CLARINDA, Iowa - July 31, 2012 - Agriculture Deputy Under Secretary for Rural Development Doug O'Brien today announced the selection of projects in Iowa for loans and grants that will support job creation efforts, business development and strengthen economic growth in rural communities across the state.

"We are pleased to be helping with efforts around the state that will strengthen the economy, create jobs, support business growth and expand opportunity for rural Iowans," O'Brien said. "The Obama Administration is committed to ensuring that rural communities are economically vibrant and successful in their business-development and job-creation efforts."

Funding is being provided through USDA's Rural Economic Development Loan and Grant program (REDLG), which provides zero-interest loans to local utilities which they, in turn, pass through to local businesses (ultimate recipients) for projects that will create and retain employment in rural areas.

With today's announcement, USDA is investing nearly $2.5 million to spur economic growth. The following is a list of rural utilities in Iowa that will receive funding, which is contingent upon the recipient meeting the terms of the loan or grant agreement.

• Eastern Iowa Light & Power Cooperative - $298,000 loan. Funding will be used to purchase land that a local community development corporation will develop as an industrial park.
• Orange City Municipal Electric Utility -- $1,000,000 loan. Funds will be used to provide loans to rural utilities program borrowers to provide economic development. This project will provide a loan to Tec Industries, LLC dba Quatro Composites to be used for the purchase of machinery and equipment. This project is expected to create 144 new jobs.
• Rock Rapids Municipal Utilities -- $300,000 grant. Funds will be used to provide grants to rural utilities program borrowers to provide economic development. This project provides support to Rock Rapids Municipal Utilities who will add $60,000 match to create a $360,000 revolving loan fund. The revolving loan fund will make a loan to Rock Rapids Area Development Foundation which will construct a new building in Rock Rapids. This project is expected to create up to 20 jobs.
• Harrison County Rural Electric Cooperative - $344,000 loan. Funding will be used to construct a 10,000-square-foot central warehouse facility for Grato Holdings, Inc. The new warehouse will consolidate the company's operations.
• Central Iowa Power Cooperative - $300,000 grant. Funds will be used to purchase land that a local community development corporation will develop as an industrial park.

O'Brien made the announcement during a two-day tour in Iowa. The trip began with a groundbreaking ceremony at Manning Regional Healthcare Center in Manning, Iowa. USDA Rural Development is providing a $21 million loan to assist with construction of the hospital. Following the ceremony, O'Brien toured the new Clarinda Regional Health Center in Clarinda, Iowa. The health center recently received an $18.9 million USDA loan to help with construction costs.

USDA Rural Development's funding continues to have a dramatic impact on rural communities across Iowa. Since 2009, the agency has invested nearly $2 billion in essential public facilities, small and emerging businesses, water and sewer systems, and housing opportunities to help Iowa families and communities build a better future.

"Under President Obama's leadership, USDA has carried out these investments, helping our rural communities and sectors which impact the rural economy," O'Brien added. "In turn, this has supported the rural way of life that stands as the backbone of our American values. It has empowered rural America to continue leading the way, strengthening America's economy, and strengthening small towns and rural communities."

President Obama's plan for rural America has brought about historic investment and resulted in stronger rural communities. Under the President's leadership, these investments in housing, community facilities, businesses and infrastructure have empowered rural America to continue leading the way - strengthening America's economy and strengthening small towns and rural communities. USDA's investments in rural communities support the rural way of life that stands as the backbone of our American values. President Obama and Agriculture Secretary Tom Vilsack are committed to a smarter use of Federal resources to foster sustainable economic prosperity and ensure the government is a strong partner for businesses, entrepreneurs and working families in rural communities.

USDA, through its Rural Development mission area, has an active portfolio of more than $170 billion in loans and loan guarantees. These programs are designed to improve the economic stability of rural communities, businesses, residents, farmers and ranchers and improve the quality of life in rural America.

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USDA is an equal opportunity provider and employer. To file a complaint of discrimination, write: USDA, Office of the Assistant Secretary for Civil Rights, Office of Adjudication, 1400 Independence Ave., SW, Washington, DC 20250-9410 or call (866) 632-9992 (Toll-free Customer Service), (800) 877-8339 (Local or Federal relay), (866) 377-8642 (Relay voice users).

Statement of Sen. Chuck Grassley

Committee on Finance Hearing, "Education Tax Incentives and Tax Reform"

Wednesday, July 25, 2012

As we consider how tax incentives help students and families pay for college, we should consider whether and how these incentives also increase costs.  A 2010 study by Nicholas Turner at the University of California-San Diego suggests that schools are reducing financial aid awards by the amount of tax benefits a student or family may receive.

In addition, a 2011 article in the Washington Monthly by Benjamin Ginsberg exposes the explosion in spending on administrators and support staff that are not directly involved in instruction or research. Such spending includes hefty increases in executive compensation and benefits.

Aside from getting a handle on rising costs and tax incentives for students and families, it is also important to consider the tax benefits that tax-exempt college and universities receive.

Just like tax-exempt hospitals, tax-exempt colleges and universities are exempt from income tax.  They also have the ability to raise capital through tax-deductible charitable contributions and the issuance of tax-exempt bonds.

The Joint Committee on Taxation, in the document prepared for today's hearing, indicates that the most expensive Federal tax expenditure for education is the charitable deduction at more than $32 billion. The tax exemption for bonds is the third most expensive at more than $18 billion.

The charitable deduction for sure fuels the growth in multi-billion dollar in college and university endowment funds.  According to the most recent annual NACUBO-Commonfund endowment study, endowments with more than $1 billion in assets had a one-year rate of return of more than 20% and a ten-year rate of return of almost 7%.

So, even though they had a couple of rough years in 2007 and 2008, they are still doing great.  Yet, despite their success and skyrocketing tuition, their payout rate hovers around 5%.

Part of their success results from their investment strategies. The same endowment study tells us that these endowments with more than $1 billion are sixty percent invested in "alternative strategies."

Such investments include private equity, international private equity, mergers and acquisition funds, hedge funds, derivatives and energy and natural resources, including oil, gas, timber and commodities.

Aside from their lack of spending on students, it's unclear whether such investments may also be contributing to the erosion of the tax base by sheltering otherwise taxable, commercial activity in tax-exempt entities.  Commodity speculation is another issue that has been of concern to both me and Senator Wyden.

When it comes to tax-exempt bonds, it seems that the ease of borrowing is causing a race to spend without considering whether such spending adds to a student's learning.

In a May 1, 2012, CNBC report, the Dean of Admissions at Pomona College suggests a $53 million investment in student housing is important because students are not making choices based on whether they are going to get a good education.  The same report highlights other California colleges offering perks such as dorm rooms with ocean front views and cafeterias with gourmet food.

In addition, an April 30, 2010, Congressional Budget Office study suggests that colleges and universities may benefit from indirect tax arbitrage by using tax-exempt bonds to fund building and equipment while hoarding money to invest in the assets I just mentioned that provide a higher rate of return.

Bottom line - the incentives for students and families are not the only ones that should be reviewed in the context of tax reform.  All education related tax expenditures should be examined to ensure that students and families, in addition to taxpayers, are getting the most bang for their buck.

Washington, D.C. - Congressman Dave Loebsack today praised the passage of legislation that would stop the U.S. Department of Labor (DOL) from finalizing the proposed rule that would limit the work children could perform on family farms.  When the rule was originally proposed earlier this year, Loebsack personally met with the DOL officials to urge them to review Iowans' concerns while working to keep our children safe.  Shortly after the meeting, DOL withdrew the proposed rule.

"Iowa farmers have a long and proud history of feeding their neighbors, state, country and the world," said Loebsack.  "I heard from family farmers earlier this year about the possible negative effects of the rule and personally urged the Department of Labor to not move forward with it.  I was pleased when the Department of Labor withdrew it.  Today's bill takes another step to ensure Iowa's way of life is protected."

In addition to meeting with the DOL, Loebsack urged the Secretary of Labor to ensure Iowa farmers and families had the opportunity to be heard regarding these proposals and also urged the Department to reconsider the provisions relating to the parental exemption for children helping on the farm.