COMMUNITY PROGRAMS Community programs provide residents in rural communities with basic amenities, alleviate health hazards, improve the quality of rural living, and contribute to their orderly economic and social development. Loans for these purposes are funded through the Rural Development Insurance Fund. Rural Development Insurance Fund The amended 1982 Budget request for insured community facilities loans under the Rural Development Insurance Fund is $130 million, and a loan program for water and waste disposal systems of $300 million is included under proposed legislation which would adjust the interest rates charged in the program to rates similar to those in the private sector for municipal bonds issued for the same purposes. Community facility loans Loans are currently made to public bodies and nonprofit corporations in rural communities and places of not more than 20,000 population. These loans finance projects involving fire, rescue, and public safety; health and medical care facilities; public buildings; hydroelectric generation facilities; and cultural and educational facilities. We are requesting $130 million for community facility loans. We have also asked that the interest rate charged borrowers in this program be adjusted from its present statutory level of 5 percent to a rate which would reflect the municipal bond market for notes of similar terms and for similar purposes. Replenishment of Rural Development Insurance Fund An appropriation of $204 million is requested to reimburse the fund for interest subsidies and losses incurred in fiscal year 1980. Water and waste disposal loans For water and waste disposal system loans, we are requesting $300 million under proposed legislation which would adjust interest rates to the comparable municipal bond rate. In order to make maximum use of these funds, priority consideration will be given to those projects which will enlarge, extend or otherwise modify existing facilities to provide service to additional rural residents. Other community programs We are requesting $100 million for water and waste disposal system grants to complement the loan program. This request is contingent upon the approval of the proposed legislation for raising the interest rates in the water and waste disposal loan program. Our request also includes $26 million for watershed works of improvement and flood prevention loans. This amount will provide ample funding for all projects ready for construction. HOUSING PROGRAMS Our rural housing programs are financed mainly by the Rural Housing Insurance Fund. The 1981 Appropriation Act provided $4.1 billion for insured housing loans, of which the President has requested a rescission of $316 million for moderate income section 502 loans. The 1982 insured loan authorization request is for $3.7 billion, of which not less than $3.2 billion shall be available for subsidized interest loans to low-income borrowers. The total loan level request is a decrease of $400 million from the level authorized in the 1981 Appropriation Act. The decrease is primarily made up of a decrease of $325 million in the moderate income housing program, $25 million in guaranteed housing loans and a reduction of $48 million in non-interest credit multi-family housing loans. In 1982, the Farmers Home Administration housing programs will continue to provide housing assistance to families with the greatest need. We will continue to emphasize the purchase of existing housing and the rehabilitation and repair of existing units when such housing is available and reasonably priced. FmHA has found that reasonably priced existing units can, in many instances, allow the Agency to reach a lower income level borrower than could be assisted otherwise. To ensure that interest credit subsidies remain focused on the most needy, we will be proposing legislation to repeal the recently enacted statutory mandate that such subsidies be extended to moderate income families for homeownership purposes. Section 504 housing repair program The request for loan authorizations for Section 504 home repair loans for 1982 is $24 million, the same level as in 1981. We have also included a $25 million request for very low-income housing repair grants. Loans and grants are made to finance essential improvements to the dwellings of very low-income families to make them safe and sanitary and to remove health hazards. Rural rental assistance The fiscal year 1982 Budget provides for an additional 14,280 units in our rural rental assistance program. This is 3,375 units less than the number of units approved in fiscal year 1981. The total cost of the 14,280 unit program level for rental assistance is estimated to be $398 million over the life of the assistance agreements. Replenishment of the Rural Housing Insurance Fund An appropriation of $654 million is requested to reimburse the Rural Housing Insurance Fund for interest subsidies and losses incurred in fiscal year 1980. The principal element of this reimbursement is the amount by which interest accruing to investors and the Federal Financing Bank exceeded interest income accruing from our housing borrowers. Other rural housing programs The Budget also includes a request of $25 million for rural housing for domestic farm labor grants. These grants are used to reduce rental rates to a level that lowincome farmworkers can afford. The proposed appropriation level is the same level as in 1981. The 1982 Budget also includes $2 million for self-help housing site loans which provide financing for the acquisition and development of building sites for homes to be built by the self-help method. We are requesting $5 million for the mutual self-help technical assistance grants. Grants and contracts are made to help provide technical assistance to groups of families who are building homes through the mutual exchange of labor. SALARIES AND EXPENSES The appropriation request for salaries and expenses is $283 million. This is about $32 million above the adjusted appropriation estimated for 1981. The 1982 request includes $5,881,000 for increased operating costs to sustain performance levels of continuing programs and provide credit counseling, loan servicing and debt collection to an ever increasing loan portfolio. An increase of $2,885,000 is also requested for the portion of pay increases absorbed in 1981 but required in 1982 to carry out the programs and for annualization of the pay increase effective in October 1980. We are also requesting an increase of $5,620,000 for additional permanent full time staff years primarily for loan servicing and credit counseling activities needed for our continually increasing number of loans outstanding. In addition, we are requesting an increase of $17,863,000 for 725 staff years of effort for which financing will shift from permanent appropriations to current appropriations. These staff years were financed primarily from the Agricultural Credit Insurance Fund in fiscal year 1981 to meet a record level emergency program, but are needed in fiscal year 1982 to meet workload in farm loan and low-income housing. Mr. Chairman, this concludes my prepared testimony. As stated earlier, I have a brief history of FmHA complete with charts and statistics which may be helpful to insert in the record. I appreciate the opportunity to discuss the performance of FmHA in meeting the needs of farmers and othe rural Americans. Thank you very much. United States Farmers Administration A Brief History of 77-802 0-81-59 January 1981 A BRIEF HISTORY OF FARMERS HOME ADMINISTRATION Farmers Home Administration (FmHA) is the credit agency for agriculture and rural development in the United States Department of Agriculture. Its history of financial and technical assistance in rural America goes back 45 years. FmHA continues the mission of its predecessors in rural assistance--the Resettlement Administration and the Farm Security Administration--but the original scope has changed. Today, the Agency serves a broader purpose than the 1930's singular effort to make loans to Depression-stricken farm families. As recently as 1960, FmHA was primarily concerned with its supervised credit program for low income farmers. FmHA is still a source of credit for building stronger family farms; in 1980 farm credit accounted for nearly one-half of all resources administered by FmHA. Congress, during the 1960's and 1970's, added additional programs that benefit families and communities throughout the rural population, helping to provide safe, modest housing; modern, sanitary water and sewer systems; essential community facilities; and job/economy boosting business and industry in rural areas. The agency was given significant new responsibilities in rural development coordination to help implement the "Small Community and Rural Development Policy Act of 1980." In August 1977, the Rural Development Service was merged into the Farmers Home Administration providing the Agency with a rural development policy management capability. FmHA began to direct its resources on high priority rural problems in the most distressed rural communities and population groups, and to influence others to adopt a similar focus. Joint investment strategies and other coordinated programs between FmHA and Federal, State, and local agencies were developed combining funds and other resources for critical rural problems, especially in housing, health, transportation, water systems, communications, energy, and economic development. A major advantage to rural people is the localized delivery system developed over the years by FmHA. Approximately 8,000 permanent full-time employees direct FmHA resources from 46 State offices, 302 district offices and more than 1,800 county offices serving every county or parish in the 50 States plus the Pacific Trust Territory, Guam, Puerto Rico, and the Virgin Islands. FmHA's existing system of people-to-people contact across the country has established it as the "lead" agency for rural development. Congress and the Administration continually recognize FmHA's long experience in serving rural communities and farm families and have over the years expanded old and created news services. FmHA loans and grants supplement the amount of credit and capital directly available from commercial lenders in rural areas. In most programs, the agency makes loans to qualified applicants who can find no other sources of financing available on terms or conditions they can meet. The money loaned by FmHA comes from collections on previous loans, or from private investors through sale of Government securities. In guaranteed loan making, funds are supplied directly to borrowers by commercial lenders with FmHA minimizing the lender's risk. Grants for rural water and waste disposal systems, industrial site development, farm labor housing, home repair for low income elderly, "self-help" homebuilding by low income families, and community planning supplement the agency's rural lending program. RESETTLEMENT ADMINISTRATION The lineage of FmHA goes back to the Resettlement Administration which was established as an independent agency in 1935 and formally assigned to the Department of Agriculture in January 1937. The programs of the Resettlement Administration offered a number of approaches to solving the problems of poor people and poor land. The most popular was the supervised loan program. Supervised loans were part of a Government-wide effort to help needy rural people re-establish themselves on a self-supporting basis. During its 2-year operation, the Resettlement Administration made more than 300,000 short-term loans, often supplemented by grants to low-income families. Each loan was based on a farm and home management plan worked out by county, farm, and home supervisors in cooperation with the borrowing family. The plans were designed to ensure the use of good farming practices and to fit the needs of the families taking part in the program. By 1937, there was a growing conviction in USDA and in Congress that supervised credit as pioneered by the Resettlement Administration was the answer to a worsening national problem of hardship and failures among tenant farmers. On July 22, 1937, the Bankhead-Jones Farm Tenant Act was passed. The Resettlement Administration was given the responsibility of the new program of supervised farm ownership loans with 40-year terms for farmers who lacked other sources of credit for buying their own land and for farm and home improvement. Also enacted in 1937 was the Water Facilities Act to provide loans for individual and association farm water systems in 17 western States where drought and water shortage were familiar hardships. The Resettlement Administration shared servicing responsibilities of the program with the Soil Conservation Service and Bureau of Agricultural Economics. This Act was the forerunner of the rural water programs now administered by FmHA. |