal payment to District of Columbia
Washington metropolitan area transit program
Dulles sewer project
Total, general government
Total, grants and shared revenues

18,599.3

20,812.8 25,029.2

*Less than $500 thousand.
1
Grants-in-aid unless otherwise specified. Excludes loans which are shown separately in table
O~8 on page 219.




219

SPECIAL ANALYSES

Table 0-8. FEDERAL LOANS TO STATE AND LOCAL GOVERNMENTS
Net outlays

Disbursements
Agency and program
1968
actual
Agriculture and agricultural resources:
Department of Agriculture:
Soil Conservation Service
Farmers Home Administration

1969
1970
estimate estimate

1968
actual

1969
1970
estimate estimate

.5
114.4

Total, agriculture and agricultural
resources
___
___
Natural resources:
Department of Agriculture: Soil conservation
Department of the Interior: Reclamation loans
Total, natural resources
Commerce and transportation:
Department of Commerce: Economic
development assistance
Department of Housing and Urban Development: Metropolitan development
Department of Transportation:
Mass transportation facilities
_.
Highway construction

.5
125.1

.8
317.1

.5
79.5

.5
73.1

.7
19.1

114.9

125.6

317.9

79.9

73.6

19.8

2.8

2.6

3.0

2.8

2.6

3.0

14.7
17.5

6.3
8.9

5.4
8.4

13.4
16.3

5.2
7.8

4.1
7.1

27.3

23.7

53.2

26.3

22.5

51.7

3.3

4.4
50.0

-.2

Total, commerce and transportation.

27.3

27.2

4.7
50.0
107.9

Community development and housing:
Department of Housing and Urban
Development:
Renewal and housing assistance
_
Metropolitan development
_

463.7
57.2

683.5
56.9

839.5
37.1

-29.1
45.7

92.7
44.2

-24.8
23.4

520.9

740.4

876.6

16.6

136.9

-1.4

25.5
1.6

48.6
4.0

41.3

24.4
1.6

48.3
4.0

39.8

161.4
188.5

130.0
182.6

109.2
150.5

143.1

109.7
162.0

87.4
127.2

Total, community development and
housing
_
Education and manpower:
Department of Health, Education, and
Welfare:
Higher education activities
Vocational education
Department of Housing and Urban Development: College housing
_
Total, education and manpower

3.5

Health and welfare:
Department of Health, Education, and
Welfare: Medical facilities in District
of Columbia.-.
Total, health and welfare

Total, general government
Total
*Less than $500 thousand.




25.8

106.1

169.1

.8
.8

.8
.8

_

General government:
Department of Defense—Civil: Ryukyu
Islands...
Department of the Interior: Administration of Territories
Department of Justice: Law enforcement facilities
General Services Administration: General activities
District of Columbia: Construction
National Capital Planning Commission _

26.1

.4
3.9

5.5

4.8

.3
60.2

-.2

.4

75.3
100.1
.9
.1
109.4
64.6
81.3
933.7 1,165.9 1,571.3

-1.5
21.4
-.2
24.0
332.1

4.5

3.8

.3

3.6

3.9

3.6

-1.3
32.3
*
35.8
441.9

-1.2
56.3
.9
63.2
322.7

SPECIAL ANALYSIS P
FEDERAL PUBLIC WORKS ACTIVITIES

Public works are fixed structural or physical improvements built
and owned by Federal, State, or local governments. Most public
works are constructed to help in carrying out essential defense and
civil governmental functions and related services for the public. To
aid in understanding the nature and magnitude of Federal activities
affecting public works, this analysis brings together information on
budget authority and outlays for Federal and federally aided public
works. The analysis also includes a separate tabulation of outlays for
major Federal programs to aid construction by private cooperatives
and nonprofit groups. Other Federal activities which affect the level
of private construction, such as Federal procurement, leases, loans,
loan guarantees, and tax concessions, are not included in this analysis.
Total private and public construction represents a large segment
of the Nation's economic activity. In recent years, construction,
including maintenance and repairs, has accounted for about 14% of the
gross national product. Public construction (Federal, State, and local)
has become an increasingly larger share of the total, rising from onesixth in 1947 to about one-third in 1967. According to Department of
Commerce projections, total new construction valued at $91 billion is
expected to be put in place in the calendar year 1969, compared with
$85 billion in 1968 and $77 billion in 1967. Public construction is
expected to be about $29 billion in 1969, compared with $28 billion in
1968 and $26 billion in 1967.
Federal outlays for public works in this analysis include direct
Federal civil and defense construction and grants and net lending to
Table P-1. FEDERAL OUTLAYS FOR PUBLIC WORKS, 1961-70
(In millions of dollars)
Fiscal year

1961
1962
1963
1964
1965
1966
1967
1968
1969 estimate
1970 estimate




Total
Federal
outlays

6,823
6,938
7,196
8,346
8,886
9,428
9,572
9,520
9,970
11,126

Direct •"ederal construction
Grants
Total

3,758
3,693
3,704
4,019
4,152
4,693
4,483
3,972
4,274
4,347

Civil

1,878
2,085
2,321
2,691
2,800
3,014
2,752
2,460
2,408
2,555

Net
lending

Defense

,880
,608
,383
,328
,352
,679
,731
,513
,866
,792

2,915
3,037
3,302
4,186
4,567
4,446
4,730
5,264
5,432
6,457

149
207
190
142
167
289
359
284
264
322

221

SPECIAL ANALYSES
Federal Expenditures for Public Works
$ Billions

7.0-

{

D

6.0

Defense
Civil

Grant:

5.4

5.3

5.0-

4.0

3.0-

2.6

2.0

V
1.0-

1961

1962

Fiscal Years

1963

!964

1965

1966

1967

1968

1969

1970
Estimate

State and local governments to assist in construction of highways,
schools, water and sewer projects, and other public facilities. In recent
years, Federal outlays have comprised about one-third of all public
works expenditures. Table P-l compares total Federal outlays for public
works, including net lending, over a 10-year period. The trends in
outlays for grants and direct Federal civil and defense construction
are shown graphically in the accompanying chart.
Federal outlays for public works are estimated at $11.1 billion in
1970, an increase of $1.2 billion over 1969, and 63% higher than in
1961. Over the 10-year period, larger outlays for civil public works
reflect mainly: (1) increased grants to States to meet the steadily
growing need for highways, schools, hospitals and related health
facilities, water supply systems, and waste disposal facilities; and (2)
the higher level of outlays for Federal water resource projects, power
facilities, roads, and research and air navigation facilities. The level of
outlays for defense construction has varied over the years, and is
estimated at $1.8 billion in 1970, 4% below the 1969 level.
Since 1966, the growth in Federal outlays has been held to a minimum by generally restrictive budget policies and efforts to limit
Federal construction in order to restrain the rapid rise in construction
costs. In keeping with these policies and the cutback actions required
under the Revenue and Expenditure Control Act of 1968, outlays for
direct Federal civil public works are estimated to decline from $3




222

THE BUDGET FOR FISCAL YEAR

1970

billion in 1966 to $2.4 billion in 1969, but will increase to $2.6 billion in
1970.
DIRECT FEDERAL PUBLIC WORKS

Outlays for direct Federal public works include the design and construction of new structures, major improvements and modifications
of existing structures, major rehabilitation, and in some instances site
acquisition, within or outside the United States. The major types of
Federal public works are defense and space installations; complex
multiple-purpose water resource projects which provide power, water
supply for irrigation, municipal and industrial use, navigation, and
flood control; air navigation facilities; research facilities; and public
office buildings.
Table P-2 summarizes outlays for civil and national defense
projects by the major Federal departments and agencies involved. In
1970, nearly 60% of the outlays for direct Federal projects will be for
Table P-2.

DIRECT

FEDERAL

PUBLIC

WORKS: OUTLAYS

AND

1970

BUDGET AUTHORITY BY AGENCY (in millions of dollars)
Budget
authority.
1970
estimate

Outlays
Program and agency

1969

1968
actua

Civil public works:
Department of Agriculture: Forest Service
Department of the Army: Corps of Engineers—
Civil...
Department of Health, Education, and Welfare:
Health Services and Mental Health
Department of the Interior:
Bureau of Indian Affairs
National Park Service. _
Bureau of Reclamation
Bonneville Power Administration
Post Office Department
Department of Transportation:
Coast Guard
Federal Aviation Administration
General Services Administration.
National Aeronautics and Space Administration. _.
Veterans Administration
Tennessee Valley Authority
Other




_

118

187

979

820

860

818

13

29

32

22

46
40
211

55
42
210

60
43
212

103
85

53
52
198

108
204

26
60
179
126
49
232
190

60
135
172
70
56
279
198

58
144
180
60
85
322
193

47
137
77
58
97
29
93

2,408

2,555

2,180

543
455
489
170
3
206

537
431
340
189
1
294

1,048
408
404
205

1,513

Subtotal national defense public works

120

674
93
492
80
4
167

National defense public works:
Department of the Army
Department of the Navy
Department of the Air Force
Interservice activities
Civil defense centers and shelters
Atomic Energy Commission

118

2,460

Subtotal civil public works

Total direct Federal public works

1970

1,866

1,792

2,293

3,972

4,274

4,347

4,473

144
47

107
55

224

SPECIAL ANALYSES

223

civil purposes. Water resource developments and related power
generation and transmission facilities are a major component of the
civil programs. The principal programs are those of the Corps of
Engineers, Bureau of Reclamation, Bonneville Power Administration,
and Tennessee Valley Authority. Other large outlays are for construction of public buildings by the General Services Administration;
roads and trails required for forest protection, timber supply, and
recreational use; recreational facilities in the national parks; Indian
schools; air navigation facilities; and ground facilities required by the
National Aeronautics and Space Administration.
GRANTS AND NET LENDING FOR PUBLIC WORKS

Table P-3 provides information on Federal outlays by major
agencies for grants and loans to aid construction of State and local
projects. The Federal grants are generally advances or reimbursements
paid to State and local governments for the Federal share of the cost
of specific projects. The Federal contribution varies by program, and
may be a fixed percentage of the total cost, or it may vary according
to such factors as population or relative financial ability of the States.
The largest Federal outlays for construction grants are for the several
highway programs financed from trust funds administered by the
Federal Highway Administration in the Department of Transportation. The Federal share of the cost of the $51 billion Interstate Highway System is 90%. Although 26,500 miles of the 41,000 mile system
are now open to traffic, large outlays will be required in the next few
years to complete the system. For most of the other highway programs,
the Federal share is 50%. The Department of Transportation, also
administers grants of up to two-thirds of "net project costs" for mass
transportation projects and 50% grants for certain airport facilities.
Many grant programs axe on a matching basis. For example, the
Office of Education administers grants for higher education facilities,
vocational schools, and libraries on a matching basis. However, the
agency also provides grants for elementary and secondary schools in
federally affected areas on the basis of the increased number of children
of Federal employees.
The Department of Housing and Urban Development provides
grants of not more than 50% of project development costs for basic
water and sewer facilities. The Farmers Home Administration administers a program of grants up to 50% of project development
costs for rural water and waste disposal developments. The Federal
Water Pollution Control Administration also provides grants up to
55% of the cost of waste treatment facilities.
In the Department of Commerce, the Economic Development
Administration provides construction grants for projects which will
assist in providing long-term employment opportunities in eligible
redevelopment areas. These grants finance up to 80% of project costs,
and may supplement other Federal grants.
In addition, Federal grants to aid local construction are provided
for such facilities as roads and health demonstration projects in the
Appalachian region, watershed protection and flood prevention
projects, hospitals and related facilities, including community mental
health centers, teaching facilities for health professions, and health
research and other research facilities.



224

THE BUDGET FOR FISCAL YEAR 1970

Federal loans on favorable terms are available to aid State and
local governments in the construction of certain types of public
works, such as water arid sewer developments, public housing, and
urban rehabilitation. Most loans are for income-producing facilities
Table P-3. GRANTS AND NET LENDING FOR PUBLIC WORKS: OUTLAYS
AND 1970 BUDGET AUTHORITY, BY AGENCY (in millions of dollars)
Outlays
1968
actual

Budget
authority,
1970
estimate

1969
estimate

1970
estimate

91

195

237

235

54
29

11
34

61
38

57
52

101

138

155

176

15

25

13

13

132
68
290
82

133
85
228
132

176
111
282
169

174
91
115
202

32
8
118

39
25
155

53
20
162

27
20
220

75
4,137

87
3,915
127
33

240
4,530
128
70

305
5,473
139
64

5,257
7

5,423
10

6,444
13

7,363
13

5,264

5,432

6,457

7,376

5

4

6

2

27

24

53

24

19
403

33
413

34
401

15

6

5

5

20
4

35
6

50
60

50
92

8

-210

-256

-295

12
-6

284

264

322

179

Grants to State and local governments:
Funds appropriated to the President: Appalachian
regional development programs
Department of Agriculture:
Soil Conservation Service
Farmers Home Administration
Department of Commerce: Economic development
assistance
Department of the Army: Corps of Engineers—
Civil
Department of Health, Education, and Welfare:
Health Services and Mental Health
National Institutes of Health
Office of Education
Department of Housing and Urban Development. _
Department of the Interior:
Bureau of Outdoor Recreation
Office of Territories _ _
___
Federal Water Pollution Control Administration.
Department of Transportation:
Federal Aviation Administration
Federal Highway Administration
Urban Mass Transportation Administration
Other civil
Subtotal civil grants
Department of Defense
Total grants

_.

Lending to State and local governments:
Department of Agriculture
Department of Commerce: Economic development
assistance.
_
_
__
Department of Health, Education and Welfare:
Office of Education
Department of Housing and Urban Development
Department of the Interior: Bureau of Reclamation
Department of Transportation: Federal Highway
Administration
District of Columbia
Other
Repayments and other
Total net lending
1

(1)
25

$33 million included in Department of Housing and Urban Development.




225

SPECIAL ANALYSES

which might otherwise be unable to furnish low-cost public services.
The Department of Housing and Urban Development provides loans
for the construction of public facilities for up to 40 years at an interest
rate XA% to Yi% above the average rate on all interest-bearing obligations forming part of the Federal debt. A revolving fund is being
established in the Department of Transportation to provide Federal
loans to State and local governments to acquire road rights-of-way.
CIVIL PUBLIC WORKS

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.—Although most projects can be completed within a few years, the more complex water control developments may require 10 years or more to complete. For projects underway in 1970, table P-4 indicates the total cost, the progress through
the budget year, and the estimated outlays to complete the projects.
The rate of completion during and after 1970 is contingent not only
on the budget authority recommended for 1970, but also, in the case
of water resource developments, on appropriations in future years.
Over the years, the estimates may need to be modified because of
changes in construction costs.
Table P-4. ESTIMATED COST OF 1970 DIRECT FEDERAL CIVIL PUBLIC
WORKS, BY CONTINUING AND NEW WORK (in millions of dollars)

Program and agency

Total
estimated
Federal
cost

Outlays
Prior
to
1970

1970
estimate

Required
to
complete

Continuing work:

Department of Agriculture: Forest Service.__
Department of the Army: Corps of Engineers—
Civil
Department of Health, Education, and Welfare:
Health Services and Mental Health
Department of the Interior:
Bureau of Indian Affairs
National Park Service
- Bureau of Reclamation
___ _
Bonneville Power Administration
Post Office Department
Department of Transportation:
Coast Guard
__
__ _
Federal Aviation Administration _
__ _
General Services Administration
_
__ _
National Aeronautics and Space Administration
Veterans Administration
Tennessee Valley Authority
__
Other
Total continuing work

340-700 O—69


-15

163

120

43

12,962

7,038

833

5,091

61

33

24

3

657
1.137
7,503
572
205

380
39
4,145
216
69

58
37
208
97
53

218
1,061
3,150
259
83

89
321
539
1,371
349
1,486
1,509

50
135
287
1,250
192
451
940

35
133
160
55
67
317
169

4
54
91
66
91
718
401

28,924

15,345

2,289

11,290

226

THE BUDGET FOR FISCAL YEAR 1970

Table P-4. ESTIMATED COST OF 1970 DIRECT FEDERAL CIVIL PUBLIC
WORKS, BY CONTINUING AND NEW WORK (in millions of dollars)-Continued
Total
estimated
Federal
cost

Program and agency

Prior
to
1970

Total new projects and features
Advance planning and site acquisition prior to start
of construction:
Department of the Army: Corps of Engineers—
Civil
Department of Health, Education, and Welfare:
Health Services and Mental Health
Department of the Interior:
Bureau of Land Management
National Park Service .
_
Bureau of Reclamation
Post Office Department _
Department of Transportation: Coast'Guard
General Services Administration
National Aeronautics and Space Administration
Veterans Administration
Other

1970
estimate

Required
to
complete

75

45

8

401

22
13
11

7
*
1

14
13
10

18
13
51
13
163

2
1
6
1
22

16
12
45
12
141

45
137
13
55
90
114
37

1
1
1

20
12
*
5
16
4
13

24
125
13
50
73
109
23

1,336

New projects and features in 1970:
Department of Agriculture: Forest Service
Department of the Army: Corps of Engineers—
Civil
Department of Health, Education, and Welfare:
Health Services and Mental Health
National Institutes of Health
Office of Education
_ __
Department of the Interior:
Bureau of Indians Affairs
Bureau of Reclamation
Bonneville Power Administration
__
Southwestern Power Administration
Post Office Department
Department of Transportation:
Coast Guard
__
Federal Aviation Administration
General Services Administration
National Aeronautics and Space Administration. __
Veterans Administration
Tennessee Valley Authority
Other
__

13

193

1,126

70

26

18

25

7

2

1

4

5
30
14
41
3
148
7
7
29

3
4
5

2
6
3
9
2
20
1
2
8

20
6
32
1
34
4
5
11

72

142

2,555

12,558

121
420

10

361

Total advance planning..
Total direct civil public works

Outlays

._

-_

94
3
*
11
148

30,621

15.506

"Less than $500 thousand.

Those projects which were started in years prior to 1970 are summarized under the heading "continuing work" in table P-4, to distinguish them from new projects which are recommended to be started
in 1970, and from advance planning of projects to be started after
1970. Outlays for continuing work are estimated at $2.3 billion in
1970, about nine-tenths of the total for direct civil public works
construction. An additional $11.3 billion of outlays is estimated to be
required after 1970 to complete these projects.



227

SPECIAL ANALYSES

Because of the restrictive budget policy for 1970, new construction
starts have been limited to a few projects of high priority. In the
water resources development category, the Corps of Engineers will
initiate construction on 12 projects estimated to cost $420 million.
The Bureau of Reclamation will begin construction on the Manson
unit of the Chief Joseph Dam project in Washington and will provide
a loan to begin the West San Bernardino project in California. The
Tennessee Valley Authority will begin a multiple-purpose project on
the Upper French Broad River in North Carolina.
In addition, the Veterans Administration will begin construction of
hospitals in San Antonio, Tex.; Phoenix, Ariz.; and Indianapolis, Ind.;
as well as a nursing home in Miami, Fla. The total cost of other new
projects recommended to be started in 1970 includes $163 million for
the Post Office Department, $137 million for the Federal Aviation
Table P-5. RESERVE OF PRESENTLY AUTHORIZED PROJECTS AND
PROGRAMS FOR UNDERTAKING AFTER 1970 (in billions of dollars)
Cost of a uthorized reserve

Agency

Estimated
total
Federal
cost

Status of plans as of
June 30, 1969
Contract

Status of plans as of
June 30, 1970

Not

In

be let
Agriculture: Forest Service
Army: Corps of Engineers—
Civil
Health, Education, and Welfare:
Health Services
Interior:
Bureau of Land Managment
Bureau of Sport Fisheries and
Wildlife
Bureau of Reclamation
Bonneville Power Administration
Justice: Bureau of Prisons
Post Office
Transportation: Federal Aviation Administration
General Services Administration.
Veterans Administration
Tennessee Valley Authority
Other agencies
Total
1

Less than $50 million.




0.9

9.4

1.4

3.6

4.4

.1

.1

0)
0)

.2
1.8

0)

0.9

2.3

4.1

.1
.3

1.1

.1
.4

C1)
1.3

.1
.1

.1

.1
.7

.1

.7

.9
.8
.1
.3
.2

.1
.1

.2
.4

16.8

0)
3.2

.7

.1

.6
.2
.1
.2
.1

6.2

7.3

(i)

.4

.1
.1

0)

.6

.6

2.9

.1

0)

.4

0)

Not

0.2

0.2

.4

In

be let

1.1

.1

Contract

.2
.3
(i)

5.3

0)
.3
.2
.1
.1
.1

6.2

.1
.4
.5

0)
.4

0)

.1

5.2

228

THE BUDGET FOR FISCAL YEAR 1970

Administration, and $121 million for the Forest Service. For all
agencies, the new civil works projects recommended in the 1970
budget are estimated to cost $1.3 billion, of which $193 million or 14%
will be spent in 1970.
Public works planning and surveys.—Outlays for preliminary planning, surveys, and general investigations are not included in the summary tables in this analysis. Coordinated long-range economic,
hydrologic, and land-use projections provide needed information for
comprehensive river basin planning which precedes the undertaking
of individual water resource projects. Such studies help to assure
economic design of facilities.
As needs are indicated by general studies, advance planning of
specific project designs begins and, in some instances, sites must be
acquired. Outlays for advance planning and site acquisition of projects
to be undertaken after 1970 are shown in table P-4. In addition, the
Department of Housing and Urban Development will advance $8
million in 1970 to facilitate advance planning by State and local
government agencies.
Authorized

reserve of civil public works.—Those

agencies whose

programs regularly involve construction of public works generally
maintain a reserve of authorized projects which 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 P-5 indicates the size and status of planning of the
authorized reserve.
Civil public works by Junction.—Public works activities are grouped
in table P-8 according to the major functional categories used in the
budget, with specific programs shown by agency under each functional
heading.
Federal-aid highway grants account for nearly half of total outlays
for civil public works in 1970, and for four-fifths of the total for the
commerce and transportation function. Another 20% of civil public
works outlays are classified under the natural resources function, which
includes most of the water resources and related developments.
Outlays by major types of water resource facilities are shown in table
P-6 and in the accompanying chart.
Public works outlays in the commerce and transportation and
natural resources functions total $6.7 billion in 1969 and $7.7 billion
in 1970, an increase of 15%. The largest increase will be for the
Federal-aid highway programs. Most of the remaining functional
areas include some public works activities. Some functions—such as
international, veterans, space, and general government—include
mainly direct Federal public works programs. These functions taken
together show an increase in outlays from $432 million in 1969 to
$515 million in 1970, an increase of 19%. Other functions include
principally grants and loans to assist State and local governments in
the construction of needed facilities. Community development and
housing, health and welfare, and education and manpower functions
are predominantly Federal-aid programs which show an increase in
public works outlays from $903 million in 1969 to $1,031 million in
1970, an increase of 14%.




229

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

1969

1968

Flood control works:
Agriculture: Soil Conservation Service (mostly grants)
Army: Corps of Engineers—Civil

1970

13.5
2.2
10.2

64.9
343.3
1A Q
z4.o
5.6
2.3
8.7

55.2
325.8
Iz.o
2.0
5.2
11.5

461.2
1.7

449.6
2.6

412.3
4.0

9.3

11.6

10.9

9.1
127.0
13.6

7.3
114.8
5.3

4.6
94.9
4.3

159.0

139.0

114.7

246.0

205.0

205.9

.1
.1

.9
.2

246.2

206.1

206.0

295.9
47.9
6.0
13.7

Total multiple-purpose facilities
Thermal-electric powerplants: Tennessee Valley Authority

320.6
36.3
10.3
23.2
390.4
103.9

363.5
189.3

281.0
59.7
.5
10.8
352.0
223.2

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

31.5
144.0
3.5
76.4

28.3
107.1
4.7
57.3

34.0
103.2
4.7
67.0

Total power transmission facilities

255.4

197.4

208.9

29.4

34.5

38.2

44.4
25.0

100.0
25.0

130.0
18.0

3.1
116.8

(0

12.9
147.0
.5

21.2
152.0
.5

218.7

319.9

359.9

1,836.5

1,867.4

1,881.0

urants
Interior: Bureau of Reclamation
State: International Boundary and Water Commission
Tennessee Valley Authority. _

.__

1 C f\

15.U

__

Total flood control works
Beach erosion control: Army: Corps of Engineers—Civil
Irrigation and water conservation works:
Agriculture: Soil Conservation Service (mostly grants)
Interior:
Bureau of Indian Affairs
Bureau of Reclamation
Loan and grant program
Total irrigation works
Navigation facilities:
Army: Corps of Engineers—Civil
_
Transportation: Saint Lawrence Seaway Development Corporation. __ _ _
Tennessee Valley Authority
___
Total navigation facilities

_

Multiple-purpose dams and reservoirs with hydroelectric power
facilities:
Army: Corps of Engineers—Civil
Interior: Bureau of Reclamation
State: International Boundary and Water Commission
Tennessee Valley Authority

Water supply and waste disposal facilities:
Agriculture: Farmers Home Administration (grants)
Housing and Urban Development:
Grants
Loan disbursements
Interior:
Bureau of Reclamation •Federal Water Pollution Control Administration (grants)
State: International Boundary and Water Commission
Total water supply and waste disposal
Total water resources and related developments
* Less than $50 thousand.




48.8
371.5

.1

0)

230

THE BUDGET FOR FISCAL YEAR 19 70

Outlays for Water Resources and Related Developments

$ Billions

2.0-

Total

1.5-

Multiple-purpose with Hydroelectric Powe
1.0-

.5Flood Control and Beach Erosion

Oj.

1961

J

1962

I

1963

I

1964

l__

1965

1966

1967 1968

Fiscal Years

1969

1970

Estimate

NATIONAL DEFENSE PUBLIC WORKS

Department of Defense—Military.—Budget authority of $2.1 billion
is recommended for 1970 to strengthen and modernize facilities of the
Armed Services, an increase of 70% over the 1969 level. Outlays in
1970 are expected to decline slightly from those in 1969. The budget
provides for construction of facilities needed for the Sentinel antiballistic missile system, for supporting the C-5A transport aircraft, for
shipyards, for aircraft repair, and for the U.S. share of the NATO
joint defense effort. Budget authority is also recommended to provide 4,800 new permanent family housing units.
Atomic Energy Commission.—Outlays for construction of atomic
energy facilities will increase in 1970, although budget authority will
decline, as projects started in recent years attain higher construction
rates. Work will continue on the 200 billion electron volt (Bev)
proton accelerator and another large accelerator for basic research in
physics, on research facilities for the fast breeder civilian power reactor
development program, and on the project to improve weapons production capabilities.




231

THE BUDGET FOR FISCAL YEAR 1970
A I D TO COOPERATIVES AND NONPROFIT GROUPS

Federal-aid programs sometimes provide support both to State and
local governments and to the private nonprofit institutions providing
similar services. Federal outlays in support of construction undertaken
by these private institutions are shown in table P-7, but are not included in the total public works figures reported in this analysis.
Table P-7. FEDERAL OUTLAYS FOR CONSTRUCTION BY COOPERATIVES
AND NONPROFIT GROUPS (not included in public works) (in millions of dollars)
1970

1969

1968

Expenditures:
Grants for private construction:
Department of Health, Education, and Welfare:
Health Services and Mental Health Administration:
Hospital construction
National Institutes of Health: Health educational, research and library facilities
Office of Education: Higher education facilities
National Technical Institute for the Deaf
Model Secondary School for the Deaf __ _ __
Gallaudet College
Howard University

122

147

39
114

43
99

54
114
1

*
2

*
2
6

1
1
10

291

Total expenditures

136

111

328

495

528

555

47

46

46

Lending:

Department of Agriculture: Rural Electrification Administration: Electrification and telephone facilities
Department of Health, Education, and Welfare: Office of
Education: Higher education facilities
Department of Housing and Urban Development: College
housing
_ _
_
Repayments

Total Federal outlays
"Less than $500 thousand.




__

120

101

-209

-211

467

Total net lending

149
-224

485

491

758

757

819

232

SPECIAL ANALYSES

Table P-8. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)
By major function and agency
OUTLAYS

BUDGET AUTHORITY
1968
actual

1969
1970
estimate estimate

1968
actual

1969
1970
estimate estimate

CIVIL PUBLIC WORKS
International Affairs and Finance
Department of State:
Foreign Service buildings
Cultural and Technical Interchange
Center, Hawaii (grant)
International Center, Washington, D.C.
(grant) _
__
United States Information Agency: Radio
facilities and special international exhibitions

21.8

Total international affairs
finance
_
__

25.9

4.1

3.2

5.2

4.3

.3

.5

.4

1.0

.2
13.7

12.5

13.9

1.0

17.2

18.2

18.9

and

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

37.8

35.7

58.2

126.1

70.0

60.0

5.3

.9

4.8

18.4

17.1

12.1

2.0

2.8

2.8

1.3

Agriculture and Agricultural Resources
Department of Agriculture:
Laboratories, research facilities, and
Library 1
Cooperative State Research Service:
Grants for research facilities
Soil Conservation Service: Resource conservation and development:
Loans
_ _
Grants
Farmers Home Administration:
Grants for rural water and sewer systems
Rural renewal loans
Total agriculture and agricultural
resources

2.0

.6

.1

.4

.5
.1

.5
.2

.7
.5

28.0

28.0

52.0

29.4

34.5

1.3

1.3

2.1

2.0

1.1

38.2

37.2

30.3

61.3

53.0

56.2

2.1
55.0

Natural Resources
Department of Agriculture:
Soil Conservation Service: Flood prevention and watershed protection:
Direct work
Grants
Loans
Forest Service: Roads, research, recreational and protective facilities1
1

Includes small amounts from trust funds.




1.2

.8

.9

1.1

1.1

.9

51.8

50.6

56.7

53.7

72.0

61.0

2.8

2.6

3.0

117.9

120.2

117.9

181.8

186.2

186.9

233

SPECIAL ANALYSES

Table P-8. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)—Con.
By major function and agency

BUDGET AUTHORITY
1968
actual

OUTLAYS
1970
1969
estimate stimate

1970
1969
estimate estimate

1968
actual

828.9
15.7
24.8

802.3
15.8
12.6

955.6
23.3
14.9

799.7
20.7
24.8

841.6
18.1
12.6

13.5

15.5

11.8

12.5

16.0

22.5

27.0

32.2
(2)

39.4

53.0

1.4

.1

CIVIL PUBLIC WORKS—Continued
Natural Resources—Continued
Department of Defense—Civil: Corps of
Engineers—Civil:
Flood control, navigation and multiplepurpose projects with power _ _
999.1
Trust funds
_ _
__
27.5
Grants
_ __
14.9
Department of the Interior:
Bureau of Land Management: Roads
and other facilities
14.9
Bureau of Outdoor Recreation: Grants
for recreation facilities _ _ _
38.8
Geological Survey: Laboratory
Bureau of Mines: Laboratories and
demonstration plants
1.2
Office of Coal Research: Demonstration
plants
5.0
Bureau of Commercial Fisheries:
Facilities
1.7
1.4
Grants
Bureau of Sport Fisheries and Wildlife:
4.5
Facilities
National Park Service: Parkways,
J
roads, buildings and utilities
52.7
Bureau of Reclamation:
Irrigation and multiple-purpose projects with power1
221.5
14.9
Loans, small irrigation projects
-1.3
Repayments
.1
Grants, small irrigation projects
Power transmission facilities:
1
Bonneville Power Administration
111.0
Southwestern Power Administration._
5.0
Federal Water Pollution Control Administration:
Buildings and facilities
Grants for waste treatment works and
212.5
research facilities
Department of State:
International Boundary and Water
Commission: Water resources projects and Chamizal settlement
11.7
Facilities for International Pacific Halibut Commission (srant)
Tennessee Valley Authority: Power, water
39.9
resources, and chemical facilities
Total natural resources

6.5

4.0

5.8

7.7

1.2

1.6
.9

1.0
1.2

1.1
.8

1.5
.8

1.5

2.1

7.7

5.0

7.8

6.2

51.6

39.8

42.5

42.9

197.3
2.9
-1.1
2
()

198.0
5.4
-1.3

211.4
14.7
-1.3
.1

209.5
6.3
-1.1
2
()

211.8
5.4
-1.3

102.1
4.0

108.4
3.4

144.0
3.5

107.1
4.7

103.2
4.7

.9

1.6

2.1

220.7

220.1

118.3

155.4

162.1

5.8

4.0

19.5

10.6

4.3

.2

.2

232.4

279.3

27.5

29.3

322.0

2,011.7 1,718.0 1,747.6 2,012.3 1,922.2 1,999.0

1
Includes small amounts from trust funds.
2 Less than $50 thousand.




7.0

234

THE BUDGET FOR FISCAL YEAR 1970

Table P-8. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)— C o n .
By major function and agency
OUTLAYS

BUDGET AUTHORITY
Function, agency, and program
1968
actual

1969
1970
estimate estimate

1968
actual

1969
1970
estimate estimate

CIVIL PUBLIC WORKS—Continued
Commerce and Transportation

Funds appropriated to the President:
Appalachian regional development
programs: Grants for highways, education, and health facilities
90.9
237.1
194.7
142.2
235.4
108.8
Public works acceleration: Grants
5.0
7.0
Department of Commerce:
Economic development assistance:
Development facilities grants
101.4
137.6
154.9
153.0
175.8
155.1
Development facilities loans
27.3
53.2
23.7
27.0
19.9
23.5
Repayments
-1.0
-1.5
-1.2
Participation in U.S. expositions: 1967
(2)
Alaska Centennial, building
Environmental Science Services Ad1.2
ministration: Structures
.4
.3
.1
.7
1.1
5.0
2.4
3.4
Bureau of Standards: Buildings
.9
.9
.1
Maritime Administration: Library and
.6
other improvements.
(2)
Department of Defense—Civil: Panama
Canal Company: Canal and harbor im15.3
9.4
14.6
provements and bridges
Department of the Interior: Bureau of
20.0
15.3
22.3
30.0
30.0
23.0
Indian Affairs: Roads
Post Office Department: Post offices, im84.6
46.6
55.0
203.5
87.8
76.1
provements and alterations
Department of Transportation:
Coast Guard: Shore facilities and navi57.8
26.5
60.1
47.3
42.3
51.7
gation aids _
Federal Aviation Administration:
Air traffic control, navigation, and re142.7
134.0
59.5
133.0
120.0
54.0
search facilities
1.7
.7
1.6
.7
3.2
.2
Dulles and National Airports
240.0
86.6
70.0
66.0
305.0
Federal-aid airport program: Grants._
74.7
Federal Highway Administration:
Federal-aid highways and other trust
funds:
4,771.3 5,441.5 5,587.7 4,101.1 3,870.9 4,526.5
Grants
50.0
50.0
31.0
Loans
Forest and public land highway
3
36.0
40.9
46.9 -118.7
47.3
grants
4.0
3.0
4.0
4.0
Chamizal Memorial Himhwa v: Grant
5.0
Alaskan highway assistance grant
Federal Railroad Administration: Alaska

.6

.6
Urban Mass Transportation Administration: * Transportation facilities:
Grants
Loans
Repayments

44.8

142.4

139.0

32.6

127.0

128.5

-.2

-.2

2.0
-.3

2 Less than $50 thousand.
• Legislation proposed to include forest and public lands highways in trust funds in 1970, and 1970
amounts are included with trust funds.
* Included in the Department of Housing and Urban Development in 1968 and in the Department
f Transportation in 1969 and 1970.




235

SPECIAL ANALYSES

Table P-8. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)—Con.
By major function and agency
OUTLAYS

BUDGET AUTHORITY

1968
actual

1969
estimate

1970
estimate

1968
actual

1969
1970
estimate estimate

CIVIL PUBLIC WORKS—Continued
Commerce and Transportation—Con.
Department of Transportation—Con.
St. Lawrence Seaway Development Corporation: Alterations.
_
Federal Communications Commission:
Facilities
Total commerce and transportation.

.1
(.)

(2)

.9

.3

.1
.2

5,428.3 6,336.4 6,821.6 4,631.8 4,781.0 5,721.3

Community Development and Housing
Department of Housing and Urban Development:
Grants for neighborhood facilities
Low-rent public housing:
Loans
Repayments
Areawide and new community development grants
_
Grants for water and sewer facilities. __
Advance planning, non-Federal public
works:
Loans
Repayments and other
.
Public facility loans
Repayments
Liquidating programs: Repayments _
Federal Home Loan Bank Board: Headquarters
Total community development and
housing

30.0

35.0

52.5

4.6

32.0

36.0

220.0 250.0
181.2
-170.9 -210.0 -245.0

78.2

165.0

—1.4

15.0
135.0

44.4

100.0

3.0
130.0

-.7

11.3
-10.6
49.3
-3.9
-.4

10.5
-13.1
52.0
-4.8
-.4

8.0
-12.4
34.0
-5.8
-.4

5.4

165.0

.6

.5

273.2

198.6

201.8

110.5

186.8

197.8

10.0
12.3

10.0
4.1

11.1
3.0

6.2
28.8

8.9
25.3

16.2
38.8

305.0
27.1

73.0
41.3

102.8

27.2

9.2

9.2

241.0
18.5
-1.0
20.6

177.8
32.7
-.8
24.5

219.1
33.6
-1.6
23.7

143.1

109.7

161.4
-18.3

130.0
-20.3

109.2
-21.8

40.6

25.3

23.4

30.8

33.0

40.4

12.4

5.2

4.0

10.1

12.5

7.2

Education and Manpower
Department of Health, Education, and
Welfare:
Office of Education:
Schools in federally affected areas:
At Federal installations...
Grants
Higher education facilities:
Grants
Loans
Repayments
Libraries (grants)
Department of Housing and Urban Development:
College housing loans
ReDavments
Department of the Interior: Bureau of
Indian Affairs: Schools and other
facilities
_
National Science Foundation: Research
facilities
2

Less than $50 thousand.




236

THE BUDGET FOR FISCAL YEAR 1970

Table P-8. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)—Con.
By major function and agency

BUDGET AUTHORITY
Function, agency, and program

1968
actual

OUTLAYS

1969
1970
estimate estimate

1968
actual

1970
1969
estimate estimate

CIVIL PUBLIC WORKS—Continued
Education and Manpower—Continued
Smithsonian Institution:
John F. Kennedy Center for Performing
Arts
Museums
Total education and manpower

.9

14.9

1.6

9.8
2.6

15.4

2.3

6.0

11.7

580.0

292.8

155.1

510.4

445.1

477.4

.4

.7

3.1

9.3

51.6
114.7

19.7
111.8

32.7
100.0

48.6
125.5

Health and Welfare
Department of Health, Education, and
Welfare:
Consumer Protection and Environmental Health Services: Buildings
Health Services and Mental Health
Administration:
Grants for mental health centers
Grants for public hospitals
District of Columbia medical facilities:
Grants
Loans
Other facilities, including St. Elizabeths Hospital
Indian health facilities*
Grants for Indian health facilities
National Institutes of Health:
Grants for health, educational research, and library facilities
Buildings and facilities
Social and Rehabilitation Service:
Grants for mental retardation facilities
_ --.
Social Security Administration: Buildings and district offices (trust funds) __
Total health and welfare

1.2
55.1
126.3

43.9
114.7

.7

7.5

.8

7.5
17.5

2.1
20.1

.2
164.7
11.2

65.6
.6

90.8
7.9

13.1

5.4

1.3

7.7

6.1

377.9

264.0

.7
12.3

.9

1.2
16.7

3.5
25.3

9.1
23.1

.4

.7

84.5
13.8

111.2
17.0

.3

3.7

1.3

7.7

6.1

314.1

233.5

271.4

355.9

68.3
18.7

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

6.0
.3

1.0
.7

1.0
.2

1.7
1.9

2.2
2.3

1.0
.6

.5
52.6

.6
7.9

.8
96.4

.5
47.6

.6
54.5

.8
84.5

4.0

4.0

5.0

1.9

4.0

3.2

.5

.9

Total veterans benefits and services ___

63.4

54.2

64.6

1

Includes small amounts from trust funds.




14.3

103.3

90.0

237

SPECIAL ANALYSES

Table P-8. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)—Con.
By major function and agency
BUDGET AUTHORITY
1968
actual

1969
1970
estimate estimate

OUTLAYS
1968
actual

1969
1970
estimate estimate

CIVIL PUBLIC WORKS—Continued

General Government
Legislative Branch:
Architect of the Capitol: Buildings and
James Madison Library
Government Printing Office: Building
site and plans
Department of Defense—Civil:
Army: Power and water systems, Ryukyu Islands:
Loans
RepaymentsCanal 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
Repayments
Department of Justice:
Immigration and Naturalization Service: Border facilities
Federal Prison System: Prison facilities..
Treasury Department:
Federal Law Enforcement Training
Center: Advance planning
__
Bureau of Customs: Border facilities
Bureau of Engraving and Printing:
Air conditioning
Bureau of the Mint: Philadelphia MintSecret Service: Training facilities
General Services Administration: Construction of public buildings, sites and
planning
_
Central Intelligence Agency: Headquarters_
District of Columbia:
Grants
Loans
Repayments.
_
Grant to Washington Metropolitan Area
Transit Authority _ _
National Capital Transportation Agency:
Land acquisition and construction
Total general government
Total civil public works
2 Less than $50 thousand.




.9

1.2

4.0

5.3

3.3

4.2
2.3

2.5

.4
— 2
1.9

3.4

(2)

15.6
4.4

12.7
4.1
-1.0

2.9

4.3

5.1

20.3
4.9
-1.0

8.2
3.9

25.3
5.5
-1.0

19.6
4.8
-1.0

7.6

10.2

.2
9.1

.3
6.4

1.2

1.2

.1

.1

.4

.8
10.4

.7
8.3
.7

4.2
.6

.8

1.8
.7

136.6

60.8

77.0

179.1

172.1
.2

11.4
71.5
-2.0

1.1
92.0
-2.6

91.8
-3.3

11.4
19.8
-2.0

1.1
34.8
-2.6

59.6
-3.3

43.8

49.4

1.6

16.0

59.3

1.8

.2

251.4

279.1

241.8

213.4

258.0

180.4

346.1

9,077.2 9,103.3 9,722.0 8,000.5 8,094.6 9,321.4

238

THE BUDGET FOR FISCAL YEAR

1970

Table P-8. FEDERAL PUBLIC WORKS ACTIVITIES (in millions of dollars)—Con.
By major function and agency
BUDGET AUTHORITY
Function, agency, and program

1968
actual

1969
estimate

37.5
3.6
154.4

83.4

74.5

48.7

130.7

5.6

2.3

1970

OUTLAYS
1968
actual

1969

1970

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

474.6
3.0

13.3
5.0
61.4

15.0
(2)
155.0

135.0

2.5

5.9
3.9

3.1
3.0

3.5
1.2

548.1 1,037.5
3.0
10.0

674.0
.2

538.0
5.0

530.0
6.8

54.0

3.0

2.7

15.0

3.7

6.0

8.5

514.3
5.0

291.5
5.0

398.4
9.6

86.1
6.9

448.0
7.0

425.5
5.8

488.5
3.9
9.5

222.1
4.3
8.3

385.3
5.3
13.2

476.7
4.3
11.0

475.0
4.0
10.0

325.0
5.4
9.5

Total Department of DefenseMilitary
1,702.8 1,219.5 2,082.0 1,352.6 1,669.2 1,510.2
Atomic Energy Commission: Facilities.. 213.1
294.4
167.2
223.7
206.4
294.5
Total national defense public works. 1,915.9 1,514.0 2,305.7 1,519.7 1,875.6 1,804.7
Total civil
works
3

and defense

Less than $50 thousand.




public

10,993.1 10,617.3 12,027.7 9,520.2

9,970.1 11,126.1

SPECIAL ANALYSIS Q
FEDERAL

RESEARCH, DEVELOPMENT, AND RELATED PROGRAMS

This analysis identifies Federal obligations and expenditures for the
conduct of research and development and for facilities related to
both activities. It also notes significant program changes in major
agencies and describes Government-wide activities in the marine and
space sciences.
Total Federal obligations for research and development, including
facilities, will increase from $16.8 billion in 1969 to $17.1 billion in
1970. Increases of $0.5 billion for Defense, and $0.1 billion for all other
agencies are partially offset by a decrease of $0.3 billion for the National Aeronautics and Space Administration, reflecting a decline in
requirements for the manned lunar landing program. Total expenditures will increase from $16.4 billion to $16.7 billion.
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 research in colleges
and universities which have traditionally been a major source of new
discoveries in basic science.
Total Federal obligations for the conduct of research—both basic
and applied—will increase from an estimated $5.3 billion in 1969 to
$5.5 billion in 1970. Expenditures will increase from $5.1 billion in
1969 to $5.4 billion in 1970.
Obligations ror Research

$ Billions

6 -

Total

5 -

I960

1961

1962

Fiscal Years




1963

1964

1965

1966

1967

1968

1969

1970

Estimate

239

240

THE BUDGET FOR FISCAL YEAR 1970
Table Q-1. CONDUCT OF RESEARCH 1 (in millions of dollars)
Expenditure i

Dbligations
1968

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

1969

1970

1968

1969

1970

1,339

1,300

1,376

1,337

1,331

1,336

1,368
1,160
402
267
244
145
49
57
45

1,408
1,196
421
255
254
153
69
63
50

1,491
1,201
437
307
264
158
82
62
59

1,422
1,094
402
248
248
138
42
54
44

1,355
1,022
421
270
251
151
68
59
48

1,487
1,138
437
293
259
154

16

17

20

15

17

19

13
5
1

14
6
3

17
11
7

11
3
1

13
4
3

14
7
6

39

45

52

40

44

49

5,150

5,254

5,543

5,099

5,057

5,406

85
63
59

1
In this table and tables Q-2 and Q-3 "obligations" and "expenditures" for AEC are both
accrued costs which approximate obligations and expenditures for analysis purposes. Detail in all
tables may not add to totals due to rounding. For ease of comparison, tables Q-3 and Q-4 are
listed in the same agency sequence.

Academic research.—In 1970, total Federal obligations for research
grants and contracts in colleges and universities will increase $63
million over 1969. This investment by the Federal Government
provides about two-thirds of all research funds spent by academic
institutions throughout the country.
Table Q-2. SUPPORT OF RESEARCH IN COLLEGES AND UNIVERSITIES
(in millions of dollars)
Expenditures

Obligation!
Department or agency

Health, Education, and Welfare....
Defense.
National Science Foundation
National Aeronautics and Space
Administration
Atomic Energy Commission
Agriculture.
_
All other
Total

1969
estimate

1970
estimate

653
235

592
252

666
275

255

207

224

243

119

101

151

130

94
62
63

96
64
76

93
61
56

94
62
60

109
96
64
66

1,508

1,571

1,456

1,414

1,519

1969
estimate

1970
estimate

700
219

713
247

705
274

221

210

130
93
62
60
1,485

1968
actual

1968
actual

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



241

SPECIAL ANALYSES

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 from $10.7 billion in 1969 to $10.8 billion in 1970. Expenditures will decrease from $10.6 billion to $10.5 billion.
Obligations (or Development
$ Billion

12Totol

10-

8-

1966

1967

1968

1969

1970
Estimate

Table Q-3. CONDUCT OF DEVELOPMENT (in millions of dollars)
E xpenditure

Obligations
Department or agency

Defense—Military functions
National Aeronautics and Space
Administration
Health, Education, and Welfare
Atomic Energy Commission
Agriculture
Interior..
.
Transportation
Commerce
..
Office of Economic Opportunity
Housing and Urban Development. _
Justice..
All other
. . .
Total
*Less than $500 thousand.
340 700 O 69
16




1969

1970

1968

1969

1970

6.342

6,610

7.053

6,628

6,466

6.723

3.087
114
967
15
42
68
18
30
10
*

2,700
125
1,015
15
52
87
19
31
12
2

2,329
125
992
16
48
152
23
34
20
15

2,820
103
1.015
15
49
85
19
29
10
2

2,400

23

32

43

3.168
98
967
15
36
63
22
29
3
*

22

25

34

10.716

10.700

10.850

11,051

10.638

10.545

1968
actual

992

16
58
135
23
27
12
14

242

THE BUDGET FOR FISCAL YEAR

1970

Research and development facilities.—Total obligations and expenditures for research and development facilities are as follows:
Table Q-4.

RESEARCH AND DEVELOPMENT FACILITIES (in millions of dollars)
Obligations

Department or agency

1968
actual

1969
estimate

Expenditures
1970

1968
actual

1969

1970

Total

200

205

207

175

228

183

65.
44
163
71
18
30
7
4
3
1

105
53
406
31
12
47
22
6
5
1

58
12
305
45
11
32
12
3
5
2

134
57
224
67
24
19
7
6
1
1

75
56
232
65
22
32
11
3
4
1

63
72
293
55
14
38
19
5
6
1

606

Defense—Military functions
National Aeronautics and Space
Administration
Health, Education, and Welfare...
Atomic Energy Commission
National Science Foundation
Agriculture
I nterior
Transportation
Commerce
Veterans Administration
Mother

891

692

715

729

748

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

MILITARY

The total Department of Defense 1970 obligations for research and
development will increase by $521 million, about 6% over the 1969
level.
For research, obligations in 1970 are estimated to increase $76
million over 1969. An increase reflected under the category of "military
sciences" includes programs of particular Defense interest such as
the effects of boundary layer turbulence on aircraft, propulsion and
explosive chemistry, superconductivity, electro-optics, information
processing, acoustics, and oceanography. More research will also be
pursued in marine technology, missile guidance and propulsion, and
electronics. A portion of the increase is due to financial adjustments,
which include greater forward funding of Defense university projects,
and to funding for new Project Themis contracts to help develop the
research capabilities of academic institutions in fields of research
contributing to national security.
Obligations for development programs and operation of test and
evaluation facilities will reach a level of $7,053 million in 1970, an
increase of $443 million over the 1969 amount. Major items under
development contributing to these increases are the advanced manned
strategic aircraft, two new tactical fighter aircraft, the VSX antisubmarine warfare aircraft, several new air-to-surface missiles, the Aircraft
Warning and Control System, and a variety of smaller programs leading to improvements in the capabilities of both the Nation's strategic
and general purpose forcjes. A more detailed explanation of development trends is given in the Budget Appendix on pages 292-294.




243

SPECIAL ANALYSES

Table Q-5. DEPARTMENT OF DEFENSE—MILITARY RESEARCH AND
DEVELOPMENT (in millions of dollars)
Purpose and budget title

Conduct of research and development:
Research, development, test, and evaluation:
Military sciences
Aircraft and related equipment
qp
Miil
d l d
i
Missiles and related equipment.__
Military astronautics and related equipment
y
qp
Shi
ll
f
d l d
i
Ships, small craft, and related equipment
Ordnance, combat vehicles, and related equipment.
Other equipment.
Programwide management and support
Emergency fund
Other appropriations
Total, conduct of research and development, obligations_
Total, conduct of research, included above
Total, conduct of development, included above
Research and development facilities, obligations.
Total obligations

1968
actual

528
1,209
2,507
1,074
258
322
1,129
317
37
3
7,681
(1,339)
(6,342)
20
0
7,881

1969
estimate

1970
estimate

561
997
2,465
1,179
342
324
1,232
391
49
370

617
1,339
2,485
1,152
346
303
1,332
425
50
380

8,429
7,910
(1,300) (1.376)
(6,610) (7,053)
25
0

27
0

8,115

8,636

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

All activities of the National Aeronautics and Space Administration
are considered as research and development for purposes of this
analysis.
With a decline in the cost of the Apollo program, a larger proportion
of NASA funds will be devoted to research than to development in
1970. The increase in research for manned space flight will provide for
instrumentation, including a solar telescope, to be used in the manned
Apollo Applications program. Additional funds will be invested in
space sciences for the design of unmanned experiments and instrumentation for the 1971 and 1973 Mars Mariner flights, and for two
new planetary projects—the 1973 Venus/Mercury and the Planetary
Explorer series. In the area of space applications, increases will be
devoted to the sixth and seventh Applications Technology Satellites
to advance further the Nation's capabilities in communications,
navigation, meteorology, and geodesy; and to the new Earth Resources
Technology Satellites to conduct experiments on remote sensing and
the use of space acquired information in the management of natural
resources.
The decrease in the Apollo manned space flight program, leading
to a drop in the conduct of development, will be partially offset by
added developmental activities related to the manned Apollo Applications program and to expansion of the NERVA nuclear rocket
program.




244

THE

BUDGET FOR FISCAL YEAR

1970

Table Q-6. NATIONAL AERONAUTICS AND SPACE A D M I N I S T R A T I O N RESEARCH AND DEVELOPMENT (in millions of dollars)
Program and type of activity

Conduct of research:
Manned space flight
Space sciences
Space applications
Space technology
Aircraft technology
Supporting activities
Research and program management

1968
actual

211
374

1969
estimate

1970
estimate

67
148
332

108
289
93
198
75
150
345

227
351
127
179
79
162
366

Total, conduct of research, budget plan
Total, conduct of research, obligations
Conduct of development:
Manned space flight
Space sciences
Space applications
Space technology
Supporting activities
Research and program management

1,445
(1,368)

1,258
(1,408)

1,491
(1,491)

2,598
80
9
25

2,069

1,781
72

Total, conduct of research, budget plan
Total, conduct of research, obligations

3,161
(3,087)
34
(65)

2,584
(2,700)

2,329
(2.329)

36
(105)

(58)

Total budget plan

4,640

3,878

3,878

Total obligations

4,520

4,213

3,878

Research and development facilities, budget plan

90
223

142
307

51
6
12
143
303

9
32

150
285

Research and development facilities, obligations-

HEALTH, EDUCATION, AND WELFARE

Obligations by the Department of Health, Education, and Welfare
for research and development, including facilities, will decrease by $36
million to a level of $1,339 million in 1970. The decrease reflects a
decline in obligations for new research and development facilities.
Major biomedical research and development efforts will continue
to be concentrated on mental illness and on cardiovascular disease and
cancer. Other biomedical research and development that will receive
particular emphasis include research into blinding eye diseases and
visual disorders by the newly created National Eye Institute, research
in the area of family planning and fertility control, and the development of vaccines against diseases such as rubella (German measles).
In addition, emphasis in 1970 will be placed on clinical trials of a new
drug to aid victims of Parkinson's disease, on identification and
control of the processes causing dental caries and periodontal disease,
and on research related to the effects and control of air pollution.
Research on education will emphasize educational problems of
minority groups. In addition, there will be increases for basic research
in reading processes, learning, and motivation. Major development
efforts will include work on secondary school curricula and on the use
of television for early childhood education.




SPECIAL ANALYSES

245

ATOMIC ENERGY COMMISSION

The research and development programs of the Atomic Energy
Commission will account for about 67% of the total outlays of the
Commission in 1970. Operating costs for the conduct of research and
development will total $1,429 million and, in addition, $293 million
will be spent for research and development related construction and
equipment.
The Atomic Energy Commission's research programs will increase
by $16 million, about 4%, in 1970. More than $11 million of this
increase is for research in the physical sciences, including nuclear
and elementary particle physics; controlled thermonuclear research;
and research in those aspects of chemistry, metallurgy, and mathematics of particular importance to nuclear science and technology.
The remainder of the increase in 1970 will be for research in the
biomedical sciences and weapons and safeguards activities.
The Atomic Energy Commission's development programs comprise
such activities as the design and testing of nuclear weapons, the development of improved reactors, and the development of peaceful uses
of radioisotopes and nuclear explosives. For the most part, these
activities will continue in 1970 at essentially the 1969 level. The major
exception is in the weapons program, where expenditures will decrease
$32 million in 1970. This reflects the phasing down of work at the
supplemental test sites in accordance with previous plans.
Within the reactor development program, emphasis will continue on
development of a liquid metal fast breeder reactor which is expected to
produce more fissionable fuel than it consumes in the process of producing power. The reactor development program includes other efforts
to develop improved types of nuclear power reactors, compact nuclear
electric power sources for space and terrestrial applications, and
reactors for naval and space propulsion.
The Atomic Energy Commission's 1970 budget for research and
development facilities provides for expenditures of $20 million and
obligations of $102 million for construction of the 200 Bev accelerator.
This facility, which will perform basic research on the frontiers of
elementary particle (high energy) physics, will have a total design
and construction cost of $250 million excluding supporting research
equipment.
Also included in the construction program of the Atomic Energy
Commission for 1970 are expenditures for continuation of several
other major projects initiated in previous years: The Los Alamos
Meson Physics Facility, a high-intensity proton accelerator for basic
research in medium energy physics; the Fast Flux Test Facility, a
test reactor for the fast breeder reactor program; a nuclear safety
engineering test facility; and various support facilities for the liquid
metal fast breeder reactor program.




246

THE BUDGET FOR FISCAL YEAR

1970

Table Q-7. ATOMIC ENERGY COMMISSION—RESEARCH AND
DEVELOPMENT (in millions of dollars)
1968
actual

Program

Conduct of research:
Weapons
Physical research
Biology and medicine
Other programs

1969
estimate

1970
estimate

57

86
3

55
275
87
4

402

421

437

24
425
491
18
9

26
511

27
479

455
14
9

462
14
10

Total, conduct of development, expenditures.

967

1,015

992

Research and development facilities, expenditures. _

224

232

293

1,593

1,668

1,722

265

Total, conduct of research, expenditures
Conduct of development:
Production of special nuclear materials
Weapons
Reactor development
Plowshare
Other programs

Total expenditures

,

286

89
5

NATIONAL SCIENCE FOUNDATION

Total obligations of the National Science Foundation for research
and research facilities will increase from $286 million in 1969 to $352
million in 1970. Increases in project grants will permit the Foundation
to expand its support of fundamental environmental studies through
the Global Atmospheric and International Biological Programs and
to finance applied, multidisciplinary research in these and other areas
of national concern. An increase is also included for modifications to the
1,000-foot radio astronomy instrument at the Arecibo (Puerto Rico)
Ionospheric Observatory which will substantially enhance the usefulness of that instrument to the scientific community.
DEPARTMENT OF AGRICULTURE

Obligations of the Department of Agriculture for research and development, including facilities, will increase from $281 million in 1969
to $290 million in 1970. Particular emphasis will be given in 1970 to
research on diets and nutrition, on means for increasing timber production, and on airborne remote sensing devices for the collection of
information on crop and harvest conditions. In addition, there are
increases for research on reducing pollution from animal wastes,
plant nutrients, and pesticides.
DEPARTMENT OF THE INTERIOR

Obligations of the Department of the Interior for research and development, including facilities, will decrease from the 1969 level of
$252 million to $237 million in 1970, reflecting reduced funding for




SPECIAL ANALYSES

247

new facilities. Program emphasis in 1970 will include research to
increase the safety of coal mining by control of highly explosive
methane liberated during the mining process.
The Department of the Interior will support in 1970 a new cooperative program of research on underground electric power transmission
in collaboration with private and public organizations and with other
Federal agencies. Research and development will be continued on
the water quality aspect of cleaning up spills of oil and other hazardous
cargoes.
The Department will also conduct experiments using data to be
collected by the NASA Earth Resources Technology Satellites to test
the usefulness of satellite data in the management of natural resources.
DEPARTMENT OF TRANSPORTATION

Obligations of the Department of Transportation for research and
development, including facilities, will increase from $177 million in
1969 to $246 million in 1970.
In the Office of the Secretary, obligations will increase from $10 million in 1969 to $25 million in 1970 for programs of broad applicability
to the Nation's transportation problems, and for special programs such
as hazardous materials and pipeline safety.
Within the Department's operating programs, the largest increase—
from $19 million in 1969 to $45 million in 1970—is in the Urban Mass
Transportation Administration. Its activity will be directed to developing, testing, and demonstrating new ideas, methods, and technology for improving mass transportation systems and services.
The Federal Highway Administration research and development
program will increase from $40 million in 1969 to $57 million in 1970.
The increase reflects further emphasis on automotive and highway
safety and improved traffic systems.
The Coast Guard will obligate $28 million for the support of research and development in 1970, $9 million over its 1969 level. The
increase is mainly for the national ocean data buoy system development project.
Research and development in the Federal Aviation Administration
will increase from obligations of $49 million in 1969 to $59 million in
1970. Principal increases are for research on air traffic control and
on noise abatement. The civil supersonic aircraft program is not included in this analysis.
The Federal Railroad Administration will obligate $18 million in
1970 for research and development activities, a decrease of $7 million
below 1969 largely due to completion of the funding of two demonstrations projects (Washington to New York and Boston to New York).
The FRA will expand its 1970 program to include a test facility for
new high-speed ground vehicles and components.
COMMERCE

The Department of Commerce will obligate $85 million for the
conduct of research and development in 1970, an increase of $3
million over 1969.




248

THE

BUDGET FOR FISCAL YEAR

1970

The Environmental Science Services Administration will strengthen
its research in support of the World Weather Program, which will
lead to more reliable and longer range weather forecasts. Additional
effort will also be devoted to improvements in the detection and
tracking of violent storms and automation of aeronautical charting
production.
The National Bureau of Standards will expand efforts in materials
measurements and standards, development of automatic data processing standards, building technology, and the dissemination of reference
data. Major emphasis will be given to implementation of the Fire
Research and Safety Act of 1968 and to the conduct of a study of the
consequences of U.S. conversion to the metric system.
GOVERNMENT-WIDE MARINE SCIENCE AND SPACE PROGRAMS
MARINE SCIENCE

Obligations for marine science, technology, and related activities in
1970 in 11 agencies are expected to increase by 12% over 1969. Increases in 1970 are primarily in the Navy where obligations are expected to increase by $36 million or 14% and are principally for the
deep submergence program, operating costs of new oceanographic
vessels, and increased capabilities for the mapping, charting, and
geodesy programs. Civilian activities are expected to increase by 9%,
principally for oceanographic research sponsored by NSF and research
and development on advanced ships and systems in the Department
of Commerce. In addition, $9.8 million is planned in 1970 for the
Coast Guard ocean data buoy development project which is designed
to serve the needs of all agencies.
Table Q-8. FEDERAL MARINE SCIENCE, TECHNOLOGY AND RELATED
ACTIVITIES * (in millions of dollars)
Department or agency

Defense
Interior
National Science Foundation
Commerce
Transportation
Atomic Energy Commission
State
Health, Education, and Welfare
Agency for International Development
Smithsonian Institution
National Aeronautics and Space Administration
Total obligations

1968
actual

1969
estimate

1970
estimate

241
71
38
34
15
14
7
6
3
2
2

262
76
35
33
34
10
7
7
3
2
2

298
78
45
41
32
11
7
7
5
2
2

432

472

58
2

1
The definition of marine science and technology used in this table is considerably broader than
research and development. Included are such diverse activities as mapping and charting, marine
environmental observation and prediction, planning for and development of coastal areas for conservation and recreation, loans for promoting the expansion of fishing industries in developing countries, and contributions to international organizations engaged in ocean related activities. The figures
in this table are not comparable to those shown for marine science and technology last year because of
changes in definition and accounting.




249

SPECIAL ANALYSES

SPACE

Budget authority and expenditures for total Federal space programs will decline in 1970, primarily because of the drop in annual
costs of the Apollo manned lunar landing program.
The operational meteorological, communications, and navigation
satellite systems of the Departments of Commerce and Defense are
included in the space program totals although they are not included
in the totals for research and development.
NASA programs are described on page 243 and table Q-6.
The estimates for the Department of Defense include satellite development and certain other amounts which contribute to the space
effort, such as portions of missile development, range operations, and
various supporting research, development, and operating costs. The
table includes funds for the Manned Orbiting Laboratory; the communications, navigation, and nuclear detection satellite programs;
the Titan III space booster; and 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 operation of the meteorological satellite system.
The Interior and Agriculture funds support research on remote sensing
of earth resources including participation in the multiagency Earth
Resources Technology Satellite project. The amounts for the National
Science Foundation are for research in astronomy using rockets and
satellite-borne observation instruments.
Table Q-9. FEDERAL SPACE PROGRAMS (in millions of dollars)
Expenditure

Budget authority
Department or agency

National Aeronautics and Space
Administration1
Defense
Atomic Energy Commission
Commerce. _ _ _ _
Interior
National Science Foundation _
Agriculture
Total

1968
actual

1969
estimate

4,452
1,922
145
28
2

3
6,553

1970
estimate

3,845
2,083
117
20
2
3
1

2 3,599
2,219
105
10
6
4
4

6,071

5,946

1969
estimate

1970
estimate

4,595
1,890
146
29
2
3
*

4,097
2,095
117
27
2
3
1

3,791
2,175
108
32
3

6,667

6,343

6,116

1968
actual

4
4

"Less than $500 thousand.
Excludes amounts for aircraft technology.
Excludes $117 million in unobligated funds from prior years to be applied to the 1970 program.

1
2




250

THE BUDGET FOR FISCAL YEAR

1970

HISTORICAL SUMMARY

The table below gives historical data on total research and development expenditures by major agency.
Table Q-10. EXPENDITURES FOR RESEARCH AND DEVELOPMENT, 1 1954-70
(in millions of dollars)
Fiscal year

1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
.
.
1968
1969 estimate
1970 estimate
1
2
3

Department of
Defense 2

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
8,148
8,036
8,254

NASA 3

AEC

D/HEW

4
9
15

Other

90
74
71

383
385
474

63
70
86

76

657

144

31

183

89
145
401
744
1,257
2,552
4,171
5,093
5,933
5,426
4,724
4,250
3,950

804
877
986
.111
,784

180
253
324
374
512

33
51
58
77
105

220
293
315
356
403

,W

632

142

478

,505
,520
,462
,467
,593
,668
,771

793
738
879
1,075
1,250
1,181
1,321

190
192
225
277
315
336
348

519
604
768
917
835
954
1,106

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




NSF

121
140
161

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
16,842
16,865
16,425
16,700

PART 4

ANALYTIC PROGRAM
STRUCTURE




251

INTRODUCTION
Part 4, Special Analysis R provides a new look at the budgets of a
number of the larger agencies, classified in terms of the program structures used for study and decisions in the agency Planning-ProgramingBudgeting systems.
The program categories and subcategories contained in these
program structures have been tailored to reflect the purposes and
activities of each agency, and to suit its own presentation and decisionmaking needs; they are not, therefore, designed to make interagency
comparisons. The use of similar wording or titles in the program
structure of more than one agency is not necessarily indicative of
comparable content across agency lines.
The program structures do not always conform to the organizational structure or appropriation pattern of an agency. This presentation, therefore, provides a different perspective from the view presented in Part 4 of the Budget, and cannot be directly interrelated
with those data.
252




SPECIAL ANALYSIS R
SELECTED AGENCY BUDGETS BY PROGRAM CATEGORIES

The tabulations shown in this analysis reflect for 3 years—1968,
1969, and 1970—the programs of selected agencies as classified in the
categories and subcategories used in the agency Planning-ProgramingBudgeting (PPB) systems.
While program structures have hitherto been published for most of
the major agencies, this is the first time that data on budget authority
have been presented in these terms. Since all agencies have not reached
an equal stage of PPB development, some executive agencies in the
Federal Government are not covered in this analysis.
T H E PPB

SYSTEM IN THE FEDERAL GOVERNMENT

Installation of the Planning-Programing-Budgeting system on a
Government-wide basis was initiated by the President in August 1965.
PPB is an effort to promote more systematic use of modern management tools that have been demonstrated to be of value in Government.
The PPB approach was employed to enable the Government agencies
and the President to:
• Identify national goals with greater precision and determine which
goals are the most urgent;
• Develop and analyze alternative means of reaching goals most
efficiently;
• Provide information on the total long term systems cost of
programs on a basis that can be related to the benefits derived
from each program;
• Set out specific proposed plans for several years ahead to achieve
stated objectives; and
• Permit better control over programs and budgets by strengthening measurement and analysis of program performance in relation
to costs.
PROGRESS UNDER THE PLANNING-PROGRAMING-BUDGETING SYSTEM

While the impact of PPB is still of modest proportions in the civilian
agencies, its effects are bedoming evident.
• Most major agencies have created a PPB System to carry out
the President's directive. Many of these agencies have dedicated
staff resources specifically to the PPB process.
• These agencies, with only a few exceptions, have established end
purpose-oriented PPB program structures, as illustrated in the
tables, enabling them to classify their funds by major program
categories and subcategories. These program structures were used,
in varying degrees, in the decisionmaking process leading to the
budgets for 1968, 1969, and 1970.
• Major program issues are being identified in advance of the time
when budget decisions have to be made and subjected to
systematic analysis.
• The introduction of PPB has provided an impetus toward
increased use of formal analysis in the decisionmaking process.
The development and consideration of alternatives has been




253

254

THE BUDGET FOR FISCAL YEAR

1970

stepped up, both in the programing stage and at the budget decision stage. The emphasis on cost effectiveness analysis as part of
the analytical effort has drawn attention to ways of achieving
given objectives at least cost, or attaining maximum results from
given outlays. Benefit/cost analysis, which had been previously
practiced chiefly in the military agencies and the water resources
field, is now underway on various programs in most major
agencies of Government.
• As experience has been gained, the various elements of the PPB
approach and the annual budget process gradually are being more
effectively interrelated, so that the analytical results of PPB are
playing a greater role in decisionmaking for the annual budget.
PROGRAM DISTRIBUTION OF BUDGET AUTHORITY

The following tables for each agency distribute budget authority
by PPB program category and, in many cases, by subcategory. In
preparing the 1970 budget, a substantial portion of the budget review
process was carried out in these program structure terms. However,
the budget is presented to and acted upon by Congress in terms of
the appropriation structure as presented in the Budget Appendix.
The amounts shown by program category and subcategory in. this
analysis are derived by distribution of the appropriation totals. This
distribution, is only as precise as the underlying agency accounting
system permits. Statistical allocations have been used where necessary
to distribute the appropriation amounts to the program structure.
Not all budgetary items are covered by the program structure. For
example, adjustments to agency budget authority totals for proprietary receipts from the public are usually not related to the program structure. Each table, however, reconciles the total amounts
shown in program structure terms to total budget authority for the
agency—identifying items excluded from the program structure and
any necessary adjustments.
Seventeen agencies are covered by this special analysis; they account for $200.2 billion, or 95 percent of the total proposed budget
authority of $210.1 billion for 1970 for the entire Federal Government. The budget authority not covered in this analysis is largely
accounted for by numerous smaller agencies, most of which have not
been required to install a PPB system. Many of the agencies not included, however, are employing PPB techniques in varying degrees.
DEPARTMENT OF AGRICULTURE

The programs of the Department of Agriculture seek to provide
an adequate supply of food, fiber, and timber; maintain farm income;
improve the nutritional level and protect the health of the entire
population; and promote the continuing development of rural areas.
To achieve these goals the Department performs research, education,
conservation, marketing, regulatory, domestic and foreign food
aid, agricultural adjustment, credit, insurance, national forest management and rural development activities.
The program structure shown below consists of a set of subcategories representing the major missions of the Department. The
subcategories are grouped under four major categories representing
the broad unifying goals that provide a focus for the Department's
program planning efforts, and one general support category.




SPECIAL

255

ANALYSES

Table R - l . PROGRAM D I S T R I B U T I O N O F BUDGET AUTHORITY
(in millions of dollars)
Program category and subcategory

Income and abundance:
Farm incomeAgricultural production capacity
Agricultural marketing and distribution system

1969
estimate

1970
estimate

_

General support:
General administration
Program support
Category total
Total distributed to Drosrams above
Deductions for offsetting receipts
Total budget authority, Department of Agriculture. _.

1,017.7
28.1
11.5
7.5

400.9

1,064.8

1,041.8
110.8
22.5
44.9

1,102.7
134.1
23 5
45.7

1,220.0

1,305.9

29.1
253.0
430.2
245.7
60.7
326.6

31.0
29.7
354.6
215.6
63.6
333.4

40.0
62.6
371.6
204.3
67.9
337.3

1.345.3

1,027.8

1,083.8

4.8
39.9

5.1
45.4

43.4

_

301.1
88.8
3.5
7.4

4.6
38.8

Communities of tomorrow:
Community development services
Housing
Public facility and business expansion
Resource protection and environmental improvement
Recreation, wildlife, and natural beauty.
Timber

4,632.9

1,062.6

Category total

6,059.7

912.0
84.4
21.7
44.5

Dimensions for living:
Diets and nutrition
Health and safety
Education and training
Services for living. __

4,023.2
496.4
113.4

1,699.9

Category total

5,358.5
586.6
114.6

1,606.6
79.9
6.2
7.2

Growing nations—new markets:
Food for Freedom
Export market development
Agricultural development _
International agricultural services

3,359.1
606.1
108.4
4,073.7

Category total

Category total

1968
actual

44.7

50.4

8,224.8
-395.4

8,753.2
-415.1

8,137.8
-435.0

7,829.4

8,338.1

7,702.8

DEPARTMENT OP COMMERCE

The statutory functions of the Department of Commerce are to
foster, promote, and develop the foreign and domestic commerce and
the manufacturing and shipping industries of the United States.
Related functions include the promotion of area and regional economic
development and performance of Government scientific and technical
activities. These progams are conducted in appropriate relation to
the overall requirements of business and industry as well as to the
broad social and economic objectives of the Nation.
The Department's functions are grouped into eight program
categories as shown in the following table:



256

THE BUDGET FOR FISCAL YEAR 1970
Table R-2. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
(in millions of dollars)
1968

Business development:
International business development
Promotion of travel to the United States.
Business assistance
_i
Export control .
Foreign direct investment control__

20.0
4.5
8.3
5.5
3.7

28.5
6.0
8.7
5.5
4.7

32.5

41.9

53.4

156.1
26.0
20.3
17.9
18.4
21.1
19.8

117.0
53.5
16.7
18.4
30.0
26.2
20.4

94.5
84.1
25.0
18.7
31.5
35.7
22.0

279.6

282.2

311.5

34.1
2.9
2.6
4.2

42.8
3.1
3.0
.2

167.4
3.3
3.0
.2

43.9

49.1

174.0

77 J
3.9
12.5
18.0
3.6
30.6
4.8
13.6
1.0

83.8
4.1
13.0
19.3
4.2
22.5
5.6
13.3
1.2

90.5
4.6
13.9
20.9
3.9
12.3
5.5
13.8
1.2

165.7

166.9

166.6

11.0
15.8
5.0

13.1
17.5
5.8

14.2
18.7
7.2

_-

31.7

36.4

40.0

-

364.7
9.4
5.4
14.8

345.8
6.9
5.5
14.2

247.6
11.3
5.4
15.8

394.3

372.4

280.0

_ -

_ _ __
-__ __
_

_-__
_
__

Category total
General purpose data production, analysis, and statistical
services:
Data production
National income and product accounts
Statistical assistance and services__
Data processing equipment and systems development
Category total

_ ___

Physical environment:
Weather and marine forecasts and warning services
River and flood prediction and warning services
Elarth description, mapping, and charting services
Marine description, mapping, and charting services
Telecommunications and space services
Environmental satellite services
_
_
Environmental data services
Research
Retired pay, commissioned officers
Category total
Physical measurements and standards program:
Basic measurements and standards __
Materials measurements and standards
Technological measurements and standards
Category total
Marine transportation:
Active foreign trade capability
Research and development
Reserve capability for emergency needs
General support
Catejiorv total




1970

16.4
3.0
7.8
5.4

Category total
Area and regional development:
Areas
Districts
-_
Urban areas __ __
Special problem areas _ __
Indian areas __
_
Regional development
__
General administration

1969

- -__ --

257

SPECIAL ANALYSES

Table R-2. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY—Con.
(in millions of dollars)
1968
actual

Technology:
Intellectual-industrial property protection
State technical services
Information dissemination
Innovation policy and encouragement

1969
estimate

1970
estimate

Total distributed to programs above
Deductions for offsetting receipts
Intragovernmental transactions
Total budget authority, Department of Commerce

46.1
5.8
4.6
.2

52.4

56.8

4.7

General administration

42.5
5.3
4.3
.2

48.6

Category total

38.8
6.5
3.0
.2

5.2

5.8

_ __ 1.000.9
-26.3
__
-4.7

1.006.4
-21.3
-6.8

1.088.1
-21.8
-5.7

969.9

978.3

1.060.5

DEPARTMENT OF DEFENSE—MILITARY

The military programs of the Department of Defense provide for
the security of the United States. Forces are grouped—regardless of
the branch of military service—according to the national security
missions or programs to be accomplished as shown below:
Table R-3. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
(in millions of dollars)
Program category

1968
actual

1969
estimate

1970
estimate

Strategic forces
General purpose forces.
Intelligence and communications
Airlift and sealift
Guard and Reserve forces
Research and development
Central supply and maintenance
Training, medical, and other general personnel activities
Administration and associated activities__
Support to other nations
Retired pay___

7,364.5
31,124.3
5,492.4
1,813.0
3,166.0
4,395.4
8,175.4
9,358.3
1,292.1
1,736.8
2,095.0

8,309.6
29,606.0
5,697.2
1,402.0
2,565.5
4,598.0
8,662.8
9,481.7
1,404.3
2,450.7
2,450.0

9,087.4
29.856.3
5,832.4
1,889.2
2,848.6
5,500.3
8,848.8
9,967.8
1,407.3
2,408.8
2,735.0

Total distributed to programs above
Undistributed nonprogram financing adjustments

76,013.0
415.5

76,627.8
-132.9

80,381.8
-144.3

76,428.5

76,494.9

80,237.5

Total budget authority, Department of Defense..

340-700 O—69



17

258

THE BUDGET FOR FISCAL YEAR

1970

DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE

The Department has responsibility for the administration of a
broad range of Federal healtn, education, and welfare programs.
Its programs have been grouped into four program categories and
an overall management category as shown in the table below. Each
program category is further divided into subcategories according
to major purpose.
Table R-4. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
(in millions of dollars)
Program category and subcategory

Education:
Development of basic skills
Development of vocational and occupational skills
Development of academic and professional skills
Library and community development
General research (nonallocable research)
General support
Category total
Health:
Development of health resources
Prevention and control of health problems
Provision of health services
General support
Category total
Social and rehabilitation services:
Improving individual capability for self-support
Improving the social functioning of individuals and families. _
General development of social and rehabilitation resources
General support
Category total
Income maintenance:
Aged assistance
Disability assistance
Other, individual and family support
General support and increasing knowledge
Category total
Executive direction and management (Office of the Secretary)
Total distributed to programs above
Net deductions for interfund transactions and receipts from the
public not distributed above
Total budget authority, Department of Health, Education,
and Welfare 1

1968

1969

2,389.0
269.3
1,330.9
87.9
25.7
35.5

2,289.3
268.3
966.2
86.8
25.6
41.3

2,179.0
304.1
1,020.7
96.0
31.1
45.3

4,138.3

3,677.5

3,676.2

2,315.0
457.1
7,345.7
48.5

2,185.7
480.8
9,980.3
54.9

2,395.6
480.5
10,739.0
64.4

10,166.5

12,701.8

13,679.4

408.9
225.7
114.6
32.0

596.4
321.5
127.9
37.7

853.6
399.2
132.6
43.1

781.3

1,083.5

1,428.5

1970

18,476.8 21,339.4 24,787.0
3,207.0 4,196.6 4,842.6
7,755.5 9,5.00.6 10,769.6
236.4
277.0
327.3
29.675,7

35,313.6 40,726.5

24.0

25.0

35.2

44,785.8

52,801.5

59,545.8

-97.5

-964.4

-522.3

44,688.2

51,837.1

59,023.5

1
While the budget authority for the Department of Health, Education, and Welfare agrees with
that shown in the budget document, there may be minor differences in the distribution among
categories and subcategories. These result from some differences in classification of budget authority.
For example, emergency health in Part 3 is classified as National Defense and is therefore excluded
from the health tally in Part 3. It has however been included in the budget authority shown above.




259

SPECIAL ANALYSES

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

The Department has the responsibility for administering the principal Federal programs which provide assistance for housing and for
the development of the Nation's communities; assisting the President
in coordination of Federal activities which affect urban community,
suburban, or metropolitan development; encouraging local and
private solution of housing and urban development problems; promotion of interstate, regional, and metropolitan cooperation; and
increasing the efficiency of the private homebuilding and mortgage
lending industries. These activities are grouped below in five major
program categories plus supporting services.
Table R-5. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
(in millions of dollars)
Program category and subcategory

Assuring decent housing for all Americans:
Assuring an adequate supply of low- and moderate-income
housing. _ _
___
Promoting the efficient functioning of private housing markets..

1968
actual

1969
estimate

1970
estimate

3,148.3
1,062.9

1,300.8
296.5

746.2

4,211.2

1,597.3

748.7

Assuring adequate and efficient local public and private facilities and services

402.3

202.8

195.7

Improving the physical environment of urban communities

850.0

1,062.5

1,112.2

212.0

312.5

750.0

4.0

14.5

212.0

316.5

764.5

45.0

43.8

65.0

Category total

Improving the social environment of urban communities:
Creating model neighborhoods in demonstration cities
_
Assuring equal opportunity in access to housing and other
facilities
Category total
Improving management of community development activities:
Improving governmental planning and executive management
of community development
Improving urban information and technical assistance support
to State and local governments
Additional education and training for efficient urban development and management
Category total
Improving management of departmental programs and resources:
Research and demonstrations in urban technology
Provide executive direction and general support
Category total
Total distributed to programs above
Intragovernmental transactions and other adjustments, net.
Total budget authority, Department of Housing and
Urban Development




2.5

5.0

2.2
3.5

3.5

9.0

50.7

47.3

79.0

10.0
50.1

18.3
57.0

32.7
74.1

60.1

75.3

106.8

5,786.3
-.5

3,301.7
-58.5

3,006.9

5,785.9

3,243.2

3,006.9

260

THE

BUDGET FOR FISCAL YEAR

1970

DEPARTMENT OF THE INTERIOR

The Department of the Interior is concerned with the management,
conservation, and development of the Nation's water, energy,
minerals, fish, wildlife, forest, and outdoor recreation resources. It also
has major responsibilities for Indian and territorial affairs. The
Department's functions are grouped into the following nine major
program categories:
Table R-6. PROGRAM DISTRIBUTION OF B U D G E T A U T H O R I T Y
(in millions of dollars)
Program category

1968
actual

1970
estimate

671.7
218.3
42.0
118.7
50.0
366.5
361.4
58.2
85.6

652.8
209.5
40.2
121.2
49.5
429.0
351.0
55.8
93.8

667.6
223.6
41.6
118.3
51.4
422.3
359.4
69.2
97.5

1,972.4
-1,518.1
-38.9

2,002.9
-1,477.2
-32.0

2,050.8
-1,568.2

415.3

493.7

482.6

Water supply and control
Energy production, distribution, and supply
Minerals exploration, production, and supply
Land-forage-timber
Aquatic living commercial resources
Recreation use and preservation
Indians
Territories
Other programs
Total distributed to programs above
Deductions for offsetting receipts
Intragovernmental transactions

1969
estimate

Total budget authority, Department of the Interior

DEPARTMENT OF JUSTICE

The chief purposes of the Department of Justice are to provide
means for the enforcement of the Federal laws, including those pertaining to immigration and naturalization; to furnish legal counsel in
Federal cases; to construe the laws under which other departments
act; and to provide assistance to States and localities in law enforcement. It conducts all suits in the Supreme Court in which the United
States is concerned, supervises the Federal penal institutions, and
investigates and detects violations against Federal laws. It represents
the Government in legal matters generally, rendering legal advice and
opinions, upon request, to the President and to the heads of the executive departments. The Attorney General supervises and directs the
activities of the U.S. attorneys and marshals in the various judicial
districts, and coordinates much of the Federal activity which seeks to
assure civil rights. The Department's programs are grouped into 11
major categories as shown below.




261

SPECIAL ANALYSES
Table R-7. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
(in millions of dollars)
Program category and subcategory

Reduction of crime:
Organized crime
Interstate crime
Federal crime
Crime prevention

1968
actual

Correction of offenders:
Custody and physical security of offenders
Inmate care and maintenance and operation of institutions
Rehabilitation of offenders
Assistance to non-Federal correctional systems

138.6

143.7

1.7
3.3
.3

19.0
29.0
3.0

20.0
230.0
22.8

25.0
.5

36.4
2.2

49.8
3.8

89.6

326.3

12.3
38.3
14.1

__

20.1
52.5
69.2
1.8

30.7

Law enforcement assistance:
Improvement of State and local law enforcement planning
Improvement of State and local law enforcement operations. __
Research and development of devices, systems, and procedures.
Support to law enforcement personnel for education and
training
General support

18.4
50.9
67.5
1.7

124.6

Category total

12.1
37.5
13.7
.1
.4
.8
64.6

14.2
49.1
17.1
2.6

.3
16.5
.9
.2

*j

Research
General support

.L

_

.9
65.8

Category total
Control of narcotics and dangerous drug abuse:
Identification of dangerous drugs
Control of traffic in narcotics and dangerous drugs
Treatment of narcotics and dangerous drug offenders
Law enforcement assistance
Public education
Research _
General support

.9
84.9

.9
1.8

7.0

20.7

29.3

19.6

21.6

22.3

1.2
.5
26.2
.1

1.3
.6
28.2
.1

1.3
.6
28.9
.1

47.6

51.7

53.2

1.7
.4
1.2
11.7
1 A
1.4
.4
.6

2.0
.9
1.4
13.3

2.1
1.2
1.6
13.8

1 7

1 7

2.0

2.3

3.7

19.4

22.0

24.8

.1

Category total
Civil rights and community relations:
Equal employment opportunity
Housing
Public education
_ _
Interference with civil rights




i

1.1

.4
.3

_

Internal security and governmental integrity:
Integrity of Government personnel
Security of Government, Government programs, and Government property
Security of Government international affairs
Identification, exposure, and control of subversive movements_
General support

Category total

i

.4
20.7
3.3
.4
.4
1.3
2.8

6.0
.2

Category total

Federally assisted programs
Public accommodations and facilities
Community relations assistance

1970
estimate

15.1
45.4
62.8
1.3

...
*

Category total

1969
estimate

.._

.4
.2

.5
.2

262

THE BUDGET FOR FISCAL YEAR

1970

Table R-7. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY—Con.
(in millions of dollars)
Program category and subcategory

Competition in the American economy:
Anticompetitive conduct
Anticompetitive market structures
Governmental intervention and influence

1969

1970

Immigration and naturalization:
Control of persons entering the United States. __
Control of aliens in the United States
_
Naturalization
Central information record
General support
Category total
General support:
Executive direction
Personnel
Information.
Administrative services.
Category total
Total distributed to programs above
Deductions for offsetting receipts
._
Total budget authority, Department of Justice

9.4

7.1
5.6
5.1
4.1
2.8
1.2

7.6
6.2
5.9
4.6
3.0
1.4

8.1
6.6
6.4
5.0
3.3
1.6

25.8

28.7

30.9

.1
17.0
1.2
1.1

.1
18.4
1.4
1.2

.1
19.8
1.6
1.3

21.0

22.8

45.3
25.4
4.5
7.1
4.6

48.0
26.0
4.9
7.4
4.9

50.3
27.1
5.0
8.0
5.0

91.3

95.4

2.5
.5
.7
3.2

3.3
.5
.7
4.2

6.2

Category total

8.8

2.4
.4
.5
2.9

Support of the Federal judicial system:
Recommendations of judicial appointments
Facilitation of litigation
Protection of the integrity of the judicial system
General support

4.6
3.7
1.1

87.0

_

4.3
3.5
1.0

19.5

Legal representation and advice to Federal officers and agencies:
Integrity of the revenue system
Defense of monetary claims
__
Recovery of money owed the United States
__
Integrity of administrative action
_
Land acquisition
Protection and development of natural resources

4.0
3.2
.9
8.2

Category total

Category total. __

1968

6.8

8.7

441.9
-4.4

543.7
-4.6

829.4
-4.6

437.5

539.1

824.8

DEPARTMENT OF LABOR

The basic goals of the Department of Labor are to increase the
employment and productive potential of the civilian labor force,
particularly the disadvantaged; to minimize the effects of unemployment by providing income support; and to promote and protect the
rights and interests of all Americans who are actual or potential
members of the work force.




263

SPECIAL ANALYSES

Programs to achieve these overall goals are carried out by the
Department's constituent bureaus and other organizations under a
variety of subgoals and objectives. At present, the Department's programs are grouped into six major program categories plus a general
support category as follows:
Table R-8. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
(in millions of dollars)
Program category and subcategory

Manpower development assistance:
Training
Special manpower programs
Work programs
Research
Policy planning and evaluation
Comprehensive manpower program planning.
Information
Manpower management data systems
Administration
Category total.
Employment assistance:
Employment market information
Job development and placement services.
Employability assistance
Civil rights compliance
Administration
Category total.
Income maintenance:
Unemployment insurance
Workmens compensation
Unemployment trust fund (excluding amounts distributed to
other subcategories)
Administration
Category total.
Wage and labor standards:
Wages and working conditions
Occupational fatalities and injuries
Utilization of women workers
Research in the area of wage and labor standards .
Administration
Category total.
Labor-management relations:
Administration of reporting and disclosure laws.
Veterans reemployment rights
Labor-management relations assistance
Research and policy development
Administration
_..
Category total.




1968

1969

396.4
20.3
13.0
50
.
20
.
.
1
.
8
23
.

412.2
15.8

666.3
18.0

50
.
24
.
.
2
.
8
26
.

52
.
26
.
34.0
.
8
35
.
30
.

439.9

439.0

733.4

18.0
145.6
69.3
11
.
80.8

20.3
143.9
91.0
.
9
86.3

21.1
149.2
94.5
.
9
90.3

314.9

342.4

356.0

93.0
61.4
3,461.8
13.6
3,629.9

154.5
69.5
3,407.9
20.7
3,652.6

116.9
60.9
3,716.2
21.2
3,915.2

23.3
26
.
.
7
22
.
16
.

25.3
29
.
.
7
22
.
22
.

30.4

33.3

25.3
34
.
.
8
23
.
22
.
34.0

1970

66
.
.
8
.
3
.
3
.
6

68
.
10
.
.
4
.
3
.
6

69
.
12
.
.
4
.
3
.
6

86
.

90
.

94
.

264

THE BUDGET FOR FISCAL YEAR 1970

Table R-8. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY—Con.
(in millions of dollars)
Program category and subcategory

1968
actual

Data collection, analysis, and dissemination:
Manpower and employment statistics
Prices and living conditions
Wages and industrial relations
Productivity, technology, and growth
Foreign labor and trade
Field services
Administration
Revision of the Consumer Price Index

7.7
3.5
3.5
1.2
.5
1.2
3.5

1969

1970

8.2
3.6
3.6
1.4
.5
1.3
3.5

8.7
3.7
3.7
1.4

.5
1.3
3.6
.6

21.0

22.0

23.5

4.4
4.8
1.3

4.9
5.2
1.4

5.1
5.1
1.4

10.6

Category total-

11.4

11.6

4,455.3
-3.2

4,509.7
-.6

5,083.1
-4.1

General support:
Executive direction and management-.
Legal services
International labor activities
Category totalTotal distributed to programs above
Deductions for offsetting receipts
Pay supplemental and other separate transmittal _
Total budget authority, Department of Labor _

1.8
4,452.1

4,510.9

5,079.0

POST OFFICE DEPARTMENT

The program structure of the Post Office Department is descriptive
of the major functions involved in providing postal services from
the acceptance of mail through delivery and the supporting activities
required to maintain an effective service. Currently, the Department's functions are grouped into eight program categories as
shown below.
Table R-9. PROGRAM DISTRIBUTION OF BUDGET

AUTHORITY

(in millions of dollars)
Program category

Direct services to mailers
Processing of mail.
Delivery services
Transportation
Enforcing postal laws and regulations
Research, development, and engineering
Administrative postal support
Logistical postal support
Total distributed to programs above
Financing adjustments
Postal revenues
Total budget authority, Post Office Department.




1968
actual

1969
estimate

1,273.8
1,453.1
2,053.6
602.9
24.9
22.1
441.2
764.2

1,400.2
1,585.8
2,244.4
630.0
28.2
34.0
522.7
899.1

1,438.7
622.8
295.5
645.0
32.0
50.0
576.2
1,095.9

6,635.8
61.9
-5,505.3

7,344.4
-20.9
-6,287.6

7,756.2

1,192.4

1,036.0

749.8

1970
estimate

265

SPECIAL ANALYSES
DEPARTMENT OF TRANSPORTATION

The broad objectives of the Department of Transportation are to:
• Increase economic efficiency through improved transportation;
• Increase safety in transportation;
• Increase the benefits derived from the preservation and enhancement of environmental social values, when impacted by transportation; and
• Support other national objectives, such as national defense and
scientific research.
The objectives of the specific programs of the Department are identical with, or in support of, these broad departmental objectives. The
Department's programs are grouped into four major program categories plus a general support category as follows:
Table R-10. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
(in millions of dollars)
Program category and subcategory

1968
actual

1969
estimate

1,868.0

2,153.2
168.5

2,171.3
202.0

Category total

1,868.0

2,321.7

2,373.3

Interurban transportation:
Highways.
Rail .
Air . . . .
Water
IntermodaL. _

2,804.0
16.0
679.7
181.6
2.5

3,238.4
18.6
829.3
184.5
2.4

3,281.2
23.3
1,156.8
194.5
2.4

Category total

3,683.9

4,273.2

4,658.1

International transportation:
Highways.
Air
Water

5.0
143.9
59.6

2.0
1.4
58.4

1.4
49.3

Category total

208.4

61.8

50.8

93.7
9.4
153.5
129.4

90.7
25.8
141.1
104.0

89.1
21.5
177.7
106.5

Category total

386.1

361.7

394.8

General support:
Research and development
General highway planning
Administration
Coast Guard retired pay

33.1
54.8
251.2
48.2

37.1
61.9
288.6
52.4

59.5
62.2
318.6
55.7

Category total

387.3

440.1

496.1

6,533.7
-19.7
-15.1

7,458.5
-27.8

7,973.0
-20.4

6,498.9

7,430.7

7,952.6

Urban transportation:
Highways, _ _ _
Urban mass transit. _

Other national interests:
National security, boundaries, and treaties
Support of science
General transportation safety
Other highway programs

_

Total distributed to programs above
Deductions for offsetting receipts
Intragovemmental transactions
Total budget authority, Department of Transportation

340-700 0—69



-18

1970
estimate

266

THE BUDGET FOR FISCAL YEAR 1970
DEPARTMENT OF THE TREASURY

The Treasury Department is responsible for the central fiscal operations of the Federal Government. The Treasury PPB system deals
with the operating elements of the Department, which are funded
mainly through annjal appropriations but also receive a substantial
amount of reimbursements and other miscellaneous funds.
The Department's functions are grouped into program categories
as shown in the table. Not included in the PPB structure is interest
on the public debt, which accounts for most of the budget authority
for the Department, and several permanent appropriations which are
aggregated in the adjusting entry in the table.
Table R-11. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
(in millions of dollars)
Program category and subcategory

Administration of Government finances:
Public debt
...
Issuance, payment, and servicing of Government checks _
General activities
Category total.
Collection of revenue:
Revenue accounting and processing
Taxpayer assistance and services
Delinquent accounts operation
Delinquent returns operation
___
Audit of tax returns
Tax fraud investigations—taxpayers in general
Taxpayer appeals
Alcohol and tobacco revenue and regulatory controls _
Collection of customs duties
General activities
Category total.
Manufacture and distribution of coins, currency, and other financial instruments
Special law enforcement:
Tax fraud investigations—racketeer segmentAlcohol and firearms investigations
Other investigations
Security responsibilities
General activities
Construction of facilities
Category total
Policy determination and related activities.

1968
actual

1969
estimate

1970
estimate

55.9
37.9
4.8

58.5
43.9
4.6

44.9
4.5

98.6

107.0

110.4

143.6
62.3
78.4
22.4
237.6
27.1
33.2
16.0
78.2
48.9

151.2
68.7
85.6
23.2
262.4
27.3
35.6
18.0
87.4
56.4

158.1
69.8
89.4
28.8
281.7
25.9
37.4
19.8
93.3
63.3

747.8

815.8

867.5

14.2

15.2

19.4

9.5
19.8
26,2
7.9
.1

14.9
22.3
24.7
10.3
.1
.8

61.0

17.2

25.9
28.4
12.9
.1

1.9

63.5

73.1

86.4

7.0

7.8

8.5
1,092.2

Total distributed to programs above
Items not included in the program structure:
Interest on the public debt
Other appropriations not included in the program structure.
Deductions for offsetting receipts
Intragovernmental transactions

931.1

1,018.9

14,573.0
312.7
-1,077.2
-82.0

16,000.0
303.0

Total budget authority, Treasury Department .

14,657.6

16,257.2




16,800.0
278.4
-978.4 -1,115.2
-86.3
-81.4

16,974.0

267

SPECIAL ANALYSES
ATOMIC ENERGY COMMISSION

The Atomic Energy Commission conducts a variety of production,
research and development, and supporting activities to discharge its
responsibilities for national defense and the peaceful applications of
atomic energy. The agency's functions are grouped into eight major
program categories, as follows:
Table R-12. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
(in millions of dollars)
1968

Procurement and production of source and special nuclear materials:
Procurement of uranium concentrates
Production of special nuclear materials

1970

125.5
360.4

_

- _ -

Category total
Development of central station nuclear power:
Converter reactors
Advanced converter and low-gain breeder reactors
High-gain breeder reactors
Desalting applications
General research and development

-

Category total
Development of other civilian applications:
Merchant shiD DroDuIsion reactors
Terrestrial electric power development
Isotopes development
- Civilian applications of nuclear explosives
_




-

1,139.4
128.5

950.4
139.8

1,267.9

1,090.2

59.1
51.7

55.5
38.8

110.8

94.4

26.0
31.8
163.2
7.9
3.0

19.5
32.8
116.6
5.0
2.8

166.9

Development of space applications:
Soace DroDuIsion
Space electric power

886.8
U5.0

24.2
52.0
84.5
2.8
3.4

Category total

427.8

128.9

-- -

475.4

72.8
56.1

- -

66.3
361.5

1,001.7

Military applications:
Nuclear weapons
Naval propulsion reactors

104.3
371.1

485.8

Category total

Category total

1969

231.9

176.7

.1
6.9
8.3
17.9

1.4
4.1
8.5
15.2

4.7
8.1
14.5

33.2

29.2

27.3

268

THE BUDGET FOR FISCAL YEAR 1970

Table R-12. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY—Con.
(in millions of dollars)
1967
actual

Basic research:
High energy physics research
Other physical research
Biomedical research

1968
estimate

1969

General support:
Program direction and administration
Community support
Security investigations
Cost of work for others
Construction planning and design
Category total
Total distributed to programs above
Adjustments to budget authority, net
Total budget authority, Atomic Energy Commission

502.9

525.1

114.2
18.0

154.2
17.9

130.2
17.4

172.1

147.6

95.3
6.4
6.8
14.3
1.4

108.6
6.8
7.7
31.3
3.9

114.7
10.1
7.9
13.1

124.2

Category total

242.9
184.3
97.9

132.2

Nuclear science and technology support:
Supporting reactor development activities. _
Training, education, and information

186.9
214.1
101.9

421.4

Category total

152.8
175.4
93.2

158.3

145.8

2,494.3
13.9

2,948.5
-377.7

2,634.9
-196.7

2,508.2

2,570.8

2,438.1

GENERAL SERVICES ADMINISTRATION

GSA provides, on a centralized basis where it is efficient to do so,
a variety of goods and services for the agencies of Government.
Among the things provided are: office and other building space,
supplies, automatic data processing equipment, property and stockpile management, communications, motor transport, records management services, and other common services. It also operates the
National Archives and presidential libraries.
GSA's PPB system groups these diversified activities into five basic
program categories to facilitate analyses of costs and effectiveness.
A sixth program category covers agency direction and a variety of
support services.




269

SPECIAL ANALYSES
Table R-13. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
(in millions of dollars)
Program category and subcategory

Facilities:
Acquisition
Management
Service directionCategory total.
Supply services:
Provision of supplies.
Supply management
Automated data management services.
Service direction
Category total.
Other property management and disposal services:
Property management
Real property disposal
Personal property disposal
Program support
Service direction
Category total.
Transportation and communications services:
Transportation (other than motor equipment) _
Motor equipment
Communications
Public utilities
Service direction._
...
Category total.
Records services:
Management
Archival services
Federal Register. _ _
Service direction
Category total.
Agency direction and support services:
Executive direction
Administrative operations
Allowances and services to former Presidents_
Presidential transition
Category total.
Total distributed to programs above.
Deductions for offsetting receipts
Total budget authority, General Services Administration.




1968

1970

1969

163.6
274.4

94.3
288.3
1.5

114.7
301.7
1.6

439.5

384.1

418.0

58.8
1.1
11.6
1.9

65.2
1.2
2.4
2.0

65.2
1.2
2.4
2.0

73.5

70.9

70.8

13.5
4.3
7.4

13.3

1.0

.6

1.0
.6

14.4
4.4
8.3
1.0
.6

26.8

27.5

28.8

2.4
.4
1.8
.1
.7

2.4
.4
1.9
.1
.7

2.4
.4
1.9
.1
.7

5.4

5.5

5.5

11.7
4.8

13.1

.6
.6

5.9
.6
.7

13.5
7.0
.7
.7

17.8

20.4

21.9

1.8
12.8
.3

1.9

1.9

13.7
.3

13.8
.4

1.5

4.5
8.0

.9
14.9

16.8

16.2

577.8
-196.8

525.2
-205.9

561.3
-273.9

381.0

319.3

287.4

270

THE BUDGET K)R FISCAL iTfiAR 1970
NATIONAL AEKONAUTICS AND SPACE ADMINISTRATION

The principal statutory functions of NASA include conducting
research for the solution of problems of flight within and outside the
earth's atmosphere, conducting activities required for the exploration
of space with manned and unmanned vehicles, and arranging for the
most effective utilization of the scientific and engineering resources of
the United States with other nations that are engaged in aeronautical
and space activities for peaceful purposes.
These functions are reflected in the program structure shown below.
The table shows the NASA budget authority distributed to the
category level except for the general support category which is
shown at the subcategory level.
Table R-14. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
(in millions of dollars)
Program category and subcategory

Extension of manned space flight capability
Lunar exploration
Planetary exploration
Astronomy
Space physics
Space biology
Space applications
Space technology
Aircraft technology
_
Supporting activities:
Tracking and data acquisition
Other supporting activities
Research and program management.-

1968
actual

_.
_-.

_
_

_-.
__

_.

Total support activities
Total distributed to programs above
Financing adjustments
Deductions for offsetting receipts
Total budget authority, National Aeronautics and Space
Administration




1969
estimate

1970
estimate

2,829.7
46.5
109.1
92.9
73.9
37.5
110.3
237.7
84.6

2,180.8
13.6

275.9
102.4
639.3

279.7
70.2
648.6

298.0
102.1
650.9

1,017.6

998.5

1,051.0

4,639.8
-51.0
-1.5

3,877.8
117.2
-2.9

3,878.0
-117.5
-3.0

4,587.3

3,992.1

3,757.5

106.8

90.1
64.4
30.0
105.0

193.7
94.9

2,011.0
22.5
174.6
76.4
62.0
28.0
148.6
198.5
105.4

SPECIAL

271

ANALYSES

VETERANS ADMINISTRATION

The Veterans Administration administers laws authorizing benefits
for former members of the Armed Forces, and for their dependents
and survivors. The agency's functions are grouped into six major
program categories, as follows:
Table R-15. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
(in millions of dollars)
Program category and subcategory

1968
actual

Compensation for service-connected disabilities and death:
Compensation for veterans disabilities
_
Compensation to survivors
Miscellaneous
Administrative support
_
_

1969
estimate

1970
estimate

1,950.4
515.6
16.3
37.7

2.080.0
525.2
10.2
40.7

2,162.6
532.4
10.3
44.6

__

2,520.1

2,656.1

2,749.9

Alleviation of financial needs of veterans and survivors not connected with military service:
Veterans pensions
Survivors pensions
_
Burial allowances and related benefits
Administrative support

1,270.3
778.2
66.9
44.7

1,283.5
848.6
71.0
47.9

1,286.6
904.7
20.2
52.4

2,160.1

2,251.1

2,263.8

378.5
22.8

570.5
31.0

668.6
37.9

33.2
38.5

37.2
45.8
1.4

37.6
46.6
17.4

473.0

685.8

808.1

149.0
701.6
38.7

9.5
40.6

5.7
43.3

889.3

50.1

49.1

744.7
1.6
18.2

754.3
4.3
19.3

760.4

764.6

777.9

787.5

1,280.3
45.9
4.9
64.1
41.1
56.6

1,369.1
48.1
5.0
79 1
44.7
11.9

1,427.5
59.7

1,492.9

1,557.9

1,738.7

8,300.0
-494.0
-5.4

7,978.9
-483.9
-6.0

8,397.1
-480.1
-5.6

7,800.7

7.489.1

7,911.4

Category total

_

Category total
Educational and training assistance:
Readjustment educational assistance to veterans
Rehabilitative training of disabled veterans
Educational assistance to children of deceased and disabled
veterans
Administrative support
Educational assistance to wives and widows._
___
Category total

_

_

Housing and other credit assistance:
Credit assistance for homes, farms, and businesses
Servicing and management of loans and properties
Administrative support
Category total

_

_

Insurance:
Veterans life insurance trust funds
Veterans life insurance revolving funds
Administrative support
Category total

_

_

_

_

_
_

Health services:
Direct medical care
Medical and prosthetic research
Research and development in health services
Education and training.
_
__
Medical support and miscellaneous services
Construction of facilities
Category total

_

__
_

_

Total distributed to programs above _
Deductions for offsetting receipts
Intragovernmental transactions

. . .

Total budget authority, Veterans Administration




_

6.0
21.2

4.8
96.1
' 49.2
101.4

272

THE BUDGET FOR FISCAL YEAR

1970

NATIONAL SCIENCE FOUNDATION

The fundamental purpose of the National Science Foundation is to
strengthen basic research and education in the sciences. The Foundation's activities are reflected in the program structure shown below.
TableR-16. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
(in millions of dollars)
Program category and subcategory

1968
actual

Support of scientific research:
Scientific research project support
Specialized research facilities and equipment
National research programs.
National research centers

1969
estimate

1970
estimate

170.6
18.9
15.5
31.5

177.3
7.0
13.0
25.7

197.0
15.0
23.2
25.7

236.5

223.0

260.9

5.0

6.0

10.0

Computing activities in education and research

22.0

17.0

22.0

Institutional support for science

83.2

41.0

74.0

Science education support:
Precollege education in science
--_
Undergraduate education in science
Graduate education in science

54.7
21.5
48.7

49.0
20.0
47.1

48.8
20.5
48.2

124.8

116.1

117.5

14.4

11.0

14.0

1.4

1.8

2.0

2.4

2.5

2.9

15.4

16.6

17.0

___

505.2
-10.2
-3.5

435.0
-35.0
-1.1

520.3
-20.3
-1.1

Total budget authority, National Science Foundation

491.5

398.9

499.0

Category total.

___

_

National sea grant program

Category total___
Science information activities

__

_

International cooperative science activities
Planning and policy studies

_._

Program development and management
Total distributed to programs above
Adjustments to budget authority, net
Deductions for offsetting receipts




_
_

273

SPECIAL ANALYSES
OFFICE OF ECONOMIC OPPORTUNITY

The Office of Economic Opportunity contributes to the national
goal of eliminating poverty by aiding in the development of Federal
antipoverty policies and programs and by administering or coordinating various antipoverty program efforts. Achievement of this goal
involves the provision of opportunity for people and communities to
help themselves through work, education, and training in a decent
and dignified environment. Effort to reach these subgoals is carried
out through activities under several major program categories, as
shown in the table.
TableR-17. PROGRAM DISTRIBUTION OF BUDGET AUTHORITY
(in millions of dollars)
Program category and subcategory

1968
actual

Employment:
Job training and work experience assistance
Other employment assistance

752.7
16.5

825.1
17.0

641.8

769.2

842.1

568.4
60.7

577.0
95.5

_

8.3

8.8

614.7
127.8
10.8

__

637.4

681.4

753.3

293.5
29.2
11.9
35.9
17.0
21.6
62.1

294.8
32.0
14.1
42.0
6.0
23.9
66.1

312.2
37.0
24.4
50.0
12.0
48.0
72.0

_-.

471.2

478.9

555.6

___

3.6

3.6

11.9

Individual and family improvement:
Compensatory and other educational assistance
Health assistance
_
Other individual and family assistance

12.5

1.5

2.5

12.6
3.4

13.4

15.0

16.0

1,767.4
-.5

1,948.0
-.5

2,180.0
-.5

1,766.8

1,947.5

2,179.5

_ __

_

Community betterment:
Resource mobilization assistance. _ _ _ _ _ _ _
_
>_
Volunteer assistance
_ _ __ _ _
Housing assistance
__ _ _
__ _
Legal assistance
____
__
Loan assistance
-- - - - Economic development assistance
Other community betterment assistance
Category total
Poverty research and evaluation
General support:
Executive direction and administration
Coordination and other
Category total_._

_

_
_

Total distributed to programs above
Deductions for offsetting receipts
Total budget authority, Office of Economic Opportunity. _ _




1970
estimate

625.6
16.2

_

Category total

Category total

1969
estimate




INDEX
Agriculture, Department of, program distribution of budget authority, 254-255
Agriculture, Department of, research and
development, 246
Aid to State and local governments, see State
and local governments, aid to
Assets, Federal, additions to, 32-33, 36-41
Assets, State and local governments, additions
to, 34, 42-43
Atomic Energy Commission, program distribution of budget authority, 267
Atomic Energy Commission, research and
development, 245-246
B
Balances, unobligated, see Unobligated balances
Balances of prior budget authority, 21-22
Borrowing by Government agencies, 27-28
Budget, funds in the, 19-26
Budget, relation of, to national income accounts,
federal sector, 11-14
Budget authority:
Balances of prior years, 21-22
By agency, 254-273
Education, 122,129
Program distribution:
Agriculture, Department of, 254-255
Atomic Energy Commission, 267
Commerce, Department of, 255-257
Defense, Department of—Military, 257
Economic Opportunity, Office of, 273
General Services Administration, 268-269
Health, Education, and Welfare, Department of, 258
Housing and Urban Development, Department of, 259
Interior, Department of the, 260
Justice, Department of, 260-262
Labor, Department of, 262-264
National Aeronautics and Space Administration, 270
National Science Foundation, 272
Post Office Department, 264
Transportation, Department of, 265
Treasury, Department of the, 266
Veterans Administration, 271
Public works, 222, 224,232-238
Unobligated balances available in 1970,78-93
Budget outlays, see Outlays
Budget receipts, see Receipts
Budgets, agency, program categories, 253-273

Capital budget, 35-36
Census, 19th Decennial, 76-77
Census of governments, 77




College and university facilities, 125
Commerce, Department of, program distribution by budget authority, 255-257
Commerce, Department of, research and development, 247-248
Compensation, Federal personnel, 104-105
Construction:
Health facilities, 152-155
Public works, by cooperative and nonprofit
groups, Federal outlays for, 231
Statistics, 75-76
Consumer protection, 166
Credit programs, Federal:
Analysis, 54-69
Disbursements and repayments, 58-61
Interest rates and maturities, 63-66
Loans, direct and guaranteed, 61-63
New commitments, 56-58
Summary of legislation, 67-69
Credit programs, Government-sponsored, 6667
Crime prevention, 190, 193
Crime reduction:
Analysis, 188-197
Outlays:
By agency, 189
By program and agency, 196
By program and selected activity, 191
Planning and coordination, 195-196
Program, by activities, 191-197
Crime statistics, 75
Criminal laws, reform of, 192-193

Debt issuances, by Government agencies, 27-28
Defense, Department of—Military, program
distribution of budget authority, 257
Defense, Department of—Military, research
and development, 242-243
Demographic statistics, 71-74
Development, scientific, 240-241
Developmental outlays, 34, 43-46
Disability benefits, 178-179
Disbursements, major Federal credit programs,
58-61
Disease prevention, 163-165
Domestic transfer payments, 1960-69, 9-10

Economic accounts, 76
Economic activity, level of, 8
Economic Opportunity, Office of, program
distribution of budget authority, 273
Economic opportunity statistics, 74
Education programs:
Adult and continuing, 130-131
Analysis, 118-133
College and university facilities, 125
Disadvantaged children, 118-119
275

276

T H E BUDGET FOR FISCAL YEAR

Education programs—Continued
Elementary and secondary, 117-122
Foreign, 132-133
Graduate and undergraduate student support, 126-127
Health manpower, 151-152
Higher, 122-129
Outlays:
By agency, 117
By agency and program, 122
By category, 113
By level, 115
Student aid, 123-124
Teacher training, 120, 128
Undergraduate students receiving aid, number of, 124
Vocational, 120-121
Education statistics, 73
Employment, Federal civilian:
Analysis, 101-109
By geographical location, 106
Compensation and benefits, 104-105
In relation to population and other Government employment, 1942-70,107-109
Numbers and workload, trends in, 107
Permanent, full-time, 101-103
Retirement, 12

Totals, 103-104

Training, 131-132
Environmental control, 165-166
Expenditure and Revenue Control Act of 1968,
8,78
Expenditures:
Aid to State and local governments, 215-218
National income accounts, Federal sector:
By category, 14-16, 18
PercentofGNP.il
Relation of, to budget, 11-14
Totals, 1940-69, 17
Trends, 8-11
Research and development, by agency, 1954—
70, 250
F
Family planning services, 166-167
Federal assets, additions to, 32-33, 36-41
Federal funds, discussion, 20-22
Financial statistics, 76
Flow of Government-administered funds, 25-26
Foreign currencies:
Availabilities and uses, 94-100
Available to meet United States requirements, 95-96
Cash availability of, 1968-70, 95
Excess and nonexcess, 94-95
Loans outstanding, repayable in, 100
Special program appropriations, 97-98
Summary of authorizations, United States
uses, 98-99
Summary of transactions, country uses, 99
Summary of transactions, United States
uses, 96-97
Trust funds, summary of transactions, 100




1970

General Services Administration, program
distribution of budget authority, 268-269
Grants-in-aid, 1960-70, 9-10
Grants and net lending, public works, 223-225
Guarantee programs, unobligated balances,
79-81

H

Health, Education, and Welfare, Department
of, program distribution of budget authority,
258
Health, Education, and Welfare, Department
of, research and development, 244
Health programs:
Analysis, 148-173
Facilities construction, 152-155
Family planning, 166-167
Federal beneficiaries, 161
Hospital and medical services, provision of,
157-161
Organization and delivery of health services,

155-157

Outlays:
By agency, 171-173
By category, 148, 169
By population and income groups, 162-163
Prevention and control of health problems,

163-166
Research, 149-151
Statistics, 71-73
Training and education, Federally aided,

151-152

Hospital services, 157-159
Housing statistics, 75-76
Housing and Urban Development, Department
of, program distribution of budget authority,
259
I
Income replacement programs, 175-181
Income security programs:
Analysis, 174-187
Benefits in kind, 185-186
Cash benefits, by agency and program,

186-187

Private organizations, 186
Program interaction, 185
State and local governments, 186
Tax expenditures, 186
Income support programs, 182-184
Insurance programs, unobligated balances,
79-81 *
Interest rates and maturities, 63-66
Interior, Department of the, program distribution of budget authority, 260
Interior, Department of, research and development, 246-247
Investment, operating, and other budget
outlays, 31-53
Investment in United States securities, Government-administered funds, 27-30

INDEX

J
Job placement assistance, 140-141
Justice, administration of, 194-195
Justice, Department of, program distribution
of budget authority, 260-262

Labor, Department of, program distribution of
budget authority, 262-264
Labor statistics, 70-71
Law enforcement, 190, 193-194
Loan programs, unobligated balances, 80,82-83
Loans:
Direct and guaranteed, 61-63
Outstanding, repayable in foreign currencies, 100
Outstanding, total, 67
See also Credit programs
To state and local governments, 219
M
Manpower programs:
Analysis, 134-147
Coordination of, 142-143
Job placement assistance, 140-141
Level of effort, and people served, 143-146
On-the-job training, 137-138
Outlays, by agency, 146-147
Outlays and individuals served, 135
Vocational rehabilitation, 139
Vocational training, 136-137
Work support programs, 139-140
Marine sciences research, 248
Medicaid, 158-159
Medicare, 157-158
N
National Aeronautics and Space Administration, program distribution of budget
authority, 270
National Aeronautics and Space Administration, research and development, 243-244
National defense, public works, 230-231
National income accounts, Federal sector:
Discussion, 7-18
Expenditures as a percent of GNP, 11
Receipts and expenditures, 1940-69, 17
Receipts and expenditures, by category, 1416,18
Relation of, to budget, 11-14
Trends in receipts and expenditures, 7-11
National Science Foundation, program distribution by budget authority, 272
National Science Foundation, research and
development, 246
Net lending, public works, by agency or program, 223-225
0
Obligations, Federal funds, 21
Operating, investment and other budget outlays, 31-53




277

Organized crime, 190
Outlays:
Aid to state and local governments, 209, 213
By fund group, 19
Cash benefits program, 174, 187
Crime reduction, 189, 191, 196
Education, 113, 115,117,122, 129
Federal funds, by agency, 20
Health, 148, 151, 162, 169, 171-173
Income replacement, 176
Income support, 182
Investment, operating, and other, 31-53
Manpower programs, 135, 146-147
Public enterprise funds, by agency, 22-23
Public works, 220,222,224,231,232-238
Trust funds, 23-24

Personnel, Federal, see Employment, Federal
civilian
Planning-Programing-Budgcting (PPB) System, 253-273
Population statistics, 71
Post Office Department, program distribution
of budget authority, 264
Price indexes, 75, 77
Production and distribution statistics, 75
Program categories, agency budgets, 253-273
Public assistance, 182-183
Public enterprise funds, discussion, 22-23
Public works:
Analysis, 220-238
Budget authority by function and agency,
232-238
Civil, estimated cost, 225-227
Construction by cooperative and nonprofit
groups, 231
Direct, outlays and budget authority, 222
Grants and net lending, 223-225
National defense. 230-231
Outlays, 1961-70, 220
Outlays, by function and agency, 232-238
Reserve of authorized projects and programs,
228
Water resources and related developments,
229
R
Receipts:
By fund group, 19
Federal funds, by source, 20
National income accounts, Federal sector:
By category, 14-16, 18
Relation of, to budget, 11-14
Totals, 1940-69, 17
Trends, 7-8
Public enterprise, funds, by source, 22-23
Trust funds, 23-24
Reform of criminal laws, 192-193
Rehabilitation, vocational, 139
Rehabilitation of offenders, 195
Repayments, major Federal credit programs,
5&-61

278

THE BUDGET FOE FISCAL YEAR

Research, health, 149-151
Research and development:
Agriculture, Department of, 246
Analysis, 239^250
Atomic Energy Commission, 245-246
Commerce, Department of, 247-248
Defense, Department of—Military, 242-243
Expenditures, by agency, 1954-70, 250
Expenditures and obligations, by agency, 240
Facilities for, 242
Health, Education, and Welfare, Department
of 244
In colleges and universities, 240
Interior, Department of the, 246-247
Marine sciences, 248
National Aeronautics and Space Administration, 243-244
National Science Foundation, 246
Space programs, 249
Transportation, Department of, 247
Retirement benefits, 175-178
Revenue and Expenditure Control Act of 1968,
8,78
S

Student aid programs, 123-124
Survivorship benefits, 179-181

Tax expenditures, 186
Taxes, changes in rates, 8
Teacher training, 120, 128
Training:
Federal employees, 131-132
Health manpower, 151-152
On-the-job, 137-138
Teachers, 120, 128
Vocational, 136-137
Transfer payments, domestic, 1960-70, 9-10
Transportation, Department of, program distribution of budget authority, 265
Transportation, Department of, research and
development, 247
Treasury, Department of the, program distribution of budget authority, 266
Trust funds, discussion, 23-25
Trust funds, foreign currency, 100
Trust revolving funds, 24-25

U

Securities, United States, purchases of, by
Government-administered funds, 27-30
Social Security statistics, 73-74
Social statistics, 71-74
Space research, 249
State and local governments, additions to
assets, 34, 42-43
State and local governments, aid to:
Analysis, 201-219
Coordination of programs, 208
Direct and indirect assistance, 203-204
Distribution of Federal aids by functions, 207
Expenditures, by agency, 204, 205, 215-218
Growth and development of Federal aids,
206-210
Income security benefits, 186
Loans, 219
Outlays, in relation to local Federal expenditures and to State and local revenue,
208-209
Percentage distribution, direct spending for
domestic program, by Federal, State, and
local governments, 210
Regional distribution, fiscal year 1967,
210-211
Urban areas, 211-212
Statistical programs:
Analysis, 70-77
Obligations for, by agency, 72
Obligations for, by broad subject areas, 71




1970

Unemployment benefits, 181
Unobligated balances, 78-93
Analysis of requirements for, 84-91
Approach to rescission, 92-93
Available for rescission, 85-91
Held for others, 85-87
Requires change in statutes, 86-88
Requires change in practices, 88-89
Without change in statutes or practices,
89-91
Characteristics of, 79-84
Planned for obligation in 1970, 85-86
Summary by agency and type of authority,
83-84
Urban areas, aid to, 211-212
Veterans Administration, program distribution of budget authority, 271
Veterans pensions, 182, 183
Vocational education, 120-121
Vocational rehabilitation, 139
Vocational training, 136-137
W
Water resources, outlays for, 229
Welfare statistics, 74
Work support programs, 139-140

o





Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102